EXHIBIT 10.02
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. RECITALS AND DEFINITIONS 2
ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM 10
Section 2.01 Appointment. 10
Section 2.02 Term. 10
Section 2.03 Opening the Casino. 10
ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM 11
Section 3.01 Construction of Riverboat/Compliance
with Law. 11
Section 3.02 Engagement of Manager As Consultant. 12
Section 3.03 Preliminary Plans and Specifications. 12
Section 3.04 Pre-Opening Committee. 12
Section 3.05 Obligations during Development Term. 13
Section 3.06 Construction. 13
Section 3.07 Pre-Opening Services by Manager. 13
Section 3.08 Payment of Pre-Opening Expenses. 14
ARTICLE 4. OPERATIONS 14
Section 4.01 Accounting Procedures and Services
Books and Records. 14
Section 4.02 Owner's Access to Gaming Financial Records.15
Section 4.03 Audits. 15
Section 4.04 Monthly Financial Statements. 16
Section 4.05 Expenses. 16
Section 4.06 Standards. 16
Section 4.07 Plans and Budgets. 19
Section 4.08 Management. 21
Section 4.09 Bank Accounts. 21
Section 4.10 Credit. 22
Section 4.11 Owner's Advances. 22
Section 4.12 Special Events. 24
Section 4.13 Cooperation of Owner and Manager. 24
Section 4.14 Financing Matters. 25
Section 4.15 Conflict of Interest/Non-Competition. 27
ARTICLE 5. MANAGEMENT FEE 28
Section 5.01 Payments to Manager. 28
ARTICLE 6. MANAGER'S RIGHT OF FIRST REFUSAL TO MANAGE
RIVERBOAT 28
ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS TO THE
RIVERBOAT AUTHORITIES 29
Section 7.01 Payment of Taxes and Assessments. 29
Section 7.02 Exceptions. 30
ARTICLE 8. USE AND OCCUPANCY OF THE CASINO 30
Section 8.01 Uses. 30
Section 8.02 Name. 30
ARTICLE 9. MAINTENANCE AND REPAIRS 31
Section 9.01 Owner's Maintenance and Repairs. 31
ARTICLE 10. INSURANCE AND INDEMNITY 32
Section 10.01 Owner Insurance Obligations. 32
Section 10.02 Parties Insured. 35
Section 10.03 Approved Insurance Companies. 36
Section 10.04 Approval of Insurance Coverage. 36
Section 10.05 Failure to Obtain Required Insurance. 36
Section 10.06 Waiver of Subrogation. 37
Section 10.07 Mutual Cooperation. 37
Section 10.08 Delivery of Insurance Policies. 37
Section 10.09 Indemnification by Manager. 38
Section 10.10 Indemnification by Owner. 39
Section 10.11 Selection of Counsel/Conduct of Litigation.40
ARTICLE 11. CASUALTY 40
ARTICLE 12. TAKING OF THE RIVERBOAT 41
Section 12.01 Definitions. 41
Section 12.02 Entire Taking of the Support Areas. 42
Section 12.03 Duty to Restore. 43
ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS 43
Section 13.01 Trustee. 43
Section 13.02 Deposits of Insurance Proceeds and Awards. 44
Section 13.03 Procedure for Distribution of
Insurance Proceeds and Awards. 44
ARTICLE 14. ASSIGNMENT AND SUBLETTING 46
ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER 47
Section 15.01 Corporate Status. 47
Section 15.02 Compliance with Laws. 47
Section 15.03 Gaming Approvals. 47
Section 15.04 Confidential Information. 48
Section 15.05 Gaming Applications. 48
ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER 48
Section 16.01 Corporate Status. 48
Section 16.02 Maintenance of Insurance. 49
Section 16.03 Compliance with Laws. 49
Section 16.04 Cooperation with Gaming Authorities. 50
Section 16.05 Confidential Information. 50
Section 16.06 Compliance with Loan Covenants. 51
Section 16.07 Non-Interference. 51
Section 16.08 Gaming Applications. 51
ARTICLE 17. REPRESENTATIONS AND WARRANTIES 51
Section 17.01 Owner Corporate Status. 51
Section 17.02 Manager Corporate Status. 52
Section 17.03 Authorization/No Conflict. 52
Section 17.04 Permits/Approvals. 53
Section 17.05 Accuracy of Representations. 53
Section 17.06 Development Plans. 54
Section 17.07 Maintenance of Gaming and Other Licenses. 54
Section 17.08 Financings; Governmental Approval. 54
Section 17.09 Condition of Riverboat During Term. 55
Section 17.10 Utilities. 55
Section 17.11 Impair Reputation. 55
ARTICLE 18. ARBITRATION 55
SECTION 18.01 Appointment of Arbitrators. 55
Section 18.02 Inability to Act. 57
ARTICLE 19. DEFAULT/STEP-IN RIGHTS 57
Section 19.01 Definition. 57
Section 19.02 Manager's Defaults. 57
Section 19.03 Step-In Rights. 58
Section 19.04 Owner's Default. 60
Section 19.05 Bankruptcy. 61
Section 19.06 Reorganization/Receiver. 61
Section 19.07 Delays and Omissions. 61
Section 19.08 Disputes in Arbitration. 62
ARTICLE 20. TERMINATION 62
Section 20.01 Termination Events. 62
Section 20.02 Notice of Termination. 63
Section 20.03 Remedies Upon Termination. 63
Section 20.04 Delivery of Riverboat. 64
ARTICLE 21. HAZARDOUS MATERIALS 64
Section 21.01 No Hazardous Materials. 64
Section 21.02 Compliance With Laws. 65
Section 21.03 Indemnification. 65
Section 21.04 Hazardous Material Defined. 66
ARTICLE 22. NOTICES 67
ARTICLE 23. MISCELLANEOUS 68
Section 23.01 Time of the Essence. 68
Section 23.02 Heirs, Successors, Assigns 68
Section 23.03 Construction. 68
Section 23.04 Governing Law. 68
Section 23.05 Severability. 68
Section 23.06 Relation of the Parties. 69
Section 23.07 No Broker or Finder. 69
Section 23.08 Default Interest Rate. 70
Section 23.09 Attorneys' Fees. 70
Section 23.10 Entire Agreement. 70
Section 23.11 Counterparts. 70
Section 23.12 Force Majeure. 71
Section 23.13 No Warranties. 71
Section 23.14 Headings. 71
Section 23.15 Waiver. 72
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is dated as of May
2, 1995, and is made and entered into by and between Southboat
Partnership, a Missouri general partnership or its successors and
assigns ("Owner"), whose address is ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Showboat Operating Company, a Nevada
corporation, or its successors and assigns ("Manager"), whose
address ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. Owner is designing and developing a riverboat casino in
order to conduct a riverboat gaming business on the Mississippi
River to be located on approximately 29 acres (the "Casino Site")
at the southernmost portion of the St. Louis County Port
Authority Site in Lemay, Missouri.
B. Owner expects to have completed construction of the
riverboat and all ancillary facilities, including, but not
limited to, docking, parking areas and administrative offices,
and to have obtained all licenses necessary to open the riverboat
to the public for gaming operations approximately by October
1996.
C. Manager has experience in designing interior gaming
premises, and in starting up and conducting a gaming business.
D. Owner desires to engage Manager as a consultant to Owner
in designing the interior gaming area of the riverboat, training
staff and installing gaming equipment for public use, and, upon
completion of the construction of the riverboat and all ancillary
facilities, including the receipt of all gaming and other
approvals, to manage and operate the gaming operations associated
with the riverboat.
E. Manager desires to be engaged as a consultant to assist in
the design of the interior gaming area of the riverboat and, upon
completion of the construction of the riverboat and all ancillary
facilities, to manage and operate the gaming operations
associated with the riverboat.
F. As of the date of this Agreement, neither Owner nor Manager
has obtained a permanent riverboat gaming license from the
Missouri Gaming Commission.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
ARTICLE 1. RECITALS AND DEFINITIONS
The foregoing Recitals are true and correct.
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person who, directly or indirectly,
or through one or more intermediaries, (i) controls, is
controlled by, or is under common control with the person in
question; (ii) is an officer, director, five percent (5%)
stockholder, partner in or trustee of any person referred to in
the preceding clause; or (iii) is a spouse, father, mother, son,
daughter, brother, sister, uncle, aunt, nephew or niece of any
person described in clauses (i) and(ii).
"Audit Day" is defined in Section 4.03.
"Audited Statements" is defined in Section 4.03.
"Award" is defined in Section 12.01.
"Bad Debts" shall mean the amount equal to gaming accounts
receivables which have not been collected for more than 120 days.
"Bank Accounts" is defined in Section 4.09.
"Business Days" shall mean all weekdays except those that
are official holidays of the state of Missouri or the U.S.
government. Unless specifically stated as "Business Days," a
reference in this Agreement to "days" means calendar days.
"Casino" shall mean those areas reserved for the operation
of slot machines, table games, electronic games of chance,
electronic games of skill and any other legal forms of gaming
permitted under applicable law, and ancillary service areas,
including reservations and admissions, cage, vault, count room,
surveillance room and any other room or area or activities
therein regulated or taxed by the Riverboat Authorities by reason
of gaming operations.
"Casino Bankroll" shall mean an amount reasonably determined
by Manager as funding required to bankroll Casino Gaming
Activities, but in no case less than the amount required by
Missouri gaming law. In no event shall such Casino Bankroll
include amounts necessary to cover Operating Expenses or
Operating Capital. Casino Bankroll shall include the funds
located on the casino tables, in the gaming devices, cages,
vault, counting rooms, or in any other location in the Casino
where funds may be found and funds in a bank account identified
by Owner for any additional amount required by Missouri gaming
law or such other amount as is reasonably determined by Manager.
"Casino Gaming Activities" shall mean the casino cage, table
games, slot machines, video machines, electronic games of chance,
electronic games of skill, and any other form of gaming managed
by Manager in the Casino. The area reserved in the Riverboat for
the Casino Gaming Activities shall be an area of approximately
26,000 square feet. If permitted by the Missouri Gaming
Commission, the area reserved on the barges for Casino Gaming
Activities shall be an area of approximately 22,000 square feet.
Owner expressly reserves the right to expand or decrease the area
reserved for gaming based upon changes in existing facts and
circumstances which may affect the Riverboat Casino project.
"Casino Operating Budget" shall be the budget of Casino
Operating Expenses.
"Casino Operating Expenses" shall mean expenses incurred by
Manager on behalf of Owner in the management of the Casino,
including, but not limited to, gaming supplies, maintenance of
the Casino area, gaming marketing materials, uniforms,
complimentaries, Casino employee training, Casino employee
compensation and entitlements, and Gaming Taxes.
"Control" shall mean, in relation to a person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such person carrying more than 25% of the voting
rights attaching to all voting securities of such person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Commencement Date" shall mean the first day on which a
revenue-paying customer is admitted to the Casino.
"Credit Policy" shall mean the policy approved by Owner,
whose approval shall not be unreasonably withheld, regarding the
extension and collection of credit to patrons of the Casino,
which Credit Policy shall be prepared by Manager based on (i) the
target markets of the Casino; (ii) prudent business judgment; and
(iii) such changes and refinements as Owner may reasonably
require and shall comply and conform in all respects with the
rules and regulations of the Riverboat Authorities.
"Default" or "Event of Default" is defined in Section 19.01.
"Development Term" shall mean the period beginning on the
date of this Agreement and ending on the Commencement Date.
"Earnings" shall mean Gross Revenue less Operating Expenses.
"Effective Date" is defined in Section 2.02.
"FF&E" shall mean all furniture, furnishings, equipment, and
fixtures, including gaming equipment, computers, housekeeping and
maintenance equipment, necessary or convenient to the operations
of the Riverboat in conformity with this Agreement and in
accordance with applicable law.
"Gaming Taxes" shall mean any tax imposed by the state of
Missouri on Gross Gaming Revenue, including, without limitation,
any state admissions tax (currently 20% of Gross Gaming Revenue
and $2.00 per customer).
"Gross Food and Beverage Revenue" shall mean all of the
revenue resulting from the operation of all of the restaurants,
snack bars, lounges, bars, vending machines and any other areas
or facilities which serve food or beverages at the Riverboat.
"Gross Gaming Revenue" shall mean all of the revenue from
the operation of the Casino.
"Governmental Authorities" shall mean the United States, the
state of Missouri, county of St. Louis, city of Lemay, any other
political subdivision in which the Riverboat is located or does
business, and any court or political subdivision agency,
commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over
Owner, Manager or the Riverboat, including the Casino.
"Gross Revenue" shall mean Gross Gaming Revenue plus all
other revenue resulting from the operation of Riverboat.
"Hazardous Material" is defined in Section 21.04.
"Impositions" is defined in Section 7.01.
"Incentive Management Fee" shall mean 20% of Earnings in
excess of $30,000,000, before any interest expense, income taxes,
capital lease rent, depreciation and amortization. The Incentive
Management Fee shall be reduced to ten percent (10%) of Earnings
in excess of $35,000,000, before any interest expense, income
taxes, capital lease rent, depreciation and amortization.
"Initial Inventory" shall mean the list of operating
supplies required for the operation of the Riverboat for the
initial 30-day period following the Commencement Date.
"Initial Inventory Price" shall mean the cost of purchasing
the Initial Inventory.
"Institution" is defined in Section 13.01.
"Institutional Mortgage" is defined in Section 13.01.
"Loan Documents" shall mean all of the documents evidencing,
securing and relating to any indebtedness owing by Owner to any
person, including, without limitation, all promissory notes, loan
agreements, mortgages, pledges, assignments, certificates,
indemnities and other instruments or agreements.
"Management Fee" shall mean that sum which is equal to (i) 2
1/4% of Gross Gaming Revenue net of all Gaming Taxes, and (ii)
the Incentive Management Fee.
"Management Fee Account" shall be the bank account
established by Manager into which the Management Fee shall be
deposited.
"Manager's Management Team" is defined in Section 4.06(d).
"Manager Pre-Opening Expenses" are those expenses incurred
during the Development Term including, but not limited to, travel
by Manager employees, officers and directors, rent, regulatory
fees, salaries, wages and benefits, and other costs of Manager
employees which are operational in nature. The Manager Pre-
Opening Expenses are estimated to be at least $250,000 per month.
"Nevada Gaming Authorities" shall mean the Nevada Gaming
Commission and the Nevada Gaming Control Board.
"Operating Budget" shall mean the Casino Operating Budget
and the budget for all other operations of the Riverboat.
"Operating Capital" shall mean such amount in the Bank
Accounts as will be reasonably sufficient to assure the timely
payment of all current liabilities of the Riverboat, including
the operations of the Casino, during the term of this Agreement,
and to permit Manager to perform its management responsibilities
and obligations hereunder, with reasonable reserves for
unanticipated contingencies and for short term business
fluctuations resulting from monthly variations from the Operating
Budget.
"Operating Expenses" shall mean actual expenses incurred
following the Commencement Date in operating the Riverboat,
including, but not limited to, the Management Fee, the Casino
Operating Expenses, employee compensation and entitlements,
including Manager's employees assigned to the Riverboat,
Operating Supplies, maintenance costs, fuel costs, utilities and
taxes.
"Operating Supplies" shall mean gaming supplies, paper
supplies, cleaning materials, marketing materials, maintenance
supplies, uniforms and all other materials used in the operation
of the Riverboat.
"Organizational Chart" shall be the Organizational Chart
attached hereto as Exhibit A, detailing the reporting lines of
representatives of Owner and Manager in relation to the
operations of the Riverboat.
"Owner's Advances" is defined in Section 4.11.
"Pre-Opening Budget" shall mean the budget of anticipated
Pre-Opening Expenses.
"Pre-Opening Expenses" shall mean all costs and expenses
incurred by Owner and Owner's Affiliates and Manager and
Manager's Affiliates in implementing the Pre-Opening Plan,
including, but not limited to, Manager Pre-Opening Expenses, the
costs of recruitment and training for all employees of the
Riverboat, costs of licensing or other qualification of Casino
employees prior to the Commencement Date, the cost of pre-opening
sales, marketing, advertising, promotion and publicity, the cost
of obtaining all operating permits, and permits for employees,
and the fees and expenses of lawyers and other professionals and
consultants retained by Owner or Manager in connection therewith.
"Pre-Opening Plan" shall mean the plan and schedule for
implementing and performing the Pre-Opening Services.
"Pre-Opening Services" is defined in Section 3.07.
"Riverboat" shall mean the Vessel and all necessary
ancillary facilities to the Vessel, including, but not limited
to, barges, restaurants, entertainment facilities, docks, piers,
vehicular parking area, waiting areas, restaurants, restrooms,
administrative offices for, but not limited to, accounting,
purchasing, and management information services (including
offices for Manager's Management Team) and other areas utilized
in support of the operations of the Riverboat.
"Riverboat Authorities" shall mean the Missouri Gaming
Commission.
"Taking" is defined in Section 12.01.
"Taking Date" is defined in Section 12.01.
"Term" is defined in Section 2.02.
"Trustee" is defined in Section 13.01.
"Vessel" shall mean the riverboat cruise vessel constructed
by Owner for operation of the Casino on the Missouri River in
Lemay, Missouri.
ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM
Section 2.01 APPOINTMENT.
Owner hereby appoints and employs Manager to act as its
agent for the supervision and control of the management of the
Riverboat on Owner's behalf, upon the terms and conditions set
forth herein. Manager hereby accepts such appointment and
undertakes to manage the Riverboat upon the terms and conditions
hereinafter set forth.
Section 2.02 TERM.
This Agreement shall be effective upon execution ("Effective
Date"). The terms of this Agreement shall commence upon the
Effective Date and shall continue until the Manager or its
Affiliates no longer hold an equity position in the Owner or its
successor (hereinafter referred to as the "Term").
Section 2.03 OPENING THE CASINO.
The Commencement Date shall be a date established by Owner
upon giving written notice thereof to Manager and shall be a date
no earlier than ten (10) days after, and no later than fifteen
(15) days after, the satisfaction of all the following
conditions: (i) the project architect has issued to Owner a
certificate of substantial completion confirming that the
Riverboat has been substantially completed in accordance with the
plans and specifications, (ii) the project interior designer has
issued to Owner a certificate of substantial completion
confirming that the FF&E has been substantially installed in the
Riverboat in accordance with the FF&E specifications contained in
the plans and specifications, (iii) all operating permits for the
Riverboat and its operations (including, without limitation, a
certificate of occupancy or local equivalent, gaming, liquor and
restaurant licenses) have been obtained, (iv) the Operating
Capital and the Casino Bankroll for the Casino has been furnished
by Owner, (v) Manager shall have given written notice to Owner
that all operational systems have been tested on a "dry-run"
basis to the satisfaction of Manager and, to the extent required
by applicable law, the Riverboat Authorities, and (vi) all other
material state and federal governmental requirements necessary to
open, occupy and operate the Riverboat, have been satisfied.
Owner shall use its best efforts to assure that the conditions
set forth in clauses (i)-(iv) and (vi) are met on or before
October, 1996. Manager shall use its best efforts in the
performance of its duties under this Agreement to assist Owner in
achieving the satisfaction of all of the foregoing requirements.
ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM
Section 3.01 CONSTRUCTION OF RIVERBOAT/COMPLIANCE WITH LAW.
Owner, at its sole cost and expense, shall construct the
Riverboat and install the FF&E. The Riverboat and its systems
(including but not limited to plumbing, heating, air
conditioning, electrical, and life safety systems, if applicable)
shall comply with the Missouri Gaming Act, and all regulations
promulgated thereunder, all appropriate building, fire and zoning
codes, the Americans With Disability Act, maritime law, including
all regulations governing maritime vessels adopted by the United
States Coast Guard.
Section 3.02 ENGAGEMENT OF MANAGER AS CONSULTANT.
Owner engages Manager to be Owner's consultant in the
configuration, layout, interior design and construction of the
Casino. Additionally, Manager shall recommend to Owner and advise
Owner as to the suggested placement of all gaming equipment and
ancillary furnishings and the configuration of ancillary areas
within the Riverboat.
Section 3.03 PRELIMINARY PLANS AND SPECIFICATIONS.
Owner, at its sole and separate expense, shall prepare
preliminary design plans, working drawings, and specifications of
the Riverboat. Manager shall evaluate the preliminary design
plans, working drawings and assist Owner in designing the Casino.
Owner shall have the sole and exclusive right to manage, direct,
control, coordinate and prosecute the construction of the
Riverboat and the installation of the FF&E.
Section 3.04 PRE-OPENING COMMITTEE.
Owner and Manager shall form a Pre-Opening Committee which
shall consist of four persons, two persons appointed by Owner and
two persons appointed by Manager immediately upon execution of
this Agreement. Within three (3) weeks of the date hereof,
Manager shall prepare and submit to the Pre-Opening Committee,
the Pre-Opening Budget for the committee's approval. The Pre-
Opening Committee shall also prepare promptly the Pre-Opening
Plan detailing each party's responsibilities (including those set
forth in Section 3.07) and the time frame for the performance of
such responsibilities during the Development Term. Each party
agrees to use its best efforts to timely complete each task, in
accordance with the Pre-Opening Plan and the Pre-Opening Budget.
The Pre-Opening Committee shall submit progress reports to Owner
on a regular basis. Manager agrees not to exceed the Pre-Opening
Budget without the prior approval of Owner.
Section 3.05 OBLIGATIONS DURING DEVELOPMENT TERM.
(a) Owner represents that it has commenced the construction
of the Riverboat, and agrees that it shall diligently complete
the construction of the Riverboat by approximately October, 1996.
(b) Owner and Manager shall file all applications necessary
to obtain all required permits and other approvals necessary to
operate the Riverboat, and the Casino located therein, as
contemplated by this Agreement.
Section 3.06 CONSTRUCTION.
The construction of the Riverboat shall be in accordance
with appropriate laws, regulations and ordinances of any kind and
nature.
Section 3.07 PRE-OPENING SERVICES BY MANAGER.
(a) Prior to the Commencement Date, Manager, as agent of
Owner, shall, among other things, perform or arrange for others
to perform the following services on behalf of and for the
account of Owner pursuant to the Pre-Opening Plan and Pre-Opening
Budget (the "Pre-Opening Services").
(b) Manager shall implement the marketing portion of the
approved Pre-Opening Plan, including, but not limited to, direct
sales, media and direct mail advertising, promotion, publicity
and public relations designed to attract customers to the
Riverboat from and after the Commencement Date.
(c) Manager shall recruit, hire, provide orientation to and
train all executive and general staff of the Riverboat, including
all personnel to be utilized during the period from the date
hereof until the Commencement Date in accordance with the Pre-
Opening Plan.
(d) Manager shall prepare and deliver to Owner a list of all
Operating Supplies necessary to operate the Casino and Owner
shall timely purchase the initial inventories for the Casino and
the Riverboat.
Section 3.08 PAYMENT OF PRE-OPENING EXPENSES.
The cost of the Pre-Opening Expenses shall be paid by Owner.
Pre-Opening Expenses and the time schedule for incurring such
expense shall be established in the Pre-Opening Budget and Pre-
Opening Plan. Owner shall deposit such sums to fund the Pre-
Opening Expenses in accordance with the schedules as shall be
established by the parties in the Pre-Opening Plan and Pre-
Opening Budget and
Owner shall maintain sufficient funds therein to timely provide
for any and all Pre-Opening Expenses.
ARTICLE 4. OPERATIONS
Section 4.01 ACCOUNTING PROCEDURES AND SERVICES BOOKS AND
RECORDS.
Manager shall use its best efforts to cause Owner's
employees to maintain a complete accounting system in connection
with the operation of the Riverboat. The books and records shall
be kept in accordance with generally accepted accounting
principles consistently applied and in accordance with federal
tax laws. Such books and records shall be kept on a calendar year
basis. Books and accounts shall be maintained at the Riverboat.
Manager shall use its best efforts to cause Owner to comply with
all requirements with respect to internal controls in accounting
and Owner shall prepare and provide all required reports under
the rules and regulations of the Riverboat Authorities regarding
the operations of the Riverboat. The cost of preparing such
reports shall be an Operating Expense. All operating bank
accounts shall be maintained in the state of Missouri.
Section 4.02 OWNER'S ACCESS TO GAMING FINANCIAL RECORDS.
Owner, at its option and at its sole cost and expense, may
engage and appoint a representative to review, examine, and copy
the gaming books and records, including all daily reports,
prepared by Manager detailing the results of operations of
Manager's business conducted from the Riverboat during regular
business hours. Any representative's review, examination and
copying shall be conducted in such a manner so as to not be
disruptive to Manager's operations. Such representative shall at
all times be bound by Owner's confidentiality covenant contained
in Section 16.05 hereof.
Section 4.03 AUDITS.
Owner shall engage a certified public accountant to audit
the operations of the Riverboat as of and at the end of each
calendar year (or portion thereof) occurring after the date of
this Agreement (the "Audited Statements") by a nationally
recognized reputable accounting firm ("Regular Auditor"), and a
sufficient number of copies of the Audited Statements shall be
furnished to Owner and Manager as soon as available to permit
Owner and Manager to meet any public reporting requirements as
may be applicable to them, but in no event later than ninety (90)
days following the end of such fiscal period (such 90th day to be
the "Audit Day"). All costs and expenses incurred in connection
with the preparation of the Audited Statements shall be Operating
Expenses. Nothing herein contained shall prevent either party
from designating an additional
reputable accounting firm ("Special Auditor") to conduct an
audit of the Riverboat as of the end of the calendar year during
regular business hours at the requesting party's expense;
provided, however, that if the additional audit shall reveal
a discrepancy within the control of Manager in the computation
of Gross Gaming Revenue of more than 5% from the audit
performed by the Regular Auditor, then the special audit shall
be paid for by Manager. In the event of any dispute between the
Regular Auditor and the Special Auditor as to any item subject
to audit, the Regular Auditor and the Special Auditor shall
select a third national, reputable accounting firm whose resolution
of such dispute shall bind the parties.
Section 4.04 MONTHLY FINANCIAL STATEMENTS.
On or before the thirtieth (30th) day of each month, Owner
shall prepare under the supervision of Manager an unaudited
operating statement for the preceding calendar month detailing
the Gross Revenue and expenses incurred in the operation of the
Riverboat (the "Monthly Financial Statements"). The Monthly
Financial Statements shall include a statement detailing drop
figure accounts on all Gross Gaming Revenue.
Section 4.05 EXPENSES.
All costs, expenses, funding or operating deficits and
Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the
gaming and nongaming operations of the Riverboat shall be the
sole and exclusive financial responsibility of Owner, except for
those instances herein where it is expressly and specifically
stated that such costs and expenses shall be the responsibility
of Manager. It is understood that statements herein indicating
that Manager shall furnish, provide or otherwise supply, present
or contribute items or services hereunder shall not be
interpreted or construed to mean that Manager is liable or
responsible to fund or pay for such items or services, except in
those instances specifically mentioned herein.
Section 4.06 STANDARDS.
(a) Manager shall exclusively manage and maintain the
Riverboat in a manner reasonably consistent with other riverboat
gaming operators in the management of riverboat casinos of the
same or similar type, class and quality, located in Missouri
subject to such adjustments as Manager in its reasonable
discretion deems necessary to adjust to the Lemay, Missouri
riverboat gaming market. Manager shall establish such standards
and procedures in its reasonable business judgment, subject only
to standards and procedures required by law.
(b) Owner hereby agrees that Manager shall have
uninterrupted control of and the exclusive responsibility for the
operation of the Riverboat during the Term of this Agreement.
Owner will not interfere or involve itself with the day-to-day
operation of the Riverboat, and Manager shall operate the
Riverboat free of eviction or disturbance by Owner or any third
party claiming by, through or under Owner. Manager agrees that it
will discharge its duties and responsibilities in the control and
operation of the Casino in good faith and for the purposes of
maximizing Gross Gaming Revenue; provided, however, that in no
event shall Owner make any claim against Manager on account of
any alleged errors of judgment made in good faith in connection
with the operation of the Riverboat. Manager agrees that,
notwithstanding the foregoing, it shall not alter the interior
and exterior design and architecture, including color schemes of
the Casino, nor make any structural engineering modifications
without the prior written consent of Owner.
