Exhibit 10.2

EXECUTION VERSION

MANAGEMENT AGREEMENT

By and Between

The Quad Manager, LLC,

a Delaware limited liability company

as Manager,

3535 LV NewCo, LLC,

a Delaware limited liability company

as Owner,

and, solely for purposes of Article VII and Sections 16.1.2, 17.5.5, 17.7.3,
17.7.4, 17.7.5, 18.3 and 19.2,

Caesars License Company, LLC,

a Nevada limited liability company

Dated as of May 5, 2014

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TABLE OF CONTENTS

 

ARTICLE I.              DEFINITIONS AND EXHIBITS

     1   

1.1

 

Definitions

     1   

1.2

 

Exhibits

     2   

1.3

 

Structure of this Agreement

     2   

ARTICLE II.            APPOINTMENT/TERM

     2   

2.1

 

Grant of Authority

     2   

2.2

 

Limitations on Manager Authority

     8   

2.3

 

Other Operations of Manager and Owner

     10   

2.4

 

Term

     11   

ARTICLE III.           FEES AND EXPENSES

     11   

3.1

 

Management Fees

     11   

3.2

 

Centralized Services Charges

     12   

3.3

 

Reimbursable Expenses

     13   

3.4

 

Interest

     13   

3.5

 

Payment of Fees and Expenses

     13   

3.6

 

Application of Payments

     14   

3.7

 

Sales and Use Taxes

     14   

ARTICLE IV.           CENTRALIZED SERVICES

     14   

4.1

 

Centralized Services

     14   

4.2

 

Modification of Centralized Services

     15   

ARTICLE V.            OPERATION OF THE MANAGED FACILITIES

     16   

5.1

 

Annual Budget

     16   

5.2

 

Maintenance and Repair; Capital Improvements

     19   

5.3

 

Personnel

     20   

5.4

 

Bank Accounts

     21   

5.5

 

Funds for Operation of the Managed Facilities

     24   

5.6

 

Purchasing

     24   

5.7

 

Managed Facilities Parking

     25   

5.8

 

Use of Affiliates by Manager

     25   

5.9

 

Limitation on Manager’s Obligations

     26   

5.10

 

Third-Party Operated Areas

     27   

5.11

 

Amenities

     27   

ARTICLE VI.           APPROVALS

     27   

6.1

 

Gaming Approvals

     27   

ARTICLE VII.         PROPRIETARY RIGHTS

     28   

7.1

 

Service Mark Rights

     28   

7.2

 

Use of Service Mark Rights

     29   

7.3

 

Rights to Service Mark Rights

     29   

7.4

 

Proprietary Information and Systems of Manager or its Affiliates

     30   

 

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ARTICLE VIII.       CONFIDENTIALITY

     34   

8.1

 

Disclosure by Owner

     34   

8.2

 

Disclosure by Manager

     35   

8.3

 

Public Statements

     36   

8.4

 

Cumulative Remedies

     37   

8.5

 

Survival

     37   

ARTICLE IX.           MARKETING

     37   

9.1

 

Marketing

     37   

ARTICLE X.            BOOKS AND RECORDS

     38   

10.1

 

Maintenance of Books and Records

     38   

10.2

 

Monthly Financial Reports

     39   

10.3

 

Quarterly Financial Reports

     40   

10.4

 

Annual Financial Reports

     40   

10.5

 

Other Reports and Schedules

     41   

ARTICLE XI.           ASSIGNMENTS

     41   

11.1

 

Assignment by Owner

     41   

11.2

 

Assignment by Manager

     42   

11.3

 

Acknowledgement of Assignment

     44   

11.4

 

Approvals

     44   

ARTICLE XII.         INSURANCE, BONDING AND INDEMNIFICATION

     44   

12.1

 

Owner Insurance and Bonding Requirements

     44   

12.2

 

Waiver of Liability

     46   

12.3

 

Indemnification

     46   

ARTICLE XIII.       FINANCING; GROUND LEASE

     48   

13.1

 

Mortgages; Collateral Assignments; Non-Disturbance

     48   

13.2

 

Lender’s Right of Access

     48   

13.3

 

Disclosure of Mortgages

     49   

13.4

 

Estoppel Certificates

     49   

13.5

 

Amendments to Agreement

     49   

13.6

 

Owner’s Ground Lease Obligations

     49   

ARTICLE XIV.       BUSINESS INTERRUPTION

     50   

14.1

 

Business Interruption

     50   

14.2

 

Proceeds of Business Interruption Insurance

     50   

ARTICLE XV.         CASUALTY OR CONDEMNATION

     50   

15.1

 

Casualty

     50   

15.2

 

Condemnation

     51   

ARTICLE XVI.       DEFAULTS AND TERMINATIONS

     52   

16.1

 

Events of Default

     52   

16.2

 

Manager Termination Rights

     54   

16.3

 

Owner Termination Rights

     56   

16.4

 

Actions To Be Taken on Termination

     57   

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ARTICLE XVII.      DISPUTE RESOLUTION

     62   

17.1

 

Generally

     62   

17.2

 

Expert Resolution

     62   

17.3

 

Time Limit

     63   

17.4

 

Prevailing Party’s Expenses

     64   

17.5

 

WAIVERS

     64   

17.6

 

Survival and Severance

     65   

17.7

 

ACKNOWLEDGEMENTS

     65   

17.8

 

Survival

     67   

ARTICLE XVIII.    GAMING LAW PROVISIONS

     67   

18.1

 

Regulatory Matters; Initial Suitability Review

     67   

18.2

 

Licensing Event

     67   

18.3

 

Unlawful Payments

     68   

ARTICLE XIX.       GENERAL PROVISIONS

     68   

19.1

 

Governing Law

     68   

19.2

 

Construction of this Agreement

     68   

19.3

 

Limitation on Liabilities

     70   

19.4

 

Waivers

     71   

19.5

 

Notices

     72   

19.6

 

Party Representatives

     73   

19.7

 

No Recordation

     73   

19.8

 

Further Assurances

     73   

19.9

 

Relationship of the Parties

     73   

19.10

 

Force Majeure

     74   

19.11

 

Terms of Other Management Agreements

     74   

19.12

 

Compliance with Law

     74   

19.13

 

Centralized Services, Insurance Programs and Purchasing Arrangements Generally

     75   

19.14

 

Execution of Agreement

     75   

19.15

 

Renovation Management Services and Project Completion

     75   

EXHIBITS

 

Exhibit A    Premises Exhibit B    Definitions Exhibit C    Form of Summary
Annual Budget Exhibit D    Manager’s Proprietary Information and Systems Exhibit
E    Insurance Requirements Exhibit F    Service Marks Exhibit G    Total
Rewards System

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MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”) is dated as of May 5, 2014, and is
made and entered into by and between 3535 LV NewCo, LLC, a Delaware limited
liability company, or its successors and permitted assigns (“Owner”), The Quad
Manager, LLC, a Delaware limited liability company (“Manager”), and, solely for
purposes of Article VII and Sections 16.1.2, 17.5.5, 17.7.3, 17.7.4, 17.7.5,
18.3 and 19.2, Caesars License Company, LLC, a Nevada limited liability company
(“CLC”). Owner and Manager are sometimes referred to collectively in this
Agreement as the “Parties” and individually as a “Party.”

RECITALS

A. Owner has acquired or intends to acquire the real property interests more
fully described on Exhibit A attached hereto (the “Premises”) and intends to own
and operate a casino (the “Casino”) and related Facilities (as hereinafter
defined) thereon (such Casino and Facilities located at the Premises,
collectively, the “Managed Facilities”).

B. Manager is a wholly-owned indirect subsidiary of CEOC (as hereinafter
defined) with experience in operating gaming, hotel and related businesses.

C. Owner desires to engage Manager to manage and operate the Managed Facilities
under and utilizing the Brand (as hereinafter defined), and Manager desires to
manage and operate the Managed Facilities under and utilizing the Brand as an
agent of Owner from and after the Opening Date.

D. Simultaneously with or shortly after the effectiveness of this Agreement,
certain Affiliates of Owner (collectively, the “Other Owners”), on the one hand,
and certain Affiliates of Manager (collectively, the “Other Managers”), on the
other hand, shall enter into substantially similar agreements (collectively, the
“Affiliate Management Agreements”) with respect to the operation and management
by the Other Managers of the casino and hotel properties owned by the Other
Owners (such properties, collectively, the “Affiliate Managed Facilities”).

AGREEMENT

NOW, THEREFORE, in consideration of the recitals and covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the Parties, the Parties agree:

ARTICLE I.

DEFINITIONS AND EXHIBITS

 

  1.1 Definitions.

All capitalized terms used without definition in this Agreement shall have the
meanings assigned to such terms in Exhibit B attached hereto and by this
reference incorporated herein.

 

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  1.2 Exhibits.

The exhibits listed in the table of contents and attached hereto are
incorporated in, and deemed to be an integral part of, this Agreement.

 

  1.3 Structure of this Agreement.

Owner and Manager each acknowledge and agree that certain operating efficiencies
and value will be achieved as a result of Owner’s engagement of Manager
hereunder and the Other Owners’ engagement of the Other Managers pursuant to the
applicable Affiliate Management Agreements to operate and manage the Managed
Facilities and the Affiliate Managed Facilities that would not be possible to
achieve if Owner and the Other Owners were to engage unrelated managers to
operate each of the Managed Facilities and the Other Managed Facilities. The
Parties hereto acknowledge and agree that Owner would not enter into this
Agreement (and the Other Owners would not enter into the Affiliate Management
Agreements) absent the understanding and agreement of the Parties that the
entire management relationship, including (without limitation) the use of the
Service Mark Rights and the use of the Total Rewards System, together with the
other related intellectual property arrangements contemplated hereunder, form
part of a single integrated transaction. Accordingly, it is the express
intention of the Parties that each of the Transaction Agreement, the IP
Assignment (as defined in the Transaction Agreement), this Agreement and the
Affiliated Management Agreements form part of such single integrated
transaction.

ARTICLE II.

APPOINTMENT/TERM

 

  2.1 Grant of Authority.

2.1.1 Engagement of Manager. On and subject to the terms and conditions of this
Agreement, Owner hereby engages Manager, and Manager hereby agrees to be
engaged, as Owner’s agent and exclusive manager to Operate the Managed
Facilities during the Term. The Parties acknowledge that the scope of both
Manager’s authority and duties as the Manager to Operate the Managed Facilities
are limited to the authority and duties set forth in this Agreement. Owner and
Manager have elected to use the “Quad” brand (the “Brand”) in connection with
Manager’s Operation of the Casino; provided, that Owner shall have the right to,
subject to the receipt of any required approval from any Governmental Authority
and Manager’s consent (such consent not to be unreasonably withheld, conditioned
or delayed), change the Brand to any other brand, with the costs of such
rebranding borne by Owner. Manager shall reasonably assist Owner, at Owner’s
expense, in connection with any such re-branding. If the Brand is modified to
another brand, the Parties shall cooperate to make such changes to this
Agreement as are necessary in light of the new brand.

2.1.2 Manager’s Standard of Care. Manager agrees with Owner that (a) it will
execute its duties under this Agreement in a manner that Manager reasonably
believes will promote the overall long-term economic value and profitability of
the Managed Facilities (the “Manager’s Standard of Care”), and (b) Manager shall
be acting as the agent of Owner in connection with the performance of its duties
under this Agreement. Owner agrees that the Manager’s Standard of Care and
Manager’s duties as agent to Owner are further subject to, and

 

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limited by, the terms and conditions of this Agreement (including Section 2.3)
and the Operating Limitations. Except for Manager’s indemnification obligations
set forth in Article XII, Owner agrees that, as between Owner and Manager,
Manager will have no liability for monetary damages or monetary relief to Owner
for any violation of Manager’s Standard of Care or claims of breach of any
fiduciary duties or duties as agent unless such violation or breach was due to
the Manager’s Gross Negligence or Willful Misconduct or any Manager Event of
Default.

2.1.3 Manager’s System Policies. Owner acknowledges that Manager’s Affiliates
operate other casino, racetrack, hotel, dining, retail, entertainment and other
operations and that Manager or its Affiliates may derive benefits in addition to
the fees and reimbursements paid hereunder, including in connection with
marketing programs, the Total Rewards System, the Operating Limitations, the
purchasing programs, the employment policies relating to the Managed Facilities
Personnel or other programmatic or policy activities that may exist from time to
time at the discretion of CEOC or its Affiliates and that extend through the
majority of Gaming properties operated by Manager’s Affiliates (collectively,
the “Manager’s System Policies”). Owner agrees that Manager will not be in
violation of the Manager’s Standard of Care or in breach of its duties as agent
hereunder when Manager follows the Manager’s System Policies, even if certain
aspects of the Manager’s System Policies have the effect of providing greater
benefit to the properties owned or operated by the Manager’s Affiliates
collectively or third parties than to the Managed Facilities, so long as the
Manager’s System Policies are Non-Discriminatory to the Managed Facilities in
both design and implementation. The foregoing shall not be deemed to excuse any
breach by Manager of any of the express provisions of this Agreement.

2.1.4 General Grant of Authority – Managed Facilities. On and subject to the
terms of this Agreement, Owner hereby grants to Manager (and Manager hereby
accepts) the right, authority and responsibility during the Term, and instructs
Manager during the Term, to take all such actions for and on behalf of Owner and
the Managed Facilities that Manager reasonably deems necessary or advisable to
Operate the Managed Facilities: (a) at a level of service and quality not less
than the level of service and quality at Planet Hollywood Las Vegas as of the
Opening Date; (b) in accordance in all material respects with the standards,
policies and programs in effect as of the Opening Date at the Managed Facilities
(with such revisions thereto from time to time as Manager may implement in a
Non-Discriminatory manner, provided that no such revisions shall result in a
material adverse change in the overall quality and level of service at the
Managed Facilities without Owner’s prior written consent thereto); and
(c) utilizing the Proprietary Information and Systems in accordance with the
standards, policies and programs generally applicable to the use and
implementation of the Proprietary Information and Systems, provided that the
same are Non-Discriminatory with respect to the Managed Facilities (the
standards and objectives described in clauses (a) through (c) being referred to
collectively as the “Operating Standard”), subject in each case to the Operating
Limitations.

2.1.5 Specific Actions Authorized by Owner. Without limiting the generality of
the authority granted to Manager in Section 2.1.4, but subject to the Annual
Budget then in effect and the Operating Limitations and other limitations and
conditions set forth in this Agreement, including in Section 2.2, Owner’s
general grant of authority under Section 2.1.4 and this Section 2.1.5 shall
specifically include the right, authority and responsibility of Manager to take,
on behalf of Owner during the Term, the following actions (either directly or,
to the extent permitted under this Agreement, through a third party designated
or subcontracted by Manager, which may be an Affiliate of Manager):

2.1.5.1 (a) hire, supervise, train and discharge all Managed Facilities
Personnel; and (b) establish all salary, fringe benefits and benefits plans for
the Managed Facilities Personnel;

 

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2.1.5.2 establish and administer Bank Accounts for the operation of the Managed
Facilities in accordance with Section 5.4;

2.1.5.3 prepare and deliver to Owner for Owner’s review and approval operating
plans and budgets in accordance with Section 5.1;

2.1.5.4 plan, account for and supervise all repairs, capital replacements and
improvements to the Managed Facilities or any portion thereof in accordance with
Sections 5.2.1 and 5.2.2;

2.1.5.5 establish and maintain for the Managed Facilities accounting, internal
controls and reporting systems that are adequate to provide Owner, Manager and
the Designated Accountant with sufficient information about the Managed
Facilities to permit the preparation of the financial statements and reports
contemplated in Article X and which comply with all Applicable Laws;

2.1.5.6 negotiate, enter into and administer, in the name of Owner, all leases,
service contracts, licenses and other contracts and agreements Manager deems
necessary or advisable for the Operation of the Managed Facilities, including
contracts and licenses for: (a) health and life safety systems and security
force and related security measures; (b) maintenance of all electrical,
mechanical, plumbing, HVAC, elevator, boiler and other building systems;
(c) electricity, gas and telecommunications (including television and internet
service); (d) cleaning, laundry and dry cleaning services; (e) use of
copyrighted materials (including games, filmed entertainment, music and videos);
(f) entertainment; (g) gaming machines and other gaming equipment in the event
applicable Gaming Laws permit or require Owner to own or lease and maintain such
gaming equipment and non-gaming equipment; and (h) ownership and operation of
gaming servers;

2.1.5.7 negotiate, administer and perform (or cause to be performed) all
obligations of Owner, in the name of Owner, under all leases, ground leases,
licenses and concession agreements or other agreements for the right to use or
occupy any public space at the Managed Facilities, including any store, office,
parking facility or lobby space thereunder;

2.1.5.8 supervise and purchase or lease or arrange for the purchase or lease of,
all FF&E and Supplies that are advisable for the Operation of the Managed
Facilities in accordance with this Agreement;

2.1.5.9 be the primary interface for all interactions with the Gaming
Authorities in connection with the Managed Facilities which shall include:
(a) oversight of any amendments to any licenses or permits required by the
applicable Gaming Authorities under any applicable Gaming Laws; (b) coordination
of all lobbying efforts with respect to the activities

 

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conducted or proposed to be conducted in connection with the Managed Facilities;
including any introduction or possible introduction of table games at the
Managed Facilities and (c) preparation and implementation of all actions
required with respect to any filing with the applicable Gaming Authorities
relating to the Managed Facilities; provided, that Manager shall consult with
and keep Owner apprised of (i) the status of any annual or other periodic
license renewals for the operation of Gaming activities at the Managed
Facilities with the Gaming Authorities and (ii) the status of non-routine
matters before the Gaming Authorities regarding the Managed Facilities; provided
further, that any filings or Gaming Approvals relating to Owner and Owner’s
Affiliates shall be the responsibility of Owner;

2.1.5.10 apply for and process applications and filings for all Approvals in a
manner and within the time periods that are required for the Managed Facilities
to be operated on a continuous and uninterrupted basis. Manager shall act in a
reasonably diligent manner to assure that all reports required by any
Governmental Authority pertaining to the Managed Facilities are filed on or
prior to their due date. Owner shall file all such other reports pertaining to
Owner. Manager shall prepare, maintain and provide to Owner, at Owner’s request,
a listing of all Approvals and reports required by any Governmental Authority
and the term, duration or frequency of such Approvals and reports for the
Managed Facilities to be operated in a continuous and uninterrupted basis;

2.1.5.11 institute in its own name, or in the name of Owner or the Managed
Facilities, using Approved Counsel, all legal actions or proceedings to:
(a) collect charges, rent or other income derived from the Managed Facilities’
operations; (b) oust or dispossess guests, tenants or other Persons in
possession therefrom; or (c) terminate any lease, license or concession
agreement for the breach thereof or default thereunder by the tenant, licensee
or concessionaire;

2.1.5.12 using Approved Counsel, defend and control any and all legal actions or
proceedings arising from Claims; provided, that as soon as reasonably practical,
Manager shall notify Owner in writing of the commencement of any legal action or
proceeding concerning the Managed Facilities which could reasonably be
anticipated to involve an expense, liability or damage to Owner that is not
fully covered by insurance or is in excess of Two Hundred Fifty Thousand Dollars
($250,000); provided further, however, unless insurance policies dictate
otherwise, that (a) Owner may appoint counsel, defend and control any and all
legal actions or proceedings pertaining to real property related claims not
involving the Operation of the Managed Facilities (such as zoning disputes,
structural defects and title disputes); (b) in determining what portion, if any,
of the cost of any legal actions or proceedings described in clause (a) above is
to be allocated to the Managed Facilities, due consideration shall be given to
the potential impact of such legal action or proceeding on the Managed
Facilities as compared with the potential impact on Manager or its Affiliates or
on the Other Managed Resorts; and (c) if Owner is also a named party in such
legal actions or proceedings, Owner shall have the right to appoint separate
counsel to prosecute and defend its interests, such appointment being at Owner’s
sole cost and expense;

2.1.5.13 using Approved Counsel, take actions to challenge, protest, appeal or
litigate to final decision in any appropriate court or forum any Applicable Laws
affecting the Managed Facilities or any alleged non-compliance with, or
violation of, any

 

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Applicable Law (with the cost of such challenge, protest, appeal or litigation
being treated in the same manner as the cost of compliance with the Applicable
Law in question would be treated under Section 5.1.5.4);

2.1.5.14 in Consultation with Owner, establish and implement all policies and
procedures of credit to patrons of the Managed Facilities;

2.1.5.15 collect and account for and remit to Governmental Authorities all
applicable excise, sales, occupancy and use Taxes and all other Taxes,
assessments, duties, levies and charges imposed by any Governmental Authority
and collectible by the Managed Facilities directly from patrons or guests
(including those Taxes based on the sales price of any goods, services, or
displays, gross receipts or admission) or imposed by Applicable Laws on the
Managed Facilities or the Operations thereof;

2.1.5.16 subject to Applicable Law and in Consultation with Owner, establish the
types of Gaming activities to be offered at the Managed Facilities, including
the matrix of owned, leased, progressive and electronic games and gaming
systems. Manager, in Consultation with Owner, shall establish all policies and
procedures for Gaming at the Casino;

2.1.5.17 administer all non-Gaming activities to be conducted at the Managed
Facilities, including all hospitality, retail, food and beverage and other
related activities;

2.1.5.18 establish and implement policies and procedures regarding, and assign
Managed Facilities Personnel to resolve, disputes with patrons of the Managed
Facilities;

2.1.5.19 establish rates for all areas within the Managed Facilities, including
all: (a) charges for food and beverage; (b) charges for recreational and other
guest amenities at the Managed Facilities, consistent with the corporate policy
applicable to comparable Other Managed Resorts; (c) subject to Applicable Law,
policies with respect to discounted and complimentary food and beverage and
other services at the Managed Facilities; (d) billing policies (including
entering into agreements with credit card organizations); (e) price and rate
schedules; and (f) rents, fees and charges for all leases, concessions or other
rights to use or occupy any space in the Managed Facilities;

2.1.5.20 supervise, direct and control the collection of income of any nature
from the Operation of the Managed Facilities and issue receipts with respect to,
and use reasonable efforts to collect all charges, rent and other amounts due
from guests, lessees and concessionaires of the Managed Facilities, and use
those funds, as well as funds from other sources as may be available to the
Managed Facilities, in accordance with this Agreement;

2.1.5.21 determine the number of hours per week and the days per week that the
Managed Facilities shall be open for business, taking into account Applicable
Laws, the season of the year and other relevant and customary factors;

2.1.5.22 in Consultation with Owner, select all entertainment and promotions
events to be staged at the Managed Facilities;

 

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2.1.5.23 cooperate in all reasonable respects with Owner and any prospective
purchaser, lessee, Lender or other prospective lender in connection with any
proposed sale, lease or financing of or relating to the Managed Facilities,
including answering questions of Owner or such other Persons, providing copies
of financial statements and projections, preparing schedules and providing
copies of leases, concessions, Supplies, FF&E, employees and other similar
matters, as may reasonably be requested by Owner or such other Persons;
provided, that (a) if cooperation by Manager pursuant to this Section 2.1.5.23
involves the disclosure of Manager Confidential Information, Manager shall only
be required to release such Manager Confidential Information to a Lender, and
only to the extent that such Lender has a “need to know” such Manager
Confidential Information in connection with any Financing, subject to customary
protections against disclosure or misuse of such information; and (b) Owner
shall reimburse Manager for any Out-of-Pocket Expenses incurred by Manager in
connection with such cooperation to the extent such expense is not otherwise
paid or reimbursed under this Agreement;

2.1.5.24 take all actions necessary (except to the extent not within Manager’s
reasonable ability to do so) to comply with: (a) all Applicable Laws or the
requirements to maintain all Approvals necessary for the operation of the
Managed Facilities (provided, that Manager shall not be a guarantor of the
Managed Facilities’ compliance with such Applicable Laws or such requirements);
(b) the requirements of the Ground Leases (as applicable), the terms of which
shall be provided by Owner to Manager (provided that Manager shall not be a
guarantor of Owner’s compliance with the Ground Leases); (c) the requirements of
any Mortgage or other lease that is specifically identified by Owner to Manager
(provided, that Manager shall not be a guarantor of Owner’s compliance with any
such Mortgage or lease); (d) the requirements of any Financing Documents
provided to Manager (provided, that Manager shall not be a guarantor of Owner’s
compliance with any such Financing Documents); and (e) the terms of all
insurance policies applicable to the Managed Facilities and provided to Manager;

2.1.5.25 as directed by Owner and at Owner’s expense, take actions to discharge
any lien, encumbrance or charge against the Managed Facilities or any component
of the Managed Facilities;

2.1.5.26 supervise and maintain books of account and records relating to or
reflecting the results of operation of the Managed Facilities;

2.1.5.27 keep the Managed Facilities and the FF&E in good operating order,
repair and condition, consistent with the Operating Standard;

2.1.5.28 take such actions as Manager determines to be necessary or advisable to
perform all duties and obligations required to be performed by Manager under
this Agreement or as are customary and usual in the operation of the Managed
Facilities in accordance with the Operating Standard and the Manager’s Standard
of Care, in each case subject to the Operating Limitations;

2.1.5.29 implement standards, policies and programs in effect for the Brand and
the Total Rewards System in accordance with Exhibit G attached hereto;

 

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2.1.5.30 with respect to the Managed Facilities Guest Data, the Guest Data, the
Managed Facilities and Total Rewards System, establish such contact and privacy
policies and implement such data security policies and security controls for
databases and systems utilizing Managed Facilities Guest Data, the Guest Data
and the Total Rewards System as Manager determines is desirable to protect such
information;

2.1.5.31 establish policies and procedures relating to problem gaming, underage
drinking, compliance with the Americans with Disabilities Act, diversity and
inclusion and a whistleblower hotline which shall, in each case, comply in all
respects with Applicable Laws;

2.1.5.32 establish, in Consultation with Owner, rates for the usage of all guest
rooms and suites, including all (i) room rates for individuals and groups;
(ii) charges for room service, food and beverage; (iii) charges for recreational
and other hotel guest amenities at the Managed Facilities (consistent with the
corporate policy applicable to the Other Managed Resorts); (iv) policies with
respect to Complimentaries; (v) billing policies (including entering into
agreements with credit card organizations); (vi) price and rate schedules; and

2.1.5.33 take any action necessary or ancillary to the responsibilities and
authorities set forth above in this Section 2.1.5, it being acknowledged and
agreed that the foregoing is not intended to be an exhaustive list of Manager’s
responsibilities or authorities.

