Member Control Agreement of Metroplex-Lakes LLC - Grand Casinos Nevada I Inc. and Metroplex LLC
MEMBER CONTROL AGREEMENT OF
METROPLEX - LAKES, LLC
THIS MEMBER CONTROL AGREEMENT is made and entered into as of the 25th
day of April, 2000 (the "Effective Date"), by and among GRAND CASINOS NEVADA I,
INC., a Minnesota corporation ("GCN"); METROPLEX, LLC, a Nevada limited
liability company ("Metroplex") (the "Members"); and METROPLEX - LAKES, LLC, a
Minnesota limited liability company (the "Company").
INTRODUCTION
A. The Members have organized the Company as of the Effective Date
pursuant to Minnesota Statutes, Chapter 322B (the "LLC Act"), by filing Articles
of Organization described in Section 1.1 below and agreeing to make capital
contributions pursuant to their Joint Contribution Agreement attached hereto as
EXHIBIT A, which have been accepted by a unanimous action of the Company's Board
of Governors dated as of the Effective Date.
B. The Members constitute all of the initial members of the Company.
C. Section 322B.37 of the LLC Act (as defined in Section 3.24)
authorizes a member control agreement for a limited liability company.
D. Each of the Members desires to enter into such an agreement, in the
form of this Agreement, with respect to the Company.
E. GCN is a wholly-owned subsidiary of Lakes Gaming, Inc., a Minnesota
corporation ("Lakes"). Lakes is engaged in the management of gaming enterprises
subject to the jurisdiction of various States and other authorities, which
require that Lakes, GCN and others affiliated with them hold Gaming Licenses, as
described in Section 5.5.
NOW, THEREFORE, in consideration of the foregoing facts, the mutual
promises of the Members and the mutual benefits to be gained by the performance
of this Agreement, the Members hereby agree as follows:
AGREEMENT
ARTICLE 1
FORMATION OF LIMITED LIABILITY COMPANY
1.1 Formation. As of the Effective Date, the Members have formed the
Company as a limited liability company under the provisions of the LLC Act. The
Company's business shall be conducted to comply with the LLC Act.
The Members hereby adopt and approve as filed in the office of the
Secretary of State of the State of Minnesota on April 25, 2000, the Articles of
Organization with respect to the Company (the "Articles"). A copy of the
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Articles is attached hereto as EXHIBIT B and hereby made a part of this
Agreement. The Company's Board shall promptly cause to be executed and so filed
any amendments of such Articles that may be adopted by the Members or required
by law.
Except as otherwise provided in this Agreement, the Articles and the
Company's Bylaws adopted by the Members, the rights and liabilities of the
Members shall be as provided in the LLC Act. The purpose of the Company is set
forth in Article 4.
1.2 Term. The term of the Company shall begin on the Effective Date and
shall continue until the Company is dissolved upon a Liquidation Event as
provided in Article 15.
1.3 Name. The name of the Company shall be "Metroplex - Lakes, LLC" or
such other name as may be agreed upon in writing by the Appointing Members. The
Company shall take such action as may be necessary or desirable to become
qualified to do business in the State of Nevada, Clark County, under the assumed
name "Metroplex." Metroplex hereby consents to the Company's use of the assumed
name "Metroplex" to do business in the States of Minnesota and Nevada, and
agrees to execute and deliver such documents as may be reasonably necessary or
desirable to accomplish that purpose.
ARTICLE 2
PLACE OF BUSINESS AND AGENT FOR PROCESS
1.4 Place of Business. The principal executive office of the Company
shall be located at 130 Cheshire Lane, Minnetonka, Minnesota 55305. The Board
may from time to time change the location of the principal office of the Company
and, in such event, the Chief Manager shall give notice to the Members within
twenty (20) days of the effective date of such change. The Board may in its
discretion establish additional places of business of the Company, one of which
shall be in Las Vegas, Nevada.
1.5 Agent for Process. The name and address of the agent for service of
process on the Company shall be Chief Financial Manager, Metroplex - Lakes, LLC,
located at 130 Cheshire Lane, Minnetonka, Minnesota 55305.
ARTICLE 3
GENERAL DEFINITIONS
Wherever used in this Agreement, unless another meaning is explicitly
indicated by the context, the following terms shall have the meanings set forth
below:
1.6 "Affiliate" means, with respect to a specific Person, any of the
following other Persons: (a) any Person directly or indirectly controlling,
controlled by, or under common control with such Person; (b) any Person owning
or controlling ten percent (10%) or more of the outstanding voting interests of
such Person, unless such voting interests are publicly traded on a national
securities exchange or NASDAQ; (c) any officer, director or general partner of
such Person; or (d) any Person who is an officer, director, general partner,
trustee or holder of ten percent (10%) or more of the voting interests (unless
such voting interests are publicly traded on a national securities exchange or
NASDAQ), of any Person described in clauses (a) through (c) of this sentence.
