EXHIBIT 10.8


 


MANAGEMENT AGREEMENT


 


THIS MANAGEMENT AGREEMENT
(this “Agreement”) is made and entered
into as of May 17, 2010 (the “Effective Date”)
, by and between TROPICANA LAS VEGAS, INC., a Nevada corporation (“Owner”), and TRILLIANT MANAGEMENT,
LP, a Delaware limited partnership (“Operator”).


 


RECITALS


 


A.            Owner owns that certain property known as the Tropicana
Las Vegas, located at 3801 Las Vegas Boulevard South, Las Vegas, Nevada 89109,
which includes among other improvements a hotel, a casino, and related dining,
recreational and retail space (collectively referred to as the “Hotel”).


 


B.            Owner desires to retain Operator in accordance with the
terms and conditions of this Agreement to provide its knowledge, expertise and
experience to Owner with respect to the Hotel and supervise, direct, manage and
operate the Hotel according to the terms and conditions of this Agreement.


 


C.            Owner hereby appoints and employs Operator to act as its
sole and exclusive agent for the performance of the Services (as defined below)
for the Hotel (or any additions or expansions thereto) on Owner’s behalf, upon
the terms and conditions hereinafter set forth.


 


D.            Subject to the obligations of Owner as set forth in this
Agreement, Operator desires to provide the Services to Owner.


 


NOW, THEREFORE, for and in
consideration of the foregoing recitals and of the mutual promises and
agreements set forth herein, Owner and Operator hereby covenant and agree
that  the foregoing recitals are true and
as follows:


 


ARTICLE ONE


 


TERM


 


1.01        Term.     The term of this Agreement (the “Term”) shall begin on the first day
following the date on which the Operator receives all necessary Gaming
Approvals (as defined below) to operate the Hotel on behalf of Owner (“Commencement Date”) and shall expire at
11:59 PM (Pacific Time) on the date immediately preceding the tenth anniversary
of the Commencement Date.  Each calendar
year during the Term shall be a “Contract
Year”, provided that the period from the Commencement Date
through December 31st of the year in which the Commencement Date
occurs shall be considered a partial Contract Year, and any amounts due during
such period shall be prorated based on the actual number of days in such
partial Contract Year.


 


1.02        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 


 


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of Operator); (b) they
are not joint venturers, partners or joint owners with respect to the Hotel;
and (c) nothing in this Agreement shall be construed as creating a
partnership, joint venture or similar relationship between the parties.


 


ARTICLE TWO


 


GRANT OF AUTHORITY AND OPERATING STANDARD


 


2.01        Grant of
Authority; Duties of Operator.  Owner hereby
grants to Operator the exclusive right, authority and discretion, and instructs
Operator, during the Term, to take, and Operator shall take, all such actions
for and on behalf of Owner that are reasonably necessary or advisable to
operate the Hotel subject to any and all limitations set forth in this
Agreement and at all times in accordance with all of the following: (a) the
Operating Standard; (b) the requirements and limitations set forth in this
Agreement; (c) the Budget (as defined below); (d) all Gaming
Approvals; and (e) Applicable Laws (as defined below).  Subject to and in accordance with the
foregoing, Operator shall have the sole authority and responsibility to (i) determine
operating policy, standards of operation, quality of service, the maintenance
and the physical appearance of the Hotel and any other matters affecting
operations and management; and (ii) supervise and direct all phases of
advertising, sales, and business promotion for the Hotel.


 


For purposes of this
Agreement, “Applicable Laws” means all
(a) statutes, laws, rules, regulations, ordinances, codes or other legal
requirements of any federal, state or local Governmental Authority (as defined
below), board of fire underwriters and similar quasi-Governmental Authority,
including any legal requirements under any Gaming Approvals; and (b) judgments,
injunctions, orders or other similar requirements of any court, administrative
agency or other legal adjudicatory authority, in effect at the time in question
and in each case to the extent the Hotel or person in question is subject to
the same. Without limiting the generality of the foregoing, references to
Applicable Law shall include any of the matters described in clause (a) or
(b) above relating to employees, zoning, building, health, safety and
environmental matters and accessibility of public facilities.


 


2.02        Annual Budget.    Operator shall assist Owner in the
preparation of an annual budget (the “Budget”) at
least 30 days prior to the commencement of each fiscal year.  Each annual Budget shall detail all operating
expenses, costs, working capital requirements, revenues and other items
reasonably anticipated by Operator, or contemplated in this Agreement, for the
next succeeding year.  Each Budget shall
be subject to the prior approval of Owner’s board of directors (the “Board”) and shall be reviewed by
Operator and Owner on at least a quarterly basis.  Material changes to the Budget require the
prior approval of the Board.


 


2.03        Specific Authorizations.  Without limiting the generality of the
authority granted to Operator in Section 2.01 and subject to the
limitations set forth in Section 2.01 and this Agreement, Operator
is specifically authorized to:


 


(a)           establish rates for the usage of all
guest rooms in the Hotel, including all: (i) room rates for individuals
and groups; (ii) charges for room service, food and beverage; (iii) charges
for recreational and other guest amenities at the Hotel; (iv) policies  with respect to any commercially
reasonable goods or services provided to gaming patrons of the Hotel free of
charge, at a discounted rate or in the form of a rebate or credit
(collectively, 


 


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“Complimentaries”); (v) billing
policies (including entering into agreements with credit card organizations); (vi) price
and rate schedules; and (vii) rents, fees and charges for all leases,
concessions or other rights to use or occupy any public space in the Hotel;


 


(b)           establish all policies and procedures
for gaming operations at the Casino;


 


(c)           supervise and direct the collection
of income of any nature from the operation of the Hotel and issue receipts with
respect to, and use commercially reasonable efforts to collect all charges,
rent and other amounts due from guests, lessees and concessionaires of the
Hotel, and use those funds, as well as funds from other sources as may be
available to the Hotel, in accordance with this Agreement and the Budget;


 


(d)           use commercially reasonable efforts
to collect and account for and remit to any government or political
subdivision, or an agency or instrumentality thereof (“Governmental Authority”) all
applicable gaming, sales, use, gross receipts, value added, live entertainment
tax, excise or similar taxes and all other taxes, assessments, duties, levies
and charges imposed by any Governmental Authority and collectible by the Hotel
directly from gaming customers, patrons or guests (including those taxes based
on the sales price of any goods, services, or displays, gross receipts or
admissions);


 


(e)           supervise and purchase or lease, or
arrange for the purchase or lease of, all FF&E and supplies that Operator
determines to be necessary or advisable for the operation of the Hotel in
accordance with this Agreement.  Operator
and Owner acknowledge and agree that all FF&E, upon installation or
placement within, or use at, the Hotel shall immediately become property of
Owner;


 


(f)            negotiate, enter into and
administer, in the name of Owner, all service contracts and licenses Operator
deems necessary or advisable for the operation of the Hotel including, without
limitation, contracts and licenses for (i) health and life safety systems;
(ii) maintenance of all electrical, mechanical, plumbing, HVAC, elevator,
boiler and all other building systems; (iii) electricity, gas,
telecommunications (including television and internet service); (iv) cleaning,
laundry and dry cleaning; (v) use of copyrighted materials (including
music and videos); and (vi) entertainment;


 


(g)           negotiate, enter into and administer,
in the name of Owner, contracts for the use of the Hotel by individuals and
groups;


 


(h)           at the request of Owner, negotiate
and administer, in the name of Owner, licenses and concession agreements for
the right to use or occupy any public space within the Hotel, including any
retail, office or lobby space;


 


(i)            institute in its own name, or in the
name of Owner or the Hotel, all legal actions or proceedings to (i) collect
charges, rent, or other income derived from the Hotel’s operations; (ii) oust
or dispossess guests, tenants or other Persons in possession therefrom; or (iii) terminate
any license or concession agreement for the breach thereof or default
thereunder by the Owner, licensee or concessionaire;


 


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(j)            take actions to challenge, protest,
appeal and/or litigate to final decision in any appropriate court or forum any
Applicable Laws affecting the Hotel or any alleged non-compliance with, or
violation of, any Applicable Laws, provided that the non-compliance with, or
violation of, Applicable Laws during such challenge, protest, appeal or
litigation does not result in the closing of the Hotel or any material portion
or material facility of the Hotel, and does not impose any material risk of
criminal or civil liability on Operator or Owner;


 


(k)           subject to Owner’s prior written
approval, appoint counsel, defend, and control any and all legal actions or
proceedings relating to the Hotel (i) in which Operator is a named party;
or (ii) that pertain to policies, procedures or business practices of
Operator or its affiliates used at the Hotel;


 


(l)            take such actions within Operator’s
reasonable control as Operator determines to be necessary or advisable to
comply with (i) all Applicable Laws; and (ii) the terms of all
insurance policies;


 


(m)          in conjunction with any player
development programs implemented at the Hotel, provide Complimentaries and
accept markers from casino customers in accordance with its promotion of gaming
operations at the Hotel; provided, however, in the exercise of its reasonable
business judgment and in conjunction with player development programs, Operator
shall obtain from patrons receiving markers, to the extent permitted, and in
accordance with Gaming Laws (as defined below), appropriate documentation in
accordance with overall markers policies established for the casino from time
to time;


 


(n)           collect all charges, rents, markers
and other amounts due on account of the casino and pursue all remedies
available pursuant to Applicable Laws and/or the terms and conditions of
relevant contracts, as applicable and necessary, from the casino guests,
patrons, tenants, subtenants, and other parties providing exclusive services
and concessionaires;


 


(o)           direct Owner with respect to the
disbursement of funds from operating accounts for the Hotel in accordance with
the Budget and Gaming Laws;


 


(p)           at the request and expense of Owner,
take actions within Operator’s reasonable control to discharge any lien,
encumbrance or charge against the Hotel or any component of the Hotel;


 


(q)           advise and assist Owner with the
maintenance of complete books of account and records relating to or reflecting
the results of operation of the Hotel, in accordance with the Budget, Gaming
Laws and general accepted accounting principles (“GAAP”);


 


(r)            incur indebtedness in the name and
on behalf of Owner including trade payables for goods and services incurred in
the ordinary course of business in the operation of the Hotel, to the extent
permitted under the Budget;


 


(s)           keep the Hotel and the FF&E in
good operating order, repair and condition, consistent with the Operating
Standard, including making necessary replacements, improvements, additions and
substitutions thereto in accordance with this Agreement;


 


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(t)            take such actions as are customary
and usual in the operation of the Hotel in accordance with the Operating
Standard; and


 


(u)           take such actions as Operator deems
necessary or advisable to perform all duties and obligations required to be
performed by Operator under this Agreement.


 


2.04        Operating Standard.  Operator shall perform the Services to the
level of competency and quality presently maintained by other operators
providing similar services to similar facilities as contemplated herein, and
Operator shall adhere to all Applicable Laws, rules, regulations, and
standards, including ethical standards, and GAAP applicable to the performance
of the Services (“Operating  Standard”).  All fees (other than the Base Fee and
Incentive fee (as defined below)) received by Operator in the performance of
the Services hereunder shall be for Owner’s sole benefit and shall be accounted
for as Hotel items.


 


2.05        Gaming
Approvals; Permits.  Owner
and Operator shall each obtain and maintain in full force and effect all
necessary Gaming Approvals and other licenses and permits as may be required
for the operation of the Hotel by Operator including, without limitation,
liquor, bar, restaurant, health permits and similar permits and licenses.  All Gaming Approvals and licenses and permits
shall be in effect as of the Commencement Date or as otherwise required by any
Gaming Authority (as defined below). 
Owner and Operator shall comply fully and promptly with any and all conditions
contained in any such Gaming Approvals or other licenses and permits. For
purposes of this Agreement, “Gaming
Approvals” shall be defined as all licenses, permits,
certificates, authorizations, registrations, waivers, variances, exemptions,
franchises, findings of suitability and entitlements issued or issuable by any
Gaming Authority or under any Gaming Law that are necessary to permit the
parties hereto to consummate the transactions contemplated by this Agreement,
including to permit the Operator to manage the Hotel and to receive the Base
Fee and the Incentive Fee, in each case pursuant to this Agreement.


