EXHIBIT 10.2
SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT
BETWEEN
THE PICAYUNE RANCHERIA OF
CHUKCHANSI INDIANS, THE CHUKCHANSI ECONOMIC DEVELOPMENT AUTHORITY,
AND
CASCADE ENTERTAINMENT GROUP, LLC
July 16, 2002
TABLE OF CONTENTS
Recitals
SECTION 1. DEFINITIONS
SECTION 2. COVENANTS
2.1 Engagement of Manager.
2.2 Term.
2.3 Status of Property.
2.4 Tribe, Authority, and Manager Compliance with Law; Licenses.
2.5 Amendments to Tribal Gaming Code and Tribal Constitution.
2.6 Compliance with Compact.
2.7 Fire and Safety.
2.8 Compliance with the National Environmental Policy Act
2.9 Satisfaction of Effective Date Requirements.
2.10 Commencement Date.
SECTION 3. BUSINESS AFFAIRS
3.1 Manager's Authority and Responsibility.
3.2 Duties of Manager.
3.2.1 Operating Capital.
3.2.2 Physical Duties.
3.2.3 Compliance.
3.2.4 Required Filings.
3.2.5 Contracts in Authority's Name Doing Business as the
Enterprise and at Arm's Length.
3.2.6 Enterprise Operating Standards.
3.2.7 Operating Days and Hours.
3.3 Security.
3.4 Damage, Condemnation or Impossibility of the Enterprise.
3.4.1 Recommencement of Operations.
3.4.2 Repair or Replacement.
3.4.3 Other Business Purposes.
3.4.4 Termination of Gaming.
3.4.5 Tolling of the Agreement.
3.5 Alcoholic Beverage and Tobacco Sales.
3.6 Employees.
3.6.1 Manager's Responsibility.
3.6.2 Enterprise Employee Policies.
3.6.3 Employees.
3.6.4 Off-Site Employees.
3.6.5 No Manager Wages or Salaries.
3.6.6 Tribal Gaming Commission (Costs)
3.6.7 Employee Background Checks.
3.6.8 Indian Preference, Recruiting and Training.
3.6.9 Removal of Employees.
3.7 Marketing.
3.7.1 Nature of Marketing Services.
3.7.2 Marketing Services.
3.8 Pre-Opening.
3.9 Operating Budget and Annual Plan.
3.9.1 Adjustments to Operating Budget and Annual Plan.
3.10 Capital Budgets.
3.11 Capital Replacements.
3.12 Capital Replacement Reserve.
3.13 Periodic Contributions to Capital Replacement Reserve.
3.14 Use and Allocation of Capital Replacement Reserve.
3.15 Contracting.
3.16 Internal Control Systems.
3.17 Tribal Access.
3.18 Banking and Bank Accounts.
3.18.1 Enterprise Bank Accounts.
3.18.2 Daily Deposits to Depository Account.
3.18.3 Disbursement Account.
3.18.4 Transfers Between Accounts.
3.19 Insurance.
3.20 Accounting and Books of Account.
3.20.1 Establishment of Accounting Procedures.
3.20.2 Statements.
3.20.3 Books of Account.
3.20.4 Accounting Standards.
3.20.5 Annual Audit.
3.21 Retail Shops and Concessions.
3.22 Entertainment Approvals.
SECTION 4. LIENS.
4.1 Liens.
4.2 Exceptions.
SECTION 5. MANAGEMENT FEE, REIMBURSEMENTS, DISBURSEMENTS, AND OTHER
PAYMENTS BY MANAGER.
5.1 Management Fee
5.2 Disbursements.
5.3 Adjustment to Bank Account.
5.4 Payment of Fees and Tribal Disbursement.
5.5 Minimum Guaranteed Monthly Payment.
5.6 Payment of Net Revenues.
5.7 Maximum for Recoupment of Development and Construction Costs.
SECTION 6. TRADE NAMES, TRADE MARKS AND SERVICE MARKS
6.1 Enterprise Name.
6.2 Marks.
SECTION 7. TAXES.
7.1 State and Local Taxes.
7.2 Tribal Taxes.
7.2.1 Termination by Manager.
7.3 Compliance with Internal Revenue Code.
SECTION 8. GENERAL PROVISIONS.
8.1 Situs of Contracts.
8.2 Notice.
8.3 Authority to Execute and Perform Agreement.
8.4 Relationship.
8.5 Manager's Contractual Authority.
8.6 Further Actions.
8.7 Defense.
8.8 Waivers.
8.9 Captions.
8.10 Severability.
8.11 Interest.
8.12 Operating Capital.
8.13 Travel and Out-of-Pocket Expenses.
8.14 Third Party Beneficiary.
8.15 Brokerage.
8.16 Survival of Covenants.
8.17 Estoppel Certificate.
8.18 Periods of Time.
8.19 Exhibits.
8.20 Successors, Assigns and Subcontracting.
8.21 Permitted Assignment.
8.22 Time is of the Essence.
8.23 Confidential Information.
8.24 Patron Dispute Resolution.
8.25 Modification.
SECTION 9. WARRANTIES.
9.1 Noninterference in Tribal Affairs.
9.2 Prohibition of Payments to Members of Tribal Government.
9.3 Prohibition of Hiring Members of Tribal Government.
9.4 Prohibition of Financial Interest in Enterprise.
9.5 Definitions.
SECTION 10. TERMINATION.
10.1 Voluntary Termination and Termination for Cause.
10.2 Voluntary Termination.
10.3 Termination for Cause.
10.3.1 Non-Curable Terminating Events.
10.3.2 Curable Defaults.
10.3.3 Parties' Rights Following Material Breach.
10.4 Involuntary Termination Due to Changes in Legal Requirements.
10.5 Manager's Right to Terminate Agreement.
10.6 Authority's Right to Terminate Agreement.
10.7 Consequences of Manager's Breach.
10.8 Consequences of Authority's or Tribe's Breach.
10.9 Notice and Opportunity to Cure.
SECTION 11. CONCLUSION OF THE MANAGEMENT TERM.
11.1 Conclusion of the Management Term.
11.2 Transition.
11.3 Undistributed Net Revenues.
SECTION 12. CONSENTS AND APPROVALS.
12.1 Authority or Tribe.
12.2 Manager.
SECTION 13. DISCLOSURES.
13.1 Members, Shareholders and Directors.
13.2 Warranties.
13.3 Criminal and Credit Investigation.
13.4 Disclosure Amendments.
13.5 Breach of Manager's Warranties and Agreements.
SECTION 14. RECORDATION.
14.1 Recordation.
SECTION 15. LIEN, LEASE OR JOINT VENTURE.
15.1 No Present Lien, Lease or Joint Venture.
SECTION 16. DISPUTE RESOLUTION.
16.1 General.
(i) Initial Procedure.
(ii) Arbitration Jurisdiction.
(iii) Court Authority.
(iv) Choice of Law.
(v) Place of Hearing.
(vi) Confidentiality.
16.2 Limited Waiver of Sovereign Immunity.
(i) Time Period.
(ii) Recipient of Waiver.
(iii) Limitations of Actions.
SECTION 17. NEGOTIATE NEW AGREEMENT.
17.1 Intent to Negotiate New Agreement.
17.2 Transition Plan.
SECTION 18. ENTIRE AGREEMENT.
18.1 Entire Agreement.
SECTION 19. GOVERNMENT SAVINGS CLAUSE.
19.1 Government Savings Clause.
SECTION 20. PREPARATION OF AGREEMENT.
20.1 Preparation of Agreement.
SECTION 21. STANDARD OF REASONABLENESS.
21.1 Standard of Reasonableness.
SECTION 22. EXECUTION.
22.1 Execution.
SECTION 23. ATTORNEY'S FEES.
23.1 Attorney's Fees.
SECTION 24. PERFORMANCE DELAYED.
24.1 Performance Delayed.
SECTION 25. CAP ON CONSTRUCTION AND DEVELOPMENT COSTS
25.1 Cap on Construction and Development Costs.
LIST OF EXHIBITS
Exhibit A Legal Description of Property
Exhibit B Enterprise Investment Policy
Exhibit C Irrevocable Banking Instructions
Exhibit D Tribal Insurance Requirements
Exhibit E Manager's Members/Shareholders
Exhibit F Manager's Officers
SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT has been entered
into as of July 16, 2002, by and between THE PICAYUNE RANCHERIA OF CHUKCHANSI
INDIANS, Coarsegold, California, (the "Tribe"), THE CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY, (the "Authority"), and CASCADE ENTERTAINMENT GROUP, LLC,
a California Limited Liability Company with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Manager" or "CEG"). This Agreement amends
and restates the Amended and Restated Management Agreement entered into between
the parties on June 15, 2001, as amended, in order to address requirements of
the National Indian Gaming Commission, to set forth the rights and obligations
of the Authority, and also to reflect changes in the scope of the parties'
mutual undertakings.
Recitals
A. The Tribe is a federally recognized Indian Tribe and has occupied
certain lands in and around what is now known as Coarsegold, California from
time immemorial.
B. Under powers granted by the Tribe's Constitution (the
"Constitution"), the Tribe has created the Chukchansi Economic Development
Authority (the "Authority"), to further the economic prosperity of the Tribe,
and has given to the Authority the sole responsibility and authority to develop
and operate Class II and Class III Gaming on behalf of the Tribe under the
Indian Gaming Regulatory Act of 1988, 25 U.S.C. ss.ss.2701 - 2721 (2000).
C. With the assistance of Manager, the Tribe acting by and through the
Authority intends to construct and operate a permanent Class II and Class III
gaming facility located on Indian Lands of the Tribe.
D. The Authority desires to use the Property to promote Tribal economic
development, self-sufficiency and strong Tribal government.
E. Manager has paid a nonrefundable fee of FIFTY THOUSAND DOLLARS
($50,000.00) to the Tribe as part of the process which has led to the selection
of Manager as the intended operator of the Facility.
F. The Tribe and the Authority now possess or will possess sovereign
powers over the Property pursuant to the Tribe's recognized powers of
self-government.
G. Manager has agreed to certain terms and has represented to the Tribe
and the Authority that it has the managerial and financial capacity to provide
and to secure financing for the funds necessary to develop and construct the
Facility, as defined herein, and to commence the operation of the Enterprise on
the Property.
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H. The Authority is seeking technical experience and expertise for the
operation of the Enterprise and instruction for members of the Tribe in the
operation of the Enterprise. Manager is willing, and has represented to the
Authority that it is able to provide such experience, expertise and instruction.
I. The Authority desires to grant Manager the exclusive right and
obligation to develop, manage, operate and maintain the Enterprise as described
in this Agreement, including the training of Tribal Managers and others in the
operation and maintenance of the Enterprise during the term of this Agreement.
Manager wishes to perform these functions for the Authority.
J. This Agreement is entered into pursuant to the Indian Gaming
Regulatory Act of 1988, PL 100-497, 25 U.S.C. ss.2701 et seq. (the "IGRA") as
that statute may be amended. All gaming conducted at the Facility will at all
times comply with the IGRA, applicable Tribal law and the Compact.
SECTION 1
DEFINITIONS
1. Definitions. As they are used in this Agreement, the terms listed below shall
have the meaning assigned to them in this Section:
"Affiliate" means as to Manager, the Authority, or the Tribe, any
corporation, partnership, limited liability company, joint venture, trust,
department or agency or individual controlled by, under common control with, or
which controls, directly or indirectly Manager, the Authority, or the Tribe.
"Authority" or "Tribal Economic Development Authority" shall mean the
Chukchansi Economic Development Authority, a body corporate and politic, an
instrumentality of the Tribe, and an authorized agency of the Tribe pursuant to
the Compact, created by Resolution of the Tribal Council pursuant to powers
granted to the Tribal Council by the Constitution, vested with certain delegated
governmental powers for the purpose of furthering the economic prosperity of the
Tribe through the development and ownership of the Enterprise and related
businesses and assets, in accordance with the IGRA, the Compact, the Tribal
Gaming Code, and this Agreement.
"Authority Resolution" shall have the meaning described in Section 2.9.
"BIA" shall mean the Bureau of Indian Affairs of the Department of the
Interior of the United States of America.
"Capital Budget" shall mean the capital budget described in Section
3.10.
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"Capital Replacement(s)" shall mean any alteration or rebuilding or
renovation of the Facility, and any replacement of Furnishings and Equipment,
the cost of which is capitalized and depreciated, rather than being expensed,
applying generally accepted accounting principles, as described in Section 3.10.
"Capital Replacement Reserve" shall mean the reserve described in
Section 3.12, into which periodic contributions are paid pursuant to Section
3.13.
"Centralized Services" shall mean technical services, such as, but not
limited to, marketing services, food and beverage services, information
technology, and purchasing, provided to the Enterprise from a site other than
the Facility, with the approval of the Tribal Council, for the sake of
efficiency and cost effectiveness.
"Chief Financial Officer" shall mean the person, selected pursuant to
the procedure described in Section 3.6.3 of this Agreement, who shall be
principally responsible for maintaining the financial records of the Enterprise.
The Chief Financial Officer shall be an Enterprise Employee.
"Class II Gaming" shall mean Class II Gaming as defined in the IGRA.
"Class III Gaming" shall mean Class III Gaming as defined in the IGRA.
"Collateral Agreements" shall mean any agreements defined to be
collateral agreements by the phrase found at 25 U.S.C. ss.2711(a)(3) and
regulations issued thereto at 25 C.F.R. ss.502.5.
"Commencement Date" shall mean the first date that the Facility is
complete, open to the public and that Gaming is conducted in the Facility
pursuant to the terms of this Agreement.
"Compact" shall mean The Tribal-State Compact which the Tribe executed
on October 10, 1999 with the State of California regarding Class III Gaming, and
which the Secretary of the Interior approved pursuant to the IGRA; as the same
may, from time to time, be amended, or such other compact that may be
substituted therefore.
"Compensation" shall mean the direct salaries and wages paid to, or
accrued for the benefit of, any employee, including incentive compensation,
together with all fringe benefits payable to or accrued for the benefit of such
executive or other employee, including employer's contribution under F.I.C.A.,
unemployment compensation or other employment taxes, pension fund contributions,
workers' compensation, group life, accident and health insurance premiums and
costs, and profit sharing, severance, retirement, disability, relocation,
housing and other similar benefits.
"Completion Date" shall mean the date upon which Manager receives:
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(i) an architect's certificate from the
architect identified in the Development
Agreement as having responsibility for the
design and supervision of construction,
certifying that the Facility has been fully
constructed substantially in accordance with
the Plans and Specifications;
(ii) certification from Manager (or the division,
department or designee of Manager having
responsibility to assure compliance with any
operational standards) stating that the
Facility, as completed, is in substantial
compliance with any such standards;
(iii) a permanent or temporary certificate of
occupancy, if required, from any government
authority or authorities pursuant to whose
jurisdiction the Facility is to be
constructed, permitting the use and
operation of all portions of the Facility in
accordance with this Agreement; and
(iv) certificates of such professional designers,
inspectors or consultants or opinions of
counsel, as Manager may determine to be
appropriate, verifying construction and
furnishing of the Facility in compliance
with all Legal Requirements.
"Confidential Information" shall mean the information described in
Section 8.23.
"Constitution" shall mean the Constitution of the Picayune Reservation
approved by the Tribe, in effect on the date of the execution by the parties of
this Agreement.
"Contingent Interest" shall mean all interest payable to Lender which
is calculated as a percentage of revenues or other performance standard set
forth in the Loan Agreement as opposed to a stated interest rate. Contingent
Interest shall exclude payments to Lender of principal, fixed interest, and fees
and costs, including prepayment fees, liquidated damages and other charges
attributable to the prepayment of the Note, prior to its scheduled maturity,
other than interest payable to Lender as a percentage of revenues or other
performance standard set forth in the Loan Agreement.
"Depository Account" shall mean the bank account described in Section
3.18.2.
"Development Agreement" shall mean that certain Development Agreement,
amended and restated, of even date herewith, by and between CEG, and the Tribe
and the Authority.
"Development Fee" shall mean the lump sum non-revenue-based fee paid to
CEG under Article 3 of the Development Agreement.
"Disbursement Account" shall mean the bank account described in Section
3.18.1.
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"Effective Date" shall mean the date five days following the date on
which all of the following listed conditions are satisfied:
(i) the parties have received written notice
that this Agreement has been approved by the
Chairman of the NIGC;
(ii) written approval of the Loan Agreement, the
Security and Reimbursement Agreement, the
Note, and the Interim Promissory Note is
granted by the Chairman of the NIGC and/or
the BIA, if required;
(iii) written approval of a Tribal Gaming Code is
granted by the Chairman of the NIGC;
(iv) written confirmation that the Tribe and the
State (to the extent required by the
Compact) have approved background
investigations of Manager;
(v) Manager has received a certified copy of the
Tribal Gaming Code and the Tribal
Resolutions adopted by the Tribe in
accordance with the Tribe's governing
documents, and a certified copy of
Resolutions of the Governing Board of the
Authority, authorizing the execution of the
Management Agreement, Loan Agreement, Note,
Interim Promissory Note, Security and
Reimbursement Agreement, and Development
Agreement;
(vi) Manager has satisfied itself as to the
proper ownership and control of the Property
and its suitability for construction and
operation of the Facility, and that all of
the Legal Requirements and other
requirements for lawful conduct and
operation of the Enterprise in accordance
with this Agreement have been met and satisfied;
(vii) for purposes of Class III Gaming, the
Compact has been signed by the Secretary of
the Interior and published in the Federal
Register as provided in 25 U.S.C.
ss.2710(d)(8)(D);
(viii) the satisfactory completion of all necessary
and applicable feasibility studies required
for the development, construction and
operation of the Enterprise;
(ix) receipt by Manager of all applicable
licenses for or related to development,
construction or management of the Enterprise;
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(x) receipt by Manager of the Authority's
approval of the Plans and Specifications for
the Facility; and
(xi) Manager has satisfied itself that the Tribal
Gaming Code and any other code adopted by
the Tribe, the Authority, or the TGC,
relative to any of the documents referenced
in this Agreement do not have a material
adverse effect on Manager's ability to
operate the Facility under this Agreement.
"Emergency Condition" shall have the meaning set forth in Section 3.11.
"Enterprise" shall mean the Class II and Class III Gaming business
owned and operated by the Authority in the Facility, and which shall include any
other lawful commercial activity allowed in the Facility including, but not
limited to the sale of alcohol, tobacco, gifts and souvenirs; or any ancillary
non-Gaming activity within the Facility generally related to Class II or Class
III Gaming.
"Enterprise Bank Accounts" shall mean those accounts described in
Section 3.18.3.
"Enterprise Employee" shall mean all persons who are assigned to work
at the Facility who are not Manager Employees. All Enterprise Employees shall be
employees of the Authority.
"Enterprise Employee Policies" shall mean those employee policies
described in Section 3.6.2.
"Facility" shall mean all buildings, structures, and improvements
located on the Property and all Fixtures, Furnishings and Equipment attached to,
forming a part of, or necessary for the operation of the Enterprise, and shall
include temporary structures and improvements, if any.
"Fiscal Year" shall mean the period commencing on October 1 of each
year and ending on September 30 of the subsequent year.
"Furnishings and Equipment" shall mean all furniture, furnishings and
equipment required for the operation of the Enterprise in accordance with the
standards set forth in this Agreement, including, without limitation:
(i) cashier, money sorting and money counting equipment,
surveillance and communication equipment, and
security equipment;
(ii) electronic lottery terminals, video games of chance,
table games, bingo blowers & equipment, electronic
displays, Class II pull-tab dispensers, pari-mutuel
betting equipment, table games, and other Class III
gaming equipment, permitted pursuant to a
Tribal-State Compact and the IGRA;
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(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, entertainment facilities, hospitality
facilities, cocktail lounges, restaurants, public
rooms, commercial and parking spaces, and
recreational facilities;
(v) all decor, special effects, and artwork; and
(vi) all other furnishings and equipment hereafter located
and installed in or about the Facility which are used
in the operation of the Enterprise in accordance with
the standards set forth in this Agreement.
"Gaming" shall mean any and all activities defined as Class II and
Class III Gaming.
"General Manager" shall mean the person selected pursuant to the
procedure described in section 3.6.3 of this Agreement, and employed by the
Enterprise to direct the operation of the Enterprise.
"Generally Accepted Accounting Principles or GAAP" shall mean those
principles defined by the Financial Accounting Standards Board.
"Governing Board" shall mean the board of directors of the Authority.
The Governing Board shall be comprised of those persons serving on the Tribal
Council from time to time.
"Governmental Action" shall mean any resolution, ordinance, statute,
regulation, order or decision regardless of how constituted having the force of
law or legal authorization of the Tribe, the Authority or any instrumentality or
agency of the Tribe.
"Gross Gaming Revenue (Win)" shall mean the net win from Gaming which
is the difference between Gaming wins and losses before deducting costs and
expenses.
"Gross Revenues" shall mean all revenues of any nature derived directly
or indirectly from the Enterprise including, without limitation, Gross Gaming
Revenue (Win), food and beverage sales, and other rental or other receipts from
lessees, sublessees, licensees and concessionaires (but not the gross receipts
of such lessees, sublessees, licensees or concessionaires, provided that such
lessees, sublessees, and licensees and concessionaires are not subsidiaries or
Affiliates of Manager), and revenue recorded for Promotional Allowances, but
excluding any taxes the Tribe is allowed to assess pursuant to Section 7.
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"House Bank" shall mean the amount of cash, chips, tokens and plaques
that Manager from time to time determines necessary to have at the Facility
daily to meet its cash needs.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, PL 100-497,
25 U.S.C. ss.2701 et seq. as same may, from time to time, be amended.
"Interim Promissory Note" shall have the meaning described for one or
more promissory notes to be executed by the Tribe and/or the Authority in favor
of Manager pursuant to the Development Agreement.
"Internal Control Systems" shall mean the systems described in Section
3.16.
"Interim Loan" shall mean the funds advanced to the Tribe as a loan
under the terms of one or more of the Pre-Construction Development Credit and
Reimbursement Agreement and the Interim Promissory Notes.
"Legal Requirements" shall mean any and all present and future
judicial, administrative, and tribal rulings or decisions, and any and all
present and future federal, state, local, and tribal laws, codes, rules,
regulations, permits, licenses and certificates, in any way applicable to the
Tribe, the Authority, the TGC, Manager, the Property, the Facility, and the
Enterprise, including without limitation, the IGRA, the Compact, and the Tribal
Gaming Code.
"Lender" shall mean the source of financing agreed upon by the parties
to provide the funding necessary to design, construct, and equip the Facility,
and provide start-up capital for the Enterprise under the Loan Agreement. The
term "Lender" shall include Manager if and to the extent Manager shall become a
source of financing under the Loan Agreement.
"Loan Agreement" shall mean the loan agreement in the original
principal amount of up to One Hundred Seventy Million Dollars ($170,000,000.00),
to be entered into between the Authority and Manager or one of its Affiliates,
or between the Authority and the Lender, to be evidenced by the Note, the
proceeds of which are to be used exclusively for the development, design,
construction, furnishing and equipping of the Facility and/or providing start-up
and working capital for the Enterprise.
"Local Community Members" shall have the meaning described in Section
3.6.8(iv).
"Management Agreement" shall mean this Agreement and may be referred to
herein as the "Agreement".
"Management Fee" shall mean (i) thirty percent (30%) of Net Revenues
minus (ii) seventy percent (70%) of all Contingent Interest.
"Manager" shall mean CASCADE ENTERTAINMENT GROUP, LLC
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"Manager Employees" shall mean those employees of the Manager who are
working at the Facility and are not Employees of the Authority, the Enterprise,
or the Tribe.
"Managing Officer" shall mean such person who Manager designates to
serve as a liaison between Manager and the Authority, provided that such person
must have limited liability company authorization to act on behalf of Manager as
evidenced by a duly adopted resolution of Manager.
"Material Breach" shall mean a failure of any party to perform a
material duty or obligation on its part for the periods described in Section
10.3. Any action taken or the adoption of any statute, ordinance or code by the
Tribe, the Authority, or TGC, that taxes, materially prejudices or materially
adversely affects or imposes additional costs or burdens on Manager's rights or
duties under this Agreement shall be a Material Breach.
"Member of The Tribal Government" shall have the meaning described in
Section 9.5.
"Minimum Balance" shall mean the amount described in Section 3.18.1.
"Minimum Guaranteed Monthly Payment" shall mean that payment due the
Tribe each month commencing in the month after the Commencement Date occurs in
accordance with 25 U.S.C. ss.2711(b)(3) and Section 5.5 hereof.
"Monthly Distribution Payment" shall have the meaning set forth in
Section 5.4.
"National Indian Gaming Commission (NIGC)" shall mean the commission
established pursuant to 25 U.S.C. ss.2704.
"Native Americans" shall mean persons who are members of any Federally
recognized Indian tribe.
"Net Revenues" shall mean the sum of "Net Revenues (Gaming)" and "Net
Revenues (Other)."
"Net Revenues (Gaming)" shall mean Gross Gaming Revenue (Win), of the
Enterprise from Class II or Class III Gaming less all Gaming related Operating
Expenses, excluding the Management Fee, and less the retail value of any
Promotional Allowances, and less the following revenues actually received by the
Authority and included in Gross Revenues:
(i) any gratuities or service charges added to a
customer's ▇▇▇▇;
(ii) any credits or refunds, for items previously included
in Gross Revenues, made to customers, guests or
patrons;
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(iii) any sums and credits received by the Enterprise for
lost or damaged merchandise;
(iv) without duplication of any Operating Expense, any
sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes
or charges received from patrons and passed on to a
governmental or quasi governmental entity;
(v) any proceeds from the sale or other disposition of
furnishings and equipment or other capital assets;
(vi) any fire and extended coverage insurance proceeds
other than for business interruption;
(vii) any condemnation awards other than for temporary
condemnation;
(viii) any proceeds of financing or refinancing; and
(ix) any interest on bank account(s).
"Net Revenues (Other)" shall mean all Gross Revenues of the Enterprise
from all other sources in support of Class II or Class III Gaming not included
in "Net Revenues (Gaming)," such as food and beverage, entertainment, and
retail, less all non-Gaming related Operating Expenses, excluding the Management
Fee and less the retail value of Promotional Allowances, if any, and less the
following revenues actually received by the Enterprise and included in Gross
Revenues:
(i) any gratuities or service charges added to a
customer's ▇▇▇▇;
(ii) any credits or refunds made to customers,
guests or patrons;
(iii) any sums and credits received by the
Enterprise for lost or damaged merchandise;
(iv) any sales taxes, excise taxes, gross receipt
taxes, admission taxes, entertainment taxes,
tourist taxes or charges received from
patrons and passed on to a governmental or
quasi governmental entity;
(v) any proceeds from the sale or other
disposition of furnishings and equipment or
other capital assets;
(vi) any fire and extended coverage insurance
proceeds other than for business
interruption;
(vii) any condemnation awards other than for
temporary condemnation;
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(viii) any proceeds of financing or refinancing; and
(ix) any interest on bank account(s).
"NIGC Net Revenues" shall mean the sum of (i) Net Revenues and (ii) any
interest on bank account(s). This provision is consistent with 25 U.S.C.
ss.2703(9), which states that: " The term ''net revenues'' means gross revenues
of an Indian gaming activity less amounts paid out as, or paid for, prizes and
total operating expenses, excluding management fees".
"Note" shall mean the promissory note or notes to be executed by the
Authority pursuant to the Loan Agreement, which shall evidence a loan to the
Authority, in an original principal amount up to One Hundred and Seventy Million
Dollars ($170,000,000).
"Off-Site Employees" shall mean such employees of Manager or Manager's
Affiliates who are not located at the Facility but who are used by Manager to
provide services to the Enterprise as described in Section 3.6.4.
"Operating Budget and Annual Plan" shall mean the operating budget and
plan described in Section 3.9.
"Operating Expenses" shall mean all expenses of the operation of the
Enterprise, pursuant to GAAP, including but not limited to the following:
(i) the payment of (a) salaries, wages, and
benefit programs for Enterprise Employees;
and (b) salaries, wages, and benefit
programs for Off-Site Employees to the
extent approved by the Governing Board as
described in Section 3.6.4;
(ii) Operating Supplies for the Enterprise;
(iii) utilities;
(iv) repairs and maintenance of the Facility
(excluding Capital Replacements);
(v) interest on the Note, including Contingent
Interest;
(vi) interest on installment contract purchases
or other interest charges on debt approved
by the Authority;
(vii) insurance and bonding;
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(viii) advertising and marketing, including busing
and transportation of patrons to the
Facility;
(ix) accounting, legal and other professional
fees;
(x) security costs;
(xi) reasonable travel expenses for officers and
employees of the Enterprise, Manager or its
Affiliates, to the extent approved by the
Authority, to inspect and oversee the
Enterprise, subject to the budget agreed
upon by the Authority;
(xii) lease payments for Furnishings and Equipment
to the extent approved by the Authority;
(xiii) trash removal;
(xiv) costs of goods sold;
(xv) other expenses designated as Operating
Expenses in accordance with the accounting
standards as referred to in Section 3.20.4;
(xvi) expenses specifically designated as
Operating Expenses in this Agreement;
(xvii) depreciation and amortization of the
Facility based on an assumed thirty (30)
year life, and depreciation and amortization
of all other assets in accordance with GAAP;
(xviii) recruiting and training expenses;
(xix) fees due to the NIGC under the IGRA;
(xx) any required payments to the State or local
governments made by or on behalf of the
Enterprise, the Authority, or the Tribe
pursuant to the Compact; and
(xxi) any budgeted charitable contributions by the
Enterprise which are approved by the
Authority.
"Operating Supplies" shall mean food and beverages (alcoholic and
nonalcoholic) and other consumable items used in the operation of a gaming
facility, such as playing cards, tokens, chips, pull-tabs, bingo paper, plaques,
fuel, soap, cleaning materials, matches, paper goods, stationery and all other
similar items.
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"Plans and Specifications" shall mean the final Plans and
Specifications approved for the Facility as described in the Development
Agreement.
"Pre-Construction Development Credit and Reimbursement Agreement" shall
mean that agreement or agreements entered into between CEG and the Tribe setting
out the security interest of CEG and reimbursement obligation of the Tribe
relating to the Interim Loan and the Interim Promissory Note(s).
"Pre-Opening Budget" shall have the meaning described in Section 3.8.
"Pre-Opening Expenses" shall have the meaning described in Section 3.8.
"Promotional Allowances" shall mean the retail value of complimentary
food, beverages, merchandise, and tokens for gaming, provided to patrons as
promotional items.
"Property" shall mean the land described in Exhibit A to this
Agreement, together with any land subsequently obtained by the Tribe or the
Authority, or title to which is taken in trust for the Tribe by the United
States, for use in the Enterprise.
"Relative" shall have the meaning described in Section 9.5.
"Security and Reimbursement Agreement" shall mean that agreement to be
entered into between Manager and the Authority which sets out the security
interest of Manager and reimbursement obligation of the Tribe and/or the
Authority relating to the Interim Promissory Note.
"State" shall refer to the State of California.
"Term" shall mean the term of this Agreement as described in Section
2.2.
"Total Manager Compensation" shall mean the sum of all payments to
Manager of the Management Fee plus the amount of the Development Fee.
"Total Manager Compensation Cap" shall mean an amount equal to thirty
percent (30%) of the NIGC Net Revenues.
"Tribal Council" shall mean the duly elected Tribal Council of the
Tribe described in the Tribe's Constitution.
"Tribal Gaming Commission" or "TGC" shall mean the Tribal body created
pursuant to the Tribal Gaming Code to regulate the Class II and Class III Gaming
in accordance with the Compact, the IGRA and the Tribal Gaming Code.
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"Tribal Gaming Code" shall mean the code and any amendments thereto to
be enacted by the Tribe, which authorizes and regulates Class II and Class III
Gaming on Indian lands, including the Property, subject to the governmental
power of the Tribe.
"Tribal Resolution" shall have the meaning described in Section 2.9.
SECTION 2
COVENANTS
2. Covenants. In consideration of the mutual covenants contained in this
Agreement, the parties agree and covenant as follows:
2.1 Engagement of Manager. The Tribe and the Authority hereby retains
and engages Manager as the exclusive manager of the Enterprise pursuant to the
terms and conditions of this Agreement, and Manager hereby accepts such
retention and engagement, subject to receipt of all necessary regulatory
approvals.
2.2 Term. The term of this Agreement shall begin on the Commencement
Date and shall continue for a period of seven (7) years after the Commencement
Date
2.3 Status of Property. The Tribe and the Authority represent and
covenant that they will maintain the Property throughout the Term as Indian
lands, eligible as a location upon which Class II and Class III Gaming can
occur. The Tribe and the Authority covenant, during the term hereof, that
Manager shall and may peaceably have complete access to and presence in the
Facility in accordance with the terms of this Agreement, free from molestation,
eviction and disturbance by the Tribe or the Authority or by any other person or
entity; provided, however, that such right of access to and presence in the
Facility shall cease upon the termination of this Agreement pursuant to its
terms, and further provided that such right of access to and presence in the
Facility shall cease upon the revocation of the Manager's gaming license.
However, nothing in this Section shall prevent the Tribe from enforcing any of
its Tribal codes for the purposes of reasonably protecting public health and
safety and the integrity of the gaming operations.
2.4 Tribe, Authority and Manager Compliance with Law; Licenses. The
parties agree that all Gaming in the Facility will be conducted in accordance
with the IGRA, the Tribal Gaming Code, and the Compact. Manager, the Authority,
and Tribe covenant that they will at all times comply with all Legal
Requirements, including the Tribal Gaming Code, the IGRA, the Compact,
California statutes, to the extent applicable, and any licenses issued under any
of the foregoing. The Authority, the Tribe and the Tribal Gaming Commission
shall not unreasonably withhold, delay, withdraw, qualify or condition such
licenses as they are authorized to grant.
2.5 Amendments to Tribal Gaming Code and Tribal Constitution. The
Tribe covenants that any amendments made to the Tribal Gaming Code will be a
legitimate effort to
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ensure that gaming is conducted in a manner that adequately protects the
environment, the public health and safety, and the integrity of the
Enterprise. The adoption of any amendments to the Tribal Gaming Code or any
other codes or resolutions that would materially and adversely affect
Manager's or Lender's rights under this Agreement, the Loan Agreement, the
Note, the Interim Promissory Note, the Security and Reimbursement Agreement,
the Development Agreement or any Collateral Agreement shall be a Material
Breach of this Agreement. The Tribe agrees that it will not amend its
Constitution, Tribal Gaming Code, the Ordinance Establishing the Chukchansi
Economic Development Authority, or any other ordinance or law in such a
fashion as to affect the jurisdiction, power, composition, independence, or
compensation of the Authority, or by exercise of the police power or
otherwise, act to modify, amend, or in any manner impair the Tribe's or the
Authority's obligations under this Agreement, provided that nothing herein
shall prevent the Tribe from adopting reasonable regulations protecting the
health, safety, and welfare of members of the Tribe and the public when such
regulations do not solely restrict the activities of Manager, and do not alter
or avoid the responsibilities and obligations of the Tribe or the Authority
under this Agreement, the Development Agreement, or the Loan.
2.6 Compliance with Compact. The parties shall at all times comply with
the provisions of the Compact.
2.7 Fire and Safety. Manager shall ensure that the Facility shall be
constructed and maintained in compliance with all fire and safety statutes,
codes, and regulations which would be applicable if the Facility were located
outside of the jurisdiction of the Tribe although those requirements would not
otherwise apply within that jurisdiction. Nothing in this Section shall grant
any jurisdiction to the State of California or any political subdivision thereof
over the Property or the Facility. The Authority shall be responsible for
arranging fire protection and police services for the Facility.
2.8 Compliance with the National Environmental Policy Act. With the
assistance of Manager, the Tribe and the Authority shall supply the NIGC with
all information necessary for the NIGC to comply with any regulations of the
NIGC issued pursuant to the National Environmental Policy Act (NEPA).
2.9 Satisfaction of Effective Date Requirements. Manager, the
Authority, and the Tribe each agree to cooperate and to use their best efforts
to satisfy all of the conditions of the Effective Date at the earliest
possible date. The Tribe and the Authority each shall adopt resolutions (the
"Tribal Resolution" and the "Authority Resolution") reciting that it is the
governing law of the Tribe that the Management Agreement, Loan Agreement,
Note, Interim Promissory Note, Security and Reimbursement Agreement,
Development Agreement and the exhibited documents attached thereto are the
legal and binding obligations of the Tribe and the Authority (as applicable),
valid and enforceable in accordance with their terms. Manager agrees to
memorialize the satisfaction of each of the following requirements as well as
the Effective Date in writings signed by Manager and delivered to the Tribe,
to the Authority, and to the Chairman of the NIGC: (i) Manager has satisfied
itself as to the proper ownership and control of the Property and its
15
suitability for construction and operation of the Facility, and that all of
the Legal Requirements and other requirements for lawful conduct and operation
of the Enterprise in accordance with this Agreement have been met and
satisfied; and (ii) the satisfactory completion of all necessary and
applicable feasibility studies required for the development, construction and
operation of the Enterprise
2.10 Commencement Date. Manager shall memorialize the Commencement Date
in a writing signed by Manager and delivered to the Tribe, to the Authority, and
to the Chairman of the NIGC.
SECTION 3
BUSINESS AFFAIRS
3. Business and Affairs in Connection with Enterprise.
3.1 Manager's Authority and Responsibility. Manager shall conduct and
direct all business and affairs in connection with the day-to-day operation,
management and maintenance of the Enterprise and the Facility, including the
establishment of operating days and hours. It is the parties' intention that the
Enterprise be open twenty-four (24) hours daily, seven (7) days a week. Manager
is hereby granted the necessary power and authority to act, through the General
Manager, in order to fulfill all of its responsibilities under this Agreement.
Nothing herein grants or is intended to grant Manager a titled interest to the
Facility or to the Enterprise. Manager hereby accepts such retention and
engagement.
The Authority shall have the sole proprietary interest in and ultimate
responsibility for the conduct of all Gaming conducted by the Enterprise,
subject to the rights and responsibilities of Manager under this Agreement.
3.2 Duties of Manager. In managing, operating, maintaining and
repairing the Enterprise and the Facility, under this Agreement, Manager's
duties shall include, without limitation, the following:
3.2.1 Operating Capital. Manager will provide Operating
Capital to the Authority under the terms of section 8.12 of this
Agreement.
3.2.2 Physical Duties. Manager shall use reasonable measures
for the orderly physical administration, management, and operation of
the Enterprise and the Facility, including without limitation capital
improvements, cleaning, painting, decorating, plumbing, carpeting,
grounds care and such other maintenance and repair work as is
reasonably necessary.
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3.2.3 Compliance. Manager shall comply with all duly enacted
statutes, regulations and codes of the State, the Federal government,
and the Tribe.
3.2.4 Required Filings. Manager shall comply with all
applicable provisions of the Internal Revenue Code including, but not
limited to, the prompt filing of any cash transaction reports and W-2G
reports that may be required by the Internal Revenue Service of the
United States or under the Compact. Manager shall also comply with all
applicable reporting and filing provisions of all other Federal, State,
and Tribal regulatory agencies.
3.2.5 Contracts in Authority's Name Doing Business as the
Enterprise and at Arm's Length. Contracts for the operations of the
Enterprise shall be entered into in the name of the Authority, doing
business as the Enterprise, and signed by the General Manager. Any
contract requiring an expenditure in any year in excess of FIFTY
THOUSAND DOLLARS ($50,000.00) shall be approved by the Authority. No
contracts, of any amount, for the supply of goods or services to the
Enterprise shall be entered into with an Affiliate of Manager unless
that affiliation is disclosed to and approved by the Authority, and the
contract terms are no less favorable for the Enterprise than could be
obtained from a nonaffiliated contractor. Notwithstanding anything to
the contrary contained herein, contracts for the supply of any goods or
services paid for entirely by Manager may be provided by an Affiliate
of the Manager, provided that payments on such contracts shall not
constitute Operating Expenses and shall be the sole responsibility of
Manager and the Authority shall be notified of any such contracts.
Nothing contained in this Section 3.2.5 shall be deemed to be or
constitute a waiver of the Tribe's or the Authority's sovereign
immunity.
3.2.6 Enterprise Operating Standards. Manager shall
operate the Enterprise in a proper, efficient and competitive manner.
3.2.7 Operating Days and Hours. Manager shall be responsible
for establishing the operating days and hours of the Facility.
3.3 Security. Manager shall provide for appropriate security for the
operation of the Enterprise. All aspects of the Facility security shall be the
responsibility of Manager. All security officers shall be bonded and insured in
an amount commensurate with his or her enforcement duties and obligations. The
cost of any charge for security and increased public safety services will be an
Operating Expense.
3.4 Damage, Condemnation or Impossibility of the Enterprise. If, during
the term of this Agreement, the Facility is damaged or destroyed by fire, war,
or other casualty, or by an Act of God, or is taken by condemnation or sold
under the threat of condemnation, or if Gaming on the Property is prohibited as
a result of a decision of a court of competent jurisdiction or by operation of
any applicable legislation, Manager shall have the following options:
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3.4.1 Recommencement of Operations. If Gaming on the Property
is prohibited by Legal Requirements, Manager shall have the option to
continue its interest in this Agreement and to commence or recommence
the operation of Gaming at the Facility if, at some point during the
Term of this Agreement, such commencement or recommencement shall be
legally and commercially feasible in the sole judgment of Manager.
3.4.2 Repair or Replacement. If the Facility is damaged,
destroyed or condemned so that Gaming can no longer be conducted at the
Facility, the Facility shall be reconstructed if the insurance or
condemnation proceeds are sufficient to restore or replace the Facility
to a condition at least comparable to that before the casualty
occurred. If Manager elects to reconstruct the Facility and if the
insurance proceeds or condemnation awards are insufficient to
reconstruct the Facility to such condition, Manager may with the
consent of the Authority, arrange for third-party financing to
reconstruct the Facility to such condition. If the insurance proceeds
are not sufficient and are not used to repair the Facility, the
Authority and Manager shall jointly adjust and settle any and all
claims from such insurance proceeds or condemnation awards, and such
proceeds or awards shall be applied in the following order: to the
amounts due under the Note (including principal and interest); to the
Security and Reimbursement Agreement (including principal and
interest); to any other loans; to any undistributed Net Revenues
pursuant to Section 5 of this Agreement; and any surplus shall be
distributed to the Authority.
3.4.3 Other Business Purposes. Manager shall have the option
to use the Facility for other purposes included in the Enterprise and
reasonably incidental to Class II and Class III Gaming, provided the
Authority has approved such purposes (which approval shall not be
unreasonably withheld). For any purpose other than Gaming, Manager
shall obtain all approvals necessary under applicable law.
3.4.4 Termination of Gaming. Manager shall have the option at
any time within a sixty (60) day period following the cessation of
Gaming on the Property to notify the Authority and the Tribe in writing
that it is terminating operations under this Agreement, in which case
Manager shall retain any rights Manager may have to undistributed
Management Fees and/or Net Revenues pursuant to Section 5 of this
Agreement and rights to repayments of amounts owed to it. If Manager
does not elect to terminate this Agreement, it may take whatever action
may be necessary to reduce expenses during such termination of Gaming,
and shall not be obligated to supply operating capital, notwithstanding
Section 8.12 to the contrary.
3.4.5 Tolling of the Agreement. If, after a period of
cessation of Gaming on the Property, the recommencement of Gaming is
possible, and if Manager has not terminated this Agreement under the
provisions of Section 3.4.4, the period of such cessation shall not be
deemed to have been part of the term of this Agreement and the date of
expiration of the term of this Agreement shall be extended by the
number of days of such cessation period. The costs of recommencing
Gaming shall be subject to the process described in section 3.9 of this
Agreement and, when approved by the Authority pursuant to that section,
shall be treated in accordance with GAAP.
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3.5 Alcoholic Beverages and Tobacco Sales. No Tribal legislation
prohibiting the sale of tobacco and/or alcoholic beverages is now in force, and
no such legislation will be enacted during the term of this Agreement. The Tribe
agrees to enact any Tribal legislation necessary to allow sale of alcoholic
beverages or tobacco products in the Facility. The Tribe, the Authority, and
Manager mutually agree to include sale of tobacco and alcoholic beverages within
the Facility to the fullest extent allowed by the Compact.
3.6 Employees.
3.6.1 Manager's Responsibility. Manager shall have, subject to
the terms of this Agreement, the exclusive responsibility and authority
to direct the selection, control and discharge of all employees
performing regular services for the Enterprise in connection with the
maintenance, operation, and management of the Enterprise and the
Facility and any activity upon the Property; and the sole
responsibility for determining whether a prospective employee is
qualified and the appropriate level of compensation to be paid.
3.6.2 Enterprise Employee Policies. Manager shall prepare a
draft of personnel policies and procedures (the "Enterprise Employee
Policies"), including a job classification system with salary levels
and scales, which policies and procedures shall be subject to approval
by the Authority. The Enterprise Employee Policies shall include a
grievance procedure in order to establish fair and uniform standards
for the employees of the Authority engaged in the Enterprise, which
will include procedures for the resolution of disputes between Manager
and Enterprise Employees. Any revisions to the Enterprise Employee
Policies shall not be effective unless they are approved in the same
manner as the original Enterprise Employee Policies. Manager shall have
the responsibility and authority, under the Enterprise Employee
Policies, to render a final decision on all Enterprise Employee
grievances.
3.6.3 Employees. The selection of the General Manager, Chief
Financial Officer, and Security Director of the Enterprise shall be
subject to consultation between Manager and the Authority. Manager
shall provide Governing Board with sufficient information to adequately
evaluate all recommendations for employment in the positions of General
Manager, Chief Financial Officer, or Security Director. The General
Manager, Chief Financial Officer, and Security Director of the
Enterprise shall be Enterprise Employees. The terms of employment of
Enterprise Employees shall be structured as though all labor,
employment, and unemployment insurance laws applicable in California
which would apply to Manager Employees if they were not working on an
Indian reservation would also apply to Enterprise Employees. The Tribe
and the Authority agree to take no action to impede, supersede or
impair such treatment.
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3.6.4 Off-Site Employees. Subject to approval of the
Authority, Manager shall also have the right to use Off-Site Employees
to provide economic benefit to the Enterprise through the use of
Centralized Services. No Off-Site Employee shall be an officer or owner
of Manager. The portion of the expenses and costs of Off-Site Employees
(including, but not limited to, salaries and benefits paid to Off-Site
employees, but excluding pension, retirement, severance or similar
benefits), that is paid by the Enterprise shall be subject to the
Operating Budget approved by the Authority, and shall be treated as
Pre-Opening Expenses or Operating Expenses as appropriate.
3.6.5 No Manager Wages or Salaries. Except as otherwise
provided with respect to Section 3.6.4 neither Manager nor Manager's
Affiliates nor any of their officers, directors, shareholders, or
employees shall be compensated by wages from or contract payments by
the Enterprise for their efforts or for any work which they perform
under this Agreement, other than loan repayments, reimbursement
pursuant to the Security and Reimbursement Agreement and the Management
Fee to be paid to Manager under Section 5.1. Nothing in this subsection
shall restrict the ability of an employee of the Enterprise to purchase
or hold stock in Manager, or Manager's Affiliates where (i) such stock
is publicly held, and (ii) such employee acquires, on a cumulative
basis, less than five percent (5%) of the outstanding stock in the
corporation.
