This
CONSULTING AGREEMENT (this “ Agreement ”)
is made and entered into as of February 10, 2009 (the “
Effective Date ”), by and among THE INN OF THE
MOUNTAIN GODS RESORT AND CASINO (the “
Enterprise ”), a tribal enterprise wholly owned
by the MESCALERO APACHE TRIBE, a federally recognized Indian Tribe
(the “ Tribe ”) , the TRIBE
(solely as set forth on the signature pages hereto), CASINO APACHE
TRAVEL CENTER, a tribally-chartered subsidiary of the Enterprise
(the “ Travel Center Entity ”). SKI
APACHE, a tribally-chartered subsidiary of the Enterprise (“
Ski Apache ”), WG-IMG, LLC, a Nevada limited
liability company (“ Consultant ”), and
William W. Warner (“ Warner ”) (solely as
set forth on the signature pages hereto).
A. The
Enterprise, Ski Apache and the Travel Center Entity (collectively,
the “ Operating Companies ”) own and
operate the Inn of the Mountain Gods Resort & Casino, a
mixed-use hotel, casino and resort complex located at 287 Carrizo
Canyon Road, Mescalero, New Mexico 88340 (the “
Resort ”), the Casino Apache Travel Center
located at 25845 US Highway 70, Mescalero, New Mexico 88340 (the
“ Travel Center ”), Ski Apache and other
recreational properties. The Resort, the Travel Center, Ski Apache
and other recreational ventures are sometimes referred to herein
singly as a “ Property ” and collectively
as the “ Properties . ”
B. The
Operating Companies wish to retain Consultant to perform, and
Consultant wishes to perform for the Operating Companies, the
consulting services and tasks more particularly described in this
Agreement.
C. The
Tribe and the Operating Companies are collectively referred to
herein as the “ Tribal Parties. ”
Consultant and Warner are collectively referred to herein as the
“ Warner Parties ”.
In
consideration of the foregoing premises and the mutual covenants
and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(a) The
term of this Agreement shall commence on the Effective Date and
expire on the last day of the 36 th
full
calendar month following the Effective Date (the “
Expiration Date ”), unless earlier terminated
as provided in this Agreement (the period from the Effective Date
through the Expiration Date or the date this Agreement is earlier
terminated pursuant to the terms hereof is referred to herein as
the “ Term ”).
(b) This
Agreement shall terminate immediately (i) upon approval by the
National Indian Gaming Commission of a Management Agreement (as
defined below) or (ii) upon the liquidation or dissolution, or
the adoption of a plan with respect to the liquidation or
dissolution, of Consultant.
(c) Prior
to the Expiration Date, this Agreement may be terminated as
follows:
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(i)
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at any time by the mutual written agreement of the parties
hereto;
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(ii)
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by the Enterprise upon 30 days prior written notice that is
provided to Consultant on or prior to July 31, 2009, if the
Enterprise does not receive, on or before June 30, 2009, a
written commitment or commitments with terms and conditions
satisfactory to the Enterprise in its sole discretion from one or
more lenders to provide financing sufficient for the Enterprise to
retire or refinance its outstanding $200.0 million aggregate
principal amount of 1.2% Senior Notes due 2010; provided
that if this Agreement is terminated solely pursuant to this clause
(ii) and within six months of the date of such termination,
the Enterprise borrows more than $10.0 million in the
aggregate from entities with which the Enterprise entered into
negotiations with respect to a financing transaction in excess of
$10.0 million within the 45 days prior to June 30,
2009, Consultant shall be entitled to the payments set forth in
Section 3(b) hereof;
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(iii)
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by the Enterprise upon a material breach by either of the Warner
Parties of the provisions of Section 6(b) hereof or a material
breach by either of the Warner Parties of any of their respective
other material obligations under this Agreement, in each case that
remains uncured for 30 days following the date that the Tribal
Parties have given the Warner Parties written notice
thereof;
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(iv)
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by Consultant upon default by the Operating Companies for 60 days
in the payment of any amount due to Consultant pursuant to Section
3(a) hereof;
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(v)
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by the Enterprise if Warner ceases to directly or indirectly own a
majority of the outstanding equity of Consultant entitled to vote
for the Board of Directors (or any other body with the power to
direct the management and policies of Consultant) or, if no Board
of Directors or other such body exists, entitled to vote to direct
the management and policies of Consultant;
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(vi)
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by the Enterprise if Consultant directly or indirectly (A)
consolidates or merges with or into any other entity or
(B) sells, assigns, leases, transfers, conveys or otherwise
disposes, in one or a series of transactions, of all or
substantially all of the assets of Consultant to any person or
entity, unless (1) with respect to any such consolidation or
merger, the Consultant is the surviving entity or (2) the
entity surviving such consolidation or merger (if Consultant is not
the surviving entity) or the entity to which such sale, assignment,
lease, transfer, conveyance or disposition is made (x) is an
entity with respect to which Warner directly or indirectly owns a
majority
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of
the outstanding equity entitled to vote for its Board of Directors
(or any other body with the power to direct its management and
policies) or, if no Board of Directors or other such body exists,
entitled to vote to direct its management and policies and
(y) assumes all of Consultant’s obligations under this
Agreement pursuant to documentation reasonably satisfactory to the
Enterprise;
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(vii)
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by the Enterprise if Warner ceases for any reason, including
without limitation death or disability, for a period of more than
30 consecutive days to provide sufficient attention and efforts to
Consultant’s operations to ensure that Consultant is
complying with Section 2(a) hereof;
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(viii)
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by the Enterprise if Warner is convicted of, or pleads nolo
contendere (or a similar plea), to any felony, any crime of
moral turpitude or any crime involving any of the Tribal
Parties;
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(ix)
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by the Enterprise at any time following the 450th day after the
Effective Date, for any reason or for no reason, upon ten days
prior written notice to Consultant; provided that upon
termination solely pursuant to this clause (ix), Consultant
shall be entitled to the payments set forth in Section 3(b) hereof;
and
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(x)
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by the Enterprise if, during the Term, gaming operations (or
material aspects thereof) at both the Resort and the Travel Center
are determined by the federal or New Mexico government or any court
of competent jurisdiction to be unlawful;
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provided
that
any such termination pursuant to this Section 1(c) shall terminate
this Agreement with respect to all of the parties hereto and shall
be effective immediately, subject in each case, to any requirement
in this Section 1(c) that prior written notice have been provided;
provided , further , notwithstanding any termination
of this Agreement pursuant to this Section 1(c), amounts
payable to Consultant under this Agreement shall accrue through and
including the last day of the Term and the obligation to pay such
amounts shall survive any such termination.
(d) This
Agreement is intended to terminate not later than the Expiration
Date and is not intended to establish an ongoing relationship
between or among the parties hereto.
(a) During
the Term and subject to the terms and conditions set forth in this
Agreement, Consultant shall perform the tasks described in
Exhibit A attached hereto (“ Tasks
”), as such Exhibit A may be amended or supplemented by
written mutual agreement of the Operating Companies and Consultant
from time to time. Consultant shall undertake the Tasks in the
order set forth in Exhibit A and shall substantially complete
a Task before beginning another Task. Within 15 days after
completion of a Task, Consultant shall provide to the Operating
Companies a written report (each a “ Report
”) describing in reasonable detail the work performed with
respect to the Task and Consultant’s advice with respect
thereto. The Operating Companies shall have complete and absolute
discretion with respect to the implementation of
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Consultant’s
advice. Within five business days preceding each 60-day anniversary
of the delivery of a Report that occurs during the Term, Consultant
shall update such Report, taking into account the Operating
Companies’ implementation of the advice set forth in such
Report and any other matters as Consultant deems
relevant.
(b) Consultant
is engaged hereunder solely in a consulting and advisory capacity.
Nothing contained in this Agreement permits or authorizes, nor
shall anything be construed to permit or to authorize, Consultant
to: (i) operate or manage any gaining conducted at the
Properties or to establish the costs of operating or administering
the same; (ii) hire, terminate or determine wages, salaries or
benefits for any employee of any of the Operating Companies or any
other person employed to work at or about the Properties;
(iii) establish policies and procedures for the operation or
management of the Properties; (iv) instruct, direct or
supervise the Operating Companies’ employees or any other
person employed to work at or about the Properties regarding the
operation or management of the Properties; (v) bind any of the
Tribal Parties or to act as an agent of any of the Tribal Parties
with regard to the operation and management of the Properties; (vi)
plan, organize, direct, coordinate or control any part of any
gaming operation within the meaning of the Indian Gaming Regulatory
Act, the regulations promulgated thereunder, or case law construing
the provisions thereof (“ IGRA ”);
(vii) undertake any other activity which constitutes
“management” of gaming operations; or (viii) take
any other action that could reasonably be construed as managing or
operating the Properties or that would otherwise violate the
purpose and intern of this Agreement.
3.
Consulting Fee and Reimbursement Of Expenses
.
(a) The
Operating Companies, jointly and severally, agree to pay Consultant
a consulting fee of $60,000 per month (the “ Consulting
Fee ”) during the Term, which shall be pro-rated for
any partial calendar month during the Term. Notwithstanding the
foregoing, the Consulting Fee shall (i) increase to $100,000
per month effective as of the 120 th
day
after the Effective Date, unless , as of such time, the
Tribal Parties and Consultant have entered into a written agreement
pursuant to which Consultant would manage or provide management
services with respect to the operations of the Properties (any such
agreement, a “ Management Agreement ”)
and the Management Agreement has been duly submitted for approval
to the National Indian Gaming Commission (the “
NIGC ”) and any other governmental or
regulatory agency that the parties mutually and reasonably agree is
required to approve the Management Agreement in order for the
Management Agreement to take effect and (ii) increase to
$150,000 per month effective as of the 450th day after the
Effective Date, unless , as of such time, the Management
Agreement has received all required approvals from the NIGC and any
other governmental or regulatory agency that the parties mutually
and reasonably agree is required to approve the Management
Agreement in order for the Management Agreement to take effect. The
Tribal Parties and Consultant agree to use good faith efforts to
cause the Management Agreement to be submitted for approval to the
NIGC as promptly as practicable after the Effective Date. The
Consulting Fee payable with respect to each calendar month during
the Term shall be payable to Consultant (without requirement of
invoice therefor) on the final business day of such month, in
accordance with payment instructions as Consultant may provide in
writing from time to time. If the amount of the Consulting Fee
payable hereunder has, pursuant to the terms and provisions of this
Agreement, changed during a calendar month, then the Consulting Fee
amounts payable for such month shall be pro-rated based on the
number of days in the applicable calendar month.
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(b) The
Operating Companies, jointly and severally, agree that if this
Agreement is terminated (i) solely pursuant to
Section 1(c)(ii) hereof and within six months of the date of
such termination, the Enterprise borrows more than
$10.0 million in the aggregate from entities with which the
Enterprise entered into negotiations with respect to a financing
transaction in excess of $10.0 million within the 45 days
prior to June 30, 2009, or (ii) solely pursuant to
Section 1(c)(ix) hereof, then the Operating Companies shall pay to
Consultant a termination fee as follows:
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(A)
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an amount equal to (A) the product of (1) the number of
days from and including the Effective Date through and including
the last day of the Term, multiplied by (2) $5,000,
less (B) the aggregate Consulting Fees payable under
Section 3(a) hereunder through and including the last day of the
Term; provided that such amount shall be payable in equal
installments on each of the first six 30-day anniversaries of the
last day of the Term; and
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(B)
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on each of the first three 30-day anniversaries of the last day of
the Term, $150,000.
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(c) Consultant
shall be responsible for Consultant’s own business expenses
in connection with Consultant’s efforts to fulfill
Consultant’s services under this Agreement. However, the
Operating Companies, jointly and severally, agree that upon the
presentation of appropriate invoices the Operating Companies shall
reimburse Consultant for (i) reasonable out-of-pocket
“coach” class airfare and other travel expenses
necessary for Consultant to perform its consulting duties,
including without limitation, lodging, meals and rental cars,
(ii) other expenses as agreed by Consultant and the Enterprise
from time to time and (c) any fees, charges, or other expenses
incurred by Consultant in connection with obtaining any
governmental or regulatory permit or license from the Tribe in
connection with the Consultant’s fulfillment of its duties
hereunder. To the extent any subcontractors or third-party
consultants are retained by the Operating Companies in connection
with performing the Tasks, the Operating Companies shall be
responsible for all payments to such parties. Reimbursement for
out-of-pocket expenses shall be for the amount of the actual cost
of the expense, without premium or mark-up.
(d) Consultant
shall submit an invoice to the Enterprise on a monthly basis
setting forth the reimbursable expenses incurred by Consultant in
connection with Consultant’s performance of the Tasks
pursuant to this Agreement. With respect to such reimbursable
expenses, the invoice shall include an itemized account of such
expenses, together with reasonable and appropriate documentation
and receipts verifying the amounts of the expenses. The Operating
Companies shall pay the invoices submitted by Consultant within
20 days of receipt by the Enterprise.
(e) Other
than the payment of Consulting Fees and the reimbursement of
expenses pursuant to this Section, the Operating Companies shall
not be liable for the payment or reimbursement of any other fees,
charges, or expenses in connection with the Tasks performed by
Consultant under this Agreement.
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(f) All
amounts payable hereunder that are not paid when due shall accrue
interest at a rate of 1% per month from the date such payment was
due until the date such payment is paid in full.
(g) Nothing
in this Agreement is intended to provide Consultant, directly or
indirectly, with any compensation based upon (i) the revenue
or net revenue of the Operating Companies or the Properties or all
or any part of a gaming operation, (ii) any percentage fee or
(iii) any criteria for the performance of any
Property.
(h) Consultant
shall not be required to make any payments to the Tribal Parties
pursuant to this Agreement under any circumstances, including,
without limitation, any minimum guaranteed payment or any payment
related to any liabilities, costs or expenses incurred by the
Tribal Parties.
4.
Sole Proprietary Interest .
(a) The
Tribal Parties and the Consultant acknowledge and agree that the
Tribal Parties have, and shall continue to have, the sole
proprietary interest in, and ultimate responsibility for, the
Enterprise, the Properties and the gaming operations conducted by
the Tribal Parties.
(b) Nothing
in this Agreement is intended to grant Consultant any proprietary
interest in, or responsibility for (i) the Operating
Companies, (ii) the Properties, (iii) the gaming
operations conducted by the Tribal Parties or (iv) any real
property held in trust by the United States or restricted as to
alienation by the laws of the United States.
(a) During
the course of the Consultant’s performance of the Tasks, the
Tribal Parties may disclose Tribal Confidential Information to the
Consultant and the Consultant may disclose Consultant Confidential
Information to the Operating Companies. “ Tribal
Confidential Information ” means information, advice
or know-how, whether tangible or intangible and in whatever form or
medium and however disclosed, provided or communicated to
Consultant with respect to the Tribal Parties’ businesses or
operations, other than any such information, advice or know-how
that (i) is or becomes publicly known or available other than
as a result of acts by Consultant in violation of this Agreement,
(ii) is known to or in the possession of Consultant prior to
disclosure by the Tribal Parties, (iii) is or becomes
available to Consultant from third persons that to
Consultant’s knowledge are not bound by a confidentiality
agreement with any of the Tribal Parties prohibiting such
disclosure or (iv) is independently created or developed by
Consultant without the aid, application or use of the Tribal
Confidential Information disclosed. “ Consultant
Confidential Information ” means information, advice
or know-how, whether tangible or intangible and in whatever form or
medium and however disclosed, provided or communicated to any of
the Tribal Parties with respect to any player tracking or other
business management tool, other than any such information, advice
or know-how that (i) is or becomes publicly known or available
other than as a result of acts by the Tribal Parties in violation
of
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