 


2.06        Personnel.


 


(a)           Operator shall employ Alejandro
Yemenidjian and such other employees as it desires in its sole and absolute
discretion, (collectively, “Operator
Employees”) to supervise, manage, provide and direct the
Services at the Hotel.  Notwithstanding Mr. Yemenidjian’s
role as the Chief Executive Officer of the Hotel, and except for Operator
Employees,   all personnel of the Hotel
shall be employees of Owner (collectively, “Owner Employees”). 
Subject to compliance with Gaming Laws and in accordance with the
Budget, as agent of Owner, Operator shall direct the hiring of, supervise,
direct the work of, direct the discharge of and advise regarding the
compensation and other benefits of all Owner Employees working in the Hotel, in
conformity with all applicable personnel policies of Owner.  Operator shall in no way be liable to Owner
Employees or to Owner for any and all claims for wages, compensation or other
benefits (including, without limitation, severance, pension, superannuation,
retirement and termination pay) asserted by or on behalf of the Owner
Employees; provided however, that Operator, and not Owner, shall be liable for
all of the foregoing in connection with Operator Employees.  In accordance with the Budget, the salaries,
other compensation and benefits of the Owner Employees shall be either paid by
Owner or paid by Operator’s check and reimbursed to Operator by Owner,
depending upon which procedure Operator and Owner agree is more feasible.


 


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(b)           Operator shall, as agent for Owner,
and at Owner’s sole expense, comply with all Applicable Laws relating to
workers’ compensation, social security, unemployment insurance, hours of labor,
wages, working conditions, federal, state and local anti-discrimination laws,
statutes and regulations and other employer-employee related subjects with
respect to the Owner Employees.


 


(c)           Operator hereby covenants and agrees, on behalf of itself
and its affiliates, and their respective successors and assigns, and any person
or entity acting for or on behalf of any of them, not to solicit the employment
of any Owner Employee, without Owner’s prior written consent, at any time
during the Term or during the one year period following termination of the
Agreement for any reason other than after (i) a condemnation pursuant to Article Eight, (ii) a sale of
all or substantially all of the assets of the Hotel or (iii) a change in
control of Owner.


 


2.07        Expenses.  All costs, expenses, funding of operating
deficits and working capital and other obligations and liabilities incurred
pursuant to the terms and conditions of this Agreement, the Budget, the
Operating Standard and the grant of authority to Operator as provided herein,
shall be the sole and exclusive responsibility and obligation of Owner.


 


2.08        Proprietary Information .  At all times during the Term and thereafter,
unless consented to in writing by the other party, neither Operator nor Owner
shall directly or indirectly at any time or in any manner use, copy or retain
any Proprietary Information and Systems (as defined below) of the other party,
and each of Operator and Owner acknowledges and agrees that all Proprietary
Information and Systems of the other party are, and shall at all times remain,
the sole property of the party providing such Proprietary Information and
Systems.  For purposes of this Agreement,
“Proprietary Information and Systems” of a party shall mean any information,
material or systems which are proprietary to the disclosing party or designated
as confidential by the disclosing party, whether or not owned or developed by
the disclosing party, which are not generally known other than by the
disclosing party, and which the receiving party may obtain knowledge of through
or as a result of the relationship established hereunder with the disclosing
party, access to the disclosing party’s premises, or communication with the
disclosing party’s employees or independent contractors.  Proprietary Information and Systems also
includes any information material or systems which the disclosing party obtains
from any third party which the disclosing party treats as proprietary or
designates as confidential.  Proprietary
Information and Systems of the Owner includes any and all guest or customer
profiles, contact information (e.g., addresses, phone numbers, facsimile
numbers and email addresses), histories, preferences and any other guest or
customer information in any database of Owner or its affiliates, whether
obtained or derived by Operator or its affiliates from: (A) guests or
customers of the Hotel; or (B) any other sources or databases. Proprietary
Information and Systems shall not include information, material or systems that
(i) are now or later become 
generally known to the public (other than as a result of a breach of
this Agreement); (ii) are independently developed by the receiving party; (iii) the
receiving party lawfully obtains from any third party who has lawfully obtained
such information; or (iv) are later published or generally disclosed to
the public by the disclosing party.  This
Section 2.08 shall survive expiration or earlier termination of
this Agreement.


 


2.09        Restrictions on Operator’s Authority.  Except as provided in this Agreement,
Operator is not authorized and may not, without obtaining the prior written
consent of Owner,


 


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which may be withheld in
Owner’s sole and absolute discretion, negotiate or enter into an agreement for,
or otherwise act as Owner’s agent or representative in, the sale, lease,
transfer, lien, or encumbrance of any type whatsoever, of all or any portion of
the Hotel or any property thereof.


 


ARTICLE THREE


 


COMPENSATION OF OPERATOR


 


3.01        Base Fee
and Incentive Fee.


 


(a)           Base Fee.  As consideration for Operator’s services
during the Term, Owner shall pay to Operator an annual base fee (the “Base Fee”) equal to two percent
(2%) of Net Revenue during such fiscal year following the Commencement Date and
thereafter until the expiration or earlier termination of the Agreement.  For purposes of this Agreement, the term “Net Revenue” means all revenue from
the operation of the Hotel less Complimentaries.  Such revenues shall be computed on an accrual
basis in accordance with GAAP.


 


(b)           Incentive Fee.  In addition to the Base Fee, Tenant shall
pay to Operator an annual incentive fee (the “Incentive
Fee”) equal to five percent (5%) of EBITDA for such fiscal
year.  For purposes of this Agreement,
the term “EBITDA” means for any fiscal year
during the Term the amount of Earnings Before Interest, Taxes, Depreciation and
Amortization for the Hotel as determined pursuant to GAAP in accordance with
gaming industry practices and counting the Base Fee as an expense.


