Development Agreement - Pokagon Band of Potawatomi Indians and Lakes Gaming Inc.
DEVELOPMENT AGREEMENT
BETWEEN THE
POKAGON BAND OF POTAWATOMI INDIANS
AND
LAKES GAMING, INC.
DATED AS OF JULY 8, 1999
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TABLE OF CONTENTS
RECITALS ..........................................................................1
ARTICLE 1 - DEFINITIONS AND OBJECTIVES.............................................2
Definitions...............................................................2
Disbursement Accounts.....................................................5
Enterprise................................................................5
Enterprise Accounts.......................................................5
Gaming Regulatory Authority...............................................7
GRA ......................................................................7
Lakes's Internal Expenses.................................................8
Independent Agreement....................................................11
ARTICLE 2 - ACQUISITION OF GAMING SITE AND NON-GAMING
LANDS....................................................................12
Selection of Gaming Site.................................................12
Option .......................................................12
Purchase Agreement..............................................12
Closing on Gaming Site; Funding..........................................12
Confidentiality..........................................................13
Assignment of Other Options..............................................13
Selection of Non-Gaming Lands............................................13
Closing on Non-Gaming Lands; Funding.....................................13
Mortgages Prior to Transfer into Trust...................................14
ARTICLE 3 - FEASIBILITY STUDY.....................................................14
Temporary Gaming Facility Feasibility Study..............................14
ARTICLE 4 - DESIGN PHASE..........................................................14
Employment of Architect..................................................14
Design and Construction Budgets..........................................15
Gaming Regulatory Authority Expenses.....................................15
Modification of Initial Scope of Work....................................16
Concept Design and Engineering...........................................16
Preliminary Program Evaluation...........................................16
Design Development.......................................................17
Plans and Specifications.................................................17
Compliance with Construction Standards, Environmental Laws
and Regulations..........................................................17
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Advance of Funds for Design Work.........................................18
ARTICLE 5 - CONSTRUCTION PHASE....................................................18
Selection of Contractor or Construction Lakes............................18
Vendor Preferences.......................................................18
Proposal Review..........................................................19
Contracts................................................................19
Construction Document Provisions.........................................19
Construction Administration..............................................20
Construction Commencement and Completion.................................20
Determination of Approved Construction Costs; Cost Overruns..............20
ARTICLE 6 - FURNISHINGS AND EQUIPMENT.............................................21
Selection of Furnishings and Equipment...................................21
ARTICLE 7 - TERM..................................................................21
Term.....................................................................21
ARTICLE 8 - PAYMENTS AND COMMITMENTS BY LAKES
BEFORE APPROVAL OF MANAGEMENT AGREEMENT..................................21
Fees Payable By Lakes to the Band........................................21
Initial Fee.....................................................21
Signing Fee.....................................................22
Monthly Payments................................................22
Escrow Account...........................................................22
Transition Loan..........................................................23
Advances on Lakes Development Loan.......................................24
Gaming Site Acquisition Funds...................................24
Site Planning and Design Development............................24
Advances to the Band for Gaming Ordinance.......................24
Non-Gaming Land Acquisition Line of Credit...............................24
ARTICLE 9 - PAYMENTS AND COMMITMENTS BY LAKES
AFTER APPROVAL OF MANAGEMENT AGREEMENT...................................24
Scholarship Program Fee..................................................24
Development and Equipment Loans..........................................25
Lakes Development Loan..........................................25
Bank Development Loan...........................................26
Equipment Loan..................................................27
ARTICLE 10 - EXCLUSIVITY; NON-COMPETITION.........................................31
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Exclusivity Regarding Facility...........................................31
Exclusivity in Michigan..................................................31
Indiana Casino...........................................................31
Non-Competition..........................................................31
Assignment; Change of Control............................................32
Restrictions on Collateral Development...................................34
ARTICLE 11 - REPRESENTATIONS, WARRANTIES, AND COVENANTS...........................34
Representations and Warranties of the Band...............................34
Band Covenants...........................................................35
Representations and Warranties of Lakes..................................36
Lakes Covenants..........................................................36
ARTICLE 12 - EVENTS OF DEFAULT....................................................37
Events of Default by the Band............................................37
Events of Default by Lakes...............................................38
Material Breach; Right to Cure...........................................39
ARTICLE 13 - TERMINATION..........................................................39
Voluntary Termination....................................................39
Termination if No NIGC Approval..........................................40
Lakes Right to Terminate on Band Event of Default........................40
Band Right to Terminate on Lakes Event of Default........................40
Band Right to Terminate for Material Adverse Change......................40
Termination on Buyout....................................................41
Involuntary Termination Due to Changes in Legal Requirements.............41
Repair or Replacement....................................................42
ARTICLE 14 - DISPUTE RESOLUTION; LIQUIDATED DAMAGES...............................43
Band's Waiver of Sovereign Immunity and Consent to Suit..................43
Arbitration..............................................................43
Choice of Law...................................................44
Place of Hearing................................................44
Confidentiality.................................................44
Limitation of Actions....................................................44
Damages .......................................................44
Consents and Approvals..........................................44
Injunctive Relief and Specific Performance......................44
Action to Compel Arbitration....................................45
Damages on Termination for Failure to Obtain NIGC Approval...............45
Liquidated Damages and Limitations on Remedies...........................45
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Liquidated Damages Payable by Lakes.............................45
Liquidated Damages Payable by the Band..........................46
Lakes Continuing Obligations.............................................46
Termination of Exclusivity...............................................46
Remedies ................................................................46
Fees not Damages.........................................................47
ARTICLE 15 - GENERAL..............................................................47
Nature of Agreement......................................................47
Lakes's Interest.........................................................47
Situs of the Agreement...................................................47
Notice ................................................................47
Relationship.............................................................48
Further Actions..........................................................48
Waivers ................................................................49
Captions ................................................................49
Third Party Beneficiary..................................................49
Survival of Covenants....................................................49
Estoppel Certificate.....................................................49
Periods of Time; Time of the ............................................49
Confidential and Proprietary Information.................................49
Government Savings Clause................................................50
Successors and Assigns...................................................50
Severability.............................................................50
Entire Agreement.........................................................50
Manager ................................................................51
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EXHIBIT LIST
EXHIBIT A Control Agreement
EXHIBIT B Lakes Note
EXHIBIT C Non-Gaming Land Acquisition Line of Credit Agreement
EXHIBIT D Transition Loan Note
EXHIBIT E Band Litigation
EXHIBIT F Conditional Release and Termination Agreement
between Lakes and CRC dated May 20, 1999, as amended
by Amendment dated on or about July 7, 1999
EXHIBIT G General Release from CRC to the Band and its members
EXHIBIT H Security Agreement
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DEVELOPMENT AGREEMENT
This Development Agreement is made as of the 8th day of July, 1999
by and between the POKAGON BAND OF POTAWATOMI INDIANS (the "Band"), and LAKES
GAMING, INC., a Minnesota corporation (the "Lakes").
RECITALS
A. The Band, pursuant to 25 U.S.C. ss. ss. 1300j et seq. (the
"Restoration Act"), is a federally recognized Indian tribe recognized as
eligible by the Secretary of the Interior for the special programs and services
provided by the United States to Indians because of their status as Indians and
is recognized as possessing powers of self-government.
B. As authorized by the Restoration Act, the Band intends to acquire
the Gaming Site in the State of Michigan, to be held by the federal government
in trust for the Band, on which the Band intends to construct and operate a
permanent Class III gaming facility (the "Facility"); and the Band will possess
sovereign governmental powers over the Gaming Site pursuant to the Band's
recognized powers of self government, and the Band desires to use the Gaming
Site to improve the economic conditions of its members.
C. The Band, on the same date as the date of this Agreement, has
entered into a management agreement with Lakes, whereby Lakes, subject to
receipt of regulatory approvals, will manage the Facility (the "Management
Agreement"); and Lakes and the Band want to take all steps reasonably possible
prior to the receipt of the regulatory approvals (i) to select the site for,
contract for and if necessary purchase the site for the Facility, (ii) to design
the Facility, and (iii) to enter into contracts to construct and equip the
Facility to be effective when all regulatory approvals have been obtained or as
soon thereafter as feasible, so that the Facility can be opened to the public as
soon as possible thereafter.
D. The Band has selected Lakes to assist the Band by obtaining
commitments for financing the Facility and by furnishing technical experience
and expertise for the development and design, and for contracting for the
construction, furnishing and equipping of the Facility.
E. The Band and Lakes intend that their relationship with regard to the
preliminary development of the Facility shall be an exclusive arrangement.
F. The Band and Lakes desire to enter into an agreement whereby
preliminary Facility design and development work (but not Facility construction
or operation) may
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proceed prior to receipt of regulatory approvals and whereby the exclusive
nature of the relationship between Lakes and the Band shall be preserved.
G. Lakes has agreed to lend certain funds and to assist the Band in
obtaining certain loans in amounts sufficient to finance acquisition of tribal
lands and to develop, finance the construction of, and operate the Facility, and
has agreed to make certain other loans and pay certain other fees to the Band as
consideration for the exclusive right to develop the Facility and manage the
Facility pursuant to the Management Agreement, and for other development rights
described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises herein contained, the receipt and sufficiency of which are
expressly acknowledged, the Band and Lakes hereby agree as follows:
ARTICLE 1
DEFINITIONS AND OBJECTIVES
Section 1.1 Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Management Agreement. In addition to
other terms which are defined elsewhere in this Agreement, the following terms,
for purposes of this Agreement, shall have the meanings set forth in this
Section.
"Account" means the account at Firstar established pursuant to ss. 8.2
that is subject to the Control Agreement.
"Accrued Expenses" shall mean the accrued unpaid development costs and
expenses relating to the Gaming Site and the Enterprise.
"Agreement" shall mean this Development Agreement.
"Agreements" shall mean this Agreement and the Management Agreement.
"Approved Construction Costs" shall mean the Architect's estimate of
Construction Costs approved by the Band and Lakes pursuant to ss. 5.8.
"Approved Development Budget" has the meaning set out in ss. 4.2.
"Architect" shall have the meaning described in ss. 4.1.
"Band Event of Default" has the meaning described in ss. 12.1.
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"Band Interest Rate" shall mean the lesser of (i) Wall Street Journal
prime rate as of the Bank Closing plus 1%, or (ii) 10%.
"Bank Closing" means the closing on the Bank Loan Agreement.
"Bank Lender" shall mean the financial institution or bond trustee
described as the lender or bond trustee in the Bank Loan Agreement.
"Bank Loan" shall mean the loan evidenced by the Bank Note.
"Bank Loan Agreement" shall mean the loan agreement or bond indenture
in a principal amount of up to $57,000,000 to be entered into between the Band
and the Bank Lender.
"Bank Note" shall mean the promissory note or bond to be executed by
the Band pursuant to the Bank Loan Agreement.
"BIA" shall mean the Bureau of Indian Affairs under the Department of
the Interior of the United States of America.
"Business Board" shall mean the decision making body created pursuant
to ss. 3.4 of the Management Agreement.
"Change of Control" shall have the meaning set out in ss. 10.5(c).
"Class II Gaming" shall mean Class II Gaming as defined in the IGRA.
"Class III Gaming" shall mean Class III Gaming as defined in the IGRA.
"Commencement Date" shall mean the first date that the Facility is
complete, open to the public and that Gaming is conducted in the Facility
pursuant to the terms of the Management Agreement. "Commencement Date" shall not
mean the opening of the Temporary Facility, if any.
"Compact" shall mean the Compact between the Band and the State dated
December 3, 1998 and approved in 64 Fed. Reg. No. 32, Thursday, February 18,
1999, at 8111, as the same may, from time to time, be amended; or such other
compact or consent decree that may be substituted therefor.
"Completion Date" shall mean the date upon which Lakes receives:
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(i) an architect's certificate from the Architect chosen
pursuant to this Agreement as having responsibility for the design and
supervision of construction, equipping and furnishing of the Facility
certifying that the Facility has been fully constructed substantially
in accordance with the Plans and Specifications;
(ii) certification from the division, department or designee
of Lakes having responsibility to assure compliance with any
operational standards stating that the Facility, as completed, is in
substantial compliance with any such standards;
(iii) a permanent or temporary certificate of occupancy, if
required, from any government authority or authorities pursuant to
whose jurisdiction the Facility is to be constructed, permitting the
use and operation of all portions of the Facility in accordance with
this Agreement; and
(iv) certificates of such professional designers, inspectors
or consultants or opinions of counsel, as Lakes may reasonably
determine to be appropriate, verifying construction and furnishing of
the Facility in compliance with all Legal Requirements.
"Constitution" shall mean the document or documents which govern the
actions of the Band and, upon enactment, the Constitution of the Pokagon Band of
Potawatomi Indians as ultimately approved by the Band and approved by the
Secretary of the Interior.
"Construction Costs" means the costs of acquiring the Gaming Site and
designing, developing, constructing, furnishing and equipping the Facility,
including all related planning and professional fees, Furnishings and Equipment,
and a contingency not to exceed 8% of such costs (excluding Furnishings and
Equipment).
"Construction Documents" shall have the meaning described in Section
5.4.
"Control Agreement" shall mean the Account Control Agreement among
Firstar, Lakes and the Band of near or even date perfecting the Band's lien and
security interest in the Account, a true copy of which is attached as Exhibit A.
"Corporate Commission" shall mean a body corporate and politic
established, at the Band's discretion, by the Pokagon Council to own the
Enterprise and such other businesses and assets as the Band may deem
appropriate.
"CRC" means Casino Resource Corporation, a Minnesota corporation and
its Insiders.
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"Design Agreement" shall have the meaning described in Section 4.1
"Design Packages" shall have the meaning described in Section 4.1.
