Exhibit 10.11
CONSULTING AGREEMENT
This AGREEMENT (hereinafter the "Agreement") dated as of August 14,
1997 by and between Conserver Corporation of America, a corporation organized
under the laws of the State of Delaware and any of its affiliated entities
(hereinafter the "Company") and Star Casinos Limited, a company organized with
limited liability under the laws of Cyprus (hereinafter the "Consultant").
WHEREAS, subject to stockholder approval, the Company is seeking to
enter into a new line of business in the hotel and casino industry; and
WHEREAS, the Company has entered or plans to enter into certain
agreements, which remain subject to stockholder approval and other conditions
(collectively, the Agreements") pursuant to which the Company has rights to
invest in and develop a hotel and casino project in Sakhalin Island, the Russian
Federation (the "Sakhalin Project"); and
WHEREAS, the Company desires to engage the Consultant to provide
consulting and technical services to the Company and its affiliated entities in
connection with advising the Company with respect to its involvement in the
planning, developing, equipping, pre-opening and other operational activities of
the Sakhalin Project and other casinos to be developed in the future by the
Company (each a "Project" and collectively, the "Projects"); and
WHEREAS, the Consultant is experienced in the planning, developing,
equipping, pre-opening and other operational activities of casino projects.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Advisory and Technical Services.
Upon the terms and conditions contained herein, Consultant agrees to
make available the services of Xxxxx Xxxxxxx ("Xxxxxxx") to provide at
all times reasonably requested by the Company, advisory and technical
consulting services described herein to the Company with respect to the
Projects, including the Sakhalin Project and other casinos which have
been identified by the Company for possible future development by the
Company. The Consultant shall also make available the services of
Xxxxxxx to identify for the Company, other potential casino
opportunities which the Company may pursue, based upon the Company's
specific criteria.
2. The Engagement: Phases of Development and Operation.
Subject to the terms and conditions hereinafter set forth, the Company
does hereby engage and retain the Consultant and the Consultant does
hereby agree to be engaged and retained by the Company, to provide the
services hereinafter described.
The services to be rendered by the Consultant to the Company with
respect to each Project shall involve two phases, which are defined
generally as:
2.1 The preliminary planning, developing, equipping, pre-opening
and other operational activities of the Project
("Phase I"); and
2.2 The operations phase for the Project ("Phase II").
3. Term of Agreement.
This Agreement shall become effective on the later of (i) October 1,
1997 and (ii) the date of receipt of stockholder approval for the
Agreements (the "Commencement Date") and shall terminate two years
thereafter, subject to extension based upon the mutual agreement of the
parties hereto.
4. Phase I - Pre-Opening of the Project.
During Phase I, which shall commence on the Commencement Date, the
Consultant shall perform the following consulting and technical
services for and on behalf of the Company:
4.1 The Consultant will review the architectural plans and
specifications for the Project and will advise and consult
with the Company with respect to the Project layout, public
space layouts, food and beverage concepts and facilities and
other space programs and requirements for the Project.
4.2 The Consultant will advise the Company in the selection,
retention and coordination of a project manager, architects,
interior designers, landscape designers and purchasing agents
during the construction period and will provide such
professionals with advice with respect to casino operations as
may be reasonably required. The Consultant will conduct such
inspections and reviews from time to time during the
construction period.
4.3 The Consultant will advise the Company of the preparation of
staffing requirements, employment time tables and hiring and
training guidelines, wages and benefit plans for employees and
other programs relating to staffing for the Project employees.
4.4 The Consultant will advise the Company in the preparation,
revision and updating from time to time of the pre-opening
operating budget and marketing plan for the Project and its
various departments.
4.5 At an appropriate time prior to the opening, the Consultant
will provide advice to the Company with respect to the hiring
and retaining of a general manager and such other department
heads as may be reasonably required in each case, and
thereafter, with the assistance of such department heads, the
Consultant
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will advise the Company on the engagement of a full staff of
employees for the Project.
