Chapter 10-016

Chapter 016

2010 -- H 8157 AS AMENDED

Enacted 05/27/10

A N A C T

RELATING TO AUTHORIZING THE FIRST AMENDMENTS TO THE MASTER VIDEO LOTTERY TERMINAL CONTRACTS

Introduced By: Representatives Costantino, Carter, Melo, San Bento, and Jackson

Date Introduced: May 19, 2010

It is enacted by the General Assembly as follows:

PART A – Authorized Amendment to UTGR Master Contract

SECTION 1. Purpose. The general assembly hereby finds that the Twin River facility

located in the Town of Lincoln is an important source of revenue for the State of Rhode Island.

The purpose of the following sections related to UTGR is to help effectuate a plan for

reorganization, pursuant to the United States Bankruptcy Code, for UTGR, and thereby

strengthen the commercial health of the Twin River facility and protect for the people of Rhode

Island the public's share of revenues generated at the Twin River facility. It is the intent of the

general assembly that this act, being necessary for the welfare of the State and its citizens, shall

be liberally construed so as to effectuate its purposes, including without limitation, the state's

attempt to minimize certain commercial risks faced by UTGR when it operates the facility and

the business conducted thereon.

SECTION 2. Definitions. For purposes of this act, the following terms shall have the

following meanings, and to the extent that such terms are defined in Chapters 322 and 323 of the

Public Laws of 2005, those terms are herby amended as follows, provided that such terms, as they

may be amended hereby, only apply to UTGR and Twin River and shall have no effect with

regard to NGJA or Newport Grand.

(a) "Control" of an entity means the power of a person (or persons acting in concert) to

cause the entity to be managed in accordance with the wishes of that person (or persons acting in

concert) whether by means of being the beneficial owner of more than fifty percent (50%) of the

issued share capital or voting rights in that entity, or having the right to appoint or remove a

majority of the directors or otherwise control the votes at board meetings of that entity.

(b) "Director" means the director of the division of lotteries.

successor as party to the UTGR Master Contract.

(d) "Division Percentage" means for any Marketing Year, the Division's percentage of net

terminal income as set forth in section 42-61.2-7.

(e) "First Amendment" means that certain first amendment to the UTGR Master Contract

authorized herein, which first amendment is to be entered into by and between the Division, the

department of transportation, and UTGR.

(f) "Lincoln Park" and "Twin River" each means the gaming and entertainment facility

located at 100 Twin River Road, Lincoln, Rhode Island.

(g) "Marketing Program" means that Marketing Program authorized in section 4(a)(iii) of

this act, which program shall include marketing expenditures as defined by the Division.

(h) "Marketing Year" means each fiscal year of the state or a portion thereof between the

effective date of the First Amendment and the termination date of the UTGR Master Contract.

(i) "Master Contract" means with respect to UTGR, the UTGR Master Contract.

(j) "Plan" means that plan of reorganization filed pursuant to chapter 11 of title 11 of the

United States Code (11 U.S.C. sections 101-1532) and to be confirmed by order of the United

States Bankruptcy Court for the District of Rhode Island in those cased jointly administered under

case number 09-12418 (ANV).

(k) "Promotional Points Program" means that promotional points program authorized in

section 4(a)(ii) of this act.

(l) "State" means the State of Rhode Island.

(m) "Term" means with respect to UTGR, the UTGR Term.

(n) "UTGR" means UTGR, Inc., a Delaware corporation and including such entity, as

reorganized under the Plan, and any UTGR Business Affiliate. References herein to "UTGR"

shall include its permitted successors and assigns under the UTGR Master Contract, if licensed by

the Rhode Island department of business regulation.

(o) "UTGR Business Affiliate" means any corporation, trust, partnership, joint venture

or any other form of business entity that Controls, is Controlled by or is under common Control

with, UTGR.

(p) "UTGR Master Contract" means that certain master video lottery terminal contract

made as of July 18, 2005 by and between the Division, department of transportation, and UTGR,

as such UTGR Master Contract is amended and extended as authorized herein and/or as such

UTGR Master Contract may be assigned as permitted herein.

(q) "UTGR Term" means the term of the UTGR Master Contract, which term commences

on the effective date of the UTGR Master Contract and continues through and including the fifth

(5th) anniversary of such effective date; provided that UTGR shall have two (2) successive five

(5) year extension options consistent with the terms of the UTGR Master Contract.

