Exhibit
10.65


 


[TRANSLATION]


 


SUBCONCESSION CONTRACT FOR
OPERATING CASINO GAMES OF CHANCE OR GAMES OF OTHER FORMS IN THE MACAU SPECIAL
ADMINISTRATIVE REGION


 


Between


 


Party
A:                                                  Galaxy
Casino Company Limited, henceforth simply referred as the “Concessionaire”,
with its headquarters at Avenida da Praia Grande, n.o 409, Edif. “China Law”,
25°, Macau, and its registration number in the Company and Moveable Assets
Registration Bureau 15066, duly represented by its Directors Mr. Fan Siu
Pang, married, holder of the Hong Kong Identity Card no. B452583(9), issued on
30/05/1990, living at Flat C, 1/F, Sunrise Court, 95 Blue Pool Road, Hong Kong,
and Mr. Lui Che Woo, married, holder of the Hong Kong Identity Card no.
A481605(9), issued on 26/06/1990, living at 29/F, Ka Wah Centre, 191 Java Road,
Hong Kong, with powers to bind the company.


 


And
Party B:                           Venetian
Macau, S.A., henceforth simply referred as the “Subconcessionaire”, with its
headquarters at Av. Dr. Mário Soares, n.° 25, Edificio Montepio, Apt. 25 – 2°,
in Macau, and its registration number in the Company and Moveable Assets
Registration Bureau 15702 (SO), duly represented in this contract by its
Director Mr. David Friedman, married, holder of U.S. Passport no.
153577147, issued on


 





















 


30/11/1995, living at Las
Vegas Boulevard South, Las Vegas, Nevada 89109, United States of America, with
powers to bind the company;


 


Considering that:


 


•                                          It
was granted by Macau SAR to the Concessionaire a concession to operate casino
games of chance or games of other forms, through an administrative concession
contract to operate casino games of chance or games of other forms in Macau SAR
on June 26th
2002, which was amended on December 19th 2002;


 


•                                          Galaxy
Casino, S.A. was authorized to sign this subconcession contract, under the
provisions of Clause seventy five, number one of the concession contract;


 


Based on the above
statements and upon consultation of the Parties, it is agreed to conclude this
Subconcession Contract. This Subconcession Contract includes the following provisions:


 


CHAPTER 1



SUBJECT MATTER, TYPE AND TERM OF THE SUBCONCESSION


Article 1 Subject Matter of the Subconcession


 


1.                                       The
subject matter of the subconcession granted under this Subconcession Contract
shall be the operation of casino games of chance or games of other forms in the
Macau SAR of the People’s Republic of China (the “PRC”).


 


2.                                       The
Subconcession is based on the Concession granted to the Concessionaire for the
operation of casino games of chance or games of other forms and is granted, as
far as the Concession is concerned, for a part of it; the Concessionaire is


 


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exempted of its liabilities as far as the
Subconcessionaire’s obligations regards, and in the terms referred to in this
contract.


 


3.                                       The
Subconcession does not include the following gaming activities:


 


(1)                                  mutual
bets;


 


(2)                                  gaming
activities provided to the public, except under article 3, paragraph 7 of Law
16/2001;


 


(3)                                  interactive
gaming; and


 


(4)                                  games
of chance or any other gaming, betting or gambling activities on ships or
planes, except under article 5, paragraph 3, subparagraph 1) and paragraph 4,
of Law 16/2001.


 


Article 2 Purposes of the Subconcession


 


The Subconcessionaire
shall have the following obligations:


 


1.                                       ensure
the proper operation and conduct of casino games of chance or games of other
forms in casino;


 


2.                                       regarding
the management and conduct of casino games of chance or games of other forms,
to employ only people that have appropriate qualifications to do their jobs and
to assume relevant responsibilities;


 


3.                                       operate
and conduct casino games of chance or games of other forms in a fair and honest
manner without the influence of criminal activities; and


 


4.                                       safeguard
and ensure the Macau SAR’s interests in tax revenue from the operation of
casinos and other gaming areas of the Concessionaire.


 


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Article 3 Governing Law and Court of Competent Jurisdiction


 


1.                                       This
Subconcession Contract shall be exclusively governed by the laws of the Macau
SAR.


 


2.                                       The
Concessionaire and the Subconcessionaire recognize and accept the exclusive
jurisdiction of the court of the Macau SAR in case of any potential dispute or
conflict of interests between themselves or with the Executive of the Macau SAR
or any third parties and therefore waive their right to file lawsuit in any
court outside the Macau SAR.


 


Article 4 Compliance with Laws of the Macau SAR


 


The Concessionaire and
the Subconcessionaire must comply with applicable laws of the Macau SAR and
waive their right to apply regulations of a place other than the Macau SAR
which exempt themselves from performing obligations or acts that must be
performed by them or that are imposed on them.


 


Article 5 Participation in the Operation of Games of Chance or Games of
Other 

Forms in Other Jurisdictions


 


1.                                       If
the Subconcessionaire wishes to participate in the operation of casino games of
chance or games of other forms in any other jurisdictions, including
participation in the operation through a management contract, it must inform
the government of such intent. If the Subconcessionaire is aware that any of
its directors or controlling shareholders, including the ultimate controlling
shareholders, or any company investor that directly or indirectly holds the
equivalent of 10% or more


 


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of its share capital has such intent, it must also
inform the government immediately.


 


2.                                       For
the purpose mentioned in number 1 above, the Subconcessionaire shall submit to
the Government or make due diligence to obtain and submit to the Government, as
the case may be, any documents, information or data that might be requested by
the Government, except as to those considered by law as confidential.


 


Article 6 Concession System


 


1.                                       The
legal framework of the concession system consists of the following laws and
regulations: the legal system for operating casino games of chance or games of
other forms as approved by the Law No. 16/2001, the Administrative Regulations
No. 26/2001, the implementing rules for operating games of chance (especially
the rules stated in Article 55 of the Law No. 16/2001 and other
supplemental regulations stated in the Law No. 16/2001) and the Concession
Contract. This legal framework is applicable to this subconcession contract.


 


2.                                       Without
prejudice of the obligations arisen to the Subconcessionaire from this contract,
the Subconcessionaire must also perform all such similar obligations as those
of the Concessionaires as arisen from time to time from the legal framework
referred to in the above number one.


 


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Article 7 Operation of the Conceded Business


 


The Subconcessionaire
must operate the conceded business in accordance with the provisions and conditions
set forth in this Subconcession Contract.


 


Article 8 Term of the Subconcession


 


1.                                       The
term of the Subconcession granted hereunder shall be June 26th 2022.


 


2.                                       The
provisions of the preceding paragraph shall not operate to the prejudice of the
survival of certain provisions contained herein after the termination of the subconcession.


 


CHAPTER 2



PLACES FOR OPERATING AND RUNNING CASINOS AND 

OTHER GAMING AREAS

Article 9 Places for Operating the Conceded Business


 


1.                                       During
the operation of its business, the Subconcessionaire may only operate games of
chance or games of other forms in casinos and other gaming areas previously
authorized and categorized by the government.


 


2.                                       The
use of any other places to operate the conceded business must be subject to the
approval of the government.


 


Article 10 Types of Games, Gaming Tables and Electrical or Mechanical

Gaming Machines


 


1.                                       The
Subconcessionaire is allowed to operate all games of chance that the
Concessionaire is allowed to, as well as any other games to be authorized by
Order of the Secretary for Economy and Finance, under request of the
Subconcessionaire and after consulting the Gambling Inspection and


 


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Coordination Bureau (the “GICB”). The rules for operating
these other games will be approved by Order of the Secretary for Economy and
Finance, after proposal of the GICB. The Subconcessionaire is also allowed to
operate any electrical or mechanical gaming machines, including slot machines,
in accordance with law.


 


2.                                       The
Subconcessionaire must submit a list to the “GICB” in December of each
year, setting forth the number of gaming tables and electrical or mechanical
gaming machines, including slot machines, that it intends to operate during the
following year, together with their location.


 


3.                                       The
number of gaming tables and electrical or mechanical gaming machines, including
slot machines, to be operated by the Subconcessionaire may be modified by prior
notification to the GICB.


 


4.                                       The
Subconcessionaire must maintain and operate in its casinos a minimum types of
games as per the instructions of the GICB.


 


Article 11 Continuous Operation of Casinos


 


1.                                       The
Subconcessionaire must open its casinos for business everyday.


 


2.                                       Without
prejudice to the applicability of the preceding paragraph, the
Subconcessionaire can establish the daily period during which its casinos and
the activities therein will be open to the public.


 


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3.                                       The
set up of daily business hours during which the casinos and the activities
therein are open to the public must be communicated to the government in
advance and shall be posted on the entrance of each casino.


 


4.                                       If
the Subconcessionaire wishes to change the daily business hours during which
the casinos and the activities therein are open to the public, it shall inform
the government at least three days in advance.


 


Article 12 Suspension of the Operation of Casinos and Other Gaming
Areas


 


1.                                       If
the Subconcessionaire wishes to suspend the operation of one or more of its
casinos and other gaming areas during one or several days, it must ask for
permission of the government by submitting a written application stating the
reasons therefor at least three days in advance.


 


2.                                       The
permission set forth in the preceding paragraph is not required in case of
emergency or force majeure, especially in case of serious incidents,
catastrophes or natural disasters that seriously endanger human lives. Under
the above conditions, the Subconcessionaire shall promptly inform the
government and the Concessionaire of the suspension of the operation of its
casinos or other gaming areas.


 


Article 13 Electronic Monitoring and Surveillance Equipment


 


1.                                       The
Subconcessionaire must install electronic monitoring and surveillance equipment
approved by the GICB and of a high international quality standard in casinos
and other gaming areas. For this purpose, the Subconcessionaire shall


 


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submit a written application stating the proposed
equipment and relevant technical specifications. The GICB may at any time
request models or samples of such equipment.


 


2.                                       If
so requested by the GICB, the Subconcessionaire shall also install electronic
monitoring and surveillance equipment at other areas adjacent to casinos and
other gaming areas or other areas leading to or connecting with casinos and
other gaming areas.


 


3.                                       When
reasonably requested by the GICB, in particular in order to ensure that the
electronic monitoring and surveillance equipment can maintain a high
international quality standard as mentioned in the first paragraph, the
Subconcessionaire must install new electronic monitoring and surveillance
equipment approved by the GICB.


 


4.                                       If
the Subconcessionaire is aware of any criminal acts or illegal administrative
acts as well as other illegal acts that it deems as serious, it must
immediately report the same to the competent authorities.


 


CHAPTER 3



SUBCONCESSIONAIRE


Article 14 Business, Address and Form of the Company


 


1.                                       The
business operated by the Subconcessionaire must be solely the operation of
casino games of chance or other games in the casino.


 


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2.                                       Subject
to the permission of government, the business operated by the Subconcessionaire
may include related facilities/activities to the operation of casino games of
chance or other games in the casino.


 


3.                                       The
Subconcessionaire must maintain its office in the Macau SAR and must maintain
its status as a company limited by shares.


 


Article 15 Share Capital and Shares


 


1.                                       The
Subconcessionaire must maintain a share capital in an amount no less than MOP
200,000,000.


 


2.                                       If
due to the situation afterwards, it is necessary for the Chief Executive to order
to increase the share capital, the Subconcessionaire must increase its share
capital.


 


3.                                       All
share capital of the Subconcessionaire shall be represented by nominative
shares.


 


4.                                       The
increase of share capital of the Subconcessionaire by means of public offering
must be subject to the permission of the government.


 


5.                                       The
issuance of preferential shares by the Subconcessionaire must be subject to the
permission of the government.


 


6.                                       Without
prejudice to the applicability of the preceding paragraph, the establishment or
issuance of types or categories of shares representing the share capital of the
Subconcessionaire or the transfer of such shares must be subject to the
permission of the government.


 


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7.                                       The
Subconcessionaire must take measures to ensure that all share capital of legal
persons that hold shares of the Subconcessionaire, legal persons that hold
capital contributions of the above legal person shareholders and so on up to
the ultimate shareholders (both natural persons and legal persons) that hold
capital contributions of the above shareholders shall be represented only by
nominative shares, save that this paragraph shall not apply to a listed company’s
shares that are traded on a stock market.


 


Article 16 Transfer of Shares and Creation of Encumbrances


 


1.                                       Any
inter vivos transfer of or creation of
encumbrances over the ownership of shares representing the share capital of the
Subconcessionaire or other rights relating to such shares, and any act
involving the granting of voting rights or other shareholders’ rights to
persons other than the original owners, shall be subject to the permission of
the government.


 


2.                                       For
the applicability of the provisions of the preceding paragraph, the
Subconcessionaire shall have the obligation to refuse, under any circumstances,
to record the shareholding of any entity which obtains or owns shares
representing its shareholding in the share capital in violation of the
provisions contained herein or the law, shall not regard such entity as a shareholder,
and it shall not expressly or implicitly recognize any validity of the above inter vivos transfer or creation of encumbrances.


 


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3.                                       Any
transfer mortis causa of the ownership of
shares representing the share capital of the Subconcessionaire or other rights
relating to such shares shall be promptly notified to the government. The
Subconcessionaire must also take measures at the same time to record such
transfer in its registers.


 


4.                                       Upon
obtaining the permission referred to in the first paragraph, if an owner of
shares representing the ownership of the share capital of the Subconcessionaire
or other rights relating to such shares transfers or creates encumbrance over
such ownership or rights, or grants the voting rights or other shareholders’
rights to other persons, he shall promptly notify the Subconcessionaire of the
relevant fact. After the Subconcessionaire makes the relevant record in its
registers or completes similar procedures, it shall notify the GICB within 30
days and shall submit a copy of the document legalizing the relevant legal acts
and provide detailed information relating to any other stipulated provisions
and terms.


