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EXHIBIT 10.2
10.2 Management Contract with Casino Padre Investment Company, LLC
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1. Term of This Agreement..........................................................2
2. Services Provided by the Management Company.....................................2
3. The Management Company's Duties - Operational Term/Operational Phase............4
4. The Management Company's Compensation..........................................10
5. Owner's Duties.................................................................11
6. Insurance......................................................................12
7. Indemnification................................................................13
8. Conflicts of Interest..........................................................13
9. Casualty.......................................................................14
10. Early Termination of Agreement.................................................14
11. Damage or Destruction of Ship..................................................16
12. Arbitration....................................................................17
13. No Partnership or Joint Venture................................................17
14. Severability...................................................................17
15. Notices........................................................................17
16. Assignment.....................................................................18
17. Controlling Law................................................................18
18. Binding Effect.................................................................18
19. Counterparts...................................................................18
20. Interpretation and Rules of Construction.......................................18
21. Further Assurances.............................................................19
22. Attorneys' Fees................................................................19
23. Entire Agreement...............................................................19
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MANAGEMENT CONTRACT
This Agreement, dated and executed this 1st day of October, 1999 by and
between Casino Padre Investment Company LLC, a Limited Liability Company
organized under the laws of Nevada, (hereinafter referred to as the "Owner"),
with its principal offices in __________________________________, and sureBET
Casinos Inc. (sureBET), a corporation organized under the laws of the State of
Utah (hereinafter referred to as "The Management Company"), with its principal
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
WHEREAS, Owner will lease and operate the excursion gambling ship known
as the MV Entertainer (Official No. 500021) ("The Ship") from a docking site in
South Padre Island, Texas, together with it's supporting portside facility ( the
"Site"). The business to be conducted on the Ship and Site shall be called "the
Operations".
WHEREAS, The Management Company covenants, represents and warrants,
that The Management Company has substantial experience in managing gaming ships
and casino operations including the management and operation of gaming tables,
coin operated slot machines, video poker machines, lottery, and keno
(hereinafter "gaming operations") and
WHEREAS, Owner desires to employ The Management Company on an exclusive
basis as an independent contractor to assist Owner with the Operations to
provide employee training and necessary pre-opening activities, and, upon
opening to manage and operate the ship and gaming operations on behalf of and
for the account and benefit of Owner; and
WHEREAS, the Owner is ready and willing to contract exclusively with
The Management Company to operate and manage the Ship and Gaming Operations, and
WHEREAS, this Agreement will cover the following two phases with
respect to the Operations:
o Pre-Operating Phase (period from the day of signing
this Agreement until the commencement of operations)
and
o Operating Phase (period from the commencement of
operations until termination of this Agreement); and
WHEREAS, The Management Company will act on behalf of and for the
benefit of Owner and as Owner's agent upon and subject to the terms and
conditions hereinafter set forth during all phases of this Agreement.
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NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein, and for other valuable considerations acknowledged
by each of the parties to be satisfactory and adequate, the parties hereto
covenant and agree as follows:
1. TERM OF THIS AGREEMENT
1.1 The term of this Agreement shall commence on the date first
above written and shall expire and terminate at such time as
owners no longer lease or own the MV Entertainer and/or at the
dock site at South Padre Island, Texas unless earlier
terminated and provided in Section 9 herein.
2. SERVICES PROVIDED BY THE MANAGEMENT COMPANY
2.1 EXCLUSIVE MANAGER. Subject to the limitations and conditions
herein set forth, owner hereby appoints The Management
Company, and The Management Company hereby accepts appointment
as the exclusive manager of the Ship. The Management Company
shall use its best efforts to do and perform all services,
acts, or things necessary to oversee the design, layout,
construction, and interior decoration of the Ship and shall
assume full responsibility for employee training and other
pre-opening activities of the Gaming Operation, and,
thereafter, upon opening, to direct, supervise and manage the
operation. The operations and activities undertaken by The
Management Company pursuant to this Agreement shall be on
behalf of, and for the account and benefit of the Owner.
2.2 ACTIVITIES. For purposes of this Agreement, Operations and
management hereunder shall include operations and management
related to food, beverage (including licensed liquor and
hospitality operations), showroom or entertainment, arcade or
parking operations or facilities ancillary to or undertaken in
conjunction with, but not directly related to Operations
(referred to herein as the "Ancillary Operations and
Facilities").
2.3 THE MANAGEMENT COMPANY'S DUTIES - INITIAL TERM/PRE-OPERATIONAL
PHASE. Commencing with the execution of this Agreement and
continuing until commencement of the Operations, The
Management Company shall perform the following services:
2.3.1 The Management Company shall prepare pre-opening
budgets, preliminary proformas for the first year of
the operation and any other requirements related to
the Operations. The Management Company shall prepare
line item budgets for pre-opening and operations. The
pre-opening budgets and operational plans (herein the
"Pre-Opening Budget and Operational Plan") shall
include a schedule of expenditures, personnel
requirements, hiring schedules, employees' training
program, pre-marketing plan, organizational aspects
of the Operations during pre-
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opening, and other matters which should be
accomplished for timely opening and a successful
operation.
