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EXHIBIT 10.5
CHARTER AGREEMENT
This CHARTER AGREEMENT is made this 1st day of October 1999, between
CSL DEVELOPMENT CORPORATION, a Delaware corporation, Three ▇▇▇▇▇▇▇▇▇ Centre, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (the "Owner"), and Casino Padre
Investment Company LLC, a Nevada limited liability company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Operator"):
The Owner is the registered Owner of the vessel M/V Entertainer, O.N.
500051, built in Warren, Rhode Island in 1965, and converted at ▇▇▇▇▇▇
ShipBuilding & Repair Co., Inc., Mobile, Alabama in January 1995, a U.S.
registered ship (the "Vessel").
1. Charter, Vessel; Charter Period. Upon the terms and conditions of this
Dry Boat Charter, Owner agrees to let and Operator agrees to hire the
Vessel, together with the gear, machinery, equipment, furnishings and
other articles and appurtenances thereto ("Owner's supplied equipment")
as well as certain casino equipment as shown on the inventory lists, to
be jointly prepared by Owner and Operator, and attached hereto in the
form of Exhibits I through III and incorporated herein, for a Charter,
commencing on October 1, 1999, and continuing until September 30, 2001,
unless extended by written agreement or unless sooner terminated as
otherwise herein provided.
2. Inventory. An inventory shall be made jointly by Owner and Operator
prior to delivery of the Vessel of all galley, salon, bar and public
rooms furnishings and gaming equipment that is to be available for
Operator's use as of the date of delivery of the Vessel, and shall be
signed by Operator and Owner as of the time of delivery of the Vessel.
A photo log will be taken to record Vessel delivery condition (for
Owner's account). At the time of redelivery, this Inventory shall be
checked at Operator's expense and any missing or damaged articles shall
be replaced or paid for by Operator at cost price.
3. Charter Hire. The Charter Hire shall be $1,500,000 annually. In
addition, Operator shall pay all applicable state and federal taxes
resulting from Charter and operation of the Vessel. The monthly Charter
Hire payments of One-Hundred Twenty-Five Thousand Dollars ($125,000.00)
plus applicable taxes thereon shall be paid by Operator quarterly in
advance to Owner by wire transfer to Owner's account or by check as
instructed by Owner in writing. Operator shall concurrently fax to
Owner a copy of each such payment. All amounts expressed as dollars in
this Agreement shall mean United States dollars. All deposits shall be
deemed earned and non-refundable.
4. Deposit. Upon execution of this Agreement, Operator shall pay to Owner
One-Hundred Twenty-Five Thousand Dollars ($125,000.00) plus applicable
taxes representing the first full month's Charter Hire. Prior to the
Vessel departing from Pensacola, Operator shall pay to Owner the sum of
Two-Hundred Fifty-Thousand Dollars ($250,000.00) plus applicable taxes
representing the first three month's Charter Hire. Failure to make any
of these deposits will constitute a breach of this Agreement and it
shall immediately become null and void. All deposits hereunder are
non-refundable.
5. Term. The term of this Agreement shall be an initial term of
twenty-four (24) months commencing October 1, 1999, or at such time as
Operator takes delivery of the Vessel, whichever shall occur first.
6. Operator's Inspection and Owner's Warranties. At the time of delivery
of the Vessel, it shall, at Owner's sole expense have current U.S.
Coast Guard certification and an ABS Load Line certification for its
Port of Operation and shall be technically ready to trade in U.S.
waters (Certifications for Operator's crew, safety inspection, and
inspection by OCMI for Certificate of Inspection at new port of
operation are Operator's responsibility).
Upon acceptance of the Vessel by Operator, it is understood and agreed
by the Operator that the charter is on an "as is" basis and no warranty
either real, expressed, or implied and no representation as to
condition, seaworthiness, merchantability or fitness for any purpose or
use whatsoever of the Vessel (including among other uses gambling
activities), including but not limited to whether current or future
United States Federal
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October 1, 1999 1
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or State law or regulations, will permit the Vessel to operate for
Operator's intended purposes as a day cruise vessel in its intended
area of operation, has been given by the Owner or its authorized
representatives. It is further agreed that the Owner shall have no
responsibility for any incidental, special or consequential damages or
any other damages of any nature whatsoever arising from this Agreement,
including, without limitation, damages for lost profits or personal
injury, which result or are claimed to result from any defect, failure,
fault, or condition in the Vessel or related assets. The warranties set
forth in this section are in lieu of all other warranties, whether
express or implied or statutory, and there are no warranties which
extend beyond the description on the face hereof.
7. Escrow Deposit. Upon the execution of this Agreement, the Operator
shall deposit the sum of Five-Hundred Thousand Dollars ($500,000.00)
(the "escrow deposit") in Trust with Bank of Pensacola (the "Escrow
Agent") which sum shall be deposited in a money market account with all
interest thereon accruing in the account as additional security. In
lieu of a cash deposit, the Operator may deposit a Certificate of
Deposit or U.S. Treasury Bonds satisfactory to Owner and endorsed for
benefit of Owner or an unconditional and irrevocable Letter of
Guarantee in favor of Owner in form and from a Federally chartered U.S.