 


5.                                       The
Subconcessionaire shall also take measures to obtain the permission of the
government with regard to the following acts: any transfer inter vivos
of the ownership of shares or other rights relating to such shares of its
shareholders (both natural persons and legal persons), any transfer inter vivos of shares of the above legal person company
(both natural persons and legal persons), and so on up to the transfer inter vivos of the shares of ultimate shareholders (both
natural persons and legal persons) provided that such shares shall be directly or
indirectly equal to 5% or more of capital contributions of the
Subconcessionaire, save that


 


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this paragraph shall not apply to a listed company’s
shares that are traded on a stock market.


 


6.                                       The
Subconcessionaire shall promptly notify the government after it is aware of the
following acts: any transfer mortis causa
of the ownership of 5% or more of the shares or other rights relating to such
shares of its shareholders (both natural persons and legal persons), any transfer
mortis causa of 5% or more of
shares of the above shareholders (both natural persons and legal persons), and
so on up to the transfer mortis causa
of the shares of ultimate shareholders (both natural persons and legal
persons).


 


7.                                       The
Subconcessionaire shall also promptly notify the government after it is aware
of the following acts: the creation of any encumbrance over the shares
representing the share capital of its shareholders, the creation of any
encumbrance over the shares owned by the above shareholders, so on up to the
encumbrance over the share capital of ultimate shareholders provided that such
shares shall be indirectly equal to 5% or more of share capital of the
Subconcessionaire, save that this paragraph shall not apply to a listed company’s
shares that are traded on a stock market.


 


8.                                       The
provisions of the preceding paragraph shall also apply to the granting of
voting rights or other shareholders’ rights to persons other than the original
owners of such rights, save that this paragraph shall not apply to a listed
company’s shares that are traded on a stock market.


 


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9.                                       The
provisions of the paragraph 4, after necessary amendments, shall apply to the
act of transfer of the ownership of capital contributions of share capital or
other rights relating to such contributions as referred to in paragraph 5.


 


10.                                 If
a dominant shareholder of the Subconcessionaire, having received written
instructions of a gaming control entity in another jurisdiction in which such
dominant shareholder is licensed to operate casino games of chance or games of
other forms, does not wish to continue to be a shareholder of the
Subconcessionaire, then, the Government may authorize the dominant shareholder
to transfer its shares on the Subconcessionaire share capital, provided that
the written instructions received by the dominant shareholder are not due to
any facts for which both the Subconcessionaire or its dominant shareholder are
liable. Still, permission of the Government for the acquisition of those shares
needs to be obtained.


 


Article 17 Issue of Bonds


 


Issue of bonds by the
Subconcessionaire shall obtain the permission of the government.


 


Article 18 Listing on a Stock Exchange


 


1.                                       The
Subconcessionaire or a company in which the Subconcessionaire holds majority
shares may not be listed on the stock exchange, except with the permission of
the government.


 


2.                                       The
Subconcessionaire shall also have the obligation to take measures to ensure
that legal persons that are controlling shareholders of the Subconcessionaire
and


 


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whose major business is to directly or indirectly
implement projects set forth in the investment plans attached hereto will not,
without prior notice given to the government, apply for listing on a stock
exchange or conduct any act aiming at being accepted for listing on a stock
exchange.


 


3.                                       An
application requesting the permission referred to in the paragraph 1 above and
the prior notice referred to in paragraph 2 above shall be made by the
Subconcessionaire and all the necessary documents shall be attached thereto,
and the government shall not be prevented from requesting the provision of
additional documents, material and information.


 


Article 19 Structures of the Shareholders and Share Capital


 


1.                                       The
Subconcessionaire must submit to the government and to the Concessionaire in December of
each year document with the latest information of its shareholders’ structure
and the structure of the share capital of a legal person, especially a company,
owning 5% or more of the share capital of the subconcessionaire, the share
capital of a legal person owning 5% or more of the share capital of such legal
person, and so on up to the share capital of a natural person or legal person
that is an ultimate shareholder, save that this paragraph shall not apply to a
listed company’s shares that are traded on a stock market, or it must submit a
statement evidencing that there is no change in the structure of such shareholders
or the share capital.


 


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2.                                       The
Concessionaire must submit to the Subconcessionaire in December of each
year the latest information of its shareholders’ structure and the structure of
the share capital of a legal person, especially a company, owning 5% or more of
the share capital of the Concessionaire, the share capital of a legal person
owning 5% or more of the share capital of such legal person, and so on up to
the share capital of a natural person or legal person that is an ultimate
shareholder, save that this paragraph shall not apply to a listed company’s
shares that are traded on a stock market, or it must submit a statement
evidencing that there is no change in the structure of such shareholders or the
share capital.


 


3.                                       The
Subconcessionaire shall also take measures to obtain and submit to the
government properly-certified statements that are signed by each of the
shareholders of the Subconcessionaire and the persons mentioned in the
preceding paragraph. The contents of such statements shall state the amount of
share capital owned by such shareholders and shall also state that such share
capital is represented by nominative shares. Such statements shall be submitted
together with copies of certificate evidencing capital contributions, as well
as the latest information or statement set forth in the preceding paragraph 1.


 


Article 20 Holding Concurrent Posts in Corporate Bodies

is Forbidden


 


1.                                       As
to the operation of casino games of chance or games of other forms, the
Subconcessionaire shall have the obligation not to appoint a person holding
posts


 


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in the offices of the other concessionaire, or of any
subconcessionaire operating in the Macau SAR or the management company of a
certain concessionaire operating in the Macau SAR to serve on the Board, the
shareholders’ meetings, the supervisory board or other corporate bodies of the
above referred companies.


 


2.                                       The
Subconcessionaire must promptly notify the government and the Concessionaire of
the appointment of any person to the Board, the shareholders’ meetings, the
supervisory board or other corporate bodies.


 


3.                                       The
Concessionaire must promptly notify the Subconcessionaire, of the appointment
of any person to boards of directors, shareholders’ meetings, supervisory
boards or other corporate bodies of other concessionaires operating casino
games of chance or games of other forms.


 


4.                                       As
to the operation of casino games of chance or games of other forms, the
government must promptly notify the Subconcessionaire of the appointment of any
person to boards of directors, shareholders’ meetings, supervisory boards or other
corporate bodies of other concessionaires operating casino games of chance or
games of other forms, or of other subconcessionaires or of other managing
companies operating casino games of chance or games of other forms in Macao
SAR.


 


Article 21 Management


 


1.                                       Granting
of the management power of the Subconcessionaire, including the appointment and
the scope of authority of the managing director, the term of


 


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authorization and any amendment to such authorization,
especially amendments involving the temporary or definitive replacement of the
managing director, shall be subject to the permission of the government. For
such purpose, the Subconcessionaire shall submit a draft of the resolution of
the Board of Directors of the Subconcessionaire to the government, enclosed
therewith the proposal of the Subconcessionaire on the granting of management
power, including identity information of the managing director, the scope of
authority of the managing director and the term of authorization, also a
description regarding the replacement in case of failure of the managing
director to perform his duties for any reason and any resolution regarding the
temporary replacement or the definitive replacement of the managing director.
The granting of the management power of the Subconcessionaire shall not take
effect prior to the permission by the government in connection with the
management power.


 


2.                                       If
the government disapproves one or several matters of the above authorization,
the Subconcessionaire shall submit a newly drafted resolution within 15 days
upon its receipt of the disapproval of the government and, if the Government
does not accept the Managing Director appointed by the Subconcessionaire, the
Subconcessionaire shall submit to the Government Annex II of the
Administrative Regulation 26/2001 dully compiled by the newly appointed
Managing Director.


 


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3.                                       Unless
it is permitted by the government, the Subconcessionaire shall have the
obligation not to give a power of attorney or to appoint a representative so as
to grant, on the basis of a stable relationship, the right to establish the
legal acts relating to the operation of the enterprise in the name of the
Subconcessionaire, save that this paragraph shall not apply to the power to
handle routine matters, especially with public departments or authorities.


 


Article 22 Articles of Association and Shareholders’ Agreements


 


1.                                       No
amendments shall be made to the Articles of Association (the “Articles”) of the
Subconcessionaire without the approval of the government.


 


2.                                       The
draft amendments to the Articles of the Subconcessionaire shall be submitted to
the government for its approval at least 30 days prior to the date of the
shareholders’ meeting for reviewing the relevant amendments.


 


3.                                       The
Subconcessionaire shall submit to the government a copy of the certified
notarization of the document within 30 days after its approval on the said
meeting regarding any amendments to the Articles.


 


4.                                       The
Subconcessionaire shall inform the government of any proposed shareholders
agreement that it has knowledge of. For such purpose, apart from taking other
necessary measures, the Subconcessionaire shall also make inquiries to its
shareholders whether there is any proposed agreement, especially the proposed
agreement regarding the exercise of voting rights or other shareholders’
rights, 15 days prior to any shareholders’ meeting or during a shareholders’
meeting in case


 


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that such shareholders’ meeting is convened without a
prior notice, and it shall inform the government of the results of taking such
measures.


 


5.                                       Within
sixty days, the Government shall notify the Subconcessionaire whether it
approves the amendments to the Articles of Association of the Subconcessionaire
as well as its shareholders agreements.


 


Article 23 Obligation of the Subconcessionaire to Provide Information


 


1.                                       Apart
from the obligation to provide information as stipulated in the concession
system set forth in Article 6, for the Concessionaires, the Subconcessionaires
shall have the obligations:


 


(1)                                  to
promptly notify the government of any situation of which it has actual knowledge
that will materially affect the normal operation of the Subconcessionaire, e.g.
situations regarding the settlement ability or repayment ability of the
Subconcessionaire, any material court cases instituted against the
Subconcessionaire, any of its directors, any shareholders holding 5% or more of
the share capital of the Subconcessionaire or any key employees of casinos, any
criminal behaviors or administrative violations in its casinos and other gaming
areas that the Subconcessionaire is aware of, any hostile behaviors of any
senior officer or staff of the public administrative authority of the Macau
SAR, including officers of the security team and law


 


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enforcement office, towards the Subconcessionaire or
senior officers of its corporate bodies;


 


(2)                                  to
promptly notify the government of the following events: all events that may materially
affect or hinder the punctual and complete performance of any obligations as a
result of this Subconcession Contract or all events that may impose exceedingly
onerous liabilities on the Subconcessionaire or all events which may constitute
a reason for revocation of the subconcession in accordance with the provisions
of Chapter 19;


 


(3)                                  to
promptly notify the government of any of the following facts or matters:


 


(a)                                  the
fixed or contingent, regular or special reward received by the directors of the
Subconcessionaire, finance provider to the Subconcessionaire and major
employees who hold key posts in the casinos in the form of wages, remuneration,
salaries or service fees or in other forms and the mechanism of profit sharing
of the Subconcessionaire by the aforesaid entities (if any);


 


(b)                                 the
benefits existing or to be established, including the form of profit
distribution;


 


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(c)                                  the
management contracts and labor provision contracts existing or suggested by the
Subconcessionaire.


 


(4)                                  to
promptly submit to the government certified copies of the following documents:


 


(a)                                  evidence
or contracts or other documents describing the reward set forth in Article 23(3)(a);


 


(b)                                 evidence
or contracts or other documents describing the benefits existing or to be
established or the form of profit distribution;


 


(c)                                  the
management contracts and labor provision contracts existing or suggested by the
Subconcessionaire.


 


(5)                                  to
promptly notify the Government of any imminent or predictable material adverse
changes in the economic and financial aspects of the Subconcessionaire of which
it has actual knowledge as well as material changes in the economic and
financial aspects of any of the following entities:


 


(a)                                  the
controlling shareholders of the Subconcessionaire;


 


(b)                                 the
entities having close contacts with the Subconcessionaire, especially those
undertaking or warranting that they will provide finance to the investment to
be made or obligations to 


 


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be borne by the Subconcessionaire in accordance with
the provisions of contracts;


 


(c)                                  the
shareholders owning 5% or more of the Subconcessionaire’s share capital who
undertake or warrant to provide finance to the investment to be made or
obligations to be borne by the Subconcessionaire.


 


(6)                                  to
promptly notify the Government that the annual turnover between the
Subconcessionaire and a third party has achieved MOP 250 million or above;


 


(7)                                  to
submit to the GICB in January of each year documents setting forth all
bank accounts of the Subconcessionaire and their balances;


 


(8)                                  to
promptly provide supplemental or additional information as requested by the
government;


 


(9)                                  to
promptly provide the GICB and the Finance Services Bureau with materials and
information as required for the smooth performance of their duties.


 


2.                                       The
government may provide that the obligations set forth in Articles 23.1(3) and
(4) should be performed once a year.


 


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CHAPTER 4



MANAGEMENT COMPANY


Article 24 Forbiddance


 


1.                                       The
Subconcessionaire shall inform the Government, with a minimum 90 (ninety) days
prior notice, of its intention to contract a Management Company to manage
activities not related to casino games of chance or games of other forms.


 


2.                                       For
the applicability of the preceding paragraph, the Subconcessionaire shall send
to the Government a notarized copy of the Articles of Association of the
Management Company or similar document as well as a copy of the draft of the
Management Contract.


 


3.                                       The
Subconcessionaire shall not celebrate contracts under the provisions of which
another company gains management powers over the Subconcessionaire as to the
operation of casino games of chance or games of other forms.


 


4.                                       Non-compliance
with number three above, without prejudice of other sanctions or penalties,
shall imply the payment of a penalty of MOP 500.000.000,00 (five hundred
million patacas) to Macau SAR.


 


CHAPTER 5



APPROPRIATE QUALIFICATIONS


Article 25 Appropriate Qualifications of the Subconcessionaire


 


1.                                       The
Subconcessionaire shall maintain its appropriate qualifications during the
subconcession term, in accordance with the law.


 


2.                                       For
the applicability of the provisions of the preceding paragraph, the
Subconcessionaire shall accept the persistent and long-term inspection and
supervision of the government, in accordance with the law.


 


24





















 


3.                                       The
Subconcessionaire will promptly pay the costs of the suitability processes; for
such purpose, GICB will issue a document with the referred costs. This document
will be considered as enough evidence of such costs.


 


Article 26 Appropriate Qualifications of the Shareholders, 

Directors and Major Employees of the Subconcessionaire


 


1.                                       Shareholders
who own 5% or more of the share capital of the Subconcessionaire, directors of
the Subconcessionaire and key employees holding important posts in the casinos
shall maintain their due qualifications during the subconcession term, in
accordance with the law.


 


2.                                       For
the applicability of the provisions of the preceding paragraph, shareholders
who own 5% or more of the share capital of the Subconcessionaire, directors of
the Subconcessionaire and key employees holding important posts in the casinos
shall accept the persistent and long-term inspection and supervision exercised
by the government, in accordance with the law.


 


3.                                       The
Subconcessionaire shall take measures to cause shareholders who own 5% or more
of the share capital of the Subconcessionaire, directors of the
Subconcessionaire and key employees holding important posts in the casinos to
maintain their appropriate suitability qualifications during the subconcession
term, and is fully aware that the said appropriate suitability qualifications
reflect on the suitability of the Subconcessionaire itself.


 


25





















 


4.                                       The
Subconcessionaire shall request shareholders who own 5% or more of the share
capital of the Subconcessionaire, directors of the Subconcessionaire and key
employees holding important posts in the casinos to notify the government
promptly of any facts which may be material to the appropriate qualifications
of the Subconcessionaire or the above shareholders, directors and key
employees.


 


5.                                       For
the applicability of the provisions of the preceding paragraph, the
Subconcessionaire shall inquire shareholders who own 5% or more of the share
capital of the Subconcessionaire, directors of the Subconcessionaire and key
employees holding important posts in the casinos every six months if they are
aware of any facts that may be material to their appropriate qualifications or
those of the Subconcessionaire. This shall not prevent the Subconcessionaire
from notifying the government immediately upon obtaining knowledge of any
material facts.


 


6.                                       If
the Subconcessionaire is aware of any facts that may be material to the
appropriate qualifications of shareholders who own 5% or more of the share
capital of the Subconcessionaire, directors of the Subconcessionaire and key
employees holding important posts in the casinos, it shall notify the
government immediately.


 


7.                                       Number
3 of the preceding Clause is applicable to the suitability processes of the
shareholders who own 5% or more of the share capital of the Subconcessionaire,
and to those of its directors and its key employees on the casino.


 


26





















 


Article 27 Special Obligations of Cooperation


 


In addition to the
general obligation of cooperation of Article 67, the Subconcessionaire
shall have the obligation to provide promptly any documents, information or
materials that the government deems necessary to examine whether the
Subconcessionaire has appropriate suitability.


 


Article 28 Special Obligations of Notification


 


1.                                       The
Subconcessionaire shall promptly notify the government in case of any
termination of approval or concession to operate casino games of chance or
games of other forms in any jurisdiction of any shareholders who own 5% or more
of the share capital of the Subconcessionaire.


 


2.                                       The
Subconcessionaire shall promptly notify the government, after receiving
knowledge of the same, of any investigation relating to a fact that may give
rise to the possibility of a gambling regulator in another jurisdiction to
punish, suspend or affect in any other way the license or concession to operate
casino games of chance or games of other forms held by any of the shareholders
holding 5% or more of the share capital of the Subconcessionaire in such
jurisdiction.


 


CHAPTER 6



FINANCIAL CAPACITY AND FINANCING


Article 29 Financial Capacity of the Subconcessionaire


 


1.                                       The
Subconcessionaire shall maintain its financial capacity to operate the conceded
business, and as provided herein, in particular the investment plans attached
to this Subconcession Contract, to timely and fully perform any


 


27





















 


obligations relating to its business and make
investments or assume other obligations provided herein.


 


2.                                       For
the applicability of the provisions of the preceding paragraph, the
Subconcessionaire and its shareholders who own 5% or more of the share capital
shall accept the persistent and long-term inspection and supervision of the
government exercised, in accordance with the law.


 


3.                                       The
Subconcessionaire shall promptly pay the costs of its financial capacity
process and the financial capacity process of its shareholders who own 5% or
more of its share capital; for such purpose, GICB will issue a document with
the referred costs. This document will be considered as enough evidence of
those costs.


 


Article 30 Loans and Similar Contracts


 


1.                                       The
Subconcessionaire shall inform the government of any loans given to a third
party and of any contracts of the same kind that exceed the value of MOP30
million.


 


2.                                       The
Subconcessionaire shall have the obligation not to provide any loans or to
enter into similar contracts with its directors, shareholders or key employees
holding important posts in the casinos, unless otherwise permitted by the
government.


 


3.                                       The
Subconcessionaire shall have the obligation not to enter into any contract,
including “step in rights” contracts, with commercial enterprise owners, which


 


28





















 


will vest in them the power to manage or participate
in the management of the Subconcessionaire, except as permitted by the
government.


 


Article 31 Undertaking Risks


 


1.                                       The
Subconcessionaire expressly represents that it shall undertake all the
obligations and full and exclusive liabilities incurred in connection with all
inherent risks of the subconcession and all risks in connection with the
financial capacity and financing of the Subconcessionaire, without prejudice to
the applicability of the provisions of Article 40.


 


2.                                       The
Macau SAR is not subject to any obligation, responsibility or risk in
connection with the financing of the Subconcessionaire.


 


Article 32 Financing


 


1.                                       The
Subconcessionaire shall obtain the necessary financing to fulfill its/to
perform the obligations related to any of its activities, its investments and
to any obligations that it has validly assumed or for which the
Subconcessionaire is, under this contract, obliged to perform, in particular
for the investment plans attached to this Subconcession Contract.


 


2.                                       Any
defense or counterplea resulted from contractual relations between the
Subconcessionaire and third parties (including entities that provide financing
and shareholders of the Subconcessionaire) in connection with the above
financing shall not be used against the Macau SAR.


 


29





















 


Article 33 Legal Reserves


 


The Subconcessionaire
shall keep reserves as required by the law.


 


Article 34 Special Obligations of Cooperation


 


1.                                       Without
prejudice of the general obligation of cooperation of Article 67, the
Subconcessionaire shall have the obligation to provide promptly any documents,
information or materials that the government deems necessary to examine whether
the Subconcessionaire has appropriate financial capacity.


 


2.                                       The
Subconcessionaire shall promptly inform the government of any loan, mortgage,
claim for obligation, guarantee or obligation that equals to or exceeds the
value of MOP8 million assumed or to be assumed in order to obtain financing for
any aspect of its company business.


 


3.                                       The
Subconcessionaire shall promptly provide the government with certified copies
of documents relating to any loan, mortgage, claim for obligation, guarantee or
obligation assumed or to be assumed in order to obtain financing for any aspect
of its company business.


 


4.                                       The
Subconcessionaire must take measures to obtain and submit to the government a
statement signed by each of its controlling shareholders (including ultimate
controlling shareholders), pursuant to which each of such shareholders agrees
to be bound by the above special obligations of cooperation. Accordingly, upon
the request of the government, each of such shareholders shall provide all
documents, information, materials or evidence and give any permission.


 


30





















 


CHAPTER 7



INVESTMENT PLANS


Article 35 Investment Plans


 


1.                                       The
Subconcessionaire must implement the investment plans in accordance with the
provisions of the investment plans attached to this Subconcession Contract,
being transferred, for all legal purposes and without prejudice of paragraphs [**]†
to [**]† below, the obligation of the Concessionaire as to the
implementation of Numbers 2, 3 and 4 of the investment plans attached to the Concession
Contract signed by Macao SAR and the Concessionaire, up to the amount referred
to in Clause 39.


 


2.                                       The
Subconcessionaire shall in particular have the following obligations:


 


(1)                                  use
qualified labors in all projects;


 


(2)                                  give
priority to enterprises doing business in the Macau SAR on a long-term basis or
local enterprises and to local workers of the Macau SAR when retaining
enterprises and recruiting workers for implementing the projects set forth in
the investment plans attached to this Subconcession Contract;


 


(3)                                  during
its formulation of the construction projects in connection with the projects
set forth in the investment plans attached to this Subconcession Contract,
comply with existing technical restrictions and technical rules of the Macau
SAR, in particular the Land Technical Rules promulgated under the Decree No.
47/96/M dated August 26, and the Rules for Safety and Loading of Building
Structure and Bridge Structure promulgated


 










† This
portion of the Subconcession Contract has been omitted and filed separately
with the Securities and Exchange Commission, pursuant to Rule 406.


 


31





















 


under the Decree No. 56/96/M dated September 16,
and specifications and approval documents of government authorities and
instructions of manufacturers or patent owners;


 


(4)                                  when
submitting the projects set forth in the investment plans attached to this
Subconcession Contract to the Land, Public Construction and Transportation
Bureau (“DSSOPT”) for approval, in addition to other documents required by
existing laws (in particular the Decree No. 79/85/M dated August 21),
provide a quality control manual prepared by an entity recognized as
technically qualified by the Land, Public Construction and Transportation
Bureau and able to show its experience in the same or similar kind of works,
and approved by the Land, Public Construction and Transportation Bureau, an
operating plan and relevant financial and operating records, samples of
important materials and resumes of professionals in charge of each construction
work. If the Subconcessionaire fails to submit a quality control manual or the
quality control manual submitted by it is not approved, the Subconcessionaire
must comply with the quality control manual prepared by a professional entity
designated by the Land, Public Construction and Transportation Bureau;


 


32





















 


(5)                                  carry
out construction strictly based on approved projects and in accordance with
existing laws and regulations, internationally recognized standards for similar
construction work or supplies and industrial norms;


 


(6)                                  adhere
to the construction period for the projects set forth in the investment plans
attached to this Subconcession Contract and the period during which such
projects shall be open to the public;


 


(7)                                  use
materials, systems and equipment certified and approved by recognized entities
and in accordance with international standards and generally recognized as
having high international quality during the implementation of the projects set
forth in the investment plans attached to this Subconcession Contract;


 


(8)                                  maintain
the quality of all projects set forth in the investment plans attached to this
Subconcession Contract according to a high international quality standard;


 


(9)                                  ensure
that the quality standard of the commercial facilities therein reaches a high
international quality standard;


 


(10)                            according
to a high international quality standard, maintain a modernized, highly
efficient and high-quality management;


 


(11)                            in the
case of conditions that cause or may cause major changes to the normal
development of construction or operation during the construction


 


33





















 


of the facilities of the Subconcessionaire, or in the
case of unusual conditions relating to building structure of the facilities of
the Subconcessionaire or any other unusual conditions, promptly inform the
government of such conditions by submitting a detailed report stating such
conditions and reasons therefor. The report shall state the assistance provided
by other entities that are generally recognized as qualified and prestigious
and the measures taken or to be taken to solve the relevant problems.


 


3.                                       The
Subconcessionaire shall be liable to the Macau SAR and third parties for any
damage caused by the design and scope of project, implementation of
construction work, insufficient maintenance of buildings set forth in the
investment plans attached to this Subconcession Contract, errors or serious negligence
and for which the Subconcessionaire is to blame.


 


4.                                       The
government may permit change in the period mentioned in paragraph 2(6) without
amending this Subconcession Contract.


 


5.                                       The
government undertakes to enable the Subconcessionaire to directly or indirectly
implement the projects set forth in the investment plans attached to this Subconcession
Contract in accordance with laws.


 


6.                                       The
total amount of the expenses done by the Subconcessionaire for the
implementation of the projects referred to on the investment plans attached to
this Subconcession Contract, up to the amount referred in Clause 39, will be
taken


 


34





















 


into account to determine the global amount referred
to in Clause 39 of the Concession Contract for which the Concessionaire is
liable for.


 


7.                                       [**]†


 


8.                                       [**]†


 


9.                                       [**]†


 


Article 36 Changes to Projects Contained in the Investment Plans


 


1.                                       During
the implementation of the investment plans attached to this Subconcession
Contract, the government may request the Subconcessionaire to provide any
document or force the Subconcessionaire to make any change in connection with
the implementation of projects contained in the investment plans to ensure
compliance with current technical norms or rules and the required quality
standard.


 


2.                                       The
government cannot force the Subconcessionaire to make any change to the above
projects that may result in an increase of the total amount mentioned in Article 39.


 


Article 37 Inspection


 


1.                                       In
accordance with the contents of the investment plans attached to this
Subconcession Contract and the applicable regulations, the government may, in
particular through the Land, Public Construction and Transportation Bureau,


 










† This
portion of the Subconcession Contract has been omitted and filed separately
with the Securities and Exchange Commission, pursuant to Rule 406.


 


35





















 


supervise and inspect the implementation of
construction work, in particular the implementation of work plans and the
quality of materials, systems and equipment.


 


2.                                       The
Land, Public Construction and Transportation Bureau shall inform the
Subconcessionaire of the representative designated by it for supervision and
inspection purpose. If more than one representative is designated to supervise and
inspect the implementation of construction work, one of them shall be appointed
as the supervisor.


 


3.                                       For
the applicability of the first paragraph of this Article, the Subconcessionaire
must provide a detailed report on a monthly basis regarding the progress of
implementing the investment plans attached to this Subconcession Contract. Such
monthly report shall include at least the following:


 


(1)                                  important
events, number of personnel and quantity of relevant materials, systems and
equipment;


 


(2)                                  work
progress of various work plans (progress control);


 


(3)                                  updated
financial records and work records;


 


(4)                                  projects,
supply, measures that should be taken and demands for materials, systems and
equipment;


 


(5)                                  major
measures to be taken to ensure the implementation of work plans; and


 


(6)                                  things
to be done to correct errors.


 


36





















 


4.                                       When
necessary, especially when the normal work progress of the investment plans
attached to this Subconcession Contract is affected, the Subconcessionaire must
submit a detailed special written report.


 


5.                                       Upon
the request of the government, the Subconcessionaire must submit any document
within a stipulated period, especially written and graphic information relating
to the investment plans attached to this Subconcession Contract.


 


6.                                       The
Subconcessionaire shall also provide all required supplemental statements and
information relating to the documents referred to in the preceding paragraph.


 


7.                                       If
the government has any doubt about work quality, it may force the
Subconcessionaire to conduct any tests in addition to scheduled tests. When
necessary, the government may seek opinions from the Subconcessionaire about
decision-making rules used in such tests.


 


8.                                       The
expenses for conducting the above tests and correcting defects found during
such tests shall be borne by the Subconcessionaire.


 


9.                                       Orders,
circulars or notices with a technical nature in connection with the
implementation of construction work may be directly sent by the government,
namely through the Land, Public Construction and Transportation Bureau, to the
chief technical officer of the construction work.


 


10.                                 The
chief technical officer shall constantly monitor the relevant work and shall
arrive at the construction site upon request.


 


37





















 


11.                                 If
it is found out that the implementation of construction work is not in
compliance with the approved project plan or is in breach of applicable laws, regulations
or contracts, the government may, through the Land, Public Construction and
Transportation Bureau, suspend and ban the implementation of construction work
in accordance with the law.


 


12.                                 The
right to inspect the performance of obligations provided hereunder shall not
result in any liability to the Macau SAR in connection with the implementation
of construction work. The Subconcessionaire shall solely assume liability for
all imperfections or defects in connection with the planning, implementation or
performance of construction work, unless such imperfections or defects are
caused by decisions of the government.


 


Article 38 Contracting and Subcontracting


 


Third person contracting
and subcontracting shall not exempt the Subconcessionaire from performing its
statutory obligations or contractual obligations.


 


Article 39 Use of Remaining Amount Left from the Investment Provided 

in the Investment Plans


 


After the completion of
construction set forth in the investment plans attached to this Subconcession
Contract, if the total amount of expenses made directly or, subject to prior
approval of the Government, indirectly by the Subconcessionaire is lower than
MOP 4.400.000.000,00 the Subconcessionaire must use the remaining amount on
projects that are designated by it and accepted by the government and are in
connection with the


 


38





















 


business of the Subconcessionaire or on projects that are designated by
the government and that will bring significant public benefit to the Macau SAR.


 


Article 40 Insurance


 


1.                                       The
Subconcessionaire must enter into and renew necessary insurance contracts to
ensure that inherent risks of the conceded business are effectively and fully
covered by insurance. The relevant insurance contracts must be entered into
with insurance companies permitted to operate in the Macau SAR. If it is not
feasible to purchase insurance with such kind of insurance companies or such
purchase will bring excessive burden to the Subconcessionaire, then upon permission
of the government, the relevant insurance contracts may be entered into with
insurance companies outside the Macau SAR.


 


2.                                       The
Subconcessionaire shall especially ensure that the following insurance
contracts shall be entered into and the effectiveness of such contracts shall
be maintained:


 


(1)                                  work-related
accidents and occupational illnesses insurance of staff of the
Subconcessionaire;


 


(2)                                  civil
liability insurance in connection with vehicles for all the vehicles belonging
to the Subconcessionaire;


 


(3)                                  civil
liability insurance in connection with ships, planes or other flying objects
belonging to the Subconcessionaire or leased to the Subconcessionaire;


 


39





















 


(4)                                  civil
liability insurance for fixing propaganda stuff and advertisements;


 


(5)                                  general
civil liability insurance in connection with the operation of casino games of
chance or games of other forms in the Macau SAR and the development of other
businesses covered in the subconcession, but not covered by any other insurance
contracts;


 


(6)                                  other
insurance for loss and damages in buildings, furniture, equipment and other
assets used in the conceded business;


 


(7)                                  construction
insurance (all risks, including civil liability) in relation to conducting any
work of the buildings related to the conceded business or conducting any work
in such buildings.


 


3.                                       The
insurance policies referred in paragraph 2(6) above shall be “all-risks”, including,
at least, the following:


 


(1)                                  fire,
thunder and lightning, or explosion (of any kind);


 


(2)                                  burst
of pipes, or leakage or spillage of water storage tanks, boilers, water pipes,
underground water storage, sinks or other water-conveying equipment;


 


(3)                                  flood,
rainstorm, hurricane, volcano eruption, earthquake, or any other natural
disaster;


 


(4)                                  crash
or impact of planes or other flying vehicles or objects fallen or thrown from
planes or other flying vehicles;


 


(5)                                  impact
of vehicles;


 


40





















 


(6)                                  burglary
or robbery;


 


(7)                                  strikes,
attacks, riots, public disorder or any other acts of the same kind.


 


4.                                       The
insurance amount or the minimum protection for the insurance referred to in
paragraph 2 above, shall be:


 


(1)                                  handled
in accordance with the current laws and regulations for the insurance referred
to in paragraphs 2(1) to (4);


 


(2)                                  the
amount to be determined by the government after considering the volume of
business of the conceded business and incidence rate for the previous year and
other parameters, for the insurance referred in paragraph 2(5) above;


 


(3)                                  equal
to the net value of the assets, for insurance referred to in paragraph 2(6)
above, the net value shall mean the gross value minus accumulative
depreciation; and


 


(4)                                  the
total amount of the construction, for insurance referred to in paragraph 2(7).


 


5.                                       The
Subconcessionaire shall ensure that any entity with which the Subconcessionaire
concludes a contract has purchased valid insurance for work-related accidents
and occupational illnesses.


 


6.                                       The
Subconcessionaire shall prove to the government that fully effective insurance
contracts have been entered into. Upon execution of insurance contracts


 


41





















 


or renewal of such insurance contracts, the
Subconcessionaire shall deliver copies of such insurance contracts to the
government.


 


7.                                       Before
copies of insurance contracts set forth in the preceding paragraph are
delivered to the government, the Subconcessionaire shall have the obligation
not to start any construction or work procedures.


 


8.                                       The
Subconcessionaire may not cancel, suspend, amend or replace any insurance
except with the permission of the government. However, if it is only a case of
change in the insurance company, the Subconcessionaire shall promptly inform the
government of the matter under such circumstances.


 


9.                                       If
the Subconcessionaire fails to pay its insurance premium, the government may
directly pay such insurance premium calculated for the Subconcessionaire by
using the guarantee deposit paid for the Subconcessionaire’s performance of its
statutory obligations or contractual obligations.


 


10.                                 The
assurance policies that the Concessionaire is responsible for to provide under
the Concession Contract signed between the Government and the Concessionaire,
do not include nor replace those referred to in this Clause.


 


CHAPTER 8



PROPERTIES

Article 41 Properties of the Macau SAR


 


1.                                       The
Subconcessionaire shall ensure that the properties of the Macau SAR obtained or
to be obtained due to the operation of the conceded business and by


 


42





















 


means of the temporary transfer of the right to
interest, income and use are in perfect condition or replaced in accordance
with the instructions of the GICB.


 


2.                                       The
Subconcessionaire shall ensure that the land and natural resources under the
administration of the government in accordance with the provisions of Article 7
of the Basic Laws of the Macau SAR and provided or to be provided through
leases or concessions due to the operation of the conceded business in perfect
conditions.


 


Article 42 Other Properties


 


1.                                       The
casinos and the equipment and utensils used for gaming business shall locate at
all the real estate under the ownership of the Subconcessionaire. No
encumbrance shall be created over such casinos, equipment and utensils, except
for those permitted by the government.


 


2.                                       Notwithstanding
that the permission specified in the preceding paragraph is given, the
Subconcessionaire shall cause the casinos and the equipment and utensils used
for gaming business, including the equipment and utensils used outside the
casinos, not to be under any encumbrance upon the termination of this
Subconcession Contract.


 


3.                                       The
casinos shall not locate at the real estate where use and income are created
under lease contracts of any nature or under any other kinds of contracts which
do not grant the full ownership of the real estate to the Subconcessionaires,
even though such contracts are non-typical contracts, unless permission of the


 


43





















 


government is obtained. Conditions may be specified in
such permission, namely to allow the transfer of ownership of the casinos to
the Macau SAR. In particular, it can be provided that the independent units
where the casinos are located shall be acquired by the Subconcessionaire at
least 180 days prior to the term referred to in Clause 43(1), unless the
subconcession is withdrawn prior to such date and in that case, such units
shall be acquired by the Subconcessionaire in the shortest time possible.


 


4.                                       After
obtaining the due permission, the Subconcessionaire shall submit to the
government copies of the contracts specified in the preceding paragraph and all
amendments to and alternations of such contracts, notwithstanding that such
amendments and alternations may have retrospective effect.


 


5.                                       The
Subconcessionaire shall locate all of its casinos in the buildings or complex
under the system of unit ownership in building property even though such
buildings or complex constitute one economic and functional unit, so that the
casinos constitute one or more independent units which can be identified and
whose area can be defined precisely.


 


6.                                       For
the applicability of the provisions of the preceding paragraph, the Subconcessionaire
shall promptly submit to the government the property registration certificate
regarding the creation of the unit ownership in building property, which shall
set forth the description of all independent units and attach a plan confirming
and defining the relevant area.


 


44





















 


7.                                       The
Subconcessionaire shall register any amendments to the proof of the creation of
the unit ownership in building property and promptly submit the relevant
property registration certificate to the government through the Finance
Services Bureau.


 


8.                                       The
Subconcessionaire shall also submit to the government the rules and regulations
of the condominium of the unit ownership in building property for prior
approval.


 


Article 43 Ownership of the Casinos and the Equipment and Utensils used
for

Gaming Business


 


1.                                       On
June 26th 2022, except when termination occurs prior to that
date, the casinos and the equipment and utensils used for gaming business,
including. the equipment and utensils [used] outside the casinos, shall be
transferred automatically to the Macau SAR without compensation. Upon the
delivery of the aforesaid properties, the Subconcessionaire shall ensure that
such properties are in the state of good maintenance and operation except for
fair wear and tear resulting from the use in compliance with the provisions of
this Concession Contract. Furthermore, it shall be ensured that no encumbrance
is attached to such properties.


 


2.                                       The
Subconcessionaire shall immediately deliver the assets specified in the
preceding paragraph.


 


45





















 


3.                                       In
case that the Subconcessionaire does not deliver the assets specified in
paragraph 1, the government shall immediately have administrative possession
over such assets. The relevant expenses shall be paid from the guarantee
deposit provided by the Subconcessionaire to guarantee performance of statutory
obligations or contractual obligations.


 


4.                                       On
the date referred to in number 1 above, the government shall inspect the assets
as specified in Articles 41 and 42 so as to examine the conditions of custody
and maintenance of such assets and prepare a record for the inspection. At the
time of inspection, a representative of the Subconcessionaire may participate
in such inspection on the spot.


 


5.                                       Upon
the dissolution or liquidation of the Subconcessionaire, division of assets of
the Subconcessionaire shall not be carried out if the government has not proved
that the assets are under good maintenance and operation through the mandatory
listing of assets procedures specified in the following article or if the
Subconcessionaire fails to ensure that the payment of damages or any amounts
payable to the Macau SAR can be satisfied by any guarantees acceptable to the government.


 


6.                                       The
provision of the last part of paragraph 1 shall not interfere with the normal
upgrading of the equipment and utensils used in the casino business.


 


46





















 


Article 44 List of Assets Used for the Conceded Business


 


1.                                       The
Subconcessionaire shall prepare a list in triplicate of all assets and rights
belonging to the Macau SAR and used for the conceded business and all assets to
be owned by the Macau SAR and update information of the asset list. Accordingly,
the Subconcessionaire shall update the relevant list in case of any changes by
no later than May 31 of each year, and submit copies of such list to the
GICB and the Finance Services Bureau respectively.


 


2.                                       In
the year of the termination of the concession, the aforesaid list shall be
mandatorily prepared sixty days prior to the termination of the subconcession.


 


3.                                       Under
other situations of termination of the Subconcession Contract, the listing of
assets specified in the first paragraph shall be conducted on the date and at
the time as specified by the government.


 


Article 45 Improvement


 


The improvements made
during the concession and transferred to the Macau SAR under Article 41
upon the expiration of the Subconcession Contract, as well as those made in the
assets that shall revert to the Macau SAR, will not entitle the Subconcessionaire
and/or the Concessionaire to any compensation or damages and do not need to be
removed.


 


Article 46 Concession of Land to be Used by the Subconcessionaire


 


1.                                       The
system for the concession of land to be used by the Subconcessionaire
especially for the operation of the conceded business shall be stipulated in
the relevant land concession contract.


