Document:

Exhibit
10.2

 

STATE OF MISSISSIPPI

 

COUNTY OF HARRISON

 

SECOND JUDICIAL DISTRICT

 

LEASE AGREEMENT

 

This  Lease made and entered into this day by
and between CHARLES T. HARRISON REALTY AGENCY, agent for MEDICAL PLAZA,
LIMITED, a limited partnership having its principal office located in the City
of Biloxi, State of Mississippi, hereinafter referred to as Lessor, and  Premier Entertainment Biloxi, LLC d/b/a
Hard Rock Hotel and Casino hereinafter referred to as Lessee, WITNESSETH:

 

WHEREAS. The Lessee is
desirous of leasing the hereinafter described office space on the terms and
conditions hereinafter set out, and the Lessor is agreeable to leasing same on
said terms:

 

WHEREAS, the Lessee has
deposited with the Lessor the sum of $ 1,170.26, which shall be applied to the
01st month’s rentals hereunder.

 

NOW THEREFORE, in
consideration of the premises and the rents paid and to be paid as herein
provided for, the Lessor does hereby lease to the Lessee and the Lessee hereby
leases from the Lessor that portion of the FIRST Floor of Medical Plaza
Building, hereinafter referred to as Building, comprising a minimum of 2,793
square feet which are situated in the South End of said Building, located at
111 Lameuse Street in the City of Biloxi, Second Judicial District, Harrison
County, Mississippi, known as the Medical Plaza Building, Suite No. 104.  The demised premises are leased together
with the appurtenances including without limitations, the rights to use in
common with others, the lobbies, elevators, stairs, parking lot and other
public portions of the Building.

 

1.             The term of this
Lease shall be for a primary term of TWO (2) YEARS and shall commence on the
19th day of April, 2004, and ending on the 18th day of April, 2006, unless
sooner terminated pursuant to the provisions of this instrument.

 

2.             The Lessee shall pay
the Lessor the net annual rental of $8.00 per square foot (hereinafter referred
to as the Minimum Rental), plus the variable rate of $4.57.  The Lessee shall pay the rental in equal
monthly installments in advance on the first day of each month during the term
of this Lease, the first installment of which shall be paid on the date of
commencement. If such date be other than the first day of the calendar month,
the first installment shall be prorated for the period between the date of
commencement of the term of this Lease and the first day of the following
month.  Such

 

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installments shall be paid to the Lessor at
its regular business address or at such other place in the City of Biloxi as
the Lessor may hereinafter designate in writing.

 

3.             The base year or variable rental rate will be
$4.57.  The variable rate shall be
adjusted as required on a semi-annual basis, (June and December) of each year.
This rate is adjusted to reflect the increased cost of the Lessor. The rental
variable rate shall be based on the previous six month period expenses. These
expenses reflect the changes in the costs of utilities (including electricity,
gas, water and sewer), taxes, insurance, and common area janitorial services
and supplies. The adjustment shall be calculated by determining an average cost
of the total utilities, taxes, insurance and janitorial services and supplies
per square foot  during the
previous six month period, which shall be known as the base cost. Lessee will
pay the Lessor a figure equal to the number of square feet times the amount of
increase per square foot of the utilities, taxes, insurance and janitorial
services and supplies, over and above the established variable rate. The Lessor
shall furnish Lessee upon request justification of increase. In no event shall
the rent be less than as originally set. This amount shall be payable on a
monthly pro rata basis beginning within thirty (30) days from the receipt of
written notice by the Lessee of any increases from the proceeding six month
period.

 

4.             The Lessor shall not be required to provide
any services or do any act in connection with the demised premises except as
specifically provided herein. The fact that the Lessee’s use and occupancy of
the demised premises shall be disturbed or prevented from any cause whatsoever
shall not in any way suspend or reduce the rental to be paid hereunder except
as other specifically provided in this Lease.

 

5.             The Lessor agrees to repair, maintain and
illuminate the parking lot at Lessor’s own cost and expense. The parking area
shall be for the exclusive use of the customers, patients and clients of the
Lessee and Lessor of the building of which the demised premises forms a part.
Lessee shall have the right by itself or in conjunction with the Lessor or one
or more Lessees to enforce this restriction by such means as it deems necessary
or desirable. The Lessor agrees to repair, maintain, illuminate, provide
janitorial services and otherwise care for all other common public areas of the
demised premises.

 

6.             The Lessee shall take good care of the leased
premises and shall make all necessary repairs excluding structural repairs to
the interior of the leased premises, heating, air conditioning and plumbing.
The lessee shall provide, at its own cost and expense, standard and customary
janitorial services to the demised premises during the entire term of this
Lease. The Lessor shall be responsible for all utilities to the demised

 

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premises. The Lessor shall
pay all electricity for the elevator and shall maintain and make all necessary
repairs to the elevator at the sole expense of the Lessor.

 

7.             All alterations, additions and installation of
fixtures and equipment affixed to the realty shall be done at Lessee’s own
expense and Lessor shall have no obligations with respect to the cost of same.
The Lessee shall obtain Lessor’s permission prior to making any structural
changes in the demised premises and installation of signs.

 

8.             All movable property, furniture, furnishings
and fixtures, including those attached to the realty, installed by the Lessee
shall remain the property of the Lessee at the termination of this Lease,
however, in the case of damage by reason of removal of any of said personal
property, furniture, furnishings and fixtures attached to the realty, the
Lessee shall restore the demised premises to good order and condition,
reimbursing Lessor for the cost of any such damage. Any structure or addition
built into the premises heroin demised at the commencement of or during the
term by the Lessor at its expense, shall be and remain a part of the premises
shall not be removed by the Lessee at the end of the term unless otherwise
expressly provided in this Lease and shall remain the property of the Lessor.
The Lessor agrees that the term fixtures, as used in this paragraph,
specifically shall include any machinery or equipment leased or borrowed by the
Lessee and the Lessor agrees that the legal owner of such machinery or
equipment shall have the right to remove said machinery or equipment from the
demised premises, notwithstanding, the manner or mode of attachment. In the
event any removal of machinery, equipment or fixtures shall injure or damage
the demises premises, the Lessee agrees to repair such damage at its own
expense.

 

9.             The Lessor will provide casualty insurance for
the entire building and will provide liability insurance for all common public
areas, the Lessee will further provide liability insurance for the area of the
demised premises that its occupies. Lessee, at its option, will provide
casualty insurance for all personal property located in the demised premises
and will not hold Lessor liable for any losses thereto. If the demised premises
shall be damaged in whole or in part by fire or other cause, the structural
damages, to include interior walls, wiring and mechanical, shall be repaired
and restored by and at the expense of the Lessor and Lessee shall repair and
restore the damage to the personal fixtures, furniture and furnishings. Lessee
shall not be entitled to any abatement or set-off because of fire or other
damage. The Lessor and Lessee shall make such repairs and replacements as
promptly as possible. In the event the building of which the demised premises
are a part is totally damaged or if rendered wholly untenantable by fire or
other cause, the Lessee may, within thirty (30) days after such fire or other
cause, terminate this Lease by giving the other party notice in writing of such
decision. Thereupon, the lease

 

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shall terminate immediately
and Lessee shall be relieved of any remaining payment obligation under this
Lease. Furthermore, as the rent is  paid
in advance, where such a casualty occurs during a period that has been paid
for, Lessee shall be entitled to a refund of the proportionate amount
representing the remainder of days remaining, but not used, during that payment
period..

 

10.           If the Lessee shall fail to pay any
installment of the fixed rent or other charges when the same has become due and
payable, or if default should be made of any of the covenants herein contained,
and such failure or default shall continue for 20 days following ample notice
to Lessee specifying such failure or default. Then the Lessor shall have the
right at the Lessor’s option, to terminate this Lease and the term hereof, as
well as all the right, title and interest of the Lessee hereunder, by giving
the Lessee twenty (20) days notice in writing of such intention and upon the
expiration of the time fixed and in such written notice, the Lessor shall be
entitled to the immediate possession of the demised premises and the Lessee
shall immediately quit and surrender the demised premises to the Lessor.
However, nothing contained in this article, except as stated in paragraph 9,
shall be construed to release the Lessee of any of its duties, obligations or
liabilities under the terms of this Lease and said Lessor’s termination right
is included primarily for the purpose of allowing the Lessor the right to
peaceably take possession of the premises. The act of the Lessee in quitting
and surrendering the demised premises to the Lessor shall in no way set-off or
reduce the liability of the Lessee hereunder.

 

11.           The Lessee shall have the right to sublet or
assign the demised premises only upon obtaining the written consent of the
Lessor. The Lessee shall not be relieved of any rent, duties or obligations
hereunder by virtue of any subletting and the acceptance by Lessor of any
assignment or sublease will in no way reduce the obligation of the Lessee under
this Lease. Lessee shall not have the right to encumber its leasehold interest
without the prior written consent of the Lessor, its successor or assigns.

 

12.           The failure of the Lessor to insist upon a
strict performance of any of the terms, conditions and covenants herein, shall
not be deemed a waiver of any rights or remedies that the Lessor may have and
shall not be deemed a waiver of any subsequent breach or default in the terms,
conditions and covenants herein contained.

 

13.           If this Lease shall be terminated by the
Lessor for the default of the Lessee, Lessee shall pay Lessor, as liquidated
damages, for the failure of Lessee to observe and perform said Lessee’s
covenants, the deficiency between the rent hereby reserved and the net amount,
if any, of the rents collected on account of the lease or leases of the demised
premises for each month of the period which would otherwise have

 

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constituted the balance of
the term of this Lease. The failure or refusal of the Lessor to re-let the
premises or any  part or parts
thereof, shall not release, diminish or affect Lessee’s liability for damages
in which case, the entire rent shall be considered liquidated damages. In
computing such liquidated damages, there shall be added to such deficiency,
such expenses as Lessor may incur in connection with re-letting the premises,
such as legal expenses, reasonable attorney fees, not to exceed 25% of the rent
in arrears, brokerage fees and for keeping the premises in good order or for
preparing the same for re-letting. Any such liquidated damages shall be paid in
monthly installments by the Lessee on the rent day specified in this Lease and
any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of the Lessor to collect the deficiency for
any subsequent month by a similar proceeding. The Lessor, at Lessor’s option,
may make such alteration, repairs, replacement and/or decorations in the
demised premises as the Lessor, in its sole judgment, considers advisable and
necessary for the purpose of re-letting the premises and the making of such
alterations and/or decorations, shall not operate or be construed to release
the Lessee from liability hereunder as aforesaid.

 

14.           The Lessee hereby waives any and all right of
redemption under any present or future law if Lessor obtains possession after
Lessee’s default, either through re-entry or following any dispossession
proceedings.

 

15.           Upon the default of the Lessee in any terms as
outlined in paragraph 10, obligations or covenants herein, including but not
limited to the making of monthly rental payments, and the continuation of such
default for a period of 20 days following written notice of such default the
Lessor, at its option, may declare the entire rent for the balance of the term
of this Lease to be at once due and payable as liquidated damages as above
described. This is in addition to all rights of the Lessor stated herein and
the option of the Lessor accelerate all rent upon the default of the Lessee is
not to be construed as a waiver of any right of the Lessor under this Lease.

 

16.           The Lessee shall in the use of the premises
comply with all laws, ordinances and regulations of the State of Mississippi
and its subordinate jurisdictions, including the City of Biloxi.

 

17.           This Lease shall go governed and construed
according to the Laws of the State of Mississippi.

 

18.           In the event the Lessee shall pay all rents
when due and otherwise comply with the terms and conditions of this Lease, then
in that event, the Lessee shall have the exclusive right and option to extend
this Lease for (4) additional and consecutive terms of

 

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two years each upon the
expiration of the primary term hereinabove set for. Price to be mutually agreed
on at  that time.

 

19.           This Lease may be modified, amended or
surrendered only by an instrument to writing duly executed by the Lessor and
Lessee.

 

Witness our signatures this
15th day of April, 2004.

 

	
   

  	
  MEDICAL PLAZA, LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Lessor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHARLES T. HARRISON REALTY AGENCY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Lessor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  hard
  rock hotel & casino

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Joe Billhimer

  	
   

  
	
   

  	
  Lessee

  	
   

  
	
   

  	
  Joe
  Billhimer/President/COO

  	
   

  

 

Agreement made to lease Suite 104 for TWO YEARS at
$35,108.01 per year in twelve equal payments of $2,925,67 monthly per year.

 

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MEDICAL PLAZA BUILDING

 

RENTAL QUOTE FOR HARD ROCK HOTEL & CASINO
2,793 SQUARE FEET.

 

	
  COST PER SQUARE FOOT:

  	
   

  	
  $ 8.00

  	
   (BASE RATE)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $ 4.57

  	
   (ADJUSTABLE RATE -
  taxes, utilities, insurance)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RENTAL RATE:

  	
   

  	
  $
  $2,925.67

  	
   

  	
  PER  MONTH

  
	
   

  	
   

  	
   

  
	
  EFFECTIVE:

  	
   

  	
  APRIL 18, 2004

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THIS AGREEMENT DOES NOT
  INCLUDE JANITORIAL SERVICES.

  
																			

 

7Exhibit
10.3

 

CONSULTING
SERVICES AGREEMENT-GENERAL

 

THIS
AGREEMENT, effective as of August 10, 2004, (the Effective Date”) is
entered into by and between Premier
Entertainment Biloxi, LLC d/b/a/ Hard Rock Casino & Hotel (Owner),
with an office and principal place of business at 111 Lameuse Street, Biloxi,
MS 39530-4213 and C P Procurement Services
Inc. (“Consultant”), with a principal place of business at 248
Basswood Street, Annandale, MN 55302. In consideration of the mutual promises
contained herein, Owner and Consultant hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1                               Agreement Documents

 

Collectively, this Consulting Services
Agreement, all Exhibits hereto and documents incorporated herein by reference
constitute the “Agreement Documents”. The terms of this Consulting Services
Agreement shall control in the event of a conflict with other Agreement
Documents, including any conflicting commercial terms and/or payment provisions
stated in the Exhibits or Consultant’s proposal. Exhibits included in the
Agreement Documents are as follows:

 

Exhibit “A” - Scope of Services

 

Exhibit “B” – Schedule of Fee Payments

 

Exhibit “C” – Schedule of Hourly Rates For Additional Services

 

1.2                               Services

 

“Services” means the services to be performed
by Consultant as described in and reasonably inferable from the Agreement
Documents, including Exhibit “A” and Article 2 below.

 

1.3                               Additional Services

 

“Additional Services” means those services,
if any, in addition to the Consultant’s initial Scope of Services described in Section 1.2
above which have been mutually agreed to by the parties and are performed by
the Consultant after receipt of Owner’s prior written approval.

 

1

 

1.4                               Project

 

The “Project” shall be those activities to be performed by Owner and
all direct contractors and consultants to Owner, including the Consultant,
Contractor, Architect, Interior Designer and their respective subcontractors
and sub-consultants, and shall collectively be referred to as the Hard Rock
Casino & Hotel.

 

1.5                               Site

 

“Site” means those areas designated by Owner for
performance of the Services that shall be within and around Owner’s premises
known as the Hard Rock Casino & Hotel, located at 777 E. Beach Boulevard,
Biloxi, MS 39530

 

1.6                               Contractor

 

The “Contractor” shall be the general contractor
selected by Owner to provide procurement, construction and construction
management services for the Project pursuant to a separate contract with Owner.

 

ARTICLE 2

 

CONSULTANT’S
SCOPE OF SERVICES

 

2.1                               Representations

 

.1                                      Consultant shall perform all Services that
are specified or reasonably inferable from the requirements set forth in
Agreement Documents, including Exhibit “A” and this Article 2. The
“Services” pertain to the FF&E for the following areas of the Hard Rock
Biloxi Tower: Back of House, Pool Deck and Restrooms, Typical Queen, Typical
King, Left Guest Suites, Center Guest Suites, Right End Suites, Hospitality
Suites, Corridors, Hotel Lobby, Public Corridor & Lower Lobby, Rooftop Nightclub,
Health Spa, and Exterior Porte Cochere.

 

.2                                      Consultant represents that it is legally
authorized to perform the Services contemplated by this Agreement and
undertakes to furnish its best skill and judgment and to cooperate with Owner
in furthering the best interests of Owner and the Project.

 

.3                                      Catherine Cheslock-Petersen will be Consultant’s principal in charge of
all Services to be performed by Consultant under the terms of this Agreement.
Consultant agrees to identify in advance and obtain Owner’s

 

2

 

prior written approval for
all personnel who will be utilized by Consultant in carrying out the Services
hereunder.

 

.4                                      Consultant shall not: (a) undertake any
activity or employment; or (b) have any significant undisclosed financial or
other interests; or (c) accept any contributions if it would reasonably appear
that such activity, employment, interest or contribution could compromise the
Consultant’s professional judgment or prevent the Consultant from serving the
best interests of Owner and the Project.

 

2.2                               Coordination

 

Consultant agrees to continuously coordinate its activities with Owner,
and where applicable, with the Contractor and Owner’s other contractors and
consultants to ensure that all Services performed by Consultant hereunder shall
be completed in a timely manner and shall not delay the activities of the
Contractor or Owner’s other contractors or consultants.

 

ARTICLE 3

 

STANDARDS
AND REMEDIES

 

3.1                               Standard Of Performance

 

Owner and Consultant hereby mutually agree that
Consultant’s Services shall conform to the following standards:

 

.1                                      Consultant’s Services shall be carried out by
personnel who are experienced, skilled and competent in their respective
professions and shall be performed in full compliance with all applicable laws,
regulations and ordinances issued by public authorities and agencies having
jurisdiction over the Consultant’s Services relating to the Project.

 

.2                                      Consultant’s final reports and
recommendations, shall be suitable for their intended purpose and shall be
prepared and/or carried out in accordance with the standards of care applicable
to nationally recognized consulting companies who are regularly engaged in
providing the same or similar services on construction projects in the United
States involving luxury casino and hotel facilities.

 

3.2                                Owner’s Remedies

 

In the event Consultant fails to comply with
Section 3.1 above, Consultant shall be responsible for all costs of
correcting negligent errors and omissions in its

 

3

 

Services which do not conform with the requirements of the Agreement
Documents, including the re-performance by Consultant of its Services as
necessary to provide corrected evaluations, testing, surveys and other relevant
reports at Consultant’s sole cost and expense. In addition, Consultant shall be
responsible for any additional costs incurred by Owner for its personnel, the
Architect and Owner’s other consultants arising out of any such negligent errors
or omissions.

 

ARTICLE 4

 

OWNER’S
RESPONSIBILITIES

 

4.1                               Relevant Information

 

To the extent already available and relevant to the Consultant’s
Services, Owner shall provide Consultant with information available to Owner,
including: (a) the latest structural, architectural, mechanical and electrical
drawing and all other documents required for completion of the Services.
Consultant shall promptly report to Owner any error, inconsistency or omission
which it discovers in any such documents.

 

4.2                               Owner’s Project
Representative

 

Owner has designated Karl Bulot, Project Manager as its Project
Representative authorized to act on Owner’s behalf with respect to the
Consultant’s Services. The Project Representative shall review the reports,
analyses and other documents submitted by Consultant and shall promptly render
decisions pertaining thereto, including issuing directives required from Owner
to facilitate the progress of the Services.

 

ARTICLE 5

 

PERFORMANCE
SCHEDULE

 

5.1                                Performance Schedule

 

Performance of this Agreement shall commence on
June 24th, 2004, and shall continue until the Consultant satisfactorily
performs and Owner duly accepts Consultant’s Services as complete. Services
shall conclude no later than October 30, 2005.

 

4

 

5.2                                Timely Performance

 

Consultant acknowledges that TIME IS
OF THE ESSENCE and that Owner’s business interests will suffer
substantial losses unless Consultant’s Services are completed in a timely
manner. Consultant’s failure to timely complete its Services in accordance with
Section 5.1 above, except for reasonable cause, shall be a material breach
of this Agreement.

 

ARTICLE 6

 

TERMS
OF PAYMENT

 

6.1                               Compensation for Services

 

.1                                      Consulting Fee

 

In consideration for the performance of the Services set forth in this
Agreement, Owner shall pay Consultant a lump sum Consulting Fee of One hundred
seventy-four thousand dollars and no cents ($174,000.00) for Consultant’s
Services.

 

.2                                      Payments

 

The Consulting Fee, Reimbursable Expenses, compensation for Additional
Services and the final payment shall be paid in accordance with Sections 6.4,
and 6.5.below.

 

.3                                      Limitations

 

Subject to Additional Services which are mutually agreed to between the
parties in advance and in writing, the Consulting Fee shall be Consultant’s
sole and total compensation for all costs, overheads and profit, including but
not limited to all cost of general conditions, federal, state, and local
statutory benefit taxes, income taxes and sales, use and excise taxes which relate
to its Services hereunder.