 

  2.2 Limitations on Manager Authority.

Notwithstanding the grant of authority given to Manager in Section 2.1, and
without limiting any of the other circumstances under which Owner’s approval is
specifically required under this Agreement, Manager shall not take any of the
following actions without Owner’s prior written approval:

2.2.1 Settle any claim (a) regardless of the amount, admitting intentional
misconduct or fraud or (b) arising out of the Operations of the Managed
Facilities which involves an amount in excess of $500,000 that is not fully
covered (other than deductible amounts) by insurance or as to which the
insurance denies coverage or “reserves rights” as to coverage; provided, that
the dollar amount specified in this Section 2.2.1 shall be increased on
January 1 of every third Operating Year by the percentage increase in the Index
since January 1 of the first Operating Year or the date of the prior increase,
as applicable;

2.2.2 Execute, amend, modify, provide a written waiver of rights under or
terminate any contract, lease, equipment lease or other agreement (in each case,
or a series of contracts, leases, equipment leases or other agreements relating
to the same or similar property, equipment, goods or services, as applicable,
with the same or a related party) that (a)(i) is for a term of greater than
three (3) years and (ii) requires payment in excess of $500,000 or (b) requires
aggregate annual payments in excess of $500,000, other than contracts, leases or
other agreements which are specifically identified in the Annual Budget;
provided, that the dollar amount specified in this Section 2.2.2 shall be
increased on January 1 of every third Operating Year by the percentage increase
in the Index since January 1 of the first Operating Year or the date of the
prior increase, as applicable;

 

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2.2.3 Except as permitted by Section 5.5.3, borrow any money or incur
indebtedness or issue any guaranty in respect of borrowed money, or issue any
indemnity or surety obligation outside of the ordinary course of business, in
the name and on behalf of Owner;

2.2.4 Grant or create any lien or security interest on the Managed Facilities or
any part thereof or interest therein; provided, that the foregoing shall not be
deemed to restrict Manager from incurring trade payables, ordinary course
advances for travel, entertainment or relocation or granting credit or refunds
to patrons for goods and services incurred in the ordinary course of business in
the Operation of the Managed Facilities in accordance with this Agreement;

2.2.5 Sell or otherwise dispose of the Managed Facilities or any part thereof or
interest therein, including FF&E, except for the sale of inventory and the
disposal of obsolete or worn out or damaged items, each in the ordinary course
of business or as contemplated in the Annual Budget or Capital Budget;

2.2.6 Commence any ROI Capital Improvements, except as directed by Owner or as
included in the Capital Budget, or commence any Building Capital Improvements,
except if required by the Operating Standard as determined pursuant to
Section 5.1.4 and Expert Resolution under Article XVII or Operating Limitations;

2.2.7 Hire or replace individuals for the positions of Senior Executive
Personnel;

2.2.8 Submit, settle, adjust or otherwise resolve any casualty insurance claim
related to the Managed Facilities involving losses or casualties in excess of
$500,000; provided, that the amount specified in this Section 2.2.8 shall be
increased on January 1 of every third Operating Year by the percentage increase
in the Index since January 1 of the first Operating Year or the date of the
prior increase, as applicable;

2.2.9 Enter into any contract or transaction with an Affiliate of Manager,
except as expressly provided for in this Agreement or expressly permitted in the
Annual Budget (it being understood that any such contract or transaction entered
into with an Affiliate of Manager and not approved in writing pursuant to this
Section 2.2 shall first comply with the provisions of Section 5.6 or
Section 5.8, as applicable);

2.2.10 Confess any judgment, make any assignment for the benefit of creditors,
admit an inability to pay debts as they become due in the ordinary course of
business, file a voluntary bankruptcy or consent to any involuntary bankruptcy
with respect to the Managed Facilities or Owner;

2.2.11 Initiate or settle any real or personal property tax appeals or claims
involving property of Owner, unless directed by Owner in writing;

2.2.12 Acquire any land or interest in land in the name of Owner;

2.2.13 Consent to any condemnation relating to the Managed Facilities, except
with respect to Manager’s interests under this Agreement as contemplated in
Section 15.2;

 

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2.2.14 File with any Governmental Authority any federal or state income tax
return applicable to Owner; or

2.2.15 Execute, amend, modify, provide written waiver of rights under or
terminate any collective bargaining, recognition, neutrality or other material
labor agreements solely involving the Managed Facilities Personnel; provided,
that with respect to the execution, amendment, modification, waiver of rights
under or termination of any collective bargaining, recognition, neutrality or
other material labor agreements which involve both Managed Facilities Personnel
and other employees providing services at properties that are owned by or
managed by Manager’s Affiliates (other than any of the Growth Managed
Facilities), the consent of Owner shall be required, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

  2.3 Other Operations of Manager and Owner.

2.3.1 Without limiting Manager’s obligation under Section 2.1.2, Owner
acknowledges that: (a) Owner has selected Manager to Operate the Managed
Facilities on behalf of Owner in substantial part because of the other hotels,
casinos, entertainment venues, dining establishments, spas and retail locations
that are owned or operated by Manager and its Affiliates; (b) Owner has
determined, on an overall basis, that the benefits of operation as part of the
Total Rewards System are substantial, notwithstanding that the properties
operating under the Service Mark Rights may not all benefit equally from
operation under the Service Mark Rights; and (c) in certain respects all hotels,
casinos, entertainment venues, dining establishments, spas and retail locations
compete on a national, regional and local basis with other hotels and casinos
and facilities, and that conflicts and competition may, from time to time, arise
between the Managed Facilities, on the one hand, and Other Managed Resorts, on
the other hand.

2.3.2 Owner acknowledges and agrees that (i) Manager and its Affiliates own and
operate many casino, hotel and other properties across the country and
internationally, some of which may be in competition with the Managed Facilities
and (ii) neither Manager nor any Affiliate of Manager shall have any obligation
to promote the value and profitability of the Managed Facilities at the expense
of such other properties. Subject to the limitations and restrictions set forth
in Sections 2.3.4, 2.3.5 and 7.4.3 and Applicable Law, Manager and its
Affiliates shall be permitted to: (a) utilize the Guest Data for its own account
and for use at Manager’s and its Affiliates’ other owned and/or operated
properties and utilize and retain the Guest Data after expiration or termination
of the Term, (b) engage in commercially reasonable cross-marketing and
cross-promotional activities with Manager’s and its Affiliates’ other owned
and/or operated properties, and (c) otherwise participate or engage in competing
projects, programs and activities. This Section 2.3.2 shall survive the
expiration or termination of this Agreement.

2.3.3 Manager acknowledges and agrees that Owner and its Affiliates may develop,
operate and manage properties and other facilities in other locations, some of
which may be in competition with the Managed Facilities. Subject to the
limitations and restrictions set forth in Sections 7.4.3 and Applicable Law,
Owner shall be permitted to: (a) utilize the Managed Facilities Guest Data for
its own account and for use at its other properties, utilize the Managed
Facilities Guest Data during the Term, and retain and use the Managed Facilities
Guest Data after expiration or termination of the Term in accordance with this
Agreement, (b) engage in

 

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cross-marketing and cross-promotional activities for the direct benefit of
Owner’s other properties in a manner that may be competitive to the Managed
Facilities or Manager’s and its Affiliates’ other owned and/or operated
facilities or operations, and (c) otherwise participate or engage in competing
projects, programs and activities. This Section 2.3.3 shall survive the
expiration or termination of this Agreement.

2.3.4 Notwithstanding anything herein to the contrary, none of the limitations
or restrictions in this Section 2.3 shall apply to e-gaming operations.

 

  2.4 Term.

2.4.1 Term. The initial term (the “Initial Term”) of this Agreement (together
with the Renewal Term and any Continuing Term, as applicable, the “Term”) shall
commence on the Commencement Date and expire on the day immediately preceding
the fifteenth (15th) anniversary of the Opening Date, unless terminated earlier
in accordance with the terms of this Agreement or extended by Manager. Manager
shall have the right (but not the obligation) to extend the Initial Term of this
Agreement for one (1) additional ten (10) year period (the “Renewal Term”) by
giving Owner written notice of its desire to extend not later than ninety
(90) days prior to the expiration of the Initial Term of this Agreement. The
Renewal Term is subject to earlier termination in accordance with the terms of
this Agreement. After expiration of the Renewal Term, the Term of this Agreement
shall continue until (a) terminated by Manager or Owner upon at least ninety
(90) days prior written notice delivered to the Other Party, (b) terminated by
Manager as permitted by Section 16.2 or (c) terminated by Owner as permitted by
Section 16.3 (the “Continuing Term”). If this Agreement is renewed for the
Renewal Term or continues for the Continuing Term, unless otherwise agreed by
the Manager and Owner in writing, this Agreement, and all terms, covenants and
conditions set forth herein, shall be automatically extended to the expiration
or earlier termination in accordance with the terms of this Agreement of the
Renewal Term or the Continuing Term, as applicable.

2.4.2 No Other Early Termination. This Agreement may only be terminated prior to
the expiration of the Term as provided in Article XVI. Notwithstanding any
Applicable Law to the contrary, including principles of agency, fiduciary duties
or operation of law, neither Owner nor Manager shall be permitted to terminate
this Agreement except in accordance with the express provisions of Article XVI
of this Agreement.

ARTICLE III.

FEES AND EXPENSES

 

  3.1 Management Fees.

The following provisions shall apply to the payment of the Management Fees and
other fees and expenses:

3.1.1 Base Management Fee. The Base Management Fee for each month shall be
payable to Manager in monthly installments in arrears within fifteen (15) days
of delivery to Owner of each Monthly Report required under Section 10.2. Each
installment payment of the Base Management Fee shall equal the Base Management
Fee for the preceding twelve (12) month period, less the sum of all prior
installment payments of Base Management

 

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Fee attributable to such period (and subject to any adjustments made in
connection with any annual reconciliations undertaken pursuant to
Section 3.1.3). At the time of submission of each Monthly Report, Manager shall
provide to Owner a computation of the Base Management Fee installment payment in
reasonable detail and certified by Manager’s Designated Financial Officer. Any
disputes regarding the Base Management Fee shall be referred to the Expert for
Expert Resolution pursuant to Article XVII.

3.1.2 Incentive Management Fee. The Incentive Management Fee shall be payable to
Manager in quarterly installments in arrears within fifteen (15) days of
delivery to Owner of each Quarterly Report with respect to the end of the
calendar quarter to which such Incentive Management Fee installment relates.
Each installment payment of the Incentive Management Fee shall equal the
Incentive Management Fee for the period consisting of the preceding four
(4) calendar quarters, less the sum of all prior installment payments of
Incentive Management Fee attributable to such period (and subject to any
adjustments made in connection with any annual reconciliations undertaken
pursuant to Section 3.1.3). At the time of submission of each Quarterly Report,
Manager shall provide to Owner a computation of the Incentive Management Fee
installment payment in reasonable detail and certified by Manager’s Designated
Financial Officer. Any disputes regarding the Incentive Management Fee shall be
referred to the Expert for Expert Resolution pursuant to Article XVII.

3.1.3 Reconciliation of Management Fees. By April 15 of each Operating Year
during the Term, Manager shall cause to be prepared and delivered to Owner a
reconciliation statement for the prior Operating Year showing the calculation
and payment of the Management Fees for the prior Operating Year, and appropriate
adjustments shall be made for any overpayment or underpayment of the Management
Fees during such Operating Year. If any reconciliation statement reflects an
overpayment of Management Fees to Manager, Manager shall, within fifteen
(15) days after such reconciliation statement has been delivered by Manager to
Owner, deposit into the Operating Account the amount of such overpayment. If the
reconciliation statement reflects an underpayment of Management Fees to Manager,
Manager shall disburse from the Operating Account, within thirty (30) days after
such reconciliation statement has been delivered by Manager to Owner, the amount
of such underpayment of Management Fees due Manager; provided that if funds in
the Operating Account are insufficient to withdraw such underpayment or such
withdrawal is otherwise restricted for a period of sixty (60) days after such
reconciliation statement has been delivered, the amount of such underpayment
shall accrue interest in accordance with Section 3.4 and shall be withdrawn by
Manager as soon as funds are sufficient therefor. Any disputes regarding such
reconciliation statement shall be referred to the Expert for Expert Resolution
pursuant to Article XVII.

 

  3.2 Centralized Services Charges.

Centralized Services Charges payable in accordance with Section 4.1.1 shall be
due and payable to Manager monthly in arrears for the immediately preceding
month within fifteen (15) days of delivery to Owner of the Monthly Report for
such month. All Centralized Services Charges shall be set forth in the Monthly
Reports. Any disputes regarding the Centralized Services Charges shall be
referred to the Expert for Expert Resolution pursuant to Article XVII.

 

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  3.3 Reimbursable Expenses.

Owner shall reimburse Manager for all Reimbursable Expenses incurred by Manager
during the Term. The Reimbursable Expenses (a) may be withdrawn by Manager from
the Operating Account to pay such Reimbursable Expenses when such amounts become
due or (b) shall be due monthly in arrears for the immediately preceding month
within fifteen (15) days of delivery to Owner of the Monthly Reports for such
month. If funds in the Bank Accounts are insufficient to pay such Reimbursable
Expenses or if such withdrawal is otherwise restricted within the sixty (60) day
period after such Reimbursable Expenses are due, such Reimbursable Expenses
shall accrue interest in accordance with Section 3.4 and shall be withdrawn by
Manager from the Operating Account as soon as funds are sufficient therefor. Any
disputes regarding the Reimbursable Expenses shall be referred to the Expert for
Expert Resolution pursuant to Article XVII.

 

  3.4 Interest.

If any fee or other amount due by either Party to the other Party or its
Affiliates or designees under this Agreement is not paid within sixty (60) days
after such payment is due, such amount shall bear interest from and after the
respective due dates thereof until the date on which the amount is received in
the bank account designated by the Party to which such amount is owed at an
annual rate of interest equal to the lesser of (a) the prevailing lending rate
of such Party’s principal bank for working capital loans to such Party plus
three percent (3%) and (b) the highest rate permitted by Applicable Law.

 

  3.5 Payment of Fees and Expenses.

3.5.1 No Offset. All payments by Owner or by Manager under this Agreement and
all related agreements between the Parties or their respective Affiliates shall
be made pursuant to independent covenants, and neither Owner nor Manager shall
set off any claim for damages or money due from either Party or any of its
Affiliates to the other, except to the extent of any outstanding and undisputed
payments owed to Owner by Manager under this Agreement.

3.5.2 Place and Means of Payment. All fees and other amounts due to Manager or
its Affiliates under this Agreement, including, without limitation, Management
Fees, Centralized Services Charges and Reimbursable Expenses, shall be paid to
Manager in U.S. Dollars, in immediately available funds. Manager may pay such
fees and other amounts owed to Manager or its Affiliates consistent with this
Agreement and the Annual Budget directly from the Operating Account or, in the
case of Management Fees, Management Account when such fees and other amounts are
due. In addition, Manager may require that any such payments to Manager
hereunder be effected through electronic debit/credit transfer of funds programs
specified by Manager from time to time, and Owner agrees to execute such
documents (including independent transfer authorizations), pay such fees and
costs and do such things as Manager reasonably deems necessary to effect such
transfers of funds.

 

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  3.6 Application of Payments.

All payments by Owner, or by Manager on behalf of Owner, pursuant to this
Agreement and all related agreements shall be applied in the manner provided in
this Agreement.

 

  3.7 Sales and Use Taxes.

Owner shall pay to Manager an amount equal to any sales, use, commercial
activity tax, gross receipts, value added, excise or similar taxes assessed
against Manager by any Governmental Authority that are calculated on
Reimbursable Expenses or Centralized Services Charges required to be paid by
Owner under this Agreement (but not, for avoidance of doubt, any such assessment
with respect to the Management Fees), other than income, gross receipts,
franchise or similar taxes assessed against Manager on the Management Fees or
income taxes on Manager’s income. Owner and Manager agree to cooperate in good
faith to minimize the taxes assessed against Manager, Owner and the Managed
Facilities, including taxes assessed against Owner in connection with paying
Reimbursable Expenses directly to the applicable third-party vendor, so long as
such actions are commercially reasonable and could not reasonably be expected
to, and do not, result in an adverse impact in any material respect on Manager,
Owner or the Managed Facilities. In the event of any dispute regarding
appropriate actions to be taken to minimize taxes assessed against Manager,
Owner and the Managed Facilities, such dispute may be submitted by either Party
for Expert Resolution in accordance with Article XVII.

ARTICLE IV.

CENTRALIZED SERVICES

 

  4.1 Centralized Services.

In connection with Manager’s Operation of the Managed Facilities, Manager agrees
to arrange for it or its Affiliates to provide, on commercially reasonable terms
and on a Non-Discriminatory basis, the centralized managerial, administrative,
supervisory and support services and products to Manager and the Managed
Facilities as are generally provided to the Other Managed Resorts as of the
Opening Date (collectively, the “Centralized Services”), including (without
limitation): (a) services and products in the areas of marketing, risk
management, information technology, legal, internal audit, accounting and
accounts payable; (b) the Proprietary Information and Systems; and (c) the Total
Rewards System. As consideration for the Management Fee, Manager grants (or has
caused its Affiliates to grant) to the Owner a license to the Technology Systems
included in the Centralized Services solely with respect to the Property during
the Term and the Transition Period; provided that, notwithstanding anything to
the contrary set forth in this Agreement, such license shall be perpetual if a
Manager Event of Default occurs. The Centralized Services to be provided under
this Agreement may be provided by Manager, CEC, CEOC, Services Co or an
Affiliate of any of them in or from Las Vegas, Nevada or in or from other
locations other than the Managed Facilities, or for such Centralized Services
provided by third parties, by a third-party designated by Manager, CEOC,
Services Co or an Affiliate of any of them (the “Third-Party Centralized
Services”). Owner and Manager acknowledge and agree that the Managed Facilities
shall participate in all Centralized Services as determined by Manager on a
Non-Discriminatory basis, and Owner shall pay all Centralized Services Charges
(all of which shall be commercially reasonable and reasonably allocated) for,
and comply with all terms and requirements of, such Centralized Services.

 

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4.1.1 Centralized Services Charges.

4.1.1.1 Calculation of Centralized Services Charges. The amounts charged to the
Managed Facilities for the Centralized Services (the “Centralized Services
Charges”) shall be determined as follows: the sum of (a) such amounts that have
been historically “allocated” to the Managed Facilities will continue to be done
in a manner consistent with past practices, and (b) such amounts that have been
historically “unallocated” and incurred in performance of the Centralized
Services and fairly and equitably allocated to the Managed Facilities on the
same basis as such amounts are determined for substantially all of the Other
Managed Resorts that are participating in such Centralized Services and in a
manner that is commercially reasonable and Non-Discriminatory to the Managed
Facilities, and may include a reasonable allocation of amounts reasonably
calculated to cover the overhead and other costs incurred by Manager or its
Affiliates (as applicable) in providing (or arranging for the provision of) such
Centralized Services, including: (i) compensation and employee benefits of
Corporate Personnel directly involved in providing the Centralized Services;
(ii) recovery of development costs and promotion costs for such Centralized
Services; (iii) costs of equipment employed in providing the Centralized
Services; and (iv) costs of operating, maintaining and upgrading the Centralized
Services. In addition, Owner shall pay all costs for the installation and
maintenance of any equipment and Technology Systems at the Managed Facilities
used in connection with the Centralized Services. Manager, its Affiliates and
any third-party providing any Centralized Services shall have the right to
increase or decrease any or all of the Centralized Services Charges from time to
time, upon notice to Owner, provided that any such changes in the services
and/or charges for such Centralized Services are commercially reasonable and are
applied on a Non-Discriminatory basis.

4.1.1.2 Allocation of Costs. Owner acknowledges that from time to time there
might be a current surplus or current deficit of funds for any one (1) or more
Centralized Services, and that any retention of funds for use at a later date
(including interest earned thereon) shall not constitute a profit. Owner
acknowledges that the Centralized Services Charges for Third-Party Centralized
Services may include a profit component to such third-party.

4.1.1.3 Right to Pay Third-Party Providers. Manager shall have the right (but
not the obligation) to pay (directly or through an Affiliate) a reasonable
allocation of any amounts due to a third-party for any Third-Party Centralized
Services provided to the Managed Facilities, in which case, notwithstanding
anything to the contrary in this Agreement, such amounts shall be deemed to be
Reimbursable Expenses for all purposes under this Agreement and such amount
shall not be included in the Centralized Services Charges to the extent it is
characterized as a Reimbursable Expense.

 

  4.2 Modification of Centralized Services.

Owner acknowledges that the Centralized Services are an integral part of
Manager’s operation of the Other Managed Resorts and related facilities, and
CEOC and/or Services Co needs the flexibility to modify the Centralized Services
to respond to market trends, customer demands, economic conditions,
technological advances and other factors affecting the operation of the Other
Managed Resorts and related facilities, as they may change from time to time.

 

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Accordingly, Owner agrees that CEOC and/or Services Co and its respective
Affiliates shall have the right to: (a) modify the structure, scope, delivery
and manner of providing of any Centralized Services; or (b) add a new, or
discontinue an existing, Centralized Service, as Manager deems advisable from
time to time; provided that, in each case, any such changes are commercially
reasonable and Non-Discriminatory to the Managed Facilities in both design and
implementation.

ARTICLE V.

OPERATION OF THE MANAGED FACILITIES

 

  5.1 Annual Budget.

5.1.1 Proposed Annual Budget. The portion of the operating plan and budget for
the Managed Facilities in effect immediately prior to the Commencement Date that
relates and applies to the period from and after the Commencement Date through
and including December 31, 2014 shall apply under this Agreement as the Annual
Budget for such period. Subject to reimbursement for Reimbursable Expenses in
accordance with this Agreement, from the Commencement Date through the Opening
Date, Manager will continue to provide the pre-opening services to the Managed
Facilities in a manner and level commensurate with the pre-opening services
being provided immediately prior to the Commencement Date to the Managed
Facilities pursuant to the terms and conditions of the Transaction Agreement. On
or before November 1 of each Operating Year, Manager shall prepare and deliver
to Owner, for its review and approval, a proposed operating plan and budget for
the next Operating Year. All operating plans and budgets proposed by Manager
shall include (without limitation) projections of Gross Operating Revenue and
Operating Expenses by department for such period for the Managed Facilities and
shall be prepared in good faith in accordance with budgeting and planning
procedures typically employed by CEOC’s operating subsidiaries. Each operating
plan and budget shall include monthly and annualized projections of each of the
following items, as applicable, for the Managed Facilities:

5.1.1.1 results of operations (including itemized Gross Operating Revenue,
Promotional Allowances, Operating Expenses and EBITDA), together with the
following supporting data: (a) total labor costs, including both fixed and
variable labor; (b) the Management Fees, Centralized Services Charges and
Reimbursable Expenses; and (c) a description of the category and nature of
Centralized Services to be provided, together with a budget for each such
category;

5.1.1.2 a description of proposed Routine Capital Improvements, Building Capital
Improvements and ROI Capital Improvements to be made during such Operating Year,
including capitalized lease expenses, an itemization of the costs of such
capital improvements (including a contingency line item) and proposed monthly
funding for such costs, and project schedules to commence and complete such
capital improvements (the “Capital Budget”);

5.1.1.3 a statement of cash flow, including a schedule of any anticipated cash
shortfalls or requirements for funding by Owner;

 

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5.1.1.4 a schedule of debt service payments and reserves required under any
Financing Documents;

5.1.1.5 a marketing plan and budget for the activities to be undertaken by
Manager pursuant to Article IX, including promotional activities and Promotional
Allowances for the Managed Facilities;

5.1.1.6 an allocation for all Centralized Services; and

5.1.1.7 any other information or projections reasonably requested by Owner to be
included in the operating plan and budget from time to time.

5.1.2 Approval of Annual Budget. Owner shall review the proposed operating plan
and budget and shall provide Manager with its written approval of or any
objections to such proposed operating plan and budget in writing, in reasonable
detail, within forty-five (45) days after receipt of the proposed operating plan
and budget from Manager; provided, any line items in the proposed operating plan
and budget shall not be adopted and implemented by Manager until Owner shall
have approved such operating plan and budget and/or any items therein in dispute
shall have been determined pursuant to Section 5.1.3. Owner shall be deemed to
have approved that portion of any proposed operating plan and budget to which
Owner has not approved in writing or objected to in writing within such
forty-five (45) day period. If Owner objects to any portion of the proposed
operating plan and budget within such forty-five (45) day period, the Parties
shall meet within twenty (20) days after Manager’s receipt of Owner’s objections
and discuss such objections, and then Manager shall submit written revisions to
the proposed operating plan and budget after such discussion. The Parties shall
use good faith efforts to reach an agreement on the operating plan and budget
prior to January 1 of each Operating Year. The proposed operating plan and
budget, as modified to reflect the revisions, if any, agreed to by the Parties
pursuant to Section 5.1.3, shall become the “Annual Budget” for the next
Operating Year. Owner shall act reasonably and exercise prudent business
judgment in approving of, or objecting to, all or any portion of any proposed
operating plan and budget.

5.1.3 Resolution of Disputes for Annual Budget. If the Parties, despite their
good faith efforts, are unable to reach final agreement on the proposed
operating plan prior to January 1 of each Operating Year, or otherwise have a
dispute regarding the Annual Budget as contemplated by this Section 5.1, those
portions of such proposed operating plan that are not in dispute shall become
effective on January 1 of such Operating Year and, pending the Parties’
resolution of such dispute, the prior year’s Annual Budget shall govern the
items in dispute, except that the budgeted expenses provided for such item(s) in
the prior year’s Annual Budget (or, if earlier, the last Annual Budget in which
the budgeted expenses for such disputed item(s) were approved) shall be
increased by the percentage increase in the Index from January 1 of the prior
Operating Year (or, if applicable, each additional Operating Year between the
prior Operating Year and the Operating Year in which there became effective the
last Annual Budget in which the budgeted expenses for such disputed item(s) were
approved). Upon the resolution of any such dispute by agreement of the Parties,
such resolution shall control as to such item(s). For purposes of clarity, all
disputes regarding the Annual Budget shall be resolved (if at all) between Owner
and Manager directly and no such dispute shall subject to Expert Resolution

 

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through the procedures described in Article XVII unless Owner and Manager (each
acting in its sole discretion) agree in writing at the time any such dispute
arises to mutually submit the subject dispute to Expert Resolution under Article
XVII.

5.1.4 Operation in Accordance with Annual Budget. Manager shall use its
commercially reasonable efforts to operate the Managed Facilities in accordance
with the Annual Budget for the applicable Operating Year (subject, in the case
of disputed items, to the provisions of Section 5.1.3). Nevertheless, the
Parties acknowledge that preparation of the Annual Budgets is inherently inexact
and that Manager may vary from any Annual Budget (a) to the extent Manager
reasonably determines that such variance is required by any Financing Document
and/or any Ground Lease, (b) in connection with the matters set forth in
Section 5.1.5, or (c) by reallocating up to ten percent (10%) of any line item
(as shown on the Summary Annual Budget in the form attached hereto as Exhibit C)
to any other line item without Owner’s prior approval (unless such other line
item is for Centralized Service Charges or Reimbursable Expenses for Third Party
Centralized Services pursuant to Section 4.1.1.3, in which event Owner’s
approval shall be required for such reallocation). Other than as set forth in
the preceding sentence, Manager shall not incur costs or expenses or make
expenditures that would cause the total expenditures for the Operation of the
Managed Facilities to exceed the aggregate amount of expenditures provided in
the Annual Budget by more than five percent (5%) without Owner’s prior approval.
Owner acknowledges that the actual financial performance of the Managed
Facilities during any Operating Year will likely vary from the projections
contained in the Annual Budget for such Operating Year, and Manager shall not be
deemed to have made any guarantee, warranty or representation whatsoever in
connection with the Annual Budget or consistency of actual results with the
Operating Plan.

