exv10w1






Exhibit 10.1




AMENDED AND RESTATED MANAGEMENT AGREEMENT




AMONG



THE INN OF THE MOUNTAIN GODS RESORT AND CASINO, CASINO APACHE



TRAVEL CENTER, SKI APACHE AND WG-IMG, LLC



DATED AS OF JANUARY 6, 2010



 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	1.	 	Recitals	 	 	1	 
	2.	 	Definitions	 	 	2	 
	 
	 	2.1	 	Affiliate	 	 	2	 
	 
	 	2.2	 	Agreement	 	 	2	 
	 
	 	2.3	 	Bank Accounts	 	 	2	 
	 
	 	2.4	 	Base Monthly EBITDA	 	 	2	 
	 
	 	2.5	 	BIA	 	 	2	 
	 
	 	2.6	 	Business	 	 	2	 
	 
	 	2.7	 	Business Employee	 	 	2	 
	 
	 	2.8	 	Business Employee Policies	 	 	2	 
	 
	 	2.9	 	Capital Budget	 	 	2	 
	 
	 	2.10	 	Capital Replacement(s)	 	 	3	 
	 
	 	2.11	 	Capital Replacement Reserve	 	 	3	 
	 
	 	2.12	 	Chief Operating Officer	 	 	3	 
	 
	 	2.13	 	Class II Gaming	 	 	3	 
	 
	 	2.14	 	Class III Gaming	 	 	3	 
	 
	 	2.15	 	Compact	 	 	3	 
	 
	 	2.16	 	Confidential Information	 	 	3	 
	 
	 	2.17	 	Department	 	 	3	 
	 
	 	2.18	 	Depository Account	 	 	3	 
	 
	 	2.19	 	Depreciation, Depletion and Amortization Expense	 	 	3	 
	 
	 	2.20	 	Disbursement Account	 	 	3	 
	 
	 	2.21	 	EBITDA	 	 	3	 
	 
	 	2.22	 	Effective Date	 	 	4	 
	 
	 	2.23	 	Emergency Condition	 	 	4	 
	 
	 	2.24	 	Enterprise	 	 	4	 
	 
	 	2.25	 	Execution Date	 	 	4	 
	 
	 	2.26	 	Existing Taxes	 	 	4	 
	 
	 	2.27	 	Facilities	 	 	4	 
	 
	 	2.28	 	Fiscal Quarter	 	 	4	 






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	 	2.29	 	Fiscal Year	 	 	4	 
	 
	 	2.30	 	Furnishings and Equipment	 	 	4	 
	 
	 	2.31	 	GAAP	 	 	5	 
	 
	 	2.32	 	Gaming	 	 	5	 
	 
	 	2.33	 	Gaming Equipment	 	 	5	 
	 
	 	2.34	 	Gaming Operations	 	 	5	 
	 
	 	2.35	 	Gaming Ordinance	 	 	5	 
	 
	 	2.36	 	Governmental Action	 	 	5	 
	 
	 	2.37	 	Gross Gaming Revenue (Win)	 	 	5	 
	 
	 	2.38	 	Gross Revenues	 	 	6	 
	 
	 	2.39	 	House Bank	 	 	6	 
	 
	 	2.40	 	IGRA	 	 	6	 
	 
	 	2.41	 	Insider	 	 	6	 
	 
	 	2.42	 	Interest Expense	 	 	6	 
	 
	 	2.43	 	Internal Control System	 	 	6	 
	 
	 	2.44	 	Internal Revenue Code	 	 	6	 
	 
	 	2.45	 	Key Business Employees	 	 	6	 
	 
	 	2.46	 	Legal Requirements	 	 	6	 
	 
	 	2.47	 	Management Board	 	 	7	 
	 
	 	2.48	 	Management Board By-Laws	 	 	7	 
	 
	 	2.49	 	Management Fee	 	 	7	 
	 
	 	2.50	 	Manager	 	 	7	 
	 
	 	2.51	 	Manager Confidential Information	 	 	7	 
	 
	 	2.52	 	Managing Officer	 	 	7	 
	 
	 	2.53	 	Marks	 	 	7	 
	 
	 	2.54	 	Member of the Tribal Government	 	 	7	 
	 
	 	2.55	 	Minimum Balance	 	 	7	 
	 
	 	2.56	 	Minimum Guaranteed Monthly Payment	 	 	7	 
	 
	 	2.57	 	Minimum Monthly Management Fee	 	 	7	 
	 
	 	2.58	 	Net Revenues	 	 	7	 






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	 	2.59	 	Net Revenues (gaming)	 	 	7	 
	 
	 	2.60	 	Net Revenues (other)	 	 	8	 
	 
	 	2.61	 	NIGC	 	 	9	 
	 
	 	2.62	 	Non-Gaming Operations	 	 	9	 
	 
	 	2.63	 	Operating Budget and Annual Plan	 	 	9	 
	 
	 	2.64	 	Operating Companies	 	 	9	 
	 
	 	2.65	 	Operating Expenses	 	 	9	 
	 
	 	2.66	 	Operating Supplies	 	 	10	 
	 
	 	2.67	 	Party	 	 	11	 
	 
	 	2.68	 	Promotional Allowances	 	 	11	 
	 
	 	2.69	 	Qualified	 	 	11	 
	 
	 	2.70	 	Regulatory Cap	 	 	11	 
	 
	 	2.71	 	Representatives	 	 	11	 
	 
	 	2.72	 	Reservation	 	 	11	 
	 
	 	2.73	 	Resort	 	 	11	 
	 
	 	2.74	 	Ski Apache	 	 	11	 
	 
	 	2.75	 	Ski Apache Entity	 	 	11	 
	 
	 	2.76	 	Ski Apache Operations	 	 	11	 
	 
	 	2.77	 	Soft Count	 	 	11	 
	 
	 	2.78	 	State	 	 	11	 
	 
	 	2.79	 	Suspension of Gaming Operations	 	 	11	 
	 
	 	2.80	 	Term	 	 	11	 
	 
	 	2.81	 	Traditional Bingo	 	 	11	 
	 
	 	2.82	 	Travel Center	 	 	12	 
	 
	 	2.83	 	Travel Center Entity	 	 	12	 
	 
	 	2.84	 	Tribe	 	 	12	 
	 
	 	2.85	 	Tribal Confidential Information	 	 	12	 
	 
	 	2.86	 	Tribal Council	 	 	12	 
	 
	 	2.87	 	Tribal Gaming Commission	 	 	12	 
	 
	 	2.88	 	Tribal Parties	 	 	12	 






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	 	 	2.89	 	Tribal Priority Distribution	 	 	12	 
	 	 	2.90	 	Warner	 	 	12	 
	 	 	2.91	 	Warner Parties	 	 	12	 
	3.	 	Engagement; Term; Other Agreements	 	 	12	 
	 	 	3.1	 	Engagement of Manager	 	 	12	 
	 	 	3.2	 	Term	 	 	12	 
	 	 	3.3	 	Status of Reservation and Businesses; Exclusive Rights	 	 	12	 
	 	 	3.4	 	Management Board	 	 	13	 
	 	 	3.5	 	Compliance with Law; Licenses	 	 	13	 
	 	 	3.6	 	Gaming Ordinance	 	 	13	 
	 	 	3.7	 	Fire and Safety	 	 	14	 
	 	 	3.8	 	Compliance with the Environmental Laws	 	 	14	 
	 	 	3.9	 	Nonrecruitment and Noncompete Covenants	 	 	14	 
	 
	 	 	 	3.9.1	 	Nonrecruitment of Employees	 	 	14	 
	 
	 	 	 	3.9.2	 	Noncompetition	 	 	14	 
	 
	 	 	 	3.9.3	 	Enforceability	 	 	15	 
	 
	 	 	 	3.9.4	 	Joinder by William W. Warner	 	 	15	 
	 	 	3.10	 	Covenant of Good Faith and Fair Dealing	 	 	16	 
	4.	 	Management and Operation of Businesses	 	 	16	 
	 	 	4.1	 	Manager’s Authority and Responsibility	 	 	16	 
	 	 	4.2	 	Duties of Manager	 	 	16	 
	 
	 	 	 	4.2.1	 	Physical Duties	 	 	16	 
	 
	 	 	 	4.2.2	 	Required Filings	 	 	16	 
	 
	 	 	 	4.2.3	 	Contracts	 	 	16	 
	 
	 	 	 	4.2.4	 	Operating Standards	 	 	17	 
	 
	 	 	 	4.2.5	 	Advertising	 	 	17	 
	 
	 	 	 	4.2.6	 	Payment of Bills and Expenses	 	 	17	 
	 	 	4.3	 	Security and Surveillance	 	 	17	 
	 	 	4.4	 	Damage, Condemnation or Impossibility of the Businesses	 	 	17	 
	 
	 	 	 	4.4.1	 	Change in Legal Requirements	 	 	17	 






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	 	 	 	4.4.2	 	Condemnation or Casualty	 	 	17	 
	 
	 	 	 	4.4.3	 	Manager’s Right to Terminate Upon Suspension of Gaming Operations Due to Applicable Legal Requirements	 	 	18	 
	 	 	4.5	 	Alcoholic Beverages and Tobacco Sales	 	 	18	 
	 	 	4.6	 	Employees	 	 	18	 
	 
	 	 	 	4.6.1	 	Manager’s Responsibility for Employees	 	 	18	 
	 
	 	 	 	4.6.2	 	Business Employee Policies	 	 	18	 
	 
	 	 	 	4.6.3	 	Employment Suitability	 	 	18	 
	 
	 	 	 	4.6.4	 	No Manager Wages or Salaries	 	 	19	 
	 
	 	 	 	4.6.5	 	Tribal Regulatory Costs	 	 	19	 
	 
	 	 	 	4.6.6	 	Indian Preference, Recruiting and Training	 	 	19	 
	 	 	4.7	 	Preference in Contracting	 	 	20	 
	 	 	4.8	 	Operating Budget and Annual Plan	 	 	20	 
	 	 	4.9	 	Capital Budgets	 	 	22	 
	 	 	4.10	 	Capital Replacements	 	 	22	 
	 	 	4.11	 	Capital Replacement Reserve	 	 	23	 
	 	 	4.12	 	Periodic Contributions to Capital Replacement Reserve	 	 	23	 
	 	 	4.13	 	Use and Allocation of Capital Replacement Reserve	 	 	23	 
	 	 	4.14	 	Internal Control System	 	 	23	 
	 	 	4.15	 	Banking and Bank Accounts	 	 	24	 
	 
	 	 	 	4.15.1	 	Bank Accounts	 	 	24	 
	 
	 	 	 	4.15.2	 	Daily Deposits to Depository Account	 	 	24	 
	 
	 	 	 	4.15.3	 	Disbursement Account	 	 	24	 
	 
	 	 	 	4.15.4	 	No Cash Disbursements	 	 	24	 
	 
	 	 	 	4.15.5	 	Transfers Between Accounts	 	 	24	 
	 
	 	 	 	4.15.6	 	Petty Cash Fund	 	 	25	 
	 
	 	 	 	4.15.7	 	No Suspension of Transfers Upon Default	 	 	25	 
	 	 	4.16	 	Insurance	 	 	25	 
	 	 	4.17	 	Accounting and Books of Account	 	 	25	 
	 
	 	 	 	4.17.1	 	Statements	 	 	25	 






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	 	 	 	4.17.2	 	Books of Account	 	 	25	 
	 
	 	 	 	4.17.3	 	Accounting Standards	 	 	26	 
	 
	 	 	 	4.17.4	 	Annual Audit	 	 	26	 
	 	 	4.18	 	Operating Capital for the Businesses	 	 	26	 
	 	 	4.19	 	Tribal Indebtedness	 	 	27	 
	 	 	4.20	 	Ski Apache	 	 	27	 
	5.	 	Indebtedness of the Operating Companies	 	 	27	 
	 	 	5.1	 	Financing Agreements	 	 	27	 
	 	 	5.2	 	Business of the Operating Companies	 	 	27	 
	 	 	5.3	 	Related Party Indebtedness	 	 	27	 
	6.	 	Management Fee, Reimbursements, Disbursements, and Other Payments by Manager	 	 	27	 
	 	 	6.1	 	Management Fee	 	 	27	 
	 	 	6.2	 	Reimbursement of Travel and Other Approved Expenses	 	 	29	 
	 	 	6.3	 	Cap on Payments to Manager	 	 	29	 
	 	 	6.4	 	Agreed Ceiling for Repayment of Development and Construction Costs	 	 	29	 
	7.	 	Intellectual Reservation; Confidentiality	 	 	29	 
	 	 	7.1	 	Names of the Businesses	 	 	29	 
	 	 	7.2	 	Marks	 	 	29	 
	 	 	7.3	 	Litigation Involving Marks	 	 	30	 
	 	 	7.4	 	Confidentiality	 	 	30	 
	8.	 	Taxes	 	 	32	 
	 	 	8.1	 	State and Local Taxes	 	 	32	 
	 	 	8.2	 	Tribal Taxes	 	 	32	 
	 	 	8.3	 	Compliance with Internal Revenue Code	 	 	32	 
	9.	 	Prohibition of Certain Transactions Between Manager and Members of the Tribe	 	 	32	 
	10.	 	Grounds for Termination	 	 	33	 
	 	 	10.1	 	Termination	 	 	33	 
	 	 	10.2	 	Voluntary Termination	 	 	33	 
	 	 	10.3	 	Involuntary Termination Due to Changes in Legal Requirements	 	 	33	 






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	 	10.4	 	Tribal Parties’ Right to Terminate Agreement	 	 	33	 
	 
	 	10.5	 	Manager’s Right to Terminate Agreement	 	 	34	 
	 
	 	10.6	 	Enterprise’s Buyout Option	 	 	35	 
	 
	 	10.7	 	Manager’s Early Termination Right	 	 	35	 
	11.	 	Termination and Transition	 	 	35	 
	 
	 	11.1	 	Transition	 	 	35	 
	 
	 	11.2	 	Businesses	 	 	36	 
	 
	 	11.3	 	Manager’s Obligations	 	 	36	 
	 
	 	11.4	 	Operating Companies’ Obligations	 	 	36	 
	12.	 	Consents and Approvals	 	 	37	 
	 
	 	12.1	 	Tribal Parties	 	 	37	 
	 
	 	12.2	 	Manager	 	 	37	 
	13.	 	Parties in Interest in Manager	 	 	37	 
	 
	 	13.1	 	Shareholders and Directors	 	 	37	 
	 
	 	13.2	 	Covenants	 	 	37	 
	 
	 	13.3	 	Compliance with Licensing Requirements	 	 	38	 
	14.	 	No Present Lien, Lease or Joint Venture	 	 	38	 
	15.	 	Indemnification; Limitation of Liability	 	 	38	 
	16.	 	Choice of Law	 	 	39	 
	17.	 	Limited Waiver of Sovereign Immunity; Dispute Resolution	 	 	39	 
	18.	 	Non-Impairment	 	 	41	 
	19.	 	General Provisions	 	 	41	 
	 
	 	19.1	 	Notice	 	 	41	 
	 
	 	19.2	 	Representations and Warranties as to Authority and Other Matters	 	 	42	 
	 
	 	19.3	 	Relationship	 	 	43	 
	 
	 	19.4	 	Defense	 	 	43	 
	 
	 	19.5	 	Waivers	 	 	44	 
	 
	 	19.6	 	Captions; Section References	 	 	44	 
	 
	 	19.7	 	Severability	 	 	44	 
	 
	 	19.8	 	Interest	 	 	44	 






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	 	19.9	 	Third Party Beneficiaries	 	44	
	 
	 	19.10	 	Brokerage	 	44	
	 
	 	19.11	 	Survival of Provisions	 	45	
	 
	 	19.12	 	Periods of Time	 	45	
	 
	 	19.13	 	Successors, Assigns, and Subcontracting	 	45	
	 
	 	19.14	 	Time is of the Essence	 	45	
	 
	 	19.15	 	Patron Dispute Resolution	 	45	
	 
	 	19.16	 	Amendments	 	45	
	 
	 	19.17	 	Estoppel Certificate	 	46	
	 
	 	19.18	 	Entire Agreement	 	46	
	 
	 	19.19	 	Government Savings Clause	 	46	
	 
	 	19.20	 	Preparation of Agreement	 	46	
	 
	 	19.21	 	Counterparts	 	46	
	 
	 	19.22	 	Joint and Several Obligations	 	46	











-viii-









 








AMENDED AND RESTATED MANAGEMENT AGREEMENT




     This AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”) is made and entered
into as of January 6, 2010 (the “Execution Date”), by and among 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”), CASINO APACHE
TRAVEL CENTER, a tribally-chartered subsidiary of the Enterprise (the “Travel Center
Entity”), SKI APACHE, a tribally-chartered subsidiary of the Enterprise (the “Ski Apache
Entity”), and WG-IMG, LLC, a Nevada limited liability company (the “Manager”). Each
of the foregoing described parties is sometimes referred to herein singly as a “Party” and
collectively as the “Parties.”


1. Recitals.




     1.1 The Tribe is a federally recognized Indian tribe eligible 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.



     1.2 The Tribe possesses sovereign governmental powers pursuant to the Tribe’s powers of
self-government over certain land owned by the United States of America in trust for the Tribe.
Such land, as well as any other land or territory over which the Tribe’s sovereign jurisdiction may
extend at any time, is referred to herein as the “Reservation”.



     1.3 In compliance with the Indian Gaming Regulatory Act of 1988, P.L. 100-497, 25 U.S.C. §
2701 et seq., as it may from time to time be amended (“IGRA”), the Tribal
Council has enacted the Gaming Ordinance, which regulates the operation of Gaming within the
Reservation. The Gaming Ordinance creates the “Mescalero Apache Tribal Gaming Commission” (the
“Tribal Gaming Commission”) and authorizes Class III gaming within the Reservation subject
to the provisions of the Gaming Ordinance and the Compact.



     1.4 The Enterprise, the Travel Center Entity and the Ski Apache Entity (collectively, the
“Operating Companies” and, together with the Tribe, the “Tribal Parties”) 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 (which is situated within the
Southwest 1/4 of Section Four (4), Township Twelve (12) South, Range Thirteen (13) East, New Mexico
Principal Meridian), including, without limitation, hunting and golf activities operated in
connection therewith (the “Resort”), the Casino Apache Travel Center located at 25845 US
Highway 70, Mescalero, New Mexico 88340 (which is situated within the Northeast 1/4 and Southeast 1/4
of Section Three (3), Township Twelve (12) South, Range Thirteen (13) East, New Mexico Principal
Meridian) (the “Travel Center”), and Ski Apache, a ski and snowboard resort located in or
near Mescalero, New Mexico (“Ski Apache”). The Tribe has granted exclusive authority to
the Operating Companies to conduct operations at the Resort, the Travel Center and Ski Apache (the
business and assets of each of the Resort, Travel Center and Ski Apache are referred to as a
“Business” and collectively the “Businesses.”) The Resort and the Travel Center
are situated entirely within the Mescalero Apache Indian Reservation, the final boundaries of which
were created by an Executive Order dated March 23, 1883. The Resort and



1









 




the Travel Center are located on sites that qualify as “Indian lands,” as such term is defined
in 25 U.S.C. § 2703(4).




     1.5 The Operating Companies operate the Businesses to improve the economic conditions of
members of the Tribe, to enable the Tribe to serve the social, economic, educational and health
needs of the Tribe, to increase Tribe revenues and to enhance the Tribe’s economic self-sufficiency
and self-determination.



     1.6 The Operating Companies are seeking technical experience and expertise for the operation
of gaming and non-gaming operations at the Businesses and instruction for members of the Tribe in
the operation of the Businesses. The Manager is willing and able to provide such experience,
expertise and instruction.



     1.7 The Operating Companies want to grant the Manager the exclusive right and obligation to
manage, operate and maintain the Businesses, and to train members of the Tribe and others in the
operation and maintenance of the Businesses during the term of this Agreement and conforming with
the provisions of this Agreement. The Manager desires to perform these functions.



     1.8 In connection with all of the foregoing, the Parties entered into that certain Management
Agreement dated as of June 18, 2009 (the “Original Agreement“), which was submitted on June
22, 2009 to the National Indian Gaming Commission (the “NIGC“) for approval by the Chairman
of the NIGC. The Parties wish to amend and restate the Original Agreement as provided herein, and
re-submit this Agreement to the NIGC for approval by the Chairman of the NIGC.


2. Definitions. As they are used in this Agreement, the terms listed below shall have the
meaning assigned to them in this Section:




     2.1 Affiliate. “Affiliate” means as to any Party, any Indian tribe, corporation,
partnership, limited liability company, joint venture, trust, department, agency, subdivision or
instrumentality or individual controlled by, under common control with, or which controls, directly
or indirectly such Party.



     2.2 Agreement. “Agreement” has the meaning set forth in the first paragraph hereof.



     2.3 Bank Accounts. “Bank Accounts” shall mean those accounts described in Section
4.15.1.



     2.4 Base Monthly EBITDA. “Base Monthly EBITDA” shall mean $2,716,120.25.



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



     2.6 Business. “Business” or “Businesses” has the meaning set forth in Section 1.4.



     2.7 Business Employee. “Business Employee” shall mean any employee who is assigned to
work at any of the Businesses.



2









 





     2.8 Business Employee Policies. “Business Employee Policies” shall have the meaning
set forth in Section 4.6.2.



     2.9 Capital Budget. “Capital Budget” has the meaning set forth in Section 4.9 hereof.



     2.10 Capital Replacement(s). “Capital Replacement(s)” shall mean any alteration or
rebuilding or renovation of the Businesses, and any replacement of Furnishings and Equipment, the
cost of which is capitalized and depreciated, rather than being expensed, applying GAAP.



     2.11 Capital Replacement Reserve. “Capital Replacement Reserve” has the meaning set
forth in Section 4.11.



     2.12 Chief Operating Officer. “Chief Operating Officer” shall mean the person
employed by the Operating Companies to direct the day-to-day operations of the Businesses.



     2.13 Class II Gaming. “Class II Gaming” shall mean class II gaming as defined in
IGRA.



     2.14 Class III Gaming. “Class III Gaming” shall mean class III gaming as defined in
IGRA.



     2.15 Compact. “Compact” shall mean the Tribal-State Class III Gaming Compact between
the Tribe and the State of New Mexico executed by the Governor of the State of New Mexico on June
1, 2004, the approval of which was published in the Federal Register on August 5, 2004, pursuant to
IGRA, and any amendments thereto from time to time the approval of which is published in the
Federal Register.



     2.16 Confidential Information. “Confidential Information” shall mean the information
described in Section 7.4.1.



     2.17 Department. Those general divisional categories shown in the Operating Budget
and Annual Plan (e.g. rooms department or food department), but shall not mean or refer to the
subcategories (e.g. linen replacement and uniforms) appearing in each such divisional category.



     2.18 Depository Account. “Depository Account” shall mean a bank account described in
Section 4.15.2.



     2.19 Depreciation, Depletion and Amortization Expense. “Depreciation, Depletion and
Amortization Expense” means, for any period, the total amount of depreciation, depletion and
amortization expense (exclusive of the amortization of the principal amount of any indebtedness)
and other similar non-cash operating charges for such period.



     2.20 Disbursement Account. “Disbursement Account” shall mean the bank account
described in Section 4.15.3.



     2.21 EBITDA. “EBITDA” shall mean, with respect to any period, Net Revenues plus the
sum of (i) the aggregate amount of Interest Expense for such period, (ii) the aggregate amount of
income taxes for such period, (iii) the aggregate amount of all taxes, fees,



3









 




assessments, or other charges of any nature whatsoever on the Businesses or on the revenues
therefrom imposed by the Tribe, or by any agent, agency, affiliate or representative of the Tribe
(including, without limitation, payments pursuant to any lease), other than (a) fees imposed on the
Tribe by the NIGC under IGRA which directly relate to the business of the Operating Companies, (b)
payments expressly and specifically provided for under this Agreement (e.g. tribal regulatory costs
as described in Section 4.6.5) and (c) Existing Taxes, for such period, (iv) Depreciation,
Depletion and Amortization Expense for such period), (v) all amounts (to the extent not already
included in (iv) above) attributable to other (a) non-cash operating charges and (b) non-cash
non-operating charges for such period, and (vi) all extraordinary charges for such period minus,
without duplication, all extraordinary gains for such period.




     2.22 Effective Date. “Effective Date” shall mean the date on which the last of the
following listed conditions is satisfied:




	 	(i)	 	written confirmation that the Tribe, and the State (to the
extent required by the Compact or other applicable state law), have approved
background investigations of Manager; and
	 
	 	(ii)	 	written approval of this Agreement and any documents collateral
hereto identified by the NIGC as requiring its approval, is granted by the
Chairman of the NIGC.





     2.23 Emergency Condition. “Emergency Condition” has the meaning set forth in Section
4.10.



     2.24 Enterprise. “Enterprise” has the meaning set forth in the first paragraph of
this Agreement.



     2.25 Execution Date. “Execution Date” has the meaning set forth in the first
paragraph of this Agreement.



     2.26 Existing Taxes. “Existing Taxes” shall mean the gross receipts tax, gasoline
tax and school assessment, all as assessed by the Tribe at the rates of assessment therefor as of
the Execution Date, which rates are (i) with respect to the gross receipts tax, 10.75% for room
rental or lodging receipts, 6.75% for retail food and beverage receipts and 6.5% for all other
receipts on the sale of goods and services; (ii) with respect to the gasoline tax, seventeen cents
($0.17) per gallon, and (iii) with respect to the school assessment, $200,000 per month in the
aggregate for all Operating Companies, less all other taxes paid or remitted by the Operating
Companies to the Tribe during such month.



     2.27 Facilities. “Facilities” shall mean the buildings, improvements, and fixtures,
now or hereafter in which the Businesses are located.



     2.28 Fiscal Quarter. “Fiscal Quarter” shall mean each of the following periods: (i)
the calendar months of May, June and July; (ii) the calendar months of August, September and
October; (iii) the calendar months of November, December, and January; and (iv) the calendar months
of February, March and April.



4









 





     2.29 Fiscal Year. “Fiscal Year” shall mean the period commencing on May 1 of each
year and ending on April 30 of the following year.



     2.30 Furnishings and Equipment. “Furnishings and Equipment” shall mean all furniture,
furnishings and equipment owned by the Operating Companies and required for the operation of the
Businesses 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)	 	Gaming Equipment;
	 
	 	(iii)	 	office furnishings and equipment;
	 
	 	(iv)	 	specialized equipment necessary for the operation of any
portion of the Businesses for accessory purposes, including equipment for
kitchens, laundries, dry cleaning, cocktail lounges, restaurants, public rooms,
commercial and parking spaces, and recreational facilities;
	 
	 	(v)	 	all other furnishings, equipment, and other personal property
used in the operation of the Businesses; and
	 
	 	(vi)	 	all other furnishings and equipment hereafter located and
installed in or about the Businesses which are used in the operation of the
Businesses in accordance with the standards set forth in this Agreement.





     2.31 GAAP. “GAAP” means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board, in each case which are in effect from time to time.



     2.32 Gaming. “Gaming” shall mean Class II Gaming and Class III Gaming.



     2.33 Gaming Equipment. “Gaming Equipment” shall mean equipment permitted under the
IGRA for Gaming, including without limitation slot machines, video games of chance, table games,
keno equipment and other Class II and Class III Gaming equipment.



     2.34 Gaming Operations. “Gaming Operations” shall mean any and all Gaming operated by
Manager in accordance with the terms of this Agreement within the Businesses.



     2.35 Gaming Ordinance. The “Gaming Ordinance” means the Mescalero Apache Tribe Gaming
Ordinance approved by the Chairman of the NIGC pursuant to the IGRA on September 4, 2001, and any
amendments thereto that are approved by the NIGC from time to time.



5









 





     2.36 Governmental Action. “Governmental Action” shall mean any resolution, ordinance,
statute, regulation, order or decision having the force of law or legal authorization of the Tribe,
the Tribal Council or any instrumentality or agency of the Tribe.



     2.37 Gross Gaming Revenue (Win). “Gross Gaming Revenue (Win)” shall mean the net win
from gaming activities which is the difference between gaming wins and losses before deducting
costs and expenses (including, without limitation, any deduction for Promotional Allowances),
determined in accordance with GAAP consistently applied.



     2.38 Gross Revenues. “Gross Revenues” shall mean all revenues of any nature derived
directly or indirectly from the Businesses including, without limitation, Gross Gaming Revenue
(Win), hotel, retail, food and beverage sales and other rental or other receipts from lessees,
sublessees, licensees and concessionaires (but not the gross receipts of such lessees, sublessees,
licensees or concessionaires), and before any deduction is made for Promotional Allowances, but
excluding any taxes the Tribe is allowed to assess pursuant to Section 8.2, all as determined in
accordance with GAAP consistently applied.



     2.39 House Bank. “House Bank” shall mean the amount of cash, chips, and tokens that
Manager from time to time determines necessary to have at the Businesses daily to meet its cash
needs.



     2.40 IGRA. “IGRA” has the meaning set forth in Section 1.3.



     2.41 Insider. “Insider” shall mean (i) with respect to any person, (a) a relative of
such person or of a general partner of such person, (b) a partnership in which such person is a
general partner, (c) a general partner of such person and (d) a corporation of which such person is
a director or officer or person in control and (ii) with respect to any entity, (a) any director or
officer of such entity, (b) any partnership in which such entity is a general partner, (c) any
general partner in or of such entity and (d) any relative of any general partner in, general
partner of, such entity or any relative of any such director, officer or person in control of such
entity.



     2.42 Interest Expense. “Interest Expense” means, for any period, without duplication,
the total consolidated interest expense including (i) interest expense attributable to capital
leases, (ii) amortization of indebtedness discount and indebtedness issuance costs (including any
original issue discount attributable to any issuance of equity securities and indebtedness
securities, (iii) capitalized interest, (iv) non-cash interest payments, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers’ acceptance
financing, (vi) net cash costs under interest rate protection agreements (including amortization of
fees), and (viii) interest actually paid under any guarantee of indebtedness or other obligations
of any other person.



     2.43 Internal Control System. “Internal Control System” has the meaning set forth in
Section 4.14.



     2.44 Internal Revenue Code. “Internal Revenue Code” means the Internal Revenue Code
of 1986, as amended.




6











 





     2.45 Key Business Employees. “Key Business Employees” shall mean, with respect to the
Businesses, the Chief Operating Officer, chief financial officer, director of marketing, director
of human resources, and director of gaming, or persons performing similar functions.



     2.46 Legal Requirements. “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 applicable to the Tribe, Manager, Reservation, and the Businesses, including
without limitation and to the extent applicable, State law, IGRA and its implementing regulations,
the Compact and the Gaming Ordinance.



     2.47 Management Board. “Management Board” shall mean the management board of the
Enterprise, as such board has been established by the Tribe pursuant to the Management Board
By-laws.



     2.48 Management Board By-Laws. “Management Board By-Laws” shall mean the By-laws of
the Management Board adopted March 25, 2004.



     2.49 Management Fee. “Management Fee” shall mean the amounts payable to the Manager
pursuant to Section 6.1.



     2.50 Manager. “Manager” has the meaning set forth in the first paragraph of this
Agreement.



     2.51 Manager Confidential Information. “Manager Confidential Information” has the
meaning set forth in Section 7.4.1.



     2.52 Managing Officer. The “Managing Officer” shall be designated by Manager by
notice given to the Tribe in accordance with Section 19.1 of this Agreement. The Managing Officer
shall serve as a liaison between the Manager and the Tribe. There shall be a Managing Officer
during the entire term of this Agreement.



     2.53 Marks. “Marks” has the meaning set forth in Section 7.2



     2.54 Member of the Tribal Government. “Member of the Tribal Government” shall mean a
member of the Tribal Council or the Tribal Gaming Commission.



     2.55 Minimum Balance. “Minimum Balance” shall mean the amount described in Section
4.15.1.



     2.56 Minimum Guaranteed Monthly Payment. “Minimum Guaranteed Monthly Payment” shall
mean the minimum payment due to the Tribe in accordance with 25 U.S.C. §2711(b)(3) in an amount
equal to $25,000 per month.



     2.57 Minimum Monthly Management Fee. “Minimum Monthly Management Fee” has the meaning
set forth in Section 6.1.



7









 





     2.58 Net Revenues. “Net Revenues” shall mean the sum of “Net Revenues (gaming)” and
“Net Revenues (other).”



     2.59 Net Revenues (gaming). “Net Revenues (gaming)” shall mean Gross Gaming Revenue
(Win) from Gaming Operations less all Gaming related Operating Expenses, excluding the Management
Fee, and less the retail value of any Promotional Allowances. Notwithstanding the foregoing, the
following shall be excluded from “Net Revenues (gaming)”:




	 	(i)	 	any gratuities or service charges added to a customer’s bill;
	 
	 	(ii)	 	any credits or refunds made to customers, guests or patrons;
	 
	 	(iii)	 	any sums and credits received by the Operating Companies for
lost or damaged merchandise;
	 
	 	(iv)	 	any sales taxes, excise taxes, gross receipt taxes, admission
taxes, entertainment taxes, tourist taxes or charges received from patrons and
passed on to the Tribe or any other governmental or quasi governmental entity;
	 
	 	(v)	 	any proceeds from the sale or other disposition of furnishings
and equipment or other capital assets;
	 
	 	(vi)	 	any fire and extended coverage insurance proceeds other than
for business interruption;
	 
	 	(vii)	 	any condemnation awards other than for temporary condemnation;
and
	 
	 	(viii)	 	any interest on bank account(s).




It is intended that this provision be interpreted to be consistent with 25 U.S.C. § 2703(9).




     2.60 Net Revenues (other). “Net Revenues (other)” shall mean all Gross Revenues from
Non-Gaming Operations not included in “Net Revenues (gaming)”. “Net Revenues (other)” includes room
revenues from operation of a hotel, food and beverage, entertainment, and retail, less all
Non-Gaming related Operating Expenses, excluding the Management Fee, and less the retail value of
Promotional Allowances. Notwithstanding the foregoing, the following shall be excluded from “Net
Revenues (other)”:




	 	(i)	 	any gratuities or service charges added to a customer’s bill;
	 
	 	(ii)	 	any credits or refunds made to customers, guests or patrons;
	 
	 	(iii)	 	any sums and credits received by the Operating Companies for
lost or damaged merchandise;
	 
	 	(iv)	 	any sales taxes, excise taxes, gross receipt taxes, admission
taxes, entertainment taxes, tourist taxes or charges received from patrons and




8









 






	 	 	 	passed on to the Tribe or any other governmental or quasi governmental
entity;
	 
	 	(v)	 	any proceeds from the sale or other disposition of furnishings
and equipment or other capital assets;
	 
	 	(vi)	 	any fire and extended coverage insurance proceeds other than
for business interruption;
	 
	 	(vii)	 	any condemnation awards other than for temporary condemnation;
	 
	 	(viii)	 	any interest on bank account(s); and
	 
	 	(ix)	 	all revenues derived from Ski Apache Operations.




It is intended that this provision be interpreted to be consistent with 25 U.S.C. § 2703(9).




     2.61
NIGC. “NIGC” has the meaning set forth in Section 1.8.


     2.62 Non-Gaming Operations. “Non-Gaming Operations” shall mean the operation of the
Businesses and any lawful commercial activity allowed in the Facilities other than Gaming
Operations including, but not limited to, hotel operations, restaurants, Travel Center operations,
Ski Apache operations, conventions, business meetings, Automatic Teller Machines (“ATM”), and the
sale of gifts and souvenirs. The Non-Gaming Operations shall not include any commercial business
conducted by the Tribe or any commercial business not located within the Facilities.



     2.63 Operating Budget and Annual Plan. “Operating Budget and Annual Plan” shall mean
the operating budget and plan described in Section 4.8.



     2.64 Operating Companies “Operating Companies” has the meaning set forth in Section
1.4.



     2.65 Operating Expenses. “Operating Expenses” shall mean all expenses of the
operation of the Operating Companies (but, notwithstanding any other term or provision of this
Agreement to the contrary, excluding all expenses of Ski Apache Operations) pursuant to GAAP,
including but not limited to the following:




	 	(i)	 	the payment of salaries, wages, and benefit programs for
Business Employees;
	 
	 	(ii)	 	Operating Supplies for the Businesses;
	 
	 	(iii)	 	utilities;
	 
	 	(iv)	 	repairs and maintenance of the Facilities (excluding Capital
Replacements);
	 
	 	(v)	 	interest accruing under any indebtedness of the Operating
Companies;




9









 






	 	(vi)	 	interest on installment contract purchases or other interest
charges on debt of the Operating Companies approved by the Management Board;
	 
	 	(vii)	 	insurance and bonding;
	 
	 	(viii)	 	advertising and marketing, including busing and transportation of patrons to
the Facilities;
	 
	 	(ix)	 	accounting, legal and other professional fees, including those
of the Tribe directly related to Gaming Operations;
	 
	 	(x)	 	security and surveillance costs;
	 
	 	(xi)	 	reasonable travel expenses for Business Employees directly
related to the operation of the Businesses and subject to the approved Annual
Budget and Operating Plan;
	 
	 	(xii)	 	operating lease payments for Furnishings and Equipment to the
extent approved by the Tribal Council;
	 
	 	(xiii)	 	trash removal;
	 
	 	(xiv)	 	costs of goods sold;
	 
	 	(xv)	 	other expenses designated as Operating Expenses in accordance
with the accounting standards as referred to in Section 4.17.3;
	 
	 	(xvi)	 	expenses specifically designated as Operating Expenses in this
Agreement;
	 
	 	(xvii)	 	depreciation and amortization of the Facilities based on schedules used by
the Operating Companies as of the Execution Date, and depreciation and
amortization of all other assets, each in accordance with GAAP;
	 
	 	(xviii)	 	recruiting and training expenses;
	 
	 	(xix)	 	any required fees due to state or federal agencies pursuant to
applicable state and federal law;
	 
	 	(xx)	 	any required payments to the State or local governments made by
or on behalf of the Businesses or the Tribe pursuant to the Compact or any
other governmental agreement;
	 
	 	(xxi)	 	any services payments or community benefit payments to be made
for city services such as for fire, police and other services;
	 
	 	(xxii)	 	any budgeted charitable contributions by the Businesses;




10









 






	 	(xxiii)	 	charges, assessments, fines or fees imposed by governmental entities of the
Tribe which are reasonably related to the cost of Tribal governmental
regulation of public health, safety or welfare, or the integrity of Tribal
gaming operations; and
	 
	 	(xxiv)	 	reasonable expense reserves.





     2.66 Operating Supplies. “Operating Supplies” shall mean food and beverages (alcoholic
and nonalcoholic) and other consumable items used in the operation of the Businesses, such as
playing cards, tokens, chips, plaques, dice, fuel, soap, cleaning materials, matches, paper goods,
stationery and all other similar items.



     2.67 Party. “Party” or “Parties” has the meaning set forth in the first paragraph of
this Agreement.



     2.68 Promotional Allowances. “Promotional Allowances” shall mean the retail value of
complimentary food, beverages, merchandise, and tokens for gaming, provided to patrons as
promotional items.



     2.69 Qualified. “Qualified” shall mean having the ability to provide the same or
similar quality goods or services at competitive prices as non-tribal competitors, having
demonstrated skills and abilities to perform the tasks to be undertaken in an acceptable manner and
able to meet the bonding requirements of Manager applicable to non-tribal competitors.



     2.70 Regulatory Cap. “Regulatory Cap” has the meaning set forth in Section 6.3.



     2.71 Representatives. “Representatives” has the meaning set forth in Section 7.4.2.



     2.72 Reservation. “Reservation” has the meaning set forth in Section 1.2.



     2.73 Resort. “Resort” has the meaning set forth in Section 1.4.



     2.74 Ski Apache. “Ski Apache” has the meaning set forth in Section 1.4.



     2.75 Ski Apache Entity. “Ski Apache Entity” has the meaning set forth in the first
paragraph of this Agreement.



     2.76 Ski Apache Operations. “Ski Apache Operations” means all operations of Ski
Apache.



     2.77 Soft Count. “Soft Count” shall mean the count of the contents in a drop box
(Tables) or the bill validator acceptor (Gaming machine).



     2.78 State. “State” shall mean the state of New Mexico.



     2.79 Suspension of Gaming Operations. “Suspension of Gaming Operations” shall mean an
occurrence pursuant to which the conduct of all Gaming Operations at the Businesses



11









 




has been rendered illegal, impossible or impracticable by virtue of a change in Legal Requirements or by
virtue of condemnation or casualty with respect to the Businesses.




     2.80 Term. “Term” has the meaning set forth in Section 3.2.



     2.81 Traditional Bingo. “Traditional Bingo” shall mean bingo that is conducted (i)
without the use of a slot machine or similar device commonly known as a “Class II slot machine”,
(ii) at a location separate and apart from the Businesses, and (iii) such that with respect to each
game, the numbers drawn are the same for all players at the site of the game (as opposed to players
at the site contemporaneously playing different games using different number generators).



     2.82 Travel Center. “Travel Center” has the meaning set forth in Section 1.4.



     2.83 Travel Center Entity. “Travel Center Entity” has the meaning set forth in the
first paragraph of this Agreement.



     2.84 Tribe. “Tribe” has the meaning set forth in the first paragraph of this
Agreement.



     2.85 Tribal Confidential Information. “Tribal Confidential Information has the
meaning provided in Section 7.4.1.



     2.86 Tribal Council. “Tribal Council” shall mean the Mescalero Apache Tribal Council
which is recognized by the United States Department of the Interior as the governing body of the
Tribe.



     2.87 Tribal Gaming Commission. “Tribal Gaming Commission” has the meaning set forth
in Section 1.3.



     2.88 Tribal Indebtedness. “Tribal Indebtedness” means, as of any given time, any and
all indebtedness for borrowed money then outstanding under which any Tribal Party is a borrower or
obligor, but excluding, for the avoidance of doubt, trade payables of the Businesses and any
amounts owing to the Manager hereunder.



     2.89 Tribal Parties. “Tribal Parties” is defined in Section 1.4.



     2.90 Tribal Priority Distribution. “Tribal Priority Distribution” shall mean a
distribution payable to the Tribe in an amount equal to $641,667 per month.



     2.91 Warner. “Warner” means William W. Warner.



     2.92 Warner Parties. “Warner Parties” means the Manager and Warner collectively.


3. Engagement; Term; Other Agreements. In consideration of the mutual covenants contained
in this Agreement, the Parties agree as follows:







12









 








     3.1 Engagement of Manager. The Operating Companies hereby retain and engage Manager
as the exclusive manager of each of the Businesses pursuant to the terms and conditions of this
Agreement, and Manager hereby accepts such retention and engagement.



     3.2 Term. The Term of this Agreement shall begin on the Effective Date and continue
for a period of five (5) years after the Effective Date, unless this Agreement is otherwise
terminated prior to such time pursuant to the terms hereof (the “Term”).



     3.3 Status of Reservation and Businesses; Exclusive Rights. The Tribal Parties
covenant that, during the Term, the Manager shall have complete peaceable access to and presence in
the Businesses in accordance with the terms of this Agreement, free from molestation, eviction and
disturbance by the Tribe or by any other person or entity; provided, however, that such right of
access to and presence in the Businesses shall cease upon the termination of this Agreement for any
reason, except to the extent necessary for Manager to perform its obligations pursuant to Article
11. The Operating Companies represent and warrant to the Manager that as of the Execution Date,
Gaming is not conducted anywhere on the Reservation other than at the Resort and the Travel Center.
The Tribal Parties agree that, during the Term: (a) the Manager will have the exclusive right to
develop Gaming (other than Traditional Bingo) and facilities housing such operations to the extent
any such gaming operations and facilities are developed beyond the scope in effect as of the
Execution Date and (b) the Manager will have the exclusive right to operate Gaming (other than
Traditional Bingo) on the Reservation. The Manager agrees that it will not have the right to
develop or operate Traditional Bingo and agrees that Traditional Bingo may be conducted on the
Reservation outside of the scope of this Agreement.



     3.4 Management Board. With respect to any matter requiring the approval or consent of
the Management Board pursuant to this Agreement: (i) the Manager will receive advance notification
of any meeting of the Management Board at which the Management Board will deliberate on such
matter, and will be given the reasonable opportunity to be present at such meeting and heard with
respect to such matter, subject to the right of the Management Board to deliberate in executive
session without the presence of the Manager or its designated representative after the Manager has
been given a reasonable opportunity to be heard with respect to such matter, and (ii) the
Management Board will not unreasonably withhold, delay or condition any such consent or approval.
The Enterprise represents and warrants to the Manager that the Management Board is vested with the
authority to manage the affairs of all of the Operating Companies, and that the Management Board
By-Laws have not been amended or modified from their form as adopted on March 25, 2004, a true and
correct copy of which has been provided to the Manager, and further covenants: (a) to provide to
Manager true and correct copies of any amendments or modifications to the Management Board By-Laws,
(b) to consult with the Manager in advance of adopting any amendments or modifications to the
Management Board By-Laws that could reasonably be expected to materially impact the approval or
consent process of any matters relating to this Agreement, (c) during the Term, the Management
Board will remain in existence and active with respect to the consideration, review and approval of
matters relating to this Agreement, and (d) to provide the Manager with true and correct copies of
all minutes of Management Board meetings at which matters pertaining to this Agreement are
deliberated or discussed; provided, however, that the content of any discussions held in executive
session may be redacted from copies of such minutes.



13









 





     3.5 Compliance with Law; Licenses. Each Party covenants that it will at all times
comply with all Legal Requirements in connection with the performance of its duties under this
Agreement. Without limitation of the foregoing, the Parties agree that all Gaming Operations will
be conducted in accordance with IGRA and the Gaming Ordinance. The Tribe shall not unreasonably
withhold, delay, withdraw, qualify or condition such licenses as the Tribe is authorized to grant.



     3.6 Gaming Ordinance. The Tribe covenants that, except as required by applicable
federal or state law or regulation: (i) any amendments made to the Gaming Ordinance and the
regulations promulgated thereunder will be a legitimate effort to ensure that Gaming is conducted
in a manner that adequately protects the environment, public health and safety, and the integrity
of the Businesses; (ii) it will not amend the Gaming Ordinance, the regulations promulgated
thereunder or any other ordinances or resolutions (nor adopt new ordinances, regulations or
resolutions) in a manner that would materially and adversely impair Manager’s rights under this
Agreement; and (iii) Manager will be given a reasonable opportunity to comment on the Gaming
Ordinance and any proposed amendments to the Gaming Ordinance, the regulations promulgated under
it, and any changes to any system for internal controls prior to their enactment.



     3.7 Fire and Safety. Manager shall maintain the Facilities in compliance with all
Legal Requirements related to fire and safety. Nothing in this Section shall grant any
jurisdiction to the State or any political subdivision thereof over the Businesses or the
Facilities, except as otherwise provided or required by applicable law. The Tribe shall be
responsible for arranging fire protection, emergency ambulance and medical services, and police
services for the Facilities. The costs incurred in good faith of such increased public safety
services attributable to the Facilities shall be an Operating Expense.



     3.8 Compliance with the Environmental Laws. The Operating Companies shall comply with
applicable environmental Legal Requirements to the extent applicable, with the assistance of
Manager as reasonably requested by the Operating Companies.



     3.9 Nonrecruitment and Noncompete Covenants.




     3.9.1 Nonrecruitment of Employees. The Tribal Parties, on the one hand, and
the Warner Parties, on the other hand, hereby agree that, during the Term and for a period
of one year after the expiration of or any termination of this Agreement, they and their
respective Affiliates shall not directly or indirectly employ, cause to be employed, solicit
or recruit for engagement or employment, or encourage to leave employment with the other,
any employee of the other or any of their Affiliates; provided that the foregoing shall not
be deemed to prohibit general advertisement or solicitations that are not directed to such
employees, nor shall anything in the foregoing apply to any employee of the Tribal Parties,
who, within twelve (12) months prior to the commencement of employment with a Tribal Party,
were employed by the Manager or any of its Affiliates.




     3.9.2 Noncompetition. The Warner Parties hereby agree that, during the Term
and for a period of one year after the expiration of or any termination of this Agreement,
neither the Manager, Warner nor any of their respective Affiliates shall conduct any



14









 






Business Activity (as defined below) within the Restricted Area (as defined below).
“Business Activity” shall mean: (i) the provision of any consulting service to any
gaming or hospitality enterprise, business or venture, including but not limited to any
hotel, casino, racetrack, off-track betting parlor or similar enterprise; (ii) the
ownership, operation or management of any gaming or hospitality enterprise, business or
venture, including, but not limited to, any hotel, casino, racetrack, off-track betting
parlor or similar enterprise; (iii) entering into a partnership, joint venture, or similar
arrangement, the purpose of which is the ownership, operation or management of any gaming or
hospitality enterprise, business or venture, including, but not limited to, any hotel,
casino, racetrack, off-track betting parlor or similar enterprise; or (iv) the acquisition
of an ownership interest in any entity that operates any gaming or hospitality enterprise,
business or venture, including, but not limited to, any hotel, casino, racetrack, off-track
betting parlor or similar enterprise, or which provides management or consulting services to
the same. “Restricted Area” shall mean: Otero County, New Mexico, and each county
in New Mexico and Texas that is contiguous to Otero County, New Mexico.




     3.9.3 Enforceability. Each of the Tribal Parties, on the on hand, and the
Warner Parties, on the other hand, acknowledges and agrees that the obligations set forth in
Sections 3.9.1 and 3.9.2 hereof are a direct inducement for the other to enter into this
Agreement. Further, the Warner Parties acknowledge that the Operating Companies have a
current and future expectation of business within the Restricted Area. Each Tribal Party
and each Warner Party acknowledges that the term, geographic area, and scope of the
covenants set forth in this Section 3.9 are reasonable, and agrees that it will not, in any
action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness
of, the premises, consideration or scope of such covenants. Specifically, each Warner Party
further acknowledges that complying with the provisions contained in Section 3.9.2 of this
Agreement will not prevent it or its Affiliates or its Affiliates’ employees, officers,
directors or agents from engaging in a lawful profession, trade or business, or from
becoming gainfully employed. Each Tribal Party and Warner Party agrees that the obligations
undertaken by such party under Sections 3.9.1 and 3.9.2 hereof are separate and distinct
under this Agreement, and the failure or alleged failure of any other Party hereto to
perform its obligations under any other provisions of this Agreement shall not constitute a
defense to the enforceability thereof. Each Tribal Party and each Warner Party agrees that
if any portion of Sections 3.9.1 or 3.9.2 hereof is deemed to be unenforceable because the
geography, time or scope of activities restricted is deemed to be too broad, the court shall
be authorized to substitute for the overbroad term an enforceable term that will enable the
enforcement thereof to the maximum extent possible under applicable law. Each Tribal Party
and each Warner Party acknowledges and agrees that any breach or threatened breach by such
party of its obligations under Sections 3.9.1 or 3.9.2 hereof will result in irreparable
damage and injury to the other Parties hereto and their Affiliates and that the
non-breaching Parties will be entitled to exercise all rights including, without limitation,
obtaining one or more temporary restraining orders, injunctive relief and other equitable
relief, including specific performance in the event of any breach or threatened breach
thereof, in any federal or state court of competent jurisdiction in New Mexico without the
necessity of posting any bond or security (all of which are waived by the Parties hereto),



15









 






and to exercise all other rights or remedies, at law or in equity, including, without
limitation, the rights to damages.




     3.9.4 Joinder by William W. Warner. By his joining in the execution of this
Agreement as provided in the joinder hereto, Warner agrees to all terms and provisions of
this Section 3.9 and all subsections hereof, and further agrees to personally perform and be
bound by all of the obligations undertaken by Warner and/or the Warner Parties pursuant to
this Section 3.9 and all subsections hereof; provided, that nothing in Section 3.9.2 will
prohibit Warner from acquiring or holding any publicly held security in a business entity
provided that the total holdings “beneficially owned” (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) by Warner comprise less than five percent (5%)
of all of the issued and outstanding equity in such entity.



     3.10 Covenant of Good Faith and Fair Dealing. Each Party agrees to act in good faith
in dealing with one another pursuant to this Agreement. Each Party hereby covenants to the others
that it shall not undermine the rights of the other Parties hereto with respect to the Agreement
and will cooperate with each other in achieving the goals of this Agreement; provided, however,
that nothing in the foregoing will be deemed to limit or otherwise affect the rights of a Party to
terminate this Agreement or seek remedies for defaults hereunder, all as provided for in this
Agreement.


4. Management and Operation of Businesses.




     4.1 Manager’s Authority and Responsibility. During the Term, Manager shall have the
exclusive authority to, and Manager shall, conduct and direct all business and affairs in
connection with the day-to-day operation, management and maintenance of the Businesses, except with
respect to matters that, pursuant to the express provisions of this Agreement require the approval
of the Management Board or the Tribe. Without limitation of the foregoing, the Manager shall
establish the operating days and hours for the Businesses; provided that it is the Parties’
intention that Gaming be conducted on days and hours to the maximum extent permitted under the
Compact. Manager is hereby granted the necessary power and authority to act in order to fulfill
all of its responsibilities under this Agreement. Nothing herein grants or is intended to grant
Manager a titled interest to the Businesses. The Tribe shall have the sole proprietary interest in
all Gaming, subject to the rights and responsibilities of Manager under this Agreement.



     4.2 Duties of Manager. Manager’s duties shall include, without limitation, the
following:




     4.2.1 Physical Duties. Manager shall use reasonable measures for the orderly
physical administration, management, and operation of the Facilities, including without
limitation cleaning, painting, decorating, plumbing, carpeting, grounds care and such other
maintenance and repair work as is reasonably necessary.




     4.2.2 Required Filings. Manager shall comply with all applicable provisions of
the Internal Revenue Code including, but not limited to, the prompt filing of any cash



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transaction reports and W-2G reports that may be required by the Internal Revenue
Service of the United States or under the Compact.




     4.2.3 Contracts. Contracts relating to the operations of the Businesses shall
be entered into in the name of the appropriate Operating Company and may be executed on
behalf of the appropriate Operating Company by either the Chief Operating Officer or the
Managing Officer; provided that, except with respect to renewals of pre-existing contracts,
any expenditure or contract with a value or potential exposure in excess of $50,000 must be
approved in advance by the Management Board. No expenditures, of any amount, for the supply
of goods or services to the Businesses shall be entered into with an Affiliate or Insider of
the Manager unless such relationship is disclosed to and approved in advance by the
Management Board. Nothing contained in this Section 4.2.3 shall be deemed to be or
constitute a waiver of the Tribe’s sovereign immunity.




     4.2.4 Operating Standards. Manager shall operate the Businesses in a proper,
efficient and competitive manner in accordance with the operating standards which are
consistent with “4-star/4- diamond” hospitality standards; provided however, that the Tribal
Parties acknowledge that the Manager does not control the hospitality ratings as they are
published by various publications, and no level of rating or ratings as they are published
by any publication shall constitute a breach of the Manager’s obligations under this Section
4.2.4, so long as the Manager operates the Businesses at a standard no lower than the
standards at which they are operated as of the Execution Date.




     4.2.5 Advertising. Manager shall be responsible for placing advertising.




     4.2.6 Payment of Bills and Expenses. Manager shall be responsible for promptly
paying bills and expenses as they become due.



     4.3 Security and Surveillance. Manager shall be responsible for providing for
appropriate security for the operation of the Businesses (including the hiring and supervision of
security personnel), subject to regulatory oversight and access of the Tribal Gaming Commission,
and all other Legal Requirements. A surveillance system (including without limitation, closed
circuit television) for monitoring the activities of the customers, employees, supervisors and
management personnel, as well as tracking the movement of all funds into, within and out of the
Businesses and Facilities, shall be maintained by either the Manager or the Tribal Gaming
Commission (as the Management Board directs).



     4.4 Damage, Condemnation or Impossibility of the Businesses.




     4.4.1 Change in Legal Requirements. If a Suspension of Gaming Operations
occurs by virtue of applicable Legal Requirements, Manager shall, subject to the provisions
in Section 4.4.3, continue its interest in this Agreement and shall commence or recommence
the operation of Gaming Operations at such time as such commencement or recommencement shall
no longer be prohibited by Legal Requirements. If Manager fails to commence or recommence
Gaming Operations within a reasonable time after which Gaming Operations are no longer
prohibited by Legal Requirements, the Tribe, at its option shall have the right to terminate
this Agreement.



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     4.4.2 Condemnation or Casualty. If the Businesses (or a material portion
thereof) are damaged, destroyed or condemned, the Businesses shall be reconstructed and/or
restored if the insurance or condemnation proceeds are sufficient to restore or replace the
Businesses to a condition at least comparable to that before the casualty or condemnation
occurred. If the insurance proceeds or condemnation awards are not sufficient and are not
used to restore the Businesses, the Enterprise and Manager shall jointly adjust and settle
any and all claims for such insurance proceeds or condemnation awards, and such proceeds or
awards shall be applied: first, to amounts required to be repaid under any indebtedness of
the Operating Companies pursuant to the express terms of such indebtedness; second, to any
amounts owing to the Manager (including, without limitation, accrued but undistributed
Management Fees); and third, the surplus shall be distributed as directed by the Enterprise.




     4.4.3 Manager’s Right to Terminate Upon Suspension of Gaming Operations Due to
Applicable Legal Requirements. Manager shall have the option at any time within a sixty
(60) day period following the commencement of a Suspension of Gaming Operations due to
applicable Legal Requirements to notify the Tribe in writing that it is terminating this
Agreement no sooner than one hundred twenty (120) days from the date of notice of its
election under this provision, in which case Manager shall retain the rights it may have to
undistributed Net Revenues pursuant to Article 6 of this Agreement and rights to repayment
of amounts owed to it by the Operating Companies. If Manager does not elect to terminate
this Agreement, Manager shall take reasonable action to reduce expenses during such
Suspension of Gaming Operations.



     4.5 Alcoholic Beverages and Tobacco Sales. During the Term, alcoholic beverages may
be served at the Businesses if permitted pursuant to all Legal Requirements. Tobacco and tobacco
products may be sold at the Businesses if permitted pursuant to all Legal Requirements.



     4.6 Employees.




     4.6.1 Manager’s Responsibility for Employees. All Business Employees shall be
employees of the Operating Companies and not of the Manager (except with respect to any
Business Employees that the Manager agrees will be an employee of the Manager).
Notwithstanding the foregoing, during the Term, the Operating Companies delegate to the
Manager (which delegation may not be revoked while this Agreement is in force and effect)
and agree that the Manager shall have, subject to the terms of this Agreement (including,
without limitation, Section 4.6.3), (i) the exclusive responsibility and authority to direct
the selection, control, promotion, discipline, and discharge of all Business Employees, and
(ii) the exclusive responsibility and control for determining whether a prospective employee
is qualified subject to the Indian preference provisions set forth herein, and the
appropriate level of compensation to be paid, subject to tribal law; provided, however, that
the selection, promotion, and compensation of any Key Business Employee will be subject to
the prior approval of the Management Board.




     4.6.2 Business Employee Policies. Manager shall adopt and administer standard
personnel policies and procedures (the “Business Employee Policies”), subject to the
approval of the Management Board. The Business Employee Policies shall include



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a job classification system with compensation levels and scales. The Business Employee
Policies shall include the grievance procedure set forth on Exhibit “A” attached hereto,
provided that nothing herein shall authorize Manager to waive the Tribal Parties’ sovereign
immunity from suit in any action brought by an aggrieved employee. Manager may, with
advance notice to and approval of the Management Board, modify the Business Employee
Policies. All such actions and policies shall comply with Legal Requirements.




     4.6.3 Employment Suitability. No individual whose prior activities, criminal
record, if any, or reputation, habits and associations are known to pose a threat to the
public interest, the effective regulation of Gaming, or to the gaming licenses of Manager or
any of its Affiliates, or to create or enhance the dangers of unsuitable, unfair or illegal
practices and methods and activities in the conduct of Gaming, shall knowingly be employed
by Manager or the Operating Companies. Without limitation of the foregoing, (i) the Tribal
Gaming Commission shall have the exclusive right to determine the licensing suitability of
any Business Employee and shall be solely responsible for the licensing of each Business
Employee and (ii) no person that has been found unsuitable by the Tribal Gaming Commission
or that has not received a license as required by the Tribal Gaming Commission may be a
Business Employee The background investigation procedures employed by the Tribal Gaming
Commission shall satisfy all regulatory requirements independently applicable to Manager in
connection with the Gaming Operation. Any costs associated with obtaining such background
investigations shall constitute an Operating Expense. Notwithstanding the foregoing, all
background investigations of Manager (including the Manager’s Affiliates) shall not
constitute an Operating Expense or an expense of the Enterprise and shall be paid by
Manager.




     4.6.4 No Manager Wages or Salaries. Neither Manager nor Manager’s Affiliates
nor any of their officers, directors, shareholders, or employees (other than Business
Employees) nor any of their respective Insiders shall without Management Board approval
receive any payment from any of the Operating Companies, other than the Management Fee or
other amounts to be paid to Manager under Section 6.1 and reimbursement of certain expenses
as provided in Section 6.2.




     4.6.5 Tribal Regulatory Costs. The tribal regulatory fee for the initial year
(or partial year) of the Gaming Operations that is chargeable as an Operating Expense shall
not exceed $2,520,000.00 (adjusted on a pro-rata basis for any partial year). After the
initial year of this Agreement, the tribal regulatory fee chargeable as an Operating Expense
shall be determined in conjunction with the Annual Plan and Operating Budget, but, in any
event, it shall be in such amount as is reasonably sufficient to properly monitor, audit and
regulate the Gaming Operations pursuant to applicable federal, state and tribal laws and
regulations. Subject to the maximum amounts described above, payments of one-fourth (1/4)
of the Tribal Gaming Commission’s annual approved budget shall be payable to the Tribe’s
bank account specified by the Tribal Council in a notice to Manager pursuant to Section 19.1
on or about January 1st, April 1st, July 1st and October 1st of each calendar year. Such
payments shall not be combined with any other payments to the Tribe. Tribal regulatory fees
shall be an Operating Expense. Funding in excess of the amounts of this Section 4.6.5 shall
be an expense of the Tribe.



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     4.6.6 Indian Preference, Recruiting and Training. Notwithstanding any other
provision of this Agreement, in order to maximize benefits of the Operating Companies to the
Tribe, Manager shall, during the Term, to the extent permitted by applicable law, including
but not limited to the Indian Civil Rights Act, 25 U.S.C. §1301 et seq., give
preference in recruiting, training and employment to qualified members of the Tribe, their
spouses and children and enrolled members of other federally recognized Indian tribes in all
job categories of the Operating Companies. In doing so, Manager shall:




	 	(i)	 	abide by any duly enacted Tribe preference
laws;
	 
	 	(ii)	 	give such preferences in the following order of
preference to the extent consistent with law;






	 	(a)	 	enrolled members of the Tribe;
	 
	 	(b)	 	spouses, parents or children of
members of the Tribe; and
	 
	 	(c)	 	enrolled members of other
federally recognized Indian Tribes;






	 	(iii)	 	conduct job fairs and skill assessment
meetings with members of the Tribe; and
	 
	 	(iv)	 	in consultation with and subject to approval of
the Management Board, develop and conduct a management training program
for members of the Tribe or people selected by the Management Board,
which shall be structured to provide appropriate training for those
participating to assume full managerial control of the Businesses at
the conclusion of the Term.





     4.7 Preference in Contracting. In entering into contracts for the supply of goods and
services for the Businesses, Manager shall give preference to Qualified members of the Tribe, and
Qualified business entities certified by the Tribe as controlled by members of the Tribe and
spouses, parents and children of members of the Tribe and businesses controlled by such persons in
the following order of preference: (i) Qualified members of the Tribe; (ii) Qualified business
entities certified by the Tribe as controlled by members of the Tribe; and (iii) spouses, parents
and children of members of the Tribe and businesses controlled by such persons. To the extent
commercially practicable, the Manager shall provide written notice to the Management Board in
advance of all such contracting, subcontracting and construction opportunities.



     To the extent that any tribal employment ordinance enacted by the Tribe conflicts with or
provides for employment standards or requirements different than those set forth above, the terms,
employment standards and requirements of the tribal ordinance shall control provided such
preference does not have a material adverse effect on this Agreement. The Manager shall notify the
Management Board of any contract awarded to any person or entity described in clauses (i), (ii) and
(iii) of the first sentence of this Section 4.7.



     4.8 Operating Budget and Annual Plan. Manager shall, in consultation with the
Management Board, not less than 45 calendar days prior to the commencement of each full or



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partial Fiscal Year during the Term, submit to the Management Board, for its approval, a
proposed Operating Budget and Annual Plan for the ensuing Fiscal Year. The Management Board shall
have the opportunity to make additions to the proposed Operating Budget and Annual Plan. The
Operating Budget and Annual Plan shall include a projected income statement, balance sheet, and
projection of cash flow for the Operating Companies, separately and on a combined basis, for such
Fiscal Year, with detailed justifications explaining the assumptions used therein and included with
the Operating Budget and Annual Plan shall be a schedule of repairs and maintenance (other than
Capital Replacements) expected during such Fiscal Year, a business and marketing plan for such
Fiscal Year, and the Minimum Balance which must remain in the Bank Accounts and the House Bank as
of the end of each month during such Fiscal Year to assure sufficient monies for working capital
purposes, and other expenditures authorized under the Operating Budget and Annual Plan. The
Management Board may, in its sole discretion, engage an independent firm or firms with expertise in
gaming operations to consult with concerning the Operating Budget and Annual Plan and the Capital
Budget (the “Financial Advisor”). The costs of the Financial Advisor, up to a maximum of
Fifty Thousand and No/100 $50,000.00 per year, shall be an Operating Expense.




     The Operating Budget and Annual Plan for the Operating Companies will be comprised of the
following (prepared on a combined basis for all Operating Companies and a separate basis for each
Operating Company):




     (a) a statement of the estimated income and expenses for the coming Fiscal Year,
including estimates as to Gross Revenues and Operating Expenses for such Fiscal Year, such
operating budget to reflect the estimated results of the operation during each month of the
subject Fiscal Year;




     (b) either as part of the statement of the estimated income and expenses referred to in
the preceding clause (a), or separately, budgets (and timetables and requirements of
Manager) for:




	 	(i)	 	repairs and maintenance;
	 
	 	(ii)	 	Capital Replacements;
	 
	 	(iii)	 	Furnishings and Equipment;
	 
	 	(iv)	 	advertising and business promotion programs; and
	 
	 	(v)	 	the estimated cost of Promotional Allowances;






     (c) a business and marketing plan for the subject Fiscal Year.



     The Management Board’s approval of the Operating Budget and Annual Plan shall proceed with all
deliberate speed and shall not be unreasonably withheld or delayed. The Management Board shall
meet within ten (10) business days of the delivery of the proposed Operating Budget and Annual
Plan. The Management Board shall deliver to the Manager any objection or addition to the proposed
Operating Budget and Annual Plan within forty-five (45) calendar days of its
delivery to the Management Board. Such objections and additions must contain specific detail as



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to any line item to which an objection is made and specific detail as to why an addition should be
made.




     If the Management Board is unable to resolve the additions, or disputed or objectionable
item(s) prior to the commencement of the applicable Fiscal Year, the undisputed portions of the
proposed Operating Budget and Annual Plan shall be deemed to be adopted and approved and the
corresponding line item(s) contained in the Operating Budget and Annual Plan for the preceding
Fiscal Year shall be adjusted as set forth in the following sentence and shall be substituted in
lieu of the disputed item(s) in the proposed Operating Budget and Annual Plan. Those line items
which are in dispute shall be determined by increasing the preceding Fiscal Year’s actual expense
for the corresponding line items by an amount determined by Manager which does not exceed the All
Items Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of
the United States Department of Labor, U.S. City Average (1982-1984 = 100) for the Fiscal Year
prior to the Fiscal Year with respect to which the adjustment to the line item(s) is being
calculated or any successor or replacement index thereto (provided, however, in no event will the
foregoing described adjustment result in a budgeted expense for a line item that is lower than the
actual expense amount for the preceding Fiscal Year). The resulting Operating Budget and Annual
Plan obtained in accordance with the preceding sentence shall be deemed to be the Operating Budget
and Annual Plan in effect until such time as the Management Board has resolved the items in
dispute.



     The Manager may, after notice to and approval from the Management Board, revise the Operating
Budget and Annual Plan from time to time, as necessary, to reflect any unpredicted significant
changes, variables or events or to include significant, additional, unanticipated items of expense.
Further, after notice to the Management Board, the Manager may reallocate part or all of the
amount budgeted with respect to any line item to another line item within the same Department and
may make such other modifications to the Operating Budget and Annual Plan as Manager deems
necessary, provided that the total amount budgeted for any Department in the Operating Budget and
Annual Plan may not be adjusted by more than 5% without approval from the Management Board. The
Manager shall provide the Management Board with a revised Operating Budget and Annual Plan on a
quarterly basis. The Tribal Parties acknowledge that the Operating Budget and Annual Plan is
intended only to be a reasonable estimate of the Businesses’ revenues and expenses for the ensuing
Fiscal Year. The Manager shall not be deemed to have made any guarantee concerning projected
results contained in the Operating Budget and Annual Plan.



     4.9 Capital Budgets. The Manager shall, not less than sixty (60) calendar days prior
to the commencement of each Fiscal Year, submit to the Management Board for its approval a
recommended capital budget (the “Capital Budget”) describing the cost, estimated useful
life and estimated replacement costs (together with the business purpose for any such replacement
or capital expenditure) for the ensuing Fiscal Year, for the physical plant, furnishings,
equipment, and ordinary capital replacement items, all of which are defined to be any items, the
cost of which is capitalized and depreciated, rather than expensed, using GAAP (“Capital
Replacements”) as shall be required to operate the Businesses in accordance with sound business
practices. Expenditures for Capital Replacements shall be subject to approval by the Management
Board. The Management Board shall meet to discuss the proposed Capital Budget.
The Manager shall be responsible for the design and installation of Capital Replacements.




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     4.10 Capital Replacements. The Operating Companies shall expend such amounts for any
Capital Replacements as shall be required, in the course of the operation of the Businesses, to
maintain, at a minimum, the Businesses in compliance with any Legal Requirements and to comply with
Manager’s recommended programs for renovation, modernization and improvement intended to keep the
Businesses competitive in their market, or to correct any condition of an emergency nature. Such
condition of an emergency nature (“Emergency Condition”) shall include without limitation,
maintenance, replacements or repairs which require immediate action to preserve and protect the
Businesses, assure their continued operation, and/or protect the comfort, health, safety and/or
welfare of the Businesses’ guests or Business Employees. In no event, however, shall the Operating
Companies be under any obligation to fund Capital Replacements in an aggregate amount greater than
its periodic required contributions to the Capital Replacement Reserve described in Section 4.12.
Manager may take all steps and make all expenditures from the Disbursement Account described in
Section 4.15.3 (in the case of non-capitalized repairs and maintenance), or Capital Replacement
Reserve described in Section 4.11 (in the case of expenditures for Capital Replacements) as are
reasonably necessary to repair and correct any Emergency Condition, regardless of whether such
provisions have been made in the Capital Budget or the Operating Budget and Annual Plan for any
such expenditures. Manager shall give notice to the Management Board within a reasonable time of
any expenditure in excess of $25,000.00 for any Emergency Condition.



     4.11 Capital Replacement Reserve. Manager shall establish a Capital Replacement
Reserve on the books of account of the Operating Companies, and the periodic contributions of cash
required by Section 4.12 shall be deposited by the Manager into an account (the “Capital
Replacement Reserve”) established in the Enterprise’s name at a bank designated by the
Management Board in accordance with Section 4.15.1 hereof. All amounts in the Capital Replacement
Reserve shall be invested in interest-bearing investments as approved by Manager and the Management
Board to the extent that the availability of funds, when required, is not thereby impaired.
Interest earned on amounts deposited in the Capital Replacement Reserve shall be credited to the
Capital Replacement Reserve and shall be available for payment of expenditures for Capital
Replacements to the Businesses. The Manager shall draw on the Capital Replacement Reserve for
Capital Replacements to purchase those items included in the Capital Budget approved by the
Management Board or to fund such emergency additions, repairs or replacements as shall be required
to correct an Emergency Condition.



     4.12 Periodic Contributions to Capital Replacement Reserve. Within 20 days of the end
of each calendar month during the Term, Manager shall make monthly deposits into the Capital
Replacement Reserve in amounts equivalent to 2.0% of Gross Revenues (less Promotional Allowances)
for such calendar month. If any adjustment of Gross Revenues (or Promotional Allowances) is made
as a result of an audit or for other accounting reasons, a corresponding adjustment in the Capital
Replacement Reserve deposit shall be made or transferred from the Capital Replacement Reserve to
the Disbursement Account, as applicable. In addition, all proceeds from the sale of capital items
no longer needed for the operation of the Businesses, and the proceeds of any insurance received in
reimbursement for any items previously paid for from the Capital Replacement Reserve, shall be
deposited into the Capital Replacement Reserve upon receipt.



23









 





     4.13 Use and Allocation of Capital Replacement Reserve. Any expenditures for Capital
Replacements which have been budgeted and previously approved may be paid by the Manager from the
Capital Replacement Reserve without further review or approval. Any amounts remaining in the
Capital Replacement Reserve at the close of any Fiscal Year shall be carried forward and retained
in the Capital Replacement Reserve until fully used.



     4.14 Internal Control System. Manager shall operate the Gaming Operations subject to
the system of internal controls (the “Internal Control System”) in place as of the
Effective Date. The Tribal Gaming Commission shall retain the right to review and approve the
Internal Control System and any changes instituted to the Internal Control System. The Tribal
Gaming Commission and Manager shall have the right and duty to maintain and police the Internal
Control System in order to minimize the potential for any loss of proceeds from the Gaming
Operations.



     4.15 Banking and Bank Accounts.




     4.15.1 Bank Accounts. The Management Board shall select a bank or banks for
the deposit and maintenance of funds and shall establish in such bank or banks accounts as
the Management Board deems appropriate and necessary in the course of business and as
consistent with this Agreement (“Bank Accounts”). The sum of money agreed to by the
Management Board to be maintained in the Bank Account(s) to serve as working capital for
operations of the Operating Companies shall be the responsibility of the Operating Companies
to provide and shall include at least all sums needed for the House Bank and all sums needed
to accrue for payment of expenses not paid on a monthly basis (the “Minimum
Balance”). The Operating Companies will cause irrevocable banking instructions to be
executed with regard to each Bank Account to be in effect during the Term in form and
substance satisfactory to the Management Board and the Manager, which instructions will
allow each of the Manager and the Enterprise to control such Bank Accounts.




     4.15.2 Daily Deposits to Depository Account. Manager shall establish for the
benefit of the Operating Companies in the Enterprise’s name a Depository Account. Manager
shall collect all gross revenues and other proceeds connected with or arising from the
operation of the Businesses, the sale of all products, food and beverage, and all other
activities of the Businesses and deposit the related cash into the Depository Account at
frequent intervals reasonably determined by the Manager. Manager agrees to obtain a bonded
transportation service to effect the safe transportation of the daily receipts to the bank,
which expense shall constitute an Operating Expense.




     4.15.3 Disbursement Account. Manager shall establish for the benefit of the
Tribe in the Enterprise’s name a Disbursement Account. Manager shall, consistent with and
pursuant to the approved annual Operating Budget and Annual Plan, have responsibility and
authority for making all payments for Operating Expenses, debt service (subject, however, to
Section 4.19), management fees, and disbursements to the Tribe from the Disbursement
Account.



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     4.15.4 No Cash Disbursements. Manager shall not make any cash disbursements
from the Bank Accounts and all payments or disbursements by the Manager from Bank Accounts
shall be made by check or wire transfer drawn against a Bank Account.




     4.15.5 Transfers Between Accounts. Manager has the authority to transfer funds
from and between the Bank Accounts to the Disbursement Account in order to pay Operating
Expenses and to invest funds in accordance with any approved investment policy adopted by
the Management Board and approved by Manager and to pay the fees payable to Manager and
distributions to the Tribe pursuant to this Agreement.




     4.15.6 Petty Cash Fund. Manager shall establish and maintain for the benefit
of and in the name of the Enterprise a petty cash fund, the amounts in which shall be
established in conjunction with the establishment of the annual Operating Budget and Annual
Plan as an Operating Expense. The petty cash funds shall be used for miscellaneous small
expenditures of the Businesses and shall be maintained at the Businesses.




     4.15.7 No Suspension of Transfers Upon Default. Notwithstanding any occurrence
or continuation of any breach by or default of this Agreement by any Tribal Party, Manager
agrees that, unless it exercises its right to terminate this Agreement in accordance with
Section 10.5, it shall make timely transfers from the appropriate accounts of funds to pay
(a) Operating Expenses, (b) the Minimum Monthly Guaranteed Payment, (c) payments due on any
indebtedness, (d) deposits into the Capital Replacement Reserve in accordance with this
Agreement, and (e) any other reserves approved by the Management Board.



     4.16 Insurance. Manager, on behalf of and subject to the approval of the Management
Board, shall arrange for, obtain and maintain, or cause its agents to maintain, with responsible
insurance carriers, insurance in compliance with the Compact and as satisfactory to Manager and the
Management Board covering the Businesses and the operations of the Operating Companies, including
coverage of public liability and property loss or damage, naming the Operating Companies as insured
parties.



     4.17 Accounting and Books of Account.




     4.17.1 Statements. Manager shall prepare and present to the Management Board
on a monthly, quarterly, and annual basis, within 21 days, 45 days and 90 days of the end of
such periods, respectively, operating statements of each of the Operating Companies
separately and on a combined basis. The operating statements shall comply with all Legal
Requirements and shall include an income and expense statement, statement of cash flows
(including projections of future cash flows), and balance sheet for each of the Operating
Companies separately and on a combined basis. Such statements shall include the Operating
Budget and Annual Plan and Capital Budget projections as comparative statements, and which
will include comparative statements from the comparable period for the prior year (provided
that the Operating Companies provide the Manager with any information needed for Manager to
make comparisons against periods prior to the Term). The Manager shall provide such
additional information relating to the business, property



25









 




     or financial condition of the Operating Companies or Businesses as the Management Board
may request from time to time.





     4.17.2 Books of Account. Manager shall maintain full and accurate books of
account at an office at the Businesses (the exact location of which will be subject to
approval by the Management Board) and copies of such books of account at Manager’s corporate
offices. The Management Board and Tribal Gaming Commission or their designated
representatives shall have immediate access to the daily operations of the Operating
Companies and shall have the unlimited right to inspect, examine, and copy all such books
and supporting business records.




     4.17.3 Accounting Standards. Manager shall maintain the books and records
reflecting the operations of the Operating Companies in conformity with GAAP consistently
applied and shall adopt and follow the fiscal accounting periods utilized by the Operating
Companies. The accounting systems and procedures shall comply with Legal Requirements and,
at a minimum, shall:




	 	(i)	 	include an adequate system of internal
accounting controls;
	 
	 	(ii)	 	permit the preparation of financial statements
in accordance with GAAP;
	 
	 	(iii)	 	be susceptible to audit;
	 
	 	(iv)	 	permit the calculation and payment of the
Management Fee described in Section 6;
	 
	 	(v)	 	permit the calculation by the Tribe and the
NIGC of annual fees payable under 25 C.F.R. Section 514.1; and
	 
	 	(vi)	 	provide for the allocation of operating
expenses or overhead expenses among the Tribe, the Operating Companies,
the Manager, and any other user of shared facilities and services (to
the extent such parties are responsible for such operating expenses or
overhead expenses).






     4.17.4 Annual Audit. An independent certified public accounting firm with at
least five (5) years experience auditing casinos of a size similar to that of the Resort
selected by the Management Board shall perform an annual audit of the books and records of
the Operating Companies and of all contracts for supplies, services or concessions
reflecting Operating Expenses. The Tribal Gaming Commission and the NIGC shall also have
the right to perform special audits of any of the Operating Companies at any time without
restriction. The costs incurred for such audits shall constitute an Operating Expense.
Such audits shall be provided by the Tribe to all applicable federal and state agencies, as
required by law, and may be used by Manager for reporting purposes under federal and state
securities laws, if required.



26









 





     4.18 Operating Capital for the Businesses. To the extent not provided from the
available cash flow of the Businesses after the requirements of Section 6.1 have been met, the
Tribe, and not the Manager, will be responsible for providing operating capital for the operation
of the Businesses; provided, however, that the Tribe will have sole discretion in determining
whether to provide operating capital for operation of the Businesses and in what amount. The
Manager will not be deemed to be in breach of its obligations under this Agreement to the extent
performance of such obligations is rendered commercially impracticable by the unavailability of
such operating capital. In no event will Manager be required to advance funds to or for the
benefit of any of the Tribal Parties (except with respect to the Minimum Guaranteed Monthly Payment
as expressly provided in Section 6.1(c)).



     4.19 Tribal Indebtedness. Notwithstanding any other term or provision of this
Agreement to the contrary, the Parties agree that the Tribe, and not the Manager, will have sole
discretion in determining the amounts of all payments and/or reserves to be made with respect to
Tribal Indebtedness at any time, and the Manager will follow the Tribe’s instructions with respect
thereto; provided, however, that the Tribe agrees not to cause payments and/or reserves to be made
with respect to Tribal Indebtedness in amounts greater than that are required at any time if such
pre-payment, acceleration or reserving could reasonably be expected to materially impair the
availability of Net Revenues pursuant to Section 6.1(c) for amounts payable to the Manager.



     4.20 Ski Apache. The Parties agree that no Gaming Operations may be conducted at Ski
Apache.


5. Indebtedness of the Operating Companies.




     5.1 Financing Agreements. The Tribal Parties represent and warrant to the Manager
that, as of the Execution Date, none of the Operating Companies is a debtor or obligor with respect
to any indebtedness other than indebtedness under (i) that certain Indenture dated as of November
3, 1993, among the Enterprise as issuer, Casino Apache, Inn of the Mountain Gods, the Travel Center
Entity and the Ski Apache Entity, as guarantors, the Tribe, and U.S. Bank National Association, as
trustee, and (ii) that certain Master Security Agreement dated as of June 2004 between the
Enterprise and Key Equipment Finance, and related documents.



     5.2 Business of the Operating Companies. The Tribal Parties represent and warrant to
the Manager that as of the Execution Date, the Operating Companies own no material assets or
properties other than the Resort, the Travel Center and Ski Apache, and engage in no business other
than the ownership and operation of the Resort, the Travel Center and Ski Apache. The Tribal
Parties covenant to the Manager that during the Term, except as consented to by the Manager, the
Operating Companies will acquire no other material assets or properties other than the Resort, the
Travel Center and Ski Apache, and will engage in no other business than the ownership and operation
of the Resort, the Travel Center and Ski Apache.



     5.3 Related Party Indebtedness. The Tribal Parties covenant to the Manager that,
during the Term, no Operating Company will incur indebtedness from any Affiliate of or Insider with
respect to any Operating Company.



27









 




6. Management Fee, Reimbursements, Disbursements, and Other Payments by Manager.




     6.1 Management Fee.



          (a) The Management Fee shall accrue from and after the Effective Date and shall be paid as
follows:




     (1) subject to clauses (2) and (3) below and subject to Section 6.3 herein,
within 21 days after the end of each calendar month during the Term, the Manager
shall receive an amount equal to the greater of (A) the product of (x) 0.20
multiplied by (y) EBITDA for such calendar month minus Base Monthly EBITDA and
(B) $60,000.00 (the amount described in this clause (B), the “Minimum Monthly
Management Fee”);




     (2) if the Effective Date occurs on a day other than the first day of a
calendar month, instead of the amount calculated pursuant to clause (1) above with
respect to such month, the Manager shall receive an amount equal to the product of
(A) the amount that would have been due to the Manager due with respect to such
month pursuant to clause (1) above if the entirety of such month occurred during the
Term multiplied by (B) the number of days from and including the Effective Date
through and including the last day of such month divided by the number of days of
such month; and




     (3) if the last day of the Term occurs on a day other than the last day of a
calendar month, instead of the amount calculated pursuant to clause (1) above with
respect to such month, the Manager shall receive an amount equal to the product of
(A) the amount that would have been due to the Manager due with respect to such
month pursuant to clause (1) above if the entirety of such month occurred during the
Term multiplied by (B) the number of days from and including the first day of such
month through and including the last day of the Term divided by the number of days
of such month.



          (b) All amounts payable to the Manager hereunder shall be disbursed by the Manager from the
Disbursement Account in accordance with Section 6.2 hereof. All amounts payable pursuant to this
section shall be calculated based upon the financial statements delivered to the Management Board
pursuant to Section 4.17 hereof.



          (c) Notwithstanding any other provision of this Agreement, the Management Fee, as well as any
deferred amounts payable to Manager as provided for in this Agreement, shall be paid only from Net
Revenues and only to the extent that (1) the Tribe has received the Minimum Monthly Guaranteed
Payment and the Tribal Priority Distribution with respect to the period for which payment would be
made under such clauses, (2) the Capital Replacement Reserve contribution has been made with
respect to the period for which payment would be made under such clauses, (3) the Tribe’s
instructions with respect to payments and/or reserves with respect to Tribal Indebtedness then due
have been complied with (in accordance with Section 4.19) and (4) such payment would not cause the
Bank Accounts to have a balance less than the Minimum Balance. The Tribe’s right to receipt of
the Minimum Monthly Guaranteed



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Payments shall be absolute and unconditional (and without limitation of the foregoing, shall
have priority over the retirement of any development and construction costs) and not subject to
setoff or recoupment by the Manager; provided, however, to the extent that the Manager makes
advances in order to make a Minimum Monthly Guaranteed Payment, the principal amount of any such
advance, without accrual of interest, may be recouped by the Manager as a deferred payment in
accordance with this Section 6.1(c). To the extent that Net Revenues for a month (after the
requirements of this Section 6.1(c) are met) are insufficient to pay the Manager amounts that would
otherwise be payable for such month, then the amounts that were not available to the Manager in
such month but were otherwise payable will be deferred to future months. With respect to any
month, any Net Revenues remaining after all amounts owing to the Manager (and not deferred to
future months) have been accounted for shall be distributed as directed by the Management Board at
the same time the Management Fee is paid, to the extent such payment would not cause the Bank
Accounts to have a balance less than the Minimum Balance.




     6.2 Reimbursement of Travel and Other Approved Expenses. The Operating Companies
jointly and severally agree that upon the presentation of appropriate invoices, the Operating
Companies shall reimburse Manager for (i) reasonable out-of-pocket “coach” class airfare and other
travel expenses necessary for Manager to perform its duties hereunder, including without
limitation, lodging, meals and rental cars, and (ii) other expenses as agreed by the Management
Board from time to time. Any such reimbursements shall be for the amount of the actual cost of the
expense, without premium or markup. Manager shall submit an invoice to the Management Board on a
monthly basis setting forth the reimbursable expenses incurred by Manager in connection with
Manager’s performance of its obligations 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 Manager within 20 days of receipt by
the Enterprise. Other than the payment of the Management Fee, payment of amounts deferred in
accordance with the provisions of this Agreement, and the reimbursement of expenses pursuant to
this Section 6.2, 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 Manager under this
Agreement.



     6.3 Cap on Payments to Manager. Except as otherwise set forth in this Agreement,
charges to and amounts payable by the Operating Companies to the Manager under this Agreement for a
calendar month (including, without limitation, deferred amounts) when combined with the Management
Fee for a calendar month, shall not exceed thirty percent (30%) of Net Revenues for such month (the
“Regulatory Cap”); provided, however, that to the extent that the Regulatory Cap prohibits
the Manager’s receipt of amounts that would otherwise be payable in a month, such amounts will be
deferred and payable to the Manager in future months (subject to the Regulatory Cap as described in
this Section 6.3). Notwithstanding the foregoing, however, upon expiration of the Term, Manager
will not be entitled to receive any amounts that, as of the time of such expiration, are still
deferred by virtue of the Regulatory Cap.



     6.4 Agreed Ceiling for Repayment of Development and Construction Costs. The Tribal
Parties acknowledge and agree that the Businesses are already in existence and there are no plans
for expansion that would significantly change the current footprint of the Facilities.



29









 




Accordingly, the agreed ceiling for repayment of development and replacement costs is zero.
Any changes to the Facilities will be limited to internal renovations, upgrades and similar
improvements to the Facilities, unless otherwise agreed by the Management Board. The cost of any
such renovations, upgrades and improvements shall be paid by the Enterprise.



7. Intellectual Reservation; Confidentiality.




     7.1 Names of the Businesses. The Resort shall be operated under the name “Inn of the
Mountain Gods Resort and Casino,” the Travel Center shall be operated under the name “Casino Apache
Travel Center,” and Ski Apache shall be operated under the name “Ski Apache” or, with respect to
the foregoing, such other business name or names as may be approved by the Management Board.



     7.2 Marks. All service marks, trademarks, copyrights, trade names, patents or other
similar rights or registrations now or hereafter (collectively, the “Marks”) used in
connection with the operations of the Operating Companies shall be the property of the Operating
Companies. The Manager hereby disclaims any right or interest therein, regardless of any legal
protection afforded thereto. The Manager covenants that in the event of termination, cancellation
or expiration of this Agreement, whether as a result of a default by a Tribal Party or otherwise,
the Manager shall not hold itself out as the manager of any of the Operating Companies, nor will it
utilize any Marks or any variant thereof in the name or operation of any property. The Manager
shall not use the Marks, or any variation thereof, directly or indirectly, in connection with a
private placement or public sale of securities or other comparable means of financing or press
releases and other public communications related to the financial performance of the Businesses
without the prior written approval of the Management Board, which consent shall not be unreasonably
withheld or delayed.



     7.3 Litigation Involving Marks. The Parties agree that, in the event a Tribal Party
and/or Manager is or are the subject of any litigation or action brought by any party seeking to
restrain the use by a Party of any Mark used for or on or in connection with the Businesses, any
such litigation or action shall be defended entirely by the Tribal Parties, notwithstanding the
possibility that no Tribal Party is named as a party thereto. The Manager shall not have the right
to bring suit against any user of any of the Marks. In all cases, the conduct of any suit, whether
brought by a Tribal Party or instituted against a Party shall be under the absolute control of
counsel to be nominated and retained by Tribe, notwithstanding the possibility that no Tribal Party
is named as a party thereto.



     7.4 Confidentiality. In connection with this Agreement, the Tribal Parties may
disclose Tribal Confidential Information to the Manager and the Manager may disclose Manager
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 Manager 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 Manager in violation of
this Agreement, (ii) is known to or in the possession of Manager prior to disclosure by the Tribal
Parties, (iii) is or becomes available to Manager from third persons that to Manager’s knowledge
are not bound by a confidentiality agreement with any of the Tribal Parties



30









 




prohibiting such disclosure or (iv) is independently created or developed by Manager without
the aid, application or use of the Tribal Confidential Information disclosed. “Manager
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 or operations 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 this Agreement, (ii) is known
to or in the possession of the Tribal Parties prior to disclosure by Manager, (iii) is or becomes
available to the Tribal Parties from third persons that to the Tribal Parties’ knowledge are not
bound by a confidentiality agreement with Manager prohibiting such disclosure or (iv) is
independently created or developed by the Tribal Parties without the aid, application or use of the
Manager Confidential Information disclosed.





     7.4.1 Subject to Section 7.4.4 hereof, each Warner Party agrees that it and its
Affiliates will keep Tribal Confidential Information in strict confidence and not disclose
Tribal Confidential Information to third parties (except as expressly provided below) and
that it will not use Tribal Confidential Information other than for the purpose of
performing the obligations of the Manager under this Agreement. The Warner Parties
additionally agree that Tribal Confidential Information will be disclosed only to those of
Manager’s employees, managers or attorneys (collectively, “Representatives”) who
need the Tribal Confidential Information to assist Manager in performing its obligations
under this Agreement, are advised of the confidentiality provisions of this Agreement and
agree to abide by such provisions. The Warner Parties will be responsible for any violation
of the confidentiality provisions of this Agreement by its Representatives to whom Manager
has provided or disclosed Tribal Confidential Information. Manager may also disclose Tribal
Confidential Information to any party retained by any of the Tribal Parties in connection
with the operation of the Businesses and will not be responsible for any disclosure of the
Tribal Confidential Information by any such party.




     7.4.2 Subject to Section 7.4.4 hereof, each of the Tribal Parties agrees that it will
keep Manager Confidential Information in strict confidence and will not sell or otherwise
distribute Manager Confidential Information to third parties. Each of the Tribal Parties
will be responsible for any violation of the terms of this Agreement by its employees to
whom Manager has provided or disclosed Manager Confidential Information. Without limitation
of the foregoing, each of the Tribal Parties agrees that it will not disclose or share the
Manager’s Confidential Information with any third party for the purposes of allowing such
third party to compete with the Manager or replicate tasks or services to be provided by the
Manager hereunder for any party other than the Operating Companies in connection with their
ownership and operation of businesses on the Reservation or directly related thereto.




     7.4.3 Notwithstanding anything in this Section 7.4 to the contrary, and subject to all
terms and provisions of this Section 7.4.4, the Manager may disclose Tribal Confidential
Information and the Tribal Parties may disclose Manager Confidential Information, in each
case if necessary to comply with any applicable law, order, regulation, ruling, subpoena or
order of a governmental authority or tribunal with competent jurisdiction. If a Tribal
Party, on the one hand, or a Warner Party, on the other



31









 






hand, is so requested or required to disclose any Tribal Confidential Information or
Manager Confidential Information, as applicable, such party shall promptly notify the other
Parties of such request or requirement prior to disclosure so that such other Parties, may,
if they so elect, seek an appropriate protective order or otherwise seek to contest, limit
or protect the confidentiality of any such requested or required disclosure.




     7.4.4 No disclosure of Tribal Confidential Information to the Manager will in any way
be deemed a license or other grant of proprietary interest in Tribal Confidential
Information (except as set forth in any written agreement or written grant by the applicable
Tribal Party). No disclosure of Manager Confidential Information to any of the Tribal
Parties will in any way be deemed a license or other grant of proprietary interest in
Manager Confidential Information (except as set forth in any written agreement or written
grant by the Manager).




     7.4.5 By his joining in the execution of this Agreement as provided in the joinder
hereto, William W. Warner agrees to all terms and provisions of this Section 7.4 and all
subsections hereof, and further agrees to personally perform and be bound by all of the
obligations undertaken by Warner and/or the Warner Parties pursuant to this Section 7.4 and
all subsections hereof.




     7.4.6 Each Tribal Party and each Warner Party acknowledges and agrees that any breach
or threatened breach by such party of its obligations under Section 7.4 hereof will result
in irreparable damage and injury to the other Parties hereto and their Affiliates and that
the non-breaching Parties will be entitled to exercise all rights including, without
limitation, obtaining one or more temporary restraining orders, injunctive relief and other
equitable relief, including specific performance in the event of any breach or threatened
breach thereof, in any federal or state court of competent jurisdiction in New Mexico
without the necessity of posting any bond or security (all of which are waived by the
Parties hereto), and to exercise all other rights or remedies, at law or in equity,
including, without limitation, the rights to damages.


8. Taxes.




     8.1 State and Local Taxes. If the State of New Mexico or any local government
attempts to impose any tax, including but not limited to any possessory interest tax, upon any
Party or upon the Businesses or the Reservation, then the Enterprise, in the name of the
appropriate party or parties in interest, may resist such attempt through legal action. The costs
of such action and the compensation of legal counsel shall be an Operating Expense. Any such tax
shall constitute an Operating Expense. This Section shall in no manner be construed to imply that
any party to this Agreement is liable for any such tax.



     8.2 Tribal Taxes. The Tribe represents and warrants to the Manager that, as of the
Execution Date, neither the Tribe nor any agent, agency, affiliate or representative of the Tribe
imposes any taxes, fees, assessments, or other charges of any nature whatsoever on the Businesses
or on the revenues therefrom other than (a) fees imposed on the Tribe by the NIGC under IGRA which
directly relate to the business of the Operating Companies, (b) payments



32









 




expressly and specifically provided for under this Agreement (e.g. tribal regulatory costs as
described in Section 4.6.5) and (c) Existing Taxes.




     8.3 Compliance with Internal Revenue Code. Manager shall comply with all applicable
provisions of the Internal Revenue Code. Notwithstanding the foregoing, the Parties acknowledge
and agree that the Manager is not responsible for, and will not be required to, file any tax
returns of the Operating Companies with any applicable taxing authority.


9. Prohibition of Certain Transactions Between Manager and Members of the Tribe. The
Parties agrees that no Member of the Tribal Government shall have a direct or indirect financial
interest in Manager. Further, Manager will not (i) employ any member of the Tribe as an employee
of the Manager (but this clause (i) is not a restriction on the Manager’s ability to select members
of the Tribe to be employees of any of the Operating Companies), (ii) give any material gifts or
other items of material value or worth to any member of the Tribe, or (iii) give, sell, or trade
any equity or ownership interest in Manager to any member of the Tribe.



10. Grounds for Termination.




     10.1 Termination. This Agreement may be terminated pursuant to the provisions of
Sections 4.4.3, 10.2, 10.3, 10.4, 10.5 and 19.7.



     10.2 Voluntary Termination. This Agreement may be terminated upon the mutual written
consent and approval of the Parties.



     10.3 Involuntary Termination Due to Changes in Legal Requirements. It is the
understanding and intention of the Parties that the establishment and operation of the Businesses
shall conform to and comply with all Legal Requirements. If during the term of this Agreement, the
Businesses or any material aspect of Gaming Operations is determined by the NIGC or the final
judgment of a court of competent jurisdiction to be unlawful under federal or state law, then,
provided that the Manager does not elect for this Agreement to continue in accordance with Section
4.4, the obligations of the parties hereto shall cease, and this Agreement shall be of no further
force and effect; provided that:




     10.3.1 Manager shall have the rights described in Section 4.4.3 of this Agreement;




     10.3.2 Manager and the Tribe shall retain all money previously paid to them pursuant to
Section 6 of this Agreement;




     10.3.3 all amounts due to the Manager through the date of termination shall be paid;
and




     10.3.4 the Tribal Parties shall retain their interest in the title (and any lease) to
all assets of the Businesses, including all fixtures, supplies and Furnishings and
Equipment.



     10.4 Tribal Parties’ Right to Terminate Agreement. The Tribal Parties may terminate
this Agreement by written notice to the Manager if:



33









 






     10.4.1 Manager fails to pay any amount due to a Tribal Party hereunder when due (or
causes a disbursement owing to a Tribal Party under Section 6.1(c) hereunder to not be
made), and fails to cure the foregoing within 30 days after written notice thereof;




     10.4.2 Manager is in breach hereunder (other than as set forth in Section 10.4.1
above), and fails to cure such breach within 60 days after written notice of such breach
from the Enterprise. Without limitation of the definition of “breach,” it shall be a
“breach” with respect to the Manager if:




          (i) William W. Warner ceases to directly or indirectly own a majority of the
outstanding equity of Manager entitled to vote for the board of directors (or any other body
with the power to direct the management and policies of Manager) or, if no board of
directors or other such body exists, entitled to vote to direct the management and policies
of Manager; or




          (ii) Manager 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 Manager to any person
or entity, unless (1) with respect to any such consolidation or merger, the Manager is the
surviving entity or (2) the entity surviving such consolidation or merger (if Manager 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 William W. Warner
directly or indirectly owns a majority 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 Manager’s obligations under this Agreement
pursuant to documentation reasonably satisfactory to the Tribe; or




     10.4.3 William W. 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.


In the event of the termination of this Agreement by the Tribal Parties under this Section 10.4,
Manager shall not, prospectively from the date of termination, have the right to accrual of its
Management Fee, but such termination shall not affect Manager’s rights relating to receipt and
reimbursement of amounts under this Agreement that are owing to Manager and unpaid as of such
termination. Any Net Revenues accruing through the date of termination shall be distributed in
accordance with Section 6 of this Agreement. An election to pursue damages or to pursue specific
performance of this Agreement or other equitable remedies (as such specific performance or other
equitable remedies are expressly provided for pursuant to Sections 3.9.3 and 7.4.7) while this
Agreement remains in effect pursuant to the provisions shall not preclude the Tribal Parties from
providing notice of termination pursuant to this Section 10.4. Neither shall termination of this
Agreement preclude initiation of an action for damages under the provisions of Section 15.




     10.5 Manager’s Right to Terminate Agreement. Manager may terminate this Agreement by
written notice to the Tribal Parties if:



34









 






     10.5.1 A Tribal Party fails to pay any amount due to Manager hereunder when due (or
causes a disbursement owing to Manager under Section 6.1 hereunder to not be made), and
fails to cure the foregoing within thirty (30) days after written notice thereof;




     10.5.2 A Tribal Party is in breach hereunder (other than as set forth in Section 10.5.1
above), and fails to cure such breach within sixty (60) days after written notice of such
breach from Manager; or




     10.5.3 Manager has been notified by any regulatory agency (other than a regulatory
agency of any Indian tribe) that the performance by it of any obligation imposed by this
Agreement will jeopardize the retention of any license, permit or approvals held by Manager
or any of its Affiliates in any jurisdiction.


In the event of termination of this Agreement by Manager under this Section 10.5, Manager shall not
be required to perform any further services under this Agreement. Manager shall have the right to
its Management Fee accruing until the date of termination as provided in Section 6 of this
Agreement. An election to pursue damages or to pursue specific performance of this Agreement or
other equitable remedies (as such specific performance or other equitable remedies are expressly
provided pursuant to Sections 3.9.3, 7.4.7 and 17.3) while this Agreement remains in effect
pursuant to the provisions shall not preclude the Manager from providing notice of termination
pursuant to this Section 10.5. Neither shall termination of this Agreement preclude initiation of
an action for damages under the provisions of Section 17.




     10.6 Enterprise’s Buyout Option. At any time after the second anniversary of the
Effective Date, the Tribal Parties may terminate this Agreement upon payment to the Manager in cash
an amount equal to present value (using a discount rate equal to the prime rate of the Federal
Reserve Bank of San Francisco in effect as of the effective date of such termination) of the
Management Fees that would have been paid hereunder during the Term following the date of the
exercise of the buyout pursuant to this section had such buyout not occurred assuming that (a) the
Term would be for five years, (b) the monthly Management Fee that would have been payable is equal
to the average monthly Management Fee earned during the most recently completed 12 full calendar
months immediately preceding the exercise of the buyout pursuant to this section and (c) the
payment of each such Management Fee would have occurred on the 15th day following the end of each
calendar month.



     10.7 Manager’s Early Termination Right. In the event that, for any three consecutive
calendar months during the Term, the Manager, by virtue of the availability of Net Revenues and the
requirements of Section 6.1(c), fails to receive a fee in an amount equal to or greater than the
Minimum Monthly Management Fee, then the Manager may terminate this Agreement by delivery of
written notice to the Enterprise, and this Agreement will be terminated ninety (90) days after the
delivery of any such written notice. For purposes of this Section 10.7, the Manager will have
failed to receive a management fee (or portion thereof) to the extent that disbursement of such fee
or portion thereof to the Manager is deferred until some future month or months.


11. Termination and Transition. The following terms and provisions will apply to any
termination of this Agreement (whether through expiration of the Term or otherwise):







35









 








     11.1 Transition. Manager shall take reasonable steps for the orderly transition of
management of the Businesses to the Enterprise or its designee(s) pursuant to a transition plan.
If, at least 180 days prior to the expiration of the Term, the Parties have not agreed upon terms
of a renewal of the Term or upon a new management agreement, then the Enterprise and Manager shall
agree upon a transition plan within 60 days. The transition plan shall be implemented for a
reasonable period, but in any event not less than 60 days. With respect to any termination of this
Agreement prior to expiration of the Term, the Operating Companies and the Manager will negotiate
towards a transition plan in good faith and in a manner that is reasonable in light of the
circumstances of such termination. Manager, will, on expiration or termination of this Agreement,
provide the Operating Companies with the data related to customers of the Businesses, as such data
appears in Manager’s database, and such data shall be provided in machine readable form or written
form, at the election of the Operating Companies. This information will be provided to the
Operating Companies as of the termination or expiration date of this Agreement. Manager shall be
prohibited from using such information for any purpose after termination or expiration of this
Agreement.



     11.2 Businesses. The Parties shall retain all money previously paid to them pursuant
to Section 6 of this Agreement; and the Tribal Parties shall retain title to all Businesses
(including, without limitation, all Facilities, fixtures, improvements, supplies, Furnishings and
Equipment, marks, funds and accounts comprising the Businesses), subject to the rights of Manager
to its accrued and unpaid Management Fees due under Section 6 of this Agreement.



     11.3 Manager’s Obligations. In connection with the expiration and/or termination of
this Agreement, Manager shall:




     11.3.1 deliver possession of the Businesses to the Operating Companies or Operating
Companies’ designated agents subject to rights of all parties in possession, in “as is”
condition, without recourse or any warranty whatsoever;




     11.3.2 deliver to the Operating Companies all books and records of the Operating
Companies and the Businesses; and




     11.3.3 after deducting therefrom any amounts due and payable under this Agreement and
not theretofore paid, disburse to the Tribe, no later than twenty-one (21) days after
termination or expiration of this Agreement, the balance, if any, remaining in the Bank
Account(s).



     11.4 Operating Companies’ Obligations. In connection with the expiration and/or
termination of this Agreement, the Operating Companies shall be solely responsible for and paying
the costs of:




     11.4.1 assuming and continuing performance under, or terminating, any agreements
entered into in connection with the Businesses;




     11.4.2 all Business Employees (except for any Business Employees who are employees of
the Manager or any Affiliate of the Manager), including the payment of any severance or
other termination benefits in connection with the termination of any such employees; and



36









 






     11.4.3 cooperating with Manager (and any of Manager’s suppliers or vendors, as
applicable) to permit the removal of any proprietary system owned or licensed solely to
Manager or Manager’s Affiliates at the Businesses, provided, however, that such equipment
shall be removed from the Facilities by Manager within ten (10) business days after
termination or expiration or this Agreement and provided further that the Tribal Parties
shall not be responsible for any damage to such equipment caused by such removal (except to
the extent of the negligence or intentional misconduct of a Tribal Party).


12. Consents and Approvals.




     12.1 Tribal Parties. Where approval or consent or other action of the Tribal Parties
is required, such approval shall mean the written approval of the Tribal Council evidenced by a
resolution thereof, certified by a Tribal official as having been duly adopted, or such other
person or entity designated by resolution of the Tribal Council.



     12.2 Manager. Where approval or consent or other action of Manager is required, such
approval shall mean the written approval of the Managing Officer, who shall be provided with all
requisite corporate authority to act on behalf of Manager.


13. Parties in Interest in Manager.




     13.1 Shareholders and Directors. Manager represents and warrants that on the date of
this Agreement, all Parties in Interest in Manager and all of its Affiliates, managers, officers,
directors and members have been disclosed to the Tribe. As used herein, the phrase “Parties in
Interest” shall mean any person or entity with a financial interest in, or having management
responsibility for this Agreement or for which background investigations are required by 25 C.F.R.
Part 537, and any amendments thereto.



     Manager represents and warrants that no officer, director or individual owner of 5% or more of
the equity interests of Manager or any affiliate of Manager has been arrested, indicted for,
convicted of, or pleaded nolo contendere (or any similar plea) to any felony or any gaming offense
or had any association with individuals or entities known to be connected to organized crime.



     13.2 Covenants. Manager agrees that all of its managers and any individual owner of
five percent (5%) or more of the membership interests or equity interests of Manager, shall:




     (a) consent to background investigations to be conducted by the Tribal Gaming
Commission, the State, the Federal Bureau of Investigation (the “FBI”) or any law
enforcement authority to the extent required by the IGRA and the Compact;




     (b) be subject to licensing requirements in accordance with the Gaming Ordinance and
this Agreement;




     (c) consent to a background, criminal and credit investigation to be conducted by or
for the NIGC, if required;




37











 






     (d) consent to a financial and credit investigation to be conducted by a credit
reporting or investigation agency at the request of the Tribal Gaming Commission;




     (e) cooperate fully with such investigations; and




     (f) disclose any information requested by the Tribal Gaming Commission which would
facilitate the background and financial investigation.


Any materially false or deceptive disclosures or failure to cooperate fully with such
investigations by an employee of Manager shall result in the immediate dismissal of such employee.
The results of any such investigation may be disclosed by the Tribe to federal officials and to
such other regulatory authorities as required by law.




     13.3 Compliance with Licensing Requirements. Manager agrees that whenever there is a
change in the direct or indirect ownership interest of Manager, Manager shall notify the Management
Board and the NIGC of such change not later than ten (10) business days following the change or
within ten (10) business days after Manager becomes aware of such change. In accordance with 25
C.F.R. § 537.2, Manager shall submit to the NIGC the background information required in 25 C.F.R. §
537.1. Any such change in the ownership interest of Manager shall not be effective until such time
as the NIGC and the Tribe have each completed any applicable background investigation and approval
of the proposed transferee(s). The Parties agree that such a change in ownership interest does not
constitute an amendment of this Agreement and that NIGC approval is only required if a new
individual or entity acquires an ownership interest in Manager. NIGC approval will not be
required if the change in ownership interest pertains to an existing individual or entity
terminating or withdrawing its ownership interest in Manager.


14. No Present Lien, Lease or Joint Venture. The Parties agree and expressly warrant that
this Agreement is not a mortgage or lease and, consequently, does not convey any present interest
whatsoever in the Facilities or the Businesses. The Parties further agree and acknowledge that it
is not their intent, and that this Agreement shall not be construed, to create a joint venture
between the Tribal Parties and Manager; rather, Manager shall be deemed to be an independent
contractor for all purposes hereunder.



15. Indemnification; Limitation of Liability.




     15.1 The Operating Companies shall indemnify and hold Manager, its members, principals,
officers and employees, and the Affiliates of all of them (the “Indemnitee Parties”),
harmless from and against any and all claims, liabilities, damages, losses, costs or expenses
(including costs and expenses incurred in defending against the foregoing, “Losses”)
incurred by or sustained by any such Indemnitee Party arising out of or as a result of the
Manager’s entering into this Agreement or performing its obligations hereunder, except to the
extent of Losses caused by the negligence or intentional misconduct of the Manager. Without
limitation of the foregoing, the Losses covered by the indemnification pursuant to this Section
15.1 will include Losses relating to or arising out of the management or operation of the
Businesses prior to the date hereof (except to the extent of Losses caused by the Manager’s
negligence or intentional



38









 




misconduct in connection with the Manager’s performance as the “Consultant” pursuant to that
certain Consulting Agreement dated as of February 10, 2009 by and among the Parties.)




     15.2 The Manager shall indemnify and hold the Tribal Parties and their directors, officers and
employees harmless from and against any and all Losses resulting from the willful or criminal
misconduct of the Manager in connection with the Manager’s performance of this Agreement.



     15.3 To the extent any Loss is covered by insurance proceeds actually paid but not otherwise,
Manager, on the one hand, and the Tribal Parties, on the other hand, each waive, release and
discharge the other from all Losses which each may have or acquire against the other, or against
each other’s principals, directors, officers, employees or agents, with respect to any claims for
any Losses incurred or sustained by either of them on account of damage to their respective
property (but not as to personal injury or property damage suffered by third parties) arising out
of the ownership, management, operation and maintenance of the Facilities, regardless whether any
such claim or demand may arise because of the fault or negligence of the other Party or its
principals, directors, officers, employees or agents. Each policy of fire and property damage
insurance shall contain a specific waiver of subrogation reflecting the provisions of this Section
15.3, or a provision to the effect that the existence of the preceding waiver shall not affect the
validity of any such policy or the obligation of the insurer to pay the full amount of any loss
sustained.



     15.4 NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY PUNITIVE,
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES.


16. Choice of Law. This Agreement shall be subject to and construed in accordance with the
internal laws of the State of New Mexico (except its choice of law rules) and not by the laws of
the Tribe; provided, however, that nothing in the foregoing will be deemed to excuse the Parties’
obligations to comply with Legal Requirements as provided for in this Agreement (including, without
limitation, Legal Requirements of the Tribe). The provisions of this Section are irrevocable and
may not be rescinded, revoked or amended without the prior written consent of the parties hereto.



17. Limited Waiver of Sovereign Immunity; Dispute Resolution.




     17.1 The Tribe, for itself and on behalf of the Operating Companies, hereby waives its
sovereign immunity from unconsented suit or other legal proceedings, whether such suit or
proceedings be brought in law or in equity, or proceedings in arbitration, solely to permit the
commencement and maintenance of any action by Manager to interpret or enforce the terms of this
Agreement and to enforce and execute any order, judgment or ruling resulting therefrom against all
revenues and assets of the Operating Companies (other than real property held in trust by the
United States and other property restricted as to alienation by the laws of the United States).



     17.2 With respect to any suit or other proceeding as to which sovereign immunity is waived
under the preceding subsection 17.1, each of the Tribal Parties expressly and



39









 




unequivocally consents and submits to the jurisdiction of the United States District Court for
the District of New Mexico, the Twelfth Judicial District Court in and for Otero County, New
Mexico, and all courts to which appeals therefrom are available, and enforcement of any judgment of
such court or, in the event that such courts decline jurisdiction, for arbitration proceedings
brought before the American Arbitration Association under the Commercial Arbitration Rules of the
American Arbitration Association, to:





     (a) order performance or compliance with any of the provisions of this Agreement, order
the Operating Companies to perform or comply with any of the provisions of this Agreement,
order amounts payable under this Agreement to be paid in accordance with the terms hereof or
thereof, whether such order or award is the product of litigation, or arbitration, provided
that any damage award (in addition to such amounts payable) is limited to actual damages and
shall not include punitive, consequential, incidental, special or indirect damages;




     (b) determine whether any consent or approval of the Operating Companies has been
improperly granted; and




     (c) enforce any judgment prohibiting the Operating Companies from taking any action, or
mandating or obligating the Tribal Parties to take any action.



     Each of the Tribal Parties expressly waives any right it may otherwise have to require any
foregoing matter to be considered or heard first in any tribal court of the Tribe or tribal
administrative tribunal, now or hereafter existing, whether because of the doctrine of exhaustion
of tribal remedies or as a matter of comity or abstention.



     17.3 The Tribal Parties acknowledge and agree that this Agreement has not been entered into on
Indian lands or on lands that could be defined as “Indian Country” pursuant to federal statutes or
case law, but rather outside the territorial boundaries of the Tribe, and that substantially all
of the negotiations regarding this Agreement, and the execution and delivery of this Agreement have
not occurred on Indian lands or lands which could be defined as “Indian Country” pursuant to
federal statutes or case law, but have occurred outside the territorial boundaries of the Tribe.
The Tribal Parties understand that the foregoing acknowledgments are offered as an inducement to
Manager to enter into this Agreement and to perform the obligations of the Manager hereunder, which
acknowledgment is and will be material to the decision of Manager to enter into this Agreement, and
without which Manager would not enter into this Agreement.



     Each of the Tribal Parties agrees not to revoke, in whole or in part, the limited waiver of
sovereign immunity hereunder or in any way to attempt to revoke, in whole or in part, such limited
waiver of sovereign immunity. In the event of any such revocation or attempted revocation, the
parties hereto expressly recognize and agree that there remains no adequate remedy at law available
to Manager. Manager will be irreparably injured upon any revocation or attempted revocation of the
limited waiver of sovereign immunity hereunder and each of the Tribal Parties consents to the entry
of appropriate injunctive relief, consistent with the terms and conditions of this Agreement. In
the event of any attempted revocation or revocation of the limited waiver of sovereign immunity
granted in this Agreement, Manager may immediately



40









 




seek judicial injunctive relief as provided without first complying with any of the
prerequisites contained in this Agreement to the limited waiver of sovereign immunity granted
there. Any action seeking injunctive relief shall be brought in a federal or state court of
competent jurisdiction, and each of the Tribal Parties expressly consents to the jurisdiction of,
and agrees to be bound by any order or judgment of such court, and any federal or state court with
appellate jurisdiction thereover.




     17.4 If, and only if, a dispute arises between Manager, on the one hand, and any of the Tribal
Parties, on the other hand, over a matter for which the Tribe has provided a limited waiver of
sovereign immunity (the “Dispute”), and neither a federal or state court of competent
jurisdiction can or is willing to hear the Dispute, then any Party hereto may request binding
arbitration of the Dispute. To initiate binding arbitration of a Dispute, a Party shall notify the
other Parties in writing. The Dispute shall be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association and subject to the laws of
the State concerning arbitration, and judgment on the award rendered by the arbitrator may be
entered in any court of competent jurisdiction pursuant to the laws of the State concerning
arbitration. Further:




     (a) Any Party hereto, before or during any arbitration, may apply to a court having
jurisdiction for a temporary restraining order or preliminary injunction where such relief
is necessary to protect its interests pending completion of the dispute resolution
proceedings.




     (b) In the event of arbitration, the prevailing party(ies) shall be entitled to all of
its costs, including reasonable attorneys’ fees, from the nonprevailing party(ies).




     (c) The arbitration shall take place at a location within the State agreed upon by the
Parties hereto. The arbitrator shall render an award within 45 days from the conclusion of
the arbitration.



     17.5 This limited waiver of sovereign immunity shall be effective for the duration of this
Agreement and for a period of three (3) years beginning immediately upon its termination by any
means provided for herein.


18. Non-Impairment. None of the Tribal Parties nor any of their Affiliates will: (a)
adopt, enact, promulgate or otherwise place into effect any law or legal requirement that impairs
or interferes, or could impair or interfere, in any manner, with any right, remedy or obligation of
Manager under this Agreement or (b) demand, impose or receive any tax, charge, assessment, fee or
other imposition or impose any regulatory or licensing requirement against Manager or its
successors based solely upon the rights, benefits, duties and obligations of the Parties under this
Agreement. The Tribal Parties represent and warrant that (a) their acceptance of this Agreement
complies with all tribal laws, rules, regulations and ordinances and (b) Manager’s obligations are
solely as set forth in this Agreement and tribal law does not place any other obligations on
Manager.



19. General Provisions.







41









 








     19.1 Notice. Notices permitted or required to be given hereunder shall be deemed
sufficient if given by registered or certified mail, postage prepaid, return receipt requested, or
by overnight mail or courier service addressed to the respective addresses of the applicable
parties or at such other addresses as the respective parties may designate by like notice from time
to time. Notices so given shall be effective upon receipt by the party to which notice is given.


If to any Tribal Party:




     Inn of the Mountain Gods Resort and Casino

     286 Carrizo Canyon Road

     P.O. Box 269

     Mescalero, NM 88340-0269

     Attention: Chief Operating Officer




     -with a copy to-



     Mescalero Apache Tribe

     P.O. Box 227

     Mescalero, NM 88340-0227

     Attention: Tribal President




     -with an additional copy to-



     John D. Wheeler

     John D. Wheeler & Associates, P.C.

     P.O. Box 1810

     Alamogordo, NM 88311-1810


THE TRIBAL PARTIES ACKNOWLEDGE AND AGREE THAT WRITTEN NOTICE PROVIDED IN ACCORDANCE WITH THE
FOREGOING WILL BE EFFECTIVE AS TO ALL TRIBAL PARTIES.



If to Manager:




     WG-IMG, LLC

     c/o Warner Gaming, LLC 

     2300 West Sahara Avenue 

     Suite 560 

     Box 5 

     Las Vegas, NV 89102 

     Attention: William W. Warner



     -with an additional copy to-



     Jones Vargas 

     3773 Howard Hughes Parkway 

     Third Floor South 

     Las Vegas, NV 89169




42












 





     Attention: Robert E. Bruce



      19.2  Representations and Warranties as to Authority and Other Matters.




     19.2.1 Each of the Tribal Parties represents and warrants to Manager, and Manager
represents and warrants to each of the Tribal Parties, as follows:




     (a) such entity has the full legal right, power and authority and has taken all
action necessary to enter into this Agreement, to perform its obligations hereunder,
and to consummate all other transactions contemplated hereby;




     (b) the person executing and delivering this Agreement is duly authorized to
execute and deliver this Agreement on behalf of such entity;




     (c) this Agreement has been duly executed and delivered by such entity and
constitutes a valid and binding obligation of such entity, enforceable against such
entity in accordance with its terms; and




     (d) the execution and delivery of this Agreement, the performance by such
entity of its obligations hereunder, and the consummation by such entity of the
transactions contemplated hereby will not violate any contract or agreement to which
such entity or any of its affiliates is a party or any law, regulation, rule or
ordinance or any order, judgment or decree of any federal, state, tribal or local
court or require any regulatory approval beyond those contemplated herein.




     19.2.2 By his joining in the execution of this Agreement as provided in the joinder
hereto, William W. Warner hereby represents and warrants to the Tribal Parties that the
execution and delivery of this Agreement and the performance of his obligations hereunder
will not violate any contract or agreement to which he is a party or any order, judgment or
decree of any federal, state, tribal or local court.



     19.3 Relationship. No Party shall be construed as a joint venturer or partner of
another Party hereto other by reason of this Agreement and, except as expressly set forth otherwise
in this Agreement, no Party shall have the power to bind or obligate any other Party by virtue of
this Agreement.



43









 





     19.4 Defense.




     19.4.1 Each Party shall notify each the other Parties hereto within five (5) business
days of becoming aware of any legal claim which may be brought by a third party arising out
of the operation of the Businesses or the subject matter of this Agreement. The Parties
agree that the Tribe shall defend any litigation or action brought by any party for a claim
in connection with the Businesses or the subject matter of this Agreement (except for any
disputes by and among the Parties hereto, which will be subject to the dispute resolution
procedures of Section 15 of this Agreement) notwithstanding that Tribe may not be named as a
party thereto; provided, however, that the Manager, at the Manager’s expense may engage
separate legal counsel to represent its interest with respect to any such litigation or
claim.




     19.4.2 All liabilities, costs and expenses, including reasonable attorneys’ fees and
disbursements incurred in defending and/or settling any such claim or legal action which are
not covered by insurance (regardless of whether payment has been made under such insurance)
shall be an Operating Expense. Nothing contained herein is a grant to Manager of the right
to waive the Tribal Parties’ sovereign immunity, which right is strictly reserved to the
Tribe. Any settlement of a third party claim or cause of action shall require the approval
of the Management Board.



     19.5 Waivers. No failure or delay by Manager or any Tribal Party to insist upon the
strict performance of any covenant, agreement, term or condition of this Agreement, or to exercise
any right or remedy consequent upon the breach thereof, shall constitute a waiver of any such
breach or any subsequent breach of such covenant, agreement, term or condition. No covenant,
agreement, term, or condition of this Agreement and no breach thereof shall be waived, altered or
modified except by written instrument. No waiver of any breach shall affect or alter this
Agreement, but each and every covenant, agreement, term and condition of this Agreement shall
continue in full force and effect with respect to any other then-existing or subsequent breach
thereof.



     19.6 Captions; Section References. The captions for each Section and Subsection are
intended for convenience only. Unless expressly indicated otherwise, references in this Agreement
to “Sections” and “Articles” are references to sections of and articles of this Agreement.



     19.7 Severability. If any of the terms or provisions hereof shall be held invalid or
unenforceable, such terms or provisions will be deemed reformed (without requirement of the
execution of an amendment by the Parties hereto) to the extent required for such term or provision
to be held valid or enforceable, as applicable; and further, no such invalidity or unenforceability
shall affect any of the other terms or provisions hereof. Notwithstanding the foregoing, however,
if any material part of a Party’s rights under this Agreement shall be declared invalid or
unenforceable (including without limitation Manager’s right to receive its Management Fees) the
party whose rights have been declared invalid or unenforceable shall have the option to terminate
this Agreement upon thirty (30) days written notice to the other party, without liability on the
part of the terminating party. Any termination pursuant to this Section 19.7 shall be subject to
Section 10.3 hereof.



44









 





     19.8 Interest. Except for advances of the Minimum Guaranteed Monthly Payment pursuant
to Section 6.1(c), any deferred amounts payable to Manager under this Agreement shall accrue
interest at a rate of 1.0% per month.



     19.9 Third Party Beneficiaries. This Agreement is exclusively for the benefit of the
Parties hereto and it may not be enforced by any party other than the Parties to this Agreement and
the Indemnitee Parties under Section 15.1 and shall not give rise to liability to any third party
other than the authorized successors and assigns of the parties hereto as such are authorized by
this Agreement.



     19.10 Brokerage. Each Party and the Tribe represents and warrants to each other Party
hereto that, except with respect to the Tribal Parties’ engagement of financial institutions to
assist in procuring management services for the Businesses, it has not sought the services of a
broker, finder or agent in this transaction, and neither has employed, nor authorized, any other
person to act in such capacity. Each Party and the Tribe hereby agrees to indemnify and hold the
other Parties hereto harmless from and against any and all claims, loss, liability, damage or
expenses (including reasonable attorneys’ fees) suffered or incurred by the other Party as a result
of a claim brought by a person or entity engaged or claiming to be engaged as a finder, broker or
agent by the indemnifying Party. Any claim for indemnification arising hereunder shall be subject
to the dispute resolution provisions of Section 17.



     19.11 Survival of Provisions. Any covenant, term or provision of this Agreement
which, in order to be effective, must survive the termination of this Agreement (including, without
limitation, the provisions of Article 11 and Article 15), shall survive any such termination.



     19.12 Periods of Time. Whenever any determination is to be made or action is to be
taken on a date specified in this Agreement, if such date shall fall on a Saturday, Sunday or legal
holiday under the laws of the Tribe, the State, or the United States, then in such event said date
shall be extended to the next day which is not a Saturday, Sunday or legal holiday.



     19.13 Successors, Assigns, and Subcontracting. Except as expressly provided otherwise
herein, none of the Parties hereto may assign or subcontract its rights, responsibilities or duties
under this Agreement. Notwithstanding anything in the foregoing to the contrary, the rights,
responsibilities and duties under this Agreement of the Enterprise, Travel Center Entity and the
Ski Apache Entity may be assigned to another entity or entities that are chartered by the Tribe to
conduct the business of the Businesses, and are wholly owned (indirectly or directly) by the Tribe,
subject to all Legal Requirements; provided that each and every such assignee assumes in writing
the obligations of the assignor hereunder; and further provided, that no such assignment may be
made to the extent that, because of the suitability of the proposed assignee or assignees, this
Agreement may be terminated, or the scope of Gaming at the Businesses (or other benefits to the
Manager under this Agreement) would be materially diminished by virtue of such assignment. Any
assignment or purported assignment made in violation of the foregoing will be void. Contracts
entered into by the Manager on behalf of an Operating Company (as expressly provided for in this
Agreement) will not be deemed to be “subcontracting” for purposes of this Section 19.13. This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.



45









 





     19.14 Time is of the Essence. Time is of the essence in the performance of this
Agreement.



     19.15 Patron Dispute Resolution. Patron disputes concerning play which cannot be
resolved on an informal basis shall be addressed and resolved in accordance with the Compact, the
Tribal Gaming Ordinance, and the regulations promulgated thereunder.



     19.16 Amendments. No amendment or modification of any provision of this Agreement
shall be effective unless the same shall be in writing signed by the Manager, on the one hand, and
the Enterprise, on the other hand, and approved by the Chairman of the NIGC. The Tribal Parties
agree that any amendment or modification of any provision of this Agreement duly executed and
delivered by the Enterprise will be effective and sufficient to bind the Tribal Parties to such
amendment or modification (subject to the approval of the Chairman of the NIGC as provided in the
previous sentence).



     19.17 Estoppel Certificate. The Manager and the Tribal Parties agree to furnish to
the other, from time to time upon request, an estoppel certificate in such reasonable form as the
requesting party may request stating whether there have been any defaults under this Agreement
known to the party furnishing the estoppel certificate and such other information relating to the
Manager or the Tribal Parties as may be reasonably requested.



     19.18 Entire Agreement. This Agreement (including all joinders hereto) constitute the
entire understanding and agreement of the Parties hereto with respect to the Businesses (including,
without limitation, all Gaming Operations) and supersede all other prior agreements and
understandings, written or oral, between the parties with respect thereto.



     19.19 Government Savings Clause. Each of the Parties agrees to execute, deliver and,
if necessary, record any and all additional instruments, certifications, amendments, modifications
and other documents as may be required by the State, the United States Department of the Interior,
BIA, the NIGC, or any applicable statute, rule or regulation in order to effectuate, complete,
perfect, continue or preserve the respective rights, obligations, liens and interests of the
parties hereto to the fullest extent permitted by law; provided, that any such additional
instrument, certification, amendment, modification or other document shall not materially change
the respective rights, remedies or obligations of the Tribal Parties or Manager under this
Agreement or any other agreement or document related hereto.



     19.20 Preparation of Agreement. This Agreement was drafted and entered into after
careful review and upon the advice of competent counsel for the Parties hereto; it shall not be
construed more strongly for or against any Party.



     19.21 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.



     19.22 Joint and Several Obligations. The Operating Companies agree and acknowledge
that all obligations expressly undertaken by the Operating Companies collectively pursuant to this
Agreement constitute the joint and several obligations of all Operating Companies. The Tribal
Parties agree and acknowledge that all obligations expressly undertaken by the Tribal



46









 




Parties collectively pursuant to this Agreement constitute the joint and several obligations
of all Tribal Parties. The Warner Parties agree and acknowledge that all obligations expressly
undertaken by the Warner Parties collectively pursuant to this Agreement constitute the joint and
several obligations of all Warner Parties.




[signature page follows]



47









 





     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Execution Date.



	 	 	 	 	 	 	 	 	 	 	 
	Manager:	 	 	 	Operating Companies:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WG-IMG, LLC	 	 	 	INN OF THE MOUNTAIN GODS RESORT
AND CASINO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	WARNER GAMING, LLC, its sole
member	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Carleton  Naiche-Palmer	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ William W. Warner 	 	 	 	 	 	Name: Carleton Naiche-Palmer	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name: William W. Warner
	 	 	 	 	 	Title: Chief Executive Officer and

	 	 
	 

	 	Title: Manager
	 	 	 	 	 	          Management Board Chairperson	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CASINO APACHE TRAVEL CENTER	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Carleton  Naiche-Palmer 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: Carleton Naiche-Palmer	 	 
	 

	 	 	 	 	 	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	SKI APACHE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Carleton  Naiche-Palmer 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: Carleton Naiche-Palmer

Title: Chief Executive Officer	 	 





Attachments and Exhibits



Joinder by the William W. Warner



Joinder by the Tribe



Exhibit A   
 Employee Grievance Procedure







48









 








JOINDER BY WILLIAM W. WARNER




     The undersigned WILLIAM W. WARNER hereby joins in the execution of the foregoing Agreement for
the sole purposes of:



     (1) agreeing to personally perform and be bound by all of the obligations expressly undertaken
by Warner and/or the Warner Parties pursuant to Section 3.9 and all subsections thereof; provided,
that nothing in Section 3.9.2 will prohibit the undersigned William W. Warner from acquiring or
holding any publicly held security in a business entity provided that the total holdings owned or
controlled by William W. Warner comprise less than five percent (5%) of all of the issued and
outstanding equity in such entity;



     (2) agreeing to personally perform and be bound by all of the obligations expressly undertaken
by Warner and/or the Warner Parties pursuant to Section 7.4 and all subsections thereof;



     (3) personally making the representations and warranties set forth in Section 19.2.2; and



     (4) agreeing to the provisions of Sections 15, 16, and 17 and to the application of such
provisions in connection with the obligations undertaken by the undersigned pursuant to this
Joinder.



     THE UNDERSIGNED JOINS IN THE EXECUTION OF THIS AGREEMENT SOLELY FOR THE PURPOSES EXPRESSLY
STATED UNDER THE HEADING “JOINDER BY WILLIAM W. WARNER” AND FOR NO OTHER PURPOSES, AND UNDERTAKES
NO LIABILITY OR OBLIGATIONS IN CONNECTION WITH THIS AGREEMENT OTHER THAN AS EXPRESSLY PROVIDED
UNDER THE HEADING “JOINDER BY WILLIAM W. WARNER.”



	 	 	 	 	 
	 	 	 
	 	/s/ William W. Warner
 	 
	 	WILLIAM W. WARNER 	 
	 	 	 



49









 






	 	 	 	 	 



JOINDER BY THE TRIBE





     The undersigned MESCALERO APACHE TRIBE hereby joins in the execution of the foregoing
Agreement for the sole purposes of:



     (1) agreeing to perform and be bound by all of the agreements, representations and warranties,
covenants and obligations expressly undertaken by the Tribe and/or the Tribal Parties pursuant to
the foregoing Agreement; and



     (2) agreeing to the provisions of Sections 15, 16, and 17 and to the application of such
provisions in connection with the obligations undertaken by the undersigned pursuant to this
Joinder.



     THE UNDERSIGNED JOINS IN THE EXECUTION OF THIS AGREEMENT SOLELY FOR THE PURPOSES EXPRESSLY
STATED UNDER THE HEADING “JOINDER BY THE TRIBE” AND FOR NO OTHER PURPOSES, AND UNDERTAKES NO
LIABILITY OR OBLIGATIONS IN CONNECTION WITH THIS AGREEMENT OTHER THAN AS EXPRESSLY PROVIDED UNDER
THE HEADING “JOINDER BY THE TRIBE.”



	 	 	 	 	 
	 	MESCALERO APACHE TRIBE

 	 
	 
	 	By:  	/s/ Carleton Naiche-Palmer 	 
	 	 	Name:  	Carleton Naiche-Palmer 	 
	 	 	Title:  	President 	 



50









 






	 	 	 	 	 



Exhibit “A”




Employee Grievance Procedure




     Any Business Employee who is terminated for reasons other than positive drug test results or
failure to complete the 90-day post-hire introductory period may ask for a reconsideration of the
termination.


Reconsideration Process:





	 	1.	 	The terminated Business Employee must, no later than five (5) business days after the
termination, submit an appeal letter to the Team Member Relations group within the human
resources department requesting that the termination be reconsidered.
	 
	 	2.	 	The terminated Business Employee’s appeal will be heard by a committee (a “Termination
Appeal Committee”) and a recommendation to uphold or overturn the termination will be
rendered. Each Termination Appeal Committee will be comprised of five (5) Business
Employees, chaired by a Business Employee who serves in some supervisory or managerial
capacity, but who does not have direct or indirect supervisory oversight of the terminated
Business Employee, and appointed by the human resources department from among a pool of
eligible Business Employees identified by the Chief Operating Officer. To be eligible to
serve on a Termination Appeal Committee, a Business Employee, at the time, must: (a) have
completed his or her 90-day post-hire introductory period; (b) not be subject to currently
on-going probation, suspension or other act of discipline; and (c) must not be related to
the terminated Business Employee (meaning not a spouse, child, foster child, parent, foster
parent, grandparent, grandchild, sibling, aunt, uncle, direct relative by marriage (step or
in-law) or living as a household member with the terminated Business Employee).
	 
	 	3.	 	Within five (5) business days after an appeal is submitted to it, the Termination
Appeal Committee will send written notice of the committee’s recommendation to the human
resources department and the Chief Operating Officer.
	 
	 	4.	 	The Chief Operating Officer, in all cases, may affirm, modify or reverse the
recommendation of the Termination Appeal Committee, and the decision of the Chief Operating
Officer will be final and non-appealable (except as set forth in No. 5 below). The Chief
Operating Officer will send written notice of his/her decision to the terminated Business
Employee and the department manager of the terminated Business Employee.
	 
	 	5.	 	Notwithstanding No. 4 above, members of the Tribe and Affiliates (as defined in Section
17-9-1(B) of the Mescalero Apache Tribal Code, or any successor provision thereto), but no
other Business Employees, will have the right to appeal a decision of the Chief Operating
Officer in connection with No. 4 above to the President of the Tribe, and then to the
Tribal Council, in accordance with Section N of the Tribe’s Personnel Policies and
Procedures Manual. Such an appeal must be made in writing within ten (10) calendar
days after the Chief Operating Officer has delivered written notice of his/her decision in
accordance with No. 4 above.




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