Native American Development and Note Receivable

The Federated Indians of Graton Rancheria

On April 22, 2003, Predecessor entered into development and management agreements with the Federated Indians of Graton Rancheria (the “FIGR”), a federally recognized Native American tribe. Pursuant to those agreements, the Company will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma County, California. The FIGR selected Predecessor to assist them in designing, developing and financing their project, and upon opening, the Company will manage the facility on behalf of the FIGR. As currently contemplated and as described in the Record of Decision for the environmental impact statement, the project would have a total of approximately 535,000 square feet of space, of which approximately 110,000 square feet will be casino space, and the remainder of which will be non-casino space, and may include a hotel, banquet and meeting space, multiple bars, a food court and various dining options.

The management agreement has a term of seven years from the date of the opening of the project. The Company will receive a management fee equal to 24% of the facility's net income in years one through four and 27% of the facility's net income in years five through seven. The Company will also receive a development fee equal to 2% of the cost of the project upon the opening of the facility. The management agreement may be terminated under certain circumstances, including but not limited to, material breach, changes in regulatory or legal status, and mutual agreement of the parties. There is no provision in the management agreement allowing the FIGR to buy-out the management agreement prior to its expiration. Under the terms of the management agreement, the Company will provide training to the FIGR such that they may assume responsibility for managing the facility upon expiration of the seven-year term of the agreement.

The Company has agreed to provide certain advances for the development of the project, including, but not limited to, monthly payments to the FIGR, professional fees, consulting services, mitigation costs and design and pre-construction services fees. The Company has agreed to assist the FIGR in obtaining third-party financing for the project, however we do not expect such financing will be obtained until shortly before the project commences construction, and as such, the timing of obtaining the financing is uncertain. In addition, there can be no assurance that we will be able to obtain third-party financing for the project on acceptable terms or at all. Prior to obtaining such financing, the Company will contribute significant financial support to the project, and through December 31, 2011, the Company and Predecessor have advanced approximately $153.5 million toward the development of the project, primarily to complete the environmental impact study and secure real estate for the project, and the carrying value of these advances is included in Native American development costs on the Company's consolidated balance sheet. Predecessor began capitalizing expenditures toward the project in 2003. Advances bear interest at a rate equal to the Company's weighted cost of capital and are expected to be repaid from the proceeds of the third-party financing or from the FIGR's gaming revenues, however there can be no assurance that the advances will be repaid. With the adoption of fresh-start reporting, the carrying value of the advances was adjusted to fair value. Through the Effective Date, Predecessor paid approximately $2.0 million in payments related to the achievement of certain milestones, which were expensed as incurred, and the Company has no further commitments to pay milestone payments on this project.

Upon termination or expiration of the management and development agreements, the FIGR will continue to be obligated to repay unpaid principal and interest on the advances from the Company and Predecessor, as well as certain other amounts that may be due, such as management fees. Amounts due to the Company under the development and management agreements are secured by substantially all of the assets of the project, other than real property. In addition, the development and management agreements contain waivers of the FIGR's sovereign immunity from suit for the purpose of enforcing the agreements or permitting or compelling arbitration and other remedies.

In October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park (the “MOU”) under which the FIGR agreed to make certain contributions and community investments to mitigate various impacts that may arise in connection with the project, in exchange for the city's support of the project and its agreement to expend the contributions in accordance with the terms of the MOU. The MOU has a term of 20 years and is subject to automatic renewals. Under the terms of the MOU, the FIGR agreed to pay a total of approximately $17.7 million in one-time contributions, plus approximately $9.7 million in recurring annual contributions for as long as the MOU remains in effect. The contributions and community investments are designated to mitigate the impact of the project on transportation and traffic, fire protection and emergency services, law enforcement, problem gambling, schools, housing, waterways, and other impacts on the community. The FIGR's obligation to pay many of the contributions and community investments is contingent upon certain future events including commencement of project construction, completion of project construction, and opening of the project.

In August 2005, Predecessor purchased 270 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In March 2006, Predecessor purchased an additional 4.7 acres adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from downtown San Francisco. The site is easily accessible via Wilfred Avenue and Business Park Drive, and will have multiple points of ingress and egress. In March 2008, it was determined that approximately 252 acres of the 270-acre site purchased in August 2005 would be taken into trust, with the remaining 23 acres retained by Predecessor. Over the period of May 2007 through June 2008, Predecessor purchased an additional 11 acres of land adjacent to the 23-acre site, bringing the total land retained for development by the Company to 34 acres.

On May 7, 2008, the DOI published in the Federal Register a Notice of Final Agency Determination (the “Determination”) to take certain land into trust for the benefit of the FIGR. The publication commenced a 30-day period in which interested parties could seek judicial review of the Determination. On June 6, 2008, the Stop The Casino 101 Coalition and certain individuals filed a complaint (the “Complaint”) in the United States District Court for the Northern District of California seeking declaratory and injunctive relief against the DOI and officials of the DOI. The Complaint sought judicial review of the Determination. On November 17, 2008, the federal defendants and the FIGR filed their respective motions to dismiss the Complaint for lack of jurisdiction and failure to state a claim. In response, the plaintiffs filed a motion for leave to amend their Complaint, which was granted on January 26, 2009. The DOI and the FIGR filed motions to dismiss the amended Complaint on February 20, 2009, and on March 27, 2009, a hearing was held to argue such motions. On April 21, 2009, the DOI and FIGR's motions to dismiss were granted. On June 8, 2009, the plaintiffs filed an appeal (the “Appeal”) in the United States Court of Appeals for the Ninth Circuit (the “Court of Appeals”), and the DOI agreed to voluntarily stay the taking of the site into trust pending resolution of the Appeal. The plaintiffs filed their opening briefs on October 26, 2009. On November 4, 2009, the DOI filed an unopposed motion to expedite the oral argument. The DOI and FIGR then filed their answering briefs on November 25, 2009. The plaintiffs responded by filing reply briefs on December 28, 2009. Oral arguments were heard on April 15, 2010, and on June 3, 2010, the Court of Appeals affirmed the district court's dismissal of the Complaint. On July 19, 2010, the plaintiffs filed a petition for rehearing en banc. The Court of Appeals denied plaintiffs' petition on August 11, 2010. Notwithstanding the fact that plaintiffs' complaint was dismissed and land has been taken into trust for the FIGR, opponents of the project may still seek to exercise legal remedies to delay or stop the project.

On October 1, 2010, the Bureau of Indian Affairs of the U.S. Department of the Interior (the “BIA”) accepted approximately 254 acres of land owned by Predecessor into trust on behalf of the FIGR for the development of the project.

On October 1, 2010, the NIGC informed Predecessor and the FIGR that the NIGC approved the management agreement by and between the FIGR and Predecessor for Class II gaming at the planned gaming and entertainment facility. Class II gaming includes games of chance such as bingo, pull-tabs, tip jars and punch boards (and electronic or computer-aided versions of such games), and non-banked card games. A banked game is one in which players compete against the licensed gaming establishment rather than against one another. The FIGR and the Company may also pursue approval of Class III gaming, which would permit casino-style gaming at the planned facility, including banked table games, such as blackjack, craps and pai gow, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering. Pari-mutuel wagering is a system of betting under which wagers are placed in a pool, management receives a fee from the pool, and the remainder of the pool is split among the winning wagers. Class III gaming would require an approved compact (a “Class III Gaming Compact”) with the State of California and approval by the NIGC of a modification to the existing management agreement, or a new management agreement, permitting Class III, or casino-style, gaming. There can be no assurance that the project will be able to obtain, in a timely fashion or at all, the approvals from the State of California and the NIGC that are necessary to conduct Class III, or casino-style, gaming at the facility.

The following table outlines our evaluation at December 31, 2011 of each of the critical milestones necessary to complete the FIGR project. Both positive and negative evidence was considered in our evaluation.



	As of December 31, 2011
Federally recognized as a tribe by the (BIA)	Yes
Date of recognition	Federal recognition was terminated during the 1950's and restored on December 27, 2000. There is currently no evidence to suggest that recognition might be terminated in the future.
Tribe has possession of or access to usable land upon which the project is to be built	Yes, on October 1, 2010 the DOI accepted approximately 254 acres of land for the project into trust on behalf the FIGR.
Status of obtaining regulatory and governmental approvals:
Tribal-State Compact	A compact is not required for Class II gaming, however the FIGR may elect to pursue a tribal-state compact for Class III gaming. In determining whether a Class III gaming compact can be entered into with the State, we considered that to the best of our knowledge there is only one tribe in the State of California that has land in trust but does not have a compact if one is desired.
Approval of gaming compact by DOI	No compact approval by DOI is required for Class II gaming, however if the FIGR elect to pursue a Class III gaming compact, DOI approval of such a compact would be required. We believe the DOI will approve a Class III compact so long as the terms and conditions thereof are consistent with compacts that have recently been approved or allowed to become effective.
Approval of management agreement by NIGC	Yes
Date	October 1, 2010
DOI accepting usable land into trust on behalf of the tribe	Yes
Date	October 1, 2010
Gaming licenses:
Type	Class II
Number of gaming devices allowed	N/A There is currently no limitation on the number of gaming devices allowed at the project, although a limitation may be imposed in the event the FIGR elect to pursue Class III gaming and enter into a compact with the State of California to do so.
City agreement	The FIGR have entered into a Memorandum of Understanding with the City of Rohnert Park under which the tribe has agreed to pay one-time and recurring mitigation contributions, subject to certain contingencies.
Date of city agreement	October 14, 2003
County and other agreements	We anticipate that the FIGR may enter into memoranda of understanding with, among others, Sonoma County and the California Department of Transportation, relating to impact mitigation. Based upon discussions with representatives of Sonoma County, we believe that Sonoma County will enter into a memorandum of understanding with the FIGR to mitigate any local impacts of the project.

The timing and feasibility of the project are dependent upon the receipt of the necessary governmental and regulatory approvals. The Company plans to continue contributing significant financial support to the project, even though there can be no assurances as to when or if the necessary approvals will be obtained. We currently estimate that construction of the facility will begin after the financing for the project has been obtained, which we anticipate to be during the middle of 2012, and we estimate that the facility would be completed and opened for business approximately 18 to 24 months after construction begins. There can be no assurance, however, that the project will be completed and opened within this time frame or at all.

We have evaluated the likelihood that the FIGR project will be successfully completed and opened, and have concluded that at December 31, 2011, the likelihood of successful completion is in the range of 80% to 90%. Our evaluation is based on our consideration of all available positive and negative evidence about the status of the project, including the status of required regulatory approvals, and the progress being made toward the achievement of all milestones and the likelihood of successful resolution of all contingencies. There can be no assurance that the project will be successfully completed nor that future events and circumstances will not change our estimates of the timing, scope, and potential for successful completion or that such changes will not be material. In addition, there can be no assurance that we will recover all of our investment in the project even if it is successfully completed and opened for business.

North Fork Rancheria of Mono Indian Tribe

On December 8, 2003, Predecessor entered into development and management agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California. Pursuant to those agreements, we have agreed to assist the Mono in developing and operating a gaming and entertainment facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera.

As currently contemplated, the project is expected to include approximately 2,000 slot machines and approximately 60 table games, a hotel and several restaurants. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, approval by the California Legislature of a gaming compact with the State of California, the BIA accepting the land into trust on behalf of the Mono and approval of the management agreement by the NIGC.

The Mono entered into memoranda of understanding with the County of Madera, the City of Madera, and the Madera Irrigation District, on August 16, 2004, October 18, 2006, and December 19, 2006, respectively. Under those agreements, the Mono agreed to make monetary contributions to mitigate potential impacts of the project on the community, and also agreed to certain non-monetary covenants. In accordance with these agreements, the tribe has agreed to pay non-recurring mitigation contributions ranging from $13.2 million to $28.2 million and recurring annual mitigation contributions totaling approximately $5.1 million, all of which are subject to CPI adjustments. These contributions are intended to mitigate the impact of the project on law enforcement, public safety, roads and transportation, local land use planning, water conservation and air quality, as well as to provide funding for parks, recreation, economic development, education, behavioral health and certain charitable programs. The Mono's obligation to pay the contributions is contingent upon certain future events including acceptance of the land into trust, commencement of project construction, and for certain contributions, the opening of the project. The tribe also expects to enter into a mitigation agreement with CalTrans for state road improvements.

On April 28, 2008, the Mono and the State of California entered into a tribal-state Class III gaming compact permitting casino-style gaming. The compact is subject to approval by the California Legislature and, if approved, will regulate gaming at the Mono's proposed gaming and entertainment project to be developed on the site. No assurance can be provided as to whether the California Legislature will approve the compact.

On August 6, 2010, the BIA published notice in the Federal Register that the environmental impact statement for the Mono's casino and resort project had been finalized and was available for review. On September 1, 2011, the Assistant Secretary of the Interior for Indian Affairs issued his determination that gaming on the proposed site would be in the best interest of the Mono and would not be detrimental to the surrounding community. In order for the proposed site to be taken into trust by the DOI for the benefit of the Mono, the Governor of California must concur in the Assistant Secretary's determination. In the event the Governor concurs, the Assistant Secretary will proceed with a final decision on having the land taken into trust for gaming purposes. Notice of the trust decision would be published in the Federal Register together with the record of decision finalizing the environmental review process. Notwithstanding the Secretary's decision, opponents of the project may still seek to exercise their legal remedies to delay or stop the project.

Under the terms of the development agreement, the Company has agreed to arrange the financing for the ongoing development costs and construction of the facility. Prior to obtaining third-party financing, we will contribute significant financial support to the project. Our advances are expected to be repaid from the proceeds of the third-party financing or from the Mono's gaming revenues, however there can be no assurance that the advances will be repaid. Predecessor began capitalizing reimbursable advances related to this project in 2003. Through December 31, 2011, advances toward the development of the project totaled approximately $17.3 million, primarily to complete the environmental impact study and secure real estate for the project, and the carrying value of these advances is included in Native American development costs on the Company's consolidated balance sheet. Reimbursable advances by Predecessor and the Company to the Mono bear interest at the prime rate plus 1.5%. With the adoption of fresh-start reporting, the carrying value of the advances was adjusted to fair value. In addition, we have agreed to pay approximately $1.3 million of payments upon achieving certain milestones, which will not be reimbursed and will be expensed as incurred. Through December 31, 2011, none of these payments had been made.

The management agreement has a term of seven years from the opening of the facility. The Company will receive a management fee of 24% of the facility's net income. The management agreement includes termination provisions whereby either party may terminate the agreement for cause, and the agreement may also be terminated at any time upon agreement of the parties. There is no provision in the management agreement allowing the tribe to buy-out the contract prior to its expiration. The management agreement provides that the Company will train the Mono such that they may assume responsibility for managing the facility upon the expiration of the agreement.

Upon termination or expiration of the management and development agreements, the Mono will continue to be obligated to repay unpaid principal and interest on the advances from Predecessor and the Company, as well as certain other amounts that may be due, such as management fees. Amounts due to Predecessor and the Company under the development and management agreements are secured by substantially all of the assets of the project. In addition, the development and management agreements contain waivers of the Mono's sovereign immunity from suit for the purpose of enforcing the agreements or permitting or compelling arbitration and other remedies.

The following table outlines our evaluation at December 31, 2011 of each of the critical milestones necessary to complete the Mono project. Both positive and negative evidence was considered during our evaluation.



	As of December 31, 2011
Federally recognized as a tribe by the BIA	Yes
Date of recognition	Federal recognition was terminated in 1961 and restored in 1983. There is currently no evidence to suggest that recognition might be terminated in the future.
Tribe has possession of or access to usable land upon which the project is to be built	The Company has acquired usable land for the development of this project on behalf of the Mono. The land has not, however, been accepted into trust for the Mono by the DOI. In determining whether land will be taken into trust for the benefit of the Mono, we considered the Secretary's determination that gaming on the proposed site is in the best interest of the Mono and would not be detrimental to the surrounding community. We also considered that the Governor must concur in the Secretary's decision before land can be taken into trust for the benefit of the Mono.
Status of obtaining regulatory and governmental approvals:
Tribal-State Compact	A compact has been negotiated and was signed by the California governor in 2008 and will be submitted to the California Legislature for ratification after the Secretary of the Interior approves taking the land into trust. We believe that the compact will be ratified by the legislature due to the precedent set by the ratification of state-tribal gaming compacts in the past.
Approval of gaming compact by DOI	Approval of the gaming compact by the DOI is expected to occur after the compact has been ratified by the California Legislature. We believe the DOI will approve the compact because the terms and conditions thereof are consistent with past compacts that have been approved.
Record of decision regarding environment impact published by BIA	ROD regarding the Environmental Impact Statement for the project has not yet been published by the BIA. We cannot predict the timing of the issuance of the ROD. There is currently no evidence to suggest that a favorable ROD will not be issued. In determining that a favorable ROD will be issued and published, we have considered the extensive Environmental Impact Statement that was prepared and the Secretary's determination that gaming on the proposed site is in the best interest of the Mono and is not detrimental to the surrounding community.
BIA accepting usable land into trust on behalf of the tribe	It is anticipated that the land will be accepted into trust by the DOI after the issuance of the ROD. We cannot, however, predict when these events will occur. There is currently no evidence to indicate that the land will not be accepted into trust. In determining that it is probable that the DOI will accept the land into trust, we considered the Secretary's decision concerning gaming on the land. We have also considered, however, the need for the Governor's concurrence and the opposition to the project by other tribes in close proximity to the proposed site.
Approval of management agreement by NIGC	Approval of the management agreement by the NIGC is expected to occur following the BIA's acceptance of the land into trust. We believe the management agreement will be approved because the terms and conditions thereof are acceptable under IGRA and are consistent with previously approved management agreements.
Gaming licenses:
Type	Current plans for the project include Class III gaming, which requires a compact with the State of California and the approval of the NIGC. The compact is subject to the ratification of the California legislature. There is currently no evidence to indicate that the California legislature will not ratify the compact. (See comments above.)
Number of gaming devices allowed	The compact signed by California's governor permits a maximum of 2,000 slot machines at the facility as currently contemplated, with an option to expand to 2,500 total machines.
Agreements with local authorities	The Mono have entered into Memoranda of Understanding with the City of Madera, the County of Madera and the Madera Irrigation District under which the Mono agreed to pay one-time and recurring mitigation contributions, subject to certain contingencies.

The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurance as to when, or if, these approvals will be obtained. We currently estimate that construction of the facility may begin in the second half of 2013 and we estimate that the facility would be completed and opened for business approximately 18 months after construction begins. There can be no assurance, however, that the project will be completed and opened within this time frame or at all. We expect to obtain third-party financing for the project once all necessary regulatory approvals have been received and construction has commenced, however there can be no assurance that we will be able to obtain such financing for the project on acceptable terms or at all.

We have evaluated the likelihood that the Mono project will be successfully completed and opened, and have concluded that at December 31, 2011, the likelihood of successful completion is in the range of 60% to 70%. Our evaluation is based on our consideration of all available positive and negative evidence about the status of the project, including, but not limited to, the status of required regulatory approvals, as well as the progress being made toward the achievement of all milestones and the successful resolution of all contingencies. There can be no assurance that the project will be successfully completed nor that future events and circumstances will not change our estimates of the timing, scope, and potential for successful completion or that any such changes will not be material. In addition, there can be no assurance that we will recover all of our investment in the project even if it is successfully completed and opened for business.

Mechoopda Indian Tribe

On January 12, 2004, Predecessor entered into development and management agreements with the Mechoopda Indian Tribe of Chico Rancheria, California (the “MITCR”), a federally recognized Native American tribe. Pursuant to those agreements, Predecessor agreed to assist the MITCR in developing and operating a gaming and entertainment facility to be located on a portion of an approximately 650-acre site in Butte County, California, at the intersection of State Route 149 and Highway 99, approximately 10 miles southeast of Chico, California and 80 miles north of Sacramento, California.

Under the terms of the development agreement, Predecessor agreed to arrange the financing for the ongoing development costs and construction of the facility. Through December 31, 2011, advances to the MITCR toward development of the project totaled approximately $12.3 million, primarily to complete the environmental assessment and secure real estate for the project. The advances to the MITCR bear interest at prime plus 2%, and are to be repaid from the proceeds of third-party project financing or from the MITCR's gaming revenues. In addition, Predecessor agreed to pay approximately $2.2 million of payments upon achieving certain milestones, which will not be reimbursed. Through December 31, 2011, $50,000 of these payments had been made by Predecessor and were expensed as incurred. In 2009, all amounts that were advanced to the MITCR were written off by Predecessor due to changes in the economic climate which resulted in a revision of the expected potential of the project. Prior to the Effective Date, Predecessor discontinued funding for the development of the facility and the Company anticipates terminating the agreements.

Gun Lake Tribe

We manage the Gun Lake Casino (“Gun Lake”) in Allegan County, Michigan, on behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians of Michigan, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe. The Gun Lake Casino, which opened in February 2011, is located on approximately 147 acres on U.S, Highway 131 and 129th Avenue, approximately 25 miles south of Grand Rapids, Michigan and 27 miles north of Kalamazoo, Michigan, and includes approximately 1,500 slot machines, 28 table games and various dining options.

On November 13, 2003, Predecessor agreed to purchase a 50% interest in MPM, a Michigan limited liability company. On July 31, 2000, MPM entered into development and management agreements with the Gun Lake Tribe, pursuant to which MPM agreed to assist the tribe in developing and operating a gaming and entertainment project to be located in Allegan County, Michigan. The Sixth Amended and Restated Management Agreement dated July 12, 2010 (the “Gun Lake Management Agreement”) has a term of seven years from the opening of the facility and provides for a management fee of 30% of the project's net income to be paid to MPM. Pursuant to the terms of the MPM operating agreement, the Company's portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees and 93% of any management fees in excess of $48 million.

MPM is considered a variable interest entity under the provisions of ASC Topic 810, Consolidation (“ASC Topic 810”). Under the terms of the MPM operating agreement, Predecessor was required to provide the majority of MPM's financing. In addition, based on a qualitative analysis, the Company believes it directs the most significant activities that impact MPM's economic performance and has the right to receive benefits and the obligation to absorb losses that could potentially be significant to MPM. As a result, the Company is considered the primary beneficiary of MPM as defined in ASC Topic 810 and therefore consolidates MPM in its consolidated financial statements. The creditors of MPM have no recourse to the general credit of the Company, and the assets of MPM may be used only to settle obligations of MPM.

In accordance with the development agreement, MPM made reimbursable advances to Gun Lake for the development of the project. Approximately $42.8 million of the advances, including principal and accrued interest, were repaid in July 2010 from the proceeds of the project's third-party financing. At the project's opening date, $21.3 million in reimbursable development costs remained outstanding, and upon opening of the facility and transfer of the project to the Gun Lake Tribe, this amount was reclassified to Native American notes receivable on Predecessor's consolidated balance sheet. With the adoption of fresh-start reporting, the carrying value of the note was adjusted to $32.5 million, which represented the estimated fair value of the note. During the Successor period June 17, 2011 through December 31, 2011, Gun Lake repaid the remaining balance due on the note in full, including principal and accrued interest. Pursuant to the terms of the note, the interest rate was retroactively reduced to prime rate plus 2% as a result of the prepayment of the note within 30 months of the commencement of gaming at the project.

Impairment of Native American Project Costs and Related Capitalized Interest

During the year ended December 31, 2009, the Company determined that a total of $13.0 million in advances and capitalized interest related to the MITCR Native American development agreement was not recoverable, and the carrying value of the project was written down to its fair value, which approximated the fair value of the land. The fair value of the land is included in land held for development in the accompanying consolidated balance sheets. The fair value of the land was estimated using traditional real estate valuation techniques based on Level 3 inputs under ASC Topic 820.