 


47





















 


2.                                       Terms
of the land concession contract between the government and the
Subconcessionaire shall be subject to the part of applicable provisions of this
Subconcession Contract.


 


CHAPTER 9



PREMIUM


Article 47 Premium


 


1.                                       A
premium shall be paid yearly by the Subconcessionaire to the Macau SAR during
the term of the Subconcession, in return for the grant of the Subconcession for
operating casino games of chance or games of other forms.


 


2.                                       The
annual amount of the premium to be paid by the Subconcessionaire has a variable
portion and a fixed portion.


 


3.                                       The
fixed portion of the annual premium payable by the Subconcessionaire shall be
MOP30 million per year.


 


4.                                       The
variable portion of the premium payable yearly by the Subconcessionaire will be
calculated in accordance with the number of gaming tables and the number of
electrical or mechanical gaming machines, including slot machines operated by
the Subconcessionaire.


 


5.                                       For
the applicability of the provisions of the preceding paragraph:


 


(i)                                     For each gaming
table, especially those located in special gaming halls or areas reserved
exclusively to certain kind of games or to certain players, the
Subconcessionaire shall pay MOP300,000;


 


48





















 


(ii)                                  For each gaming table
not reserved exclusively to certain kind of games or to certain players, the
Subconcessionaire shall pay MOP 150,000;


 


(iii)                               For each electrical or
mechanical gaming machine, including the slot machine, the Subconcessionaire
shall pay MOP1,000 each year;


 


6.                                       Independently
of the number of gaming tables that the Subconcessionaire has in each moment in
operation, the amount of the variable portion of the annual premium cannot be
less than the amount that the long-term operation of 100 gaming tables, namely
of those located in special gaming halls or areas reserved exclusively to
certain kinds of games or to certain players and the long-term operation of 100
gaming tables not reserved exclusively to certain kind of games or to certain
players.


 


7.                                       The
Subconcessionaire shall pay the fixed portion of the annual premium by no later
than January 10th of the relevant year. The government may also
provide payment by monthly installments.


 


8.                                       The
Subconcessionaire shall pay the variable portion of the annual premium monthly
by no later than the 10th day of the month immediately following the
relevant month in connection with the operation of the gaming tables and the electrical
and mechanical gaming machines including the “slot machines” in the previous
month.


 


49





















 


9.                                       For
the purpose of calculating the amount of variable portion of the annual premium
referred to in the preceding paragraph, the number of days in the relevant
month in which the Subconcessionaire operates each gaming table and each
electrical and mechanical gaming machine including the “slot machines” shall be
taken into consideration.


 


10.                                 The
payment of premium shall be made by submission of the relevant payment slip to
the cashier of the Finance and Tax Department of the Macau SAR.


 


CHAPTER 10



CONTRIBUTIONS


Article 48 Contribution for a Public Foundation


 


1.                                       The
Subconcessionaire shall contribute to the Macau SAR an amount equivalent to 1.6%
of the gross revenue of the gaming business. Such contribution shall be
delivered to a public fund designated by the government whose goal is to
promote, develop or study culture, society, economy, education and science and
engage in academic and charity activities.


 


2.                                       The
contribution referred to in the preceding paragraph shall be paid monthly by
the Subconcessionaire with the relevant payment slip given to the cashier
office of the Finance and Tax Department of the Macau SAR by no later than the
tenth day of the month immediately following the relevant month.


 


3.                                       The
contribution referred to in the first paragraph shall have its own budget
record made by the Macau SAR.


 


50


















 


Article 49 Contribution for Urban Development, Tourism Promotion and
Social 

Security


 


1.                                       The
Subconcessionaire shall contribute to the Macau SAR with an amount equivalent
to 2.4% of the gross revenue of the gaming business for the development of
urban construction and tourism promotion of and the provision of social
security to the Macau SAR.


 


2.                                       The
contribution referred to in the preceding paragraph shall be paid monthly by
the Subconcessionaire with the relevant payment slip given to the cashier
office of the Finance and Tax Department of the Macau SAR by no later than the
tenth day of the month immediately following the relevant month.


 


3.                                       The
contribution referred to in the first paragraph shall have its own budget
record made by the Macau SAR.


 


4.                                       The
government may designate one or more entities as the beneficiary entities to
receive the paid contributions in part or in whole.


 


5.                                       The
government and the Subconcessionaire may agree to the direct contribution of an
amount up to 1.2% of the gross revenue resulting from the operation of casinos
games of chance or games of other forms to be used in one or more specific
projects or by one or more specific entities. In such a case, the amount of
contribution to be delivered directly to the relevant entity and the cashier
order of the finance and tax department of the Macau SAR referred to in the
first paragraph shall be decreased accordingly.


 


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CHAPTER 11



TAXATION OBLIGATIONS AND DELIVERY OF DOCUMENTS


Article 50 Special Gaming Tax


 


1.                                       The
Subconcessionaire shall pay special gaming tax to the Macau SAR in accordance
with the law. Such tax shall be paid by twelve installments, which shall be
paid to the government monthly by no later than the 10th day of the month
immediately following the relevant month.


 


2.                                       Special
gaming tax may be paid in patacas or in other currency accepted by the
government.


 


3.                                       Special
gaming tax paid in patacas shall be paid directly delivered to the treasury of
the Macau SAR.


 


4.                                       Special
gaming tax paid in a foreign currency other than patacas and accepted by the
government shall be paid to the Macau Monetary Authority. Macau Monetary
Authority will, then, deliver the exchanged amount in patacas to the treasury
of the Macau SAR.


 


Article 51 Withholding Taxes


 


1.                                       The
Subconcessionaire shall collect and pay the statutory taxes on junket
commissions or other remuneration paid to the gaming intermediaries through
withholding the definitive amount of such taxes. The relevant taxes shall be
paid monthly to the cashier office of the finance and taxation department of
the Macau SAR by no later than the tenth day of the month immediately following
the relevant month.


 


52






















 


2.                                       The
Subconcessionaire shall collect and pay the employment tax provided by law in
connection with the staff of the Subconcessionaire through withholding the
definitive amount of such taxes. The relevant tax shall be paid to the cashier
office of the finance and taxation department of the Macau SAR in accordance
with the law.


 


Article 52 Payment of Other Payable Taxes, Levies, Expenses 

and Handling Fees


 


The Subconcessionaire
shall pay the payable and non-exemptible taxes, levies, expenses and handling
fees provided by the laws and regulations of the Macau SAR.


 


Article 53 Documents Proving No Liabilities Payable to the Public
Currency 

Note Bureau of the Macau SAR


 


1.                                       The
Subconcessionaire shall submit to the government a certificate issued by the
Finance Services Bureau by no later than March 31 annually to prove that
the Subconcessionaire does not owe the Macau SAR any levies, taxes, penalties
or additional payments of the precedent year. Additional payments shall include
compensatory interest, default interest and 3% of debts.


 


2.                                       The
Subconcessionaire shall submit by no later than March 31 annually the
document stating the tax status of the precedent year of its managing director,
senior officers of its corporate bodies and shareholders holding 5% or more of
the share capital of the Subconcessionaire to the government.


 


53






















 


Article 54 Document Proving No Liabilities Payable to the Macau SAR 

with respect to Social Security


 


The Subconcessionaire
shall submit to the government certifying documents issued by


the social security fund
of the Macau SAR to prove that the contributions made by the Subconcessionaire
in connection with the social security of the Macau SAR are in compliance with
the law by no later than March 31 of each year.


 


Article 55 Provision of Information


 


1.                                       The
Subconcessionaire shall submit quarterly a trial balance of the previous
quarter to the government by no later than the last day of the month
immediately following the end of the relevant quarter, and the trial balance of
the last quarter of each year shall be submitted by no later than the last day
of February in the following year.


 


2.                                       The
Subconcessionaire shall submit the following information to the government at
least 30 days before the date when the annual shareholders’ meeting is held to
adopt the accounts:


 


(1)                                  All
the accounting statements and statistic statements of the previous year;


 


(2)                                  Full
names of members who have been on the Board or the supervisory board, of any
representatives appointed and person in charge of the accounting department in
the relevant business year and the various language versions of such names that
may be used;


 


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(3)                                  A
copy of the report of the Board and accounts enclosed with the opinion of the
supervisory board and external auditors.


 


Article 56 Accounting and Internal Audit


 


1.                                       The
Subconcessionaire shall establish its own accounting system, sound
administrative organizations and appropriate internal auditing procedures, and
shall comply with the instructions of the government issued on such matters,
especially instructions issued through the GICB and the Finance Services
Bureau.


 


2.                                       The
Subconcessionaire shall adopt the current standards of the generally accepted
accounting format in its compilation and submission of the accounts, but
without prejudice to the Chief Executive, upon the suggestions of the head of
the GICB or the Finance Services Bureau, stipulating special rules to be
complied with by the Subconcessionaire relating to accounting books, accounting
documents or other accounting information required, the standards to be adopted
by the Subconcessionaire in recording its business activities and compilation
and submission of the accounts.


 


Article 57 External Audit of Annual Accounts


 


The Subconcessionaire
shall submit its accounts to an independent external entity with
internationally recognized reputation previously approved by the GICB and the
Finance Services Bureau for auditing, and shall provide to such entity in
advance all necessary documents, namely the documents referred to in
Article 34 of Law 16/2001.


 


55






















 


Article 58 Special Audit


 


When the GICB or the
Finance Services Bureau thinks necessary or appropriate and at any time and
with or without prior notice, the Subconcessionaire shall accept the special
audit conducted by an independent external entity or other entities with
internationally recognized reputation.


 


Article 59 Compulsory Announcement


 


1.                                       The
Subconcessionaire undertakes to announce the following information of the
previous business year ended December 31 on the Bulletin of the Macau SAR
and two newspapers that have the largest circulation among other newspapers
(one in Chinese and the other in Portuguese) published in the Macau SAR by no
later than April 30 each year:


 


(1)                                  The
balance sheet, the profit and loss statement and annexes;


 


(2)                                  The
business consolidation report;


 


(3)                                  The
opinion of the supervisory board;


 


(4)                                  The
consolidated opinion of external auditors;


 


(5)                                  The
name list of major shareholders holding 5% or more of the share capital of the
Subconcessionaire and the numerical value of the relevant percentage during any
period of that year;


 


(6)                                  The
names of senior management of its corporate bodies.


 


2.                                       The
Subconcessionaire shall submit to the government copies of all the information
referred to in the preceding paragraph and other information required


 


56






















 


to be announced by the concession system as set forth
in Article 6 by no later than 10 days prior to the announcement.


 


3.                                       The
Concessionaire and the Subconcessionaire undertake to publish jointly the
information referred to in number 1 above.


 


Article 60 Obligations of Cooperation


 


In addition to the
general obligations of cooperation of Article 67, the Subconcessionaire
shall have the obligation to cooperate with the government, especially with the
GICB and the Finance Services Bureau, and provide the material and information
required for conducting special audit, assist such departments in analyzing or
examining the accounting system of the Subconcessionaire and perform all the
obligations provided by the concession system as set forth in Article 6.


 


CHAPTER 12



GUARANTEE


Article 61 Guarantee Deposit for the Subconcessionaire’s Performance of


Statutory Obligations and Contractual Obligations


 


1.                                       The
guarantee deposit to guarantee performance of legal and contractual obligations
by the Subconcessionaire shall be provided by any means as specified by law and
acceptable to the government.


 


2.                                       In
order to ensure the performance of the following obligations, the
Subconcessionaire must maintain “first demand” guarantees issued by Banco
Nacional Ultramarino, S.A. with the government as the beneficiary:


 


(1)                                  accurately
and timely perform its statutory obligations and contractual obligations;


 


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(2)                                  accurately
and timely pay the premium under Article 47 payable by the
Subconcessionaire to the Macau SAR;


 


(3)                                  pay
fines or other monetary penalties imposed in accordance with the law or the
provisions contained herein; and


 


(4)                                  pay
any damages arising from the contractual obligation in connection with any
damage or loss of benefits caused by its failure to perform all or a part of
its obligations under this Concession Contract.


 


3.                                       The
Subconcessionaire must maintain the “first demand” guarantees set forth in the
preceding paragraph in a maximum amount of MOP 500,000,000 from the date hereof
to December 26th, 2007 and in a maximum amount of MOP
300,000,000 from that date until the 180th day after the termination date of
this Subconcession, referred to in Clause 8, and the government shall be the
beneficiary of such first demand guarantees.


 


4.                                       The
Subconcessionaire must take all actions and perform all obligations necessary
to maintain the validity of the above “first demand” guarantees.


 


5.                                       If
the Subconcessionaire fails to perform its statutory obligations and
contractual obligations, accurately and timely pay the premium payable by it or
pay fines or other monetary penalties imposed in accordance with the law or the
provisions contained herein, and it fails to raise its objection within a
legally-prescribed period, the government may draw on the “first demand”
guarantees set forth in paragraph 2 of this Article, regardless whether or not
a judicial award has been


 


58






















 


made. In case of any damages arising from the
contractual obligation in connection with any damage or loss of benefits caused
by the Subconcessionaire’s failure to perform all or a part of its obligations
hereunder, the government may also draw on the “first demand” guarantees set
forth in paragraph 2 of this Article.


 


6.                                       If
the government draws on the “first demand” guarantees set forth in paragraph 2
of this Article, the Subconcessionaire must, within fifteen days after the date
on which it receives a notice in connection with the use of such “first demand”
guarantees, take all necessary measures to restore the full validity of such
“first demand” guarantees.


