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Sample Business ContractsHome: Sample Business Contracts:
MANAGEMENT AGREEMENT
BETWEEN THE
POKAGON BAND OF POTAWATOMI INDIANS
AND
LAKES GAMING, INC.
DATED AS OF JULY 8, 1999
<PAGE> 2
TABLE OF CONTENTS
1. RECITALS..................................................................1
2 DEFINITIONS...............................................................2
Affiliate.................................................................2
Band Gaming Ordinance.....................................................2
Band Representatives......................................................3
Bank Lender...............................................................3
BIA.......................................................................3
Business Board............................................................3
Capital Budget............................................................3
Capital Replacement(s)....................................................3
Capital Replacement Reserve...............................................3
Class II Gaming...........................................................3
Class III Gaming..........................................................3
Collateral Agreements.....................................................3
Compensation..............................................................4
Confidential Information..................................................4
Constitution..............................................................4
Development Agreement.....................................................4
Depository Account........................................................4
Disbursement Accounts.....................................................4
Emergency Condition.......................................................4
Enterprise................................................................5
Enterprise Accounts.......................................................5
Enterprise Employee.......................................................5
Enterprise Employee Policies..............................................5
Facility..................................................................5
Fiscal Year...............................................................5
Furnishings and Equipment.................................................6
Gaming....................................................................6
Gaming Regulatory Authority...............................................6
GRA.......................................................................6
Gaming Site...............................................................6
General Manager...........................................................6
Generally Accepted Accounting Principles..................................7
GAAP......................................................................7
Gross Gaming Revenue (Win)................................................7
Gross Revenues............................................................7
House Bank................................................................7
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Internal Control Systems..................................................7
Legal Requirements........................................................7
Manager...................................................................8
Manager's Internal Expenses...............................................8
Manager's Representatives.................................................8
Management Agreement......................................................8
Management Fee............................................................8
Managing Officer..........................................................8
Material Breach...........................................................9
Member of the Band Government.............................................9
Minimum Balance...........................................................9
Minimum Guaranteed Monthly Payment........................................9
Monthly Distribution Payment..............................................9
Net Revenues..............................................................9
Net Revenues (gaming).....................................................9
Net Revenues (other).....................................................10
Operating Budget and Annual Plan.........................................11
Operating Expenses.......................................................11
Operating Supplies.......................................................13
Plans and Specifications.................................................13
Pokagon Council..........................................................13
Pre-Opening Budget.......................................................13
Pre-Opening Expenses.....................................................13
Promotional Allowances...................................................13
Relative.................................................................14
State....................................................................14
Term.....................................................................14
3 ENGAGEMENT; BUSINESS BOARD; COMPLIANCE...................................14
Engagement of Manager....................................................14
Term.....................................................................15
Status of Gaming Site....................................................15
Manager Compliance with Law; Licenses....................................15
Compliance with Compact..................................................16
Fire and Safety..........................................................16
Compliance with the National Environmental Policy Act....................16
Commencement Date........................................................16
4 BUSINESS AND AFFAIRS OF THE ENTERPRISE...................................16
Manager's Authority and Responsibility...................................16
Duties of Manager........................................................17
ii
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Physical Duties..........................................................17
Compliance with Band Ordinances..........................................17
Required Filings.........................................................17
Contracts in Band's Name Doing Business as the Enterprise and at
Arm's Length.............................................................17
Enterprise Operating Standards...........................................17
Security.................................................................18
Damage, Condemnation or Impossibility of the Enterprise..................18
Alcoholic Beverages and Tobacco Sales....................................18
Employees................................................................18
Manager's Responsibility.................................................18
Enterprise Employee Policies.............................................18
Senior Employees.........................................................19
Enterprise Employees.....................................................19
Removal of Employees.....................................................19
No Manager Internal Expenses; Limitation on Manager Payments.............19
GRA Expenses.............................................................20
Employee Background Checks...............................................20
Indian Preference: Recruiting and Training...............................20
Pre-Opening..............................................................21
Operating Budget and Annual Plan.........................................22
Adjustments to Operating Budget and Annual Plan and Capital Budget.......24
Capital Budgets..........................................................24
Capital Replacements.....................................................25
Capital Replacement Reserve..............................................26
Periodic Contributions to Capital Replacement Reserve....................26
Use and Allocation of Capital Replacement Reserve........................27
Indian Preference: Vendors and Contractors...............................27
Internal Control Systems.................................................27
Banking and Bank Accounts................................................28
Enterprise Accounts......................................................28
Daily Deposits to Depository Account.....................................28
Disbursement Accounts....................................................29
No Cash Disbursements....................................................29
Transfers Between Accounts...............................................29
Insurance................................................................29
Accounting and Books of Account..........................................29
Statements...............................................................29
Books of Account.........................................................30
Accounting Standards.....................................................30
Annual Audit.............................................................30
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Manager's Contractual Authority..........................................31
Retail Shops and Concessions.............................................31
Entertainment Approvals..................................................31
Litigation...............................................................31
5 MANAGEMENT FEE, DISBURSEMENTS, AND OTHER
PAYMENTS BY MANAGER......................................................32
Management Fee...........................................................32
Fee Subordinated.........................................................32
Disbursements............................................................32
Adjustment to Bank Account...............................................33
Payment of Fees and Band Disbursement....................................33
Minimum Guaranteed Monthly Payment.......................................33
Payment of Net Revenues..................................................35
Harrah's Termination Agreement...........................................35
6 ENTERPRISE NAME; MARKS...................................................35
Enterprise Name..........................................................35
Marks....................................................................35
Signage..................................................................35
7 TAXES....................................................................36
State and Local Taxes....................................................36
Band Taxes...............................................................36
Compliance with Internal Revenue Code....................................36
8 BUY-OUT OPTION...........................................................37
9 EXCLUSIVITY; NON-COMPETITION.............................................37
Exclusivity in Michigan..................................................37
Indiana Casino...........................................................37
Non-Competition..........................................................37
Permitted Assignment; Change of Control..................................38
Restrictions on Collateral Development...................................40
10 REPRESENTATIONS, WARRANTIES, AND COVENANTS..............................40
Representations and Warranties of the Band...............................40
Due Authorization........................................................41
Valid and Binding........................................................41
Pending Litigation.......................................................41
Band Covenants...........................................................41
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No Impairment of Contract................................................41
Waiver of Sovereign Immunity.............................................41
Valid and Binding........................................................41
Legal Compliance.........................................................42
No Termination...........................................................42
Representations and Warranties of Manager................................42
Due Authorization........................................................42
Valid and Binding........................................................42
Litigation...............................................................42
Certifications...........................................................42
Manager Covenants........................................................42
Noninterference in Band Affairs..........................................42
Prohibition of Payments to Members of Band Government....................43
Prohibition of Hiring Members of Band Government.........................43
Prohibition of Financial Interest in Enterprise..........................43
No Amendment.............................................................43
CRC......................................................................44
No Liens.................................................................44
Permitted Liens..........................................................45
Authority to Execute and Perform Agreement...............................45
Brokerage................................................................45
11 DEFAULT..................................................................45
Events of Default by the Band............................................45
Events of Default by Manager.............................................46
Material Breach; Right to Cure...........................................47
12 TERMINATION..............................................................47
Voluntary Termination....................................................47
Termination if No NIGC Approval..........................................47
Manager Right to Terminate on Band Event of Default......................47
Band Right to Terminate on Manager Event of Default......................47
Band Right to Terminate for Material Adverse Change......................48
Termination if Manager License Withdrawn or on Conviction................49
Termination on Buy-Out...................................................49
Involuntary Termination Due to Changes in Legal Requirements.............49
13 DISPUTE RESOLUTION; LIQUIDATED DAMAGES...................................50
Band's Waiver of Sovereign Immunity and Consent to Suit..................50
Arbitration..............................................................51
Choice of Law............................................................51
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Place of Hearing.........................................................51
Confidentiality..........................................................51
Limitation of Actions....................................................51
Damages..................................................................51
Consents and Approvals...................................................52
Injunctive Relief and Specific Performance...............................52
Action to Compel Arbitration.............................................52
Damages on Termination for Failure to Obtain NIGC Approval...............52
Liquidated Damages and Limitations on Remedies...........................52
Liquidated Damages Payable by Manager....................................53
Liquidated Damages Payable by the Band...................................53
Manager Continuing Obligations...........................................53
Termination of Exclusivity...............................................53
Remedies.................................................................53
Band Injunctive Relief...................................................54
No Setoff Against Payments to Band.......................................54
Indemnification on Termination...........................................54
Fees not Damages.........................................................54
Undistributed Net Revenues...............................................54
14 CONSENTS AND APPROVALS...................................................55
Band.....................................................................55
Manager..................................................................55
15 DISCLOSURES..............................................................55
Shareholders and Directors...............................................55
Warranties...............................................................55
Disclosure Amendments....................................................56
Breach of Manager's Warranties and Agreements............................57
16 NO PRESENT LIEN, LEASE OR JOINT VENTURE..................................57
17 CONCLUSION OF THE MANAGEMENT TERM........................................57
18 MISCELLANEOUS............................................................57
Situs of the Contracts...................................................57
Notice...................................................................58
Relationship.............................................................59
Further Actions..........................................................59
Waivers..................................................................59
Captions.................................................................59
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Severability.............................................................59
Advances.................................................................60
Third Party Beneficiary..................................................60
Survival of Covenants....................................................60
Estoppel Certificate.....................................................60
Periods of Time; Time of Essence.........................................60
Exhibits.................................................................60
Successors and Assigns...................................................60
Confidential and Proprietary Information.................................60
Patron Dispute Resolution................................................61
Modification.............................................................61
Entire Agreement.........................................................61
Government Savings Clause................................................61
Preparation of Agreement.................................................62
Consents.................................................................62
Execution................................................................62
vii
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LIST OF EXHIBITS
Exhibit A Manager's Affiliates, Principal Shareholders, Officers and Directors
Exhibit B Pending Band Litigation
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<PAGE> 10
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT has been entered into as of July 8th, 1999,
by and between the POKAGON BAND OF POTAWATOMI (the "Band"), and LAKES GAMING,
INC., a Minnesota corporation ("Manager") for the operation of a gaming facility
in the State of Michigan.