4.6 The Consultant will advise the Company in the coordination of
the development of the Project operating concepts, the
selection and acquisition of gaming equipment and the
development of a credit policy and credit collection system.
4.7 The Consultant will advise the Company in the coordination of
securing all licenses necessary to open and operate the
Project, including gaming licenses, occupational licenses,
liquor licenses, sanitary licenses and the like.
4.8 The Consultant will advise the Company and the Company will
hire and retain sales personnel and establish a sales program
for the purpose of marketing the activities and other
facilities of the casino, prior to the opening of the Project.
4.9 The Consultant will advise the Company in the coordination of
establishing appropriate accounting, internal financial
controls, financial reporting systems, and such other systems
and methods of reporting (including those required by
applicable law) as may be necessary or appropriate for the
Project.
4.10 The Consultant will assist the Company in the preparation and
coordination of pre-opening advertising, public relations and
sales budgets and will assist the Company in hiring
advertising and public relations firms and coordinate their
activities so as to develop a cohesive and coordinated
pre-opening program for advertising, public relations and
sales of the Project, all subject to the Company's approval.
4.11 The Consultant shall advise the Company in coordination of the
development of operating concepts for the food and beverage
facilities, the entertainment lounge and other specialized
areas such as uniform and employee areas of the Project.
4.12 In general, the Consultant will assist the Company in all
activities necessary or reasonably required to open the
Project for business, to see that the Project is properly
staffed and equipped, and to see that there is in place, well
in advance of the opening day, a coordinated program for
marketing the gaming operations, facilities, and services of
the Project.
5. Phase II - Operation of the Project On and After Opening Date.
The following provisions shall govern certain of the duties and
obligations of the Company and the Consultant from and after the date
when the Project shall open for business to the public (the "Opening
Date"):
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5.1 General Duties of Consultant. The Consultant shall provide to
and for the benefit of the Company such consulting services as
are usually and customarily performed by a consultant for
casino operations, and, without limiting the generality of the
foregoing, the Consultant is hereby authorized to and shall
provide advice, recommendations and counsel to Company
regarding the following:
5.1.1 Marketing related facilities of the Project.
5.1.2 Employment, pay and benefits, supervision, and other
policies and procedures applicable to all employees
of the Project.
5.1.3 Utility services, telephone, security, fire
protection services necessary or reasonably required
for the operation of the Project.
5.1.4 Policies regarding the purchase of (a) food,
beverages, operating supplies, and other
merchandise; and (b) gaming equipment, reservation
systems, security systems, telex equipment, and
other mechanical and electronic equipment and
systems necessary for the proper operation of the
Project.
5.1.5 The establishment of necessary accounting systems
and internal controls as may be required by
applicable gaming laws and regulations and the
development of such periodic financial reports and
other reports with respect to operations of the
Project from time to time as may be specially
required hereunder, or consult with the firm of
Independent Auditors hired or retained for the
Project (the "Auditors") to prepare and file same,
and cooperate with and assist the Auditors in so
doing.
5.1.6 Advise concerning all policies and procedures
affecting overall operations of the Project in
accordance with first class standards in the
industry.
5.1.7 Assist the Company in evaluating marketing plans,
including the promotion of the Project facilities
and the hiring, building and retention of
entertainment appropriate for the Project.
5.1.8 Advise concerning such other things required to be
done in or about the Project as necessary to comply
with all statutes, ordinances, laws, rules,
regulations, orders and requirements of any
governmental body or agency and any appropriate
departments, commissions, boards and offices thereof
having jurisdiction in the matter respecting the use
or operation thereof.
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6. No Authority to Operate or Manage.
Consultant is engaged hereunder solely in a consulting and advisory
capacity. Nothing contained in this Agreement permits or authorizes,
nor shall anything be construed to permit or to authorize, Consultant,
without the prior written authorization of the Company, (i) to operate
or manage any Project or to establish the costs of operating or
administering the same; (ii) to hire, terminate or determine wages,
salaries or benefits for any employee or any other person employed to
work at or about any Project (iii) to establish policies or procedures
for the operation or management of any Project; (iv) to instruct,
direct or supervise employees or any other person employed to work at
or about any Project regarding the operation or management of any
Project; (v) to bind the Company or to act as an agent of the Company
with regard to the operation of any Project; or (vi) to take any other
action that could reasonably be construed as managing or operating any
Project or that would otherwise violate the purpose and intent of this
Agreement.
7. Confidentiality. It is understood that in the course of the
Consultant's performance under this Agreement with the Company, the
Consultant has become and will continue to become acquainted with
Confidential Information (as defined below). The Consultant recognizes
that Confidential Information has been developed by the Company at
great expense, is confidential and proprietary to the Company, and is
and shall remain the exclusive property of the Company. "Confidential
Information" shall mean all proprietary and other information
concerning any Project as well as the Company generally and all of its
lines of business, including but not limited to information concerning
the Company's customers, vendors and others with whom it transacts
business, its methods of operation and other trade secrets, its future
plans and strategies, and any financial information concerning the
Company or any Project. The Consultant agrees that all Confidential
Information is the exclusive property of the Company and that
Consultant will not, and shall not permit any of its officers,
directors, shareholders, partners, employees, or agents to, remove the
originals or make copies of any Confidential Information without the
Company's prior written consent. The Consultant shall not, and shall
not permit any of its officers, directors, shareholders, partners,
employees, or agents to, use Confidential Information for any purposes
other than to carry out such obligations under this Agreement and will
not divulge Confidential Information to any other person or entity
during or after the term of this Agreement without the Company's prior
written consent, unless required by law or judicial or other process.
The provisions of this Section 7 shall continue to apply to the parties
after this Agreement is terminated. Upon termination of this Agreement,
the Consultant shall promptly return to the Company originals or copies
of any and all materials, documents, notes, manuals or lists containing
or embodying Confidential Information, or relating directly or
indirectly to the business of the Company or with respect to any
Project, in the possession or control of Consultant. Consultant agrees
that the Company shall be entitled to equitable relief including
injunction, in the event of any breach of the provisions of this
Section 7 and Section 12 hereof in addition to any right at law to
damages. In addition, Consultant hereby acknowledges that it is aware,
that the United States securities laws prohibit any
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person who has material, non-public information concerning the matters
which are the subject of this Agreement and the business of the Company
from purchasing or selling securities of the Company from communicating
such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell
such securities. Consultant consents that it shall not violate, and
shall not permit any of its officers, directors, shareholders,
partners, employees or agents to violate, any provision of the
aforementioned laws or the analogous laws of any State of the United
States.
8. Scope of Relationship.
Nothing contained in this Agreement creates nor shall anything be
construed to create, an agency relationship, a partnership, joint
venture or any other association between the Company and Consultant
with regard to the operation and management of any Project.
9. Compensation.
Consultant shall be compensated for services rendered under this
Agreement in accordance with the following fee schedule:
9.1. As of the Commencement Date, Consultant shall be paid a fee of
US$[21,000] per month for twenty-four months, or a pro-rata
portion thereof for any partial month in which services are
provided, which amount shall be due and payable the first day
of each month effective as of October 1, 1997. Consultant
shall be entitled to receive a bonus payment of US$250,000 on
the second anniversary of this Agreement assuming Consultant
is not in breach of any provision of this Agreement at such
time and this Agreement shall not have been terminated prior
thereto. Commencing on October 1, 1997 and until the
Commencement Date, Consultant shall be paid a fee equal to
US$[21,000] per month, or a pro-rata portion thereof for any
partial month in which services are provided.
