Consulting Agreement - Circus Circus Casinos Inc. and Lakeview Co.
CONSULTING AGREEMENT
between
CIRCUS CIRCUS CASINOS, INC.
and
LAKEVIEW COMPANY
ARTICLE I - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Annual Consulting Fee. . . . . . . . . . . . . . . . . . . . . .1
1.3 Lakeview.. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Circus . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.7 Effective Rate . . . . . . . . . . . . . . . . . . . . . . . . .2
1.8 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.9 General Manager. . . . . . . . . . . . . . . . . . . . . . . . .2
1.10 Impositions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.11 Insurance Requirements . . . . . . . . . . . . . . . . . . . . .2
1.12 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . .2
1.13 Operating Accounts . . . . . . . . . . . . . . . . . . . . . . .3
1.14 Operating Year . . . . . . . . . . . . . . . . . . . . . . . . .3
1.15 Out-of-Pocket Costs. . . . . . . . . . . . . . . . . . . . . . .3
1.16 Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.17 Resort Standard. . . . . . . . . . . . . . . . . . . . . . . . .3
1.18 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.19 Terminating Event. . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II - Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Initial Operating Term . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III - Operation of the Resort. . . . . . . . . . . . . . . . . . .4
3.1 Use and Standard of Operation. . . . . . . . . . . . . . . . . .4
3.2 Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.3 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . .5
3.4 Working Capital and Inventories. . . . . . . . . . . . . . . . .5
3.5 Lakeview to Bear All Operating Expenses. . . . . . . . . . . . .5
3.6 License, Permits and Other Documents . . . . . . . . . . . . . .6
ARTICLE IV - Repairs and Alterations . . . . . . . . . . . . . . . . . . .6
4.1 Repairs and Maintenance. . . . . . . . . . . . . . . . . . . . .6
4.2 Emergency Repairs. . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE V - Consulting Fee . . . . . . . . . . . . . . . . . . . . . . . .7
5.1 Annual Consulting Fee. . . . . . . . . . . . . . . . . . . . . .7
5.2 Time and Manner of Payment . . . . . . . . . . . . . . . . . . .7
ARTICLE VI - Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.1 Insurance to Be Maintained During Term . . . . . . . . . . . . .7
6.2 Endorsements . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.3 Parties Insured. . . . . . . . . . . . . . . . . . . . . . . . .8
6.4 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . .9
6.5 Blanket Insurance. . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE VII - Termination. . . . . . . . . . . . . . . . . . . . . . . . .9
7.1 Termination Based Upon Events of Default . . . . . . . . . . . .9
7.2 Certain Rights on Termination. . . . . . . . . . . . . . . . . 10
ARTICLE VIII - Right to Perform Covenants of Defaulting Party. . . . . . 11
ARTICLE IX - Destruction . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1 Substantial Damages. . . . . . . . . . . . . . . . . . . . . . 11
9.2 Partial Damage . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE X - Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.1 Assignment by Circus. . . . . . . . . . . . . . . . . . . 12
ARTICLE XI - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 13
11.1 Approvals . . . . . . . . . . . . . . . . . . . . . . . . 13
11.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 13
11.3 Successors and Assigns. . . . . . . . . . . . . . . . . . 13
11.4 Circus Right to Close Resort . . . . . . . . . . . . . . 13
11.5 Indemnification . . . . . . . . . . . . . . . . . . . . . 13
11.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.7 Amendments. . . . . . . . . . . . . . . . . . . . . . . . 14
11.8 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 14
11.9 Applicable Law. . . . . . . . . . . . . . . . . . . . . . 14
11.10 Extensions for Force Majeure. . . . . . . . . . . . . . . 15
11.11 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . 15
11.13 Relationship. . . . . . . . . . . . . . . . . . . . . . . 15
11.14 Attorneys Fees . . . . . . . . . . . . . . . . . . . . . 15
11.15 Construction and Interpretation . . . . . . . . . . . . . 15
11.16 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 16
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ( Agreement ) is entered into as of
June 1, 1995 (the Effective Date ) between CIRCUS CIRCUS CASINOS,
INC., a Nevada corporation ( Circus ) and LAKEVIEW COMPANY, a
Nevada general partnership ( Lakeview ).
R E C I T A L S:
This Agreement is entered into upon the basis of the following
facts, understandings and intentions of the parties:
A. Capitalized terms used in these Recitals shall have the
meaning ascribed to them elsewhere in this Agreement.
B. Lakeview desires to secure and retain, and Circus is
prepared to provide to Lakeview, consulting services in the
management of the Resort for the account of Lakeview, all upon the
terms and conditions of this Agreement.
