AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
TRADING COVE ASSOCIATES
TABLE OF CONTENTS
Page
RECITALS .................................................................. 1
ARTICLE I
CONTINUATION, NAME, PURPOSES,
OFFICE AND TERM OF THE PARTNERSHIP .................. 1
1.01 Admission of Sun and the Continuation of the Partnership ........ 1
1.02 Name of the Partnership ......................................... 1
1.03 Purposes of the Partnership ..................................... 2
1.04 Principal Office; Agent for Service of Process .................. 2
1.05 Term of the Partnership ......................................... 2
ARTICLE II
CAPITAL CONTRIBUTIONS AND RELATED MATTERS ............... 3
2.01 Capital Contributions by the Partners; Percentage
Interests ....................................................... 3
2.02 Additional Contributions ........................................ 3
2.03 Optional Loans .................................................. 3
2.04 Limitations on Use of Capital Contribution ...................... 4
2.05 Capital Contributions to Restore Capital Accounts at
Termination of the Partnership .................................. 4
2.06 Return of Capital Contributions; Interest on Capital
Contributions ................................................... 4
2.07 Remedies for Non-Payment of Additional Contributions ............ 4
2.08 Additional Capital Contributions by the Partners ................ 6
2.09 Remedies for Non-Payment of Additional Capital
Contributions ................................................... 6
ARTICLE III
ALLOCATION OF THE
PROFITS, LOSSES, AND
DISTRIBUTIONS OF THE PARTNERSHIP ................... 9
3.01 Allocation of the Profits and Losses of the Partnership ......... 9
3.02 Allocations Solely for Federal Income Tax Purposes .............. 11
3.03 Distribution of Excess Cash ..................................... 12
3.04 Withholding of Tax .............................................. 13
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ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP
AND RELATED MATTERS .......................... 13
4.01 Management Powers of the Managing Partners ...................... 13
4.02 Major Business Decisions of the Original Partners ............... 15
4.03 Resolution of Disputes .......................................... 16
4.04 Designated Representative of the Managing Partner ............... 18
4.05 Duty to Devote Time; Other Activities ........................... 19
4.06 Indemnity ....................................................... 20
4.07 Dealing with the Partnership .................................... 20
4.08 Certain Services, Fees and Reimbursements to the Partners
and Affiliates of the Partners .................................. 21
4.09 Employment Agreement with an Affiliate .......................... 25
4.10 The Facility and the Development Agreement ...................... 25
4.11 Budget .......................................................... 25
ARTICLE V
ACCOUNTING MATTERS AND BANK ACCOUNTS ................. 26
5.01 Fiscal Year and Accounting Method ............................... 26
5.02 Books and Records ............................................... 26
5.03 Bank Accounts ................................................... 26
5.04 Tax Information and Financial Statements ........................ 26
5.05 Tax Matters Partner ............................................. 26
ARTICLE VI
ASSIGNMENTS OF PARTNERSHIP INTERESTS,
WITHDRAWAL OF A PARTNER AND RELATED MATTERS .............. 27
6.01 Assignment of Sun's Partnership Interest ........................ 27
6.02 Assignment of an Original Partner's Partnership Interest ........ 28
6.03 Admission of the Partners ....................................... 30
6.04 Transfers at Death or Incompetency of a Principal of the
Original Partners ............................................... 31
6.05 Withdrawal etc. of a Partner .................................... 32
6.06 Development Agreement Withdrawal ................................ 33
6.07 Financing Withdrawal ............................................ 35
6.08 Insolvency of a Partner ......................................... 36
6.09 Power of Attorney ............................................... 36
6.10 Dissolution of a Partner ........................................ 36
ARTICLE VII
WINDING UP AND TERMINATION OF THE PARTNERSHIP ............. 36
7.01 Liquidation of the Property and Assets of the Partnership
and Disposition of the Proceeds ................................. 36
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES BY THE PARTNERS ............ 38
8.01 Original Partner Representations ................................ 38
8.02 Sun Representations ............................................. 39
8.03 Mutual Representations .......................................... 39
ARTICLE IX
MISCELLANEOUS PROVISIONS ....................... 39
9.01 Notices ......................................................... 40
9.02 Article and Section Headings .................................... 41
9.03 Construction .................................................... 41
9.04 Severability .................................................... 41
9.05 Governing Law ................................................... 42
9.06 Counterparts .................................................... 42
9.07 Entire Agreement ................................................ 42
9.08 Amendments to this Agreement .................................... 42
9.09 Benefits Limited to Partners .................................... 42
9.10 Further Assurances .............................................. 42
9.11 Successors and Assigns .......................................... 42
ARTICLE X
GLOSSARY ............................... 42
10.01 Definitions ..................................................... 42
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Exhibit List
Page
Exhibit A
Capital Contributions by the Partners ............................. 3
Exhibit B
Development Agreement ............................................. 33
Exhibit C
Withdrawal Agreement .............................................. 36
Exhibit D
Shareholders of Record of Sun ..................................... 39
Exhibit E
Initial Budget .................................................... 46
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AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
TRADING COVE ASSOCIATES
THIS AGREEMENT, made as of the 21st day of Sept, 1994 by and among (1) Sun
Cove, Ltd., a Connecticut corporation ("Sun"), (ii) RJH Development Corp., a New
York corporation ("RJH"), (iii) Leisure Resort Technology, Inc., a Connecticut
corporation ("Leisure"), (iv) ▇▇▇▇▇▇ Suites, Inc., a Michigan corporation
("▇▇▇▇▇▇") and (v) LMW Investments, Inc., a Connecticut corporation ("LMW").
RECITALS:
A. RJH, Leisure, ▇▇▇▇▇▇ and LMW, as partners (hereinafter collectively
referred to as the "Original Partners"), were parties to a partnership agreement
dated July 23, 1993, as amended by that certain First Amendment to Partnership
Agreement of Trading Cove Associates dated effective March 24, 1994 (as amended
from time to time, the "Original Partnership Agreement") pursuant to which the
parties formed Trading Cove Associates, a Connecticut general partnership (the
"Partnership").
B. The parties desire that (i) Sun be admitted to the Partnership as a
partner, (ii) the original Partnership Agreement be further amended, modified
and restated in its entirety by this Agreement, and (iii) the Partners continue
the Partnership, for the purposes and term set forth in, and in accordance with
the provisions of, this Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
CONTINUATION, NAME, PURPOSES,
OFFICE AND TERM OF THE PARTNERSHIP
1.01 Admission of Sun and the
Continuation of the Partnership:
Sun shall be admitted to the Partnership as a partner and the Partners
shall continue the Partnership as a partnership under the Act, for the purposes
and term set forth in, and in accordance with, the provisions of this Agreement.
The admission of Sun shall be effected by, and shall occur at the time of, the
execution of this Agreement by all of the Partners.
1.02 Name of the Partnership:
The name of the Partnership shall continue to be "Trading Cove Associates",
or such other name as shall be selected from time to time by the Managing
Partners. The Partnership may transact its business under any assumed name or
names selected by the Managing Partners at any time and from time to time. The
Managing Partners shall expeditiously file any certificates or other filings
with governmental agencies as may be required in connection with the
Partnership's business pursuant to any statute, ordinance, rule or regulation.
1.03 Purposes of the Partnership:
a. The purposes of the Partnership are, and the Partnership is being
continued to, (i) become, act as, execute all of the rights and powers of, and
perform all of the duties, responsibilities and obligations of, the exclusive
agent of The Mohegan Nation (the "Mohegan Tribe"), to manage and develop an
entertainment and gaming facility (the "Facility") on certain land located in
the City of Montville and the City of Norwich, Connecticut (or such other land
as may be required to develop the Facility) (the "Property"), which Property is
to be located within the Mohegan Tribe's Reservation, (ii) at the election of
the Partners, become, act as, exercise all of the rights and powers of, and
perform all of the duties, responsibilities and obligations of, the exclusive
agent for or otherwise participate in other gaming and/or resort activities
involving Native Americans or any other gaming activity (individually an
"Alternative Facility" and collectively the "Alternative Facilities"), (iii)
sell or otherwise dispose of all, or any portion of, or any interest in, the
Development Agreement or any other agreement relating to an Alternative Facility
or any other property or asset of the Partnership if and when the Partners, in
their sole discretion, so determine, and if and to the extent permitted under
the Development Agreement or any other agreement relating to an Alternative
Facility, and (iv) engage in any and all activities incidental or related to the
foregoing activities.
b. The Partnership and the Partners shall have all the powers necessary
or appropriate for the accomplishment of the Partnership's purposes, including,
but not limited to, the powers described or referred to in Section 4.01 a.
hereof.
1.04 Principal Office; Agent for Service of Process:
a. The principal office of the Partnership shall be located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as the Managing Partners shall select from time to time. In the event the
Managing Partners elect to designate another principal office for the
Partnership, the Managing Partners shall send each Partner a written notice of
the Partnership's new principal office address.
b. If the Partnership is required to maintain an agent for service of
process for any reason or is otherwise required to maintain a designated agent,
such agent shall be ▇▇▇ ▇▇▇▇▇▇, whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other person as the Managing Partners
shall select from time to time. ▇▇▇ ▇▇▇▇▇▇ shall promptly (i) inform the other
Partners in writing of any information relating to the Partnership which comes
into his possession as a result of his acting as agent for the Partnership in
accordance with this Section 1.04 b. and (ii) send the Partners all papers,
documents and any other materials concerning the Partnership served upon him in
his capacity as agent for the Partnership pursuant to this Section 1.04 b.
Notwithstanding the foregoing, if any Partner is served or receives any of the
foregoing information or materials from a third party, it shall promptly send
such information or materials to all of the Partners.
1.05 Term of the Partnership:
a. The term of the Partnership began on July 27, 1993.
b. The term of the Partnership shall end on December 31, 2040 and the
Partnership shall dissolve on such date. However, if any of the following events
shall occur prior to December 31, 2040, the Partnership shall dissolve on the
first to occur of such events:
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(1) A final disposition by the Partnership of its entire interest in
the Facility and the termination of the Development Agreement; provided,
however, if the Partnership has acquired any interest in an Alternative
Facility, the term of the Partnership shall not end until a final
disposition by the Partnership of its entire interest in all such
Alternative Facilities and the termination of any agreements relating
thereto; and provided further, if such sale or other disposition results in
the acquisition of a receivable by the Partnership, the Partnership shall
not dissolve until such receivable has been collected, unless the Managing
Partners agree otherwise;
(2) The decision of the Managing Partners to terminate the
Partnership; or
(3) Any other event which, under this Agreement or the Act, results
in the dissolution of the Partnership.
ARTICLE II
CAPITAL CONTRIBUTIONS AND RELATED MATTERS
2.01 Capital Contributions by the Partners; Percentage Interests:
a. Each Partner has made a Capital Contribution in the amount set forth
opposite its name in column (2) on Exhibit A attached hereto and incorporated
herein (the "Original Capital Contribution").
b. Each Partner shall have the Percentage Interest set forth opposite his
name in column (3) on Exhibit A attached hereto.
2.02 Additional Contributions:
When and if additional monies are needed to fund the Partnership's
obligations under the Development Agreement, in excess of all monies contributed
to date by the Partners to the Partnership as set forth in Exhibit A, Sun on the
one hand and the Original Partners on the other hand shall each fund such
obligations pro rata in accordance with their Percentage Interests up to a
maximum aggregate amount of U.S. $160,000.00 (individually an "Additional
Contribution" and collectively "Additional Contributions"), so that in the
aggregate the Partners' contributions to the Partnership will not exceed the
maximum contribution amount, U.S. $1,100,000.00, one-half of which shall be
contributed by Sun and one-half of which shall be contributed by the Original
Partners. In the event any Additional Contribution is required, the Original
Partners Managing Partners shall give each of the Partners a capital call notice
("Capital Call Notice"), which Capital Call Notice shall specify the amount
required and the budgeted item(s) in the Initial Budget for which the Capital
Call Notice is given together with a copy of paid invoices or a statement
indicating such budgeted items are currently due and payable.
2.03 Optional Loans:
In the event the Partnership requires any additional funds to satisfy the
Partnership's obligations under the Development Agreement or to otherwise
satisfy any obligations it may have with respect to any Alternative Facility,
any Partner may, but shall not be obligated to, make loans to the Partnership
(together with any accrued interest thereon, the "Loans"). Each Partner shall be
entitled to make Loans to the Partnership on a pro rata basis, based on each of
its respective Partnership Interests; provided, however, if any Partner elects
not to make such Loans, the Partners making such Loans may increase their
respective pro rata shares of such Loans or may make such Loans on any basis
agreeable to the
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Partners making such Loan and the Managing Partners. The amounts so advanced on
a pro rata basis shall (i) bear interest at an annual rate of two (2%) percent
above the prime rate as publicly announced from time to time by the Bank of New
York as its "prime rate" and (ii) be a general unsecured obligation of the
Partnership, payable, together with accrued but unpaid interest, from the first
funds available to the Partnership prior to any distributions to the Partners
under Section 3.03 a. hereof. Any change in the prime rate shall immediately
effect a change in the interest rate. The Loans shall be non-recourse to the
Partners and shall be satisfied only from the assets of the Partnership.
2.04 Limitations on Use of Capital Contribution:
The Original Capital Contributions and the Additional Contributions shall
be used to fund the Partnership's next required expenditures in substantial
conformity with the amounts and items set forth in the Initial Budget as the
Initial Budget may change, from time to time, with the approval of the Partners.
2.05 Capital Contributions to Restore Capital
Accounts at Termination of the Partnership:
No Partner shall have an obligation to restore any deficit in its Capital
Account. This Section 2.05 shall not diminish a Partner's obligations under any
other provision of this Agreement.
2.06 Return of Capital Contributions;
Interest on Capital Contributions:
a. No Partner shall have the right to withdraw from the Partnership, or
to withdraw his Capital Contributions or to demand or receive the return of his
Capital Contributions or any part thereof, except as otherwise provided in this
Agreement.
b. Except as otherwise provided for in this Agreement, to the extent that
any Partner shall ever have the right to withdraw his Capital Contributions or
to demand or receive the return of his Capital Contributions or any part
thereof, no Partner shall be personally liable or responsible for the return of
such Capital Contributions and any such return shall be made solely from the
assets of the Partnership.
c. No interest shall be paid by the Partnership on any Capital
Contributions to the Partnership, except as otherwise provided for in this
Agreement.
2.07 Remedies for Non-Payment of Additional Contributions:
a. If the Original Partners Managing Partners determine that under the
terms of this Agreement an Additional Contribution is required to fund the
Partnership's obligations under the Development Agreement and the Original
Partners Managing Partners have given Sun a Capital Call Notice in accordance
with Section 2.02 hereof, and if Sun does not make such Capital Contribution
within 10 days after the delivery of such Capital Call Notice, Sun shall
automatically be deemed to have withdrawn from the Partnership if the amount
specified in such Capital Call Notice is not paid within 20 days after delivery
of written notice by the Original Partners Managing Partners to Sun of such
default and the failure of Sun to pay such amount within such 20 day period;
provided, however, in the event the Original Partners are in default under their
obligations under Section 2.02, so long as such default is continuing, Sun shall
not be deemed to have withdrawn from the Partnership and shall not have an
obligation to make such Additional Contribution until the Original Partners are
no longer in default. In
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the event of a withdrawal of Sun pursuant to this Section 2.07 a., Sun shall not
be entitled to receive a return of its Original Capital Contribution or any
Additional Contributions it may have funded to the Partnership pursuant to this
Agreement but shall be entitled to receive the repayment of any Loans made by it
to the Partnership upon the commencement of the construction of Phase One of the
Facility.
b. If the Original Partners Managing Partners determine that an
Additional Contribution is required to fund the Partnership's obligations under
the Development Agreement and the Original Partner's Managing Partners have
given the Original Partners a Capital Call Notice with respect to such
Additional Contribution, if the Original Partners do not collectively pay their
pro rata share of such Additional Contributions and if the amount specified in
such Capital Call Notice is not paid within twenty (20) days after delivery of
written notice by the Sun Managing Partners to the Original Partners of such
default, Sun shall have the right, but not the obligation, to pay such
shortfall. The amount so advanced by Sun, at the election of Sun:
(1) Shall be deemed to be a loan (the "Sun Loan") to the Defaulting
Original Partner(s) (as hereinafter defined) in the amount of such
Defaulting Original Partner's shortfall
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in such Additional Contribution and a Capital Contribution by such
Defaulting Original Partner to the Partnership; such loans to bear interest
at a rate of two percent (2%) above the prime rate of interest publicly
announced from time to time by Bank of New York as its "prime rate"; and
the portion of all Partnership distributions and Organizational and
Administrative Fee (as hereinafter defined) otherwise distributable or
payable to such Defaulting Original Partner shall be first paid to Sun pari
passu with any Original Partner Loans (as hereinafter defined) and the
Original Partner Shortfall Loans; or
(2) Shall be deemed to be a Capital Contribution by Sun to the
Partnership and, in such event, the Percentage Interest of Sun and such
Defaulting Original Partner shall be adjusted to reflect Sun's contribution
made in accordance with this paragraph, such Defaulting Original Partner's
Percentage Interest shall be reduced, but not below five percent (5%) with
respect to RJH and Leisure, to an amount equal to (a) multiplied by (b),
where:
(a) is the Defaulting Original Partner's Percentage Interest,
and
(b) is a fraction, of which the numerator is the Defaulting
Partner's total Capital Contributions and the denominator is its total
Capital Contributions plus the Additional Contribution required to be
made under Sections 2.01 and 2.02 hereof.
The amount of reduction in the Defaulting Partner's Percentage
Interest shall be allocated to Sun.
2.08 Additional Capital Contributions by the Partners:
If at any time, and from time to time during the term of the Partnership,
the Majority of the Original Partners, on the other hand, determine that
additional monies are needed to fund the Partnership's obligations under this
Agreement in excess of (i) the Initial Capital Contributions and (ii) the
Additional Contributions set forth in Section 2.02 hereof, the Partners (subject
to Section 2.09 d. with respect to Leisure) shall each fund such obligations pro
rata, in accordance with their respective Percentage Interests (individually an
"Additional Capital Contribution" and collectively the "Additional Capital
Contributions"). Any requirement for an Additional Capital Contribution
pursuant to this Section 2.08 shall require the concurrence of Sun, on the one
hand, and the Majority of the Original Partners, on the other hand. In the
event any Additional Capital Contribution is required to fund the Partnership's
obligations, as determined by Sun and the Majority of the Original Partners, the
Managing Partners shall give each Partner a Capital Call Notice, which Capital
Call Notice shall specify the amount required and the items for which the
Capital Call Notice is given.
2.09 Remedies for Non-Payment of Additional Capital Contributions:
a. If Sun and the Majority of the Original Partners determine that under
Section 2.08 of this Agreement an Additional Capital Contribution is required to
fund the Partnership's obligations, Managing Partners have given the Partners a
Capital Call Notice in accordance with Section 2.08 hereof, then, if Sun does
not make such Additional Capital Contribution within ten (10) days after the
delivery of such Capital Call Notice, Sun shall automatically be deemed to have
withdrawn from the Partnership if the amount specified in such Capital Call
Notice is not paid within twenty (20) days after delivery of written notice by
the Original Partners Managing Partners to Sun of such default and the failure
of Sun to pay such amount within such twenty (20) day period; provided, however,
in the event the Original Partners are in default under their obligations under
Section 2.08 hereof, so long as such default is continuing, Sun shall not be
deemed to have withdrawn from the Partnership and shall not have
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an obligation to make such Additional Contribution until the Original Partners
are no longer in default. In the event of a withdrawal of Sun pursuant to this
Section 2.09 a., Sun shall not be entitled to receive a return of its Initial
Capital Contribution, any Additional Contributions or any Additional Capital
Contributions it may have funded to the Partnership pursuant to this Agreement
but shall be entitled to receive the repayment of any Loans made by it to the
Partnership upon the commencement of the construction of Phase One of the
Facility, if the withdrawal occurs prior thereto, or within 120 days after the
withdrawal, if the withdrawal occurs after the commencement of construction of
Phase One of the Facility.
b. If at any time the Majority of the Original Partners and Sun determine
under Section 2.08 of this Agreement that an Additional Capital Contribution is
required to fund the Partnership's obligations under this Agreement and the
Managing Partners have given the Partners a Capital Call Notice in accordance
with Section 2.08 hereof, if any Original Partner does not make such Additional
Capital Contribution within ten (10) days after the delivery of Capital Call
Notice ("Defaulting Original Partner") then the other Original Partners, other
than the Defaulting Original Partner, shall have the right, but not the
obligation, to pay such shortfall. The amount so advanced by the non-defaulting
Original Partners, at the unanimous election of the other non-defaulting
Original Partners (on a pro rata basis or on any other basis agreed to by all of
the non-defaulting Original Partners):
(1) shall be deemed to be a loan to the Defaulting Original
Partner(s) in the amount of such Defaulting Original Partner's shortfall in
such Additional Capital Contribution ("Original Partners Shortfall Loan")
and a Capital Contribution by such Defaulting Original Partner to the
Partnership; the Original Partners Shortfall Loan bear interest at a rate
of two percent (2%) above the prime rate of interest publicly announced
from time to time by Bank of New York as its "prime rate"; and the portion
of all Partnership distributions and Organizational and Administrative Fee)
otherwise distributable or payable to such Defaulting Original Partner
shall be first paid to the non-defaulting Original Partners pari passu with
any Original Partner Loans and the Sun Loan; or
(2) shall be deemed to be a Capital Contribution by the contributing
non-defaulting Original Partners to the Partnership and, in such event, the
Percentage Interest of the Defaulting Original Partner(s) shall be adjusted
to reflect each of the other contributing Original Partner's contributions
made in accordance with this paragraph, and such Defaulting Original
Partner's Percentage Interest shall be reduced, but not below five percent
(5%), to an amount equal to (a) multiplied by (b), where:
(a) is the Defaulting Original Partner's Percentage Interest;
and
(b) is a fraction, of which the numerator is the total Capital
Contributions of the Defaulting Original Partner and the denominator
is the Defaulting Original Partner's total Capital Contributions plus
the Additional Capital Contribution required to be made under Section
2.08 hereof.
The amount of reduction in the Defaulting Original Partner's
Percentage Interest shall be allocated to each of the contributing Original
Partners, pro rata, based on the contribution of each contributing Original
Partner under this clause (2) in relation to the total contributions made
by all of the contributing Original Partners under this clause (2).
(3) Notwithstanding the foregoing, if at the time that an Additional
Capital Contribution is required in accordance with Section 2.08 hereof,
and either (i) Excess Cash is
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available for distribution to Leisure pursuant to the terms of Section 3.03
hereof and/or Leisure is due any portion of the Organizational and
Administrative Fee or (ii) Excess Cash has previously been distributed to
Leisure pursuant to Section 3.03 hereof and/or Leisure has been distributed
its pro rata share of the Organizational and Administrative Fee (the
aggregate of all such distributions or payments are hereinafter
collectively referred to as the "Leisure Distribution"), all of the
Original Partners, including Leisure (to the extent of the Leisure
Distribution less any amounts paid by Leisure for federal and state income
tax with respect to such Leisure Distribution and any amount previously
contributed by Leisure to the Partnership as an additional contribution
with respect to the Leisure Distribution set forth in Section 2.07 b.
hereof), shall make the Additional Capital Contribution based on each
Original Partner's Percentage Interest in relation to the Percentage
Interests of all Original Partners.
In the event that Leisure's pro rata share of capital required to be
contributed pursuant to the preceding paragraph exceeds the Leisure
Distribution less any amounts paid by Leisure for federal and state income
tax with respect to such Leisure Distribution and any amounts previously
contributed to the Partnership as an Additional Contribution by Leisure
with respect to the Leisure Distribution set forth in Section 2.07 b.
hereof, all of the Other Original Partners shall contribute their pro rata
share of such deficiency based on the Percentage Interest of each such
Other Original Partner in relation to the Percentage Interests of all of
the Other Original Partners.
In the event that Leisure is unable, despite its best efforts, to
contribute to the Partnership all or any portion of the funds required to
be contributed by it pursuant to clause (ii) above, the Other Original
Partners shall have the right to advance to the Partnership all or any
portion of such shortfall pro rata, based on their respective Percentage
Interests or on any other basis the Other Original Partners determine
appropriate. The amount so advanced by the Other Original Partners shall be
deemed to be (i) Original Partner Loans to Leisure by the Other Original
Partners making such advances, and (ii) an Additional Capital Contribution
by Leisure to the Partnership. Such Original Partner Loans shall (i) bear
interest at a rate of two percent (2%) above the prime rate publicly
announced from time to time by Bank of New York as its "prime rate", and
(ii) at the election of each of the Other Original Partners, be evidenced
by promissory note(s) containing such terms and conditions not inconsistent
with this paragraph. If any of the Other Original Partners make such
Original Partner Loans, the portion of all Partnership distributions and
Organizational and Administrative Services Fee otherwise distributable or
payable to Leisure shall, instead of being paid to Leisure, be first paid
pan passu with any Sun Loan and any Original Partner Shortfall Loan to such
Other Original Partners who have made such Original Partner Loans pro rata,
based on the Original Partner Loans made by each Other Original Partner in
relation to Original Partner Loans made by all of the Other Original
Partners and applied against all principal and accrued interest on such
loans until all such loans are paid in full.
(4) If Sun and the Majority of the Original Partners determine that
an Additional Capital Contribution is required to fund the Partnership's
obligations pursuant to Section 2.08 hereof and the Managing Partners have
given the Original Partners a Capital Call Notice with respect to such
Additional Capital Contribution, if the Original Partners do not
collectively pay their pro rata share of such Additional Capital
Contribution and if the amount specified in such Capital Call Notice is not
paid within twenty (20) days after delivery of written notice by the Sun
Managing Partner to the Original Partners of such default and the failure
of the Original Partners to pay such amount within such twenty (20) day
period, then Sun shall have the right,
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but not the obligation, to pay such shortfall. The amount so advanced by
Sun, at the election of Sun:
(a) shall be deemed to be a loan to the Defaulting Original
Partner(s) in the amount of such Defaulting Original Partner's
shortfall in such Additional Contribution ("Sun Loan") and a Capital
Contribution by such Defaulting Original Partner to the Partnership;
the Sun Loan shall bear interest at a rate of two percent (2%) above
the prime rate of interest publicly announced from time to time by
Bank of New York as its "prime rate", and that portion of all
Partnership distributions and the Organizational and Administrative
Services Fee otherwise distributable or payable to such Defaulting
Original Partner shall be first paid to Sun pari passu with any
Original Partner Loans and any Original Partner Shortfall Loan; or
(b) shall be deemed to be a Capital Contribution by Sun to the
Partnership and, in which event, the Percentage Interest of the
Defaulting Original Partner(s) shall be adjusted to reflect Sun's
contribution made in accordance with this paragraph; such Defaulting
Original Partner's Percentage Interest shall be reduced, but not below
five percent (5%) with respect to RJH and Leisure, to an amount equal
to i) multiplied by ii), where:
i) is the Defaulting Original Partner's Percentage
Interest (calculated after any dilution pursuant to Section 2.09
b. (2) hereof; and
ii) is a fraction, of which the numerator is the total
Capital Contributions of the Original Defaulting Partner and the
denominator is the Original Defaulting Partner's total Capital
Contributions plus the Additional Capital Contribution required
to be made under 2.08 hereof.
The amount of resulting reduction in the Original Defaulting Partner's
Percentage Interest shall be allocated to Sun.
ARTICLE III
ALLOCATION OF THE
PROFITS, LOSSES, AND
DISTRIBUTIONS OF THE PARTNERSHIP
3.01 Allocation of the Profits
and Losses of the Partnership:
a. Profits and Losses. After giving effect to the special allocations set
forth in Section 3.01 b. and the curative allocations set forth in Section 3.01
c. hereof, Profit or Loss for any fiscal year shall be allocated as Set forth in
Section 3.01 a.(1) below, subject to the limitations in Section 3.01 a.(2)
below.
(1) Profit for any fiscal year shall be allocated among the Partners,
pro rata, in accordance with their Percentage Interests.
(2) Loss for any fiscal year shall be allocated among the Partners
pro rata, in accordance with their Percentage Interests.
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(3) The Losses allocated pursuant to Section 3.01 a.(2) hereof shall
not exceed the maximum amount of Losses that can be so allocated without
causing any Partner to have a deficit in its Adjusted Capital Account at
the end of any fiscal year. All Losses in excess of the limitations set
forth in this Section 3.01 a.(3) shall be allocated to the other Partners
pro rata, in the ratio that their Percentage Interests bears to each other,
so long as such allocation will not create a deficit in the Adjusted
Capital Account of any other Partner.
b. Special Allocations. The following special allocations shall be made
in the following order:
(1) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, if there is a net decrease in "partnership
minimum gain" during any fiscal year, each Partner shall be specially
allocated items of Partnership income and gain for such fiscal year (and,
if necessary, subsequent fiscal years) in an amount equal to such Partner's
share of the net decrease in "partnership minimum gain," determined in
accordance with Section 1.704-2(g) of the Regulations. Allocations pursuant
to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The
items to be so allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 3.01
b.(1) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Regulations and shall be interpreted consistently
therewith.
(2) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-(2)(i)(4) of the Regulations, if there is a net decrease in
"partner nonrecourse debt minimum gain" attributable to a "partner
nonrecourse debt" during any fiscal year, each Partner who has a "share of
partner nonrecourse debt minimum gain" attributable to such "partner
nonrecourse debt," determined in accordance with Section 1.704-2(i)(5) of
the Regulations, shall be specially allocated items of Partnership income
and gain for such fiscal year (and, if necessary, subsequent fiscal years)
in an amount equal to such Partner's share of the net decrease in "partner
nonrecourse debt minimum gain" attributable to such "partner nonrecourse
debt," determined in accordance with Section 1.704-2(i)(4) of the
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined
in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the
Regulations. This Section 3.01 b.(2) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and
shall be interpreted consistently therewith.
(3) In the event that any Partner unexpectedly receives any
adjustments, allocations or distributions described in Section 1.704-
1(b)(2)(ii)(d)(4)-(6) of the Regulations, items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
deficit in such Partner's Adjusted Capital Account as quickly as possible,
provided that an allocation pursuant to this Section 3.01 b.(3) shall be
made only to the extent that such Partner would have a deficit in its
Adjusted Capital Account after all other allocations provided for in this
Section 3.01 have been tentatively made as if this Section 3.01 b.(3) were
not in the Agreement.
(4) Nonrecourse Deductions. "Nonrecourse deductions" for any fiscal
year shall be specially allocated among the Partners pro rata, in
accordance with their Percentage Interests.
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(5) Partner Nonrecourse Deductions. Any "partner nonrecourse
deductions" for any fiscal year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the "partner
nonrecourse debt" to which such "partner nonrecourse deductions" are
attributable in accordance with Section 1.704-2(i)(l) of the Regulations.
c. Curative Allocations. The allocations set forth in Sections 3.01 a.(2)
and 3.01 b. hereof (collectively, the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or, if necessary, with special
allocations of other items of Partnership income, gain, loss, or deduction
pursuant to this Section 3.01 c. Therefore, notwithstanding any other provision
of this Section 3.01 (other than the Regulatory Allocations), special
allocations of Partnership income, gain, loss, or deduction shall be made to
offset the Regulatory Allocations such that each Partner's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Partnership items were allocated pursuant to Section 3.01 a.
In applying this Section 3.01 c., there shall be taken into account future
Regulatory Allocations under Sections 3.01 b.(1) and 3.01 b.(2) that, although
not yet made, are likely to offset other Regulatory Allocations previously made
under Sections 3.01 b.(3) and 3.01 b.(4).
d. Definitions. For purposes of this Section 3.01, (i) "Regulations"
shall mean regulations promulgated by the U.S. Department of Treasury, (ii) all
other terms set off in quotation marks shall have the meanings ascribed to them
in Section 1.704-2 of the Regulations, and (iii) Adjusted Capital Account shall
mean, with respect to any Partner such Partner's Capital Account, reduced by
those anticipated allocations, adjustments and distributions described in
Section 1.704-1(b)(2)(ii)(d)(4)-(6) of the Regulations and increased by such
Partner's "share of partnership minimum gain", such Partner's "share of partner
nonrecourse debt minimum gain" and the amount of any deficit in such Partner's
Capital Account that such Partner is deemed obligated to restore under Section
1.704-1(b)(2)(ii)(c) of the Regulations as of the end of such fiscal year.
3.02 Allocations Solely for Federal Income Tax Purposes:
a. In the event of the transfer of a Partner's Partnership Interest or a
portion thereof by sale or exchange, or upon the death of a Partner, the
Partnership shall, if the person acquiring such Partnership Interest or portion
thereof so requests and if the Partners agree to do so, elect, pursuant to
Section 754 of the Code, or any corresponding provision of succeeding law, to
adjust the basis of the Partnership property. Each Partner hereby agrees to
provide the Partnership with all information necessary to give effect to such
election.
(1) Any change in the amount of the depreciation or amortization
deducted by the Partnership, and any change in the gain or loss of the
Partnership, for federal income tax purposes, resulting from such election,
shall be allocated entirely to the transferee of the Partnership Interest
or portion thereof so transferred; provided, however, neither the Capital
Contribution obligations of, nor the amount of any cash distributions to,
the Partners shall be affected as a result of such election, and the making
of such election shall have no effect except for federal income tax
purposes.
(2) A subsidiary account shall be established on the books of the
Partnership for each asset, the basis of which is adjusted as a result of
such election, and each such subsidiary account shall be debited (in the
case of an increase in basis) or credited (in the case of a decrease in
basis) by the amount of such basis adjustment, and the offsetting credit or
debit shall
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be made to a subsidiary capital account established on the books of the
Partnership for the transferee Partner. Any change in the amount of the
depreciation deducted by the Partnership, and any change in the gain or
loss of the Partnership, for federal income tax purposes, attributable to
the basis adjustment made as a result of such election shall be debited or
credited, as the case may be, to the appropriate subsidiary asset account
and the offsetting credit or debit shall be made to the subsidiary capital
account of the appropriate Partner.
b. In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and the initial Book Value of such property (computed in
accordance with Section 10.01 m.(1) hereof). If the Book Value of any
Partnership property is adjusted pursuant to Section 10.01 m.(2) hereof,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal Income tax purposes and the Book Value of such asset in the
same manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder.
3.03 Distribution of Excess Cash:
a. The Managing Partners shall, from time to time but no less often than
quarterly), determine whether the Partnership has Excess Cash, as defined in
Section 3.03 b. hereof, and whenever the Partnership has Excess Cash, the
Managing Partners shall cause the Excess Cash to be paid:
(1) First, to the Partners pro rata, based on their respective
Percentage Interests, an amount determined by multiplying (i) times (ii),
where (i) equals the sum of (-A-) plus (-B-), where (-A-) equals the
maximum federal income tax rate on individuals and (-B-) equals the greater
of (a) Connecticut income tax rate on individuals or (b) combined Michigan
income tax rates on individuals plus the Michigan intangibles tax rate and
(ii) is the sum of (-A-) plus (-B-), where (-A-) equals the Partnership's
taxable income as shown on the Partnership's U.S. Federal Income Tax Form
1065, and (-B-) equals the amount of all other items of income and gain
allocated to such Partners by virtue of their Partnership Interest which
are not otherwise included in clause (ii) (-A-) above;
(2) Next, to Sun in payment of its Deferred Development Fee, to the
extent that its Deferred Development Fee has not been paid by prior
application of this Section 3.03 a.(2) (or otherwise paid from other
sources); and
(3) Then, the balance, if any, to the Partners pro rata, based on
their respective Percentage Interests.
Notwithstanding the foregoing, after the distributions of Excess Cash to
the Partners provided in Section 3.03 a.(l) and Section 3.03 a.(2) above, at the
option of the Managing Partners, the Managing Partners may annually fund an
additional Partnership reserve fund out of the next available Excess Cash of the
Partnership (the "Additional Reserve") of up to the lesser of (-A-) 10% of the
Excess Cash of the Partnership or (-B-) U.S. $2,000,000, or such greater amount
as shall be determined by the Partners.
b. As used in this Agreement, "Excess Cash" means, at any relevant time,
that portion of the cash and cash equivalent assets of the Partnership which, in
light of the Partnership's then current and foreseeable sources of, and needs
for, cash, exceeds the amount needed by the Partnership to (i) service
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its debts and obligations to third parties in a timely fashion, (ii) pay the
Organizational and Administrative Fee, the Marketing and Casinos Operation Fee,
the Management Services Fee and the portion of the Development Services Fee not
constituting the Deferred Development Fee, (iii) maintain adequate working
capital and reserves other than Additional Reserves, (iv) conduct its business
and carry out its purposes and (v) repay any Loans.
c. Anything contained in this Agreement to the contrary notwithstanding,
in the event of an inconsistency between the provisions of this Section 3.03 and
the provisions of Section 7.01 a. hereof, the provisions of Section 7.01 a.
hereof shall govern and control.
3.04 Withholding of Tax:
The Partnership shall withhold with respect to the share of Partnership
income or profits of any foreign partner and remit to the Internal Revenue
Service, any tax that is required to be so withheld and remitted under Section
1446, or any successor or other provision, of the Code. The withholding of any
tax with respect to a Partner's share of income or profits of the Partnership
shall be treated as a distribution of cash to such Partner and shall reduce the
amount otherwise distributable to such Partner under the terms of this
Agreement. Notwithstanding the foregoing, if in any calendar year there is
insufficient Excess Cash available for distribution to any foreign partner to
fund any tax required to be withheld with respect to such foreign partner, such
foreign partner shall immediately remit to the Partnership sufficient funds to
enable the Partnership to satisfy its withholding obligations under Section 1446
of the Code. The determination of such withholding obligations shall be made by
the Partnership's accountants.
ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP
AND RELATED MATTERS
4.01 Management Powers of the Managing Partners:
a. Subject to Section 4.02 hereof, the Partnership shall be managed by
the Managing Partners, who shall have the full, exclusive and absolute right,
power and authority to manage and control the Partnership and the property,
assets and business thereof, and the Managing Partners shall make all decisions
affecting the Partnership and the property, assets and business thereof. The
Managing Partners shall have all of the rights, powers and authority conferred
upon the partners of a partnership by law and all of the rights, powers and
authority conferred upon them under other provisions of this Agreement. In
addition thereto, the Managing Partners shall have the right, power and
authority, for and on behalf of the Partnership, on terms and conditions
agreeable to them, to cause the Partnership to:
(1) Recommend to the Mohegan Tribe, and, if approved by the Mohegan
Tribe, implement (i) the nature, scope, elements, timing, and design of
each phase of the Facility, (ii) when and how each phase of the Facility
will be constructed and (iii) all other matters related to the development
of each phase of the Facility, including, but not limited to, the
preparation of a budget for each phase of the Facility;
(2) Pursuant to the Development Agreement, cause each phase of the
Facility to be constructed for and on behalf of the Mohegan Tribe, and
negotiate, enter into and perform any and al! agreements, execute any and
all instruments and documents (including, but not limited
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to, agreements with Affiliates as provided herein), and take any and all
actions with respect thereto;
(3) Operate, maintain and manage the Facility for and on behalf of
the Mohegan Tribe, and negotiate, enter into and perform agreements and
subcontract for the operation, maintenance and management of the Facility
(including, but not limited to the Consulting Agreement and other
agreements with Affiliates as provided herein), and enter into all
instruments, documents and agreements incidental, related or similar
thereto;
(4) Determine whether or not to acquire any interest in an
Alternative Facility and negotiate, enter into, conclude and perform
agreements for the development and operation of any Alternative Facility
(including agreements with Affiliates as provided herein);
(5) Acquire any other property or asset that the Managing Partners
deem necessary or appropriate to the business of the Partnership;
(6) Borrow money and incur other debts and obligations and issue
evidences of indebtedness, in furtherance of the Partnership business, and
secure such indebtedness by mortgage, pledge or other lien on, or security
interest in, any property or asset of the Partnership;
(7) Negotiate arrangements for financing with respect to any phase of
the Facility pursuant to the Development Agreement or other agreements
relating to an Alternative Facility (including, agreements with Affiliates
as provided herein);
(8) Negotiate, enter into, conclude and perform and take any action
with respect to, the Development Agreement and any amendments or
modifications thereof,
(9) Change the amount of, amend, modify or change the terms of,
extend the time for the payment of, or retire, discharge or refinance, any
indebtedness or obligation of the Partnership; and change the amount or
value of, modify or change the nature or type of, or make any other
modifications or changes with respect to, any security granted or
collateral given for any Partnership indebtedness or obligation; and amend,
modify or change the terms of any agreement, instrument or document with
respect to any such security or collateral;
(10) Subject to Section 3.03 a. hereof, establish and maintain
reserves in such amounts and for such purposes as the Managing Partners
shall determine, in the exercise of their sole and absolute judgment;
(11) Negotiate, enter into, conclude and perform agreements for, and
take actions with respect to, the sale, exchange, lease or other
disposition of all, or any part of or any interest in, the Development
Agreement, if and to the extent permitted under the Development Agreement
or any other property or asset of the Partnership;
(12) ▇▇▇ on, defend or compromise any and all claims or liabilities in
favor of or against the Partnership; submit any or all such claims or
liabilities to arbitration; and confess a judgment against the Partnership
in connection with any litigation in which the Partnership may be involved;
(13) Make or revoke any election permitted the Partnership by any
taxing authority;
- 14 -
(14) Retain or employ, and coordinate the services of employees,
administrators, supervisors, consultants, legal counsel, accountants,
architects, engineers and contractors, and other professionals in
connection with the Partnership business;
(15) Subject to the provisions of Section 4.07 and 4.08 hereof,
contract with any person to supply any goods and/or services of any type or
kind to the Partnership in connection with the Partnership business and pay
the purchase price, costs, fees, commissions, compensation and/or other
amounts and/or consideration therefor;
(16) Open, maintain and close bank accounts and make deposits to and
withdrawals from such bank accounts;
(17) Admit a person as a partner of the Partnership pursuant to the
applicable provisions of this Agreement; and
(18) Perform any and all other acts the Managing Partners deem
necessary or appropriate with respect to the Partnership or the property,
assets or business thereof.
b. The rights, powers and authority vested in, and conferred upon, the
Managing Partners pursuant to Section 4.01 a. hereof, shall be exercised by the
Managing Partners pursuant to, and in accordance with, the provisions of this
Agreement. All decisions of the Managing Partners require the concurrence of the
Sun Managing Partner, on the one hand, and the Original Partners Managing
Partners, on the other hand, and the Original Partners Managing Partners shall
be entitled to one vote and the Sun Managing Partner shall be entitled to one
vote.
c. No person dealing with the Partnership shall be required to
investigate or inquire as to the authority of the Managing Partners to execute
instruments and documents and to take actions on behalf of the Partnership; and
any person dealing with the Partnership shall be entitled to rely upon any
instrument or document executed and any action taken by the Managing Partners,
on behalf of the Partnership and the Partnership shall be bound thereby. Sun
shall be entitled to rely on any action taken by the Original Partners Managing
Partners and shall not be required to investigate or inquire as to the authority
of the Original Partners Managing Partners.
d. No Partner who is not a Managing Partner shall have any power to sign
on behalf or bind the Partnership to any agreement or undertaking, or to act on
behalf of the Partnership in any manner whatsoever.
4.02 Major Business Decisions of the Original Partners:
a. The Original Partners Managing Partners shall make and implement all
decisions on behalf of the Original Partners except the Major Business Decisions
of the Original Partners and any other decision which requires the concurrence
of the Original Partners as provided herein.
b. As used in this Agreement, the term "Major Business Decision of the
Original Partners" shall mean any decision specified in Section 4.02 c. or
Section 4.02 d.
c. The following Major Business Decisions of the Original Partners shall
require the concurrence of all Original Partners:
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(1) Incurring or paying expenses or costs which are not in the
ordinary course of business or changing the purpose of the Partnership,
except those expenses or costs which are included in the Budget; and
(2) Determining the compensation of the Original Partners Managing
Partners.
d. The following Major Business Decisions of the Original Partners shall
require the concurrence of a Majority of the Original Partners:
(1) Incurring or paying expenses or costs which exceed in any one
transaction or in a series of related transactions a monetary commitment on
behalf of the Original Partners of $10,000 or more, except those costs or
expenses included in the Budget;
(2) Borrowing money or incurring other debts or obligations on behalf
of the Partnership or issuing evidence of indebtedness in excess of
$10,000, except those costs or expenses included in the Budget;
(3) Retaining, employing or coordinating the services of legal
counsel, accountants or other professionals;
(4) Making other major business decisions within the stated purpose
of the Partnership;
(5) Resolving any dispute between the Original Partners Managing
Partners with respect to any decision required to be made by the Original
Partners Managing Partners on behalf of the Original Partners Group under
Sections 4.01 a. or 4.08 a.(4) hereof; and
(6) Approving the Budget.
e. Any act requiring the approval of the Majority of the Original
Partners or the concurrence of all Original Partners shall be made as follows:
(1) The Original Partners Managing Partners shall give notice to each
Original Partner in accordance with Section 8.01 hereof;
(2) In the event that any Original Partner does not respond within 30
days of receipt of such notice, it shall be conclusive that such Original
Partner has consented to the act for which the approval was sought. The
Original Partners acknowledge that in order to manage the Partnership and
the Original Partners' interest in the Partnership properly, the Original
Partners Managing Partners must receive prompt responses and this mechanism
is set up to assure that there will be prompt responses.
4.03 Resolution of Disputes:
The Managing Partners and the Partners agree that, as partners, they have a
mutual obligation of good faith and fair dealing and a mutual obligation to make
all reasonable efforts to resolve any disagreements that may arise between them
with respect to the Partnership or the business thereof. If any such
disagreements arise between the Managing Partners with respect to any matter
hereof, and the Managing Partners are unable to resolve such disagreement after
making all reasonable efforts to do so, then, in such event, either Group may
give the other Group written notice that such dispute is considered
- 16 -
to be a material deadlock dispute (the "Deadlock Dispute"). Each Group shall
have ten (10) days from the receipt of such notice to resolve the Deadlock
Dispute between them. In the event such Deadlock Dispute is not resolved within
such ten (10) day period, then:
(1) Either Group shall have the right, exercisable by written notice
given to the other Group (the "Buy-Out Notice") to require the other Group
to elect to either (i) sell the other Group's Partnership Interests to the
Group giving notice at the price and under the terms set forth in the Buy-
Out Notice (the "Buy-Out Price") or (ii) to have the other Group or its
designee purchase the Partnership Interests of the Group giving notice at
the Buy-Out Price on the following terms and conditions:
Within forty-five (45) days after the receipt of the Buy-Out
Notice, the Group receiving the Buy-Out Notice shall elect, by giving
written notice to the other Group, to either:
(-A-) sell its entire Partnership Interests to the Group sending
the Buy-Out Notice for the Buy-Out Price of such Group's Partnership
Interests (in the event that such election is made, the Group
receiving the Buy-Out Notice is hereinafter referred to as the
"Selling Group" and the Group sending the Buy-Out Notice is
hereinafter referred to as the "Purchasing Group"), or
(-B-) purchase the entire Partnership Interests of the Group
sending the Buy-Out Notice for the Buy-Out Price of such Group's
Partnership Interests (in the event such election is made, the Group
sending the Buy-Out Notice or its designee is (are) hereinafter
referred to as the "Selling Group" and the Group receiving the Buy-Out
Notice is hereinafter referred to as the "Purchasing Group").
In the event the Group receiving the Buy-Out Notice shall fail to make
an election during the time and in the manner provided above, the Group
receiving the Buy-Out Notice shall be deemed to have made the election
described in Section 4.03 (1)(-A-) above.
(2) The closing of the purchase and sale of the Selling Group's
Partnership Interests pursuant to the provisions of this Section 4.03
(hereinafter referred to as the "Closing") shall take place at the
principal office of the Partnership (or such other place as designated by
both Groups) on a date, not to exceed seventy-five (75) days from the
expiration of the forty-five (45) day period provided in Section 4.03 a.(1)
above, by the Purchasing Group in written notice given to the Selling Group
at least fifteen (15) days prior thereto or on such other date as shall be
mutually agreeable to the Selling Group and Purchasing Group; provided,
however, that such Closing date shall be automatically extended by any
period of time required to obtain any consents or approvals of such sale as
referred to in Section 4.10 d. hereof. At the Closing, the Buy-Out Price
shall be paid in accordance with the terms of the Buy-Out Notice. At the
Closing of such purchase, the Selling Group shall execute and deliver such
assignments and other instruments as shall be necessary or desirable in the
reasonable opinion of the Purchasing Group to transfer and assign the
Selling Group's Partnership Interests.
(3) Notwithstanding anything herein to the contrary, either the
Selling Group or the Purchasing Group can elect at any time prior to
Closing to terminate this Buy-Sell option and, in such event, the Deadlock
Dispute shall be resolved and the decision of the non-rescinding Group
shall be deemed to be the decision of the Managing Partners.
- 17 -
(4) On or after the Closing, the Purchasing Group, at its sole
election, may terminate any agreement with any Partner of the other Group
or its Affiliate(s) with respect to their employment arrangement or other
arrangements with the Partnership.
(5) The Purchasing Group shall release the Selling Group from any and
all liability owed to the Partnership or any members of the Purchasing
Group and shall indemnify the Selling Group for any obligations it may
incur subsequent to the Closing with respect to its participation in the
Partnership, except for acts which constitute fraud, gross negligence, bad
faith or breach of duty of loyalty. The liability for such indemnification
shall be non-recourse to the remaining Partners and may be satisfied only
from the assets of the Partnership.
4.04 Designated Representative of the Managing Partner:
▇. ▇▇▇▇▇▇ ("▇▇▇▇▇") ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") shall be the Designated
Representative of Sun and the Sun Managing Partner. In his absence, ▇▇▇▇ ▇▇▇▇▇▇▇
shall be the Designated Representative of Sun. Such Designated Representatives
shall have the right, power and authority to act for and on behalf of, and to
bind, Sun (and the Sun Managing Partner) with respect to all matters relating to
the Partnership and the business thereof. ▇▇▇▇▇▇▇ may appoint by proxy another
person(s) to act in his stead upon written notification to the Original Partners
Managing Partners. Sun shall have the right to remove and the right to replace
▇▇▇▇▇▇▇ and/or any other substitute Designated Representative, and ▇▇▇▇▇▇▇,
and/or any other substitute Designated Representative shall have the right to
resign, as a Designated Representative without the consent of the Original
Partners.
b. Subject to the provisions of Section 4.04 c.; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("▇▇▇▇▇") and ▇▇▇ ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇") shall be the Designated Representatives
of the Original Partners and the Original Partners Managing Partners. Such
Designated Representatives shall have the right, power and authority to act for
and on behalf of, and to bind, the Original Partners and the Original Partners
Managing Partners with respect to all matters relating to the Partnership and
the business thereof. The Original Partners shall have the right to remove, and
the right to replace, Hertz or ▇. ▇▇▇▇▇▇ and/or any other substitute Designated
Representative as provided in Section 4.04 c. hereof, and Hertz or ▇. ▇▇▇▇▇▇
and/or any other substitute Designated Representative, shall have the right to
resign, as a Designated Representative, without the consent of Sun.
c. Notwithstanding anything in Section 4.04 b. above, in the event that
(i) Hertz sells a controlling interest in RJH, (ii) RJH is no longer a Partner
or (iii) Hertz dies, becomes incompetent, becomes disabled or for any other
reason is unable to perform the duties required of the Designated Representative
in this Agreement, then Hertz shall immediately cease to be a Designated
Representative and ▇. ▇▇▇▇▇▇ shall be the sole Designated Representative and LMW
the Original Partner Managing Partner. In the event that ▇. ▇▇▇▇▇▇ (i) no longer
owns at least a 50% interest in LMW, (ii) LMW is no longer a Partner or (iii) ▇.
▇▇▇▇▇▇ dies, becomes incompetent, becomes disabled or for any other reason is
unable to perform the duties required of a Designated Representative in this
Agreement, then ▇. ▇▇▇▇▇▇ shall immediately cease to be a Designated
Representative and ▇▇▇▇ ▇▇▇▇▇▇ shall replace him as a Designated Representative;
provided, however, in the event that ▇▇▇▇ ▇▇▇▇▇▇ (i) no longer owns at least a
50% interest in LMW, (ii) LMW is no longer a Partner or (iii) ▇▇▇▇ ▇▇▇▇▇▇ dies,
becomes incompetent, becomes disabled or for any other reason is unable to
perform the duties required of a Designated Representative in this Agreement,
then ▇▇▇▇ ▇▇▇▇▇▇ shall not become or shall not be a Designated Representative
and Hertz shall be the sole Designated Representative and RJH the sole Original
Partners Managing Partners. In the event that ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
cease to be Designated Representatives in accordance with this Section 4.04 c.,
then Tyrol shall be the successor Designated Representative and Leisure the sole
Original Partners Managing Partners. Notwithstanding
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the foregoing, any Designated Representative and any Original Partners Managing
Partners may be changed at any time by a vote of the Majority of the Original
Partners.
d. The Partners and their respective Designated Representatives agree to
and accept the appointment of such Designated Representatives. They also agree
that no further or subsequent authorization, consent or ratification shall be
required with respect to the exercise of any of the rights, powers or authority,
or the doing of any act, that such Designated Representatives have the right,
power or authority to do under the provisions of this Agreement. Each Partner
hereby acknowledges and agrees that it shall be bound by any action taken on its
behalf by its Designated Representative.
4.05 Duty to Devote Time; Other Activities:
a. The Managing Partners shall devote such time and attention to the
business of the Partnership as shall be necessary for them to perform their
respective responsibilities under Section 4.01 a. hereof. The Partners hereby
acknowledge and agree that the Partnership may engage the services of persons
affiliated and related to any Partner, subject to the provisions of this
Agreement.
b. Subject to the provisions of, and except as otherwise provided in
Section 4.05 c. hereof, the Partners acknowledge that each of them may have
interests in other present or future ventures, including competitive ventures,
and that, notwithstanding their status as Partners in the Partnership, each
Partner shall be entitled to obtain and/or continue its individual participation
in such ventures without (i) accounting to the Partnership or the other Partners
for any profits with respect thereto, (ii) any obligation to advise the other
Partners of business opportunities for the Partnership which may come to its
attention as a result of its participation in such other ventures, or in the
Partnership, and (iii) being subject to any claims whatsoever on account of such
participation.
c. Until the later to occur of the termination of the term of the
Development Agreement, as such term may be extended, from time to time, or the
termination of any activities of the Partnership with respect to the Partners
agree to bring to the attention of the Partnership all opportunities to manage,
operate or otherwise deal with gaming activities on Native American reservations
involving Native Americans pursuant to the Indian Gaming Act wherever located
and any other gaming activity planned, contemplated or carried on within a
radius of 100 miles from the Facility, to the extent that such activity is not
prohibited by the Development Agreement. The Partners agree that they shall
discuss on a good faith basis mutually satisfactory arrangements to deal with
such opportunities in the Partnership. Among other things, the Partners agree
that if either of the Groups or any Partner brings to the attention of the other
Group or Partners, as the case may be, an opportunity for the Partnership to
manage, operate or otherwise deal with gaming or resort activities on behalf of
Native Americans on Native American reservations, the Partners will explore any
such opportunity on the same participation basis which exists under this
Agreement unless otherwise agreed to by the Partners. If the Partners or other
Group, as the case may be, are unable to reach a mutually satisfactory
arrangement within sixty (60) days from the presentation of such opportunity,
the Partners or Group being offered the opportunity will not be permitted to
pursue such an opportunity (and the Partner(s) presenting such proposal shall be
free to pursue such opportunity) without the prior consent of the Partners or
other Group presenting such opportunity. Notwithstanding the foregoing, the
Partners acknowledge and agree that this Section 4.05 c. shall not apply to
▇▇▇▇▇▇ and its Affiliates with respect to certain property owned by ▇▇▇▇▇▇ or
its Affiliate on Atwater Street in Detroit, Michigan (the "Excluded Property"),
and it is hereby agreed that ▇▇▇▇▇▇ may develop the Excluded Property in any
manner it elects and shall not be required to offer such opportunity to the
Partners as required under this Section 4.05 c.
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d. The Partners acknowledge and agree that any other opportunities which
the Partners agree to undertake pursuant to Section 4.05 c. above, will include
consulting arrangements with the Management Services Company under terms and
conditions to be agreed upon among the Partners.
e. At the request of the Original Partners Managing Partners, Sun agrees
that it shall devote such time, attention, and expertise as required to assist
the Mohegan Tribe and/or the Original Partners in purchasing the Property or
such other land as required to effectuate the purposes of the Development
Agreement and to place in trust such land for the Mohegan Tribe, site planning
such land and improvements for the Facility, selecting and working with
architects, planners, engineers, accountants, attorneys, underwriters and others
in the planning of the Facility, and awarding of contracts.
f. Upon the approval of the Compact and the Development Agreement, Sun
agrees that it shall use its reasonable best efforts to obtain a financing
commitment for phase one of the Facility ("Phase One"). It is presently
anticipated that the construction and development of Phase One of the Facility,
will require a loan in the approximate amount of $150,000,000 (the "Phase One
Financing") Sun shall be primarily responsible for obtaining such Phase One
Financing, which may be obtained from third party sources or from parties
affiliated with Sun. Any commitment for the Phase One Financing shall be subject
to approval of (i) the Original Partners, which approval shall not be
unreasonably withheld, (ii) the Mohegan Tribe, and (iii) the Commission, to the
extent legally required. Notwithstanding the foregoing, the Partners acknowledge
that by executing this Agreement, Sun is not guaranteeing that it will be able
to obtain the Phase One Financing and neither any Original Partner nor the
Partnership shall have any claim against Sun for the failure to obtain Phase One
Financing so long as it has used its reasonable best efforts to do so. The
parties agree that the Phase One Financing, whether or not obtained from parties
or sources affiliated with Sun, shall contain such terms and conditions,
including interest rate(s), applicable to such financing based on the prevailing
market conditions (with the expectation that it will not require lender
participation in equity or profit sharing).
4.06 Indemnity:
No Managing Partner shall be liable to the Partnership or any of the other
Partners (and the Partnership Interests of the Managing Partners shall be free
of any claims by the Partnership or any of the other Partners) by reason of any
act performed for or on behalf of the Partnership, or in the furtherance of
Partnership business, or any omission to act, except for acts or omissions that
constitute a material breach of any provision of this Agreement, a breach of a
duty of loyalty as a Partner, gross negligence, fraud or bad faith. The
Partnership shall indemnify, defend and hold harmless the Managing Partners from
any claim, demand or liability, and from any loss, cost or expense, including,
but not limited to, attorneys' fees and court costs, which may be made or
imposed upon them by reason of any act performed for or on behalf of the
Partnership or in furtherance of the Partnership business, or any omission to
act, except for acts and omissions that constitute a breach of any provision of
this Agreement, a breach of a duty of loyalty as a Partner, gross negligence,
fraud or bad faith.
4.07 Dealing with the Partnership:
Each Partner and its Affiliates shall have the right to contract and
otherwise deal with the Partnership with respect to the sale or lease of
personal property, the rendition of services, the lending of money and for other
purposes, and to receive the purchase price, fees, interest and other amounts
and/or forms of consideration in connection therewith, without being subject to
claims for self dealing; provided that, except with respect to the transactions
referred to in Sections 4.08 and 4.09 hereof or in other Sections of this
Agreement, (i) the Managing Partner(s) of the other Group has given its written
consent thereto, and (ii) the terms and conditions of such transactions are not
less favorable to the
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Partnership than those which the Partnership could obtain from comparable
independent third parties. The approval by the Managing Partner(s) of the other
Group shall be prima facie evidence of the foregoing.
4.08 Certain Services. Fees and Reimbursements to the Partners and
Affiliates of the Partners:
Pursuant to the terms of a certain Management Agreement between the Mohegan
Tribe and the Partnership and the terms of a certain Hotel/Resort Management
Agreement between the Mohegan Tribe and the Partnership (collectively, the
"Management Agreements"), the Partnership is required to perform various
services on behalf of the Mohegan Tribe, including organizational, planning,
development, management, marketing, administrative and supervisory services
(hereinafter collectively referred to as the "Services"). Certain Affiliates of
Partners shall be subcontracted by the Partnership to perform or have performed
certain of these Services on behalf of the Mohegan Tribe and shall be
compensated for the Services from the revenues the Partnership is to receive
from the Mohegan Tribe pursuant to the Management Agreements as set forth below.
a. The Partners agree that an entity to be formed by an Affiliate of Sun,
as to a 50% interest, and the Waterford Hotel Group, Inc., an Affiliate of
▇▇▇▇▇▇ and LMW, as to a 50% interest (the "Management Services Company') shall
be subcontracted by the Partnership to perform certain of the services the
Partnership is required to provide pursuant to the Management Agreements. The
Management Services Company shall perform certain supervisory duties with
respect to how management duties, responsibilities and functions will be carried
out with respect to the Facility in conformance with the Management Agreements
and to the extent directed by the Partnership. The Management Services Company
shall be entitled to compensation therefor as set forth below pursuant to a
Management Services Agreement between the Partnership and the Management
Services Company incorporating the terms set forth in this Section 4.08 a. with
the understanding that if the Management Services Company is unwilling or unable
to reach agreement on any matter relating to the day-to-day activities of the
Facility, decisions relating to such matter(s) shall be made by the Managing
Partners:
(1) The Management Services Company shall make available to the
Partnership adequate employees or other supervisory personnel who will
provide consultation services to the Partnership to assist the Partnership
in the day-to-day supervision of all aspects and functions required to
implement the management decisions and supervision of the day-to-day
operation of the Facility. It is contemplated by the Partners that ▇▇▇▇▇▇
will become the chief operating officer of the Management Services Company.
(2) In consideration of the services rendered by the Management
Services Company, the Partnership shall pay the Management Services Company
an on-going fee of 1% of the gross revenues of the Facility, but not
greater than 25% of the Excess Cash, plus the organizational and
administrative fee, and the marketing and casino operation fee, annually
(the "Management Services Fee").
(3) The Management Services Company can be terminated by the Managing
Partners for "cause" as defined in the Management Services Agreement.
(4) The Management Services Company shall meet and consult with the
Managing Partners on a regular basis, but no less often than quarterly or
as otherwise requested by the Managing Partners. The Management Services
Company shall also meet and consult with any Original Partner(s) and/or the
Managing Partners as reasonably requested by such Original Partner(s) to
discuss any issues, concerns or disagreements which may arise from time to
time in connection with the relationship of the Mohegan Tribe and the
Partnership or the
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Partnership's obligations under the Development Agreement and Management
Agreements. The Management Services Company and/or the Managing Partners,
as the case may be, shall give serious consideration to all such concerns
or problems brought to the attention of the Management Services Company
and/or the Managing Partners, as the case may be, and, to the extent
possible in the best business judgment of the Management Services Company
and/or Managing Partners, as the case may be, shall address such concerns
or problems in such a mariner so as to minimize such problems or concerns.
The Managing Partners shall have the right to require changes in any
management or operation procedure suggested or implemented by the
Management Services Company.
b. The Partners agree that an Affiliate of Sun (hereinafter referred to
as the "Marketing Agent"), shall be subcontracted by the Partnership to perform
marketing and casino operations consulting services required to be performed
under the Management Agreements for the Mohegan Tribe, including the marketing
of promotional events to the extent directed by the Partnership and the Managing
Partners. The Marketing Agent shall be entitled to compensation therefor as set
forth below pursuant to a Marketing Agreement to be entered into among the
Partnership and the Marketing Agent incorporating the terms set forth in this
Section 4.08 b. with the understanding that ultimate decisions in the event the
Marketing Agent is unable to reach agreement on any matter relating to the
responsibilities of the Marketing Agent under the Marketing Agreement shall be
made by the Managing Partners.
(1) The Marketing Agent shall provide consulting advice regarding
casino operations and, among other marketing services, shall together with
its Affiliates provide certain expertise in marketing of promotional
events, the association with Sun and its Affiliates, use of sales offices
and coordination of various marketing activities to ensure consistency of
cultural heritage and symbols in the development and decor of the Facility
and shall create a premium customer development program.
(2) In consideration of the services rendered by the Marketing Agent,
the Partnership shall pay the Marketing Agent an on-going fee (the
"Marketing and Casino Operations Fee") as follows:
If in any fiscal year the Facility gross revenues ("Facility
Gross Revenues") equal or exceed the thresholds set forth below, the
Partnership shall pay the Marketing and Casino Operations Fee calculated as
follows:
Facility Gross Organizational and
Revenues Thresholds Administrative Fee
------------------- ------------------
$300 Million 1.5% of Facility Gross Revenues
$400 Million 2.0% of Facility Gross Revenues
The Marketing and Casino Operations Fee (i) shall be paid sixty (60) days
after the end of each fiscal year, (ii) is solely an obligation of the
Partnership without recourse to the Partners, (iii) shall terminate in the
event of an admission or withdrawal of a Partner and (iv) shall be paid
pari passu with the Organizational and Administrative Fee.
(3) The Marketing Agent shall consult with the Managing Partners to
discuss any issues, concerns or disagreements which may arise in the
marketing in the marketing area. The Managing Partners shall have the right
to require changes in the marketing procedure suggested or implemented by
the Marketing Agent.
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c. The Partners agree that the Original Partners or Affiliates of the
Original Partners (hereinafter collectively referred to as the "Administrative
Agents"), shall be subcontracted by the Partnership to perform or have performed
certain organizational and administrative services required to be performed
under the Management Agreements for the Mohegan Tribe, including the
coordination of certain administrative services, and certain consultation
services in connection with governmental approvals to the extent directed by the
Partnership and the Managing Partners. The Administrative Agents shall be
entitled to compensation therefor as set forth below pursuant to an
Organizational and Administrative Services Agreement to be entered into among
the Partnership and the Administrative Agents incorporating the terms set forth
in this Section 4.08 c. with the understanding that ultimate decisions in the
event the Administrative Agents are unable to reach agreement on any matter
relating to the responsibilities of the Administrative Agents under the
Organizational and Administrative Services Agreement shall be made by the
Managing Partners.
(1) The Administrative Agents shall provide or have provided certain
organizational and administrative services, including advising the Mohegan
Tribe in connection with its application for Federal government
recognition, negotiations with the State of Connecticut with respect to the
Compact, settlement of a land claim, negotiations with the City of
Monteville, aiding the Mohegan Tribe in obtaining Federal legislation to
secure its land claim, aiding the Mohegan Tribe in purchasing additional
land and placing the additional land in trust, providing the Mohegan Tribe
with organizational planning and business and financial advice on an on
going basis, planning and coordination of certain tribal activities,
serving as a liaison with the Mohegan Tribe and various professionals and
other parties, interviewing and recommending professionals to represent the
Mohegan Tribe, coordinating, planning and obtaining appropriate tribal
approvals for the development activities, and coordinating various
marketing activities to ensure consistency of cultural heritage and symbols
in the development and decor of the Facility.
(2) In consideration of the services rendered by the Administrative
Agents, the Partnership shall pay the Administrative Agents an on-going fee
(the "Organizational and Administrative Fee") as follows:
If in any fiscal year the Facility Gross Revenues equal or exceed
the thresholds set forth below, the Partnership shall pay the
Organizational and Administrative Fee calculated as follows:
Facility Gross Organizational and
Revenues Thresholds Administrative Fee
------------------- ------------------
$300 Million 1.5% of Facility Gross Revenues
$400 Million 2.0% of Facility Gross Revenues
The Organizational and Administrative Fee shall be paid to the Original
Partners or their Affiliates (allocated among the Original Partners as they
may agree among themselves). The Organizational and Administrative Fee (i)
shall be paid sixty (60) days after the end of each fiscal year, (ii) is
solely an obligation of the Partnership without recourse to the Partners,
(iii) shall terminate in the event of an admission or withdrawal of a
Partner and (iv) shall be paid pan passu with the Marketing and Casino
Operations Fee.
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(3) The Administrative Agents shall meet and consult with one another
on a regular basis, but no less often than monthly. The Administrative
Agents shall also consult with the Managing Partners to discuss any issues,
concerns or disagreements which may arise in the administrative services or
other relationships between the Partnership's obligations under the
Development Agreement and the Management Agreements to the Mohegan Tribe.
The Managing Partners shall have the right to require changes in the
administrative procedure suggested or implemented by the Administrative
Agents.
d. The Partners agree that Sun (or its Affiliate) (hereinafter in such
capacity referred to as the "Developer") shall be subcontracted by the
Partnership to act as the developer of the Facility and perform certain planning
and developmental functions required of the Partnership under the Development
Agreement for the Mohegan Tribe. The Developer shall be entitled to compensation
therefor as set forth below pursuant to a Development Services Agreement between
Sun and the Partnership ("Development Services Agreement") incorporating the
terms set forth in this Section 4.08(d).
(1) The Developer will make available to the Mohegan Tribe its
development expertise, plans and employees to provide the necessary
expertise to enable the Partnership to perform its obligations under the
Development Agreement for the benefit of the Mohegan Tribe.
(2) In consideration of the service rendered by the Developer, the
Partnership shall pay the Developer a fee in the amount equal to three
percent (3%) of the total development costs of Phase One of the Facility
(which development costs shall include all so-called bard and soft costs
with respect to the construction of the Facility, except land acquisition
costs), plus an additional $25,000 for any out-of-pocket costs and expenses
it might incur (the "Development Services Fee").
(3) The Development Services Fee shall be due and payable, to the
extent available or made available to the Partnership from the Phase One
Financing, as follows: (i) 30% of the amount of the Development Services
Fee shall be paid out of the proceeds of the first construction loan draw
made for Phase One; (ii) 40% of the Development Services Fee shall be
payable when 50% of the Phase One is completed, and (iii) the remaining 30%
of the Development Services Fee shall be paid upon completion of Phase One.
To the extent that there is insufficient Phase One financing proceeds
available to pay all or any portion of the Development Services Fee (the
"Deferred Development Fee") the payment of such Deferred Development Fee
shall be deferred until there are other proceeds available or there is
sufficient Excess Cash to pay such Deferred Development Fee in accordance
with Section 3.03 a.(2) hereof.
(4) In the event the Partnership pursues the development of
additional phases of the Facility, similar fees will be paid to the
Developer for its services to the Partnership in the development of the
additional phase(s).
(5) The Partners acknowledge that Sun will enter into a subcontract
with ▇▇▇▇▇▇ Construction Company ("▇▇▇▇▇▇ Construction"), an Affiliate of
LMW, and RJH, under which ▇▇▇▇▇▇ Construction and RJH will, subject to
Sun's direction, assist in supervising and monitoring the planning and
construction of Phase One. For its services, Sun will pay ▇▇▇▇▇▇
Construction and RJH collectively 20.83% of the Development Services Fee
plus $25,000 for expense reimbursement, as and when received, payable
ratably.
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4.09 Employment Agreement with an Affiliate:
The Partners acknowledge and agree that Tyrol has entered into an
employment agreement with the Partnership pursuant to which Tyrol is acting as
the full time executive director of the Partnership in the operation of the
Partnership, the coordination of the relationship between the Partnership and
the Mohegan Tribe and the development of new business opportunities for the
Partnership. The relationship between Tyrol and the Partnership is governed by
the terms of such employment agreement, subject to the provisions of this
Agreement.
4.10 The Facility and the Development Agreement:
a. The Facility is to be developed in phases and is expected to contain
Class III gaming (as those terms are defined in the Indian Gaming Regulatory
Act, 25 U.S.C. Section 2701 et seq.), restaurants, bars, retail shops, one or
more hotels and other entertainment facilities. The Partners acknowledge that
Phase One is expected to include gaming facilities, a hotel, restaurants, bars,
retail shops and other entertainment facilities, as well as such other
assistance to the Mohegan Tribe as is required under the Development Agreement.
b. Under the terms of the Development Agreement, the Partnership is
obligated to act as the Mohegan Tribe's exclusive agent to design, develop,
construct, manage and maintain the Facility on the Property, or such other site
as selected by the Mohegan Tribe and the Partnership, solely for the benefit of
the Mohegan Tribe.
c. The Partners hereby agree that all of their respective obligations and
duties under this Agreement (including obligations and duties of Affiliates)
shall be conducted in a manner consistent with the Development Agreement and in
cooperation with the Mohegan Tribe.
d. Notwithstanding anything in this Agreement to the contrary, the rights
of any Partner to transfer any Partnership Interest under any provision of this
Agreement, shall in all respects be subject to the consent of (i) the Mohegan
Tribe and (ii) any governmental agency to the extent legally required, and shall
be in conformance with all requirements of the Development Agreement. To the
extent that any transfer of Partnership Interests occur among Partners, the
consent of the Mohegan Tribe shall be required, other than set forth in Section
6.01 b. hereof unless legally required.
e. The Partners acknowledge and agree that the initial undertaking
contemplated by this Agreement includes Phase One only and that any subsequent
phases of the development of the Facility shall require the concurrence of the
Managing Partners.
4.11 Budget:
The Managing Partners shall annually, at least sixty (60) days prior to the
beginning of each fiscal year of the Partnership, prepare a budget for proposed
Partnership expenditures for the next year (the "Budget"). The Budget shall be
sent to each Partner.
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ARTICLE V
ACCOUNTING MATTERS AND BANK ACCOUNTS
5.0l Fiscal Year and Accounting Method:
The Partnership shall operate on a calendar fiscal year and shall use the
accrual method of accounting or such other fiscal year or method of accounting
as shall be determined by the Managing Partners.
5.02 Books and Records:
The books and records of the Partnership shall be maintained at the
Partnership's principal office, or at such other location as the Managing
Partners shall determine. Each Partner may inspect the Partnership's books and
records at any reasonable time.
5.03 Bank Accounts:
All funds of the Partnership shall be deposited in such bank account(s) as
shall be determined by the Managing Partners. All withdrawals therefrom shall be
made upon checks signed by any person(s) authorized to do so by the Managing
Partners.
5.04 Tax Information and Financial Statements:
At the end of each fiscal year of the Partnership, the Managing Partners,
at the expense of the Partnership, shall cause to be prepared and furnished to
the Partners (i) all information relating to the Partnership that is necessary
for the preparation of the Partners' federal, state or local income tax returns,
and (ii) such financial statements as the Managing Partners shall decide to have
prepared, which shall be unaudited unless either the Sun Managing General
Partner, on the one hand, or the Original Managing General Partners, on the
other hand, shall decide otherwise.
5.05 Tax Matters Partner:
LMW Investment, Inc. is hereby designated as Tax Matters Partner for the
Partnership. The Managing Partners may, in their discretion, designate any other
person as Tax Matters Partner. The Tax Matters Partner shall have full power and
authority to act as such for the Partnership and the Partners, with all the
rights and responsibilities of that position described in Section 6222 through
6232 of the Code. Notwithstanding the foregoing, unless the Tax Matters Partner
shall have obtained the advance written approval of the other Managing Partners,
the Tax Matters Partner shall not have the power or authority to (i) choose any
judicial, administrative or other forum in which to contest or litigate any
position or action taken by any taxing authority against or with respect to the
Partnership (or any Partner concerning the Partnership), or (ii) agree to any
extension of any period within which any taxing authority must take action
against or with respect to the Partnership (or any Partner concerning the
Partnership).
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ARTICLE VI
ASSIGNMENTS OF PARTNERSHIP INTERESTS,
WITHDRAWAL OF A PARTNER AND RELATED MATTERS
6.01 Assignment of Sun's Partnership Interest:
a. Except as otherwise provided in Section 6.01 b., 6.01 C. or 6.01 d.
and subject in all respects to Section 4.10 d. hereof, Sun shall not have the
right to assign all or any portion of its Partnership Interest without the
consent of the Original Partners; and, except as otherwise provided in Sections
6.01 b., 6.01 c. and 6.01 d. hereof no assignee of Sun's Partnership Interest or
portion thereof shall have the right to be admitted to the Partnership as a
partner in respect thereof.
b. Sun shall have the right to assign its Partnership Interest to an SEC
Affiliate of Sun and if Sun so elects to have such assignee admitted to the
Partnership as a Partner in respect thereof without the consent of the Original
Partners. Any person to whom Sun makes an assignment of its Partnership Interest
pursuant to the provisions of this Section 6.01 b. shall have the right to be
admitted to the Partnership as a partner in respect of the Partnership Interest
or portion thereof so assigned to such person upon the satisfaction of the
requirements set forth in Section 6.03 a. hereof.
c. If Sun receives a bona fide written offer to purchase all or any
portion of its Partnership Interest in the Partnership, Sun, if it desires to
sell such Partnership Interest, may transfer its Partnership Interest in
accordance with the provisions of Section 6.03 a. hereof without the consent of
the Original Partners under the following terms and conditions:
(1) Sun shall give written notice to the Original Partners Group of
its desire to make such sale, the name and address of the offeror and the
purchase price and other terms of sale together with a copy of the offer
(the "Offer Notice").
(2) The Original Partners Group shall thereupon have the option, but
not the obligation, to purchase all (but not less than all) of said
Partnership Interest subject to, and on the same terms and conditions as
set forth in, the Offer Notice. The option shall be exercised by the
Original Partners giving written notice ("Acceptance") to Sun within thirty
(30) days after the receipt of the Offer Notice by the Original Partners.
The Acceptance shall fix a date ("Closing Date") as the date on which the
purchase of such Partnership Interest shall be consummated, such date to be
not less than fifteen (15) nor more than sixty (60) days (or such longer
time as may be required to obtain any applicable consents from any
governmental agency so long as such consent(s) are diligently pursued)
after the expiration of such thirty (30) day period. Failure of the
Acceptance to fix a Closing Date shall be deemed an election to consummate
the purchase on the sixtieth (6Oth) day. The Original Partners Group shall
purchase such Partnership Interest in proportion to the Percentage Interest
each accepting Original Partner bears to the total Percentage Interest of
all accepting Original Partners or as otherwise agreed to by the Original
Partners.
(3) Failure by the Original Partners to give a notice of Acceptance
within the time specified in Section 6.01 c.(2) shall be deemed an election
by the Original Partners not to exercise such option. In the event all
Original Partners shall fail to exercise their rights to purchase such
Partnership Interest as offered, Sun shall be free to transfer such
Partnership Interest but only in accordance with the terms and conditions
referred to in the Offer Notice given pursuant to Section 6.01 c.(l) during
a period thirty (30) days following the expiration
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of the period of time in which the Original Partners Group had the right to
purchase the same (or such longer time as may be required to obtain any
applicable consents from any governmental agency so long as such consent(s)
are diligently pursued); but after said thirty (30) day period has expired,
the Original Partner Group's right of first refusal as provided shall
reapply to the Partnership Interest so offered.
d. The equity securities of Sun may be transferred to any SEC Affiliate
of its current corporate parent without the consent of the Original Partners. No
other transfers of the equity securities of Sun shall be permitted without the
consent of the Original Partners.
e. Any assignee of Sun's Partnership interest or portion thereof who is
not admitted to the Partnership as a Partner in respect thereof shall only be
entitled to receive, in accordance with any agreement that such assignee may
have with Sun, all or a portion of the Profits, Losses and/or distributions of
the Partnership otherwise allocable to Sun in respect of Sun's Partnership
Interest or portion thereof assigned to such assignee, and such assignee shall
not have any other rights of a Partner under this Agreement or otherwise.
f. As used in this Article VI., the term (i) "assignment" means any sale,
conveyance, transfer, assignment, mortgage, pledge, encumbrance, hypothecation
or any other alienation or disposition of any type or kind, (ii) "assign" means
any making of an assignment, (iii) "assignor" means any person who makes an
assignment, and (iv) "assignee" means any person to whom or for whose benefit an
assignment is made.
6.02 Assignment of an Original Partner's Partnership Interest:
a. Except as otherwise provided in Sections 6.02 b., 6.02 c. or 6.02 d.
hereof and subject in all respects to Section 4.10 d. hereof, no Original
Partner (and no assignee of an Original Partner's Partnership Interest or a
portion thereof) shall have the right to assign its Partnership Interest or any
portion thereof without the written consent of the Partners; and, except as
otherwise provided in Sections 6.02 b., 6.02 c. and 6.02 d. hereof, no assignee
of an Original Partner's Partnership Interest or a portion thereof shall have
the right to be admitted to the Partnership as a partner in respect thereof, and
such assignee shall only be entitled to receive, in accordance with any
agreement that he may have with the assignor, all or a portion of the Profits,
Losses and/or distributions of the Partnership otherwise allocable to the
assignor in respect of such Partnership Interest or portion thereof, and such
assignee shall not have any of the other rights of a partner of the Partnership.
b. Any Original Partner may assign its Partnership Interest to an
Affiliate of such Original Partner at any time with the consent of the Majority
of the Remaining Original Partners, which consent shall not be unreasonably
withheld. Any person to whom an Original Partner makes an assignment of its
Partnership Interest or a portion thereof which is permitted under the
provisions of this Section 6.02 b. shall have the right to be admitted to the
Partnership as a partner in respect of the Partnership Interest or portion
thereof so assigned to such person upon the satisfaction of the requirements set
forth in Section 6.03 a. hereof.
c. Except to the trustees of a trust for the benefit of a Principal
and/or his spouse and/or his issue and only if the trustee agrees to assume the
obligations of this Agreement and to abide by the terms hereof, no Original
Partner shall (i) permit any transfer of its stock, other than resulting from
the death of a shareholder, to be recorded on its books or records, or (ii)
issue any additional shares of its stock or warrants or other rights authorizing
the purchase of additional shares with the results that the Principals of such
Original Partner (including the interests of a trustee permitted above) have
together less than
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50.1 % interest in such controlling and beneficial interest in the Original
Partner. A violation of this Section 6.02 c. will result in such Original
Partner's interest in the Partnership being deemed converted to a beneficial
interest under the general terms and conditions set forth in Section 6.04 f.
hereof. The Managing Partners shall take whatever action is needed to effectuate
such conversion. The Original Partners shall pay for all expenses incurred to
carry Out such conversion except for the converted Original Partner's expenses,
such as accounting and legal, which shall be the sole obligation of such
converted Original Partner.
d. Anything contained in this Agreement to the contrary notwithstanding,
if any Partner who is a member of the Original Partners Group receives a bona
fide written offer to purchase all (but not a portion) of its Partnership
Interest, such Partner, if it desires to sell, may transfer such interest in
accordance with this Section 6.02 d. without the consent of the Partners, under
the following terms and conditions:
(1) If any Original Partner receives a bona fide written offer to
purchase all of its Partnership Interests, such Original Partner, if it
desires to sell, may transfer such interest in accordance with the terms of
this Section 6.02 d.
(2) The Original Partner who receives an offer under this Section
6.02 d. (the "Selling Partner") shall give the Offer Notice to the other
non-selling Partners of the Original Partners Group (the "Non-Selling
Partners").
(3) The Non-Selling Partners shall thereupon have the option, but not
the obligation, to purchase all (but not less than all) of said Partnership
Interest on the same terms and conditions as set forth in the Offer Notice.
The option shall be exercised by the Non-Selling Partner's giving of the
Acceptance to the Selling Partner within thirty (30) days after the receipt
of the Offer Notice by the Non-Selling Partners. The Acceptance shall fix
the Closing Date, such Closing Date shall be not less than fifteen (15) nor
more than sixty (60) days after the expiration of such thirty (30) day
period. Failure of the Acceptance to fix a Closing Date shall be deemed an
election to consummate the purchase on the sixtieth (6Oth) day. The Non-
Selling Partners shall purchase such Partnership Interest in the proportion
to the Percentage Interest of each accepting Original Partner bears to the
total Percentage Interest of all accepting Original Partners.
(4) Failure by a Non-Selling Partner to give a notice of Acceptance
within the time specified in Section 6.02 d.(3) shall be deemed an election
by the Non-Selling Partner not to exercise such option. In the event all
Non-Selling Partners shall fail to exercise their rights to purchase such
Partnership Interest as offered, the Selling Partner shall then give the
Offer Notice to Sun.
(5) Sun shall thereupon have the option, but not the obligation, to
purchase all (but not less than all) of said Partnership Interest on the
same terms and conditions as set forth in the Offer Notice. The option
shall be exercised by Sun giving the Acceptance to the Selling Partner
within thirty (30) days after the receipt of the Offer Notice by Sun. The
Acceptance shall fix the Closing Date, such Closing Date to be not less
than fifteen (15) nor more than sixty (60) days after the expiration of
such thirty (30) day period. Failure of the Acceptance to fix the Closing
Date shall be deemed an election to consummate the purchase on the sixtieth
(60th) day. Failure by Sun to give the notice of Acceptance within the time
specified in Section 6.02 d.(5) shall be deemed an election by Sun not to
exercise such option. In the event that Sun shall fail to exercise its
rights to purchase such Partnership Interest as offered, the Selling
- 29 -
Partner shall be free to transfer such Partnership Interest, but only in
accordance with the terms and conditions referred to in the Offer Notice
given pursuant to Section 6.02 d.(2) during a period thirty (30) days
following the expiration of the period of time in which Sun had the right
to purchase the same; but after said thirty (30) day period has expired,
the Non-Selling Partners' right of first refusal as provided and Sun's
rights under Section 6.02 d.(4) shall reapply to the Partnership Interest
so offered.
6.03 Admission of the Partners:
a. If a Partner makes an assignment of his Partnership interest or a
portion thereof which satisfies the requirements of Section 6.01 or Section 6.02
hereof (and subject in all respects to Section 4.10 d. hereof), the assignee
shall become a partner of the Partnership in respect of such Partnership
Interest or portion thereof, if all of the following requirements are satisfied:
(1) The assignor Partner executes and delivers to the assignee, and
delivers to the Managing Partners an executed counterpart of, an instrument
of assignment which provides, among other things, that it is the assignor
Partner's intention that the assignee become a partner of the Partnership
in the place and stead of the assignor Partner in respect of the
Partnership Interest or portion thereof assigned by the assignor Partner to
the assignee;
(2) The assignee executes and delivers to the assignor Partner, and
delivers to the Managing Partners an executed counterpart of, an assignment
under the terms of which he (i) accepts such assignment and admission as a
partner of the Partnership, (ii) assumes and agrees to perform the
obligations of the assignor Partner to the Partnership in respect of the
Partnership Interest or portion thereof assigned to him by the assignor
Partner from and after the date of the assignment, and (iii) agrees to be
bound by, and to perform the provisions of, this Agreement in respect of
the Partnership Interest or portion thereof assigned to him by the assignor
Partner from and after the date of the assignment; and the assignee
executes and delivers to the Managing Partners such other instruments and
documents as the Managing Partners shall require, which may include, but
shall not necessarily be limited to, a conformed counterpart of this
Agreement;
(3) The assignor Partner and/or the assignee reimburses the
Partnership for the reasonable legal fees and other expenses incurred by it
in connection with such assignment and admission as a partner of the
Partnership; and
(4) The Partners, as applicable, give their express written consent
to such admission as a partner of the Partnership, except to the extent
that such consent is not required under Section 6.01 or 6.02 hereof.
b. The assignor Partner shall cease to be, and the assignee shall become,
a partner of the Partnership in respect of the Partnership Interest or portion
thereof assigned to such assignee, as of the date on which all of the
requirements of Section 6.03 a. hereof have been satisfied.
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6.04 Transfers at Death or Incompetency of
a Principal of the Original Partners:
a. In the event of the occurrence of a Disability Event with respect to
(i) Hertz or Tyrol, (ii) both ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, or (iii) both ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇. and Del ▇. ▇▇▇▇▇▇ ("Option Triggering Event"), then the Original
Partner whose shareholder, shareholders or key employee had the occurrence of a
Disability Event (the "Disabled Party") shall have the option to appoint an
officer, shareholder or key employee to be substituted for such Disabled Party
("Substitute Party"), and, upon the approval of the Majority of the Remaining
Original Partners, such Substituted Party shall be substituted in the place and
stead of the Disabled Party; provided, however, if such Substitute Party is not
acceptable to the Majority of the Remaining Original Partners, then, in such
event, or if the Disabled Party elects it shall have the option to (-A-) sell
its entire Partnership Interest to the other Original Partners as set forth in
Section 6.04 c. hereof at the Purchase Price determined in accordance with
Section 6.04 b. hereof or (B) to have its Partnership Interest converted to a
beneficial interest in accordance with Section 6.04 e. hereof.
b. The purchase price for such Disabled Party's Partnership Interest
shall be the fair market value thereof as of the date upon which notice was
provided to the other Group pursuant to Section 6.03 b. hereof (the "Notice
Date"). If the Disabled Party and the remaining Original Partners cannot agree
as to such fair market value within sixty (60) days after the Notice Date, then
the purchase price of the Partnership Interest shall be the fair market value of
such Partnership Interest as of the Notice Date, as determined by a nationally
recognized accounting firm selected in the manner specified below, whose
decision shall be final. The Disabled Party and the remaining Original Partners
shall together appoint a qualified nationally recognized accounting firm to
value the Partnership Interests in the Partnership owned by the Partners and to
value any other assets of the Partnership in order to assist such accountants in
determining the fair market value of the Partnership Interest. If the Disabled
Party and the remaining Original Partners cannot agree as to a suitable
accounting firm within seventy-four (74) days after the Notice Date, then each
shall promptly select a qualified nationally recognized accounting firm and one
of such firms shall be chosen by lot to value the Partnership Interest of the
Disabled Party. In making its determination, such accountants may retain one or
more qualified appraisers (or such other persons as they deem appropriate) to
value the Partnership assets and shall not discount the Disabled Party's
Partnership Interest for not being freely transferable or not being a
controlling interest, but shall value such Partnership Interest based on its
allocable Percentage Interest in the fair market value of the Partnership assets
and liabilities and the rights and obligations relating to such Partnership
Interest and any outstanding Loans (the "Purchase Price").
c. The Disabled Party shall have the obligation to notify the remaining
Original Partners of its decision to appoint a Substituted Party or to sell or
to convert the Partnership Interest pursuant to Section 6.04 a. above within
ninety (90) days after the occurrence of the Disability Event. The remaining
Original Partners shall then immediately commence the determination of the
Purchase Price pursuant to Section 6.04 b. hereof. Upon receipt of the
notification of the Purchase Price, the Disabled Party shall give notice within
ten (10) days of its election to grant the Partners the option to purchase or to
convert its interest to a beneficial interest as set forth in Section 6.04 a.
above. The notice, if exercising the right to sell, shall fix a date for the
transfer ("Transfer Date") which date shall be not less than thirty (30) nor
more than sixty (60) days after the notice. Failure of such notice to establish
a Transfer Date shall be deemed an election of the Transfer Date to be the
sixtieth (60th) day. Failure to notify the remaining Original Partners within
said ten (10) day period shall be deemed a decision to convert.
d. If the Disabled Party exercises its option to sell its Partnership
Interest, the remaining Original Partners shall by unanimous decision have the
option to (i) require the Disabled Party to convert
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its Partnership Interest to a beneficial interest; or (ii) purchase the interest
of the Disabled Party in proportion to which each remaining Original Partners'
Percentage Interest bears to the total of all Percentage Interests of the
remaining Original Partners, unless the remaining Original Partners agree
unanimously to a different percentage or different purchasers (such purchasers
are hereinafter referred to as the "Purchasing Partners"). The Purchasing
Partners shall notify the Disabled Party of their decision to purchase or
convert within thirty (30) days of the receipt of the notice pursuant to Section
6.04 c. Failure to notify the Disabled Party within said thirty (30) day period
shall be deemed a decision to convert.
e. The Purchase Price shall be paid, at the election of each Purchasing
Partner as follows: (i) in cash or (ii) 10% thereof in cash on the Transfer
Date; the balance by each Purchasing Partner's execution and delivery of a
promissory note for the portion such Partner is purchasing dated as of the
Transfer Date, made payable to the order of the Disabled Party payable in equal
consecutive monthly installments of principal and interest that would fully
amortize such promissory note over the lesser of (-A-) a five year period or
(-B-) the remaining unexpired term of the Development Agreement, with the first
payment commencing thirty (30) days from the Transfer Date. Interest on the
unpaid balance shall be at the lowest rate of interest, presently known as the
"Test Rate" which pursuant to the provisions of Section 1274 of the Code (or any
successor statute of like purpose) and the regulations thereunder, without
regard to Section 1274A of the Code, is sufficient to avoid characterization of
any part of the purchase price as "unstated interest" as that term is described
in such statute and regulation. Such promissory note shall provide for the
privilege of prepayment at any time without premium or penalty and shall recite
that the total balance shall become due at the option of the holder if all or
any part of the principal or interest remains unpaid for thirty (30) days after
the date on which the same becomes due.
f. If the Disabled Party elects to convert its interest or the remaining
Original Partners elect to have the Disabled Parties' interest converted to a
beneficial interest, then the Disabled Party and the remaining Original Partners
shall take all steps necessary to evidence the assignment of the Disabled
Parties' Partnership Interest to the remaining Original Partners, in the
proportion each remaining Original Partners Partnership Interest bears to all of
the other remaining Original Partners Partnership Interests and the Original
Partners shall thereupon make an assignment of a beneficial interest in the
Profits, Losses and distributions of the Partnership to the Disabled Party with
respect to the Disabled Parties' Partnership Interest to the Disabled Parties;
provided, however, such Disabled Party shall continue to be liable for the
Disabled Party's obligations and liabilities under the Partnership Agreement.
g. The Original Partners, pro rata, shall pay all costs associated with
the valuation of the Disabled Parties Partnership Interest under this Section
6.04.
6.05 Withdrawal etc. of a Partner:
a. Except as provided in Sections 6.06 through 6.10 hereof, no Partner
may withdraw from the Partnership without the consent of all of the other
Partners (except in connection with an assignment of its entire Partnership
Interest and the admission of the assignee as a partner of the Partnership in
respect of its Partnership Interest, pursuant to, and in accordance with, the
provisions of Section 6.01, 6.02 and 6.03 hereof). If a Partner shall withdraw
from the Partnership in violation of the preceding sentence ("Withdrawn
Partner"), then:
(1) Unless the remaining Partners shall decide otherwise, the
remaining Partners shall continue the business of the Partnership;
- 32 -
(2) The Withdrawn Partner shall be liable to the remaining Partners
for all damages caused to them by its withdrawal;
(3) The Withdrawn Partner shall cease to be a partner of the
Partnership and shall cease to have any interest in, any rights with
respect to, the Partnership, the management of the Partnership, or any
other property or asset of the Partnership or the business of the
Partnership, and anything contained in this Agreement to the contrary
notwithstanding, the Withdrawn Partner shall have no right to participate
in the management of the Partnership or receive any distributions or other
amounts from the Partnership or the remaining Partners under any Section of
this Agreement; however, the Withdrawn Partner shall nevertheless remain
liable for all of its existing unperformed obligations to, and with respect
to, the Partnership and for its share of all existing liabilities of the
Partnership to third parties; and
(4) The Withdrawn Partner shall be deemed to have renounced its
Partnership Interest and to have waived any right that it would otherwise
have under this Agreement, the Act or otherwise to demand or receive any
amounts from the Partnership or the remaining Partners in respect of the
value of its Partnership Interest or otherwise, or to be indemnified
against present or future Partnership liabilities, and the Partnership and
the remaining Partners shall have no obligation whatsoever to pay to the
Withdrawn Partner the value of its Partnership Interest or any other amount
or to indemnify it against any present or future Partnership liabilities.
If (and only if) the remaining Partners decide not to, or are otherwise unable
to, continue the business of the Partnership, the Partnership shall be wound up
and liquidated pursuant to the provisions of Article VII hereof.
b. The Withdrawn Partner shall be deemed to have appointed the other
Partners and each of them, with full power of substitution, as its true and
lawful attorney-in-fact, in its name and behalf, to execute and deliver any and
all documents and instruments that are necessary or advisable, in the judgment
of such attorney-in-fact, to effectuate the provisions of Section 6.05 a.
hereof. The foregoing power of attorney, and all other powers of attorney
granted hereunder or pursuant hereto, is a special power of attorney coupled
with an interest, is irrevocable and shall survive the assignment by a Partner
of its Partnership Interest and the occurrence of a Disability Event with
respect to a Partner.
6.06 Development Agreement Withdrawal:
a. Except for a delay or denial described in Section 6.06 b. hereof and
which delay or denial is cured by the Original Partners, if the Development
Agreement is not approved by the Commission, or if it is approved but on terms
substantially less favorable than set forth in the Development Agreement
attached hereto as Exhibit B, Sun may elect to withdraw from the Partnership. In
the event that Sun elects to withdraw from the Partnership pursuant to this
Section 6.06 a., Sun shall have no further rights or obligations hereunder and,
in such event, Sun shall not be entitled to receive a return of its Original
Capital Contribution, Additional Capital Contribution or any Additional
Contributions but shall be entitled to the repayment of any Loans made by it to
the Partnership upon the commencement of the construction of Phase One of the
Facility.
b. Notwithstanding anything to the contrary in this Section 6.06, if the
approval of the Development Agreement is not obtained because of the
Commission's objection to Sun's, its designee's or any of its key employee's
participation, which objection is not cured within ninety (90) days after
receipt by Sun of notice from the Original Partners of such objection, the
Original Partners, in their sole discretion upon written notice to Sun, may
elect to cause Sun to withdraw from the Partnership and proceed to develop the
Facility without the participation of Sun. Subject to the regulation of the
- 33 -
Commission, if Sun is required to withdraw from the Partnership under this
Section 6.06 b., (i) the Partnership will have the right to utilize all plans
and materials previously prepared or supplied by Sun in connection with the
development of the Facility, (ii) irrespective of whether or not such plans or
materials are utilized, the Partnership shall reimburse Sun for the aggregate
amount of its Original Capital Contribution, Additional Capital Contribution and
any Additional Contribution it has funded and Loans which it has made to the
Partnership immediately upon the commencement of the construction of Phase One
of the Facility and (iii) Sun shall have no further rights or obligations
hereunder.
c. In the event the approval of the Development Agreement is denied or
delayed because of the Commission's objection to the participation of one or
more of the Original Partners or any of their key employees, which objection is
not cured within ninety (90) days after receipt by the Original Partners of such
objection, such Original Partners shall withdraw from the Partnership on the
terms and conditions set forth in Section 6.06 d. below. In the event all of the
Original Partners are disqualified, which disqualification with respect to all
of the Original Partners cannot be cured as provided above, Sun shall have the
right, at its option, to acquire all of the Partnership Interests in the
Partnership and continue the Partnership's rights under the Development
Agreement. In such event, subject to the regulation of the Commission, Sun shall
pay each Original Partner its total Capital Contributions and Loans made to the
Partnership as of the date of such withdrawal.
d. (1) Subject to the regulation of the Commission, if an Original
Partner is required to withdraw from the Partnership under Section 6.06 c.
above ("Withdrawing Original Partner"), the other Original Partners pro
rata, or on any other basis agreed to by the other Original Partners) shall
acquire the Partnership Interest of such Withdrawing Original Partner(s).
The purchase price for the Partnership Interest of the Withdrawing Original
Partner shall be the product of (i) times (ii) times (iii), where (i)
equals the Withdrawing Original Partner's Percentage Interest, (ii) equals
Seventy percent (70%) and (iii) equals the Excess Cash for the first five
(5) years of operation of the Project, increased by the Marketing and
Casinos Operations Fee and Organization and Administration Fee for the
first five (5) years of the operation of the Project and reduced by the
Development Services Fee for the first five (5) years of the operation of
the Project.
The purchase price shall be paid to the Withdrawing Original Partner
in five (5) annual installments with the first installment being due 425
days after the Project first opens for business and continuing annually
thereafter for four (4) additional years on the same date. Each annual
installment shall be calculated as described above for the preceding year,
with the first annual installment relating to the year commencing on the
date the Project opens for business and ending 365 days thereafter and
annually calculated thereafter for the same time period (e.g., if the
Project opened for business on September 1, 1995, the first annual
installment would relate to the year September 1, 1995 - August 31, 1996
and would be due on October 30, 1996, the second annual installment would
relate to the year September 1, 1996 - August 31, 1997 and would be due on
October 1997, etc.).
(2) Each Original Partner represents and warrants to each of the
other Original Partners the following:
That it, its officers, directors or persons holding ten percent (10%) or
more of the stock or equity of such Original Partner or any parent or
subsidiary companies of such Original Partner have never had or been
subject to any of the following:
i) a felony conviction in any jurisdiction;
- 34 -
ii) an arrest or prosecution for any gaming related offense,
felony, misdemeanor or otherwise;
or
iii) a felony arrest or prosecution for any offense involving
fraud or deceit;
iv) a successful civil prosecution or settlement of any claim
involving fraud.
6.07 Financing Withdrawal:
The parties agree that in the event a satisfactory commitment for the Phase
One Financing is not obtained within one hundred twenty (120) days after the
later to occur of (i) the approval of the Development Agreement by the
Commission and (ii) the approval of the Compact by the Commission (the "Approval
Date"), the Original Partners Managing Partners shall have the right to cause
Sun to withdraw from the Partnership and the Partnership may proceed to plan,
develop, construct and operate the Facility without the participation of Sun;
provided, however, in the event that the Original Partners Managing Partners
elect to cause Sun to withdraw from the Partnership pursuant to this Section
6.07, the Original Partners Managing Partners shall give Sun written notice of
such intent to cause Sun to withdraw from the Partnership and, in such event,
Sun shall be deemed to have withdrawn from the Partnership upon the expiration
of the fourteen (14) day time period described below unless such satisfactory
commitment for the Phase One Financing is obtained within fourteen (14) days
after the delivery of written notice thereof by the Original Partners Managing
Partners, and further provided that the Original Partners Managing Partners may
not cause Sun to withdraw if the Original Partners are in material default under
their obligations under this Agreement. In the event that the Original Partners
Managing Partners elect to cause Sun to withdraw pursuant to this Section 6.07,
Sun shall not be entitled to receive a return of its Capital Contributions it
may have funded pursuant to this Agreement but shall be entitled to the
repayment of all Loans upon such withdrawal and Sun shall have no further rights
or obligations hereunder.
Notwithstanding the foregoing or any other provision in this Agreement to
the contrary, the Original Partners shall not have the right to cause Sun to
withdraw from the Partnership provided all of the following have been satisfied:
(1) Sun has approved the commitment for Phase One Financing;
(2) Sun, any of its affiliates or any stockholder of Sun or any of
its affiliates, has agreed to make a subordinated loan to the Mohegan Tribe
in the amount of twenty five million dollars ($25,000,000) (the
"Subordinated Loan"), at a market rate of interest, and in a manner which
is otherwise acceptable to the Phase I financing lender;
(3) Sun has agreed to execute a completion guaranty under the terms
and conditions as required by the Phase One Financing lender; and
(4) the Subordinated Loan and the Phase One Financing meet all the
requirements of the Commission.
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6.08 Insolvency of a Partner:
a. If a Partner shall become an Insolvent Partner, then, at the election
of the other Partner(s), the Insolvent Partner shall be deemed to be a Withdrawn
Partner within the meaning of Section 6.05 hereof and shall be deemed to have
withdrawn from the Partnership on the date on which it became an Insolvent
Partner (or such later date as shall be designated by a majority of the Other
Partners), and the provisions of Section 6.05 hereof shall apply.
b. As used in this Agreement, the term "Insolvent Partner" means a
Partner (i) which makes an assignment for the benefit of creditors, (ii) which
files a voluntary petition in bankruptcy, (iii) which is adjudicated a bankrupt
or insolvent, (iv) which files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, (v) which files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in any proceeding of the nature
described in clause (iv), (v) which seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for such Partner or all or any
substantial part of its properties and assets, or (vi) with respect to which a
trustee, receiver or liquidator of it or any substantial part of its properties
and assets has been appointed without its consent or acquiescence.
6.09 Power of Attorney:
In the event of a withdrawal of a Partner, other than in violation of
Section 6.05 hereof, such Partner shall be deemed to have appointed each of the
Managing Partners, with full power of substitution, as its true and lawful
attorney-in-fact, in its name and behalf, to execute and deliver the Withdrawal
Agreement attached hereto as Exhibit C, to effectuate the provisions of Article
VI hereof. The foregoing power of attorney is a special power of attorney
coupled with an interest, is irrevocable and shall survive the assignment by a
Partner of its Partnership Interest and the occurrence of a Disability Event
with respect to a Partner. Each Partner shall take such corporate and
shareholder actions as is necessary to effectuate the foregoing and concurrently
herewith shall deliver to the Managing Partners appropriate board of director
resolutions specifically authorizing the foregoing.
6.10 Dissolution of a Partner:
The dissolution of a Partner shall not cause the dissolution of the
Partnership and the remaining Partners shall continue the Partnership unless the
remaining Partners shall decide otherwise. Upon the dissolution of a Partner,
such Partner shall be deemed to have only a beneficial interest in the
Partnership and shall not have any voting or management rights.
ARTICLE VII
WINDING UP AND TERMINATION OF THE PARTNERSHIP
7.01 Liquidation of the Property and Assets of the
Partnership and Disposition of the Proceeds:
a. Upon the dissolution of the Partnership, the Managing Partners shall
proceed to wind up the affairs, and liquidate the property and assets, of the
Partnership, and the proceeds of such liquidation, and any amounts contributed
to the Partnership pursuant to Section 2.03 hereof, shall be applied and
distributed in the following order of priority:
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(1) To the expenses of the liquidation;
(2) To the payment of all debts and liabilities of the Partnership;
(3) To the establishment of any reserves which the Managing Partners
deem reasonably necessary to provide for any contingent or unforeseen
liabilities or obligations of the Partnership or of the Managing Partners
arising out of or in connection with the Partnership; provided, however,
that after the expiration of such period of time as the Managing Partners
deem advisable, the balance of such reserves remaining after payment of
such contingencies shall be distributed in the manner hereinafter set forth
in this Section 7.01; and
(4) Any remaining proceeds shall be distributed to, and allocated
among, the Partners pro rata in accordance with their Capital Account
balances. For this purpose, the determination of the Partners' Capital
Account balances shall be made after adjustment to reflect the allocation
of all Profits and Losses under Section 3.01 hereof. All distributions
pursuant to this Section 7.01 a.(4) shall be made by the end of the fiscal
year of liquidation (or, if later, within 90 days after the date of
liquidation); however, the Partnership may withhold (A) reserves
established under Section 7.01 a.(3) hereof and (B) receivables of the
Partnership for the purpose of collecting any amounts due thereunder. Any
amounts so withheld (or the proceeds of the collection of receivables so
withheld) shall be distributed as soon as practicable to, and allocated
among, the Partners in the ratio of their positive Capital Accounts.
b. A reasonable time shall be allowed for the orderly liquidation of the
property and assets of the Partnership and the payment of the debts and
liabilities of the Partnership in order to minimize the normal losses attendant
upon a liquidation.
c. The Partners hereby appoint the Managing Partners and each of them,
and any person designated by the Managing Partners or either of them, with full
power of substitution, as their true and lawful attorneys-in-fact to hold,
collect and disburse, in accordance with this Agreement, any Partnership
receivables existing at the time of the termination of the Partnership and the
proceeds of the collection of such receivables, including, but not limited to,
those arising from the sale of Partnership property and assets. The foregoing
power of attorney (and all other powers of attorney granted hereunder) is a
special power of attorney coupled with an interest, is irrevocable and shall
survive the transfer or assignment by a Partner of his Partnership Interest and
the death or disability of each Partner; provided, however, such power of
attorney shall terminate upon the distribution of the proceeds of all such
receivables in accordance with the provisions of this Agreement. Such attorneys-
in-fact shall be entitled to reimbursement for the reasonable expenses incurred
by them in acting under this power of attorney.
d. Anything contained in this Section 7.01 to the contrary
notwithstanding, if the Managing Partners shall determine that a complete
liquidation of all of the property and assets of the Partnership would involve
substantial losses or be impractical or ill advised under the circumstances, the
Managing Partners shall liquidate that portion of the property and assets of the
Partnership sufficient to pay the expenses of liquidation and the debts and
liabilities of the Partnership (excluding the debts and liabilities of the
Partnership to the extent they are adequately secured by mortgages on, or
security interests in, property and assets of the Partnership), and the
remaining property and assets shall be distributed to the Partners as
tenants-in- common, partitioned in accordance with applicable statutes or
distributed in such other reasonable manner as shall be determined by the
Managing Partners. The distribution of such remaining property and assets to the
Partners shall be made subject to any mortgages on, or security interests in,
such property and assets. If any assets are distributed (or, pursuant to Section
708(b)(l)(13) of the Code, deemed distributed) in kind, such assets shall be
distributed (or deemed distributed, as the
- 37 -
case may be) in a manner which is consistent with the order of priority set
forth in Section 7.01 a. hereof. In determining such order of priority, the
Capital Account of each Partner shall be credited or debited immediately prior
to such distribution, in accordance with Sections 10.01 k.(2) and 10.01 o.
hereof, with the amount of gain or loss, respectively, with which such Partner's
Capital Account would be credited or debited if such assets were sold by the
Partnership at their fair market values. Upon distribution of such assets, the
Capital Account of each Partner shall be debited with the fair market value of
any such assets distributed to such Partner.
e. If, at the time of the dissolution and winding up of the Partners hip,
there is no Managing Partner, the Partners shall, by vote of a Majority in
Interest of the Partners, appoint a liquidator to wind up the affairs and
liquidate the property and assets of the Partnership, and such liquidator shall
have all powers necessary to perform all acts contemplated to be performed by
the Managing Partners under this Section 7.01, and shall be compensated as
agreed upon by such Majority in Interest of the Partners and such liquidator.
Such liquidator may, but need not be, a Partner.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES BY THE PARTNERS
8.01 Original Partner Representations:
The Original Partners severally represent and warrant to Sun that:
a. The Partnership was and continues to be a general partnership duly
organized and validly existing under the laws of the State of Connecticut.
b. RJH, Leisure, ▇▇▇▇▇▇ and LMW are the sole partners of the Partnership.
the Partnership and each of the Original Partners have the power and authority
to execute and deliver this Agreement, which has been duly authorized by all
necessary partnership action of the Partnership and corporate action of each of
its partners, as applicable.
c. There are no actions, suits or proceedings pending or, to the best
knowledge of any Original Partner, threatened against or affecting the
Partnership. The total liabilities of the Partnership did not currently exceed
$80,000.00 as of March 24, 1994.
d. The Partnership and each of the Original Partners have taken all
requisite partnership and corporate action, as applicable, on behalf of the
Partnership to enter into the Development Agreement.
e. Neither the Partnership nor any Original Partner is currently
insolvent or the subject of or a party to any pending bankruptcy, reorganization
or insolvency proceeding.
f. The sole shareholder of RJH is ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
g. The sole shareholder of Leisure is ▇▇▇ ▇. ▇▇▇▇▇ but ▇▇. ▇▇▇▇▇ has
entered into agreements to transfer not more than 49% of his shares in Leisure
to others.
h. The sole shareholders of ▇▇▇▇▇▇ are trusts for the benefit of the
family of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
- 38 -
i. The sole shareholders of LMW are ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
8.02 Sun Representations:
Sun represents and warrants to the Original Partners that:
a. Sun is a corporation duly organized, validly existing and in good
standing under the laws of Connecticut.
b. Sun has power and authority to enter into this Agreement.
c. There are no actions, suits or proceedings pending, or to the best
knowledge of Sun, threatened against or affecting Sun or its ultimate corporate
parent before any court or any governmental department or agency which may
result in a material adverse change in the business or condition of Sun or Sun's
ultimate corporate parent or Sun's ability to perform its obligations under this
Agreement.
d. To the best of knowledge of Sun, each of Sun and Sun's ultimate
corporate parent has complied in all material respects with all applicable
statutes and regulations of all governmental authorities having jurisdiction
over it and it is not in default with respect to any material order, writ,
injunction or decree of any court or governmental agency.
e. Neither Sun nor Sun's ultimate corporate parent is currently insolvent
or the subject of or a party to any pending bankruptcy reorganization or
insolvency proceeding.
f. The shareholders of record of Sun are as set forth in Exhibit D
attached hereto.
8.03 Mutual Representations:
Each Partner severally (and not jointly) represents, warrants and agrees
with each other Partner as material inducement to cause each other Partner to
enter into this Agreement that (i) all transactions contemplated by this
Agreement to be performed by it have been duly authorized by all necessary
action of its directors and/or stockholders, as the case may be, as required,
(ii) it shall cause its officers, directors, and/or stockholders, as the case
may be, to act in accordance with the terms and provisions of this Agreement,
(iii) the consummation of such transactions shall not result in a breach or a
violation of, or a default under, its charter or bylaws, as the case may be, any
material agreement by which it or any of its properties or any of its
shareholders is or are bound, or any statute, regulation, order or other law to
which it or any of its stockholders is or are subject, (iv) it shall use its
reasonable best efforts to perform, or employ or engage others to perform,
including an Affiliate, all of its obligations under the Agreement and all
activities and furtherance of the purposes of the Partnership, (v) each Partner
is capable, financially and in all other respects, of fulfilling its
responsibilities under this Agreement, and (vi) this Agreement is binding upon
each Partner in accordance with its terms.
- 39 -
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Notices:
All notices to be given hereunder shall be deemed served upon (i) receipt
by the addressee by personal delivery or facsimile transmission, (ii) two (2)
business day after delivery by an overnight express delivery service for the
next business day delivery, or (iii) if mailed, upon the first to occur of
receipt or the expiration of one hundred twenty (120) hours after deposit in
United States Postal Service certified mail, postage postpaid, addressed to the
parties at the addresses appearing below. Such addresses may be changed by
notice given in the same manner.
If to Sun: c/o Sun International Management
(UK) LTD.
Badgemore House
Gravel Hill
▇▇▇▇▇▇ on ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Att'n: ▇▇▇▇▇▇ ("▇▇▇▇▇") ▇▇▇▇▇▇▇
Telecopy No. 44491576526
With Copy to: ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Partnership
or the Original Partners: LMW Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇ ▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: RJH Development Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
- 40 -
With Copy to: Leisure Resort Technology, Inc.
c/o LMW Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇ ▇. ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: Chorches & ▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: ▇▇▇▇▇▇ Suites, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: Del ▇. ▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
9.02 Article and Section Heading:
The article and section headings in this Agreement are inserted for
identification and convenience only, and they are in no way intended to define
or limit the scope or intent of this Agreement or any of the provisions hereof.
9.03 Construction:
Whenever the singular number is used herein, the same shall include the
plural, and the masculine gender shall include the feminine and neuter genders.
If any language is stricken or deleted from this Agreement, such language shall
be deemed never to have appeared herein and no other implication shall be drawn
therefrom.
9.04 Severability:
If any provision hereof shall be judicially determined to be illegal, or if
the application thereof to any person or in any circumstance shall, to any
extent, be judicially determined to be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to persons or in
circumstances other than those to which it has been judicially determined to be
invalid or unenforceable, shall not be affected thereby, and each provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
- 41 -
9.05 Governing Law:
This Agreement shall be construed and enforced in accordance with, and
governed by, the laws and decisions of the State of Connecticut.
9.06 Counterparts:
This Agreement may be executed in any number of counterparts, each of which
shall, for all purposes, constitute an original and all of which, taken
together, shall constitute one and the same Agreement.
9.07 Entire Agreement:
This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof. All prior agreements among the parties
hereto with respect to the subject matter hereof, including the Agreement to
Participate between the Partnership and Sun dated March 24, 1994, whether
written or oral, are merged herein and shall be of no force or effect. This
Agreement cannot be amended, modified or changed orally, but only by an
agreement in writing.
9.08 Amendments to this Agreement:
This Agreement may be amended or modified only by a written instrument
executed by all of the Partners.
9.09 Benefits Limited to Partners:
Except as otherwise expressly provided in this Agreement, nothing in this
Agreement is intended to confer, and nothing in this Agreement shall confer, any
rights or benefits of any kind on any person who is not a Partner (or, to the
extent provided in this Agreement, an Affiliate or a Partner).
9.10 Further Assurances:
The parties will execute and deliver such further instruments and do such
further acts and things as may be required to carry out the intent and purposes
of this Agreement.
9.11 Successors and Assigns:
Subject to the restrictions on transferability contained herein, this
Agreement shall be binding upon, and shall inure to the benefit of, the
successors and assigns of the respective parties hereto.
ARTICLE X
GLOSSARY
10.01 Definitions:
As used in this Agreement, the following terms have the following
respective meanings, unless the context clearly indicates a different meaning:
- 42 -
a. "Act" means the Connecticut Uniform Partnership Act, as amended.
b. "Acceptance" has the meaning specified in Section 6.01 c.(2) hereof.
c. "Additional Capital Contributions" has the meaning specified in
Section 2.08 hereof.
d. "Additional Contribution" or "Additional Contributions" has the
meaning specified in Section 2.02 hereof.
e. "Additional Reserve" has the meaning specified in Section 3.03 a.
hereof.
f. "Administrative Agents" has the meaning specified in Section 4.08
hereof.
g. "Affiliate" means (i) with respect to any Partner who is an
individual, (-1-) any individual related by blood or marriage to such Partner,
or (-2-) any entity controlled, directly or indirectly, by such Partner and/or
any one or more of the individuals described in clause (-1-) above, and any
trust created for the benefit of such Partner and/or any one or more individuals
referred to in clause (-1-) above, and (ii) with respect to any Partner which is
an entity, (-1-) any person who, on any relevant date, controls, directly or
indirectly, or is a member, partner, shareholder, director or officer of, such
entity, (-2-) any ancestor, descendant, sibling, spouse or spouse of a sibling
of any individual referred to in clause (-1-) above, (iii) any trust established
for the benefit of any one or more of the individuals referred to in clause
(-1-) and/or (-2-) above, and (iv) any entity controlled, directly or
indirectly, by such entity and/or any one or more of the individuals referred to
in clause (-1-) and/or (-2-) above, or any entity in which one or more of the
individuals referred to in clause (-1-) and/or (-2-) above is a shareholder,
officer, director, member or partner.
h. "Agreement" means this Amended and Restated Partnership Agreement of
Trading Cove Associates, as it may be amended from time to time.
i. "Alternative Facilities" has the meaning specified in Section 1.03 a.
hereof.
j. "Alternative Facility" has the meaning specified in Section 1.03 a.
hereof.
k. "Approval Date" has the meaning specified in Section 6.07 hereof.
l. "Assignment," "assign," "assignor" and "assignee," as used in Article
VI hereof, shall have the respective meanings specified in Section 6.01 f.
hereof.
m. "Book Value" means, with respect to any asset, such asset's adjusted
basis for federal income tax purposes, except as follows:
(1) The initial Book Value of any asset contributed by a Partner to
the Partnership shall be the fair market value of such asset, as determined
by the Partners;
(2) The Book Values of all Partnership assets shall be adjusted to
equal their respective fair market values, as determined by the Partners,
as of the following times: (i) the acquisition from the Partnership, in
exchange for more than a de minimis Capital Contribution, of (-1-) a
Partnership Interest by an additional Partner, or (-2-) an additional
Partnership Interest by an existing Partner; (ii) the distribution by the
Partnership to a Partner of more than a de minimis amount of Partnership
property other than money; (iii) the termination of the Partnership
- 43 -
for federal income tax purposes pursuant to Section 708(b)(l)(B) of the
Code on account of the sale or exchange of fifty percent (50%) or more of
the interests in capital and profits of the Partnership within a twelve
month period, and (iv) the Partnership's ceasing to be a going concern
(even though it may continue in existence for the purposes of winding up
its affairs, paying its debts, and distributing any proceeds of the
collection of its receivables to the Partners); and
(3) If the Book Value of an asset has been determined or adjusted
pursuant to Section 10.01 m.(l) or 10.01 m.(2) hereof, such Book Value
shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profit and Loss.
Upon the admission of Sun to the Partnership, the Book Value of the
Partnership's assets (exclusive of any contribution of Sun) shall be adjusted so
that, in the aggregate, they exceed the liabilities of the Partnership (as
reflected on the Partnership's balance sheet) by the amount of cash previously
contributed by the other Partners, and each Partner's Capital Account shall be
correspondingly adjusted to equal the amount of such Partner's contribution(s)
to the Partnership.
n. "Budget" has the meaning specified in Section 4.11 hereof.
o. "Buy-Out Notice" has the meaning specified in Section 4.03 a. hereof.
p. "Buy-Out Price" has the meaning specified in Section 4.03 a. hereof.
q. "Capital Account" means a bookkeeping account maintained by the
Partnership with respect to each Partner which shall be
(1) credited with (i) such Partner's Capital Contributions, (ii) such
Partner's distributive share of Profits and any items of income or gain
allocated to such Partner pursuant to Section 3.01 hereof, and (iii) the
amount of any Partnership liabilities that are assumed by such Partner or
that are secured by any Partnership property distributed to such Partner,
and
(2) debited with (i) the amount of cash and the Book Value (as
adjusted pursuant to Section 10.01 m. hereof) of any Partnership property
distributed to such Partner pursuant to any provision of this Agreement,
(ii) such Partner's distributive share of Losses and any items of expense
or loss allocated to such Partner pursuant to Section 3.01 hereof, and
(iii) the amount of any liabilities of such Partner that are assumed by the
Partnership or that are secured by any property contributed by such Partner
to the Partnership.
In the event that a Partner's Partnership Interest or a portion thereof is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that it relates
to the Partnership Interest or portion thereof so transferred.
In the event the Book Values of Partnership assets are adjusted pursuant to
Section 10.01 m.(2) hereof, the Capital Accounts of all Partners shall be
adjusted simultaneously to reflect the aggregate net adjustment as if the
Partnership recognized gain or loss equal to the amount of such aggregate net
adjustment.
- 44 -
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Section 1.704-l(b) of the Treasury Regulations, and shall be interpreted and
applied in a manner consistent with such Regulations.
r. "Capital Call Notice" has the meaning specified in Section 2.02
hereof.
s. "Capital Contribution" means, with respect to each Partner, the total
amount of money and the initial Book Value of any property (other than money)
that such Partner has contributed or agreed to contribute, as the context
requires, to the capital of the Partnership, as provided in this Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution of a predecessor holder of the Partnership Interest of such
Partner.
t. "Closing" has the meaning specified in Section 4.03 a. hereof.
u. "Closing Date" has the meaning specified in Section 6.01 c.(2) hereof.
v. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
w. "Commission" means the National Indian Gaming Commission.
x. "Compact" means the compact entered into between the Mohegan Tribe and
the State of Connecticut which will enable the Facility to include gambling
activities.
y. "Deadlock Dispute" has the meaning specified in Section 4.03 a.
hereof.
z. "Defaulting Original Partner" has the meaning specified in Section
2.09 hereof.
aa. "Deferred Development Fee" has the meaning specified in Section 4.08
b. hereof.
ab. "Depreciation" means, with respect to any asset of the Partnership for
each fiscal year of the Partnership or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to such asset for such year or other period, except that if the Book
Value of such asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation with
respect to such asset shall be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization or
other cost recovery deduction with respect to such asset 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 with respect to such asset for such year is zero, Depreciation shall
be determined with reference to such beginning Book Value using any reasonable
method selected by the Partners.
ac. "Designated Representatives" means, with respect to (i) the Sun Group,
▇▇▇▇▇▇ ("▇▇▇▇▇") ▇▇▇▇▇▇▇ and (ii) the Original Partners Group, Hertz and ▇.
▇▇▇▇▇▇ and any substitute Designated Representative appointed for the Sun Group
or the Original Partners Group, as the case may be, in accordance with the
provisions of Section 4.04 hereof.
ad. "Developer" has the meaning specified in Section 4.08 hereof.
ae. "Development Agreement" means, collectively, that certain Hotel/Resort
Facility Development and Construction Agreement for Mohegan Destination Resort
in Connecticut, that certain Gaming Facility Development and Construction
Agreement, and the Management Agreements, each to
- 45 -
be entered into by the Mohegan Tribe and the Partnership, as the foregoing may
be amended, modified, restated or supplemented from time to time.
af. "Development Services Fee" has the meaning specified in Section 4.08
hereof.
ag. "Disabled Party" has the meaning specified in Section 6.04 a. hereof.
ah. "Disability Event" means with respect to any Partner or Affiliate, the
death, disability, incapacity, incompetency, dissolution, termination,
bankruptcy or insolvency of such Partner or Affiliate.
ai. "Excess Cash" has the meaning specified in Section 3.03 b. hereof.
aj. "Excluded Property" has the meaning specified in Section 4.05 c.
hereof.
ak. "Facility" has the meaning specified in Section 1.03 a. hereof.
al. "Facility Gross Revenues" has the meaning specified in Section 4.08
hereof.
am. "Group" means alternatively the Sun Group or the Original Partners
Group.
an. "Hertz" has the meaning specified in Section 4.04 b. hereof.
ao. "Insolvent Partner" has the meaning specified in Section 6.08 b.
hereof.
ap. "Initial Budget" means the initial budget for the obligations relating
to the Facility prior to the Closing on the Phase One Financing and the
commencement of construction on the Facility, totaling approximately $1,100,000
and set forth on Exhibit E hereto.
aq. "▇▇▇▇▇▇▇" has the meaning specified in Section 4.04 a. hereof.
ar. "Leisure" has the meaning specified in the introductory paragraph of
this Agreement.
as. "Leisure Distribution" has the meaning specified in Section 2.09 b.(3)
hereof.
at. "Loans" has the meaning specified in Section 2.03 hereof.
au. "LMW" has the meaning specified in the introductory paragraph of this
Agreement.
av. "Major Business Decision of the Original Partners" has the meaning
specified in Section 4.02 b. hereof.
aw. "Majority in Interest of the Partners" means, at any relevant time,
Partners who have an aggregate Percentage Interest in excess of one half of the
aggregate Percentage Interests of all of the Partners.
ax. "Majority in Interest of the Original Partners" means, at any relevant
time, the Original Partners who have an aggregate Percentage Interest in excess
of one-half of the aggregate Percentage Interest of all Original Partners.
- 46 -
ay. "Majority of the Original Partners" means more than 50% of the
Original Partners with each Original Partner having one vote.
az. "Majority of the Remaining Original Partners" means more than 50% of
the Non-Selling Partners, or the Original Partners whose shareholders, officers
or key employee's is not a Disabled Party, with each such Partner having one
vote.
ba. "Management Agreements" have the meaning specified in Section 4.08
hereof.
bb. "Management Services Company" has the meaning specified in Section
4.08 hereof.
bc. "Management Services Fee" has the meaning specified in Section 4.08
hereof.
bd. "Managing Partners" means the Sun Managing Partner and the Original
Partners Managing Partners.
be. "Marketing Agent" has the meaning specified in Section 4.08 hereof.
bf. "Marketing Agreement" has the meaning specified in Section 4.08
hereof.
bg. "Marketing and Casino Operations Fee" has the meaning specified in
Section 4.08 hereof.
bh. "Mohegan Tribe" has the meaning specified in Section 1.03 a. hereof.
bi. "Non-Selling Partners" has the meaning as specified in Section 6.02
c.(2) hereof.
bj. "Notice Date" has the meaning as specified in Section 6.04 b. hereof.
bk. "Offer Notice" has the meaning as specified in Section 6.01 c.(1)
hereof.
bl. "Option Triggering Event" has the meaning specified in Section 6.04 a.
hereof.
bm. "Organizational and Administrative Agreement" has the meaning
specified in Section 4.08 hereof.
bn. "Organizational and Administrative Fee" has the meaning specified in
Section 4.08 hereof.
bo. "Original Partner Loans" has the meaning specified in Section 2.07 b.
hereof.
bp. "Original Partners" has the meaning specified in Recital A to this
Agreement.
bq. "Original Partners Group" means the Original Partners and any
assignee, within the meaning of Section 6.01 f. hereof, of the Partnership
Interest or any portion thereof of either of them (or any direct or indirect
transferee or assignee of either of them) who is admitted to the Partnership as
a Partner with respect to such Partnership Interest or portion thereof pursuant
to the provisions of this Agreement, in his capacity as, and for so long as such
person is, a Partner.
- 47 -
br. "Original Partners Managing Partners" means RJH and LMW in their
capacities as, and for so long as each is a Managing Partner of the Partnership,
and any other person who hereafter becomes, or who is otherwise made, a Managing
Partner of the Partnership for the Original Partners Group pursuant to the terms
of this Agreement, in his capacity as, and for so long as he is, a Managing
Partner of the Partnership.
bs. "Original Partners Shortfall Loan" has the meaning specified in
Section 2.09 hereof.
bt. "Original Partnership Agreement" has the meaning specified in Recital
A to this Agreement.
bu. "Partner" means any of the Partners.
bv. "Partners" means Sun, ▇▇▇▇▇▇, RJH, Leisure and LMW and each in its
capacity as, and for so long as it is, a Partner of the Partnership and any
other person hereafter admitted to the Partnership as a partner in accordance
with the provisions of this Agreement, in his capacity as, and for so long as he
is, a Partner of the Partnership.
bw. "Partnership" has the meaning specified in Recital A to this
Agreement.
bx. "Partnership Interest" means, with respect to each Partner, such
Partner's (i) entire interest in the Partnership, and the property, assets,
business, and capital thereof, and (ii) share of the Profits, Losses, items of
income, gain, expense or loss and distributions of the Partnership allocable to
such Partner under the provisions of this Agreement.
by. "Percentage Interest" means, with respect to each Partner, the
percentage set forth opposite his name in column (3) on Exhibit A attached
hereto.
bz. "Phase One" has the meaning specified in Section 4.05 f. hereof.
ca. "Phase One Financing" has the meaning specified in Section 4.05 f.
hereof.
cb. "Principal" means any one of ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Del ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ or Tyrol.
cc. "Profit" and "Loss" each means, for each fiscal year of the
Partnership or other period, the Partnership's taxable income or loss for such
fiscal year or other 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 Section 703(a)(l) of the Code shall be included in
taxable income or loss), adjusted as follows:
(i) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profit or Loss
pursuant to this Section 10.01 cc., shall be added to such taxable income
or loss;
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(13)
expenditures pursuant to Section l.704-l(b)(2)(iv)(i) of the Treasury
Regulations, and not otherwise taken into account in computing Profit or
Loss pursuant to this Section 10.01 cc., shall be subtracted from such
taxable income or loss;
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(iii) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account with respect to any asset in
computing such taxable income or loss, there shall be taken into account
Depreciation with respect to such asset for such fiscal year or other
period, computed in accordance with Section 10.01 ah. hereof;
(iv) Any gain or loss realized by the Partnership for federal income
tax purposes upon the sale or other disposition of any property or asset of
the Partnership, or any part thereof or interest therein, shall be
determined by reference to the Book Value of such property or asset,
notwithstanding that its Book Value may differ from its adjusted tax basis;
(v) Notwithstanding any other provision of this Section 10.01 cc.,
any item of income, gain, expense or loss allocated pursuant to Section
3.01 b. or 3.01 C. hereof shall not be taken into account in computing
Profit or Loss; and
(vi) Any items which are allocated pursuant to Section 3.02 hereof
shall not be taken into account in computing Profit or Loss.
cd. "Property" has the meaning specified in Section 1.03 a. hereof.
ce. "Purchasing Group" has the meaning specified in Section 4.03 q.
hereof.
cf. "Purchasing Partners" has the meaning specified in Section 6.04 d.
hereof.
cg. "Purchase Price" has the meaning specified in Section 6.04 b. hereof.
ch. "Regulations" has the meaning specified in Section 3.01 d. hereof.
ci. "Regulatory Allocations" has the meaning specified in Section 3.01 c.
hereof.
cj. "RJH" has the meaning specified in the introductory paragraph of this
Agreement.
ck. "SEC Affiliate" means an "Affiliate" as such term is defined in Rule
405 of Securities Act of 1933.
cl. "Selling Group" has the meaning specified in Section 4.03 a.(1)
hereof.
cm. "Selling Partner" has the meaning specified in Section 6.02 c.(2)
hereof.
cn. "Services" has the meaning specified in Section 4.08 hereof.
co. "SIIL" means Sun International Investments Limited, a BVI company.
cp. "▇▇▇▇▇▇" has the meaning specified in the introductory paragraph of
this Agreement.
cq. "Subordinated Loan" has the meaning specified in Section 6.07 hereof.
cr. "Substitute Party" has the meaning specified in Section 6.04 a.
hereof.
cs. "Sun" has the meaning specified in the introductory paragraph to this
Agreement.
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ct. "Sun Group" means Sun and any assignee, within the meaning of Section
6.01 f. hereof, of the Partnership Interest or any portion thereof (or any
direct or indirect assignee of Sun who is admitted to the Partnership as a
Partner with respect to such Partnership Interest or portion thereof pursuant to
the provisions of this Agreement, in his capacity as, and for so long as each
such person is, a Partner.
cu. "Sun Loan" has the meaning specified in Section 2.07(c) hereof.
cv. "Sun Managing Partner" means Sun in its capacity as, and for so long
as it is, a Managing Partner of the Partnership, and any other person who
hereafter becomes, or who is otherwise made, a Managing Partner of the Sun Group
pursuant to the terms of this Agreement, in his capacity as, and for so long as
he is, a Managing Partner of the Partnership.
cw. "Tax Matters Partner" has the meaning specified in Section 5.05
hereof.
cx. "Transfer Date" has the meaning specified in Section 6.04 c. hereof.
cy. "Tyrol" means ▇▇▇ ▇. ▇▇▇▇▇.
cz. "Withdrawal Notice" has the meaning specified in Section 4.03 b.
hereof.
da. "Withdrawing Original Partner" has the meaning specified in Section
6.06 d. hereof.
db. "Withdrawn Partner" has the meaning specified in Section 6.05 hereof.
dc. "▇. ▇▇▇▇▇▇" has the meaning specified in Section 4.04 b. hereof.
dd. "▇▇▇▇▇▇ Construction" has the meaning specified in Section 4.08
hereof.
IN WITNESS WHEREOF, the undersigned Partners have executed this Agreement
the day and year above written.
PARTNERS:
SUN COVE, LTD.
______________________________________
a Connecticut corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
"Sun"
Its: President
---------------------------------
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RJH DEVELOPMENT CORP.,
a New York corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Its: President
---------------------------------
"RJH"
LEISURE RESORT TECHNOLOGY, INC.,
a Connecticut corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇ Tyrol
---------------------------------
Its: President
---------------------------------
"Leisure"
▇▇▇▇▇▇ SUITES, INC.,
a Michigan corporation
By: /s/ Del ▇. ▇▇▇▇▇▇
---------------------------------
Its: Executive Vice President
---------------------------------
"▇▇▇▇▇▇"
LMW INVESTMENTS, INC.,
a Connecticut corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------
Its: President
---------------------------------
"LMW"
EXHIBIT A
TO
SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF
TRADING COVE ASSOCIATES
(1) (2) (3)
Capital Percentage
Name and Address Contribution Interest
---------------- ------------ --------
PARTNERS
RJH Development Corp., $117,500 11.25%
a New York corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Leisure Resort Technology, Inc., $ -- 5%
a Connecticut corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Suites, Inc., $235,000 22.5%
a Michigan corporation
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LMW Investment, Inc., $117,500 11.25%
a Connecticut corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sun Cove, Ltd, $470,000* 50.0%
a Connecticut corporation
----
_________________________________
_________________________________ TOTAL 100%
* The capital contribution of Sun reflects the total aggregate cash advance
of SIIL or its SEC Affiliates made to the Partnership pursuant to the
Participation Agreement.
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