2.3.2 Prepare detailed plans for the design, the layout and
construction of all facilities on the Operations, the
selection of all gaming equipment, tokens, chips,
cards, currency counters, wrapping machines, safes
and other security equipment the furniture and
furnishings to be utilized in all casino facilities,
and the uniforms to be worn by employees.
2.3.3 Select applicants and establish training programs for
all staff at a location provided by the Owner. All
training costs, including travel and accommodations,
salaries for trainers, training equipment, and
advertising will be borne and paid by the Owner. The
Management Company shall provide Owner a training
plan and budget in a timely manner.
2.3.4 Establish such accounting, auditing, recordkeeping
and reporting systems and systems of internal control
as are required.
2.3.5 Prepare Cash Flow Projections and Statements of
Pre-Opening cash requirements.
2.3.6 Commence recruitment and hiring of executives, key
employees, professionals and other personnel for and
on behalf of the Owner necessary to staff the Ship
and the Ancillary Operations and Facilities in a
timely fashion to insure the adequacy of such staff
upon commencement of operations.
2.3.7 The Management Company shall select and purchase or
lease the necessary gaming equipment (principally,
slot machines and gaming tables) in the name and for
the account of Owner utilizing funds made available
and provided by Owner. In addition, The Management
Company will select with the prior approval of the
Owner and purchase for the account of Owner, all
related accessory equipment, including, but not
limited to, gaming machine tokens, chips and cards
for table games, coin handling equipment, currency
counters, wrapping machines, special tools and other
equipment as well as spare parts. Owner reserves the
option to purchase or lease the aforementioned gaming
and accessory equipment directly from third parties
in the event that such purchase or lease form third
parties results in a lower cost to Owner. Owner shall
retain ownership over all of the foregoing gaming
equipment and related accessory equipment whether or
not described above, and will be responsible for
payment of any customs, export or other duties.
2.3.8 The Management Company shall establish a computerized
security and management system, a double key system,
a standardized security log machine cash box,
double-check accounting procedures, etc., as well as
appropriate control, supervision and surveillance
techniques.
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2.3.9 The Management Company shall supervise the
installation of the gaming equipment.
2.3.10 The Management Company shall assist the Owner's
accounting and bookkeeping staff in order to keep
proper and detailed books, accounts and records as
required by Owner showing complete Pre-Operational
activities, the receipt and expenditure of monies in
connection therewith or otherwise for the account of
Owner or its authorized employees or agents, to
assist the members of the Owner's internal Audit
Department in carrying out an audit of such books,
accounts and records as Owner may from time to time
reasonably require. Owner may have a Finance and
Internal Audit Department which will review the
operations for internal controls, financial controls
and internal compliance at Owner's sole discretion.
2.3.11 The Management Company shall supervise the Owner's
accountants in order to submit to owner a
pre-Operating Phase budget, by month, within one week
after the pre-opening period has commenced.
2.3.12 The Management Company shall credit and allow, in
full, to Owner any commission, discount, rebate,
deduction or other allowance of any description,
which The Management Company shall receive or be
allowed in the course of its managing activities;
including and concerning the purchase of any gaming
equipment, gaming devices, gaming machinery and their
accessories, and other items described in Section
2.3.7 of this Agreement.
2.3.13 The Management Company shall submit to Owner at least
fourteen (14) days prior to the end of each month a
notice of The Management Company's anticipated cash
requirements for the following month. At the end of
each month, The Management Company shall provide
Owner with a statement which itemizes for that month
both the funds advanced to it by Owner and the cash
disbursements made during last month. All excess
funds held by The Management Company shall be held in
interest bearing accounts with interest accruing to
Owner.
3. THE MANAGEMENT COMPANY'S DUTIES - OPERATIONAL TERM/OPERATIONAL PHASE
3.1 During the Operational Term, The Management Company shall on
behalf of Owner, and for the benefit and account of, and at
Owner's expense, perform the following enumerated duties upon
the opening of the commencement of operations:
3.1.1 Comply with federal, state, county and city laws.
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3.1.2 All business and casino affairs in connection with
the day-to-day operation, management, and maintenance
of the Ship shall be the sole and exclusive
responsibility of The Management Company who is
hereby granted the necessary power and authority to
carry out The Management Company's duties and
responsibilities under this Agreement. Owner hereby
warrants to The Management Company uninterrupted
control of the Operation and warrants that it will
not interfere or involve itself in any way with the
day-to-day operations. The owner shall direct any
questions regarding management in writing to an
officer of The Management Company on any matter
connected with the Operation or this Agreement. Any
comments, recommendations, suggestions or requests
for change shall be made only to officers of The
Management Company and shall not be made to the local
general The Management Company or any other employee
on the premises. The Management Company shall have
absolute discretion in the determination of: (1)
ticket rates, (2) food and beverage selection and
prices, (3) all charges of any nature to passengers
for services performed by The Management Company for
the Ship, (4) the terms of admittance on the Ship,
(5) terms of rental for entertainer, (6) labor
policies, (7) publicity and promotion, (8) rules and
regulations regarding gaming and wagering, and (9)
contracts, leases and agreements int he ordinary and
customary course of business operations.
3.1.3 At the time of commencement of business, The
Management Company shall provide at Owner's expense
all necessary inventories of marine supplies, food,
beverage, paper products, gaming supplies and other
operational supplies and consumables as The
Management Company deems necessary for the Operation.
3.1.4 In the name of and on behalf of the Owner, The
Management Company shall hire, promote, discharge and
supervise the work of the executive staff, including
the General Manager, assistant manager, and
department heads. Through such executive staff, the
General Manager shall supervise the hiring,
promotion, discharge and work of all other operating
and service employees. All of The Management
Company's corporate employees not employed in or
about the Operation, shall be employees of The
Management Company and on The Management Company's
payroll, and Owner shall not be liable to such
employees for their wages or compensation, nor to The
Management Company or others for any act or omission
on the part of such employees, except with respect to
the General Manager as provided herein. Except for
the General Manager, all Casino employees employed in
or about the Casino shall be employees and paid by
the Owner. The Management Company shall have the
authority in all cases to create appropriate job
descriptions for and hire, promote, discharge and
supervise the work of any such employees. The
Management Company shall procure and maintain, at the
Owner's expense, adequate workmen's compensation
insurance and such other insurance as parties
required covering all the Owner's employees.
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3.1.5 The Management Company shall appoint one of its
principal executive officers to serve as the General
Manager. The General Manager shall perform his duties
on-site and shall relocate to the South Padre Island,
Texas area. Owner shall be responsible for
reimbursement of all costs attributable to the
General Manager, including but not limited to salary,
bonuses, relocation costs, fringe benefits,
retirement benefits, and housing allowances.
3.1.6 The Management Company shall establish and supervise,
at Owner's expense, an accounting department with
appropriate casino accounting and cost systems,
including such accounting, recordkeeping and
reporting systems as may be required. and in
accordance with Standard Operating Procedures. At
Owner's expense, The Management Company shall prepare
and timely file or cause the preparation and timely
filing of all reports and returns required by such
laws and regulations, and all reports and returns
relating to withholding taxes, social security taxes,
unemployment insurance, disability insurance, and all
other statements and reports pertaining to employment
with respect to The Management Company's and Owner's
payroll in or about the Casino. The Management
Company shall provide copies of all such reports and
returns to Owner not later than the time such are
required to be filed or otherwise submitted to the
appropriate governmental authority, and shall furnish
the Owner with proof of payment of taxes and fees
required to be paid pursuant to federal, state or
local laws. The Management Company shall be
responsible for the preparation or filing of any
federal, state or local income tax or franchise tax
returns on behalf of Owner.
3.1.7 On behalf of, for the benefit of, at the expense of
the Owner, and in accordance with Standard Operating
Procedures prepared by The Management Company,
arrange for an appropriate security force sufficient
to reasonably assure safety of customers, personnel,
monies, and property of the Operation facility. Any
security force shall be comprised of security
officers employed directly by the Owner or provided
under a contract with a third party and the Owner.
The third party or security officer shall report
directly to The Management Company. Each security
officer shall be bonded in sufficient amounts
commensurate with their enforcement duties and
obligations. The cost of such security force shall be
included in the operating expenses of the gaming
facility. The Management Company shall also receive,
consider and handle the complaints of all guests or
users of all facilities or gaming devices.
3.1.8 Manage the selecting of vendors for the furnishing
electricity, gas, water, steam, telephone, cleaning,
vermin exterminators, air-conditioning maintenance,
master television antennas and/or master cable
television service, and at the expense of the Owner,
purchase or lease all materials and supplies,
including gaming devices and equipment.
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3.1.9 Arrange for the making or installation, in the name
of and at the expense of Owner, of alterations,
repairs, decorations, replacements, equipment or
installations.
3.1.10 Open and maintain, in accordance with Standard
Operating Procedures prepared by The Management
Company, and on behalf of the Owner, one or more
operating account(s) in a money market fund or funds
or banking institution or institutions selected by
the Owner and deposit therein all monies furnished by
the Owner as bankroll or other working funds, all
monies received, retained or set aside as reserves by
The Management Company for or on behalf of Owner and
deposit daily therein all monies generated by the
daily operations. The Management Company shall be the
signer on all such accounts. Provided, further, that
Owner shall indemnify and hold The Management Company
harmless from any liability for payroll taxes or sums
owed which have been incurred in the operation with
respect to Owner's employees and payroll, but for
which there are insufficient funds to pay. The
amounts of such bankroll, working funds and reserves
shall be in an amount determined necessary and
appropriate by the Owner. The Management Company
shall pay from such accounts, expenses reasonably
required for the operation , including without
limitation, all gaming equipment taxes and fees, and
all assessments and charges of every kind imposed by
any governmental authority having jurisdiction and
interest and appraisal fees; fines, penalties and
court disbursements incurred in connection with the
operation; premiums on policies and insurance and all
expenses and payments authorized by this Agreement.
3.1.11 Comply with all statutes, ordinances, laws, rules,
regulations, orders and determinations affecting or
issued in connection with the Operation by any
governmental authority having jurisdiction thereof.