(c) All persons employed in connection with the operations
of the Riverboat, including the Casino located therein, shall be
employees of Owner or a subsidiary of Owner, except for Manager's
Management Team. Manager shall determine the fitness and
qualifications of all Casino employees, whether Owner employees
or Manager's Management Team, subject only to Missouri riverboat
gaming licensing standards. Manager shall hire, supervise, direct
the work of, and discharge all personnel working in the
Riverboat. Manager shall determine the wages and conditions of
employment of all employees, all of which shall be comparable to
the existing standards therefor in Missouri for employees of
riverboat casinos. Manager and Owner shall consult, and if Owner
approves, Manager may hire at Owner's expense consultants or
independent contractors for surveillance, security and other
matters. All wages, bonuses, compensation and entitlements of
employees of the Riverboat and the Manager's Management Team
(although not employees of the Riverboat), shall be an expense of
Owner.
(d) Manager shall assign experienced gaming executives to
direct and supervise the management of the Riverboat (the
"Manager's Management Team"). Manager shall solely select
individuals who shall collectively represent Manager's Management
Team.
(e) Manager shall formulate, coordinate and implement
promotions and sales programs for casino operations on the
Riverboat and Owner shall cause the Riverboat to participate in
such sales and promotional campaigns and, as appropriate,
activities involving complimentary food and beverages to patrons
of the Riverboat in Manager's sole discretion in the exercise of
good management practice. All such promotion and sales programs
shall be an expense of Owner.
Section 4.07 PLANS AND BUDGETS.
(a) Manager shall furnish Owner with the Operating Budget
within thirty (30) days of the Effective Date of this Agreement.
Manager shall use its best efforts to comply with the Operating
Budget to meet or exceed the goals set forth therein.
(b) Owner shall approve or disapprove the Operating Budget
within twenty (20) days of receipt of the budget, provided that
if Owner does not give written notice to Manager of its approval
or disapproval within such time period, the Operating Budget
shall be deemed approved. Owner's approval of the Operating
Budget cannot be unreasonably withheld or delayed. Owner may hire
a consultant to evaluate the Operating Budget. In the event that
Owner disagrees with any line item contained in the Operating
Budget, Owner shall discuss its disagreement with Manager.
Manager will, within ten (10) days of notice of Owner's
disagreement, offer constructive corrections to resolve Owner's
concerns. During any period that Owner disapproves of the
Operating Budget, Manager will continue to manage the Riverboat
in accordance with the Operating Budget for the preceding year
plus ten percent (10%), as the same may be adjusted for increases
year-to-year in the Consumer Price Index applicable to the St.
Louis area.
(c) The Operating Budget may be amended from time to time
with Owner's and Manager's approval, which approvals shall not be
unreasonably withheld or delayed, after submission by Manager or
Owner, as applicable, of the amendments to such budget and the
rationale for such amendments.
(d) Manager and Owner make no guaranty, warranty or
representation whatsoever in regard to either of the Operating
Budget, the same being intended as reasonable estimates only.
(e) Manager shall furnish Owner with the Initial Inventory
and the Initial Inventory Price on or before ____________, 1995.
Section 4.08 MANAGEMENT.
Manager shall have the discretion and authority to determine
operating policies and procedures, standards of operating,
staffing levels and organization, win payment arrangements,
standards of service and maintenance, food and beverage quality
and service, pricing, and other policies affecting the Riverboat,
or the operation thereof, to implement all such policies and
procedures, and to perform any act on behalf of Owner which
Manager deems necessary or desirable in its reasonable business
judgment for the operation and maintenance of the Riverboat on
behalf of, for the account of, and at the expense of Owner.
Section 4.09 BANK ACCOUNTS.
Immediately upon giving written notice to Manager of the
Commencement Date, Owner shall have established bank accounts
that are necessary for the operation of the Riverboat, including
an account for the Casino Bankroll, and to effect the Pre-Opening
Plan at various banking institutions chosen by Owner and
reasonably acceptable to Manager (such accounts are hereinafter
collectively referred to as the "Bank Accounts"). The Bank
Accounts shall be in Owner's name. Checks drawn on the Bank
Accounts shall be signed only by representatives of Manager who
are covered by the fidelity insurance described in Section 10.01
and Manager may be the only signatures on checks drawn on the
Bank Accounts which do not exceed $50,000. Any checks exceeding
$50,000 shall be executed by a representative of Owner and a
representative of Manager. The Bank Accounts shall be interest
bearing accounts if such accounts are reasonably available and
all interest thereon shall be credited to the Bank Accounts. All
Gross Revenue shall be deposited in the Bank Accounts and Manager
shall use its best efforts to cause Owner to pay out of the Bank
Accounts, to the extent of the funds therein, from time to time,
all Operating Expenses and other amounts required by Manager to
perform its obligations under this Agreement. All funds in the
Bank Accounts shall be separate from any other funds of any of
Owner's Affiliates and Owner may not commingle any of Owner's
funds with the funds of any of Owner's Affiliates in the Bank
Accounts. Owner shall bear the risk of the insolvency of any
financial institutions holding such Bank Accounts.
Section 4.10 CREDIT.
If permitted by Missouri law, all decisions regarding the
granting and collection of credit shall be governed by the Credit
Policy to be developed by Manager and Owner. All credit
consistent with the Credit Policy shall be for the account of and
at the sole risk of Owner.
Section 4.11 OWNER'S ADVANCES.
Owner shall advance to Manager on a timely and prompt basis
immediately available funds to conduct the affairs of the
Riverboat and maintain the Riverboat (hereinafter referred to as
"Owner's Advances") as set forth in this Agreement and as
otherwise provided hereunder.
(a) Pre-Opening Budget. Owner shall timely deposit in the
Bank Accounts the amounts set forth in the Pre-Opening Plan and
Pre-Opening Budget or any revisions thereof approved by Owner. In
the event that Owner or Manager anticipates a delay in the
opening of the Riverboat beyond October, 1996, each shall be
obligated to immediately notify the other in writing and Owner
shall, at the request of Manager, at any time and from time to
time, deposit any additional amounts that are reasonably
necessary to pay the additional pre-opening expenses attributable
to the delay, which shall include, without limitation, wages and
other expenses relating to the Riverboat personnel already
employed.
(b) Initial Cash Needs. Two (2) weeks prior to the
Commencement Date, Owner shall fund the Operating Capital
necessary to commence operating the Riverboat, in an amount not
to exceed the estimated operating expenses for eight (8) weeks,
as set forth in the Operating Budget, and an amount equal to the
Casino Bankroll.
(c) Operating Capital. During the Term of this Agreement,
within five (5) Business Days after receipt of written notice
from Manager, Owner shall fund Owner's Advances in such a fashion
so as to adequately insure that the Operating Capital set forth
in the Operating Budget as revised is sufficient to support the
uninterrupted and efficient ongoing operation of the Riverboat.
The written request for any additional Operating Capital shall be
submitted by Manager to Owner on a monthly basis based on the
interim statements and the Operating Budget as revised.
(d) Payment of Expenses. Owner shall pay from the Gross
Revenue the following items in the order of priority listed
below, subject to the laws of the state of Missouri, on or before
their applicable due date: (i) Operating Expenses (including
taxes and Management Fee), (ii) emergency expenditures to correct
a condition of an emergency nature, including structural repairs,
which require immediate repairs to preserve and protect the
Riverboat, (iii) required payments to the state of Missouri, and
(iv) principal, interest and other payments due the holder of any
Institutional Mortgage. In the event that funds are not available
for payment of the Operating Expenses in their entirety all state
and local taxes shall be paid first from the available funds.
Failure to pay the Management Fee in accordance with the time
periods set forth in this Agreement shall constitute a default of
this Agreement.
Section 4.12 SPECIAL EVENTS.
Owner shall have the right from time to time to use a
portion of the Riverboat to host special events (each, a "Special
Event") provided (i) Owner gives Manager at least two (2) weeks
prior written notice of the Special Event and (ii) the Special
Event does not unreasonably interfere with the efficient
operation of the Riverboat. Manager shall have the right to make
revisions to the Operating Budget to reflect the impact of such
events, subject to Owner's approval.
Section 4.13 COOPERATION OF OWNER AND MANAGER.
Owner and Manager shall cooperate fully with each other
during the Term of this Agreement to facilitate the performance
by Manager of Manager's obligations and responsibilities set
forth in this Agreement and to procure and maintain all
construction and operating permits. Owner shall provide Manager
with such information pertaining to the Riverboat necessary to
the performance by Manager of its obligations hereunder as may be
reasonably and specifically requested by Manager from time to
time.
Section 4.14 FINANCING MATTERS.
(a) If Owner, or any Affiliate of Owner shall, at any time,
sell or offer to sell any securities issued by Owner or any
Affiliate of Owner through the medium of any prospectus or
otherwise and which relates to the Riverboat or its operation, it
shall do so only in compliance with all applicable laws, and
shall clearly disclose to all purchasers and offerees that,
except to the extent of Manager or its Affiliates' interest in
Owner, (i) neither Manager nor any of its Affiliates, officers,
directors, agents or employees shall in any way be deemed to be
an issuer or underwriter of such securities, and (ii) Manager and
its Affiliates, officers, directors, agents and employees have
not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including
without limitation, any liability or responsibility for any
financial statements, projections or other information contained
in any prospectus or similar written or oral communication.
Manager shall have the right to approve any description of
Manager or its Affiliates, or any description of this Agreement
or of Owner's relationship with Manager hereunder, which may be
contained in any prospectus or other communications, and Owner
agrees to furnish copies of all such materials to Manager for
such purposes not less than twenty (20) days prior to the
delivery thereof to any prospective purchaser or offeree. Owner
agrees to indemnify, defend or hold Manager and its Affiliates,
officers, directors, agents and employees, free and harmless from
any and all liabilities, costs, damages, claims or expenses
arising out of or related to the breach of Owner's obligations
under this Section 4.14. Manager agrees to reasonably cooperate
with Owner in the preparation of such agreements and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in Section 4.14, Owner may
represent that the Riverboat shall be managed by Manager and
Manager may represent that it manages the Riverboat and both may
describe the terms of this Agreement and the physical
characteristics of the Riverboat in regulatory filings and public
or private offerings. Moreover, nothing in this Section shall
preclude the disclosure of (i) already public information, or
(ii) audited or unaudited financial statements from the Riverboat
required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the
Governmental Authorities, or (iv) the amount of the Management
Fees earned in any period. Both parties shall use their best
efforts to consult with the other concerning disclosures as to
the Riverboat. Owner and Manager shall cooperate with each other
in providing financial information concerning the Riverboat and
Manager that may be required by any lender or required by any
Governmental Authority.
(c) In the event that the holder of any Institutional
Mortgage requires the collateral assignment of this Agreement as
further security for its loan, Manager shall consent to such
assignment; provided, however, that such collateral assignment
shall contain non-disturbance provisions satisfactory to Manager
and provided further that in no event shall Manager be required
to accept any reduction or subordination of its Management Fee
and Incentive Management Fee or to diminish any right which it
may have under this Agreement.
Section 4.15 CONFLICT OF INTEREST/NON-COMPETITION.
Owner acknowledges that Manager and/or its Affiliates
operate other casinos in Missouri and throughout the world and
may in the future operate additional casinos in different areas
of the world, and that marketing efforts may cross over in the
same markets and with respect to the same potential customer
base. Manager, in the course of managing the Casino, may refer
customers of the Riverboat and other parties to other facilities
operated by Affiliates of Manager to utilize gaming,
entertainment and other amenities, without payment of any fees to
Owner. Owner consents to such activities and agrees that such
activities will not constitute a conflict of interest. Owner
acknowledges and agrees that Manager may distribute promotional
materials for Manager's Affiliates and facilities, including
casinos, at the Riverboat. Either Manager or Owner and/or their
Affiliates in the future may acquire an interest or operate other
casinos, including, without limitation, any similar or
competitive riverboat operation in Missouri, so long as such
casino is not within the boundaries as shown on the map attached
hereto as Exhibit "A".
ARTICLE 5. MANAGEMENT FEE
Section 5.01 PAYMENTS TO MANAGER.
The Management Fee shall be paid monthly. Manager shall
deposit the Management Fee into the Management Fee Account for
any calendar month in which the Riverboat conducts gaming
operations by the twentieth (20th) day of the following month.
The Management Fee shall be deemed paid upon deposit in the
Management Fee Account.
ARTICLE 6. MANAGER'S RIGHT OF FIRST
REFUSAL TO MANAGE RIVERBOAT
In the event that Owner transfers the Riverboat to conduct a
gaming business in a new location or locations other than on the
Casino Site, Owner hereby grants to Manager a right of first
refusal to manage the gaming operations of the Riverboat at such
new location. Should Owner determine to so relocate the
Riverboat, Owner shall immediately submit to Manager in writing
the terms of the management agreement acceptable to Owner. Owner
covenants and agrees that the terms for the management agreement
for such relocated Riverboat shall be substantially similar to
the terms hereof, with such changes as are necessary to reflect
the appropriate laws and regulations governing gaming operations
at such new location. The offer or terms submitted hereby shall
be accompanied by a written notice giving Manager a first right
to manage the relocated Riverboat within the time provided in
such offer, but in no event less than thirty (30) days of the
date upon which Manager receives from Owner notification of such
terms. If Manager elects to exercise its right of first refusal,
Manager shall give Owner written notice thereof within thirty
(30) days of receipt of the notification from Owner and Manager
and Owner shall prepare and execute a management agreement for
such relocated Riverboat within sixty (60) days following Owner's
receipt of acceptance by Manager.
ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS
TO THE RIVERBOAT AUTHORITIES
Section 7.01 PAYMENT OF TAXES AND ASSESSMENTS.
Owner shall be responsible for the payment when due, if any,
of all taxes and assessments, including, without limitation,
property taxes, assessments for benefits from public works or
improvements, levies, fees, Gaming Taxes, and all other
governmental charges, general or special, ordinary or
extraordinary, foreseen or unforeseen, together with interest and
penalties thereon, which may heretofore or hereafter be levied
upon or assessed against the Riverboat. All charges set forth in
this Section 7.01 are herein called "Impositions." If any
Impositions are levied or assessed against the Riverboat which
may be legally paid in installments, Owner shall have the option
to pay such Impositions in installments except that each
installment thereof, and any interest thereon, must be paid by
the final date fixed for the payment thereof. In the event of the
enactment, adoption or enforcement by any Governmental
Authorities or Riverboat Authorities of any assessment, levy, fee
or tax, whether sales, use or otherwise, on or in respect of the
Management Fee and charges set forth herein, Owner shall pay such
assessment, levy, fee or tax.
Section 7.02 EXCEPTIONS.
Nothing contained in this Agreement shall be construed to
require Owner to pay any estate, inheritance or succession tax,
corporate franchise tax or any net income or excess profits tax
of Manager.
ARTICLE 8. USE AND OCCUPANCY OF THE CASINO
Section 8.01 USES.
Manager agrees to manage the Riverboat continuously during
the Term hereof only for the purpose of legally operating a
gaming casino establishment and related ancillary services.
Manager and Owner shall not use or allow the Riverboat or any
part thereof to be used or occupied for any unlawful purpose or
for any dangerous or other trade or business not customarily
deemed acceptable to relevant casinos. In no event may Manager or
Owner conduct ancillary uses which violate the Missouri Gaming
Act. In addition, Manager shall not knowingly permit any unlawful
occupation, business or trade to be conducted on the Riverboat or
any use to be made of the Casino contrary to any law, ordinance
or regulation as aforesaid with respect thereto.
Section 8.02 NAME.
Manager or its Affiliates (excluding Owner) are the owners
of the trademark "Showboat," its logos, trademarks, tradenames,
service marks, and any variation or extension of such name
(collectively "Trademark"). Manager shall operate the Riverboat
under the Trademark, and shall grant to Owner a non-exclusive
personal and non-transferable right to use the Trademark in
Lemay, Missouri in connection with the operation of the
Riverboat, pursuant to a trademark license agreement satisfactory
to Manager or its Affiliates. Notwithstanding the foregoing,
Owner acknowledges that its use of the Trademark shall not create
in Owner's favor any right, title, or interest in or to the
Trademark, but all rights of ownership and control of the
Trademark shall reside solely in Manager or its Affiliates.
ARTICLE 9. MAINTENANCE AND REPAIRS
Section 9.01 OWNER'S MAINTENANCE AND REPAIRS.
Owner, at its cost, shall maintain, in good condition and
repair, the following:
(a) The structural parts of the Riverboat;
(b) The electrical, plumbing, and sewage systems of the
Riverboat;
(c) Heating, ventilating, and air conditioning systems
servicing the Riverboat.
Owner shall have ten (10) days after notice pursuant to
Article 22 from Manager to commence to perform its obligations
under Section 9.01, except that (i) Owner shall perform its
obligations immediately upon receipt of oral notice from Manager
if the nature of the problem presents a hazard or emergency; or
(ii) Owner shall perform and complete its obligations within
twelve (12) hours after receipt of written or oral notice from
Manager if the nature of the problem interferes with gaming
operations in the Casino. If Owner does not perform its
obligations within the time limitations in this Section, Manager
may perform the obligations of Owner and have the right to be
reimbursed for the sum it actually expends in the performance of
Owner's obligations. Any amounts paid by Manager shall be due
from Owner on the first (lst) day of the month occurring after
any such payment, with interest at the rate of twelve percent
(12%) per annum from the date of payment thereof by Manager until
repayment thereof by Owner.
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.01 OWNER INSURANCE OBLIGATIONS.
Owner covenants and agrees that it will at all times stated
herein, at its sole cost and expense, of this Agreement, keep the
Riverboat insured, with:
(a) appropriate marine hull insurance coverage forms to
provide coverage for all risks as is traditionally covered by
such insurance. The marine hull insurance shall contain full
repair and replacement coverage and against all risks as now are
or hereafter may be available by extended coverage form or
endorsements in an amount not less than one hundred percent
(100%) of the full insurable replacement value of the Vessel.
Owner shall obtain such marine hull insurance coverage at the
time that it obtains possession of the Vessel, and Owner shall
maintain such insurance thereafter until the termination of this
Agreement.
(b) full repair and replacement coverage endorsements,
against all risks including, but not limited to, ice, floods and
earthquakes, and against loss or damage by such other, further
and additional risks as now are or hereafter may be available by
standard extended coverage forms or endorsements in an amount
sufficient to prevent Manager or Owner from becoming a co-insurer
of any loss, but in no event in an amount less than one hundred
percent (100%) of the full insurable replacement value of the
Riverboat. So long as Owner is not in default under this
Agreement, all proceeds of insurance not otherwise applied for
the purpose of repairing, replacing or restoring the damage
insured against or applied to an Institutional Mortgage shall be
paid over to Owner.
Owner shall obtain such insurance coverage at the time that it
obtains possession of the Riverboat (exclusive of the Vessel),
and Owner shall maintain such insurance thereafter until the
termination of this Agreement.
(c) general comprehensive public liability insurance
including Broad Form Liability coverage (including coverage for
false arrest, wrongful detention and invasion of privacy, and
coverage for elevators, if any, on the Riverboat) against claims
for bodily injury, death or property damage occurring on, in or
about the Riverboat, the ancillary facilities and the adjoining
streets, sidewalks and passageways, such insurance to afford
protection, with respect to any one occurrence, of not less than
$1,000,000 and no less than $5,000,000 in the aggregate or such
higher amount as Owner and Manager may from time to time
reasonably agree to be maintained, which insurance shall also
cover Owner's liability under any indemnity contained herein, it
being understood that the standard of reasonableness shall be
that amount of insurance which a prudent owner of a comparable
property would maintain. Owner shall also obtain and maintain a
$40,000,000 umbrella liability policy in excess of the general
comprehensive public liability policy. Owner shall obtain such
general comprehensive public liability insurance at the time that
Owner employs its first employee, and Owner shall maintain such
insurance until the termination of this Agreement.
(d) adequate boiler and pressure vessel insurance on all
equipment, parts thereof and appurtenances attached or connected
to the Riverboat which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding. Owner
shall obtain such insurance at the time that it obtains
possession of the Vessel, and Owner shall maintain such insurance
thereafter until the termination of this Agreement.
(e) war-risk insurance as and when such insurance is
obtainable from the United States Government or any agency or
instrumentality thereof, and a state of war or national or public
emergency exists or threatens, in an amount not less than the 90%
of the replacement value of the Riverboat.
(f) such other insurance as Owner and Manager may from time
to time reasonably agree to be maintained or as may be required
by lenders of Owner in such amounts and against such insurable
hazards which at the time is customary in the case of businesses
similarly situated.
(g) for the mutual benefit of Owner and Manager, maintain
liquor liability insurance in an amount to be determined by
Owner, covering Manager and Owner under any liquor liability laws
which may currently be in existence or which may hereafter be
enacted as they would be applicable to Manager's operations of
the Riverboat.
Owner shall obtain such insurance on or before the Commencement Date,
and Owner shall maintain such insurance until the termination of the
Agreement.
(h) all required workmen's compensation insurance or
equivalent Missouri industrial accident coverage, or coverages
required by the federal maritime act (a\k\a ▇▇▇▇▇ Act). Owner
shall obtain such insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(i) business interruption resulting from losses covered
under policies covering land-based buildings and marine water
borne hull will be required in an amount sufficient to protect
losses for a period of six (6) months. Owner shall obtain such
insurance on or before the Commencement Date, and Owner shall
maintain such insurance until the termination of this Agreement.
(j) crime insurance which includes fidelity and such other
crime coverages as may be desired in the amount of $5,000,000.
Owner shall obtain such insurance at the time that Owner employs
its first employee, and Owner shall maintain such insurance until
the termination of this Agreement.
Section 10.02 PARTIES INSURED.
The policies with respect to such insurance as described in
Section 10.01 shall name Owner and Manager as parties insured
thereby and such policies shall require all insurance proceeds
except for liability and third party insurance to be paid to a
Trustee as designated pursuant to Article 13. Such policies shall
also contain, when requested by Owner or Manager, a mortgagee
clause or clauses naming the mortgagee or mortgagees involved
and/or the holder or such mortgage or mortgages as parties
insured thereby (in the form required by such mortgagee or
mortgagees) all as their respective interests may appear and with
loss payable provisions accordingly.
Section 10.03 APPROVED INSURANCE COMPANIES.
Insurance procured under this Article 10 shall be placed
with reputable, financially sound insurance companies, with a
Best guide rating of A-10 admitted in the state of Missouri,
acceptable to Owner and Manager, as the parties may mutually
agree.
Section 10.04 APPROVAL OF INSURANCE COVERAGE.
Each year, Owner shall submit to Manager a summary of the
insurance coverage maintained by Owner (including deductibles)
with respect to the Riverboat and Manager shall have thirty (30)
days thereafter to give its comments thereon to Owner. If Owner
receives
no written comments from Manager within said period, the insurance
program shall be deemed approved for that year.
Section 10.05 FAILURE TO OBTAIN REQUIRED INSURANCE.
In the event Owner shall at any time fail, neglect, or
refuse to maintain any of the insurance required under the
provisions of this Article 10, then Manager may procure or renew
such insurance, and any amounts paid therefor by Manager shall be
due from Owner on the first day of the month occurring after any
such payment, with interest at the rate of twelve percent (12%)
per annum from the date of payment thereof by Manager until
repayment thereof to Manager by Owner.
Section 10.06 WAIVER OF SUBROGATION.
As long as the insurer of a party is willing to include a
waiver of subrogation in the policies insuring against the loss
or damages referred to in this Article 10 without an extra
charge, the parties shall cause the waiver of subrogation to be
included in the policies. If an insurer of a party is willing to
include a waiver of subrogation in an insurance policy only if an
extra charge is paid, the party carrying the insurance shall be
required to cause the waiver of subrogation to be included in the
policy only if the other party pays the extra charge.
Section 10.07 MUTUAL COOPERATION.
Owner shall cooperate with Manager to the extent Manager may
reasonably require, and Manager shall cooperate with Owner to the
extent Owner may reasonably require in connection with the
prosecution or defense of any action or proceeding arising out
of, or for the collection of any insurance proceeds and will
execute and deliver to Owner or Manager, as the case may be, such
instruments as may be properly required to facilitate the
recovery of any insurance proceeds (including the endorsement by
Owner or Manager over to the Trustee of all checks evidencing
said insurance proceeds).
Section 10.08 DELIVERY OF INSURANCE POLICIES.
Owner shall deliver, as applicable, promptly after the
execution and delivery of this Agreement the original or
duplicate policies or certificates of insurers satisfactory to
Manager evidencing all the insurance which is then required to be
maintained by Owner hereunder. Owner shall, within thirty (30)
days prior to the expiration of any such insurance, deliver to
Manager original or duplicate policies or other certificates of
the insurers evidencing the renewal of such insurance.
Section 10.09 INDEMNIFICATION BY MANAGER.
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Manager or
those holding under Manager, and that Manager will at all times
protect, indemnify and save and keep Owner harmless against and
from any and all claims and against and from any and all loss,
cost, damage or expense, including reasonable attorneys' fees,
arising out of any failure of Manager in any respect to comply
with and perform all the requirements and provisions hereof
except where any penalty, damage, charges, loss, cost or expense
is caused by the sole or negligent or the wanton or willful acts
of Owner's directors, officers, employees, agents or
stockholders. Without limiting the generality of the foregoing
and with the inclusion of the same exceptions as set forth above,
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Owner where such claim arises out of or is asserted in
connection with Manager's management of the Casino, including any
claim by any subtenant, guest, licensee or invitee of Manager.
This indemnity does not apply to loss or damage occasioned by
defects in the Riverboat.
Section 10.10 INDEMNIFICATION BY OWNER.
Owner covenants and agrees that it will protect, keep and
defend Manager forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Owner or
those holding under Owner, and that Owner will at all times
protect, indemnify, defend and save and keep harmless Manager
against and from any and all claims and against and from any and
all loss, cost, damage or expense, including reasonable
attorneys' fees, arising out of any failure of Owner in any
respect to comply with and perform all the requirements and
provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the negligent or the wanton or
willful acts of Manager's officers, agents, employees or
stockholders. Without limiting the generality of the foregoing,
and with the inclusion of the same exceptions as set forth above,
Owner covenants and agrees it will protect, keep and defend
Manager forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Manager where such claim arises out of or is asserted in
connection with Owner's ownership of the
Riverboat. This indemnity does not apply to loss or damage occasioned
by defects in the Riverboat.
Section 10.11 SELECTION OF COUNSEL/CONDUCT OF LITIGATION.
Defense counsel engaged by Manager or Owner, as indemnitor,
shall be reasonably acceptable to Manager and Owner, as
indemnitee. Without limiting the generality of the foregoing,
indemnitee shall be promptly provided with copies of all claims
and pleadings (as well as correspondence, memos, documents and
discovery with respect thereto, unless within the scope of any
applicable privilege) relating to any such matters. Indemnitee
shall be given prior written notice of all meetings, conferences
and judicial proceedings and shall be afforded an opportunity to
attend and participate in same. Indemnitee shall have the right
to engage independent counsel, at its sole expense, to represent
indemnitee as additional and/or co-counsel in all such
proceedings, trials, appeals and meetings with respect thereto.
ARTICLE 11. CASUALTY
In case of any damage or loss to the Riverboat by reason of
fire or otherwise, Manager shall give immediate notice thereof to
Owner. If the Riverboat shall at any time be damaged or destroyed
by fire or otherwise, Owner shall at its sole option either (i)
promptly repair or rebuild same at Owner's expense, so as to make
the Riverboat at least equal in value to the Riverboat existing
immediately prior to such occurrence and as nearly similar to it
in quality and character as shall be practicable and reasonable
or (ii) if dockside gaming is permitted under the laws of the
state of Missouri, promptly construct a barge in compliance with
all regulations of the Riverboat Authorities. Owner shall submit
for Manager's approval, which approval Manager shall not
unreasonably withhold or delay, complete detailed plans and
specifications for such rebuilding or construction. Promptly
after receiving Manager's approval of said plans and
specifications, Owner shall begin such repairs and rebuilding and
shall prosecute the same to completion with diligence, subject,
however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other foreseeable causes beyond
the reasonable control of Owner. Insofar as a certificate of
occupancy may be necessary with respect to such repairs or
construction, Owner shall obtain a temporary or final certificate
of occupancy or similar certificate before the Riverboat shall be
occupied by Manager. Such repairs, rebuilding or construction
shall be completed free and clear of mechanics' or other liens,
in accordance with the building code and all applicable laws,
ordinances, regulations or orders of any state, municipal or
other public authority affecting the same.
