Exhibit 10.05
AMENDED AND RENEGOTIATED
CASINO OPERATING CONTRACT
EFFECTIVE AS OF October 30, 1998
TABLE OF CONTENTS
Page
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ARTICLE I. POLICY, PURPOSE AND SUBJECT MATTER.................................................................2
1.1. Public Policy and Amendment and Renegotiation.........................................................3
1.2. Subject Matter........................................................................................3
1.3. Exclusive Contract....................................................................................4
ARTICLE II. DEFINITIONS.....................................................................................11
ARTICLE III. GRANT OF AUTHORITY.............................................................................48
3.1. Grant of Authority...................................................................................48
3.2. Permitted Use........................................................................................49
3.3. Approval Prerogative.................................................................................49
3.4. Location of Official Gaming Establishment............................................................50
ARTICLE IV. WARRANTIES AND REPRESENTATIONS...................................................................50
4.1. Gaming Board Warranties; Due Authorization...........................................................50
4.2. Casino Operator Warranties...........................................................................50
ARTICLE V. TERM AND EXTENDED TERM............................................................................51
5.1. Initial Term.........................................................................................52
5.2. Extended Term........................................................................................52
ARTICLE VI. COMPENSATION PAYMENTS; AMOUNTS AND METHODS......................................................52
6.1. Fixed Payment Obligations............................................................................52
6.2. Louisiana Gross Gaming Revenue Share Payments........................................................54
6.3. Remittance and Monthly Adjustments...................................................................57
6.4. State's Interest in Daily Collections................................................................59
6.5. Daily Deposits.......................................................................................59
6.6. Casino Operator's Right to Grant Security Interest...................................................60
6.7. Late Payment Interest................................................................................60
6.8. No Reduction in Payment..............................................................................60
6.9. Continuing Payment Requirement.......................................................................61
ARTICLE VII. OTHER CONSIDERATIONS............................................................................61
7.1. Open Access..........................................................................................61
7.2. Gaming Board's Controlled Space......................................................................61
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ARTICLE VIII. CASINO MANAGER AND CASINO MANAGEMENT CONTRACT..................................................62
8.1. Subcontracting of Casino Operator's Obligations......................................................62
8.2. Subcontracting by Casino Operator....................................................................63
8.3. Casino Operator's Obligations Under the Casino Management Contract...................................64
8.4. Acts and Omissions of the Casino Manager.............................................................64
8.5. Access to Casino Manager's Books and Records of the Casino...........................................65
8.6. Notice of Termination of Casino Management Contract..................................................65
8.7. Casino Name Change...................................................................................66
8.8. Termination Transition Payment.......................................................................67
8.9. Leasehold Mortgagee Exemption........................................................................67
ARTICLE IX. CASINO OPERATOR'S AFFIRMATIVE COVENANTS..........................................................67
9.1. General..............................................................................................67
9.2. Official Gaming Establishment........................................................................67
9.3. Payment..............................................................................................68
9.4. Initial Plan Financing and Site Possession...........................................................68
9.5. Financial Stability..................................................................................68
9.6. Non-Discrimination Policies..........................................................................73
9.7. Minority Employment Policies.........................................................................73
9.8. Compulsive Gaming Program............................................................................73
9.9. Maintain Qualifications..............................................................................73
9.10. On-Site Inspections.................................................................................74
9.11. Cooperate in Investigations.........................................................................74
9.12. Access to Information, Materials and Data...........................................................74
9.13. Maintain Books and Records After Termination or Expiration..........................................75
9.14. Documents for Investigations........................................................................75
9.15. Cooperation to Facilitate Restrictive Use Casino Operating Contracts................................75
9.16. Maintain Suitability................................................................................75
9.17. Information Concerning Creditors....................................................................76
9.18. Business Ability and Casino Gaming Experience.......................................................77
9.19. Notice of Claims....................................................................................77
9.20. Insurance Coverages.................................................................................77
9.21. Essential Agreements................................................................................77
9.22. Casino Bankroll.....................................................................................78
9.23. Days and Hours of Operation.........................................................................78
9.24. Age Limitations.....................................................................................79
9.25. Maintenance of Casino...............................................................................80
9.26. Computerized Accountability.........................................................................80
9.27. Minimum Internal Controls...........................................................................83
9.28. Utilization of Louisiana Goods and Services.........................................................84
9.29. Timetables and Outside Dates........................................................................85
9.30. Rivergate/City Payments.............................................................................85
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9.31. Payment of Impositions..............................................................................86
9.32. Payment to Unsecured Creditors......................................................................86
ARTICLE X. CASINO OPERATOR'S NEGATIVE COVENANTS.............................................................86
10.1. General.............................................................................................86
10.2. Food and Restaurant Facilities and Service..........................................................87
10.3. No Lodging..........................................................................................88
10.4. Prohibited Contacts with Public Officers............................................................88
10.5. Improper Activities.................................................................................88
10.6. Prohibited Sale of Certain Products.................................................................89
10.7. Exclusion and Detention of Certain Persons..........................................................89
10.8. Environmental Laws..................................................................................90
10.9. Other Prohibited Activities.........................................................................90
ARTICLE XI. DESIGN AND CONSTRUCTION.........................................................................91
11.1. Casino Design.......................................................................................91
11.2. Casino Construction.................................................................................91
11.3. Poydras Street Support Facility and Poydras Tunnel Construction.....................................91
11.4. Effect of Delivery..................................................................................92
11.5. Changes to Construction Documents...................................................................92
11.6. Material Change Approval Procedure..................................................................92
11.7. Disclaimer of Representations and Prohibited Reliance...............................................94
11.8. Compliance with Governmental Requirements...........................................................95
11.9. Delivery of Notice..................................................................................95
11.10. Commencement Dates.................................................................................95
11.11. Completion Dates...................................................................................95
11.12. Reports and Monitoring.............................................................................95
ARTICLE XII. FINANCIAL AND ACCOUNTING RECORDS, ACCESS AND REPORTING REQUIREMENTS, CONFIDENTIALITY............97
12.1. Financial and Accounting Records....................................................................97
12.2. Financial Statements and Quarterly Meetings.........................................................98
12.3. Expiration or Termination Audit.....................................................................99
12.4. Public Company Disclosure...........................................................................99
12.5. Review and Audit....................................................................................99
12.6. Cooperation with the Legislative Auditor...........................................................101
12.7. Public Records Access..............................................................................101
12.8. Errors in Financial and Accounting Records Resulting in Overpayment to the Gaming Board............103
ARTICLE XIII. FUNDS AND FINANCING...........................................................................104
13.1. Financing..........................................................................................104
iii
13.2. Amount of Initial Plan Financing...................................................................104
13.3. Source of Initial Plan Financing...................................................................104
13.4. Evidence of Initial Plan Financing.................................................................104
13.5. Financing Representations; Restrictions............................................................105
13.6. Limitations on Financing...........................................................................106
13.7. Capital Replacement Fund...........................................................................106
ARTICLE XIV. INSURANCE......................................................................................109
14.1. Property and Casualty Insurance Coverage...........................................................109
14.2. Builder's Risk Insurance...........................................................................111
14.3. Adjustments to Policy Limits and Deductibles.......................................................111
14.4. Liability Insurance................................................................................111
14.5. Contractor Insurance...............................................................................113
14.6. Other Contractor Insurance.........................................................................114
14.7. Architect and Engineer Insurance...................................................................117
14.8. Business Interruption Insurance....................................................................118
14.9. Adjustments to Policy Limits for Liability Insurance...............................................119
14.10. Form of Insurance and Insurers....................................................................119
14.11. Other Policies....................................................................................120
14.12. Adjustment of Insurance...........................................................................120
14.13. Insurance Notice..................................................................................120
14.14. Keep in Good Standing.............................................................................121
14.15. Blanket Policies..................................................................................121
14.16. Change of Circumstances...........................................................................122
ARTICLE XV. DAMAGE TO OR DESTRUCTION OF THE CASINO..........................................................122
15.1. Damage or Destruction..............................................................................122
15.2. Insurance Proceeds.................................................................................123
15.3. Utilization of Insurance Proceeds..................................................................123
15.4. Damage at End of Casino Term.......................................................................125
ARTICLE XVI. ALTERATIONS AND MODIFICATIONS TO CASINO PREMISES AFTER COMPLETION..............................125
16.1. Alteration Approvals...............................................................................125
16.2. Manner of Performance..............................................................................126
ARTICLE XVII. ENTRY UPON CASINO PREMISES BY GAMING BOARD; INSPECTION........................................126
17.1. Access and Inspection Rights.......................................................................126
ARTICLE XVIII. INDEMNIFICATION..............................................................................127
iv
18.1. Indemnification....................................................................................127
18.2. Defense of Proceedings.............................................................................130
18.3. Right to Participate in Defense....................................................................130
18.4. No Settlement Without Gaming Board Approval........................................................131
18.5. Payment of Judgment................................................................................131
18.6. Indemnity of State.................................................................................131
ARTICLE XIX. CRITERIA FOR OPENING CASINO...................................................................131
19.1. Financing Completed................................................................................131
19.2. Insurance Coverages................................................................................131
19.3. Landlord Approvals and Consents....................................................................131
19.4. Completion Acceptance..............................................................................132
19.5. Occupancy Permits and Licenses.....................................................................132
19.6. Suitability and Licensing..........................................................................132
19.7. Operational Checkout...............................................................................132
19.8. Casino Manager's Certification.....................................................................133
19.9. No Default.........................................................................................133
ARTICLE XX. CASINO OPERATOR'S DEFAULT.......................................................................133
20.1. Events of Default..................................................................................133
20.2. Notice; Opportunity to Cure........................................................................137
20.3. Payment Disputes...................................................................................138
20.4. Remedies...........................................................................................138
20.5. Right to Injunctive Relief.........................................................................140
20.6. No Limitation on Available Remedies................................................................140
20.7. Costs..............................................................................................142
20.8. Fines, Penalties...................................................................................142
ARTICLE XXI. BANKRUPTCY AND INSOLVENCY......................................................................143
21.1. Bankruptcy or Insolvency. If the Casino Operator..................................................143
21.2. Regulation; Exercise of Police and Regulatory Powers...............................................144
21.3. Cash Collateral....................................................................................144
21.4. Performance; Assumption or Rejection...............................................................144
21.5. No Performance Excused.............................................................................145
21.6. Notice of Filing...................................................................................145
21.7. Relief from Automatic Stay.........................................................................145
21.8. Cure Periods Not Tolled............................................................................146
ARTICLE XXII. DEFAULT BY THE GAMING BOARD...................................................................146
22.1. Default by Gaming Board............................................................................146
22.2. Remedies...........................................................................................147
22.3. Exclusivity - Default by the Gaming Board and Remedies.............................................147
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ARTICLE XXIII. LEASEHOLD MORTGAGEES.........................................................................147
23.1. General............................................................................................148
23.2. Registered Leasehold Mortgagee.....................................................................148
23.3. Notices to Registered Leasehold Mortgagees.........................................................148
23.4. Opportunity to Cure................................................................................149
23.5. Revocation/Suspension Proceedings..................................................................150
23.6. Receivership/Foreclosure Proceedings...............................................................151
23.7. Effect of Appointment of Receiver..................................................................155
23.8. No Effect On Suit to Enforce.......................................................................155
23.9. Third Party Beneficiaries..........................................................................155
23.10. No Lien on this Casino Operating Contract.........................................................155
ARTICLE XXIV. SUITABILITY OF OTHERS.........................................................................155
24.1. Suitability Requirements...........................................................................155
24.2. Unsuitability - Casino Manager.....................................................................156
24.3. Unsuitability - Holders of Equity or Debt Interests................................................156
24.4. Safe Harbor........................................................................................157
ARTICLE XXV. GUARANTEES AND ASSURANCES......................................................................159
25.1. Rolling Minimum Payment Guaranty...................................................................159
25.2. Completion Guarantee...............................................................................161
25.3. Additional Guarantees and Assurances...............................................................162
25.4. Matters Relating to Minimum Payment Guaranty.......................................................163
ARTICLE XXVI. TRANSFER RESTRICTIONS.........................................................................164
26.1. Casino Operator Transfers - Casino Operating Contract..............................................164
26.2. Casino Operator Transfers - Essential Agreements...................................................165
26.3. Other Actions or Transfers Requiring Approval......................................................165
26.4. Conditions to Approval of Proposed Transfer........................................................165
26.5. Five Percent Accumulation..........................................................................165
26.6. Transfer Restriction Legend........................................................................167
26.7. Notice and Cure Period; Safe Harbor................................................................167
ARTICLE XXVII. NOTICES......................................................................................168
27.1. Manner of Giving Notice............................................................................168
ARTICLE XXVIII. MISCELLANEOUS...............................................................................169
28.1. No Joint Venture or Partnership....................................................................169
28.2. No Waiver..........................................................................................169
28.3. Partial Invalidity.................................................................................169
28.4. Responsibility for Costs and Risks of Operations...................................................170
28.5. Applicable Law.....................................................................................170
28.6. Venue, Personal Jurisdiction and Forum Selection...................................................170
28.7. Compliance.........................................................................................171
28.8. Captions...........................................................................................171
28.9. Number and Gender..................................................................................172
28.10. No Drafting Presumptions..........................................................................172
28.11. Prior Agreements; Amendment.......................................................................172
28.12. Intervention by Casino Manager....................................................................173
28.13. Time of the Essence...............................................................................173
28.14. Successors and Assigns............................................................................173
28.15. No Third Party Beneficiary........................................................................173
28.16. Assignment........................................................................................173
28.17. No Novation.......................................................................................174
28.18. Counterparts......................................................................................174
Section
Exhibits Reference
-------- ---------
A Approved Program Plans 11.1
B Form of Completion Guarantee 25.2
C Form of Performance Bond 25.2
D Form of State Release Agreement Recitals
E-1 Legal Description of Employee and Bus Support Parking
Facilities 2.145
▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Parking Facilities 2.145
F Legal Description of Casino Premises 2.27
G Form of HET/JCC Agreement 25.4
H. Form of Initial Unconditional Minimum Payment Guaranty 25.1
I. Form of Unconditional Guaranty for Fiscal Year
Ending March 31, ____ 25.1
vii
State of Louisiana
Orleans Parish
AMENDED AND RENEGOTIATED CASINO OPERATING CONTRACT
This Amended and Renegotiated Casino Operating Contract is
made and entered into this 30th day of October, 1998 among the State of
Louisiana by and through the Louisiana Gaming Control Board (the "Gaming Board")
assuming the regulatory authority, control and jurisdiction of the Louisiana
Economic Development Control Board pursuant to R.S. 27:15, ▇▇▇▇▇▇'▇ Jazz
Company, a Louisiana general partnership ("HJC"), and Jazz Casino Company,
L.L.C., a Louisiana limited liability company ("Jazz Casino Company" or "JCC").
RECITALS
WHEREAS, on July 15, 1994 the Louisiana Economic Development
and Gaming Corporation entered into a Casino Operating Contract (the "Initial
Operating Contract") with HJC, whereby HJC was authorized to construct and
operate the Official Gaming Establishment; and
WHEREAS, HJC filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code on or about November 22, 1995;
and
WHEREAS, on or about May 1, 1996, pursuant to R.S. 27:15 the
Gaming Board assumed, among other things, all regulatory authority, control and
jurisdiction over gaming activities authorized under the LEDGC Act; and
WHEREAS, HJC has submitted and the United States Bankruptcy
Court has confirmed a plan of reorganization (the "Plan") in the bankruptcy
proceedings of HJC; and
WHEREAS, pursuant to the Plan, the assets and business of HJC
will vest in Jazz Casino Company, a newly formed Louisiana limited liability
company, on the Plan Effective Date; and
WHEREAS, the Gaming Board has agreed to renegotiate this
Casino Operating Contract with HJC and has Approved the amendment, renegotiation
and assignment of this Casino Operating Contract as amended and renegotiated to
JCC as HJC's successor pursuant to the Plan as of the Plan Effective Date; and
WHEREAS, pursuant to the Plan, the single membership interest
in Jazz Casino Company will be wholly owned by JCC Holding Company, a publicly
traded company which, upon consummation of the Plan, a subsidiary of ▇▇▇▇▇▇'▇
Entertainment, Inc. ("HET") shall purchase Class B New Common Stock (issued
pursuant to the Plan) equivalent to forty-nine and nine tenths percent (49.9%)
of the equity of JCC Holding Company (some of which will be disbursed as per the
Plan), the holders of the 14 1/4% First Mortgage Notes Due
1
2001 with Contingent Interest issued by HJC and ▇▇▇▇▇▇'▇ Jazz Finance Corp.
shall receive pro rata, Class A New Common Stock (issued pursuant to the Plan)
equivalent to thirty-seven and one-tenth percent (37.1%) of the equity of JCC
Holding Company, and a disbursing agent for the benefit of said holders shall
receive Class A New Common Stock equivalent to thirteen percent (13%) of the
equity of JCC Holding Company; and
WHEREAS, pursuant to the Plan, HJC has been authorized to
execute this Amended and Renegotiated Casino Operating Contract; and
WHEREAS, pursuant to the Plan JCC Holding Company as the sole
member of Jazz Casino Company has duly authorized the execution of the Amended
and Renegotiated Casino Operating Contract, the Board of Directors of JCC
Holding Company (together with Jazz Casino Company, the "JCC Entities") has duly
authorized the execution of this Casino Operating Contract, and the Board of
Directors of JCC Holding Company will consist of an equal number of directors
elected by the holders of a majority of shares of Class B stock - the HET
Directors - and directors elected by a majority of the shares of the Class A
stock - the Independent Directors, with the HET Directors generally supervising
the day-to-day activities of each of the JCC Entities, unless and until such
day-to-day supervision rights terminate pursuant to the Certificate of
Incorporation of JCC Holding Company and the Articles of Organization of Jazz
Casino Company as a result of events of default under the Casino Operator's loan
documents or the indentures for the new notes and new contingent notes issued
pursuant to the Plan, payment or material events of default under the Casino
Lease, certain events of default under this Amended and Renegotiated Casino
Operating Contract, material events of default under the Casino Management
Agreement, breach of the completion guarantees from ▇▇▇▇▇▇'▇ Operating Company,
Inc. ("▇▇▇▇▇▇'▇ Operating") and HET pursuant to the Plan and certain other
default events as described in said Certificate of Incorporation and Articles of
Organization; and
WHEREAS, as part of the Plan and with the approval of the
Gaming Board, Jazz Casino Company has been authorized to assume the role of
Casino Operator subject to the requirements of this Amended and Renegotiated
Casino Operating Contract and the Suitability Requirements; and
WHEREAS, effective as of the Plan Effective Date certain
claims of the parties and others will be resolved pursuant to that certain State
Release Agreement attached as Exhibit D hereto and by this reference
incorporated herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
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ARTICLE I. POLICY, PURPOSE AND SUBJECT MATTER
1.1. Public Policy and Amendment and Renegotiation
(a) Amendment and Renegotiation. Pursuant to the Casino Act,
the Gaming Board and HJC hereby amend and renegotiate the Initial Casino
Operating Contract on the terms set forth in this Amended and Renegotiated
Casino Operating Contract, which shall be revocable in accordance with the terms
hereof. The Initial Casino Operating Contract, as hereby amended and
renegotiated, and any future amendments, changes, modifications, renegotiations
or restatements, is hereinafter referred to as the "Casino Operating Contract."
(b) Public Policy. The Parties acknowledge the public policy
and provisions of the Casino Act. The purpose of this Casino Operating Contract
is to set forth the conditions, covenants, obligations, requirements and terms
under which the Casino Operator shall provide and furnish the Casino and shall
be entitled to conduct Gaming Operations in the Official Gaming Establishment or
Casino; to set forth the rights and privileges of the Gaming Board under this
Casino Operating Contract and the corresponding duties, responsibilities and
obligations of the Casino Operator to the Gaming Board under this Casino
Operating Contract; and to set forth the rights of the Casino Operator with
respect to the Gaming Board.
1.2. Subject Matter.
The subject matter of this Casino Operating Contract is the
Official Gaming Establishment or Casino to be constructed, furnished, equipped
and operated by the Casino Operator on the site known as the "Rivergate" and
numbered ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in the City of New Orleans, Orleans Parish, Louisiana.
3
1.3. Exclusive Contract
(a) Exclusivity Protection. Subject to the conditions,
obligations, requirements, provisions and terms of this Casino Operating
Contract, this Casino Operating Contract is exclusive as to land-based gaming in
the Parish of Orleans as more particularly set forth in R.S. 27:241(H) as in
effect January 1, 1997 and Section 1.3(b) - "Violations Generally." Except as
otherwise permitted in this Section 1.3 - "Exclusive Contract," no other
land-based gaming facility shall be contracted or licensed in the Parish of
Orleans during the term of this Casino Operating Contract or any renewal or
extensions hereof.
(b) Violations Generally.
(A) Violations. The Casino Operator shall be relieved of the
obligation to make the Minimum Payment, Daily Payment and Louisiana Gross Gaming
Revenue Share Payments (collectively, the "Revenue Share Payments") as set forth
in Section 1.3(c) - "Judicial Relief for Exclusivity Violations" only if all of
the following three conditions ((i) through (iii)) occur:
(i) there is a Material violation of the exclusivity
provisions of R.S. 27:241(H) or of Section 1.3(a) -
"Exclusivity Protection" (as qualified and defined
hereinafter in this Section 1.3(b) - "Violations
Generally") as a result of
(a) a change, other than a "Permitted Amendment"
(as defined below), in State law (adopted by
statute, regulation or rule) from that in
effect January 1, 1997,
(1) permitting any Game (whether
authorized at the Casino or at any
other land based facility) or
Gaming Device (except video poker
operations authorized pursuant to
the Video Draw Poker Devices
Control Law as in effect January 1,
1997) at another land-based
facility in the Parish of Orleans,
or
(2) permitting riverboats (other than a
Permitted Riverboat (as defined
below)) to conduct dockside gaming
in
4
Orleans Parish beyond the scope of
R.S. 27:65(B)(1), as in effect
January 1, 1997
(collectively, a "Change in State Law");
provided, however, a Change in State Law
shall not include a change in State law
authorizing at any time or from time to time
one or more licensed riverboats to remain
dockside and conduct dockside gaming beyond
the scope of R.S. 27:65(B)(1), as in effect
January 1, 1997; provided that, with respect
to Orleans Parish, the authorization shall
be limited to not more than one licensed
riverboat at any time (a "Permitted
Riverboat") which must be located on Lake
Pontchartrain in Orleans Parish, and
provided, further, that the authorization
(as to Orleans Parish) includes the
following prohibitions:
(A) a prohibition against a
Permitted Riverboat
conducting gaming
activities in an area(s)
exceeding thirty thousand
(30,000) square feet in the
aggregate;
(B) a prohibition against the
owner or operator of a
Permitted Riverboat
participating directly or
indirectly in the
ownership, construction,
operation or subsidization
of any hotel of a size
exceeding three hundred
ninety-nine (399) guest
rooms within a distance of
one (1) mile from the
berthing area of a
Permitted Riverboat; and
(C) a prohibition against a
Permitted Riverboat
maintaining or offering for
patron or public use on the
vessel and at its terminal,
berthing area and any hotel
referred to above, more
than eight thousand (8,000)
square feet of restaurant
facilities in the aggregate
(exclusive of food
preparation and handling
areas) .
Any change in State law authorizing
a Permitted Riverboat to remain
dockside and conduct dockside gaming
beyond the scope of R.S. 27:65(B)(1)
as in effect January 1, 1997, and
subject to the foregoing
prohibitions, shall be a "Permitted
Amendment."
(b) a failure by the State, or an agency
or instrumentality of the State, to
enforce the State law regarding
land-based gaming in the Parish of
Orleans (other than Dockside
5
Violations which are subject to the
exclusive remedies set forth in
Section 1.3(d) - "Dockside
Violations" and Permitted Amendment
Violations which are subject to the
exclusive remedies set forth in
Section 1.3(e) - "Permitted
Amendment Violations"),
(c) the Gaming Board and/or the State
permitting riverboats to conduct
gaming operations in the Parish of
Orleans if the riverboats do not
meet the requirements of R.S.
27:44(4) and 27:44(23)(c) and (d),
as in effect January 1, 1997, or
(d) Indian Gaming Operations being
conducted in the Parish of Orleans,
(each such Material violation, (a) through (d), an
"Exclusivity Violation");
(ii) such Exclusivity Violation continues after
Notice (of such Exclusivity Violation) from
the Casino Operator to the Gaming Board and
the passage of a sixty (60) Day cure period
for the Gaming Board or the State to remedy
such Exclusivity Violation; and
(iii) a court of competent jurisdiction renders a
final non-appealable judgment holding that
such Exclusivity Violation did occur and was
not timely cured within sixty (60) Days
after Notice thereof from the Casino
Operator to the Gaming Board.
It is hereby agreed that Dockside Violations and Permitted Amendment Violations
are not, and will not form the basis for, any Exclusivity Violations.
(B) Matters Not Constituting Prohibited Land-Based Gaming. For
purposes of this Section 1.3(b) - "Violations Generally", the following shall
not constitute prohibited land-based gaming as described in Section 1.3(a) -
"Exclusivity Protection" or this Section 1.3(b) - "Violations Generally":
(i) gaming operations upon riverboats while
cruising or sailing or dockside in
accordance with the Louisiana Riverboat
Economic Development and Gaming Control Act
(as in effect January 1, 1997),
6
(ii) riverboat dockside gaming in accordance with
any Permitted Amendment to State law as
provided in Section 1.3(b)(A)(i)(a) hereof,
(iii) video poker operations authorized pursuant
to the Video Draw Poker Devices Control Law
(as in effect January 1, 1997),
(iv) authorized charitable gaming activities,
lottery games conducted pursuant to the
provisions of the Louisiana Lottery
Corporation Law (as in effect January 1,
1997), and
(v) pari-mutuel wagering as authorized by the
provisions of Chapter 4 of Title 4 of the
Louisiana Revised Statutes of 1950 (as in
effect January 1, 1997).
(c) Judicial Relief for Exclusivity Violation. Any judicial
relief sought by the Casino Operator with respect to an Exclusivity Violation
shall include a prayer for a determination as to the date of such Exclusivity
Violation and the duration of such Exclusivity Violation. The Casino Operator,
with a reservation of all its legal rights, shall continue to pay the Revenue
Share Payments while any judicial action brought by the Casino Operator with
respect to an Exclusivity Violation is prosecuted to a final non-appealable
judgment. If such judicial action results in a final non-appealable judgment
that an Exclusivity Violation has occurred, the Casino Operator shall be
relieved of its obligation to make further Revenue Share Payments from the date
of such final non-appealable judgment, subject to the additional cure rights set
forth in Section 1.3(f) - "Notice and Cure Subsequent to Judicial Relief." The
Casino Operator's obligation to make future Revenue Share Payments shall resume
in accordance with the Judicial Declaration of Cure provisions in Section 1.3(f)
- "Notice and Cure Subsequent to Judicial Relief." The Casino Operator shall be
entitled to an offset against future Revenue Share Payments for an amount equal
to any Revenue Share Payments
7
paid to the Gaming Board and/or the State during the judicially determined
period of any Exclusivity Violation.
(d) Dockside Violations. The State and the Gaming Board shall
not permit any Dockside Violations. A "Dockside Violation" shall mean any
riverboat conducting dockside gaming in the Parish of Orleans in violation of
the requirements of R.S. 27:65(B)(1), as in effect January 1, 1997, provided
that a dockside violation shall not include gaming on a riverboat (i) while
cruising or sailing or dockside in accordance with the Louisiana Riverboat
Economic Development and Gaming Control Act as in effect January 1, 1997 if such
violation is not a Material violation, that is, if such riverboat sails or
cruises in Material accordance with the requirements of R.S. 27:65(B)(1), as in
effect January 1, 1997 or (ii) remaining dockside pursuant to a Permitted
Amendment. If any Dockside Violation continues after Notice from the Casino
Operator to the Gaming Board and sixty (60) Days opportunity to cure by the
Gaming Board or the State, and if a court of competent jurisdiction renders a
judgment (subject to applicable appellate rights) holding that Dockside
Violations did occur and were not timely cured within sixty (60) Days after
receipt by the Gaming Board of Notice from the Casino Operator, the Casino
Operator will be entitled to seek only the following remedies: (i) specific
performance by the Gaming Board and/or the State of the obligations under this
Section 1.3(d) - "Dockside Violations," not to permit Dockside Violations,
and/or (ii) mandamus against the Gaming Board or any other appropriate
governmental authority not to permit Dockside Violations. During the pendency of
any judicial action and through final non-appealable judgment concerning
Dockside Violations and at all times thereafter, the Casino Operator shall not
be relieved of its obligation to pay
8
the Revenue Share Payments. Any finding of a Dockside Violation by a judgment of
a court of competent jurisdiction shall not at that time or any time thereafter
relieve the Casino Operator of its obligation to pay the Revenue Share Payments.
(e) Permitted Amendment Violations. The State and the Gaming
Board shall not permit any Permitted Amendment Violations. A "Permitted
Amendment Violation" shall mean a Permitted Riverboat conducting gaming in the
Parish of Orleans in violation of a Permitted Amendment. If any Permitted
Amendment Violation continues after Notice from the Casino Operator to the
Gaming Board and 60 days opportunity to cure by the Gaming Board or the State,
and if a court of competent jurisdiction renders a judgment (subject to
applicable appellate rights) holding that Permitted Amendment violations did
occur and were not timely cured within sixty (60) Days after receipt by the
Gaming Board of Notice from the Casino Operator, the Casino Operator will be
entitled to seek only the following remedies: (i) specific performance by the
Gaming Board and/or the State of the obligations under this Section 1.3(e) -
"Permitted Amendment Violations," not to permit Permitted Amendment Violations,
and/or (ii) mandamus against the Gaming Board or any other appropriate
governmental authority not to permit Permitted Amendment Violations. During the
pendency of any judicial action and through final non-appealable judgment
concerning Permitted Amendment Violations and at all times thereafter, the
Casino Operator shall not be relieved of its obligation to pay the Revenue Share
Payments. Any finding of a Permitted Amendment Violation by a judgment of a
court of competent jurisdiction shall not at that time or at any time thereafter
relieve the Casino Operator of its obligation to pay the Revenue Share Payments.
9
(f) Notice and Cure Subsequent to Judicial Relief.
Notwithstanding the terms of any final non-appealable judgment resulting in a
court holding that an Exclusivity Violation occurred and was not cured within
sixty (60) Days after Notice from the Casino Operator (a "Judicial Declaration
of Violation"), the Gaming Board and/or the State shall have twenty-four (24)
months after the date such Judicial Declaration of Violation is rendered to cure
such Exclusivity Violation and to file an action for declaratory relief seeking
a declaration from a court of competent jurisdiction confirming that such
Exclusivity Violation has been cured and the date and duration of any one or
more period or periods of cure after the original sixty (60) day cure period as
provided for in Section 1.3(b) during which such cure was effected up to the
last day with respect to which the court accepts evidence on the issue (a
"Judicial Declaration of Cure"). The parties recognize that the period of any
such cure may occur, if at all, only after such Judicial Declaration of
Violation and that such cure may be achieved during some, but not all, of that
twenty-four (24) month period. If such Judicial Declaration of Cure determines
that such Exclusivity Violation has been cured within the specified twenty-four
(24) months, the Casino Operator's obligations to make Revenue Share Payments
shall be reinstated for any period of cure as established by such Judicial
Declaration of Cure and continue from the latest date of cure and thereafter,
subject to any prior rights of offset pursuant to Section 1.3(c) - "Judicial
Relief for Exclusivity Violation" for any Revenue Share Payments previously paid
by the Casino Operator during any period of an Exclusivity Violation. In the
event of any Exclusivity Violation(s) subject to a Judicial Declaration of Cure
the provisions of Sections 1.3(a), (b), (c), (d) and (e) shall remain
applicable.