The Management Company shall notify Owner of all such
orders, determinations and requirements and any
alleged violation of any statute, ordinance, law,
rule, regulations, order determination or requirement
as soon as The Management Company receives notice
(formal or informal) thereof. The Management Company
shall make any alterations or repairs so ordered or
so required. Unless otherwise directed by Owner, The
Management Company, at Owner's expense may protest or
contest in an appropriate court or forum any order,
rule or regulation or claimed violation thereof
affecting the Operation. The Management Company may
settle or compromise any such claim for less than
$25,000.00 in its discretion (and shall notify Owner
promptly of such settlement or compromise). All fines
and penalties imposed on The Management Company or
Owner under this subsection except as a result of The
Management Company's gross negligence (unless at the
specific direction of Owner) shall be paid by the
Owner and Owner shall indemnify, protect and defend
The Management Company from and against any liability
therefore. All fines and penalties imposed upon
Owner, or imposed on The Management Company as the
result of The Management Company's compliance with
Owner's specific
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directions, shall be paid by Owner. Legal fees for
any action shall be limited to $25,000.00 unless
otherwise agreed to by Owner.
3.1.12 Determine the number and types of gaming tables and
gaming machines, pay back percentages, table limits,
changes in table limits, number of decks and manner
of dealing blackjack, general casino rules and game
rules, treatment of customers by casino personnel and
dealers, settlement of disputes with patrons, the
conduct of casino personnel while off duty, including
but not limited to consumption of alcoholic
beverages, meals, break area, association with
casino, and other activities which reflect on the
business of the Owner and The Management Company.
3.1.13 Institute any necessary legal action or proceeding to
collect charges, rents or other income for, or debts
owing to the Operation or to oust or dispossess
guests, or other persons in possession or to cancel
or terminate any lease for the breach thereof or
default thereunder, all in accordance with Standard
Operating Procedures.
3.1.14 At Owner's expense, render statements to the Owner as
follows:
(a) On or before the fifteenth (15th) day of
each calendar month, The Management Company
shall render to Owner, and to any persons
designated by Owner, a detailed profit and
loss statement prepared on a cash basis for
the operation for the preceding calendar
month and for the portion of the operating
year ended on the last day of such preceding
calendar month and for such calendar month
and calendar year a statement of all capital
expenditures made by The Management Company
for the account of the Owner, a statement of
management compensation, lease payments, and
any amounts distributable to the Owner.
(b) The Management Company shall render to
Owner, to the certified public accountants
designated Owner and to any other persons
designated by Owner, in a timely fashion,
copies of such records, reports, financial
statements, audits and supplemental
information as may be reasonably requested
by Owner and a required by all applicable
federal, state, county and city laws and
regulations.
(c) The Management Company shall make available
to the Owner and its designated agents, who
shall have the right to inspect, copy and
analyze them, all journals, ledgers and any
other original source documents, internal
statements and reports, analyzes and other
information kept or used by The Management
Company in connection with rendering the
reports, balance sheets and statements
described in this Section 3.1, which are
deemed necessary by Owner to determine and
satisfy Owner that The Management Company is
complying with this Agreement.
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3.1.15(a) The Management Company shall, at Casino
Padre's expense, maintain and repair the
Ship, its furnishings, equipment in
accordance with The Management Company's
operational standards. Except as set forth
in subsection (c) below, The Management
Company is authorized to enter into in the
name of and expense of Owner all contracts
and agreements as are in The Management
Company's opinion necessary for the
operation, supply and maintenance of the
Ship and to pay the same when due. It is
accepted that over the term of this
Agreement, expenditure on maintenance and
repairs will average five (5%) of gross
revenue annually.
(b) In addition to ordinary maintenance and
repair, Owner authorizes The Management
Company to expend such amounts for ordinary
capital replacement items as are required to
operate the Ship in accordance with The
Management Company's standards and comply
with The Management Company's programs for
renovation, modernization and improvement
then in effect. There shall be deducted in
each fiscal month an amount equal to Ten
Thousand Dollars ($10,000.00) per month for
a "reserve fund" which shall be recorded on
the books of account as "Reserve for Capital
Replacements" (appearing as a deduction
below the "net profit after tax" level in
the income and expense statement). Each
fiscal month , the amount so deducted shall
be placed into an interest bearing account
established in Owner's name at a financial
institution of Owner's selection with The
Management Company's designees being the
only authorized signatories on said account.
Any expenditures for capital replacements,
substitutions or additions, which have been
budgeted, may be made without Owner's
approval, by The Management Company to the
extent available from the reserve fund
(including unused accumulations from earlier
years).
In the event that the reserve fund balance
is below budget for the ensuring year, Owner
shall supply the necessary funds by deposit
to that account within ten (10) days of
receipt of notice to that effect. All
amounts remaining in the reserve fund at the
close of each fiscal year shall be carried
forward and retained in the reserve until
fully used as herein provided.
Upon termination of this Agreement, The
Management Company's rights to any unused
portion of the reserve fund shall terminate
and the balance of the fund shall be paid
over to Owner.
(c) The Management Company shall be required to
obtain the prior written consent of Owner,
which shall not be unreasonably withheld,
before entering into any contract, agreement
or purchase involving structural repair or
rehabilitation of the Ship or the repair
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or replacement of any furnishings, fixtures
and equipment if the amount payable under
such contract exceeds the sum of Twenty-Five
Thousand Dollars ($25,000.00) unless said
amount was approved as an annual or
quarterly budgeted item. The foregoing
amount is based upon the purchasing power of
money at the date of this Agreement and
shall be adjusted by The Management Company
when deemed necessary to retain the same
purchasing power, using the Cost of Living
Index figures of the United States Bureau of
labor Statistics as may be adjusted. In the
event of an emergency situation requiring
immediate action to protect persons or
property or if required by governmental
regulations, The Management Company in its
sole discretion is hereby authorized upon
notice to Owner but without Owner's prior
consent, to enter into contracts occasioned
by such emergency or governmental
regulations in excess of such sum.
(d) The Management Company shall have the right
to make such alterations, additions or
improvements in or to the Ship as are
customarily made in the operation of ships,
provided, however, that no alterations,
additions or improvements involving a
fundamental change in the character of the
Ship shall be made without Owner's prior
written approval if the amount payable under
the contract for said alteration, addition
or improvement exceeds the sum of
Twenty-Five Thousand Dollars ($25,000.00)
which amount shall be adjusted as provided
in (c), immediately above.
4. THE MANAGEMENT COMPANY'S COMPENSATION
4.1 INITIAL TERM FEES. During the Pre-Operational Phase (i.e., the
Initial Term), and in accordance with the plan and budgets
prepared jointly by the Owner and The Management Company, no
fees shall be paid to The Management Company for its services
provided pursuant to this Agreement, except for training of
the Casino employees in anticipation of the Casino opening
("Pre-Opening Casino Employee Training Services"). Owner shall
bear all out-of-pocket training costs incurred by The
Management Company and pay in advance such sums as may be
reasonably requested by The Management Company for anticipated
training costs. The Management Company will use its best
efforts to coordinate such training activities within the two
months preceding an anticipated Casino opening date, subject
to any changes therein.
4.2 OPERATIONAL TERM MANAGEMENT FEE. In consideration of the
services to be provided by The Management Company pursuant to
the provisions of this Agreement, Owner shall pay to The
Management Company fee (hereinafter referred to as the
"Operational Term Management Fee") in an amount equal to the
sum of the following:
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4.2.1 Basic Management Fee. An amount equal to two (2%)
percent of the accumulated "Gross Revenue" payable
monthly in arrears on the 10th day of each month.
4.2.2 Incentive Management Fee. An amount equal to seven
(7%) percent of Operating Profit referred to as
"Earnings Before Interest Taxes Depreciation and
Amortization" (EBITDA), as such terms are hereinafter
defined, payable quarterly.
4.3. Gross Revenue. For purposes of computing the Operational Term
Management Fee herein, "Gross Revenue" shall mean revenue from
all sources at the Operation including, but not limited to,
ticket fares, food and beverage sales, gift shop sales, casino
win, as well as the proceeds of any business interruption
insurance policy carried by Owner. Gross Revenue shall not
include interest income or tips given to employees.
4.4 Operating Profit shall be defined as gross revenue, less all
operational expenses of the operation excluding however;
(a) Depreciation of furniture, fixtures, and equipment.
(b) Debt service payments including principal and
interest, under mortgages or liens on the operation
or personal property or rental payments under leases
of capital assets with options to purchase.
(c) Property taxes and assessments
(d) Amortization of pre-opening expenses
(e) Capital expenditures including replacement of
furniture, fixtures, and equipment, but not excluding
maintenance and normal repairs.
(f) Charter payments for the vessel.
4.5 Management fees and all reimbursable expenses due The
Management Company shall be a first charge and priority on
gross revenue and shall be paid prior to the payment of any
other expenses incurred in said operation and shall be paid in
arrears monthly on the tenth day of each month during the term
hereof. Any adjustments to the Management fees shall be based
on the final adjustments to the Company's operating statements
by its auditors.
5. OWNER'S DUTIES
5.1 Owner shall provide consultants, policy support, and
information to reasonably assist The Management Company in the
discharge of The Management Company's duties and
responsibilities hereunder.
5.2 During the Operational Term, Owner shall be responsible for
providing and maintaining all necessary cash and cash reserves
adequate for the opening of the operation and the day-to-day
operation.
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5.3 During the term of this Agreement, Owner shall provide
sufficient funds to bankroll gaming operations and working
capital in amounts which the Owner and The Management Company
mutually agree are adequate to assure the uninterrupted and
efficient operation.
6. INSURANCE
6.1 The Management Company shall maintain, at Owner's expense,
insurance of such kinds and amounts as shall be required to
carry pursuant to the provisions of any deed of trust, loan
agreement, lease, charter or other agreement affecting the
operation, as well as any other insurance that may be required
or necessary by applicable gaming regulations. The Management
Company shall provide the Owner with copies of all insurance
policies as The Management Company may from time to time
request.
6.2 There shall be maintained, at the expense of Owner, throughout
the term of this Agreement such fidelity and other bonds as
may be required from time to time for the protection of the
respective interests of the Owner and The Management Company.
Any such bonds shall also protect the interests of the holder
of any mortgage, or deed of trust, and shall be in such
amounts and obtained from such surety companies as The
Management Company, lender or mortgage holder shall direct.
6.3 All policies insuring against liability, damage to the Ship or
portions thereof or interruption of business, rent or the like
and fidelity and other bonds shall name Owner, The Management
Company, and such other parties as may be required by the
provisions of any mortgage, lease, other agreement or
regulation as the insured thereunder, as their respective
interest may appear. All policies of hazard insurance shall
include loss payment clauses in the form required by any deed
of trust, lease or other agreement. All insurance and bond
premiums shall be paid from the Casino operating accounts.
Certificates of all policies of insurance and duplicates
thereof shall be delivered to the Owner, The Management
Company, any holder of any deed of trust or to such other
persons or governmental authorities as Owner shall direct.
6.4 Provided The Management Company or Owner shall procure and
keep in force all of the procurable insurance mutually agreed
upon by Owner and The Management Company and required to be
obtained pursuant to the foregoing provisions of this Section,
and shall name The Management Company as additional insured
thereon, then to the extent that the same are covered by such
insurance, neither Owner nor The Management Company shall
assert against the other any claims for any losses, damages,
liability or expenses (including attorneys' fees) incurred or
sustained by either of them on account of damage or injury to
person or property arising out of the ownership, operation or
maintenance of the Casino. The parties agree that all policies
of insurance to be procured by The Management Company or Owner
shall permit the foregoing waiver.
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6.5 Owner shall give to The Management Company, and The Management
Company shall give to Owner, prompt notice of any claim made
against Owner or The Management Company in excess of Five
Thousand and no/100 Dollars ($5,000.00), and each party shall
cooperate fully with each other and with any insurance carrier
to the end that all such claims will be properly investigated,
defended and compromised. Claims should be promptly submitted
to the insurance carrier, and if said claims are less than the
deductible, they may be settled by The Management Company, in
its sole discretion.
7. INDEMNIFICATION
7.1 Owner shall indemnify and hold The Management Company, its
officers, directors, agents, employees or affiliates harmless
against any losses, damages or expenses, or claims of third
parties (including legal and other fees) in excess of the
amount of any insurance proceeds paid to The Management
Company, which is incurred or sustained by The Management
Company as a result of or attributable to any breach of this
Agreement, negligent or intentional acts, violation of any
law, rule, regulation or agreement with any governmental
authority by Owner or any person or entity acting on behalf of
or who is under the control or supervision of Owner.
7.2 The Management Company shall indemnify and hold Owner, its
officers, directors, agents, employees or affiliates harmless
against any losses, damages or expenses, or claims of third
parties (including legal and other fees) in excess of the
amount of any insurance proceeds paid to Owner, which is
incurred or sustained by Owner as a result of or attributable
to any breach of this agreement with any governmental
authority by Owner or any person or entity acting on behalf of
or who is under the control or supervision of Manager.
8. CONFLICTS OF INTEREST
The Company may be subject to conflicts of interest arising out of its
relationship with The Management Company. The Management Company,
through its officers and directors intends to exercise its best
business judgment and discretion in resolving such conflicts which may
rise but do not intend necessarily to accord priority to the Company
with respect to any other company or entity with which it may be
affiliated. The conflicts of interest which may arise include, but are
not limited to, the following:
8.1 Other Investments by The Management Company. The Management
Company may in the future, directly or indirectly engage in
other business ventures, including casino vessels or casino
ventures, and neither the Company nor any Unit Holder will be
entitled to any interest with respect to such other ventures.
These other business ventures could be in competition with the
business of this Company. The Management Company intends to
continue other activities in the casino industry and to enter
into other ventures in the future.
8.2 Lack of Separate Representation. The Company and The
Management Company are not represented by separate counsel.
The attorneys, accountants and other experts performing
services for the Company in connection with the formation of
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the Company and this offering also have represented The
Management Company and may provide future services to both
entities. Should a dispute arise between the Company and The
Management Company, the Management Company will, if and when
appropriate, cause the Company to retain separate counsel. The
Company has not retained independent counsel to represent
interests of investors in connection with the offering of the
Units or the preparation of the Management. SUCH COUNSEL DO
NOT PURPORT TO HAVE ACTED ON BEHALF OF THE UNIT HOLDERS. EACH
PROSPECTIVE INVESTOR SHOULD CONSULT INDEPENDENT COUNSEL IN
CONNECTION WITH AN INVESTMENT IN THE COMPANY.
9. CASUALTY
9.1 In the event of any damage or loss to the Casino by fire or
other casualty, The Management Company shall act as follows:
If the damage or loss involves more than Five Thousand Dollars
($5,000.00), The Management Company shall give immediate
written notice thereof to Owner.
9.2 Regardless of the amount of such damage or loss, as agent for
Owner, The Management Company shall promptly make claim for
the proceeds of any insurance covering such damage or loss,
and in owner's name shall litigate or negotiate for payment of
such proceeds, selecting counsel if necessary for such
purpose, unless counsel is designated by Owner.
9.3 The Management Company shall give written notice of any
proposed settlement to Owner, shall settle such claim and, on
behalf of Owner, collect the proceeds thereof; provided that,
Owner's written consent, which shall not be unreasonably
withheld or delayed, shall be required to validate the
settlement of any claim for loss or damage in excess of
Twenty-Five Thousand Dollars ($25,000.00).