 


7.                                       The
“first demand” guarantees set forth in paragraph 2 of this Article may be
discharged only upon the permission of the government.


 


8.                                       The
government may permit amendments made to the provisions or terms set forth in
paragraphs 3 to 6, and may also permit other means stipulated by the law in
lieu of the “first demand” guarantee referred to in paragraph 2 for the
provision of guarantee to guarantee the performance of statutory and contractual
obligations by the Subconcessionaire.


 


9.                                       All
expenses incurred in connection with the issuance, maintenance and discharge of
the guarantee payment to guarantee performance of statutory and contractual
obligations by the Subconcessionaire shall be borne by the Subconcessionaire.


 


59






















 


Article 62 Special Bank Guarantee for the Payment of Special Gaming Tax


 


1.                                       If
the government has reasons to believe that the Subconcessionaire will not pay
the special gaming tax anticipated to be payable each month, the
Subconcessionaire shall provide a “first demand” guarantee in accordance with
the time limit, provisions, terms and amounts stipulated by the government with
the government as the beneficiary in order to guarantee the payment of the
above-mentioned amount.


 


2.                                       Without
the permission of the government, the terms and conditions of the first demand
guarantee set forth in the preceding paragraph of this Article must not be
amended. The Subconcessionaire shall strictly comply with the terms as
stipulated in providing the guarantee and to perform all obligations that incur
or may incur in maintaining the validity of the guarantee.


 


3.                                       If
the Subconcessionaire fails to pay the special gaming tax payable to the Macau
SAR in accordance with the laws and the provisions contained herein, the
government may draw on the first demand guarantee set forth in the first
paragraph of this Article, regardless whether or not a judicial award has been
made.


 


4.                                       If
the government draws on the first demand guarantee set forth in the first
paragraph of this Article, the Subconcessionaire must, within fifteen days
after the date on which it receives a notice in connection with the use of such
first demand guarantee, take all necessary measures to restore the full
validity of such guarantee.


 


60






















 


5.                                       The
guarantee set forth in the first paragraph of this Article may be
discharged by the Subconcessionaire only 180 days after the termination of the
subconcession and the permission of the government.


 


6.                                       All
expenses incurred in connection with the issuance, maintenance and discharge of
the first demand guarantee set forth in the first paragraph of this
Article shall be borne by the Subconcessionaire.


 


Article 63 Guarantee to be Provided by the Controlling Shareholders or 

Shareholders of the Subconcessionaire


 


1.                                       The
government may ask for a guarantee to be provided by the controlling
shareholder of the Subconcessionaire, in terms acceptable by the government, to
ensure that the Subconcessionaire performs its undertakings and obligations; in
case there is no controlling shareholder, the government may ask the
shareholders of the Subconcessionaire to provide it.


 


2.                                       The
guarantee referred to in the preceding paragraph, may be demanded, namely, when
there is a justified concern that the Subconcessionaire will not be able to
perform its undertakings and obligations.


 


3.                                       The
guarantee referred to in paragraph 1 above may be provided through deposit of cash,
bank guarantee, guaranteed insurance or any means specified in Article 619
of Civil Code, within the timeframe, terms and conditions specified by Order of
the Chief Executive.


 


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4.                                       If
the Subconcessionaire fails to perform the undertakings and obligations in
accordance with the laws and the provisions contained herein, the government
may draw on the guarantee provided according to this Article, regardless
whether or not judicial award has been made.


 


5.                                       If
the government draws on the guarantee provided according to this Article, the
Subconcessionaire shall cause its controlling shareholder or the relevant
shareholder to, within 15 days after it receives a notice regarding the
approval order given with respect to the use of such guarantee, take all
necessary measures to restore the full validity of such guarantee.


 


6.                                       The
guarantee provided according to this Article cannot be amended without the
permission of the government.


 


CHAPTER 13



SUPERVISION OF THE PERFORMANCE 

OF THE SUBCONCESSIONAIRE’S OBLIGATIONS


Article 64 Supervision, Monitoring and Control by the Government


 


1.                                       The
power for the supervision, monitoring and control of the performance of the
Subconcessionaire’s obligations shall be exercised by the government,
especially through the GICB and the Finance Services Bureau.


 


2.                                       For
appropriate effectiveness and upon the request of the government, without prior
notification, the Subconcessionaire shall allow the government or any other
entities specifically and duly authorized and identified by the government to
enter into any part of the facilities of the Subconcessionaire freely and
review and


 


62






















 


examine freely the accounts or books of the Subconcessionaire,
including any trading records, books, minutes, accounts and other records or
documents and the management statistic materials and records used. In addition,
it shall provide to the government or entities authorized by the government
copies of the materials they deem necessary.


 


3.                                       The
Subconcessionaire shall comply with and implement the decisions made by the
government within the scope of its power for inspection and supervision,
especially the instructions made by the GICB, including the decision to suspend
the operation of the casinos and other gaming area.


 


4.                                       In
operating the conceded business, the Subconcessionaire shall be subject to the
long-term supervision and inspection of the GICB in accordance with the
provisions of the applicable laws.


 


Article 65 Daily Supervision on Gross Income of Gaming Operation


 


The Subconcessionaire
shall accept the daily supervision of the government on the gross income of the
gaining operation exercised in accordance with the law through GICB.


 


CHAPTER 14



GENERAL OBLIGATIONS OF COOPERATION


Article 66 Government’s General Obligations of Cooperation


 


The government and the
Concessionaire shall cooperate with the Subconcessionaire so that the
Subconcessionaire may fulfill its legal and contractual obligations.


 


63






















 


Article 67 Subconcessionaire’s General Obligations of Cooperation


 


1.                                       For
the applicability of the provisions of this Subconcession Contract, the
Subconcessionaire shall cooperate with the government, and accordingly, upon
the request of the government, provide all documents, information, materials or
evidence and shall give any permission.


 


2.                                       The
Subconcessionaire shall also cooperate with the Concessionaire so that the
Concessionaire may fulfill its legal or contractual obligations.


 


CHAPTER 15



OTHER OBLIGATIONS OF THE SUBCONCESSIONAIRE


Article 68 Operation of Casinos and Other Premises and other Adjacent
Property


 


The Subconcessionaire
shall operate all ancillary facilities in the casinos and other premises and
the adjacent property used for operating the conceded business in a normal way
for the original purposes or authorized purposes.


 


Article 69 General Obligations of the Subconcessionaire


 


1.                                       The
Subconcessionaire shall assume special obligations to procure and require all
entities retained for developing of the business covered by the concession to
abide by all rules that ensure healthy organization and operation and the
special security measures designed for the customers and staff of the casinos and
other gaming areas and other people holding positions in the casinos and other
gaming areas of the Subconcessionaire.


 


2.                                       In
order to develop the business covered by the subconcession, the
Subconcessionaire must retain entities that have appropriate licenses and
permits and have appropriate professional and technical abilities in the
relevant areas.


 


64






















 


Article 70 Other Government Permissions


 


Any replacement,
cancellation or change of certificates and records which relate to the business
of the Subconcessionaire or obtaining the gaming equipment and instruments
shall be subject to the permission of the government.


 


Article 71 Government Permission and Approval


 


An approval and
permission of the government or its refusal to grant an approval and permission
shall not exempt the Subconcessionaire’s obligation to timely perform its
obligations under this Subconcession Contract and shall not result in any
liability to the government, except that the government’s action will impose
liabilities on or cause special and unusual damages to the Subconcessionaire.


 


CHAPTER 16



RESPONSIBILITIES OF THE SUBCONCESSIONAIRE AND OF THE 

CONCESSIONAIRE


Article 72 Assumption of Civil Liability to the Macau SAR


 


1.                                       The
Subconcessionaire shall be liable to the Macau SAR for any damage caused by the
non-performance of all or a part of the Subconcessionaire’s legal or
contractual obligations as a result of any fact that the Subconcessionaire is
to blame.


 


2.                                       Save
as otherwise provided in Clause 35, the Concessionaire is not liable for and
does not share any liabilities for the Macau SAR for the damages caused by the
non-performance of all or a part of the Subconcessionaire’s legal or
contractual obligations as a result of any fact that the Subconcessionaire is
to blame.


 


65






















 


Article 73 Exemption of the Macau SAR and of the Concessionaire from 

Undertaking the Non-contractual Liabilities of the Subconcessionaire to a Third


Party


 


1.                                       The
Macau SAR shall not bear or share any liabilities of the Subconcessionaire that
may constitute as a result of an act taken by the Subconcessionaire or taken by
the Subconcessionaire for its benefits, involving or possibly involving civil
liabilities or other liabilities.


 


2.                                       The
Concessionaire does not undertake and shall not bear any liabilities that may
constitute as a result of an act taken by the Subconcessionaire or taken by the
Subconcessionaire for its benefits, involving or possibly involving civil liabilities
or other liabilities.


 


3.                                       The
Subconcessionaire shall comply with the general provisions of the relationship
between the principal and the entrusted party and be liable for losses caused
by the entities appointed by the Subconcessionaire for the development of the
businesses covered by the subconcession.


 


CHAPTER 17



CHANGE OF THE ENTITY OF THE SUBCONCESSION


Article 74 Assignment, Encumbrance, Conveyance and Transfer of Contract


 


1.                                       Unless
permission of the government is obtained, the Subconcessionaire shall have an
obligation not to, expressly or implicitly, formally or informally, assign,
convey or transfer or otherwise create encumbrance over the operation of a
casino or over the operation of any gaming area, or carry out any legal act
that will have the same effect.


 


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2.                                       Without
prejudice to other applicable penalties or punishments, in case of an act in
violation of the preceding paragraph, the Subconcessionaire shall pay the
following penalties:


 


•                                          for
assignment, conveyance or transfer of the operation of all of its casinos or
gaming area: MOP 1,000,000,000;


 


•                                          for
assignment, conveyance or transfer of the operation of a part of its casinos or
gaming area: MOP 500,000,000; and


 


•                                          for
creation of encumbrance over the operation of all or part of the casinos or
gaming area: MOP 300,000,000.


 


3.                                       Enclosed
with its application for the permission set forth in paragraph 1 shall be all
required documents clearly indicating any legal act contemplated by the
Subconcessionaire, without prejudice to the right of the government to request
additional documents, materials or information.


 


Article 75 Sub-Concession


 


1.                                       The
Subconcessionaire undertakes not to grant a sub-concession of all or a part of
the casinos granted under this subconcession or carry out any legal act that
will have the same effect.


 


2.                                       Without
prejudice to other applicable penalties or punishments, in case of an act in
violation of the preceding paragraph, the Subconcessionaire shall pay a penalty
of MOP 500,000,000 to the Macau SAR.


 


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CHAPTER 18



NON-PERFORMANCE OF CONTRACT

Article 76 Non-performance of Contract


 


1.                                       The
Subconcessionaire shall be liable to statutory or contractual punishment or
penalty if the Subconcessionaire fails to perform its responsibility or
obligation hereunder or under government decisions as a result of any fact that
the Subconcessionaire is to blame, without prejudice to the provisions of
Articles 77 and 78.


 


2.                                       Under
the situations of force majeure or other facts that the Subconcessionaire is
proved not to blame, the Subconcessionaire shall be exempted from the
responsibilities set forth in the preceding paragraph to the extent of actual
hindrance of the timely and fully performance of the responsibilities or
obligations.


 


3.                                       Events
that are unforeseeable, irresistible or beyond the control of the
Subconcessionaire and that the occurrence of their consequences does not rely
on the intention and personnel situations of the Subconcessionaire, especially
wars, terrorism, disruption of the public order, pestilence, atomic radiation,
fire, thunder and lightening, serious flood, cyclones, hurricanes, earthquake
and other natural disasters directly affecting the businesses covered by the
concession, shall be deemed to be the situations of force majeure and shall
cause the consequences as specified in the following paragraph.


 


4.                                       In
case of the occurrence of force majeure events, the Subconcessionaire shall
immediately notify the government and promptly indicate the hindrance of its


 


68






















 


performance of the obligations under this
Subconcession Contract caused by the occurrence of such events deemed by it and
shall specify the measures under the circumstances that such measures are
proposed to be implemented by the Subconcessionaire for the purpose of
minimizing the effects of such events and/or for the performance of such
obligations in compliance with the provisions.


 


5.                                       In
case of the occurrence of any of the situations specified in paragraph 3, the
Subconcessionaire shall promptly reconstruct the property damaged or recover
the property damaged to its original status so as to resume the proper
operation of the casino games of chance or games of other forms. If the
Subconcessionaire does not have any economic benefit over the reconstruction
and/or recovery of the aforesaid property, it shall transfer the insurance
benefits to the Macau SAR.


 


CHAPTER 19



REVOCATION AND TERMINATION OF THE SUBCONCESSION


Article 77 Discharge by Parties’ Agreement


 


1.                                       The
Concessionaire and the Subconcessionaire may discharge this Subconcession
Contract at any time by the agreement of the parties.


 


2.                                       In
case the government and the Subconcessionaire, after the opening to the public
of the Resort-Hotel-Casino referred to in the investments plan attached to this
Subconcession contract, agree to discharge this Subconcession Contract by
agreement of the parties, the Concessionaire undertakes to accept that discharge
from now on and gives its agreement to it.


 


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3.                                       The
Subconcessionaire shall be fully responsible for the effectiveness of the
termination of contracts to which it is a party and the Macau SAR and the
Concessionaire shall not bear any responsibilities in this regard unless it is
agreed expressly otherwise.


 


Article 78 Redemption


 


1.                                       From
the 15th year of the Subconcession onwards, the government may redeem the
subconcession by at least one year prior notice to the Subconcessionaire sent
by registered post with return slip request unless the laws stipulate
otherwise.


