Exhibit 10.169
CONDITIONAL RELEASE AND TERMINATION AGREEMENT
THIS CONDITIONAL RELEASE AND TERMINATION AGREEMENT (the Termination
Agreement") is made this 20 day of May, 1999, by and between Lakes Gaming. Inc.,
a Minnesota corporation ("Lakes") and Casino Resource Corporation, a Minnesota
corporation ("CRC").
WITNESSETH
WHEREAS, Lakes and CRC executed that certain Memorandum of
Understanding, dated as of December 29, 1998 (the "Memorandum"), pursuant to
which they each, evidenced their intention to negotiate in good faith towards
the execution of a joint venture agreement, on the terms and subject to the
conditions set forth in the Memorandum, for purposes of seeking to obtain an
Indian, gaming management and, development agreement (the "Management
Agreement") with the Pokagon Band of Potawatomi Indians (the "Tribe"), for
planned casinos in Michigan and Indiana;
WHEREAS, as of the date hereof, the parties have not executed a joint
venture agreement, nor has the Tribe awarded Lakes by CRC the Management
Agreement;
WHEREAS, it is the understanding of the parties hereto, that the Tribe
may or may not be amenable to awarding the Management Agreement solely to Lakes
so long as Lakes terminates its affiliation with CRC with respect to such
Management Agreement: and
WHEREAS, in the event the Tribe determines to award the Management
Agreement to Lakes, and such selection, is conditioned on the CRC's
noninvolvement in the management or development of the casinos, the parties,
wish to terminate the Memorandum and release each from, any and all liability
and claims they might otherwise have against each other related to or otherwise
arising out of Ac transactions contemplated by the Memorandum, in each case on
the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and promises set forth herein, the parties intending to be legally
bound hereby agree as follows:
1. Subject to the conditions set forth in Section 3 below, Lakes
hereby acquits, and forever discharges CRC, and each of its officers, directors,
employees mid affiliates, and its and their respective successors and assigns of
and from all actions, causes of actions, claims, suits, debts, dues, account,
bonds, covenants, contracts, agreements, judgments, damages and costs whatsoever
in law or in equity arising out of the Memorandum and the transactions
contemplated thereby, which Lakes can, shall or may have from the beginning of
the world to the date of these presents.
2. Subject to the conditions set forth in Section 3 below, CRC hereby
releases, acquits, and forever discharges Lakes, and each of its officers,
directors, employees and affiliates.
Confidential
SCHEDULE I
AMOUNT PAYABLE WHEN PAYABLE
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Michigan Casino
$ 4,000,000 Year 1 - Payable $1,000,000 quarterly in arrears
$ 4,000,000 Year 2 - Payable $1,000,000 quarterly in arrears
$ 4,000,000 Year 3 - Payable $1,000,000 quarterly in arrears
$ 4,000,000 Year 4 - Payable $1,000,000 quarterly in arrears
$ 4,000,000 Year 5 - Payable $1,000,000 quarterly in arrears
Indiana Casino
$ 2,000,000 Year 1 - Payable $500,000 quarterly in arrears
$ 2,000,000 Year 2 - Payable $500,000 quarterly in arrears
$ 2,000.000 Year 3 - Payable $500,000 quarterly in arrears
$ 2,000,000 Year 4 - Payable $500,000 quarterly in arrears
S 2,000,000 Year 5 - Payable $500,000 quarterly in arrears
-----------
$30,000,000 Total
None of the above payments shall exceed on an annual basis twenty percent (20%)
of Lakes Gaming Management Fee. If these payments during Year 1 exceed 20% of
Lakes annual Management Fee, a credit will be given on the following years
payments.
Both parties agree that at the end of the five year period, an average annual
Management Fee will be calculated, with any appropriate adjustments made so as
to assure that both Lakes Gaming and CRC that the amounts payable on Schedule I
are no less than the amounts listed payable, but no greater than 20% of the
Lakes Management Fee received by Lakes over the five year period. However, the
overriding formula shall be that the fee paid to CRC shall be no more than 20%
of the five year Management Fee received by Lakes.
AMENDMENT TO CONDITIONAL RELEASE
AND TERMINATION AGREEMENT
THIS AMENDMENT TO CONDITIONAL RELEASE AND TERMINATION AGREEMENT (the
"Amendment") is made this 1st day of July, 1999, by and between Lakes Gaming,
Inc., a Minnesota corporation ("Lakes") and Casino Resource Corporation, a
Minnesota corporation ("CRC").
BACKGROUND
Lakes and CRC executed that certain Memorandum of Understanding, dated
as of December 29, 1998 (the "Memorandum"), pursuant to which they each
evidenced their intention to negotiate in good faith towards the execution of a
joint venture agreement, on the terms and subject to the conditions set forth in
the Memorandum. The Joint Venture intended to seek to obtain an Indian gaming
management and development agreement (the "Management Agreement") with the
Pokagon Band of Potawatomi Indians (the "Tribe"), for planned casinos in
Michigan and Indiana.
It was the understanding of the parties that the Tribe might be
amenable to awarding the Management Agreement to Lakes if CRC terminated its
affiliation with Lakes and the proposed Joint Venture with, respect to the
Management Agreement.
Based on the foregoing understanding, the parties entered into a
Conditional Release and Termination Agreement dated May 20, 1999 (the
"Termination Agreement").
Subsequent to the entering into of the Termination Agreement, the
Tribe determined to negotiate exclusively with Lakes with a view to entering a
Management Agreement.
As part of the negotiations with the Tribe. The Tribe required that
the Termination Agreement between Lakes and CRC be modified so that CRC would
not be receiving any payments based on the revenues received by Lakes under the
Management Agreement.
In order to comply with the requirements of the Tribe, Lakes and CRC
determined to amend the Termination Agreement and fix the payments from Lakes to
CRC in full satisfaction of Lakes' financial obligations to CRC under the
Memorandum and Termination Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Paragraph 5 of the Termination Agreement be and the same is hereby
restated in its entirety as follows:
5. In consideration of CRC's prompt termination, withdrawal and
disassociation from its relationship with each of Lakes, the proposed Joint
Venture and the Tribe under the Memorandum or the Management Agreement. Lakes
agrees to pay in full satisfaction of any and all obligations it owes to CRC the
aggregate maximum sum of $16,100,000 (assuming the Casino is opened in the New
Buffalo area) payable as follows:
5.1 $2 million shall be payable upon the later to occur of
the signing of a Management Agreement and ratification of' same by the new
Tribal Council pertaining to the proposed Michigan casino (as ratification is
defined in the development agreement between the Tribe and Lakes, attached
hereto as Exhibit B). Except for a change in the location not contemplated
herein; any changes in the Management Agreement that the Tribe or Lakes Gaiming,
Inc. might make in the Management Agreement will have no bearing on the payment
to Casino Resource Corporation. The payment to Casino Resource Corporation will
be triggered by the release of or payment of any funds, in excess of an
aggregate of $250,000, by Lakes Gaming under their Management Agreement to the
Tribe. Lakes Gaming, Inc. agrees to notify and pay CRC within 24 hours of the
payment of funds, as described above. Lakes shall be given credit for a
$2,604,923 million payment against the maximum $16.1 million aggregate amount in
recognition of present valuing the advance cash payment being made.
5.2 $10,995,077 or the adjusted lesser amount per this
Agreement shall be payable as set forth on Schedule A, attached hereto. Such
payments shall commence on the last day of the calendar quarter in which the
Tribe's Michigan casino opens, and continue only so long as Lakes Gaming, Inc.
or an affiliate is and continues to be the manager and the casino is open.
5.3 Notwithstanding the foregoing, in the event the Tribe's
Michigan casino is not substantially ready to open on or before June 30, 2004,
and the Tribe has not granted an extension to open the casino within six months
to Lakes, CRC shall repay to Lakes the $2 million paid to CRC pursuant to
Paragraph 5.1 above, together with simple interest at the rate of 10% per annum
from and after July 1, 2004. Such payment of principal and interest shall be
made on July 30, 2004. If however, the Tribe's Michigan casino opens after the
provisions of this subsection 5.3 become effective, and Lakes or an affiliate of
Lakes is the manager, on such date, Lakes shall pay back to CRC any principal
paid by CRC to Lakes pursuant to this Section 5.3 and CRC shall be released of
any further payments to Lakes under this Section 5.3 except for any unpaid
interest due.
5.4 Notwithstanding anything herein to the contrary, in the
event the Tribe's Michigan casino is opened in the Xxxxxx Harbor area, the
payments pursuant to Paragraph 5.2 above, shall be reduced from $10,995,077 to
$7,095,077 and that amount shall be paid to CRC as follows: 16.1% of the amount
shall be paid in year 1 on a quarterly basis in
(2)
arrears; 17.7% of the amount shall be paid in year 2 on a quarterly basis in
arrears; 21.2% of the amount shall be paid in year 3 on a quarterly basis in
arrears; 22.1% of the amount shall be paid in year 4 on a quarterly basis in
arrears; and 23.0% of the amount shall be paid in year 5 on a quarterly basis in
arrears. In the event the Tribe's Michigan casino is opened in the Hartford
area, the payments pursuant to Paragraph 5.2 above, stall be reduced from
$10,995,077 to $3,515,077 and that amount shall be paid to CRC as follows: 16.1%
of the amount shall be paid in year 1 on a quarterly basis in arrears; 17.7% of
the amount shall be paid in year 2 on a quarterly basis in arrears; 21.2% of The
amount shall be paid in year 3 on a quarterly basis in arrears; 22.1 % of the
amount shall be paid in year 4 on a quarterly basis in arrears; and 23.0% of the
amount shall be paid in year 5 on a quarterly basis in arrears. All payments are
conditioned on the facts that the Casino is open and Lakes is the manager.
5.5 At the end of the calendar quarter in which the Tribe's
Indiana casino is opened, if ever, Lakes shall pay CRC an aggregate of $2.5
million payable quarterly in the amount of $125,000 (without interest) each (but
only if Lakes, or an affiliate of Lakes, is, all the time the payment is due,
serving as the manager or developer of such casino and the casino is open.
5.6 Any payments made pursuant to this Paragraph 5 may be
prepaid, at any time, by Lakes for the "present value" of the remaining payments
due, using 10% as the discount rate."
5.7 Should Lakes fail to make any payments due CRC under
this Section 5 as and when due, or within 10 business days after written notice
of nonpayment has been given by CRC to Lakes, all remaining payments shall be
and become immediately due and payable.
5.8 The releases in Section 2 of the Termination Agreement
shall not apply to any payment due under this Section 5 or agreement contained
in the Amendment to Conditional Release and Termination Agreement.
2. It is understood by the parties that any costs incurred in
obtaining the Management Agreement will be borne by Lakes Gaming, Inc. as the
sole manager and developer of the gaming facility.
3. Sections 3, 4, 6,7 and 8 of the Termination Agreement be and they
are hereby stricken in their entirety and shall be of no further force or
effect. Notwithstanding the deletion of Section 3 of the Termination Agreement,
the parties hereto agree that the mutual releases set forth in Sections 1 and 2
of the Termination Agreement (the effectiveness of which were conditioned on the
occurrence of events identified in Section 3 of the Termination Agreement) are
effective, valid and binding.
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4. CRC will execute a release in form and substance satisfactory to
the Tribe as called for in Section 11.4 (V of the Development Agreement) between
Lakes and the Tribe.
5. The remaining xxxxx and provisions of the Termination Agreement be
and the same are hereby ratified, approved and confirmed.
6. This Amendment and Termination Agreement contains the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes any inconsistent provisions in the Termination
Agreement or Memorandum.
7. This Amendment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
8. Both parties represent and warrant that they ate duly authorized by
their respective Board of Directors to execute this Amendment.
9. CRC agrees to execute Certification as called for in the Management
Agreement in Section 10.3.4.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date and year first above written.
LAKES GAMING, INC. CASINO RESOURCE CORPORATION
By /s/ Xxxx Xxxxxx By /s/ Xxxx X. Xxxxxx
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Xxxx Xxxxxx, CEO Xxxx X. Xxxxxx. CEO
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EXHIBIT A
10.6 MILLION ESTIMATED INCOME DUE CRC BY LAKES GAMING
Year 3 Year 4 Year 5 Year 6 Year 7
0.1608105 0.176614 0.211619 0.220828 0.230128 Total
--------- --------- --------- --------- --------- ----------
1st Qtr 442,031 485,471 581,692 607,005 632,569 2,748,768
2nd Qtr 442,031 485,471 581,692 607,005 632,569 2,748,768
3rd Qtr 442,031 485,471 581,692 607,005 632,569 2,748,768
4th Qtr 442,031 485,471 581,692 607,005 632,569 2,748,773
--------- --------- --------- --------- --------- ----------
1,768,124 1,941,884 2,326,768 2,428,020 2,530,276 10,995,077
========= ========= ========= ========= ========= ==========
CERTIFICATE
The undersigned Casino Resource Corporation ("CRC") certifies to the
Pokagon Band of Potawatomi Indians (the "Band") and Lakes Gaming, Inc. as
follows:
1. Neither CRC nor any Insider of CRC has engaged the services of any
member of the Pokagon Band, for consideration or otherwise. In connection
with or in any way related to a Casino.
2. Neither CRC nor any Insider of CRC has attempted to influence any member
of the Band, including any member of the Band government, directly or
indirectly, concerning consideration of any Proposal.
3. Unless described in writing attached hereto to the best of its knowledge
neither CRC nor any Insider of CRC employs, as an employee, consultant or
otherwise, any member of the Band, or any member of the Immediate Family of
any Band member.
4. Neither CRC nor any Insider of CRC has paid any fee, consideration or
other remuneration of any kind to any member of the Band or any member of
the Immediate Family of any Band member in connection with any Proposal,
the Casino, or Band's gaming activity generally.
5. Unless described in writing attached hereto to the best of CRC's
knowledge neither CRC nor any Insider of CRC has any agreement, written or
oral, to employ, as an employee, consultant or otherwise, any member of the
Band or any member of the Immediate Family of any Band member.
6. Neither CRC nor any Insider of CRC has any agreement, written or oral,
to pay any fee, consideration or other remuneration of any kind to any
member of the Band or any member of the Immediate Family of any Band member
in connection with any Proposal, the Casino, or Band's gaming activity
generally.
For purposes of this Certificate the following definitions control:
"Casino" means a casino to be owned or operated by the Band in Michigan.
"Immediate Family" means a person's spouse, children, step-children,
parents, including spouse's parents, siblings, grandparents, including
spouse's grandparents, and grandchildren, including
step-grandchildren.
"Insider" has the meaning defined in 11 U.S.C. Section 101(31),
assuming
CRC were the debtor in that definition.
"Proposal" means any proposal submitted to the Band by CRC or Lakes
relating to a Casino.
CRC understands that the Band and Lakes Gaming, Inc. are relying on this
Certificate in closing on a Development Agreement, a Management Agreement and
related documents of near or even date.
Dated: July 7, 1999
Witness: Casino Resource Corporation
/s/ Xxxxxx X. Xxxxx by: /s/ Xxxx X. Xxxxxx
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V.P. its CEO
GENERAL RELEASE
Casino Resource Corporation ("CRC"), for itself and its officers,
employees, directors, attorneys, agents, shareholders, successors and assigns
(collectively "Releasors"), hereby releases and discharges the Pokagon Band of
Potawatomi Indians (the "Band"), its council members, officers, employees,
attorneys, agents, successors and assigns, and all members of the Band, their
respective heirs, personal representatives and assigns (collectively
"Releasees"), from any and all debts, demands, actions, causes of action,
attachments, liens, contracts, agreements, promises, doings, omissions,
variances, damages, claims, rights, liabilities, suits at law, in equity, and
administrative law, which now exist or may in the future result from the
existing state of facts, whether known or unknown, whether direct or indirect,
of whatever kind or nature, which each of them have or may have against
Releasees as of the date hereof or which may in the future arise from the
existing state of things.
This Release contains the entire Agreement relating to such Release and
supersedes all prior oral and written Agreements between the parties hereto on
the subject matter hereof. There are no oral understandings or agreements
between the parties hereto. The terms of this Release are contractual and are
not a mere recital. No cross release shall be inferred from this release.
The person executing this Release on behalf of CRC warrants that he is duly
authorized to do so.
This Release is governed by the law of the State of Michigan.
This Release may be executed in counterparts, all of which together shall
be one original.
CAUTION: READ BEFORE SIGNING
Dated: July 7, 1999
Witness:
Casino Resource Corporation
/s/ Xxxxxx X. Xxxxx by: /s/ Xxxx X. Xxxxxx
------------------------------------- ------------------------------------
V.P. its: CEO
print name: Xxxx X. Xxxxxx
State of Mississippi
Xxxxxxx, County July 7, 1999
Personally appeared before me the above named Xxxx X. Xxxxxx CEO of Casino
Resource Corporation, and swore that the foregoing was his free act and deed in
his said capacity and the free act and deed of that corporation.
/s/ X.X. Xxxx
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Notary Public
2551 (STAMP)
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and its and their respective successors and assigns of and from all actions,
causes of actions, claims, suits, debts, dues, accounts, bonds, covenants,
contracts, agreements, judgments, damages and costs whatsoever in law or in
equity arising out of the Memorandum and the transactions contemplated thereby,
which CRC can, shall or may have from the beginning of the world to the date of
these presents.
3. The effectiveness of the foregoing releases are conditioned on the
occurrence of each of the following:
(a) The Tribe shall award Lakes or one of its affiliates the
Management Agreement for either or both of the Tribe's planned casinos in
Michigan or Indiana.
(b) The Tribe shall request, either orally or in writing, for any
reason or for no reason, and either before or after awarding of the Management
Agreement, that Lakes disassociate itself from CRC or any of its officers,
directors or employees.
4. In the event the conditions set forth in Section 3 occur, the
Memorandum shall be of no further force or effect, and CRC covenants and agrees
with Lakes that it will promptly withdraw from the Tribal selection process and
terminate any interest it may have or otherwise be entitled to under the
Memorandum or any Management Agreement, subject to the payment by Lakes of the
consideration set forth in Section 5.
5. In consideration of CRC's prompt termination, withdrawal and
disassociation from its relationship with each of Lakes and the Tribe under the
Memorandum or the Management Agreement Lakes agrees to pay CRC not less than a
sum equal to twenty percent (20%) of any management fee or like fee that Lakes'
actually earns and collects under any Management Agreement with the Tribe, (i)
up to an annual maximum payment of $4 million to CRC or an aggregate maximum
payment of $20 million to CRC with respect to the Tribe's planned Michigan
casino, and (ii) not less than a sum equal to twenty percent (20%) of any
management fee or like fee that Lakes' actually earns and collects under any
Management Agreement with the Tribe, up to an annual maximum payment of $2
million to CRC or an aggregate maximum payment of $10 million to CRC with
respect to the Tribe's planned Indiana casino, in each case pursuant to the
terms of Schedule I attached hereto.
6. Notwithstanding anything to the contrary contained herein, in the
Memorandum or in the Management Agreement, the calculation of Lakes' management
fee or like fee shall be made without regard to the receipt by Lakes at any time
of interest income from the Tribe on any amount of outstanding indebtedness to
the Tribe or any principal payments made by the Tribe on such indebtedness. It
is the further agreed by the parties hereto, that any amounts owing from Lakes
to CRC under this Agreement, shall only be paid by Lakes following Lakes' prior
receipt and collection of such management fee from the Tribe, and any risk of
Lakes' noncollection, risk of setoff or other forfeiture of the management fee
or like fee, for whatever reason, any reason or no reason shall be borne 80%
by Lakes and 20% by CRC, and such nonreceipt or noncollection shall reduce the
amount of consideration payable by Lakes or any affiliate of Lakes owing to CRC
under Section 5 hereof.
(2)
7. All monies due CRC under this Termination Agreement are further
conditioned upon, due and payable only if received by Lakes, or its subsidiary
or affiliate. If for any reason or for no reason Lakes, a subsidiary of Lakes,
or an affiliate of Lakes does not receive management fee income or like fee from
the venture then nothing is due or payable or does not earn a management fee.
8. Further, if NIGC does not approve the proposed Management Agreement
between Lakes and the Pokagon Band alone, then both parties agree to negotiate
in good faith, and Lakes agrees to compensate CRC in a like manner, mirroring
the terms of this Termination Agreement, and subject to NIGC approval.
IN WITNESS WHEREOF, the parties have executed this agreement as of
the date set forth above.
LAKES GAMING, INC. CASINO RESOURCE CORPORATION
By /s/ Xxxx Xxxxxx By /s/ Xxxx X. Xxxxxx
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Its CEO Its CEO
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