For purposes of this definition, the terms "control," "is controlled by" or "is
under common control with" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
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otherwise. Notwithstanding the foregoing, Lyle Berman, a significant shareholder
of Lakes, shall be deemed to be an Affiliate of Lakes and GCN; and Brett Torino,
the sole owner of Metroplex shall be deemed to be an Affiliate of Metroplex,
along with Torino Companies, Inc.
1.7 "Agreement" or "Member Control Agreement" means this Member Control
Agreement (including all of its Exhibits and Schedules, if any), as amended from
time to time.
1.8 "Articles" shall mean the Articles of Organization filed on behalf
of the Company with the Minnesota Secretary of State on April 25, 2000, and are
attached hereto as Exhibit B, as they may be amended from time to time by the
Appointing Members, pursuant to the LLC Act and the Company's Bylaws.
1.9 "Appointing Member" shall mean any Member that is entitled to
appoint one or more Governors pursuant to Article 10, without an election by all
of the voting Members; and includes each of its successors and assigns that
becomes a Member hereunder with respect to all of the Interest held by the
Appointing Member.
1.10 "Board" means the Board of Governors of the Company, appointed by
the Appointing Members pursuant to Article 10 and the Bylaws.
1.11 "Bankruptcy" means, with respect to any Person, a "Voluntary
Bankruptcy" or an "Involuntary Bankruptcy."
(1) "Voluntary Bankruptcy" means, with respect to any
Person, an admission in writing by such Person of his, her or its
inability to pay such debts generally or a general assignment by such
Person for the benefit of creditors; the filing of any petition or
answer by such Person seeking to adjudicate it a bankrupt or insolvent
or seeking for such Person any liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of such
Person or the debts of such Person under any law relating to
bankruptcy, insolvency or reorganization for the benefit of debtors; or
seeking, consenting to or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for such Person or for any substantial part of such
Person's property; or corporate action taken by such Person to
authorize any of the actions set forth above.
(2) "Involuntary Bankruptcy" means, with respect to any
Person, without the consent or acquiescence of such Person, the
entering of an order for relief or approving a petition for relief or
reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
other similar relief under any present or future bankruptcy, insolvency
or similar statute, law or regulation; or the filing of any such
petition against such Person which petition shall not be dismissed
within ninety (90) days; or, without the consent or acquiescence of
such Person, the entering of any order appointing a trustee, custodian,
receiver or liquidator of such Person or of all or any substantial part
of the property of such Person, which order shall not be dismissed
within ninety (90) days.
1.12 "Business Day" shall mean any day on which Federal government
offices are open.
1.13 "Bylaws" means the Bylaws of the Company, as unanimously adopted
by the Members under the LLC Act and hereafter amended from time to time
unanimously by the Members. The initial Bylaws are attached hereto as EXHIBIT C.
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1.14 "Cable Property" means the real estate interests subject to the
Cable Options described in the Joint Contribution Agreement.
1.15 "Capital Account" shall have the meaning set forth in Section
6.1(b).
1.16 "Capital Contribution" shall have the meaning set forth in Section
6.1(c).
1.17 "Code" means the Internal Revenue Code of 1986, as amended from
time to time (and any corresponding provisions of succeeding law).
1.18 "Company" means Metroplex - Lakes, LLC, the Minnesota limited
liability company formed as of the Effective Date pursuant to this Agreement and
the Articles.
1.19 "Company Property" means the Joint Venture Property and the Cable
Property (as and when each parcel thereof becomes owned by the Company), and all
other real and personal property acquired and held from time to time by the
Company and any improvements thereto; and shall include both tangible and
intangible property.
1.20 "Contribution Agreement" means the Joint Contribution Agreement;
and any other agreement in writing, executed by the Company and a Person
desiring to become a Member after the Effective Date, setting forth the terms of
such Person's admission as a Member including, but not limited to, the agreed
value of the contribution that shall be made by such Person to the capital of
the Company and the Percentage Interest and Voting Interest to be issued by the
Company to such Person.
1.21 "Depreciation" shall have the meaning set forth in Section 6.1(d).
1.22 "Development Budget" shall have the meaning set forth in Section
8(c) of the Joint Contribution Agreement. Each such Development Budget shall be
established and approved by the Appointing Members in writing pursuant to
Section 8(c) of the Joint Contribution Agreement.
1.23 "Development Committee" shall have the meaning set forth in
Section 10.4.
1.24 "Development Costs" shall have the meaning set forth in Section
8(d) of the Joint Contribution Agreement. Except as otherwise specified herein,
Development Costs include Internal Development Costs (as defined below).
1.25 "Distribution" means any distribution to the Members of cash or
other assets of the Company made from time to time pursuant to Article 8 or
Section 15.3.
1.26 "Effective Date" means April 25, 2000, which is the effective date
of this Agreement and the formation of the Company.
1.27 "Financial Rights" means a Member's rights to (a) a Capital
Account; (b) a Percentage Interest in Company Profits, Losses and Distributions;
(c) payments (if any) under the terms and conditions of Article 13 upon the
Member's death or other withdrawal; and (d) the Member's limited right (if any)
to Transfer such rights according to Article 12.
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1.28 "Fiscal Year" means (a) the period commencing on the Effective
Date and ending on December 31, 2000, (b) any subsequent calendar year, or (c)
any portion of either of the periods described in clauses (a) and (b) for which
the Company is required or elects to close its books and allocate Profits,
Losses and other Company items pursuant to Article 7.
1.29 "Gaming Licenses" shall have the meaning set forth in Section 5.5.
1.30 "GCN" shall mean Grand Casinos Nevada I, Inc., a Minnesota
corporation that is one of the Appointing Members; or any successor to its
Interest in the Company.
1.31 "Governance Rights" means all of a Member's rights as a Member,
other than the Member's Financial Rights, and includes the Member's Voting
Interest and any rights as an Appointing Member.
1.32 "Governing Authority" shall have the meaning set forth in Section
9.1.
1.33 "Governor" shall mean any individual elected under Section 10.1 to
serve on the Board. The first Governors are the three (3) individuals named in
Section 10.2.
1.34 "Interest" shall have the same meaning as Membership Interest
(defined below).
1.35 "Internal Development Costs" shall have the meaning set forth in
Section 8(d)(ii) of the Joint Contribution Agreement. To the extent specified
herein, Internal Development Costs are treated differently from other
Development Costs.
1.36 "Joint Contribution Agreement" means the initial written agreement
of the first Members, dated as of the Effective Date, which is attached hereto
as EXHIBIT A and hereby made a part of this Agreement.
1.37 "Joint Venture Property" means the real estate interests subject
to the Company's Option described in the Joint Contribution Agreement.
1.38 "LLC Act" means the Minnesota Limited Liability Company Act, as
set forth in Minnesota Statutes, Chapter 322B, as amended from time to time (or
any corresponding provisions of succeeding law).
1.39 "Lakes" means Lakes Gaming, Inc., the Minnesota corporation that
currently owns all of the capital stock of GCN.
1.40 "Liquidating Event" shall have the meaning set forth in Section
15.1.
1.41 "Loss" and "Losses" shall have the meaning set forth in Section
7.1.
1.42 "Managers" means (a) the Chief Manager and the Treasurer elected
by the Board; (b) each other individual who shall hereafter be elected,
appointed, or otherwise designated as a Manager by the Board, with the written
consent of the Appointing Members, pursuant to Section 9.1 and the Bylaws; and
(c) any other person considered elected as a manager pursuant to the LLC Act.
1.43 "Member" or "Members" shall have the meaning set forth in Section
5.1.
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1.44 "Membership Interest" or "Interest" means the Percentage Interest
and the Voting Interest of a Member in the Company and the appurtenant rights,
powers and privileges, including both the Financial Rights and Governance Rights
of such Member with respect to the Company.
1.45 "Metroplex" shall mean Metroplex, LLC, a limited liability company
organized under the laws of the State of Nevada; or any successor to its
Interest in the Company.
1.46 "Net Cash From Operations" means the gross cash proceeds from
Company operations other than sales of real estate, less the portion thereof
used to pay or establish fair and reasonable reserves for all Company expenses,
lease rentals or debt payments (excluding any debt service or lease payments due
more than one year in the future), capital improvements, replacements and
contingencies, all as determined in good faith by the Board. "Net Cash From
Operations" shall not be reduced by depreciation, amortization, cost recovery
deductions or similar allowances, but shall be increased by any reduction of
reserves previously established pursuant to the preceding sentence.
1.47 "Net Cash From Sales or Re-financing" means the net cash proceeds
from (a) all sales and other dispositions of Company Property, other than (i) a
sale of all or substantially all of the Company Property or (ii) sales and other
dispositions of tangible personal property in the ordinary course of business;
and (b) all re-financing of Company Property; less any portion of either used to
establish fair and reasonable reserves for the purposes described in the
definition of Net Cash From Operations, all as determined in good faith by the
Board.
1.48 "Percentage Interest" means the percentage interest of a Member in
the Company and shall be the percentage set forth as its Percentage Interest in
Section 6.2, subject to adjustment in accordance with Section 6.3.
1.49 "Person" means any individual, partnership, limited liability
company, corporation, trust or other entity.
1.50 "Profits" shall have the meaning set forth in Section 7.1.
1.51 "Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
1.52 "Required Records" are the financial records and other records
(including this Agreement) required to be kept at the principal executive office
of the Company under Section 322B.373 of the LLC Act.
1.53 "Transfer" means, as a noun, any voluntary or involuntary transfer
(by operation of law, Bankruptcy, court order or otherwise), sale, exchange,
assignment, pledge or other encumbrance, foreclosure of a security interest
upon, or other disposition of an item; or, as a verb, to voluntarily or
involuntarily cause a Transfer of an item. "Transferred" means, as an adjective,
that an item has been the subject of a Transfer.
1.54 "Voting Interest" means a Member's relative voting power as a
Member and shall be the percentage set forth as such Member's Voting Interest
set forth in Section 6.2, as amended from time to time pursuant hereto.
ARTICLE 4
PURPOSES
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The Company has been formed (a) to develop, acquire, finance,
refinance, contract for construction of improvements, build upon, lease, manage
and sell one or more parcels of the Joint Venture Property and the Cable
Property and any related personal property (including without limitation), in
fee or by lease, or any rights therein as may be necessary or appropriate for
such purposes, to the extent that each of the Appointing Members first approve
in writing the acquisition of each such parcel, the development plan and any
related agreements to lease or sell such parcel as in the best interests of the
Company; (b) to exercise any rights therein as may be necessary or appropriate
for such purposes; to borrow funds for such purposes and to mortgage or
otherwise encumber any or all of the Company Property to secure such borrowings;
(c) to sell or otherwise dispose of the Company's rights or ownership interests
in such Company Property; and (d) to undertake and carry on all activities
necessary or advisable in connection with such purposes.
The approval of the Appointing Members with respect to any real estate
acquisition, development plan and related agreement described in clause (a) of
the preceding paragraph shall not be unreasonably withheld or delayed if the
development plan satisfies each of the criteria set forth in Section 2(b) of the
Joint Contribution Agreement.
The Company may not engage in any other business incompatible with such
purposes without the consent of the Appointing Members.
ARTICLE 5
MEMBERS, NEW MEMBERS AND GAMING LICENSES
1.55 Members. The full names and addresses of the Members are set
forth below:
(1) Grand Casinos Nevada I, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
(2) Metroplex, LLC
5710 East Tropicana
Las Vegas, NV 89122
For all purposes of this Agreement, the terms "Member" or "Members"
means the Persons initially signing this Agreement as Members of the Company
under the LLC Act, in their capacity as Members, and each other Person who shall
hereafter be admitted to the Company as a Member, or is otherwise properly
reflected in the Required Records of the Company as the owner of any Governance
Rights of a Membership Interest of the Company.
1.56 Terms of Membership Interests. The Original Capital
Contribution (as defined in Section 6.1) and the Percentage Interest and Voting
Interest included in the original Membership Interest of each of the Members are
reflected below and are ordinary membership interests of one class, without
series, and shall have the rights provided by the LLC Act, subject to any
statements and limitations in the Articles or this Agreement of the specific
rights or terms of such Membership Interests:
<CAPTION>
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Member Original Capital Percentage Voting
Contribution Interests Interests
----------------------------------------------------------------------------------------------------------------
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Metroplex $10,000 (in cash) 50%* 49%**
----------------------------------------------------------------------------------------------------------------
GCN $10,000 (the value of the Company's 50%* 51%**
Option and the Cable Options, as
described in the Joint Contribution
Agreement)
----------------------------------------------------------------------------------------------------------------
Total $20,000 100% 100%
----------------------------------------------------------------------------------------------------------------
* Subject to certain variations set forth in Sections 7.2 and 7.3.
** Members shall be entitled to vote on all matters in proportion to their
Voting Interests, except as may be provided otherwise in Article 10, elsewhere
in this Agreement or pursuant to the following paragraph. A Member's right to
vote is a Governance Right.
With the written consent of the Appointing Members, the Board may enter
into Contribution Agreements with prospective Members providing for one or more
classes of Interests having either Governance Rights that are limited (as
compared with the original Interests) or Financial Rights that are limited or
preferred (as compared with the original Interests), or any combination of such
rights. If any such new class of Interests is issued, this Agreement shall be
amended to state the rights of such Interests.
1.57 Additional Members. Additional Members may be admitted to the
Company by the Board only upon such terms and conditions as may be established
by written approval of the Appointing Members, effective as of any prospective
date established by such consent or, if none is stated, by the Board. Except as
otherwise expressly provided herein, the Company may not issue additional
Interests, Financial Rights or Governance Rights, to existing Members or
otherwise, without the prior written consent of Members holding at least
two-thirds of the Voting Interests. Upon such consent and issuance of additional
Membership Interests, Section 5.2 shall be appropriately amended. Nothing in
this Section 5.3 shall be construed to limit the effect of Articles 12 and 13
with respect to the Transfer of Membership Interests by Members.
Each additional Member admitted to the Company shall execute this
Agreement and, if making a Capital Contribution, shall execute and perform a
Contribution Agreement delivered to and accepted on behalf of the Company by the
Managers pursuant to the terms and conditions approved by the required number of
Members as required by the preceding paragraph.
Any Person who is admitted to the Company as a Member shall be subject
to and bound by all the provisions of this Agreement (as a party to this
Agreement), including specifically the requirements of Article 6 relating to
Capital Contributions.
