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SHINNECOCK INDIAN N A TION/GA TEW A Y CASINO RESORTS

TERM SHEET
Project
Authority
Developer/Manager
Non-Gaming Land
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Permitting, development, financing, construction and management of
multiple Class III gaming operations on lands owned or controlled by
the Nation. The Nation shall negotiate a compact with the State of New
York (the "State") which seeks to provide for the conduct of multiple
Class Ill gaming operations. The agreements described herein will
supersede and replace all present agreements between the parties and
will be consistent with the parameters of the Indian Gaming Regulatory
Act ("IGRA") and the regulations promulgated by the National Indian
Gaming Commission ("NIGC").
The Nation's right to conduct gaming operations shall be exercised through
the Shinnecock Nation Gaming Authority (the "Authority").
Gateway Casino Resorts, LLC ("Gateway") shall be the Nation's
exclusive developer and manager for the Nation's Class III gaming
operations, or Class II to the extent such operations are not located on
the Nation's Reservation (including Westwoods), in the state of New
York. The Nation shall be Gateway's exclusive partner for casino
gaming in the states of New York, Connecticut, New Jersey or Rhode
Island, absent the Authority's consent. In the event Gateway undertakes
a casino gaming project in Pennsylvania, east of the Susquehanna River,
Gateway agrees that the Authority may be an equal partner with
Gateway in such a project if the Authority contributes equal capital as
Gateway to the project. Gateway has advanced, and will continue to
advance, costs and expenses associated with realization of the Nation's
right to conduct and operate multiple Class Ill gaming operations in
New York.
Gateway shall assist the Nation in pursuing the acquisition of the college
campus known as State University of New York at Stony Brook in
Southampton, New York (the "College") by providing reasonable financial
assistance to the Nation to: conduct due diligence and research regarding
the property, investigate acquisition options, negotiate with the State of
New York and federal, state and local entities regarding acquisition of the
property, and provide other reasonable assistance to help the Nation
facilitate the acquisition of the college. Gateway a&>rees that the initial
$500,000 Gateway provides for such purposes will be a gift to thse Nation
and that, neither the Nation nor the Authority is required to repay this initial
amount of $500,000 to Gateway, with any remaining expenditure being
Approved Development Costs. The parties a&>ree that, if the parties
determine that the due diligence contemplated by this para&>raph indicates
that the Nation has a viable opportunity to acquire the College, the parties
will discuss how Gateway can assist the Nation with such acquisition or
Development Costs
Operating Costs
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assist the Nation in acquiring a loan to purchase the property. Gateway
shall also support efforts by the Nation to include the acquisition of non-
gaming land during the compact and other negotiations with the State, local
and federal governments.
Gateway has advanced, and will continue to advance, all costs and
expenses associated with realization of the Nation's right to conduct and
operate multiple Class Il I gaming operations in New York. The parties
agree to review the parties' records regarding development costs to-date
in order to agree upon the presently accrued development costs that
should constitute Approved Development Costs. Only those costs and
expenses relating to development costs and expenses approved by the
Authority either (a) in a budget submitted to the Authority by Gateway,
(b) on a case-by-case basis. (c) by approving an invoice for services
rendered, or (d) by approving a schedule of costs accrued before
execution of this agreement, will be included as "Development Costs"
to be repaid by the Authority as described herein (the sum of (a), (b),
(c), and (d) herein is described as "Approved Development Costs". The
parties shall use best efforts to review and approve invoices submitted
for project-related services on a monthly basis, and to meet quarterly to
reconcile development costs from the preceding quarter on an ongoing
basis.
Until a period which is sixty (60) days following the date upon which a
Class Ill gaming facility is open to the public, Gateway agrees to
advance operating funds to the Nation and the Authority. From the date
the development agreement is executed Gateway will pay to the
Authority for such operating costs the amount of$250,000 per month, of
which $130,000 per calendar quarter shall be deemed "Sponsored
Operating Costs," which neither the Authority nor the Nation shall be
obligated to repay. In the tenth month after the parties execute the
development agreement, the parties agree to re-evaluate such operating
funds to determine whether the project is progressing as planned toward
a Tribal-State compact and federal approval such that an adjustment in
operating funds is justified. The parties also agree that if state and
federal approvals necessary for operation of a Class III gaming facility
are granted Gateway shall increase the monthly operating costs pursuant
to a mutual agreement of the parties as to a pre-opening budget. The
pre-opening budget shall include such sums as are necessary to fund
additional costs on the part of the Authority. Nation, and Shinnecock
Nation Gaming Commission related to the development of expertise and
capacity necessary to fulfill their respective duties relative to operation
of the facility. In addition to such operating costs, Gateway shall
continue to advance expenses. in addition to the advances for operating
costs.. for all lawyers. lobbyists. consultants and other professional
service providers related to the Project and the Authority agrees to
maintain the existing professional team unless the parties agree to
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Limited Recourse
Repayment
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changes. These payments shall be deemed Approved Development
Costs unless otherwise agreed to by the Authority and Gateway. The
Parties further agree that certain funds have been advanced by Gateway to
the Nation or the Authority that do not have to be repaid by either the
Nation or the Authority, as to be described in the definitive agreements.
The $1,500,000 previously paid to the Nation for purposes of Federal
Recognition pursuant to section 2.1 of the original
Development/Management Agreement shall be deemed a signing bonus that
is unrestricted tor the Nation to spend at its discretion. This $1 ,500,000 is
not a loan of any type, is non-refundable, and is not to be repaid to Gateway
by the Authority or the Nation under any circumstances.
The Authority will waive its defense of sovereign immunity for
enforcement, with appropriate limitations as to the extent of liability. All
funding advanced by Gateway will be non-recourse to the Nation and
limited recourse to the Authority. Specifically, any liability arising from the
transactions described herein shall be limited to: (1) the Authority's
revenues from gaming enterprises, (2) the furniture, fixtures and equipment
related to the gaming enterprises, (3) the accounts receivable of the gaming
enterprises, and ( 4) any insurance award or payment made to compensate
the Authority for the loss of gaming revenues (net of any legal fees and
expenses associated with the obtaining of such award or payment), (5)
injunctive or other equitable relief. In no event shall Gateway have
recourse to: (a) distributions of revenue made to the Nation, (b) assets of the
Nation whether or not purchased with distributions of revenue from the
gaming enterprises, and (c) other sources of revenue not related to the
gaming enterprise.
The Authority shall repay to Gateway all Approved Development Costs.
Interest on Development Costs will begin accruing on all development costs
on October 1, 2010 at 350 basis points over the 30 day LIB OR on the
balance due on the first day of each quarter, adjusted quarterly until the date
of repayment. The Authority agrees to undertake all commercially
reasonable requirements necessary for the Authority to obtain financing for
the project from third party lenders and will repay Gateway as much as
possible of the Development Costs from the Authority's initial financing
transaction with third party lenders tor the project, subject to market
constraints. To the extent any portion of the Development Costs cannot be
financed in the Authority's initial financing transaction with third party
lenders, Gateway agrees to accept notes in exchange tor the amount of the
indebtedness owed to Gateway for the remaining amount which shall be
subordinated to senior project financing and paid on a monthly basis in
equal installments of principal, plus interest, over a period of seven (7)
years commencing sixty ( 60) days f(>llowing the date on which a Class Ill
gaming facility is open to the public, with all amounts being fully due and
payable seven (7) years from the commencement of gaming.
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Financing
Contract Terms
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The Authority will undertake to identify financing on terms it believes
are most favorable to the Authority and the project. At the Authority's
request, Gateway will assist in arranging for the financing for the
permitting, design, construction, furnishing, equipping and initial
capitalization of all gaming facilities which may include a combination
of debt, equity or other types of financing. The parties will jointly agree
on the size, scope and cost of each facility and ensure that the financing
is commercially viable.
The parties anticipate that the financing markets will require a contingency
escrow of I 0% of the project cost for each site that will be included in the
amount financed by the Authority for the project. Gateway will agree to
provide a completion guaranty of up to 5% of total project costs for each
site over and above that I 0% contingency escrow, in a form that is
acceptable to the financial markets. Gateway also a&>Tees to provide gap
financing in an amount up to I 0% of total project cost for each facility if:
( 1) the financing transaction is led by an investment banking firm with an
international reputation and significant experience in the gaming and high
yield markets; (2) after the launch of financing, the project is not able to be
fully financed; (3) the parties jointly detennine that they nonetheless desire
to proceed with the same level of investment in that particular project. To
the extent it is necessary tor Gateway to expend funds contemplated by this
section, the Authority will re-pay Gateway within seven (7) years at
Gateway's cost plus 50 bps.
To the extent Development Costs cannot be financed in the Authority's
initial financing transaction with third party lenders, Gateway agrees to
accept notes in exchange tor the amount of the indebtedness owed to
Gateway which the Authority is unable to finance, which shall be
subordinated to senior project financing and paid on a monthly basis in
equal installments of principaL plus interest, over a period of seven (7}
years commencing sixty (60) days following the date on which a Class
III gaming facility is open to the public, with all amounts being fully
due and payable seven (7) years from the commencement of gaming.
For up to three separate gaming facilities at separate locations, Gateway
and the Authority shall enter into a development contract and
management contract for a term of seven (7) years that contains tem1s
customary in the Indian gaming industry and includes a management fee
equal to 28% of the monthly net revenue. If Gateway has not begun
construction on the second facility within three years of the opening of
the first facility. unless a delay in commencing construction is caused by
the actions or inaction of the Authority, the Nation, or a third party, the
Authority may terminate the contract for the second facility. If Gateway
has not begun construction on the third facility within two years from
the opening of the second facility. unless a delay in commencing
construction is caused by the actions or inaction of the Authority. the
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Minimum Payment
Recoupable Costs
Gaming Land
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Nation, or a third party, the Authority may terminate the contract for the
third facility. In the event that the Authority opens more than three
facilities, the Authority may negotiate with Gateway for a development
and/or management contract, enter into an agreement with another entity
to do so or go forward on its own, provided, however, that if the
Authority enters into an agreement with another entity, then Gateway
shall have the right to match the terms of that agreement and proceed as
the developer and manager of that facility. The parties will jointly and
in good faith submit to the NIGC the Development Agreement for a
declination letter and, at the appropriate time, the Management
Agreements for approval, along with any information necessary to
support the agreement term.
The Management Agreement, as required by IGRA, will provide for a
minimum guaranteed tribal payment of: (a) $1,000,000 per month if the
Authority is operating at least one Class Ill gaming facility located west
of a line extending north and south from the easternmost part of the
Brookhaven Calabro Airport: or (b) $500,000 per month if the Authority
is operating only one Class III gaming facility, and that facility is
located east of a line extending no11h and south from the easternmost
part of the Brookhaven Calabro Airport. Gateway's obligation to pay the
minimum guaranteed payment is triggered only if, and to the extent, the
Authority's revenue from all gaming operations is less than the applicable
minimum guaranteed payment To the extent Gateway pays the
Authority the minimum guaranteed payment, such amounts constitute a
no interest loan from Gateway to the Authority that the Authority shall
repay to Gateway as soon as the Authority's revenue allows such
repayment
The parties agree that the maximum dollar amount for the recoupment
of development and construction costs for each gaming facility
developed under the transaction documents shall be capped at
$750,000,000 per facility unless the parties otherwise agree in writing,
based upon the location of a particular facility justifying an increase in
the maximum recoupable development costs.
Gateway shall have the obligation to fund the acquisition of gaming land as
set forth in this paragraph. The Authority shall have the obligation to repay
Gateway for acquisition of gaming land as set forth in this para!,>raph. If
gaming sites cannot be acquired from government entities with the
Authority paying for the land from operating revenue on terms
acceptable to both the Authority and Gateway, then Gateway will
purchase the land after: (a) both parties agree to the location and the
tern1s of the purchase, (b) the parties execute the development and
management agreements for the site pursuant to the terms of this term
sheet, (c) those agreements are approved and Gateway is satisfied that
they are binding: and (d) the Authority agrees to repay Gateway within
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Reformation
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seven (7) years after the first facility is open to the public at Gateway's
acquisition and borrowing costs plus 50 basis points accrued from the
date of acquisition, provided that Gateway's borrowing costs will not
exceed the best rate available to Gateway and its principals. Such land
acquisition loan funds shall be amortized over 7 -years and the Authority
shall repay Gateway with eighty-four (84) monthly payments until the
loan is repaid. Notwithstanding the preceding sentences, if in any
month the required loan payment exceeds 50% of available net revenues
(defined as net revenue after paying senior interest and principal
payments, equipment debt service, the guaranteed tribal payment, and
the management fee), the Authority may defer any amount of the
monthly payment that exceeds 50% of available net revenue until such
time as the Nation is able to submit that payment without exceeding
50% of available net revenue.
Any loan for land acquisition will be separate from loan agreements
between the parties related to Development Costs. If it becomes
necessary to acquire property before the approvals needed to conduct
gaming at the site occur, Gateway will fund the property acquisition if:
(a) both parties agree to the location and the terms of the purchase, (b)
Gateway holds title to the land until the conditions for gaming are
satisfied, and (c) in the event the Authority subsequently changes the
gaming site or gaming at the purchased site is not authorized, the
Authority will re-purchase the land from Gateway when and if the
Authority opens a casino at another location at Gateway's acquisition
and borrowing costs plus 50 basis points.
At its election, Gateway may option property prior to the satisfaction of
the conditions set forth in this paragraph. however, such option shall
only be repaid upon the conditions set forth in this paragraph being
satisfied. Any purchase of land for gaming site purposes prior to
issuance of all necessary approvals needed to conduct gaming shall
include a third party right to the Nation to acquire the land from
Gateway at its purchasing price plus borrowing costs at either a) the
time any such approvals needed to conduct gaming are issued: b) at the
election of the Nation; or c) if the agreements contemplated herein are
terminated, or Gateway fiJr any reason intends to sell the land for any
reason.
If the parties determine that the agreements contemplated by this term
sheet require National Environmental Policy Act (''NEPA") review and
that NEPA review will cause unacceptable delays for the project. the
parties will restructure the relationship as a development and consulting
agreement on terms that are mutually acceptable. The parties agree that
any such revised agreement must comply with JGRA and NJGC
requirements.
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Termination
Decision-making
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Gateway may tem1inate the agreement if it determines that the project is
no longer feasible, if a compact or secretarial procedures are not
approved within a certain time period, or if it determines that the project
will jeopardize licensing of Gateway or any of its principals or af1iliates
in other jurisdictions.
Except as specifically delineated below, the Authority shall have final
approval on all major decisions with respect to permitting, planning,
financing, developing, constructing, equipping, furnishing and
completing any gaming facility to be owned and operated hy the Authority.
With regard to specific major decisions related to the development (pre-
opening) of the Authority's casino facilities, the parties agree that decision-
making process shall be as follows for pre-opening, development decisions:
1. The Nation, with input from the Authority, shall compact for the
authority to conduct Class lii gaming upon such terms as it may determine;
2. The parties shall jointly select the site or sites upon which gaming
shall be conducted;
3. The Nation shall detennine all aspects of pursuing its land claims,
however, as Gateway is funding pursuit of those land claims, the parties
shall jointly consult regarding land claim strategy, including the parties
reviewing on a monthly basis the invoices submitted by professionals
working on the land claim on the Nation's behalf, and a6'fee that Gateway's
funding of the Nation's pursuit of that land claim may cease: (a) if the
Nation executes a settlement of its land claim with the defendants in the
litigation; or (b) if a federal court issues a final decision that is not timely
appealed; or (c) after the Nation-State Compact between the Nation and the
State of New York is approved and the Nation has received all federal
approvals necessary to conduct gaming; or (d) mutual consent of the parties.
4. The parties shall jointly identify and recruit the Executive
Management Team;
5. The parties shall jointly determine size and scope of gammg
operations, including determining which non-gaming amenities shall be
included with each respective gaming operation;
6. The parties shall jointly determine interior and exterior desi6'11 and
selection of furnishing and equipment;
7. Gateway shall submit a budget to the Authority tor the Authority's
approval or disapproval;
8. The parties shall jointly review and consult as to financial resource
suppliers and investment bankers, and will work cooperatively to negotiate
the tem1s and conditions of financing in the best interest of the project;
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Management Team
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9. The parties shall jointly review, select, and negotiate terms by which
all professionals shall be engaged in connection with the projects, including,
without limitation lobbyists, consultants, attorneys, advisors, architects,
planners, and designers;
I 0. The parties shall jointly select contractors and major subcontractors
and will cooperatively work together to negotiate contract terms in the best
interest of the project; and
II. Gateway shall submit business plans, including marketing and
operation plans upon which each gaming facility will be operated, to the
Authority for the Authority's approval or disapproval.
The process generally for decision-making between the parties, including
decisions identified above as joint decisions, will be for Gateway to submit
written recommendations to the Authority regarding each item. If the
Authority disapproves any item, it will provide written notice to Gateway
of such disapproval and Gateway will proceed to recommend additional
decisions to the Authority for its approval or disapproval until the
Authority's approval on any item has been obtained. The parties agree to
develop a mechanism to resolve stalemates in the decision-making process
and to ensure expedient decisions.
The parties acknowledge and agree that identifying the Executive
Management Team is essential to successfully raising the financing
necessary to develop the gaming operations contemplated by this
agreement. Accordingly, after the Nation-State Compact between the
Nation and the State of New York receives final approval and the
Nation has received all federal approvals necessary to conduct gaming.
as soon as is necessary to ensure their appropriate participation in the
financing process. Gateway agrees to advance the funds necessary for
the Authority to hire and retain the proposed facility's chief executive
officer and chief financial officer.
The remaining members of the Executive Management team shall be
hired six months prior to the time a Class !II gaming facility is
estimated to open. If the Authority is operating only one Class Ill
gaming facility. the Executive Management Team shall include the
chief executive officer, chief operating officer. chief financial officer.
vice president of slots. vice president of table games, vice president of
food and beverage and vice president of hotel, if applicable. If the
Authority is operating more than one Class III gaming facilities. the
Executive Management Team shall include a chief executive officer
and chief financial officer to oversee all properties. as well as each of
the following positions at each facility: general manager, vice president
of slots. vice president of table games. vice president of food and
beverage and vice president of hotel. if applicable.
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Ancillary Development
Buyout
Sale or Assignment
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All non-gaming ventures approved by the parties, including the hotel
and other amenities to be located on any site acquired by the Nation or
Authority, shall be included as part of the gaming operations developed
by Gateway and the Authority. Each party shall have the right to
participate in any development by the other party on any contiguous
site. The agreements shall further define the parties' respective rights
to participate in a development contemplated by the other party on any
contiguous or nearby site.
The Authority may request to buyout Gateway's rights under its contractual
agreements with the Authority at any time, with Gateway having sole
discretion to decide whether to accept such an offer.
If, after the Nation has entered into a Nation-State Compact with the State
of New York, Gateway is or becomes unlicensable under New York State
or Nation standards set forth in the Nation's Compact and Nation Gaming
Ordinance as approved by NIGC, or breaches any agreement set forth
herein, the Authority shall have the option to void or cancel the
Development and Management Agreements. In this event, the Authority
shall provide written notice to Gateway and, subject to the Authority's
consent, which shall not be unreasonably withheld or delayed, and the
Authority's right of first refusal to buyout Gateway on the same tenus as
those negotiated with an independent third party purchaser, Gateway shall
have the right to sell or assign its rights and interest in the Development and
Management Al,'feements. Gateway shall submit all documents for
licensing approval as required by the Nation within 90 days from the date
on which the NIGC approves the Nation's Gaming Ordinance.
Gateway or Gateway's principals may at any time, without need for the
consent of the Nation or Authority, assign or subcontract any of their
rights, interests, or obligations to one of the other principals or to a trust,
family member or affiliate of Gateway or Gateway's principals.
(Affiliate means a person or entity that directly or indirectly controls, is
controlled by. or is under common control with Gateway or one of its
principals.) Additionally, subject to a right of first refusal in the favor of
the Authority to buyout Gateway on the same terms as those negotiated
with an independent third party purchaser, Gateway shall have the right
to sell or assign, in whole or in part, its rights and interest under the
agreements upon the written consent of the Authority, which consent
shall not be unreasonably withheld or delayed, provided, however, that:
(i) any such sale or assignment by Gateway shall not cause an
interruption or unreasonable delay in construction with respect to a
gaming facility that is in the construction or pre-construction phase, (ii)
Gateway shall not have the right to partially assign its management
responsibilities, and (iii) consent shall not be deemed to be unreasonably
withheld or delayed if the Authority determines, pursuant to objective
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standards agreed upon by the parties, that the sale or assignment would
be to the detriment of the project.
Transaction Reserve Funds The Parties will agree on mechanics of Nation refunding the contingency
escrow account.
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This letter of serves to memorialize the terms of agreement between the Shinnecock Nation
Gaming Authority (the "Authority") and Gateway Casino Resorts, L.L.C., a Michigan limited liability
company ("Gateway"), which are outlined in the Term Sheet that is attached as Exhibit 1 (the "Term
Sheet") and incorporated into this agreement as if fully stated herein. The parties will amend the
Standstill Agreement between the parties so that it remains in effect pending completion of the
substantive agreements.
SHINNECOCK NATION GAMING
AUTHORITY
By: .J


Title: SNGA C6air:VJcmaa
Date: (:, / /(, I ,.2.6 II
. .
SHINNECOCK NATION GAMING
A'f\101\ITY I
e-ll (i

Name: \ t<r:ttLf:rl
Title: T 4o::t.S wt.LV
Date: IJ;I/!&; I ?Lou
'
SHINNECOCK NATION GAMING
AUTHORITY
By: __________________ ___
Name: ________________ ___
Title:----------------
Date: -----------------
GATEWAY CASINO RESORTS, LLC, a
Michigan limited liability company
BY: GATEWAY MANAGER, INC., a
Michigan corporation, Manager
Marian Ilitch, Secretary
SHINNECOCK NATION GAMING
AUTHORITY

u), 'II, '.;,ms
Title: 1/, C:.,e, Uo,w
Date: ftp I t &._ I :La II
r , ;
SHINNECOCK NATION GAMING
AUTHORITY
By: __________________ __
Name: __________________ ___
Title: -------------------
Date: -------------------
GATEWAY CASINO RESORTS, LLC, a
Michigan limited liability company
BY: GATEWAY MANAGER, INC., a
Michigan corporation, Manager
Michael J. Malik, Sr., President
Agreement Regarding Term Sheet
Page2
Acknowledged by:
SHINNECOCK INDIAN NATION
' /
'// f
/ \
By: /
Name: Randy King' \
Title: Trustee "
Date: "
SHINNECOCK INDIAN NATION
By:
Name: Fred Bess
Title: Trustee
Date: __________ _
LANO I \135950.3
ID,JTHA - 088652000 I
SHINNECOCK INDIAN NATION
__ tL__v __
Title: Trustee
Date: __ _

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