Bank acceptable to Owner. The deposit shall be security in favor of
Owner and Mortgagee to cover any and all monies which may be payable by
the Operator to the Owner under this Agreement included but not limited
to:
a. Unpaid Charter Hire;
b. Insurance deductible, attorney fees, third party
administration charges in connection with any employee or
passenger injury claims;
c. Amounts payable under any indemnity;
d. Damages;
e. Vessel repair;
f. Unpaid salaries and wages of Operator's employees;
g. Unpaid bills of Operator's vendors and suppliers;
h. Unpaid charges of any nature that may become a lien on the
Vessel; and
i. Discharge of any liens created by the Operator
The deposit shall be continuously maintained at $500,000 during the
remaining term of this Agreement except that it shall be increased by
$25,000 for each filed claim for injury in excess of six claims.
Payment of the deposit or a portion thereof by Escrow Agent shall be
made on demand upon receipt of demand and affidavit of nonpayment and
default from Owner in which event Escrow Agent shall immediately comply
with Owner's demand for payment.
The deposit shall remain in trust with Escrow Agent during the term of
the Charter and for a period of 365 days after the Vessel has been
returned to Owner. At the end of such 365 day period, if no arbitration
or dispute is pending and if no claims have been made against the
deposit, the balance of the deposit, if any, shall be returned to
Operator together with the interest. If any arbitration or dispute is
pending or any claim is made against the deposit, then the monies shall
remain in escrow until final resolution is made of such claims and all
appeal periods have expired.
All of the Parties herein hereby release and discharge Escrow Agent,
and its officers, directors and employees from any and all actions,
proceedings, claims, demands or other liability arising from the
performance of said services by Escrow Agent and further all of the
Parties herein shall at all times indemnify and keep indemnified, and
hold harmless and defend Escrow Agent and its officers, directors and
employees, from the same arising from the performance of said services
by Escrow Agent. The sole duty of Escrow Agent shall be to make payment
honestly in response to demands pursuant to the above terms and
conditions.
8. The Mortgage. The Vessel is subject to a First Preferred Ship's
Mortgage in favor of Bank of Pensacola. This Charter shall be subject
and subordinate to the Mortgage and any new or additional mortgages.
9. Time for Delivery and Use of Vessel. The Vessel, together with Owner's
supplied equipment, shall be delivered to and taken over by the
Operator no later than October 1, 1999, after Owner's receipt of all
deposits as set forth in Paragraph 4 above, and the Certificates of
Insurance referenced in Paragraph 24 and after the Deposit to Escrow
Agent referenced in Paragraph 7. The Operator having already inspected
the Vessel is
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October 1, 1999 2
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satisfied that the Vessel is suitable for its required purpose, and the
Operator is responsible for obtaining from the authorities necessary
approvals to operate the Vessel in its proposed area of operations and
for its intended purpose. The Vessel shall not carry more passengers or
cargo than can lawfully and safely be carried and shall not in any
event exceed the number of passengers as stipulated by local and survey
authorities. Cargo capacity is limited to passengers personal luggage
only. The Vessel shall not sail in any territorial waters outside the
United States. Vessel shall only operate out of South Padre Island
("Port of Operation") as may be permitted by its then current survey,
and shall be restricted to voyage within the number of miles from shore
as permitted by its then current survey.
10. Risk of Loss Prior to Delivery. The risk of loss, damage or destruction
of the Vessel shall be borne by Owner until this transaction is
consummated by delivery (evidenced by written acknowledgment received
by Owner from Operator or Operator's vessel captain) of the Vessel to
Operator. In the event there is no such delivery due to loss, damage or
destruction of the Vessel, any monies paid by Operator, shall be
returned to Operator and this Agreement shall be deemed null and void.
11. Documentation. Throughout the Charter period, the Operator at its
expense will maintain the registration and documentation of Vessel in
Owner's name under the laws and regulations of the United States. Owner
will, at the expense of Operator, execute such documents and furnish
such information as Operator may reasonably require to enable Operator
to obtain and maintain the documentation of the Vessel, and Operator
will not permit the Vessel to be registered or documented or operated
under any flag other than that of the United States or suffer or permit
to be done anything which might injuriously affect or prejudice in any
way the registration and documentation of the Vessel under the laws and
regulations of The United States. Owner will not change the Port of
Documentation of the Vessel.
12. Maintenance. Operator shall have full responsibility for maintenance
and repair of the Vessel and all of its fixtures, furnishings and
equipment throughout the Charter period and at its expense will (a)
maintain and preserve the Vessel and maintain and preserve or replace
Owner's supplied equipment to the end that (i) the Vessel and her
equipment will at all times during the Charter period be in the same
condition, running order and repair as on delivery, and (ii) the Vessel
shall be tight, staunch, strong and well and sufficient tackled,
appareled, furnished, equipped and in every respect seaworthy and in
good operating condition, and (b) cause the Vessel to be overhauled,
drydocked, cleaned and bottom-painted as may be required to maintain
the Vessel in class to maintain its load line certificate and in
compliance with all regulatory and survey requirements. Operator will
notify Owner of each proposed drydocking as far in advance as
practicable. All replacement to Owner's supplied equipment placed on or
installed in the Vessel shall be of identical or superior quality free
and clear of all liens, encumbrances and rights of others and shall
immediately become the property of Owner and be subject to this
Charter.
Operator will permit representatives of Owner at any time and without
notice to inspect the Vessel and the Vessel's logs, papers and cargo
but in such a manner as to not unduly disrupt the operations of the
Vessel. All reasonable expenses in connection with any such inspection
shall be paid by Operator. Operator agrees to undertake at its expense
to perform any repair work that in Owner's reasonable opinion is
necessary.
Without limitation, any repair or maintenance requested by Owner shall
be deemed reasonable and shall be performed promptly if:
a. Requested by U.S. Coast Guard, the American Bureau of Shipping
or any other regulatory agency having jurisdiction over the
Vessel.
b. As to any matter affecting passenger safety or comfort to a
standard that existed on the date of this Agreement as
determined by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the Naval Architect who
supervised conversion of the Vessel in 1995 or another Naval
Architect selected by Owner.
c. As to any matter relating to the maintaining of the
mechanical, electrical, plumbing, and HVAC to a standard that
existed on the date of this Agreement as determined by
International Marine Diesel Specialists, Inc., independent
Marine consultants.
13. Relocation Expenses. All of the preparation expenses for relocating the
Vessel and all of the expenses incurred in relocating the Vessel shall
be paid by Operator.
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October 1, 1999 3
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14. Payment of Taxes and Compliance with Governmental Laws and Regulations.
All applicable state and federal taxes on the Charter payment and taxes
that may be imposed as a result of the operation or from income earned
by Operator are the responsibility of Operator and Operator shall
indemnify, defend and hold Owner harmless from payment of same and
shall not permit any lien to be imposed against the Vessel with regard
to the same. Any and all taxes that may be imposed against the Owner as
a result of income earned by Owner (except for sales tax on the
Charter) are the responsibility of Owner and Owner shall indemnify,
defend and hold Operator harmless from payment of same and shall not
permit any lien to be imposed against the Vessel with regard to the
same. Any duties, taxes or fees on the Vessel of any country, state,
city, regulatory or taxing authority incurred prior to the date of this
Agreement shall be the responsibility of the Owner, and validation of
such payment is the responsibility of Owner. Any duties, taxes, or fees
of the Vessel, incurred on or after the date of this Agreement shall be
the responsibility of Operator, and validation of such payment is the
responsibility of Operator. Further, the Operator warrants that the
Operator shall comply with all operational requirements imposed by any
governmental agency or law of the United States including but not
limited to surveys or other inspections.
It shall be Operator's responsibility to comply with all United States
Federal, State and local laws and regulations relating to crew ▇▇▇▇▇▇▇
and operation of the Vessel, including compliance with all drug and
alcohol regulations.
Operator warrants that during the term of this Charter the Vessel will
comply with all applicable U.S. Federal and State laws and regulations
relating to navigation, pollution and safety, including, but not
limited to, the U.S.C.G. Regulations contained in Titles 33 and 46 of
the Code of Federal Regulations, as amended, and will reimburse Owner
for any expenses, insurance premiums, costs of modifications to the
Vessel, or other costs that Mortgagee and/or Owner may incur in
complying with such laws and regulations.
15. Assignment and Sub-Demise. The Operator shall not assign this Agreement
nor transfer possession or control the Vessel or cause a change in
control in or of the Operator or of management except with the prior
consent in writing of the Owner. The Operator may not sub-let the
Vessel.
16. Sale, Option to Purchase and Right of First Refusal.
a. The Owner may continue to market the Vessel for sale subject
to the terms and conditions of this Agreement. Operator shall
provide reasonable access and inspection, including reasonable
sea trials, to the Vessel during normal business hours to
Owner and prospective buyers in connection with Owner's
marketing of the Vessel of sale. Such inspections shall be at
such times as the Vessel is in port. Sea trials shall be
conducted at times when there are no regularly scheduled
cruises for the Vessel. Such inspections and sea trials shall
be at Owner's expenses.
b. Owner hereby grants Operator the irrevocable option to
purchase the Vessel and equipment thereon, provided Operator
is not then in default of this Agreement, during the term of
the charter period for a purchase price of Six Million Dollars
($6,000,000.00) exclusive of any on-board equipment not owned
by Owner, for cash. Owner shall deliver and warrant good title
to the Vessel, free and clear of all liens and encumbrances or
Operator shall have the right to apply the purchase price to
satisfy any such liens and encumbrances. Should Operator
desire to purchase the Vessel, Operator shall give written
notice to Owner of Operator's exercise of this right to
purchase. The closing of the purchase shall be at a place
designated by Owner which may include but not be limited to
the Vessel while it is out of the territorial waters of the
United States. Fifty percent (50%) of the Charter Hire
payments that are provided for by the terms of the Charter and
which have been made prior to the time that the option is
exercised and the purchase is closed shall be applied and
credited to the purchase price if the option is exercised and
the purchase price is paid on or before 365 days from the date
of the Agreement.
17. Officers and Crew. During the Charter period, the Operator shall
provide and pay the master and such other officers and seamen as
required by the authorities and governments that shall have
jurisdiction in the areas in which the Vessel is to be operated and, in
any event, a sufficient complement of master, officers and seamen as
shall be required for the safe and efficient operation of the Vessel.
The Operator shall at all times
Charter Agreement Casino Padre
October 1, 1999 4
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indemnify and keep indemnified, and hold harmless and defend the Owner,
Vessel and Mortgagee and their servants or agents from any actions,
proceedings, claims or demands made against them or any one of them by
any master, officer or crew member of the Vessel for crew's wages,
salvage or otherwise. The senior captain and chief engineer shall be
employees of Operator but must be pre-approved in writing by Owner
which approval shall not be unreasonably withheld. At Owner's option,
the master, marine manager and/or chief engineer may be employed by
Owner in which event their salary will be reimbursed to Owner by
Operator.
18. Working Expenses. The Operator shall provide and pay for all
provisions, fuel oil, greases and other consumables and shall pay all
port charges, pilotage, agencies, commissions and all other charges
whatsoever.
19. Liens Against Vessel. During the Charter period, neither the Operator,
nor its agents, nor the Master of the Vessel, shall have any right,
power, or authority to create, incur, or permit to be imposed upon the
Vessel any liens whatsoever except for crews' wages and salvage. The
Operator agrees to carry a properly certified copy of this Agreement,
and any addendum thereto, with the ship's papers. In no event shall
Operator procure or permit to be procured for the Vessel any supplies,
necessaries or services, except for crew services and salvage, without
previously obtaining a statement signed by an authorized representative
of the furnisher thereof acknowledging such supplies, necessaries or
services are being furnished on the credit of the Operator and not on
the credit of the Vessel or her Owner or Mortgagee, and that the
furnisher claims no maritime lien against the Vessel, and therefore
waives any such lien that may arise from operation of law or customer,
usage and practice. The Operator shall notify any person furnishing
repairs, supplies, towage, or other necessaries to the Vessel that
neither the Operator, nor its agents, nor the Master, has any right to
create, incur, or permit to be imposed upon the Vessel any liens
whatsoever. Such notice shall be in writing with copy to Owner. The
Operator further agrees to fasten to the Vessel at all points of
entrance, in the engine room, the wheelhouse, and other locations in
the Vessel where notices are normally displayed, and to maintain during
the life of this Agreement, a conspicuous notice reading as follows:
"This Vessel is the property of CSL Development Corporation.
It is under charter to Casino Padre Investment Company LLC and
by the terms of the Charter Agreement, neither Casino Padre
Investment Company LLC or the Master nor anyone in possession
of the vessel has any right, power, or authority to create,
incur, or permit to be imposed upon the Vessel any liens
whatsoever."
Should any lien or liens, excluding the Preferred Mortgages, be placed
against the Vessel for any reason whatsoever including but not limited
to crew's wages, salvage, or otherwise, Operator is responsible and
agrees at its expense and cost to discharge and eliminate any and all
such liens within 24 hours of placement of said lien. Failure to do so
shall at Owner's option, result in immediate termination of this
Charter Agreement. Owner, at its option, may discharge liens with funds
from the Escrow Deposit as set forth in paragraph 7(h) herein.
Operator waives any lien it currently has or may have in the future
against the Vessel.
20. Survey.
a. On or before delivery, Owner shall cause to be issued such
U.S. Coast Guard and regulatory certificates to the Vessel
sufficient to permit transit of the Vessel to its destination.
The United States Coast Guard, shall inspect the Vessel's work
list, ▇▇▇▇▇▇▇ and preparation for the sea voyage prior to
delivery and issue current Certificate of Inspection.
b. The Vessel is a U.S. registered Vessel as evidenced by the
Survey Certificate inspected by the Operator. The Vessel shall
remain a U.S. registered ship.
c. After the delivery, Operator shall be responsible for keeping
the Vessel in Survey and in obtaining the necessary approvals
from the surveying authorities, depending on its area of
operation. The Vessel
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October 1, 1999 5
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shall be dry docked as required by the authorities, and during
that period the Operator shall pay all costs and expenses of
the dry docking and Survey.
21. Change of Name. Operator shall have the right, at its expense, to
rename and to change the name of the Vessel, to paint the Vessel it its
own colors, to install and display its tack insignia, and to fly its
own house flag. Owner will, at the cost and expense of Operator,
cooperate in the execution and filing of any documents necessary to
affect a change in the name of the Vessel. At time of redelivery to
Owner, Operator, at its expense, shall return Vessel to its original
colors, flag and name.
22. Owner Cooperation. Operator intends to operate the Vessel as a day
cruise vessel on voyages out of the Port of Operation. Operator will be
required to obtain necessary approvals from United States governmental
authorities, including the United States Coast Guard, for operation of
the Vessel. Owner shall fully cooperate and assist Operator, as
reasonably necessary, with regard to Operator's dealings with such
authorities. Such cooperation shall include Owners making the Marine
Manager or other appropriate representative of Owner reasonably
available at mutually convenient times and places for meetings with
such authorities, provided however that Operator shall pay a reasonable
fee and reasonable travel expenses, including lodging and meals of
Owner's representatives.
21. Security Bonds. Any security bonds or deposits required by the
governments or other authorities in the area of operation shall be
provided by the operator and all costs and expenses incurred in
providing such shall be met by the Operator.
22. Area of Operation. The Vessel shall only be employed in lawful trade
and carriage of passengers from the Port of Operation only. Further,
the Vessel may only be operated in such areas or in such parts of that
area in which the Vessel can be safely operated and can always safely
lie afloat and within the limits imposed by the authorities under which
the Vessel is registered.
23. Notice of Loss, Requisition, Liable, Sale, Casualties. In the event of
(a) actual total loss of the Vessel, (b) requisition of the use of or
title to, or seizure of, the Vessel by any governmental authority or
persons acting under the color thereof, (c) the filing of any libel
against the Vessel, or the attachment, levying upon, detection,
sequestration or taking into custody of the Vessel in connection with
any proceeding, and (d) Marshal's or other sale of the Vessel, or (e)
any casualty, accident or damage to the Vessel, Operator will
immediately give verbal notice thereof (containing full particulars) to
Owner and Mortgagee and no later than 24 hours given written notice by
facsimile and registered mail.
24. Insurance.
▇. ▇▇▇▇ & Machinery. During the term of this Agreement, the
Vessel and Owner's supplied equipment shall be kept insured by
the Operator at its expense against Fire, Collision, Hull,
Machinery, Salvage marine and War Risks in the names of the
Operator, the Owner and Mortgagee as their interests may
appear. The hull and machinery insurance coverage shall be for
an amount no less than $6,500,000 and for on-board gambling
equipment in the amount no less than $700,000 with a carrier
acceptable to Owner exclusive of coverage for any equipment
owned or leased by Operator. Operator, at its expense, shall
carry appropriate personal property insurance with a carrier
reasonably suitable to Owner for any equipment owned or leased
by operator in an amount equal to its fair market value.
b. Protection and Indemnity. The Operator shall purchase
Protection and Indemnity Insurance with a carrier acceptable
to Owner in the names of the Operator, the Owner and Mortgagee
as their interests may appear, in an amount not less than U.S.
Ten Million Dollars ($10,000,000.00) the cost of which shall
be payable by the Operator. Deductibles, if any, shall not
exceed Twenty-Five Thousand Dollars ($25,000.00). Operators
shall be responsible for the deductible on any insurance claim
for injury to anyone on the vessel including but not limited
to employees, independent contractors, concessionaires,
passengers and guests.
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October 1, 1999 6
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c. Carrier and Coverage. The insurances shall be underwritten by
a first class insurer who shall be approved by the Owner and
Mortgagee, and Certificates of Currency showing the Owner's
and Mortgagee's interest shall be supplied to the Owner and
Mortgagee. The above insurance shall include both an Innocent
Owner's Interest Clause and a Loss Payable and
Non-Cancellation Clause in forms similar to those examples as
set forth on Exhibit ____ attached hereto and incorporated
herein acceptable to Owner.
25. War.
a. Unless the Owner's consent in writing be first obtained, the
Vessel shall not be ordered to voyage to nor continue to any
place or on any voyage nor be used on any service which will
bring the Vessel within a zone which is dangerous as a result
of any actual or threatened act of war, war-like operations,
acts of piracy or hostility, revolution, civil war, civil
commotion or the operation of international law, nor be
exposed in any way to any risks or penalties whatsoever
consequent upon the imposition of sanctions, nor carry goods
that may in any way expose the Vessel to any risks of seizure,
capture, penalties or any other interferences of any kind
whatsoever by belligerent or fighting powers or parties or by
governments or rulers.
b. Should the Vessel approach or be brought or ordered within
such zone or be exposed in any way to the said risks, the
Charter Hire payments shall be paid for all the time lost,
including any loss owing to loss or injury to the Master,
officers or crew or to the action of the crew in refusing to
proceed to such zone or to be exposed to such risks.
c. If the insurance and/or war risks insurance premiums are
increased by reason of or during the existence of any matters
set forth in Sub-Paragraph _____, the amount of the increase
shall be paid by the Operator.
d. The Operator shall have the liberty to comply with any orders
or directions as to departure, arrival, routes, ports of call,
stoppages, destinations, delivery or in any other ways
whatsoever given by any government or any person or body
acting or purporting to act with the authority of such
government of by any committee or any persons having under the
terms of the way risk insurance on the Vessel the right to
give such orders or directions.
26. Salvage. The Operator will not permit the Vessel to be used in salvage
operations of any nature save as required by law. All delays occasioned
by attempting or rendering towage or salvage services as required by
law or repairing damage occasioned thereby shall be borne by the
Operator, and all benefits arising from such salvage operations shall
be for the Operator's sole benefit.
27. Modification. During the term of this Agreement, the Operator shall not
modify or alter the Vessel in any respect without the prior approval of
the Owner in writing, which consent (in case of minor and not
structural modifications) shall not unreasonably be withheld. Any
modifications or alterations to the Vessel agreed by the Owner shall be
carried out to a standard approved by the Owner and the Survey
authorities, and the cost and expenses incurred in such modifications
or alterations shall be paid by the Operator.
28. Corporate Authority. Operator and Owner warrant that they each have the
power and authority to enter into this Agreement and all other
documents executed, received or delivered hereunder. Each represents
that all necessary corporate and stock Owner action has been to
authorize and direct the execution hereof by Operator and Owner and to
consummate this transaction, and that Operator shall obtain, as
required, permits and approvals in accordance with all governmental
regulatory requirements.
29. Re-Delivery. At the expiration of the Charter period (unless this
Charter shall have been sooner terminated pursuant to its terms),
Operator at its expense will re-deliver the Vessel to Owner at a Port
on the Atlantic or Gulf Coast to be designated by Owner.