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(g) Moratorium. The Casino Operator shall not initiate any
action for judicial relief concerning any Exclusivity Violation, Dockside
Violation or Permitted Amendment Violation until the expiration of eighteen (18)
months after the Actual Opening Date of the Casino, although the Notice and cure
provisions of both parties set forth in this Section 1.3 - "Exclusive Contract"
shall be in force during such eighteen (18) month period. In no event shall the
Casino Operator be restricted during such eighteen (18) month period from
asserting any Exclusivity Violation, Dockside Violation or Permitted Amendment
Violation as a defense or in any other procedural manner required under the
circumstances to properly seek the relief specified in Sections 1.3(b), (c), (d)
and (e) in response to any action initiated by the Gaming Board to (i) terminate
this Casino Operating Contract, or (ii) challenge the financial suitability of
the Casino Operator caused substantially by the said Exclusivity Violation,
Dockside Violation and/or Permitted Amendment Violation; provided that such
action by the Gaming Board or defense by the Casino Operator shall not include
matters relating to routine operational regulatory interaction between the
Gaming Board and/or the State and the Casino Operator.
ARTICLE II. DEFINITIONS
For the purposes of this Casino Operating Contract, the
following words and phrases, in addition to words and phrases defined elsewhere
in this Casino Operating Contract, shall have the meanings set forth below,
unless otherwise expressly provided in this Casino Operating Contract:
2.1. "Additional Charges" means any and all payments, costs, expenses,
fines and penalties (other than the remittance of the Louisiana Gross Gaming
Revenue Share Payments
11
and the Daily Payments) that are required to be paid by the Casino Operator to
the Gaming Board pursuant to the provisions of this Casino Operating Contract or
the Rules and Regulations.
2.2. "Affiliate" means with respect to a particular Person, any other
Person who, directly or indirectly Controls, or is Controlled by, or is under
common Control with the Person specified. "Affiliate" means and includes a Key
Person. Whenever the term "Affiliate" is used with respect to the Casino
Operator, the term also means and includes any Person holding a direct or
indirect shareholder interest that gives such Person the ability to Control the
Casino Operator or any Person owning a five percent (5%) or more direct interest
in the Casino Operator. For purposes of calculating the percentage of ownership
interest, the following shall be attributed to such Person, (a) the ownership,
income or profit interest held by a trustee of a trust of which a Person is a
beneficiary, and (b) the interest held by a member of such Person's immediate
family. "Immediate family" means a person's spouse, children, parents, brothers,
sisters, nieces, nephews and cousins to the first degree. Notwithstanding the
foregoing, a shareholder owning, directly or indirectly, five percent (5%) or
more ownership, income or profit interest in a corporation the shares of which
are widely held and publicly traded shall not be an "Affiliate" of a Person
unless the Gaming Board determines the shareholder Controls that Person.
2.3. "Alterations" has the meaning set forth in Section 16.1 -
"Alteration Approvals."
2.4. "Annual Audit" means the audit performed each Fiscal Year by the
Independent CPA of the Fiscal Year Financial Statements of the Casino Operator.
The
12
Annual Audit shall be performed in accordance with the requirements of Section
12.5 - "Review and Audit."
2.5. "Annual Business Plan" means an annual plan for the forthcoming
Fiscal Year to be prepared by or for the Casino Operator for the Gaming Board
consisting of an estimate of revenue and expenses, including the Louisiana Gross
Gaming Revenue Share Payments and other economic items. The information
contained in each Annual Business Plan shall be certified by the Casino Operator
and by the Casino Manager as being true and complete.
2.6. "Approve," "Approves," "Approved," "Approval" mean, when used with
respect to the Gaming Board that the Gaming Board shall have the right, prior to
an action, to approve, confirm, uphold or grant permission with respect to the
subject matter thereof. Appeals of the actions, decisions or orders of the
Gaming Board, a hearing examiner or the Chairman, when exercising its duty or
prerogative to Approve, shall be in accordance with R.S. 27:255(B). When the
term "approve," "approves," "approved" or "approval" is used without an initial
capital "A," it shall mean the Gaming Board has contractual approval rights
only. When the term "approve," "approves," "approved" or "approval" is used with
an initial capital "A" it shall mean the Gaming Board has regulatory Approval
rights.
2.7. "Approved Financial Institution" means either of the following:
(a) a state or federal bank domiciled in the State or with a
branch or correspondent bank located in the State and which satisfies the
following requirements:
(i) the bank has capital and surplus in excess of Two Hundred
Fifty Million Dollars ($250,000,000);
13
(ii) there is no enforcement action against the bank by any
regulatory authority that would lead to a receiver being appointed; and
(iii) no current member of the board of directors or senior
officer of the bank or its holding company has ever been convicted of a felony
involving the activities of the bank or been the subject of civil money
penalties imposed as a result of a regulatory action involving the bank; or
(b) any other financial institution Approved by the Gaming Board.
The Approved Financial Institution (i) shall waive all contractual and legal
rights of setoff against all funds of the Casino Operator on deposit in or
otherwise held by that financial institution other than contractual setoff
rights provided by security or collateral documents Approved by the Gaming
Board; and (ii) if not domiciled in the State, shall, for purposes of any action
brought by the Gaming Board, appoint an agent for service of process in the
State and consent to jurisdiction and venue in the State.
2.8. "Architect Agreement" means one or more of the contracts between
the Casino Operator and the Casino Operator's Architect.
2.9. "Books and Records" means all financial statements, revenue,
expense and other accounting or financial documents or records, including
general ledgers, accounts receivable, accounts payable, invoices, payroll
records, ownership records, expense records, income records and other documents
or records required by the Internal Control System (including detailed records
by game, drop and shift) and all other documents or records maintained by the
Casino Operator or the Casino Manager whether in print, electronic, magnetic,
optical, digital or other media form relating to or concerning the Casino.
14
2.10. "Business Days" means all days except Saturdays, Sundays and all
days that are official legal holidays of the State, the City or the United
States. Unless specifically stated as "Business Days," a reference to "day"
means a calendar day and "days" means consecutive calendar days.
2.11. "Capital Replacements" means the capital improvements and
replacements to the Casino that are required from time to time in order to keep
and maintain the Casino in a first class, efficient operating condition.
2.12. "Capital Replacement Fund" is a replacement reserve fund which
shall be established and maintained by the Casino Operator in a segregated
account as an assurance fund to guarantee all necessary Capital Replacements to
the Casino. The Capital Replacement Fund shall be maintained in an Approved
Financial Institution or invested in U.S. government securities, certificates of
deposit issued by an Approved Financial Institution or any other investments
Approved by the Gaming Board.
2.13. "Casino" means the entirety of the building and improvements
located at the Rivergate site in the Parish of Orleans. The Gaming Board shall
retain jurisdiction and approval rights over the Second Floor Master Plan and
the right to require any lessee or sub-lessee to comply with all licensing,
permitting and Suitability requirements of the Casino Act, Rules and Regulations
and Section 8.2 - "Subcontracting by Casino Operator."
2.14. "Casino Act" means R.S. 27:201 to 286 (Redesignated from R.S.
4:601 by Acts 1996, 1st Ex. Sess. Section 3, eff. May 1, 1996) and all other
relevant provisions of R.S. 27:1 et seq., as it may be amended from time to
time.
15
2.15. "Casino Bankroll" means the amount necessary to pay promptly all
undisputed winning ▇▇▇▇▇▇ to Casino patrons without excuse, forbearance or
delay. The initial Casino Bankroll shall be the "Minimum Balance" plus the
"House Bank" as defined in the Casino Management Agreement. The amount of the
Casino Bankroll may be changed from time to time by the Rules and Regulations to
ensure the payment of the full amount of winning ▇▇▇▇▇▇ to Casino patrons as and
when due without excuse, extension, forbearance or delay.
2.16. "Casino Employee" is an individual who is employed by the Casino
Operator or the Casino Manager and who performs work or services at or in
connection with the Casino.
2.17. "Casino Gaming Day" means the twenty-four (24) hour period
commencing at 6:00 a.m. Central Standard Time or Central Daylight Savings Time
when in effect in Louisiana, or such other time periods selected by the Casino
Operator and Approved.
2.18. "Casino Lease" means that written agreement of lease originally
entered into among Rivergate Development as Landlord, the City as intervenor and
Celebration Park Casino, Inc. as tenant, a multiple counterpart original of
which was registered on April 27, 1993 in the Office of the Register of
Conveyances for Orleans Parish as COB Instrument No. 68200, Notarial Archives
No. 93-18036, as amended by that certain amended lease agreement among Rivergate
Development as Landlord, the City as intervenor and ▇▇▇▇▇▇'▇ Jazz Company, as
tenant, dated March 15, 1994, which was registered on March 16, 1994 in the
office of the Registrar of Conveyances of Orleans Parish as COB Instrument No.
83942,
16
Notarial Archives No. 94-13887, as further amended by the Amended and Restated
Casino Lease Agreement entered pursuant to the Plan, as it may be amended from
time to time.
2.19. "Casino Manager" means ▇▇▇▇▇▇'▇ New Orleans Management Company or
other Person with whom the Casino Operator contracts to provide all or
substantially all of the services necessary for the day-to-day management of the
Casino pursuant to this Casino Operating Contract and the Rules and Regulations
who or which has been Approved and found Suitable by the Gaming Board.
2.20. "Casino Management Contract" means a written agreement, Approved
by the Gaming Board, between the Casino Operator and the Casino Manager through
which the latter agrees to provide all or substantially all of the services
necessary for the day-to-day management and operation of the Casino pursuant to
this Casino Operating Contract and the Rules and Regulations.
2.21. "Casino Opening Date" means the day upon which the Casino opens
for business to the general public (not to include testing days authorized by
the Gaming Board nor pre-opening special events) ("Actual Opening Date");
provided, however, for purposes of Section 25.1 - "Rolling Minimum Payment
Guaranty," Section 2.67 - "Fiscal Year," and Section 2.115 - "Minimum Payment,"
Section 6.2(b) - "Minimum Payment Default," and Section 6.3 "Remittance and
Monthly Adjustments", the "Casino Opening Date" shall mean the earlier of (i)
the Actual Opening Date, or (ii) the date on which the Casino would have been
open for business to the general public as provided in Section 9.29 "Timetables
and Outside Dates," if the Casino Operator had timely performed its obligations
under the Casino Operating Contract to have the Casino fully operational and
open for business so long as any
17
necessary regulatory approvals from the LGCB, the State Police or
any other State regulatory authorities have been received, provided that timely
receipt of any such approvals has been diligently pursued by or on behalf of the
Company in accordance with the Rules and Regulations for such approvals..
2.22. "Casino Operating Contract" has the meaning set forth in Section
1.1 - "Public Policy and Amendment and Renegotiation" hereof.
2.23. "Casino Operator" means Jazz Casino Company and any other Person
who or which, with the prior Approval of the Gaming Board, has succeeded to the
Casino Operator's right, powers and duties under this Casino Operating Contract.
2.24. "Casino Operator's Architect"
means one or more-licensed architects engaged by the Casino
Operator pursuant to the Architect Agreement to prepare the Design Development
Documents and to supervise construction of the Casino improvements.
2.25. "Casino Premises" means the real estate described in the legal
description attached hereto as Exhibit F and by this reference incorporated
herein.
2.26. "Casino Property" means all personal and movable property that
legally belongs to either the Casino Operator, the Casino Manager or gaming
suppliers, manufacturers and distributors and that has been brought onto the
Casino Premises by or for the Casino Operator, the Casino Manager or their
respective employees, agents, servants, suppliers, distributors or contractors
for use in connection with the operation of the Casino. Casino Property
includes, but is not limited to, all Gaming Devices, equipment and supplies and
card or gaming tables.
18
2.27. "Casino Representatives" are those persons employed by the Casino
Operator or by the Casino Manager, who shall be duly authorized to represent the
Casino Operator or the Casino Manager before or in meetings with the Gaming
Board or its representatives.
2.28. "Certificate" means a written statement signed by a Person (or
such Person's duly authorized representative) having knowledge of the
truthfulness of the facts and circumstances recited therein sworn to under oath
to the best of such Person's Knowledge.
2.29. "Certify" means to attest to the truthfulness of facts and
circumstances by signing a Certificate.
2.30. "Chairman" means the Chairman of the Gaming Board or his designee
consistent with the terms of R.S. 27:31.
2.31. "Change in State Law" shall have the meaning set forth in Section
1.3(b)(A)(i) - "Violations Generally."
2.32. "City" means the City of New Orleans, Louisiana.
2.33. "Claims" means any and all claims, demands or causes of action of
every kind and character, whether foreseen or unforeseen and asserting liability
for performance or entitlement to recover value for any loss, cost, damage,
outlay, expense, obligation, penalty, fine or monetary sum whatsoever (including
reasonable attorney's fees or other costs of proceedings) and based on any
theory or principle of law or equity whatsoever, including but not limited to
tort, negligence, failure to act, strict liability, absolute liability,
vicarious liability, product liability, fraud, misrepresentation, contract,
quasi-contract, inducement to breach a contract, express or implied warranties.
19
2.34. "Completion Date" shall have the meaning set forth in Section
9.29(c) hereof
2.35. "Completion Guarantee" shall have the meaning set forth in
Section 25.2 - "Completion Guarantee".
2.36. "Consumer Price Index" or "CPI" means the Consumer Price Index
for all Urban Consumers, U.S. City Average, prepared by the Bureau of Labor
Statistics of the United States Department of Labor [1982-1984 = 100], or, if
such index shall cease to be published, such other comparable index of inflation
as may be reasonably selected by the Gaming Board.
2.37. "Construction Documents" means the drawings and specifications in
sufficient detail for review by appropriate governmental authorities for the
issuance of a building permit.
2.38. "Contractor" means the one or more firms licensed as a contractor
in the State engaged by the Casino Operator, each of which shall carry such
insurance and be bonded to the extent required by applicable law, the General
Development Agreement and this Casino Operating Contract.
2.39. "Contractor Agreement" means the principal construction contract
between the Casino Operator and Centex-▇▇▇▇▇▇ for construction of the Casino and
the construction contract with Broadmoor for construction of the parking
garages.
2.40. "Contractor Notice to Proceed" means the notice issued by the
Casino Operator to the Contractor to proceed with the construction of the Casino
pursuant to the Plan.
2.41. "Control" means with respect to a Person, the ability in the sole
opinion and discretion of the Gaming Board, to exercise a significant influence
over the activities of such
20
Person. Nothing in this Section shall restrict the rights of the Gaming Board
under R.S. 27:236(E).
2.42. "Control Relationship" means an affiliation between a Person and
another Person who Controls or is Controlled by or is Controlled with the first
Person.
2.43. "Daily Payments" has the meaning set forth in Section 6.3 -
"Remittance and Monthly Adjustments."
2.44. "Date of Substantial Completion" means the date when the
construction of the Casino is substantially complete so that it can be occupied
and used for its intended purpose.
2.45. "Day" or "Days" when not preceded by the word "business" mean a
calendar day or consecutive calendar days, respectively.
2.46. "Debt" means all obligations to repay money, which are (a)
secured or unsecured, (b) from advances, borrowings, final judgments, loans,
obligations or sale of debt instruments and (c) obtained from and due to any
source or Person. Debt does not include current liabilities incurred in the
ordinary course of business.
2.47. "Default Interest Rate" means a floating rate of interest at all
times equal to the greater of (a) the prime rate of Citibank, N.A. or its
successor plus five percent (5%) or (b) fifteen percent (15%) per annum,
whichever is greater, provided, however, that the Default Interest Rate shall
not exceed the maximum interest rate allowed by applicable law.
2.48. "Default Notice" shall have the meaning set forth in Section
6.2(b) - "Minimum Payment Default."
21
2.49. "Design Development Documents" means the intermediate level
plans, drawings and specifications for the construction of the Casino. The
American Institute of Architects professional standards for design development
documents shall be applied in determining the sufficiency of the Design
Development Documents.
2.50. "Distributions" means payments (a) to Affiliates of income or
profits, return of capital, reimbursement of expenses, repayment of advances,
salaries, Debt, consulting fees or other guaranteed payments; (b) to any other
Person in a Control Relationship with any Affiliate in excess of Fifty Thousand
Dollars ($50,000) (annually) including payments for advances, salaries, Debt,
consulting fees or other guarantee payments, advertising purchases, accounting
fees or management fees, or on account of any Insider Financing.
2.51. "Dockside Violation" has the meaning set forth in Section 1.3(d)
- "Dockside Violations."
2.52. "Effective Date" means the date upon which the LEDGC and HJC
executed the Initial Operating Contract. This Casino Operating Contract shall be
effective immediately upon execution, and shall not alter the term which will
remain twenty (20) years with one (1) ten (10) year renewal option (relating
back to July 15, 1994).
2.53. "Environmental Laws" means any applicable law, rule or regulation
pertaining to health, safety or the environment including without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, as
hereafter amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976
as amended by the Used Oil Recycling Act of 1980, the Hazardous and Solid Waste
Amendments of 1984, as
22
hereafter amended ("RCRA"), the Federal Water Pollution Control Act, as now or
hereafter amended ("WPCA"), and any laws of the State or any subdivision or
governmental unit thereof, relating to abatement, disposal, existence,
generation, handling, leaking, presence, release, threatened release, removal,
storage, transportation or use of hazardous substances, oil, petroleum, solid
waste or toxic pollutants about, from, in, on, to or under the Casino or any
additions to the Casino made during the Term of this Casino Operating Contract.
The terms "hazardous substance" and "release" shall have the meanings specified
in CERCLA and RCRA; the terms "solid waste" and "disposal" or "disposed" shall
have the meanings specified in RCRA; the terms "oil," "petroleum," and "toxic
pollutant" shall have the meanings specified in WPCA and RCRA; provided that, to
the extent that the laws of the State, as currently enacted or hereafter
amended, establish a meaning for "oil," "petroleum," "toxic pollutants"
"hazardous substance," "release," solid waste" or "disposal" that is broader
than that specified in CERCLA, RCRA or WPCA, such broader meaning shall apply.
2.54. "Essential Agreements" means the Articles of Organization and
Operating Agreement, if any, of the Casino Operator and the Casino Management
Contract.
2.55. "Event of Default" has the meaning specified in Section 20.1 -
"Events of Default."
2.56. "Evidence of Title" means a certified copy of a title insurance
policy or a letter of commitment to issue title insurance to Jazz Casino Company
pursuant to the First American Settlement Agreement entered into by HJC, First
American Title Company and other parties.
23
2.57. "Exclusivity Violation" has the meaning set forth in Section
1.3(b) - "Violations Generally."
2.58. "Excusable Temporary Cessation of Operations" means any of the
following circumstances to the extent and only for such time that it causes
temporary closure or temporary cessation of operations of the Casino beyond the
reasonable control of JCC, and further provided that the Casino Operator
diligently and in good faith seeks to reopen the Casino and to recommence Casino
Operations:
(a) strikes, lockouts, inability to procure materials, failure of
power;
(b) arbitrary or capricious State, local or municipal governmental
action (but in no event shall an Excusable Temporary Cessation
of Operations pursuant to this clause (b) exceed a period of
six (6) months);
(c) acts of God, hurricanes, floods, sinkholes, fires and other
casualties, earthquakes, epidemics, or quarantine;
(d) acts of a public enemy, acts of war, terrorism, blockades,
insurrections, riots, civil disturbances, governmental
preemption in connection with a national emergency, or
national or international calamities;
(e) the entry of a judgment, order or ruling in litigation not
filed by JCC or any Affiliates of JCC and which judgment,
order or ruling was not entered substantially as the result of
the fault of JCC or any Affiliates of JCC and which judgment,
order or ruling restrains or substantially interferes with
operations of the Casino;
24
(f) any action by the legislature or any governmental agency the
result of which is that gaming as currently proposed to be
conducted at the Casino is materially diminished;
(g) any other causes related to or arising out of the causes
stated in subsections (a) through (g) above beyond the
reasonable control of JCC (excluding any bankruptcy of JCC or
failure of JCC to obtain financing or to pay its financial
obligations as they come due) and not substantially the result
of the fault of JCC; and
(h) any other cause which the Gaming Board in its sole discretion
formally determines to be an Excusable Temporary Cessation of
Operations.
2.59. "Expiration Date" means the last Day of the Term whether by
expiration through lapse of time, automatic expiration before the end of the
Term or termination as a result of an Event of Default.
2.60. "Extended Term" means the additional ten (10) year extension
period following the end of the Initial Term.
2.61. "FF&E" means all furniture, furnishings, equipment and fixtures
(including but not limited to Gaming Devices) necessary for the conducting of
Gaming Operations at the Casino.
2.62. "Financial Statements" means a Person's balance sheet and related
statements of income and operations, partnership or shareholder equity and cash
flow prepared in conformity with GAAP, the requirements of this Casino Operating
Contract and the Rules and Regulations.
25
2.63. "Financially Stable" with respect to the Casino Operator means
that the Casino Operator is in full compliance with the objective financial
stability requirements of this Casino Operating Contract, as determined by the
Gaming Board.
2.64. "Financing" means the act or process or an instance of raising
funds relating to the Casino through the issuance of shares of stock, bonds,
notes, mortgages, debentures or other devices evidencing debt or equity
interests.
2.65. "Financing Affiliate" means any corporation, the stock of which
is wholly owned by the Casino Operator and that is utilized solely for the
purpose of Financing.
2.66. "Financing Arrangement" shall mean any lease, installment
purchase, purchase money security interest, use right subject to a participation
in profits, or other financing method used for acquisition, purchase or use of
FF&E.
2.67. "Fiscal Quarter" means the three calendar month period that
begins on the first day of January, April, July and October of each Fiscal Year
as the case may be.
2.68. "Fiscal Year" means the period that begins on April 1st and ends
on March 31st of the following year. The "First Fiscal Year" shall be the period
commencing on the Casino Opening Date and ending on the first March 31st to
occur after the Casino Opening Date. The term "Full Fiscal Year" means any
Fiscal Year containing not fewer than three hundred sixty-five (365) days. A
Fiscal Year containing three hundred sixty-six (366) days is a "Fiscal Leap
Year." Any partial Fiscal Year ending with the expiration of the Term but not
ending due to a termination as a result of an Event of Default shall constitute
the "Last Fiscal Year."
26
2.69. "Game" means any banking or percentage game conducted in the
Casino that is played with cards, dice or any electronic, electrical or
mechanical device or machine for money, property or any thing of value. "Game"
includes any form of wagering that may hereafter be authorized at the Casino by
the Casino Act. "Game" does not mean or include wagering, betting or risking
anything of value on either lottery, bingo, charitable games, raffles,
electronic video bingo, pull tabs, cable television bingo, wagering on dog
races, sports betting or wagering on any type of sports events, inclusive but
not limited to football, basketball, baseball, hockey, boxing, tennis,
wrestling, ▇▇▇ ▇▇▇▇ or other sports contest or event.
2.70. "Gaming Authority" or "Gaming Authorities" means the Gaming Board
and all other Louisiana governmental agencies, related State authorities and
instrumentalities having regulatory oversight of the gaming or related
activities of the Casino Operator, the Casino Manager, their respective
Affiliates or any Person in a Control Relationship with any of them.
2.71. "Gaming Board" means the Louisiana Gaming Control Board created
pursuant to R.S. 27:11, its successors and assigns.
2.72. "Gaming Board's Controlled Space" shall have the meaning set
forth in Section 7.2 - "Gaming Board's Controlled Space."
2.73. "Gaming Device" means any equipment or mechanical,
electromechanical or electronic contrivance, component or machine used directly
or indirectly in connection with Gaming or any Game which affects the result of
a wager by determining win or loss. The term includes a system for processing
information which can alter the normal criteria of random selection, which
affects the operation of any Game or which determines the outcome
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of any Game. "Gaming Device" does not include a system or device which affects a
Game solely by stopping its operation so that the outcome remains undetermined.
2.74. "Gaming Employee" means any Person employed or working in any
capacity at the Casino in the operation or supervision of a Game including but
not limited to (a) pit bosses, floormen, boxmen, dealers, croupiers, machine
mechanics, designated gaming area security personnel, count room personnel, cage
personnel, slot machine and slot booth personnel, credit and collection
personnel, casino surveillance personnel, (b) supervisory personnel authorized
to make discretionary decisions that regulate Gaming Operations including but
not limited to shift bosses, credit executives, casino cashier supervisors,
gaming managers and assistant managers, and (c) any other individual (but not
non-gaming equipment maintenance personnel, cleaning personnel, waiters,
waitresses and secretaries) whose duties require or authorize access to
designated gaming areas.
2.75. "Gaming Operations" or "Gaming Activities" means the offering or
conducting of any Game or Gaming Device at the Casino in accordance with the
provisions of the Casino Act, this Casino Operating Contract and the Rules and
Regulations.
2.76. "Gaming Supplies" means all materials and supplies (other than
Gaming Devices) that the Gaming Board Approves to be used or expended in Gaming
Operations through the Rules and Regulations.
2.77. "General Development Agreement" means that written contract
originally entered into among Rivergate Development, the City as intervenor, and
Celebration Park Casino, Inc., a multiple counterpart of which was registered on
April 27, 1993 in the conveyance records of Orleans Parish as Instrument No.
68201, Notarial Archives No. 93-
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18037, as amended in its entirety by that certain written contract among
Rivergate Development, the City as intervenor, and the Casino Operator, dated
March 15, 1994, which was registered in the conveyance records of Orleans Parish
on March 16, 1994 as Instrument No. 83943, Notarial Archives No. 94-13889, as
further amended in its entirety in that certain Amended and Restated General
Development Agreement executed pursuant to the Plan and pursuant to which the
Casino Operator agrees and obligates itself to construct and equip the Casino
and the related Support Facilities and to undertake certain other obligations
therein contained, as it may be amended from time to time with the Approval of
the Gaming Board.
2.78. "Generally Accepted Accounting Principles" or "GAAP" means
principles of accounting for casinos as set forth in the Audit and Accounting
Guide for Audits of Casinos, with conforming changes as of May 1, 1992 prepared
by the American Institute of Certified Public Accountants, as amended from time
to time, or if not thereby addressed, other generally accepted accounting
principles.
2.79. "Governance Documents" means (a) with respect to a corporation,
the articles of incorporation, by-laws, shareholder's agreements, resolutions of
the board of directors and any other document relating to the organization of
the corporation, (b) with respect to a partnership, the partnership agreement
and any other documents relating to the organization of the partnership, and (c)
with respect to any other type of entity, the documents relating to the
organization of the entity or establishing the right of the owners of the entity
with respect to the entity or each other.
2.80. "Governmental Requirements" means all laws, ordinances, statutes,
rules, regulations of any governmental authority or Gaming Authority, including
but not limited to
29
the Casino Act and the Rules and Regulations that are applicable to the
acquisition, renovation, development, construction, equipping, use, occupancy or
operation of the Casino, as modified by any waivers, variances or approvals
obtained pursuant thereto.
2.81. "Gross Gaming Revenue" means the total receipts of the Casino
Operator from Gaming Operations, including all cash, checks, property and credit
extended to a patron for purposes of gaming less the total value of all (i)
amounts paid out as winnings to patrons and (ii) credit instruments or checks
which are uncollected subject to an annual cap of uncollected credit instruments
and checks of four percent (4%) of the total receipts of the Casino Operator
from Gaming Operations, including all cash, checks, property and credit extended
to a patron for purposes of gaming in a Fiscal Year. Winnings for purposes of
the definition of Gross Gaming Revenue means the total amount delivered by a
Gaming Device as win to a patron or the amount determined by the approved table
game odds as win to a patron, exclusive of any double jackpots, increased
payouts in addition to table game odds or other increased payouts that result
from promotional activities, unless approved in advance by the Gaming Board.
2.82. "HET/JCC Agreement" shall have the meaning set forth in Section
25.4(a) - "Agreement."
2.83. "HJC" shall have the meaning set forth in the preamble of this
Casino Operating Contract.
2.84. "Impositions" shall have the meaning set forth in Section 9.31 -
"Payment of Impositions."
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2.85. "Independent Counsel" means an attorney at law or law firm
selected by the Casino Operator and Approved by the Gaming Board to defend the
Gaming Board in accordance with the Indemnity provisions of this Casino
Operating Contract.
2.86. "Independent CPA" means the auditor engaged by the Casino
Operator to perform the Annual Audit. The Independent CPA shall be either (i)
one of the six (6) largest accounting firms having a national practice in the
United States of America or (ii) any other accounting firm that is selected by
the Casino Operator and Approved by the Gaming Board. The Gaming Board may
require the Casino Operator to select a different Independent CPA if the Gaming
Board for good cause determines the Independent CPA is not sufficiently
independent of the Casino Operator to perform its required functions, which
determination shall not be based solely on the fact that the Independent CPA is
or has been engaged by an Affiliate of the Casino Operator. The Casino Operator
shall Notify the Gaming Board of a change of the selection of the Independent
CPA and the reasons for the change. Without the Gaming Board's Approval, the
Casino Operator shall not change an Independent CPA who has been engaged to
perform the Annual Audit for a Fiscal Year before the Independent CPA has
completed the audit of that Fiscal Year. The Independent CPA's engagement
arrangements shall require that all audited Persons waive any applicable
confidentiality privilege in order to enable the Independent CPA to fully and
completely report to the Gaming Board and that the Gaming Board shall have full
access to the Independent CPA's workpapers. The Independent CPA shall prepare
and deliver to the Gaming Board a management letter that complies with the
requirements of the Rules and Regulations and the Internal Control System.
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2.87. "Information" shall have the meaning set forth in Section 12.7 -
"Public Records Access."
2.88. "Initial Costs" shall have the meaning set forth in Section
6.1(b) - "Suitability and Other Advances and Accounting."
2.89. "Initial Operating Contract" shall have the meaning set forth in
the first Whereas clause of this Casino Operating Contract.
2.90. "Initial Plan Financing" means the closing of one or more
transactions contemplated in the Plan necessary to provide sufficient money to
the Casino Operator, in addition to the funds otherwise available to the Casino
Operator, to fund the design, construction and opening of the Casino, the Casino
Bankroll, and other necessary Casino operating expenses pursuant to the Plan,
including without limitation, the new bank financing to be obtained by the
Casino Operator pursuant to the Plan and Leasehold Mortgage for the benefit of
the lenders of such new bank financing, the new notes and the new contingent
notes to be issued pursuant to the Plan to the holders of the 14 1/4% first
mortgage notes due 2001 with contingent interest issued by HJC and ▇▇▇▇▇▇'▇ Jazz
Finance Corp. and Leasehold Mortgage for the benefit of the holders of such new
notes and new contingent notes.
2.91. "Initial Term" means the time period of the Initial Operating
Contract and this Casino Operating Contract, commencing on the Effective Date
and ending at midnight twenty (20) years thereafter unless sooner terminated
(including automatic expiration) pursuant to the provisions of this Casino
Operating Contract.
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2.92. "Initial Term Expiration Date" means the day ending at midnight
twenty (20) years after the Effective Date unless the Initial Term automatically
expires or is terminated pursuant to this Casino Operating Contract.
2.93. "Insider Financing" means advances, borrowings or loans made to
or for the benefit of the Casino Operator (or its Financing Affiliate) by
Affiliates of the Casino Operator or any Person in a Control Relationship with
any of them (other than holders of over five percent (5%) of the ownership
interests of any company whose shares are widely held and publicly traded on a
recognized national stock exchange), including advances, borrowings or loans
resulting from the performance of obligations under completion and other
guarantees or assurances provided to the Gaming Board.
2.94. "Insurance Coverages" means those insurance coverages described
in this Casino Operating Contract in Article XIV - "Insurance."
2.95. "Internal Control System" means the system of internal controls
containing administrative and accounting procedures necessary for the complete
and accurate calculation and reporting of financial data including the Louisiana
Gross Gaming Revenue Share Payments as approved by the Gaming Board.
2.96. "Jazz Casino Company" shall have the meaning set forth in the
preamble of this Casino Operating Contract.
2.97. "JCC Development Company" shall mean JCC Development Company,
L.L.C., a Louisiana limited liability company, which is wholly owned by JCC
Holding Company.
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2.98. "Judicial Declaration of Cure" has the meaning set forth in
Section 1.3(e) -"Notice and Cure Subsequent to Judicial Relief."
2.99. "Judicial Declaration of Violation" has the meaning set forth in
Section 1.3(e) -"Notice and Cure Subsequent to Judicial Relief."
