EXHIBIT 10.1
FIRST AMENDED AND RESTATED
MEMORANDUM OF AGREEMENT
REGARDING
GAMING DEVELOPMENT
AND
MANAGEMENT
AGREEMENT
BETWEEN
SHINGLE SPRINGS BAND OF MIWOK INDIANS
A FEDERALLY RECOGNIZED TRIBE
AND
LAKES KAR-SHINGLE SPRINGS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED: OCTOBER 13,2003
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THIS FIRST AMENDED AND RESTATED MEMORANDUM OF AGREEMENT, is made and
entered into this 13 day of October, 2003 by and between the Shingle Springs
Band of Miwok Indians, a federally recognized Indian tribe (hereinafter referred
to as ("the Tribe"), located in the State of California with tribal offices
located at X.X. Xxx 0000, Xxxxxxx Xxxxxxx, Xxxxxxxxxx 00000 and Lakes
KAR-Shingle Springs, LLC, a Delaware limited liability company (hereinafter
referred to as "LKAR"), whose business office is located at 000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000.
RECITALS
A. The Tribe is a federally recognized Indian tribe eligible for the
special programs and services provided by the United States to Indians because
of their status as Indians and is recognized as possessing powers of
self-government.
B. The United States government holds lands in the State of California in
trust for the benefit of the Tribe ("Tribal Lands") over which the Tribe
possesses sovereign governmental powers, and the Tribe intends to acquire other
lands to be held also in trust for the Tribe by the federal government and over
which the Tribe will possess sovereign governmental powers.
C. In compliance with the Indian Gaming Regulatory Act of 1988, P.L.
100-497, 25 U.S.C. 2701 et seq. as it may from time to time be amended, the
Tribal Council of the Tribe has enacted a tribal ordinance regulating the
operation of gaming activities on Tribal Lands (hereinafter referred to as the
"Tribal Gaming Ordinance"), creating the Shingle Springs Tribal Gaming
Commission, and authorizing Class II Gaming and Class III Gaming on its Tribal
Lands subject to the provisions of the Tribal Gaming Ordinance and a
Tribal-State Compact.
D. The Tribe is committed to the use of gaming activities to provide
employment and improve the social, economic, education, and health needs of its
members; to increase the revenues of the Tribe; and to enhance the Tribe's
economic self-sufficiency and self-determination.
E. The Tribe presently lacks the resources to develop and operate a gaming
facility and enterprise on its own and desires to retain the services of a
developer and manager with knowledge and experience in the gaming industry to
secure financing, develop, manage and operate a Class II Gaming and Class III
Gaming facility and related resort facilities located on its Indian lands in
accordance with the Indian Gaming Regulatory Act of 1988, as amended.
F. LKAR has represented to the Tribe that it has the managerial and
financial capacity to provide and secure financing for the funds necessary to
develop and construct the Facility, as defined herein, and to commence operation
of the Enterprise, as defined herein; and LKAR agrees to assist the Tribe in
obtaining the capital investment necessary to the development of gaming
facilities, and provide the management expertise necessary to the conducting of
successful tribal gaming operations.
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X. Xxxx Argovitz Resorts-Shingle Springs, L.L.C. ("KARSS") entered into
Development and Management Agreements with the Shingle Springs Band of Miwok
Indians (the "Tribe") dated June 11, 1999 (the "Development and Management
Agreements"), pursuant to which KARSS was to develop and manage a gaming
facility and certain related facilities to be owned by the Tribe. Lakes Gaming,
Inc. and KARSS entered into an agreement under which they agreed to form LKAR to
assume the rights and obligations of KARSS in connection with the Development
and Management Agreements. KARSS has assigned its rights and obligations under
the Development and Management Agreements to LKAR pursuant to the terms of an
Assignment and Assumption Agreement.
H. In connection with the development and construction of the Facility, as
defined herein, and the operation and management of the Enterprise, as defined
herein, LKAR and the Tribe entered into a Memorandum of Agreement Regarding
Gaming Development and Management Agreement dated May 5, 2000 ("May 5, 2000
Memorandum of Agreement"). Pursuant to the May 5, 2000 Memorandum of Agreement
and by tribal resolution, the Tribe consented to the assignment of the
Development and Management Agreements to LKAR by KARSS and LKAR's assumption of
KARSS's rights and responsibilities under the Development and Management
Agreements.
I. In accordance with LKAR's assumption of KARSS's rights and
responsibilities under the Development and Management Agreements, the Tribe
granted to LKAR the exclusive right and obligation to develop, manage, operate
and maintain the Facility and Enterprise as described in the May 5, 2000
Memorandum of Agreement, which was intended by the parties thereto to supercede
and replace the Development and Management Agreements.
J. The May 5, 2000 Memorandum of Agreement (and related exhibit documents)
between the Tribe and LKAR has been submitted for approval to the National
Indian Gaming Commission ("NIGC"); NIGC staff have reviewed the May 5, 2000
Memorandum of Agreement (and related exhibit documents) and have requested
certain modifications to the documents prior to issuing NIGC approval; the Tribe
and LKAR have made such modifications to the documents as they have deemed
necessary; such modifications are incorporated herein and, accordingly, the
Tribe and LKAR agree to enter into this First Amended and Restated Memorandum of
Agreement Regarding Gaming Development and Management Agreement ("Amended
Memorandum Agreement") and related Transaction Documents in connection with the
Project. The parties hereto intend that this Amended Memorandum Agreement is to
supercede and replace the May 5, 2000 Memorandum of Agreement.
K. This Amended Memorandum Agreement shall become effective when all the
necessary approvals listed in Section 3.19 of this Amended Memorandum Agreement
are received (the "Effective Date") and shall continue for a term of seven (7)
years from the Commencement Date, or as otherwise provided in this Amended
Memorandum Agreement.
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L. The Tribe and LKAR desire that the preliminary Facility design and
development work will be done (but not the Facility construction or Enterprise
operation) so the Project may proceed prior to receipt of necessary regulatory
approvals.
M. The Tribe and LKAR desire to take all lawful steps reasonably possible
prior to the receipt of the necessary regulatory approvals: (i) to obtain a
preliminary commitment for financing of the Facility, (ii) to select and develop
the site for the Facility, (iii) to design the Facility, and (iv) to enter into
contracts to construct and equip the Facility so that the Facility can be opened
to the public as soon as possible after the receipt of all necessary regulatory
approvals.
N. LKAR desires to advance to the Tribe, subject to the terms and
conditions of the Transition Loan described herein, sums sufficient to finance
performance of the preliminary development work described immediately above and
for other purposes. The Tribe and LKAR agree that all sums previously advanced
to the Tribe by KARSS under the superceded Development and Management
Agreements, and by LKAR under the superceded May 5, 2000 Memorandum of
Agreement, shall constitute advances by LKAR to the Tribe hereunder, be credited
to LKAR's obligations hereunder, and shall be subject to the terms of the
Transition Loan or the Land Acquisition Loan herein, as applicable.
O. The Tribe has selected LKAR, and the LKAR has agreed, to assist the
Tribe in obtaining permanent financing for the Project, subject to the terms and
conditions of the Facility Loan described herein, and to furnish technical
experience and expertise for the development and design of the Project, and for
contracting for the construction, furnishing and equipping of the Project.
P. This Amended Memorandum Agreement is entered into pursuant to the
Indian Gaming Regulatory Act of 1988, P.L. 100-497, 25 U.S.C. 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 tribal law and the
Tribal-State Compact.
Q. Any dispute regarding this Amended Memorandum Agreement between the
parties or any other Transaction Documents is to be subject to the dispute
resolution and governing law provisions contained herein, as well as the
Resolution of Limited Waiver attached hereto.
NOW, THEREFORE, in consideration of the hereinafter mutual promises and
covenants, and for other good and valuable consideration as set forth herein,
the receipt and sufficiency of which are expressly acknowledged, the Tribe and
LKAR agree as follows:
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ARTICLE 1.
DEFINITIONS
As they are used in this Amended Memorandum Agreement, the terms listed
below shall have the meaning assigned to them in this Article:
1.1 "Access Land Transfer Agreement" shall mean the Access Land Transfer
Agreement described in Section 2.1(b) to be executed simultaneously herewith by
the parties hereto in connection with providing access to Tribal Lands, together
with all amendments, substitutions and renewals thereof.
1.2 "Amended Memorandum Agreement" means the two agreements contained in
this document, the Development Agreement and the Management Agreement, and all
amendments hereto.
1.3 "Approved Construction Budget" means the budget prepared in the manner
set forth in Section 2.2(b) in connection with the development and construction
of the Facility, which has been approved by Developer and the Tribe.
1.4 "Acquired Tribal Lands" shall have the meaning set forth in Section
2.1(b).
1.5 "BIA" means the United States Department of Interior Bureau of Indian
Affairs.
1.6 "Chairperson" means the Tribal Chairperson as defined by the Tribe's
governing documents.
1.7 "Class II Gaming" means games as defined in 25 U.S.C. Section 2703
(7)(A), as such law may be amended and as defined by the National Indian Gaming
Commission in 25 C.F.R. Section 502.3 and amendments thereto, but only to the
extent such games are authorized by tribal ordinance and licensed by the Tribal
Gaming Commission.
1.8 "Class III Gaming" means all gaming that is not Class I or Class II
Gaming as defined in the IGRA, including, but not limited to, the forms of
gaming listed as Class III games by the National Indian Gaming Commission in 25
C.F.R. Section 502.4 and amendments thereto, but only to the extent such gaming
is allowed by the Tribal-State Compact, tribal ordinance, and licensed by the
Tribal Gaming Commission.
1.9 "Commencement Date" means the first day upon which the Facility is
open to the public to engage in gaming activities.
1.10 "Completion" means the completion of the Facility, or portions
thereof, in substantial accordance with the Plans and Specifications, as
evidenced by a completion certificate from the Architect that the Facility, or
portions thereof, have been substantially completed in accordance with
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the Plans and Specifications, and by the issuance of a certificate of occupancy
by the tribal governmental agency having jurisdiction, and certificates of such
professional designers, inspectors or consultants or opinions of counsel, as
LKAR may reasonably determine to be appropriate, verifying construction and
furnishing of the Facility is in compliance with all Legal Requirements.
1.11 "Construction Contract" means the contract between the Tribe and the
General Contractor described in Section 2.4(b), together with all amendments,
substitutions and renewals thereof.
1.12 "Costs of Construction" means all costs incurred by the Tribe or LKAR
pursuant to this Amended Memorandum Agreement in the aggregate to develop,
construct and complete the Facility, including, without limitation, labor,
materials, all furniture, fixtures and equipment (including gaming equipment)
necessary for the opening of the Facility to the public, builder's risk
insurance, surveys, permits, interest on the Facility Loan, Land Acquisition
Loan or Transition Loan incurred prior to the opening of the Facility to the
public, payment and performance bonds, architectural plans and services, and a
resort feasibility study, but excluding Initial Costs of Operation. The final
amount of costs to be included in the Costs of Construction shall be determined
by mutual agreement of the parties and shall be documented in the Approved
Construction Budget.
1.13 "Costs of Gaming Operations" means the total of all expenses for the
operation of the Enterprise's Class II Gaming and III Gaming activities pursuant
to Generally Accepted Accounting Principles ("GAAP"), including but not limited
to the following: (1) all fees imposed by the Tribal Gaming Commission,
including but not limited to fees based upon the Enterprise's gross receipts
from operation of Class II Gaming and Class III Gaming at the Facility, (2) fees
imposed upon the Enterprise by the National Indian Gaming Commission based upon
its gross receipts from Class II Gaming and Class III Gaming, (3) all funds
required by the Tribal-State Compact to be paid by the Tribe, including but not
limited to any contributions and license/regulatory fee reimbursements payable
to the State pursuant to the Tribal-State Compact, (4) the amount required by
the Tribal-State Compact to fund or support programs for the treatment and
assistance of compulsive gamblers and for the prevention of compulsive gambling,
(5) license or other fees for background investigations upon "key employees" and
"primary management officials", (6) depreciation applicable to the portion of
the Facility in which the Enterprise operates Class II Gaming and Class III
Gaming and depreciable items located therein, (7) costs of administration,
hiring, firing and training employees working in or for the Enterprise's Class
II Gaming and Class III Gaming activities, (8) compensation and benefits to such
employees, (9) management compensation to be paid Manager under Section 6.5(b)
hereof, and (10) total gaming-related costs, fees and expenses, including,
without limitation, materials, supplies, inventory, utilities, repairs,
maintenance, insurance, bonding, marketing, advertising, annual audits,
accounting, legal or other professional and consulting services, security or
guard services, and such other costs, expenses or fees necessarily, customarily
and reasonably incurred in the operation of the Enterprise's Class II Gaming and
Class III Gaming, and necessary travel expenses incurred subsequent
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to the Commencement Date for officers and employees of Manager and authorized
representatives of the Tribe in connection with the Project; provided, however,
that "Costs of Gaming Operations" shall specifically not include any costs of
background investigation of Manager or its employees in connection with the NIGC
or any license fees or costs of background investigations with licensing with
the Tribal Gaming Commission.
1.14 "Costs of Incidental Operations" means all expenses and costs
pursuant to Generally Accepted Accounting Principles incurred in operating the
hotel, restaurants, food and beverage service, office space, swimming pool,
fitness center, childcare, kids arcade, golf course and other commercial
business areas comprising the Facility in which the Enterprise conducts neither
Class II Gaming nor Class III Gaming, including, without limitation: (1)
depreciation and amortization applicable to such non-gaming facilities based
upon an assumed life consistent with GAAP, and depreciation and amortization of
all other assets (including without limitation all capital replacements and
improvements, and fixtures, furnishings and equipment) located therein in
accordance with GAAP; (2) all employment costs relating to non-gaming employees
working in or for such commercial business facilities; (3) management fees; (4)
non-gaming supplies and materials, insurance and other non-gaming costs
reasonably and customarily incurred in operation of such portion of the
Enterprise in which neither Class II Gaming nor Class III Gaming may be
conducted; provided, however, that no non-commercial operations of the Tribe
(including, without limitation, any school, hospital or library) shall be
directly or indirectly included within the computation of the "Costs of
Incidental Operations".
1.15 "Design Agreement" means the contract between the Tribe and the
Architect described in Section 2.2(a).
1.16 "Developer" means Lakes KAR-Shingle Springs, LLC, a Delaware limited
liability company with its business office located at 000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000.
1.17 "Development Agreement" shall mean those provisions of this Amended
Memorandum Agreement that deals with the development and construction of the
Facility, as the same may be amended or modified. The Development Agreement
shall continue until the earlier of either the Commencement Date or June 11,
2004; provided however, that the Notes and Security Provisions shall continue
until all amounts owing to LKAR with respect thereto have been paid in full.
1.18 "Dominion Account" shall have the meaning described in Section 3.8(a)
herein.
1.19 "Dominion Account Agreement" shall mean the Dominion Account
Agreement to be executed by the Tribe in favor of the LKAR in the form agreed to
by the parties thereto, together with all amendments, substitutions and renewals
thereof.
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1.20 "Effective Date" means the effective date of this Amended Memorandum
Agreement as determined pursuant to Section 3.19.
1.21 "Enterprise" means the business enterprise of the Tribe created to
engage in Class II Gaming and Class III Gaming at the Facility, and which shall
include any other lawful commercial activity allowed in or near the Facility
including, but not limited to, operating and managing office space, kids arcade,
child care facility, hotel with swimming pool and golf course, restaurant, RV
park, retail stores, entertainment facilities, or the sale of fuel, food,
beverages, alcohol, tobacco, gifts, and souvenirs.
1.22 "Enterprise Accounts" shall have the meaning described in Section 3.8
herein.
1.23 "Facility" means the permanent buildings, structures and improvements
used by the Enterprise for its gaming and incidental operations located on the
Gaming Site and all Furnishings and Equipment.
1.24 "Facility Loan" means the loan arranged by Developer for the Tribe,
as borrower, in an aggregate principal amount not to exceed three hundred
million dollars ($300,000,000) for Initial Costs of Operation and for Costs of
Construction, which Facility Loan shall be further evidenced by the Facility
Note and other loan documentation as further defined herein.
1.25 "Facility Note" means the promissory note evidencing the Facility
Loan in a form to be agreed to by the parties to the Facility Loan, together
with all amendments, substitutions and renewals thereof.
1.26 "Fiscal Year" means the accounting year used for the operation of the
Enterprise.
1.27 "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 Amended Memorandum Agreement, including, without
limitation:
(i) cashier, money sorting and money counting equipment,
surveillance and communication equipment, and security equipment;
(ii) slot machines, video games of chance, table games, keno
equipment and other gaming equipment;
(iii) office furnishings and equipment;
(iv) specialized equipment necessary for the operation of any
portion of the Enterprise for accessory purposes, including equipment for
kitchens, laundries, dry cleaning,
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cocktail lounges, restaurants, public rooms, commercial and parking
spaces, and recreational facilities; and
(v) hotel equipment (to the extent a hotel is included in the
Enterprise);
(vi) all other furnishings and equipment hereafter located and
installed in or about the Facility which are used in the operation of the
Enterprise in accordance with the standards set forth in this Amended
Memorandum Agreement.
1.28 "Gaming Site" shall mean the Tribal Lands located within the exterior
boundaries of the Tribe's reservation (whose legal description is described in
Exhibit A attached hereto), which are held in trust by the United States
government for the benefit of the Tribe, and upon which Class II Gaming and
Class III Gaming may legally be conducted under IGRA and the Tribal-State
Compact.
1.29 "General Contractor" shall mean the person or entity selected by the
Tribe and approved by Developer pursuant to Section 2.4 to construct the
Facility.
1.30 "Generally Accepted Accounting Principles" or "GAAP" means those
principles defined by the Financial Accounting Standards Board consistently
applied to the gaming industry practice.
1.31 "Governmental Authorities" means the United States federal
government, the BIA, the State, the State Gaming Agency, the Tribal Council, the
National Indian Gaming Commission, the Tribal Gaming Commission, and any court,
agency, department, commission, board, bureau or instrumentality, or any of them
to the extent each has legal jurisdiction over the Class II and Class III Gaming
activities, Tribal Lands, the construction and operation of the Facility and
Enterprise thereon, or LKAR's performance under this Amended Memorandum
Agreement.
1.32 "Gross Gaming Revenues" means the Enterprise's total revenue from
Class II Gaming and Class III Gaming activities (excluding any insurance
proceeds received other than business interruption insurance proceeds and
insurance proceeds received to reimburse the Enterprise for any claims included,
or to be included, as Costs of Gaming Operations).
1.33 "Gross Incidental Revenues" means the Enterprise's total receipts
from the sale of food, beverages, souvenirs and any other goods and services
supplied for non-Class II Gaming and non-Class III Gaming activities that are
incidental to the operation of the Enterprise (excluding any insurance proceeds
received other than business interruption insurance proceeds and insurance
proceeds received to reimburse the Enterprise for any claims included, or to be
included, as Costs of Incidental Operations).
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1.34 "Gross Total Revenues" means the total of Gross Gaming Revenues and
Gross Incidental Revenues of the Enterprise.
1.35 "IGRA" means the Indian Gaming Regulatory Act of 1988, P.L. 100-497,
as codified at 25 U.S.C. Section 2701 et. seq., as such may be amended from time
to time.
1.36 "Initial Costs of Operation" means all Costs of Operation advanced to
the Tribe pursuant to Section 2.8 and 6.2, prior to the opening of the Facility
to the public, including, but not limited to, advance payments or deposits to
providers of goods and services, cash for bankrolls and slot hoppers,
pre-opening payroll, cash for payment of prizes, legal, licensing, marketing,
employee hiring and training, all costs associated with grand opening events and
any "fun" nights held prior to the public opening of the Facility, and funding
for the establishment and operation of the Tribal Gaming Commission pursuant to
the terms of Section 4.6.6 of the Management Agreement between the Tribe and KAR
entered on June 11, 1999. Initial Costs of Operation shall also include any
costs incurred by either party for reasonable and necessary travel expenses
incurred subsequent to the execution of the May 5, 2000 Memorandum of Agreement
until the Commencement Date for officers and employees of LKAR or affiliates and
authorized representatives of the Tribe in connection with the Project, and in
obtaining regulatory approval of this Amended Memorandum Agreement (but not any
license fees or costs, including costs pertaining to background investigations
of LKAR or its employees, in connection with licensing by either NIGC or Tribal
Gaming Commission, nor those costs incurred by the parties, prior to execution,
in negotiating the May 5, 2000 Memorandum of Agreement, or any amendments
thereto).
1.37 "Interim Promissory Note" means the promissory note evidencing the
Transition Loan in the form agreed to by the parties hereto, together with all
amendments, substitutions and renewals thereof.
1.38 "Land Acquisition Loan" means the loan or advances made to the Tribe
directly by LKAR pursuant to Section 2.3(a)(ii) and evidenced by the Land
Acquisition Note.
1.39 "Land Acquisition Note" means the promissory note of even date
herewith evidencing the Land Acquisition Loan in the form agreed to by the
parties hereto, together with all amendments, substitutions and renewals
thereof.
1.40 "Legal Requirements" means 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 Tribe, LKAR,
the Tribal Lands, the Gaming Site, the Facility, and the Enterprise, including
without limitation, the IGRA, the Tribal-State Compact, and the Tribal Gaming
Ordinance.
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1.41 "Lender or Other Lender" means any third party who makes the Facility
Loan to the Tribe under Section 2.5 herein.
1.42 "Limited Recourse" means that the Facility Loan, Land Acquisition
Loan and Transition Loan advances, and all liabilities and obligations of the
Tribe related to this Amended Memorandum Agreement, the Facility Loan or
Facility Note, the Land Acquisition Note, the Interim Promissory Note, the
Operating Note, any UCC Financing Statements, any other Transaction Documents
and their applicable documentation, the Facility, or the Enterprise contemplated
by this Amended Memorandum Agreement, and any related awards, judgments or
decrees, shall be payable solely out of undistributed and future Net Total
Revenues of the Enterprise or any other Tribal Gaming Enterprise, and shall be a
limited recourse obligation of the Tribe, with no recourse to tribal assets
other than such undistributed and future Net Total Revenues (except as to: (i) a
security interest in the Furnishings and Equipment purchased with Facility Loan
or Transition Loan proceeds or other purchase money agreements; (ii) the
security interest in the undistributed and future Net Total Revenues pursuant to
the Dominion Account Agreement; and as to any mortgages or deeds of trust on the
Acquired Tribal Lands prior to their transfer in trust). In no event shall LKAR
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 Facility Loan or Transition Loan or other purchase money
agreements), (b) Net Total Revenue distributions already made to the Tribe
pursuant to this Amended Memorandum Agreement and/or the Dominion Account
Agreement, (c) assets of the Tribe purchased with its Net Total Revenue
distributions, or (d) any other asset of the Tribe (other than such
undistributed and future Net Total Revenues of the Enterprise or any other
Tribal Gaming Enterprise).
1.43 "Management Agreement" shall mean those provisions of this Amended
Memorandum Agreement that deals with the management of the Facility and the
Enterprise, as the same may be amended or modified. The Effective Date of the
Management Agreement shall be as set out in Section 3.19.
1.44 "Manager" means Lakes KAR-Shingle Springs, LLC, a Delaware limited
liability company with its business office is located at 000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000.
1.45 "Minimum Guaranteed Monthly Payments" means the minimum monthly
amount payable to the Tribe, which amount shall be determined pursuant to
Section 6.3 hereof.
1.46 "National Indian Gaming Commission" or "NIGC" means the commission
established pursuant to the IGRA.
1.47 "Net Gaming Revenues" means Gross Gaming Revenues less (1) amounts
paid out as, or paid for, prizes; and (2) Costs of Gaming Operation (excluding
management compensation as set forth in Section 6.5 herein).
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1.48 "Net Incidental Revenues" means Gross Incidental Revenues less Costs
of Incidental Operations.
1.49 "Net Total Revenues" means the sum of Net Gaming Revenues plus Net
Incidental Revenues.
1.50 "NIGC Approval" means written approval by the NIGC Chairman of the
Management Agreement provisions herein.
1.51 "Non-Gaming Lands Transfer Agreement" shall mean the Non-Gaming Lands
Transfer Agreement described in Section 2.1(b) to be executed simultaneously
herewith by the parties hereto, together with all amendments, substitutions and
renewals thereof.
1.52 "Notes and Security Provisions" shall have the meaning set forth in
Section 7.4(a) hereof.
1.53 "Operating Note" means the promissory note evidencing the Minimum
Guaranteed Payment Advances under Section 6.3(b) herein and the Working Capital
Advances under Section 6.7 herein made by Manager, substantially in the form
agreed to by the parties hereto, together with all amendments, substitutions and
renewals thereof.
1.54 "Plans and Specifications" means the approved plans, drawings, and
specifications for the Facility pursuant to Section 2.2(b).
1.55 "Project" means the scope of the development project contemplated by
this Amended Memorandum Agreement, established in the Design Agreement and
approved by the parties pursuant to Section 2.2(a).
1.56 "Property" means the Tribal Lands, agreed to by the parties, upon
which the Tribe will build the Facility, and which land is held by the United
States in trust for the Tribe and upon which Class II Gaming and Class III
Gaming may legally be conducted by the Tribe, and any other land or
rights-of-way acquired for development of the Project.
1.57 "Replacement" shall have the meaning described in Section 7.4(b)
herein.
1.58 "Request for Advance" means any request by the Tribe for funds to pay
for Project expenses incurred in connection with either approved Costs of
Construction or Initial Costs of Operation pursuant to either Sections 2.5(a) or
2.5(b).
1.59 "Resolution of Limited Waiver" refers to the limited waiver of
sovereign immunity to be adopted by the Tribe in the form attached hereto as
Exhibit B and evidencing all approvals required pursuant to the Tribe's
governing documents and applicable law.
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1.60 "Scope of Project Description Sheet" shall mean the Scope of Project
Description Sheet dated July 15, 2003, which substantially describes the scope
of Project currently contemplated by the Tribe and LKAR.
1.61 "Secretary" means the Secretary of the Interior of the United States,
or her appropriately designated representative/agent.
1.62 "Security Agreement" shall mean the Security Agreement to be executed
by the Tribe in favor of LKAR in the form agreed to by the parties thereto,
together with all amendments, substitutions and renewals thereof.
1.63 "State" means the State of California.
1.64 "Transaction Documents" shall have the meaning described in Section
10.12(b) herein.
1.65 "Transition Loan" means the loan or advances made to the Tribe
directly by LKAR pursuant to Section 2.3(a)(i) and evidenced by the Interim
Promissory Note.
1.66 "Tribal Council" means the governing body of the Tribe.
1.67 "Tribal Gaming Commission" means the Shingle Springs Tribal Gaming
Commission created by Shingle Springs Tribal Gaming Ordinance, No. 96-4, as such
ordinance now exists or may in the future be amended, with authority to license
and regulate gaming activities on Tribal Lands and which is a subordinate
governmental entity of the Tribe and is entitled to all sovereign governmental
immunity of the Tribe; which ordinance was approved by the NIGC on August 5,
1996.
1.68 "Tribal Gaming Enterprise" shall mean any gaming operations conducted
by the Tribe which are not a part of the Enterprise.
1.69 "Tribal Lands" means all lands presently and in the future held in
trust by the United States for the Tribe and all lands within the confines of
the Shingle Springs Reservation and such lands as may be hereafter added
thereto.
1.70 "Tribal-State Compact" means the agreement between the Tribe and the
State approved on May 16, 2000, as published in the Federal Register, concerning
Class III Gaming and any amendments or other modifications thereto.
1.71 "Tribe" means the Shingle Springs Band of Miwok Indians.
1.72 "UCC Financing Statements" means UCC-1 financing statements naming
Tribe as debtor and naming the Lender and LKAR as secured parties, in the form
approved by the parties.
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1.73 "Working Capital Advances" shall have the meaning described in
Section 6.7 herein.
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DEVELOPMENT AGREEMENT PROVISIONS
ARTICLE 2.
GAMING SITE SELECTION; CONSTRUCTION AND FINANCING
2.1 Gaming Site Selection.
(a) The Tribal Council and LKAR have mutually agreed that the site
to be used for constructing the Facility ("Gaming Site") shall be those Tribal
Lands located within the exterior boundaries of the Tribe's reservation (whose
legal description is described in Exhibit A attached hereto), which are held in
trust by the United States government for the benefit of the Tribe, and upon
which Class II Gaming and Class III Gaming may legally be conducted under IGRA
and the Tribal-State compact.
(b) It is understood that the parties intend that LKAR will transfer
its interests in certain lands held by its designees, nominees or members to the
Tribe pursuant to the terms and conditions of, respectively, the parties' Access
Land Transfer Agreement and their Non-Gaming Lands Transfer Agreement, each of
which is to be executed simultaneously herewith. Lands transferred by LKAR to
the Tribe under the parties' Access Land Transfer Agreement and their Non-Gaming
Lands Transfer Agreement shall be known as "Acquired Tribal Lands".
(c) Any costs incurred by the Tribe in connection with the
acquisition of the Acquired Tribal Lands described in Section 2.1(b) above may
be financed in advance of the Tribe obtaining any permanent financing of the
Project by advances from LKAR to the Tribe, repayable under the Land Acquisition
Loan on the terms and conditions described in Sections 2.3(a)(ii), (b)(ii) and
(c), and shall be evidenced by the Land Acquisition Note.
2.2 Architects, Studies, Plans and Specifications.
(a) As soon as reasonably possible after signing this Amended
Memorandum Agreement, the Tribe, based upon the recommendation and subject to
the approval of LKAR, shall select an architect (the "Architect") for the
purpose of performing certain services in connection with the design and
construction of the Facility, including site development. The Tribe's agreement
with the Architect shall be in the form of a contract (the "Design Agreement")
approved by LKAR and the Tribal Council. The scope of the project contemplated
by this Amended Memorandum Agreement (the "Project"), shall be stated and
established in the Design Agreement, and shall be subject to the mutual approval
of the parties. It is contemplated the scope of the Project will be
substantially as described on the Scope of Project Description Sheet, subject to
such changes as may be necessary or appropriate taking into account competitive
conditions, financing and other circumstances. The parties understand that
market, Tribal-State Compact, governmental or other conditions may change and it
may be necessary to expand or decrease the scope of the Project before
construction is
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commenced. The Design Agreement shall also provide for and establish appropriate
design packages, each pertaining to a discrete portion or phase of the Project.
The Design Agreement shall allow LKAR the right and responsibility to supervise,
direct, control and administer the duties, activities and functions of the
Architect and to efficiently carry out its covenants and obligations under this
Amended Memorandum Agreement.
(b) The Architect shall be responsible for creating the plans and
specifications for the Facility ("the Plans and Specifications") and a budget
for all Costs of Construction ("Approved Construction Budget"), both of which
shall be subject to the mutual approval of the Tribe and LKAR prior to the
commencement of construction of the Facility. The Costs of Construction budget
shall not be exceeded unless mutually agreed otherwise in writing by the Tribe
and LKAR, except LKAR may in its reasonable discretion reallocate part or all of
the amount budgeted with respect to any line item to another line item. The
Architect shall also supervise the completion of all construction, development
and related activities undertaken pursuant to the terms and conditions of the
Construction Contract with the General Contractor.
(c) The Tribe, using funds advanced to it under the Facility Loan or
Transition Loan, shall provide funds necessary for the design, construction and
development of the Facility and Enterprise, including architectural and
engineering costs. The fee for the Architect's services shall: (i) be agreed to
by the Tribe and LKAR; (ii) be advanced by LKAR to the Tribe; and (iii) be
repaid by the Tribe to LKAR as part of and according to the terms of the
Transition Loan. Following Completion or in the event of a termination of this
Amended Memorandum Agreement, it is agreed between the parties hereto that the
Plans and Specifications and all other design documents shall be owned by the
Tribe.
(d) The Facility shall be designed and constructed so as to
adequately protect the environment and the public health and safety. The design,
construction and maintenance of the Facility shall, except to the extent a
particular requirement or requirements may be waived in writing by the Tribal
Council, meet or exceed all reasonable minimum standards pertaining to the Tribe
and national, State and local building codes, fire codes and safety and traffic
requirements (but excluding planning, zoning and Gaming Site use laws,
ordinances, regulations and requirements), which would be imposed on the
Enterprise by existing State or federal statutes or regulations which would be
applicable if the Facility were located outside of the jurisdictional boundaries
of the Tribe, even though those requirements may not apply within the Tribe's
jurisdictional boundaries. To the extent that the Tribe has adopted or may in
the future adopt more stringent requirements, those requirements shall govern.
Nothing in this subsection shall grant to the State or any political subdivision
thereof any jurisdiction (including but not limited to, jurisdiction regarding
zoning or Gaming Site use) over the Facility or Enterprise or its development,
management and operation.
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(e) Any costs incurred by the Tribe in connection with the
activities described in this Section 2.2 may be financed in advance of the Tribe
obtaining any permanent financing of the Project by advances from LKAR to the
Tribe, repayable under the Transition Loan on the terms and conditions described
in Section 2.3 and evidenced by the Interim Promissory Note.
2.3 Pre-Construction Advances and Terms of Land Acquisition Loan and
Transition Loan.
(a)(i) LKAR agrees to make the following pre-construction advances
to the Tribe: (1) two hundred fifty thousand dollars ($250,000) upon execution
of the June 11, 1999 Development and Management Agreements; (2) seventy thousand
dollars ($70,000) each month thereafter until the Commencement Date; (3)
advances for costs incurred in connection with the activities described in
Section 2.2; (4) advances for the establishment and operation of the Tribal
Gaming Commission pursuant to Section 4.6.6 of the Management Agreement between
the Tribe and KAR entered on June 11, 1999; (5) expenses relating to the Tribe's
CNIGA activities, subject to the written approval of LKAR, which approval shall
not be unreasonably withheld; and (6) legal expenses incurred by the Tribe in
connection with eliminating obstacles to the implementation of this Amended
Memorandum Agreement, subject to the written approval of LKAR, which approval
shall not be unreasonably withheld. The Tribe and LKAR agree that all sums
previously advanced to the Tribe by KARSS under the superceded Development and
Management Agreements, and by LKAR under the superceded May 5, 2000 Memorandum
of Agreement (excluding advances for acquisition of the Acquired Tribal Lands),
shall constitute advances by LKAR to the Tribe hereunder, be credited to LKAR's
obligations hereunder, and shall be subject to the terms of the Transition Loan
herein.
(a)(ii) in accordance with the terms of the Access Land Transfer
Agreement, the Non-Gaming Lands Transfer Agreement and Section 2.1 hereof, LKAR
agrees to make advances to the Tribe to finance the acquisition costs associated
with the Acquired Tribal Lands.
(b)(i) The total amount of funds advanced to the Tribe directly from
LKAR pursuant to Section 2.3(a)(i) shall equal the total amount of the
Transition Loan. The total amount of the Transition Loan shall be in an amount
not exceeding twenty five million dollars ($25,000,000). The parties agree that
as of _____________, 2003, LKAR has advanced $___________ to the Tribe under the
Transition Loan. The Transition Loan shall accrue interest at the prime interest
rate of Chase Manhattan Bank (or any successor bank by acquisition or merger)
plus two percent (2%), fixed from the date the funds are advanced to the Tribe.
Principal and interest due under the Transition Loan shall be paid as provided
under Section 2.3(c) below.
(b)(ii) The total amount of funds advanced to the Tribe by LKAR
pursuant to Section 2.3(a)(ii) shall equal the total amount of the Land
Acquisition Loan. The total amount of the Land Acquisition Loan shall be in an
amount not exceeding Ten Million dollars ($10,000,000). The parties agree that
as of ______________, 2003, LKAR has advanced $____________ to the Tribe
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under the Land Acquisition Loan. The Land Acquisition Loan shall accrue interest
at the prime interest rate of Chase Manhattan Bank (or any successor bank by
acquisition or merger) plus two percent (2%), fixed from the date the funds are
advanced to the Tribe in accordance with Section 2.3(a)(ii) hereof. Principal
and interest due under the Land Acquisition Loan shall be paid as provided under
Section 2.3(c) below.
(c) The Land Acquisition Loan and the Transition Loan shall each (i)
be subject to all the terms and conditions of this Amended Memorandum Agreement;
(ii) subject to the priorities set forth below, principal and interest due under
such loans shall be repaid monthly as follows (collectively, the "Monthly Loan
Payment"): (1) the Tribe shall retain the first $500,000 from any monthly Net
Total Revenue distribution made to the Tribe by the Enterprise; (2) if in any
month the Tribe receives a Net Total Revenue distribution in excess of $500,000,
it shall pay to LKAR the excess over $500,000 up to a total principal and
interest payment of $500,000; and (3) for any month in which the Net Total
Revenue distribution received by the Tribe is in excess of $1,000,000, the Tribe
shall in addition pay to LKAR 50% of the distribution amount which it has
received in excess of $1,000,000 as an additional principal and interest
payment; (iii) the Monthly Loan Payment shall on a prorata basis be applied to
and divided between such loans monthly based on the relative amounts outstanding
under such loans; (iv) such Monthly Loan Payments shall commence on the
thirtieth (30th) day after the Commencement Date and continue on the same day of
each calendar month there after until all amounts owing under such loans and the
related promissory notes are paid in full; and (v) all such obligations shall be
repaid solely as Limited Recourse obligations of the Tribe without any cross
collateralization from other projects of Tribe and without any other liability
or guarantee on the part of the Tribe except for the security interests
described herein. Except for the Minimum Guaranteed Monthly Payment to the Tribe
and repayment of the Operating Note and Facility Loan, repayment of the Land
Acquisition Loan and the Transition Loan shall have first priority on any Net
Gaming Revenues and Net Incidental Revenues generated by the Enterprise or any
other Tribal Gaming Enterprise. Subject to the foregoing, the Tribe agrees to
grant to LKAR a first priority and perfected security interest, including a
Dominion Account arrangement pursuant to the Dominion Account Agreement (in the
form consistent with the terms of this Amended Memorandum Agreement), on any Net
Gaming Revenues and Net Incidental Revenues of the Enterprise or any other
Tribal Gaming Enterprise in order to secure repayment of the Land Acquisition
Note and the Interim Promissory Note, and such Land Acquisition Loan and
Transition Loan shall also be secured on a first priority and perfected basis by
any Furnishings and Equipment financed by proceeds of the Transition Loan or
Facility Loan or other purchase money agreements pursuant to the Security
Agreement; provided that upon request of the lender providing the Facility Loan
or Furnishing and Equipment loan (as applicable), LKAR agrees to subordinate its
security interests in the Furnishing and Equipment and any Net Gaming Revenues
and Net Incidental Revenues of the Enterprise or any other Tribal Gaming
Enterprise (as applicable) pursuant to a subordination agreement in form and
substance acceptable to LKAR and such lender. The Tribe agrees not to encumber
any of the assets of the Facility or the Enterprise without the written consent
of LKAR, which consent will not be
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unreasonably withheld; except that the Tribe shall have the right without the
consent of LKAR to grant security interests in the Enterprise's revenues which
are subordinate to LKAR's and Other Lenders' interests under this Amended
Memorandum Agreement and all related Transaction Documents pursuant to a
subordination agreement in form and substance acceptable to LKAR and any Other
Lender. The Tribe agrees to enter into a limited, transactional waiver of
sovereign immunity and consent to jurisdiction and arbitration as to LKAR and in
connection with the Land Acquisition Loan and the Transition Loan, as provided
in the Resolution of Limited Waiver.
(d) The Tribe shall retain the right to prepay each of the Land
Acquisition Loan and the Transition Loan, in whole or in part, without
imposition of any prepayment penalty.
(e) It is the understanding of the parties that each of the Land
Acquisition Loan and the Transition Loan will be the sole responsibility of
Tribe, will be a Limited Recourse obligation of the Tribe, and will not be
subject to any other guarantee or obligation on the part of the Tribe except the
security interests and liens described herein.
2.4 Construction.
(a) LKAR shall arrange financing for the Costs of Construction
pursuant to Section 2.5.
(b) As soon as reasonably possible after the approval of the Plans
and Specifications and the budget for the Costs of Construction, the Tribe, with
the assistance of the Architect, shall enter into a contract with a General
Contractor pertaining to the construction of the Facility (the "Construction
Contract"), subject to the approval of such contract by LKAR. The General
Contractor must (i) exhibit the financial capability to complete the work, (ii)
have the ability to obtain adequate payment and performance bonds and builder's
risk insurance in amounts requested by LKAR and Tribe, (iii) provide an
acceptable bid, as mutually agreed upon by Tribe and LKAR, (iv) be capable of
meeting the construction schedule and (v) construct quality facilities. The
General Contractor shall be responsible for providing, including through
subcontractors, all material, equipment and labor to construct and initially
equip the Facility as necessary in conformance with the Plans and
Specifications, including site development.
(c) The Construction Contract shall contain such provisions for the
protection of the Tribe and LKAR as the parties deem appropriate, and shall
provide that construction of the Facility shall commence within thirty days of
the parties receiving NIGC Approval, and any necessary Tribal Gaming Commission
approvals (not to be unreasonably withheld), following and subject to the
granting of all approvals necessary to commence construction and obtaining the
Facility Loan; and shall also provide that the General Contractor, and all its
subcontractors, shall exert its best efforts to complete construction within
such time as the Tribe and LKAR agree, but which shall not exceed one
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year following NIGC Approval. The Construction Contract shall provide that LKAR
shall be responsible and obligated for all construction administration during
the construction phases of the Project. LKAR shall act as the Tribe's designated
representative and shall have full power and complete authority to act on behalf
of the Tribe in connection with the Construction Contract. To the extent allowed
by the Construction Contract, LKAR shall have control and charge of any persons
performing work on the Project site, and shall interpret and decide on matters
concerning the performance of any requirements of the Construction Contract.
LKAR shall have the authority and obligation to reject work which does not
conform to the Construction Contract. LKAR shall conduct inspections to
determine the date or dates of substantial completion and the date of
Completion. LKAR shall observe and evaluate or authorize the observation and
evaluation of Project work performed, review or authorize review of applications
for payment for submission to the tribe and review or authorize review and
certification of the amounts due the contractors and/or the General Contractor.
The General Contractor shall, at a minimum, warrant its work to be performed
free of defects and unworkmanlike labor pursuant to industry standards for not
less than the maximum period subsequent to Completion customary in the industry
or as required by State law or the Tribal-State Compact. The General Contractor
shall also be required to obtain before construction commences and maintain
until Completion a policy of insurance of at least equal to the estimated Cost
of Construction of the Facility naming the Tribe as an additional insured; said
policy to be issued by an insurance company licensed by the State and having an
AM Best rating of A7 or better. General Contractor shall also provide
comprehensive general liability insurance in the amount of not less than ten
million dollars ($10,000,000), naming the Tribe as an additional insured.
(d) Construction change orders to the Plans and Specifications or to
the Construction Contract shall require written approval of the Architect, Tribe
and LKAR and a representative of the Tribal Gaming Commission if required by
applicable law. It is agreed that if completion of the construction, equipping
and furnishing of the Facility cannot be reasonably accomplished within the
budget for Costs of Construction to be agreed upon pursuant to Section 2.2(b)
above, then, Tribe, upon receiving advice from LKAR and Architect, shall
promptly determine which components of the Facility shall be deleted or reduced
in size, such that the total expenditures for Costs of Construction shall not
exceed the approved budget.
(e) LKAR and the Tribe each reserves to itself the right, as a Cost
of Construction, to inspect the Facility prior to the disbursement of each
requested advance of funds, and (i) approve the progress and the workmanship of
the construction; (ii) verify compliance with the Plans and Specifications;
(iii) verify the percentage of the Completion as set forth in requests for
advance; and (iv) satisfy itself that all work for which such advance is
requested has been performed and all materials for which such advance is
requested are in place or, as to stored materials, are owned by the Tribe and
suitably safeguarded. Such inspection will be performed in a timely manner and
not unreasonably delay the disbursement of any advance.
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(f) Final acceptance of construction of the Facility shall not occur
until (i) evidence of Completion has been received and approved by Tribe, (ii) a
fully executed indemnity or release from liens is received from the General
Contractor and all subcontractors, (iii) any other documentation reasonably
requested by the Tribe, the Tribal Gaming Commission or LKAR is received from
the General Contractor and (iv) all approvals have been received from all
Governmental Authorities from which approvals are required.
(g) LKAR, with the assistance of the Architect, shall submit to the
Tribal Council, for its review and approval, the specifications for Furnishings
and Equipment . Thereafter, LKAR shall select and procure vendors for purchase
by the Tribe of Furnishings and Equipment required to operate the Enterprise in
conformity with such specifications. The cost of Furnishings and Equipment shall
be financed through the Facility Loan. Alternatively, in the sole discretion of
the Tribe, LKAR may arrange for the procurement of Furnishings and Equipment on
lease terms consistent with the terms provided as to the Facility Loan.
(h) The Tribe shall keep the Facility and Gaming Site free and clear
of all mechanic's and other liens resulting from the construction of the
Facility, which shall at all times remain the property of the Tribe. If such
lien is claimed or filed, it shall be the responsibility of the Enterprise to
discharge or take reasonable steps to otherwise cause the removal of the lien
within thirty days after receiving written notice of such claim. The Enterprise
shall indemnify and hold the Tribe and LKAR harmless for any pre-existing
conditions on the Gaming Site. Tribe shall indemnify and hold LKAR harmless from
any and all liability alleged to arise from any prior agreements entered into by
the Tribe with any persons or entities in connection with development of the
Facility and the Enterprise, including but not limited to, Xxxxx Xxxxxxxx, Xxxxx
Image Gaming and Excelsior Gaming; provided, however, that in the event that
Lakes Gaming, Inc. is sued in its individual capacity based upon any alleged
relationship with Sharp Image prior to the formation of LKAR, and not as a
member of LKAR, this indemnification and hold harmless obligation shall not
apply to Lakes Gaming.
2.5 Financing Obligation and Terms of Facility Loan.
(a) Commencing on the Effective Date of this Amended Memorandum
Agreement, and subject to satisfaction of each of the conditions set forth in
Section 2.6(a) below, LKAR will, upon LKAR's approval of requests to advance
funds ("Requests for Advance"), arrange for a Lender to loan to the Tribe under
the Facility Loan or, in its discretion, LKAR may advance directly to the Tribe
for the benefit of the Tribe funds for the actual Costs of Construction up to an
aggregate of the Approved Construction Budget approved by the parties. Such
amounts loaned or advanced for Costs of Construction shall be payable and accrue
interest on terms as set forth in the Facility Note, in the form agreed to by
the Tribe and the Lender or by the Tribe and LKAR, as applicable. All advances
of Costs of Construction made by LKAR shall be recorded by LKAR on a schedule to
be attached to the Facility Note.
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(b) Commencing on the Effective Date of this Amended Memorandum
Agreement, and subject to satisfaction of each of the conditions set forth in
Section 2.6(b) below, LKAR will arrange to have a Lender loan the Tribe under
the Facility Loan or, in its discretion, LKAR may advance directly to the Tribe
funds up to the amount of the approved budget to finance the Initial Costs of
Operation. All amounts loaned or advanced for Initial Costs of Operation shall
be payable and accrue interest on terms as set forth in the Facility Note. All
advances of Initial Costs of Operations made by LKAR shall be recorded by LKAR
on a schedule to be attached to the Facility Note.
(c) The Costs of Construction and Initial Costs of Operation shall
equal the total cost of the Facility Loan. The total amount of the Facility
Loan, or total advances if made directly by LKAR, shall be in an amount up to
but not exceeding three hundred million dollars ($300,000,000). Advances for
Costs of Construction and Initial Costs of Operation, if made directly by LKAR,
shall accrue interest at the prime interest rate of Chase Manhattan Bank (or any
successor bank by acquisition or merger) plus two percent (2%), fixed from the
date the funds are advanced to the Tribe; with repayment of principal and
interest to be made in equal monthly installments over a term of seven (7) years
commencing on the thirtieth (30th) day after the Commencement Date, or five (5)
years if the Tribe exercises its right under Section 3.19 of this Amended
Memorandum Agreement.
(d) The Facility Loan, or total advances if made directly by LKAR,
shall (i) be subject to all the terms and conditions of this Amended Memorandum
Agreement; (ii) be evidenced by the Facility Note executed by Tribe (in a form
consistent with the terms of this Development Agreement if LKAR makes the
advances); and (iii) be repaid solely as a Limited Recourse obligation of the
Tribe without any cross collateralization from other projects of Tribe and
without any other liability or guarantee on the part of the Tribe except the
security interests described herein. Except for the Minimum Guaranteed Monthly
Payment to the Tribe and repayment of the Operating Note, repayment of the
Facility Loan, or total advances if made directly by LKAR, shall have first
priority on any Net Gaming Revenues and Net Incidental Revenues generated by the
Enterprise or any other Tribal Gaming Enterprise. Subject to the foregoing, the
Tribe agrees to grant to the Lender, or to LKAR to the extent LKAR makes
advances directly to the Tribe, a first priority and perfected security
interest, including a Dominion Account arrangement pursuant to the Dominion
Account Agreement (in a form consistent with the terms of this Development
Agreement), on any Net Gaming Revenues and Net Incidental Revenues of the
Enterprise or any other Tribal Gaming Enterprise in order to secure repayment of
the Facility Note, and such Facility Loan shall also be secured on a first
priority and perfected basis by any Furnishings and Equipment financed by
proceeds of the Facility Loan or Transition Loan or other purchase money
agreements pursuant to the Security Agreement. The Tribe agrees not to encumber
any of the assets of the Facility or the Enterprise without the written consent
of LKAR and the holder of the Facility Note, which consent will not be
unreasonably withheld; except that the Tribe shall have the right without the
consent of LKAR and such holder to
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grant security interests in the Enterprise's revenues which are subordinate to
LKAR's or such holder's interests under this Amended Memorandum Agreement and
all related documents and agreements pursuant to a subordination agreement in
form and substance acceptable to LKAR and any Other Lender. The Tribe agrees to
enter into a limited, transactional waiver of sovereign immunity and consent to
jurisdiction and arbitration as to the holder of the Facility Note, or to LKAR
to the extent LKAR makes advances directly to the Tribe, as provided in the
Resolution of Limited Waiver.
(e) The Tribe shall retain the right to prepay the Facility Loan, or
total advances if made directly by LKAR, in whole or in part, without imposition
of any prepayment penalty.
(f) It is the understanding of the parties that the Facility Loan,
or total advances if made directly by LKAR, will be the sole responsibility of
Tribe, will be a Limited Recourse obligation of the Tribe, and will not be
subject to any other guarantee or obligation on the part of the Tribe except the
security interests and liens described herein.
2.6 Conditions Precedent to Facility Loan.
(a) The obligation of LKAR to arrange for the issuance of the
Facility Loan to the Tribe, or to make direct advances to the Tribe, for the
initial or any subsequent advance of Costs of Construction pursuant to Section
2.5(a) above is subject to the following conditions:
(i) The Facility Loan and related Facility Note, UCC Financing
Statements or other related documentation required shall be dated
and duly executed and delivered by the Tribe and shall have been
approved by the BIA or National Indian Gaming Commission if required
by applicable law.
(ii) This Amended Memorandum Agreement shall have become
effective pursuant to Section 3.19 and LKAR shall have received an
opinion of counsel for the Tribe concerning the enforceability of
this Amended Memorandum Agreement and the other Transaction
Documents against the Tribe and the authority of the Tribe to
execute each of the same.
(iii) LKAR shall have received and approved the Plans and
Specifications, the budget for the Costs of Construction, and the
executed Construction Contract in accordance with Sections 2.2 and
2.4.
(iv) LKAR shall have received evidence that the Gaming Site is
held in trust by the United States of America, as trustee for the
Tribe.
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(v) LKAR shall have received and approved evidence of the
bonds and insurance required of the General Contractor pursuant to
Section 2.4(b).
(vi) Tribe shall have furnished to LKAR an ALTA/ACSM survey of
the Gaming Site and any other Tribal Lands on which the Enterprise
will be located in a form acceptable to LKAR, which survey shall
locate all property lines, existing access ways, building setback
lines and easements affecting the Gaming Site and other applicable
Tribal Lands identified by book and page of recording, where
applicable, water, electric and sewer lines, and other physical
matters, including encroachments, if any, affecting the title and
use of such property. The survey shall set forth the exact legal
description of the Gaming Site and any other applicable Tribal Lands
used with respect to the Enterprise. The Tribe further agrees to
furnish to LKAR a copy of the recorded plat, if any, applicable to
the Gaming Site and any other applicable Tribal Lands. All surveys
required hereunder shall contain a certificate in favor of, and in
form and substance satisfactory to, LKAR.
(vii) LKAR shall have received satisfactory evidence that all
permits or other authorizations, including, and without limitation,
the building permit(s), required by any applicable Governmental
Authority to authorize construction of the Facility have been issued
and are in full force and effect. If all permits are not available
prior to the closing of the Facility Loan, it shall be within LKAR's
discretion to arrange for the advance by a lender of such sums under
the Facility Loan for work for which all applicable permits have
been received. At LKAR's option, the Tribe shall furnish LKAR
reasonable evidence that all other permits required in order to
construct the Facility in accordance with the Plans and
Specifications, and within the Approved Construction Budget, will be
available when necessary.
(viii) LKAR shall have received satisfactory evidence of the
availability of adequate water, electricity, telephone, sanitary
sewer, and, if applicable, storm sewer service to the Facility to be
provided as part of the Costs of Construction or otherwise as agreed
to by the parties.
(ix) All representations and warranties of the Tribe shall be
true and correct, this Amended Memorandum Agreement shall remain in
effect, and the Tribe shall not be in default under this Amended
Memorandum Agreement on the date of each advance.
(x) There shall be no pending or threatened litigation, claim
or dispute which, in LKAR's good faith judgment, might materially
adversely affect the ability of the Tribe to timely perform its
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23
Agreement, including, without limitation, a ruling that the
Tribal--State Compact is void for purposes of the IGRA. Further, the
Tribe shall not be the subject of any pending or threatened
bankruptcy, insolvency, reorganization or similar proceedings which,
in LKAR's good faith judgment, would materially adversely affect the
security for the Facility Loan or the Tribe's ability to perform its
obligations under this Amended Memorandum Agreement or the Facility
Note.
(xi) LKAR shall have received satisfactory evidence that the
Gaming Site is free from environmental contamination of any nature
whatsoever or any other environmental condition that would require
any remediation pursuant to any applicable Legal Requirement.
(b) The obligation of the LKAR to arrange for a Lender to make the
initial or any subsequent advances for Initial Costs of Operation, or to make
such advances directly to the Tribe, is subject to the conditions precedent set
forth above in subparagraphs 2.6(a) (i), (ii), (ix), (x) and (xi).
2.7 Advances for Costs of Construction. Nothing herein contained shall
obligate LKAR to arrange for a Lender to advance the Costs of Construction, or
make advances directly to the Tribe, for payment of any item not included in or
in an amount in excess of the Approved Construction Budget.
(a) Subject to the provisions of Section 2.7 (c) relating to
retainage, LKAR shall arrange for a Lender to make advances, or make advances
directly, to the Tribe for materials purchased by the Tribe and stored on or off
the Gaming Site but not yet incorporated into the Facility only if the Tribe
provides evidence satisfactory to LKAR that such stored materials are protected
against theft and damage.
(b) Unless it otherwise agrees, LKAR shall not be required to
arrange for a Lender to make advances, or make advances directly to the Tribe,
for Costs of Construction under the Facility Note more often than once monthly.
Advances for Costs of Construction will be made based upon the progress of
construction as verified by Requests for Advance approved and certified by the
Architect.
(c) Subject to the provisions of the Construction Contract, LKAR may
retain from each advance for payment of Costs of Construction to the General
Contractor an amount equal to ten percent (10%) (or other lower retainage as may
be agreed upon by LKAR and set forth in the Construction Contract with the
General Contractor) of the amount of each Request for Advance. Upon Completion,
any amounts remaining from such retainage shall be paid to the Tribe or the
Contractor for Costs of Construction less such reasonable amounts to be escrowed
for payment of punchlist items.
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(d) LKAR shall not be obligated to arrange for a Lender to make the
final advance, or make the final advance directly to the Tribe, for Costs of
Construction until the following conditions have been satisfied: (i) all
conditions stated in this Section 2.7 and Section 2.4(f) shall have been
satisfied; and (ii) LKAR shall have received the following: (1) evidence that
all work requiring inspection by any Governmental Authorities having
jurisdiction over the Facility has been inspected and approved by such
authorities and that all other required certificates and approvals have been
issued; (2) an as-built survey showing the Gaming Site, the Facility, including,
without limitation, the building, parking areas (including parking spaces
designated as regular, compact or handicapped spaces), walkways, driveways,
access ways to public streets, signs, and any encroachments; and (3) a
certificate from the Architect to the effect that the Facility (including
landscaping and on-site and any off-site improvements) have been completed
substantially in accordance with the Plans and Specifications and that direct
connection has been made to all appropriate utility facilities.
2.8 Advances for Initial Costs of Operation. Advances under the Facility
Note for Initial Costs of Operation will be arranged by LKAR with a Lender, or
made directly by LKAR to the Tribe, upon written request by the Tribe within the
budget for Initial Costs of Operation approved pursuant to Section 6.1(b) and if
supported by invoices or other documentation as LKAR may reasonably require. In
addition, LKAR is hereby authorized to make direct payments for Initial Costs of
Operation incurred by LKAR in its role as agent for the Tribe, subject to the
accounting and record keeping provisions of Section 3.4(d). LKAR shall provide
the Tribe with monthly reports of all advances for Initial Costs of Operation
that shall compare actual advances with the budget for Initial Costs of
Operation prepared pursuant to Section 6.1(b).
2.9 Title to Facility. The Facility, the Enterprise and all related
improvements and assets shall be the sole and exclusive property of the Tribe,
subject to no liens or encumbrances except for any UCC and other liens permitted
in favor of the Lender and LKAR to be granted pursuant to the provisions of this
Amended Memorandum Agreement or any loan or other financing agreements between
the Lender or LKAR and the Tribe entered into after the date the parties execute
this Amended Memorandum Agreement.
2.10 No Liens. During the term of this Amended Memorandum Agreement,
neither the Tribe nor LKAR shall act in any way whatsoever, either directly or
indirectly, to cause any other party to lease or to become a lienholder of the
Gaming Site, the Facility, the Enterprise, or any related assets except as
expressly agreed to by the parties or permitted herein.
2.11 Limited Waiver of Sovereign Immunity. By this Amended Memorandum
Agreement, the Tribe does not waive, limit, or modify its sovereign immunity
from unconsented suit except as provided in the Resolution of Limited Waiver as
simultaneously executed, delivered and attached hereto as Exhibit B. The Tribe
understands that its agreement to adopt an enforceable Resolution of
25
Limited Waiver is a material inducement to the LKAR's execution of this Amended
Memorandum Agreement and is a condition precedent to any of the respective
obligations of the parties under this Amended Memorandum Agreement. The Tribe
further agrees that it will not amend or alter or in any way lessen the rights
of the Lender or LKAR as set forth in the Resolution of Limited Waiver, which is
attached hereto as Exhibit B and incorporated here by reference. This Section
2.11 shall survive the termination of this Amended Memorandum Agreement,
regardless of the reason for the termination.
2.12 Exclusivity. During the term of this Amended Memorandum Agreement,
the Tribe shall have an exclusive relationship with LKAR regarding the
development of the Facility and the Enterprise; provided however, that LKAR
acknowledges that it is aware of the Tribe's pre-existing relationship with
Sharp Image and waives the application of this section and Section 2.6(a)(x)
with respect to that relationship to the extent the Tribe may have existing
enforceable legal obligations to Sharp Image but only on the following
conditions: (i) any monies payable to Sharp Image or another entity or person
from the Tribe based upon present or past relationships, and the Tribe's legally
required performance thereunder in connection with the operation of the
Enterprise shall be paid solely by the Tribe, and any monies paid in settlement
of any claims or judgments held by Sharp Image shall be paid by the Tribe and
shall not be a considered a Cost of Gaming Operations or Cost of Incidental
Operations; (ii) in the event that the Enterprise has to pay any monies to
settle any claims or judgments held by Sharp Image, then the Tribe shall repay
such amounts to the Enterprise; and (iii) if an enforceable legal obligation is
found by a court of competent jurisdiction to exist between the Tribe and Sharp
Image or another entity or person based upon present or past relationships in
connection with the operation of the Enterprise, and the Tribe's legally
required performance thereunder results in LKAR being terminated or discontinued
as Manager of the Enterprise before expiration of the term period contained in
Section 3.19, then the Tribe shall be obligated to pay to LKAR an amount equal
to the sum of its actual costs incurred to the date of such termination, plus
interest at a rate to be determined through arbitration if the parties cannot
agree on said rate, plus such additional amount, if any, as an arbitrator may
find necessary under all the circumstances to compensate LKAR for the value it
has contributed to the enterprise through its efforts and expertise. The Tribe
and LKAR will vigorously and in good faith defend against any action by Sharp
Image to establish and enforce such obligations. Subject to all Legal
requirements, the Tribe also agrees that, during the term of this Amended
Memorandum Agreement, the tribe may pursue other commercial, gaming and economic
development opportunities on Tribal Lands; provided it grants to LKAR the right
of first refusal to participate with the Tribe upon the terms and conditions
proposed by the Tribe, with prompt response by LKAR required, but in no event
later than thirty (30) days after written notice from the Tribe. In the event
that LKAR declines to participate with the Tribe upon such terms and conditions,
the Tribe shall have the right to pursue such opportunity but may not offer to
an unrelated third party terms and conditions more favorable than those offered
to LKAR. If the Tribe does not enter into a signed agreement with such unrelated
third party regarding the other commercial, gaming and economic development
opportunity which has been declined by LKAR within one (1) year of such
declination, then LKAR's right of first refusal granted herein is reinstated for
that
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opportunity. Except for the restrictions in Section 10.21, nothing herein shall
be deemed to restrict LKAR's gaming activities related to commercial or Indian
gaming.
2.13 Intentionally Omitted.
2.14 Term of Development Agreement. Unless sooner terminated as provided
in this Amended Memorandum Agreement, the term of the Development Agreement
shall run until the earlier of either (i) the Commencement Date; or (ii) June
11, 2004; provided however, that the Notes and Security Provisions shall
continue until all amounts owing to LKAR with respect thereto have been paid in
full.
2.15 Tribal Representatives. The Tribe hereby acknowledges and agrees that
to the extent any authorization, consent or other approval of the Tribe or the
Tribal Council is required under this Amended Memorandum Agreement or any
related Transaction Documents and the Tribe shall provide to LKAR a tribal
resolution naming any individual or individuals authorized to represent the
Tribe and the Tribal Council for purposes or for the purpose of the operation
and performance of this Amended Memorandum Agreement and related Transaction
Documents, then LKAR shall be entitled to rely on all decisions, authorizations,
consents, and approvals provided by such individual or individuals, as
applicable, until such time as the Tribe shall deliver to LKAR an additional
tribal resolution revoking or otherwise modifying such authority.
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MANAGEMENT AGREEMENT PROVISIONS
ARTICLE 3.
AUTHORITY AND DUTY OF LKAR
3.1 Appointment as Agent. Subject to the terms and conditions of this
Amended Memorandum Agreement, the Tribe hereby appoints LKAR to act as the
exclusive agent for the Tribe for all non-governmental matters related to the
Facility and the Enterprise during the term of the Management Agreement. LKAR's
agency responsibilities shall include, among other things, maintenance and
improvement of the Facility, management and operation of the Enterprise's Class
II Gaming and Class III Gaming activities within the Facility, and all other
revenue producing activities that are conducted by the Enterprise, such as the
sale of food and beverages in the Facility. LKAR accepts such appointment as the
Tribe's exclusive agent for the term of this Management Agreement. Subject to
the provisions of this Amended Memorandum Agreement and specifically the
restrictions in this Article 3 and the budget provisions of Article 6 hereof,
LKAR shall have, and the Tribe does hereby grant to LKAR, the power and
authority as agent for the Tribe, to exercise the non-governmental rights of the
Tribe under and to execute, modify, or amend any contracts associated with the
operations of the Facility and Enterprise, including, without limitation,
purchase orders, equipment and retail leases, contracts for services, including
utilities, and maintenance and repair services, relating to the operation of the
Facility and the Enterprise (except for this Amended Memorandum Agreement and
contracts or compacts between the Tribe and the State or its political
subdivisions, which shall remain the sole authority of the Tribe). The duties
and authorities of LKAR shall be subject in all events to receipt of all
necessary licenses, consents or approvals from the Tribal Gaming Commission.
3.2 Limitations. LKAR shall have no authority to waive or impair the
Tribe's sovereign immunity or any other attribute of its sovereign governmental
powers. Except as stated herein, LKAR shall have no authority as the Tribe's
agent under this Amended Memorandum Agreement without the prior written approval
of the Tribe (not to be unreasonably withheld): (a) to incur costs which are
materially in excess of the expenditures to be agreed upon in the operating
budget or capital expenditure budget to be developed pursuant to Section 6.1(c)
herein; (b) to sell, encumber or otherwise dispose of any personal property or
equipment located in the Facility, except for inventory sold in the regular
course of business and other items which must be replaced due to age,
obsolescence, or wear and tear; (c) to purchase any goods or services from LKAR
or any of LKAR's affiliated companies as a Costs of Gaming Operations, Costs of
Incidental Operations or Costs of Construction unless such arrangement is
specifically approved in writing by the Tribal Council. Except as specifically
authorized in this Article 3, LKAR shall not hold itself out to any third party
as the agent or representative of the Tribe.
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3.3 LKAR's Authority and Responsibility.
(a) LKAR 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, in accordance with the requirements of this Amended Memorandum Agreement.
It is the parties' intention that the Enterprise be open 24 hours daily, seven
days a week. LKAR is hereby granted the necessary power and authority to act,
through the Enterprise's general manager, in order to fulfill all of its
responsibilities under this Amended Memorandum Agreement. Nothing herein grants
or is intended to grant LKAR any title or ownership interest to the Facility or
to the Enterprise. LKAR hereby accepts such retention and engagement. The Tribe
shall have the sole proprietary interest in and ultimate responsibility for the
conduct of all Class II Gaming and Class III Gaming conducted by the Enterprise,
subject to the rights and responsibilities of LKAR under this Amended Memorandum
Agreement.
(b) In managing, operating, maintaining and repairing the Enterprise
and the Facility, LKAR's duties shall include, without limitation, the
following: (i) using 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; (ii) complying with all duly enacted statutes, regulations
and ordinances of the Tribe; and (iii) complying 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 Tribal-State Compact.
3.4 Compliance with Laws.
(a) LKAR shall assist the Tribe in compliance with all terms and
conditions of the Tribal-State Compact, the Tribal Gaming Ordinance, IGRA and
any gaming regulations (collectively, the "Governing Laws"), the violation of
which would materially impair the conduct of gaming permitted to be conducted
under IGRA by the Enterprise. Without limiting the foregoing, LKAR, as agent for
the Tribe, shall supply the NIGC with all information necessary to comply with
the National Environmental Policy Act, as it may be amended from time to time,
and comply with the NIGC's regulations relating thereto. LKAR shall ensure
compliance with requirements concerning the reporting and withholding of taxes
with respect to the winnings from gaming operations pursuant to this Amended
Memorandum Agreement. The Tribe agrees to cooperate with LKAR and to aid LKAR in
ensuring compliance with the foregoing laws, regulations and requirements.
(b) The parties shall use their best efforts to obtain all necessary
approvals of Governmental Authorities of this Amended Memorandum Agreement.
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3.5 Security. LKAR shall provide for appropriate security for the
operation of the Enterprise. All aspects of Facility security shall be the
responsibility of LKAR. Upon agreement of the Tribe and LKAR, any security
officer may 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 a Costs of Gaming Operations or Costs
of Incidental Operations, as appropriate.
3.6 Accounting, Financial Records, and Audits.
(a) LKAR shall maintain full and accurate records and books of
account for operations of gaming activities and related incidental operations
managed hereunder. Such records shall be maintained at the Enterprise's general
manager's office located within the Facility and shall be made available for
immediate inspection and verification at all times. Inspection or verification
by the Governmental Authorities shall be coordinated through the Tribal Gaming
Commission.
(b) At least three months prior to the Commencement Date, and
subject to the approval of the Tribal Council and the Tribal Gaming Commission,
which approvals shall not be unreasonably withheld and which shall occur prior
to the Commencement Date, LKAR shall establish and maintain such approved
accounting systems and procedures that shall: (i) include procedures for
internal accounting controls; (ii) permit the preparation of financial
statements in accordance with generally accepted accounting principles; (iii) be
susceptible to audit; (iv) allow the Enterprise, the Tribe and NIGC to calculate
the annual fee under 25 CFR Section 514.1; (v) permit the calculation of LKAR's
compensation under Section 6.5(b) herein; and (vi) provide for the allocation of
operating expenses or overhead expenses among the Tribe, the Enterprise and
LKAR, or any other user of shared facilities or services. Supporting records and
the agreed upon accounting system shall be sufficiently detailed to permit the
calculation and payment of any fee or contribution computations required under
IGRA, the Tribal-State Compact and other applicable laws or regulations.
(c) Net Gaming Revenues, Net Incidental Revenues, and Net Total
Revenues will be calculated by LKAR for purposes of distribution monthly in
accordance with Section 6.5 and copies of such calculations shall be promptly
supplied to the Tribal Council as required by Section 6.4 herein.
(d) All records shall be maintained so as to permit the preparation
of financial statements in accordance with generally accepted accounting
principles consistently applied and in accordance with procedures to be mutually
agreed upon by the parties. LKAR shall, as a Costs of Gaming Operations, furnish
to the Tribe and the Tribal Gaming Commission, monthly financial reports in
accordance with Section 6.4. Such reports shall provide reasonable detail as
requested by the Tribe and the Tribal Gaming Commission with respect to revenues
and expenses of each profit center of the Enterprise. In addition, all gaming
operations conducted within the Facility shall be
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subject to special outside annual audits, which the Tribal Gaming Commission may
cause to be conducted, and all contracts or subcontracts for supplies, services
or concessions for a contract amount in excess of $25,000 annually relating to
gaming activities within Facility shall be subject to audits which the Tribal
Gaming Commission may cause to conducted by an independent certified public
accountant selected and approved by the Tribal Gaming Commission. The cost of
such audits and audit reports (including the annual audit under Section 6.6)
shall constitute Costs of Gaming Operations. LKAR, shall make any reports or
presentations to the Tribal Council as are requested by the Tribe.
3.7 Cash Monitoring. As a Cost of Construction, LKAR shall install a video
surveillance system and computerized systems for monitoring the Gross Gaming
Revenues on a daily basis. LKAR through the enterprise's general manager will
promulgate, and all parties and their respective employees, agents, and
representatives will obey operational policies consistent with the Gaming
Control Ordinance respecting the handling of cash, security systems, and access
to cash cage, counting rooms, and other places where cash is kept and handled.
The Tribe and the Tribal Gaming Commission and their authorized representatives
shall have the right to monitor and investigate systems for cash management
implemented by the Enterprise's general manager in order to prevent any skimming
of receipts or losses of the proceeds and to verify daily Gross Gaming Revenues,
Gross Incidental Revenues, and Gross Total Revenues.
3.8 Bank Accounts, Reserve Funds and Permitted Investments.
(a) On or prior to the Commencement Date, the Tribe and LKAR shall
execute the Dominion Account Agreement and create the dominion Account
("Dominion Account") described therein. Gross Gaming Revenues and Gross
Incidental Revenues shall be deposited daily into the Dominion Account, which
shall be subject to the lien of the Dominion Account Agreement and established
at a commercial bank, of the Tribe's choice, organized under the laws of the
United States of America or any state thereof provided such bank is a member of
the Federal Deposit Insurance Corporation and has combined capital, undivided
profits and surplus of at least $500,000,000. LKAR, through the Enterprise's
general manager, shall also establish other segregated bank accounts with the
approval of the Tribe for the operation of the Enterprise (the "Enterprise
Accounts"), which accounts must indicate the custodial nature of the accounts.
The signature of the Enterprise's general manager, (or his designated
representative) shall be the only signature required to make withdrawals (by
check or otherwise) from such accounts, provided that the monies withdrawn are
to be used only for the purposes set forth herein, and provided further that if
the amount of any single withdrawal exceeds $250,000 (excluding payout and
prizes and transfers to any designated payroll accounts, taxes, and purchases of
currency, or LKAR's compensation under Section 6.5 herein), then the signature
of the Tribe's designated representative will also be required.
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(b) LKAR agrees that subject to the terms of Sections 6.3(b) and
7.4(a) hereof and the Dominion Account Agreement, LKAR shall make or permit
timely transfers from the Dominion Account to the Enterprise Accounts of all
funds needed to pay (i) Costs of Gaming Operations; (ii) Costs of Incidental
Operations; (iii) required debt service on the Land Acquisition Loan, the
Transition Loan and the Facility Loan, as well as any other third party loans to
which LKAR has consented in writing pursuant to the terms of this Amended
Memorandum Agreement or other agreement; (iv) the Minimum Guaranteed Monthly
Payment; (v) Minimum Guaranty Payment Advances; and (vi) disbursements required
pursuant to Section 6.5 hereof. Upon the termination of this Amended Memorandum
Agreement and so long as: (a) any amounts remain owing to LKAR hereunder or with
respect to any related Transaction Documents, and (b) the Enterprise shall
continue in operation pursuant to the terms of Section 7.4 hereof, then LKAR
shall continue to permit transfers from the Dominion Account to the Enterprise
Accounts for payment of the amounts described above, including any Costs of
Gaming Operations or Costs of Incidental Operations (but specifically excluding
any such costs otherwise payable to the Tribe or any political subdivision or
other affiliate of the Tribe which is not a reasonable gaming license fees, and
any costs or expense which is not associated with the provision of reasonable
supplies and/or services provided by the Tribe to the Enterprise).
(c) Surplus funds deposited in such account may be invested by LKAR
in the following permitted investments: (i) a money market mutual fund
registered under the Investment Company Act of 1940 that invests exclusively in
(1) marketable direct obligations issued or unconditionally guaranteed by the
United State Government or issued by an agency thereof and backed by the full
faith and credit of the United States, (2) commercial paper having, at the time
of acquisition, a rating of A-1 or P-1 or better from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc., respectively; or (ii) other
investments as may be directed by LKAR with the prior written consent of Tribe.
3.9 Enforcement of Rights.
(a) During the term of this Amended Memorandum Agreement, except as
otherwise provided in Section 3.9 (b), the Tribe and LKAR shall mutually agree
with respect to the handling of the defense, prosecution or settlement of civil
disputes with third parties relating to gaming and other management activities
conducted or contracts executed by LKAR, as agent for the Tribe. The parties
will assist and cooperate with each other with respect to such third-party
claims and disputes. All uninsured liabilities incurred or expenses incurred by
the Tribe and LKAR or any of the employees, officers or directors of any party
in defending such claims by third parties or prosecuting claims against third
parties shall be considered either Costs of Gaming Operation or Costs of
Incidental Operations, depending upon the circumstances and nature of the claim,
except with respect to claims and liabilities resulting from criminal
misconduct, which shall be governed by Article 8 herein.
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(b) All claims brought against the LKAR or any of the employees,
officers or directors of LKAR or the Enterprise arising out of or relating to
gaming or other operations conducted pursuant to this Amended Memorandum
Agreement that may be settled and released for a total settlement amount of less
than $100,000 may be paid and settled by LKAR, as agent for and on behalf of the
Tribe and/or in accordance with LKAR's good faith business judgment.
3.10 Fire and Safety Services. LKAR shall be responsible for obtaining
adequate coverage for fire and safety services and may, with the consent of the
Tribe, which consent shall not be unreasonably withheld, have such services
provided on a contractual basis by the local Fire and Police Departments. The
costs of any fire and safety protection services shall be appropriately
allocated between Costs of Gaming Operation and Costs of Incidental Operations,
and, if provided by a Department of the Tribe, shall not exceed the actual cost
to the Tribe of providing such services.
3.11 Timely Payment of Costs of Gaming Operations and Costs of Incidental
Operations. LKAR shall be responsible for paying Costs of Gaming Operation and
Costs of Incidental Operations from the bank account(s) established pursuant to
Section 3.8 so as to avoid any late-payment penalties, except those incurred as
a result of good faith payment disputes.
3.12 Acquisition of Gaming and Other Equipment.
(a) All gaming equipment shall, subject to the approval of the Tribe
(not to be unreasonably withheld), be acquired by the Enterprise from Tribal
Gaming Commission licensed distributors and manufacturers.
(b) All acquisitions of new equipment after the public opening of
the Facility shall, subject to the approval of the Tribe, which approval shall
not be unreasonably withheld, be purchased by Enterprise on a cash on delivery
basis, unless otherwise agreed by the Tribe.
3.13 Hours of Operation. Unless otherwise agreed by the parties, the
Facility and Enterprise shall be operated for the maximum days per week and
hours per day, subject to any restrictions in the IGRA and the Tribal-State
Compact.
3.14 Access to Operations. LKAR, through the Enterprise's general manager,
shall provide immediate access by appropriate officials of the Tribal Gaming
Commission and the Tribe's designated representative to the gaming operation,
including all books and records in addition to those listed in the access
requirements set forth in Sections 3.6 and 3.7.
3.15 Increased Public Safety Services. The parties agree that increased
actual costs of law enforcement and police protection services required as a
result of the Class II Gaming and Class III Gaming in the Facility shall be paid
as Costs of Gaming Operation.
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3.16 Advertising. LKAR, through the Enterprise's general manager, shall
contract for and place advertising, subject to prior approval of the general
concepts of the advertising by the Tribe. Advertising costs will be included in
the operating budgets prepared in accordance with Article 6.
3.17 Certain Meetings. The parties agree that, to facilitate oversight of
the activities conducted pursuant to this Management Agreement and to maintain
communication generally between the individuals who will be involved in
supervising those activities, the Tribal Council or its designated
representative and the LKAR's principal individuals will meet at least monthly
to review operations of the Facility and Enterprise and any current issues
pertaining thereto.
3.18 Maintenance. LKAR will cause the Facility to be repaired and
maintained and operated in a clean, good and orderly condition. Repairs and
maintenance will be paid as Costs of Gaming Operation if related to the gaming
operations of the Enterprise, or as Costs of Incidental Operation if related to
the other operations of the Enterprise.
3.19 Term. Notwithstanding the date of signature of the parties hereto,
this Amended Memorandum Agreement shall become effective upon the last of the
following events to occur (the "Effective Date"): (i) written approval of the
Tribal Gaming Ordinance and this Amended Memorandum Agreement by the Chairman of
the National Indian Gaming Commission; (ii) approval by the Secretary and
publication in the federal register of the Tribal-State Compact; or (iii)
issuance by the Tribal Gaming Commission to LKAR of all applicable license(s)
required by IGRA, the Tribal Gaming Ordinance or the Tribal--State Compact. The
Commencement Date shall be the first day upon which the Facility is open to the
public to engage in Class II Gaming and Class III Gaming activities. Unless
sooner terminated as provided in this Amended Memorandum Agreement, this Amended
Memorandum Agreement shall continue for a period of seven (7) years from the
Commencement Date because the capital investment required and the income
projections for development of the Facility and Enterprise beyond the scope
initially planned will require additional time beyond five (5) years; provided
that the Tribe shall have the right to terminate this Amended Memorandum
Agreement after five (5) years (effective upon thirty (30) days written notice
to LKAR), but only in the event LKAR has not completed at least one of the
following within five (5) years of the Commencement Date: (a) develops a gaming
facility and related amenities with a cost in excess of One Hundred Million
Dollars ($100,000,000); (b) obtains a Facility Loan with a term seven (7) years
or more; or (c) completes a Facility with all of the following: (i) 120,000
square feet of building space, (ii) 2,000 compacted Class III gaming devices,
and 40 table games (assuming allowed by Tribal-State Compact), (iii) parking
garage and flat parking totaling 1,500 parking spaces, (iv) specialty
restaurant, (v) food buffet restaurant, (vi) 24 hour coffee shop, (vii) snack
bar, (viii) retail area, (ix) multi-purpose entertainment room, (x) meeting
rooms, (xi) child care center, (xii) video arcade facility, (xiii)
administrative offices, (xiv) hotel with an indoor pool, (xv) RV park, and (xvi)
convenience store/gas station; and provided further that the Notes and Security
Provisions, including without limitation, each of (a) the Security Agreement,
Dominion Account Agreement and UCC
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Financing Statements, and (b) Sections 3.8 and Article 8 hereof shall each
survive and remain effective until terminated under Article 7 hereof and the
amounts owing to LKAR by the Tribe under this Amended Memorandum Agreement and
related Transaction Documents have been paid in full. Any dispute as to whether
LKAR has completed the above described items shall be subject to the dispute
resolution provisions contained in Article 11 hereof.
ARTICLE 4.
PERSONNEL MATTERS
4.1 Employees. All employees involved with operation of the Enterprise's
Class II Gaming and Class III Gaming activities and related activities
throughout the Facility subject to management under this Management Agreement
shall be employees of the Tribe. Subject to the applicable requirements in the
Tribal-State Compact, the employment relationship shall be governed by Tribe
substantive law, and any applicable federal law, subject to the Tribe's
reasonable Indian preference policies, and all matters will be subject to
dispute resolution procedures in the manner described in this Amended Memorandum
Agreement. LKAR, through the Enterprise's general manager, shall be solely
responsible for the hiring, training, promoting, and firing of all such
employees (except for the general manager as agreed to by the Tribe and LKAR,
whose employment, advancement and termination shall be subject to approval of
the Tribe, such approval not to be unreasonably withheld). LKAR, through the
Enterprise's general manager, shall develop a policy and procedure in
conjunction with the Tribe, to implement an executive development program for
employees who are members of the Tribe whereby Tribe members will be prepared
through training and education to assume key management positions within the
gaming and non-gaming operations of the Enterprise. All salaries, wages,
employee insurance, worker compensation premiums, employment taxes, government
exactions of any kind related to employment, benefits, and overhead related to
the hiring, supervising, and discharge of employees, will be Costs of Gaming
Operations or Costs of Incidental Operations, as appropriate.
4.2 Enterprise Employee Policies. LKAR, through the Enterprise's general
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 Tribal 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 the Enterprise and Enterprise employees. At a minimum, the
Enterprise Employee Policies shall provide for an employee grievance process
which provides the following:
A written "Board of Review" process will be created by the Enterprise's
general manager to provide Enterprise employees with a procedure for
bringing work related issues to the attention of Enterprise management so
they may be promptly and permanently resolved in a fair and equitable
manner. The Board of Review process will be available to all Enterprise
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employees except: (1) employees at the director level and above, and (2)
employees discharged for actions involving violations of tribal gaming
regulations or law, or federal, state, or local law. Enterprise employees
will be eligible to use the Board of Review process if they have: (a)
completed thirty (30) work shifts, and progressed through the chain of
command in their home department in the Enterprise, (b) brought the work
related issue to the attention of the Enterprise's human resources
department, and (c) completed a Board of Review hearing request form
within the allotted time frame. The Enterprise's human resources
department shall be responsible for selecting hearing panel members as
outlined in written procedures to be adopted. The Board of Review will be
empowered to make the full range of decisions available and appropriate
(i.e. providing back pay and an apology to the employee, or upholding the
employee's discharge). The Board of Review's decision on the work related
issue will final and binding, and there will be no appeal beyond the Board
of Review.
LKAR, through the Enterprise's general manager, shall be responsible for
administering the Enterprise Employee Policies. Any revisions to the Enterprise
Employee Policies shall not be effective unless they are approved by the Tribal
Council. All such actions shall comply with applicable tribal law, subject to
the applicable requirements in the Tribal-State Compact.
4.3 Employee Background Checks. A background investigation shall be
conducted by the Tribal Gaming Commission 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 Class II Gaming or
Class III Gaming, or to the gaming licenses of LKAR or the Enterprise, or to
create or enhance the dangers of unsuitable, unfair, or illegal practices and
methods and activities in the conduct of Enterprise gaming activities, shall
knowingly be employed by Enterprise or the Tribe. The background investigation
procedures employed by the Tribal Gaming Commission shall be formulated in
consultation with LKAR and shall satisfy all regulatory requirements
independently applicable to LKAR; provided, however, that this provision shall
not be deemed to limit or impair the exclusive authority of the Tribal Gaming
Commission pursuant to the Tribal Gaming Ordinance or the exercise of its
discretion thereunder. Any cost associated with obtaining such background
investigations shall constitute an Costs of Gaming Operations.
4.4 Indian Preference. LKAR, through the Enterprise's general manager,
shall adhere in regard to recruitment, employment, reduction in force,
promotion, training and related employment actions to a publicly announced
policy and practice of Indian Preference as approved by the Tribe.
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4.5 Conflict of Interest.
(a) LKAR covenants that it will not unduly interfere with, or
attempt to influence the internal affairs or government decisions of the Tribe
for its gain or advantage.
(b) LKAR hereby certifies that no payments have been made or will be
made in the future by LKAR to any Tribe official, member of the Tribal Council,
relative of any tribal official or tribal government employee for the purpose of
obtaining any special privilege, gain, advantage or consideration for LKAR,
except for the fees payable to the Tribal Gaming Commission and amounts payable
to the Tribe pursuant to this Amended Memorandum Agreement. However, nothing in
this provision shall prohibit LKAR from making contributions to community
organizations within the Tribe or to the Tribe for the purpose of funding
community activities.
(c) No member of the Tribal Gaming Commission, or any tribal court
official may be employed by the Enterprise or LKAR, or be a "Party in Interest"
as defined in Section 9.1 (a) herein with respect to this Amended Memorandum
Agreement or a gaming equipment agreement or have any direct or indirect
financial interest in the gaming to be operated pursuant to this Amended
Memorandum Agreement. Members of the Tribal Council and their relatives shall
not be eligible for employment at the Facility and Enterprise but shall be
eligible to enter into contracts for the provision of goods or services for the
Facility and Enterprise.
(d) LKAR further agrees to comply with all conflict of interest
rules set forth in regulations or ordinances of the Tribe.
4.6 Participation in Tribe Functions. LKAR acknowledges that personnel who
are members of the Tribe have cultural and religious responsibilities to perform
in regard to Tribe rituals and similar activities. LKAR, through the
Enterprise's general manager, will schedule working hours and take other
actions, with the assistance and advice of the Tribe, to accommodate Tribe
members in performing these responsibilities without affecting their employment
status or position.
ARTICLE 5.
INSURANCE
5.1 Duty to Maintain. LKAR, acting as agent for the Tribe, shall maintain
during the course of this Amended Memorandum Agreement, appropriately allocated
as a Cost of Gaming Operation or a Cost of Incidental Operations, insurance
coverages in forms and amounts that will adequately protect the Tribe and LKAR,
but in no case less than the amounts set forth in this Article, or as required
by the Tribal-State Compact.
5.2 Workers' Compensation. LKAR, acting as agent for the Tribe, shall
maintain adequate workers' compensation insurance in accordance with all
applicable laws, including
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employer's liability insurance, in the amounts agreed to by the LKAR and Tribe,
and as required by the Tribal-State Compact.
5.3 Commercial General Liability. LKAR, acting as agent for the Tribe,
shall maintain commercial general liability insurance covering operations of the
Enterprise, including blanket contractual liability coverage, broad form
property liability coverage, and personal injury coverage in the amount of
$1,000,000 per person/$3,000,000 per occurrence for bodily injury and $1,000,000
per person/$3,000,000 per occurrence for property damage, or as required by the
Tribal-State Compact or Tribal Gaming Commission.
5.4 Automobile. LKAR, acting as agent for the Tribe, shall maintain
comprehensive automobile liability insurance covering operations of the
Enterprise, including all owned, hired and non-owned automobiles, trucks, buses,
trailers, motorcycles or other equipment licensed for highway use with limits
and coverage approved by the LKAR and Tribe.
5.5 Tribe and LKAR to be Insured. Insurance set forth in Sections 5.3 and
5.4 shall name the Tribe and LKAR as insureds, and such policies shall be
endorsed to prohibit the insurer from raising tribal sovereign immunity as a
defense to the payment of claim by the insurer.
5.6 Property Insurance. LKAR, acting as agent for the Tribe, shall procure
replacement value all-risk casualty and extended hazard insurance in appropriate
coverage amounts which shall insure the Facility and any fixtures, improvements
and contents located therein against lost or damage by fire, theft and
vandalism. Such casualty insurance policy or policies shall name the Tribe and
LKAR, and the Facility Loan lenders as insureds. All such casualty insurance
proceeds shall be applied to the immediate replacement of the applicable
Facility part or fixture, improvements or contents therein unless the parties
agree otherwise. Subject to the terms of Sections 7.4 and 7.6 hereof, any excess
insurance proceeds that are not used to repair, replace or reconstruct the
applicable damaged Enterprise assets shall be deposited into the Dominion
Account and disbursed in accordance with the same terms and provisions
applicable to Gross Total Revenues, provided however that such excess proceeds
(except business interruption insurance proceeds) shall be excluded from Net
Total Revenues for purposes of calculating the management compensation of LKAR
under Section 6.5(b) hereof.
5.7 Fidelity Bond. LKAR, as agent for the Tribe, shall maintain fidelity
bonds on such employees and in such amounts as LKAR and Tribe shall deem
reasonable.
5.8 Unemployment Insurance. LKAR, as agent for the Tribe, shall maintain
adequate unemployment compensation/disability insurance with respect to the
Enterprise employees in compliance with the Tribal-State Compact.
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5.9 Evidence of Insurance. Prior to the opening of the Facility to the
public and commencing operations of the Enterprise and from time to time as
reasonably requested by the Tribe, LKAR, as agent for the Tribe, shall supply to
the Tribe and any necessary Governmental Authorities copies of the insurance
policies applicable to the Facility or Enterprise operations as required by this
Article.
5.10 Insurance Proceeds. Subject to the terms of Sections 7.4 and 7.6
hereof, any insurance proceeds received with respect to the Enterprise, except
as provided in Section 5.6 hereof, shall be deposited into the Dominion Account
and disbursed in accordance with the same terms and provisions applicable to
Gross Total Revenues, provided, however, that if there is any insurance recovery
for a claim related to the operation of the Enterprise for which either the
Tribe or LKAR has previously paid from its own separate funds, then, to the
extent of amounts paid by either of such parties, the insurance proceeds will be
paid over to them and the balance shall be deposited into the Dominion Account
as above.
ARTICLE 6.
BUDGETS, COMPENSATION AND REIMBURSEMENT
6.1 Projections and Budgets.
(a) The parties have used their best efforts to project expected
revenues and expenses for the first three (3) years of operation of the
Enterprise, and the projections, as described in the business plan to be
submitted to the NIGC with this Amended Memorandum Agreement, represent the
parties' mutual expectations.
(b) LKAR shall prepare a budget for the Initial Costs of Operation
and submit such budget to the Tribe, for approval by the Tribal Council or its
designated representative, within one hundred twenty (120) days of execution of
this Amended Memorandum Agreement. LKAR shall also prepare an initial operating
budget for the first Fiscal year and submit the same to the Tribe for approval
by the Tribal Council at least ninety (90) days prior to the Commencement Date.
Annual operating budgets shall be submitted by the Enterprise's general manager
to the Tribe thereafter by no later than thirty (30) days prior to the
commencement of each succeeding Fiscal Year. The proposed initial operating
budget and each subsequent annual operating budget shall be subject to approval
or disapproval within thirty (30) days of submission to the Tribe, such approval
not to be unreasonably withheld. The parties recognize that mutually agreeable
adjustments may be made to previously approved operating budgets from time to
time during any Fiscal Year, to reflect the impact of unforeseen circumstances,
financial constraints, or other events. LKAR, shall keep the Tribe informed
regarding any items of revenue or expense that are reasonably anticipated to
cause a material change to the operating budget previously approved by the
Tribe.
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(c) LKAR shall prepare an annual capital expenditure budget and
submit such budget to the Tribe, for approval by the Tribal Council or its
designated representative, at least ninety (90) days prior to the Commencement
Date. Annual capital expenditure budgets shall be submitted by the Enterprise's
general manager to the Tribe thereafter by no later than thirty (30) days prior
to the commencement of teach succeeding Fiscal Year. The proposed capital
expenditure budgets shall be subject to approval or disapproval within thirty
(30) days of submission to the Tribe for approval, such approval not to be
unreasonably withheld. The parties recognize that mutually agreeable adjustments
may be made to previously approved capital expenditure budgets from time to time
during any budget year, to reflect the impact of unforeseen circumstances,
financial constraints, or other events. LKAR, through the Enterprise's general
manager, shall keep the Tribe informed and obtain the Tribe's approval regarding
any projects or expenditures that are reasonably anticipated to cause a material
change to the capital expenditure budget previously approved by the Tribe.
6.2 Initial Costs of Operation. The budget for the Enterprise's Initial
Costs of Operations shall contain amounts approved by LKAR and the Tribe, which
amounts shall be included as pre-opening costs and not as Costs of Gaming
Operations or Costs of Incidental Operations.
6.3 Minimum Guaranteed Monthly Payments.
(a) During the term of this Management Agreement, the Enterprise
shall, subject to the provisions of Section 6.3(b) below, pay the Tribe Five
Hundred Thousand Dollars ($500,000) per month on a cumulative Fiscal Year basis
(the "Minimum Guaranteed Monthly Payment"), beginning on the Commencement Date
and continuing for the remainder of the term of this Management Agreement. The
Minimum Guaranteed Monthly Payment shall be payable to the Tribe in arrears on
the twentieth (20th) day of each calendar month following the month in which the
Commencement Date occurs, which payment shall have priority over the Operating
Note, Facility Loan, Land Acquisition Loan or Transition Loan repayment and
payment of LKAR's compensation. 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. The Minimum Guaranteed Monthly
Payment shall be prorated if gaming is conducted at the Facility for any other
partial months.
(b) Minimum Guaranteed Monthly Payments shall be deducted from any
disbursements of Net Total Revenues received by the Tribe under Section 6.5
hereof in any given month; provided, however, that if the Net Total Revenues of
the Enterprise in a given month are less than $500,000, LKAR shall advance the
funds necessary to compensate for the deficiency from its own funds (the
"Minimum Guaranteed Payment Advances", which advances shall not accrue interest
but shall be evidenced by an Operating Note in a form agreed to by the Tribe and
LKAR), and provided further that the Minimum Guaranteed Monthly Payments shall
be reduced to $10,000 per month for the remaining months in a Fiscal Year after
the Tribe has received in such Fiscal Year Total Net Revenue distributions of
$6,000,000. LKAR shall be entitled to recoup any Minimum Guaranteed
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Payment Advances made under this subsection from the Net Total Revenues of the
Enterprise in succeeding months during the term hereof, as provided in Section
6.5 hereof. In no event shall this recoupment payment for Minimum Guaranteed
Payment Advances result in the Tribe receiving less than its Minimum Guaranteed
Monthly Payment in any month, and in no event shall LKAR be allowed or entitled
to interest on any Minimum Guaranteed Payment Advances. Minimum Guaranteed
Monthly Payments shall be prorated with respect to any months (or portions
thereof) that Class II Gaming or Class III Gaming is suspended or terminated at
the Facility, and no Minimum Guaranteed Monthly Payments shall be required with
respect to any months that no Class II Gaming or Class III Gaming is conducted
at the Facility or accrue subsequent to termination of this Management
Agreement.
(c) Any obligations owing by the Tribe under the Operating Note
shall be repaid solely as a Limited Recourse obligation of the Tribe without any
cross collateralization from other projects of Tribe and without any other
liability or guarantee on the part of the Tribe except for the security
interests described herein. Except for the Minimum Guaranteed Monthly Payment to
the Tribe, repayment of the Operating Note obligations shall have first priority
on any Net Gaming Revenues and Net Incidental Revenues generated by the
Enterprise or any other Tribal Gaming Enterprise. Subject to the foregoing, the
Tribe agrees to grant to LKAR a first priority and perfected security interest,
including a Dominion Account arrangement pursuant to the Dominion Account
Agreement (in a form consistent with the terms of this Amended Memorandum
Agreement), on any Net Gaming Revenues and Net Incidental Revenues of the
Enterprise or any other Tribal Gaming Enterprise in order to secure repayment of
the Operating Note, and such Operating Note shall also be secured on a first
priority and perfected basis by any Furnishings and Equipment financed by
proceeds of the Facility Loan and Transition Loan pursuant to the Security
Agreement. The Tribe agrees not to encumber any of the assets of the Facility or
the Enterprise without the written consent of LKAR, which consent will not be
unreasonably withheld; except that the Tribe shall have the right without the
consent of LKAR to grant security interests in the Enterprise's revenues which
are subordinate to LKAR's interests under this Amended Memorandum Agreement and
all related Transaction Documents pursuant to a subordination agreement in form
and substance acceptable to LKAR. The Tribe agrees to enter into a limited,
transactional waiver of sovereign immunity and consent to jurisdiction and
arbitration as to LKAR and in connection with the Operating Note, as provided in
the Resolution of Limited Waiver.
6.4 Daily and Monthly Statements. LKAR shall furnish to the Tribe's
designated representative statements identifying for each day the Gross Gaming
Revenues attributable to the Enterprise's Class II Gaming and Class III Gaming
on each day that such reports are normally available. Within fifteen (15) days
after the end of each calendar month, LKAR, shall provide a verifiable financial
statements in accordance with GAAP to the Tribe and the Tribal Gaming Commission
covering the preceding month's operations of the Enterprise, including operating
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statements, balance sheets, income statements and statements reflecting the
amounts computed to be distributed in accordance with Section 6.5 hereof.
6.5 Distribution of Net Total Revenues.
(a) All Net Total Revenues shall be disbursed on a monthly basis as
set forth below, paid on the twentieth day of each calendar month for the
preceding month. Such Net Total Revenues shall be disbursed from the Enterprise
Bank Account(s) to the extent available for payment of the following accounts in
the following order of priority:
(i) The Minimum Guaranteed Monthly Payment described in
Section 6.3 hereof;
(ii) All outstanding Minimum Guaranteed Payment Advances and
Working Capital Advances (and accrued interest thereon) or any other
amounts owing to LKAR under the Operating Note or to the Tribe under
Section 6.7 hereof;
(iii) Current principal, accrued interest and any other
payments due on Facility Loan;
(iv) Current principal, accrued interest and any other
payments due on the Land Acquisition Loan and the Transition Loan;
(v) Management compensation due LKAR under Section 6.5(b)
below; provide that if the distribution under this subsection in any
month is insufficient to fund such payment in full, the unpaid
amount shall be deferred and paid under subsection (vi) below;
(vi) Any amounts deferred (including accrued interest on any
deferred management compensation which interest shall accrue at the
rate of the prime interest rate of Chase Manhattan Bank, N.A. (or
any successor bank) plus two percent (2%) from the date the
management compensation is deferred) under subsections (ii), (iii),
(iv) and (v) above;
(vii) Any monthly capital replacement or other reserve
contributions which have been created with the written approval of
LKAR and the Tribe;
(viii) Any indemnification or other obligations then owing by
the Tribe to LKAR under any Transaction Document and not paid as
Costs of Gaming Operations or Costs of Incidental Operations
(provided LKAR has provided written notice to the
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Tribe that above amounts are owed under the Transaction Documents,
and the Tribe has not disputed the same or such amounts have been
determined to be owing through an arbitration proceeding under
Article 11 hereof); and
(ix) All remaining Net Total Revenues shall be disbursed to
the Tribe on the same date the Management compensation is paid,
subject to the rights of the LKAR under the Dominion Account
Agreement upon the occurrence of a Material Breach by the Tribe.
(b) As compensation for LKAR's services, LKAR shall receive thirty
percent (30%) of Net Total Revenues for the prior calendar month, for so long as
this Amended Memorandum Agreement shall remain in effect during the term hereof,
as provided in this Amended Memorandum Agreement. Any amounts owing to LKAR
hereunder shall be Limited Recourse obligations of the Tribe and shall be
subject to the security provisions described in Section 6.3(c) hereof, including
the Dominion Account Agreement and Security Agreement.
(c) LKAR, as agent for the Tribe, shall ensure that the Enterprise's
general manager is responsible for making the Net Total Revenues disbursements
to the appropriate party.
6.6 Annual Audit. With respect to each Fiscal Year, the Tribe shall cause
an audit to be conducted by an independent certified public accountant from a
Big Five accounting firm, who is licensed in California, has more than five (5)
years experience in audits of gaming enterprise operations, and is to be
selected and approved by the Tribe. On or before one hundred twenty (120) days
after the end of such year, such accounting firm shall issue a report with
financial statements in accordance with GAAP with respect to the preceding
Fiscal Year (or portion of the year in the case of the first year) operations of
the Enterprise, including operating statements, balance sheets, income
statements and statements reflecting the amounts computed to be distributed in
accordance with Section 6.5 hereof. In addition, upon termination of this
Management Agreement portion of this Amended Memorandum Agreement in accordance
with its terms, such accounting firm shall conduct an audit, and on or before
ninety (90) days after the termination date, shall issue a report setting forth
the same information as is required in the annual report, in each case with
respect to the portion of the Fiscal Year ending on the termination date. If the
Net Total Revenues or other amounts paid to the Tribe or LKAR in accordance with
Section 6.5 (b) above for relevant period are different from the amount which
should have been paid to such party based on the report prepared by the
accounting firm and based upon the provisions of this Management Agreement, then
to the extent either party received an overpayment, it shall repay and deposit
the amount of such overpayment into the bank account referenced in Section 3.8
(a) hereof within twenty-five (25) days of the receipt by such party of the
accountant's report, and to the extent either party received an underpayment, it
shall receive a distribution from the bank account referenced in Section 3.8 (a)
hereof of the amount of such underpayment within ten (10) days of the receipt by
such party of the accountant's report. LKAR, as
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agent for the Tribe, shall ensure that the Enterprise's general manager may make
adjustment to future payments to correct a discrepancy if required distributions
are not made.
6.7 Advances for Working Capital. Where amounts in bank accounts
established pursuant to Section 3.8 are insufficient to meet Costs of Gaming
Operations or Costs of Incidental Operation, during the first twelve (12) months
after the Commencement Date, the LKAR shall advance monies to the Enterprise
sufficient to meet Costs of Gaming Operations and Costs of Incidental
Operations. Thereafter, the Tribe shall advance such monies to the Enterprise
sufficient to meet Costs of Gaming Operations and Costs of Incidental
Operations. If LKAR makes any advances hereunder ("Working Capital Advances",
which advances shall be evidenced by an Operating Note in a form agreed to by
the Tribe and LKAR and shall accrue interest rate of the prime interest rate of
Chase Manhattan Bank, N.A. (or any successor bank) plus two percent (2%) from
the date the advances are made), LKAR shall be repaid as provided in Section 6.5
hereof (and any amounts outstanding on account of Working Capital Advances at
the end of the term of this Management Agreement shall be immediately due and
payable by the Tribe). Any Working Capital Advances shall be Limited Recourse
obligations of the Tribe and shall be subject to the security provisions
described in Section 6.3(c) hereof, including the Dominion Account Agreement and
Security Agreement. Any advances made by the Tribe hereunder shall accrue
interest at the same rate as applies to the Transition Loan as described in
Section 2.3(c) hereof and shall be repaid pursuant to Section 6.5 hereof.
6.8 Development and Construction Cost Repayment. The maximum dollar amount
for repayment of development and construction costs for the Facility and
Enterprise shall be three hundred sixty five million dollars ($365,000,000).
Subject to any applicable Legal Requirements, the parties may increase the
maximum repayment amount by mutual written agreement.
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PROVISIONS APPLICABLE TO BOTH
THE DEVELOPMENT AND MANAGEMENT AGREEMENTS
ARTICLE 7.
TERMINATION
7.1 Termination for Cause.
(a) Subject to the provisions of Section 9.2, either party may
terminate this Amended Memorandum Agreement if the other party commits or allows
to be committed a Material Breach (as hereinafter defined) of this Amended
Memorandum Agreement and fails to cure or to take steps to substantially cure
such breach within thirty (30) calendar days after receipt of a written notice
from the non-breaching party identifying the nature of the Material Breach in
specific detail and its intention to terminate this Amended Memorandum
Agreement. Termination is not an exclusive remedy for breach, and the
non-breaching party shall be entitled to other rights and remedies as may be
available. For purposes of this Amended Memorandum Agreement, a "Material
Breach" is any of the following circumstances: (i) failure of LKAR to provide
the Tribe with the Minimum Guaranteed Monthly Payments pursuant to Section 6.3,
(ii) material failure of either party to perform in accordance with this Amended
Memorandum Agreement for reasons not excused under Section 10.6 (Force Majeure),
(iii) if any of LKAR's employees commits theft, embezzlement or crime of moral
turpitude and if, after knowledge of such act or, if disputed, after
determination by arbitration under Article 11, LKAR does not remove such
employee from connection with Class II Gaming or Class III Gaming operations of
the Enterprise within thirty (30) days after receipt of written notice, (iv)
default under the Facility Note, the Land Acquisition Note, the Interim
Promissory Note, the Operating Note, any other Transaction Document or any
document or agreement related thereto by the Tribe, or (v) any representation or
warranty made pursuant to Section 10.11 or 10.12 proves to be knowingly false or
erroneous in any material way when made. Any final notice of termination
hereunder shall be in writing detailing the reason the party considers the
Material Breach not to be cured and must be delivered to the other party before
such termination becomes effective.
(b) Notwithstanding any provision to the contrary herein, the
parties agree that, for so long as the Tribe owes any amounts under the Facility
Note, the Land Acquisition Note, the Interim Promissory Note or the Operating
Note, the Tribe agrees that it will not terminate this Amended Memorandum
Agreement without cause.
7.2 Mutual Consent. This Amended Memorandum Agreement may be terminated at
any time upon the mutual written consent and approval of the parties.
7.3 Involuntary Termination Due to Changes in Law or Tribal-State Compact.
The parties hereby agree to use their best efforts to conduct Class II Gaming
and Class III Gaming activities in
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accordance with this Amended Memorandum Agreement and to ensure that such
activities and this Amended Memorandum Agreement conform to and comply with all
applicable laws and the Tribal-State Compact. The Tribe agrees that, except as
may be required by federal law, the Tribe will not enact or pass any new
ordinances subsequent to the execution of this Amended Memorandum Agreement that
would materially impair the rights of LKAR under this Amended Memorandum
Agreement. The Tribe will not enact any tax ordinance that will put the Facility
or the Enterprise, or any portion thereof, at a competitive disadvantage with
businesses in the same or like industries. In the event of any change in state
or federal laws that results in a final determination by the Secretary, the
National Indian Gaming Commission, or a court of competent jurisdiction that
this Amended Memorandum Agreement is unlawful, the Tribe and LKAR shall use
their best efforts to amend this Amended Memorandum Agreement in a mutually
satisfactory manner which will comply with the change in applicable laws and not
materially change the rights, duties and obligations of the parties hereunder.
In the event such amendment is not practical, performance of this Amended
Memorandum Agreement shall be automatically suspended effective upon the date
that performance of this Amended Memorandum Agreement becomes unlawful, and
either party shall have the right to terminate such suspended Amended Memorandum
Agreement (except the Notes and Security Provisions, as defined in Section 7.4
(a)), upon thirty (30) days written notice to the other party.
7.4 Ownership of Assets and Repayment of Notes on Termination.
(a) Upon termination, except in connection with LKAR's and Lender's
security interests in the Net Total Revenues of the Enterprise pursuant to the
Tribe's Limited Recourse obligations under the Facility Note, the Land
Acquisition Note, Interim Promissory Note and Operating Note (if not yet
satisfied), or any other security interests or liens in any Furnishings and
Equipment purchased with Facility Loan and Transition Loan proceeds or other
purchase money agreements, the Tribe will retain full ownership of the Facility,
Plans and Specifications therefor, and the Enterprise and its assets; and LKAR
will have no rights to the Enterprise and its assets or the Facility (or any
equipment, books and records, materials or furnishings therein that were
purchased with Costs of Gaming Operations, Costs of Incidental Operations or
Costs of Construction) except as to the security interests and liens recited
above or as may be established otherwise by a proceeding pursuant to Article 11
hereof. In the event of any termination (whether voluntary or involuntary), the
Tribe shall continue to have the obligation to pay unpaid principal and interest
and other amounts due under either the Facility Note, the Land Acquisition Note,
Interim Promissory Note or Operating Note executed in connection herewith,
together with any unpaid compensation owed to LKAR under Section 6.5(b) hereof
(if not yet satisfied), each of which shall become due and payable on such
termination date. Any and all obligations and provisions contained in this
Amended Memorandum Agreement concerning indemnity obligations or repayment of
the Facility Note, Land Acquisition Note, Interim Promissory Note or Operating
Note, and the security therefor, including the Security Agreement and Dominion
Account Agreement, together with any unpaid compensation owed to LKAR under
Section 6.5(b) hereof and the terms and provisions set forth in Articles 10 and
11 hereof
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excluding Sections 10.21 and 10.22 (collectively, the "Notes and Security
Provisions"), shall survive termination of this Amended Memorandum Agreement.
(b) Subject to the provisions of Section 7.1 (b), in the event of
termination of this Amended Memorandum Agreement for any reason prior to the
full repayment to LKAR of any amounts owed to it by the Tribe under the
Transaction Documents, including without limitation, the Facility Note, Land
Acquisition Note, Interim Promissory Note or Operating Note, the Tribe shall, as
promptly as reasonably possible, appoint a person or entity to manage the
Facility and operate the Enterprise (the "Replacement") and use its best efforts
to obtain approvals of all required Governmental Authorities for such
Replacement. The Tribe agrees to keep full and accurate financial records of
operations of the Enterprise by such Replacement and to allow LKAR to audit such
records at reasonable times prior to full repayment to LKAR of any amounts owed
to it by the Tribe under either the Facility Note, Land Acquisition Note, the
Interim Promissory Note or the Operating Note, and that Tribe's compliance with
this paragraph shall not preclude the LKAR from exercising any of its other
rights and remedies hereunder or any Transaction Documents, including, without
limitation, rights under the Facility Note, Land Acquisition Note, Interim
Promissory Note or Operating Note.
7.5 Notice of Termination. In the event of termination pursuant to this
Article, the Tribe shall provide notice of the termination to the Secretary or
other appropriate Governmental Authorities within ten (10) days after the
termination.
7.6 Cessation of Either Class II Gaming or Class III Gaming at the
Facility.
(a) If, during the term of this Amended Memorandum Agreement, either
Class II Gaming or Class III Gaming cannot be lawfully conducted at the Facility
by reason of the application of any legislation or court or administrative
agency order or decree adopted or issued by a governmental entity having the
authority to do so, LKAR shall, within sixty (60) days after such legislation,
order or decree becomes effective, elect to:
(i) retain LKAR's interest in this Amended Memorandum
Agreement and suspend both Class II and Class III Gaming operations
until such date on which both Class II Gaming and Class III Gaming
at the Facility becomes lawful (during which period the term of the
Management Agreement will be tolled until both Class II Gaming and
Class III Gaming at the Facility becomes lawful, and the period of
cessation shall not be deemed to have been part of the term of the
Management Agreement and the term shall be extended by the length of
time of the cessation); or
(ii) retain LKAR's interest in this Amended Memorandum
Agreement, suspend both Class II Gaming and Class III Gaming
operations until such date on which both Class II Gaming and Class
III Gaming at the Facility becomes lawful
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(during which period the term of the Management Agreement will be
tolled until Class III Gaming at the Facility becomes lawful, and
the period of cessation shall not be deemed to have been part of the
term of the Management Agreement and the term shall be extended by
the length of time of the cessation), and with the prior approval of
the Tribe, which approval shall not be unreasonably withheld, use
the Facility for any other lawful purpose pursuant to a use
agreement containing terms reasonably acceptable to LKAR and the
Tribe; or
(iii) terminate both Class II Gaming and Class III Gaming
operations and terminate this Amended Memorandum Agreement.
LKAR shall give the Tribe written notice of LKAR's election within such
sixty (60) day period.
(b) If LKAR elects to retain its interest in this Amended Memorandum
Agreement under Section 7.6 (a)(i) or (ii) above, LKAR shall have the right (but
not the obligation) to commence either Class II Gaming and Class III Gaming
operations within sixty (60) days after the date on which both Class II Gaming
and Class III Gaming becomes lawful. LKAR may exercise such right by giving the
Tribe written notice of such exercise within thirty (30) days after the date on
which both Class II Gaming and Class III Gaming becomes lawful. Any reasonable
payment to any third party made during the period during which either Class II
Gaming or Class III Gaming is unlawful to preserve or eliminate any leasehold or
purchase contract rights of the Facility shall be paid by LKAR as Costs of
Gaming Operations or Costs of Incidental Operations and reimbursed after both
Class II Gaming and Class III Gaming is recommenced.
(c) If LKAR elects to terminate this Amended Memorandum Agreement
under this Section 7.6, the provisions of Section 7.4 above shall apply.
(d) If, during the term of this Amended Memorandum Agreement, the
Facility is damaged by casualty or other occurrence to the extent, as reasonably
determined by LKAR, that either Class II or Class III Gaming cannot be conducted
at the Facility, LKAR shall, within sixty (60) days after such casualty or
occurrence, elect to:
(i) retain LKAR's interest in this Amended Memorandum
Agreement pending repair or reconstruction of the Facility, suspend
both Class II Gaming and Class III Gaming operations pending the
repair or reconstruction of the Facility (during which period the
term of the Management Agreement will be tolled until Class III
Gaming is recommenced at the Facility, and the period of cessation
shall not be deemed to have been part of the term of the Management
Agreement and the term
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shall be extended by the length of time of the cessation), and
arrange for such repair or reconstruction in the manner described in
this Section 7.6; or
(ii) terminate both Class II Gaming and Class III Gaming
operations and terminate this Amended Memorandum Agreement, such
termination to be effective on the thirtieth (30th) day after
written notice of termination has been delivered to the Tribe.
LKAR shall give the Tribe written notice of LKAR's election within
such sixty (60) day period.
(e) If LKAR elects to retain its interest in this Amended Memorandum
Agreement under Section 7.6(d)(i) above, LKAR shall promptly verify the amount
of insurance or other proceeds available to pay the cost of repair, replacement
or reconstruction. LKAR is hereby granted the authority to submit, adjust and
settle, on behalf of the Tribe, all insurance claims associated with the
casualty or occurrence; provided, however, that LKAR shall obtain the Tribe's
prior written consent (which consent shall not be unreasonably withheld) to any
settlement. LKAR shall provide copies of all settlement documents to the Tribe.
7.7 Renewal Option. Subject to Section 3.19, the parties by mutual
agreement may decide to renew or extend the Management Agreement of this Amended
Memorandum Agreement. Any such renewal or extension shall only become effective
upon approval by the NIGC and appropriate licensing by the Tribal Gaming
Commission.
7.8 Buyout Option. Beginning forty eight (48) months after commencement of
gaming operations at the Enterprise, the Tribe shall have the option to buy out
the LKAR's remaining rights and obligations under this Amended Memorandum
Agreement for the Buy-Out Purchase Price (as hereinafter established), provided
the Tribe has paid off in full the Land Acquisition Loan and the Transition Loan
at the time it exercises its option. The Tribe may exercise such option by
giving LKAR at least twelve (12) months prior written notice of such exercise.
The Buy-Out Purchase Price shall equal the monthly average of the last forty
eight (48) months of revenue received by LKAR under Section 6.5 (b) or the
monthly average of the last twelve months of revenue received by LKAR under
Section 6.5 (b), whichever is greater, multiplied by the number of months
remaining on the NIGC approved contract term, less five percent (5%) of that
amount, representing LKAR's overhead savings from not having to perform
management services after the buy out date, plus seven and one-half percent
(7.5%) of the average monthly revenue received by the LKAR multiplied by the
number of months between June 1999 and the Commencement Date, representing
compensation to LKAR for all work completed prior to the generation of revenues
of the Enterprise. The Buy-Out Purchase Price is to be paid in cash, less a
discount for present value at the Chase Manhattan Bank (or any successor bank)
prime interest rate plus two percent (2%) not to exceed ten percent (10%).
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ARTICLE 8.
RELEASE AND INDEMNITY
8.1 Third-Party Claims. Except for Section 2.4(h) and except for claims
resulting from the other party's own gross negligence or willful or criminal
misconduct, neither party shall be entitled to recover from, and expressly
releases, the other party, its agents, officers and employees, from or for any
third-party damages, claims, causes of action, losses and/or expenses of
whatever kind or nature, including attorneys' fees and expenses incurred in
defending such claims in connection with the lawful operation of the Facility
and Enterprise in accordance with the terms of this Amended Memorandum
Agreement, and such claims, damages, losses or expenses shall be considered
either Costs of Gaming Operations or Costs of Incidental Operations, depending
on the circumstances and nature of the claim, payable from the bank account
established pursuant to Section 3.8(a).
8.2 Indemnity from LKAR. Notwithstanding Section 8.1, LKAR shall indemnify
and hold the Tribe harmless against any and all damages, claims, losses or
expenses of whatever kind or nature, including reasonable attorneys' fees
resulting from the criminal misconduct and intentional torts of LKAR, its
officers and directors in connection with LKAR's performance of this Amended
Memorandum Agreement, and no such damages, losses or expenses shall be paid from
the bank accounts established pursuant to Section 3.8(a), nor shall such losses
or expenses be considered Costs of Gaming Operations or Costs of Incidental
Operations.
8.3 Indemnity from Tribe. Notwithstanding Section 8.1, Tribe shall
indemnify and hold LKAR harmless against any and all damages, claims, losses or
expenses of whatever kind or nature, including reasonable attorneys' fees
resulting from the criminal misconduct and intentional torts of the Tribe, its
officers, directors, or tribal government employees, in connection with Tribe's
performance of this Amended Memorandum Agreement, and no such damages, losses or
expenses shall be paid from the bank accounts established pursuant to Section
3.8(a), nor shall such losses or expenses be considered Costs of Gaming
Operations or Costs of Incidental Operations.
8.4 Indemnity Against Unauthorized Debt and Liabilities. The parties
expressly agree that neither this Amended Memorandum Agreement nor its
performance creates or implies a partnership between the parties or authorizes
either party to act as agent for the other except to the extent expressly
provided herein. LKAR hereby agrees to indemnify and hold the Tribe harmless
from any third-party claims, actions and liabilities, including reasonable
attorneys' fees on account of obligations or debts of LKAR that LKAR is not
authorized to undertake as agent for the Tribe pursuant to the terms of this
Amended Memorandum Agreement. The Tribe likewise agrees to indemnify and hold
LKAR harmless from any third-party claims, actions and liabilities on account of
any of the separate obligations or debts of the Tribe that are not authorized
Costs of Gaming Operations, Costs of Incidental Operations or Costs of
Construction pursuant to this Amended Memorandum Agreement.
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ARTICLE 9.
PARTIES IN INTEREST
9.1 Payment of Fees and Submission of Information for Background
Investigations. Upon execution of this Amended Memorandum Agreement, LKAR shall
pay from its own funds the fees required by federal and Tribe's regulations for
background investigations for the "Parties in Interest" as defined herein, and
it shall submit the information required by this Section in duplicate to the
National Indian Gaming Commission and the Tribal Gaming Commission and update
such information at any time that changes occur in prior submissions so as to
allow complete background investigations. However, in no event shall the cost of
background investigations under this Section relating to Tribal Gaming
Commission regulations exceed ten thousand dollars ($10,000) per individual,
without the mutual consent of the parties, which consent shall not be
unreasonably withheld.
(a) As used in this Section 9.1, the term "Parties in Interest"
includes any person or entity with a financial interest in, or having management
responsibility for, this Amended Memorandum Agreement or for which background
investigations are required by 25 C.F.R. Part 537, or by tribal or federal law,
or the Tribal-State Compact and any amendments thereto.
(b) LKAR shall require sufficient information and identification
from each "Party in Interest" to perform a background investigation for the
purpose of determining the suitability of such persons for employment in a Class
II Gaming and Class III Gaming operation, including, at a minimum, the
information required by the National Indian Gaming Commission as set forth in 25
C.F.R. Part 537, by federal and tribal law, and by the Tribal-State Compact, and
any amendments thereto.
(c) Without limiting the foregoing, LKAR shall obtain a current set
of fingerprints on each person for whom background investigations are required
by the Tribal Gaming Commission and the National Indian Gaming Commission, using
forms supplied by the National Indian Gaming Commission and/or the Tribal Gaming
Commission, which shall be referred to the Federal Bureau of Investigation (FBI)
Fingerprint Identification Division or other law enforcement agency designated
by the Tribal Gaming Commission.
(d) The parties hereby agree that a listing of all "Parties in
Interest" as defined in Section 9.1 (a) above shall be submitted to the NIGC.
All such "Parties in Interest", as such listing shall be supplemented from time
to time, shall be required to furnish the information required by this Section
9.1 prior to obtaining such interest. All necessary Governmental Authorities
must approve any change in the "Parties in Interest". Any deletion of a person
listed as one of the "Parties in Interest" shall not constitute a change in
persons with a financial interest in or management responsibility for a
management contract.
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9.2 Removal; Divestiture. Should the Tribal Gaming Commission or the
National Indian Gaming Commission, by agency action, find that any person or
entity with either a "direct or indirect financial interest" in this Amended
Memorandum Agreement (as defined in 25 C.F.R. Section 502.17, and any amendments
thereto) or with management authority hereunder, whose prior activities,
criminal record, if any, or reputation, habits, and associations pose a threat
to the public interest, or the tribal interest, or the effective regulation of
gaming, or create or enhance the dangers of unsuitable, unfair, or illegal
practices and methods and activities in the conduct of gaming or the carrying on
of related business and financial arrangements, or should such agency revoke the
license of such person or entity, and should either agency notify LKAR or the
Tribe of such finding or revocation, then LKAR shall immediately take all
necessary steps to require such person or entity to divest their interest in
this Amended Memorandum Agreement and shall immediately remove such person or
entity from all association with operations under this Amended Memorandum
Agreement upon receipt of such notice; provided that any person or entity
subject to such removal/divestiture shall be permitted to be revested and able
to associate with operations in the event the agency action is reversed upon
agency administrative or judicial appeal. In addition, if any person or entity
with "direct or indirect financial interest" in this Amended Memorandum
Agreement (as defined in 25 C.F.R. Section 502.17, and any amendments thereto)
or with management authority hereunder: (a) has been or is subsequently
convicted of a felony relating to gaming, (b) knowingly or willfully provided
materially false statements to the Tribe, the Tribal Gaming Commission or the
National Indian Gaming Commission, or refused to respond to questions from
either of such agencies, or (c) attempts to unduly interfere or unduly influence
for their gain or advantage any decision or process of tribal government
relating to Class II Gaming or Class III Gaming, and if LKAR becomes aware of
such conflicts or prohibited actions, then LKAR shall notify Tribe of such event
and immediately take all necessary steps to cause such person or entity to
divest their interest in LKAR. No person or entity required under this provision
to divest itself of its interest in LKAR or this Amended Memorandum Agreement,
or subject to removal under this provision, shall as a result thereof have any
legal or other recourse against the Tribe or any officer, employee, or agent of
the Tribe as a result of such divestiture except as provided in Article 11 or
pursuant to applicable law or regulations.
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ARTICLE 10.
MISCELLANEOUS
10.1 Assignment and Subcontractors. The rights and obligations under this
Amended Memorandum Agreement shall not be assigned or subcontracted by any party
without the prior written consent of the other party and without first obtaining
prior approval by the National Indian Gaming Commission or the BIA, if
applicable, and any other necessary regulatory approvals. However, the Tribe
reserves the right to assign its rights and obligations under this Amended
Memorandum Agreement to a tribally chartered entity or an XXX section 17
corporation that it wholly owns and controls and the LKAR reserves the right to
assign its rights and obligations under this Amended Memorandum Agreement to a
wholly owned subsidiary, provided that LKAR shall have received prior approval
from the NIGC and any other necessary regulatory approvals. Other than as
expressly provided herein or in Section 10.2 below, any attempted assignment or
subcontracting without such consent and approval shall be void. Approval of any
assignment or subcontract to any new party must be preceded by a complete
background investigation of the new party as required by Section 9.1. Subject to
the preceding requirements, this Amended Memorandum Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns.
10.2 Change of Control in Ownership Interest; Severability. LKAR is a
Delaware limited liability company whose members are Lakes Shingle Springs, Inc.
and Kean Argovitz Resorts- Shingle Springs, LLC. In the event that either of
LKAR's members, as an entity, either: (i) has its gaming license withdrawn or
fails to obtain a gaming license, each after exhaustion of all available
administrative and other legal due process, and fails, despite good faith
efforts to do so, to cure the condition causing the license withdrawal or
failure to obtain a license within the time frames contained in Section 7.1; or
(ii) for any reason is rendered legally incapable of continuing its
participation in this Amended Memorandum Agreement, the Tribe agrees and
consents to the cessation of all participation by that member of LKAR in this
Amended Memorandum Agreement and to the assumption by the remaining member of
LKAR of all rights and obligations pursuant to this Amended Memorandum
Agreement. In the event that either of LKAR's members, as an entity, with the
consent of the other member requests permission from the Tribe to withdraw from
participation in this Amended Memorandum Agreement, the Tribe shall consider in
good faith granting its consent, which consent shall not be unreasonably
withheld. In granting such consent, the Tribe agrees and consents to the
cessation of all participation by that member of LKAR in this Amended Memorandum
Agreement and to the assumption by the remaining member of LKAR of all rights
and obligations pursuant to this Amended Memorandum Agreement. Any Change of
Control (as defined herein) in LKAR shall require prior written consent of the
Tribe and be subject to Legal Requirements, or this Amended Memorandum Agreement
shall be terminated. For purposes of this Amended Memorandum Agreement, a
"Change of Control" means the acquisition by any legal entity,
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person or affiliated group of persons not presently members of LKAR of
beneficial ownership of fifty one percent (51%) or more of membership interest
in LKAR.
10.3 Notices. Any notice, consent or any other communication permitted or
required by this Amended Memorandum Agreement shall be in writing and shall be
effective on the date sent and shall be delivered by personal service, via
telecopier with reasonable evidence of transmission, express delivery or by
certified or registered mail, postage prepaid, return receipt requested, and,
until written notice of a new address or addresses is given, shall be addressed
as follows:
If to the Tribe: Shingle Springs Band of Miwok Indians
X.X. Xxx 0000
Xxxxxxx Xxxxxxx, XX 00000
Attention: Chairman
With a copy to: Xxxxxxx Xxxxx, Esq.
Xxxxxxx, Xxxxxxxxxxx & Xxxxxxxxx
0000 Xxxxxxxxx Xxx.
Xxxxx 000
Xxxxx Xxxx, XX 00000
If to the LKAR: Lakes KAR-Shingle Springs, LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxx Xxxxx & Xxxxx XXX
X0000 First National bank Building
000 Xxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
and Xxxxx Xxxxx, Esq.
Maslon, Edelman, Xxxxxx & Brand, LLP
3300 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Copies of any notices shall be given to the Tribal Gaming Commission.
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10.4 Amendments. This Amended Memorandum Agreement may be amended only by
written instrument duly executed by all of the parties hereto and with any and
all necessary regulatory approvals previously obtained.
10.5 Counterparts. This Amended Memorandum Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
10.6 Force Majeure. No party shall be in default in performance due
hereunder if such failure or performance is due to causes beyond its reasonable
control, including acts of God, war, fires, floods, or accidents causing damage
to or destruction of the Facility or property necessary to operate the Facility,
or any other causes, contingencies, or circumstances not subject to its
reasonable control which prevent or hinder performance of this Amended
Memorandum Agreement.
10.7 Time is Material. The Parties agree that time is of the essence and
the time and schedule requirements set forth in this Amended Memorandum
Agreement are material terms of this Amended Memorandum Agreement.
10.8 Further Assurances. The parties hereto agree to do all acts and
deliver necessary documents as shall from time to time be reasonably required to
carry out the terms and provisions of this Amended Memorandum Agreement.
10.9 Severability. In the event that any provision of this Amended
Memorandum Agreement is, by final order of a court of competent jurisdiction or
Government Authority, held to be illegal or void, the validity of the remaining
provisions of the Amended Memorandum Agreement shall be enforced as if the
Amended Memorandum Agreement did not contain such illegal or void clauses or
provisions, and the parties shall use their best efforts to negotiate an
amendment to this Amended Memorandum Agreement which will comply with the
judicial order and maintain the originally contemplated rights, duties and
obligations of the parties hereunder.
10.10 Sovereign Immunity. Except as described in the Resolution of Limited
Waiver attached hereto as Exhibit B and incorporated herein by reference,
nothing in this Amended Memorandum Agreement shall be deemed or construed to
constitute a waiver of sovereign immunity of the Tribe and the only applicable
waivers of sovereign immunity shall be those expressly provided and executed by
the Tribe's duly authorized representative and substantially conforming to the
form as approved by the parties. The parties agree that they will not amend or
alter the Resolution of Limited Waiver in any way which will lessen the rights
of any party as set forth in the Resolution of Limited Waiver. This Section
10.10 shall survive termination of this Amended Memorandum Agreement, regardless
of the reason for the termination.
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10.11 Representations and Warranties of LKAR. The LKAR hereby represents
and warrants as follows:
(a) This Amended Memorandum Agreement has been duly executed and
delivered by LKAR and, when approved by necessary Governmental Authorities
as set forth (where applicable), will constitute a valid and binding
obligation, enforceable against LKAR in accordance with its terms.
(b) The execution and delivery of this Amended Memorandum Agreement,
the performance by LKAR of its obligations hereunder and the consummation
by LKAR of the transactions contemplated hereby will not violate any
contract or agreement to which LKAR or any of its affiliated companies is
a party or any law, regulation, rule or ordinance or any order, judgment
or decree of any federal, state, tribal or local court or require any
regulatory approval beyond those contemplated herein.
(c) LKAR has the full legal right, power and authority and has taken
all action necessary to enter into this Amended Memorandum Agreement, to
perform its obligations hereunder, and to consummate all other
transactions contemplated by this Amended Memorandum Agreement.
(d) LKAR has conducted due diligence investigations and has
satisfied itself as to the present and past relationships between Tribe
and all other entities in connection with the Tribe's economic development
activities, including but not limited to Sharp Image Gaming, Inc., and,
subject to the provisions in Section 2.12, waives any claim that such
relationships and the Tribe's legally required performance thereunder, if
any, constitute a breach of this contract or an actionable tort.
10.12 Representations and Warranties of Tribe. The Tribe hereby represents
and warrants as follows:
(a) The Tribe is duly organized Indian tribe under the laws of the
Tribe and the United States.
(b) The Tribe has full legal right, power and authority under the
laws for the Tribe and has taken all official Tribal Council action
necessary (i) to enter into this Amended Memorandum Agreement and
authorize the Tribe to execute and deliver this Amended Memorandum
Agreement, the Operating Note, Dominion Account Agreement, Security
Agreement, the Facility Loan documentation, Facility Note, Land
Acquisition Note and Interim Promissory Note, and any and all other
documents and agreements related thereto (collectively and as amended,
renewed, or extended from time to time, the "Transaction
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Documents"), (ii) to perform its obligations hereunder, and (iii) to
consummate all other transactions contemplated by this Amended Memorandum
Agreement and other Transaction Documents.
(c) This Amended Memorandum Agreement (and the other Transaction
Documents), when executed and delivered by Tribe and approved by necessary
Governmental Authorities, if required, including the Tribe, will
constitute a valid and binding obligation, enforceable against Tribe in
accordance with their terms.
(d) Subject to the provisions of Section 10.11(d), the execution and
delivery of this Amended Memorandum Agreement (and other Transaction
Documents), the performance by Tribe of its obligations hereunder and
thereunder, and the consummation by Tribe of the transactions contemplated
hereby will not violate any contract or agreement to which Tribe is a
party, law, regulation, rule or ordinance or any order judgment or decree
of any federal, state, tribal or local court, or require any approval by
Governmental Authorities beyond those contemplated herein.
10.13 Governing Law. This Amended Memorandum Agreement has been
negotiated, made and executed at the Tribe's office located in the State of
California and shall be construed in accordance with the applicable laws of the
State of California, without regard to its conflict of laws provisions, and
applicable Tribe and federal laws.
10.14 Entire Agreement. This Amended Memorandum Agreement, including all
exhibits, represents the entire agreement between the parties and supersedes all
prior agreements relating to the subject matter of Class II Gaming and Class III
Gaming to be developed and conducted by the Tribe at the Facility and operations
of the Enterprise. The parties hereto intend that this Amended Memorandum
Agreement (and related Transaction Documents) is to supercede and replace the
May 5, 2000 Memorandum of Agreement and any other prior agreements between the
parties in connection with the Project.
10.15 Representatives of Tribe. The Tribal Council shall furnish to LKAR a
list of the authorized representatives who are empowered to act on behalf of the
Tribe for the purposes of this Amended Memorandum Agreement and the Tribe shall
keep such list current. The Tribe hereby acknowledges and agrees that to the
extent any authorization, consent or other approval of the Tribe or the Tribal
Council is required under this Amended Memorandum Agreement or any related
Transaction Documents and the Tribe shall provide to LKAR a tribal resolution
naming any individual or individuals authorized to represent the Tribe and the
Tribal Council for purposes or for the purpose of the operation and performance
of this Amended Memorandum Agreement and related Transaction Documents, then
LKAR shall be entitled to rely on all decisions, authorizations, consents,
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and approvals provided by such individual or individuals, as applicable, until
such time as the Tribe shall deliver to LKAR an additional tribal resolution
revoking or otherwise modifying such authority.
10.16 Limitations of Liability. LKAR expressly agrees that the Tribe's
total aggregate liability for damages for breach of the Amended Memorandum
Agreement shall be limited in accordance with the Resolution of Limited Waiver
attached hereto as Exhibit B and incorporated herein by reference. The Tribe
shall bear no liability for further damages.
10.17 Approvals. Unless otherwise provided herein, all approvals or
consents required by either party hereunder shall not be unreasonably withheld
or delayed, unless otherwise provided herein. Approval by the Tribal Council or
its duly authorized representative shall be deemed to constitute approval by the
Tribe and approval by the duly authorized President of LKAR shall be deemed to
constitute approval by the LKAR.
10.18 Best Efforts. LKAR and the Tribe shall use their best efforts to
perform and fulfill their obligations under this Amended Memorandum Agreement in
the manner required by this Amended Memorandum Agreement.
10.19 Request for NIGC Approval. The parties specifically request that the
NIGC, or the Secretary where appropriate, approve this Amended Memorandum
Agreement and other Transaction Documents, if required, or declare that such
approval is not required.
10.20 Non-disclosure. The parties agree not to divulge to third parties
the terms of this Amended Memorandum Agreement or any other proprietary or
confidential information exchanged between the parties pursuant to this Amended
Memorandum Agreement, unless (i) the information is required to be disclosed
pursuant to judicial or Legal Requirements, (ii) the information is at the time
of disclosure already in the public domain, or (iii) to the extent required in
order to obtain financing. This prohibition shall not apply to disclosures by
either party to their attorneys, accountants, or other professional advisers. In
situations where disclosure of the terms of this Amended Memorandum Agreement to
regulatory, governmental or judicial entities is required by law or regulations,
the parties will make reasonable efforts to secure confidential treatment of the
terms of this Amended Memorandum Agreement by such entities; provided, however,
this disclosure restriction shall not prohibit LKAR making any SEC filings it
deems legally necessary. The parties agree to consult with each other and
cooperate regarding any press releases regarding this Amended Memorandum
Agreement and the relationships described herein. LKAR understands that as a
tribal government, the Tribe is obligated to fully inform, consult with, and
obtain the consent of its membership to its entry into and performance of this
Amended Memorandum Agreement. LKAR also understands that the Tribe has no
control over the distribution by its members of this Amended Memorandum
Agreement or their dissemination of other confidential information. LKAR
therefore agrees that this section is intended only to bind the Tribe as a legal
entity, and its officers and agents, and the Tribe shall have no liability for
failure of any other person to comply with this provision.
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10.21 Non-Competition. LKAR agrees that, during the term of this Amended
Memorandum Agreement, it will not finance, manage, or consult in connection with
any facility where Class II Gaming or Class III Gaming is or will be conducted
within a radius of fifty (50) miles from the Gaming Site or in the Lake Tahoe
area without the prior written consent of the Tribe (excluding Xxxx Xxxxxx and
his involvement with Park Place Entertainment, Inc.). The Tribe agrees that,
during the term of this Amended Memorandum Agreement, it will not solicit or
enter into any negotiations or agreements with any person or company with
respect to any Class II Gaming or Class III Gaming conducted within fifty (50)
miles of the Gaming Site without the prior written consent of LKAR.
10.22 Other Business Opportunities. LKAR agrees that, in an effort to
develop a long-lasting business relationship with the Tribe, LKAR will make its
best efforts to present appropriate business and investment opportunities to the
Tribe.
10.23 Use of Trade Marks and Trade Names. To assure that the Tribe can
continue operation of the Facility and Enterprise without disruption in the
event that this Amended Memorandum Agreement is terminated or not renewed, LKAR
agrees that it will not use any trade xxxx or trade name to identify any portion
of the Facility or Enterprise or services offered within the Facility or
Enterprise unless such trade xxxx or trade name is registered in the name of the
Tribe.
ARTICLE 11.
DISPUTE RESOLUTION
11.1 Disputes Between the Enterprise and Patrons. Disputes that arise
between the Enterprise and any patron of the Facility shall be resolved in
accordance with the Tribal-State Compact and tribal ordinances, if applicable.
11.2 Disputes Between the Enterprise and Enterprise Employees. The Tribe
and LKAR shall jointly develop an employee dispute resolution policy and LKAR,
as agent of the Tribe, shall ensure that the enterprise's general manager shall
implement and administer the employee dispute resolution policy after its
adoption.
11.3 Disputes Between the Tribe and LKAR. Disputes between the Tribe and
LKAR with respect to this Amended Memorandum Agreement, the Land Acquisition
Note, the Interim Promissory Note, the Facility Note, Operating Note, or any
other Transaction Document or a party's performance hereunder or thereunder,
shall be resolved by the following dispute resolution process herein and
pursuant to the Resolution of Limited Waiver attached hereto.
(a) The parties shall first meet and confer in a good faith attempt
to resolve the dispute through negotiations not later than ten (10) calendar
days after receipt of written notice of the dispute, unless both parties agree
in writing to an extension of time.
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(b) If the dispute is not resolved to the satisfaction of the
parties within thirty (30) calendar days after the first meeting in Section
11.3(a) above, then any claim, controversy or dispute arising out of or relating
to this Amended Memorandum Agreement, Facility Note, Land Acquisition Note, the
Interim Promissory Note, the Operating Note, or any other Transaction Document,
or any alleged default hereunder or breach of any provisions thereof, shall be
submitted to binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect at the time of
submission; except that: (a) the question whether or not a dispute is arbitrable
under this Amended Memorandum Agreement or any other Transaction Document shall
be a matter for binding arbitration by the arbitrators, such question shall not
be determined by any court and, in determining any such question, all doubts
shall be resolved in favor of arbitrability; and (b) discovery shall be
permitted in accordance with the Federal Rules of Civil Procedure, subject to
supervision as to scope and appropriateness by the arbitrators. Judgment on any
arbitration award may be entered in any court having jurisdiction over the
parties pursuant to the Resolution of Limited Waiver attached hereto as Exhibit
B and incorporated herein by reference.
(c) Unless the parties hereto otherwise agree in writing prior of
the submission of such claim, controversy or dispute to arbitration, arbitration
proceedings under this Article 11 shall be held in Sacramento, California.
(d) Either party may, at any time prior to the selection of an
arbitrator or arbitrators, require that the arbitrator or arbitrators selected
be an attorney or attorneys licensed to practice law in California and that the
attorneys have experience in Indian gaming regulatory and development issues.
(e) Unless the parties hereto otherwise agree in writing, any matter
to be arbitrated shall be submitted to a panel of three arbitrators. One
arbitrator shall be selected by the Tribe, one arbitrator shall be selected by
LKAR and the third arbitrator shall be selected by mutual agreement of the two
arbitrators selected by the parties hereto.
(f) The arbitration award shall be in writing signed by each of the
arbitrators, and shall state the basis for the award. The arbitration award
shall be set forth in reasonable detail as to its findings of fact and law, and
basis of determination of award form and amount. In connection with any
arbitration award, the arbitrators shall be empowered to take the actions and
enforce the judicial remedies described in Paragraph 5 of the Resolution of
Limited Waiver; provided however, that although the arbitrators may award
damages in the event the Tribe or the Tribal Gaming Commission do not to comply
with the award, the arbitrators may not require the Tribe or the Tribal Gaming
Commission to take or modify any governmental legislative decision or action
which the arbitrators have determined has resulted in the dispute between the
parties and is contrary to the parties rights, liabilities or obligations under
this Amended Memorandum Agreement, the Facility Note, the Land Acquisition Note,
the Interim Promissory Note, the Operating Note, or any other Transaction
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60
Document ("Specific Performance Restriction"). Provided further, that: (a)
should the arbitrators determine that there has been an intentional bad faith
violation of a party's rights under this Amended Memorandum Agreement or any
other transaction Document by the Tribe or Tribal Gaming Commission, and if the
Tribe or the Tribal Gaming Commission do not reverse such intentional bad faith
violation through governmental legislative decision or action within thirty (30)
days after the being notified by the arbitrators of such determination, then the
arbitrators shall award one-and-half (1-1/2 ) times damages to LKAR, or other
claimant, as applicable, for damages suffered as a consequence of the Tribe's or
Tribal Gaming Commission's intentional bad faith violation; and (b) such
Specific Performance Restriction shall not prevent LKAR, or other claimant, as
applicable, from enforcing the Facility Note, the Land Acquisition Note, the
Interim Promissory Note, the Operating Note, the Security Agreement, the
Dominion Account Agreement, or the liens and security interests granted
thereunder, nor from realizing on collateral encumbered thereby.
(g) Except to the extent such enforcement will be inconsistent with
a specific provision of this Amended Memorandum Agreement, arbitration awards
made pursuant to this Article 11 shall be enforceable in federal court under
Title 9 of the United States Code and any applicable tribal, federal or state
law governing the enforcement of arbitration awards.
(h) In addition to any basis for appeal of an arbitration award
stated in Title 9 of the United States Code or any applicable law governing the
enforcement of arbitration awards, either party hereto may appeal an arbitration
award on the basis that the arbitrator or arbitrators incorrectly decided a
question of law in making the award, or the award was made in an arbitrary or
capricious manner or in manifest disregard of the factual evidence.
(i) Either party hereto, without having to exhaust any tribal
remedies first, shall have the right to seek and obtain a court order from a
court having jurisdiction over the parties requiring that the circumstances
specified in the order be maintained pending completion of the arbitration
proceeding, to the extent permitted by applicable law.
(j) The parties agree that: (1) in the event that a dispute
submitted to arbitration under this section involves the right of LKAR to
continue to receive compensation under Section 6.5 hereof, or (2) in the event
that LKAR appeals an agency decision under Section 9.2 for removal/divestiture,
then any compensation which is asserted to be due to LKAR during such dispute
shall, if not paid to LKAR, be deposited into an interest bearing escrow account
with the entity that is designated as the "Depository" under the Dominion
Account Agreement and LKAR shall be granted a security interest in said escrow
account which interest is contingent, as follows: such escrow funds shall be
released to LKAR upon an arbitration award being issued in its favor or on the
date the agency action under Section 9.2 is reversed by agency administrative or
judicial appeal; provided that upon final conclusion of such arbitration or
agency administrative or judicial appeal, any portion of
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such escrowed funds not expressly awarded to LKAR shall be immediately released
unconditionally to the Tribe.
[Rest of page left blank intentionally; signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Amended
Memorandum Agreement, subject to separate written approval of all exhibits
referred to herein and related Transaction Documents.
Shingle Springs Band of Lakes KAR-Shingle Springs, LLC
Miwok Indians
By: signature illegible By: Xxxxxxx Xxxx
---------------------- ----------------------
Its: Tribal Chairman Its: President
By: signature illegible
----------------------
Its: vice-chairman
Approved pursuant to 25 U.S.C. Section 2711
National Indian Gaming Commission
By: _____________________________
Print Name: Xxxxxx X. Xxxxx
Its Chairman
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63
LIST OF EXHIBITS
Pursuant to Item 601(b) of Regulation S-K, certain Exhibits have been omitted
from this Agreement. The Registrant will furnish a copy of any omitted Exhibit
to the Commission upon request.
Exhibit A Legal Description of Gaming Site
Exhibit B Resolution of Limited Waiver of Immunity from Suit
JUNE 16, 2004 AMENDMENT TO
FIRST AMENDED AND RESTATED
MEMORANDUM OF AGREEMENT
REGARDING
GAMING DEVELOPMENT
AND
MANAGEMENT
AGREEMENT
BETWEEN
SHINGLE SPRINGS BAND OF MIWOK INDIANS
A FEDERALLY RECOGNIZED TRIBE
AND
LAKES KAR-SHINGLE SPRINGS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED: OCTOBER 13, 2003
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
1
THIS AMENDMENT ("AMENDMENT") to the October 13, 2003 FIRST AMENDED AND
RESTATED MEMORANDUM OF AGREEMENT, by and between the Shingle Springs Band of
Miwok Indians, a federally recognized Indian tribe (hereinafter referred to as
("the Tribe"), located in the State of California with tribal offices located at
X.X. Xxx 0000, Xxxxxxx Xxxxxxx, Xxxxxxxxxx 00000 and Lakes KAR-Shingle Springs,
LLC, a Delaware limited liability company (hereinafter referred to as "LKAR"),
whose business office is located at 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, is
made and entered into this 16th day of June, 2004 by the parties.
RECITALS
A. The Tribe is a federally recognized Indian tribe eligible for the
special programs and services provided by the United States to Indians because
of their status as Indians and is recognized as possessing powers of
self-government.
B. In compliance with the Indian Gaming Regulatory Act of 1988, P.L.
100-497, 25 U.S.C. 2701 et seq. as it may from time to time be amended, the
Tribal Council of the Tribe has enacted a tribal ordinance regulating the
operation of gaming activities on Tribal Lands (hereinafter referred to as the
"Tribal Gaming Ordinance"), creating the Shingle Springs Tribal Gaming
Commission, and authorizing Class II Gaming and Class III Gaming on its Tribal
Lands subject to the provisions of the Tribal Gaming Ordinance and a
Tribal-State Compact.
C. The Tribe is committed to the use of gaming activities to provide
employment and improve the social, economic, education, and health needs of its
members; to increase the revenues of the Tribe; and to enhance the Tribe's
economic self-sufficiency and self-determination.
D. The Tribe presently lacks the resources to develop and operate a gaming
facility and enterprise on its own and desires to retain the services of a
developer and manager with knowledge and experience in the gaming industry to
secure financing, develop, manage and operate a Class II Gaming and Class III
Gaming facility and related resort facilities located on its Indian lands in
accordance with the Indian Gaming Regulatory Act of 1988, as amended.
E. To assist with the financing, development, management and operations of
its planned gaming facility and enterprise (the "Project"), the Tribe and LKAR
agreed to enter into their First Amended and Restated Memorandum of Agreement
Regarding Gaming Development and Management Agreement ("Amended Memorandum
Agreement") and related Transaction Documents dated October 13, 2003 in
connection with the Project.
F. The October 13, 2003 Amended Memorandum Agreement (and related exhibits
and Transaction Documents) between the Tribe and LKAR has been submitted for
approval to the National Indian Gaming Commission ("NIGC"); NIGC staff have
reviewed the October 13, 2003 Amended Memorandum Agreement (and related exhibits
and Transaction Documents) and have requested certain modifications to the
documents prior to issuing NIGC approval; the Tribe and
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
2
LKAR have made such modifications to the documents as they have deemed
necessary, including those made necessary by changes in circumstances related to
increased financing needs of the Project; such modifications are incorporated
herein and, accordingly, the Tribe and LKAR agree to enter into this June 16,
2004 Amendment to the October 13, 2003 First Amended and Restated Memorandum of
Agreement Regarding Gaming Development and Management Agreement in connection
with the Project.
G. This June 16, 2004 Amendment to the October 13, 2003 Amended Memorandum
Agreement shall become effective when all the necessary approvals listed in
Section 3.19 of the Amended Memorandum Agreement are received (the "Effective
Date") and shall continue for a term of seven (7) years from the Commencement
Date, or as otherwise provided in the October 13, 2003 Amended Memorandum
Agreement.
H. Any dispute regarding this June 16, 2004 Amendment to the October 13,
2003 Amended Memorandum Agreement between the parties is to be subject to the
dispute resolution and governing law provisions contained in the October 13,
2003 Amended Memorandum Agreement, as well as the Resolution of Limited Waiver
attached as Exhibit B thereto.
NOW, THEREFORE, in consideration of the above circumstances and the
hereinafter mutual promises and covenants, and for other good and valuable
consideration as set forth herein, the receipt and sufficiency of which are
expressly acknowledged, the Tribe and LKAR agree as follows:
1. Section 2.3(b)(i) of the October 13, 2003 Amended Memorandum Agreement
is amended to state as follows:
(b)(i) The total amount of funds advanced to the Tribe directly from
LKAR pursuant to Section 2.3(a)(i) shall equal the total amount of the
Transition Loan. The total amount of the Transition Loan shall be in an amount
not exceeding thirty million dollars ($30,000,000). The parties agree that as of
May 30, 2004, LKAR has advanced $29,143,769.02 to the Tribe under the Transition
Loan. The Transition Loan shall accrue interest at the prime interest rate of
Chase Manhattan Bank (or any successor bank by acquisition or merger) plus two
percent (2%), fixed from the date the funds are advanced to the Tribe. Principal
and interest due under the Transition Loan shall be paid as provided under
Section 2.3(c) below.
2. Section 2.3(b)(ii) of the October 13, 2003 Amended Memorandum Agreement
is amended to state as follows:
(b)(ii) The total amount of funds advanced to the Tribe by LKAR
pursuant to Section 2.3(a)(ii) shall equal the total amount of the Land
Acquisition Loan. The total amount of the Land Acquisition Loan shall be in an
amount not exceeding Ten Million dollars ($10,000,000). The parties agree that
as of May 30, 2004, LKAR has advanced $7,429,454.73 to the Tribe under the Land
Acquisition Loan. The Land Acquisition Loan shall accrue interest at the prime
interest rate of Chase
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
3
Manhattan Bank (or any successor bank by acquisition or merger) plus two percent
(2%), fixed from the date the funds are advanced to the Tribe in accordance with
Section 2.3(a)(ii) hereof. Principal and interest due under the Land Acquisition
Loan shall be paid as provided under Section 2.3(c) below.
3. Section 2.14 of the October 13, 2003 Amended Memorandum Agreement is
amended to state as follows:
Term of Development Agreement. Unless sooner terminated as provided in
this Amended Memorandum Agreement, the term of the Development Agreement shall
run until the earlier of either (i) the Commencement Date; or (ii) December 11,
2005; provided however, that the Notes and Security Provisions shall continue
until all amounts owing to LKAR with respect thereto have been paid in full.
4. Section 6.5(b) of the October 13, 2003 Amended Memorandum Agreement is
amended to state as follows:
(b) As compensation for LKAR's services, LKAR shall receive thirty percent
(30%) of Net Total Revenues for the prior calendar month, for the first five (5)
years of the term of this Amended Memorandum Agreement, and in years six (6) and
seven (7) of the term of this Amended Memorandum Agreement, shall receive 25% of
the first $90 million of Net Total Revenues per year, then 15% of the next $60
million of Net Total Revenues per year and 5% of all Net Total Revenues over
$150 million per year, as provided in this Amended Memorandum Agreement. Any
amounts owing to LKAR hereunder shall be Limited Recourse obligations of the
Tribe and shall be subject to the security provisions described in Section
6.3(c) hereof, including the Dominion Account Agreement and Security Agreement.
5. Section 2.11 of the October 13, 2003 Amended Memorandum Agreement is
amended to state as follows:
Limited Waiver of Sovereign Immunity. By this Amended Memorandum
Agreement, the Tribe does not waive, limit, or modify its sovereign immunity
from unconsented suit except as provided in tribal Resolution 2003-12 dated
October 13, 2003 attached hereto as Exhibit B and in tribal Resolution 2004-xx
dated June 16, 2004 attached hereto as Exhibit C. The Tribe understands that its
agreement to adopt enforceable resolutions of limited waiver is a material
inducement to the LKAR's execution of this Amended Memorandum Agreement and is a
condition precedent to any of the respective obligations of the parties under
this Amended Memorandum Agreement. The Tribe further agrees that it will not
amend or alter or in any way lessen the rights of the Lender or LKAR as set
forth in the resolutions of limited waiver, which are attached hereto as Exhibit
B and Exhibit C, both of which are incorporated here by reference. This Section
2.11 shall survive the termination of this Amended Memorandum Agreement,
regardless of the reason for the termination.
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
4
6. Section 10.10 of the October 13, 2003 Amended Memorandum Agreement is
amended to state as follows:
Sovereign Immunity. Except as described in the resolutions of limited
waiver attached hereto as Exhibit B and Exhibit C, both of which are
incorporated herein by reference, nothing in this Amended Memorandum Agreement
shall be deemed or construed to constitute a waiver of sovereign immunity of the
Tribe and the only applicable waivers of sovereign immunity shall be those
expressly provided and executed by the Tribe's duly authorized representative
and substantially conforming to the form as approved by the parties. The parties
agree that they will not amend or alter the resolution of limited waiver
attached hereto as Exhibit B and Exhibit C in any way which will lessen the
rights of any party as set forth in the resolutions of limited waiver. This
Section 10.10 shall survive termination of this Amended Memorandum Agreement,
regardless of the reason for the termination.
7. Section 11.3(b) of the October 13, 2003 Amended Memorandum agreement is
amended to state as follows:
(b) If the dispute is not resolved to the satisfaction of the
parties within thirty (30) calendar days after the first meeting in Section
11.3(a) above, then any claim, controversy or dispute arising out of or relating
to this Amended Memorandum Agreement, Facility Note, Land Acquisition Note, the
Interim Promissory Note, the Operating Note, or any other Transaction Document,
or any alleged default hereunder or breach of any provisions thereof, shall be
submitted to binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect at the time of
submission; except that: (a) the question whether or not a dispute is arbitrable
under this Amended Memorandum Agreement or any other Transaction Document shall
be a matter for binding arbitration by the arbitrators, such question shall not
be determined by any court and, in determining any such question, all doubts
shall be resolved in favor of arbitrability; and (b) discovery shall be
permitted in accordance with the Federal Rules of Civil Procedure, subject to
supervision as to scope and appropriateness by the arbitrators. Judgment on any
arbitration award may be entered in any court having jurisdiction over the
parties pursuant to the resolutions of limited waiver attached hereto as Exhibit
B and Exhibit C, both of which are incorporated herein by reference.
8. Section 11.3(f) of the October 13, 2003 Amended Memorandum agreement is
amended to state as follows:
(f) The arbitration award shall be in writing signed by each of the
arbitrators, and shall state the basis for the award. The arbitration award
shall be set forth in reasonable detail as to its findings of fact and law, and
basis of determination of award form and amount. In connection with any
arbitration award, the arbitrators shall be empowered to take the actions and
enforce the judicial remedies described in Paragraph 5 of the resolutions of
limited waiver attached hereto as Exhibit B
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
5
and Exhibit C, both of which are incorporated herein by reference; provided
however, that although the arbitrators may award damages in the event the Tribe
or the Tribal Gaming Commission do not to comply with the award, the arbitrators
may not require the Tribe or the Tribal Gaming Commission to take or modify any
governmental legislative decision or action which the arbitrators have
determined has resulted in the dispute between the parties and is contrary to
the parties rights, liabilities or obligations under this Amended Memorandum
Agreement, the Facility Note, the Land Acquisition Note, the Interim Promissory
Note, the Operating Note, or any other Transaction Document ("Specific
Performance Restriction"). Provided further, that: (a) should the arbitrators
determine that there has been an intentional bad faith violation of a party's
rights under this Amended Memorandum Agreement or any other transaction Document
by the Tribe or Tribal Gaming Commission, and if the Tribe or the Tribal Gaming
Commission do not reverse such intentional bad faith violation through
governmental legislative decision or action within thirty (30) days after the
being notified by the arbitrators of such determination, then the arbitrators
shall award one-and-half (1-1/2 ) times damages to LKAR, or other claimant, as
applicable, for damages suffered as a consequence of the Tribe's or Tribal
Gaming Commission's intentional bad faith violation; and (b) such Specific
Performance Restriction shall not prevent LKAR, or other claimant, as
applicable, from enforcing the Facility Note, the Land Acquisition Note, the
Interim Promissory Note, the Operating Note, the Security Agreement, the
Dominion Account Agreement, or the liens and security interests granted
thereunder, nor from realizing on collateral encumbered thereby.
9. The List of Exhibits page of the October 13, 2003 Amended Memorandum
Agreement is amended to state as follows:
LIST OF EXHIBITS
Exhibit A Legal Description of Gaming Site
Exhibit B Resolution 2003-12 concerning Limited Waiver of Immunity
from Suit
Exhibit C Resolution 2004-xx concerning Limited Waiver of Immunity
from Suit
10. Section 10.14 of the October 13, 2003 Amended Memorandum Agreement is
amended to state as follows:
Entire Agreement. This Amended Memorandum Agreement (including all its
exhibits and related Transaction Documents, along with tribal Resolution 2004-18
approving the establishment of the Foothills Oaks Tribal Gaming Authority and
its related Ordinance, the June 16, 2004 Amendment to the October 13, 2003
Amended Memorandum Agreement, the June 16, 2004 Consent Agreement
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
6
entered into by the parties, and tribal Resolution 2004-xx concerning the June
16, 2004 Amendment and Consent Agreement), represents the entire agreement
between the parties and supersedes all prior agreements relating to the subject
matter of Class II Gaming and Class III Gaming to be developed and conducted by
the Tribe at the Facility and operations of the Enterprise. The parties hereto
intend that this Amended Memorandum Agreement (and related Transaction
Documents) is to supercede and replace the May 5, 2000 Memorandum of Agreement
and any other prior agreements between the parties in connection with the
Project.
11. The Tribe and LKAR agree that any dispute in connection with this June
16, 2004 Amendment to the October 13, 2003 Amended Memorandum Agreement shall be
subject to the dispute resolution procedures and limited waiver of sovereign
immunity contained in the October 13, 2003 Amended Memorandum Agreement and the
Resolution of Limited Waiver attached thereto as Exhibit B, the terms of which
are incorporated by reference herein.
12. The Tribe and LKAR agree that capitalized terms used herein and not
defined shall have the meanings given them in the October 13, 2003 Amended
Memorandum Agreement.
13. The Tribe and LKAR agree that this Amendment shall be construed in
accordance with and governed by the internal laws and decisions of the State of
California, without giving effect to its choice of law principles.
14. The Tribe and LKAR agree that no modification, amendment or change to
this Amendment shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, amendment or change is
sought.
15. Except as amended above, all other provisions of the October 13, 2003
Amended Memorandum Agreement shall remain in full force and effect as originally
stated and are equally applicable hereto.
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
7
IN WITNESS WHEREOF, the parties hereto have executed this June 16, 2004
Amendment to the October 13, 2003 Amended Memorandum Agreement of the parties.
Shingle Springs Band of Lakes KAR-Shingle Springs, LLC
Miwok Indians
By: signature illegible By: Xxxxxxx Xxxx
------------------------------ -------------------------------
Its: Tribal Chairman Its: President
By: signature illegible
------------------------------
Its: vice chair
Approved pursuant to 25 U.S.C. Section 2711
National Indian Gaming Commission
By:
------------------------------------
Print Name: Xxxxxx X. Xxxxx
Its Chairman
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
8
Pursuant to Item 601(b) of Regulation S-K, certain Exhibits have been omitted
from this Agreement. The Registrant will furnish a copy of any omitted Exhibit
to the Commission upon request.
June 16, 2004 Amendment to
October 13, 2003 Amended Memorandum Agreement
06/16/04 revision
9