30. No Set-Off. No payment of Charter Hire or other payment required to be
made by Operator by the terms of this Charter shall be subject to any
right of set-off, counterclaim, defense, abatement, suspension,
deferment or reduction, and Operator shall have no right to terminate
this Charter (except as expressly provided herein)
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October 1, 1999 7
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or to be released, relieved or discharged from any obligation or
liability under this Charter for any reason whatsoever, including
without limitation: (a) any damage to, or loss, requisition, seizure,
forfeiture or Marshal's or other sale of the Vessel; (b) any libel,
attachment, levy, detention, sequestration or taking into custody of
the Vessel, or any restriction of or prevention of or interference with
the use of the Vessel; (c) any title defect or encumbrance or any
disposition from the Vessel not by reason of some act, omission or
breach on the part of Owner or a third party, whether or not resulting
from accident and whether or not without fault on the part of Operator,
Operator will continue to make all payments required of Operator by the
terms of this Charter without interruption or abatement.
31. Events of Default; Retaking. If any of the following events ("Events of
Default") shall occur, namely, if (a) Operator shall fail to pay any
Charter Hire on the due date hereof, or (b) Operator shall fail to
perform or comply with any of the provisions of this Charter; then and
in any such event, Owner may, at its option, immediately withdraw the
Vessel from the service of Operator upon giving written notice to
Operator, without compensation of liability to Operator and without
prejudice to any claim for damage suffered or to be suffered by reason
of any such default which Owner might otherwise have had against
Operator in the absence of such withdrawal, and, upon the giving of
such notice, retaking this Vessel, wherever found, whether upon the
high seas or in any port, harbor or other place, without prior demand
and without legal process, and for that purpose enter upon any dock,
pier or other premises where the Vessel may be and take possession
thereof, or require Operator, at Operator's expense, forthwith to
redeliver the Vessel to Owner at such port as Owner may require and/or
exercise any rights and privileges Owner may have in law and/or in
equity.
32. Assignment of Lease. Operator does hereby assign, transfer and set over
unto the Owner, with the right to reassign, all of its rights, title
and interest in and to the Lease and in and to the demised premises and
berth located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, as set
forth in Exhibit _____ attached hereto; it being expressly understood
and agreed that this Assignment of lease is made by the Operator to the
Owner upon the following terms, covenants, limitations, and conditions:
a. Operator shall retain possession of the leased premises in
accordance with the terms and conditions of the Lease so long
as no default is made in this Charter Agreement.
b. If default be made by the Operator in the performance of the
Charter, then Owner shall have the option of taking over the
leased premises, provided, however, that in the event Owner
elects to exercise said option of taking over the demised
premises for the purpose of operating the same, written notice
of its election so to do shall be mailed promptly by Owner to
the Lessor. Upon the exercise of such option, the Owner shall
be deemed to be substituted as the Lessee in said Lease in the
place and instead of the Operator, and shall be deemed to have
assumed expressly all of the terms, covenants, and obligations
of the Lease theretofore applicable to the Operator, and shall
likewise be entitled to enjoy all of the rights and privileges
granted to the Operator under the terms and conditions of the
Lease, with the right to reassign same.
c. It is understood and agreed that so long as the Owner shall
not have exercised its option under the foregoing provisions
hereof as to the leased premises, the Owner shall not be
liable for rent or any obligation of the Operator under and by
virtue of or in connection with the Lease, and the Operator
shall remain liable for such rent and obligations.
d. a condition precedent to this Charter taking effect, Lessor
shall execute its approval in form set forth in Exhibit _____.
33. Termination of Agreement and Turnover of Business. In the event that
this Agreement terminates for any reason whatsoever, other than by
Operator exercising and closing on its option to purchase the Vessel,
including but not limited to, termination of the initial term (or
extensions thereof), or upon a material default by Operator hereunder,
then in that event, Operator at Owner's sole option, shall use
reasonable efforts to deliver and turn over the business conducted on
the vessel as a going concern and without disruption in service ("the
Turnover"). The Turnover shall include but not be limited to:
a. Operator delivery to Owner of the name, address and pay
schedule of each employee;
Charter Agreement Casino Padre
October 1, 1999 8
9
b. Operator granting a release of any employee who will not be
employed by Operator or its affiliates from any contractual
arrangement that would prevent said employee from being
employed by Owner;
c. All customer lists and rating cards;
d. All mailing lists;
e. An assignment of all telephone numbers and yellow page
listings;
f. All advertising promotion and collateral material;
g. An assignment of all media contracts;
h. All software including but not limited to reservations and
accounting software;
i. Group sales lists, lead lists and existing group contracts;
j. Operating manuals;
k. Internal controls; and
l. Employee procedure manuals.
34. Right of First Refusal. In the event that Operator elects for the
business to be turned over, then in that event, Owner shall have the
right of first refusal for a period of thirty (30) days to purchase at
a mutually agreed upon fair market value, all furniture, fixtures and
equipment used by Operator in the conduct of the Business.
35. Remedies Cumulative. Each and every power and remedy herein given to
Owner or otherwise existing shall be cumulative and in addition to
every other remedy herein so given or now or hereafter existing at law,
in equity, in admiralty, or under statute, and each and every power and
remedy, whether herein so given or otherwise existing, maybe exercised
from time to time and as often and in such order as may be deemed
expedient by Owner, and the exercise, or the beginning of the exercise,
of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time, or thereafter, any other right,
power or remedy. No delay or omission by Owner in the exercise of any
right or power or in the pursuit of any remedy shall impair any such
right or be construed a waiver of any default or to be an acquiescence
therein.
36. Owner May Cure Defaults; Reimbursement of Expenses. If Operator shall
fail to perform or observe any of the terms of this Charter, Owner may
, in its discretion, do all acts and make all expenditures necessary to
remedy such failure, including without limitation, the taking out of
insurance on the Vessel and entry upon the Vessel to make repairs, and
Operator shall promptly reimburse Owner, with interest at the rate of
12% per annum for any and all expenditures so made; but Owner, though
privileged so to do, shall be under no obligation to Operator to do any
such act or make any such expenditures nor shall the making thereof
relieve Operator of any default in that respect. Operator will also
reimburse Owner promptly, with interest at the rate of 12% per annum
for any and all expenditures made by Owner at any time in withdrawing
the Vessel from service of Operator or otherwise protecting its rights
hereunder and for any and all damages sustained by Owner from or by
reason of any default or defaults of Operator.
37. Purchase of fuel and inventory. The Operator shall purchase from the
Owner the fuel on the vessel at the time of the closing at the cost
price thereof to the Owner and the Operator shall pay the Owner for the
same at the time of delivery of the Vessel. The written statement of
the Marine Manager as to the amount of fuel on the Vessel at such time
shall be accepted as conclusive by the parties. Operator shall purchase
all unopened liquor and groceries, unopened food stuffs, paper and
plastic goods, stores, disposables, oils, lubricants, and other
operating inventories on the Vessel from Owner at Owner's invoiced
cost.
38. Indemnity. The Operator shall at all times indemnify and keep
indemnified, and hold harmless and defend the Owner and Mortgagee and
their servants or agents from any actions, proceedings, claims or
demands made against them or anyone of them by any passenger, servant
or agent or guest of the Operator arising out of any act of any
passenger, servant, agent or guest of the Operator.
Should the Vessel be arrested, confiscated or detained as a result of
the act or omission of the Operator or of the unlawful use of the
Vessel by the Operator during the currency of this Agreement, the
Operator indemnifies the Owner against all costs, expenses and damages
sustained by the Owner resulting from such arrest, confiscation or
detention. Operator shall take all steps reasonably required to insure
that no illegal drugs or other substances are transported aboard the
Vessel, whether by crew, passengers or otherwise.
Charter Agreement Casino Padre
October 1, 1999 9
10
Such steps shall include, but not be limited to, the adoption of
policies specifically prohibiting the use or carriage of illegal drugs
aboard the Vessel and publicizing such policies to passengers and crew.
39. Insolvency of Operator. The filing of any petition in bankruptcy, or
the adjudication of Operator as a bankrupt or insolvent, or the
appointment of a receiver or trustee to take possession of all or
substantially all of the assets of Operator, or a general assignment by
Operator for the benefit of creditors, or any action taken or suffered
by Operator under any state or federal Insolvency or Bankruptcy Act
shall constitute a breach and a default of this agreement by Operator
and in such event Owner may at its option terminate this Agreement and
exercise any and all of its rights as set forth in this Agreement.
It is understood and agreed that neither this Agreement, or any
interest herein or hereunder, or any estate created hereby, shall pass
by operation of law under any state or Federal Insolvency or Bankruptcy
Act to any trustee, receiver, assignee for the benefit of creditors, or
any other person whatsoever without the express written consent of
Owner and Mortgagee first had and obtained. Any purported transfer in
violation of the provisions of this Paragraph shall constitute a breach
and a default of this Agreement and in such event Owner may at its
option declare this Agreement terminated and exercise any and all of
its rights and remedies as set forth in this Agreement.
40. Arbitration. If at any time any question, dispute or difference
whatsoever shall arise between the parties hereto out of or in
connection with this Agreement which the parties cannot settle by
reaching a mutual understanding, then any party shall give notice to
the other in writing of the existence of such question, dispute or
difference, and the same shall be submitted within fourteen days (14)
days, of such notice by a party, to and thereafter shall be settled and
decided by arbitration in accordance with the laws of the State of
Florida which arbitration shall be final. Such dispute or difference
shall be referred to the decision of three (3) arbitrators who are
members of the American Maritime Association, who shall conduct all
proceedings in Pensacola, Florida. Within seven (7) days of such notice
by a party to the other of such question, dispute or difference, each
party shall select one arbitrator and thereafter such arbitrators shall
in turn mutually select the third arbitrator. If any party fails to
select an arbitrator within the seven (7) days, the other party may
select such arbitrator.
41. Applicable law. This Agreement shall be interpreted in accordance with
the laws of the State of Florida. All arbitration and litigation shall
take place in Escambia County, Florida and the parties hereto agree and
consent to jurisdiction of the State and Federal courts located in
Escambia County, Florida.
42. Notices. All notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been duly
given or made seven (7) business days after dispatch if set by prepaid
registered post and one (1) business day after dispatch if made by
telex, cable or facsimile transmission to the party to which such
notice, request, demand or other communication is required or permitted
to be given or made under this Agreement addressed as follows:
If to the Owner: CSL Development Corporation
Three ▇▇▇▇▇▇▇▇▇ Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
If to the Operator: Casino Padre Investment Company LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
43. Time. This is of the essence for the performance of all obligations and
the satisfaction of all conditions of this Agreement.
44. Attorneys' Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment
based on this Agreement, in any legal proceeding whatsoever, including
but not limited to insolvency, bankruptcy, arbitration, declaratory
relief, or other litigation as well as any appeals thereof, the
prevailing party shall be entitled to receive from the other party or
parties thereof reimbursement
Charter Agreement Casino Padre
October 1, 1999 10
11
for reasonable attorneys' fees and costs, including, but not limited
to, service of process costs, filing fees, court and court reporter
costs, investigative costs, expert witness fees, and the cost of any
bonds, and such reimbursement shall be included in any judgment or
final order issued in that proceeding.
45. Counterparts. This Agreement may be executed in any manner of identical
counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument
when each party has signed one (1) such counterpart. In addition,
facsimile signed copies of this Agreement shall serve and have the
effect of binding originals until such time as the parties hereto are
able to exchange original signed copies.
46. Severability. In the event that any of the terms, conditions, or
provisions of this Agreement are held to be illegal, unenforceable, or
invalid by any court of competent jurisdiction, the legality, validity,
and enforceability of the remaining terms, conditions, or provisions
shall not be affected thereby.
47. Lien on Equipment. Operator does hereby pledge to Owner as security for
the Charter payments and performance of this Charter, all furniture,
fixtures, gaming equipment, cash in banks, and personal property of
every nature used by Operator whether located on the Vessel or
elsewhere. Operator agrees to execute any further documentation
necessary to protect Owner's security interest in the above.
48. Guarantee and Pledge of Ownership Interest. For valuable consideration,
N/A , and N/A jointly and severally, ("Guarantor") do hereby guarantee
the performance of the terms and conditions and the payments of the
sums set forth in this Agreement by Operator. Notice of Default, Demand
for Payment, and Demand for Performance as a Condition to Liability on
this Guarantee are hereby waived. In addition, Guarantor agrees to pay
any attorneys' fees and costs incurred in enforcing this Guarantee, and
hereby waive diligence, demand and Notice of Non-Payment and of
Non-Performance, and authorize extensions of time and changes in the
terms of this Agreement without notice to and without affecting the
liability of the Guarantor. It is further agreed that any assignment of
this Agreement shall not release the Guarantor from his obligations as
Guarantor hereunder. Guarantor hereby further waives the right to
require Owner to proceed against Operator or its assignees, or to
pursue any other remedy in its power and Guarantor hereby authorizes
Owner to proceed directly against the Guarantor. Performance of the
Guarantee shall be secured by a pledge of all of Guarantor's interest
in Operator which interest will represent no less than One-Hundred
percent (100%).
49. Complete Agreement. The parties acknowledge receipt of a copy of this
Agreement; that the terms of the Agreement are the entire agreement
between them; and that they have not received or relied on any
representations that are not expressed in this Agreement. NO PRIOR,
PRESENT, OR FUTURE AGREEMENTS OR REPRESENTATIONS WILL BE RELIED ON OR
WILL BIND THE PARTIES UNLESS IN WRITING AND INCORPORATED INTO THIS
AGREEMENT. Modifications of this Agreement will not be binding unless
in writing, signed and delivered by the party to be bound. Handwritten
or typewritten terms inserted in or attached to this Agreement prevail
over preprinted terms. Signatures, initials and modifications
communicated by facsimile or telecopy will be considered as original.
The parties should promptly deliver originals of faxed or telecopied
documents. If any provision of this Agreement is or becomes invalid or
unenforceable, all remaining provisions will continue to be fully
effective unless said provision specifically provides to the contrary.
50. Pilot, Tugboat or Stevedor Negligence. The Operator shall be
responsible for all losses substained by Owner or Vessel or Mortgagee
through the negligence of pilots, tugboats or stevedores, even Operator
and/or it's Agents engage or furnish such services.
51. Tickets. Operator shall use a form of passenger ticket approved by the
insurance carrier.
52. Attorney Disclosure. Operator is aware that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is an
attorney and represents that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ has not given any legal
advice to Operator. Operator further represents that it has received
its own independent legal advice regarding this Agreement or that
Operator has voluntarily chosen not to seek independent legal advice in
connection with this Agreement.
Charter Agreement Casino Padre
October 1, 1999 11
12
53. Miscellaneous. This Agreement constitutes the entire agreement between
the Parties hereto and it is agreed and understood that there are no
other duties, obligations, liability or warranties implied or
otherwise. This Agreement is binding on Owner and Operator, their
successors or assigns, as soon as executed by both parties hereto.
WITNESS: OWNER:
CSL DEVELOPMENT CORPORATION,
A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- -----------------------------
Its: Vice President
OPERATOR:
CASINO PADRE INVESTMENT
COMPANY LLC, A NEVADA LIMITED
LIABILITY COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- -----------------------------
Its: Managing Member
GUARANTOR(S):
----------------------------- By: N/A
Charter Agreement Casino Padre
October 1, 1999 12
13
CSL DEVELOPMENT CORPORATION [LETTERHEAD]
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November 2, 1999
Casino Padre Investment Company, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
RE: AMENDMENT TO CHARTER AGREEMENT
Gentlemen:
The purpose of this letter is to confirm an amendment to the Charter Agreement
to comply with the Private Placement Memorandum of Casino Padre Investment
Company, LLC of August 1999 and the agreements between the investors, ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, as follows:
1. The first three months charter deposit ($375,000.00) and the damage
deposit ($200,000.00) are hereby waived in consideration of receiving a
fifty percent (50%) interest in working capital and a fifty percent
(50%) distribution of operating income.
This letter will serve as the formal amendment to the Charter Agreement.
Sincerely,
CSL DEVELOPMENT CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
Agreed and Accepted:
Casino Padre Investment Company, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date:11/2/99
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Member
