SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8570
CIRCUS CIRCUS ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0121916
(State or other jurisdiction of (I.R.S.
employer
incorporation or organization) identification
no.)
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109-1120
(Address of principal executive offices)
(702) 734-0410
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securi-
ties Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at June 9, 1994
Common Stock, $.01-2/3 par value 85,695,334 shares
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at
April 30, 1994 (Unaudited) and January 31,
1994 . . . . . . . . . . . . . . . . . . . . 3-4
Condensed Consolidated Statements of Income
(Unaudited) for the Three Months Ended
Ended April 30, 1994 and 1993. . . . . . . . 5
Condensed Consolidated Statements of Cash
Flows (Unaudited) for the Three Months
Ended April 30, 1994 and 1993. . . . . . . . 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) . . . . . . . . . . 7-14
Item 2. Management's Discussion and Analysis of Finan-
cial Condition and Results of Operations . . 15-19
Part II. OTHER INFORMATION 20
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
April 30, January 31,
1994 1994
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents................ $ 38,699 $ 39,110
Receivables.............................. 7,380 8,673
Inventories.............................. 21,507 20,057
Prepaid expenses......................... 19,453 20,062
Total current assets................ 87,039 87,902
PROPERTY, EQUIPMENT AND LEASEHOLD INTERESTS,
at cost, less accumulated depreciation
and amortization of $356,330 and $336,287
respectively............................. 1,190,204 1,179,961
EXCESS OF PURCHASE PRICE OVER FAIR MARKET
value of net assets acquired, net........ 10,109 10,200
INVESTMENTS IN AND ADVANCES ON BEHALF OF
JOINT VENTURES............................ 23,815 3,203
OTHER ASSETS................................ 11,619 16,658
Total Assets......................... $1,322,786 $1,297,924
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
April 30, January 31,
1994 1994
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt................ $ 173 $ 169
Accounts payable - trade ........................ 16,828 14,804
Accounts payable - construction.................. 7,429 13,844
Accrued liabilities ............................. 74,254 59,438
Income tax payable .............................. 15,703 3,806
Total current liabilities ................ 114,387 92,061
LONG-TERM DEBT ...................................... 549,440 567,345
DEFERRED INCOME TAX ................................. 78,919 77,153
OTHER LONG-TERM LIABILITIES ......................... 1,399 1,415
Total liabilities ........................ 744,145 737,974
STOCKHOLDERS' EQUITY:
Common stock, $.01-2/3 par value
Authorized - 450,000,000 shares
Issued - 96,293,148 and 96,168,769 shares ..... 1,605 1,603
Preferred stock, $.01 par value
Authorized - 75,000,000 shares - -
Additional paid-in capital ...................... 121,564 120,135
Retained earnings ............................... 650,737 618,446
Treasury stock (10,597,814 and 10,062,814 shares),
at cost........................................ (195,265) (180,234)
Total stockholders' equity ............... 578,641 559,950
Total Liabilities and
Stockholders' Equity $1,322,786 $1,297,924
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Three Months
Ended April 30,
1994 1993
REVENUES:
Casino ......................... $151,248 $122,564
Rooms .......................... 54,192 38,851
Food and beverage .............. 47,339 33,139
Other .......................... 37,570 21,920
290,349 216,474
Less-complimentary allowances .. (8,255) (6,688)
282,094 209,786
COSTS AND EXPENSES:
Casino ......................... 59,687 47,228
Rooms .......................... 23,723 17,471
Food and beverage .............. 45,067 32,014
Other operating expenses ....... 21,674 14,300
General and administrative ..... 44,459 31,582
Depreciation and amortization .. 20,490 11,986
215,100 154,581
OPERATING PROFIT BEFORE CORPORATE
EXPENSE ........................ 66,994 55,205
CORPORATE EXPENSE ................ 5,914 3,433
INCOME FROM OPERATIONS ........... 61,080 51,772
OTHER INCOME (EXPENSE):
Interest, dividend and
other income (expense) ....... (27) (139)
Interest expense ............... (10,598) (1,968)
(10,625) (2,107)
INCOME BEFORE PROVISION FOR
INCOME TAX ..................... 50,455 49,665
Provision for income tax ....... 18,164 16,886
NET INCOME ....................... $ 32,291 $ 32,779
EARNINGS PER SHARE ............... $ .38 $ .38
Average shares outstanding ..... 86,088,125 87,292,363
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended April 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,291 $ 32,779
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 20,899 12,185
(Gain) loss on sale of fixed assets 116 208
(Increase) decrease in other current assets 452 877
(Increase) decrease in other non-current assets 5,048 (992)
Increase (decrease) in interest payable 8,716 3,669
Increase (decrease) in income tax payable 11,897 13,893
Increase (decrease) in other current liabilities 8,124 4,259
Increase (decrease) in deferred taxes 1,766 993
Increase (decrease) in other non-current
liabilities (16) (15)
Total adjustments 57,002 35,077
Net cash provided by operating activities 89,293 67,856
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (31,249) (105,611)
Decrease in construction payables (6,415) (12,579)
Increase in investments in and advances on
behalf of joint ventures (20,612) -
Proceeds from sale of equipment and other assets 82 35
Net cash used in investing activities (58,194) (118,155)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net effect on cash of issuances and payments
of debt with initial maturities of
three months or less (17,869) 44,923
Principal payments of debt with original
maturities in excess of three months (41) (37)
Exercise of stock options and warrants 1,431 1,147
Purchases of treasury stock (15,031) (2,834)
Net cash provided by (used in)
financing activities (31,510) 43,199
Net decrease in cash and cash equivalents (411) (7,100)
Cash and cash equivalents at beginning of period 39,110 43,415
Cash and cash equivalents at end of period $ 38,699 $ 36,315
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 1,622 $ -
Income tax $ 2,000 $ 2,000
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All information for the three months ended April 30, 1994 and
1993 is unaudited.)
(1) Principles of consolidation and basis of presentation -
Circus Circus Enterprises, Inc. (the "Company") was
incorporated February 27, 1974. The Company operates hotel and
casino facilities in Las Vegas, Reno and Laughlin, Nevada and is a
partner in a casino operation in Windsor, Canada.
The condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.
Material intercompany accounts and transactions have been
eliminated.
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of
management, all adjustments (which include normal recurring
adjustments) necessary for a fair statement of results for the
interim periods have been made. The results for the three-month
period are not necessarily indicative of results to be expected
for the full fiscal year.
Certain reclassifications have been made to the financial
statements for the three months ended April 30, 1993 to conform to
the financial statement presentation for the three months ended
April 30, 1994. These reclassifications have no effect on net
income.
These financial statements should be read in conjunction with
the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended
January 31, 1994.
(2) Long-term debt -
Long-term debt consists of the following (in thousands):
April 30, January 31,
1994 1994
(Unaudited)
Amounts due under corporate
debt program at floating
interest rates, currently at
approximately 4.1% $149,581 $167,450
7-5/8% Senior Subordinated Debentures
due 2013 150,000 150,000
6-3/4% Senior Subordinated Notes
due 2003 (net of unamortized
discount of $146 and $150) 149,854 149,850
10-5/8% Senior Subordinated Notes
due 1997 (net of unamortized
discount of $56 and $60) 99,944 99,940
Other notes 234 274
549,613 567,514
Less - current portion (173) (169)
$549,440 $567,345
The Company has established a corporate debt program whereby
it can issue commercial paper or similar forms of short-term debt.
Although the debt instruments issued under this program are short-
term in tenor, they are classified as long-term debt because (i)
they are backed by long-term debt facilities (see below) and (ii)
it is management's intention to continue to replace such
borrowings on a rolling basis as various instruments come due and
to have such borrowings outstanding for longer than one year. To
the extent that the Company incurs debt under this debt program,
it must maintain an equivalent amount of credit available under
its revolving credit and term loan agreements with its bank group.
In September 1993, the Company renegotiated its $350 million
reducing revolver dated April 11, 1990 and its $200 million
reducing revolver dated September 6, 1988. These agreements were
replaced by new revolving loan agreements consisting of a $250
million unsecured 364-day facility and a $500 million unsecured
reducing revolver which matures in September 1998 (the
"Revolvers"). The $250 million facility has provisions for annual
renewal subject to the consent of the banks and converts to a two-
(2) Long-term debt (continued)-
year term loan if not renewed. The Revolvers contain financial
covenants regarding minimum net worth, interest charge coverage,
maximum leverage ratio, new venture capital expenditures and new
venture investments. The maximum available credit under the $500
million revolver reduces by $60 million on March 31, 1997,
September 30, 1997 and March 31, 1998. The Revolvers are for
general corporate purposes. The Company currently incurs
commitment fees of 18.75 basis points on the unused portion of the
$250 million facility and 22.50 basis points on the unused portion
of the $500 million revolver. As of April 30, 1994, the Company
had no direct borrowings under the Revolvers. At such date, the
Company had $149.6 million issued under the corporate debt program
thus reducing, by that amount, the credit available under the
Revolvers for purposes other than repayment of the corporate debt.
The fair value of the debt issued under the corporate debt program
approximates the carrying amount of the debt due to the short-term
maturities of the individual components of the debt.
In July 1993, the Company issued $150 million principal
amount of 6-3/4% Senior Subordinated Notes (the "6-3/4% Notes")
due July 2003 and $150 million principal amount of 7-5/8% Senior
Subordinated Debentures (the "7-5/8% Debentures") due July 2013,
with interest payable each July and January. The 6-3/4% Notes,
which were discounted to $149.8 million, and the 7-5/8% Debentures
are not redeemable prior to maturity and are not subject to any
sinking fund requirements. The net proceeds from these offerings
were used primarily to repay borrowings under the Company's
corporate debt program.
In June 1990, the Company issued $100 million principal
amount of 10-5/8% Senior Subordinated Notes (the "10-5/8% Notes")
due June 1997, with interest payable each June and December. The
10-5/8% Notes, which were discounted to $99.9 million are not
redeemable prior to maturity and are not subject to any sinking
fund requirements. Holders of the 10-5/8% Notes may require the
Company to repurchase all or any portion of their notes at par
upon the occurrence of both a Designated Event (as defined in the
indenture) and a Rating Decline (as defined in the indenture). As
of April 30, 1994 $9.1 million principal amount of the 10-5/8%
Notes was owned by one of the Company's two founders.
(2) Long-term debt (continued) -
The Company has a policy aimed at managing interest rate risk
associated with its current and future anticipated borrowings.
This policy enables the Company to use any combination of interest
rate swaps, futures, options, caps and similar arrangements. The
Company currently has various interest rate swap agreements,
principally with its bank group, whereby the Company pays a fixed
interest rate (weighted average of approximately 9.1%) and
receives a variable interest rate (weighted average of
approximately 4.0% at April 30, 1994) on $140 million notional
amount, and pays a variable rate (weighted average of
approximately 3.9% at April 30, 1994) and receives a fixed rate
(weighted average of approximately 6.1%) on $245 million notional
amount of "reversing" swaps. The net effect of such swaps at
April 30, 1994 is that the Company currently pays an interest rate
differential of approximately .44% on the total notional amount of
the swaps. The various swaps have termination dates ranging from
October 1994 through August 2001. The Company is exposed to
credit loss in the event of nonperformance by the other parties to
the interest rate swap agreements. However, the Company considers
the risk of nonperformance by the counterparties to be minimal
because the parties to the swaps and reverse swaps are
predominantly members of the Company's bank group.
As of April 30, 1994, under the Company's most restrictive
loan covenants, the Company was restricted as to the payment of
dividends or the purchase of its own capital stock in excess of
approximately $7 million and was restricted from issuing
additional debt in excess of approximately $460 million.
(3) Stock split
In June 1993, the Board of Directors declared a 3-for-2 split
on the Company's common stock, which was paid July 23, 1993, to
stockholders of record on July 9, 1993. Earnings per share data,
common share data, and warrant and stock option data have been
adjusted retroactively in the accompanying financial statements
for the 3-for-2 stock split.
(4) Warrants, stock options and share repurchases -
In June 1989, the stockholders approved a stock purchase
warrant plan enabling the Company to offer warrants to its
officers and other key employees to purchase up to 4.5 million
shares of the Company's common stock. In accordance with the
provisions of such plan, the 4.5 million warrants were issued in
June 1989 at a price of $.17 per warrant with an exercise price of
$14.33 ($.67 per share over the fair market value on the date the
warrants were authorized). Each warrant has a term of seven
years, with 50% of the warrants becoming exercisable two years
from the date of grant and the remaining 50% three years from the
date of grant. As of April 30, 1994, warrants representing 3.5
million shares had been exercised. No warrants were exercised
during the three months ended April 30, 1994.
The Company also has various stock option plans for
executive, managerial and supervisory personnel as well as the
Company's outside directors. The plans permit grants of options,
performance shares and restricted stock covering a maximum of
13.5 million shares of the Company's common stock. As of
April 30, 1994, options for a total of 13.5 million shares have
been granted whereby options for 5.5 million shares have been
exercised, options for 3.3 million shares have been canceled and
options for 4.7 million shares remain exercisable at prices
ranging from $8.58 to $39.34 with a weighted average exercise
price of $28.03 per share. During the three months ended April
30, 1994, options for 124,379 shares were exercised at prices
ranging from $8.58 to $15.29 with a weighted average exercise
price of $11.51 per share. As of April 30, 1994, options
covering 2.9 million shares remain available for grant.
The stock options, both incentive and nonqualified, granted
prior to 1988 are immediately exercisable. The stock options
granted in 1988 and thereafter are exercisable in one or more
installments beginning not less than nine months after the grant
date.
(4) Warrants, stock options and share repurchases (continued) -
During the three months ended April 30, 1994, the Company
repurchased 535,000 shares of its common stock at a cost of
$15.0 million.
(5) Preferred stock -
The Company is authorized to issue up to 75 million shares of
$.01 par value preferred stock in one or more series having such
respective terms, rights and preferences as are designated by the
Board of Directors. No preferred stock has yet been issued.
(6) Earnings per share -
Earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
period. Outstanding stock options and warrants are not included in
earnings per share computations since their exercise would not have
a material dilutive effect.