 

6.2                               Compensation for Additional
Services

 

To the extent approved in advance and in writing by Owner, payment for
Additional Services shall be computed on either: (a) “time and expense” basis
measured by the Schedule of Hourly Rates listed in Exhibit “C”, without
markups, plus Reimbursable Expenses directly related to the Additional
Services, without mark-ups; or (b) a “lump sum” basis as may be mutually agreed
upon by the parties in advance and in writing. Lump-sum amounts for Additional
Services shall be inclusive of all Reimbursable Expenses.

 

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6.3                               Reimbursable Expenses

 

Reimbursable Expenses shall be limited to actual expenditures for the
items listed below without mark-ups and which are reasonably incurred by the
Consultant in the direct performance of Services and Additional Services
performed on a “time and expense” basis as follows:

 

.1                                      Any unusual excessive postage, shipping, and
air courier costs at actual cost.

 

.2                                      Any reasonable expenses in connection with
out-of-town travel authorized by Owner.

 

Reimbursable
Expenses that exceed $500.00 will need prior written approval of Owner. All
travel schedules will be approved prior to the actual booking of said trips.

 

6.4                              Progress Payments

 

Consultant shall submit
monthly Applications for Progress Payment that shall separately itemize the
following:

 

.1                                      The relevant Consulting Fee progress payment
due in accordance with Exhibit “B” –Schedule of Fee Payments.

 

.2                                      Separate line item entries which identify all
Additional Services which were approved in advance and in writing by Owner and
which were completed during the preceding month. Consultant’s submittal for
these Additional Costs shall include: (a) a copy of Owner’s prior written
approval: and (b) an itemization of all Reimbursable Expenses attributable to
each separate item of Additional Service performed and incurred during the
preceding month.

 

6.5                               Monthly Payments

 

Within thirty (30) calendar days after receipt of Consultant’s
Application for Progress Payment submitted in compliance with the requirements
of Section 6.4 above, Owner shall pay the amounts approved in accordance
with this Article 6 without retention, including Consulting Fee progress
payments, Reimbursable Expenses and amounts for Additional Services during the
preceding month, if any.

 

6

 

ARTICLE 7

 

INDEMNIFICATION

 

7.1                                Indemnities

 

The term “Indemnitees” means Premier
Entertainment Biloxi, LLC, d/b/a Hard Rock Casino & Hotel, and
each of its subsidiary companies, affiliated companies and parent companies of
every tier, and each of its directors, officers, employees, agents,
representatives and assignees permitted herein.

 

7.2                                Consultant’s Duty to
Indemnify

 

Consultant shall indemnify, defend and hold each of the Indemnitees
harmless from and against any and all claims, causes of actions, damages,
liabilities, losses, costs and expenses, including reasonable attorney’s fees,
arising out of and to the extent caused by the negligent acts, errors or
omissions by the Consultant, its employees and agents, or others for whom the
Consultant is legally liable in the performance its Services under this
Agreement. It is further provided the Indemnitees’ rights set forth in this
Section shall not apply to the extent that any claims, costs, expenses,
losses or liabilities result from the negligent acts or omissions of the
Indemnitees or other parties for whom Consultant is not responsible.

 

ARTICLE 8

 

INSURANCE

 

8.1                               Consultant’s Insurance
Requirements

 

Commencing with the performance of its Services hereunder, and
continuing until the Services have been fully performed, Consultant shall
obtain and maintain at its expense during the term of this Agreement policies
of insurance of the types and in amounts not less than the minimum coverages
specified below.

 

.1                                      Commercial General Liability
Insurance covering bodily
injury and property damage (including the property of the Indemnities) with
minimum limits on a per project basis of One Million Dollars ($1,000,000)
combined single limit, with blanket contractual, independent contractors, broad
form property damage, personal and advertising injury, cross liability and
severability of interests. This policy shall be endorsed for coverage to be on
a per project basis and to name Owner and the Indemnities defined in
Section 7.1 above as an additional insured.

 

.2                                      Workers’ Compensation
Insurance in accordance with
the statutory requirements of the state or states where the Services are to be
performed

 

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including bodily injury, occupational illness or disease coverage and
Employers Liability with minimum limits of not less than One Million Dollars
($1,000,000).

 

.3                                      Automobile Liability Insurance
covering all owned,
non-owned and hired vehicles with minimum limits of not less than One Million
Dollars ($1,000,000) combined single limit for bodily injury and property
damage liability.

 

.4                                      Professional Liability
Insurance with minimum
limits of One Million Dollars ($1,000,000) per occurrence.

 

8.2                               Conditions Of Coverage

 

Policies required in this Article 8 above shall be placed with
insurance companies having an A.M. Best Company rating of A VIII or better.
Certificates of Insurance for each policy in a form satisfactory to Owner shall
be delivered to Owner upon execution of this Agreement and shall include all
endorsements specified in this Article 8. Each policy and Certificate
shall also be endorsed to require a minimum of thirty (30) calendar days prior
written notice to Owner in advance of any cancellation of, or change in such
policy. The parties, including all Indemnitees, each mutually waive any and all
rights of subrogation against each other and/or their respective insurance
carriers to the full extent permitted by law.