"Development Expenditures" shall mean all Approved Construction Costs;
all other costs of equipping and opening the Facility, including but not limited
to all related planning and professional fees, costs of infrastructure,
equipment, furniture and fixtures (including gaming equipment), and pre-opening
costs, fees and expenses; all legal, lobbying, public relations and other
professional costs and expenses related to transferring Gaming Lands and
Non-Gaming Lands into trust and to the Compact between the Band and the State of
Michigan; and all legal, lobbying and other fees and expenses previously
incurred by the Band in obtaining, or litigating with regard to, the Compact
with the State of Michigan, not to exceed $20,000, as well as all other such
fees and expenses subsequently incurred by the Band that the Band reasonably
chooses to include in the Development Budget.
"Disbursement Accounts" shall mean those accounts described in ss.
4.19.3 of the Management Agreement.
"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
of the Management Agreement.
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"Equipment Lender" shall mean the financial institution described as
the lender in the Equipment Loan Agreement.
"Equipment Loan Agreement" shall mean the loan agreement or equipment
lease in a principal amount of up to $35,000,000 to be entered into between the
Band and the Equipment Lender to finance acquisition of the Furnishings and
Equipment.
"Equipment Loan" means the loan or lease under the Equipment Loan
Agreement.
"Equipment Note" shall mean the promissory note or bond to be executed
by the Band pursuant to the Equipment Loan Agreement.
"Facility" shall mean the permanent buildings, structures and
improvements located on the Gaming Site and all fixtures, Furnishings and
Equipment attached to, forming a part of, or necessary for the operation of the
Enterprise.
"Feasibility Study" means the study of the feasibility of the Temporary
Facility to be conducted by Lakes pursuant to ss. 3.1 of this Agreement.
"Firstar" shall mean Firstar Bank of Minnesota, N.A.
"Force Majeure" shall mean acts of God, fire, flood, storm, earthquake,
war, civil disorder, governmental acts, regulations, orders or restrictions,
accidents not caused by a party's negligence, strikes or labor disturbances.
"Furnishings and Equipment" shall mean all furniture, furnishings and
equipment required for the operation of the Enterprise in accordance with the
standards set forth in this Agreement, including, without limitation:
(i) cashier, money sorting and money counting equipment,
surveillance and communication equipment, and security equipment;
(ii) slot machines, video games of chance, table games, keno
equipment and other gaming equipment;
(iii) office furnishings and equipment;
(balance of this page intentionally left blank)
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(iv) specialized equipment necessary for the operation of any
portion of the Enterprise for accessory purposes, including equipment
for kitchens, laundries, dry cleaning, cocktail lounges, restaurants,
public rooms, commercial and parking spaces, and recreational
facilities; and
(v) hotel equipment (to the extent a hotel is included in the
Enterprise);
(vi) all other furnishings and equipment hereafter located and
installed in or about the Facility which are used in the operation of
the Enterprise in accordance with the standards set forth in this
Agreement.
"Gaming" shall mean any and all activities defined as Class II and
Class III Gaming pursuant to IGRA.
"Gaming Ordinance" shall have the meaning described in Section
8.4(iii).
"Gaming Regulatory Authority" or "GRA" shall mean the Band body created
pursuant to the Band Gaming Ordinance to regulate the Class II and Class III
Gaming of the Band in accordance with the Compact, the IGRA and the Gaming
Ordinance.
"Gaming Site" shall mean any parcel of land in Michigan identified by
the Band, after consultation with Lakes, 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.
"Gaming Site Acquisition Advances" shall mean funds advanced under the
Lakes Development Loan in such amount or amounts as are needed to option or
acquire the Gaming Site, provided that the total amount of Gaming Site
Acquisition Advances shall not exceed $8,000,000.
"Gaming Site Option" has the meaning provided in ss. 2.1.1.
"Gaming Site Purchase Agreement" has the meaning provided in ss. 2.1.2.
"Initial Scope of Work" means a facility including not less than 90,000
sq.ft. of gaming space, 75 gaming tables, 3,000 slot machines, 4,000 surface
parking spaces for guests (unless a smaller number is approved by the Business
Board) and parking spaces for 45 buses and 600 employees; provided that if
financing beyond the aggregate amount of the Loans set forth in ss. 9.2 is
available to the Band without Lakes' guarantee on terms acceptable to the Band,
the Initial Scope of Work may at the Band's option be increased
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to include a hotel, bingo hall and multi-purpose entertainment facility, or an
indoor garage.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, P.L.
100-497, 25 U.S.C. ss. 2701 et seq. as it may from time to time be amended.
"Insider" has the meaning defined in 11 U.S.C. ss. 101(31), assuming
Lakes were the debtor in that definition, and shall include persons or entities
that become Insiders after the date of this Agreement, whether as the result of
a merger, acquisition, restructuring or otherwise.
"Lakes Development Loan" shall mean the loan to the Band to be made by
Lakes under the Lakes Note in a principal amount of up to $43,000,000, comprised
of (A) up to $8,000,000 for Gaming Site Acquisition Advances and (B) $35,000,000
for Development Expenditures other than acquisition of the Gaming Site.
"Lakes Event of Default" has the meaning described in ss. 12.2.
"Lakes's Internal Expenses" shall mean Lakes's corporate overhead,
including without limitation salaries or benefits of any of Lakes's officers and
employees, whether or not they perform services for the Project or the
Enterprise, and any travel or other expenses of Lakes's employees.
"Lakes Note" shall mean the promissory note to be executed by the Band
to evidence the Lakes Development Loan, which shall be in the form attached
hereto as Exhibit B.
"Legal Requirements" shall mean any and all present and future
judicial, administrative, and tribal rulings or decisions, and any and all
present and future federal, state, local and tribal laws, ordinances, rules,
regulations, permits, licenses and certificates, in any way applicable to the
Band, Lakes, the Gaming Site, the Facility, and the Enterprise, including
without limitation, the IGRA, the Compact, and the Band Gaming Ordinance.
"Limited Recourse" shall mean that all Loans and all liabilities of the
Band under or related to the Agreements, the Enterprise or the Gaming Regulatory
Authority, and any related awards, judgments or decrees, shall be payable solely
out of undistributed or future Net Revenues of the Enterprise and shall be a
limited recourse obligation of the Band, with no recourse to tribal assets other
than such Net Revenues (except (i), as to the Equipment Loan, a security
interest in the Furnishings and Equipment purchased with Equipment Loan
proceeds, (ii), if the Commencement Date does not occur, Subsequent
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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.
"Management Agreement" shall mean the agreement between the Band and
Lakes dated the same date as this Agreement, pursuant to which Lakes shall
manage the Enterprise.
"Material Adverse Change" shall mean a material adverse change in
Lakes's financial condition which materially and substantially impairs Lakes's
ability to perform under the Agreements.
"Material Breach" means a failure of either party to perform any
material duty or obligation on its part, if such party fails to (i) cure the
specified default within thirty (30) days following receipt of the notice
provided under ss. 12.3, or (ii) if the default is not capable of being cured
within 30 days, commences such cure within 30 days, proceeds diligently to
complete the cure, and completes the cure no later than 90 days after receipt of
such notice.
"Memorandum of Understanding" means the Memorandum of Understanding
between the Band and the Secretary of the Interior executed on behalf of the
Secretary on January 11, 1999.
"Monthly Payments" shall have the meaning described in Section 8.1(c).
"National Indian Gaming Commission" or "NIGC" means the commission
established pursuant to 25 U.S.C. ss. 2704.
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"Net Revenues" shall have the meaning set forth in the Management
Agreement, and shall include "Net Revenues (gaming)" and "Net Revenues (other)"
as defined in the Management Agreement.
"NIGC Approval" means (a) a determination by NIGC that Lakes is
suitable for licensing and (b) approval by NIGC of the Agreements.
"NIGC Disapproval" means a determination by NIGC that Lakes is
unsuitable for licensing, if within 120 days after notification of the NIGC
decision Lakes has not cured the reason for such unsuitability and obtained a
statement of suitability from NIGC.
"Non-Gaming Land" means any parcels of land in Michigan or Indiana
(other than the Gaming Site) which are (a) identified in a writing executed by
the Band as suitable for reservation homelands for the Band in accordance with
the Memorandum of Understanding, and (b) meet the requirements of United States
of America to be accepted in trust for the Band for Gaming or non-Gaming
purposes; provided that the Gaming Site and the Non-Gaming Land shall not exceed
4,700 acres in the aggregate.
"Non-Gaming Land Acquisition Line of Credit" shall mean an internal
line of credit in favor of the Band established by Lakes in the amount of
$10,000,000 pursuant to the Non-Gaming Land Acquisition Line of Credit Agreement
in the form attached hereto as EXHIBIT C, to enable the Band to option or
acquire Non-Gaming Lands.
"New Pokagon Council" means the Pokagon Council elected at a Band
election scheduled for on or about July 10, 1999, which shall take office in
August, 1999.
"Operating Expense" has the meaning provided in ss. 2 of the Management
Agreement.
"Plans and Specifications" shall mean the final Plans and
Specifications approved for the Facility as described in ss. 4.8.
"Pokagon Council" shall mean the duly elected governing legislative
body of the Band described pursuant to 25 U.S.C. ss. 1300j-4(b) or, at the
option of the Band, a designed committee or council created pursuant to
resolution or ordinance of the Pokagon Council.
"Preliminary Development Budget" shall have the meaning described in
ss. 4.2.
"Project" shall have the meaning described in ss. 4.1.
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"Ratification" means passage on or before September 15, 1999 of a
resolution by the New Pokagon Council, at a duly called meeting with a quorum
present, ratifying and endorsing the execution of this Agreement by the Band.
"Restoration Act" shall mean 25 U.S.C. ss. ss. 1300j et seq.
"Restricted Territory" shall mean the States of Ohio, Illinois, Indiana
and Michigan.
"Scholarship Program Fee" shall mean the $1,000,000 non-refundable fee
paid by Lakes under ss. 9.1 of this Agreement.
"Security Agreement" shall mean the pledge and security agreement
between Lakes and the Band granting the Band a lien and security interest in the
Account.
"Signing Fee" shall have the meaning described in Section 8.1(b).
"State" shall refer to the State of Michigan.
"Subsequent Gaming Facility Revenues" means gaming revenues from a
gaming facility (other than the Facility) owned or operated by the Band in
Michigan, but only to the following extent: (i) all Class III Gaming Net Revenue
and (ii) Class II Gaming Net Revenue, to the extent that such Net Revenue
exceeds $1,000,000 per annum.
"Temporary Facility" means a temporary Gaming facility located on the
Gaming Site, if the Band elects to built and operate such a temporary facility
prior to the Commencement Date, after consultation with Lakes.
"Term" shall mean the term of this Agreement as described in ss. 7.1.
"Transition Loan" shall have the meaning described in ss. 8.3.
"Transition Loan Note" shall mean the promissory note to be executed by
the Band evidencing the Transition Loan, which shall be in the form attached
hereto as Exhibit D.
"Tribal Distributions" shall mean Monthly Distribution Payments,
Minimum Guaranteed Monthly Payments and any other payments received by the Band
pursuant to or in connection with the Management Agreement.
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Section 1.2 Independent Agreement. The objective of the Band and Lakes
in entering into and performing this Agreement is to provide a legally
enforceable procedure and agreement pursuant to which Lakes will pay certain
fees to the Band and make certain loans to the Band, and whereby the Band and
Lakes can proceed as far as possible with development of the Facility prior to
the approval of the Management Agreement by the NIGC so that the Facility can be
opened to the public as soon as possible after the approval of the Management
Agreement by the NIGC; and to set forth the rights and obligations of the
parties if approval of the Management Agreement by the NIGC does not occur or on
the occurrence or non-occurrence of certain other events. This is intended to be
a legally enforceable agreement, independent of the Management Agreement, which
shall enter into effect when executed and delivered by the parties and be
enforceable between the parties regardless of whether or not this Agreement or
the Management Agreement is approved by the Chairman of the NIGC.
ARTICLE 2
ACQUISITION OF GAMING SITE AND NON-GAMING LANDS
Section 2.1. Selection of Gaming Site. As soon as reasonably possible
after the date of this Agreement, Lakes shall recommend one or more sites to be
acquired for the Facility and shall furnish the Pokagon Council with a map and
legal description of each site, with its written recommendation for purchase of
each site, including advice as to the suitability of each site for the Facility
and the availability and terms of options, if any, pertaining to each site. The
parties agree that the proposed gaming site in New Buffalo, Michigan is
preferable for economic reasons, and that the Initial Scope of Work is premised
on that location. The Pokagon Council shall then select the Gaming Site, after
consultation with Lakes; provided that the purchase price for the Gaming Site
and the cost of any related options shall not exceed $8,000,000 in the
aggregate.
Section 2.1.1. Option. If Lakes holds an option on the site
(the "Gaming Site Option"), the Lakes shall assign such Option to the
Band when requested to do so by the Band in the Band's sole and
absolute discretion, such assignment to be without warranty or other
recourse.
Section 2.1.2. Purchase Agreement. If Lakes does not hold a
Gaming Site Option, the Lakes shall negotiate a purchase contract
("Gaming Site Purchase Agreement") for purchase of the site by Lakes or
its designee or nominee. Upon the Band's approval of the form of Gaming
Site Purchase Agreement proposed by Lakes, Lakes or its designee or
nominee shall enter into the Gaming Site Purchase Agreement with the
seller of the site. Lakes shall assign the Gaming Site Purchase
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Agreement to the Band when requested to do so by the Band in the Band's
sole and absolute discretion, such assignment to be without warranty or
other recourse.
Section 2.2. Closing on Gaming Site; Funding. The Band shall thereafter
proceed to purchase the Gaming Site and to close that purchase in accordance
with the terms, conditions and provisions of the assigned Gaming Site Option or
Gaming Site Purchase Agreement, as the case may be, and this Agreement. Such
purchase may occur on or immediately following NIGC Approval, or at such earlier
time as may be (a) required to avoid expiration of the Gaming Site Option or to
comply with deadlines set in the Gaming Site Purchase Agreement, as they may be
extended with the consent of the owner of the proposed Gaming Site, (b) required
to secure approval by appropriate officials or agencies of the Management
Agreement, or (c) as may be allowed by the Secretary of the Interior or his
designee. After Ratification Lakes shall advance funds in such amount or amounts
as shall be needed to option and/or acquire the Gaming Site, including without
limitation all related fees, real estate commissions and transfer taxes,
provided that the total amount shall not exceed $8,000,000. All amounts so
advanced by Lakes, together with option or acquisition payments made by Lakes
prior to assignment of the Gaming Site Option or Gaming Site Purchase Agreement
to the Band, shall be a Development Expenditure and shall be advanced under the
Lakes Note.
Section 2.3. Confidentiality. The parties agree on a reasonable efforts
basis to keep the intended use of each site for Gaming confidential until the
Gaming Site Option or the Gaming Site Purchase Agreement has been executed and
delivered by all parties thereto.
Section 2.4. Assignment of Other Options. Lakes shall at the Band's
sole and absolute discretion assign to the Band any options (other than the
Gaming Site Option) it may have on, or other interests in, land in Michigan,
such assignments to be without warranty or other recourse. Option payments or
acquisition payments made by Lakes prior to such assignment shall be advances
under the Non-Gaming Land Acquisition Line of Credit and repayable in accordance
with its terms.
Section 2.5. Selection of Non-Gaming Lands. As soon as reasonably
possible after the date of this Agreement, the Pokagon Council shall select the
Non-Gaming Lands. The Band shall have sole discretion over the selection and
terms of acquisition of the Non-Gaming Lands.
Section 2.6. Closing on Non-Gaming Lands; Funding. The Band shall
thereafter proceed to purchase the Non-Gaming Lands. Such purchase shall occur
on or immediately following NIGC Approval, or at such earlier time as may be
allowed by the Secretary of the Interior or his designee or may be required to
avoid expiration of options
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or deadlines set in purchase agreements, as they may be extended with the
consent of the owners of the proposed Non-Gaming Lands. After Ratification Lakes
shall advance funds in such amount or amounts as shall be needed to option
and/or acquire the Non-Gaming Lands, including without limitation all related
fees, real estate commissions and transfer taxes, provided that the total amount
Lakes shall be required to advance shall not exceed $10,000,000. All amounts so
advanced by Lakes shall be advanced under the Non-Gaming Land Acquisition Line
of Credit, which shall be Limited Recourse, shall bear interest at the Band
Interest Rate, and shall be repayable in 60 equal monthly instalments of
principal and interest commencing on the 15th day of the month after the month
in which the Commencement Date occurs.
Section 2.7. Mortgages Prior to Transfer into Trust. Prior to transfer
of the Gaming Site and the Non-Gaming Lands into trust, amounts advanced by
Lakes under the Lakes Note (as to the Gaming Site) or under the Non-Gaming Land
Acquisition Line of Credit (as to Non-Gaming Lands) may be secured by mortgages
in favor of Lakes on the Gaming Site or the Non-Gaming Lands, respectively.
Lakes shall release any such mortgages upon transfer of such lands into trust or
as otherwise provided in this Agreement.
ARTICLE 3
FEASIBILITY STUDY
Section 3.1. Temporary Gaming Facility Feasibility Study. Within 120
days after execution of this Agreement, Lakes shall perform a study of the
feasibility and desirability of constructing the Temporary Facility on the
Gaming Site, and shall deliver a copy of the Feasibility Study to the Band along
with its recommendation as to whether a Temporary Facility should be built. The
Feasibility Study shall include, without limitation, an analysis of construction
costs, time line, operating income and expense, financing requirements and
impact on the permanent Facility. The Band, after consultation with Lakes, shall
have the sole right to decide whether such a Temporary Facility will be built.
If the Band decides to build a Temporary Facility, the cost of constructing and
operating the Temporary Facility shall be funded out of the Development Loans,
which shall be increased by an amount equal to the incremental cost of
constructing and operating the Temporary Facility and reasonably acceptable to
the Band and Lakes. Such incremental costs, if advanced under the Lakes
Development Loan, shall be repaid by the Band on terms reasonably acceptable to
the Band and Lakes; if advanced under the Bank Development Loan, under the terms
applicable to that loan facility. "Commencement Date" shall, notwithstanding
operation of a Temporary Facility, refer to the opening of the permanent
Facility.
ARTICLE 4
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DESIGN PHASE
Section 4.1. Employment of Architect. Lakes shall recommend to the Band
a minimum of three duly licensed architects, who shall be familiar with the
design of gaming facilities, for interview by the Pokagon Council, and the Band
shall select an architect from the group or, if none of the first group is found
acceptable to the Band, groups recommended by Lakes. The Band shall employ such
architect (the "Architect") for the purpose of performing certain services in
connection with the design and construction of the Facility, including site
development. The Band's agreement with the Architect shall be in the form of a
contract (the "Design Agreement") approved by Lakes and the Pokagon Council. The
scope of the project contemplated by this Agreement (the "Project"), shall be
stated and established in the Design Agreement, and shall be subject to the
mutual approval of the parties, but shall incorporate at a minimum the Initial
Scope of Work (subject to the provisions of ss. 4.4). The scope of design shall
not include, but the design shall facilitate, the possibility of the Band later
designing and constructing phased expansions of the hotel, theme retail space,
golf course and other amenities. The Design Agreement shall also provide for and
establish appropriate design packages ("Design Packages"), each pertaining to a
discrete portion or phase of the Project. The Design Agreement shall allow Lakes
the right and responsibility to supervise, direct, control and administer the
duties, activities and functions of the Architect and to efficiently carry out
its covenants and obligations under this Agreement; but the Design Agreement
shall provide that the Architect will consult closely with the Band and the
Band's advisers, and that all design elements shall be subject to review and
approval by the Band.
Section 4.2. Design and Construction Budgets. Lakes, with the
assistance and input of the Architect and subject to the approval of the Pokagon
Council, shall establish a preliminary Development Budget (the "Preliminary
Development Budget") for designing, constructing, furnishing and equipping the
Facility and related costs and Development Expenditures. The Preliminary
Development Budget, as approved by the Pokagon Council and as it may be amended
with the approval of the Pokagon Council, is referred to as the "Approved
Development Budget." The Approved Development Budget shall reflect planned
phasing, if any; but the initial phase of the Project shall include, at a
minimum, the Initial Scope of Work except as provided in ss. 4.4. Lakes may,
after notice to and approval by the Pokagon Council, revise the aggregate
Approved Development Budget from time to time as necessary or appropriate to
reflect any unpredicted changes, variables or events or to include additional
and unanticipated Project costs. Lakes may, at is sole discretion after notice
to and approval by the Business Board, reallocate part or all of the amount
budgeted with respect to any line item to another line item and to make such
other modifications to the Approved Development Budget as Lakes deems necessary
or appropriate, provided that: (i) the cumulative modifications of the Approved
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Development Budget for all Design Packages shall not, without Lakes's prior
approval and the Pokagon Council's prior approval, exceed the aggregate Approved
Development Budget, and (ii) any modifications shall not otherwise conflict with
the terms of this Agreement. Approved Development Budget adjustments which
otherwise vary from the terms of the Agreement, shall, in addition to requiring
Lakes's approval, require the approval of the Pokagon Council. The Band
acknowledges that the Approved Development Budget is intended only to be a
reasonable estimate of Project costs, subject, however, to the provisions of ss.
5.8 with regard to cost overruns.
Section 4.3. Gaming Regulatory Authority Expenses. The Approved
Development Budget shall include such amounts as the Band determines, after
consultation with Lakes, are reasonable and necessary to assure that the GRA is
able to fulfill its regulatory role in a manner that does not slow the opening
of the Facility (including the Temporary Facility, if any); provided that the
cost of final preparation and approval of the Gaming Ordinance shall not exceed
$20,000.
Section 4.4 Modification of Initial Scope of Work. Notwithstanding any
provision of this Article, the Initial Scope of Work may be reduced as follows:
i. The Band and Lakes may at any time notify the other party that it
believes that unanticipated material adverse changes in local
gaming market conditions (not including changed economic
conditions, whether locally or in the economy generally) make
construction of the Facility to the Initial Scope of Work not
feasible. In that event both parties shall negotiate in good
faith to determine what adjustments, if any, in the Initial Scope
of Work are appropriate in light of the changed local gaming
market conditions; provided that such adjustments shall not
result in a Facility, if located in New Buffalo, Michigan, with
fewer than 1,350 slot machines, 60 table games and 40,000 sq.ft.
of gaming space.
ii. Lakes and the Band recognize that the Initial Scope of Work is
premised on the Gaming Site being in New Buffalo, Michigan. If
the Gaming Site is not in New Buffalo, the Initial Scope of Work
shall not control. The parties shall in such event negotiate in
good faith to determine what adjustments, if any, in the Initial
Scope of Work are appropriate in light of the site chosen,
provided that the following minimum scale shall apply:
A. If the Gaming Site is in Benton Harbor, 1,350 slot
machines, 60 gaming tables and 40,000 sq. ft. of gaming
space; and
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B. If the Gaming Site is in Hartford, 800 slot machines, 35
gaming tables and 25,000 sq. ft. of gaming space.
iii. If the Gaming Site is not located in New Buffalo, Benton Harbor
or Hartford, no minimum scale shall apply and the appropriate
scale shall be subject to agreement between the parties.
Section 4.5. Concept Design and Engineering. Lakes, after consultation
with the Business Board and the Architect, shall prepare for the review and
approval of the Pokagon Council, a statement of requirements for the Facility,
if any, including, but not limited to, planned phasing, if any, a program of
preliminary objectives, schedule requirements, design criteria, including
assumptions regarding HVAC demands, space requirements and relationships,
special equipment and site requirements.
Section 4.6. Preliminary Program Evaluation. Lakes shall prepare for
review by the Business Board and approval of the Pokagon Council, a preliminary
evaluation of the proposed Project including, but not limited to, planned
phasing, if any, schedule, Development Budget requirements, and alternative
approaches to Project design and construction. Based upon the agreed-upon
schedule, Development Budget requirements and design, the Architect shall
prepare schematic design documents consisting of drawings and other documents
illustrating the scale and relationship of the Facility and any other Enterprise
components, as well as a preliminary estimate of Enterprise costs based upon the
proposed area, size and scope of the Enterprise.
Section 4.7. Design Development. After review by the Business Board and
upon final approval of the schematic design documents by the Pokagon Council and
Lakes, the Architect shall prepare design development documents consisting of
drawings and other documents to fix and describe the size and character of the
Project as to architectural, structural, mechanical and electrical systems,
materials and such other elements and/or Design Packages as may be appropriate.
Further, the Architect shall advise Lakes with respect to, and update, any
Development Budget estimates. Lakes shall submit to the Pokagon Council, for its
review and approval, finalized versions of the design development documents
prepared by the Architect and agreed to by Lakes.
Section 4.8. Plans and Specifications. Based upon the approved design
development documents and any further adjustments in the scope and quality of
the Project or in the Development Budget, the Architect shall prepare for
approval by Lakes and the Business Board construction documents consisting of
preliminary drawings and specifications setting forth the general requirements
for construction of the Project. The Architect shall proceed with completion of
detailed plans and specifications (the "Plans and Specifications") as they
relate to construction of portions of the Facility in the order
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such portions are to be completed or in the order required for sequential
completion, and shall proceed with completion of all Plans and Specifications as
soon as reasonably possible given construction scheduling and the intended
progress of Project work. The Architect shall advise the Business Board of any
adjustments to previous Development Budget estimates. The Plans and
Specifications shall be designed to accommodate the addition of further
amenities, including without limitation a hotel, parking garage and
bingo/multi-purpose entertainment hall.
As portions of the detailed Plans and Specifications are completed for
segments of the Project, the Architect shall be required to submit duplicate
copies of those portions of the Plans and Specifications to Lakes and to the
Business Board (for approval prior to release of such documents to prospective
bidders for bidding and prior to commencement of construction of such portions)
and to the Pokagon Council (for information).
Section 4.9. Compliance with Construction Standards, Environmental
Laws and Regulations. The Facility shall be designed and constructed so as to
adequately protect the environment and the public health and safety. The design,
construction and maintenance of the Facility shall, except to the extent a
particular requirement or requirements may be waived in writing by the Pokagon
Council, meet or exceed all reasonable minimum standards pertaining to the Band
and national, State and local building codes, fire codes and safety and traffic
requirements (but excluding planning, zoning and Gaming Site use laws,
ordinances, regulations and requirements), which would be imposed on the
Enterprise by existing State or Federal statutes or regulations which would be
applicable if the Facility were located outside of the jurisdictional boundaries
of the Band, even though those requirements may not apply within the Band's
jurisdictional boundaries. To the extent that the Band has adopted or may in the
future adopt more stringent requirements, those requirements shall govern.
Nothing in this subsection shall grant to the State or any political subdivision
thereof any jurisdiction (including but not limited to, jurisdiction regarding
zoning or Gaming Site use) over the Facility or Enterprise or its development,
management and operation.