C. Lakeview and Circus desire to enter into this Agreement
and to set out their understandings with respect to the management
of the Resort.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and promises herein contained and the receipt of other
valuable consideration which is acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions
This Agreement uses the following defined terms:
1.1 Affiliate. With respect to a specified person or entity,
any person or entity who directly or indirectly controls, is
controlled by, or is under common control with the specified person
or entity; provided, however, that for the purposes of this
Agreement, Lakeview shall not be deemed an Affiliate of Circus.
1.2 Annual Consulting Fee. As defined in Section 6.1.
1.3 Lakeview. As defined in the Preamble.
1.4 Circus. As defined in the Preamble.
1.5 Commission. The Nevada Gaming Commission and any other
governmental authorities with the responsibility of regulating and
licensing gaming activities in the State of Nevada.
1.6 Compensation. With respect to a specified person, such
person s salary (including payroll taxes) or other compensation,
including annual bonuses and fringe benefits payable to or with
respect to the employees of Circus or its Affiliates, prorated
where applicable to take into account the portion of such
employees time devoted or allocated to providing such services;
provided, however, that the term compensation shall not include
salaries or fringe benefits paid or payable to the executive
officers of Circus or its Affiliates.
1.7 Effective Rate. A rate of interest per annum of two
percent (2%) above the prime rate of Bank of America, N.T. & S.A.
on the date the determination is made, for its most creditworthy
commercial customers not to exceed, however, the highest rate of
interest then allowable under the usury laws of the State of
Nevada, as modified by any federal preemption, such rate of
interest to be determined as of the last business day of each month
included in any period for which interest is charged hereunder,
such adjustment to take effect on the first day of the succeeding
month.
1.8 Force Majeure. Strikes, lockouts, labor disputes, acts of
God, fire, flood, earthquake or other casualty, pestilence, war,
civil strike, riot, embargo, inability to procure or general
shortages of labor or materials in the open market, governmental
restrictions, emergency acts, or any other circumstances or cause
beyond the reasonable control of Lakeview or Circus, whichever
shall be applicable.
1.9 General Manager. The person employed or assigned to
manage the Resort.
1.10 Impositions. All taxes, assessments, water, sewer or
other rents, rates and charges, levies, license fees, permit fees,
inspection fees, and any other charges assessed or imposed on or
with respect to the Resort or the operations conducted at the
Resort.
1.11 Insurance Requirements. All terms of each insurance
policy and all orders, rules, regulations and other requirements of
the National Board of Fire Underwriters applicable to the Resort
(including any portion or department thereof) or the construction,
furnishing, equipping or operation thereof; but excluding
recommendations of the insurance carriers.
1.12 Legal Requirements. All laws, statutes, ordinances,
orders, rules, regulations, permits, licenses, authorizations,
directions and requirements of all government and governmental
authorities (including, without limitation, the Commission and all
appropriate alcoholic beverage control authorities) and public
utilities which now or hereafter may be applicable to the Resort
(including any portion or department thereof) or the construction,
furnishing, equipping or operation thereof or to Circus in its
performance of the Agreement.
1.13 Operating Accounts. As defined in Section 3.3.
1.14 Operating Year. Each fiscal year of Lakeview (January 1 -
December 31) included in the Term, except that the first Operating
Year shall commence as of the date hereof and shall end on December
31, 1995 , and the last Operating Year shall end on the last day of
the Term, unless sooner terminated pursuant to the provisions of
this Agreement.
1.15 Out-of-Pocket Costs. All reasonable out-of-pocket
expenses incurred by Circus or its Affiliates in connection with
any services rendered by Circus or its Affiliates, and reasonable
out-of-pocket costs incurred by employees of Circus or its
Affiliates in connection with any services rendered hereunder by
Circus or its Affiliates; provided, however, that the term Out-of-
Pocket shall not include the Compensation of executive officers of
Circus or its Affiliates.
1.16 Resort. The property commonly known as The Gold Strike
Inn and Casino near Boulder City, in the unincorporated area of
Clark County, Nevada.
1.17 Resort Standard. The operations of the Resort and the
repair and maintenance of the facilities constituting the Resort
shall be maintained in accordance with the following standard,
which is referred to herein as the Resort Standard : (i) with
respect to the maintenance and repair of the physical plant, the
standard shall be the level of condition, quality, and finish that
exists as of the date of this Agreement (subject only to Force
Majeure); and (ii) with respect to the operations of each element
of the Resort, consistent with the historic operation of the
Resort, and with the same diligence, quality and care, as Circus
currently operates its existing casino and hotel operations in
Nevada (without depletion of adequate levels of supplies,
inventory, and consumables to continue operations at the required
level) and without depleting supplies, inventories or consumables.
1.18 Term. As defined in Section 2.1.
1.19 Terminating Event. The date on which all of the
shareholders, executive officers and directors of the corporations
which are partners of Lakeview cease to be members of the Board of
Directors or executive officers of Circus Circus Enterprises, Inc.
or an Affiliate.