ARTICLE 12. TAKING OF THE RIVERBOAT
Section 12.01 DEFINITIONS.
(a) "Permanent Taking" means the permanent taking (more than
one year) of, or permanent damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(b) "Temporary Taking" means the temporary taking (one year
or less) of, or temporary damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(c) "Taking Date" means the date on which a condemning
authority shall have the right of possession of property pursuant
to a Permanent Taking or a Temporary Taking.
(d) "Award" means the award for, or proceeds of, a taking
less all fees and expenses incurred in connection with collecting
the award or proceeds including the reasonable fees and
disbursements of attorneys, appraisers, and expert witnesses.
Section 12.02 ENTIRE TAKING OF THE SUPPORT AREAS.
The following shall apply if all or a part of the Riverboat
are taken pursuant to a Permanent Taking or a Temporary Taking:
(a) Owner shall be entitled to any Award.
(b) If all of the Riverboat is taken pursuant to a Permanent
Taking, this Agreement shall be terminated as of the Taking Date.
(c) If all or such portion of the Riverboat is taken
pursuant to a Permanent Taking which renders it uneconomic to
continue operation of the Riverboat in Manager's reasonable
judgment, Manager shall have the option to terminate this
Agreement by giving Owner notice of termination within ten (10)
days after Owner gives Manager notice of the Permanent Taking.
This Agreement will terminate five (5) days after Manager
delivers its written termination notice to Owner.
(d) If all or a part of the Riverboat is taken pursuant to a
Temporary Taking, Manager shall have the option to terminate this
Agreement by giving Owner notice of termination within ten (10)
days after Owner gives Manager notice of the Temporary Taking.
This Agreement will terminate five (5) days after Manager
delivers its written termination notice to Owner.
Section 12.03 DUTY TO RESTORE.
If part of the Riverboat is taken pursuant to a Permanent
Taking and this Agreement is not terminated, then Owner shall
restore the Riverboat to an architectural unit as near as
possible to its function and condition immediately prior to the
Permanent Taking. The restoration shall begin promptly after the
Taking Date and shall be prosecuted diligently. If a party shall
have an option to terminate with respect to the Permanent Taking,
then Owner may delay the beginning of the restoration until the
option is waived or until the time within which the option may be
exercised expires.
ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS
Section 13.01 TRUSTEE.
If the Riverboat is encumbered by an Institutional Mortgage,
the "Trustee" shall be the Institutional Mortgagee or a national
bank designated by such mortgagee. If the Riverboat is not
encumbered by an Mortgage, the "Trustee" shall be a commercial
bank which maintains an office in the greater St. Louis
metropolitan area and the total assets of which exceed $1
billion, and the Trustee shall be selected by Owner subject to
the reasonable approval of Manager. An "Institutional Mortgage"
is a Mortgage granted to an Institution. An "Institution" is a
bank, insurance company, trust company, savings and loan
association, real estate investment trust, pension trust,
governmental entity or similar institution. An "Institutional
Mortgagee" is the holder of Mortgage of Owner's interest in the
Riverboat.
Section 13.02 DEPOSITS OF INSURANCE PROCEEDS AND AWARDS.
In the event this Agreement is not terminated all insurance
proceeds and Awards shall be paid to the Trustee. If this
Agreement is terminated, all Insurance Proceeds and Awards shall
be paid to Owner and Manager as their interests may apply. All
funds paid to the Trustee shall be held by the Trustee, and the
Trustee shall disburse them solely in accordance with this
Article.
Section 13.03 PROCEDURE FOR DISTRIBUTION OF INSURANCE PROCEEDS
AND AWARDS.
The following shall apply unless this Agreement is
terminated and the termination is not nullified.
(a) The Trustee shall make payments to Owner or Manager, as
appropriate, out of the insurance proceeds or Awards to be
applied to the cost of repair or restoration. The payments shall
be made as the repair or restoration progresses.
(b) The Trustee shall comply with the following requirements
which shall be contained in escrow instructions, if required by
the Trustee, with respect to the payments:
(i) The Trustee shall not make payments more frequently
than once each month.
(ii) Until the repair or restoration is complete, the
Trustee shall make no payment unless the sum of the payment
requested and all previous payments shall be less than ninety
percent (90%) of the cost of the repair or restoration to date.
(iii) The Trustee shall make no payment unless the
balance of the insurance proceeds or Awards shall be at least
sufficient to complete the repair or restoration.
(iv) The Trustee shall make no payment unless it
receives a certificate of Owner or Manager, as appropriate, and a
certificate of Owner's or Manager's architect or engineer, as
appropriate, in accordance with part (c) of this subsection.
(v) The Trustee shall receive, prior to any payment, a
certificate from the Title Insurance Company stating that there
are no liens filed of record.
(c) The certificate of Owner or Manager shall be certified
as true and correct by an officer of Owner or Manager and shall
set forth the following information:
(i) The estimated cost of the repair or restoration.
(ii) The nature of the work to be done and the
materials furnished which form the basis for the requested
payments.
(iii) That the requested payment does not exceed the
reasonable cost of the work and materials.
(iv) That none of the work or materials has been made
the basis for any previous payment.
(v) That, insofar as the work has been completed, the
work complies with the requirements of this Agreement, applicable
legal requirements, and insurance requirements.
(vi) That all contractors, laborers, suppliers and
subcontractors that have performed work shall have been paid any
amount then payable to them.
(d) The architect's or engineer's certificates shall be
certified by an architect or engineer familiar with the work. The
certificate shall be certified as true and correct to the best of
the knowledge, information and belief of the architect or
engineer and shall be based upon periodic on-site inspections of,
and testing by, the architect or engineer. The architect or
engineer selected by one party shall be reasonably satisfactory
to the other party. The architect or engineer shall certify that,
in the opinion of the architect or engineer, the Trustee shall
have complied with the requirements of clauses (ii) and (iii) of
part (b) of this subsection; shall verify that the statements set
forth in clauses (iii), (iv) and (v) of part (c) of this
subsection are true; and shall set forth the information required
by clauses (i) and (ii) of part (c) of this subsection.
(e) Any balance of insurance proceeds or Awards after the
cost of any repair or restoration shall have been paid in full
shall be paid to Owner or Manager, as their interests appear, and
shall be the sole property of such party.
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Except as provided in Section 4.14(c), neither Owner or
Manager shall assign this Agreement or any interest therein
without the prior written consent of the other party, which
consent shall not be unreasonably withheld. However, Manager may
assign or transfer this Agreement to any Affiliate, provided,
that a counterpart original of such assignment is delivered to
Owner on or before the effective date of such assignment, and
provided further that such Affiliate expressly assumes and agrees
to be bound by all of the terms and conditions of this Agreement.
ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER
Manager hereby covenants and agrees that so long as this
Agreement remains in effect:
Section 15.01 CORPORATE STATUS.
Manager shall preserve and maintain its corporate rights,
franchises and privileges in Nevada and Missouri.
Section 15.02 COMPLIANCE WITH LAWS.
Manager shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Riverboat, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Riverboat Authorities, the Nevada Gaming Authorities, the
New Jersey Casino Control Commission, the Louisiana Gaming
Division of State Police, and the New South Wales Casino Control
Authority. Manager shall also follow applicable federal laws,
rules, and regulations.
Section 15.03 GAMING APPROVALS.
Manager shall use its best efforts to obtain the approval of
the Nevada Gaming Authorities, the New Jersey Casino Control
Commission, the Louisiana Gaming Division of the State Police,
and the New South Wales Casino Control Authority to permit it to
conduct gaming operations in the state of Missouri and shall use
its best efforts to secure and maintain such approvals necessary
for the conduct of gaming operations at the Casino.
Section 15.04 CONFIDENTIAL INFORMATION.
Manager agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Manager
who are also bound by this section) without the prior express
written consent of Owner (except as such disclosures are required
in applications or by applicable securities or gaming laws) any
of Owner's confidential data, whether related to the Riverboat or
to general business matters, which shall come into their
possession or knowledge. In addition, Manager agrees that it
shall cause all documents, drawings, plans or other materials
developed by Owner in connection with the Riverboat to be
returned to the Owner in the event of termination of this
Agreement and that Manager shall not make use of such information
in connection with the Riverboat or any other undertaking by
Manager without the prior express written consent of Owner.
Section 15.05 GAMING APPLICATIONS.
Manager agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER
Owner hereby covenants and agrees that so long as this
Agreement remains in effect:
Section 16.01 CORPORATE STATUS.
Owner shall preserve and maintain its corporate rights,
franchises and privileges in Missouri, including without
limitation its right to own a gaming establishment.
Section 16.02 MAINTENANCE OF INSURANCE.
Owner shall, in accordance with the provisions of Article 10
of this Agreement, maintain insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged
in similar business and owning similar properties in the same
general area in which Owner operates, and which may be necessary
to satisfy the requirements of Owner's lenders, as well as the
mutual approvals and agreements of the parties hereto as is
specified in Article 10 hereof.
Section 16.03 COMPLIANCE WITH LAWS.
Owner shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Riverboat, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Riverboat Authorities, the Nevada Gaming Authorities, the
New Jersey Casino Control Commission, the Louisiana Gaming
Division of the State Police and the New South Wales Casino
Control Authority. Owner shall also follow applicable federal
laws, rules, and regulations. In connection with this Agreement,
Owner acknowledges that certain casino gaming licenses are
currently issued to and held by Manager's Affiliates by the
States of Nevada, Louisiana and New Jersey, and the State of New
South Wales, Australia, and Manager or its Affiliates may in the
future apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Manager or
its Affiliates to disclose private or otherwise confidential
information about Owner and its respective principals, lenders
and Affiliates. Owner agrees to refrain from all conduct that may
negatively affect such licenses or license applications. Owner
further agrees that this Agreement shall terminate immediately at
Manager's option if any representative, agent or Affiliate of
Owner is required to be licensed, qualified or found suitable by
Nevada, New Jersey, Louisiana, New South Wales or other gaming
authority and is denied such status by such gaming authority;
provided, however, that upon the termination of any such
agreement, Owner shall be obligated to reimburse Manager
immediately for any Management Fees and all other amounts due to
Manager under this Agreement.
Section 16.04 COOPERATION WITH GAMING AUTHORITIES.
Owner shall use its best efforts to cause its officers,
directors, employees and stockholders to provide any gaming
authority which governs or may govern gaming facilities of
Affiliates of Manager with necessary documents and information.
Section 16.05 CONFIDENTIAL INFORMATION.
Owner agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Owner who
are
also bound by this section) without the prior express written
consent of Manager (except as such disclosures are required in
applications or by applicable securities or gaming laws) any of
Manager's confidential data, whether related to Riverboat or to
general business matters, which shall come into their possession
or knowledge. In addition, Owner agrees that it shall cause all
documents, drawings, plans or other materials developed by
Manager in connection with the Riverboat to be returned to the
Manager in the event of termination of this Agreement and that
Owner shall not make use of such information in connection with
the Riverboat or any other undertaking by Owner without the prior
express written consent of Manager.
Section 16.06 COMPLIANCE WITH LOAN COVENANTS.
Owner shall comply with and be bound by and shall not breach
or default under any of the terms, covenants or provisions of any
mortgage, loan, financing or debt covenant applicable to it.
Section 16.07 NON-INTERFERENCE.
Owner agrees and shall use its best efforts to cause its
shareholders, directors, officers, and employees to not interfere
with or attempt to influence Casino day-to-day operations (except
in accordance with this Agreement).
Section 16.08 GAMING APPLICATIONS.
Owner agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
ARTICLE 17. REPRESENTATIONS AND WARRANTIES
Section 17.01 OWNER CORPORATE STATUS.
Owner represents and warrants that it is a general
partnership duly organized, validly existing and in good standing
under the laws of the state of Missouri and qualified to do
business in Missouri, that Owner has full power and authority to
enter into this Agreement and perform its obligations hereunder,
and that the officers of Owner who executed this Agreement on
behalf of Owner are in fact officers of Owner and have been duly
authorized by Owner to execute this Agreement on its behalf.
Futuresouth, Inc., as a general partner of Owner, represents and
warrants that it is corporation duly organized, validly existing,
and in good standing under the laws of the state of Missouri and
is qualified to do business in Missouri, that it has full
corporate power and authority to enter into this Agreement and to
perform the obligations hereunder, and that the officer who
executed this
Agreement is in fact an officer of Futuresouth and has been duly
authorized by Futuresouth to execute this Agreement on its behalf.
Section 17.02 MANAGER CORPORATE STATUS.
Manager represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Nevada, and qualified to do business in the
State of Missouri, that Manager has full corporate power and
authority to enter into this Agreement and perform its
obligations hereunder, and that the officers of Manager who
executed this Agreement on behalf of Manager are in fact officers
of Manager and have been duly authorized by Manager to execute
this Agreement on its behalf.
Section 17.03 AUTHORIZATION/NO CONFLICT.
The execution, delivery and performance by Owner and
Manager, as applicable, of this Agreement has been duly
authorized by all necessary corporate action (including any
necessary stockholder action) on the part of Owner and Manager,
as applicable, and no further action or approval is required in
order to constitute this Agreement as the valid and binding
obligations of Owner and Manager, enforceable in accordance with
its terms. The execution, delivery and performance of this
Agreement by Owner and Manager, as applicable, does not and will
not (a) violate or conflict with any provisions of their
respective Articles of incorporation or bylaws, or of any law,
rule, regulation of the Riverboat Authorities, or any order,
writ, judgment, decree, determination or award presently in
effect having applicability to Owner or Manager; (b) result in a
breach of any condition or provision of, or constitute a default
under, any indenture, loan or credit agreement or any other
agreement or instrument to which Owner or Manager is a party or
by which Owner or Manager may be bound or affected; or (c) result
in, or require, the creation or imposition of any lien, claim,
charge or encumbrance of any nature upon or with respect to any
of the properties now owned or hereafter acquired by Owner or
Manager.
Section 17.04 PERMITS/APPROVALS.
Owner and Manager possess adequate franchises, licenses,
permits, orders and approvals of all federal, state and local
governmental or regulatory bodies required for them to carry on
their businesses as presently conducted; all of such franchises,
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is
threatened; and none of such franchises, licenses, permits,
orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement.
Section 17.05 ACCURACY OF REPRESENTATIONS.
No representation or warranty of Owner or Manager in this
Agreement nor any information, exhibit, memorandum, schedule or
report furnished by Owner or Manager in connection with this
Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
of fact contained therein not misleading.
Section 17.06 DEVELOPMENT PLANS.
Unless Owner is prevented or delayed from disclosing any
such report or study by law or by any applicable rules or
regulations of governmental agencies or bodies, Owner covenants
to make available immediately or at the expiration of the
restriction to Manager, or to Manager's authorized agents, any
and all reports and feasibility studies related to the
development of the Riverboat. Owner shall make such reports and
studies available for copying by Manager, at Manager's expense.
Unless Manager is prevented or delayed from disclosing any such
report or study by law or by any applicable rules or regulations
of governmental agencies or bodies, Manager covenants that it
shall make available for copying by Owner any report or
feasibility studies related to the Casino upon completion of the
same upon the request of Owner.
Section 17.07 MAINTENANCE OF GAMING AND OTHER LICENSES.
Owner and Manager agree to provide the other party with
copies of all applications, reports, letters, and other documents
filed or provided to the Riverboat Authorities. Both parties
agree to use their best efforts to secure and maintain any
license needed for the operation of the Casino.
Section 17.08 FINANCINGS; GOVERNMENTAL APPROVAL.
Owner will use its best efforts to obtain financing and all
necessary licenses, permits and approvals from various
governmental authorities with respect to the construction of the
Riverboat, if applicable.
Section 17.09 CONDITION OF RIVERBOAT DURING TERM.
During the Term of this Agreement, Owner shall maintain the
Riverboat in first-class condition and repair. All areas of the
Riverboat shall be adequately illuminated and adequately
patrolled by security guards.
Section 17.10 UTILITIES.
At the time Manager takes possession of the Riverboat, all
necessary utilities, including electricity, water, sewerage and
gas, will be available.
Section 17.11 IMPAIR REPUTATION.
Owner will do nothing to embarrass or impair Manager's good
name and reputation. Manager will do nothing to embarrass or
impair Owner's good name and reputation.
ARTICLE 18. ARBITRATION
SECTION 18.01 APPOINTMENT OF ARBITRATORS.
IF ANY DISPUTE SHALL ARISE OR IF ANY ISSUE LEFT OPEN
HEREUNDER CANNOT BE RESOLVED BETWEEN THE PARTIES HERETO, SUCH
DISPUTE IS TO BE REFERRED FIRST TO A COMMITTEE OF FOUR PERSONS
WHO SHALL MEET IN AN ATTEMPT TO RESOLVE SAID DISPUTE OR OPEN
ISSUE. THE COMMITTEE SHALL CONSIST OF TWO PERSONS APPOINTED BY
OWNER AND TWO PERSONS APPOINTED BY MANAGER. IF AN AGREEMENT
CANNOT BE REACHED TO RESOLVE THE DISPUTE BY THE COMMITTEE, THE
DISPUTE OR OPEN ISSUE WILL BE RESOLVED BY BINDING ARBITRATION
BEFORE ARBITRATORS HAVING NOT LESS THAN 10 YEARS EXPERIENCE IN
THE GAMING INDUSTRY. ANY AWARD OF THE ARBITRATORS MAY BE FILED IN
A COURT OF LAW AS A FINAL JUDGMENT. ANY SUCH ARBITRATION SHALL BE
IN ACCORDANCE WITH THE RULES AND REGULATIONS ADOPTED BY THE
AMERICAN ARBITRATION ASSOCIATION OR AS THE PARTIES OTHERWISE
AGREE. EITHER PARTY MAY SERVE UPON THE OTHER PARTY A WRITTEN
NOTICE OF THE DEMAND DISPUTE OR APPRAISAL TO BE RESOLVED PURSUANT
TO THIS ARTICLE. WITHIN THIRTY (30) DAYS AFTER THE GIVING OF SUCH
NOTICE, EACH OF THE PARTIES HERETO SHALL NOMINATE AND APPOINT AN
ARBITRATOR (OR APPRAISER, AS THE CASE MAY BE) AND SHALL NOTIFY
THE OTHER PARTY IN WRITING OF THE NAME AND ADDRESS OF THE
ARBITRATOR SO CHOSEN. UPON THE APPOINTMENT OF THE TWO ARBITRATORS
AS HEREINABOVE PROVIDED, SAID TWO ARBITRATORS SHALL FORTHWITH,
WITHIN FIFTEEN (15) DAYS AFTER THE APPOINTMENT OF THE SECOND
ARBITRATOR, AND BEFORE EXCHANGING VIEWS AS TO THE QUESTION AT
ISSUE, APPOINT IN WRITING A THIRD ARBITRATOR ("SELECTED
ARBITRATOR") AND GIVE WRITTEN NOTICE OF SUCH APPOINTMENT TO EACH
OF THE PARTIES HERETO. IN THE EVENT THAT THE TWO ARBITRATORS
SHALL FAIL TO APPOINT OR AGREE UPON THE SELECTED ARBITRATOR
WITHIN SAID FIFTEEN (15) DAY PERIOD, THE SELECTED ARBITRATOR
SHALL BE SELECTED BY THE PARTIES THEMSELVES IF THEY SO AGREE UPON
SUCH SELECTED ARBITRATOR WITHIN A FURTHER PERIOD OF TEN (10)
DAYS. IF A SELECTED ARBITRATOR SHALL NOT BE APPOINTED OR AGREED
UPON WITHIN THE TIME HEREIN PROVIDED, THEN EITHER PARTY ON BEHALF
OF BOTH MAY REQUEST SUCH APPOINTMENT BY THE AMERICAN ARBITRATION
ASSOCIATION (OR ITS SUCCESSOR OR SIMILAR ORGANIZATION IF THE
AMERICAN ARBITRATION ASSOCIATION IS NO LONGER IN EXISTENCE).
OWNER AND MANAGER SHALL SHARE EQUALLY THE COST OF THE SELECTED
ARBITRATOR. SAID ARBITRATORS
SHALL BE SWORN FAITHFULLY AND FAIRLY TO DETERMINE THE QUESTION AT
ISSUE. THE ARBITRATORS SHALL AFFORD TO OWNER AND MANAGER A HEARING
AND THE RIGHT TO SUBMIT EVIDENCE, WITH THE PRIVILEGE OF
CROSS-EXAMINATION, ON THE QUESTION AT ISSUE, AND SHALL WITH ALL
POSSIBLE SPEED MAKE THEIR DETERMINATION IN WRITING AND SHALL GIVE
NOTICE TO THE PARTIES HERETO OF SUCH DETERMINATION. THE CONCURRING
DETERMINATION OF ANY TWO OF SAID THREE ARBITRATORS SHALL BE BINDING
UPON THE PARTIES, OR, IN CASE OF NO TWO OF THE ARBITRATORS
SHALL RENDER A CONCURRING DETERMINATION, THEN THE DETERMINATION
OF THE SELECTED ARBITRATOR SHALL BE BINDING UPON THE PARTIES
HERETO. EACH PARTY SHALL PAY THE FEES OF THE ARBITRATOR APPOINTED
BY IT, AND THE FEES OF THE SELECTED ARBITRATOR SHALL BE DIVIDED
EQUALLY BETWEEN OWNER AND MANAGER.
Section 18.02 INABILITY TO ACT.
In the event that an arbitrator appointed as aforesaid shall
thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this
Article for the appointment of the arbitrator so dying or
becoming unable or unwilling to act.
ARTICLE 19. DEFAULT/STEP-IN RIGHTS
Section 19.01 DEFINITION.
The occurrence of any one or more of the following events
which is not cured within the time permitted shall constitute a
default under this Agreement (hereinafter referred to as a
"Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
Section 19.02 MANAGER'S DEFAULTS.
If Manager shall (a) fail to perform or materially comply
with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager (other than
monetary payments) and such failure shall continue for a period
of thirty (30) days after written notice thereof from Owner to
Manager specifying in detail the nature of such failure, or, in
the case such failure is of a nature that it cannot, with due
diligence and good faith, be cured within thirty (30) days, if
Manager fails to proceed promptly and with all due diligence and
in good faith to cure the same and thereafter to prosecute the
curing of such failure to completion with all due diligence
within ninety (90) days thereafter, or (b) take or fail to take
any action to the extent required of Manager under this Agreement
that creates a default under or breach of any Loan Document, any
related contract or any requirement of the Riverboat Authorities,
unless Manager cures such default or breach prior to the
expiration of applicable notice, grace and cure periods, if any;
provided, however, that Manager shall only be
required to cure any defaults with respect to which Manager has
a duty hereunder. If the only result of the failure by Manager to
act is a monetary loss to Owner which is not otherwise capable of
being cured by Manager, then Manager shall not be in Default
if Manager reimburses Owner for such losses within ten (10)
Business Days of incurring such loss or otherwise protects Owner
against such loss in a manner reasonably acceptable to Owner.
Section 19.03 STEP-IN RIGHTS.
(a) If Owner funds are available, and Manager fails to pay
when due any amount which it is Manager's responsibility to pay
pursuant to this Agreement, then Owner, after five (5) Business
Days written notice to Manager with respect to any Operating
Expense, and with respect to non-Operating Expense with such
notice, if any, as may be reasonable under the circumstances
(except in the event that Manager has exposure to potential
liability in connection with making such payments in which case
Owner shall give Manager two (2) days written notice), and
without waiving or releasing Manager from any responsibility of
Manager hereunder, Owner may (but shall not be required to) pay
such amounts (including fines, penalty, interest and late payment
fees) and take all such action as may be necessary in respect
thereof. Manager shall, following such payments by Owner,
promptly reimburse Owner from the Bank Accounts to the extent
funds are available the amount which Manager failed to pay when
due. In addition, unless Manager has not acted with reasonable
diligence in failing to make such payments then, to the extent
that Manager's lack of reasonable diligence in this connection
has resulted in fines, penalty, interest or late payment fees in
excess of Twenty-Five Thousand Dollars ($25,000) in any twelve
(12) month period, then Manager shall immediately disburse to
Owner from Gross Revenue, following such payments by Owner, such
amounts as may be necessary to reimburse Owner for such payments
and Manager shall promptly deposit into the appropriate Bank
Accounts, from Manager's own funds, the full amount of any fines,
penalty, interest or late payment fees paid in connection
therewith.
(b) If Manager fails to take any action which it is
Manager's responsibility under this Agreement to take and the
result is to expose the Riverboat to a material loss or Riverboat
patrons to a material risk of physical safety, then Owner, upon
five (5) days written notice to Manager (except in any emergency
in which case Owner shall give Manager such notice, if any, as is
reasonable under the circumstances), without saving or releasing
Manager from any obligation of Manager hereunder, may (but shall
not be required to) take such actions as may be necessary to
preserve Owner's assets from such a material loss and/or to
protect the Riverboat patrons. Manager shall, following any
payments by Owner made with respect to such actions, promptly
reimburse Owner from the Bank Accounts, to the extent funds are
available, the amount which Owner
has expended. In addition, unless Manager has acted with
reasonable diligence in failing to take such action then, to
the extent that Manager's lack of reasonable diligence in this
connection has resulted in fines or late payment fees in excess
of Twenty-Five Thousand Dollars ($25,000) in any twelve month
period, then Manager shall immediately disburse to Owner from
Gross Revenue, following payment of such amounts by Owner, such
amounts as are necessary to reimburse Owner for any fines or late
payment fees by Owner in connection with taking such action on
Manager's behalf and Manager shall also deposit into the
appropriate Bank Account, from Manager's own funds, the full
amount of such payment made to Owner.
Section 19.04 OWNERS DEFAULT.
If Owner shall (a) fail to make any monetary payment
required under this Agreement (or other agreements between Owner
and Manager or Manager's Affiliates), including, but not limited
to, debt service, Management Fee or Owner's Advances, on or
before the due date recited herein and said failure continues for
five (5) Business Days after written notice from Manager
specifying such failure, or (b) fail to perform or materially
comply with any of the other covenants, agreements, terms or
conditions contained in this Agreement (or other agreements
between Owner and Manager or Manager's Affiliates) applicable to
Owner (other than monetary payments) and such failure shall
continue for a period of thirty (30) days after written notice
thereof from Manager to Owner specifying in detail the nature of
such failure, or, in the case such failure is of a nature that it
cannot, with due diligence and good faith, cure within thirty
(30) days, if Owner fails to proceed promptly and with all due
diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion with all due
diligence within ninety (90) days thereafter.
Section 19.05 BANKRUPTCY.
If either party (i) applies for or consents to the
appointment of a receiver, trustee or liquidator of itself or any
of its property, (ii) makes a general assignment for the benefit
of creditors, (iii) is adjudicated a bankrupt or insolvent, or
(iv) files a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors,
takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation Law, or admits
the material allegations of a petition filed against it in any
proceedings under any such law.
Section 19.06 REORGANIZATION/RECEIVER.
If an order, judgment or decree is entered by any court of
competent jurisdiction approving a petition seeking
reorganization
of Manager or Owner, as the case may be, or appointing a
receiver, trustee or liquidator of Manager or Owner, as the case
may be, or of all or a substantial part of any of the assets of
Manager or Owner, as the case may be, and such order, judgment or
decree continues unstayed and in effect for a period of sixty (60)
days from the date of entry thereof.
Section 19.07 DELAYS AND OMISSIONS.
No delay or omission as to the exercise of any right or
power accruing upon any Event of Default shall impair the non-
defaulting party's exercise of any right or power or shall be
construed to be a waiver of any Event of Default or acquiescence
therein.
Section 19.08 DISPUTES IN ARBITRATION.