The Board may authorize the Managers to enter into contribution
allowance agreements with current Members or prospective Members pursuant to
section 322B.43 of the LLC Act, providing for the right, but not the obligation,
to make a specified Capital Contribution in the future and thereby purchase a
specified Interest, upon such terms and conditions as may be established by the
Board, but only with the written approval of the Appointing Members.
1.58 Agreement Not to Resign. During initial two (2) years of the
Company's existence, each Appointing Member agrees not to withdraw or otherwise
voluntarily resign from membership in the Company for any reason whatsoever
without the consent of each remaining Appointing Member, if the Company then
owns
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any of the Company Property purchased by exercising the Company's options to
acquire any of the Joint Venture Property or the Cable Property.
If an Appointing Member nevertheless withdraws or otherwise voluntarily
resigns from membership in the Company in violation of the preceding paragraph,
without the consent of each remaining Appointing Member, the Appointing Member
who resigns shall be liable to the Company for any damages resulting from that
action. Such damages shall include without limitation the expenses (including
reasonable attorneys' fees) of (a) admitting a new Member, if desired by the
remaining Appointing Member; and (b) if applicable, purchasing the terminating
Member's Membership Interest under Article 13 (excluding the purchase price and
any interest payable thereunder).
5.5 Gaming Licenses and Effect of Adverse Finding. Each Member
(other than GCN, Lakes or any of their Affiliates) acknowledges that the
primary business of Lakes and certain of its subsidiaries and other Affiliates
is the operation and management of gaming facilities; and that Lakes and certain
of its subsidiaries and other Affiliates must obtain and maintain in effect
various approvals, findings of suitability, licenses, permits and registrations
(collectively "Gaming Licenses") from various gaming authorities. The provisions
of this Section 5.5, as they apply to each current Member other than GCN, Lakes
or any of their Affiliates (a "Non-Lakes Member"), shall also apply in the same
manner to any other additional or substituted Member that becomes a Non-Lakes
Member.
If (a) any Non-Lakes Member or any of its Affiliates, or any other
Person who directly or indirectly owns or has any interest in a Non-Lakes Member
or is otherwise affiliated with a Non-Lakes Member, is found by any gaming
authority with competent jurisdiction to be unsuitable or unqualified to be
associated with Lakes or any subsidiary or other Affiliate of Lakes; or (b) the
Board of Directors of Lakes determines in good faith that the continued
association of Lakes with the Non-Lakes Member may reasonably be expected to
result in (i) the disapproval, adverse modification or non-renewal of any
contract or agreement under which Lakes or any subsidiary or other Affiliate of
Lakes has sole or shared authority to manage any gaming facility; or (ii) the
loss or non-reinstatement of any Gaming License, then Lakes shall give the
Non-Lakes Member written notice of such finding or determination. Such notice
shall describe the situation or relationship that is the basis for such finding
or determination.
Such Non-Lakes Member shall, promptly after its receipt of the written
notice from Lakes specifying such finding or determination, take all actions
required to terminate or discontinue or otherwise cure, to the satisfaction of
the Board of Directors of Lakes and any gaming authority having jurisdiction
over Lakes or any subsidiary or other Affiliate of Lakes, the situation or
relationship described in the notice given by Lakes. If, within thirty (30) days
after such Non-Lakes Member's receipt of the notice given by Lakes (or such
shorter period of time as may be required or requested by any gaming authority),
such Non-Lakes Member fails or is unable to take such actions to the
satisfaction of the Board of Directors of Lakes and any gaming authority having
jurisdiction, such Non-Lakes Member may at any time within such period give
Lakes, GCN and the Company written notice of such failure or inability or, if
such Non-Lakes Member has not already given such notice, GCN or Lakes may at the
end of such period give a notice of such failure or inability to such Non-Lakes
Member and the Company. In the event any notice of such failure or inability is
given (whether or not on a timely basis), then:
(1) if the Company has not yet acquired any of the Joint Venture
Property or any of the Cable Property, the Company shall then have the
right and option to purchase such Non-Lakes Member's entire Interest in
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the Company pursuant to the applicable provisions of Article 13, except
that the purchase price shall be equal to the remaining balance of the
Capital Account of such Non-Lakes Member, less the cumulative sum of
any Internal Development Costs that have been allocated thereto; and,
if the Company does not exercise such option, first GCN and then Lakes
shall each have such a right and option; or
(2) if the Company has acquired any of the Joint Venture
Property or any of the Cable Property, the Company shall then have the
right and option to purchase such Non-Lakes Member's entire Interest in
the Company pursuant to the applicable provisions of Article 13 and, if
the Company does not exercise such option, first GCN and then Lakes
shall each have such a right and option.
ARTICLE 6
MEMBERS' CAPITAL
1.59 Definitions Relating to Capital.
(1) "Additional Capital Contributions" means, with
respect to each Member, the Capital Contributions made by such Member
pursuant to Section 6.3, reduced by the amount of any liabilities of
such Member assumed by the Company in connection with such Capital
Contribution or which are secured by any property contributed by such
Member as a part of such Capital Contribution.
(2) "Capital Account" means, with respect to any
Member, the Capital Account maintained for such Member in accordance
with the following provisions:
(1) To each Member's Capital Account there shall be
credited such Member's Capital Contributions, such Member's
distributive share of Profits and any items in the nature of
income or gain which are specially allocated pursuant to
Section 7.5 or Section 7.6, and the amount of any Company
liabilities assumed by such Member or which are secured by any
Company Property distributed to such Member.
(2) To each Member's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Company Property distributed to such Member pursuant to any
provision of this Agreement, such Member's distributive share
of Losses and any items in the nature of deductions or
expenses that are specially allocated pursuant to Section 7.5
or Section 7.6, and the amount of any liabilities of such
Member that are assumed by the Company or secured by any
property contributed by such Member to the Company.
(3) In the event all or any portion of an Interest
is Transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred
Interest.
(4) In determining the amount of any liability for
purposes of Sections 6.1(a), 6.1(b)(i), 6.1(b)(ii), and
6.1(f), there shall be taken into account Code section 752(c)
and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
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with Regulations Section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations. In the event that the Appointing
Members shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities that are secured by
contributed or distributed property, or are assumed by the Company or any
Member), are computed in order to comply with such Regulations, they may make
such modification; provided, however, that it is not likely to have a material
effect on the amounts allocable to any Member pursuant to Article 7, or
distributable to any Member pursuant to Article 7 or Article 15. The Board shall
(i) make any adjustments that are necessary or appropriate to maintain equality
between the sum of the Capital Account balances of the Members and the total
amount of capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q); and (ii)
make any appropriate modifications in the event unanticipated events (for
example, the acquisition by the Company of oil or gas properties) might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b), to the extent those modifications do not cause any material adverse
effect on the Financial Rights of any Member.
(3) "Capital Contribution" means, with respect to any Member, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Company with respect to the Interest held by such
Member, and includes an Original Capital Contribution under Section 6.1(f) and
any Additional Capital Contribution under Section 6.1(a). The principal amount
of a promissory note that is not readily traded on an established securities
market and is contributed to the Company by the maker of the note (or a Member
related to the maker of the note within the meaning of Regulations Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any Member
until the Company makes a taxable disposition of the note or until (and to the
extent) principal payments are made on the note, all in accordance with
Regulations Section 1.704-1(b)(2)(iv)(d)(2).
(4) "Depreciation" means, for each Fiscal Year, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for Federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the Federal income tax
depreciation, amortization or other cost recovery deduction for such Fiscal Year
bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for Federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board.
(5) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(1) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such
asset, as determined by the contributing Member and the Board;
(2) The Gross Asset Values of all items of Company Property
shall be adjusted to equal their respective gross fair market values,
as determined by the Board, as of one of the following times: (A) the
acquisition of an additional Interest by any new or
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existing Member in exchange for more than a de minimis Capital
Contribution; (B) the Distribution by the Company to a Member
of more than a de minimis amount of Company Property as
consideration for an Interest; and (C) the liquidation of the
Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses (A) and (B) above shall be made only if the
Board reasonably determines that such adjustments are necessary
or appropriate to reflect the relative economic interest of the
Members in the Company;
(3) The Gross Asset Value of any item of Company Property
(other than cash) distributed to any Member shall be adjusted
to equal the gross fair market value of such asset on the date
of Distribution as determined by the distributee and the Board;
and
(4) The Gross Asset Values of Company Property shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code section 734(b)
or Code section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)
and Sections 7.1(f) and 7.5(a); provided, however, that Gross
Asset Values shall not be adjusted pursuant to this paragraph
(iv) to the extent the Board determines that an adjustment
pursuant to 6.1(e)(ii) is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment pursuant to this paragraph.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Section 6.1(e)(i), Section 6.1(e)(ii), or
this Section 6.1(e)(iv), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits
and Losses.
(6) "Original Capital Contribution" means, with respect to each
Member, the Capital Contribution made by such Member pursuant to
Section 6.2, reduced by the amount of any liabilities of such Member
that are (i) assumed by the Company in connection with such Capital
Contribution or (ii) secured by any property contributed by such Member
to the Company as a part of such Capital Contribution.
1.60 Initial Capital and Interests of Members. The initial capital
of the Company shall be contributed by the Members and accepted by the Board at
the respective values set forth in Section 5.2. As of the Effective Date, each
Member shall contribute to the capital of the Company the amount specified
following its name in Section 5.2 as its Original Capital Contribution, and
shall be credited with the Interest set forth therein, including without
limitation the Percentage Interest and Voting Interest specified therein.
1.61 Additional Capital Contributions. The Appointing Members shall
make the following payments, which shall be treated as Additional Capital
Contributions to the limited extent provided below:
(1) Carrying Costs of Joint Venture Property.
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(1) Payment of Carrying Costs by GCN. During the
development of the Joint Venture Property, GCN shall pay all of the
ownership and other carrying costs with respect to each parcel of the
Joint Venture Property, as such costs are described in Section 8(a) of
the Joint Contribution Agreement ("Carrying Costs"), until GCN's rights
in such parcel are purchased by the Company; such Carrying Costs shall
not be treated as Additional Capital Contributions or loans to the
Company; and GCN shall not be entitled to be reimbursed for such
Carrying Costs by the Company or Metroplex, because such Carrying Costs
have been taken into account on an estimated basis in establishing the
Aggregate Purchase Price for the Joint Venture Property under the
Company's Option described in the Joint Contribution Agreement.
Nevertheless, GCN shall report to the Company in writing the amount and
a description of all of such Carrying Costs paid after the Effective
Date, for purposes of paragraph (iii) of this Section 6.3(a).
(2) Remedies Upon GCN Default. If GCN does not timely pay
any Carrying Costs it is required to pay under the preceding paragraph,
that failure would materially and adversely affect the right of the
Company to purchase any parcel of the Joint Venture Property, and GCN
does not pay such Carrying Costs within ten (10) Business Days after
receiving written notice of such delinquency from the Company or
Metroplex (a "Carrying Cost Default"), then the Company shall use its
best efforts to obtain debt financing for such unpaid amount of
Carrying Costs. In the event any such financing is obtained, fifty
percent (50%) of the sum of all interest and other costs of such
financing shall, unless and until paid by GCN, be treated as if it were
a Carrying Cost Loan described in the following paragraph, for purposes
of subsection (iii) of this Section 6.3(a). No payment by GCN of any
amount treated as a Carrying Cost Loan under the preceding sentence
shall be treated as a Capital Contribution hereunder.
If a Carrying Cost Default occurs and such financing is not
obtained, Metroplex shall have the right and option to either (A)
exercise its right to terminate the Joint Contribution Agreement and
dissolve the Company pursuant to Section 9 of the Joint Contribution
Agreement, or (B) advance the unpaid Carrying Costs as a secured loan
to the Company that would be guaranteed in writing by GCN, upon GCN's
receipt of a written notice of such loan, and repaid with interest at
the rate set forth in Section 13.8(c) (a "Carrying Cost Loan"), on the
following terms, whether or not Metroplex makes a further election to
shift Percentage Interests under the next paragraph. If any Carrying
Cost Loan has not been paid to the Company by GCN (on account of such
guarantee) for repayment to Metroplex before the Company's next
purchase of Joint Venture Property from GCN, the Company shall repay
each outstanding Carrying Cost Loan (with interest) from the proceeds
of the financing obtained to pay the purchase price to GCN with respect
to such property, and the purchase price otherwise due GCN from the
Company shall be reduced by the balance due on each such Carrying Cost
Loan. No payment of a Carrying Cost Loan by GCN, whether made in cash
or indirectly as a purchase price reduction, shall be treated as a
Capital Contribution hereunder.
(3) Election to Shift Percentage Interest from GCN to
Metroplex. If one or more Carrying Cost Loans remain unpaid by GCN on
the last day of any Fiscal Year (a "Determination Date"),
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Metroplex may elect in writing to treat the unpaid balance of all such
Carrying Cost Loans as an Additional Capital Contribution (excluding
any amounts so treated on any prior Determination Date), which shall
have the following effect on the Percentage Interests of GCN and
Metroplex for each following Fiscal Year until such Percentage
Interests are again adjusted pursuant to this paragraph or otherwise.
In any such event, the Percentage Interest of GCN shall be adjusted by
multiplying its original Percentage Interest (50%) by the number one
(1), less a fraction determined as of that Determination Date, of which
the numerator shall be the cumulative total of the unpaid balances of
all Carrying Cost Loans treated as Additional Capital Contributions
under this paragraph; and the denominator shall be the cumulative sum
of (A) all Capital Contributions and Carrying Costs paid by GCN on and
after the Effective Date, and (B) the unpaid balances of all Carrying
Cost Loans treated as Additional Capital Contributions under this
paragraph. To the extent that GCN pays the amount of any such Carrying
Cost Loan either in cash to the Company, or indirectly as a purchase
price reduction under the preceding paragraph, that payment amount
shall be removed from the numerator and denominator of such fraction
as of the next Determination Date, and such amount shall be distributed
to Metroplex from its Capital Account. Any such payment by GCN shall
not be treated as a Capital Contribution by GCN, but rather as the
performance of its obligation to pay Carrying Costs.