 

ARTICLE 9

 

TERMINATION,
CANCELLATION AND RIGHT TO SUPPLEMENT WORK

 

9.1                               Termination for Convenience

 

Owner may for any reason or no reason, terminate this agreement upon
giving (fifteen) calendar day written notice to consultant. Thereafter,
consultant shall only be entitled to payment for work performed and expenses
incurred through the effective date of termination and upon the effective date
of termination, Owner shall be forever discharged from any other obligations
under this agreement.

 

9.2                               Termination for Cause

 

Owner may terminate this Agreement for cause at any time upon giving
seven (7) calendar days written notice to the Consultant. Thereafter,
Consultant shall only be entitled to payment for work performed and expenses
incurred through the effective date of termination, subject to any offsets
and/or damages to Owner that may arise out of any default(s) by Consultant.
Otherwise upon the effective date

 

8

 

of termination, Owner shall be forever discharged from any other
obligations under this agreement

 

9.3                               Right to Supplement Work of
Consultant

 

If the Consultant violates or breaches any of the terms, conditions or
covenants hereof, then Owner may, without prejudice to any other remedy he may
have, provide any such labor and materials as are necessary to remedy such
deficiency and deduct the cost thereof from any money due or thereafter
becoming due to the Consultant.

 

ARTICLE 10

 

OWNER’S
AUDIT RIGHTS

 

Consultant shall maintain, and require its employees and agents, or
others for whom the Consultant is legally liable under this Agreement to
maintain detailed records of all its Services, including Additional Services,
Reimbursable Expenses and personnel hours expended during the course of such
Services. Such financial records shall be kept in accordance with generally
accepted accounting principles and shall be promptly made available to Owner
and its authorized representatives for purposes of audit promptly after receipt
of written notice from Owner.

 

ARTICLE 11

 

GENERAL
PROVISIONS

 

11.1                       Assignment

 

The Services to be provided by Consultant herein is personal in nature
and, accordingly, Consultant shall not assign its interest in this Agreement
without the prior written consent of Owner. Any purported assignment by
Consultant without such consent shall be null and void.

 

11.2                       Proprietary Information

 

Owner considers all information pertaining to the Services or the
Project to be confidential and proprietary unless otherwise stated to
Consultant in writing. Consultant shall not disclose any such information
without Owner’s prior written consent, including any information which is
prepared or developed by or through

 

9

 

Consultant, Owner, and Owner’s other contractors or any Project
designers, architects or other consultants.

 

11.3                      Ownership and Use of
Agreement Documents

 

All documents prepared by Consultant as part of the Services, including
all original reports, drawings, renderings, specifications, estimates, field
notes and similar data prepared by Consultant in furtherance of the Services
shall be the property of Owner. Consultant hereby assigns to Owner all
documents prepared by Consultant, its employees and agents, or others for whom
the Consultant is legally liable under this Agreement, including all copyright
rights. At the time of completion, or upon an earlier cancellation or
termination of this Agreement, Consultant shall promptly on demand turn over to
Owner the originals of all such documents. Consultant may retain one (1) set of
reproducible copies thereof for information and reference purposes only.

 

11.4                        Independent Contractor

 

Consultant shall at all times be an independent contractor and have
sole responsibility for and control over all means, methods, techniques,
sequences and procedures for coordinating and scheduling its Services to
achieve the requirements of this Agreement. Nothing in this Agreement shall be
deemed to imply or represent that the Consultant, its employees and agents, or
others for whom the Consultant is legally liable under this Agreement are the
agents, representatives or employees of the Contractor, Owner or other
Indemnities and, Consultant agrees and acknowledges that they shall not have the
power, directly or indirectly to bind or otherwise obligate owner to any
undertaking whatsoever.

 

11.5                        Claims and Disputes

 

.1                                      All claims, disputes and other matters in
question arising out of or relating to this Agreement or the breach thereof,
shall be decided by a court of competent jurisdiction in the state where
Consultant’s Services are to be utilized by Owner and not by arbitration. The
existence of any claim, dispute or legal proceeding shall not relieve
Consultant from its obligation to properly perform its Services as set forth
herein. Neither party shall initiate a judicial proceeding, and the applicable
statute of limitations shall not commence to run, until the date of substantial
completion of Consultant’s Services or any termination of this Agreement,
whichever occurs first.

 

.2                                      Notwithstanding the above, before either
party pursues a judicial determination, the parties agree to attempt to resolve
any dispute amicably at a meeting to be attended by persons with
decision-making authority. If,

 

10

 

within thirty (30) calendar days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they agree to submit
the dispute to mediation in accordance with the then- current Model Procedure
for Mediation of Business Disputes of the Center for Public Resources, and to
bear equally the costs of the mediation.

 

11.6                       Governing Law and Forum

 

The laws of the state of Mississippi shall govern
the validity, construction, performance and effect to this Agreement. Any
lawsuit to interpret or enforce the terms of this Agreement shall be brought in
a court of competent jurisdiction in the state of Mississippi.

 

11.7                       Binding Effect

 

Owner and Consultant, respectively, bind themselves and to the extent
applicable, their partners, successors, assigns and legal representatives to
fulfill all obligations contained in this Agreement.

 

11.8                       Enforceability

 

Nothing contained in this Agreement shall create a contractual
relationship with or a cause of action in favor of a third party against either
Owner or the Consultant. The invalidity or non-enforceability of any provision
of the Agreement shall not impair or affect the validity or enforceability of
any other provisions. In the event that any such provision is determined to be
unenforceable or void, the remainder of the Agreement shall remain in full
force and effect. In the event of a waiver or series of waivers by Owner of a
breach or default of any provision of this Agreement, such waiver(s) shall not
constitute a waiver of any future breach or default of the same provision, or a
waiver of any breaches or defaults in any other provisions.

