THE MAJESTIC STAR CASINO, LLC Fourth Amended And Restated Operating Agreement
Exhibit
3.1
THE
MAJESTIC STAR CASINO, LLC
Fourth Amended And Restated
Operating Agreement
THIS
FOURTH AMENDED AND RESTATED OPERATING AGREEMENT (this "Agreement") is executed
as of the 9th day of July, 2004, by ▇▇▇▇▇▇ DEVELOPMENT, INC., an Indiana
corporation having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇▇") and ANY PERSONS HEREAFTER EXECUTING THIS AGREEMENT PURSUANT TO
SECTION 12.2 OR 13.1 HEREOF and having the names and addresses recited in
Exhibit A hereto.
WHEREAS,
pursuant to the filing on December 8, 1993 of Articles of Organization with the
Indiana Secretary of State (the "Secretary"), President Riverboat Casino-Gary,
Inc., a Delaware corporation ("PRC"), ▇▇▇▇▇▇ (under its former name "▇▇▇▇▇▇
Enterprises, Inc."), and Gary Riverboat Gaming, LLC (the "Investor LLC") formed
a limited liability company, pursuant to the Indiana Business Flexibility Act of
1993 (the "Act").
WHEREAS,
the limited liability company so formed (the "Company") was at such time
(a) known as ▇▇▇▇▇▇ PRC-Gary, LLC, (b) constituted as a manager-managed
limited liability company for purposes of Section 23-18-4-1(b) of the Act, and
(c) governed by an Operating Agreement dated December 8, 1993.
WHEREAS,
on June 30, 1995, the Investor LLC, ▇▇▇▇▇▇ and the Company were petitioned by
IRC to permit the withdrawal of PRC from the Company, both as a member and as
manager, upon specified terms.
WHEREAS,
such consent was granted, and, in contemplation of PRC's withdrawal from the
Company, ▇▇▇▇▇▇ and the Investor LLC, constituting the sole members of the
Company, executed, for filing with the Secretary, an amended and restated
version of the Company's articles of organization, to, inter alia, (a) change the
name of the Company to ▇▇▇▇▇▇-▇▇▇▇▇ Casino, LLC, (b) remove any references to
PRC, and (c) convert the Company to a member-managed limited liability company
for purposes of Section 23-18-4-1(b) of the Act.
WHEREAS,
▇▇▇▇▇ Gaming Company, a Delaware corporation ("▇▇▇▇▇"), requested the
opportunity to invest in the Company, as a member and as a creditor, on those
terms negotiated by Davis, Barden, the Investor LLC and the
Company.
WHEREAS,
pursuant to the granting of ▇▇▇▇▇' request, and in contemplation of the
continuing and anticipated operations of the Company, ▇▇▇▇▇▇, ▇▇▇▇▇ and the
Investor LLC amended and restated the operating agreement of the Company as of
July 31, 1995.
WHEREAS,
the Company has retired all of ▇▇▇▇▇' interest in the Company (whether as member
or creditor), pursuant to an amendment, dated September 30, 1995, to the
aforementioned restated operating agreement of July 31, 1995.
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WHEREAS,
by execution of a restated operating agreement on October 1, 1995, ▇▇▇▇▇▇ and
the Investor LLC further amended the operating agreement of July 31,
1995.
WHEREAS,
on January 31, 1996, ▇▇▇▇▇▇ and the Investor LLC filed an amendment and
restatement of the Company's articles of organization to, inter alia, change the name
of the Company to "The Majestic Star Casino, LLC."
WHEREAS,
on ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇ and the Investor LLC filed a further amendment and
restatement of the Company's articles of organization to, inter alia, thereafter
constitute the Company as a manager-managed limited liability
company.
WHEREAS,
▇▇▇▇▇▇, the Investor LLC and any Participants amended and restated the restated
operating agreement as of March 29, 1996.
WHEREAS,
▇▇▇▇▇▇ and the Investor LLC amended the operating agreement of the Company as of
June 18, 1999.
WHEREAS,
▇▇▇▇▇▇ and the Investor LLC amended the operating agreement of the Company as of
May 17, 2001, to indicate that the Investor LLC was no longer a
Member.
WHEREAS,
by execution of this Fourth Amended and Restated Operating Agreement, ▇▇▇▇▇▇ and
any Participants wish to amend and restate the amended operating agreement of
May 17, 2001, such that from and after the date hereof; and unless and until
further amended, this Agreement, alone and in its entirety shall serve as the
operating agreement of the Company for purposes of Section 23-18-1-16 of the
Act.
NOW,
THEREFORE, in consideration of the foregoing premises, the mutual promises and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE
I.
Definitions
1.1 Specific
Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Act" has
the meaning ascribed to it in the recitals hereto.
"Agreement"
means this Fourth Amended And Restated Operating Agreement and any amendments
adopted in accordance with this Agreement and the Act.
"Articles"
means the Articles of Organization of the Company filed with the Secretary, as
amended and in effect from time to time.
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"Authorizations"
means the License and any other licenses, permits, approvals and consents
necessary or required for the Company to operate the Gary Facility.
"Affiliate"
means any person that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with, a
Member.
"▇▇▇▇▇▇"
means ▇▇▇▇▇▇ Development, Inc., and/or, upon any action taken pursuant to
Section 12.2, any successor-in-interest to it.
"BMI"
means ▇▇▇▇▇▇ Management Inc., an Indiana corporation, and/or, upon any action
taken pursuant to Section 12.2, any successor-in-interest to it.
"Book
Value" means, with respect to any asset, the asset's adjusted basis for federal
income tax purposes, except (a) the initial Book Value of any asset contributed
to the Company shall be its gross fair market value at the time of contribution,
(b) if the Company so elects, the Book Value of all Company assets shall be
adjusted to equal their gross fair market values at the times required by Code
Section 704(b), and (c) if the Book Value of an asset has been determined
pursuant to clause (a) or (b), such Book Value shall thereafter be adjusted in
the same manner as would the asset's adjusted basis for tax purposes except that
depreciation deductions shall be computed as specifically provided.
"Certificate
of Suitability" means the Certificate of Suitability issued to the Company on
December 27, 1994 by the Commission, as may be extended from time to
time.
"Code"
means the Internal Revenue Code of 1986, as amended from time to time, or
corresponding provisions of future laws.
"Commission"
means the Indiana Gaming Commission, organized pursuant to the Indiana Riverboat
Gambling Act, as constituted from time to time or any successor
thereto.
"Company"
has the meaning ascribed to it in the recitals hereto.
"Consensus"
means each and every incumbent Member, acting in accordance with Article
VI.
"Contributions"
means the amount of cash or the fair market value of other property contributed
to the Company or required to be contributed to the Company.
"Debt
Memorandum" means the Offering Memorandum, dated on or about May of 1996,
relating to the Debt Offering, and including any supplement thereto as may be
approved by the Manager.
"Debt
Offering" means the issuance by the Company of Initial Notes having a stated
principal amount of $105,000,000, more or less, pursuant to which the
subscribing eligible offeree (or offerees) shall lend funds to the
Company.
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"Depreciation"
means for each Fiscal Year of the Company or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable under
the Code with respect to an asset for such year or other period, except that if
the Book Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be air amount that bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to such beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation, amortization or
other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Book Value using any reasonable
method selected by the Manager.
"Development
Entity" means ▇▇▇▇▇▇▇▇▇▇ Harbor Riverboats, LLC, a Delaware limited liability
company that owns certain real estate and related assets in the vicinity of the
Gary Facility.
"Distribution"
means the amount of cash, and the fair market value of property, distributed to
a Member by the Company, to the extent such distribution is not (a) compensation
for services, (b) payment for purchased or leased property, or (c) repayment of
(or interest on) sums expressly designated as loans.
"Equity
Memorandum" means a Subscription Agreement and Offering Memorandum, each
pertaining to the Equity Offering, as may hereafter be structured in accordance
with Section 13.1, including supplements thereto, all as may be approved by
the manager.
"Equity
Offering" means any future issuance, by the Company, of equity interest in the
Company, pursuant to which subscribing eligible offerees shall become
Members.
"Exchange"
means the transaction in which the Company shall (a) permit the holder or
holders of the Initial Notes to exchange, on a dollar-for-dollar basis,
outstanding initial. Notes for Registered Votes, and (b) retire the
Initial Notes returned to the Company upon such exchange.
"Fiscal
Year" means the calendar year.