9.2 In consideration for the services to be provided hereunder,
the Company hereby grants to the Consultant options to
purchase up to 100,000 shares of the Company's common stock
(the "Option"), subject to the terms set forth below. The
exercise price of the Option shall be $6.50 per share of the
Company's common stock. The Option may be exercised as
follows: (i) on or after the first year anniversary of the
Commencement Date, the option to purchase up to 50,000 shares
of the Company's common stock; and (ii) on or after the second
year anniversary of the Commencement Date, the option to
purchase up to an additional 50,000 shares of the Company's
common stock. The Option will expire on the third year
anniversary of the Commencement Date. The Option granted
hereunder is subject, in all respects, to the terms of the
Company's 1996 Stock Option Plan, as amended (the "Stock
Option Plan"). If for any reason, this Agreement is terminated
by either the Company
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or the Consultant, the Option shall immediately terminate;
provided, however that in the event that the Consultant has
exercised the option in accordance with the terms of this
Agreement, subject to the terms of the Stock Option Plan,
prior to any termination of the Agreement by the Company, the
Consultant shall be entitled to purchase such shares
thereunder.
9.3 In consideration for the compensation to be paid to Consultant
hereunder in Sections 9.1 and 9.2, Consultant agrees that
during the period of this Agreement, Consultant agrees to
perform the services described in this Agreement with respect
to any other casino to be developed by the Company, in
addition to the Sakhalin Project, subject to the prior written
approval by the Company.
10. Expenses.
In addition to the fees provided in Section 9, the Company shall
reimburse Consultant for all direct travel and related expenses
reasonably and necessarily incurred in the performance of the services
requested under this Agreement, subject to written documentation of
such expenses provided to the Company.
11. Termination.
The Company shall have the right to terminate this Agreement for cause.
For purposes of this Agreement, the term "cause" shall mean: (a) a
finding by the Company that Consultant or Xxxxxxx has willfully and
materially failed, refused or neglected to perform and discharge his
duties and responsibilities hereunder for at least 15 business days
after written notice from the Company setting forth the actions or
omissions, as the case may be, which constitute such failure, refusal
or neglect, (b) the Consultant's or Xxxxxxx'x violation of scope and
intent of this Agreement, (c) a material breach of the Consultant's
obligations under this Agreement which results in a material detriment
to the Company or any Project, (d) the Consultant's or Xxxxxxx'x
engagement in misconduct materially injurious to the Company or any
Project, (e) the Consultant's or Xxxxxxx'x intentional misappropriation
of property or corporate opportunity of the Company or with respect to
any Project for use by the Consultant or third parties, (f) the
Consultant's or Xxxxxxx'x commission of an act of fraud or
embezzlement, (g) the Consultant's or Xxxxxxx'x conviction for a crime
(excluding minor traffic offenses) or (h) the termination of Xxxxxxx'x
control of the Consultant or the unavailability of Xxxxxxx to provide
the services required of Consultant hereunder. Consultant shall have
the right to terminate this Agreement in the event that the Company
elects not to proceed with any Project.
12. Non-competition, Non-Solicitation.
12.1 During the term of this Agreement and for a period of two (2)
years after the termination of this Agreement, the Consultant
shall not (i) directly or indirectly, as an employee, agent,
manager, director, officer, controlling
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stockholder, partner or otherwise, engage or participate in
any business engaged in any activities competitive with any
activities in which the Company is engaged with respect to the
casino business within a ____ mile radius of the Sakhalin
Project or any other casino property owned or managed by the
Company or its affiliated entities during the term of this
Agreement, or (ii) solicit from any client or division,
department or subsidiary of any client of the Company, or any
individual employed by any of the foregoing, for whom the
Consultant performed services during the course of performance
under this Agreement, any business relating to services
similar to the services which were so performed by the
Consultant under this Agreement. In addition, the Consultant
shall not during such time request or cause any client of the
Company to cancel or terminate any business relationship with
the Company or any of its subsidiaries or with respect to any
Project or any other casino property owned or managed by the
Company or its affiliated entities, or directly or indirectly
solicit or otherwise cause any employee to terminate such
employee's relationship with the Company or with respect to
any Project or any other casino property owned or managed by
the Company or its affiliated entities.
12.2 If any portion of the restrictions set forth in this Section
12 should, for any reason whatsoever, be declared invalid by a
court of competent jurisdiction, the validity or
enforceability of the remainder of such restrictions shall not
thereby be adversely affected.
12.3 The Consultant declares that the foregoing scope, territorial
and time limitations are reasonable and properly required for
the adequate protection of any Project or any other casino
property owned or managed by the Company or its affiliated
entities. In the event any such scope, territorial or time
limitation is deemed to be unreasonable by a court of
competent jurisdiction, the Consultant agrees to the reduction
of said scope, territorial or time limitation to such scope,
area or period which said court shall have deemed reasonable.
12.4 The existence of any claim or cause of action by the
Consultant against the Company other than under this Agreement
shall not constitute a defense to the enforcement by the
Company of the foregoing restrictive covenants, but such claim
or cause of action shall be litigated separately.
13. Avoidance of Conflicts.
Except to the extent consented to in writing by the Company, during the
term of this Agreement, Consultant agrees that neither it, nor any
entity in which it owns a controlling interest shall represent, manage
or consult with any entity, if such representation or consultation
would: (i) create a conflict of interest with the matters on which
Consultant consults with and advises the Company with respect to any
Project, (ii) prejudice, damage or be adverse to any interest of the
Company with
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respect to any Project, (iii) adversely affect Consultant's
professional judgement with respect to the Company as it relates to any
Project; or (iv) adversely affect Consultant's responsibility to the
Company with respect to any Project.
14. Binding Effect.
This Agreement and the rights and obligations arising hereunder shall
inure to the benefit of, be binding upon and enforceable by the Company
and Consultant and their respective successors, permitted assigns,
heirs and representatives, it is understood and agreed that neither
party shall be entitled to circumvent this Agreement (including,
limitation, the provisions hereof relating to avoidance of conflicts
and non- disclosure of confidential information) by acting, directly or
indirectly by or through one or more of such party's principals,
companies, employees, agents, affiliates.
subsidiaries supervision or control.
15. Assignments.
Neither party to this Agreement may assign this Agreement without the
prior written consent of the other, provided, however, that the Company
may assign all or a part of its rights and obligations hereunder to one
or more subsidiaries or affiliates of the Company.
16. Headings.
The headings of the paragraphs hereof are inserted for convenience only
and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
17. Interpretation.
In case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If, moreover, any one or
more of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it,
so as to be enforceable to the extent compatible with the applicable
law as it shall then appear.
18. Notices.
All notices under this Agreement shall be in writing and shall be
deemed to have been given at the time when delivered personally or by
facsimile transmission, sent by recognized overnight courier service,
or mailed by registered or certified mail, addressed to the address set
forth at the end of this Agreement, or to such changed
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address as such party may have fixed by notice; provided, however, that
any notice of change of address shall be effective only upon receipt.
To the Consultant:
Star Casinos Ltd.
00 Xxxxxxx Xxxx
Xxxxxx X000XX
Tel.:000000000000
Fax:000000000000
To the Company:
Conserver Corporation of America
0000 XxXxxxx Xxxx
Xxxxx 000
Xxxxx Xxxxxx, Xx 00000
Tel.:000-000-0000
Fax: 000-000-0000
19. Waivers.
If either party should waive any breach of any provision of this
Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of
this Agreement.
20. Complete Agreement; Amendments.
The foregoing is the entire agreement of the parties with respect to
the subject matter hereof and supersedes in its entirety any letter
agreements or other writings by and among the Consultant and the
Company. This Agreement may not be amended, supplemented, cancelled or
discharged except by written instrument executed by both parties
hereto.
21. Applicable Law.
The validity, construction and enforceability of, and the rights and
obligations of the parties under this Agreement shall be governed by
and construed and enforced in accordance with, the laws of the State of
New York without giving effect to conflict of laws principles. Each
party to this Agreement hereby irrevocably submits to the non-exclusive
jurisdiction of any New York State and Federal Court sitting in the
City of New York with respect to any suit, action or proceeding arising
out of or related to this Agreement.
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IN WITNESS WHEREOF, the Company and Consultant have executed this
Agreement as of the day and year first above written.
STAR CASINOS LTD. CONSERVER CORPORATION OF AMERICA
By /s/ By /s/
------------------------ ---------------------------
Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President
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