2.100. "Key Person" means a Person who in the opinion of the Gaming
Board exercises critical or significant management or operating authority over
the activities of the Casino Operator.
2.101. "Knowledge" means actual knowledge of a Person including such
knowledge as would have been obtained by a diligent inquiry and knowledge
imputed to a Person by operation of law.
2.102. "Landlord" means the Rivergate Development Corporation.
2.103. "Late Payment Interest" shall have the meaning set forth in
Section 6.7 - "Late Payment Interest."
2.104. "Leasehold Mortgage" means a mortgage on the Casino Operator's
leasehold interest in the Casino Lease, including all immovable improvements so
situated upon the land, including but not limited to a lien in favor of the
Minimum Payment Guarantor, holders of the new notes and new contingent notes
issued pursuant to the Plan (and related trustees and successor trustees), the
Lenders of the financing to be obtained by the Casino Operator pursuant to the
Plan or any other creditor. Every provision of a Leasehold Mortgage shall be
subject to the provisions of the Casino Act and this Casino Operating Contract.
2.105. "Leasehold Mortgagee" means the holder, from time to time, of a
Leasehold Mortgage, including but not limited to the Minimum Payment Guarantor,
holders of the new
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notes and new contingent notes issued pursuant to the Plan (and related trustees
and successor trustees), the Lenders of the financing to be obtained by the
Casino Operator pursuant to the Plan or any other creditor. The Gaming Board
shall have the right to Approve any Leasehold Mortgagee; provided, however, by
executing this Casino Operating Contract, the Gaming Board (i) hereby approves
the Leasehold Mortgagees that hold interests in the Leasehold Mortgages pursuant
to the Plan including, the holders of the new notes and new contingent notes
issued pursuant to the Plan (and related trustees) and the Lenders of the
financing to be obtained by the Casino Operator pursuant to the Plan and (ii)
further declares that such holders shall be deemed Suitable Lenders, subject to
the Gaming Board's rights over debtholders as provided in the Casino Act, the
Rules and Regulations and Section 2.142 of this Casino Operating Contract.
2.106. "LEDGC" means the Louisiana Economic Development and Gaming
Corporation, its successors and assigns.
2.107. "Legislative Auditor" means the Legislative Auditor of the State
and persons designated by the Legislative Auditor as its representatives.
2.108. "Legislature" means the Legislature of the State as it may be
constituted from time to time.
2.109. "Lender" means:
(a) any insurance company regulated by any state of the United
States;
(b) any investment company registered under the Investment Company
Act of 1940;
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(c) any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees;
(d) any trust fund the trustee of which is a bank or trust company
and the participants of which are exclusively plans of the type identified in
subsection (c) of this Section 2.108 - "Lender";
(e) any investment adviser registered under the Investment
Advisers Act of 1940;
(f) any real estate investment trust registered with the United
States Securities and Exchange Commission;
(g) any dealer registered pursuant to Section 15 of the Securities
and Exchange Act of 1934;
(h) any "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933), and any entity, all of the equity owners of
which are "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act of 1933), acting for its own account or the accounts of other
qualified institutional buyers;
(i) any bank as defined in Section 3(a)(2) of the Securities Act
of 1933, any savings and loan association or other institution as referenced in
Section 3(a)(5)(A) of the Securities Act of 1933, or any foreign bank or savings
and loan association or equivalent institution or any investment fund that
participates in a bank syndication (and purchaser that takes an assignment
interest in the bank syndication);
36
(j) any investor or group of investors purchasing debt securities
of the Casino Operator (or a subsidiary or direct or indirect parent of the
Casino Operator) in any public offering registered pursuant to the Securities
Act of 1933, receiving debt securities of the Casino Operator (or a subsidiary
thereof) pursuant to Section 1145 of the Bankruptcy Code or through any private
placement, and any investor purchasing such securities in a subsequent sale,
provided, however, that any of the foregoing securities are publicly traded, and
the investor holds no more than twenty percent (20%) of the Casino Operator's
total debt (or its subsidiary or direct or indirect parent) or fifty percent
(50%) of a material debt issue of the Casino Operator (or its subsidiary or
direct or indirect parent) unless otherwise Approved by the Gaming Board, so as
not to give such investor the ability to Control the Casino Operator or the
Casino Manager;
(k) any business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940;
(l) any business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(m) HET or ▇▇▇▇▇▇'▇ Operating and their wholly owned subsidiaries,
as to any loan made to the Casino Operator, including without limitation any
loan made as a result of advances made pursuant to that certain Completion Loan
Agreement entered into by ▇▇▇▇▇▇'▇ Entertainment, Inc., ▇▇▇▇▇▇'▇ Operating and
the Casino Operator pursuant to the Plan, that certain Amended and Restated
Construction Lien Indemnity Obligation Agreement entered into by HET, ▇▇▇▇▇▇'▇
Operating and the Casino Operator pursuant to the Plan, the guarantee by HET and
▇▇▇▇▇▇'▇ Operating of the new bank financing pursuant to the Plan, any
37
Demand Loan made pursuant to that certain HET/JCC Agreement entered into by the
Casino Operator, HET and ▇▇▇▇▇▇'▇ Operating, the Subordinated Loan to be made to
the Casino Operator by HET or ▇▇▇▇▇▇'▇ Operating pursuant to the Plan, and the
indemnity by HET or ▇▇▇▇▇▇'▇ Operating to the provider of the Performance Bond
pursuant to Section 25.2 - "Completion Guarantee".
(n) any other Person found Suitable and Approved by the Gaming
Board.
2.110. "Louisiana Gaming Board Architect" means the architect
designated from time to time by the Gaming Board to perform consulting functions
to or for the Gaming Board with regard to the construction and equipping of the
Casino.
2.111. "Louisiana Casino Revenue Account" means an account established
in the State Treasury into which the Casino Operator shall deposit or cause to
be deposited all sums (including the Daily Payment and other components of the
Louisiana Gross Gaming Revenue Share Payments and Additional Charges) which
become due and payable to the State by and through the Gaming Board pursuant to
this Casino Operating Contract.
2.112. "Louisiana Gross Gaming Revenue Share Payments" has the meaning
set forth in Section 6.2(a) - "Payments."
2.113. "Material" shall mean compliance with the obligations of Section
1.3(b) - "Violations Generally" and 1.3 (d) - "Dockside Violations" in all
respects other than minor or unimportant violations.
2.114. "Material Change" means for the purposes of Article XI - "Design
and Construction" a change that either (a) reduces the gaming area of the Casino
by more than five percent (5%), or (b) constitutes a change that materially
affects the structural integrity of the
38
Casino, or (c) materially alters the design or composition (e.g. materials) of
the exterior of the Casino or (d) impairs the ability of the Casino Operator (or
any Casino Manager) to remain in compliance with this Casino Operating Contract,
including the Internal Control System.
2.115. "Minimum Payment" means the sum of One Hundred Million Dollars
($100,000,000) per Full Fiscal Year. For the First Fiscal Year commencing on the
Casino Opening Date and for the Last Fiscal Year, the Minimum Payment shall be
the product of the Daily Payment and the number of Days in such First or Last
Fiscal Year.
2.116. "Minimum Payment Default" has the meaning set forth in Section
6.2(b) - "Minimum Payment Default."
2.117. "Minimum Payment Guarantor" has the meaning set forth in Section
25.1 - "Rolling Minimum Payment Guaranty."
2.118. "Minimum Payment Guaranty" has the meaning set forth in Section
25.1 - "Rolling Minimum Payment Guaranty."
2.119. "19th JDC" has the meaning set forth in Section 28.6 - "Venue,
Personal Jurisdiction and Forum Selection."
2.120. "Notice" means a writing sent or delivered to a party at its
address and in the manner provided in Article XXVII - "Notices."
2.121. "Official Gaming Establishment" means the Casino. The terms
"Official Gaming Establishment" and "Casino" shall have the same meaning and are
used interchangeably in this Casino Operating Contract.
2.122. "Other Contractors" has the meaning set forth in Section 14.6 -
"Other Contractor Insurance."
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2.123. "Outside Dates" means the dates set forth in Section 9.29 -
"Timetables and Outside Dates."
2.124. "Payment Credit" has the meaning set forth in Section 6.1(b) -
"Suitability and Other Advances and Accounting".
2.125. "Permit" or "Permits" means all licenses, permits, approvals,
consents and authorizations required by Governmental Authorities in connection
with the demolition, construction, renovation improvement, opening, occupancy or
operation of the Casino.
2.126. "Permitted Amendment" shall have the meaning set forth in
Section 1.3(b)(A)(1)(a) - "Violations Generally."
2.127. "Permitted Amendment Violation" shall have the meaning set forth
in Section 1.3(e) - "Permitted Amendment Violations."
2.128. "Permitted Riverboat" shall have the meaning set forth in
Section 1.3(b)(A)(i)(a) - "Violations Generally."
2.129. "Person" means any individual, partnership, corporation,
association, unincorporated association or organization, limited liability
company, limited liability partnership, trust or other juridical entity or any
governmental agency, body or subdivision.
2.130. "Plan" means the Joint Plan of Reorganization under Chapter 11
of the United States Bankruptcy Code, consolidated Case Numbers 95-14545,
95-14544, 95-14871, filed by the ▇▇▇▇▇▇'▇ Jazz Company, ▇▇▇▇▇▇'▇ Jazz Finance
Corp., and ▇▇▇▇▇▇'▇ New Orleans Investment Company, which plan was confirmed by
the United State Bankruptcy Court, Eastern District of Louisiana on January 29,
1998, as subsequently modified.
40
2.131. "Plan Effective Date" shall mean the Effective Date as defined
in the Plan which date shall also be concurrent with the effectiveness of the
obligations, terms and conditions of this Casino Operating Contract.
2.132. "Reduced Operations Period" means any period of time during the
Term after the Casino Opening Date when the Casino is not fully open for
business (other than temporary adjustments made by the Casino Operator to the
number of open Casino areas or Games made on the basis of the number of patrons
then in the Casino), including but not limited to any time period during which
the Casino is not fully open for business as a result of (a) the Gaming Board's
enforcement or regulatory proceedings, (b) any fire, flood or other casualty or
(c) the performance of Work or Alterations.
2.133. "Required Payments" has the meaning set forth in Section 6.3(a)
- "Amount and Payment of Daily Payment."
2.134. "Revenue Share Payments" has the meaning set forth in Section
1.3(b)(A) - "Violations Generally."
2.135. "RFQ/P" means the Request for Qualifications and Proposals
issued by the LEDGC dated April 29, 1994.
2.136. "Rivergate Development" means the Rivergate Development
Corporation, a Louisiana public benefit corporation, and its successors,
transferees and assigns.
2.137. "Rules and Regulations" means the rules and regulations of the
Gaming Board now existing and hereafter adopted in order to implement the
legislative policy declared in the Casino Act pursuant to R.S. 27:24 as well as
any regulations adopted by the LEDGC that remain in effect pursuant to R.S.
27:31(E).
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2.138. "Second Floor Sublease" means that certain sublease from the
Casino Operator to JCC Development Company with respect to the non-gaming areas
of the second floor of the Casino.
2.139. "Second Floor" means the leased premises pursuant to the Second
Floor Sublease.
2.140. "Secured Debt" means a debt of the Casino Operator secured by a
Leasehold Mortgage or a security interest in Gaming Devices or Gaming Supplies.
2.141. "Space Lease" means any concession, franchise, lease, license,
sublease or other agreement other than the Casino Lease, or the Casino
Management Contract that would permit or allow a Person to use and maintain
non-gaming space as a tenant in the building on the Rivergate site, including
the second floor.
2.142. "Space Lease Operator" means the Person entitled to use and/or
maintain space under a Space Lease.
2.143. "State" means the State of Louisiana.
2.144. "Suitable" or "Suitability Requirements" means, as applicable to
any Person, the criteria provided for in R.S. 27:234, R.S. 27:235, and in the
Rules and Regulations, as the same may be amended, modified or restated from
time to time.
2.145. "Suitable Lender" means a Lender described in Section 2.108 -
"Lender," subsections (a) through (n) or any other Lender presumed suitable by
the Rules and Regulations unless at any time either (i) such Lender exercises
Control or intends to exercise Control over the Casino Operator or the Casino
Manager, or (ii) the Gaming Board receives information indicating that such
Lender may not meet the Suitability requirements. If the
42
Gaming Board in its sole discretion determines that a condition described in
either (i) or (ii) exists with respect to a particular lender, the presumption
may no longer exist for that lender and the lender shall be required to
demonstrate its Suitability in accordance with the terms of the Casino Act.
Neither the commencement of a foreclosure proceeding and the seeking of a
receiver in accordance with R.S. 27:275 et seq. nor the acceptance of a debt or
equity interest in JCC Holding Company pursuant to the Plan shall, in and of
itself, lead to the loss of the presumption unless the Gaming Board, in its sole
discretion, determines that the Lender is exercising Control of the Casino
Operator.
2.146. "Support Facilities" means the employee and bus support parking
facilities on the land legally described on Exhibit E-1 attached hereto and by
this reference incorporated herein and the Poydras Street parking facilities on
the land legally described on Exhibit E-2 attached hereto and by this reference
incorporated herein.
2.147. "System Marks" means all service marks, trademarks, copyrights,
trade names, patents or similar rights or registrations under which the Casino
may be operated pursuant to the Casino Management Agreement.
2.148. "Term" means the Initial Term and any Extended Term of this
Casino Operating Contract.
2.149. "Termination Event" shall have the meaning set forth in Section
20.6(b) - "Termination of Casino Operating Contract."
2.150. "Transfer" means to alienate, assign, bequeath, bestow, cede,
change control, convey, dispose of, divest, donate, give, grant an interest in,
grant a security or secured interest in, hypothecate, mortgage, pawn, pledge or
sell.
43
2.151. "Work" means the labor, material and professional design and
other services which must be performed in order to repair and restore the Casino
following damage or destruction resulting from fire, flood or other casualty.
ARTICLE III. GRANT OF AUTHORITY
3.1. Grant of Authority. Subject to the conditions, covenants,
obligations, requirements and terms herein contained and in consideration of the
obligation and agreement of the Casino Operator to provide for and furnish the
Official Gaming Establishment, to collect and remit the Louisiana Gross Gaming
Revenue Share Payments and Additional Charges due and to become due to the State
by and through the Gaming Board in accordance with this Casino Operating
Contract and the Rules and Regulations and in consideration of other conditions,
covenants, obligations, requirements and terms agreed to by the Casino Operator
(some of which may be more extensive or onerous than the basic obligations
provided for in the Casino Act but are authorized pursuant to the Casino Act,
and particularly, without limitation, R.S. 27:241(D) and R.S. 27:244 (A)(10)),
the Gaming Board does hereby grant to the Casino Operator the exclusive
authority to conduct Games and Gaming Operations at the Casino for the benefit
of the Gaming Board (and through the Gaming Board, for the benefit of the State)
and the Casino Operator.
3.2. Permitted Use. The Casino Operator may use the Casino solely for
the purposes of conducting Games and Gaming Operations therein pursuant to and
in compliance with the Casino Act, this Casino Operating Contract and the Rules
and Regulations and for such other uses as may be permitted by the Casino Act
and the Rules and Regulations. The Casino Operator shall not use or suffer the
use of the Casino for any illegal or unlawful
44
purpose or in violation of Governmental Requirements, the Casino Lease, or the
requirements of the Insurance Coverages.
3.3. Approval Prerogative. The Casino Operator acknowledges and
consents to the Gaming Board's right to allow, permit or sanction a proposed
action or request by the Casino Operator (including requests to do and requests
not to do) whenever and wherever by virtue of the Casino Act, this Casino
Operating Contract or the Rules and Regulations, the Gaming Board's prior
approval, consent or satisfaction is a prerequisite condition, subject to appeal
or review as provided in this Casino Operating Contract.
3.4. Location of Official Gaming Establishment. The Official Gaming
Establishment shall be located at the site of the former Rivergate Convention
Center in Orleans Parish.
ARTICLE IV. WARRANTIES AND REPRESENTATIONS
4.1. Gaming Board Warranties; Due Authorization. The Gaming Board
warrants to the Casino Operator that it is a duly established State regulatory
agency under Louisiana law and pursuant to the Gaming Act is authorized to
execute and deliver this Casino Operating Contract on its own behalf and on
behalf of the State.
4.2. Casino Operator Warranties. The Casino Operator warrants and
represents that on the Plan Effective Date:
(a) Due Organization and Good Standing. HJC and JCC are duly
organized and in good standing under Louisiana law and have the full right,
power and authority to enter into this Casino Operating Contract and to perform
all of its conditions and obligations hereunder. The making, execution, delivery
and performance of this Casino
45
Operating Contract by HJC and the Casino Operator has been duly authorized and
approved by requisite action of HJC and the Casino Operator in accordance with
the requirements of its Governance Documents and applicable law.
(b) Financial Capacity. The Casino Operator has and shall have the
requisite authority and ability (financial or otherwise) to perform, as and when
timely performance is required, all of its obligations under this Casino
Operating Contract and the Rules and Regulations, as such authority and ability
is contemplated by the Plan and by the financial stability tests set forth in
Section 9.5 - "Financial Stability" of this Casino Operating Contract.
(c) No Material Misrepresentation. There is not any material
misrepresentation contained in any warranty or representation made by the Casino
Operator in this Casino Operating Contract or in any Plan Document (as defined
in the Plan) that has been submitted to the Gaming Board by the Casino Operator.
(d) No Knowledge of Unsuitability. The Casino Operator does not
have knowledge of any fact or circumstance not disclosed to the Gaming Board in
writing that would render unsuitable any Person who or which is required by the
Casino Act, this Casino Operating Contract or the Rules and Regulations to be
found Suitable pursuant to the Casino Act.
(e) Evidence of Title to Casino. The Casino Operator has the right
to possession and use of the Casino pursuant to the Casino Lease, and the Casino
Operator has obtained the evidence of its leasehold interest in the Casino in
the form of the Evidence of Title.
46
ARTICLE V. TERM AND EXTENDED TERM
5.1. Initial Term. The Initial Term shall be twenty (20) consecutive
years commencing on the Effective Date and expiring at midnight on the Initial
Term Expiration Date, unless this Casino Operating Contract expires or is sooner
terminated as provided in this Casino Operating Contract.
5.2. Extended Term. Provided that this Casino Operating Contract has
not been terminated as provided in this Casino Operating Contract, the Term of
this Casino Operating Contract shall be automatically extended for the Extended
Term, an additional ten (10) year extension period following the end of the
Initial Term, unless the Casino Operator has given notice to the Gaming Board of
its election not to extend the Term a minimum of eighteen (18) months prior to
the expiration of the Initial Term.
ARTICLE VI. COMPENSATION PAYMENTS; AMOUNTS AND METHODS
6.1. Fixed Payment Obligations
(a) Initial Payment. As partial consideration for the rights
granted to the Casino Operator pursuant to the Initial Operating Contract, the
Gaming Board acknowledges that HJC paid the initial payment of One Hundred
Twenty-Five Million Dollars ($125,000,000) to the LEDGC.
(b) Suitability and Other Advances and Accounting. As partial
consideration for the personnel costs incurred by the Gaming Board in connection
with initial suitability, investigations and the State's reasonable fees for
work previously performed and to be performed by its principal contract counsel
and for work regarding the negotiation of terms and conditions of this Casino
Operating Contract and related documents, and subject to
47
the payment schedule set forth below, the Casino Operator shall advance to the
Gaming Board an amount (the "Initial Costs"), except as provided hereinafter,
not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000) to
reimburse the Gaming Board and the State for actual costs, including, but not
limited to Gaming Board, State Police and Attorney General personnel and any
contract staff or firms appropriate to the suitability process and for work
previously performed or to be performed by the principal contract counsel firm
for the LGCB and/or the Attorney General and State for work regarding the
negotiation of terms and conditions for the Casino Operating Contract and
related documents that were or are incurred in connection with the suitability
findings and negotiations necessary for the drafting and execution of the Casino
Operating Contract and related documents and the opening of the Casino. It is
acknowledged by the Gaming Board that the Casino Operator advanced Five Hundred
Thousand Dollars ($500,000) of the Initial Costs to the Gaming Board prior to
the Plan Effective Date to cover Initial Costs. The Casino Operator shall
advance an additional Three Million Dollars ($3,000,000) of the Initial Costs to
the Gaming Board on or before the Plan Effective Date. Six (6) months after the
Plan Effective Date, the Gaming Board will provide the Casino Operator with a
full accounting of the amounts spent to that date and projections as to any
additional Initial Costs that are anticipated. Upon Notice from the Gaming Board
to the Casino Operator, accompanying the referenced projections as to additional
anticipated Initial Costs, the Gaming Board may notify the Casino Operator that
the Initial Costs have exceeded the Three Million Five Hundred Thousand Dollars
($3,500,000) previously advanced. In making such projections the Gaming Board
and State will give an appropriate credit to the Casino Operator for any funds
collected or anticipated by the Gaming
48
Board or the State in the form of Suitability fees. The Casino Operator shall be
required, within thirty (30) days after such notice, to advance an amount
necessary to cover but not to exceed such excess costs. Within thirty (30) Days
after the opening of the Casino, the Gaming Board shall prepare and provide the
Casino Operator with a final accounting of the Initial Costs which includes all
actual costs and fees incurred by the Gaming Board, the Louisiana State Police
and the Attorney General as described above. If the Initial Costs advanced by
the Casino Operator as described herein exceed the actual costs and fees as set
forth in the final accounting, the Casino Operator shall be entitled to a credit
for the difference between the Initial Costs advanced and the actual costs and
fees (the "Payment Credit"). In the event the actual costs and fees exceed Three
Million Five Hundred Thousand Dollars ($3,500,000), the Gaming Board and/or the
State may require the Casino Operator to pay such deficiency, which will be paid
within fifteen (15) days of demand, and if not timely paid said deficiency will
be payable with interest at the rate provided in Section 6.7 - "Late Payment
Interest."
6.2. Louisiana Gross Gaming Revenue Share Payments. (a) Payments. In
addition to the payment of the Initial Payment previously paid by HJC and as
further consideration for the rights granted to the Casino Operator pursuant to
this Casino Operating Contract, the Casino Operator shall pay an amount to the
Gaming Board (the "Louisiana Gross Gaming Revenue Share Payments") to be
calculated in the following manner. Subject to the terms of the relief, if any,
from payment set forth in Section 1.3 (b), (c), (e) and (f), the Louisiana Gross
Gaming Revenue Share Payments for each Fiscal Year from the Casino shall equal
the greater of (i) the Minimum Payment or (ii) the sum of the following
percentages of
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Gross Gaming Revenue from the Casino in that Fiscal Year: (A) eighteen and
one-half percent (18.5%) of Gross Gaming Revenue up to and including Six Hundred
Million Dollars ($600,000,000); plus (B) twenty percent (20%) of Gross Gaming
Revenue in excess of Six Hundred Million Dollars ($600,000,000) up to and
including Seven Hundred Million Dollars ($700,000,000); plus (C) twenty two
percent (22%) of Gross Gaming Revenue in excess of Seven Hundred Million Dollars
($700,000,000) up to and including Eight Hundred Million Dollars ($800,000,000);
plus (D) twenty four percent (24%) of Gross Gaming Revenue in excess of Eight
Hundred Million Dollars ($800,000,000) up to and including Nine Hundred Million
Dollars ($900,000,000); plus (E) twenty five percent (25%) of Gross Gaming
Revenue in excess of Nine Hundred Million Dollars ($900,000,000).
(b) Minimum Payment Default. If following the Casino Opening Date (i)
an Event of Default has occurred pursuant to Section 20.1(o), (ii) the Casino
Operator has failed to make the Daily Payments and failed to cure such
non-payment (plus any interest pursuant to Section 6.7 - "Late Payment Interest"
within fifteen (15) Days of Notice by the Gaming Board to Casino Operator, JCC
Holding and the Minimum Payment Guarantor of a failure to make a Daily Payment
(the "Default Notice") and the Gaming Board thereafter notifies the Casino
Operator, JCC Holding and the Minimum Payment Guarantor that such failure has
not been cured or (iii) the Casino Operator has filed for bankruptcy and has
ceased continuing Gaming Operations (each, a "Minimum Payment Default"), then as
of the Minimum Payment Default, the Minimum Payment Guarantor shall be obligated
in accordance with the terms and conditions of the Minimum Payment Guaranty to
pay to the Gaming Board all Daily Payments which have not been paid (plus Late
Payment Interest as
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provided in Section 6.7 - "Late Payment Interest") and thereafter to pay to the
Gaming Board all Daily Payments on a daily basis for the remainder of the Fiscal
Year in which the Minimum Payment Default occurs to the extent such Daily
Payments have not been paid by the Casino Operator; provided that after the
Actual Opening Date the Minimum Payment Guarantor shall not be obligated to make
any Daily Payments due for any Day which is twenty (20) days or more prior to
any Default Notice from the Gaming Board pursuant to clause (ii) of this Section
6.2(b) - "Minimum Payment Default." Notwithstanding the above, if a Minimum
Payment Default occurs in the First Fiscal Year, the Casino Operator shall be
obligated to pay the Daily Payment until the Day prior to the first anniversary
of the Casino Opening Date, and the obligation of the Minimum Payment Guarantor
shall apply to, and the Minimum Payment Guarantor shall pay, any unpaid Daily
Payments, plus interest as provided in Section 6.7 - "Late Payment Interest,"
for the remainder of the period ending on such Day prior to the first
anniversary of the Casino Opening Date; provided that after the Actual Opening
Date the Minimum Payment Guarantor shall not be obligated to make any Daily
Payments due for any Day which is twenty (20) days or more prior to any such
Default Notice from the Gaming Board pursuant to clause (ii) of this Section
6.2(b) - "Minimum Payment Default." If any Leasehold Mortgagee shall effect a
cure by paying the State, by and through the Gaming Board, the past due Daily
Payments (plus interest as provided in Section 6.7 - "Late Payment Interest") at
any time prior to forty-five (45) Business Days after the Minimum Payment
Default, the amount paid by any such Leasehold Mortgagee to effect any such cure
shall become an obligation of the Casino Operator to such Leasehold Mortgagee
and shall be secured by such Leasehold Mortgagee's Leasehold Mortgage.
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6.3. Remittance and Monthly Adjustments. Beginning on the Casino
Opening Date and continuing until the Expiration Date, the Casino Operator shall
make daily payments of the Louisiana Gross Gaming Revenue Share Payments (the
"Daily Payments") as follows:
(a) Amount and Payment of Daily Payment. The parties intend that
at all times during each Fiscal Year, the Gaming Board shall be paid an amount
not less than the Daily Payment times the number of Days that have elapsed to
date in the Fiscal Year (the "Required Payments"), with a true-up for any
Louisiana Gross Gaming Revenue Share Payments in excess of the Minimum Payment
to occur at the end of each Fiscal Year; provided however, the Required
Payments/Daily Payments shall be suspended if there is an Excusable Temporary
Cessation of Business pursuant to Section 2.58(b) hereof (in no event to exceed
six (6) months) or a business interruption insurance claim period pursuant to
Section 15.3 - "Utilization of Insurance Proceeds." The amount of the Daily
Payment in a non-leap Fiscal Year shall be the sum of Two Hundred Seventy-Three
Thousand Nine Hundred Seventy-Two and 60/100 Dollars ($273,972.60). The amount
of the Daily Payment in a Fiscal Leap Year shall be the sum of Two Hundred
Seventy-Three Thousand Two Hundred Twenty-Four and 04/100 Dollars ($273,224.04).
The Daily Payment shall be paid each Business Day on the terms provided in
Section 6.5 - "Daily Deposits." The Daily Payment for each non-Business Day
shall be carried forward without interest and paid on the next Business Day. The
Casino Operator shall be entitled to a set-off against any Daily Payment due in
an amount equal to the Payment Credit. The Casino Operator shall also be
entitled to offset against each Daily Payment due during the second Full Fiscal
Year a per diem amount
52
equal to Four Million Eight Hundred Twelve Thousand Four Hundred Forty Seven
Dollars ($4,812,447) divided by the number of days in such second Full Fiscal
Year as a credit for the overpayment of funds previously paid by the Casino
Operator to the LEDGC. Except as provided hereinabove in this Section 6.3(a)
"Amount and Payment of Daily Payment," there shall be no abatement in, any right
of offset, setoff, or recoupment of, or any right to withhold or fail to pay the
Daily Payment as required in Section 6.5 - "Daily Deposits."
(b) Daily Gross Gaming Revenue Report. The Casino Operator shall,
in accordance with the Rules and Regulations of the Gaming Board, submit to the
Gaming Board or its representative a daily gaming revenue report.
(c) Monthly Report - Adjustments to Louisiana Gross Gaming Revenue
Share Payments. On or before the 15th day following the end of each month, the
Casino Operator shall submit to the Gaming Board a report showing:
- Gross Gaming Revenue for the previous month and the
Fiscal Year to date.
- Any adjustments to the Gross Gaming Revenue
calculation including, without limitation,
adjustments for bad debt writeoffs (subject to a cap
of four percent (4%) of gross gaming revenue),
progressive jackpot accruals or other appropriate
adjustments.
- Total amount of Daily Payment paid during the
previous month.
- The actual amount of the Required Payments remitted
to the Gaming Board during the Fiscal Year through
the end of the previous month.
- In the last month of the Fiscal Year, the actual
amount of the Louisiana Gross Gaming Revenue Share
Payments actually due for the Fiscal Year based on
the amount of Gross Gaming Revenue for that period.
If the actual amount due to the Gaming Board as Louisiana Gross Gaming Revenue
Share Payments for the Fiscal Year, after accounting for Gross Gaming Revenue
adjustments,
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exceeds the aggregate amount paid to the Gaming Board as Required
Payments in the Fiscal Year, the Casino Operator shall pay the difference
without interest on or before the due date of the final monthly report in each
Fiscal Year.
6.4. State's Interest in Daily Collections. The State shall own that
portion of the daily collections from Gaming Operations equal to the greater of
(a) the Daily Payment or (b) the Gaming Board's interest in the actual amount of
the collections from Gaming Operations for that Day (the "State's Interest in
Daily Collections"). No other Person shall have any interest whatsoever in or to
the State's Interest in Daily Collections. The Casino Operator shall not enter
into any contract or other agreement that permits or purports to permit the
Casino Operator or any other Person to claim any ownership or collateral or
security right or interest in or to the Louisiana Gross Gaming Revenue Share
Payments, including the State's Interest in Daily Collections, and the Casino
Operator shall indemnify the State against all loss suffered by the State as a
result of the Claims of other Persons to the Louisiana Gross Gaming Revenue
Share Payments, including the State's Interest in Daily Collections.
6.5. Daily Deposits. The State's Daily Payment for each Casino Gaming
Day shall be deposited by wire or electronically directly into the Louisiana
Casino Revenue Account, or such other account designated by the State by and
through the Gaming Board, by 5:00 p.m. Central Standard Time (or Central
Daylight Savings Time when in effect in Louisiana) of the next Business Day
following the close of that Casino Gaming Day (unless the Gaming Board directs a
different method). For example, the State's Daily Payment for the Casino Gaming
Day ending 6:00 a.m. on Thursday, June 11, 1998 shall be deposited in the
Louisiana Casino Revenue Account by 5:00 p.m. on Friday, June 12, 1998.
54
6.6. Casino Operator's Right to Grant Security Interest. The Casino
Operator shall have the right to grant to one or more Leasehold Mortgagees a
security interest or lien in the funds owned by the Casino Operator, provided
that the instrument granting the security interest or lien clearly states that
the security instrument does not extend to the State's ownership interest in the
Louisiana Gross Gaming Revenue Share Payments, including the State's Interest in
Daily Collections and provided the Casino Operator obtains the Approval of the
Gaming Board. The Leasehold Mortgagee shall acknowledge that its Leasehold
Mortgage does not extend to the State's ownership interest in the Louisiana
Gross Gaming Revenue Share Payments, including the State's Interest in Daily
Collections.
6.7. Late Payment Interest. If the Casino Operator fails to pay as and
when due any amount due to the State or the Gaming Board under this Casino
Operating Contract, the amount past due shall bear interest at the Default
Interest Rate from the due date until paid ("Late Payment Interest"), regardless
of whether such amount shall be paid to the State or the Gaming Board by the
Casino Operator, the Minimum Payment Guarantor, a Leasehold Mortgagee or any
other payor.
6.8. No Reduction in Payment. All payments due to the State or the
Gaming Board pursuant to this Casino Operating Contract shall be made in
immediately available lawful money of the United States of America, by
electronic funds transfer and except as provided herein, without notice or
demand and without abatement, deduction, reduction or setoff.
6.9. Continuing Payment Requirement. During any Reduced Operations
Period, the Casino Operator shall continue to pay all sums due to the State or
the Gaming Board,
55
including the Louisiana Gross Gaming Revenue Share Payments, subject, however,
to the suspension set forth in Section 15.3 - "Utilization of Insurance
Proceeds." Notwithstanding actual Gross Gaming Revenue during the time period
that Work or Alterations are undertaken, the Louisiana Gross Gaming Revenue
Share Payments after the Casino Opening Date shall never be less than the
Minimum Payment.
ARTICLE VII. OTHER CONSIDERATIONS
7.1. Open Access. As additional consideration for the right to operate
the Casino, the Casino Operator agrees that it shall comply with the
requirements of R.S. 27:202(F) and (G).
7.2. Gaming Board's Controlled Space. As additional consideration for
this Casino Operating Contract and in order to permit the Gaming Board to
perform on-site its regulatory duties and to monitor the Casino Operator's
performance under this Casino Operating Contract, the Casino Operator shall
provide at no cost to the Gaming Board reasonable space in the Casino (the
"Gaming Board's Controlled Space") for the Gaming Board, its representatives,
personnel, the State Police and equipment. The Gaming Board's Controlled Space
shall be specifically configured (in one or more locations in the Casino) and
equipped at the Casino Operator's expense as the Gaming Board directs from time
to time. The Gaming Board's Controlled Space shall be secure space accessible
only to the Gaming Board and its representatives and the State Police. All of
the Gaming Board equipment in the Gaming Board Space shall be secure and
accessible only to the Gaming Board and its representatives and the State
Police.
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ARTICLE VIII. CASINO MANAGER AND CASINO MANAGEMENT CONTRACT
8.1. Subcontracting of Casino Operator's Obligations. This Casino
Operating Contract is personal to the Casino Operator. The performance of the
Casino Operator's duties and obligations under this Casino Operating Contract
may not be subcontracted, assigned or otherwise delegated to any other Person
without the Gaming Board's Approval. In connection with the obligation of the
Casino Operator to demonstrate that it is capable of conducting, and likely to
conduct, the activities for which it is licensed and that it has acquired, or
guarantees that it will acquire, adequate business competence and experience in
the operation of Casino Gaming Operations, the Gaming Board has agreed to permit
the Casino Operator to enter into a single, comprehensive management agreement,
subject to its approval, so long as necessary, through which a knowledgeable and
experienced Person shall covenant and agree with the Casino Operator to operate
the Casino in accordance with this Casino Operating Contract, and Rules and
Regulations as promulgated by the Board. Except for the Casino Management
Contract between the Casino Operator and the Casino Manager, the Casino Operator
shall not have the right further to subcontract, assign or delegate performance
of the Casino Operator's duties and obligations under this Casino Operating
Contract or receive performance from any other Person without the Gaming Board's
prior Approval. No Person subcontracting Casino management with the Casino
Operator shall have different or greater rights than the Casino Operator nor
shall such Person have the right further to subcontract or assign, or delegate
performance of its obligations under the Casino Management Contract to other
Persons without the Gaming Board's Approval. No provision of the Casino
Management Contract that conflicts with the provisions of this Casino Operating
Contract shall be valid and each such conflicting provision is hereby declared
to be
57
void and of no effect. Without limiting the generality of the foregoing, no
provision of the Casino Management Contract which provides for or otherwise
imposes a penalty or liquidated damages for termination shall be valid or
enforceable if the Gaming Board orders the Casino Management Contract
terminated, limited or restricted as a result of the Casino Manager's violation
of the obligations imposed on the Casino Operator under this Casino Operating
Contract.
8.2. Subcontracting by Casino Operator. The Casino Operator or JCC
Development Company may enter into Space Leases concerning non-gaming activities
and enter into incidental contracts with vendors, suppliers, contractors or
consultants as long as such incidental contracts do not, either alone or when
aggregated, constitute a Casino Management Contract; provided that the Gaming
Board (i) retains the right to require compliance by such Persons with the
licensing, permitting and Suitability Requirements of the Casino Act and the
Rules and Regulations of the Gaming Board and (ii) shall have the authority to
approve all subleases and to license and permit any sub-lessees of any of the
Second Floor Space to ensure that the sublessee is Suitable and that any desired
use of the Second Floor is consistent with and complies with the Casino Act and
the Rules and Regulations. In connection with the development of the Second
Floor, the Casino Operator shall deliver a master plan for the initial build-out
and leasing of the Second Floor, and any subsequent build-out, for the Gaming
Board's approval based upon the terms of the Gaming Act; provided, however, the
Casino Operator shall not seek and the Gaming Board shall not approve any use
that (i) targets, solicits or encourages persons under the age of twenty-one
(21) to patronize businesses on the Second Floor; or (ii) authorizes the Casino
Operator or
58
anyone affiliated with the Casino Operator to offer seated restaurant facilities
to the general public (subject to the right of the Gaming Board pursuant to R.S.
27:243 to authorize the Casino Operator to lease non-gaming space on the Second
Floor to any business or entertainment facility which is not affiliated with the
Casino Operator that may offer food to the general public).
8.3. Casino Operator's Obligations Under the Casino Management
Contract. The Casino Operator shall at all times hereafter implement the Casino
Management Contract and abide by the terms of the Casino Management Contract
that do not conflict with the obligations imposed on the Casino Operator under
this Casino Operating Contract. The Casino Operator shall operate the Casino
diligently and efficiently and in a manner consistent with the operation of
first class casinos by leaders in the industry and in accordance with this
Casino Operating Contract and the Rules and Regulations.
8.4. Acts and Omissions of the Casino Manager. The acts and omissions
of the Casino Manager shall be conclusively deemed to be the acts and omissions
of the Casino Operator for all purposes under this Casino Operating Contract.
Without limiting the generality of the foregoing in any way, all Gross Gaming
Revenue received by the Casino Manager shall be conclusively deemed to have been
contemporaneously received for and on the joint account of the Casino Operator
and the Gaming Board in accordance with Section 6.4 - "State's Interest in Daily
Collections." The required timely performance by the Casino Operator of this
Casino Operating Contract shall not be excused by virtue of the acts or
omissions of the Casino Manager. For purposes of this Casino Operating Contract,
the Casino Operator shall be responsible for the acts and omissions of all
Casino Employees.
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8.5. Access to Casino Manager's Books and Records of the Casino. The
Gaming Board or its designee shall at all times during the Term have full and
unrestricted access to the Books and Records irrespective of whether the same
are maintained by the Casino Operator, Casino Manager or any other Person.
8.6. Notice of Termination of Casino Management Contract. The Casino
Operator shall give the Gaming Board no less than twelve (12) months' advance
Notice of any intended termination of the Casino Management Contract (or any
other event that would result in the Casino Operator's inability to use System
Marks at the Casino), provided, however, that the Casino Operator may terminate
the Casino Management Contract upon shorter Notice and without penalty if the
Gaming Board has ordered the Casino Management Contract to be terminated and/or
has Approved a substitute Casino Manager and a substitute Casino Management
Contract. In any case of planned termination, the Casino Operator shall provide
to the Gaming Board a written plan providing for the continuous operation of the
Casino without material interruption. A continuous operation plan shall provide
for the continuous uninterrupted operation of the Casino and provide for the
orderly replacement of all signs and items bearing trade names or System Marks
that the Casino Operator no longer has the right to use; replacement or
assignment of the right to continue to use proprietary or non-proprietary
computer systems; assignment of occupancy agreements and operating agreements as
materially necessary for continued Casino operations; and substitution of
services provided under the Casino Operating Contract for marketing, accounting
and insurance services. A Casino continuous operations plan shall also provide
for orderly replacement of all System Marks, labeled Gaming Supplies and Gaming
Devices; removal of
60
all permanently affixed or movable System ▇▇▇▇ items such as signs, carpets,
fixtures, trade fixtures, furniture, equipment, and improvements; replacement of
all marketing and advertising materials, whether or not located at the Casino,
such as billboards, handbills, flyers, and media tapes; and replacement of any
other Casino Property that contains or bears any System ▇▇▇▇, whether or not
proprietary in nature, such as computer hardware/software, management
information systems, and non-gaming consumables such as napkins, flatware,
glassware and stationery.
8.7. Casino Name Change. Any name change of the Casino shall be subject
to prior approval of the Gaming Board. If there is a change in the name of the
Casino, the Casino Operator shall, at the Casino Operator's sole cost and
expense, comply with the continuous operation plan to provide for uninterrupted
operation of the Casino and remove or cause to be removed from the Casino all
property bearing any System ▇▇▇▇ of the Casino Manager or any of its Affiliates
(including, if applicable, the name "▇▇▇▇▇▇'▇").
8.8. Termination Transition Payment. [TEXT DELETED - NOT APPLICABLE]
8.9. Leasehold Mortgagee Exemption. [TEXT DELETED - NOT APPLICABLE]
ARTICLE IX. CASINO OPERATOR'S AFFIRMATIVE COVENANTS
9.1. General. Throughout the Term, the Casino Operator covenants with
the Gaming Board to observe and to cause the Casino Manager, where applicable,
to observe the covenants contained in this Article IX - "Casino Operator's
Affirmative Covenants" as well as those found elsewhere in this Casino Operating
Contract.
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9.2. Official Gaming Establishment. The Casino Operator shall be solely
responsible for providing, improving and maintaining the Casino and shall
provide all FF&E, Gaming Devices and Gaming Supplies and other things or
services necessary for the efficient conduct of Games and Gaming Operations at
the Official Gaming Establishment. The Casino Operator shall conduct all Games
and Gaming Operations at the Official Gaming Establishment in accordance with
this Casino Operating Contract, the Rules and Regulations and the Casino Act.
The Casino Operator shall provide or cause to be provided the Casino Employees
and other personnel and such other services or goods as required by this Casino
Operating Contract and the Rules and Regulations necessary to comply with its
obligations under this Casino Operating Contract. The Casino Operator shall
comply with the requirements of R.S. 27:244, shall provide, improve and maintain
the Casino and shall be responsible for payment of all expenses of Casino Gaming
Operations and other operations of the Casino. The Casino Operator shall provide
private security for the detection and prevention of offenses against patrons
and for the orderly operation of the Casino. The Casino shall have at least one
hundred thousand (100,000) square feet of usable space in a single structure
upon the Date of Substantial Completion and shall commence operations with
usable and non-obsolete FF&E, which shall be sufficient to conduct full Gaming
Operations in the 100,000 square feet of usable space.
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9.3. Payment. The Casino Operator shall pay the Louisiana Gross Gaming
Revenue Share Payments and the Additional Charges due to the Gaming Board in
accordance with the provisions of this Casino Operating Contract.
9.4. Initial Plan Financing and Site Possession. As a significant and
material inducement to execute this Casino Operating Contract, and without which
the Gaming Board would not have signed this Casino Operating Contract, the
Casino Operator has represented to the Gaming Board that the Casino Operator,
either alone or through its Financing Affiliate, has the present and future
ability to obtain the Initial Plan Financing and to proceed to complete
construction of the Casino in accordance with the Plan.
9.5. Financial Stability. In order to maintain its Suitability, the
Casino Operator shall at all times be and remain Financially Stable and, to the
extent it meets such requirements, the Casino Operator shall be deemed to be
financially suitable. The Casino Operator shall at all times during the Term
demonstrate its financial stability and its ability to perform under this Casino
Operating Contract. The Casino Operator shall, through periodic compliance
reports to the Gaming Board (which until a different reporting period is ordered
by the Gaming Board by Notice to the Casino Operator, shall be quarterly and
delivered to the Gaming Board not later than the fifth (5th) Business Day of
each Fiscal Quarter) demonstrate by clear and convincing evidence its ability to
comply with the financial requirements of this Casino Operating Contract and the
Essential Agreements as and when required and without seeking extensions or
delays. The periodic compliance reports shall be Certified by the Casino
Operator and by the president and the chief financial officer of the Casino
Manager, or their respective designees. The Casino Operator shall be deemed to
be Financially Stable only
63
when its periodic compliance reports demonstrate the required compliance with
each of the financial stability standards set forth in subsections (a) through
(d) of this Section 9.5 - "Financial Stability."
(a) Maintenance of Casino Bankroll. The Casino Operator shall be
able to demonstrate its ability to maintain the Casino Bankroll in the amount
established in this Casino Operating Contract and the Rules and Regulations. The
Casino Operator shall establish its compliance with this financial stability
standard only when it proves by clear and convincing evidence that it has
continuously maintained the Casino Bankroll required by this Casino Operating
Contract and has not failed to pay the full amount of winning ▇▇▇▇▇▇ to Casino
patrons as and when due and without excuse, extension, forbearance or delay.
(b) Performance and Payment of Operating Expense Obligations. The
Casino Operator shall be able to demonstrate its ability to pay in full when due
all sums due under this Casino Operating Contract and all other undisputed
operating expenses of the Casino of every kind and character other than Debt
(which is governed by subsection (c) below), including but not limited to timely
payment of (i) the Louisiana Gross Gaming Revenue Share Payments, (ii) the
Additional Charges, rent and other payments due under the Casino Lease or other
leases, and (iii) the Daily Payment, all without excuse, extension, forbearance
or delay, and, as a result, the Casino Operator has funds to pay when due other
undisputed operating expenses. The Casino Operator shall establish its
compliance with this financial stability standard only by proving by clear and
convincing evidence that it has paid all such sums not disputed as and when due
or has been excused from performance or otherwise received an extension of time,
forbearance or delay.
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(c) Performance and Payment of Debt Obligations. The Casino
Operator shall demonstrate its continuing ability to pay, exchange, refinance
or extend Debt that will mature or otherwise become due and payable during
the ensuing twelve (12) month period, or otherwise to manage a default with
respect thereto in a manner Approved by the Gaming Board. The Casino Operator
shall establish its compliance with this financial stability standard only by
proving by clear and convincing evidence that it has the continuing ability
to pay, exchange, refinance or extend its Debt that will mature or otherwise
become due and payable during the ensuing twelve (12) month period. The
periodic financial report required by this subsection (c) shall also state
the source, manner and timing of all payment of Debt for the ensuing twelve
(12) month period.
(d) Capital Maintenance Expenses. The Casino Operator shall
demonstrate its ability to make all capital maintenance expenditures necessary
to ensure the maintenance of the Casino in a first-class operating condition.
The Casino Operator shall establish its compliance with this financial stability
standard only by proving by clear and convincing evidence that it has made all
payments to the Capital Replacement Fund as and when due and without excuse,
extension, forbearance or delay and that it has met all of the Capital
Replacement Fund requirements set forth in the Casino Management Contract, or if
the Casino Management Contract with ▇▇▇▇▇▇'▇ New Orleans Management Company has
expired or has been terminated, as set forth in the Rules and Regulations.
(e) Financial Stability Default. If, at any time, the Casino
Operator is unable to demonstrate that it is Financially Stable, then and in any
such event, the Casino Operator after Notice from the Gaming Board to cure a
failure to comply with the
65
requirements of the Gaming Board shall be subject to the regulatory authority of
the Gaming Board as provided below. The cure period for any default in
maintaining the Casino Bankroll as set forth in Section 9.5(a) - "Maintenance of
Casino Bankroll," shall be ten (10) days after Notice from the Gaming Board. The
cure period for any default in performance and payment of operating expense
obligations, as set forth in Section 9.5(b) - "Performance and Payment of
Operating Expense Obligations," shall be three (3) months after Notice from the
Gaming Board (except for any payment due to the Gaming Board which shall be
subject to a fifteen (15) Day cure period). The cure period for any default in
performance and payment of Debt Obligations, as set forth in Section 9.5(c) -
"Performance and Payment of Debt Obligations" shall be six (6) months after
Notice from the Gaming Board. The cure period for any default in Capital
Maintenance expenditures, as set forth in Section 9.5(d) - "Capital Maintenance
Expenses" shall be three (3) months after Notice from the Gaming Board. During
the cure period the Gaming Board may make and impose orders or regulatory
conditions, including but not limited to the following: (1) shortening the
period for periodic reporting concerning financial stability; (2) changing the
required content of periodic reporting concerning financial stability; (3)
interdicting or placing restrictions on Distributions by the Casino Operator to
its Affiliates or any other Person in a Control Relationship with any of them;
(4) appointing a representative to act as fiscal agent for the Casino which
person shall have authority to interdict or restrict Distributions by the Casino
Operator to its Affiliates or to any other person in a Control Relationship with
any of them. Notwithstanding the foregoing, Distributions for the following
purposes shall not be interdicted or restricted: (i) payments for reasonable and
necessary goods and services in amounts not exceeding the cost of similar goods
and services
66
from independent third parties; (ii) salaries to Key Employees in an amount not
exceeding one and five-hundredths (1.05) times that person's salary in the prior
year; and (iii) repayment of Debt or indebtedness to any Leasehold Mortgagee,
debtholder or any "institutional investors" (as defined in the Rules and
Regulations), to the extent funds are available after all required payments to
the Gaming Board have been made. If, after the applicable cure period has
expired, the Gaming Board makes a final determination that the Casino Operator
is not Financially Stable and if this determination is appealed by the Casino
Operator to the proper court within the applicable period provided by law, the
Gaming Board shall not terminate the Casino Operating Contract as a result of
the determination of financial instability/suitability until the appeal is
dismissed or the proper court renders a final non-appealable judgment upholding
the Gaming Board's determination. Provided further, if an appeal from the Gaming
Board's determination concerning financial stability/suitability is filed by the
Casino Operator, the Gaming Board may, pending the appeal, take such steps as
the Gaming Board in its sole opinion deems appropriate in order to protect the
public interest, the integrity of the Casino (including Gaming Operations), and
the fiscal interest of the Gaming Board and the State, including but not limited
to the immediate appointment of a conservator who shall have such powers and
duties with respect to the Casino and Gaming Operations as the Gaming Board
approves by emergency or other Rules and Regulations including the power to
interdict or restrict all Distributions. In the event of the appointment of a
receiver in accordance with the terms of the Casino Act, the conservatorship
shall be terminated and the receiver shall be governed by the Rules and
Regulations adopted by the Gaming Board.
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9.6. Non-Discrimination Policies. The Casino Operator shall adhere to
non-discrimination policies and practices embodied in all applicable federal,
state and local law or regulation and as required by R.S. 27:202(G)(1) and the
Rules and Regulations.
9.7. Minority Employment Policies. The Casino Operator shall, as nearly
as practicable, employ minorities at least consistent with the minority
population of the State, all as required by R.S. 27:202(G)(2) and the Rules and
Regulations and all applicable law.
9.8. Compulsive Gaming Program. The Casino Operator shall develop,
adopt and implement a program for persons suffering from compulsive or problem
gaming activities in accordance with HJC's response to the RFQ/P.
9.9. Maintain Qualifications. The Casino Operator shall maintain its
qualifications, including strict adherence to the Suitability Requirements.
9.10. On-Site Inspections. The Casino Operator shall permit and not
hinder, delay or obstruct either (a) the Gaming Board's or its representatives'
on-site inspections of the Casino, the Casino Premises, Gaming Devices, Gaming
Supplies, the Support Facilities, the Casino Operator's and the Casino Manager's
on-site and off-site offices (including office or building space in the Casino
occupied by the Casino Manager or its personnel pursuant to occupancy rights
granted in the Casino Management Contract) or (b) the Gaming Board's examination
and review of the Books and Records and the operations and business of the
Casino Operator or the Casino Manager.
9.11. Cooperate in Investigations. The Casino Operator shall cooperate
fully in any investigation by the Gaming Board into:
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(a) the qualifications of each applicant for a contract, license
or permit requested or to be issued pursuant to the Casino Act; or
(b) the circumstances surrounding any act or failure to act or
transaction for which the Gaming Board's review, notification or Approval is
required; or
(c) violations of any of the Governmental Requirements relating to
Gaming or Gaming Operations at the Casino.
9.12. Access to Information, Materials and Data. The Casino Operator
shall provide to the Gaming Board (and its representatives) continuing and
unobstructed access to the Books and Records and such other information,
material or data concerning the Casino Operator and the Casino Manager as
provided in R.S. 27:231(A)(8) and (C)(4)(a) and the Rules and Regulations.
9.13. Maintain Books and Records After Termination or Expiration. The
Casino Operator shall maintain the Books and Records in accordance with the
terms of this Casino Operating Contract for three (3) years following expiration
or termination of this Casino Operating Contract.
9.14. Documents for Investigations. The Casino Operator shall supply
upon demand by the Gaming Board and cause the Casino Manager to supply upon
demand by the Gaming Board such information, documents, data (electronic or
otherwise) necessary to permit the Gaming Board to perform its investigative
duties under the Casino Act and the Rules and Regulations.
9.15. Cooperation to Facilitate Restrictive Use Casino Operating
Contracts. The Casino Operator shall fully cooperate with the Gaming Board and
its representatives as
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and when required by the Gaming Board in order to enable the Gaming Board to
enter into restrictive use agreements with Gaming Authorities.
9.16. Maintain Suitability. The Casino Operator (including, without
limitation, the officers and directors of the Casino Operator) and the Casino
Manager shall be Suitable at the Plan Effective Date of this Casino Operating
Contract and shall remain Suitable at all times during the Term as required by
R.S. 27:234 and 27:235 and the Rules and Regulations. For purposes of this
Casino Operating Contract and subject to cure, safe harbor provisions and
financial stability provisions contained herein: the Casino Operator shall be
and remain a person of good character, honesty and integrity; shall not be
disqualified under R.S. 27:235; shall be and remain capable and likely to
conduct the Casino and Gaming Operations in accordance with the conditions,
covenants, obligations, requirements and terms of this Casino Operating Contract
and the Rules and Regulations; shall possess adequate business experience and
competence and have adequate financing from sources required to be found
Suitable by the Gaming Board; shall be and remain capable of complying with R.S.
27:234(C)(3) with respect to bonds or financial guarantees; shall continually
inform the Gaming Board as required by Rules and Regulations of material changes
in its respective affiliations, businesses, financial standing, operations,
ownership and relationships; shall provide upon the Gaming Board's demand such
information, data and documentation necessary to a continuing Suitability
determination; shall not be convicted or enter pleas of guilty or nolo
contendere to any offense punishable by imprisonment for more than one year;
shall have no Control Relationship with a Person who is not Suitable (subject,
however, to any "safe harbor" provisions applicable to the Casino Operator).
Additionally, the Casino Operator shall
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comply with the Rules and Regulations in
connection with any contract for fixtures, furniture, equipment or supplies or
the conduct of any business relating to the Casino or Gaming Operations.
9.17. Information Concerning Creditors. Upon the Gaming Board's
request, the Casino Operator shall produce information, documentation and
assurances concerning any holders of indentures, notes or other evidences of
indebtedness either in effect or proposed which bear any relation to the
Official Gaming Establishment, Games or Gaming Operations in order to enable the
Gaming Board to perform its duties pursuant to R.S. 27:242(A).
9.18. Business Ability and Casino Gaming Experience. In conformity with
the requirements of R.S. 27:242(B), upon the Gaming Board's request, the Casino
Operator shall furnish to the Gaming Board such information, documentation and
assurances as may be required to establish by clear and convincing evidence that
the Casino Operator has sufficient business ability and casino gaming experience
or is capable of obtaining employees with such experience to establish the
Casino Operators' ability to conduct Gaming Operations in accordance with the
provisions of this Casino Operating Contract and the Rules and Regulations.
9.19. Notice of Claims. Subject to the confidentiality provisions
contained in the Casino Act, the Casino Operator shall give Notice to the Gaming
Board concerning each threatened or pending Claim, administrative proceeding,
criminal or investigative proceeding (including grand jury investigations) or
lawsuit concerning the Casino Operator, the Casino Manager, their respective
Affiliates or any other Person in a Control Relationship with any of them known
to the Casino Operator which may be material to the Casino Operator's or the
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Casino Manager's ability to perform under this Casino Operating Contract or to
the Gaming Board's interests herein.
9.20. Insurance Coverages. The Casino Operator shall effect and
maintain the Insurance Coverages.
9.21. Essential Agreements. The Casino Operator shall timely perform
all of its obligations under each of the Essential Agreements, the Casino Lease
and the General Development Agreement and shall not default or suffer a default
under any Essential Agreements, the Casino Lease or the General Development
Agreement if a default would adversely affect the Casino Operator's ability to
perform any of its obligations under this Casino Operating Contract. The Casino
Operator shall not permit the amendment, cancellation, modification or
restatement of any of the Essential Agreements without the Approval of the
Gaming Board unless Gaming Board approval of any such amendment, cancellation,
modification or restatement is not required pursuant to the Rules and
Regulations.
9.22. Casino Bankroll. The Casino Operator shall provide the Casino
Bankroll as required by Section 9.5(a) - "Maintenance of Casino Bankroll."
9.23. Days and Hours of Operation. After the Casino Opening Date, the
Casino Operator shall keep the Casino open for business twenty-four (24) hours
per day or the operating hours proposed by the Casino Operator and approved by
the Gaming Board. Notwithstanding the foregoing, the Casino Operator, with the
Approval of the Gaming Board, may close the Casino from time to time as
necessary to effect Work or Alterations which cannot be effected while the
Casino is open for business. The Casino Operator may make
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temporary adjustments to the Casino area being operated based on the number of
patrons then present in the Casino. However, no closing of the Casino or
reduction in hours of operation, with or without the Approval of the Gaming
Board, shall relieve the Casino Operator of its obligations to make all payments
required under this Casino Operating Contract, except with respect to the
payment forbearance provided herein with respect to delays occasioned by the
adjustment of losses concerning business interruption insurance as set forth in
Section 14.12 - "Adjustment of Insurance."
9.24. Age Limitations. The Casino Operator shall take all reasonable
steps necessary to prevent persons under the age of twenty-one (21), unless
otherwise permitted under applicable law, to:
(a) play or be allowed to play any Game or Gaming Device at the
Casino;
(b) loiter or be permitted to loiter in or about any room,
premises, or designated area where any Game or Gaming Device is located,
operated or conducted at the Casino;
(c) be employed as a Gaming Employee or an operator of any Game
or Gaming Device at the Casino; or
(d) serve or be served, consume or be allowed to consume any
alcoholic beverage at the Casino.
The Casino Operator shall draft and implement policies and procedures designed
to satisfy the requirements, including policies and procedures pertaining to
documentation relating to proof of age and the examination of such document by
responsible Casino Employees and to provide suitable security to enforce the
policies and procedures. Notwithstanding the
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provisions of R.S. 27:260, the Casino Operator covenants and agrees that it
shall at all times be subject to the Gaming Board's regulatory authority and
that the Gaming Board may, by the Rules and Regulations provide for incremental
fines and/or penalties for any violation of the same kind or involving the same
Person in addition to those fines and/or penalties stipulated in R.S. 27:260.
9.25. Maintenance of Casino. The Casino Operator shall maintain the
Casino, including the landscaped areas, driveways, sidewalks and pedestrian and
vehicular passageways in a clean, safe, sanitary first-class condition and in
compliance with the Governmental Requirements.
9.26. Computerized Accountability.
(a) Centralized Computer. In order to provide necessary security,
integrity and financial accountability for Casino Operations at the Casino, the
Casino Operator shall maintain the Books and Records relating to Casino
Operations in the Casino Operator's/Casino Manager's Casino Management System
("CMS System") and the Slot Data System ("SDS System") with terminals located at
the Casino Premises or at such other location within the State as may be
approved by the Gaming Board or the Louisiana State Police. All Gaming Devices
that can be linked to the SDS System, excluding table games and similar gaming
devices, shall be linked to the SDS System.
(b) Access to Computer Records. The Gaming Board and the Louisiana
State Police shall be afforded complete and unrestricted access to information
stored on-line in the SDS and CMS Systems relating to Casino Operations
(excluding employee information which information shall be available upon
request by the Gaming Board or the Louisiana
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State Police) in accordance with the procedures specified below with the
understanding that such access is not intended to expand the statutory rights of
the Gaming Board to request and obtain information as set forth in the Casino
Act or other applicable law.
(i) The Casino Operator/Casino Manager shall provide the Gaming
Board and the Louisiana State Police with a computer terminal and printer to be
located in the Gaming Board Controlled Space or other approved area in the
Casino to access the information in the CMS and SDS Systems in accordance with
the terms hereof. If information requested is not available for review at such
terminal by the Gaming Board or the Louisiana State Police due to technical
problems, the Casino Operator/Casino Manager shall cooperate with the Gaming
Board and the Louisiana State Police in providing immediate alternative access
to requested information.
(ii) The access to the computer terminal that is provided to the
Gaming Board and the Louisiana State Police shall be on an inquiry-only basis
and shall not include any ability to enter updates or otherwise add, delete,
modify, program or reorganize the data in the Casino Operator's/Casino Manager's
SDS and CMS Systems.
(iii) Due to the public reporting requirements imposed upon the
Casino Operator under the federal securities laws and due to the propriety and
confidential nature of much of the information maintained on-line in the SDS and
CMS Systems, the Gaming Board (its employees, servants, agents, including the
Louisiana State Police) agree to treat all information obtained from its review
of the SDS and CMS Systems, in a confidential manner and to use it solely for
its investigatory, administrative and audit functions permitted by the Casino
Act.
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(iv) At any given time, the Gaming Board and the Louisiana State
Police shall designate, in the aggregate, no more than eight (8) employees who
may access Information in the SDS and CMS systems, provided, however, nothing
herein shall prevent such employees from sharing and utilizing any information
obtained with authorized employees of the Louisiana State Police, the Attorney
General's Office or the Gaming Board in connection with the performance of their
duties. The Casino Operator or the Casino Manager shall provide such employees
designated by the Gaming Board and the Louisiana State Police with special
passwords that shall provide access to the information identified herein to the
designated employees without further assistance of the Casino Operator/Casino
Manager, provided, however, that the Casino Operator/Casino Manager agrees to
provide the designated employees with instructions and training on how to access
the data banks identified in subsection (ii) above. No other Gaming Board
employee or agent shall be trained or permitted to access the SDS and CMS
Systems. The Gaming Board and the Louisiana State Police shall take appropriate
internal measures to protect the security of the information in the SDS and CMS
Systems.
(v) To ensure the integrity of the direct access relationship to
the proprietary and confidential material maintained on the SDS and CMS Systems,
the Casino Operator or the Casino Manager may keep through such SDS and CMS
Systems an audit trail of the activity on the terminal that is made available to
the Gaming Board pursuant to this Section 9.26 - "Computerized Accountability,"
including: (a) the date, time and duration of the access; (b) the identity of
the employee gaining access; and (c) the data screens reviewed. The specific
elements recorded on the audit trail may also include a designation of which
data
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screens were printed. The audit trail shall not be used by the Casino
Operator or the Casino Manager to thwart, interfere with or undermine a Gaming
Board investigation or audit.
(vi) If the Casino Operator or the Casino Manager determines
through its review of the audit trail that a Gaming Board employee or agent has
exceeded the rights granted by this Section 9.26 - "Computerized Accountability"
or that a Gaming Board employee or agent may have disclosed information to an
unauthorized person, then the Casino Operator or the Casino Manager shall notify
the Gaming Board. If the Gaming Board determines that one of its employees
accessed or used information contrary to the terms of this Section 9.26 -
"Computerized Accountability," the Gaming Board shall take appropriate action
against such employee or agent and it shall take all steps to prevent the misuse
of information obtained from the Casino Operator or the Casino Manager,
including the prosecution of all available remedies against any unauthorized
Persons that have access to such information.
(vii) This Section 9.26 - "Computerized Accountability" creates
no new or independent obligation for the Casino Operator or the Casino Manager
to revise their computer screens or create new computer screens, so long as the
Gaming Board and the Louisiana State Police have terminal access to all
information that is otherwise on-line in the SDS and CMS Systems.