5.1.5 Exceptions to Annual Budget. Notwithstanding Section 5.1.4, Owner
acknowledges and agrees as follows:

5.1.5.1 The amount of certain expenses provided for in the Annual Budget for any
Operating Year will vary based on the occupancy, use and demand for goods and
services provided at the Managed Facilities and, accordingly, to the extent that
occupancy, use and demand for such goods and services for any Operating Year
exceeds the occupancy, use and demand projected in the Annual Budget for such
Operating Year, such Annual Budget shall be deemed to include corresponding
increases in such variable expenses, provided, that the percentage increase in
the variable expense over budget shall not exceed the percentage increase in
corresponding revenue over projections. To the extent that occupancy, use and
demand for goods and services provided at the Managed Facilities for any
Operating Year is less than the occupancy, use and demand projected in the
Annual Budget for such Operating Year, Manager will make commercially reasonable
adjustments to the Operation of the Managed Facilities in an effort to reduce
such variable expenses;

5.1.5.2 The amount of certain expenses provided for in the Annual Budget for any
Operating Year are not within the ability of Manager to control, including real
estate and personal property taxes, applicable gaming taxes, insurance premiums,
utility rates, license and permit fees and certain charges provided for in
contracts and leases entered into pursuant to this Agreement, and accordingly,
Manager shall have the right to pay from the Operating Account the actual amount
of such uncontrollable expenses without reference to the

 

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amounts provided for with respect thereto in the Annual Budget for such
Operating Year (provided that Manager shall promptly provide Owner with a
reasonably detailed written explanation of all variances in excess of five
percent (5%) between the budgeted and actual amounts of any such uncontrollable
expenses);

5.1.5.3 If any expenditures are required on an emergency basis to (a) preserve
or repair the Managed Facilities or other property or (b) avoid potential injury
to persons or material damage to the Managed Facilities or other property,
Manager shall have the right to make such expenditures, whether or not provided
for, or within the amounts provided for, in the Annual Budget for the Operating
Year in question, to the extent reasonably required to avoid or mitigate such
injury or material damage; and

5.1.5.4 If any expenditures are required to comply with, or cure or prevent any
violation of, any Applicable Law, Manager shall, following written notice to
Owner (except in the case of emergency, in which case the provisions of
Section 5.1.5.3 shall govern) have the right to make such expenditures, whether
or not provided for or within the amounts provided for in the Annual Budget for
the Operating Year in question, as may be necessary to comply with, or cure or
prevent the violation of, such Applicable Law.

5.1.6 Modification to Annual Budget. Manager shall have the right from time to
time during each Operating Year to propose modifications to the Annual Budget
then in effect based on actual operations during the elapsed portion of the
applicable Operating Year and Manager’s reasonable business judgment as to what
will transpire during the remainder of such Operating Year. If, during any
Operating Year, Manager forecasts the EBITDA for such Operating Year to be less
than the budgeted EBITDA by more than five percent (5%), Manager shall meet with
Owner to discuss appropriate modifications to the operating, promotional and
marketing plans in order to address the forecasted variance. Modifications to
such Annual Budget, if any, shall be subject to Owner’s prior written approval;
provided, that in no event shall Owner have the right to withhold its approval
to any material modifications on account of changes to costs of insurance
premiums, operating supplies and equipment, charges provided for in contracts
and leases entered into pursuant to this Agreement or other amounts that are not
within Manager’s ability to control (e.g., taxes, assessments, utilities,
license or permit fees, inspection fees and any impositions imposed by any
Governmental Authority).

 

  5.2 Maintenance and Repair; Capital Improvements.

5.2.1 Required Maintenance and Repair and Capital Improvements. Except as
otherwise provided in this Section 5.2, Manager, at Owner’s expense, shall
perform or cause to be performed all ordinary maintenance and repairs and all
such Routine Capital Improvements and Building Capital Improvements: (a) as are
necessary or advisable to keep the Managed Facilities in good working order and
condition and in compliance with the Operating Standard (subject to the Annual
Budget and Section 5.1.4) and Operating Limitations; and (b) as Manager
reasonably determines are necessary or advisable to comply with, and cure or
prevent the violation of, any Applicable Laws. Manager, at Owner’s expense,
shall perform or cause to be performed all such Routine Capital Improvements and
Building Capital Improvements as are provided in the Annual Budget or otherwise
approved in writing by Owner.

 

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5.2.2 Discretionary Capital Improvements. Manager, at Owner’s expense, shall
cause to be performed all ROI Capital Improvements approved by Owner (in the
Annual Budget or otherwise in writing in advance), and shall supervise such work
and ensure that the performance of such work is undertaken in a manner
reasonably calculated to avoid or minimize interference with the Operation of
the Managed Facilities. Except as provided in the applicable Annual Budget or
proposed by Manager and approved by Owner, Owner shall notify Manager of any ROI
Capital Improvements proposed to be undertaken by Owner and Manager may, within
thirty (30) days after receipt of such notice, object to the undertaking of such
ROI Capital Improvements based on Manager’s reasonable determination that such
ROI Capital Improvements will not be consistent with the Operating Standard or
will unreasonably interfere with the Operation of the Managed Facilities,
including that such ROI Capital Improvements would unreasonably interfere with
the Managed Facilities’ operating performance and the ability of Manager to
Operate the Managed Facilities in accordance with the Operating Standard. Within
fifteen (15) days after receipt of any notice from Manager alleging a deficiency
with respect to any ROI Capital Improvement proposed by Owner, Owner shall
respond in detail to such allegation and, if the matter is not resolved by the
Parties within thirty (30) days after Owner’s response, the determination of
whether such capital improvement does not, or when constructed will not, be
consistent with the Operating Standard or will unreasonably interfere with the
Operation of the Managed Facilities shall be submitted to the Expert for Expert
Resolution in accordance with Article XVII. If the Expert determines that such
capital improvement does not, or when constructed will not, comply with the
Operating Standard or will unreasonably interfere with the Operation of the
Managed Facilities, Owner shall promptly take such actions as the Expert shall
require to bring such capital improvement into compliance with the Operating
Standard or to cause such capital improvement to not unreasonably interfere with
the Operation of the Managed Facilities.

5.2.3 Intentionally Omitted.

5.2.4 Intentionally Omitted.

5.2.5 Remediation of Design or Construction Defect. If the design or
construction of the Managed Facilities is defective, and the defective condition
presents a risk of injury to persons or damage to the Managed Facilities or
other property, or results in non-compliance with Applicable Law, then Manager
shall have the authority to, at Owner’s expense, perform all work necessary to
remedy such design or construction defect in the Managed Facilities. Owner
acknowledges that such work shall be performed at Owner’s expense and that
Manager shall not use funds in the Operating Account in remedying such defects.

 

  5.3 Personnel.

5.3.1 Manager Control. Manager shall manage and have sole and exclusive control
of all aspects of the Managed Facilities’ human resources functions as set forth
in this Section 5.3.

5.3.2 Employment of Managed Facilities Personnel. All Managed Facilities
Personnel shall be employees of Owner or an Affiliate and Owner shall bear all
Managed Facilities Personnel Costs. Managed Facilities Personnel Costs shall be
Operating Expenses. Owner shall have no right to supervise, discharge or direct
any Managed Facilities Personnel, except as otherwise set forth herein, and
covenants and agrees not to attempt to so supervise, direct or discharge.

 

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5.3.3 Senior Executive Personnel. Subject to Owner’s approval rights in
Section 2.2.7, Manager shall, on Owner’s behalf, recruit, screen, appoint, hire,
pay (from the Operating Account), train, supervise, instruct and direct the
Senior Executive Personnel, and they, or other Managed Facilities Personnel to
whom they may delegate such authority, shall, on Owner’s behalf: (a) recruit,
screen, appoint, hire, train, supervise, instruct and direct all other Managed
Facilities Personnel necessary or advisable for the Operation of the Managed
Facilities; and (b) discipline, transfer, relocate, replace, terminate and
discharge any Managed Facilities Personnel.

5.3.4 Terms of Employment. Subject to Owner’s approval rights under
Section 2.2.7, all terms and conditions of employment, personnel policies and
practices relating to the Managed Facilities Personnel shall be established,
maintained and implemented by Manager in compliance with all Applicable Laws, on
Owner’s behalf, including, but not limited to, Applicable Laws relating to the
terms and conditions of employment, recruiting, screening, appointment, hiring,
compensation, bonuses, severance, pension plans and other employee benefits,
training, supervision, instruction, direction, discipline, transfer, relocation,
replacement, termination and discharge of Managed Facilities Personnel. Manager
shall process the payroll and benefits for Managed Facilities Personnel.

5.3.5 Non-Solicitation. Manager hereby agrees not to, and to cause its
Affiliates, its and their respective successors and assigns and any Person
acting for or on behalf of any of them not to, solicit the employment of any
senior supervisory Managed Facilities Personnel, without Owner’s prior written
consent, at any time during the Term or any management personnel of any
Affiliate of Owner during the Term; provided, that this covenant shall not
restrict Manager and its Affiliates from engaging in general solicitation or
advertising of employment opportunities that is not targeted at employees of the
Managed Facilities.

5.3.6 Corporate Personnel. All Corporate Personnel who travel to the Managed
Facilities to perform technical assistance, participate in special projects or
provide other services shall be permitted to reasonably utilize the services
provided at the Managed Facilities (including food and beverage consumption),
without charge to Manager or such Corporate Personnel.

 

  5.4 Bank Accounts.

5.4.1 Administration of Bank Accounts. Manager shall establish and administer
the bank accounts listed in this Section 5.4 (the “Bank Accounts”) on Owner’s
behalf at a bank or banks selected by Owner and reasonably approved by Manager.
All Bank Accounts shall (a) be established by Manager, as agent for Owner, in
the name of Owner, doing business as the Managed Facilities, (b) be owned by
Owner and (c) use the taxpayer identification number of Owner. The Bank Accounts
shall be interest-bearing accounts if such accounts are reasonably available.
The Bank Accounts may include:

5.4.1.1 one or more accounts for the purposes of depositing all funds received
in the Operation of the Managed Facilities and paying all Operating Expenses
(collectively, the “Operating Account”);

 

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5.4.1.2 one or more accounts into which amounts sufficient to cover all Managed
Facilities Personnel Costs shall be deposited from time to time by Manager (by
transfer of funds from the Operating Account);

5.4.1.3 a separate account for the purpose of depositing funds sufficient to pay
all Management Fees and other amounts due to Manager under this Agreement (by
transfer of funds from the Operating Account) (the “Management Account”); and

5.4.1.4 such other accounts as Manager with Owner’s prior approval (or Owner
with Manager’s approval (not to be unreasonably withheld)) deems necessary or
desirable.

All funds in the Bank Accounts shall be held in express trust for the benefit of
Owner and shall be disbursed on the terms and subject to the conditions of this
Agreement and only for the purposes set forth in this Agreement, and Manager
shall not commingle the funds associated with the Managed Facilities with those
of any other property or Person and Manager shall use such funds solely in
connection with the Operation of the Managed Facilities and for no other
purpose. All funds of Owner and all funds generated with respect to the Managed
Facilities shall be held, at all times, in the Bank Accounts until such funds
are paid to third parties in accordance with this Agreement and Manager shall
not hold any such funds in any other manner. To the extent, if any, that the
funds in the Bank Accounts are deemed not to be held in express trust for the
benefit of Owner and to the extent permitted by the terms of any Financing,
Owner is hereby granted a security interest and lien in the Bank Accounts to
secure Manager’s obligations under this Agreement and Owner is entitled to
perfect its security interest and lien in the Bank Accounts through an account
control agreement with the applicable bank(s) where the Bank Account(s) are
deposited (in customary form and substance and which is reasonably satisfactory
to Manager and which is consistent with this Agreement, including the provisions
of this agreement applicable to the holding and disbursement of funds).

5.4.2 Authorized Signatories; Bank Account Information.

5.4.2.1 Manager’s designees shall be the only Persons authorized to draw funds
from the Bank Accounts and make deposits into the Bank Accounts during the Term;
provided, however, that if any Manager Event of Default has occurred, Manager is
in breach of Section 5.4.4 or the fifth sentence of Section 5.4.1, (i) Owner
shall be authorized to draw, disburse and retain funds as Manager would be so
entitled under Section 5.4.4 (and such funds may only be used in accordance with
Section 5.4.4) and (ii) if any Manager Event of Default has occurred, Manager
shall cease having any further rights to draw on such Bank Accounts and a
signature (electronic or otherwise) from Owner shall also be required for the
drawing of funds from the Bank Accounts. Manager shall establish reasonable
controls to ensure accurate reporting of all transactions involving the Bank
Accounts and as Manager, consistent with commercially reasonable business
procedures and practices which are consistent with the size and nature of the
operations at the Managed Facilities, reasonably deems necessary or advisable.

5.4.2.2 Manager shall (a) provide Owner copies of bank statements with respect
to the Bank Accounts, and (b) provide Owner (1) weekly cash balance summaries
with respect to each Bank Account and (2) such other information regarding the
Bank Accounts as reasonably requested by Owner from time to time.

 

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5.4.3 Permitted Investments; Liability for Loss in Bank Accounts. Manager shall
not invest funds in the Bank Accounts, except as may be permitted under the
Financing Documents and as approved by Owner. Owner shall bear all losses
suffered in any investment of funds into any such Bank Account, and Manager
shall have no liability or responsibility for such losses, except to the extent
due to Manager’s Gross Negligence or Willful Misconduct or any Manager Event of
Default.

5.4.4 Disbursement of Funds to Owner. All revenues from the operation of the
Managed Facilities shall be deposited promptly by Manager in the Operating
Account. Unless the Parties agree otherwise, on or about the twenty fifth
(25th) day of each calendar quarter, Manager shall disburse to Owner, as
directed by Owner, any funds remaining in the Operating Account at the end of
the immediately preceding month after payment, contribution or retention, as
applicable, of the following in the following order of priority: (a) all
Operating Expenses then due but which have not yet been paid; (b) the amount of
debt service accruals and payments due to Lenders as provided in the most
recently updated Monthly Debt Service Schedule; (c) transfer of the Management
Fees then due to the Management Account (for payment within one (1) Business Day
to Manager and, if applicable, in accordance with Section 5.4.5); (d) the amount
of any reserves required to be funded pursuant to the Financing Documents; and
(e) retention by Manager of an amount sufficient to cover (i) a reasonable
reserve (as approved by Owner in the Annual Budget or otherwise in writing in
advance), (ii) any other amounts necessary to cure or prevent any violation of
any Applicable Law in accordance with this Agreement, and (iii) such other
amounts as may be agreed to by the Parties from time to time. In the event Owner
disputes any decision by Manager to reserve and not disburse to Owner funds
pursuant to this Section 5.4.4, such dispute may be submitted by either Party
for Expert Resolution in accordance with Article XVII.

5.4.5 Transfers Between Bank Accounts. Manager has the authority to transfer
funds from and between the Bank Accounts in order to pay Operating Expenses, to
pay debt service with respect to the Managed Facilities, to invest funds for the
benefit of the Managed Facilities (to the extent permitted under this
Agreement), to pay the Management Fees to Manager pursuant to this Agreement and
for any other purpose consistent with the Annual Budget and good business
practices; provided, that, if the circumstance contemplated by the proviso in
the first sentence of Section 5.4.2 has occurred and is continuing, Manager
shall not transfer funds from the Management Account without the co-signature
(electronic or otherwise) of a representative of Owner (other than an Affiliate
of Manager) (and Owner shall not unreasonably withhold, condition or delay such
co-signature).

5.4.6 Monthly Debt Service Schedule. Whenever Owner incurs indebtedness with
respect to the Managed Facilities, Owner shall provide Manager with a schedule
of all principal and interests payments due with respect thereto and the method
for calculating interest with respect to such indebtedness (as the same may be
updated, the “Monthly Debt Service Schedule”).

 

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  5.5 Funds for Operation of the Managed Facilities.

5.5.1 Initial Working Capital. As of the Commencement Date, Owner shall ensure
that the available funds in the Operating Account include at least $4,347,913 of
cash and the net working capital of the Managed Facilities (as calculated in a
manner consistent with the calculation of Net Working Capital as defined in the
Transaction Agreement) shall be at least $(4,177,370).

5.5.2 Additional Funds. If Manager reasonably determines at any time during the
Term that: (a) the available funds in the Operating Account are insufficient to
allow for the uninterrupted and efficient Operation of the Managed Facilities in
accordance with this Agreement (including the Operating Standard) based on a
ninety (90) day reference period; (b) the available funds in the Operating
Account are insufficient for the timely payment of amounts in any given month to
be paid under Section 5.4.4; (c) the available funds in the Operating Account
are insufficient for (i) the Operation of the Managed Facilities in accordance
with the Operating Limitations, (ii) Building Capital Improvements or (iii) ROI
Capital Improvements then contemplated in the Annual Budget or otherwise
approved by Owner, Manager shall notify Owner of the existence and amount of the
shortfall (a “Funds Request”) and shall provide a reasonably detailed
explanation (including any relevant documentation related thereto) of the cause
of such shortfall. Owner shall be obligated to deposit into the Operating
Account the amount requested by Manager in the Funds Request within fifteen
(15) days after delivery of the Funds Request.

5.5.3 Failure to Provide Funds. If Owner fails to deposit all or any portion of
any amount requested in a Funds Request, Manager shall have the right (but not
the obligation) to use or pledge its credit in paying, on Owner’s behalf,
(a) ordinary and customary Operating Expenses to the extent incurred in
accordance with this Agreement, (b) Building Capital Improvements and Routine
Capital Improvements to the extent incurred in accordance with this Agreement
and (c) ROI Capital Improvements then contemplated in the Annual Budget or
otherwise approved by Owner, in which case Owner shall pay for such goods or
services when such payment is due. In addition, if Owner fails to pay for such
goods or services when such payment is due, then Manager shall have the right
(but not the obligation) to pay for such goods or services, in which case Owner
shall reimburse Manager immediately upon demand by Manager (and Manager shall be
entitled to reimburse itself from any available funds from the Operation of the
Managed Facilities, including the Operating Account) for all such amounts
advanced by Manager, together with interest thereon in accordance with
Section 3.4. Notwithstanding the foregoing, Manager shall not have the rights
described in this Section 5.5.3 with respect to any failure by Owner to fund or
pay such amounts that is caused directly or indirectly by Manager or any of its
Affiliates.

 

  5.6 Purchasing.

Manager and its Affiliates shall make or cause to be made available to the
Managed Facilities, on a Non-Discriminatory basis, licensing or purchasing
programs available to Other Managed Resorts (whether on a national, regional,
mandatory, optional or other basis) (each, a “Purchasing Program”). Manager may
elect, in its discretion, but subject to the terms of this Section 5.6 and
Applicable Law, to license any games or purchase or lease any FF&E and

 

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Supplies for the Operation of the Managed Facilities from a Purchasing Program
maintained by or for the benefit of Manager or its Affiliates; provided, that
Manager shall ensure the prices and terms of the games, FF&E and Supplies to be
licensed or purchased under such Purchasing Program (including with such
modifications as provided below) are reasonably comparable to the prices and
terms which would be charged by reputable and qualified unrelated third parties
on an arm’s length basis for similar games, FF&E and Supplies sold, leased or
licensed to similar companies in the hospitality industry, and may be grouped in
reasonable categories rather than being compared item by item. Manager and its
Affiliates shall pass through any discounts, rebates or similar incentives
received in connection with a Purchasing Program to the Managed Facility on a
Non-Discriminatory basis, and Owner hereby acknowledges that certain discounts,
rebates and similar incentives are not passed through to Other Managed Resorts.
Owner acknowledges and agrees that Manager and its Affiliates shall have the
right, provided the same is implemented on a Non-Discriminatory basis, to
(a) modify the fees, costs or terms of any such Purchasing Program, including
adding games, FF&E and Supplies to, and, subject to Applicable Law, deleting
games, FF&E and Supplies from, such Purchasing Program; (b) terminate all or any
portion of any such Purchasing Program, from time to time, upon sixty (60) days’
notice to Owner; (c) subject to the obligation to pass through any such amounts
as set forth in the immediately preceding sentence, receive commercially
reasonable payments, fees, commissions or reimbursements from suppliers and
third parties in respect of such purchases, leases or licenses; and (d) own or
have investments in such suppliers.

 

  5.7 Managed Facilities Parking.

Owner shall cause to be available as part of the Managed Facilities parking
sufficient for the Operation of the Managed Facilities (it being acknowledged
and agreed by Manager that, as of the Commencement Date, the parking facilities
available to the Managed Facilities are sufficient for the Operation of the
Managed Facilities). If parking for the Managed Facilities is not Operated as a
part of the Managed Facilities, Manager shall have the right to approve the
arrangements for such operation, including the identity of any third-party
parking manager.

 

  5.8 Use of Affiliates by Manager.

In performing its obligations under this Agreement, Manager from time to time
may use the services of one (1) or more of its Affiliates as permitted under
this Agreement. If an Affiliate of Manager performs services Manager is required
to provide under this Agreement, such Affiliate and its employees must hold such
licenses or qualifications as may be required by the Gaming Authorities in
connection with the performance of such services and Manager shall be ultimately
responsible to Owner for its Affiliate’s performance. Owner shall bear no cost
or expense for the Affiliate’s services, other than as expressly set forth in
Section 4.1.1 for Centralized Services Charges, Section 3.3 for Reimbursable
Expenses, Section 5.6 for participation in Purchasing Programs, Section 5.11 for
an Amenities Manager and Section 12.1.2 for the Insurance Program. Additionally,
Manager may cause Affiliates of Manager who operate other facilities on behalf
of Owner or Owner’s Affiliates to perform services Manager is required to
provide under this Agreement and the costs associated with such performance
shall be an Operating Expense of the Managed Facilities. Any agreement or
transaction between Manager acting on behalf of Owner, on the one hand, and any
Affiliate of Manager, on the other hand, that involves a cost or expense to
Owner or the Managed Facilities, or a transfer of assets from the

 

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Managed Facilities, shall either be (a) approved by Owner or (b) expressly set
forth in the Annual Budget (subject to Sections 5.1.4 and 5.1.5) and identified
as an expense of an Affiliate of Manager (except that Managed Facilities
Personnel Costs and costs incurred to third-party vendors under the Purchasing
Program need not be separately identified in the Annual Budget as an expense to
an Affiliate of Manager). Subject to any confidentiality or similar obligations
(provided the same are applied in a Non-Discriminatory manner to all Persons
with whom Manager transacts similar business), Manager shall make available to
Owner such information as reasonably requested by Owner to compare the cost or
expense charged by the Affiliate with charges of an unaffiliated third party.
Notwithstanding anything to the contrary contained herein, Manager acknowledges
and agrees that all transactions with, or services performed by, any Affiliate
of Manager hereunder shall be on commercially reasonable and fair, arm’s-length
terms and conditions (unless otherwise expressly approved by Owner in writing).

 

  5.9 Limitation on Manager’s Obligations.

5.9.1 General Limitations. Manager’s obligations under this Agreement are
subject in all respects to the availability of sufficient funds from the
Operation of the Managed Facilities, or which are otherwise provided by Owner.
Except as otherwise expressly provided in this Agreement, all costs and expenses
of Operating the Managed Facilities shall be payable out of funds from the
Operation of the Managed Facilities, or which are otherwise provided by Owner.
In no event shall Manager be obligated to pledge or use its own credit or
advance any of its own funds to pay any such costs or expenses for the Managed
Facilities. Accordingly, notwithstanding anything to the contrary in this
Agreement, Manager shall be relieved from its obligations to Operate the Managed
Facilities in compliance with the Operating Standard and in accordance with this
Agreement whenever and to the extent that Manager is prevented or restricted in
any way from doing so by reason of: (a) the occurrence of a Force Majeure Event;
(b) the Operating Limitations; (c) Owner’s breach of any material term of this
Agreement (including Owner’s obligation to provide sufficient funds as required
under this Agreement); (d) any limitation or restriction in this Agreement on
Manager’s authority or ability to expend funds in respect of the Managed
Facilities; or (e) the lack of availability of sufficient funds to Operate the
Managed Facilities, except to the extent caused by Manager’s Gross Negligence or
Willful Misconduct or any Manager Event of Default (disregarding any applicable
notice and/or cure periods for such purpose).

5.9.2 Pre-Existing Conditions and External Events. If any environmental,
construction, personnel, real property-related or other problems arise at the
Managed Facilities during the Term that: (a) relate to the Operation or
condition of the Managed Facilities, or activities undertaken at the Managed
Facilities or on the Premises, prior to the Term; or (b) are caused by or arise
from sources outside of the Managed Facilities, Manager’s services under this
Agreement shall not extend to management of any remediation, abatement or other
correction of such problems, and Owner shall retain full managerial and
financial responsibility and liability for and control over the remediation,
abatement and correction of such problems (in each case, in accordance with all
Applicable Law), and shall take such actions in a timely manner with as little
disturbance or interruption of the use and Operation of the Managed Facilities
as reasonably practicable. Notwithstanding the foregoing, in the event such
problems exist: (i) Manager will cooperate reasonably with Owner in connection
with Owner’s remediation, abatement and correction efforts; and (ii) if there is
a reasonable likelihood that such problems would cause

 

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criminal or civil liability to Manager, injury to persons using the Managed
Facilities or damage to the Managed Facilities, Owner shall promptly remedy such
problems and if Owner fails to do so, Manager shall have the right to take all
reasonably necessary steps to comply with any Applicable Law, or to avoid
criminal or civil liability to Manager, or injury to Persons or property;
provided, that Manager shall give Owner prior notice thereof.

 

  5.10 Third-Party Operated Areas.

Manager shall, in Consultation with Owner, identify particular portions of the
Managed Facilities, such as a restaurant, bar, entertainment venue, spa or
retail location (“Third-Party Operated Areas”), that shall be operated by third
parties (the “Third-Party Managers”) under a lease, operating agreement,
franchise agreement or similar agreement arranged by Manager and in the name of
Owner. Manager shall have the right to manage the process of selecting any
Third-Party Managers. Any lease, operating agreement, franchise agreement or
similar agreement entered into with a Third-Party Manager shall (a) be
consistent with the terms of this Agreement (including that the same shall be
Non-Discriminatory to the Managed Facilities); (b) require the Third Party
Managers to operate the Third-Party Operated Areas in accordance with the
Operating Standard and all other terms of this Agreement, subject to the
Operating Limitations, and (c) require the Third-Party Managers and their
employees and contractors, as applicable, to hold such license or qualification
as may be required by the Gaming Authorities.

 

  5.11 Amenities.

Subject to Section 2.2.9, Manager shall have the right to propose to have an
Affiliate of Manager (the “Amenities Manager”) operate one or more of the
Third-Party Operated Areas. The arrangement with any Amenities Manager for the
operation of a restaurant, bars, entertainment venue, spa, retail location or
other amenity as a part of the Managed Facilities shall be documented pursuant
to a lease or management agreement prepared by Manager and approved by Owner
which shall provide that the restaurant, bars, entertainment venue, spa, retail
location or other amenity, as applicable, shall be (a) designed and constructed
in all material respects in accordance with the Operating Standard, Design
Guidance and any other standards reasonably required by Owner and the Amenities
Manager, and (b) operated in accordance with the Operating Standard and all
other terms of this Agreement, in each case subject to the Operating
Limitations.

ARTICLE VI.

APPROVALS

 

  6.1 Gaming Approvals.

This Agreement and all other agreements contemplated herein shall be executed
only after receipt of all required approvals and authorizations, if any, by all
applicable Gaming Authorities. Owner, at its expense, during the Term shall take
such commercially reasonable actions as may be reasonably required to maintain
such required approvals or authorizations from the applicable Governmental
Authorities to make effective this Agreement as and if required by Applicable
Law and permit Owner to make the payments required to be made to Manager under
this Agreement and all related agreements; provided, that Manager, at Manager’s
expense, during the Term shall maintain such license(s) or qualification(s)
applicable to Manager

 

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as may be required by applicable Gaming Authorities. Manager shall have the
right, at its expense, to participate in all phases of the approval or
authorization process. The Parties shall cooperate in all such undertakings or
dealings with Gaming Authorities, and Owner shall provide reasonable notice to
Manager prior to all meetings with any Gaming Authority for such purpose. Each
of Manager and Owner covenants and agrees to use its best efforts to maintain
all Approvals (other than such license(s) or qualification(s) applicable to the
other Party) required to approve Manager to Operate the Managed Facilities and
this Agreement.

ARTICLE VII.