3.6.6 Tribal Gaming Commission (Costs). The funding of the
operation of the Tribal Gaming Commission shall, prior to the
Commencement Date, be funded as an advance to the Tribe, said advance
to be repaid pursuant to an Interim Note as a component of the Interim
Loan or pursuant to the terms of the Loan Agreement. The costs of
operation of the TGC shall thereafter be an operating expense to the
Tribe. The budget for the TGC shall reflect the reasonable cost of
regulating the Enterprise.
3.6.7 Employee Background Checks. A background investigation
shall be conducted by the TGC in compliance with all Legal
Requirements, to the extent applicable, on each applicant for
employment as soon as reasonably practicable.
No individual whose prior activities, criminal record, if any,
or reputation, habits and associations are known to pose a threat to
the public interest, the effective regulation of Gaming, or to the
gaming licenses of Manager or any of its Affiliates, or to create or
enhance the dangers of unsuitable, unfair or illegal practices and
methods and activities in the conduct of Gaming, shall knowingly be
employed by Manager, the Enterprise, or the Authority, or the Tribe.
The background investigation procedures employed by the TGC
shall be formulated in consultation with Manager and shall satisfy all
regulatory requirements independently applicable to Manager. Any cost
associated with obtaining such background investigations of the Tribe
or the Authority shall constitute an Operating Expense. Any cost
associated with background investigations of Manager shall be paid by
Manager.
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3.6.8 Indian Preference, Recruiting and Training. In order to
maximize benefits of the Enterprise to the Tribe, Manager shall, during
the term of this Agreement, to the extent permitted by applicable law,
including but not limited to the Indian Civil Rights Act, 25 U.S.C.
ss.1301 et seq., and the Compact, give preference in recruiting,
training and employment to qualified Native Americans, their spouses
and children in all job categories of the Enterprise. Manager shall:
(i) conduct job fairs and skills assessment
meetings for Native Americans, their spouses
and children;
(ii) abide by any duly enacted Tribal preference
laws;
(iii) in consultation with and subject to the
approval of the Authority, develop a
management training program for Native
Americans, their spouses and children. This
program shall be structured to provide
appropriate training for those participating
to assume full managerial control at the
conclusion of the Term of this Agreement;
(iv) train and hire, to the maximum extent permitted by
law, members of the local communities where the
Facility is located. Whenever possible, Enterprise
jobs shall be filled by Native Americans, their
spouses and children, and persons living within
Madera County ("Local Community Members"). Final
determination of the qualifications of all persons
for employment shall be made by Manager, subject to
any licensing requirements of the TGC; and
(v) within two hundred seventy (270) days of the
Commencement Date, Manager shall develop and
present to the Authority for its approval, a
training plan designed to progressively
reduce the number of Manager Employees, so
that, by the end of the Term of the
Agreement, all persons assigned to work at
the Facility will be Enterprise Employees.
3.6.9 Removal of Employees. Manager will act in accordance
with the Enterprise Employee Policies with respect to the discharge,
demotion or discipline of any Enterprise Employee.
3.7 Marketing.
3.7.1 Nature of Marketing Services. The services described in
this Section 3.7 ("Marketing Services") shall be provided by Manager.
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3.7.2 Marketing Services. Manager shall provide the following
Marketing Services which shall be an Operating Expense of the
Enterprise:
(i) provide a marketing director and adequate
staff to implement a marketing plan. The
marketing director and his or her staff
shall be employees of the Enterprise;
provided that the Authority may authorize
marketing services to be provided by
Off-Site Employees, pursuant to Section
3.6.4 of this Agreement;
(ii) no later than 90 days prior to the scheduled
opening date of the Facility, Manager shall
have prepared and implemented a marketing
plan for the Facility;
(iii) the marketing plan shall include provisions for the
Facility opening, public relations, community
relations, electronic and print media advertising,
industry advertising and relations, employee
marketing programs, promotional programs,
entertainment and hospitality marketing and
advertising, group sales, special events, tour
sales, and any & all other related or required
components of a complete marketing program
sufficient to maximize the Facility's position in
the local market.
(iv) the Manager shall have the responsibility
for placing the advertising contemplated by
the marketing plan.
3.8 Pre-Opening. Six (6) months prior to the scheduled Commencement
Date, Manager shall commence implementation of a pre-opening program which shall
include all activities necessary to financially and operationally prepare the
Facility for opening. To implement the pre-opening program, Manager shall
prepare a comprehensive pre-opening budget which shall be submitted to the
Authority for its approval no later than seven (7) months prior to the scheduled
Commencement Date ("Pre-Opening Budget"). The Pre-Opening Budget sets forth
expenses which Manager anticipates to be necessary or desirable in order to
prepare the Facility for the Commencement Date, including without limitation,
cash for disbursements, Furnishings and Equipment and Operating Supplies,
hiring, training, relocation and temporary lodging of employees, advertising and
promotion, office overhead and office space (whether on or off the Property),
and travel and business entertainment (including opening celebrations and
ceremonies) ("Pre-Opening Expenses"). The Pre-Opening Budget shall be included
in an Interim Promissory Note, the Interim Loan, or funded pursuant to the Loan
Agreement. The Authority recognizes that the Pre-Opening Budget will have been
prepared well in advance of the Commencement Date and will be intended only to
be a reasonable estimate, subject to variation due to a number of factors, some
of which will be outside of Manager's control (e.g. the time of completion,
inflationary factors and varying conditions for the goods and services
required). The Authority agrees that the Pre-Opening Budget may be modified from
time to time, subject to approval of the Governing Board in accordance with the
procedure established by Section 3.9 of this Agreement for adjustments to the
Operating Budget and Annual Plan.
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3.9 Operating Budget and Annual Plan. Manager shall, prior to the
scheduled Commencement Date, submit to the Authority, for its approval, a
proposed Operating Budget and Annual Plan for the remainder of the current
Fiscal Year. Thereafter, Manager shall, not less than sixty (60) days prior to
the commencement of each full or partial Fiscal Year, submit to the Authority,
for its approval, a proposed Operating Budget and Annual Plan for the ensuing
full or partial Fiscal Year, as the case may be. The Operating Budget and Annual
Plan shall include a projected income statement, balance sheet, and projection
of cash flow for the Enterprise, with detailed justifications explaining the
assumptions used therein. Included with the Operating Budget and Annual Plan
shall be a schedule of repairs and maintenance (other than Capital
Replacements), a business and marketing plan for the Fiscal Year, the Minimum
Balance which must remain in the Enterprise Bank Accounts and the House Bank as
of the end of each month during the Fiscal Year to assure sufficient monies for
working capital purposes, and the House Bank and other expenditures authorized
under the Operating Budget and Annual Plan.
The Operating Budget and Annual Plan for the Enterprise will be comprised of the
following:
a) a statement of the estimated income and expenses for
the coming Fiscal Year, including estimates as to
Gross Revenues and Operating Expenses for such Fiscal
Year, such operating budget to reflect the estimated
results of the operation during each month of the
subject Fiscal Year;
b) either as part of the statement of the estimated
income and expenses referred to in the preceding
clause (a), or separately, budgets (and timetables
and requirements of Manager) for:
(i) repairs and maintenance;
(ii) Capital Replacements;
(iii) Furnishings and Equipment;
(iv) advertising and business promotion
programs for the Enterprise; and
(v) the estimated cost of Promotional
Allowances; and
c) a business and marketing plan for the subject Fiscal Year.
The Authority's approval of the Operating Budget and Annual Plan
shall not be unreasonably withheld or delayed. Manager shall meet with the
Governing Board to discuss the proposed Operating Budget and Annual Plan,
and the Authority's approval shall be deemed given
23
unless a specific written objection thereto is delivered by the Authority to
Manager within thirty (30) days after Manager and the Governing Board have met
to discuss the proposed Operating Budget and Annual Plan. If the Governing
Board for any reason fails to meet with Manager to discuss a proposed
Operating Budget and Annual Plan, the Authority shall be deemed to have
consented unless a specific written objection is delivered to Manager within
fifteen (15) days after the date the proposed Operating Budget and Annual Plan
is submitted to the Authority. The Authority shall review the Operating Budget
and Annual Plan on a line-by-line basis. To be effective, any notice which
disapproves a proposed Operating Budget and Annual Plan must contain specific
objections in reasonable detail to individual line items.
If the initial proposed Operating Budget and Annual Plan contains any
disputed budget item(s), the Governing Board and Manager agree to cooperate with
each other in good faith to resolve the disputed or objectionable proposed
item(s). If the Authority and Manager are unable to resolve the disputed or
objectionable item(s) prior to the commencement of the applicable fiscal year,
the undisputed portions of the proposed Operating Budget and Annual Plan shall
be deemed to be adopted and approved and the corresponding line item(s)
contained in the Operating Budget and Annual Plan for the preceding fiscal year
shall be adjusted as set forth herein and shall be substituted in lieu of the
disputed item(s) in the proposed Operating Budget and Annual Plan. Those line
items which are in dispute shall be determined by increasing the preceding
fiscal year's actual expense for the corresponding line items by an amount equal
to the Consumer Price Index for All Urban Consumers published by the Bureau of
Labor Statistics of the United States Department of Labor, U.S. City Average,
all items (1982-1984 = 100) for the Fiscal Year prior to the Fiscal Year with
respect to which the adjustment to the line item(s) is being calculated or any
successor or replacement index thereto.
3.9.1 Adjustments to Operating Budget and Annual Plan. Manager
may, after notice to and approval by the Authority, revise the
Operating Budget and Annual Plan from time to time, as necessary, to
reflect any unpredicted significant changes, variables or events or
to include additional, unanticipated items of expense. Manager may,
after notice to the Authority, reallocate part or all of the amount
budgeted with respect to any line item to another line item and to
make such other modifications to the Operating Budget and Annual Plan
as Manager deems necessary, provided that the total adjustments to
the Operating Budget and Annual Plan shall not exceed one hundred ten
percent (110%) of the aggregate approved Operating Budget and Annual
Plan without approval of the Authority. Manager shall submit a
revision of the Operating Budget and Annual Plan to the Authority for
review on a quarterly basis. In addition, in the event actual Gross
Revenues for any period are greater than those provided for in the
Operating Budget and Annual Plan, the amounts approved in the
Operating Budget and Annual Plan for guest services, food and
beverage, telephone, utilities, marketing and the repair and
maintenance of the Facility for any month shall be automatically
deemed to be increased to an amount that bears the same relationship
(ratio) to the amounts budgeted for such items as actual Gross
Revenue for such month bears to the projected Gross Revenue for such
month. The Authority acknowledges that the Operating Budget and
Annual Plan is intended only to be a reasonable estimate of the
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Enterprise's revenues and expenses for the ensuing Fiscal Year.
Manager shall not be deemed to have made any guarantee concerning
projected results contained in the Operating Budget and Annual Plan.
3.10 Capital Budgets. Manager shall, not less than sixty (60) days
prior to the commencement of each fiscal year, or partial fiscal year, submit to
the Authority a recommended capital budget (the "Capital Budget") describing the
present value, estimated useful life and estimated replacement costs for the
ensuing full or partial year, as the case may be, for the physical plant,
furnishings, equipment, and ordinary capital replacement items, all of which are
defined to be any items, the cost of which is capitalized and depreciated,
rather than expensed, using GAAP ("Capital Replacements") as shall be required
to operate the Enterprise in accordance with sound business practices. Capital
Replacements in the Capital Budget in an aggregate sum equal to or less than the
sum of the Capital Replacement Reserve for the Fiscal Year shall be approved by
the Authority; and any amounts in excess of the Capital Replacement Reserve for
the Fiscal Year shall be subject to approval of the Authority in its sole
discretion. The Governing Board and Manager shall meet to discuss the proposed
Capital Budget and the Authority shall be required to make specific written
objections to a proposed Capital Budget in the same manner and within the same
time periods specified in Section 3.9 with respect to an Operating Budget and
Annual Plan. The Authority shall not unreasonably withhold or delay its consent.
Unless the Authority and Manager otherwise agree, Manager shall be responsible
for the design and installation of Capital Replacements, subject to the
Authority's approval.
3.11 Capital Replacements. The Authority shall effect and expend such
amounts for any Capital Replacements as shall be required, in the course of the
operation of the Enterprise, to maintain, at a minimum, the Enterprise in
compliance with any Legal Requirements and to comply with Manager's recommended
programs for renovation, modernization and improvement intended to keep the
Enterprise competitive in its market, to maintain industry standards; or to
correct any condition of an emergency nature, including without limitation,
maintenance, replacements or repairs which are required to be effected by the
Authority, which in Manager's sole discretion requires immediate action to
preserve and protect the Facility, assure its continued operation, and/or
protect the comfort, health, safety and/or welfare of the Facility's guests or
employees (an "Emergency Condition"); provided, however, that the Authority
shall be under no obligation to fund Capital Replacements in an aggregate amount
greater than its periodic required contributions to the Capital Replacement
Reserve described in Section 3.12. Manager is authorized to take all steps and
to make all expenditures from the Disbursement Account, described at Section
3.18.3 (in the case of non-capitalized repairs and maintenance), or Capital
Replacement Reserve, described at Section 3.12, (in the case of expenditures for
Capital Replacements) as it deems necessary to repair and correct any Emergency
Condition, regardless whether such provisions have been made in the Capital
Budget or the Operating Budget and Annual Plan for any such expenditures. Design
and installation of Capital Replacements shall be effected in a time period and
subject to such conditions as the Authority may establish to minimize
interference with or disruption of ongoing operations.
25
3.12 Capital Replacement Reserve. Manager shall establish a Capital
Replacement Reserve on the books of account of the Enterprise, and the periodic
contributions of cash required by Section 3.13 shall be deposited by Manager
into an account (the "Capital Replacement Reserve") established in the
Enterprise's name at a bank designated by the Authority in accordance with
Section 3.18.1 of this Agreement. All amounts in the Capital Replacement Reserve
shall be invested in interest bearing investments in accordance with the
Enterprise Investment Policy attached hereto as Exhibit B and approved by
Authority to the extent that availability of funds, when required, is not
thereby impaired. Interest earned on amounts deposited in the Capital
Replacement Reserve shall be credited to the Capital Replacement Reserve and
shall be available for payment of expenditures for Capital Replacements to the
Facility. Manager shall draw on the Capital Replacement Reserve for Capital
Replacements to purchase those items included in the Capital Budget approved by
the Authority or such emergency additions, repairs or replacements as shall be
required to correct an Emergency Condition or to comply with operating
standards.
3.13 Periodic Contributions to Capital Replacement Reserve. In
accordance with Section 5.4 of this Agreement, Manager shall make monthly
deposits into the Capital Replacement Reserve in amounts equivalent to an annual
rate of two percent (2%) of Gross Revenues during the first two (2) years of the
Term of this Agreement after the Commencement Date and equivalent to an annual
rate of three percent (3%) of Gross Revenues during the remainder of the Term.
The cash amounts required to be so deposited shall be calculated and deposited
into the Capital Replacement Reserve, in arrears, no later than the twenty-first
(21st) day of the month immediately following the month with respect to which a
deposit is made. If any adjustment of Gross Revenues is made as a result of an
audit or for other accounting reasons, a corresponding adjustment in the Capital
Replacement Reserve deposit shall be made. In addition, all proceeds from the
sale of capital items no longer needed for the operation of the Enterprise, and
the proceeds of any insurance received in reimbursement for any items previously
paid for from the Capital Replacement Reserve, shall be deposited into the
Capital Replacement Reserve upon receipt.
3.14 Use and Allocation of Capital Replacement Reserve. Any
expenditures for Capital Replacements which have been budgeted and previously
approved may be paid from the Capital Replacement Reserve without further
approval from the Authority. Any amounts remaining in the Capital Replacement
Reserve at the close of any Fiscal Year shall be carried forward and retained in
the Capital Replacement Reserve until fully used.
3.15 Contracting. In entering into contracts for the supply of goods
and services for the Enterprise, Manager shall give preference to qualified
Native Americans, their spouses and children, and qualified business entities
certified by the Authority to be controlled by members of the Tribe. "Qualified"
shall mean a member of the Tribe, a member's spouse or children, or a business
entity certified by the Authority to be controlled by members of the Tribe, who
or which is able to provide services at competitive prices, has demonstrated
skills and abilities to perform the tasks to be undertaken in an acceptable
manner, in Manager's opinion, and can meet the reasonable bonding and/or
financial requirements of Manager.
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3.16 Internal Control Systems. Manager shall install systems for
monitoring of all funds (the "Internal Control Systems"), which systems shall
comply with all Legal Requirements, and shall be submitted to the Authority and
the Tribal Gaming Commission for approval in advance of implementation, which
approval shall not be unreasonably withheld. The Authority shall have the right
to retain an auditor to review the adequacy of the Internal Control Systems
prior to the Commencement Date. If the Authority elects to exercise this right,
the cost of such review shall be a Pre-Opening Expense. Any significant changes
in such systems after the Commencement Date also shall be subject to review and
approval by the Tribal Gaming Commission. The Tribal Gaming Commission and
Manager shall have the right and duty to maintain and police the Internal
Control Systems in order to prevent any loss of proceeds from the Enterprise.
The Tribal Gaming Commission shall have the right to inspect and oversee the
Internal Control Systems at all times. Manager shall install a closed circuit
television system to be used for monitoring all cash handling activities of the
Enterprise sufficient to meet all Legal Requirements.
3.17 Tribal Access. Manager shall provide immediate access to the
Gaming operation, including the books and records of the Enterprise, by the
Authority and Tribal officials designated by the Tribal Council in accordance
with the Tribal Gaming Code, who shall have the right to verify the daily Gross
Revenues and Net Revenues from the Gaming operation; and access to any other
Gaming-related information the Authority or the Tribe deems appropriate.
3.18 Banking and Bank Accounts.
3.18.1 Enterprise Bank Accounts. The Authority shall select a
bank or banks for the deposit and maintenance of funds and shall
establish in such bank or banks accounts as Manager deems appropriate
and necessary in the course of business and as consistent with this
Agreement ("Enterprise Bank Accounts"). Establishment of any Enterprise
Bank Account shall be subject to the approval of the Authority, and
shall be consistent with the terms of the Loan Agreement. The sum of
money agreed to by the Authority to be maintained in the Enterprise
Bank Account(s) to serve as working capital for Enterprise operations,
shall include all sums needed for the House Bank, and all sums needed
to accrue for payment of expenses not paid on a monthly basis (the
"Minimum Balance"). Manager will maintain funds in the Enterprise Bank
Accounts equal to the Minimum Balance, and Manager may increase the
Minimum Balance, in Manager's sole discretion, at any time during the
first year following the Commencement Date to reflect unanticipated
working capital needs revealed by actual Enterprise operations.
Attached hereto as Exhibit C is the form of Irrevocable Banking
Instructions to be executed by the Authority with regard to each
Enterprise Bank Account and to be in effect during the Term of this
Agreement.
3.18.2 Daily Deposits to Depository Account. Manager shall
establish for the benefit of the Authority in the Enterprise's name a
Depository Account. Manager shall collect all Gross Revenues and
other proceeds connected with or arising from the operation of the
Enterprise, the sale of all products, food and beverage, and all
other activities of the Enterprise and deposit the related cash
daily into the Depository Account at least once
27
during each twenty-four (24) hour period. All money received by the
Enterprise on each day that it is open must be counted at the close
of operations for that day or at least once during each twenty-four
(24) hour period; provided that the Authority may approve an
alternative system for counting that provides equivalent accuracy and
security. Manager agrees to obtain a bonded transportation service to
effect the safe transportation of the daily receipts to the bank,
which expense shall constitute an Operating Expense. All actions of
Manager under this section shall be consistent with the terms of the
Loan Agreement.
3.18.3 Disbursement Account. Manager shall establish for the
benefit of the Authority in the Enterprise's name a Disbursement
Account. Manager shall, consistent with and pursuant to the approved
annual Operating Budget and Annual Plan, have responsibility and
authority for making all payments for Operating Expenses, debt service,
management fees, and disbursements to the Tribe and the Authority from
the Disbursement Account. All actions of Manager under this section
shall be consistent with the terms of the Loan Agreement.
3.18.4 Transfers Between Accounts. Manager shall have the
authority to transfer funds, in accordance with the Budget, from and
between the Enterprise Bank Accounts to the Disbursement Account in
order to pay Operating Expenses and to pay debt service pursuant to the
Loan Agreement and Note, the Security and Reimbursement Agreement, the
Development Agreement, to invest funds in accordance with the
Enterprise Investment Policy and to pay the fees payable to Manager and
distributions to the Authority pursuant to this Agreement. All actions
of Manager under this section shall be consistent with the terms of the
Loan Agreement.
3.19 Insurance. Manager shall be responsible for obtaining and
maintaining insurance coverage, including coverage of public liability and
property loss or damage. Such coverage shall be consistent with any Lender's
requirements set forth in the Loan Agreement. The cost of such insurance shall
be an Operating Expense of the Enterprise. Such insurance shall be obtained from
responsible insurance carriers licensed to do business in the State of
California and shall name the Tribe and the Authority, the Enterprise, Manager,
Lender, any other required party under the Loan Agreement, and Manager's
Affiliates as insured parties, in at least the amounts which are set forth in
Exhibit D.
3.20 Accounting and Books of Account.
3.20.1 Establishment of Accounting Procedures. Manager shall
provide for the establishment and maintenance of satisfactory
accounting systems that shall at a minimum include an adequate system
of internal accounting controls; permit the preparation of financial
statements in accordance with GAAP; be susceptible to audit; allow the
Enterprise, the Authority, the Tribe, and the NIGC to calculate the
annual fee under 25 C.F.R. ss.514.1; permit the calculation and payment
of the Management Fee; and provide for the allocation of Operating
Expenses or overhead expenses among the Authority, the Enterprise,
Manager, and any other user of shared facilities and services within
the Enterprise.
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3.20.2 Statements. Manager shall prepare and provide operating
statements to the Authority on a monthly, quarterly, and annual basis.
The operating statements shall comply with all Legal Requirements and
shall include an income statement, statement of cash flows, and balance
sheet for the Enterprise. Such statements shall include the Operating
Budget and Annual Plan and Capital Budget projections as comparative
statements, and which, after the first full year of operation, will
include comparative statements from the comparable period for the prior
year of all revenues, and all other amounts collected and received, and
all deductions and disbursements made therefrom in connection with the
Enterprise.
3.20.3 Books of Account. Manager shall maintain full and
accurate books of account at an office in the Facility or at such other
location as may be determined by Manager and approved by the Authority.
The Authority and Tribal officials designated by the Tribal Council in
accordance with the Tribal Gaming Code shall have immediate access to
the books of account and daily operations of the Enterprise twenty-four
hours a day, seven days a week, and shall have the unlimited right to
inspect, examine, and copy all such books and supporting business
records. Any such copies are to be considered confidential and
proprietary and shall not be divulged to any third parties without the
express written permission of the Authority. Such rights may be
exercised through the Tribal Gaming Commission or through an agent,
employee, attorney, or independent accountant acting on behalf of the
Authority, designated pursuant to the provisions of section 3.17 of
this Agreement, under the provisions of the Tribal Gaming Code.
3.20.4 Accounting Standards. Manager shall maintain the books
and records reflecting the operations of the Enterprise in accordance
with the accounting practices of Manager in conformity with Generally
Accepted Accounting Principles consistently applied and shall adopt and
follow the fiscal accounting periods utilized by Manager in its normal
course of business (i.e., a month, quarter and year prepared in
accordance with the Enterprise Fiscal Year). The accounting systems and
procedures shall comply with Legal Requirements and, at a minimum:
(i) include an adequate system of internal
accounting controls;
(ii) permit the preparation of financial
statements in accordance with generally
accepted accounting principles;
(iii) be susceptible to audit;
(iv) permit the calculation and payment of the
Management Fee described in Section 5.1; and
29
(v) provide for the allocation of operating
expenses or overhead expenses among the
Tribe, the Authority, the Enterprise, and
any other user of shared facilities and
services.
3.20.5 Annual Audit. An independent certified public
accounting firm selected by the Authority shall perform an annual audit
of the books and records of the Enterprise and of all contracts for
supplies, services or concessions reflecting Operating Expenses. The
NIGC shall also have the right to perform special audits of the
Enterprise on any aspect of the Enterprise at any time without
restriction. The costs incurred for such audits shall constitute an
Operating Expense. Such audits shall be provided by the Authority to
all applicable federal and state agencies, as required by law, and may
be used by Manager for reporting purposes under federal and state
securities laws, if required.
3.21 Retail Shops and Concessions. With respect to the operation of the
shops and concessions located within the Facility, the Authority shall approve
in advance in writing the specific type or types of shops or concessions
proposed by Manager to be authorized for inclusion in the Facility.
3.22 Entertainment Approvals. In the event that Manager shall determine
to provide entertainment and/or sporting events to the public at the Facility,
the same will be subject to approval by the Authority, unless authorized as part
of an Annual Plan or original Project concept.
SECTION 4
LIENS
4.1. Liens. Subject to the exceptions hereinafter stated in Section
4.2, the Tribe and the Authority specifically warrant and represent to Manager
that during the term of this Agreement they shall not act in any way whatsoever,
either directly or indirectly, to cause any person or entity to become an
encumbrancer or lien holder of the Property or the Facility, or to allow any
person or entity to obtain any interest in this Agreement without the prior
written consent of Manager, and, where applicable, consent of the United States.
Manager specifically warrants and represents to the Tribe and the Authority that
during the term of this Agreement Manager shall not act in any way, directly or
indirectly, to cause any person or entity to become an encumbrancer or lien
holder of the Property or the Facility, or to obtain any interest in this
Agreement without the prior written consent of the Tribe and the Authority, and,
where applicable, the United States. The Authority, and Manager shall keep the
Facility and Property free and clear of all enforceable mechanics' and other
enforceable liens resulting from the construction of the Facility and all other
enforceable liens which may attach to the Facility or the Property. If any such
lien is claimed or filed, it shall be the duty of the Authority to discharge the
lien within thirty (30) days after having been given written notice of such
claim, either by payment to the claimant, by the posting of a bond and the
payment into the court of the amount necessary to relieve and discharge the
Property from such claim, or in any other manner which will result in the
discharge or stay of such claim, and Manager is authorized to act in behalf of
the Authority to discharge any liens.
30
4.2 Exceptions. The Authority shall have the right to grant security
interests in Enterprise revenues subordinated to all loans made by Manager to
the Authority and all amounts due under the Loan Agreement and this Agreement,
as well as first priority security interests in any Facility assets other than
personal property purchased with the proceeds of the Loan, but only if such
security interests are permissible under the Loan Agreement, granted to secure
loans made to and for the benefit of the Enterprise, and Manager has been
offered a prior opportunity to make such loans on similar financial terms.
SECTION 5
MANAGEMENT FEE, REIMBURSEMENTS, DISBURSEMENTS, AND
OTHER PAYMENTS BY MANAGER
5.1 Management Fee. Subject to the provisions of Section 5.4, on or
before the twenty-first (21st) day of each month after the first calendar month
of operation, Manager is authorized by the Authority to pay itself from the
Enterprise Bank Account(s) the Management Fee, provided that in no event shall
the aggregate amount of Total Manager Compensation paid to Manager (including
the Management Fee) exceed the Total Manager Compensation Cap. Any portion of
such Management Fee withheld from payment to Manager as being in excess of the
Total Management Compensation Cap shall thereafter be payable to Manager if and
at such time during the term of this Agreement as such payment to Manager will
not cause the aggregate Total Manager Compensation to exceed the Total Manager
Compensation Cap.
5.2 Disbursements. As and when received by Manager, Gross Revenues
shall be deposited in the Depository Account created pursuant to Section 3.18.2
of this Agreement. There shall, in turn, be disbursed by Manager, on a monthly
basis, for and on behalf of the Authority, funds from the Enterprise Bank
Account(s) to pay, to the extent available, Operating Expenses and thereafter
the items identified in section 5.4 of this Agreement, in the priority specified
in that section.
5.3 Adjustment to Bank Account. After the disbursements pursuant to
Section 5.2, and establishment of any additional reserves into the Enterprise
Bank Accounts for future disbursements as Manager deems necessary and as are
approved by the Authority, taking into account anticipated cash flow and
Operating Expenses, any excess funds remaining in the Enterprise Bank Account(s)
over the Minimum Balance, the Capital Replacement Reserve, and such additional
reserves approved by the Authority, shall be disbursed monthly in accordance
with Section 5.4.
5.4 Payment of Fees and Tribal Disbursement. Within twenty-one (21)
days after the end of each calendar month of operations, Manager shall calculate
Gross Revenues, Operating Expenses, and Net Revenues of the Enterprise for the
previous month's operations and the year's operations to date. Such Net Revenues
shall be disbursed from the Enterprise Bank Account(s) to the extent available
to pay the scheduled items to the extent due and payable and earned in the
following order of priority:
31
(i) the Minimum Guaranteed Monthly Payment
described in Section 5.5;
(ii) payments due on the Note or as otherwise
required by the Loan Agreement (and if
payments are due other than monthly, a
reserve equal to a proportionate amount of
the scheduled quarterly payment shall be
deposited in a designated Enterprise Bank
Account for such payment, and may be
invested in accordance with the Enterprise
Investment Policies pending payment);
(iii) Capital Replacement Reserve contributions as
described in Section 3.13;
(iv) payments due on the Interim Promissory Note
and the reimbursement of amounts advanced by
Manager; and
(v) the Management Fee.
All remaining Net Revenues (the "Monthly Distribution Payment") shall be
distributed to the Authority at the same time the Management Fee is paid.
5.5 Minimum Guaranteed Monthly Payment. Manager shall pay the Tribe ONE
HUNDRED THOUSAND DOLLARS ($100,000) per month (the "Minimum Guaranteed Monthly
Payment"), beginning on the Commencement Date and continuing for the remainder
of the Term. The Minimum Guaranteed Monthly Payment shall be payable to the
Tribe in arrears on the twenty first (21st) day of each calendar month following
the month in which the Commencement Date occurs, which payment shall have
priority over the Management Fee and retirement of development and construction
costs. 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. Minimum Guaranteed Monthly Payments shall be charged against the
Authority's Monthly Distribution Payment for each month provided, however, where
the Net Revenues in a given month are less than ONE HUNDRED THOUSAND DOLLARS
($100,000.00), Manager shall pay the funds necessary to compensate for the
deficiency from its own funds on a non-cumulative and non-recoverable basis. If
during a given month gaming does not occur for a portion of the month, the
Minimum Guaranteed Monthly Payment shall be reduced pro rata, in proportion to
the portion of the month in which gaming does not occur. If no gaming takes
place in a given month, no Minimum Guaranteed Monthly Payment shall be made
during that month. The obligation to make Minimum Guaranteed Monthly Payments
shall cease upon termination of this Agreement. Except as provided in the
preceding sentence of this Section 5.5, Manager's obligation to pay the Tribe
the Minimum Guaranteed Monthly Payment is unconditional, and shall not be
affected by the actual level of funds generated by the Enterprise.
32
5.6 Payment of Net Revenues. The Net Revenues paid to the Authority
pursuant to this Section 5 shall be payable to the Authority's bank account
specified by the Authority in a notice to Manager pursuant to Section 8.2.
5.7 Maximum for Recoupment of Development and Construction Costs. In
accordance with the Development Agreement, Manager shall be entitled to recoup
no more than ONE HUNDRED AND SEVENTY MILLION DOLLARS ($170,000,000) for the
development, design, construction, furnishing and equipping of the Facility,
and/or providing start-up and initial working capital for the Enterprise.
SECTION 6
TRADE NAMES, TRADE MARKS AND SERVICE MARKS
6.1 Enterprise Name. The Enterprise shall be operated under a business
name which readily identifies the Facility to the public along with a reference
to the Tribe, the Authority or such other name as the parties may agree (the
"Enterprise Name").
6.2 Marks. Prior to the Commencement Date and from time to time during
the Term hereof, Manager agrees to erect and install, in accordance with local
codes and regulations, all signs Manager deems necessary in, on or about the
Facility, including, but not limited to, signs bearing the Enterprise Name. All
Trade Names, Trade Marks and Service Marks of the Enterprise shall be the
property of the Authority.
SECTION 7
TAXES
7.1 State and Local Taxes. If the State of California or any local
government attempts to impose any tax including any possessory interest tax upon
any party to this Agreement or upon the Enterprise, the Facility or the
Property, the Authority, in the name of the appropriate party or parties in
interest, may resist such attempt through legal action. The costs of such action
and the compensation of legal counsel shall be an Operating Expense of the
Enterprise. Any such tax shall constitute an Operating Expense of the
Enterprise. This Section shall in no manner be construed to imply that any party
to this Agreement or the Enterprise is liable for any such tax.
7.2 Tribal Taxes. The Tribe and the Authority agree that neither they
nor any agent, agency, Affiliate or representative of the Tribe or the
Authority will impose any taxes, fees, assessments, or other charges of any
nature whatsoever on payments of any debt service to Manager or any of its
Affiliates or to any lender furnishing financing for the Facility or for the
Enterprise, or on the Enterprise, the Facility, the revenues therefrom or on
the Management Fee as described in
33
Section 5.1 of this Agreement; provided, however, the Tribe may assess license
fees reflecting reasonable regulatory costs incurred by the Tribal Gaming
Commission. The Tribe and the Authority further agree that neither they nor
any agent, agency, Affiliate or representative will impose any taxes, fees,
assessments or other charges of any nature whatsoever on the salaries or
benefits, or dividends paid to, any of Manager's stockholders, officers,
directors, or employees, or any of the employees of the Enterprise; or any
provider of goods, materials, or services to the Enterprise, other than with
respect to any such provider of goods, materials, or services to the
Enterprise, license fees reflecting reasonable regulatory costs incurred by
the TGC. Manager retains the right, subject to Section 16 of this Agreement,
to terminate this Agreement and all accompanying agreements if it reasonably
determines that any statute, law, code or regulation of the Tribe or the
Authority renders operation of the Enterprise uncompetitive.
Nothing in this Section 7.2 shall be construed to prohibit the Tribe or
the Authority from taxing the sale of goods or services by the Enterprise to the
public in amounts equivalent to any state taxes that would otherwise be
applicable but for the Tribe's status as an Indian tribe; provided that no such
tax shall be applied to any goods or services supplied as Promotional
Allowances.
7.2.1. Termination by Manager. Should Manager terminate this
Agreement pursuant to this Section 7.2, Manager shall retain the right
to repayment of: (a) money lent to the Tribe or the Authority by
Manager or Manager's Affiliates and money lent to the Tribe or the
Authority and guaranteed by the Manager and/or Manager's Affiliates to
the extent Manager and/or Manager's Affiliates are required to pay
pursuant to such guarantee; (b) reimbursement of any monies which may
become due and payable under the terms of the Security and
Reimbursement Agreement. Except as otherwise provided herein, if any
taxes, fees or assessments are levied by the Tribe or the Authority
against the Manager, such taxes and assessments shall constitute
Operating Expenses of the Enterprise.
7.3 Compliance with Internal Revenue Code. Manager shall comply with
all applicable provisions of the Internal Revenue Code.
SECTION 8
GENERAL PROVISIONS
8.1 Situs of the Contracts. This Agreement, as well as all contracts
entered into between the Tribe or the Authority and any person or any entity
providing services to the Enterprise, shall be deemed entered into in and
governed by the law of California, and shall be subject to all Legal
Requirements of the Tribe and Federal law as well as approval by the Secretary
of the Interior where required by 25 U.S.C. ss.81 or by the Chairman of the NIGC
where required by the IGRA. Nothing in this Agreement is intended to or shall
have the effect of precluding the parties, in this or other transactions, from
choosing as governing law the laws of a State other than the State of
California.
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8.2 Notice. Any notice required to be given pursuant to this Agreement
shall be delivered to the appropriate party by Federal Express or by Certified
Mail Return Receipt Requested, addressed as follows:
If to the Tribe: THE PICAYUNE RANCHERIA OF
CHUKCHANSI INDIANS
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Tribal Chairperson
Copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Authority: THE CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY,
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairperson
Copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Manager: CASCADE ENTERTAINMENT GROUP, LLC
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Copies to: ▇▇▇▇▇▇▇▇, BUFFALO, ▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, LTD.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
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or to such other different address(s) as Manager, the Authority, or the Tribe
may specify in writing using the notice procedure called for in this Section
8.2. Any such notice shall be deemed given three (3) days following deposit in
the United States mail or upon actual delivery, whichever first occurs.
8.3 Authority to Execute and Perform Agreement. The Tribe, the
Authority, and Manager represent and warrant to each other that they each have
full power and authority to execute this Agreement and to be bound by and
perform the terms hereof. On request, each party shall furnish the other
evidence of such authority.
8.4 Relationship. Manager, the Authority, and the Tribe shall not be
construed as joint venturers or partners of each other by reason of this
Agreement and none shall have the power to bind or obligate the others except as
set forth in this Agreement. The Tribe and the Authority shall be jointly and
severally liable for the obligations and liabilities of the other under this
Agreement.
8.5 Manager's Contractual Authority. Manager is authorized to make,
enter into and perform in the name of and for the account of the Authority,
doing business as the Enterprise, such contracts deemed necessary by Manager to
perform its obligations under this Agreement, provided such contracts comply
with the terms and conditions of this Agreement, including, but not limited to,
Section 3.2.5, and provided such contracts do not obligate the Enterprise to pay
sums not approved in the Operating Budget and Annual Plan or the Capital Budget.
8.6 Further Actions. The Tribe, the Authority, and Manager agree to
execute all contracts, agreements and documents and to take all actions
necessary to comply with the provisions of this Agreement and the intent hereof.
8.7 Defense. Except for disputes between the Tribe and Manager, and
between the Authority and Manager, and claims relating to the Tribe's status as
a Tribe, the Authority's status as a body corporate and politic of the Tribe, or
the status of the Property as Indian lands, Manager shall bring and/or defend
and/or settle any claim or legal action brought against Manager, the Enterprise,
the Authority, or the Tribe, individually, jointly or severally, or any
Enterprise Employee, in connection with the operation of the Enterprise. Subject
to the Authority's approval of legal counsel, Manager shall retain and supervise
legal counsel, accountants and such other professionals, consultants and
specialists as Manager deems appropriate to defend any such claim or cause of
action. All liabilities, costs and expenses, including reasonable attorneys'
fees and disbursements incurred in defending and/or settling any such claim or
legal action which are not covered by insurance, shall be an Operating Expense,
or, if incurred prior to the Commencement Date, shall be a Pre-Opening expense.
Nothing contained herein is a grant to Manager of the right to waive the
Tribe's, the Authority's, or the Enterprise's sovereign immunity. That right is
strictly reserved to the Tribe, as to matters affecting the Tribe, and the
Authority, as to matters affecting the Authority. Any settlement of a third
party claim or cause of action shall require approval of the Tribe, as to claims
affecting the Tribe, and approval of the Authority, as to claims affecting the
Authority.
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8.8 Waivers. No failure or delay by Manager, the Authority, or the
Tribe to insist upon the strict performance of any covenant, agreement, term or
condition of this Agreement, or to exercise any right or remedy consequent upon
the breach thereof, shall constitute a waiver of any such breach or any
subsequent breach of such covenant, agreement, term or condition. No covenant,
agreement, term, or condition of this Agreement and no breach thereof shall be
waived, altered or modified except by written instrument. No waiver of any
breach shall affect or alter this Agreement, but each and every covenant,
agreement, term and condition of this Agreement shall continue in full force and
effect with respect to any other then existing or subsequent breach thereof.
8.9 Captions. The captions for each Section and Subsection are intended
for convenience only.
8.10 Severability. If any of the terms and provisions hereof shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any of the other terms or provisions hereof. If, however, any material
part of a party's rights under this Agreement shall be declared invalid or
unenforceable, (specifically including Manager's right to receive its Management
Fees) the party whose rights have been declared invalid or unenforceable shall
have the option to terminate this Agreement upon thirty (30) days written notice
to the other party, without liability on the part of the terminating party.
8.11 Interest. Except as otherwise provided in the Development
Agreement, any amounts advanced by Manager or the Authority related to the
operation of the Enterprise shall accrue interest at the rate agreed to in the
Interim Promissory Note(s) or other loan agreements applicable to the advance.
8.12 Operating Capital. In the event Gross Revenues are insufficient
to pay Operating Expenses, after application of all reserves established under
Section 3.13 of this Agreement and all other reserves established pursuant to
the Loan Agreement, Manager shall provide operating capital to the Enterprise.
Manager's obligation under this section shall not be deemed to require
contributions in excess of the minimum amounts necessary to permit the
continued operation of the Enterprise, and to comply with the Gaming Code, the
Compact, and any other Legal Requirements. Notwithstanding the foregoing,
however, Manager may contribute operating capital in excess of such minimum
amounts, provided that such contributions have been approved in advance in
writing by the Authority. Manager shall keep appropriate records to document
all reimbursable expenses paid by Manager, which records shall be made
available for inspection by the Authority or its agents upon request. The
Authority agrees to reimburse Manager with interest from future Net Revenues
for money paid or property contributed by Manager to satisfy obligations of
the Authority in connection with the Enterprise and/or this Agreement.
Interest shall be calculated at the rate set forth in Section 8.11 from the
date the Authority was obligated to provide the operating capital for
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the satisfaction of such obligation to the date reimbursement is made.
Manager's sole source of such reimbursement shall be from undistributed and
future Net Revenues.
8.13 Travel and Out-of-Pocket Expenses. To the extent approved by the
Authority, Manager shall be reimbursed for all travel and out-of-pocket expenses
reasonably incurred at the request of the Authority outside the scope of this
Agreement. Subject to the Operating Budget and Annual Plan, all travel and
out-of-pocket expenses of Enterprise Employees reasonably incurred in the
performance of their duties shall be an Operating Expense.
8.14 Third Party Beneficiary. This Agreement is exclusively for the
benefit of the parties hereto and it may not be enforced by any party other than
the parties to this Agreement and shall not give rise to liability to any third
party other than the authorized successors and assigns of the parties hereto as
such are authorized by this Agreement.
8.15 Brokerage. Except, for Manager, with respect to securing the Loan,
Manager, the Authority, and the Tribe represent and warrant to each other that
neither has sought the services of a broker, finder or agent in this
transaction, and neither has employed, nor authorized, any other person to act
in such capacity. Manager, the Authority, and the Tribe each hereby agrees to
indemnify and hold the others harmless from and against any and all claims,
loss, liability, damage or expenses (including reasonable attorneys' fees)
suffered or incurred by the other party as a result of the breach of the
representation and warranty set forth herein.
8.16 Survival of Covenants. Any covenant, term or provision of this
Agreement which, in order to be effective, must survive the termination of this
Agreement, shall survive any such termination.
8.17 Estoppel Certificate. Manager, the Authority, and the Tribe each
agree to furnish to the other parties, from time to time upon request, within
ten (10) business days of receipt of the request an estoppel certificate in such
reasonable form as the requesting party may request stating whether there have
been any defaults under this Agreement known to the party furnishing the
estoppel certificate and such other information relating to the Enterprise as
may be reasonably requested.
8.18 Periods of Time. Whenever any determination is to be made or
action is to be taken on a date specified in this Agreement, if such date shall
fall on a Saturday, Sunday or legal holiday under the laws of the Tribe, Federal
government, or the State of California, then in such event said date shall be
extended to the next day which is not a Saturday, Sunday or legal holiday.
8.19 Exhibits. All exhibits attached hereto are incorporated herein by
reference and made a part hereof as if fully rewritten or reproduced herein.
8.20 Successors, Assigns, and Subcontracting. The benefits and
obligations of this Agreement shall inure to and be binding upon the
parties hereto and their respective successors and
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assigns. Manager shall have the right to assign its rights under this
Agreement and the Development Agreement to one or more directly or indirectly
wholly-owned subsidiaries of CASCADE ENTERTAINMENT GROUP, LLC, or its
successor. The Tribe's and the Authority's consent shall be required for the
assignment or subcontracting by the Manager of its rights, interests or
obligations as Manager hereunder to any other Affiliate of Manager, or any
successor corporation to Manager, provided that any such assignee or
subcontractor agrees to be bound by the terms and conditions of this
Agreement, and the Tribe and the Authority shall consent to any such assignee
or subcontractor provided that such assignee or subcontractor has, in the
discretion of the Tribe and the Authority, the competency and financial
capability to perform as required by this Agreement. The acquisition of
Manager or its parent company by a party other than an Affiliate of Manager,
or its successor corporation, shall not constitute an assignment of this
Agreement by Manager and this Agreement shall remain in full force and effect
between the Tribe, the Authority, and Manager, subject only to Legal
Requirements.
8.21 Permitted Assignment. Any assignment of this Agreement permitted
under the Agreement, to the extent mandated by the IGRA, shall be subject to
approval by the Chairman of the NIGC or his authorized representative after a
complete background investigation of the proposed assignee. Any assignment by
the Tribe or the Authority shall not prejudice the rights of Manager under this
Agreement or the Lender under the Loan Agreement. No assignment authorized
hereunder shall be effective until all necessary government approvals have been
obtained.
8.22 Time is of the Essence. Time is of the essence in the
performance of this Agreement.
8.23 Confidential Information. The parties agree that any information
received concerning another party during the performance of this Agreement,
regarding the parties' organization, financial matters, marketing plans, or
other information of a proprietary nature (the "Confidential Information"), will
be treated by all parties in full confidence and except as required to allow
Manager, the Authority, and the Tribe to perform their respective covenants and
obligations hereunder, or under the Loan Agreement, as required in connection
with any arbitration proceeding commenced hereunder or in response to legal
process or appropriate and necessary inquiry, and will not be revealed to any
other persons, firms or organizations. This provision shall survive the
termination of this Agreement for a period of two (2) years.
The obligations not to use or disclose the Confidential
Information shall not apply to Confidential Information which (i) has been
made previously available to the public by the Tribe, the Authority, or
Manager or Manager's Affiliates or becomes generally available to the
public, unless the Confidential Information being made available to the
public results in a breach of this Agreement; (ii) prior to disclosure to
the Tribe, the Authority, or Manager or Manager's Affiliates, was already
rightfully in any such person's possession; or (iii) is obtained by the
Tribe, the Authority, or Manager or Manager's Affiliates from a third party
who is lawfully in possession of such Confidential Information, and not in
violation of any contractual, legal or fiduciary obligation
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to the Tribe, the Authority, or Manager or Manager's Affiliates, with respect
to such Confidential Information and who does not require the Tribe, the
Authority, or Manager or Manager's Affiliates to refrain from disclosing such
Confidential Information to others.
8.24 Patron Dispute Resolution. Manager shall have the authority to
resolve all patron disputes. In the event a patron is dissatisfied with
Manager's final resolution of a dispute, the patron may seek such redress as may
be authorized under the rules and regulations of the Tribal Gaming Commission,
after all dispute resolution procedures adopted by Manager have been exhausted.
8.25 Modification. Any change to or modification of this Agreement must
be in writing signed by all parties hereto and shall be effective only upon
approval by the Chairman of the NIGC, the date of signature of the parties
notwithstanding.
SECTION 9
WARRANTIES
9.1 Noninterference in Tribal Affairs. Manager agrees not to interfere
in or attempt to wrongfully influence the internal affairs or government
decisions of the Tribe's government, or of the Authority, by offering cash
incentives, by making written or oral threats to the personal or financial
status of any person, or by any other action, except for actions in the normal
course of business of Manager that relate to the Enterprise. As of the date of
this Agreement, the Tribe and the Authority acknowledge that Manager has not
interfered or wrongfully interfered in the internal affairs of the Tribe or the
Authority. For the purposes of this Section 9.1, if any such undue interference
in Tribal affairs or the affairs of the Authority is alleged by the Federally
recognized Tribal government or by the Authority in writing, and the NIGC finds
that Manager has unduly interfered with the internal affairs of the Tribe's
government or the Authority, and has not taken sufficient action to cure and
prevent such interference, that finding of interference shall be grounds for
termination of the Agreement. Manager shall be entitled to immediate written
notice and a complete copy of any such complaint to the NIGC.
9.2 Prohibition of Payments to Members of Tribal Government. Manager
represents and warrants that no payments have been or will be made by Manager or
Manager's Affiliates, to any Member of the Tribal Government, any Tribal
official, any relative of a Member of Tribal Government or Tribal official, or
any Tribal government employee for the purpose of obtaining any special
privilege, gain, advantage or consideration.
9.3 Prohibition of Hiring Members of Tribal Government. No Member of
the Tribal Government, Tribal official, or employee of the Tribal government may
be employed at the Enterprise or by Manager or its Affiliates without a written
waiver of this Section 9.3 by the Authority. For this purpose, the Tribe and the
Authority will identify all such persons to Manager in a writing and take
reasonable steps to keep the list current; Manager shall not be held responsible
if any person not on such written list is employed.
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9.4 Prohibition of Financial Interest in Enterprise. No Member of
the Tribal Government or relative of a Member of the Tribal Government
shall have a direct or indirect financial interest in the Enterprise
greater than the interest of any other member of the Tribe, and no Member
of the Tribal Government or relative of a Member of the Tribal Government
shall purchase or hold an interest or stock in Manager, or Manager's
Affiliates; provided, however, nothing in this subsection shall restrict
the ability of a Tribal Member who is not a Member of the Tribal Government
or a relative of a Member of the Tribal Government to purchase or hold
stock in Manager, or Manager's Affiliates where (i) such stock is publicly
held, and (ii) the Tribal Member acquires less than five percent (5%) of
the outstanding stock in the corporation, provided that if a Tribal Member
shall acquire more than five percent (5%) such person shall comply with all
applicable law.
9.5 Definitions. As used in this Section 9, "Member of the Tribal
Government" means any member of the Tribal Council, the Authority, the TGC or
any independent board or body created to oversee any aspect of Gaming and any
Tribal court official; "Relative" means an individual residing in the same
household who is related as a spouse, father, mother, son or daughter.
SECTION 10
TERMINATION
10.1 Voluntary Termination and Termination for Cause. This
Agreement may be terminated pursuant to the provisions of Sections 3.4.4,
9.1, 10.2, 10.3, 10.4, 10.5 and 10.6.
10.2 Voluntary Termination. This Agreement may be terminated upon the
mutual written consent and approval of the parties, subject to the terms of the
Loan Agreement. Notwithstanding the foregoing, the voluntary termination of this
Agreement by either of the Tribe or the Authority shall be deemed the
termination by both the Tribe and the Authority.
10.3 Termination for Cause. Either the Authority or Manager may
terminate this Agreement by written notice to the other parties as set forth in
this Section 10.3 in the event of a Material Breach of this Agreement.
10.3.1 Non-Curable Terminating Events. The Authority may
terminate this Agreement on not less than 15 days written notice to
Manager upon the occurrence of any of the following events:
(i) an act of fraud perpetrated by any officer or
member of Manager in connection with the
performance by Manager of its obligations under
this Agreement;
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(ii) an act of fraud perpetrated by any employee, agent
or representative (other than officers) of
Manager, or embezzlement or theft perpetrated by
any employee, agent or representative of Manager
in connection with the performance of Manager of
its obligations under this Agreement, for which
Manager shall not promptly (i) make full
restitution to the Enterprise to the extent such
loss is not covered by insurance proceeds, (ii) to
the extent permitted under applicable law,
terminate the employee(s), agent(s) and
representative(s) perpetrating such fraud,
embezzlement or theft and (iii) institute
appropriate procedures to prevent any further
fraud, embezzlement or theft by similar means;
(iii) the existence of a pattern or practice of fraud,
embezzlement or theft resulting from the gross
negligence of Manager in connection with the
performance of Manager of its obligations under
this Agreement;
(iv) the suspension or termination of the gaming
license of any member, officer or director of
Manager as a result of any criminal conviction;
provided, that Manager has not removed such person
from all responsibility with respect to Manager
within such 15-day period; or
(v) the suspension of the Manager's gaming license in
accordance with the terms and conditions of this
Agreement and the Tribal Gaming Code.
10.3.2 Curable Defaults. In the event of Material Breaches
other than those described in section 10.3.1, the non-breaching party
may terminate this Agreement if (i) such breach has continued for
thirty (30) consecutive days following receipt by the breaching party
of written notice describing the breach, (ii) the non-breaching party
thereafter provides written notice to the other of its intention to
declare a default and terminate this Agreement, and (iii) the
defaulting party thereafter fails to cure or take steps to
substantially cure the default within sixty (60) days. The
discontinuance or correction of a Material Breach under this subsection
10.3.2 shall constitute a cure thereof. Notwithstanding anything to the
contrary contained in this Agreement, a Material Breach by either of
the Tribe or the Authority shall be deemed a Material Breach of both
the Tribe and the Authority.
10.3.3. Parties Rights Following Material Breach. In the
event of any termination for cause, regardless of fault, the parties
shall retain all money previously paid to them pursuant to Section 5
of this Agreement; and the Authority shall retain title to all
Enterprise and Facility fixtures, improvements, supplies, equipment,
funds and accounts, subject to the rights of Manager under any
security agreement and to the rights of Manager to any accrued and
unpaid Net Revenues due under Section 5 of this Agreement. Manager
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shall continue to have the right to repayment of unpaid principal
and interest and other amounts due to Manager or outstanding and
guaranteed by Manager and/or Manager's Affiliates (if Manager is
called on to pay under such guarantee) under the Interim Note,
Loan Agreement and/or Security and Reimbursement Agreement and
advances made by Manager and interest thereon as contemplated by
Section 8.12, and any other agreements entered into pursuant
hereto. An election to pursue damages or to pursue specific
performance of this Agreement or other equitable remedies while
this Agreement remains in effect pursuant to the provisions of
Sections 10.7 or 10.8 shall not preclude the injured party from
providing notice of termination pursuant to this Section 10.3.
Neither shall termination preclude a suit for damages.
10.4 Involuntary Termination Due to Changes in Legal Requirements. It
is the understanding and intention of the parties that the establishment and
operation of the Enterprise shall conform to and comply with all Legal
Requirements. If during the term of this Agreement, the Enterprise or any
material aspect of Gaming is determined by the Congress of the United States,
the Department of the Interior of the United States of America, the NIGC, or the
final judgment of a court of competent jurisdiction to be unlawful under federal
law, the obligations of the parties hereto shall cease, and this Agreement shall
be of no further force and effect; provided that:
(i) Manager shall have the rights described in Section
5.4 of this Agreement;
(ii) Manager, the Tribe, and the Authority shall retain
all money previously paid to them pursuant to
Section 5 of this Agreement;
(iii) funds of the Enterprise in any Enterprise account
shall be paid and distributed as provided in
Section 5 of this Agreement;
(iv) any money loaned or advanced to the Tribe or the
Authority by or guaranteed by Manager or Manager's
Affiliates (to the extent Manager or its Affiliates
have paid under such guarantee) or owed to Manager
or its Affiliates pursuant to the Security and
Reimbursement Agreement or any other written
agreement that has been approved by the Tribe or
the Authority shall be repaid to Manager or its
Affiliates in accordance with the terms of the
Agreement; and
(v) The Authority shall retain its interest in the
title (and any lease) to all Enterprise assets,
including all fixtures, supplies and equipment,
subject to the rights of Manager under the Security
and Reimbursement Agreement and subject to any
requirements of financing arrangements.
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10.5 Manager's Right to Terminate Agreement. Manager may terminate
this Agreement by written notice effective upon receipt if:
(i) Any Tribal, State or Federal authority where
approval is required fails to approve this
Agreement or otherwise objects to the performance
by Manager of any obligation imposed on it under
this Agreement.
(ii) Manager has been notified by any regulatory agency
that the performance by it of any obligation
imposed by this Agreement will jeopardize the
retention of any license, or approvals granted
thereunder, held by Manager or any of its
Affiliates in any other jurisdiction, and the Tribe
or the Authority refuses to allow Manager to
immediately rectify any such complaint.
(iii) Manager has reason to believe that the performance
by it, the Authority or the Tribe of any obligation
imposed under this Agreement may reasonably be
expected to result in the breach of any Legal
Requirement and the parties have been unable to
agree upon waiver of such performance within ten
(10) days written notice by Manager.
(iv) Through its own actions, the Tribe or the Authority
fails to make any payment to Manager when due
within the time specified in this Agreement and a
grace period of thirty (30) days.
10.6 Authority's Right to Terminate Agreement.
10.6.1 Authority's Right to Terminate. The Authority may
terminate this Agreement by written notice effective upon receipt if:
(i) Any Federal or State authority, where approval is
required, fails to approve this Agreement or
otherwise objects to the performance by Manager of
any obligation imposed on it under this Agreement
and Manager has not cured the circumstance giving
rise to the failure to approve or the objection to
performance within one hundred twenty (120) days. A
good faith effort to take steps to substantially
cure the breach shall constitute cure until such
time that no further appeal or resolution of the
circumstance giving rise to the failure to approve
or the objection to performance is available.
(ii) The Authority has reason to believe that the
performance by it or Manager of any obligation
imposed under this Agreement may
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reasonably be expected to result in the breach of any
Legal Requirement and the parties have been unable to
agree upon waiver of such performance within ten
(10) days of written notice given by the Authority.
(iii) Manager fails to make any payment to the Tribe or
Authority when due, including but not limited to
any Monthly Distribution Payment to the Authority
or any Minimum Guaranteed Monthly Payment to the
Tribe within the time specified in this Agreement
and a grace period of thirty (30) days.
10.6.2 Tribe/Authority: No Right to Terminate Upon Other's
Default. A Material Breach by the Authority shall not permit the
termination of this Agreement by the Tribe. A Material Breach by the
Tribe shall not permit the termination of this Agreement by the
Authority.
10.7 Consequences of Manager's Breach. In the event of the termination
of this Agreement by the Authority for cause under Section 10.3, Manager shall
not, prospectively from the date of termination, except as provided in Section
10.3, have the right to its Management Fee from the Enterprise, but such
termination shall not affect Manager's rights relating to recoupment and
reimbursement of monies owed to Manager and/or guaranteed by Manager and/or
Manager's Affiliates (to the extent Manager or Manager's Affiliate has paid
under such guarantee) under this Agreement, the Loan Agreement, the Note or any
other agreements entered pursuant hereto. Any Net Revenues accruing through the
date of termination shall be distributed in accordance with Section 5 of this
Agreement. Manager, the Authority and the Tribe acknowledge and agree that
termination of this Agreement may not be a sufficient or appropriate remedy for
breach by Manager, and further agree that pursuant to the other provisions of
this Agreement, including but not limited to Section 17, the Authority and the
Tribe shall, upon breach of this Agreement by Manager, have the right to pursue
such remedies (in addition to termination) at law or equity as it determines are
best able to compensate it for such breach, including the common law right of
set-off. However, such right of set-off shall not apply to payments of amounts
owing under the Loan Agreement or the Note. Manager specifically acknowledges
and agrees that there may be irreparable harm to the Tribe or the Authority and
that damages will be difficult to determine if Manager commits a Material
Breach, and Manager therefore further acknowledges that an injunction and/or
other equitable relief may be an appropriate remedy for any such breach. In any
event, the Authority shall have the right to all payments due to the Authority
accruing until the date of termination.
10.8 Consequences of Authority's or Tribe's Breach. In the event
of termination of this Agreement by Manager for cause under Section 10.3,
Manager shall not be required to perform any further services under this
Agreement and the Tribe and the Authority shall indemnify and hold Manager
harmless against all liabilities of any nature whatsoever relating to the
Enterprise, but only insofar as these liabilities result from acts within
the control of the Tribe or the Authority or
45
their agents or were created by the termination of this Agreement. Manager,
the Authority, and the Tribe acknowledge and agree that termination of this
Agreement may not be a sufficient or appropriate remedy for breach by the
Authority or Tribe, and further agree that pursuant to the other provisions of
this Agreement, including but not necessarily limited to, Section 16, Manager
shall, upon breach of this Agreement by the Authority or Tribe, have the right
to pursue such remedies (in addition to termination) at law or equity as it
determines are best able to compensate it for such breach, including, without
limitation, specifically actions to require payment of the Management Fee
pursuant to Section 5 for a term equal to the then remaining term of this
Agreement at the percentage of Net Revenues specified in Section 5. The
Authority and the Tribe specifically acknowledge and agree that there may be
irreparable harm to Manager and that damages will be difficult to determine if
the Authority or the Tribe commits a Material Breach, and the Authority and
the Tribe therefore further acknowledge that an injunction and/or other
equitable relief may be an appropriate remedy for any such breach. In any
event, Manager shall have the right to its Management Fee accruing until the
date of termination as provided in Section 5 of this Agreement, and to the
repayment of unpaid principal and interest and other amounts due under the
Interim Note and any other note guaranteed by Manager or its Affiliates, the
Loan Agreement, and any other loans to the Authority or the Tribe, and the
Security and Reimbursement Agreement.
10.9 Notice and Opportunity to Cure. The Tribe and the Authority will
give Manager notice of any alleged violation of the Tribal Gaming Code by
Manager and thirty (30) days opportunity to cure before the Tribal Gaming
Commission may take any action based on such alleged violation.
SECTION 11
CONCLUSION OF THE MANAGEMENT TERM
11.1 Conclusion of the Management Term. Upon the conclusion or the
termination of this Agreement, Manager shall have the following rights and
obligations:
11.2 Transition. Manager shall take reasonable steps for the orderly
transition of management of the Enterprise to the Authority or its designee
pursuant to a transition plan as described in Section 17 of this Agreement; such
transition period shall be for a reasonable period but not less than thirty (30)
days.
11.3 Undistributed Net Revenues. If the Enterprise has accrued Net
Revenues which have not been distributed under Section 5 of this Agreement,
Manager shall receive that Management Fee equal to that Management Fee it would
have received had the distribution occurred during the term of the Management
Agreement.
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SECTION 12
CONSENTS AND APPROVALS
12.1 Authority or Tribe. Where approval or consent or other action of
the Tribe or the Authority is required, such approval shall mean the written
approval of the Tribal Council or the Governing Board, as the case may be,
evidenced by a resolution thereof, certified by a Tribal official or Authority
official as having been duly adopted, or such other person or entity designated
by resolution of the Tribal Council or the Governing Board. Any such approval,
consent or action shall not be unreasonably withheld or delayed; provided that
the foregoing does not apply where a specific provision of this Agreement allows
the Tribe or the Authority an absolute right to deny approval or consent or
withhold action. Notwithstanding the foregoing, if the approval or consent of
the Tribe or the Authority, or the delivery of notice to the Tribe or the
Authority, is required by the terms and conditions of this Agreement, then the
approval or consent of, or the delivery of notice to, either the Tribe or the
Authority shall be deemed to constitute the approval or consent of, or delivery
of notice to, both the Tribe and the Authority, and if any inconsistent or
contradictory instructions (by way of approval, disapproval, consent or
otherwise) shall be delivered by the Authority and the Tribe, Manager shall have
the right to choose (in its sole and absolute discretion) the instruction that
shall be binding upon both the Authority and the Tribe (and the Authority and
the Tribe acknowledge and agree that Manager's choice shall be binding on them).
12.2 Manager. Where approval or consent or other action of Manager is
required, such approval shall mean the written approval of the Managing Officer.
Any such approval, consent or other action shall not be unreasonably withheld or
delayed.
SECTION 13
DISCLOSURES
13.1 Members, Shareholders and Directors. Manager warrants that on
the date of this Agreement its members, shareholders, directors and
officers are those listed on Exhibits E and F.
13.2 Warranties. Manager further warrants and represents as follows:
(i) no person or entity has any beneficial ownership
interest in Manager other than as set forth
herein;
(ii) no officer, director or owner of five percent (5%)
or more of the stock of Manager has been arrested,
indicted for, convicted of, or pleaded nolo
contendere to any felony or any gaming offense, or
had any association with individuals or entities
known to be connected with organized crime; and
(iii) no person or entity listed on Exhibits E or F to
this Agreement, including any officers and
directors of Manager, has been arrested,
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indicted for, convicted of, or pleaded nolo contendere
to any felony or any gaming offense, or had any
association with individuals or entities known to
be connected with organized crime.
13.3 Criminal and Credit Investigation. Manager agrees that all of
its members, shareholders, directors and officers (whether or not involved
in the Enterprise), shall:
(i) consent to background investigations to be
conducted by the Tribe, the State of California,
the Federal Bureau of Investigation (the "FBI") or
any other law enforcement authority to the extent
required by the IGRA and the Compact;
(ii) be subject to licensing requirements in accordance
with Tribal law and this Agreement;
(iii) consent to a background, criminal and credit
investigation to be conducted by or for the NIGC,
if required;
(iv) consent to a financial and credit investigation to
be conducted by a credit reporting or
investigation agency at the request of the TGC;
(v) cooperate fully with such investigations; and
(vi) disclose any information requested by the TGC
which would facilitate the background and
financial investigation.
Any materially false or deceptive disclosures or failure to cooperate
fully with such investigations by an employee of Manager or an employee of the
Authority shall result in the immediate dismissal of such employee. The results
of any such investigation may be disclosed by the TGC to federal officials and
to such other regulatory authorities as required by law.
13.4 Disclosure Amendments. Manager agrees that whenever there is
any change proposed in the information disclosed pursuant to this Section
13 it shall notify the NIGC, the Authority and the TGC of such change
within ten days of any such proposed change. In the event there is any
change in information disclosed pursuant to section 13.1 of this section,
Manager agrees that it will notify the Authority, the TGC and the NIGC not
later than thirty (30) days following the change or within ten days after
it becomes aware of such change, whichever is later. No addition to the
list of persons listed in section 13.1 of this Agreement, or to the persons
having management responsibility for the Enterprise pursuant to this
Agreement, shall be effective until the parties are notified that the
Chairman of the NIGC has approved the change pursuant to the provisions of
25 C.F.R. Part 535. All of the warranties and agreements contained in this
Section 13 shall apply to any person or entity who would be listed in this
Section 13 as a result of such changes.
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13.5 Breach of Manager's Warranties and Agreements. The Material Breach
of any warranty or agreement of Manager contained in this Section 13 shall be
grounds for immediate termination of this Agreement; provided that (i) if a
breach of the warranty contained in clause (ii) of Section 13.2 is discovered,
and such breach was not disclosed by any background check conducted as part of
the Federal approval of this Agreement, or was discovered by the investigation
but all officers and directors of Manager sign sworn affidavits that they had no
knowledge of such breach, then Manager shall have sixty (60) days after notice
from the Authority to terminate the interest of the offending person or entity
and, if such termination takes place, this Agreement shall remain in full force
and effect; and (ii) if a breach relates to a failure to update changes in
financial position or additional gaming related activities, then Manager shall
have thirty (30) days after notice from the Authority to cure such default prior
to termination.
SECTION 14
RECORDATION
14. Recordation. At the option of Manager or the Authority, any security
agreement related to the Loan Agreement, or the Security and Reimbursement
Agreement, may be recorded in any public records. Where such recordation is
desired in any relevant recording office maintained by the Tribe, and/or in the
public records of the BIA, the Authority will accomplish such recordation upon
the request of Manager. Manager shall promptly reimburse the Authority for all
expenses, including attorney fees, incurred as a result of such request. No such
recordation shall waive the Tribe's or the Authority's sovereign immunity.
SECTION 15
LIEN, LEASE OR JOINT VENTURE
15. No Present Lien, Lease or Joint Venture. The parties agree and expressly
warrant that neither the Management Agreement nor any exhibit thereto is a
mortgage or lease and, consequently, does not convey any present interest
whatsoever in the Facility or the Property, nor any proprietary interest in the
Enterprise itself. The parties further agree and acknowledge that it is not
their intent, and that this Agreement shall not be construed, to create a joint
venture between the Tribe and Manager or the Authority and the Manager; rather,
Manager shall be deemed to be an independent contractor for all purposes
hereunder.
SECTION 16
DISPUTE RESOLUTION
16.1 General. The parties agree that binding arbitration shall be the
remedy for all disputes, controversies and claims between the Tribe and the
Manager or between the Authority and the
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Manager arising out of this Agreement, any documents referenced by any of
this Agreement, any agreements collateral thereto, or any notice of
termination thereof, including without limitation, any dispute, controversy
or claim arising out of any of these agreements. The Tribe and the
Authority waive any recourse to any court of the Tribe, and agree that
Tribal court procedures need not be exhausted as a precondition to
commencing or maintaining dispute resolution procedures under this
Agreement. The parties intend that such arbitration shall provide final and
binding resolution of any dispute, controversy or claim, and that action in
any other forum shall be brought only if necessary to compel such
arbitration, to aid such arbitration, or to enforce an award or order
resulting from such arbitration. All initial proceedings between the
parties before the arbitrator shall be instituted within twelve (12) months
after the claim accrues or shall be forever barred. Notwithstanding the
foregoing, an arbitrator shall not have the power to compel, negate,
assume, usurp or in any manner affect any Governmental Action unless any
Governmental Action or failure to take any Governmental Action constitutes
a breach of this Agreement by the Tribe or the Authority.
(i) Initial Procedure. Each party agrees that it will use its
best efforts to negotiate an amicable resolution of any
dispute between Manager and the Tribe or the Authority
arising from this Agreement.
(ii) Arbitration Jurisdiction. Arbitration shall be initiated
by written notice given by one party to the other,
pursuant to the Notice section of this Agreement, and the
Commercial Arbitration Rules of the American Arbitration
Association shall thereafter apply. The Arbitrator shall
have the power to grant legal, equitable and injunctive
relief, including preliminary and temporary injunctive
relief, and specific performance as provided in this
Agreement, the Interim Promissory Note, the Note, the
Loan Agreement (to the extent Manager is the Lender
thereunder), the Security and Reimbursement Agreement,
the Development Agreement and/or any agreement collateral
thereto.
(iii) Court Authority. If necessary, orders to compel arbitration,
aid arbitration, or enforce an award of an arbitrator or
provide any necessary remedies in aid of an arbitration may be
sought before the courts of the State of California and the
Federal Courts.
(iv) Choice of Law. In determining any matter, the arbitrator shall
apply the terms of this Agreement, without adding to,
modifying or changing the terms in any respect, and shall
apply Federal and applicable State law.
(v) Place of Hearing. All arbitration hearings shall be held at a
place designated by the arbitrator in Madera County,
California.
(vi) Confidentiality. The parties shall maintain strict
confidentiality with respect to any arbitration commenced or
maintained under the provisions of this Agreement,
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provided that Manager or the Tribe or the Authority may
provide any notice or information that may be required to any
person under the terms of any Loan Agreement.
16.2 Limited Waiver of Sovereign Immunity. The Tribe and the Authority
expressly and irrevocably waive their immunity from suit as provided for and
limited by this Section. This waiver is limited to the Tribe's and the
Authority's consent to all arbitration proceedings, and actions to compel
arbitration, to aid arbitration, and to enforce any awards or orders issuing
from or connected to such arbitration which are sought in the Courts of the
State of California and the Federal Courts. The arbitrator shall not have the
power to award punitive damages.
(i) Time Period. The waiver granted herein shall commence as
of the date of this Agreement and shall continue for one
year following expiration, termination or cancellation of
this Agreement, but shall remain effective for the
duration of any arbitration or dispute resolution
proceedings then pending, all appeals therefrom,
including court procedures, and except as limited by this
Section, to the full satisfaction of any awards or
judgments which may issue from such proceedings, provided
that an action to collect such judgments has been filed
within one year of the date of the final judgment.
(ii) Recipient of Waiver. This limited waiver is granted only to
Manager and its permitted assigns hereunder and not to any
other individual or entity.
(iii) Limitations of Actions. This limited waiver is specifically
limited to the following actions and judicial remedies:
(a) Damages. The enforcement of an award of money damages
by the arbitrator, provided that the waiver does not
extend beyond the assets specified in Subsection (c)
below. No court or arbitrator shall have any
authority or jurisdiction to order execution against
any assets or revenues of the Tribe or the Authority
except as provided in this Section or to award any
punitive damages against the Tribe or the Authority.
(b) Action to Compel Litigation. An action to compel, aid
or enforce arbitration or awards or orders resulting
from or connected to such arbitration.
(c) Limitation Upon Enforcement. Damages awarded
against the Tribe or the Authority shall be
satisfied solely from the distributable share of Net
Revenues of the Tribe and the Authority from the
Enterprise, the tangible assets of the Facility and
the business of the Enterprise, provided, however,
that this limited waiver of sovereign immunity
shall terminate with respect to the collection of
any Net Revenues transferred from the
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accounts of any of these businesses to the Tribe
or the Tribe's bank account in the normal course
of business. In no instance shall any
enforcement of any kind whatsoever be allowed
against any assets of the Tribe other than those
specified in this Subsection.
(d) Extent of Waiver. Notwithstanding the preceding three
Subsections, the Tribe's and the Authority's waiver
in this Section 16.2 extends to any action, order, or
judgment of an arbitrator or court that provides for
injunctive and/or declaratory relief."
SECTION 17
NEGOTIATE NEW AGREEMENT
17. Intent to Negotiate New Agreement. On or before thirty (30) days after the
end of the sixth (6th) year of this Agreement, the Authority shall give Manager
notice of its intent regarding its willingness to enter into negotiations for a
new Management Agreement to be effective upon the conclusion of this Agreement.
17.1 Transition Plan. If the Authority and Manager are unable to agree
to the terms of a new agreement or if the Authority decides not to enter into
negotiations for a new agreement, then the Authority and Manager shall agree
upon a transition plan within thirty (30) days notice from the Authority of its
intention not to negotiate a new Management Agreement, which plan shall be
sufficient to allow the Authority to operate the Enterprise and provide for the
orderly transition of the management of the Enterprise.
SECTION 18
ENTIRE AGREEMENT
18. Entire Agreement. This Agreement, including the Schedules and Exhibits
referred to herein and any documents executed by the parties simultaneously
herewith, including the Development Agreement and the Interim Promissory Note,
constitutes the entire understanding and agreement of the parties hereto and
supersedes all other prior agreements and understandings, written or oral,
between the parties.
SECTION 19
GOVERNMENT SAVINGS CLAUSE
19. Government Savings Clause. Each of the parties agrees to execute,
deliver and, if necessary, record any and all additional instruments,
certifications, amendments, modifications and
52
other documents as may be required by the United States Department of the
Interior, BIA, the NIGC, the office of the Solicitor, or any applicable
statute, rule or regulation in order to effectuate, complete, perfect,
continue or preserve the respective rights, obligations, liens and
interests of the parties hereto to the fullest extent permitted by law;
provided, that any such additional instrument, certification, amendment,
modification or other document shall not materially change the respective
rights, remedies or obligations of the Tribe, the Authority, or Manager
under this Agreement or any other agreement or document related hereto.
SECTION 20
PREPARATION OF AGREEMENT
20. Preparation of Agreement. This Agreement was drafted and entered into after
careful review and upon the advice of competent counsel; it shall not be
construed more strongly for or against either party.
SECTION 21
STANDARD OF REASONABLENESS
21. Standard of Reasonableness. Unless specifically provided otherwise, all
provisions of this Agreement and all collateral agreements shall be governed by
a standard of reasonableness.
SECTION 22
EXECUTION
22. Execution. This Agreement may be executed in four counterparts, two to be
retained by each party. Each of the six originals is equally valid. This
Agreement shall be deemed "executed" and shall be binding upon all parties when
properly executed and approved by the Chairman of the NIGC.
SECTION 23
ATTORNEY'S FEES
23. Attorneys' Fees. If a dispute resolution proceeding is filed under this
Agreement based in contract, tort or equity, or this Agreement gives rise
to any other legal proceeding between any of the parties hereto, the
prevailing party shall be entitled to recover from the losing party
reasonable attorneys' fees, costs and expenses, including, but not limited
to, expert witness fees, accounting and engineering fees, and any other
professional fees incurred in connection with the prosecution or defense of
such action, if but only if an arbitrator or court (as applicable)
determines that the claims of the losing party were frivolous or were made
in bad faith and with the intent to harass or obstruct
53
the prevailing party. For purposes of this Agreement, the terms "attorneys'
fees," "costs" and "expenses" shall also include the fees and expenses
incurred by counsel to the parties hereto for photocopies, duplications,
deliveries, postage, telephone and facsimile communications, and
transcripts of proceedings relating to the action, and all fees billed for
law clerks, paralegals, librarians, secretaries and others not admitted to
the bar but performing services under the supervision of an attorney. The
terms "attorneys' fees," "costs" and "expenses" shall also include, without
limitation, fees and costs incurred in the following proceedings: (1)
arbitrations; (2) bankruptcy proceedings; (3) appeals; (4) post-judgment
motions and collection actions; and (5) garnishment, levy and debtor
examinations. The prevailing party shall also be entitled to attorneys'
fees and costs after any dismissal of an action.
SECTION 24
PERFORMANCE DELAYED
24. Performance Delayed. Neither the Tribe, the Authority, nor the Manager
party will be liable for any failure or delay in the performance of its
obligations hereunder which are due, in whole or in part, directly or
indirectly, to any cause beyond the reasonable control of such party, which
in the exercise of due diligence could not have been avoided, including
without limitation, fire, explosion, earthquake, storm, flood or other
weather, unavailability of necessary utilities or raw materials, strike,
lockout, unavailability of any component, activities of a combination of
workers or other labor difficulties, war, insurrection, riot, act of God or
public enemy, law, act, order, export control regulation, proclamation
decree, regulations, ordinance, or instruction of government or other
public authorities, or judgment or decree of a court of competent
jurisdiction (not arising out of any breach by such party of this
Agreement). In the event of such occurrence, the party so affected will
give prompt notice to the other parties, stating the period of time the
occurrence is expected to continue.
SECTION 25
CAP ON CONSTRUCTION AND DEVELOPMENT COSTS
25. Cap on Construction and Development Costs. Notwithstanding anything to
the contrary contained in this Agreement, the Development Agreement, or any
other agreement between the parties, in no event shall the aggregate cost
to (i) development the Property, (ii) design and construct the Facility and
(iii) purchase Furnishings and Equipment, all in accordance with the Plans and
Specifications, exceed One Hundred Seventy Million Dollars ($170,000,000.00).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
PICAYUNE RANCHERIA OF CHUKCHANSI INDIANS
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Tribal Chairperson
CHUKCHANSI ECONOMIC DEVELOPMENT AUTHORITY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Its: Chairperson
CASCADE ENTERTAINMENT GROUP, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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