 


3.02        Costs and Expenses.  In
addition to the compensation provisions contained herein, Owner shall reimburse
Operator’s for its reasonable actual out-of-pocket costs and expenses incurred
for and during business travel in the furtherance of Operator’s duties set
forth in this Agreement, not to exceed $7,500.00 per month unless such amount
in excess has been consented to in writing by Owner.  Operator shall invoice Owner on a monthly
basis (which invoice shall include supporting documentation reasonably
satisfactory to Owner), and Owner shall pay to Operator within 15 days of
receipt of such invoice, the amount of actual out-of-pocket expenses incurred
by Operator.


 


3.03        Payment
of Base Fee and Incentive Fee.


 


(a)           The Base Fee and Incentive Fee shall
be paid by Owner to Operator in tentative monthly installments in arrears on
the fifteenth (15th) day of each
calendar month, provided that, during the Renovation Period (as defined below),
the Base Fee and Incentive Fee shall accrue (without interest) but not be
paid  until the end of the Renovation
Period, when the Base Fee and Incentive Fee shall be paid as set forth above
and monthly thereafter.  Owner shall
continue to timely reimburse Operator during the Renovation Period for all
costs and expenses under Section 3.02 hereof.  Each installment shall be equal to the Base
Fee and Incentive Fee, as determined in Section 3.01, for the
cumulative period from the commencement of each Contract Year to the date on
which payment is due, less the aggregate amount of tentative monthly
installments having theretofore become payable and been paid to Operator for
Contract Year. If the aggregate amount of tentative monthly installments paid
to Operator in any fiscal year of


 


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Owner is more or less than
the annual Base Fee and Incentive Fee payable for such Contract Year based upon
the final audited financial statements for such Contract Year, then, by way of
year-end adjustment within fifteen (15) days after delivery of such audited
statements to Owner, Operator shall pay into an account for the benefit of
Owner (the “Agency Account”)
the amount of the overpayment, or shall receive from Owner the amount of any
underpayment, as the case may be.  “Renovation Period” shall mean from
the Effective Date until the date on which Hotel holds the grand opening of
Nikki Beach.


 


(b)           Notwithstanding anything to the
contrary in this Agreement, in the event that after the payment, in the
following order of priority, of taxes, debt service, employee compensation, and
operating expenses (excluding any Base Fee and Incentive Fee payable to
Operator) applicable to the Hotel, the Hotel has insufficient cash flow to
timely make the payment of any Base Fee and/or Incentive Fee payable to
Operator hereunder, then compounded interest at the rate of four percent (4%)
annually shall begin to accrue on the amount of such unpaid Base Fee and/or
Incentive Compensation, or any portion thereof, until such Base Fee and/or
Incentive Fee is paid in full.


 


3.04        Form of
Payment.  Owner shall pay
all Base Fees, Incentive Fees and all reimbursements due Operator in currency
of the United States of America to such account or accounts as Operator shall
from time to time designate in writing.


 


ARTICLE FOUR




OWNER’S AGREEMENTS REGARDING THE HOTEL


 


4.01        Funds;
Reports; Certain Documents.  Owner warrants and represents to Operator
that:


 


(a)           Owner will provide, initially and
throughout the Term, and at Owner’s sole cost and expense, funds in accordance
with the approved Budget for the purchase of adequate initial inventories of
food and beverage and of consumable items utilized in operating the Hotel, such
as soap, cleaning materials, matches, stationery and all other similar items.


 


(b)           Owner will provide, initially and
throughout the Term, and at Owner’s sole cost and expense, working capital in
accordance with the approved Budget for the operation of the Hotel.


 


(c)           Owner will promptly furnish to
Operator true and correct copies of all property tax statements and insurance
policies and all financing documents (including notes and mortgages) relating
to the Hotel.


 


(d)           As soon as is practicable, but no
later than the twentieth (20th) day of each calendar month, Owner, with the assistance of Operator,
shall furnish Operator with an unaudited operating statement for the Hotel for
the prior calendar month detailing (i) statistical data, (ii) gaming
revenue data (broken down by departmental or revenue source), (iii) gaming
operating expense data (broken down by departmental or expense source), (iv) food
and beverage department data, (v) other income data, (vi) overhead
departments data, (vii) fixed charges, (viii)


 


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gross operating profit for
the casino and EBITDA for the casino, and (x) net income or loss,
including the Base Fee, Incentive Fee and other amounts paid to Operator.


 


ARTICLE FIVE




REPRESENTATIONS, WARRANTIES AND COVENANTS


 


5.01        By Owner.  Owner makes the following warranties, representations
and covenants to Operator, which representations, warranties and covenants
shall, unless otherwise stated herein, survive the Effective Date of this
Agreement and continue to be true during the Term:


 


(a)           Owner shall cooperate with Operator in
Operator’s performance of its duties set forth herein and deliver to Operator
copies of non-proprietary information relating to the Hotel (i) which is
not otherwise available to Operator; and (ii) which is reasonably
necessary or required in permitting Operator to properly and effectively
perform the Services required hereunder (“Relevant
Owner Information”).


 


(b)           Owner is a validly formed and
existing corporation in good standing under the laws of the State of Nevada and
has the power and authority to enter into this Agreement and perform its
obligations hereunder.


 


(c)           Owner will obtain and maintain all
Gaming Approvals required to be obtained and maintained by Owner pursuant to
this Agreement and Gaming Laws;


 


(d)           This Agreement, when executed and
delivered by Owner, will be its legal, valid and binding obligation,
enforceable against Owner in accordance with its terms.  Neither the execution and delivery of this
Agreement by Owner nor Owner’s performance of its obligations hereunder will
result in a violation or breach of, or constitute a default with respect to or
accelerate the performance required under any other agreement or obligation to
which Owner is a party or is otherwise bound or to which the Hotel or any part
thereof is subject, and will not constitute a violation of any federal, state
or local law, regulation or order to which Owner or the Hotel is subject.


