AMENDED AND RESTATED OPERATING AGREEMENT OF BUENA VISTA DEVELOPMENT COMPANY, LLC A NEW YORK LIMITED LIABILITY COMPANY
Exhibit
10.10
AMENDED
AND RESTATED
OF
BUENA
VISTA DEVELOPMENT COMPANY, LLC
A
NEW YORK LIMITED LIABILITY COMPANY
TABLE
OF CONTENTS
|
Page
|
||
|
ARTICLE
1. DEFINITIONS
|
1
|
|
|
ARTICLE
2. FORMATION OF THE COMPANY
|
6
|
|
|
2.1.
|
Formation
|
6
|
|
2.2.
|
Purpose
|
6
|
|
2.3.
|
Principal
Place of Business
|
7
|
|
2.4.
|
Registered
Office and Registered Agent
|
7
|
|
2.5.
|
Term
|
7
|
|
2.6.
|
Licensing
|
7
|
|
2.7.
|
Tax
Classification
|
7
|
|
ARTICLE
3. ESTABLISHMENT OF CLASSES; RIGHTS AND OBLIGATIONS OF
MEMBERS
|
7
|
|
|
3.1.
|
Establishment
of Classes of Membership Interest
|
7
|
|
3.2.
|
Limitation
of Liability
|
7
|
|
3.3.
|
Company
Debt Liability
|
7
|
|
3.4.
|
Access
to Information; Records
|
7
|
|
3.5.
|
Right
to Conduct Business with Company
|
8
|
|
3.6.
|
Indemnification
|
8
|
|
3.7.
|
Confidentiality
|
8
|
|
3.8.
|
Additional
Members
|
8
|
|
ARTICLE
4. MANAGEMENT; MEETINGS; VOTING RIGHTS
|
8
|
|
|
4.1.
|
Managing
Member
|
8
|
|
4.2.
|
Duty
of Good Faith
|
9
|
|
4.3.
|
Meetings
of the Members
|
9
|
|
4.4.
|
Voting
of Membership Interests
|
9
|
|
4.5.
|
Required
Vote
|
9
|
|
4.6.
|
Outside
Businesses
|
9
|
|
ARTICLE
5. CONTRIBUTIONS TO THE COMPANY AND CAPITAL
ACCOUNTS
|
10
|
|
|
5.1.
|
Initial
Capital Contributions
|
10
|
|
5.2.
|
Additional
Capital Contributions and Changes in Percentage
Interests
|
10
|
|
5.3.
|
Capital
Accounts
|
10
|
|
5.4.
|
No
Withdrawal or Reduction of Members’ Capital
Contributions
|
10
|
|
ARTICLE
6. DISTRIBUTIONS, ALLOCATIONS, INCOME TAX, ELECTIONS
AND REPORTS
|
10
|
|
|
6.1.
|
Distribution
Rights of Members
|
10
|
|
6.2.
|
Allocations
of Net Profit and Loss
|
10
|
|
6.3.
|
Special
Allocations
|
11
|
|
6.4.
|
Withheld
Amounts
|
11
|
|
6.5.
|
Limitation
upon Distributions
|
11
|
|
6.6.
|
Accounting
Principles
|
11
|
|
6.7.
|
Accounting
Period
|
11
|
-
i
-
TABLE
OF
CONTENTS
(continued)
|
Page |
||
|
6.8.
|
Financial
Statements
|
11
|
|
6.9.
|
Returns
and Other Elections
|
11
|
|
6.10.
|
Tax
Matters Partner
|
12
|
|
ARTICLE
7. TRANSFERABILITY
|
12
|
|
|
7.1.
|
General
Conditions on Assignments
|
12
|
|
7.2.
|
Assignment
|
13
|
|
7.3.
|
Rights
of Assignee
|
17
|
|
7.4.
|
Death
or Incompetency
|
18
|
|
ARTICLE
8. DISSOLUTION AND TERMINATION
|
18
|
|
|
8.1.
|
Dissolution
|
18
|
|
8.2.
|
Winding
Up, Liquidation and Distribution of Assets
|
18
|
|
8.3.
|
Deficit
Account
|
19
|
|
8.4.
|
Articles
of Dissolution
|
19
|
|
8.5.
|
Effect
of Filing Articles of Dissolution
|
19
|
|
8.6.
|
Return
of Contribution Nonrecourse to Other Members
|
19
|
|
ARTICLE
9. AMENDMENTS
|
19
|
|
|
9.1.
|
Amendments
|
19
|
|
ARTICLE
10. DISPUTE RESOLUTION AND ARBITRATION
|
20
|
|
|
10.1.
|
Dispute
Resolution
|
20
|
|
10.2.
|
Arbitration
|
20
|
|
10.3.
|
Binding
Decision
|
20
|
|
ARTICLE
11. MISCELLANEOUS PROVISIONS
|
20
|
|
|
11.1.
|
Notices
|
20
|
|
11.2.
|
Application
of New York Law
|
21
|
|
11.3.
|
Further
Agreements
|
21
|
|
11.4.
|
Construction
|
21
|
|
11.5.
|
Headings
|
21
|
|
11.6.
|
Waivers
|
21
|
|
11.7.
|
Rights
and Remedies Cumulative
|
21
|
|
11.8.
|
Severability
|
21
|
|
11.9.
|
Heirs,
Successors and Assigns
|
21
|
|
11.10.
|
Third
Parties
|
21
|
|
11.11.
|
Counterparts
|
21
|
|
11.12.
|
Material
Contracts
|
22
|
|
11.13.
|
Entire
Agreement
|
22
|
EXHIBIT
A
INITIAL CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
EXHIBIT
B
CAPITAL ACCOUNTS
EXHIBIT
C
SPECIAL ALLOCATIONS
-
ii
-
AMENDED
AND RESTATED
OF
BUENA
VISTA DEVELOPMENT COMPANY, LLC
A
NEW YORK LIMITED LIABILITY COMPANY
THIS
AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”)
is
made and entered into as of the 21st
day of
April, 2005, by and between Casino Development & Management Company, LLC
(“CD&M”)
and
Nevada Gold BVR, L.L.C. (“Nevada
Gold”).
WHEREAS,
Articles of Organization were filed for Buena Vista Development Company,
LLC
(originally known as Buena Vista, LLC, the “Company”)
with
the Office of the New York Secretary of State on the 25th
day of
June, 2002, in accordance with the Limited Liability Company Law of the State
of
New York (the “Act”);
WHEREAS,
subsequent to the formation of the Company, CD&M, as the sole Member (as
such term is defined herein) of the Company, adopted an Operating Agreement
for
the Company dated July 25, 2004 (the “Operating
Agreement”);
WHEREAS,
pursuant to an Investment Agreement of even date herewith (the “Investment
Agreement”),
CD&M and Nevada Gold have agreed that in exchange for the Capital
Contribution by Nevada Gold described and set forth in the Investment Agreement,
Nevada Gold will be granted a Membership Interest (as defined herein) in
the
Company;
WHEREAS,
pursuant to the Investment Agreement, Nevada Gold has agreed to make the
Loan to
the Company; and
WHEREAS,
the undersigned wish to enter into this Agreement to amend and restate the
Operating Agreement in order to, among other things, provide for the management
of the Company and set forth the rights, preferences, privileges and obligations
of the Members.
NOW,
THEREFORE, in consideration of the mutual covenants and promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
1.
DEFINITIONS
The
following terms used in this Agreement shall have the following
meanings:
1.1. “Act”
shall
mean the Limited Liability Company Law of the State of New York, as amended
from
time to time.
1.2. “Adjusted
Deficit Capital Account”
shall
mean, with respect to any Member, the deficit balance, if any, in such
Member’s
Capital Account as of the end of the taxable year, after giving effect
to the
following adjustments:
1.2.1. credit
to
such Capital Account any amount that such Member is obligated to restore
under
Treasury Regulation § 1.704-1(b)(2)(ii)(c), as well as any addition thereto
pursuant to the next to last sentence of Treasury Regulation §§ 1.704-2(g)(1)
and 1.704-2(i)(5), after taking into account thereunder any changes during
such
year in partnership minimum gain (as determined in accordance with Treasury
Regulation § 1.704-2(d)) and in the minimum gain attributable to any
partner nonrecourse debt (as determined under Treasury Regulation §
1.704-2(i)(3)); and
1.2.2. debit
to
such Capital Account the items described in Treasury Regulation
§§ 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This
definition of Adjusted Deficit Capital Account is intended to comply with
the
provisions of Treasury Regulation §§ 1.704-1(b)(2)(ii)(d) and 1.704-2, and shall
be interpreted consistently with those provisions.
1.3. “Affected
Member”
shall
mean the Member that is notified that it is an Unsuitable Person under
Section 7.2.2.2
or
Section 7.2.2.3.2.
1.4. “Affiliate”
shall
mean a Person whose relationship to a Member is such that a Gaming Authority
considers such Person’s suitability as a factor in determining the Member’s or
the Company’s suitability for receiving a Gaming License.
1.5. “Agreed
Value”
shall
mean the fair market value of an asset, the Membership Interests or, where
applicable, the Capital Accounts as of the date of valuation, which fair
market
value shall be determined by unanimous agreement of the Members or, if they
cannot so agree, by an independent appraiser selected by the
Members.
1.6. “Agreement”
shall
mean this Agreement as originally executed and as amended from time to
time.
1.7. “Approved
Expense”
shall
mean an expense that has been approved in advance by the Class B Member,
such
approval not to be unreasonably withheld.
1.8. “Articles
of Organization”
shall
mean the Articles of Organization of Buena Vista Development Company, LLC
as
filed with Office of the New York Secretary of State, and as amended from
time
to time.
1.9. “Auditor”
shall
mean the auditor of the Company as appointed by the Members from time to
time.
1.10. “Business
Day”
shall
mean any day other than Saturday, Sunday or a statutory holiday in New
York.
2
1.11. “California
Regulatory Authority”
shall
mean a Gaming Authority whose approval is necessary in order for the Company
to
obtain or maintain Gaming Licenses with respect to the Tribe.
1.12. “Capital
Account”
as of
any given date shall mean the Capital Account established for each Member,
pursuant to Article
5
and
Exhibit B, as adjusted up to such date pursuant to this
Agreement.
1.13. “Capital
Contribution”
shall
mean any contribution by a Member to the capital of the Company in cash or
property, whenever made.
1.14. “Catch-up
Distribution”
shall
mean a distribution to the Class B Members in an amount equal to the
product of (i) the Class B Members’ Percentage Interest, times
(ii) total Construction Management Profits.
1.15. “Class
A Members”
shall
mean the Class A Member listed on Exhibit A attached hereto, and any Persons
to
which such Class A Member’s Membership Interest may be assigned, as
permitted by Section 7.2.1.
1.16. “Class
B Members”
shall
mean the Class B Member listed on Exhibit A attached hereto, and any Persons
to
which such Class A Member’s Membership Interest may be assigned, as
permitted by Section 7.2.1.
1.17. “Code”
shall
mean the Internal Revenue Code of 1986, as amended, or corresponding provisions
of subsequent superseding federal revenue laws.
1.18. “Compact”
shall
mean the Tribal-State Gaming Compact between the Tribe and the State of
California, as amended and in effect on the date hereof, and as hereinafter
amended, supplemented, restated or replaced.
1.19. “Company”
shall
mean Buena Vista Development Company, LLC.
1.20. “Confidential
Information”
is
defined as all information, knowledge or data relating to the business of
the
Company, its clients and third parties doing business with the Company. This
includes trade secrets, financial and pricing information, formulas, techniques
and methods, business plans and strategies, internal correspondence, reports,
software source code, memoranda, information regarding the equity ownership
of
the Company and other documents utilized internally by the Company, and any
other material which by its nature or notice is intended to be confidential.
Confidential Information shall not include any information that is in the
public
domain or otherwise publicly available (other than through the wrongful act
of a
Member).
1.21. “Construction
Management Profits”
shall
mean the amount of any and all compensation received by Wilmorite Inc. from
the
Tribe pursuant to the Construction Management Agreement dated as of December
29,
2004; provided, however, that reimbursable expenses reimbursed by the Tribe
to
Wilmorite, Inc. pursuant to Section 13.4 of the Construction Management
Agreement shall not be included in computing Construction Management
Profits.
3
1.22. “Development
Agreement”
shall
mean the Development Agreement dated as of December 29, 2004, between the
Tribe
and the Company.
1.23. “Development
Fee”
shall
mean the Development Fee payable under Section 6.1 of the Development
Agreement.
1.24. “Development
Revenue”
shall
mean revenues of the Company (calculated in accordance with GAAP) derived
from
the Development Agreement, including but not limited to the Development Fee,
Reimbursable Expenses and payments under the Interim Tribal Loan, and any
other
agreement between the Company and the Tribe.
1.25. “Disputing
Parties”
shall
have the meaning set forth in Section 10.1
hereof.
1.26. Intentionally
Omitted.
1.27. “Entity”
shall
mean any general partnership, limited partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative, association,
foreign trust or foreign business organization.
1.28. “Effective
Date”
shall
mean the date first set forth in the opening paragraph of this Agreement,
which
date shall also be deemed to be the execution date of this
Agreement.
1.29. “Fiscal
Year”
shall
mean a calendar year.
1.30. “GAAP”
shall
mean United States generally accepted accounting principles as in effect
from
time to time, applied on a consistent basis using the accrual method of
accounting.
1.31. “Gaming
Authority”
shall
mean any national, state, tribal, local and other governmental, regulatory
and
administrative authority, agency, board, commission or official responsible
for
or involved in the regulation of gaming activities of the Company or its
Members
in any jurisdiction, including the Tribal Gaming Agency and the State Gaming
Agency within the meaning of the Compact.
1.32. “Gaming
Laws”
shall
mean the Compact and the laws pursuant to which any Gaming Authority possesses
regulatory, licensing or permit authority over gaming within any
jurisdiction.
1.33. “Gaming
License”
any
license, permit, authorization, consent or favorable determination from or
issued by a Gaming Authority pursuant to any Gaming Laws.
1.34. “Initial
Capital Contribution”
shall
mean the initial contribution to the capital of the Company by the Members
in
accordance with the terms of this Agreement, and as set forth on Exhibit
A.
1.35. “Interim
Tribal Loan”
shall
have the meaning ascribed to such term in the Development
Agreement.
4
1.36. “Investment
Agreement”
shall
mean that Investment Agreement of even date herewith between CD&M and Nevada
Gold.
1.37. “Licensed
Member”
shall
mean any Member to which a Gaming License has been granted, or to whose
Affiliate a Gaming License has been granted.
1.38. “Loan”
shall
mean the loan made or to be made by Nevada Gold to the Company pursuant to
the
Investment Agreement.
1.39. “Majority
in Class Interest”
shall
mean, with respect to any class of Membership Interest, fifty-one percent
(51%)
of the aggregate Percentage Interest in the Company designated as belonging
to
such class.
1.40. “Majority
in Interest”
shall
mean fifty-one percent (51%) of the aggregate Percentage Interests in the
Company.
1.41. “Managing
Member”
has the
meaning given such term in Section
4.1.
1.42. “Member”
shall
mean each of the parties that executes a counterpart of this Agreement and
each
other Person that may become a Member from time to time with the consent
of all
of the Members.
1.43. “Membership
Interest”
shall
mean an interest in the Company, including a share of one or more of the
Company’s Profits or Losses, distributions of the Company’s assets, and
allocations obtained pursuant to this Agreement and the Act, together with
the
right to participate in the management of the business and affairs of the
Company as set forth in this Agreement or the Act, including (to the extent
granted pursuant to the terms of this Agreement) the right to vote on, consent
to, or otherwise participate in any decision or action of or by the Members
granted pursuant to this Agreement and the Act.
1.44. “Net
Development Revenue”
shall
mean Development Revenue and any other revenue of the Company, reduced by
any
cash debt repayments by the Company to Members or their Affiliates made in
accordance with the priorities established in the Investment Agreement, and
further reduced by Approved Expenses paid in cash. “Net Development Revenue
Available for Distribution” shall mean all Net Development Revenue received by
the Company and not previously distributed to Members.
1.45. “Net
Loss”
shall
mean the excess of the Company’s aggregate Losses over aggregate Profits for an
accounting period.
1.46. “Net
Profit”
shall
mean the excess of the Company’s aggregate Profits over aggregate Losses for an
accounting period.
1.47. “Non-Compliant
Member”
shall
have the meaning set forth in Sections 7.2.2.2
or 7.2.2.3.2
hereof,
as applicable.
5
1.48. “Percentage
Interest”
shall
mean, for any class of Members, the percentage interest in the Company
as set
forth on Exhibit A as that percentage may be changed from time to time
in
accordance with Section 2 of the Investment Agreement.
1.49. “Person”
shall
mean any individual or Entity, and the heirs, executors, administrators,
legal
representatives, successors, and assigns of such “Person” where the context so
permits.
1.50. “Profits”
and “Losses”
shall
mean the income, gain, loss, deductions and credits of the Company as determined
in accordance with Exhibit B.
1.51. “Reimbursable
Expenses”
shall
have the meaning ascribed to such term in the Development
Agreement.
1.52. “Remaining
Members”
shall
mean those Members remaining after a Member has withdrawn from the Company
as a
Member for any reason.
1.53. “Special
Allocations”
are
defined in Exhibit C attached hereto.
1.54. “Treasury
Regulations”
shall
include proposed, temporary and final regulations promulgated from time to
time
under corresponding provisions of the Code.
1.55. “Tribe”
shall
mean the Buena Vista Rancheria of Me-Wuk Indians, a federally recognized
Indian
Tribe, and after the Assumption Date (as defined in the Development Agreement)
shall include the Gaming Authority (as defined in the Development
Agreement).
1.56. “Trigger
Date”
shall
mean the later of the date of receipt by the Company and receipt by all other
Members of a notice from a Licensed Member under Sections 7.2.2.2
or
7.2.2.3
that it
intends to exercise the rights set forth in Section 7.2.2.4.
1.57. “Unsuitable
Person”
shall
mean (i) any Person who, if the Person is an Affiliate of the Company
or
any Member, will cause the Company, any Member or any Affiliate of any Member
(A) not to obtain any Gaming License, or (B) to have a Gaming License revoked
or
note renewed, or (ii) a Member who is properly determined by a second
Member to be an Unsuitable Person in accordance with Sections 7.2.2.2
or 7.2.2.3.2
for
reasons that remain unremedied.
ARTICLE
2.
FORMATION
OF THE COMPANY
2.1. Formation.
The
Company has been organized as a New York limited liability company by executing
and delivering Articles of Organization to the Office of the New York Secretary
of State in accordance with and pursuant to the Act.
2.2. Purpose.
The
purpose of the Company shall be to engage in and conduct any lawful activity
for
which limited liability companies may be organized under the Act; provided,
however, that the prior written consent of all the Members shall be required
before the Company engages in any material business other than in furtherance
of
its relationship with the Tribe.
6
2.3. Principal
Place of Business.
The
principal place of business of the Company shall be located at Rochester,
New
York, or such other place as the Members shall designate in accordance
with the
Act.
2.4. Registered
Office and Registered Agent.
The
Company’s initial registered office shall be at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and thereafter at such other location as the Members
may designate in accordance with the Act. The name of its initial registered
agent shall be CT Corporation System and thereafter its registered agent
shall
be such person as the Members may designate in accordance with the
Act.
2.5. Term.
The
Company shall have perpetual existence, unless the Company is dissolved earlier
pursuant to the provisions of this Agreement or the Act.
2.6. Licensing.
The
Company shall become licensed to do business in any jurisdiction where it
is
necessary for the Company to become licensed to do business and shall comply
with all Gaming Laws.
2.7. Tax
Classification.
The
Company intends to be classified as a partnership for federal and state tax
purposes.
ARTICLE
3.
ESTABLISHMENT
OF CLASSES; RIGHTS AND OBLIGATIONS OF MEMBERS
3.1. Establishment
of Classes of Membership Interest.
On the
Effective Date there shall be Class A and Class B Membership Interests. Each
class of Membership Interest shall have the relative rights, powers,
preferences, privileges and duties as set forth in this Agreement. Subsequent
to
the Effective Date, the rights, powers, preferences, privileges and duties
of a
specific class of Membership Interest shall not be altered or amended without
the consent of the Members holding a Majority in Class Interest of the class
of
Membership Interest to be affected by such amendment (which consent shall
be in
addition to any other vote required hereunder in order to amend this
Agreement).
3.2. Limitation
of Liability.
Each
Member’s liability with respect to the Company shall be limited to the fullest
extent provided in the Act, this Agreement, or any applicable law.
3.3. Company
Debt Liability.
A
Member shall not be personally liable for any debts, obligations, liabilities
or
losses of the Company beyond its Capital Contribution.
3.4. Access
to Information; Records.
Each
Member has the right to obtain from the Company from time to time upon
reasonable demand for any purpose reasonably related to the Member’s interest as
a Member of the Company:
3.4.1. true
and
full information regarding the status of the business and financial condition
of
the Company;
7
3.4.2. promptly
after becoming available, a copy of the Company’s federal, state, and local
income tax returns and all other tax returns deemed necessary and required
for
each jurisdiction in which the Company does business;
3.4.3. a
copy of
any Company agreement, Articles of Organization, and all amendments
thereto;
3.4.4. true
and
full information regarding the amount of cash and a description and statement
of
the Agreed Value of any other property or services contributed by each Member
or
which the Member has agreed to contribute in the future to the Company, and
the
date on which each became a Member; and
3.4.5. other
information regarding the affairs of the Company as is reasonable or required
to
be provided to a Member under the Act.
3.5. Right
to Conduct Business with Company.
Upon
the consent of all of the Members, a Member may lend money to, borrow money
from, act as a surety, guarantor or endorser for, guarantee or assume one
or
more specific obligations of, provide collateral for and transact other business
with the Company, including entering into any contract with the Company on
an
arms’-length basis. Each of the Members on the date of this Agreement is
conclusively deemed to have consented to the loans and other transactions
between Members and the Company that are described and/or specifically approved
in the Investment Agreement.
3.6. Indemnification.
The
Company shall, to the fullest extent permitted by law, indemnify and hold
harmless the Members from and against any and all claims and demands whatsoever
in connection with the business of the Company. The Company shall advance
indemnification payments, including legal fees and costs, that reasonably
appear
to be due hereunder upon the request of a party subject to indemnity hereunder
and the execution by such party of a written agreement to return such payments
in the event that the indemnification is ultimately determined not to be
due
such party hereunder.
3.7. Confidentiality.
Each
Member agrees that such Member will not copy, distribute, disclose, or
disseminate Confidential Information to anyone, except the Company’s employees
or authorized agents who have a need to know such Confidential Information
for
the purpose for which it is disclosed or as may be required by applicable
law,
including but not limited to, applicable Gaming Laws and securities
laws.
3.8. Additional
Members.
The
Company may admit additional Members with the consent of all of the existing
Members. No new Members shall be (i) entitled to any retroactive allocation
of
the Company’s Profits or Losses or (ii) an Unsuitable Person.
ARTICLE
4.
MANAGEMENT;
MEETINGS; VOTING RIGHTS
4.1. Managing
Member.
The
Company’s business and affairs shall be managed by a Managing Member chosen by a
Majority in Interest and as directed thereby. As of the Effective Date, the
Managing Member shall be CD&M.
8
4.2. Duty
of Good Faith.
The
Managing Member shall perform its management duties in good faith and in
a
manner such Managing Member reasonably believes to be in the Company’s best
interests. The Managing Member’s liability for acts performed or omitted in such
capacity shall be limited to the extent permitted by the Act and other
relevant
law. The Managing Member shall not be liable to the Company or any other
Member
unless any loss or damage suffered by the Company or such other Member
was the
result of the Managing Member’s bad faith, gross negligence, intentional
misconduct, or a knowing violation of law.
4.3. Meetings
of the Members.
The
Company shall not be required to hold annual meetings of the Members. A meeting
shall be held upon prior written request by a Majority in Class Interest
of any
class of Members, delivered to the Managing Member not more frequently than
once
each calendar quarter. A meeting may be held by conference among the Members
using any means of communication permitted by the Act. For all meetings,
Members
holding a Majority in Interest shall constitute a quorum. Any action required
or
permitted to be taken at a meeting of Members may be taken without a meeting
by
written action signed by Members holding aggregate Percentage Interests that
would be required to take the same action at a meeting. Such written action
shall be effective when signed by the required Members. When written action
is
taken by fewer than all Members, but only if there is not a requirement of
unanimity set forth in this Agreement, all Members shall be notified immediately
of its text and effective date.
4.4. Voting
of Membership Interests.
Each
Member shall have a vote equal to such Member’s Percentage Interest in the
Company.
4.5. Required
Vote.
Unless
a greater vote is required by the Act or is expressly provided for hereunder,
the affirmative vote of a Majority in Interest of the Members entitled to
vote
shall be required to approve any proposed action with respect to which the
Members are entitled to vote.
4.6. Outside
Businesses.
Except
as provided in any other agreement, any Member may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Company, and
the
Company and/or Members shall have no rights by virtue of this Agreement in
and
to such independent ventures or to the income or gains derived therefrom,
and
the pursuit of any such venture, even if competitive with the business of
the
Company, shall not be deemed wrongful or improper. No Member shall be obligated
to present any particular investment opportunity to the Company even if such
opportunity is of a character that, if presented to the Company, could be
taken
by the Company, and any Member shall have the right to take for his, her
or its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment opportunity. Notwithstanding the
foregoing, the Members hereby agree that any and all business activities
related
to the Tribe shall be conducted solely by and through the Company unless
all of
the Members consent to a Member’s engaging in business activities with the Tribe
independent of the Company.
9
ARTICLE
5.
CONTRIBUTIONS
TO THE COMPANY AND CAPITAL ACCOUNTS
5.1. Initial
Capital Contributions.
Each
Member has contributed the amount set forth next to its name on Exhibit A
as its
share of the Initial Capital Contribution.
5.2. Additional
Capital Contributions and Changes in Percentage Interests.
Upon
the consent of all of the Members, additional contributions may be made to
the
Company by the Members in proportion to their Percentage Interests; provided,
however, that no Member shall be required to make additional contributions
to
the Company without such Member’s consent.
Upon any
such contribution, the Percentage Interest of each Member shall be increased
or
decreased, as the case may be, as determined by all of the Members.
5.3. Capital
Accounts.
Capital
Accounts shall be maintained in accordance with Exhibit B.
5.4. No
Withdrawal or Reduction of Members’ Capital Contributions.
A
Member may not withdraw any or all of its Capital Contribution without the
approval of all of the Members, which approval may be withheld for any reason.
ARTICLE
6.
DISTRIBUTIONS,
ALLOCATIONS, INCOME TAX, ELECTIONS
AND
REPORTS
6.1. Distribution
Rights of Members.
No
later than 5 business days following the close of each calendar month, Net
Development Revenue Available for Distribution shall be distributed to the
Members as follows:
6.1.1. Distributions
to Class B Member.
First,
to the Class B Members, pro-rata in accordance with their Class B Membership
Interests an amount equal to the product of the Net Development Revenue
Available for Distribution multiplied by the Class B Members’ Percentage
Interest.
6.1.2. Catch-up
Distributions.
Second,
to the Class B Members, pro-rata in accordance with their Class B Membership
Interests until such time as the Class B Members have received aggregate
distributions under this Section
6.1.2
equal to
the Catch-Up Distribution.
6.1.3. Distributions
to Class A Member.
Third,
after the Class B Members have received aggregate distributions under
Section
6.1.2
equal to
the Catch-Up Distribution, the balance (after taking into account distributions
under Section
6.1.1)
to the
Class A members, pro-rata in accordance with their Class A Membership
Interests.
6.2. Allocations
of Net Profit and Loss.
Subject
to Section
6.3,
Net
Profit and Net Loss shall be allocated to the Members in accordance with
their
respective Percentage Interests.
10
6.3. Special
Allocations.
Notwithstanding Section 6.2,
Special
Allocations shall be made to the Members in accordance with Exhibit C.
6.4. Withheld
Amounts.
All
amounts withheld pursuant to the Code or any provisions of state or local
tax
law with respect to any payment or distribution to the Members from the Company
shall be treated as amounts distributed to the relevant Member or Members
for
purposes of Section
6.1.
6.5. Limitation
upon Distributions.
No
distributions or return of Capital Contributions shall be made if, after
the
distribution or return of contribution is made, the liabilities of the Company
(other than liabilities to Members on account of their Membership Interests,
and
liabilities for which the recourse of creditors is limited to specified property
of the Company), exceed the fair value of the assets of the Company, provided
that the fair value of property that is subject to a liability for which
the
recourse of creditors is limited, shall be included in the assets of the
Company
only to the extent that the fair value of that property exceeds that
liability.
6.6. Accounting
Principles.
The
Company shall maintain books and records, which shall include statements
of
Profit and Loss and Capital Accounts, in accordance with this Agreement and
GAAP.
6.7. Accounting
Period.
The
Company’s accounting period shall be from January 1 to December 31 of each
year.
6.8. Financial
Statements.
Within
15 days after the end of each calendar quarter, the Company shall prepare
and
deliver to each Member an income/expense statement. In addition, within 45
days
after the end of each Fiscal Year, the Company shall prepare and deliver
to each
Member a financial statement which shall include a balance sheet, a profit
and
loss statement, and, with respect to the annual statements, a report of the
Capital Accounts of the Members, including the Profits and Losses, and the
share
of the Profits and Losses of each Member for such period. The annual statements
shall be reviewed by the accountants of the Company. Notwithstanding anything
contained herein to the contrary, the Members shall have the right, at their
own
expense, (A) to review with the accountants the accounting methods and
procedures to be used, and (B) to review and audit the books and records
of the
Company for the purpose of verifying any financial statements of the Company.
If
the audit of the books and records reflects more than a two percent error
in the
income or loss of the Company, then the Company shall reimburse the Member
performing the audit all of such Member’s costs and expenses for the audit. In
connection with such accounting methods, all decisions as to accounting
principles, including any elections to be made by or for the Company under
the
provisions of the Code or other applicable tax law shall be determined by
the
Members upon the affirmative vote of a Majority in Interest, provided that
all
such accounting methods and principles shall be consistent with
GAAP.
6.9. Returns
and Other Elections.
The
Members shall cause the preparation and timely filing of all tax returns
required to be filed by the Company pursuant to the Code and all other tax
returns deemed necessary and required in each jurisdiction in which the Company
does business or is subject to taxation. Copies of such returns, or pertinent
information therefrom, shall be furnished to the Members within a reasonable
time after the end of the Fiscal Year upon the Members’ written request. All
elections permitted to be made by the Company under Federal or state laws
shall
be made by the Members upon the affirmative vote of a Majority in Interest,
except that the consent of all of the Members shall be required in order
to
elect not to treat the Company as a flow-through entity or partnership for
tax
purposes.
11
6.10. Tax
Matters Partner.
The
Class A Member is designated the “Tax Matters Partner” (as defined in Code
Section 6231), and is authorized and required to represent the Company
(at the
Company’s expense) in connection with all examinations of the Company’s affairs
by tax authorities, including, without limitation, administrative and judicial
proceedings, and to expend Company funds for professional services and
costs
associated therewith. The Members agree to cooperate with each other and
to do
or refrain from doing any and all things reasonably required to conduct
such
proceedings.
ARTICLE
7.
TRANSFERABILITY
7.1. General
Conditions on Assignments.
No
assignment of a Membership Interest after the date of this Agreement will
be
effective unless all of the conditions set forth below are
satisfied:
7.1.1. Unless
waived by the Company, the assignor signs and delivers to the Company an
undertaking in form and substance satisfactory to the Company to pay all
reasonable expenses incurred by the Company in connection with the assignment
(including, but not limited to, reasonable fees of counsel and accountants
and
the costs to be incurred with any additional accounting required in connection
with the assignment, and the cost and fees attributable to preparing, filing
and
recording such amendments to the organizational documents or filings as may
be
required by law);
7.1.2. Such
assignment does not require the registration of such assigned Membership
Interests pursuant to any applicable federal or state securities laws, and
the
assignor delivers to the Company an opinion of counsel for the assignor
satisfactory in form and substance to the Company to the effect that the
assignment of the Membership Interest is in compliance with the applicable
federal and state securities laws, and a statement of the assignee in form
and
substance satisfactory to the Company making appropriate representations
and
warranties in respect to compliance with the applicable federal and state
securities laws and as to any other matter reasonably required by the
Company;
7.1.3. The
Company receives an opinion from its counsel that (i) the assignment
does
not cause the Company to lose its classification as a partnership for federal
or
state income tax purposes, and (ii) unless waived by the Company,
the
assignment, together with all other assignments within the preceding twelve
months, does not cause a termination of the Company for federal or state
income
tax purposes;
12
7.1.4. The
assignor signs and delivers to the Company a copy of the assignment of
the
Membership Interests to the assignee, together with the certificates
representing such Membership Interests, duly executed for
assignment;
7.1.5. The
assignee signs and delivers to the Company its agreement to be bound by this
Agreement;
7.1.6. Such
assignment does not cause the Company to become a “Publicly Traded Partnership,”
as such term is defined in Sections 469(k)(2) or 7704(b) of the
Code;
7.1.7. Such
assignment does not subject the Company to regulation under the Investment
Company Act of 1940, the Investment Advisers Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended;
7.1.8. Such
assignment is not made to an Unsuitable Person and is in compliance with
any and
all applicable gaming acts and regulations now or hereafter existing in the
State of California, including a finding of suitability of such assignee
or any
owners or beneficial owners of such assignee;
7.1.9. Such
assignment is not made to any Person who lacks the legal right, power or
capacity to own such Membership Interest; and
7.1.10. The
assignment is in compliance with the other provisions of this
Agreement.
7.2. Assignment.
A
Membership Interest may be assigned only in accordance with this Section
and in
compliance with all applicable Gaming Laws.
7.2.1. Voluntary
Assignment.
A
Member or assignee thereof may assign all or a portion of its Membership
Interest only upon the consent of all of the Members, provided, however,
such
consent shall not be required in connection with the merger or consolidation
by
the publicly held parent company of Nevada Gold with another party that is
not
an Unsuitable Person or, so long as it does not cause the Company to become
an
Unsuitable Person, the sale or transfer of all or substantially all of the
assets of the publicly held parent company of Nevada Gold. Any transfer of
all
or any part of a Member’s interest without the consent of all of the Members as
required by this Section shall be null and void.
7.2.2. Finding
of Unsuitability and Buy-Out.
7.2.2.1.
No
Unsuitability Knowledge.
Each
Member represents to the other that it is not aware of any facts or
circumstances which would make it an Unsuitable Person.
7.2.2.2.
Regulatory
Compliance in the State of California.
Each
Member acknowledges that it and its Affiliates will be subject to licensing
and
other regulatory review and approval procedures by California Regulatory
Authorities. Each Member agrees to cooperate fully and to cause its Affiliates
to cooperate fully with the representatives of all California Regulatory
Authorities. If any California Regulatory Authority determines at any time
that
a necessary Gaming License will not be issued or renewed for the Company,
or
must be revoked, as a result of a Member’s, or a Member’s Affiliate’s
relationship to the Company or a Member, then such Member shall, if possible,
remedy or cause its Affiliate to remedy the condition that gave rise to such
determination to the satisfaction of the California Regulatory Authority.
If the
Member (the “Non-Compliant Member”) does not remedy the condition that gave rise
to such determination prior to the expiration of the period prescribed by
the
California Regulatory Authority, then the Licensed Member may provide written
notice to the Non-Compliant Member that it is an Unsuitable Person, and of
its
intention to exercise the provisions set forth in Section 7.2.2.4.
13
7.2.2.3.
Gaming
Regulations in Jurisdictions Outside of California.
7.2.2.3.1.
Each Member acknowledges that each other Member and its Affiliates may or
will
be a Licensed Member because of Gaming Licenses related to Gaming Authorities
other than California Regulatory Authorities. Each Member acknowledges that
the
issuance and maintenance of Gaming Licenses are highly regulated by these
other
Gaming Authorities and that the laws of applicable jurisdictions may require
a
Licensed Member to disclose private or otherwise confidential information
about
the other Members and their respective Affiliates. If requested to do so
by a
Licensed Member, any other Member shall obtain any Gaming License,
qualification, clearance or the like which shall be requested or required
of
such other Member by any Gaming Authority having jurisdiction over the Licensed
Member.
7.2.2.3.2.
All Members acknowledge and agree that if a Gaming Authority shall determine
that any Member or any of its Affiliates (a) is or might be engaged
in, or
is about to be engaged in, any activity or activities, or (b) was
or is
involved in a relationship with any Person, and if as a result of such
determination any Gaming Authority (i) fails to issue a Gaming License,
(ii) fails to grant or renew any required or requested Gaming License
or
related application upon terms and conditions which are in the Licensed Member’s
reasonable discretion acceptable to the Licensed Member, (iii) unreasonably
delays any Gaming License sought by the Licensed Member, (iv) conditions
any Gaming License sought by the Licensed Member upon terms and conditions
which
are in the Licensed Member’s reasonable discretion not acceptable to the
Licensed Member, (v) revokes any Gaming License, or (vi) disciplines,
in any manner, the Licensed Member, then such other Member (the “Non-Compliant
Member”) shall immediately (A) terminate any relationship with the Person
which is the source of the problem, or (B) cease the activity creating
the
problem. In the event that the Non-Compliant Member does not comply with
item
(A) or (B) above, then the Licensed Member may provide written notice to
the
Non-Compliant Member that it is an Unsuitable Person, and of its intention
to
exercise the provisions set forth in Section 7.2.2.4.
14
7.2.2.4.
Buy-Out
Provisions.
7.2.2.4.1.
In the event of an unremedied finding that a Member is an Unsuitable Person
and
the sending of notice by a Licensed Member of its intention to exercise the
rights set forth in this Section 7.2.2.4,
the
provisions of this Section 7.2.2.4
shall
apply, notwithstanding any other provision herein to the contrary.
7.2.2.4.2.
During the period commencing with the Trigger Date and ending with the transfer
or sale of the Affected Member’s Membership Interest pursuant to a subsection of
this Section 7.2.2.4,
(i) the Company shall not be required or permitted to pay any distribution
or interest with regard to the Membership Interests and the amount of such
distributions or interest shall be held in escrow by the Company, (ii) the
holder of such Membership Interests shall not be entitled to vote on any
matter,
and (iii) the Company shall not pay any remuneration in any form to
the
holder of the Membership Interests except in exchange for such Membership
Interests as provided in Section 7.2.2.4.6.
Upon
any sale or transfer of the Affected Member’s Membership Interest in accordance
herewith, all voting rights shall be reinstated with respect to the Membership
Interest and all amounts held in escrow shall be applied to pay to the Affected
Member the purchase price of the Membership Interest.
7.2.2.4.3.
For a period of 120 days following the Trigger Date (or such shorter period
of
time as the California Regulatory Authority or the Gaming Authority, as
applicable, otherwise allows), the Affected Member shall have the option
to
transfer its Membership Interest to an immediate family member of an individual
who, together with other immediate family members, owns at least 50% of such
Member, directly or indirectly, or a trust, partnership, or other entity
established for the benefit of one or more such immediate family members;
provided that such transfer meets the requirements of Section 7.1.
7.2.2.4.4.
For a period of 120 days following the Trigger Date (or such shorter period
of
time as the California Regulatory Authority or the Gaming Authority, as
applicable, otherwise allows), the Affected Member shall have the right to
sell
its Membership Interest to a third party for cash, subject to the provisions
of
Section 7.1
and
the
right of first refusal in favor of the other Members pursuant to and in
accordance with the terms of Section 7.2.2.4.8.
15
7.2.2.4.5.
If the Affected Member has not given notice to the other Members on or
before
120 days following the Trigger Date (or such shorter period of time as
the
California Regulatory Authority or the Gaming Authority, as applicable,
otherwise allows), that the Membership Interest of the Affected Member
has been
transferred to a family member as permitted in Section 7.2.2.4.3
or that
a third party (who is permitted to receive an assignment of the Membership
Interest pursuant to Section 7.1),
has
entered into a binding agreement to purchase the Membership Interest for
cash,
or if the cash purchase is not consummated within the period provided in
Section 7.2.2.4.8,
any one
or more of the remaining Members may purchase the Membership Interest by
giving
written notice of such Member’s or Members’ purchase intent to the Company and
the Affected Member. The price of this purchase shall be an amount equal
to the
sum of (a) the outstanding principal balance of and accrued and
unpaid
interest on the Affected Member’s loans to the Company, plus (b) the Agreed
Value of the Affected Member’s Membership Interest as of the Trigger Date. Such
purchase price shall be payable, without interest on the Agreed Value of
the
Affected Member’s Membership Interest but with interest on the Affected Member’s
loans to the Company, by the Company applying the distributions of purchasing
Member or Members from the Company to pay the Affected Member until the
purchase
price has been paid in full.
7.2.2.4.6.
In the event that the Affected Member does not give proper notice that it
is
transferring its Membership Interest to a family member as permitted by
Section 7.2.2.4.3
or that
it has entered into a binding agreement to sell its Membership Interest pursuant
to Section 7.2.2.4.4,
or if,
in the case of a sale, the cash purchase is not consummated within the period
provided in Section 7.2.2.4.8,
and if
no Member chooses to purchase the Membership Interest as provided for in
Section 7.2.2.4.5,
the
Majority in Interest of the remaining Members may choose to continue the
business of the Company. In such event, the Company shall repay any loans
owed
to the Unsuitable Person and shall repurchase the Unsuitable Person’s Membership
Interest for its Agreed Value plus any escrowed amounts under Section
7.2.2.4.2.
The
Company shall repay the Unsuitable Person’s loans when the Company receives cash
payments that the Company would have been required to use to repay loans
made by
the Unsuitable Person, had the Unsuitable Person remained a Member. The Agreed
Value of the Unsuitable Person’s Membership Interest (without interest) shall be
payable when the Company receives cash payments that the Company would have
been
required to distribute to all Members under Section
3.4,
had the
Unsuitable Person remained a Member.
16
7.2.2.4.7.
In the event that the Majority in Interest of the remaining Members decides
not
to continue the business of the Company, the Company shall be
dissolved.
7.2.2.4.8.
Prior to any assignment of a Membership Interest to a third party pursuant
to
Section 7.2.2.4.5,
the
Affected Member must obtain a written offer to purchase for cash meeting
the
requirements of this Section (a “Third Party Offer”). The Third Party Offer must
not be subject to unstated conditions or contingencies or be part of a larger
transaction such that the price for the Membership Interests stated in such
Third Party Offer does not accurately reflect fair market value (reduced
by the
amount of associated liabilities of such Membership Interests). The Third
Party
Offer must contain a description of all of the consideration, material terms
and
conditions of the proposed assignment. The Affected Member must give notice
of
the Third Party Offer to the Company and all other Members, together with
a
written offer to sell the Membership Interests (which is the subject of the
Third Party Offer) to the other Members on the same price and terms as the
Third
Party Offer as provided herein. The other Members shall have the right, on
a pro
rata basis in accordance with the ratio of their Percentage Interests to
total
Percentage Interests held by the other Members, to purchase, in whole but
not in
part, the Membership Interests of the Affected Member in accordance with
the
terms of the Third Party Offer by giving notice to the Affected Member within
30
days after notice of such offer. Unless otherwise agreed, the closing of
such
sale will be held at the Company’s principal place of business in Rochester, New
York on a date to be specified by the assignees which is not later than 120
days
after the date of the notice of acceptance by the assignees. At the closing,
the
assignees will deliver the consideration in accordance with the terms of
the
Third Party Offer, and the Affected Member will by appropriate documents
assign
to the assignees the Membership Interests to be sold, free and clear of all
liens, claims and encumbrances. If all of the other Members reject the right
of
first refusal or if the acceptance of the right of first refusal is not closed
in accordance with this Section 7.2.2.4.8,
the
Affected Member will be free for a period of 60 days after the last
day for
such acceptance to sell all, but not less than all, of such Membership Interests
so offered, but only to the third party for a price and on terms no more
favorable to the third party than the Third Party Offer and subject to
Section 7.1.
If such
Membership Interests are not so sold within such 60-day period (or within
any
extensions of such period agreed to in writing by the non-selling members),
all
rights to sell such Membership Interests pursuant to such Third Party Offer
(without making another offer to the other Members pursuant to this Section 7.2.2.4.8)
will
terminate.
7.3. Rights
of Assignee.
An
assignee that does not become a Member shall not have the rights of a Member
except that so long as the assignee is not an Unsuitable Person, the assignee
shall be entitled to share in Profits and Losses, to receive such distribution
or distributions, and to receive such allocation of Net Profit or Net Loss
to
which the assignor was entitled, to the extent assigned to the assignee.
An
assignee that does become a Member shall have all the rights, duties and
liabilities under this Agreement of its assignor, except liabilities not
reasonably known to him upon the assignment and which could not be ascertained
from the Agreement.
17
7.4. Death
or Incompetency.
If a
Member who is an individual dies or a court of competent jurisdiction adjudges
him to be incompetent to manage his person or his property, such Member’s
executor, administrator, guardian, conservator or other legal representative
may
exercise all of the Member’s rights for the purpose of settling his estate or
administering his property, including any power under this Agreement of an
assignee that becomes a Member. If the Member is a corporation, trust or
other
Entity and is dissolved or terminated, the powers of that Member may be
exercised by its legal representative or successor.
ARTICLE
8.
DISSOLUTION
AND TERMINATION
8.1. Dissolution.
The
Company shall be dissolved and its affairs shall be wound up upon the occurrence
of any of the following events:
8.1.1. an
election to dissolve the Company by all of the Members;
8.1.2. any
event
that is a termination of a limited liability company under the Act;
or
8.1.3. the
death, retirement, resignation, expulsion, bankruptcy or dissolution of a
Member
or the occurrence of any other event that terminates the continued membership
of
the Member of the Company, unless the business of the Company is continued
by
the consent of a majority of the Remaining Members within ninety (90) days
of
the occurrence of the terminating event.
8.2. Winding
Up, Liquidation and Distribution of Assets.
8.2.1. Upon
the
occurrence of an event terminating the Company and if the Members do not
continue the business of the Company, an accounting shall be made by the
Company’s independent accountants of the accounts of the Company and of the
Company’s assets, liabilities and operations, from the date of the last previous
accounting until the date of dissolution. The Company’s creditors shall be paid
in satisfaction of the liabilities of the Company (and loans by Members will
be
paid in the priority set forth in the Investment Agreement) and its assets
shall
be distributed as soon as practicable. To the extent that the Company has
assets
remaining after the satisfaction of its liabilities, such assets shall be
distributed to the Members in the manner specified in Section 6.1,
and for
this purpose, any and all assets of the Company shall be deemed to be Net
Development Revenues Available for Distribution.
18
8.2.2. If
any
asset is to be distributed in kind, the Members’ Capital Accounts shall be
adjusted as provided for in Section
5.3
hereof
(consistent with the requirements of Regulation Section 1.704-1(b)(2)(iv)
under
Section 704 of the Code) before any such distribution is made to reflect
the
increases or decreases to said Capital Accounts which would have occurred
if
such asset to be distributed in kind had been sold for its fair market
value by
the Company immediately prior to such distribution. All such liquidating
distributions shall be made by the end of the taxable year of the Company
in
which there is a liquidation of the Company for purposes of paragraphs
(b)(2)(ii)(b) and (b)(2)(ii)(g) of Regulation Section 1.704-1 under Code
Section
704 or, if later, within 60 days after the date of such liquidation
8.3. Deficit
Account.
Notwithstanding anything to the contrary contained herein, upon a liquidation
within the meaning of Treasury Regulation § 1.704-1(b)(2)(ii)(g), if any Member
has an Adjusted Deficit Capital Account (after giving effect to all
contributions, distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such liquidation occurs),
such Member shall have no obligation to make any Capital Contribution, and
the
negative balance of such Member’s Adjusted Capital Account shall not be
considered a debt owed by such Member to the Company or to any other Person
for
any purpose whatsoever.
8.4. Articles
of Dissolution.
When
all debts, liabilities and obligations of the Company have been paid and
discharged or adequate provisions have been made therefor and all of the
remaining property and assets of the Company have been distributed, Articles
of
Dissolution shall be executed and filed with the Office of the New York
Secretary of State as required by the Act.
8.5. Effect
of Filing Articles of Dissolution.
Upon
the filing of Articles of Dissolution with the Office of the New York Secretary
of State, the existence of the Company shall cease, except for the purpose
of
suits, other proceedings and appropriate action as provided in the Act. The
Members shall have authority to distribute any Company property discovered
after
dissolution, convey real estate and take such other action as may be necessary
on behalf of and in the name of the Company. In no event shall any Member
conduct business on behalf of the Company after Articles of Dissolution have
been filed with the Office of the New York Secretary of State.
8.6. Return
of Contribution Nonrecourse to Other Members.
Except
as provided by law, or by separate agreement between the parties, upon
dissolution, each Member shall look solely to the assets of the Company for
the
return of its Capital Contribution. If the Company’s property remaining after
the payment or discharge of the debts and liabilities of the Company is
insufficient to return the cash contribution of one or more Members, such
Members shall have no recourse against any other Member, except as otherwise
provided by law.
19
ARTICLE
9.
AMENDMENTS
9.1. Amendments.
Except
as otherwise specifically provided herein, this Agreement may only be amended
upon the consent of all of the Members.
ARTICLE
10.
DISPUTE
RESOLUTION AND ARBITRATION
10.1. Dispute
Resolution.
In the
event that a dispute arises between Members or between Members and the Company
(“Disputing Parties”) that is related to this Agreement or the Company, the
Disputing Parties shall attempt in good faith to resolve any dispute promptly
by
negotiations between representatives with authority to settle the dispute.
If
the matter has not been resolved within thirty (30) days of the first day
of
such negotiations, any Disputing Party may initiate arbitration as provided
in
Section
10.2
of this
Agreement. All negotiations pursuant to this clause will be confidential
and
will be treated as compromise and settlement negotiations under the U.S.
Federal
Rules of Evidence.
10.2. Arbitration.
Any
dispute arising out of or relating to this Agreement or the Company that
is not
resolved pursuant to Section
10.1
shall be
finally settled by arbitration conducted in accordance with the Rules of
the
American Arbitration Association. Any such arbitration shall be conducted
before
a single arbitrator selected in accordance with such rules. Any such arbitration
shall take place in Rochester, New York. The arbitrator shall not alter,
amend
or modify the terms and conditions of this Agreement, but shall consider
the
pertinent facts and circumstances and be guided by the terms and conditions
of
this Agreement, which shall be binding upon them in resolving any dispute
or
controversy hereunder. The cost of the arbitration hereunder, including the
cost
of the record of transcripts (if any), the arbitrator’s fees, administrative
fees, attorney’s fees, and all other fees involved, shall be paid by the
Disputing Party determined by the arbitrator to be the non-prevailing Disputing
Party, or otherwise allocated in an equitable manner as determined by the
arbitrator.
10.3. Binding
Decision.
The
decision by the arbitrator shall be binding and conclusive on the Disputing
Parties and their successors and assigns, and the parties shall comply with
such
decision in good faith. The decision or award of the arbitrator may be entered
in any state or federal court having jurisdiction to enforce the judgment.
The
Disputing Parties shall be deemed to have consented to venue and personal
jurisdiction in the jurisdictions provided in this Section.
ARTICLE
11.
MISCELLANEOUS
PROVISIONS
11.1. Notices.
Any
required notice (including for meetings of the Members) shall be delivered
personally or by facsimile transmission, electronic mail or any other electronic
means, United States mail or courier to each Person entitled to such notice
at
its business address. Notice by mail shall be deemed to be given when deposited
in the United States mail properly addressed, with postage thereon prepaid.
Facsimile transmission notice shall be deemed to be given upon completion
of the
transmission of the message to the number given to the Company by the Person
entitled to such notice and receipt of a completed answer-back indicating
receipt. Electronic notice shall be deemed to have been given when transmitted.
Notice given personally or by courier shall be deemed to have been given
when
actually delivered. Neither the business to be transacted at, nor the purpose
of, any annual or special meeting of the Members need be stated in the notice,
unless specifically required by statute or this Agreement.
20
11.2. Application
of New York Law.
This
Agreement and its interpretation shall be governed exclusively by its terms
and
by the laws of the State of New York, and specifically the Act. This Agreement
and the Investment Agreement have been partially negotiated in New York and
the
parties have signed this Agreement and the Investment Agreement in New York.
All
payments due to Nevada Gold hereunder shall be made to an account in New
York
designated by Nevada Gold.
11.3. Further
Agreements.
Each
Member hereby agrees to execute such other and further statements of interest
and holdings, designations and other instruments necessary to comply with
any
laws, rules or regulations.
11.4. Construction.
Whenever the singular number is used in this Agreement and when required
by the
context, the same shall include the plural and vice versa, and the masculine
gender shall include the feminine and neuter genders and vice versa. All
references to Articles, Sections, Exhibits and the like shall refer to this
Agreement, unless specified otherwise.
11.5. Headings.
The
headings in this Agreement are inserted for convenience only and are in no
way
intended to describe, interpret, define, or limit the scope, extent or intent
of
this Agreement or any provision hereof.
11.6. Waivers.
No
failure or delay on the part of any Member in exercising any power or right
under this Agreement or the Act shall operate as a waiver thereof, nor shall
any
single or partial exercise of any such power or right preclude any other
or
further exercise thereof or the exercise of any other power or right. Any
waiver
hereunder must be express and in writing by the party agreeing to waive any
right hereunder.
11.7. Rights
and Remedies Cumulative.
The
rights and remedies provided by this Agreement are cumulative and the use
of any
one right or remedy by any party shall not preclude or waive the right to
use
any other remedy. Said rights and remedies are given in addition to any other
legal rights the parties may have.
11.8. Severability.
If any
provision of this Agreement or the application thereof to any person or
circumstance shall be invalid, illegal or unenforceable to any extent, the
remainder of this Agreement and the application thereof shall not be affected
and shall be enforceable to the fullest extent permitted by law.
11.9. Heirs,
Successors and Assigns.
Each
and all of the covenants, terms, provisions and agreements herein contained
shall be binding upon and inure to the benefit of the parties hereto and,
to the
extent permitted by this Agreement, their respective heirs, legal
representatives, successors and assigns.
21
11.10. Third
Parties.
None of
the provisions of this Agreement shall be for the benefit of or enforceable
by
any creditors of the Company (other than a Member) or any other third
party.
11.11. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed
an
original but all of which shall constitute one and the same instrument.
11.12. Material
Contracts.
Every
material contract and agreement obligating the Company, or to which the Company
may become a party, or by which it may be bound, shall be in
writing.
11.13. Entire
Agreement.
This
Agreement, including any Exhibits presently or subsequently attached hereto,
and
the Investment Agreement constitute, collectively, the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersede
all
prior agreements and amendments, whether written or oral, between the parties
with respect to the subject matter hereto.
[SIGNATURE
PAGE FOLLOWS]
22
IN
WITNESS WHEREOF, the undersigned Members have caused their signatures, or
the
signatures of their duly authorized representatives, to be set forth below
on
the day and year first above written in New York.
CLASS
A MEMBER:
Casino
Development & Management Company, LLC
By:
CDM
Management, LLC, its Managing Member
By:
___________________________________
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, ▇▇.
Its:
Manager
STATE
OF
___________________ )
)
ss
COUNTY
OF
_________________ )
The
foregoing instrument was acknowledged before me this ___ day of April, 2005,
by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., as the Manager of CDM Management, LLC, a New York
limited
liability company, on behalf of said company.
_____________________________________
Notary
Public
(Signature
Page 1 of 2 to Amended and Restated Operating Agreement)
CLASS
B MEMBER:
Nevada
Gold BVR, L.L.C.
By:
Nevada Gold & Casinos, Inc., its Sole Member
By:
____________________________________
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Its:
General Counsel and Secretary
STATE
OF
___________________ )
)
ss
COUNTY
OF
_________________ )
The
foregoing instrument was acknowledged before me this ___ day of April, 2005,
by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as the General Counsel and Secretary of Nevada Gold &
Casinos, Inc. the sole member of Nevada Gold BVR, L.L.C., on behalf of said
company.
_____________________________________
Notary
Public
(Signature
Page 2 of 2 to Amended and Restated Operating Agreement)
Exhibit
A
Initial
Capital Contributions and Percentage Interests
Exhibit
B
Capital
Accounts
A
separate Capital Account will be maintained for each Member. Each Member’s
Capital Account will be increased by (1) the amount of money contributed
by
such Member to the Company; (2) the Agreed Value of property contributed
by
such Member to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to under
Code
Section 752); and (3) allocations to such Member of Net Profit. Each
Member’s Capital Account will be decreased by (1) the amount of money
distributed to such Member by the Company; (2) the Agreed Value of
property
distributed to such Member by the Company (net of liabilities secured by
such
distributed property that such Member is considered to assume or take subject
to
under Code Section 752); and (3) allocations to the account of such
Member
of Net Loss as set forth in the Treasury Regulations.
In
the
event of a permitted sale or exchange of a Membership Interest in the Company,
the Capital Account of the transferor shall become the Capital Account of
the
transferee to the extent it relates to the transferred Membership Interest
in
accordance with Treasury Regulation § 1.704-1(b)(2)(iv).
The
manner in which Capital Accounts are to be maintained pursuant to this
Exhibit B
is
intended to comply with the requirements of Code Section 704(b) and the Treasury
Regulations promulgated thereunder. If the Company determines that the manner
in
which Capital Accounts are to be maintained pursuant to the preceding provisions
of this Exhibit B
should
be modified in order to comply with Code Section 704(b) and the Treasury
Regulations, then notwithstanding anything to the contrary contained in the
preceding provisions of this Exhibit, the method in which Capital Accounts
are
maintained shall be so modified; provided, however, that any change in the
manner of maintaining Capital Accounts shall not materially alter the economic
agreement between or among the Members as set forth in the
Agreement.
Except
as
otherwise required in the Act, no Member shall have any liability to restore
all
or any portion of a deficit balance in such Member’s Capital
Account.
For
purposes of maintaining the Capital Account, “Net Profit” is any excess of
aggregate “Profits” over aggregate “Losses” for an accounting period, and “Net
Loss” is any excess of aggregate “Losses” over aggregate “Profits” for an
accounting period. “Profits” and “Losses” means, for each accounting period, an
amount equal to the Company’s taxable income or loss (including any amounts of
the Company’s gross income, loss, gain or deduction which may be specifically
allowed pursuant to the provisions of Exhibit C
hereto
and losses and deductions described in Treasury Regulation
§ 1.704-1(b)(2)(iv)(g)) for such year period, determined in accordance
with
Code Section 703(a) (for this purpose, all items of income, gain,
loss, or
deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with
the
following adjustments:
(i)Any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profits and Losses pursuant to this paragraph
shall be added to such taxable income or loss;
B-1
(ii)Any
expenditures of the Company described in Code Section 705(a)(2)(B)
or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation § 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this paragraph shall be subtracted
from
such taxable income or loss;
(iii)In
the
event the Agreed Value of any Company asset is adjusted pursuant to Exhibit C,
paragraph 11 thereof, the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(iv)Gain
or
loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed
by
reference to the Agreed Value of the property disposed of, notwithstanding
that
the adjusted tax basis of such property differs from its Agreed
Value;
(v)If
the
Agreed Value of any Company property differs from its adjusted tax basis,
then
in lieu of the depreciation, amortization, and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall
be
taken into account depreciation for such fiscal year or other period, based
on
the Agreed Value;
(vi)To
the
extent an adjustment to the adjusted tax basis of any Company asset pursuant
to
Code Section 734(b) or Code Section 743(b) is required pursuant
to
Treasury Regulation § 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member’s interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis
of
the asset) or loss (if the adjustment decreases the basis of the asset) from
the
disposition of the asset and shall be taken into account for purposes of
computing Profits or Losses.
B-2
Exhibit
C
Special
Allocations
1. In
the
event any Member unexpectedly receives any adjustments, allocations, or
distributions described in Treasury Regulation §§ 1.704-1(b)(2)(ii)(d)(4), (5),
(6), which create or increase an Adjusted Deficit Capital Account of such
Member, then items of Company income and gain (consisting of a pro
rata
portion
of each item of Company income, including gross income, and gain for such
year
and, if necessary, for subsequent years) shall be specially credited to the
Capital Account of such Member in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Deficit
Capital
Account so created as quickly as possible. It is the intent that this Exhibit
be
interpreted to comply with the alternate test for economic effect set forth
in
Treasury Regulation § 1.704-1(b)(2)(ii)(d).
2. In
the
event any Member would have an Adjusted Deficit Capital Account at the end
of
any Company taxable year, the Capital Account of such Member shall be specially
credited with items of Membership income (including gross income) and gain
in
the amount of such excess as quickly as possible.
3. If
there
is a net decrease in the Company’s minimum gain as defined in Treasury
Regulation Section 1.704-2(d) during a taxable year of the Company, then,
the
Capital Account of each Member shall be allocated items of income (including
gross income) and gain for such year (and if necessary for subsequent years)
equal to that Member’s share of the net decrease in Company minimum gain. The
items so allocated shall be determined in accordance with Treasury Regulation
§
1.704-2(j)(2)(i). This paragraph 5 is intended to comply with the minimum
gain
chargeback requirement of Treasury Regulation § 1.704-2 and shall be interpreted
consistently therewith. If in any taxable year that the Company has a net
decrease in the Company’s minimum gain, and the minimum gain chargeback
requirement would cause a distortion in the economic arrangement among the
Members and it is not expected that the Company will have sufficient other
income to correct that distortion, the Members may in their discretion seek
to
have the Internal Revenue Service waive the minimum gain chargeback requirement
in accordance with Treasury Regulation § 1.704-2(f)(4).
4. Except
as
otherwise provided in Treasury Regulation § 1.704-2(i)(4) notwithstanding
any other provision of this Exhibit, if there is a net decrease in partner
nonrecourse debt minimum gain as determined under Treasury Regulation
§ 1.704-2(i)(3) attributable to a partner nonrecourse debt as defined
in
Treasury Regulation § 1.704-2(b)(4) during any Fiscal Year, each Member who
has a share of the partner nonrecourse debt minimum gain attributable to
such
partner nonrecourse debt, determined in accordance with Treasury Regulation
§ 1.704-2(i)(5), shall be specially allocated items of Partnership
Profit
and Loss for such Fiscal Year (and, if necessary, subsequent Fiscal Years)
in an
amount equal to such Member’s share of the net decrease in partner nonrecourse
debt minimum gain attributable to such partner nonrecourse debt, determined
in
accordance with Treasury Regulation § 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be
so
allocated shall be determined in accordance with Treasury Regulation
§§ 1.704-2(i)(4) and 1.704-2(j)(2)(ii). This paragraph 6 is intended
to
comply with the minimum gain chargeback requirement in Treasury Regulation
§ 1.704-2(i)(4) and shall be interpreted consistently
therewith.
C-1
5. Items
of
Company loss and deduction (including non-deductible expenditures described
in
Code Section 705(a)(2)(B) which are attributable to any nonrecourse debt
of the
Company and are characterized as partner (Member) nonrecourse deductions
under
Treasury Regulation § 1.704-2(i)) shall be allocated to the Members’ Capital
Accounts in accordance with Treasury Regulation § 1.704-2(i).
6. Beginning
in the first taxable year in which there are allocations of “nonrecourse
deductions” (as described in Treasury Regulation § 1.704-2(b)) such deductions
shall be allocated to the Members in accordance with, and as a part of, the
allocations of Company Profit or Loss for such period.
7. In
accordance with Code Section 704(c), the Treasury Regulations promulgated
thereunder, and Treasury Regulation § 1.704-1(b)(2)(iv)(d), if a Member
contributes property with a fair market value that differs from its adjusted
basis at the time of contribution, income, gain, loss and deductions with
respect to the property shall, solely for federal income tax purposes, be
allocated among the Members so as to take account of any variation between
the
adjusted basis of such property to the Company and its fair market value
at the
time of contribution in such manner as the Members shall agree.
8. Pursuant
to Code Section 704(c)(1)(B), if any contributed property is distributed
by the
Company other than to the contributing Member within seven years of being
contributed, then, except as provided in Code Section 704(c)(2), the
contributing Member shall be treated as recognizing gain or loss from the
sale
of such property in an amount equal to the gain or loss that would have been
allocated to such Member under Code Section 704(c)(1)(A) if the property
had
been sold at its fair market value at the time of the distribution.
9. In
the
case of any distribution by the Company to a Member, such Member shall be
treated as recognizing gain in an amount equal to the lesser of:
(i) the
excess (if any) of (A) the fair market value of the property (other than
money)
received in the distribution over (B) the adjusted basis of such Member’s
Membership Interest in the Company immediately before the distribution reduced
(but not below zero) by the amount of money received in the distribution,
or
(ii) the
Net
Precontribution Gain (as defined in Code Section 737(b)) of the Member. The
Net
Precontribution Gain means the net gain (if any) which would have been
recognized by the distributee Member under Code Section 704(c)(1)(B) if all
property which (1) had been contributed to the Company within seven years
of the
distribution, and (2) is held by the Company immediately before the
distribution, had been distributed by the Company to another Member. If any
portion of the property distributed consists of property which had been
contributed by the distributee Member to the Company, then such property
shall
not be taken into account under this paragraph 11 and shall not be taken
into
account in determining the amount of the Net Precontribution Gain. If the
property distributed consists of an interest in an Entity, the preceding
sentence shall not apply to the extent that the value of such interest is
attributable to the property contributed to such Entity after such interest
had
been contributed to the Company.
C-2
10. In
connection with a Capital Contribution of money or other property (other
than a
de minimis amount) by a new or existing Member as consideration for a Membership
Interest, or in connection with the liquidation of the Company or a distribution
of money or other property (other than a de minimis amount) by the Company
to a
retiring Member (as consideration for a Membership Interest), the Capital
Accounts of the Members shall be adjusted to reflect a revaluation of Company
property (including intangible assets) to its Agreed Value in accordance
with
Treasury Regulation § 1.704-1(b)(2)(iv)(f). If, under Treasury Regulation
§ 1.704-1(b)(2)(iv)(f), Company property that has been revalued is
properly
reflected in the Capital Accounts and on the books of the Company at its
Agreed
Value and that differs from the adjusted tax basis of such property, then
depreciation, depletion, amortization and gain or loss with respect to such
property shall be shared among the Members in a manner that takes account
of the
variation between the adjusted tax basis of such property and its Agreed
Value,
in the same manner as variations between the adjusted tax basis and fair
market
value of property contributed to the Company are taken into account in
determining the Members’ shares of tax items under Code Section
704(c).
11. All
recapture of income tax deductions resulting from the sale or disposition
of
Company property shall be allocated to the Members to whom the deduction
that
gave rise to such recapture was allocated hereunder to the extent that such
Member is allocated any gain from the sale or other disposition of such
property.
12. Upon
the
dissolution and liquidation of the Company, after all required special
allocations of Profit or Loss are made, Profit or Loss (or items of income,
gain
or loss included in the computation of Profit or Loss) shall be allocated
to the
Members so that the balance in each Member’s Capital Accounts is equal to the
amount to be distributed to such Member pursuant to the provisions of
Section
8.2.
13. To
the
extent an adjustment in the adjusted tax basis of any Company asset, pursuant
to
Code Section 734(b) or Code Section 743(b) is required, pursuant to Treasury
Regulation § 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as the result of a distribution
to
a Member in complete liquidation of such Member’s interest in the Company, the
amount of such adjustment to Capital Accounts shall be treated as an item
of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in accordance with their interests in the Company
in
the event Treasury Regulation § 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Member to whom such distribution was made in the event Treasury Regulation
§
1.704-1(b)(2)(iv)(m)(4) applies.
C-3