Annual Plan and Operating Budget. (a) Owner and Manager acknowledge and agree to adopt the annual plan and operating budget attached hereto as Schedule “4” as the Approved Annual Plan and Operating Budget for the first Fiscal Year for the Property. Not fewer than sixty (60) days prior to the commencement of each Full Fiscal Year thereafter (i.e., on or before November 1st of each Fiscal Year), Manager shall submit a proposed Annual Plan and Operating Budget to Owner for Owner’s review and approval. Manager shall use commercially reasonable efforts to base each Annual Plan and Operating Budget upon current and reliable information then available, taking into account the location of the Property and Manager’s experience in operating other comparable hotels, casinos and resorts. Each proposed Annual Plan and Operating Budget shall include the following: (1) Monthly and annual projections of the following: (i) estimated results of operations (including estimated Gross Revenue, Operating Costs and EBITDA), together with estimates of total labor costs; projected monthly balance sheets; and estimates of the Management Fees and Reimbursable Expenses; (ii) a description of proposed Routine Repairs and Maintenance to be made during such Fiscal Year pursuant to and in accordance with Section 7.1; (iii) a description of proposed Capital Improvements and Replacements to be made during such Fiscal Year; (iv) a statement of cash flow and description of Working Capital requirements; and (v) the initial Cage Cash Minimum Balance; (2) In accordance with the Manager Allocation Agreement, (i) the proposed allocation of Corporate Overhead and Expenses to the Property for such Fiscal Year; and (ii) with respect to the Annual Plan and Operating Budget for the 2011 Fiscal Year, the Initial Gross Revenues Budget and Initial Corporate Overhead Budget, excluding bonuses
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Samples: Management Agreement (Station Casinos LLC), Management Agreement (Station Casinos LLC)
Annual Plan and Operating Budget. (a) Owner and Manager acknowledge and agree to adopt the annual plan and operating budget attached hereto as Schedule “4” as the Approved Annual Plan and Operating Budget for the first Fiscal Year for the PropertyProperties. Not fewer than sixty (60) days prior to the commencement of each Full Fiscal Year thereafter (i.e., on or before November 1st of each Fiscal Year), Manager shall submit a proposed Annual Plan and Operating Budget to Owner for Owner’s review and approval. Manager shall use commercially reasonable efforts to base each Annual Plan and Operating Budget upon current and reliable information then available, taking into account the location of the Property applicable Properties and Manager’s experience in operating other comparable hotels, casinos and resorts. Each proposed Annual Plan and Operating Budget shall include the following:
(1) Monthly and annual projections of the following: (i) estimated results of operations (including estimated Gross Revenue, Operating Costs and Budgeted EBITDA), together with estimates of total labor costs; projected monthly balance sheets; and estimates of the Management Fees and Reimbursable Expenses; (ii) a description of proposed Routine Repairs and Maintenance to be made during such Fiscal Year pursuant to and in accordance with Section 7.1; (iii) a description of proposed Capital Improvements and Replacements to be made during such Fiscal Year; (iv) a statement of cash flow and description of Working Capital requirements; and (v) the initial Cage Cash Minimum Balance;
(2) In accordance with the Manager Allocation Agreement, (i) the proposed allocation of Corporate Overhead and Expenses to the Property Properties for such Fiscal Year; and (ii) with respect to the Annual Plan and Operating Budget for the 2011 Fiscal Year, the Initial Gross Revenues Budget and Initial Corporate Overhead Budget, excluding bonusesbonuses payable to Employees and employees of Manager (and/or Xxxxxxxx Entertainment and/or its Subsidiaries), for the first Full Fiscal Year;
(3) The proposed Promotional Allowance; and
(4) Any other items required to be included in the Annual Plan and Operating Budget pursuant to the terms and conditions of this Agreement and such other materials reasonably requested by Owner, from time to time.
(b) Manager shall make its representatives available during normal business hours to meet with Owner, from time to time, at Owner’s reasonable prior written request made no later than ten (10) Business Days prior to the proposal meeting date to review and discuss the proposed Annual Plan and Operating Budget. Owner shall have the right to approve or disapprove the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein), and/or to direct Manager to make whatever changes thereto Owner elects, in Owner’s sole and absolute discretion; provided, however, notwithstanding anything to the contrary contained herein, subject further to Manager’s rights to make expenditures pursuant to and in accordance with Sections 8.4 and 8.5 below, Owner shall not withhold its approval with respect to: (i) Manager’s reasonable projections of Gross Revenues or the components thereof; and (ii) subject to Manager’s obligation to use commercially reasonable efforts to estimate and include all such amounts in the applicable Annual Plan and Operating Budget, Impositions, reservation fees, utilities, insurance premiums, license and permit fees as well as amounts necessary to fund the cost and expense of food safety, life safety, and compliance with Gaming Laws; provided, further, in the event Owner does not approve in writing any specific item or items or the amounts thereof referenced in clause (ii) immediately above set forth in the Annual Plan and Operating Budget and the Parties are unable to resolve such monetary dispute prior to the commencement of the Fiscal Year in question, either Manager or Owner may submit the same for resolution as set forth in Section 17.16(c) below and pending the same, the specific item or items of expense (not revenue) shall be suspended and replaced for the Fiscal Year in question by an amount equal to the lesser of (1) that proposed by Manager for such Fiscal Year or (2) such budget items as set forth in the immediately prior Approved Annual Plan and Operating Budget (subject to escalation per item by the percentage increase in the CPI over the twelve (12) Fiscal Month period immediately preceding the start of the Fiscal Year in question). In the event that Owner shall approve or disapprove, and/or direct Manager to make whatever changes to the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein) in Owner’s sole and absolute discretion, Manager shall revise such Annual Plan and Operating Budget in accordance therewith and resubmit the same to Owner for approval and, other than the limitations on Owner’s approval rights referenced in clauses (i) and (ii) above, Manager shall have no right to object thereto except that Owner shall not have the right to disapprove, and/or direct Manager to make changes thereto, that would effectively prevent Manager from operating any one or more of the Properties (for example, Owner shall have the right to disapprove and/or direct Manager to make changes to the security payroll line item in Owner’s sole and absolute discretion but Owner shall not have the right to disapprove the payroll line item in its entirety or to make such other changes that would prevent Manager from employing a sufficient number of security personnel that are necessary to ensure public safety, to monitor Gaming operations in an effort to prevent theft and fraud, and to comply with all Legal Requirements (subject to Owner’s right to contest any Legal Requirement as permitted pursuant to and in accordance with Section 2.11), or if the failure of Owner to approve a security payroll line item in the amount thereof would necessitate a closing of a Property and effectively prevent Manager from operating such Property) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below.