9.27. Minimum Internal Controls. The Casino Operator shall establish or
cause to be established a system of internal controls containing administrative
and accounting procedures necessary for the complete and accurate calculation
and reporting of financial data including the Louisiana Gross Gaming Revenue
Share Payments (the "Internal Control
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System"). The Internal Control System shall be Approved by the Gaming Board. The
Gaming Board shall at all times during the Term have the right to modify the
requirements for the Internal Control System by Rules and Regulations. The
Casino Operator shall cause to be prepared by the Independent CPA an annual
report of the Casino Operator concerning compliance with the policies and
procedures set forth in the Internal Control System. The Casino Operator's
annual compliance report shall be delivered to the Gaming Board not later than
one hundred twenty (120) Days following the close of each calendar year after
the Casino Opening Date. The compliance report shall address the adequacy of the
design of the Internal Control System and the effectiveness of the Casino
Operator's implementation of the Internal Control System in order to assure the
Casino Operator's compliance with this Casino Operating Contract. The compliance
report shall include a listing of all material matters or items of
non-compliance with the Internal Control System that have come to the
Independent CPA's attention. Within thirty (30) days of delivery of the
Independent CPA's compliance report, the Casino Operator shall (a) advise the
Gaming Board in writing as to the manner in which it has corrected or proposes
to correct each material matter or material item of non-compliance identified in
the compliance report, and (b) provide a timetable for completing each material
matter or material item of noncompliance not then corrected. The Gaming Board
may at any time direct the Casino Operator to correct any item of material
non-compliance with the Internal Control System (whether reported by the
Independent CPA, by the Casino Manager or coming to the attention of the Gaming
Board in any other manner) in a manner Approved by the Gaming Board.
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9.28. Utilization of Louisiana Goods and Services. In purchasing or
contracting for goods and services, the Casino Operator shall give preference
and priority to Louisiana residents, laborers, vendors and suppliers except in
those instances wherein the Casino Operator establishes that it is not
reasonably possible to do so without added expense, substantial inconvenience or
sacrifice in operational efficiency.
9.29. Timetables and Outside Dates. The Casino Operator shall meet the
timetables and achieve the Outside Dates for the following events:
(a) Initial Plan Financing shall be obtained in accordance with
Section 13.4 - "Evidence of Initial Plan Financing" no later than the Plan
Effective Date.
(b) Construction on the Casino shall re-commence no later than
thirty (30) days after the Plan Effective Date.
(c) The Casino shall be fully operational and open for business no
later than twelve (12) months after the Plan Effective Date (the "Completion
Date"). The Outside Dates shall be extended by the number of Days as set forth
in Section 1.1(a)(i) of the Completion Guarantee issued pursuant to Section 25.2
- "Completion Guarantee" of this Casino Operating Contract and attached as
Exhibit B hereto and by this reference incorporated herein, and the Casino
Operator's obligation to complete the Casino by the Outside Date shall be
subject to such extensions and limitations as set forth in Article 12 of the
Completion Guarantee.
9.30. Rivergate/City Payments. Within sixty (60) Days after the end of
each Fiscal Year, the Casino Operator shall deliver to the Gaming Board a
certified statement detailing the date, purpose and amount of all payments made
to Rivergate Development, the City or
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other Persons pursuant to the Casino Lease or any other agreement with the City
or Rivergate Development for the previous Fiscal Year.
9.31. Payment of Impositions. The Casino Operator shall pay or cause to
be paid, and pay timely, on or before the last day on which they may be paid
without penalty or interest, all non-discriminatory and uncontested real estate
taxes and assessments (ordinary and extraordinary, unforeseen as well as
foreseen), water rents, sewer and other charges, value added tax, use and
occupancy tax, sales tax, vault tax and other taxes, duties and charges, fees or
payments imposed by any governmental, quasi-governmental or public authority, or
utility or entity, which is imposed, assessed, levied or becomes due or payable
or becomes a charge or lien upon, or arises in connection with the ownership,
use, occupancy or possession of the Casino Premises, or any part thereof, or any
of the improvements thereon, or any appurtenances thereto (all of the foregoing
being herein collectively referred to as "Impositions") during the Term of this
Casino Operating Contract.
9.32. Payment to Unsecured Creditors. The Allowed General Unsecured
Creditors as designated in the Plan shall be paid cash by the Casino Operator
equal to the amounts of their Allowed General Unsecured Claims on the Plan
Effective Date, which payments shall be guaranteed by the Completion Guarantee
(attached hereto as Exhibit B) issued by HET and ▇▇▇▇▇▇'▇ Operating.
ARTICLE X. CASINO OPERATOR'S NEGATIVE COVENANTS
10.1. General. Throughout the Term, the Casino Operator covenants with
the Gaming Board to duly and timely observe and to cause the Casino Manager,
where applicable, to duly and timely observe each and every one of the following
covenants as well
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as the other covenants, requirements and terms found elsewhere
in this Casino Operating Contract to wit:
10.2. Food and Restaurant Facilities and Service. To the extent
prohibited by State law and in order to comply with State law, the Casino
Operator shall not offer seated restaurant facilities with table food service in
the Casino for Casino patrons other than limited cafeteria style food services
for Casino patrons, provided, however, that: (a) seating for any such food
facility shall not exceed two hundred fifty (250) persons; and (b) no food
prepared by the Casino Operator shall be given away or subsidized at such
facility by the Casino Operator or any licensee. In accordance with the
authorization to the Gaming Board to provide for a system or concession in the
Casino whereby area restaurant owners and food preparers may elect or offer to
provide for service in the Casino food service areas, food prepared and offered
at their restaurants accompanied by identification of the restaurant providing
the food and in an effort to encourage the Casino Operator to conduct business
with local restaurants and food preparers, the Casino Operator shall comply with
the regulation in effect on the date of the execution of this Casino Operating
Contract as set forth in the preamble to the Casino Operating Contract,
LAC:IX.3587 (or any such modification thereof as may be required by a final
judicial non-appealable judgment). Subject to any prohibition provided by State
law, nothing herein shall prevent the leasing of non-gaming space by the Casino
Operator or JCC Development on the second floor of the building on the Rivergate
site to any business or entertainment facility unaffiliated with the Casino
Operator that may offer food to the general public.
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10.3. No Lodging. The Casino Operator shall not, to the extent
prohibited by State law (a) offer lodging in the Casino or (b) engage in any
practice or enter into any business relationship to give any hotel or lodging
facility any advantage or preference not available to all similarly situated
hotels or lodging facilities. To the extent required by State law, the Casino
Operator shall obtain the approval of the Gaming Board prior to entering into
any contract with any hotel or lodging facility.
10.4. Prohibited Contacts with Public Officers. The Casino Operator
shall not engage in any business activity with any person whom the Casino
Operator knows or should know is a public officer as defined in R.S. 42:1,
including but not limited to those business activities described in R.S. 27:261
except as a patron in the Casino. The Casino Operator and the Casino Manager
shall not make campaign contributions to any person seeking election or
re-election to a public office as defined in R.S. 42:1. Nor shall the Casino
Operator make a contribution, loan or expenditure on behalf of a political
candidate or group connected thereto or as otherwise prohibited by the Casino
Act, the Governmental Requirements and the Rules and Regulations. The Casino
Operator and Casino Manager shall further comply with all restrictions on direct
and indirect campaign contributions under State law as it may be amended from
time to time.
10.5. Improper Activities. The Casino Operator shall not divert or
"skim revenues" in violation of R.S. 27:262 or engage in illegal activities or
reduce competition from other gaming entities in violation of R.S. 27:240(l)(b)
or conduct Games or Gaming Operations so as to prevent guests from patronizing
local businesses other than the Casino in violation of R.S. 27:240(l)(c).
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10.6. Prohibited Sale of Certain Products. To the extent prohibited by
State law or the Rules and Regulations, the Casino Operator shall not engage in
the sale of products that are not directly related to Games or Gaming
Operations.
10.7. Exclusion and Detention of Certain Persons. In order to
effectuate the policies of the Casino Act and in order to effectively maintain
strict regulation of Games and Gaming Operations, the Casino Operator shall not
knowingly admit and shall exclude and eject from the Official Gaming
Establishment, all persons whose presence in the Casino is determined by the
Gaming Board by Notice to the Casino Operator to pose a threat to the interests
of the State, the Gaming Board, licensed gaming or all of them. The Casino
Operator shall further use its best efforts to provide security for the
detection and prevention of offenses against patrons. In connection with these
requirements, and in accordance with the legislative mandates in R.S. 27:239,
244(A)(6), 240(3), 265 and 260 to 264, in the event the Casino Operator, Casino
Manager, or their employees and agents, have reasonable cause to believe that a
Person at the Casino: (a) is or has violated any provision of the Casino Act or
the Rules and Regulations; (b) is subject to exclusion or ejection pursuant to
the Involuntary Exclusion List as provided in the Rules and Regulations; (c) has
engaged in an act that is subject to the ejectment criteria as provided in the
Rules and Regulations; or (d) is or may be threatening the safety or welfare of
any patron or employee within the Casino, the Casino Operator, Casino Manager
and their employees or agents may escort such Person to an approved Security
Officer for questioning and, if appropriate, notification and turnover to
regulatory or law enforcement authorities, including, without limitation, the
Gaming Board, the New Orleans Police Department or the State Police. In
connection with any detention and
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questioning of a Person as provided herein, the Casino Operator shall ensure
that there is surveillance coverage of any detention and questioning. The Gaming
Board, as promptly as possible following the execution of the Casino Operating
Contract, shall promulgate regulations to implement the terms of this Section.
10.8. Environmental Laws. The Casino Operator shall not cause, permit
or allow any violation of any Environmental Laws on, about or beneath the
Casino. The Casino Operator shall obtain all permits and approvals necessary
under the Environmental Laws in connection with the remodeling, demolition or
construction of the Casino.
10.9. Other Prohibited Activities. The Casino Operator shall not engage
in any other activity or activities prohibited by the Casino Act, this Casino
Operating Contract, the Rules and Regulations or the Governmental Requirements.
The Casino Operator and the Casino Manager shall not knowingly employ, or enter
into a consulting agreement with, a person who was the Mayor or a City Council
member of the City during 1993 or any managerial level employee of or consultant
to the City and who provided services to the City of New Orleans relating to the
negotiation and execution of the Casino Lease. The employment or consulting
prohibition in the previous sentence shall end with respect to a person two
years after termination of the person's employment or consulting relationship
with the City.
ARTICLE XI. DESIGN AND CONSTRUCTION
11.1. Casino Design. The Casino Operator has presented to the Gaming
Board and the Gaming Board has approved, the Casino Operator's program plans for
the Casino, as more fully identified in Exhibit A as "Approved Program Plans"
attached hereto and by this
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reference incorporated herein. The Casino Operator shall cause the Casino
Operator's Architect to prepare the Design Development Documents and the
Construction Documents relating to the first and second floor changes for the
Casino. The Design Development Documents and the Construction Documents shall be
consistent with the Approved Program Plans for the Casino attached hereto as
Exhibit A and with sound architectural and engineering practices. Upon
completion of the Construction Documents for the Casino, reproducible copies of
the Construction Documents shall be submitted to the Gaming Board and its
authorized representative, as further detailed in Section 11.12 - "Reports and
Monitoring." The Gaming Board and its representative shall have access to said
documents and their preparers for plan review during the Design Development and
Construction Document preparation phases.
11.2. Casino Construction. The Casino Operator shall, at its sole cost
and expense, cause the Casino to be constructed in substantial conformity to the
Casino Construction Documents.
11.3. Poydras Street Support Facility and Poydras Tunnel Construction.
The Casino Operator shall, at its sole cost and expense, cause the Poydras
Street support facility and the Poydras tunnel to be constructed in conformity
with the Poydras Street support facility Construction Documents and Poydras
tunnel Construction Documents, respectively.
11.4. Effect of Delivery. Any delivery of Design Development Documents
or the Construction Documents contemplated hereby or described herein shall not
deprive the Casino Operator or the Casino Operator's Architect of the right to
retain the originals or other
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reproducible copies of the Design Development Documents or the Construction
Documents, as the case may be, or the right to re-use information contained
therein.
11.5. Changes to Construction Documents. The Casino Operator shall
obtain prior approval from the Gaming Board of any Material Change to the Design
Development Documents set forth in Section 11.1 - "Casino Design" or the
Construction Documents in accordance with the procedures set forth in Section
11.6 - "Material Change Approval Procedure." Changes to the Design Development
Documents or the Construction Documents not constituting a Material Change may
be made by the Casino Operator from time to time without approval, provided that
the Casino Operator delivers documentation of all changes to the Gaming Board
within a reasonable period of time following completion of the documents.
11.6. Material Change Approval Procedure.
(a) The Casino Operator may from time to time submit to the Gaming
Board for approval Material Changes to the Design Development Documents or the
Construction Documents, as the case may be. Each request for approval shall be
in writing and shall include a detailed description of the requested change or,
if applicable or requested, drawings from the Design Development Documents or
plans and specifications from the Construction Documents relating to the
requested change and shall contain a certification by the Casino Operator and
its applicable contractor of the effect upon time and costs to complete. The
Gaming Board shall not withhold its consent to a proposed change required by
Governmental Requirements.
(b) Promptly after receipt of a request for approval of a proposed
Material Change, the Gaming Board shall notify the Casino Operator in writing
whether the proposed
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Material Change is approved, approved as noted or disapproved. A notice of
disapproval shall describe in reasonable detail the reasons for the disapproval.
If the Gaming Board fails to so Notify the Casino Operator in writing in a
reasonable time after receipt of the proposed Material Change, the proposed
Material Change shall be deemed approved, unless the Gaming Board has notified
the Casino Operator of the necessity for additional time.
(c) If the Gaming Board disapproves a proposed Material Change,
the Casino Operator may, at its option, (i) abandon the proposed Material
Change, (ii) resubmit to the Gaming Board for its approval one or more revised
versions of the proposed Material Change, or (iii) notify the Gaming Board in
writing that the Casino Operator contends the Gaming Board has unreasonably
withheld its approval of the proposed Material Change. If the Casino Operator
resubmits a revised version of the proposed Material Change, the submission
shall be treated as a new request for approval and shall be governed by the
procedures described above in this Section 11.6 - "Material Change Approval
Procedure." If the Casino Operator notifies the Gaming Board that it contends
the Gaming Board has unreasonably withheld its approval, the Casino Operator and
the Gaming Board shall diligently and in good faith attempt to resolve the
dispute. If the Casino Operator and the Gaming Board are unable to resolve the
dispute within a reasonable period after receipt by the Gaming Board of the
Casino Operator's notice, the Casino Operator may, at its option, either abandon
the disputed Material Change or appeal the Gaming Board's decision in accordance
with the Casino Act.
(d) The Casino Operator may at its own risk start the work called
for by any changes to the Construction Documents for which approval of the
Gaming Board is
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required and for which approval of the Gaming Board is pending or disputed.
However, if the necessary approval is not subsequently obtained, the Casino
Operator shall, at the request of the Gaming Board, restore any work that does
not conform to the requirements of this Casino Operating Contract.
11.7. Disclaimer of Representations and Prohibited Reliance. The Casino
Operator acknowledges that the Gaming Board has made no representation that the
contemplated work can be constructed within the required time periods or within
proposed budgets or that proposed Financing and other sources of funding will be
sufficient to complete the construction of the work as required or that the
design professionals or Contractors engaged by the Casino Operator are
sufficiently skilled to accomplish the construction or work on time, within
budget or as required by the General Development Agreement. Neither the Casino
Operator nor any other Person, including a lender, may rely on any approval
given by the Gaming Board or its representatives in connection with the
exercising of the Gaming Board's construction approval rights.
11.8. Compliance with Governmental Requirements. The work described
above shall fully and strictly conform in all respects with all Governmental
Requirements, including but not limited to federal, state and local regulation
and building and life-safety codes.
11.9. Delivery of Notice. The Casino Operator shall deliver to the
Gaming Board a full and complete copy of any notice or other demand for
compliance which may be received by the Casino Operator from the Landlord or
delivered by the Casino Operator to the Landlord.
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11.10. Commencement Dates. The Casino Operator shall cause construction
of the Casino to re-commence no later than the date required therefor by Section
9.29 - "Timetables and Outside Dates."
11.11. Completion Dates. Once the required construction has
re-commenced, the Casino Operator shall prosecute the construction diligently to
completion. The Casino Operator shall cause the Completion Date for the Casino
to occur no later than the date required therefor by Section 9.29 - "Timetables
and Outside Dates."
11.12. Reports and Monitoring. From the date construction re-commences,
the Casino Operator shall provide a written progress report to the Gaming Board
on a monthly basis, which shall describe in reasonable detail the status of
preparation of the Construction Documents for the Casino and the progress of
construction, as appropriate. In addition, during the period of construction of
the Casino, an authorized representative of the Gaming Board shall have the
right to conduct on-site monitoring, at the expense of the Casino Operator as
set forth at the end of this Section 11.12 - "Reports and Monitoring", to
confirm that construction is proceeding in accordance with this Casino Operating
Contract. During the construction phase of the Casino, the Casino Operator shall
deliver the following to the Chairman:
(a) a copy of all required building permits for the Casino and for
all other construction work required by this Casino Operating Contract;
(b) a copy of each request for advance of construction draws by
the General Contractor to the Casino Operator and by the Casino Operator to the
applicable lender or fund in conformance with A.I.A. documents;
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(c) certificates of payments;
(d) schedule of values which has been approved by all persons
whose approval is required;
(e) a copy of all change orders approved by the Casino Operator
and the general contractor to the general construction contract, the contract to
provide FF&E, and the contract to provide security and surveillance, provided
however a Material Change shall be subject to approval by the Gaming Board;
(f) a true copy of the general construction contract for the
Casino; the contract for the fixtures, furniture, and equipment of the Casino,
and the contract for the security and surveillance together with all copies of
any amendments to such contracts; and
(g) copies of any notice of defaults from the City, Rivergate
Development, and any contractor or lender. To provide sufficient funds to the
Gaming Board for its monitoring of construction, the Casino Operator shall pay
to the Gaming Board the sum of Eleven Thousand Three Hundred Sixty-Three and
64/100 Dollars ($11,363.64) per month beginning one month from the execution of
this Casino Operating Contract and ending the month in which the Date of
Substantial Completion occurs.
ARTICLE XII. FINANCIAL AND ACCOUNTING RECORDS, ACCESS
AND REPORTING REQUIREMENTS, CONFIDENTIALITY
12.1. Financial and Accounting Records. The Casino Operator shall
maintain and keep, or shall cause to be maintained and kept, full, complete and
accurate Books and Records, of all business conducted or transacted in, upon or
from the Casino, including but not limited to all business and Gaming Operations
conducted by the Casino Operator, the
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extension of credit to Casino patrons and other information which may reasonably
assist the Gaming Board in performing its duties under this Casino Operating
Contract, including determining the amounts of the payments due and to be paid
by the Casino Operator to the Gaming Board and in determining whether the Casino
Operator is in compliance with this Casino Operating Contract, the Internal
Control System, the Rules and Regulations and the Essential Agreements. The
Books and Records shall be maintained in accordance with the Rules and
Regulations of the Gaming Board. The Casino Operator shall also provide to the
Gaming Board, without cost or charge, detailed information and instructions
concerning use of and access to the Books and Records including an index, if an
index exists. The Casino Operator shall observe the record retention and storage
policies required by the Rules and Regulations and the Governmental
Requirements.
12.2. Financial Statements and Quarterly Meetings. Within forty-five
(45) Days following the end of each Fiscal Quarter, the Casino Operator shall
provide to the Gaming Board complete, accurate and unaudited Fiscal Quarter
Financial Statements of the business and Gaming Operations undertaken from or
concerning the Casino said reporting to be done in accordance with the Rules and
Regulations. The Casino Operator shall also provide the Gaming Board or its
authorized representative audited Quarterly Statements on Gross Gaming Revenue
with said reporting to be done in accordance with Rules and Regulations. The
Fiscal Quarter Financial Statements shall be prepared in accordance with GAAP
and shall be Certified as accurate by the Casino Operator and by the Casino
Manager. Within ninety (90) Days after the end of each calendar year, the
calendar year Financial Statements audited by the Independent CPA shall be
provided to the Gaming Board. The form for the Fiscal Quarter
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Financial Statements and calendar year Financial Statement reporting will be
prescribed in the Rules and Regulations. Within ten (10) Days of the delivery of
each Fiscal Quarter Financial Statement, but in no event later than fifty-five
(55) Days following the close of each Fiscal Quarter and within ten (10) Days
after delivery of each calendar year Financial Statement, but in no event later
than one hundred (100) Days following the close of each calendar year, the
Financial Statements shall be explained to the Gaming Board by the Casino
Operator. Before each Fiscal Quarter, the Casino Operator shall also provide the
Gaming Board, through it's Chairman, with the following additional information:
(a) A ninety (90) day or Fiscal Quarter projection for revenue and
expenses; and
(b) A statistical analysis of Games and Gaming Operations at the
Casino for the preceding Fiscal Quarter. The Casino Operator shall further
provide the Gaming Board with such other reports as required by the Rules and
Regulations.
12.3. Expiration or Termination Audit. In addition to the Fiscal Year
Financial Statements prepared during the Term, the Financial Statements for the
Last Fiscal Year of the Term shall be audited at the expiration or termination
of this Casino Operating Contract.
12.4. Public Company Disclosure. Notwithstanding the foregoing, if the
Casino Operator, or any Affiliate is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, there shall be no requirement
to submit to the Gaming Board a quarterly or annual Financial Statement until
the statement or the information therein becomes a matter of public record by
the inclusion of the statement or the information therein in a report filed with
the Securities and Exchange Commission, provided, however, this provision
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shall not limit the Gaming Board's review and audit rights under this Casino
Operating Contract.
12.5. Review and Audit. The Casino Operator shall notify the Gaming
Board in writing at least twenty (20) Days prior to the date that the
Independent CPA will commence the calendar year audit. The Gaming Board shall
have the right (through its employees or agents or through outside auditors,
accountants, attorneys or other consultants) to review the Books and Records at
any time, without prior notice or demand and shall have the right, during the
time that the Independent CPA is conducting the Annual Audit to participate with
the Independent CPA, and independently to examine, audit, inspect and transcribe
the Books and Records of the Casino Operator and the Casino Manager. If, upon
completion of an audit conducted by the Gaming Board, the audit reveals that the
Casino Operator has understated Gross Gaming Revenue or any other material
financial information or has failed to pay to the Gaming Board all sums due to
the Gaming Board by the Casino Operator, then the Casino Operator shall pay to
the Gaming Board, within seven (7) Days after demand, sums as are due to the
Gaming Board together with interest at the Default Interest Rate. If the amount
of the understatement exceeds two percent (2%) of the amounts due for the period
subject to the audit, the Casino Operator shall pay to the Gaming Board the
actual cost to the Gaming Board of the Gaming Board's audit. Nothing contained
in this Section shall prevent the Gaming Board from exercising any other remedy
available to address underpayments including the imposition of incremental fines
or penalties upon the Casino Operator, the Casino Manager or any Person found
responsible for an underpayment to the Gaming Board.
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12.6. Cooperation with the Legislative Auditor. The Legislative
Auditor, or persons designated by him, shall have the right to audit or review
the Books and Records of the Casino Operator and/or Casino Manager subject to
and in accordance with Governmental Requirements. The Casino Operator and Casino
Manager shall cooperate fully in connection with any audit of the Casino
Operator or Casino Manager by the Legislative Auditor. The Legislative Auditor
will maintain the confidentiality of information as required by the AICPA Code
of Professional Conduct, Section 3.01, and the terms of R.S. 24:513(f) and (h).
Nothing in this Casino Operating Contract shall restrict or enlarge the review
and audit rights of the Legislative Auditor as provided by this Casino Operating
Contract or by applicable law.
12.7. Public Records Access. The Casino Operator acknowledges that
records obtained by the Gaming Board may be subject to public disclosure as
required by R.S. 27:237 and R.S. 27:21 and other applicable "public records" and
"freedom of information" laws or regulations as such laws and regulations
presently exist and as they may be amended from time to time. To the extent
deemed confidential by State law, the Gaming Board agrees to treat the Books and
Records, Financial Statements and other financial information (collectively, the
"Information") received or obtained from the Casino Operator, the Casino Manager
or their respective Affiliates as confidential provided that the Casino
Operator, the Casino Manager or their respective Affiliates have treated and
handled the same as confidential by marking or otherwise designating the
Information as confidential in a visible manner reasonably calculated to provide
actual notice to the Gaming Board of confidential status and by taking due care
to prevent disclosure of the Information except to authorized persons.
Confidential Information or data which is obtained by the Gaming Board shall not
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be released or revealed, in whole or in part, except in the course of the proper
administration of the Gaming Act or as otherwise provided by law.
Notwithstanding any entitlement to status as "confidential" of any Information
provided to it by the Casino Operator or obtained by the Gaming Board from any
source, the Gaming Board shall have the complete right to provide any
Information which it possesses to:
(a) the Louisiana State Police, Gaming Division and the Louisiana
Attorney General, Gaming Division, both in connection with their
responsibilities under the Casino Act; and
(b) any law enforcement agency in connection with any violation or
perceived violation of this Casino Operating Contract, the Rules and
Regulations, the Internal Control System or Governmental Requirements; and
(c) other Gaming Authorities having regulatory supervision over
the Casino Operator, the Casino Manager, their respective Affiliates or any
Person in a Control Relationship with any of them; and
(d) any court or other tribunal in connection with the enforcement
of the Gaming Board's rights under this Casino Operating Contract or under the
Casino Act or the Rules and Regulations; and
(e) the Gaming Board's representatives, including but not limited
to accountants, auditors, employees, agents, attorneys and consultants, provided
that any such disclosure shall be limited to information that in the Gaming
Board's opinion is required to be disclosed under the circumstances. The Gaming
Board shall take steps reasonably designed to protect the confidentiality of
confidential information.
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(f) The Gaming Board, as promptly as possible following the
execution of this Casino Operating Contract, shall promulgate regulations
elaborating on the public records and confidentiality sections in R.S. 27:237
and R.S. 27:21 to enhance and preserve the public trust in the regulatory
process while also facilitating the free flow of information of the Casino
Operator, Casino Manager and their employees and Affiliates that is not
otherwise publicly available and is deemed confidential by State law. At a
minimum, such regulations shall (i) establish procedures for the release of
public records to the public, and (ii) protect against public disclosure of
Information deemed confidential under R.S. 27:237 and/or R.S. 27:21, including
any such confidential Information obtained in a background investigation or a
continuing investigation of the suitability of any Person. The term "background
investigation" shall include the Gaming Board's continuing investigation of the
Casino Operator or Casino Manager, and any applicants, licensees, permittee or
Person required to be found Suitable.
12.8. Errors in Financial and Accounting Records Resulting in
Overpayment to the Gaming Board. If an audit by the Independent CPA discloses
errors that resulted in an overpayment of sums due to the Gaming Board pursuant
to this Casino Operating Contract, and if the Gaming Board Approves the proposed
adjustment, or if an audit by the Gaming Board discloses errors that resulted in
an overpayment of sums due to the Gaming Board pursuant to this Casino Operating
Contract, the Gaming Board shall refund the amount of the overpayment to the
Casino Operator within thirty (30) Business Days after the Gaming Board receives
the results of and approves such audit. If the Gaming Board's available
resources at the time repayment is due are not sufficient to permit repayment in
full, the Gaming Board
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may allow the Casino Operator to deduct the amount of the overpayment and
interest from the next ensuing Daily Payment.
ARTICLE XIII. FUNDS AND FINANCING
13.1. Financing. The Casino Operator shall provide all funds necessary
to comply with this Casino Operating Contract through its own resources or
through Approved Financing with a Suitable Lender.
13.2. Amount of Initial Plan Financing. The Casino Operator shall have
obtained Initial Plan Financing as of the Plan Effective Date.
13.3. Source of Initial Plan Financing. The Casino Operator shall raise
Initial Plan Financing as described in the Plan.
13.4. Evidence of Initial Plan Financing. The Casino Operator shall be
deemed to have obtained Initial Plan Financing when the equity contributions
required by the Plan and the balance of the amount of the Initial Plan Financing
has been funded to the Casino Operator or committed under a legally binding
agreement subject to no exceptions other than those exceptions which have been
Approved by the Gaming Board which shall occur as of or before the Plan
Effective Date. By executing this Casino Operating Contract, the Gaming Board
shall be deemed to have Approved the Initial Plan Financing, including the terms
and conditions of all related agreements, with such approval including all
approvals required by the Rules and Regulations for the Initial Plan Financing.
13.5. Financing Representations; Restrictions. The Casino Operator
shall not represent to any Person that the Gaming Board or the State is, or in
any way may be, liable or responsible for any of the representations or
obligations of the Casino Operator in connection
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with any Financing, including but not limited to public or private offering of
securities. If the Casino Operator or its Financing Affiliate shall at any time
sell or offer to sell any securities issued by the Casino Operator or its
Financing Affiliate, whether by prospectus or otherwise, that relate to the
Casino or its operations, it shall do so only in full compliance with all
applicable federal and state securities laws and shall disclose to all
prospective purchasers and offerees that neither the Gaming Board nor the State
shall in any way be deemed to be an issuer or underwriter of any such securities
and that the Gaming Board, its directors, officers, agents, employees,
attorneys, accountants and other professional consultants and the State have not
assumed and shall not have any liability arising out of or related to the sale
or offer of any such securities, including without limitation, any liability or
responsibility for any financial statements, projections or other information
contained in or omitted from any prospectus, placement memorandum or similar
written or oral communication. The Casino Operator, shall defend, indemnify and
hold the Gaming Board harmless from any and all Claims relating to a breach of
the Casino Operator's obligations under this Section in accordance with the
provisions of Article XVIII "Indemnification" hereof.
13.6. Limitations on Financing. The Casino Operator or its Financing
Affiliate may obtain Debt after the Initial Plan Financing is obtained only from
a Suitable Lender and with the Approval of the Gaming Board, provided that the
Gaming Board Approval shall not be required in connection with any Financing
(whether secured or unsecured) that is obtained from a Suitable Lender and that
meets any one or more of the following conditions:
(a) the principal amount of Debt incurred in the Financing does
not exceed the sum of (i) debt retired with proceeds of the Financing, (ii) the
projected cost of capital
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improvements to be funded with proceeds of the Financing; and (iii) customary
transaction costs relating to the Financing; or
(b) the pre-tax cash flow of the Casino Operator for the
twelve-month period ending on the last day of the calendar quarter preceding the
calendar month in which the Financing occurs is not less than one and
twenty-five hundredths (1.25) times the amount of annual interest payable with
respect to Secured Debt incurred in the Financing; or
(c) the Financing is permitted by the Rules and Regulations
without prior Approval by the Gaming Board and is from a Suitable Lender,
provided that the Financing must meet all of the requirements imposed by the
Rules and Regulations.
13.7. Capital Replacement Fund.
(a) Beginning after the Casino Opening Date, the Casino Operator
shall establish or cause to be established a reserve for Capital Replacements in
accordance with this Section 13.7 (the "Capital Replacement Fund"). Commencing
on the first full calendar month after the Casino Opening Date, and monthly
thereafter, the Casino Operator shall deposit (a) one-twelfth (1/12) of Three
Million Dollars ($3,000,000) for each month during the first year following the
opening of the Casino, (b) one-twelfth (1/12) of Four Million Dollars
($4,000,000) for each month during the second year after the opening of the
Casino, (c) one-twelfth (1/12) of Five Million Dollars ($5,000,000) for each
month during the third year after the opening of the Casino, and (d) two percent
(2%) of monthly gross gaming revenue and gross non-gaming revenue for each month
during each ensuing year thereafter as required by the Casino Management
Agreement. It is intended that this Capital Replacement Fund and the Capital
Replacement Fund maintained pursuant to the Casino Lease shall be the same and
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are not separate funds. Any amounts in the Capital Replacement Fund maintained
pursuant to the Casino Lease shall satisfy and reduce the amounts of the Capital
Replacement Fund required pursuant to this Section 13.7 - "Capital Replacement
Fund."
(b) In accordance with each Annual Business Plan (as it may be
modified in accordance with the Casino Management Contract), the Capital
Replacement Fund shall be established as a segregated account and shall be used
first for any necessary Capital Replacements to the Casino and the Support
Facilities. Any amounts remaining in the Capital Replacement Fund at the close
of each Fiscal Year shall be carried forward and retained in the Capital
Replacement Fund. If the amount in the Capital Replacement Fund is insufficient
at the time the funds are planned for expenditure in accordance with the Annual
Business Plan (as it may be modified in accordance with the Casino Management
Contract), the Casino Operator shall supply or cause to be supplied such
additional funds as may be required by deposit into the Capital Replacement Fund
within thirty (30) days following notice of the shortfall or deficit.
Notwithstanding the foregoing, at the end of any calendar year, and after
payment of all capital improvements and replacements for the calendar year, if
(i) the Capital Replacement Fund balance exceeds Twenty Five Million Dollars
($25,000,000) (adjusted for changes in the CPI), and (ii) the capital
replacement expenditures planned for the ensuing calendar year, less the Casino
Operator's anticipated contributions to the Capital Replacement Fund for such
ensuing calendar year, are equal to or less than Twenty Five Million Dollars
($25,000,000) (adjusted for CPI), the Casino Operator may withdraw the excess
amount from the Capital Replacement Fund. The amount in the Capital Replacement
Fund can be reduced with the Approval of the Gaming Board.
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(c) All net cash proceeds from the sale of capital items from the
Casino no longer needed in the operation of the Casino shall be deposited into
the Capital Replacement Fund unless otherwise Approved by the Gaming Board;
provided, however, this Section 13.7(c) shall not apply if the Casino Operator
uses such proceeds to acquire replacement items.
(d) Upon the expiration or termination of this Casino Operating
Contract, the balance in the Capital Replacement Fund shall be first used to
restore the Casino to first class condition, reasonable wear and tear excepted.
Upon any expiration or termination of this Casino Operating Contract that
results in the inability to use the Casino Operator's or Casino Manager's trade
names, trademarks or system marks (collectively the "Marks") in connection with
the operation of the Casino, and if the Casino Lease is terminated as a result
thereof, the balance in the Capital Replacement Fund shall also be used to
effectuate the replacement and removal of the Marks from the Casino. So long as
there then exists no Event of Default and no other monies are due to the Gaming
Board, in the event of the expiration of termination of this Casino Operating
Contract, the balance in the Capital Replacement Fund, if any, may be paid over
to the Casino Manager or Leasehold Mortgagees, as their interests may appear, or
retained by the Casino Operator.
(e) Notwithstanding the Casino Operator's obligation to maintain
the Casino and related amenities in a "first class condition" as set forth in
this Casino Operating Contract, with respect to Capital Replacements, the Casino
Operator's obligations shall be measured in comparison to other casinos located
in the United States of America. The Casino Operator shall make or shall cause
to be made all Capital Replacements necessary to maintain
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this standard regardless of the amount allocated to or contained in the Capital
Replacement Fund. If the Gaming Board determines that the required standard is
not being maintained, the Gaming Board shall provide the Casino Operator with
written notice to that effect specifying the deficiencies in reasonable detail.
The Casino Operator may appeal the decision of the Gaming Board in accordance
with the Casino Act. It is only upon the failure of the Casino Operator to
implement the court's decision concerning Capital Replacements within the time
frames set forth in the decision that an Event of Default for such failure shall
exist and be treated as such under Article XX - "Casino Operator's Default."
ARTICLE XIV. INSURANCE
14.1. Property and Casualty Insurance Coverage. The Casino Operator, at
its sole cost and expense, commencing on the Plan Effective Date and through the
remainder of the Term, shall keep the Casino insured, through an insurance
company or companies authorized to do business in Louisiana having an A-M Best
Rating of A-:VIII or better, for the mutual benefit of the Casino Operator as
the named insured, and the Gaming Board, the Landlord and each Leasehold
Mortgagee as additional insureds (to the extent of their insurable interest),
against loss or damage by fire, explosion, lightning, and other risks embraced
by coverage of the type now known as the broad form of extended coverage,
including, but not limited to, riot and civil commotion, smoke, windstorm,
aircraft, vehicle, strike, riot, and vandalism and malicious mischief with
additional coverage for broad form water damage, sprinkler leakage, flood,
boiler and machinery and against such other risks or hazards as consistent with
industry standards in an amount not less than one hundred percent (100%) of the
then full replacement cost of the Casino (exclusive of the cost of undamaged
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excavations, foundations and footings) without deduction for physical
depreciation. The peril of flood applicable to improvements will be insured in
the amount of Fifty Million Dollars ($50,000,000) for the Casino. The full
replacement cost of the Casino shall be appropriately recalculated at regular
intervals no less frequently than annually, unless there is a material change to
the Casino. Such policy or policies may include a deductible of not more than
One Million Dollars ($1,000,000) per occurrence, exclusive of the perils of
windstorm and flood. For windstorm, the deductible shall be Two Million Five
Hundred Thousand Dollars ($2,500,000), unless the Gaming Board Approves a higher
deductible amount because of commercial unavailability. For flood insurance, the
deductible, after purchase of the limits available from the National Flood
Insurance Program, shall be Five Hundred Thousand Dollars ($500,000). The Casino
Operator shall be solely responsible for all losses within the deductibles, if
any. The Casino Operator, at its sole cost and expense, shall also maintain
insurance to cover the Casino Operator's contractual indemnity obligations
undertaken in this Casino Operating Contract but only insofar as such
obligations relate to indemnities for personal injury, death or property damage.
14.2. Builder's Risk Insurance. During the construction of the
improvements pursuant to the General Development Agreement, the Casino Operator
shall maintain or cause to be maintained Builder's Risk Insurance on an "All
Risk" form, including fire and extended coverage. The deductible shall not
exceed One Hundred Thousand Dollars ($100,000) per occurrence. For flood, the
deductible, after purchase of the limits available from the National Flood
Insurance program, shall not exceed Five Hundred Thousand Dollars ($500,000).
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14.3. Adjustments to Policy Limits and Deductibles. The specific policy
limits and deductibles provided above with respect to property and casualty
policies including builders risk insurance (as adjusted for changes in industry
standards) shall be increased periodically to an amount that represents the
equivalent, after inflation, of the sums hereinabove specified consistent with
industry standards.
14.4. Liability Insurance. The Casino Operator with the Gaming Board,
the Landlord, the City and each Leasehold Mortgagee as additional insureds and
Casino Operator as the named insured, shall maintain or cause to be maintained
with an insurance company or companies authorized to do business in Louisiana
having an A.M. Best Rating of A-:VIII or better during the Term of this Casino
Operating Contract with respect to the Casino, the following:
(a) General Aggregate Limit (other than Products-Completed
Operations) - Two Million Dollars ($2,000,000)
(b) Products-Completed Operations Aggregate Limit - Two Million
Dollars ($2,000,000)
(c) Commercial General Liability insurance on an "occurrence
basis" against claims for bodily injury, death or property damage occurring
upon, in or about the Casino or any elevators or any escalators therein and on,
in or about the non-public streets and passageways on the Casino. The insurance
required to be maintained by the Casino Operator under this subsection (i) shall
afford immediate minimum protection in the amount specified below on the Plan
Effective Date and (ii) at all times thereafter shall have such limits as may
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be necessary consistent with industry standards. As of the date of this Casino
Operating Contract, the limits of liability under such insurance are the
following:
Type of Coverage Minimum Policy Limits
---------------- ---------------------
General Aggregate Limits (other than Products-Completed Operations) $2,000,000
Products-Completed Operations Aggregate Limits $2,000,000
Personal and Advertising Injury Limit $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Limit $ 50,000
Medical Expense Limit $ 5,000
(d) Boiler and pressure vessel insurance including air tanks,
pressure piping and major air conditioning equipment provided the Improvements
contain equipment of the nature ordinarily covered by such insurance and for an
amount not less than Fifteen Million Dollars ($15,000,000) or such larger sum as
the Gaming Board may require from time to time in accordance with industry
standards.
(e) Comprehensive Motor Vehicle Liability Insurance with limits of
not less than One Million Dollars ($1,000,000) combined single limit bodily
injury liability and property damage. Coverages are to include all owned, hired
and non-owned vehicles.
(f) Workers' Compensation and Employers' Liability Insurance in
accordance with Louisiana statutory limits, including any and all State
Endorsements which will provide coverage for claims under both the Louisiana
Workers' Compensation Act and, when applicable, the Federal Longshoremen's and
Harbor Workers' Compensation Act with United States statutory limits. The limits
of liability under the Employers' Liability Section of the Workers' Compensation
and Employers' Liability insurance policy or policies required
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hereunder shall be in the amount of One Million Dollars ($1,000,000). The
Workers' Compensation and Employer's Liability Insurance may be self-insured if
the self-insurance plan complies with Louisiana law.
(g) Commercial Umbrella Liability Insurance in excess of the
coverages described in Commercial General Liability, Business Automobile
Liability and Employers Liability above, with limits of not less than Seventy
Five Million Dollars ($75,000,000) and a self-insured retention of not more than
Fifty Thousand Dollars ($50,000).
14.5. Contractor Insurance. Casino Operator shall require each
Contractor under a Contractor Agreement engaged during construction or
alterations on the Casino Premises to provide and maintain, during such time, at
no cost or expense to the Gaming Board such insurance that will name as
additional insureds and protect the Gaming Board and the Casino Operator,
Rivergate Development, the City and each Leasehold Mortgagee from any and all
claims for damage to public or private property or personal injury or death to
the employees of the Contractor, or to any members of the public, that may arise
from any or all operations under the contract between the Casino Operator and
the Contractor or to any of their respective subcontractors. The insurance
required by this Section shall comply with all of the general requirements
applicable to the coverages required by Section 14.2 - "Builder's Risk
Insurance" and Section 14.4 - "Liability Insurance", and such insurance coverage
provided by any Contractor pursuant to this paragraph must be issued by an
insurance company authorized to do business in Louisiana and having an A.M. Best
rating of A-:VIII or better. The insurance coverages required hereby shall
extend to all occurrences that are the result of or arise from work performed by
or under such Contractor, provided, however, that products and
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completed operations coverages shall extend for a period of two (2) years after
the date on which such work is completed. Nothing contained in the foregoing
provisions of this Section shall be construed as requiring any such Contractor
to maintain the coverage required during any period of time during which the
contract has been suspended or after such time as the contract has been
terminated or completed.
14.6. Other Contractor Insurance. The Casino Operator shall require
contractors other than Contractors ("Other Contractors"), prior to commencing
work, to provide to the Casino Operator proof of the following insurance
coverages required by this Casino Operating Contract. Insurance is to be placed
with insurers authorized to do business in the State with an A. M. Best's rating
of no less than A: VI. This rating requirement will be waived for the workers'
compensation coverage and policies written through Lloyds of London or Institute
of London Underwriter (ILU) companies. The Casino Operator will in turn furnish
Certificates of Insurance to the Gaming Board regarding such insurance coverage.
All such insurance provided under this Section 14.6 - "Other
Contractor Insurance" will name as additional insureds and protect the Gaming
Board and Rivergate Development from any and all claims for damage to public or
private property or personal injury or death to the employees of the Other
Contractor, or to any members of the public, that may arise from any or all
operations under the contract between the Casino Operator and the Other
Contractor or to any of the subcontractors of the Other Contractor.
All such insurance policies shall require thirty (30) days
prior notice of cancellation to be given to the Casino Operator and all
additional insureds by registered mail,
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return receipt requested. All notices will name the Other Contractor and any
subcontractor and identify the contract.
Insurance coverage specified in ALA Document A 201, 1987 Edition
will be provided by the Other Contractors, and any other insurance described
below shall be furnished with the following minimum limits:
(a) Workers' Compensation. Statutory - in compliance with the
Compensation Law of the State.
(b) Commercial General Liability Insurance with a Combined Single
Limit Per Occurrence for Bodily Injury and Property Damage: This insurance shall
include coverage for bodily injury and property damage for the seven (7)
coverages listed below unless the Gaming Board approves the Casino Operator's
request that such insurance coverage should be waived because said insurance is
not applicable to the work and/or not commercially available. The seven (7)
coverages are:
(i) Premises - Operations;
(ii) Broad Form Contractual Liability;
(iii) Products and Completed Operations;
(iv) Use of Contractors and Subcontractors;
(v) Personal Injury;
(vi) Broad Form Property Damage; and
(vii) Explosion, Collapse and Underground (XCU) Coverage.
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On the certification of insurance, under the description of operations, the
following wording is required: THE AGGREGATE LOSS LIMIT APPLIES TO EACH PROJECT,
or a copy of ISO form CG2503 (Ed. 11-85) shall be submitted.
The combined single limit (CSL) amount of insurance required shall be:
Contracts Contracts
Contracts Under $100,001 -- Over
New Buildings and Renovation $100,000 $1,000,000 $1,000,000
------------------------------ --------------- ----------- -----------
Each Occurrence/Minimum Limit $ 500,000 $1,000,000 $3,000,000
Aggregate (Applicable to this Contract ONLY) $ 500,000 $1,000,000 $3,000,000
(c) Business Automobile Liability Insurance. This coverage shall
have a combined single limit of One Million Dollars ($1,000,000) per occurrence
for bodily injury and property damage, unless otherwise indicated. This
insurance shall include for bodily injury and property damage the following
coverages:
(i) Owned automobiles;
(ii) Hired automobiles; and
(iii) Non-owned automobiles.
(d) Owner's and Contractor's Protective Liability Insurance shall
be furnished by the Other Contractor as indicated below:
Contracts Contracts Contracts
All Construction Under $100,001 -- Over $1,000,000
$100,000 $1,000,000
----------------- ---------- ------------ ------------------
CSL - Each Occurrence $500,000 $1,000,000 $3,000,000
(e) An Umbrella Policy may be used to meet minimum requirements
as set forth in Sections 14.6(a) - "Workers Compensation," 14.6(b) - "Commercial
General Liability Insurance with a Combined Single Limit Per Occurrence for
Bodily Injury and Property
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Damage," 14.6(c) - "Business Automobile Liability Insurance" and 14.6(d) -
"Owner's and Contractor's Protective Liability Insurance" above.
(f) All policies of insurance shall be approved by the Casino
Operator prior to the inception of any work.
14.7. Architect and Engineer Insurance. The Casino Operator shall cause
its principal architect and engineers subcontracted to the principal architect
to obtain and secure Architects' and Engineers' Professional Liability Insurance
covering all architectural and engineering services and work performed in
connection with the construction of the Casino with coverage limits not less
than Ten Million Dollars ($10,000,000) with a deductible of not more than Two
Hundred Fifty Thousand Dollars ($250,000) per occurrence. Such policy or
policies of insurance shall include coverage for ensuring losses caused by
architects' or engineers' errors and omissions. Such policy or policies shall
delete exclusions with reference to contractual liability, joint ventures,
parks, amusement devices and skateboards whenever applicable provided that such
insurance is commercially available.
14.8. Business Interruption Insurance. Beginning on the Commencement
Date and thereafter throughout the Term, the Casino Operator shall maintain, at
its sole cost and expense, a policy or policies of Business Interruption
Insurance insuring the Casino Operator and naming the Gaming Board as an
additional insured (as its interests may appear) against the loss in the amount
described below which may be occasioned by a casualty or catastrophe that
interrupts the normal business and earnings of the Casino Operator and the
Casino Operator's ability to pay the Louisiana Gross Gaming Revenue Share
Payments due and to become due under this Casino Operating Contract. Except as
otherwise provided in Section
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15.3 - "Utilization of Insurance Proceeds," the existence of such insurance
coverage shall not relieve the Casino Operator of any payment obligation to the
Gaming Board under this Casino Operating Contract when due hereunder. For
purposes of this Section 14.8 - "Business Interruption Insurance", the Gaming
Board's interest in the proceeds of business interruption insurance for the
Casino (unless the Minimum Payment obligation ceases pursuant to Section 1.3 -
"Exclusive Contract") shall be Two Hundred Seventy Three Thousand Nine Hundred
Seventy-Three Dollars ($273,973) per day minus, in each case, the amount of the
Louisiana Gross Gaming Revenue Share Payments actually paid for the same period.
In the event the Minimum Payment obligation ceases pursuant to Section 1.3 -
"Exclusive Contract" hereof, the obligation to obtain business interruption
insurance for the Casino shall also cease.
14.9. Adjustments to Policy Limits for Liability Insurance. The kinds
and types of insurance coverages, the specific policy limits and the deductibles
provided above (as adjusted for changes in industry standards) may be changed or
increased periodically subject to the Approval and/or requirements of the Gaming
Board to an amount which represents the equivalent coverages, limits and
deductibles, after inflation and adjusted for changes in the CPI as determined
by a risk manager. Notwithstanding the foregoing, the primary limits for
liability coverages may be increased through Commercial Umbrella Liability
Insurance, where applicable.
14.10. Form of Insurance and Insurers. All policies of insurance
required by this Casino Operating Contract shall be effected under valid and
enforceable policies, in such forms as authorized for use in Louisiana and
issued by insurers of required responsibility and who are authorized to transact
business in Louisiana and shall name the State and the Gaming
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Board as additional insureds. Upon the execution of this Casino Operating
Contract and thereafter prior to the expiration date of each policy, a copy of
each policy or a certificate thereof required to be furnished shall be delivered
by the Casino Operator to the Gaming Board.
If at any time any of the insurance policies required herein shall be
or become unsatisfactory to the Gaming Board as to form or substance, or if a
company issuing any such policy shall be or become unsatisfactory to the Gaming
Board, subject to such rights being exercised only in a commercially reasonable
circumstance, the Casino Operator shall cause the Contractor upon notice to that
effect from the Gaming Board to the Casino Operator, promptly to obtain a new
policy, submit the same to the Gaming Board for Approval and submit a
certificate thereof as hereinabove provided.
In policies of Workers' Compensation and Employer's Liability coverage
as required herein, the Casino Operator shall cause the Contractor to secure an
agreement from the insurer to waive all rights of subrogation against the State
and the Gaming Board, its officers, officials, employees, boards, commissions or
volunteers for losses arising from work performed by the Contractor for the
Casino Operator.
14.11. Other Policies. Unless otherwise required by a Leasehold
Mortgage, the Casino Operator shall not take out separate insurance concurrent
in form, or contributing in the event of loss, with that required in this
Article unless the Gaming Board is an additional insured therein, with loss
payable as provided in this Casino Operating Contract. The Casino Operator shall
notify the Gaming Board of the taking out of any such separate insurance and
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shall cause the original policies in respect thereof or certificates therefor to
be delivered to the Gaming Board.
14.12. Adjustment of Insurance. All insurance policies required by this
Article XIV - "Insurance" shall provide for loss thereunder to be adjusted with
the Casino Operator, and payable to the insured and the additional insureds as
their respective interests may appear with respect to any particular casualty
resulting in damage or destruction to the Casino.
14.13. Insurance Notice. Each policy on which the Gaming Board is an
additional insured shall, to the extent obtainable, contain a provision that no
act or omission of the Casino Operator or the Casino Manager that would
otherwise result in forfeiture or reduction of the insurance therein provided
shall affect or limit the obligation of the insurer so to pay the amount of any
loss sustained by the Gaming Board and an agreement by the insurer that such
policy shall not be canceled or modified without at least thirty (30) days prior
written notice by registered mail, return receipt requested, to the Gaming
Board.
14.14. Keep in Good Standing. The Casino Operator shall observe and
comply with the requirements of all policies of public liability, fire and other
policies of insurance at any time in force with respect to the Casino and the
Casino Operator shall so perform and satisfy the requirements of the companies
writing such policies so that at all times there shall be a company of good
standing willing to write or to continue such insurance. The Casino Operator
shall, in the event of any violations or attempted violations of the provisions
of this Section 14.14 - "Keep in Good Standing" by any permitted Space Lease
Operator, take steps, immediately upon knowledge of such violation or attempted
violation, to remedy or prevent the same as the case may be.
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14.15. Blanket Policies. Any insurance coverages required to be
provided by the Casino Operator pursuant to this Casino Operating Contract may
be effected by a policy or policies of blanket insurance; provided, however,
that the amount of the total insurance allocated to the Casino shall be such as
to furnish in protection the equivalent of separate policies in the amounts
herein required, and provided further that in all other respects, any such
policy or policies shall comply with the other specific insurance provisions and
the Casino Operator shall deposit the original policy or policies or a copy
thereof or a certificate thereof with the Gaming Board.
14.16. Change of Circumstances. If any insurance required to be
maintained under the Casino Operating Contract is not available at commercially
reasonable rates, the Casino Operator shall make good faith efforts to procure
alternative insurance. If alternative insurance is not available at commercially
reasonable rates, the Casino Operator and the Gaming Board shall negotiate in
good faith to arrive at a practical solution that reasonably protects their
respective interests.
ARTICLE XV. DAMAGE TO OR DESTRUCTION OF THE CASINO
15.1. Damage or Destruction. In the event of damage to or destruction
of the buildings or improvements constituting the Casino or any part thereof,
including the related Support Facilities by fire, other casualty or otherwise,
the Casino Operator, at its sole expense and whether or not the insurance
proceeds, if any, shall be sufficient therefor, shall promptly, after the
insurance proceeds have been adjusted, repair and restore the Casino as nearly
as possible to the same condition of the Casino or such part thereof as the same
existed prior to such damage or destruction, using materials of an equal or
superior quality to those existing in
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the Casino before such casualty, so that the Casino shall contain at least the
same usable area existing before such fire, flood or other casualty. If
required, the Casino Operator shall obtain a permanent certificate of occupancy
as soon as practicable after the completion of the repair and restoration.
15.2. Insurance Proceeds. Subject to the requirements of the Casino
Lease, and any Leasehold Mortgage, all insurance proceeds on the Casino, except
as to the Gaming Board's interest in the business interruption insurance
required by Section 14.8 - "Business Interruption Insurance," shall be made
available to pay for the cost of restoration if the Casino or any part thereof
is damaged or destroyed in whole or in part by fire, flood or other casualty. If
the insurance proceeds are insufficient to pay for the Work, the Casino Operator
shall, nevertheless, complete the Work at its sole cost and expense.
15.3. Utilization of Insurance Proceeds. Except as provided in Section
15.4 - "Damage at End of Casino Term" below, no destruction of or damage to the
Casino or any part thereof or property therein by fire, flood or other casualty,
whether such damage or destruction be partial or total, shall permit the Casino
Operator to surrender or terminate this Casino Operating Contract or relieve the
Casino Operator from its timely payment and performance obligations to the
Gaming Board under this Casino Operating Contract. Notwithstanding anything to
the contrary in this Casino Operating Contract, the Casino Operator may suspend
Daily Payments of the Louisiana Gross Gaming Revenue Share Payments (and related
pro rata share of the Minimum Payment) in the event of a casualty loss requiring
closure of all or a part of the Casino and requiring adjustment of business
interruption insurance until the earlier of (i) the date on which the Casino
re-opens to the
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general public for business, or (ii) the receipt by the Casino Operator of the
business interruption insurance proceeds related to such loss, provided that:
(a) Business interruption insurance meeting the criteria of this
Casino Operating Contract is in full force and effect at the time of the loss;
(b) The Casino Operator proceeds in good faith and in due
diligence to adjust the claim with the insurer;
(c) Upon adjustment of the claim and payment by the insurer to the
Casino Operator, the Casino Operator shall pay all past due Louisiana Gross
Gaming Revenue Share Payments, including any interest paid upon adjustment of
the claim (paid pro rata based upon interest paid on the entire claim).
If the closure of the Casino is a partial closure, the suspension
of the daily payments of the Louisiana Gaming Gross Revenue Share Payment
pursuant to this Section shall be a pro rata suspension in proportion to the
percentage of Gaming Operations which have been suspended at the Casino as a
result of such partial closure, and such suspended Daily Payments shall resume
on the earlier to occur of (i) the date on which the partial closure is
re-opened to the general public for business, or (ii) the receipt by the Casino
Operator of the business interruption insurance proceeds related to such partial
closure.
If the Casino Operator's claim for business interruption insurance
is denied, and, if the denial is challenged by the Casino Operator, and a final
judgment affirming such denial is entered, the Casino Operator shall be liable
to the State for all unpaid payments of the Louisiana Gross Gaming Revenue Share
Payments which were not paid for the period of the suspension of such payments.
If the Casino Operator does not challenge the denial of the
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claim, the Casino Operator shall pay all Louisiana Gaming Gross Revenue Share
Payments for the period of the suspension of such payments.
15.4. Damage at End of Casino Term. If destruction or damage to the
Casino occurs during the last three (3) years of the Term and the Casino
Operator determines that it is impracticable to repair the destruction or
damage, the Casino Operator shall, at the Casino Operator's election, be
entitled to terminate this Casino Operating Contract upon:
(a) giving written Notice to the Gaming Board;
(b) payment to the Gaming Board monthly for the remainder of the
Term one-twelfth (1/12) of the greater of (i) the average annual amount of the
Louisiana Gross Gaming Revenue Share Payments for the previous three (3) Full
Fiscal Years or (ii) the Minimum Payment; the Casino Operator shall be entitled
to a credit against the monthly payments in an amount equal to the business
interruption insurance actually paid to the Gaming Board plus the payments
actually made to the Gaming Board from a new casino operator or manager during
the remainder of the Term;
(c) assignment to Landlord of Property/Casualty Insurance
proceeds;
(d) the Casino Operator's satisfying or removing all liens and
encumbrances on the Casino Premises created by the Casino Operator; and
(e) the Casino Operator's surrender and cancellation of the Casino
Lease.
ARTICLE XVI. ALTERATIONS AND MODIFICATIONS TO CASINO
PREMISES AFTER COMPLETION
16.1. Alteration Approvals. After the Completion Date of the Casino,
the Casino Operator shall not make, cause or permit the making of any
demolition, alteration, reconstruction, addition, modification, renovation or
improvement that is a Material Change
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(collectively referred to as "Alterations") to the Casino without prior Notice
to the Gaming Board. All Alterations shall be made at the sole cost and expense
of the Casino Operator and the Gaming Board shall have no liability or
responsibility therefor.
16.2. Manner of Performance. All Alterations shall be performed in a
good and workmanlike manner and in no event shall the quality of the Alterations
be less than the quality of the Casino under the approved Construction Documents
by this Casino Operating Agreement. All Alterations shall be subject to
inspection by the Gaming Board through its designated representatives; however,
the Gaming Board shall have no obligation to inspect and in the event that the
Gaming Board does inspect, the Gaming Board shall have no liability to the
Casino Operator or to any other Person as a result of its inspection.
ARTICLE XVII. ENTRY UPON CASINO PREMISES BY GAMING BOARD; INSPECTION
17.1. Access and Inspection Rights. The Gaming Board and its
representatives shall have complete, immediate and unrestricted right at all
times and without notice or demand to the Casino Operator and/or the Casino
Manager or to any other Person, to enter the Casino, including so-called
"secured" areas, as defined by Rules and Regulations for purposes of inspection
and determining whether the Casino Operator and/or the Casino Manager are
complying with the obligations of this Casino Operating Contract, including
exercising the Gaming Board's right to examine the Books and Records. The Casino
Operator shall not delay, hinder, impede or restrict the Gaming Board's or its
authorized representatives' immediate access to the totality of the Casino and
any area, building or location leased, owned or operated by or on behalf of the
Casino Operator relative to Casino operations, and shall not permit the Casino
Manager or any other Person to do so. The Casino Operator shall deliver to
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the Gaming Board accurate scale drawings of the floor plans of the Casino
showing and designating the use for each room or enclosed area, the "secured"
areas, and particularly areas where gross gaming receipts and other Casino
revenues are handled. The Casino Operator shall deliver updated copies of the
scale drawings to the Gaming Board as changes are made in the use of any room or
enclosed area.
ARTICLE XVIII. INDEMNIFICATION
18.1. Indemnification. From and after the Plan Effective Date, the
Casino Operator shall defend, indemnify and hold the Gaming Board harmless from
and against any and all Claims that are asserted against, incurred by or imposed
upon the Gaming Board or that the Gaming Board may be required to pay or observe
that arise out of or are in any manner related to the possession, construction,
operation and management of the Casino by the Casino Operator or the Casino
Manager and their respective employees and agents including, but not limited to,
Claims based or grounded in whole or in part on:
(a) the failure of the Casino Operator or the Casino Manager and
any Space Lease Operator to comply with the terms of this Casino Operating
Contract;
(b) the construction or remodeling of the Casino or the
performance of any work or therein or thereon;
(c) the Gaming Board's review or refusal to review and/or Approve
of Construction Documents, Design Development Documents, life safety systems,
fire safety systems or any other aspect relating to the design or construction
of the Casino or the qualifications of any design professional contractor or
sub-contractor;
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(d) the failure of the Casino Operator, the Casino Manager, any
Space Lease Operator and their respective employees, agents and servants to
comply with the terms of the Casino Lease, any Essential Agreements or any other
agreement affecting the Casino to which the Casino Operator, the Casino Manager
or a Space Lease Operator is a party;
(e) any personal injury, death or property damage suffered or
alleged to have been suffered by the Casino Operator, the Casino Manager, any
Space Lease Operator and their respective employees, agents or servants or any
other Person in, on or about the Casino;
(f) any act, omission or other negligence of the Casino Operator,
the Casino Manager, any Space Lease Operator or their respective employees,
agents or servants;
(g) any failure of the Casino Operator, the Casino Manager, any
Space Lease Operator or their respective employees, agents or servants to comply
in all respects with the all applicable Governmental Requirements, the
Environmental Laws or any other law, ordinance, code or rule or regulation
applicable to the Casino or the Casino operations;
(h) the performance of any labor, service or the furnishing of any
material for the Casino or the condition of any building, improvement or
component part forming the Casino or any non-public street, curb or sidewalk on
or about the Casino or any vaults, tunnels, malls, passageways or space therein
or thereabout or the failure to pay for such labor, service or furnishing of
material as and when required;
(i) any breach of any agreement between the Casino Operator and
other Persons, including but not limited to the Casino Operator's shareholders
or Affiliates and any Person in a Control Relationship with the Casino Operator,
or vendors, investors,
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underwriters, financiers, lenders, creditors, suppliers, contractors,
sub-contractors, materialmen, real property lessors, equipment lessors,
accountants, attorneys, consultants or advisors, employees, agents or Space
Lease Operators, Casino patrons, invitee, guests and any other Person whomsoever
or whatsoever;
(j) any act or omission of the Casino Manager or any Space Lease
Operator or any Person for whom either the Casino Manager or a Space Lease
Operator is vicariously responsible;
(k) any act or omission of a design professional, Contractor,
subcontractor, equipment lessor, consultant or other Person performing labor or
services or providing equipment in connection with the construction of the
Casino or any Work or Alterations; or
(l) those other circumstances or matters expressly described
elsewhere in this Casino Operating Contract requiring indemnification of the
Gaming Board by the Casino Operator; Provided however, no indemnification shall
be required with respect to Claims that are based upon (i) the sole negligence
or intentional fault of the Gaming Board or (ii) a finding of unsuitability that
has been adjudicated by a proper court to have been arbitrary and capricious,
(iii) the joint or solidary fault of the Gaming Board the State or any Person
for whom either is vicariously liable with a third party or parties other than
the Casino Operator, the Casino Manager or their respective Affiliates (iv) a
breach of this Casino Operating Contract by the Gaming Board; or (v) any
allegation of breach of Section 4.1 - "Gaming Board Warranties; Due
Authorization" hereof.
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18.2. Defense of Proceedings. If an action or proceeding is brought or
asserted against the Gaming Board based upon a Claim in respect of which the
Casino Operator is obligated to indemnify the Gaming Board, the Casino Operator
shall upon Notice from the Gaming Board:
(a) defend the Claim on behalf of the Gaming Board through
Independent Counsel;
(b) pay all costs of defense without exclusion;
(c) keep the Gaming Board fully and completely advised of all
material developments and proceedings in connection therewith;
(d) furnish the Gaming Board with true, correct and complete
copies of all papers filed or served in the proceeding, irrespective of by whom
served or filed; and
(e) pay or otherwise discharge any final judgment or award
rendered therein.