 


(e)           Except for the Gaming Approvals,
there is no consent or approval of any Gaming Authorities, other Governmental
Authorities or other person that must be obtained in connection with its
execution and delivery of this Agreement or Owner’s performance of its
obligations hereunder.


 


(f)            Owner shall provide Operator with
copies of any communications directed to it relating to any actual, alleged,
suspected or threatened violation of any legal requirements that relate to the
Hotel or any portion thereof within five days of receipt of such communication.


 


(g)           Neither Owner nor any affiliate has
dealt with any person or entity who has acted as a broker, finder or similar
capacity that would entitle such person or entity to any commission, finder’s
fee or similar compensation in connection with this Agreement or the
transaction described herein.


 


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5.02        By
Operator.  Operator
makes the following warranties, representations and covenants to Owner, which
warranties, representations and covenants shall, unless otherwise stated
herein, survive the Effective Date of this Agreement and continue to be true
during the Term:


 


(a)           Operator is a validly formed and
existing limited partnership in good standing under the laws of the State of
Delaware and is duly registered and qualified to do business in the State of
Nevada as a foreign limited liability company, and has the corporate power and
authority to enter into this Agreement and perform its obligations hereunder.


 


(b)           Operator will obtain and maintain all
Gaming Approvals required to be obtained and maintained by Operator pursuant to
this Agreement and Gaming Laws;


 


(c)           This Agreement, when executed and
delivered by Operator, will be its legal, valid and binding obligation,
enforceable against it in accordance with its terms. Neither the execution and
delivery of this Agreement by Operator nor Operator’s performance of its
obligations here under will result in a violation or breach of, or constitute a
default with respect to or accelerate the performance required under any other
agreement or obligation to which Operator is a party or is otherwise bound or to
which any of its assets is subject, and will not constitute a violation of any
federal, state or local law, regulation or order to which Operator or any of
its assets is subject.


 


(d)           Except for the Gaming Approvals,
there is no consent or approval of any Gaming Authorities, other Governmental
Authorities or other person that must be obtained in connection with its
execution and delivery of this Agreement or Operator’s performance of its
obligations hereunder.


 


(e)           Operator shall provide Owner with
copies of any communications directed to Operator relating to any actual,
alleged, suspected or threatened violation of any legal requirements that
relate to the Hotel or any portion thereof within five days of receipt of such
communication.


 


(f)            Operator shall cooperate with Owner
in Owner’s performance of its duties set forth herein and deliver to Owner
copies of all material information relating to Owner’s duties hereunder
promptly after the receipt thereof by Operator.


 


(g)           Neither Operator nor any affiliate has
dealt with any person or entity who has acted as a broker, finder or similar
capacity that would entitle such person or entity to any commission, finder’s
fee or similar compensation in connection with this Agreement or the
transaction described herein.


 


ARTICLE SIX




INSURANCE AND INDEMNITY


 


6.01        Insurance.  Owner shall provide, at Owner’s sole cost and
expense, the insurance coverages set forth in Exhibit “A” which is
attached hereto and made a part hereof by reference.


 


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6.02        Indemnity.  Owner
shall protect, defend, indemnify and hold harmless Operator from any liability,
loss, cost, damage, claim or occurrence of any kind, or expense, including
reasonable attorneys’ fees and court costs (“Claim”), arising in connection with the Hotel prior to the
Effective Date.  Each party agrees to
indemnify and hold harmless the other against any Claim arising of this
Agreement or the operation of the Hotel to the extent such Claim is the result
of (a) any acts beyond the scope of the indemnifying party’s authority
hereunder and not otherwise authorized; or (b) any negligent acts or
omissions, any fraud, any willful misconduct, or any breach of this Agreement,
by the indemnifying party, its agents or employees.  The provisions of this Section 6.02(a) shall
survive any expiration or termination of this Agreement.


 


ARTICLE SEVEN




DAMAGE TO AND DESTRUCTION OF THE HOTEL


 


7.01        Owner to
Restore.  Owner may,
in its sole discretion, repair, restore, rebuild or replace any insured damage
to, or impairment or destruction of the Hotel from fire or other casualty,
provided that Owner shall only be required to spend money to the extent of
actual insurance proceeds received by Owner and applicable deductibles.  If Owner elects not to repair, restore,
rebuild or replace such damage, impairment or destruction of the Hotel, then
Operator shall have the option to terminate this Agreement without any
liability.   An election by Owner not to
repair, restore, rebuild or replace such damage, impairment or destruction of
the Hotel shall entitle Operator to any Base Fee, Incentive Fee and
reimbursements due under Section 3.02, as provided for and computed
in Article Three, through the effective date of the termination.


 


7.02        Termination.  Any notice of termination under this Article Seven
shall become effective 30 days after the giving of the same.


 


ARTICLE EIGHT




CONDEMNATION


 


8.01        Total
Condemnation.  If the
whole of the Hotel shall be taken or condemned in any eminent domain,
condemnation, compulsory acquisition or like proceeding by any competent
authority for any public or quasi-public use or purpose, this Agreement will
terminate as of the date of such taking. 
Thereafter, within 30 days after the date that Owner is reasonably
compensated for such total condemnation, Owner shall pay Operator any Base Fee,
Incentive Fee and reimbursements due under Section 3.02, as
provided for and computed in Article Three, through the effective
date of the termination.


 


8.02        Partial
Condemnation.  If only a
part of the Hotel shall be taken or condemned and the taking or condemnation of
such part does not make it unfeasible or imprudent, in Operator’s reasonable
opinion, to operate the remainder as a Hotel of the type and class immediately
preceding such taking or condemnation, the Operator may terminate the
Agreement.  Thereafter, within 30 days
after the effective date of the termination, Owner shall pay Operator any Base
Fee, Incentive Fee and reimbursements due under Section 3.02, as
provided for and computed in Article Three, through the effective
date of the termination.


 


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ARTICLE NINE




TERMINATION


 


9.01        Termination For Cause.  Notwithstanding any other provision of this
Agreement to the contrary, the party other than the defaulting party, as
defined herein (the “Non-defaulting Party”),
shall have the right, but not the obligation, to terminate this Agreement
immediately upon an Event of Default.  “Event
of Default” shall mean any of the following:


 


(a)           The following shall
constitute an Event of Default by Owner:


 


(i)            Owner is unable to make the
payments required of it to Operator pursuant to this Agreement and, upon
written notice thereof, Owner has not cured within a period of 30 days; or


 


(ii)           The Nevada Gaming Commission
issues any notification that Owner is unsuitable to maintain any Gaming
Approvals issued to Owner in conjunction with the Hotel or Owner fails to
obtain or maintain any material license or permit required for Owner’s
performance under this Agreement.


 


(b)           The following shall
constitute an Event of Default by Operator:


 


(i)            Failure to obtain or
maintain any Gaming Approval during the Term;


 


(ii)           Fraud or illegal conduct;


 


(iii)          Material breach of this
Agreement if Operator has not cured such breach within a period of 30 days
after receipt of written notice thereof; or


 


(iv)          The Nevada Gaming Commission
determines that Operator is unsuitable to continue the operation of the Hotel.


 


(c)           It shall be a material
breach by either party upon:


 


(i)            Admission in writing of such
party’s inability to pay its debts generally as they become due, or as required
by this Agreement;


 


(ii)           With respect to such party,
the bankruptcy, dissolution or appointment of a receiver, or the voluntary
filing of any petition thereof or consent thereto, or any assignment for the
benefit of creditors, whether under Title 11 of the United States Code or any
other insolvency laws; or


 


(iii)          Any levy or judgment is
filed against such party which (x) materially adversely affects such party’s
ability to perform under 


 


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this Agreement, and (y) is not satisfied
or otherwise removed, stayed or set aside within 10 days of the filing thereof.


 


(d)           If this Agreement is
terminated as set forth in this Section 9.01, and the
Non-defaulting Party is the Owner, it may recover such damages suffered by reason
of the defaulting party’s non-compliance, breach or default.  If the Agreement is terminated as set forth
in this Section 9.01, and the Non-defaulting Party is the Operator,
it shall have the right to collect any Base Fee, Incentive Fee, and reimbursement
due under Section 3.02 through the effective date of the
termination.


 


9.02        Privileged Licenses;
Unsuitability; Termination. Operator acknowledges
that Owner and its affiliates are businesses that are or may be subject to
and exist because of privileged licenses issued by the Gaming
Authorities.  Notwithstanding anything to the contrary contained herein,
in the event that (i) Owner, in its sole and absolute discretion, deems it
likely that Owner’s continued affiliation or contractual relationship (including
this Agreement) with Operator will preclude or materially delay, impede,
jeopardize or impair the ability of Owner to obtain or retain any gaming
licenses in any jurisdiction, or result in the imposition of materially
burdensome terms and conditions on any such gaming licenses or
subject Owner to any disciplinary proceedings by any Gaming Authorities or
constitute a violation of Applicable Laws, then Owner may terminate this
Agreement immediately upon written notice to Operator.  For purposes of this Agreement, (a) the “Gaming Authorities” shall be
defined as those national, state, local and other governmental, regulatory and
administrative authorities, agencies, boards and officials responsible for or
involved in the regulation of gaming or gaming activities in any applicable
jurisdiction and, within the State of Nevada, specifically, the Nevada Gaming
Commission, the Nevada State Gaming Control Board, and the Clark County Liquor
and Gaming Licensing Board; and (b) “Gaming
Laws” shall be defined as all laws pursuant to which any Gaming
Authority possesses regulatory, licensing or permit authority over gaming
within any applicable jurisdiction and, within the State of Nevada,
specifically, the Nevada Gaming Control Act, as codified in the Nevada Revised
Statutes Chapter 463, and the regulations of the Nevada Gaming Commission
promulgated thereunder, and the Clark County Code.


 


9.03        Termination Without Cause.  Owner shall have the right to terminate this
Agreement at any time and for any reason or no reason upon 30 days prior
written notice to Operator, without any liability whatsoever, except (a) any
Base Fee, Incentive Fee and reimbursement due under Section 3.02,
through the effective date of the termination and the Termination Fee as
provided for and computed in Section 9.05.


 


9.04        Reciprocal Termination
Pursuant to Government Act. Upon occurrence of any of
the following, each party shall have the right, upon 30) days prior written
notice to the other party, to terminate this Agreement without any liability,
aside from payment of any Base Fee, Incentive Fee and reimbursements then due
to Operator through the effective date of termination:


 


(a)           As a result of any judicial,
legislative, regulatory or administrative change or determination, which makes
the performance by either Owner or Operator of any material


 


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term, covenant, condition or
provision of this Agreement a violation of any statute, rule, court order or
regulation; or


 


(b)           If the State of Nevada
terminates gaming in Nevada, or otherwise orders the Hotel closed without
default of Owner or Operator, or taxes or regulations applicable to the Hotel
change such that it becomes materially uneconomic, in either party’s
discretion, to operate the Hotel.


 


9.05        Operator’s Liquidated
Damages Upon Termination Under Section 9.03.  If Owner terminates this Agreement pursuant
to Section 9.03, or in the event of a sale of the Hotel or change
of control of Owner as set forth in Section 10.01, and only in such
events, then Owner shall pay to Operator as liquidated damages and not as a
penalty, and Operator shall accept from Owner the applicable amount as follows
(“Termination Fee”):


 


The
Termination Fee shall be an amount equal to (i) all amounts due Operator
for Services rendered under this Agreement for periods prior to the effective
date of termination plus (ii) a sum equal to the “Base Amount”.  “Base Amount” shall mean the aggregate amount
paid or payable to Operator for Services rendered under this Agreement during
the twelve (12) months immediately preceding the date of termination, or an
annualized amount if there are fewer than twelve (12) months in such period.


 


The
parties hereby expressly agree that the sums set forth in this provision are to
serve as a liquidated damages representing a reasonable estimation of the loss
to the Operator of the benefit of Operator’s bargain and not a penalty.  Upon payment of the Termination Fee, both
Operator and Owner shall execute and deliver a standard form of mutual general
release of claims.


 


9.06        Actions to be Taken upon
Termination.  Upon
termination of this Agreement and payment of any Base Fee, Incentive Fee,
Termination Fee and reimbursements due under Section 3.02, in
addition to all other provisions of this Agreement, the following will apply:


 


(a)           Operator shall peacefully
vacate and surrender the Hotel to Owner.


 


(b)           Operator shall deliver,
assign and transfer to Owner or Owner’s designee: (i) all books and
records of the Hotel in the possession of Operator, and Owner shall be entitled
to conduct a final audit of any Base Fees, Incentive Fees and reimbursements
due under Section 3.02; and (ii) any other property of Owner,
and all copies thereof, possessed by Operator.


 


(c)           Operator shall release and
transfer to Owner any of Owner’s funds held or controlled by Operator.


 


(d)           Operator shall cooperate
with Owner and make itself available to consult with and advise Owner regarding
the operation of the Hotel for a period of up to 30 days following termination.


 


(e)           Operator shall not directly
or indirectly hold itself or the Hotel out to the public as being or remaining
(or otherwise associated) with Owner.


 


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ARTICLE TEN




SUCCESSORS AND ASSIGNS


 


10.01      Permitted
Assignments.  Subject to
the approval of the Gaming Authorities, neither Owner’s nor Operator’s consent
shall be required for either party to assign this Agreement or its rights and
interest in the operation of the Hotel to any entity in which the assigning party
maintains a majority and controlling interest, and such assignment shall serve
to fully relieve and discharge the assigning party from any further duties or
obligations pursuant to this Agreement. 
Except as provided in the preceding sentence, neither Operator nor Owner
may  assign this Agreement without the
prior written consent of the other party. 
It is understood and agreed that any consent granted to any such
assignment shall not be deemed a waiver of the covenant herein contained
against assignment in any subsequent case. 
In the event of a sale of all or substantially all of the assets of the
Hotel or a change in control of Owner, Owner may terminate this Agreement,
provided that Owner pays Operator any Base Fee, Incentive Fee, and
reimbursements due under Section 3.02 through the effective date of
termination, and the Termination Fee as provided for and computed in Section 9.05.


 


10.02      Assigns
Bound.  Subject to
the provisions of this Agreement regarding and/or restricting sale or
assignments, the terms, provisions, covenants, undertakings, agreements,
obligations and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the successors in interest and the assigns of the
parties hereto with the same effect as if mentioned in each instance where the
party hereto is named or referred to, except that no assignment, transfer
pledge, mortgage, lease or sublease by or through Operator or by or through
Owner, as the case may be, in violation of the provision of this Agreement shall
vest any rights in the assignee, transferee, mortgagee, pledgee, lessee,
sublessee or occupant.


 


ARTICLE ELEVEN




GENERAL PROVISIONS


 


11.01      Other
Business.  Subject to
anything to the contrary in this Agreement, it is further expressly understood
and agreed by the parties hereto that either party may engage in any other
business or investment, including the ownership of or investment in real estate
and the construction and/or sales of commercial projects, and that the other
party hereto shall have no rights in and to any such business or investment or
the income or profit derived therefrom.


 


11.02      Notices.  Unless otherwise provided for herein, all
notices and other communications required or permitted hereunder shall be in
writing and be either hand-delivered or mailed, certified mail, return receipt
requested, sent by facsimile, email or sent via commercial courier, addressed
to:


 


	
  To
  Operator:

  	
   

  	
  TRILLIANT
  MANAGEMENT, LP

  Attn: Timothy A.R. Duncanson

  C/O Onex Corporation

  161 Bay Street, 49th Floor

  P.O. Box 700

  



 


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  Toronto,
  ON M5J 2S1

  Facsimile: (416) 362-5765

  Email: tduncanson@onex.com

  
	
   

  	
   

  	
   

  
	
  To
  Owner:

  	
   

  	
  TROPICANA
  LAS VEGAS, INC.

  Attn: Joanne Beckett, Esq.

  3801 Las Vegas Boulevard, South

  Las Vegas, Nevada 891019

  Facsimile: (702) 739-2703

  Email: Jbeckett@tropicanalv.com

  



 


Except as otherwise provided
in this section, all notices shall be deemed delivered as of the date actually
delivered. All notices mailed shall be deemed delivered as of three (3) business
days after the date postmarked.  All
notices telecopied shall be deemed delivered as of the business day immediately
following the date receipt of the telecopy is confirmed. All notices sent via
email shall be deemed delivered as of the business day immediately following
the date receipt of the email is confirmed. 
All notices sent via commercial courier shall be deemed delivered as of
the business day immediately following the date the notice is entrusted to the
commercial courier service with directions for service within one (1) day.
Any changes in any of the addresses listed herein shall be made by notice as
provided in this Section 11.02.


 


11.03      Attorneys’
Fees.  If any
suit, action, arbitration or other proceeding (hereinafter “proceeding(s)”) is
instituted in connection with any controversy arising out of this Agreement,
the prevailing party shall be entitled to recover, from the losing or
defaulting party all reasonable fees, costs and expenses (including the
reasonable fees and expenses of attorneys and witnesses) incurred in connection
with the prosecution or defense of such proceeding, whether or not the
proceeding is prosecuted to a final judgment or determination; provided,
however, if there is no clear prevailing party, such fees, costs and expenses
shall be borne as determined by the fact finder.


 


11.04      Interpretation.  Titles or captions in this Agreement are
included only as a matter of convenience and reference, and are in no way
intended to define, limit, extend or describe the scope of this Agreement.
Reference to Articles, Sections, Paragraphs and clauses in this Agreement shall
be deemed to be references to the Articles, Sections, Paragraphs and clauses of
this Agreement unless otherwise explicitly indicated. All references to the
singular shall include the plural, as the context may require, and all
references to gender shall, as appropriate, include other genders.


 


11.05      Amendments
and Waivers.  No
amendment, modification or waiver of or to this Agreement shall be effective
unless the same is in writing and executed by both parties.  A waiver by a party of any of the terms or
provisions of this Agreement shall not constitute a subsequent waiver of any of
the terms or provisions of this Agreement.


 


11.06      Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada
without giving effect to any choice or conflict of


 


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law provision or rule (whether of the
State of Nevada or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Nevada.


 


11.07      Cooperation.  Should any claim, demand, action or other
legal proceeding arising out of matters covered by this Agreement be made or
instituted by any third party against a party to this Agreement, the other
party to this Agreement shall furnish such information and reasonable
assistance in defending such proceeding as may be requested by the party
against whom such proceeding is brought.


 


11.08      Waiver of
Rights.  The failure
of Owner or Operator to seek redress for violations, or to insist upon the
strict performance of any covenant, agreement, provision or condition of this
Agreement, shall not constitute a waiver of the terms of such covenant,
agreement, provision or condition at any subsequent time, or of the terms of
any other covenant, agreement, provision or condition contained in this
Agreement.


 


11.09      No
Recourse. 
The parties agree that there shall be no recourse against any
shareholder, member or partner, as the case may be, of Owner or Operator for
any payments due, or the enforcement of any obligations under this Agreement,
as applicable; each party’s liability under this Agreement shall be limited to
the amount which can be recovered from such party’s assets.


 


11.10      Severability.  If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, and if the invalidity or unenforceability of such
provision would not deprive either party of a material benefit under this
Agreement, then the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.


 


11.11      No
Third Party Beneficiary.  Except for Section 11.14, this Agreement
is made solely and specifically between and for the benefit of the parties
hereto, and their respective successors and assigns subject to the express
provisions hereof relating to successors and assigns, and no other person
whatsoever shall have any rights, interest, or claims hereunder or be entitled
to any benefits under or on account of this Agreement as a third party
beneficiary or otherwise.


 


11.12      Force
Majeure.  The parties
to this Agreement shall not be held liable or be deemed to be in default or
breach of this Agreement if the performance of any obligation under this
Agreement is materially hindered or prevented by strike, boycott, lockout or
other labor trouble; and storm, fire, earthquake or Act of God; any riot, civil
disturbance, or any act of war; the material shortage, unavailability or
disruption in the supply of labor, materials, fuels or the material disruption
of postal, electrical, telephone or other utility service; any present or
future governmental law, ordinance, order rule or regulation; or any other
cause or contingency beyond the respective parties’ control, but only during
such time as such party is unable due to a specified reason herein to perform
its obligations hereunder.


 


11.13      Integration.  This Agreement sets forth the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and supersedes and takes the place of any


 


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and all previous agreements entered into between the parties hereto
relating to the subject matter of this Agreement.


 


11.14      Counterparts.  This Agreement may be executed in several
counterparts and all so executed shall constitute one agreement, binding on all
of the parties hereto. In the event the parties hereto utilize “facsimile”
transmitted executed documents or counterpart, such parties agree to accept and
rely upon such documents as if they bore original signatures.


 


11.15      No
recording by Operator.  In
no event shall this Agreement and/or any memorandum of this Agreement be
recorded by Operator against the Hotel, and any memorandum or agreement that is
recorded shall have no effect.  Owner or
any mortgagee of Owner (that shall be a third party beneficiary of this
provision) shall have the right to introduce this paragraph of this Agreement
as evidence in connection with the filing of any termination of any memorandum
or agreement that is filed in contravention of this Agreement.


 


11.16      Dispute
Resolution.  Any and all
claims, disputes or controversies arising between the parties hereto regarding
any of the terms of this Agreement or the breach thereof shall first be
discussed between Owner and Operator in the expectation of amicable resolution.
In the event such efforts fail to bring about an amicable resolution, then, on
the written demand of either of the parties hereto, shall be submitted to and
be determined by binding and final arbitration held in Las Vegas, Nevada, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one or more arbitrators appointed in accordance with
such rules. This agreement to arbitrate shall be specifically enforceable in
any court of competent jurisdiction. Any decision by the arbitrator or
arbitration panel, as the case may be, shall be final and binding and shall be
subject to review only upon a showing of fraud on the part of the
arbitrator(s).


 


11.17      Disclosure
and Cooperation.  Each party
hereto acknowledges that, as a result of the possibility of each becoming
licensed or qualified as a licensed casino operator in various jurisdictions,
each will be required to conduct appropriate due diligence inquiries concerning
any material transaction in which it engages and that the transactions
envisioned by this Agreement fall within the class of transactions which
require that each conduct such due diligence inquiries regarding the other.
Based on the foregoing, each party agrees that, upon one party’s request (the “requesting party”), the other party
(the “responding party”) shall make such
disclosures as are necessary or desirable for the requesting party to conduct
such inquiries of the responding party as the requesting party deems
appropriate to conduct the required due diligence inquiries.


 


11.18      Gaming
Matters.  The parties
hereto acknowledge that the obligations of Operator and Owner hereunder are
subject to and contingent upon receipt of all necessary Gaming Approvals,  To that end, the parties hereto agree to
promptly to cooperate with each other in obtaining all necessary Gaming
Approvals.


 


[Signature page follows]


 


A-18

















 


IN WITNESS WHEREOF, the
parties hereto have duly executed and delivered this Agreement as of the date
first above written.


 


	
   

  	
  TROPICANA
  LAS VEGAS, INC.,

  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Joanne Beckett

  
	
   

  	
  Name:
  

  	
  Joanne
  Beckett, Esq.

  
	
   

  	
  Title:
  

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRILLIANT
  MANAGEMENT, L.P.,

  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Trilliant
  Gaming Nevada, Inc., its General Partner

  
	
   

  	
  By:

  	
  /s/
  Timothy A.R. Duncanson

  
	
   

  	
  Name:
  

  	
  Timothy
  A.R. Duncanson

  
	
   

  	
  Title:

  	
  Vice
  President

  



 


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