PROPRIETARY RIGHTS

 

  7.1 Service Mark Rights.

7.1.1 In consideration of the Management Fee, Manager and CLC shall procure for
the benefit of, and hereby grant to, Owner and the Managed Facilities the
non-exclusive right and license to use and otherwise exploit the Service Mark
Rights in connection with the Operation, promotion and marketing of the Managed
Facilities throughout the Term of this Agreement and during the Transition
Period. As between Owner and CLC or any CLC assignee that owns any Service Mark
Right, with respect to such right and license, CLC and/or such assignee shall,
during the Term, have the sole and exclusive right to determine the form of
presentation of the Service Mark Rights in the Operation of the Managed
Facilities, including in all uses of the Service Mark Rights in marketing,
sales, advertising and promotional materials of the Managed Facilities, any
goods or services relating to the Managed Facilities and any signage for the
Managed Facilities. Subject to the Annual Budget, Manager agrees to procure
merchandise bearing the Brand or the Service Mark Rights on behalf of the Owner
for sale or promotion at the Managed Facilities at customary whole-sale prices
for such merchandise.

7.1.2 Notwithstanding that Manager shall use the Service Mark Rights in the
conduct of the Operations, Owner acknowledges that, as between CLC or any CLC
assignee that owns any Service Mark Right, on the one hand, and Owner, on the
other hand, this use of the Service Mark Rights shall not create in Owner’s
favor any right, title, or interest in or to any of the Service Mark Rights, but
all rights of ownership and control of the Service Mark Rights shall reside
solely with CLC or any CLC assignee that owns such Service Mark Right(s). If and
to the extent Owner acquires any right, title or interest in or to any of the
Service Mark Rights, Owner hereby assigns all such right, title and interest
therein to such CLC or any CLC assignee that owns any Service Mark Right, as
directed by CLC.

7.1.3 Owner acknowledges and agrees that the right to use the Service Mark
Rights in connection with the Managed Facilities (a) excludes any right of Owner
to register any trademarks, copyrights or domain names or seek any patents which
use any element of the Service Mark Rights, such right being reserved
exclusively to CLC or any CLC assignee that owns any Service Mark Right;
(b) excludes any right of Owner to sublicense or subcontract or permit other
Persons to use the Service Mark Rights (including the production of branded
products) without the prior written consent of Manager (except a successor
manager of the Managed Facilities during the Transition Period shall be
permitted such use), (c) does not permit Owner to use the Service Mark Rights or
any marks, names, indicia or identifiers that are or may be confusingly similar
to any element of the Service Mark Rights in Owner’s corporate name;

 

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(d) does not permit Owner to acquire, or represent in any manner that Owner has
acquired, in any manner any ownership rights in the Service Mark Rights or any
marks, names, indicia or identifiers that are confusingly similar to the Service
Mark Rights, and (e) does not permit Owner to use the Service Mark Rights to
incur, secure or guarantee any obligation or indebtedness in such a manner as
may, in any way, subject CLC or any CLC assignee that owns such Service Mark
Right(s) to liability. Further, as between Owner and CLC or any CLC assignee
that owns any Service Mark Right, any new trademarks, trade dress, slogans,
logos, and any other matter capable of serving as a designation of origin for
the goods and services provided in connection with the Managed Facilities to the
extent incorporating and derived from a Service Mark Right shall be owned by CLC
or any CLC assignee that owns such Service Mark Right, as directed by CLC.

 

  7.2 Use of Service Mark Rights.

Subject to the obligation of the Manager to operate the Managed Facilities under
the Brand, as part of Manager’s services under this Agreement for the Operation
of the Managed Facilities, Manager may, during the Term, use any Service Mark
Rights in the Operation of the Managed Facilities as Manager deems appropriate
or advisable consistent with the Annual Budget. The Managed Facilities shall be
a part of the Total Rewards System used generally at the Other Managed Resorts.
Manager reserves the right and discretion to require Managed Facilities
Personnel to sign a commercially reasonable confidentiality and restricted use
agreement as a condition to the disclosure or use of any Service Mark Rights by
such Person, which shall supplement the terms set forth in this Article VII.

 

  7.3 Rights to Service Mark Rights.

7.3.1 Subject to Section 7.3.2, Owner hereby (a) recognizes the sole and
exclusive right of ownership of CLC or any CLC assignee that owns any Service
Mark Right to all Service Mark Rights and (b) agrees that Owner’s use of the
Service Mark Rights shall be conducted exclusively by Manager (or, as provided
herein during the Transition Period, Owner or a successor manager of the Managed
Facilities) under this Agreement. Without limiting any other rights, remedies or
claims of CLC or any CLC assignee that owns any Service Mark Right and/or any of
their respective Affiliates at law, under this Agreement or otherwise, Owner
covenants that in the event of any termination or expiration of this Agreement,
whether as a result of a default by Manager or otherwise, Owner shall not
continue the operations of the Managed Facilities pursuant to a Service Mark
Right, nor will it otherwise utilize any of the Service Mark Rights (or hold
itself out as operating pursuant to the same) or any confusingly similar variant
thereof in the operations of the Managed Facilities or the name of the Managed
Facilities; provided, however, that Owner shall have a period of twelve
(12) months following termination or expiration of this Agreement to remove all
Service Mark Rights from FF&E and the Managed Facilities, the cost which shall
be borne by Owner. All use of the Service Mark Rights by Owner during such
period shall inure to the benefit of CLC or any CLC assignee that owns such
Service Mark Right. If Owner fails to so remove all Service Mark Rights from
FF&E and the Managed Facilities within such twelve (12) month period, Owner
agrees that Manager and its Affiliates or their respective representatives may
enter the Managed Facilities at reasonable times and upon fifteen days’ prior
written notice to Owner to remove all Service Mark Rights from FF&E and the
Managed Facilities, the cost of which shall be borne by Owner provided that
Manager and its Affiliates use commercially reasonable efforts to avoid
unnecessary damages to the FF&E and the Managed Facilities.

 

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7.3.2 Notwithstanding the foregoing, Owner shall have and is hereby granted by
CLC an irrevocable and perpetual (including following the Transition Period, but
in each case subject to CLC’s enforcement rights, including the right to seek
and obtain specific performance or other equitable relief for quality control
breaches), transferable, royalty-free, sublicenseable (in connection with the
Managed Facilities) and non-exclusive license and right to all Owner Primary
Marks for use in connection with the Managed Facilities subject only to the use
of such Owner Primary Marks at a level of quality that is at least generally
commensurate with the level of quality during the Term. With respect to the
Service Mark Rights and the Owner Primary Marks, each of Manager, CLC and any
CLC assignee that owns a Service Mark shall have the right after the Term to
inspect the Managed Facilities upon reasonable notice and at reasonable times to
confirm the quality of the goods and services offered under the Service Mark
Rights and the Owner Primary Marks. All use of the Service Mark Rights and Owner
Primary Marks by Owner shall inure to the benefit of CLC or CLC’s assignee that
owns the same.

7.3.3 Owner Primary IP. Owner shall have, and is hereby granted by Manager and
CLC, an irrevocable, perpetual (including following the Transition Period),
transferable, royalty-free, sublicenseable and non-exclusive license and right
to exploit all Owner Primary IP.

7.3.4 Owner Owned IP. Owner and its Affiliates shall have the sole and exclusive
right, title and ownership to all Owner Owned IP. All Owner Owned IP made during
the Term is hereby irrevocably assigned by Manager and CLC on behalf of
themselves and their respective Affiliates (to the extent of Manager’s, CLC’s
and their respective Affiliates’ interest therein, if any) to Owner or its
designee and upon creation shall be and become the exclusive property of Owner
or its designee, and neither Manager, CLC nor any of their respective Affiliates
shall have any ownership rights in any such Owner Owned IP. Owner hereby grants
for the benefit of Manager, its Affiliates, CEC and its Affiliates, CEOC and its
Affiliates, Services Co and the Managed Facilities the non-exclusive right and
license to use and otherwise exploit the Owner Owned IP during the Term and the
Transition Period in connection with the Operation, promotion and marketing of
the Managed Facilities and in connection with enterprise level functions not
associated with a specific facility consistent with uses as of the Commencement
Date (including the Total Rewards System). Prior to or at the expiration of the
Transition Period, Manager, its Affiliates, CEC and is Affiliates shall
discontinue all use of the Owner Owned IP.

7.3.5 This Section 7.3 shall survive the expiration or termination of this
Agreement; provided, that notwithstanding the foregoing, this Section 7.3 shall
be replaced and superseded by the terms and conditions set forth in the
Cross-License Agreement upon the effective date of such agreement.

 

  7.4 Proprietary Information and Systems of Manager or its Affiliates.

7.4.1 Proprietary Information and Systems. Owner agrees that, as of the
Commencement Date, Manager, its Affiliates and licensees have the sole and
exclusive right,

 

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title and ownership to the following items as now in existence and as the same
may be modified, supplemented or updated in the future, in each case as and to
the extent provided during the Term by Manager, CEOC or any of their respective
Affiliates or licensees for use in the operation of the Managed Facilities
(collectively, the “Proprietary Information and Systems”):

7.4.1.1 proprietary information, techniques and methods of operating and
marketing, gaming, hotel and related businesses, including without limitation,
the Total Rewards System;

7.4.1.2 proprietary information, techniques and methods of designing, selecting,
maintaining, operating, marketing, developing and customizing games used in
gaming, hotel and related businesses;

7.4.1.3 proprietary information, techniques and methods of training employees in
the gaming, hotel and related businesses;

7.4.1.4 proprietary business plans, projections, marketing, advertising and
promotion plans, strategies and systems, including the proprietary items listed
on Exhibit D attached hereto and incorporated herein by this reference and any
modifications, supplements or revisions thereof, which may hereafter be made by
Manager, CEOC or any of their respective Affiliates or licensees, all of which
have been developed or acquired over many years through the expenditure of time,
money and effort and to the extent which Manager, CEOC or any of their
respective Affiliates or licensees maintain as confidential and as a trade
secret(s); and

7.4.1.5 all proprietary information, techniques and methods used in connection
with the Total Rewards System or any other rewards system which is used
generally at Other Managed Resorts.

Notwithstanding the foregoing, Proprietary Information and Systems shall not
include: information, techniques, methods and systems (a) developed by Owner or
third parties (that are not Affiliates or licensees of CEC or CEOC) on Owner’s
behalf; (b) developed by Manager or its Affiliates or a third party specifically
for use at the Managed Facilities; (c) specific to the Managed Facilities that
may be contained in Proprietary Information and Systems, including the Managed
Facilities Guest Data; and (d) which are not recognized as a trade secret of
Manager or its Affiliates, or entitled to protection as proprietary to Manager
or its Affiliates, under applicable state law.

Manager and CLC shall procure for the benefit of, and hereby grant to, Owner and
the Managed Facilities the non-exclusive and sublicenseable right and license to
use and otherwise exploit the Proprietary Information and Systems (and other
proprietary intellectual property used by Manager under this Agreement, if any,
excluding Owner Primary IP, Owner Owned IP and any Service Mark Right) in
connection with the Operation, promotion and marketing of the Managed Facilities
throughout the Term of this Agreement and during the Transition Period.

7.4.2 Confidentiality. Owner further agrees that, to the extent Owner has access
to the Proprietary Information and Systems and subject to Owner’s right to use
or permit use on its behalf as permitted under this Agreement, Owner shall:
(a) maintain the confidentiality of Manager Confidential Information in such
Proprietary Information and

 

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Systems, and not provide access to such Manager Confidential Information (or any
documents, notes, memoranda, lists, computer programs or summaries thereof) to
any third parties; (b) not use the Proprietary Information and Systems for any
purpose other than as permitted under this Agreement; (c) make no copies of all
or any portion of the Proprietary Information and Systems; and (d) upon the
termination or expiration of this Agreement, (i) return all Proprietary
Information and Systems to Manager, including documents, notes, memoranda,
lists, computer programs and any summaries of the Proprietary Information and
Systems in Owner’s possession or control but excluding any Managed Facilities
Guest Data which Owner may retain pursuant to the terms of this Agreement, and
(ii) cease to access any and all of the Proprietary Information and Systems, in
each case upon the end of the Transition Period.

7.4.3 Guest Data and Managed Facilities Guest Data.

7.4.3.1 Owner recognizes the exclusive right of ownership of Manager and its
Affiliates to all Guest Data, other than Managed Facilities Guest Data, and the
Parties agree that they shall have and hereby assign to each other joint
ownership to all Managed Facilities Guest Data (without a duty to account to the
other or other obligations except as expressly set forth herein). Owner hereby
disclaims any right or interest in Guest Data, other than Managed Facilities
Guest Data, regardless of any legal protection afforded thereto. Owner and
Manager hereby acknowledge and agree that a portion of the consideration paid or
payable (as applicable) pursuant to Section 3.5 of the Transaction Agreement,
dated as of February 28, 2014, by and among CEC, CEOC, Caesars License Company,
LLC, CGP and certain other parties thereto (as may have been amended prior to
the Commencement Date, the “Transaction Agreement”) shall be treated as a
prepaid license fee and other consideration paid by Owner for the Proprietary
Information and Systems and the Managed Facility Guest Data. Owner agrees that
throughout the Term, Manager or Manager’s designees shall host and retain the
database relating to customers’ activities at the Managed Facilities which shall
be collected and stored in systems implemented and managed by or on behalf of
Manager or its Affiliates, including all customer information gathered by or on
behalf of Manager or its Affiliates in connection with any casino player loyalty
program card or successor player or guest rewards program, and Manager or one of
its Affiliates shall own and, subject to the restrictions set forth in this
Section 7.4.3, be entitled to use any and all of the customer or other
information gathered by or on behalf of Manager or its Affiliates in connection
with this Agreement or such programs.

7.4.3.2 Each of Owner and Manager shall not and shall cause its respective
Affiliates (and Persons to whom disclosure is made by it under clause (c) below)
not to, and each of Manager and Owner shall cause Services Co not to, and Owner
shall cause any successor manager of the Managed Facilities not to, (a) use the
Managed Facilities Guest Data to offer, solicit or promote any illegal, obscene,
inappropriate, adult oriented, or pornographic material or activity or to engage
in any activity that would constitute spamming or a violation of any Applicable
Laws relating to privacy, (b) use the Managed Facilities Guest Data in any
manner which is inconsistent with the integrity of the Brand or the Service Mark
Rights, (c) sell, license or grant to any other Person (except, in the case of
Manager, to an Affiliate of Manager, CEC or its Affiliate, CEOC or its
Affiliate, CERP or its Affiliate or Services Co or its Controlled subsidiary or,
in the case of Owner, to an Affiliate of Owner) a right to use, view or copy the
Managed Facilities Guest Data or (d) use the Managed Facilities Guest Data for
any purpose which is not for the direct benefit of the Managed Facilities, or
the businesses and/or operations

 

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of Manager and its Affiliates, CEC or its Affiliates, CEOC or its Affiliates,
CERP or its Affiliates or Owner and its Affiliates. Notwithstanding anything
contained in this Agreement to the contrary, the use of the Managed Facilities
Guest Data shall, in all events, be subject to the limitations and restrictions
set forth in any other agreement or other contract related thereto, this
Agreement, Applicable Law and this Section 7.4.3. Owner and Manager further
agree not to use, nor permit their Affiliates (or Persons to whom disclosure is
made by it under clause (c) above) to use, at any time, the Managed Facilities
Guest Data in any illegal manner, nor to engage in any activity that would
constitute spamming or a violation of any privacy laws under any applicable
jurisdiction’s regulations. For the avoidance of doubt, Owner agrees that it
shall not and shall cause its Affiliates not to disclose any gaming play or
player rating information contained in the Managed Facilities Guest Data to a
Competitor. Notwithstanding the foregoing, if, upon the Assignment by Manager of
this Agreement or the expiration or termination of this Agreement, Owner engages
a successor manager to Operate the Managed Facilities ((including any Person who
becomes the “Manager” hereunder or otherwise performs any of Managers rights or
obligations hereunder, including Services Co), then the Managed Facilities Guest
Data may be disclosed to and used by such successor, but in all events such use
shall be subject to the limitations and restrictions set forth in any other
agreement or other contract related thereto, this Agreement, Applicable Law and
this Section 7.4.3; provided, that if Applicable Law or any privacy policy of
Manager or its Affiliates requires Manager to provide guests of the Managed
Facilities with notice of such transfer and/or a right to “opt out” of having
their information transferred to such successor, Owner and Manager shall comply
with such requirement and the election of such guest with respect thereto. Each
of Owner and Manager agrees to, and to cause its respective Affiliates (and
Persons to whom disclosure is made by it under clause (c) above) to and Services
Co to, and Owner shall cause any successor manager to, (A) maintain commercially
reasonable measures to protect the physical safety and data integrity of the
Managed Facilities Guest Data, and (B) comply with (1) all applicable data
protection policies applicable to guest data, to which Manager and its
Affiliates are subject, including compliance with all relevant security best
practices including PCI Data Security Standards and the Sarbanes Oxley Act, and
(2) during the Term, all privacy, data security and reasonable contact policies
of Manager and its Affiliates, in the case of clause (B)(1) or (B)(2), Owner’s
obligations shall only apply to such policies that have been identified to Owner
in advance in writing. Manager may require Owner to acknowledge in writing its
receipt of any Managed Facilities Guest Data (in whatever form) and confirm its
obligations under this Section 7.4.3 and the requirements described herein. In
the event Manager reasonably believes the integrity of such Managed Facilities
Guest Data has been compromised, Manager and its Affiliates shall have the
right, upon reasonable notice and at reasonable times, to inspect the physical
facilities and servers where Owner stores (or has stored on its behalf) the
Managed Facilities Guest Data and to review all methods and processes associated
with the storage and use of same.

7.4.3.3 Subject to any limitations or requirements of any applicable Gaming
Authority and in conformance with Applicable Law, during the Term and the
Transition Period:

(a) from time to time (but not more than twice per year), upon the reasonable
request of Owner and at Owner’s expense, Manager shall prepare filtered lists
and datasets from the Managed Facilities Guest Data and provide to Owner a copy
of the Managed Facilities Guest Data in comma separate value (CSV) format,
unless another format is agreed upon by Owner and Manager; and

 

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(b) Manager shall maintain, in a manner consistent with commercially reasonable
data retention and security practices on a monthly basis, backup tapes in
iSeries format (the “Backup Tapes”) containing all Managed Facilities Guest Data
resident on the management system installed for the Managed Facilities (the
“CMS”), provided, that the Backup Tapes may be located at the Managed Facilities
or such other location reasonably determined by Manager and to which Owner has
reasonable access, and Manager shall keep the Backup Tapes for a rolling period
of six (6) months, with the costs of all Backup Tapes and maintenance thereof
shall be an Operating Expense.

7.4.4 Improvements to System. All intellectual property rights to the
improvements made during the Term in the Proprietary Information and Systems
(the “System Improvements”) are hereby irrevocably assigned by Owner (to the
extent of Owner’s interest therein, if any) to CEOC or its designee and upon
creation shall be and become the exclusive property of CEOC or its designee, and
neither Owner nor any of its Affiliates nor any successor manager hereunder
shall have any ownership rights in any System Improvements. CEOC or its
Affiliates may incorporate any such System Improvements into the Proprietary
Information and Systems and shall have the exclusive right to all intellectual
property rights (including patent, copyright, and industrial design rights) in
and to the System Improvements, and to register and protect such System
Improvements in CEOC’s or its designee’s own name to the exclusion of Owner, who
shall have no rights to use such System Improvements except as specifically
granted to Owner under this Agreement. Owner agrees to execute such assignment
or other documents, and to cause any successor manager to execute such
assignment or other documents, as CEOC may reasonably request to evidence its
ownership or to assist CEOC in securing intellectual property rights to the
System Improvements, at CEOC’s sole expense.

7.4.5 Survival. This Section 7.4 shall survive the expiration or termination of
this Agreement.

ARTICLE VIII.

CONFIDENTIALITY

 

  8.1 Disclosure by Owner.

Owner acknowledges that Manager will provide certain Manager Confidential
Information to Owner in connection with the Operation of the Managed Facilities,
and that such Manager Confidential Information is proprietary to Manager and its
Affiliates, and includes trade secrets. Accordingly, during the Term and
thereafter: (a) Owner shall not, and shall cause its Affiliates not to, use the
Manager Confidential Information in any other business or capacity, and Owner
acknowledges such use would constitute an unfair method of competition;
(b) Owner shall maintain the confidentiality of, and shall not disclose to any
other Person (including the media), any Manager Confidential Information or the
terms of this Agreement, except to its shareholders, partners, directors,
officers, employees, agents, representatives, legal counsel, accountants and
existing and potential Lenders and investors and potential purchasers (provided
such potential investor or purchaser is not a Competitor), but only on a
reasonable “need to know” basis in connection with its ownership of the Managed
Facilities and subject to customary

 

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confidentiality protections; (c) Owner shall not make unauthorized copies of any
portion of the Manager Confidential Information disclosed in written, electronic
or other form; and (d) Owner shall ensure that none of its shareholders,
partners, directors, officers, employees, agents, legal counsel, accountants and
existing and potential Lenders or investors or potential purchasers use,
disclose or copy any Manager Confidential Information, disclose any terms of
this Agreement or take any other actions that Owner is otherwise prohibited from
taking under this Section 8.1. Notwithstanding the foregoing, the restrictions
on the use and disclosure of Manager Confidential Information shall not apply:
(i) to information or techniques which are or become generally known to the
public (other than through any breach of this Section 8.1 with respect to
confidentiality); (ii) to the extent such disclosure is required under
Applicable Laws, including reporting requirements applicable to public
companies, or stock exchange rules; or (iii) to information known to Owner
(other than in connection with the performance of its rights or duties
hereunder) before disclosure by Manager or disclosed to Owner by a third party
not subject to confidentiality obligations to Manager or developed by Owner
without use of Manager Confidential Information. In the event that Owner or any
Person to which Owner has disclosed Manager Confidential Information is
requested or required by oral question, interrogatory, request for information
or documents, subpoena, civil investigative demand or similar process to
disclose any Manager Confidential Information, Owner shall and shall cause such
Person to: (A) provide Manager with prompt notice, to the extent legally
permissible, so that Manager and its Affiliates may seek a protective order or
other appropriate remedy or, in their discretion, waive compliance with the
provisions of this Section 8.1; and (B) reasonably cooperate with Manager and
its Affiliates, at their expense, in any effort Manager or any of its Affiliates
undertakes to obtain a protective order or other remedy. In the event that such
protective order or other remedy is not obtained or Manager in its discretion
waives compliance with the provisions of this Section 8.1, Owner shall and shall
cause such Person to disclose to the Person compelling disclosure only that
portion of the Manager Confidential Information that Owner is advised, by
outside counsel, is legally required and to use commercially reasonable efforts
to obtain reliable assurance that confidential treatment is accorded the Manager
Confidential Information so disclosed (to the extent available). Owner shall be
responsible for any acts or omissions of any of its employees, members,
managers, attorneys, accountants, agents, representatives, consultants, existing
and potential Lenders and investors and potential purchasers in violation of
this Section 8.1.

 

  8.2 Disclosure by Manager.

Manager acknowledges that Owner may from time to time provide certain Owner
Confidential Information to Manager in connection with the Operation of the
Managed Facilities, and that such Owner Confidential Information is proprietary
to Owner and its Affiliates, and may include trade secrets. Accordingly, during
the Term and thereafter: (a) Manager shall not, and shall cause its Affiliates
not to, use the Owner Confidential Information in any other business or
capacity, and Manager acknowledges such use would constitute an unfair method of
competition; (b) Manager shall maintain the confidentiality of, and shall not
disclose to any other Person (including the media), any Owner Confidential
Information or the terms of this Agreement, except to its shareholders,
partners, directors, officers, employees, agents, representatives, legal
counsel, accountants and existing and potential lenders and investors and
potential purchasers, but only on a reasonable “need to know” basis in
connection with its Operation of the Managed Facilities and subject to customary
confidentiality protections; (c)

 

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Manager shall not make unauthorized copies of any portion of the Owner
Confidential Information disclosed in written, electronic or other form; and
(d) Manager shall ensure that none of its shareholders, partners, directors,
officers, employees, agents, legal counsel, accountants and existing and
potential lenders or investors or potential purchasers use, disclose or copy any
Owner Confidential Information, disclose any terms of this Agreement or take any
other actions that Manager is otherwise prohibited from taking under this
Section 8.2. Notwithstanding the foregoing, the restrictions on the use and
disclosure of Owner Confidential Information shall not apply: (i) to information
or techniques which are or become generally known to the public (other than
through any breach of this Section 8.2 with respect to confidentiality); (ii) to
the extent such disclosure is required under Applicable Laws, including
reporting requirements applicable to public companies, or stock exchange rules;
or (iii) to information known to Manager (other than in connection with the
performance of its rights or duties hereunder) before disclosure by Owner or
disclosed to Manager by a third party not subject to confidentiality obligations
to Owner or developed by Manager without use of Owner Confidential Information.
In the event that Manager or any Person to which Manager has disclosed Owner
Confidential Information is requested or required by oral question,
interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process to disclose any Owner Confidential
Information, Manager shall and shall cause such Person to: (A) provide Owner
with prompt notice, to the extent legally permissible, so that Owner and its
Affiliates may seek a protective order or other appropriate remedy or, in their
discretion, waive compliance with the provisions of this Section 8.2; and
(B) reasonably cooperate with Owner and its Affiliates, at their expense, in any
effort Owner or any of its Affiliates undertakes to obtain a protective order or
other remedy. In the event that such protective order or other remedy is not
obtained or Owner in its discretion waives compliance with the provisions of
this Section 8.2, Manager shall and shall cause such Person to disclose to the
Person compelling disclosure only that portion of the Owner Confidential
Information that Manager is advised, by outside counsel, is legally required and
to use commercially reasonable efforts to obtain reliable assurance that
confidential treatment is accorded the Owner Confidential Information so
disclosed (to the extent available). Manager shall be responsible for any acts
or omissions of any of its employees, members, managers, attorneys, accountants,
agents, representatives, consultants, existing and potential lenders and
investors and potential purchasers in violation of this Section 8.2.

 

  8.3 Public Statements.

The Parties shall cooperate with each other on all press releases and other
public statements relating to the Managed Facilities and neither Party shall
issue any press release or other public statement relating to the Managed
Facilities without the prior written approval of the other Party and receipt of
any required approvals from any Governmental Authority, except for any public
statement required under Applicable Law; provided, that Manager and its
Affiliates may, subject to Applicable Law, make public statements and press
releases regarding the Managed Facilities in connection with CEOC’s general
business operations, the Operation of the Managed Facilities or in the ordinary
course of Manager’s Operation of the Managed Facilities. With respect to any
public statement required under Applicable Law, the issuing Party shall provide
the other Party with a reasonable opportunity to review and comment upon any
such statement prior to its issuance. In addition, either Party may make
reference to the Managed Facilities, this Agreement and such Party’s business in
connection with making Securities Exchange Commission filings, investor and
lender reports and presentations, financing documents and offering materials.

 

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  8.4 Cumulative Remedies.

Owner acknowledges that any violation of the provisions of Section 8.1 or 8.3
would cause irreparable harm and injury to Manager and its Affiliates and that
money damages would not be an adequate remedy for any such violation and,
accordingly, Manager and its Affiliates shall be entitled to injunctive or other
equitable relief to prevent any actual or threatened breach of any of such
provisions and to enforce such provisions specifically, without the necessity of
posting a bond or other security or of proving actual damages, by an appropriate
court in the appropriate jurisdiction.

Manager acknowledges that any violation of the provisions of Section 8.2 or 8.3
would cause irreparable harm and injury to Owner and its Affiliates and that
money damages would not be an adequate remedy for any such violation and,
accordingly, Owner and its Affiliates shall be entitled to injunctive or other
equitable relief to prevent any actual or threatened breach of any of such
provisions and to enforce such provisions specifically, without the necessity of
posting a bond or other security or of proving actual damages, by an appropriate
court in the appropriate jurisdiction.

The remedies provided in this Section 8.4 are cumulative and shall not exclude
any other remedies to which a Party or its Affiliates may be entitled under this
Agreement or Applicable Law, and the exercise of a remedy under this Section 8.4
shall not be deemed an election excluding any other remedy or any waiver
thereof.

 

  8.5 Survival.

This Article VIII shall survive the expiration or termination of this Agreement.

ARTICLE IX.

MARKETING

 

  9.1 Marketing.

9.1.1 Managed Facilities Marketing Program. In addition to the Managed
Facilities’ participation in any marketing program included as part of the
Centralized Services, Manager shall develop and implement a specific marketing
program for the Managed Facilities, which shall provide for the planning,
publicity, internal communications, organizing and budgeting activities to be
undertaken, and which may include the following: (a) production, distribution
and placement of promotional materials relating to the Managed Facilities,
including materials for the promotion of employee relations; (b) development and
implementation of promotional offers or programs that benefit the Managed
Facilities and are undertaken by Manager or by a group of hotels and casinos
that includes the Managed Facilities; (c) attendance of Managed Facilities
Personnel at conferences, conventions, meetings, seminars and travel congresses;
(d) selection of and guidance to advertising agency and public relations
personnel; and (e) preparation and dissemination of news releases for national
and international trade and, consumer publications. Owner shall not publish any
advertising materials or otherwise

 

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implement any marketing, advertising or promotion program for the Managed
Facilities on its own, without Manager’s prior written approval (not to be
unreasonably withheld, conditioned, or delayed).

9.1.2 Development and Implementation. The development and implementation of the
Managed Facilities’ specific marketing program shall be effected substantially
by Managed Facilities Personnel, with periodic assistance from Corporate
Personnel with marketing and sales expertise. Any such assistance provided by
any Corporate Personnel shall be at no cost to Owner or the Managed Facilities
for such Corporate Personnel’s time, but the reasonable Out-of-Pocket Expenses
incurred by Manager or its Affiliates in connection with such assistance shall
be Operating Expenses. Subject to the provisions of Section 5.1 relating to the
Annual Budget, the Managed Facilities’ specific marketing program shall comply
with the sales, advertising and public relations policies and guidelines and
corporate identity requirements established by Manager, for Other Managed
Resorts, as such policies, guidelines and requirements may be modified from time
to time. Subject to the provisions of Section 5.1 relating to the Annual Budget,
Manager shall have the right to engage a Person on behalf of Owner to perform
such marketing and public relations activities for the Managed Facilities
pursuant to this Article IX.

9.1.3 Content. Manager shall have the right to obtain, or at the reasonable
request of Manager, Owner shall obtain and provide to Manager, updated
photographs, descriptive content and other media, such as video and floor plans,
of the Managed Facilities (collectively, “Content”) from time to time in
accordance with Manager’s specifications for Content. All ownership or license
rights to Content, whether procured by Manager or Owner, shall vest in Owner. If
Owner obtains Content, Owner shall ensure that any such Content includes usage
rights for the benefit of Manager in connection with the operation of the
Managed Facilities during the Term.

ARTICLE X.

BOOKS AND RECORDS

 

  10.1 Maintenance of Books and Records.

Manager shall keep and maintain, on an Operating Year basis in accordance with
GAAP, accurate books, records and accounts reflecting all of the financial
affairs, and all items of income and expense, in connection with the Operation
of the Managed Facilities and otherwise in a manner consistent with the then
existing policies and standards applicable to Other Managed Resorts and
otherwise reasonably acceptable to Owner. All books of account and other
financial records of the Managed Facilities shall be available to Owner, any
Lender and their respective agents, representatives and designees (subject to
Section 8.1) at all reasonable times for examination, audit, inspection and
copying; provided, that Owner shall bear all Out-Of-Pocket Expenses incurred by
Manager or its Affiliates in connection with any such examination, audit,
inspection or copying. All of the financial books and records of the Managed
Facilities, including books of account and front office records (but excluding
any Proprietary Rights) shall be the property of Owner. Notwithstanding anything
to the contrary contained in this Agreement, Owner shall have the right (not
more than once per calendar year), at its expense, to or to cause its agents or
auditors to carry out an independent audit or inspection of the books of

 

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accounts and records and/or any other information maintained by the Manager with
respect to the Managed Facilities (including, without limitation, all
information, records and materials with respect to contracts and engagements
entered into by Manager with Affiliates and/or with respect to purchasing
programs, which information shall include terms of all cost allocations between
the Managed Facilities on the one hand and other hotel properties and casinos
owned and/or managed by Manager and its Affiliates and subject to the same
agreements and/or purchasing programs on the other hand, and copies of all
agreements and fee schedules with respect to such properties and such other
information as is reasonably necessary to make the determination set forth in
clause (ii) below). In the event of any such audit or inspection, Manager shall
promptly respond to any queries raised by any such auditors in relation to that
audit and shall promptly make available to any such auditors any and all
materials relevant to the management of the applicable Managed Facilities.
Notwithstanding the foregoing, if it is determined by any such audit or
inspection that (i) the actual amount of Gross Operating Revenues or Operating
Expenses for any Operating Year differs by more than five percent (5%) from the
amount of Gross Operating Revenues or Operating Expenses for such Operating Year
recorded in the books and records maintained by Manager, or (ii) Manager has
materially breached any of its obligations with respect to the requirements in
this Agreement that all Purchasing Programs and all contracts with (or services
provided by) Affiliates of Manager shall be Non-Discriminatory to the Managed
Facilities and on arms-length terms, then, in either case, Manager shall be
responsible for the entire out-of-pocket cost of such audit or inspection and
immediately upon demand shall reimburse Owner therefor.

 

  10.2 Monthly Financial Reports.

Manager shall cause to be prepared and delivered to Owner reasonably detailed
unaudited monthly operating reports (the “Monthly Reports”) that reflect the
operational results of the Managed Facilities for each month of each Operating
Year. Manager shall deliver each Monthly Report to Owner on or before the twenty
fifth (25th) day of the month following the month (or partial month) to which
such Monthly Report relates. At a minimum, the Monthly Reports shall include:
(a) a balance sheet including current and prior month and prior year-end
comparisons (to the extent applicable) and differences in reasonable detail;
(b) an income and expense statement for such month and for the elapsed portion
of the current Operating Year through the end of such month (with comparison to
previous year); (c) a statement of cash flows for such month and for the elapsed
portion of the Current Operating Year through the end of such month (with
comparison to previous year) in reasonable detail to allow Owner to identify and
ascertain sources and uses thereof; (d) a statement of account balances in each
Bank Account; (e) a computation of any installment of the Base Management Fees
due following delivery of such Monthly Report; and (f) such other reports or
information otherwise specified in this Agreement to be provided to Owner on a
monthly basis or as Owner may reasonably specify from time to time.
Notwithstanding anything to the contrary contained in this Section 10.2, Manager
shall not be obligated to deliver a Monthly Report for the last month of each
calendar quarter. In lieu of such delivery, Manager shall deliver the Quarterly
Report for the applicable calendar quarter and such Quarterly Report shall
include the information that would have been included in the Monthly Report for
such month pursuant to this Section 10.2.

 

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  10.3 Quarterly Financial Reports.

Manager shall cause to be prepared and delivered to Owner reasonably detailed
unaudited quarterly operating reports (the “Quarterly Reports”) and shall
deliver each Quarterly Report to Owner on or before the twenty fifth (25th) day
of the month following the end of the fiscal quarter (or partial fiscal quarter)
to which such Quarterly Report relates. With respect to the Quarterly Reports,
Manager’s Designated Financial Officer shall certify that it has reviewed such
Quarterly Reports and, to such Designated Financial Officer’s Knowledge, such
Designated Financial Officer has no reason to believe that such Quarterly
Reports do not fairly present, in all material respects, the financial
condition, results of operations, cash flows and other financial and operating
results, as applicable, of the Managed Facilities for the periods presented in
the report (except for the fact that there are no footnotes to such Quarterly
Reports and subject to year end adjustments in all respects). At a minimum, the
Quarterly Reports shall include: (a) a narrative report on Owner’s actual
performance to the Operating Plan and Capital Budget; (b) a computation of any
installment of the Incentive Management Fees due following delivery of such
Quarterly Report; (c) an itemization of expenses other than Management Fees
incurred to Manager or any Affiliate of Manager during such quarter, including
Centralized Services Charges and Reimbursable Expenses; (d) a schedule comparing
the financial performance of the Managed Facilities to the financial covenants
under Financing Documents to the extent that the applicable Financing relates
the Managed Facilities only; (e) a report on the project status and actual to
budget expenditures for Routine Capital Improvements and Building Capital
Improvements projects underway; (f) for the last month of such calendar quarter,
the information that would have been included in the Monthly Report for such
month pursuant to Section 10.2; and (g) such other reports or information
otherwise specified in this Agreement to be provided to Owner on a quarterly
basis or as Owner may reasonably specify from time to time.

 

  10.4 Annual Financial Reports.

Manager shall cause to be prepared and delivered to Owner no later than
fifty-five (55) days after the end of each Operating Year (beginning with
February 25 of the second (2nd) Operating Year with respect to the completion of
the first (1st) Operating Year), year end financial statements for the preceding
Operating Year (including a balance sheet, a statement of earnings and retained
earnings and a statement of cash flows), which statements shall be unaudited and
shall be prepared in accordance with GAAP. With respect to such statements,
Manager’s Designated Financial Officer shall certify that it has reviewed such
statements and, to such Designated Financial Officer’s knowledge, such
Designated Financial Officer has no reason to believe that such statements do
not fairly present, in all material respects, the financial condition, results
of operations, cash flows and other financial and operating results, as
applicable, of the Managed Facilities for the periods presented in the
statements (except for the fact that there are no footnotes to such statements
and subject to all adjustments made in the Certified Financial Statements).
Owner shall engage the Designated Accountant to provide audited financial
statements for the Operating Year then ended (the “Certified Financial
Statements”). Owner and Manager shall cooperate in all respects with the
Designated Accountant in the preparation of such financial statements, including
the delivery by Manager of any financial information generated by Manager
pursuant to the terms of this Agreement and reasonably required by the
Designated Accountant to prepare such audited financial statements. The
Certified Financial Statements prepared by the Designated Accountant pursuant to
this

 

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Section 10.4 and all information therein shall be binding and conclusive on the
Parties unless, within sixty (60) days after the delivery of such statements to
the Parties, either Party shall deliver written notice to the other Party of its
objection thereto setting forth in reasonable detail the nature of such
objection. If the Parties are unable thereafter to resolve any disputes with
respect to the matters set forth in the Certified Financial Statements within
sixty (60) days after delivery by either Party of such notice, either Party
shall have the right to cause such dispute to be resolved in accordance with
Article XVII.

 

  10.5 Other Reports and Schedules.

In addition to the Operating Reports and Certified Financial Statement required
to be delivered to Owner hereunder, Manager shall cause to be prepared and
delivered to Owner any additional reports and schedules as Owner may reasonably
request from time to time, and copies of such leases, contracts and documents as
Owner may reasonably request from time to time.

ARTICLE XI.

ASSIGNMENTS

 

  11.1 Assignment by Owner.

11.1.1 Owner Assignments Restricted. Except as otherwise permitted in Article
XIII or this Article XI, Owner may not cause, permit or suffer an Assignment of
Owner’s right, title and interest in and to this Agreement without the prior
consent of Manager which consent shall not be unreasonably withheld, conditioned
or delayed. Any Change of Control of Owner shall be deemed an Assignment for
purposes of this Article XI. Any Assignment by Owner in violation of the terms
of this Article XI shall be void and of no force or effect as between the
Parties and shall constitute an Event of Default by Owner governed by the terms
of Article XVI.

11.1.2 Assignment by Owner without Manager’s Consent.

11.1.2.1 Notwithstanding the provisions of Section 11.1.1, Owner shall have the
right, without Manager’s consent, to effect an Assignment of this Agreement in
connection with a Managed Facilities Transfer; provided, that, to the extent
applicable, the conditions described in Section 11.1.3 are satisfied in
connection with such Assignment.

11.1.2.2 Notwithstanding the provisions of Section 11.1.1, Owner shall have the
right, without Manager’s consent, to effect an Assignment of this Agreement or a
Managed Facilities Transfer in connection with any Financing provided, that, to
the extent applicable, the conditions described in Section 11.1.3 are satisfied
in connection with such Assignment.

11.1.3 Conditions to Assignment. Notwithstanding anything to the contrary in
Section 11.1.2, all Assignments by Owner (whether or not Manager’s consent is
required pursuant to this Section 11.1) shall be subject to the following
conditions:

11.1.3.1 Owner shall provide written notice to Manager at least thirty (30) days
prior to the proposed Assignment, specifying in reasonable detail the nature of
the Assignment and such additional information as Manager may reasonably request
in order to determine whether the proposed transferee is a Manager Prohibited
Person;

 

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11.1.3.2 The assignee (other than a Lender in connection with a Financing,
except to the extent of any foreclosure or realization) shall assume the
obligations of Owner under this Agreement and shall agree in writing to be bound
by this Agreement from and after the date of the Assignment, and Owner shall
provide Manager with a copy of such agreement, together with copies of all other
documents effecting such Assignment, within ten (10) days following the date of
the Assignment; and

11.1.3.3 The assignee (in the case of a direct assignment) or controlling
parties (in the case of a Change of Control), and in each case its or their
direct or indirect equity owners, is not a Manager Prohibited Person.

 

  11.2 Assignment by Manager.

11.2.1 Manager Assignments Restricted. Except as otherwise permitted in this
Article XI, Manager may not cause, permit or suffer an Assignment, in whole or
in part, of Manager’s right, title and interest in and to this Agreement without
the prior consent of Owner. Any Change of Control of Manager shall be deemed an
Assignment for purposes of this Article XI. Any Assignment by Manager in
violation of the terms of this Article XI shall be void and of no force or
effect as between the Parties and shall constitute an Event of Default by
Manager governed by the terms of Article XVI.

11.2.2 Assignment by Manager without Owner’s Consent. Notwithstanding the
provisions of Section 11.1.1, Manager shall have the right, without Owner’s
consent, to assign its right, title and interest in and to this Agreement (a) to
any Affiliate of Manager that is directly or indirectly wholly owned by CEOC, or
(b) in connection with (i) a Change of Control of CEOC or (ii) a Substantial
Sale; provided, that neither the proposed transferee (in the case of a direct
transfer), or controlling parties (in the case of a Change of Control or CEOC or
Substantial Sale), nor in either case any of its direct or indirect equity
owners, is an Owner Prohibited Person and provided further that Manager shall
(a) provide written notice to Owner at least thirty (30) days prior to the
proposed Assignment, specifying in reasonable detail the nature of the
Assignment, and such additional information as Owner may reasonably request in
order to determine whether the proposed transferee is an Owner Prohibited
Person, and (b) the assignee shall assume the obligations of Manager under this
Agreement and shall agree in writing to be bound by this Agreement from and
after the date of the Assignment, and Manager shall provide Owner with a copy of
such agreement, together with copies of all other documents effecting such
Assignment, within ten (10) days following the date of this Assignment.

11.2.3 Assignment at the Request of Owner. Subject to the provisions of this
Section 11.2.3, Manager shall, upon the written request of Owner, assign all of
its rights, benefits, obligations, duties, responsibilities and liabilities
under this Agreement to Services Co (or a Controlled subsidiary of Services Co)
as soon as reasonably practicable following the formation and capitalization of
Services Co (the “Services Co Assignment”). Notwithstanding the foregoing, Owner
shall not be permitted to request the Services Co Assignment unless and until
(a) all Gaming Approvals have been received with respect to such Services Co
Assignment, and (b) any required Approvals from any Governmental Authorities
have been received with

 

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respect to such Services Co Assignment. Manager acknowledges that Owner may not
request the Services Co Assignment until Owner is satisfied, in its sole
discretion that Services Co (or a Controlled subsidiary of Services Co) has
obtained all items and rights needed to Operate the Managed Facilities under the
Brand (including to provide the Centralized Services to the Managed Facilities)
all in accordance with this Agreement, which items and rights shall include,
without limitation: (i) all intellectual property rights required to grant,
maintain and support the licenses and assignments set forth under this Agreement
(including under Article VII), (ii) all Corporate Personnel and other personnel
required to Operate the Managed Facilities, and (iii) all infrastructure,
processes, procedures, contracts, permits, licenses, consents, approvals, assets
and other items and rights required to Operate the Managed Facilities. Each of
Owner and Manager agrees that upon the effective date of the Services Co
Assignment: (A) The Quad Manager, LLC shall assign all of its rights, benefits,
obligations, duties, responsibilities and liabilities under this Agreement to
Services Co (or a Controlled subsidiary of Services Co) and Services Co shall
automatically and without any further action by any Person become the “Manager”
under this Agreement, provided, that The Quad Manager, LLC (the “Transferring
Manager”) shall retain all rights in respect of pre-assignment periods, rights
under Section 19.2.7, the right to receive the Management Fees during the Term
(and any interest thereon or taxes with respect thereto), any Termination Fee
and the right to claim damages in respect of any Owner breach of this Agreement
that directly results in a reduced or terminated Management Fees (the “Retained
Rights”); (B) Services Co (or a Controlled subsidiary of Services Co) shall
expressly assume all of the Transferring Manager’s rights (other than the
Retained Rights), benefits, obligations, duties, responsibilities and
liabilities under this Agreement pursuant to an assignment and assumption
agreement mutually agreeable to Owner and the Transferring Manager and the
Transferring Manager shall be released from its obligations under this
Agreement; (C) Services Co (or a Controlled subsidiary of Services Co) shall be
entitled to receive all Centralized Services Charges and all Reimbursable
Expenses incurred under this Agreement from and after the Services Co
Assignment; (D) the Transferring Manager’s rights with respect to the Bank
Accounts shall terminate and any right to withdraw the Management Fees from the
Management Account will be undertaken by Services Co as successor manager; and
(E) with respect to each provision in this Agreement that by its terms survives
any expiration or termination of this Agreement, such provisions shall survive
the Services Co Assignment with respect to the Transferring Manager, CEOC and
their respective Affiliates. This Section 11.2 shall survive the Services Co
Assignment and any expiration or termination of this Agreement thereafter. Owner
and Transferring Manager agree, between them, to amend or amend and restate this
Agreement following the Services Co Assignment as needed solely to implement the
provisions set forth in this Section 11.2.2 and Transferring Manager and CLC
shall do and cause to be done all such acts, matters and things and shall
execute all such documents and instruments required to effectuate the Services
Co Assignment in accordance with this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, (x) the Retained Rights may be
terminated immediately by Owner if there is any Event of Default of Services Co
hereunder following the effective date of the Services Co Assignment that is
caused by or results from a breach by CEOC (or any Affiliate thereof that is a
member of Services Co) of any of its obligations under the limited liability
company agreement of Services Co, in which case Owner shall not be required to
terminate this Agreement with respect to Services Co or Transferring Manager,
and (y) if as a result of any Event of Default of Services Co hereunder
following the effective date of the Services Co Assignment, Owner becomes
entitled (whether pursuant to the terms hereof, at law or in equity) to any
reduction in and/or offset of Management Fees or to otherwise recover any

 

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losses, costs, damages and/or expenses from Services Co, Owner shall be entitled
to deduct (without duplication of any other recovery made by Owner) any and all
such amounts from future installments of Management Fees otherwise due and
payable to the Transferring Manager as part of the Retained Rights during the
Term until Owner has recovered the entire amount of all such losses, costs,
damages and/or expenses (provided, however, that the Transferring Manager shall
not have any liability for any such amounts in excess of the value of the
remaining Management Fees payable hereunder during the Term at the time Owner
becomes entitled to any such recovery). From and after the Services Co
Assignment, Owner shall not permit any amendment to this Agreement that would
reasonably be expected to reduce or otherwise adversely impact the Retained
Rights.

 

  11.3 Acknowledgement of Assignment.

Notwithstanding anything to the contrary contained herein, with respect to any
Assignment under this Article XI, the transferring Party shall, within thirty
(30) days following the request of the non-assigning Party, provide a written
acknowledgement to the non-assigning Party confirming that such Assignment
complied with the provisions of this Article XI and was permitted hereunder and
such acknowledgment shall be accompanied by the provision of such information as
may reasonably be necessary to demonstrate that the Assignment complies with the
provisions of this Article XI.

 

  11.4 Approvals.

To the extent necessary, all Assignments will be subject to the requirements of
the Gaming Authorities, which may include prior approval of such Assignments.

ARTICLE XII.

INSURANCE, BONDING AND INDEMNIFICATION

 

  12.1 Owner Insurance and Bonding Requirements.

12.1.1 Insurance Policies and Bonding Requirements.

12.1.1.1 Manager, at Owner’s expense (except to the extent such expenses are
expressly classified as Operating Expenses), shall procure and maintain all
insurance policies required under the Insurance Requirements set forth as
Exhibit E (except to the extent Exhibit E attached hereto or this Agreement
expressly provides that Manager shall procure and obtain specific insurance
policies) and in accordance with the Annual Budget to protect the Owner and
Manager against loss or damage arising in connection with the ownership and
operation of the Managed Facilities. The insurance policies shall be effective
upon the Commencement Date. Manager may modify the Insurance Requirements on at
least sixty (60) days’ notice to respond to insurance market trends, customer
demands, economic conditions, technological advances and other factors affecting
the gaming industry and its risks, as they may change from time to time;
provided, that the Insurance Requirements are (a) consistent with the Other
Managed Resorts that are similarly situated to the Managed Facilities or
(b) only applicable to the Managed Facilities and a material policy, and in
either case they shall be subject, at Owner’s election, to review by Owner’s
independent insurance consultant and, in the case of clause (b), approval by
such consultant (not to be unreasonably withheld). Manager, at its sole
discretion, shall hire a qualified insurance broker to place such insurance
policies required under Exhibit E attached hereto.

12.1.1.2 Manager, at Owner’s expense, shall have the power and authority to
procure and deliver to the applicable Gaming Authorities all bonding instruments
required by the State where the Managed Facilities are located.

 

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12.1.2 Insurance Program. Manager shall make the insurance programs provided to
the Other Managed Resorts available to Owner with respect to the Managed
Facilities (the “Insurance Program”) on substantially the same basis and for the
same premium allocation methodology as for the Other Managed Resorts, to the
extent permitted by the terms of such Insurance Program. Owner, at Manager’s
sole direction, may obtain any insurance coverage required under the Insurance
Requirements through the Insurance Program to the extent such coverage is
available under the Insurance Program. Owner acknowledges that (a) the premiums
charged under the Insurance Program include certain third-party pass-through
costs, such as brokers’ commissions and insurance services performed by third
parties, and (b) some or all of the insurance in the Insurance Program may be
provided by an Affiliate of Manager, and such Affiliate will have a profit or
loss for its insurance business from time to time, depending on the amount of
premiums received, and claims paid, by such Affiliate during the relevant
period. Manager shall cause any and all costs, expenses or savings resulting
from the foregoing clauses (a) and (b) to be passed through, applied and
realized amongst all participants in any Insurance Program on a
Non-Discriminatory basis.

12.1.3 Evidence of Insurance. Owner (for insurance policies obtained by Owner
through third-party insurers) and Manager (for insurance policies obtained by
Manager through the Insurance Program or other vendors) shall provide the other
Party with certificates or other reasonably satisfactory insurance evidence
confirming that the insurance policies comply with the Insurance Requirements.
In addition, upon a Party’s request, the other Party promptly shall provide to
the requesting Party a schedule of insurance obtained by such Party, listing the
insurance policy numbers, the names of the insurers, the names of the Persons
insured, the amounts of coverage, the expiration dates and the risks covered
thereunder.

12.1.4 Payment of Premiums. For all insurance policies contemplated by this
Section 12.1, Manager shall have the right to pay premiums using funds from the
Operating Account. For the avoidance of doubt, any additional insurance policies
obtained by Owner or Manager that are not contemplated by this Section 12.1 or
otherwise approved by the Parties, shall not be funded from the Operating
Account.

12.1.5 Review of Insurance. All insurance policy limits provided under this
Article XII shall be reviewed by the Parties every three (3) years following the
commencement of the Term, or sooner if reasonably requested by Owner or Manager,
to determine the suitability of such insurance limits in view of exposures
reasonably anticipated over the ensuing three (3) years. Owner and Manager
hereby acknowledge that changing practices in the insurance industry and changes
in the local law and custom may necessitate changes to types or amounts of
coverage during the Term. Each Party agrees to comply with any other insurance
requirements the other Party reasonably requests in order to protect the Managed
Facilities and the respective interests of Owner and Manager. Any dispute
regarding such other insurance requirements shall be referred to the Expert for
Expert Resolution pursuant to Article XVII.

 

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12.1.6 Investigation of Claims and Reports. Manager shall promptly investigate
and, as soon as reasonably practicable, make a full written report to Owner
regarding all material accidents or claims for material damage relating to the
ownership, operation and maintenance of the Managed Facilities and the estimated
liability or cost of repair thereof, and shall prepare, for the approval of
Owner, any and all reports required by any insurance carrier in connection
therewith.

12.1.7 Reliance on Owner’s Advisors. Owner acknowledges that neither Manager nor
any insurance broker that Manager or its Affiliates may retain makes any
representation, warranty or guaranty whatsoever regarding: (a) the advisability
or sufficiency of the insurance required or obtained under this Agreement;
(b) whether the insurance made available under the Insurance Program maintained
by Manager or its Affiliates is sufficient to protect Owner, the Managed
Facilities and its Operations against all liability, damage, loss, cost or
expense that might be incurred; or (c) any other insurance that Owner should
consider for the protection of Owner, the Managed Facilities and its Operations,
and Owner agrees to rely exclusively on its own insurance advisors with respect
to all insurance matters.

 

  12.2 Waiver of Liability.

AS LONG AS A PARTY AND ANY AFFILIATES REQUESTED BY SUCH PARTY ARE A NAMED
INSURED OR ADDITIONAL INSURED UNDER THE OTHER PARTY’S INSURANCE POLICIES, OR THE
POLICIES OTHERWISE PERMIT IF SUCH PARTY OR ITS AFFILIATES ARE NOT SO NAMED, SUCH
PARTY HEREBY RELEASES THE OTHER PARTY, AND ITS AFFILIATES, AND ITS AND THEIR
TRUSTEES, BENEFICIARIES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, AND THE
SUCCESSORS AND ASSIGNS OF EACH OF THE FOREGOING, FROM ANY AND ALL LIABILITY FOR
MONETARY RELIEF, DAMAGE, LOSS, COST OR EXPENSE INCURRED BY THE RELEASING PARTY,
WHETHER OR NOT DUE TO THE NEGLIGENT OR OTHER ACTS OR OMISSIONS OF THE PERSONS SO
RELEASED TO THE EXTENT SUCH LIABILITY, DAMAGE, LOSS, COST OR EXPENSE IS COVERED
BY THE INSURANCE POLICIES OF THE RELEASING PARTY, BUT (OTHER THAN AS PROVIDED IN
ARTICLE XIV) ONLY TO THE EXTENT OF INSURANCE PROCEEDS RECEIVED.

 

  12.3 Indemnification.

12.3.1 Indemnification by Owner. Subject to Sections 12.3.3, 12.3.4 and 17.5.5,
Owner shall defend, indemnify and hold harmless Manager and its Affiliates (and,
following the Services Co Assignment until such time as neither Services Co nor
any of its Affiliates is the Manager hereunder, the Transferring Manager and its
Affiliates), and each of their respective shareholders, members, partners,
trustees, beneficiaries, directors, officers, employees and agents, and the
successors and assigns of each of the foregoing (collectively, the “Manager
Indemnified Parties”) for, from and against any and all Claims that are not
within the scope of Manager’s indemnification pursuant to Section 12.3.2.
Nothing in this Section 12.3 shall be deemed to limit Owner’s right to pursue
its contractual damage remedies against

 

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Manager with respect to amounts paid by Owner to one (1) or more other Persons
in connection with any Claim caused by an Event of Default by Manager (it being
further understood that the provisions of this Section 12.3 shall not be deemed
to modify the provisions of Section 16.1 regarding the establishment of an Event
of Default by Manager, including any provisions of Section 16.1 regarding notice
of cure of any default that would, with the giving of notice or the passage of
time, become an Event of Default). Manager shall promptly provide Owner with
written notice of any Claim that is reasonably likely to result in any
indemnification by Owner.

12.3.2 Indemnification by Manager. Subject to Sections 12.3.3, 12.3.4 and
17.5.5, Manager shall defend, indemnify and hold harmless Owner and its
Affiliates, and each of their respective shareholders, members, partners,
trustees, beneficiaries, directors officers, employees and agents, and the
successors and assigns of each of the foregoing (collectively, the “Owner
Indemnified Parties”) for, from and against any and all (a) Claims that any
Owner Indemnified Party or Parties may incur, become responsible for or pay out
to the extent caused by Manager’s Gross Negligence or Willful Misconduct or as a
result of an Event of Default by Manager (disregarding any applicable notice or
cure periods for such purpose) or the use of any intellectual property rights
owned, licensed or otherwise provided by Manager or its Affiliates (including,
without limitation, the Service Mark Rights and the Proprietary Information and
Systems) that infringes, misappropriates or otherwise violates or is alleged to
infringe, misappropriate or otherwise violate the intellectual property rights
of any third party, and (b) any uninsured loss incurred by Owner due to the
commission by any Senior Executive Personnel or Corporate Personnel of any act
of fraud, embezzlement, misappropriation or similar act of malfeasance with
respect to the Managed Facilities.

12.3.3 Insurance Coverage. Notwithstanding anything to the contrary in this
Section 12.3, the Parties shall look first to the appropriate insurance
coverages in effect pursuant to this Agreement prior to seeking indemnification
under this Section 12.3 in the event any claim or liability occurs as a result
of injury to persons or damage to property, regardless of the cause of such
claim or liability; provided, that if the insurance carrier denies coverage or
“reserves rights” as to coverage, then the Indemnified Parties shall have the
right to seek indemnification, without first looking to such insurance coverage.
In addition, nothing contained in this Section 12.3 shall in any way affect the
releases set forth in Section 12.2.

12.3.4 Indemnification Procedures. The Indemnifying Party shall have the right
to assume the defense of any Claim with respect to which the Indemnified Party
is entitled to indemnification hereunder. If the Indemnifying Party assumes such
defense, (a) such defense shall be conducted by counsel selected by the
Indemnifying Party and approved by the Indemnified Party, such approval not to
be unreasonably withheld or delayed (provided, that the Indemnified Party’s
approval shall not be required with respect to counsel designated by the
Indemnifying Party’s insurer); (b) so long as the Indemnifying Party is
conducting such defense with reasonable diligence, the Indemnifying Party shall
have the right to control said defense and shall not be required to pay the fees
or disbursements of any counsel engaged by the Indemnified Party except if a
material conflict of interest exists between the Indemnified Party and the
Indemnifying Party with respect to such Claim or defense; and (iii) the
Indemnifying Party shall have the right, without the consent of the Indemnified
Party, to settle such Claim, but only if such settlement involves only the
payment of money, the Indemnifying Party pays all amounts due in connection with
or by reason of such settlement and, as part thereof, the Indemnified Party

 

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is unconditionally released from all liability in respect of such Claim. The
Indemnified Party shall have the right to participate in the defense of such
Claim being defended by the Indemnifying Party at the expense of the Indemnified
Party, but the Indemnifying Party shall have the right to control such defense
(other than in the event of a material conflict of interest between the parties
with respect to such Claim or defense). In no event shall (A) the Indemnified
Party settle any Claim without the consent of the Indemnifying Party so long as
the Indemnifying Party is conducting the defense thereof in accordance with this
Agreement or (B) if a Claim is covered by the Indemnifying Party’s insurance,
knowingly take or omit to take any action that would cause the insurer not to
defend such Claim or to disclaim liability in respect thereof.

12.3.5 Survival. This Section 12.3 shall survive any expiration or termination
of this Agreement.

ARTICLE XIII.

FINANCING; GROUND LEASE

 

  13.1 Mortgages; Collateral Assignments; Non-Disturbance.

Subject to Article XI, Owner shall have the right to grant a Mortgage or
Security Interest to a Lender in connection with any Financing, and to assign to
any Lender as collateral security for any Financing, all of Owner’s right, title
and interest in and to this Agreement. Promptly following execution of any such
Financing Documents, Owner shall provide Manager a true and complete copy of all
such Financing Documents. Owner shall cause any Lender under a Financing
Document and any lessor under the Ground Lease to enter into a Non-Disturbance
Agreement in a form acceptable to Manager, in its reasonable discretion, which
explicitly provides that such Lender or lessor may not terminate Manager under
this Agreement, under any circumstance except to the extent Manager may be
terminated in accordance with the terms of this Agreement, irrespective of
whether the Financing or Ground Lease is in default or has been foreclosed upon
or the Lender or lessor has acquired all or a portion of the Managed Facilities
or Premises by deed-in-lieu of foreclosure.

Any foreclosure or realization on a Financing Document or the Ground Lease or
that results in a transfer of all or a substantial portion of the Managed
Facilities, the Premises, the Ground Lease, this Agreement or Manager’s rights
hereunder other than for security purposes shall be subject to the transfer
provisions set forth under Article XI of this Agreement.

 

  13.2 Lender’s Right of Access.

Upon reasonable advance notice from a Lender (which notice may be given orally
in connection with an emergency or upon the occurrence of an event of default
under any Financing Documents), Manager shall permit and cooperate with such
Lender and its agents and representatives to enter any part of the Managed
Facilities, except for those parts of the Managed Facilities as to which access
is restricted by Applicable Law, at any reasonable time for the purposes of
examining or inspecting the Managed Facilities, or examining or copying the
books and records of the Managed Facilities; provided, that: (a) any expenses
incurred in connection with such activities shall be Operating Expenses of the
Managed Facilities; and (b) Owner shall use commercially reasonable efforts
(including the inclusion of an appropriate confidentiality provision in the
Financing Documents) to cause such Lender to agree to treat as confidential any

 

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information such Lender obtains from examining the books and records of the
Managed Facilities provided by Owner to Manager, including the Annual Budget.
Manager acknowledges that a Lender may disclose such information to the same
extent and subject to the same restrictions as are applicable to the Owner with
respect to Manager Confidential Information under Article VIII of this Agreement
(including to any actual or potential purchasers of the relevant Mortgage or any
interest therein).

 

  13.3 Disclosure of Mortgages.

Owner represents and warrants that as of the date of this Agreement, except as
disclosed to Manager in writing prior to the Commencement Date, there is no
Mortgage encumbering the Managed Facilities, Premises or the Ground Lease or any
portion thereof or interest therein. Owner shall provide to Manager a true and
complete copy of any new proposed Mortgage documents for Manager’s review no
less than thirty (30) days before the execution of such new Mortgage documents.
Promptly following execution of such new Mortgage documents, Owner shall provide
Manager a true and complete copy of all such new Mortgage documents.

 

  13.4 Estoppel Certificates.

Upon written request at any time during the Term, Manager shall issue to Owner
or any Lender, within no less than thirty (30) days after Manager’s receipt of
such request from Owner, an estoppel certificate, comfort letter or other
documents as may be reasonably requested by a Lender: (a) certifying that this
Agreement has not been modified and is in full force and effect (or, if there
have been modifications, specifying the modifications and that the same is in
full force and effect as modified); and (b) stating whether, to the knowledge of
the signatory of such certificate, any default by Owner exists, and if so,
specifying each default of which the signatory has knowledge. Similarly, Manager
shall be entitled to (and Owner shall provide upon written request) an estoppel
certificate from Owner, any Lender, or any ground lessor (with respect to any
ground lease), upon the same notice and terms for an estoppel certificate issued
by Manager.

 

  13.5 Amendments to Agreement.

In the event any Lender or proposed Lender, directly or indirectly as a
condition of closing the proposed Financing, requires any commercially
reasonable modification of any terms or provisions of this Agreement, the
Parties shall comply with such request; provided, that in no event shall Manager
be required to agree to any requested modification or amendment to this
Agreement that would increase Manager’s obligations under this Agreement or
diminish the fees or reimbursements becoming due to Manager.

 

  13.6 Owner’s Ground Lease Obligations.

Without limiting Manager’s rights set forth in this Agreement, Owner shall
(a) timely exercise any and all renewal or other term extension rights granted
to Owner under the Ground Lease and not terminate the Ground Lease, (b) comply
in all respects with its base rent payments, participation rent payments and all
other payment obligations set forth in the Ground Lease, (c) otherwise comply in
all material respects with the terms and conditions of the Ground Lease and
(d) not suffer an Assignment of Owner’s interest in the Ground Lease except
pursuant to a Managed Facilities Transfer permitted by this Agreement and which
includes the Managed Facilities.

 

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ARTICLE XIV.

BUSINESS INTERRUPTION

 

  14.1 Business Interruption.

At all times during the Term, Manager shall assist Owner in procuring, at
Owner’s Expense, and Owner shall maintain Business Interruption Insurance for
the Managed Facilities in accordance with the requirements set forth in Exhibit
E attached hereto. If any event, including a Force Majeure Event, occurs that
results in an interruption in the Operation of the Managed Facilities (a
“Business Interruption Event”), Manager shall use commercially reasonable
efforts to reduce Operating Expenses, Centralized Services Charges and
Reimbursable Expenses to levels commensurate with the levels of reduced revenues
and business activity. All Centralized Service Charges and Reimbursable Expenses
actually incurred during the period of the Business Interruption Event shall
continue to be payable in accordance with the provisions this Agreement,
regardless of whether there are sufficient Business Interruption Insurance
proceeds to cover such amounts. Owner shall also be obligated to pay to Manager,
in accordance with this Agreement, Management Fees based on the prior year’s
actual Net Operating Revenues and EBITDA (as measured as of the date immediately
prior to the commencement of the Business Interruption Event) during the period
of the Business Interruption Event; provided, that during the first Operating
Year, EBITDA shall be based on the projected EBITDA included in the Annual
Budget(s) for the twelve (12) months from and after the Opening Date.

 

  14.2 Proceeds of Business Interruption Insurance.

The net proceeds of the Business Interruption Insurance maintained in accordance
with Section 14.1 (after the application of any deductible) shall be deposited
in the Operating Account and used by Manager in the same manner as funds
generated from the Operation of the Managed Facilities are used by Manager in
accordance with this Agreement, including the payment of Operating Expenses,
Management Fees, the Centralized Services Charges and Managed Facilities
Personnel Costs and all other Operating Expenses as provided in Section 14.1.

ARTICLE XV.

CASUALTY OR CONDEMNATION

 

  15.1 Casualty.

15.1.1 Notices. If the Managed Facilities or any portion thereof is damaged by a
Casualty, Manager shall immediately notify Owner thereof.

15.1.2 Casualty. If the Managed Facilities are damaged or destroyed by a
Casualty and, thereafter, the business operations at the Managed Facilities
substantially cease, then a Force Majeure Event shall be deemed to exist and the
Term of this Agreement shall be extended for each day that such Force Majeure
Event continues. If Owner elects to commence and complete the Restoration of the
Managed Facilities following such Casualty, the Term of

 

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this Agreement shall recommence upon the completion of such Restoration. If
Owner chooses not to complete such Restoration and sells the Managed Facilities
(or any material portion of the Managed Facilities or the parking structure)
following such Casualty, then Manager, upon written notice to Owner, may elect
to terminate this Agreement in accordance with Section 16.2.4 and Owner, upon
written notice to Manager, may elect to terminate this Agreement in accordance
with Section 16.3.4.

 

  15.2 Condemnation.

15.2.1 Notices. If either Party receives notice of any actual, pending or
contemplated Condemnation (or other action in lieu thereof) of all or a portion
of the Managed Facilities, such party shall promptly notify the other Party
thereof.

15.2.2 Total Condemnation. If all or substantially all of the Managed Facilities
is taken in a Condemnation, or if a portion of the Managed Facilities shall be
so taken such that Owner determines that the cost of Restoration is not
justified in comparison to the anticipated profitability of the Managed
Facilities during the remaining Term or the remaining portion cannot be Operated
as a casino, either Party, upon written notice to the other Party, may terminate
this Agreement. The proceeds of any condemnation award for the condemnation of
all, or substantially all, of the Managed Facilities shall be equitably
allocated between Manager and Owner based on their respective interests in the
Managed Facilities; provided, however, that in no event shall Manager receive
from the Condemnation award an amount in excess of the fee that would be payable
to Manager in accordance with Section 16.3.4 (assuming a fee would be payable
thereunder) based on the date of termination of this Agreement. The provisions
of this Section 15.2.2 shall survive the termination or expiration of this
Agreement.

15.2.3 Partial Condemnation. If all or a portion of the Managed Facilities shall
be taken by Condemnation and this Agreement is not terminated by either Party in
accordance with Section 15.2.2, or the Condemnation is only on a temporary
basis, this Agreement shall not terminate and Owner shall promptly commence and
complete the Restoration, but only to a viable architectural unit and provided,
that Owner shall not be obligated to expend any funds in excess of the amount of
Condemnation proceeds actually received by Owner. In the event of a partial
condemnation, the proceeds of any condemnation award shall be payable solely to
Owner.

15.2.4 Exception. Notwithstanding anything in this Agreement to the contrary,
Owner shall not be liable for any inconvenience or annoyance to Manager or
injury to Manager’s business relating in any way from such Condemnation or
repair or restoration.

15.3 Coordination with Ground Lease and Financing Documents. To the extent this
Agreement is in effect and the provisions of Section 15.1 or 15.2 are in
conflict with any of the provisions of the Ground Lease or the Financing
Documents with respect to any casualty or condemnation affecting the Managed
Facilities, the Ground Lease or the Financing Documents, as applicable, shall
control.

 

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ARTICLE XVI.

DEFAULTS AND TERMINATIONS

 

  16.1 Events of Default.

16.1.1 Owner Events of Default. Each of the following actions and events may be
deemed an “Owner Event of Default”:

16.1.1.1 A failure by Owner within the time periods specified in this Agreement
to pay the amount due and payable under this Agreement to Manager or its
Affiliates for the Management Fees, Reimbursable Expenses or Centralized
Services Charges and that is not cured within sixty (60) days after notice to
Owner specifying such failure; provided, that in the event sufficient funds are
available in the Operating Account to pay such amounts then due and Manager has
the right to withdraw, transfer or apply such funds to the payment of such
amounts then due, then such failure of Owner to pay such amount shall not be an
Event of Default;

16.1.1.2 Except as set forth in Section 16.1.1.1, a failure by Owner to pay any
amount of money to Manager when due and payable under this Agreement that is not
cured within sixty (60) days after notice to Owner;

16.1.1.3 A failure by Owner to materially perform or comply with any of the
covenants, duties or obligations set forth in this Agreement to be performed by
Owner that is not cured within thirty (30) days following notice of such default
from Manager to Owner; provided, that if: (a) the default is not susceptible of
cure within a thirty (30) day period; (b) the default cannot be cured solely by
the payment of a sum of money; and (c) the default would not expose Manager to
an imminent and material risk of criminal liability or of material damage to its
business reputation, the thirty (30) day cure period shall be extended for such
time as is necessary (but in no event longer than ninety (90) days) to cure the
default so long as Owner commences to cure the default within such thirty
(30) day period and thereafter proceeds with reasonable diligence to complete
such cure; and

16.1.1.4(i) Owner’s failure generally to pay its debts as such debts become due;
(ii) a general assignment by Owner for the benefit of its creditors, or any
similar arrangement with its creditors by Owner; (iii) the entry of a judgment
of insolvency against Owner; (iv) the filing by the Owner of a petition for
relief under applicable bankruptcy, insolvency, or similar debtor relief laws;
(v) the filing of a petition for relief under applicable bankruptcy, insolvency
or similar debtor relief laws by any Person against Owner which is consented to
by Owner; (vi) the appointment (or petition or application for appointment) of a
receiver, custodian, trustee, conservator, or liquidator to oversee all or any
substantial part of Owner’s assets or the conduct of its business; (vii) any
action by Owner for dissolution of its operations; or (viii) any other similar
proceedings in any relevant jurisdiction affecting Owner.

Notwithstanding the foregoing, there shall be no Owner Event of Default if the
basis for any asserted Owner Event of Default is in the process of being
resolved pursuant to Sections 5.1.3 and 5.1.4 or Article XVII.

 

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16.1.2 Manager Events of Default. Each of the following actions and events may
be deemed a “Manager Event of Default”:

16.1.2.1 A failure by Manager to pay any amount of money to Owner when due and
payable under this Agreement that is not cured within sixty (60) days after
notice to Manager;

16.1.2.2 A failure by Manager or CLC to materially perform or comply with any of
the covenants, duties or obligations set forth in this Agreement to be performed
by Manager or CLC, as applicable, that is not cured within thirty (30) days
following notice of such default from Owner to Manager; provided, that if:
(a) the default is not susceptible of cure within a thirty (30) day period;
(b) the default cannot be cured solely by the payment of a sum of money; and
(c) the default would not expose Owner to an imminent and material risk of
criminal liability or of material damage to its business reputation, the thirty
(30) day cure period shall be extended for such time as is necessary (but in no
event longer than ninety (90) days) to cure the default so long as Manager
commences to cure the default within such thirty (30) day period and thereafter
proceeds with reasonable diligence to complete such cure; and

16.1.2.3(i) Manager’s failure generally to pay its debts as such debts become
due; (ii) a general assignment by Manager and/or CLC for the benefit of its
creditors, or any similar arrangement with its creditors by Manager and/or CLC;
(iii) the entry of a judgment of insolvency against Manager and/or CLC; (iv) the
filing by the Manager and/or CLC of a petition for relief under applicable
bankruptcy, insolvency, or similar debtor relief laws; (v) the filing of a
petition for relief under applicable bankruptcy, insolvency or similar debtor
relief laws by any Person against Manager and/or CLC which is consented to by
Manager and/or CLC, as applicable; (vi) the appointment (or petition or
application for appointment) of a receiver, custodian, trustee, conservator, or
liquidator to oversee all or any substantial part of Manager’s assets or the
conduct of its business; (vii) any action by Manager for dissolution of its
operations; (viii) the appointment (or petition or application for appointment)
of a receiver, custodian, trustee, conservator, or liquidator to oversee all or
any substantial part of CLC’s assets or the conduct of its business; (ix) any
action by CLC for dissolution of its operations; or (x) any other similar
proceedings in any relevant jurisdiction affecting Manager and/or CLC.

Notwithstanding the foregoing, there shall be no Manager Event of Default if the
basis for any asserted Manager Event of Default is in the process of being
resolved pursuant to Sections 5.1.3 and 5.1.4 or Article XVII.

16.1.3 Remedies for Event of Default. Subject to the terms of this Agreement, if
any Event of Default shall have occurred, the non-defaulting Party shall have
the right to terminate this Agreement in accordance with this Section 16.1 and
to exercise against the defaulting Party any other rights and remedies available
to the non-defaulting Party under this Agreement (subject to the provisions
hereof) at law or in equity; provided, however, Owner shall not have the right
to terminate this Agreement by reason of the occurrence of any Event of Default
and Manager shall not have the right to terminate this Agreement by reason of
the occurrence of an Event of Default under this Section 16.1, unless: (a) the
Event of Default is material in amount or in its adverse effect on the
Operation, ownership or possession of the Managed Facilities; (b) the Event of
Default constitutes intentional misconduct, reckless

 

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behavior or repeated Events of Default of a similar nature by the defaulting
Party; or (c) the remedies under this Agreement are inadequate to redress such
Event of Default; provided, that the foregoing limitations and the cure period
set forth in Section 16.1.2.1 shall not be applicable in the event of any breach
by the Manager under Section 5.4 of this Agreement involving at least One
Million Dollars ($1,000,000) and a ten (10) day cure period shall instead be
applicable after written notice is received by Manager from Owner. For the
avoidance of doubt, in the event of any payment by Manager that is the subject
of a breach notice as contemplated by the foregoing sentence, Manager may cure
the breach by placing the amount of the payment into a mutually agreeable escrow
to be held for its benefit pending the outcome of dispute resolution in
accordance with this Agreement (which shall include, in the case of Management
Fees, Expert Resolution pursuant to Article XVII). Notwithstanding the
foregoing, Manager may not terminate this Agreement by reason of the occurrence
of an Event of Default under Section 16.1.1.1 or Section 16.1.1.2 unless the
nonpayment giving rise to the Event of Default is greater than One Million
Dollars ($1,000,000). If, following a Service Co Assignment, a Manager Event of
Default occurs and Owner terminates this Agreement, Owner may (in addition to
the other rights and remedies available to Owner under this Agreement) terminate
Transferring Manager’s right to receive the Retained Rights.

16.1.4 Notice of Termination. If termination of this Agreement is a remedy
elected by a non-defaulting Party pursuant to this Section 16.1, such remedy
shall be exercised by the non-defaulting Party only by irrevocable and
unconditional written notice of termination to the defaulting Party, in which
case this Agreement shall terminate on the date specified by the non-defaulting
Party in the termination notice, which date shall be no less than ninety
(90) days nor later than twelve (12) months after the delivery of such notice.
The right of termination shall be in addition to, and not in lieu of, any other
rights or remedies at law or in equity by reason of the occurrence of any such
Event of Default, it being understood and agreed that the exercise of the remedy
of termination shall not constitute an election of remedies and shall be without
prejudice to any such other rights or remedies otherwise available to the
non-defaulting Party.

 

  16.2 Manager Termination Rights.

16.2.1 In Connection with Certain Assignments. Manager shall have the right to
terminate this Agreement if there shall be (a) any Assignment in violation of
Article XI, (b) any Transfer of Ownership Interests to a Manager Prohibited
Person or (c) any Change of Control, such termination to be effective (i) twelve
(12) months after delivery of such notice (unless Owner shall agree to an
earlier termination date) or (ii) if such Assignment or Transfer of Ownership
Interests involves a Manager Prohibited Person, such earlier date as is required
by any Gaming Authority. Such right of termination shall be exercisable until
the date which is of ninety (90) days after Manager receives written notice of
such an Assignment, Transfer of Ownership Interests or Change of Control from
Owner.

16.2.2 In Connection with a Managed Facilities Transfer. Manager shall have the
right to terminate this Agreement if there shall be a Managed Facilities
Transfer, such termination to be effective twelve (12) months after delivery of
such notice (unless Owner shall agree to an earlier termination date). Such
right of termination shall be exercisable until the date which is of ninety
(90) days after Manager receives written notice of such Managed Facilities
Transfer from Owner.

 

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16.2.3 Upon an Operating Deficiency. If, at any time during the Term, Manager
determines in the exercise of its good faith judgment that it cannot Operate the
Managed Facilities in all material respects in accordance with the Operating
Standard and Operating Limitations as provided herein and that the proximate
cause thereof is an Operating Deficiency Cause, Manager shall be entitled to
provide notice of such determination to Owner (an “Operating Deficiency
Notice”), which Operating Deficiency Notice shall allege with reasonable
specificity the details of the non-compliance with the Operating Standard or
Operating Limitations. For purposes of the preceding sentence, an “Operating
Deficiency Cause” shall mean any one or more of the following: (a) any failure
by Owner to fund a Funds Request issued pursuant to Section 5.5.2; or (b) any
interference by Owner or its agents or representatives in any material respect
with the Operation of the Managed Facilities. Within fifteen (15) days after
receipt of any Operating Deficiency Notice, Owner shall respond in detail to
such allegation and, if the matter is not resolved by the Parties within forty
five (45) days after Owner’s response, the matter shall be referred to the
Expert for Expert Resolution in accordance with Article XVII. If the Expert
determines that the Managed Facilities are not being Operated in accordance with
the Operating Standard or Operating Limitations in one or more material respects
as provided herein and that the proximate cause of such non-compliance is an
Operating Deficiency Cause, then an “Operating Limitations Deficiency” shall be
deemed to exist, and, unless Owner shall within fifteen (15) days of the
Expert’s determination fund the subject Funds Request or cease the actions that
interfere with the Operation of the Managed Facilities by Manager, then Manager
shall have the right, in its discretion, exercisable within thirty (30) days of
the Expert’s determination by written notice to Owner, to terminate this
Agreement, such termination to be effective twelve (12) months following
delivery of Manager’s notice of termination unless Owner shall agree to an
earlier termination date. A Termination Fee shall not be payable by Owner upon a
termination by Manager pursuant to this Section 16.2.3.

16.2.4 Upon a Casualty or Condemnation. Manager shall have the right to
terminate this Agreement as provided in Section 15.1.2 due to a Casualty only if
Owner elects not to undertake Restoration and sells any material portion of the
remaining Managed Facilities and interest in the Premises and/or the Ground
Lease (the “Remainder”). Manager shall have the right to terminate this
Agreement as provided in Section 15.2.2 due to a Condemnation and Manager shall
share in the condemnation proceeds as set forth in Section 15.2.2. Such
termination shall be effective as of the date set forth in the notice of
termination. A Termination Fee shall not be payable by Owner upon a termination
by Manager pursuant to this Section 16.2.4.

16.2.5 Upon a Failure to Amend. Manager shall have the right to terminate this
Agreement as provided in Section 19.2.10 of this Agreement by written notice to
Owner to terminate this Agreement, such termination to be effective thirty
(30) days following delivery of Manager’s notice of termination. No termination
fee or penalty shall be payable by Owner upon a termination of this Agreement
pursuant to this Section 16.2.5.

16.2.6 Upon a Licensing Event. Manager shall have the right, in its discretion,
to terminate this Agreement upon no less than ninety (90) days’ nor more than
twelve (12) months’ written notice of termination to Owner following a Licensing
Event which is not cured within the period required by the applicable Gaming
Authorities. No termination fee or penalty shall be payable by Owner upon a
termination of this Agreement pursuant to this Section 16.2.6.

16.2.7 Notice of Termination. If termination of this Agreement is elected by
Manager pursuant to this Section 16.2, such remedy shall be exercised by Manager
only by irrevocable and unconditional written notice of termination to Owner and
shall not be an exclusive remedy.

 

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  16.3 Owner Termination Rights.

16.3.1 Termination Upon a Managed Facilities Transfer. Owner shall have the
right, in its discretion, to terminate this Agreement upon no less than ninety
(90) days’ nor more than twelve (12) months’ written notice of termination to
Manager following a Managed Facilities Transfer. Such right of termination shall
be exercisable until the date which is ninety (90) days after such Managed
Facilities Transfer. Upon and as a condition to such termination by Owner, Owner
shall pay to Manager a Termination Fee.

16.3.2 Upon a Licensing Event. Owner shall have the right, in its discretion, to
terminate this Agreement upon no less than ninety (90) days’ nor more than
twelve (12) months’ written notice of termination to Manager, without payment of
any termination fee or penalty, if, as a result of a final, non-appealable
determination by any applicable Gaming Authority, Manager shall have failed to
obtain or maintain any license, qualification or approval from any Gaming
Authority necessary for Manager to manage the Managed Facilities unless such
failure was attributable, in whole or in part, to Owner or one or more direct or
indirect members or other equity holders of Owner (other than any such Person
who is an Affiliate of Manager). No termination fee or penalty shall be payable
by Owner upon a termination pursuant to this Section 16.3.2.

16.3.3 Upon a Failure to Amend. Owner shall have the right to terminate this
Agreement, without payment of any termination fee or penalty, as provided in
Section 19.2.10 of this Agreement, upon written notice of termination to
Manager, such termination to be effective thirty (30) days following delivery of
Owner’s notice of termination. No termination fee or penalty shall be payable by
Owner upon a termination pursuant to this Section 16.3.3.

16.3.4 Upon a Casualty or Condemnation. Owner shall have the right to terminate
this Agreement as provided in Section 15.2 due to a Casualty only if Owner
elects not to undertake Restoration and sells the Remainder, in which event
(a) if the Remainder is sold to a third party and the purchaser agrees for the
benefit of Manager not to build a casino on the Premises for the Trailing Period
following such Casualty, Owner shall not be obligated to pay to Manager any
termination fee or penalty and (b) if the Remainder is sold to a third party and
such third party does not agree for the benefit of Manager that it will not
build a casino on the Premises for the Trailing Period following such Casualty,
then Owner shall pay to Manager the Termination Fee. Owner shall have the right
to terminate this Agreement as provided in Section 15.2.2 due to a Condemnation
and Manager shall share in the condemnation proceeds as set forth in
Section 15.2.2; provided, that if the Remainder remaining after the Condemnation
is subsequently sold to a third party and such third party does not agree (in
favor of Manager) that it will not build a casino on the Premises at any time
during the Trailing Period following such Casualty, then Owner shall pay to
Manager the Termination Fee less the amount of the

 

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condemnation award received by Manager in accordance with Section 15.2.2. Such
termination shall be effective as of the date set forth in the notice of
termination. For purposes hereof, “Trailing Period” means (a) if during the
Initial Term, the period of time that this Agreement would have continued to be
in effect if the Initial Term had not terminated, (b) if during the Renewal
Term, the period of time that this Agreement would have continued to be in
effect if the Renewal Term had not terminated, and (c) during any Continuing
Term, there shall be no Trailing Period.

16.3.5 In Connection with Certain Assignments. If there shall be any Assignment
by Manager in violation of Section 11.2 or to an Owner Prohibited Person, Owner
shall have the right to terminate this Agreement, such termination to be
effective (i) twelve (12) months after delivery of such notice (unless Manager
shall agree to an earlier termination date) or (ii) if such Assignment involves
an Owner Prohibited Person, such earlier date as is required by any Gaming
Authority. Such right of termination shall be exercisable until the date which
is ninety (90) days after Owner receives written notice of such an Assignment,
transfer of Ownership Interest or Change of Control from Manager. No termination
fee or penalty shall be payable by Owner upon a termination pursuant to this
Section 16.3.8.

16.3.6 Notice of Certain Assignments, Change of Control, Managed Facilities
Transfer and Ground Lease Matters. Owner shall provide prompt written notice to
Manager of (a) any Assignment, Transfer of Ownership Interests, Change of
Control or Managed Facilities Transfer, in each case both at the time of
execution of any definitive agreement with respect thereto and at the time of
the consummation of such transaction or (b) receipt of notice of any breach
under the Ground Lease or any termination notice delivered under the Ground
Lease, in each case including a copy of the relevant notice.

16.3.7 Notice of Termination. If termination of this Agreement is elected by
Owner pursuant to this Section 16.3, such remedy shall be exercised by Owner
only by irrevocable and unconditional written notice of termination to Manager
and shall not be an exclusive remedy.

 

  16.4 Actions To Be Taken on Termination.

The Parties shall take the following actions upon the expiration or termination
of this Agreement pursuant to this Section 16 or otherwise pursuant to this
Agreement (in addition to the rights of the non-defaulting Party to pursue all
other remedies available to it under this Agreement if such termination is due
to an Event of Default):

16.4.1 Payment of Expenses for Termination. In the event of termination of this
Agreement due to an Event of Default of the Owner, all commercially reasonable
direct expenses arising as a result of the cessation of Managed Facilities
operations by Manager (including expenses arising under this Section 16.4) shall
be for the sole account of Owner, and Owner shall reimburse Manager within
fifteen (15) days following receipt of any invoice from Manager for any such
expenses, including those arising from or in connection with severing the
employment of Managed Facilities Personnel not engaged by Owner in accordance
with Section 16.6.9 (with severance benefits calculated in accordance with
policies applicable generally to employees of Other Managed Resorts or any
applicable employment agreement or union agreement that had been reflected in
the Annual Budget or otherwise approved by Owner) incurred by Manager in the
course of effecting the termination of this Agreement.

 

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16.4.2 Payment of Amounts Due to Manager. Upon the expiration or termination of
this Agreement, Owner shall pay to Manager (a) the Base Management Fee through
the effective date of such expiration or termination, (b) Managed Facilities
Personnel Costs, (c) other Reimbursable Expenses, (d) the Centralized Services
Charges, (e) any Incentive Management Fees which were due but not yet paid,
(f) any other amounts due Manager under this Agreement through the effective
date of expiration or termination and (g) if applicable, any termination fee
that may be due in accordance with (and for the avoidance of doubt, no
termination fee or penalty shall be due in the event of any other termination),
Section 16.3.1 (Managed Facilities Transfer) or Section 16.3.4
(Casualty/Condemnation), (subject, in the case of termination pursuant to
Section 16.3.4, to the terms thereof). This obligation is unconditional and
shall survive the expiration or termination of this Agreement (including all
amounts owed to Manager that are not fully ascertainable as of the expiration or
termination date), and Owner shall not have or exercise any rights of setoff,
except to the extent of any outstanding and undisputed payments owed to Owner by
Manager under this Agreement. Manager acknowledges that the payment of any
termination fee under this Section 16.4.2 and the payment of all other amounts
under this Section 16.4, as and when paid, shall be the sole and exclusive
remedy of Manager in the case of any termination by Owner or Manager under
circumstances in which any such termination fee is to be paid. The Parties
further acknowledge that any such termination fee does not represent a penalty
or punitive clause but represents an agreed measure of damages, the amount of
which is impossible to determine on the date this Agreement is signed. Any
disputes regarding amounts owed to Manager under this Section 16.4.2 shall be
referred to the Expert for Expert Resolution pursuant to Article XVII. In
addition, all provisions in this Agreement that specifically survive the
expiration or termination of this Agreement shall continue to survive as
provided herein and, notwithstanding the limitations contained in this
Section 16.4.2, Manager shall continue to have a right to receive any and all
payments which would be due and payable in connection with such surviving
provisions.

16.4.3 Surrender of Managed Facilities; Cooperation. Manager shall peacefully
vacate and surrender the Managed Facilities to Owner on the effective date of
such expiration or termination, and the Parties shall execute and deliver any
expiration or termination or other necessary agreements either Party shall
request for the purpose of evidencing the expiration or termination of this
Agreement, and Manager shall deliver to Owner all keys, passwords, combinations,
and take all such additional actions as Owner may reasonably request to ensure
the orderly transition of Operation of the Managed Facilities to Owner or such
Person as Owner may designate.

16.4.4 Proprietary Information and Systems; Service Mark Rights.

16.4.4.1 Upon the expiration or termination of this Agreement, Owner, at its
expense, shall immediately commence and diligently pursue to completion during a
transition period of twelve (12) months following termination or expiration of
this Agreement (the “Transition Period”) the following actions:

(a) the discontinuation of all use in any manner of any Proprietary Information
and Systems and any and all Service Mark Rights (other than the Owner Primary
Marks); provided that, with respect to the Proprietary Information and Systems,
Manager shall (i) reasonably cooperate with Owner, at Owner’s expense, to
develop, construct and install such hardware and software systems as are
reasonably necessary to continue to Operate the Managed Facilities in
substantially the same manner and functionality as Operated by Manager prior to
such termination, and (ii) provide Owner reasonably in advance of such
discontinuation with a list that describes with reasonable specificity the
Proprietary Information and Systems to which the obligation described in this
Section 16.4.4.1(a) applies and their respective functions;

 

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(b) the cancellation of all fictitious or assumed name registrations relating to
Owner’s use of any Proprietary Information and Systems;

(c) notification to Owner and all telephone directory publishers of the
termination or expiration of Owner’s right to use any telephone number and any
regular, classified or other telephone directory listings associated with any
Proprietary Information and Systems and authorization to transfer such number to
Manager or at Manager’s direction; provided, that nothing herein shall be deemed
to require Owner to change or surrender any telephone number used exclusively by
the Managed Facilities;

(d) removal from the Managed Facilities, and discontinuation for any purpose, of
all publicly observable FF&E, Supplies, signage and other materials to the
extent displaying any aspect of the Service Mark Rights (other than the Owner
Primary Marks); and

(e) the cessation of use of Manuals, policy statements and the like to the
extent displaying any Service Mark Right (other than the Owner Primary Marks).

16.4.4.2 From and after the conclusion of the Transition Period:

(a) Owner shall not, copy, reproduce, use or retain any of the Proprietary
Information and Systems, other than historical materials relating to the Managed
Facilities that include incidental Proprietary Information and Systems;

(b) Owner shall not hold itself or the Managed Facilities out to the public as
being or remaining (or otherwise associated with) any other Managed Resorts, or
any project or resort managed by Manager or its Affiliates; and

(c) Owner shall provide to Manager evidence reasonably satisfactory to Manager
of Owner’s compliance with its obligations under this Section 16.4.4.

16.4.5 Assignment and Transfers to Owner. Upon the expiration or termination of
this Agreement, Manager shall assign and transfer to Owner:

16.4.5.1 all leases and contracts to which Manager, CLC, or any of their
Affiliates is a party, if any, (including collective bargaining agreements and
pension plans, equipment leases, leases, licenses and concession agreements and
maintenance and service

 

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contracts) in effect that relate exclusively to the Managed Facilities or the
Owner Owned IP as of the date of expiration or termination of this Agreement
which are assignable without third party consent or as to which consent to
assignment may be and has been obtained without cost to Manager, and Owner
shall, effective as of the date of such termination, assume all liabilities and
obligations thereunder, and Owner shall confirm its assumption of such
liabilities and obligations in writing; provided, that Manager shall provide to
Owner a list of all contracts and agreements with CLC, and any Affiliates of
Manager, and Manager shall assign, and Owner shall assume only such contracts
and agreements between the Managed Facilities, on the one hand, and CLC or an
Affiliate of Manager, on the other hand, as Owner shall elect (and Manager shall
terminate, at Manager’s sole cost and expense) all Affiliate contracts and
agreements not so assumed by Owner);

16.4.5.2 all of Manager’s right, title and interest in and to all Approvals,
including liquor licenses, if any, held by Manager in connection with the
Operation of the Managed Facilities, but only to the extent such assignment or
transfer is permitted under Applicable Law; provided, that Owner shall reimburse
Manager for any funds Manager has expended in obtaining any such Approvals (if
not otherwise paid or reimbursed by Owner). In addition, if Manager or any
Affiliate of Manager is the holder of any liquor license for the Managed
Facilities which is not assignable to Owner or its designee upon termination of
this Agreement, then, upon the request of Owner, Manager (or such Affiliate)
shall enter into a temporary lease, license or such other agreement as may be
permitted under Applicable Law to permit the continuous and uninterrupted sale
of alcohol beverages at the Managed Facilities consistent with prior operations.
In such event, Manager (or its Affiliate, if applicable) shall not be entitled
to compensation in connection with such arrangement, but shall not incur any
cost or liability in connection therewith and shall be named as an additional
insured on any “dramshop” or other liability insurance pertaining to the sale of
alcoholic beverages at the Managed Facilities. Any such temporary lease, license
or other arrangement shall include an indemnification of Manager and its
Affiliates from Owner and shall provide for the termination of all obligations
of Manager and its Affiliates thereunder within one hundred twenty (120) days
following the date of termination of this Agreement. In addition, to the extent
permitted under Applicable Law, any other permits or licenses that may not be
assigned to Owner shall be maintained by Manager for Owner’s benefit at Owner’s
cost and expense until such time (but no later than one hundred twenty
(120) days following the termination of this Agreement) as Owner may secure
permits and licenses in its own name, subject to Owner’s provision of an
indemnification of Manager and its Affiliates from Owner; and

16.4.5.3 all books and records of the Managed Facilities (but excluding any
Manager Confidential Information); provided, that Manager may retain one or more
archival copies of such books and records for Manager’s independent use.

16.4.6 Bookings and Reservations. Owner shall honor, and shall cause any
successor manager to honor, all business confirmed for the Managed Facilities
with reservations (including reservations made by Manager pursuant to Manager’s
other promotional programs) dated after the effective date of the expiration or
termination of this Agreement in accordance with such bookings as accepted by
Manager. Manager shall transfer to Owner and will assume responsibility for all
advance deposits received by Manager for the Managed Facilities.

 

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16.4.7 Bank Accounts; Receivables. On the expiration or termination of this
Agreement, Manager shall either, at Owner’s election, (a) terminate all Bank
Accounts and disburse all funds therein to Owner or (b) terminate the authority
of Manager’s authorized signatories to draw funds from the Bank Accounts and
cause the Persons designated by Owner to become authorized signatories. All
receivables of the Managed Facilities outstanding as of the effective date of
termination or expiration of this Agreement shall continue to be the property of
Owner. Manager will turn over to Owner any receivables collected directly by
Manager after the effective date of termination or expiration of this Agreement.

16.4.8 Final Accounting. Within thirty (30) days following the expiration or
termination of this Agreement, Manager shall render a full accounting to Owner
(including all statements and reports in the forms required herein) for the
final month ending on the date of expiration or termination of this Agreement.
At the request of Owner, Manager shall cause to be prepared and delivered to
Owner within ninety (90) days following the expiration or termination of this
Agreement Certified Financial Statements for the final Operating Year,
containing the reports and other items and prepared on the same basis as under
Section 10.4. The cost of preparing the Certified Financial Statements pursuant
to this Section 16.4.8 shall be an Operating Expense attributable to the final
Operating Year. The final Certified Financial Statements delivered pursuant to
this Section 16.4.8, and all information contained therein, shall be binding and
conclusive on the Parties unless, within sixty (60) days following the delivery
thereof, either Party shall deliver to the other Party written notice of its
objection thereto setting forth in reasonable detail the nature of such
objection. If the Parties are unable thereafter to resolve any disputes between
them with respect to the matters set forth in the final Certified Financial
Statements within sixty (60) days after delivery by either Party of the
aforesaid written notice, either Party shall have the right to cause such
dispute to be resolved by Expert Resolution in accordance with the provisions of
Article XVII.

16.4.9 Managed Facilities Personnel. From and after expiration or termination of
this Agreement the Managed Facilities Personnel shall not be restrained by this
Agreement in making their own decision as to whether to be employed by Owner,
Manager or their respective Affiliates and Manager and its Affiliates may employ
any of the Senior Executive Personnel or any other Managed Facilities Personnel
who desire employment with Manager or its Affiliates and who Owner does not
employ. Manager shall make reasonably available to Owner from time to time
during the Transition Period any Managed Facilities Personnel employed by
Manager or its Affiliates to answer questions that Owner may have regarding the
Managed Facilities.

16.4.10 Centralized Services and Purchasing Program. In consideration of the
continued payment of the Centralized Services Charges (as set forth in
Section 4.1.1), the charges for Reimbursable Expenses (as set forth in
Section 3.3) and for participation in Purchasing Programs (as contemplated by
Section 5.6), Manager shall, during the Transition Period (or such shorter
period as requested by Owner), continue to provide Centralized Services and
allow the Owner to purchase through the Purchasing Program, in each case to the
extent Manager and its Affiliates are permitted to do so pursuant to the terms
of any applicable third party arrangements.

16.4.11 Survival. This Section 16.4 shall survive the expiration or termination
of this Agreement.

 

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ARTICLE XVII.

DISPUTE RESOLUTION

 

  17.1 Generally.

17.1.1 Except for disputes specifically provided in this Agreement to be
referred to Expert Resolution, all claims, demands, controversies, disputes,
actions or causes of action of any nature or character arising out of or in
connection with this Agreement, whether legal or equitable, known or unknown,
contingent or otherwise shall be resolved in the United States District Court
for Nevada and any appellate courts thereto, or if federal jurisdiction is
lacking, then in the State Courts of Nevada. The Parties agree that service of
process for purposes of any such litigation or legal proceeding need not be
personally served or served within the State of Nevada, but may be served with
the same effect as if the Party in question were served within the State of
Nevada, by giving notice containing such service to the intended recipient (with
copies to counsel) in the manner provided in Section 19.5. This provision shall
survive and be binding upon the Parties after this Agreement is no longer in
effect.

17.1.2 If any dispute between any of the Parties or any of their respective
Affiliates is pending in any state or federal court located in the State of
Nevada with respect to this Agreement (or this Agreement), and any subsequent
dispute arises between one or more Parties or any of their respective Affiliates
which is not required by this Agreement to be referred to Expert Resolution and
is pending in any other state or federal court, the Parties shall (to the extent
permissible under applicable rules) jointly move to consolidate such subsequent
dispute in the same court with the pending dispute, and in the event that the
court declines to consolidate the disputes (or consolidation is not permissible
under applicable rules), the Parties shall request that the court refer the
subsequent dispute to the judge presiding over the pending dispute as a related
case, it being the intent of the Parties to keep any litigation relating to this
Agreement within the same court to the fullest extent possible under the law.

 

  17.2 Expert Resolution.

With respect to any dispute to be submitted to an Expert pursuant to this
Agreement, any Party that is party to such dispute may require that the dispute
be submitted to final and binding arbitration (without appeal or review) in Las
Vegas, Nevada (“Expert Resolution”), administered by an independent arbitration
tribunal consisting of three (3) arbitrators, one of which is appointed by each
Party and the third arbitrator shall be selected by the other two arbitrators
(collectively, the “Expert”). Such Expert Resolution shall be conducted by the
American Arbitration Association in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The Expert shall be a person
having not less than ten (10) years’ experience in the area of expertise on
which the dispute is based and having no conflict of interest with either Party.
With respect to any dispute to be submitted to an Expert pursuant to this
Agreement, the use of the Expert shall be the exclusive remedy of the Parties
and neither Party shall attempt to adjudicate such dispute in any other forum.
The decision of the Expert shall be final and binding on the Parties and shall
not be capable of challenge, whether by Expert Resolution, arbitration, in court
or otherwise.

 

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17.2.1 Related Disputes.

17.2.1.1 Any two (2) or more disputes which are required to be submitted to an
Expert under this Agreement shall be considered related for purposes of this
section if they involve the same or substantially similar issues of law or fact.
In the event any Party to a dispute (the “Subsequent Related Dispute”)
designates it as being related to a prior or pending dispute (the “Prior Related
Dispute”), the Subsequent Related Dispute shall be referred for resolution to
the Expert to whom the Prior Related Dispute was referred (the “Initial
Expert”). If a Party objects to the designation of a Subsequent Related Dispute
as being related to a Prior Related Dispute, the objection shall be resolved by
the Initial Expert. If the Initial Expert concludes that the disputes are
related, the Subsequent Related Dispute shall be resolved by the Initial Expert
in accordance with this Section 17.2, and to the extent practical issues in the
Subsequent Related Dispute that are the same or substantially similar as in the
Prior Related Dispute shall be resolved in a manner consistent with the
resolution of such issues in the Prior Related Dispute. If the Initial Expert
concludes that the Subsequent Related Dispute is not related to the Prior
Related Dispute, the Subsequent Related Dispute shall be referred to an Expert
selected in accordance with the introductory paragraph of this Section 17.2.

17.2.1.2 Notwithstanding anything to the contrary contained in this Agreement,
if a claim is asserted involving an alleged Event of Default under this
Agreement (or under this Agreement) (a “Default Claim”), any and all issues,
whether legal, factual or otherwise, relating to such Default Claim shall be
resolved exclusively by a state or federal court located in the State of Nevada
in accordance with the provisions hereof regardless of whether any of such
issues would otherwise be required to be referred to an Expert for resolution
under a provision of this Agreement; provided, that any decision by an Expert
made in accordance with this Agreement which was rendered prior to the assertion
of a Default Claim and which relates to such Default Claim shall be considered
final and binding in any court proceeding involving such Default Claim, it being
the intent and understanding of the Parties that, except for specific issues
that were determined by an Expert before a Default Claim is asserted, all issues
relating to such Default Claim shall be resolved exclusively by the court in the
action or proceeding involving the Default Claim.

17.2.2 Restrictions on Expert. THE EXPERT SHALL HAVE NO AUTHORITY TO VARY OR
IGNORE THE TERMS OF THIS AGREEMENT, INCLUDING SECTION 17.7.5, AND SHALL BE BOUND
BY APPLICABLE LAW. ALL PROCEEDINGS, AWARDS AND DECISIONS UNDER ANY EXPERT
RESOLUTION PROCEEDING SHALL BE STRICTLY PRIVATE AND CONFIDENTIAL, EXCEPT AS MAY
BE NECESSARY TO ENFORCE THE SAME.

 

  17.3 Time Limit.

Any Expert Resolution of a dispute must be commenced within twelve (12) months
from the date on which either Party first gave written notice to the other of
the existence of the dispute, and any Party who fails to commence litigation or
Expert Resolution within such twelve (12) month period shall be deemed to have
waived any of its affirmative rights and claims in connection with the dispute
and shall be barred from asserting such rights and claims at any time thereafter
except as a defense to any related or similar claims subsequently raised by the
other

 

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party. An Expert Resolution shall be deemed commenced by a Party when the Party
sends a notice to the other Party and to the American Arbitration Association,
identifying the dispute and requesting Expert Resolution. Litigation shall be
deemed commenced by a Party when the Party serves a complaint (or, as the case
may be, a counterclaim) on the other Party with respect to the dispute.

 

  17.4 Prevailing Party’s Expenses.

The prevailing Party in any Expert Resolution, litigation or other legal action
or proceeding arising out of or related to this Agreement shall be entitled to
recover from the losing Party all reasonable fees, costs and expenses incurred
by the prevailing Party in connection with such Expert Resolution, litigation or
other legal action or proceeding (including any appeals and actions to enforce
any Expert Resolution awards and court judgments), including reasonable fees,
expenses and disbursements for attorneys, experts and other third parties
engaged in connection therewith and its share of the fees and costs of the
Expert. If a Party prevails on some, but not all, of its claims, such Party
shall be entitled to recover an equitable amount of such fees, expenses and
disbursements, as determined by the applicable Expert(s) or court. All amounts
recovered by the prevailing Party under this Section 17.4 shall be separate
from, and in addition to, any other amount included in any Expert Resolution
award or judgment rendered in favor of such Party.

 

  17.5 WAIVERS.

17.5.1 JURISDICTION AND VENUE. OWNER AND MANAGER WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL DEFENSES BASED ON LACK OF JURISDICTION OR INCONVENIENT
VENUE OR FORUM FOR ANY LITIGATION OR OTHER LEGAL ACTION OR PROCEEDING PURSUED BY
MANAGER OR OWNER IN THE JURISDICTION AND VENUE SPECIFIED IN SECTION 17.1.

17.5.2 TRIAL BY JURY. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
TRIAL BY JURY OF ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT.

17.5.3 CLASS ACTIONS. OWNER AGREES THAT, FOR MANAGER’S AND ITS AFFILIATES’ CHAIN
OF BRANDED HOTELS AND CASINOS TO FUNCTION PROPERLY, MANAGER SHOULD NOT BE
BURDENED WITH THE COSTS OF ARBITRATING OR LITIGATING SYSTEM WIDE CLAIMS.
ACCORDINGLY, OWNER AGREES THAT ANY DISAGREEMENT BETWEEN OWNER AND MANAGER SHALL
BE CONSIDERED UNIQUE AS TO ITS FACTS AND SHALL NOT BE BROUGHT AS A CLASS ACTION,
AND OWNER WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO BRING A
CLASS ACTION OR MULTI-PLAINTIFF, CONSOLIDATED OR COLLECTIVE ACTION AGAINST
MANAGER OR ANY OF ITS AFFILIATES. FOR AVOIDANCE OF DOUBT, THE FOREGOING
RESTRICTION SHALL NOT BE CONSTRUED TO PROHIBIT EITHER PARTY OR ITS AFFILIATES
FROM JOINING WITH OTHER PARTIES TO THE AFFILIATE MANAGEMENT AGREEMENTS TO BRING
ACTIONS RELATING TO ONE OR MORE OF SUCH AFFILIATE MANAGEMENT AGREEMENTS.

 

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17.5.4 DECISIONS IN PRIOR CLAIMS. SUBJECT TO SECTION 17.2.1.2, OWNER AND MANAGER
AGREE THAT IN ANY EXPERT RESOLUTION OR LITIGATION BETWEEN THE PARTIES, THE
EXPERT(S) OR COURT SHALL NOT BE PRECLUDED FROM MAKING ITS OWN INDEPENDENT
DETERMINATION OF THE ISSUES IN QUESTION, NOTWITHSTANDING THE SIMILARITY OF
ISSUES IN ANY OTHER EXPERT RESOLUTION OR LITIGATION INVOLVING MANAGER AND ANY
OTHER OWNER OR ANY OF THEIR AFFILIATES, AND EACH PARTY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHTS TO CLAIM THAT A PRIOR DISPOSITION OF THE
SAME OR SIMILAR ISSUES PRECLUDES SUCH INDEPENDENT DETERMINATION.

17.5.5 PUNITIVE, CONSEQUENTIAL AND CERTAIN OTHER DAMAGES. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR UNDER APPLICABLE LAW, IN ANY
EXPERT RESOLUTION, LAWSUIT, LEGAL ACTION OR PROCEEDING BETWEEN THE PARTIES
ARISING FROM OR RELATING TO THIS AGREEMENT OR THE MANAGED FACILITIES, THE
PARTIES UNCONDITIONALLY AND IRREVOCABLY WAIVE AND DISCLAIM TO THE FULLEST EXTENT
PERMITTED UNDER APPLICABLE LAW ALL RIGHTS TO ANY CONSEQUENTIAL, LOST PROFITS,
PUNITIVE, EXEMPLARY, STATUTORY OR TREBLE DAMAGES (OTHER THAN STATUTORY RIGHTS
AND MANAGER’S RIGHT TO RECEIVE ANY TERMINATION FEE IN ACCORDANCE WITH THIS
AGREEMENT, AND EXCEPT FOR A CLAIM FOR RECOVERY OF ANY SUCH DAMAGES THAT THE
CLAIMING PARTY IS REQUIRED BY A COURT OF COMPETENT JURISDICTION OR THE EXPERT TO
PAY TO A THIRD PARTY), AND ACKNOWLEDGE AND AGREE THAT THE RIGHTS AND REMEDIES IN
THIS AGREEMENT, AND ALL OTHER RIGHTS AND REMEDIES AT LAW AND IN EQUITY, WILL BE
ADEQUATE IN ALL CIRCUMSTANCES FOR ANY CLAIMS THE PARTIES MIGHT HAVE WITH RESPECT
TO DAMAGES.

 

  17.6 Survival and Severance.

This Article XVII shall survive the expiration or termination of this Agreement.
The provisions of this Article XVII are severable from the other provisions of
this Agreement and shall survive and not be merged into any termination or
expiration of this Agreement or any judgment or award entered in connection with
any dispute, regardless of whether such dispute arises before or after
termination or expiration of this Agreement, and regardless of whether the
related Expert Resolution or litigation proceedings occur before or after
termination or expiration of this Agreement. If any part of this Article XVII is
held to be unenforceable, it shall be severed and shall not affect either the
duties to submit any dispute to Expert Resolution or any other part of this
Article XVII.

 

  17.7 ACKNOWLEDGEMENTS.

OWNER AND MANAGER EACH ACKNOWLEDGE AND CONFIRM TO THE OTHER THAT:

17.7.1 INFORMED INVESTOR. THE ACKNOWLEDGING PARTY HAS HAD THE BENEFIT OF LEGAL
COUNSEL AND ALL OTHER ADVISORS DEEMED

 

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NECESSARY OR ADVISABLE TO ASSIST IT IN THE NEGOTIATION AND PREPARATION OF THIS
AGREEMENT, AND THE OTHER PARTY’S ATTORNEYS HAVE NOT REPRESENTED THE
ACKNOWLEDGING PARTY, OR PROVIDED ANY LEGAL COUNSEL OR OTHER ADVICE TO THE
ACKNOWLEDGING PARTY, WITH RESPECT TO THIS AGREEMENT.

17.7.2 BUSINESS RISKS. THE ACKNOWLEDGING PARTY (A) IS A SOPHISTICATED PERSON,
WITH SUBSTANTIAL EXPERIENCE IN THE OWNERSHIP AND OPERATION OF COMMERCIAL
DEVELOPMENT PROJECTS; (B) RECOGNIZES THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT INVOLVE SUBSTANTIAL BUSINESS RISKS; AND (C) HAS MADE AN INDEPENDENT
INVESTIGATION OF ALL ASPECTS OF THIS AGREEMENT SUCH PARTY DEEMS NECESSARY OR
ADVISABLE.

17.7.3 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES. NO PARTY HAS MADE ANY
PROMISES, REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND WHATSOEVER TO
ANY OTHER PARTY, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND NO
PERSON IS AUTHORIZED TO MAKE ANY PROMISES, REPRESENTATIONS, WARRANTIES OR
GUARANTIES ON BEHALF OF A PARTY, EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT.

17.7.4 NO RELIANCE. NO PARTY HAS RELIED UPON ANY STATEMENTS OR PROJECTIONS OF
REVENUE, SALES, EXPENSES, INCOME, GAMING WIN, RATES, AVERAGE DAILY RATE,
CONTRIBUTION, PROFITABILITY, VALUE OF THE MANAGED FACILITIES OR SIMILAR
INFORMATION PROVIDED BY ANY OTHER PARTY BUT HAS INDEPENDENTLY CONFIRMED THE
ACCURACY AND RELIABILITY OF ANY SUCH INFORMATION AND IS SATISFIED WITH THE
RESULTS OF SUCH INDEPENDENT CONFIRMATION.

17.7.5 LIMITATION ON FIDUCIARY DUTIES. TO THE EXTENT ANY FIDUCIARY DUTIES THAT
MAY EXIST AS A RESULT OF THE RELATIONSHIP OF THE PARTIES ARE INCONSISTENT WITH,
OR WOULD HAVE THE EFFECT OF EXPANDING, MODIFYING, LIMITING OR RESTRICTING ANY OF
THE EXPRESS TERMS OF THIS AGREEMENT, (A) THE EXPRESS TERMS OF THIS AGREEMENT
SHALL CONTROL AND (B) ANY LIABILITY OF THE PARTIES FOR MONETARY DAMAGES OR
MONETARY RELIEF SHALL BE BASED SOLELY ON PRINCIPLES OF CONTRACT LAW AND THE
EXPRESS TERMS OF THIS AGREEMENT. ACCORDINGLY, NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE
LAW, THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE AND DISCLAIM ANY
POWER OR RIGHT SUCH PARTY MAY HAVE TO CLAIM ANY PUNITIVE, EXEMPLARY, STATUTORY
OR TREBLE DAMAGES OR CONSEQUENTIAL OR INCIDENTAL DAMAGES FOR ANY BREACH OF
FIDUCIARY DUTIES.

17.7.6 IRREVOCABILITY OF CONTRACT. IN ORDER TO REALIZE THE FULL BENEFITS
CONTEMPLATED BY THE PARTIES, THE PARTIES INTEND THAT THIS AGREEMENT SHALL BE
NON-TERMINABLE, EXCEPT FOR THE SPECIFIC

 

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TERMINATION RIGHTS IN FAVOR OF A PARTY SET FORTH IN THIS AGREEMENT. ACCORDINGLY,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, TO THE FULLEST
EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVE AND DISCLAIM ALL RIGHTS TO TERMINATE THIS AGREEMENT AT LAW OR
IN EQUITY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

  17.8 Survival.

The provisions of this Article XVII shall survive the expiration or termination
of this Agreement.

ARTICLE XVIII.

GAMING LAW PROVISIONS

 

  18.1 Regulatory Matters; Initial Suitability Review.

18.1.1 Manager’s Regulatory Environment. Owner acknowledges that Manager, CEOC
and their respective Affiliates (a) conduct business in an industry that is
subject to and exists because of privileged licenses issued by Governmental
Authorities in multiple jurisdictions, (b) are subject to extensive gaming
regulation and oversight, and are required to adhere to strict laws and
regulations regarding vendor and other business relationships, and (c) have
adopted strict internal controls and compliance policies governing their own
activities and those of certain parties with whom they do business.

18.1.2 Suitability Investigations. As an initial matter, Owner acknowledges and
agrees that Manager, CEOC and their respective Affiliates must perform a
background check, suitability review and such other due diligence with respect
to the Subject Group, but excluding Manager and its Affiliates and those
individuals associated with Owner previously subject to CEOC’s suitability
review, as required under applicable gaming regulations and/or the corporate
policies of Manager, CEOC and their respective Affiliates. Accordingly, Owner
hereby (a) acknowledges and understands that Manager, CEOC and their respective
Affiliates must perform such investigations and inquiries with respect to the
Subject Group regarding the financial and credit condition, the existence and
status of any litigation, criminal proceedings and convictions, character and
personal qualifications of any such Person, (b) agrees to promptly provide the
information regarding the Subject Group required by the CEC Business Information
Form (Revised 6/22/05) and such other information as is reasonably requested by
Manager, CEOC or their respective Affiliates for such purposes (collectively,
the “Requested Information”), and (c) agrees to cooperate with Manager, CEOC and
their respective Affiliates in the completion of its due diligence and gaming
suitability and background checks of the Subject Group. Manager acknowledges
receipt and completion of such investigation and inquiries on the persons or
entities within the Subject Group as of the date of this Agreement.

 

  18.2 Licensing Event.

If there shall occur a Licensing Event and any aspect of such Licensing Event is
attributable to a member of the Subject Group, then Manager shall notify Owner
as promptly as practicable after becoming aware of such Licensing Event (but in
no event later than twenty (20)

 

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days after becoming aware of such Licensing Event). In such event, Owner shall
and shall cause the other members of the Subject Group to use commercially
reasonable efforts to assist Manager and its Affiliates in resolving such
Licensing Event within the time period required by the applicable Gaming
Authorities by submitting to investigation by the relevant Gaming Authorities
and cooperating with any reasonable requests made by such Gaming Authorities
(including filing requested forms and delivering information to the Gaming
Authorities). If, despite these efforts, such Licensing Event cannot be resolved
to the satisfaction of the applicable Gaming Authorities within the time period
required by such Gaming Authorities, Manager shall have the right to terminate
this Agreement to the extent provided in Section 16.2.6 or, if applicable, Owner
shall have the right to terminate this Agreement to the extent provided in
Section 16.3.2.

 

  18.3 Unlawful Payments.

Neither Party nor any Person for or on behalf of such Party, shall make, and
each Party acknowledges that the other Party will not make, any expenditure for
any unlawful purposes in the performance of its obligations under this Agreement
and in connection with its activities in relation thereto. Neither Party nor any
Person for or on behalf of such Party, shall, and each Party acknowledges that
the other Party will not, make any illegal offer, payment or promise to pay,
authorize the payment of any money, or offer, promise or authorize the giving or
anything of value, to (a) any government official, any political party or
official thereof, or any candidate for political office; or (b) any other Person
while knowing or having reason to know that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly, to
any such official, to any such political party or official thereof, or to any
candidate for political office for the purpose of (i) influencing any action or
decision of such official party or official thereof, or candidate in his or its
capacity, including a decision to fail to perform his or its official functions;
or (ii) inducing such official party or official thereof, or candidate to use
his or its influence with any Governmental Authority to effect or influence any
act or decision of such Governmental Authority. Each Party represents and
warrants to the other Party that no government official nor any candidate for
political office has any direct or indirect ownership or investment interest in
the revenues or profit of such Party or the Managed Facilities. CLC shall be a
“Party” for purposes of this Section 18.3.

ARTICLE XIX.

GENERAL PROVISIONS

 

  19.1 Governing Law.

This Agreement shall be construed under the laws of the State of Nevada, without
regard to any conflict of law principles.

 

  19.2 Construction of this Agreement.

The Parties and CLC (which shall be a “Party” for purposes of this Section 19.2)
intend that the following principles (and no others not consistent with them) be
applied in construing and interpreting this Agreement:

19.2.1 Presumption Against a Party. The terms and provisions of this Agreement
shall not be construed against or in favor of a Party hereto merely because such
Party is the Manager hereunder or such Party or its counsel is the drafter of
this Agreement.

 

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19.2.2 Severability. If any term or provision of this Agreement is held invalid,
illegal or unenforceable by a court of competent jurisdiction or the Expert for
any reason, the remainder of this Agreement shall in no way be affected and
shall remain valid and enforceable for all purposes, each Party hereby declaring
that it (i) would have executed this Agreement without inclusion of such term or
provision; and (ii) execute and deliver to the other Party any additional
documents that may be reasonably requested by a Party to fully effectuate this
Section 19.2.2.

19.2.3 Certain Words and Phrases. All words in this Agreement shall be deemed to
include any number or gender as the context or sense of this Agreement requires.
The words “will,” “shall,” and “must” in this Agreement indicate a mandatory
obligation. The use of the words “include,” “includes,” and “including” followed
by one (1) or more examples is intended to be illustrative and is not a
limitation on the scope of the description or term for which the examples are
provided. All dollar amounts set forth in this Agreement are stated in U.S.
dollars, unless otherwise specified. The words “day” and “days” refer to
calendar days unless otherwise stated. The words “month” and “months” refer to
calendar months unless otherwise stated. The words “hereof”, “hereto” and
“herein” refer to this Agreement, and are not limited to the article, section,
paragraph or clause in which such words are used. If any decision, approval or
other determination is required or permitted to be made hereunder in a Party’s
“discretion”, the word “discretion” shall be interpreted to mean such Party’s
sole discretion. If the Operating Year is a fiscal year other than a calendar
year, all references in this Agreement to January 1 shall mean the first day of
such fiscal year.

19.2.4 Headings. The table of contents, headings and captions contained herein
are for the purposes of convenience and reference only and are not to be
construed as a part of this Agreement. All references to any article, section or
exhibits in this Agreement are to articles, sections or exhibits of this
Agreement, unless otherwise noted.

19.2.5 Approvals. Unless expressly stated otherwise in this Agreement, whenever
a matter is submitted to a Party for approval or consent in accordance with the
terms of this Agreement, that Party has a duty to act reasonably and timely in
rendering a decision on the matter.

19.2.6 Entire Agreement. This Agreement (including the attached Exhibits),
together with the Transaction Agreement, constitutes the entire agreement
between the Parties with respect to the subject matter contemplated herein and
supersedes all prior agreements and understandings, written or oral. No
undertaking, promise, duty, obligation, covenant, term, condition,
representation, warranty, certification or guaranty shall be deemed to have been
given or be implied from anything said or written in negotiations between the
Parties prior to the execution of this Agreement, except as expressly set forth
in this Agreement. Neither Party shall have any remedy in respect of any untrue
statement made by the other Party on which that Party relied in entering into
this Agreement (unless such untrue statement was made fraudulently), except to
the extent that such statement is expressly set forth in this Agreement.

 

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19.2.7 Third-Party Beneficiary. Except as set forth in Section 12.3, no
third-party shall be a beneficiary of Owner’s or Manager’s rights or benefits
under this Agreement; provided, that each of CEC, CEOC, CERP the Transferring
Manager, CLC and their respective Affiliates shall be express beneficiaries of
this Agreement to the extent related to the Service Mark Rights or to other
intellectual property rights or confidential information owned by them, the
Retained Rights, Article XVIII and any other provision of this Agreement that
specifically identifies it.

19.2.8 Time of the Essence. Time is of the essence for all purposes of this
Agreement.

19.2.9 Remedies Cumulative. Except as otherwise expressly provided in this
Agreement, the remedies provided in this Agreement are cumulative and not
exclusive of the remedies provided by Applicable Law, and a Party’s exercise of
any one or more remedies for any default shall not preclude the Party from
exercising any other remedies at any other time for the same default.

19.2.10 Amendments. Neither this Agreement nor any of its terms or provisions
may be amended, modified, changed, waived or discharged, except: (a) for
Manager’s right to make changes to the Operating Limitations, Total Rewards
System, and Centralized Services as permitted under this Agreement; (b) by an
instrument in writing signed by the Party against whom the enforcement of the
amendment, modification, change, waiver or discharge is sought; and (c) if any
Governmental Authority requires, as a condition of its approval of the initial
effectiveness of this Agreement, directly or indirectly, the modification of any
terms or provisions of this Agreement, the Parties shall use their commercially
reasonable efforts to comply with such request; provided, that if such requested
modification would materially and adversely affect either Party’s rights or
obligations under this Agreement, then either Party shall have the right to
terminate this Agreement by giving written notice to the other Party within
thirty (30) days after receipt of such request for modification, with no
liability whatsoever to the terminating Party for such termination.

19.2.11 Survival. The expiration or termination of this Agreement does not
terminate or affect Owner’s or Manager’s covenants and obligations that either
expressly or by their nature survive the expiration or termination of this
Agreement. This Section 19 shall survive the expiration or termination of this
Agreement.

 

  19.3 Limitation on Liabilities.

19.3.1 Projections in Annual Budget. Owner acknowledges that: (a) all budgets
and financial projections prepared by Manager or its Affiliates prior to the
date of this Agreement or under this Agreement, including the Annual Budget, are
intended to assist in Operating the Managed Facilities, but are not to be relied
on by Owner or any third-party as to the accuracy of the information or the
results predicted therein; and (b) Manager does not guarantee the accuracy of
the information nor the results in such budgets and projections. Accordingly,
Owner agrees that (i) neither Manager nor its Affiliates shall be liable to
Owner or any third-party for divergence between such budgets and projections and
actual operating results achieved except as otherwise provided in this
Agreement, including limits on incurring expenses; (ii) the failure of the
Managed Facilities to achieve any Annual Budget for any Operating Year

 

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shall not constitute a default by Manager or give Owner the right to terminate
this Agreement; and (iii) if Owner provides any such budgets or projections to a
third-party, Owner shall advise such third-party in writing of the substance of
the disclaimer of liability set forth in this Section 19.3.1. Manager represents
that it shall prepare all budgets and financial projections and operating plans
prepared by Manager under this Agreement in good faith based upon Manager’s
experience and knowledge.

19.3.2 Approvals and Recommendations. Each party acknowledges that in granting
any consents, approvals or authorizations under this Agreement, and in providing
any advice, assistance, recommendation or direction under this Agreement,
neither party nor any Affiliates guarantee success or a satisfactory result from
the subject of such consent, approval, authorization, advice, assistance,
recommendation or direction. Accordingly, each agrees that neither party shall
have any liability whatsoever to the other or any third person by reason of:
(a) any consent, approval or authorization, or advice, assistance,
recommendation or direction, given or withheld; or (b) any delay or failure to
provide any consent, approval or authorization, or advice, assistance,
recommendation or direction (except in the event of a breach of a covenant
herein not to unreasonably withhold or delay any consent or approval); provided,
however, each agrees to act in good faith when dealing with or providing any
advice, consent, assistance, recommendation or direction.

19.3.3 Technical Advice. Owner acknowledges that any review, advice, assistance,
recommendation or direction provided by Manager with respect to the design,
construction, equipping, furnishing, decoration, alteration, improvement,
renovation or refurbishing of the Managed Facilities (a) is intended solely to
assist Owner in the development, construction, maintenance, repair and upgrading
of the Managed Facilities and Owner’s compliance with its obligations under this
Agreement; and (b) does not constitute any representation, warranty or guaranty
of any kind whatsoever that (i) there are no errors in the plans and
specification, (ii) there are no defects in the design of construction of the
Managed Facilities or installation of any building systems or FF&E therein or
(iii) the plans, specifications, construction and installation work will comply
with all Applicable Laws (including laws or regulations governing public
accommodations for Individuals with disabilities). Accordingly, Owner agrees
that neither Manager nor its Affiliates shall have any liability whatsoever to
Owner or any third-party for any (A) errors in the plans and specifications;
(B) defects in the design of construction of the Managed Facilities or
installation of any building systems or FF&E therein; or (C) noncompliance with
any engineering and structural design standards or Applicable Laws.

19.3.4 Owner Limitation. Manager agrees that in no event shall Owner’s liability
to Manager with respect to lost or future Management Fees upon any Owner Event
of Default exceed the amount of the termination fee that would be payable to
Manager under Section 16.4.2 upon a termination of this Agreement as of the date
of such Owner Event of Default.

 

  19.4 Waivers.

Except as set forth in Section 17.3 of this Agreement, no failure or delay by a
Party to insist upon the strict performance of any term of this Agreement, or to
exercise any right or

 

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remedy consequent on a breach thereof, shall constitute a waiver of any breach
or any subsequent breach of such term. No waiver of any default shall alter this
Agreement, but each and every term of this Agreement shall continue in full
force and effect with respect to any other then existing or subsequent breach.

 

  19.5 Notices.

All notices, consents, determinations, requests, approvals, demands, reports,
objections, directions and other communications required or permitted to be
given under this Agreement shall be in writing and delivered by: (a) personal
delivery; (b) overnight DHL, FedEx, UPS or other similar courier service; or
(c) facsimile transmission (provided, that a copy of such facsimile transmission
together with confirmation of such facsimile transmission is delivered to the
addressee in the manner provided in clause (a) or (b) above by no later than the
second (2nd) business day following such transmission, addressed to the Parties
at the addresses specified below, or at such other address as the Party to whom
the notice is sent has designated in accordance with this Section 19.5, and
shall be deemed to have been received by the Party to whom such notice or other
communication is sent upon (i) delivery to the address (or facsimile number) of
the recipient Party; provided, that such delivery is made prior to 5:00 p.m.
(local time for the recipient Party) on a business day, otherwise the following
business day; or (ii) the attempted delivery of such Notice if such recipient
Party refuses delivery, or such recipient Party is no longer at such address
number, and failed to provide the sending Party with its current address
pursuant to this Section 19.5 (unless the sending Party had actual knowledge of
such current address)). Notwithstanding the foregoing, any notice or other
communication delivered to a Party by email that is actually received by such
Party (and for which such Party has sent an acknowledgement of receipt by return
email) shall be deemed to have been sufficiently given for purposes of this
Agreement and shall be deemed to have been received at the time described in
clause (i) above, as if such notice had been delivered by one of the methods
described in clauses (a) through (c) above. Notwithstanding anything to the
contrary contained in this Agreement, if any documents or materials delivered
under this Agreement are delivered by email (with confirmation of receipt from
the intended recipient), no additional copies of such documents or materials
shall be required to be delivered.

OWNER:

3535 LV NewCo, LLC

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: General Counsel

with a copy to:

Caesars Acquisition Company

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: General Counsel

MANAGER:

The Quad Manager, LLC

One Caesars Palace Drive

Las Vegas, Nevada 89109

Attention: General Counsel

Facsimile: (702) 407-6418

 

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  19.6 Party Representatives.

Owner has designated Mitch Garber to act as representative for Owner (“Owner’s
Representative”), and Manager shall have the right to rely on all actions by,
and communications with, Owner’s Representative as binding on Owner. Owner shall
provide to Manager the name, address, telephone and fax numbers, email address
and other relevant contact information for the Owner’s Representative within ten
(10) days of any change thereto. Manager has designated Tom Jenkins to act as
representative for Manager (“Manager’s Representative”), and Owner shall have
the right to rely on all actions by, and communications with, Manager’s
Representative as binding on Manager. Manager shall provide to Owner the name,
address, telephone and fax numbers, email address and other relevant contact
information for the Manager’s Representative within ten (10) days of any change
thereto. Subject to compliance with applicable Gaming Laws, Owner’s
Representative shall have access at all reasonable times to all books and
records maintained by Manager with respect to the Managed Facilities, copies of
all leases, contracts, agreements, permits and approvals related to the Managed
Facilities and all associated files, and all physical areas of the Managed
Facilities, other than private offices.

 

  19.7 No Recordation.

Neither this Agreement nor any memorandum hereof shall be recorded against the
Project, the Managed Facilities or the Premises and any recordation or attempted
recordation of this Agreement or any memorandum of this Agreement by Manager
shall constitute an Event of Default, and in addition to any other remedies
therefor, Owner is hereby granted a power of attorney (which power is coupled
with an interest and shall be irrevocable) to execute and record on behalf of
Manager a notice or memorandum removing this Agreement or such memorandum of
this Agreement from the public records or evidencing the termination hereof (as
the case may be).

 

  19.8 Further Assurances.

The Parties shall do and cause to be done all such acts, matters and things and
shall execute and deliver all such documents and instruments as shall be
required to enable the Parties to perform their respective obligations under,
and to give effect to the transactions contemplated by, this Agreement.

 

  19.9 Relationship of the Parties.

The Parties acknowledge and agree that (a) the relationship between them shall
be that of principal (in the case of Owner) and agent (in the case of Manager),
which relationship may not be terminated by Owner except in strict accord with
the termination provisions of this Agreement; (b) Manager shall have the
authority to bind the Owner with respect to third Persons to the extent Manager
is performing its obligations under and consistent with this Agreement; (c)

 

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Manager’s agency established with the Owner is, and is intended to be, an agency
coupled with an interest; (d) this Agreement does not create joint venturers,
partners or joint owners with respect to the Managed Facilities; and (e) nothing
in this Agreement shall be construed as creating a partnership, joint venture or
similar relationship between the Parties. The Parties further acknowledge and
agree that in Operating the Managed Facilities, including entering into leases
and contracts, accepting reservations, and conducting financial transactions for
the Managed Facilities, (i) Manager assumes no independent contractual
liability; and (ii) Manager shall have no obligation to extend its own credit
with respect to any obligation incurred in Operating the Managed Facilities or
performing its obligation under this Agreement.

 

  19.10 Force Majeure.

In the event of a Force Majeure Event, the obligations of the Parties and the
time period for the performance of such obligations (other than an obligation to
pay any amount hereunder) shall be extended for each day that such Party is
prevented, hindered or delayed in such performance during the period of such
Force Majeure Event, except as expressly provided otherwise in this Agreement.
Upon the occurrence of a Force Majeure Event, the affected Party shall give
prompt notice of such Force Majeure Event to the other Party. If Manager is
unable to perform its obligations under this Agreement due to a Force Majeure
Event, or Manager reasonably deems it necessary to close and cease the Operation
of all or any portion of the Managed Facilities due to a Force Majeure Event in
order to protect the Managed Facilities or the health, safety or welfare of the
its guests or Managed Facilities Personnel, then Manager may close or cease
Operation of all or a portion of the Managed Facilities for such time and in
such manner as Manager reasonably deems necessary as a result of such Force
Majeure Event, and reopen or recommence the Operation of the Managed Facilities
when Manager again is able to perform its obligations under this Agreement, and
determines that there is no unreasonable risk to the Managed Facilities or
health, safety or welfare or its guests or Managed Facilities Personnel.
Notwithstanding anything contained herein to the contrary, Owner and Manager
each acknowledge and agree that the Term of this Agreement shall be extended for
each day that a Force Majeure Event continues.

 

  19.11 Terms of Other Management Agreements.

Manager makes no representation or warranty that any past or future forms of its
management agreement do or will contain terms substantially similar to those
contained in this Agreement. In addition, Owner acknowledges and agrees that
Manager may, due to local business conditions or otherwise, waive or modify any
comparable terms of other management agreements heretofore or hereafter entered
into by Manager or its Affiliates.

 

  19.12 Compliance with Law.

Owner and, subject to the Operating Limitations, Manager shall each exercise
their respective rights, perform their respective obligations and take all other
actions required or permitted to be taken by each of them hereunder in
compliance with all Applicable Laws.

 

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  19.13 Centralized Services, Insurance Programs and Purchasing Arrangements
Generally.

The Parties hereby agree that Manager and its Affiliates shall administer,
implement and make available to Owner and the Managed Facilities, the
Centralized Services, the Insurance Programs and any multi-party purchasing
programs and arrangements contemplated hereunder on commercially reasonable
terms and on a Non-Discriminatory basis and in such a manner that, in each case,
there shall be no (i) mark-up, margin or other premium charged or otherwise
passed through to Owner in connection therewith (except as may be payable to a
third party), and (ii) duplication of any reimbursable expense otherwise payable
by Owner to Manager or its Affiliates.

 

  19.14 Execution of Agreement.

This Agreement may be executed in counterparts, each of which when executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one and the same instrument.

 

  19.15 Renovation Management Services and Project Completion.

Manager represents, warrants and covenants to and for the benefit of Owner that
there shall be no costs or expenses passed through to Owner in connection with
the completion of the renovations at the Managed Facilities except as reflected
in the approved budget therefor, and subject to, and without limitation of, any
of the terms or conditions of the Transaction Agreement.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
and year first above written.

 

3535 LV NewCo, LLC, a Delaware limited liability company By: 3535 LV Parent, LLC
its sole member

By 3535 LV Corp.

its sole member By:  

/s/ Donald Colvin

Name:   Donald Colvin Title:   President and Treasurer The Quad Manager, LLC, a
Delaware limited liability company By: Caesars Entertainment Operating Company,
Inc. its sole member By:  

/s/ Eric Hession

Name:   Eric Hession Title:   Senior Vice President and Treasurer Solely for
purposes of Article VII and Sections 16.1.2, 17.5.5, 17.7.3, 17.7.4, 17.7.5,
18.3 and 19.2

CAESARS LICENSE COMPANY, LLC,

a Delaware limited liability company

By: Caesars Entertainment Operating Company, Inc. its sole member By:  

/s/ Eric Hession

Name:   Eric Hession Title:   Senior Vice President and Treasurer

 

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CEOC hereby irrevocably and unconditionally guarantees to Owner the prompt and
complete payment and performance when due of all of the covenants, agreements,
promises, liabilities and obligations of Manager to Owner under this Management
Agreement, whether now existing or hereafter arising, including, without
limitation, Manager’s indemnification obligations under Section 12.3.2 and the
obligation to pay all other amounts due and owing or to become due and owing by
Manager to Owner under the Management Agreement; provided, however, that CEOC’s
obligations pursuant to this paragraph shall be void and of no further force or
effect on the earliest to occur of (a) that date on which neither CEOC nor an
Affiliate of CEOC owns, directly or indirectly, any Ownership Interest in
Manager, (b) the date on which neither CAC nor one of its Controlled
subsidiaries Controls Owner and (c) assignment of this Agreement by Manager to
Services Co or a Controlled subsidiary of Services Co.

 

CAESARS ENTERTAINMENT OPERATING COMPANY, INC., a Delaware corporation By:  

/s/ Gregory J. Miller

Name:   Gregory J. Miller Title:   Executive Vice President of Domestic
Development

[Signature Page to the Management Agreement]