(c) Owner acknowledges that the projections contained in the Approved Annual Plan and Operating Budget for any particular Fiscal Year may be affected by changes in financial, economic, market, competitive, labor, natural and other conditions and circumstances beyond Manager’s control. If, by reason of any of such changes, Manager determines that, in its reasonable judgment, (i) amounts set forth in the Approved Annual Plan and Operating Budget are not sufficient to satisfy the Operating Standards or otherwise permit Manager to perform its responsibilities in the manner required hereunder, Manager shall notify Owner with respect to such deficiencies (accompanied by a narrative summary detailing the reasons for the request for additional funds) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval; or (ii) that a major renovation of one or more of the Properties is required, which renovation is not contained in the Approved Annual Plan and Operating Budget and is not otherwise permitted under this Section 8.3, Manager shall notify Owner with respect to such major renovation (accompanied by a narrative summary detailing the reasons for such major renovation) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval (each an “Discretionary Amendment”). If Owner fails to approve any Discretionary Amendment within thirty (30) days after the date of such submission, the Properties shall continue to be operated in accordance with the then-current Approved Annual Plan and Operating Budget; provided, however, Owner’s approval shall be subject to the same standards and limitations as set forth herein with respect to the initial Annual Plan and Operating Budget for such Fiscal Year and, further, Owner shall not unreasonably withhold its approval with respect to variable changes in line items of expense (unless otherwise required under this Agreement) which are related to and necessitated by changes in the projected occupancy rate (a “Variable Expense”), provided that such Variable Expense may be increased or decreased to the extent such increases or decreases are warranted and the re-projected occupancy rate of the applicable Property (to which such allocation is sought) for any Full Fiscal Year exceeds or falls below the projected occupancy and Gross Revenue (for avoidance of doubt, the Variable Expenses shall not automatically increase proportionately with increases in occupancy rate or Gross Revenues but shall only increase to the extent such increases in occupancy rate reasonably require greater expenditures with respect to the line item in question; for example, an increase in occupancy rate will require greater and perhaps proportionate expenditures for housekeeping but will not require greater expenditures for the General Manager) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below. If Owner approves any such Discretionary Amendment, the Annual Plan and Operating Budget, as amended and approved pursuant to the Discretionary Amendment, shall be the Approved Annual Plan and Operating Budget for the remainder of the Fiscal Year to which the Approved Annual Plan and Operating Budget, as amended by the Discretionary Amendment, relates; provided, however, such amended and restated Approved Annual Plan and Operating Budget shall neither result in a change to the Budgeted EBITDA set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year nor Manager’s obligations to meet the Performance Test pursuant to the thresholds set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year.
(d) Other than those disputes with respect to which Manager shall have the right to submit the same for resolution under Section 17.16(c) as expressly set forth in paragraph (b) or (c) above, no proposed Annual Plan and Operating Budget or any proposed Discretionary Amendment shall be subject to dispute nor subject to arbitration under Section 17.16; provided, however, if (i) in any Fiscal Year, Owner disapproves of the proposed Annual Plan and Operating Budget or any Discretionary Amendment thereto prepared by Manager in accordance with Sections 8.3(a) or (c), as applicable, with expenditures at levels reasonably required in order to comply with the Operating Standards; and (ii) Manager can reasonably demonstrate that Owner’s refusal to approve such proposed Annual Plan and Operating Budget and/or Discretionary Amendment will have an adverse effect on the Operating Standards for such Fiscal Year, then Manager shall not be in breach of those Operating Standards for such Fiscal Year (but Manager shall not be relieved from the performance of Manager’s services duties and responsibilities under this Agreement and the Performance Test shall be equitably adjusted in accordance with Section 3.2) to the extent Manager was effectively prevented from complying with such Operating Standards as a result of differences between those expenditures in the proposed Annual Plan and Operating Budget and/or Discretionary Amendment and those permitted under the Approved Annual Plan and Operating Budget. Notwithstanding the foregoing, under no circumstances shall Manager be relieved from its obligations to maintain the Operating Standards in any Fiscal Year on account of amounts budgeted for Capital Improvements if Owner approves an Annual Plan and Operating Budget providing for at least five percent (5%) of Gross Revenues to be made available for Capital Improvements in the Approved Annual Plan and Operating Budget. NOTWITHSTANDING THE FOREGOING OR ANYTHING TO THE CONTRARY SET FORTH HEREIN, OTHER THAN (A) THOSE ITEMS FOR WHICH OWNER IS EXPRESSLY PROHIBITED FROM WITHHOLDING ITS APPROVAL OVER PURSUANT TO SECTION 8.3(b) ABOVE; (B) MANAGER’S RIGHTS TO REIMBURSABLE EXPENSES PURSUANT TO SECTION 8.2(b); (C) EMERGENCY EXPENDITURES AS PERMITTED UNDER SECTION 8.4; (D) EXPENDITURES REQUIRED TO COMPLY WITH LEGAL REQUIREMENTS AS PERMITTED UNDER SECTION 8.5; AND/OR (E) OWNER’S OBLIGATIONS TO FUND WORKING CAPITAL SHORTFALLS UNDER SECTION 4.1, OWNER SHALL HAVE NO OBLIGATION TO ADVANCE OR APPROVE ANY ADDITIONAL FUNDS FOR THE OPERATION, MANAGEMENT AND MAINTENANCE OF THE PROPERTIES AND NOTWITHSTANDING OWNER’S DETERMINATION NOT TO ADVANCE SUCH FUNDS, MANAGER SHALL NEVERTHELESS REMAIN OBLIGATED TO PERFORM ANY AND ALL OBLIGATIONS AND DUTIES SET FORTH HEREIN.
(e) Manager makes no assurances that the actual performance of the Properties shall correspond to estimates in the Annual Plan and Operating Budget. Manager shall use diligent, commercially reasonable efforts (but without the obligation to incur any additional cost to Manager which is not reimbursable by Owner hereunder) to operate the Properties within the Approved Annual Plan and Operating Budget; provided, however, Manager shall not be required to obtain Owner’s prior approval for additional expenditures which: (i) will cause the total expenses in the Approved Annual Plan and Operating Budget to be exceeded by less than five percent (5%); (ii) will cause the total expenses for an applicable department of the Properties or each category of undistributed expenses to be exceeded by seven percent (7%) of the Approved Annual Plan and Operating Budget for such department or category; or (iii) relate to any category of cost or expense beyond the reasonable control of Manager including, without limitation, utility charges, insurance premiums, license and permit fees, legal judgments and/or taxes which shall be deemed increased to the actual cost levels incurred (provided, however, that items for which variable usage contributes to cost or for which alternative providers, coverage amounts and competitive bidding are available, in each case shall be subject to reasonable objection and cooperation by Owner as to such usage or coverage matters, and any dispute in respect thereof shall be resolved in accordance with Section 17.16(c) below) (each, a “Permitted Variance”). For avoidance of doubt, Manager shall not be in default of Manager’s express obligations to operate in accordance with the Approved Annual Plan and Operating Budget as set forth throughout this Agreement to that extent that Manager in its good faith, reasonable discretion exceeds the Approved Annual Plan and Operating Budget by the Permitted Variance.
(f) Manager shall use its commercially reasonable efforts to expend funds for Promotional Allowances and otherwise provide complimentary or discount goods and services in an amount not to exceed the amount set forth in the Approved Annual Plan and Operating Budget (excluding any Permitted Variance which the Parties acknowledge shall not apply to Promotional Allowances). In the event Manager believes in good faith that expenses in excess of the Promotional Allowance as provided in any Approved Annual Plan and Operating Budget are reasonably required or advisable to compete effectively with other hotel-casinos similarly to the applicable Property, Manager shall have the right to exceed the approved Promotional Allowance by an amount not to exceed twenty-five percent (25%) for each Fiscal Quarter (“Promotional Variance”); provided, however, Manager shall give notice to Owner of any such Promotional Variance and such Promotional Variances will be subject to review by Owner at the end of the Fiscal Quarter. Any Promotional Variance exceeding twenty-five percent (25%) shall be subject to Owner’s prior written approval in its sole and absolute discretion. For avoidance of doubt, Manager shall not be in default of this Agreement for any Promotional Variance, not exceeding twenty-five percent (25%) and made by Manager in its good faith, reasonable discretion.
Appears in 1 contract
Annual Plan and Operating Budget. (a) Owner and Manager acknowledge and agree to adopt the annual plan and operating budget attached hereto as Schedule “4” as the Approved Annual Plan and Operating Budget for the first Fiscal Year for the Property. Not fewer than sixty (60) days prior to the commencement of each Full Fiscal Year thereafter (i.e., on or before November 1st of each Fiscal Year), Manager shall submit a proposed Annual Plan and Operating Budget to Owner for Owner’s review and approval. Manager shall use commercially reasonable efforts to base each Annual Plan and Operating Budget upon current and reliable information then available, taking into account the location of the Property and Manager’s experience in operating other comparable hotels, casinos and resorts. Each proposed Annual Plan and Operating Budget shall include the following:
(1) Monthly and annual projections of the following: (i) estimated results of operations (including estimated Gross Revenue, Operating Costs and Budgeted EBITDA), together with estimates of total labor costs; projected monthly balance sheets; and estimates of the Management Fees and Reimbursable Expenses; (ii) a description of proposed Routine Repairs and Maintenance to be made during such Fiscal Year pursuant to and in accordance with Section 7.1; (iii) a description of proposed Capital Improvements and Replacements to be made during such Fiscal Year; (iv) a statement of cash flow and description of Working Capital requirements; and (v) the initial Cage Cash Minimum Balance;
(2) In accordance with the Manager Allocation Agreement, (i) the proposed allocation of Corporate Overhead and Expenses to the Property for such Fiscal Year; and (ii) with respect to the Annual Plan and Operating Budget for the 2011 Fiscal Year, the Initial Gross Revenues Budget and Initial Corporate Overhead Budget, excluding bonusesbonuses payable to Employees and employees of Manager (and/or Xxxxxxxx Entertainment and/or its Subsidiaries), for the first Full Fiscal Year;
(3) The proposed Promotional Allowance; and
(4) Any other items required to be included in the Annual Plan and Operating Budget pursuant to the terms and conditions of this Agreement and such other materials reasonably requested by Owner, from time to time.
(b) Manager shall make its representatives available during normal business hours to meet with Owner, from time to time, at Owner’s reasonable prior written request made no later than ten (10) Business Days prior to the proposal meeting date to review and discuss the proposed Annual Plan and Operating Budget. Owner shall have the right to approve or disapprove the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein), and/or to direct Manager to make whatever changes thereto Owner elects, in Owner’s sole and absolute discretion; provided, however, notwithstanding anything to the contrary contained herein, subject further to Manager’s rights to make expenditures pursuant to and in accordance with Sections 8.4 and 8.5 below, Owner shall not withhold its approval with respect to: (i) Manager’s reasonable projections of Gross Revenues or the components thereof; and (ii) subject to Manager’s obligation to use commercially reasonable efforts to estimate and include all such amounts in the applicable Annual Plan and Operating Budget, Impositions, reservation fees, utilities, insurance premiums, license and permit fees as well as amounts necessary to fund the cost and expense of food safety, life safety, and compliance with Gaming Laws; provided, further, in the event Owner does not approve in writing any specific item or items or the amounts thereof referenced in clause (ii) immediately above set forth in the Annual Plan and Operating Budget and the Parties are unable to resolve such monetary dispute prior to the commencement of the Fiscal Year in question, either Manager or Owner may submit the same for resolution as set forth in Section 17.16(c) below and pending the same, the specific item or items of expense (not revenue) shall be suspended and replaced for the Fiscal Year in question by an amount equal to the lesser of (1) that proposed by Manager for such Fiscal Year or (2) such budget items as set forth in the immediately prior Approved Annual Plan and Operating Budget (subject to escalation per item by the percentage increase in the CPI over the twelve (12) Fiscal Month period immediately preceding the start of the Fiscal Year in question). In the event that Owner shall approve or disapprove, and/or direct Manager to make whatever changes to the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein) in Owner’s sole and absolute discretion, Manager shall revise such Annual Plan and Operating Budget in accordance therewith and resubmit the same to Owner for approval and, other than the limitations on Owner’s approval rights referenced in clauses (i) and (ii) above, Manager shall have no right to object thereto except that Owner shall not have the right to disapprove, and/or direct Manager to make changes thereto, that would effectively prevent Manager from operating the Property (for example, Owner shall have the right to disapprove and/or direct Manager to make changes to the security payroll line item in Owner’s sole and absolute discretion but Owner shall not have the right to disapprove the payroll line item in its entirety or to make such other changes that would prevent Manager from employing a sufficient number of security personnel that are necessary to ensure public safety, to monitor Gaming operations in an effort to prevent theft and fraud, and to comply with all Legal Requirements (subject to Owner’s right to contest any Legal Requirement as permitted pursuant to and in accordance with Section 2.11), or if the failure of Owner to approve a security payroll line item in the amount thereof would necessitate a closing of the Property and effectively prevent Manager from operating the Property) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below.
(c) Owner acknowledges that the projections contained in the Approved Annual Plan and Operating Budget for any particular Fiscal Year may be affected by changes in financial, economic, market, competitive, labor, natural and other conditions and circumstances beyond Manager’s control. If, by reason of any of such changes, Manager determines that, in its reasonable judgment, (i) amounts set forth in the Approved Annual Plan and Operating Budget are not sufficient to satisfy the Operating Standard or otherwise permit Manager to perform its responsibilities in the manner required hereunder, Manager shall notify Owner with respect to such deficiencies (accompanied by a narrative summary detailing the reasons for the request for additional funds) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval; or (ii) that a major renovation of the Property is required, which renovation is not contained in the Approved Annual Plan and Operating Budget and is not otherwise permitted under this Section 8.3, Manager shall notify Owner with respect to such major renovation (accompanied by a narrative summary detailing the reasons for such major renovation) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval (each an “Discretionary Amendment”). If Owner fails to approve any Discretionary Amendment within thirty (30) days after the date of such submission, the Property shall continue to be operated in accordance with the then-current Approved Annual Plan and Operating Budget; provided, however, Owner’s approval shall be subject to the same standards and limitations as set forth herein with respect to the initial Annual Plan and Operating Budget for such Fiscal Year and, further, Owner shall not unreasonably withhold its approval with respect to variable changes in line items of expense (unless otherwise required under this Agreement) which are related to and necessitated by changes in the projected occupancy rate (a “Variable Expense”), provided that such Variable Expense may be increased or decreased to the extent such increases or decreases are warranted and the re-projected occupancy rate of the Property (to which such allocation is sought) for any Full Fiscal Year exceeds or falls below the projected occupancy and Gross Revenue (for avoidance of doubt, the Variable Expenses shall not automatically increase proportionately with increases in occupancy rate or Gross Revenues but shall only increase to the extent such increases in occupancy rate reasonably require greater expenditures with respect to the line item in question; for example, an increase in occupancy rate will require greater and perhaps proportionate expenditures for housekeeping but will not require greater expenditures for the General Manager) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below. If Owner approves any such Discretionary Amendment, the Annual Plan and Operating Budget, as amended and approved pursuant to the Discretionary Amendment, shall be the Approved Annual Plan and Operating Budget for the remainder of the Fiscal Year to which the Approved Annual Plan and Operating Budget, as amended by the Discretionary Amendment, relates; provided, however, such amended and restated Approved Annual Plan and Operating Budget shall neither result in a change to the Budgeted EBITDA set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year nor Manager’s obligations to meet the Performance Test pursuant to the thresholds set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year.
(d) Other than those disputes with respect to which Manager shall have the right to submit the same for resolution under Section 17.16(c) as expressly set forth in paragraph (b) or (c) above, no proposed Annual Plan and Operating Budget or any proposed Discretionary Amendment shall be subject to dispute nor subject to arbitration under Section 17.16; provided, however, if (i) in any Fiscal Year, Owner disapproves of the proposed Annual Plan and Operating Budget or any Discretionary Amendment thereto prepared by Manager in accordance with Sections 8.3(a) or (c), as applicable, with expenditures at levels reasonably required in order to comply with the Operating Standard; and (ii) Manager can reasonably demonstrate that Owner’s refusal to approve such proposed Annual Plan and Operating Budget and/or Discretionary Amendment will have an adverse effect on the Operating Standard for such Fiscal Year, then Manager shall not be in breach of the Operating Standard for such Fiscal Year (but Manager shall not be relieved from the performance of Manager’s services duties and responsibilities under this Agreement and the Performance Test shall be equitably adjusted in accordance with Section 3.2) to the extent Manager was effectively prevented from complying with such Operating Standard as a result of differences between those expenditures in the proposed Annual Plan and Operating Budget and/or Discretionary Amendment and those permitted under the Approved Annual Plan and Operating Budget. Notwithstanding the foregoing, under no circumstances shall Manager be relieved from its obligations to maintain the Operating Standard in any Fiscal Year on account of amounts budgeted for Capital Improvements if Owner approves an Annual Plan and Operating Budget providing for at least five percent (5%) of Gross Revenues to be made available for Capital Improvements in the Approved Annual Plan and Operating Budget. NOTWITHSTANDING THE FOREGOING OR ANYTHING TO THE CONTRARY SET FORTH HEREIN, OTHER THAN (A) THOSE ITEMS FOR WHICH OWNER IS EXPRESSLY PROHIBITED FROM WITHHOLDING ITS APPROVAL OVER PURSUANT TO SECTION 8.3(b) ABOVE; (B) MANAGER’S RIGHTS TO REIMBURSABLE EXPENSES PURSUANT TO SECTION 8.2(b); (C) EMERGENCY EXPENDITURES AS PERMITTED UNDER SECTION 8.4; (D) EXPENDITURES REQUIRED TO COMPLY WITH LEGAL REQUIREMENTS AS PERMITTED UNDER SECTION 8.5; AND/OR (E) OWNER’S OBLIGATIONS TO FUND WORKING CAPITAL SHORTFALLS UNDER SECTION 4.1, OWNER SHALL HAVE NO OBLIGATION TO ADVANCE OR APPROVE ANY ADDITIONAL FUNDS FOR THE OPERATION, MANAGEMENT AND MAINTENANCE OF THE PROPERTY AND NOTWITHSTANDING OWNER’S DETERMINATION NOT TO ADVANCE SUCH FUNDS, MANAGER SHALL NEVERTHELESS REMAIN OBLIGATED TO PERFORM ANY AND ALL OBLIGATIONS AND DUTIES SET FORTH HEREIN.
(e) Manager makes no assurances that the actual performance of the Property shall correspond to estimates in the Annual Plan and Operating Budget. Manager shall use diligent, commercially reasonable efforts (but without the obligation to incur any additional cost to Manager which is not reimbursable by Owner hereunder) to operate the Property within the Approved Annual Plan and Operating Budget; provided, however, Manager shall not be required to obtain Owner’s prior approval for additional expenditures which: (i) will cause the total expenses in the Approved Annual Plan and Operating Budget to be exceeded by less than five percent (5%); (ii) will cause the total expenses for an applicable department of the Property or each category of undistributed expenses to be exceeded by seven percent (7%) of the Approved Annual Plan and Operating Budget for such department or category; or (iii) relate to any category of cost or expense beyond the reasonable control of Manager including, without limitation, utility charges, insurance premiums, license and permit fees, legal judgments and/or taxes which shall be deemed increased to the actual cost levels incurred (provided, however, that items for which variable usage contributes to cost or for which alternative providers, coverage amounts and competitive bidding are available, in each case shall be subject to reasonable objection and cooperation by Owner as to such usage or coverage matters, and any dispute in respect thereof shall be resolved in accordance with Section 17.16(c) below) (each, a “Permitted Variance”). For avoidance of doubt, Manager shall not be in default of Manager’s express obligations to operate in accordance with the Approved Annual Plan and Operating Budget as set forth throughout this Agreement to that extent that Manager in its good faith, reasonable discretion exceeds the Approved Annual Plan and Operating Budget by the Permitted Variance.
(f) Manager shall use its commercially reasonable efforts to expend funds for Promotional Allowances and otherwise provide complimentary or discount goods and services in an amount not to exceed the amount set forth in the Approved Annual Plan and Operating Budget (excluding any Permitted Variance which the Parties acknowledge shall not apply to Promotional Allowances). In the event Manager believes in good faith that expenses in excess of the Promotional Allowance as provided in any Approved Annual Plan and Operating Budget are reasonably required or advisable to compete effectively with other hotel-casinos similarly to the Property, Manager shall have the right to exceed the approved Promotional Allowance by an amount not to exceed twenty-five percent (25%) for each Fiscal Quarter (“Promotional Variance”); provided, however, Manager shall give notice to Owner of any such Promotional Variance and such Promotional Variances will be subject to review by Owner at the end of the Fiscal Quarter. Any Promotional Variance exceeding twenty-five percent (25%) shall be subject to Owner’s prior written approval in its sole and absolute discretion. For avoidance of doubt, Manager shall not be in default of this Agreement for any Promotional Variance, not exceeding twenty-five percent (25%) and made by Manager in its good faith, reasonable discretion.
Appears in 1 contract
Annual Plan and Operating Budget. (a) Owner and Manager acknowledge and agree to adopt the annual plan and operating budget attached hereto as Schedule “4” as the Approved Annual Plan and Operating Budget for the first Fiscal Year for the PropertyManaged Properties. Not fewer than sixty (60) days prior to the commencement of each Full Fiscal Year thereafter (i.e., on or before November 1st of each Fiscal Year), Manager shall submit a proposed Annual Plan and Operating Budget to Owner for Owner’s review and approval. Manager shall use commercially reasonable efforts to base each Annual Plan and Operating Budget upon current and reliable information then available, taking into account the location of the Property applicable Properties and Manager’s experience in operating other comparable hotels, casinos and resorts. Each proposed Annual Plan and Operating Budget shall include the following:
(1) Monthly and annual projections of the following: (i) estimated results of operations (including estimated Gross Revenue, Operating Costs and Budgeted EBITDA), together with estimates of total labor costs; projected monthly balance sheets; and estimates of the Management Fees and Reimbursable Expenses; (ii) a description of proposed Routine Repairs and Maintenance to be made during such Fiscal Year pursuant to and in accordance with Section 7.1; (iii) a description of proposed Capital Improvements and Replacements to be made during such Fiscal Year; (iv) a statement of cash flow and description of Working Capital requirements; and (v) the initial Cage Cash Minimum Balance;
(2) In accordance with the Manager Allocation Agreement, (i) the proposed allocation of Corporate Overhead and Expenses to the Property Properties for such Fiscal Year; and (ii) with respect to the Annual Plan and Operating Budget for the 2011 Fiscal Year, the Initial Gross Revenues Budget and Initial Corporate Overhead Budget, excluding bonusesbonuses payable to Employees and employees of Manager (and/or Xxxxxxxx Entertainment and/or its Subsidiaries), for the first Full Fiscal Year;
(3) The proposed Promotional Allowance; and
(4) Any other items required to be included in the Annual Plan and Operating Budget pursuant to the terms and conditions of this Agreement and such other materials reasonably requested by Owner, from time to time.
(b) Manager shall make its representatives available during normal business hours to meet with Owner, from time to time, at Owner’s reasonable prior written request made no later than ten (10) Business Days prior to the proposal meeting date to review and discuss the proposed Annual Plan and Operating Budget. Owner shall have the right to approve or disapprove the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein), and/or to direct Manager to make whatever changes thereto Owner elects, in Owner’s sole and absolute discretion; provided, however, notwithstanding anything to the contrary contained herein, subject further to Manager’s rights to make expenditures pursuant to and in accordance with Sections 8.4 and 8.5 below, Owner shall not withhold its approval with respect to: (i) Manager’s reasonable projections of Gross Revenues or the components thereof; and (ii) subject to Manager’s obligation to use commercially reasonable efforts to estimate and include all such amounts in the applicable Annual Plan and Operating Budget, Impositions, reservation fees, utilities, insurance premiums, license and permit fees as well as amounts necessary to fund the cost and expense of food safety, life safety, and compliance with Gaming Laws; provided, further, in the event Owner does not approve in writing any specific item or items or the amounts thereof referenced in clause (ii) immediately above set forth in the Annual Plan and Operating Budget and the Parties are unable to resolve such monetary dispute prior to the commencement of the Fiscal Year in question, either Manager or Owner may submit the same for resolution as set forth in Section 17.16(c) below and pending the same, the specific item or items of expense (not revenue) shall be suspended and replaced for the Fiscal Year in question by an amount equal to the lesser of (1) that proposed by Manager for such Fiscal Year or (2) such budget items as set forth in the immediately prior Approved Annual Plan and Operating Budget (subject to escalation per item by the percentage increase in the CPI over the twelve (12) Fiscal Month period immediately preceding the start of the Fiscal Year in question). In the event that Owner shall approve or disapprove, and/or direct Manager to make whatever changes to the proposed Annual Plan and Operating Budget (including, without limitation, each and every line item or the amount thereof contained therein) in Owner’s sole and absolute discretion, Manager shall revise such Annual Plan and Operating Budget in accordance therewith and resubmit the same to Owner for approval and, other than the limitations on Owner’s approval rights referenced in clauses (i) and (ii) above, Manager shall have no right to object thereto except that Owner shall not have the right to disapprove, and/or direct Manager to make changes thereto, that would effectively prevent Manager from operating any one or more of the Properties (for example, Owner shall have the right to disapprove and/or direct Manager to make changes to the security payroll line item in Owner’s sole and absolute discretion but Owner shall not have the right to disapprove the payroll line item in its entirety or to make such other changes that would prevent Manager from employing a sufficient number of security personnel that are necessary to ensure public safety, to monitor Gaming operations in an effort to prevent theft and fraud, and to comply with all Legal Requirements, (subject to Owner’s right to contest any Legal Requirement as permitted pursuant to and in accordance with Section 2.11), or if the failure of Owner to approve a security payroll line item in the amount thereof would necessitate a closing of a Property and effectively prevent Manager from operating such Property) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below.
(c) Owner acknowledges that the projections contained in the Approved Annual Plan and Operating Budget for any particular Fiscal Year may be affected by changes in financial, economic, market, competitive, labor, natural and other conditions and circumstances beyond Manager’s control. If, by reason of any of such changes, Manager determines that, in its reasonable judgment, (i) amounts set forth in the Approved Annual Plan and Operating Budget are not sufficient to satisfy the Operating Standards or otherwise permit Manager to perform its responsibilities in the manner required hereunder, Manager shall notify Owner with respect to such deficiencies (accompanied by a narrative summary detailing the reasons for the request for additional funds) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval; or (ii) that a major renovation of one or more of the Properties is required, which renovation is not contained in the Approved Annual Plan and Operating Budget and is not otherwise permitted under this Section 8.3, Manager shall notify Owner with respect to such major renovation (accompanied by a narrative summary detailing the reasons for such major renovation) and propose revisions to the Approved Annual Plan and Operating Budget for Owner’s approval (each an “Discretionary Amendment”). If Owner fails to approve any Discretionary Amendment within thirty (30) days after the date of such submission, the Properties shall continue to be operated in accordance with the then-current Approved Annual Plan and Operating Budget; provided, however, Owner’s approval shall be subject to the same standards and limitations as set forth herein with respect to the initial Annual Plan and Operating Budget for such Fiscal Year and, further, Owner shall not unreasonably withhold its approval with respect to variable changes in line items of expense (unless otherwise required under this Agreement) which are related to and necessitated by changes in the projected occupancy rate (a “Variable Expense”), provided that such Variable Expense may be increased or decreased to the extent such increases or decreases are warranted and the re-projected occupancy rate of the applicable Property (to which such allocation is sought) for any Full Fiscal Year exceeds or falls below the projected occupancy and Gross Revenue (for avoidance of doubt, the Variable Expenses shall not automatically increase proportionately with increases in occupancy rate or Gross Revenues but shall only increase to the extent such increases in occupancy rate reasonably require greater expenditures with respect to the line item in question; for example, an increase in occupancy rate will require greater and perhaps proportionate expenditures for housekeeping but will not require greater expenditures for the General Manager) and, in any such event, Manager shall have the right to dispute such disapproval or such changes as Owner may direct Manager to make and submit the same for resolution as set forth in Section 17.16(c) below. If Owner approves any such Discretionary Amendment, the Annual Plan and Operating Budget, as amended and approved pursuant to the Discretionary Amendment, shall be the Approved Annual Plan and Operating Budget for the remainder of the Fiscal Year to which the Approved Annual Plan and Operating Budget, as amended by the Discretionary Amendment, relates; provided, however, such amended and restated Approved Annual Plan and Operating Budget shall neither result in a change to the Budgeted EBITDA set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year nor Manager’s obligations to meet the Performance Test pursuant to the thresholds set forth in the initial Approved Annual Plan and Operating Budget for such Fiscal Year.
(d) Other than those disputes with respect to which Manager shall have the right to submit the same for resolution under Section 17.16(c) as expressly set forth in paragraph (b) or (c) above, no proposed Annual Plan and Operating Budget or any proposed Discretionary Amendment shall be subject to dispute nor subject to arbitration under Section 17.16; provided, however, if (i) in any Fiscal Year, Owner disapproves of the proposed Annual Plan and Operating Budget or any Discretionary Amendment thereto prepared by Manager in accordance with Sections 8.3(a) or (c), as applicable, with expenditures at levels reasonably required in order to comply with the Operating Standards; and (ii) Manager can reasonably demonstrate that Owner’s refusal to approve such proposed Annual Plan and Operating Budget and/or Discretionary Amendment will have an adverse effect on the Operating Standards for such Fiscal Year, then Manager shall not be in breach of those Operating Standards for such Fiscal Year (but Manager shall not be relieved from the performance of Manager’s services duties and responsibilities under this Agreement and the Performance Test shall be equitably adjusted in accordance with Section 3.2) to the extent Manager was effectively prevented from complying with such Operating Standards as a result of differences between those expenditures in the proposed Annual Plan and Operating Budget and/or Discretionary Amendment and those permitted under the Approved Annual Plan and Operating Budget. Notwithstanding the foregoing, under no circumstances shall Manager be relieved from its obligations to maintain the Operating Standards in any Fiscal Year on account of amounts budgeted for Capital Improvements if Owner approves an Annual Plan and Operating Budget providing for at least five percent (5%) of Gross Revenues to be made available for Capital Improvements in the Approved Annual Plan and Operating Budget. NOTWITHSTANDING THE FOREGOING OR ANYTHING TO THE CONTRARY SET FORTH HEREIN, OTHER THAN (A) THOSE ITEMS FOR WHICH OWNER IS EXPRESSLY PROHIBITED FROM WITHHOLDING ITS APPROVAL OVER PURSUANT TO SECTION 8.3(b) ABOVE; (B) MANAGER’S RIGHTS TO REIMBURSABLE EXPENSES PURSUANT TO SECTION 8.2(b); (C) EMERGENCY EXPENDITURES AS PERMITTED UNDER SECTION 8.4; (D) EXPENDITURES REQUIRED TO COMPLY WITH LEGAL REQUIREMENTS AS PERMITTED UNDER SECTION 8.5; AND/OR (E) OWNER’S OBLIGATIONS TO FUND WORKING CAPITAL SHORTFALLS UNDER SECTION 4.1, OWNER SHALL HAVE NO OBLIGATION TO ADVANCE OR APPROVE ANY ADDITIONAL FUNDS FOR THE OPERATION, MANAGEMENT AND MAINTENANCE OF THE PROPERTIES AND NOTWITHSTANDING OWNER’S DETERMINATION NOT TO ADVANCE SUCH FUNDS, MANAGER SHALL NEVERTHELESS REMAIN OBLIGATED TO PERFORM ANY AND ALL OBLIGATIONS AND DUTIES SET FORTH HEREIN.
(e) Manager makes no assurances that the actual performance of the Properties shall correspond to estimates in the Annual Plan and Operating Budget. Manager shall use diligent, commercially reasonable efforts (but without the obligation to incur any additional cost to Manager which is not reimbursable by Owner hereunder) to operate the Properties within the Approved Annual Plan and Operating Budget; provided, however, Manager shall not be required to obtain Owner’s prior approval for additional expenditures which: (i) will cause the total expenses in the Approved Annual Plan and Operating Budget to be exceeded by less than five percent (5%); (ii) will cause the total expenses for an applicable department of the Properties or each category of undistributed expenses to be exceeded by seven percent (7%) of the Approved Annual Plan and Operating Budget for such department or category; or (iii) relate to any category of cost or expense beyond the reasonable control of Manager including, without limitation, utility charges, insurance premiums, license and permit fees, legal judgments and/or taxes which shall be deemed increased to the actual cost levels incurred (provided, however, that items for which variable usage contributes to cost or for which alternative providers, coverage amounts and competitive bidding are available, in each case shall be subject to reasonable objection and cooperation by Owner as to such usage or coverage matters, and any dispute in respect thereof shall be resolved in accordance with Section 17.16(c) below) (each, a “Permitted Variance”). For avoidance of doubt, Manager shall not be in default of Manager’s express obligations to operate in accordance with the Approved Annual Plan and Operating Budget as set forth throughout this Agreement to that extent that Manager in its good faith, reasonable discretion exceeds the Approved Annual Plan and Operating Budget by the Permitted Variance.
(f) Manager shall use its commercially reasonable efforts to expend funds for Promotional Allowances and otherwise provide complimentary or discount goods and services in an amount not to exceed the amount set forth in the Approved Annual Plan and Operating Budget (excluding any Permitted Variance which the Parties acknowledge shall not apply to Promotional Allowances). In the event Manager believes in good faith that expenses in excess of the Promotional Allowance as provided in any Approved Annual Plan and Operating Budget are reasonably required or advisable to compete effectively with other hotel-casinos similarly to the applicable Property, Manager shall have the right to exceed the approved Promotional Allowance by an amount not to exceed twenty-five percent (25%) for each Fiscal Quarter (“Promotional Variance”); provided, however, Manager shall give notice to Owner of any such Promotional Variance and such Promotional Variances will be subject to review by Owner at the end of the Fiscal Quarter. Any Promotional Variance exceeding twenty-five percent (25%) shall be subject to Owner’s prior written approval in its sole and absolute discretion. For avoidance of doubt, Manager shall not be in default of this Agreement for any Promotional Variance, not exceeding twenty-five percent (25%) and made by Manager in its good faith, reasonable discretion.
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