10. EARLY TERMINATION OF AGREEMENT
10.1 Except as to liabilities or claims which shall have accrued or
arisen prior to such termination, including, without
limitation, the amount of all accrued Operational Term
Management Fee payable to The Management Company pursuant to
Section 4.2, through the date of any such termination (which
shall survive termination), at the election of Owner, all
obligations hereunder may be terminated only upon the
occurrence of any of the following events:
(1) If The Management Company or any of it's officers or
Directors convicted of a felony or misdemeanor (other
than a conviction for a traffic offense), or if the
Owner reasonably believes The Management Company
jeopardizes or causes the withdrawal of any gaming
license, permit or authorization necessary to conduct
the business of the Owner, or
(2) If there shall be filed by The Management Company in
any court pursuant to any statute either of the
United States or of any state a petition in
bankruptcy or insolvency or for a reorganization or
for the appointment of
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a receiver or trustee of all or a substantial part of
The Management Company's property, or if The
Management Company makes an assignment for or
petitions for or enters into an arrangement for the
benefit of creditors or if an involuntary petition in
bankruptcy is filed against The Management Company
which is not dismissed within ninety (90) days
thereafter.
10.2 Except as to liabilities or claims which shall have accrued or
arisen prior to such termination, including, without
limitation, the amount of all accrued Operational Term
management Fee payable to The Management Company pursuant to
Section 4.2, through the date of any such termination (which
shall survive termination), at the election of The Management
Company, all obligations hereunder may be terminated only upon
the occurrence of any of the following events:
(1) If the Owner shall fail or refuse to provide the
capital and operating funds required pursuant to a
budget previously approved by owner, after ten days
prior written notice of such failure or refusal, or
(2) Owner's failure or refusal to pay The Management
Company the Operational Term Management Fee payable
to The Management Company pursuant to Section 4.2, or
(3) the occurrence of a default under any of the Loan
Agreements, or
(4) In the event of the sale of all or substantially all
of the assets of the Operation, in which event The
Management Company may elect to terminate this
Agreement and Owner shall pay The Management Company
the sum of One Hundred Thousand Dollars ($100,000.00)
which shall be paid at the time of the closing of any
such sale. Owner and The Management Company have
negotiated the amount provided for above and agree
and acknowledge that it represents fair payment and
is not intended to be nor shall it be deemed to be a
penalty, or
(5) In the event more than fifty (50%) percent of the
outstanding voting capital stock of Owner is sold, or
in the event of the merger or liquidation and
dissolution of Owner, or
(6) If there shall be filed by Owner in any court
pursuant to any statute either of the United States
or of any state a petition in bankruptcy or
insolvency or for a reorganization or for the
appointment of a receiver or trustee of all or a
substantial part of Owner's property, or if Owner
makes an assignment for or petitions for or enters
into an arrangement for the benefit of creditors or
if an involuntary petition in bankruptcy is filed
against Owner which is not dismissed within ninety
(90) days thereafter.
10.3 Upon termination of this Agreement by either party, The
Management Company shall turn over to Owner all property,
books and records of the Casino, and Owner
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and The Management Company shall fully cooperate with each
other in connection with all matters relating to the Casino
which took place prior to termination.
11. DAMAGE OR DESTRUCTION OF SHIP
11.1 Subject to the requirements of any deed of trust, mortgage or
other security device encumbering the Ship or its property and
to the extent that there are insurance proceeds available to
Owner, if the Ship, or any portion thereof, shall be damaged
or destroyed at any time or times during the term of this
Agreement by storm, fire or any other casualty, Owner, at no
expense or risk to The Management Company, shall apply
available insurance proceeds to repair, rebuild or replace the
same (such repairing, rebuilding or replacing being herein
called "restoration") so that after such restorations the Ship
shall be substantially the same as prior to such damage or
destruction, and all proceeds of insurance, other than
business interruption, shall be made available to Owner for
such purpose; provided that, The Management Company shall have
the right to ensure that such proceeds of insurance shall be
applied to such restoration. If Owner fails to undertake such
restoration within ninety (90) days after such storm, fire or
other casualty, or shall fail to complete the same diligently,
The Management Company may, but shall not be obligated to
undertake or complete such restoration and, to the extent of
available insurance proceeds, shall be entitled, upon demand,
to be repaid therefor, including all necessary incidental
costs and expense incurred in connection therewith, together
with interest on the aggregate out-of-pocket amount expended
at a per annum rate equal to the prime or base rate for
commercial loans publicly announced by Chase Manhattan Bank,
National Association, or its successors, at the time of such
expenditure, plus two percent (2%) per annum (but not to
exceed the maximum interest allowed by law) from the date of
making such expenditure or expenditures until repayment
thereof. In such case, the proceeds of insurance shall be made
available to The Management Company for this purpose; provided
that, Owner shall have the right to ensure that such proceeds
of insurance shall be applied to such restoration. If the
restoration costs less than One Hundred Thousand and 00/100
Dollars ($100,000.00) to complete, The Management Company
shall supervise all aspects of the restoration at no
additional cost to the Owner, provided, however, if the
proceeds of insurance provide for a supervisory fee, such fee
shall be paid to The Management Company up to an amount not to
exceed Twenty Five Thousand and 00/100 Dollars ($25,000.00).
11.2 Notwithstanding anything contained in this Section 11.2 to the
contrary, if, in connection with any casualty, the Ship shall
be so damaged or destroyed such that it cannot be restored
within nine (9) months after the casualty, and Owner shall
elect not to use the proceeds of insurance to rebuild, repair
or restore the Ship, then either Owner or The Management
Company shall have the right, exercisable by written notice to
the other, given within ninety (90) days form the occurrence
of such casualty, to terminate this Agreement as to such
damaged or destroyed Ship.
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11.3 Should the period of restoration exceed ninety (90) days, then
commencing on the 91st day, The Management Company shall be
entitled to one-half of its Management Fees during the
remaining period of restoration based on the average monthly
fee paid to The Management Company during the three months
immediately preceding the casualty.
12. ARBITRATION
The parties agree that any dispute arising out of interpretation or
performance of this Agreement involving an aggregate sum of Two Hundred
Thousand and 00/100 Dollars ($200,000.00) or less, shall be submitted
to binding arbitration in Pensacola, Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by
arbitrators chosen and paid for as provided in this Section 12. Owner
and The Management Company shall each select and pay the fees and
expenses of one arbitrator and those two shall select a third
arbitrator. The fees of the third arbitrator shall be paid one-half by
the Owner and one-half by The Management Company. The arbitrators shall
have the power to award attorneys' fees and costs of arbitration to the
prevailing party in any arbitration under this Section. The arbitrators
shall set forth the reasons for any decision.
13. NO PARTNERSHIP OR JOINT VENTURE
Unless specifically provided for by a separate written agreement, the
relationship between the Owner and The Management Company is not
intended to be nor shall it be deemed a partnership or joint venture.
The Owner and The Management Company agree that neither shall pledge
the other's credit in any manner and sum and that all property in and
about the Ship shall be and will remain the property of the Owner free
and clear of all liens and security interests of or incurred by The
Management Company except as may otherwise be specifically provided for
in this Agreement.
14. SEVERABILITY
If any provisions of this Agreement shall be determined by a court of
competent jurisdiction to be illegal, invalid or unenforceable, such
determination shall not effect or impair the validity, legality, or
enforceability of the remaining provisions contained herein.
15. NOTICES
Any notice, demand, request or other instrument which may be or is
required to be given under this Agreement shall be delivered in person
by prepaid recognized national or international courier service, return
receipt requested, or sent by United States registered or certified
mail, postage prepaid, return receipt requested, addressed to the
respective parties at the addresses set forth on the signature page(s)
below or at such other address as such party shall designate by like
written notice, and shall be effective upon receipt. A copy of any
notice, demand, request or other instrument which may be or is required
to be given under this Agreement shall be sent to:
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(names and addresses)
A copy of each notice, demand, request or other instrument transmitted
in accordance with this Section shall simultaneously be transmitted by
facsimile machine to the Owner, The Management Company, and above-named
counsel at the following telephone numbers:
Owner Facsimile No:
The Management Company Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
16. ASSIGNMENT
Neither this agreement nor any other rights or obligations hereunder
may be assigned or transferred by either party without express written
consent of The Management Company and Owner, which consent shall not be
unreasonably withheld.
17. CONTROLLING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the United States where applicable and otherwise by the
laws of the State of Florida, except those pertaining to choice of law.
Venue for all disputes shall be in the State of Florida, USA, and the
parties consent to such venue in all cases.
18. BINDING EFFECT
This Agreement shall be only for the benefit of and binding upon the
Owner and The Management Company and their respective successors and
assigns.
19. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original of this Agreement.
20. INTERPRETATION AND RULES OF CONSTRUCTION
Section and subsection headings are for reference purposes only and are
not intended to affect the meaning, interpretation, or construction of
this Agreement. All references to amounts expressed in dollars shall
refer to the lawful currency of the United States of America. Owner and
The Management Company acknowledge and agree that they have each
reviewed this Agreement and that any rule of construction resolving
ambiguities against the drafting party shall not be employed in the
interpretation of this Agreement or any amendment, exhibit or schedule
hereto.
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21. FURTHER ASSURANCES
Owner and The Management Company hereby agree for themselves and for
their respective successors and assigns to execute and deliver any
instruments and to perform any acts which may be necessary or helpful
to carry out the purposes of this Agreement.
22. ATTORNEYS' FEES
In the event a suit or proceeding is brought by Owner or The Management
Company to enforce or to defend its provisions, or to seek remedy for
any breach hereof, the prevailing party shall be entitled to receive
its reasonable attorneys' fees and disbursements incurred in connection
with such suit or proceeding, including fees and expenses incurred in
any appellate proceedings.
23. ENTIRE AGREEMENT
This Agreement contains the final and entire agreement between the
parties hereto regarding management of the Casinos. No change or
modification of this agreement shall be valid or binding upon the
parties hereto unless such change or modification shall be in writing
and signed by the parties hereto, and neither the parties nor their
agents shall be bound by any terms, conditions, statements, warranties
or representations, oral or written, not herein contained.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement the day and year first above written.
OWNER
CASINO PADRE INVESTMENT COMPANY LLC, A
NEVADA LIMITED LIABILITY COMPANY
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
WITNESS:
BY:
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ITS:
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THE MANAGEMENT COMPANY
sureBET CASINOS, INC., A UTAH CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
BY:
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ITS:
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