(7) Investments in and advances on behalf of joint ventures-
The Company has investments in and advances on behalf of joint
ventures that are accounted for on the equity method. Under the
equity method, original investments are recorded at cost and
adjusted by the Company's share of undistributed earnings or losses
of these companies. Investments in and advances on behalf of joint
ventures consists of the following (in thousands):
April 30, January 31,
1994 1994
(unaudited)
Circus and Eldorado Joint Venture
(Hotel/Casino, Reno, Nevada) $ 13,971 $ 2,706
American Entertainment L.L.C.
(Riverboat Casino, Chalmette, LA) 3,039 73
Windsor Casino Limited
(Hotel/Casino, Windsor, Canada) 6,805 424
$ 23,815 $ 3,203
As of April 30, 1994, all of the projects pursuant to these joint
ventures were still in the development or construction stage and
had not generated any earnings or losses. For additional
information on these projects, please see Note 8-Commitments and
contingent liabilities.<PAGE>
(8) Commitments and contingent liabilities -
In December 1993, Windsor Casino Limited, a joint venture
composed equally of Circus Circus Enterprises, Inc., Caesars World,
Inc. and Hilton Hotels Corporation, was selected to exclusively
design, build and operate a casino complex in Windsor, Ontario,
Canada. The planned complex includes casino, showroom and meeting
facilities as well as a 300-room hotel, all located in Windsor's
central business district, immediately across the Detroit River
from Detroit, Michigan. A temporary casino opened May 14, 1994 and
is operated by Windsor Casino Limited pending completion of a
permanent facility expected to be completed in 1997. As of April
30, 1994, Circus had contributed approximately $6.8 million to fund
completion of the temporary casino.
The Company is developing a riverboat casino in Tunica County,
Mississippi, approximately 20 miles from the Memphis, Tennessee
airport. Construction of this project began in late 1993 and it is
expected to open by Fall 1994. This circus-themed property has an
estimated cost of approximately $80 million. As of April 30, 1994,
the Company had incurred approximately $14.0 million of costs for
this project.
The Company has also entered into a 50/50 joint venture with
American Entertainment Corporation to develop and operate a
riverboat gaming facility in Louisiana. The riverboat will feature
a 30,000-square-foot casino and will be docked in Chalmette,
Louisiana, just 15 minutes from downtown New Orleans. The scope of
the project is still being developed. Construction recently began
on this project, and as of April 30, 1994, the Company had incurred
approximately $3.0 million of costs.
The Company has entered into a 50/50 joint venture with the
Eldorado Hotel/Casino (the "Eldorado"), a privately held company,
to develop and operate a hotel/casino in downtown Reno, Nevada.
Project "C" is themed after a turn-of-the-century mining town and
is located on a site adjacent to Circus Circus-Reno and the
Eldorado. The project broke ground in late 1993 and completion is
expected by mid-1995. Of the estimated cost of approximately $310
million, the venturers are expected to fund 30% in equity. The
Company is also obligated under the joint venture to provide
financing, either directly or indirectly, for the remaining project
costs and a $10 million credit line for working capital purposes.
As of April 30, 1994, the Company had advanced approximately $14.0
million on behalf of the joint venture.
The collective bargaining agreement with one of the Company's
largest unions expired on May 31, 1994. The agreement has been
extended indefinitely as negotiations continue on a new contract.
The Company does not anticipate any difficulties in renewing such
agreement.
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation will
not have a material effect on the results of operations or the
financial position of the Company.
RESULTS OF OPERATIONS
Earnings Per Share
Earnings per share for the quarter ended April 30, 1994 were even
with the same quarter a year ago. Net income was $32.3 million, or
$.38 per share, versus $32.8 million, or $.38 per share last year.
While the Company benefitted from strong earnings generated by
Luxor, its new pyramid-themed resort which opened October 15, 1993,
this benefit was offset by approximately $8.6 million of additional
interest expense and $2.2 million of additional new project
development costs.
Revenues
For the first quarter, revenues for the Company increased $72.3
million, or 34%, versus the prior year. Luxor accounted for most
of this growth, reporting $70.0 million in total revenues for the
quarter. Revenues at Circus Circus-Las Vegas were up 7%, while
revenues at the Company's other major properties were flat or down
slightly.
Operating Income
For the quarter ended April 30, 1994, income from operations rose
$9.3 million, or 18%, from last year's first quarter. However, the
Company's composite operating margin dropped to 21.7% versus 24.7%
in the prior year quarter. The decline in operating margin was
attributable to a variety of factors, as discussed below.
The increase in operating income was due primarily to Luxor, which
posted $16.2 million in operating income for the first quarter.
However, operating income was flat or down at all of the Company's
other properties, most notably Excalibur (down 10%) and the
Company's Laughlin properties, the Colorado Belle and Edgewater
(down 11% on a combined basis).
Results at Excalibur were down primarily due to construction of a
new parking garage at that property and at the adjacent Luxor.
Demand for parking exceeded expectations, requiring construction of
these new garages, which temporarily reduced available parking.
These garages were partially open for the Memorial Day weekend and
the Company anticipates they will be fully open for the July 4th
weekend. Results at Excalibur were also impacted by increased
competition from the major new themed resorts which opened in Las
Vegas late last year, including the neighboring Luxor. Excalibur's
operating margin declined, as these factors contributed to lower
revenues in the casino department where the Company traditionally
generates its highest margins.
Results at the Company's Laughlin properties were down due to
increased competition in room rates as well as increased
competition from the new major themed resorts in Las Vegas. A
competitor added 1,100 rooms in September 1993, representing an
increase of approximately 12% in the market. This has had the
effect of depressing room rates and reducing occupancy percentages.
The resulting lower room revenue, given the mostly fixed costs in
that department, contributed to lower operating margins at these
properties.
While revenues at Circus Circus-Las Vegas were up slightly,
operating income was flat. This was due primarily to Grand Slam
Canyon, which generated positive cash flow but reported an
operating loss after depreciation expense. However, Grand Slam
Canyon is in the midst of an approximate $12 million expansion
which should significantly broaden its appeal and which should be
completed by early summer. Operating income at Circus Circus-Reno
held even with the prior year, though the property is experiencing
some business disruption due to the ongoing construction of
neighboring Project "C" (a joint venture between the Company and
the Eldorado Hotel/Casino). See Financial Position and Capital
Resources for additional details on the Grand Slam Canyon expansion
and Project "C".
Interest Expense
Interest expense for the quarter increased $8.6 million compared to
the prior year first quarter. The increase stemmed from a
combination of lower capitalized interest and higher borrowings.
Capitalized interest was $.2 million for the quarter ended April
30, 1994 versus $4.7 million in the year-ago quarter when Luxor and
Grand Slam Canyon were still under construction. Long-term debt,
meanwhile, stood at $549 million at April 30, 1994 compared to $353
million at April 30, 1993. The increase in debt levels was
attributable primarily to expenditures required to complete Luxor
and Grand Slam Canyon.
Income Tax
The Company's effective tax rate for the three months ended April
30, 1994 was 36.0%. This reflects the corporate statutory rate of
35.0% pursuant to the Revenue Reconciliation Act of 1993 plus the
effect of certain non-deductible expenses. The effective tax rate
for the three months ended April 30, 1993 was 34.0%, which
reflected the federal statutory rate prior to the passage of the
Revenue Reconciliation Act of 1993.
Financial Position and Capital Resources
The Company had cash and cash equivalents of $39 million at April
30, 1994 reflecting normal daily operating needs. The Company's
pre-tax cash flow from operations was $82 million for the three
months ended April 30, 1994 versus $64 million in the prior year,
an increase of 28%. In this context, pre-tax cash flow from
operations is defined as the Company's income from operations plus
non-cash operating expenses (primarily depreciation and
amortization).
For the quarter ended April 30, 1994, capital expenditures were
$31.2 million. Of this amount, $6.1 million related to
construction of the riverboat casino in Tunica, Mississippi; $4.6
million related to the purchase of land for future expansion of
Circus Circus-Reno; $3.1 million related to construction of the new
parking garages at Luxor and Excalibur; and $2.3 million related to
the expansion of Grand Slam Canyon. Additionally during the
quarter, the Company funded equity investments in new projects
totalling $20.6 million. These equity investments include the
temporary casino in Windsor, Canada ($6.4 million); Project "C" in
Reno, Nevada ($11.2 million); and the riverboat casino in
Chalmette, Louisiana ($3.0 million). Also during the first
quarter, the Company repurchased 535,000 shares of its common stock
at a total cost of approximately $15.0 million.
In July 1993, the Company issued $150 million principal amount of
6-3/4% Senior Subordinated Notes due 2003. The notes were priced
at 99.894%. Also in July 1993, the Company issued, at par, $150
million principal amount of 7-5/8% Senior Subordinated Debentures
due 2013. The net proceeds of these offerings were used to retire
amounts outstanding under the Company's short-term debt program.
The intention of the Company is to position itself for long-term
growth by securing additional long-term capital at attractive
interest rates.
In September 1993, the Company signed a $750 million unsecured bank
credit facility with its bank group, the largest bank credit ever
completed for a gaming Company. The managing agent for the
facility is Bank of America with Canadian Imperial Bank of Commerce
acting as Co-Managing Agent. This facility replaced the Company's
previous $350 million and $200 million reducing revolvers.
<PAGE>
The Company has several new projects in various stages of
development which should contribute to future growth.
In December 1993, Windsor Casino Limited, a joint venture composed
equally of Circus Circus Enterprises, Inc., Caesars World, Inc. and
Hilton Hotels Corporation, was selected to exclusively design,
build and operate a casino complex in Windsor, Ontario, Canada.
The planned complex includes casino, showroom and meeting
facilities as well as a 300-room hotel, all located in Windsor's
central business district, immediately across the Detroit River
from Detroit, Michigan. A temporary casino opened May 14, 1994 and
is operated by Windsor Casino Limited pending completion of a
permanent facility in 1997. As of April 30, 1994, Circus had
contributed approximately $6.8 million to fund completion of the
temporary casino.
The Company is developing a riverboat casino in Tunica County,
Mississippi, approximately 20 miles from the Memphis, Tennessee
airport. Construction of this project began in late 1993 and it is
expected to open by Fall 1994. This circus-themed property has an
estimated cost of approximately $80 million. As of April 30, 1994,
the Company had incurred approximately $14 million of costs for
this project.
The Company has also entered into a 50/50 joint venture with
American Entertainment Corporation to develop and operate a
riverboat gaming facility in Louisiana. The riverboat will feature
a 30,000 square foot casino and will be docked in Chalmette,
Louisiana, just 15 minutes from downtown New Orleans. The scope of
the project is still being developed. Construction recently began
on this project, and as of April 30, 1994, the Company had incurred
approximately $3 million of costs.
The Company has entered into a 50/50 joint venture with the
Eldorado Hotel/Casino, a privately held company, to develop and
operate a hotel/casino in downtown Reno, Nevada. Project "C" is
themed after a turn-of-the-century silver mining town and covers a
two block area between Circus Circus-Reno and the Eldorado. Ground
breaking occurred in late 1993 and completion is expected by mid-
1995. As currently proposed, the project is estimated to cost
approximately $310 million, of which the venturers are expected to
fund approximately 30% in equity. The Company is also obligated
under the joint venture agreement to provide financing, either
directly or indirectly, for the remaining project costs and a $10
million credit line for working capital purposes. As of April 30,
1994, the Company had advanced approximately $14 million on behalf
of the joint venture.
At Circus Circus-Las Vegas, the Company is nearing completion of
the first phase of expansion at Grand Slam Canyon. This $12
million expansion phase will add nine new attractions plus midway
games to the facility. It is expected that this expansion will be
completed by early Summer.
The Company believes that it has sufficient capital resources
through its existing bank agreements and its operating cash flows
to meet all of its existing cash obligations, strategically
repurchase shares and fund its commitments on each of the above
discussed projects. The Company anticipates that additional funds
could, however, be raised through debt or equity markets if
necessary.
PART II. OTHER INFORMATION
Items 2., 3., 4., and 5. of Part II are not applicable.
Item 1. Legal Proceedings.
A complaint in a purported class action lawsuit has been filed
in the United States District Court, Middle District of Florida,
against 41 manufacturers, distributors and casino operators of
video poker and electronic slot machines, including the Company.
The Complaint alleges that the defendants have engaged in a course
of fraudulent and misleading conduct intended to induce persons to
play such games based on a false belief concerning how the gaming
machines operate, as well as the extent to which there is an
opportunity to win. The complaint alleges violations of the
Racketeer Influenced and Corrupt Organizations Act, as well as
claims of common law fraud, unjust enrichment and negligent
misrepresentation, and seeks damages in excess of $6 billion.
Management believes that the claims are wholly without merit and
does not expect that the lawsuit will have a material adverse
effect on the Company's financial position or results of
operations.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits filed as a part of this report are listed on
the Index to Exhibits accompanying this report.
(b) Reports on Form 8-K. No report on Form 8-K was filed
during the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CIRCUS CIRCUS ENTERPRISES, INC.
(Registrant)
Date: June 14, 1994 By CLYDE TURNER
Clyde Turner
President and
Chief Executive Officer
By DANIEL COPP
Daniel Copp
Executive Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
No. Description
10(a). Interim Casino Operating Agreement, dated as of May 14,
1994, by and among 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.
10(b). Heads of Agreement, dated as of May 14, 1994, by and
among 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.
EXHIBIT 10(a).
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;
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
(a) Definitions: The following definitions shall apply in
the interpretation of this Agreement and the recitals and Schedules
hereto:
(i) "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;
(ii) "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;
(iii) "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;
(iv) "Approved Operating Budget" means, with respect to
an Operating Year, the Operating Budget for such
Operating Year as approved by OCC;
(v) "Approved Operating Plan" means, collectively, the
Approved Operating Policies and the then current
Approved Operating Budget;
(vi) "Approved Operating Policies" means the Operating
Policies for the Interim Casino Complex as approved
by OCC pursuant to Subsection 3.5(d), as amended or
supplemented from time to time in accordance with
the terms hereof;
(vii) "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;
(viii) "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;
(ix) "Base Fee" has the meaning ascribed thereto in
Subsection 8.1(a)(i);
(x) "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;
(xi) "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;
(xii) "Capital Renewal Reserve" means, for any
period, the reserve established in the
Approved Operating Budget for Capital
Renewals;
(xiii) "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);
(xiv) "Casino" means those areas located in the
Building which are used for the purpose of
playing or operating a Game of Chance;
(xv) "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;
(xvi) "City" means The Corporation of the City of
Windsor;
(xvii) "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;
(xviii) "Commencement Date" has the meaning ascribed
thereto in the Interim Casino Lease;
(xix) "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;
(xx) "Contingency Reserve" has the meaning ascribed
thereto in Section 8.3;
(xxi) "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;
(xxii) "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;
(xxiii) "Discretionary Deficiency Contributions" has
the meaning ascribed thereto in Subsection
4.3(g);
(xxiv) "Enabling Legislation" means the Ontario
Casino Corporation Act, 1993 (Ontario), as
amended or re-enacted from time to time;
(xxv) "ETA" means the Excise Tax Act (Canada) as
amended or re-enacted from time to time;
(xxvi) "Event of Default" has the meaning ascribed
thereto in Section 10.1;
(xxvii) "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;
(xxviii) "Expert" has the meaning ascribed thereto in
Section 13.1;
(xxix) "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;
(xxx) "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;
(xxxi) "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)),
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;
(xxxii) "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;
(xxxiii) "Gaming Control Act" means the Gaming Control
Act, 1992 as amended or re-enacted from time
to time;
(xxxiv) "Gaming Control Commission" means the Gaming
Control Commission established under the
Regulatory Legislation and any successor or
replacement thereto;
(xxxv) "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;
(xxxvi) "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;
(xxxvii) "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;
(xxxviii) "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;
(xxxix) "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 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;
(xl) "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;
(xli) "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;
(xlii) "Her Majesty" means Her Majesty the Queen in
Right of Ontario;
(xliii) "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;
(xliv) "Improvements" means, collectively, the
Building and the Parking Facilities;
(xlv) "Incentive Fee" has the meaning ascribed
thereto in Subsection 8.1(a)(ii);
(xlvi) "including" means including without
limitation;
(xlvii) "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 and other
agreements or instruments relating to any of
the foregoing, but for greater certainty does
not include customer lists;
(xlviii) "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;
(xlix) "Interim Casino Complex" means, collectively,
the Complex Lands and the Improvements;
(l) "Interim Casino Equipment" means the FF&E, the
Operating Equipment and the Operating Supplies
collectively;
(li) "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;
(lii) "Interim Casino Opening Date" means the date
on which the Casino is opened to the public;
(liii) "Landlord" means The Art Gallery of Windsor
and its successors and assigns as landlord
under the Interim Casino Lease;
(liv) "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;
(lv) "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);
(lvi) "Mandatory Deferrals" has the meaning ascribed
thereto in Subsection 4.3(f);
(lvii) "Master Agreement" has the meaning ascribed
thereto in the Permanent Casino Heads of
Agreement;
(lviii) "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;
(lix) "Maximum Mandatory Deferral" has the meaning
ascribed thereto in Subsection 4.3(f);
(lx) "Mediation Period" has the meaning ascribed
thereto in Section 13.1;
(lxi) "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;
(lxii) "OCC" means the Ontario Casino Corporation,
the Crown corporation established pursuant to
the Enabling Legislation, and its successors
and permitted assigns;
(lxiii) "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;
(lxiv) "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 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;
(lxv) "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;
(lxvi) "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);
(lxvii) "Operating Period" means the period beginning
with the Interim Casino Opening Date and
ending upon the expiration or sooner
termination of this Agreement;
(lxviii) "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;
(lxix) "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;
(lxx) "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;
(lxxi) "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;
(lxxii) "Operator" means Windsor Casino Limited, its
successors and permitted assigns;
(lxxiii) "Operator's Fee" has the meaning ascribed
thereto in Section 8.1;
(lxxiv) "Outstanding Pre-Opening Expenses" has the
meaning ascribed thereto in Section 11.2;
(lxxv) "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;
(lxxvi) "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;
(lxxvii) "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;
(lxxviii) "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;
(lxxix) "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;
(lxxx) "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
(II) the Hilton Reservation Service, and
(III) sales offices and affiliate
locations, including Caesars Worlds
Marketing, and
(IV) 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;
(lxxxi) "Participants" means the parties of the third
part hereto and their respective successors
and permitted assigns;
(lxxxii) "Permanent Casino Complex" has the meaning
ascribed to the term "Project" in the
Permanent Casino Heads of Agreement;
(lxxxiii) "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;
(lxxxiv) "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;
(lxxxv) "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 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;
(lxxxvi) "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;
(lxxxvii) "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;
(lxxxviii) "Pre-Opening Period" means the period
from December 6, 1993 to the Interim
Casino Opening Date;
(lxxxix) "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;
(xc) "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";
(xci) "Regulatory Legislation" means the Gaming
Control Act and all regulations made
thereunder and all mandatory directives and
orders issued thereunder or pursuant thereto;
(xcii) "Reimbursement Rate of Interest" means 10%
per annum calculated and compounded monthly;
(xciii) "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;
(xciv) "Renovations" means the renovations to the
Building contemplated by the Renovation Plans
and includes all related fixtures, equipment
and attachments;
(xcv) "Severance Reserve" has the meaning ascribed
thereto in Section 11.4;
(xcvi) "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;
(xcvii) "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
(xcviii) "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, 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
(xcix) "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.
(b) 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
(c) Currency: References to money herein are references to
lawful money in Canada.
ARTICLE TWO
APPOINTMENT OF OPERATOR
(a) 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.
(b) 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.
(c) 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 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:
(i) 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
(ii) 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.
(d) 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
(a) 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.
(b) 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.
(c) 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:
(i) 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
(ii) 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).
(d) 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.
(e) Other Services: The Operator shall, as independent
contractor:
(i) 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;
(ii) use its reasonable efforts to obtain all necessary
Governmental Consents required for the operation of
the Interim Casino Complex in accordance with
Applicable Law;
(iii) 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;
(iv) in consultation with OCC, prepare and obtain OCC's
approval to the Operating Policies for the Interim
Casino Complex;
(v) 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 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);
(vi) 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
(vii) 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
(a) 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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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.
(b) 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 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.
(c) 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:
(i) 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.
(ii) 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.
(iii) 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).
(iv) 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
(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.
(v) 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.
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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.
(x) 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.
(xi) 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.
(xii) 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
Operating Year and statements of earnings,
retained earnings and changes in financial
position for the Operating Year then ended.
(d) No Duplication: The interpretation of this Agreement
shall not permit a receipt, payment, reserve or reimbursement to be
duplicated.
(e) 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:
(i) 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;
(ii) 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
(iii) 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.
(f) 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:
(i) 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
(ii) 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.
(g) 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.
(h) 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:
(i) 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;
(ii) 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
(iii) 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.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
(a) 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:
(i) Organization: The Operator is a corporation duly
incorporated and organized under the laws of the
Province of Ontario.
(ii) Ownership of Operator: Each of the Participants
Controls 1/3 of all of the issued and outstanding
shares of the Operator.
(iii) 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) Registration: The Operator is registered as a
supplier under the Regulatory Legislation.
(b) 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:
(i) Organization: The Participant is a corporation
duly incorporated and organized under the laws of
its governing jurisdiction.
(ii) Control: The Participant Controls 1/3 of all of
the issued and outstanding shares of the Operator.
(iii) 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.
(iv) 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.
(v) 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 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.
(vi) 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.
(c) 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:
(i) Organization: OCC is a corporation duly
established and organized under the laws of the
Province of Ontario.
(ii) 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.
(iii) 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 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.
(iv) 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.
(d) 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
(a) 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:
(i) 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.
(ii) Compliance with Laws, etc.: Except to the extent
contested in good faith, comply in all material
respects with all Applicable Law.
(iii) Maintain Registration under the Regulatory
Legislation: Maintain its registration under
the Regulatory Legislation.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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
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.
(viii) 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.
(ix) 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.
(x) Change of Officers: Obtain OCC's approval to the
identity of any new President or Chief Financial
Officer of the Operator.
(xi) Windsor Raceway: Participate with OCC in
discussions and initiatives instituted with
representatives of Windsor Raceway.
(xii) 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.
(xiii) Operating Policies: Obtain OCC's prior
approval to any significant changes to the
standards, policies and procedures set forth
in the Approved Operating Policies.
(b) Negative Covenants of the Operator: During the term of
this Agreement, the Operator agrees that it will not without the
written consent of OCC:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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).
(vi) 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.
(vii) 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.
(c) 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:
(i) 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).
(ii) 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.
(iii) 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.
(iv) 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).
(v) 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.
(d) 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:
(i) 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 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.
(ii) 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.
(iii) 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.
(e) 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.
ARTICLE SEVEN
INTELLECTUAL PROPERTY
(a) 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.
(b) 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 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.
(c) 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
(a) Operator's Fee:
(i) 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"):
(A) 2.75% of the Gross Operating Receipts in each
Operating Year (the "Base Fee"); and
(B) 5% of the Net Operating Margin in each
Operating Year (the "Incentive Fee").
(ii) 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 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.
(iii) 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.
(iv) 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).
(v) 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.
(b) 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:
(i) 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
(ii) 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).
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.
(c) Third Party Claims:
(i) 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 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.
(ii) 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.
(d) 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.
(e) 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.
ARTICLE NINE
NON-COMPETITION
(a) Non-Competition/Right of First Offer:
(i) 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.
(ii) 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)).
ARTICLE TEN
EVENTS OF DEFAULT
(a) 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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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 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;
(vi) 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;
(vii) 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
(viii) 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.
(b) 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.
ARTICLE ELEVEN
TERMINATION
(a) 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:
(i) upon the expiry of 60 days after notice given by
OCC to the Operator if an Event of Default shall
have occurred;
(ii) 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);
(iii) 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
(iv) 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
(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.
(b) 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:
(i) 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;
(ii) 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
(iii) 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.
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.
(c) 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.
(d) 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.
(e) 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
(a) Indemnification by Operator: The Operator agrees to
indemnify and save harmless OCC from all Losses suffered or
incurred by OCC as a result of:
(i) any breach by the Operator of, or any inaccuracy of
any representation or warranty of the Operator
contained in this Agreement; and
(ii) 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.
(b) 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:
(i) any breach by OCC of or any inaccuracy of any
representation or warranty contained in this
Agreement; and
(ii) 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.
(c) Indemnification by Participants:
(i) Each of the Participants severally agrees to
indemnify and save harmless OCC from all Losses
suffered or incurred by OCC as a result of:
(A) 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
(B) 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.
(ii) 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.
(d) 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.
(e) 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.
(f) Limitation on Claims for Damages:
(i) 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.
(ii) 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.
(g) 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
(a) 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.
ARTICLE FOURTEEN
GENERAL
(a) 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:
(i) OCC, addressed to it at:
1075 Bay Street
6th Floor
Toronto, Ontario
M5S 2B1
Telecopier: (416) 325-0416
Attention: President
(ii) 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
with a copy to each of the Participants
(iii) 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 -
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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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:
(i) such request for approval, consent or decision shall:
(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;
(ii) such approval, consent or decision shall be in
writing;
(iii) such approval, consent or decision shall not
be unreasonably withheld or delayed;
(iv) 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
(v) 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.
(g) 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.
(h) 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.
(i) 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 unconditionally submits to the
non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
(j) 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.
(k) 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.
(l) 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.
(m) 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.
(n) 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 ___________________________
___________________________
WINDSOR CASINO LIMITED
by ___________________________
___________________________
CAESARS WORLD, INC.
by ___________________________
___________________________
CIRCUS CIRCUS ENTERPRISES, INC.
by ___________________________
___________________________
HILTON HOTELS CORPORATION
by ___________________________
___________________________
<PAGE>
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
INTERIM CASINO OPERATING AGREEMENT
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
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
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
EXHIBIT 10(b).
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
HEADS OF AGREEMENT
May 14, 1994
HEADS OF AGREEMENT
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . 2
1.2 Schedules . . . . . . . . . . . . . . . . . . . 9
1.3 Currency. . . . . . . . . . . . . . . . . . . 10
ARTICLE 2
INTERIM PHASE
2.1 Good Faith Obligations. . . . . . . . . . . . . 11
2.2 Operator's Pre-Closing Obligations. . . . . . . 11
2.3 OCC's Pre-Closing Obligations . . . . . . . . . 12
2.4 Pre-Construction Phase Expenses . . . . . . . . 13
2.5 OCC's Approval Rights . . . . . . . . . . . . . 13
2.6 Working Committee . . . . . . . . . . . . . . . 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the
Operator. . . . . . . . . . . . . . . . . . . . 15
3.2 Representations and Warranties of the
Participants. . . . . . . . . . . . . . . . . . 16
3.3 Representations and Warranties of OCC . . . . . 17
3.4 Survival of Representations and Warranties. . . 18
ARTICLE 4
INTERIM CLOSING
4.1 Interim Closing Deliveries. . . . . . . . . . . 19
4.2 Conditions Benefitting OCC. . . . . . . . . . . 19
4.3 Conditions Benefitting the Operator . . . . . . 20
4.4 Conditions Benefitting the Operator and OCC . . 20
4.5 Satisfaction. . . . . . . . . . . . . . . . . . 21
4.6 Other Closing Matters . . . . . . . . . . . . . 21
ARTICLE 5
TERMINATION PRIOR TO THE MASTER AGREEMENT CLOSING DATE
5.1 Rights of Termination . . . . . . . . . . . . . 22
5.2 Reimbursement on Termination. . . . . . . . . . 23
5.3 Remedies. . . . . . . . . . . . . . . . . . . . 23
5.4 Commencement of Grace Period. . . . . . . . . . 23
ARTICLE 6
GENERAL
6.1 Notices . . . . . . . . . . . . . . . . . . . . 25
6.2 Table of Contents and Headings. . . . . . . . . 27
6.3 Enforceability. . . . . . . . . . . . . . . . . 27
6.4 Successors and Assigns. . . . . . . . . . . . . 28
6.5 Time of Essence and Force Majeure . . . . . . . 28
6.6 Approvals . . . . . . . . . . . . . . . . . . . 28
6.7 Governing Law . . . . . . . . . . . . . . . . . 29
6.8 Relationship of the Parties . . . . . . . . . . 29
6.9 Third Parties . . . . . . . . . . . . . . . . . 29
6.10 Disclosure. . . . . . . . . . . . . . . . . . . 29
6.11 Publicity . . . . . . . . . . . . . . . . . . . 30
6.12 Counterparts and Delivery by Facsimile. . . . . 30
SCHEDULES
Schedule A - Material Terms of Principal Agreements
Part 1 - Master Agreement
Part 2 - City Master Agreement
Part 3 - Land Lease
Part 4 - Land Sublease
Part 5 - City Option Agreement
Part 6 - Project Lease
Part 7 - Operating Agreement
Schedule B - Project Site
HEADS OF AGREEMENT
THIS AGREEMENT made as of the 14th day of May, 1994.
A M O N G:
ONTARIO CASINO CORPORATION,
a corporation established pursuant to the
Enabling Legislation
and which is for all its purposes an agent of HER
MAJESTY
THE QUEEN IN RIGHT OF ONTARIO,
(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 the Operator's Proposal
for the development, financing and operation of the Project;
AND WHEREAS the Operator has been designated as the
party with whom OCC will undertake sole and exclusive
negotiations with respect to the Project;
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 1
DEFINITIONS
1.1 Definitions: The following definitions shall apply in
the interpretation of this Agreement and in the Recitals and the
Schedules hereto (provided that where a word or term is defined
in a Schedule hereto, the word or term as defined in such
Schedule shall apply in the interpretation of the Schedule):
(a) "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;
(b) "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;
(c) "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;
(d) "City" means The Corporation of the City of Windsor;
(e) "City Development Agreements" means any and all
development, site plan, landscaping, tunnel, pedestrian
bridge, sidewalk improvement or other agreements with
the City or with the City and others relating to the
development or operation of the Project;
(f) "City Master Agreement" means the agreement pursuant to
which the City agrees to complete the assembly of the
Land and lease the Land to OCC, the material terms of
which are summarized in Part 2 of Schedule A hereto;
(g) "City Option Agreement" means the agreement pursuant to
which OCC is granted the option to acquire all of the
right, title and interest of the City in the Project,
the material terms of which are set out in Part 5 of
Schedule A hereto;
(h) "Concept Design" means the preliminary concept design
for the Project to be prepared by the Operator and
approved by OCC;
(i) "Construction Lien Act" means the Construction Lien Act
(Ontario) as amended or re-enacted from time to time;
(j) "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;
(k) "Development Schedule" means a schedule setting forth
the dates of commencement and duration of the various
development functions necessary to achieve Substantial
Completion of the various components of the Project by
the respective dates scheduled therefor therein, to be
prepared by the Operator and approved by OCC;
(l) "Enabling Legislation" means the Ontario Casino
Corporation Act, 1993 (Ontario) as amended or re-
enacted from time to time;
(m) "Event of Default" means:
(i) a monetary default which is not remedied within 5
Business Days after (A) notice from OCC to the
Operator, or (B) notice from the Operator to OCC,
as the case may be; and
(ii) any other default under this Agreement which is
not remedied within 30 days after (A) notice from
OCC to the Operator, or (B) notice to OCC from the
Operator, as the case may be, or in either case
such longer period as may be reasonably regarded
as necessary to remedy such default provided that
the recipient of the notice has commenced within a
reasonable time and with good faith the remedying
of such default within such 30 day period and
thereafter prosecutes to completion with diligence
and continuity the remedying thereof;
(n) "Event of Insolvency" means if:
(i) the Operator or any Participant shall admit its
insolvency or make a general assignment for the
benefit of creditors or any proceeding shall be
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 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; or
(ii) any proceeding shall be 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;
(o) "Final Closing Date" means the date on which the Final
Closing Documents are executed and delivered;
(p) "Final Closing Deadline" means November 1, 1994 as such
date may be extended by the parties hereto from time to
time;
(q) "Final Closing Documents" means, collectively:
(i) the Land Lease,
(ii) the Land Sublease,
(iii) the City Option Agreement,
(iv) the City Development Agreements,
(v) the Insurance Trust Agreement,
(vi) the Project Lease,
(vii) the Operating Agreement,
and such other agreements, documents and/or instruments
to be executed and/or delivered pursuant to the Master
Agreement or the City Master Agreement on the Final
Closing Date;
(r) "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 or affairs caused by the party relying upon
such Force Majeure) which shall cause or contribute
towards any party being unable to fulfil or being
delayed or restricted in the fulfilment 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, lock-outs, 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 the 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 paragraph
1.1(r), collectively constitute one party, and
that a consent or approval given or withheld
within the time period envisioned by this
Agreement shall not constitute a delay or failure
by such party for the purposes of this
subparagraph 1.1(r)(vi)),
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;
(s) "General Contractor" means such Person designated by
the Operator and approved by OCC;
(t) "Governmental Authority" means Canada, the Province of
Ontario, the City of Windsor, any other political
subdivision in which the Project 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 or
an Affiliate of a Participant or the Project, but
excluding OCC;
(u) "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;
(v) "Governmental Requirements" means all laws and
agreements with any Governmental Authority that are
applicable to the development or operation of the
Project, including without limitation, any rules,
guidelines or restrictions created by or imposed by
Governmental Authorities;
(w) "Her Majesty" means Her Majesty the Queen in Right of
Ontario;
(x) "Improvements" means the mixed-use integrated complex,
including:
(i) a casino;
(ii) three restaurants;
(iii) a hotel;
(iv) an entertainment theatre;
(v) a sports pavilion and ancillary facilities;
(vi) a parking facility;
(vii) a child daycare facility;
(viii) a water fountain, amphitheatre, pedestrian
walks and bridges and landscaping accessory
to and integrated with the foregoing,
all as generally shown in the Concept Design and as the
same may be altered, modified or revised in accordance
with the terms hereof, and all related structures,
erections, fixtures, equipment and attachments;
(y) "including" means including without limitation;
(z) "Interim Casino Operating Agreement" means the
agreement so entitled of even date herewith between the
parties hereto;
(aa) "Land" means the lands in the City of Windsor outlined
and shown as Blocks 1 and 2 on Schedule B hereto and
all appurtenances thereto;
(ab) "Land Lease" means the lease pursuant to which OCC is
to lease the Land from the City, the material terms of
which are summarized in Part 3 of Schedule A hereto;
(ac) "Land Sublease" means the sublease pursuant to which
the Operator is to sublease the Land from OCC, the
material terms of which are summarized in Part 4 of
Schedule A hereto;
(ad) "Master Agreement" means the agreement pursuant to
which the Operator is to construct and develop the
Improvements, the material terms of which are
summarized in Part 1 of Schedule A hereto;
(ae) "Master Agreement Closing Date" means the date on which
all of the formal documentation referenced in
Schedule A is finalized;
(af) "Master Agreement Deadline" means September 1, 1994 as
such date may be extended by the parties hereto from
time to time;
(ag) "OCC" means the Ontario Casino Corporation, the Crown
corporation established pursuant to the Enabling
Legislation, and its successors and permitted assigns;
(ah) "Operating Agreement" means the agreement pursuant to
which the Operator shall operate the Project, the
material terms of which are summarized in Part 7 of
Schedule A hereto;
(ai) "Operator" means Windsor Casino Limited, its successors
and permitted assigns;
(aj) "Operator's Proposal" means the proposal for the
development, financing and operation of the Project
submitted by the Operator in response to a request for
proposals dated April 19, 1993;
(ak) "Participants" means the parties of the third part
hereto and their respective successors and permitted
assigns;
(al) "Permitted Encumbrances" means this Agreement, the
Master Agreement, the Land Lease, the Land Sublease,
the Project Lease, leases of space in the Project made
by the Operator and approved by OCC and such other
encumbrances as the parties may approve in writing from
time to time;
(am) "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;
(an) "Pre-Construction Phase Expenses" means amounts
incurred and paid by the Operator in connection with
the preconstruction activities and services pertaining
to the Project carried out by it or on its behalf
hereunder and approved by OCC, from time to time,
through approval of a budget or otherwise;
(ao) "Project" means collectively the Land and the
Improvements;
(ap) "Project Architect" means such Person designated by the
Operator and approved by OCC;
(aq) "Project Budget" means a comprehensive budget
(including all relevant assumptions) in respect of the
design, construction, development, financing,
furnishing and equipping of the Project to be prepared
by the Operator and approved by OCC from time to time;
(ar) "Project Lease" means the lease pursuant to which OCC
is to lease the Project from the Operator, the material
terms of which are summarized in Part 6 of Schedule A
hereto;
(as) "Project Manager" means such Person, if any, designated
by the Operator and approved by OCC to perform the
function of a manager for the development and
construction of the Project;
(at) "Project Plans" means the construction plans and
specifications relating to the construction and
development of the Project evolving from the Concept
Design and the Site Plan to be prepared by the Operator
and approved by OCC from time to time;
(au) "Regulatory Legislation" means the Gaming Control Act,
1992, as amended or re-enacted from time to time and
all regulations made thereunder and all mandatory
directives and orders issued thereunder or pursuant
thereto;
(av) "Site Plan" means the preliminary site plan for the
Project to be prepared by the Operator and approved by
OCC, as the same may be altered from time to time,
identifying in a general fashion:
(i) the physical improvements and landscaping for the
Project;
(ii) the footprint for all buildings and other
principal structures;
(iii) the balance of the Land outside the
structural walls of all buildings and
principal structures; and
(iv) access and other easement areas;
(aw) "Substantial Completion" means that all work required
to achieve "substantial performance" of the Project has
been completed, giving to the term "substantial
performance" the meaning substantial performance of a
contract in the Construction Lien Act; and
(ax) "Substantial Completion Date" means the date upon which
Substantial Completion has occurred, as evidenced by a
certificate issued by the Project Architect pursuant to
the Construction Lien Act.
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 - Material Terms of Principal
Agreements
Part 1 - Master Agreement
Part 2 - City Master Agreement
Part 3 - Land Lease
Part 4 - Land Sublease
Part 5 - City Option Agreement
Part 6 - Project Lease
Part 7 - Operating Agreement
Schedule B - Project Site
1.3 Currency: All references to money herein are
references to lawful money of Canada.
ARTICLE 2
INTERIM PHASE
2.1 Good Faith Obligations: Subject to the terms hereof,
each party shall proceed in good faith as expeditiously as
possible to use its reasonable efforts to perform and to satisfy
its respective obligations in respect of the Project as set out
in this Article 2 and to satisfy those pre-conditions as are set
out in Article 4 to be satisfied by it, in each case, by no later
than the Master Agreement Closing Date. In that regard the
parties shall each co-operate with one another and, subject to
their rights hereunder, shall each provide such co-operation as
is reasonably required to enable such obligations to be performed
and such pre-conditions to be met.
2.2 Operator's Pre-Closing Obligations: Prior to the
Master Agreement Closing Date the Operator shall:
(a) meet and consult with OCC and its consultants on an
ongoing basis through finalization of the Master
Agreement;
(b) use its reasonable efforts to ensure that all Persons
retained by it or on its behalf for the provision of
goods or services for or to the Project are registered
as suppliers as required under the Regulatory
Legislation;
and to the extent reasonable under the circumstances:
(c) retain and oversee the performance of the Project
Architect, the Project Manager, if any, the General
Contractor and other consultants;
(d) enter into agreements with the Project Architect, the
Project Manager, if any, and the other consultants
which shall be on terms that:
(i) provide for a release of any copyright in plans,
designs and other similar property (to the extent
that such plans, designs and other similar
property may be used in the Project), it being
understood that the foregoing shall, as between
the Operator and OCC, be the property of the
Operator until termination of this Agreement; and
(ii) permit OCC or its nominee the right to assume
the Operator's rights and obligations under
such agreements without payment of any
penalty by OCC or its nominee or further
consent (or if such further consent shall be
required such consent shall be obtained by
the Operator);
(e) commence the development of the Project Plans based
upon and subject to the financial parameters prepared
by the Operator in the Operator's Proposal;
(f) commence the development of the Development Schedule;
(g) commence the development of the Project Budget based
upon and subject to the financial parameters prepared
by the Operator in the Operator's Proposal;
(h) use its reasonable efforts to obtain all necessary
Governmental Consents as and when required for the
construction of the Project in accordance with the
Project Plans, the Enabling Legislation and Applicable
Law;
(i) use its reasonable efforts to finalize all governmental
and other agreements, approvals, consents, permits,
licences and other documentation necessary or desirable
with respect to the development of the Project;
(j) use its reasonable efforts to obtain any licences,
permits or other permissions required in respect of the
development or operation of any infrastructure made
necessary by reason of the development and/or operation
of the Project; and
(k) co-operate with OCC in obtaining any rezoning or
legislative amendment necessary to permit the uses of
the various components of the Project for their
intended use.
2.3 OCC's Pre-Closing Obligations: Prior to the Master
Agreement Closing Date, OCC shall:
(a) meet and consult with the Operator and the Participants
and their respective consultants on an ongoing basis,
through finalization of the Master Agreement;
(b) subject to Applicable Law and any conditions as to
confidentiality as may have been imposed or agreed upon
in connection with the delivery of such information,
make available for inspection and review by the
Operator and its authorized representatives all
documentation and agreements pertaining to the Land in
OCC 's possession or control, including any surveys,
plans, "as-built" drawings of existing improvements
located on the Land, all existing agreements affecting
the Land and other related documentation, reports,
studies and information in OCC's possession or control
from time to time with respect to the Land and, at the
Operator's expense, permit the Operator to make copies
of the same;
(c) co-operate with the Operator in obtaining any rezoning
or legislative amendment necessary to permit the uses
of the various components of the Project for their
intended use;
(d) undertake sole and exclusive negotiations with respect
to the Project with the Operator and no other Person
with respect to the performance of the obligations
contemplated to be performed by the Operator pursuant
to this Agreement;
(e) act diligently in granting all approvals required by
this Agreement.