"Gary
Facility" means the riverboat and/or dockside gaming facility in Gary, Indiana
for which the Company has received a Certificate of Suitability from the
Commission and all businesses and other activities reasonably related or
ancillary thereto owned or operated by the Company.
"Initial
Notes" means the secured promissory notes to be issued by the Company pursuant
to a private placement consistent with the Debt Memorandum, bearing set and
contingent interest, and having such other attributes as are consistent with
Section 4.4.
"Interim
Funds" means those sums, if any, paid over to the Company by ▇▇▇▇▇▇ that,
pursuant Section 4.3, qualify, and are designated by ▇▇▇▇▇▇, as
loans.
"Investor
LLC" means Gary Riverboat Gaming, LTLC, and/or, upon any action taken pursuant
to Section 12.2, any successor-in-interest to it.
"License"
means a license granted by the commission to operate a riverboat or any other
casino gaming facility within the State of Indiana.
"Majority
Interest" means any group of Members that includes all, but not fewer than all,
of the following subsets:
(a) those
Members holding Percentages aggregating over 50%, and
(b) those
Members holding over 50% of all Company capital (as determined by reference to
the Members' respective then-current capital accounts).
"Manager"
means ▇▇▇▇▇▇ (or any successor to it pursuant to Section 5.1) serving as manager
of the Company in accordance with Section 23-18-4-1(b) of the Act.
"Members"
means ▇▇▇▇▇▇ and, in the event of appropriate action taken to grant a person
membership in the Company pursuant to Section 12.2 or Section 13.1, any
successor-in-interest to ▇▇▇▇▇▇.
"Notes"
means the Initial Notes and/or Registered Notes.
"Participants"
means any persons hereafter admitted to the Company as members thereof, pursuant
to their making of a Contribution in accordance with Subsection 4.1(b) or
Section 13.1, and, upon any action taken to grant a person membership in the
Company pursuant to Section 11.2, any successor-in-interest to any or all of
them.
"Percentage"
means the percentage, as reflected on Schedule A hereto, in which a member
shares Profits, Losses and Distributions, as determined from time to time
consistent with Section 4.6, Section 12.2 and/or Article XIII.
"Profits
and Losses" means taxable profits or losses of the Company for each Fiscal Year
(or other period) determined in accordance with Code Section 703 (provided that
(a) any tax-exempt income shall be added to such taxable income or loss, (b) any
code Section 705(a)(2)(B) expenditures shall be subtracted from such taxable
income or loss, (c) if the Book Value of any asset is adjusted consistent with
Code Section 704(b), such adjustment shall constitute gain or loss from the
disposition of such asset, (d) any gain or loss from any disposition of Company
property shall be computed by reference to the Hook Value of such property
rather than its adjusted tax basis, (e) in lieu of depreciation or amortization,
Depreciation shall be taken into account, and (f) any items that are specially
allocated pursuant to Section 7.12 shall not be taken into account in computing
Profits or Losses).
"Property"
means the real and personal property, whether or not tangible, owned from time
to time by the company.
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"Registered
Notes" means promissory notes that are to be (a) issued by the Company after
issuance of the Initial Notes, (b) substantially identical to the
then-outstanding Initial Notes in terms and amount, and (c) distributed in an
offering registered under (i) the Securities Act of 1933, and (ii) the
securities laws of selected political subdivisions of the United
States.
"Regulation"
means the treasury regulations promulgated under the Code.
"Regulatory
Authority" means the Commission and any other government, quasi-governmental or
other regulatory authority with jurisdiction, control or authority over the
granting and policing of any one or more of the Authorizations.
"Reserves"
means the amount, if any, set aside from time to time in the discretion of the
Manager to provide for the Company's actual or potential business and capital
needs.
"Residual
Proceeds" means the net proceeds resulting from (a) the sale, exchange or other
event resulting in the voluntary or involuntary disposition of all or
substantially all of the Property, (b) the refinancing of any mortgage loan,
and/or (c) the release of cash (pursuant to the discretionary decision of the
Manager) from any previously established contingency allowance that was
originally funded with Residual Proceeds.
"Revenues"
means annual net revenues (as opposed to net income) of the Company, as
determined in accordance with generally accepted accounting principles and
consistent with the Company's accounting methods as selected by the Company's
outside accountants.
"Secretary"
has the meaning ascribed to it in the recitals hereto.
"Trustee"
means the then-incumbent trustee acting as the designated fiduciary for the
holders of the Notes.
1.2 General
Provisions.
(a) Certain
technical terms used in Section 8.12 shall have the respective meanings ascribed
to them in Section 8.13.
(b) Accounting
terms not defined in this Agreement, and accounting terms partly defined to the
extent not fully, defined, shall have the respective meanings given to them
under generally accepted accounting principles.
(c) Words of
the masculine gender shall be deemed to include the feminine or neuter genders,
and vice versa, where applicable. Words of the singular number shall
be deemed to include the plural number, and vice versa, where
applicable.
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ARTICLE
II.
Organization of
Company
2.1 Continuation. The
parties hereto hereby agree and acknowledge that, from and after March 29, 1996,
the Company shall be constituted as a manager-managed limited liability company
in accordance with the Act and shall be governed by this Agreement.
2.2 Name/Office. The
name of the Company shall hereafter be The Majestic Star Casino, LLC, and ▇▇▇▇▇▇
is authorized to file an amendment to the Articles to reflect the
same. The Company's principal offices shall be located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place in Indiana as
the Members may determine from time to time.
2.3 Registered
Office/Agent. The Company's registered office shall be located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered
agent for the Company at such office shall be CT Corporation
System. The registered office and registered agent may be changed
from time to time in accordance with the Act. If the registered agent
shall ever resign, the Manager shall promptly appoint a successor.
2.4 Personnel. Consistent
with Article VI, the general direction and supervision of the Company shall be
reserved to the Board of Directors; provided, however, that the
day-to-day operations of the Company shall be reserved to the Manager, subject
to the supervision of the Board of Directors, as determined and announced by the
Manager's chairman, president and/or ranking vice president, acting on behalf of
the Manager. Managerial personnel selected by the Manager may, along
with other Company employees, be employed directly by the Company, provided that
no such personnel shall have independent authority (beyond such operating
authority, consistent with such employee's role, as is appropriate to implement
the directives of the Manager). Subject to the foregoing limitation,
the Manager may designate one or more persons as officers of the Company, and
may assign specific titles to such persons, with each person holding such title
at the pleasure of the Manager.
ARTICLE
III.
Purpose
3.1 Scope of
Authority. The Company is organized to establish, develop and
operate the Gary Facility in accordance with the terms of the Certificate of
Suitability obtained, and the License to be obtained, for that purpose (and all
applicable Authorizations), and including participation as a member of the
Development Entity, in respect of the land, developments and operations
contiguous to the Gary Facility, and such other businesses and activities as may
be determined by the Majority Interest.
3.2 Scope of
Enterprise. The Company shall engage in only the activities
contemplated by Section 3.1, and no Member need afford the Company or any Member
the opportunity to acquire or invest in any investment or asset that such Member
may learn of or
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3.3 may wish
to acquire in his own name, whether or not such transaction or prospect would
otherwise be an opportunity of or (subject to Section 3.3) competitive with the
Company.
3.4 Restricted
Activities. Any of the Members may engage in other business
ventures of every nature and description, independently or with others, and the
engagement in such activities shall not be deemed to be wrongful or improper as
long as such activities are in compliance with Indiana gaming laws and would not
adversely affect the Company's ability to be issued or to hold a License;
provided, however, that, until such time as the Company is formally and finally
denied a License to operate the Gary Facility,
(a) no Member
nor any Affiliate of a Member shall, directly or indirectly, apply for or take
any action in connection with the preparation of an application for a License to
operate in Gary, other than the Company's application for the Gary Facility, nor
shall any of them acquire or hold any ownership interest in any applicant for a
License to operate in Gary,
(b) no member
nor any of its Affiliates shall, directly or indirectly, apply far or take any
action in connection with the preparation of an application for a License to
operate at any location within any Indiana county that borders on Lake Michigan,
nor shall any of them acquire or hold any ownership interest in any applicant
for a License to operate at any such location, and
(c) no Member
nor any of its Affiliates shall, directly or indirectly, manage, or hold any
material interest in, any casino or other gaming operation operating at any
location within any Indiana county that borders on Lake Michigan, nor shall any
of them acquire or hold any ownership interest in any applicant for a License to
operate at any such location.
ARTICLE
IV.
Capital and
Debt
4.1 General.
(a) As more
specifically recited below, (1) by March 31, 1996, ▇▇▇▇▇▇ shall have made a net
Contribution of $19,545,365 (including sums paid by ▇▇▇▇▇▇ for the account of
the Company), (ii) by March 31, 1996, the Investor LLC shall have made a net
Contribution of $3,449,162, (iii) ▇▇▇▇▇▇ may lend such Interim Funds as are
permitted by Section 4.3, (iv) third parties may lend any such sums as may be
raised pursuant to the Debt Offering, (v) third parties and/or Members may make
such further Contributions as may be raised pursuant to any Equity offering or
other permitted means, and (vi) third parties and/or Members may make further
loans pursuant to Section 4.5. Accordingly,
(i) the
Manager shall solicit any interim Funds as ▇▇▇▇▇▇ may agree to
make,
(ii) the
Manager shall solicit the Contributions to be made by the Participants in the
event the manager elects to conduct an Equity Offering, and, in connection
therewith, the Manager shall distribute an Equity Memorandum to each prospective
Participant, and, in such event, shall conduct the Equity offering on such
terms, consistent with Section 12.1, as the Manager may approve,
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(iii) the
manager shall conduct the Debt offering on behalf of the Company, and, in
connection therewith, the Manager and its agents shall distribute the Debt
Memorandum to each prospective lender, and shall conduct the Debt Offering on
such terms, consistent with Section 4.4, as the Manager may approve,
and
(iv) the
Manager shall borrow such further sums as may be needed consistent with Section
4.5.
(b) Unless
approved by the Manager and Consensus from time to time, no Member shall have
any obligation to make additional Contributions, provided that (i) any Member
admitted to the Company pursuant, to Section 13.1 shall make the Contribution
specified pursuant to Subsection 13.1(b), and (ii) Members shall repay any
excess amounts received by them pursuant to Subsection 8.3(c).
(c) No Member
shall be required to restore any deficit in his capital account, and, until
termination of the Company, no Member shall withdraw any of his capital
account.
4.2 Contributions.
(a) ▇▇▇▇▇▇
and the investor LLC have made the Contributions respectively referenced in
Paragraphs 4.1(a)(i) and 4.1(a)(ii).
(b) In the
event the manager at any time elects to conduct an Equity Offering, the Company
shall, with the consent of the Majority Interest, issue such number of interest
in the Company to, and raise such Contributions from, the Participants as shall
be determined consistent with Sections 13.1 and 6.3.
4.3 Interim
Funding. ▇▇▇▇▇▇ shall be entitled, but shall not be obligated,
to lend up to $30,000,000 to the Company on any such terms as ▇▇▇▇▇▇ shall
accept. Neither the terms of any interim Funding, nor the lending
itself of any Interim Funds, shall be subject to approval or challenge by the
Company or any of the Members, unless any such Interim Funding shall (a) call
for the accrual of interest at a rate exceeding 12% per annum, (b) call for the
accrual of interest pending any default at a rate exceeding 15% per annum, (e)
specify a term of less than 30 days, or (d) run afoul of any unwaived provision
of the Notes.
4.4 Notes. The
Manager is authorized to conduct, on behalf of the company, (1) the issuance of
the Initial Notes, (ii) the issuance of the Registered Notes (after the issuance
of the initial Notes), and (iii) the Exchange (after, or upon, the issuance of
the Registered Notes). Subject to any other specific restrictions
recited in this Agreement and applicable to the Notes, the Manager shall have
discretion to structure and/or approve (A) the Notes themselves, (B) the Debt
Offering, (C) the pledging of Company assets and credit, (D) the subordinating
of Distributions, (E) the third-party indentures and other obligations ancillary
to the issuance of the Notes, (F) the Exchange, and (G) all other matters
attendant to the Notes and/or exchange. Notwithstanding, the foregoing, however,
the principal amount of the Notes shall not exceed $110,000,000.
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4.5 Other
Loans.
(a) Subject
to all applicable restrictions imposed by the Notes, and subject to the right of
▇▇▇▇▇▇ to be repaid any outstanding Interim Funds, the Company may borrow such
sums, from such sources and on such terms, as the Manager may deem appropriate
for the Company's operations, for the meeting of its obligations and/or the
preservation of its assets.
(b) Any
further funds required by the Company and requested by the manager may, if the
Manager in its discretion decides not to pursue third-party financing or make an
Interim Funding, be lent by the Manager and/or any one or more Members on such
terms as may be established by the Manager from time to time, which in any event
shall be subject to all applicable restrictions imposed by the Notes, and
subject to the right of ▇▇▇▇▇▇ to be repaid any outstanding Interim
Funds. In the case of any loan to the Company from the Manager or its
Affiliate (other than a loan of Interim Funds), the Manager shall give not less
than ten days notice to each Member setting forth the terms on which the Company
is prepared to borrow from one or more particular Members or Affiliates, and
each other Member electing to lend to the Company on the same terms shall be
permitted to do so. Each Electing Member (or his designated
Affiliate) shall be entitled to lend no more than (i) the total amount to be
lent by all Members, times (ii) the electing Member's
Percentage. Neither the Manager nor any Member shall be obligated to
lend to the Company.
4.6 New
Members.
(a) Upon the
conclusion of any Equity Offering, and assuming the receipt of funds and
acceptable subscriptions from one or more Participants, the manager shall admit
the Participants to the Company as Members in accordance with Section
4.2(b).
(b) In the
event the Manager from time to time (and in its discretion) determines that
additional funding is required by the Company, and that all or any portion of
that funding is not to be solicited as a loan, additional Contributions may be
solicited subject to, and consistent with, Section 12.1.
ARTICLE
V.
Board of
Directors
5.1 Powers and
Duties. The business and affairs of the Company are managed
under the supervision of the Board of Directors.
5.2 Number and Terms of Office;
Qualifications. The Company shall have no fewer than 1
Director. The total number of Directors shall be as set by the
Members from time to time. Directors are elected at each annual
Member meeting and serve for a term expiring at the following annual Member
meeting and/or until their successor(s) are duly elected and
qualified. A Director who has been removed pursuant to Section 5.3 of
this Article V ceases to serve immediately upon removal; otherwise, a Director
whose term has expired continues to serve until
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a
successor is elected and qualified or until there is a decrease in the number of
Directors. A person need not be a shareholder or an Indiana resident
to qualify to be a Director.
5.3 Removal. Any
Director may be removed with or without cause by action of a Majority in
Interest of the Members.
5.4 Vacancies. If
a vacancy occurs on the Board of Directors, including a vacancy resulting from
an increase in the number of Directors or the resignation of a Director, the
Members may fill the vacancy. Any Director elected to fill a vacancy
holds office until the next annual meeting of the Members and/or until a
successor is duly elected and qualified.
5.5 Annual
Meetings. Unless otherwise agreed by the Board of Directors,
the annual meeting of the Board of Directors shall be held at such time and
place as the Board of Directors shall determine, for the purpose of electing
officers and considering any other business which may be brought before the
meeting.
5.6 Regular and Special
Meetings. Regular meetings of the Board of Directors may be
held at such time and place as the Board of Directors shall
determine. Notice is not necessary for any regular
meeting. Special meetings of the Board of Directors may be held upon
the call of a Majority in Interest of the Members or of a Majority in Interest
of the Directors and upon 24 hours written or oral notice specifying the date,
time, and place of the meeting. Notice of a special meeting may be
waived in writing before or after the time of the meeting. The waiver
must be signed by each Director entitled to the notice and filed with the
minutes of the meeting. Attendance at or participation in a meeting
waives any required notice of the meeting, unless at the beginning of the
meeting (or promptly upon the Director's arrival) the Director objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
5.7 Quorum. A
quorum for the transaction of business at any meeting of the Board of Directors
consists of a majority of the number of Directors specified in Section 5.2 of
this Article V. If a quorum is present when a vote is taken,
action on a matter is approved if the action receives the affirmative vote of a
majority of the Directors present.
5.8 Action by
Consent. Any action required or permitted to be taken at an
annual, regular or special meeting of the Board of Directors may be taken
without a meeting, without prior notice, and without a vote, if consents in
writing, setting forth the action so taken, are signed by the Directors having
not fewer than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all members were present and voted.
Each consent shall bear the date and signature of each Director signing the
consent. Prompt notice of the taking of action without a meeting by
less than unanimous written consent shall be given to all Directors who have not
consented in writing to such action.
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5.9 Committees. The
Board of Directors may create one or more committees and appoint members of the
Board of Directors to serve on them. Each committee may have one or
more members, who serve at the pleasure of the Board of
Directors. All rules applicable to action by the Board of Directors
apply to committees and their members. The Board of Directors may
specify the authority that a committee may exercise; however, a committee may
not (a) authorize distributions, (b) approve or propose to Members action
that must be approved by Members, (c) fill vacancies on the Board of Directors
or on any of its committees, (d) amend the Articles of Organization, (e) adopt,
amend, or repeal this Agreement, (f) approve a plan of merger not requiring
Member approval, or (g) authorize or approve the issuance or sale or a contract
for the sale of Membership interests, or determine the designation and relative
rights, preferences, and limitations of a class or series of membership
interests, except the Board of Directors may authorize a committee to so act
within limits prescribed by the Board of Directors.
5.10 Presence. The
Board of Directors may permit any or all Directors to participate in any annual,
regular, or special meeting by any means of communication by which all Directors
participating may simultaneously hear each other during the
meeting. A Director so participating is deemed to be present in
person at the meeting.
5.11 Compensation. Each
Director shall receive such compensation for service as a Director as may be
fixed by the Members.
ARTICLE
VI.
Manager Rights and
Obligations
6.1 Manager
Management.
(a) The
day-to-day operations of the Company shall be managed by the Manager, subject to
the general supervision of the Board of Directors, and, except as may be
specifically provided for in this Agreement, shall not be governed by its
Members. In addition, the Manager shall have apparent authority to
the extent recited in Subsection 6.2(f). The Company shall at no time
have more than one Manager.
(b) The
Manager shall be ▇▇▇▇▇▇, until ▇▇▇▇▇▇'▇ (1) voluntary resignation as Manager,
(ii) dissolution or bankruptcy, or (iii) removal pursuant to Subsection
6.1(c). If ▇▇▇▇▇▇'▇ tenure expires pursuant to the foregoing
sentence, the new Manager shall be BMI, until BMI's (A) voluntary resignation as
Manager, (B) dissolution or bankruptcy, or (C) removal pursuant to Subsection
6.1(c). If BMI refuses to so serve or if BMI's tenure expires
pursuant to the foregoing sentence, a new Manager shall be appointed by those
Members holding a majority in interest of Percentages and majority in interest
of Company capital, pursuant to Section 6.3.
(c) Those
Members holding three-fourths of those Percentages that are not held by
Affiliates of the Manager may remove a Manager if, and only if, such Manager (i)
shall have embezzled money or other assets from the Company, or (ii) after
written warning, materially breached this Agreement and failed to cure such
breach within 60 days thereafter.
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6.2 Manager
Powers.
(a) The
Manager shall manage, and, subject to Article V and Section 6.3, shall have
complete control over the conduct of, the affairs of the
Company. Subject to the other provisions of this Article VI, the
Manager shall have the authority, on behalf of the Company, to do all things
appropriate to the accomplishment of the purposes of the Company, including (but
not limited to):
(i) developing,
operating, expanding, enhancing, retracting, leasing, holding, selling and/or
promoting all or any portion of the ▇▇▇▇ Facilities,
(ii) those
actions generally described in Article IV,
(iii) employing
contractors, subcontractors, attorneys, accountants or other agents, including
Affiliates, and defining their duties and establishing their
compensation,
(iv) investing
and reinvesting Company funds,
(v) negotiating
and executing the operating agreement of the Development Entity and any
amendments thereto, voting the Company's interest as a member of the Development
Entity, committing Company funds, credit and resources to the Development Entity
(and/or the projects of the development entity), delineating the Company's
rights to the Development Entity's land and facilities, and negotiating and
contracting with the Development Entity,
(vi) otherwise
entering into -- and committing Company funds, credit and resources to --
ventures with one or more neighboring enterprises in respect of the development,
purchase, operation and/or allocation of common areas and
facilities,
(vii) causing
the Company to make all payments, and to provide all consideration, consistent
with this Article VI,
(viii) executing
contracts, notes and other writings, including those with respect to which an
Affiliate is a counterparty, and
(ix) appointing
any person as agent for service of process on the Company,
(b) In
furtherance and not in limitation of the foregoing, the Manager is authorized to
execute, on behalf of the Company, all documents required in connection with (i)
the further or full acquisition of the ▇▇▇▇ Facility, and (ii) the interest,
rights and liabilities of the Company in respect of the common areas appurtenant
to the ▇▇▇▇ Facilities and/or to be shared with (or with the patrons of) any and
all neighboring facilities.
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(c) Each
Member irrevocably appoints the Manager and each officer of the Manager as his
attorney-in-fact on his behalf and in his stead to execute, swear to and file
any amendment or revocation of the Articles and to execute, sign any Member's
name to, swear to and file any writing, and to give any notice that may be
required by any rule or law that may be appropriate to the effecting of any
action by or on behalf of the Company or the Members that has been taken as
provided in this Agreement, that may be necessary or appropriate to enable the
Company to transact business in any other state, or that may be necessary or
appropriate to correct any errors or omissions. This power of
attorney (i) is coupled with an interest and shall not be revoked by the act,
death or incapacity of any Member, and (ii) shall survive an assignment by any
Member of his interest (provided that where a Member's entire interest is
assigned to a person becoming a substitute Member, this power shall survive
solely to permit the Manager to effect the substitution).
(d) Any
amendments to the Articles shall be filed by the Manager with the
Secretary. The Manager need not deliver a copy of any such document
to each Member, but shall provide copies to a Member upon request.
(e) Subject
to the other provisions of this Article VI, the Manager shall have the power to
act for and to bind the Company to the full extent provided by Indiana
law.
(f) No third
party shall be required to independently confirm that any Manager's action on
behalf of the Company is authorized, and such third party shall be entitled to
assume the authority of any incumbent Manager purporting to act on behalf of the
Company, and every contract, note, mortgage, lease, deed or other instrument
executed by a Manager shall be conclusive evidence that, at the time of
Execution, the Company was then in existence, this Agreement had not theretofore
been terminated or amended in any manner not disclosed in the Articles, and the
execution and delivery of such instrument was duly authorized by the
Company.
(g) The
Manager shall act as "tax matters partner" of the Company, as defined in Code
Section 6231(a)(7).
6.3 Limitation on
Power. Notwithstanding the foregoing and any other provision
contained in this Agreement to the contrary, the Manager's unilateral authority
shall be circumscribed in the case of those matters listed in this Section
6.3. Accordingly, the discretionary consent of the Majority Interest
shall be required before the Manager may approve or implement:
(a) any
merger of the Company,
(b) dissolution
of the Company pursuant to Subsection 10.2(c),
(c) any act
that would contravene the Articles, this Agreement or the Act,
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(d) the
admission to the Company, pursuant to Section 13.1, of a person who is not the
assignee or successor of a then-existing Member,
(e) the
admission to the Company, pursuant to Section 12.2, of a person who is the
assignee or successor of a then-existing Member (with the two relevant
determinations of Majority Interest (i.e., Percentages and Capital) to be made
by considering only the respective interests held by those Members who have not
made the assignment to the candidate), provided that (i) the consent of the
Majority Interest shall not be required, and such substitution shall be made at
the request of the Trustee, if Subsection 12.2(b) is invoked, and (ii) the
consent of the Majority Interest shall be determined by considering the
respective interests held by all Members, including those who have made the
assignment to the candidate, if Subsection 12.2(c) is invoked,
(f) the
issuance of additional equity interests in, to raise further capital for, the
Company,
(g) the
continuation of the Company pursuant to Paragraph 10.2(d)(ii) (with the two
relevant determinations of majority Interest (i.e., Percentages and Capital) to
be made by considering only the respective interests held by those Members who
are not themselves the subject of the withdrawal event),
(h) the
appointment of a substitute Manager, in the event neither ▇▇▇▇▇▇ nor BMI is able
or willing to so serve,
(i) any
payment by the Company to any Manager or any Affiliate of a Manager,
unless:
(i) such
payment is pursuant to a loan to the Company meeting the requirements of Section
4.3, 4.4 or 4.5 (in which case authorization by the Majority interest or any
other person shall not be required),
(ii) such
payment is otherwise specifically noted in the Debt Memorandum (in which case
authorization by the Majority interest or any other person shall not be
required),
(iii) such
payment is a reimbursement described in Section 6.5 (in which case authorization
by the Majority Interest or any other person shall not be
required),
(iv) such
payment (A) is disclosed to the Members, (B) is fair to the Company, (C)
reflects terms substantially similar to those that would have been reached in an
arms' length arrangement, and (D) is terminable upon 60 days notice by the
Company (in which case authorization by the Majority interest or any other
person shall not be required), or
(v) such
payment is a management fee (and/or expense reimbursement) owing to the Manager
in accordance with Section 6.5.
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(j) any other
consideration by the Company to any Manager or any Affiliate of a Manager,
unless:
(i) such
consideration is the right of ▇▇▇▇▇▇ to from time to time appoint itself and/or
any one or more of its Affiliates as a perpetual royalty-free licensee of the
phrase, and the trademarks associated with, "The Majestic Star Casino" (or any
portion of such phrase or trademark) in connection with the designation or
promotion of (I) gaming operators, (II) other entities, and/or (III) their
respective facilities (in which case authorization by the Majority Interest or
any other person shall not be required), or
(ii) such
consideration is otherwise specifically noted in the Debt Memorandum (in which
case authorization by the Majority Interest or any other person shall not be
required), or
(k) the
assignment of an interest in the Company, pursuant to Section 12.1.
6.4 Standard of
Care. The Manager shall discharge its management duties in
good faith. Nonetheless, no Manager shall be liable for monetary
damages to the Company for any breach of any such management duties, except for
(a) receipt of a financial benefit to which it is not entitled, (b) assenting to
a distribution in violation of this Agreement or the Act, (c) the commission of
a crime, or (d) material violations of this Agreement that are both knowing and
willful.
6.5 Compensation. The
Member and/or its Affiliate shall be entitled to (a) reasonable compensation for
their services to the Company in managing the affairs thereof, and (b),
reimbursement for any reasonable out-of-pocket expenses incurred by them on the
Company's behalf. Neither the terms nor the amount of any such
management fees shall be subject to the approval of the Majority in Interest or
any other Members.
ARTICLE
VII.
Meetings of
Members
7.1 Voting. Members
shall be entitled to vote on any matter to the extent, and in the manner,
provided for in Section 6.3 or Subsection 6.1(c).
7.2 Meetings. Meetings
of Members for the dissemination of information, or for the transaction of any
proposal subsumed by Section 6.3 or Subsection 6.1(c), shall be held at such
place, on such date and at such time as the Manager shall
determine. Such meetings may be called by the Manager, and shall be
called by the Manager upon the written request of those Members holding
one-fourth of all percentages held by all Members other than the Manager's
Affiliates. The Company shall deliver or mail written notice stating
,the date, time, place and purposes of any meeting to each
Member. Such notice shall be given not fewer than ten nor more than
60 days before the meeting, and shall permit participation at the meeting via
teleconference hook-up.
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7.3 Consent.
(a) In the
event a member is not an individual, any consent granted on behalf of a Member
shall be taken, if at all, (i) by all trustees, if the Member is a trust, (ii)
by all partners, if the Member is a co-partnership, (iii) by all general
partners, if the Member is a limited partnership, (iv) by the president, if the
Member is a corporation, (v) by all managers, if the Member is a manager-managed
limited liability company, or (vi) by a majority in interest of the members, if
the Member is a member-managed limited liability company.
(b) Any
action required or permitted to be taken at an annual or special meeting of the
Members may be taken without a meeting, without prior notice, and without a
vote, if consents in writing, setting forth the action so taken, are signed by
the Members having not fewer than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all Members
entitled to vote on the action were present and voted. Each consent shall bear
the date and signature of each Member signing the consent. Prompt
notice of the taking of action without a meeting by less than unanimous written
consent shall be given to all Members who have not consented in writing to such
action.
ARTICLE
VIII.
Capital, Profits, Losses and
Distributions
8.1 Capital
Accounts. A capital account shall be maintained for each
Member, to which contributions, Profits and any items of income and gain under
this Article VIII shall be credited and against which distributions and Losses
and any items of deduction and loss under this Article VIII shall be
charged. Capital accounts shall be maintained in accordance with the
accounting principles of Code Section 704 and the Regulations
thereunder.
8.2 Profits and
Losses. Subject to Sections 8.4 through 8.14, Profits and
Losses shall be determined as of the end of each Fiscal Year.
(a) Profits
shall be allocated:
(i) first, to
those Members having a negative balance in their respective capital accounts, in
proportion to, and to extent of, such deficits,
(ii) next, to
the Members in proportion to, and to the extent of, any Losses that were (A)
previously allocated to them and (B) not addressed by any later allocation of
Profits pursuant to this Paragraph 8.2(a)(ii), and
(iii) last, to
the Members, in proportion to their respective Percentages.
(b) Losses
shall be allocated to the members in proportion to their respective
Percentages.
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8.3 Distributions. At
such times as the Manager may discretionarily determine, but subject to the
rights of creditors (including creditors pursuant to Sections 4.3, 4.4 and/or
4.5), cash and/or property of the Company (net of Reserves) shall be distributed
as recited in this Section 8.3.
(a) Such cash
and/or property, other than distributions constituting Residual Proceeds, shall
be distributed:
(i) first, in
accordance with Subsection 8.3(c), and
(ii) last, in
proportion to their respective Percentages.
(b) Distributions
constituting Residual Proceeds shall be distributed in accordance with
Subsection 11.2.
(c) As
referenced in Subsection 8.3(a), in the case of distributions that do not
constitute Residual Proceeds, such cash and/or property shall be distributed to
the Members, in accordance with their respective Percentages, in an amount equal
to 40% of the excess, if any, of (i) Profits for the immediately preceding
calendar quarter over (ii) any then-existing net cumulative Losses through the
immediately preceding quarter. A tentative distribution under
paragraph 8.3(a)(i) shall be paid within 15 days after each fiscal quarter in an
amount equal to the figure described in the foregoing sentence, as estimated in
writing by the Company's accountants. A reconciliation of such
tentative distribution shall be made within 45 days after the relevant fiscal
quarter, by which time the definitive amount figure shall have been determined
by the Company's accountants and by which time (A) each member shall forthwith
repay to the Company the amount, if any, by which such Member's preliminary
distribution was excessive, or (B) the Company shall forthwith pay each Member
the amount, if any, by which such Member's preliminary distribution was
inadequate.
8.4 Changes in
Interest. If an addition, withdrawal or substitution of, or
any other change in the interest of, any Member occurs during the period covered
by an allocation, then, subject to any agreement between the persons affected,
Profits and Losses for the period shall be allocated among those interests
consistent with code Section 706(d). If Code Section 706(d) allows
alternative methods of allocation, the manager shall determine, in its sole
discretion, which alternative method to use in allocating Profits and
Losses.
8.5 Depreciation
Recapture. In characterizing Profits for purposes of
allocation, that portion, if any, constituting depreciation recapture shall be
the first Profits so allocated and shall be allocated in the proportions that
the depreciation giving rise to such recapture was allocated.
8.6 Section
754. If an election under Code Section 754 is in effect with
respect to the interest of any Member, the allocation of items of income,
deduction, gain or loss shall be governed by the regulations thereunder, but
such allocation shall not be reflected on the Company books.
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8.7 Imputed
Interest. If any Member makes a loan to the Company, or the
Company makes a loan to any Member, and interest in excess of the amount
actually payable is imputed under Code Sections 7872, 483, or 1277 through 1288,
then any item of income or expense attributable to any such imputed interest
shall be allocated solely to the Member who made or received the loan and shall
be credited or charged, as appropriate, to his capital account.
8.8 Contributed
Assets. Income, gain, loss or deduction with respect to any
property contributed by a Member shall, solely for tax purposes, be allocated
among the Members, to the extent required by Code Section 704(c), to take
account of the variation between the basis of the assets to the Company and its
fair market value when contributed.
8.9 Partial-Year
Allocation. In allocating Profits and Losses, the Members
shall assume that one-twelfth of the Profit or Loss for a year was realized in
each month thereof.
8.10 Installment
Receipts. Any interest received on an installment obligation
received by the Company upon the sale of the Property shall be treated as
Residual Proceeds and shall be distributed among the Members in the same
proportions as the total Residual Proceeds are distributed.
8.11 Involuntary
Conversion. Notwithstanding any contrary provision of this
Agreement, upon the compulsory or involuntary conversion of all or any part of
the Property consistent with Code Section 1033(a), if and to the extent
determined by the Manager in its sole discretion, the Company shall not
distribute the net proceeds thereof to the Members, but instead shall reinvest
the net proceeds in such a manner as to avoid recognition (for federal income
tax purposes) of part or all of the gain on such conversion.
8.12 Other
Allocations. Notwithstanding the foregoing provisions of this
Article VIII or any other provision of this Agreement, the following provisions
shall apply:
(a) The
Members intend that the Company be treated as a partnership for federal income
tax purposes and, accordingly, the partnership tax provisions of the Code shall
apply to the Company and its Members. The Members further intend that
each Member's distributive share of income, gain, loss, deduction or credit (or
item thereof) be determined and allocated in accordance with this Article VIII
to the fullest extent permitted by Code Section 704(b). To preserve
the determinations and allocations provided for in this Article VIII, the
Manager is authorized and directed to allocate income, gain, loss, deduction, or
credit (or item thereof) arising in any year differently than otherwise provided
for in this Article VIII to the extent that such an allocation in the manner
otherwise provided for in this Article VIII would cause the determinations and
allocations of each Member's distributive share of income, gain, loss, deduction
or credit (or item thereof) to contravene code Section 704(b). Any
allocation made pursuant to this Section 8.12 shall be a complete substitute for
any allocation otherwise provided for in this Article VIII, and no amendment of
this Agreement or approval of any Member shall be required.
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(b) In making
any allocation (the "new allocation") under this Section 8.12, the Manager may
act only after having been advised by the Company's accountants that, under code
Section 704(b), (i) the new allocation is necessary, and (ii) the new allocation
is the minimum modification of the allocations otherwise provided for in this
Article VIII needed to assure that, either in the then-current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in accordance
with this Article VIII to the fullest extent permitted by Code Section
704(b).
(c) If a net
decrease an Company Minimum Gain occurs during a Fiscal Year so that an
allocation is required by Regulation 1.704-2(f), each Member shall be specially
allocated items of income and gain for such year (and, if necessary, subsequent
years) equal to his share of the net decrease in Company Minimum Gain as
determined by Regulation 1.704-2(g)(2). Such allocations shall be
made in a manner and at a time that will satisfy Regulation 1.704-2(f), or the
corresponding provisions of subsequently adopted Regulations, in order that the
allocations provided for in this Article VIII will be recognized for federal
income tax purposes.
(d) If a net
decrease in the Member Nonrecourse Debt Minimum Gain occurs during any Fiscal
Year, any Member who has a share of such Member Nonrecourse Debt Minimum Gain
(as determined in the same manner as partner nonrecourse debt minimum gain under
Regulation X.704-2(i)(5)) shall be specially allocated items of income or gain
for such year (and, if necessary, subsequent Fiscal Years) equal to his share of
the net decrease in the Member Nonrecourse Debt Minimum Gain in the manner and
to the extent required by Regulation 1.704-2(i)(4).
(e) If a
Member unexpectedly receives an adjustment, allocation, or distribution
described in Regulation 1.704-1(b) (2) (ii-) (d) (4), (5) or (6), any of which
causes or increases an Adjusted Deficit Capital Account Balance in such Member's
capital account, he will be specially allocated items of income and gain in an
amount and manner sufficient to eliminate such deficit balance created or
increased by such adjustment, allocation, or distribution as quickly as
possible.
(f) If a
Member has an Adjusted Deficit Capital Account Balance at the end of a Fiscal
Year, such Member shall be allocated items of income and gain in the amount of
such Adjusted Deficit Capital Account Balance as quickly as possible to
eliminate it.
(g) Nonrecourse
Deductions shall be allocated among the Members in proportion to their
respective Percentages, and any Member Nonrecourse Deductions shall be allocated
to the Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in
accordance with Regulation 1.704-2(i)(1).
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(h) if the
Manager is required by Subsection 8.12(a), 8.12(c), 8.12(d), 8.12(e), 8.12(f),
8.12(q) or 8.12(h) to make any new allocation in a manner other than as provided
for in this Article VIII without regard thereto, then the Manager shall, insofar
as it is permitted to do so by Code Section 704(b), allocate income, gain, loss,
deduction or credit (or item thereof) arising in the current Fiscal Year (or
subsequent Fiscal Years, it necessary) in order to bring the proportions of
income, gain, loss, deduction or credit (or item thereof) allocated to the
Members as nearly as possible to the proportion otherwise contemplated by this
Article VIII without regard thereto; provided that Nonrecourse Deductions shall
not be taken into account except to the extent Company Minimum Gain is reduced,
and Member Nonrecourse Deductions shall not be taken into account except to the
extent Member. Minimum Gain has been reduced and provided further
that such Nonrecourse Deductions and Member Nonrecourse Deduction shall in no
event be taken into account to the extent the Manager reasonably determines that
such allocations will likely be offset by future allocations under Subsection
8.12(c) or 8.12(d).
(i) Allocations
made by the Manager under this Section 8.12 in reliance on the advice of the
Company's accountants are deemed made pursuant to the Manager's fiduciary
obligation to the Company and the Members.
(j) 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 Regulation
1.704-1(b)(2)(iv)(m), to be taken into account in determining capital accounts,
the amount of such adjustment to the capital accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreased such basis), and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
capital accounts are required to be adjusted pursuant to such
Regulations.
8.13 Special
Definitions. As used in Section 8.12, the following terms,
where capitalized, shall have the meanings ascribed to them below in this
Section 8.13.
"Adjusted
Deficit Capital Account Balance" means, with respect to any Member, any deficit
balance in such Member's capital account as of the end of the relevant Fiscal
Year, (1) increased by any amounts such Member is obligated to restore under
Regulation 1.704-1(b)(2)(ii)(c), plus such Member's share of Company Minimum
Gain and such Member's share of Member Nonrecourse Debt Minimum Gain, and (2)
decreased by the items described in Regulation 1,704-1(b)(2)(ii)(d)(4), (5) and
(6).
"Nonrecourse
Deductions" has the meaning set forth in Regulation 1.704-2(c).
"Member
Nonrecourse Debt Minimum Gain" means the amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a nonrecourse liability of the Company,
determined in accordance with Regulation 1,704-2(i)(3).
"Member
Nonrecourse Debt" has the meaning set forth in Regulation
1.704-2(b)(4).
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"Member
Nonrecourse Deductions" has the meaning set forth in Regulation
1.704-2(i)(2).
"Company
Minimum Gain" means an amount determined in accordance with Regulation
1,704-2(d) by computing, with respect to each Company nonrecourse liability (as
defined in Regulation 1.752-1(a)(2)), the amount of gain (of whatever character)
realized by the Company if (in a taxable transaction) it disposed of property
subject to such liability in full satisfaction thereof, and by then aggregating
the amounts so computed.
8.14 Excess
Liabilities. For purposes of calculating the Members' shares
of excess nonrecourse liabilities (within the meaning of Regulation
1.752-3(a)(3)), the Members shall be deemed to share Profits in proportion to
their respective Percentages.
ARTICLE
IX.
Exculpation and
Indemnification
9.1 Exculpation. No
Manager or Member, and no officer, director, employee or agent of the Company or
of a Manager or Member, shall be liable for the acts or obligations of the
Company, unless he shall have expressly assumed such liability.
9.2 Indemnification. Except
as otherwise provided in this Article IX, the Company shall indemnify any
Manager, any Member, any employee, officer, manager, director or agent of a
Manager or Member, and any employee, officer or agent of the Company, who was or
is a party or is threatened to be made a party to a threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal (other than an action by or in the
right of the Company) by reason that such person is or was a manager, member,
employee, director or agent of the Company or of a Manager or Member, against
expenses (including attorneys' fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with the action, suit or proceeding, but only if the person acted in good faith
and in a manner that such person believed to be in the best interests of the
Company, and, with respect to a criminal action or proceeding, if such person
believed his conduct was not unlawful. Any indemnification permitted
under this Section 9.2 shall (unless ordered by a court) be made by the Company
only as authorized in the specific case, in the absence of a judicial
determination that the indemnification is improper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. Notwithstanding the foregoing, no indemnification shall
be provided to any person for or in connection with (i) the receipt of a
financial benefit to which such person is not entitled, (ii) voting for or
assenting to a distribution to Members in violation of this Agreement or the
Act, or (iii) a knowing violation of law.
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ARTICLE
X.
Term of
Company
10.1 Commencement. The
term of the Company commenced upon the filing of the Articles with the
Secretary.
10.2 Dissolution. The
Company shall be dissolved upon the occurrence of any of the following
event's:
(a) December
31, 2043.
(b) The sale,
redemption or other disposition of all or substantially all of the
Property.
(c) The
written consent of the Manager and all Members.
(d) The
death, retirement, resignation, withdrawal, expulsion, bankruptcy, mental
incapacity or dissolution of any Member; provided, however, that the Company
existence shall not terminate if:
(i) the
Company has two or more remaining Members, and
(ii) within 60
days after such event, the Manager, the Majority interest, and those Members
holding in the aggregate over half of the Capital (all as determined without
regard to the interest or holdings of the withdrawing Member) elect in writing
to continue the Company.
(e) The
death, retirement, resignation, withdrawal, expulsion, bankruptcy, mental
incapacity ,or dissolution of the Manager; provided, however, that the Company
existence shall not terminate if within 30 days after such event a new person
assumes the role of Manager in accordance with Subsection 6.1(b).
(f) Upon
entry of a decree of judicial dissolution pursuant to the Art.
- -
23
ARTICLE
XI.
Winding-Up
11.1 Procedure. Upon
termination of the Company, the Manager shall conclude the affairs of the
Company. The assets of the Company may be liquidated or distributed
in kind, as determined by the Manager. To the extent Company assets
cannot either be sold without undue loss or readily divided for distribution in
kind to the Members, the Company may, as determined by the Manager, convey those
assets to a trust or other suitable holding entity established for the benefit
of the Members in order to permit the assets to be sold without undue loss and
the proceeds thereof distributed to the Members at a future date. The
legal form of the holding entity, the identity of the trustee or other
fiduciary, and the terms of its governing instrument shall be determined by the
Manager.
11.2 Application of
Assets. Upon the winding-up of the Company, the assets of the
Company shall first be applied to the payment of, or to a reserve for the
payment of, Company liabilities (including such Provision for contingent or
unforeseen liabilities as the Manager deems appropriate), and then shall be
distributed to the Members. In accordance with their respective
capital accounts (after all such accounts shall have been adjusted for all
allocations pursuant to Section 8.2 and for all distributions pursuant to
Subsection 8.3(a)). If Company assets are distributed in kind, the
assets so distributed shall be valued at their then-current fair-market values
and the unrealized appreciation or depreciation in value of such assets shall be
allocated to the Members' respective capital accounts in the manner described in
Article VIII as if such assets had been sold, and such assets shall then be
distributed to the Members in accordance with their respective positive capital
accounts as so adjusted.
ARTICLE
XII.
Assignability of
Interests
12.1 Permitted
Assignments.
(a) Subject
to all further applicable restrictions recited in Section 12.3, a Member may
assign (and/or pledge) his interest in the Company, in whole or in part with,
and only with, the discretionary consent of the Manager and Majority
Interest.
(b) No
assignment (and no execution of any pledge) under this Section 12.11 shall of
itself substitute the assignee (or pledgee) as a Member, and such assignment
(and such execution of any pledge made) shall entitle the assignee (or pledgee)
to none of the rights of a Member, whether under this Agreement or under the
Act, other than the right to receive (to the extent assigned) the Distributions
to which the assigning (or pledging) Member would otherwise be
entitled.
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24
12.2 Admission of
Assignees.
(a) Subject
only to Subsections 12.2(b) and, 12.2(c), an assignee shall not be admitted as a
Member, unless the assignee shall have received the discretionary consent of the
Manager and Majority interest, with both the determination of Majority Interest
to be made without regard to the interest or holdings of the assigning
Member. As a condition of its consent, the Manager may require a
substitute Member to pay the legal and other costs incurred by the Company in
effecting his admission. If admitted, the substitute Member shall
have, to the extent assigned, all of the rights and powers, and shall be subject
to all the restrictions and liabilities, of a Member. In addition, the assignee
shall provide the Company with the information and agreements that the Manager
deems necessary in connection with the assignment, including written
acknowledgement binding the assignee to this Agreement as a Member
thereof.
(b) No
Manager or Member shall be called upon to approve the admission of the Trustee
as a Member, and such admission shall be implemented without further action, if
the Trustee (i) has executed (and delivered to the Manager) a memorandum binding
itself to this Agreement as a Member thereof, and (ii) has provided the Manager
with written confirmation that (A) the Trustee has been pledged ▇▇▇▇▇▇'▇ equity
interest in the Company, (B) the Trustee has duly succeeded to such interest
pursuant to the terms governing such pledge, (C) any cure period afforded ▇▇▇▇▇▇
has expired, and (D) the Trustee wishes to become a Member in the stead of
▇▇▇▇▇▇.
(c) In the
case of the proposed admission of any assignee of ▇▇▇▇▇▇ as a Member, the
procedures described in Subsection 12.2(a) shall, with the following exception,
be implemented. All Members shall be entitled to vote on the proposed
admission, and, consequently, the consent of the Majority Interest shall be
determined with regard to the interests and holdings of all Members, including
those of the assigning Member.
12.3 General
Restrictions. In addition to the foregoing transfer
restrictions, no Member shall sell, assign, transfer, exchange, mortgage,
pledge, grant, hypothecate or otherwise dispose of any interest in the Company
(a) without the prior discretionary consent of all the Members, if the
assignment would terminate the Company within the meaning of Code Section
708(b), and (b) without an opinion of counsel in form and substance satisfactory
to the Company that registration is not required under the Securities Act of
1933 and applicable state law (unless this requirement (b) is waived by the
Manager). In no event shall any Member assign his interest in the
Company if such assignment would (i) violate any applicable state or federal
securities law, (ii) result in any direct or indirect interest in the Company
being held, on or before December 31, 1996, by a person that is not a resident
of Indiana for purposes of SEC Rule 147, (iii) violate the Articles, or (iv) run
afoul of any requirement (or fail to meet with any necessary approval) of the
Indiana Gaming Commission or of any statute granting the Commission its
jurisdiction. The members acknowledge that their interests in the
Company have not been registered under the securities laws of any jurisdiction
and agree that such interests will riot be transferred without appropriate
registration or an exemption therefrom.
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25
12.4 Regulatory
Restrictions. In addition to the foregoing transfer
restrictions, and notwithstanding any provision of this Agreement to the
contrary, no interest in the Company shall be sold, assigned, donated or
otherwise transferred (whether or not such conveyance results in a substitution
or admission of a Member), unless such transfer is in compliance with the rules
of the Commission, including any successor proposed or final rules.
ARTICLE
XIII.
Admission and
Withdrawal
13.1 Admissions. Other
than as provided in Section 12.2 with respect to the successors and assigns of
then-existing Members, additional Members may be admitted to the Company with
the discretionary approval of the Manager and Majority Interest. Such
approval shall be solicited pursuant to a written proposal that:
(a) shall
have been agreed to by (i) the Manager and (ii) the candidate (unless the
proposal calls for the issuance of additional equity interests pursuant to an
Equity Offering made to undesignated offerees),
(b) shall
specify the terms of the proposed admission, including (i) the candidate's
identity, date of admission, Percentage and commitment to make Contributions, or
(ii) the terms of the Equity Offering,
(c) shall
specify that all then-existing percentages shall be diluted ratably to the
aggregate extent of the candidate's (or offerees') Percentage (provided that a
particular Member's Percentage may be disproportionately diluted, but only if,
and only to the extent, such Member specifically agrees to such disproportionate
dilution), and
(d) shall
comport with Section 12.4.
13.2 Withdrawals.
(a) No Member
may voluntarily resign from the Company without the discretionary consent of the
Manager, which, if given, shall specify the terms of such
withdrawal.
(b) A Member
voluntarily resigning from the Company without the discretionary consent of the
Manager shall be liable to the Company for any damages attendant thereto in
accordance with Section 23-18-6-6 of the Act.
(c) A Member
resigning or otherwise withdrawing from the Company shall, in the discretion of
the Manager and subject to any applicable restrictions on distribution recited
in the Act, receive, net of any damages pursuant to Subsection 13.2(b), either
(i) the ongoing Distributions to which he would otherwise be entitled were he
still a Member, or (ii) within 12 months after withdrawal, the fair value of his
interest in the Company as of the date of withdrawal.
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26
(d) At the
written election of the Manager,
(i) the
Company shall redeem the interest in the Company held by any other Member whose
affiliation with the Company shall, to a material degree, delay, jeopardize the
issuance of, result in added restrictions on, or impair the good standing of any
License or other necessary authorization issued (or to be issued) to the
Company, so long as (A) the redemption price is equal to the affected Investor's
capital account, (B) such payment is made in cash within 12 months thereafter,
and (C) written advice has been received from the relevant Regulatory Authority
referencing the affected Member and the jeopardy generated by his affiliation,
and
(ii) the
Company shall, in lieu of any action for damages, redeem the interest in the
Company held by any other Member who shall have breached any covenant set forth
in Section 15.1, or with respect to whom any representation set forth in Section
15.2 is or has become materially false, so long as (A) such breach or
misrepresentation remains uncured for 30 days after the date of the election,
(B) the redemption price is equal to the affected investor's capital account,
minus the amount of damages suffered by the Company as a result of such breach
or misrepresentation, and (C) such payment is made in one-half in cash within 12
months thereafter, with the balance payable without interest in five equal
annual installments coming due on the anniversary of the first
payment.
(e) Upon the
withdrawal of a Member (and the retirement of such Member's interest in the
Company) pursuant to this Section 13.2 or pursuant to any other action in which
no person (other than the Company itself) succeeds to the withdrawing Member's
interest, the Percentages of the remaining Members shall increase ratably to the
aggregate extent of the withdrawn Member's Percentage.
(f) A Manager
may voluntarily resign as Manager upon 60 days notice to the
Members.
ARTICLE
XIV.
Amendment
14.1 Generally. Subject
to Section 14.2, this Agreement may be amended only with the discretionary
written consent of (a) the Manager, (b) a three-fourths interest of the Members,
as determined with respect to Percentages, and (c) a three-fourths interest of
the Members, as determined with respect to capital-account
balances.
14.2 Exception. Notwithstanding
Section 14.1,
- -
27
(a) this
Agreement may be amended to the extent, if any, contemplated by
Section 8.12, according to the terms and conditions recited in Section
8.12, and
(b) Schedule
A may be amended by the Manager alone to reflect any action taken from time to
time in accordance with Article XIII, Section 4.1 or Section 12.2.
ARTICLE
XV.
Covenants And
Representations
15.1 Covenants. Each
Member, on behalf of itself and each of its permitted successors and assigns,
covenants and agrees as follows:
(a) It will
provide (and, if applicable, cause its Affiliates to provide) to the Company,
and if required, timely file or cause its Affiliates to, file with the
Commission or any other Regulatory Authority any and all documents and all
information required in connection with all necessary Authorizations and in
connection with any proceeding or investigation with respect to the Member's (or
any of its Affiliates') character, reputation, experience, or financial
integrity.
(b) Upon
reasonable request, it will, promptly and timely, cooperate, and cause all of
its Affiliates to cooperate, with the other Members, the Commission or such
other Regulatory Authority in the procurement of all necessary Authorizations
and in any determination of the character, reputation, experience or financial
integrity of the Member or any Affiliate of the Member.
(c) It will
proceed, in good faith and with due diligence, and will use its best efforts to
demonstrate to the Commission or other Regulatory Authority its and, if
applicable, its Affiliates' good character, reputation, experience and financial
integrity.
(d) It will
proceed in good faith to further the goals of development and operation of the
▇▇▇▇ Facility and to perform its obligations in connection
therewith.
15.2 Representations. Each
Member represents and warrants to the Company and to each other Member
that:
(a) Neither
it nor, to the best of its knowledge, any of its Affiliates has
ever:
(i) been
convicted of a felony under Indiana law, the laws of any other state, or the
laws of the United States,
(ii) knowingly
or intentionally submitted an application for a gaming license that contained
false information, or
(iii) had a
license to own, manage or operate gambling facilities in another jurisdiction
revoked, denied or suspended.
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28
(b) It has no
reason to believe that it or any of its Affiliates would not be found, by the
Commission or other Regulatory Authority, to be of good character, reputation,
experience and financial integrity.
(c) It is
acquiring its interest in the Company for its own account as an investment and
without an intent to distribute such interest, and it acknowledges that the
interests in the Company have not been registered or qualified under the
Securities Act of 1933 or any state securities law, and may not be resold or
transferred by the Member without appropriate registration and qualification or
an exemption therefrom.
15.3 Survival. The
covenants contained and the representations made in this Article XV shall
survive the execution of this Agreement indefinitely.
ARTICLE
XVI.
Miscellaneous
Provisions
16.1 Records. The
Manager shall keep true and complete books of account and records of all Company
transactions. The books of account and records shall be kept at the
principal office of the Company. The Company shall maintain at such
office (i) a list of names and addresses of all Members, (ii) a copy of the
Articles together with executed copies of all powers of attorney pursuant to
which the Articles have been executed, (iii) copies of the Company's federal,
state and local income tax returns and reports for the three most recent years,
(iv) copies of the Company's current Agreement, and (v) copies of the financial
statements of the Company for the three most recent years. Such
Company records shall be available to any Member or his designated
representative during ordinary business hours, at his reasonable request and
expense.
16.2 Reports. The
Manager shall use its best efforts to furnish, or cause to be furnished, to
Members (a) annually, an income statement for the prior year and a balance sheet
as of the year ended, and (b) by March 15 of each year, Schedule
K-1.
16.3 Accounts and
Investment. All funds of the Company shall be deposited in its
name in such checking accounts, savings accounts, time deposits or certificates
of deposit shall be invested in such other manner as shall be designated by the
Manager from time to time. Withdrawals shall be made upon such signature or
signatures as the Manager may designate.
16.4 Accounting
Decisions. All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the Manager in
accordance with generally accepted accounting principles consistently
applied. Such decisions shall be acceptable to the accountants
retained by the Company, and the Manager may rely upon the advice of the
accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
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29
16.5 Tax
Election. The Company shall, to the extent permitted by
applicable law and upon obtaining any necessary approval of the Commissioner of
Internal Revenue, make all tax elections in such manner as the Manager
determines to be most favorable to the Members. The Manager may rely
upon accountants hired by the Company as to the availability and effect of all
such elections.
16.6 Investment
Representation. The Members represent to each other and to the
Company that they are acquiring their respective interests in the Company for
their own accounts, and without a view to selling or pledging them.
16.7 Composition. This
Agreement constitutes the entire Agreement among the parties and may be modified
only as provided herein, but is in addition to the subscription agreement and
any other contract between a party and the Company. No representation
or agreement has been made by (or on behalf of) any party hereto, and no party
relies upon any statement or covenant not recited herein. This
Agreement supersedes any and all other agreements, whether oral or written, by
ands among the Members.
16.8 Notice. Any
notice, writing or other matter, and any distribution, to be delivered hereunder
shall be conveyed to the party at the address reflected in this Agreement and
shall be deemed given when deposited in the United States mail with postage
prepaid for when delivered in person or by courier; provided that a person may
change his address by written notice to the Company.
16.9 Member
Consent. Various provisions of this Agreement require or
permit the approval or disapproval, written or otherwise, of the Members or some
specified proportion thereof. In any such case, the Manager may give
all Members written notice of the proposed action or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 15 days after
mailing of the notice) shall be deemed to have given his consent to the action,
or to have made the agreement, referred to in the notice.
16.10 Further
Execution. Upon request of the Manager from time to time, the
Members shall execute and swear to or acknowledge any amended Articles and other
writing that may be required by any law or that may be appropriate to effecting
any action by or on behalf of the Company or the Members taken in accordance
with this Agreement.
16.11 Binding
Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties, their successors and permitted
assigns. No provision of this Agreement (other than Subsection
12.2(b), in favor of the Trustee, during the term of the Notes) shall be
construed as for the benefit of or as enforceable by any creditor of the Company
or of the Members, or any other person not a party to it's
Agreement.
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30
16.12 Application. The
invalidity or unenforceability of any provision of this Agreement in a
particular respect shall not affect the validity and enforceability of any other
provision of this Agreement or of the same provision in any other
respect. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
instrument. The headings to the various provisions of this Agreement
are for reference purposes only, and shall not bear on the interpretation of
this Agreement. The validity and interpretation of, and the
sufficiency of performance under, this Agreement shall be governed by Indiana
law.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
▇▇▇▇▇▇
DEVELOPMENT, INC.
By: /s/
▇▇▇ ▇.
▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇, President
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31
SCHEDULE
A
Identities And Interests Of
The Members
|
Name and Address
|
Admission Date
|
Contribution
|
Percentage
|
|
▇▇▇▇▇▇
Development, Inc.
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
12/08/93
|
$19,545,365
|
100%
|
32