Notwithstanding the provisions of this Article 19, any
occurrence which would otherwise constitute an Event of Default
hereunder shall not constitute an Event of Default for so long as
such dispute is subject to arbitration pursuant to the
arbitration provisions of Article 18.
ARTICLE 20. TERMINATION
Section 20.01 TERMINATION EVENTS.
This Agreement shall terminate upon the occurrence of the
following:
(a) on _________, 199_, in the event that Owner has not
completed construction of the Riverboat in accordance with the
regulations and specifications required by the Riverboat
Authorities;
(b) Owner fails to secure all appropriate licenses for
itself and any of its employees for whom licenses are required
prior to ____________, 1995;
(c) Manager fails to secure all appropriate licenses for
itself and any of its employees for whom licenses are required
prior to ___________, 1995;
(d) upon the effective date of passage of legislation making
it unlawful to operate a riverboat casino in the state of
Missouri or the entry of an order or judgment from a court of
appropriate jurisdiction declaring such legislation
unconstitutional or invalid under the laws of the state of
Missouri (the termination shall be delayed if any court order is
duly appealed and its effectiveness is suspended);
(e) upon the occurrence of an Event of Default under this
Agreement and the time to cure has lapsed;
(f) upon Manager's failure to maintain all approvals from
any gaming authority permitting Manager or its affiliates to
conduct gaming in the state of Missouri;
Section 20.02 NOTICE OF TERMINATION.
In the event of an occurrence specified in Section 20.01(a)-
(f), either Manager or Owner, as appropriate, shall terminate
this Agreement by giving five (5) days written notice, and the
Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term.
Section 20.03 REMEDIES UPON TERMINATION.
(a) Prior to Commencing Gaming Operations. In the event that
this Agreement is terminated prior to commencing gaming
operations and if the termination is not the result of an Event
of Default caused by Manager, Owner shall reimburse Manager all
Manager Pre-Opening Expenses.
(b) After Commencement of Gaming Operations. Owner shall pay
to Manager all earned Management Fees plus any unpaid Manager Pre-
Opening Expenses.
Section 20.04 DELIVERY OF RIVERBOAT.
Upon termination of this Agreement for any reason, Manager
shall assign and transfer to Owner all of Manager's rights,
title, and interest in and to all transferable licenses and
permits with respect to the operation of the Riverboat, save and
except the name "Showboat" which will and shall remain the
property of Manager. Manager shall peacefully vacate the
Riverboat. No signs or personalized property bearing the name
"Showboat" shall be purchased or used by Owner without prior
written arrangements between Owner and Manager, which may need a
license from its parent company, Showboat, Inc. Upon surrender,
any exterior signs inscribed with the name "Showboat" shall be
removed as soon as is practicable, and in any event within
fifteen (15) days of the date of termination. Additionally, any
personalized property bearing the name "Showboat" (including
without limitation, ashtrays, office supplies, linen, glassware,
paper goods, promotional items, guest checks, uniforms, carpets,
and upholstery) shall also be removed as soon as practicable, and
in any event within thirty (30) days of the date of termination.
ARTICLE 21. HAZARDOUS MATERIALS
Section 21.01 NO HAZARDOUS MATERIALS.
Owner represents and warrants to the best of Owner's
knowledge that: (i) any handling, removing, transportation,
storage, treatment or usage of Hazardous Materials or toxic
substances that has occurred at the Casino Site to date has been
in compliance with all applicable federal, state and local laws,
regulations and ordinances; (ii) no leak, spill, release,
discharge, emission or disposal of Hazardous Materials or toxic
substances has occurred at the Casino Site to date; and (iii) the
Casino Site is free of asbestos, toxic or Hazardous Materials as
of the date that the term of this Agreement commences.
Section 21.02 COMPLIANCE WITH LAWS.
Owner agrees to comply with all federal, state and local
environmental and real estate laws, including the Americans With
Disabilities Act relating to Owner's construction, ownership,
management and operation of the Riverboat. Manager agrees to
comply with all federal, state and local environmental and real
estate laws, including the Americans With Disabilities Act
relating to Manager's management and operation of the Riverboat.
All expenses incurred in such compliance shall be Operating
Expenses.
Section 21.03 INDEMNIFICATION.
Owner agrees to indemnify, defend and hold Manager and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Manager) which arise
during or after the Term as a result of any breach of Owner's
representation and warranty contained in Section 21.01 or as a
result of Owner's failure to perform its covenant contained in
Section 21.02. Without limiting the generality of the foregoing,
the indemnification provided by this Section shall specifically
cover costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision because of the presence or suspected
presence of asbestos, other toxic or Hazardous Material at the
Casino Site, or the soil, groundwater or soil vapor on or under
the Casino Site, unless the Hazardous Materials are present
solely as a result of the actions of Manager, its officers,
shareholders, employees or agents. The foregoing indemnity shall
survive the expiration or earlier termination of this Agreement.
Section 21.04 HAZARDOUS MATERIAL DEFINED.
"Hazardous Material," as used in this Agreement, shall be
construed in its broadest sense and shall include asbestos, other
asbestotic material (which is currently or may be designated in
the future as a Hazardous Material), any petroleum base products,
pesticides, paints and solvents, polychlorinated biphenyl, lead,
cyanide, DDT, acids, ammonium compounds and other chemical
products (excluding commercially used cleaning materials in
ordinary quantities) and any substance or material if defined or
designated as a hazardous or toxic substance, or other similar
term, by any federal, state or local law, statute, regulation, or
ordinance affecting the Riverboat, the Casino Site or any support
areas.
ARTICLE 22. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which either party desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received, or (iii) by a
nationally recognized overnight delivery service provided for
receipted delivery, addressed as follows:
Owner: Southboat Partnership
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Manager: Showboat Operating Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇ Houssels, III
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Either Owner or Manager may change the address or name of
addressee applicable to subsequent notices (including copies of
said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving
notice to the other party as aforesaid, provided that notice of
such change shall not be effective until the fifth (5th) day after
mailing or facsimile transmission.
ARTICLE 23. MISCELLANEOUS
Section 23.01 TIME OF THE ESSENCE.
Time is of the essence with respect to all time periods set
forth in this Agreement.
Section 23.02 HEIRS, SUCCESSORS, ASSIGNS.
Except as otherwise provided herein, each provision hereof
shall extend to and shall, as the case may require, bind and
inure to the benefit of the parties' heirs, executors,
administrators, permitted successors, permitted assigns and legal
representatives. Owner and Manager understand and agree that,
pursuant to that certain letter agreement dated May 1, 1995 by
and between Futuresouth, Inc. and Showboat ▇▇▇▇▇, Inc., Owner
anticipates that it will be restructured as a limited
partnership. Owner and Manager agree that such limited
partnership is a permitted assignee under this Agreement, and
that as of the date upon which such limited partnership agreement
is executed, such limited partnership will assume all rights,
duties and obligations of Owner under this Management Agreement.
Section 23.03 CONSTRUCTION.
All of the provisions of this Agreement shall be deemed and
construed to be conditions as well as covenants as though in
words specifically expressing or importing covenants and
conditions for use in each separate provision hereof. The
language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning, and not strictly
for or against Owner or Manager. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the party causing the same to be
drafted.
Section 23.04 GOVERNING LAW.
This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Nevada without
reference to its choice of law provisions.
Section 23.05 SEVERABILITY.
Should any portion of this Agreement be declared invalid or
unenforceable, then such portion shall be deemed to be severed
from this Agreement and shall not affect the remainder thereof.
Section 23.06 RELATION OF THE PARTIES.
Nothing in this Agreement shall be construed as creating a
tenancy, ownership, limited partnership, joint venture, or any
other relationship between the parties hereto other than as
principal and agent. All debts and liabilities incurred by
Manager within the scope of the authority granted and permitted
hereunder in the course of its management and operation of the
Riverboat shall be the debts and liabilities of Owner only, and
Manager shall not be liable for such debts and liabilities except
as specifically stated to the contrary herein.
Section 23.07 NO BROKER OR FINDER.
Each party represents to the other that it has not engaged
any finder, broker or agent for whose commission or fee the other
party could be liable. Each party covenants and agrees to
indemnify and hold the other party free and harmless at all times
in respect of any and all liabilities, actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including attorneys fees, arising from, by reason of, or in
connection with any fees, commissions or other compensation which
shall be alleged to be due to any finder, broker, agent or other
similar representative in connection with this transaction, if
the person is found to have been engaged by either party or if
such services are found to have been provided at the request of
either party.
Section 23.08 DEFAULT INTEREST RATE.
Any sum accruing to Owner or Manager under this Agreement
which shall not be paid when due shall bear interest at the rate
of twelve percent (12%) per annum from the date such payment
becomes due and payable until it is paid in full with said
interest.
Section 23.09 ATTORNEYS' FEES.
Should either party institute an arbitration, action or
proceeding to enforce any provisions hereof or for other relief
due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other
party all costs of the action or proceeding and reasonable
attorneys fees.
Section 23.10 ENTIRE AGREEMENT.
This Agreement covers in full each and every agreement of
every kind or nature whatsoever between the parties hereto
concerning this Agreement, and all preliminary negotiations and
agreements, whether verbal or written, of whatsoever kind or
nature are merged herein. No oral agreement or implied covenant
shall be
held to vary the provisions hereof, any statute, law or custom to
the contrary notwithstanding.
Section 23.11 COUNTERPARTS.
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
Section 23.12 FORCE MAJEURE.
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
Section 23.13 NO WARRANTIES.
Manager shall use its best efforts to render the services
contemplated by this Agreement in good faith to Owner, but hereby
explicitly disclaims any and all warranties, express or implied,
including but not limited to the success or profitability of the
Riverboat.
Section 23.14 HEADINGS.
Headings or captions have been inserted for convenience of
reference only and are not to be construed or considered to be a
part hereof and shall not in an way modify, restrict or amend any
of the terms or provisions hereof.
Section 23.15 WAIVER.
The waiver by one party of any default or breach of any of
the provisions, covenants or conditions hereof of the part of the
other party to be kept and performed shall not be a waiver of any
preceding or subsequent breach or any other provisions, covenants
or conditions contained herein.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
DATED as of the day first above written.
"Manager" "Owner"
SHOWBOAT OPERATING COMPANY, SOUTHBOAT PARTNERSHIP,
a Nevada corporation a Missouri general partnership
By: FUTURESOUTH, INC.,
a Missouri corporation
General Partner
By: /s/ By: /s/
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Secretary Its: President
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement ), dated
as of the 2nd day of May, 1995, between Showboat Operating
Company, a Nevada corporation whose principal office is located
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Showboat"), and
Southboat Partnership, a Missouri general partnership whose
principal office is located at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Owner").
W I T N E S S E T H:
WHEREAS, Showboat and its management are experienced in
providing corporate administrative services to riverboat casinos
and restaurant operations; and
WHEREAS, Owner anticipates applying for a gaming license
from the Missouri Gaming Commission ("MGC") to manage and operate
a riverboat casino and ancillary facilities (collectively, the
"Riverboat') on the Mississippi River in or near ▇▇▇▇▇, Missouri;
and
WHEREAS, Owner has appointed Showboat as the manager and
operator of the Riverboat; and
WHEREAS, Owner desires to engage Showboat to render certain
corporate administrative services to Owner in order for Owner to
manage and operate the Riverboat all as more fully described
herein; and
WHEREAS, Showboat desires to render such services to Owner;
and
WHEREAS, the parties hereto are desirous of setting forth
the terms of compensation for the services to be rendered by
Showboat hereunder; and
WHEREAS, pursuant to the Riverboat Gambling Act (Missouri
1993), Owner is permitted to enter into an Agreement with
Showboat, providing for the payment of a percentage of revenues
to be derived from the operation of the Riverboat; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained, the parties agree as
follows:
ARTICLE 1.0 - SERVICES TO BE PROVIDED
1.1. THE SERVICES. Upon the terms and conditions described
herein, Showboat shall provide to Owner the corporate
administrative services (the "Services") set forth in Exhibit A,
which is attached hereto and made a part hereof.
1.2. CONTINUED OWNER PERFORMANCE. Any Services to be
performed by Showboat hereunder shall not be performed as a
substitute for Owner performance, but shall assist, support or
supplement the routine functions and responsibilities of the
employees, officers and managers of Owner.
1.3. SHOWBOAT PERSONNEL. All Showboat personnel engaged to
render the Services shall remain the employees of Showboat, and
Showboat shall be responsible for their compensation and for
withholding federal or state income taxes. The costs and expenses
incurred by Showboat for consultants, agents and independent
contractors selected and engaged to perform Services for Owner
shall be engaged directly by Owner and paid directly by Owner or
reimbursed to Showboat upon demand. Any such consultants, agents
and independent subcontractors shall separately invoice and
account for Services to Owner. To the extent that Showboat itself
or any Showboat personnel, other than consultants, agents and
independent contractors, must be licensed or approved by the MGC,
however, Owner shall bear the expense of obtaining such
regulatory approvals and Showboat shall cooperate fully in order
to obtain all necessary regulatory approvals.
1.4. SHOWBOAT PERFORMANCE/RESPONSIBILITY. Showboat
undertakes to provide the Services hereunder with the same degree
of care and diligence it uses in providing such Services for its
own operations. In providing the Services hereunder, Showboat
shall not be liable to Owner for errors or omissions hereunder
except to the extent that such errors and omissions constitute
gross negligence or willful misconduct. Under no circumstances
shall any of Showboat's employees, officers, agents, directors,
or stockholders be liable to Owner for any errors or omissions by
Showboat hereunder.
ARTICLE 2.0 - PAYMENT OF COMPENSATION
2.1. FEES. Owner shall pay to Showboat fees for the
Services rendered hereunder equal to one percent (1%) of Owner's
gross gaming revenue net of all gaming taxes. Owner shall pay
such fees monthly on or before the twentieth (20th) day of the
following month. "Gross gaming revenue" shall mean all revenue
from the operation of the Casino. "Gaming taxes" shall mean any
tax imposed by the State of Missouri on gross gaming revenue,
including, without limitation, any state admissions tax
(currently 20% of gross gaming revenue and $2.00 per customer).