2.4 Pre-Construction Phase Expenses: The Operator shall be
responsible for all Pre-Construction Phase Expenses, provided
that:
(a) if this Agreement is terminated pursuant to Section
5.1, the Operator shall be paid by way of reimbursement
its Pre-Construction Phase Expenses in accordance with
the provisions of Section 5.2, together with interest
thereon from the date of termination of the Agreement
to the date of payment at the rate of 10% per annum
calculated and compounded monthly; and
(b) if this Agreement is not terminated, the Pre-
Construction Phase Expenses and all other expenses
incurred and paid by the Operator with respect to the
Project may be included in the Project Budget and shall
be recovered by the Operator in the manner and to the
extent described in Section 9(d) of Part 7 to Schedule
A.
2.5 OCC's Approval Rights: OCC shall have approval rights
with respect to the preconstruction process including as to:
(a) the Concept Design, the Site Plan and the Project
Plans;
(b) the Development Schedule;
(c) the Project Budget;
(d) the identity of the General Contractor, the Project
Architect and the Project Manager, if any; and
(e) all material agreements, contracts, permits, licences,
consents, bonds, guarantees and warranties pertaining
to any material aspect of the construction, financing,
management or operation of the Project and any material
amendments or modifications thereto or terminations
thereof.
2.6 Working Committee: Each of the Operator and OCC shall
appoint at all times and from time to time one or more
representatives (herein individually called a "Working Committee
Representative"). The parties shall agree upon the authorities
of the Working Committee Representatives, rules governing
meetings of the Working Committee and other matters relating to
the Working Committee.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 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 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 or will be entered into in accordance with this
Agreement and to which the Operator is or will be a
party, have been or will be duly authorized by the
Operator and constitute or will 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 nor the fulfilment of or compliance with
the terms and conditions hereof:
(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.
(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 Project.
(g) Registration: The Operator is registered as a supplier
under the Regulatory Legislation.
3.2 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 it, enforceable against it in accordance
with its terms. All other agreements referred to in
this Agreement which have been or will be entered into
in accordance with this Agreement and to which the
Participant is or will be a party have been or will be
duly authorized by the Participant and constitute or
will 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 nor the fulfilment of or compliance with
the terms and conditions hereof:
(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 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 Participants 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 Project.
3.3 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 or will be entered into in accordance with this
Agreement and to which it is or will be a party have
been or will be duly authorized by OCC.
(c) No Violation: Neither the execution and delivery of
this Agreement nor the fulfilment of or compliance with
the terms and conditions hereof:
(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 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 and the
Participants 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.
3.4 Survival of Representations and Warranties: The
representations and warranties set forth in Sections 3.1, 3.2 and
3.3 and in the certificates to be provided pursuant to
Subsections 4.2(d) and 4.3(d) shall survive the Master Agreement
Closing Date and shall not merge in any transaction completed on
the Master Agreement Closing Date.
ARTICLE 4
INTERIM CLOSING
4.1 Interim Closing Deliveries: Subject to and in
accordance with the terms and conditions hereof the parties
hereto each agree that, on the Master Agreement Closing Date:
(a) the Operator, the Participants and OCC shall each
execute and deliver the Master Agreement;
(b) the Operator, OCC and the City shall each execute and
deliver the City Master Agreement; and
(c) the Operator, OCC and the Participants shall each
execute and deliver the Operating Agreement.
4.2 Conditions Benefitting OCC: OCC's obligation to carry
out the transactions contemplated herein is subject to the
fulfilment of each of the following conditions on or before the
Master Agreement Closing Date, unless waived in writing by OCC on
or prior to the Master Agreement Closing Date:
(a) all of the documents to be finalized by the Master
Agreement Deadline, including all of those documents
outlined in Schedule A shall have been finalized;
(b) all documents or copies of documents required to be
executed and/or delivered to OCC by the Operator and
the Participants hereunder shall have been so executed
and delivered;
(c) all of the terms, covenants and conditions of this
Agreement to be complied with or performed by the
Operator and the Participants on or prior to the Master
Agreement Closing Date shall have been complied with or
performed in all material respects; and
(d) the representations and warranties set forth in
Sections 3.1 and 3.2 shall be true and correct when
made and shall continue to be true and correct in all
material respects as if made as of the Master Agreement
Closing Date and the Operator and the Participants
shall have delivered to OCC a certificate signed by an
officer of the Operator and an officer of each of the
Participants setting forth such statements as
representations and warranties of the Operator and the
Participants effective as of the Master Agreement
Closing Date.
In the event that any one or more of the above-noted conditions
has not been fulfilled on or prior to the Master Agreement
Deadline and has not been waived by OCC as aforesaid, OCC may, by
notice in writing to the Operator and the Participants terminate
this Agreement without prejudice however to any rights it may
have as a result of any breach by the Operator or the
Participants of any of their obligations hereunder.
4.3 Conditions Benefitting the Operator: The obligation of
the Operator and the Participants to carry out the transactions
contemplated herein is subject to the fulfilment of each of the
following conditions on or before the Master Agreement Closing
Date, unless waived in writing by the Operator on or before the
Master Agreement Closing Date:
(a) all of the documents to be finalized by the Master
Agreement Deadline, including all of those documents
outlined in Schedule A shall have been finalized;
(b) all documents or copies of documents required to be
executed and delivered to the Operator and the
Participants by either or both of the City and OCC
hereunder shall have been so executed and delivered;
(c) all of the terms, covenants and conditions of this
Agreement to be complied with or performed by OCC on or
prior to the Master Agreement Closing Date shall have
been complied with or performed in all material
respects; and
(d) the representations and warranties set forth in
Section 3.3 shall be true and correct when made and
shall continue to be true and correct in all material
respects as if made as of the Master Agreement Closing
Date and OCC shall have delivered to the Operator and
the Participants a certificate signed by an officer of
OCC setting forth such statements as representations
and warranties effective as of the Master Agreement
Closing Date.
In the event that any one or more of the above-noted conditions
has not been fulfilled on or prior to the Master Agreement
Deadline and has not been waived by the Operator as aforesaid,
the Operator may, by notice in writing to OCC terminate this
Agreement without prejudice however to any rights it may have as
a result of any breach by OCC of its obligations hereunder.
4.4 Condition Benefitting the Operator and OCC: The
obligation of OCC, the Operator and the Participants to carry out
the transactions contemplated herein is subject to the City
Master Agreement being executed and delivered by the City on or
before the Master Agreement Closing Date, unless waived in
writing by each of OCC and the Operator on or before the Master
Agreement Closing Date. In the event that the foregoing
condition has not been fulfilled on or prior to the Master
Agreement Deadline and has not been waived by OCC and the
Operator, as aforesaid, either OCC or the Operator may, by notice
in writing to the other, terminate this Agreement without
prejudice however to any rights it may have as a result of any
breach by the other parties hereto of any of their obligations
hereunder.
4.5 Satisfaction: If a notice is not given pursuant to
Section 4.2, Section 4.3 or Section 4.4 by the party entitled to
deliver such notice, indicating that a condition has been
fulfilled or waived, by no later than the date for satisfaction
of such condition, such party shall, unless the date set for the
satisfaction of such condition has been extended by mutual
consent in writing, be deemed not to have been satisfied with
respect to and not to have waived that particular condition and
shall be deemed not to have given notice of satisfaction or
waiver thereof.
4.6 Other Closing Matters: In connection with the
completion of the closing herein:
(a) the closing shall commence at 10:00 a.m. in the offices
of Davies, Ward & Beck or at such other time or place
within the Municipality of Metropolitan Toronto as such
offices may be located from time to time;
(b) each party shall pay its own legal fees with respect to
the transactions herein contemplated; and
(c) the obligation of any party to convey any interest
pursuant hereto is expressly subject to compliance with
the provisions of Section 50 of the Planning Act
(Ontario) and amendments thereto.
ARTICLE 5
TERMINATION PRIOR TO THE MASTER AGREEMENT CLOSING DATE
5.1 Rights of Termination: This Agreement will terminate
(except to the extent necessary to give effect to the provisions
of this Article 5, including Section 5.2) in any of the following
cases:
(a) upon the Master Agreement Deadline if the Master
Agreement Closing Date has not occurred;
(b) upon a notice given by OCC to the Operator prior to the
Master Agreement Closing Date if an Event of Insolvency
shall have occurred in respect of the Operator or any
Participant;
(c) upon a notice given by OCC to the Operator prior to the
Master Agreement Closing Date if an Event of Default
shall have occurred in respect of the Operator;
(d) upon a notice given by the Operator to OCC prior to the
Master Agreement Closing Date if an Event of Default
shall have occurred in respect of OCC;
(e) upon a termination of the Interim Casino Operating
Agreement pursuant to Section 11.1(a) or Section
11.1(i) thereof;
(f) upon termination of this Agreement in accordance with
the provisions of Section 4.2, Section 4.3 or Section
4.4 hereof; and
(g) upon a notice given by the Operator:
(i) if an event shall occur or state of facts be found
to exist with respect to the Project 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 denial of an
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
(ii) any increase(s) in the payments to be made
under subsection 15(1)2 of the Enabling
Legislation to the Consolidated Revenue Fund
of the Province of Ontario or the levying of
or any increase(s) in any 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 Project (or in each case,
amounts paid in lieu thereof) (excluding, for
greater certainty, capital or income taxes of
the Operator) which, individually, or in the
aggregate, will materially adversely affect
the operating profit of the Project.
5.2 Reimbursement on Termination: In the event of
termination of this Agreement pursuant to Section 5.1, OCC shall,
on the Reimbursement Date, pay to the Operator by way of
reimbursement its Pre-Construction Phase Expenses together with
interest as provided herein provided that the obligation of OCC
to reimburse the Operator in respect of any Pre-Construction
Phase Expenses together with interest as provided herein shall be
subject to the following conditions:
(a) in the case of any Pre-Construction Phase 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; and
(b) in the case of any Pre-Construction Phase 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 to such contract.
For the purposes of this Section 5.2, "Reimbursement Date" means
180 days after this Agreement is terminated.
5.3 Remedies: Any termination of this Agreement pursuant
to Section 5.1 shall be without prejudice to any rights or
remedies available to the parties hereto in the event the other
party willfully fails to use its reasonable efforts to negotiate
the provisions of the Master Agreement in good faith in
accordance with the applicable provisions of this Agreement but
in all other cases, a termination of this Agreement pursuant to
Section 5.1 shall be deemed to be a choice of remedy by the
parties hereto and save and except for the provisions of Sections
2.4 and 5.2 hereof, shall be the sole obligation of the parties
hereto following termination of this Agreement.
5.4 Commencement of Grace Period: In the event there is a
dispute as to whether an event giving rise to an Event of Default
or an Event of Insolvency has occurred, any applicable grace or
cure period shall commence on the date of the determination of
such dispute.
ARTICLE 6
GENERAL
6.1 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) Operator, addressed to it, at:
108 City Centre
333 Riverside Drive West
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
Canada, M5L 1A9
Telecopier: (416) 863-3033
Attention: John M. Tuzyk
with a copy to each of the Participants
(c) 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 Blvd., 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
- and -
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:
Blake, Cassels & Graydon
199 Bay Street
Suite 2800, Commerce Court West
P. O. Box 25
Toronto, Ontario
Canada, 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 postal authority.
6.2 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.
6.3 Enforceability: If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid,
illegal or unenforceable as written, such provision shall be
enforced to the maximum extent permitted by Applicable Law.
6.4 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 shall not be unreasonably
withheld or delayed.
6.5 Time of Essence and Force Majeure: 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. Notwithstanding any other
provision in 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 periods in which such
obligation is to be performed shall be extended for such period
of inability to perform; every obligation contained in this
Agreement shall be deemed to be subject to Force Majeure
provided, however, that the Master Agreement Deadline and the
Final Closing Deadline may not be extended by reason of Force
Majeure but only by agreement between the parties hereto as
herein provided.
6.6 Approvals: Wherever the provisions of this Agreement
contemplate an approval or consent of or 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:
(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;
(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, one of OCC's
Working Committee Representatives, or a member of the
"Casino Project Team" established by Her Majesty.
6.7 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 unconditionally submits to the
non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
6.8 Relationship of the Parties: Nothing herein shall be
construed so as to make OCC a partner or joint venturer 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.
6.9 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.
6.10 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.
6.11 Publicity: Except where disclosure is required by a
Participant or the Operator under Applicable Law, the parties
agree that they shall mutually agree on all press releases and
other public disclosures concerning the Project prior to any
party making any such press releases or public disclosures.
6.12 Counterparts and Delivery by Facsimile: This Agreement
may be executed in several counterparts each of which so executed
shall be deemed to be an original, and such counterparts together
shall constitute one and the same instrument and notwithstanding
their date of execution shall be deemed to bear date as of the
date first above written. An executed copy of this Agreement may
be delivered by any party hereto by facsimile. In such event,
such party shall forthwith deliver to the other parties hereto, a
copy of this Agreement executed by such party.
IN WITNESS WHEREOF this Agreement has been executed by
the parties.
ONTARIO CASINO CORPORATION
By:
By:
WINDSOR CASINO LIMITED
By:
By:
CAESARS WORLD, INC.
By:
By:
CIRCUS CIRCUS ENTERPRISES, INC.
By:
By:
HILTON HOTELS CORPORATION
By:
By:
SCHEDULES
Schedule A - Material Terms of Principal Agreements
Part 1 - Master Agreement
Part 2 - City Master Agreement
Part 3 - Land Lease
Part 4 - Land Sublease
Part 5 - City Option Agreement
Part 6 - Project Lease
Part 7 - Operating Agreement
Schedule B - Project Site
SCHEDULE A
MATERIAL TERMS OF PRINCIPAL AGREEMENTS
PART 1 - MASTER AGREEMENT
1. Purpose: The Master Agreement will supersede the Heads of
Agreement as an executory contract, will contain the other formal
documents as schedules and will govern the relationship and
duties of the parties with respect to preconstruction and
construction.
2. The Parties: OCC, the Operator and the Participants.
3. Identification of Site:
(i) legal description to be attached; and
(ii) acreage, reference to bordering streets, streets
to be closed or widened, etc.