1. RECITALS
1.1 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.
1.2 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.
1.3 Manager has paid $150,000, will on execution of this Agreement
pay a further $100,000, and shall on Ratification pay a
further $900,000, in each case as nonrefundable fees to the
Band as part of the process which has led to the selection of
Manager as the intended operator of the Facility.
1.4 Upon the transfer of the Gaming Site to the United States in trust
for the Band, the Band will possess sovereign powers over the Gaming
Site pursuant to the Band's recognized powers of self-government.
1.5 The Band desires to use the Gaming Site and the Facility to
improve the economic conditions of its members, to enable it
to serve the social, economic, educational and health needs of
the Band, to increase the revenues of the Band and to enhance
the Band's economic self sufficiency and self determination.
1.6 The Band wishes to establish an Enterprise, as hereinafter defined, to
conduct Class II and Class III Gaming as hereinafter defined on the
Gaming
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Site. This Agreement sets forth the manner in which the Enterprise
will be managed.
1.7 Manager has agreed to certain terms and has represented to the Band
that it has the managerial and financial capacity to provide and to
secure financing for the funds necessary to develop and construct the
Facility, as defined herein, and to commence the operation of the
Enterprise on the Gaming Site.
1.8 The Band is seeking technical experience and expertise for the
operation of the Enterprise and instruction for members of the
Band in the operation of the Enterprise. Manager is willing,
and has represented to the Band that it is able, to provide
such experience, expertise and instruction.
1.9 The Band desires to grant Manager the exclusive right and
obligation to develop, manage, operate and maintain the
Enterprise as described in this Agreement and to train Band
members and others in the operation and maintenance of the
Enterprise during the term of this Agreement. Manager wishes
to perform these functions for the Band.
1.10 This Agreement is entered into pursuant to the Indian Gaming
Regulatory Act of 1988, PL 100-497, 25 U.S.C. ss. 2701 et seq.
(the "IGRA") as that statute may be amended. All gaming
conducted at the Facility will at all times comply with the
IGRA, applicable Band law and the Compact.
2 DEFINITIONS
As they are used in this Agreement, the terms listed below shall have
the meaning assigned to them in this Section:
"AGREEMENT" shall mean this Management Agreement.
"AGREEMENTS" shall mean this Agreement and the Development Agreement.
"AFFILIATE" means as to Manager or the Band, any corporation,
partnership, limited liability company, joint venture, trust department or
agency or individual controlled by, under common control with, or which directly
or indirectly controls, Manager or the Band.
"BAND EVENT OF DEFAULT" has the meaning described in ss. 11.1.
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"BAND GAMING ORDINANCE" shall mean the ordinance and any amendments
thereto to be enacted by the Band, which authorizes and regulates Class II and
Class III Gaming on Indian lands subject to the governmental power of the Band.
"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 REPRESENTATIVES" shall mean the persons designated by the Pokagon
Council to sit on the Business Board.
"BANK CLOSING" means the closing on the Bank Loan.
"BANK LENDER" shall mean the financial institution agreed upon by the
parties to provide certain funding necessary to design, construct, and equip the
Facility, and provide start-up capital for the Enterprise.
"BANK LOAN" shall have the meaning defined in the Development Agreement.
"BIA" shall mean the Bureau of Indian Affairs of 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 this Agreement.
"BUY-OUT OPTION" shall mean the Band's option to buy out this Agreement
under ss. 8.
"CAPITAL BUDGET" shall mean the capital budget described in ss. 4.12.
"CAPITAL REPLACEMENT(S)" shall mean any alteration or rebuilding or
renovation of the Facility, and any replacement of Furnishings and Equipment,
the cost of which is capitalized and depreciated rather than being expensed
under GAAP.
"CAPITAL REPLACEMENT RESERVE" shall mean the reserve described in ss.
4.14, into which periodic contributions are paid pursuant to ss. 4.15.
"CHANGE OF CONTROL" shall have the meaning set out in ss. 9.4.3.
"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
3
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"COLLATERAL AGREEMENTS" shall mean any agreements defined as collateral
agreements under 25 USC ss. 2711(a)(3) and regulations issued thereto at 25
C.F.R. ss. 502.5.
"COMMENCEMENT DATE" shall mean the first date that the permanent
Facility is complete, open to the public and that Gaming is conducted in the
Facility pursuant to the terms of this Agreement. "Commencement Date" shall not
mean the opening of the Temporary 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.
"COMPENSATION" shall mean the direct salaries and wages paid to, or
accrued for the benefit of, any employee, including incentive compensation,
together with all fringe benefits payable to or accrued for the benefit of such
executive or other employee, including employer's contribution under F.I.C.A.,
unemployment compensation or other employment taxes, pension fund contributions,
workers' compensation, group life, accident and health insurance premiums and
costs, and profit sharing, severance, retirement, disability, relocation,
housing and other similar benefits.
"CONFIDENTIAL INFORMATION" shall mean the information described in ss.
18.15.
"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.
"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.
"DEVELOPMENT AGREEMENT" shall mean the agreement of even date between
Manager and the Band.
"DEPOSITORY ACCOUNT" shall mean the bank account described in ss.
4.19.2.
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"DISBURSEMENT ACCOUNTS" shall mean the bank account or accounts
described in ss. 4.19.3.
"EFFECTIVE DATE" shall have the meaning provided in ss. 18.22.
"EMERGENCY CONDITION" shall have the meaning set forth in ss. 4.13.
"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 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.
"ENTERPRISE EMPLOYEE" shall mean all employees who work at the Facility.
"ENTERPRISE EMPLOYEE POLICIES" shall mean those employee policies
described in ss. 4.5.2.
"ENTERPRISE INVESTMENT POLICY" shall have the meaning
described in ss. 4.19.1.
"EQUIPMENT LENDER" shall mean the entity making the Equipment Loan.
"EQUIPMENT LOAN" shall have the meaning provided in the Development
Agreement.
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"FACILITY" shall mean all 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.
"FISCAL YEAR" shall mean the 12-month period commencing on the first
day of the month next following the Commencement Date, and each succeeding
12-month period, or such other period as the Pokagon Council and Manager may
agree. The Band and Manager agree to take such actions as are necessary to
implement this Fiscal Year promptly after the Commencement Date.
"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) hotel equipment (to the extent a hotel is included in the
Enterprise);
(v) 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
(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.
"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 Band Gaming
Ordinance.
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"GAMING SITE" shall mean any parcel of land in the State identified by
the Band, after consultation with Manager, as suitable for development of the
Facility and operation of the Enterprise which meets the requirements of United
States of America to be accepted in trust for the Band for Gaming purposes.
"GENERAL MANAGER" shall mean the person employed by the Band to direct
the operation of the Enterprise.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean the
principles defined by the Financial Accounting Standards Board.
"GROSS GAMING REVENUE (WIN)" shall mean the net win from gaming
activities which is the difference between gaming wins and losses before
deducting costs and expenses.
