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

Project

Authority

Developer/Manager

Non-Gaming Land

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June 16, 20 11

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 non­gaming 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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\ L..l IIi

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 (pre­opening) of the Authority's casino facilities, the parties agree that decision­making 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 a~o;reement 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 ~~-lA Nam~?C:= Title: SNGA C6air:VJcmaa Date: (:, / /(, I ,.2.6 II . . SHINNECOCK NATION GAMING A'f\101\ITY I

~ v.~ e-ll (i By:71~~"-Name: \ t<r:ttLf:rl /+M~ 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

By:euJ~ Name~ u), 'II, '.;,ms Title: 1/, C:.,e, • Uo,w m~ 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: =/;;r~M);, ~"'>)f?!#P Name: Fred Bess Title: Trustee Date: __________ _

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SHINNECOCK INDIAN NATION

~~~~:d~~ __ tL_·_v __ Title: Trustee Date: --<-Zj~~A~p/A==v __ _