4. Description of Project:
(i) identify basic features;
(ii) Concept Design to be attached; and
(iii) Site Plan to be attached.
5. Representations and Warranties: As in Heads of Agreement.
6. Preconstruction Phase:
(a) Good Faith: Each party would be obligated to act
diligently and in good faith to carry out its
preconstruction obligations.
(b) OCC's Preconstruction Obligations: OCC would be
responsible for the following preconstruction
activities pertaining to the Project:
(i) assist in the process of obtaining all provincial
government controlled permits, licenses, etc.;
(ii) act diligently in granting all approvals required
by the Agreement;
(iii) meet and consult with the Operator, the
Participants and their respective consultants
on an ongoing basis;
(iv) to use its reasonable efforts to assist the
Operator in obtaining all necessary Governmental
Consents as and when required for the construction
of the Project in accordance with the Project
Plans, the Enabling Legislation and Applicable
Law;
(v) to use its reasonable efforts to assist the
Operator in finalizing all governmental and other
agreements, approvals, consents, permits, licenses
and other documentation necessary or desirable
with respect to the development of the Project;
(vi) to use its reasonable efforts to assist the
Operator in obtaining any licenses, permits or
other permissions required in respect of the
development or operation of any infrastructure
made necessary by reason of the development and/or
operation of the Project; and
(vii) to co-operate with the Operator in obtaining
any rezoning or legislative amendment
necessary to permit the uses of the various
components of the Project for their intended
use.
(c) Operator's Preconstruction Obligations: The Operator
would be generally responsible for all other
preconstruction activities pertaining to the Project,
including:
(i) to retain and oversee the Project Manager, if any
and to retain and oversee the Project Architect,
the General Contractor and other consultants;
(ii) enter into agreements with the Project Architect,
the Project Manager if any, and other consultants
which shall be on terms that:
(A) provide for a release of any copyright in
plans, designs, and other similar property
(to the extent that such plans, designs and
other similar property may be used in the
Project), it being understood that the
foregoing shall, as between the Operator and
OCC, be the property of the Operator until
termination of the Master Agreement; and
(B) permit OCC or its nominee the right to assume
the Operator's rights and obligations under
such agreements without payment of any
penalty by OCC or its nominee or further
consent (or if further consent shall be
required such consent shall be obtained by
the Operator);
(iii) to develop and finalize the Project Plans
based upon the Concept Design, the Site Plan
and based upon and subject to the financial
parameters prepared by the Operator in the
Operator's Proposal;
(iv) to supervise and direct the design development
process;
(v) to supervise and direct the preparation of all
working drawings and specifications;
(vi) to develop and finalize the Development Schedule;
(vii) to develop and finalize the Project Budget
based upon and subject to the financial
parameters prepared by the Operator in the
Operator's Proposal;
(viii) to prepare, undertake, review and award
competitive bid packages as appropriate and
to finalize and enter into the general
construction contract;
(ix) to use its reasonable efforts to retain sufficient
work forces, subcontractors, consultants, etc.;
(x) to use its reasonable efforts to obtain
appropriate bonding;
(xi) to use its reasonable efforts to obtain all
necessary Governmental Consents as and when
required for the appropriate stage of construction
of the Project;
(xii) to use its reasonable efforts to have all
necessary testing undertaken;
(xiii) to enter into all required development, site
plan and other municipal type agreements;
(xiv) to obtain a site location survey;
(xv) to use its reasonable efforts to obtain all
permissions respecting infrastructure;
(xvi) to use its reasonable efforts to arrange for
the supply of all necessary infrastructure;
(xvii) to use its reasonable efforts to obtain all
licences necessary to operation of the casino
and other uses identified in the Project
Plans;
(xviii) to use its reasonable efforts to obtain
excavation and other building permits;
(xix) to consult with OCC's designated
representatives through the Project
development to the finalization of Project
Plans, working drawings, Project Budget,
Development Schedule, etc.;
(xx) to identify requirements pertaining to furniture,
furnishings, equipment (including all gaming
equipment), fixtures, apparatus and other personal
property to be used in, held in storage for use
in, or required in connection with the operation
of the casino in the Project;
(xxi) to establish and maintain cost accounting
records in accordance with normal business
practice appropriate for the development of
the Project;
(xxii) to use its reasonable efforts to cause
regular progress meetings to be held to be
attended by OCC representatives;
(xxiii) to establish one or more segregated bank
accounts for the Project;
(xxiv) to participate with OCC in discussions with
representatives of Windsor Raceway with
respect to teletheatre and any other
initiatives that have been identified and
approved by OCC and the Operator; and
(xxv) apprise OCC prior to entering into any
material transaction with any of the
Participants or with any Affiliates of the
Participants, 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 Project
Budget.
(d) OCC's Approval Rights: OCC would have approval rights
with respect to the form of and material amendments to
all material agreements with the City and others
relating to any material aspect of the construction,
development, financing or operation of the Project (the
"Project Agreements").
7. Closing:
(a) Delivery of Documents: The following would be executed
and delivered on the Final Closing Date:
(i) the Land Lease;
(ii) the Land Sublease;
(iii) the City Option Agreement;
(iv) the City Development Agreements;
(v) the Insurance Trust Agreement;
(vi) the Leasehold Mortgagee Acknowledgement
Agreements;
(vii) the Project Lease; and
(viii) the Operating Agreement.
(b) Pre-Conditions Benefitting OCC: OCC's obligation to
carry out the transactions contemplated in the
Agreement will be subject to fulfilment of conditions
similar to those set forth in Section 4.2 of the Heads
of Agreement but making reference to the Final Closing
Date and the Final Closing Deadline.
(c) Pre-Conditions Benefitting the Operator: The
Operator's obligation to carry out the transactions
contemplated in the Agreement will be subject to
fulfilment of conditions similar to those set forth in
Section 4.3 of the Heads of Agreement but making
reference to the Final Closing Date and the Final
Closing Deadline.
(d) Pre-Conditions Benefitting OCC and the Operator: OCC's
and the Operator's obligations to carry out the
transactions contemplated in the Agreement will be
subject to fulfilment of each of the following
conditions on or before the Final Closing Deadline:
(i) that the site for the Project has been duly
assembled by the City;
(ii) that the City has good and marketable fee simple
title to the Land;
(iii) that the site is properly zoned for the intended
uses for the Project;
(iv) compliance with the provisions of Section 50 of
the Planning Act (Ontario) and amendments thereto;
(v) all documents to be finalized by the Final Closing
Deadline shall have been finalized;
(vi) all documents or copies or documents required to
be executed and delivered by the Operator, the
City or OCC shall have been so executed and
delivered;
(vii) there being no litigation which, if successful,
would prevent or have a material adverse effect on
the completion or economic viability of the
Project;
(viii) there being no material adverse change in the
legal or economic circumstances relating to the
Project or which would have a material adverse
effect on the completion or economic viability of
the Project;
(ix) the Project Plans having been approved by OCC;
(x) the Project Budget having been approved by OCC;
(xi) the Development Schedule having been approved by
OCC;
(xii) the Project Manager and the General Contractor
having been approved by OCC;
(xiii) all Project Agreements in existence as of such
date having been approved by OCC;
(xiv) all necessary permits, licences and other
approvals from governmental bodies, utilities and
other third parties necessary to permit
commencement of construction being in hand;
(xv) that the Operator has bonding approved by OCC in
place with OCC as a co-obligee;
(xvi) that the Operator has in place third party
financing or other loan arrangements approved by
OCC for no more than 75% of budgeted development
costs and monies for at least 25% of the budgeted
development costs shall be provided by the
Participants or their Affiliates or Persons under
the Control of the Participants.
(e) Satisfaction: As in Heads of Agreement.
8. Other Closing Matters:
(a) closing date identified (to be no later than Final
Closing Deadline); and
(b) responsibility for costs, expenses, including
registration and legal fees.
9. Construction Phase:
(a) Preconditions to Operator's Construction Obligations:
As in Section 7(d) above.
(b) Operator's Construction Obligations: The Operator
would be responsible to construct the Project in
accordance with the Project Plans, within the Project
Budget and in compliance with the Development Schedule,
including:
(i) to cause site preparation, demolition, if any, and
excavation to be commenced as permitted by
Applicable Law;
(ii) to direct and oversee all construction activities;
(iii) to use its reasonable efforts to ensure that
all necessary construction supplies are
ordered;
(iv) to use its reasonable efforts to ensure that
sufficient work forces are retained; and
(v) to consult with the Project Architect and other
principal consultants re compliance with Project
Plans, Project Budget and Development Schedule.
(c) OCC's Construction Obligations: OCC would be
responsible for the following:
(i) assist in the process of obtaining all provincial
government control permits, licenses, etc.;
(ii) act diligently in granting all approvals required
by the Agreement;
(iii) meet and consult with the Operator, the
Participants and their respective consultants
on an ongoing basis;
(iv) have available on site during normal business
hours a Working Committee Representative having
the authority to grant approvals for any site
changes to the Project Plans and the Development
Schedule; and
(v) apprise OCC prior to entering into any material
transaction with any of the Participants or with
any Affiliate of the Participants, including any
guarantee by the Operator of any obligations of
any such Person, other than as may be expressly
permitted by the Project Budget.
(d) OCC's Approval Rights: OCC would have a prior right to
approve the creation of any new Project Agreement and
any termination of an existing Project Agreement.
(e) Project Agreements: The Operator would enter into all
Project Agreements (i.e., with consultants,
contractors, other third parties) on terms that:
(i) provide for a release of copyright and other
rights in plans, designs, etc. (it being
understood that the foregoing shall, as between
the Operator and OCC, be the property of the
Operator until the termination of the Master
Agreement); and
(ii) permit OCC or its nominee to assume the Operator's
rights and obligations under such contracts
without payment of penalty by OCC or its nominee
or further consent (or if further consents shall
be required such consents shall be obtained by the
Operator).
(f) Insurance re construction phase: The Operator will
arrange for all appropriate property damage, liability
and other required insurance to be in place, naming OCC
(and the City with respect to liability) as a named
insured, with the Operator and the Participants as
named insureds or additional named insureds. The
policies shall provide for the waiver or release of all
rights of subrogation against the Operator, OCC and the
City, such coverage to be primary and non-contributory
as to other insurance of the Operator, with loss
payable under the property damage insurance to an
Insurance Trustee.
(g) Information and Access:
(i) OCC shall be kept fully informed of all material
events and developments pertaining to construction
of the Project;
(ii) an OCC liaison team shall be established and shall
be briefed at regular meetings for Project
updates;
(iii) subject to compliance with applicable
insurance requirements, OCC's representatives
designated in writing in advance (in
accordance with procedures to be established
by the parties) would be entitled to the same
degree of access to the work site and to
fabrication sites as are the Operator's
representatives; and
(iv) OCC's representatives would have the right to
attend on regular site inspections with the
Operator, the Project Architect, etc.
(h) Accounts and Records:
(i) the Operator would maintain an office at or near
the Project site where it would keep
comprehensive, true, complete and accurate books,
records, accounts and documents, reports, studies,
tests, plans, drawing permits, models, studies,
and other construction-related material with
respect to the entire construction process and the
transactions pertaining thereto;
(ii) OCC's authorized representatives would, upon
reasonable prior notice to the Operator, have full
access during normal business hours to inspect
such books, records, accounts, documents, etc.,
and to make extracts or copies and perform audits;
and
(iii) the Operator would provide such evidence as
to the payment of development costs as OCC
shall reasonably require.
(i) Reports: The Operator would provide a monthly report
to OCC as to construction progress, costs incurred,
compliance with or variance from Project Budget and
Development Schedule, estimated cost to complete, etc.,
in such form and detail as provided by the Project
Architect or the General Contractor.
(j) Changes to Project Plans: A procedure would be
established for notice to OCC as to proposed material
changes to the Project Plans, a review period, an
approval deadline, etc.
10. Substantial Completion: The Operator would covenant to
cause the various components of the Project to be Substantially
Completed by the respective dates scheduled therefor in the
approved Development Schedule. The Participants would covenant
to achieve Substantial Completion of the various components of
the Project by no later than the respective dates scheduled
therefor in the approved Development Schedule, and in any event
to provide such monies as may be necessary to fund any overruns
in the cost of the Project beyond the budgeted cost in the
approved Project Budget. The obligations of the Participants
under this Agreement are and shall be several and proportional to
the equity interest of the Participants in the Operator and shall
not be joint or joint and several.
11. Change of Control/Ownership: The Operator and Participants
would agree that, until a date to be determined and unless OCC
otherwise consents, such consent not to be unreasonably withheld,
the only shareholders of the Operator would be one or more of the
Participants or their Affiliates, except for:
(a) a transaction which is not prohibited by Section 6.4(c)
of the Interim Casino Operating Agreement;
(b) a transfer to a Person (other than a joint venture or
partnership) Controlled by or under common Control with
a Participant;
(c) transfers or issuances of securities after the Master
Agreement Closing Date provided that all times the
Participants or their Affiliates continue to Control
the Operator and on such other terms as may be agreed;
and
(d) any transfer as may be required under Applicable Law or
by any other Governmental Authority.
12. Assignment: The Operator would be permitted to
assign/mortgage its interest in the Agreement to an
assignee/mortgagee permitted by the Land Sublease.
13. Termination: The Agreement would terminate upon:
(a) the Final Closing Deadline if the Final Closing Date
has not occurred;
(b) a notice given by OCC to the Operator if an Event of
Insolvency shall have occurred prior to the Final
Closing Date in respect of the Operator or any
Participant;
(c) a notice given by OCC to the Operator prior to the
Final Closing Date if an Event of Default shall have
occurred in respect of the Operator;
(d) a notice given by the Operator to OCC prior to the
Final Closing Date if an Event of Default shall have
occurred in respect of OCC;
(e) upon termination of the Interim Casino Operating
Agreement pursuant to Section 11.1(a) or Section
11.1(i) thereof;
(f) upon termination of the Agreement as a result of the
failure to fulfil (in absence of waiver with respect
to) any of the preconditions to Closing referred to in
Sections 7(b), (c) or (d) of Part 1 of this Schedule A;
and
(g) upon a notice given by the Operator:
(i) if an event shall occur or state of facts be found
to exist with respect to the Project 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 denial of an
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
(ii) any increase(s) in the payments to be made under
subsection 15(1)2 of the Enabling Legislation to
the Consolidated Revenue Fund of the Province of
Ontario or the levying of or any increase(s) in
any 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 Project (or in each case, amounts paid in
lieu thereof) (excluding, for greater certainty,
capital or income taxes of the Operator) which,
individually, or in the aggregate, will materially
adversely affect the operating profit of the
Project.
