National Indian Gaming Commission 

SETTLEMENT AGREEMENT 

This Settlement Agreement ("Agreement") is entered into by and between the Chairman 

of the National Indian Gaming Commission (''NIGC Chairman"); the Puyallup Tribe of 

Indians, a federally-recognized Indian tribe ("Puyallup Tribe" or "Tribe"); and BJ's 

Enterprises, Inc., the owner of BJ's Bingo, an individually owned Class I1 gaming facility 

operating on the Puyallup Indian Reservation ("BJ's"). This Agreement resolves all of 

the issues identified in a letter dated October 13,2006, from the NIGC Region Director to 

the Puyallup Tribe and BJ's regarding the proper revenue share at BJ's Bingo (Exh. A). 

RECITALS 

1. The Puyallup Tribe conducts and licenses various gaming activities within the 

boundaries of the Puyallup Indian Reservation pursuant to the Indian Gaming 

Regulatory Act ("IGRA"), 25 U.S.C. $5 2710-2721, the Puyallup Tribe of Indians 

Tribal Gaming Ordinance as approved by the NIGC Chairman, the NIGC's 

regulations, and other applicable tribal laws and regulations. 

2. BJ's is an individually owned, Class I1 gaming operation that is licensed by the 

Puyallup Tribe pursuant to IGRA's grandfathering provision for such facilities 

that were in operation as of September 1, 1986. 25 U.S.C. $ 2701(b)(4)(B)(i)(III). 

3. IGRA, the NIGC's regulations, and the Puyallup Tribe's approved tribal gaming 

ordinance all require grandfathered, individually owned gaming facilities to 

provide not less than 60% of the facility's net revenues to the licensing tribe. 

4. In an effort to implement the 60% of net revenue requirement, the Puyallup 

Gaming Commission adopted certain accounting regulations that include a 

worksheet formula that the Puyallup Gaming Commission, for a number of years, 

has required BJ's to follow in calculating its monthly payments to the Tribe. 

5. In a letter dated October 13,2006 (Exh. A), the NIGC Region Director informed 

the Puyallup Tribe and BJ's of the NIGC's concern that BJ's was not distributing 

at least 60% of its net revenues to the Puyallup Tribe. Subsequently, it was 

determined that the underpayments were caused primarily by implementation of 

the worksheet formula. 

6. The NIGC Chairman, the Puyallup Tribe, and BJ's wish to enter this Agreement 

in order to preserve their longstanding relationships; avoid the expense, time and 

risk associated with a formal enforcement action; and achieve an amicable 
resolution of all of the issues raised in the NIGC Region Director's letter dated 

October 13,2006. 

7. Now, therefore, the NIGC Chairman, the Puyallup Tribe, and BJ's have agreed to 

enter into this Agreement and perform in accordance with the following terms. 

TERMS OF SETTLEMENT 

8. This Agreement shall be effective on the date that it is signed by the last party to 

sign the Agreement ("Effective Date"). This Agreement shall continue in force 

after the Effective Date for as long as BJ's operates BJ's Bingo, or until this 

Agreement is terminated or amended by written agreement, signed by all three 

parties. 

9. By entering this Agreement, the NIGC Chairman agrees to waive his right to issue 

a notice of violation, impose civil fines, or issue a closure order regarding any and 

all of the issues covered in the NIGC Region Director's letter dated October 13, 

2006 (Exh. A), as long as the Tribe and BJ's comply with the terms of this 

Agreement. Although the NIGC did not review activity occurring during the 

current fiscal year, the waiver in this Paragraph applies as well to the same issues 

and type of activities that occurred during the current fiscal year, before the 

Effective Date of this Agreement. The Tribe and BJ's acknowledge and agree 

that if the Tribe or BJ's fail to comply with the terms of this Agreement, the 

NIGC Chairman retains the authority as provided by law to pursue one or more 

enforcement actions regarding the issues covered in this Agreement. The 

Puyallup Tribe and BJ's acknowledge and agree that the NIGC Chairman's 

waiver in this paragraph covers only those issues covered under this Agreement, 

and does not preclude or otherwise affect any other enforcement actions that the 

NIGC Chairman may pursue regarding any other enforcement matter under the 

NIGC's jurisdiction. 

10. Within thirty (30) days after the Effective Date, the Tribe or a proper political 

entity of the Tribe shall adopt tribal code or regulations that reflect the same 

substantive content as provided under Exhibit B to this Agreement. The Tribe 

and BJ's shall follow such code or regulations upon their adoption. BJ's agrees 

that it shall not challenge such code or regulations in tribal court or any other 

forum. For the duration of the current fiscal year, BJ's shall pay the monthly 

revenue sharing fee to the Tribe, but no reconciliation report or reconciliation 

payment shall be due until the end of the first full fiscal year following adoption 

of the code or regulations. 

11. In calculating "net revenues" for the reconciliation reports required by the code or 

regulations to be adopted under this Agreement, BJ7s shall deduct from gross 

revenues only legitimate and market-based expenses, and shall comply with the 

following specific limitations: 
A. Executive Compensation - For purposes of calculating annual net revenues 

under this Agreement, any salaries, bonuses and any other form of 

compensation to corporate shareholders shall be limited as follows. For 

fiscal year 2008 (April 1,2007 through March 3 1,2008), the value of such 

executive com ensation deducted from gross revenues shall not be greater 

than ( dl Thereafter, the value of such executive compensation 

deducted from gross revenues shall change for each new fiscal year by the 

same percentage increase or decrease that occurred &om the previous fiscal 

year in the facility's Operation Revenue, as defined in the code or 

regulations to be adopted under this Agreement (Exh. B). Notwithstanding 

the previous sentence, any such annual change in executive compensation 

shall not exceed a 10% decrease or a 5% increase, even if Operation 

Revenue decreases by more than 10% or increases by more than 5%. The 

NIGC acknowledges that BJ's may provide higher salary, bonus or draw 

payments to its corporate shareholders if allowed under applicable corporate 

tax laws, but for purposes of calculating net revenues under this Agreement, 

the amount of all such salary, bonus or draw payments deducted fiom gross 

revenues as operating expenses shall be limited as provided herein. 

B. Rent - Any rent or lease payments made from BJ's to a corporate 

shareholder or a party controlled or closely related to a corporate 

shareholder shall be limited to the fair-market value of rent for similar 

properties in the area. 

C. Warehouse Expense - Any warehouse or storage expense made from BJ7s 

to a corporate shareholder or a party controlled or closely related to a 

corporate shareholder shall be limited to the fair-market value of such 

services in the area. 

D. Depreciation Expense - Any depreciation expense shall be limited to 

GAAP presentation on an accrual basis (not tax basis) of accounting, and 

shall be supported by an appraisal or other documentation fiom an 

independent Certified Public Accountant. 

12. If a dispute develops between the parties to this Agreement regarding 

implementation of the code or regulations required by this Agreement, including 

the content and calculations in the reconciliation reports submitted by BJ's, then 

the NIGC shall solicit and consider input fiom the Tribe and BJ's, and shall 

provide a written decision that resolves the dispute. The Tribe and BJ's shall 

abide by the decision provided by the NIGC. 

13. The parties acknowledge that the intent of the code or regulations required by this 

Agreement is to provide a simple mechanism to ensure compliance with IGRA by 

mandating fees that are at least as high, or slightly higher, than the 60% of net 

revenues required under IGRA. Therefore, at the end of every two (2) hll fiscalyears following the Effective Date of this Agreement, if BJ's can demonstrate that 

such revenue sharing fees have been higher than 60% of its net revenues during 
the preceding two (2) fiscal years, then BJ's may request an amendment to the 

code or regulations required under this Agreement in order to reduce 

prospectively BJ's monthly fees. Upon such request, if the Tribe and the NIGC 

agree that BJ's revenue sharing fees have been higher than 60% of net revenues, 

and the Tribe determines that a revenue share reduction would be a good policy 

decision, then the Tribe may make an appropriate adjustment to the code or 

regulations in order to bring BJ's revenue sharing fees closer to, but not lower 

than, 60% of net revenues. In the course of this analysis, BJ's shall provide any 

information that may be requested by the Tribe or the NIGC to determine whether 

the revenue sharing fees have been higher than 60% of BJ's net revenues, 

including information concerning the legitimacy of operating expenses claimed 

by BJ's. BJ's shall abide by the decision of the NIGC and the Tribe regarding 

whether-and if so, how much-to adjust the revenue sharing fees, and shall not 

challenge such decision in tribal court, federal court, or any other forum. 

14. The Tribe and BJ's agree that the NIGC has the authority to monitor and inspect 

the Tribe's and BJ's activities for the purpose of verifying the Tribe's and BJ's 

compliance with the terms of th~s Agreement, and the Tribe and BJ's agree to 

provide under th~s Agreement any documents that the NIGC Chairman or his 

designee may request that are reasonably relevant to the Tribe's or BJ's 

obligations under this Agreement. The Tribe and BJ's stipulate that the 

withholding of any such documents referenced in the preceding sentence 

constitutes a breach of this Agreement, and relieves the NIGC Chairman of the 

waiver in Paragraph 9, thus subjecting the Tribe or BJ's to the exercise of the 

NIGC Chairman's enforcement authority as provided by law with respect to the 

issues covered in this Agreement. In addition, the NIGC Chairman reserves the 

right to request other documents fiom the Tribe and BJ's under IGRA's 

monitoring/oversight authority. 

ADDITIONAL COVENANTS 

15. This Agreement is the entire agreement. Any amendments must be in writing and 

signed by all three parties. 

16. The Puyallup Tribe and BJ's stipulate that this Agreement shall be deemed to be 

the subject of a final order of the NIGC under 25 C.F.R. $575.4(~)(1), and agree 

to waive any right to appeal the terms of this Agreement. 

17. This Agreement may be executed in one or more counterparts and each shall 

constitute an original. A signature produced by facsimile shall be deemed to be 

an original signature and shall be effective and binding for the purposes of this 

Agreement. 
. 2 

LA - " 

C' 

/&ki*c;.v=,l ' 7- 

Herman Dillon, Sr., Chairman 

Puyallup Tribe of Indians 

Dated: 

BJ's ~nt&prises, Inc. 

- 

Dated: 2 & . j 6 bJ 67 
Exhibit A 
October 13. 2006 

i lerrn~r~ Ditlot~, Sr,. C'haimau 

l'uy~illup Tribe of Irtdiatls 

18.50 Alexrlt~cter Ave. 

'1 actlnsii. WA OX42 1 

McKa~xitic f'tirtiipseed 

f%JYy I:nterprises, Inc. 

44 1 1 Pact tic Highway lhst 

Fife, %'A 98424 

Dt~ring a Nafioilal Indian Grrrnlnp Commission (:NICiC:") investtgaticlltl at lllc Puyallup Indian 

Reservation, ~vclevelapcti n concern that @J's Bntcrpriscs, Inc ('935's"') is naf distributir~g at lcast 60% 

ai'iis net revenues to the FwyaiXup Indian 'Tribe. 

Tl~c Irldinn {iarning Regulatory Act (""1C;fW") pr-ovides that ffihal gzitning clt-cii~iances ttlay al1r.r~ 

it~divirfunfiy owned, grandf~tltered Ctass I! operations to contintic to c~perntc, as Idrig as certain 

requiranenls are met, il~cl\xd~ng tl~e tecli~lrer~~cnl tfr;dxior less tl~at~ 68% i3f the facility'~ rtrt revettues is 

Irlcome: to ttrc Iicnising Kridiasl tribe. 25 (J.S C'. G 27 ii)fh)(.%){U)fi)(lll]. 

111 accr~rclanco wit11 EC;RA, the Puyallup i"r- he's agprc~vecf tribal gaming odina~ice provides Ehat 

granrffi~fheseci, indicid~ialfy o\vned Class I1 g&mir.rp rsperations mtist prntidc nat less tl3ari 60 percent of 

their 11et revenues RS income to the Pzi yallr rp Tribe. f'rg~nfltlp ir).ifte .r$ln&rrrr$ Elbnl &~rn!t~g C?r%Sitt~;t~,v, 

Ordinance: Ne. UCrO000, S&an 4.04(b)(i)(C:), hlrthen~~owc, tlre gaming ordinance providw that "[t Jhr 

Tribe rnay license and regulate Class II gaming activities owned by any person or entrty 19lht;r that1 fhc 

'f'ribc. and condncfud on incli;.m larids wittrir~ tlze 'Tribe's jurisdiction. rt~lly if thc rcquirer~ents described in 

scctior~ (b)(i) of this Sccrtc!tl are rnct . . . ." id. $ 4.84(a). IJnder thrs langui~ge. tllc Tribe may riot lice~z~c 

an inctii ~tii~aliy nlxrjeri panlirrg operation tl~ar 1s not providirxg at least 60% of its nt.t revenues tct the 'f'ribe. 

IGRA ricfincs "not rrvenucd' as "g~~oss revenztes af at? Xnd~an gaming activity lcss amounts paid out as, or 

paid firr. prizes and total apes;ttinp expenses, wcludillg manage~rtc~~~ fees,"25 1I.S.C. $2703f9). NFGC 

regulntrons detil~e "net reventtcs" ;as "gross gaming revettucs of an rnctian gaming operatior1 less--- (8) 

Artxorlnts paid out as, or galti fbr, prtxes; iistd (b) Totikl gnmmg-relateil, cverating expenses, cxciudirtg 

nranagemetrt fees." 25 C.F.R. 6 5112.16. 'Tire Puyalltlp Tribe's approved tribal gamillg ordltlifi~ce defines 

''11et I"C'VC~III~" as "gross revenues caf zi gartting activity less arnottnts paid out as, ar paid fbr, prizes, 

tvlmzings, and total operating cxpaljses, cxclticling marlagornent fea." I+t,vullup fieifre of I~rrfititclns Triilaf 

Gnntittg Ot.t1intrncc.. Ordinance No f)TtOXrF)O, S~tiort 2.1 5. 

Ilsirtg tllcsc stalutcrry and regulatory ciefinitiotis uf 'he1 reventjes," as xnfornled by tieneriiily Accepted 

Accourlting Principles ~'GAAPY'j. ctur invcstig3ic)rs reviewed tile last frr;e audited Prnancial staterttentq 

fro111 BJ". ~tttd cafctifatcd what sl~ould Rsvc heen provitled b~ tile P~~;iflup'1'rihe ns 601% of net rgvcnum. 

Tile atlacfletl spreadsheci shows Ihc figures we used aittt the ceiculalions we perfnrmed, tvl~ich 

demonstrate that BJk has no! prosicfed at leas1 GOQ,$ trf its net revenues tto [he I?iyallaiy 'f'ri'trc in any ofthc, 

REClOW t %alcrnn< Burldlrg &?<I SW Man $!ratt S~,itr~ 112 &&land, OF( 97205 ?@I 503 326.5005 Fan 5O3 326 W2 

NhrtaWAL WFAOQLIARTFRS 144" i %) nl\y Sblte P"c3(1, Wl5~l.tshgutfi 3C >%a', Tr?i A02 632 YW? Fax 102 632 33& W.WlCC.GOV 
inst fit^ ye(\rs. Acco~~~II,~ fo our mlctilofi~tls, tlttre has herr~ ~1 total dlort-fail over tthc past five years of 

illmost (- ' tlic exact figure is (-1 Wc ;ire ware fllii~ in an effifr,rt to iraplcrnrtit 1CiRA"i' individualiy ttwtled gan~ing rever~tic sl~re 

rcqutrcri~ent, tbc I1uyalltip Gaoling Csmmrssinn adopted cestain accounting regitlatit~ns that include 

"Xxt~ftu~tt~fi~ to "I'itx Rcpot%inpV and a mortthly woi-ksheet tlmt tile Puyfillup Ci;tlnirlg (:t3mtnis%ion it:qujie~ 

13J.s to fc)lfoxv irz calculating its monthly payno~ts to tile *IHbe. 'T'llc NIQC is not opposed to the cttn~~pl 

trfa f<~rrt~uln Lo assist the Tribe and its licet~sees comply with the 60% requirement, hut any sttcll li)mula 

nlrrsl rest~lt payt~le~lf f~! file 1 nbc nf at least 601% of the fa'acility's 11et revenues. To file cxicart tliat any 

tribal gaming crtrntnission adopts or approves regulaticrt~s ur procerixlres rlrat cc~nllict '~~1117 3 trihitf gsrmir~g 

c~rtl!t?arrce spprc~vwi by the C:hrtirtnen of the NICK, thtrsc reguhtinns or prc~ccdurcs are in vioiation of 

XtjKA and wc consider them to l7u void. 

As de~nunslrated by the :tttacE~rli .liyrcndsl.reet, tllc current fonnula-either as written or ss npl~lied-does 

not rcsult in the correct paymcnts to the f3uyallop 'l'ribe. 'i'het-ehre, the currerlt system is riot j>er~nissiblt: 

urrder IGRA, the NIt';C:'a regulations, c~rlrl the Puynllitp Trihe's approved gaming ordiinartce. atid ~'rlust be 

ctrrractetl. 

Wc t~tidcrstimd that T3J's Itingo is the tast individttally owned, grandfathered Class If facility in operatirttr 

under IORA, attd rlrat this fact is a saiirce crF pride fir 11,f's and the Puyllup 'l'ribe, 'i"herefnn+ wc Are 

I~opeful tl.iai ne call rcach rz resolution to [his issue that will allow R3.1; tcr contjrrtre fn operate fiir as long 

as the 'Sribe wisl~es to license its cycratjnn, arld ar; long DS interest in the tribal charter or nw~~er~ilip oftlle 

facility is not tmrlslbned 10 $illy olhcr person or entity. See 25 II,S.C. 4 23tOfb)(4)(Df(ii). 

Our Oflice of'licncral ('ottrlscl will contact. your attctnjcys lo discrrss how this trlatter slruuld he rc.$rtlvccl. 

In !Ire mearitirne, if you have tiny questio~~s, you may contact me $it (503) 326-5009. 

cc i%iyallup Tribal Gaming Comn~ission 

C'i~l(~s n~los Santos, Tribal Attorney (via tftilail) 

Frattk Miflcr, C'cru~tscl hr RJ's Et~lcipr-ir;cs, Irrc. (via ernail) 
Exhibit B 
TRIBAL GAMING REGULATION NO. 

Section Revenue Sharing Fee Requirement. 

A. Any gaming operation licensed pursuant to Section 4.04 of the Tribal Gaming 

Ordinance shall pay to the Tribe a monthly revenue sharing fee equal to twelve 

percent (12%) of the monthly Operation Revenue. For the purposes of this 

Section, "Operation Revenue" means the gross wagers and bets received, plus 

the gross revenues from all other activities andlor sales at the facility, less the 

value of complimentary sales (promotions) reflected in gross revenues, and less 

prizes paid. 

B. Within 120 days after the end of the gaming operation's fiscal year, the 

gaming operation shall submit to the Tribe and the National Indian Gaming 

Commission (NIGC) a reconciliation report of the fees paid to the Tribe during the 

preceding fiscal year. This reconciliation report shall be developed by an 

independent Certified Public Accountant in conjunction with the gaming 

operation's annual audited financial statements. The reconciliation report shall 

calculate 60% of the gaming operation's net revenues for the subject fiscal year. 

If the reconciliation report demonstrates that the fees paid to the Tribe were less 

than 60% of the gaming operation's net revenues, then the gaming operation 

shall make a reconciliation payment to the Tribe within thirty (30) days after 

submitting the reconciliation report. This reconciliation payment shall equal the 

difference between 60% of the gaming operation's net revenues and the fees 

paid to the Tribe by the gaming operation during the subject fiscal year. If the 

reconciliation payment is made according to this Section, then there shall be no 

interest or late-payment fee charged to the gaming operation. Because the 

NIGC's 60% requirement is a minimum payment requirement, there shall be no 

refunds or credits given to the gaming operation if the reconciliation report 

demonstrates that the fees paid to the Tribe were more than 60% of the gaming 

operation's net revenues. 

C. For purposes of the reconciliation reports and reconciliation payments 

required under this Section, the term "net revenues" shall have the same 
definition as provided by the NIGC's regulations which are in effect at the time, 

as guided by Generally Accepted Accounting Principles (GAAP). Expenses that 

are paid to shareholders of the gaming operation, or to parties that are 

ownedlcontrolled by or closely related to shareholders of the gaming operation 

("related-party transactions") may be deducted from gross revenues only to the 

extent that such related-party transactions reflect legitimate business expenses 

and fair-market value. The reconciliation report shall identify all related-party 

transactions and include support for the position that each related-party 

transaction was a legitimate business expense and did not exceed fair-market 

value. 

Section Payment and Remittance 

A. The revenue sharing fee imposed under this Regulation shall be due and 

payable monthly and remittance therefore shall be made on or before the last 

day of the month next succeeding the end of the monthly period in which the 

payment accrued. 

B. Each monthly payment shall be accompanied by the Revenue Sharing Form 

provided by the Tribe's Accounting Department and prepared by the gaming 

operation's accounting department or independent Certified Public Accountant. 

C. Fees required by this Regulation shall be remitted to the Puyallup Tribe of 

Indians on or before the time required by bank draft, certified check, cashier's 

check, personal check, money order, wire transfer, or in cash. If payment is 

made by a draft or check, the required payment shall not be deemed paid until 

the draft or check is accepted in the usual course of business. Nor shall the 

acceptance of any sum by the Tribe be an acquittance or discharge of the fees 

unless the amount paid is the full amount due. 

Section Failure To Pay In Full - Penalty fee. 

A. If full payment of the revenue sharing fee under this Regulation is not 

received by the Tribe's Accounting Department on or before the due date, there 

shall be added as follows: 
1 - 10 days late, 5% of fee is due 

1 1-21 days late, 15% of fee is due 

22-31 days late, 20% of fee is due 

32-60 days late, 25% of fee is due 

B. But in no event shall the penalty amount be less than $50.00. In addition to 

this penalty, the Tribe shall charge the licensee interest of eight percent (8%) of 

the revenue sharing fees due for each 30-day period or portion thereof that the 

amounts are past due. Failure to make payment following the day the fee 

amount initially became due shall be both a civil and a criminal violation of the 

Tribe's Gaming Ordinance.