 


2.                                       By
redeeming the Subconcession, the Macau SAR shall enjoy all rights and undertake
all obligations incurred as a result of the redemption from the lawful
behaviors under any contracts effectively entered into by the Subconcessionaire
before the date of notice set forth in the preceding paragraph.


 


3.                                       As
regards obligations created under any contracts entered into by the
Subconcessionaire after the notice set forth in the first paragraph, the Macau
SAR shall bear such obligations only if such contracts have obtained permission
from the government before their conclusion.


 


4.                                       The
Macau SAR shall be responsible for the obligations created by the
Subconcessionaire, without prejudice to its right to recourse against the
Subconcessionaire for obligations created by the Subconcessionaire that exceeds
the normal management of the conceded business.


 


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5.                                       Upon
the redemption of the concession, the Subconcessionaire shall have the right to
obtain reasonable and fair compensation/indemnity for losses due to the
redemption of its Resort — Hotel — Casino facilities referred to in the
Investment Plan attached to this Subconcession contract. Standards for the
calculation of the amount of compensation/indemnity shall be determined
according to the amount of the revenue of the said premises, generated during
the tax year prior to the redemption, before deducting any amounts for
interests, depreciation and redemption of equipment, multiplied by the number
of years missing to the term referred to in this Subconcession contract.


 


Article 79 Temporary Administrative Participation


 


1.                                       In
case of the occurrence or possible occurrence of the situation where the
Subconcessionaire terminates or suspends the operation of all or a part of the
conceded business without permission and which is not caused by force majeure
or in case of the occurrence of serious chaos in the overall organization and
operation of the Subconcessionaire or insufficiency of facilities and equipment
which may affect the normal operation of the conceded business, the government
may replace the Subconcessionaire directly or through a third party during the
aforesaid termination or suspension or subsistence of the aforesaid chaos and
insufficiency and shall ensure the operation of the conceded business and cause
the adoption of necessary measures to protect the subject matter of this
Subconcession Contract.


 


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2.                                       During
the period of temporary administrative participation, the expenses required for
maintaining the normal operation of the conceded business shall be borne by the
Subconcessionaire. Accordingly, the government may draw on the guarantee for
the performance of the statutory obligations and contractual obligations of the
Subconcessionaire and the guarantee provided by the controlling shareholder of
the Subconcessionaire.


 


3.                                       If
the reasons for the temporary administrative participation no longer exist and
if the government deems appropriate, the government shall notify the
Subconcessionaire to resume the normal operation of the conceded business
within a prescribed period.


 


4.                                       If
the Subconcessionaire does not want to or is not able to resume operation of
the conceded business, or even though the operation of the conceded business is
resumed, serious chaos or insufficiency continues to occur in its organization
and operation, the government, may announce to discharge this Subconcession
Contract unilaterally on the basis that this Subconcession Contract is not
performed.


 


Article 80 Unilateral Discharge


 


1.                                       In
case of the Subconcessionaire’s failure to perform its basic obligations in
accordance with the laws or the provisions contained herein, the government,
after consulting the Concessionaire, may terminate the concession by unilateral
discharge of this Subconcession Contract due to failure to perform.


 


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2.                                       Major
reasons for unilateral discharge of this Subconcession Contract shall be,
especially:


 


(1)                                  Deviation
from the subject matter of the subconcession due to operation of gaming without
permission or operation of business which do not fall within the business scope
of the Subconcessionaire;


 


(2)                                  waiver
of operation of the conceded business and. suspension of operation of the
conceded business without reasonable grounds for more than seven consecutive
days or more than fourteen non-consecutive days within one calendar year;


 


(3)                                  temporary
or definite transfer of all or part of the operation in violation of provisions
concerning the concession system specified in Article 6;


 


(4)                                  failure
to pay the taxes, premiums, levies or other returns payable to the Macau SAR as
stipulated in the concession system specified in .Article 6 and not
impugned within the statutory time limit;


 


(5)                                  refusal
or failure of the Subconcessionaire to re-gain the subconcession in accordance
with the provisions of paragraph (4) of the preceding Article or
subsistence of conditions that may lead to temporary administrative
participation notwithstanding that the subconcession has been re-gained;


 


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(6)                                  repeated
objections to the implementation of supervision and inspection power [by the
government] or repeated failure to comply with government decisions, especially
the instructions of the GICB;


 


(7)                                  systematic
non-compliance with the basic obligations included in the concession system
specified in Article 6;


 


(8)                                  failure
to provide or supplement guarantee deposit or guarantees specified in this
Subconcession Contract as required and within the prescribed period;


 


(9)                                  bankruptcy
or insolvency of the Subconcessionaire;


 


(10)                            carrying
out any serious fraudulent activity whose purpose is to jeopardize the public
interests;


 


(11)                            serious
and repeated violation of the implementation rules for carrying out casino
games of chance or games of other forms or damage to the fairness of casino games
of chance or games of other forms;


 


(12)                            granting
to any other legal person managing powers over the Subconcessionaire in order
to operate casino games of chance or any other games in casino, or granting a
subconcession, in whole or in part, of this Subconcession, or entering into any
agreement to obtain the same effect.


 


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(13)                            The
non compliance with the obligation referred to in Article 16(10) to
transfer the shares, within ninety days, for which the controlling shareholder
is liable for.


 


3.                                       Without
prejudice to the provisions of Article 83, in the occurrence of any of the
situations specified in the preceding paragraph or any other situations which
may cause the unilateral discharge of this Subconcession Contract in accordance
with the provisions of this Article due to failure to perform, the
government shall notify the Subconcessionaire to fully perform its obligations
and remedy or indemnify the results caused by its behaviors within a prescribed
period, except for those situations which cannot be remedied.


 


4.                                       If
the Subconcessionaire fails to perform its obligations or correct or indemnify
the results caused by its behaviors in accordance with the provisions as
stipulated by the government, the government may unilaterally discharge this
Subconcession Contract upon notification to the Subconcessionaire and to the
Concessionaire. The government may also notify, in writing, the entity which
has undertaken to provide finance to the investment to be made and the
obligations to be borne by the Subconcessionaire, in accordance with and for
the purposes stated on the concessions legal framework referred to in Clause 6,
related to the financial capacity.


 


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5.                                       Notice
to the Subconcessionaire in connection with the decision to discharge this
Subconcession Contract as specified in the preceding paragraph shall be
effective immediately without going through any other procedures.


 


6.                                       In
case of emergency and where the delay in the process of remedying the
non-performance as specified in paragraph 3 is unbearable, the government may
immediately perform temporary administrative participation in accordance with
the provisions of the preceding Article without affecting the
implementation of such process and violation of the provisions of paragraph 4.


 


7.                                       The
Subconcessionaire shall be liable for damages to the Macau SAR as a result of
the unilateral discharge of this Subconcession Contract in accordance with the
provisions of this Article due to failure to perform, the damages shall be
calculated in accordance with the general provisions of the laws.


 


8.                                       The
unilateral discharge of this Subconcession Contract due to failure to perform
will result in the immediate attribution of the ownership of the casinos and
the equipment and utensils used for gaming, even though they do not locate at
the casinos, to the Macau SAR without compensation.


 


Article 81 Expiration/Forfeiture


 


1.                                       This
Subconcession Contract shall become invalid at the expiration of the term as
stipulated in Article 8 and the contractual relationship between the
parties to this Subconcession Contract shall terminate, without prejudice to
the survival of 


 


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applicable provisions contained herein after the
expiration of the subconcession term.


 


2.                                       In
case of the occurrence of the invalidity as stipulated in the preceding
paragraph, the Subconcessionaire shall be fully responsible for the
effectiveness of the termination of the contracts to which it is a party and
the Macau SAR shall not bear any responsibilities in this regard.


 


CHAPTER 20



AMENDMENT AND MODIFICATION OF CONTRACT


Article 82 Amendments To The Subconcession Contract


 


1.                                       Notwithstanding
the authorization of the Government, this Contract may be amended after
negotiations between the Concessionaire and the Subconcessionaire, in
accordance with the law.


 


2.                                       The
Concessionaire hereby agrees with any future amendments to this Subconcession
Contract agreed between the government and the Subconcessionaire provided that
they do not increase the obligations of the Concessionaire.


 


3.                                       Amendments
to this Subconcession Contract and to any Amendment to this Subconcession
Contract shall be made in compliance with the procedures set forth by the
Government.


 


CHAPTER 21



PHASES PRIOR TO LEGAL PROCEEDINGS


Article 83 Consultation Prior to Legal Proceedings


 


1.                                       The
government, the Concessionaire and the Subconcessionaire, or the government and
the subconcessionaire or the government and the Concessionaire


 


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shall resolve through consultation issues or disputes
arising between the parties on the validity, application, execution,
interpretation of or additions to the rules governing this Subconcession
Contract.


 


2.                                       The
occurrence of issues shall not exempt the Subconcessionaire and/or the
Concessionaire from timely and full performance of the provisions of this
Subconcession Contract and the government decisions notified to the Subconcessionaire
according to the provisions contained herein or permit the Subconcessionaire to
suspend the development of any aspect of its business. The relevant development
shall continue to be made according to the provisions in effect on the date the
issue is brought up.


 


3.                                       The
provisions of the preceding paragraph regarding the performance by the
Subconcessionaire and/or the Concessionaire of the government decisions shall
also apply to the succeeding decisions made on the same matter even if such decisions
are made after the date the consultation starts, provided that the first
decision of such succeeding decisions is notified to the Subconcessionaire
and/or the Concessionaire, respectively, prior to the date the consultation
starts.


 


CHAPTER 22



FINAL PROVISIONS


Article 84 Obtaining of Approvals, Licenses or Permits


 


1.                                       This
Subconcession Contract shall not exempt the obligations of the
Subconcessionaire to submit applications, pay fees and/or take measures for the
purpose of obtaining the approvals, licenses or permits necessary for the
operation of any aspect of its business or the performance of its obligations


 


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hereunder and shall not exempt the Subconcessionaire
from abiding by or compliance with all requirements necessary for obtaining
such approvals, licenses or permits and maintaining the effectiveness thereof.


 


2.                                       If
any approval, license or permit set forth in the preceding paragraph is
revoked, void, suspended or abolished or no longer be effective due to any
reason, the Subconcessionaire shall notify the government immediately and state
the measures taken or to be taken in order to re-gain such approval, license or
permit or make such approval, license or permit effective again.


 


3.                                       None
of the provisions contained herein shall be construed as replacing the
statutory provisions or contracts on obtaining any approval, license or permit.


 


Article 85 Industrial Property Rights and Intellectual Property Rights


 


1.                                       In
operating its business, the Subconcessionaire shall respect the industrial
property rights and intellectual property rights according to the existing laws
of the Macau SAR, and independently assume liabilities for infringement upon
such property rights.


 


2.                                       As
a condition precedent to the issuance of approvals, licenses and permits,
especially those relating to the performance of the investment plans attached
to this Subconcession Contract, the Subconcessionaire shall comply with all
industrial property rights and intellectual property rights.


 


3.                                       The
Subconcessionaire shall assign to the Macau SAR free of charge, research,
drafts, plans, drawings, documents or other materials of any nature that are
necessary or helpful for the


 


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Subconcessionaire to perform the duties hereunder or
to exercise the rights granted hereunder.


 


4.                                       Upon
the request of the Macau SAR, the Subconcessionaire must prepare any kind of
document or declaration to confirm or register the rights set forth in the preceding
paragraph.


 


5.                                       If
the industrial property rights or intellectual property rights transferred or
to be transferred to the Macau SAR according to this Article are
infringed, and the Subconcessionaire has not solved any dispute with a third
person over such infringement, the Macau SAR may interfere with such dispute to
safeguard such property rights. The Subconcessionaire shall provide all
assistance required for such purpose.


 


Article 86 Notices, Announcements, Permits and Approvals


 


1.                                       Unless
otherwise provided, the notices, announcements, permits and approvals as
referred to herein must be made in writing and delivered in the following
method:


 


(1)                                  delivered
in person, but the signature of the recipient is a must;


 


(2)                                  sent
by fax, but the receipt of the fax is a must;


 


(3)                                  sent
by registered mail with return receipt request.


 


2.                                       Permits
granted by the, government shall be prior permits and may be conditional.


 


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3.                                       No
answers to the application for permits and approvals or other requests made by
the Subconcessionaire and/or the Concessionaire shall be deemed to be
disapproval;


 


4.                                       For
the applicability of the provisions of this Subconcession Contract, the
following address and place for receiving faxes shall be deemed as the domicile
of the Government, the Concessionaire and Subconcessionaire hereto:


 


The Macau SAR:


Gambling Inspection and
Coordination Bureau


21st Floor, China Plaza,


No. 762-804, Av. da Praia
Grande, Macau


Fax: 370296


 


Concessionaire: Galaxy
Casino Company Limited


Address: Avenida da Praia
Grande, n.° 409, Edif. “China Law”, 25, Macau


Fax: 371199


 


Subconcessionaire:
Venetian Macau, S.A.


Address: Av. Dr. Mario
Soares, n.° 25, Edificio Montepio, Apartamento 25, 2° andar, Macau.


Fax: 712633


 


5.                                       Upon
prior notice, the Government, the Concessionaire and the Subconcessionaire may
amend the aforesaid address and place for receiving faxes.


 


Article 87 Prohibition of Act Limiting Competition


 


1.                                       The
Subconcessionaire must conduct its business in positive and fair competition,
subject to the inherent principles of market economy.


 


2.                                       The
Subconcessionaire has the obligation not to execute agreements or conduct
agreed acts with other concessionaires, or other Subconcessionaires or managing


 


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companies operating in Macao SAR, as to operating
casino games of chance or games of other forms, or companies of the relevant
group that may hinder, restrict or jeopardize competition in any manner.


 


3.                                       The
Subconcessionaire has the obligation not to misuse the leading position it has
in the market or the considerable market share it has in order to hinder,
restrict or jeopardize competition.


 


Article 88 Gaming Intermediaries


 


The Subconcessionaire
must assume liabilities to the government for the activities conducted in the
casinos and other gaming areas by the gaming intermediaries registered in its
company, its directors and cooperative parties. Accordingly, it shall supervise
the activities of such intermediaries, directors and cooperative parties.


 


Article 89 Promotion of the Facilities of the Subconcessionaire


 


1.                                       The
Subconcessionaire has the obligation to conduct publicity and marketing
activities with respect to its facilities, especially the casinos, within and
outside the Macau SAR.


 


2.                                       The
government and the Subconcessionaire shall have the obligations to coordinate
the work and activities in promoting Macau outside the territory of Macau when
they conduct their publicity and marketing work and activities.


 


3.                                       Without
permission of the government, the Subconcessionaire has the obligation not to
allow the use of the image of its casinos or other places and adjacent areas,
for operating the conceded business or a large amount of introductory


 


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explanations implying the same in the website or
website address of the Internet or any other place used for promoting
interactive gambling.


 


Article 90 Contents Incorporated in the Subconcession Contract


 


The content of the executive summary attached to the tender
proposal presented by the Concessionaire to the First Public Tender for
granting three concessions for the operation of casinos games of chance and
other games shall be deemed as being incorporated in this Subconcession
Contract, except as to those parts that are expressly or implicitly waived by
this Subconcession Contract.


 


Article 91 Chips Used in the Operation of Conceded Business


 


1.                                       The
Subconcessionaire must abide by the guidance of the government when it issues
chips of any kind or nature and puts them into circulation.


 


2.                                       Without
prejudice of the maximum amount being determined by the government, the amount
of chips issued and put in circulation, does not depend upon permission of the
government.


 


3.                                       The
Subconcessionaire guarantees to pay by cash, check or equivalent credit proof
for the chips put into circulation.


 


4.                                       With
respect to all chips put into circulation, the Subconcessionaire must provide
cash and proof of high solvency to maintain solvency ratio, establish reserve
funds and abide by the prudent rules stipulated by the government at any time
in order to ensure the prompt payment for the chips.


 


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Article 92 Confidentiality


 


1.                                       Documents
prepared by the Government, the Concessionaire and the Subconcessionaire for
the implementation of the concessions legal framework referred to in
Article 6 or performance of the provisions of this Subconcession Contract
shall have the nature of confidentiality, which may be provided to a third
party only upon the permission of the others.


 


2.                                       The
government, the Concessionaire and the Subconcessionaire shall take necessary
measures so that their staff are bound by the obligation of confidentiality.


 


3.                                       The
government, the Concessionaire and the Subconcessionaire shall urge others who
are able to get access to or may get access to the confidential documents to
compile with the obligation of confidentiality, especially those being able to
d9 so through consultant contracts, labor provision contracts or other
contracts.


 


4.                                       The
Concessionaire and the Subconcessionaire shall keep the confidentiality of this
contract, and of any other documents that may reveal its content, and shall
only reveal it to third parties upon permission of the government.


 


5.                                       It
is not included within the confidentiality referred in number 1 and 4 above,
any documents, information or materials that may be. reasonably requested by
judicial order, by any gaming regulator agency of other jurisdiction or by a
stock regulator agency; however, the Concessionaire or the Subconcessionaire,
as the case may be, must inform the government.


 


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6.                                       The
Concessionaire and the Subconcessionaire are also exempted of this
confidentiality obligation referred in number 1 and 4 above, for any documents,
information or materials that they deem necessary to present to any financial
institution, lawyer, accountant, or consulting entity, provided that this
confidentiality is extended to those parties.


 


7.                                       After
obtaining authorization referred in number 4 above, the Concessionaire or the
Subconcessionaire, as the case may be, shall urge to take all necessary actions
in order to guarantee that anyone that has or will become aware of the content
of this Subconcession Contract, including any related documents that may reveal
its content, are bind to this confidentiality.


 


Article 93 Complaint Book


 


1.                                       The
Subconcessionaire shall set up a complaint book particularly for complaints in
connection with the operation of casino games of chance or games of other
forms, and ensure such complaint book for use by customers in the casinos and
other gaming areas.


 


2.                                       The
Subconcessionaire shall post notices in the casinos and other gaming areas in
an outstanding manner, stating the existence of the complaint book.


 


3.                                       The
Subconcessionaire shall submit a copy of the complaints written in the
complaint book to the government in 48 hours, together with a report on such
complaints prepared by the Subconcessionaire.


 


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Article 94 Termination of the Concession


 


1.                                       The
termination of the concession granted to the Concessionaire before the term
referred to in Article 8 of this Subconcession Contract does not imply the
termination of the Subconcession granted under this Subconcession Contract.


 


2.                                       In
case of the preceding paragraph, the government will make efforts to the
transference of the position of the Concessionaire in this Subconcession
Contract to other of the Concessionaires granted with a license to operate
casinos game of chance and games of other forms in casino.


 


CHAPTER 23



TRANSITIONAL PROVISIONS


Article 95 Occupational Training Plan


 


1.                                       The
Subconcessionaire must prepare the occupational training plan for employees who
hold posts in the operation of the business covered by the subconcession within
the time limit prescribed by the government.


 


2.                                       The
Subconcessionaire must deliver to the government any other additional documents
or materials with respect to the plan referred to in the preceding paragraph
within the stipulated time limit.


 


Article 96 Deposit of the Company’s Capital


 


The Subconcessionaire
shall maintain its capital to be deposited with a local credit institution or a
branch or subsidiary of a credit institution permitted to be operated in the
Macau SAR and such capital shall not be transferred before the commencement of
business of the Subconcessionaire. The date which is expressly acknowledged by
the government through the order of the Secretary for Economy and Finance to be
the date of the commencement of business of a Subconcessionaire shall be deemed
to be the date of the commencement of business of such Subconcessionaire.


 


 


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Article 97 Managing Director Designated


 


1.                                       The
government shall, by no later than fifteen days after the conclusion of this
Subconcession Contract, notify the Subconcessionaire whether to permit the
candidate specified in Annex 1 of the Administrative Regulations No.
26/2001 submitted by the Subconcessionaire to act as the managing director of
the Subconcessionaire.


 


2.                                       The
provisions of paragraphs 1 and 2 of Article 21 are applicable to the act
of granting the management power of the Subconcessionaire for the first time to
the managing director after the conclusion of this Subconcession Contract.


 


Article 98 Bank Accounts


 


The Subconcessionaire
shall, by no later than seven days after the conclusion of this Subconcession
Contract, submit to the government the documents setting forth all bank
accounts and the relevant balance in the name of the Subconcessionaire to the
government.


 


Article 99 Declaration of the Obligations of Cooperation


 


The Subconcessionaire
shall take measures to obtain a declaration executed by every shareholder
holding 5% or more of the capital of the Subconcessionaire, every director and
major employee holding key post in the casinos and every controlling
shareholder, including the ultimate controlling shareholders of the Subconcessionaire,
stating that such persons are willing to be bound by a special obligation to
cooperate with the government. Accordingly, they shall provide any documents,
information, materials or evidence and give any permission upon request. The
Subconcessionaire shall submit to the government


 


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such declaration by no
later than fifteen days after the conclusion of this Subconcession Contract.


 


Article 100 Fixed Portion and the Variable Portion 

of the Premium


 


1.                                       The
due portion of the fixed part of the annual premium referred to in
Article 47, will only be due from June 26’h of the year 2005, unless,
until then, the Subconcessionaire begins to operate a casino or a gaming area
within the Resort-Hotel-Casino referred to in the investment plans attached to
this Subconcession contract. If so, the fixed part of the premium shall be due
from that moment on.


 


2.                                       The
payment of the variable part of the annual premium referred to in Clause 47
will only be due after the date the Subconcessionaire begins operating either
in temporary facilities or in the facility referred to in the preceding
paragraph; to allow the Government to calculate the variable part of the annual
premium, the Subconcessionaire shall, within ten days before opening its first
casino or first gaming area, submit to the government a list which will set
forth the number of gaming tables and the number of electrical or mechanical
gaming machines including “slot machines” and the locations proposed to be operated
by the Subconcessionaire in that year.


 


3.                                       If
the Subconcessionaire opens its first casino or gaming area in a temporary
facility, the amount of the variable part of the annual premium cannot be less
than the amount that the long-term operation of 20 gaming tables, namely of
those


 


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located in special gaming halls or areas reserved
exclusively to certain kinds of games or to certain players and the long-term
operation of 20 gaming tables not reserved exclusively to certain kind of games
or to certain players, until the opening of the casino or gaming area on the
facility referred to in paragraph I above.


 


4.                                       The
amounts of the variable part of the annual premium referred to in
Article 47(5) will be subject to renegotiations between the government and
the Subconcessionaire from the third year after the conclusion of this
Subconcession contract on.


 


Article 101 of the Articles of Association and of the Shareholders 

Agreement


 


The government shall, by
no later than sixty days after the conclusion of this Subconcession contract,
notify the Subconcessionaire whether the Articles of Association of the
Subconcessionaire and its shareholders agreement have been


approved.


 


Article 102 Proxy and Powers of Attorney


 


The Subconcessionaire
shall, by no later than fifteen days after the conclusion of this Subconcession
contract notify the government of all and any existing power of attorney or
appointment of representatives for granting, on the basis of a stable relationship,
the right to establish the legal acts relating to the operation of the
enterprise in the name of the Subconcessionaire, so that the government may
grant its permission. Save that this


 


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paragraph shall not apply
to the power to handle routine matters especially with public departments or
authorities, or to provide, within the same time frame referred to above, a
statement certifying its non existence.


 


Article 103 Existing Participation in the Operation of Casino Games of
Chance 

and Gaming of Other Forms in Other Jurisdiction


 


The Subconcessionaire
shall, by no later than fifteen days after the conclusion of this Subconcession
contract notify the government of the existing participation in the operation
of casino games of chance or gaming of other forms in any other jurisdiction by
any of its directors and controlling shareholders, including the ultimate
controlling shareholders, or all shareholders directly or indirectly holding
“the equivalent of 10% or more of the share capital of the Subconcessionaire,
including the participation through a management contract.


 


Article 104 Composition of the Corporate Bodies of the
Subconcessionaire


 


The Subconcessionaire
shall, by no later than seven days after the conclusion of this Subconcession
contract notify the government of the composition of its Board of Directors,
shareholders’ meetings and Supervisory Board and other corporate bodies on the
day of execution of this Subconcession Contract.


 


Article 105 Structure of Shareholders and Share Capital


 


1.                                       The
Subconcessionaire shall, by no later than seven days after the conclusion of
this Subconcession contract, submit to the government a document with the


 


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shareholders’ structure of the Subconcessionaire on
the day of execution of this Subconcession Contract.


 


2.                                       The
Subconcessionaire shall, by no later than seven days after the conclusion of
this Subconcession contract, submit to the government the structure of share
capital of a legal person, especially a company, owning 5% or more of the share
capital of the Subconcessionaire, and the share capital of a legal person
owning 5% or more of the share capital of such legal person, and so on up to
the share capital of a natural person or legal person that is an ultimate
shareholder on the day of execution of this Subconcession Contract.


 


3.                                       The
Subconcessionaire shall, by no later than fifteen days after the conclusion of
this Subconcession contract, submit to the government a declaration for the
year 2002 as specified in paragraph 2 of Article 19.


 


Article 106 “Most favorable nation”


 


If the Macau SAR grants
new concessions for operating casino games of chance or games of other forms
under conditions that are, in global terms, more favorable than those specified
in this Subconcession Contract, then the Macau SAR shall also extend them to
the Subconcessionaire by amending this Subconcession Contract.


 


Article 107 Amendment to the Percentage of Allocation


 


The percentages specified
in Articles 48 and 49 shall be amended by the government and the
Subconcessionaire in 2010.


 


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Article 108  Effectiveness


 


This Subconcession
Contract shall be written in two official languages and become effective from
the 26th December 2002 on.


 


This Contract has been
read by the signatories present and the contents of this Contract have been
explained and, as it corresponds to their will, it is going to be signed.


 


This Subconcession Contract
is going to be executed in three counterparts, one of which will be to the
Concessionaire, another to the Subconcessionaire and the other to the
government of the Macau SAR.


 


Macau, December 19th
2002.


 


	
  For and on behalf of
  the Concessionaire

  	
   

  	
  For and on behalf of
  the Subconcessionaire

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  /s/

  	
   

  



 


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ANNEX TO THE
SUBCONCESSION CONTRACT


 


Investment Plans


 


Without prejudice of
Clause 39 of this Subconcession Contract, the Subconcessionaire shall implement,
namely:


 


1.                                       One
Resort-Hotel-Casino complex, with a “Venetian” theme, to conclude and open to
the public in June 2006;


 


2.                                       One
Convention Centre, to be completed and open to the public in
December 2006;


 


3.                                       One
“City Club”, in Macau.


 


Total amount: 4.400.000.000,00
(Four Billion Four Hundred Million Patacas) to be invested within a maximum of
7 (seven) years counting from the signature of this Subconcession Contract.


 


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