14. Reimbursement For Costs and OCC Assumption: As per Sections
2.4 and 5.2 of the Heads of Agreement.
15. Approvals: To be discussed.
16. Time of Essence and Force Majeure: As in Heads of
Agreement.
17. Entire Agreement Clause: .
18. Status Certificates: .
19. Dispute Resolution: To be discussed.
PART 2 - CITY MASTER AGREEMENT
1. Purpose: The City Master Agreement will:
(a) obligate the City to complete the site assembly;
(b) obligate the City to sell or ground lease the site to
OCC;
(c) obligate the City to provide the City Option to OCC;
(d) obtain the City's representations as to title, zoning,
etc.;
(e) obligate the City to co-operate in the preconstruction
and construction process; and
(f) seek to limit the municipal fees and charges with
respect to the Project.
2. The Parties: The City, the Operator and OCC.
3. Representations and Warranties:
(a) From the City as to:
(i) status of site assembly;
(ii) its good and marketable fee simple title to the
site;
(iii) extent of services to the site;
(iv) proper zoning for the site for the intended uses
for the Project;
(v) no outstanding or threatened litigation re the
site assembly;
(vi) no contaminants or environmental infractions;
(vii) proper authority, due qualification, etc.; and
(viii) such other representations consistent with general
practice in transactions of a similar nature.
(b) From the Operator as to:
proper authority, due qualification, etc. (as in Heads
of Agreement).
(c) From OCC as to:
proper authority, due qualification, etc. (as in Heads
of Agreement).
4. The City's Preconstruction Obligations:
(a) to complete the site assembly;
(b) as to any re-zoning for the intended uses for the
Project;
(c) as to any title issues;
(d) as to any contaminants and environmental matters;
(e) as to any site related litigation;
(f) as to any required site preparation;
(g) as to demolition and removal of structures and
foundations;
(h) to acknowledge that the Operator and/or OCC may act as
the City's authorized representative vis-a-vis the site
through the preconstruction process (i.e., the City
owns the site);
(i) to permit full access to the site for inspection,
testing, etc.
(j) to provide general co-operation and assurances;
(k) to proceed expeditiously with development review,
processing of plans, municipal agreements, etc.;
(l) to deliver vacant possession of the Land on the Final
Closing Date;
(m) to co-operate and consent to any application(s) to have
the Land registered under the Land Titles Act
(Ontario); and
(n) such additional obligations as are consistent with
general practice in transactions of a similar nature.
5. OCC's and Operator's Approval/Consultation Rights:
(a) as to any settlements with existing landowners;
(b) as to any exceptions to good and marketable title;
(c) as to any re-zoning required for the intended uses for
the Project; and
(d) as to such other additional matters as are consistent
with general practice in transactions of a similar
nature.
6. Closing:
(a) Delivery of Documents: The following documents would
be executed and delivered:
(i) the Land Lease;
(ii) the City Option Agreement;
(iii) the City Development Agreements;
(iv) recognition and non-disturbance agreements; and
(v) such additional agreements as are consistent with
general practice in transactions of a similar
nature.
(b) Preconditions to Closing: The Operator's and OCC's
obligation to close would be conditional upon:
(i) the site being fully assembled;
(ii) the City having good and marketable fee simple
title to the site;
(iii) the site being properly zoned for the intended
uses for the Project;
(iv) the site being free from contaminants or
environmental infractions;
(v) all superstructures and other improvements have
been reduced to grade level and all foundations
removed;
(vi) the City's acquisition costs for the Land and the
interest factor to be utilized for the Land Lease
Rent shall have received the prior approval of the
Operator and OCC;
(vii) delivery of vacant possession to the Land; and
(viii) such additional preconditions as are consistent
with general practice in transactions of a similar
nature.
(c) Other Closing Matters:
(i) adjustment provisions;
(ii) parties each responsible for their own costs and
expenses, including registration and legal fees;
and
(iii) such additional provisions as are consistent
with general practice in transactions of a
similar nature.
PART 3 - LAND LEASE
1. The Parties: The City, as landlord and OCC, as tenant.
2. Term: The initial term (the "Initial Term") would be the
aggregate of 20 years and the period that is the shorter of:
(a) 3 years; and
(b) the period from the commencement date to the date on
which the casino portion of the Project is open to the
public for gaming operations.
3. Renewal Rights: OCC (or its assignee) would have ongoing
rights to renew the term for two successive periods of 10 years
and one further period that results in the Initial Term plus
renewals aggregating 50 years less one day.
4. Land Lease Rent: The rent (the "Land Lease Rent") during
the Initial Term shall be per annum amount payable in equal
consecutive monthly instalments calculated with reference to the
City's acquisition costs of the Land (as approved by OCC and by
the Operator pursuant to the City Master Agreement) amortized on
a straight line basis with an appropriate interest factor over
the Initial Term. The rent for any renewal term would be $1 a
year.
5. Net Lease: The rent would be absolutely net to the
landlord, with no set-off of costs and expenses of any nature or
kind except for any costs and expenses pertaining to any matter
represented and warranted by the landlord in the documentation
which was inaccurate, incomplete or untrue.
6. Use: The tenant would be entitled to use the site for any
lawful purpose including for the construction and operation of
the Project for the intended uses (i.e., casino, hotel,
entertainment, restaurants, theatres, parking, etc.).
7. Impositions: The tenant would be responsible to pay, or
cause to be paid, all taxes, levies, rates, charges, fees of
every nature and kind assessed by any taxing authority in respect
of the Project including the construction or operation of the
Project or part thereof or the businesses thereon.
8. Insurance: The tenant would be obliged to obtain and
maintain, or cause to be obtained and maintained, comprehensive
liability coverage and rental insurance (re: Land Lease Rent)
with the landlord as a named insured, with loss payable under the
rental insurance payable to an Insurance Trustee as per Land
Sublease.
9. Repairs and Maintenance: The tenant would be obliged to
maintain the Project, once constructed, in accordance with all
applicable municipal laws, and on termination, to turn the
Project over in the same condition as it was required to maintain
the Project, reasonable wear and tear and other matters to be
excepted.
10. Indemnity: The tenant would agree to indemnify and hold the
landlord harmless from all losses, costs, damages, etc. which
arise from the construction or operation of the Project except
losses, costs, damages, etc., resulting from the negligence or
wilful misconduct of the landlord.
11. Assigning and Subletting and Sales: There would be no
restrictions on assignments or subletting by the tenant during
the Term and any sale by the landlord will be subject to the
terms of the City Option Agreement.
12. Right of First Refusal: The tenant would be entitled to a
right of first refusal upon any proposed sale by the landlord of
its interest in the Land.
13. Non Disturbance: Non-disturbance and recognition agreements
to OCC and the Operator and its or their successors, tenants and
lenders, so as to facilitate financing of the Operator's interest
in the Project. The landlord's rights would not be subordinated
to or rank equally with the rights of a leasehold mortgagee. The
Operator would only be entitled to mortgage its interest in the
Land Sublease if the mortgage included a charge of the Operator's
interest under the Operating Agreement. Any lenders would be
entitled to certain rights vis-a-vis the landlord, such as:
(i) the right to cure the tenant's Land Lease defaults
to prevent lease termination; and
(ii) such other rights as are reasonable under the
circumstances, taking into consideration trade
practices and market conditions.
The landlord shall agree to act reasonably in making such
modifications to the Land Lease as are reasonably necessary to
facilitate financing of Project Costs, as aforesaid.
14. Events of Default: Breaches or defaults under the Land
Lease which:
(a) in the case of substantial monetary defaults, were not
cured within 30 days after written notice of default
from the non-breaching party; and
(b) in the case of substantial non-monetary defaults, were
not cured within 60 days after written notice of
default from the non-breaching party or such longer
period as is reasonably regarded as necessary to remedy
such default provided that the tenant has commenced
with good faith the remedying of such default within
such 60 day period and thereafter prosecutes to
completion with diligence and continuity the remedying
thereof.
In the event there is a dispute as to whether an event giving
rise to a right of termination has occurred, any applicable grace
or cure period shall commence on the date of the determination of
such dispute.
15. Status Certificates:
16. Quiet Enjoyment: The landlord will provide a covenant for
quiet enjoyment.
17. Non Recourse to OCC: The landlord would not have any
recourse against OCC or Her Majesty for non-performance of any of
the tenant's covenants or obligations, the landlord's sole remedy
(as against OCC and Her Majesty) being limited to termination of
the Land Lease.
18. Operator Covenant: Until Substantial Completion of the
Project, the Operator will covenant directly with the landlord to
make all payments of Land Lease Rent to the landlord.
19. Time of the Essence and Force Majeure: As in Heads of
Agreement.
PART 4 - LAND SUBLEASE
1. The Parties: OCC, as lessor, Operator, as lessee.
2. Term: The initial term would be the Initial Term of the
Land Lease less the last day.
3. Renewal Rights: OCC shall renew the term for a term co-
terminous with the term of the Land Lease (in each case, less one
day), provided that the Operating Agreement had been renewed or
replaced for a like period of time.
4. The Land Lease Covenants: The Operator would agree to remit
to the City all rent and other monies payable by OCC under the
Land Lease, unless the 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) and would agree to indemnify and hold OCC harmless
from liabilities which arise from the construction or operation
of the Project or which arise under the Land Lease, other than
losses, costs, damages resulting from the negligence or wilful
misconduct of OCC.
5. Net Lease: The rent would be absolutely net to the lessor
(i.e. all amounts payable by the tenant under the Land Lease
would be payable by the Operator as rent under the Land
Sublease).
6. Use: The tenant would only be entitled to use the Project
for the intended purpose of the Improvements (and uses reasonably
ancillary thereto and other uses approved by OCC).
7. Impositions: As per Land Lease.
8. Insurance: The tenant would be obliged to obtain and
maintain satisfactory comprehensive insurance protection,
including construction, full replacement cost, comprehensive
liability coverage, business interruption, etc. with OCC (and the
City with respect to comprehensive liability and rental) as named
insureds and with the Insurance Trustee as loss payee on the
property insurance and business interruption insurance.
9. Repairs and Maintenance: The tenant would be obliged to
maintain the Project, once constructed, in good condition and
repair (at minimum, to the standards of maintenance and repair
established from time to time pursuant to the Operating
Agreement), and on termination to turn the Project over in the
same condition as it was required to maintain it, reasonable wear
and tear and other matters to be excepted.
10. Major Capital Improvements and Redevelopment: Only as may
be approved by OCC and the Operator.
11. Damage and Destruction: To be discussed.
12. Assignment and Subletting: Other than to permit financing
or refinancing of Project Costs as referred to in Section 13
below, there would be no permitted assignments or subletting
during the Term without the consent of the lessor, such consent
not to be unreasonably withheld, other than the Project Lease and
space leases and in other circumstances to be negotiated.
13. Leasehold Mortgaging:
(a) the lessor's rights would not be subordinated to or
rank equally with the rights of a leasehold mortgagee;
(b) permitted leasehold mortgagees would be those that were
approved by OCC for funding, limited to a maximum of
75% of "Project Costs" not in excess of the amounts
budgeted therefor in the approved Project Budget;
(c) the Operator would only be entitled to mortgage its
interest in the Land Sublease if the mortgage included
a charge of the Operator's interest under the Operating
Agreement;
(d) permitted leasehold mortgagee would be entitled to
certain rights vis-a-vis the landlord, such as:
(i) the right to cure the tenant's Land Sublease
defaults to prevent lease termination;
(ii) the right to a replacement Land Sublease on the
same terms and for the remaining term in the case
of an incurable default; and
(iii) such other rights as are reasonable under the
circumstances, taking into consideration
trade practices and market conditions.
(e) OCC agrees to act reasonably in making such
modifications to the Land Sublease and the Operating
Agreement as are reasonably necessary to facilitate
financing of Project Costs, as aforesaid.
14. Events of Default:
(a) an Event of Default under the Master Agreement or the
Operating Agreement;
(b) breaches or defaults which would, with the giving of
notice or lapse of time, or both, constitute an Event
of Default under the Land Lease and which,
(i) in the case of monetary defaults, were not cured
within 20 days after prior written notice of such
default from the non-breaching party;
(ii) in the case of non-monetary defaults, were not
cured within 30 days after written notice of
default or one-half of such longer period in
excess of 60 days as the City has agreed is
reasonably required given the nature of the
default provided that the breaching party has
commenced with good faith the remedying of such
default within such 60 day period and thereafter
prosecutes to completion with diligence and
continuity the remedying thereof.
(c) abandonment of the Project by the Operator;
(d) discontinuation of the operation of the "casino use";
and
(e) failure to pay any amount to an extent that the Project
is under imminent sale and/or seizure.
In the event there is a dispute as to whether an event giving
rise to a right of termination has occurred, any applicable grace
or cure period shall commence on the date of the determination of
such dispute.
15. Dispute Resolution: To be negotiated.
16. Quiet Enjoyment: The lessor will provide a covenant for
quiet enjoyment.
17. Termination: In addition to any other remedies available to
OCC, OCC may terminate the Land Sublease upon the occurrence of
an Event of Default. The Land Sublease shall terminate upon:
(a) a termination of the Operating Agreement by affluxion
of time; or
(b) the termination of the Master Agreement by the Operator
or OCC.
All right, title and interest of the Operator in and to the
Project shall automatically revert to OCC upon a termination of
the Land Sublease.
18. City Option Agreement: Nature and extent of Operator
rights, if any, to be negotiated.
19. Non Disturbance: Non-disturbance and recognition agreements
to the Operator and its successors, tenants and lenders, so as to
facilitate financing of the Operator's interest in the Project.