"GROSS REVENUES" shall mean all revenues of any nature derived directly
or indirectly from the Enterprise including, without limitation, Gross Gaming
Revenue (Win), food and beverage sales and other rental or other receipts from
lessees, sublessees, licensees and concessionaires (but not the gross receipts
of such lessees, sublessees, licensees and concessionaires provided that such
lessees, sublessees, licensees and concessionaires are not Affiliates or
Insiders of Manager), and revenue recorded from Promotional Allowances, but
excluding any Permitted Taxes.
"HOUSE BANK" shall mean the amount of cash, chips, tokens and plaques
that Manager from time to time determines necessary to have at the Facility
daily to meet its cash needs.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, PL 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
Manager 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.
"INTERNAL CONTROL SYSTEMS" shall mean the systems described in ss. 4.18.
"LAKES DEVELOPMENT LOAN" shall have the meaning defined in the
Development Agreement.
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"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, Manager, 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 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, and (iii) mortgages
on the Gaming Site and Non-Gaming Lands prior to their transfer into trust). In
no event shall 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 Non-Gaming Acquisition Line of Credit, mortgages on the Non-
Gaming Lands prior to their transfer into trust, (iii) as to the Lakes Note,
mortgages on the Gaming Site prior to their transfer into trust, and (iv) such
Net Revenues of the Enterprise).
"LOANS" shall mean the Lakes Development Loan, the Bank Loan and the
Equipment Loan.
"MANAGER" shall mean Lakes Gaming, Inc.
"MANAGER'S INTERNAL EXPENSES" shall mean Manager's corporate overhead,
including without limitation salaries or benefits of any of Manager's officers
and employees, whether or not they perform services for the Project or the
Enterprise, and any travel or other expenses of Manager's employees.
"MANAGER'S REPRESENTATIVES" shall mean the persons designated by
Manager to sit on the Business Board.
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"MANAGEMENT AGREEMENT" shall mean this Agreement and may be referred to
herein as the "Agreement".
"MANAGEMENT FEE" shall mean the management fee described in ss. 5.1.
"MANAGER EVENT OF DEFAULT" has the meaning described in ss. 11.2.
"MANAGING OFFICER" shall mean the person designated by Manager to serve
as a liaison between Manager and the Band and to serve on the Business Board.
"MARKS" means all trade names, trade marks and service marks used by
the Facility or the Enterprise.
"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. 11.3, 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.
"MEMBER OF THE BAND GOVERNMENT" shall mean any member of the Pokagon
Council, the GRA or any independent board or body created to oversee any aspect
of Gaming and any Pokagon court official.
"MINIMUM BALANCE" shall mean the amount described in ss. 4.19.1.
"MINIMUM GUARANTEED MONTHLY PAYMENT" shall mean the payment due the
Band each month commencing in the month after the Commencement Date occurs in
accordance with 25 U.S.C. ss. 2711(b)(3) and ss. 5.6 hereof.
"MONTHLY DISTRIBUTION PAYMENT" shall have the meaning set forth in ss.
5.5.
"NATIONAL INDIAN GAMING COMMISSION" OR "NIGC" means the commission
established pursuant to 25 U.S.C. ss. 2704.
"NET REVENUES" shall mean the sum of "NET REVENUES (GAMING)" and "NET
REVENUES (OTHER)".
"NET REVENUES (GAMING)" shall mean the Gross Gaming Revenue (Win), of
the Enterprise from Class II or Class III gaming less all gaming related
Operating Expenses, excluding the Management Fee, and less the retail value of
any Promotional Allowances,
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and less the following revenues actually received by the Enterprise and included
in Gross Revenues:
(i) any gratuities or service charges added to a customer's bill:
(ii) any credits or refunds made to customers, guests or patrons;
(iii) any sums and credits received by the Enterprise for
lost or damaged merchandise;
(iv) any sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes
or charges received from patrons and passed on to a
governmental or quasi governmental entity, including
without limitation any Permitted Taxes;
(v) any proceeds from the sale or other disposition of
furnishings and equipment or other capital assets;
(vi) any fire and extended coverage insurance proceeds
other than for business interruption;
(vii) any condemnation awards other than for temporary
condemnation; and
(viii) any proceeds of financing or refinancing.
It is intended that this provision be consistent with 25 U.S.C. ss.2703(9).
"NET REVENUES (OTHER)" shall mean all Gross Revenues of the Enterprise
from all other sources in support of Class II or Class III gaming not included
in "Net Revenues (gaming)," such as food and beverage, entertainment, and
retail, less all Operating Expenses, excluding the Management Fee and less the
retail value of Promotional Allowances, if any, and less the following revenues
actually received by the Enterprise and included in Gross Revenues:
(i) any gratuities or service charges added to a customer's bill;
(ii) any credits or refunds made to customer, guests or patrons;
(iii) any sums and credits received by the Enterprise for
lost or damaged merchandise;
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(iv) any sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes
or charges received from patrons and passed on to a
governmental or quasi governmental entity, including
without limitation any Permitted Taxes;
(v) any proceeds from the sale or other disposition of
furnishing and equipment or other capital assets;
(vi) any fire and extended coverage insurance proceeds
other than for business interruption;
(vii) any condemnation awards other than for temporary
condemnation; and
(viii) any proceeds of financing or refinancing;
but excluding revenues from hotel, non-Gaming activity or other commercial
enterprises not included in the Enterprise.
It is intended that this provision be consistent with 25 U.S.C. ss.2703(9).
"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.
"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.
"OPERATING BUDGET AND ANNUAL PLAN" shall mean the operating budget and
plan described in ss. 4.11.
"OPERATING EXPENSES" shall mean all expenses of the operation of the
Enterprise, pursuant to GAAP, including but not limited to the following:
(i) the Compensation of Enterprise Employees;
(ii) Operating Supplies for the Enterprise;
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(iii) utilities;
(iv) repairs and maintenance of the Facility (excluding
Capital Replacements)
(v) interest on the Loans and all other loans or capital
leases pertaining to the Facility and the Enterprise,
but shall exclude interest on the Non-Gaming Land
Acquisition Line of Credit and the Transition
Loan;
(vi) interest on installment contract purchases or other
interest charges on debt approved by the Business
Board;
(vii) insurance and bonding;
(viii) advertising and marketing, including busing and
transportation of patrons to the Facility;
(ix) accounting, audit, legal and other professional fees;
(x) security costs;
(xi) operating lease payments for Furnishings and
Equipment to the extent approved by the Business
Board, and capital lease payments to the extent
approved by the Business Board and properly expensed
under GAAP;
(xiii) trash removal;
(xiv) cost of goods sold;
(xv) other expenses designated as Operating Expenses in
accordance with the accounting standards as referred
to in ss. 4.21.3;
(xvi) expenses specifically designated as Operating
Expenses in this Agreement;
(xvii) depreciation and amortization of the Facility based
on an assumed 30 year life, and depreciation and
amortization of all other assets in accordance with
GAAP;
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(xviii) recruiting and training expenses;
(xix) fees due to the NIGC under the IGRA;
(xx) any required payments to the State or local
governments made by or on behalf of the Enterprise or
the Band pursuant to the Compact or any related
consent decree;
(xxi) any budgeted charitable contributions by the
Enterprise for the benefit of charities located or
providing services in the vicinity of the Gaming Site
which are approved by the Business Board;
(xxii) Pre-opening expenses shall be capitalized and treated
as an expense during the first year after opening;
and
(xxiii) charges, assessments, fines or fees imposed by
governmental entities of the Band which are
reasonably related to the cost of Tribal governmental
regulation of public health, safety or welfare, or
the integrity of Tribal gaming operations.
but Operating Expenses shall not include any portion of Manager's Internal
Expenses or Permitted Taxes (other than as described in clause xxiii above), or
any expenses related to hotel, non-Gaming activity or other commercial
enterprises not included in the Enterprise.
"OPERATING SUPPLIES" shall mean food and beverages (alcoholic and
nonalcoholic) and other consumable items used in the operation of a casino, such
as playing cards, tokens, chips, plaques, dice, fuel, soap, cleaning materials,
matches, paper goods, stationary and all other similar items.
"PERMITTED TAXES" shall mean taxes, fees, assessments or other charges
imposed by the Band that are permitted under ss. 7.2.
"PLANS AND SPECIFICATIONS" shall mean the final Plans and
Specifications approved for the Facility as described in the Development
Agreement.
"POKAGON COUNCIL" shall mean the duly elected, governing legislative
body of the Band described pursuant to Public Law 102-323 or, at the option of
the Band, a designee committee or council created pursuant to resolution or
ordinance of the Pokagon Council.
"PRE-OPENING BUDGET" shall have the meaning described in ss. 4.10.
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"PRE-OPENING EXPENSES" shall have the meaning described in ss. 4.10.
"PROJECT" shall have the meaning described in ss. 4.1 of the
Development Agreement.
"PROMOTIONAL ALLOWANCES" shall mean the retail value of complimentary
food, beverages, merchandise, and tokens for gaming, provided to patrons as
promotional items.
"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.
"RELATIVE" shall mean an individual residing in the same household who
is related as a spouse, father, mother, son or daughter.
"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.
"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 Class II
Net Revenue exceeds $1,000,000.
"TEMPORARY FACILITY" means a Temporary Facility located on the Gaming
Site, if the Band elects to built and operate such a temporary facility prior to
the Commencement Date in accordance with the Development Agreement, after
consultation with Lakes.
"TERM" shall mean the term of this Agreement as described in ss. 3.2.
"TRIBAL DISTRIBUTIONS" shall mean Monthly Distribution Payments,
Minimum Guaranteed Monthly Payments and any other payments received by the Band
from the Enterprise pursuant to or in connection this Agreement.
2.1 Terms defined in the Development Agreement not otherwise defined in
this Agreement shall have the same meaning herein as therein.
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3 ENGAGEMENT; BUSINESS BOARD; COMPLIANCE
In consideration of the mutual covenants contained in this Agreement,
the parties agree and covenant as follows:
3.1 Engagement of Manager. The Band hereby retains and engages
manager as the exclusive manager of the Enterprise pursuant to
the terms and conditions of this Agreement, and Manager hereby
accepts such retention and engagement, subject to receipt of
all necessary regulatory approvals.
3.2 Term. The term of this Agreement shall begin on the date this
Agreement, the Development Agreement and the Lakes Note are
approved by the Chairman of the NIGC, and/or the BIA, if
required, and continue for a period of five (5) years after
the Commencement Date unless earlier terminated in accordance
with its terms; but this five year term shall not be construed
to include the period of time any Temporary Facility may be
open.
3.3 Status of Gaming Site. The Band represents and covenants that
it will acquire a Gaming Site in accordance with the terms of
the Development Agreement, and will maintain the Gaming Site
throughout the Term as land held in Trust by the United States
of America for the benefit of the Band, eligible as a location
upon which Class II and Class III Gaming can occur. The Band
covenants, during the term hereof, that Manager shall and may
peaceably have complete access to and presence in the Facility
in accordance with the terms of this Agreement, free from
molestation, eviction and disturbance by the Band or by any
person or entity; provided, however, that such right of access
to and presence in the Facility shall cease upon the
termination of this Agreement pursuant to its terms.
3.4 Creation and Operation of Business Board. The Band and the
Manager agree to create a Business Board comprised of an equal
number of persons representing and designated by the Band and
the Manager. Unless otherwise agreed by the Band and the
Manager, the Business Board shall have four (4) members. Any
member of the Business Board may designate another person to
exercise authority as a member by written notice signed by
such Business Board member and given in accordance withss.18.2
of this Agreement. The Business Board shall remain active
during the entire term of this Agreement. Within thirty (30)
days following the date of this Agreement, each party shall
give the other notice of the individuals initially designated
by each to serve on the Business Board. The Business Board
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shall have the obligations, rights and powers described in
this Agreement. In order to be effective, any action of the
Business Board must be the result of mutual agreement of a
majority of the Business Board members or their designees. In
the event mutual agreement cannot be reached, the appropriate
action shall be determined in the manner provided in Article
13.
3.5 Manager Compliance with Law; Licenses. Manager covenants that
it will at all times comply with Legal Requirements, including
the Band Gaming Ordinance, the IGRA, the Compact, State
statutes, to the extent applicable, and any licenses issued
under any of the foregoing. The Band shall not unreasonably
withhold, delay, withdraw, qualify or condition such licenses
as the Band is authorized to grant.
3.6 Compliance with Compact. The parties shall at times comply
with the provisions of the Compact.
3.7 Fire and Safety. Manager shall ensure that the Facility shall
be constructed and maintained in compliance with all fire and
safety statutes, ordinances, and regulations which would be
applicable if the Facility were located outside of the
jurisdiction of the Band although those requirements would not
otherwise apply within that jurisdiction. Nothing in this
Section shall grant any jurisdiction to the State or any
political subdivision thereof over the Gaming Site or the
Facility. Manager and the Band shall be jointly responsible
for arranging fire protection and police services for the
Facility.
3.8 Compliance with the National Environmental Policy Act. With
the assistance of Manager, the Band shall supply the NIGC with
all information necessary for the NIGC to comply with any
regulations of the NIGC issued pursuant to the National
Environmental Policy Act (NEPA).
3.9 Commencement Date. Manager shall memorialize the Commencement
Date in a writing signed by Manager and delivered to the Band
and to the Chairman of the NIGC.
4 BUSINESS AND AFFAIRS OF THE ENTERPRISE
4.1 Manager's Authority and Responsibility. Manager shall conduct
and direct all business and affairs in connection with the
day-to-day operation, management and maintenance of the
Enterprise and the Facility, including the establishment of
operating days and hours. It is the parties' intention that
the Enterprise be open 24 hours daily, seven days a week.
Manager is
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hereby granted the necessary power and authority to act,
through the General Manager, in order to fulfill all of its
responsibilities under this Agreement. Nothing herein grants
or is intended to grant Manager a titled interest to the
Facility or to the Enterprise. Manager hereby accepts such
retention and engagement. The Band shall have the sole
proprietary interest in and ultimate responsibility for the
conduct of all Gaming conducted by the Enterprise, subject to
the rights and responsibilities of Manager under this
Agreement.
4.2 Duties of Manager. In managing, operating, maintaining and
repairing the Enterprise and the Facility, under this
Agreement, Manager's duties shall include, without limitation,
the following:
4.2.1 Physical Duties. Manager shall use reasonable
measures for the orderly physical administration,
management, and operation of the Enterprise and the
Facility, including without limitation cleaning,
painting, decorating, plumbing, carpeting, grounds
care and such other maintenance and repair work as is
reasonably necessary.
4.2.2 Compliance with Band Ordinances. Manager shall comply
with all duly enacted statutes, regulations and
ordinances of the Band, subject to the provisions of
ss. 10.2.1.
4.2.3 Required Filings. Manager shall comply with all
applicable provisions of the Internal Revenue Code
including, but not limited to, the prompt filing of
any cash transaction reports and W-2G reports that
may be required by the Internal Revenue Service of
the United States or under the Compact.
4.2.4 Contracts in Band's Name Doing Business as the
Enterprise and at Arm's Length. Contracts for the
operations of the Enterprise shall be entered into in
the name of the Band, doing business as the
Enterprise, and signed by the General Manager. Any
contract requiring an expenditure in any year in
excess of $50,000, or such higher amount as may be
set by the Business Board, shall be approved by the
Business Board. No contracts, of any amount, for the
supply of goods or services to the Enterprise shall
be entered into with an Affiliate or Insider of the
Manager unless that affiliation is disclosed to and
approved by the Business Board, and the contract
terms are no less favorable for the Enterprise than
could be obtained from a nonaffiliated contractor.
Nothing contained in this ss.4.2.4
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shall be deemed to be or constitute a waiver of the
Band's sovereign immunity.
4.2.5 Enterprise Operating Standards. Manager shall use its
best efforts to operate the Enterprise in a proper,
efficient and competitive manner in accordance with
operating standards which are consistent with the
highest operating standards of the casino,
hospitality and resort industries.
4.2.6 Security. Manager shall provide for appropriate
security for the operation of the Enterprise. All
aspects of the Facility security shall be the
responsibility of Manager. Any security officer shall
at the request of the Business Board be bonded and
insured in an amount commensurate with his or her
enforcement duties and obligations. The cost of any
charge for security and increased public safety
services will be an Operating Expense.
4.3 Damage, Condemnation or Impossibility of the Enterprise.
Damage to or destruction or condemnation of the Facility or
the Enterprise shall be governed by the provisions of ss. 13.8
of the Development Agreement.
4.4 Alcoholic Beverages and Tobacco Sales. During the term of this
Agreement alcoholic beverages may be served at the Facility if
permissible in accordance with applicable law. The parties
acknowledge that no enabling Band legislation for the sale of
alcoholic beverages is now in force, and that such legislation
would be necessary in order to serve alcoholic beverages at
the Facility. If such legislation is subsequently enacted, and
if other requisite approvals are obtained, the Band and
Manager may mutually agree to include service of such
beverages within the Enterprise. Tobacco may be sold at the
Facility subject to and in accordance with the Band's
licensing requirements, if any.
