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EXHIBIT 10.63
FEE GUIDELINES AGREEMENT
(HINCKLEY FACILITY)
This Agreement is made effective October 1, 1996, by and between The Corporate
Commission of the Mille Lacs Band of Ojibwe Indians (the "Corporate
Commission"), and Mille Lacs Gaming Corporation, a Minnesota corporation
("Manager").
WHEREAS, the Corporate Commission and Manager are the parties to that certain
Management Agreement - Hinckley Facility dated as of October 1, 1996 (the
"Hinckley Management Agreement"); and
WHEREAS, the Hinckley Management Agreement states the terms and conditions
pursuant to which Manager will, from and after the Effective Date, manage
gaming and nongaming activities at the facility owned by the Corporate
Commission and known as Grand Casino Hinckley; and
WHEREAS, Section 7.1 of the Hinckley Management Agreement provides that the
Corporate Commission and Manager are to agree to criteria to be used in
periodically evaluating and adjusting the Nongaming Management Fee; and
WHEREAS, the Corporate Commission and Manager desire to evidence their
agreement to the criteria stated below;
NOW, THEREFORE, the Corporate Commission and the Manager hereby agree as
follows:
1. Definitions. Capitalized terms used in this Agreement but which are not
defined in this Agreement shall either have the meanings ascribed to them in
the Hinckley Management Agreement or in Section 4 below.
2. Criteria. The Nongaming Management Fee to be established by the Management
Committee pursuant to Section 7.1 of the Hinckley Management Agreement shall be
established for each Fiscal Month during the term of the Hinckley Management
Agreement prior to making the distributions and payments for such Fiscal Month
to be made pursuant to Article VII of the Hinckley Management Agreement. The
Nongaming Management Fee for such Fiscal Month shall be the percentage (the
"Nongaming Management Fee Percentage") of the Gross Nongaming Revenues received
by the Enterprise during such Fiscal Month as
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will produce a Nongaming Management Fee for such Fiscal Month which, when added
to or subtracted from the Gaming Management Fee to be paid for such Fiscal
Month, will equal the aggregate amount which would have been distributed for
such Fiscal Month under the 1990 Hinckley Management Agreement, as modified by
the Accounting Practices and Procedures (the "Accounting Practices") described
in Section 3 below, as the Original Hinckley Fee (had the 1990 Hinckley
Management Agreement remained in effect). Each of the parties hereto
acknowledges that the Nongaming Management Fee for a given fiscal month may,
depending on the results of the calculation of such Nongaming Management Fee,
be either positive or negative.
The Nongaming Management Fee Percentage for a given Fiscal Month shall be
calculated as follows:
(a) First, the Original Hinckley Fee for such Fiscal Month which
would have been paid under the 1990 Hinckley Management Agreement
(as modified by the Accounting Practices) shall be calculated;
(b) Second, the Gaming Management Fee under the Hinckley
Management Agreement shall be calculated;
(c) Third, the result of calculation (b) above shall be
subtracted from the result of calculation (a) above;
(d) Fourth, the result of calculation (c) above shall be divided
by the Nongaming Revenue for such Fiscal Month;
(e) Fifth, the result of calculation (d) above (expressed as a
decimal number) shall be converted into a percentage.
The percentage resulting from the conversion to which subparagraph (e) above
refers shall be the Nongaming Management Fee Percentage for such Fiscal Month.
3. Accounting Practices and Procedures. In determining the Original Hinckley
Fee and the amount which would have been distributed under the 1990 Hinckley
Management Agreement, "net profits" to be allocated between the Corporate
Commission and Manager shall mean income before income taxes determined
pursuant to generally accepted accounting principles, adjusted as follows:
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Additions:
(i) Add depreciation expense as recorded under generally accepted
accounting principles; and
(ii) Add insurance expense as recorded under generally accepted
accounting principles.
Subtractions:
(i) Subtract principal paid which would have been paid pursuant
to that certain Real Estate Construction and Term Note (the "1991
Note"), in the original principal amount of $5,000,000, dated
November 26, 1991 and given by the Corporate Commission to Peoples
Bank of Commerce had such 1991 Note been paid in accordance with its
original amortization schedule;
(ii) Subtract principal paid under notes, and principal reductions
under asset leases accounted for as capital lease obligations
pursuant to generally accepted accounting principles, which notes
and leases pertain to Enterprise assets;
(iii) Subtract principal, if any, which would have been paid
pursuant to the Original Hinckley Note (and the Restated Hinckley
Note if the Restated Hinckley Note has replaced the Original
Hinckley Note) had the Original Hinckley Note (and Restated Note)
been paid in accordance with its (their) original amortization
schedule;
(iv) Subtract principal, if any, which would have been paid
pursuant to the Original Hinckley Restaurant Note (and the Restated
Hinckley Restaurant Note if the Restated Hinckley Restaurant Note
has replaced the Original Hinckley Restaurant Note) had the Original
Hinckley Note (and Restated Restaurant Note) been paid in accordance
with its (their) original amortization schedule;
(v) Subtract principal, if any, which would have been paid
pursuant to the Original Hinckley RV Park Note (and the Restated
Hinckley RV Park Note if the Restated Hinckley RV Park Note has
replaced the Original Hinckley RV Park Note) had the Original
Hinckley RV Park Note (and
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Restated RV Park Note) been paid in accordance with its (their)
original amortization schedule;
(vi) Subtract such capital expenditure reserves for the Enterprise
established by the Management Committee under the 1990 Hinckley
Management Agreement; and
(vii) Subtract such other costs and expenses of the Enterprise, if
any, as were designated by such Management Committee for such
subtraction.
4. Capitalized Terms. Capitalized terms and phrases which are not defined in
the preceding portions of this Agreement or in the Hinckley Management
Agreement shall have the following meanings:
(a) 1990 Hinckley Management Agreement. "1990 Hinckley
Management Agreement" shall mean that certain Amended and Restated
Management and Construction Agreements between the Corporate
Commission and Manager dated as of September 10, 1990.
(b) Original Hinckley Fee. "Original Hinckley Fee" shall mean
the sum of all amounts which Manager would be entitled to receive
under the 1990 Hinckley Management Agreement (as adjusted by the
Accounting Practices) but excluding (i) all amounts payable under
Sections 11.4 and 27 of the 1990 Hinckley Management Agreement, and
(ii) all amounts payable under Section 11.1 of the 1990 Hinckley
Management Agreement which are attributable to xxxx acceptors
attached to video slot machines, for the period from October 1, 1996
to May 15, 1999 assuming the 1990 Hinckley Management Agreement
remained in full force and effect through May 15, 1999.
(c) Original Hinckley Note. "Original Hinckley Note" shall mean
that certain Amended and Restated Adjustable Rate Promissory Note
dated as of September 10, 1990 and evidencing a loan made by
Manager to the Corporate Commission.
(d) Original Hinckley RV Note. "Original Hinckley RV Note" shall
mean that certain Promissory Note - Hinckley RV Park dated as of
July 1, 1992 under which Manager made loan advances to the Corporate
Commission.
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(e) Original Hinckley Restaurant Note. "Original Hinckley
Restaurant Note" shall mean that certain Promissory Note-Hinckley
Restaurant dated as of July 1, 1992 under which Manager made loan
advances to the Corporate Commission.
(f) Restated Hinckley Note. "Restated Hinckley Note" shall mean
that certain Restated Note as defined in Section 1.10 of the
Hinckley Management Agreement.
(g) Restated Hinckley RV Note. "Restated Hinckley RV Note" shall
mean that certain Restated Hinckley RV Note as defined in Section
1.10 of the Hinckley Management Agreement.
(h) Restated Hinckley Restaurant Note. "Restated Hinckley
Restaurant Note" shall mean that certain Restated Hinckley
Restaurant Note as defined in Section 1.10 of the Hinckley
Management Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
effective date stated above.
Corporate Commission of the
Mille Lacs Band of Ojibwe
Indians
By s/ Xxxx Xxxx
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Name Xxxx Xxxx
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Title Interim Commissioner of
Corporate Affairs
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Mille Lacs Gaming Corporation
By /s/ Xxxxxx Xxxxxx
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Name Xxxxxx Xxxxxx
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Title President
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