20. Time of the Essence and Force Majeure: As in Heads of
Agreement.
21. Status Certificates:
PART 5 - CITY OPTION AGREEMENT
1. The Parties: The City and OCC.
2. Grant of Option: The City would grant OCC an option to
acquire the site together with any improvements thereon, which
may be exercised at any time up to the date which is 180 days
after the date on which the Land Lease terminates (whether
through affluxion of time or due to the tenant's default).
3. Payment Terms: If OCC exercises its option at any time on
or after the expiry date of the Initial Term of the Land Lease,
the purchase price would be $1.00. If OCC exercises its option
at any time prior to the expiry date of the Initial Term of the
Land Lease, the purchase price would be the then present value of
all remaining payments of basic rent under the Land Lease,
discounted at the same discount rate as the rate of return used
in determining such rent.
4. Closing Terms: The exercise of the option would effectively
create an agreement of purchase and sale with all the usual
terms, including:
(a) closing date to be 10 Business Days following the date
of the exercise of the Option;
(b) the usual closing adjustments;
(c) the obligation of the City to provide originals or true
copies of all relevant documentation;
(d) the usual transfer documentation;
(e) the right to prior access to the Project and all
information; and
(f) the right to clear title.
PART 6 - PROJECT LEASE
1. The Parties: The Operator, as sublandlord and OCC, as
subtenant.
2. Premises: The premises would be the entire Project.
3. Term: Commencing on the earlier of (i) Substantial
Completion of the Project; and (ii) the date of opening of the
casino portion of the Project for casino operations (the "Casino
Opening Date"), and ending on the day before the last day of the
initial term of the Land Sublease; provided that OCC would have
the same rights to renew the term of the Project Lease as its
rights to renew the Land Sublease.
4. Rent: The rent would be a limited recourse "pass-
through" of (i) rent and other amounts as required under the Land
Sublease and (ii) a formula based upon Project Costs.
5. Use: The use provision would be the same as in the Land
Sublease.
6. Assignments: It is contemplated that any assignments or
other transfers by OCC of its sublease interest would only be
with the consent of the Operator.
7. Subletting: Subletting in accordance with the Operating
Agreement.
8. Quiet Enjoyment: The sublandlord will provide a covenant
for quiet enjoyment.
9. Amendments: Parties to act reasonably in making such
modifications to the Project Lease as are reasonably
necessary to facilitate financing the Project Costs.
10. Time of the Essence and Force Majeure: As in Heads of
Agreement.
11. Dispute Resolution: To be negotiated.
12. Termination: Upon termination of the Land Sublease.
13. Other Provisions: To be negotiated.
PART 7 - OPERATING AGREEMENT
1. The Parties: OCC, the Operator and the Participants.
2. Appointment of Operator:
(a) Subject to paragraph (b) below, OCC would retain, on a
sole and exclusive basis, the Operator as independent
contractor to operate and maintain the Project; and
(b) OCC would appoint the Operator as OCC's sole and
exclusive agent to operate on its behalf the Games of
Chance (as such term is defined in the Criminal Code
(Canada)) to be carried on in the Project.
3. Initial Term: The length of the Initial Term would be 10
years commencing at the same time as the Project Lease,
notwithstanding the Operating Agreement shall be executed and
delivered on the Master Agreement Closing Date.
4. Renewal Rights:
(a) The Operating Agreement would be automatically renewed
for a further term of 10 years at the expiration of the
Initial Term unless, by notice (a "Non-Renewal Notice")
given at least 12 months prior to the expiry of the
Initial Term, OCC or the Operator elected to terminate
the Operating Agreement at the expiry of the Initial
Term.
(b) If a Non-Renewal Notice is given by the Operator, it
would not be entitled to payment or recovery on account
of the Operator's Fee (as defined in paragraph 13
below) subsequent to the expiry of the Initial Term and
the Operator would be solely responsible to retire and
discharge all amounts owing under the third party
credit arrangements established by the Operator for the
development of the Project (the "Third Party Credit
Arrangements"). The Operator would be required to
cause the third party lenders to release and discharge
any and all security held by them against the Project.
(c) If a Non-Renewal Notice is given by OCC, the Operator
would not be entitled to payment or recovery on account
of the Operator's Fee subsequent to the expiry of the
Initial Term. However, OCC would be obliged to pay to
the Operator:
(i) if OCC elects and is able to conclude satisfactory
arrangements with the third party lenders for the
repayment of the Third Party Credit Arrangements
on terms satisfactory to OCC an amount equal to
50% of the total budgeted development costs
approved by OCC and as set out in the Project
Budget (exclusive of Land Costs, working capital
and any cost overruns) or a fixed amount in lieu
thereof as agreed to by the parties and, in such
circumstances, OCC and not the Operator shall be
responsible to retire and discharge all amounts
owing under the Third Party Credit Arrangements;
or
(ii) if OCC does not so elect or is not able to
conclude such arrangements, an amount equal to the
aggregate of (A) 50% of the total budgeted
development costs approved by OCC and as set out
in the Project Budget (exclusive of Land Costs,
working capital and any cost overruns) or a fixed
amount in lieu thereof as agreed to by the parties
and (B) an amount equal to the debt outstanding as
at the end of the Initial Term under the Third
Party Credit Arrangements and, in such
circumstances, the Operator and not OCC would be
responsible to retire and discharge all amounts
owing under the Third Party Credit Arrangements
and to cause the third party lenders to release
and discharge any and all security held by them
against the Project.
5. Operating Policies: All operating policies for the Casino
would be prepared by the Operator and approved by OCC prior to
the commencement of the Initial Term.
6. Annual Operating Budget:
(a) The Operator would, not less than 45 days and not more
than 60 days prior to start of each operating year for
the Project, submit to OCC for its approval the
proposed operating budget for the Project for the
following operating year.
(b) If OCC failed to approve any proposed operating budget
within 30 days of its submission, or to submit its
objection within such period, then OCC would be deemed
to have approved such proposed operating budget.
(c) If OCC objected to certain portions of the proposed
operating budget, the undisputed portions of the
proposed operating budget would be deemed to be
approved and, until the disputed portions were
approved, the corresponding items in the previous
year's operating budget (as adjusted by a 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 before the operating budget
for the previous operating year was submitted to OCC
for its approval) would be substituted in the proposed
operating budget in respect of the disputed portions.
7. Services of Operator: The Operator would, in compliance
with all material agreements relating to the Project and the
approved operating budget and in all material respects in
compliance with the approved operating policies perform, or cause
to be performed, the following services:
(a) use its reasonable efforts to obtain and maintain all
Governmental Consents required for the Project;
(b) use its reasonable efforts to do or cause to be done
all such things relating to the operation of the
Project which are necessary to ensure compliance with
Applicable Law;
(c) identify, select, interview, hire and train personnel
to be employed in the operation of the Project, all
such personnel to be employees of the Operator and not
OCC;
(d) 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 Project and perform such other actions in or about
the Project as it may, acting reasonably, consider
necessary or advisable to carry out the intent of the
Agreement;
(e) use its reasonable efforts to ensure that it and the
Persons retained by it or on its behalf for the
provision of goods or services for or to the Project
are registered as suppliers as required under the
Regulatory Legislation;
(f) prepare and obtain OCC's approval any significant
changes to the operating policies for the Casino;
(g) remit directly to the City as and when due all rent and
other monies payable by the tenant under the Land
Lease, unless the 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);
(h) use its reasonable efforts to negotiate and finalize
concessions, licences or other arrangements with
respect to other space and facilities in the Project;
(i) make available such operating equipment and operating
supplies as it may, acting reasonably, consider
necessary or advisable for the proper operation of the
Project; and
(j) to the extent not completed by the Casino Opening Date,
diligently pursue the completion of the pre-opening
services.
8. Limitation on Authority of Operator: Appropriate provisions
to ensure compliance with the Criminal Code (Canada).
9. Accounting and Distribution of Funds: The Operator would
perform the following accounting and financial services:
(a) Monthly Reports: The Operator would, within 20 days
after the end of each month, prepare and submit to OCC
written reports, in a format approved by OCC, for the
Project setting out:
(i) income and expense statements for the Project 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; and
(ii) an operating statement reconciling capital renewal
reserves and operating reserves taken in previous
months to capital renewals and operating expenses
incurred and paid,
together with a bank reconciliation of the Project bank
accounts (the "Project Accounts") as at the end of the
previous month to be delivered at the later of the same
time as the foregoing reports or within 10 days after
receipt of the same from the bank.
(b) Banking: The Operator would handle all banking
necessary for the due performance of the Operator's
accounting and administrative functions under the
provisions of the Agreement and for the receipt and
disbursements of all monies pertaining to the Project
required to be attended to by the Operator under the
provisions of the Agreement. The Operator assumes no
responsibility for the financial viability or strength
of the financial institution.
(c) Project Accounts: These provisions will be
substantially the same as those contained in the
Interim Casino Operating Agreement.
(d) Project Account Distributions and Reserves: The
Operator would, in accordance with the approved
operating policies and approved operating budget,
withdraw from, or reserve in the Project 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;
(iv) payments of rent and other amounts as required
under the Land Lease, as and when due;
(v) payments of rent and other amounts as required
under the Project Lease, as and when due;
(vi) payments for Operating Expenses provided such
costs are set forth in the approved operating
budget;
(vii) payments for FF&E Repairs and Capital
Renewals in accordance with the approved
operating budget;
(viii) Capital Renewal Reserves and Operating
Reserves as established in the approved
operating budget;
(ix) payments representing repayment of Mandatory
Deficiency Contributions, if any, made by the
Operator pursuant to paragraph (f) below during
prior periods, together with accrued and unpaid
interest thereon;
(x) payments representing repayment of Discretionary
Deficiency Contributions made by the Operator
pursuant to paragraph (g) below during prior
periods, together with accrued and unpaid interest
thereon;
(xi) payment of the Operator's Fee;
(xii) the balance existing at the end of each
calendar month would be wired to an account
designated by OCC concurrently with the
payment of the Operator Fee.
The Operator would not overdraw the Project Accounts.
(e) Cash Management: The Operator would 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 Project Accounts in addition to the operating
account.
(f) Operating Reserves and Mandatory Deficiency
Deferrals/Contributions (if any): These provisions
will be negotiated by the parties..
(g) Discretionary Deficiency Contributions: These
provisions will be substantially the same as those
contained in the Interim Casino Operating Agreement.
(h) Accounting/No Commingling: The Operator would
acknowledge that all monies received by the Operator
pursuant to any of the obligations provided for in the
Agreement shall be accounted for and in the manner
provided for in (c) and (d). The Operator would not
commingle in the Project Accounts funds pertaining to
the Project with funds which are unrelated to the
Project.
(i) Books of Account; Information: The Operator at all
times would maintain at or near the Casino appropriate
books of account and records with respect to all
transactions entered into in performance of the
Agreement. OCC and its authorized representatives
would have the right upon reasonable notice and at
reasonable times and intervals to obtain information
with respect to the Project and the Operator and to
cause such inspections of the books and records
maintained by the Operator pursuant to the Agreement
relating to the Project to be made as may be reasonable
in the circumstances.
(j) Method of Keeping Accounts: The Operator would
maintain the Operator's accounts with respect to
matters arising under the Agreement in such a manner as
to enable OCC to readily extract financial statements
pertaining to the Project.
(k) Furnish Information to Auditors: The Operator would,
after reasonable notice from OCC or the auditors for
the Project, make available to such 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 Project, as the case may be.
(l) Financial Statements: The Operator would 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 Project 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 operating year and statements of
earnings, retained earnings and changes in financial
position for the operating year then ended.
(m) Repayment of Deficiency Deferral/Contributions (if
any): These provisions will be substantially similar
to those contained in the Interim Casino Operating
Agreement.
(n) OCC Review of Financial Statements: These provisions
would be substantially similar to those contained in
the Interim Casino Operating Agreement.
(o) Definitions: The definitions of "Gross Revenues",
"Gross Operating Receipts", "Net Operating Profit",
"Operating Expenses", "FF&E Repairs", "Impositions",
"Capital Renewals", and "Operating Reserves" would be
the same as those contained in the Interim Casino
Operating Agreement with the exception that such
definitions would refer to the Project in lieu of the
Interim Casino Complex. "Capital Renewal Reserves"
would be defined as a percent of Gross Revenues per
operating year of 1% in year one, 2% in year two, 3% in
year three, 4% in year four and 5% (or such greater
percentage approved by OCC) thereafter.
10. Representations and Warranties of the Operator, the
Participants and OCC: The representations and warranties would
be substantially similar to those contained in the Interim Casino
Operating Agreement.
11. Covenants of OCC, the Operator and the Participants: To be
negotiated, based upon those contained in the Interim Casino
Operating Agreement.
12. Indemnities and Third Party Claims: These provisions will
be negotiated.
13. Operator's Fee: Base amount plus 2% of gross operating
receipts and 5% of net operating revenue.
14. Non-Competition/Right of First Offer: These provisions
would be similar to those contained in the Interim Casino
Operating Agreement.
15. Intellectual Property: These provisions would be similar to
those contained in the Interim Casino Operating Agreement.
16. Termination Events: These events would be similar to those
contained in the Interim Casino Operating Agreement, including
provisions with respect to cure periods.
17. Dispute Resolution/Arbitration: To be negotiated.
18. Arrangements re Windsor Raceway: To be negotiated.
19. Termination Option: These provisions will be substantially
similar to those contained in the Interim Casino Operating
Agreement with the following to be included as an additional
default of the Operator:
The Project failing to achieve 85% of the forecasted Gross
Revenues set forth in the annual operating budget for three
operating years in any five year operating period.
20. Turnover of Operations: On termination.
21. General and Other: To be discussed.
22. Disclosure: As per Heads of Agreement.
23. Amendments: OCC agrees to act reasonably in making such
modifications to the Operating Agreement as is necessary to
facilitate financing of project costs.
24. Employee Severance Arrangements: As per the Interim Casino
Operating Agreement.
25. Time of the Essence and Force Majeure: As per the Interim
Casino Operating Agreement.
26. Insurance Provisions: Similar to the Interim Casino
Operating Agreement.