ARTICLE II
Term
2.1 Initial Operating Term. This Agreement shall commence on
June 1, 1995 and shall continue until a Terminating Event, or the
termination of this Agreement pursuant to any other provision
hereof.
ARTICLE III
Operation of the Resort
3.1 Use and Standard of Operation.
3.1.1 Circus shall provide executive level management
and direction to Lakeview, performing all of the functions and
providing all of the direction that would otherwise be provided at
a Circus property by management personnel above the levels of
General Manager and Controller. Lakeview shall use the Resort
solely for the operation of a casino and hotel business.
3.1.2 The Resort shall be operated as an independent
resort using the name Gold Strike Inn & Casino in such a manner
and organization that Lakeview, through its employees, is fully
staffed, trained and equipped to conduct all of the operations
necessary to operate the Resort to the Resort Standard, subject to
the executive level management services provided by Circus. Circus
shall use reasonable efforts to maintain this level of independent
operation of Lakeview such that at the end of the Term, Lakeview
shall be fully staffed, trained and equipped to continue the
operations of the Resort pursuant to the Resort Standard, needing
only alternative executive management to oversee and direct the
activities of the General Manager and the other employees of
Lakeview.
3.1.3 Notwithstanding anything in this Section 3.1 or
elsewhere in this Agreement to the contrary, Circus shall be
excused from its obligation to operate the Resort in conformity
with the Resort Standard: (i) to the extent and whenever Circus
shall be prevented from compliance with such standard by Force
Majeure; (ii) to the extent of any material breach by Lakeview of
any provision hereof which prevents compliance by Circus of any
provision hereof which prevents compliance with such standard;
(iii) to the extent and whenever there are insufficient funds of
Lakeview available for Circus to expend with respect to the Resort;
(iv) to the extent inconsistent with the direction of any director
or senior officer of Circus Circus Enterprises, Inc. or its
Affiliates, who holds a position with Lakeview or is a shareholder,
director or officer of a corporate partner of Lakeview, and (v) to
the extent required to comply with legal requirements.
3.2 Personnel.
3.2.1 Circus may, with the consent of Lakeview,
assign one or more of the employees of Circus or one of its
Affiliates to the Resort on a temporary basis. Lakeview shall
reimburse Circus for the Compensation and Out-of-Pocket Expenses of
such employees, which shall be reasonable for the services rendered
or to be rendered; provided, however, that Lakeview shall not be
liable to reimburse Circus for any Compensation given to the
executive officers of Circus or its Affiliates, whether or not they
render services to Lakeview, it being the agreement that the Annual
Consulting Fee is intended to provide compensation to Circus or its
Affiliates for the services rendered by its executive officers
pursuant to this Agreement.
3.2.2 Circus shall, as directed by Lakeview,
negotiate and make agreements with labor unions, if any employees
are union members.
3.3 Bank Accounts. Lakeview shall deposit all moneys advanced
by Lakeview as working capital in a bank or banks selected by
Lakeview, and in accounts bearing the name of Lakeview ( Operating
Accounts ). Lakeview shall deposit all moneys received from the
operations of the Resort in the Operating Accounts. The General
Manager and the shareholders of the corporate partners of Lakeview
shall have signing authority over the Operating Accounts. Funds in
the Operating Accounts shall be used to pay all costs and expenses
incurred in connection with the operation of the Resort including
all amounts required to perform Circus obligations hereunder and
all payments due to Circus for services performed under this Agreement.
3.4 Working Capital and Inventories. Lakeview shall be solely
responsible for providing sufficient funds, inventories and
supplies for the operation of the Resort. At all times, sufficient
funds shall be on hand in the Operating Accounts to assure the
timely payment of all costs and expenses incurred in connection
with opening, operation, maintenance and repair of the Resort
(including all fees, charges and reimbursements payable to Circus
and its Affiliates and their employees hereunder). Such working
capital shall include, without limitation, amounts sufficient to
satisfy applicable law and amounts sufficient for maintenance of
change and petty cash funds and operating bank accounts, payrolls,
prepaid expenses and funds required to maintain inventory,
operating supplies and operating equipment.
3.5 Lakeview to Bear All Operating Expenses. In performing
its duties hereunder during the Term, Circus shall act solely for
the account of and as agent of Lakeview. Subject to the terms and
conditions of this Agreement, all expenses incurred by Circus, its
Affiliates or their employees pursuant to this Agreement shall be
borne exclusively by Lakeview. Circus, its Affiliates or their
employees shall be reimbursed for all Compensation (except
Compensation of Circus executive officers) and Out-of-Pocket
Expenses reasonably incurred in rendering services to the Resort.