Section 4.10. Advance of Funds for Design Work. Notwithstanding any
lack of approval of the Management Agreement or this Agreement by the NIGC,
Lakes shall advance such funds as are reasonably necessary to proceed prior to
Bank Closing with site and facility planning, architectural renderings and
plans, including payments to the Architect pursuant to the Design Agreement,
engineering and environmental services, working drawings and construction
contract bidding documents. All amounts so advanced by Lakes prior to NIGC
Approval and Bank Closing shall be a part of the development cost of the
Enterprise and shall be advanced under the Lakes Note as part of the Lakes
Development Loan.
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ARTICLE 5
CONSTRUCTION PHASE
Section 5.1. Selection of Contractor or Construction Lakes. Lakes
shall, in consultation with the Architect and the Business Board, initiate a
pre-bid selection process in order to pre-qualify prospective general
contractors and/or construction management in connection with the construction
of the Facility. Lakes shall submit the list of pre-qualified general
contractors and/or construction Lakes to the Pokagon Council, together with
Lakes's recommendations, for the Pokagon Council's review, comment and approval.
Special consideration shall be given in the selection of contractors and/or
construction managers to companies with a proven history of effective employment
of Native American and local subcontractors.
Section 5.2. Vendor Preferences. In entering contracts for the supply
of goods and services for the Enterprise, including the selection of contractors
and/or construction managers, subcontractors and suppliers, Lakes shall give
preference to qualified members of the Band, their spouses and children, and
qualified business entities as to which the Band certifies that a member is the
real party in interest, provided their bids are reasonably competitive.
"Qualified" shall mean a member of the Band, a member's spouse or children, or a
business entity certified by the Band to be controlled by members of the Band,
who or which is able to provide services at reasonably competitive prices, has
demonstrated skills and abilities to perform the tasks to be undertaken in an
acceptable manner, in Lakes's opinion, and can meet the reasonable bonding
requirements of Lakes. Lakes shall provide written notice to the Band in advance
of all such contracting, subcontracting and construction opportunities. The Band
reserves the right to require use of union labor on some or all contracts,
subject to review with the Lakes of any related budgetary impact.
Section 5.3. Proposal Review. Subsequent to the pre-qualification of
prospective contractors and/or construction managers, Lakes shall conduct a
review of responsive proposals for the construction of the Project, and Lakes
shall recommend to the Band a well-qualified construction manager, contractor
and/or contractors. The recommended contractor, contractors and/or construction
manager shall be subject to the approval of the Pokagon Council, shall be
properly licensed in the State of Michigan, and shall be capable of furnishing a
payment and performance bond satisfactory to the Business Board to cover the
construction for which the contractor, contractors and/or construction manager
may be retained.
Section 5.4. Contracts. The Band shall enter into a construction
management agreement and/or construction contract or contracts (the
"Construction Documents") with the parties selected and approved in the form
negotiated by Lakes and approved by the
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Business Board for each Construction Document. The Construction Documents shall
provide that work shall begin only after NIGC Approval, and the Construction
Documents may provide that they shall be canceled by either party if NIGC
Approval has not occurred by a specified fixed calendar date. The selected
contractor, construction manager and/or other contracting parties shall be
compensated solely from the proceeds of the Lakes Development Loan and the Bank
Development Loan, subject to, and in accordance with the terms, conditions and
provisions of the Construction Documents and the respective Loan Agreements.
Section 5.5. Construction Document Provisions. The Construction
Documents shall (i) require the successful construction manager or general
contractor and all contractors to be responsible for providing all materials,
equipment and labor necessary to construct and equip the Project as necessary
including site development; (ii) shall include appropriate provisions assuring
non-payment of Michigan sales and use tax for goods and materials in the Project
(to the extent said exemption is available for the Project); and (iii) require
said construction manager or general contractor and all contractors to construct
the Project in accordance with the Plans and Specifications, including any
changes or modifications thereto approved by the Business Board. The Band agrees
to indemnify Lakes against loss or liability caused by any written direction by
the Pokagon Council not to collect or remit Michigan sales tax. The Construction
Documents will provide for insurance conforming to the applicable insurance
requirements of the Management Agreement, appropriate lien waivers, and for
construction schedules by which milestones, progress payments and late
penalties, if any, may be calculated.
Section 5.6. Construction Administration. The Construction Documents
shall provide that Lakes shall be responsible for all construction
administration during the construction phase of the Project. Lakes shall act as
the Band's designated representative and shall have full power and complete
authority to act on behalf of the Band in connection with the Construction
Documents. To the extent allowed by the Design Agreement and the Construction
Documents, Lakes shall have control and charge of any persons performing work on
the Project site, and shall interpret and decide on matters concerning the
performance of any requirements of the Construction Documents. Lakes shall have
the authority to reject work which does not conform to the Construction
Documents. Lakes may conduct inspections to determine the date or dates of
substantial completion and the Completion Date. Lakes shall observe and evaluate
or authorize the observation and evaluation of Project work performed, review or
authorize review of applications for payment for submission to the Band and
review or authorize review and certification of the amounts due the contractors
and/or construction Lakes.
Section 5.7. Construction Commencement and Completion. The Construction
Documents shall contain such provisions for the protection of the Band and
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Lakes as the Band and Lakes shall deem appropriate; shall provide that the
construction of the Project shall commence on NIGC Approval, following and
subject to the granting of all approvals necessary to commence construction; and
shall also provide that any contractor shall exert its best efforts to complete
construction within such time as the Band and Lakes agree following the
commencement of construction. All contractors shall, at a minimum, warrant their
respective portions of the work to be performed to be free of defects for at
least one year after the Completion Date.
Section 5.8. Determination of Approved Construction Costs; Cost
Overruns. Promptly upon the Band's execution of the Construction Documents, the
Architect shall submit a final estimate of Construction Costs, which estimate
shall be subject to the reasonable approval of Lakes and the Pokagon Council.
This estimate of Construction Costs, as so approved, is referred to as "Approved
Construction Costs." Lakes shall pay, without repayment from the Enterprise or
recourse to the Band, Construction Costs to the extent they exceed the lesser of
(a) such Approved Construction Costs (including the approved contingency
reserve), as such costs may change because of change orders approved by the Band
or amendments to the Approved Development Budget approved by the Band, or (b)
$135,000,000, or such other amount as the Pokagon Council and Lakes may agree;
in each case except insofar as such overruns are caused by Force Majeure or by
acts or omissions of the Band.
ARTICLE 6
FURNISHINGS AND EQUIPMENT
Section 6.1. Selection of Furnishings and Equipment. Lakes shall submit
to the Business Board, for its review and approval, the specifications for
Furnishings and Equipment. Thereafter, Lakes shall select and procure vendors
for purchase by the Band of Furnishings and Equipment required to operate the
Enterprise in conformity with such specifications. The cost of Furnishings and
Equipment shall be financed through the Equipment Loan. Alternatively, in the
sole discretion of the Band, Lakes may arrange for the procurement of
Furnishings and Equipment on lease terms consistent with the terms provided
below as to the Equipment Loan, with such changes as may be approved by the
Business Board. Any commitments for the procurement of Furnishings and Equipment
shall, however, become binding on the Band only upon later of (a) NIGC Approval
or (b) the receipt by Band of a commitment for the Equipment Loan consistent
with the terms of this Agreement.
ARTICLE 7
TERM
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Section 7.1. Term. This Agreement shall enter into and remain in full
force and effect from the date of execution hereof until, unless earlier
terminated in accordance with its terms, the later of (i) five years from the
Commencement Date or (ii) when all obligations owed to Lakes by the Band
pursuant to this Agreement and any related notes have been satisfied in full or
otherwise discharged.
ARTICLE 8
PAYMENTS AND COMMITMENTS BY LAKES
BEFORE APPROVAL OF MANAGEMENT AGREEMENT
Section 8.1. Fees Payable By Lakes to the Band. Lakes will pay the
following fees and advances to the Band:
(a) Initial Fee. Lakes has paid the Band a non-refundable fee
of $150,000 on execution of Term Sheet, the receipt of which is hereby
acknowledged by the Band.
(b) Signing Fee. Lakes will pay the Band a non-refundable
signing fee of $1,000,000 (the "Signing Fee") which shall be paid to
the Band as follows: $100,000 upon execution and delivery of the
Management Agreement and this Agreement and $900,000 upon receipt of
written notice of Ratification. Use and disbursement of Signing Fee
monies, once received by the Band, shall be at the sole discretion of
the Band, and Lakes shall have no responsibility for such funds after
receipt thereof by the Band.
(c) Monthly Payments. Lakes will advance $125,000 to the Band
(the "Monthly Payments") on receipt of notice of Ratification, and
thereafter on the 15th day of each month, beginning in the month
following the month in which Ratification occurs, and continuing until
the date on which one of the following, whichever is earlier, has
occurred:
(i) the Commencement Date has occurred; or
(ii) this Agreement and the Management Agreement have
been terminated in accordance with their terms, and all
related payments have been made; or
(iii) five years after the Ratification of this Agreement.
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Use and disbursement of the Monthly Payments, once received by the Band, shall
be at the sole discretion of the Band, and Lakes shall have no responsibility
for such funds after receipt thereof by the Band. All Monthly Payments shall
constitute advances under the Transition Loan pursuant to Section 8.3 of this
Agreement and shall be repayable as provided in that section.
Section 8.2. Deposit into the Account. Upon execution of the Agreements
Lakes shall deposit $20,900,000 into the Account, subject to the Security
Agreement and the Control Agreement. Lakes shall also deposit such further sums
from time to time as shall be necessary to maintain a minimum balance in the
Account of at least $2,000,000 at all times prior to the Commencement Date;
provided that Lakes shall not be required to make aggregate deposits that exceed
the total amount of fees, loans and other payments to be made by it to or for
the account of the Band under this Agreement. The Account shall:
(i) serve as collateral for liquidated or other damages
payable to the Band as provided in the Agreements;
and
(ii) serve as a funding mechanism as provided in the
Control Agreement, at Lakes's option, for Lakes's
obligation to make payments to the Band (other than
the Scholarship Program Fee) and to make advances
under the Lakes Development Loan.
Lakes agrees to execute and deliver the Security Agreement, the Control
Agreement, and such financing statements and other instruments as the Band
requests to perfect this security interest. Nothing in this section shall limit
Lakes's obligations to make payments as required under this Agreement or limit
the Band's remedies in the event of Lakes's default. Funds in the Account shall
be invested in such manner as Lakes reasonably deems prudent, provided that the
investment vehicles are liquid and do not include equities, swaps, derivatives,
commodities, or speculative instruments. Lakes shall inform the Band of the
nature and terms of the financial instruments in which the escrowed funds are
invested. Income from the Account shall be payable to Lakes prior to a Lakes
Event of Default. After a Lakes Event of Default,income shall be payable to the
Band to the extent needed to fund damages payable to the Band. The Bank shall be
entitled to reasonable compensation acceptable to the Band and Lakes and to
reimbursement of expenses, all of which shall be payable from the Account prior
to a Lakes Event of Default and, after such an Event of Default, by Lakes.
Payments into the Account shall not be deemed advances to the Band for purposes
of accrual of interest, and interest shall only accrue as to funds advanced by
Lakes through the Account upon disbursement from the Account.
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Section 8.3. Transition Loan. Upon Ratification, Lakes shall make a
loan to the Band for the purposes and as set forth in clause (c) of Section 8.1,
upon the terms set forth in the form of Transition Loan Note (the "Transition
Loan"). Each advance of funds to the Band by Lakes as part of the Transition
Loan shall be evidenced by the Transition Loan Note, duly authorized and
executed by the Band. All amounts advanced under the Transition Loan shall be
repayable to Lakes as unsecured Limited Recourse obligations of the Band; shall
not accrue interest for the first two years after execution of the Management
Agreement; shall, after the expiration of that two year period, bear interest at
the Band Interest Rate, as defined below; and shall be payable monthly in
arrears, beginning on the 15th day of the month after the Commencement Date, in
60 equal monthly payments of principal and interest. If the Bank Closing does
not occur, interest shall accrue on amounts advanced under the Transition Loan
at Wall Street Journal prime plus 1%, not to exceed 10%.
Section 8.4. Advances on Lakes Development Loan. Lakes will provide the
following funds to the Band after Ratification but prior to NIGC Approval and
the Bank Closing as advances on the Lakes Development Loan, to be repaid with
interest in accordance with the terms provided in ss. 9.2.1:
(i) Gaming Site Acquisition Funds. After Ratification Lakes
shall advance funds to permit the Band to enter into or perform in
accordance with one or more Options or Gaming Site Purchase Agreements,
pursuant to Section 2.2.
(ii) Site Planning and Design Development. After Ratification
Lakes shall advance funds reasonably necessary for the work described
in Articles 3, 4 and 5 of this Agreement to be performed prior to NIGC
Approval and the Bank Closing, pursuant to those Articles.
(iii) Advances to the Band for Gaming Ordinance. In order to
enable the Band to fulfill its covenant set forth in Section 11.2(i)
below to timely adopt a Gaming Ordinance and regulations (the "Gaming
Ordinance"), Lakes shall advance to the Band after Ratification but
prior to NIGC Approval the reasonable cost of preparation and approval
of the Gaming Ordinance, not to exceed $20,000.
Section 8.5. Non-Gaming Land Acquisition Line of Credit. Lakes will
provide advances to the Band under the Non-Gaming Land Acquisition Line of
Credit after Ratification but prior to the Commencement Date as provided in
Section 2.6, upon the terms set forth in the form of Non-Gaming Land Acquisition
Line of Credit attached hereto as Exhibit C (the "Non-Gaming Land Acquisition
Line of Credit"). Each advance of funds to the Band by Lakes as part of the
Non-Gaming Land Acquisition Line of Credit shall be evidenced by such Line of
Credit, duly authorized and executed by the
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Band and setting forth the applicable terms of this Agreement. All such advances
shall be repaid with interest on the same terms as provided in Article 9 with
regard to the Lakes Development Loan, except that funds advanced under the
Non-Gaming Land Acquisition Line of Credit shall at Lakes' request, prior to
transfer of land into trust, be secured by mortgages in favor of Lakes on any
Non-Gaming Lands acquired by the Band. The Non-Gaming Land Acquisition Line of
Credit shall otherwise be Limited Recourse. All land and options acquired
through the Non-Gaming Land Acquisition Line of Credit shall be acquired in the
name of the Band.
ARTICLE 9
PAYMENTS AND COMMITMENTS BY LAKES
AFTER APPROVAL OF MANAGEMENT AGREEMENT
Section 9.1 Scholarship Program Fee. Upon NIGC Approval and transfer of
the Gaming Site into trust eligible for Gaming purposes, Lakes will pay the Band
a non-refundable fee of $1,000,000 (the "Scholarship Program Fee") into an
account established and controlled by the Band. The ultimate use and
disbursement of these funds shall be at the sole discretion of the Band, and
Lakes shall have no responsibility for such funds after payment to the Band.
Section 9.2. Development and Equipment Loans. Lakes shall make
available to the Band the Lakes Development Loan and, upon NIGC Approval and
transfer of the Gaming Site into trust for the Band, shall assist the Band in
obtaining the Bank Development Loan and the Equipment Loan. Such Loans shall be
in an aggregate amount sufficient to, and shall be used to, pay for all
Development Expenditures, provided that such aggregate amount shall not exceed
$135,000,000. The Loans shall be in the following amounts and on the following
terms, unless otherwise agreed by the Band:
Section 9.2.1. Lakes Development Loan.
i. Amount: $43,000,000, comprised of (A) up to
$8,000,000 for Gaming Site Acquisition
Advances and (B) $35,000,000 for Development
Expenditures other than acquisition of the
Gaming Site.
ii. Five year term, plus the period of
development and construction.
iii. Interest at the Band Interest Rate shall
accrue from date of advance until the
Commencement Date; thereafter the Lakes
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Development Loan shall be payable monthly in
arrears, beginning on the 15th day of the
month after the month of the Commencement
Date, in equal monthly payments of principal
and interest for the successive 60 months of
the term. If the Bank Closing does not
occur, interest shall accrue on amounts
advanced under the Lakes Development Loan at
Wall Street Journal prime plus 1%, not to
exceed 10%.
iv. Repayment of the Lakes Development Loan
shall be subordinated to the Bank
Development Loan, the Equipment Loan, as
well as to any other third-party loans or
equipment leases. Lakes agrees to execute
and deliver a subordination agreement
evidencing such subordination in form
acceptable to the Bank Lender, the Equipment
Lender, or such other third-party lender or
equipment lessor.
v. The Band shall be entitled to draw on the
Lakes Development Loan prior to NIGC
Approval, as provided in Section 8.4.
Advances under the Lakes Development Loan
may be made through the Account.
vi. Principal may be prepaid at any time without
penalty.
vii. Each advance of funds to the Band by Lakes
under the Lakes Development Loan shall be
made under a promissory note in the form of
Lakes Note, duly authorized and executed by
the Band.
viii. All disbursements under the Lakes
Development Loan shall be made through the
Enterprise Account and the Disbursement
Account and shall be on account of
Development Expenditures in accordance with
the Approved Development Budget, unless
otherwise approved by the Business Board.
Lakes shall provide the Band with a monthly
accounting of all such disbursements, which
accounting shall include a certification by
Lakes that the disbursements shown on the
accounting were for Development Expenditures
in accordance with the Approved Development
Budget, or were otherwise approved by an
attached vote of the Business Board.
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Section 9.2.2 Bank Development Loan.
i. Amount: $57,000,000.
ii. Lakes shall not be required to provide its
guarantee of the Bank Development Loan or
any other credit enhancements.
iii. The loan commitment or undertaking shall not
be assignable by either Lakes or the Band
without the written consent of both parties.
iv. Lakes may after the Commencement Date seek
to refinance the Bank Development Loan, to
the extent it is made by a third party
lender with Lakes' guarantee. The Band
agrees to cooperate with that refinancing,
provided that (I) all costs and expenses of
the refinancing are borne by Lakes, (II) the
terms of the refinancing are in all respects
no less favorable to the Band than provided
in this Agreement and the Bank Loan
Agreement (including, without limitation,
interest rate, amortization, and recourse),
and are otherwise reasonably acceptable to
the Band; and (III) the refinanced debt
shall not be payable on termination of the
Agreements with Lakes, provided that
management of the Enterprise after such
termination shall be reasonably acceptable
to the lender.
v. Lakes shall proceed promptly and with due
diligence after NIGC Approval to assist the
Band in obtaining a bank commitment or firm
underwriting commitment for the Bank
Development Loan, and in closing on the Bank
Development Loan promptly after obtaining
such commitment.
vi. If the Band, with Lakes' assistance, is
unable to obtain within 120 days after NIGC
Approval a bank commitment or firm
underwriting commitment to provide the Bank
Development Loan on the terms set forth in
this Agreement at an interest rate equal to
or less than 13%, Lakes agrees that it will
loan the Band $57,000,000 at a 13% interest
rate on the same terms as provided in this
Agreement with regard to the Bank
Development Loan. Lakes agrees that the
Band's inability to obtain such a commitment
shall be presumed if it cooperates
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with the reasonable requests of Lakes in
seeking such financing.
Section 9.2.3 Equipment Loan.
i. Amount: $35,000,000.
ii. Four year term, or such other term as may be
reasonably acceptable to the Band.
iii. Interest to accrue until the Commencement
Date; thereafter payable monthly in arrears,
beginning on the 15th day of the month after
the month of the Commencement Date, in equal
monthly payments of principal and interest
for the successive 48 months of the term.
iv. Security: Purchase money security interest
in Furnishings and Equipment purchased with
the loan proceeds.
v. Lakes shall not be required to provide its
guarantee or any other credit enhancement.
vi. The loan commitment shall not be assignable
by either Lakes or the Band without the
written consent of both parties.
vii. Lakes may after the Commencement Date seek
to refinance the Equipment Loan, to the
extent it is made by a third party lender
with Lakes' guarantee. The Band agrees to
cooperate with that refinancing, provided
that (a) all costs and expenses of the
refinancing are borne by Lakes, (b) the
terms of the refinancing are in all respects
no less favorable to the Band than provided
in this Agreement and the Equipment Loan
Agreement (including, without limitation,
interest rate, amortization, and recourse),
and are otherwise reasonably acceptable to
the Band; and (c) the refinanced debt shall
not be payable on termination of the
Agreements with Lakes, provided that
management of the Enterprise after such
termination shall be reasonably acceptable
to the lender.
viii. At the Band's option the Equipment Loan may
be structured into an equivalent equipment
lease.
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ix. Lakes shall proceed promptly and with due
diligence after NIGC Approval to assist the
Band in obtaining a commitment for the
Equipment Loan, and in closing on the
Equipment Loan promptly after obtaining such
commitment.
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x. If the Band, with Lakes' assistance, is
unable to obtain within 90 days after NIGC
Approval a bank or lessor commitment to
provide the Equipment Loan on the terms set
forth in this Agreement at an interest rate
equal to or less than 13%, Lakes agrees that
it will loan the Band $35,000,000 at a 13%
interest rate on the same terms as provided
in this Agreement with regard to the
Equipment Loan. Lakes agrees that the Band's
inability to obtain such a commitment shall
be presumed if it cooperates with the
reasonable requests of Lakes in seeking such
financing.
Section 9.2.4 Terms Applicable to all Loans.
i. (intentionally deleted)
ii. Loan repayments shall be solely out of
revenues of the Enterprise and shall be a
Limited Recourse obligation of the Band. The
Band agrees not to encumber any of the
assets of the Facility or the Enterprise
without the written consent of Lakes and the
holder of the Bank Development Loan, which
consent will not be unreasonably withheld;
except that the Band shall have the right
without the consent of Lakes and such holder
to grant subordinate security interests in
Enterprise revenues, as well as first
priority security interests in any
Enterprise assets other than Furnishings and
Equipment purchased with the proceeds of the
Equipment Loan, but only if such security
interests are granted to secure loans made
for the benefit of the Enterprise. The Band
shall not lease the Facility or grant a
leasehold mortgage on the Facility without
Lakes' consent.
iii. The Band shall enter into a limited,
transactional waiver of sovereign immunity
and consent to jurisdiction and arbitration
as to the holder of the Bank Note and the
Equipment Note as provided in ss. ss. 14.1
and 14.2 as to Lakes. Governing law shall be
Michigan law unless the Band otherwise
agrees.
iv. All other terms are subject to the Band's
approval, which approval shall not be
unreasonably withheld.
v. The selection of the lenders making the Bank
Development Loan, the Equipment Loan and all
other loans or leases relating to the
Enterprise, and of all underwriters and
professionals relating to any such
transaction, shall be subject to the Band's
reasonable approval.
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vi. Promptly and with due diligence after NIGC
Approval and transfer of the Gaming Site
into trust, but in no event later than 90
days after such approval and transfer
(unless otherwise agreed by the Band), Lakes
shall (a) deliver to the Band a proposed
commitment from a lender with regard to the
Equipment Loan, the terms of which shall be
consistent with this Agreement and otherwise
reasonably acceptable to the Band, and (b)
increase the amount of the Escrow Account to
$43 million (less amounts previously
advanced under the Lakes Development Loan).
vii. Promptly and with due diligence after NIGC
Approval and transfer of the Gaming Site
into trust, but in no event later than 90
days after such approval and transfer
(unless otherwise agreed by the Band), Lakes
shall deliver to the Band a proposed
commitment or other firm undertaking from a
lender or underwriter with regard to the
Bank Development Loan, the terms of which
shall be consistent with this Agreement and
otherwise reasonably acceptable to the Band.
viii. The Band may, not earlier than two years
after the Commencement Date, seek to
refinance any Loan. Lakes agrees to
cooperate with that refinancing, provided
that (I) all costs and expenses of the
refinancing shall, to the extent that
interest expense is reduced by the
refinancing, be an Operating Expense of the
Facility, and shall otherwise be either
borne by the Band or funded through the
refinancing; and (II) Lakes is not required
to guarantee any new facilities. Interest on
any new facility shall be an Operating
Expense of the Facility.
ix. The Band consents to the grant by Lakes of
other guarantees pari passu to third
parties, provided that such other guarantees
do not and shall not impair Lakes's ability
to perform under the Agreements.
x. The amount of Loans may be reduced if the
Initial Scope of Work is reduced on account
of unanticipated material adverse changes in
gaming market conditions or because of the
Band's selection of a Gaming Site other than
New Buffalo, as provided inss.4.4; the
reduction in each Loan to be a fraction, the
numerator of which is the number of slots in
the Facility, as reduced in scale in
accordance withss.4.4, and the denominator
is the number of slots in the Initial Scope
of Work. The amount of Loans may also be
increased by agreement of Lakes and the Band
to the extent that the
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Approved Development Budget exceeds the
funds available under the Loans as provided
above.
xi. Lakes's obligation to advance funds under
the Lakes Development Loan (except as
provided in ss. 8.4) and to procure and
close on the Bank Development Loan and the
Equipment Loan are conditioned upon NIGC
Approval. Nothing in this subsection affects
or impairs Lakes's liability for damages in
the event of NIGC Disapproval.
xii. The Band recognizes that if Lakes guarantees
the Bank Development Loan or the Equipment
Loan and pays in full either loan pursuant
to its guarantee, Lakes shall be subrogated
to the rights and remedies of the lender of
the loan so paid.
ARTICLE 10
EXCLUSIVITY; NON-COMPETITION
Section 10.1. Exclusivity Regarding Facility. During the term of this
Agreement, Lakes shall have an exclusive relationship with the Band regarding
the development of the Facility.
Section 10.2. Exclusivity in Michigan. The Band shall deal exclusively
with Lakes for gaming development on Indian lands in Michigan from the date of
execution of this Agreement through the earlier of five years from the
Commencement Date or termination or buyout of the Agreements.
Section 10.3. Indiana Casino. Lakes recognizes that the Band intends to
develop a casino in Indiana, and that the Band shall have no obligations to
Lakes in that regard; except that the Band agrees that, if it decides to engage
an outside manager to develop or operate an Indiana casino, it shall discuss
contracting with Lakes for such development or operation for 45 days before
soliciting proposals from third parties as to management or development of that
casino. No obligation to enter into an agreement with Lakes shall be implied
from this undertaking, and the Band shall retain full and absolute discretion in
that regard.
Section 10.4. Non-Competition. Lakes agrees that for five years after
execution of the Agreements or the Term of the Agreements, whichever is greater,
neither it nor any present or future Insider will directly or indirectly in the
Restricted Territory develop, operate, consult with regard to, or be in any way
affiliated with any non-Indian gaming facility, any Class II or III Gaming
facility or any other kind of gaming, or any hotels or other amenities related
to such gaming or facility; except that Insiders shall not include (a) Kids
Quest, Grand Casinos, Inc., Park Place Entertainment or Innovative Gaming Corp.
by reason of (i) the service of (A) Lyle Berman as director or employee (without
management responsibility) of such entities, provided that Mr. Berman votes as
director
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against, or abstains from voting as to, any direct or indirect lobbying by Park
Place Entertainment against a compact between the Band and the State of Indiana
or any direct or indirect opposition by Park Place Entertainment to the Band's
taking of land into trust for a casino to be owned or operated by the Band in
Indiana, and does not personally directly or indirectly lobby against such a
compact or oppose such taking into trust; (B) Lyle Berman as employee of Park
Place Entertainment with management responsibility, so long as Park Place
Entertainment does not (x) develop, operate, consult with regard to, or be in
any way affiliated with a Class III Gaming facility in the Restricted Territory
(excluding Ohio) that commences new operations or expands its gaming capacity
more than 50% after the execution of the Agreements, or (y) directly or
indirectly lobby against a compact between the Band and the State of Indiana, or
directly or indirectly oppose the taking of land into trust by the Band for a
casino to be owned or operated by the Band in Indiana; or (C) Thomas Brosig as
director or employee (without any management responsibility for gaming in the
Restricted Territory unless the Band consents) in Park Place Entertainment, or
(ii) any stock ownership of Lakes in such entities; or (b) any entity because of
the investment banking services of Ron Kramer, a director of Lakes.