 

ARTICLE 12

 

NOTICES

 

All notices relating to termination, cancellation for convenience,
suspension or material breach shall be sent to the parties at the addresses
stated below, by registered or certified mail. All other notices may be sent by
regular mail. Notice by facsimile transmissions shall be effective upon
receipt, but must be confirmed by registered, certified or regular mail, as is
appropriate to the type of notice. Either party hereto may specify to the other
party a different address for the giving of notices.

 

11

 

12.1                          Notices To Owner

 

All notices to Owner shall be sufficient when sent as states above and
addressed as follows:

 

Name: Karl Bulot, Project Manager

Hard Rock Casino & Hotel

111 Lameuse Street

Biloxi, MS 39530

 

12.2                          Notices to Consultant

 

All notices to the Consultant shall be sufficient when sent as stated
above and addressed as follows:

 

Catherine Cheslock-Petersen

C P Procurement Services

248 Basswood Street

Annandale, MN 55302

 

ARTICLE 13

 

ENTIRE
AGREEMENT

 

This
Agreement represents the entire and integrated agreement between Owner and
Consultant and supersedes all prior negotiations, representations or
agreements, whether written or oral. This Agreement shall not be changed or
modified except by written amendment signed by officers of the parties.

 

	
  Owner:

  	
  Consultant:

  
	
   

  	
   

  
	
  Hard Rock Casino & Hotel

  	
  C P Procurement Services Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joe Billhimer

  	
   

  	
  By:

  	
  /s/ Catherine J. Cheslock-Petersen

  	
   

  
	
  Joe Billhimer

  	
  Catherine J. Cheslock-Petersen

  
	
  President and COO

  	
  President

  
						

 

12

 

EXHIBIT A

SCOPE OF SERVICES

 

Consultant
scope of services are described in the attached letter dated April 7th 5th,
2004.

 

13

 

C P
PROCUREMENT SERVICES INC.

248
Basswood Street

Annandale,
MN 55302

320/274-2829

 

April 7,
2004

 

 

Hard Rock Casino & Hotel

DBA: Premier Entertainment

Attn: Mr. Karl Bulot

 

 

RE: Purchasing Services

 

Dear Karl:

 

Per our conversation of yesterday, I am sending you a fee proposal to
provide a variety of services for your project.

 

These fees have been based upon the following information:

1). FF&E Package including tax, freight, and installation - $5.8
million

2). Preliminary design stage currently

3). Construction has begun

4).
Completion date of 8/2005

 

SUMMARY OF FEES:

 

DESIGN/BUDGET DEVELOPMENT

 

•                  Establish the client’s criteria with the
created team of owner, development manager, architect and designer to create
realistic preliminary budgets establishing dollars for designated areas, i.e.,
Casino seating, restaurant furnishings, hotel amenities, etc

 

14

 

•                 Establish the program, and schedules working
with the client’s criteria and construction, i.e. time lines, for
manufacturing, installation of goods on site, working closely with the
construction team to establish critical paths that all trades can perform their
work effectively insuring a high quality finish.

•                 Detailed review of the FF&E product
specifications prepared by the Designer and Architect. Working closely with
this portion of the team during this stage allows the designer to present to
the owner selections that will meet the budget requirements without
compromising the quality of the product and time. Making recommendations for
product that would be best suited for the operation and usage of the owner’s
property.

•                 Review the Architectural and Interior Design
drawings including room layout, floor plans, furniture size, etc. to verify
that all product specified will fit into the designated areas.

•                 Prepare reports identifying areas of concern
and/or suggestions based on past experience for the owner’s review and
comments. Requests/questions pertaining to the specifications and drawings
would continue until budgets are complete, and purchase orders are processed.

•                 Participate in resolution of problems.

 

PURCHASING/ACCOUNTS PAYABLE/SCHEDULING

 

•                 Prepare bid documents to receive three
competitive bids from viable manufacturers for final pricing. Three bids will
be provided for the drapery fabrication, artwork, wall covering, carpet, case
goods, and upholstered seating, lighting, and mattresses/box springs. All other
product will be priced out based upon the designer’s specifications if the
product meets all criteria.

•                 Collect all bids analyze and make an
appropriate recommendation to award contract.

•                 Determine quantity of material required
including stock

•                 Create a final budget based upon current
information

•                 Meet and assist client/owner where necessary
and appropriate to determine that all areas are covered within the current
budget

•                 Finalize and present budget for approval
including the costs of goods, estimated freight, storage and installation.

•                 Prepare all purchase orders and deposit
requests using the owners accounting system. Using your purchase order system
will allow you at a later date to have all the information already incorporated
into your system for further purchase requirements. Using your system would
allow all discounts and rebates to be passed on to the owner promptly.

•                  Process all purchase orders with vendor and
verify that delivery dates can be met.

•                  Expedite and ship

•                  Establish freight carriers in advance for
cost savings

•                  Review invoices and process paperwork
required to process payment.

•                  Negotiate and prepare change orders to
purchase orders as required.

 

15

 

•                  Work
with vendors and the Accounting Department to zero out purchase orders at the
end of the project.

•                  Prepare
and/or respond to correspondence as required.

•                  Schedule,
review, coordinate, and resolve any problems associated with required
submittals.

•                  Handle
all issues such as overage, shortages, receipt of damaged material, etc.

•                  Revise
delivery dates if required to match project progress if enough notification has
been given to make the necessary changes.

•                  Confirm
products delivered to warehouse are received.

 

INSTALLATION/ON SITE COORDINATION

•                  Assist
owner in development of overall project install schedule.

•                  Prepare
Just In Time schedules for the Casino seating, case goods, upholstered seating,
and mattresses/box springs.

•                  Assist
owner in creating the most effective way for storage/warehousing.

•                  Work
closely with the warehouse manager in the receipt of all products.

•                  Solicit
bids for installation of FFE and coordinate with owner for the awarded bidder.

•                  Coordinate
and oversee all phases of the installation of FF&E

•                  Perform
overall administration of installation subcontracts including preparation of
purchase order for the FF&E installation company, drapery fabricator,
scheduling, on site supervision, problem resolution.

•                  Obtain
and prepare presentation to Fire Marshall concerning flame-rating certificates
on all FF&E

 

These
fees are based upon the owner having the following positions in place:

•                  An
accounting clerk dedicated to assist CPPS with paper-flow between purchasing
and accounting.

•                  A
warehouse supervisor to work directly with the receiving of all goods that will
be sent to the owners’ warehouse.

•                  Need
a Detailed Budget and Construction Timeline

 

REIMBURSABLE EXPENSES:

 

Reimbursable
Expenses are in addition to the above fees. Reimbursable expenses include air
travel, lodging, meals, car rental, gas and parking, and any other project
related miscellaneous expenses such as excessive long distance telephone calls,
reproductions, postage, mileage, and other typical business related expenses.

 

PROGRESSIVE BILLING:

 

Payments
made to CPPS would be through a progressive billing process. A down payment
would be required prior to the commencement of work with a monthly billing
there after which would be due within 30 days. The remaining 10% of the total
fee would be billed out the month of installation.

 

16

 

TRAVEL:

 

I
am not sure how much time you are expecting for CPPS to be on site, but I have
listed the following time frames and travel requirements, based upon past
experience.

 

Design Budget Development: Weekly or bi-weekly travel to site and
design office. Approximately 6-8 weeks.

 

Bid Process for FF&E — this process can be done from my office,
along with creating the vendor relationships, setting up appointments for
vendors to present at site, etc. One trip would be required for final budget
review.

 

Purchasing — Purchasing of FF&E would take approximately 5 weeks.

 

Construction Meetings: - Once a month for sure, but this trip could
also be incorporated in above.

 

Installation — Calculating 7 weeks, which would mean approximately 5-6 trips. Of
course through this process, on going correspondence would be daily, and
scheduling would be flexible depending on need.

 

FEES:

 

My
fees to complete this project would be $174,000.00. As you know everything is
negotiable, but I do know that I would contribute a wealth of information which
would only create a stronger successful project.

 

Karl,
it would be my recommendation to bring me on now on a need be basis to assist
you with the design development, if you are at the point that decisions are
being made. I wouldn’t think you would need me full time right now. I have
listed out a timeline based upon opening in August 2005.

 

August 2005
- Open

July 2005
– Wishful thinking

Mid
May through June, 2005 Installation of Furnishings

Mid
March through Mid May – Carpet & Wall covering Installation + Lighting

November 2004
through March 2005 – Production of wall covering, carpet, lighting

November 2004
through February 2005 – Production of Fabrics

Mid
October through November 2004 – Purchasing

Late
September to Mid October 2004 – Budgeting

Specifications
written – July – August 2004

April-July –
2004 – Finalization of Design and Construction Documents

 

17

 

I
know some of these dates are reality, but many probably are not. If you choose
to go with overseas production, you have to allow much more time for
everything. Of course we didn’t get that far into actual schedules, so take it
for what’s it is worth.

 

Last
but not least, I can also help you with all of your OSE items, casino seating,
back of house furnishings etc. It would be great to work with you again, and I
am sure we would once again create a successful project.

 

Look
forward to discussing further with you your purchasing requirements. Call me
once you have look this over and let me know your thoughts, whether there is
something you want me to delete or add. Nothing at this point is in concrete.

 

Sincerely,

 

 

Catherine
J. Cheslock-Petersen

 

18

 

EXHIBIT B

SCHEDULE OF FEE PAYMENTS

 

Payments
will be made according to the following fee schedule:

 

	
  December 2004*

  	
   

  	
  $

  	
  64,084.00

  	
   

  
	
  January,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  February,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  March,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  April,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  May,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  June,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  July,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  August,
  2005

  	
   

  	
  $

  	
  10,000.00

  	
   

  
	
  September,
  2005 – Final Payment **

  	
   

  	
  $

  	
  29,916.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  174,000.00

  	
   

  

 

*The
December billing of $64,084.00 shall be inclusive of all work performed in
August, September, October, November, and December together with any down
payment due.

 

**The
Final Payment will be billed in September, 2005 with payment due no later than
October, 2005.

 

Dated:
August 26, 2004

 

19

 

EXHIBIT C

 

**Hourly
Rates for Additional Services will be billed at $85.00 per hour.

 

This
hourly rate does not apply to this project, for if the total dollar amount
should rise, an additional total dollar amount would be agreed upon.

 

20

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