Circus, its Affiliates and their employees shall in no event be
required under this Agreement to advance any of its funds for the
operation of the Resort, nor shall Circus, any of its Affiliates or
their employees be required to incur any liability in connection
therewith unless Lakeview shall have furnished Circus with funds
necessary for the discharge thereof. Circus shall have the right,
but not the obligation: (i) to advance funds in payment of any
expenses of the Resort, capital expenditures or any other
expenditures which Lakeview is obligated to make pursuant to this
Agreement or (ii) to take any action on behalf of Lakeview which
Lakeview is obligated to take under this Agreement. If Circus pays
any amount out of its own funds or takes any such action under the
foregoing sentence, Lakeview shall repay Circus on demand all
amounts so expended, with interest thereon at the Effective Rate
from the date of expenditure by Circus to the date of repayment by
Lakeview. The obligation of Lakeview under this Section 3.5 shall
not be affected by any termination of this Agreement.
3.6 License, Permits and Other Documents. During the Term,
Lakeview shall make, execute and deliver any and all applications
and other documents and shall otherwise cooperate to the fullest
extent with Circus in applying for, obtaining and maintaining all
required approvals, licenses and permits applicable to (or in any
manner relating to) the Resort, the ownership and operation
thereof, or the operation conducted at the Resort. Lakeview shall
have the obligation during the Term to obtain and maintain all such
approvals, licenses and permits, and nothing contained herein shall
be construed to limit or diminish such obligation of Lakeview.
Lakeview shall also make, execute and deliver such agreements,
contracts, leases, applications, verifications, instruments and
other documents desirable or required in connection with the
operation of the Resort. Lakeview shall cooperate fully with
Circus, in connection with Circus exercise of the rights and
performance of the obligations set forth in this Article III.
ARTICLE IV
Repairs and Alterations
4.1 Repairs and Maintenance. Lakeview shall care for the
Resort in the same good order and condition and make all repairs
necessary in order to comply with the Resort Standard and keep the
Resort in the condition existing as of the commencement date of
this Agreement. Lakeview shall make all alterations required for
the proper maintenance and operation of the Resort in accordance
with the Resort Standard.
4.2 Emergency Repairs. Notwithstanding any provision in this
Agreement to the contrary, if Circus shall, at any time, reasonably
believe that (i) a dangerous condition exists at the Resort; (ii)
repairs or alterations are required to comply with any applicable
Legal Requirements or Insurance Requirements; or (iii) expenditures
are required to eliminate a dangerous condition or to prevent
further property damage arising out of fire, act of God, flood,
earthquake or other casualty or other emergency, Circus may, but
shall not be obligated to, cause and direct the employees of
Lakeview to take all steps and make, at the expense of Lakeview,
without Lakeview s prior approval if such approval cannot be timely
obtained with reasonable effort, all reasonable expenditures
necessary to cure such condition or make such repairs or
alterations, or which are otherwise so required. Lakeview shall
immediately, and in no case later than fourteen (14) days after
notice from Circus, provide Circus with all funds required in
connection with Circus performance of emergency repairs pursuant
to this Section 4.2. Circus shall notify Lakeview as soon as
reasonably practicable of any such emergency condition or situation
but shall not incur any liability to Lakeview on account of its
failure to provide such notification.
ARTICLE V
Consulting Fee
5.1 Annual Consulting Fee. For each Operating Year Circus
shall be paid One Hundred Twenty Thousand and No/100 Dollars
($120,000.00) for its consulting services hereunder (the Annual
Consulting Fee ). If any Operating Year is less than twelve (12)
calendar months or if an Annual Consulting Fee is paid with respect
to a portion of an Operating Year, the Annual Consulting Fee shall
be prorated to reflect the number of days actually contained in
such Operating Year for which payment is being made. Circus retains
the right to renegotiate the Annual Consulting Fee to the extent
that the executive level management services to be provided by
Circus or the salaries of those employees of Circus providing such
services exceed the levels currently contemplated by Circus and
Lakeview. In the event Circus shall recommend an increase in the
amount of the Annual Consulting Fee, it shall be entitled to
terminate this Agreement in accordance with Section 7.1.3 if
Lakeview shall not consent to the increase within five (5) days
following receipt of such recommendation.
5.2 Time and Manner of Payment.
5.2.1 The Annual Management Fee shall be earned on a
monthly basis during the Term and shall be due and payable on the
last day of each month.
ARTICLE VI
Insurance
6.1 Insurance to Be Maintained During Term. Lakeview shall
procure and maintain, at no cost to Circus, for the account of
Circus and Lakeview, the insurance described below with respect to
the Resort with responsible, financially sound and properly
licensed companies.
6.1.1 Commercial general liability insurance
(including property damage, personal injury, liquor law liability,
innkeeper s legal liability, advertising liability; automobile
liability with respect to owned and non-owned vehicles; and garage
liability and garage keeper s legal liability), with limits equal
to customary limits on similar properties, but not less than
$10,000,000 (or such greater amount reasonably requested in writing
by Circus), combined single limit coverage for personal injury or
death and for damage to property resulting from any occurrence.
