Schedule 3—Second deed of variation to the management agreement
DEED dated 12 October 1995.
BETWEEN THE HONOURABLE HADDON STOREY QC MLC, the Minister of the Crown for the time being administering the Casino Control Act, acting for and on behalf of the State of Victoria ("State").
AND CROWN LIMITED ACN 006 973 262 with its registered office at Level 1, 99 Queensbridge Street, Southbank, Victoria ("Company").
A. The State and the Company entered into an agreement dated 20 September 1993 ratified by and scheduled to the Casino (Management Agreement) Act 1993 ("Management Agreement").
B. The Management Agreement was varied by a deed of variation dated 14 November 1994 ratified by and scheduled to the Casino (Management Agreement) (Amendment) Act 1994.
C. The parties have agreed to further vary the Management Agreement as provided in this document.
Definitions
Unless the context otherwise requires or the contrary intention appears, terms defined in the Casino Control Act or the Management Agreement have the same meaning when used in this document.
Ratification and operation of provisions
2.1 A minister of the State must introduce and sponsor a Bill in the Parliament of Victoria to ratify this document as soon as reasonably practicable after its execution.
2.2 Clauses 3 and 5 of this document shall come into operation once—
(b) the changes to the Drawings referred to in clause 6 have been authorised in writing by the Minister and the period for disallowance under section 16 of the Casino (Management Agreement) Act 1993 has expired without the changes being disallowed.
2.3 Clauses 1, 2, 4, 6, 7, 8 and 9 of this document shall come into operation on the date of this document.
2.4 If the conditions in clause 2.2 are not satisfied by 30 June 1996 or such later date agreed by the parties, this document other than clauses 4.5 and 7 will terminate. Following such termination neither party shall have any claim against the other with respect to any matter or thing antecedent to or arising out of or done, performed, or omitted to be done or performed under this document save for any right arising under clauses 4.5 or 7.
Variation of Management Agreement
3.1 The State and the Company agree to vary the Management Agreement in the following manner—
(a) the following definitions shall be included in clause 2 in their appropriate alphabetical order—
Schedule Sch 3 - Casino (Management Agreement) Act 1993 - Second deed of variation to the management agreement | Zoe
"Commission Based Player" means a person who participates in a premium player arrangement or a junket where the person and the Company satisfy the requirements of any relevant controls and procedures approved by the Authority under section 121 of the Casino Control Act in respect of a premium player or a junket player (as the case may be);
"Commission Based Players' Gaming Revenue" means the total of all sums, including cheques and other negotiable instruments whether collected or not, received in any period after 31 December 1995 by the Company from the conduct or playing of games within the Temporary Casino or the Melbourne Casino (as the case may be) by Commission Based Players less the total of all sums paid out as winnings during that period to Commission Based Players in respect of such conduct or playing of games;
"Melbourne Casino Complex (excluding the Southern Tower of the Hotel)" means all of the Melbourne Casino Complex except the Southern Tower of the Hotel;
"Southern Tower of the Hotel" means the second tower of the hotel to be constructed by the Company, such tower comprising not more than 24 floors above the podium and not less than 465 rooms and to be located at the south west corner of Queensbridge Street and Whiteman Street, but it excludes the Training and Human Resource Centre;
"Training and Human Resource Centre" means the facility comprising 5 levels of office space and a car park with a capacity for up to 180 cars to be constructed by the Company on the land bounded by Queensbridge Street, Kingsway and Whiteman Street for the purposes of staff facilities (including training and administration);
(b) the definition of "Completion" in clause 2 shall be deleted and the following substituted—
' "Completion" means the completion of the construction, the Fit-Out and the Commissioning of the Temporary Casino, the Temporary Casino Complex, the Melbourne Casino, the Melbourne Casino Complex (excluding the Southern Tower of the Hotel), the Melbourne Casino Complex, the Training and Human Resource Centre, the Southern Tower of the Hotel or any other relevant part of the Melbourne Casino Complex, as the case may be, to a state of operational readiness which complies with the Completion Standards, as determined pursuant to clause 15, and "Complete" and "Completed" have corresponding meanings;' ;
(c) the definition of "Completion Date" in clause 2 shall be deleted and the following substituted—
' "Completion Date" means (subject in each case to clause 16):
(a) in relation to the Temporary Casino, the day immediately following the expiration of 34 weeks from the Licensing Date or such later date as is agreed by the State's Nominated Representative;
(b) in relation to the Temporary Casino Complex, the day immediately following the expiration of 34 weeks from the Licensing Date or such later date as is agreed by the State's Nominated Representative;
(c) in relation to the Melbourne Casino, 30 November 1996 or such later date as is agreed by the State's Nominated Representative;
(d) in relation to the Melbourne Casino Complex (excluding the Southern Tower of the Hotel), 30 November 1996 or such later date as is agreed by the State's Nominated Representative; and
(e) in relation to the Southern Tower of the Hotel, 24 December 1997 or such later date as is agreed by the State's Nominated Representative;' ;
(d) the definition of "Completion Standards" in clause 2 shall be deleted and the following substituted—
' "Completion Standards" means:
(a) for the construction of the Melbourne Casino, the Melbourne Casino Complex (excluding the Southern Tower of the Hotel), the Melbourne Casino Complex, the Training and Human Resource Centre, the Southern Tower of the Hotel or any other relevant part of the Melbourne Casino Complex, the Temporary Casino or the Temporary Casino Complex, when in relation to the relevant works—
(i) an occupancy permit is issued by the responsible authority;
(ii) those works are fit for use by the Company;
(iii) the Fit-Out and Commissioning has been completed in accordance with the requirements of this document; and
(iv) all other requirements under this document have been complied with; and
(b) in respect of the Melbourne Casino or the Temporary Casino, when a certificate is issued by the Authority pursuant to clause 20 of the Casino Agreement;' ;
(e) with effect on 1 January 1996, the definition of "Gross Gaming Revenue" in clause 2 shall be varied by including the words "but excluding any Commission Based Players' Gaming Revenue" at the end of the definition;
(f) the definition of "Melbourne Casino Complex Development Proposals" in clause 2 shall be deleted and the following substituted—
' "Melbourne Casino Complex Development Proposals" means the proposals of the Company in relation to the construction, development and establishment of the Melbourne Casino Complex, a copy of which has been signed on behalf of the State's Nominated Representative and the Company for the purposes of identification, or such proposals as amended by agreement of the State's Nominated Representative and the Company from time to time;' ;
(g) the definition of "Site" in clause 2 shall be deleted and the following substituted—
' "Site" means that part of the land bounded by the Yarra River, Clarendon Street, Whiteman Street and Queensbridge Street in the City of Melbourne and more particularly described as part of Crown Allotments 58D and 58E, County of Bourke, Parish of Melbourne South, City of Melbourne, as identified in the draft Plan of Survey annexed as Schedule Three (being the land the subject of the Site Lease) and the land in Certificates of Title Volume ("V") 9872 Folio ("F") 067, V9876 F112, V9874 F285, V6519 F602, V9117 F032, V6253 F477, V5061 F124, V8404 F673, V9580 F903, V8444 F586, V8597 F415, V9468 F166, V10182 F514, V10182 F515, V5867 F3263, V5867 F3264 and V6087 F365 together with any road adjoining any such land which is closed for the purpose of being part of the land for the Melbourne Casino Complex;' ;
(h) the definition of "Site Lease" in clause 2 shall be deleted and the following substituted—
' "Site Lease" means the lease of part of the Site from the Minister for Finance on behalf of the State to the Company;' ;
(i) clause 10.1 shall be varied by—
(i) deleting the word "and" at the end of paragraph (b);
(ii) adding the words "(excluding the Southern Tower of the Hotel)" after the words "Melbourne Casino Complex" in paragraph (c);
(iii) deleting the full stop at the end of paragraph (c) and substituting "; and"; and
(iv) adding the following as paragraph (d):
"(d) Complete the Southern Tower of the Hotel by the Completion Date.";
(j) clause 10.3 shall be deleted and the following substituted—
"(10.3) The Company must construct on the land located on the western side of Kingsway fronting Whiteman Street a car park of 7 levels above ground comprising approximately 2600 car parking spaces with on site queuing for in excess of 40 cars which shall be available for use by patrons of the Melbourne Casino Complex. The Company must provide weather protection and security access from such car park to the Melbourne Casino Complex. In addition to all approvals required under the Control Acts, the design of the car park must be approved by the Minister. The Company must—
(a) use its best endeavours to obtain as soon as practicable all necessary approvals under the Control Acts and from the Minister for the construction of the car park; and
(b) as a condition to the approval required under the Planning and Environment Act—
(i) ensure that a car park guidance system reasonably acceptable to the State is provided; and
(ii) pay to City of Melbourne immediately after all necessary approvals have been obtained $500 000 to be used for a parking guidance system which is to be developed for the Southbank area.";
(k) the following clause shall be added as clause 10.4—
"10.4 As part of the development of the Melbourne Casino Complex, the Company must construct the Training and Human Resource Centre and the Southern Tower of the Hotel. The Company must use its best endeavours to obtain as soon as practicable all necessary approvals under the Control Acts and from the Minister for construction of the Training and Human Resource Centre and the Southern Tower of the Hotel.";
(l) clause 15.1 shall be deleted and the following shall be substituted—
'15.1 The Company must give not less than 7 Business Days notice in writing to the State's Nominated Representative that the Company anticipates that the Temporary Casino, the Temporary Casino Complex, the Melbourne Casino, the Training and Human Resource Centre, the Melbourne Casino Complex (excluding the Southern Tower of the Hotel), the Southern Tower of the Hotel or the Melbourne Casino Complex, as the case may be, ("Relevant Works") will be Completed on the date specified in the notice.' ;
(m) clause 15.4 shall be varied by deleting the words "Subject to clause 15.9" at the beginning of the clause and substituting "Subject to clauses 15.9 and 15.10";
(n) clause 15.9 shall be varied by including the words "Subject to clause 15.10," at the beginning of the clause;
(o) the following clause shall be added as clause 15.10—
"15.10 It is a condition precedent to the issue by the State's Nominated Representative of a certificate of Completion for the Melbourne Casino under clause 15.4 that the Authority has advised the State's Nominated Representative that the wardrobe and staff change facilities in the Training and Human Resource Centre necessary for the proper conduct of operations in the Melbourne Casino are complete and available for use by staff of the Company, as determined by the Authority in its absolute discretion. The Melbourne Casino will be taken to be not Completed if the Authority has not advised the State's Nominated Representative accordingly.";
(p) clause 16.1 shall be varied by including the words ", the Melbourne Casino Complex (excluding the Southern Tower of the Hotel)" after the words "the Melbourne Casino" and before the words "or the Melbourne Casino Complex";
(q) clause 16.3 shall be varied by including the words ", the Melbourne Casino Complex (excluding the Southern Tower of the Hotel)" after the words "the Melbourne Casino" and before the words "or the Melbourne Casino Complex";
(r) clause 16.9(b) shall be deleted and the following substituted—
"(b) The amount of the insurance proceeds received by the Company in respect of a period which shall be paid as compensation to the State under paragraph (a) for that period shall be an amount equal to the taxes that would have been paid by the Company to the State under clauses 22 and 22A during the relevant period based on the assumption that Gross Gaming Revenue and Commission Based Players' Gaming Revenue had been earned at the average daily rate calculated for the six months period immediately prior to the commencement of that period.";
(s) clause 17.1 shall be varied by including the words "(excluding the Southern Tower of the Hotel)" after the words "Melbourne Casino Complex";
(t) clause 17.2 shall be varied by including the words "(excluding the Southern Tower of the Hotel)" after the words "Melbourne Casino Complex" wherever appearing;
(u) clause 17.3 shall be varied by adding the words "(excluding the Southern Tower of the Hotel)" after the words "Melbourne Casino Complex";
(v) clause 17.4 shall be varied by deleting the word "Complex" in paragraph (a);
(w) clause 20.3 shall be deleted and the following substituted—
"20.3 To facilitate the marketing of Victoria in the general tourism and convention markets, the Company agrees to pay to Tourism Victoria, $5 000 000 by 5 annual payments of $1 000 000, the first payment being due on the later of 1 November 1995 and the date on which this clause comes into operation, and each subsequent payment being due on 1 July in each year. The State will use its best endeavours to procure that a body will be formed for convention marketing on an outsource basis from Tourism Victoria, and that the Company may appoint a director to this body. The State will also procure that Tourism Victoria consults with the Company to periodically review the marketing activities of both bodies, but Tourism Victoria will not be obliged to act on any proposals or recommendations of the Company.";
(x) with effect on 1 January 1996, the following clause shall be added as clause 22A—
'22A. Tax on Commission Based Players' Gaming Revenue
22A.1 In addition to any fees or taxes payable by the Company under clause 22 or otherwise, while the Casino Licence remains in force, the Company must pay to the State, in respect of each month in which gaming is conducted in the Temporary Casino or the Melbourne Casino, as the case may be—
(a) casino tax in an amount equal to 9% of the Commission Based Players' Gaming Revenue for the month in question, such tax being payable within 7 days following the end of each month, the first payment to be made in relation to the month commencing 1 January 1996; and
(b) a community benefit levy in an amount equal to 1% of the Commission Based Players' Gaming Revenue for the month in question, on the same dates as payments are made to the State under paragraph (a); but
(c) if in any month the Commission Based Players' Gaming Revenue is less than zero, the amount of the negative Commission Based Players' Gaming Revenue may be carried forward to the following month and applied to reduce the Commission Based Players' Gaming Revenue in that month.
22A.2 If the casino tax paid by the Company to the State under clause 22A.1(a) and the community benefit levy paid under clause 22A.1(b) in respect of the year commencing on 1 January 1996 or the 6 month period commencing on 1 January 1997 is less than $5 000 000, the Company must pay to the State within 7 days following the end of that year or 6 month period (as the case may be), as additional casino tax, an amount equal to $5 000 000 less the casino tax paid under clause 22A.1(a) and the community benefit levy paid under clause 22A.1(b) in respect of that year or 6 month period (as the case may be).
22A.3 If the casino tax paid by the Company to the State under clause 22A.1(a) and the community benefit levy paid under clause 22A.1(b) in respect of any Financial Year commencing on or after 1 July 1997 is less than $10 000 000, the Company must pay to the State within 7 days following the end of that Financial Year, as additional casino tax, an amount equal to $10 000 000 less the casino tax paid under clause 22A.1(a) and the community benefit levy paid under clause 22A.1(b) in respect of that Financial Year.
22A.4 In addition to the casino tax and community benefit levy payable under clause 22A.1, while the Casino Licence remains in force the Company must pay to the State in respect of each Financial Year in which Commission Based Players' Gaming Revenue exceeds the CBP Base Amount, additional casino tax calculated in accordance with clause 22A.6.
22A.5 In this clause 22A "CBP Base Amount" means, subject to clause 22A.8—
(a) to 30 June 1994, $160 000 000; and
(b) on 1 July 1994 and each anniversary of that date ("Review Date"), the amount determined at any time after that Review Date in accordance with the following formula—
R = A/B x C
R is the CBP Base Amount in respect of the year commencing on the relevant Review Date;
A is the Consumer Price Index (All Groups for Melbourne) published from time to time in the Australian Statistician' s Summary of Australian Statistics ("CPI Index") published for the day immediately preceding the relevant Review Date;
B is the CPI Index for the day one year and one day prior to the relevant Review Date; and
C is the CBP Base Amount (as amended from time to time in accordance with this clause) for the year immediately preceding the relevant Review Date.
22A.6 The amount of the additional casino tax payable under clause 22A.4 shall be calculated in accordance with the following table—
Amount of ECBPR $
Amount of additional casino tax $
Nil
—
19 999 999
Nil
+
1% of the Excess
20 000 000
—
39 999 999
200 000
+
2% of the Excess
40 000 000
—
59 999 999
600 000
+
3% of the Excess
60 000 000
—
79 999 999
1 200 000
+
4% of the Excess
80 000 000
—
99 999 999
2 000 000
+
5% of the Excess
100 000 000
—
119 999 999
3 000 000
+
6% of the Excess
120 000 000
—
139 999 999
4 200 000
+
7% of the Excess
140 000 000
—
159 999 999
5 600 000
+
8% of the Excess
160 000 000
—
179 999 999
7 200 000
+
9% of the Excess
180 000 000
—
199 999 999
9 000 000
+
10% of the Excess
200 000 000
—
219 999 999
11 000 000
+
11% of the Excess
220 000 000
or more
13 200 000
+
12.25% of the Excess
"ECBPR" is the amount by which Commission Based Players' Gaming Revenue in a Financial Year exceeds the CBP Base Amount for that Financial Year; and
"Excess" means in respect of any row in the above table, the amount by which ECBPR exceeds the number first appearing in the first column of that row.
22A.7 The casino tax calculated under clause 22A.6 and payable under clause 22A.4 must be paid to the State within 7 days following the end of each Financial Year.
22A.8 If the Australian Statistician updates the reference base for the CPI Index an appropriate adjustment shall be made to the definition of "CBP Base Amount" in clause 22A.5 to preserve the intended continuity of calculation by using an alternative appropriate factor determined by the Statistician in lieu of "A/B" in the definition of "CBP Base Amount".
22A.9 If the CPI Index referred to in the definition is discontinued, suspended or otherwise altered to such an extent that an adjustment under clause 22A.8 cannot in the reasonable opinion of the State be made, the Base Amount shall be determined by substituting for "A/B" in the definition of "CBP Base Amount" such other comparable index as the State may reasonably require.
22A.10 The casino tax payable by the Company under this clause 22A shall be reviewed by the State in consultation with the Company prior to the date which is 5 years after the opening of the Melbourne Casino. The review shall have regard to factors such as the Company' s profits from commission based players, its investment in the market place and its capacity to effectively compete in the international and interstate commission based gaming markets. The casino tax payable by the Company under this clause 22A may then be varied by Act of Parliament, with effect from a date after the 5 year period referred to above, taking into account (among other things), the findings of this review, but any such variation shall be at the discretion of the State.
22A.11 The casino tax payable by the Company under this clause 22A will be reviewed by the State, if requested by the Company at any time prior to the expiry of 5 years after the opening of the Melbourne Casino on the grounds that the rates of tax substantially impede the Company from competing effectively in the international or interstate commission based gaming markets, and may following such review be varied by Act of Parliament at the discretion of the State.';
(y) with effect on 1 January 1996, the following clause shall be added as clause 22B—
"22B. In addition to any fees or taxes payable by the Company under clauses 22 or 22A or otherwise, the Company agrees to pay to the State as additional tax in respect of each month during the period commencing 1 January 1996 and ending 31 December 1998 a guaranteed minimum base tax of $2 800 000 per month, each payment being due on the first day of each month, with the first payment being due on 1 January 1996."; and
(z) the following clause shall be added as clause 22C—
"22C. If the Company fails to make any payment required under clauses 22, 22A or 22B on the due date, without prejudice to any other right or remedy arising because of that failure, the Company must pay to the State interest (calculated daily) on the amount in default (including accrued interest) at the Default Rate for the period from the due date until payment is made (including all interest due under this clause)."
Extension of Completion Date—Payment to the State
4.1 In consideration of the State agreeing to extend the Completion Date for the Melbourne Casino, the Company agrees to pay to the State $5 300 000 on the date of this document, such amount representing the amount which would have been payable as liquidated damages but for the extension.
4.2 If the Company fails to make the payment required under clause 4.1 on the due date, without prejudice to any other right or remedy arising because of that failure, the Company must pay to the State interest (calculated daily) on the amount in default (including accrued interest) at the Default Rate for the period from the due date until payment is made (including all interest due under this clause).
4.3 If any day for the payment of money under this clause 4 falls on a day which is not a Business Day the payment will be made on the next day which is a Business Day.
4.4 A breach by the Company of this clause 4 shall be taken to be a breach of the Management Agreement for the purposes of clause 25.2 of the Management Agreement.
4.5 If clause 3 of this document does not come into operation by 30 June 1996 and this document therefore terminates, the State shall refund to the Company the amount paid to the State under this clause 4 within 5 Business Days after such termination.
Modifications to North River Bank
5.1 Subject to and in consideration of the Company making the payment referred to in clause 5.2, the State releases and discharges the Company from its obligations under clause 19.1 of the Management Agreement to modify the North River Bank as set out in Part 1.0 of Schedule 5 of the Management Agreement.
5.2 The Company agrees to pay $1 401 000 to the City of Melbourne (or such other person nominated by the State) within 5 Business Days of this clause coming into force, which amount shall be applied to modifications to the North River Bank.
5.3 A breach by the Company of this clause 5 shall be taken to be a breach of the Management Agreement for the purposes of clause 25.2 of the Management Agreement.
Drawings
6.1 The Company must as soon as practicable and in any event by 8.00 a.m. on 23 October 1995, submit for authorisation by the Minister such changes to the Drawings of the Melbourne Casino Complex as are required by the Minister. The changes must provide for, among other things, the Southern Tower of the Hotel (as defined in clause 3.1(a) of this document), the Training and Human Resource Centre (as defined in clause 3.1(a) of this document) and the car park on the western side of Kingsway fronting Whiteman Street.
6.2 The parties confirm for the avoidance of doubt that unless the changes are disallowed in accordance with section 16 of the Casino (Management Agreement) Act 1993, the Drawings as changed with the written authorisation of the Minister are the Drawings for the purposes of the Management Agreement.
Force Majeure Event
The Company acknowledges that none of the negotiation, preparation and execution of this document, its ratification under clause 2, the approval of changes in the Drawings under clause 6 and their tabling in Parliament in accordance with the Casino (Management Agreement) Act 1993, or any of the circumstances relating to or giving rise to the creation of this document has or will cause or create any Government Action or Force Majeure Event.
Confirmation of other terms
8.1 The parties acknowledge and confirm that except as varied by this document the terms and conditions of the Management Agreement remain in full force and effect.
8.2 Without limiting clause 8.1, the Company acknowledges and confirms—
(a) that subject to clause 16.3 of the Management Agreement, the Company shall be liable for liquidated damages under clause 17 of the Management Agreement if the Melbourne Casino is not Completed and open for business by the Completion Date (as amended by clause 3.1(c) of this document); and
(b) that the Company must comply with the requirements of clause 13.1 of the Management Agreement in relation to materials, fittings, equipment and workmanship utilised in carrying out the construction of the Melbourne Casino Complex.
8.3 The Company agrees—
(a) to obtain all funds necessary to comply with the variations to its obligations as set out in this document and to Complete the Melbourne Casino Complex; and
(b) to ensure that such funding will not cause the Company to breach clause 22.1(m) of the Casino Agreement.
8.4 A breach by the Company of clause 8.3 shall be taken to be a breach of the Management Agreement for the purposes of clause 25.2 of the Management Agreement.
General Provisions
Clauses 33 and 35 to 40 (inclusive) of the Management Agreement apply to this document as if expressly included in this document.
EXECUTED as a deed.
| SIGNED by the HONOURABLE HADDON STOREY QC MLC for and on behalf of the State of Victoria in the presence of: | | HON HADDON STOREY QC MLC |
| TIMOTHY P. HENDER Signature of Witness<br>TIMOTHY HENDER Name of Witness | | |
| THE COMMON SEAL of CROWN LIMITED is affixed in accordance with its articles of association in the presence of: | | LS |
| ANTHONY SEYFORT Secretary | | B. J. HAMILTON Director |