SECTION 3. Unless otherwise amended by this act, the terms, conditions, provisions,

and definitions of chapters 322 and 323 of the public laws of 2005 are hereby incorporated herein

by reference and shall remain in full force and effect.

SECTION 4. Authorized Procurement of First Amendment to the Master Video Lottery

Terminal Contract.

(a) Notwithstanding any provisions of the general laws or regulations adopted thereunder

to the contrary, including, but not limited to, the provisions of: Chapters 322 and 323 of the

public laws of 2005; chapter 2 of title 37 of the general laws; chapter 61 of title 42 of the general

laws; and chapter 61.2 of title 42 of the general laws, the Division is hereby expressly authorized

and empowered, and with respect to section 4(a)(vi) of this act the department of transportation is

also hereby expressly authorized and empowered, to enter into with UTGR a First Amendment to

the UTGR Master Contract, to be become effective upon the effective date of the Plan for the

following purposes and containing the following terms and conditions, all of which shall be set

forth in more particular detail in the First Amendment:

(i) to provide for a UTGR Term commencing on the effective date of the UTGR Master

Contract and continuing through and including the fifth (5th) anniversary of such effective date;

provided that UTGR shall have two (2) successive five (5) years extension options with the First

Extension Term, as defined in the UTGR Master Contract, commencing on July 18, 2010 and the

Second Extension Term, as defined in the UTGR Master Contract, commencing on July 18, 2015.

Except as otherwise provided herein in section 4(a)(vi), the exercise of the option to extend said

Master Contract shall be subject to the terms and conditions of section 2.5 of the UTGR Master

Contract; provided however, section 2.5B of the UTGR Master Contract shall be amended such

that with respect to UTGR's exercise of its option to extend for the Second Extension Term,

UTGR shall be required to certify to the Division that (i) there are 650 full-time equivalent

employees at the Twin River facility on the date of the exercise of the option for the Second

Extension Term; and (ii) for the one-year period preceding the date said Second Extension Term

option is exercised, there had been 650 full-time equivalent employees on average, as the term

full-time equivalent employee is defined in section 2.5B of the UTGR Master Contract and as

confirmed by the Rhode Island department of labor and training.

(ii) to provide for a Promotional Points Program at Twin River, pursuant to the terms and

conditions established from time to time by the Division during the UTGR Term, such terms to

include, but not limited to, a State fiscal year audit of the Promotional Points Program, the cost of

which audit shall be borne by UTGR. The approved amount of the Promotional Points Program

shall not exceed four percent (4%) of the amount of UTGR's net terminal income of the prior

Marketing Year. Said promotional points are to be used by UTGR to provide promotional points

to customers and prospective customers of UTGR at Twin River. Nothing herein shall prohibit

UTGR, with prior approval from the Division, from spending additional funds on the Promotional

Points Program; provided, however, that said additional amounts shall not be funded in any part

by net terminal income.

(iii) to provide for a Marketing Program for Twin River, commencing July 1, 2010,

which shall be monitored by the Division and pursuant to which, for each Marketing Year, to the

extent UTGR's marketing expenditures exceed four million dollars ($4,000,000), the Division

shall pay UTGR an amount equal to the product of such excess multiplied by the Division

Percentage, provided, however, that (1) the total amount payable by the Division for each

Marketing Year pursuant to this section 4(a)(iii) shall be capped at an amount equal to the

Division Percentage multiplied by six million dollars ($6,000,000) and (2) the Division shall not

owe any amount pursuant to this section 4(a)(iii) in any given Marketing Year unless, pursuant to

subsection 42-61.2-7(a), the State has received net terminal income for such Marketing Year in an

amount equal to or exceeding the amount of net terminal income the State received for the State's

fiscal year 2009; provided, further, that in any partial Marketing Year, the total amount payable

by the Division shall be capped at an amount equal to six million dollars ($6,000,000) multiplied

by the Division Percentage, the product of which shall be further reduced by multiplying it by a

fraction, (A) the numerator of which is the number of days in any such partial Marketing Year

and (B) the denominator of which is 365. (It is anticipated that the only partial Marketing Years

shall occur between the effective date of the First Amendment and the last day of the fiscal year

of the State during which such effective date occurred and/or the first day of the fiscal year of the

State in which the termination of the UTGR Master Contract occurs and the termination date of

the UTGR Master Contract, as the case may be).

(iv) to provide that the UTGR Master Contract shall not be assigned by either party

without the prior written consent of the other party and to further provide that so long as the

proposed assignee of UTGR or any of its permitted successors shall have been found to be

qualified by the Division to hold a video lottery terminal license, the Division shall not

unreasonably withhold or delay its consent to such proposed assignment. Proposed assignees

and/or successors shall be subject to licensure by the appropriate regulatory authorities.

(v) to permit UTGR, at its discretion, to maintain and operate all video lottery games at

Twin River up to twenty-four (24) hours per day, up to seven (7) days per week, including

without limitation, federal and state recognized holidays.

(vi) to irrevocably waive, release, acknowledge the fulfillment of or to deem fulfilled, as

applicable, as of the effective date of the Plan, (1) any obligation, covenant, condition or

commitment performed or to be performed by UTGR, BLB and/or any BLB affiliate under or in

connection with the UTGR Master Contract prior to and/or including the effective date of the

Plan; (2) any UTGR breach, default, noncompliance or delayed compliance on the part of UTGR,

BLB and/or any BLB affiliate of any representation, warranty, covenant, term or condition any

time prior to and/or including the effective date of the Plan, and (3) in connection with UTGR's

right to exercise the option for the First Extension Term only, any prior obligation, covenant,

condition, circumstance or commitment under section 2.5.B of the UTGR Master Contract;

specifically, said waiver, release, and acknowledgement of section 2.5B shall not relate to the

Second Extension Term.

(b) The entry into by the Division, department of transportation, and UTGR of the First

Amendment is hereby authorized, approved, ratified and confirmed in all respects.

on a frequency agreed by the Division (but no less frequently than annually) out of that share of

net terminal income disbursed pursuant to subsection 42-61.2-7(a)(1) as an administrative

expense of the Division, after allocation of net terminal income pursuant to subsections 42-61.2-

7(a)(1), (2), (3), (4), (5), and (6).

SECTION 5. Section 42-61.2-7 of the General Laws in Chapter 42-61.2 entitled "Video

Lottery Terminal" is hereby amended as follows:

42-61.2-7. Division of revenue. [Effective June 30, 2009 and expires June 30, 2010.] -

(a) Notwithstanding the provisions of section 42-61-15, the allocation of net terminal

income derived from video lottery games is as follows:

(1) For deposit in the general fund and to the state lottery division fund for

administrative purposes: Net terminal income not otherwise disbursed in accordance with

subdivisions (a)(2) -- (a)~~(7)~~(6) herein;

(i) Except for the fiscal year ending June 30, 2008, nineteen one hundredths of one

percent (0.19%) up to a maximum of twenty million dollars ($20,000,000) shall be equally

allocated to the distressed communities as defined in section 45-13-12 provided that no eligible

community shall receive more than twenty-five percent (25%) of that community's currently

enacted municipal budget as its share under this specific subsection. Distributions made under

this specific subsection are supplemental to all other distributions made under any portion of

general laws section 45-13-12. For the fiscal year ending June 30, 2008 distributions by

community shall be identical to the distributions made in the fiscal year ending June 30, 2007 and

shall be made from general appropriations. For the fiscal year ending June 30, 2009, the total

state distribution shall be the same total amount distributed in the fiscal year ending June 30,

2008 and shall be made from general appropriations. For the fiscal year ending June 30, 2010, the

total state distribution shall be the same total amount distributed in the fiscal year ending June 30,

2009 and shall be made from general appropriations, provided however that $784,458 of the total

appropriation shall be distributed equally to each qualifying distressed community.

(ii) Five one hundredths of one percent (0.05%) up to a maximum of five million dollars

($5,000,000) shall be appropriated to property tax relief to fully fund the provisions of section 44-

33-2.1. The maximum credit defined in subdivision 44-33-9(2) shall increase to the maximum

amount to the nearest five dollar ($5.00) increment within the allocation until a maximum credit

of five hundred dollars ($500) is obtained. In no event shall the exemption in any fiscal year be

less than the prior fiscal year.

(iii) One and twenty-two one hundredths of one percent (1.22%) to fund section 44-34.1-

1, entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998", to the maximum

amount to the nearest two hundred fifty dollar ($250) increment within the allocation. In no event

shall the exemption in any fiscal year be less than the prior fiscal year.

(iv) Except for the fiscal year ending June 30, 2008, ten one hundredths of one percent

(0.10%) to a maximum of ten million dollars ($10,000,000) for supplemental distribution to

communities not included in paragraph (a)(1)(i) above distributed proportionately on the basis of

general revenue sharing distributed for that fiscal year. For the fiscal year ending June 30, 2008

distributions by community shall be identical to the distributions made in the fiscal year ending

June 30, 2007 and shall be made from general appropriations. For the fiscal year ending June 30,

2009, no funding shall be disbursed. For the fiscal year ending June 30, 2010 and thereafter,

funding shall be determined by appropriation.

(2) To the licensed video lottery retailer:

(a) (i) Prior to the effective date of the NGJA Master Contract, Newport Jai Ali twenty-

six percent (26%) minus three hundred eighty four thousand nine hundred ninety-six dollars

($384,996);

(ii) On and after the effective date of the NGJA Master Contract, to the licensed video

lottery retailer who is a party to the NGJA Master Contract, all sums due and payable under said

Master Contract minus three hundred eighty four thousand nine hundred ninety-six dollars

($384,996).

(b) (i) Prior to the effective date of the UTGR Master Contract, to the present licensed

video lottery retailer at Lincoln Park which is not a party to the UTGR Master Contract, twenty-

eight and eighty-five one hundredths percent (28.85%) minus seven hundred sixty-seven

thousand six hundred eighty-seven dollars ($767,687);

(ii) On and after the effective date of the UTGR Master Contract, to the licensed video

lottery retailer who is a party to the UTGR Master Contract, all sums due and payable under said

Master Contract minus seven hundred sixty-seven thousand six hundred eighty-seven dollars

($767,687).

(3) (i) To the technology providers who are not a party to the GTECH Master Contract

as set forth and referenced in Public Law 2003, Chapter 32, seven percent (7%) of the net

terminal income of the provider's terminals;

(ii) To contractors who are a party to the Master Contract as set forth and referenced in

Public Law 2003, Chapter 32, all sums due and payable under said Master Contract;

(iii) Notwithstanding paragraphs (i) and (ii) above, there shall be subtracted

proportionately from the payments to technology providers the sum of six hundred twenty-eight

thousand seven hundred thirty-seven dollars ($628,737);

(4) To the city of Newport one and one hundredth percent (1.01%) of net terminal

income of authorized machines at Newport Grand except that ~~upon passage~~ effective November

9, 2009, the allocation shall be one and two tenths percent (1.2%) of net terminal income of

authorized machines at Newport Grand for each week the facility operates video lottery games on

a twenty-four (24) hour basis for all eligible hours authorized and to the town of Lincoln one and

twenty-six hundredths percent (1.26%) of net terminal income of authorized machines at Lincoln

Park except that ~~upon passage~~ effective November 9, 2009, the allocation shall be one and forty-

five hundredths percent (1.45%) of net terminal income of authorized machines at Lincoln Park

for each week the facility operates video lottery games on a twenty-four (24) hour basis for all

eligible hours authorized;

(5) To the Narragansett Indian Tribe, seventeen hundredths of one percent (0.17%) of net

terminal income of authorized machines at Lincoln Park up to a maximum of ten million dollars

($10,000,000) per year, which shall be paid to the Narragansett Indian Tribe for the account of a

Tribal Development Fund to be used for the purpose of encouraging and promoting: home

ownership and improvement, elderly housing, adult vocational training; health and social

services; childcare; natural resource protection; and economic development consistent with state

law. Provided, however, such distribution shall terminate upon the opening of any gaming facility

in which the Narragansett Indians are entitled to any payments or other incentives; and provided

further, any monies distributed hereunder shall not be used for, or spent on previously contracted

debts; and

(6) Unclaimed prizes and credits shall remit to the general fund of the state;

(7) Payments into the state's general fund specified in subdivisions (a)(1) and (a)~~(7)~~(6)

shall be made on an estimated monthly basis. Payment shall be made on the tenth day following

the close of the month except for the last month when payment shall be on the last business day.

(b) Notwithstanding the above, the amounts payable by the Division to UTGR related to

the Marketing Program shall be paid on a frequency agreed by the Division, but no less

frequently than annually.

Director is authorized to fund the Marketing Program as described above in regard to the First

Amendment to the UTGR Master Contract.

42-61.2-7. Division of revenue. [Effective June 30, 2010] -- (a) Notwithstanding the

provisions of section 42-61-15, the allocation of net terminal income derived from video lottery

games is as follows: