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FIRST AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
BETWEEN THE
POKAGON BAND OF POTAWATOMI INDIANS
AND
GREAT LAKES GAMING OF MICHIGAN, LLC
(f/k/a GREAT LAKES OF MICHIGAN, LLC)
DATED AS OF OCTOBER 16, 2000
<PAGE> 2
TABLE OF CONTENTS
RECITALS ...........................................................................1
ARTICLE 1 - DEFINITIONS AND OBJECTIVES..............................................2
Definitions.....................................................................2
Independent Agreement..........................................................13
ARTICLE 2 - ACQUISITION OF GAMING SITE AND NON-GAMING
LANDS..........................................................................14
Selection of Gaming Site.......................................................14
Option................................................................14
Purchase Agreement....................................................14
Closing on Gaming Site; Funding................................................15
Funding where Gaming Site Acquired by Band Designee............................15
Confidentiality................................................................15
Assignment of Other Options....................................................15
Selection of Non-Gaming Lands..................................................16
Closing on Non-Gaming Lands; Funding...........................................16
Funding where Non-Gaming Land Acquired by Band Designee........................16
Mortgages Prior to Transfer into Trust.........................................17
ARTICLE 3 - FEASIBILITY STUDY......................................................17
Initial Phase..................................................................17
Final Scope of Work............................................................17
Modification of Final Scope of Work............................................18
Bank Loans and Equipment Loans.................................................18
ARTICLE 4 - DESIGN PHASE...........................................................18
Employment of Architect........................................................18
Design and Construction Budgets................................................19
Gaming Regulatory Authority Expenses...........................................19
Concept Design and Engineering.................................................19
Preliminary Program Evaluation.................................................20
Design Development.............................................................20
Plans and Specifications.......................................................20
Compliance with Construction Standards, Environmental Laws
and Regulations................................................................21
Advance of Funds for Design Work...............................................21
ARTICLE 5 - CONSTRUCTION PHASE.....................................................21
<PAGE> 3
Selection of Contractor or Construction Lakes..................................21
Vendor Preferences.............................................................22
Proposal Review................................................................22
Contracts......................................................................22
Construction Document Provisions...............................................22
Construction Administration....................................................23
Construction Commencement and Completion.......................................23
Determination of Approved Construction Costs; Cost Overruns....................24
ARTICLE 6 - FURNISHINGS AND EQUIPMENT..............................................24
Selection of Furnishings and Equipment.........................................24
ARTICLE 7 - TERM...................................................................24
Term...........................................................................24
ARTICLE 8 - PAYMENTS AND COMMITMENTS BY LAKES
BEFORE APPROVAL OF MANAGEMENT AGREEMENT........................................25
Fees Payable By Lakes to the Band..............................................25
Initial Fee...........................................................25
Signing Fee...........................................................25
Monthly Payments......................................................25
Deposit into Account...........................................................26
Transition Loan................................................................26
Advances on Lakes Development Loan.............................................27
Gaming Site Acquisition Funds.........................................27
Site Planning and Design Development..................................27
Advances to the Band for Gaming Ordinance.............................27
Non-Gaming Land Acquisition Line of Credit.....................................27
ARTICLE 9 - PAYMENTS AND COMMITMENTS BY LAKES
AFTER APPROVAL OF MANAGEMENT AGREEMENT.........................................28
Scholarship Program Fee........................................................28
Development and Equipment Loans................................................28
Lakes Development Loan................................................29
Bank Development Loan.................................................33
Equipment Loan........................................................35
Terms Applicable to all Loans.........................................38
ARTICLE 10 - EXCLUSIVITY; NON-COMPETITION..........................................39
Exclusivity Regarding Facility.................................................39
Exclusivity in Michigan........................................................39
Indiana Casino.................................................................41
<PAGE> 4
Non-Competition................................................................41
Assignment; Change of Control..................................................42
Restrictions on Collateral Development.........................................44
ARTICLE 11 - REPRESENTATIONS, WARRANTIES, AND COVENANTS............................44
Representations and Warranties of the Band.....................................44
Band Covenants.................................................................44
Representations and Warranties of Lakes........................................46
Lakes Covenants................................................................46
ARTICLE 12 - EVENTS OF DEFAULT.....................................................47
Events of Default by the Band..................................................47
Events of Default by Lakes.....................................................48
Material Breach; Right to Cure.................................................49
ARTICLE 13 - TERMINATION...........................................................49
Voluntary Termination..........................................................49
Termination if No NIGC Approval................................................50
Lakes Right to Terminate on Band Event of Default..............................50
Band Right to Terminate on Lakes Event of Default..............................50
Band Right to Terminate for Material Adverse Change............................50
Termination on Buyout..........................................................51
Involuntary Termination Due to Changes in Legal Requirements...................51
Repair or Replacement..........................................................52
Setoff; Recoupment.............................................................53
ARTICLE 14 - DISPUTE RESOLUTION; LIQUIDATED DAMAGES................................53
Band's Waiver of Sovereign Immunity and Consent to Suit........................53
Arbitration....................................................................53
Choice of Law.........................................................54
Place of Hearing......................................................54
Confidentiality.......................................................54
Limitation of Actions..........................................................54
Damages...............................................................54
Consents and Approvals................................................54
Injunctive Relief and Specific Performance............................55
Action to Compel Arbitration..........................................55
Damages on Termination for Failure to Obtain NIGC Approval.....................55
Liquidated Damages and Limitations on Remedies.................................55
Liquidated Damages Payable by Lakes...................................55
Liquidated Damages Payable by the Band................................56
Lakes Continuing Obligations...................................................56
<PAGE> 5
Termination of Exclusivity.....................................................57
Remedies ......................................................................57
Fees not Damages...............................................................57
ARTICLE 15 - GENERAL...............................................................57
Nature of Agreement............................................................57
Lakes's Interest...............................................................57
Situs of the Agreement.........................................................57
Notice.........................................................................57
Relationship...................................................................59
Further Actions................................................................59
Waivers........................................................................59
Captions.......................................................................59
Third Party Beneficiary........................................................59
Survival of Covenants..........................................................60
Estoppel Certificate...........................................................60
Periods of Time; Time of the ..................................................60
Confidential and Proprietary Information.......................................60
Government Savings Clause......................................................60
Successors and Assigns.........................................................61
Severability...................................................................61
Entire Agreement...............................................................61
Consents ......................................................................61
Ratification...................................................................62
Execution Page.................................................................63
<PAGE> 6
EXHIBIT LIST
EXHIBIT A Control Agreement
EXHIBIT A-1 Dominion Agreement
EXHIBIT B First Amended and Restated Non-Gaming Lakes Note
EXHIBIT B-1 Description of Gaming Site
EXHIBIT C-1 First Amended and Restated Non-Gaming Land Acquisition Line of
Credit Agreement
EXHIBIT D Amended and Restated Non-Gaming Transition Loan Note
EXHIBIT E Band Litigation
EXHIBIT F Conditional Release and Termination Agreement between Lakes and
CRC dated May 20, 1999, as amended by Amendment dated on or
about July 7, 1999
EXHIBIT G General Release from CRC to the Band and its members
<PAGE> 7
FIRST AMENDED AND RESTATED DEVELOPMENT AGREEMENT
This First Amended and Restated Development Agreement is made as of the
16th day of October, 2000 by and between the POKAGON BAND OF POTAWATOMI INDIANS
(the "Band"), and GREAT LAKES GAMING OF MICHIGAN, LLC, a Minnesota limited
liability company (f/k/a Great Lakes of Michigan, LLC) ("Great Lakes").
RECITALS
A. The Band, pursuant to 25 U.S.C. ss.ss. 1300j et seq. (the
"Restoration Act"), is a federally recognized Indian tribe recognized as
eligible by the Secretary of the Interior for the special programs and services
provided by the United States to Indians because of their status as Indians and
is recognized as possessing powers of self-government.
B. As authorized by the Restoration Act, the Band intends to acquire
the Gaming Site in the State of Michigan, to be held by the federal government
in trust for the Band, on which the Band intends to construct and operate a
permanent Class III gaming facility (the "Facility"); and the Band will possess
sovereign governmental powers over the Gaming Site pursuant to the Band's
recognized powers of self government, and the Band desires to use the Gaming
Site to improve the economic conditions of its members.
C. The Band and Lakes Gaming, Inc. ("Lakes") entered into a
Development Agreement dated as of July 8, 1999 (the "Development Agreement")
which contains provisions relating to the development of the Facility.
D. The Band has ratified the Development Agreement and the
Development Agreement is now in full force and effect.
E. Lakes has assigned its rights and obligations under the
Development Agreement to Great Lakes pursuant to an Assignment and Assumption
Agreement of near or even date, subject to certain terms and conditions.
F. At the request of the Band, Lakes has agreed to loan the Band an
additional $8 million for immediate use by the Band in acquiring both gaming and
non-gaming land. The Band and Lakes have agreed to construct the Facility in a
phased approach. Lakes has also agreed, due to uncertainty in the capital
markets over the availability of financing for Facility, to provide a greater
proportion of the initial phase of project financing from its own funds, and
affirmed its commitment to finance all phases of the project entirely from its
own funds if financing at an interest
<PAGE> 8
rate of 13% or less is not available from the capital markets. The Band has in
turn agreed to extend the term of the Management Agreement and to enter into a
Dominion Agreement granting Lakes a security interest in the Dominion Account as
defined in the Management Agreement.
G. The cost of developing, constructing and equipping the Initial
Phase of the Project is understood as totaling approximately $97 million, which
will be financed as follows: the Lakes Development Loan in the amount of $46
million; the Bank Loan in the amount of $28 million (subject to increase to not
more than $36 million, plus accrued interest thereon, to refinance funds
advanced by Lakes from the Land Acquisition Reserve for Gaming Site Acquisition
and Non-Gaming Land Acquisition); and the Equipment Loan in the amount of $22.75
million.
H. This First Amended and Restated Development Agreement incorporates
certain amendments to the Development Agreement agreed to by the parties
pursuant to a First Amendment to Development Agreement dated as of October 16,
2000.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises herein contained, the receipt and sufficiency of which are
expressly acknowledged, the Band and Great Lakes hereby agree as follows:
ARTICLE 1
DEFINITIONS AND OBJECTIVES
Section 1.1 Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Management Agreement. In addition to
other terms which are defined elsewhere in this Agreement, the following terms,
for purposes of this Agreement, shall have the meanings set forth in this
Section.
"Account" means the account at Firstar established pursuant to ss. 8.2
that is subject to the Control Agreement.
"Accrued Expenses" shall mean the accrued unpaid development costs and
expenses relating to the Gaming Site and the Enterprise.
"Agreement" shall mean this Development Agreement.
"Agreements" shall mean this Agreement and the Management Agreement.
"Approved Construction Costs" shall mean the Architect's estimate of
Construction Costs approved by the Band and Lakes pursuant to ss. 5.8.
<PAGE> 9
"Approved Development Budget" has the meaning set out in ss. 4.2.
"Architect" shall have the meaning described in ss. 4.1.
"Band Designee" shall mean Pokagon Properties, LLC, a Delaware limited
liability company, Northern Indiana Holdings, LLC, an Indiana limited liability
company, or such other entities as may be designated by the Band in writing.
"Band Designee Guarantee" shall mean the guarantee by the Band Designee
to Lakes of amounts advanced by Lakes or Great Lakes under the Lakes Note and
the Non- Gaming Land Acquisition Line of Credit, which shall be substantially in
the form of the guaranty executed by Pokagon Properties, LLC in favor of Lakes
dated March 9, 2000.
"Band Designee Mortgage" means the mortgage granted by the Band
Designee to Lakes securing the Lakes Note Guarantee, which shall be
substantially in the form of the mortgage granted by Pokagon Properties, LLC to
Lakes dated March 9, 2000.
"Band Event of Default" has the meaning described in ss. 12.1.
"Band Interest Rate" shall mean the lesser of (i) Wall Street Journal
prime rate as of the Bank Closing plus 1%, or (ii) 10%.
"Band Mortgage" means the mortgage granted by the Band to Lakes
securing the Lakes Note and the Non-Gaming Land Acquisition Line of Credit,
which shall be substantially in the form of the mortgage granted by Pokagon
Properties, LLC to Lakes dated March 9, 2000, with appropriate changes
reasonably acceptable to Lakes and the Band reflecting the change to the Band as
mortgagor and to Great Lakes as mortgagee.
"Bank Closing" means the closing on the Bank Loan Agreement.
"Bank Lender" shall mean the financial institution or bond trustee
described as the lender or bond trustee in the Bank Loan Agreement.
"Bank Loan" shall mean the loan evidenced by the Bank Note.
"Bank Loan Agreement" shall mean (a) the capital lease, loan agreement
and/or bond indenture to be entered into between the Band and the Bank Lender
for the Initial Phase in a principal amount, not to exceed $36,000,000 plus
accrued interest with respect to advances on the Second Tranche - Lakes Note and
the Second Tranche - Non-Gaming, which will (i), when added to the Lakes
Development Loan,
<PAGE> 10
finance all Development Expenditures for the Initial Phase (other than
acquisition of Furnishings and Equipment) and (ii) refinance all amounts
advanced by Lakes from the Land Acquisition Reserve; and (b) the subsequent or
amended capital lease, loan agreement and/or bond indenture in an amount which
will finance all Development Expenditures associated with the expansion of the
Facility to the Final Scope of Work (other than acquisition of Furnishings and
Equipment); provided that the aggregate principal amount of such capital lease,
loan and/or indenture, when added to the Equipment Loan for that expansion,
shall not exceed $100,000,000.
"Bank Note" shall mean the promissory note or bond to be executed by
the Band pursuant to the Bank Loan Agreement.
"BIA" shall mean the Bureau of Indian Affairs under the Department of
the Interior of the United States of America.
"Business Board" shall mean the decision making body created pursuant
to ss. 3.4 of the Management Agreement.
"Change of Control" shall have the meaning set out in ss. 10.5(c).
"Class II Gaming" shall mean Class II Gaming as defined in the IGRA.
"Class III Gaming" shall mean Class III Gaming as defined in the IGRA.
"Commencement Date" shall mean the first date that Gaming is conducted
pursuant to the terms of the Management Agreement in a Facility, including
Gaming conducted on completion of the Initial Phase of the Facility.
"Compact" shall mean the Compact between the Band and the State dated
December 3, 1998 and approved in 64 Fed.Reg. No. 32, Thursday, February 18,
1999, at 8111, as the same may, from time to time, be amended; or such other
compact or consent decree that may be substituted therefor.
"Completion Date" shall mean the date upon which Great Lakes receives,
as to the Initial Phase or the Final Scope of Work:
(i) an architect's certificate from the Architect chosen
pursuant to this Agreement as having responsibility for the design and
supervision of construction, equipping and furnishing of the Facility
certifying that the Initial Phase or the Final Scope of Work, as the
case may be, has been fully constructed substantially in accordance
with the Plans and Specifications;
<PAGE> 11
(ii) certification from the division, department or designee
of Great Lakes having responsibility to assure compliance with any
operational standards stating that the Initial Phase or the Final Scope
of Work, as the case may be, as completed, is in substantial compliance
with any such standards;
(iii) a permanent or temporary certificate of occupancy, if
required, from the regulatory entity within the Band Government with
authority to grant such a certificate, permitting the use and operation
of the Initial Phase or the Final Scope of Work, as the case may be, in
accordance with this Agreement; and
(iv) certificates of such professional designers, inspectors
or consultants or opinions of counsel, as Great Lakes may reasonably
determine to be appropriate, verifying construction and furnishing of
the Initial Phase or the Final Scope of Work, as the case may be, in
compliance with all Legal Requirements.
"Constitution" shall mean the document or documents which govern the
actions of the Band and, upon enactment, the Constitution of the Pokagon Band of
Potawatomi Indians as ultimately approved by the Band and approved by the
Secretary of the Interior.
"Construction Costs" means the costs of acquiring the Gaming Site and
designing, developing, constructing, furnishing and equipping the Facility,
including all related planning and professional fees, Furnishings and Equipment,
and a contingency not to exceed 8% of such costs (excluding Furnishings and
Equipment).
"Construction Documents" shall have the meaning described in Section
5.4.
"Control Agreement" shall mean the Account Control Agreement among
Firstar, Lakes and the Band of near or even date perfecting the Band's lien and
security interest in the Account, a true copy of which is attached as Exhibit A.
"Corporate Commission" shall mean a body corporate and politic
established, at the Band's discretion, by the Pokagon Council to own the
Enterprise and such other businesses and assets as the Band may deem
appropriate.
"CRC" means Casino Resource Corporation, a Minnesota corporation and
its Insiders.
"Design Agreement" shall have the meaning described in Section 4.1
<PAGE> 12
"Design Packages" shall have the meaning described in Section 4.1.
"Development Expenditures" shall mean all Approved Construction Costs;
all other costs of equipping and opening the Facility, including but not limited
to all related planning and professional fees, costs of infrastructure,
equipment, furniture and fixtures (including gaming equipment), and pre-opening
costs, fees and expenses; all legal, lobbying, public relations and other
professional costs and expenses related to transferring Gaming Lands and
Non-Gaming Lands into trust and to the Compact between the Band and the State of
Michigan; and all legal, lobbying and other fees and expenses previously
incurred by the Band in obtaining, or litigating with regard to, the Compact
with the State of Michigan, not to exceed $20,000, as well as all other such
fees and expenses subsequently incurred by the Band that the Band reasonably
chooses to include in the Development Budget.
"Disbursement Accounts" shall mean those accounts described in ss.
4.19.3 of the Management Agreement.
"Dominion Account" means the collateral account in favor of Lakes
established under ss. 4.19.2 of the Management Agreement.
"Dominion Agreement" means the collateral agreement granting and
perfecting Lakes a security interest in the Dominion Account, which shall be in
the form attached as Exhibit A-1.
"Enterprise" shall mean the enterprise of the Band created by the Band
to engage in Class II and Class III Gaming at the Facility, and which shall
include all gaming at the Facility and any other lawful commercial activity
allowed in the Facility, including but not limited to the sale of alcohol,
tobacco, gifts and souvenirs; provided, however, the Enterprise shall only
include any hotel operated by the Band, ancillary non-Gaming activity within the
Facility, or other commercial enterprise conducted by the Band which is not
generally related to Class II or Class III Gaming if such hotel, non-Gaming
activity or other commercial enterprise (a) is financed by, or through the
guaranty of, Manager, (b) is specifically included within the Initial Scope of
Work or is not a material expansion of the Initial Scope of Work, or (c) is
specified by the Business Board and the Pokagon Council as being included in the
Enterprise, in which case depreciation and other expenses relating to such
hotel, non-Gaming activity or other commercial enterprise shall be an Operating
Expense, all related revenues shall be included in Gross Revenues, and interest
on all related financing shall be paid by the Enterprise; and provided further
that the Enterprise shall not include a tribal gift/craft business which the
Band may elect to operate, rent free, on an area of about 2,400 square feet at
the Facility. The design and operation of such gift/craft shop shall be
consistent with the theme and quality of the Facility, and
<PAGE> 13
the location of such gift/craft shop shall be approved by the Business Board.
"Enterprise Accounts" shall mean those accounts described in ss. 4.19.1
of the Management Agreement.
"Equipment Lender" shall mean the financial institution described as
the lender in the Equipment Loan Agreement.
"Equipment Loan Agreement" shall mean (a) the bond indenture, loan
agreement and/or equipment lease in a principal amount of up to $22,750,000 to
be entered into between the Band and the Equipment Lender to finance acquisition
of the Furnishings and Equipment for the Initial Phase, and (b) the subsequent
or amended bond indenture, loan agreement and/or equipment lease which will
finance the acquisition of the Furnishings and Equipment for expansion of the
Facility to the Final Scope of Work; provided that the principal amount of such
loan or lease, when added to the Bank Development Loan for that expansion, shall
not exceed $100,000,000.
"Equipment Loan" means the loan or lease under the Equipment Loan
Agreement.
"Equipment Note" shall mean the promissory note or bond to be executed
by the Band pursuant to the Equipment Loan Agreement.
"Facility" shall mean the permanent buildings, structures and
improvements located on the Gaming Site and all fixtures, Furnishings and
Equipment attached to, forming a part of, or necessary for the operation of the
Enterprise.
"Final Scope of Work" means the final gaming facility and associated
amenities that the parties intend to complete, unless otherwise agreed by Great
Lakes and the Band, no later than the third anniversary of the Commencement
Date, which, together with the Initial Phase, shall include not less than
111,000 sq.ft. of gaming space, 100 gaming tables, 3,000 slot machines, 4,000
surface parking spaces for guests and a 2,000 car garage (unless, as to either
the surface parking or the garage, a smaller number is approved by the Business
Board), parking spaces for 45 buses and 600 employees, a 200 room hotel and a
2,500 seat bingo and events center, and which shall contain (excluding the hotel
and bingo/events center) at least 304,000 sq. ft. of space. The Final Scope of
Work will include and be integrated with the Initial Phase.
"First Tranche - Lakes Note" means all amounts advanced under the Lakes
Note other than the Second Tranche - Lakes Note.
<PAGE> 14
"First Tranche - Non-Gaming" means all amounts advanced under the Non-
Gaming Land Acquisition Line of Credit other than the Second Tranche -
Non-Gaming.
"Firstar" shall mean Firstar Bank N.A.
"Force Majeure" shall mean acts of God, fire, flood, storm,
earthquake, war, civil disorder, governmental acts, regulations, orders or
restrictions, accidents not caused by a party's negligence, strikes or labor
disturbances.
"Furnishings and Equipment" shall mean all furniture, furnishings and
equipment required for the operation of the Enterprise in accordance with the
standards set forth in this Agreement, including, without limitation:
(i) cashier, money sorting and money counting equipment,
surveillance and communication equipment, and security equipment;
(ii) slot machines, video games of chance, table games, keno
equipment and other gaming equipment;
(iii) office furnishings and equipment;
(iv) specialized equipment necessary for the operation of
any portion of the Enterprise for accessory purposes, including
equipment for kitchens, laundries, dry cleaning, cocktail lounges,
restaurants, public rooms, commercial and parking spaces, and
recreational facilities; and
(v) hotel equipment (to the extent a hotel is included in
the Enterprise);
(vi) all other furnishings and equipment hereafter located
and installed in or about the Facility which are used in the operation
of the Enterprise in accordance with the standards set forth in this
Agreement.
"Gaming" shall mean any and all activities defined as Class II and
Class III Gaming pursuant to IGRA.
"Gaming Ordinance" shall have the meaning described in Section
8.4(iii).
"Gaming Regulatory Authority" or "GRA" shall mean the Band body created
pursuant to the Band Gaming Ordinance to regulate the Class II and Class III
Gaming of the Band in accordance with the Compact, the IGRA and the Gaming
Ordinance.
<PAGE> 15
"Gaming Site" shall mean the parcels of land in New Buffalo, Michigan
described on the attached Exhibit B-1, or such other parcels identified by the
Band and approved by Great Lakes, as suitable for development of the Facility
and operation of the Enterprise; all of which must meet the requirements of
United States of America to be accepted in trust for the Band for Gaming
purposes.
"Gaming Site Acquisition Advances" shall mean funds advanced under the
Lakes Development Loan in such amount or amounts as are needed to option or
acquire the Gaming Site, provided that the total amount of Gaming Site
Acquisition Advances shall not exceed $11,000,000.
"Gaming Site Option" has the meaning provided in ss. 2.1.1.
"Gaming Site Purchase Agreement" has the meaning provided in ss. 2.1.2.
"Great Lakes" means Great Lakes Gaming of Michigan, LLC, a Minnesota
limited liability company (f/k/a Great Lakes of Michigan, LLC).
"Initial Phase" shall mean the first phase of the Facility, which shall
(unless otherwise agreed by Great Lakes and the Band) have not less than 63,000
sq.ft. of gaming space, 50 table games, 1,750 slot machines and food and
beverage facilities, and which shall contain at least 153,000 sq. ft. of space
but shall not include a hotel. The Initial Phase shall be designed and
constructed so that it will be an integral part of the Final Scope of Work.
"Initial Scope of Work" means a facility including not less than 90,000
sq.ft. of gaming space, 75 gaming tables, 3,000 slot machines, 4,000 surface
parking spaces for guests (unless a smaller number is approved by the Business
Board) and parking spaces for 45 buses and 600 employees; provided that if
financing beyond the aggregate amount of the Loans set forth in ss. 9.2 is
available to the Band without Lakes' guarantee on terms acceptable to the Band,
the Initial Scope of Work may at the Band's option be increased to include a
hotel, bingo hall and multi-purpose entertainment facility, or an indoor garage.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, P.L.
100-497, 25 U.S.C. ss. 2701 et seq. as it may from time to time be amended.
"Insider" has the meaning defined in 11 U.S.C. ss. 101(31), assuming
Lakes were the debtor in that definition, and shall include persons or entities
that become Insiders after the date of this Agreement, whether as the result of
a merger, acquisition. restructuring or otherwise.
<PAGE> 16
"Lakes" shall mean either Great Lakes or both Great Lakes and Lakes
Gaming, Inc., to the extent provided in the Assignment and Assumption Agreement
among Great Lakes, Lakes Gaming, Inc. and the Band of near or even date.
"Lakes Development Loan" shall mean the loan to the Band to be made by
Lakes under the Lakes Note in a principal amount of up to $ 46,000,000,
comprised of (A) up to $ 11,000,000 for Gaming Site Acquisition Advances and (B)
$35,000,000 for Development Expenditures other than acquisition of the Gaming
Site.
"Lakes Event of Default" has the meaning described in ss. 12.2.
"Lakes's Internal Expenses" shall mean Lakes's corporate overhead,
including without limitation salaries or benefits of any of Lakes's officers and
employees, whether or not they perform services for the Project or the
Enterprise, and any travel or other expenses of Lakes's employees.
"Lakes Note" shall mean the promissory note to be executed by the Band
to evidence the Lakes Development Loan, which shall be in the form attached
hereto as Exhibit B.
"Land Acquisition Reserve" shall mean the sum of $8,000,000, of which
$3,000,000 shall be allocated to Gaming Site Acquisition Advances under the
Lakes Note and $5,000,000 shall be allocated to fund the acquisition of
Non-Gaming Land under the Non-Gaming Acquisition Line of Credit. The Land
Acquisition Reserve is to fund a portion of advances under the Non-Gaming Land
Acquisition Line of Credit and the Lakes Note, as provided in ss.ss. 2.1, 2.2
and 2.6.
"Legal Requirements" shall mean any and all present and future
judicial, administrative, and tribal rulings or decisions, and any and all
present and future federal, state, local and tribal laws, ordinances, rules,
regulations, permits, licenses and certificates, in any way applicable to the
Band, Lakes, the Gaming Site, the Facility, and the Enterprise, including
without limitation, the IGRA, the Compact, and the Band Gaming Ordinance.
"Limited Recourse" shall mean that all Loans and all liabilities of the
Band under or related to the Agreements, the Enterprise or the Gaming Regulatory
Authority, and any related awards, judgments or decrees, shall be payable solely
out of undistributed or future Net Revenues of the Enterprise and shall be a
limited recourse obligation of the Band, with no recourse to tribal assets other
than such Net Revenues (except (i), as to the Equipment Loan, a security
interest in the Furnishings
<PAGE> 17
and Equipment purchased with Equipment Loan proceeds, (ii), if the Commencement
Date does not occur, Subsequent Gaming Facility Revenues to the extent provided
in this Agreement, (iii) mortgages on the Gaming Site and Non-Gaming Lands prior
to their transfer into trust, and (iv) after the Commencement Date occurs, funds
on deposit in the Dominion Account to the extent provided in ss. 9.2(x) of the
Development Agreement and the Dominion Agreement, or in any other dominion
agreement executed by the Band). In no event shall Great Lakes or any lender or
other claimant have recourse to (a) the physical property of the Facility (other
than Furnishings and Equipment subject to the security interest securing the
Equipment Loan), (b) Tribal Distributions, (c) assets of the Band purchased with
Tribal Distributions, (d) revenues or assets of any other gaming facility owned
or operated by the Band, or (e) any other asset of the Band (other than (i) as
to the Transition Loan and the Non-Gaming Acquisition Line of Credit, if the
Commencement Date does not occur, Subsequent Gaming Facility Revenues to the
extent provided in this Agreement, (ii) as to the Lakes Note and the Non-Gaming
Acquisition Line of Credit, mortgages on the Gaming Site and Non-Gaming Lands
prior to their transfer into trust, (iii) funds on deposit in the Dominion
Account to the extent provided in the Agreements, the Dominion Agreement and any
other dominion agreement executed by the Band, and (iv) such Net Revenues of the
Enterprise).
"Loans" shall mean the Lakes Development Loan, the Bank Loan and the
Equipment Loan.
"Management Agreement" shall mean the agreement between the Band and
Lakes dated the same date as this Agreement, pursuant to which Lakes shall
manage the Enterprise, as amended by First Amendment dated October 16, 2000.
"Material Adverse Change" shall mean a material adverse change in
Lakes's financial condition which materially and substantially impairs Lakes's
ability to perform under the Agreements.
"Material Breach" means a failure of either party to perform any
material duty or obligation on its part, if such party fails to (i) cure the
specified default within thirty (30) days following receipt of the notice
provided under ss. 12.3, or (ii) if the default is not capable of being cured
within 30 days, commences such cure within 30 days, proceeds diligently to
complete the cure, and completes the cure no later than 90 days after receipt of
such notice.
"Memorandum of Understanding" means the Memorandum of Understanding
between the Band and the Secretary of the Interior executed on behalf of the
Secretary on January 11, 1999.
<PAGE> 18
"Monthly Payments" shall have the meaning described in Section 8.1(c).
"National Indian Gaming Commission" or "NIGC" means the commission
established pursuant to 25 U.S.C. ss. 2704.
"Net Revenues" shall have the meaning set forth in the Management
Agreement, and shall include "Net Revenues (gaming)" and "Net Revenues (other)"
as defined in the Management Agreement.
"NIGC Approval" means (a) a determination by NIGC that Lakes is
suitable for licensing and (b) approval by NIGC of the Agreements.
"NIGC Disapproval" means a determination by NIGC that Lakes is
unsuitable for licensing, if within 120 days after notification of the NIGC
decision Lakes has not cured the reason for such unsuitability and obtained a
statement of suitability from NIGC.
"Non-Gaming Land" means any parcels of land in Michigan or Indiana
(other than the Gaming Site) which are (a) identified in a writing executed by
the Band as suitable for reservation homelands for the Band in accordance with
the Memorandum of Understanding, and (b) meet the requirements of United States
of America to be accepted in trust for the Band for Gaming or non-Gaming
purposes; provided that the Gaming Site and the Non-Gaming Land shall not exceed
4,700 acres in the aggregate.
"Non-Gaming Land Acquisition Line of Credit" shall mean an internal
line of credit in favor of the Band established by Great Lakes in the amount of
$15,000,000, pursuant to the Non-Gaming Land Acquisition Line of Credit
Agreement in the form attached hereto as EXHIBIT C-1, to enable the Band to
option or acquire Non-Gaming Lands.
"New Pokagon Council" means the Pokagon Council elected at a Band
election scheduled for on or about July 10, 1999, which shall take office in
August, 1999.
"Operating Expense" has the meaning provided in ss. 2 of the Management
Agreement.
"Plans and Specifications" shall mean the final Plans and
Specifications approved for the Facility as described in ss. 4.8.
"Pokagon Council" shall mean the duly elected governing legislative
body of the Band described pursuant to 25 U.S.C. ss. 1300j-4(b) or, at the
option of the Band, a designed committee or council created pursuant to
resolution or ordinance of the Pokagon Council.
<PAGE> 19
"Preliminary Development Budget" shall have the meaning described in
ss. 4.2.
"Project" shall have the meaning described in ss. 4.1.
"Ratification" means passage on or before September 15, 1999 of a
resolution by the New Pokagon Council, at a duly called meeting with a quorum
present, ratifying and endorsing the execution of this Agreement by the Band.
"Restoration Act" shall mean 25 U.S.C. ss.ss. 1300j et seq.
"Restricted Territory" shall mean the States of Ohio, Illinois, Indiana
and Michigan.
"Scholarship Program Fee" shall mean the $1,000,000 non-refundable fee
paid by Lakes under ss. 9.1 of this Agreement.
"Second Tranche - Lakes Note" means Gaming Site Acquisition Advances to
the extent they exceed $8,000,000.
"Second Tranche - Non-Gaming" means amounts advanced under the Non-
Gaming Land Acquisition Line of Credit to the extent such advances exceed
$10,000,000.
"Security Agreement" shall mean the pledge and security agreement
between Lakes and the Band granting the Band a lien and security interest in the
Account.
"Signing Fee" shall have the meaning described in Section 8.1(b).
"State" shall refer to the State of Michigan.
"Subsequent Gaming Facility Revenues" means gaming revenues from a
gaming facility (other than the Facility) owned or operated by the Band in
Michigan, but only to the following extent: (i) all Class III Gaming Net Revenue
and (ii) Class II Gaming Net Revenue, to the extent that such Net Revenue
exceeds $1,000,000 per annum.
"Term" shall mean the term of this Agreement as described in ss. 7.1.
"Transition Loan" shall have the meaning described in ss. 8.3.
"Transition Loan Note" shall mean the promissory note to be executed by
the
<PAGE> 20
Band evidencing the Transition Loan, which shall be in the form attached hereto
as Exhibit D.
"Tribal Distributions" shall mean Monthly Distribution Payments,
Minimum Guaranteed Monthly Payments and any other payments received by the Band
pursuant to or in connection with the Management Agreement.
Section 1.2 Independent Agreement. The objective of the Band and Lakes
in entering into and performing this Agreement is to provide a legally
enforceable procedure and agreement pursuant to which Lakes will pay certain
fees to the Band and make certain loans to the Band, and whereby the Band and
Lakes can proceed as far as possible with development of the Facility prior to
the approval of the Management Agreement by the NIGC so that the Facility can be
opened to the public as soon as possible after the approval of the Management
Agreement by the NIGC; and to set forth the rights and obligations of the
parties if approval of the Management Agreement by the NIGC does not occur or on
the occurrence or non-occurrence of certain other events. This is intended to be
a legally enforceable agreement, independent of the Management Agreement, which
shall enter into effect when executed and delivered by the parties and be
enforceable between the parties regardless of whether or not this Agreement or
the Management Agreement is approved by the Chairman of the NIGC.
ARTICLE 2
ACQUISITION OF GAMING SITE AND NON-GAMING LANDS
Section 2.1. Selection of Gaming Site. As soon as reasonably possible
after the date of this Agreement, Lakes shall recommend one or more sites to be
acquired for the Facility and shall furnish the Pokagon Council with a map and
legal description of each site, with its written recommendation for purchase of
each site, including advice as to the suitability of each site for the Facility
and the availability and terms of options, if any, pertaining to each site. The
parties agree that the proposed gaming site in New Buffalo, Michigan is
preferable for economic reasons, and that the Initial Scope of Work is premised
on that location. The Pokagon Council shall then select the Gaming Site, after
consultation with Great Lakes; provided that the purchase price for the Gaming
Site and the cost of any related options shall not exceed $11,000,000.
Section 2.1.1. Option. If Lakes holds an option on the site
(the "Gaming Site Option"), the Lakes shall assign such Option to the
Band when requested to do so by the Band in the Band's sole and
absolute discretion, such assignment to be without warranty or other
recourse. At the Band's option, any Gaming Site Options may be obtained
and held in the name of the Band
<PAGE> 21
Designee.
Section 2.1.2. Purchase Agreement. If Lakes does not hold or
cannot acquire Gaming Site Options as to the entire Gaming Site, Lakes
shall negotiate one or more purchase contracts (each, a "Gaming Site
Purchase Agreement") for purchase of any remaining portions of the site
by Lakes or its designee or nominee, or, at the Band's option, by the
Band or the Band Designee. Upon the Band's approval of the form of
Gaming Site Purchase Agreement proposed by Lakes, Lakes or its designee
or nominee shall enter into the Gaming Site Purchase Agreement with the
seller of the site. Lakes shall assign the Gaming Site Purchase
Agreement to the Band or, at the Band's option, the Band Designee, when
requested to do so by the Band in the Band's sole and absolute
discretion, such assignment to be without warranty or other recourse.
Section 2.2. Closing on Gaming Site; Funding. The Band or the Band
Designee shall thereafter proceed to purchase the Gaming Site and to close that
purchase in accordance with the terms, conditions and provisions of the assigned
Gaming Site Options or Gaming Site Purchase Agreements, as the case may be, and
this Agreement. Such purchase or purchases may occur on or immediately following
NIGC Approval, or at such earlier time as may be (a) required to avoid
expiration of the Gaming Site Option or to comply with deadlines set in the
Gaming Site Purchase Agreement, as they may be extended with the consent of the
owner of the proposed Gaming Site, (b) required to secure approval by
appropriate officials or agencies of the Management Agreement, or (c) as the
parties may otherwise agree. After Ratification Lakes shall advance funds in
such amount or amounts as shall be needed to option and/or acquire the Gaming
Site, including without limitation all related fees, real estate commissions and
transfer taxes, provided that the total amount shall not exceed $11,000,000. All
amounts so advanced by Lakes, together with option or acquisition payments made
by Lakes prior to assignment of the Gaming Site Options or Gaming Site Purchase
Agreements to the Band, shall be Development Expenditures and shall be advanced
under the Lakes Note.
2.2.1 Funding where Gaming Site Property Acquired by Band Designee. If
the Band opts to have the Band Designee enter into Gaming Site Options
or Gaming Site Purchase Agreements, or acquire any of the Gaming Site,
the cost of obtaining such Options and Gaming Site Purchase Agreements,
and of closing under such Options and Agreements, including all related
fees, commissions and expenses, shall be advanced by Lakes to the Band
under the Lakes Note as a Development Expenditure. The Band shall in
turn advance or contribute such amounts to or for the benefit of the
Band Designee. The Band
<PAGE> 22
Designee shall execute and deliver the Band Designee Guarantee to
Lakes. The Band Designee shall also execute and deliver to Lakes a Band
Designee Mortgage (or an amendment of such mortgage, if one is already
filed in the county in question) securing that guarantee.
Section 2.3. Confidentiality. The parties agree on a reasonable efforts
basis to keep the intended use of each site for Gaming confidential until the
Gaming Site Option or the Gaming Site Purchase Agreement has been executed and
delivered by all parties thereto.
Section 2.4. Assignment of Other Options. Lakes shall at the Band's
sole and absolute discretion assign or cause to be assigned to the Band or the
Band Designee any or all options (other than the Gaming Site Option) it, or any
other nominee, Insider or agent of Lakes may have on, or other interests in, the
following properties: (a) all lands acquired by Lakes or any agent or Insider of
Lakes relating to the development of the Facility and related amenities, and (b)
any other land located within the 20-mile radius described in ss. 10.6 below,
unless the Band consents in writing to their retention of specified options or
interests for specified purposes. Any such consent given by the Band shall be
irrevocable as to the specified property and purposes. Any such assignments
shall be without warranty or other recourse. Option payments or acquisition
payments made by Lakes or Lakes' other nominees or agents prior to such
assignment shall be advances under the Non-Gaming Land Acquisition Line of
Credit and repayable in accordance with its terms.
Section 2.5. Selection of Non-Gaming Lands. As soon as reasonably
possible after the date of this Agreement, the Pokagon Council shall select the
Non-Gaming Lands. The Band shall have sole discretion over the selection and
terms of acquisition of the Non-Gaming Lands.
Section 2.6. Closing on Non-Gaming Lands; Funding. The Band or the Band
Designee shall thereafter proceed to purchase the Non-Gaming Lands. Such
purchase shall occur on or immediately following NIGC Approval; as may be
required to avoid expiration of options or deadlines set in purchase agreements,
as they may be extended with the consent of the owners of the proposed
Non-Gaming Lands; or as otherwise agreed by the parties. After Ratification
Lakes shall advance funds in such amount or amounts as shall be needed to option
and/or acquire the Non-Gaming Lands, including without limitation all related
fees and transfer taxes, provided that the total amount Lakes shall be required
to advance shall not exceed $15,000,000. All amounts so advanced by Lakes shall
be advanced under the Non-Gaming Land Acquisition Line of Credit, which shall be
Limited Recourse, shall bear interest at the Band Interest Rate, and shall be
repayable (except for the Second Tranche - Non-Gaming) in 60 equal monthly
instalments of principal and interest
<PAGE> 23
commencing on the 15th day of the month after the month in which the
Commencement Date occurs. The Second Tranche - Non-Gaming shall be repaid as
provided in ss. 9.2.1(iii) below.
2.6.1 Funding where Non-Gaming Land Acquired by Band Designee. If the
Band opts to have the Band Designee enter into options or purchase
agreements for Non- Gaming Lands, or acquire any of the Non-Gaming
Lands, the cost of obtaining such options and agreements, and of
closing under such options and agreements, including all related fees,
commissions and expenses, shall be advanced by Lakes to the Band under
the Non-Gaming Land Acquisition Line of Credit, through a designee
other than Great Lakes, which designee shall be the nominee of and
agent for Lakes. The Band shall in turn advance or contribute such
amounts to or for the benefit of the Band Designee. The Band Designee
shall execute and deliver to Lakes the Band Designee Guarantee. The
Band Designee shall also execute and deliver to Lakes' nominee a Band
Designee Mortgage securing that guarantee, or an amendment to such
mortgage, upon each closing on the Band Designee's acquisition of any
such real property. Lakes's Designee shall act solely as agent and
nominee for Lakes in advancing funds under the Non-Gaming Land
Acquisition Line of Credit and holding the Band Designee Mortgage, and
shall not have any independent capacity; shall be subject to all claims
and defenses of the Band and the Band Designee against Lakes, to the
same extent as if the property in question had been acquired by the
Band and mortgaged by the Band to Lakes; and shall be subject to the
arbitration, limited waiver of immunity, Limited Recourse and other
provisions of Article 14 of the Development Agreement. Lakes' designee
shall only be entitled to enforce the Band Designee Mortgage against
the Band Designee to the extent that, and in the same manner as, Lakes
would be entitled to enforce a Band Mortgage against the Band. Any
Lakes' designee shall execute and deliver to the Band an agency
agreement reasonably acceptable to the Band and Lakes.
Section 2.7. Mortgages Prior to Transfer into Trust. Prior to transfer
of the Gaming Site or Non-Gaming Lands into trust, amounts advanced by Lakes
under the Lakes Note and under the Non-Gaming Land Acquisition Line of Credit
shall be secured by a Band Mortgage or Band Designee Mortgage on all such
properties. Lakes and Great Lakes shall release such mortgages upon transfer of
the respective lands subject to such mortgages into trust, or as otherwise
provided in this Agreement.
ARTICLE 3
CONSTRUCTION PHASES
<PAGE> 24
Section 3.1. Initial Phase The Facility shall be constructed in two
phases, the Initial Phase and the Final Scope of Work. Lakes and the Band agree
to proceed with the Design Phase and the Construction Phase of the Initial Phase
in accordance with Articles 4 and 5, and to equip the Initial Phase of the
Facility in accordance with Article 6. The intent of the parties is to take all
steps necessary in accordance with Articles 4 and 5 to permit the Band to
commence construction of the Initial Phase immediately upon the taking into
trust of the Gaming Site and receipt of NIGC Approval, and to complete
construction of the Initial Phase, equip the Initial Phase of the Facility and
commence Gaming as soon as reasonably practicable thereafter.
Section 3.2. Final Scope of Work. No later than eighteen months after
the Commencement Date, Lakes shall submit to the Band a proposed Preliminary
Development Budget, plans and specifications for the Final Scope of Work. Upon
approval of such budget, plans and specifications, Lakes and the Band shall
proceed in accordance with Articles 4, 5 and 6 to design, construct and equip
the Facility in accordance with the Final Scope of Work in a timely manner so as
to permit opening of the Facility expansion no later than three years after the
Commencement Date.
Section 3.3. Modification of Final Scope of Work. Notwithstanding any
provision of this Article, the Final Scope of Work may be reduced as follows:
The Band and Lakes may at any time notify the other party that it believes that
unanticipated material adverse changes in local gaming market conditions (not
including changed economic conditions, whether locally or in the economy
generally) make construction of the Facility to the Final Scope of Work not
economically feasible. In that event both parties shall negotiate in good faith
to determine what adjustments, if any, in the Final Scope of Work are
appropriate in light of the changed local gaming market conditions; provided
that such adjustments shall not result in a Facility smaller than the Initial
Phase. The Band and Great Lakes shall mutually agree upon the final budget,
plans and specifications for the Final Scope of Work.
Section 3.4. Bank Loans and Equipment Loans. Any references in Articles
4, 5 and 6 to the Bank Loan, the Equipment Loan or the Bank Closing shall refer
to such loans or closings as they pertain to the financing of the Initial Phase
or the expansion to the Final Scope of Work, as appropriate.
ARTICLE 4
DESIGN PHASE
Section 4.1. Employment of Architect. Lakes shall recommend to the Band
a minimum of three duly licensed architects, who shall be familiar with the
<PAGE> 25
design of gaming facilities, for interview by the Pokagon Council, and the Band
shall select an architect from the group or, if none of the first group is found
acceptable to the Band, groups recommended by Lakes. The Band shall employ such
architect (the "Architect") for the purpose of performing certain services in
connection with the design and construction of the Facility, including site
development. The Band's agreement with the Architect shall be in the form of a
contract (the "Design Agreement") approved by Lakes and the Pokagon Council. The
scope of the project contemplated by this Agreement (the "Project") shall be
stated and established in the Design Agreement and shall be subject to the
mutual approval of the parties, but shall incorporate at a minimum the Initial
Phase and the Final Scope of Work (subject to the provisions of ss. 3.3). The
scope of design shall not include, but the design shall facilitate, the
possibility of the Band later designing and constructing phased expansions of
the hotel, theme retail space, golf course and other amenities. The Design
Agreement shall also provide for and establish appropriate design packages
("Design Packages"), each pertaining to a discrete portion or phase of the
Project. The Design Agreement shall allow Lakes the right and responsibility to
supervise, direct, control and administer the duties, activities and functions
of the Architect and to efficiently carry out its covenants and obligations
under this Agreement; but the Design Agreement shall provide that the Architect
will consult closely with the Band and the Band's advisers, and that all design
elements shall be subject to review and approval by the Band.
Section 4.2. Design and Construction Budgets. Lakes, with the
assistance and input of the Architect and subject to the approval of the Pokagon
Council, shall establish a preliminary Development Budget (the "Preliminary
Development Budget") for designing, constructing, furnishing and equipping the
Facility and related costs and Development Expenditures. The Preliminary
Development Budget, as approved by the Pokagon Council and as it may be amended
with the approval of the Pokagon Council, is referred to as the "Approved
Development Budget." The Approved Development Budget shall reflect the Initial
Phase and, as to the expansion to include the Final Scope of Work, the Final
Scope of Work (subject to revision as provided in ss. 3.3), as well as any other
planned phasing. Lakes may, after notice to and approval by the Pokagon Council,
revise the aggregate Approved Development Budget from time to time as necessary
or appropriate to reflect any unpredicted changes, variables or events or to
include additional and unanticipated Project costs. Lakes may, at is sole
discretion after notice to and approval by the Business Board, reallocate part
or all of the amount budgeted with respect to any line item to another line item
and to make such other modifications to the Approved Development Budget as Lakes
deems necessary or appropriate, provided that: (i) the cumulative modifications
of the Approved Development Budget for all Design Packages shall not, without
Lakes's prior approval and the Pokagon Council's prior approval, exceed the
aggregate Approved Development Budget, and (ii) any modifications shall not
otherwise
<PAGE> 26
conflict with the terms of this Agreement. Approved Development Budget
adjustments which otherwise vary from the terms of the Agreement, shall, in
addition to requiring Lakes's approval, require the approval of the Pokagon
Council. The Band acknowledges that the Approved Development Budget is intended
only to be a reasonable estimate of Project costs, subject, however, to the
provisions of ss. 5.8 with regard to cost overruns.
Section 4.3. Gaming Regulatory Authority Expenses. The Approved
Development Budget shall include such amounts as the Band determines, after
consultation with Lakes, are reasonable and necessary to assure that the GRA is
able to fulfill its regulatory role in a manner that does not slow the opening
of the Facility; provided that the cost of final preparation and approval of the
Gaming Ordinance shall not exceed $20,000.
Section 4.4 [INTENTIONALLY DELETED].
Section 4.5. Concept Design and Engineering. Lakes, after consultation
with the Business Board and the Architect, shall prepare for the review and
approval of the Pokagon Council, a statement of requirements for the Facility,
if any, including, but not limited to, planned phasing, if any, a program of
preliminary objectives, schedule requirements, design criteria, including
assumptions regarding HVAC demands, space requirements and relationships,
special equipment and site requirements.
Section 4.6. Preliminary Program Evaluation. Lakes shall prepare for
review by the Business Board and approval of the Pokagon Council, a preliminary
evaluation of the proposed Project including, but not limited to, planned
phasing, if any, schedule, Development Budget requirements, and alternative
approaches to Project design and construction. Based upon the agreed-upon
schedule, Development Budget requirements and design, the Architect shall
prepare schematic design documents consisting of drawings and other documents
illustrating the scale and relationship of the Facility and any other Enterprise
components, as well as a preliminary estimate of Enterprise costs based upon the
proposed area, size and scope of the Enterprise.
Section 4.7. Design Development. After review by the Business Board
and upon final approval of the schematic design documents by the Pokagon Council
and Lakes, the Architect shall prepare design development documents consisting
of drawings and other documents to fix and describe the size and character of
the Project as to architectural, structural, mechanical and electrical systems,
materials and such other elements and/or Design Packages as may be appropriate.
Further, the Architect shall advise Lakes with respect to, and update, any
Development Budget estimates.
<PAGE> 27
Lakes shall submit to the Pokagon Council, for its review and approval,
finalized versions of the design development documents prepared by the Architect
and agreed to by Lakes.
Section 4.8. Plans and Specifications. Based upon the approved design
development documents and any further adjustments in the scope and quality of
the Project or in the Development Budget, the Architect shall prepare for
approval by Lakes and the Business Board construction documents consisting of
preliminary drawings and specifications setting forth the general requirements
for construction of the Project. The Architect shall proceed with completion of
detailed plans and specifications (the "Plans and Specifications") as they
relate to construction of portions of the Facility in the order such portions
are to be completed or in the order required for sequential completion, and
shall proceed with completion of all Plans and Specifications as soon as
reasonably possible given construction scheduling and the intended progress of
Project work. The Architect shall advise the Business Board of any adjustments
to previous Development Budget estimates. The Plans and Specifications shall be
designed to accommodate the addition of further amenities, including without
limitation a hotel, parking garage and bingo/multi-purpose entertainment hall.
As portions of the detailed Plans and Specifications are completed for segments
of the Project, the Architect shall be required to submit duplicate copies of
those portions of the Plans and Specifications to Lakes and to the Business
Board (for approval prior to release of such documents to prospective bidders
for bidding and prior to commencement of construction of such portions) and to
the Pokagon Council (for information).
Section 4.9. Compliance with Construction Standards, Environmental Laws
and Regulations. The Facility shall be designed and constructed so as to
adequately protect the environment and the public health and safety. The design,
construction and maintenance of the Facility shall, except to the extent a
particular requirement or requirements may be waived in writing by the Pokagon
Council, meet or exceed all reasonable minimum standards pertaining to the Band
and national, State and local building codes, fire codes and safety and traffic
requirements (but excluding planning, zoning and Gaming Site use laws,
ordinances, regulations and requirements), which would be imposed on the
Enterprise by existing State or Federal statutes or regulations which would be
applicable if the Facility were located outside of the jurisdictional boundaries
of the Band, even though those requirements may not apply within the Band's
jurisdictional boundaries. To the extent that the Band has adopted or may in the
future adopt more stringent requirements, those requirements shall govern.
Nothing in this subsection shall grant to the State or any political subdivision
thereof any jurisdiction (including but not limited to, jurisdiction regarding
zoning or Gaming Site use) over the Facility or Enterprise or its development,
management and operation.
<PAGE> 28
Section 4.10. Advance of Funds for Design Work. Notwithstanding any
lack of approval of the Management Agreement or this Agreement by the NIGC,
Lakes shall advance such funds as are reasonably necessary to proceed prior to
Bank Closing with site and facility planning, architectural renderings and
plans, including payments to the Architect pursuant to the Design Agreement,
engineering and environmental services, working drawings and construction
contract bidding documents. All amounts so advanced by Lakes prior to NIGC
Approval and Bank Closing shall be a part of the development cost of the
Enterprise and shall be advanced under the Lakes Note as part of the Lakes
Development Loan.
ARTICLE 5
CONSTRUCTION PHASE
Section 5.1. Selection of Contractor or Construction Lakes. Lakes
shall, in consultation with the Architect and the Business Board, initiate a
pre-bid selection process in order to pre-qualify prospective general
contractors and/or construction management in connection with the construction
of the Facility. Lakes shall submit the list of pre-qualified general
contractors and/or construction Lakes to the Pokagon Council, together with
Lakes's recommendations, for the Pokagon Council's review, comment and approval.
Special consideration shall be given in the selection of contractors and/or
construction managers to companies with a proven history of effective employment
of Native American and local subcontractors.
Section 5.2. Vendor Preferences. In entering contracts for the supply
of goods and services for the Enterprise, including the selection of contractors
and/or construction managers, subcontractors and suppliers, Lakes shall give
preference to qualified members of the Band, their spouses and children, and
qualified business entities as to which the Band certifies that a member is the
real party in interest, provided their bids are reasonably competitive.
"Qualified" shall mean a member of the Band, a member's spouse or children, or a
business entity certified by the Band to be controlled by members of the Band,
who or which is able to provide services at reasonably competitive prices, has
demonstrated skills and abilities to perform the tasks to be undertaken in an
acceptable manner, in Lakes's opinion, and can meet the reasonable bonding
requirements of Lakes. Lakes shall provide written notice to the Band in advance
of all such contracting, subcontracting and construction opportunities. The Band
reserves the right to require use of union labor on some or all contracts,
subject to review with the Lakes of any related budgetary impact.
Section 5.3. Proposal Review. Subsequent to the pre-qualification of
prospective contractors and/or construction managers, Lakes shall conduct a
review
<PAGE> 29
of responsive proposals for the construction of the Project, and Lakes shall
recommend to the Band a well-qualified construction manager, contractor and/or
contractors. The recommended contractor, contractors and/or construction manager
shall be subject to the approval of the Pokagon Council, shall be properly
licensed in the State of Michigan, and shall be capable of furnishing a payment
and performance bond satisfactory to the Business Board to cover the
construction for which the contractor, contractors and/or construction manager
may be retained.
Section 5.4. Contracts. The Band shall enter into a construction
management agreement and/or construction contract or contracts (the
"Construction Documents") with the parties selected and approved in the form
negotiated by Lakes and approved by the Business Board for each Construction
Document. The Construction Documents shall provide that work shall begin only
after NIGC Approval, and the Construction Documents may provide that they shall
be canceled by either party if NIGC Approval has not occurred by a specified
fixed calendar date. The selected contractor, construction manager and/or other
contracting parties shall be compensated solely from the proceeds of the Lakes
Development Loan and the Bank Development Loan, subject to, and in accordance
with the terms, conditions and provisions of the Construction Documents and the
respective Loan Agreements.
Section 5.5. Construction Document Provisions. The Construction
Documents shall (i) require the successful construction manager or general
contractor and all contractors to be responsible for providing all materials,
equipment and labor necessary to construct and equip the Project as necessary
including site development; (ii) shall include appropriate provisions assuring
non-payment of Michigan sales and use tax for goods and materials in the Project
(to the extent said exemption is available for the Project); and (iii) require
said construction manager or general contractor and all contractors to construct
the Project in accordance with the Plans and Specifications, including any
changes or modifications thereto approved by the Business Board. The Band agrees
to indemnify Lakes against loss or liability caused by any written direction by
the Pokagon Council not to collect or remit Michigan sales tax. The Construction
Documents will provide for insurance conforming to the applicable insurance
requirements of the Management Agreement, appropriate lien waivers, and for
construction schedules by which milestones, progress payments and late
penalties, if any, may be calculated.
Section 5.6. Construction Administration. The Construction Documents
shall provide that Lakes shall be responsible for all construction
administration during the construction phase of the Project. Lakes shall act as
the Band's designated representative and shall have full power and complete
authority to act on behalf of the Band in connection with the Construction
Documents. To the extent allowed by the Design Agreement and the Construction
Documents, Lakes shall have control and
<PAGE> 30
charge of any persons performing work on the Project site, and shall interpret
and decide on matters concerning the performance of any requirements of the
Construction Documents. Lakes shall have the authority to reject work which does
not conform to the Construction Documents. Lakes may conduct inspections to
determine the date or dates of substantial completion and the Completion Date.
Lakes shall observe and evaluate or authorize the observation and evaluation of
Project work performed, review or authorize review of applications for payment
for submission to the Band and review or authorize review and certification of
the amounts due the contractors and/or construction Lakes.
Section 5.7. Construction Commencement and Completion. The Construction
Documents shall contain such provisions for the protection of the Band and Lakes
as the Band and Lakes shall deem appropriate; shall provide that the
construction of the Initial Phase of the Project shall commence on NIGC
Approval, following and subject to the granting of all approvals necessary to
commence construction; and shall also provide that any contractor shall exert
its best efforts to complete construction within such time as the Band and Lakes
agree following the commencement of construction. If the Band decides to proceed
with an expansion to the Final Scope of Work, Lakes and the Band shall proceed
in good faith with construction of a permanent Facility in accordance with the
Final Scope of Work, as modified under ss. 3.3, with such construction to be
completed no later than three years after the Commencement Date unless otherwise
agreed by the Band. All contractors shall, at a minimum, warrant their
respective portions of the work to be performed to be free of defects for at
least one year after the Completion Date of the Initial Phase and Final Scope of
Work, respectively.
Section 5.8. Determination of Approved Construction Costs; Cost
Overruns. Promptly upon the Band's execution of the Construction Documents, the
Architect shall submit a final estimate of Construction Costs, which estimate
shall be subject to the reasonable approval of Lakes and the Pokagon Council.
This estimate of Construction Costs, as so approved, is referred to as "Approved
Construction Costs." Lakes shall pay, without repayment from the Enterprise or
recourse to the Band, Construction Costs of the Initial Phase to the extent they
exceed the lesser of (a) such Approved Construction Costs of the Initial Phase
(including the approved contingency reserve), as such costs may change because
of change orders approved by the Band and Lakes or amendments to the Approved
Development Budget approved by the Band and Lakes, or (b) $100,000,000, or such
other amount as the Pokagon Council and Lakes may agree; in each case except
insofar as such overruns are caused by Force Majeure or by acts or omissions of
the Band.
ARTICLE 6
<PAGE> 31
FURNISHINGS AND EQUIPMENT
Section 6.1. Selection of Furnishings and Equipment. Lakes shall submit
to the Business Board, for its review and approval, the specifications for
Furnishings and Equipment. Thereafter, Lakes shall select and procure vendors
for purchase by the Band of Furnishings and Equipment required to operate the
Enterprise in conformity with such specifications. The cost of Furnishings and
Equipment shall be financed through the Equipment Loan. Alternatively, in the
sole discretion of the Band, Lakes may arrange for the procurement of
Furnishings and Equipment on lease terms consistent with the terms provided
below as to the Equipment Loan, with such changes as may be approved by the
Business Board. Any commitments for the procurement of Furnishings and Equipment
shall, however, become binding on the Band only upon later of (a) NIGC Approval
or (b) the receipt by Band of a commitment for the Equipment Loan consistent
with the terms of this Agreement.
ARTICLE 7
TERM
Section 7.1. Term. This Agreement shall enter into and remain in full
force and effect from the date of execution hereof until, unless earlier
terminated in accordance with its terms, the later of:
(a) seven years from the Commencement Date; or
(b) the date on which all obligations owed to Lakes by the
Band pursuant to this Agreement and any related notes have been
satisfied in full or otherwise discharged.
ARTICLE 8
PAYMENTS AND COMMITMENTS BY LAKES
BEFORE APPROVAL OF MANAGEMENT AGREEMENT
Section 8.1. Fees Payable By Lakes to the Band. Lakes will pay the
following fees and advances to the Band:
(a) Initial Fee. Lakes has paid the Band a non-refundable fee
of $150,000 on execution of Term Sheet, the receipt of which is hereby
acknowledged by the Band.
(b) Signing Fee. Lakes will pay the Band a non-refundable
signing
<PAGE> 32
fee of $1,000,000 (the "Signing Fee") which shall be paid to the Band
as follows: $100,000 upon execution and delivery of the Management
Agreement and this Agreement and $900,000 upon receipt of written
notice of Ratification. Use and disbursement of Signing Fee monies,
once received by the Band, shall be at the sole discretion of the Band,
and Lakes shall have no responsibility for such funds after receipt
thereof by the Band.
(c) Monthly Payments. Lakes will advance $125,000 to the Band
(the "Monthly Payments") on receipt of notice of Ratification, and
thereafter on the 15th day of each month, beginning in the month
following the month in which Ratification occurs, and continuing until
the date on which one of the following, whichever is earlier, has
occurred:
(i) the Commencement Date; or
(ii) this Agreement and the Management Agreement
have been terminated in accordance with
their terms, and all related payments have
been made; or
(iii) five years after the Ratification of this
Agreement.
Use and disbursement of the Monthly Payments, once received by the Band, shall
be at the sole discretion of the Band, and Lakes shall have no responsibility
for such funds after receipt thereof by the Band. All Monthly Payments shall
constitute advances under the Transition Loan pursuant to Section 8.3 of this
Agreement and shall be repayable as provided in that section.
Section 8.2. Deposit into the Account. Upon execution of the Agreements
Lakes shall deposit $20,900,000 into the Account, subject to the Security
Agreement and the Control Agreement. Lakes shall also deposit such further sums
from time to time as shall be necessary to maintain a minimum balance in the
Account of at least $2,000,000 at all times prior to the Commencement Date;
provided that Lakes shall not be required to make aggregate deposits that exceed
the total amount of fees, loans and other payments to be made by it to or for
the account of the Band under this Agreement. The Account shall:
(i) serve as collateral for liquidated or other damages
payable to the Band as provided in the Agreements; and
(ii) serve as a funding mechanism as provided in the
Control Agreement, at Lakes's option, for Lakes's
obligation to make payments to the Band (other than
the Scholarship Program Fee)
<PAGE> 33
and to make advances under the Lakes Development
Loan.
Lakes agrees to execute and deliver the Security Agreement, the Control
Agreement, and such financing statements and other instruments as the Band
requests to perfect this security interest. Nothing in this section shall limit
Lakes's obligations to make payments as required under this Agreement or limit
the Band's remedies in the event of Lakes's default. Funds in the Account shall
be invested in such manner as Lakes reasonably deems prudent, provided that the
investment vehicles are liquid and do not include equities, swaps, derivatives,
commodities, or speculative instruments. Lakes shall inform the Band of the
nature and terms of the financial instruments in which the escrowed funds are
invested. Income from the Account shall be payable to Lakes prior to a Lakes
Event of Default. After a Lakes Event of Default, income shall be payable to the
Band to the extent needed to fund damages payable to the Band. The Bank shall be
entitled to reasonable compensation acceptable to the Band and Lakes and to
reimbursement of expenses, all of which shall be payable from the Account prior
to a Lakes Event of Default and, after such an Event of Default, by Lakes.
Payments into the Account shall not be deemed advances to the Band for purposes
of accrual of interest, and interest shall only accrue as to funds advanced by
Lakes through the Account upon disbursement from the Account.
Section 8.3. Transition Loan. Upon Ratification, Lakes shall make a
loan to the Band for the purposes and as set forth in clause (c) of Section 8.1,
upon the terms set forth in the form of Transition Loan Note (the "Transition
Loan"). Each advance of funds to the Band by Lakes as part of the Transition
Loan shall be evidenced by the Transition Loan Note, duly authorized and
executed by the Band. All amounts advanced under the Transition Loan shall be
repayable to Lakes as unsecured Limited Recourse obligations of the Band; shall
not accrue interest for the first two years after execution of the Management
Agreement; shall, after the expiration of that two year period, bear interest at
the Band Interest Rate, as defined below; and shall be payable monthly in
arrears, beginning on the 15th day of the month after the Commencement Date, in
60 equal monthly payments of principal and interest. If the Bank Closing does
not occur, interest shall accrue on amounts advanced under the Transition Loan
at Wall Street Journal prime plus 1%, not to exceed 10%.
Section 8.4. Advances on Lakes Development Loan. Lakes will provide the
following funds to the Band after Ratification but prior to NIGC Approval and
the Bank Closing as advances on the Lakes Development Loan, to be repaid with
interest in accordance with the terms provided in ss. 9.2.1:
(i) Gaming Site Acquisition Funds. After Ratification Lakes
shall advance funds to permit the Band to enter into or perform in
accordance with
<PAGE> 34
one or more Options or Gaming Site Purchase Agreements, pursuant to
Section 2.2.
(ii) Site Planning and Design Development. After Ratification
Lakes shall advance funds reasonably necessary for the work described
in Articles 3, 4 and 5 of this Agreement to be performed prior to NIGC
Approval and the Bank Closing, pursuant to those Articles.
(iii) Advances to the Band for Gaming Ordinance. In order to
enable the Band to fulfill its covenant set forth in Section 11.2(i)
below to timely adopt a Gaming Ordinance and regulations (the "Gaming
Ordinance"), Lakes shall advance to the Band after Ratification but
prior to NIGC Approval the reasonable cost of preparation and approval
of the Gaming Ordinance, not to exceed $20,000.
Section 8.5. Non-Gaming Land Acquisition Line of Credit. Lakes will
provide advances to the Band under the Non-Gaming Land Acquisition Line of
Credit after Ratification but prior to the Commencement Date as provided in
Sections 2.6 and 2.6.1, upon the terms set forth in the form of Non-Gaming Land
Acquisition Line of Credit attached hereto as Exhibit C-1 (the "Non-Gaming Land
Acquisition Line of Credit"); except that Lakes' obligation to fund any portion
of the Second Tranche - Non-Gaming shall terminate on the earlier of (a) the
Bank Closing, if the Bank Development Loan has been increased from $28,000,000
to $36,000,000 plus accrued interest on amounts advanced on the Second Tranche
-- Lakes Note and Second Tranche -- Non-Gaming, and such increment is available
first to fund any undisbursed amounts of the Second Tranche -- Lakes Note and
the Second Tranche -- Non-Gaming, and second to repay Lakes amounts advanced by
Lakes under such Second Tranches; or (b) the Commencement Date. Each advance of
funds to the Band by Lakes as part of the Non-Gaming Land Acquisition Line of
Credit shall be evidenced by such Line of Credit, duly authorized and executed
by the Band and setting forth the applicable terms of this Agreement. All such
advances shall be repaid with interest on the same terms as provided in Article
9 with regard to the Lakes Development Loan, except that (a) funds advanced
under the Non-Gaming Land Acquisition Line of Credit shall at Lakes' request,
prior to transfer of land into trust, be guaranteed by the Band Designee and
secured by mortgages in favor of Lakes on any Non-Gaming Lands acquired by the
Band or the Band Designee; and (b) principal and interest on the Second Tranche
-- Non-Gaming shall be repaid either (I) at Bank Closing, to the extent the Bank
Development Loan has been increased from $28,000,000 to $36,000,000 plus accrued
interest on such Second Tranches, and such increment is available first to fund
any undisbursed amounts of the Second Tranche -- Lakes Note and the Second
Tranche -- Non-Gaming, or (II) from distributions made under ss. 5.5.5 and 5.5.6
of the Management Agreement and, if not
<PAGE> 35
sooner paid, shall be paid in full five years after the Commencement Date. The
Non-Gaming Land Acquisition Line of Credit shall otherwise be Limited Recourse.
All land and options acquired through the Non-Gaming Land Acquisition Line of
Credit shall be acquired in the name of the Band or the Band Designee.
ARTICLE 9
PAYMENTS AND COMMITMENTS BY LAKES
AFTER APPROVAL OF MANAGEMENT AGREEMENT
Section 9.1 Scholarship Program Fee. Upon NIGC Approval and transfer of
the Gaming Site into trust eligible for Gaming purposes, Lakes will pay the Band
a non-refundable fee of $1,000,000 (the "Scholarship Program Fee") into an
account established and controlled by the Band. The ultimate use and
disbursement of these funds shall be at the sole discretion of the Band, and
Lakes shall have no responsibility for such funds after payment to the Band.
Section 9.2. Development and Equipment Loans. Lakes shall make
available to the Band the Lakes Development Loan and, upon NIGC Approval and
transfer of the Gaming Site into trust for the Band, shall assist the Band in
obtaining the Bank Development Loan and the Equipment Loan. Such Loans shall be
in an aggregate amount sufficient to, and shall be used to, pay for all
Development Expenditures for both the Initial Phase and the Final Scope of Work,
provided that (a) the aggregate amount of Development Expenditures for the
Initial Phase shall not exceed $100,0000, (b) the aggregate amount of additional
Development Expenditures for the Final Scope of Work shall not exceed
$100,000,000, and (c) the Bank Development Loan and Equipment Loan to fund the
Final Scope of Work need not be obtained at the same time as such Loans are
obtained for the Initial Phase. The Loans shall be in the following amounts and
on the following terms, unless otherwise agreed by the Band:
Section 9.2.1. Lakes Development Loan.
i. Amount: $46,000,000 for the Initial Phase,
comprised of (A) up to $11,000,000 for
Gaming Site Acquisition Advances and (B)
$35,000,000 for Development Expenditures
other than acquisition of the Gaming Site.
Lakes shall not be required to provide
additional funding for the Initial Phase or
for the expansion to the Final Scope of
Work, except as provided under ss.ss.5.8,
9.2.2(vi) and 9.2.3(x).
<PAGE> 36
ii. Five year term, plus the period of
development and construction; except that
the Second Tranche -- Lakes Note shall be
repaid from the proceeds of the Bank
Development Loan at the Bank Closing on the
Initial Phase, to the extent such proceeds
exceed $28,000,000 and such increment is
available first to repay the Second Tranche
-- Lakes Note and the Second Tranche --
Non-Gaming; and provided further that
if the Bank Development Loan is less than
the sum of (A) $28,000,000 plus (B) the
amount of such Second Tranche, such Second
Tranche shall be repaid as provided in ss.
5.5.5 and 5.5.6 of the Management Agreement
and, if not sooner paid, in full at the end
of the Term.
iii. A. Interest at the Band Interest Rate
shall accrue from date of advance
until the Commencement Date;
thereafter the Lakes Development
Loan shall be payable as follows:
(a) the amount outstanding under
First Tranche -- Lakes Note as of
such Commencement Date shall be
repaid monthly in arrears,
beginning on the 15th day of the
month after the month in which the
Commencement Date occurs, in equal
monthly payments of principal and
interest for the successive 60
months of the term; and (b)
principal and interest on Second
Tranche -- Lakes Note shall be
repaid either (I) at Bank Closing,
to the extent the Bank Development
Loan has been increased from
$28,000,000 to $36,000,000 plus
accrued interest on such Second
Tranches, and such increment is
available first to fund any
undisbursed amounts of the Second
Tranche -- Lakes Note and the
Second Tranche -- Non-Gaming, or
(II) from distributions made
underss.ss.5.5.5 and 5.5.6 of the
Management Agreement and, if not
sooner paid, in full at the end of
the Term.
B. If the Bank Closing does not occur,
interest shall accrue on amounts
advanced under the Lakes Development
Loan at Wall Street Journal prime
plus 1%, not to exceed 10%.
iv. Repayment of the Lakes Development Loan
shall be
<PAGE> 37
subordinated to the Bank Development Loan,
the Equipment Loan, as well as to any other
third-party loans or equipment leases. Lakes
agrees to execute and deliver subordination
agreements evidencing such subordination in
form reasonably acceptable to the Bank
Lender, the Equipment Lender, or such other
third-party lender or equipment lessor.
v. The Band shall be entitled to draw on the
Lakes Development Loan prior to NIGC
Approval, as provided in Section 8.4.
Advances under the Lakes Development Loan
may be made through the Account.
vi. Principal may be prepaid at any time without
penalty.
vii. Each advance of funds to the Band by Lakes
under the Lakes Development Loan shall be
made under a promissory note in the form of
Lakes Note, duly authorized and executed by
the Band.
viii. All disbursements under the Lakes
Development Loan shall be made through the
Enterprise Account and the Disbursement
Account, unless otherwise agreed by Lake and
the Band in writing, and shall be on account
of Development Expenditures in accordance
with the Approved Development Budget, unless
otherwise approved by the Business Board.
Lakes shall provide the Band with a monthly
accounting of all such disbursements, which
accounting shall include a certification by
Lakes that the disbursements shown on the
accounting were for Development Expenditures
in accordance with the Approved Development
Budget, or were otherwise approved by an
attached vote of the Business Board.
ix. Lakes' obligation to fund any portion of the
Second Tranche -- Lakes Note shall terminate
on the earlier of (a) the Bank Closing, if
the Bank Development Loan has been increased
from $28,000,000 to $36,000,000 plus accrued
interest on the Second Tranches, and such
increment is available first to fund any
undisbursed amounts of the Second Tranche --
Lakes Note and the Second Tranche --
Non-Gaming, and second to repay Lakes
amounts
<PAGE> 38
advanced by Lakes under such Second
Tranches; or (b) the Commencement Date.
x. The obligations of the Band to Lakes under
the Lakes Note, the Non-Gaming Land
Acquisition Line of Credit and the
Transition Loan, and, under the Management
Agreement, for Management Fees, shall be
secured by a first security interest in the
Dominion Account pursuant to the Dominion
Agreement. Lake's security interest in the
Dominion Account shall be subject to the
following terms and conditions:
A. Lakes may block payment to the
Band of Monthly Distribution
Payments and may foreclose on its
security interest on the Dominion
Account only on the occurrence of a
Band Event of Default under the
Development Agreement or the
Management Agreement, if such
default is not cured within any
applicable cure period and, if
arbitration is timely demanded,
after entry of an arbitrator's award
finding a Band Event of Default has
occurred.
B. Lake's security interest in the
Dominion Account shall be
subordinate to any security
interests granted to the Bank Lender
and the Equipment Lender, and shall
be further subject to payment of (i)
Operating Expenses; (ii) all Loans,
as well any other third party loans
to which Lakes has subordinated in
writing; (iii) the Minimum
Guaranteed Monthly Payment; (iv)
deposits into the Capital
Replacement Reserve pursuant to ss.
4.15 of the Management Agreement;
(v) maintenance of the Minimum
Balance, and any other reserves
approved by the Business Board with
the written consent of Lakes; and
(vi) claims of third parties granted
priority over Lakes under the
Agreements, if the events occur
which trigger that priority (see,
e.g. ss. 13.8 below [priority of
distributions from insurance
proceeds, if casualty loss and
Facility not rebuilt]. Terms in this
subsection not defined in this
Agreement shall have the meanings
set forth in the Management
Agreement. Lakes shall promptly
<PAGE> 39
execute and deliver subordination
agreements pertaining to the
Dominion Agreement with regard to
any Bank Lender or Equipment Lender,
which agreements shall contain
provisions reasonably acceptable to
Lakes and such lenders.
C. The Dominion Agreement shall be
amended at the Band's request (i) to
conform with requests of the Bank
Lender and the Equipment Lender, to
the extent needed to obtain the Bank
Development Loan or the Equipment
Loan, and (ii) to the extent
reasonably necessary to provide for
subordinate security interests for
loans for the benefit of the
Enterprise as provided in ss.
9.2.4(ii) below.
D. The Dominion Agreement shall
terminate as to Lakes, without
prejudice to the Bank Lender, the
Equipment Lender, or any other party
that may have joined in, or be
benefitted by, that agreement, and
Lake's security interest in the
Dominion Account shall be
discharged, on termination of this
Agreement pursuant to ss. 13.1,
13.2, 13.4 (prior to the
Commencement Date), 13.5, or 13.6
hereof, or of the Management
Agreement pursuant to ss. 12.1,
12.2, 12.4 (prior to the
Commencement Date), 12.5, 12.6
(prior to the Commencement Date) or
12.7 thereof. On a termination under
ss. 13.4 (after the Commencement
Date) or 13.7 of the Development
Agreement or ss. 12.4 (after the
Commencement Date), 12.6 or 12.8 of
the Management Agreement after the
Commencement Date, such security
interest shall remain in effect
until amounts due Lakes have been
paid in accordance with the
Agreements, and shall thereafter be
promptly discharged; provided that
Lakes' right to payment and security
interest in the Dominion Account
after such termination under or
pursuant to the Agreements shall be
subordinate to (I) fees or other
amounts due to any manager of the
Enterprise and (II) any amounts due
to lenders or lessors under loans
for the benefit of the Enterprise,
whether existing as of the
termination or made thereafter,
including without limitation the
Bank
<PAGE> 40
Loan and the Equipment Loan. Lakes
shall promptly execute and deliver
subordination agreements pertaining
to the Dominion Agreement with
regard to any such manager, lender
or lessor, which agreements shall
contain provisions reasonably
acceptable to Lakes and the manager,
lenders or lessors.
E. Nothing in the Dominion Agreement
shall alter the damages due Lakes
(I) on a Band Event of Default,
which shall continue to be
controlled by Article 14 of this
Agreement and Article 13 of the
Management Agreement, and the amount
which Lakes is entitled to obtain on
foreclosure on the Dominion Account
would be controlled by those
Articles; or (ii) under any other
provision of the Agreements or any
related agreement. Upon payment in
full of all amounts due Lakes under
the Agreements, the Lakes Note, the
Non-Gaming Acquisition Line of
Credit and the Transition Loan,
Lakes shall promptly terminate the
Dominion Agreement and release any
related security interest.
Section 9.2.2 Bank Development Loan.
i. Amount: I. For the Initial Phase, an
amount (not to exceed
$36,000,000 plus accrued
interest on the Second
Tranches) equal to the sum of
(A) an amount which, when added
to the Lakes Development Loan,
will finance all Development
Expenditures for the Initial
Phase (other than acquisition
of Furnishings and Equipment),
plus (B) the amount by which
Gaming Site Acquisition
Advances exceed $8,000,000;
II. For the expansion of the
Facility to the Final
Scope of Work, an amount
which will finance all
Development Expenditures
associated with such
expansion (other than
acquisition of
<PAGE> 41
Furnishings and
Equipment); provided that
the principal amount of
such loan, capital lease
and/or indenture, when
added to the Equipment
Loan for that expansion,
shall not exceed
$100,000,000.
ii. Lakes shall not be required to provide its
guarantee of the Bank Development Loan or
any other credit enhancements.
iii. The loan commitment or undertaking shall not
be assignable by either Lakes or the Band
without the written consent of both parties.
iv. Lakes may after the Commencement Date seek
to refinance the Bank Development Loan, to
the extent it is made by a third party
lender with Lakes' guarantee. The Band
agrees to cooperate with that refinancing,
provided that (I) all costs and expenses of
the refinancing are borne by Lakes, (II) the
terms of the refinancing are in all respects
no less favorable to the Band than provided
in this Agreement and the Bank Loan
Agreement (including, without limitation,
interest rate, amortization, and recourse),
and are otherwise reasonably acceptable to
the Band; and (III) the refinanced debt
shall not be payable on termination of the
Agreements with Lakes, provided that
management of the Enterprise after such
termination shall be reasonably acceptable
to the lender.
v. Lakes shall proceed promptly and with due
diligence after NIGC Approval to assist the
Band in obtaining a bank commitment or firm
underwriting commitment for the Bank
Development Loan, and in closing on the Bank
Development Loan promptly after obtaining
such commitment.
vi. If the Band, with Lakes' assistance, is
unable to obtain, no later than the earlier
of (I) 120 days after NIGC Approval or (II)
the date by which additional funding is
needed to keep development and construction
of the Initial Phase on schedule without
slowdown or abatement, a bank commitment or
firm underwriting commitment to provide the
Bank Development Loan on the terms set forth
in this
<PAGE> 42
Agreement at an interest rate equal to or
less than 13% in an amount not less than
$28,000,000 for the Initial Phase, Lakes
agrees that it will loan the Band such
amount at a 13% interest rate and otherwise
on the same terms as provided in this
Agreement with regard to the Lakes
Development Loan. Lakes further agrees that,
if the Band, with Lakes' assistance, is
unable to obtain an additional or increased
bank commitment or firm underwriting
commitment, no later than two years after
the Commencement Date (or such later date as
may be approved by the Business Board), to
provide the Bank Development
Loan to finance expansion to the Final Scope
of Work on the terms set forth in this
Agreement at an interest rate equal to or
less than 13%, in an amount equal to the
Approved Development Budget for such
expansion, Lakes will loan the amount of
such Approved Development Budget to the Band
at a 13% interest rate on the same terms as
provided in this Agreement with regard to
the Lakes Development Loan; provided that
(A) the sum of such loan and the Equipment
Loan for such expansion shall not exceed
$100,000,000, and (B) the loan shall be
amortized beginning fifteen days after the
Completion Date of the Final Scope of Work
in equal monthly payments over five years,
except that all amounts outstanding under
such loan shall be due and payable seven
years after the Commencement Date or upon
any earlier buy- out of the Management
Agreement by the Band.
Section 9.2.3 Equipment Loan.
i-iii. The Equipment Loan for the
Initial Phase shall be in an
amount, not to exceed
$22,750,000, necessary to
equip the Initial Phase of
such Facility. The Equipment
Loan for the expansion to the
Final Scope of Work shall be
in the amount necessary to
equip the Facility to the
Final Scope of Work, provided
that the principal amount of
such Equipment Loan, when
added to the Bank Development
Loan for such expansion, shall
not exceed
<PAGE> 43
$100,000,000. Interest shall
accrue on the amount advanced
for the Initial Phase until
the Commencement Date;
thereafter such advance shall
be repayable monthly in
arrears, beginning on the 15th
day of the month after the
month in which the
Commencement Date occurs, in
equal monthly payments of
principal and interest for the
successive 48 months of the
term. The amount advanced to
equip the expansion to the
Final Scope of Work shall be
repaid in equal monthly
payments of principal and
interest for the successive 60
months after Completion Date
of such expansion, beginning
15 days after such Completion
Date; or on such other terms
as the Band may reasonably
approve.
iv. Security: Purchase money security interest
in Furnishings and Equipment purchased with
the loan proceeds.
v. Lakes shall not be required to provide its
guarantee or any other credit enhancement.
vi. The loan commitment shall not be assignable
by either Lakes or the Band without the
written consent of both parties.
vii. Lakes may after the Commencement Date seek
to refinance the Equipment Loan, to the
extent it is made by a third party lender
with Lakes' guarantee. The Band agrees to
cooperate with |
