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EXHIBIT 3.2
THE MAJESTIC STAR CASINO, LLC
Third Amended And Restated Operating Agreement
THIS AMENDED AND RESTATED OPERATING AGREEMENT (this "Agreement") is executed as
of the 29th day of March, 1996, by BARDEN DEVELOPMENT, INC., an Indiana
corporation having an address at One Buffington Harbor Drive, Gary, Indiana
46406 ("Barden"), GARY RIVERBOAT GAMING, LLC, an Indiana limited liability
company having an address at One Buffington Harbor Drive, Gary, Indiana 46406
(the "Investor LLC"), and ANY PERSONS HEREAFTER EXECUTING THIS AGREEMENT
PURSUANT TO SECTION 11.2 OR 12.1 HEREOF and having the names and addresses
recited in Exhibit A hereto.
WHEREAS, pursuant to the filing on December 8, 1993 of Articles of Organization
with the Indiana Secretary of State (the "Secretary"), President Riverboat
Casino-Gary, Inc., a Delaware corporation ("PRC"), Barden (under its former
name "Barden Enterprises, Inc."), and the Investor LLC formed a limited
liability company, pursuant to the Indiana Business Flexibility Act of 1993
(the "Act").
WHEREAS, the limited liability company so formed (the "Company") was at such
time (a) known as Barden PRC-Gary, LLC, (b) constituted as a manager-managed
limited liability company for purposes of Section 23-18-4-1(b) of the Act, and
(c) governed by an Operating Agreement dated December 8, 1993.
WHEREAS, on June 30, 1995, the Investor LLC, Barden and the Company were
petitioned by PRC to permit the withdrawal of PRC from the Company, both as a
member and as manager, upon specified terms.
WHEREAS, such consent was granted, and, in contemplation of PRC's withdrawal
from the Company, Barden and the Investor LLC, constituting the sole members of
the Company, executed, for filing with the Secretary, an amended and restated
version of the Company's articles of organization, to, inter alia, (a) change
the name of the Company to Barden-Davis Casino, LLC, (b) remove any references
to PRC, and (c) convert the Company to a member-managed limited liability
company for purposes of Section 23-18-4-1(b) of the Act.
WHEREAS, Davis Gaming Company, a Delaware corporation ("Davis"), requested the
opportunity to invest in the Company, as a member and as a creditor, on those
terms negotiated by Davis, Barden, the Investor LLC and the Company.
WHEREAS, pursuant to the granting of Davis' request, and in contemplation of
the continuing and anticipated operations of the Company, Barden, Davis and the
Investor LLC amended and restated the operating agreement of the Company as of
July 31, 1995.
WHEREAS, the Company has retired all of Davis' interest in the Company (whether
as member or creditor), pursuant to an amendment, dated September 30, 1995, to
the aforementioned restated operating agreement of July 31, 1995.
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WHEREAS, by execution of a restated operating agreement on October 1, 1995,
Barden and the Investor LLC further amended the operating agreement of July 31,
1995.
WHEREAS, on January 31, 1996, Barden and the Investor LLC filed an amendment
and restatement of the Company's articles of organization to, inter alia,
change the name of the Company to "The Majestic Star Casino, LLC".
WHEREAS, on March 29, 1996, Barden and the Investor LLC filed a further
amendment and restatement of the Company's articles of organization to, inter
alia, thereafter constitute the Company as a manager-managed limited liability
company.
WHEREAS, by execution of this Third Amended and Restated Operating Agreement,
Barden, the Investor LLC and any Participants wish to amend and restate the
restated operating agreement of October 1, 1995, such that from and after the
date hereof, and unless and until further amended, this Agreement, alone and in
its entirety, shall serve as the operating agreement of the Company for
purposes of Section 23-18-1-16 of the Act.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions
1.1 Specific Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Act" has the meaning ascribed to it in the recitals hereto.
"Agreement" means this Third Amended And Restated Operating Agreement and
any amendments adopted in accordance with this Agreement and the Act.
"Articles" means the Articles of Organization of the Company filed with
the Secretary, as amended and in effect from time to time.
"Authorizations" means the License and any other licenses, permits,
approvals and consents necessary or required for the Company to operate the
Gary Facility.
"Affiliate" means any person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control
with, a Member.
"Barden" means Barden Development, Inc., and/or, upon any action taken
pursuant to Section 11.2, any successor-in-interest to it.
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"BMI" means Barden Management Inc., an Indiana corporation, and/or, upon
any action taken pursuant to Section 11.2, any successor-in-interest to it.
"Book Value" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except (a) the initial Book Value of any asset
contributed to the Company shall be its gross fair market value at the time of
contribution, (b) if the Company so elects, the Book Value of all Company
assets shall be adjusted to equal their gross fair market values at the times
required by Code Section 704(b), and (c) if the Book Value of an asset has been
determined pursuant to clause (a) or (b), such Book Value shall thereafter be
adjusted in the same manner as would the asset's adjusted basis for tax
purposes except that depreciation deductions shall be computed as specifically
provided.
"Certificate of Suitability" means the Certificate of Suitability issued
to the Company on December 27, 1994 by the Commission, as may be extended from
time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of future laws.
"Commission" means the Indiana Gaming Commission, organized pursuant to
the Indiana Riverboat Gambling Act, as constituted from time to time or any
successor thereto.
"Company" has the meaning ascribed to it in the recitals hereto.
"Consensus" means each and every incumbent Member, acting in accordance
with Article VI.
"Contributions" means the amount of cash or the fair market value of other
property contributed to the Company or required to be contributed to the
Company.
"Debt Memorandum" means the Offering Memorandum, dated on or about May of
1996, relating to the Debt Offering, and including any supplement thereto as
may be approved by the Manager.
"Debt Offering" means the issuance by the Company of Initial Notes having
a stated principal amount of $105,000,000, more or less, pursuant to which the
subscribing eligible offeree (or offerees) shall lend funds to the Company.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code with respect to an asset for such year or
other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount that bears the same ratio to such
beginning Book Value as the federal income tax depreciation,
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amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Book Value using any reasonable method selected by the Manager.
"Development Entity" means Buffington Harbor Riverboats, LLC, a Delaware
limited liability company that owns certain real estate and related assets in
the vicinity of the Gary Facility.
"Distribution" means the amount of cash, and the fair market value of
property, distributed to a Member by the Company, to the extent such
distribution is not (a) compensation for services, (b) payment for purchased or
leased property, or (c) repayment of (or interest on) sums expressly designated
as loans.
"Equity Memorandum" means a Subscription Agreement and Offering
Memorandum, each pertaining to the Equity Offering, as may hereafter be
structured in accordance with Section 12.1, including supplements thereto, all
as may be approved by the Manager.
"Equity Offering" means any future issuance, by the Company, of equity
interest in the Company, pursuant to which subscribing eligible offerees shall
become Members.
"Exchange" means the transaction in which the Company shall (a) permit the
holder or holders of the Initial Notes to exchange, on a dollar-for-dollar
basis, outstanding Initial Notes for Registered Notes, and (b) retire the
Initial Notes returned to the Company upon such exchange.
"Fiscal Year" means the calendar year.
"Gary Facility" means the riverboat and/or dockside gaming facility in
Gary, Indiana for which the Company has received a Certificate of Suitability
from the Commission and all businesses and other activities reasonably related
or ancillary thereto owned or operated by the Company.
"Initial Notes" means the secured promissory notes to be issued by the
Company pursuant to a private placement consistent with the Debt Memorandum,
bearing set and contingent interest, and having such other attributes as are
consistent with Section 4.4.
"Interim Funds" means those sums, if any, paid over to the Company by
Barden that, pursuant Section 4.3, qualify, and are designated by Barden, as
loans.
"Investor LLC" means Gary Riverboat Gaming, LLC, and/or, upon any action
taken pursuant to Section 11.2, any successor-in-interest to it.
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"License" means a license granted by the Commission to operate a riverboat
or any other casino gaming facility within the State of Indiana.
"Majority Interest" means any group of Members that includes all, but not
fewer than all, of the following subsets:
(a) those Members holding Percentages aggregating over 50%, and
(b) those Members holding over 50% of all Company capital (as determined by
reference to the Members' respective then-current capital accounts).
"Manager" means Barden (or any successor to it pursuant to Section 5.1)
serving as manager of the Company in accordance with Section 23-18-4-1(b) of
the Act.
"Members" means Barden, the Investor LLC and any Participants, if any,
and, in the event of appropriate action taken to grant a person membership in
the Company pursuant to Section 11.2 or Section 12.1, any successor-in-interest
to any or all of them.
"Notes" means the Initial Notes and/or Registered Notes.
"Participants" means any persons hereafter admitted to the Company as
members thereof, pursuant to their making of a Contribution in accordance with
Subsection 4.1(b) or Section 12.1, and, upon any action taken to grant a person
membership in the Company pursuant to Section 11.2, any successor-in-interest
to any or all of them.
Percentage" means the percentage, as reflected on Schedule A hereto, in
which a Member shares Profits, Losses and Distributions, as determined from
time to time consistent with Section 4.6, Section 11.2 and/or Article XII.
"Profits and Losses" means taxable profits or losses of the Company for
each Fiscal Year (or other period) determined in accordance with Code Section
703 (provided that (a) any tax-exempt income shall be added to such taxable
income or loss, (b) any Code Section 705(a)(2)(B) expenditures shall be
subtracted from such taxable income or loss, (c) if the Book Value of any asset
is adjusted consistent with Code Section 704(b), such adjustment shall
constitute gain or loss from the disposition of such asset, (d) any gain or
loss from any disposition of Company property shall be computed by reference to
the Book Value of such property rather than its adjusted tax basis, (e) in lieu
of depreciation or amortization, Depreciation shall be taken into account, and
(f) any items that are specially allocated pursuant to Section 7.12 shall not
be taken into account in computing Profits or Losses).
"Property" means the real and personal property, whether or not tangible,
owned from time to time by the Company.
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"Registered Notes" means promissory notes that are to be (a) issued by the
Company after issuance of the Initial Notes, (b) substantially identical to the
then-outstanding Initial Notes in terms and amount, and (c) distributed in an
offering registered under (i) the Securities Act of 1933, and (ii) the
securities laws of selected political subdivisions of the United States.
"Regulation" means the treasury regulations promulgated under the Code.
"Regulatory Authority" means the Commission and any other government,
quasi-governmental or other regulatory authority with jurisdiction, control or
authority over the granting and policing of any one or more of the
Authorizations.
"Reserves" means the amount, if any, set aside from time to time in the
discretion of the Manager to provide for the Company's actual or potential
business and capital needs.
"Residual Proceeds" means the net proceeds resulting from (a) the sale,
exchange or other event resulting in the voluntary or involuntary disposition
of all or substantially all of the Property, (b) the refinancing of any
mortgage loan, and/or (c) the release of cash (pursuant to the discretionary
decision of the Manager) from any previously established contingency allowance
that was originally funded with Residual Proceeds.
"Revenues" means annual net revenues (as opposed to net income) of the
Company, as determined in accordance with generally accepted accounting
principles and consistent with the Company's accounting methods as selected by
the Company's outside accountants.
"Secretary" has the meaning ascribed to it in the recitals hereto.
"Trustee" means the then-incumbent trustee acting as the designated
fiduciary for the holders of the Notes.
1.2 General Provisions.
(a) Certain technical terms used in Section 7.12 shall have the respective
meanings ascribed to them in Section 7.13.
(b) Accounting terms not defined in this Agreement, and accounting terms
partly defined to the extent not fully defined, shall have the respective
meanings given to them under generally accepted accounting principles.
(c) Words of the masculine gender shall be deemed to include the feminine
or neuter genders, and vice versa, where applicable. Words of the singular
number shall be deemed to include the plural number, and vice versa, where
applicable.
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ARTICLE II
Organization of Company
2.1 Continuation. The parties hereto hereby agree and acknowledge that, from
and after March 29, 1996, the Company shall be constituted as a manager-managed
limited liability company in accordance with the Act and shall be governed by
this Agreement.
2.2 Name/Office. The name of the Company shall hereafter be The Majestic Star
Casino, LLC, and Barden is authorized to file an amendment to the Articles to
reflect the same. The Company's principal offices shall be located at One
Buffington Harbor Drive, Gary, Indiana 46406, or such other place in Indiana as
the Members may determine from time to time.
2.3 Registered Office/Agent. The Company's registered office shall be located
at One North Capitol Avenue, Indianapolis, Indiana 46204, and the registered
agent for the Company at such office shall be CT Corporation System. The
registered office and registered agent may be changed from time to time in
accordance with the Act. If the registered agent shall ever resign, the
Manager shall promptly appoint a successor.
2.4 Personnel. Consistent with Article V, the direction and supervision of,
and all executive-level decisions made in respect of, the Company shall be
reserved to the Manager, as determined and announced by the Manager's chairman,
president and/or ranking vice president, acting on behalf of the Manager.
Managerial personnel selected by the Manager may, along with other Company
employees, be employed directly by the Company, provided that no such personnel
shall have independent authority (beyond such operating authority, consistent
with such employee's role, as is appropriate to implement the directives of the
Manager). Subject to the foregoing limitation, the Manager may designate one
or more persons as officers of the Company, and may assign specific titles to
such persons, with each person holding such title at the pleasure of the
Manager.
ARTICLE III
Purpose
3.1 Scope of Authority. The Company is organized to establish, develop and
operate the Gary Facility in accordance with the terms of the Certificate of
Suitability obtained, and the License to be obtained, for that purpose (and all
applicable Authorizations), and including participation as a member of the
Development Entity, in respect of the land, developments and operations
contiguous to the Gary Facility, and such other businesses and activities as
may be determined by the Majority Interest.
3.2 Scope of Enterprise. The Company shall engage in only the activities
contemplated by Section 3.1, and no Member need afford the Company or any
Member the opportunity to acquire or invest in any investment or asset that
such Member may learn of or may wish to
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acquire in his own name, whether or not such transaction or prospect would
otherwise be an opportunity of or (subject to Section 3.3) competitive with the
Company.
3.3 Restricted Activities. Any of the Members may engage in other business
ventures of every nature and description, independently or with others, and the
engagement in such activities shall not be deemed to be wrongful or improper as
long as such activities are in compliance with Indiana gaming laws and would
not adversely affect the Company's ability to be issued or to hold a License;
provided, however, that, until such time as the Company is formally and finally
denied a License to operate the Gary Facility,
(a) no Member nor any Affiliate of a Member shall, directly or indirectly,
apply for or take any action in connection with the preparation of an
application for a License to operate in Gary, other than the Company's
application for the Gary Facility, nor shall any of them acquire or hold any
ownership interest in any applicant for a License to operate in Gary,
(b) no Member nor any of its Affiliates shall, directly or indirectly,
apply for or take any action in connection with the preparation of an
application for a License to operate at any location within any Indiana county
that borders on Lake Michigan, nor shall any of them acquire or hold any
ownership interest in any applicant for a License to operate at any such
location, and
(c) no Member nor any of its Affiliates shall, directly or indirectly,
manage, or hold any material interest in, any casino or other gaming operation
operating at any location within any Indiana county that borders on Lake
Michigan, nor shall any of them acquire or hold any ownership interest in any
applicant for a License to operate at any such location.
ARTICLE IV
Capital and Debt
4.1 General.
(a) As more specifically recited below, (i) by March 31, 1996, Barden
shall have made a net Contribution of $19,545,365 (including sums paid by
Barden for the account of the Company), (ii) by March 31, 1996, the Investor
LLC shall have made a net Contribution of $3,449,182, (iii) Barden may lend
such Interim Funds as are permitted by Section 4.3, (iv) third parties may lend
any such sums as may be raised pursuant to the Debt Offering, (v) third parties
and/or Members may make such further Contributions as may be raised pursuant to
any Equity Offering or other permitted means, and (vi) third parties and/or
Members may make further loans pursuant to Section 4.5. Accordingly,
(1) the Manager shall solicit any Interim Funds as Barden may agree to
make,
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(2) the Manager shall solicit the Contributions to be made by the
Participants in the event the Manager elects to conduct an Equity Offering,
and, in connection therewith, the Manager shall distribute an Equity
Memorandum to each prospective Participant, and, in such event, shall
conduct the Equity Offering on such terms, consistent with Section 12.1, as
the Manager may approve,
(3) the Manager shall conduct the Debt Offering on behalf of the Company,
and, in connection therewith, the Manager and its agents shall distribute
the Debt Memorandum to each prospective lender, and shall conduct the Debt
Offering on such terms, consistent with Section 4.4, as the Manager may
approve, and
(4) the Manager shall borrow such further sums as may be needed consistent
with Section 4.5.
(b) Unless approved by the Manager and Consensus from time to time, no
Member shall have any obligation to make additional Contributions, provided
that (i) any Member admitted to the Company pursuant to Section 12.1 shall make
the Contribution specified pursuant to Subsection 12.1(b), and (ii) Members
shall repay any excess amounts received by them pursuant to Subsection 7.3(c).
(c) No Member shall be required to restore any deficit in his capital
account, and, until termination of the Company, no Member shall withdraw any of
his capital account.
4.2 Contributions.
(a) Barden and the Investor LLC have made the Contributions respectively
referenced in Paragraphs 4.1(a)(i) and 4.1(a)(ii).
(b) In the event the Manager at any time elects to conduct an Equity
Offering, the Company shall, with the consent of the Majority Interest, issue
such number of interest in the Company to, and raise such Contributions from,
the Participants as shall be determined consistent with Sections 12.1 and 5.3.
4.3 Interim Funding. Barden shall be entitled, but shall not be obligated, to
lend up to $30,000,000 to the Company on any such terms as Barden shall accept.
Neither the terms of any Interim Funding, nor the lending itself of any
Interim Funds, shall be subject to approval or challenge by the Company or any
of the Members, unless any such Interim Funding shall (a) call for the accrual
of interest at a rate exceeding 12% per annum, (b) call for the accrual of
interest pending any default at a rate exceeding 15% per annum, (c) specify a
term of less than 30 days, or (d) run afoul of any unwaived provision of the
Notes.
4.4 Notes. The Manager is authorized to conduct, on behalf of the Company, (i)
the issuance of the Initial Notes, (ii) the issuance of the Registered Notes
(after the issuance of the Initial Notes), and (iii) the Exchange (after, or
upon, the issuance of the Registered
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Notes). Subject to any other specific restrictions recited in this Agreement
and applicable to the Notes, the Manager shall have discretion to structure
and/or approve (A) the Notes themselves, (B) the Debt Offering, (C) the
pledging of Company assets and credit, (D) the subordinating of Distributions,
(E) the third-party indentures and other obligations ancillary to the issuance
of the Notes, (F) the Exchange, and (G) all other matters attendant to the
Notes and/or Exchange. Notwithstanding, the foregoing, however, the principal
amount of the Notes shall not exceed $110,000,000.
4.5 Other Loans.
(a) Subject to all applicable restrictions imposed by the Notes, and
subject to the right of Barden to be repaid any outstanding Interim Funds, the
Company may borrow such sums, from such sources and on such terms, as the
Manager may deem appropriate for the Company's operations, for the meeting of
its obligations and/or the preservation of its assets.
(b) Any further funds required by the Company and requested by the Manager
may, if the Manager in its discretion decides not to pursue third-party
financing or make an Interim Funding, be lent by the Manager and/or any one or
more Members on such terms as may be established by the Manager from time to
time, which in any event shall be subject to all applicable restrictions
imposed by the Notes, and subject to the right of Barden to be repaid any
outstanding Interim Funds. In the case of any loan to the Company from the
Manager or its Affiliate (other than a loan of Interim Funds), the Manager
shall give not less than ten days notice to each Member setting forth the terms
on which the Company is prepared to borrow from one or more particular Members
or Affiliates, and each other Member electing to lend to the Company on the
same terms shall be permitted to do so. Each Electing Member (or his
designated Affiliate) shall be entitled to lend no more than (i) the total
amount to be lent by all Members, times (ii) the electing Member's Percentage.
Neither the Manager nor any Member shall be obligated to lend to the Company.
4.6 New Members.
(a) Upon the conclusion of any Equity Offering, and assuming the receipt
of funds and acceptable subscriptions from one or more Participants, the
Manager shall admit the Participants to the Company as Members in accordance
with Section 4.2(b).
(b) In the event the Manager from time to time (and in its discretion)
determines that additional funding is required by the Company, and that all or
any portion of that funding is not to be solicited as a loan, additional
Contributions may be solicited subject to, and consistent with, Section 12.1.
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ARTICLE V
Manager Rights and Obligations
5.1 Manager Management.
(a) The Company shall be managed by the will of the Manager, and, except
as may be specifically provided for in this Agreement, shall not be governed by
its Members. In addition, the Manager shall have apparent authority to the
extent recited in Subsection 5.2(f). The Company shall at no time have more
than one Manager.
(b) The Manager shall be Barden, until Barden's (i) voluntary resignation
as Manager, (ii) dissolution or bankruptcy, or (iii) removal pursuant to
Subsection 5.1(c). If Barden's tenure expires pursuant to the foregoing
sentence, the new Manager shall be BMI, until BMI's (A) voluntary resignation
as Manager, (B) dissolution or bankruptcy, or (C) removal pursuant to
Subsection 5.1(c). If BMI refuses to so serve or if BMI's tenure expires
pursuant to the foregoing sentence, a new Manager shall be appointed by those
Members holding a majority in interest of Percentages and majority in interest
of Company capital, pursuant to Section 5.3.
(c) Those Members holding three-fourths of those Percentages that are not
held by Affiliates of the Manager may remove a Manager if, and only if, such
Manager (i) shall have embezzled money or other assets from the Company, or
(ii) after written warning, materially breached this Agreement and failed to
cure such breach within 60 days thereafter.
5.2 Manager Powers.
(a) The Manager shall manage, and, subject to Section 5.3, shall have
complete control over the conduct of, the affairs of the Company. Subject to
the other provisions of this Article V, the Manager shall have the authority,
on behalf of the Company, to do all things appropriate to the accomplishment of
the purposes of the Company, including (but not limited to):
(i) developing, operating, expanding, enhancing, retracting, leasing,
holding, selling and/or promoting all or any portion of the Gary
Facilities,
(ii) those actions generally described in Article IV,
(iii) employing contractors, subcontractors, attorneys, accountants or
other agents, including Affiliates, and defining their duties and
establishing their compensation,
(iv) investing and reinvesting Company funds,
(v) negotiating and executing the operating agreement of the Development
Entity and any amendments thereto, voting the Company's interest as a
member of the Development Entity,
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committing Company funds, credit and resources to the Development Entity
(and/or the projects of the development entity), delineating the Company's
rights to the Development Entity's land and facilities, and negotiating and
contracting with the Development Entity,
(vi) otherwise entering into -- and committing Company funds, credit and
resources to -- ventures with one or more neighboring enterprises in
respect of the development, purchase, operation and/or allocation of common
areas and facilities,
(vii) causing the Company to make all payments, and to provide all
consideration, consistent with this Article V,
(viii) executing contracts, notes and other writings, including those with
respect to which an Affiliate is a counterparty, and
(ix) appointing any person as agent for service of process on the Company.
(b) In furtherance and not in limitation of the foregoing, the Manager is
authorized to execute, on behalf of the Company, all documents required in
connection with (i) the further or full acquisition of the Gary Facility, and
(ii) the interest, rights and liabilities of the Company in respect of the
common areas appurtenant to the Gary Facilities and/or to be shared with (or
with the patrons of) any and all neighboring facilities.
(c) Each Member irrevocably appoints the Manager and each officer of the
Manager as his attorney-in-fact on his behalf and in his stead to execute,
swear to and file any amendment or revocation of the Articles and to execute,
sign any Member's name to, swear to and file any writing, and to give any
notice that may be required by any rule or law that may be appropriate to the
effecting of any action by or on behalf of the Company or the Members that has
been taken as provided in this Agreement, that may be necessary or appropriate
to enable the Company to transact business in any other state, or that may be
necessary or appropriate to correct any errors or omissions. This power of
attorney (i) is coupled with an interest and shall not be revoked by the act,
death or incapacity of any Member, and (ii) shall survive an assignment by any
Member of his interest (provided that where a Member's entire interest is
assigned to a person becoming a substitute Member, this power shall survive
solely to permit the Manager to effect the substitution).
(d) Any amendments to the Articles shall be filed by the Manager with the
Secretary. The Manager need not deliver a copy of any such document to each
Member, but shall provide copies to a Member upon request.
(e) Subject to the other provisions of this Article V, the Manager shall
have the power to act for and to bind the Company to the full extent provided
by Indiana law.
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(f) No third party shall be required to independently confirm that any
Manager's action on behalf of the Company is authorized, and such third party
shall be entitled to assume the authority of any incumbent Manager purporting
to act on behalf of the Company, and every contract, note, mortgage, lease,
deed or other instrument executed by a Manager shall be conclusive evidence
that, at the time of execution, the Company was then in existence, this
Agreement had not theretofore been terminated or amended in any manner not
disclosed in the Articles, and the execution and delivery of such instrument
was duly authorized by the Company.
(g) The Manager shall act as "tax matters partner" of the Company, as
defined in Code Section 6231(a)(7).
5.3 Limitation on Power. Notwithstanding the foregoing and any other provision
contained in this Agreement to the contrary, the Manager's unilateral authority
shall be circumscribed in the case of those matters listed in this Section 5.3.
Accordingly, the discretionary consent of the Majority Interest shall be
required before the Manager may approve or implement:
(a) any merger of the Company,
(b) dissolution of the Company pursuant to Subsection 9.2(c),
(c) any act that would contravene the Articles, this Agreement or the Act,
(d) the admission to the Company, pursuant to Section 12.1, of a person
who is not the assignee or successor of a then-existing Member,
(e) the admission to the Company, pursuant to Section 11.2, of a person
who is the assignee or successor of a then-existing Member (with the two
relevant determinations of Majority Interest (i.e., Percentages and Capital) to
be made by considering only the respective interests held by those Members who
have not made the assignment to the candidate), provided that (i) the consent
of the Majority Interest shall not be required, and such substitution shall be
made at the request of the Trustee, if Subsection 11.2(b) is invoked, and (ii)
the consent of the Majority Interest shall be determined by considering the
respective interests held by all Members, including those who have made the
assignment to the candidate, if Subsection 11.2(c) is invoked,
(f) the issuance of additional equity interests in, to raise further
capital for, the Company,
(g) the continuation of the Company pursuant to Paragraph 9.2(d)(ii) (with
the two relevant determinations of Majority Interest (i.e., Percentages and
Capital) to be made by considering only the
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respective interests held by those Members who are not themselves the subject
of the withdrawal event),
(h) the appointment of a substitute Manager, in the event neither Barden
nor BMI is able or willing to so serve,
(i) any payment by the Company to any Manager or any Affiliate of a
Manager, unless:
(i) such payment is pursuant to a loan to the Company meeting the
requirements of Section 4.3, 4.4 or 4.5 (in which case authorization by the
Majority Interest or any other person shall not be required),
(ii) such payment is otherwise specifically noted in the Debt Memorandum
(in which case authorization by the Majority Interest or any other person
shall not be required),
(iii) such payment is a reimbursement described in Section 5.5 (in which
case authorization by the Majority Interest or any other person shall not
be required), or
(iv) such payment (A) is disclosed to the Members, (B) is fair to the
Company, (C) reflects terms substantially similar to those that would have
been reached in an arms'-length arrangement, and (D) is terminable upon 60
days notice by the Company (in which case authorization by the Majority
Interest or any other person shall not be required),
(j) any other consideration by the Company to any Manager or any Affiliate
of a Manager, unless:
(i) such consideration is the right of Barden to from time to time appoint
itself and/or any one or more of its Affiliates as a perpetual royalty-free
licensee of the phrase, and the trademarks associated with, "The Majestic
Star Casino" (or any portion of such phrase or trademark) in connection
with the designation or promotion of (I) gaming operators, (II) other
entities, and/or (III) their respective facilities (in which case
authorization by the Majority Interest or any other person shall not be
required), or
(ii) such consideration is otherwise specifically noted in the Debt
Memorandum (in which case authorization by the Majority Interest or any
other person shall not be required), or
(k) the assignment of an interest in the Company, pursuant to Section
11.1.
5.4 Standard of Care. The Manager shall discharge its management duties in
good faith. Nonetheless, no Manager shall be liable for monetary damages to
the Company for any breach of any such management duties, except for (a)
receipt of a financial benefit to which it is
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not entitled, (b) assenting to a distribution in violation of this Agreement or
the Act, (c) the commission of a crime, or (d) material violations of this
Agreement that are both knowing and willful.
5.5 Compensation. No Member or Affiliate shall receive any compensation for
managing the affairs of the Company, although the Manager and its Affiliates
shall be reimbursed for any reasonable out-of-pocket expenses incurred by it on
behalf of the Company.
ARTICLE VI
Meetings of Members
6.1 Voting. Members shall be entitled to vote on any matter to the extent, and
in the manner, provided for in Section 5.3 or Subsection 5.1(c).
6.2 Meetings. Meetings of Members for the dissemination of information, or for
the transaction of any proposal subsumed by Section 5.3 or Subsection 5.1(c),
shall be held at such place, on such date and at such time as the Manager shall
determine. Such meetings may be called by the Manager, and shall be called by
the Manager upon the written request of those Members holding one-fourth of all
Percentages held by all Members other than the Manager's Affiliates. The
Company shall deliver or mail written notice stating the date, time, place and
purposes of any meeting to each Member. Such notice shall be given not fewer
than ten nor more than 60 days before the meeting, and shall permit
participation at the meeting via teleconference hook-up.
6.3 Consent.
(a) In the event a Member is not an individual, any consent granted on
behalf of a Member shall be taken, if at all, (i) by all trustees, if the
Member is a trust, (ii) by all partners, if the Member is a co-partnership,
(iii) by all general partners, if the Member is a limited partnership, (iv) by
the president, if the Member is a corporation, (v) by all managers, if the
Member is a manager-managed limited liability company, or (vi) by a majority in
interest of the members, if the Member is a member-managed limited liability
company.
(b) Any action required or permitted to be taken at an annual or special
meeting of the Members may be taken without a meeting, without prior notice,
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the Members having not fewer than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all Members entitled to vote on the action were present and voted. Each
consent shall bear the date and signature of each Member signing the consent.
Prompt notice of the taking of action without a meeting by less than unanimous
written consent shall be given to all Members who have not consented in writing
to such action.
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ARTICLE VII
Capital, Profits, Losses and Distributions
7.1 Capital Accounts. A capital account shall be maintained for each Member,
to which contributions, Profits and any items of income and gain under this
Article VII shall be credited and against which distributions and Losses and
any items of deduction and loss under this Article VII shall be charged.
Capital accounts shall be maintained in accordance with the accounting
principles of Code Section 704 and the Regulations thereunder.
7.2 Profits and Losses. Subject to Sections 7.4 through 7.14, Profits and
Losses shall be determined as of the end of each Fiscal Year.
(a) Profits shall be allocated:
(i) first, to those Members having a negative balance in their respective
capital accounts, in proportion to, and to extent of, such deficits,
(ii) next, to the Members in proportion to, and to the extent of, any
Losses that were (A) previously allocated to them and (B) not addressed by
any later allocation of Profits pursuant to this Paragraph 7.2(a)(ii), and
(iii) last, to the Members, in proportion to their respective Percentages.
(b) Losses shall be allocated to the Members in proportion to their
respective Percentages.
7.3 Distributions. At such times as the Manager may discretionarily determine,
but subject to the rights of creditors (including creditors pursuant to
Sections 4.3, 4.4 and/or 4.5), cash and/or property of the Company (net of
Reserves) shall be distributed as recited in this Section 7.3.
(a) Such cash and/or property, other than distributions constituting
Residual Proceeds, shall be distributed:
(i) first, in accordance with Subsection 7.3(c), and
(ii) last, in proportion to their respective Percentages.
(b) Distributions constituting Residual Proceeds shall be distributed in
accordance with Subsection 10.2
(c) As referenced in Subsection 7.3(a), in the case of distributions that
do not constitute Residual Proceeds, such cash and/or property shall be
distributed to the Members, in accordance with their respective Percentages, in
an amount equal to 40% of the excess, if any, of (i) Profits for the
immediately preceding calendar
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quarter over (ii) any then-existing net cumulative Losses through the
immediately preceding quarter. A tentative distribution under Paragraph
7.3(a)(i) shall be paid within 15 days after each fiscal quarter in an amount
equal to the figure described in the foregoing sentence, as estimated in
writing by the Company's accountants. A reconciliation of such tentative
distribution shall be made within 45 days after the relevant fiscal quarter, by
which time the definitive amount figure shall have been determined by the
Company's accountants and by which time (A) each Member shall forthwith repay
to the Company the amount, if any, by which such Member's preliminary
distribution was excessive, or (B) the Company shall forthwith pay each Member
the amount, if any, by which such Member's preliminary distribution was
inadequate.
7.4 Changes in Interest. If an addition, withdrawal or substitution of, or any
other change in the interest of, any Member occurs during the period covered by
an allocation, then, subject to any agreement between the persons affected,
Profits and Losses for the period shall be allocated among those interests
consistent with Code Section 706(d). If Code Section 706(d) allows alternative
methods of allocation, the Manager shall determine, in its sole discretion,
which alternative method to use in allocating Profits and Losses.
7.5 Depreciation Recapture. In characterizing Profits for purposes of
allocation, that portion, if any, constituting depreciation recapture shall be
the first Profits so allocated and shall be allocated in the proportions that
the depreciation giving rise to such recapture was allocated.
7.6 Section 754. If an election under Code Section 754 is in effect with
respect to the interest of any Member, the allocation of items of income,
deduction, gain or loss shall be governed by the regulations thereunder, but
such allocation shall not be reflected on the Company books.
7.7 Imputed Interest. If any Member makes a loan to the Company, or the
Company makes a loan to any Member, and interest in excess of the amount
actually payable is imputed under Code Sections 7872, 483, or 1271 through
1288, then any item of income or expense attributable to any such imputed
interest shall be allocated solely to the Member who made or received the loan
and shall be credited or charged, as appropriate, to his capital account.
7.8 Contributed Assets. Income, gain, loss or deduction with respect to any
property contributed by a Member shall, solely for tax purposes, be allocated
among the Members, to the extent required by Code Section 704(c), to take
account of the variation between the basis of the assets to the Company and its
fair market value when contributed.
7.9 Partial-Year Allocation. In allocating Profits and Losses, the Members
shall assume that one-twelfth of the Profit or Loss for a year was realized in
each month thereof.
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7.10 Installment Receipts. Any interest received on an installment obligation
received by the Company upon the sale of the Property shall be treated as
Residual Proceeds and shall be distributed among the Members in the same
proportions as the total Residual Proceeds are distributed.
7.11 Involuntary Conversion. Notwithstanding any contrary provision of this
Agreement, upon the compulsory or involuntary conversion of all or any part of
the Property consistent with Code Section 1033(a), if and to the extent
determined by the Manager in its sole discretion, the Company shall not
distribute the net proceeds thereof to the Members, but instead shall reinvest
the net proceeds in such a manner as to avoid recognition (for federal income
tax purposes) of part or all of the gain on such conversion.
7.12 Other Allocations. Notwithstanding the foregoing provisions of this
Article VII or any other provision of this Agreement, the following provisions
shall apply:
(a) The Members intend that the Company be treated as a partnership for
federal income tax purposes and, accordingly, the partnership tax provisions of
the Code shall apply to the Company and its Members. The Members further
intend that each Member's distributive share of income, gain, loss, deduction
or credit (or item thereof) be determined and allocated in accordance with this
Article VII to the fullest extent permitted by Code Section 704(b). To
preserve the determinations and allocations provided for in this Article VII,
the Manager is authorized and directed to allocate income, gain, loss,
deduction, or credit (or item thereof) arising in any year differently than
otherwise provided for in this Article VII to the extent that such an
allocation in the manner otherwise provided for in this Article VII would cause
the determinations and allocations of each Member's distributive share of
income, gain, loss, deduction or credit (or item thereof) to contravene Code
Section 704(b). Any allocation made pursuant to this Section 7.12 shall be a
complete substitute for any allocation otherwise provided for in this Article
VII, and no amendment of this Agreement or approval of any Member shall be
required.
(b) In making any allocation (the "new allocation") under this Section
7.12, the Manager may act only after having been advised by the Company's
accountants that, under Code Section 704(b), (i) the new allocation is
necessary, and (ii) the new allocation is the minimum modification of the
allocations otherwise provided for in this Article VII needed to assure that,
either in the then-current year or in any preceding year, each Member's
distributive share of income, gain, loss, deduction, or credit (or item
thereof) is determined and allocated in accordance with this Article VII to the
fullest extent permitted by Code Section 704(b).
(c) If a net decrease in Company Minimum Gain occurs during a Fiscal Year
so that an allocation is required by Regulation 1.704-2(f), each Member shall
be specially allocated items of income
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and gain for such year (and, if necessary, subsequent years) equal to his share
of the net decrease in Company Minimum Gain as determined by Regulation
1.704-2(g)(2). Such allocations shall be made in a manner and at a time that
will satisfy Regulation 1.704-2(f), or the corresponding provisions of
subsequently adopted Regulations, in order that the allocations provided for in
this Article VII will be recognized for federal income tax purposes.
(d) If a net decrease in the Member Nonrecourse Debt Minimum Gain occurs
during any Fiscal Year, any Member who has a share of such Member Nonrecourse
Debt Minimum Gain (as determined in the same manner as partner nonrecourse debt
minimum gain under Regulation 1.704-2(i)(5)) shall be specially allocated items
of income or gain for such year (and, if necessary, subsequent Fiscal Years)
equal to his share of the net decrease in the Member Nonrecourse Debt Minimum
Gain in the manner and to the extent required by Regulation 1.704-2(i)(4).
(e) If a Member unexpectedly receives an adjustment, allocation, or
distribution described in Regulation 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any
of which causes or increases an Adjusted Deficit Capital Account Balance in
such Member's capital account, he will be specially allocated items of income
and gain in an amount and manner sufficient to eliminate such deficit balance
created or increased by such adjustment, allocation, or distribution as quickly
as possible.
(f) If a Member has an Adjusted Deficit Capital Account Balance at the end
of a Fiscal Year, such Member shall be allocated items of income and gain in
the amount of such Adjusted Deficit Capital Account Balance as quickly as
possible to eliminate it.
(g) Nonrecourse Deductions shall be allocated among the Members in
proportion to their respective Percentages, and any Member Nonrecourse
Deductions shall be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Regulation 1.704-2(i)(1).
(h) If the Manager is required by Subsection 7.12(a), 7.12(c), 7.12(d),
7.12(e), 7.12(f), 7.12(g) or 7.12(h) to make any new allocation in a manner
other than as provided for in this Article VII without regard thereto, then the
Manager shall, insofar as it is permitted to do so by Code Section 704(b),
allocate income, gain, loss, deduction or credit (or item thereof) arising in
the current Fiscal Year (or subsequent Fiscal Years, if necessary) in order to
bring the proportions of income, gain, loss, deduction or credit (or item
thereof) allocated to the Members as nearly as possible to the proportion
otherwise contemplated by this Article VII without regard thereto; provided
that Nonrecourse Deductions shall not be taken into account except to the
extent Company Minimum Gain is reduced, and Member Nonrecourse Deductions shall
not be taken into account except to the extent Member Minimum Gain has been
reduced and provided
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further that such Nonrecourse Deductions and Member Nonrecourse Deduction shall
in no event be taken into account to the extent the Manager reasonably
determines that such allocations will likely be offset by future allocations
under Subsection 7.12(c) or 7.12(d).
(i) Allocations made by the Manager under this Section 7.12 in reliance on
the advice of the Company's accountants are deemed made pursuant to the
Manager's fiduciary obligation to the Company and the Members.
(j) To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) or Code Section 743(b) is required,
pursuant to Regulation 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis), and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Regulations.
7.13 Special Definitions. As used in Section 7.12, the following terms, where
capitalized, shall have the meanings ascribed to them below in this Section
7.13.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, any deficit balance in such Member's capital account as of the end of
the relevant Fiscal Year, (1) increased by any amounts such Member is obligated
to restore under Regulation 1.704-1(b)(2)(ii)(c), plus such Member's share of
Company Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum
Gain, and (2) decreased by the items described in Regulation
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Nonrecourse Deductions" has the meaning set forth in Regulation
1.704-2(c).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in accordance with Regulation 1.704-2(i)(3).
"Member Nonrecourse Debt" has the meaning set forth in Regulation
1.704-2(b)(4).
"Member Nonrecourse Deductions" has the meaning set forth in Regulation
1.704-2(i)(2).
"Company Minimum Gain" means an amount determined in accordance with
Regulation 1.704-2(d) by computing, with respect to each Company nonrecourse
liability (as defined in Regulation 1.752-1(a)(2)), the amount of gain (of
whatever character) realized by the Company if (in a taxable transaction) it
disposed of property subject to such
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liability in full satisfaction thereof, and by then aggregating the amounts so
computed.
7.14 Excess Liabilities. For purposes of calculating the Members' shares of
excess nonrecourse liabilities (within the meaning of Regulation
1.752-3(a)(3)), the Members shall be deemed to share Profits in proportion to
their respective Percentages.
ARTICLE VIII
Exculpation and Indemnification
8.1 Exculpation. No Manager or Member, and no officer, director, employee or
agent of the Company or of a Manager or Member, shall be liable for the acts or
obligations of the Company, unless he shall have expressly assumed such
liability.
8.2 Indemnification. Except as otherwise provided in this Article VIII, the
Company shall indemnify any Manager, any Member, any employee, officer,
manager, director or agent of a Manager or Member, and any employee, officer or
agent of the Company, who was or is a party or is threatened to be made a party
to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, and whether formal or
informal (other than an action by or in the right of the Company) by reason
that such person is or was a manager, member, employee, director or agent of
the Company or of a Manager or Member, against expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with the action, suit or
proceeding, but only if the person acted in good faith and in a manner that
such person believed to be in the best interests of the Company, and, with
respect to a criminal action or proceeding, if such person believed his conduct
was not unlawful. Any indemnification permitted under this Section 8.2 shall
(unless ordered by a court) be made by the Company only as authorized in the
specific case, in the absence of a judicial determination that the
indemnification is improper under the circumstances because the person to
indemnify has met the applicable standard of conduct and upon an evaluation of
the reasonableness of expenses and amount paid in settlement. Notwithstanding
the foregoing, no indemnification shall be provided to any person for or in
connection with (i) the receipt of a financial benefit to which such person is
not entitled, (ii) voting for or assenting to a distribution to Members in
violation of this Agreement or the Act, or (iii) a knowing violation of law.
ARTICLE IX
Term of Company
9.1 Commencement. The term of the Company commenced upon the filing of the
Articles with the Secretary.
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9.2 Dissolution. The Company shall be dissolved upon the occurrence of any of
the following events:
(a) December 31, 2043.
(b) The sale, redemption or other disposition of all or substantially all
of the Property.
(c) The written consent of the Manager and all Members.
(d) The death, retirement, resignation, withdrawal, expulsion, bankruptcy,
mental incapacity or dissolution of any Member; provided, however, that the
Company existence shall not terminate if:
(i) the Company has two or more remaining Members, and
(ii) within 60 days after such event, the Manager, the Majority Interest,
and those Members holding in the aggregate over half of the Capital (all as
determined without regard to the interest or holdings of the withdrawing
Member) elect in writing to continue the Company,
(e) The death, retirement, resignation, withdrawal, expulsion, bankruptcy,
mental incapacity or dissolution of the Manager; provided, however, that the
Company existence shall not terminate if within 30 days after such event a new
person assumes the role of Manager in accordance with Subsection 5.1(b).
(f) Upon entry of a decree of judicial dissolution pursuant to the Act.
ARTICLE X
Winding-Up
10.1 Procedure. Upon termination of the Company, the Manager shall conclude
the affairs of the Company. The assets of the Company may be liquidated or
distributed in kind, as determined by the Manager. To the extent Company
assets cannot either be sold without undue loss or readily divided for
distribution in kind to the Members, the Company may, as determined by the
Manager, convey those assets to a trust or other suitable holding entity
established for the benefit of the Members in order to permit the assets to be
sold without undue loss and the proceeds thereof distributed to the Members at
a future date. The legal form of the holding entity, the identity of the
trustee or other fiduciary, and the terms of its governing instrument shall be
determined by the Manager.
10.2 Application of Assets. Upon the winding-up of the Company, the assets of
the Company shall first be applied to the payment of, or to a reserve for the
payment of, Company liabilities (including such provision for contingent or
unforeseen liabilities as the Manager deems appropriate), and then shall be
distributed to the Members in accordance with their respective capital accounts
(after all such accounts shall have been adjusted for all allocations pursuant
to
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Section 7.2 and for all distributions pursuant to Subsection 7.3(a)). If
Company assets are distributed in kind, the assets so distributed shall be
valued at their then-current fair-market values and the unrealized appreciation
or depreciation in value of such assets shall be allocated to the Members'
respective capital accounts in the manner described in Article VII as if such
assets had been sold, and such assets shall then be distributed to the Members
in accordance with their respective positive capital accounts as so adjusted.
ARTICLE XI
Assignability of Interests
11.1 Permitted Assignments.
(a) Subject to all further applicable restrictions recited in Section
11.3, a Member may assign (and/or pledge) his interest in the Company, in whole
or in part with, and only with, the discretionary consent of the Manager and
Majority Interest.
(b) No assignment (and no execution of any pledge) under this Section 11.1
shall of itself substitute the assignee (or pledgee) as a Member, and such
assignment (and such execution of any pledge made) shall entitle the assignee
(or pledgee) to none of the rights of a Member, whether under this Agreement or
under the Act, other than the right to receive (to the extent assigned) the
Distributions to which the assigning (or pledging) Member would otherwise be
entitled.
11.2 Admission of Assignees.
(a) Subject only to Subsections 11.2(b) and 11.2(c), an assignee shall not
be admitted as a Member, unless the assignee shall have received the
discretionary consent of the Manager and Majority Interest, with both the
determination of Majority Interest to be made without regard to the interest or
holdings of the assigning Member. As a condition of its consent, the Manager
may require a substitute Member to pay the legal and other costs incurred by
the Company in effecting his admission. If admitted, the substitute Member
shall have, to the extent assigned, all of the rights and powers, and shall be
subject to all the restrictions and liabilities, of a Member. In addition, the
assignee shall provide the Company with the information and agreements that the
Manager deems necessary in connection with the assignment, including written
acknowledgement binding the assignee to this Agreement as a Member thereof.
(b) No Manager or Member shall be called upon to approve the admission of
the Trustee as a Member, and such admission shall be implemented without
further action, if the Trustee (i) has executed (and delivered to the Manager)
a memorandum binding itself to this Agreement as a Member thereof, and (ii) has
provided the Manager with written confirmation that (A) the Trustee has been
pledged Barden's equity interest in the Company, (B) the Trustee has duly
succeeded to such interest pursuant to the terms governing such pledge, (C) any
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cure period afforded Barden has expired, and (D) the Trustee wishes to become a
Member in the stead of Barden.
(c) In the case of the proposed admission of any assignee of Barden as a
Member, the procedures described in Subsection 11.2(a) shall, with the
following exception, be implemented. All Members shall be entitled to vote on
the proposed admission, and, consequently, the consent of the Majority Interest
shall be determined with regard to the interests and holdings of all Members,
including those of the assigning Member.
11.3 General Restrictions. In addition to the foregoing transfer restrictions,
no Member shall sell, assign, transfer, exchange, mortgage, pledge, grant,
hypothecate or otherwise dispose of any interest in the Company (a) without the
prior discretionary consent of all the Members, if the assignment would
terminate the Company within the meaning of Code Section 708(b), and (b)
without an opinion of counsel in form and substance satisfactory to the Company
that registration is not required under the Securities Act of 1933 and
applicable state law (unless this requirement (b) is waived by the Manager).
In no event shall any Member assign his interest in the Company if such
assignment would (i) violate any applicable state or federal securities law,
(ii) result in any direct or indirect interest in the Company being held, on or
before December 31, 1996, by a person that is not a resident of Indiana for
purposes of SEC Rule 147, (iii) violate the Articles, or (iv) run afoul of any
requirement (or fail to meet with any necessary approval) of the Indiana Gaming
Commission or of any statute granting the Commission its jurisdiction. The
Members acknowledge that their interests in the Company have not been
registered under the securities laws of any jurisdiction and agree that such
interests will not be transferred without appropriate registration or an
exemption therefrom.
11.4 Regulatory Restrictions. In addition to the foregoing transfer
restrictions, and notwithstanding any provision of this Agreement to the
contrary, no interest in the Company shall be sold, assigned, donated or
otherwise transferred (whether or not such conveyance results in a substitution
or admission of a Member), unless such transfer is in compliance with the rules
of the Commission, including any successor proposed or final rules.
ARTICLE XII
Admission and Withdrawal
12.1 Admissions. Other than as provided in Section 11.2 with respect to the
successors and assigns of then-existing Members, additional Members may be
admitted to the Company with the discretionary approval of the Manager and
Majority Interest. Such approval shall be solicited pursuant to a written
proposal that:
(a) shall have been agreed to by (i) the Manager and (ii) the candidate
(unless the proposal calls for the issuance of additional equity interests
pursuant to an Equity Offering made to undesignated offerees),
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(b) shall specify the terms of the proposed admission, including (i) the
candidate's identity, date of admission, Percentage and commitment to make
Contributions, or (ii) the terms of the Equity Offering,
(c) shall specify that all then-existing Percentages shall be diluted
ratably to the aggregate extent of the candidate's (or offerees') Percentage
(provided that a particular Member's Percentage may be disproportionately
diluted, but only if, and only to the extent, such Member specifically agrees
to such disproportionate dilution), and
(d) shall comport with Section 11.4.
12.2 Withdrawals.
(a) No Member may voluntarily resign from the Company without the
discretionary consent of the Manager, which, if given, shall specify the terms
of such withdrawal.
(b) A Member voluntarily resigning from the Company without the
discretionary consent of the Manager shall be liable to the Company for any
damages attendant thereto in accordance with Section 23-18-6-6 of the Act.
(c) A Member resigning or otherwise withdrawing from the Company shall, in
the discretion of the Manager and subject to any applicable restrictions on
distribution recited in the Act, receive, net of any damages pursuant to
Subsection 12.2(b), either (i) the ongoing Distributions to which he would
otherwise be entitled were he still a Member, or (ii) within 12 months after
withdrawal, the fair value of his interest in the Company as of the date of
withdrawal.
(d) At the written election of the Manager,
(i) the Company shall redeem the interest in the Company held by any other
Member whose affiliation with the Company shall, to a material degree,
delay, jeopardize the issuance of, result in added restrictions on, or
impair the good standing of any License or other necessary authorization
issued (or to be issued) to the Company, so long as (A) the redemption
price is equal to the affected Investor's capital account, (B) such payment
is made in cash within 12 months thereafter, and (C) written advice has
been received from the relevant Regulatory Authority referencing the
affected Member and the jeopardy generated by his affiliation, and
(ii) the Company shall, in lieu of any action for damages, redeem the
interest in the Company held by any other Member who shall have breached
any covenant set forth in Section 14.1, or with respect to whom any
representation set forth in Section 14.2 is or has become materially false,
so long as (A) such breach or misrepresentation remains uncured for 30 days
after the date of the election, (B) the redemption price is equal to
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the affected Investor's capital account, minus the amount of damages
suffered by the Company as a result of such breach or misrepresentation,
and (C) such payment is made in one-half in cash within 12 months
thereafter, with the balance payable without interest in five equal annual
installments coming due on the anniversary of the first payment.
(e) Upon the withdrawal of a Member (and the retirement of such Member's
interest in the Company) pursuant to this Section 12.2 or pursuant to any other
action in which no person (other than the Company itself) succeeds to the
withdrawing Member's interest, the Percentages of the remaining Members shall
increase ratably to the aggregate extent of the withdrawn Member's Percentage.
(f) A Manager may voluntarily resign as Manager upon 60 days notice to the
Members.
ARTICLE XIII
Amendment
13.1 Generally. Subject to Section 13.2, this Agreement may be amended only
with the discretionary written consent of (a) the Manager, (b) a three-fourths
interest of the Members, as determined with respect to Percentages, and (c) a
three-fourths interest of the Members, as determined with respect to
capital-account balances.
13.2 Exception. Notwithstanding Section 13.1,
(a) this Agreement may be amended to the extent, if any, contemplated by
Section 7.12, according to the terms and conditions recited in Section 7.12,
and
(b) Schedule A may be amended by the Manager alone to reflect any action
taken from time to time in accordance with Article XII, Section 4.1 or Section
11.2.
ARTICLE XIV
Covenants and Representations
14.1 Covenants. Each Member, on behalf of itself and each of its permitted
successors and assigns, covenants and agrees as follows:
(a) It will provide (and, if applicable, cause its Affiliates to provide)
to the Company, and if required, timely file or cause its Affiliates to file
with the Commission or any other Regulatory Authority any and all documents and
all information required in connection with all necessary Authorizations and in
connection with any proceeding or investigation with respect to the Member's
(or any of its Affiliates') character, reputation, experience, or financial
integrity.
(b) Upon reasonable request, it will, promptly and timely, cooperate, and
cause all of its Affiliates to cooperate, with the other Members, the
Commission or such other Regulatory Authority in
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the procurement of all necessary Authorizations and in any determination of the
character, reputation, experience or financial integrity of the Member or any
Affiliate of the Member.
(c) It will proceed, in good faith and with due diligence, and will use
its best efforts to demonstrate to the Commission or other Regulatory Authority
its and, if applicable, its Affiliates', good character, reputation, experience
and financial integrity.
(d) It will proceed in good faith to further the goals of development and
operation of the Gary Facility and to perform its obligations in connection
therewith.
14.2 Representations. Each Member represents and warrants to the Company and
to each other Member that:
(a) Neither it nor, to the best of its knowledge, any of its Affiliates
has ever:
(i) been convicted of a felony under Indiana law, the laws of any other
state, or the laws of the United States,
(ii) knowingly or intentionally submitted an application for a gaming
license that contained false information, or
(iii) had a license to own, manage or operate gambling facilities in
another jurisdiction revoked, denied or suspended.
(b) It has no reason to believe that it or any of its Affiliates would not
be found, by the Commission or other Regulatory Authority, to be of good
character, reputation, experience and financial integrity.
(c) It is acquiring its interest in the Company for its own account as an
investment and without an intent to distribute such interest, and it
acknowledges that the interests in the Company have not been registered or
qualified under the Securities Act of 1933 or any state securities law, and may
not be resold or transferred by the Member without appropriate registration and
qualification or an exemption therefrom.
14.3 Survival. The covenants contained and the representations made in this
Article XIV shall survive the execution of this Agreement indefinitely.
ARTICLE XV
Miscellaneous Provisions
15.1 Records. The Manager shall keep true and complete books of account and
records of all Company transactions. The books of account and records shall be
kept at the principal office of the Company. The Company shall maintain at
such office (i) a list of names and addresses of all Members, (ii) a copy of
the Articles together with executed copies of all powers of attorney pursuant
to
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which the Articles have been executed, (iii) copies of the Company's federal,
state and local income tax returns and reports for the three most recent years,
(iv) copies of the Company's current Agreement, and (v) copies of the financial
statements of the Company for the three most recent years. Such Company
records shall be available to any Member or his designated representative
during ordinary business hours, at his reasonable request and expense.
15.2 Reports. The Manager shall use its best efforts to furnish, or cause to
be furnished, to Members (a) annually, an income statement for the prior year
and a balance sheet as of the year ended, and (b) by March 15 of each year,
Schedule K-1.
15.3 Accounts and Investment. All funds of the Company shall be deposited in
its name in such checking accounts, savings accounts, time deposits or
certificates of deposit shall be invested in such other manner as shall be
designated by the Manager from time to time. Withdrawals shall be made upon
such signature or signatures as the Manager may designate.
15.4 Accounting Decisions. All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the Manager in
accordance with generally accepted accounting principles consistently applied.
Such decisions shall be acceptable to the accountants retained by the Company,
and the Manager may rely upon the advice of the accountants as to whether such
decisions are in accordance with generally accepted accounting principles.
15.5 Tax Elections. The Company shall, to the extent permitted by applicable
law and upon obtaining any necessary approval of the Commissioner of Internal
Revenue, make all tax elections in such manner as the Manager determines to be
most favorable to the Members. The Manager may rely upon accountants hired by
the Company as to the availability and effect of all such elections.
15.6 Investment Representation. The Members represent to each other and to the
Company that they are acquiring their respective interests in the Company for
their own accounts, and without a view to selling or pledging them.
15.7 Composition. This Agreement constitutes the entire Agreement among the
parties and may be modified only as provided herein, but is in addition to the
subscription agreement and any other contract between a party and the Company.
No representation or agreement has been made by (or on behalf of) any party
hereto, and no party relies upon any statement or covenant not recited herein.
This Agreement supersedes any and all other agreements, whether oral or
written, by and among the Members.
15.8 Notice. Any notice, writing or other matter, and any Distribution, to be
delivered hereunder shall be conveyed to the party at the address reflected in
this Agreement and shall be deemed given when deposited in the United States
mail with postage prepaid
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or when delivered in person or by courier; provided that a person may change
his address by written notice to the Company.
15.9 Member Consent. Various provisions of this Agreement require or permit
the approval or disapproval, written or otherwise, of the Members or some
specified proportion thereof. In any such case, the Manager may give all
Members written notice of the proposed action or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 15 days after
mailing of the notice) shall be deemed to have given his consent to the action,
or to have made the agreement, referred to in the notice.
15.10 Further Execution. Upon request of the Manager from time to time, the
Members shall execute and swear to or acknowledge any amended Articles and
other writing that may be required by any law or that may be appropriate to
effecting any action by or on behalf of the Company or the Members taken in
accordance with this Agreement.
15.11 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties, their successors and permitted assigns. No
provision of this Agreement (other than Subsection 11.2(b), in favor of the
Trustee, during the term of the Notes) shall be construed as for the benefit of
or as enforceable by any creditor of the Company or of the Members, or any
other person not a party to this Agreement.
15.12 Application. The invalidity or unenforceability of any provision of this
Agreement in a particular respect shall not affect the validity and
enforceability of any other provision of this Agreement or of the same
provision in any other respect. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The headings to the various provisions of this
Agreement are for reference purposes only, and shall not bear on the
interpretation of this Agreement. The validity and interpretation of, and the
sufficiency of performance under, this Agreement shall be governed by Indiana
law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
GARY RIVERBOAT GAMING, LLC BARDEN DEVELOPMENT, INC.
By: BARDEN MANAGEMENT, INC.
By: Don H. Barden
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Don H. Barden, President
By: Don H. Barden
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Don H. Barden, President
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SCHEDULE A
Identities And Interests Of The Members
Name and Address Admission Date Contribution Percentage
Barden Development, Inc. 12/08/93 $19,545,365 85.000%
One Buffington Harbor Drive
Gary, Indiana 46406
Gary Riverboat Gaming, LLC 12/13/93 $3,449,182 15.000%
One Buffington Harbor Drive
Gary, Indiana 46406