(2) Maintenance of Cable Property Options. During any period of time in
which the Company holds one or more purchase options to acquire the Cable
Property, each of the Appointing Members shall pay or advance to the Company a
portion of Company's periodic carrying costs for retaining such options, as and
when such costs are incurred, which portion shall be equal to the Appointing
Member's Percentage Interest; provided, however, that Metroplex shall not be
required by pay its share of such costs while its obligation to do so is
suspended pursuant to Section 2(b)(iv) of the Contribution Agreement. All of
such costs paid or advanced to the Company by each Appointing Member shall be
promptly reported to the Company and, upon review and approval by the Board,
accounted for by the Company as Additional Capital Contributions by such
Appointing Member, which shall not affect the Percentage Interest or Voting
Interest of any Members in the Company, if such additional contributions are
made by the Appointing Members in proportion to their Percentage Interests.
If either of the Appointing Members does not timely contribute its
required share of the monthly cost to maintain the purchase options to acquire
the Cable Property, and the delinquent Member does not pay such costs within ten
(10) Business Days after receiving written notice of such delinquency from the
Company or the other Appointing Member, the other Appointing Member shall have
the right to either terminate the Joint Contribution Agreement and dissolve the
Company pursuant to Section 9 of the Joint Contribution Agreement or purchase
such purchase options from the Company for a price equal to the amount of the
delinquent payment amount, which shall be payable to the grantor of such
options.
(3) Development Costs. Metroplex shall pay or advance to the Company
all of the Development Costs incurred for developing each parcel of the Joint
Venture Property and the Cable Property, to the extent provided in Section 8(c)
of the Joint Contribution Agreement, until such parcel is subject to a binding
commitment to be sold or leased (to a primary tenant) by the Company (a
"Commitment").
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All Development Costs paid or advanced to the Company by
Metroplex with respect to a parcel before it is subject to a Commitment
shall be promptly reported to the Company and, if such Development
Costs (when added to previously reported and approved Development
Costs) are within the total amount of expenditures contemplated for the
relevant line item category of expenditures in the relevant Development
Budget, or are otherwise approved in writing by GCN, they shall be
accounted for by the Company as Additional Capital Contributions by
Metroplex; provided, however, that no such contributions shall affect
the Percentage Interest or Voting Interest of Metroplex in the Company.
In all such reports and requests for approval, Internal Development
Costs shall be identified by Metroplex as separate line item components
of its Development Costs. Notwithstanding any contrary provision of
this Agreement or the Joint Contribution Agreement, Metroplex shall not
be required to incur any Development Costs that either (i) are not
included in such a Development Budget; or (ii) would generally be
incurred, under commonly accepted practices for similar developments in
Clark County, Nevada, with respect to a parcel after it is subject to a
Commitment.
Each Member may contribute from time to time as an Additional Capital
Contribution such additional money or other property as the Appointing Members
may agree in writing; provided, however, that any Additional Capital
Contribution of property (other than money) made pursuant to this paragraph
shall be subject to the terms and provisions of a Contribution Agreement
approved by the Board and the Appointing Members and executed by the
contributing Member and a Manager prior to delivery of such property.
Except as otherwise provided in the paragraphs (a), (b) and (c) of this
Section 6.3, if Additional Capital Contributions are not made equally by all
Members, the Percentage Interests and Capital Accounts of each Member shall be
equitably adjusted to account for any non-pro-rata Additional Capital
Contributions on terms that shall be set forth in a Contribution Agreement
approved by the Board and Members holding at least two-thirds of the Voting
Interests (including at least any Member whose Interest would be adversely
affected), and signed as provided in the preceding paragraph, which agreement
shall serve as an amendment to Section 5.2. Any such agreement may also
equitably adjust the Members' Voting Interests.
Additional Membership Interests may be granted only as permitted by
Section 5.3. If an additional Membership Interest is granted, Section 5.2 shall
be appropriately amended.
1.62 Other Capital Matters.
(1) Except as otherwise provided in this Agreement, no Member
shall demand or receive a return of the Member's Capital Contributions
or withdraw them from the Company without the consent of the Appointing
Members. Under circumstances allowing or requiring a return of any
Capital Contributions, no Member shall have the right to receive
Company Property other than cash except as may be specifically provided
herein.
(2) No Member shall receive any interest, salary or draw with
respect to the Member's Capital Contributions or the Member's Capital
Account.
(3) The Members shall not be liable for the debts,
liabilities, contracts or any other obligations of the Company. Except
as otherwise expressly provided by any other agreements among the
Members or mandatory provisions of applicable state law, a Member shall
not be liable to make
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any Capital Contributions other than the Member's Original Capital
Contribution and any Additional Capital Contributions required by
Section 6.5. No Member shall be required to lend any funds to the
Company.
1.63 Other Contribution Defaults by Member. In the event that a
Member fails to make any payment, or any installment thereof, of any Capital
Contribution or other obligation expressly required hereunder or under the Joint
Contribution Agreement (or any other Contribution Agreement), and the delinquent
Member does not satisfy such obligation within ten (10) