Common use of Overhead Allocation Clause in Contracts

Overhead Allocation. FG and the Mortgage Lenders agree to negotiate in good faith to determine, and reflect in the definitive documentation for the New PropCo management agreement, the appropriate allocation of corporate overhead and expenses between FG and New PropCo, and any relevant offsets against management fees otherwise payable to FG under such management agreement. The methodology and allocations will be determined by FG and the Mortgage Lenders in the definitive documentation, subject to input from outside accountants, to be generally consistent in relative allocation (though not necessarily as to allocation categories and type) between current unallocated corporate overhead and expenses and allocated corporate overhead and expenses, and will involve, among other factors (FG allocations to be paid directly or by means of offset against management fees if paid by New PropCo): (a) Allocation of functions and associated personnel to be the responsibility of FG, with allocation of cost and expense to FG, with specific functions and personnel types to be detailed, such as CEO, COO, VP of Operations, HR, IT, Slots, and Marketing and associated support personnel; (b) corporate headquarters space rental and other costs and expenses for FG operations and personnel, including that necessary for the above functions and FG’s performance under the management agreement, allocated to FG; (c) allocation during the term of the management agreement, with monitoring and approval of allocations in the budget process solely by the OH Directors contemplated under Annex 7 (as a distinct required budget approval component, modifying the otherwise applicable budget provisions contemplated under Annex 7) and monitoring to be handled by the non-FG officers referred to in Annex 7; (d) concurrently with the delivery of the initial annual budget and for the initial two Fiscal Years under the Management Agreement, FG and the PropCo Plan Recipients will agree upon a budget setting forth the pro forma Gross Revenues (“Initial Gross Revenues Budget”) and budgeted pro forma corporate overhead and expenses to be borne by the Properties which shall be consistent with the principle set forth above (the “Initial Corporate Overhead Budget”), and in the event that for either the first or second Fiscal Year the actual corporate overhead and expenses borne by Propco (“Actual Corporate Overhead”) for the Fiscal Year exceeds (such excess, if any, the “Corporate Overhead Excess”) the product of (1) Initial Corporate Overhead Budget for the first Fiscal Year and (2) the greater of (x) 1.0, (y) a fraction the numerator of which is actual Gross Revenues for such Fiscal Year and the denominator of which is the Initial Gross Revenues Budget for the first Fiscal Year or (z) for the second Fiscal Year, the CPI increase for such year, then 35% of such Corporate Overhead Excess for such Fiscal Year shall be deducted from the management fees otherwise payable to the Manager under the Management Agreement; and

Overhead Allocation. FG and the Mortgage Lenders agree to negotiate in good faith to determine, and reflect in the definitive documentation for the New PropCo management agreement, the appropriate allocation of corporate overhead and expenses between FG and New PropCo, and any relevant offsets against management fees otherwise payable to FG under such management agreement. The methodology and allocations will be determined by FG and the Mortgage Lenders in the definitive documentation, subject to input from outside accountants, to be generally consistent in relative allocation (though not necessarily as to allocation categories and type) between current unallocated corporate overhead and expenses and allocated corporate overhead and expenses, and will involve, among other factors (FG allocations to be paid directly or by means of offset against management fees if paid by New PropCo): (a) Allocation of functions and associated personnel to be the responsibility of FG, with allocation of cost and expense to FG, with specific functions and personnel types to be detailed, such as CEO, COO, VP of Operations, HR, IT, Slots, and Marketing and associated support personnel; (b) corporate headquarters space rental and other costs and expenses for FG operations and personnel, including that necessary for the above functions and FG’s performance under the management agreement, allocated to FG; (c) allocation during the term of the management agreement, with monitoring and approval of allocations in the budget process solely by the OH Directors contemplated under Annex 7 (as a distinct required budget approval component, modifying the otherwise applicable budget provisions contemplated under Annex 7) and monitoring to be handled by the non-FG officers referred to in Annex 7; (d) concurrently with the delivery of the initial annual budget and for the initial two Fiscal Years under the Management Agreement, FG and the PropCo Plan Recipients will agree upon a budget setting forth the pro forma Gross Revenues (“Initial Gross Revenues Budget”) and budgeted pro forma corporate overhead and expenses to be borne by the Properties which shall be consistent with the principle set forth above (the “Initial Corporate Overhead Budget”), and in the event that for either the first or second Fiscal Year the actual corporate overhead and expenses borne by Propco (“Actual Corporate Overhead”) for the Fiscal Year exceeds (such excess, if any, the “Corporate Overhead Excess”) the product of (1) Initial Corporate Overhead Budget for the first Fiscal Year and (2) the greater of (x) 1.0, (y) a fraction the numerator of which is actual Gross Revenues for such Fiscal Year and the denominator of which is the Initial Gross Revenues Budget for the first Fiscal Year or (z) for the second Fiscal Year, the CPI increase for such year, then 35% of such Corporate Overhead Excess for such Fiscal Year shall be deducted from the management fees otherwise payable to the Manager under the Management Agreement; and (e) if Corporate Overhead Excess occurs during the first two Fiscal Years, it is acknowledged that the initial allocations of corporate overhead between New PropCo and FG in the management agreement were incorrect and the allocation of corporate overhead will be readjusted for future Fiscal Years to increase the direct corporate overhead responsibilities and associated costs and expenses of FG and/or to offset a portion of New PropCo corporate overhead against management fees otherwise payable to FG, in each case in amount, kind and type so as to ensure the result in the intended effect of the initial allocations, the provisions for such adjustments to be determined as part of the definitive documentation with input from outside accountants. As part of the due diligence and definitive documentation under the Term Sheet, including the Management Agreement, the staffing and structure of FG shall be adequate to ensure FG’s ability to perform its duties as described in this Term Sheet. Capitalized terms used in this Annex 4 have the following meanings: