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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A-2
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: June 30, 1995
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission File Number: 0-11532
INLAND CASINO CORPORATION
(Name of Small Business Issuer in its Charter)
Utah 33-0618806
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4225 Executive Square, Suite 1650, La Jolla, California 92037
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (619) 546-9383
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes _X_ No___
Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. / X /
State issuer's revenues for its most recent fiscal year: $14,152,565.
As of September 29, 1995, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $4,777,547.
State the number of shares outstanding of each of the registrant's classes
of common equity at September 29, 1995: 12,541,657.
Transitional Small Business Disclosure Format (check one) Yes ___ No _X_
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement prepared in connection with the
Annual Meeting of Stockholders to be held in 1995 -- Part III.
No. of Sequentially Numbered Pages: 5
Exhibit Index: Page 4
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) LIST OF EXHIBITS.
Exhibit No.
-----------
3.1 Amended and Restated Articles of Incorporation of Inland
Casino Corporation (formerly known as Twin Creek Exploration
Co., Inc.)
3.2 Amended and Restated Bylaws of Inland Casino Corporation
(formerly known as Twin Creek Exploration Co., Inc.)
Material Contracts Relating to Management Compensation Plans or
Arrangements
10.1 Corporate Guaranty between ICC II and Arthur R. Pfizenmayer,
dated February 1, 1995.
10.2 1994 Stock Option Plan of ICC II.
10.3 Verbal agreement between ICC II and Jonathan Ungar entered
into in May, 1995, pursuant to which ICC II paid $40,000 to
Mr. Ungar in exchange for market research consulting services
in the United States.
10.4 Verbal agreement between ICC II and Alan Henry Woods entered
into in May, 1995, pursuant to which ICC II paid $193,000 to
Mr. Woods in exchange for market research consulting services
in overseas markets.
Other Material Contracts
10.5+ Gaming Management Agreement between Barona Group of the
Capitan Grande Band of Mission Indians and Inland Casino
Partners, dated February, 1992, and Amendment No.
1 thereto, dated July 1, 1992.
10.6 Assignment and Assumption of Lease between ICC II and Winland
Corporation, dated as of January 1, 1995.
10.7 Lease agreement between SSK Game Enterprises and Inland Casino
Partners, dated August 13, 1993.
10.8 Gaming Machine Location Agreement between Zino, Inc. and
Inland Casino Partners, dated July 2, 1993.
10.9 Gaming Machine Location Agreement between American Heritage
Amusement Corporation and Inland Casino Partners, dated July
15, 1993.
10.10 Lease Agreement between Sprung Instant Structures, Inc. and
Inland Casino Partners (d/b/a Barona Casino), dated December
14, 1993.
16.1 Letter of Tanner & Company regarding change in certifying
accountant.
16.2 Letter of Charles Reibel, Inc. regarding change in certifying
accountant.
- ---------------------------------
+ Confidential treatment has been requested with respect to certain portions
of this Agreement pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended. Such portions of the Agreement have been omitted and
filed separately with the Securities and Exchange Commission.
2
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INLAND CASINO CORPORATION,
a Utah corporation
Dated: August 30, 1996 By: /s/ Duane M. Eberlein
---------------------
Duane M. Eberlein
Vice President, Chief Financial
Officer
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EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ------------
3.1 Amended and Restated Articles of Incorporation of
Inland Casino Corporation (formerly known as Twin
Creek Exploration Co., Inc.)
3.2 Amended and Restated Bylaws of Inland Casino
Corporation (formerly known as Twin Creek
Exploration Co., Inc.)
Material Contracts Relating to Management Compensation Plans or
Arrangements
10.1 Corporate Guaranty between ICC II and Arthur R.
Pfizenmayer, dated February 1, 1995.
10.2 1994 Stock Option Plan of ICC II.
10.3 Verbal agreement between ICC II and Jonathan Ungar
entered into in May, 1995, pursuant to which ICC II
paid $40,000 to Mr. Ungar in exchange for market
research consulting services in the United States.
10.4 Verbal agreement between ICC II and Alan Henry Woods
entered into in May, 1995, pursuant to which ICC II
paid $193,000 to Mr. Woods in exchange for market
research consulting services in overseas markets.
Other Material Contracts
10.5+ Gaming Management Agreement between Barona Group of
the Capitan Grande Band of Mission Indians and
Inland Casino Partners, dated February, 1992, and
Amendment No. 1 thereto, dated July 1, 1992.
10.6 Assignment and Assumption of Lease between ICC II
and Winland Corporation, dated as of January 1,
1995.
10.7 Lease agreement between SSK Game Enterprises and
Inland Casino Partners, dated August 13, 1993.
10.8 Gaming Machine Location Agreement between Zino, Inc.
and Inland Casino Partners, dated July 2, 1993.
10.9 Gaming Machine Location Agreement between American
Heritage Amusement Corporation and Inland Casino
Partners, dated July 15, 1993.
10.10 Lease Agreement between Sprung Instant Structures,
Inc. and Inland Casino Partners (d/b/a Barona
Casino), dated December 14, 1993.
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SEQUENTIALLY
NUMBERED
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ------------
16.1 Letter of Tanner & Company regarding change in
certifying accountant.
16.2 Letter of Charles Reibel, Inc. regarding change in
certifying accountant.
- -------------------------------
+ Confidential treatment has been requested with respect to certain portions
of this Agreement pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended. Such portions of the Agreement have been omitted and
filed separately with the Securities and Exchange Commission.
5
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CONFIDENTIAL TREATMENT*
GAMING MANAGEMENT AGREEMENT
BETWEEN
BARONA GROUP OF THE CAPITAN GRANDE BAND OF MISSION INDIANS
AND
INLAND CASINO PARTNERS, A CALIFORNIA PARTNERSHIP
FEBRUARY, 1992
* This Agreement is a material agreement furnished pursuant to 17 C.F.R.
228.601(b)(10).
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TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS AND PRINCIPLES OF
INTERPRETATION
1.1 Definitions 1
1.2 Gender and Number 4
1.3 Entire Agreement 4
1.4 Index and Headings 4
1.5 Applicable Law 5
1.6 Materiality of Recitals 5
ARTICLE II - MANAGEMENT
2.1 Manager's Authority and Responsibility 5
2.2 Term of Agreement 5
2.3 Exclusivity of Manager's Rights 5
2.4 Rights, Duties and Obligations of Manager 6
2.4(a) Personnel Matters 6
2.4(b) Compliance 7
2.4(c) Security Force 7
2.4(d) Periodic Reports; Audits 8
2.4(e) Accounting Requirements 8
2.4(f) Maintenance of Building and Equipment 8
2.4(g) Cash Monitoring 8
2.4(h) Insurance 9
2.4(i) Cessation of Barona Indian Gaming 9
2.4(j) Bank Accounts 11
2.4(k) Collection of Gross Receipts 11
2.4(l) Financial Feasibility Report 12
2.4(m) Annual Operating Budget 12
2.4(n) Water and Sewer 12
2.5 Limits of Authority 12
ARTICLE III - WARRANTIES
3.1 Manager's Representations and Warranties 13
3.1(a) Organization 13
3.1(b) Power 13
3.1(c) Execution and Delivery 13
3.1(d) Statements 13
3.1(e) Prohibited Payments 13
3.1(f) Parties in Interest 13
3.1(g) Restriction on Employees 14
3.1(h) Investigation and FBI Clearance 14
3.1(i) No Criminal Convictions 15
3.1(j) Tribe's Right to Inspect Books 15
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3.1(k) Interference with Tribe Prohibited 15
3.1(l) EPA Compliance 16
3.1(m) Minimum Sessions 16
3.1(n) Assumption of Risk from NGC 16
3.1(o) Assumption of Risk from BIA 17
3.1(p) Divestiture of Interest 17
3.2 Tribe's Representations and Warranties 18
3.2(a) Authority 18
3.2(b) Execution and Delivery 18
3.2(c) Best Efforts 18
3.2(d) Prohibited Payments 18
3.2(e) Resolution 19
3.2(f) Tribe's Regulations 19
3.2(g) Indian Land 19
3.2(h) Submission for Approval 19
3.2(i) Tribe's Request for Background Check 19
3.2(j) Tract and Facility 20
3.2(k) Tribal Representatives 20
3.2(l) Legal Opinion 20
ARTICLE IV - COMPENSATION AND REIMBURSEMENT
4.1 Profit Split 22
4.1(a) Bingo 22
4.1(b) Card Room 23
4.1(c) Off Track Betting 23
4.1(d) Electronic Video Gaming Devices 24
4.2 Future Departments 24
4.3 Justification for Use of Gross Receipts 24
4.4 Manager Loan 24
4.5 Payment of Recommencement Costs 25
4.6 Distributions of Net Profits; Reports 25
4.7 Annual License Fee 25
4.8 AMA Stipulated Judgment 26
ARTICLE V - OTHER AGREEMENTS 26
5.1 Capital Improvements; Replacement 26
5.2 Assignments 27
5.3 FBI Clearance 27
5.4 Waiver of Taxes and Fees 27
5.5 Secretary's Approval 28
5.6 Dispute Resolution 28
5.7 Limited Waiver of Sovereign Immunity
and Tribe's Rights 28
5.8 Jurisdiction 29
5.9 Termination 29
5.9(a) Material Breach 29
5.9(b) Notice of Material Breach 30
5.9(c) Retention of Property
Upon Termination 30
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5.9(d) Involuntary Termination Due to
Changes in Applicable Law 30
5.9(e) Voluntary Cessation of Operations 31
5.10 Certificate of Self-Regulation 31
ARTICLE VI - INDEMNIFICATION
6.1 Indemnification by Manager 32
6.2 Indemnification by Tribe 32
6.3 Procedures 32
6.4 Survival 32
ARTICLE VII - FURTHER AGREEMENTS
7.1 Employee Grievance Committee 32
7.2 Legal Fees 33
7.3 AMA Stipulated Judgment 33
7.4 Fidelity Bond 33
7.5 Barona Indian Gaming Committee 33
(a) General Policies 33
(b) Informal Dispute Resolution 34
(c) Designation of Tribal
Representatives 34
(d) General Authority 34
(e) Membership 35
7.6 Letter of Credit 35
ARTICLE VIII - MISCELLANEOUS
8.1 Validity 35
8.2 Survival of Rights 36
8.3 Counterparts 36
8.4 Further Assurances 36
8.5 Notices 36
8.5(a) Addresses 36
8.5(b) Effective Date 37
8.5(c) Changes 37
8.6 No Partnership Created 37
8.7 Covenant of Good Faith and Fair Dealings 37
8.8 Time is of the Essence 37
8.9 Prior Sub-Contract 37
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GAMING MANAGEMENT AGREEMENT
THIS GAMING MANAGEMENT AGREEMENT (the "AGREEMENT"), is entered into by and
between BARONA GROUP OF CAPITAN GRANDE BAND OF MISSION INDIANS (a/k/a Barona
Band of Mission Indians), a federally-recognized Indian tribe (the "TRIBE"), and
INLAND CASINO PARTNERS, a California Partnership (the "MANAGER").
R E C I T A L S
A. TRIBE is seeking technical experience and expertise for the operation
of Barona Indian Gaming (as hereafter defined) and to instruct members of TRIBE
as to the operation of Barona Indian Gaming, and it is agreed that MANAGER can
supply and has such experience, expertise, and instruction and that MANAGER is
willing to assist TRIBE to enhance TRIBE'S revenues from Barona Indian Gaming.
B. TRIBE is desirous of vesting in MANAGER the exclusive right and
obligation to manage, operate and maintain Barona Indian Gaming in conformance
with the terms and conditions of this AGREEMENT.
C. The parties desire to memorialize their relationship, which shall be
subject to the terms and conditions of this AGREEMENT.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants and agreements set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS. Whenever used in this AGREEMENT, the following words and
terms shall have the respective meanings ascribed to them as follows:
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(a) AGREEMENT - "AGREEMENT" means this Gaming Management Agreement
and all instruments supplemental hereto or in amendment or confirmation
hereof; "hereof" "hereto" and "hereunder" and similar expressions mean and
refer to this Agreement and not to any particular article or section;
"Article" or "Section " means and refers to the specified article or
section of this Agreement.
(b) APPROVAL OF TRIBE - "APPROVAL OF TRIBE" means that when a matter
hereunder is to be submitted by Manager for approval of Tribe, Tribal
Council of Tribe or its designee shall approve or disapprove such matter
in writing and deliver its decision to Manager within fifteen days of the
date of submission of such matter for approval, and failure to deliver
written approval or disapproval to manager within such fifteen day period
shall be deemed to be approval of such matter by Tribe and Manager shall
be entitled to act accordingly.
(c) BARONA INDIAN GAMING COMMITTEE - "BARONA INDIAN GAMING
COMMITTEE" means the group of no more than seven (7) persons appointed by
Tribe's Tribal Council functioning as described in Section 7.5 as the (1)
conduit for information between Tribal Council and Barona Indian Gaming;
(2) an advisory body to Tribal Council regarding gaming matters; and (3)
Tribal Council's official voice to Manager regarding gaming matters as
authorized by Tribal Council. Barona Indian Gaming Committee has been
established by a resolution of Tribal Council and will conduct its
business according to a set of guidelines established for it by Tribal
Council.
(d) AUTHORIZED ACTIVITIES - "BARONA INDIAN GAMING" means the
operation of the Gaming Activities conducted pursuant to this Agreement
and associated activities, including, but not limited to, the sale of food
and beverage concessions, souvenirs, gifts, player supplies, tobacco and
tobacco products and such other goods and services necessary or incidental
thereto, at the Facility, and the operation of any and all other
activities or businesses on Tract. "Gaming Activities" means all of those
activities allowed under the Gaming Ordinance and authorized as "Class II"
or "Class III" gaming under the Indian Gaming Regulatory Act.
(e) COMMISSION - "COMMISSION" means the National Indian Gaming
Commission appointed pursuant to Section 5 of the Indian Gaming Regulatory
Act (25 U.S.C. Section 2704). "Commission" shall also mean the Chairman of
the Commission where the Chairman has the power to act on behalf of the
Commission pursuant to Section 6 of the Indian Gaming Regulatory Act (25
U.S.C. Section 2705).
(f) EFFECTIVE DATE - "EFFECTIVE DATE" means the date that this
Agreement is executed by both parties.
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(g) FACILITY - "FACILITY" means the building (capable of housing
2,000 patrons) located on Tract within which Barona Indian Gaming will be
housed, including the cardroom addition thereto, and from which it will be
operated, together with all associated real property, fixtures and
personal property used in connection with Barona Indian Gaming.
(h) GAMING ORDINANCE - "GAMING ORDINANCE" means the Gaming Ordinance
enacted by Tribe on March 4, 1989, as amended.
(i) GENERAL MANAGER - "GENERAL MANAGER" means the person selected by
Manager who will be the chief executive officer of Barona Indian Gaming
and who will be under the direct and exclusive supervision of the Manager
and whose salary shall be an Operating Expense according to the approved
budget.
(j) GROSS RECEIPTS - "GROSS RECEIPTS" means the total receipts from
the operation of Barona Indian Gaming from all sources, including, but not
limited to, receipt from all Authorized Activities, admission, sale or
rental of bingo cards, sale of food and beverage concessions, souvenirs,
gifts, player supplies, tobacco and tobacco products and such other goods
and services necessary or incidental thereto, and total receipts from the
operation of any and all other activities or businesses on Tract, but
excluding loan proceeds.
(k) MANAGER - "MANAGER" means INLAND CASINO PARTNERS, a California
Partnership.
(l) NET PROFITS - "NET PROFITS" means the total amount of monies
remaining from monthly Gross Receipts after payment of the Operating
Expenses for such month, which amount shall be calculated on a cash basis.
(m) OPERATING EXPENSES - "OPERATING EXPENSES" means all expenses
necessary for the operation of Barona Indian Gaming, including, without
limitation, any and all applicable state or federal taxes, licenses or
fees of Barona Indian Gaming or similar costs imposed upon the Manager for
managing Barona Indian Gaming (other than income taxes imposed on the
Manager with respect to its share of Net Profits and except the license
fee described in Section 4.7); compensation and benefits to employees,
independent contractors, or consultants of Barona Indian Gaming; costs,
fees and expenses of Barona Indian Gaming relating to prizes, materials,
equipment, supplies, inventory, utilities, repairs, maintenance,
insurance, bonding, advertising, accounting and legal services, waste
removal, security, travel and transportation, cost of goods sold, and
interest on instalment contract
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purchases by Barona Indian Gaming; repayment of principal on any Manager
Loan described in Section 4.2 hereof; a reasonable reserve for operations
and prize distributions of Barona Indian Gaming; and such other costs,
expenses or fees necessarily, routinely or customarily incurred in the
operation of Barona Indian Gaming. Expenses which are not specifically
enumerated herein must be agreed to in writing by Tribe and Manager prior
to incurring said expense.
(n) SECRETARY - "SECRETARY" means Secretary of the Interior of the
United States or his designated representative.
(o) TRACT - "TRACT" means that parcel of land constituting
approximately 10 acres more particularly described on Exhibit "A" attached
hereto and incorporated herein by this reference, which is located on the
lands of the Tribe's Reservation, held in trust by the United States for
benefit of Tribe pursuant to the Act of May 4, 1932.
(p) TRIBE - "TRIBE" means Barona Group of the Capitan Grande Band of
Mission Indians (a/k/a Barona Band of Mission Indians), a federally
recognized Indian Tribe.
(q) TRIBE'S GOVERNMENT - "TRIBE'S GOVERNMENT" means the government
of Tribe.
1.2 GENDER AND NUMBER. Words importing the singular include the plural and
vice versa; and words denoting gender include all genders.
1.3 ENTIRE AGREEMENT. This Agreement, together with any schedule,
agreement or other document to be delivered pursuant hereto or contemplated
hereby, constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth
herein. No supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties to be bound hereby.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
1.4 INDEX AND HEADINGS. The index to this AGREEMENT and the Article and
Section headings contained herein are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not be considered part of this AGREEMENT.
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1.5 APPLICABLE LAW. With respect to interpretations of this agreement in
arbitration or litigation to construe the rights, duties, privileges and
obligations of MANAGER and TRIBE pursuant to this AGREEMENT, the laws of the
United States shall govern and in the absence of applicable federal law, the
substantive laws of the State of California shall be used in such
interpretation; provided, however, nothing herein shall be construed to be a
surrender of jurisdiction by TRIBE to any state court or other state agency.
1.6 MATERIALITY OF RECITALS. Recitals of this AGREEMENT constitute a
material part of this AGREEMENT, are incorporated herein and, to the extent
necessary, required, or helpful, shall be considered in construing, interpreting
and enforcing the terms and conditions of this AGREEMENT.
ARTICLE II
MANAGEMENT
2.1 MANAGER'S AUTHORITY AND RESPONSIBILITY. TRIBE hereby agrees that
during the term of this AGREEMENT, all business and affairs in connection with
the day-to-day operation, management and maintenance of Barona Indian Gaming
shall be the sole responsibility of MANAGER, who is hereby granted the necessary
power and authority as TRIBE'S agent to act in order to fulfill its
responsibility pursuant to this AGREEMENT. HOWEVER, ONCE IT HAS ESTABLISHED A
PROGRAM FOR BINGO OPERATIONS, MANAGER WILL MAKE NONSIGNIFICANT CHANGE IN IT, OR
DECREASE PRIZE LEVELS OR TOTALS, WITHOUT THE APPROVAL OF THE BARONA INDIAN
GAMING COMMITTEE. TRIBE hereby retains, licenses and engages MANAGER for such
purposes and MANAGER hereby accepts such engagement, subject to MANAGER'S
payment for and the Tribe's issuance of the annual license described in Section
4.7.
2.2 TERM OF AGREEMENT. Subject to termination pursuant to Sections 2.4(i)
(D) and 5.9 hereof, this AGREEMENT shall be for a term of seven (7) years,
commencing on the date that the authorized representatives of both parties
execute this AGREEMENT. It is agreed by TRIBE and MANAGER that such seven (7)
year term is necessary for the recovery of capital already expended and to be
expended by MANAGER based on the commitment of capital by MANAGER under this
AGREEMENT, the risk involved therewith, and the projected timing for recovery
thereof.
2.3 EXCLUSIVITY OF MANAGER'S RIGHTS. MANAGER shall have the exclusive
right and authority to manage and operate Barona Indian Gaming during the term
of this AGREEMENT. TRIBE warrants that it will not establish, conduct, or permit
to be conducted any other gaming facility on TRIBE'S Reservation during the term
of this AGREEMENT.
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2.4 RIGHTS, DUTIES AND OBLIGATIONS OF MANAGER. The right and
authority of MANAGER to manage and operate Barona Indian Gaming shall
include, but not be limited to, the authority to approve payment of
any and all Operating Expenses, which right and authority shall be
exercised to enhance the overall success and profitability of Barona
Indian Gaming for the benefit of TRIBE and MANAGER, and the following
rights, duties and obligations:
2.4(a) PERSONNEL MATTERS.
(i) *
(ii) *
(iii) *
* Confidential information has been omitted and filed separately with the
Commission.
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(iv) *
(v) *
2.4(b) COMPLIANCE. In carrying out its obligations under this
AGREEMENT, MANAGER agrees to comply with all duly enacted regulations and
ordinances of TRIBE that are presently in effect or which may in the future be
enacted, provided TRIBE hereby agrees that it (i) will take no action and adopt
no ordinance that violates the Indian Civil Rights Act (25 U.S.C. Section
1301-1303) or (ii) will take no action nor adopt any ordinance which would have
the effect of amending, modifying, limiting or in any way altering any right of
MANAGER hereunder, and provided that any changes in TRIBE'S land use or zoning
regulations or ordinances shall provide that during the term of this AGREEMENT
the TRACT and FACILITY shall be exempt from such changes.
2.4(c) SECURITY FORCE. MANAGER shall be responsible for obtaining a
security force sufficient to reasonably assure the safety of the customers,
personnel, monies, and property of Barona Indian Gaming. *
* Confidential information has been omitted and filed separately with the
Commission.
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*
2.4(d) PERIODIC REPORTS; AUDITS. MANAGER shall furnish to TRIBE
monthly, quarterly and annual financial reports in accordance with Section 4.3
hereof. An independent audit by a certified public accountant from a national
firm who is nominated by MANAGER and approved by the Barona Indian Gaming
Committee shall be performed annually. All contracts for supplies, services or
concessions which exceed $25,000.00 annually shall also be audited.
*
Copies of all audits shall be provided to the Indian Gaming
commission.
2.4(e) ACCOUNTING REQUIREMENTS. MANAGER shall maintain full and
accurate books of account for Barona Indian Gaming at MANAGER'S office located
at Barona Indian Gaming. The books shall be kept on a cash basis and the records
shall be maintained using generally accepted accounting principles. Net Profits
shall be calculated on the cash basis method of accounting. Notwithstanding
anything to the contrary in this Subsection, it is agreed that MANAGER alone
shall be entitled to take any and all tax advantage such as depreciation or
other exemption which shall in no way affect the Net Profits or the split
thereof as otherwise provided herein.
2.4(f) MAINTENANCE OF BUILDING AND EQUIPMENT. MANAGER, as a part of
Operating Expenses, shall maintain the building and all equipment necessary to
the operation of Barona Indian Gaming, including, but not limited to, all
equipment, furnishings, tools and other support items for Gaming Activities and
related activities which are necessary to the operation of Barona Indian Gaming.
MANAGER shall be entitled to expend up to $2,500 on individual items of
equipment, furnishings, maintenance, repairs and capital improvements without
prior Approval of TRIBE, but expenditures in excess of $2,500 on any individual
item shall require prior Approval of TRIBE and shall be the sole cost and
expense of TRIBE in accordance with Section 5.1.
2.4(g) CASH MONITORING. MANAGER shall install systems for monitoring
the Gross Receipts from the operation of Barona Indian Gaming. MANAGER shall
have the right and duty to maintain and police its systems for cash management
in order to prevent loss of proceeds from Barona Indian Gaming and TRIBE shall
have the right to inspect such systems at any time. TRIBE shall have the right
to appoint a designee to be present and count or oversee the counting of the
Gross Receipts on a daily basis.
* Confidential information has been omitted and filed separately with the
Commission.
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2.4(h) INSURANCE. As an Operating Expense, MANAGER shall maintain
public liability insurance in the amount of at least $500,000 per person and $1
million per occurrence. MANAGER shall maintain as an Operating Expense
replacement value casualty insurance which shall insure Facility and its
contents, and any other improvements on Tract, against loss or damage by fire,
theft and vandalism. All such casualty insurance proceeds shall be applied to
the immediate replacement of Facility and such improvements and contents. Unless
specifically directed otherwise by TRIBE in writing, MANAGER shall maintain
workman's compensation insurance covering all employees of Barona Indian Gaming
and the premiums related thereto shall be Operating Expenses. Such insurance
policies shall list MANAGER and TRIBE as the insureds. Any insurance provided by
MANAGER may be effected under policies of blanket insurance which may cover
other enterprises owned or managed by MANAGER, provided that such insurance is
secured at a lesser rate than if obtained independently and if the premiums
thereon can be prorated and the proper share attributed to Barona Indian Gaming.
2.4(i) CESSATION OF BARONA INDIAN GAMING. If Barona Indian Gaming as
a whole ceases operations as a result of a decision of a court of competent
jurisdiction, or by operation of any applicable legislation, by fire, war, or
other casualty, or by an Act of God, MANAGER shall have the following options:
2.4(i)(A) MAINTENANCE OF THE FACILITY. MANAGER shall have the
option to continue its interest in this Agreement and to recommence
the operation of Gaming Activities at the Facility if at some point
during the term of this AGREEMENT such commencement shall be legally
and commercially feasible in the sole judgment of MANAGER. During
any such period of suspension of all operations, MANAGER will still
be obligated to make the guaranteed minimum monthly payments
described below.
2.4(i)(B) REPAIR OR REPLACEMENT OPTION. If Facility is damaged
or destroyed so that Gaming Activities no longer can be conducted at
the Facility, MANAGER, at its sole option, may elect to use any
available insurance monies to repair or replace the damaged portions
of Facility or may elect to terminate this Agreement under the
provisions of Section 2.4(i)(D). If the insurance proceeds are not
used to repair Facility, then the proceeds shall be first applied to
outstanding operating expenses and taxes, second to MANAGER as
repayment of a MANAGER Loan under
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<PAGE> 14
Section 4.2, and any surplus funds shall be distributed to TRIBE.
2.4(i)(C) OTHER BUSINESS PURPOSES. MANAGER shall have the
option to use the Facility for another business purpose, provided
that TRIBE has approved such use and an annual budget for such use
in advance (which approval shall not be unreasonably withheld);
PROVIDED, further that all required federal approvals are obtained,
if any.
2.4(i)(D) TERMINATION OF AGREEMENT. MANAGER shall have the
option to notify TRIBE in writing that it is terminating operations
under this AGREEMENT in which case MANAGER shall forfeit all rights
under this AGREEMENT and its duty to make guaranteed monthly
payments to TRIBE will cease.
2.4(i)(E) DIVISION OF PROFITS OF NON-GAMING OPERATIONS. If
MANAGER elects to proceed under the option described in Section
2.4(i)(C), then the proceeds of any business established by MANAGER
shall be apportioned between MANAGER and TRIBE as provided in
Article IV of this AGREEMENT.
2.4(i)(F) RECOMMENCEMENT OF GAMING. If after a period of
suspension of Gaming Activities on Tract, the recommencement of
Gaming Activities is possible, and if MANAGER has not terminated
this Agreement under the provisions of Section 2.4(i)(D), then all
provisions of this AGREEMENT shall also recommence. If the period of
cessation of Gaming Activities has not resulted from any act or
fault of MANAGER, and if MANAGER has not elected to terminate this
AGREEMENT during that period, then the period of such cessation
shall not be deemed to have been part of the term of this AGREEMENT
and the date of expiration of the term of this AGREEMENT shall be
extended by the number of days of such suspension period; PROVIDED,
that such period of cessation shall not exceed one (1) year. Any
reasonable payments made to any third party to eliminate rights
acquired in the premises during the period of cessation shall be
deemed Operating Expenses of Barona Indian Gaming.
10
<PAGE> 15
2.4(j) BANK ACCOUNTS.
*
2.4(k) COLLECTION OF GROSS RECEIPTS. MANAGER shall collect all Gross
Receipts and deposit them daily into the general account. All monies received by
Barona Indian Gaming on each day it is open for business must be counted and
receipted at the close of operations for that day by one representative from
TRIBE and one representative from MANAGER. Adequate security shall be provided
in transporting the funds to the bank. The parties hereto agree to obtain a
bonded transportation service to effect the safe transportation of the daily
receipts to the bank, and the cost thereof shall be an Operating Expense.
* Confidential information has been omitted and filed separately with the
Commission.
11
<PAGE> 16
2.4(l) FINANCIAL FEASIBILITY REPORT. Prior to commencement of Gaming
Activities at Facility pursuant to this AGREEMENT, or within 30 days of
resumption of bingo operations MANAGER shall provide a financial feasibility
report to TRIBE, which shall include projected development costs and initial
operating costs and expenses required to maintain and operate Barona Indian
Gaming.
2.4(m) ANNUAL OPERATING BUDGET. Commencing for calendar year 1993,
MANAGER shall submit an Annual Operating budget for approval of the TRIBE thirty
(30) days prior to the beginning of each calendar year, showing in reasonable
detail the projected or estimated expenses of Barona Indian Gaming during such
operating year. For calendar year 1992, the MANAGER will submit this projected
budget within 30 days of the resumption of bingo operations. The annual
Operating Budget shall also include the salaries for each employee position,
including General MANAGER and Director of Operations. Tribe shall give its
approval or disapproval of the Annual Operating Budget not later than thirty
(30) days after its submission to it by MANAGER. If TRIBE shall not have
approved or disapproved any Annual Operating Budget prior to the commencement of
the operating year for which such budget was prepared, then MANAGER shall
continue to operate Barona Indian Gaming in accordance with the previous year's
Annual Operating budget as to which the parties have reached agreement. If TRIBE
objects to all or any portion of such Annual Operating budget, then TRIBE shall
notify MANAGER of the reasons for its objections, and TRIBE and MANAGER shall
use their best efforts to agree with, respect to the disputed budget items.
2.4(n) WATER AND SEWER. MANAGER shall cause the water and sewer
system which serves Facility to be maintained and serviced as an Operating
Expense.
2.5 LIMITS OF AUTHORITY. Except as specifically set forth in this
Article II, MANAGER has no authority to waive or impair the sovereign immunity
of TRIBE or to obligate or encumber any funds or property of TRIBE. MANAGER is
not authorized to act, or to hold itself out to any third parties, as a
representative of TRIBE on any matter whatsoever, provided, however, MANAGER
shall have the authority to act as an agent for Barona Indian Gaming when it
purchases any and all materials and equipment necessary to operate Barona Indian
Gaming. MANAGER also may hold itself out as an agent or representative of Barona
Indian Gaming to the extent reasonably necessary to exercise its rights and
fulfill its management duties and obligations under this AGREEMENT.
12
<PAGE> 17
ARTICLE III
WARRANTIES
3.1 MANAGER'S REPRESENTATIONS AND WARRANTIES. MANAGER hereby represents
and warrants to TRIBE as follows:
3.1(a) ORGANIZATION. MANAGER is a duly organized and validly
existing partnership under the laws of the State of California and
has full power and authority to own and operate its properties and
assets and to conduct its business as presently conducted and as
contemplated by this Agreement.
3.1(b) POWER. MANAGER has all requisite legal and corporate
power and authority to enter into this AGREEMENT.
3.1(c) EXECUTION AND DELIVERY. The execution and delivery of
this AGREEMENT and the consummation of the transactions contemplated
hereby will not result in a breach or violation of any agreement,
judgment or administrative order by which MANAGER is bound or
obligated, except as described in Section 3.1(n).
3.1(d) STATEMENTS. MANAGER warrants that neither it, nor any
of its officers, agents, or employees, have knowingly and willingly
provided false statements or attempted to interfere with or
influence the decision making process of TRIBE'S Government, nor
have they failed to comply with the terms of this AGREEMENT, the
Gaming Ordinance, or the General Council's Resolution authorizing
the execution of this AGREEMENT. MANAGER further represents and
warrants that Barona Indian Gaming will be operated in accordance
with the applicable ordinances of TRIBE.
3.1(e) PROHIBITED PAYMENTS. No payments have been, or will be,
made by MANAGER to any elected member of TRIBE'S Government or
relative of any elected member of TRIBE'S Government for the
purposes of obtaining or maintaining this AGREEMENT or any other
privilege or benefit in favor of MANAGER.
3.1(f) PARTIES IN INTEREST. Attached hereto as Schedule
3.1(f), MANAGER has
13
<PAGE> 18
supplied the following information to TRIBE concerning all of its
employees who will have day-to-day managerial responsibility for
Barona Indian Gaming, shareholders, officers, partners, investors,
and directors: (i) full name; (ii) current address; (iii) current
business address; (iv) occupation; (v) date and place of birth; and
(vi) social security number. MANAGER also agrees to provide similar
information with respect to any assignee for which approval may be
requested under Section 5.2. Also attached as Schedule 3.1(f) are
copies of the partnership agreement and statement of MANAGER
authorizing this AGREEMENT. Upon request of TRIBE, MANAGER shall
also provide to TRIBE resumes of all employees, partners, investors,
shareholders, officers and directors. MANAGER represents that no
individual identified in this Section 3.1(f) is an elected member of
TRIBE'S Government or a relative of an elected member of TRIBE'S
Government. "Relative" shall be as defined in the regulations
promulgated by the Indian Gaming Commission or, until such time as
such regulations are final, by the 1986 guidelines of the Assistant
Secretary-Indian Affairs. MANAGER further agrees that in the event
any person identified above becomes an elected member of TRIBE'S
Government or a relative of an elected member of TRIBE'S Government,
such individual will be required to divest himself of any direct or
indirect interest in this AGREEMENT or MANAGER.
3.1(g) RESTRICTION ON EMPLOYEES. No elected member of TRIBE'S
Government or a relative in the immediate household of an elected
member of TRIBE'S Government shall be an employee of MANAGER or of
Barona Indian Gaming, except as may be allowed by the TRIBE or the
Commission.
3.1(h) INVESTIGATION AND FBI CLEARANCE. MANAGER shall provide
such additional information concerning MANAGER or the persons
identified in Section 3.1(f) as may be requested by TRIBE, Federal
Bureau of Investigation ("FBI"), the Secretary, the commission or
any other governmental agency having jurisdiction over the subject
matter of this AGREEMENT, OR AN APPROPRIATE AGENCY OF THE STATE OF
CALIFORNIA REGARDING AUTHORIZED
14
<PAGE> 19
ACTIVITIES CONDUCTED UNDER A COMPACT WITH THE STATE OF CALIFORNIA.
MANAGER represents that its partners, investors, officers,
directors, employees (whether or not involved in Barona Indian
Gaming) and shareholders listed under Section 3.1(f) shall consent
to background investigations to be conducted by the FBI or any other
law enforcement authority at the request of the TRIBE. MANAGER
represents that MANAGER and each of the foregoing persons shall
disclose any information requested by TRIBE which would facilitate
in the background and financial investigations, and will cooperate
fully with such investigations. Any false or deceptive disclosures
or failure to cooperate fully with such investigations by an
employee of MANAGER or an employee of Barona Indian Gaming shall
result in the immediate dismissal of such employee.
3.1(i) NO CRIMINAL CONVICTIONS. MANAGER further warrants that
to the best of Manager's knowledge no officer, director, employee,
partner, investor, or shareholder of MANAGER has been convicted of
or pleaded nolo contendere to any felony, or had any association
with individuals or entities connected with organized crime. MANAGER
warrants that whenever there is any change in the information
disclosed pursuant to Sections 3.1(f) and 3.1(i), MANAGER shall
immediately notify TRIBE of such change not later than thirty (30)
days following the change. All of the warranties and agreements
contained in Sections 3.1(f) and 3.1(i) shall apply to any person or
entity who would be listed in Sections 3.1(f) and 3.1(i) as a result
of such changes.
3.1(j) TRIBE'S RIGHT TO INSPECT BOOKS. TRIBE shall have the
right to inspect, examine and copy all books of account and
supporting business records of Barona Indian Gaming during normal
business hours. This right of inspection may be exercised through
any agent, employee, attorney or independent certified public
accountant acting on behalf of TRIBE and at TRIBE'S cost and
expense.
3.1(k) INTERFERENCE WITH TRIBE PROHIBITED. MANAGER, including
any shareholder, officer, director, employee, partner,
15
<PAGE> 20
investor, or agent thereof, whether or not members of TRIBE, shall
not interfere, directly or indirectly, with, become involved in, or
attempt to influence the internal affairs of TRIBE, or the members
of TRIBE'S Government; provided, however, MANAGER shall be entitled
to meet with TRIBE or others in connection with the normal
performance of MANAGER'S rights, duties and obligations under this
AGREEMENT.
3.1(l) EPA COMPLIANCE. MANAGER shall comply with the
United States National Environmental Policy Act in
re-opening, managing, and operating Barona Indian Gaming.
MANAGER shall prepay the cost of the environmental
assessment and shall be reimbursed the cost thereof as an
Operating Expense.
3.1(m) MINIMUM SESSIONS. MANAGER shall operate at least three
(3) sessions of bingo per week at Facility, will operate the card
room everyday, and will operate the off-track betting enterprise on
everyday that Southern California Off-Track Wagering, Inc. provides
the necessary signal and services for operation. The number of
sessions of bingo operated at Facility shall be increased as
warranted and as determined feasible.
3.1(n) ASSUMPTION OF RISK FROM NGC. MANAGER acknowledges that,
from December 7, 1990 to December 17, 1991, National Gaming Corp.
("NGC") operated bingo at the Facility under a Management Agreement
dated October 11, 1990 and approved by the authorized representative
of the Secretary on October 30, 1990. On December 19, 1991 the Tribe
gave formal notice to NGC of certain claimed defaults of NGC under
that agreement, and gave NGC 30 days, until January 18, 1992 in
which to cure those defaults. On December 19, 1991 NGC notified the
Tribe that it believes that an event of force majeure had occurred,
which event suspended NGC's duty to perform under its management
agreement with the Tribe. The Tribe denies that there has been any
such event and, on January 22, 1992 filed a demand for arbitration
of this issue with the American Arbitration Association. No hearing
has yet been set. If the result of this
16
<PAGE> 21
arbitration is favorable to the Tribe, then there should be no
legal obstacle, except as described below, to the resumption
of gaming operations by Manager under this Management
Agreement. However, Manager acknowledges that the result of
this arbitration could be favorable to NGC. In that case, this
Management Agreement will be null and void no later than the
entry of a final judgment enforcing the arbitrator's award.
Manager hereby assumes all risks, liabilities, damages,
claims, or other consequences flowing from execution of this
Management Agreement, operation of gaming under this
Management Agreement, or other actions related thereto, from
or by NGC, and will indemnify and hold harmless the Tribe
therefrom including, but not limited to, any such liability,
damages, claims, etc. relating to interference with NGC's
above Management Agreement.
3.1(o) ASSUMPTION OF RISK FROM BIA. Manager also
acknowledges that, in the absence of the ability of the
Commission to approve this Management Agreement, the
Sacramento Area Office of the U.S. Bureau of Indian Affairs
must approve this Management under 25 U.S.C. Section 81 and 25
U.S.C. Section 2709. Normally, operations cannot begin prior
to such approval. However, in unusual cases, such as this,
where the long-term viability of the gaming enterprise is at
risk, and where the current interruption in operations is
causing severe harm to the Tribe and its members, the Bureau
of Indian Affairs may grant approval of this Management
Agreement after operations under it are in progress. However,
Manager acknowledges that the Bureau of Indian Affairs may not
consider approval of this Management Agreement while
operations are in progress, may issue an order to cease and
desist operations, or may take other steps to delay or deny
its approval due to premature resumption of operations.
Manager hereby assumes all risks and liabilities flowing from
the resumption of operations prior to and/or without the above
approval of this Management Agreement.
3.1(p) DIVESTITURE OF INTEREST. In the event it is
necessary to divest an officer, director, investor, partner,
stockholder, or employee of MANAGER or of Inland Casino Corp.
17
<PAGE> 22
for any reason whatsoever, such divestiture, even if such
stockholder, director, partner, investor, officer, or employee
shall have a majority interest in MANAGER or of Inland Casino
Corp., will not operate to nullify, void, or cancel this
contract. In the event changes in ownership affecting more
than fifty percent (50%) of the common stock ownership of
Inland Casino Corp. or a transfer of a controlling interest in
MANAGER shall occur, MANAGER shall cause written notice to be
given within thirty (30) days to the TRIBE. Such transfer of
more than fifty percent (50%) of the common stock of Inland
Casino Corp. or a transfer of a controlling interest in
MANAGER will require the consent of the TRIBE, which will not
be unreasonably withheld.
3.2 TRIBE'S REPRESENTATIONS AND WARRANTIES: TRIBE hereby represents and
warrants to MANAGER as follows:
3.2(a) AUTHORITY. TRIBE has the requisite legal authority
and power to enter into this AGREEMENT and consummate all
transactions contemplated hereby, except as described above in
Sections 3.1(n) and (o).
3.2(b) EXECUTION AND DELIVERY. The execution and delivery
of this AGREEMENT and the consummation of all transactions
contemplated hereby will not result in a breach or violation
of any agreement, judgment or administrative order by which
TRIBE is bound or obligated or, subject to the approval of the
Secretary and/or Commission, as applicable, any state or
federal law or regulation, except as described in Sections
3.1(n) and (o) above and Section 4.7 below.
3.2(c) BEST EFFORTS. TRIBE will use its best efforts to
assist Manager in the fulfillment of its obligations and
responsibilities under this AGREEMENT and will obtain such
approvals, licenses and permits which are required of it by
this AGREEMENT or which can only be obtained by TRIBE.
3.2(d) PROHIBITED PAYMENTS. No payments have been made
to, and no payments will be accepted by, any elected member of
TRIBE'S Government or relative of any elected member of
TRIBE'S Government for the purposes of
18
<PAGE> 23
obtaining or maintaining this AGREEMENT or any other privilege
or benefit in favor of MANAGER.
3.2(e) RESOLUTION. The resolution attached as Schedule
3.2(e) hereto and incorporated herein by this reference, sets
forth the authority of TRIBE'S officials who have signed this
AGREEMENT.
3.2(f) TRIBE'S REGULATIONS. TRIBE represents and warrants
to MANAGER that the regulations relating to the operation and
management of Gaming Activities on TRIBE'S lands are
encompassed entirely within the Gaming Ordinance and that no
other Tribal ordinances, resolutions, Bylaws, statutes,
customs, traditions or orders impact thereon.
3.2(g) INDIAN LAND. TRIBE represents and warrants to
MANAGER that the Tract is located on TRIBE'S Reservation held
in trust by the United States for the benefit of TRIBE
pursuant to the Act of May 4, 1932, and as such, the Tract
constitutes "Indian country" under 18 U.S.C. Section 1151 and
"Indian lands" under 25 U.S.C. Section 2703(4).
3.2(h) SUBMISSION FOR APPROVAL. Upon submission of this
AGREEMENT to the Secretary and/or Commission, as applicable,
TRIBE shall request the Secretary and/or Commission, as
applicable, to authorize (1) the seven (7) year term of this
AGREEMENT described in Section 2.2 hereof; and (2) MANAGER'S
percentage interest described in Section 4.1 hereof, which
request is based on the commitment of capital by MANAGER under
this AGREEMENT, the risk involved therewith, and the projected
timing for recovery thereof.
3.2(i) TRIBE'S REQUEST FOR BACKGROUND CHECK. TRIBE shall
request Secretary to request the FBI to conduct a background
check on each management employee of Barona Indian Gaming
prior to his or her being hired. TRIBE agrees that such
employee may be hired pending the result of such background
check as long as MANAGER believes that such employee has not
been convicted of a felony, a crime involving moral turpitude,
or numerous convictions for
19
<PAGE> 24
misdemeanors, and that such employee has no ties to organized
crime.
3.2(j) TRACT AND FACILITY. TRIBE represents that it can
make available to MANAGER according to the terms of this
AGREEMENT, free from claims of third parties (other than the
claim of American Management & Amusement, Inc. described in
Section 4.8 and the potential claims of NGC as described in
Section 3.1(n) above), the Facility including the building
commonly known as "The Barona Indian Bingo Palace" along with
the improvements, inventory, personal property and equipment
located thereon and therein sufficient for the resumption and
initial conduct of Gaming Activities within Facility, and that
there are no claims of third parties (other than the claim of
American Management & Amusement, Inc. described in Section 4.8
and the potential claims of NGC as described in Section 3.1(n)
above), that may affect the rights of TRIBE to enter into this
AGREEMENT (subject to approval of the Secretary or Commission,
as applicable) with MANAGER or in any way affect the
usefulness of Facility to MANAGER. MANAGER shall have full
access to and use of such Facility at all times during the
term of this AGREEMENT. Notwithstanding any provision in this
AGREEMENT to the contrary, this Agreement does not convey to
MANAGER any real property interest whatever in or to Facility
or TRACT or the existing buildings and grounds.
3.2(k) TRIBAL REPRESENTATIVES. TRIBE shall make sure that
at least one duly authorized TRIBAL representative is
available at all times to provide a Tribal signature for
checks, and to receipt and count all Gross Receipts.
3.2(l) LEGAL OPINION. Within 30 days after the execution
of this AGREEMENT, TRIBE agrees to cause a legal opinion to be
delivered to MANAGER by legal counsel for TRIBE, reasonably
acceptable to MANAGER, whereby such counsel opines as follows
under federal law, the laws of TRIBE and the applicable laws
of the State of California:
20
<PAGE> 25
(a) Subject only to approval by the Secretary and/or
Commission, as applicable, and the potential claims of NGC as
described in Section 3.1(n) above, TRIBE has the requisite
legal authority and power to enter into this AGREEMENT and
consummate all transactions contemplated hereby and this
AGREEMENT is the legal, valid and binding obligation of TRIBE,
enforceable in accordance with its terms.
(b) The execution and delivery of this AGREEMENT and the
consummation of all transactions contemplated hereby will not
result in a breach or violation of any agreement, judgment or
administrative order by which TRIBE is bound or obligated or,
subject to the approval of the Secretary and/or Commission, as
applicable, any state or federal law or regulation, or any law
or regulation of TRIBE except for the potential claims of NGC
as described in Section 3.1(n) above.
(c) The resolution attached as Schedule 3.2(e) to this
AGREEMENT sets forth the authority of TRIBE'S officials who
have signed this AGREEMENT on behalf of TRIBE and identifies
the provision of TRIBE'S document that authorizes this
AGREEMENT and the execution thereof, and such resolution is in
full force and effect.
(d) The regulations relating to the operation and
management of Gaming Activities on TRIBE'S lands are
encompassed entirely within the Gaming Ordinance and there are
no other TRIBAL ordinances, resolutions, Bylaws, statutes,
customs, traditions or orders that impact thereon.
(e) The Tract constitutes TRIBE'S land which is
encompassed within Tribe's Reservation and therefore
constitutes "Indian country" under 18 U.S.C. Section 1151 and
"Indian lands" under 25 U.S.C. Section 2703(4).
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<PAGE> 26
ARTICLE IV
COMPENSATION AND REIMBURSEMENT
4.1 PROFIT SPLIT.
*
4.1(a) BINGO.
*
*Confidential information has been omitted and filed separately with
the Commission.
22
<PAGE> 27
*
4.1(b) CARD ROOM.
*
4.1(c) OFF TRACK BETTING.
*
* Confidential information has been omitted and
filed separately with the Commission.
23
<PAGE> 28
*
4.1(d) ELECTRONIC VIDEO GAMING DEVICES.
*
4.2 FUTURE DEPARTMENTS. If and when further forms of gaming are
permitted under a Class III compact with the State of California, and if the
Tribe wishes to offer such further form of gaming, the Tribe will offer a right
of first refusal to conduct such gaming as an additional department(s) under
this Agreement to Manager, who will have 30 days in which to accept the terms of
the offer. If the offer is not accepted within that 30-day period, the Tribe may
engage another operator for that purpose(s) outside the scope of this agreement
on terms no more favorable to the operator than in the offer to Manager.
4.3 JUSTIFICATION FOR USE OF GROSS RECEIPTS.
*
However, notwithstanding any provision in this Agreement to the
contrary, to the extent required by 27 U.S.C. Section 2711(b)(3)-(4) and the
regulations implementing this statute to be promulgated by the Commission, the
above guaranteed minimum payments to the Tribe will have preference over
repayment of the above manager loan and recoupment of recommencement costs.
4.4 MANAGER LOAN. MANAGER may loan to Barona Indian Gaming such monies
as MANAGER in its sole discretion deems necessary and advisable, not to exceed
$500,000.00 total unless otherwise agreed
* Confidential information has been omitted and
filed separately with the Commission.
24
<PAGE> 29
in writing, which loan or loans (the "Manager Loan") shall be interest free.
MANAGER shall have no recourse for the collection of the Manager Loan other than
against the receipts of Barona Indian Gaming from bingo operations. MANAGER
shall also advance such funds as it deems necessary to resume operation of
Gaming Activities at Barona Indian Gaming and such advances shall also
constitute a Manager Loan.
*
4.5 PAYMENT OF RECOMMENCEMENT COSTS.
*
4.6 DISTRIBUTIONS OF NET PROFITS; REPORTS.
*
4.7 ANNUAL LICENSE FEE. In accordance with the Gaming Ordinance,
MANAGER will pay from its own funds to TRIBE the sum of Ten Thousand and no/100
Dollars ($10,000.00) per year as an annual fee for the privilege of being and
acting as TRIBE'S exclusive agent for the purposes specified in this AGREEMENT.
This fee must be paid in full before the commencement of gaming operations, and
will be due each year thereafter on the anniversary date of the issuance of the
first license. Except for the existing card room operation, no form of gaming
may be conducted without such a valid license. Any such license will specify all
forms of gaming which
* Confidential information has been omitted and
filed separately with the Commission.
25
<PAGE> 30
it authorizes. No new forms of gaming may be offered without an appropriate
amendment to the license. If manager desires to offer a form of gaming not
described in the license, the Tribal Council may make payment of its actual
costs of investigation of the proposed new form of gaming a condition to
issuance of the amendment. Offering of any form of gaming by Manager which is
not described in the license is a violation of the Tribe's Gaming Ordinance and,
on 48 hours notice to Manager by the Tribal Council and an informal hearing by
the Tribal Council, the Tribal Council may suspend or revoke Manager's license
for such unauthorized gaming. If Manager's license is suspended or revoked, any
gaming conducted by Manager will be unauthorized and subject to appropriate
federal penalties.
4.8 AMA STIPULATED JUDGMENT. MANAGER acknowledges that the TRIBE and
American Management & Amusement, Inc. ("AMA") have entered into a Stipulated
Judgment, a copy of which is attached hereto as Exhibit "B" and incorporated
herein by this reference. MANAGER acknowledges that under the Stipulated
Judgment, TRIBE has an obligation to make payments to AMA according to the terms
set forth in the Stipulated Judgment.
ARTICLE V
OTHER AGREEMENTS
5.1 CAPITAL IMPROVEMENTS; REPLACEMENT.
*
* Confidential information has been omitted and
filed separately with the Commission.
26
<PAGE> 31
*
5.2 ASSIGNMENTS. Any assignment of this AGREEMENT by MANAGER to a third
party shall be effective only upon approval of TRIBE and the Secretary and/or
Commission, as applicable. However, MANAGER shall have the right to assign the
AGREEMENT to a limited or general partnership or to add new partners to the
existing partnership provided that all new partners are subject a background
investigation and all other applicable requirements of the Indian Gaming
Regulatory Act; and such assignment shall only be effective if MANAGER is a
general partner in such partnership. In the event any assignment is submitted
for approval to TRIBE and the Secretary and/or Commission, as applicable, such
assignment shall contain all of the information required by Section 3.1(f)
hereof. Notwithstanding the foregoing, MANAGER shall be entitled to contract
with third parties for the sale of tobacco and tobacco products, food and
beverage concessions, souvenirs, gifts and other accessory or ancillary items
related to Barona Indian Gaming, provided TRIBE has given the Approval of Tribe
with respect to any such contract. In the event MANAGER subcontracts any of such
services, MANAGER agrees to consider qualified members of TRIBE as such
subcontractors.
Transfer of a controlling interest in MANAGER shall be subject to prior
Approval of TRIBE.
5.3 FBI CLEARANCE. TRIBE agrees that all information provided pursuant
to Sections 3.1(f), 3.1(h) and 3.1(i) hereof shall be transmitted by TRIBE to
the FBI for a record investigation. It is understood that the results of the
FBI's investigation shall be sent to the Chief, Division of Law Enforcement
Service, Bureau of Indian Affairs, who maintains a control file of this
information. If the FBI's investigation reveals an indictment of any such
person, TRIBE may, at its option, deny the right of participation of such person
in Barona Indian Gaming.
5.4 WAIVER OF TAXES AND FEES. TRIBE hereby waives any right to impose a
tax, license fee or similar fee upon MANAGER (other than the $10,000.00 annual
license fee set forth in Section 4.7), Barona Indian Gaming or any of MANAGER'S
shareholders, officers, partners, directors or employees, or customers of Barona
Indian Gaming with respect to the operation of Barona Indian Gaming or upon any
income, salary, wages or other compensation arising therefrom, or upon any sales
of any items in, at or from Barona Indian Gaming, during the term of this
AGREEMENT or any extension thereof. TRIBE agrees that its right to disbursements
pursuant to Article IV hereof constitutes its entire entitlement to revenues
under this AGREEMENT except as may be specifically provided in this Agreement.
The only taxes or fees required to be collected by MANAGER in connection with
the operation of Barona Indian Gaming
* Confidential information has been omitted and
filed separately with the Commission.
27
<PAGE> 32
shall be those assessed by the United States Government or other taxes legally
due or requested to be withheld. TRIBE will use its best efforts and sovereign
immunity to resist the assertion of license fees and taxes from all other
non-federal governmental entities, provided that the legal fees incurred in such
resistance, if approved in writing by both TRIBE and MANAGER, shall be
considered Operating Expenses.
5.5 SECRETARY'S APPROVAL. This AGREEMENT is subject to approval by the
Secretary and/or Commission, as applicable.
5.6 DISPUTE RESOLUTION.
*
5.7 LIMITED WAIVER OF SOVEREIGN IMMUNITY AND TRIBE'S RIGHTS. By this
AGREEMENT, TRIBE does not in any way waive or limit its
* Confidential information has been omitted and
filed separately with the Commission.
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<PAGE> 33
sovereign immunity from unconsented suit except, TRIBE does consent to suit by
MANAGER to enforce any of the terms of this AGREEMENT, and does hereby waive its
immunity to the extent necessary to allow the full enforcement of the terms and
conditions of this AGREEMENT, including, without limitation, the right to seek
declaratory judgments, injunctions and restraining orders, and the enforcement
of an award of money damages by any court referenced in Section 5.8 or by
arbitration in accordance with Section 5.6; provided, however, that any such
court or arbitrator(s) shall have no authority or jurisdiction to execute
against any assets of TRIBE except for undistributed or future proceeds of
gaming conducted by TRIBE under the management of MANAGER, and not from any
other assets of TRIBE.
Nothing in this AGREEMENT is intended to waive or shall be construed to
waive the sovereign immunity of TRIBE with respect to any dispute or matter
outside of the terms of this AGREEMENT, or as to any claims or demands of any
person or entity not a party to this AGREEMENT.
5.8 JURISDICTION. Subject to completion of the arbitration proceedings
set forth in Section 5.6, it is hereby agreed that any action to enforce the
terms and conditions of this AGREEMENT, or to otherwise resolve any disputes
between TRIBE and MANAGER arising out of this AGREEMENT, shall be brought in,
and TRIBE hereby consents to be sued in, any court of competent jurisdiction,
including the appeals courts therefrom, as set forth above.
5.9 TERMINATION
5.9(a) MATERIAL BREACH. Either party may terminate this
AGREEMENT if the other party commits, or allows to be committed,
any material breach of this AGREEMENT. Material breach of this
AGREEMENT shall include, but not be limited to, failure of either
party to perform any material duty or obligation for a period of
thirty (30) consecutive business days after the required date of
performance. Moreover, a material breach on the part of MANAGER
shall include: (i) the commencement of any proceeding against
MANAGER under any bankruptcy, liquidation, receivership,
dissolution, rearrangement of debt or insolvency law which has not
been dismissed within sixty (60) days of commencement of such
proceeding; (ii) MANAGER'S filing of a voluntary petition in
bankruptcy or general assignment for the benefit of creditors; and,
(iii) theft or embezzlement by any officer of MANAGER.
Notwithstanding the foregoing, in the event of either party being
rendered
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<PAGE> 34
wholly unable by force majeure to carry out its obligations under
this AGREEMENT, it is agreed that upon such party's giving notice
and reasonably full particulars of such force majeure in writing
within a reasonable time after the occurrence of the cause relied
upon, the obligations of the party giving notice shall be suspended
during the continuance of any disability so caused, and the period
of such suspension shall extend time periods to any agreed upon and
appropriate deadlines for a like period of time. However, in no
case will such suspension continue more than 120 days. The cause of
the force majeure shall, so far as possible, be remedied with all
reasonable dispatch by the party claiming it. The term "force
majeure" as employed herein shall include, without limitation, acts
of God, strikes, lockouts, wars, governmental or judicial action or
other events not within the control of the parties that
significantly impair the ability of MANAGER to perform all its
essential obligations under this AGREEMENT.
5.9(b) NOTICE OF MATERIAL BREACH. Neither party may terminate
this AGREEMENT on the grounds of a material breach, unless (i)
written notice is provided by the nondefaulting party to the
defaulting party identifying the nature of the material breach and
its intention to terminate this AGREEMENT, and (ii) the defaulting
party fails to cure or take steps to substantially cure such breach
within thirty (30) days after receipt of such notice.
Discontinuance or correction of the material breach within such
thirty (30) day notice period shall constitute a cure thereof.
5.9(c) RETENTION OF PROPERTY UPON TERMINATION. In the event of
any termination of this AGREEMENT pursuant to this Section 5.9,
regardless of fault, MANAGER and TRIBE, shall retain all monies
previously paid to them pursuant to this AGREEMENT and any
remaining funds of Barona Indian Gaming earned but not yet
distributed shall be disbursed in accordance with Article IV
hereof.
5.9(d) INVOLUNTARY TERMINATION DUE TO CHANGES IN APPLICABLE
LAW. The parties hereby agree to use their best efforts to insure
that
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<PAGE> 35
this AGREEMENT conforms to and complies with all applicable laws.
In the event that this AGREEMENT or Barona Indian Gaming is
determined by the Congress of the United States, the Secretary
and/or Commission, as applicable, or a court of competent
jurisdiction, to be unlawful, TRIBE and MANAGER shall use their
best efforts to secure an amendment to this AGREEMENT which will
comply with applicable law and not materially change the rights,
duties and obligations of the parties hereunder. If no such change
is possible then (1) MANAGER shall have the rights set forth in
Section 2.4(i) (Cessation of Barona Indian Gaming); (2) MANAGER and
TRIBE shall retain all monies previously paid to them pursuant to
Article IV (Compensation and Reimbursement); (3) all funds of
Barona Indian Gaming in any account shall be paid and distributed
as provided in Article IV; and (4) TRIBE shall retain title to
Tract and Facility and associated fixtures, improvements, supplies
and equipment.
5.9(e) VOLUNTARY CESSATION OF OPERATIONS. Notwithstanding any
provision to the contrary in Sections 5.9(a) or 5.9(b), should
MANAGER voluntarily cease operations of any Department of, or all
of Barona Indian Gaming (other than as a result of an event of
force majeure as set forth in Section 5.9(a) for a period of
fourteen (14) consecutive days without prior Approval of Tribe,
such cessation of operations shall constitute an immediate default
hereunder and cause for immediate termination of this AGREEMENT by
TRIBE without the 30-day opportunity to cure described above;
provided, that if the cessation is the result of an unwarranted act
of TRIBE, determined to be an unwarranted act of TRIBE by
arbitration as described above, then such cessation is not a
default under this Subsection.
5.10 CERTIFICATE OF SELF-REGULATION. TRIBE shall use its best efforts
to obtain from the Commission at the earliest possible date a certificate of
self-regulation in accordance with the provisions of Section 11(c)(3) of the
National Indian Gaming Regulatory Act [(25 U.S.C. Section 2710(c)(3)].
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ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY MANAGER. MANAGER shall indemnify and hold
harmless TRIBE from and against all liability, loss, damages, costs and expenses
to any third party or for personal injury or property damage which are the
result of fraud or willful misconduct of MANAGER and its employees or agents in
its management of Barona Indian Gaming under this AGREEMENT; provided that
nothing herein shall be construed to impose any duty of indemnity on MANAGER for
actions taken in the exercise by MANAGER of reasonable business judgment.
6.2 INDEMNIFICATION BY TRIBE. Tribe shall indemnify and hold harmless
MANAGER and its officers, directors, shareholders, employees and agents from and
against any and all liability, loss, demand, costs and expenses resulting from
fraud or willful misconduct of TRIBE, its officers, directors, employees and
agents, in taking any actions or performing any duties under this AGREEMENT.
6.3 PROCEDURES. In any case in which the parties have agreed to
indemnify any other party such indemnity shall be deemed to include an
obligation on the part of said indemnifying party to appear on behalf of the
action, all at said indemnifying party's cost and shall include the indemnifying
party's right to control the conduct of such proceedings and to settle and
compromise the same on behalf of the indemnified party and at said indemnifying
party's expense; provided, however, at the option of any party to be so
indemnified, that party may waive indemnification. The indemnified party shall
forego such right to indemnify if it shall fail to reasonably cooperate with the
indemnifying party in the investigation and handling of the matter for which
indemnity is sought.
6.4 SURVIVAL. The provisions of this section shall survive any
termination or expiration of this AGREEMENT, whether by lapse of time or
otherwise, and shall be binding upon both parties, their successors and assigns.
ARTICLE VII
FURTHER AGREEMENTS
7.1 EMPLOYEE GRIEVANCE COMMITTEE. TRIBE and MANAGER shall establish an
Employee Grievance Committee to consider any grievances arising out of the
operation of Barona Indian Gaming, and to make recommendations regarding
employee grievances. Its procedures and policies will be provided to MANAGER for
implementation into Barona Indian Gaming operation and shall, to
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<PAGE> 37
the extent possible, be consistent with TRIBAL policy regarding such matters.
7.2 LEGAL FEES. All legal fees incurred in resisting and defending
against efforts of others to impede or halt the operations of Barona Indian
Gaming shall be preapproved by MANAGER and Barona Indian Gaming Committee and
shall be paid from Gross Receipts as an Operating Expense, subject to the
provisions of Section 3.1(n) and (o).
7.3 AMA STIPULATED JUDGMENT. MANAGER acknowledges that TRIBE has
entered into a Stipulated Judgment with AMA, a copy of which is attached hereto
as Exhibit "B" and incorporated herein by this reference. If TRIBE makes any
payment less than the amount set forth in paragraphs 2.1, 2.2 or 2.3 of the
Stipulated Judgment, or if TRIBE fails to make any payment for a particular
month, then AMA may cause, at any reasonable time upon five days prior written
notice to TRIBE and MANAGER, a complete audit to be made of TRIBE'S and
MANAGER'S business affairs and records for that month and for up to twelve
months before that month. AMA shall also be entitled to examine TRIBE'S and
MANAGER'S books and records of Gross Receipts, tax returns, inventories, and all
other documents necessary to verify the amount of Gross Receipts and Net Profits
received by TRIBE and MANAGER for the said periods. TRIBE and MANAGER agree to
keep for at least two (2) years following any such month all pertinent original
records consisting of all Gross Receipts from the conduct of any and all Gaming
Activities in Facility, as well as all Operating Expenses and Net Profits.
7.4 FIDELITY BOND. MANAGER and those employees of MANAGER, TRIBE and
Barona Indian Gaming who handle or are responsible for the handling of money
shall be bonded by a fidelity bond acceptable both to MANAGER and TRIBE,
indemnifying TRIBE and MANAGER as obligee against loss, theft, embezzlement or
other fraudulent acts on the part of MANAGER, MANAGER'S employees or employees
of Barona Indian Gaming. Notwithstanding the previous sentence, on the
recommendation of a suitable plan by MANAGER and Barona Indian Gaming Committee,
Tribal Council may authorize a form of self-bonding if such a plan will promote
the economy of the operation without unduly impairing TRIBE'S security.
7.5 BARONA INDIAN GAMING COMMITTEE. For the purposes described in
Section 1.1(c), above, Barona Indian Gaming Committee shall perform the
following functions as authorized by the Tribal Council:
7.5(a) GENERAL POLICIES. Subject to the prior approval of
Tribal Council, to establish all general policies of Barona Indian
Gaming in the implementation of (i) this AGREEMENT, (ii) TRIBE'S
Gaming ordinance, and (iii) items approved under this AGREEMENT,
such as the
33
<PAGE> 38
Annual Operating Budget, financial feasibility report, and similar
matters. Such policies shall include personnel, grievances,
inventory, accounting, annual audits, details of Indian preference
in employment, procurement and game promotions. Such policies shall
be in aid of MANAGER'S responsibility for and authority to control
the day-to-day operation of Barona Indian Gaming and the conduct of
the games according to MANAGER'S best professional judgment, but
shall not operate to change any of the provisions of this
AGREEMENT. Such policies shall be furnished to MANAGER prior to the
date that approval of this AGREEMENT by the Secretary and/or
Commission, as applicable, has been obtained and Barona Indian
Gaming recommences operations.
7.5(b) INFORMAL DISPUTE RESOLUTION. Without limiting the
rights of the parties under Sections 5.6 or 5.8, to attempt
informal resolution of any disputes between TRIBE and MANAGER,
including any claim that MANAGER is attempting to influence or
interfere in internal affairs of TRIBE'S Government, or that the
Barona Indian Gaming Committee or Tribal Council is interfering in
MANAGER'S day-to-day operation of Barona Indian Gaming or
implementation of policies established as described above. Any such
conflicts which cannot be resolved informally within the Barona
Indian Gaming Committee may be referred to Tribal Council for
resolution, subject to either party's right to have such conflict
resolved pursuant to Sections 5.6 or 5.8.
7.5(c) DESIGNATION OF TRIBAL REPRESENTATIVES. Subject to the
approval of Tribal council, to designate all official Tribal
representatives for counting and deposit of Gross Receipts,
authorizing transfers from the general account and signing checks
on all accounts requiring dual signatures, as provided in this
AGREEMENT.
7.5(d) GENERAL AUTHORITY. To (i) take all actions on behalf of
TRIBE called for in this AGREEMENT as Tribal Council may authorize;
(ii) report to Tribal Council and TRIBE'S General Counsel on all
matters concerning Barona Indian Gaming; and (iii)
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<PAGE> 39
monitor the performance of MANAGER under this AGREEMENT, the Gaming
Ordinance, and all policies not in conflict therewith, and to
report the results of such monitoring to Tribal Council.
7.5(e) MEMBERSHIP. No more than one (1) member of Barona
Indian Gaming committee will be a representative of and nominated
by MANAGER. No more than two (2) members will be members of TRIBE'S
Tribal Council, one (1) of whom shall be and shall establish, in
consultation with MANAGER, guidelines for the Barona Indian Gaming
Committee, including quorum, notice of meetings, frequency of
meetings, term of office, other duties, removal, and other
appropriate procedural matters. The other four (4) members of the
Barona Indian Gaming Committee shall be appointed by the Tribal
Council and shall not be members of the Tribal Council.
7.5 LETTER OF CREDIT. MANAGER agrees that for a period of one (1) year,
a Letter of Credit shall be pledged in the amount of One Hundred Thousand
Dollars ($100,000.00) to insure the payment of the guaranteed minimums and other
obligations due to the TRIBE. If the amount of this Letter of Credit has not
been reduced to $0 at the above 1-year expiration of this Letter of Credit as
provided below, then it will be extended or renewed on the same terms for one
additional year upon such expiration at the amount at which it stands at the
expiration of its initial one-year term. For each Two Hundred Fifty Thousand
Dollars ($250,000.00) of profits earned, the Letter of Credit shall be reduced
by Twenty-five Thousand Dollars ($25,000.00). The Letter of Credit shall be
utilized if: (1) the operation is closed down with unpaid bills; or, (2) the
MANAGER terminates Barona Indian Gaming within one (1) year of commencing
operations; provided, that said termination is not caused by an Act of God or by
a material breach by TRIBE. MANAGER WILL POST THIS LETTER OF CREDIT, IN A FORM
ACCEPTABLE TO THE TRIBE, NO LATER THAN 30 DAYS AFTER THIS AGREEMENT IS APPROVED
BY THE SECRETARY.
ARTICLE VIII
MISCELLANEOUS
8.1 VALIDITY. In the event that any provision of this AGREEMENT shall
be held to be invalid or unenforceable, the same shall not affect in any respect
whatsoever the validity or enforceability of the remainder of this AGREEMENT.
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8.2 SURVIVAL OF RIGHTS. Except as provided herein to the contrary, this
AGREEMENT shall be binding upon and inure to the benefit of the parties
signatory hereto, their respective heirs, executors, legal representatives and
permitted successors and assigns.
8.3 COUNTERPARTS. This AGREEMENT may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement.
8.4 FURTHER ASSURANCES. Each party hereto agrees to do all acts and
things and to make, execute and deliver such written instruments as shall from
time to time be reasonably required to carry out the terms and provisions of
this AGREEMENT.
8.5 NOTICES
8.5(a) ADDRESSES. All notices under this AGREEMENT shall be in
writing and shall be delivered by personal service, express
delivery or by certified or registered mail, postage prepaid,
return receipt requested and addressed as follows:
If to Tribe: 1095 Barona Road
Lakeside, California 92040
ATTN.: Chairman
with a copy to: Art Bunce, Esq.
P.O. Box 1416
Escondido, CA 92033
If to Manager: Donald Speer
Inland Casino Partners
240 N. Jones Blvd., Suite 111
Las Vegas, NV 89107
-and-
Donald Speer
Barona Indian Gaming
1000 Barona Road
Lakeside, CA 92040
-and-
William Hammer, Esq.
Nitz, Walton & Hammer, Ltd.
2300 Paseo del Prado, Suite B-202
Las Vegas, NV 89102
36
<PAGE> 41
-and-
Michael Shiffman, Esq.
Kaplan, Russin & Vechi
580 California St., 16th Floor
San Francisco, CA 94104
or to such other different address(es) as MANAGER or TRIBE may in
writing specify, using the procedure called for in this paragraph.
8.5(b) EFFECTIVE DATE. All notices, demands and requests shall be
effective upon personal delivery, twenty-four (24) hours following
acceptance by an express service or three (3) business days after
being deposited in the United States mail. Rejection or other
refusal to accept or the inability to deliver because of changed
address of which no notice was given as provided in accordance with
Subsection 8.5(c) shall be deemed to be receipt of the notice,
demand or request sent.
8.5(c) CHANGES. By giving to the other party at least thirty (30)
days notice thereof, the parties hereto and their respective
permitted successors and assigns shall have the right, at any time
during the term of this AGREEMENT, to change their respective
addresses for notices, and each shall have the right to specify as
its address for notices any other address within the United States
of America.
8.6 NO PARTNERSHIP CREATED. The parties expressly agree that neither
this AGREEMENT nor its performance creates or implies a partnership between the
parties.
8.7 COVENANT OF GOOD FAITH AND FAIR DEALINGS. MANAGER and TRIBE hereby
agree that neither of them shall act in any manner which would cause this
AGREEMENT to be altered, amended, modified, canceled, terminated (except for
cause), or otherwise frustrated without the written consent of the other.
MANAGER and TRIBE further covenant they will act in good faith and fair dealing
with each other in all matters relating to this AGREEMENT.
8.8 TIME IS OF THE ESSENCE. The parties agree that time is of the
essence in the performance of this AGREEMENT.
8.9 PRIOR SUB-CONTRACT. The parties acknowledge that, on March 5, 1991,
Inland Casino Corp. and National Gaming Corp., with the Tribe's approval,
executed a sub-contract under the Tribe's
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above Management Agreement with NGC. The parties further acknowledge and agree
that, under section II.B. of that subcontract, they believe that the Management
Agreement between the Tribe and NGC expired on January 19, 1992 as described in
Sections 3.1(n) and (o) above and that the sub-contract has therefore now become
a direct contract between the Tribe and Inland Casino Corp. When this Agreement
is executed by the parties, it will take the place of, nullify, replace,
supersede, and cancel that prior sub-contract in all respects, except if the
results of the current arbitration described in Section 3.1(n) and (o) above are
unfavorable to the Tribe, in which case the sub-contract will remain in full
force and effect according to its terms.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT on
the dates and year set forth below, to be effective on the Effective Date.
TRIBE: BARONA GROUP OF THE CAPITAN GRANDE
BAND OF MISSION INDIANS (A/K/A
BARONA BAND OF MISSION INDIANS), A
FEDERALLY RECOGNIZED INDIAN TRIBE
BY: /s/ CLIFFORD M. LA CHAPPA
---------------------------------------
CHAIRMAN
MANAGER: INLAND CASINO PARTNERSHIP, A
CALIFORNIA PARTNERSHIP
BY: /s/ L. DONALD SPEER
---------------------------------------
L. DONALD SPEER, PRESIDENT,
INLAND CASINO CORP., PARTNER
APPROVED:
UNITED STATES DEPARTMENT
OF INTERIOR
BY
-----------------------------
SECRETARY
DATE:
--------------------------
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<PAGE> 43
CONFIDENTIAL TREATMENT*
AMENDMENT NO. 1 TO
GAMING MANAGEMENT AGREEMENT
BETWEEN
BARONA GROUP OF THE CAPITAN GRANDE BAND OF MISSION INDIANS
AND
INLAND CASINO PARTNERS
For the reasons set forth in Tribal Council Resolution No. 92630, the
Barona Group of the Capitan Grande Band of Mission Indians (the "Tribe") and
Inland Casino Partners ("ICP") hereby amend the Gaming Management Agreement
which they executed on February 26, 1992 as follows:
1. The scope of permitted "Gaming Activities" in Paragraph 1.1(d) is
hereby amended so as to exclude any off-track satellite wagering ("OTSW") from
those gaming activities whose management, control, conduct, operation, and
maintenance is authorized and permitted to be performed by ICP under the compact
between the Tribe and the State of California which was approved by the
authorized representatives of the Secretary of the Interior on June 23, 1992 and
published in the Federal Register of June 30, 1992.
2. For the duration of the effectiveness of this Amendment No. 1, any
OTSW conducted on the Indian lands of the Barona Indian Reservation will be
managed, performed, conducted, operated, and maintained exclusively by and
supervised solely by the Tribe, subject to the provisions of the said Compact.
Such Tribal supervision and control will be exercised directly by the Tribe's
Tribal Council through its designated representative who will now be its senior
member, Albert Phoenix, who will be the direct supervisor of the Facilities
Manager, who is expected to be Harry Yost. The Facilities Manager will supervise
the OTSW's security
* This Amendment No. 1 is an amendment to a material agreement furnished
pursuant to 17 C.F.R. 228.601(b)(10).
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<PAGE> 44
and service personnel, all of whom, along with the Facilities Manager, will be
direct employees of the Tribe, and not of ICP, and who will be paid directly and
exclusively by the Tribe. The facilities Manager will also supervise the
personnel of Southern California Off-Track Wagering, Inc.
3. For the duration of the effectiveness of this Amendment No. 1, all
net profits of the OTSW Facility will be retained by the Tribe, and none will be
distributed to ICP either under Paragraph 4.1(c) of the Contract, or otherwise.
4. Because it is impractical to recite each of the many separate
provisions of the Contract that would have to be individually re-cast so as to
eliminate all involvement of and control of ICP over the OTSW Facility and its
operations and finances, this amendment will simply state that, except as
provided herein and subject to the provisions of the above compact, all
provisions of the Contract which give to ICP any control, supervision, financial
interest in, or responsibility for the OTSW facility and its operations are
hereby eliminated for the duration of this Amendment No. 1. Any conflict in the
interpretation or application of this paragraph will be resolved in the spirit
of Tribal Council Resolution No. 92630.
5. This Amendment No. 1 to the contract will become effective
immediately upon its execution by the parties, and will continue in effect
according to its terms until (1) the authorized representative of the Secretary
of the Interior approves the Contract, and (2) the California Attorney General
issues either
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<PAGE> 45
conditional or unconditional registrations to all of ICP's principals and
personnel according to the terms of the above compact. When both of these events
have happened, this Amendment No. 1 will immediately cease to be effective, and
only the terms of the Contract will govern the relations of the parties.
6. In all other respects, the Contract remains in full force
and effect.
Dated: July 1, 1992 BARONA GROUP OF THE CAPITAN GRANDE
BAND OF MISSION INDIANS
by: /s/ CLIFFORD M. LA CHAPPA
-----------------------------------
Clifford M. La Chappa, Chairman
INLAND CASINO PARTNERS
by: /s/ LLOYD DON SPEER
-----------------------------------
Lloyd Don Speer, President,
Inland Casino Corp., managing
partner
3
<PAGE> 46
DECLARATION
LLOYD DONALD SPEER deposes and states as follows:
1. I am the president of Inland Casino Corp. ("ICC"), a
Nevada corporation qualified to do business in California. ICC is a general
partner in Inland Casino Partners ("ICP") which executed a gaming management
agreement (the "Contract") with the Barona Band of Mission Indians (the "Tribe")
on February 26, 1992.
2. I have read Tribal Council Resolution No. 92630, have agreed to its
terms and spirit, and have accordingly executed Amendment No. 1 to the said
management agreement on behalf of ICP.
3. Accordingly, I agree that the Tribe will have the sole proprietary
interest in and exclusive control and supervision of the management and
operations of the off-track satellite wagering facility ("OTSWF") described
therein according to the terms of the said Amendment No. 1 for the purposes
described in the said Tribal Council Resolution. In particular, for the duration
of the effectiveness of the said Amendment No. 1, neither ICP, ICC, nor any of
the principals of either will draw or otherwise receive any distribution of the
share of net profits from the OTSWF that would otherwise be due to ICP under the
Contract, particularly under Paragraph 4.1(c), nor any repayment of the
Manager's amortized investment, nor will ICP have to pay the $5,000/month
guaranteed minimum payment to the Tribe, as specified in said Paragraph 4.1(c).
4. I further represent that there is no undisclosed quid-pro-quo or
other hidden understanding by which the intent of Tribal Council Resolution No.
92630 would be frustrated or circumvented.
4
<PAGE> 47
5. I declare under penalty of perjury that the above is true and
correct to the best of my personal knowledge, information, and belief. Executed
this 1st day of July, 1992 at the Barona Indian Reservation, San Diego County,
California.
/s/ LLOYD DONALD SPEER
------------------------------
Lloyd Donald Speer
5
<PAGE> 48
DECLARATION
CLIFFORD M. LA CHAPPA deposes and states as follows:
1. I am the duly elected and serving Chairman of the Barona
Band of Mission Indians which executed a Gaming Management Agreement with Inland
Casino Partners on February 26, 1992. I also executed Amendment No. 1 thereto on
behalf of the Barona Band on July 1, 1992.
2. I have read Tribal Council Resolution No. 92630, have
agreed to its terms and spirit.
3. Accordingly, I agree that the Tribe will have the sole proprietary
interest in and exclusive control and supervision of the management and
operations of the off-track satellite wagering facility ("OTSWF") described
therein according to the terms of the said Amendment No. 1 for the purposes
described in the said Tribal Council Resolution. In particular, for the duration
of the effectiveness of the said Amendment No. 1, neither ICP, ICC, nor any of
the principals of either will draw or otherwise receive any distribution of the
share of net profits from the OTSWF that would otherwise be due to ICP under the
Contract, particularly under Paragraph 4.1(c), nor any repayment of the
Manager's amortized investment, nor will ICP have to pay the $5,000/month
guaranteed minimum payment to the Tribe, as specified in said Paragraph 4.1(c).
4. I further represent that there is no undisclosed quid-pro-quo or
other hidden understanding by which the intent of Tribal Council Resolution No.
92630 would be frustrated or circumvented.
5. I declare under penalty of perjury that the above is true
6
<PAGE> 49
and correct to the best of my personal knowledge, information, and
belief. Executed this 1st day of July, 1992 at the Barona Indian
Reservation, San Diego County, California.
/s/ CLIFFORD M. LA CHAPPA
--------------------------
Clifford M. La Chappa
7
<PAGE> 50
GAMING ORDINANCE
BE IT ORDAINED BY THE GENERAL COUNCIL OF THE BARONA GROUP OF THE
CAPITAN GRANDE BAND OF MISSION INDIANS OF THE BARONA INDIAN RESERVATION,
SAN DIEGO COUNTY, CALIFORNIA THAT:
1. Repeal of Bingo Ordinance. Due to the enactment of the Indian Gaming
Regulatory Act of October 17, 1988 (Public Law 100-497), the Tribe's Bingo
Ordinance, originally passed by the Tribal Council on April 20, 1981 and
re-enacted and amended by the General Council on May 2, 1987 and January 14,
1989, is now obsolete and is therefore repealed and replaced by this Gaming
Ordinance.
2. Scope of Permitted Gaming. Under the conditions described below,
gaming will be permitted on the tribal trust lands of the Barona Indian
Reservation. "Gaming" means all those activities, such as traditional bingo,
decision bingo, satellite bingo, video bingo, pull-tabs or break-opens, poker,
low-ball poker and pan or panguine, which are permitted by the State of
California by California Penal Code Section 326.5, Section 337s, or similar
statute, and which the United States has made available to all tribes in
California under the Indian Gaming Regulatory Act of October 17, 1988.
3. Conditions of Permitted Gaming. No person, partnership, joint
venture, corporation, or other entity of any kind may engage in gaming of any
kind on the Barona Indian Reservation unless it meets the following
conditions:
a. Only those games described in paragraph 2 above may be
played.
b. The only location at which gaming may occur is the Bingo
Palace constructed for gaming purposes in 1984.
c. The Tribe must issue a license for gaming at the one
permitted location. The operator must pay an annual fee
of $10,000 to the Tribe for this license.
d. The Tribe will have the sole proprietary interest in and
responsibility for the conduct of any gaming activity.
e. Net revenues from all gaming will be used only for the
following purposes:
1. to fund tribal government operations or programs
2. to provide for the general welfare of the Tribe
and its members
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3. to promote tribal economic development
4. to donate to charitable organizations
f. The Tribe must provide copies of annual outside audits of
tribal gaming to the National Indian Gaming Commission.
g. All contracts for supplies, services, or concessions for
a contract in excess of $25,000 annually, except
contracts for professional legal or accounting services,
relating to such gaming will be subject to such
independent audits.
h. The maintenance of the Bingo Palace and all operations in
it must adequately protect the environment and public
health and safety.
i. No person may be a primary management official or key
employee of the gaming enterprise unless he or she (1)
has had an adequate background check conducted with its
results communicated to the National Indian Gaming
Commission before issuance of a license, and (2) has been
issued a license by the Tribe, and the Tribe has promptly
notified the National Indian Gaming Commission of the
issuance of the license.
j. The Tribe must oversee all primary management officials
and key employees of the gaming enterprise on an on-going
basis. No person may receive a license or be employed by
the gaming enterprise if he or she has a criminal record
including conviction of any felony or any
gambling-related offense, or has engaged in prior
activities or has a reputation, habits, or associations
which, in the judgment of the Tribal Council or the
National Indian Gaming Commission, poses a threat to the
public interest or to the effective regulation of gaming,
or creates or enhances the dangers of unsuitable, unfair,
or illegal practices and methods and activities in the
conduct of gaming. If the National Indian Gaming
Commission informs the Tribe that it has reliable
information that any licensed individual does not meet
the above standard, the Tribe may revoke his or her
license after notice and hearing.
k. In order to engage in gaming that falls within Class III,
as defined in Section 4(8) of the Indian Gaming
Regulatory Act, the Tribe will enter into a compact with
the State of California regarding the regulation of such
Class III gaming, and approved by the Secretary of the
Interior.
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4. Other Limitations. All gaming will be open to the public. No one
under 18 years of age may play the games authorized by this ordinance. There
will be no limit as to the prizes offered. Gaming may occur 24 hours of every
day. Participants in the games must be physically present to win any prize. This
ordinance does not apply to those bingo games operated by bona fide charitable
organizations under California Penal Code Section 326.5.
5. Penalties. Any organization or other person who wilfully and
knowingly violates any provision of this ordinance is punishable by a fine not
to exceed five hundred dollars ($500.00), for each violation, or for each day
the violation continues.
CERTIFICATION
The above ordinance was enacted at a regularly called meeting of the
General Council of the Barona Group of the Capitan Grande Band of Mission
Indians at which a quorum was present on March 4, 1989 by a vote of 51 in favor,
16 opposed, and 0 not voting.
/s/ CLIFFORD M. LA CHAPPA
--------------------------------------
Secretary Chairman
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