"Casino" shall mean those areas reserved for the operation of
slot machines, table games, electronic games of chance,
electronic games of skill and any other legal forms of gaming
permitted under applicable law, and ancillary service areas,
including reservations and admissions, cage, vault, count room,
surveillance room and any other room or areas or activities
therein regulated or taxed by the Missouri Gaming Commission by
reason of gaming operations. Showboat and owner agree that the
fees provided for by this Section 2.1 constitute their good faith
determination of the fair market value of such services.
2.2. PARTIAL YEARS. Fees for partial fiscal years and
months hereunder shall be prorated
2.3. TAXES. Showboat and Owner agree that in the event any
tax or assessment (other than any such tax or assessment on
income) is required to be paid as a result of the performance of
the Services by Showboat hereunder, Owner shall be solely
responsible for the payment of such tax or assessment.
2.4. FISCAL YEAR: BOOKS AND RECORDS. Owner shall keep at
its usual place of business books and records relating to gross
revenues and the payment to be made hereunder containing such
true entries as may be necessary or proper to ascertain the
amount of payments to be made to Showboat hereunder. Owner shall
produce, during normal business hours, said books and records and
make them available for inspection or audit by duly authorized
agents of Showboat, shall permit such agents to make copies
thereof, and shall give such information as may be necessary or
proper to enable the amount of payment due hereunder to be
ascertained and verified.
ARTICLE 3.0 - TERM AND TERMINATION
3.1. TERM. The term of this Agreement shall begin as of the
date hereof and shall continue until Showboat or its affiliates
no longer hold an equity position in Owner or its successor.
3.2. FORCE MAJEURE. Neither party shall be liable in any
manner for failure or delay of performance of all or any part of
this Agreement, directly or indirectly, owing to an act of God,
governmental orders or restrictions, strikes or other labor
disturbances, riots, embargoes, revolutions, wars (declared or
undeclared), sabotage, fires, floods, or any other causes or
circumstances beyond the control of the parties. The party
suffering such delay or failure shall give prompt notice to the
other party and shall exert its best efforts to remove the causes
or circumstances of nonperformance with all possible dispatch. If
any of the causes or circumstances above continue for more than
six (6) months, either party hereto may elect to terminate this
Agreement by written notice to the other party.
3.3. ACCRUED PAYMENTS. Termination of the Agreement
pursuant to Section 3.2 hereof shall not affect the right of
Showboat to any fees accrued hereunder prior to the date of such
termination.
3.4. REMEDIES. In the event that either party commits a
material default of its obligations hereunder, the nondefaulting
party may notify the defaulting party of such default. In the
event that such default is not cured within thirty (30) days
thereafter, the nondefaulting party shall be entitled to pursue
any remedies available to it, including but not limited to, the
termination of the Agreement upon notice to the defaulting party.
ARTICLE 4.0 - GENERAL PROVISIONS
4.1. OTHER SERVICES. Nothing in this Agreement shall be
construed to prohibit Showboat from undertaking to provide
additional services to Owner not described in this Agreement or
in the exhibits hereto on terms and conditions (including the
fees therefore) satisfactory to each of Showboat and Owner.
4.2. INDEPENDENT PARTIES. Nothing in this Agreement shall
be construed as creating a partnership or a joint venture between
Showboat and Owner, or making either party an agent or employee
of the other party, but in all of its operations hereunder
Showboat shall be an independent contractor for Owner. No
employee of Showboat who renders any service hereunder shall be
considered, construed, or deemed to be an employee of Owner as a
result thereof.
4.3. INTEGRATION, MODIFICATION AND WAIVER. This Agreement
constitutes the entire agreement between Showboat and Owner
pertaining to the subject matter hereof and supersedes all prior
understandings of the parties. No supplement, modifications or
amendment of this Agreement shall be binding upon either Showboat
or Owner unless executed in writing by each of them. No waiver of
any of the provisions of this Agreement shall be deemed to be or
shall constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
4.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of
Nevada without giving effect to the conflict of laws principles
thereof.
4.5 NOTICES. Any notice or other communication required or
permitted under this Agreement shall be deemed given when: (a) it
is personally delivered; (b) it is transmitted by telecopy,
telex, or telegram with confirmation of receipt; (c) the day
after it is sent by a nationally recognized overnight courier
service; or (d) five (5) days after it is sent by United States
mail with postage prepaid, addressed to the respective party at
its address set forth in the first paragraph of this Agreement,
attention: President if for Showboat or Partner if for Owner.
Either party may change the address or telecopy number to which
notices or other communications are to be given under this
Agreement by furnishing the other party with written notice of
such change in accordance with this Section 4.5.
4.6. BINDING EFFECT: ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of the other
party. Showboat and Owner understand and agree that, pursuant to
that certain letter agreement by and between Futuresouth, Inc.
and Showboat ▇▇▇▇▇, Inc. dated May 1, 1995, it is anticipated
that Owner will be restructured as a limited partnership under
the laws of the state of Missouri. Showboat and Owner consent and
agree that, under the terms and conditions of this provision,
such new limited partnership is and shall be a permitted
assignee, and that upon the execution of such limited partnership
agreement, such limited partnership shall assume automatically
all of the rights, duties and obligations of this Agreement.
4.7 HEADINGS. The headings used in this Agreement are for
convenience of reference only and are not intended to affect the
interpretation of this Agreement.
4.8. SEVERABILITY. If any provision of this Agreement or
the application of any provision to any party or circumstance
shall, to any extent, be adjudged invalid or unenforceable, the
application of the remainder of such provision to such party or
circumstance, the application of such provision to other parties
or circumstances, and the application of the remainder of this
Agreement shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
4.9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
4.10. NO THIRD PARTY BENEFICIARIES. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any person or entity, other than the parties
hereto, any rights or remedies under or by the reason of the
Agreement.
4.11. NO WARRANTIES. Showboat shall use its best efforts to
provide the services in good faith to Owner, but disclaims any
and all warranties, express or implied, including, but not
limited to, the success or profitability of the business
conducted by Owner. Nothing contained herein shall be deemed to
confer on Showboat the right or ability to manage Owner's
business. Management of Owner's business shall solely be the
function and responsibility of Owner.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their representatives thereunto duly
authorized.
SHOWBOAT OPERATING COMPANY,
a Nevada corporation
By: /s/H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary
SOUTHBOAT PARTNERSHIP,
a Missouri general partnership
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
EXHIBIT A
SERVICES TO BE PROVIDED
Pursuant to the Administrative Services Agreement entered
into by the Parties, Owner engages Showboat to render, or cause
to be rendered, the following corporate administrative services
in connection with Owner's operations.
1. Human Resource services, including: provision of policy
development and operating guidelines for standardization of
operation philosophy and principles for employee management; and
establishment of uniform controls for selection and licensing of
key management personnel, compensation and benefits.
2. Accounting and financial services, including: development of
standards and procedures for internal audits and supervision;
review and evaluation of internal audits; assistance with the
development of policies, standards and procedures for accounting
and supervision; and, provision of technical accounting advisory
services and review of financial statements and other accounting
records maintained by Owner.
3. Data processing services, including: development of
policies, standards and procedures governing data processing
operations: assistance in the acquisition of software programs;
coordination of hardware acquisitions; and, review and evaluation
of data processing systems and operations.
4. Tax planning and compliance, including: review of federal
and state income tax returns; review of estimated tax
payments; and assistance in the coordination of Internal Revenue
Service and state agency examinations.
5. General administrative services, including: consultation on
selection of consultants for strategic planning efforts;
assistance in the evaluation and acquisition of insurance
policies and establishment of standards and policies related to
all insurance-related matters; assistance in the development of
standards and policies related to safety programs and supervision
of such programs; and such other administrative services as may
be appropriate.
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement")
made as of May 2, 1995, by and between Showboat, Inc., a Nevada
corporation ("Licensor"), and Southboat Partnership, a Missouri
general partnership ("Licensee").
RECITALS
A. Licensor is the owner of the trademark "Showboat," its
logos, trademarks, tradenames, service marks, and any variation
or extension of such name ("Trademark").
B. Licensor and Licensee desire that the Licensee be
permitted to use the Trademark in connection with the operation of a
gaming riverboat (the "Riverboat") to be located on the Mississippi
River in or near ▇▇▇▇▇, Missouri (the "Territory"). Licensee is
the owner of the Riverboat.
OPERATIVE PROVISIONS
In consideration of the recitals, covenants and
conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Licensor and Licensee agree as follows:
1. LICENSE. The Licensor grants to the Licensee the non-
exclusive, personal and nontransferable right to use the
Trademark in the Territory in connection with the operation of
the Riverboat.
2. OPERATION OF THE RIVERBOAT. The Licensee shall operate
the Riverboat in a first-rate manner, consistent with the quality of
other riverboat gaming operations in Missouri, and shall use the
Trademark only in connection with the operations of the
Riverboat, and the quality of the operations of the Riverboat
shall be satisfactory to the Licensor, as determined in its sole
discretion.
3. INSPECTION. The Licensee will permit duly authorized
representatives of the Licensor to inspect, at all reasonable
times, the operations of the Riverboat.
4. USE OF TRADEMARK. Whenever the Licensee uses the
Trademark in advertising or in any other manner in connection with
the Riverboat, the Licensee shall clearly indicate the Licensor's
ownership of the Trademark. The Licensee shall provide the
Licensor with samples of all signs, advertising, promotional
material, literature, packages and labels prepared by or for the
Licensee and intended to be used by Licensee. When using the
Trademark under this Agreement, the Licensee undertakes to comply
with all laws pertaining to trademarks in force at any time in
the Territory.
5. REGISTRATION OF LICENSEE. If the law requires, or
if requested by the Licensor or its duly authorized representative,
the Licensee shall execute any such documents and to take such
action as may be necessary to implement an application to
register the Licensee as a Permitted User or to retain, enforce
or defend the Trademark.
6. ASSIGNMENT OF LICENSE. The right granted in
Paragraph 1 hereof shall not be transferable without the Licensor's
prior written consent, which consent may be granted or withheld in
Licensor's sole discretion.
7. INDEMNITY. The Licensor assumes no liability to the
Licensee or to third parties with respect to the operations of the
Riverboat, and the Licensee hereby defends, indemnifies and holds
harmless the Licensor against all losses, damages and expenses,
including attorneys' fees, incurred as a result of or related to
claims of third persons arising out of the operations of the
Riverboat.
8. TERM.
(a) The term of this Agreement shall begin as of
the date hereof and shall continue until Licensor or its
affiliates no longer holds an equity position in Licensee or its
successor.
(b) If the Licensee or any sublicensee makes any
assignment of assets or business for the benefit of creditors, or
if a trustee or receiver is appointed to administer or conduct its
business or affairs, or if it is adjudged in any legal proceeding
to be either voluntary or involuntary bankrupt, then all the
rights granted herein shall forthwith cease and terminate without
prior notice or legal action by the Licensor and without any
further obligation or liability to Licensor.
(c) Should the Licensee fail to comply with any
provision of this Agreement or Licensee's actions or failure to
act in any way threaten, jeopardize or harm the Trademark, the
Licensor may terminate this Agreement without prior notice or
legal action and without any further obligation or liability to
Licensor. The Licensor shall have the right to determine
unilaterally whether or not the conditions envisioned by this
subparagraph exist, and the Licensor's determination shall be
final.
(d) Notwithstanding anything to the contrary
contained herein, Licensor may terminate this Agreement, at any
time and for any reason whatsoever, in its sole and absolute
discretion, provided that it shall first give the Licensee thirty
(30) days prior written notice of the intended termination, with
said termination to be effective thirty (30) days from the date of
the notice, without any further obligation or liability to Licensor.
9. FEES. Licensee shall pay to Licensor fees for the
use of the Trademark equal to two percent (2%) of Licensee's
gross gaming revenue net of all gaming taxes. Licensee shall pay
such fee monthly on or before the twentieth (20th) day of the
following month. "Gross gaming revenue" shall mean all revenue
from the operation of the Casino. "Gaming taxes" shall mean
any tax imposed by the State of Missouri on gross gaming
revenue, including, without limitation, any state admissions tax
(currently 20% of gross gaming revenue and $2.00 per customer).
"Casino" shall mean those areas of the Riverboat reserved for the
operation of slot machines, table games, electronic games of
chance, electronic games of skill and any other legal forms of
gaming permitted under applicable law, and ancillary service
areas, including reservations and admissions, cage, vault, count
room, surveillance room and any other room or areas or activities
therein regulated or taxed by the Missouri Gaming Commission by
reason of gaming operations. Showboat and ▇▇▇▇▇▇▇▇ agree that the
fees provided for by this Section 9 constitute their good faith
determination of the fair market value of the use of the
Trademark.
10. OWNERSHIP OF TRADEMARK. The Licensee acknowledges
the Licensor's exclusive right, title, and interest in and to the
Trademark including its trademarks, logos, service marks, and any
variation or extensions thereof (collectively, "Showboat
Intellectual Property" and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or
tending to impair any part of such right, title, and interest. In
connection with the use of the Trademark, the Licensee shall not
in any manner represent that it has any ownership in the
Trademark or registration hereof, and the Licensee acknowledges
that use of the Trademark shall not create in the Licensee's
favor any right, title, or interest in or to the Trademark, but
all uses of the Trademark by the Licensee shall inure to the
benefit of the Licensor. Upon termination of this Agreement in
any manner provided herein, the Licensee will cease and desist
from all use of the Trademark in any way (and will deliver up to
the Licensor, or its duly authorized representatives, all
material and papers upon which the Trademark appears), and the
Licensee shall at no time adopt or use, without the Licensor's
prior written consent, any word or ▇▇▇▇ which is likely to be
similar to or confusing with the Trademark.
11. NOTICES. Any notices required or permitted to be
given under this Agreement shall be deemed sufficiently given if
mailed by certified mail, postage prepaid, addressed to the party
to be notified at its address shown at the beginning of this
Agreement, or at such other address as may be furnished in writing
to the notifying party.
IN WITNESS WHEREOF this Agreement has been executed as
of the day and year first above written.
"Licensor" "Licensee"
SHOWBOAT, INC., SOUTHBOAT PARTNERSHIP,
a Nevada corporation a Missouri general partnership
By: FUTURESOUTH, INC.
a Missouri corporation
Its: General Partner
By: /s/H. ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Secretary Its: President