Exhibit 10.146
CONSULTING AGREEMENT
(Kickapoo Project)
This Consulting Agreement (this "Agreement") effective on June 2, 2005,
between Kevin M. Kean, 210 E. Flamingo Rd. #101, Las Vegas, NV 89109-4707
("Kean"), Lakes Kickapoo Consulting, LLC., a Minnesota limited liability company
("Lakes Consulting") and Lakes Kickapoo Management, LLC"., a Minnesota limited
liability company ("Lakes Management" and together with Lakes Consulting, the
"Lakes Entities").
BACKGROUND
A. Kean is experienced in establishing and maintaining business relationships
and business ventures, including gaming projects, with federally recognized
Native American Indian Tribes specifically including the Kickapoo Traditional
Tribe of Texas (the "Tribe").
B. Lakes Consulting wishes to establish and enter into consulting agreements
(such agreements hereinafter referred to as the "Consulting Agreements") with
the Tribe respectively related to (i) the Tribe's existing gaming facility (the
"Lucky Eagle Casino"), and (ii) the design, construction, and consultation of a
new Indian gaming facility and ancillary businesses to be located on and/or near
tribal lands near Eagle Pass, Texas (the "New Project")
C. Lakes Management wishes to establish and enter into management agreements
(such agreement hereinafter referred to as the "Management Agreements") with the
Tribe related to the management of the Lucky Eagle Casino and the New Project
(collectively, the "Projects").
D. In pursuit of such goals the Lakes Entities have requested and Kean has
agreed to introduce the Lakes Entities to the Tribe and assist each of them in
respectively negotiating and executing their respective Consulting Agreements,
Management Agreements and related agreements ancillary thereto.
E. The Lakes Entities will make all final decisions and be responsible for the
consultation, development or management, as applicable, of the Projects and any
other project or venture with the Tribe. Kean will not have any authority or any
duties or obligations of consultation, development and/or management of the
Projects or any other gaming or other business ventures with the Tribe unless
specifically agreed to in writing between the parties.
ACCORDINGLY, Kean and the Lakes Entities hereby covenant, agree and
obligate themselves as follows:
1. BACKGROUND. The Background statement is made a part of this Agreement.
2. SERVICES. Kean's only duties under this Agreement, unless otherwise
mutually agreed to, shall be for Kean to introduce the Lakes Entities
to and foster their business relationship with the Tribe, and at the
request of the Lakes Entities, to act as a consultant to each of them
in negotiating and signing its respective Consulting Agreements and
Management Agreements with the Tribe related to the Projects.
3. AUTHORITY. In performing his obligations hereunder, Kean shall not be
and shall not represent himself as an agent of either of the Lakes
Entities and shall not have any authority to bind either of the Lakes
Entities contractually or otherwise, or to cause either of the Lakes
Entities to incur any obligation to any third party including the
Tribe.
4. TERM. The term of and Kean's rights under this Agreement will commence
only upon final execution of this Agreement by all parties and shall
terminate on the earlier of (a) with respect to Lakes Consulting, on
the earlier of (i) the date of termination or expiration of the
Consulting Agreements, as same may be renewed or extended, or (ii) the
date that Lakes Consulting or any of its Affiliates is no longer the
consultant of the Project; (b) with respect to Lakes Management, on
the earlier of (i) the date of termination or expiration of the
Management Agreements, as same may be renewed or extended, or (ii) the
date that Lakes Management or any of its Affiliates is no longer the
manager of the Projects, and (c) the date that the parties shall
mutually terminate this agreement or the date that the Lakes Entities
shall terminate this Agreement after the occurrence of an Event of
Default (as hereinafter defined) by Kean or in accordance with Section
15 below upon the occurrence of an adverse regulatory finding or
determination against Kean. In the event that any of the Consulting
Agreements or the Management Agreements is terminated or expires and
the applicable Lake Entity or any of its Affiliates, whether directly
or indirectly, enters into a new contract or agreement similar thereto
with the Tribe related to the Projects within two (2) years after such
termination or expiration, then this Agreement shall be reinstituted
between Kean and such Lakes Entity or such Affiliate, as the case may
be, upon the same terms as contained herein as of the date the new
contract is executed with the Tribe, subject to Kean obtaining any all
necessary federal, state and tribal regulatory approvals.
As used in this Agreement, (yy) the term "Affiliate" shall mean with
respect to any specified person or entity (a "Person"), any other
Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with the specified Person; and for the purposes of this definition,
"control" (including the terms controlling, controlled by, or under
common control with) means the possession, direct or indirect, or the
power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities,
partnership or member interests, by
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contract or otherwise; and (zz) the term "Event of Default" shall mean
the occurrence of any one or more of the following events: (1) any
breach by Kean of his obligations under this Agreement, or (2) the
occurrence of any breach or event of default by Kean or any of his
Affiliates under any other document or agreement with any of the Lakes
Entities or any of their respective Affiliates (but excluding Lakes
Shingle Springs, Inc., Lakes Jamul, Inc., Lakes KAR Shingle Springs,
L.L.C., Lakes Kean Argovitz Resorts-California, L.L.C).
5. ADVANCE PAYMENT OF KEAN CONSULTING FEES. The Lakes Entities hereby
jointly and severally agree to make the following payments to Kean as
advance payments of the Kean Consulting Fees to be paid to Kean under
Section 6 hereof (collectively, the "Advance Payments"):
a. Twenty Five Thousand Dollars ($25,000) for each of two months
for assisting Lakes in signing a letter of intent with the Tribe
($25,000 which was advanced to Kean on November 15, 2004 and
$25,000 which was advanced on December ___, 2004 and Kean hereby
acknowledges receipt of such payments); and
b. Twenty Five Thousand Dollars ($25,000) per month for a period
of twelve (12) months commencing the earlier of (i) the date that
the Tribe and Lakes Consulting sign the first Consulting
Agreement, or (ii) if the Tribe and Lakes Management sign a
Management Agreement for the New Project, the date upon which
construction of the Project shall have commenced.
The Advance Payments, together with accrued interest thereon, shall be
due and payable as follows: (xx) on each date that any Kean Consulting
Fee shall be paid to Kean under Section 6 hereof and in connection
therewith, the Lakes Entities are authorized to setoff all such
amounts against the then due and payable Kean Consulting Fee payment
owing to Kean, provided that prior to the occurrence of an Event of
Default by Kean, such right of setoff shall be limited to fifty
percent (50%) of such Kean Consulting Fee; (yy) on the date of any
permitted sale or assignment of Kean's rights under this Agreement,
and (zz) upon the termination of Kean's rights under this Agreement in
accordance with the terms herein, the occurrence of an Event of
Default by Kean, or if Kean shall be found to be unsuitable under
Section 15 hereof and this Agreement is not reinstated within the
required one (1) year period, then such amounts shall become
immediately due and payable in full.
6. FEE. Kean shall receive a consulting fee (individually and
collectively, the "Kean Consulting Fee") for services rendered
hereunder from each of the Lakes Entities as follows: (a) from Lakes
Consulting, a fee equal to twenty percent (20%) of the sum of any
development fees, consulting fees or other income received by Lakes
Consulting under each Consulting
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Agreement (the "Lakes Consulting Fee") but specifically excluding the
Excluded Payments (as hereinafter defined), and (b) from Lakes
Management, a fee equal to twenty percent (20%) of the sum of any
management fees or other income received by Lakes Management under
each Management Agreement (the "Lakes Management Fee") but
specifically excluding the Excluded Payments. As used herein, the term
"Excluded Payments" shall mean all interest income, expense
reimbursements and indemnification payments payable to either Lakes
Consulting or Lakes Management under this Agreement.
The Kean Consulting Fee shall be payable to Kean by the applicable
Lakes Entity if and only if such Lakes Entity shall actually receive
its respective Lakes Consulting Fee or Lakes Management Fee, as
applicable, from the Tribe for such period. To the extent that the
applicable Lakes Entity shall receive less than its required Lakes
Consulting Fee or Lakes Management Fee, the Kean Consulting Fee due
hereunder shall be reduced by a similar proportionate basis. Subject
to the limitations set forth in this Agreement, the Kean Consulting
Fee will be paid to Kean on a monthly basis within thirty (30) days
after receipt by the applicable Lakes Entity of its respective Lakes
Consulting Fee or Lakes Management Fee for such month. Kean shall
further not be entitled to any compensation under this provision for
any period prior to the commencement of the term of this Agreement and
unless and until he has received such federal, state and tribal
regulatory approvals and licenses as may be necessary for him to
receive and the applicable Lakes Entity to pay the Kean Consulting
Fee.
7. SECURITY INTEREST. Kean previously entered into that certain Loan and
Security Agreement dated January 30, 2003 (the "Security Agreement")
with Lakes Entertainment, Inc. (the indirect parent company of the
Lakes Entities) and certain of its Affiliates. Kean acknowledges and
agrees that he shall contemporaneously herewith amend the Security
Agreement to add (a) each of the Lakes Entities as a "Secured Party",
(b) the "Advance Payments as additional "Secured Obligations", and (c)
the Kean Consulting Fees as additional collateral subject to the
security interest provided in such Security Agreement.
8. INSPECTION OF RECORDS. Kean and/or his designated representative(s)
shall be allowed not more often than once per calendar quarter and at
his expense to review and inspect (including copying) any and all
books, records and/or data in the possession and/or control of Lakes
that concerns or relates to any contracts, revenues and/or receipts of
any kind between each of the Lakes Entities and the Tribe. Kean and/or
his representatives may conduct any review and inspection at the
business office of Lakes or such other place as the documents are
normally and customarily maintained at any time during the hours of
8:00 a.m. through 5:00 p.m., Monday through Friday. Kean shall give
Lakes five (5) business days
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written notice of the date and time that he intends to begin any
review and inspection of documents. Kean shall and shall cause his
agents to keep all such books, records and information confidential in
accordance with the following confidentiality provisions:
(a) For purposes of this agreement, "Confidential Information" means
non-public information relating to either of the Lakes Entities or
their Affiliates, but does not include information that Kean can
demonstrate (i) was already known to Kean, or (ii) was or becomes
generally available to the public, or part of the public domain,
through no fault of, or disclosure by, Kean or his agents, or (iii)
was or becomes available to Kean from a source other than either of
the Lakes Entities or their Affiliates, provided that such source is
not bound by a duty of confidentiality to any of them.
(b) Kean agrees to use Confidential Information solely in connection
with discussions with the Lakes Entities or related transactions, and
to keep all such Confidential Information strictly secret and
confidential. Unless authorized in writing by the Lakes Entities, Kean
will maintain all Confidential Information in confidence and will not
divulge to anyone outside the Lakes Entities or use any of the
Confidential Information for Kean's own or another's benefit. Kean
shall be responsible for any breach of this agreement by any his
agents and any person (other than Lakes Entities or their Affiliates
and their respective officers, directors, employees and independent
contractors) to whom Kean discloses any of the Confidential
Information.
(c) If, notwithstanding this agreement, any of the Confidential
Information is required to be disclosed by applicable law, regulatory
requirement or legal process, Kean will give the Lakes Entities prompt
notice of such requirement and, if requested, will assist the Lakes
Entities in seeking a protective order or other measures to preserve
the confidentiality of such Confidential Information insofar as
possible.
(d) Once this Agreement has ended, upon the request of either of the
Lakes Entities, all Confidential Information theretofore provided by
the Lakes Entities or their Affiliates to Kean (and all copies,
summaries and notes of the contents or parts thereof) shall be
returned to the Lakes Entities and not retained by Kean in any form,
and Kean shall upon request promptly provide to the Lakes Entities a
certificate signed by Kean confirming that all such materials have
been returned to the Lakes Entities.
9. NO JOINT VENTURE. This Agreement is not intended to create any joint
venture between either of the Lakes Entities and Kean. Each of the
Lakes Entities shall be solely responsible for arranging for the
funding, financing or otherwise capitalizing any business or venture
or project that it may enter into with the Tribe. Kean does not
represent that he has the capability to or that he will be responsible
in any manner for funding, financing or otherwise capitalizing all or
any portion any business or
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venture or project that either of the Lakes Entities may enter into
with the Tribe.
10. BEST EFFORTS. Kean shall perform his duties hereunder, both express
and implied, at all times in good faith and to the best of his ability
and shall use his best efforts in connection with providing the
services required to be provided to the Lakes Entities under this
Agreement.
11. NON-COMPETE. Unless approved by the Tribe and Lakes, Kean agrees that
(a) he shall and shall cause any entity in which he shall directly or
indirectly own an equity interest together with any officers,
directors, equity owners, employees and agents of such entity
(collectively, the "Non-compete Parties"), to comply with each of the
non-competition agreements set forth in the Consulting Agreements, the
Management Agreements and/or under any related documents and
agreements; and (b) in addition to the foregoing, that he shall not
and shall cause each of the other Non-compete Parties to not directly
or indirectly solicit or enter into any consulting, brokerage,
management, financing or other similar agreement with the Tribe other
than on behalf of the Lakes Entities.
12. FURTHER ASSURANCES. Each of the Lakes Entities and Kean agrees to
execute such additional documents and agreements as are necessary to
effectuate the intents and purposes of this Agreement.
13. GOVERNING LAW/VENUE. This Agreement will be governed by and
interpreted in accordance with Minnesota law. SUBJECT TO THE TERMS OF
SECTION 14 HEREOF, THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
HENNEPIN, STATE OF MINNESOTA OR, AT THE SOLE OPTION OF THE LAKES
ENTITIES, IN ANY OTHER COURT IN WHICH THE LAKES ENTITIES SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. THE PARTIES WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.
14. DISPUTE RESOLUTION/ARBITRATION. In connection with any dispute
hereunder, the parties agree to negotiate in good faith for up to
twenty days. If they are unable to resolve the dispute in such period,
then either party may demand and such dispute shall be submitted to
and resolve by binding arbitration in accordance with the following
terms:
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(a) GOVERNING RULES. Any arbitration proceeding will (i) proceed in a
location in Minneapolis Minnesota selected by the American Arbitration
Association ("AAA"); (ii) be governed by the Federal Arbitration Act
(Title 9 of the United States Code), notwithstanding any conflicting
choice of law provision in any of the documents between the parties;
and (iii) be conducted by the AAA, or such other administrator as the
parties shall mutually agree upon, in accordance with the AAA's
commercial dispute resolution procedures. Any party who fails or
refuses to submit to arbitration following a demand by any other party
shall bear all costs and expenses incurred by such other party in
compelling arbitration of any dispute. The arbitration requirement
does not limit the right of any party to obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or
the appointment of a receiver or the exercise of any foreclosure or
self-help remedies under the Minnesota Uniform Commercial Code, before
during or after the pendency of any arbitration proceeding. The
parties agree that any arbitration proceeding amongst each of them
and/or any of their related Affiliates, whether under this Agreement
or any other agreement, may be consolidated with any other arbitration
proceeding amongst or between any of such parties.
(b) ARBITRATOR POWERS. The arbitrator will determine whether or not an
issue is arbitratable and will give effect to the statutes of
limitation in determining any claim. In any arbitration proceeding the
arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to
motions to dismiss for failure to state a claim or motions for summary
adjudication. The arbitrator may grant any remedy or relief that a
court of such state could order or grant within the scope hereof and
such ancillary relief as is necessary to make effective any award. The
arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the
arbitrator deems necessary to the same extent a judge could pursuant
to the Federal Rules of Civil Procedure, the Minnesota Rules of Civil
Procedure or other applicable law. Judgment upon the award or any
order or determination rendered by the arbitrator may be entered in
any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(c) MISCELLANEOUS. The arbitrator shall award all costs and expenses
of the arbitration proceeding. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing of
the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in
the ordinary course of its business or by
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applicable law or regulation. If more than one agreement for
arbitration by or between the parties potentially applies to a
dispute, the arbitration provision most directly related to the
documents between the parties or the subject matter of the dispute
shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship
between the parties.
15. ADVERSE REGULATORY ACTION. The parties acknowledge and agree that an
important purpose of this Agreement is to allow the Lakes Entities to
promptly achieve any and all necessary regulatory approval and if
applicable, become licensed by the National Indian Gaming Commission
("NIGC") and any applicable state and tribal regulatory authorities
(collectively, the "Regulatory Authorities") and to immediately allow
the completion of design, construction and/or management of a gaming
facility on lands of the Tribe. Should any of the Regulatory
Authorities take any action to nullify or otherwise disrupt this
Agreement, then the parties shall immediately meet and negotiate in
good faith to agree to such modifications as may be necessary to
obtain such regulatory approval hereof while still maintaining the
intents and purposes of this Agreement, with any disputes related
thereto resolved by arbitration as provided for above; provided
however that if at any time any Regulatory Authorities shall issue a
determination that Kean is unsuitable under any applicable gaming laws
and thus may not receive the Kean Consulting Fee, then Kean's right to
receive such Fee hereunder shall immediately terminate, but such
rights shall be reinstated if within one (1) year after the issuance
thereof, such ruling is reversed or vacated and Kean is found to be
suitable.
16. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors
and assigns and to the extent expressly referred to herein, shall also
inure to the benefit of the Affiliates of each of the parties, except
that Kean may not assign his rights or obligations, in whole or in
part, hereunder except with the prior written consent of the Lakes
Entities which written consent shall not be required in the event that
Kean shall desire to assign his right to receive the Consulting Fee
(subject to the terms and conditions set forth below) to a legal
entity in which he owns, directly or indirectly, 51% or more of the
equity interest or to an immediate family member (excluding any
spouse), i.e., child, mother, father, brother or sister but not a
spouse. Any permitted assignment of such financial interest shall be
further conditioned upon Kean's satisfaction of the following
conditions precedent: (i) any such assignment shall not relieve Kean
of his duties and obligations under this Agreement and at the time of
such transfer, no Event of Default by Kean shall have occurred, (ii)
all rights of any assignee under this Agreement and any related
documents and agreements shall be expressly subject and subordinate to
the rights and interests of each of the Lakes Entities and their
Affiliates (the "Lakes Related
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Parties") hereunder and under the Security Agreement and any related
documents and agreements and such assignee shall execute and deliver
in favor of the Lakes Related Parties a subordination agreement in
form and substance reasonably acceptable to such Lakes Related
Parties, and (iii) the Lakes Entities receiving (aa) a copy of all
documents and agreements relating to such transfer, (bb) written
evidence that such transferee is "suitable" and has obtained any
necessary licenses and approvals required from any Regulatory
Authorities under the Indian Gaming Regulatory Act and other
applicable law to participate in Indian gaming or in the alternative
that no such findings or licenses are required; (cc) a legal opinion
in form and substance reasonably acceptable to the Lakes Entities that
such transfer is in compliance with all applicable federal, state and
tribal laws, rules and regulations, including without limitation the
Indian Gaming Regulatory Act, as amended (collectively, the
"Applicable Laws"), and no additional approvals or consents of any
federal, state or tribal governmental entity or third party is
required with respect thereto under any Applicable Law or any other
agreement between Kean and/or any of the Lakes Entities and the Tribe,
if any, (dd) a written assignment and assumption agreement executed by
Kean and the transferee in form and substance reasonably acceptable to
Lakes whereby such transferee shall receive the rights of Kean under
this Agreement and shall agree to be bound by the terms and provisions
set forth herein; (ee) all sale proceeds payable on account of such
transfer shall be paid to the Lakes Related Parties to be applied
first towards the repayment of any amounts owing by Kean under this
Agreement and secondly, to each of the other "Secured Obligations"
owing to each "Secured Party" by Kean under the Security Agreement,
and (ff) payment of all reasonable costs and expenses (including
reasonable attorneys fees) of the Lakes Entities incurred in
connection with completing such transfer. Lakes agrees to not
unreasonably withhold consent to any permitted assignments by Kean.
17. ENTIRE AGREEMENT/RELEASE OF LAKES ENTERTAINMENT. This Agreement
contains the entire understanding of the parties regarding its subject
matter, and supercedes all prior negotiations, understandings and
agreements of the parties and/or Lakes Entertainment, Inc. ("Lakes
Entertainment") with respect thereto; and Kean acknowledges and agrees
that all obligations of Lakes Entertainment and rights and claims of
Kean under the Letter Agreement (as hereinafter defined) with respect
to the Project and the Tribe are hereby terminated and released and
are replaced by the terms and provisions set forth in this Agreement.
The express terms of this Agreement shall control and supercede any
course of performance and/or customary practice inconsistent with such
terms. Any agreement between the parties hereunder made shall not
change or modify this Agreement unless in writing and signed by the
party against whom enforcement of such change or modification is
sought. Any amendments to this Agreement must be in writing and signed
by all parties.
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18. SETOFF/RECOUPMENT RIGHTS. Subject to the limitations of Sections 5 and
7 hereof and additional limitations set forth in the Security
Agreement, the parties acknowledge and agree that each of the Lakes
Related Parties (each of which shall be an intended third party
beneficiary of this provision) shall have the right to setoff or
recoup any amount owing to it by Kean (including without limitation,
the Secured Obligations described in the Security Agreement) against
any obligations owing by it to Kean under this Agreement or any other
Loan Documents (as such term is defined in the Security Agreement.
19. NO JOINT AND SEVERAL LIABILITY. Except for the obligations of the
Lakes Entities to make the Advance Payments to Kean as set forth in
Section 5 hereof, the obligations of each of the Lakes Entities under
this Agreement are several and not joint and several.
20. TIME OF THE ESSENCE. The parties acknowledge and agree that time is of
the essence in connection with the performance of their respective
obligations under this Agreement.
21. NOTICES. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be
delivered, or mailed first class postage prepaid, registered or
certified mail, addressed to a party at the address set forth in the
introductory paragraph, or to such other address as a party may
hereafter designate by written notice and may also be by facsimile at
the following fax numbers or such other number as a as a party may
hereafter designate by written notice:
If to the Lakes Entities: 952-449-7064
Attn: Timothy J. Cope
Tcope@lakesentertainment.com
If to the Kean: 702-734-9118
Attn: Kevin M. Kean
Kevin@keanco.net
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by facsimile, each of which shall constitute one and
the same agreement, and any of the parties hereto may execute this
Agreement by signing such counterpart, provided that this Agreement
shall not become effective until all parties have executed the same.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
on the date(s) set forth below.
LAKES KICKAPOO CONSULTING, LLC.
By: /s/ Timothy J. Cope
--------------------------------
Timothy J. Cope, President Date: June 14, 2005
LAKES KICKAPOO MANAGEMENT, LLC.
By: /s/ Timothy J. Cope
--------------------------------
Timothy J. Cope, President Date: June 14, 2005
/s/ Kevin M. Kean
--------------------------------
Kevin M. Kean Date: June 14, 2005