EXHIBIT 10.10
COMPROMISE AGREEMENT
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This Compromise Agreement (the "Compromise Agreement") is entered into by
and among Hilton New Orleans Corporation, a Louisiana corporation ("HNOC"), New
Orleans Paddlewheels, Inc., a Louisiana corporation ("NOP"), Queen of New
Orleans at the Hilton Joint Venture, a joint venture of HNOC and NOP organized
under Louisiana law ("QNOV"), and the City of New Orleans ("City").
RECITALS
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A. QNOV is the holder of a riverboat gaming license issued and regulated
by the Louisiana Gaming Control Board ("the Board"). Whenever a matter referred
to in this Compromise Agreement requires "Board approval," such approval shall
be evidenced by an order executed by the Board (or, if authorized, by its
Chairman), which order is unconditional as to the subject matter thereof, or
contains conditions which are acceptable to QNOV, HNOC and NOP.
B. HNOC intends to terminate its participation in QNOV and Shreveport
Paddlewheels, L.L.C. ("Shreveport Paddlewheels," an entity with the same
ownership as NOP), HWCC-Louisiana, Inc. ("Hollywood"), a wholly-owned subsidiary
of Hollywood Casino Corporation, and Sodak Louisiana, L.L.C. ("Sodak"), a
wholly-owned subsidiary of Sodak Gaming, Inc., intend to become joint venturers
in QNOV (or a new entity which will succeed to QNOV's rights and obligations) to
operate a riverboat gaming vessel berthed in the City of Shreveport, State of
Louisiana, in conjunction with a project to be approved by the Board (same being
referred to herein as QNOV whether a new successor entity is formed or a new
name is used).
C. On or about October 20, 1997, QNOV filed a petition with the Board
requesting approval of the transfer of interest in QNOV from HNOC to NOP and/or
Shreveport Paddlewheels, Sodak and Hollywood (such request is the "NOP Transfer
Request" and the transfer of such interests is the "Transfer") and approval of
QNOV's Shreveport project both as more fully described in the memorandum
attached to the Petition (the "Shreveport Project Request"). The NOP Transfer
Request and the Shreveport Project Request have been taken under advisement and
shall be decided by the Board in due course. Hollywood and Sodak have agreed to
execute a side agreement relating to the obligations of QNOV to the City.
D. Pursuant to an order of the Board dated October 11, 1996, QNOV
previously established an escrow account in the amount of $6 million. QNOV
requested that the escrow account be terminated at the Board meetings held on
October 21, 1997 and November 18, 1997 ("Escrow Termination Request").
E. City, through its Department of Finance, Bureau of Revenue, and
through Xxxxxx X. Xxxx, Director of Finance (the "Department of Finance") has
made demands upon QNOV, NOP, HNOC, the Flamingo Casino and others for alleged
sales and use taxes, ad valorem taxes, boarding fees, interest, penalties,
attorneys fees and audit costs in the aggregate sum of THREE MILLION EIGHT
HUNDRED TEN THOUSAND SEVEN HUNDRED EIGHTY FIVE and 46/100
($3,810,785.46) DOLLARS, as described in the attached Exhibits "A-1" and "A-2,"
all allegedly arising out of the operation of the M/V QUEEN OF NEW ORLEANS
(d/b/a Flamingo Casino), (the "Vessel"), which operated from a berth in the City
of New Orleans through September 30, 1997 (the "Tax Claims").
F. City has also alleged, and QNOV has denied, that QNOV is indebted to
City in the sum of TEN MILLION and no/100ths ($10,000,000) DOLLARS (the "Moving
Claims") pursuant to an Order of the Board dated October 11, 1996.
G. In connection with the Tax Claims, City has caused the seizure of
various assets of QNOV, NOP and HNOC including certain bank deposits and funds
in which QNOV, HNOC and/or NOP have or are alleged to have an ownership or
similar interest ("the Bank Seizure") and the Vessel owned by HNOC ("the
Flamingo Seizure") and the parties have instituted various legal proceedings,
including:
(1) New Orleans Paddlewheels, Inc. v. Xxxxxx Xxxx, Director of the
Department of Finance, Bureau of Revenue of the City of New Orleans, Orleans
Parish Civil District Court No. 97-16630, and any and all appeals thereof;
(2) Queen of New Orleans at the Hilton Joint Venture and New Orleans
Paddlewheels, Inc. v. Xxxxxx Xxxx, Director of the Department of Finance, Bureau
of Revenue of the City of New Orleans, Orleans Parish Civil District Court No.
