DEVELOPMENT AGREEMENT

EXHIBIT 10.64

DEVELOPMENT AGREEMENT

BY AND AMONG

PUEBLO OF NAMBÉ,

NAMBÉ PUEBLO GAMING ENTERPRISE BOARD

AND

GAMING ENTERTAINMENT (SANTA FE), LLC

DATED AS OF SEPTEMBER 20, 2005

TABLE OF CONTENTS

 

 

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DEVELOPMENT AGREEMENT

This Development Agreement (this “Agreement”) has been entered into as of the 20th day of September, 2005, by and among the NAMBÉ PUEBLO GAMING ENTERPRISE BOARD (the “Board”), GAMING ENTERTAINMENT (SANTA FE), LLC, a Nevada limited liability company established and operated by Full House Resorts, Inc., a Delaware corporation, (“Manager”) (jointly and severally the “Parties” or “Party”) and the PUEBLO OF NAMBÉ (the “Tribe”) for the limited purposes stated in the Preamble and Sections 1.1 (“Effective Date”), 3.1, 11.2, 13.3, and Article 9, Article 14 and Article 16.

RECITALS

A. TRIBE is a federally recognized Indian tribe recognized as eligible by the Secretary of the Interior for the special programs and services provided by the United States to Indians because of their status as Indians and is recognized as possessing powers of self-government.

B. The U.S. holds land in trust for the benefit of TRIBE, pursuant to the TRIBE’S recognized powers of self-government, and the laws, customs, traditions, statutes and ordinances of TRIBE.

C. TRIBE possesses sovereign governmental powers over the Tribal Lands and desires to utilize the Tribal Lands to improve the economic conditions of TRIBE’s members.

D. TRIBE has established the Board as a duly constituted instrumentality of the TRIBE with all appropriate power and authority.

E. TRIBE has delegated to the Board all proprietary but not governmental powers and rights of the Pueblo over the development, construction, operation, promotion, maintenance and financing of the Gaming Facility

F. MANAGER has agreed to assist the Board in financing and developing the Gaming Facility.

G. The Board and the TRIBE have entered into a Management Agreement with MANAGER whereby MANAGER, subject to receipt of regulatory approvals, will manage the Gaming Facility (the “Management Agreement”).

H. MANAGER and Board desire to take all steps reasonably possible prior to the receipt of the regulatory approvals (i) to obtain a preliminary commitment for financing of the Gaming Facility, (ii) to select and develop the site for the Gaming Facility, (iii) to design the Gaming Facility, and (iv) to enter into contracts to construct and equip the Gaming Facility so that the Gaming Facility can be opened to the public as soon as possible after the receipt of all regulatory approvals.

I. TRIBE and the Board has selected MANAGER to assist the Board to obtain financing for the gaming developments, and to furnish technical experience and expertise for the development and design of the developments, and for contracting for the construction, furnishing and equipping of the Gaming Facility.

J. TRIBE, the Board and MANAGER intend that their relationship with regard to this Development Agreement shall be exclusive.

K. The Board and MANAGER desire to enter into an agreement whereby the preliminary Gaming Facility design and development work (but not the Gaming Facility construction or operation) may proceed prior to receipt of regulatory approvals.

L. MANAGER has agreed to certain terms and has represented to TRIBE and the Board that MANAGER has the capabilities to provide professional management, funds and financing necessary to develop and construct the Gaming Facility, as defined herein, and to commence the operation of the Enterprise as outlined in this Agreement as consideration for the exclusive right to develop and manage the Gaming Facility pursuant to the Management Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises herein contained, the receipt and sufficiency of which are expressly acknowledged the Board and MANAGER hereby agree as follows:

ARTICLE 1

DEFINITIONS AND OBJECTIVES

SECTION 1.1 DEFINITIONS.

Capitalized terms not otherwise defined herein shall have the meanings set forth in the Management Agreement. In addition to other terms which are defined elsewhere in this Agreement, the following terms, for purposes of this Agreement, shall have the meanings set forth in this Section:

“AFFILIATE” means as to MANAGER, any corporation, partnership, limited liability company, joint venture, trust, department or agency or individual controlled by, under common control with, or which controls, directly or indirectly MANAGER.

“AGREEMENT” shall mean this Development Agreement.

“ARCHITECT” shall mean the person or firm retained pursuant to Section 5.1 who shall be an individual or company duly licensed as an Architect and/or Engineer familiar with the design of gaming facilities.

“BIA” shall mean the Bureau of Indian Affairs under the Department of the Interior of the United States of America.

“BOARD” shall mean the Nambé Pueblo Gaming Enterprise Board, having the authority by Tribal Council to oversee gaming development and operation.

 

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“CLASS II GAMING” shall mean Class 11 gaming as defined in the IGRA.

“CLASS III GAMING” shall mean Class III Gaming as defined in the IGRA.

“COMMENCEMENT DATE” shall mean the first date that the Gaming Facility is complete, open to the public and that Gaming is conducted in the Gaming Facility pursuant to the terms of the Management Agreement.

“COMMERCIAL DEVELOPMENT” shall mean Tribal economic development projects that are non-gaming in nature.

“COMPACT” shall mean Tribal-State Compact which TRIBE has executed or intends to negotiate and execute with the State for the conduct of Class Ill Gaming, and approved pursuant to the IGRA; as the same may, from time to time, be amended, or such other compact that may be substituted therefore.

“COMPLETION DATE” shall mean the date upon which MANAGER receives:

(i) an architect’s certificate from the Architect chosen pursuant to this Agreement as having responsibility for the design and supervision of construction, equipping and furnishing of the Gaming Facility certifying that the Gaming Facility has been fully constructed substantially in accordance with the Plans and Specifications;

(ii) certification from MANAGER or its designee, having responsibility to assure compliance with any operational standards stating that the Gaming Facility, as completed, is in substantial compliance with any such standards;

(iii) a permanent or temporary certificate of occupancy, if required, from any government authority or authorities pursuant to whose jurisdiction the Gaming Facility is to be constructed, permitting the use and operation of all portions of the Gaming Facility in accordance with this Agreement; and

(iv) certificates of such professional designers, inspectors or consultants or opinions of counsel, as MANAGER may determine to be appropriate, verifying construction and furnishing of the Gaming Facility in compliance with all Legal Requirements.

“CONTRACT DOCUMENTS” shall mean any and all construction management agreements and/or construction contracts or contracts, including drawings and schedules, with well-qualified construction manager(s), contractor(s) and/or construction manager(s) properly licensed in the State.

“DESIGN AGREEMENT” shall mean an agreement between the Board and the Architect and/or Engineer providing the scope of design work for the Gaming Facility project. This Design Agreement should also include, at a minimum, site design, building design, and interior design, as well as plans for expansion and any other future phased additions or amenities, payment, termination clauses, reporting procedures to the Board, Project schedules, and Design Packages.

 

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“DESIGN PACKAGES” shall mean design layouts for each portion of the Enterprise including drawings, sketches, models, and/or other visual designs.

“DEVELOPMENT AGREEMENT” shall mean this agreement by and between MANAGER and the Board, providing the terms under which MANAGER and Board will work exclusively together in matters relating to gaming development, and MANAGER will advance certain specified funds to the Project and will cause to be financed and develop the Gaming Facility, including without limitation, design, construction, furnishing and equipping same.

“DEVELOPMENT BUDGET” shall mean the proposed budgets for designing, constructing, furnishing and equipping the Gaming Facility, including the Temporary Gaming Facility, if any, and related costs which may be identified prior to the commencement of design by the Architect.

“EFFECTIVE DATE” shall mean the date five days following the date on which all of the following listed conditions are satisfied:

(i) written approval of the Management Agreement is granted by the Chairperson of the NIGC;

(ii) written approval, as required by law, of the Note, the Loan Agreement, and the Security and Reimbursement Agreement is granted by the Chairperson of the NIGC and/or the BIA; if required

(iii) written approval of a Tribal Gaming Ordinance (“Gaming Ordinance”) and of any other ordinances adopted by TRIBE relative to any of the documents referenced in the Management Agreement in form and substance satisfactory to MANAGER as required by the NIGC or the BIA;

(iv) written confirmation, if required, that TRIBE, the State, and the NIGC, have approved background investigations of MANAGER and any related parties subject to background investigations;

(v) MANAGER has received a certified copy of the ratifying Tribal resolution and Ordinance adopted in accordance with TRIBE’s governing documents reciting that it is the governing law of TRIBE, that this Agreement, the Management Agreement, Loan Agreement, Note, Security and Reimbursement Agreement and the exhibited documents attached thereto are the legal and binding obligations of TRIBE and/or the Board, as appropriate, and are valid and enforceable in accordance with their terms;

(vi) MANAGER has satisfied itself as to the proper ownership and control of the Tribal Lands and its suitability for construction and operation of the contemplated Gaming Facility, and that all of the Legal Requirements and other requirements for lawful conduct and operation of the Enterprise in accordance with the Management Agreement have been met and satisfied;

 

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(vii) for purposes of Class III Gaming, the Compact has been signed by the Secretary of the Interior and published in the Federal Register as provided in 25 U.S.C. Section 2710(d)(8)(D);

(viii) the satisfactory completion of all necessary and applicable feasibility studies required for the development, construction and operation of the Gaming Facility;

(ix) receipt by MANAGER of all applicable licenses for or related to the development, construction and operation of the Gaming Facility; and

(x) receipt by MANAGER of Board’s approval of the Plans and Specifications of the Gaming Facility.

TRIBE and Board agree to cooperate and use their best efforts to satisfy all of the above conditions at the earliest possible date. MANAGER agrees to memorialize the satisfaction of each of (vi) and (viii), as well as the Effective Date, in writings signed by MANAGER and delivered to TRIBE, the Board and to the Chairperson of the NIGC.

“ENTERPRISE” shall mean the enterprise of TRIBE, under the authority of the Board, created to engage in Class II and Class Ill Gaming at the Gaming Facility, and which shall include any other lawful commercial activity allowed in the Gaming Facility including, but not limited to the operation of a hotel, RV Park, retail stores, restaurants, entertainment facilities, or the sale of fuel, food, beverages, alcohol, tobacco, gifts, and souvenirs.

“FIXTURES AND EQUIPMENT” shall mean all furniture, fixtures and equipment (excepting “Operating Equipment” as hereinafter defined) required for the operation of the Enterprise in accordance with the standards set forth in this Agreement, including, without limitation:

(i) cashier, money sorting and money counting equipment, surveillance and communication equipment, and security equipment;

(ii) slot machines, video games of chance, table games, bingo equipment, keno equipment and other gaming equipment;

(iii) office furniture and equipment;

(iv) specialized equipment necessary for the operation of any portion of the Enterprise for accessory purposes, including equipment for kitchens, laundries, dry clearing, cocktail lounges, restaurants, public rooms, commercial and parking spaces, and recreational facilities; and

(v) all other furnishing and equipment hereafter located and installed in or about the Gaming Facility which are used in the operation of the Enterprise in accordance with the standards set forth in this Agreement.

“GAMING” shall mean any and all activities defined as Class II and Class III Gaming pursuant to IGRA.

 

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“GAMING FACILITY” shall mean the buildings, structures and improvements located on the Tribal Lands and all Furniture, Fixtures and Equipment attached thereto, forming a part of, or necessary for the operation of the Enterprise, within that portion of Tribal Lands authorized for gaming..

“IGRA” shall mean the Indian Gaming Regulatory Act of 1988, PL 100-497, 25 U.S.C. Section 2701 et. seq. as same may, from time to time, be amended.

“LEGAL REQUIREMENTS” shall mean any and all present and future judicial, administrative, and tribal rulings or decisions, and any and all present and future federal, state, local, and tribal laws, ordinances, rules, regulations, permits, licenses and certificates, in any way applicable to TRIBE, the Board, MANAGER, the Tribal Lands, the Gaming Facility, and the Enterprise, including without limitation, the IGRA, the Compact, and Tribal Gaming Ordinance.

“LENDER” shall mean the financial institution to provide to Manager the funding necessary to design, construct, and equip the Facility, and provide start-up capital for the Enterprise.

“LOAN” shall mean the loan to the MANAGER to be made pursuant to a certain Loan Agreement.

“LOAN AGREEMENT” shall mean the loan agreement in a principal amount of up to $40,000,000, to be entered into between Lender and MANAGER, but in any event MANAGER will cause to be provided to the Enterprise the above proceeds which are to be used exclusively for Gaming Developments, the design construction, furnishing and equipping of the Gaming Facility and/or providing start-up and working capital for the Enterprise.

“MANAGEMENT AGREEMENT” shall mean the agreement between TRIBE, the Board and MANAGER as approved by the NIGC, pursuant to which MANAGER will manage the Enterprise.

“MANAGER” shall mean Gaming Entertainment (Santa Fe), LLC, or its affiliates.

“NATIONAL INDIAN GAMING COMMISSION” (“NIGC”) is the commission established pursuant to 25 U.S.C. Section 2704.

“NET REVENUES” shall have the meaning set forth in the Management Agreement.

“PLANS AND SPECIFICATIONS” shall mean the final Plans and Specifications approved for the Gaming Facility as described in this Agreement.

“PROJECT” shall have the mean the planning, construction, and development of the temporary, if any, and permanent Gaming Facility.

“SECURITY AND REIMBURSEMENT AGREEMENT” shall mean that agreement to be entered into between MANAGER and the Board which shall set out the security interest of MANAGER and reimbursement obligation of the Board relating to the Loan.

 

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“STATE” shall refer to the State of New Mexico.

“TRIBE” shall mean the Pueblo of Nambé.

“TERM” shall mean the term of this Agreement as described in Article 8.

“TRIBAL CONSULTANTS” shall include but not be limited to (i) those persons or entities as described in Article 9, section 9.1, and (ii) the Tribal Consulting Attorney.

“TRIBAL COUNCIL” shall mean the duly elected governing body of TRIBE.

“TRIBAL DISTRIBUTIONS” shall mean gaming revenues distributed by the Enterprise to the Tribe whereby such revenues are converted to Tribal assets.

“TRIBAL LANDS” means all lands presently and in the future held in trust for the TRIBE and all lands within the confines of the Tribe’s reservation and to such lands as may thereafter be added thereto.

ARTICLE 2

INDEPENDENT AGREEMENT

SECTION 2.1 INDEPENDENT AGREEMENT.

The objective of the Board and MANAGER in entering into and performing this Agreement is to provide a legally enforceable procedure and agreement pursuant to which MANAGER will make certain funds available to the Board for the development of the Gaming Facility prior to the approval of the Management Agreement by the NIGC and the obtaining of any other necessary approvals so that the Project can commence operations as soon as possible; and set forth the rights and obligations of the parties if approval of the Management Agreement by the NIGC does not occur or if the Project is unable to be developed for any other reason. This is intended to be a legally enforceable agreement, independent of the Management Agreement, which shall enter into effect when executed and delivered by the parties, and be enforceable between the parties regardless of whether or not this Agreement or the Management Agreement is approved by the Chairperson of the NIGC.

ARTICLE 3

SITE ACQUISITION

SECTION 3.1 SELECTION OF TRIBAL LANDS.

In the event that the existing Tribal Trust Land cannot be used as the site for the Gaming Facility, the TRIBE, the Board and the MANAGER agree to select an appropriate site for the Gaming Facility. No party’s consent will be unreasonably withheld. In the event that an appropriate site cannot be selected and no gaming facility can be developed, this Agreement and the Management Agreement shall terminate. The site selection shall be deemed appropriate for gaming purposes only if it complies with 25 U.S.C. § 2719(a).

 

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SECTION 3.2 PURCHASE AGREEMENT.

Upon approval of acquisition of an alternate site, which is not existing Tribal Lands, by the mutual agreement of MANAGER, the Board and the Tribal Council, MANAGER shall negotiate a purchase contract or option agreement for purchase of the site by MANAGER or its designee or nominee. Upon approval of the form of Purchase or Option Agreement proposed by MANAGER by the Tribal Council, MANAGER or its designee or nominee shall enter into the Purchase or Option Agreement with the seller of the site. It is mutually agreed that the site shall be transferred by MANAGER to the United States to be held in trust for the benefit of TRIBE upon approval of a Tribal-State Compact. The actual closing of the real estate agreement and the transfer of title to the United States to be held in trust for the benefit of TRIBE may occur following the Effective Date, or at a time as may be necessary to secure approval by appropriate officials or agencies of the Management Agreement, the Compact and the approval of the Secretary of the Interior to take the site into trust for the benefit of TRIBE for gaming purposes. All amounts so advanced by MANAGER shall be a part of the Loan and shall be repaid to MANAGER from the first proceeds of the Loan to the extent proceeds from the Loan are available for this purpose and shall be subject to the Security and Reimbursement Agreement.

SECTION 3.3 TRANSFER OF TRIBAL LANDS TO TRIBE.

On or immediately following the Effective Date, or at such time as may be necessary to secure approval by appropriate officials or agencies, of the Management Agreement or the Compact and the approval of the Secretary of the Interior to take the land into trust for the benefit of TRIBE for gaming purposes, MANAGER or its designee or nominee shall transfer title to the United States to be held in trust by the United States for the benefit of TRIBE for gaming purposes. Any amounts required to be paid to effect such transfer shall be paid by MANAGER and shall be a part of the development cost of the Enterprise and repaid to MANAGER from the first proceeds of the Loan.

SECTION 3.4 CONFIDENTIALITY.

The parties agree on a reasonable efforts basis to keep the intended use of each site confidential until the Purchase Agreement has been executed and delivered by all parties to the Purchase Agreement.

ARTICLE 4

FEASIBILITY STUDIES

SECTION 4.1 FEASIBILITY STUDY.

As soon as reasonably possible after the signing of this Agreement by both parties, MANAGER shall perform a feasibility study to explore the design, cost, size and projected economic benefit of the Gaming Facility within the scope of the Enterprise. A copy of the feasibility study shall be furnished by MANAGER to the Board and Tribal Council. All actual costs incurred by MANAGER to perform or cause the feasibility study to be performed shall be included as part of the development cost of the Enterprise and repaid to MANAGER as a Transition Loan or from the first proceeds of the Loan to the extent available for this purpose.

 

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SECTION 4.2 FEASIBILITY DETERMINATION.

After said feasibility study has been furnished to the Board, the Board and MANAGER shall jointly determine the size and scope of the Gaming Facility and whether or not to include a Temporary Gaming Facility within the Enterprise. Inclusion of a Temporary Gaming Facility within the Enterprise shall be dependent upon an agreement between MANAGER and the Board with respect to such additional matters as may need to be addressed in order to fully provide for said Temporary Gaming Facility. Construction and operation of the Temporary Gaming Facility shall in no way limit the full term of the Management Agreement for the Gaming Facility. The terms, conditions and provisions of this Section 4.2 shall control and take precedence over any contrary terms, conditions and provisions contained in this Agreement.

ARTICLE 5

DESIGN PHASE

SECTION 5.1 EMPLOYMENT OF ARCHITECT.

MANAGER and the Board shall enter into a Design Agreement with a duly licensed Architect and/or Engineer familiar with the design of gaming facilities. The Board and MANAGER shall work closely with Architect to consult, supervise, direct, control and administer duties, activities and functions of the Architect and to efficiently carry out covenants and obligations under this Agreement. The parties understand that market, compact, governmental or other conditions may change and it may be necessary to expand or decrease the scope of the project before construction is commenced. In this and any case, the Board retains the right to review and approve major design elements of the Enterprise.

SECTION 5.2 DESIGN AND CONSTRUCTION BUDGETS.

MANAGER, with the assistance and input of the Architect, shall submit to the Board, proposed budgets (collectively the “Development Budget”) for designing, constructing, furnishing and equipping the Gaming Facility, including the Temporary Gaming Facility, if any, and related costs which may be identified, prior to the commencement of design by the Architect. The Development Budget shall reflect planned phasing, if any. MANAGER may, after notice to and approval by the Board, revise the aggregate Development Budget from time-to-time, as necessary or appropriate to reflect any unpredicted changes, variables or events or to include additional and unanticipated Project costs. MANAGER may, after notice to and approval by the Board, reallocate part or all of the amount budgeted with respect to any line item to another line item and to make such other modifications to the Development budget as MANAGER deems necessary or appropriate, provided that: (i) the cumulative modifications of the Development Budget for all Design Packages shall not, without MANAGER’s prior approval and the Board’s prior approval, exceed the approved aggregate Development Budget, and (ii) such modifications do not otherwise conflict with the terms of this Agreement. Development Budget adjustments which otherwise vary from the terms of the Agreement shall, in addition to requiring MANAGER’s approval require the approval of the Board. The Board acknowledges that the Development Budget is intended only to be a reasonable estimate of Project costs.

 

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SECTION 5.3 CONCEPT DESIGN AND ENGINEERING.

MANAGER, shall prepare for the review and approval of the Board, a statement of requirements for the Gaming Facility, and the Temporary Gaming Facility, if any, including, but not limited to, planned phasing, if any, a program of preliminary objectives, schedule requirements, design criteria, including assumptions regarding HVAC demands, space requirements and relationships, special equipment and site requirements.

SECTION 5.4 PARTY RESPONSIBILITIES FOR DESIGN PHASE.

MANAGER shall prepare, for the review and approval of the Board, a preliminary evaluation of the proposed Project for use by the Architect. The preliminary evaluation should include, at the minimum, a feasibility study, planned phasing, if any, schedule, Development Budget requirements, and alternative approaches to Project design and construction.

(i) MANAGER and the Board shall review and approve final schematic design documents prepared by the Architect.

(ii) MANAGER shall submit to the Board, for its review and approval, finalized versions of the design development documents, including Development Budgets .that may or may not include planned phasing budgets, as prepared by the Architect and agreed to by MANAGER.

(iii) MANAGER and the Board shall review and approve construction documents consisting of preliminary drawings and specifications setting forth the general requirements for Project construction.

(iv) MANAGER shall be responsible for obtaining copies of all construction documents and all notices of Design Budget adjustments and shall forward such copies to the Board to keep it informed of the progress of work and the projected costs of the Project.

(v) MANAGER shall be responsible for obtaining detailed Plans and Specifications for each segment of the Project and shall forward such copies to the Board for approval prior to release of such documents to prospective bidders for bidding and prior to commencement of construction of such portions.”

SECTION 5.5 RESERVED.

SECTION 5.6 RESERVED.

SECTION 5.7 RESERVED.

SECTION 5.8 COMPLIANCE WITH CONSTRUCTION STANDARDS, ENVIRONMENTAL LAWS AND REGULATIONS.

The Gaming Facility shall be designed and constructed so as to adequately protect the environment and the public health and safety. The design, construction and maintenance of the Gaming Facility shall, except to the extent a particular requirement or requirements may be

 

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waived in writing by the Board, with the approval of the Tribal Council if required, meet or exceed all reasonable minimum standards pertaining to TRIBE and State building codes, fire codes and safety and traffic requirements (but excluding planning, zoning and property use laws, ordinances, regulations and requirements), which would be imposed on the Enterprise by existing State or Federal statutes or regulations or codes which would be applicable if the Gaming Facility were located outside of the jurisdictional boundaries of TRIBE, even though those requirements may not apply within TRIBE’s jurisdictional boundaries. To the extent that TRIBE may adopt more stringent requirements, those requirements shall govern. Nothing in this subsection shall grant to the State or any political subdivision thereof any jurisdiction (including but not limited to, jurisdiction regarding zoning or property use) over the Enterprise or its development, management and operation.

SECTION 5.9 ADVANCE OF FUNDS FOR DESIGN WORK.

Notwithstanding any lack of approval of the Management Agreement or this Agreement by the NIGC, MANAGER shall advance such funds as are reasonably necessary to proceed with site and facility planning, architectural renderings and plans, including payments to the Architect pursuant to the Design Agreement, engineering and environmental services, working drawings and construction contract bidding documents, and the advances shall be repaid to MANAGER from the first draws under the Loan to the extent proceeds of the Loan are available for this purpose. After the Effective Date, the Architect shall be compensated for services rendered in accordance with the Design Agreement out of Loan proceeds, subject to and in accordance with the terms, conditions and provisions of the Loan Agreement.

ARTICLE 6

CONSTRUCTION PHASE

SECTION 6.1 SELECTION OF CONTRACTOR OR CONSTRUCTION MANAGER.

MANAGER shall, in consultation with the Architect, initiate a pre-bid selection process in order to pre-qualify prospective general contractors and/or construction managers in connection with the construction of the Gaming Facility. MANAGER shall submit the list of pre-qualified general contractors and/or construction managers to the Board, together with MANAGER’s recommendations, for its review, comment and approval. Special consideration shall be given