4.5 Employees.
4.5.1 Manager's Responsibility. Manager shall have, subject
to the terms of this Agreement, the exclusive
responsibility and authority to direct the selection,
control and discharge of all employees performing
regular services for the Enterprise in connection
with the maintenance, operation, and management of
the Enterprise and the Facility and any activity upon
the Gaming Site; and the sole
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responsibility for determining whether a prospective
employee is qualified and the appropriate level of
Compensation to be paid.
4.5.2 Enterprise Employee Policies. Manager shall prepare a
draft of personnel policies and procedures (the
"Enterprise Employee Policies"), including a job
classification system with salary levels and scales,
which policies and procedures shall be subject to
approval by the Business Board and the Pokagon
Council. The Enterprise Employee Policies shall
include a grievance procedure in order to establish
fair and uniform standards for the Enterprise
Employees, which will include procedures for the
resolution of disputes between Manager and Enterprise
Employees. Any revisions to the Enterprise Employee
Policies shall not be effective unless they are
approved by the Business Board. All such actions
shall comply with applicable Band law.
4.5.3 Senior Employees. The selection of the General
Manager, Chief Financial Officer, Casino Manager, and
Human Resources Manager of the Enterprise, or the
functionally equivalent positions, shall be subject
to consultation between, and agreement by, Manager,
the Business Board and the Pokagon Council. All such
Employees shall be Enterprise Employees.
4.5.4 Enterprise Employees. The terms of employment of all
Enterprise Employees shall be structured as though
all labor, employment, and unemployment insurance
laws applicable in the State which would apply to
Enterprise Employees if they were not working on an
Indian reservation would also apply to Enterprise
Employees; except that the Band reserves the right to
by ordinance establish a workman's compensation trust
fund and worker's compensation system instead of
adopting Michigan workers compensation law, and to
adopt other laws and regulations that might preempt
otherwise applicable law.
4.5.5 Removal of Employees. Manager will act in accordance
with the Enterprise Employee Policies with respect to
the discharge, demotion or discipline of any
Enterprise Employee.
4.5.6 Band Employees. All Enterprise Employees shall be
employees of the Band.
4.6 No Manager Internal Expenses; Limitation on Manager Payments.
No Manager Internal Expenses shall be paid by the Enterprise.
No officer,
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director, shareholder or employee of Manager shall be
compensated by wages from or contract payments by the
Enterprise for their efforts or for any work which they
perform under this Agreement. Manager shall receive no
payments from the Enterprise other than loan repayments
(whether under the Lakes Note, for other advances in
accordance with this Agreement, or as subrogee after paying on
any Loan guarantee) and the Management Fee to be paid to
Manager under ss. 5.1. Manager Internal Expenses may be paid
from Management Fees and loan repayments after they have been
received by Manager. Nothing in this subsection shall restrict
the ability of an employee of the Enterprise to purchase or
hold stock in Manager where (i) such stock is publicly held,
and (ii) such employee acquirers, on a cumulative basis, less
than five percent (5%) of the outstanding stock in the
corporation.
4.7 GRA Expenses. The funding of the operation of the Gaming
Regulatory Authority shall, prior to the Commencement Date, be
a start up expense of the Enterprise and thereafter shall be
an Operating Expense. The budget for the GRA shall reflect the
reasonable cost of regulating the Enterprise. Disputes between
the parties relating to GRA costs shall be resolved pursuant
to the provisions of Article 13 of this Agreement. The
decisions and actions of the GRA as to Manager shall be
subject to the provisions of Article 13 hereof.
4.8 Employee Background Checks. A background investigation shall
be conducted by the GRA in compliance with all Legal
Requirements, to the extent applicable, on each applicant for
employment as soon as reasonably practicable. No individual
whose prior activities, criminal record, if any, or
reputation, habits and associations are known to pose a threat
to the public interest, the effective regulation of Gaming, or
to the gaming licenses of Manager, or to create or enhance the
dangers of unsuitable, unfair, or illegal practices and
methods and activities in the conduct of Gaming, shall
knowingly be employed by Manager or the Band. The background
investigation procedures employed by the GRA shall be
formulated in consultation with Manager and shall satisfy all
regulatory requirements independently applicable to Manager.
Any cost associated with obtaining such background
investigations shall constitute an Operating Expense,
provided, however, the costs of background investigations
relating to Manager and the shareholders, officers, directors
or employees of Manager or its Affiliates shall be borne
solely by Manager, shall be nonrefundable, shall not be
treated as part of the Lakes Development Loan or as Operating
Expenses of the Enterprise, and shall not exceed $50,000.
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4.9 Indian Preference: Recruiting and Training. In order to
maximize benefits of the Enterprise to the Band, Manager
shall, during the term of this Agreement, to the maximum
extent reasonably possible under applicable law, including,
but not limited to the Indian Civil Rights Act, 25
U.S.C. ss.1301, et. seq., give preference in recruiting,
training and employment to qualified members of the
Band, their spouses, and children in all job categories of the
Enterprise, including senior management. Manager shall:
(i) conduct job fairs and skills assessment meetings for
Band members;
(ii) in consultation with and subject to the approval of
the Band, develop a management training program for
Band members or people selected by the Band. This
program shall be structured to provide appropriate
training for those participating to assume full
managerial control at the conclusion of the Term of
this Agreement; and
(iii) within two hundred seventy (270) days of the
Commencement Date, Manager shall develop and present
to the Band for its approval, a training plan
designed so that, by the end of the Term of the
Agreement, all Enterprise Employees will be Band
members or others designated by the Band.
Manager shall also give preference to residents of the
community in which the Gaming Site is located. Final
determination of the qualifications of Band members and all
other persons for employment shall be made by Manager, subject
to any licensing requirements of the Gaming Regulatory
Authority. Not later than 90 days prior to the Commencement
Date, Manager shall develop and present to the Band for its
approval a training plan designed to meet the goals set out in
this section.
4.10 Pre-Opening. Nine months prior to the scheduled Commencement
Date, Manager shall commence implementation of a pre-opening
program which shall include all activities necessary to
financially and operationally prepare the Facility for
opening. To implement the pre-opening program, Manager shall
prepare a comprehensive pre-opening budget which shall be
submitted to the Business Board for its approval no later than
seven months prior to the scheduled Commencement Date
("Pre-Opening Budget"). The Pre-Opening Budget shall identify
expenses which Manager anticipates to be necessary or
desirable in order to prepare the Facility for the
Commencement Date, including without limitation, cash for
disbursements,
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Furnishings and Equipment and Operating Supplies, hiring,
training, relocation and temporary lodging of employees,
advertising and promotion, office overhead and office space
(whether on or off the Gaming Site), and travel and business
entertainment (including opening celebrations and ceremonies)
("Pre-Opening Expenses"). The Band recognizes that the Pre-
Opening Budget has been prepared well in advance of
Commencement and is intended only to be a reasonable estimate,
subject to variation due to a number of factors, some of which
will be outside of Manager's control (e.g. the time of
completion, inflationary factors and varying conditions for
the goods and services required). The Band agrees that the
Pre-Opening Budget may be modified from time to time, subject
to approval of the Business Board in accordance with the
procedure established by ss. 4.11 of this Agreement for
adjustments to the Operating Budget and Annual Plan. If a
Temporary Facility is constructed, Manager shall prepare a
pre-opening budget in that regard which shall be submitted to
the Business Board for its approval no later than two months
prior to the scheduled opening of the Temporary Facility, or
at such other time as may be approved by the Business Board.
4.11 Operating Budget and Annual Plan. Manager shall, prior to the
scheduled Commencement Date, submit to the Business Board for
its approval a proposed Operating Budget and Annual Plan for
the Fiscal Year commencing on the Commencement Date.
Thereafter, Manager shall, not less than 30 days prior to the
commencement of each full or partial Fiscal Year, submit to
the Business Board for its approval a proposed Operating
Budget and Annual Plan for the ensuing full or partial Fiscal
Year, as the case may be. The Operating Budget and Annual Plan
shall include a projected income statement, balance sheet, and
projection of cash flow for the Enterprise, with detailed
justifications explaining the assumptions used therein. The
Operating Budget and Annual Plan shall include, without
limitation, a schedule of repairs and maintenance (other than
Capital Replacements), a business and marketing plan for the
Fiscal Year, and the Minimum Balance which must remain in the
Enterprise Accounts and the House Bank as of the end of each
month during the Fiscal Year to assure sufficient monies for
working capital purposes, and detail of other expenditures
proposed to be authorized under the Operating Budget and
Annual Plan.