97-16629, and any and all appeals thereof;
(3) Xxxxxx Xxxx, Director of Finance, City of New Orleans v. Queen of New
Orleans at the Hilton Joint Venture, New Orleans Paddlewheels, Inc. and Hilton
New Orleans Corporation, Orleans Parish Civil District Court No. 97-17222, and
any and all appeals thereof.
Collectively, all of such suits are referred to as the "Tax Litigation."
H. City has also filed the following suits or petitions:
(1) The City of New Orleans v. The Louisiana Gaming Control Board, the
State of Louisiana, The Queen of New Orleans at the Hilton Joint Venture, New
Orleans Paddlewheels, Inc. and Hilton New Orleans Corporation, 19th Judicial
District Docket No. 443,179, and any and all appeals thereof; and
(2) A petition styled "Petition for Rehearing and Clarification of Board
Order" with the Board (the "City Petition").
Collectively, the foregoing suit and petition are referred to as the
"Gaming Litigation."
I. The discontinuance of operations of the Vessel by QNOV has resulted in
the loss of jobs of approximately 362 former employees of QNOV ("the Unemployed
Workers").
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J. The parties hereto appeared at public meetings of the Board held on
October 21, 1997 and November 18, 1997, during which the parties entered into
and stipulated on the record a compromise of the Tax Claims and the Moving
Claims that City has asserted or may have asserted against QNOV, HNOC and/or NOP
as well as any and all defenses, counterclaims, and cross-claims that QNOV, HNOC
and/or NOP have or may have against City, whether asserted or unasserted (the
"Counterclaims") arising out of the operation or discontinuance of the operation
of the Vessel and/or the Bank Seizure and/or the Flamingo Seizure.
K. The parties desire to further evidence and establish the terms and
conditions of the compromise reached among them by execution of this Compromise
Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the payments to be received hereunder
and for additional good and valuable consideration, the parties agree as
follows:
Section 1. RECITALS
1.1 The Recital paragraphs appearing immediately above are
incorporated herein by this reference and the parties hereto acknowledge the
accuracy of the statements made therein.
Section 2. OBLIGATIONS IMPOSED UPON AND UNDERTAKEN BY HNOC
2.1 Upon Board approval of the Escrow Termination Request and the
transfer of the interest of HNOC in QNOV to NOP, Hollywood and Sodak, or their
respective affiliates or designees, HNOC will pay unto City the sum of FIVE
MILLION and no/100ths ($5,000,000.00) in cash, in satisfaction of HNOC's
obligations for the Moving Claims and thereafter HNOC and its affiliates shall
have no further responsibility or liability to City or any other party hereto
with respect to the Moving Claims, and the obligations of QNOV shall
specifically exclude HNOC.
2.2 Intentionally omitted.
2.3 HNOC and its parent, Hilton Hotels Corporation, agree to offer to
the former employees of QNOV comparable employment at its other gaming
properties owned or managed by HNOC, its parent or affiliates, located in
Mississippi, New Jersey, Nevada and Missouri. HNOC and its parent and
affiliates will make available at least 300 such jobs at such properties to
persons that apply for such employment prior to the earlier of October 31, 1998
or the date 90 days after the date that the letter attached hereto as Exhibit
"B" is sent to such persons (the later of such dates is the "Expiration Date").
Any person so applying must meet all licensing and other job criteria and agree
to pay all relocation expenses associated with their new employment. HNOC will
keep the City informed of the responses that it receives to such letter on or
prior to the Expiration Date and the action taken with respect to such
responses. If HNOC and its parent and affiliates are able to place all
qualified former employees that apply on or before the Expiration Date and who
meet the
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other requirements set forth above, then all obligations under this Section 2.3
shall be deemed satisfied and fulfilled. Nothing contained herein shall be
construed as an offer of guaranteed employment or employment at any specific
location to any particular person or group of persons.
Section 3. OBLIGATIONS IMPOSED UPON AND UNDERTAKEN BY QNOV
3.1 In partial satisfaction of the Tax Claims, QNOV has previously
delivered to City checks in the amounts of $453,902.34 and $428,955.38 for ad
valorem personal property taxes, and QNOV has also paid to City riverboat gaming
boarding fees for the month of September, 1997 in the amount of $306,650. Upon
the execution hereof QNOV will pay unto City (by check made payable jointly to
the City and its attorneys, Xxxxxx, Xxxxxxxxx et al.) the sum of NINE HUNDRED
TEN THOUSAND FOUR HUNDRED AND NINETY TWO AND 28/100ths ($910,492.28) DOLLARS in
cash, which, when combined with the prior payments, will constitute payment of
TWO MILLION ONE HUNDRED THOUSAND AND 00/100 ($2,100,000) DOLLARS in full
satisfaction and final settlement of the Tax Claims together with all attorney
fees and related expenses incurred by City in connection with City's efforts to
collect the Tax Claims, the Moving Claims, in negotiating and consummating this
Compromise Agreement, and in connection with the Bank Seizure and the Flamingo
Seizure.
3.2 If the Shreveport Project Request is approved by the Board and
the Transfer occurs, for the remainder of the satisfaction of the Moving Claims,
QNOV hereby agrees to pay to City the sum of FIVE MILLION and no/100ths
($5,000,000.00) DOLLARS immediately following receipt by QNOV of the first
proceeds of the financing, other than equity contributions of the QNOV partners
(whether such financing is through debt, equity, or a combination thereof)
obtained by it for the commencement of construction of landside facilities in
Shreveport, Louisiana representing approximately 70% of the total project cost,
or about $100 million ("the Shreveport Financing"). If the Shreveport Financing
shall not be obtained but the Shreveport Project is nonetheless constructed and
opened for business, then the $5,000,000 payment shall be due on or before the
date of opening. It is expressly understood and agreed that the aforesaid
amount shall become due and payable immediately following receipt of the first
debt or loan proceeds so obtained, and if the Shreveport Financing does not
occur and the Shreveport Project is not otherwise constructed and opened for
business, QNOV shall have no further obligation to the City hereunder or
otherwise. QNOV expressly agrees to provide City with written reports every
thirty (30) calendar days concerning the progress of the Shreveport Financing
and with copies of all applications submitted to any banks or other commercial
lenders to obtain such financing with copies of any Offering Summaries or
similar documents prepared by it to solicit or obtain any equity or bond
financing, whether public or private.
3.3 If the Shreveport Project Request is approved by the Board and
the Transfer occurs, QNOV agrees to provide preferred access to reemployment to
at least 100 Unemployed Workers (or such lesser number as then remain
unemployed) who meet all licensing and other job criteria and who agree to pay
all relocation expenses associated with their new employment, in connection with
the riverboat gaming project in Shreveport. QNOV agrees to provide City with
full
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details of the implementation of this reemployment program at least sixty (60)
calendar days prior to commencing operations in Shreveport. Nothing contained
herein shall be construed as an offer of guaranteed employment to any particular
person or group of persons.
Section 4. MUTUAL RELEASES AND INDEMNITIES
4.1 (a) Upon execution of this Compromise Agreement by all parties
and payment of the sums due City as provided in Section 3.1 hereof, City does
hereby release, forgive, acquit, and forever discharge QNOV, HNOC, NOP and their
respective agents, servants, employees, officers, managers, stockholders,
partners, directors, underwriters, insurers, subsidiary, parent and affiliated
corporations, successors, assigns and the M/V QUEEN OF NEW ORLEANS and any other
vessel or vessels which are, or might be involved, and her mastering crew, her
agents, her owners or charterers, her managers and/or her underwriters, and such
vessels shall be fully and finally released from all claims for alleged tax
indebtedness owed by QNOV, NOP and HNOC, including, without limitation, the Tax
Claims and all other claims regarding Amusement Tax, Riverboat Gaming Admission
Fee, Sales and Use Tax, Tobacco Products Special Tax, and Occupational License
Tax, from May 20, 1992 through the date hereof, including all claims, demands,
liens, rights and causes of action of whatsoever kind arising from the
aforementioned Tax Litigation, or the matters referenced therein, whether
pending or that could have been brought in the Tax Litigation, and
(b) Upon (1) execution of this Compromise Agreement by all parties, and
(2) payment to the City of the $5 million as provided in Section 2.1 hereof, for
and in consideration thereof and in consideration of the reciprocal release
contained herein, City does hereby release, forgive, acquit, and forever
discharge QNOV, HNOC, NOP and their respective agents, servants, employees,
officers, managers, stockholders, partners, directors, underwriters, insurers,
subsidiary, parent and affiliated corporations, successors, assigns and the M/V
QUEEN OF NEW ORLEANS and any other vessel or vessels which are, or might be
involved, and her mastering crew, her agents, her owners or charterers, her
managers and/or her underwriters, and such vessels shall be fully and finally
released from the Moving Claims including all claims, demands, liens, rights and
causes of action of whatsoever kind arising from the aforementioned Tax
Litigation and Gaming Litigation, or the matters referenced therein, whether
pending or that could have been brought in the Tax Litigation and Gaming
Litigation. Notwithstanding anything herein to the contrary, the obligations of
the parties under or evidenced by this Agreement, and any rights or claims for a
breach thereof, shall not be waived, released or discharged under this Section
or otherwise.
(c) The matters released and discharged hereby shall include, but not be
limited to, any pending claims and claims that could have been brought for
penalties, attorney's fees, interest, audit or examination costs, and all
costs, fees, expenses or other payments due to City and/or the Civil Sheriff of
the Parish of Orleans, and any and all additional fees, costs, expenses or other
payments due to or incurred by the City or the Civil Sheriff shall be borne by,
and be the sole responsibility of, City.
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4.2 For good and valuable consideration, receipt of which is hereby
acknowledged, QNOV, NOP, and HNOC their successors and assigns, and the
officers, directors, agents, employees, and attorneys of any of them, do hereby
release, forgive, acquit, and forever discharge, City, its agencies and
departments, and all officials, agents, employees, and attorneys of any of them,
from any and all further liability whatsoever by virtue of the Counterclaims
arising out of the operation or discontinuance of the operation of the Vessel
and/or the Bank Seizure and/or the Flamingo Seizure. This release shall be
effective as to the Bank Seizure, the Flamingo Seizure and the Tax Claims upon
the execution of this Compromise Agreement and the release by City of the Bank
Seizure and the liens on the accounts subject thereto, and the Flamingo Seizure
and the liens on the M/V Queen of New Orleans, and any other assets seized by
City. This release shall be effective as to the Moving Claims upon receipt by
the City of the $5 million as set forth in Section 2.1.
4.3 Upon the effectiveness of the foregoing releases, each of the
parties agrees to take any and all actions, and to file such pleadings, motions,
petitions or other items as are necessary to dismiss any and all pending law
suits or other litigation between them concerning the Tax Claims, the Moving
Claims, and/or the Counterclaims, including each suit comprising the Tax
Litigation and the Gaming Litigation, and to withdraw the City Petition. All
such suits shall be dismissed with prejudice, each party to bear its own
respective costs. Each party represents and warrants to the other parties that
it knows of no other litigation pending or filed with respect the matters
referenced herein or the business of QNOV.
4.4 NOP and HNOC do hereby agree to indemnify City, its agencies and
departments, and all officials, agents, employees, and attorneys of any of them,
from any and all actual losses by virtue of claims or litigation, presented or
filed by persons or entities who are not parties to this Compromise Agreement,
arising out of the discontinuance of the operation of the Vessel and/or the Bank
Seizure and/or the Flamingo Seizure; provided that the foregoing shall not apply
to any loss, claim, or litigation involving any governmental entity or body
(including, without limitation, the Civil Sheriff of the Parish of Orleans or
any other costs or expenses relating to the Vessel Seizure and the Bank
Seizure).
Section 5. MISCELLANEOUS
5.1 It is expressly agreed, acknowledged and understood that the
payments and other matters and actions referenced herein are made purely by way
of compromise and settlement and are in no way to be construed as an admission
of liability on the part of any party hereto or as an admission of the validity
of any tax or other payment alleged to have been due from any party.
5.2 Any party hereto may specifically waive any breach of this
Compromise Agreement by the other party but no such waiver shall be deemed to
have been given unless the waiver is in writing signed by the waiving party and
specifically designating the breach waived nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
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5.3 If, for any reason whatsoever, any one or more of the provisions
of this Compromise Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Compromise Agreement inoperative, unenforceable or invalid and the
inoperative, unenforceable or invalid provisions shall be construed as if it
were written so as to effectuate, to the maximum extent possible, to parties'
intent.
5.4 The existence, validity, construction, operation and effect of
any and all terms and provisions of this Compromise Agreement shall be
determined in accordance with and governed by the internal laws of the State of
Louisiana.
5.5 This Compromise Agreement contains the entire agreement among the
parties with respect to the subject matter hereof and supersedes any and all
prior agreements, understandings and commitments whether oral or written. This
Compromise Agreement may be amended only by a written signing by duly authorized
representatives for all the parties to this Compromise Agreement.