Such policies shall be specifically endorsed to provide that the
insurance will be deemed primary.
6.1.2 All risk insurance against fire and other
risks included in the broad form extended coverage endorsement
(including earthquake and flood coverage if available on
commercially reasonable terms), insuring all real and personal
property, in an amount not less than the full replacement cost
value of the improvements to the Resort, such insurance to be
written on a stipulated or agreed amount basis.
6.1.3 Insurance on the Resort against loss or damage
from an accident to and/or caused by boilers, heating apparatus,
sprinklers, pressure vessels, pressure pipes, electrical or air
conditioning equipment, in such reasonable amount as Lakeview shall
deem advisable, or such greater amount as reasonably requested in
writing by Circus.
6.1.4 Business interruption insurance against the
perils enumerated in Sections 6.1.2 and 6.1.3, in amounts
reasonably determined by Lakeview, to the extent such business
interruption insurance is available on commercially reasonable
terms.
6.1.5 Workers compensation, employer s liability and
similar insurance as may be required by law or as Lakeview shall
deem advisable, or such greater amount as reasonably requested in
writing by Circus.
6.1.6 Additional insurance required by Lakeview or
any permitted mortgagee of the Resort.
All such policies of insurance described above shall be
in the form of occurrence insurance to the extent available on
commercially reasonable terms. Lakeview shall provide Circus, upon
written request, with duplicates of all insurance policies, as well
as certificates of insurance for each policy maintained hereunder.
6.2 Endorsements. Each policy of insurance provided for in
this Article VII shall have attached thereto: (i) an endorsement
that such policy shall not be canceled or materially changed
without at least thirty (30) days prior written notice to Lakeview
and Circus; and (ii) an endorsement to the effect that no action or
omission of a party hereto shall affect the obligation of the
insurer to pay the full amount of any loss sustained to the other
party hereto and any other parties insured under such policy. The
public liability policies shall have such endorsements as are
required by Lakeview or Circus.
6.3 Parties Insured. All policies of insurance obtained under
this Article VI, to the extent so obtainable, shall be carried
under the names of Lakeview and Circus, and losses thereunder shall
be payable to the parties as their respective interests may appear.
All liability insurance shall name Lakeview, Circus and their
respective directors, officers, partners, agents, and employees as
insureds. Any policy of business interruption insurance shall name
Lakeview and Circus as insureds. The public liability insurance
shall provide for severability of interest, provide that an act or
omission of one of the insureds or additional named insureds which
would void or otherwise reduce coverage shall not reduce or void
the coverage as to the insured or other additional insureds, and
afford coverage for all claims based on acts, omissions, injury and
damage which occurred or arose (or the onset of which occurred or
arose) in whole or in part during the policy period.
6.4 Waiver of Subrogation. Neither Circus nor Lakeview shall
assert against the other, and each does hereby waive with respect
to the other to the extent it is legally possible to do so, any
claims for any losses, damages, liabilities and expenses (including
attorneys fees and disbursements) incurred or sustained by it on
account of damage or injury to persons or property arising out of
the ownership, operation or maintenance of the Resort, to the
extent that the same are covered by the proceeds received as a
result of insurance required under this Article VII or actually
carried by the parties, so long as such waiver does not adversely
affect such insurance coverage. Lakeview and Circus shall each
cause all policies to contain a waiver of subrogation clause to the
extent the same is available at commercially reasonably cost. The
provisions of this Section 6.4 are intended to restrict each party
(as permitted by law) to recovery against insurance carriers to the
extent of such coverage and waive fully, and for the benefit of
each, any rights and/or claims which might give rise to a right of
subrogation in any insurance carrier.
6.5 Blanket Insurance. Any insurance coverage provided by
Lakeview as required under this Article VII may be effected under
policies of blanket insurance which may cover other properties
owned and managed by Lakeview or its Affiliates, and where
applicable an allocable portion of the premiums therefor shall be
charged to the operation of the Resort. Any policies or insurance
maintained by Lakeview pursuant to the provisions of this Article
VII may contain such deductible provisions and such other
provisions as are customary.
ARTICLE VII
Termination
7.1 Termination Based Upon Events of Default.
7.1.1 Events of Default on the Part of Either Party.
The following shall constitute events of default hereunder on the
part of defaulting party (as defined):
7.1.1.1 The failure of either party (the
defaulting party ) to pay to the other party (the non-defaulting
party ) any sum which may become due hereunder within fifteen (15)
days after receipt by the defaulting party of a notice from the
non-defaulting party specifying such failure.
7.1.1.2 The failure by either party (the
defaulting party ) to perform, keep or fulfill any of the material
terms set forth in this Agreement (other than those referred to in
Section 7.1.1.1), and the continuance of such failure for a period
of thirty (30) days after receipt by the defaulting party of notice
thereof from the other party hereto (the non-defaulting party )
specifying such failure, provided that if such failure is of a
nature that it cannot, with due diligence and in good faith, be
cured within thirty (30) days, it shall not constitute an event of
default unless such defaulting party fails to proceed promptly and
with due diligence and in good faith to cure the same, and
thereafter to prosecute the curing of such failure with due
diligence and in good faith (it being intended that, in connection
with a failure not susceptible of being cured with diligence and in
good faith within thirty (30) days, the time of such defaulting
party within which to cure the same shall be extended for such
period as may be necessary for the curing thereof with due
diligence and in good faith).
7.1.1.3 Any of the following actions taken by
either party (the defaulting party ): (i) apply for or consent to
the appointment of a receiver, trustee or liquidator of such party
or of all or a substantial part of its assets; (ii) file a
voluntary petition in bankruptcy or admit in writing its inability
to pay its debts as they come due; (iii) make a general assignment
for the benefit of creditors; (iv) file a petition or an answer
seeking reorganization or agreement with creditor or take advantage
of any insolvency law, or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (v) if an order,
judgment or decree shall be entered by any court of competent
jurisdiction, on the application of a creditor, adjudicating such
party a bankrupt or insolvent or appointing a receiver, trustee or
liquidator of such party or of all or a substantial part of its
assets, and such order, judgment or decree shall continue unstayed
and in effect for a period of ninety (90) consecutive days.
7.1.2 Consequences of Event of Default. If an event
of default shall occur, the non-defaulting party may, at its
option, give to the defaulting party notice of intention to
terminate the Agreement after the expiration of a period of thirty
(30) days from the date of such notice, and, upon the expiration of
such period and even if the default has been cured, the Term shall
expire on the date specified in the notice. Such termination shall
be without prejudice to any right to damages which the non-
defaulting party may have against the defaulting party under
applicable law, subject to the terms of this Agreement.
7.1.3 Circus Right to Terminate. Circus shall have
the right to terminate on fifteen (15) days notice in the event
Lakeview fails to agree to an increase in the amount of the Annual
Consulting Fee within five (5) days following Circus
recommendation of such amount.
7.2 Certain Rights on Termination. In addition to, and
without limiting, the rights of a party pursuant to the provisions
of this Article VII or other provisions of this Agreement, upon the
termination of this Agreement for any reason under this or any
other Article (including expiration of the Term), the following
shall be applicable:
7.2.1 All accrued unpaid fees, charges,
reimbursements, loans and other payments due Circus as of the date
of termination (including any Annual Management Fee prorated
through the date of termination) shall be paid by Lakeview to
Circus within ten (10) days after the rendition to Lakeview by
Circus of statements therefor.
7.2.2 Lakeview shall indemnify, defend, protect and
hold Circus harmless from all damages and liabilities owed to third
parties, to the extent arising out of, in connection with, or
resulting from the ownership, operation or use of the Resort after
the date of termination, including, without limitation, (i) the
failure of Lakeview following the expiration or earlier termination
(for whatever cause) of this Agreement to provide all of the
services contracted for in connection with the business booked for
the Resort on or prior to the date of such expiration or
termination, and (ii) any liability to employees or creditors of
the Resort, including but not limited to any unfunded pension or
retirement benefits required by law or contract. The provisions of
this Section shall survive any such termination or expiration and
shall be binding upon Lakeview and Circus, their successors and
assigns.
ARTICLE VIII
Right to Perform
Covenants of Defaulting Party
8.1 Right to Perform. If Lakeview or Circus shall fail to
make any payment or to perform any act to be made or performed by
it when required pursuant to this Agreement, then the non-
defaulting party may, upon written notice to the defaulting party,
and without waiving or releasing the defaulting party from any
obligations under this Agreement, make such payment or perform such
act. All sums so paid by the non-defaulting party and all
necessary incidental costs and expenses incurred by the non-
defaulting party in connection with the performance of any such
act, together with interest thereon at the Effective Rate from the
date of making such expenditure or expenditures by the non-
defaulting party, shall be payable hereunder to the non-defaulting
party upon demand. Any amounts payable hereunder to the non-
defaulting party may, at the option of the non-defaulting party, be
withdrawn from the Operating Accounts. The rights provided in this
Section are in addition to the rights provided in Article VII hereof.
ARTICLE IX
Destruction
9.1 Substantial Damages. If the Resort shall be substantially
damaged by fire or other casualty to the extent that the Resort
must be closed, either party may, at any time during the period of
closing give notice to the other party terminating this Agreement
effective upon receipt by the other party of such notice or,
alternatively, suspending Circus obligations hereunder, and
Lakeview s obligations to pay the Annual Consulting Fee (but not
its other obligations during the period of closure). A notice of
termination pursuant to this Section 9.1 shall be effective
notwithstanding the giving of a prior notice of suspension pursuant
hereto. Any insurance proceeds of Lakeview paid under any business
interruption or similar insurance policy for loss of income,
revenues or profits excluding proceeds for the cost of repairing
and rebuilding of the Resort to substantially the same condition
and character which existed immediately prior to the occurrence of
such casualty, shall be paid to Lakeview. If Circus or Lakeview
elects to terminate this Agreement as provided in this Section 9.1,
the provisions of Section 7.2 shall be applicable and, in addition,
Lakeview shall make the payments to Circus set forth above and all
remaining proceeds shall be paid to Lakeview.
9.2 Partial Damage. In the event of any damage to the Resort
by fire or other casualty and the failure of either party to
suspend this Agreement pursuant to Section 9.1 hereof, then this
Agreement shall remain in full force and effect.
ARTICLE X
Assignment
10.1 Assignment by Circus.
10.1.1 Circus may transfer this Agreement and its
rights and obligations hereunder to any of the following: (i)
Circus Circus Enterprises, Inc. ( CCEI ); (ii) any wholly-owned
subsidiary of CCEI; (iii) any successor or assignee of CCEI which
may result from any merger, consolidation, purchase of CCEI stock,
recapitalization or reorganization; (iv) any assignee which shall
acquire all, or substantially all, of the business and assets of
CCEI and shall assume its obligations with reference thereto,
including those hereunder, and in either case shall retain or
replace those employees of Circus required to continue to operate
the Resort pursuant to the Resort Standard, or (v) any assignee
approved by Lakeview. Upon any assignment pursuant hereto and the
assumption by the assignee of Circus obligation hereunder, Circus
liability hereunder shall thereupon terminate, except as to the
obligations, if any, accrued prior to the effective date of such
assignment and assumption.
10.1.2 Circus may also transfer this Agreement,
without the consent of Lakeview, to any other Affiliate of Circus,
but in the event of such assignment, Circus shall continue to be
liable hereunder to the same extent as though such transfer had not
been made.
10.1.3 Except as provided above, Circus may not
transfer its rights and obligations hereunder without the approval
of Lakeview, which shall not be unreasonably withheld.
ARTICLE XI
Miscellaneous
11.1 Approvals. Whenever either party hereto is requested or
required hereunder to give its consent or approval to a matter,
such consent or approval shall not be unreasonably withheld or
delayed except where specifically provided that such party may
withhold its consent in its sole discretion.
11.2 No Waiver. No failure by Circus or Lakeview to insist
upon strict performance of any covenant, agreement, term or
condition of this Agreement, or to exercise any right or remedy
consequent upon a breach thereof, shall constitute a waiver of any
such breach or any subsequent breach of such covenant, agreement,
term or condition of this Agreement, and no breach thereof shall be
waived, altered or modified except by written instrument. No
waiver of any breach shall affect or alter this Agreement, but each
and every covenant, agreement, term or condition of this Agreement
shall continue in full force and effect with respect to any other
existing or subsequent breach thereof.
11.3 Successors and Assigns. Subject to the provisions of
Article X hereof, this Agreement shall be binding upon the heirs,
personal representatives, successors and assigns of the parties
hereto.
11.4 Circus Right to Close Resort. If at any time during the
term hereof it becomes necessary in Circus reasonable opinion to
cease operation of the Resort in order to protect the Resort and/or
the health, safety and welfare of the guests and/or employees of
the Resort in an emergency situation caused by a Force Majeure,
then in such event Circus shall promptly notify Lakeview and may
close and cease operation of all or part of the Resort, reopening
and commencing operation when Circus and Lakeview deem that such
may be done without jeopardy to the Resort, its guests and employees.
11.5 Indemnification.
121.5.1 Lakeview shall indemnify, defend, protect and
hold Circus harmless from and against any and all claims, demands,
causes of action or liabilities owed to third parties, including
attorneys fees and all other costs and expenses incident thereto
( claims ), to the extent arising out of any action taken or
omitted to be taken pursuant to this Agreement by Circus or
Lakeview, their respective officers, shareholders, employees, or
its agents or representatives employed pursuant to the terms of
this Agreement, except actions constituting a willful material
breach of Circus obligations hereunder or defaults arising out of
the fraud, willful misconduct, gross negligence of Circus or its
officers or employees or taken or omitted to be taken in bad faith,
with respect to which actions or defaults Lakeview shall have no
liability.
11.5.2 Circus shall indemnify, defend, protect and
hold Lakeview harmless from all costs, expenses, claims, damages
and liabilities, including, without limitation, counsel fees and
disbursements, arising out of, in connection with, or resulting
from Circus fraud, gross negligence, willful misconduct or willful
material breach of an express provision of this Agreement.
11.6 Notices. All notices, demands, requests, consents or
approvals required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall
be personally served and mailed, registered or certified, return
receipt requested, postage prepaid (or by a substantially similar
method), or delivered by a reputable overnight courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or such other address
as such party shall have specified most recently by written notice.
Notice shall be deemed given or delivered on the date of service or
transmission if personally served or served by overnight courier
service or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given or
delivered on the third business day following the date mailed or on
the next business day following the delivery of such notice to a
reputable overnight courier service.
To Lakeview:
Goldstrike Development Company, Inc.
c/o David R. Belding
Highway 93
Boulder City, Nevada 89005
To Circus:
Circus Circus Casinos, Inc.
2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attn.: General Counsel
11.7 Amendments. Neither this Agreement, nor any provision
hereof, may be modified, altered or changed except by another
written instrument executed by the parties hereto.
11.8 Entire Agreement. This Agreement, along with all other
agreements being executed concurrently herewith, contains the
entire agreement of the parties hereto concerning the direction,
supervision, management and operation of the Resort, and this
Agreement supersedes all other agreements and understandings
(whether oral or written) heretofore made by the parties.
11.9 Applicable Law. This Agreement shall be governed in all
respects by the laws of the State of Nevada.
11.10 Extensions for Force Majeure. If either party is
delayed in the performance of any covenant of this Agreement
because of Force Majeure (financial inability, imprudent management
or negligence excepted), then such performance shall be excused for
the period of the delay and the period for such performance shall
be extended for a period equivalent to the period of such delay,
except that the foregoing or any Force Majeure shall in no way
affect or apply to any party s obligation to provide funds as
required herein. Nothing herein contained shall excuse a party
from exercising all due diligence and taking all necessary actions
possible under the circumstances to terminate any delaying cause
herein specified at the earliest feasible time.
11.11 Time. Time is of the essence of this Agreement and
every portion hereof.
11.12 Confidentiality. During the term of this Agreement,
Circus or Lakeview may have access to or become acquainted with
various trade secrets and confidential information of the other,
including recipes, management guidelines and procedures, operating
manuals and similar compilations and documents regularly used in
the operation of the business of the other. Neither party shall
disclose to any third person any of the other party s, or use the
other party s trade secrets or confidential information, directly
or indirectly, during or subsequent to the term of this Agreement.
Except in the case of Circus and its Affiliates in the due
performance of its obligations hereunder, each party further agrees
not to photocopy or otherwise duplicate any such material without
the prior written consent of the other party. All recipes, files,
records, documents, compilations, manuals and similar items
(including all copies or facsimiles thereof) shall remain the
exclusive property of the originating party.
11.13 Relationship. Nothing in this Agreement shall
constitute or be construed to be a partnership or joint venture
between Lakeview and Circus. To the extent appropriate to the
duties and obligations hereunder, Circus shall be an agent and none
of its independent employees shall be employees of Lakeview. This
Agreement is for the benefit of Lakeview and Circus and shall not
create third party beneficiary rights.
11.14 Attorneys Fees. If any action or proceeding is
commenced to obtain a declaration of rights hereunder or to enforce
any provision hereof, to seek rescission of this Agreement for
default or any other relief in connection with the transaction
contemplated herein, whether legal or equitable (including, without
limitation, any cross-complaint, counterclaim or third party
claim), the prevailing party in such action shall be entitled to
recover its cost and expense of suit, including but not limited to
reasonable attorneys fees and accountant s fees in addition to all
other relief to which it may be entitled therein whether or not
such action is prosecuted to judgment.
11.15 Construction and Interpretation. This Agreement
shall not be construed for or against either party by reason of the
authorship or alleged authorship of any provision hereof or by
reason of the status of the respective parties. This Agreement
shall be construed reasonably to carry out its intent without
presumption against or in favor of either party. The natural
persons executing this Agreement on behalf of each party have the
full right, power and authority to do and affirm the foregoing
warranty on behalf of each party and on their own behalf. If any
provision hereof shall be declared invalid by any court or in any
administrative proceeding, then the provisions of this Agreement
shall be construed in such manner so as to preserve the validity
hereof and the substance of the transaction herein contemplated to
the extent possible. The captions on sections are provided for
purposes of convenience and are not intended to limit, define the
scope of or aid in interpretation of any of the provisions hereof.
References to a party or parties shall refer to Lakeview and
Circus, or both, as the context may require. All pronouns and
singular or plural references as used herein shall be deemed to
have interchangeably (where the sense of the sentence requires) a
masculine, feminine or neuter, and/or singular or plural meaning,
as the case may be.
11.16 Counterparts. This Agreement may be executed in
counterparts, which counterparts shall together constitute one
Agreement.
IN WITNESS WHEREOF, the parties have hereunto executed and
delivered this Agreement as of the date first hereinabove set
forth.
Circus Lakeview
CIRCUS CIRCUS CASINOS, INC. LAKEVIEW COMPANY
By: Goldstrike Development
Company, Inc.
Its: General Partner
By:___________________________
Its:___________________________ By:
__________________________
David R. Belding, President