The Operating Budget and Annual Plan for the Enterprise will
be comprised of the following:
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4.11.1 A statement of the estimated income and expenses for
the coming Fiscal Year, including estimates as to
Gross Revenues and Operating Expenses for such Fiscal
Year, such operating budget to reflect the estimated
results of the operation during each month of the
subject Fiscal Year;
4.11.2 Either as part of the statement of the estimated
income and expenses referred to ss. 4.11.1, or
separately, budgets (and timetables and requirements
of Manager) for:
4.11.2.1 repairs and maintenance;
4.11.2.2 Capital Replacements;
4.11.2.3 Furnishings and Equipment;
4.11.2.4 advertising and business promotion programs
for the Enterprise;
4.11.2.5 the estimated cost of Promotional
Allowances; and
4.11.2.6 a business and marketing plan for the
subject Fiscal Year.
4.11.3 The Business Board's approval of the Operating Budget
and Annual Plan shall not be unreasonably withheld or
delayed. Manager shall meet with the Business Board
to discuss the proposed Operating Budget and Annual
Plan and the Business Board's approval shall be
deemed given unless a specific written objection
thereto is delivered by the Band Representatives to
Manager within thirty (30) days after Manager and the
Business Board have met to discuss the proposed
Operating Budget and Annual Plan. If the Band
Representatives for any reason decline to meet with
Manager to discuss a proposed Operating Budget and
Annual Plan after not less than twenty (20) days
written notice, the Band Representatives shall be
deemed to have consented unless a specific written
objection is delivered to Manager within thirty (30)
days after the date of the proposed meeting. The
Business Board shall review the Operating Budget and
Annual Plan on a line-by-line basis, if requested by
the Band Representative.
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4.11.4 If the initial proposed Operating Budget and Annual
Plan contains disputed budget item(s), the Band
Representatives on the Business Board and the Manager
agree to cooperate with each other in good faith to
resolve the disputed or objectionable proposed
item(s). In the event that the Band Representatives
on the Business Board and the Manager are not able to
reach mutual agreement concerning any disputed or
objectionable item(s) within a period of fifteen (15)
days after the date the Band Representatives on the
Business Board provide written notice of the Band's
objection to Manager, either party shall be entitled
to submit the dispute to arbitration in accordance
with Article 13. If the Band Representatives on the
Business Board and the Manager are unable to resolve
the disputed or objectionable item(s) prior to the
commencement of the applicable fiscal year, the
undisputed portions of the proposed Operating Budget
and Annual Plan shall be deemed to be adopted and
approved and the corresponding line item(s) contained
in the Operating Budget and Annual Plan for the
preceding fiscal year shall be adjusted as set forth
herein and shall be substituted in lieu of the
disputed item(s) in the proposed Operating Budget and
Annual Plan. Those line items which are in dispute
shall be determined by increasing the preceding
fiscal year's actual expense for the corresponding
line items by an amount determined by Manager which
does not exceed the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor,
U.S. City Average, all items (1997-98 = 100) for the
Fiscal Year prior to the Fiscal Year with respect to
which the adjustment to the line item(s) is being
calculated or any successor or replacement index
thereto. The resulting Operating Budget and Annual
Plan obtained in accordance with the preceding
sentence shall be deemed to be the Operating Budget
and Annual Plan in effect until such time as Manager
and the Band Representatives on the Business Board
have resolved the items objected to by the Band
Representatives on the Business Board or an
arbitrator has rendered his award on the dispute.
4.11.5 Adjustments to Operating Budget and Annual Plan and
Capital Budget. Manager may, after notice to and
approval by the Business Board, revise the Operating
Budget and Annual Plan and the Capital Budget from
time to time, as necessary, to reflect any
unpredicted significant changes, variables or events
or to include significant, additional, unanticipated
items of expense. Expenditures
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shall not materially vary from the approved budgets
nor exceed the aggregate Operating Budget and Annual
Plan (as approved by the Business Board, and revised
with the reasonable approval of the Business Board)
absent the written consent of the Business Board;
provided that the Band recognizes that (a) the
absolute amounts of expenditures may exceed budgeted
amounts if the volume of business at the Facility
exceeds projections, (b) the relative amounts of
income and expense may vary from budgeted amounts if
the volume of business is less than projected, and
(c) Manager does not guarantee the economic
performance shown in budgets. Manager shall submit a
revision of the Operating Budget and Annual Plan to
the Business Board for review on a quarterly or other
appropriate basis.
4.12 Capital Budgets. Manager shall, not less than 30 days prior to
the commencement of each fiscal year, or partial fiscal year,
submit to the Business Board a recommended capital budget (the
"Capital Budget") describing the present value, estimated
useful life and estimated replacement costs for the ensuing
full or partial year, as the case may be, for the physical
plant, furnishings, equipment, and ordinary capital
replacement items, all of which are defined to be any items,
the cost of which is capitalized and depreciated, rather than
expended, using GAAP ("Capital Replacements") as shall be
required to operate the Enterprise in accordance with sound
business practices. Capital Replacements in the Capital Budget
in an aggregate sum equal to or less than the sum of the
Capital Replacement Reserve for the Fiscal Year shall be
approved by the Business Board; and any amounts in excess of
the Capital Replacement Reserve for the Fiscal Year shall be
subject to approval of the Pokagon Council in its sole
discretion. The Pokagon Council, Business Board, and Manager
shall meet to discuss the proposed Capital Budget and the
Business Board and Pokagon Council shall be required to make
specific written objections to a proposed Capital Budget in
the same manner and within the same time periods specified in
ss. 4.11.4 with respect to an Operating Budget and Annual
Plan. The Business Board and Pokagon Council shall not
unreasonably withhold or delay its consent. Unless the Pokagon
Council, Business Board, and Manager otherwise agree, Manager
shall be responsible for the design and installation of
Capital Replacements, subject to the Business Board's approval
and ratification by the Pokagon Council and right to inspect.
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4.13 Capital Replacements. The Band shall effect and expend such
amounts for any Capital Replacements as shall be required, in
the course of the operation of the Enterprise, to maintain, at
a minimum, the Enterprise in compliance with any Legal
Requirements and to comply with Manager's recommended programs
for renovation, modernization and improvement intended to keep
the Enterprise competitive in its market; or to correct any
condition of an emergency nature, including without
limitation, maintenance, replacements or repairs which are
required to be effected by the Band, which in Manager's sole
discretion requires immediate action to preserve and protect
the Facility, assure its continued operation, and/or protect
the comfort, health, safety and/or welfare of the Facility's
guests or employees (an "Emergency Condition"); provided,
however, that the Band shall be under no obligation to fund
Capital Replacements in aggregate amount greater than its
periodic required contributions to the Capital Replacement
Reserve described in ss. 4.15. Manager is authorized to take
all steps and to make all expenditures from the Disbursement
Accounts described in ss. 4.19.3 (in the case of
non-capitalized repairs and maintenance), or Capital
Replacement Reserve described at ss. 4.15, (in the case of
expenditures for Capital Replacements) as it deems necessary
to repair and correct any Emergency Condition, regardless
whether such provisions have been made in the Capital Budget
or the Operating Budget and Annual Plan for any such
expenditures; or the cost thereof may be advanced by Manager
and reimbursed from future revenues. Design and installation
of Capital Replacements shall be effected in a time period and
subject to such conditions as the Business Board may establish
to minimize interference with or disruption of ongoing
operations.
4.14 Capital Replacement Reserve. Manager shall establish a Capital
Replacement Reserve on the books of account of the Enterprise,
and the periodic contributions of cash required by ss. 4.15
shall be deposited by the Enterprise into an account (the
"Capital Replacement Reserve") established in the Band's name
at a bank designated by the Business Board in accordance with
ss. 4.19.1 of this Agreement. All amounts in the Capital
Replacement Reserve shall be invested in interest bearing
investments in accordance with the Enterprise Investment
Policy to the extent that availability of funds, when
required, is not thereby impaired. Interest earned on amounts
deposited in the Capital Replacement Reserve shall be credited
to the Capital Replacement Reserve and shall be available for
payment of expenditures for Capital Replacements to the
Facility. Manager shall draw on the Capital Replacement
Reserve for Capital Replacements to purchase those items
included in the Capital Budget approved by the
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Business Board or such emergency additions, repairs or
replacements as shall be required to correct an Emergency
Condition.
4.15 Periodic Contributions to Capital Replacement Reserve. In
accordance with ss. 5.5 of this Agreement, Manager shall make
monthly deposits into the Capital Replacement Reserve in
amounts equivalent to an annual rate of 1% (one percent) of
Gross Revenues during the first Fiscal Year after the
Commencement Date and equivalent to an annual rate of 3%
(three percent) of Gross Revenues during each Fiscal Year over
the remainder of the Term; such reserve shall be funded out of
Monthly Distribution Payments. The cash amounts required to be
so deposited shall be calculated and deposited into the
Capital Replacement Reserve, in arrears, no later than the
twenty-first (21st) day of the month immediately following the
month with respect to which a deposit is made. If any
adjustment of Gross Revenues is made as result of an audit or
for other accounting reasons, a corresponding adjustment in
the Capital Replacement Reserve deposit shall be made. In
addition, all proceeds from the sale of capital items no
longer needed for the operation of the Enterprise, and the
proceeds of any insurance received in reimbursement for any
items previously paid from the Capital Replacement Reserve,
shall be deposited into the Capital Replacement Reserve upon
receipt.
4.16 Use and Allocation of Capital Replacement Reserve. Any
expenditures for Capital Replacements which have been budgeted
and previously approved may be paid from the Capital
Replacement Reserve without further approval from the Business
Board. Any amounts remaining in the Capital Replacement
Reserve at the close of any year shall be carried forward and
retained in the Capital Replacement Reserve until fully used.
If the amounts in the Capital Replacement Reserve at the end
of any year plus the anticipated contributions to the Capital
Replacement Reserve for the next ensuing year are not
sufficient to pay for Capital Replacements authorized by the
Capital Budget for such ensuing year, then additional funds,
in the amount of the projected deficiency, may be advanced by
the Manager and reimbursed by the Enterprise from future
revenues.
4.17 Indian Preference: Vendors and Contractors. In order to
maximize benefits of the Enterprise to the Band, Manager and
the Band shall, during the term of this Agreement, together
strive for use of Native American contractors, sub-contractors
and vendors, provided their bids are reasonably competitive.
The Band and Manager shall agree on policies reasonably
governing (i) preferential purchases from vendors and
contractors owned by
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or affiliated with members of the Band, which shall among
other things limit such preference to entities in which the
member is the real party in interest and require the price and
other terms offered by such vendors to be reasonably
competitive; and (ii) purchases of goods or services from the
Band, which shall be on terms that are reasonably competitive.
The Band reserves the right to require use of union labor on
some or all contracts, subject to review of budgetary impact.
Manager shall provide written notice to the Band in advance of
all such contracting, subcontracting and construction
opportunities.
4.18 Internal Control Systems. Manager shall install systems for
monitor of all funds (the "Internal Control Systems"), which
systems shall comply with all Legal Requirements, and shall be
submitted to the Business Board and the Band Regulatory
Authority for approval in advance of implementation, which
approval shall not be unreasonably withheld. The Band shall
retain the right to review all Internal Control Systems and
any changes instituted to the Internal Control Systems of the
Enterprise. The Band shall have the right to retain an auditor
to review the adequacy of the Internal Control Systems prior
to the Commencement Date. The cost of such review shall be a
Pre-Opening Expense. Any significant changes in such systems
after the Commencement Date also shall be subject to review
and approval by the Gaming Regulatory Authority. The Gaming
Regulatory Authority and Manager shall have the right and duty
to maintain and police the Internal Control Systems in order
to prevent any loss of proceeds from the Enterprise. The
Gaming Regulatory Authority shall have the right to inspect
and oversee the Internal Control System at all times. Manager
shall install a closed circuit television system to be used
for monitoring the cash handling activities of the Enterprise
sufficient to meet all Legal Requirements.
4.19 Banking and Bank Accounts.
4.19.1 Enterprise Accounts. The Business Board shall select,
and the Pokagon Council shall approve, a bank or
banks for the deposit and maintenance of funds and
shall establish in such bank or banks accounts as
Manager deems appropriate and necessary in the course
of business and as consistent with this Agreement
("Enterprise Accounts"). Establishment of any
Enterprise Bank Account shall be subject to the
approval of the Business Board. The sum of money
agreed to by the Business Board to be maintained in
the Enterprise Bank Account(s) to serve as working
capital for Enterprise
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operations, shall include all sums needed for the
House Bank, and all sums needed to accrue for payment
of expenses not paid on a monthly basis (the "Minimum
Balance"). Manager shall propose a policy for
investing funds in excess of the Minimum Balance (the
"Enterprise Investment Policy"), which shall be
subject to the approval of the Business Board.
4.19.2 Daily Deposits to Depository Account. Manager shall
establish for the benefit of the Band in the
Enterprise's name a Depository Account. Manager shall
collect all Gross Revenues and other proceeds
connected with or arising from the operation of the
Enterprise, the sale of all products, food and
beverage, and all other activities of the Enterprise
and deposit the related cash daily into the
Depository Account at least once during each 24-hour
period unless otherwise agreed by the Business Board.
All money received by the Enterprise on each day that
it is open must be counted at the close of operations
for that day or at least once during each 24-hour
period. Manager agrees to obtain a bonded
transportation service to effect the safe
transportation of the daily receipts to the bank,
which expense shall constitute an Operating Expense.
4.19.3 Disbursement Accounts. Manager shall establish for
the benefit of the Band in the Enterprise's name one
or more Disbursement Accounts. Manager shall,
consistent with and pursuant to the approved annual
Operating Budget and Annual Plan and Capital Budget,
have responsibility and authority for making all
payments for Operating Expenses, debt service,
Management Fees, and Tribal Distributions from the
Disbursement Accounts.
4.19.4 No Cash Disbursements. Manager shall not make any
cash disbursements from the Enterprise Accounts
except for the payment of cash prizes; and except for
such cash disbursements, any and all payments or
disbursements by the Manager shall be made by check
or wire transfer drawn against an Enterprise Bank
Account.
4.19.5 Transfers Between Accounts. Manager has the authority
to transfer funds from and between the Enterprise
Accounts to the Disbursement Accounts in order to pay
Operating Expenses and to pay debt service pursuant
to the Loans, to invest funds in accordance with the
Enterprise Investment Policy, and to pay the
Management Fees and Tribal Distributions pursuant to
this Agreement.
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4.20 Insurance. Manager, on behalf of the Band, shall arrange for,
obtain and maintain, or cause its agents to maintain, with
responsible insurance carriers licensed to do business in the
State, insurance satisfactory to Manager and the Business
Board covering the Facility and the operations of the
Enterprise, naming the Band, the Enterprise and Manager as
insured parties. Manager shall recommend to the Business Board
the minimum amounts of insurance coverage for the Enterprise,
which shall be subject to the reasonable approval of the Band.
4.21 Accounting and Books of Account.
4.21.1 Statements. Manager shall prepare and provide to the
Band on a monthly, quarterly, and annual basis,
operating statements on behalf of the Enterprise. The
operating statements shall comply with all Legal
Requirements and shall include an income statement,
statement of cash flows, and balance sheet for the
Enterprise. Such statements shall include the
Operating Budget and Annual Plan and Capital Budget
projections as comparative statements, and, after the
first full year of operation, will include
comparative statements from the comparable period for
the prior year; and shall reflect in accordance with
GAAP all amounts collected and received and all
expenses, deductions and disbursements made therefrom
in connection with the Enterprise.
4.21.2 Books of Account. Manager shall maintain full and
accurate books of account on behalf of the Enterprise
at an office in the Facility and at such other
location as may be determined by Manager. The GRA and
other designated representatives of the Pokagon
Council shall have access to the daily operations of
the Enterprise and shall have the unlimited right to
inspect, examine, and copy all such books and
supporting business records. Such rights may be
exercised through the Gaming Regulatory Authority or
through an agent, employee, attorney, or independent
accountant acting on behalf of the Band.
4.21.3 Accounting Standards. Manager shall maintain the
books and records on behalf of the Enterprise
reflecting the operations of the Enterprise in
accordance with Generally Accepted Accounting
Principles consistently applied and shall adopt and
follow the fiscal accounting periods utilized by
Manager in its normal course of business (i.e., a
month, quarter and year prepared in accordance with
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the Fiscal Year). The accounting systems and
procedures shall comply with Legal Requirements and,
at a minimum:
4.21.3.1 include an adequate system of internal
accounting controls;
4.21.3.2 permit the preparation of financial
statements in accordance with GAAP;
4.21.3.3 be susceptible to audit;
4.21.3.4 permit the calculation and payment of the
Management Fee described in ss. 5; and
4.21.3.5 provide for the allocation of operating
expenses or overhead expenses among the
Band, the Enterprise, and any other user of
shared facilities and services.
4.22 Annual Audit. An independent certified public accounting firm selected
by the Band and reasonably acceptable to Manager shall perform an
annual audit of the books and records of the Enterprise and of all
contracts for supplies, services or concessions reflecting Operating
Expenses, and shall provide such other services as the Business Board
shall designate. The Band, the BIA and the NIGC shall also have the
right to perform special audits of the Enterprise on any aspect of the
Enterprise at any time without restriction. The costs incurred for such
audits shall constitute an Operating Expense. Such audits shall be
provided by the Band to all applicable federal and state agencies, as
required by law, and may be used by Manager for reporting purposes
under federal and state securities laws, if required.
4.23 Manager's Contractual Authority. Manager is authorized to make, enter
into and perform in the name of and for the account of the Band, doing
business as the Enterprise, such contracts deemed necessary by Manager
to perform its obligations under this Agreement, provided such
contracts comply with the terms and conditions of this Agreement,
including, but not limited to, ss. 4.2.4, and provided such contracts
do not obligate the Enterprise to pay sums not approved in the
Operating Budget and Annual Plan or the Capital Budget.
4.24 Retail Shops and Concessions. The Business Board shall approve in
advance in writing the specific type or types of shops or concessions
to be authorized for inclusion in the Facility.
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4.25 Entertainment Approvals. The Pokagon Council may require that the
Business Board approve in advance in writing entertainment and/or
sporting events to provided at the Facility.
4.26 Litigation. Except for disputes between the Band and Manager, and
claims relating to the Band's status as a Tribe or the trust status of
the Gaming Site, Manager shall bring and/or defend and/or settle any
claim or legal action brought against Manager, the Enterprise or the
Band, individually, jointly or severally, or any Enterprise Employee,
in connection with the operation of the Enterprise if the basis of such
claim or legal action was within the scope of Manager's authority under
the Agreements; except that bringing litigation or arbitration relating
to claims in excess of $100,000 must be approved by the Business Board
and, as to claims in excess of $500,000, by the Pokagon Council (which
consent shall not be unreasonably withheld); and Manager shall furnish
such information regarding claims, litigation and arbitration as the
Band may request. Subject to the Band's approval of legal counsel,
Manager shall retain and supervise legal counsel, accountants and such
other professionals, consultants and specialists as Manager deems
appropriate to assert or defend any such claim or cause of action. All
liabilities, costs and expenses, including reasonable attorneys' fees
and disbursements incurred in defending and/or settling any such claim
or legal action which are not covered by insurance and which, as to
Manager, relate to acts or omissions of Manager within the scope of its
authority under the Agreements, shall be an Operating Expense, or, if
incurred prior to the Commencement Date, shall be a Pre-Opening
Expense. Nothing contained herein is a grant to Manager of the right to
waive the Band's or the Enterprise's sovereign immunity. That right is
strictly reserved to the Band, and shall at the option of the Pokagon
Council be asserted by the Band through its counsel (whose fees and
expenses relating to the Enterprise shall be an Operating Expense). Any
settlement of a third party claim or cause of action shall require
approval of the Business Board and, as to claims in excess of $100,000
not covered by insurance, by the Pokagon Council (which consent shall
not be unreasonably withheld).
5 MANAGEMENT FEE, DISBURSEMENTS, AND OTHER PAYMENTS BY
MANAGER.
5.1 Management Fee. Subject to the provisions of ss. 5.5, on or
before the twenty-first (21st) day of each month after the
month in which the Commencement Date occurs, Manager is
authorized by the Band to pay itself from the Enterprise Bank
Account(s) a fee as follows: 24% of the Net Revenues of the
Enterprise in the period from the Commencement Date until the
first day of the month next following the Commencement Date
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(which shall constitute the commencement of the next Fiscal
Year), payable on or before the twenty-first day of that next
month; then 24% of the Net Revenues of each succeeding month,
payable monthly in arrears, until the Net Revenues in a Fiscal
Year have totaled $80 million; and thereafter 19% of Net
Revenues of each succeeding month, payable monthly in arrears,
to the extent that aggregate Net Revenues in such Fiscal Year
exceed $80 million. To the extent that aggregate Net Revenues
reach $80 million during a month, the fee shall be prorated.
5.2 Fee Subordinated. The Management Fee shall be subordinated to
the Bank Loan, the Equipment Loan, any other third-party loans
or equipment leases pertaining to the Enterprise, and the
Minimum Guaranteed Monthly Payment. Manager agrees to execute
and deliver a subordination agreement evidencing such
subordination in form acceptable to the Bank Lender, the
Equipment Lender, or any other third-party lender or equipment
lessor.
5.3 Disbursements. As and when received by the Enterprise, Gross
Revenues shall be deposited in the Depository Account created
pursuant to ss. 4.19.2 of this Agreement. There shall, in
turn, be disbursed by Manager, on a monthly basis, for and on
behalf of the Band, funds from the Enterprise Bank Account(s)
to pay, to the extent available, Operating Expenses and
required deposits into the Capital Replacement Reserve for
Capital Replacements. Manager will reserve funds in the
Enterprise in amounts equal to the Minimum Balance. Additionally,
Manager may advance any monies needed to cover any operating cash
shortfall and shall be allowed to be reimbursed same in accordance
with ss. 18.8.
5.4 Adjustment to Bank Account. After the disbursements pursuant
to ss. 5.3 and establishment of any additional reserves for
future disbursements as Manager deems necessary and as are
approved by the Business Board, taking into account
anticipated cash flow and Operating Costs of the Enterprise,
any excess funds remaining in the Enterprise Bank Account(s)
over the Minimum Balance, the Capital Replacement Reserve, and
such additional reserves as may be approved by the Business
Board shall be disbursed monthly in accordance with ss. 5.5.
5.5 Payment of Fees and Band Disbursement. Within twenty-one (21)
days after the end of each calendar month of operations,
Manager shall calculate Gross Revenues, Operating Expenses,
and Net Revenues of the Enterprise for the previous month's
operations and the Fiscal Year's operations to
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date. Such Net Revenues shall be disbursed from the Enterprise Bank
Account(s) to the extent available in the following order of
priority:
5.5.1 the Minimum Guaranteed Monthly Payment described in ss. 5.6;
5.5.2 Current principal and any other payments due on all Loans
(and if payments are due quarterly, a reserve equal to one
third of the scheduled quarterly payment shall be deposited
in a designated Enterprise Bank Account for such payment,
and may be invested in accordance with the Enterprise
Investment Policies pending payment);
5.5.3 Capital Replacement Reserve contributions as described in
ss. 4.15; and
5.5.4 the Management Fee.
All remaining Net Revenues (the "Monthly Distribution
Payment") shall be distributed to the Band at the same time
the Management Fee is paid.
5.6 Minimum Guaranteed Monthly Payment. The Enterprise shall,
subject to the provisions of ss. 5.6.1, pay the Band
$1,000,000 per month (the "Minimum Guaranteed Monthly
Payment"), beginning on the Commencement Date and continuing
for the remainder of the Term. The Minimum Guaranteed Monthly
Payment shall be payable to the Band in arrears on the twenty
first (21st) day of each calendar month following the
month in which the Commencement Date occurs, which payment
shall have priority over the Management Fee. If the
Commencement Date is a date other than the first day of a
calendar month, the first payment will be prorated from the
Commencement Date to the end of the month.
5.6.1 Minimum Guaranteed Monthly Payments shall be charged
against the Band's distribution of Net Revenues for each
month; provided, however, that if the Net Revenues in a
given month are less than $1,000,000, Manager shall pay the
funds necessary to compensate for the deficiency from its
own funds; and provided further that Manager's obligation to
make such payment shall be reduced to the extent that the
Band has received or receives distributions from Net
Revenues during that Fiscal Year, on a cumulative basis,
exceeding the Minimum Guaranteed Monthly Payments required
under this section. For example, if (a) the Fiscal Year
commences on October
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1 and (b) the Band receives distributions in October,
November and December totaling $5 million, receives no
distributions in January, February and March, and receives
$1.5 million in April; then Manager would not be required to
make payments from its own funds in January and February;
would be required to pay the Band $1 million in March; and
would be permitted to recoup $500,000 of that payment out of
the payment that the Band would otherwise receive in April.
Manager shall not otherwise be entitled to reimbursement
from the Enterprise or the Band for payments it makes from
its own funds on account of Minimum Guaranteed Monthly
Payments.
5.6.2 The obligation to make Minimum Guaranteed Monthly Payments
shall cease upon termination of this Agreement, unless the
Agreement is terminated by the Band for a Material Breach by
the Manager.
5.6.3 The Minimum Guaranteed Monthly Payment shall be reduced
prospectively from $1,000,000 to $500,000 upon the opening,
if any, of a casino in Indiana owned by the Band, on the
same cumulative basis as provided in ss. 5.6.1.
5.6.4 Except as provided in this ss. 5.6 with regard to cumulation
of payments in any Fiscal Year or otherwise specifically
provided in this Agreement, Manager's obligation to pay the
Band the Minimum Guaranteed Monthly Payment is unconditional
and shall not be affected by the actual level of funds
generated by the Enterprise.
5.7 Payment of Net Revenues. The Net Revenues paid to the Band pursuant
to this Article 5 shall be payable to the Band bank account
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