LIMITED PARTNERSHIP AGREEMENT
OF
DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP
between
HARRAH'S ILLINOIS CORPORATION
and
JOHN Q. HAMMONS
Dated February 28, 1992
TABLE OF CONTENTS
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Page
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R E C I T A L S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - FORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.01 Partnership Agreement . . . . . . . . . . . . . . . . . 5
2.02 Organization and Name . . . . . . . . . . . . . . . . . 5
2.03 Place of Business and Principal Office;
Registered Agent and Registered Office . . . . . . 5
2.04 Purpose and Title . . . . . . . . . . . . . . . . . . . 5
2.05 Term . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01 Capital Contributions; Partnership Interests . . . . . 6
3.02 Capital Accounts . . . . . . . . . . . . . . . . . . . 8
3.03 Assignment of Entitlements . . . . . . . . . . . . . . 9
ARTICLE 4 - ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . 10
4.01 Allocations of Taxable Income . . . . . . . . . . . . . 10
4.02 Allocations of Tax Loss . . . . . . . . . . . . . . . . 10
4.03 Timing and Amount of Allocations of Taxable
Income and Tax Loss . . . . . . . . . . . . . . . 10
4.04 Distributions of Proceeds of a Major Capital
Event . . . . . . . . . . . . . . . . . . . . . . 10
4.05 Distribution of Cash Flow . . . . . . . . . . . . . . . 10
4.06 Priority and Distribution of Property . . . . . . . . . 11
4.07 Additional Allocation Provisions . . . . . . . . . . . 11
ARTICLE 5 - GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . 15
5.01 Management Authority of the General Partner . . . . . . 15
5.02 Limitation on Authority of the General Partner . . . . 19
5.03 Delegation of Authority . . . . . . . . . . . . . . . . 19
5.04 Compensation . . . . . . . . . . . . . . . . . . . . . 20
5.05 Extent of Management Duties . . . . . . . . . . . . . . 20
5.06 Transactions with Related Parties . . . . . . . . . . . 20
5.07 Liability for Acts and Omissions . . . . . . . . . . . 20
5.08 Right to Rely Upon the Authority of the General . . . . 22
5.09 Continuing Liability . . . . . . . . . . . . . . . . . 22
5.10 Effect of Bankruptcy of the General Partner . . . . . . 22
5.11 Transfer of General Partnership Interest . . . . . . . 23
5.12 Right to Own Limited Partnership Interest . . . . . . . 25
ARTICLE 6 - LIMITED PARTNER . . . . . . . . . . . . . . . . . . . . . . . . 25
6.01 Limitation on Liability of Limited Partners . . . . . . 25
6.02 Management of the Partnership . . . . . . . . . . . . . 25
6.03 Power of Attorney . . . . . . . . . . . . . . . . . . . 26
6.04 Representations . . . . . . . . . . . . . . . . . . . . 27
6.05 Restriction on Transfer of Limited Partnership . . . . 28
6.06 Disposition if No Gaming Qualification . . . . . . . . 30
6.07 Effect of Bankruptcy, Death or Incompetency
of Limited Partner . . . . . . . . . . . . . . . . 31
6.08 Notices to Limited Partner . . . . . . . . . . . . . . 31
ARTICLE 7 - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 8 - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.01 Remedies . . . . . . . . . . . . . . . . . . . . . . . 34
8.02 Choice of Remedies . . . . . . . . . . . . . . . . . . 34
8.03 Buy and Sell . . . . . . . . . . . . . . . . . . . . . 35
8.04 Advances; Buy-Down . . . . . . . . . . . . . . . . . . 37
8.05 Appraisal Buy Out . . . . . . . . . . . . . . . . . . . 40
8.06 Forbearance . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 9 - VALUATION AND APPRAISAL PROCEDURE . . . . . . . . . . . . . . . 41
9.01 Voluntary Appraisal . . . . . . . . . . . . . . . . . . 41
9.02 Appraisal Panel . . . . . . . . . . . . . . . . . . . . 41
9.03 Appraised Value . . . . . . . . . . . . . . . . . . . . 43
9.04 Expenses . . . . . . . . . . . . . . . . . . . . . . . 43
9.05 Qualification . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 10 - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 43
10.01 Bank Accounts . . . . . . . . . . . . . . . . . . . . 43
10.02 Title to Partnership Property . . . . . . . . . . . . 43
10.03 Books and Records . . . . . . . . . . . . . . . . . . 43
10.04 Notices . . . . . . . . . . . . . . . . . . . . . . . 44
10.05 Meetings . . . . . . . . . . . . . . . . . . . . . . 45
10.06 Amendment . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11 - FISCAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 45
11.01 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 45
11.02 Method of Accounting . . . . . . . . . . . . . . . . 45
11.03 Accountants and Accounting Principles . . . . . . . . 46
11.04 Reports . . . . . . . . . . . . . . . . . . . . . . . 46
11.05 Tax Returns; Tax Matters Partner . . . . . . . . . . 46
11.06 Basis Election . . . . . . . . . . . . . . . . . . . 46
11.07 Partnership Expenses . . . . . . . . . . . . . . . . 47
11.08 Change in Control . . . . . . . . . . . . . . . . . . 47
ARTICLE 12 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.01 Events of Dissolution . . . . . . . . . . . . . . . . 48
12.02 Winding Up . . . . . . . . . . . . . . . . . . . . . 48
12.03 Distribution on Dissolution and Termination . . . . . 49
ARTICLE 13 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 50
13.01 Governing Law . . . . . . . . . . . . . . . . . . . . 50
13.02 Successors and Assigns . . . . . . . . . . . . . . . 50
13.03 Grammatical Changes . . . . . . . . . . . . . . . . . 51
13.04 Captions . . . . . . . . . . . . . . . . . . . . . . 51
13.05 Severability . . . . . . . . . . . . . . . . . . . . 51
13.06 Counterparts . . . . . . . . . . . . . . . . . . . . 51
13.07 Other Matters . . . . . . . . . . . . . . . . . . . . 51
13.08 Private Litigation . . . . . . . . . . . . . . . . . 51
13.09 Waiver of Right to Court Decree of Dissolution
and Partition . . . . . . . . . . . . . . . . . . . 52
13.10 Competing Business . . . . . . . . . . . . . . . . . 52
13.11 Personal Property . . . . . . . . . . . . . . . . . . 53
13.12 No Third Party Rights . . . . . . . . . . . . . . . . 53
13.13 Consent of Bank Group . . . . . . . . . . . . . . . . 53
EXHIBIT A - Capital Contributions and Percentage Share . . . . . . . . . . 1
General Partner . . . . . . . . . . . . . . . . . . . . . . 1
Limited Partner . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT B - Legal Description of Property . . . . . . . . . . . . . . . . . 1
LIMITED PARTNERSHIP AGREEMENT
OF
DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT of Des Plaines Development Limited
Partnership (the "Partnership Agreement" or "Agreement") is made and entered as
of the 28th day of February, 1992, by and among Harrah's Illinois Corporation, a
Nevada corporation, and John Q. Hammons, an individual.
RECITALS
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A. The General Partner is a wholly-owned, indirect subsidiary of
Harrah's, a Nevada corporation ("Harrah's"). Harrah's and the General Partner
are in the business of operating gaming facilities.
B. The Limited Partner is the sole owner of Des Plaines Development
Corporation, an Illinois corporation ("DPDC"), which has applied for a license
to operate a riverboat gaming facility on the Des Plaines River in Joliet,
Illinois, and has received a finding of preliminary suitability from the
Illinois Gaming Board.
C. The Limited Partner desires that the General Partner invest in such
riverboat gaming facility, and rather than continue the corporate form of
ownership through DPDC, the General Partner and the Limited Partner desire to
undertake a joint venture to develop and operate a riverboat gaming facility on
the Des Plaines River in Joliet, Illinois on the terms set forth herein and
desire that any funding of preliminary suitability of DPDC be transferred to
such joint venture consistent with the rules of the Illinois Gaming Board.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual agreements of the parties
hereto and subject to the terms and conditions hereof, it is hereby agreed as
follows:
ARTICLE 1
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DEFINITIONS
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Unless otherwise expressly provided herein or unless the context otherwise
requires, each of the following terms when used herein shall have the following
defined meanings:
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C.
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Sec. 17-101, et seq. as amended from time to time, or any successor statute.
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"Adjusted Capital Account Deficit" shall have the meaning set forth in
Section 4.07(g)(i) hereof.
"Affiliate," when used with reference to a specified Person, means (i) any
relative or spouse of the specified Person; (ii) any Person who is an officer,
partner or trustee of, or serves in a similar capacity with respect to, the
specified Person; (iii) any partnership, corporation, trust or other entity of
which the specified Person is a partner, officer, trustee or serves in a similar
capacity or is directly or indirectly the owner of a partnership interest, any
portion of a class of equity securities, or in which the specified Person has a
substantial beneficial interest; and (iv) any Person that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with the specified Person. "Affiliate" when used in reference to
any of the Partners shall also include any Person that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with any one or more of the beneficial owners of such Partner.
"Agreement" means this Limited Partnership Agreement of Des Plaines
Development Limited Partnership, as amended, modified or supplemented from time
to time.
"Capital Account" shall have the meaning set forth in Section 3.02(a)
hereof.
"Capital Contribution" means the total amount of money and the fair market
value of any property (determined net of any liabilities secured by such
property that the Partnership is considered to assume or take subject to and
determined consistently with Code Section 752(c) and without regard to Code
Section 7701(g)) contributed, or to be contributed, as the case may be, to the
Partnership by a Partner.
"Cash Flow" means all cash received by the Partnership from all sources in
excess of all cash expended or reserved in the discretion of the General Partner
for (i) currently due and maturing obligations and liabilities (excluding
Partner loans) and expenses of the Partnership or obligations secured by
Partnership assets including but not limited to debt service upon any
indebtedness incurred by the Partnership, (ii) capital expenditures, (iii)
contingent liabilities or (iv) such other purposes as the General Partner shall
determine to be necessary or proper. Without limiting the generality of the
foregoing, all amounts received from the City of Joliet, Illinois or any other
governmental agencies as reimbursements, subsidies or payments in respect of the
Project, including without limitation reimbursements of gaming tax, shall be
included in the calculations of "Cash Flow".
"Code" means the Internal Revenue Code of 1986, as amended.
"Default Loan" shall have the meaning set forth in Section 8.04(a) hereof.
"Defaulting Partner" shall have the meaning set forth in Section 8.01
hereof.
"Distributions" means all distributions or other payments to Partners by
the Partnership of cash or the fair market value of any property (determined net
of any liabilities secured by such property that the distributee is considered
to assume or take subject to and determined consistently with Code Section
752(c) and without regard to Code Section 7701(g)) distributed to the Partners
pursuant to Article 4 or Section 12.03 hereof.
"Event of Default" shall have the meaning set forth in Article 7 hereof.
"General Partner" means Harrah's Illinois Corporation, a Nevada
corporation, or any Person who, at the time of reference thereto, has been
admitted to the Partnership as a successor or additional general partner of the
Partnership, in each such Person's capacity as a General Partner.
"Initial Capital Loan" shall have the meaning set forth in Section 3.01(d)
hereof.
"Initial Capital Loan Documents" shall have the meaning set forth in
Section 3.01(d) hereof.
"Limited Partner" means John Q. Hammons, an individual, or any Person who,
at the time of reference thereto, has been admitted to the Partnership as a
successor or additional limited partner of the Partnership, in each such
Person's capacity as a Limited Partner.
"Major Capital Event" means any borrowings or financings (except short term
borrowing in the ordinary course of business) by the Partnership or otherwise
relating to the Project, any sale of all or a portion of the Project or any
Partnership assets (except dispositions of personal property and equipment in
the ordinary course of business) or any insured casualty loss or condemnation or
other involuntary conversion (including losses covered by title insurance).
"Net Invested Capital" means the initial Capital Contribution for such
Partner set forth on Exhibit A hereto plus the amount of capital hereafter
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contributed to the Partnership by such Partner and credited to its Capital
Account, less all distributions hereafter made by the Partnership to such
Partner and debited against its Capital Account, but in no event less than zero.
"Nondefaulting Partner" shall have the meaning set forth in Section 8.01
hereof.
"Partner Minimum Gain" shall have the meaning set forth in Section
4.07(g)(iii) hereof.
"Partners" means the General Partner(s) and the Limited Partner(s).
"Partnership" means the Delaware limited partnership governed by this
Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in Section
4.07(g)(ii) hereof.
"Percentage Share" means the percentage assigned to each Partner by which
each such Partner shall share in various allocations and distributions of the
Partnership in accordance with the terms of this Agreement. The Percentage
Share initially allocated to each Partner is set forth in Section 3.01(f)
hereof, and is subject to the provisions of Section 8.04(b) hereof.
"Person" means any individual, partnership, corporation, unincorporated
association, trust or other entity.
"Prime Rate" means the prime rate of interest charged by Citibank, N.A.,
New York, New York to borrowers on ninety (90) day unsecured commercial loans,
as the same may be changed from time to time.
"Project" means the gaming/recreational business conducted with respect to
the Property.
"Property" means the real property and improvements thereto located in the
City of Joliet, Will County, Illinois, generally described in Exhibit B hereto
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and by this reference incorporated herein, together with such additional real
property as the General Partner may determine to acquire and one or more
riverboats, berthing and docking facilities, reception buildings, parking
facilities, offices and storage areas, restaurants, hotels, gaming devices and
other property relating to the business of the Partnership.
"Treasury Regulation" shall mean the income tax regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
ARTICLE 2
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FORMATION
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2.01 Partnership Agreement. The Partnership is a limited partnership
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organized under and pursuant to the terms of the Act and this Partnership
Agreement. From and after its execution, this Partnership Agreement shall
constitute the only agreement of limited partnership of the Partnership, except
as it may hereafter be amended pursuant to the provisions of this Partnership
Agreement. This Partnership Agreement represents the entire agreement and
understanding of the parties hereto, and all prior or concurrent agreements,
understandings, representations and warranties in regard to the subject matter
hereof are and have been merged herein.
2.02 Organization and Name. The Partnership is and shall be a limited
---------------------
partnership organized under and pursuant to the Act. The name of the Partnership
is "Des Plaines Development Limited Partnership." The General Partner and the
Limited Partner of the Partnership shall be the parties designated aforesaid.
The Partners agree to execute such certificates or documents and do such filings
and recordings and all other acts, including the filing of a Certificate of
Limited Partnership of the Partnership and any amendments thereto in appropriate
governmental offices as may be required in order to comply with all applicable
laws.
2.03 Place of Business and Principal Office; Registered Agent and
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Registered Office
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(a) The principal place of business of the Partnership shall be
Joliet, Illinois and its principal office shall be at 1023 Cherry Road, Memphis,
Tennessee 38117, or at such other place as the General Partner may designate by
notice to all Partners.
(b) The name and address of the registered agent for service of
process on the Partnership in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The registered office of the Partnership is located at
such address. The General Partner may designate any other Person as the
registered agent and any other location as the registered office, respectively,
as the General Partner deems appropriate subject to applicable law.
2.04 Purpose and Title. The purpose and business of the Partnership
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shall be to own, develop and operate the Property and the Project. The
Partnership shall have the power to do all acts and things necessary,
appropriate, convenient or useful in connection with the foregoing, including
without limitation, all of the powers that may be exercised by the General
Partner on behalf of the Partnership under this Agreement. Title to any or all
of the Property (or the interest of the Partnership therein) may be taken and
held in the name of the Partnership or in the name of an Illinois land trust in
which the entire beneficial interest shall be owned by the Partnership and the
power of direction vested in the Partnership or its designees, as provided in
this Agreement. The Partnership shall be a partnership only for the purposes
described in this Section 2.04, and this Agreement shall not be deemed to create
a partnership between the Partners with respect to any activities whatsoever
other than the activities contemplated hereby or incident thereto.
2.05 Term. The Partnership commenced on the date of first filing of
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the Partnership's Certificate of Limited Partnership with the office of the
Secretary of State of the State of Delaware and shall continue in full force and
effect until the date which is fifty (50) years from such date, or until
dissolution prior thereto pursuant to the provisions hereof or by operation of
law.
ARTICLE 3
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CONTRIBUTIONS
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3.01 Capital Contributions; Partnership Interests
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(a) Capital Contributions by the General Partner. The General
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Partner shall contribute Twenty Five Million Nine Hundred Twenty Thousand
Dollars ($25,920,000) to the Partnership when called for pursuant to Section
3.01(c) hereof as an initial Capital Contribution which shall be credited to the
General Partner's Capital Account. The General Partner shall make additional
Capital Contributions as and when called for by the General Partner in its sole
discretion, which shall be credited to the General Partner's Capital Account.
(b) Capital Contributions by the Limited Partner. The Limited
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Partner shall contribute Six Million Four Hundred Eighty Thousand Dollars
($6,480,000) to the Partnership when called for pursuant to Section 3.01(c)
hereof as an initial Capital Contribution which shall be credited to the Limited
Partner's Capital Account. The Limited Partner shall make additional Capital
Contributions as and when called for by the General Partner in its sole
discretion, which shall be credited to the Limited Partner's Capital Account.
(c) Calls for Contributions. The General Partner may at any
-----------------------
time or from time to time call for Capital Contributions, including initial
Capital Contributions, from the Partners by not less than three (3) days written
notice to the Partners. The Partners shall make such Capital Contributions to
the Partnership on or before the date specified in any such notice from the
General Partner.
(d) Initial Capital Loan. The General Partner shall
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contribute, on behalf of the Limited Partner, the Limited Partner's initial
Capital Contribution set forth in Section 3.01(b) hereof as a loan to the
Limited Partner (the "Initial Capital Loan"). The Limited Partner hereby grants
authority to the General Partner to disburse portions of the Initial Capital
Loan to the Partnership when portions of the Limited Partner's initial Capital
Contribution are called for pursuant to Section 3.01(c) hereof. The Initial
Capital Loan shall be deemed a Default Loan hereunder and the rights of the
Partners hereunder in respect of the Initial Capital Loan shall include all
rights of the Partners in respect of Default Loans, including, without
limitation, the distribution provisions of Sections 4.04, 4.05 and 8.04(d)
hereof and Article 12 hereof; provided that (x) nothing herein shall be
construed as causing the Limited Partner to be in default as a result of the
Initial Capital Loan being deemed to be a Default Loan unless the Limited
Partner shall fail to pay or perform under the Initial Capital Loan Documents
(as defined below) and (y) the General Partner may not exercise any right under
Article 8 hereof with respect to the Initial Capital Loan, unless and until an
Event of Default shall have occurred hereunder. The Initial Capital Loan shall
(i) be evidenced by a promissory note in form and substance acceptable to the
General Partner, (ii) be secured by the Limited Partner's interest in the
Partnership pursuant to a security agreement and UCC financing statements in
form and substance acceptable to the General Partner and any other documents as
may be necessary to further assure and perfect a security interest in the
Limited Partner's Partnership interest (such promissory note, security agreement
and UCC-1 financing statements are the "Initial Capital Loan Documents"), (iii)
bear interest on the outstanding principal balance, payable on the first day of
each calendar quarter in arrears (the first such payment to be due on July 1,
1992), at a rate equal to the lower of (x) the then current Prime Rate plus two
percent (2%) per annum or (y) the maximum rate of interest permitted under
applicable law, from the date hereof until payment in full by the Limited
Partner, (iv) be prepayable at any time, and (v) be due and payable (including
all principal and accrued interest outstanding) on the earlier of the date which
is four (4) years from the date hereof, or the occurrence of an Event of Default
hereunder (unless accelerated earlier pursuant to the terms of the promissory
note evidencing such loan). The Initial Capital Loan shall be made to the
Limited Partner and guaranteed by the spouse of the Limited Partner pursuant to
the Guarantee attached hereto, with full recourse to the assets of the Limited
Partner and the spouse of the Limited Partner.
(e) Evidence of Partnership Interest. No certificates or other
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evidence of ownership shall be issued with respect to the partnership interests
in the Partnership except this Agreement which, when executed, shall solely
represent and evidence the partnership interests in the Partnership owned by
each Partner.
(f) Percentage Share. Effective as of the date hereof, the
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partnership interests hereunder are allocated between the Partners such that the
Percentage Share which is attributed to each Partner is as follows:
(i) 80% - General Partner
(ii) 20% - Limited Partner
Such Percentage Shares are subject to revision pursuant to Section 8.04(b)
hereof.
(g) Withdrawal of Capital; Loans. No Partner shall have any
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right to withdraw or make a demand for withdrawal of all or any portion of such
Partner's capital (or the amount, if any, reflected in such Partner's Capital
Account). No interest or additional share of profits shall be paid or credited
to the Partners on their Capital Accounts, or on any undistributed profits or
funds left on deposit with the Partnership; provided, however, that nothing
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herein contained shall be construed to prevent or prohibit the payment of
interest on account of loans made by the Partners to the Partnership. Any loans
made to the Partnership by a Partner shall not increase its Capital Account or
interest in the profits, losses, or Cash Flow, but shall be a debt due from the
Partnership and repaid accordingly only out of Cash Flow or the Partnership
assets in the discretion of the General Partner.
3.02 Capital Accounts
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(a) There shall be established for each Partner on the books of
the Partnership, as of the date hereof, a capital account (the "Capital
Account") reflecting the excess (deficit) of (i) the sum of (A) such Partner's
initial Capital Account balance which initial balance reflects the deemed
contributions of such Partner to the Partnership in exchange for such Partner's
interest in the Partnership, (B) such Partner's additional Capital Contributions
(if any) to its Capital Account made in accordance with this Agreement, (C) such
Partner's share of taxable income and (D) such Partner's share of tax-exempt
income of the Partnership over (ii) the sum of (A) such Partner's share of tax
losses, (B) such Partner's share of other Partnership expenditures that are not
deductible for federal income tax purposes and (C) any Distributions to such
Partner, (iii) as adjusted by such Partner's share of income, gain, deduction or
loss described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(b) Notwithstanding any other provision in this Section 3.02 or
elsewhere in this Agreement, each Partner's Capital Account shall be maintained
and adjusted in accordance with the Code and the Treasury Regulations, including
Treasury Regulation Section 1.704-1(b)(2)(iv). It is intended that appropriate
adjustments shall thereby be made to Capital Accounts to give effect to any
income, gain, loss or deduction (or items thereof) that is specially allocated
pursuant to this Agreement.
(c) A Partner's Capital Account shall be reduced by the fair
market value (determined without regard to Code Section 7701(g)) of any property
(net of liabilities secured by such property that the Partner is considered to
assume or take subject to and determined consistently with Code Section 752(c))
distributed by the Partnership to such Partner, whether in connection with a
liquidation of the Partnership or of such Partner's partnership interests or
otherwise. Accordingly, Capital Accounts shall first be adjusted to reflect the
manner in which the unrealized income, gain, loss and deduction inherent in such
property (that has not been previously reflected in Capital Accounts) would be
allocated, pursuant to Article 4 hereof, among the Partners if there were a
taxable disposition of such property for its fair market value (taking Code
Section 7701(g) into account) on the date of distribution.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of capital accounts are intended to comply
with Treasury Regulation Section 1.704-1, and shall be interpreted and applied
in a manner consistent with such Treasury Regulation. In the event the General
Partner shall determine, in its sole discretion, that it is prudent to modify
the manner in which the capital accounts, or any debits or credits thereto, are
computed in order to comply with such Treasury Regulation, the General Partner
may make such modification, provided that it will not have a material adverse
effect on the amounts distributable to any Limited Partner during the operation
of, or upon the dissolution of, the Partnership.
3.03 Assignment of Entitlements. Without any adjustments to the
--------------------------
Partners' Percentage Shares or to the Partners' Capital Accounts, the General
Partner and the Limited Partner hereby (and the Limited Partner shall cause DPDC
to) irrevocably assign and transfer by quitclaim conveyance any and all of their
respective rights and interest in any studies, plans, engineering reports,
environmental reports, wetlands reports or other marketing materials, property,
contracts, agreements, options, licenses, permits, or other rights or interests
relating to the development and operation of the Project, including without
limitation, any easements, gaming applications or licenses, variances, consents,
approvals or entitlements from any Port Authorities, the U.S. Army Corp of
Engineers, the City of Joliet, Illinois, or any other federal, state, county or
municipal authority or any governmental or quasi-governmental entity necessary
for the development and use of the Property in connection with the Project.
ARTICLE 4
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ALLOCATIONS AND DISTRIBUTIONS
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4.01 Allocations of Taxable Income. Except as provided in Section
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4.07 hereof, taxable income of the Partnership (including any gain realized in a
Major Capital Event) shall be allocated among the Partners in accordance with
their Percentage Shares.
4.02 Allocations of Tax Loss. Except as provided in Section 4.07
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hereof, tax loss of the Partnership (including any loss realized in a Major
Capital Event) shall be allocated among the Partners in accordance with their
Percentage Shares.
4.03 Timing and Amount of Allocations of Taxable Income and Tax Loss.
---------------------------------------------------------------
Taxable income and tax loss of the Partnership shall be determined and allocated
with respect to each fiscal year of the Partnership as of the end of such year.
Subject to the other provisions of this Article 4, an allocation to a Partner of
a share of taxable income or tax loss shall be treated as an allocation of the
same share of each item of income, gain, loss or deduction that is taken into
account in computing taxable income or tax loss.
4.04 Distributions of Proceeds of a Major Capital Event. The proceeds
--------------------------------------------------
of any Major Capital Event (other than in connection with or in contemplation of
a liquidation of the Partnership) shall be applied as follows:
(a) First, to pay all expenses incurred in connection with
the Major Capital Event;
(b) Second, to pay all accrued and unpaid interest on and
the principal balance of all Default Loans made by the Nondefaulting
Partner under Section 8.04(a) hereof and accounted for as set forth in
Section 8.04(d) hereof;
(c) Third, to repay, at the discretion of the General
Partner, any or all indebtedness of the Partnership secured by liens on the
Property;
(d) Fourth, to repay any Capital Contribution by a Partner
in excess of its Percentage Share of the total Capital Contributions in the
Partnership; and
(e) Fifth, the balance, if any, to the Partners in
accordance with their Percentage Shares.
4.05 Distribution of Cash Flow. Cash Flow (other than proceeds of any
-------------------------
Major Capital Event or in connection with or in contemplation of a liquidation
of the Partnership) shall be applied as follows:
(a) First, to pay all accrued and unpaid interest on and
the principal balance of all Default Loans made by the Nondefaulting
Partner under Section 8.04(a) hereof and accounted for as set forth in
Section 8.04(d) hereof;
(b) Second, to repay any Capital Contribution by a Partner
in excess of its Percentage Share of the total Capital Contributions in the
Partnership; and
(c) Third, the balance, if any, to and among the Partners
in accordance with their Percentage Shares.
4.06 Priority and Distribution of Property. Except as herein
-------------------------------------
expressly provided, no Partner shall have priority over any other Partner as to
the return of capital, income or losses, or Distributions of Cash Flow. No
Partners shall have the right to demand or receive property other than cash for
its Capital Contributions to the Partnership or in payment of its share of Cash
Flow.
4.07 Additional Allocation Provisions. Notwithstanding the foregoing
--------------------------------
provisions of this Article 4:
(a) The losses allocated under Section 4.02 hereof to any
Partner shall not exceed the maximum amount of losses that can be so allocated
without causing such Partner to have an Adjusted Capital Account Deficit at the
end of any fiscal year. If some but not all of the Partners would have Adjusted
Capital Account Deficits as a consequence of an allocation of losses pursuant to
Section 4.02 hereof, then the limitation set forth in this Section 4.07(a) shall
be applied so as to allocate the maximum permissible loss to each Partner under
the preceding sentence and Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
Losses, the allocation of which to any Partner are prohibited under the first
sentence of this Section 4.07(a), shall be allocated to the remaining Partners
in proportion to their respective Percentage Shares.
(b) Notwithstanding any other provisions of this Section 4.07,
if there is a net decrease in Partnership Minimum Gain during any Partnership
fiscal year, each Partner shall be specially allocated items of Partnership
income and gain (as specified in Regulations Sections 1.704-2(f)(6) and 1.704-
2(j)(2)(i)) for such year (and, if necessary, for subsequent years, as provided
in Regulation Section 1.704-2(j)(2)(iii)) in an amount equal to the portion of
such Partner's share of the net decrease in such Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g)(2).
The items of income and gain to be so specially allocated pursuant to this
Section 4.07(b) shall be determined in accordance with Treasury Regulation
Section 1.704-2(f). This Section 4.07(b) is intended to comply with the minimum
gain chargeback requirement of Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
(c) Notwithstanding any provision of this Section 4.07 to the
contrary (except Section 4.07(b) hereof), if there is a net decrease in Partner
Minimum Gain attributable to a "partner nonrecourse debt" (within the meaning of
Treasury Regulation Section 1.704-2(b)(4)) during any Partnership fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
partner nonrecourse debt, determined in accordance with Treasury Regulation
Section 1.704-2(i)(5), shall be specially allocated items of Partnership income
and gain (as specified in Regulation Section 1.704-2(j)(2)(ii)) for such fiscal
year (and, if necessary, subsequent years, as provided in Regulation Section
1.704-2(j)(2)(iii)) in an amount equal to the portion of such Partner's share of
the net decrease in Partner Minimum Gain attributable to such partner
nonrecourse debt, determined in accordance with Treasury Regulation Section
1.704-2(g)(2).
The items of income and gain to be so specially allocated pursuant to this
Section 4.07(c) shall be determined in accordance with Treasury Regulation
Section 1.704-2(i)(4). This Section 4.07(c) is intended to comply with the
partner minimum gain chargeback requirement of Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(d) Subject to the priority rules of Treasury Regulation Section
1.704-2, if any Partner unexpectedly receives any adjustment, allocation or
distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) that causes or increases an
Adjusted Capital Account Deficit with respect to such Partner, 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 Treasury
Regulation Sections 1.704-1(b) and 1.704-2, the Adjusted Capital Account Deficit
of such Partner as quickly as possible. It is intended that this Section
4.07(d) qualify and be construed as a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(e) If special allocations are required under Sections 4.07(b),
4.07(c) and/or 4.07(d) hereof in any fiscal year, such allocations shall be
made in the priorities required by Treasury Regulation Sections 1.704-1(b) and
1.704-2.
(f) "Nonrecourse deductions" (within the meaning of Treasury
Regulation Sections 1.704-2(b)(1) and 1.704-2(c)) for any fiscal year or other
period shall be specially allocated to the Partners in proportion to their
Percentage Shares. "Partner nonrecourse deductions" (within the meaning of
Treasury Regulation Section 1.704-2(i)) for any fiscal year or other period
shall be specially allocated to the Partner who bears the economic risk of loss
with respect to the "partner nonrecourse debt" (within the meaning of Treasury
Regulation Section 1.704-2(b)(4)) to which such partner nonrecourse deductions
are attributable in accordance with Treasury Regulation Section 1.704-2(i).
(g) As used herein, the following terms shall have the following
meanings associated with them:
(i) The term "Adjusted Capital Account Deficit" means,
with respect to any Partner, the deficit balance, if any in such Partner's
Capital Account as of the end of the relevant fiscal year, after giving
effect to the following adjustments:
(A) Add to such Capital Account the
following items: (1) the amount, if any, which such
Partner is obligated to contribute to the Partnership
upon liquidation of such Partner's interest; and (2)
the amount which such Partner is deemed to be obligated
to restore to the Partnership pursuant to the
penultimate sentences of Treasury Regulation Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(B) Subtract from such Capital Account such
Partner's share of the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
(ii) The term "Partnership Minimum Gain" shall have the
meaning set forth in Treasury Regulation Sections 1.704-2(b) and
1.704-2(d).
(iii) The term "Partner Minimum Gain" means an amount,
with respect to each "partner nonrecourse debt" (within the meaning of
Treasury Regulation Section 1.704-2(b)(4)), equal to the Partnership
Minimum Gain that would result if such partner nonrecourse debt were
treated as a "nonrecourse liability" (within the meaning of Treasury
Regulation Sections 1.704-2(b)(3) and 1.752-1(a)(2)), determined in
accordance with Treasury Regulation Section 1.704-2(i).
(h) The Partners acknowledge that all Distributions (including
distributions upon liquidation of the Partnership) are intended to be made in
accordance with the priorities set forth in Sections 4.04, 4.05 and 12.03 hereof
and that the Partners' Capital Accounts are intended to reflect the manner in
which such distributions are intended to be made. The allocations set forth in
Sections 4.07(a) (last sentence), 4.07(b), 4.07(c), 4.07(d) and/or 4.07(f)
hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2, but may
result in distortions of the Partners' Capital Accounts in relation to the
Distributions that each Partner is intended to receive from the Partnership.
Notwithstanding the provisions of Sections 4.01, 4.02, 4.03 and 4.07 hereof
(other than the Regulatory Allocations), the Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss and deduction
among the Partners so that, to the extent possible, at any point in time the
Partners' Capital Accounts shall reflect the manner in which Distributions would
be made to the Partners, if the Partnership were liquidated and the proceeds of
such liquidation were distributed to the Partners in accordance with Section
12.03 hereof.
(i) For any fiscal year during which (a) a Partner's interest in
the Partnership is assigned by such Partner (or by an assignee or successor in
interest to a Partner) or (b) a Partner's Percentage Share changes, the portion
of the taxable income and tax loss of the Partnership that is allocable in
respect of such Partner's transferred or modified interest shall be apportioned
between the assignor and the assignee of such Partner's interest, in the case of
an assignment, or allocated, as otherwise provided in this Article 4, in the
case of a change in Percentage Shares, on the basis of an interim closing of the
Partnership's books, without regard to any payments or distributions made to the
Partners before or after such assignment or change, except as otherwise provided
in and required by Code Section 706(d)(2); provided that in any event any
assignments or transfers of any interest in the Partnership shall be subject to
the provisions of Sections 5.11 and 6.05 hereof.
(j) In the event that any amount claimed by the Partnership to
constitute a deductible expense in any fiscal year is treated for federal income
tax purposes as a distribution made to a Partner in its capacity as a partner of
the Partnership and not a guaranteed payment as defined in Code Section 707(c)
or a payment to a Partner not acting in its capacity as a partner under Code
Section 707(a), then the Partner who is deemed to have received such
distribution shall first be allocated an amount of Partnership gross income
equal to such payment, its Capital Account shall be reduced to reflect the
distribution, and for purposes of this Article 4, taxable income and tax loss
shall be determined after making the allocation required by this Section
4.07(j).
(k) Notwithstanding any other provision of this Agreement,
allocations of items for book and tax purposes and adjustments to the Partners'
Capital Accounts shall be made in accordance with the provisions of Treasury
Regulation Sections 1.704-1(b) and 1.704-2. In particular, as required by
Treasury Regulation Section 1.704-1(b)(4)(i), income, gain, loss and deduction
for tax purposes with respect to Partnership property revalued on the
Partnership's books and records shall be shared among the Partners so as to take
account of the variation between the adjusted tax basis of such property and its
book value in the same manner as variations between the adjusted tax basis and
fair market value of property contributed to a partnership are to be taken into
account in determining the partners' shares of tax items under Code Section
704(c).
(l) Notwithstanding the foregoing provisions of this Article 4,
income, gain, loss and deduction with respect to property contributed to the
Partnership by a Partner shall be shared among the Partners, pursuant to
Treasury Regulations promulgated under Code Section 704(c), so as to take
account of the variation, if any, between the basis of the property to the
Partnership and its fair market value at the time of contribution.
(m) In the event that the Code or any Treasury Regulations
promulgated thereunder require allocations of items of income, gain, loss,
deduction or credit different from those set forth in this Agreement, upon the
advice of the Partnership's counsel or accountants, the General Partner is
hereby authorized to make new allocations in reliance upon the Code, the
Treasury Regulations and such advice of the Partnership's counsel or
accountants, and no such new allocation shall give rise to any claim or cause of
action by the Limited Partner or the Partnership.
ARTICLE 5
---------
GENERAL PARTNER
---------------
5.01 Management Authority of the General Partner. The General Partner
-------------------------------------------
shall have full, complete and exclusive discretion to manage and control the
business of the Partnership for the purposes herein stated, shall make all
decisions affecting the business of the Partnership, and shall manage and
control the affairs of the Partnership. In addition to the rights and powers
herein conferred, the General Partner shall possess and may exercise all of the
rights and powers of a general partner as provided in (but subject to the
limitations and restrictions of) the Act. The General Partner, on behalf of the
Partnership and in furtherance of the business of the Partnership, shall have
the power and authority to perform all acts which the Partnership is authorized
to perform, and to (without limitation) do any of the following:
(a) enter into such sales agreements, construction
agreements, leases, licenses, easements, covenants, conditions or
restrictions, agreements with other land owners, construction contracts,
set aside agreements, or other contracts, agreements, documents, or
arrangements with respect to all or any portion of the Property or the
other Partnership assets, whether or not such arrangements (including
renewal terms) shall extend beyond the date of the termination of the
Partnership, at such rental or amount, or for such consideration, and upon
such terms, as it deems proper;
(b) compromise, submit to arbitration, sue on or defend
all claims in favor of or against the Partnership;
(c) make and revoke any election permitted the Partnership
by any taxing authority;
(d) borrow money for Partnership purposes and as security
therefor to mortgage, pledge, hypothecate or encumber all or any part of
the Property or other assets of the Partnership, and to repay, prepay,
refinance, increase, modify, recast, consolidate or extend, in whole or in
part, all such loans and indebtedness, as and when it shall see fit and
enter into any loan agreements, notes, mortgages, financing statements,
assignment of rents, guarantees, letters of credit, or other documents,
agreements, security arrangements or other arrangements in connection
therewith;
(e) acquire rights, title or interests in, manage,
maintain and improve all or any portion of the Property consistent with the
purposes of the Partnership;
(f) do all acts it deems necessary, appropriate,
incidental or convenient for the operation, development, management,
disposition, improvement, protection or preservation of the Partnership
business;
(g) obtain and keep in force such forms of insurance in
such amounts, and upon such terms and with such carriers, as it shall
determine;
(h) employ, engage or contract with persons for the
operation, development, management, disposition, improvement, protection or
presentation of the Partnership business, including but not limited to,
land managers, construction managers, property managers, casino managers,
riverboat operators, appraisers, consulting engineers, architects,
contractors, developers, agents, insurance brokers, real estate brokers,
leasing agents, loan brokers, accountants and attorneys, on such terms, for
such compensation and pursuant to any such contracts or agreements as the
General Partner shall determine;
(i) establish reserve funds for Partnership purposes from
revenues derived from Partnership operations or from financing,
refinancing, sales or other dispositions of the Property or any of the
Partnership assets;
(j) enter into agreements, options or any other
arrangements for the lease, sale, exchange or other disposition of all or
any portion of the Property or any of the Partnership assets,
notwithstanding that such activity may constitute a sale or disposition of
all or substantially all of the assets of the Partnership, it being agreed
that such a sale or disposition shall not be deemed to constitute an act
which would make it impossible to carry on the ordinary business of the
Partnership;
(k) execute, acknowledge, deliver and perform any and all
deeds, agreements, documents and instruments to effectuate the foregoing;
(l) obtain and maintain all necessary permits, licenses,
rezoning, variances, consents, approvals or entitlements from any Port
Authorities, the U.S. Army Corp of Engineers, the Illinois Gaming Board,
the City of Joliet, Illinois, the County of Will, the State of Illinois or
any other federal, state, county or municipal authority or any governmental
or quasi-governmental entity necessary for the development and use of the
Property in connection with the Project;
(m) develop and improve shore facilities, acquire and
renovate vessels, appear before the Illinois Gaming Board or other
governmental authorities and manage and control the relationship of the
Partnership with such governmental authorities, and commission and obtain
environmental, wetlands, engineering and other reports and studies;
(n) execute, acknowledge, deliver and perform a
Construction Contract with Service Marine Industries, Inc. or any other
contractor for construction of a vessel as General Partner shall determine,
and a Development Agreement with The City of Joliet, each on terms and
conditions it deems appropriate;
(o) execute, acknowledge, deliver and perform a Management
Agreement with the General Partner or any of its Affiliates on the terms
and conditions set forth on the term sheet attached hereto as Exhibit C,
---------
which agreement the Partners hereby agree complies with the provisions of
Section 5.06 hereof, and the Limited Partner hereby acknowledges its
understanding that said Management Agreement will be between the
Partnership with the General Partner acting on behalf of the Partnership,
as Owner, and the General Partner or its Affiliate, as Manager, and the
Limited Partner hereby expressly acknowledges and agrees that the General
Partner, on behalf of the Partnership, as Owner under such Management
Agreement, shall have the sole authority, in its discretion, to (defined
terms used in the following items shall have the meanings specified in said
Management Agreement):
(1) approve any Pre-Opening Budget;
(2) approve any Pre-Opening Program;
(3) approve any plans and specifications in connection with the
construction and renovation of the Building or the Vessel;
(4) inspect and approve for occupancy or use the Building or
the Vessel;
(5) incur and approve Capital Expenditures;
(6) approve any Annual Plan;
(7) exercise any right of first offer under the Management
Agreement;
(8) declare or waive any Event of Default under the Management
Agreement and exercise or forebear from exercising any
remedy to which the Partnership, as Owner, is entitled
under the Management Agreement;
(9) submit to arbitration any dispute arising under the
Management Agreement;
(10) enter any agreement with the Manager to amend or modify the
Management Agreement; or
(11) perform any other action, give any consent, or approval or
exercise any other right on behalf of the Partnership, as
Owner, under the Management Agreement.
(p) admit additional general and limited partners of the
Partnership on such terms and conditions as the General Partner shall
determine; provided, however, that (1) if the General Partner shall admit
-------- -------
an additional general partner who is not an Affiliate of the General
Partner, then the General Partner shall give notice to the Limited Partner
of such impending admission no less than thirty (30) days prior to such
admission, and the Limited Partner shall have the right, for a period of
thirty (30) days after the date of such notice, to notify the General
Partner in writing of its objection to such admission and require the
General Partner to exercise the remedies set forth in either Section
8.01(c) or Section 8.01(d) hereof, at the sole election of the General
Partner and (2) the General Partner's right to admit additional limited
partners, other than in the case of a transfer of any interest of the
Limited Partner or the General Partner, shall be limited to admitting
additional limited partners which limited partners' aggregate Percentage
Share does not exceed fifty percent (50%), and any such admission of
additional limited partners shall ratably reduce the Percentage Shares of
existing partners. For the purposes of any exercise of remedies pursuant
to this Section 5.01(p), (i) the Limited Partner shall be deemed the
Defaulting Partner, and (ii) the Appraisal Buyout Price (as defined in
Section 8.05(b) hereof) shall be calculated by using one hundred percent
(100%) of the Appraised Value (as defined in Section 9.03 hereof).
Any and all of the foregoing powers of the General Partner as set forth in this
Section 5.01 shall be exercised in the sole determination of the General
Partner, and the Limited Partner shall have no right to approve, veto or vote on
any such decision.
5.02 Limitation on Authority of the General Partner. The General
----------------------------------------------
Partner shall have no authority without the prior written consent of the Limited
Partner to:
(a) do any act in contravention of this Agreement;
(b) do any act which would make it impossible to carry on
the ordinary business of the Partnership (it being expressly understood
that the General Partner may consummate a sale, financing, or other
disposition of all or any portion of the assets of the Partnership,
including the Property, without obtaining the prior consent or approval of
the Limited Partner and that such action is not inconsistent with this
Subsection 5.02(b));
(c) possess Partnership property or assign the rights of
the Partnership in specific Partnership assets for other than a Partnership
purpose;
(d) on behalf of the Partnership, become a surety or
guarantor of, or an accommodation party to, an obligation of any other
person, except as may be necessary in connection with the development,
financing, refinancing, operation or sale or other disposition of the
Property or any of the Partnership assets; or
(e) assign the Partnership assets in trust for creditors
or on the assignee's promise to pay the debts of the Partnership.
5.03 Delegation of Authority. The General Partner may delegate any of its
-----------------------
powers, rights and obligations hereunder, and may appoint, employ, contract or
otherwise deal with any person for the transaction of the business of the
Partnership, which person may, under supervision of the General Partner, perform
any acts or services for the Partnership as the General Partner may approve.
Any delegation of powers, rights or obligations pursuant to this Section 5.03
shall at all times be subject to the supervision of the General Partner.
5.04 Compensation. The General Partner shall receive no compensation
------------
for its activities as General Partner, except as otherwise authorized in Section
5.06 hereof; provided that nothing herein shall restrict reimbursement to the
General Partner of any costs or expense incurred by it in connection with the
Partnership.
5.05 Extent of Management Duties. The General Partner and its
---------------------------
officers and directors, shall not be required to devote their full time to the
management of the Partnership business, and the General Partner and its officers
and directors, shall devote only such time to the Partnership business as they,
in their sole discretion, shall deem to be necessary to manage and supervise the
Partnership business and affairs in an efficient manner; but nothing in this
Agreement shall preclude the employment, at the expense of the Partnership, of
any agent or third party manager to manage or provide other services in respect
of the Partnership assets, subject to the supervision by the General Partner of
any such agent or party.
5.06 Transactions with Related Parties
---------------------------------
(a) The General Partner may engage the individual services of
any Partner (including the General Partner), or any Affiliate of a Partner, and
nothing in this Agreement shall preclude the payment as a Partnership expense to
such Partner or Affiliate of compensation for such services rendered; provided,
--------
however, that any such compensation, fee, commission or other payment shall not
- -------
exceed the rates generally charged by others for similar services.
(b) Except as herein provided or as permitted under Section
5.06(a) hereof, no Partner shall receive any fee or other compensation for its
services to the Partnership; provided that the Partnership shall reimburse the
General Partner for all reasonable out-of-pocket expenses authorized by the
General Partner and incurred by the General Partner on behalf of the Partnership
in connection with the business and affairs of the Partnership, including,
without limitation, all legal, accounting, travel, lodging, telephone, third
party consulting charges and other similar expenses.
5.07 Liability for Acts and Omissions
--------------------------------
(a) To the fullest extent permitted by applicable law, the
General Partner, any Affiliate of the General Partner, and any agents, officers,
directors, stockholders and employees of the General Partner or such Affiliate
(each an "Indemnified Person") shall not be liable, responsible or accountable
in damages or otherwise to the Partnership, or to any of the Partners, for any
act or omission performed or omitted by them in good faith on behalf of the
Partnership and in a manner reasonably believed by them to be within the scope
of their authority and in the best interests of the Partnership; provided,
--------
however, that this exculpation shall not apply to acts or omissions which are
- -------
determined, by final decision of a court of competent jurisdiction, to
constitute either fraud, bad faith, gross negligence, or wilful misconduct.
(b) To the fullest extent permitted by law, the Partnership,
its receiver or its trustee, shall indemnify and hold harmless each Indemnified
Person from and against any and all loss, cost, damage, expense or liability,
including, without limitation, fees and expenses of attorneys and other experts
and advisors and any and all court costs incurred by them or any of them, which
relate to or arise out of the Partnership, the Property, the Project or the
Partnership's business or affairs, regardless of whether such Indemnified Person
continues to be the General Partner, any Affiliate of the General Partner, and
any agents, officers, directors, stockholders and employees of the General
Partner or such Affiliate at the time any such liability or expense is paid or
incurred, if the Indemnified Person's conduct did not constitute fraud, bad
faith, gross negligence or willful misconduct.
(c) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or to the Partners, any Indemnified Person acting under this
Agreement or otherwise shall not be liable to the Partnership or to any Partner
for its good faith reliance on the provisions of this Agreement. The provisions
of this Agreement, to the extent that they expand or restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the Partners to replace such other duties and liabilities of such
Indemnified Person.
(d) Whenever in this Agreement the General Partner is permitted
or required to make a decision (i) in its "sole discretion" or "discretion," or
under a similar grant of authority or latitude, the General Partner shall make
such decision in good faith considering only the best interests of the
Partnership and shall have no duty or obligation to give any consideration to
any interest of or factors affecting any Limited Partner, or (ii) in its "good
faith" or under another express standard, the General Partner shall act under
such express standard and shall not be subject to any other or different
standards imposed by this Agreement or by law or any other agreement
contemplated herein. Any agreement made in good faith by the General Partner
shall be binding on the Partners and the Partnership. The Limited Partner
hereby agrees that any standard of care or duty imposed in this Agreement or any
other agreement contemplated herein or under the Act or any other applicable
law, rule or regulations shall be modified, waived or limited in each case as
required to permit the General Partner to act under this Agreement or any other
agreement contemplated herein and to make any decision pursuant to the authority
prescribed in this Agreement so long as such action or decision does not
constitute wilful misconduct and is reasonably believed by the General Partner
to be consistent with the overall purposes of the Partnership.
5.08 Right to Rely Upon the Authority of the General Partner. Persons
-------------------------------------------------------
dealing with the Partnership may rely upon the representation of the General
Partner that it has the authority to make any commitment or undertaking on
behalf of the Partnership. No person dealing with the General Partner shall be
required to ascertain its authority to make any such commitment or undertaking,
or any other fact or circumstance bearing upon the existence of its authority.
In no event shall any person dealing with the General Partner, with respect to
any of the Partnership assets, be obligated to see to the application of any
purchase money, rent or money borrowed or advanced thereon, or be obligated to
see that the terms of this Agreement have been complied with, or be obligated to
inquire into the necessity or expediency of any act or action of such General
Partner, and every contract, agreement, deed, mortgage, lease, promissory note
or other instrument or document executed by the General Partner, with respect to
any of the Partnership's assets, shall be conclusive evidence in favor of any
and every person relying thereon or claiming thereunder that (a) at the time or
times of the execution and/or delivery thereof, the Partnership was in full
force and effect, (b) such instrument or document was duly executed and
authorized and is binding upon the Partnership and all of the Partners and (c)
the General Partner executing and delivering the same was duly authorized and
empowered to execute and deliver any and every such instrument or document for
and on behalf of the Partnership.
5.09 Continuing Liability. In the event that the General Partner
--------------------
withdraws from the Partnership, or sells, transfers or assigns its entire
partnership interest, the General Partner shall be free of any obligation or
liability incurred on account of the activities of the Partnership from and
after such time, and unless the General Partner's successor assumes the
obligations and liabilities incurred by the General Partner prior to such date,
the General Partner shall remain liable for all such obligations and liabilities
incurred by it as General Partner prior to the effective date of such
occurrence.
5.10 Effect of Bankruptcy of the General Partner. None of the events
-------------------------------------------
described in Section 17-402(a)(4) or (5) of the Act with respect to the General
Partner shall cause the General Partner to cease to be a general partner of the
Partnership or the dissolution of the Partnership, and the business of the
Partnership shall continue. Upon the occurrence of any of the events described
in Section 17-402(a)(4) or (5) of the Act with respect to the General Partner,
the Limited Partner at its option by written notice to the General Partner may
assume all rights of the General Partner for the purpose of managing the affairs
of the Partnership or designate a successor General Partner to replace the
General Partner.
5.11 Transfer of General Partnership Interest; Right of First Refusal
----------------------------------------------------------------
(a) If the General Partner desires to sell, assign or otherwise
transfer its Partnership interest to a person or entity (other than an Affiliate
of the General Partner), it shall not sell, assign or otherwise transfer its
Partnership interest to any person, or other entity not then a Partner (other
than an Affiliate of the General Partner), until such Partnership interest is
first offered for sale to the Limited Partner. Such first refusal offer to the
Limited Partner shall be made in writing setting forth all of the terms and
conditions on which the General Partner proposes to sell its Partnership
interest (whether or not the General Partner has received a bona fide offer for
the purchase of its Partnership interest) and shall state the name of the
prospective purchasers, if any, who have indicated a willingness to purchase on
such terms and conditions. Said terms and conditions shall include at a minimum
the purchase price, timing, method of payment and financing terms, if any. The
Limited Partner shall then have a first refusal right for fifteen (15) days
after the date of the receipt of such first refusal offer to elect to acquire
the General Partner's Partnership interest upon the same terms and conditions as
those set forth in such first refusal offer.
(b) For the purposes of this Section 5.11, the General Partner
may grant to a prospective purchaser an option or contingent contract to
purchase its Partnership interest without offering to grant the Limited Partner
a similar option or contingent contract and without making a first refusal offer
pursuant to this Section 5.11 to the Limited Partner, but the Partnership
interest may not be sold to such prospective purchaser, pursuant to the exercise
of such option or contingent contract or otherwise unless such Partnership
interest is first offered to the Limited Partner pursuant to a first refusal
offer under this Section 5.11.
(c) If the Limited Partner shall not exercise the right to
acquire the General Partner's Partnership interest by notifying the General
Partner of its election to do so within fifteen (15) days of such offer,
accepting a conveyance of the Partnership interest and making payment therefor
within such period on the above terms, the General Partner may, within a period
of six (6) months from the date of such first refusal offer, either (i) dispose
of the Partnership interest upon terms and conditions no more favorable to the
prospective purchaser than those set forth in such first refusal offer, or (ii)
arrange for the sale of both its interest and the Limited Partner's interest in
the Partnership on such terms and conditions as it deems acceptable, and the
Limited Partner hereby agrees to dispose of its entire Partnership interest to
the prospective purchaser on such terms and conditions. The proceeds from such
sale of all of the Partnership interest shall be distributed in accordance with
Article 12 hereof.
(d) If during the six (6) month period from the date of such
first refusal offer the General Partner receives an offer for its Partnership
interest from a prospective purchaser on terms less favorable to the General
Partner than the terms specified in such first refusal offer, prior to accepting
such offer the General Partner shall give notice (the "Subsequent Offer") to the
Limited Partner and specify that the General Partner is willing to sell its
Partnership interest on such terms. The Limited Partner shall have the right
for a period of fifteen (15) days after the Subsequent Offer to elect to
purchase the Partnership interest of the General Partner, on the terms less
favorable to the General Partner than the terms specified in the Subsequent
Offer. If the Limited Partner shall not exercise the right to acquire the
General Partner's Partnership interest by notifying the General Partner of its
election to do so within fifteen (15) days thereafter, accepting a conveyance of
the Partnership interest and making payment therefor within such period on the
terms set forth in the Subsequent Offer, such Partnership interest may be
disposed of by the General Partner to a prospective purchaser upon terms and
conditions no more favorable to such prospective purchaser than those set forth
in the Subsequent Offer. The General Partner may reinstitute the procedure set
forth in this Section 5.11(d) if no disposition is made within the six (6) month
period.
(e) In the event that the General Partner, pursuant to this
Section 5.11, transfers all or a portion of its interest in the Partnership as a
general partner of the Partnership to another Person (a "Transferee"), the
admission to the Partnership of the Transferee as a successor or additional
General Partner, as the case may be, shall be conditioned upon the receipt by
the General Partner of the following: (1) the successor or additional General
Partner's agreement in writing to be bound by all of the terms of this
Agreement, including acting as a General Partner hereunder, (2) such other
documents or instruments as may be required in order to effect its admission as
a General Partner under this Agreement and applicable law, and (3) the
Transferee expressly assumes all of the obligations of this Agreement, including
without limitation, those in this Section 5.11. In the event the transfer by
the General Partner is of its entire interest in the Partnership as a general
partner of the Partnership, upon satisfaction of the conditions set forth in
items (1), (2) and (3) above, the admission of the Transferee to the Partnership
as a successor General Partner shall occur, and for all purposes shall be deemed
to have occurred, immediately prior to the transfer by the General Partner of
its interest in the Partnership. Upon a transfer by the General Partner of its
entire interest in the Partnership, the General Partner shall cease to be a
general partner of the Partnership and the successor General Partner shall
continue, and is hereby authorized to continue, the business of the Partnership
without dissolution. In the event that the General Partner, pursuant to this
Section 5.11, transfers a portion of its interest in the Partnership as a
general partner of the Partnership to a Transferee, the admission of the
Transferee to the Partnership as an additional General Partner shall occur upon
satisfaction of the conditions set forth in items (1), (2) and (3) above. In
accordance with the Act, upon the admission of a successor or additional General
Partner to the Partnership as set forth above, an appropriate amendment to the
Certificate of Limited Partnership of the Partnership shall be filed with the
Secretary of State of the State of Delaware.
(f) For purposes of this Section, such terms and conditions of
the prospective purchaser's offer will be considered more favorable to such
prospective purchaser if the present value of the purchase price in such offer
(discounted at a rate of fifteen percent (15%)) is less than the present value
of the purchase price in such first refusal offer.
5.12 Right to Own Limited Partnership Interest. Nothing herein shall
-----------------------------------------
prevent the General Partner or an officer, shareholder, director or Affiliate of
the General Partner from owning any limited partner interest herein, and to the
extent of such ownership, said officer, shareholder or director shall not be
deemed to be a General Partner and shall be considered as a Limited Partner and
shall be governed by all of the rights, privileges, duties and responsibilities
attendant upon said limited partner interest.
ARTICLE 6
---------
LIMITED PARTNER
---------------
6.01 Limitation on Liability of Limited Partners. The Limited Partner
-------------------------------------------
shall not be liable for the debts, liabilities, contracts or any other
obligations of the Partnership in excess of its contribution to the capital of
the Partnership (which has not been previously returned to it), its obligations
to make other payments provided for in this Agreement, and its share of the
Partnership's assets and undistributed profits (subject to the obligation of a
Limited Partner to repay any funds wrongfully distributed to it). The Limited
Partner shall be liable to make its Capital Contributions as and when required
pursuant to Section 3.01(c) hereof or otherwise under the terms of this
Agreement, and to contribute any negative balance in its Capital Account when
and as required hereby. The Limited Partner shall not be required to lend any
funds to the Partnership.
6.02 Management of the Partnership. The Limited Partner shall not
-----------------------------
take part in the management or control of the business of the Partnership, nor
transact any business in the name of the Partnership, nor shall have any right
or authority to act for or bind the Partnership, except as shall be expressly
required pursuant to this Agreement.
6.03 Power of Attorney. The Limited Partner, by execution hereof,
-----------------
hereby irrevocably constitutes and appoints the General Partner with full power
of substitution as its true and lawful attorney-in-fact, in its name, place and
stead to make, execute, sign, acknowledge, swear to, record and file, on behalf
of the Limited Partner and on behalf of the Partnership, the following:
(a) the Partnership's Certificate of Limited Partnership,
a certificate of doing business under an assumed name, and any other
certificates or instruments which may be required to be filed by the
Partnership or the Partners under applicable law;
(b) a certificate of cancellation of the Partnership and
such other instruments or documents as may be deemed necessary or desirable
by said attorney upon the dissolution and winding up of the affairs of the
Partnership;
(c) any and all amendments of the instruments described
in Subsections (a) and (b) above and amendments to this Agreement, provided
such amendments are either required by law to be filed, permitted to be
made by the General Partner pursuant to Section 10.06 hereof or have been
authorized by the Partners;
(d) any and all notes, security agreements, mortgages and
UCC-1 financing statements, as may be necessary to grant and perfect a
security interest in the Defaulting Partner's Partnership interest to
secure any Default Loan made by a Nondefaulting Partner pursuant to Section
8.04(a) hereof; and
(e) any and all such other instruments as may be deemed
necessary or desirable by said attorney to carry out fully the provisions
hereof in accordance with its terms.
The foregoing appointments and grants of authority (i) are special powers
of attorney, coupled with an interest, (ii) shall survive the death, bankruptcy,
dissolution, or adjudication of incompetency of the Limited Partner and (iii)
may be exercised by the General Partner for the Limited Partner by a facsimile
signature of the General Partner. Pursuant to the power of attorney granted by
the Limited Partner to the General Partner as hereinabove described, the Limited
Partner authorizes said attorney to take any further action which said attorney
shall consider necessary or convenient in connection with any of the foregoing,
hereby giving said attorney full power and authority to do and perform each and
every act and thing whatsoever requisite and necessary to be done in and about
the foregoing as fully as the Limited Partner might or could do if personally
present, and hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof.
6.04 Representations
---------------
(a) No registration statement relating to the limited
partnership interests in the Partnership or otherwise, has been or shall be
filed with the United States Securities and Exchange Commission under the
federal Securities Act of 1933, as amended, or the securities laws of any state.
(b) The Limited Partner represents and warrants to the General
Partner and to the Partnership that:
(i) The Limited Partner has the power and authority to
execute and comply with the terms and provisions hereof;
(ii) The Limited Partner's Partnership interest has been
or will be acquired solely by and for the account of the Limited Partner
for investment purposes only and is not being purchased for, or with a view
to, subdivision, fractionalization, resale or distribution; except as
provided in this Agreement, the Limited Partner has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or
pledge to such person or anyone else the Limited Partner's Partnership
interest (or any part thereof); and the Limited Partner has no present
plans or intentions to enter into any such contract, undertaking or
arrangement; and agrees not to sell, hypothecate or otherwise dispose of
all or any part of its partnership interest;
(iii) The Limited Partner's partnership interest has not
and will not be registered under the federal Securities Act of 1933, as
amended, and cannot be sold or transferred without compliance with the
registration provisions of said Act or compliance with exemptions, if any,
available thereunder. The Limited Partner understands that neither the
Partnership nor its General Partner have any obligation or intention to
register the partnership interests under any federal or state securities
act or law, or to file the reports to make public the information required
by Rule 144 under the Securities Act of 1933, as amended;
(iv) The Limited Partner represents that: (A) the Limited
Partner has knowledge and experience in financial and business matters in
general, and in investments of the type made by the Partnership in
particular; (B) the Limited Partner is capable of evaluating the merits and
risks of an investment in the Partnership; (C) the Limited Partner's
financial condition is such that the Limited Partner has no need for
liquidity with respect to the Limited Partner's investment in the
Partnership to satisfy any existing or contemplated undertaking or
indebtedness; (D) the Limited Partner is able to bear the economic risk of
the Limited Partner's investment in the Partnership for an indefinite
period of time, including the risk of losing all of such investment, and
loss of such investment would not materially adversely affect the Limited
Partner; (E) the Limited Partner has either secured independent tax advice
with respect to the investment in the Partnership, upon which the Limited
Partner is solely relying, or the Limited Partner is sufficiently familiar
with the income taxation of partnerships that the Limited Partner has
deemed such independent advice unnecessary;
(v) The Limited Partner acknowledges that it has received
or has access to all material information and documents with respect to the
Partnership and has had an opportunity to ask questions and receive answers
thereto and to verify and clarify any information available to the General
Partner;
(vi) The Limited Partner has relied solely upon
independent investigation made by the Limited Partner, and not on any
statements, actions or representations of the General Partner or any
Affiliate of the General Partner, in making the decision to acquire the
Limited Partner's partnership interest; and
(vii) The Limited Partner acknowledges that: (A) no
federal or state agency has reviewed or passed upon the adequacy or
accuracy of the information set forth in the documents submitted to the
Limited Partner or made any finding or determination as to the fairness for
investment, or any recommendation or endorsement of an investment in the
Partnership; (B) there are restrictions on the transferability of the
Limited Partner's interest hereunder; (C) there will be no public market
for the Limited Partner's partnership interest, and, accordingly, it may
not be possible for the Limited Partner to liquidate its investment in the
Partnership; and (D) any anticipated federal or state income tax benefits
applicable to the Limited Partner's partnership interest may be lost
through changes in, or adverse interpretations of, existing laws and
regulations.
(viii) The Limited Partner is the sole owner of DPDC, and
DPDC and the Limited Partner, in connection with the investigation of DPDC
by the Illinois Gaming Board, have been found suitable by the Illinois
Gaming Board.
6.05 Restriction on Transfer of Limited Partnership Interest; Right of
-----------------------------------------------------------------
First Refusal
- -------------
(a) Notwithstanding anything to the contrary contained herein,
the Limited Partner may not sell, transfer or assign, in whole or in part, its
partnership interest without first obtaining the General Partner's prior written
consent, which consent may not be unreasonably withheld or denied.
(b) If the Limited Partner desires to sell, assign or otherwise
transfer its Partnership interest, it shall not sell, assign or otherwise
transfer its Partnership interest to any person, or other entity not then a
Partner, until such Partnership interest is first offered for sale to the
General Partner. Such first refusal offer to the General Partner shall be made
in writing setting forth all of the terms and conditions on which the Limited
Partner proposes to sell its Partnership interest (whether or not the Limited
Partner has received a bona fide offer for the purchase of its Partnership
interest) and shall state the name of the prospective purchasers, if any, who
have indicated a willingness to purchase on such terms and conditions. Said
terms and conditions shall include at a minimum the purchase price, timing,
method of payment and financing terms, if any. The General Partner shall then
have a first refusal right for fifteen (15) days after the date of the receipt
of such first refusal offer to elect to acquire the Limited Partner's
Partnership interest upon the same terms and conditions as those set forth in
such first refusal offer.
(c) For the purposes of this Section 6.05 and subject to the
provisions of Section 6.05(a) hereof, the Limited Partner may grant to a
prospective purchaser an option or contingent contract (which such option or
contingent contract expressly states that any sale thereunder is subject to the
first refusal offer under this Section) to purchase its Partnership interest
without offering to grant the General Partner a similar option or contingent
contract and without making a first refusal offer pursuant to this Section 6.05
to the General Partner, but the Partnership interest may not be sold to such
prospective purchaser, pursuant to the exercise of such option or contingent
contract or otherwise unless such Partnership interest is first offered to the
General Partner pursuant to a first refusal offer under this Section 6.05.
(d) If the General Partner shall not exercise the right to
acquire the Limited Partner's Partnership interest by notifying the Limited
Partner of its election to do so within fifteen (15) days of such offer,
accepting a conveyance of the Partnership interest and making payment therefor
within such period on the above terms, such Partnership interest may and subject
to the provisions of Section 6.05(a) hereof, within a period of six (6) months
from the date of such first refusal offer, be disposed of by the Limited Partner
upon terms and conditions no more favorable to the prospective purchaser than
those set forth in such first refusal offer, but not otherwise.
(e) If during the six (6) month period from the date of such
first refusal offer the Limited Partner receives an offer for its Partnership
interest from a prospective purchaser on terms less favorable to the Limited
Partner than the terms specified in such first refusal offer, prior to accepting
such offer the Limited Partner shall give notice (the "Subsequent Offer") to the
General Partner and specify that the Limited Partner is willing to sell its
Partnership interest on such terms. The General Partner shall have the right
for a period of fifteen (15) days after the Subsequent Offer to elect to
purchase the Partnership interest of the Limited Partner, on the terms specified
in the Subsequent Offer. If the General Partner shall not exercise the right to
acquire the Limited Partner's Partnership interest by notifying the Limited
Partner of its election to do so within fifteen (15) days thereafter, accepting
a conveyance of the Partnership interest and making payment therefor within such
period on the terms set forth in the Subsequent Offer, such Partnership interest
may be disposed of by the Limited Partner to a prospective purchaser upon terms
and conditions no more favorable to the purchaser than those set forth in the
Subsequent Offer. The Limited Partner may reinstitute the procedure set forth
in this Section 6.05(e) if no disposition is made within the six (6) month
period.
(f) If, in accordance with this Section, the General Partner
approves a transfer by the Limited Partner of a portion of its Partnership
interest to another Person (an "Assignee"), such Assignee shall be admitted to
the Partnership as a limited partner of the Partnership upon (1) its execution
of a counterpart to this Agreement, (2) when such Assignee is listed as a
Limited Partner of the Partnership on the books and records of the Partnership,
and (3) the Assignee expressly assumes all of the obligations of this Agreement,
including without limitation, those contained in this Section 6.05. In the
event the transfer by the Limited Partner is of its entire interest in the
Partnership as a limited partner of the Partnership, upon satisfaction of
conditions (1), (2) and (3) above, the admission of the Assignee to the
Partnership as a successor Limited Partner shall occur, and for all purposes
shall be deemed to have occurred immediately prior to the transfer by the
Limited Partner of its interest in the Partnership.
(g) For purposes of this Section, such terms and conditions of
the prospective purchaser's offer will be considered more favorable to such
prospective purchaser if the present value of the purchase price in such offer
(discounted at a rate of fifteen percent (15%)) is less than the present value
of the purchase price in such first refusal offer.
6.06 Disposition if No Gaming Qualification. Affiliates of the
--------------------------------------
General Partner own and operate or will own and operate casino gaming facilities
in the states of Nevada and New Jersey, and other jurisdictions, which are
subject to extensive state and local regulation. The Partnership and the
Partners will be subject to gaming laws and regulations in the State of
Illinois. If in the sole judgment and discretion of the General Partner
(without regard for the interests of the Partnership or the Limited Partner) the
status of the Limited Partner or any Affiliate of the Limited Partner as they
may be associated with the General Partner may result in a disciplinary action
or the loss of or inability to reinstate any registration, application or
license or any rights or entitlements held by the Partnership, the General
Partner or any Affiliate of the General Partner under any state or local gaming
laws, or if the Limited Partner or any Affiliate of the Limited Partner fails to
remain qualified in Illinois or is required to qualify or be found suitable
under any other state or local gaming laws under which the General Partner, the
Partnership or any Affiliate of the General Partner is licensed, registered,
qualified or found suitable, and the Limited Partner or any Affiliate of the
Limited Partner does not so qualify (at its own expense), then (i) the General
Partner shall deliver written notice of the foregoing to the Limited Partner,
and (ii) if in the sole judgment and discretion of the General Partner (without
regard for the interests of the Partnership or the Limited Partner) the
foregoing is either not curable within ten (10) days or less from the date of
such notice, or if curable within such time period the Limited Partner does not
effect such cure within such time period, then the Limited Partner shall be
deemed to be in default in accordance with paragraph (e) of Article 7 hereof and
the General Partner shall be deemed the Nondefaulting Partner under Section 8.01
hereof and be entitled, in its sole discretion (without regard for the interest
of the Partnership or the Limited Partner), to exercise the remedies in Section
8.01(b) hereof or Section 8.01(c) hereof (subject to applicable gaming
regulations); provided, however, that for purposes of any exercise of remedies
-------- -------
pursuant to this Section 6.06 the Appraisal Buyout Price (as defined in Section
8.05(b) hereof) shall be calculated by using One Hundred percent (100%) of the
Appraised Value (as defined in Section 9.03 hereof), and shall be subject to
applicable gaming regulations.
6.07 Effect of Bankruptcy, Death or Incompetency of Limited Partner.
--------------------------------------------------------------
The Limited Partner shall have no right to withdraw, retire or resign from the
Partnership. The bankruptcy, dissolution, death or adjudication of incompetency
of the Limited Partner shall not in and of itself cause the termination or
dissolution of the Partnership, and the business of the Partnership shall
continue. Upon any such occurrence, the trustee, receiver, executor,
administrator, committee, guardian or conservator of the Limited Partner shall
have all the rights of the Limited Partner for the purpose of settling or
managing their estate or property.
6.08 Notices to Limited Partner. Prior to entering into any of the
--------------------------
following transactions, the General Partner agrees to give the Limited Partner
written notice of the following:
(a) execution by the Partnership of any contract, including
without limitation any contract to borrow money, which by its express terms
commits the Partnership to pay an amount in excess of One Million Dollars
($1,000,000);
(b) entering into a binding agreement for any capital
expenditure item which agreement by its express terms commits the Partnership to
pay an amount in excess of One Million Dollars ($1,000,000);
(c) prior to the commencement of each fiscal year, a copy of
the Partnership's annual budget for the coming fiscal year; and
(d) proposed action or undertaking by the Partnership which
shall require an additional Capital Contribution by the Limited Partner in
excess of One Million Dollars ($1,000,000).
The General Partner further agrees that within fifteen (15) days of such
notice the Limited Partner shall have the opportunity to call a meeting of the
Partners in accordance with Section 10.05 hereof to discuss any such proposed
action or undertaking of the Partnership. The Limited Partner acknowledges and
agrees that the right of the Limited Partner to call such meeting and discuss
the proposed action under this Section 6.08(d) shall in no way be construed as
granting the Limited Partner any right to consent, approve or disapprove of the
contemplated action or undertaking by the Partnership set forth in the notice
provided for in this Section 6.08(d). The Limited Partner acknowledges and
agrees that the General Partner, after such meeting with the Limited Partner,
shall in its sole discretion (as set forth in Section 5.07(d)) decide what
action shall be taken.
ARTICLE 7
---------
EVENTS OF DEFAULT
-----------------
It shall be an event of default (an "Event of Default") if any one or more
of the following events shall occur:
(a) the failure of either Partner to make any Capital
Contributions when and as required by Section 3.01(c) hereof or otherwise
hereunder;
(b) the failure of either Partner to perform any of its
obligations under this Agreement or the breach by either Partner of any of the
other terms, conditions or covenants of this Agreement or the failure of any
representation or warranty in this Agreement to be true in all material respects
and a continuation of such failure or breach for more than thirty (30) days
after written notice by the Nondefaulting Partner to the Defaulting Partner that
such Defaulting Partner has failed to perform any of its obligations under, or
has breached, this Agreement; provided, that no Event of Default shall exist
hereunder if cure of such default has been commenced within such thirty (30)
days and is thereafter diligently prosecuted;
(c) a case or proceeding shall be commenced by either Partner
seeking relief under any provision or chapter of the federal Bankruptcy Code or
any other federal or state law relating to insolvency, bankruptcy or
reorganization; an adjudication that either Partner is insolvent or bankrupt;
the entry of an order for relief under the federal Bankruptcy Code with respect
to either Partner; the filing of any such petition or the commencement of any
such case or proceeding against either Partner, unless such petition and the
case or proceeding initiated thereby are dismissed within ninety (90) days from
the date of such filing; the filing of an answer by either Partner admitting the
allegations of any such petition; the appointment of a trustee, receiver or
custodian for all or substantially all of the assets of either Partner unless
such appointment is vacated or dismissed within ninety (90) days from the date
of such appointment but not less than five (5) days before the proposed sale of
any assets of either Partner; the insolvency of either Partner or the execution
by either Partner of a general assignment for the benefit of creditors; the
convening by either Partner of a meeting of its creditors, or any class thereof,
for purposes of effecting a moratorium upon or extension or composition of its
debts; the failure of either Partner to pay its debts as they mature, or the
failure generally of either Partner to pay its debts as they become due; the
levy, attachment, execution or other seizure of the Project or other assets of
the Partner or all or substantially all of the assets or the Partner's
Partnership interest where such seizure is not discharged within thirty (30)
days thereafter; or the admission by either Partner in writing of its inability
to pay its debts as they mature or that it is generally not paying its debts as
they become due;
(d) the failure of either Partner to make payment on any
purchase obligation or otherwise close any purchase arising under Section 8.03
hereof for a period of five (5) days after notice from the Partner to whom
payment was due or to whom the interest in the Partnership is to be transferred.
(e) after notice to the Limited Partner and expiration of the
cure period (if applicable) provided in Section 6.06 hereof, the failure of the
Limited Partner to remain qualified under the Illinois gaming laws and
regulations to own and operate a casino gaming facility or the finding that the
Limited Partner is unsuitable under any other state or local gaming laws under
which the General Partner, the Partnership or any Affiliates of the General
Partner are licensed, registered and qualified, or if, in the sole judgment and
discretion of the General Partner (without regard for the interests of the
Partnership or the Limited Partner), the status of the Limited Partner or any
Affiliate of the Limited Partner as they may be associated with the General
Partner might result in a disciplinary action or the loss of or inability to
reinstate any registration, application or license or any rights or entitlements
held by the Partnership, the General Partner or an Affiliate of the General
Partner.
(f) the failure of the Limited Partner to pay or perform under
the Initial Capital Loan Documents.
(g) the death, incapacity or insanity of the Limited Partner.
ARTICLE 8
---------
REMEDIES
--------
8.01 Remedies. In accordance with Section 8.02 hereof, upon the
--------
occurrence of any Event of Default with respect to a Partner (the "Defaulting
Partner") which shall not have been cured prior to an election by the other
Partner (the "Nondefaulting Partner") under this Section 8.01, the Nondefaulting
Partner may elect to do one or more of the following by written notice of such
election to the Defaulting Partner:
(a) advance money to the Defaulting Partner and exercise the
rights as provided in Section 8.04 hereof;
(b) wind up the affairs of, and dissolve, the Partnership, or
sell the Property and any other assets of the Partnership; as provided in
Section 12.01 hereof, with the proceeds of such liquidation to be applied as
provided in Section 12.03 hereof;
(c) purchase the Defaulting Partner's Partnership interest as
provided in Section 8.05 hereof;
(d) exercise the buy/sell as provided in Section 8.03 hereof;
(e) enforce any covenant by the Defaulting Partner to advance
money (including, without limitation, any contributions required pursuant to
Section 3.01(c) hereof and the contribution of a negative Capital Account
balance) or to take or forbear from any other action hereunder;
(f) pursue any other remedy permitted at law or in equity;
8.02 Choice of Remedies. The election to pursue any other remedies at
------------------
law or in equity pursuant to Section 8.01 hereof may be made alone or in
combination with any other remedies. Nothing contained herein shall limit any
rights to sue a Defaulting Partner for amounts owing to the Partnership
hereunder, or for any other breach of this Agreement.
8.03 Buy and Sell
------------
(a) If an Event of Default occurs, the Nondefaulting Partner
(the "Offeror") may by written notice establish a gross sales price for the
Partnership ("Partnership Price"), which shall be the price to be used in the
calculation procedures set forth in Section 8.03(b) hereof. Any offer made
pursuant to this Section 8.03(a) shall be the "Offer" and any notice of an Offer
shall be a "Notice." The Offeror shall prepare the Notice which shall (i) state
the Partnership Price, and (ii) summarize in reasonable detail the calculations
described in Section 8.03(b) hereof which determine the terms on which the
Offeror would be willing either (x) to purchase from the other Partner (the
"Offeree") the Offeree's partnership interest or (y) to sell to the Offeree the
Offeror's partnership interest, and (iii) state the liabilities to be assumed
pursuant to Section 8.03(d) hereof. If the Offeror shall become a Defaulting
Partner at any time after making an Offer, the buy/sell initiated pursuant to
such Offer shall terminate.
(b) The prices payable to the Offeror or Offeree, as the case
may be, shall be determined as follows: (i) first, the Offeror shall designate a
Partnership Price as the basis for the further calculations to be made pursuant
to this Section 8.03(b); (ii) second, the Partnership Price shall be treated as
hypothetical proceeds of liquidation pursuant to Section 12.03 hereof, and the
portions of such hypothetical proceeds which would be respectively distributed
to each Partner under Section 12.03 hereof (assuming that all debts and
liabilities of the Partnership to third parties shall be paid from such
hypothetical proceeds or assumed by the purchasing Partner) shall be calculated,
and (iii) third, (a) the portion so calculated of such hypothetical proceeds
that the Offeror would receive for its Partnership interest (including or less
any amounts as are payable to such Partner in respect of Default Loans pursuant
to Section 8.04(d) hereof) shall be defined as the Offeror's "Net Partnership
Price", and (b) the portion so calculated of such hypothetical proceeds that the
Offeree would receive for its interest in the Partnership (including or less any
amounts as are payable to such Partner in respect of Default Loans pursuant to
Section 8.04(d) hereof) shall be defined as the Offeree's "Net Partnership
Price."
(c) From the date the Notice is given, the Offeree shall have
thirty (30) days to notify the Offeror of its election either to purchase the
Offeror's partnership interest or sell its own partnership interest at the
prices so offered.
(1) If the Offeree determines to purchase the Offeror's
partnership interest, the Offeree shall serve written notice of such election
specifying a closing date for such purchase not more than ninety (90) days from
the date of such notice of election (including the escrow period) within which
it must purchase the partnership interest of the Offeror at the Offeror's Net
Partnership Price as calculated above.
(2) If the Offeree determines to sell its partnership
interest, it shall give written notice of such election to the Offeror, who
shall, within ten (10) days of the Offeree's election, designate a closing date
for such sale not more than ninety (90) days thereafter and shall purchase the
Offeree's partnership interest at the Offeree's Net Partnership Price as
calculated above.
(3) If the Offeree does not elect either to buy or sell
within the thirty (30) day period referred to above, the Offeror may elect to
buy the Offeree's partnership interest and the Offeror shall have the ten (10)
days following expiration of such thirty (30) day period in which to designate a
closing date for such purchase not more than one hundred twenty (120) days from
the date of such deemed election.
(d) The closing of the purchase and sale contemplated by
Section 8.03(c) hereof shall occur at a specific time and place designated by
the buying Partner and at the time for closing designated in accordance with
Section 8.03(c) hereof. The Partners understand and agree that, under certain
circumstances, the Net Partnership Price applicable to a Partner may be less
than zero (0) and require a reimbursement from the selling Partner to the buying
Partner rather than a payment from the buying Partner to the selling Partner
(as, for example, in the case where the selling Partner has a Capital Account
with a negative balance). The Net Partnership Price for any purchase and sale
pursuant to Section 8.03(c) hereof shall be paid in cash at the closing. At the
closing of the purchase of a partnership interest pursuant to this Section
8.03(d), the Partnership and the buying Partner shall, and do hereby, save,
protect, defend, indemnify, and hold harmless the selling Partner from all debts
and liabilities owed by the Partnership to third parties. Costs of any sale of
a partnership interest, including recording fees, escrow costs, if any, and
other fees (but not attorneys' fees) shall be divided equally between the
Partners. A Partner selling its interest in the Partnership pursuant to Section
8.03(c) hereof shall deliver all appropriate documents of transfer at closing
and shall convey its Partnership interest to the buying Partner, or its nominee,
free and clear of all liens, claims, encumbrances or other charges of any kind
whatsoever. In the event the Partnership interest is conveyed to a nominee of
the buying Partner, the admission of such nominee to the Partnership as a
successor to the selling Partner shall occur, and for all purposes shall be
deemed to have occurred immediately prior to the transfer by the selling Partner
of its Partnership interest. From and after the closing of any such sale of a
partnership interest, the selling Partner shall have no further interest in the
assets, profits or management of the Partnership and shall not be responsible
for any of its obligations or losses except for uninsured tort claims by third
parties arising out of incidents which occurred prior to the closing, and all
obligations of the Partnership to the selling Partner, including all capital
accounts, loans and advances, shall be deemed satisfied and discharged.
(e) If the buying Partner shall fail to close a purchase
pursuant to Section 8.03(d) hereof, the selling Partner may, in addition to any
other rights hereunder, elect to purchase the buying Partner's partnership
interest at the Net Partnership Price which would otherwise have been payable to
the buying Partner pursuant to Section 8.03(b) hereof.
8.04 Advances; Buy-Down
------------------
(a) If the Defaulting Partner shall have failed to make any
Capital Contribution or to pay any other amount as required under this Agree-
ment, the Nondefaulting Partner may advance to the Partnership on behalf of the
Defaulting Partner the amount of such delinquency, with each such advance to be
treated as a loan by the Nondefaulting Partner to the Defaulting Partner (a
"Default Loan"). Each separate advance by a Nondefaulting Partner shall be a
separate Default Loan. The amount of each such advance shall be credited to the
Defaulting Partner's Capital Account. Each Default Loan shall be (i) secured by
the Defaulting Partner's interest in the Partnership, (ii) payable on demand,
and (iii) bear interest, payable monthly, at a rate equal to the lower of (x)
the then Prime Rate plus three percent (3%) or (y) the maximum rate permitted
under applicable law, from the date of such Default Loan to the earlier of the
date of payment in full by the Defaulting Partner or the date of the Nonde-
faulting Partner's exercise of its rights pursuant to Sections 8.04(b) or
8.04(c) hereof. The Defaulting Partner hereby grants the Nondefaulting Partner
a security interest in its Partnership interest and all proceeds thereof to
secure any Default Loans made by the Nondefaulting Partner to the Defaulting
Partner. The Nondefaulting Partner shall give written notice to the Defaulting
Partner of the making of any such Default Loan, and the Defaulting Partner shall
have one hundred twenty (120) days thereafter within which to repay the
Nondefaulting Partner the amount of such Default Loan. Any interest paid on
such Default Loan shall be paid directly to the Nondefaulting Partner and shall
not affect either the Nondefaulting Partner's or the Defaulting Partner's
Capital Account. Upon the payment in full of the principal of and all accrued
interest on a Default Loan within such one hundred twenty (120) day period or
pursuant to Sections 8.04(b) or 8.04(c) hereof, the Defaulting Partner's
default, with respect to which a Default Loan was made, shall be deemed cured.
The making of a Default Loan shall not be deemed to cure a default with respect
to which a Default Loan has been made, and such cure may be made only in the
manner set forth in the immediately preceding sentence or in Sections 8.04(b),
8.04(c) and 8.04(d) hereof. Any Default Loan made pursuant hereto shall be made
to the Limited Partner, and guaranteed by the spouse of the Limited Partner
pursuant to the Guarantee attached hereto, with full recourse to the assets of
the Limited Partner and the spouse of the Limited Partner.
(b) If the Defaulting Partner fails to repay the Nondefaulting
Partner with respect to any one or more Default Loans within the one hundred
twenty (120) day period referred to in Section 8.04(a) hereof, the Nondefaulting
Partner may, at any time after the expiration of such one hundred twenty (120)
day period and before the repayment of such Default Loan or Default Loans by the
Defaulting Partner (including a repayment pursuant to Section 8.04(c) hereof),
elect, by one hundred twenty (120) days prior written notice (the "Conversion
Notice") with respect to any one or more Default Loans to the Defaulting
Partner, to increase the Nondefaulting Partner's Percentage Share and decrease
the Defaulting Partner's Percentage Share as of the date of and immediately
following the date thirty (30) days following the Conversion Notice. If a
Defaulting Partner has not repaid the Default Loan or Default Loans specified in
the Conversion Notice within said thirty (30) days, the Nondefaulting Partner
may elect to increase its Percentage Share (but not to exceed One Hundred
percent (100%)) to equal a percentage derived from a fraction the numerator of
which equals the Adjusted Capital Contribution (as defined below) of the
Nondefaulting Partner and the denominator of which equals the aggregate sum of
both Partners' Capital Contributions. The Defaulting Partner's Percentage Share
shall be correspondingly decreased so that it shall be equal to One Hundred
percent (100%) minus the Nondefaulting Partner's Percentage Share as increased
in accordance with the preceding sentence. "Adjusted Capital Contribution"
shall mean the sum of all Capital Contributions, not including the Contribution
representing the Default Loan, actually made by the Nondefaulting Partner as of
the time of the recalculation plus an amount equal to One Hundred and Twenty
percent (120%) of the sum of all Default Loans which the Nondefaulting Partner
has made to the Defaulting Partner with respect to which such adjustments were
made. The parties acknowledge that in the event this remedy is exercised,
additional Capital Contributions will be of critical value to the Partnership,
and the parties further acknowledge that such value is not readily ascertainable
as of the date hereof and a reasonable estimate of such value is achieved by the
formula contained herein. Such formula for the "buy-down" reflects such
estimate of the parties, and is not intended to be a penalty. Upon any such
election, the Defaulting Partner's default, with respect to which the Default
Loan or Default Loans specified in the Conversion Notice was made, shall be
deemed cured, the Nondefaulting Partner's advance pursuant to 8.04(a) hereof
with respect to which such Default Loan or Default Loans was made shall be added
to the Nondefaulting Partner's Capital Account, and the amount of such advance
shall be deducted from the Defaulting Partner's Capital Account. Upon such
recalculations of the Partners' Percentage Shares and the corresponding
adjustments of the Partners' respective Percentage Share, the default associated
with the Default Loan with respect to which such adjustments were made shall be
deemed cured, to the extent such Default Loan made by the Nondefaulting Partner,
as of the date of such adjustments.
(c) Notwithstanding anything to the contrary contained in
Section 8.04 (b) hereof, in the event that the Percentage Share is adjusted as
set forth in Section 8.04(b) hereof, and the Defaulting Partner's Percentage
Share, as readjusted, is equal to zero (0), then the General Partner shall have
the right (but not the obligation), in its sole discretion, to either (i) admit
to the Partnership as an additional limited partner of the Partnership a nominee
of the General Partner, and to deem the Limited Partner to have transferred its
entire interest in the Partnership to such nominee (instead of increasing the
General Partner's Percentage Share by such amount), whereupon the Limited
Partner will cease to be a limited partner of and to have any interest in the
Partnership, or (ii) take all steps necessary to dissolve and wind up the
affairs of the Partnership, and to cause all assets to be liquidated and the net
proceeds therefrom to be distributed solely to the General Partner, with the
Limited Partner having no right to receive any such Distribution. The General
Partner is expressly authorized to make any filings or take any actions on
behalf of the Limited Partner or the Partnership to effectuate the provisions of
this Section 8.04(c).
(d) At any time when any Default Loan shall be outstanding, all
distributions of cash pursuant to Article 4 or Article 12 hereof from and after
the making of such Default Loan to which the Defaulting Partner would otherwise
be entitled shall be paid to the Nondefaulting Partner to be applied first
against interest and then against the principal of any Default Loans until the
repayment in full of all accrued interest and principal of any Default Loans or
an election or elections by the Nondefaulting Partner pursuant to Sections
8.04(b) or 8.04(c) hereof to increase the Nondefaulting Partner's Percentage
Share with respect to all Default Loans which have not previously been repaid in
full. Any such amounts so applied to accrued and unpaid interest and then to
principal on a Default Loan shall be deducted from the Defaulting Partner's
Capital Account. Upon request by the Nondefaulting Partner at any time from the
date of the Nondefaulting Partner's advance pursuant to Section 8.04(a) hereof
until any such Default Loan shall be repaid in full or converted to an increased
in Percentage Share, the Defaulting Partner (or, if the Defaulting Partner
should refuse to do so, the General Partner pursuant to the power of attorney
granted herein) shall execute any and all documents reasonably requested by the
Nondefaulting Partner, including, without limitation, notes, security agreements
and UCC-1 financing statements which notes, security agreements and UCC-1
financing statements shall be in the form provided by the Nondefaulting Partner
to the Defaulting Partner, as may be necessary to further assure and perfect a
security interest in the Defaulting Partner's Partnership interest to secure the
Nondefaulting Partner's Default Loan.
8.05 Appraisal Buy Out
-----------------
(a) Except as otherwise provided in this Article 8, upon the
occurrence of any Event of Default, the Nondefaulting Partner may give the
Defaulting Partner notice that it intends to exercise its right to buy the
Defaulting Partner's Partnership interest pursuant to this Section 8.05. Upon
such notice the fair market value of the assets of the Partnership shall be
determined pursuant to Article 9 hereof. The Nondefaulting Partner shall have
thirty (30) days from the earlier of the date on which the Partners agree upon a
fair market value pursuant to Section 9.01 hereof or the date on which the
Partners receive notice of the decision of the appraisers pursuant to Section
9.02 hereof (the "Valuation Date") in which to purchase the Defaulting Partner's
partnership interest by payment, in cash, to the Defaulting Partner of an amount
equal to the Appraisal Buyout Price, as determined pursuant to Section 8.05(b)
hereof.
(b) The "Appraisal Buyout Price" shall be an amount equal to
the amount derived from the following calculations: (i) first, ninety percent
(90%) of the Appraised Value (as established pursuant to Section 9.03 hereof) of
the assets of the Partnership shall be treated as hypothetical sales proceeds
for distribution under Section 12.03 hereof, and the portions of such hypothet-
ical sales proceeds which would be respectively distributed to each Partner
pursuant to Section 12.03 hereof (assuming that all debts and liabilities of the
Partnership to third parties shall be paid from such hypothetical sales proceeds
and that any gain or loss realized upon such hypothetical sale shall have been
allocated to the Partners' Capital Accounts) shall be calculated; and (ii)
second, the portion so calculated of such hypothetical sales proceeds that the
Defaulting Partner would receive, if any (including or less any amounts as are
payable to a Partner in respect of Default Loans pursuant to Section 8.04(d)
hereof), shall be the Appraisal Buyout Price.
(c) The closing of the Nondefaulting Partner's purchase of the
Defaulting Partner's partnership interest shall occur at a place and time
designated by the Nondefaulting Partner within thirty (30) days after the
Valuation Date and shall be paid in cash in the amount of the Appraisal Buyout
Price at the closing. At the closing of the purchase of a partnership interest
pursuant to this Section 8.05(c), the Partnership and the buying Partner shall,
and do hereby, save, protect, defend, indemnify and hold harmless the selling
Partner from all debts and liabilities owed by the Partnership to third
parties. The Partners understand and agree that under certain circumstances the
Appraisal Buyout Price may be less than zero and require a reimbursement from
the selling Partner to the buying Partner rather than a payment from the buying
Partner to the selling Partner (as, for example, in the case where the selling
Partner has a Capital Account with a negative balance).
(d) Costs of the transaction, including recording fees, escrow
costs, if any, and other fees (but not attorneys' fees) shall be borne by the
Defaulting Partner. The Defaulting Partner shall deliver all appropriate
documents of transfer at the closing and shall convey its entire partnership
interest to the Nondefaulting Partner, or the Nondefaulting Partner's nominee,
free and clear of all liens, claims, encumbrances, or other charges of any kind
whatsoever on its partnership interest. In the event the Partnership interest
is transferred to a nominee of the Nondefaulting Partner, the admission of such
nominee to the Partnership as a successor to the Defaulting Partner shall occur,
and for all purposes shall be deemed to have occurred immediately prior to the
transfer by the Defaulting Partner of its Partnership interest. From and after
the closing, the Defaulting Partner shall have no further interest in the
assets, profits or management of the Partnership and shall not be responsible
for any of its obligations or losses except uninsured tort claims by third
parties arising out of incidents which occurred prior to the closing, and all
obligations of the Partnership to the Defaulting Partner, including all capital
accounts, loans and advances, shall be satisfied and discharged.
8.06 Forbearance. Notwithstanding anything to the contrary contained in
-----------
Articles 8 hereof, the General Partner agrees to forebear from exercising any
remedies hereunder for failure of the Limited Partner to make any Capital
Contributions pursuant to Section 3.01(c) hereof (other than the initial Capital
Contribution of $6,480,000) until the date that is one hundred eighty (180) days
after the opening of the Project for business. Nothing herein shall restrict
the exercise of any remedies with respect to the initial Capital Contribution.
ARTICLE 9
---------
VALUATION AND APPRAISAL PROCEDURE
---------------------------------
9.01 Voluntary Appraisal. Upon an election under Section 8.05 hereof, the
-------------------
Partners shall promptly attempt, in good faith, to agree upon the fair market
value of all or a part of the assets of the Partnership.
9.02 Appraisal Panel
---------------
(a) If the Partners cannot agree within fifteen (15) days
following an election under Section 8.05 hereof by a Nondefaulting Partner upon
the fair market value of some or all of the assets of the Partnership, either
Partner shall have the right to call for an appraisal, and the electing Partner
may give the other Partner written notice that it intends to exercise its right
to call for an appraisal pursuant to this Section 9.02. Such notice shall
designate those assets of the Partnership the value of which has not been agreed
upon. The Partners shall thereupon attempt, in good faith, to agree upon a
single appraiser to appraise the assets of the Partnership. If the Partners
cannot agree upon a single appraiser within fifteen (15) days, either Partner
may give the other Partner a written notice calling for appointment of an
appraisal panel (the "Appraisal Panel"), and such notice shall designate a
disinterested person who is familiar with gaming operations and recognized by
those in the business of operating gaming facilities as one who could fairly and
accurately evaluate a gaming operation (the "First Appraiser") selected by the
electing Partner to serve on the Appraisal Panel provided for below.
(b) Upon receipt of such notice from the electing Partner, the
other Partner shall have seven (7) days in which to designate a disinterested
person who is familiar with gaming operations and recognized by those in the
business of operating gaming facilities as one who could fairly and accurately
evaluate a gaming operation (the "Second Appraiser") to serve on the Appraisal
Panel by serving notice of such designation on the electing Partner. If the
Second Appraiser is not so appointed and designated within or by the time so
specified, then the First Appraiser shall be the sole appraiser to determine the
value of the assets of the Partnership.
(c) Upon the designation, if any, of the Second Appraiser, the
First Appraiser and the Second Appraiser shall themselves appoint a third
disinterested person who is familiar with gaming operations and recognized by
those in the business of operating gaming facilities as one who could fairly and
accurately evaluate a gaming operation (the "Third Appraiser") within seven (7)
days. If the First Appraiser and the Second Appraiser are unable to agree upon
such appointment within said seven (7) days, then the electing Partner shall
request such appointment by the president or executive committee of the Chapter
of the American Institute of Real Estate Appraisers which includes the Property
within its jurisdiction.
(d) In the event of failure, refusal or inability of any
appraiser to act, a new appraiser shall be appointed in the stead thereof, which
appointment shall be made in the same manner as provided in this Section 9.02
for the appointment of such appraiser so failing, refusing or being unable to
act.
(e) The one or three appraisers appointed as the appraisal
panel pursuant to Section 9.02 hereof (the "Appraisal Panel") shall each
appraise the assets designated in the electing Partner's notice taking into
account appropriate indicators of the fair market value of such assets in a cash
sale between a willing buyer and seller not under undue duress and shall report
their findings to the Partners in writing. In the case of a three appraiser
Appraisal Panel, if one or more appraisers fail to deliver their reports within
sixty (60) days after the appointment of the Third Appraiser, the electing
Partner may dismiss the delinquent appraiser and a new appraiser may be
appointed in accordance with Section 9.02(d) above.
9.03 Appraised Value. The "Appraised Value" of the assets to be
---------------
appraised shall be equal to the mean of the two closest appraised values
reported by the Appraisal Panel; provided that if such values are equally
distributed, the "Appraised Value" of the assets to be appraised shall be equal
to the mean of the three appraised values reported by the Appraisal Panel.
9.04 Expenses. Except as otherwise provided herein, each Partner shall
--------
pay the fees and expenses of the appraiser appointed by such Partner, or in
whose stead, as above provided, such appraiser was appointed, and the fees and
expenses of the third appraiser, and all other expenses, if any, shall be borne
equally by both parties.
9.05 Qualification. To be qualified to be selected or designated as an
-------------
appraiser for purposes of this Article 9, such appraiser must demonstrate (a)
current good standing as a licensed appraiser, and (b) past appraising experi-
ence of at least five years, which experience shall include the appraisal of
riverboat or casino gaming operations.
ARTICLE 10
----------
ADMINISTRATION
--------------
10.01 Bank Accounts. All funds of the Partnership not otherwise invested
-------------
shall be deposited as the General Partner shall determine, and withdrawals shall
be made only on the signature of the General Partner or such other person or
persons as the General Partner may from time to time designate.
10.02 Title to Partnership Property. Title to the Property shall be held
-----------------------------
either in the name of the Partnership, or in the name of any bank or trust
company authorized to accept land trusts under the laws of the State of
Illinois, or as the General Partner may from time to time determine.
10.03 Books and Records. The books and records of the Partnership shall
-----------------
be maintained at the principal office of the Partnership and shall be available
for examination there by any Partner, or its duly authorized representatives, at
any and all reasonable times during regular business hours. The Partnership
shall maintain such books and records and provide such financial or other
statements as the General Partner in its sole discretion deems advisable. Such
financial statements may be prepared with or without audit in the sole
discretion of the General Partner. A current list of the full name and last
known address of each Partner, a copy of the Partnership's Certificate of
Limited Partnership and all amendments thereto and executed copies of all powers
of attorney pursuant to which such Certificate or any certificate of amendment
has been executed, copies of the Partnership's federal, state and local income
tax returns and reports, if any, for the three most recent years after the date
hereof, and copies of this Agreement, any amendments thereto, and of any
financial statements of the Partnership for the three most recent years after
the date hereof, and the Partnership's books, shall be maintained at the
principal office of the Partnership.
10.04 Notices. The address of each of the parties shall for all purposes
-------
be as set forth below unless otherwise changed by the applicable party by notice
to the other as provided herein.
General Partner:
Harrah's Illinois Corporation
c/o The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 762-8777
Attn: Corporate Secretary
with a copy to:
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 762-8777
Attn: Stephen H. Brammell
The Limited Partner:
John Q. Hammons
300 John Q. Hammons Parkway
Suite 900
Springfield, Missouri 65806
Phone:________________
Fax:________________
with a copy to:
William J. Hart
Farrington & Curtis
750 North Jefferson
Springfield, Missouri 65802
Phone: (417) 862-6726
Fax: (417) 862-6948
All notices or other communications required or permitted to be given pursuant
to the provisions of this Agreement shall be in writing and shall be considered
as properly given if mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested, or by overnight courier
service, or by telecopier or facsimile, or by delivering the same in person to
the intended addressee, or by prepaid telegram. Notices hereunder in any manner
shall be effective only if and when received by the addressee.
10.05 Meetings. The General Partner may but shall not be obligated to
--------
call meetings of the Partnership from time to time, for the purpose of having a
vote by the Partners, or for any other purpose which the General Partner deems
appropriate. The Limited Partner may but shall not be obligated to call
meetings of the Partnership for the purposes set forth in Section 6.08(d)
hereof. Such meetings shall be called by notice duly given to each of the
Partners not less than five (5) days prior to the date of such meeting, or by
telephone or telegram communication, confirmed afterwards in writing. The
meetings shall be at the principal office of the Partnership, or at such other
place as is designated in writing by the General Partner and shall be at the
specific time designated in such notice.
10.06 Amendment. Amendments may be made to this Agreement from time to
---------
time by the General Partner without the consent of the Limited Partner;
provided, however, that without the consent of the Limited Partner, this
- -------- -------
Agreement may not be amended so as to (a) convert the Limited Partner's interest
into a General Partner's interest; (b) modify the limited liability of the
Limited Partner; (c) limit the rights of the Limited Partner hereunder; (d)
modify the allocation of taxable income and tax losses or the distribution
provisions contained herein so as adversely to affect the Limited Partner; or
(e) modify the capital account provisions contained herein so as adversely to
affect the Limited Partner.
ARTICLE 11
----------
FISCAL MATTERS
--------------
11.01 Fiscal Year. The fiscal year of the Partnership shall be the
-----------
calendar year, or such other period as may be determined by the General Partner,
as permitted by the Code.
11.02 Method of Accounting. The General Partner, in its sole discretion,
--------------------
may cause the Partnership to make or revoke the election regarding cash or
accrual method tax treatment referred to in Section 446 of the Code or any
similar provision enacted in lieu thereof. The expense of preparing the
Partnership's annual Federal and Illinois tax returns shall be borne by the
Partnership.
11.03 Accountants and Accounting Principles. The General Partner shall
-------------------------------------
keep, or cause to be kept, full and accurate books and records of all
transactions of the Partnership, which books and records shall be maintained in
accordance with generally accepted accounting principles. If the General
Partner elects to have the financial statements prepared with an audit, the
records and books of account shall be audited by a certified public accountant
selected by the General Partner as of the end of each fiscal year of the
Partnership and at any other time that the General Partner may deem it necessary
or desirable.
11.04 Reports. As soon as practicable after the end of each fiscal
-------
quarter of the Partnership, the General Partner shall deliver to each Partner
quarterly financial reports of the Partnership. As soon as practicable after
the end of each fiscal year of the Partnership, the General Partner shall
deliver to each Partner such information as is necessary for the preparation by
such Partner of its federal and state or other income tax returns, and such
other information as in the judgment of the General Partner shall be reasonably
necessary for the Partners to be advised of the results of the operations of the
Partnership. All elections and options available to the Partnership for federal
or state income tax purposes shall be taken or rejected by the Partnership in
the sole discretion of the General Partner.
11.05 Tax Returns; Tax Matters Partner. The General Partner shall
--------------------------------
prepare, or cause to be prepared, income tax returns for the Partnership and, in
connection therewith, make any available or necessary elections, including
elections with respect to the rates of depreciation of such assets. The General
Partner shall be the "tax matters partner" for purposes of Code Sections 6221
through 6232 and the Treasury Regulations promulgated thereunder. The General
Partner shall use its best efforts to prepare, or cause to be prepared, the
Partnership's income tax return for any fiscal year on or before April 1 of the
succeeding calendar year. The Limited Partner shall furnish to the General
Partner a copy of the Limited Partner's federal and state tax returns each year
concurrently with its filing of such tax returns.
11.06 Basis Election. Upon the transfer of an interest in the
--------------
Partnership, or a distribution of its property, the General Partner, on behalf
of the Partnership, may, in its sole discretion, elect to adjust the basis of
the partnership assets as allowed by Code Sections 734(b) and 743(b) or any
successors to said Sections. Except insofar as such an election pursuant to the
aforesaid Sections has been made with respect to the interest of any Partner,
the determination of taxable income, tax loss, or Cash Flow shall be made as
provided for in this Agreement. Each Partner agrees to furnish the Partnership
with all information necessary to give effect to such election.
11.07 Partnership Expenses. The Partnership shall pay or reimburse the
--------------------
General Partner for all expenses (which expenses may be billed directly to the
Partnership) of the Partnership which may include, but are not limited to: (a)
all costs of personnel employed by the Partnership and involved in the business
of the Partnership; (b) all costs of borrowed money, taxes and assessments on
the Property and other taxes applicable to the Partnership; (c) legal, audit,
accounting, brokerage and other fees; (d) printing and other expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration
and recording of documents evidencing ownership of an interest in the
Partnership or in connection with the business of the Partnership; (e) fees and
expenses paid to independent contractors, mortgage bankers, brokers and
servicers, leasing agents, consultants, on-site managers, real estate brokers,
insurance brokers and other agents; (f) expenses in connection with the
disposition, replacement, alteration, repair, remodeling, refurbishment,
leasing, refinancing and operation of the Property or other Partnership assets
(including the costs and expenses of foreclosures, insurance premiums, real
estate brokerage and leasing commissions, and maintenance); (g) the cost of
insurance as required in connection with the business of the Partnership; (h)
expenses of organizing, revising, amending, converting, modifying or terminating
the Partnership; (i) expenses in connection with distributions made by the
Partnership to, and communications and bookkeeping and clerical work necessary
in maintaining relations with, the Partners, including the cost of printing and
mailing to such persons various notices or other communications; (j) expenses in
connection with preparing and mailing reports required to be furnished to the
Partners for investor, tax reporting or other purposes, or which reports the
General Partner deems the furnishing thereof to be in the best interests of the
Partnership; (k) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership, (l)
the cost of preparation and dissemination of the information, material and
documentation relating to a potential sale, refinancing or other disposition of
the Property or other Partnership assets, (m) the cost of any appraisals of the
Property as may be required by, financings, General Partner's internal
procedures or any regulatory reporting requirements on an annual or special
basis, and (n) any letter of credit fees or expenses incurred by the General
Partner or its Affiliates in connection with development of the Property.
11.08 Change in Control. If (i) the majority of the outstanding stock
-----------------
of the General Partner shall cease to be owned directly or indirectly by
Harrah's or The Promus Companies Incorporated, and (ii) within ninety (90) days
after the close of such transaction there is a change in the majority of the
directors on the board of the General Partner, then the Limited Partner shall
have the right to exercise the "Buy and Sell" remedy in accordance with Section
8.03 hereof by written notice within thirty (30) days from the date of notice to
the Limited Partner of the transfer of the majority of the outstanding stock of
the General Partner or the Promus Companies Incorporated and change in the
majority of the directors of the General Partner; provided, however, that if the
-------- -------
Limited Partner fails to deliver such written notice to the General Partner
within such thirty (30) day period, the Limited Partner shall be deemed to have
consented to such transfer or change.
ARTICLE 12
----------
TERMINATION
-----------
12.01 Events of Dissolution. The Partnership shall be dissolved on the
---------------------
earliest to occur of:
(a) the expiration of the term of the Partnership;
(b) the passage of thirty (30) days after the conversion to cash
or its equivalent, sale or other disposition of all of the Partnership assets;
(c) the election by the General Partner to dissolve the
Partnership, notice of which is given to the Limited Partner;
(d) the withdrawal or removal of the General Partner, or the
filing of a certificate of dissolution or its equivalent, for the General
Partner, or the revocation of its charter and the expiration of ninety (90) days
after the date of notice to the General Partner of revocation without a
reinstatement of its charter, unless (i) at the time of occurrence of such event
there is at least one other general partner who is hereby authorized to and
agrees to continue the business of the Partnership without dissolution, or (ii)
within ninety (90) days after the occurrence of such event, all Partners agree
in writing to continue the business of the Partnership and to the appointment,
effective as of the date of such event, of one or more additional general
partners of the Partnership; or
(e) any other event requiring the dissolution of the Partnership
under the laws of the State of Delaware.
12.02 Winding Up
----------
(a) Upon the dissolution of the Partnership pursuant to Section
12.01 hereof, the Partnership business shall be wound up and its assets
liquidated by the Liquidator, as defined herein, as provided in this Section
12.02, and the net proceeds of such liquidation shall be distributed in
accordance with Section 12.03 hereof. The "Liquidator," as used herein shall
mean the General Partner, or, if there is none at the time in question, such
other person who may be appointed by the Partners (or in accordance with
applicable law if the Partners fail to make such appointment). The Liquidator
shall be responsible for taking all action necessary or appropriate to wind up
the affairs and distribute the assets of the Partnership upon its dissolution.
(b) The Liquidator shall file all certificates and notices of
the dissolution of the Partnership required by law. The Liquidator shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership's assets; provided, however, that if the Liquidator shall determine
that an immediate sale of part or all of the Partnership assets would cause
undue loss to the Partners, then, in order to avoid such loss, the Liquidator
may defer the liquidation, to the extent permitted by law.
12.03 Distribution on Dissolution and Termination
-------------------------------------------
(a) Upon dissolution of the Partnership, the net proceeds of
such liquidation shall be applied and distributed in the following order of
priority; provided that the higher level(s) of priority have been fully
satisfied and provided, further that if the Capital Account of any Partner shall
have a negative balance after giving effect to the allocation of tax items, such
Partner shall pay to the Partnership the amount of such negative balance not
later than ten (10) days from the date of written notice to such effect:
(i) first, to the payment of debts and liabilities of the
Partnership to third parties (including any loans or advances that may have
been made by any of the Partners to the Partnership) and the expenses of
liquidation, and to the setting up of any reserves which may be deemed
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership. Such reserves shall be paid over to an
escrowee designated by the Liquidator to be held for the purpose of
disbursing such reserves in payment of any of the aforementioned
contingencies and, at the expiration of such period as shall be deemed
advisable, to distribute the balance hereafter remaining in the manner
provided in this Section 12.03;
(ii) second, according to the order of priority set forth
in Section 4.04 (a) through (c) hereof; provided, however, that all Capital
Account balances shall be determined after taking into account all Capital
Account adjustments for the Partnership taxable year during which such
liquidation occurs; and
(iii) thereafter, to the Partners in respect of the
balances, if any, remaining in their Capital Accounts.
(b) If there is not a pro rata distribution of each asset, asset
distributions in kind shall be appraised by appraisers retained by the
Liquidator, if necessary, so that each Partner receives his pro rata share of
net Partnership assets as appraised. It shall not be a requirement that each
Partner receive a pro rata share of each asset available for distribution to the
Partners on dissolution. In the event valuation of the assets of the
Partnership cannot be agreed upon, such assets shall be valued at their fair
market value as determined by appraisers retained by the Liquidator. The
Liquidator may retain such appraisers and other consultants as may be necessary
and advisable, all at the expense of the Partnership, in connection with the
wind-up of the Partnership affairs. No Partner shall have any right to demand
or receive property other than cash upon dissolution and termination of the
Partnership.
(c) A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the discharge of liabilities as
to creditors.
(d) Within ninety (90) days after the complete liquidation of
the Partnership, the Liquidator shall furnish to each of the Partners a
financial statement for the period from the first day of the then current fiscal
year through the date of such complete liquidation certified by the
Partnership's certified public accountant. Such statement shall include a
Partnership statement of operation for such period and a Partnership balance
sheet as to the date of such complete liquidation.
(e) Each Partner shall look solely to the assets of the
Partnership for all distributions with respect to the Partnership and its
Capital Contribution thereto and share of profits and losses thereof, and shall
have no recourse therefor (upon dissolution or otherwise) against the General
Partner or the Liquidator. It is expressly understood and agreed that the
General Partner shall not be personally liable for the return or repayment of
all or any portion of the capital of any Partner.
ARTICLE 13
----------
MISCELLANEOUS
-------------
13.01 Governing Law. This Agreement and the rights of the parties
-------------
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware.
13.02 Successors and Assigns. Any person acquiring or claiming an
----------------------
interest in the Partnership, in any manner whatsoever, shall be subject to and
bound by all terms, conditions and obligations of this Agreement to which its or
his predecessor in interest was subject or bound, without regard to whether such
a person has executed a counterpart hereof or any other document contemplated
hereby. No person, including the legal representative, heir or legatee of a
deceased Partner, shall have any rights or obligations greater than those set
forth in this Agreement and no person shall acquire an interest in the
Partnership or become a Partner hereof except as permitted by the terms of this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors, assigns, heirs, legal representatives,
executors and administrators.
13.03 Grammatical Changes. Whenever from the context it appears
-------------------
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter
gender as the circumstances require.
13.04 Captions. Captions contained in this Agreement are inserted only as
--------
a matter of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision hereof.
13.05 Severability. If any provision of this Agreement, or the
------------
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby; provided that the parties shall attempt to reformulate
such invalid provision to give effect to such portions thereof as may be valid
without defeating the intent of such provision; and further provided that this
Section 13.05 shall not apply to change the status of any Limited Partner to a
General Partner, or to alter the classification of the Partnership as a
partnership under the Code.
13.06 Counterparts. This Agreement, or any amendment hereto may be
------------
executed in multiple counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument, notwithstanding that
all of the Partners are not signatories to the original or the same counterpart.
In addition, this Agreement, or any amendment hereto, may contain more than one
counterpart of the signature pages, and this Agreement, or any amendment hereto,
may be executed by the affixing of the signatures of each of the Partners to one
of such counterpart signature pages; all of such counterpart signature pages
shall be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
13.07 Other Matters. Matters not covered in this Agreement relating to
-------------
limited partnerships shall be governed and controlled by the Act.
13.08 Private Litigation
------------------
(a) In the event the Partnership is made a party to any
litigation, or otherwise incurs any losses or expenses as a result of or in
connection with any Partner's personal obligations or liabilities unconnected
with Partnership business, such Partner shall reimburse the Partnership for all
such expenses incurred (including attorneys' fees and court costs), and the
interest of such Partner in this Partnership may be charged thereof.
(b) If either the General Partner or the Limited Partner brings
any judicial action or proceeding to enforce its rights under this Agreement,
the prevailing party shall be entitled, in addition to any other remedy, to
recover from the other, regardless of whether such action or proceeding is
prosecuted to judgment, all costs and expenses, including without limitation
reasonable attorneys' fees, incurred therein by the prevailing party.
13.09 Waiver of Right to Court Decree of Dissolution and Partition. The
------------------------------------------------------------
Partners agree that irreparable damage would be done to the good will and
reputation of the Partnership if any Partner should bring an action in court to
dissolve this Partnership. To the extent permitted by law, each Partner hereby
waives and renounces its right to seek a court decree of dissolution or to seek
the appointment by a court of a liquidator for the Partnership. The Partners
further agree that the Property is not and will not be suitable for partition
and, accordingly, to the fullest extent permitted by applicable law, each of the
Partners hereby irrevocably waives any and all rights which it may have to
maintain an action for partition of the Property, or any portion thereof, or to
otherwise divide (whether through an action in equity or through some other
means) the beneficial interest in any nominee holding title thereto.
13.10 Competing Business. The Partners agree as follows:
------------------
(a) Any Partner may engage and possess an interest in any other
business venture of any nature, kind of description, including, without limiting
the generality of the foregoing, any business venture engaged in the same type
of business as the Partnership, even if such other business is competitive with
that of the Partnership, and the ownership, financing and management of casino
and other gaming operations of any kind whatsoever. Further, the Partners agree
that except as otherwise agreed in writing by the Partners:
(i) Neither the Partnership nor any of its Partners shall
have the right in and to such other business venture or the income or
profits derived therefrom.
(ii) No Partner need disclose to any other Partner or the
Partnership any other business venture in which he may have an interest or
any other business opportunity presented to him, even if such opportunity
is of a character which, if presented to the Partnership, could be taken by
the Partnership, and the General Partner shall have the right to take for
its own account or to recommend to others any such particular investment
opportunity or business venture.
(iii) As a natural part of the consideration for the
execution of this Agreement by the General Partner, the Limited Partner
hereby waives, relinquishes and renounces any right or claim of
participation in another business venture of the General Partner.
(b) Notwithstanding the foregoing, in no event shall any Partner
or any Affiliate of such Partner engage in any business venture to the extent
same is prohibited under any agreement to which the Partnership is a party, or
by which any of its property or assets are bound.
13.11 Personal Property. This Agreement shall not be deemed to create in
-----------------
any Partner any right, title, interest or lien in, to or on all or any portion
of the Property, it being understood that any right or interest of any Partner
created by this Agreement shall solely be an interest in the Partnership and
shall be personal property.
13.12 No Third Party Rights. This Agreement is for the sole and exclusive
---------------------
benefit of the Partners designated herein and the Partnership and no other
person or entity (including any creditors of the Partnership or the Partners)
shall under any circumstances be deemed to be a beneficiary of any of the
rights, remedies, terms and provisions of this Agreement.
13.13 Consent of Bank Group. The effectiveness of this Agreement is
---------------------
expressly conditioned upon and shall not be effective until receipt of the
approval by certain lenders to The Promus Companies Incorporated (the indirect
parent of the General Partner) of investments of the type contemplated by this
Agreement on or before April 15, 1992. Upon obtaining such notice, the General
Partner shall promptly give written notice of such approval to the Limited
Partner and the giving of such notice shall be conclusive evidence of
satisfaction of the condition contained in this Section 13.13. If such approval
is not obtained prior to such date, this Agreement shall be void and of no
further force or effect. The General Partner shall give written notice to the
Limited Partner if such approval is not obtained prior to such date, and such
notice shall be conclusive evidence that this Agreement is void and of no force
or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
HARRAH'S ILLINOIS CORPORATION,
a Delaware corporation
By: /s/ Philip G. Satre
-------------------------------
Name: Philip G. Satre
-------------------------
Title: President
------------------------
LIMITED PARTNER:
/s/ John Q. Hammons
-------------------------------
John Q. Hammons, an individual
Guarantee
Mrs. Juanita Hammons (the "Guarantor") joins in this Agreement for the purpose
of guarantying the Limited Partner's obligations hereunder and hereby
unconditionally guarantees any and all obligations of the Limited Partner under
this Agreement, including and without limitation, the repayment by the Limited
Partner of the Initial Capital Loan and any Default Loans (the "Guaranteed
Obligations"). Except as specifically set forth above, the Guarantor shall have
no obligation or liability under this Agreement.
The Guaranteed Obligations may be extended or renewed and the Guarantor will be
bound under this guarantee notwithstanding any extension, renewal, or alteration
of the Guaranteed Obligations. The Guarantor hereby waives presentation of,
demand of, and protest of the Guaranteed Obligations and waives notice of
protest for nonpayment. This guarantee shall not be affected by:
(a) the failure of any party to assert any claim or demand
or to enforce any right or remedy against the Limited Partner under this
Agreement,
(b) any extension or renewal of any provision thereof, or
(c) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement.
The Guarantor further agrees that this guarantee constitutes a guarantee of
payment when due and not of collection and waives any right to require that any
resort be had by any party to any of the security held for payment of any of the
Guaranteed Obligations or to any balance of any deposit account or credit on the
books of any party in favor of any person.
The obligations of the Guarantor shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise of
any of the Guaranteed Obligations, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of any of the Guaranteed Obligations,
discharge of the Limited Partner from obligations in a bankruptcy or similar
proceeding or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor shall not be discharged or impaired or otherwise
affected by its failure to assert any claim or demand or to enforce any remedy
under this Agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of any of
the Guaranteed Obligations, or by any other act or thing or omission or delay to
do any other act or thing which may or might in any manner or to any extent vary
the risk of the Guarantor or which would otherwise operate as a discharge of the
Guarantor as a matter of law or equity.
The Guarantor further agrees that this guarantee shall continue to be effective
or to be reinstated, as the case may be, if at any time payment, or any part
thereof, of principal of or interest on any Guaranteed Obligation is rescinded
or must otherwise be restored by any party upon the bankruptcy or reorganization
of the Limited Partner or otherwise.
Upon payment by the Guarantor of any sum as provided above so long as any of the
Guaranteed Obligations shall remain outstanding hereunder, all rights of the
Guarantor against the Limited Partner arising as a result thereof by way of
right of subrogation or otherwise, shall in all respects be subordinated and
junior in right of payment to the prior indefeasible payment in full of all the
Guaranteed Obligations.
The Guarantor hereby waives and relinquishes all rights and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of any such rights or remedies, including without limitation (a) any
right to require the General Partner to proceed against or exhaust its recourse
against the Limited Partner or any security or collateral held by the Limited
Partner or to pursue any other remedy in its power before being entitled to
payment from the Limited Partner; (b) any defense that may arise by reason of
(i) the incapacity, lack of authority, death or disability of the Guarantor,
(ii) the revocation or repudiation hereof or the revocation or repudiation of
the Partnership Agreement unless caused by a Partner other than the Limited
Partner, (iii) the failure of the General Partner to file or enforce a claim
against the estate (either in administration, bankruptcy or any other
proceeding) of the Limited Partner, (iv) the unenforceability in whole or in
part of the Partnership Agreement or any other instrument, document or agreement
referred to herein unless caused by a Partner other than Limited Partner, (v)
the General Partner's election, in any proceeding instituted under the federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the federal
Bankruptcy Code, or (vi) any borrowing or grant of a security interest under
Section 364 of the federal Bankruptcy Code; (c) presentment, demand for payment,
protest, notice of discharge, notice of acceptance of this Agreement, and
indulgences and notices of any other kind whatsoever; (d) any defense based upon
an election of remedies (including, if available, an election to proceed by
non-judicial foreclosure) by the General Partner which destroys or otherwise
impairs the subrogation rights of the Guarantor to proceed against the Limited
Partner for reimbursement; (e) any defense based upon any taking, modification
or release of any collateral or guarantees for any indebtedness of the Limited
Partner to the General Partner, or any failure to perfect any security interest
in, or the taking of or failure to take any other action with respect to any
collateral; or (f) any rights or defenses based upon an offset by the Guarantor
against any obligation now or hereafter owed to the Guarantor by the Limited
Partner; it being the intention hereof that Guarantor shall remain liable as
principal, to the extent set forth herein, until the full payment of the
Guaranteed Obligations notwithstanding any act, omission or thing which might
otherwise operate as a legal or equitable discharge of Guarantor.
The Guarantor hereby represents and warrants as follows: (i) the Guarantor has
the capacity and legal right to execute, deliver, and perform this Agreement,
(ii) this Agreement and all other documents required to be executed and
delivered hereunder, when executed and delivered, will constitute legal, valid
and binding obligations of the Guarantor enforceable against the Guarantor in
accordance with their terms, (iii) neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will,
with or without notice and/or lapse of time: constitute a breach of any of the
terms and provisions of, or constitute a default under, any note, contract,
document, instrument, agreement or undertaking, whether written or oral, to
which the Guarantor is a party or to which the Guarantor's property is subject;
accelerate or constitute an event entitling the holder of any indebtedness of
the Guarantor to accelerate the maturity of any such indebtedness; conflict with
or result in a breach of any writ, order, injunction or decree against the
Guarantor any court or governmental agency or instrumentality, whether national,
state, local or other; or conflict with or be prohibited by any federal, state,
local or other governmental law, statute, rule or regulation.
The General Partner may maintain successive actions for other defaults. The
rights of the General Partner hereunder shall not be exhausted by its exercise
of any of its rights or remedies or by any such action or by any number of
successive actions so long as this Agreement is in force and effect.
No delay or omission by the General Partner to exercise any right under this
guarantee shall impair any such right, nor shall it be construed to be a waiver
thereof. No amendment, modification, termination or waiver of any provision of
any guarantee, or consent to any departure by the Guarantor therefrom, shall in
any event be effective without the written concurrence of the General Partner.
No waiver of any single breach of default under this guarantee shall be deemed a
waiver of any other breach or default.
Guarantor agrees that any proceeding to enforce, or otherwise relating to or
arising from, this Agreement may be brought in federal court located in the
State of Illinois if such court has jurisdiction, or if no such jurisdiction
exists, then state court in the State of Illinois, each as the General Partner
may elect. By executing this Agreement, Guarantor irrevocably accepts and
submits to the nonexclusive personal jurisdiction of each of the aforesaid
courts, generally and unconditionally with respect to any such proceeding.
Guarantor agrees not to assert any basis for transferring jurisdiction of any
such proceeding to another court. Guarantor further agrees
that a final judgment no longer subject to appeal against Guarantor in any
proceeding shall be conclusive evidence of Guarantor's liability for the full
amount of such judgment.
/s/ Mrs. Juanita Hammons
--------------------------
Mrs. Juanita Hammons
GUARANTOR
EXHIBIT A
Capital Contributions and Percentage Share
------------------------------------------
General Partner
- ---------------
Initial Percentage Share - 80%
Initial Capital Contribution $25,920,000
Limited Partner
- ---------------
Initial Percentage Share - 20%
Initial Capital Contribution $ 6,480,000
A-1
EXHIBIT B
Legal Description of Property
-----------------------------
(See Article 1, "Property")
[Diagram of property]
B-1
EXHIBIT C
Term Sheet for Management Agreement
-----------------------------------
JOLIET MANAGEMENT AGREEMENT
SUMMARY OF TERMS
1. Terms and Renewals
(a) Initial Term: 20
(b) Renewals: 3 ten-year terms
2. Development of the boat and ancillary shoreside facilities
(a) Party responsible: Owner constructs and furnishes boat and
ancillary shoreside facilities
(b) Plans and Prepared on Owner's behalf, subject to
Specifications: Manager's approval of design/layout
No material changes of design/layout
allowed without Manager's approval
(c) Deadline for If boat and facilities are not
completion: operational by April 1, 1993 (unless
extended by Manager), Manager may
terminate Management Agreement
3. Pre-Opening
(a) Budget: Agreed by Owner and Manager 120 days
prior to opening. Budget line items may
be exceeded by 10% for reasonable
unanticipated expenditures. Budget may
be exceeded to cover additional expenses
caused by construction delays
(b) Programs Agreed by Owner and Manager 90 days
after execution of Management Agreement
(will include, among other things,
recruiting and training of staff and
advertisement and marketing)
(c) Payment of Expenses: Owner deposits funds into accounts
established in Owner's name by Manager;
payment is made by Manager
4. Operations
(a) Manager control: Manager determines operating policies
and standards, including guest
admittance, gaming policies, labor
policies, food and beverage policies,
credit policies, etc.
(b) Contractual Manager has authority to lease space in
Authority: the boat and shoreside facilities in
Owner's name (restaurant, gift shop,
other retail space),
supervise such lessees and their
operations and enforce the agreements
with such lessees until any court action
is required, and lease equipment in the
Owner's Name
(c) Permits: Manager obtains and maintains all
licenses and permits at Owner's expense
(d) Personnel: Manager employs on-site personnel
Manager hires, supervises and discharges
all personnel
Owner responsible for all salaries and
expenses of on-site personnel and all
expenses of other Manager employees who
perform services for operation
(e) Marketing: Manager responsible for all marketing
decisions and expenditures at Owner's
expense, subject to annual budget
(f) Maintenance: Manager responsible for all maintenance
of the boat and other facilities at
Owner's expense, subject to annual
budget
(g) Capital Replacements: Annual capital reserve of 3.5% of gross
revenues
Owner responsible for designing and
implementing capital replacements of a
structural or extraordinary nature,
subject to Manager's approval
Manager responsible for designing and
implementing, at Owner's expense,
capital replacements of a non-structural
or ordinary nature, subject to the
annual budget (except in the case of
expenditures occasioned by emergencies
or legal requirements)
5. Accounting matters
(a) Books/records: Manager maintains
(b) Auditors: To be agreed by Owner and Manager
(c) Statements: Manager delivers quarterly and annual
profit and loss statements to Owner
6. Budget Manager submits proposed budget to Owner
for approval at least 60 days prior to
opening and 60 days prior to each fiscal
year thereafter
Any budget disputes submitted to
arbitration
Manager may reallocate budgeted items
within departments
Manager may exceed budget (within limits
to be agreed on) for unexpected
expenditures
7. Bank Accounts Manager establishes bank accounts in
name of Owner with Manager entitled to
withdraw funds
Minimum cash reserve (funded by Owner)
to be agreed by Owner and Manager
8. Management Fee (includes 6% of gross revenue
license fee; use of
separate license
arrangement to be
determined)
9. Priority of Funds Disbursement
Manager disburses funds from bank account monthly in the following order of
priority:
(a) Operating costs (including management fee and Manager's
reimbursable expenses)
(b) Replenishment of bank account or capital reserve fund for payment
of emergency expenditures
(c) Deposits into the bank accounts to maintain minimum cash reserve
(d) Deposits into the capital reserve fund
(e) Payment of debt service
(f) Payment to Owner
10. Insurance
Owner obtains and maintains customary liability, priority and other
insurance
11. Indemnification
(a) To Manager: Owner indemnifies Manager against all
claims pertaining to ownership,
management or use of boat and shoreside
facilities unless caused by Manager's
gross negligence or willful misconduct
(b) To Owner: Manager indemnifies Owner against all
claims pertaining to management or use
of boat and shoreside facilities caused
by Manager's gross negligence or willful
misconduct
12. Termination Rights
(a) For cause: Either party may terminate in the case
of customary events of default,
including uncured breach under
Management Agreement, bankruptcy and
insolvency
(b) Termination fees/ Management fees for previous 3
liquidated damages years (including termination as a result
of casualty, default of Owner and
certain other circumstances)
13. Governing Law Illinois
14. Assignment/Mortgage
(a) By Manager: Manager may assign to affiliate, entity
that acquires substantially all of
Joliet riverboat gaming business, or as
part of corporate reorganization or
recapitalization
Manager may assign management fees in
connection with any financing
(b) By Owner: Owner may not sell boat or shoreside
facilities without Manager's consent
Owner may mortgage the boat and
shoreside facilities if the financing
meets coverage and other financial tests
acceptable to Manager
Owner will be required to dispose of
interests in the boat and shoreside
facilities to the extent their ownership
jeopardizes any Harrah's gaming license
15. Boat Operation Owner appoints boat operator subject to
Manager's consent
If boat is operated in manner which
interferes with Manager's ability to
conduct successful operations, Manager
may appoint new boat operator, subject
to Owner's approval; if Owner refuses to
approve Manager's appointment, Manager
may terminate Management Agreement and
collect termination fee
FIRST AMENDMENT TO
LIMITED PARTNERSHIP AGREEMENT OF
DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP
This First Amendment (this "Amendment") to Limited Partnership
Agreement of Des Plaines Development Limited Partnership is made as of this 5th
day of October, 1992 by and between Harrah's Illinois Corporation, a Nevada
corporation, and John Q. Hammons, an individual.
Recitals
--------
A. The parties hereto are parties to that certain Limited Partnership
Agreement of Des Plaines Development Limited Partnership, dated as of February
28, 1992 (as amended hereby, the "Partnership Agreement"). Capitalized terms
used herein and not defined herein shall have the meaning given to them in the
Partnership Agreement.
B. The Partnership Agreement provides for the General Partner to loan
to the Limited Partner the Limited Partner's initial Capital Contribution, and
the parties hereto desire that any amounts so advanced by the General Partner
shall be repaid, and such loan shall no longer be available to the Limited
Partner upon such repayment. After such repayment, the Limited Partner shall
make contributions to the Partnership pursuant to Section 3.01 of the
Partnership Agreement, as amended hereby.
C. The parties hereto desire to enter into certain other agreements
with respect to the Partnership, and to amend certain provisions of the
Partnership Agreement, all as more fully set forth herein.
Agreement
---------
NOW, THEREFORE, in consideration of the mutual agreements of the
parties hereto and subject to the terms and conditions hereof, the parties
hereto agree as follows:
1. Repayment of Initial Capital Loan. The Limited Partner agrees to
---------------------------------
repay all outstanding principal and accrued interest of the Initial Capital
Loan, in immediately available funds, on or before October 13, 1992. The
failure to make such payment shall constitute an Event of Default. Upon such
payment, the promissory note evidencing the Initial Capital Loan shall be
returned to the Limited Partner, the Security Agreement securing the Initial
Capital Loan shall be of no further force or effect, and the General Partner
shall deliver to the Limited Partner appropriate UCC termination statements
terminating the UCC financing statements on file with respect to the Initial
Capital Loan.
2. Termination of Initial Capital Loan Availability. Effective
------------------------------------------------
upon the repayment of the Initial Capital Loan required by paragraph 1 hereof,
the Partnership Agreement shall be amended as follows:
a. The following definitions are hereby deleted from Article I of
the Partnership Agreement: (i) "Initial Capital Loan," and (ii) "Initial
Capital Loan Documents."
b. Section 3.01(d) of the Partnership Agreement is hereby deleted
in its entirety, and subsections (e), (f) and (g) shall be relettered (d), (e)
and (f), respectively.
c. Item (f) in Article VII of the Partnership Agreement is hereby
deleted in its entirety, and item (g) is hereby relettered as (f).
3. Amendment to Section 3.01(c). Section 3.01(c) of the Partnership
-----------------------------
Agreement is hereby deleted in its entirety, and the following is hereby
substituted therefor:
(c) Calls for Contributions. The General Partner may at any time
------------------------
or from time to time call for Capital Contributions, including initial Capital
Contributions, from the Partners by not less than seven (7) business days
written notice to the Partners. The Partners shall make such Capital
Contributions to the Partnership on or before the date specified in any such
notice from the General Partner.
4. Amendment to Buy-Down Remedy. Sections 8.04(a) and (b) of the
----------------------------
Partnership Agreement are hereby deleted in their entirety, and the following is
hereby substituted therefor:
(a) If the Defaulting Partner shall have failed to make any
Capital Contribution or to pay any other amount as required under this Agreement
prior to the opening of the Project for business, the Nondefaulting Partner may
advance to the Partnership on behalf of the Defaulting Partner the amount of
such delinquency (a "Default Contribution"). If the Defaulting Partner shall
have failed to make any Capital Contribution or to pay any other amount as
required under this Agreement after the opening of the Project for business, the
Nondefaulting Partner may advance to the Partnership on behalf of the Defaulting
Partner the amount of such delinquency, with each such advance to be treated as
a loan by the Nondefaulting Partner to the Defaulting Partner (a "Default
Loan"). Each separate advance by a Nondefaulting Partner shall be a separate
Default Contribution or Default Loan, as the case may be. The amount of any
Default Loan shall be credited to the Defaulting Partner's Capital Account.
Each Default Loan shall be (i) secured by the Defaulting Partner's
interest in the Partnership, (ii) payable on demand, and (iii) bear interest,
payable monthly, at a rate equal to the lower of (x) the then Prime Rate plus
three percent (3%) or (y) the maximum rate permitted under applicable law, from
the date of such Default Loan to the earlier of the date of payment in full by
the Defaulting Partner or the date of the Nondefaulting Partner's exercise of
its rights pursuant to Sections 8.04(b) or 8.04(c) hereof. The Defaulting
Partner hereby grants the Nondefaulting Partner a security interest in its
Partnership interest and all proceeds thereof to secure any Default Loans made
by the Nondefaulting Partner to the Defaulting Partner. The Nondefaulting
Partner shall give written notice to the Defaulting Partner of the making of any
such Default Loan, and the Defaulting Partner shall have one hundred twenty
(120) days thereafter within which to repay the Nondefaulting Partner the amount
of such Default Loan. Any interest paid on such Default Loan shall be paid
directly to the Nondefaulting Partner and shall not affect either the
Nondefaulting Partner's or the Defaulting Partner's Capital Account. Upon the
payment in full of the principal of and all accrued interest on a Default Loan
within such one hundred twenty (120) day period or pursuant to Sections 8.04(b)
or 8.04(c) hereof, the Defaulting Partner's default, with respect to which a
Default Loan was made, shall be deemed cured. The making of a Default Loan
shall not be deemed to cure a default with respect to which a Default Loan has
been made, and such cure may be made only in the manner set forth in the
immediately preceding sentence or in Sections 8.04(b), 8.04(c) and 8.04(d)
hereof. Any Default Loan made pursuant hereto to the Limited Partner shall be
guaranteed by the spouse of the Limited Partner pursuant to the Guarantee
attached hereto, with full recourse to the assets of the Limited Partner and the
spouse of the Limited Partner.
(b) In the event a Nondefaulting Partner shall make a Default
Contribution the Nondefaulting Partner's Percentage Share shall be increased and
the Defaulting Partner's Percentage Share shall be decreased as of the date of
such advance. At such time the Nondefaulting Partner's Percentage Share shall
increase to a percentage (but not to exceed One Hundred percent (100%)) that is
equal to a percentage derived from a fraction the numerator of which equals the
sum of all Capital Contributions, including the Default Contribution, actually
made by the Nondefaulting Partner as of the time of the recalculation, and the
denominator of which equals the aggregate sum of both Partners' Capital
Contributions. The Defaulting Partner's Percentage Share shall be
correspondingly decreased so that it shall be equal to One Hundred percent
(100%) minus the Nondefaulting Partner's Percentage Share as increased in
accordance with the preceding sentence. The Nondefaulting Partner's advance
pursuant to 8.04(a) constituting such Default Contribution(s) shall be added to
the Nondefaulting Partner's Capital Account. Upon such recalculations of the
Partners' Percentage Shares and the corresponding adjustments of the Partners'
respective Percentage Shares, the default associated with the Default
Contribution(s) with respect to which such adjustments were made shall be deemed
cured, to the extent of such Default Contribution(s) made by the Nondefaulting
Partner, as of the date of such adjustments.
If the Defaulting Partner fails to repay the Nondefaulting Partner
with respect to any one or more Default Loans within the one hundred twenty
(120) day period referred to in Section 8.04(a) hereof, the Nondefaulting
Partner may, at any time after the expiration of such one hundred twenty (120)
day period and before the repayment of such Default Loan or Default Loans by the
Defaulting Partner (including a repayment pursuant to Section 8.04(c) hereof),
elect, by one hundred twenty (120) days prior written notice (the "Conversion
Notice") with respect to any one or more Default Loans to the Defaulting
Partner, to increase the Nondefaulting Partner's Percentage Share and decrease
the Defaulting Partner's Percentage Share as of the date of and immediately
following the date thirty (30) days following the Conversion Notice. If a
Defaulting Partner has not repaid the Default Loan or Default Loans specified in
the Conversion Notice within said thirty (30) days, the Nondefaulting Partner
may elect to increase its Percentage Share (but not to exceed One Hundred
percent (100%)) to equal a percentage derived from a fraction the numerator of
which equals the Adjusted Capital Contribution (as defined below) of the
Nondefaulting Partner and the denominator of which equals the aggregate sum of
both Partners' Capital Contributions. The Defaulting Partner's Percentage Share
shall be correspondingly decreased so that it shall be equal to One Hundred
percent (100%) minus the Nondefaulting Partner's Percentage Share as increased
in accordance with the preceding sentence. "Adjusted Capital Contribution"
shall mean the sum of all Capital Contributions, not including the Contribution
representing the Default Loan, actually made by the Nondefaulting Partner as of
the time of the recalculation plus an amount equal to One Hundred and Twenty
percent (120%) of the sum of all Default Loans which the Nondefaulting Partner
has made to the Defaulting Partner with respect to which such adjustments were
made. The parties acknowledge that in the event this remedy is exercised,
additional Capital Contributions will be of critical value to the Partnership,
and the parties further acknowledge that such value is not readily ascertainable
as of the date hereof and a reasonable estimate of such value is achieved by the
formula contained herein. Such formula for the "buy-down" reflects such
estimate of the parties, and is not intended to be a penalty. Upon any such
election, the Defaulting Partner's default, with respect to which the Default
Loan(s) specified in the Conversion Notice was made, shall be deemed cured, the
Nondefaulting Partner's advance pursuant to 8.04(a) hereof with respect to which
such Default Loan(s) were made shall be added to the Nondefaulting Partner's
Capital Account, and the amount of such advance shall be deducted from the
Defaulting Partner's Capital Account. Upon such recalculations of the Partner's
Percentage Shares and the corresponding adjustments of the Partner's respective
Percentage Shares, the default associated with the Default Loan(s) with respect
to which such adjustments were made shall be deemed cured, to the extent of such
Default Loan(s) made by the Nondefaulting Partner, as of the date of such
adjustments.
5. Amendment to Appraisal But Out Remedy. Section 8.05(b) of the
-------------------------------------
Partnership Agreement is hereby amended to delete the number "ninety percent
(90%) from the third line thereof, and the following is hereby substituted
therefor: "(x) prior to the opening of the Project for business, one hundred
percent (100%), or (y) after the opening of the Project for business, ninety
percent (90%),".
6. Amendment to Section 8.06. Section 8.06 of the Partnership
-------------------------
Agreement is hereby deleted in its entirety.
7. Amendment to Section 9.03. Section 9.03 of the Partnership
-------------------------
Agreement is hereby deleted in its entirety, and the following is hereby
substituted therefor:
The "Appraised Value" of the assets shall be equal to the following
amounts: (a) prior to the opening of the Project for business, the
aggregate Capital Contributions of the Partners plus the outstanding
principal balance of any debt owed by the Partnership; (b) after the
opening of the Project for business and if the Partners are in agreement as
to the fair market value of the assets, such agreed value; or (c) after the
opening of the Project for business if the Partners are unable to agree as
to fair market value, the mean of the two closest appraised values reported
by the Appraisal Panel; provided that if such values are equally
distributed, the "Appraised Value" of the assets to be appraised shall be
equal to the mean of the three appraised values reported by the Appraisal
Panel.
8. Amendment to Section 13.13. Section 13.13 of the Partnership
--------------------------
Agreement is hereby deleted in its entirety.
9. References. All references to the Partnership Agreement contained
----------
therein shall be deemed to refer to the Partnership Agreement as amended hereby.
10. Modification. Except as modified hereby, the Partnership
------------
Agreement remains in full force and effect. In the case of any inconsistency
between this Amendment and the Partnership Agreement this Amendment shall
control.
11. Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which is an original and all of which constitute one
agreement.
12. Gaming Approval. The parties hereto confirm that the
---------------
Partnership Agreement, as amended hereby, is subject to all statutes and
regulations regulating gaming in the State of Illinois, and that certain acts
contemplated by the Partnership Agreement as amended hereby, including without
limitation transfers of partnership interests, are subject to the approval of
the Illinois Gaming Board.
[SIGNATURES ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first written above.
GENERAL PARTNER:
HARRAH'S ILLINOIS CORPORATION,
By: /s/ Philip G. Satre
------------------------------
Name: Philip G. Satre
------------------------------
Title: President
------------------------------
LIMITED PARTNER:
/s/ John Q. Hammons
------------------------------
John Q. Hammons, an individual
I hereby consent to the foregoing Amendment, and confirm and ratify my guarantee
contained in the Partnership Agreement in all respects.
/s/ Mrs. Juanita Hammons
---------------------------
Mrs. Juanita Hammons
Guarantor