GAMING FACILITY MANAGEMENT
AGREEMENT
AMONG
THE ST. REGIS MOHAWK TRIBE,
ST. REGIS MOHAWK GAMING AUTHORITY,
AND
MOHAWK MANAGEMENT, LLC
TABLE OF CONTENTS
1. Recitals and Conditions Precedent 1
2. Definitions 2
Authority 2
Authority's Representatives 2
Bureau of Indian Affairs 2
Cash Maintenance Account 2
Class II Gaming 2
Class III Gaming 2
Collateral Agreement 2
Compact 3
Depository Account 3
Developer 3
Development and Construction Agreement 3
Development Business Board 3
Effective Date 3
Financing Agreements 3
Furniture, Trade Fixtures, and Equipment 3
Gaming 3
Gaming Authority Charter 3
Gaming Enterprise 3
Gaming Enterprise Personnel Policies 4
Gaming Facility 4
General Manager 4
Generally Accepted Accounting Principles 4
Gross Gaming Revenue Win 4
Gross Revenues 4
IGRA 5
Indebtedness 5
Independent Financial Advisor 5
Indian 5
Interest and Excess Cash Flow Account 5
Land Purchase Agreement 5
Legal Requirements 5
Management Board 5
Management Business Board 5
Manager's Representative 5
Member of the Tribal Government 5
Memorandum of Understanding 5
Minimum Balance 6
Minimum Priority Payment 6
National Indian Gaming Commission 6
Net Revenues 6
Non-Casino Facility 6
Operating Expenses 6
Person 7
Phase I 7
Phase I Commencement Date 7
Phase II 7
Phase II Commencement Date 7
Project Costs 7
Promotional Allowances 7
Property 8
Relative 8
Senior Secured Note Indenture 8
Senior Secured Notes 8
Shared Facilities Agreement 8
Trade Fixtures 8
Tribal Gaming Ordinance 8
Tribe 8
Trustee 8
3. Covenants 9
3.1 Engagement of Manager 9
3.2 Term 9
3.3 Establishment and Operation of
Management Business Board 9
3.4 Manager's Compliance With Law: Licenses 10
3.5 Tribe's Amendments to Tribal Gaming Ordinance 10
3.6 Management Fee 10
4. Business and Affairs in Connection with 11
Gaming Enterprise
4.1 Manager's Authority and Responsibility 11
4.1.1 Selection of General Manager 11
4.1.2 Removal of General Manager 11
4.1.3 Interim General Manager 11
4.2 Duties of the Manager 12
4.2.1 Management 12
4.2.2 Compliance 12
4.2.3 Required Filings 14
4.2.4 Contracts in Authority's Name and 14
at Arm's Length
4.2.5 Financing 14
4.2.6 Operating Capital 15
4.2.7 Compliance With Material Agreements 15
4.3 Security and Surveillance 15
4.4 Damage, Condemnation or Impossibility 15
of the Gaming Enterprise
4.4.1 Recommencement of Operations 16
4.4.2 Repair or Replacement 16
4.4.3 Other Business Purposes 17
4.4.4 Cessation Of Gaming 17
4.4.5 Tolling Of the Agreement 17
4.5 Alcoholic Beverages and Tobacco Sales 17
4.6 Employees 17
4.6.1 Manager's Responsibility 17
4.6.2 Authority's Employees 18
4.6.3 Authority's Inspector(s) 18
4.6.4 Indian Employment Preference 18
and Training
4.6.5 Removal of Employees 18
4.7 Marketing and Advertising 19
4.8 Pre-Opening 19
4.9 Operating Budgets 20
4.10 Capital Budgets 22
4.11 Capital Replacements 22
4.12 Contracting 23
4.13 Determination of Qualifications and Compensation 23
4.14 Litigation 23
4.15 Employee Background Investigations 24
4.16 Gaming Enterprise Personnel Policies 24
4.17 No Manager Wages or Salaries 24
4.18 Internal Control Systems 25
4.19 Bank Accounts 25
4.20 Daily Deposits to Depository Account 26
4.21 Disbursement Account 26
4.22 No Cash Disbursements 26
4.23 ▇▇▇▇▇ Cash Fund 26
4.24 Transfers Between Accounts 26
4.25 Insurance 27
4.25.1 27
4.25.2 27
4.25.3 27
4.25.4 27
4.25.5 27
4.25.6 28
4.25.7 28
4.25.8 28
4.25.9 Waiver of Subrogation 29
4.26 Accounting and Books of Account 29
4.26.1 Statements and Audits 29
4.26.2 Books of Account 29
4.26.3 Accounting Standards 30
4.26.4 Depreciation Schedules 30
5. Liens 30
6. Management Fee, Reimbursement and ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
Financing Guarantee, Funding and Buy Out Option
6.1 Authorization for Payment of Management 31
Fee by Manager
6.2 Disbursements 31
6.3 Adjustment to Bank Account 31
6.4 Payment of Fees and Authority Disbursement 31
6.4.1 Subordination Provisions 33
6.5 Operative Dates 35
6.6 Payment of Net Revenues 35
6.7 Total Recoupment for Development Costs 35
7. General Provisions 35
7.1 Notice 35
7.2 Authorization 36
7.3 Relationship 37
7.4 Manager's Contractual Authority 37
7.5 Further Actions 37
7.5.1 Fire and Safety 37
7.5.2 Taxes 37
7.5.3 Governing Law 36
7.5.4 National Environmental Policy Act 38
7.6 Defense 38
7.7 Indemnity 38
7.8 Waivers 39
7.9 Captions 39
7.10 Severability 39
7.11 Interest 39
7.12 Reimbursement 39
7.13 Third Party Beneficiary 40
7.14 Brokerage 40
7.15 Survival of Covenants 40
7.16 Estoppel Certificate 40
7.17 Periods of Time 40
7.18 Preparation of Agreement 40
7.19 Exhibits 40
7.20 Non-Assignability 41
7.21 Confidential Information 41
7.22 Patron Dispute Resolution 42
7.23 Modification 42
8. Warranties 42
8.1 Preservation of Agreement 42
8.2 Non-Interference in Tribal Affairs 42
8.3 Prohibition of Payments to Members of 42
Tribal Government or Authority
8.4 Prohibition of Hiring Members of 43
Tribal's Government or Authority
8.5 Prohibition of Financial Interest 43
in Gaming Enterprises
8.6 Tribal Taxes 43
9. Grounds for Termination 44
9.1 Voluntary Termination and Termination for cause 44
9.2 Voluntary Termination 44
9.3 Termination for Cause 44
9.3.1 By Either Party 44
9.3.2 By the Authority 44
9.3.3 Rights Upon Termination 45
9.3.4 No Election of Remedies 45
9.4 Involuntary Termination Due to Changes 46
in Legal Requirements
9.5 Manager's Right to Terminate Agreement 46
9.6 Consequences of Termination for Manager's Breach 46
9.7 Consequences of Termination for Authority's Breach 47
10. Conclusion of the Management Term 47
10.1 Transition 47
10.2 Undistributed Net Revenues 47
11. Consents and approvals 48
11.1 Authority 48
11.2 Manager 48
12. Disclosures 48
12.1 Partners and Affiliates 48
12.2 Criminal and Credit Investigation 48
12.3 Disclosure Amendments 49
12.4 Breach of Manager Warranties and Agreements 49
13. Recordation 49
14. Authority to Execute 49
15. No Present Lien, Lease or Joint Venture 49
16. Dispute Resolution 50
16.1 Consent to Suit 50
16.1.1 Arbitration 50
16.1.2 Choice of Law 51
16.1.3 Place of Hearing 51
16.1.4 Confidentiality 51
16.2 Limitation of Actions 51
16.2.1 Damages 51
16.2.2 Consents and Approvals 51
16.2.3 Injunctive Relief and Specific Performance 52
16.2.4 Action to Compel Arbitration 52
16.2.5 Action to Preserve the Status Quo 52
During Disputes
16.3 Limitation of Liability 52
17. Time is of the Essence 52
18. Authority's Assets 52
19. Notice Provision 52
20. Performance During Disputes 52
21. Marks 53
21.1 Authority's Marks 53
21.2. Manager's Marks 54
22. Execution in Counterpart Originals 55
23. Gaming Enterprise Name 55
24. Intent to Negotiate New Agreement 55
25. Entire Agreement 55
26. Government Savings Clause 55
27. Reasonableness 56
EXHIBITS
A. Legal Description of the Property
B. List of Members of Mohawk Management, L.L.C.
C. Policies and Procedures for Resolution of Disputes Between Manager and
Customers
D. Policies and Procedures for Personnel Disputes
E. List of Tribal Holidays
GAMING FACILITY
MANAGEMENT AGREEMENT
THIS GAMING FACILITY MANAGEMENT AGREEMENT has been entered into July 31,
1996, by and among the ST. REGIS MOHAWK GAMING AUTHORITY (the "Authority"), and
its permitted successors and assigns, MOHAWK MANAGEMENT, L.L.C., a New York
limited liability company, ("the Manager"), and its permitted successors and
assigns, and the ST. REGIS MOHAWK TRIBE (the "Tribe") for the limited purposes
stated in sections 3.5 and 4.2.2 and Articles 8 and 16.
1. Recitals and Conditions Precedent.
WHEREAS, the Tribe is an Indian Tribe which possesses governmental power
over its tribal lands and is acknowledged as such by the United States; and
WHEREAS, the United States Congress enacted the Indian Gaming Regulatory
Act ("IGRA") to promote tribal economic development, tribal self-sufficiency,
and strong tribal governments; and
WHEREAS, the Tribe has entered into a Class III gaming compact with the
State of New York, and that compact was approved by the United States Secretary
of the Interior on December 4, 1993, to govern the conduct of Class III gaming
on tribal lands; and
WHEREAS, it is the objective of the Tribe to extend its tribal gaming
operations to provide employment, for its members and improve the social,
economic, educational, and health services for its members and the community;
and
WHEREAS, Catskill Development, L.L.C., proposes to convey legal title to
approximately 30 acres of land in Monticello, New York to the United States of
America in trust for the St. Regis Mohawk Tribe; and
WHEREAS, the ▇▇▇▇▇▇▇▇ County community surrounding such land is very
positive about and strongly supportive of the Tribe's plan to develop such land
and to conduct gaming upon such land; and
WHEREAS, the Tribe has established the Authority, an instrumentality of
the Tribe, to which the Tribe has assigned its authority over the development
and conduct of gaming on the land in Monticello, New York, to be conveyed to the
United States in trust for the Tribe, including the authority to enter into
agreements for the financing, development and construction, and operation of a
casino on such land; and
WHEREAS, the development of the Gaming Enterprise require a significant
capital investment; and
WHEREAS, the Authority seeks technical and financial expertise to manage
the Gaming Enterprise and is desirous of employing a firm with the appropriate
management and business expertise to manage the Gaming Enterprise; and
WHEREAS, Manager meets the Authority's standard in terms of expertise,
experience and ability to assist the Authority in obtaining financing to
construct and develop the Gaming Enterprise and thereafter to manage, operate,
and maintain the Gaming Enterprise as well as instructing the Authority and
others in the operation of a first-class gaming facility;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1.5 This Agreement is entered into pursuant to the Indian Gaming
Regulatory Act of 1988, PL 100-497, 25 U.S.C. 2701, et seq, (herein after
"IGRA").
2. DEFINITIONS. As they are used in this Agreement, the terms listed below shall
have the meaning assigned to them in this Section:
"AUTHORITY" shall mean the St. Regis Mohawk Gaming Authority.
"AUTHORITY'S REPRESENTATIVES" shall mean the persons designated by the
Authority to sit on the Management Business Board. The Authority's
Representatives shall serve as the liaisons between the Authority and the
Manager during the term of this Agreement.
"BUREAU OF INDIAN AFFAIRS" or "B.I.A." is the Bureau of Indian Affairs of
the Department of the Interior of the United States of America.
"CASH MAINTENANCE ACCOUNT" means the cash collateral account required to
be established by the Senior Secured Note Indenture.
"CLASS II GAMING" shall mean Class II Gaming as defined in IGRA.
"CLASS III GAMING" shall mean Class III Gaming as defined in IGRA.
"COLLATERAL AGREEMENT" shall mean other agreements between the parties as
defined by 25 C.F.R 'SS'502.5.
"COMPACT" shall mean the tribal-state Compact, and any amendments or
modifications thereto, entered into between the Tribe and the State of New York
pursuant to IGRA, or such other Compact as may be substituted therefor.
"DEPOSITORY ACCOUNT" shall mean that certain depository account
established by Manager for the benefit of the Authority pursuant to Section 4.20
hereof.
"DEVELOPER" shall mean Monticello Raceway Development Company, L.L.C.
"DEVELOPMENT AND CONSTRUCTION AGREEMENT" shall mean that certain
Development and Construction Agreement of even date, by and among Developer, the
Authority, and the Tribe for the limited purposes, set forth therein, providing
the terms under which Developer will develop the Gaming Facility, including
without limitation, design, construction and furnishing and equipping same.
"DEVELOPMENT BUSINESS BOARD" is the committee of that name created by
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the Development and Construction Agreement.
"EFFECTIVE DATE" shall mean the date on which written approval of this
Agreement is granted by the Chairman of the NIGC. The parties agree to cooperate
and to use their best efforts to satisfy the above condition at the earliest
possible date.
"FINANCING AGREEMENTS" shall mean the Senior Secured Note Indenture, the
Senior Secured Notes, and any other related or collateral agreement and the
exhibits and schedules thereto by which funds are advanced to the Authority the
proceeds of which are to be used exclusively to purchase the Property, develop,
design, construct, furnish, equip and provide start-up and working capital for
the Gaming Enterprise and to make certain renovations, improvements or
alterations to the Non-Casino Facility.
"FURNITURE, TRADE FIXTURES, AND EQUIPMENT" shall mean all furniture, trade
fixtures and equipment required or used in the operation of the Gaming
Enterprise in accordance with the plans and specifications of the Gaming
Facility.
"GAMING" shall mean any and all activities defined as Class II or Class
III Gaming under IGRA or authorized under the Compact.
"GAMING AUTHORITY CHARTER" shall mean the Charter establishing the
Authority as enacted by Resolution No. 96-22 of the Tribal Council of the
Tribe.
"GAMING ENTERPRISE" is any commercial enterprise of the Authority
authorized by the IGRA and/or the Compact and operated and managed by Manager on
the Property in accordance with the terms and conditions of this Agreement to
engage in Gaming; and any other lawful commercial activity related to Gaming
allowed in the Gaming Facility including, but not limited to, Automatic Teller
Machines, and, subject to any limitations contained in the Memorandum of
Understanding, the sale for individual consumption of food, beverages, tobacco,
gifts and souvenirs, but excluding any franchised or licensed vendors paying a
fee to the Gaming Enterprise. It is acknowledged and agreed to by the parties
hereto that "Gaming Enterprise" shall exclude any wagering activities related to
the outcome of any racetrack or racing contest conducted off the Property. The
Gaming Enterprise includes any building or accommodation used for Gaming on the
Property and related on-site retail sales on the Property. The Authority shall
have the sole proprietary interest in and responsibility for the conduct of all
Gaming conducted by the Gaming Enterprise, subject to the rights and
responsibilities of the Manager under this Agreement.
"GAMING ENTERPRISE PERSONNEL POLICIES" shall mean the policies and
procedures established pursuant to section 4.16 herein.
"GAMING FACILITY" shall mean the buildings, improvements, and fixtures,
now or hereafter located on the Property within which the Gaming Enterprise will
be housed.
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"GENERAL MANAGER" shall mean the individual employed by the Manager to
direct the operation of the Gaming Facility.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession.
"GROSS GAMING REVENUE WIN" or "WIN" shall mean the net win from Gaming
activities which is the difference between Gaming wins and losses before
deducting costs and expenses, determined in accordance with GAAP consistently
applied.
"GROSS REVENUES" shall mean all revenues of any nature derived directly or
indirectly from the Gaming Enterprise including, without limitation, gross
gaming win, interest, distributions, or dividends earned on bank accounts and
investments, 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), and revenue recorded
for Promotional Allowances, determined in accordance with GAAP consistently
applied.
"IGRA" shall mean the Indian Gaming Regulatory Act of 1988, PL 100-497,
25 U.S.C. 2701 et seq. as it may, from time to time, be amended.
"INDEBTEDNESS" shall have the meaning as set forth in the Senior Secured
Note Indenture.
"INDEPENDENT FINANCIAL ADVISOR" shall mean an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Management Business Board, (i) qualified to perform the task for
which it has been engaged and (ii) disinterested and independent with respect to
the Authority and the Manager.
"INDIAN" shall mean any member of a federally recognized Indian Tribe or
of a Mohawk Tribe recognized by the government of Canada, and certified as such
by the Authority to the Manager.
"INTEREST AND EXCESS CASH FLOW ACCOUNT" shall have the meaning as set
forth in the Senior Secured Note Indenture.
"LAND PURCHASE AGREEMENT" shall mean that certain Land Purchase Agreement,
dated of even date herewith between Catskill Development, L.L.C. and the
Authority, by which Catskill Development, L.L.C. shall convey the Property to
the United States to be held in trust for the benefit of the Tribe.
"LEGAL REQUIREMENTS" shall mean singularly and collectively, the Compact,
IGRA, the Memorandum of Understanding, all applicable laws, rules and
4
regulations of the Tribe, including, without limitation, the Tribal Gaming
Ordinance, and all other applicable federal and New York laws.
"MANAGEMENT BOARD" is the Management Board of the Authority.
"MANAGEMENT BUSINESS BOARD" is the committee created by section 3.3 of
this Agreement.
"MANAGER'S REPRESENTATIVE" shall mean the persons designated by the
Manager to sit on the Management Business Board. The Manager's Representatives
shall serve as the liaisons between the Manager and the Authority during the
term of the Agreement.
"MEMBER OF THE TRIBAL GOVERNMENT" shall mean any member of the Tribal
Council of the Tribe, or of the Management Board of the Authority, and any
Tribal court official with jurisdiction on the Property or over the Gaming
Enterprise.
"MEMORANDUM OF UNDERSTANDING" shall mean the Memorandum of Understanding
by and between the ▇▇▇▇▇▇▇▇ County Casino Gaming Advisory Board (the ▇▇▇▇▇▇▇▇
County Boards) and the Tribe, dated April 29, 1996, the Addendum thereto dated
May 23, 1996, and any agreements implementing such Memorandum of Understanding
and Addendum between the Tribe and/or Authority and the ▇▇▇▇▇▇▇▇ County Board
and/or local governing bodies.
"MINIMUM BALANCE" shall mean that sum of money agreed to by the Management
Business Board to be maintained in the Gaming Enterprise bank account(s) to
serve as working capital for Gaming Facility operations. The Minimum Balance may
be adjusted by the Management Business Board at any time and from time to time
in accordance with reasonable and prudent business practices.
"MINIMUM PRIORITY PAYMENT" shall mean the amount to be paid to the
Authority as provided in Section 6.4 (First) of this Agreement.
"NATIONAL INDIAN GAMING COMMISSION" or "NIGC" is the commission
established pursuant to 25 U.S.C. 'SS' 2704.
"NET REVENUES shall mean Gross Revenues of the Gaming Enterprise from all
sources, less all related Operating Expenses, excluding the Management Fee, and
less the retail value of Promotional Allowances and less the following revenues
actually received by the Gaming 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 Gaming Enterprise for lost or damaged merchandise; (iv) any
sales, excise, gross receipt, admission, entertainment, tourist or other taxes
or charges (or assessments equivalent thereto, or payments made in lieu thereof)
which are 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
5
interruption; (vii) any condemnation awards other than for temporary
condemnation; and (viii) any proceeds of financing or refinancing, all as
determined in accordance with GAAP consistently applied and 25 U.S.C. 'SS' 2703
(9).
"NON-CASINO FACILITY" shall mean all buildings, fixtures and improvements
located on land adjacent to the Property owned by Catskill Development, L.L.C.,
or any of its affiliates, and used in connection with any parimutuel wagering
activities and other similar activities related, directly or indirectly, to the
Monticello Racetrack and any ancillary activities thereto.
"OPERATING EXPENSES" shall mean expenses of the operation of the Gaming
Enterprise determined in accordance with GAAP, consistently applied. Operating
Expenses shall include, without limitation: (i) all accrued interest expense
(whether or not distributed and whether or not deposited including deposits into
the Interest and Excess Cash Flow Account as that term is defined in the Senior
Secured Note Indenture) with respect to interest on the Senior Secured Notes;
(ii) depreciation and amortization expense; (iii) any bond premium incurred
pursuant to the Senior Secured Note Indenture; (iv) payments required pursuant
to the Memorandum of Understanding; and (v) payments required pursuant to any
agreement with the State of New York.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PHASE I" shall mean the initial period of operation of the Gaming
Enterprise, utilizing existing facilities with minimal structural adaptation.
The parties anticipate Phase I to last two years, pending completion of
development and construction of the permanent Gaming Facility.
"PHASE I COMMENCEMENT DATE" shall mean the first date that the Gaming
Enterprise is open to the public and Gaming is being conducted at the Property
on a temporary interim basis.
"PHASE II" shall mean the operation of the Gaming Enterprise in the fully
completed Gaming Facility; the parties intend for this phase to run from the
Phase II Commencement Date through the term of the Agreement.
"PHASE II COMMENCEMENT DATE" shall mean the first date that the Gaming
Facility is fully Completed (as that term is defined in the Senior Secured Note
Indenture), open to the public and that Gaming is being conducted in the Gaming
Facility on a non-temporary basis, pursuant to the terms of this Agreement. The
Manager shall memorialize the Phase II Commencement Date in a writing signed by
the Manager and the Authority and delivered to the NIGC and to the BIA Area
Director, Eastern Area Office.
"PROJECT COSTS" means the sum of: (i) all so-called "hard" and "soft"
costs incurred in developing, designing, constructing, equipping and
6
furnishing the Gaming Facility, and making certain renovations, improvements or
alterations to the Non-Casino Facility, including, without limitation, any costs
related to land acquisition, professional services, pre-opening costs, and
initial operating capital for the Gaming Enterprise; (ii) all start up and
operating costs of the Gaming Authority until the Phase I Commencement Date; and
(iii) all financing fees and expenses, additional start-up fees in connection
with Phase II, interest payments and any scheduled principal payments, prior to
the Phase II Commencement Date; provided that all Project Costs shall be
allocated in accordance with GAAP, consistently applied.
"PROMOTIONAL ALLOWANCES" shall mean the retail value of any
transportation, complimentary accommodations at local hotels, food, beverages,
merchandise, chips, tokens, shows, or services provided to patrons for
promotional purposes.
"PROPERTY" shall mean the parcel of land described in Exhibit A, or such
other parcel, approved by the Authority, and Catskill Development, L.L.C., to be
held by the United States of America in trust for the Tribe and upon which the
Gaming Enterprise is to be conducted.
"RELATIVE" shall mean an individual residing in the same household and who
is related as a spouse, father, mother, sister, brother, son or daughter of the
other person.
"SENIOR SECURED NOTE INDENTURE" means that certain Indenture by and among
the Authority, the Tribe, and the Trustee, pursuant to which the Senior Secured
Notes are issued.
"SENIOR SECURED NOTES" means the Authority's Series A Senior Secured Notes
and Series B Senior Secured Notes, if any, issued by the Authority pursuant to
the Senior Secured Note Indenture.
"SHARED FACILITIES AGREEMENT" shall mean that certain Shared Facilities
Agreement by and between the Authority and Catskill Development, L.L.C. with
respect to the maintenance, repair and operation of the Gaming Facility and the
Non-Casino Facility.
"TRADE FIXTURES" shall mean those fixtures or equipment attached to the
building in which the Gaming Enterprise shall be conducted, which are used to
conduct, support or facilitate the conduct of Gaming, and including, but not
limited to: gaming machines, gaming tables, gaming equipment cabinets, coin,
cash and chip counting machines, computers, computer monitors and related
equipment, cash registers, safes, surveillance equipment, television cameras,
monitors and recorders, audio and musical instruments, equipment and speakers,
and stoves, ovens, cabinets, refrigerators, freezers, and other kitchen
equipment. Decorative fixtures, railings, lights, flooring, plumbing fixtures,
sinks, toilets, and all other real property fixtures are not Trade Fixtures and
shall not be subject to any lien or encumbrance.
"TRIBAL GAMING ORDINANCE" shall mean the St. Regis Mohawk Tribal Gaming
Ordinance adopted by Resolution No. 93-102 of the Tribal Council of the Tribe
7
and any amendments, supplements or modifications thereto, and all related or
implementing ordinances, which are enacted by the Tribe or the Authority to
authorize and regulate Gaming on the Property pursuant to IGRA.
"TRIBE" shall mean the St. Regis Mohawk Tribe, a federally recognized
Indian tribe.
"TRUSTEE" means the trustee, designated under the Senior Secured Note
Indenture.
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3. COVENANTS. In consideration of the mutual covenants contained in this
Agreement, the parties agree and covenant as follows:
3.1 ENGAGEMENT OF MANAGER. The Authority hereby retains and engages
Manager as its agent for the purposes of carrying out its duties under this
Agreement including managing the Gaming Enterprise and training employees of the
Gaming Enterprise in the management of the Gaming Enterprise. Subject to the
terms of this Agreement, the foregoing is intended to grant Manager the
exclusive right to manage the Gaming Enterprise during the Term. Nothing
contained herein grants or is intended to grant Manager a titled interest to the
Gaming Facility or to the Gaming Enterprise. The Manager hereby accepts such
retention and engagement and promises to use its reasonable best efforts to
promote and manage the Gaming Enterprise and to train the Authority and others
as aforesaid.
3.2 TERM. This Agreement shall become effective on the Effective Date. The
term ("Term") of this Agreement shall begin on the Phase I Commencement Date and
continue for a period of seven (7) years, unless sooner terminated by either
party in accordance with the provisions of this Agreement, provided that the
Term shall not include either (a) the interim, if any, between Phase I and Phase
II operation of the Gaming Enterprise, during which no gaming shall be conducted
on the Property, or (b) any period of cessation of Gaming on the Property during
which the Term is tolled pursuant to Section 4.4.5 of this Agreement.
3.3 ESTABLISHMENT AND OPERATION OF MANAGEMENT, BUSINESS BOARD. The
Management Business Board is a committee which shall consist of four
representatives, two of whom are appointed by the Authority and two of whom are
appointed by the Manager. The Manager shall designate as its representatives to
the Management Business Board the same persons who represent the Developer on
the Development Business Board established by the Development and Construction
Agreement. The Authority shall designate as its representatives to the
Management Business Board the same persons who represent it on the Development
Business Board. Either party may change its representatives to the Management
Business Board at any time, provided that this Section 3.3 is complied with, and
that notice is provided pursuant to Section 7. The Authority and the Manager may
designate a proxy to act on behalf of a named representative to act in the
absence of such representative to the Management Business Board, provided that
such designation be in writing by, in the case of the Authority, its Chairman,
or in the case of the Manager, its managing director, and that notice of such
designation be provided pursuant to section 7.1 of this Agreement. Such proxy
shall have the full authority to act, vote or consent on behalf of such
representative. Except as otherwise expressly provided in this Agreement, in
order to be effective, any action of the Management Business Board must be the
result of agreement by at least three members of the Management Business Board
or designees. The parties hereby agree to ensure that their respect, i.e.,
representatives to the Management Business Board shall cooperate fully and shall
try to reach agreement or compromise on all matters before the Management
Business Board. In the event such agreement cannot be reached, the appropriate
action shall be determined in the manner provided in Article XVI.
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3.4 MANAGER'S COMPLIANCE WITH LAW; LICENSES. The Manager covenants that it
will at all times comply in all material respects with all Legal Requirements,
including the Tribal Gaming Ordinance, the IGRA, the Compact, applicable New
York statutes, applicable Federal law, and any licenses issued under any of the
foregoing. The Manager, Manager's executive officers, and all other persons
required by applicable law shall be licensed to operate the Gaming Enterprise
pursuant to the Tribal Gaming Ordinance. The Authority shall not unreasonably
withhold, withdraw, qualify or condition such licenses, provided however, that
the Authority may assess license fees reflecting reasonable regulatory costs
incurred by the Authority solely in connection with the Gaming Enterprise.
3.5 TRIBE'S AMENDMENTS TO TRIBAL GAMING ORDINANCE. The Tribe and the
Authority covenant that any amendments made to the Tribal Gaming Ordinance will
be a legitimate effort to ensure that Gaming is conducted in a manner that
adequately protects the environment, the public health and safety, or the
integrity of the Gaming Enterprise. The Tribe and the Authority further covenant
that any amendments to the Tribal Gaming Ordinance will comply with the
foregoing standard. Except as required by State or federal law, the Tribe and
the Authority will not adopt any amendments to the Tribal Gaming Ordinance that
would (a) materially increase Manager's obligations hereunder; (b) result in a
material reduction in the amount of the Management Fee payable to Manager absent
such amendment to the Tribal Gaming Ordinance; or (c) have any other material
adverse effect on the Manager's rights under this Agreement, the Financing
Agreements, the Developer's rights under the Development and Construction
Agreement, or any other document executed by the parties related thereto,
provided that nothing herein shall prevent the Authority from assessing license
fees reflecting reasonable regulatory costs incurred by the Authority. The
Authority shall give Manager notice and a copy of the full text of any proposed
amendment to the Tribal Gaming Ordinance at least 14 days before any such
amendment will go into effect, but failure to give such notice shall not affect
the validity or enforceability of such amendment.
3.6 MANAGEMENT FEE. The Authority agrees to pay the Manager a fee (the
"Management Fee") equal to 35% of Net Revenues. Such fee shall be paid pursuant
to Section 6 of this Agreement.
The Management Fee shall be calculated as described in this Section 3.6
and shall be paid monthly as provided by Section 6.1 of this Agreement.
4. BUSINESS AND AFFAIRS IN ENTERPRISE.
4.1 MANAGER'S AUTHORITY AND RESPONSIBILITY. All business and affairs in
connection with the day-to-day operation, management and maintenance of the
Gaming Enterprise and the Gaming Facility, including the establishment of
operating days and hours, shall be the exclusive responsibility of the Manager.
The Manager shall select a General Manager on or before a date which is at least
sixty (60) days prior to the commencement of operation of Phase I. The General
Manager shall be an employee of the Gaming Enterprise. The Manager is hereby
granted all power and authority which is necessary or appropriate to act,
through the General Manager, in order to fulfill its
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responsibilities under this Agreement. Manager agrees to employ prudent and
commercially reasonable management practices, including competitive selection of
goods and services where appropriate.
4.1.1 SELECTION OF GENERAL MANAGER. The General Manager shall be
proposed by the Manager, and his appointment shall be subject to approval by the
Management Business Board, provided that such approval must be by unanimous vote
of the four members of the Management Business Board. The Manager shall exercise
its reasonable best efforts to promptly propose the General Manager, including
any replacement General Manager, and to obtain Management Business Board
approval.
4.1.2 REMOVAL OF GENERAL MANAGER. The General Manager may be
removed, with or without Cause (hereafter defined), by an affirmative vote of
three members of the Management Business Board. In addition, the General Manager
shall be removed if Cause exists for his removal and the Authority's
Representatives request his removal in writing, specifying such Cause, provided
that, "Cause" for the purposes of this Section shall be limited to the
following: (a) the General Manager shall have been convicted or indicted for any
federal or state felony involving moral turpitude or any federal or state gaming
offense; (b) the removal of the General Manager is required by the NIGC or its
Chairman in order to avoid termination of this Agreement; or (c) the General
Manager has knowingly and willfully provided materially important false or
misleading statements or information to the NIGC or the Authority.
4.1.3 INTERIM GENERAL MANAGER. In the event that the General
Manager's position is vacant, until such time as the Management Business Board
approves a General Manager, the Manager may appoint an interim General Manager.
4.2 DUTIES OF THE MANAGER. In managing, operating, maintaining and
repairing the Gaming Enterprise and the Gaming Facility, the Manager's duties
shall include, without limitation, the following:
4.2.1
MANAGEMENT. The Manager shall use prudent and commercially reasonable
measures for the orderly administration, management, and operation of the
Gaming Enterprise and the Gaming Facility.
4.2.2
COMPLIANCE. The Manager shall comply in all material respects with all
present and future statutes, regulations and ordinances of the Tribe and the
Authority.
Except with the consent of the Management Business Board or as required
by federal or state law, the Tribe shall not and the Authority shall not, and
shall not permit any of their respective representatives, political subunits or
councils, agencies or instrumentalities, to, directly or indirectly, (i)
increase or impose any tax, levy, or other monetary payment or reimbursement
obligation on the Gaming Enterprise (except for licensing fees and the
reasonable costs and expenses of investigations for tribal gaming licenses as
11
permitted in this Agreement) or on any patrons of the Gaming Enterprise, or on
any activity at the Gaming Enterprise (gaming or otherwise) , other than any
payments due under any agreement in effect on the Effective Date or any such
payments that are not materially adverse to the economic interests of the
Manager; (ii) amend the terms of the Financing Agreements in any material manner
that would be materially adverse to the economic interests of the Manager; (iii)
take any other action, enter into any agreement or enact any ordinance, law,
rule or regulation that would, directly or indirectly, have a material adverse
economic effect on the Manager's rights hereunder, materially reduce the
Management Fee otherwise payable hereunder or materially increase the Manager's
obligations hereunder; or (iv) violate the Indian Civil Rights Act (25 U.S.C. SS
1301-1303). Prior to any changes in the Tribe's or the Authority's land use or
zoning regulations or ordinances applicable to the Property during the Term of
this Agreement, the Manager and the Tribe and/or the Authority shall jointly
determine whether the Property shall be exempt from such changes. In addition,
except as specifically provided in this Agreement, the Tribe shall not, and
shall not permit the Authority or any of the Tribe's representatives, political
subunits or councils, agencies, instrumentalities to, directly or indirectly,
impose, levy, tax or otherwise make any charge on the Management Fee, unless
such levy, tax, or charge is reimbursed in full.
If the Tribe takes action to comply with federal or state law that would
otherwise violate the foregoing paragraph, the Tribe will give notice to the
Manager of such action and, to the extent practicable, the Tribe shall give the
Manager at least 30 days prior written notice of any such action.
The Tribe will not permit or incur any consensual liability of the Tribe
(or of any other instrumentality or subunit of the Tribe) that is a legal
obligation of the Authority (except if payable solely from the Authority's
distribution of Net Revenues), or for which the Authority's assets (other than
the Authority's distribution of Net Revenues) may be bound, other than a
liability that the Authority is permitted or not prohibited from incurring on
its own behalf under this Agreement. Without the consent of the Management
Business Board, neither the Authority nor the Manager shall incur any liability
that is not consistent with the annual budget or incur any material indebtedness
which shall directly or indirectly become an Operating Expense, except nothing
herein shall limit the power of the Tribe to assess the licensing fees permitted
under this Agreement.
The Tribe will not, pursuant to or within the meaning of any bankruptcy
law, appoint or consent to the appointment of a custodian of the Authority or
for all or substantially all of the property of the Authority that has the
effect of staying, repudiating, or terminating this contract, or removing the
Manager.
The Tribe agrees that it will not enact any bankruptcy law or similar law
for the relief of debtors that would impair, limit, restrict, delay, or
otherwise materially adversely affect any of the rights and remedies of the
Manager provided in this Agreement.
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The Tribe agrees that it will not, and will not permit the Authority or
any of the Tribe's representatives, political subunits, agencies,
instrumentalities or councils to, exercise any power of eminent domain over the
Property (other than any such exercise that would not materially adversely
affect the economic rights and benefits of the Manager).
The Tribe agrees that the Authority shall have sole and exclusive
jurisdiction to operate any Gaming enterprise on behalf of the Tribe or any
political subunit thereof on the Property.
Nothing in this Section shall limit or restrict the sovereign right of the
Tribe to enact laws, regulations or ordinances that do not affect the Gaming
Enterprise or the rights and benefits of the Manager hereunder or otherwise in a
manner that does not violate this Section.
4.2.3
REQUIRED FILINGS. The Manager shall comply with all applicable provisions
of the Internal Revenue Code including, but not limited to, the prompt filing of
any cash transaction reports and W-2G reports that may be required by the
Internal Revenue Service of the United States or under the Compact.
4.2.4
CONTRACTS IN AUTHORITY'S NAME AND AT ARM'S LENGTH. Contracts for the
operation of the Gaming Enterprise shall be negotiated by the Manager and shall
be entered into on behalf of and in the name of the Authority and signed by the
General Manager. The General Manager may enter into such contracts without the
approval of the Management Business Board if the expenditure under such contract
is provided for in the annual budget approved by the Management Business Board
and is not with a party affiliated with the Manager or its members, officers, or
directors. Contracts requiring the expenditure in any fiscal year in excess of
$25,000 the expenditure of which is not provided for in the annual budget shall
require the approval of the Management Business Board. No contracts for the
supply of goods or services to the Gaming Enterprise shall be entered into with
parties affiliated with the Manager or its members, managers, officers or
directors (an "Affiliate Transaction") unless (a) such Affiliate Transaction is
on terms that are no less favorable than those that would have been obtained in
a comparable transaction with an unrelated Person, (b) the Manager delivers to
the Authority (i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $2 million, a resolution adopted by the disinterested
member of the Manager approving such Affiliate Transaction and set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $5 million, a written opinion as to the fairness
to the Authority from a financial point of view issued by an Independent
Financial Advisor with assets in excess of $1 billion or from a nationally
recognized accounting firm, a so-called "big six" accounting firm, and (c) such
Affiliate Transaction is approved by the Management Business Board. Prior
approval by the Management Business Board of a contract referred to above, shall
not be required where the contract is entered into to remedy an immediate threat
or
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danger to persons or property or to the Gaming Enterprise or the conduct of
Gaming thereon, provided that the Manager shall promptly thereafter notify all
members of the Management Business Board of the nature of the danger or threat
and of the contract so executed.
4.2.3
FINANCING. The Manager or its affiliates shall assist the Authority in
obtaining financing for the Enterprise, including but not limited to financing
for the construction and equipping of the Gaming Facility and any additions to
or replacement thereof. Any fees associated with this effort which might
otherwise be paid by the lender to Manager shall be applied to reduce the
principal amount of such financing. This provision shall not apply to the
Management Fee payable hereunder or to the Development Fee payable pursuant to
the Development and Construction Agreement.
4.2.6
OPERATING CAPITAL. All necessary initial capital for the Gaming
Enterprise shall be procured by the Authority through proceeds of the
Financing Agreements.
4.2.7
COMPLIANCE WITH MATERIAL AGREEMENTS. Further, the Manager shall use its
reasonable efforts to assist the Authority to comply with the Authority's
obligations under all material agreements, including, without limitation, the
Financing Agreements, the Land Lease, and the Shared Facilities Agreement;
provided, however, that the Manager shall not be liable for any of the
Authority's obligations under any such agreements.
4.3 SECURITY AND SURVEILLANCE. The Manager shall supervise appropriate
security and surveillance for the operation of the Gaming Facility. All aspects
of Gaming Facility security and surveillance shall be managed and administered
by the Manager on behalf of the Authority. Any security officer shall be bonded
and insured, either individually or under blanket policies, in an amount
commensurate with his or her enforcement duties and obligations. The cost of any
charge for fire, ambulance or other emergency public safety services will be an
Operating Expense. The members of the Management Business Board and authorized
officials of the Authority of which the Manager has been given notice pursuant
to this Agreement shall have full 24 hour access to the entire Gaming Facility,
including the surveillance room, and to all surveillance tapes and records. All
surveillance and security records of any kind, including tapes, computer records
and written files, shall be maintained at the Gaming Facility. All costs and
expenses incurred in providing appropriate security, surveillance services and
related ancillary services for the Gaming Facility shall constitute an Operating
Expense. Subject to the provisions of the Compact, nothing herein shall limit
the law enforcement authority of the Tribe on the Property.
4.4 DAMAGE, CONDEMNATION OR IMPOSSIBILITY OF THE GAMING ENTERPRISE. If,
during the term of this Agreement, the Gaming 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
14
Property is prohibited as a result of a decision of a court of competent
jurisdiction or by operation of any applicable federal legislation, or if,
through no fault of the Manager, the Authority unilaterally and without cause
prohibits the Manager from performing its obligations under this Agreement, or
if the conduct of Gaming pursuant to this Agreement becomes commercially
impracticable in the view of the Management Business Board, subject to the
Financing Agreements, the Manager shall have the following options:
4.4.1
RECOMMENCEMENT OF OPERATIONS. The Manager shall have the option in its
sole discretion to continue its interest in this Agreement and to commence or
recommence the operation of Gaming at the Gaming 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 the Manager.
4.4.2
REPAIR OR REPLACEMENT. If the Gaming Facility is damaged, destroyed or
condemned so that Gaming can no longer be conducted at the Gaming Facility,
subject to the terms of the Financing Agreements, the insurance or condemnation
proceeds shall, at the option of the Management Business Board, be utilized to
restore or replace the Gaming Facility and to reopen the Gaming Enterprise, and
the Manager may within 60 days after the casualty, choose to reconstruct the
Gaming Facility to a condition at least comparable to that before the casualty
occurred. If the Management Business Board elects to reconstruct the Gaming
Facility and if the insurance proceeds or condemnation awards are insufficient
to reconstruct the Gaming Facility to such condition, the Manager may, in its
sole discretion, supply or arrange such additional funds as are necessary to
reconstruct the Gaming Facility to such condition and such funds shall, with the
prior consent of the Authority and the B.I.A. or NIGC, as appropriate,
constitute obligations of the Authority. The principal amount of any such
borrowing shall be repayable by the Authority from its share of the Net Revenues
of the Gaming Enterprise upon such terms as may be agreed upon by the Authority
and the Manager. The interest and other charges (if any) of any such borrowing
shall be payable from the Gross Revenues of the Gaming Enterprise as an
Operating Expense; provided, however, that the aggregate of any such borrowing
(exclusive of interest) together with all other indebtedness for Project Costs
shall not exceed FOUR HUNDRED MILLION DOLLARS ($400,000,000). If the insurance
proceeds are not used to repair the Gaming Facility, the Authority shall have
the sole right to adjust and settle any and all claims for such insurance
proceeds or condemnation awards, and such proceeds or award shall be applied
first to the amounts due under the Financing Agreements (including principal,
interest and premium, if any); second, any other Indebtedness of the Authority
and Operating Expenses; third, any undistributed Net Revenues pursuant to
Section 6 of this Agreement; and fourth, any surplus shall be paid over to the
Authority. Proceeds of property hazard insurance remaining after all financing
obligations are repaid shall belong to the Authority. Proceeds of business
interruption insurance shall be included in the Gross Revenues of the Gaming
Enterprise.
4.4.3
OTHER BUSINESS PURPOSES. The Manager shall allow the Gaming Facility to
15
be used for other purposes reasonably incidental to Gaming, provided the
Management Business Board has approved such purposes, which approval shall not
be unreasonably withheld, and the Management Business Board shall approve such
purposes as set forth in the subdivision application previously submitted to the
Village of Monticello. For any purpose other than Gaming, the Manager and the
Management Business Board shall obtain all approvals necessary pursuant to the
Financing Agreements and under applicable law. Neither the Authority nor the
Manager shall conduct any wagering activities on the Property related to the
outcome of any racetrack or racing contest.
4.4.4
CESSATION OF GAMING. The Manager may, at any time following the cessation
of Gaining on the Property, notify the Authority in writing that it is
terminating this Agreement, in which case the Manager shall retain any rights to
undistributed Net Revenues pursuant to Section 6 of this Agreement, and any
rights pursuant to Section 16 of this Agreement. if Manager does not elect to
terminate this Agreement, it may take whatever action may be necessary to reduce
expenses during such cessation of Gaming on the Property.
4.4.5
TOLLING OF THE AGREEMENT. If, after a period of cessation of Gaming on
the Property, the recommencement of Gaming is possible, and if the Manager has
not terminated this Agreement under the provisions of Section 4.4.4, the period
of such cessation shall not be deemed to have been part of the Term of the
Agreement and the date of expiration of the Term of the Agreement shall be
extended by the number of days of such period of cessation, provided that in no
event shall this Agreement be extended pursuant to this provision for more than
Five (5) years.
4.5 ALCOHOLIC BEVERAGES AND TOBACCO SALES. Alcoholic beverages may be
served for individual consumption at the Gaming Facility if permissible subject
to and in accordance with the Compact, the Authority's licensing requirements,
other applicable law and the Memorandum of Understanding.
Tobacco may be sold for individual consumption at the Gaming Facility
subject to and in accordance with the Authority's licensing requirements, other
applicable law, and the Memorandum of Understanding.
4.6 EMPLOYEES.
4.6.1
MANAGER'S RESPONSIBILITY. Manager shall have, subject to the terms of this
Agreement, the exclusive responsibility and authority to direct the selection,
hiring, retention, training, control and discharge of all employees performing
regular services for the Gaming Enterprise in connection with the maintenance,
operation, and management of the Gaming Enterprise and the Gaming Facility.
4.6.2
AUTHORITY'S EMPLOYEES. All employees of the Gaming Enterprise will be
employees of the Authority.
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4.6.3
AUTHORITY'S INSPECTOR(S). The Authority shall select a reasonable number
of Authority's Inspector(s) ("Authority's Inspectors"), who shall be employed by
the Authority and shall have the full access to inspect all aspects of the
Gaming Enterprise, including the daily operations of the Gaming Enterprise, and
to verify daily Gross Revenues and all income of the Gaming Enterprise, at any
time without notice, in a manner which does not hamper or impede the normal
course of business. The Authority shall give notice to the Manager of the
selection of the Authority's Inspectors in accordance with this Agreement. The
General Manager or his or her designee may accompany the Authority's
Inspector(s) upon any inspection. The salary and benefits, if any, of the
Authority's Inspector(s) and other terms of employment shall be paid by the
Authority from the license fees assessed against the Gaming Enterprise pursuant
to Section 3.4 hereof. The Authority's Inspector(s) shall report directly to the
Authority.
4.6.4
INDIAN EMPLOYMENT PREFERENCE AND TRAINING. In order to maximize benefits
of the Gaming Enterprise to the Tribe, the Manager shall, during the term of
this Agreement, give preference in recruiting, training and employment first to
qualified members of the Tribe, and secondly to other qualified Indians. The
Manager shall provide training programs for Tribal members. Such training
programs shall be available to assist Tribal members in obtaining necessary
skills and qualifications relating to all job categories. Notwithstanding
anything to the contrary contained in this Agreement, all costs and expenses of
any training programs administered or supervised by the Manager shall constitute
Operating Expenses of the Gaming Enterprise.
The Manager shall use its reasonable best efforts to recruit and train
Tribal members, including without limitation: providing job fairs for members of
the Tribe and clearly specifying in all job advertisements the preference for
Tribal members.
4.6.5
REMOVAL OF EMPLOYEES. The General Manager will act in accordance with the
Gaming Enterprise Personnel Policies with respect to the discharge, demotion or
discipline of any Enterprise employee. The Manager shall promptly notify the
Authority's Representatives of any such discharge, demotion or discipline. Only
the Authority shall have the right to remove the Authority's Inspector(s),
subject to any contractual rights of such persons, and the Authority shall
promptly notify the Manager of any such removal.
4.7
MARKETING AND ADVERTISING. The Manager shall have responsibility to
advertise and promote the Gaming Enterprise in accordance with a marketing plan
approved by the Management Business Board and subject to the Budget. Manager may
participate in sales and promotional campaigns and activities involving
Promotional Allowances. Manager, in marketing and advertising the Gaming
Facility, and subject to Sections 4.2.4 and 4.6.3, shall have the right to use
marketing, transportation, advertising and other employees and services of
Manager, its partners, parent and affiliated companies not located at the Gaming
Facility.
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4.8
PRE-OPENING. (a) No later than sixty (60) days prior to the Phase I
Commencement Date, Manager shall commence implementation of a pre-opening
program for Phase I which shall include all activities necessary to
operationally prepare the Gaming Facility for the conduct of Gaming on a limited
interim basis until the Gaming Facility is fully Operating. To implement such
pre-opening program, manager shall prepare a comprehensive pre-opening Phase I
budget which shall be submitted to the Management Business Board for its
approval within sixty (60) days after the Effective Date ("Pre- Opening
Budget"). All costs and expenses of the pre-opening program shall be paid from a
special bank account(s) opened by manager in the name of, and on behalf of, the
Authority upon which only Manager shall be authorized to draw ("Pre-Opening
Phase I Bank Account(s)"). After all pre-opening expenses for Phase I have been
paid, the balance in the Pre-Opening Phase I Bank Account(s) shall be
transferred to the Depository Account and the Pre-Opening Phase I Bank
Account(s) closed.
Beginning on the Effective Date of this Agreement, and ending on the Phase
I Commencement Date, the Manager shall make a monthly administrative payment of
$25,000 to the Authority. Such payments shall be due on the monthly anniversary
of the Effective Date, and shall be credited against the distributions to be
made to the Authority out of Net Revenues under Section 6.4 of this Agreement,
provided that such payments shall not reduce any Minimum Monthly Priority
Payment due the Authority under Section 6.4 of this Agreement.
(b) No later than six (6) months prior to the Phase II Commencement Date,
Manager shall commence implementation of a pre-opening program for Phase II (the
"Phase II Pre-Opening Program"), which shall include all activities necessary to
operationally prepare the Game Facility to be Fully Operating (as defined in the
Senior Secured Note Indenture) on the Phase II Commencement Date. To implement
the Phase II Pre-Opening Program, Manager shall prepare a comprehensive
pre-opening budget for Phase II which budget shall be submitted to the
Management Business Board for its approval at least 180 days prior to the Phase
11 Commencement Date (the "Phase 11 Pre-Opening Budget"). All costs and expenses
of the Phase II Pre-Opening Program shall be paid from a special bank account(s)
opened by the Manager in the name of, and on behalf of the Authority, upon which
only the Manager shall be authorized to draw (the "Phase II Pre-Opening Bank
Account'). After all Phase II Pre-Opening Program expenses have been paid, the
balance of the Phase II Pre-Opening Bank Account(s) shall be transferred to the
Depository Account and the Phase II Pre-Opening Bank Account(s) shall be
thereafter closed.
4.9 OPERATING BUDGETS. Manager shall, 60 days prior to the Phase I
Commencement Date, submit to the Management Business Board, for its approval, a
detailed proposed budget, including compensation for all key employees and
projected contracts with third party vendors and consultants, for the remainder
of the then current fiscal year ("Budget"). Thereafter, Manager shall, not less
than sixty (60) days prior to the commencement of each full or partial fiscal
year, submit to the Management Business Board, for its approval, a proposed
Budget for the ensuing full or partial fiscal year, as
18
the case may be.
The Management Business Board's approval of the Budget shall not be
unreasonably withheld or delayed. Manager or the General Manager shall meet with
the Management Business Board to discuss the proposed Budget and the Management
Business Board's approval shall be deemed given unless a specific written
objection thereto was delivered to Manager within thirty (30) days after Manager
or the General Manager and the Management Business Board have met to discuss the
proposed Budget. If the Management Business Board for any reason declines to
meet with Manager or the General Manager to discuss a proposed Budget, it shall
be deemed to have given its consent unless a specific written objection is
delivered by it or the objecting representatives, as applicable, to Manager
within thirty (30) days after the date the proposed Budget is submitted to the
Management Business Board. The Management Business Board or the objecting
representatives, as applicable, shall review the Budget on a line-by-line basis.
To be effective, any notice which disapproves a proposed Budget must contain
specific objections in reasonable detail to individual line items.
If the initial proposed Budget contains disputed budget item(s), the
Manager's Representatives and the Authority's Representatives shall cooperate
with each other in good faith to resolve the disputed or objectionable proposed
item(s). In the event the Manager's Representatives and the Authority's
Representatives are not able to reach agreement concerning any disputed or
objectionable item(s) within a period of thirty (30) days after the date the
Management Business Board receives a copy of such proposed Budget from the
Manager, either party shall be entitled to submit the dispute to arbitration in
accordance with Section 16 of this Agreement. If the Manager's Representatives
and the Authority's Representatives 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 Budget shall be deemed to be adopted and
approved and the corresponding line item(s) contained in the Budget for the
preceding fiscal year (or in the proposed Budget if there is no Budget 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 Budget. Those line
items which are in dispute shall be determined by increasing the preceding
fiscal year's actual expense (pro-rated over a full year, in the event the
Gaming Enterprise was not in operation during the entire preceding fiscal year)
for the corresponding line items by an amount determined by Manager which does
not exceed the Consumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics of the United States Department of Labor, U.S. City
Average, all items (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. The resulting Budget obtained in
accordance with this paragraph shall be deemed to be the Budget in effect until
such time as Manager's Representatives and the Authority's Representatives have
resolved the items objected to or in dispute.
Manager may, after notice to the Management Business Board, revise the
Budget from time-to-time, as necessary, to reflect any unpredicted significant
19
changes, variables or events or to include significant, additional,
unanticipated items of expense. Manager may, after notice to the Management
Business Board reallocate part or all of the amount budgeted with respect to any
line item to another line item and to make such other modifications to expenses
under the Budget as Manager deems necessary, provided that: (i) the individual
or cumulative modifications of the Budget (a) shall not exceed ten percent (10%)
of the approved Budget during Phase I and the first twelve (12) month period
beginning after the Phase II Commencement Date; or (b) with respect to any
period thereafter, shall not exceed five percent (5%) of the approved Budget,
and (ii) do not otherwise conflict with the terms of this Agreement. Budget
adjustments which exceed the restrictions set forth in the preceding sentence
shall require the approval of the Management Business Board. Budget adjustments
which otherwise vary from the terms of this Agreement shall require the written
approval of the Management Business Board. In addition, in the event actual
Gross Revenues for any fiscal period are greater than those provided for in the
Budget, the amounts approved in the Budget for Operating @ enses for any fiscal
month may be increased by the Manager to an amount that bears the same
relationship (ratio) to the amounts budgeted for such items as actual Gross
Revenue for such fiscal month bears to the projected Gross Revenue for such
fiscal month. The Authority acknowledges that the Budget is intended only to be
a reasonable estimate of the Gaming Enterprise revenue and expenses for the
ensuing fiscal year. Manager shall not be deemed to have made any guarantee,
warranty or representation whatsoever in connection with the Budget.
4.10 CAPITAL BUDGETS. Manager shall, not less than sixty (60) days prior
to the Phase 11 Commencement Date and the commencement of each fiscal year
thereafter, submit to the Management Business Board a recommended "Capital
Budget" for the ensuing full or partial fiscal year, as the case may be, for
furnishings, equipment, and ordinary capital replacement items ("Capital
Replacements") as shall be required to operate the Gaming Enterprise in
accordance with sound business practices. The Management Business Board and
Manager shall meet to discuss the proposed Capital Budget, and the Management
Business Board or the objecting representatives, as applicable, 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 4.9 with
respect to a Budget. The Management Business Board shall not unreasonably
withhold or delay its consent to any proposed Capital Budget. Unless the
Management Business Board and Manager otherwise agree, Manager shall be
responsible for the design and installation of Capital Replacements, subject to
the Management Business Board's approval and right to inspect.
To be effective, any notice which disapproves a proposed Capital Budget
must contain specific objections in reasonable detail to individual line items.
If the initial proposed Capital Budget contains disputed budget item(s), the
Management Business Board and Manager agree to cooperate with each other in good
faith to resolve the disputed or objectionable proposed item(s). If unable to
reach agreement concerning any disputed or objectionable item(s) within thirty
(30) days after the date the Management Business Board or the objecting
representatives, as applicable, provides written notice of its objection to
Manager, either party shall be entitled to
20
submit the dispute to arbitration in accordance with Section 16 of this
Agreement. If the Management Business Board 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 Capital Budget
shall be deemed to be adopted and approved.
4.11 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 Gaming Enterprise, to maintain the Gaming Enterprise in
compliance with any Legal Requirements and to comply with the Management
Business Board's recommended programs for renovation, modernization and
improvement intended to keep the Gaming Enterprise competitive in its market,
maintain first class standards for the Enterprise, 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 require
immediate action to preserve and protect the Gaming Facility, assure its
continued operation, and/or protect the comfort, health, safety and/or welfare
of the Gaming Facility's guests or employees. Manager is authorized, upon
consultation with the Management Business Board, to take all steps and to make
all expenditures from the Disbursement Account, described at Section 4.21, as it
deems necessary to repair and correct any such condition, regardless whether
such provisions have been made in the Budget for any such expenditures, and the
cost thereof may be advanced by Manager and reimbursed from future revenues.
Design and installation of Capital Replacements shall be effected in a time
period and subject to such conditions as the Management Business Board may
establish to minimize interference with or disruption of ongoing operations.
4.12 CONTRACTING. In entering into contracts for the supply of goods and
services for the Gaming Enterprise, the Manager shall give preference first to
qualified members of the Tribe, and qualified business entities certified by the
Authority or the Tribe to be controlled by members of the Tribe, and second to
other qualified Indians and qualified business entities certified by the
Authority to be controlled by Indians; provided that this preference shall not
apply where the contract is entered into to remedy an immediate threat or danger
to the Gaming Enterprise or the conduct of Gaming thereon.
"Qualified" shall mean an individual or a business entity, 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 the
Manager's reasonable opinion, and can meet the reasonable bonding requirements
of the Manager. The Manager shall provide written notice to the Authority in
advance of all such contracting, subcontracting and construction opportunities
in excess of $25,000 (TWENTY-FIVE THOUSAND DOLLARS).
4.13 DETERMINATION OF QULIFICATIONS AND COMPENSATION. Subject to Sections
4.6.1, 4.15 and 4.16, Manager shall have the sole responsibility for determining
whether a prospective employee is qualified and the appropriate level of
compensation to be paid thereto.
4.14 LITIGATION. If the Tribe, the Authority, the Manager, the
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Management Business Board or any employee of the Tribe, the Authority, or
Manager at the Gaming Facility or of the Gaming Enterprise is sued by any person
not a party to this Agreement, or is alleged by any person not a party to this
Agreement, to have engaged in unlawful or discriminatory acts within the scope
of their employment in connection with the operation of the Gaming Enterprise,
the Authority or the Manager, as appropriate, shall defend such action. Any cost
of such litigation shall constitute an Operating Expense, or, if incurred prior
to the Phase I Commencement Date, shall be a Phase I preopening Operating
Expense. Nothing in this Section shall be construed to waive or limit the
Tribels or the Authority's sovereign immunity.
4.15 EMPLOYEE BACKGROUND INVESTIGATIONS. The Authority shall be
responsible for conducting a background investigation 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 pose a threat to
the public interest, the effective regulation of Gaming, or to the gaming
licenses of the Manager or any of its affiliates, or create or enhance the
dangers of unsuitable, unfair or illegal practices and methods and activities in
the conduct of Gaming, shall be employed by the Manager or the Authority. The
background investigation procedures shall be formulated in consultation with the
Manager and shall satisfy all regulatory requirements independently applicable
to the Manager. Any cost associated with obtaining such background
investigations shall constitute an Operating Expense, provided, however, the
costs of background investigations relating to shareholders, officers, directors
or key employees of the Manager or of the Authority shall not constitute an
Operating Expense and the costs thereof shall be borne by the applicable party.
The Manager and the Authority shall provide all information required by the NIGC
with respect to background investigations as required by the IGRA.
4.16 GAMING ENTERPRISE PERSONNEL POLICIES. The Manager shall establish
Gaming Enterprise Personnel Policies in accordance with the Budget, which Gaming
Enterprise Personnel Policies which shall include (a) a job classification
system with salary levels and scales; (b) provisions for an employee-funded
defined contribution retirement program, to the extent permitted by law, and (c)
a grievance procedure which seeks to establish fair and uniform standards for
the employees of the Gaming Enterprise. The grievance procedures attached hereto
as Exhibit C shall be incorporated into such Enterprise Personnel Policies. Any
revisions to the Enterprise Personnel Policies shall not be effective unless
they are approved by the Management Business Board. All such actions shall
comply with applicable law of the Tribe. The Gaming Enterprise Personnel
Policies shall also require employees to comply with all rules, regulations and
other applicable laws of the New York State Racing Authorities and other
applicable entities.
4.17 NO MANAGER WAGES OR SALARIES. Neither the Manager nor any of its
officers, directors or shareholders or any employees, shall be compensated by
wages from or contract payments by the Gaming Enterprise for their efforts or
for any work which they perform under this Agreement, other than payments
pursuant to the Financing Agreements, reimbursement pursuant to the Financing
22
Agreements and the Management Fee paid to Manager under Section 6.4. Nothing in
this subsection shall restrict the ability of an employee of the Gaming
Enterprise to purchase or hold stock in the Manager, its parents, subsidiaries
or affiliates where (i) such stock is publicly held, and (ii) such employee
acquires, on a cumulative basis, less than ten percent of the outstand;.ng stock
in the corporation.
4.18 INTERNAL CONTROL SYSTEMS. The Manager shall install systems for
monitoring of all funds, which systems shall be submitted to the Management
Business Board for approval in advance of implementation, which approval shall
not be unreasonably withheld. The Authority shall retain the right to review all
internal control systems and any material changes instituted to the internal
control systems of the Gaming Enterprise. The Authority shall have the right to
retain an independent auditor to review the adequacy of the internal control
systems prior to the Phase I Commencement Date. The cost of such review shall
constitute a start-up expense. Any significant changes in such systems after
commencement of operation of the Gaming Facility also shall be subject to review
and approval by the Authority. The Authority and the Manager shall have the
right and duty to maintain and police its internal control systems in order to
prevent any loss of proceeds from the Gaming Enterprise. The Authority shall
have the right to inspect and oversee the systems and to have the Authority's
Inspector present to oversee all cash counting and machine or game credit
verification procedures at all times. The Manager shall install a closed circuit
television system to be used for monitoring the cash counting rooms and the cage
area. The Authority's Inspector shall have full access to the closed circuit
television system for use in monitoring the cash handling activities of the
Gaming Enterprise.
4.19 BANK ACCOUNTS. The Management Business Board shall select a State or
Federally chartered bank or banks located in the State of New York for the
deposit and maintenance of funds and shall establish such bank accounts as the
Manager deems appropriate and necessary in the course of business and as
consistent with this Agreement. All such bank accounts established shall comply
with any applicable requirements of the Financing Agreements with respect to the
granting of a security interest therein. The Manager shall give notice of any
such accounts to the Trustee and shall take such other action as the Trustee may
require to evidence the establishment of the security interest in accordance
with the terms of the Senior Secured Note Indenture.
4.20 DAILY DEPOSITS TO DEPOSITORY ACCOUNT. Subject to Section 4.23 of this
Agreement, the Manager shall establish for the benefit of the Tribe in the
Tribels name a depository bank account ("Depository Account") in accordance with
Section 4.19 above. The Manager shall collect all Gross Revenues and deposit the
related cash less any Bank Roll Amount (hereafter defined) into the Depository
Account at least once during each business day. on a daily basis, the General
Manager shall determine in its discretion based on prudent commercial practices
and the experience of the General Manager in light of the amount of Gaming
conducted in the Gaming Facility in the past, the amount of cash ("Bank Roll
Amount") necessary to be maintained on-site at the Gaming Facility for the
day-to-day operation of the Gaming Enterprise.
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The Bank Roll Amount shall be calculated based on all cash or coins located on
the premises including, without limitation, all cash or monies in the counting
room, cages and any other temporary holding facility in the Gaming Facility for
cash or other monies. Notwithstanding anything to the contrary contained in this
paragraph, the Bank Roll Amount on any given day shall not exceed FOUR MILLION
DOLLARS ($4,000,000) without the prior written consent of the Management
Business Board. All money received by the Gaming Enterprise on each day that it
is open must be counted at the close of operations for that day or at least once
during each 24-hour period. The parties hereto agree to obtain a bonded
transportation service to effect the safe transportation of the daily receipts
to the bank, if such service is available at a reasonable cost, which expense
shall constitute an Operating Expense.
4.21 DISBURSEMENT ACCOUNT. The Manager shall establish for the benefit of
the Authority in the Authority's name a disbursement bank account in accordance
with Section 4.19 hereof (the "Disbursement Account"). The Manager shall,
consistent with and pursuant to the approved Budget, have responsibility and
authority for making all required payments for Operating Expenses, debt service,
management fees, disbursements to the Authority, and other disbursements
permitted by this Agreement from the Disbursement Account.
4.22 NO CASH DISBURSEMENTS. The Manager shall not make any cash
disbursements from the bank accounts except for the payment of cash prizes and
expenditures from the ▇▇▇▇▇ Cash Fund described in Section 4.23; any and all
payments or disbursements by the Manager shall be made by check or wire transfer
drawn against a bank account.
4.23 ▇▇▇▇▇ CASH FUND. Manager shall establish and maintain for the benefit
of and in the name of the Authority a ▇▇▇▇▇ cash fund ("▇▇▇▇▇ Cash Fund") in the
amount of $10,000, or such other amount as may be set by the management Business
Board. The amounts of such fund shall be established by the Management Business
Board in conjunction with the establishment of the Budget, as an Operating
Expense, or more often as approved by the Management Business Board. The ▇▇▇▇▇
Cash Fund shall be used for miscellaneous small expenditures of the Gaming
Enterprise, and shall be maintained at the Gaming Facility.
4.24 TRANSFERS BETWEEN ACCOUNTS. The Manager has the authority to transfer
funds from the Depository Account to the Disbursement Account in order to pay
Operating Expenses and to pay debt service pursuant to the Financing Agreements,
Development and Construction Agreement and the fees payable to Manager pursuant
to this Agreement.
4.25 INSURANCE. The Manager, on behalf of the Authority, shall maintain,
or cause its agents to maintain, with responsible insurance carriers (each an
"Insurance Company") licensed to do business in the State of New York, insurance
reasonably satisfactory to the Authority covering the Gaming Facility and the
operations of the Gaming Enterprise, naming the Authority, and the Manager as
insured parties, as follows:
4.25.1 During the course of any new construction or remodeling,
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builder's risk insurance on an "all risk, basis (including collapse) on a
non-reporting form for full replacement value covering the interest of the
Authority in all work incorporated in the Gaming Facility, all materials
and equipment on or about the Gaming Facility and any new construction or
remodeling of the Gaming Facility. All materials and equipment in any
off-site storage location intended for permanent use in the Gaming
Facility, or incident to the construction thereof, shall be insured on an
"all risk, basis as soon as the same have been acquired by the Authority.
4.25.2 Commercial general liability insurance on behalf of the Tribe,
the Authority, and the Manager in an amount not less than Fifty Million
($50,000,000) Dollars per occurrence and One Hundred Million
($100,000,000) Dollars in the aggregate for all activities on, about or in
connection with the Gaming Facility. The commercial general liability
insurance shall include premises liability, contractor's protective
liability on the operations of all subcontractors, completed operations
and blanket contractual liability. The automobile liability insurance
shall cover owned, non-owned and hired vehicles.
4.25.3 On or before the Phase II Commencement Date, "all risk"
insurance on the Gaming Facility against loss by fire, lightening,
extended coverage perils, collapse, water damage, vandalism, malicious
mischief and all other risks and contingencies, subject only to such
exceptions as the Authority and the Manager may approve in an amount equal
to the actual replacement costs thereof, without deduction for physical
depreciation, with coverage for demolition and increased costs of
construction, and providing coverage in an "agreed amounts or without
provision for coinsurance.
4.25.4 Worker's Compensation and Employer's Liability Insurance
subject to the statutory limits of the State of New York in respect of any
work or other operations on, about or in connection with the Gaming
Facility.
4.25.5 From and after the Phase I Commencement Date, (a) "Dram Shop"
or "Liquor Law Liability insurance on behalf of the Tribe, the Authority,
and the Manager against all claims or liability arising directly or
indirectly to any persons or property on account of the sale or dispensing
of beer, wine or other alcoholic beverages on the Gaming Facility
including, without limitation, coverage for loss of means of support in an
amount not less than Ten Million ($10,000,000) Dollars per occurrence; (b)
fidelity bond coverage with respect to those employees of the Gaming
Enterprise specifically designated in writing by the Management Business
Board; (c) business interruption (including loss of rents) insurance
covering not less than 12 months of loss; and (d) special theft insurance
coverage; all in such amounts as determined by the Manager as commercially
prudent taking into consideration the coverages maintained by owners of
casino facilities comparable to the Gaming Facility.
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4.25.6 Such other or differing insurance with respect to the Gaming
Facility and in such amounts as the Management Business Board from
time-to-time may reasonably request against such other insurable hazards
which at the time are commonly insured against in respect of property
similar to the Gaming Facility.
4.25.7 The insurance policies required under Sections 4.25.1, 4.25.3
and 4.25.5 above shall have a standard noncontributory endorsement naming
Manager as an additional loss payee, to the extent of any insurable
interest. The insurance required under Section 4.25.2 above shall name the
Manager as an additional named insured. All insurance required hereunder
shall contain a provision requiring at least 30 days' prior written notice
to the Manager and the Authority before any cancellation, material changes
or reduction shall be effective. Appropriate deductibles, approved by the
Management Business Board, shall be included for all types of insurance
required under this Section 4.25. The Manager may effect any insurance
coverage required by this Agreement under blanket insurance policies,
provided that the Authority shall be furnished satisfactory evidence that
the protection afforded the Authority and the Manager under such blanket
insurance policy is not less than that which would have been afforded
under separate policies relating only to the Gaming Facility.
4.25.8 The insurance policies acquired under this Section 4.25 shall
include a provision which prohibits any Insurance Company from invoking
the Tribe's or the Authority's sovereign immunity as a defense to any
action within the limits of the policy. All such insurance policies shall
be issued by carriers having an A.M. Best & Company, Inc. rating of A or
higher and a financial size category of not less than XII, or if such
carrier is not rated by A.M. Best & Company, Inc., having the financial
stability and size deemed appropriate as certified by a reputable
insurance broker.
4.25.9 WAIVER OF SUBROGATION. Each of the Authority and the Manager,
shall, to the extent such insurance endorsement is available, obtain for
the benefit of the other a waiver of any right of subrogation which the
fire and extended coverage insurer may acquire against the other by virtue
of the payment of any such loss covered by such insurance. The foregoing
waiver shall be operative only so long as the same shall not preclude the
other from obtaining insurance, and shall have no effect to the extent
that it diminishes, reduces, or impairs the liability of any insurer or
the scope of any coverage under any policy applicable to the Property.
4.26 ACCOUNTING AND BOOKS OF ACCOUNT.
4.26.1 STATEMENTS AND BOOKS OF ACCOUNT. The Manager shall prepare
and provide to the Authority on a monthly, quarterly, and annual basis,
operating statements which after the full year of operation will include
comparative statements of all revenues, and all other amounts collected
and received, and all deductions and disbursements made
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therefrom in connection with the Gaming Enterprise. A nationally
recognized independent certified public accounting firm with casino
industry experience selected by the Authority, shall perform an annual
audit of the books and records of the Gaming Enterprise. The Management
Business Board shall have full access to the audit work papers and all
instructions to and reports from the auditor. The Authority, the B.I.A.
and the NIGC shall also have the right to perform special audits of the
Gaming Enterprise on any aspect of the Gaming Enterprise at any time
without restriction. The costs incurred for such audits and reports 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 the Manager for reporting purposes under federal,
foreign, and state securities and gaming laws, if required.
4.26.2 BOOKS OF ACCOUNT. The Manager shall maintain full and
accurate books of account at an office in the Gaming Facility and at such
other locations as may be determined by the Manager, with the prior
written consent of the Management Business Board, which consent shall not
be unreasonably withheld. The Management Business Board and the
Authority's Inspectors shall have access to the daily operations of the
Gaming Enterprise and shall have the unlimited right to inspect, examine,
and copy all such books and supporting business records, provided that any
such inspection shall be conducted in a manner to minimize interference
with normal day-to-day operations of the Gaming Enterprise. Such rights
may be exercised through a designated agent, employee, attorney, or
independent accountant acting on behalf of the Management Business Board,
provided that any such designation be in writing signed by the members of
the Management Business Board, and that notice of such designation be
provided to the Manager. Nothing contained herein is intended to restrict
Manager's right to utilize centralized accounting at an off-site location
for the Gaming Enterprise, provided that the Management Business Board or
the Authority shall have full 24-hour access to such accounting, and all
related books and records at or from the Gaming Facility.
4.26.3 ACCOUNTING STANDARDS. Manager shall maintain the books and
records reflecting the operations of the Gaming Enterprise in accordance
with the accounting practices of Manager in conformity with GAAP, and
shall adopt and follow fiscal accounting periods as set by the Management
Business Board. The Gaming Facility accounting records reflecting
detailed day-to-day transactions of the Gaming Facility's operations shall
be kept pursuant to Section 4.26.2 of this Agreement. The accounting
systems and procedures shall, at a minimum (i) include an adequate system
of internal accounting controls; (ii) permit the preparation of financial
statements in accordance with GAAP; (iii) be susceptible to audit; (iv)
allow the Gaming Enterprise, the Authority, and the NIGC, to calculate the
annual fee payable under 25 C.F.R. 'SS' 514.1; (v) permit the calculation
and payment of the Management Fee described in Section 3.7A; and (vi)
provide for the allocation of operating Expenses or overhead expenses
among the Authority, the Gaming Facility, and any other user of shared
facilities and services.
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4.26.4 DEPRECIATION SCHEDULES. Depreciation schedules for all assets
of the Enterprise shall be determined by the Management Business Board in
accordance with GAAP, consistently applied. The Gaming Facility shall be
depreciated over a 40 year life.
5. LIENS. The Authority specifically warrants and represents to the Manager that
during the term of this Agreement the Authority shall not act in any way
whatsoever, either directly or indirectly, to cause any party to become an
encumbrancer or lienholder of the Property or the Gaming Facility, other than
Manager or the lender(s) under the Financing Agreements, or to allow any party
to obtain any interest in this Agreement without the prior written consent of
the Manager, and, where applicable, consent from the United States. The Manager
specifically warrants and represents to the Authority that during the term of
this Agreement the Manager shall not act in any way, directly or indirectly, to
cause any party to hold a valid encumbrance or lien of the Property or the
Gaming Facility, or to obtain any interest in this Agreement without the prior
written consent of the Authority, and, where applicable, the United States. The
Authority and the Manager, on behalf of the Authority, shall keep the Gaming
Facility and Property free and clear of all valid mechanics and other liens
resulting from the construction of the Gaming Facility and all other liens which
may attach to the Gaming Facility or the Property, which shall at all times
remain the property of the United States in trust for the Tribe. Manager shall
have the right to contest any such liens on behalf of the Authority.
Notwithstanding the foregoing, security interests in personal property and
the Authority's leasehold interest in the Property may be granted with the
consent of the Authority and, when necessary, the B.I.A., United States
Department of Interior or the NIGC as appropriate.
6. MANAGEMENT FEE. REIMBURSEMENT AND DISBURSEMENT,
FINANCING GUARANTEE, FUNDING AND BUY OUT OPTION.
6.1 AUTHORIZATION FOR PAYMENT OF MANAGEMENT FEE BY MANAGER. Subject to the
provisions of Sections 6.4 on or before the twenty-fifth (25th) day of each
fiscal month after the first full month of operation, Manager is authorized by
the Authority to pay itself from the Bank Account(s) a fee calculated as
provided by Section 3.6 of this Agreement.
6.2 DISBURSEMENTS. As and when received by Manager, Gross Revenues shall
be deposited in the Depository Account created pursuant to Section 4.20 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 Disbursement Account to pay
to the extent available Operating Expenses.
Manager will reserve funds (in excess of the Minimum Balance), on an
annualized basis, in the Disbursement Account each fiscal month for payment of
any Operating Expenses or any of the above items which Manager has a duty to pay
that are not paid on a monthly basis (e.g., insurance premiums, etc.).
6.3 ADJUSTMENT TO BANK ACCOUNT. After the disbursements pursuant to
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Section 6, and establishment of any reserves for future disbursements as the
Manager deems necessary, taking into account anticipated cash flow and Operating
Costs at the Gaming Facility, any excess funds remaining in the Disbursement
Account over the Minimum Balance (and such reserves) shall be disbursed monthly
in accordance with Section 6.4.
6.4 PAYMENT OF FEES AND AUTHORITY DISBURSEMENT. Within 25 days after the
end of each calendar month of operations, the Manager shall calculate and report
to the Authority the Gross Revenues, operating Expenses, and Net Revenues of the
Gaming Enterprise for the previous month's operations and the year's operations
to date. Such Net Revenues, less any amount reasonably needed to maintain the
▇▇▇▇▇ Cash Fund as previously agreed upon by the Management Business Board and
any amounts required to fund the Bank Roll Amount, shall be disbursed from the
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:
First Minimum Priority Payment shall have first priority and shall
be paid monthly in the amount of ONE HUNDRED THOUSAND DOLLARS
AND 00/100 ($100,000) during Phase I and until the Phase II
Commencement Date, and TWO HUNDRED FIFTY THOUSAND DOLLARS AND
00/100 ($250,000.00) during Phase II. Minimum Priority
Payments shall be charged against the Authority's distribution
of Net Revenues and, where there is insufficient Net Revenues
in a given month, Manager shall advance the funds necessary to
compensate for the deficiency and shall be reimbursed by the
Authority in the next succeeding month or months in accordance
with the schedule of disbursements set forth in this Article
6.4, as recoupment payments. Minimum Priority Payments shall
be made for any month during which Gaming is conducted,
including those months when Gaming is conducted for only a
part of a month. No Minimum Priority Payment shall be owed for
any month during which Gaming is suspended or terminated at
the Gaming Facility for a full month pursuant to Section 4.4.
The obligation shall cease to accrue upon termination of this
Agreement for any reason.
Second Current principal, and any other payments including sinking
funds or any required deposit to the Cash Maintenance Account
and in the Interest and Excess Cash Flow Account (exclusive of
interest, which shall be paid as an Operating Expense) due on
or pursuant to the Senior Secured Notes (including pursuant to
any required offer to purchase) or the Senior Secured Note
Indenture.
Third Recoupment payments to Manager for funds advanced to the
Authority for Minimum Priority Payments made for any prior
period, and reimbursement of other amounts advanced by the
Manager pursuant to Section 7.12. (These funds shall be
charged, with interest at a rate equal to the prime rate
published from time to time in the Wall Street Journal plus
29
one percent, against the Authority's share of Net Revenues).
Fourth Management Fee, subject to the restrictions on the
distributions of the Management Fee in the Senior Secured Note
Indenture.
All remaining Net Revenues and cash from any prior period shall be
distributed to the Authority subject to the restrictions on distributions to the
Authority in the Senior Secured Note Indenture. The priority of payments from
available funds which is described in this Section 6.4 does not control the
calculation of the &mount of each of these obligations. The calculation of the
amounts of these obligations shall be as otherwise provided by this Agreement.
The Manager and the Authority agree that they will disburse all Net
Revenues and pay all Operating Expenses in accordance with the terms of this
Section 6.4.
6.4.1 SUBORDINATION PROVISIONS. Notwithstanding anything to the contrary
contained in this Agreement, the following paragraphs shall apply during any
period when any amounts are due and outstanding under the Senior Secured Notes
and/or Senior Secured Note Indenture:
(a) By the execution of this Agreement, the Manager hereby acknowledges
and agrees that the Management Fee and any other amounts owed by the
Authority to Manager under this Agreement shall be subordinated in
right of payment to the prior payment in full of all the obligations
of the Authority which are then due and payable under the Senior
Secured Note Indenture and the Senior Secured Notes, and that such
subordination is for the benefit of the holders of the Senior
Secured Notes.
(b) Upon any distribution to any creditors of the assets of the Gaming
Enterprise in a liquidation or dissolution of the Gaming Enterprise
or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding of the Gaming Enterprise or its property, or any
assignment for the benefit of creditors or any marshalling of the
assets and liabilities of the Gaming Enterprise, (i) the holders of
the Senior Secured Notes shall be entitled to receive payment in
full of all obligations (as defined in the Senior Secured Note
Indenture) in respect of the Senior Secured Notes, including,
without limitation, any principal, interest, penalties, premiums or
other amounts due and payable under the Senior Secured Notes
(*Amounts Owed to Senior Secured Noteholders) before any payment of
any accrued and unpaid Management Fees, recoupment payments or any
other distributions permitted under this Agreement to the Manager
('Management Distributions) and before any payment or other
distributions to the Authority pursuant to this Agreement; and (ii)
any distributions to the Manager and the Authority that it would be
entitled to under this Agreement but for this paragraph
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shall be made to the holders of the Senior Secured Notes. Any
distribution paid under clause (ii) shall not be deemed to be a
payment in satisfaction or discharge of any obligation to pay
Management Distributions to the Manager under this Agreement.
(c) The Manager hereby agrees that it shall not make or receive any
Management Distributions (i) if a default in the payment of any
Amounts Owed to Senior Secured Noteholders occurs and is continuing
beyond any applicable grace period provided for in the Senior
Secured Note Indenture until all Amounts owed to Senior Secured
Noteholders have been paid in full; or (ii) if a default, other than
a payment default, under the Senior Secured Note Indenture occurs
and is continuing and is of such a nature that the Trustee, or the
holders of the Senior Secured Notes is permitted to accelerate the
principal, premium, if any, and interest due under the Senior
Secured Notes, until such default is cured. The Authority covenants
that it shall provide written notice to the Manager upon the
occurrence of any default described in this paragraph.
(d) In the event that the Manager receives any payment or distribution
from the Authority at a time when the Manager has actual knowledge
that such payment or distribution is in violation of the terms and
provisions of this Section 6.4.1, such payment or distribution shall
be held by the Manager, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to the
Trustee on behalf of the holders of the Senior Secured Notes to be
applied in accordance with the applicable provisions of the Senior
Secured Note Indenture.
(e) This Section 6.4.1 defines the relative rights of the Manager and
the holders of the Senior Secured Notes. Nothing in this Section
6.4.1 shall (i) impair, as between the Authority and the Manager,
the right of the Manager to receive any Management Distributions;
(ii) affect the relative rights of the Manager and creditors of the
Authority other than their rights in relation to the holders of the
Senior Secured Notes; or (iii) prevent the Manager from exercising
its available remedies upon a breach of the Authority's obligations
under this Agreement, subject to the rights of the holders of the
Senior Secured Notes to receive distributions and payments otherwise
payable to the Manager.
(f) No right of any holder of the Senior Secured Notes to enforce the
subordination of the Management Fee and any other amounts owed to
the Manager under this Agreement shall be impaired by any act or
failure to act by the Trustee, any holder of the Senior Secured
Notes, the Authority, or the Manager in compliance with the terms of
this Section 6.4.1.
(g) The provisions of this Section 6.4.1 shall not be amended or odified
without the written consent of the Trustee, on behalf of
31
the holders of the Senior Secured Notes.
The Manager agrees that if the Trustee under the Senior Secured Note
Indenture forecloses upon, or accepts a deed in lieu of foreclosure of, the
Leasehold Mortgage (as defined in the Senior Secured Note Indenture) that
Manager shall have no interest in the leasehold estate thereunder or any rights
or remedies against the Trustee (so long as the Trustee pays any Management
Distributions payable to Manager under this Agreement and permitted to be paid
under this Section 6.4.1) or the Senior Secured Noteholders for the loss of its
management interests hereunder, and Manager shall vacate and not remain on the
Premises, so long as Gaming is not conducted on the Premises.
6.5 OPERATIVE DATES. For purposes of this Section 6, the first year of
operations shall begin on the Phase I Commencement Date and continue until the
first day of the month following the first anniversary of the Phase I
Commencement Date, and each subsequent year of operations shall be the 12-month
period following the end of the previous year. Notwithstanding the foregoing,
subject to Sections 3.2 and 4.4.5, the term of this Agreement shall extend up to
and through but not beyond seven (7) years after the Phase I Commencement Date.
6.6 PAYMENT OF NET REVENUES. The Manager is authorized to transfer
funds from the bank accounts of the Gaming Enterprise to the bank accounts of
the Manager and the Authority in order to distribute Net Revenues and any other
amounts due under this Section 6. The Net Revenues paid to the Authority
pursuant to this Section 6 shall be payable to the official of the Authority or
to the bank account specified by the Authority's Representative pursuant to
Section 7.
6.7 TOTAL RECOUPMENT FOR DEVELOPMENT COSTS. The total amount of
recoupment for development costs (exclusive of interest) including the aggregate
principal amount of borrowings by the Authority for Project Costs shall under no
circumstances exceed $400,000,000 (FOUR HUNDRED MILLION DOLLARS).
7. GENERAL PROVISIONS.
7.1 NOTICE. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given to the
applicable party (i) on the date of hand delivery, with signed receipt, (ii) on
the business daimmediately following transmittal to Federal Express or
othenationally recognized overnight commercial courier, with signed receipt, or
(iii) five (5) days after deposit in the United States mail, postage prepaid, in
any case addressed to the address of the applicable party set forth below, or
such other address as such party may hereafter specify by notice to the other.
The parties also designate the following persons as agents for receipt of
service of process:
If to the Authority: Chairman
St. Regis Mohawk Gaming Authority
St. Regis Mohawk Reservation
Community Building
Route 37, Box SA
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
32
with a copy to: ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Hobbs, Straus, ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇., ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Manager: Mohawk Management, L.L.C.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
c/o Monticello Raceway
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Suite 1616
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
33
with a copy to: ▇▇▇▇▇ 1. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other different addresses as the Manager or the Authority may specify
in writing using the notice procedure called for in this Section 7.
7.2 AUTHORIZATION. The Authority and Manager represent and warrant to
each other that each has full power and authority to execute this Agreement and
to be bound by and perform the terms hereof. Each party shall furnish evidence
of such authority to the other, which shall be attached as Exhibits to this
Agreement.
7.3 RELATIONSHIP. Manager and the Authority shall not be construed as
joint venturers or partners of each other by reason of this Agreement and
neither shall have the power to bind or obligate the other except as set forth
in this Agreement.
7.4 MANAGER'S CONTRACTUAL AUTHORITY. Subject to Section 4.2.4, Manager
is authorized to make, enter into and perform in the name of and for the account
of the Authority any contracts in furtherance of its obligations under this
Agreement, including, without limitation, promotional or cross marketing
agreements with any third party which are intended to enhance Gaming revenues.
7.5 FURTHER ACTIONS. 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. The parties further
agree that:
7.5.1 FIRE AND SAFETY. The Gaming Facility shall be constructed
and maintained in substantial compliance with such fire and safety
statutes, New York Building Code and related regulations which would be
applicable if the Gaming Facility were located outside of the
jurisdiction of the Authority although those requirements would not
otherwise apply within that jurisdiction. To the extent that the
Authority adopts fire, safety, or building code requirements which are
more stringent than those otherwise applicable pursuant to the Compact,
the Gaming Facility shall comply with such law. Nothing in this Section
shall grant any jurisdiction (including but not limited to jurisdiction
regardingzoning or land use) to the State of New York or any political
subdivision thereof over the Property or the Gaming Facility. Fire
protection services for the Gaming Facility will be provided by the
Authority, or third parties pursuant to agreement with the Authority.
7.5.2 TAXES. If any government attempts to impose any possessory
interest tax upon any party to this Agreement or upon the Gaming
Enterprise, the Gaming Facility or the Property, the Management
Business Board, in the name of the appropriate party or parties in
interest, may, upon unanimous vote, resist such attempt through legal
action. The costs of such action and the compensation of legal counsel
shall be an Operating Expense of the Gaming Enterprise. Any such tax or
required payment shall constitute an Operating Expense of the Gaming
Enterprise. This Section shall in no manner be construed to imply that
any party to this Agreement or the Gaming Enterprise
34
is liable for any such tax. This Section 7.5.2 shall not be construed
to apply to any lawfully imposed tax, including but not limited to
federal or state income taxes, which may be imposed upon Manager's
share of the Net Revenues.
7.5.3 GOVERNING LAW. The rights and obligations of the parties
and the interpretation and performance of this agreement shall be
governed by the law of the State of New York. All gaming covered by
this Agreement will be conducted in accordance with the Compact, IGRA,
and the Tribal Gaming ordinance.
7.5.4 NATIONAL ENVIRONMENTAL POLICY ACT. The Authority shall
supply the NIGC or the B.I.A., as appropriate, with all information
necessary for the NIGC or the B.I.A. to comply with the National
Environmental Policy Act ("NEPAI), and any applicable regulations
thereunder. The cost of any such compliance shall constitute an
Operating Expense.
7.6 DEFENSE. Except for disputes between the Authority and Manager,
Manager shall bring, defend, or settle any claim or legal action brought against
Manager or the Authority, individually, jointly or severally in connection with
the operation of the Gaming Enterprise. Subject to the approval of the
Management Business Board, Manager shall retain and supervise legal counsel,
accountants and such other professionals, consultants and specialists as Manager
deems appropriate to defend and/or settle any such claim or cause of action. Any
action which poses a substantial risk to the normal operation of the Gaming
Facility shall be supervised by the Management Business Board with notice to and
appropriate consultation with the Authority. All liabilities, costs, and
expenses, including attorneys' fees and disbursements, incurred in defense or
settlement of any such claim or legal action which are not covered by insurance
shall be an Operating Expense. Nothing contained in this Section 7.6 is a grant
to the Manager of the right to waive the Tribe's or the Authority's sovereign
immunity.
7.7 INDEMNITY. Manager shall indemnify and save the Authority harmless
from and against all loss, cost, liability and expense, including, but not
limited to, reasonable counsel fees and disbursements that may be occasioned by
any acts constituting theft, fraud, willful misconduct or gross negligence on
the part of Manager in the performance of its duties under this Agreement.
Except for MaLnager's theft, fraud, willful misconduct or gross negligence, the
Authority shall indemnify, defend and hold harmless Manager from any loss, cost,
liability and expense, including, but not limited to, reasonable counsel fees
and disbursements relating to the Gaming Enterprise or Gaming Facility that
results from the Manager's performance of its obligations under this Agreement.
The payment of all such obligations of the Authority shall constitute Operating
Expenses. The indemnifications and terms set forth in this section shall survive
the expiration or earlier termination of this Agreement.
7.8 WAIVERS. No failure or delay by Manager or the Authority 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,
35
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.
7.9 CAPTIONS. The captions for each Section are intended for
convenience only.
7.10 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.
7.11 INTEREST. Any amount payable to Manager or the Authority by the
other, including without limitation, unpaid interest, which has not been paid
when due shall accrue interest at same rate as the Senior Secured Notes, but in
no event shall such interest exceed the cost of such funds. Any funds advanced
by the Manager for the minimum monthly guaranteed payment will be repaid from
the Authority's share of future Net Revenues with interest as provided in
Section 6.4.
7.12 REIMBURSEMENT. With the approval of the Management Business Board,
Manager may, according to the terms of this Agreement or at its option, advance
funds or contribute property, on behalf of the Authority, to satisfy obligations
of the Authority in connection with the Gaming Facility and this Agreement.
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 Gaming
Enterprise and this Agreement. Interest shall be calculated at the rate and in
the manner set forth in Section 7.11 from the date the Authority was obligated
to remit the funds or contribute the property for the satisfaction of such
obligation to the date reimbursement is nade; all such interest shall constitute
an operating expense pursuant to GAAP. The Manager's sole source of such
reimbursement shall be from undistributed and future Net Revenues.
7.13 THIRD PARTY BENEFICIARY. Except with respect to the rights of the
Trustee and the holders of the Senior Secured Notes under Sections 4.2 and 6.4,
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
notwithstanding the provisions of Section 7.12, shall not give rise to liability
to any third party other than the authorized successors and assigns of the
parties hereto.
7.14 BROKERAGE. Manager and the Authority each hereby agrees to
indemnify and hold the other harmless from and against any and all claims, loss,
liability, damage or expenses (including reasonable attorneys' fees) suffered or
incurred by the other party as a result of a claim brought by a person or entity
engaged or claiming to be engaged as a finder, broker or agent by the
indemnifying party. This provision shall survive the expiration or earlier
termination of this Agreement.
36
7.15 SURVIVAL OF COVENANTS. Any covenant, term or provision of this
Agreement which, in order to be effective, must survive the expiration or
earlier termination of this Agreement, shall survive any such expiration or
earlier termination.
7.16 ESTOPPEL CERTIFICATE. Manager and the Authority agree to promptly
furnish to the other party, from time to time upon request, an estoppel
certificate in such reasonable form as the requesting party may request stating
whether there have been any defaults under this Agreement known to the party
furnishing the estoppel certificate and such other information relating to the
Gaming Enterprise as may be reasonably requested.
7.17 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, legal holiday under the laws of the State of New
York, or legal holiday of the Tribe (a list of which is set forth on Exhibit E
attached hereto), then in such event said date shall be extended to the next day
which is not a Saturday, Sunday or legal holiday.
7.18 PREPARATION OF AGREEMENT. This Agreement shall not be construed
more strongly against either party regardless of who is responsible for its
preparation.
7.19 EXHIBITS. All exhibits attached hereto are incorporated herein by
reference and made a part hereof as if fully rewritten or reproduced herein.
7.20 NON-ASSIGNABILITY. This Agreement shall not be assigned by either
party, nor shall subcontracts be entered into between Manager and a third party
wherein the third party will have any responsibility for gaming or access to the
proceeds of the gaming operation, without the prior written consent of the other
party, which consent shall not be unreasonably withheld. No assignment of a
controlling interest in Manager shall be made without the prior written consent
of the Authority. No assignment involving responsibility for Gaming shall be
valid until approved by the Chairman of the NIGC. If an assignment is so
approved, this Agreement shall inure to the benefit of and be binding on the
assignee.
Notwithstanding anything to the contrary contained in this Agreement,
Manager may assign its rights or interests in this Agreement without the consent
of the Authority, provided that all of the following conditions are satisfied:
(a) Manager is not in "material breach" of any of its obligations
under this Agreement as such term is defined Section 9.1 hereof.
(b) The proposed assignee ("Proposed Assignee") shall be a reputable
entity or person of good character with sufficient financial net
worth reasonably satisfactory to the Authority in light of the
obligations assumed hereunder as evidenced by financial
statements and other information reasonably requested by
the Authority.
(c) Proposed Assignee shall have sufficient experience and business
expertise in managing a first class gaming facility or other
similar facility in the reasonable judgment of the Authority, and
the Authority shall be provided with evidence thereof as
reasonably requested by the Authority.
37
(d) Proposed Assignee shall execute and deliver to the Authority an
assumption agreement in form and substance reasonably acceptable
to the Authority, evidencing the Proposed Assignee's agreement to
abide and be bound by the terms of this Agreement.
(e) The NIGC has approved the proposed assignment of this Agreement
to the Proposed Assignee.
7.21 CONFIDENTIAL INFORMATION. Each party agrees that any information
received concerning the other party during the performance of this Agreement,
regarding a parties' organization, financial matters, marketing plans, or other
information of a proprietary nature, will be treated in a confidential manner
and will not be disclosed to any other persons, firms or organizations, provided
that the foregoing shall not apply to information that is (a) publicly
available, (b) obtained by a party from third parties without restrictions on
disclosure, or (c) required to be disclosed by order of a court of competent
jurisdiction or other applicable governmental entity. In an action under Article
XVI of this Agreement for actual or threatened breach of the provisions of this
Section, the party bringing the action will be deemed to have no adequate remedy
at LAW and will be entitled to immediate and injunctive and other equitable
relief, without bond and without the necessity of showing actual money damages.
This provision shall survive the expiration or earlier termination of this
Agreement.
7.22 PATRON DISPUTE RESOLUTION. Manager shall attempt to resolve all
Patron disputes pursuant to the Policies and Procedures set forth in Exhibit D.
7.23 MODIFICATION. Any change to or modification of this Agreement must
be in writing signed by the Manager and the Authority and shall be effective
only upon approval by the Chairman of the NIGC, the date of signature of the
parties notwithstanding.
8. WARRANTIES.
8.1 PRESERVATION OF AGREEMENT. The Manager, the Tribe, and the
Authority each warrant and represent that they shall not act in any way
whatsoever, directly or indirectly, to cause this Agreement to be amended,
modified, canceled, or terminated, except pursuant to Section 7.23 and Article
9. The Manager, the Tribe, and the Authority warrant and represent that they
shall take all actions necessary to ensure that this Agreement shall remain in
full force and effect at all times.
8.2 NON-INTERFERENCE IN TRIBAL AFFAIRS. The Manager agrees not to
unduly interfere in or attempt to influence the internal affairs or government
decisions of the Tribe or 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 the
Manager that only affect the activities of the Gaming Enterprise. For the
purposes of this Section 8.2, if any such undue interference in Tribal affairs
is alleged by the Tribe or the Authority, the provisions of Section 9.3 shall
apply.
8.3 PROHIBITION OF PAYMENTS TO MEMBERS OF TRIBAL GOVERNMENT OR
AUTHORITY. Manager represents and warrants that no payments or gifts of services
or other things of value have been or will be made to any member, official,
Relative of a member or
38
official, or employee of the Tribal government or of the Management Board or the
regulatory arm of the Authority for the purpose of obtaining any special
privilege, gain, advantage or consideration. The foregoing shall not prohibit
seasonal gifts, birthday gifts, and gifts for other special occasions, provided
that each such gift is for nominal value not to exceed $100 (ONE HUNDRED)
dollars, and the aggregate value of such gifts in any one calendar year shall
not exceed $500 (FIVE HUNDRED) dollars. The Authority shall provide to the
Manager from time to time a list of all members, officials, Relatives of each
member and official, and employees of the Tribal government, the Management
Board and any regulatory arm of the Authority, and the Manager shall be entitled
to rely upon such list for purposes of this Section.
8.4 PROHIBITION OF HIRING MEMBERS OF TRIBAL GOVERNMENT OR AUTHORITY. No
member, official, or employee of the Tribal Government or of the Management
Board or regulatory arm of the Authority may be employed at the Gaming
Enterprise without a written waiver of this Section 8.4 by the Authority, as
appropriate, and, where required by applicable law, the Area Director, Eastern
Area Office, B.I.A. or the NIGC or other appropriate federal official. The
Authority shall provide to the Manager from time to time a list of all members,
officials, Relatives of each member and official, and employees of the Tribal
government, the Management Board and any regulatory arm of the Authority, and
the Manager shall be entitled to rely upon such list for purposes of this
Section.
8.5 PROHIBITION OF FINANCIAL INTEREST IN GAMING ENTERPRISE. No member
or Relative of a member of the Tribal government, or of the Management Board or
the regulatory arm of the Authority shall have a direct or indirect financial
interest in the Gaming Enterprise greater than the interest of any other member
of the Tribe; provided, however, nothing in this subsection shall restrict the
ability of a Tribal member to purchase or hold stock in the Manager, its
partners, parents, subsidiaries or affiliates where (i) such stock is publicly
held, and (ii) the Tribal member acquires less than (10%) ten percent of the
outstanding stock in the corporation, provided that if a Tribal member shall
acquire more than (10%) ten percent such person shall comply with all applicable
law, including, without limitation, the Compact.
8.6 Tribal Taxes. The Authority and the Tribe warrant and agree that
neither they nor any agent, agency, affiliate or representative of the Authority
or the Tribe will impose any taxes, fees, assessments, or other charges of any
nature whatsoever on payments of any kind to Manager or to any lender furnishing
financing for the Gaming Facility or for the Gaming Enterprise, or on the Gaming
Enterprise, the Gaming Facility, the revenues therefrom or on the Management Fee
as described in Section 6.4 of this Agreement; provided, however, the Authority
or the Tribe, as appropriate, may assess against the Gaming Enterprise license
fees reflecting reasonable regulatory costs incurred by the Authority or the
Tribe. The Authority and the Tribe further warrant and 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 or distributions paid to, any of the Manager's partners,
members, stockholders, officers, directors, or employees or affiliates, or any
of the employees of the Gaming Enterprise. If any such tax, fee, assessment or
other charge is in fact levied, imposed, or collected, the Authority or the
Tribe warrants and agrees that it shall reimburse Manager or the affected
partners, members, stockholders, officers, directors, employees or affiliates
for the full value, and dollar for dollar of such tax, fee, assessment or other
charge. Except as otherwise provided herein, if
39
any taxes, fees or assessments are levied by the Authority or the Tribe, such
taxes and assessments shall constitute Operating Expenses of the Gaming
Enterprises.
9. GROUNDS FOR TERMINATION.
9.1 VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. This Agreement may
be terminated pursuant to the provisions of Sections 4.4.4, 9.2, 9.3, 9.4, 9.5,
and 12.5.
9.2 VOLUNTARV TERMINATION. This Agreement may be terminated upon the
mutual written consent and approval of the parties.
9.3 TERMINATION FOR CAUSE.
9.3.1 BY EITHER PARTY. Either party may terminate this Agreement if the
other party commits or allows to be committed any material default of this
Agreement. Neither party may terminate this Agreement on grounds of material
default unless it has provided written notice to the other party of such
default, and the defaulting party thereafter fails to cure or take steps to
substantially cure the default within sixty (60) days following receipt of such
notice. If during the period specified in such notice the defaulting party is
actively proceeding in good faith to cure such default, the cure period shall be
extended for a reasonable period. During the period specified in such notice,
either party may submit the matter to arbitration under the dispute resolution
procedures of this Agreement. The period to cure such default shall be tolled
during the pendency of such arbitration proceeding. The discontinuance or
correction of a default shall constitute a cure thereof.
9.3.2 BY THE AUTHORITY. The Authority may also terminate this Agreement
where (a) the Manager, or a manager, member, director, or officer of the
Manager, has been convicted or indicted for any federal or state felony
involving moral turpitude or any federal or state gaming offense, provided,
however, that the Authority may not terminate this Agreement based on the
conviction of a member, director, or officer where the Manager terminates such
individual (or such individual withdraws or resigns, as applicable) within ten
days after receiving notice of the conviction or indictment from the Authority;
(b) the removal of the Manager is required by the NIGC or its Chairman,
provided, however, that the Authority shall not so terminate this Agreement and
the Manager may contest such requirement of the NIGC or its Chairman so long as
such contest is in good faith and shall not prevent the Authority from
conducting Gaming at the Gaming Facility; or (c) the Manager, through a manager,
member, director, or officer of the Manager, has knowingly and willfully
provided materially important false or misleading statements or information to
the Authority, provided, however, that the Authority may not terminate this
Agreement based on such statements or information provided by a manager, member,
director, or officer of Manager or a member of Manager, where the Manager
terminates such individual (or such individual withdraws or resigns, as
applicable) within 30 days after the later of (i) the Manager receives written
notice from the Authority of such statements or information or (ii) if Manager
contests in good faith such statements or information by filing for a proceeding
in arbitration in accordance with Section 16.1.1 within such 30 days and
terminates such individual (or such individual withdraws or resigns as
applicable) within 30 days after the decision of such arbitrator in favor of the
Authority. For purposes of this Section 9.3.2 'materially important false or
misleading statements' means a false or misleading statement that is of such
importance and materiality to the operation of the Gaming Enterprise so as to
40
merit termination in the view of a reasonably prudent commercial business
person.
9.3.3 RIGHTS UPON TERMINATION. In the event of any termination for
cause, regardless of fault, the parties shall retain all money previously paid
to them pursuant to Section 6 of this Agreement; and the Authority shall retain
title to all Gaming Enterprise and Gaming Facility fixtures, improvements,
supplies, equipment, funds and accounts, and subject to the rights of the
Manager subject to offset, to any accrued and unpaid Net Revenues due under
Section 6 of this Agreement. Subject to any adjudicated offsets, the Manager
shall continue to have the right to repayment of unpaid principal and interest
and other amounts due under any other agreements.
9.3.4 NO ELECTION OF REMEDIES. Subject to Section 16, 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 Section 9.6 or 9.7 shall not preclude the injured party from
providing notice of termination pursuant to this Section 9.3. Neither shall
termination preclude a suit for damages.
9.4 INVOLUNTARY TERMINATION DUE TO CHANGES IN LOCAL REQUIREMENTS. It is
the understanding and intention of the parties that the establishment and
operation of the Gaming Enterprise conforms to and complies with all Legal
Requirements. If during the term of this Agreement, the Gaming Enterprise, any
material aspect of Gaming or any material aspect of the Compact is rendered
unlawful by an Act of Congress, or is determined to be unlawful under federal
law by the final judgment of a federal or state court of competent jurisdiction,
the obligations of the parties hereto shall cease, and this Agreement shall be
of no further force and effect; provided that (i) the Manager shall have the
rights in Section 4.4 of this Agreement; (ii) the Manager and the Authority
shall retain all money previously paid to them pursuant to Section 6 of this
Agreement; (iii) funds of the Gaming Enterprise in any account shall be paid and
distributed as provided in Section 6 of this Agreement; (iv) any money lent by
or guaranteed by the Manager or its affiliates to the Authority shall be repaid
to the Manager to the extent provided in Section 16.2.1; and (v) the Authority
shall retain its interest in the lease and title to all Gaming Enterprise
furnishing, fixtures, supplies and equipment, subject to the rights of the
Manager under the Financing Agreements and subject to any requirements of
financing arrangements.
9.5 MANAGER'S RIGHT TO TERMINATE AGREEMENT. Manager may terminate this
Agreement by written notice effective upon receipt by the Authority if:
(i) Any Tribal, State or Federal authority whose 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 material 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 Authority refuses to allow the Manager to
immediately rectify any such complaint.
(iii) Manager, after seven days prior notice to the Authority,
has reason to believe that the performance by it or the Authority of
any material obligation imposed under this Agreement may reasonably be
expected to result in
41
the breach of any applicable Tribal, State or Federal law.
9.6 Consequences of Termination for Manager's Breach. In the event of
the termination of this Agreement by the Authority for cause under Section 9.3,
the Manager shall not, prospectively from the date of termination, except as
provided in Section 9.3, have the right to its Management Fee from the Gaming
Enterprise, but such termination shall not affect the Manager's rights
relating to reimbursement under this Agreement or any other agreements entered
pursuant hereto. Manager shall indemnify and hold the Tribe and the Authority
harmless against all liabilities of any nature whatsoever relating to the Gaming
Enterprise, but only insofar as these liabilities result from acts within the
control of the Manager or its agents. Any Net Revenues accruing through the date
of termination shall be distributed in accordance with Section 6 of this
Agreement. Nothing in this section shall preclude any claim by the Authority
against Manager for damages or equitable remedies caused by a breach of this
Agreement. Further, nothing in this section shall preclude any claim by the
Manager against the Authority for damages or equitable remedies caused by a
wrongful termination of this Agreement.
9.7 CONSEQUENCES OF TERMINATION FOR AUTHORITY'S BREACH. In the event of
termination of this Agreement by the Manager for cause under Section 9.3, the
Manager shall not be required to perform any further services under this
Agreement and the Authority shall indemnify and hold the Manager harmless
against all liabilities of any nature whatsoever relating to the Gaming
Enterprise, but only insofar as these liabilities result from acts within the
control of the Authority or its agents. Any Net Revenues accruing through the
date of termination shall be distributed in accordance with Section 6 of this
Agreement. Nothing in this section shall preclude any claim by Manager against
the Authority for damages or equitable remedies cause by a breach of this
Agreement. Further, nothing in this section shall preclude any claim by the
Authority against the Manager for damages or equitable remedies caused by
wrongful termination of this Agreement.
10. CONCLUSION OF THE MANAGEMENT TERM. Upon the conclusion of the term
of the Management Agreement, or the termination of this Agreement under other of
its provisions, in addition to other rights under this Agreement, the Manager
shall have the following rights:
10.1 TRANSITION. If termination occurs at any time other than upon the
conclusion of the Term, Manager shall be entitled to a reasonable period of not
more than thirty (30) days (such time as may be necessary to bring the
accounting period to the close of a calendar month) to transition management of
the Gaming Enterprise to the Authority or its designee. Manager and the
Authority shall cooperate to effect an orderly transition.
10.2 UNDISTRIBUTED NET REVENUES. If the Gaming Enterprise has accrued
Net Revenues which have not been distributed under Section 6 of this Agreement,
such Net Revenues shall be distributed according to Section 6.4 of this
Agreement.
11. CONSENTS AND APPROVALS.
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11.1 AUTHORITY. Where approval or consent or other action of the
Authority, or any agent or political subdivision of the Authority is required,
such approval shall mean the written approval of the Management Board of the
Authority evidenced by a duly enacted resolution thereof, or such other person
or entity designated by resolution of such board. Any such approval, consent or
action shall not be unreasonably withheld, delayed, or conditioned.
11.2 MANAGER. Where approval or consent or other action of the Manager
is required, such approval shall mean the written approval of the Manager's
Representatives. Except as otherwise expressly provided herein, any such
approval, consent or other action shall not be unreasonably withheld, delayed,
or conditioned.
12. DISCLOSURES.
12.1 PARTNERS AND AFFILIATES. The Manager warrants that on the date of
this Agreement a complete list of its members and officers is attached as
Exhibit B.
12.2 CRIMINAL AND CREDIT INVESTIGATION. The Manager agrees that all of
its members and officers involved in the Gaming Enterprise shall:
(i) consent to background investigations to be conducted by the
Authority, the State of New York, the Federal Bureau of Investigation
(the "FBI") or any other law enforcement authority or regulatory
authority having jurisdiction, if requested by the Authority and to the
extent required by the IGRA and the Compact,
(ii) be subject to licensing requirements in accordance with the
law of the Authority,
(iii) consent to a background, criminal and credit investigation
to be conducted by the NIGC or B.I.A.,
(iv ) consent to a financial and credit investigation to be
conducted by a credit reporting or investigation agency at the request
of the Authority,
(v) cooperate fully with such investigations,
(vi) disclose any information requested by the Authority which
would facilitate in the background and financial investigation, and
(vii) pay the cost and expenses of investigation required by 25
CFR Part 537 for licensing of any person.
Any materially false or deceptive disclosures or failure to
cooperate fully with such investigations by an employee of the, 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 Authority to federal officials as required by law.
The Authority may assess reasonable costs and expenses of
investigation for licensing of any person required by the Tribal Gaming
Ordinance.
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12.3 DISCLOSURE AMENDMENTS. The Manager shall, no later than 30 days
prior to any proposed change in financial interest in the Manager, provide the
Authority with all information required by 25 CFR 537.1, provided however, that
if Manager exercises due diligence pursuant to this Section 12.4, any reasonable
or unavoidable delay in the delivery of such information shall not be or be
deemed to be a material breach of this Agreement. The Authority shall submit the
information required by 25 CFR SS 533 and 537 to the NIGC.
12.4 BREACH OF MANAGER WARRANTIES AND AGREEMENTS. If a matter is
discovered which was not disclosed by any background check conducted by the FBI
as part of the B.I.A. or other federal approval of this Agreement, and which
would cause the subject not to be licensable, or which would cause the denial or
revocation of any gaming license needed to operate the Gaming Facility, then the
Manager shall have 30 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. The Manager shall have 30
days after notice from the Authority to cure a failure to update changes in
financial position or additional gaming related activities prior to termination.
13. RECORDATION. At the option of the Manager or the Authority, any security
agreement related to the Financing. Agreements may be recorded in alny public
records. Where such recordation is desired in the public records of the B.I.A.,
the Authority will accomplish such recordation upon the request of the Manager.
No such recordation shall waive the Authority's sovereign immunity.
14. AUTHORITV TO EXECUTE. Each party warrants to the other that it has full
authority to execute this Agreement and perform its obligations hereunder.
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 Gaming Facility or the Property, nor any proprietary interest
in the Gaming 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 Authority and the Manager.
16. DISPUTE RESOLUTION.
16.1 CONSENT TO SUIT. Subject to Section 20 the Tribe and the Authority
expressly waive sovereign immunity for the purpose of permitting or compelling
arbitration as provided in this Section, and to be sued in any court of
competent jurisdiction by the Manager for the purpose of compelling arbitration
or enforcing any arbitration award or judgment arising out of this Agreement,
the Financing Agreements, any Collateral Agreements or other obligations between
the parties, or of the Tribal Gaming Ordinance, or any rules, actions, or
decisions of the Authority pursuant thereto, or the issuance, non-issuance,
condition, suspension, denial or revocation of any license. Without in any way
limiting the generality of the foregoing, the Tribe and the Authority expressly
authorize any governmental authorities who have the right and duty under
applicable law to take any action authorized or ordered by any court, to take
such action, including without limitation, entering the Property and
repossessing any furniture and
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equipment subject to a security interest or otherwise giving effect to any such
judgment entered. In no instance shall any enforcement of any kind whatsoever be
allowed against any assets of the Tribe or the Authority other than the limited
assets of the Authority specified in Section 16.2.1.
16.1.1 ARBITRATION. All disputes, controversies or claims arising out
of or relating to this Management Agreement, or the termination or purported
termination thereof, or of the Tribal Gaming Ordinance, or the Gaming Authority
Charter or any rules, actions, or decisions of the Gaming Authority pursuant
thereto, or the issuance, nonissuance, condition, suspension, denial or
revocation of any license required thereunder, shall be settled by binding
arbitration in accordance with the Expedited Procedure provisions (Rules 53
through 57 in the current edition) of the commercial arbitration rules of the
American Arbitration Association. Arbitration shall occur before a single
arbitrator, or any greater number of arbitrators ("Arbitrator(s)") if agreed to
by the parties to the arbitration ("Parties"). The Arbitrator(s) shall possess
relevant expertise and shall be selected by agreement of the Parties. If the
Parties are unable to agree on the selection of the Arbitrator(s), the
Arbitrator(s) shall be selected by the American Arbitration Association. The
Arbitrator(s) shall render a decision promptly after the submission of the
dispute and shall apply the standards of a reasonable, prudent business person.
The arbitrator(s) shall have no authority to award punitive damages. Unless the
Parties mutually agree otherwise, binding arbitration shall be sole remedy as to
all disputes arising out of this Agreement, except for disputes requiring
injunctive or declaratory relief, which shall be pursued as provided in Sections
16.1 and 16.2.
16.1.2 CHOICE OF LAW. In determining any matter the Arbitrator(s) shall
apply the terms of this Agreement, without adding to, modifying or changing the
terms in any respect, and shall apply New York law and applicable federal and
tribal law. New York law shall govern the interpretation and construction of
this Agreement.
16.1.3 PLACE OF HEARING. All arbitration hearings shall be held at a
place designated by the Arbitrator(s) in New York County, New York.
16.1.4 CONFIDENTIALITY. The Parties and the Arbitrator(s) shall
maintain strict confidentiality with respect to the arbitration, subject to the
requirements of applicable law, including the federal securities laws and
Section 7.21 of this Agreement.
16.2 LIMITATION OF ACTIONS. The waiver of immunity from suit in this
Article XVI is specifically limited to the following actions and judicial
remedies:
16.2.1 DAMAGES. The enforcement of an award of money damages by
arbitration; provided that the Arbitrator(s) and/or the court shall have no
authority or jurisdiction to order execution against any assets or revenues of
the Tribe and may execute only as to the Authority against (i) undistributed or
future Net Revenues of the Gaming Enterprise; or (ii) if it has been
specifically found by an arbitrator that, by exercise of regulatory authority
pursuant to the
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Tribal Gaming Ordinance or otherwise, or any rules, actions, or decisions of the
Gaming Authority pursuant thereto, or the issuance, non-issuance, condition,
suspension, denial or revocation of any license, the Authority has prejudiced
the Manager's rights under this Agreement or accompanying agreements, or has in
any material way caused the lack of business success of the Gaming Enterprise,
the future Net Revenues of any other gaming operations conducted by the
Authority, or any other entity of the Authority, on this Property. In no
instance shall any enforcement of any kind whatsoever be allowed against any
assets of the Tribe or the Authority other than the limited assets of the
Authority specified in this Section 16.2.1.
16.2.2 CONSENTS AND APPROVALS. The enforcement of a determination by
the Arbitrator(s) that the Authority's consent or approval has been unreasonably
withheld contrary to the terms of this Agreement.
16.2.3 INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE. The enforcement of a
determination by an arbitrator that prohibits the Tribe or the Authority from
taking any action that would prevent the Manager from operating the Gaming
Enterprise pursuant to the terms of this Agreement, or that requires the Tribe
or the Authority to specifically perform any obligation under this Agreement
(other than an obligation to pay money which is provided for in Section 16.2.1).
16.2.4 ACTION TO COMPEL ARBITRATION. An action to compel arbitration
pursuant to this Section 16.
16.2.5 ACTION TO PRESERVE THE STATUS QUO DURING DISIPUTES. An action to
preserve the status quo during disputes pursuant to Section 20.
16.3 LIMITATION OF LIABILITY. Neither the Tribe nor any officer,
officeholder, employee, agent, representative or member of the Tribe or the
Authority, as such, shall have any personal liability for obligations of the
Authority under this Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Further, no member, nor any
officer, office holder, employee, agent, representative, or member of any member
of Manager shall have any personal liability for the obligations of the Manager
under this Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation.
17. TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
18. AUTHORITY'S ASSETS. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement shall obligate or authorize the payment or
encumbrance of any funds or assets of the Tribe, or the Authority. The only
assets subject to payment or encumbrance shall be the revenues and assets of the
Gaming Enterprise (excluding the Gaming Facility and the Property on which it is
located) held by the Gaming Authority.
19. NOTICE PROVISION. The Authority will give the Manager notice of any alleged
violation of the Tribal Gaming ordinance and thirty (30) days opportunity to
cure before the Authority may take any action based on such alleged violation.
If
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during such period the Manager is actively proceeding to cure the violation, the
period shall be extended for a reasonable time. At least (14) fourteen days
before any final action upon any proposed amendments to the Tribal Gaming
Ordinance, the Authority will give Manager written notice of the complete text
of any such amendments.
20. PERFORMANCE DURING DISPUTES. It is mutually agreed that during any kind of
controversy, claim, disagreement or dispute, including a dispute as to the
validity of this Agreement, the issuance, non-issuance, condition, suspension,
denial or revocation of any license, or the Manager's ability to perform its
duties and collect its Management Fee, Manager shall remain in possession of the
Gaming Facility as Manager; and the Authority and Manager shall continue their
performance of the provisions of this Agreement and its exhibits. Manager shall
be entitled to injunctive relief from a civil court or other competent authority
to maintain possession in the event of a threatened eviction during any dispute,
controversy, claim or disagreement arising out of this Agreement.
21. MARKS. Prior to the Commencement Date and from time to time during the Term
hereof, Manager agrees to erect and install, in accordance with applicable local
codes and regulations, all signs Manager deems necessary in, on or about the
Gaming Facility, including, but not limited to, signs bearing the Manager's and
the Authority's Marks. The use of any such Marks shall require the prior
approval of the Authority. The costs of purchasing, leasing, transporting,
constructing, maintaining, and installing the required signs and systems shall
be part of the start-up costs and Operating Expenses, as the case may be.
21.1 AUTHORITY'S MARKS. The Manager agrees to recognize the exclusive
right of ownership of Authority to all Authority's service marks, trademarks,
copyrights, trade names, patents or other similar rights or registrations, now
or hereafter held or applied for in connection therewith; these marks shall
include all marks which are unique to and developed for the Gaming Facility
(collectively, the "Authority's Marks"). The Manager hereby disclaims any right
or interest therein, regardless of any legal protection afforded thereto. The
Manager acknowledges that all of Authority's Marks might not be used in
connection with the Gaming Enterprise, and the Authority shall have sole
discretion to determine which Authority's Marks shall be so used. The Manager
shall not use the Authority's name, or any variation thereof, directly or
indirectly, in connection with (a) a private placement or public sale of
securities or other comparable means of financing or (b) press releases and
other public communications, without the prior written approval of the
Authority.
The Authority and Manager hereby agree that in the event the Authority
and/or Manager is (are) the subject of any litigation or action brought by any
party seeking to restrain the use, for or with respect to the Gaming Enterprise,
by the Authority and/or Manager of any Authority's ▇▇▇▇ used by Manager for or
in connection with the Gaming Enterprise, any such litigation or action shall be
defended entirely at the expense of Authority, notwithstanding that Authority
may not be named as a party thereto. In the event the Manager desires to bring
suit against any user of any Authority's ▇▇▇▇, seeking to restrain such user
from using any Authority's ▇▇▇▇, then such suit shall be brought only with the
consent of Authority and at the expense of the Authority notwithstanding
that
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such user may be a prior or subsequent user. In all cases the conduct of any
suit whether brought by the Authority and/or Manager or instituted against the
Authority and/or Manager shall be under the absolute control of the Authority
notwithstanding that Authority may not be a party to such suit. The Manager, at
its sole cost, shall have the right to engage its own legal counsel and the
Manager's own counsel shall have the right to non-controlling participation in
any such litigation. The Manager shall have the right at any time during the
course of such litigation to withdraw from participation therein.
21.2 MANAGER'S MARKS The Authority agrees to recognize the exclusive
right of ownership of Manager to all. Manager's service marks, trademarks,
copyrights, trade names, patents or other similar rights or registrations now or
hereafter held or applied for in connection therewith (collectively, the
"Manager's Marks"), provided that Manager shall claim no ownership of any marks
including the names "Mohawk" or "St. Regis." The Authority hereby disclaims any
right or interest in Manager's Marks, regardless of any legal protection
afforded thereto. The Authority acknowledges that all of Manager's Marks might
not be used in connection with the Gaming Enterprise, and Manager shall have
sole discretion to determine which Manager's Marks shall be so used. The
Authority covenants that in the event of termination, cancellation or expiration
of this Agreement, whether as a result of a default by Manager or otherwise, the
Authority shall not hold itself out as, or continue operation of the Gaming
Enterprise as Manager's casino nor will it utilize any of Manager's Marks or any
variant thereof in the operation of its Gaming Facility. The Authority agrees
that Manager or its representative may, at any reasonable time thereafter, enter
the Gaming Facility for the sole purpose of removing all signs, furnishings,
printed material, emblems, slogans or other distinguishing characteristics which
are now or hereafter may be connected or identified with Manager's or which
carry any Manager's ▇▇▇▇. Such removal shall be accomplished in a manner which
leaves the premises in a condition suitable for appropriate commercial use. The
Authority shall not use the Manager's name, or any variation thereof, directly
or indirectly, in connection with (a) a private placement or public sale of
securities or other comparable means of financing or (b) press releases and
other public communications, without the prior written approval of Manager.
The Authority and Manager hereby agree that in the event the Authority
and/or Manager is (are) the subject of any litigation or action brought by a
party seeking to restrain the use, for or with respect to the Gaming Enterprise,
by the Authority and/or Manager of any Manager's ▇▇▇▇ used by Manager for or in
connection with the Gaming Enterprise, any such litigation or action shall be
defended entirely at the expense of Manager, notwithstanding that Manager may
not be named as a party thereto. In the event the Authority desires to bring
suit against any user of any Manager's ▇▇▇▇, seeking to restrain such user from
using any Manager's ▇▇▇▇, then such suit shall be brought only with the consent
of Manager and at the expense of the Authority notwithstanding that such user
may be a prior or subsequent user. In all cases the conduct of any suit whether
brought by the Authority and/or Manager or instituted against the Authority
and/or Manager shall be under the absolute control of the Manager
notwithstanding that Manager may not be a party to such suit. The Authority, at
its sole cost, shall have the right to engage its own legal counsel and the
Authority's own counsel shall have the right to non-controlling participation in
any such
litigation. The Authority shall have the right at any time during the course of
such litigation to withdraw from participation therein.
22. EXECUTION IN COUNTERPART ORIGINALS. This Agreement is being executed in four
counterparts, two to be retained by each party. Each of the four originals is
equally valid. This Agreement shall be deemed "executed" and shall be binding
upon both parties when properly executed and approved by the Chairman of the
NIGC.
23. GAMING ENTERPRISE NAME. The Gaming Enterprise shall be operated under such
name as the parties may agree.
24. 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.
25. ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits
referred to herein, any collateral documents, and any documents executed by the
parties simultaneously herewith, constitutes the entire understanding and
agreement of the parties hereto and supersedes all other prior agreements and
understandings, written or oral, between the parties.
26. GOVERNMENT SAVINGS CLAUSE. Each of the parties agrees to execute, deliver
and, if necessary, record any and all additional instruments, certifications,
amendments, modifications and other documents as may be required by the United
States Department of the Interior, B.I.A., the NIGC, the office of the Field
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 Authority or the Manager under this
Agreement or any other agreement or document related hereto, without the consent
of the affected party.
27. REASONABLENESS. Whenever the consent or approval of any partyunder this
Agreement is required, such consent or approval shallnot be unreasonably
withheld, unless specifically provided otherwise. Further, whenever any
provision of this Agreement requires the exercise of "reasonable" consent,
judgment, efforts, best efforts, or "commercially prudent" efforts the standard
for such reasonableness or commercial prudence shall be conduct consistent with
the actions of a prudent commercial business person or prudent commercial owner
of a gaming facility substantially similar to the Gaming Facility.
Remainder of this page is intentionally blank. Signatures appear on the
following pages.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ST. REGIS MOHAWK MOHAWK MANAGEMENT, L.L.C.
GAMING AUTHORITY
By_________________________ By_______________________
ST, REGIS MOHAWK TRIBE (solely
with respect to its rights and obligations
under Sections 3.5 and 4.2.2 and
Articles 8 and 16 of this Agreement)
By__________________________
CERTIFICATION: This is to hereby certify that the above was duly executed by
officers of the St. Regis Mohawk Gaming Authority and the St. Regis Mohawk
Tribal Council pursuant to the authority vested therein.
_____________________________ _______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Tribal Clerk Date
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