Management Agreement - Pokagon Band of Potawatomi Indians and Lakes Gaming Inc.
MANAGEMENT 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
1. RECITALS..................................................................1
2 DEFINITIONS...............................................................2
Affiliate.................................................................2
Band Gaming Ordinance.....................................................2
Band Representatives......................................................3
Bank Lender...............................................................3
BIA.......................................................................3
Business Board............................................................3
Capital Budget............................................................3
Capital Replacement(s)....................................................3
Capital Replacement Reserve...............................................3
Class II Gaming...........................................................3
Class III Gaming..........................................................3
Collateral Agreements.....................................................3
Compensation..............................................................4
Confidential Information..................................................4
Constitution..............................................................4
Development Agreement.....................................................4
Depository Account........................................................4
Disbursement Accounts.....................................................4
Emergency Condition.......................................................4
Enterprise................................................................5
Enterprise Accounts.......................................................5
Enterprise Employee.......................................................5
Enterprise Employee Policies..............................................5
Facility..................................................................5
Fiscal Year...............................................................5
Furnishings and Equipment.................................................6
Gaming....................................................................6
Gaming Regulatory Authority...............................................6
GRA.......................................................................6
Gaming Site...............................................................6
General Manager...........................................................6
Generally Accepted Accounting Principles..................................7
GAAP......................................................................7
Gross Gaming Revenue (Win)................................................7
Gross Revenues............................................................7
House Bank................................................................7
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Internal Control Systems..................................................7
Legal Requirements........................................................7
Manager...................................................................8
Manager's Internal Expenses...............................................8
Manager's Representatives.................................................8
Management Agreement......................................................8
Management Fee............................................................8
Managing Officer..........................................................8
Material Breach...........................................................9
Member of the Band Government.............................................9
Minimum Balance...........................................................9
Minimum Guaranteed Monthly Payment........................................9
Monthly Distribution Payment..............................................9
Net Revenues..............................................................9
Net Revenues (gaming).....................................................9
Net Revenues (other).....................................................10
Operating Budget and Annual Plan.........................................11
Operating Expenses.......................................................11
Operating Supplies.......................................................13
Plans and Specifications.................................................13
Pokagon Council..........................................................13
Pre-Opening Budget.......................................................13
Pre-Opening Expenses.....................................................13
Promotional Allowances...................................................13
Relative.................................................................14
State....................................................................14
Term.....................................................................14
3 ENGAGEMENT; BUSINESS BOARD; COMPLIANCE...................................14
Engagement of Manager....................................................14
Term.....................................................................15
Status of Gaming Site....................................................15
Manager Compliance with Law; Licenses....................................15
Compliance with Compact..................................................16
Fire and Safety..........................................................16
Compliance with the National Environmental Policy Act....................16
Commencement Date........................................................16
4 BUSINESS AND AFFAIRS OF THE ENTERPRISE...................................16
Manager's Authority and Responsibility...................................16
Duties of Manager........................................................17
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Physical Duties..........................................................17
Compliance with Band Ordinances..........................................17
Required Filings.........................................................17
Contracts in Band's Name Doing Business as the Enterprise and at
Arm's Length.............................................................17
Enterprise Operating Standards...........................................17
Security.................................................................18
Damage, Condemnation or Impossibility of the Enterprise..................18
Alcoholic Beverages and Tobacco Sales....................................18
Employees................................................................18
Manager's Responsibility.................................................18
Enterprise Employee Policies.............................................18
Senior Employees.........................................................19
Enterprise Employees.....................................................19
Removal of Employees.....................................................19
No Manager Internal Expenses; Limitation on Manager Payments.............19
GRA Expenses.............................................................20
Employee Background Checks...............................................20
Indian Preference: Recruiting and Training...............................20
Pre-Opening..............................................................21
Operating Budget and Annual Plan.........................................22
Adjustments to Operating Budget and Annual Plan and Capital Budget.......24
Capital Budgets..........................................................24
Capital Replacements.....................................................25
Capital Replacement Reserve..............................................26
Periodic Contributions to Capital Replacement Reserve....................26
Use and Allocation of Capital Replacement Reserve........................27
Indian Preference: Vendors and Contractors...............................27
Internal Control Systems.................................................27
Banking and Bank Accounts................................................28
Enterprise Accounts......................................................28
Daily Deposits to Depository Account.....................................28
Disbursement Accounts....................................................29
No Cash Disbursements....................................................29
Transfers Between Accounts...............................................29
Insurance................................................................29
Accounting and Books of Account..........................................29
Statements...............................................................29
Books of Account.........................................................30
Accounting Standards.....................................................30
Annual Audit.............................................................30
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Manager's Contractual Authority..........................................31
Retail Shops and Concessions.............................................31
Entertainment Approvals..................................................31
Litigation...............................................................31
5 MANAGEMENT FEE, DISBURSEMENTS, AND OTHER
PAYMENTS BY MANAGER......................................................32
Management Fee...........................................................32
Fee Subordinated.........................................................32
Disbursements............................................................32
Adjustment to Bank Account...............................................33
Payment of Fees and Band Disbursement....................................33
Minimum Guaranteed Monthly Payment.......................................33
Payment of Net Revenues..................................................35
Harrah's Termination Agreement...........................................35
6 ENTERPRISE NAME; MARKS...................................................35
Enterprise Name..........................................................35
Marks....................................................................35
Signage..................................................................35
7 TAXES....................................................................36
State and Local Taxes....................................................36
Band Taxes...............................................................36
Compliance with Internal Revenue Code....................................36
8 BUY-OUT OPTION...........................................................37
9 EXCLUSIVITY; NON-COMPETITION.............................................37
Exclusivity in Michigan..................................................37
Indiana Casino...........................................................37
Non-Competition..........................................................37
Permitted Assignment; Change of Control..................................38
Restrictions on Collateral Development...................................40
10 REPRESENTATIONS, WARRANTIES, AND COVENANTS..............................40
Representations and Warranties of the Band...............................40
Due Authorization........................................................41
Valid and Binding........................................................41
Pending Litigation.......................................................41
Band Covenants...........................................................41
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No Impairment of Contract................................................41
Waiver of Sovereign Immunity.............................................41
Valid and Binding........................................................41
Legal Compliance.........................................................42
No Termination...........................................................42
Representations and Warranties of Manager................................42
Due Authorization........................................................42
Valid and Binding........................................................42
Litigation...............................................................42
Certifications...........................................................42
Manager Covenants........................................................42
Noninterference in Band Affairs..........................................42
Prohibition of Payments to Members of Band Government....................43
Prohibition of Hiring Members of Band Government.........................43
Prohibition of Financial Interest in Enterprise..........................43
No Amendment.............................................................43
CRC......................................................................44
No Liens.................................................................44
Permitted Liens..........................................................45
Authority to Execute and Perform Agreement...............................45
Brokerage................................................................45
11 DEFAULT..................................................................45
Events of Default by the Band............................................45
Events of Default by Manager.............................................46
Material Breach; Right to Cure...........................................47
12 TERMINATION..............................................................47
Voluntary Termination....................................................47
Termination if No NIGC Approval..........................................47
Manager Right to Terminate on Band Event of Default......................47
Band Right to Terminate on Manager Event of Default......................47
Band Right to Terminate for Material Adverse Change......................48
Termination if Manager License Withdrawn or on Conviction................49
Termination on Buy-Out...................................................49
Involuntary Termination Due to Changes in Legal Requirements.............49
13 DISPUTE RESOLUTION; LIQUIDATED DAMAGES...................................50
Band's Waiver of Sovereign Immunity and Consent to Suit..................50
Arbitration..............................................................51
Choice of Law............................................................51
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Place of Hearing.........................................................51
Confidentiality..........................................................51
Limitation of Actions....................................................51
Damages..................................................................51
Consents and Approvals...................................................52
Injunctive Relief and Specific Performance...............................52
Action to Compel Arbitration.............................................52
Damages on Termination for Failure to Obtain NIGC Approval...............52
Liquidated Damages and Limitations on Remedies...........................52
Liquidated Damages Payable by Manager....................................53
Liquidated Damages Payable by the Band...................................53
Manager Continuing Obligations...........................................53
Termination of Exclusivity...............................................53
Remedies.................................................................53
Band Injunctive Relief...................................................54
No Setoff Against Payments to Band.......................................54
Indemnification on Termination...........................................54
Fees not Damages.........................................................54
Undistributed Net Revenues...............................................54
14 CONSENTS AND APPROVALS...................................................55
Band.....................................................................55
Manager..................................................................55
15 DISCLOSURES..............................................................55
Shareholders and Directors...............................................55
Warranties...............................................................55
Disclosure Amendments....................................................56
Breach of Manager's Warranties and Agreements............................57
16 NO PRESENT LIEN, LEASE OR JOINT VENTURE..................................57
17 CONCLUSION OF THE MANAGEMENT TERM........................................57
18 MISCELLANEOUS............................................................57
Situs of the Contracts...................................................57
Notice...................................................................58
Relationship.............................................................59
Further Actions..........................................................59
Waivers..................................................................59
Captions.................................................................59
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Severability.............................................................59
Advances.................................................................60
Third Party Beneficiary..................................................60
Survival of Covenants....................................................60
Estoppel Certificate.....................................................60
Periods of Time; Time of Essence.........................................60
Exhibits.................................................................60
Successors and Assigns...................................................60
Confidential and Proprietary Information.................................60
Patron Dispute Resolution................................................61
Modification.............................................................61
Entire Agreement.........................................................61
Government Savings Clause................................................61
Preparation of Agreement.................................................62
Consents.................................................................62
Execution................................................................62
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LIST OF EXHIBITS
Exhibit A Manager's Affiliates, Principal Shareholders, Officers and Directors
Exhibit B Pending Band Litigation
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT has been entered into as of July 8th, 1999,
by and between the POKAGON BAND OF POTAWATOMI (the "Band"), and LAKES GAMING,
INC., a Minnesota corporation ("Manager") for the operation of a gaming facility
in the State of Michigan.
1. RECITALS
1.1 The Band, pursuant to 25 U.S.C. ss.ss. 1300j et seq. (the
"Restoration Act"), is a federally recognized Indian tribe
recognized as eligible by the Secretary of the Interior for
the special programs and services provided by the United
States to Indians because of their status as Indians and is
recognized as possessing powers of self-government.
1.2 As authorized by the Restoration Act, the Band intends to
acquire the Gaming Site in the State of Michigan, to be held
by the federal government in trust for the Band, on which the
Band intends to construct and operate a permanent Class III
gaming facility (the "Facility"); and the Band will possess
sovereign governmental powers over the Gaming Site pursuant to
the Band's recognized powers of self government, and the Band
desires to use the Gaming Site to improve the economic
conditions of its members.
1.3 Manager has paid $150,000, will on execution of this Agreement
pay a further $100,000, and shall on Ratification pay a
further $900,000, in each case as nonrefundable fees to the
Band as part of the process which has led to the selection of
Manager as the intended operator of the Facility.
1.4 Upon the transfer of the Gaming Site to the United States in trust
for the Band, the Band will possess sovereign powers over the Gaming
Site pursuant to the Band's recognized powers of self-government.
1.5 The Band desires to use the Gaming Site and the Facility to
improve the economic conditions of its members, to enable it
to serve the social, economic, educational and health needs of
the Band, to increase the revenues of the Band and to enhance
the Band's economic self sufficiency and self determination.
1.6 The Band wishes to establish an Enterprise, as hereinafter defined, to
conduct Class II and Class III Gaming as hereinafter defined on the
Gaming
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Site. This Agreement sets forth the manner in which the Enterprise
will be managed.
1.7 Manager has agreed to certain terms and has represented to the Band
that it has the managerial and financial capacity to provide and to
secure financing for the funds necessary to develop and construct the
Facility, as defined herein, and to commence the operation of the
Enterprise on the Gaming Site.
1.8 The Band is seeking technical experience and expertise for the
operation of the Enterprise and instruction for members of the
Band in the operation of the Enterprise. Manager is willing,
and has represented to the Band that it is able, to provide
such experience, expertise and instruction.
1.9 The Band desires to grant Manager the exclusive right and
obligation to develop, manage, operate and maintain the
Enterprise as described in this Agreement and to train Band
members and others in the operation and maintenance of the
Enterprise during the term of this Agreement. Manager wishes
to perform these functions for the Band.
1.10 This Agreement is entered into pursuant to the Indian Gaming
Regulatory Act of 1988, PL 100-497, 25 U.S.C. ss. 2701 et seq.
(the "IGRA") as that statute may be amended. All gaming
conducted at the Facility will at all times comply with the
IGRA, applicable Band law and the Compact.
2 DEFINITIONS
As they are used in this Agreement, the terms listed below shall have
the meaning assigned to them in this Section:
"AGREEMENT" shall mean this Management Agreement.
"AGREEMENTS" shall mean this Agreement and the Development Agreement.
"AFFILIATE" means as to Manager or the Band, any corporation,
partnership, limited liability company, joint venture, trust department or
agency or individual controlled by, under common control with, or which directly
or indirectly controls, Manager or the Band.
"BAND EVENT OF DEFAULT" has the meaning described in ss. 11.1.
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"BAND GAMING ORDINANCE" shall mean the ordinance and any amendments
thereto to be enacted by the Band, which authorizes and regulates Class II and
Class III Gaming on Indian lands subject to the governmental power of the Band.
"BAND INTEREST RATE" shall mean the lesser of (i) Wall Street Journal
prime rate as of the Bank Closing plus 1%, or (ii) 10%.
"BAND REPRESENTATIVES" shall mean the persons designated by the Pokagon
Council to sit on the Business Board.
"BANK CLOSING" means the closing on the Bank Loan.
"BANK LENDER" shall mean the financial institution agreed upon by the
parties to provide certain funding necessary to design, construct, and equip the
Facility, and provide start-up capital for the Enterprise.
"BANK LOAN" shall have the meaning defined in the Development Agreement.
"BIA" shall mean the Bureau of Indian Affairs of the Department of the
Interior of the United States of America.
"BUSINESS BOARD" shall mean the decision making body created pursuant
to ss. 3.4 of this Agreement.
"BUY-OUT OPTION" shall mean the Band's option to buy out this Agreement
under ss. 8.
"CAPITAL BUDGET" shall mean the capital budget described in ss. 4.12.
"CAPITAL REPLACEMENT(S)" shall mean any alteration or rebuilding or
renovation of the Facility, and any replacement of Furnishings and Equipment,
the cost of which is capitalized and depreciated rather than being expensed
under GAAP.
"CAPITAL REPLACEMENT RESERVE" shall mean the reserve described in ss.
4.14, into which periodic contributions are paid pursuant to ss. 4.15.
"CHANGE OF CONTROL" shall have the meaning set out in ss. 9.4.3.
"CLASS II GAMING" shall mean Class II Gaming as defined in the IGRA.
"CLASS III GAMING" shall mean Class III Gaming as defined in the IGRA
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"COLLATERAL AGREEMENTS" shall mean any agreements defined as collateral
agreements under 25 USC ss. 2711(a)(3) and regulations issued thereto at 25
C.F.R. ss. 502.5.
"COMMENCEMENT DATE" shall mean the first date that the permanent
Facility is complete, open to the public and that Gaming is conducted in the
Facility pursuant to the terms of this Agreement. "Commencement Date" shall not
mean the opening of the Temporary Facility.
"COMPACT" shall mean the Compact between the Band and the State dated
December 3, 1998 and approved in 64 Fed.Reg. No. 32, Thursday, February 18,
1999, at 8111, as the same may, from time to time, be amended; or such other
compact or consent decree that may be substituted therefor.
"COMPENSATION" shall mean the direct salaries and wages paid to, or
accrued for the benefit of, any employee, including incentive compensation,
together with all fringe benefits payable to or accrued for the benefit of such
executive or other employee, including employer's contribution under F.I.C.A.,
unemployment compensation or other employment taxes, pension fund contributions,
workers' compensation, group life, accident and health insurance premiums and
costs, and profit sharing, severance, retirement, disability, relocation,
housing and other similar benefits.
"CONFIDENTIAL INFORMATION" shall mean the information described in ss.
18.15.
"CONSTITUTION" shall mean the document or documents which govern the
actions of the Band and, upon enactment, the Constitution of the Pokagon Band of
Potawatomi Indians as ultimately approved by the Band and approved by the
Secretary of the Interior.
"CORPORATE COMMISSION" shall mean a body corporate and politic
established, at the Band's discretion, by the Pokagon Council to own the
Enterprise and such other businesses and assets as the Band may deem
appropriate.
"CRC" means Casino Resource Corporation, a Minnesota corporation and
its Insiders.
"DEVELOPMENT AGREEMENT" shall mean the agreement of even date between
Manager and the Band.
"DEPOSITORY ACCOUNT" shall mean the bank account described in ss.
4.19.2.
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"DISBURSEMENT ACCOUNTS" shall mean the bank account or accounts
described in ss. 4.19.3.
"EFFECTIVE DATE" shall have the meaning provided in ss. 18.22.
"EMERGENCY CONDITION" shall have the meaning set forth in ss. 4.13.
"ENTERPRISE" shall mean the enterprise of the Band created by the Band
to engage in Class II and Class III Gaming at the Facility, and which shall
include all gaming at the Facility and any other lawful commercial activity
allowed in the Facility, including but not limited to the sale of alcohol,
tobacco, gifts and souvenirs; provided, however, the Enterprise shall only
include any hotel operated by the Band, ancillary non- Gaming activity within
the Facility, or other commercial enterprise conducted by the Band which is not
generally related to Class II or Class III Gaming if such hotel, non- Gaming
activity or other commercial enterprise (a) is financed by, or through the
guaranty of, Manager, (b) is specifically included within the Initial Scope of
Work or is not a material expansion of the Initial Scope of Work, or (c) is
specified by the Business Board and the Pokagon Council as being included in the
Enterprise, in which case depreciation and other expenses relating to such
hotel, non-Gaming activity or other commercial enterprise shall be an Operating
Expense, all related revenues shall be included in Gross Revenues, and interest
on all related financing shall be paid by the Enterprise; and provided further
that the Enterprise shall not include a tribal gift/craft business which the
Band may elect to operate, rent free, on an area of about 2,400 square feet at
the Facility. The design and operation of such gift/craft shop shall be
consistent with the theme and quality of the Facility, and the location of such
gift/craft shop shall be approved by the Business Board.
"ENTERPRISE ACCOUNTS" shall mean those accounts described in ss. 4.19.1.
"ENTERPRISE EMPLOYEE" shall mean all employees who work at the Facility.
"ENTERPRISE EMPLOYEE POLICIES" shall mean those employee policies
described in ss. 4.5.2.
"ENTERPRISE INVESTMENT POLICY" shall have the meaning
described in ss. 4.19.1.
"EQUIPMENT LENDER" shall mean the entity making the Equipment Loan.
"EQUIPMENT LOAN" shall have the meaning provided in the Development
Agreement.
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"FACILITY" shall mean all buildings, structures, and improvements
located on the Gaming Site and all fixtures, Furnishings and Equipment attached
to, forming a part of, or necessary for the operation of the Enterprise.
"FISCAL YEAR" shall mean the 12-month period commencing on the first
day of the month next following the Commencement Date, and each succeeding
12-month period, or such other period as the Pokagon Council and Manager may
agree. The Band and Manager agree to take such actions as are necessary to
implement this Fiscal Year promptly after the Commencement Date.
"FURNISHINGS AND EQUIPMENT" shall mean all furniture, furnishings and
equipment required for the operation of the Enterprise in accordance with the
standards set forth in this Agreement, including, without limitation:
(i) cashier, money sorting and money counting equipment,
surveillance and communication equipment, and security
equipment;
(ii) slot machines, video games of chance, table games,
keno equipment and other gaming equipment;
(iii) office furnishings and equipment;
(iv) hotel equipment (to the extent a hotel is included in the
Enterprise);
(v) specialized equipment necessary for the operation of
any portion of the Enterprise for accessory purposes,
including equipment for kitchens, laundries, dry
cleaning, cocktail lounges, restaurants, public
rooms, commercial and parking spaces, and
recreational facilities; and
(vi) all other furnishings and equipment hereafter located
and installed in or about the Facility which are used
in the operation of the Enterprise in accordance with
the standards set forth in this Agreement.
"GAMING" shall mean any and all activities defined as Class II and
Class III Gaming.
"GAMING REGULATORY AUTHORITY" or "GRA" shall mean the Band body created
pursuant to the Band Gaming Ordinance to regulate the Class II and Class III
Gaming of the Band in accordance with the Compact, the IGRA and the Band Gaming
Ordinance.
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"GAMING SITE" shall mean any parcel of land in the State identified by
the Band, after consultation with Manager, as suitable for development of the
Facility and operation of the Enterprise which meets the requirements of United
States of America to be accepted in trust for the Band for Gaming purposes.
"GENERAL MANAGER" shall mean the person employed by the Band to direct
the operation of the Enterprise.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean the
principles defined by the Financial Accounting Standards Board.
"GROSS GAMING REVENUE (WIN)" shall mean the net win from gaming
activities which is the difference between gaming wins and losses before
deducting costs and expenses.
"GROSS REVENUES" shall mean all revenues of any nature derived directly
or indirectly from the Enterprise including, without limitation, Gross Gaming
Revenue (Win), food and beverage sales and other rental or other receipts from
lessees, sublessees, licensees and concessionaires (but not the gross receipts
of such lessees, sublessees, licensees and concessionaires provided that such
lessees, sublessees, licensees and concessionaires are not Affiliates or
Insiders of Manager), and revenue recorded from Promotional Allowances, but
excluding any Permitted Taxes.
"HOUSE BANK" shall mean the amount of cash, chips, tokens and plaques
that Manager from time to time determines necessary to have at the Facility
daily to meet its cash needs.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, PL 100-497,
25 U.S.C. ss. 2701 et seq. as it may from time to time be amended.
"INSIDER" has the meaning defined in 11 U.S.C. ss. 101(31), assuming
Manager were the debtor in that definition, and shall include persons or
entities that become Insiders after the date of this Agreement, whether as the
result of a merger, acquisition.
restructuring or otherwise.
"INTERNAL CONTROL SYSTEMS" shall mean the systems described in ss. 4.18.
"LAKES DEVELOPMENT LOAN" shall have the meaning defined in the
Development Agreement.
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"LEGAL REQUIREMENTS" shall mean any and all present and future
judicial, administrative, and tribal rulings or decisions, and any and all
present and future federal, state, local and tribal laws, ordinances, rules,
regulations, permits, licenses and certificates, in any way applicable to the
Band, Manager, the Gaming Site, the Facility and the Enterprise, including
without limitation, the IGRA, the Compact, and the Band Gaming Ordinance.
"LIMITED RECOURSE" shall mean that all Loans and all liabilities of the
Band under or related to the Agreements, the Enterprise or the Gaming Regulatory
Authority, and any related awards, judgments or decrees, shall be payable solely
out of undistributed or future Net Revenues of the Enterprise and shall be a
limited recourse obligation of the Band, with no recourse to tribal assets other
than such Net Revenues (except (i), as to the Equipment Loan, a security
interest in the Furnishings and Equipment purchased with Equipment Loan
proceeds, (ii), if the Commencement Date does not occur, Subsequent Gaming
Facility Revenues to the extent provided in this Agreement, and (iii) mortgages
on the Gaming Site and Non-Gaming Lands prior to their transfer into trust). In
no event shall Lakes or any lender or other claimant have recourse to (a) the
physical property of the Facility (other than Furnishings and Equipment subject
to the security interest securing the Equipment Loan), (b) Tribal Distributions,
(c) assets of the Band purchased with Tribal Distributions, (d) revenues or
assets of any other gaming facility owned or operated by the Band, or (e) any
other asset of the Band (other than (i) as to the Transition Loan and the
Non-Gaming Acquisition Line of Credit, if the Commencement Date does not occur,
Subsequent Gaming Facility Revenues to the extent provided in this Agreement,
(ii) as to the Non-Gaming Acquisition Line of Credit, mortgages on the Non-
Gaming Lands prior to their transfer into trust, (iii) as to the Lakes Note,
mortgages on the Gaming Site prior to their transfer into trust, and (iv) such
Net Revenues of the Enterprise).
"LOANS" shall mean the Lakes Development Loan, the Bank Loan and the
Equipment Loan.
"MANAGER" shall mean Lakes Gaming, Inc.
"MANAGER'S INTERNAL EXPENSES" shall mean Manager's corporate overhead,
including without limitation salaries or benefits of any of Manager's officers
and employees, whether or not they perform services for the Project or the
Enterprise, and any travel or other expenses of Manager's employees.
"MANAGER'S REPRESENTATIVES" shall mean the persons designated by
Manager to sit on the Business Board.
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"MANAGEMENT AGREEMENT" shall mean this Agreement and may be referred to
herein as the "Agreement".
"MANAGEMENT FEE" shall mean the management fee described in ss. 5.1.
"MANAGER EVENT OF DEFAULT" has the meaning described in ss. 11.2.
"MANAGING OFFICER" shall mean the person designated by Manager to serve
as a liaison between Manager and the Band and to serve on the Business Board.
"MARKS" means all trade names, trade marks and service marks used by
the Facility or the Enterprise.
"MATERIAL BREACH" means a failure of either party to perform any
material duty or obligation on its part, if such party fails to (i) cure the
specified default within thirty (30) days following receipt of the notice
provided under ss. 11.3, or (ii) if the default is not capable of being cured
within 30 days, commences such cure within 30 days, proceeds diligently to
complete the cure, and completes the cure no later than 90 days after receipt of
such notice.
"MEMBER OF THE BAND GOVERNMENT" shall mean any member of the Pokagon
Council, the GRA or any independent board or body created to oversee any aspect
of Gaming and any Pokagon court official.
"MINIMUM BALANCE" shall mean the amount described in ss. 4.19.1.
"MINIMUM GUARANTEED MONTHLY PAYMENT" shall mean the payment due the
Band each month commencing in the month after the Commencement Date occurs in
accordance with 25 U.S.C. ss. 2711(b)(3) and ss. 5.6 hereof.
"MONTHLY DISTRIBUTION PAYMENT" shall have the meaning set forth in ss.
5.5.
"NATIONAL INDIAN GAMING COMMISSION" OR "NIGC" means the commission
established pursuant to 25 U.S.C. ss. 2704.
"NET REVENUES" shall mean the sum of "NET REVENUES (GAMING)" and "NET
REVENUES (OTHER)".
"NET REVENUES (GAMING)" shall mean the Gross Gaming Revenue (Win), of
the Enterprise from Class II or Class III gaming less all gaming related
Operating Expenses, excluding the Management Fee, and less the retail value of
any Promotional Allowances,
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and less the following revenues actually received by the Enterprise and included
in Gross Revenues:
(i) any gratuities or service charges added to a customer's bill:
(ii) any credits or refunds made to customers, guests or patrons;
(iii) any sums and credits received by the Enterprise for
lost or damaged merchandise;
(iv) any sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes
or charges received from patrons and passed on to a
governmental or quasi governmental entity, including
without limitation any Permitted Taxes;
(v) any proceeds from the sale or other disposition of
furnishings and equipment or other capital assets;
(vi) any fire and extended coverage insurance proceeds
other than for business interruption;
(vii) any condemnation awards other than for temporary
condemnation; and
(viii) any proceeds of financing or refinancing.
It is intended that this provision be consistent with 25 U.S.C. ss.2703(9).
"NET REVENUES (OTHER)" shall mean all Gross Revenues of the Enterprise
from all other sources in support of Class II or Class III gaming not included
in "Net Revenues (gaming)," such as food and beverage, entertainment, and
retail, less all Operating Expenses, excluding the Management Fee and less the
retail value of Promotional Allowances, if any, and less the following revenues
actually received by the Enterprise and included in Gross Revenues:
(i) any gratuities or service charges added to a customer's bill;
(ii) any credits or refunds made to customer, guests or patrons;
(iii) any sums and credits received by the Enterprise for
lost or damaged merchandise;
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(iv) any sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes
or charges received from patrons and passed on to a
governmental or quasi governmental entity, including
without limitation any Permitted Taxes;
(v) any proceeds from the sale or other disposition of
furnishing and equipment or other capital assets;
(vi) any fire and extended coverage insurance proceeds
other than for business interruption;
(vii) any condemnation awards other than for temporary
condemnation; and
(viii) any proceeds of financing or refinancing;
but excluding revenues from hotel, non-Gaming activity or other commercial
enterprises not included in the Enterprise.
It is intended that this provision be consistent with 25 U.S.C. ss.2703(9).
"NEW POKAGON COUNCIL" means the Pokagon Council elected at a Band election
scheduled for on or about July 10, 1999, which shall take office in August,
1999.
"NIGC APPROVAL" means (a) a determination by NIGC that Lakes is suitable
for licensing and (b) approval by NIGC of the Agreements.
"NIGC DISAPPROVAL" means a determination by NIGC that Lakes is unsuitable
for licensing, if within 120 days after notification of the NIGC decision Lakes
has not cured the reason for such unsuitability and obtained a statement of
suitability from NIGC.
"OPERATING BUDGET AND ANNUAL PLAN" shall mean the operating budget and
plan described in ss. 4.11.
"OPERATING EXPENSES" shall mean all expenses of the operation of the
Enterprise, pursuant to GAAP, including but not limited to the following:
(i) the Compensation of Enterprise Employees;
(ii) Operating Supplies for the Enterprise;
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(iii) utilities;
(iv) repairs and maintenance of the Facility (excluding
Capital Replacements)
(v) interest on the Loans and all other loans or capital
leases pertaining to the Facility and the Enterprise,
but shall exclude interest on the Non-Gaming Land
Acquisition Line of Credit and the Transition
Loan;
(vi) interest on installment contract purchases or other
interest charges on debt approved by the Business
Board;
(vii) insurance and bonding;
(viii) advertising and marketing, including busing and
transportation of patrons to the Facility;
(ix) accounting, audit, legal and other professional fees;
(x) security costs;
(xi) operating lease payments for Furnishings and
Equipment to the extent approved by the Business
Board, and capital lease payments to the extent
approved by the Business Board and properly expensed
under GAAP;
(xiii) trash removal;
(xiv) cost of goods sold;
(xv) other expenses designated as Operating Expenses in
accordance with the accounting standards as referred
to in ss. 4.21.3;
(xvi) expenses specifically designated as Operating
Expenses in this Agreement;
(xvii) depreciation and amortization of the Facility based
on an assumed 30 year life, and depreciation and
amortization of all other assets in accordance with
GAAP;
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(xviii) recruiting and training expenses;
(xix) fees due to the NIGC under the IGRA;
(xx) any required payments to the State or local
governments made by or on behalf of the Enterprise or
the Band pursuant to the Compact or any related
consent decree;
(xxi) any budgeted charitable contributions by the
Enterprise for the benefit of charities located or
providing services in the vicinity of the Gaming Site
which are approved by the Business Board;
(xxii) Pre-opening expenses shall be capitalized and treated
as an expense during the first year after opening;
and
(xxiii) charges, assessments, fines or fees imposed by
governmental entities of the Band which are
reasonably related to the cost of Tribal governmental
regulation of public health, safety or welfare, or
the integrity of Tribal gaming operations.
but Operating Expenses shall not include any portion of Manager's Internal
Expenses or Permitted Taxes (other than as described in clause xxiii above), or
any expenses related to hotel, non-Gaming activity or other commercial
enterprises not included in the Enterprise.
"OPERATING SUPPLIES" shall mean food and beverages (alcoholic and
nonalcoholic) and other consumable items used in the operation of a casino, such
as playing cards, tokens, chips, plaques, dice, fuel, soap, cleaning materials,
matches, paper goods, stationary and all other similar items.
"PERMITTED TAXES" shall mean taxes, fees, assessments or other charges
imposed by the Band that are permitted under ss. 7.2.
"PLANS AND SPECIFICATIONS" shall mean the final Plans and
Specifications approved for the Facility as described in the Development
Agreement.
"POKAGON COUNCIL" shall mean the duly elected, governing legislative
body of the Band described pursuant to Public Law 102-323 or, at the option of
the Band, a designee committee or council created pursuant to resolution or
ordinance of the Pokagon Council.
"PRE-OPENING BUDGET" shall have the meaning described in ss. 4.10.
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"PRE-OPENING EXPENSES" shall have the meaning described in ss. 4.10.
"PROJECT" shall have the meaning described in ss. 4.1 of the
Development Agreement.
"PROMOTIONAL ALLOWANCES" shall mean the retail value of complimentary
food, beverages, merchandise, and tokens for gaming, provided to patrons as
promotional items.
"RATIFICATION" means passage on or before September 15, 1999 of a
resolution by the New Pokagon Council, at a duly called meeting with a quorum
present, ratifying and endorsing the execution of this Agreement by the Band.
"RELATIVE" shall mean an individual residing in the same household who
is related as a spouse, father, mother, son or daughter.
"RESTORATION ACT" shall mean 25 U.S.C. ss.ss. 1300j et seq.
"RESTRICTED TERRITORY" shall mean the States of Ohio, Illinois, Indiana
and Michigan.
"STATE" shall refer to the State of Michigan.
"SUBSEQUENT GAMING FACILITY REVENUES" means gaming revenues from a
gaming facility (other than the Facility) owned or operated by the Band in
Michigan, but only to the following extent: (i) all Class III Gaming Net
Revenue, and (ii) Class II Gaming Net Revenue to the extent that such Class II
Net Revenue exceeds $1,000,000.
"TEMPORARY FACILITY" means a Temporary Facility located on the Gaming
Site, if the Band elects to built and operate such a temporary facility prior to
the Commencement Date in accordance with the Development Agreement, after
consultation with Lakes.
"TERM" shall mean the term of this Agreement as described in ss. 3.2.
"TRIBAL DISTRIBUTIONS" shall mean Monthly Distribution Payments,
Minimum Guaranteed Monthly Payments and any other payments received by the Band
from the Enterprise pursuant to or in connection this Agreement.
2.1 Terms defined in the Development Agreement not otherwise defined in
this Agreement shall have the same meaning herein as therein.
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3 ENGAGEMENT; BUSINESS BOARD; COMPLIANCE
In consideration of the mutual covenants contained in this Agreement,
the parties agree and covenant as follows:
3.1 Engagement of Manager. The Band hereby retains and engages
manager as the exclusive manager of the Enterprise pursuant to
the terms and conditions of this Agreement, and Manager hereby
accepts such retention and engagement, subject to receipt of
all necessary regulatory approvals.
3.2 Term. The term of this Agreement shall begin on the date this
Agreement, the Development Agreement and the Lakes Note are
approved by the Chairman of the NIGC, and/or the BIA, if
required, and continue for a period of five (5) years after
the Commencement Date unless earlier terminated in accordance
with its terms; but this five year term shall not be construed
to include the period of time any Temporary Facility may be
open.
3.3 Status of Gaming Site. The Band represents and covenants that
it will acquire a Gaming Site in accordance with the terms of
the Development Agreement, and will maintain the Gaming Site
throughout the Term as land held in Trust by the United States
of America for the benefit of the Band, eligible as a location
upon which Class II and Class III Gaming can occur. The Band
covenants, during the term hereof, that Manager shall and may
peaceably have complete access to and presence in the Facility
in accordance with the terms of this Agreement, free from
molestation, eviction and disturbance by the Band or by any
person or entity; provided, however, that such right of access
to and presence in the Facility shall cease upon the
termination of this Agreement pursuant to its terms.
3.4 Creation and Operation of Business Board. The Band and the
Manager agree to create a Business Board comprised of an equal
number of persons representing and designated by the Band and
the Manager. Unless otherwise agreed by the Band and the
Manager, the Business Board shall have four (4) members. Any
member of the Business Board may designate another person to
exercise authority as a member by written notice signed by
such Business Board member and given in accordance withss.18.2
of this Agreement. The Business Board shall remain active
during the entire term of this Agreement. Within thirty (30)
days following the date of this Agreement, each party shall
give the other notice of the individuals initially designated
by each to serve on the Business Board. The Business Board
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shall have the obligations, rights and powers described in
this Agreement. In order to be effective, any action of the
Business Board must be the result of mutual agreement of a
majority of the Business Board members or their designees. In
the event mutual agreement cannot be reached, the appropriate
action shall be determined in the manner provided in Article
13.
3.5 Manager Compliance with Law; Licenses. Manager covenants that
it will at all times comply with Legal Requirements, including
the Band Gaming Ordinance, the IGRA, the Compact, State
statutes, to the extent applicable, and any licenses issued
under any of the foregoing. The Band shall not unreasonably
withhold, delay, withdraw, qualify or condition such licenses
as the Band is authorized to grant.
3.6 Compliance with Compact. The parties shall at times comply
with the provisions of the Compact.
3.7 Fire and Safety. Manager shall ensure that the Facility shall
be constructed and maintained in compliance with all fire and
safety statutes, ordinances, and regulations which would be
applicable if the Facility were located outside of the
jurisdiction of the Band although those requirements would not
otherwise apply within that jurisdiction. Nothing in this
Section shall grant any jurisdiction to the State or any
political subdivision thereof over the Gaming Site or the
Facility. Manager and the Band shall be jointly responsible
for arranging fire protection and police services for the
Facility.
3.8 Compliance with the National Environmental Policy Act. With
the assistance of Manager, the Band shall supply the NIGC with
all information necessary for the NIGC to comply with any
regulations of the NIGC issued pursuant to the National
Environmental Policy Act (NEPA).
3.9 Commencement Date. Manager shall memorialize the Commencement
Date in a writing signed by Manager and delivered to the Band
and to the Chairman of the NIGC.
4 BUSINESS AND AFFAIRS OF THE ENTERPRISE
4.1 Manager's Authority and Responsibility. Manager shall conduct
and direct all business and affairs in connection with the
day-to-day operation, management and maintenance of the
Enterprise and the Facility, including the establishment of
operating days and hours. It is the parties' intention that
the Enterprise be open 24 hours daily, seven days a week.
Manager is
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hereby granted the necessary power and authority to act,
through the General Manager, in order to fulfill all of its
responsibilities under this Agreement. Nothing herein grants
or is intended to grant Manager a titled interest to the
Facility or to the Enterprise. Manager hereby accepts such
retention and engagement. The Band shall have the sole
proprietary interest in and ultimate responsibility for the
conduct of all Gaming conducted by the Enterprise, subject to
the rights and responsibilities of Manager under this
Agreement.
4.2 Duties of Manager. In managing, operating, maintaining and
repairing the Enterprise and the Facility, under this
Agreement, Manager's duties shall include, without limitation,
the following:
4.2.1 Physical Duties. Manager shall use reasonable
measures for the orderly physical administration,
management, and operation of the Enterprise and the
Facility, including without limitation cleaning,
painting, decorating, plumbing, carpeting, grounds
care and such other maintenance and repair work as is
reasonably necessary.
4.2.2 Compliance with Band Ordinances. Manager shall comply
with all duly enacted statutes, regulations and
ordinances of the Band, subject to the provisions of
ss. 10.2.1.
4.2.3 Required Filings. Manager shall comply with all
applicable provisions of the Internal Revenue Code
including, but not limited to, the prompt filing of
any cash transaction reports and W-2G reports that
may be required by the Internal Revenue Service of
the United States or under the Compact.
4.2.4 Contracts in Band's Name Doing Business as the
Enterprise and at Arm's Length. Contracts for the
operations of the Enterprise shall be entered into in
the name of the Band, doing business as the
Enterprise, and signed by the General Manager. Any
contract requiring an expenditure in any year in
excess of $50,000, or such higher amount as may be
set by the Business Board, shall be approved by the
Business Board. No contracts, of any amount, for the
supply of goods or services to the Enterprise shall
be entered into with an Affiliate or Insider of the
Manager unless that affiliation is disclosed to and
approved by the Business Board, and the contract
terms are no less favorable for the Enterprise than
could be obtained from a nonaffiliated contractor.
Nothing contained in this ss.4.2.4
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shall be deemed to be or constitute a waiver of the
Band's sovereign immunity.
4.2.5 Enterprise Operating Standards. Manager shall use its
best efforts to operate the Enterprise in a proper,
efficient and competitive manner in accordance with
operating standards which are consistent with the
highest operating standards of the casino,
hospitality and resort industries.
4.2.6 Security. Manager shall provide for appropriate
security for the operation of the Enterprise. All
aspects of the Facility security shall be the
responsibility of Manager. Any security officer shall
at the request of the Business Board be bonded and
insured in an amount commensurate with his or her
enforcement duties and obligations. The cost of any
charge for security and increased public safety
services will be an Operating Expense.
4.3 Damage, Condemnation or Impossibility of the Enterprise.
Damage to or destruction or condemnation of the Facility or
the Enterprise shall be governed by the provisions of ss. 13.8
of the Development Agreement.
4.4 Alcoholic Beverages and Tobacco Sales. During the term of this
Agreement alcoholic beverages may be served at the Facility if
permissible in accordance with applicable law. The parties
acknowledge that no enabling Band legislation for the sale of
alcoholic beverages is now in force, and that such legislation
would be necessary in order to serve alcoholic beverages at
the Facility. If such legislation is subsequently enacted, and
if other requisite approvals are obtained, the Band and
Manager may mutually agree to include service of such
beverages within the Enterprise. Tobacco may be sold at the
Facility subject to and in accordance with the Band's
licensing requirements, if any.
4.5 Employees.
4.5.1 Manager's Responsibility. Manager shall have, subject
to the terms of this Agreement, the exclusive
responsibility and authority to direct the selection,
control and discharge of all employees performing
regular services for the Enterprise in connection
with the maintenance, operation, and management of
the Enterprise and the Facility and any activity upon
the Gaming Site; and the sole
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responsibility for determining whether a prospective
employee is qualified and the appropriate level of
Compensation to be paid.
4.5.2 Enterprise Employee Policies. Manager shall prepare a
draft of personnel policies and procedures (the
"Enterprise Employee Policies"), including a job
classification system with salary levels and scales,
which policies and procedures shall be subject to
approval by the Business Board and the Pokagon
Council. The Enterprise Employee Policies shall
include a grievance procedure in order to establish
fair and uniform standards for the Enterprise
Employees, which will include procedures for the
resolution of disputes between Manager and Enterprise
Employees. Any revisions to the Enterprise Employee
Policies shall not be effective unless they are
approved by the Business Board. All such actions
shall comply with applicable Band law.
4.5.3 Senior Employees. The selection of the General
Manager, Chief Financial Officer, Casino Manager, and
Human Resources Manager of the Enterprise, or the
functionally equivalent positions, shall be subject
to consultation between, and agreement by, Manager,
the Business Board and the Pokagon Council. All such
Employees shall be Enterprise Employees.
4.5.4 Enterprise Employees. The terms of employment of all
Enterprise Employees shall be structured as though
all labor, employment, and unemployment insurance
laws applicable in the State which would apply to
Enterprise Employees if they were not working on an
Indian reservation would also apply to Enterprise
Employees; except that the Band reserves the right to
by ordinance establish a workman's compensation trust
fund and worker's compensation system instead of
adopting Michigan workers compensation law, and to
adopt other laws and regulations that might preempt
otherwise applicable law.
4.5.5 Removal of Employees. Manager will act in accordance
with the Enterprise Employee Policies with respect to
the discharge, demotion or discipline of any
Enterprise Employee.
4.5.6 Band Employees. All Enterprise Employees shall be
employees of the Band.
4.6 No Manager Internal Expenses; Limitation on Manager Payments.
No Manager Internal Expenses shall be paid by the Enterprise.
No officer,
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director, shareholder or employee of Manager shall be
compensated by wages from or contract payments by the
Enterprise for their efforts or for any work which they
perform under this Agreement. Manager shall receive no
payments from the Enterprise other than loan repayments
(whether under the Lakes Note, for other advances in
accordance with this Agreement, or as subrogee after paying on
any Loan guarantee) and the Management Fee to be paid to
Manager under ss. 5.1. Manager Internal Expenses may be paid
from Management Fees and loan repayments after they have been
received by Manager. Nothing in this subsection shall restrict
the ability of an employee of the Enterprise to purchase or
hold stock in Manager where (i) such stock is publicly held,
and (ii) such employee acquirers, on a cumulative basis, less
than five percent (5%) of the outstanding stock in the
corporation.
4.7 GRA Expenses. The funding of the operation of the Gaming
Regulatory Authority shall, prior to the Commencement Date, be
a start up expense of the Enterprise and thereafter shall be
an Operating Expense. The budget for the GRA shall reflect the
reasonable cost of regulating the Enterprise. Disputes between
the parties relating to GRA costs shall be resolved pursuant
to the provisions of Article 13 of this Agreement. The
decisions and actions of the GRA as to Manager shall be
subject to the provisions of Article 13 hereof.
4.8 Employee Background Checks. A background investigation shall
be conducted by the GRA in compliance with all Legal
Requirements, to the extent applicable, on each applicant for
employment as soon as reasonably practicable. No individual
whose prior activities, criminal record, if any, or
reputation, habits and associations are known to pose a threat
to the public interest, the effective regulation of Gaming, or
to the gaming licenses of Manager, or to create or enhance the
dangers of unsuitable, unfair, or illegal practices and
methods and activities in the conduct of Gaming, shall
knowingly be employed by Manager or the Band. The background
investigation procedures employed by the GRA shall be
formulated in consultation with Manager and shall satisfy all
regulatory requirements independently applicable to Manager.
Any cost associated with obtaining such background
investigations shall constitute an Operating Expense,
provided, however, the costs of background investigations
relating to Manager and the shareholders, officers, directors
or employees of Manager or its Affiliates shall be borne
solely by Manager, shall be nonrefundable, shall not be
treated as part of the Lakes Development Loan or as Operating
Expenses of the Enterprise, and shall not exceed $50,000.
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4.9 Indian Preference: Recruiting and Training. In order to
maximize benefits of the Enterprise to the Band, Manager
shall, during the term of this Agreement, to the maximum
extent reasonably possible under applicable law, including,
but not limited to the Indian Civil Rights Act, 25
U.S.C. ss.1301, et. seq., give preference in recruiting,
training and employment to qualified members of the
Band, their spouses, and children in all job categories of the
Enterprise, including senior management. Manager shall:
(i) conduct job fairs and skills assessment meetings for
Band members;
(ii) in consultation with and subject to the approval of
the Band, develop a management training program for
Band members or people selected by the Band. This
program shall be structured to provide appropriate
training for those participating to assume full
managerial control at the conclusion of the Term of
this Agreement; and
(iii) within two hundred seventy (270) days of the
Commencement Date, Manager shall develop and present
to the Band for its approval, a training plan
designed so that, by the end of the Term of the
Agreement, all Enterprise Employees will be Band
members or others designated by the Band.
Manager shall also give preference to residents of the
community in which the Gaming Site is located. Final
determination of the qualifications of Band members and all
other persons for employment shall be made by Manager, subject
to any licensing requirements of the Gaming Regulatory
Authority. Not later than 90 days prior to the Commencement
Date, Manager shall develop and present to the Band for its
approval a training plan designed to meet the goals set out in
this section.
4.10 Pre-Opening. Nine months prior to the scheduled Commencement
Date, Manager shall commence implementation of a pre-opening
program which shall include all activities necessary to
financially and operationally prepare the Facility for
opening. To implement the pre-opening program, Manager shall
prepare a comprehensive pre-opening budget which shall be
submitted to the Business Board for its approval no later than
seven months prior to the scheduled Commencement Date
("Pre-Opening Budget"). The Pre-Opening Budget shall identify
expenses which Manager anticipates to be necessary or
desirable in order to prepare the Facility for the
Commencement Date, including without limitation, cash for
disbursements,
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Furnishings and Equipment and Operating Supplies, hiring,
training, relocation and temporary lodging of employees,
advertising and promotion, office overhead and office space
(whether on or off the Gaming Site), and travel and business
entertainment (including opening celebrations and ceremonies)
("Pre-Opening Expenses"). The Band recognizes that the Pre-
Opening Budget has been prepared well in advance of
Commencement and is intended only to be a reasonable estimate,
subject to variation due to a number of factors, some of which
will be outside of Manager's control (e.g. the time of
completion, inflationary factors and varying conditions for
the goods and services required). The Band agrees that the
Pre-Opening Budget may be modified from time to time, subject
to approval of the Business Board in accordance with the
procedure established by ss. 4.11 of this Agreement for
adjustments to the Operating Budget and Annual Plan. If a
Temporary Facility is constructed, Manager shall prepare a
pre-opening budget in that regard which shall be submitted to
the Business Board for its approval no later than two months
prior to the scheduled opening of the Temporary Facility, or
at such other time as may be approved by the Business Board.
4.11 Operating Budget and Annual Plan. Manager shall, prior to the
scheduled Commencement Date, submit to the Business Board for
its approval a proposed Operating Budget and Annual Plan for
the Fiscal Year commencing on the Commencement Date.
Thereafter, Manager shall, not less than 30 days prior to the
commencement of each full or partial Fiscal Year, submit to
the Business Board for its approval a proposed Operating
Budget and Annual Plan for the ensuing full or partial Fiscal
Year, as the case may be. The Operating Budget and Annual Plan
shall include a projected income statement, balance sheet, and
projection of cash flow for the Enterprise, with detailed
justifications explaining the assumptions used therein. The
Operating Budget and Annual Plan shall include, without
limitation, a schedule of repairs and maintenance (other than
Capital Replacements), a business and marketing plan for the
Fiscal Year, and the Minimum Balance which must remain in the
Enterprise Accounts and the House Bank as of the end of each
month during the Fiscal Year to assure sufficient monies for
working capital purposes, and detail of other expenditures
proposed to be authorized under the Operating Budget and
Annual Plan.
The Operating Budget and Annual Plan for the Enterprise will
be comprised of the following:
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4.11.1 A statement of the estimated income and expenses for
the coming Fiscal Year, including estimates as to
Gross Revenues and Operating Expenses for such Fiscal
Year, such operating budget to reflect the estimated
results of the operation during each month of the
subject Fiscal Year;
4.11.2 Either as part of the statement of the estimated
income and expenses referred to ss. 4.11.1, or
separately, budgets (and timetables and requirements
of Manager) for:
4.11.2.1 repairs and maintenance;
4.11.2.2 Capital Replacements;
4.11.2.3 Furnishings and Equipment;
4.11.2.4 advertising and business promotion programs
for the Enterprise;
4.11.2.5 the estimated cost of Promotional
Allowances; and
4.11.2.6 a business and marketing plan for the
subject Fiscal Year.
4.11.3 The Business Board's approval of the Operating Budget
and Annual Plan shall not be unreasonably withheld or
delayed. Manager shall meet with the Business Board
to discuss the proposed Operating Budget and Annual
Plan and the Business Board's approval shall be
deemed given unless a specific written objection
thereto is delivered by the Band Representatives to
Manager within thirty (30) days after Manager and the
Business Board have met to discuss the proposed
Operating Budget and Annual Plan. If the Band
Representatives for any reason decline to meet with
Manager to discuss a proposed Operating Budget and
Annual Plan after not less than twenty (20) days
written notice, the Band Representatives shall be
deemed to have consented unless a specific written
objection is delivered to Manager within thirty (30)
days after the date of the proposed meeting. The
Business Board shall review the Operating Budget and
Annual Plan on a line-by-line basis, if requested by
the Band Representative.
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4.11.4 If the initial proposed Operating Budget and Annual
Plan contains disputed budget item(s), the Band
Representatives on the Business Board and the Manager
agree to cooperate with each other in good faith to
resolve the disputed or objectionable proposed
item(s). In the event that the Band Representatives
on the Business Board and the Manager are not able to
reach mutual agreement concerning any disputed or
objectionable item(s) within a period of fifteen (15)
days after the date the Band Representatives on the
Business Board provide written notice of the Band's
objection to Manager, either party shall be entitled
to submit the dispute to arbitration in accordance
with Article 13. If the Band Representatives on the
Business Board and the Manager are unable to resolve
the disputed or objectionable item(s) prior to the
commencement of the applicable fiscal year, the
undisputed portions of the proposed Operating Budget
and Annual Plan shall be deemed to be adopted and
approved and the corresponding line item(s) contained
in the Operating Budget and Annual Plan for the
preceding fiscal year shall be adjusted as set forth
herein and shall be substituted in lieu of the
disputed item(s) in the proposed Operating Budget and
Annual Plan. Those line items which are in dispute
shall be determined by increasing the preceding
fiscal year's actual expense for the corresponding
line items by an amount determined by Manager which
does not exceed the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor,
U.S. City Average, all items (1997-98 = 100) for the
Fiscal Year prior to the Fiscal Year with respect to
which the adjustment to the line item(s) is being
calculated or any successor or replacement index
thereto. The resulting Operating Budget and Annual
Plan obtained in accordance with the preceding
sentence shall be deemed to be the Operating Budget
and Annual Plan in effect until such time as Manager
and the Band Representatives on the Business Board
have resolved the items objected to by the Band
Representatives on the Business Board or an
arbitrator has rendered his award on the dispute.
4.11.5 Adjustments to Operating Budget and Annual Plan and
Capital Budget. Manager may, after notice to and
approval by the Business Board, revise the Operating
Budget and Annual Plan and the Capital Budget from
time to time, as necessary, to reflect any
unpredicted significant changes, variables or events
or to include significant, additional, unanticipated
items of expense. Expenditures
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shall not materially vary from the approved budgets
nor exceed the aggregate Operating Budget and Annual
Plan (as approved by the Business Board, and revised
with the reasonable approval of the Business Board)
absent the written consent of the Business Board;
provided that the Band recognizes that (a) the
absolute amounts of expenditures may exceed budgeted
amounts if the volume of business at the Facility
exceeds projections, (b) the relative amounts of
income and expense may vary from budgeted amounts if
the volume of business is less than projected, and
(c) Manager does not guarantee the economic
performance shown in budgets. Manager shall submit a
revision of the Operating Budget and Annual Plan to
the Business Board for review on a quarterly or other
appropriate basis.
4.12 Capital Budgets. Manager shall, not less than 30 days prior to
the commencement of each fiscal year, or partial fiscal year,
submit to the Business Board a recommended capital budget (the
"Capital Budget") describing the present value, estimated
useful life and estimated replacement costs for the ensuing
full or partial year, as the case may be, for the physical
plant, furnishings, equipment, and ordinary capital
replacement items, all of which are defined to be any items,
the cost of which is capitalized and depreciated, rather than
expended, using GAAP ("Capital Replacements") as shall be
required to operate the Enterprise in accordance with sound
business practices. Capital Replacements in the Capital Budget
in an aggregate sum equal to or less than the sum of the
Capital Replacement Reserve for the Fiscal Year shall be
approved by the Business Board; and any amounts in excess of
the Capital Replacement Reserve for the Fiscal Year shall be
subject to approval of the Pokagon Council in its sole
discretion. The Pokagon Council, Business Board, and Manager
shall meet to discuss the proposed Capital Budget and the
Business Board and Pokagon Council shall be required to make
specific written objections to a proposed Capital Budget in
the same manner and within the same time periods specified in
ss. 4.11.4 with respect to an Operating Budget and Annual
Plan. The Business Board and Pokagon Council shall not
unreasonably withhold or delay its consent. Unless the Pokagon
Council, Business Board, and Manager otherwise agree, Manager
shall be responsible for the design and installation of
Capital Replacements, subject to the Business Board's approval
and ratification by the Pokagon Council and right to inspect.
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4.13 Capital Replacements. The Band shall effect and expend such
amounts for any Capital Replacements as shall be required, in
the course of the operation of the Enterprise, to maintain, at
a minimum, the Enterprise in compliance with any Legal
Requirements and to comply with Manager's recommended programs
for renovation, modernization and improvement intended to keep
the Enterprise competitive in its market; or to correct any
condition of an emergency nature, including without
limitation, maintenance, replacements or repairs which are
required to be effected by the Band, which in Manager's sole
discretion requires immediate action to preserve and protect
the Facility, assure its continued operation, and/or protect
the comfort, health, safety and/or welfare of the Facility's
guests or employees (an "Emergency Condition"); provided,
however, that the Band shall be under no obligation to fund
Capital Replacements in aggregate amount greater than its
periodic required contributions to the Capital Replacement
Reserve described in ss. 4.15. Manager is authorized to take
all steps and to make all expenditures from the Disbursement
Accounts described in ss. 4.19.3 (in the case of
non-capitalized repairs and maintenance), or Capital
Replacement Reserve described at ss. 4.15, (in the case of
expenditures for Capital Replacements) as it deems necessary
to repair and correct any Emergency Condition, regardless
whether such provisions have been made in the Capital Budget
or the Operating Budget and Annual Plan for any such
expenditures; or the cost thereof may be advanced by Manager
and reimbursed from future revenues. Design and installation
of Capital Replacements shall be effected in a time period and
subject to such conditions as the Business Board may establish
to minimize interference with or disruption of ongoing
operations.
4.14 Capital Replacement Reserve. Manager shall establish a Capital
Replacement Reserve on the books of account of the Enterprise,
and the periodic contributions of cash required by ss. 4.15
shall be deposited by the Enterprise into an account (the
"Capital Replacement Reserve") established in the Band's name
at a bank designated by the Business Board in accordance with
ss. 4.19.1 of this Agreement. All amounts in the Capital
Replacement Reserve shall be invested in interest bearing
investments in accordance with the Enterprise Investment
Policy to the extent that availability of funds, when
required, is not thereby impaired. Interest earned on amounts
deposited in the Capital Replacement Reserve shall be credited
to the Capital Replacement Reserve and shall be available for
payment of expenditures for Capital Replacements to the
Facility. Manager shall draw on the Capital Replacement
Reserve for Capital Replacements to purchase those items
included in the Capital Budget approved by the
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Business Board or such emergency additions, repairs or
replacements as shall be required to correct an Emergency
Condition.
4.15 Periodic Contributions to Capital Replacement Reserve. In
accordance with ss. 5.5 of this Agreement, Manager shall make
monthly deposits into the Capital Replacement Reserve in
amounts equivalent to an annual rate of 1% (one percent) of
Gross Revenues during the first Fiscal Year after the
Commencement Date and equivalent to an annual rate of 3%
(three percent) of Gross Revenues during each Fiscal Year over
the remainder of the Term; such reserve shall be funded out of
Monthly Distribution Payments. The cash amounts required to be
so deposited shall be calculated and deposited into the
Capital Replacement Reserve, in arrears, no later than the
twenty-first (21st) day of the month immediately following the
month with respect to which a deposit is made. If any
adjustment of Gross Revenues is made as result of an audit or
for other accounting reasons, a corresponding adjustment in
the Capital Replacement Reserve deposit shall be made. In
addition, all proceeds from the sale of capital items no
longer needed for the operation of the Enterprise, and the
proceeds of any insurance received in reimbursement for any
items previously paid from the Capital Replacement Reserve,
shall be deposited into the Capital Replacement Reserve upon
receipt.
4.16 Use and Allocation of Capital Replacement Reserve. Any
expenditures for Capital Replacements which have been budgeted
and previously approved may be paid from the Capital
Replacement Reserve without further approval from the Business
Board. Any amounts remaining in the Capital Replacement
Reserve at the close of any year shall be carried forward and
retained in the Capital Replacement Reserve until fully used.
If the amounts in the Capital Replacement Reserve at the end
of any year plus the anticipated contributions to the Capital
Replacement Reserve for the next ensuing year are not
sufficient to pay for Capital Replacements authorized by the
Capital Budget for such ensuing year, then additional funds,
in the amount of the projected deficiency, may be advanced by
the Manager and reimbursed by the Enterprise from future
revenues.
4.17 Indian Preference: Vendors and Contractors. In order to
maximize benefits of the Enterprise to the Band, Manager and
the Band shall, during the term of this Agreement, together
strive for use of Native American contractors, sub-contractors
and vendors, provided their bids are reasonably competitive.
The Band and Manager shall agree on policies reasonably
governing (i) preferential purchases from vendors and
contractors owned by
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or affiliated with members of the Band, which shall among
other things limit such preference to entities in which the
member is the real party in interest and require the price and
other terms offered by such vendors to be reasonably
competitive; and (ii) purchases of goods or services from the
Band, which shall be on terms that are reasonably competitive.
The Band reserves the right to require use of union labor on
some or all contracts, subject to review of budgetary impact.
Manager shall provide written notice to the Band in advance of
all such contracting, subcontracting and construction
opportunities.
4.18 Internal Control Systems. Manager shall install systems for
monitor of all funds (the "Internal Control Systems"), which
systems shall comply with all Legal Requirements, and shall be
submitted to the Business Board and the Band Regulatory
Authority for approval in advance of implementation, which
approval shall not be unreasonably withheld. The Band shall
retain the right to review all Internal Control Systems and
any changes instituted to the Internal Control Systems of the
Enterprise. The Band shall have the right to retain an auditor
to review the adequacy of the Internal Control Systems prior
to the Commencement Date. The cost of such review shall be a
Pre-Opening Expense. Any significant changes in such systems
after the Commencement Date also shall be subject to review
and approval by the Gaming Regulatory Authority. The Gaming
Regulatory Authority and Manager shall have the right and duty
to maintain and police the Internal Control Systems in order
to prevent any loss of proceeds from the Enterprise. The
Gaming Regulatory Authority shall have the right to inspect
and oversee the Internal Control System at all times. Manager
shall install a closed circuit television system to be used
for monitoring the cash handling activities of the Enterprise
sufficient to meet all Legal Requirements.
4.19 Banking and Bank Accounts.
4.19.1 Enterprise Accounts. The Business Board shall select,
and the Pokagon Council shall approve, a bank or
banks for the deposit and maintenance of funds and
shall establish in such bank or banks accounts as
Manager deems appropriate and necessary in the course
of business and as consistent with this Agreement
("Enterprise Accounts"). Establishment of any
Enterprise Bank Account shall be subject to the
approval of the Business Board. The sum of money
agreed to by the Business Board to be maintained in
the Enterprise Bank Account(s) to serve as working
capital for Enterprise
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operations, shall include all sums needed for the
House Bank, and all sums needed to accrue for payment
of expenses not paid on a monthly basis (the "Minimum
Balance"). Manager shall propose a policy for
investing funds in excess of the Minimum Balance (the
"Enterprise Investment Policy"), which shall be
subject to the approval of the Business Board.
4.19.2 Daily Deposits to Depository Account. Manager shall
establish for the benefit of the Band in the
Enterprise's name a Depository Account. Manager shall
collect all Gross Revenues and other proceeds
connected with or arising from the operation of the
Enterprise, the sale of all products, food and
beverage, and all other activities of the Enterprise
and deposit the related cash daily into the
Depository Account at least once during each 24-hour
period unless otherwise agreed by the Business Board.
All money received by the Enterprise on each day that
it is open must be counted at the close of operations
for that day or at least once during each 24-hour
period. Manager agrees to obtain a bonded
transportation service to effect the safe
transportation of the daily receipts to the bank,
which expense shall constitute an Operating Expense.
4.19.3 Disbursement Accounts. Manager shall establish for
the benefit of the Band in the Enterprise's name one
or more Disbursement Accounts. Manager shall,
consistent with and pursuant to the approved annual
Operating Budget and Annual Plan and Capital Budget,
have responsibility and authority for making all
payments for Operating Expenses, debt service,
Management Fees, and Tribal Distributions from the
Disbursement Accounts.
4.19.4 No Cash Disbursements. Manager shall not make any
cash disbursements from the Enterprise Accounts
except for the payment of cash prizes; and except for
such cash disbursements, any and all payments or
disbursements by the Manager shall be made by check
or wire transfer drawn against an Enterprise Bank
Account.
4.19.5 Transfers Between Accounts. Manager has the authority
to transfer funds from and between the Enterprise
Accounts to the Disbursement Accounts in order to pay
Operating Expenses and to pay debt service pursuant
to the Loans, to invest funds in accordance with the
Enterprise Investment Policy, and to pay the
Management Fees and Tribal Distributions pursuant to
this Agreement.
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4.20 Insurance. Manager, on behalf of the Band, shall arrange for,
obtain and maintain, or cause its agents to maintain, with
responsible insurance carriers licensed to do business in the
State, insurance satisfactory to Manager and the Business
Board covering the Facility and the operations of the
Enterprise, naming the Band, the Enterprise and Manager as
insured parties. Manager shall recommend to the Business Board
the minimum amounts of insurance coverage for the Enterprise,
which shall be subject to the reasonable approval of the Band.
4.21 Accounting and Books of Account.
4.21.1 Statements. Manager shall prepare and provide to the
Band on a monthly, quarterly, and annual basis,
operating statements on behalf of the Enterprise. The
operating statements shall comply with all Legal
Requirements and shall include an income statement,
statement of cash flows, and balance sheet for the
Enterprise. Such statements shall include the
Operating Budget and Annual Plan and Capital Budget
projections as comparative statements, and, after the
first full year of operation, will include
comparative statements from the comparable period for
the prior year; and shall reflect in accordance with
GAAP all amounts collected and received and all
expenses, deductions and disbursements made therefrom
in connection with the Enterprise.
4.21.2 Books of Account. Manager shall maintain full and
accurate books of account on behalf of the Enterprise
at an office in the Facility and at such other
location as may be determined by Manager. The GRA and
other designated representatives of the Pokagon
Council shall have access to the daily operations of
the Enterprise and shall have the unlimited right to
inspect, examine, and copy all such books and
supporting business records. Such rights may be
exercised through the Gaming Regulatory Authority or
through an agent, employee, attorney, or independent
accountant acting on behalf of the Band.
4.21.3 Accounting Standards. Manager shall maintain the
books and records on behalf of the Enterprise
reflecting the operations of the Enterprise in
accordance with Generally Accepted Accounting
Principles consistently applied and shall adopt and
follow the fiscal accounting periods utilized by
Manager in its normal course of business (i.e., a
month, quarter and year prepared in accordance with
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the Fiscal Year). The accounting systems and
procedures shall comply with Legal Requirements and,
at a minimum:
4.21.3.1 include an adequate system of internal
accounting controls;
4.21.3.2 permit the preparation of financial
statements in accordance with GAAP;
4.21.3.3 be susceptible to audit;
4.21.3.4 permit the calculation and payment of the
Management Fee described in ss. 5; and
4.21.3.5 provide for the allocation of operating
expenses or overhead expenses among the
Band, the Enterprise, and any other user of
shared facilities and services.
4.22 Annual Audit. An independent certified public accounting firm selected
by the Band and reasonably acceptable to Manager shall perform an
annual audit of the books and records of the Enterprise and of all
contracts for supplies, services or concessions reflecting Operating
Expenses, and shall provide such other services as the Business Board
shall designate. The Band, the BIA and the NIGC shall also have the
right to perform special audits of the Enterprise on any aspect of the
Enterprise at any time without restriction. The costs incurred for such
audits shall constitute an Operating Expense. Such audits shall be
provided by the Band to all applicable federal and state agencies, as
required by law, and may be used by Manager for reporting purposes
under federal and state securities laws, if required.
4.23 Manager's Contractual Authority. Manager is authorized to make, enter
into and perform in the name of and for the account of the Band, doing
business as the Enterprise, such contracts deemed necessary by Manager
to perform its obligations under this Agreement, provided such
contracts comply with the terms and conditions of this Agreement,
including, but not limited to, ss. 4.2.4, and provided such contracts
do not obligate the Enterprise to pay sums not approved in the
Operating Budget and Annual Plan or the Capital Budget.
4.24 Retail Shops and Concessions. The Business Board shall approve in
advance in writing the specific type or types of shops or concessions
to be authorized for inclusion in the Facility.
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4.25 Entertainment Approvals. The Pokagon Council may require that the
Business Board approve in advance in writing entertainment and/or
sporting events to provided at the Facility.
4.26 Litigation. Except for disputes between the Band and Manager, and
claims relating to the Band's status as a Tribe or the trust status of
the Gaming Site, Manager shall bring and/or defend and/or settle any
claim or legal action brought against Manager, the Enterprise or the
Band, individually, jointly or severally, or any Enterprise Employee,
in connection with the operation of the Enterprise if the basis of such
claim or legal action was within the scope of Manager's authority under
the Agreements; except that bringing litigation or arbitration relating
to claims in excess of $100,000 must be approved by the Business Board
and, as to claims in excess of $500,000, by the Pokagon Council (which
consent shall not be unreasonably withheld); and Manager shall furnish
such information regarding claims, litigation and arbitration as the
Band may request. Subject to the Band's approval of legal counsel,
Manager shall retain and supervise legal counsel, accountants and such
other professionals, consultants and specialists as Manager deems
appropriate to assert or defend any such claim or cause of action. All
liabilities, costs and expenses, including reasonable attorneys' fees
and disbursements incurred in defending and/or settling any such claim
or legal action which are not covered by insurance and which, as to
Manager, relate to acts or omissions of Manager within the scope of its
authority under the Agreements, shall be an Operating Expense, or, if
incurred prior to the Commencement Date, shall be a Pre-Opening
Expense. Nothing contained herein is a grant to Manager of the right to
waive the Band's or the Enterprise's sovereign immunity. That right is
strictly reserved to the Band, and shall at the option of the Pokagon
Council be asserted by the Band through its counsel (whose fees and
expenses relating to the Enterprise shall be an Operating Expense). Any
settlement of a third party claim or cause of action shall require
approval of the Business Board and, as to claims in excess of $100,000
not covered by insurance, by the Pokagon Council (which consent shall
not be unreasonably withheld).
5 MANAGEMENT FEE, DISBURSEMENTS, AND OTHER PAYMENTS BY
MANAGER.
5.1 Management Fee. Subject to the provisions of ss. 5.5, on or
before the twenty-first (21st) day of each month after the
month in which the Commencement Date occurs, Manager is
authorized by the Band to pay itself from the Enterprise Bank
Account(s) a fee as follows: 24% of the Net Revenues of the
Enterprise in the period from the Commencement Date until the
first day of the month next following the Commencement Date
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(which shall constitute the commencement of the next Fiscal
Year), payable on or before the twenty-first day of that next
month; then 24% of the Net Revenues of each succeeding month,
payable monthly in arrears, until the Net Revenues in a Fiscal
Year have totaled $80 million; and thereafter 19% of Net
Revenues of each succeeding month, payable monthly in arrears,
to the extent that aggregate Net Revenues in such Fiscal Year
exceed $80 million. To the extent that aggregate Net Revenues
reach $80 million during a month, the fee shall be prorated.
5.2 Fee Subordinated. The Management Fee shall be subordinated to
the Bank Loan, the Equipment Loan, any other third-party loans
or equipment leases pertaining to the Enterprise, and the
Minimum Guaranteed Monthly Payment. Manager agrees to execute
and deliver a subordination agreement evidencing such
subordination in form acceptable to the Bank Lender, the
Equipment Lender, or any other third-party lender or equipment
lessor.
5.3 Disbursements. As and when received by the Enterprise, Gross
Revenues shall be deposited in the Depository Account created
pursuant to ss. 4.19.2 of this Agreement. There shall, in
turn, be disbursed by Manager, on a monthly basis, for and on
behalf of the Band, funds from the Enterprise Bank Account(s)
to pay, to the extent available, Operating Expenses and
required deposits into the Capital Replacement Reserve for
Capital Replacements. Manager will reserve funds in the
Enterprise in amounts equal to the Minimum Balance. Additionally,
Manager may advance any monies needed to cover any operating cash
shortfall and shall be allowed to be reimbursed same in accordance
with ss. 18.8.
5.4 Adjustment to Bank Account. After the disbursements pursuant
to ss. 5.3 and establishment of any additional reserves for
future disbursements as Manager deems necessary and as are
approved by the Business Board, taking into account
anticipated cash flow and Operating Costs of the Enterprise,
any excess funds remaining in the Enterprise Bank Account(s)
over the Minimum Balance, the Capital Replacement Reserve, and
such additional reserves as may be approved by the Business
Board shall be disbursed monthly in accordance with ss. 5.5.
5.5 Payment of Fees and Band Disbursement. Within twenty-one (21)
days after the end of each calendar month of operations,
Manager shall calculate Gross Revenues, Operating Expenses,
and Net Revenues of the Enterprise for the previous month's
operations and the Fiscal Year's operations to
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date. Such Net Revenues shall be disbursed from the Enterprise Bank
Account(s) to the extent available in the following order of
priority:
5.5.1 the Minimum Guaranteed Monthly Payment described in ss. 5.6;
5.5.2 Current principal and any other payments due on all Loans
(and if payments are due quarterly, a reserve equal to one
third of the scheduled quarterly payment shall be deposited
in a designated Enterprise Bank Account for such payment,
and may be invested in accordance with the Enterprise
Investment Policies pending payment);
5.5.3 Capital Replacement Reserve contributions as described in
ss. 4.15; and
5.5.4 the Management Fee.
All remaining Net Revenues (the "Monthly Distribution
Payment") shall be distributed to the Band at the same time
the Management Fee is paid.
5.6 Minimum Guaranteed Monthly Payment. The Enterprise shall,
subject to the provisions of ss. 5.6.1, pay the Band
$1,000,000 per month (the "Minimum Guaranteed Monthly
Payment"), beginning on the Commencement Date and continuing
for the remainder of the Term. The Minimum Guaranteed Monthly
Payment shall be payable to the Band in arrears on the twenty
first (21st) day of each calendar month following the
month in which the Commencement Date occurs, which payment
shall have priority over the Management Fee. If the
Commencement Date is a date other than the first day of a
calendar month, the first payment will be prorated from the
Commencement Date to the end of the month.
5.6.1 Minimum Guaranteed Monthly Payments shall be charged
against the Band's distribution of Net Revenues for each
month; provided, however, that if the Net Revenues in a
given month are less than $1,000,000, Manager shall pay the
funds necessary to compensate for the deficiency from its
own funds; and provided further that Manager's obligation to
make such payment shall be reduced to the extent that the
Band has received or receives distributions from Net
Revenues during that Fiscal Year, on a cumulative basis,
exceeding the Minimum Guaranteed Monthly Payments required
under this section. For example, if (a) the Fiscal Year
commences on October
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1 and (b) the Band receives distributions in October,
November and December totaling $5 million, receives no
distributions in January, February and March, and receives
$1.5 million in April; then Manager would not be required to
make payments from its own funds in January and February;
would be required to pay the Band $1 million in March; and
would be permitted to recoup $500,000 of that payment out of
the payment that the Band would otherwise receive in April.
Manager shall not otherwise be entitled to reimbursement
from the Enterprise or the Band for payments it makes from
its own funds on account of Minimum Guaranteed Monthly
Payments.
5.6.2 The obligation to make Minimum Guaranteed Monthly Payments
shall cease upon termination of this Agreement, unless the
Agreement is terminated by the Band for a Material Breach by
the Manager.
5.6.3 The Minimum Guaranteed Monthly Payment shall be reduced
prospectively from $1,000,000 to $500,000 upon the opening,
if any, of a casino in Indiana owned by the Band, on the
same cumulative basis as provided in ss. 5.6.1.
5.6.4 Except as provided in this ss. 5.6 with regard to cumulation
of payments in any Fiscal Year or otherwise specifically
provided in this Agreement, Manager's obligation to pay the
Band the Minimum Guaranteed Monthly Payment is unconditional
and shall not be affected by the actual level of funds
generated by the Enterprise.
5.7 Payment of Net Revenues. The Net Revenues paid to the Band pursuant
to this Article 5 shall be payable to the Band bank account
specified by the Pokagon Council in a notice to Manager pursuant
to ss. 18.2.
5.8 Harrah's Termination Agreement. Manager shall pay out of its
Management Fee all obligations of the Band to make payments under
ss.ss. 1.4.1 and 1.4.3 (as it pertains to interest on payments due
under ss. 1.4.1) of the Termination Agreement dated September 12,
1998 between the Band and Harrah's Southwest Michigan Casino
Corporation (the "Harrah's Termination Agreement"), and shall
indemnify and hold the Band harmless against all loss, liability
and expense relating to its liability under those sections of the
Harrah's Termination Agreement. Such payments shall not constitute
Operating Expenses of the Gaming Facility and shall not be
reimbursed by the Band or the Enterprise.
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5.9 The Band shall indemnify Manager against any decrease in Management
Fee caused by an Indiana casino owned or operated by the Band,
provided that (a) the alleged reduction in fees shall be measured
against the Management Fees actually earned by Manager in the
12-month period preceding the date on which the Manager notifies
the Band of the claim for indemnification under this section,
without giving effect to any subsequent actual or projected
increase in such fees over that level; and (b) in any arbitration
relating to such a claim, Manager must prove its claim by clear and
convincing evidence.
6 ENTERPRISE NAME; MARKS
6.1 Enterprise Name. The Enterprise shall be operated under a business
name approved by the Business Board and reasonably acceptable to
the Band (the "Enterprise Name").
6.2 Marks. All Marks shall be approved by the Business Board and shall
be subject to the reasonable approval of the Pokagon Council. Prior
to the Commencement Date and from time to time during the Term
hereof, Manager agrees to take such actions on behalf of the Band
as are reasonably necessary to register and protect all Marks.
6.3 Signage. Manager shall erect and install in accordance with local
codes and regulations appropriate signs in, on or about the
Facility, including, but not limited to, signs bearing Marks as
part of the Enterprise Name. The costs of purchasing, leasing,
transporting, constructing, maintaining and installing the required
signs and systems, and of registering and protecting all Marks,
shall be part of the Operating Expenses.
7 TAXES
7.1 State and Local Taxes. If the State or any local government
attempts to impose any tax including any possessory interest tax
upon any party to this Agreement or upon the Enterprise, the
Facility or the Gaming Site, the Pokagon Band may direct the
Enterprise, in the name of the appropriate party or parties in
interest, to resist such attempt through legal action. The costs of
such action and the compensation of legal counsel shall be an
Operating Expense of the Enterprise. Any such tax shall constitute
an Operating Expense of the Enterprise. This section shall in no
manner be
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construed to imply that any party to this Agreement or the
Enterprise is liable for any such tax.
7.2 Band Taxes. The Band agrees that neither it nor any agent, agency,
affiliate or representative of the Band will impose any taxes,
fees, assessments or other charges of any nature whatsoever on
payments of any debt service on any Loan or on debt service on any
other financing for the Facility or for the Enterprise, or on the
revenues of the Enterprise or the Facility, or on the Management
Fee as described in ss. 5.1 of this Agreement; but the Band
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. Without limiting the foregoing, 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, 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.
7.3 Compliance with Internal Revenue Code. Manager shall comply with
all applicable provisions of the Internal Revenue Code.
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8 BUY-OUT OPTION
The Band shall have the right, beginning two years after the
Commencement Date, to buy out the remaining term of this Agreement (the "Buyout
Option"), provided that such buyout includes repayment in full of all
outstanding debt owed by the Band to Manager, including without limitation the
Lakes Development Loan, the Transition Loan, the Non-Gaming Land Acquisition
Line of Credit, and either repayment of the Bank Development Loan and the
Equipment Loan (to the extent they are guaranteed by Manager) or release of
Manager's guarantees and other credit enhancements, if any, relating to those
Loans. The Buyout Option price shall be determined by multiplying the average
monthly Management Fee earned during the 12 month period prior to exercise of
the Buyout by the number of months remaining in the term of this Agreement, and
discounting future payments at a discount rate equal to the Band Interest Rate.
The Band shall not be required in connection with its exercise of the Buyout
Option to pay any termination fee or to make any payment related to the value of
gaming equipment, amenities, or any other asset of the Facility or the
Enterprise.
9 EXCLUSIVITY; NON-COMPETITION
9.1 Exclusivity in Michigan. The Band shall deal exclusively with
Manager 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.
9.2 Indiana Casino. Manager recognizes that the Band intends to
develop a casino in Indiana, and that the Band shall have no
obligations to Manager 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
Manager 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 Manager shall be implied from this undertaking, and
the Band shall retain full and absolute discretion in that regard.
9.3 Non-Competition. Manager 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
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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 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 Manager in such entities; or (b) any
entity because of the investment banking services of Ron Kramer, a
director of Manager.
9.4 Permitted Assignment; Change of Control.
9.4.1 Manager may not assign its rights under this Agreement
without the Band's prior written consent, except that
Manager may assign its rights under such Agreement, but not
its obligations, to a wholly owned subsidiary.
9.4.2 The Band may not assign its rights under this Agreement;
except that the Band may, without the consent of Manager,
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
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Band of any obligation hereunder, unless otherwise agreed by
Manager or the holder of such obligation.
9.4.3 The Band shall be entitled to terminate the Agreements if
Manager 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 Manager or any third party
in the event of such termination, and such obligations shall
remain payable in accordance with their payment terms.
Manager 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 Manager's knowledge of any event described in
Clauses III or IV of that definition.
"Change of Control," for purposes of this provision, means
(I) the merger, consolidation or other business combination
of Manager with, or acquisition of all or substantially all
of the assets of Manager by, any other entity; (II) Lyle
Berman's ceasing to be either Chief Executive Officer or
Chairman of the Board of Manager (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
Manager of beneficial ownership of 30% or more in interest
of the outstanding voting stock of Manager, 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 Manager of beneficial ownership
of 10% or more in interest of the outstanding voting stock
of Manager, as determined under 17 CFR ss.ss. 240.13d-3 or
240.16a-1, if a majority of the Board of Directors of
Manager 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. 9.3(a)(i)(B) are
breached, the following terms shall control:
(A) Manager 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.
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(B) The Band shall within 45 days of that
notification inform Manager if it will waive
that breach.
(C) If the Band states that it will not waive
the breach, Manager may within 30 days of
the Band's notification inform the
Band whether Mr. Berman will resign as
officer and director of Manager, and who
Manager proposes as Mr. Berman's successor
as Chairman and/or Chief Executive Officer
of Manager. Manager 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.
9.3(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, Manager may
nominate another proposed successor within
30 days, failing which Manager shall be in
default (subject to arbitration under ss.
13).
(F) If Manager 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, Manager shall
be in default (subject to arbitration under
ss. 13).
9.5 Restrictions on Collateral Development. Manager 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.
10 REPRESENTATIONS, WARRANTIES, AND COVENANTS
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10.1 Representations and Warranties of the Band. The Band represents
and warrants to Manager as follows:
10.1.1 Due Authorization. The Band'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 the Band and
do not require further Band approval.
10.1.2 Valid and Binding. This Agreement has been properly
executed, and once approved in accordance with Legal
Requirements constitutes the Band's legal, valid and
binding obligations, enforceable against the Band in
accordance with their terms.
10.1.3 Pending Litigation. There are no material actions,
suits or proceedings, pending or threatened, against or
affecting the Band before any court or governmental
agency, except as disclosed on EXHIBIT B.
10.2 Band Covenants. The Band covenants and agrees as follows:
10.2.1 No Impairment of Contract. During the term of this
Agreement and the Development 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.
10.2.2 Waiver of Sovereign Immunity. The Band will waive
sovereign immunity on the limited basis described in ss.
13.1 with respect to this Agreement.
10.2.3 Valid and Binding. This Agreement, the Development
Agreement, the Lakes Note, the Transition Note and the
Non-Gaming Land
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Acquisition Line of Credit, and each other contract
contemplated by this Agreement shall, once approved in
accordance with Legal Requirements, be enforceable in
accordance with their terms.
10.2.4 Legal Compliance. In its performance of this Agreement,
the Band shall comply with all Legal Requirements.
10.2.5 No Termination. 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 Manager.
10.3 Representations and Warranties of Manager. Manager
represents and warrants to the Band as follows:
10.3.1 Due Authorization. Manager'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 Manager and
do not require further approval.
10.3.2 Valid and Binding. This Agreement has been properly
executed and constitutes Manager's legal, valid and
binding obligation, enforceable against Manager in
accordance with its terms.
10.3.3 Litigation. There are no actions, suits or proceedings
pending or threatened against or affecting Manager
before any court or governmental agency that would in
any material way affect Manager's ability to perform
this Agreement, other than litigation disclosed in
filings by Manager with the Securities and Exchange
Commission. Manager warrants that no litigation so
disclosed in any material way affects or will affect
Lakes' ability to perform under the Agreements.
10.3.4 Certifications. The certifications contained in the
Respondent Certifications attached as Exhibit H to
Manager's Proposal (the "Certificate") are true and
correct as to Manager and as to all Insiders of Manager,
as if each such Insider were the "undersigned
respondent" on such Certificate.
10.4 Manager Covenants. Manager covenants and agrees as follows:
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10.4.1 Noninterference in Band Affairs. Manager agrees not to
interfere in or attempt to wrongfully influence the internal
affairs or government decisions of the Band government by
offering cash incentives, by making written or oral threats to
the personal or financial status of any person, or by any
other action, except for actions in the normal course of
business of Manager that relate to the Enterprise. For the
purposes of this ss. 10.4.1, if any such undue interference in
Band affairs is alleged by the Pokagon Council and the NIGC
finds that Manager has unduly interfered with the internal
affairs of the Band government and has not taken sufficient
action to cure and prevent such interference, that finding of
interference shall be grounds for termination of the
Agreement. Manager shall be entitled to immediate written
notice and a complete copy of any such complaint to the NIGC.
10.4.2 Prohibition of Payments to Members of Band Government. Manager
represents and warrants that no payments have been or will be
made by Manager or any Affiliate or Insider of Manger to any
Member of the Band Government, any Band official, any Relative
of a Member of Band Government or Band official, any Band
Government employee, any agent of the Band, or any entity
known by Manager to be associated with any such person, for
the purpose of obtaining any special privilege, gain,
advantage or consideration.
10.4.3 Prohibition of Hiring Members of Band Government. No Member
of the Band Government, Band official, Relative of a Member of
the Band Government or Band official or employee of the Band
Government may be employed at the Enterprise without a written
waiver of this ss.10.4.3 by the Band. For this purpose, the
Band will identify all such persons to Manager in a writing
and take reasonable steps to keep the list current; Manager
shall not be held responsible if any person not on such
written list is employed.
10.4.4 Prohibition of Financial Interest in Enterprise. No Member
of the Band Government or Relative of a Member of the Band
Government shall have a direct or indirect financial interest
in the Enterprise greater than the interest of any other
member of the Band; provided, however, nothing in this
subsection shall restrict the ability of a Band member to
purchase or hold stock in Manager where (i) such stock is
publicly held and (ii) the Band member acquires less than 5%
of the outstanding stock in the corporation.
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10.4.5 No Amendment. Manager 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.
10.4.6 CRC. CRC shall not during the Term of the Management Agreement
(a) be directly or indirectly affiliated with Manager or the
Facility, whether as joint venturer or otherwise, (b) be
employed by Manager or, to the knowledge of Manager, any
entity having any contractual relationship with Manager, with
regard to the Facility, or (c) directly or indirectly receive
any payment or anything of value from Manager from or out of
the Management Fee or any other payment made to Manager by the
Band or the Facility. Manager 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 Manager of a certain Conditional
Release and Termination Agreement between Lakes and CRC dated
May 20, 1999, as amended by Amendment dated on or about July
7, 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.
Manager 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 Manager may hold stock of CRC as collateral for Manager's
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.
10.5 No Liens. Subject to the exceptions stated in ss. 10.6, the Band
specifically warrants and represents to Manager that during the
term of this Agreement the Band shall not act in any way
whatsoever, either directly or indirectly, to cause any person or
entity to become an encumbrancer or lienholder of the Gaming Site
or the Facility. Manager specifically warrants and represents to
the Band that during the term of this Agreement Manager shall not
act in any way, directly or indirectly, to cause any person or
entity to become an encumbrancer or lienholder of the Gaming Site
or the Facility,
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or to obtain any interest in this Agreement without the prior
written consent of the Band, and, where applicable, the United
States. The Band and Manager shall keep the Facility and Gaming
Site free and clear of all enforceable mechanics' and other
enforceable liens resulting from the construction of the Facility
and all other enforceable liens which may attach to the Facility or
the Gaming Site, which shall at all times remain the property of
the United States in trust for the Band.
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10.6 Permitted Liens. The Band shall have the right to grant the
following liens and security interests pertaining to the Enterprise
and the Facility:
10.6.1 The purchase money security interest in Furnishings and
Equipment granted to the Equipment Lender to secure the
Equipment Loan;
10.6.2 Security interests in Facility or Enterprise revenues,
subordinate to the right of Manager to receive payment of
Management Fees and payments on the Lakes Development Loan;
10.6.3 Security interests in Facility or Enterprise assets, as
provided in ss. 9.2.4(ii) of the Development Agreement; and
10.6.4 Other liens and security interests in assets of the Facility
and Enterprise with the written consent of Manager and the
Bank Lender, which consent will not be unreasonably withheld.
10.7 Authority to Execute and Perform Agreement. The Band and
Manager represent and warrant to each other that they each
have full power and authority to execute this Agreement and to
be bound by and perform the terms hereof. On request, each
party shall furnish the other evidence of such authority.
10.8 Brokerage. Manager and the Band represent and warrant to each other
that neither has sought the services of a broker, finder or agent
in this transaction, and neither has employed, nor authorized, any
other person to act in such capacity. Manager and the Band each
hereby agrees to indemnify and hold the other harmless from and
against any and all claims, loss, liability, damage or expenses
(including reasonable attorneys' fees) suffered or incurred by the
other party as a result of a claim brought by a person or entity
engaged or claiming to be engaged as a finder, broker or agent by
the indemnifying party; subject, as to Manager's relations with
CRC, to the provisions of ss. 10.4.6.
11 DEFAULT
11.1 Events of Default by the Band. Each of the following shall be an
event of default by the Band under this Agreement ("Band Event of
Default"):
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11.1.1 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.
11.1.2 Any of the representations and warranties made by the Band in
ss. 10.1 of this Agreement were not true when made or would
not be true if made on the date such performance would
otherwise be due.
11.1.3 The Band violates the provisions of ss.9.1 of this Agreement,
subject to notice and right to cure.
11.1.4 The Band commits any Material Breach of the Development
Agreement which is not cured within any applicable cure
period.
If any Band Event of Default occurs, Manager may, upon written
notice to Band, exercise the rights and remedies available to
Manager provided in this Agreement; provided, however, that all
such rights and remedies shall be Limited Recourse.
11.2 Events of Default by Manager. Each of the following shall be an
event of default by Manager under this Agreement ("Manager Event of
Default"):
11.2.1 Any Minimum Guaranteed Monthly Payment, Monthly Distribution
Payment or other payment due the Band under this Agreement is
not paid within ten (10) days after its due date.
11.2.2 Manager shall commit any other Material Breach of any of
Manager's obligations under this Agreement.
11.2.3 Any representation or warranty that Manager 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.
11.2.4 Manager violates the provisions of Article 9 of this
Agreement applicable to Manager, subject to rights of notice
and cure to the extent provided in that Article.
11.2.5 Manager commits any Material Breach of the Development
Agreement which is not cured within any applicable cure
period.
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11.2.6 NIGC Disapproval occurs.
11.2.7 Manager violates Legal Requirements in the management of the
Enterprise, including without limitation the Band Gaming
Ordinance, and such violation is not cured within (i) thirty
(30) days after notice, as to the Band Gaming Ordinance or
any other gaming laws or regulations, or (ii) within a
reasonable period, not to exceed 90 days, as to any other
Legal Requirements.
If any Manager Event of Default occurs, the Band may, upon written
notice to Manager, exercise the rights and remedies available to
the Band provided in this Agreement.
11.3 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 13. The
discontinuance or correction of a Material Breach shall constitute
a cure thereof.
12 TERMINATION
12.1 Voluntary Termination. This Agreement may be terminated by mutual
written consent.
12.2 Termination if No NIGC Approval. The Band and Manager may each
unilaterally terminate the Agreements by written notice if NIGC
Approval has not occurred within five years after execution of the
Agreements.
12.3 Manager Right to Terminate on Band Event of Default. Manager shall
be entitled to terminate the Agreements (i) upon a Band Event of
Default or (ii) as specifically provided in the Agreements, subject
to right to cure and arbitration as provided in this Agreement.
12.4 Band Right to Terminate on Manager Event of Default. The Band shall
be entitled to terminate the Agreements (i) upon a Manager Event of
Default or
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(ii) as specifically provided in the Agreements, subject to right
to cure and arbitration as provided in this Agreement.
12.5 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. Manager shall notify the Band in the event of any Material
Adverse Change.
ii. Manager shall send to the Band copies of all filings by
Manager 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 Manager in writing and
shall request specified further assurances of Manager's
continued ability to perform under the Agreements.
iv. Within thirty (30) days after that notification Manager 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
assurances, shall tender such further assurances as it deems
sufficient to ensure its continued ability to perform under
the Agreements.
v. If Manager denies the Material Adverse Change or disputes
that the requested further assurances are reasonably required
to assure the Band of Manager'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 Manager's continued ability to perform under the
Agreements; and (C) if a Material Adverse Change has occurred
but the requested further assurances are not
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reasonably required to so assure the Band, what further
assurances must be provided by Manager to reasonably assure
the Band of Manager's continued ability to perform under the
Agreements. Any further assurances required under the
arbitrator's award must be furnished by Manager within thirty
(30) days after entry of the award.
vi. If Manager admits the Material Adverse Change but does not
furnish further assurances, or if Manager does not timely
provide further assurances pursuant to an arbitrator's award,
the Band may terminate the Agreements by written notice to
Manager.
vii. Manager and the Band agree that the continuing ability of
Manager 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.
12.6 Termination if Manager License Withdrawn or on Conviction. The Band
may also terminate this Agreement immediately where Manager has had its
gaming license withdrawn in any jurisdiction by final administrative
action (the finality of which shall be determined without regard to
pending or possible judicial review or appeal), or if Manager, or an
Insider of Manager, has been convicted of a criminal (i) felony or (ii)
misdemeanor offense involving gaming, fraud or moral turpitude;
provided, however, the Band may not terminate this Agreement based on a
director or officer's conviction where Manager terminates such
individual within ten (10) days after receiving notice of the
conviction.
12.7 Termination on Buy-Out. This Agreement shall terminate if the Band
exercises its option to buy out the Agreement in accordance with ss. 8.
12.8 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
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Agreements shall be of no further force and effect as of 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, Manager shall be entitled to damages as
provided in ss. 14.4 of the Development Agreement 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 it pursuant to the
Agreements, 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
Manager, or owed to Manager as subrogee (to the extent
Manager has paid under such guarantees) shall be repaid to
Manager in accordance with the Limited Recourse terms of the
Lakes Note and the Development Agreement;
(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 the Development Agreement; and
(D) Any Net Revenues accruing through the date of
termination shall be distributed in accordance with Article 5
of this Agreement.
13 DISPUTE RESOLUTION; LIQUIDATED DAMAGES
13.1 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 13 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
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arbitration or enforcing any arbitration award or judgment arising out
of this Agreement, the Transition Loan Note, the Lakes Note, the
Non-Gaming Land Acquisition Line of Credit, the Development 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. 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 ss. 13.3.1 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.
13.2 Arbitration. All disputes, controversies or claims arising out of or
relating to this Agreement or other obligations between Manager and the
Band 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.
13.2.1 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.
13.2.2 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.
13.2.3 Confidentiality. The parties and the arbitrator(s) shall
maintain strict confidentiality with respect to the
arbitration.
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13.3 Limitation of Actions. The Band's waiver of immunity from suit is
specifically limited to the following actions and judicial remedies:
13.3.1 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 (i)
undistributed or future Net Revenues of the Facility; (ii) as
to the Equipment Loan, the Furnishings and Equipment securing
that Loan; (iii) 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; (iv) as to the Non- Gaming
Acquisition Line of Credit, mortgages on the Non-Gaming Lands
prior to their transfer into trust; and (v) 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.
13.3.2 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.
13.3.3 Injunctive Relief and Specific Performance. The enforcement of
a determination by an arbitrator that prohibits the Band from
taking any action that would prevent Manager 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 Facility; and
shall not relate to any asset of the Band other than the
Facility.
13.3.4 Action to Compel Arbitration. An action to compel arbitration
pursuant to this Article 13.
13.4 Damages on Termination for Failure to Obtain NIGC Approval. In the
event of termination of this Agreement under ss.12.2 because NIGC
Approval has not been obtained within five years after execution of the
Agreements, the Band shall be responsible for damages as provided in
ss. 14.4 of the Development Agreement but shall not be liable for
additional damages under this Agreement.
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13.5 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:
13.5.1 Liquidated Damages Payable by Manager. In the event of a
Manager Event of Default prior to the Commencement Date, after
such notice and right to cure as may be provided in this
Agreement, Manager shall pay liquidated damages as provided in
ss. 14.5(i) of the Development Agreement and shall not be
liable for additional damages under this Agreement.
13.5.2 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 pay liquidated damages as provided in ss.
14.5(ii) of the Development Agreement and shall not be liable
for additional damages under this Agreement.
13.6 Manager Continuing Obligations. Nothing in this Article shall
affect or impair Manager's continuing obligations under ss.ss.
9.3 (non-competition) and 18.15 (confidentiality) of this
Agreement, all of 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. 9.3, the greater of five years after execution of the
Agreements or one year after termination; and (ii) as to ss.
18.15, the greater of five years after execution of the
Agreements or two years after termination.
13.7 Termination of Exclusivity. Section 9.1 (Exclusivity in
Michigan) of this Agreement shall terminate upon any
termination of the Agreements, notwithstanding any breach of
the Agreements by the Band.
13.8 Remedies. In consideration of the agreement to liquidated
damages to the extent provided above, the Band and Manager
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
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otherwise specified, be entitled to such 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).
13.9 Band Injunctive Relief. Manager and Band acknowledge and agree
that termination of this Agreement and payment of damages may
not be a sufficient or appropriate remedy for breach by the
Manager, and further agree that the Band shall, upon breach of
this Agreement by the Manager, have the right to pursue such
remedies (in addition to termination) at law or equity as it
determines are best able to compensate it for such breach,
including specifically actions to require payment of the
Minimum Guaranteed Monthly payment and the Monthly
Distribution Payment. The Manager specifically acknowledges
and agrees that there will be irreparable harm to the Band and
that damages will be difficult to determine if a Manager Event
of Default occurs, and the Manager therefor further
acknowledges that an injunction and/or other equitable relief
will be an appropriate remedy for any such breach.
13.10 No Setoff Against Payments to Band. The Band's right to
payment of the Minimum Guaranteed Monthly Payments and the
Monthly Distribution Payments until termination shall be
absolute and not subject to setoff or recoupment.
13.11 Indemnification on Termination. In the event of termination,
(i) Manager shall indemnify and hold the Band harmless against
all loss, liability, damage and expense from or arising out of
any acts or omissions of Manager prior to termination in
violation of, or beyond the scope of its authority under, this
Agreement; and (ii) the Band shall indemnify and hold Manager
harmless against all loss, liability, damage and expense from
or arising out of any acts of Manager prior to termination
pursuant to and in accordance with the terms of this
Agreement. This covenant shall survive any termination.
13.12 Fees not Damages. In no event shall fees or other
non-refundable payments made by Manager to Band, or Tribal
Distributions, constitute damages to Manager or be repayable
by the Band.
13.13 Undistributed Net Revenues. If on termination the Enterprise
has accrued Net Revenues which have not been distributed under
ss. 5 of this Agreement,
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Manager shall receive that Management Fee equal to the
Management Fee it would have received for the period prior to
termination had the distribution occurred during the term of
the Management Agreement, subject to the Band's right of
setoff and recoupment.
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14 CONSENTS AND APPROVALS
14.1 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.
14.2 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.
14.3 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.
15 DISCLOSURES
15.1 Shareholders and Directors. Manager warrants that on the date
of this Agreement its Affiliates, directors, officers and
shareholders owning five percent (5%) or more of the stock of
Manager are those listed on EXHIBIT A.
15.2 Warranties. Manager further warrants and represents as
follows:
15.2.1 No officer, director or individual owner of five
percent (5%) or more of the stock of Manager or any
Affiliate of Manager has been arrested, indicted for,
convicted of, or pleaded nolo contendere to any
felony or any gaming offense, or had any association
with individuals or entities known to be connected
with organized crime, except, as to Lyle Berman, an
arrest prior to 1980 for a gaming offense that did
not result in a conviction; and
15.2.2 No person or entity listed on EXHIBIT A to this
Agreement, including any officers and directors of
Manager, has been arrested, indicted for, convicted
of, or pleaded nolo contendere to any felony or any
gaming offense, or had any association with
individuals or entities known to be connected with
organized crime, except, as to Lyle
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Berman, an arrest prior to 1980 for a gaming offense
that did not result in a conviction.
15.2.3 Manager agrees that all of its directors and officers
and any individual owners of five percent (5%) or
more of the stock of Manager (whether or not involved
in the Enterprise), shall:
15.2.3.1 consent to background investigations to be
conducted by the Band, the State, the
Federal Bureau of Investigation (the "FBI")
or any law enforcement authority to the
extent required by the IGRA and the Compact;
15.2.3.2 be subject to licensing requirements in
accordance with Band law and this Agreement;
15.2.3.3 consent to a background, criminal and credit
investigation to be conducted by or for the
NIGC, if required;
15.2.3.4 consent to a financial and credit
investigation to be conducted by a credit
reporting or investigation agency at the
request of the Band;
15.2.3.5 cooperate fully with such investigations;
and
15.2.3.6 disclose any information requested by the
Band which would facilitate the background
and financial investigation.
Any materially false or deceptive disclosures or failure to cooperate
fully with such investigations by an employee of Manager or an employee of the
Band shall result in the immediate dismissal of such employee. The results of
any such investigation may be disclosed by the Band to federal officials and to
such other regulatory authorities as required by law.
15.3 Disclosure Amendments. Manager agrees that whenever there is
any material change in the information disclosed pursuant to
this Article 15 it shall notify the Band of such change not
later than thirty (30) days following the change or within ten
days after it becomes aware of such change, whichever is
later. The Band shall, in turn, provide the Secretary of the
Interior and/or the NIGC (whichever is applicable) copies of
any such notifications. All of the warranties and agreements
contained in this
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Article 15 shall apply to any person or entity who would be
listed in this Article 15 as a result of such changes.
15.4 Breach of Manager's Warranties and Agreements. The material
breach of any warranty or agreement of Manager contained in
this Article 15 shall be grounds for immediate termination of
this Agreement; provided that (a) if a breach of the
warranties contained in ss.ss. 15.2.2 or 15.2.3 is discovered,
and such breach was not disclosed by any background check
conducted by the FBI as part of the BIA or other federal
approval of this Agreement, or was discovered by the FBI
investigation but all officers and directors of Manager sign
sworn affidavits that they had no knowledge of such breach,
then Manager shall have thirty (30) days after notice from the
Band to terminate the interest of the offending person or
entity and if such termination takes place, this Agreement
shall remain in full force and effect; and (b) if a breach
relates to a failure to update changes in financial position
or additional gaming related activities, then Manager shall
have thirty (30) days after notice from the Band to cure such
default prior to termination.
16 NO PRESENT LIEN, LEASE OR JOINT VENTURE. The parties agree and
expressly warrant that neither the Management Agreement nor any exhibit
thereto is a mortgage or lease and, consequently, does not convey any
present interest whatsoever in the Facility or the Gaming Site, nor any
proprietary interest in the Enterprise itself. The parties further
agree and acknowledge that it is not their intent, and that this
Agreement shall not be construed, to create a joint venture between the
Band and Manager; rather, Manager shall be deemed to be an independent
contractor for all purposes hereunder.
17 CONCLUSION OF THE MANAGEMENT TERM. Upon the conclusion or the
termination of this Agreement, Manager shall take reasonable steps for
the orderly transition of management of the Enterprise to the Band or
its designee pursuant to a transition plan; such transition period
shall be for a reasonable period but not less than sixty days. Manager
shall cooperate fully with the Band in that regard. No later than four
months before the expiration of the Term of this Agreement, Manager
shall submit to the Business Board and the Band a transition plan which
shall be sufficient to allow the Band to operate the Enterprise and
provide for the orderly transition of the management of the Enterprise.
18 MISCELLANEOUS
18.1 Situs of the Contracts. This Agreement, as well as all contracts
entered into between the Band and any person or any entity providing
services to the Enterprise, shall be deemed entered into in Michigan,
and shall be subject to all
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Legal Requirements of the Band and federal law as well as approval by
the Secretary of the Interior where required by 25 U.S.C. ss. 81 or by
the Chairman of the NIGC where required by the IGRA.
18.2 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
and to:
Robert Gips, Esq.
Gips and Associates
71 Myrtle Avenue, Suite 2000
South Portland, ME 04106
If to Manager:
Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
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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 Manager 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, whichever first occurs.
18.3 Relationship. Manager 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.
18.4 Further Actions. The Band and Manager 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.
18.5 Waivers. No failure or delay by Manager 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 or 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 wavier 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.
18.6 Captions. The captions for each section and subsection are intended for
convenience only.
18.7 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
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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.
18.8 Advances. Except as otherwise provided in the Agreements, any amounts
advanced by Manager or the Band related to the operation of the
Enterprise shall accrue interest at the Band Interest Rate and shall be
treated according to GAAP.
18.9 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 as such are authorized by this Agreement.
18.10 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.
18.11 Estoppel Certificate. Manager 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 and such other information
relating to the Enterprise as may be reasonably requested.
18.12 Periods of Time; Time of 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.
18.13 Exhibits. All exhibits attached hereto are incorporated herein by
reference and made a part hereof as if fully rewritten or reproduced
herein.
18.14 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.
18.15 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
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nature (the "Confidential Information") will be treated by both parties
in full confidence and except as required to allow Manager 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. 13.6. 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 Manager 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 Manager was already rightfully in any such
persons' possession; (c) which is obtained by the Band or Manager 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 Manager, with respect to such Confidential Information and
who does not require the Band or Manager to refrain from disclosing
such Confidential Information to others; or (d) by the Band, if such
Confidential 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.
18.16 Patron Dispute Resolution. Manager shall submit all patron disputes
concerning play to the Gaming Regulatory Authority pursuant to the Band
Gaming Ordinance, and the regulations promulgated thereunder.
18.17 Modification. Any change to or modification of this Agreement must be
in writing signed by both parties hereto and shall be effective only
upon approval by the Chairman of the NIGC, the date of signature of the
parties notwithstanding.
18.18 Entire Agreement. This Agreement, including the Schedules and Exhibits
referred to herein and any documents executed by the parties
simultaneously herewith, including the Development Agreement, the Lakes
Note, the Transition Loan Note, the Non-Gaming Acquisition Line of
Credit, the Control Agreement and the Security Agreement which are
expressly incorporated herein by reference, constitutes the entire
understanding and agreement of the parties hereto and supersedes all
other prior agreements and understandings, written or oral between the
parties.
18.19 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
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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 Manager under this Agreement or any other
agreement or document related hereto.
18.20 Preparation of Agreement. This Agreement was drafted and entered into
after careful review and upon the advice of competent counsel; it shall
not be construed more strongly for or against either party.
18.21 Consents. Except where expressly indicated that an agreement or consent
is in the sole or unilateral discretion of a party, no agreement or
consent under this Agreement shall be unreasonably withheld or delayed.
18.22 Execution. This Agreement may be executed in four counterparts, two to
be retained by each party. Each of the four originals is equally valid.
This Agreement shall be binding upon both parties when properly
executed and approved by the Chairman of the NIGC (the "Effective
Date").
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
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Its Secretary
Approved pursuant to 25 U.S.C. ss.2711
NATIONAL INDIAN GAMING
COMMISSION
By
------------------------------
Print name:
---------------------
Its Chairperson
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