Interim Casino Operating Agreement - Ontario Casino Corp., Windsor Casino Ltd., Caesars World Inc., Circus Circus Enterprises Inc. and Hilton Hotels Corp.
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