Section 10.5. Assignment; Change of Control.
a. Lakes may not assign its rights under this Agreement without the
Band's prior written consent, except that Lakes may assign its
rights under such Agreement, but not its obligations, to a wholly
owned subsidiary.
b. The Band may not assign its rights under this Agreement; except
that the Band may, without the consent of Lakes, but subject to
approval by the Secretary of the Interior or the Chairman of the
NIGC or his authorized representative, if required, assign this
Agreement and the assets of the Enterprise to a Corporate
Commission or other instrumentality of the Band organized to
conduct the business of the Project and the Enterprise for the
Band that assumes all obligations herein. No assignment
authorized hereunder shall be effective until all necessary
governmental approvals have been obtained. No such assignment
shall relieve the Band of any obligation hereunder, unless
otherwise agreed by Lakes or the holder of such obligation.
c. The Band shall be entitled to terminate the Agreements if Lakes
undergoes a Change of Control without the prior written consent
of the Band. The Band shall not be required to prepay any amounts
advanced by Lakes or any third party in the event of such
termination, and such obligations shall remain payable in
accordance with their payment terms. Lakes agrees to notify the
Band in writing within 30 days after the occurrence of any event
described in Clauses I or II in the definition of Change of
Control, and within 30 days of Lakes's knowledge of any event
described in Clauses III or IV of that definition.
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"Change of Control," for purposes of this provision, means (I)
the merger, consolidation or other business combination of Lakes
with, or acquisition of all or substantially all of the assets of
Lakes by, any other entity; (II) Lyle Berman's ceasing to be
either Chief Executive Officer or Chairman of the Board of Lakes
(other than on account of death or disability, and except as
provided at the end of this definition); (III) the acquisition by
any person or affiliated group of persons not presently a
shareholder of Lakes of beneficial ownership of 30% or more in
interest of the outstanding voting stock of Lakes, as determined
under 17 CFR ss.ss. 240.13d-3 or 240.16a-1; or (IV) the
acquisition by any person or affiliated group of persons not
presently a shareholder of Lakes of beneficial ownership of 10%
or more in interest of the outstanding voting stock of Lakes, as
determined under 17 CFR ss.ss. 240.13d-3 or 240.16a-1, if a
majority of the Board of Directors of Lakes is replaced within
two years after such acquisition by directors not nominated and
approved by the Board of Directors.
Notwithstanding any other provision of this definition, if
the non-competition provisions of ss. 10.4(a)(i)(B) are breached,
the following terms shall control:
(A) Lakes shall notify the Band within 30 days of a
breach of that subsection, and shall describe in
reasonable detail the nature and circumstances of
that breach.
(B) The Band shall within 45 days of that notification
inform Lakes if it will waive that breach.
(C) If the Band states that it will not waive the breach,
Lakes may within 30 days of the Band's notification
inform the Band whether Mr. Berman will resign as
officer and director of Lakes, and who Lakes proposes
as Mr. Berman's successor as Chairman and/or Chief
Executive Officer of Lakes. Lakes shall, in
connection with that notification, provide the Band
with a detailed description of the qualifications and
affiliations of the proposed successor.
(D) The Band shall then have 45 days to grant or withhold
its consent to that succession, which consent shall
not be unreasonably withheld. If the Band so
consents, Mr. Berman resigns and the named successor
replaces Mr. Berman as Chairman and/or Chief
Executive Officer, the breach under ss. 10.4(a)(i)(B)
shall be deemed waived.
(E) If the Band does not so consent and its denial of
consent is not unreasonable, or if Mr. Berman does
not resign and the named successor does not succeed
him, Lakes may nominate another
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proposed successor within 30 days, failing which
Lakes shall be in default (subject to arbitration).
(F) If Lakes does nominate another proposed successor,
subsections (C) and (D) shall apply to the new
nominee. If the Band does not consent to the new
nominee and its denial of consent is not
unreasonable, or if Mr. Berman does not resign and
the new nominee does not succeed him, Lakes shall be
in default (subject to arbitration).
Section 10.6. Restrictions on Collateral Development. Lakes agrees that
for five years after execution of the Agreements or the Term of the Agreements,
whichever is greater, neither it nor any present or future Insider will directly
or indirectly purchase any land or operate, manage, develop or have any direct
or indirect interest in any commercial facilities or business venture located
within 20 miles of the Facility without the prior written consent of the Band.
ARTICLE 11
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 11.1. Representations and Warranties of the Band. The Band
represents and warrants to Lakes as follows:
(i) The Band's execution, delivery and performance of this
Agreement, the Lakes Note and all other instruments and agreements
executed in connection with this Agreement have been properly
authorized by the Band and do not require further Band approval.
(ii) This Agreement, the Lakes Note, the Transition Loan
Note, the Non-Gaming Acquisition Line of Credit and the Control
Agreement and the Security Agreement have been properly executed, and
once approved in accordance with Legal Requirements constitute the
Band's legal, valid and binding obligations, enforceable against the
Band in accordance with their terms.
(iii) There are no actions, suits or proceedings, pending or
threatened, against or affecting the Band before any court or
governmental agency, except as disclosed on Exhibit E.
Section 11.2. Band Covenants. The Band covenants and agrees as
follows:
(i) Promptly after the execution of this Agreement it will
take the steps necessary to adopt and will adopt the Gaming Ordinance.
The Gaming Ordinance will meet the requirements of IGRA and the
applicable regulations under IGRA and be consistent with the provisions
of this Agreement and the Management Agreement, and not adversely
affect the rights of Lakes hereunder and thereunder.
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After adoption of the Gaming Ordinance the Band will establish a
governmental authority to regulate gaming at the Gaming Site ("the
Gaming Regulatory Authority" or "GRA"). The Band agrees to consult with
Lakes concerning the terms of the Gaming Ordinance and any regulations
adopted thereunder, but the final decision on those matters is in the
Band's sole discretion.
(ii) After NIGC Approval the Band shall enter into the Bank
Loan Agreement and the Equipment Loan Agreement and execute the Bank
Note and the Equipment Note and related closing documentation, all
subject to the terms provided in this Agreement and Lakes's performance
of its obligations under this Agreement.
(iii) During the term of this Agreement and the Management
Agreement, the Band shall enact no law impairing the obligations or
contracts entered into in furtherance of the development, construction,
operation and promotion of Gaming on the Gaming Site. Neither the
Pokagon Council nor any committee, agency, board of any other official
body, and no officer or official of the Band shall, by exercise of the
police power or otherwise, act to modify, amend, or in any manner
impair the obligations of contracts entered into by the Pokagon Council
or the GRA or other parties in furtherance of the financing,
development, construction, operation, or promotion of Gaming at the
Gaming Site without the written consent of the non-tribal parties to
such contracts. Any such action or attempted action shall be void ab
initio.
(iv) The Band will waive sovereign immunity on the limited
basis described in Article 14 with respect to the Loans, the Transition
Loan and the Non-Gaming Land Acquisition Line of Credit.
(v) This Agreement, the Management Agreement, the Lakes
Note, the Transition Loan Note, the Non-Gaming Acquisition Line of
Credit, the Control Agreement and the Security Agreement, and each
other contract contemplated by this Agreement shall, once approved in
accordance with Legal Requirements, be enforceable in accordance with
their terms.
(vi) In its performance of this Agreement, the Band shall
comply with all Legal Requirements.
(vii) The Band will not impose taxes on the revenues of the
Facility or the management fee payable to Lakes, but reserves the right
to otherwise impose usual and customary taxes and fees on transactions
at or in connection with the Facility or on the Facilities's employees,
officers, directors, vendors and patrons. The Band shall be
specifically permitted to impose (i) 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, and
(ii) other taxes, charges, assessments or fees imposed against the
Enterprise or property of the Enterprise, or sales, use,
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excise, hotel occupancy and other similar taxes (excluding taxes,
charges, assessments or fees against real or personal property of the
Facility or on gaming revenues or earnings) of such types and
percentage amounts not to exceed those imposed by any state or local
government within the Restricted Territory.
(viii) The Band shall not act in any way whatsoever, directly
or indirectly, to cause this Agreement to be amended, modified,
canceled, or terminated, except pursuant to its express terms or with
the consent of Lakes.
Section 11.3. Representations and Warranties of Lakes. Lakes
represents and warrants to the Band as follows:
(i) Lakes's execution, delivery and performance of this
Agreement and all other instruments and agreements executed in
connection with this Agreement have been properly authorized by Lakes
and do not require further approval.
(ii) This Agreement has been properly executed and
constitutes Lakes's legal, valid and binding obligation, enforceable
against Lakes in accordance with its terms.
(iii) There are no actions, suits or proceedings pending or
threatened against or affecting Lakes before any court or governmental
agency that would in any material way affect Lakes's ability to perform
this Agreement, other than litigation disclosed in filings by Lakes
with the Securities and Exchange Commission. Lakes warrants that no
litigation so disclosed in any material way affects or will affect
Lakes' ability to perform under the Agreements.
Section 11.4. Lakes Covenants. Lakes covenants and agrees as
follows:
(i) Lakes shall comply with all Legal Requirements in its
performance of the Agreements.
(ii) Lakes has and at all times during the Term shall have
the financial capacity to pay to the Band all fees and payments and to
make all advances and loans described in this Agreement.
(iii) Lakes shall not act in any way whatsoever, directly or
indirectly, to cause this Agreement to be amended, modified, canceled,
or terminated, except pursuant to its express terms or with the consent
of the Band.
(iv) Lakes's Internal Expenses shall not be paid by the
Enterprise from revenues of the Enterprise or the proceeds of any Loan,
but may be paid by Lakes from Management Fees and loan repayments after
they are received by Lakes. No officer or employee of Lakes shall
receive a salary or other payment from the Facility.
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(v) CRC shall not during the Term of the Management Agreement
(a) be directly or indirectly affiliated with Lakes or the Facility,
whether as joint venturer or otherwise, (b) be employed by Lakes or, to
the knowledge of Lakes, any entity having any contractual relationship
with Lakes, with regard to the Facility, or (c) directly or indirectly
receive any payment or anything of value from Lakes from or out of the
Management Fee or any other payment made to Lakes by the Band or the
Facility. Lakes agrees to indemnify the Band and its members and hold
them harmless against all loss, liability and expense relating to
claims, of whatever kind or nature, of CRC against any one or more of
them. The Band consents to the execution and delivery by Lakes of a
certain Conditional Release and Termination Agreement between Lakes and
CRC dated May 20, 1999, as amended by Amendment dated July, 1, 1999,
true copies of which are attached as Exhibit F, provided that CRC
executes and delivers to the Band and its members a general release in
the form attached as Exhibit G. Lakes warrants that it has no
agreements or understandings with CRC in any way related to the Band or
the Enterprise other than as set forth in Exhibit F. The Band further
agrees that Lakes may hold stock of CRC as collateral for a Lakes'
guarantee of a loan to a third party, provided that on default it
proceeds to liquidate such collateral in a reasonably prompt and
orderly manner, and that Lyle Berman may continue to hold approximately
350,000 shares of CRC so long as he plays no role in the management of,
and does not sit on, the board of directors of CRC.
ARTICLE 12
EVENTS OF DEFAULT
Section 12.1. Events of Default by the Band. Lakes shall not be
obligated to pay any fees, provide the Bank Development Loan or the Equipment
Loan, make any advance on the Lakes Development Loan or otherwise perform its
obligations under or pursuant to this Agreement if a Band Event of Default, as
defined below, has occurred and is continuing on the date such fee payment, loan
advance or performance would otherwise be made. In addition, Lakes shall not be
obligated to make any loan advance to the Band pursuant to this Agreement unless
and until Lakes receives the duly authorized and executed Lakes Note. Each of
the following shall be a "Band Event of Default":
(i) The Band shall fail to pay when due the Lakes Note, the
Transition Loan Note, the Non-Gaming Acquisition Line of Credit or any
other indebtedness to Lakes, and such payment default has continued for
thirty (30) days after Lakes gives the Band notice thereof.
(ii) The Band shall commit a Material Breach of any of the
Band's obligations under this Agreement, subject to the rights to cure
provided in this Agreement.
(iii) Any of the representations and warranties made by the
Band in ss. 11.1 of this Agreement were not true when made or would not
be true if made on the date such performance would otherwise be due.
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(iv) The Band violates the provisions of Article 10 of this
Agreement.
(v) The Band commits any Material Breach of the Management
Agreement which is not cured within any applicable cure period.
(vi) The Band, through a vote of its Council at which a
quorum is present prior to NIGC Approval, either expressly (i)
repudiates the Management Agreement or the Development Agreement, or
(ii) authorizes the Band, prior to terminating the Agreements in
accordance with their terms or expiration of the Term, to enter into
management or development agreements with a third party with regard to
a Michigan casino.
If any Band Event of Default occurs, Lakes may, upon written notice to Band,
declare Lakes's commitment to make advances under this Agreement terminated and
Lakes may exercise the rights and remedies available to Lakes provided in this
Agreement; provided, however, that all such rights and remedies shall be Limited
Recourse.
Section 12.2. Events of Default by Lakes. The Band shall not be
obligated to perform its obligations under or pursuant to this Agreement if a
Lakes Event of Default, as defined below, has occurred or if any of the
representations and warranties made by Lakes in this Agreement were not true
when made or would not be true if made on the date such performance would
otherwise be due. Each of the following shall be a "Lakes Event of Default":
(i) Any Monthly Payment is not paid within ten (10) days
after its due date.
(ii) Lakes shall fail to make any other payments (whether of
fees, advances or loans) required by this Agreement, and such failure
shall continue for ten (10) days after the Band gives Lakes written
notice thereof.
(iii) Lakes shall commit any other Material Breach any of
Lakes's obligations under this Agreement.
(iii) Any representation or warranty that Lakes has made under
this Agreement shall prove to have been untrue when made or would not
be true if made on the date such performance would otherwise be due.
(iv) Lakes violates the provisions of Article 10 of this
Agreement, subject to rights of notice and cure to the extent provided
in that Article.
(v) Lakes commits any Material Breach of the Management
Agreement which is not cured within any applicable cure period.
(vi) NIGC Disapproval occurs.
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If any Lakes Event of Default occurs, the Band may, upon written notice to
Lakes, exercise the rights and remedies available to the Band provided in this
Agreement.
12.3 Material Breach; Right to Cure. Neither party may terminate this
Agreement or recover damages on grounds of Material Breach unless it has
provided written notice to the other party of its intention to terminate this
Agreement or seek damages or other remedies. During the 30 day period after the
receipt of the notice to terminate (as to defaults which can be cured within 30
days) or the 90 day period after such receipt (as to defaults which cannot be
cured within 30 days), whichever is applicable, either party may submit the
matter to arbitration under the dispute resolution provisions of this Agreement
set forth at Article 14. The discontinuance or correction of a Material Breach
shall constitute a cure thereof.
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ARTICLE 13
TERMINATION
Section 13.1. Voluntary Termination. This Agreement may be terminated
by mutual written consent.
Section 13.2. Termination if No NIGC Approval. The Band and Lakes may
each unilaterally terminate the Agreements by written notice if NIGC Approval
has not occurred within five years after Ratification.
Section 13.3. Lakes Right to Terminate on Band Event of Default. Lakes
shall be entitled to terminate the Agreements (i) upon a Band Event of Default
or (ii) as specifically provided in the Agreements.
Section 13.4. Band Right to Terminate on Lakes Event of Default. The
Band shall be entitled to terminate the Agreements (i) upon a Lakes Event of
Default or (ii) as specifically provided in the Agreements.
Section 13.5. Band Right to Terminate for Material Adverse Change.
Prior to the Commencement Date, the Band shall be entitled to terminate the
Agreements in the event of a Material Adverse Change; provided that the
following procedures shall apply:
i. Lakes shall notify the Band promptly in the event of
any Material Adverse Change, and in any event within
30 days after its occurrence.
ii. Lakes shall send to the Band copies of all filings by
Lakes with the Securities and Exchange Commission
under Forms 8K, 10Q and 10K; shall furnish the Band
with copies of such other SEC filings that the Band
may request; and shall furnish the Band with such
other information concerning a Material Adverse
Change as the Band may reasonably request.
iii. If the Band believes that a Material Adverse Change
has occurred, the Band shall so notify Lakes in
writing and shall request specified further
assurances of Lakes's continued ability to perform
under the Agreements.
iv. Within thirty (30) days after that notification Lakes
shall admit or deny the alleged Material Adverse
Change, giving the specific basis for its response;
shall state whether it agrees to provide the
requested further assurances; if it agrees to provide
the requested further assurances, shall tender its
performance in that regard; and, if it admits a
Material Adverse Change but disputes the requested
further
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assurances, shall tender such further assurances as
it deems sufficient to ensure its continued ability
to perform under the Agreements.
v. If Lakes denies the Material Adverse Change or
disputes that the requested further assurances are
reasonably required to assure the Band of Lakes's
continued ability to perform under the Agreements,
those issues shall be submitted to arbitration. The
arbitrator shall determine whether (A) a Material
Adverse Change has occurred; (B) the requested
further assurances are reasonably required to assure
the Band of Lakes's continued ability to perform
under the Agreements; and (C) if a Material Adverse
Change has occurred but the requested further
assurances are not reasonably required to so assure
the Band, what further assurances must be provided by
Lakes to reasonably assure the Band of Lakes's
continued ability to perform under the Agreements.
Any further assurances required under the
arbitrator's award must be furnished by Lakes within
thirty (30) days after entry of the award.
vi. If Lakes admits the Material Adverse Change but does
not furnish further assurances, or if Lakes does not
timely provide further assurances pursuant to an
arbitrator's award, the Band may terminate the
Agreements by written notice to Lakes.
vii. Lakes and the Band agree that the continuing ability
of Lakes to make the payments and advances provided
under this Agreement, and to ensure the Band can
obtain the Loans to develop, construct, equip and
operate the Facility provided in this Agreement, is
an essential part of the consideration for which the
Band bargained in entering into the Agreements.
Section 13.6. Termination on Buyout. This Agreement shall terminate if
the Band exercises its option to buy out the Management Agreement in accordance
with its terms.
Section 13.7. Involuntary Termination Due to Changes in Legal
Requirements. It is the understanding and intention of the parties that the
development, construction and operation of the Enterprise shall conform to and
comply with all Legal Requirements. If during the term of this Agreement, the
Enterprise or any material aspect of Gaming at the Gaming Site is determined by
the Congress of the United States, Department of the Interior of the United
States of America, the NIGC, or the judgment of a court of competent
jurisdiction (after expiration of the time within which appeals must be filed or
completion of appeals, if any) to be unlawful under federal law, the obligations
of the parties hereto shall cease and the Agreements shall be of no further
force and effect as of
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the date of such determination; subject, however, to the following provisions as
to damages:
i. If the date of such determination is prior to the
Commencement Date, Lakes shall be entitled to damages
to the same extent as provided in ss 14.4 with
regard to failure to obtain NIGC Approval.
ii. If the date of such determination is after the
Commencement Date:
(A) The Band shall retain all fees and
Monthly Payments previously paid or advanced to its
pursuant to this Agreement, as well as all Tribal
Distributions and Non-Gaming Lands, the Gaming Site
and any other property transferred into trust;
(B) Any money loaned to the Band by or
guaranteed by Lakes, or owed to Lakes as subrogee (to
the extent Lakes has paid under such guarantees)
shall be repaid to Lakes or its Affiliates in
accordance with the Limited Recourse terms of the
Lakes Note, the Transition Loan Note, the Non-Gaming
Acquisition Line of Credit and this Agreement; and
(C) The Band shall retain its interest in
the title (and any lease) to all Enterprise assets,
including the Gaming Site and any fixtures, supplies
and equipment, subject to the purchase money security
interest in equipment securing the Equipment Loan and
any other liens granted in accordance with this
Agreement.
Section 13.8. Repair or Replacement. If the Facility is damaged,
destroyed or condemned so that continued development, construction or operation
of Gaming cannot be or can no longer be continued at the Facility, the Facility
shall at the Band's option be reconstructed if the insurance or condemnation
proceeds, together with any other funds available to the Band, are sufficient to
restore or replace the Facility to a condition at least comparable to that
before the casualty occurred or such other condition as Lakes and the Band may
agree. If the insurance proceeds, together with other funds available to the
Band, are not sufficient to so restore or replace the Facility or are not used
to repair the Facility, the Band shall, with the assistance of Lakes, adjust and
settle any and all claims for such insurance proceeds or condemnation awards,
and such proceeds or award and any undistributed Net Revenues pursuant to
Article 5 of the Management Agreement shall be applied first, as to proceeds or
awards relating to Furnishings and Equipment securing the Equipment Loan, to the
amounts due under the Equipment Loan; second, to the amounts due under the Bank
Development Loan; third, to any remaining balance under the Equipment Loan and
to any other third party liabilities of the Enterprise; fourth, to the Lakes
Development Loan; and fifth, to the Band. Any unpaid balance of the Lakes
Development Loan, after application of such proceeds, shall be repaid as
provided in ss. 14.4 on failure to obtain NIGC Approval.
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ARTICLE 14
DISPUTE RESOLUTION; LIQUIDATED DAMAGES
Section 14.1. Band's Waiver of Sovereign Immunity and Consent to Suit.
The Band expressly waives its sovereign immunity from suit for the purpose of
permitting or compelling arbitration as provided in this Article 14 and consents
to be sued in the United States District Court for the District in which the
Gaming Site is located (or, if the Gaming Site has not been designated, for the
Western District of Michigan - Southern Division), the United States Court of
Appeals for the Sixth Circuit, and the United States Supreme Court for the
purpose of compelling arbitration or enforcing any arbitration award or judgment
arising out of this Agreement, the Management Agreement, the Lakes Note, the
Transition Loan Note, the Non-Gaming Acquisition Line of Credit, the Control
Agreement, the Security Agreement, any mortgages granted to Manager securing the
Lakes Note or the Non-Gaming Land Acquisition Line of Credit, or other
obligations between the parties. If the United States District Court lacks
jurisdiction, the Band consents to be sued in the Michigan State Court system
for the same limited purpose. The Band waives any requirement of exhaustion of
tribal remedies. Without in any way limiting the generality of the foregoing,
the Band expressly authorizes any governmental authorities who have the right
and duty under applicable law to take any action authorized or ordered by any
such court, and to take such action, including without limitation, repossessing
or foreclosing on any real property not in trust and or on equipment subject to
a security interest, or otherwise giving effect to any judgment entered;
provided, however, that liability of the Band under any judgment shall always be
Limited Recourse, and in no instance shall any enforcement of any kind
whatsoever be allowed against any assets of the Band other than the limited
assets of the Band specified in Section 14.3(i) below. The Band appoints the
Chairman of the Pokagon Council and the Secretary of the Pokagon Council as its
agents for service of all process under or relating to the Agreements. The Band
agrees that service in hand or by certified mail, return receipt requested,
shall be effective for all purposes under or relating to the Agreements if
served on such agents.
Section 14.2. Arbitration. All disputes, controversies or claims
arising out of or relating to this Agreement and the Lakes Note, the Transition
Loan Note, the Non-Gaming Acquisition Line of Credit, the Control Agreement and
the Security Agreement or other obligations between the parties shall be settled
by binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association in effect on the date demand for
arbitration is made, and the Federal Arbitration Act. The parties agree that
binding arbitration shall be the sole remedy as to all disputes arising out of
this Agreement, except for disputes requiring injunctive or declaratory relief.
(i) Choice of Law. In determining any matter the Arbitrator(s)
shall apply the terms of this Agreement, without adding to, modifying
or changing the terms in any respect, and shall apply Michigan law.
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(ii) Place of Hearing. All arbitration hearings shall be held
at a place designated by the arbitrator(s) in Kalamazoo, Michigan or at
such other place agreed to by the parties.
(iii) Confidentiality. The parties and the arbitrator(s) shall
maintain strict confidentiality with respect to the arbitration.
Section 14.3. Limitation of Actions. The Band's waiver of immunity
from suit is specifically limited to the following actions and judicial
remedies:
(i) Damages. The enforcement of an award of money and/or
damages by arbitration; provided that the award of any arbitrator
and/or court must be Limited Recourse, and no arbitrator or court shall
have authority or jurisdiction to order execution against any assets or
revenues of the Band except (A) undistributed or future Net Revenues of
the Enterprise; (B) as to the Equipment Loan, the Furnishings and
Equipment securing that Loan; (C) 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; (D) as to the Non-Gaming Acquisition Line
of Credit, mortgages on the Non-Gaming Lands prior to their transfer
into trust; and (E) as to the Lakes Note, mortgages on the Gaming Site
prior to their transfer into trust). In no instance shall any
enforcement of any kind whatsoever be allowed against any assets of the
Band other than the limited assets of the Band specified in this
subsection.
(ii) Consents and Approvals. The enforcement of a
determination by an arbitrator that the Band's consent or approval has
been unreasonably withheld contrary to the terms of this Agreement.
(iii) Injunctive Relief and Specific Performance. The
enforcement of a determination by an arbitrator that prohibits the Band
from taking any action that would prevent Lakes from performing its
obligations pursuant to the terms of this Agreement, or that requires
the Band to specifically perform any obligation under this Agreement;
provided, however, that any injunction against the Band shall be
Limited Recourse; shall not mandate, preclude or affect payment of any
funds of the Band other than undistributed or future Net Revenues of
the Enterprise; and shall not related to any asset of the Band other
than the Facility.
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(iv) Action to Compel Arbitration. An action to compel
arbitration pursuant to this Article 14.
Section 14.4. Damages on Termination for Failure to Obtain NIGC
Approval. In the event of termination of this Agreement under ss.13.2 because
NIGC Approval has not been obtained within five years after Ratification, (i)
the Band shall be obligated to repay Lakes all amounts loaned by Lakes to the
Band under or pursuant to this Agreement, but not fees, non-refundable payments
and other payments not specifically designated as loans or advances under this
Agreement; provided that such repayment shall be made only out of distributions
to the Band from Subsequent Gaming Facility Revenues, and shall be paid in 60
equal monthly instalments of principal and interest beginning one month after
opening of such a facility. To secure this obligation Lakes shall retain its
mortgages, if any, on property of the Band not transferred into trust, and may
foreclose such mortgages (subject to the arbitration provisions of this Article
14) if the Band fails to perform as provided in this subsection. Such payment
and collateral shall be Lakes's sole remedy and recourse in the event of
termination of this Agreement under ss. 13.2. In no event shall Lakes have
recourse in the event of such termination to (a) assets purchased by the Band
with funds advanced by Lakes, except as collateral to the extent provided in
this subsection; (b) assets of any other gaming facility owned or operated by
the Band, other than Subsequent Gaming Facility Revenues; or (c) any other asset
of the Band.
Section 14.5. Liquidated Damages and Limitations on Remedies. The
following liquidated damages and limitations on remedies apply under this
Agreement, in addition to those provided elsewhere in this Agreement as to
claims and remedies against the Band:
i. Liquidated Damages Payable by Lakes. In the event of a
Lakes Event of Default prior to the Commencement Date, after
such notice and right to cure as may be provided in this
Agreement, Lakes shall: (A) forfeit to the Band all amounts in
the Account as of the default; (B) pay the Band an amount
equal to the sum of (x) the aggregate Monthly Payments payable
under ss. 8.1(c) over the balance of the 5-year Term, as if
the Agreements had not been terminated, and (y) the Accrued
Expenses; (C) release all claims against the Band, including
without limitation all amounts owed by the Band to Lakes under
or related to the Agreements and all rights under the
Agreements, and discharge all mortgage and security interests
on assets of the Band; (D) transfer to the Band, at the Band's
discretion and without payment of any consideration, any and
all options and interests in real property in Michigan held by
Lakes; and (E) deliver to the Band all documents and work
product in the possession or control of Lakes or its agents
related to the proposed Facility, the Gaming Site and the Non-
Gaming Lands. Lakes agrees to execute and deliver such
release,
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discharges and transfer instruments, and to deliver such work
product and documents, at the time of payment of liquidated
damages.
ii. Liquidated Damages Payable by the Band. In the event of a
Band Event of Default prior to the Commencement Date, after
such notice and right to cure as may be provided in this
Agreement, the Band shall: (A) pay Lakes all amounts loaned by
Lakes to the Band under this Agreement, but not fees,
non-refundable payments and other payments not specifically
designated as loans or advances under this Agreement, less the
Band's right of offset, if any; such damages to be payable
only out of Subsequent Gaming Facility Revenues on the same
terms and with the same limitations on recourse as are
provided in ss. 14.4 with regard to damages payable by the
Band under that subsection; (B) release any interest in the
funds in the Account, which shall be released to Lakes; and
(C) transfer to Lakes all options and land (other than land
held in trust) acquired by the Band through funds advanced by
Lakes (or, failing such transfer, Lakes may foreclose on any
mortgages it holds on such options or land not held in trust);
provided that the amount of any damages payable to Lakes shall
be reduced by the amount paid for any options or land
transferred by the Band to Lakes.
Section 14.6. Lakes Continuing Obligations. Nothing in this Article
shall affect or impair Lakes' continuing obligations under ss.ss. 10.4
(non-competition) and 15.13 (confidentiality) of this Agreement, which shall
remain enforceable for the following terms, notwithstanding the termination of
the Agreements and payment of liquidated or other damages: (i) as to ss.10.4,
the greater of five years after execution of the Agreements or one year after
termination; and (ii) as to ss. 15.13, the greater of five years after execution
of the Agreements or two years after termination.
Section 14.7. Termination of Exclusivity. Section 10.2 (Exclusivity in
Michigan) of this Agreement shall terminate upon any termination of the
Agreements, notwithstanding any breach of the Agreements by the Band.
Section 14.8. Remedies. In consideration of the agreement to liquidated
damages to the extent provided above, the Band and Lakes each waive the right to
actual, consequential, exemplary or punitive damages to the extent that
liquidated damages are applicable to a default, but shall retain the right to
injunctive relief (i) prior to termination of the Agreements, to enforce rights
and remedies thereunder, subject to the Limited Recourse provisions of this
Agreement as to the Band and the Band's limited waiver of sovereign immunity;
and (ii) after termination, to the extent that provisions of this Agreement
specifically survive such termination, subject to such Limited Recourse
provisions and limited waiver. The injured party shall, where liquidated damages
are not applicable and damages or remedies are not otherwise specified, be
entitled to such
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damages as it may be entitled to under applicable law, subject to such Limited
Recourse provisions and limited waiver of the Band's sovereign immunity (which
shall apply to all claims against the Band under or relating to the Agreements,
in addition to all Loans).
Section 14.9. Fees not Damages. In no event shall fees or other
non-refundable payments or Tribal Distributions made by Lakes to Band constitute
damages to Lakes or be repayable by the Band.
ARTICLE 15
GENERAL
Section 15.1. Nature of Agreement. This Agreement is not intended as
and shall not be construed as a "management agreement" within the meaning of the
IGRA.
Section 15.2. Lakes's Interest. Nothing contained herein grants or is
intended (i) to grant Lakes a titled interest to the Facility, or (ii) in any
way to impair the Band's sole proprietary interest in the Facility.
Section 15.3. Situs of the Agreement. This Agreement, the Lakes Note,
the Transition Note and the Non-Gaming Land Acquisition Line of Credit shall be
deemed entered into in Michigan.
Section 15.4. Notice. Any notice required to be given pursuant to this
Agreement shall be delivered to the appropriate party by Certified Mail Return
Receipt Requested or by overnight mail or courier service, to the following
addresses:
If to the Band:
Pokagon Band of Potawatomi Indians
53237 Townhall Road
Dowagiac, MI 49047
Attn: Chairman, Tribal Council
with a copy to:
S. Eric Marshall, Esq.
1318 Mishawaka Avenue
South Bend, Indiana 46615
and to:
Daniel Amory, Esq.
Drummond Woodsum & MacMahon
P.O. Box 9781
Portland, ME 04104-5081
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and to:
Robert Gips, Esq.
Gips and Associates
71 Myrtle Avenue, Suite 2000
South Portland, ME 04106
If to Lakes:
Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
with a copy to:
Douglas S. Twait, Esq.
Johnson Hamilton Quigley Twait & Foley, PLC
First National Bank Building
Suite W1450
332 Minnesota Street
Saint Paul, MN 55101-1314
or to such other different address(es) as Lakes or the Band may specify in
writing. Any such notice shall be deemed given three days following deposit in
the United States mail, one day following delivery to a courier service or upon
actual delivery or upon actual delivery, whichever first occurs.
Section 15.5. Relationship. Lakes and the Band shall not be construed
as joint venturers or partners of each other by reason of this Agreement and
neither shall have the power to bind or obligate the other except as set forth
in this Agreement.
Section 15.6. Further Actions. The Band and Lakes agree to execute all
contracts, agreements and documents and to take all actions reasonably necessary
to comply with the provisions of this Agreement and the intent hereof.
Section 15.7. Waivers. No failure or delay by Lakes or the Band to
insist upon the strict performance of any covenant, agreement, term or condition
of this Agreement, or to exercise any right or remedy consequent upon the breach
thereof, shall constitute a waiver of any such breach or any subsequent breach
of such covenant, agreement, term of condition. No covenant, agreement, term or
condition of this Agreement and no breach thereof shall be waived, altered or
modified except by written instrument. No waiver of any breach shall affect or
alter this Agreement, but each and every covenant, agreement, term and condition
of this Agreement shall continue in full force and effect with respect to any
other then existing or subsequent breach thereof.
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Section 15.8. Captions. The captions of each article, section and
subsection contained in this Agreement are for ease of reference only and shall
not affect the interpretational meaning of this Agreement.
Section 15.9. Third Party Beneficiary. This Agreement is exclusively
for the benefit of the parties hereto and it may not be enforced by any party
other than the parties to this Agreement and shall not give rise to liability to
any third party other than the authorized successors and assigns of the parties
hereto.
Section 15.10. Survival of Covenants. Any covenant, term or provision
of this Agreement which, in order to be effective, must survive the termination
of this Agreement, shall survive any such termination.
Section 15.11. Estoppel Certificate. Lakes and the Band agree to
furnish to the other party, from time to time upon request, an estoppel
certificate in such reasonable form as the requesting party may request stating
whether there have been any defaults under this Agreement known to the party
furnishing the estoppel certificate.
Section 15.12. Periods of Time; Time of the Essence. Whenever any
determination is to be made or action is to be taken on a date specified in this
Agreement, if such date shall fall on a Saturday, Sunday or legal holiday under
the laws of the Band or the State of Michigan, then in such event said date
shall be extended to the next day which is not a Saturday, Sunday or legal
holiday. Time is of the essence.
Section 15.13. Confidential and Proprietary Information. Both parties
agree that any information received concerning the other party during the
performance of this Agreement, regarding the parties' organization, financial
matters, marketing and development plans for the Enterprise, the Gaming Site, or
other information of a proprietary nature (the "Confidential Information") will
be treated by both parties in full confidence except for such public disclosure
as may be required to allow Lakes and the Band to perform their respective
covenants and obligations hereunder, or in response to legal process, and will
not be revealed to any other persons, firms or organizations. This provision
shall survive the termination of this Agreement as provided in ss. 14.6. The
obligations not to use or disclose the Confidential Information shall not apply
to Confidential Information (a) which has been made previously available to the
public by the Band or Lakes or becomes generally available to the public, unless
the Confidential Information being made available to the public results in a
breach of this Agreement; (b) which prior to disclosure to the Band or Lakes was
already rightfully in any such persons' possession; (c) which is obtained by the
Band or Lakes from a third party who is lawfully in possession of such
Information, and not in violation of any contractual, legal or fiduciary
obligation to the Band or Lakes, with respect to such Confidential Information
and who does not require the Band or Lakes to refrain from disclosing such
Confidential Information to others; or (d) by the Band, if such Information
pertains to the Gaming Site or the Enterprise, in connection with the Band's
development, construction and operation of a gaming facility after termination
of the Agreements.
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Section 15.14. Government Savings Clause. Each of the parties agree to
execute, deliver and, if necessary, record any and all additional instruments,
certifications, amendments, modifications and other documents as may be required
by the United States Department of the Interior, Bureau of Indian Affairs, the
office of the field Solicitor, the NIGC, or any applicable statute, rule or
regulation in order to effectuate, complete, perfect, continue or preserve the
respective rights, obligations, liens and interests of the parties hereto to the
fullest extent permitted by law; provided, that any such additional instrument,
certification, amendment, modification or other document shall not materially
change the respective rights, remedies or obligations of the Band or Lakes under
this Agreement or any other agreement or document related hereto.
Section 15.15. Successors and Assigns. The benefits and obligations of
this Agreement shall inure to and be binding upon the parties hereto and their
respective permitted successors and assigns.
Section 15.16. Severability. If any provision, or any portion of any
provision, of this Agreement is found to be invalid or unenforceable, such
unenforceable provision, or unenforceable portion of such provision, shall be
deemed severed from the remainder of this Agreement and shall not cause the
invalidity or unenforceability of the remainder of this Agreement. If any
provision, or any portion of any provision, of this Agreement is deemed invalid
due to its scope or breadth, such provision shall be deemed valid to the extent
of the scope or breadth permitted by law.
Section 15.17. Entire Agreement. This Agreement (together with the
Exhibits and Management Agreement of even date herewith) sets forth the entire
agreement between the parties hereto with respect to the subject matter hereof.
All agreements, covenants, representations, and warranties, express or implied,
oral or written, of the parties with respect to the subject matter hereof are
contained herein. No other agreements, covenants, representations, or
warranties, express or implied, oral or written have been made by any party to
the other with respect to the subject matter of this Agreement. All prior and
contemporaneous conversations, discussions, negotiations, possible and alleged
agreements and representations, covenants and warranties with respect to the
subject matter hereof, including without limitation the Term Sheet agreed to by
the parties dated June 18, 1999, are waived, merged herein and superseded
hereby. Each party affirmatively represents that no promises have been made to
that party which
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are not contained in this Agreement, the Management Agreement, and the
Exhibits, and stipulates that no evidence of any promises not contained in this
Agreement, the Management Agreement, and the Exhibits, shall be admitted into
evidence on their behalf. This Agreement shall not be supplemented, amended or
modified by any course of dealing, course of performance or uses of trade and
may only be amended or modified by a written instrument duly executed by
officers of both parties.
Section 15.18. Consents.
a. Band. Where approval or consent or other action of
the Band is required, such approval shall mean the
written approval of the Pokagon Council evidenced by
a resolution thereof, certified by a Band official as
having been duly adopted, or such other person or
entity designated by resolution of the Pokagon
Council. Any such approval, consent or action shall
not be unreasonably withheld or delayed; provided
that the foregoing does not apply where a specific
provision of this Agreement allows the Band an
absolute or unilateral right to deny approval or
consent or withhold action.
b. Manager. Where approval or consent or other action of
Manager is required, such approval shall mean the
written approval of the Managing Officer. Any such
approval, consent or other action shall not be
unreasonably withheld or delayed.
c. Business Board. Where approval or consent or other
action of the Business Board is required, any such
approval, consent or other action shall not be
unreasonably delayed.
Section 15.19. Ratification. The Agreements are effective upon their
execution by the parties, but the continued rights and obligations of the
parties hereunder are contingent upon Ratification of the Agreements. If
Ratification does not occur, the Agreements and all related documents shall be
of no force and effect; the Band shall retain all non-refundable payments made
under these Agreements; and theControl Agreement shall be discharged, and all
property in the Account shall be released to Lakes.
(balance of this page intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
The Pokagon Band of Potawatomi Lakes Gaming, Inc.
Indians
By: /s/ John Miller By: /s/ Timothy J. Cope
------------------------------ -----------------------------
Its Council Chairman Its: Chief Financial Officer
By: /s/ Kevin Daugherty
------------------------------
Its Secretary
53