5.6 (a) Notices Procedure. All notices or other communications
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required or permitted to be given or delivered pursuant to this Compromise
Agreement shall be in writing and shall be considered as properly given if
mailed by Certified United States mail, postage prepaid, with return receipt
requested, overnight courier service or facsimile transmission with receipt
confirmed. Any party hereto may from time to time, by notice in writing served
upon the other parties hereto pursuant to this Section designate a different
address or person to whose attention notices shall be given. Notices hereunder
shall be deemed given upon receipt.
(b) Addresses. The addresses of the parties hereto for notices
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are:
City: City of New Orleans
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attention: City Clerk
and
City Attorney
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
and
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Rodney, Bordenave, Xxxxxx, Xxxxxxxx &
Xxxxx
000 Xxxxxxx Xxxxxx - Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, Xx.
Xxxxxx New Orleans Corporation: Hilton Hotels Corporation
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Baltimore, Jr.
and
Xxxxxx Xxxxxx, L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
New Orleans Paddlewheels, Inc.:
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxx
and
XxXxxxxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Notices to the Queen of New Orleans at the Hilton Joint Venture should be sent
to each of the parties listed herein other than the City.
Sodak Gaming, Inc.:
Sodak Gaming, Inc.
0000 Xxxxx Xxxxxxx 00
Xxxxx Xxxx, XX 00000
Hollywood Casino Corporation:
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Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
00000 Xxxx Xxxx, XX 00
Xxxxxx, Xxxxx 00000
5.7 This Compromise Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
5.8 Captions in this Compromise Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Compromise Agreement.
5.9 There shall be no third party beneficiaries to this Compromise
Agreement.
5.10 The release in favor of QNOV, NOP, and HNOC, their successors and
assigns, and the officers, directors, agents, employees, and attorneys of any of
them provided in Section 4.1 above shall be automatically and retroactively
voided and all released obligations shall be automatically reinstated as if such
release had never been given if, at any time, any payment or part thereof to
City with respect to any of the released obligations or claims, or the release
provided in Section 4.2 above to City, is avoided, rescinded, or must otherwise
be restored by City pursuant to any insolvency, bankruptcy, reorganization,
receivership, or an other debt relief granted to QNOV or NOP or HNOC or any of
their successors and assigns or of any other person. In the event that City
shall be obligated to restore any payment or part thereof to City with respect
to any of the released obligations or claims, or the release provided in Section
4.2 above to City is avoided for any reason, the obligations and claims
released under Section 4.1 above shall be renewed, restored, and reinstated and
shall remain in full force and effect to the same degree and extent as if such
release had never been granted. Nothing contained in this Section shall be
deemed an admission of liability by QNOV, NOP, and HNOC, the parties recognizing
and agreeing that all defenses to liability held by all or any of them, if any,
shall be reinstated and restored to the same degree and extent as the
obligations and claims shall be reinstated and restored. Notwithstanding the
above, in the event that the release provided in Section 4.1 shall be voided
pursuant to this Section, the release provided by QNOV, NOP, and HNOC under
Section 4.2 above shall remain in full force and effect. The provisions of this
Section shall apply only to the payments hereunder for which a party is
responsible under this Agreement so that for example, if any payment under
Sections 3.2 hereof is returned by the City, such event shall not affect the
release of HNOC under Section 2.2 hereof.
IN WITNESS WHEREOF, the parties have executed this Compromise Agreement, in
multiple originals, as of the 15th day of September, 1998.
QUEEN OF NEW ORLEANS AT THE HILTON JOINT VENTURE, a
Louisiana Joint venture
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By: HILTON NEW ORLEANS CORPORATION, a
Louisiana Corporation
By:
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Name:
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Title:
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By: NEW ORLEANS PADDLEWHEELS, INC., a
Louisiana Corporation
By:
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Name:
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Title:
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HILTON NEW ORLEANS CORPORATION, a Louisiana Corporation
By:
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Name:
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Title:
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NEW ORLEANS PADDLEWHEELS, INC., a Louisiana Corporation
By:
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Name:
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Title:
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CITY OF NEW ORLEANS
By:
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Name:
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Title:
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Hilton Hotels Corporation has executed this Compromise Agreement for the
sole and exclusive purpose of Section 2.3 hereof, and each of the parties
acknowledge and agree that Hilton Hotels Corporation shall have no liabilities
or obligations other than those specifically set forth in such Section 2.3.
HILTON HOTELS CORPORATION
By:
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Name:
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Title:
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