18.3. Right to Participate in Defense. The Gaming Board shall have the
unrestricted right, but not the obligation, at the Gaming Board's expense to be
represented in any such Claim subject to indemnification by the Attorney General
of the State or one or more special assistant Attorneys General engaged by the
Attorney General.
18.4. No Settlement Without Gaming Board Approval. The Gaming Board
shall have the right to approve the conditions of any proposed settlement of a
Claim subject to indemnification, including any agreement to acknowledge
liability or pay money, unless the proposed settlement involves no
acknowledgment of responsibility or liability on the part of the Gaming Board.
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18.5. Payment of Judgment. The Casino Operator shall promptly pay and
discharge any final and non-appealable judgment or ruling rendered on a Claim
subject to indemnification.
18.6. Indemnity of State. The Casino Operator shall indemnify the State
in the event a judgment is rendered against the State as a result of the actions
of the Casino Operator or its agents.
ARTICLE XIX. CRITERIA FOR OPENING CASINO
19.1. Financing Completed. The Casino Operator shall have obtained the
Initial Plan Financing and delivered to the Gaming Board all guarantees or
assurances required by this Casino Operating Contract before it shall be
entitled to open the Casino.
19.2. Insurance Coverages. The Casino Operator shall have procured and
paid for the Insurance Coverages for the Casino before it shall be entitled to
open the Casino.
19.3. Landlord Approvals and Consents. The Casino Operator shall have
obtained all required Landlord approvals and consents required under the Casino
Lease for the opening of the Casino or shall have provided written evidence of
the Landlord's waiver of the Landlord approvals and consents before it shall be
entitled to open the Casino.
19.4. Completion Acceptance. All construction relating to the Casino
shall have been accepted as substantially complete by the Landlord and the
Casino Operator's Architect or the architect providing contract administration
before the Casino Operator shall be entitled to open the Casino.
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19.5. Occupancy Permits and Licenses. The Casino Operator shall have
obtained all necessary occupancy licenses and permits and delivered copies of
the same to the Gaming Board before the Casino Operator shall be entitled to
open the Casino.
19.6. Suitability and Licensing. All persons who must be found Suitable
and/or licensed by the Gaming Board for opening the Casino shall be found
Suitable and/or licensed before the Casino Operator shall be entitled to open
the Casino.
19.7. Operational Checkout. The Casino Operator shall not be entitled
to open the Casino until the Gaming Board has completed its on-site inspection
of the Casino and found all Games, Gaming Devices, Gaming Supplies, Books and
Records, accounting and other systems to be in full compliance with this Casino
Operating Contract and the Rules and Regulations. The Gaming Board's onsite
inspection shall include, but is not limited to, pre-opening inspections and
audits consisting of tests of gaming equipment, casino operations and casino
employees and personnel, and shall include testing of internal control, security
and surveillance procedures. The Casino Operator shall submit to post-opening
testing as ordered by the Gaming Board.
19.8. Casino Manager's Certification. The Casino Operator shall not be
entitled to open the Casino until it has delivered to the Gaming Board a
Certificate of the Casino Manager attesting that the Casino Manager has
completed its inspection of the Casino and accepts to the best of the Casino
Manager's knowledge, all construction, Games, Gaming Devices, Gaming Supplies,
Books and Records, accounting and other systems as operational and in conformity
with this Casino Operating Contract and the Rules and Regulations. No
certification by the Casino Manager shall be deemed to be a waiver of the Casino
Operator's
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or the Casino Manager's claims against vendors, suppliers, manufacturers or any
other third Person.
19.9. No Default. The Casino Operator shall not be entitled to open the
Casino if there is then existing any Event of Default under this Casino
Operating Contract.
ARTICLE XX. CASINO OPERATOR'S DEFAULT
20.1. Events of Default. The occurrence of any of the following shall
constitute a default under this Casino Operating Contract by the Casino
Operator, which if not cured after Notice and opportunity to cure as provided in
this Casino Operating Contract shall be an "Event of Default":
(a) If Casino Operator fails to pay the Daily Payment, Louisiana
Gross Gaming Revenue Share Payments, or Additional Charges or any other Payment
due to the Gaming Board hereunder as and when due, and such default is not
remedied within fifteen (15) Days following delivery of Notice of non-payment
from the Gaming Board to the Casino Operator; or
(b) If the Casino Operator is not Financially Stable, and the
applicable cure period in Section 9.5(e) - "Financial Stability" has elapsed; or
(c) If the Gaming Board makes a final determination that either
the Casino Operator or the Casino Manager is not Suitable, provided that any
suitability determination that is financially related shall be first subject to
the cure period set forth in Section 9.5(e) - "Financial Stability" and provided
further that if any suitability determination is appealed by the Casino Operator
or the Casino Manager to the court of competent jurisdiction within the
applicable period provided by law, the Gaming Board shall not terminate this
Casino
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Operating Contract as a result of the determination of unsuitability until the
appeal is dismissed or the proper court renders a final non-appealable judgment
upholding the Gaming Board's determination. If an appeal to the Gaming Board's
determination is filed by the Casino Operator or the Casino Manager, the Gaming
Board may, pending the appeal, take such steps as the Gaming Board in its sole
opinion deems appropriate in order to protect the public interest, the integrity
of the Casino (including Gaming Operations), and the fiscal interest of the
Gaming Board and the State, including but not limited to appointing a fiscal
agent who shall be empowered to approve all disbursements made or expenses
incurred by the Casino Operator or the Casino Manager or the appointment of a
conservator who shall have such powers and duties with respect to the Casino and
Gaming Operations as the Gaming Board approves by emergency or other Rules and
Regulations; or
(d) If the Gaming Board makes a final determination that any other
Person required to be Suitable including but not limited to a Partner or any
Affiliate of the Casino Operator, the Casino Manager, a Partner or any Person in
a Control Relationship with any of them is not Suitable, and the Casino Operator
fails to comply with the safe harbor requirements of Section 24.3 -
"Unsuitability - Holders of Equity or Debt Interests' and Section 24.4 - "Safe
Harbor"; or
(e) If the Casino Operator is in material non-compliance with any of
the affirmative or negative covenants contained in this Casino Operating
Contract, provided that any financial covenants (excluding any covenants or
obligations to pay money to the Gaming Board) shall be subject to the cure
period in Section 9.5(e) - "Financial Stability" and Section 20.2 - "Notice;
Opportunity to Cure"; or
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(f) If the Casino Operator contracts with, engages or otherwise or
utilizes a casino manager without the Approval of the Gaming Board; or
(g) If the Casino Operator assigns or subcontracts or attempts to
assign or subcontract any of the casino operator's material duties or
obligations to provide or to operate the Casino in violation of this Casino
Operating Contract except as specifically authorized in this Casino Operating
Contract; or
(h) If the Casino Operator is convicted of conduct that, in the
applicable jurisdiction, is punishable as a felony or equates to a felony in the
State; or
(i) If the Casino Operator Transfers this Casino Operating
Contract or any interest herein except with the Approval of the Gaming Board; or
(j) If the Casino Operator is adjudicated to be in default under
any Essential Agreement, the Casino Lease or the General Development Agreement
that, in the Gaming Board's sole opinion, materially affects the Casino
Operator's ability to perform its obligations under this Casino Operating
Contract; or
(k) If the Casino Operator amends or permits the amendment of any
Essential Agreement without the Approval of the Gaming Board; or
(l) If this Casino Operating Contract, or any right created
hereby, is taken pursuant to any execution or other process of law directed
against the Casino Operator, or pursuant to any seizure or attachment by any
creditor of the Casino Operator or claimant against the Casino Operator, and
such execution, seizure or attachment is not fully released, discharged or
disposed of within five (5) Days after such execution, seizure or attachment
becomes effective; or
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(m) If the Casino Operator makes a general assignment for the
benefit of creditors; or admits in writing its insolvency or its inability to
pay its debts as they come due; or is adjudged to be insolvent in any judicial
or administrative proceeding; or files a petition or other request for relief
seeking any reorganization (other than any filings in connection with the Plan),
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation; or files an
answer or other pleading or response admitting or not contesting the material
allegations of, and/or stipulating to the relief sought in, a petition filed
against it in any such proceeding; or seeks or consents to or acquiesces in the
appointment of a trustee, administrator, or liquidator for the Casino Operator
or a material part of its assets; or voluntarily liquidates or dissolves; or
(n) If the Casino Operator fails to perform or to comply with any
other material obligation contained in this Casino Operating Contract but not
specifically addressed in this Article XX "Casino Operator's Default;" or
(o) If the Casino Operator, other than as a result of an Excusable
Temporary Cessation of Operations closes the Casino or ceases Gaming Operations
and fails to reopen the Casino and resume Gaming Operations within seven (7)
days; or
(p) If the Casino Operator shall not have caused to be provided
and continuously maintained a Minimum Payment Guaranty as required by Section
25.1 - "Rolling Minimum Payment Guaranty."
20.2. Notice; Opportunity to Cure. The Casino Operator acknowledges and
agrees that time is of the essence of this Casino Operating Contract and of the
Casino Operator's observance and performance of its duties and obligations under
this Casino Operating
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Contract. A default under any of subsections (b), (e), (f), (g), (h), (j), (k),
(l), or (n) of Section 20.1 - "Events of Default" shall not be an Event of
Default unless the Casino Operator fails to remedy the default within thirty
(30) Days after Notice of default by the Gaming Board (subject to such
additional period for financial stability related issues as set forth in Section
9.5(e) - "Financial Stability" hereof) provided however, if the default is not
susceptible with due diligence of being cured by the Casino Operator within
thirty (30) Days and the Casino Operator commences to cure the default within
thirty (30) Days of Notice of default and diligently and continuously prosecutes
the cure to completion, then the thirty (30) Day period shall be extended for
the period of time required to complete the cure. The occurrence of the events
under subsections (a), (c), (d), (i), (m), (o) or (p) of Section 20.1 - "Events
of Default" shall constitute an Event of Default without any other notice or
opportunity to cure.
20.3. Payment Disputes. Notwithstanding any of the foregoing, the
following provisions shall apply to a default that involves any payment or
charge due hereunder, or which may be cured by the expenditure of funds by
Casino Operator. If the asserted default involves a good faith dispute over the
amount of a payment due to the Gaming Board, the Casino Operator shall, before
the lapsing of the applicable cure period, pay and transfer to the Gaming Board
the entire amount asserted by the Gaming Board to be due and payable, including
that portion thereof which is in dispute, otherwise such failure shall be an
Event of Default. If the Casino Operator subsequently proves that all or a
portion of the disputed amount was not in fact due, then in the Gaming Board's
sole discretion, the Gaming Board shall either return the amounts determined not
to have been due to the Casino Operator or
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designate that the amounts paid shall be setoff against the next ensuing
payments of the Louisiana Gross Gaming Revenue Share Payments.
20.4. Remedies.
(a) Termination. Upon the occurrence of an Event of Default and
subject to the rights of the Leasehold Mortgagees set forth below in Article
XXIII - "Leasehold Mortgagees", the Gaming Board shall have the right, without
prejudice to any other right or remedy the Gaming Board may have hereunder, to
terminate this Casino Operating Contract by delivery of Notice specifying the
date of termination; provided, however, upon the occurrence of an Event of
Default that is also a Termination Event, the provisions of Section 20.6(b) -
"Termination of Casino Operating Contract" shall apply.
(b) Specific Performance. If the Gaming Board does not terminate
this Casino Operating Contract, the Gaming Board may, at its option, (a) enforce
the Casino Operator's obligations to pay all amounts due under this Casino
Operating Contract together with interest at the Default Interest Rate, (b)
enforce the Casino Operator's other obligations hereunder by an action for
specific performance or by restricting, limiting or suspending the Casino
Operator's rights under this Casino Operating Contract, or (c) enforce any other
remedy available to the Gaming Board in law or in equity. The remedies to which
the Gaming Board may resort under this Casino Operating Contract are cumulative
and are not intended to be exclusive of other remedies or means of redress to
which the Gaming Board may be entitled in case of any breach or threatened
breach of this Casino Operating Contract. Election of any particular default
remedy shall not preclude the Gaming Board from electing any other available
remedy in law or in equity. The failure of the Gaming Board to insist
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upon the strict compliance with any law or regulation applicable to the Casino
and/or the Casino Operator, or the strict compliance with or performance of any
of the conditions of this Casino Operating Contract shall not be construed as a
waiver or relinquishment of any right or remedy for the failure of such or any
other obligation, including the right to insist upon complete and timely
performance of all obligations of the Casino Operator. Under no circumstances
shall any action, inaction or delay which may be suffered in connection with the
Casino Operator's performance hereunder create any custom, course of dealing or
other basis for any claim of estoppel or detrimental reliance by the Casino
Operator.
20.5. Right to Injunctive Relief. In the event of a breach or
threatened breach by the Casino Operator of any of the obligations of this
Casino Operating Contract, the Gaming Board shall have the right to seek
temporary and injunctive relief in addition to any other remedy at law or
equity, without the necessity of furnishing bond.
20.6. No Limitation on Available Remedies.
(a) General. Nothing herein shall be construed to limit, reduce
or preclude recovery by the Gaming Board against the Casino Operator of any
sums or damages to which, in addition to any fines, penalties, or damages
particularly provided for herein, the Gaming Board may lawfully be entitled
by reason of any Event of Default hereunder on the part of the Casino
Operator. Subject to Section 20.6(b)--"Termination of Casino Operating
Contract," nothing herein contained shall be construed to limit or prejudice
the right of the Gaming Board to prove and obtain as liquidated damages by
reason of the termination of this Casino Operating Contract as a result of an
Event of Default, an amount equal to the maximum allowed by any law in effect
at the time and governing the proceedings in which such
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damages are to be proved, whether or not such amount is greater, equal to, or
less than any of the sums referred to in other Sections of this Casino Operating
Contract. Moreover, the Casino Operator acknowledges the authority of the Gaming
Board to impose the fines and seek other remedies provided in the Rules and
Regulations subject to review under applicable law.
(b) Termination of Casino Operating Contract. The Casino Operator
hereby agrees to the immediate termination of this Casino Operating Contract,
including any rights to operate the Casino, if either (i) the Casino Operator,
other than as a result of an Excusable Temporary Cessation of Operations, closes
the Casino or ceases Gaming Operations and fails to reopen the Casino and resume
Gaming Operations within seven (7) days, or (ii) the Casino Operator fails
timely to post the Minimum Payment Guaranty pursuant to the requirements of this
Casino Operating Contract (either of (i) or (ii) above, a "Termination Event"),
and upon the occurrence of either Termination Event, this Casino Operating
Contract shall be deemed terminated without further action.
If any such Termination Event occurs after the Casino Opening Date
and provided that (i) the Gaming Board has received the greater of the Minimum
Payment for that Fiscal Year (or in the case of the Initial Unconditional
Minimum Payment Guaranty attached hereto as Exhibit H for the three hundred
sixty five (365) days after the Casino Opening Date) or the Louisiana Gross
Gaming Revenue Share Payments for that Fiscal Year as of the Termination Event
(plus any Late Payment Interest, if any), no later than ten (10) days following
the end of such Fiscal Year, and (ii) this Casino Operating Contract has been
terminated, the State and the Gaming Board, except as provided below in this
Section, shall
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not seek or assert an affirmative claim against the Casino Operator for
additional Louisiana Gross Gaming Revenue Share Payments for the remaining
balance of the Term of the terminated Casino Operating Contract.
Notwithstanding the above, nothing herein shall limit any claims
of the Gaming Board for any Additional Charges or for Louisiana Gross Gaming
Revenue Share Payments due and owing but not paid for a prior Fiscal Year and/or
for indemnity and/or contribution or limit the Gaming Board's right to assert
such claims as a defense, offset and/or recoupment in any action or proceeding.
If any one or more of the Casino Operator, JCC Holding, HET,
▇▇▇▇▇▇'▇ Operating, the Casino Manager or any of their respective successors, or
any of their controlled affiliates (as may be determined by the court of law in
which the litigation is pending) institutes legal action against the Gaming
Board and/or the State asserting any claims related to this Casino Operating
Contract or any such person(s) or entity(ies) assert that the Casino Operator
has any continuing rights to operate the Casino, then the Gaming Board's remedy
limitation set forth in this Section 20.6(b) shall not apply.
20.7. Costs. If the Gaming Board is the prevailing party, all costs
incurred by the Gaming Board to collect any amounts and damages owing by the
Casino Operator under the provisions of this Casino Operating Contract or to
enforce any provision of this Casino Operating Contract, including reasonable
Litigation Expenses and other expenses of enforcement from the date any such
matter is turned over to an attorney, shall be recoverable by the Gaming Board
from the Casino Operator. "Litigation Expenses" include, but are not limited to,
the following: the reasonable fees and charges of attorneys, legal assistants,
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paralegals, law clerks and other personnel used by attorneys and under attorney
supervision and all costs incurred or advanced by any of them irrespective of
whether incurred in or advanced before the initiation of any legal, equitable,
arbitration, administrative, bankruptcy, trial or similar proceedings and any
appeal from any of same, expert expenses and court costs.
20.8. Fines, Penalties. In addition to any other remedies, penalties,
or similar types of recourse specified in this Casino Operating Contract, the
Gaming Board shall have the right to impose monetary fines upon the Casino
Operator as provided in the Rules and Regulations.
ARTICLE XXI. BANKRUPTCY AND INSOLVENCY
21.1. Bankruptcy or Insolvency. If the Casino Operator
(a) files a voluntary petition under any chapter of the Bankruptcy
Code; or
(b) an involuntary petition is filed against the Casino Operator
under any chapter of the Bankruptcy Code which petition is not dismissed within
sixty (60) Days after filing, then the following provisions shall apply: All
references in this Article to the "Bankruptcy Code" shall mean Title 11 of the
United States Code as it exists or may hereafter be amended in the form
applicable to the Casino Operator's case and related proceedings. All references
in this Article XXI - "Bankruptcy and Insolvency" shall mean the United States
Bankruptcy Court in which the Casino Operator's bankruptcy case was filed,
and/or such other court as may have jurisdiction of and act with respect to the
case. All references in this Section to the "Casino Operator" shall apply
equally to: (i) the Casino Operator; (ii) the Casino Operator as debtor and/or
debtor in possession in any bankruptcy case; (iii) any Trustee of the Casino
Operator's estate appointed under any Chapter of the Bankruptcy Code; and (iv)
any assignee of or purported assignee of this Casino Operating Contract pursuant
to
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an assumption and assignment order by the Bankruptcy Court. All time periods
provided for hereunder shall be considered to run continuously and without
interruption; that is, it is intended and agreed by the Casino Operator that no
time period shall be considered to be interrupted or suspended by the automatic
stay or by the occurrence of any event such as the conversion of a pending
bankruptcy case, appointment of a trustee, entry of an order for relief in an
involuntary case, or similar event. No provision hereunder addressing the
attempted assignment of this Casino Operating Contract by the Casino Operator
shall be considered to waive or modify any other provision hereof prohibiting
the Casino Operator from assigning this Casino Operating Contract. Such
provisions are included only in order to provide for the situation in which the
Gaming Board is compelled by the Bankruptcy Court to acquiesce in an assignment
duly approved by the Bankruptcy Court.
21.2. Regulation; Exercise of Police and Regulatory Powers. The Casino
Operator acknowledges and agrees that for purposes of the Bankruptcy Code, the
enforcement of the Casino Act by the Gaming Board, this Casino Operating
Contract and the Rules and Regulations, are an exercise by a governmental unit
of its police and regulatory powers not subject to the automatic stay imposed by
Section 362 of the Bankruptcy Code.
21.3. Cash Collateral. The Casino Operator acknowledges and agrees that
it has no ownership claims to the Louisiana Gross Gaming Revenue Share Payments,
including the State's Interest in Daily Collections.
21.4. Performance; Assumption or Rejection. The Casino Operator
acknowledges and agrees that the Casino Act, the Rules and Regulations and all
other laws and regulations applicable to this Casino Operating Contract
including but not limited to those addressing
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Suitability as well as the purpose and subject matter hereof render this Casino
Operating Contract, or any part hereof, inappropriate for "assumption" by the
Casino Operator pursuant to Section 365 of the Bankruptcy Code. The Casino
Operator further acknowledges and agrees that:
(a) "Applicable law" as that term is defined in Section 365 of the
Bankruptcy Code in all cases would excuse the Gaming Board from accepting
performance from any entity other than the Casino Operator to whom the Casino
Operator might propose to "assign" or Transfer all or any part of this Casino
Operating Contract; and
(b) The Gaming Board has no duty to consent or consider whether it
might consent to any proposed assumption and assignment, pursuant to Section 365
of the Bankruptcy Code, of this Casino Operating Contract and any rights
hereunder.
21.5. No Performance Excused. Irrespective of whether the Casino
Operator is in default under this Casino Operating Contract at the time of
commencement of the voluntary or involuntary case, the Casino Operator shall not
be excused from full and timely performance under this Casino Operating
Contract.
21.6. Notice of Filing. The Casino Operator agrees to give the Gaming
Board Notice contemporaneously with the commencement of a voluntary case, and
within twenty-four (24) hours of the Casino Operator's receipt of notice, formal
or informal, of the commencement of an involuntary case against the Casino
Operator.
21.7. Relief from Automatic Stay. The Casino Operator agrees to entry
of an immediate order from the Bankruptcy Court, on the Gaming Board's ex parte
motion: (1) granting to the Gaming Board a modification of the automatic stay
(and/or recognition that the automatic stay is not applicable) allowing it to
fully enforce the provisions of this Casino
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Operating Contract, the Casino Operator hereby agreeing that in such case,
"cause," as defined by the Bankruptcy Code would exist for the immediate entry
by the Bankruptcy Court of such an order modifying the automatic stay; and (2)
if deemed necessary or advisable by the Gaming Board, compelling the Casino
Operator to appear immediately and to show cause why this Casino Operating
Contract should not be immediately terminated and/or, if appropriate, "rejected"
under Bankruptcy Code Section 365.
21.8. Cure Periods Not Tolled. Neither the commencement of a case nor
the automatic stay shall interrupt or suspend the tolling of any applicable cure
period. If the Casino Operator is in default under any provision of this Casino
Operating Contract and any required notice has not been given with respect to
such default at the time of commencement of the voluntary or involuntary case,
then Casino Operator agrees that cause exists for and agrees to the immediate
entry by the Bankruptcy Court, on the Gaming Board's ex parte motion, of an
order granting the Gaming Board relief from the automatic stay in order to give
any required notice and allow such cure period to toll, and further, upon the
expiration of such cure period, to proceed to enforce any and all rights under
this Casino Operating Contract for the preservation or enforcement of Gaming
Board's rights hereunder.
ARTICLE XXII. DEFAULT BY THE GAMING BOARD
22.1. Default by Gaming Board. In the event of a default by the Gaming
Board of any of its obligations under this Casino Operating Contract, except as
provided in Section 22.3 hereinbelow, the Casino Operator shall provide a
written Notice of default to the Gaming Board. The Gaming Board shall have
thirty (30) Business Days after delivery of the Notice of default within which
to cure the default. If, however, the default cannot with due diligence be
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cured by the Gaming Board within thirty (30) Business Days and if the Gaming
Board commences to cure the default within thirty (30) Business Days and
diligently and continuously prosecutes the cure to completion, then the thirty
(30) Business Day period shall be extended for the period of time required for
the Gaming Board to complete the cure.
22.2. Remedies. If the Gaming Board fails to cure a default within the
time period provided above, the Casino Operator shall be entitled to compel
specific performance of the Gaming Board's obligations. The Casino Operator
shall also be entitled to any other remedy provided or permitted by law.
22.3. Exclusivity - Default by the Gaming Board and Remedies. The
provisions of Section 22.1 - "Default by Gaming Board" and Section 22.2 -
"Remedies," including, without limitation, the notice, cure and remedy
provisions set forth therein, shall not apply to the provisions of Section 1.3 -
"Exclusive Contract," it being understood that the rights and obligations of the
parties with respect to the matters set forth in Sections 1.3(a) through (g)
inclusive of this Casino Operating Contract shall be governed exclusively by the
terms set forth therein.
ARTICLE XXIII. LEASEHOLD MORTGAGEES
23.1. General. To encourage the lending of money to the Casino
Operator, to ▇▇▇▇▇▇ economic development and growth, to ensure the continuity of
employment of Louisiana citizens and to maintain the integrity and regulation of
Gaming Activities, the Gaming Board in accordance with the terms of the Casino
Act, hereby provides for certain protections of the rights of Leasehold
Mortgagees including the receivership provisions contained in the Casino Act.
The actions of the receiver during the term of the receivership shall be
governed by and
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taken in strict accordance with the Rules and Regulations promulgated by the
Gaming Board. No rule or regulation and no provision in this Casino Operating
Contract executed pursuant to authority granted in R.S. 27:275 shall be the
basis for any cause of action in contract, tort or otherwise against the State,
the Gaming Board, or their respective employees, agents or attorneys. The Gaming
Board shall have the right, but not the obligation, to Approve the terms of any
future Leasehold Mortgage, as well as the term of the transaction or
transactions as required by the Rules and Regulations.
23.2. Registered Leasehold Mortgagee.
A Leasehold Mortgagee may provide a written registration
notice to the Gaming Board. The registration notice shall advise the Gaming
Board of the existence of the Leasehold Mortgage, the name of the Leasehold
Mortgagee and the name and address of not more than four persons to whom Notices
of default from the Gaming Board should be sent. Upon delivery of the
registration notice, the Leasehold Mortgagee shall be a "Registered Leasehold
Mortgagee."
23.3. Notices to Registered Leasehold Mortgagees. The Gaming Board
shall send to each Registered Leasehold Mortgagee a copy of each written Notice
of default given by the Gaming Board to the Casino Operator. The copy of the
Notice of default shall be sent to each Registered Leasehold Mortgagee at the
same time the Notice of default is sent to the Casino Operator. The Gaming Board
shall also send each Registered Leasehold Mortgagee notice if the Casino
Operator has been notified by the Gaming Board that the Casino Operator is under
investigation for any act that may lead to suspension or revocation of the
authorization to engage in Gaming Operations pursuant to this Casino Operating
Contract.
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Notwithstanding the provisions of this Article XXIII - "Leasehold
Mortgagees", the Gaming Board has no obligation to provide Notice to any
Registered Leasehold Mortgagee prior to the termination of this Casino Operating
Contract under the provisions of Section 20.6(b) "Termination of Casino
Operating Contract," but shall provide reasonably prompt subsequent notification
pursuant to such Section of the occurrence of any Termination Event.
23.4. Opportunity to Cure. With respect to any default with respect to
which the Casino Operator is granted cure rights pursuant to this Casino
Operating Contract, a Leasehold Mortgagee shall have the right to cure or cause
to be cured any such default specified by the Gaming Board in its Notice of
default. A Leasehold Mortgagee shall have a period of up to forty-five (45)
Business Days after the expiration of the Casino Operator's cure period within
which to remedy such a default but in no event shall such cure period extend
beyond the occurrence of a Termination Event. The Gaming Board shall have the
right at any time after the expiration of the cure period afforded to the Casino
Operator to appoint a fiscal agent who shall be authorized to pay to the Gaming
Board all current and past due Louisiana Gross Gaming Revenue Share Payments and
take any other action as may be provided by Rules and Regulations, including
providing the protection of the rights of holders of security interests in
property owned by the Casino Operator in accordance with R.S. 27:275. The
Leasehold Mortgagees have only the right, but not the obligation, to cure a
default. Except as provided in Section 20.6(b) - "Termination of Casino
Operating Contract," this Casino Operating Contract shall not terminate as a
result of an Event of Default until after the Gaming Board has provided Notice
of its intent to terminate to each Registered Leasehold
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Mortgagee and the passage of forty-five (45) Business Days during which the
Leasehold Mortgagees may seek the appointment of a receiver in accordance with
terms of this Casino Operating Contract, provided the Gaming Board shall have
the right during this forty-five (45) Business Day period to appoint a fiscal
agent who shall be authorized to pay to the Gaming Board all current and past
due Louisiana Gross Gaming Revenue Share Payments and to take any other action
as may be provided by Rules and Regulations. Nothing contained in this Article
XXIII - "Leasehold Mortgagees" is intended to, nor shall it provide any
Leasehold Mortgagee or any Person with any right to cure any default or Event of
Default which also constitutes a Termination Event (as provided in Section
20.6(b) - "Termination of Casino Operating Contract").
23.5. Revocation/Suspension Proceedings. The Gaming Board shall provide
notice to the Registered Leasehold Mortgagees of any administrative hearing or
other public proceeding that might lead to a suspension or revocation of the
authorization to engage in Gaming Operations pursuant to this Casino Operating
Contract, and each Leasehold Mortgagee shall have the right to participate in
any such hearing or proceeding, including any appeal from any such proceeding.
23.6. Receivership/Foreclosure Proceedings. The Gaming Board shall
maintain a list of at least three Persons who meet the Suitability Requirements
to operate the Official Gaming Establishment in the event of a receivership.
This list shall be known as the "Receivership List."
(a) Receivership Proceeding - Gaming Board as Nominal Defendant.
If a Leasehold Mortgagee wishes to continue the operation of the Official Gaming
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Establishment during and after the filing of a suit to enforce its security
interest, the Leasehold Mortgagee shall name the Gaming Board as a nominal
defendant in such suit and request the appointment of a receiver from among the
persons on the Receivership List. Upon proof of the Casino Operator's default
under the Leasehold Mortgage and the Leasehold Mortgagee's right to enforce the
Leasehold Mortgage, the court shall appoint a receiver from the Receivership
List.
(b) Bond. Upon the appointment of a receiver by the court, such
receiver shall be required to furnish a fidelity bond in favor of the Leasehold
Mortgagee, the Casino Operator and the Gaming Board in an amount set by the
court after consultation with the Gaming Board, the Leasehold Mortgagee and the
Casino Operator. No cause or right of action shall exist to test the sufficiency
of the Bond.
(c) Provisional Contract. Upon the appointment and posting of a
bond by the receiver, the receiver so appointed shall be issued a one-time,
nonrenewable provisional contract by the Gaming Board to continue Gaming
Operations until the receivership is terminated for any reason, including, but
not limited to, the following: (i) the Transfer of the Casino to a duly approved
or authorized Person or pursuant to Section 23.6(g) - "Transfers in Connection
with Foreclosures," (ii) the payment in full or release (including without
limitation unpaid interest) of all obligations due to the Leasehold Mortgagee,
(iii) an agreement for the termination of the receivership signed by the
Leasehold Mortgagee and the Casino Operator, and approved by the Gaming Board
and the court, (iv) the lapse of five (5) years from the date of the initial
appointment of the receiver, or (v) notice to the Gaming Board and the court
from the Leasehold Mortgagee that provoked the receivership of its
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intention to withdraw its financial support of the Receivership at a specified
time not less than ninety (90) Days from the date of notice. In any proceeding
thereafter by the court or by any parties to the suit other than the Gaming
Board to remove the receiver for cause or to appoint a successor receiver in the
event of death, disability or resignation of the receiver, the Gaming Board
shall be served with a notice of such action and shall have standing to contest
or concur in the action to remove the receiver or to appoint a successor
receiver. No Person may be appointed as a successor receiver unless such Person
is named in the Receivership List.
(d) Operations by Receiver/Accounting. The actions of the receiver
during the term of the receivership shall be governed by and taken in strict
accordance with the Rules and Regulations. The receiver shall be required to
account to both the court and, the Gaming Board during the receiver's tenure at
such times and in such detail as may be required by the Rules and Regulations.
Fees of the receiver and the authority for expenditures of the receiver shall be
established by the Rules and Regulations and shall be considered costs of
operations of the Official Gaming Establishment.
(e) Cost of Receivership. The Leasehold Mortgagee that provoked
the appointment of a receiver shall be required to pay the cost of the
receiver's bond and the cost of operating the Official Gaming Establishment
during the term of the receivership to the extent that such costs exceed
available revenues in accordance with the Rules and Regulations; provided that
if the Leasehold Mortgagee that provoked the receivership provides notice to the
Gaming Board of its intention to withdraw financial support of the receivership
at a specified time not less than ninety (90) days from the date of such notice,
the Leasehold Mortgagee shall not be responsible for any costs or expenses of
the receivership
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after the date specified in the notice, except reasonable costs and fees of the
receiver in concluding the receivership and the costs of a final accounting.
(f) Effect of Termination of Receivership. If the receivership is
terminated as a result of (i) the payment in full of all obligations due to the
Leasehold Mortgagee or (ii) an agreement for termination of the receivership
(which may include a Transfer of the property as provided in Section 23.6(g) -
"Transfers in Connection with Foreclosures," including this Casino Operating
Contract, subject to the Gaming Board's Approval) signed by the Leasehold
Mortgagee and the Casino Operator and approved by the Gaming Board and the
court, the Casino Operator may simultaneously be restored to the same position
as if the receivership had never occurred. If the receivership is terminated due
to (i) the Transfer of the property subject to the receivership and/or this
Casino Operator Contract to a duly approved or authorized Person, (ii) as a
result of the lapse of five (5) years from the date of the initial appointment
of the receiver or (iii) by the withdrawal of financial support of the
receivership by the Leasehold Mortgagee, the authority of the Casino Operator
may be revoked by the Gaming Board, and if this Casino Operating Contract has
not been sold or transferred to a duly approved or authorized person this Casino
Operating Contract may be terminated and the right to operate the Official
Gaming Establishment may be rebid.
(g) Transfers in Connection with Foreclosures. Subject to
approvals from the Gaming Board required under the Casino Act and the Rules and
Regulations, the following Transfers shall be permitted: (i) any Transfer of the
Casino to a Leasehold Mortgagee or its nominee by foreclosure or deed in lieu of
foreclosure, (ii) a Transfer by such Leasehold Mortgagee or such nominee to a
third party following the foreclosure by such
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Leasehold Mortgagee or deed in lieu of foreclosure to such Leasehold Mortgagee
or nominee, or (iii) a Transfer to a third party pursuant to a foreclosure sale
upon a foreclosure by a Leasehold Mortgagee. In connection with any transfer of
the Casino pursuant to clauses (i), (ii), and (iii) of the preceding sentence,
this Casino Operating Contract (subject to Gaming Board approval) may be
Transferred to the party acquiring the Casino and subject to a prior finding of
Suitability of the transferee by the Gaming Board and compliance with the Casino
Act and the Rules and Regulations and compliance by the transferee with the
terms of this Casino Operating Contract, including, without limitation, the
requirement of providing a Minimum Payment Guaranty pursuant to Section 25.1 -
"Rolling Minimum Payment Guaranty." For purposes of this Section, a "nominee"
shall mean a Person who is designated by a Leasehold Mortgagee to act in place
of such Leasehold Mortgagee solely for the purpose of holding the interest
represented by such Leasehold Mortgagee's Leasehold Mortgage and performing the
obligations of Leasehold Mortgagee thereunder.
23.7. Effect of Appointment of Receiver. Upon the appointment of a
receiver and posting of bond, the authority of the Casino Operator shall be
conditioned, subject to full reinstatement by the Gaming Board according to the
Rules and Regulations. If the Casino Operator is operating pursuant to a
contract with the Gaming Board, the receiver shall be considered to have all of
the rights and obligations of the contract formerly held by the Casino Operator.
23.8. No Effect On Suit to Enforce. The appointment of a receiver shall
have no effect on the subsequent prosecution of the action to enforce the
security interest of a Leasehold Mortgagee.
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23.9. Third Party Beneficiaries. A Leasehold Mortgagee shall have the
right to rely on and shall be a third party beneficiary of the provisions of
this Article XXIII - "Leasehold Mortgagees."
23.10. No Lien on this Casino Operating Contract. The Casino Operator
shall not pledge, hypothecate or ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest in or
otherwise encumber this Casino Operating Contract, and each Leasehold Mortgage
shall contain a provision expressly excluding this Casino Operating Contract
from any pledge, lien, security interest, hypothecation or encumbrance granted
by such Leasehold Mortgage.
ARTICLE XXIV. SUITABILITY OF OTHERS
24.1. Suitability Requirements. The Casino Act provides the Gaming
Board with discretion to require that certain Persons in addition to the Casino
Operator satisfy the Suitability Requirements. These Persons include the Casino
Manager, certain holders of debt and/or equity interests in one or more of the
Casino Operator, and its Affiliates and any other Person who, in the opinion of
the Gaming Board has the ability to exercise a significant influence over the
activities of the Casino Operator. If the Gaming Board determines that a Person
required to be found Suitable is not Suitable, the Gaming Board shall notify the
Casino Operator of this determination and the Casino Operator shall take the
actions specified below.
24.2. Unsuitability - Casino Manager. If the Gaming Board makes a final
determination that the Casino Manager is not Suitable after providing the Casino
Manager with notice and an opportunity for a hearing and after exhaustion of all
administrative and judicial rights, the Casino Operator shall terminate the
Casino Management Contract within
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thirty (30) Business Days (or such shorter period of time as ordered by the
Gaming Board) after receipt of notice by the Casino Operator of the Gaming
Board's final determination on Suitability.
24.3. Unsuitability - Holders of Equity or Debt Interests. If the
Gaming Board makes a final determination that a holder of a debt or equity
interest in the Casino Operator, or any of its Affiliates is not Suitable, the
Casino Operator (or an Affiliate of the Casino Operator, as the case may be)
shall upon receipt of Notice from the Gaming Board (a) undertake and prosecute
diligent good faith efforts to cause the disqualified holder to dispose of his
interests, and (b) insulate the disqualified holder from the Casino Operator by
ensuring that the disqualified holder: (i) does not receive dividends or
interest on the securities of the Casino Operator or, if applicable, its
Affiliates; (ii) does not exercise, directly or indirectly, including through a
trustee or nominee, any right conferred by the securities of the Casino Operator
or, if applicable, its Affiliates; (iii) does not receive any remuneration from
the Casino Operator or its Affiliates; (iv) does not receive any economic
benefit from the Casino Operator or its Affiliates; and (v) subject to the
disposition requirements of this Section 24.3 "Unsuitability - Holders of Equity
or Debt Interests" does not continue in an ownership or economic interest in the
Casino Operator or, if applicable, remain as a manager, officer, director of the
Casino Operator or its intermediary holding companies, as the case may be.
24.4. Safe Harbor. If at any time the Gaming Board finds that a holder
of a debt or equity interest in the Casino Operator, or its respective
Affiliates, that is required to be and remain Suitable has failed to demonstrate
Suitability, the Gaming Board may, consistent with the Casino Act and this
Casino Operating Contract, take any action that the Gaming Board
147
deems necessary to protect the public interest. Provided however, if a holder of
a debt or equity interest in the Casino Operator or its Affiliates associated
with the Casino Operator has failed to demonstrate Suitability, the Gaming Board
shall take no action to declare the Casino Operator or its Affiliate, as the
case may be, not Suitable based upon such finding, if the affected Casino
Operator or its Affiliate takes immediate good-faith action (including the
prosecution of all legal remedies) and complies with any order of the Gaming
Board to cause such Person failing to demonstrate Suitability to dispose of such
Person's interest in the affected Casino Operator or Affiliate, and, that,
pending such disposition such affected Casino Operator, or Affiliate, from the
date of Notice from the Gaming Board of a finding of failure to demonstrate
Suitability, ensures that the Person failing to demonstrate Suitability:
(i) does not receive dividends or interest on the securities of
the Casino Operator or Affiliate;
(ii) does not exercise, directly or indirectly, including through
a trustee or nominee, any right conferred by the securities of the Casino
Operator or its Affiliates;
(iii) does not receive any remuneration from the Casino Operator
or Affiliate;
(iv) does not receive any economic benefit from Casino Operator or
Affiliate;
(v) subject to the disposition requirements of this Section, does
not continue in an ownership or economic interest in the Casino Operator or
Affiliate or to remain
148
as a manager, officer, director, employee, consultant or agent of the Casino
Operator or Affiliate.
Nothing contained in this Section 24.4 - "Safe Harbor" shall prevent the Gaming
Board from taking any action against the Casino Operator if the Casino Manager
fails to be or to remain Suitable. Moreover, nothing contained in this Section
shall prevent the Gaming Board from taking regulatory action against the Casino
Manager, Casino Operator or its Affiliate as the case may be, if the Casino
Operator, Casino Manager or Affiliate, as the case may be, (i) had actual or
constructive knowledge or should have had knowledge of the facts that are the
basis of the Gaming Board regulatory action and failed to take appropriate
action or (ii) is so tainted by such Person failing to demonstrate Suitability
so as to affect the suitability of the Casino Operator, the Casino Manager or
Affiliates under the standards of the Casino Act or the Rules and Regulations,
or (iii) cannot meet the Suitability standards contained in the Casino Act and
the Rules and Regulations.
ARTICLE XXV. GUARANTEES AND ASSURANCES
25.1. Rolling Minimum Payment Guaranty. For each Fiscal Year during the
Term, the Casino Operator shall cause to be provided to the Gaming Board a
letter of credit, surety arrangement or guaranty of the Minimum Payment that
shall as to form and substance be subject to Approval by the Gaming Board (the
"Minimum Payment Guaranty"). The Minimum Payment Guaranty shall be (i) for the
first three hundred sixty five (365) days (three hundred sixty-six (366) days if
a leap year) including and after the Casino Opening Date, substantially in the
form of the Initial Unconditional Minimum Payment Guaranty attached hereto as
Exhibit H and by this reference incorporated herein, and for subsequent Fiscal
149
Years, substantially in the form of the Unconditional Guaranty for Fiscal Year
Ending March 31, ____ attached hereto as Exhibit I and by this reference
incorporated herein, (ii) in the form of a commercial letter of credit in form
and substance acceptable to the Gaming Board with the sole drawing condition to
be notice from the Gaming Board that a Minimum Payment Default has occurred, or
(iii) such other form as may be approved by the Gaming Board. The Minimum
Payment Guaranty may be provided by (i) HET and ▇▇▇▇▇▇'▇ Operating, pursuant to
Section 25.4 - "Matters Relating to Minimum Payment Guaranty" and subject to the
continuing Suitability requirements (financial and otherwise) of the Casino Act
and the Rules and Regulations or (ii) any Suitable Lender or Lenders or others
as Approved by the Gaming Board and which have sufficient resources to provide
the Minimum Payment Guaranty (the "Minimum Payment Guarantor"). The Casino
Operator shall provide an Initial Unconditional Minimum Payment Guaranty in the
form of Exhibit H attached hereto to the Gaming Board on the Plan Effective
Date. The Casino Operator agrees to provide the Gaming Board Notice and a copy
of any communication from the then Minimum Payment Guarantor that it may not or
will not provide the required Minimum Payment Guaranty to the Gaming Board in
the subsequent Fiscal Year concurrent with any public announcement of such
event. In addition, the Casino Operator shall provide further Notice to the
Gaming Board in the event it has not procured the required Minimum Payment
Guaranty for the next Fiscal Year at least thirty (30) Days prior to the first
Day of each Fiscal Year; provided, however, that the Gaming Board agrees that
the Casino Operator shall have until the last Day of the Fiscal Year to provide
the required Minimum Payment Guaranty to the Gaming Board for the next Fiscal
Year. The failure of the Casino Operator to provide the required Minimum Payment
Guaranty to the
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Gaming Board at least one day prior to the first Day of each and
every Fiscal Year shall be an Event of Default and a Termination Event,
resulting in the immediate termination of this Casino Operating Contract in
accordance with Section 20.6(b) "Termination of Casino Operating Contract" with
no right of the Casino Operator or any Person to cure. In no event shall the
Minimum Payment Guarantor be liable to the State and/or the Gaming Board for any
amount in excess of the difference between the Minimum Payment for any Fiscal
Year and the total of the Louisiana Gross Gaming Revenue Share Payments which
have been paid to the Gaming Board for that one Fiscal Year in which there is a
Minimum Payment Default or be responsible for any Daily Payments in any Fiscal
Year following a Fiscal Year in which there is a Minimum Payment Default except
as to the Minimum Payment Guarantor providing the Initial Unconditional Minimum
Payment Guaranty, who shall be obligated as provided in the Minimum Payment
Guaranty attached as Exhibit H hereto.
25.2. Completion Guarantee. The Casino Operator shall cause HET and its
wholly-owned subsidiary ▇▇▇▇▇▇'▇ Operating to provide a solidary guarantee to
the Gaming Board to complete the construction, equip and furnish the Casino for
opening of the Casino, and open the Casino for Gaming Operations, and pay all
costs and expenses related thereto, so long as, with respect to opening the
Casino, all necessary regulatory approvals from the LGCB or other State
regulatory authorities have been received, provided that timely receipt of any
such approvals has been diligently pursued by or on behalf of the Casino
Operator, (the "Completion Guarantee") as required by the terms of this Casino
Operating Contract and in the form of Exhibit "B" - "Form of Completion
Guarantee," attached hereto and by this reference incorporated herein. The
Casino Operator shall also post a commercial surety bond
151
issued by a qualified surety company to assure completion of the Casino, and the
payment of all costs and expenses related thereto, in the form of Exhibit "C" -
"Form of Performance Bond" attached hereto and incorporated herein. Payment of
reimbursement obligations with respect to the Completion Guarantee may be made
pursuant to that certain Amended and Restated Completion Loan Agreement, by and
among HET, ▇▇▇▇▇▇'▇ Operating and the Casino Operator. If, before completion of
construction of the Casino, either (a) the financial condition of HET or
▇▇▇▇▇▇'▇ Operating, in the reasonable judgment of the Gaming Board, deteriorates
to such an extent that their ability timely to perform under the Completion
Guarantee is materially impaired; or (b) HET or ▇▇▇▇▇▇'▇ Operating contests the
validity or enforceability, or fails timely to comply with the terms, of the
Completion Guarantee and if, in either such case, the Casino Operator fails to
provide, within thirty (30) days after receipt of notice and demand from the
Gaming Board, a substitute Completion Guarantee reasonably acceptable to the
Gaming Board, the Gaming Board may require the Casino to substitute a
guarantor(s) reasonably acceptable to the Gaming Board and the failure to do so
shall constitute an Event of Default.
25.3. Additional Guarantees and Assurances. The Casino Operator, in
order to guarantee successful completion of and compliance with this Casino
Operating Contract or such other projects that are regulated by the Gaming
Board, shall:
(a) provide the Completion Guarantee and surety bond as required
in Section 25.2 - "Completion Guarantee";
(b) provide the Evidence of Title required in Section 4.2(e) -
"Evidence of Title to Casino";
152
(c) perform all of its obligations under the Essential Agreements
as required in Section 9.21 - "Essential Agreements";
(d) maintain Financial Stability as required in Section 9.5 -
"Financial Stability";
(e) maintain the Insurance Coverages required by Article XIV -
"Insurance," including Business Interruption Insurance as required in Section
14.8 - "Business Interruption Insurance";
(f) maintain a capital replacement fund as required in Section
13.7 - "Capital Replacement Fund";
25.4. Matters Relating to Minimum Payment Guaranty
(a) Agreement. Concurrently with the execution of this Casino
Operating Contract, (i) HET and ▇▇▇▇▇▇'▇ Operating have provided the Gaming
Board that certain Initial Unconditional Minimum Payment Guaranty in the form of
Exhibit H attached hereto, and (ii) the Casino Operator, HET and ▇▇▇▇▇▇'▇
Operating have entered into that certain HET/JCC Agreement (the "HET/JCC
Agreement") attached hereto as Exhibit G and by this reference incorporated
herein, to which neither the State nor the Gaming Board is a party.
(b) No Third Party Beneficiaries. The Gaming Board hereby
acknowledges that there are no third party beneficiaries to the HET/JCC
Agreement.
(c) Acknowledgment and Disclosure. The State and the Gaming Board
hereby acknowledge and agree that in connection with the HET/JCC Agreement,
neither HET nor ▇▇▇▇▇▇'▇ Operating has any legal obligation or duty, express or
implied, to the State or the Gaming Board to provide any renewal guaranty beyond
any Fiscal Year in which an HET
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Guaranty is provided in writing. In connection therewith, the State and the
Gaming Board hereby acknowledge that HET and ▇▇▇▇▇▇'▇ Operating have informed
them and they agree that they may not infer or assume that (i) HET and ▇▇▇▇▇▇'▇
Operating will renew any HET Guaranty or the HET/JCC Agreement; or (ii) HET and
▇▇▇▇▇▇'▇ Operating will, other than at their sole discretion, determine whether
to renew any HET Guaranty or HET/JCC Agreement notwithstanding that HET and
▇▇▇▇▇▇'▇ Operating are involved in a number of different capacities in
connection with the reorganization of HJC, the governance of the Casino Operator
and JCC Holding, and the operation of the Casino; or (iii) any projections
and/or feasibility study set forth in the Plan and Disclosure Statement
circulated therewith constitute any representation or warranty upon which the
Gaming Board or the State may rely nor is it intended that any other Person may
rely thereon.
(d) Reliance. The State and the Gaming Board understand and
acknowledge that HET and ▇▇▇▇▇▇'▇ Operating are entering into the HET/JCC
Agreement and providing any HET Guaranty in reliance on Section 20.6(b) -
"Termination of Casino Operating Contract" and this Section 25.4 - "Matters
Relating to Minimum Payment Guaranty." The State, the Gaming Board and JCC agree
that the provisions of Section 20.6(b) - "Termination of Casino Operating
Contract" and this Section 25.4 - "Matters Relating to Minimum Payment Guaranty"
cannot be amended or modified without the written consent of HET and ▇▇▇▇▇▇'▇
Operating so long as any Minimum Payment Guaranty provided by HET and ▇▇▇▇▇▇'▇
Operating remains in effect, and if any such provisions are amended or modified
and not consented to by HET and ▇▇▇▇▇▇'▇ Operating, no such amendment or
modification shall be effective as against HET or ▇▇▇▇▇▇'▇ Operating.
154
ARTICLE XXVI. TRANSFER RESTRICTIONS
26.1. Casino Operator Transfers - Casino Operating Contract. The Casino
Operator shall not Transfer this Casino Operating Contract, or any interest
herein or subcontract the performance of any of the Casino Operator's duties or
obligations hereunder to any Person without first obtaining the Approval of the
Gaming Board.
26.2. Casino Operator Transfers - Essential Agreements. Except a
Transfer to a Leasehold Mortgagee in compliance with the Casino Lease or in
connection with the Initial Plan Financing, or a Transfer pursuant to Section
23.6(g) - "Transfer in Connection with Foreclosure," the Casino Operator shall
not voluntarily or involuntarily Transfer the Casino Lease, the General
Development Agreement, or any interest therein to any Person without first
obtaining the Approval of the Gaming Board.
26.3. Other Actions or Transfers Requiring Approval. The Casino
Operator shall not amend its Governance Documents and no Person shall Transfer
any direct interest in the Casino Operator to any Person without first obtaining
the Approval of the Gaming Board. The Persons who are shareholders of any
company holding a direct interest in the Casino Operator shall not Transfer any
interest in an Affiliate of the Casino Operator that results in a change of
Control of the Casino Operator without first obtaining the Approval of the
Gaming Board. This Section is not intended to restrict the transfer of publicly
traded securities, provided that the Gaming Board maintains the power to require
the holder of any such securities subsequently to be found Suitable.
26.4. Conditions to Approval of Proposed Transfer. The Gaming Board may
Approve the sale, transfer, or assignment of the Casino Operating Contract, or
an interest
155
therein, or may grant such Approval subject to the conditions imposed by the
Gaming Board or by applicable law.
26.5. Five Percent Accumulation. Pursuant to the terms of the Casino
Act, any Person acquiring five percent (5%) or more direct economic interest in
the Casino Operator is required to obtain the Approval of the Gaming Board prior
to the acquisition. The Casino Operator agrees to facilitate the Gaming Board's
enforcement of the restriction by providing written Notice to the Gaming Board
of an accumulation requiring the prior Approval of the Gaming Board within two
(2) Business Days after the Casino Operator obtains knowledge of the
accumulation. The Casino Operator acknowledges the authority of the Gaming Board
to take appropriate action against a Person who accumulates without first
obtaining the required Approval of the Gaming Board. However, an accumulation
without the required prior Approval of the Gaming Board shall not be a default
by the Casino Operator under this Casino Operating Contract if, upon receipt of
Notice from the Gaming Board, the Casino Operator (or an Affiliate of the Casino
Operator) (a) undertakes and prosecutes diligent good faith efforts to cause the
disqualified Person to dispose of the interest, and (b) insulates the
disqualified Person by insuring that the disqualified Person: (i) does not
receive dividends or interest on the securities of the Casino Operator or, if
applicable, its Affiliates, (ii) does not exercise directly or indirectly,
including through a trustee or nominee, any right conferred by the securities of
the Casino Operator, or, if applicable, its Affiliates; (iii) does not receive
any remuneration from the Casino Operator or if applicable its Affiliates; (iv)
does not receive any economic benefit from the Casino Operator or if applicable
its Affiliates; (v) subject to the disposition requirement of this Section 26.5
- "Five Percent Accumulation", does not continue
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in an ownership or economic interest in the Casino Operator or, if applicable,
its affiliates, and (vi) does not remain as a manager, officer, director of the
Casino Operator, or if applicable its Affiliates.
26.6. Transfer Restriction Legend. All instruments evidencing ownership
interests in the Casino Operator or pursuant to which the ownership interest is
issued shall contain a statement in form acceptable to the Gaming Board setting
forth the transfer restrictions imposed by R.S. 27:236, this Casino Operating
Contract and the Rules and Regulations.
26.7. Notice and Cure Period; Safe Harbor. Before revoking this Casino
Operating Contract for a violation of this Article XXVI "Transfer Restrictions,"
the Gaming Board shall give Notice and a reasonable opportunity to cure the
violation to the Casino Operator. With respect to a Transfer by anyone other
than the Casino Operator in violation of the terms of this Article XXVI -
"Transfer Restrictions," the Transfer shall not be a default by the Casino
Operator under this Casino Operating Contract if, upon receipt of Notice from
the Gaming Board, the Casino Operator (or an Affiliate of the Casino Operator)
(a) undertakes and prosecutes diligent good faith efforts to cause the
disqualified Person to dispose of the interest, and (b) insulates the
disqualified Person by insuring that the disqualified Person: (i) does not
receive dividends or interest on the securities of the Casino Operator or, if
applicable, its Affiliates, (ii) does not exercise directly or indirectly,
including through a trustee or nominee, any right conferred by the securities of
the Casino Operator, or, if applicable, its Affiliates; (iii) does not receive
any remuneration from the Casino Operator or if applicable its Affiliates; (iv)
does not receive any economic benefit from the Casino Operator or if applicable
its Affiliates; (v) subject to the disposition requirement of this Section
26.7.
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"Notice and Cure Period; Safe Harbor", does not continue in an ownership or
economic interest in the Casino Operator or, if applicable, its affiliates, and
(vi) does not remain as a manager, officer, director of the Casino Operator, or
if applicable its Affiliates.
ARTICLE XXVII. NOTICES
27.1. Manner of Giving Notice. All notices required or permitted to be
given under this Casino Operating Contract shall be in writing and shall be
deemed given or delivered when delivered by hand or three (3) Business Days
after mailing, postage prepaid, by certified or registered mail, return receipt
requested to the parties at the following addresses:
Casino Operator:
Jazz Casino Company, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
with a copy to: ▇▇▇▇▇▇'▇ New Orleans Management Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Gaming Board: Louisiana Gaming Control Board
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman of Louisiana Gaming Control Board
with a copy to: Attorney General
State of ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: First Assistant Attorney General
and Attorney General
State of ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director, Gaming Division
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ARTICLE XXVIII. MISCELLANEOUS
28.1. No Joint Venture or Partnership. Under no circumstances shall
this Casino Operating Contract or the cooperative endeavor aspects of the Casino
Act or this Casino Operating Contract or any action taken by the parties in
furtherance of this Casino Operating Contract be deemed to create either a joint
venture or a partnership between the Gaming Board and the Casino Operator such
that either shall be deemed to have the duties and obligations of a partner or
joint venturer toward the other or to authorize either to act for or bind the
other, the same being expressly negated.
28.2. No Waiver. The receipt by the Gaming Board of any payment from
the Casino Operator with knowledge of the breach of any term hereof shall not be
deemed a waiver of such breach. No provision of this Casino Operating Contract
shall be deemed to have been waived by the Gaming Board unless the waiver is in
writing and signed by a duly authorized representative of the Gaming Board. No
payment by the Casino Operator or receipt by the Gaming Board of any amount less
than the payment actually due shall be deemed to be other than on account of the
earliest payment due. No endorsement or statement on any check or letter
accompanying any check shall be deemed to be an accord and satisfaction, and the
Gaming Board may accept any check or payment without prejudice to the Gaming
Board's rights to recover the balance of such payment or to pursue any other
remedy available to the Gaming Board.
28.3. Partial Invalidity. If any term of this Casino Operating Contract
or the application thereto to any Person or circumstance, shall at any time or
to any extent, be invalid or unenforceable, the remainder of this Casino
Operating Contract, or the application of such
159
term of this Casino Operating Contract to Persons or circumstances other than
those as to which the same has been held invalid or unenforceable, shall not be
affected thereby, and each term of this Casino Operating Contract shall be valid
and be enforced to the fullest extent permitted by law.
28.4. Responsibility for Costs and Risks of Operations. The Casino
Operator shall bear and pay all costs and assume all risks of doing work and
carrying on operations permitted under this Casino Operating Contract and the
prevailing party in any judicial proceeding shall have the right to recover from
the other party, all costs, reasonable attorney's fees and other expenses
incurred to enforce, secure or protect its rights under this Casino Operating
Contract, whether by litigation or settlement.
28.5. Applicable Law. This Casino Operating Contract shall be governed,
interpreted and enforced in accordance with Louisiana law.
28.6. Venue, Personal Jurisdiction and Forum Selection. The Casino
Operator, Casino Manager and JCC Holding hereby submit to and will have the
Minimum Payment Guarantor submit to the jurisdiction of the State and the courts
thereof and to the jurisdiction of the 19th Judicial District Court in and for
East Baton Rouge Parish ("19th JDC") for purposes of any suit, action or other
proceeding arising out of or relating to this Casino Operating Contract and
agrees not to assert by way of motion as a defense or otherwise that such suit
action or other proceeding is brought in an inconvenient forum or that the venue
of such suit action or other proceeding is improper or that the subject matter
thereof may not be enforced in or by such court or assert that any suit or
action filed in the 19th JDC may be removed to Federal Court, and the Casino
Operator, Casino Manager and JCC Holding agree
160
that the 19th JDC shall have the exclusive jurisdiction for purposes of any
suit, action or other proceeding brought by any of them relating to or arising
out of this Casino Operating Contract.
If at any time during the Term, the Casino Operator, JCC Holding
or the Casino Manager is not a resident of the State or has no officer,
director, employee or agent available for service of process as a resident of
the State, or if any permitted Transferee shall be a foreign Person having no
officer, director, employee or agent available for service of process in the
State, the Casino Operator, JCC Holding and the Casino Manager and each
permitted Transferee hereby designates the Secretary of State of Louisiana as
its agent for service of process in any suit, action or proceeding involving the
Gaming Board or arising out of or relating to this Casino Operating Contract and
such service shall be made as provided by Louisiana law for service on an
insurance company through the Secretary of State.
28.7. Compliance. Any condition, covenant, obligation, requirement or
term hereof that requires the Casino Operator to take action or to refrain from
taking action shall be deemed to require the Casino Operator to cause the action
to be taken or to cause the action not to be taken, as the case may be.
28.8. Captions. The captions in this Casino Operating Contract are
solely for convenience of reference and shall not affect the interpretation of
this Casino Operating Contract.
28.9. Number and Gender. All words used in this Casino Operating
Contract, regardless of the number or gender in which the words are used shall
be deemed to include the other number and each other gender.
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28.10. No Drafting Presumptions. The parties agree and acknowledge that
each has had significant input into the drafting of this Casino Operating
Contract. Consequently, and notwithstanding the provisions of Article 2056 or
2057 of the Louisiana Civil Code to the contrary, nothing contained in this
Casino Operating Contract shall be presumptively construed against a party on
the basis of any drafting responsibility. Further, the parties agree and
acknowledge that the drafting of this Casino Operating Contract was facilitated
and expedited by the specific undertaking of the parties and their respective
counsel, and in order to induce each other to make reasonable drafting
accommodations, that no revision (by insertion or deletion) to any draft of this
Casino Operating Contract either shall constitute or ever be used by or on
behalf of any of them as an interpretive aid or as the basis of any contention
to the effect that any such deletion or insertion or change from prior drafts
proves facts or circumstances concerning the intent or agreement of a party in a
subsequent draft or drafts.
28.11. Prior Agreements; Amendment. This Casino Operating Contract
contains the entire agreement between the parties with respect to the subject
matter described in this Casino Operating Contract. This Casino Operating
Contract supersedes all prior and contemporaneous agreements, whether written or
oral, between the parties relating or pertaining to the subject matter of this
Casino Operating Contract. This Casino Operating Contract may be amended or
modified only by an agreement in writing signed by both the Gaming Board and the
Casino Operator.
28.12. Intervention by Casino Manager. The Casino Manager intervenes
herein for the sole purpose of acknowledging the terms hereof applicable to the
Casino Manager. This
162
intervention is not a guarantee of the Casino Operator's financial obligations
under this Casino Operating Contract.
28.13. Time of the Essence. Time is of the essence of this Casino
Operating Contract. No Notice, demand or putting in default shall be required
except as herein expressly provided for.
28.14. Successors and Assigns. This Casino Operating Contract shall be
binding on and enforceable against the parties and their respective successors
and assigns.
28.15. No Third Party Beneficiary. Except as otherwise provided in
Article XXIII - "Leasehold Mortgagees" or Section 25.4(d) - "Reliance," there
shall be no third party beneficiaries of this Casino Operating Contract.
28.16. Assignment. This Amended and Renegotiated Casino Operating
Contract is hereby assigned to JCC, as successor to HJC, as set forth in the
Plan. Pursuant to R.S. 27:236(B) and LAC 42:IX 2901 et seq., the Gaming Board
Approves such assignment by HJC to JCC. JCC hereby undertakes the obligations of
the Casino Operator under this Amended and Renegotiated Casino Operating
Contract.
28.17. No Novation. This Casino Operating Contract is an amendment and
renegotiation of the Initial Casino Operating Contract and is not and shall not
be construed as a novation of the Initial Casino Operating Contract.
28.18. Counterparts. This Casino Operating Contract may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an orginal,
but all of which shall together constitute one and the same instrument.
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S-4 The parties have signed this Casino Operating Contract on the dates
noted below their respective signatures.
The State of Louisiana by and through
the LOUISIANA GAMING CONTROL
BOARD
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Title: Chairman
-----------------------
Date: 10/30/98
-----------------------
S-1
▇▇▇▇▇▇'▇ JAZZ COMPANY,
a Louisiana general partnership
By: ▇▇▇▇▇▇'▇ NEW ORLEANS
INVESTMENT COMPANY,
a Nevada corporation, General Partner
Name: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇
-----------------------
Title: Vice President
-----------------------
Date: 10/30/98
-----------------------
By: NEW ORLEANS/LOUISANA
DEVELOPMENT CORPORAITON,
a Louisiana corporation, General Partner
Name: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Title: Vice President
-----------------------
Date: 10/30/98
-----------------------
By: GRAND PALAIS CASINO, INC.,
a Delaware corporation, General Partner
Name: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Title: Chairman
-----------------------
Date: 10/30/98
-----------------------
S-2
JAZZ CASINO COMPANY L.L.C.,
Louisiana limited liability company
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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Date: 10/30/98
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INTERVENOR:
▇▇▇▇▇▇'▇ NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇
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Title: Vice President
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Date: 10/30/98
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S-3
The undersigned hereby intervenes in said
Casino Operating Contract and agrees thereto
to the extent it is applicable to the undersigned.
JCC HOLDING COMPANY, a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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Date: 10/30/98
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S-4