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EXHIBIT 10.52
ADMINISTRATIVE SERVICES AGREEMENT
October 30, 1998
Xxxxxx'x Operating Company, Inc.
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Re: Provision of Services
Ladies and gentlemen:
Jazz Casino Company, L.L.C., a Louisiana limited liability company
("JCC") and wholly-owned subsidiary of JCC Holding Company, a Delaware
corporation ("JCC Holding"), has requested Xxxxxx'x Operating Company, Inc., a
Delaware corporation ("Service Provider") and a wholly-owned subsidiary of
Xxxxxx'x Entertainment, Inc., a Delaware corporation ("HET"), to provide or
otherwise perform certain services described on Schedule I attached hereto and
incorporated herein by reference (the "Services") in connection with the
operation of the land-based casino at 0 Xxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxx
00000. JCC has determined that based on a number of factors, including, among
others, the price at which the Services will be provided by Service Provider and
the quality of the Services that can be provided by Service Provider, it is in
JCC's best interest for Service Provider to provide the Services to JCC. In
light of the foregoing, JCC hereby requests that Service Provider provide the
Services upon the terms and conditions set forth in this administrative services
agreement (this "Administrative Services Agreement").
In consideration of the agreements, representations, and covenants set
forth in this Administrative Services Agreement and for other good and valuable
consideration, the parties hereto agree as of October 30, 1998, as follows:
1. Provision of Services. Service Provider shall provide the Services
in accordance with the terms and conditions of this Agreement. This
Administrative Services Agreement is entered into pursuant to that certain
Second Amended and Restated Management Agreement by and between Xxxxxx'x New
Orleans Management Company (the "Manager") and JCC dated October 29, 1998 (the
"Management Agreement") to document only the elective services to be provided by
Manager and Manager's affiliates pursuant to Section 9.03 of the Management
Agreement and the cost of certain Proprietary Systems being provided by Manager
and Manager's affiliates pursuant to Section 9.04 of the Management Agreement.
The Services shall not include
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any services of the Manager provided pursuant to the Management Agreement, any
of the Xxxxxx'x Services as provided for in Article 11 of the Management
Agreement, any services provided by pursuant to any written employee lease
arrangement between HET or its subsidiaries and JCC Holding or its subsidiaries,
including without limitation the Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxx and
Xxxxx Xxxxxxx lease or other employment arrangements between HET and JCC and the
Xxxxxx Xxxxxx lease arrangement between HET and JCC Development, or any other
services otherwise agreed by the parties.
2. Service Fee
(a) In consideration for the provision of the Services, JCC agrees
to pay Service Provider fees for the Services and to reimburse Service Provider
for all reasonable costs and expenses incurred in providing the Services as set
forth on Schedule I hereto. Service Provider shall provide JCC reasonably
detailed invoices with respect to the Services at the end of each calendar month
in which Services are provided. At the end of each calendar year, or as
otherwise specified on Schedule I, Service Provider shall calculate actual
amounts due in respect of any Services billed monthly on an estimated basis.
Within sixty (60) days of the end of each calendar year, Service Provider shall
provide JCC a true-up calculation as to the actual costs of such estimated
Services for such year and provide JCC a creditor refund as to any over-payments
or a billing as to any under-payments for such Services. Subject to the
procedure for dispute resolution set forth below, JCC agrees to pay such monthly
and annual true-up invoices within twenty (20) days after receipt thereof.
(b) If JCC disagrees with any invoice submitted by Service Provider
as required by Section 2(a) hereof, within fifteen (15) days after the date it
has received such invoice, JCC shall notify Service Provider in writing of such
disagreement, which notice shall state the basis for such disagreement. The
parties shall then cooperate to resolve the dispute, with Service Provider
providing JCC with such supporting documentation relating to the calculation of
the cost of the Services as JCC may reasonably request.
3. Limitation on Authority. Notwithstanding any provision of this
Administrative Services Agreement, the responsibilities and authority of Service
Provider hereunder are limited to the provision of the Services and matters
related to the Services. This Administrative Services Agreement shall not, in
the absence of a specific grant by JCC in writing, authorize Service Provider to
take any other action other than in connection with the Services.
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4. Term; Termination
(a) This Administrative Services Agreement shall commence as of
October 30, 1998, and the Services to be provided shall begin and end as of the
dates described on Schedule I hereto. Unless earlier terminated in writing by
JCC and Service Provider, this Administrative Services Agreement shall be
effective until the earlier of (i) the expiration date of all Services as set
forth on Schedule I hereto or (ii) thirty (30) days after written notice of
termination from either party; provided, however, that JCC may terminate, at any
time, less than all of the Services to be provided by Service Provider in
accordance with Sections 4(b) and (c) hereof.
(b) As to those Services identified in Schedule I hereto as
"Severable Services," any one or more of such Severable Services shall terminate
upon the earlier of (i) the termination date for each Severable Service as
described on Schedule I hereto, (ii) thirty (30) days after written notice of
termination to Service Provider by JCC describing the Services to be terminated
or (iii) thirty (30) days after written notice of termination to JCC by Service
Provider describing the Services to be terminated.
(c) As to those Services identified in Schedule I hereto as "Bundled
Services", all, but not less than all, of such Bundled Services shall terminate
upon the earlier of (i) the termination for the Bundled Service as described on
Schedule I hereto, (ii) thirty (30) days after written notice of termination to
Service Provider by JCC, or (iii) thirty (30) days after written notice of
termination to JCC by Service Provider. Nothing in this Section 4(c) shall
prohibit JCC or Service Provider from, in accordance with this Section 4(c),
terminating any or all of the Severable Services without terminating the Bundled
Services or terminating all of the Bundled Services without terminating the
Severable Services.
5. Indemnification
(a) At all times during the term and after the termination of this
Administrative Services Agreement, JCC shall indemnify, defend and hold harmless
Service Provider and any of its affiliates, including, without limitation, HET,
employees, agents, representatives, officers and directors (the "Indemnified
Service Provider Parties") against any claim, action, suit, demand, damage,
liability, costs or expenses (including reasonable attorneys fees) arising out
of or in connection with the performance by Service Provider of the Services
(except to the extent arising out of Service Provider's proven fraud, gross
negligence or willful misconduct or with respect to any action taken by any
Indemnified Service Provider Party in breach of this Administrative Services
Agreement).
(b) At all times during the term and after the termination of this
Administrative Services Agreement, Service Provider shall indemnify, defend and
hold
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harmless JCC and any of its affiliates, including, without limitation, JCC
Holding (but excluding, to the extent deemed an affiliate of JCC, HET and any
affiliate of HET), employees, agents, representatives, officers and directors
against any claim, action, suit, demand, damage, liability, costs or expenses
(including reasonable attorneys fees) arising out of or in connection with the
breach of this Administrative Services Agreement by Service Provider or the
proven fraud, gross negligence or willful misconduct of Service Provider in
connection with the performance of its obligations under this Administrative
Services Agreement.
6. Independent Contractor Status. Service Provider shall be deemed to
be an independent contractor to JCC. Nothing contained in this Administrative
Services Agreement shall create or be deemed to create the relationship of
employer and employee, and no party to this Administrative Services Agreement
shall, by reason hereof, be deemed to be a partner or a joint venturer of any
other party hereto in the conduct of their respective businesses and/or the
conduct of the activities contemplated by this Administrative Services
Agreement. Except as specifically and explicitly provided in this Administrative
Services Agreement, and subject to and in accordance with the provisions hereof,
no party to this Administrative Services Agreement is now, shall become, or
shall be deemed to be an agent or representative of any other party hereto with
respect to the subject matter hereof.
7. Further Assurances. The parties hereto agree to cooperate, to the
extent reasonably necessary, by executing and delivering such other documents
and instruments and taking such further action to carry out the intent of this
Administrative Services Agreement.
8. Entire Agreement. This Administrative Services Agreement represents
the entire agreement of the parties hereto with respect to the subject matter
hereof and all prior agreements, understandings, representations and warranties
in regard to the subject matter hereof are and have been merged herein and are
superseded hereby.
9. Amendment
(a) This Administrative Services Agreement, including, without
limitation, Schedule I hereto, may not be amended, supplemented or otherwise
modified other than by a writing executed by the parties hereto.
(b) It is anticipated but not required that the parties hereto will
from time to time and most likely on an annual basis in any event review the
Services and fees therefor and determine whether to revise the scope or term of
Services or the fees therefor, and to the extent of any such agreed revisions
execute an amended Schedule I in accordance with Section 9(c) hereof. Such
amended Schedules shall each be numbered
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serially in the upper left hand corner, with the first such Schedule attached
hereto being version number 1.
(c) The parties hereto may revise, update, or modify Schedule I
hereto from time to time by means of both parties signing and serially numbering
a copy of such revised, updated or modified Schedule I with the following at the
end thereof: "This revised Schedule I hereby supersedes in its entirety all
prior versions of this Schedule I and is hereby attached to and made a part of
that certain Administrative Services Agreement dated October 30, 1998 between
Jazz Casino Company, LLC and Xxxxxx'x Operating Company, Inc. Except as amended
hereby, the Administrative Services Agreement remains in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this version number
___ of Schedule I to Administrative Services Agreement as of ______________.
XXXXXX'X OPERATING COMPANY, INC., a
Delaware corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
10. Assignment; Successors and Assigns. This Administrative Services
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their successors and assigns. Except as expressly provided in this
Administrative Services Agreement, no party hereto shall, without the prior
written consent of the other party, assign any rights or obligations of such
party hereunder.
11. Governing Law. This Administrative Services Agreement shall be
governed by and interpreted in accordance with the internal laws of the State of
Tennessee without regard to the conflicts of laws principles of such state.
12. Representations and Warranties; Further Assurances. Service
Provider represents that the service fees set forth on Schedule I hereto fully
compensate
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Service Provider for the cost of rendering the Services covered hereby. JCC and
Service Provider agree that the Services are being provided by Service Provider
to JCC solely in exchange for the consideration enumerated herein. JCC and
Service Provider further state that no inference or presumption shall be drawn
from this Administrative Services Agreement that it is anything other than an
"arm's length" transaction as set forth herein.
Please acknowledge your acceptance and agreement to the foregoing by
executing this Administrative Services Agreement in the space provided below as
of the date of this Administrative Services Agreement. This Administrative
Services Agreement may be executed in multiple counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
agreement, binding the parties hereto.
Very truly yours,
JAZZ CASINO COMPANY, L.L.C.
a Louisiana limited liability company
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
----------------------------------
Title: Vice President
---------------------------------
ACCEPTED AND AGREED
as of October 30, 1998:
XXXXXX'X OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
--------------------------------
Title: Vice President
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Version Number 1
Schedule I
to Administrative Services Agreement
New Orleans Systems and Services
Type of Services Fees For Services
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I. 1998 System and Services
For the period from October 30, 1998 to
December 31, 1998, JCC received the following
services:
Open Access Compliance Tracking $59 per hour
information technology consulting with JCC to
establish a systematic method of collecting,
storing and reporting statistical information for
the City of New Orleans Open Access Plans
and Programs
II. 1999 System and Services
The services and fees for calendar 1999 are set forth
below for the period from January 1, 1999 up to the
Casino opening scheduled for October 30, 1999 (the
"Pre-Opening Period") and the remainder of the year
after opening (the "Post-Opening Period")
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Type of Services Fees For Services
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A. Severable Services
1. Corporate Facilities 1999 projected costs spread evenly
Office Space in Memphis; facilities services relate to estimated at $34,610, consisting of the
corresponding function and are bundled with that function. following:
The functions are:
Pre Opening Post-Opening
----------- ------------
property reporting $ 6,678 $ 1,336
market planning 5,078 1,016
accounting systems administration 1,388 278
payroll 1,342 268
procurement 701 152
compensation 4,108 822
HRIS 4,268 854
property tax 4,090 818
1,132 226
other ---------- ----------
$ 28,842 $ 5,768
2. Market research Pre-Opening estimated at $41,667,
market information and planning Post-Opening estimated at $8,333 based
on assumed number of studies being managed
3. Property, sales and use tax assistance - review state and Pre-Opening estimated at $5,250 and
local sales and use tax applications, recommend a sales tax Post-Opening estimated at $1,050
compliance process, sales and use tax training for JCC payable in monthly installments for the
employees, as requested, response to up to 10 specific sales property tax services; $100 per hour for
and use tax questions per month, represent in any sales or use all other tax services
tax audits, prepare and file appeals and represent JCC in
appeals of audit decisions, recommendations regarding
settlement or litigation of sales or use tax controversies,
recommendation of counsel and administration of sales and use
tax litigation
4. Y2K reporting and assessment Pass through billing for any external
consultants or out-of-pocket costs
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Type of Services Fees For Services
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5. Legal - legal services from Service Provider's in-house Lawyers at $75.00 an hour, legal
counsel located outside of New Orleans; as requested by the assistants at $22.00 an hour
general counsel of Manager, including, without limitation,
o regulatory - assistance with regulatory
filings and disciplinary matters and
regulatory inquiries
o labor
o provide general advice regarding labor
and employment law matters
o prepare/revise responses to EEOC
and related claims
o negotiate labor union contracts
o provide union contract administration
(e.g., contract interpretation and
grievance and arbitration handling)
o operations
o security-regulatory (e.g. junkets and branch office)
o contracts (e.g. kiosk agreements)
o slot purchases/leases
o uninsurance litigation referred by JCC
o Total Gold
o national agreements (e.g. food
purchasing, purchase orders, CocaCola,
Juice Time, Nascar, etc.)
o other marketing contracts
6. Miscellaneous pass through cost
federal express and copies of HET manuals
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Type of Services Fees For Services
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7. Risk Management Property insurance estimated at
assist JCC in obtaining property, general liability and $139,520 Pre-Opening and $47,202
worker's compensation insurance pursuant to Exhibit C to the Post-Opening based on property value
Management Agreement times the Adjustment Factor (as
hereinafter defined); general liability
insurance estimated at $60,000 Pre-Opening
and $189,330 Post-Opening based on revenue
times the Adjustment Factor; worker's
compensation estimated at $230,000
Pre-Opening and $267,447 Post-Opening based
on payroll times the Adjustment Factor. The
Adjustment Factor means the class rate plus
claim adjustment fees and administrative
cost
8. Insurance Litigation management of litigation - lawyers at $75.00 an
management of insured litigation relating to the operation of hour and legal assistants at $22.00 an hour
the Casino (bundled with risk management services)
B. Bundled Services
1. Front of House Customer Products
(Proprietary Systems pursuant to Section 9.04 of the
Management Agreement)
SDS Product Post-Opening - 2.1% of product costs - estimated
at $8,250 based on assumption of 2,850 slot
machines
CMS Product (New Gaming) Post-Opening - 3.5% of product costs - estimated
at $120,310 based on assumption of 3,500 non
poker gaming positions and $20 million of monthly
gaming revenue
WINet - Patron Database Post-Opening -1.4% of product costs - estimated
at $84,841 based on assumption of 150,000 active
accounts and $20 million of monthly gaming
revenue
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Type of Services Fees For Services
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assumption of 150,000 active accounts and $20
million of monthly gaming revenue
WINet - Marketing Workbench Post-Opening - 1.4% of product costs - estimated
at $43,253 based on assumption of 150,000 active
accounts and $20 million of monthly gaming
revenue
Kiosks Post-Opening - 1.5% of product costs - estimated at
$2,168 based on assumption of 5 kiosks
Teleservices Pre-Opening estimated at $19,000 and Post-Opening
1-800-XXXXXX'X reservation services estimated at $41,000 based on estimated call volume
at $2.50 per call
SUBTOTAL FRONT OF HOUSE PRODUCTS $318,822 (estimated)
2. Back of House Employee & Financial Products
Employee Products Post-Opening - 1.3% of product costs - estimated
at $27,700 based on assumption of 2,400 employees
Financial Products Post-Opening - 1.3% of product costs reduced by
fixed asset system cost - estimated at $21,515
based on assumption of 2,400 employees
Fixed Asset System Post-Opening - 4.4% of Financial Products Cost -
estimated at $1,000
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Type of Services Fees For Services
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POS & Procurement Products Post-Opening - 1.3% of product costs - estimated at
$25,650 based on assumption of 2,400 employees
SUBTOTAL BACK OF HOUSE PRODUCTS $75,865 (estimated)
3. Infrastructure Products
Network Product Post-Opening - 1.2% of product costs - estimated
at $29,364 based on assumption of 2,400 employees
and 12 "rings"
Infrastructure Product Post-Opening - 1.2% of product costs - estimated
at $8,194 based on assumption of 2,400 employees
and 270 PC's
SUBTOTAL INFRASTRUCTURE PRODUCTS $37,557 (estimated)
4. 1998/1999 one time information technology implementation $487,489
charges for customer products, employee and financial
products, infrastructure products and systems
5. Human Resource Services
Payroll Pre-Opening estimated at $1,029, Post-Opening
estimated at $9,261, based on estimated volume of
transactions and average cost of $2.25 per
employee per month
HRIS Pre-Opening estimated at $30,870, Post-Opening
estimated at $7,719, based on estimated number of
employees and cost of $1.60 per employee per
month
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Type of Services Fees For Services
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Compensation Pre-Opening estimated at $46,750, Post-Opening
estimated at $9,350, based on estimated number of
employees and cost of $1.95 per employee per
month
Benefits Pre-Opening estimated at $18,724, Post-Opening
estimated at $19,200, based on cost of $4 per
employee per month and fully operational 2,400
employees and staff
S&RP Pre-Opening estimated at $4,480, Post-Opening
estimated at $584, based on cost of $5 per
employee assuming 700 active 401K participants,
preopening includes initial setup and
administration
Legal Lawyers at $75.00 an hour and legal assistants at
$22.00 an hour
legal services relating to employee benefits administration,
including without limitation:
o review 401(k) plan document and SPD. Assist in transition
issues such as transfers of employees, service credit and
enrollment
o review group insurance plan documents and SPD for medical,
dental and vision, and disability plans
o provide advice on enrollment, eligibility and claims
administration
o review/assist on executive compensation, including stock
option, restricted stock, bonus and deferred compensation
plans
SUBTOTAL HUMAN RESOURCES SERVICES $147,967 (estimated)
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Type of Services Fees For Services
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6. Accounting & Tax Services
Property Reporting Pre-Opening estimated at $18,510, Post-Opening
estimated at $3,702, based on assumed services to
be provided
Fixed Asset Accounting Post-Opening estimated at $200, based upon asset
maintenance to be performed at property
Procurement Post-Opening estimated at $4,540, based on assumed
number of transactions
Financial Accounting Systems Administration Pre-Opening estimated at $10,000 flat fee and
Post-Opening estimated at $2,000 flat fee, based
on cost divided by number of properties supported
SUBTOTAL ACCOUNTING & TAX SERVICES $38,952 (estimated)
III. Estimated Xxxxxxxx and Annual True-Up
The assumed opening date, numbers of employees, and other assumptions
regarding the Services may not occur as assumed or projected. Where
indicated, the fees for the Services are estimates based on
assumptions. Actual fees for the Services in such cases will vary
depending on the actual circumstances which may vary from the
estimates. Monthly xxxxxxxx by Service Provider will be based on
estimated amounts. A true-up to actual amounts will be calculated by
Service Provider after the end of the calendar year, and a credit or
refund will be made to JCC by Service Provider or a balance due will be
billed to JCC by Service Provider, as the case may be.
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IN WITNESS WHEREOF, the undersigned have executed this Version
Number 1 of Schedule I to Administrative Services Agreement as of October 30,
1998.
XXXXXX'X OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Vice President
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JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company
By: /s/ L. Xxxxxx Xxxxxx
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Name: L. Xxxxxx Xxxxxx
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Title: Vice President, Secretary and Treasurer
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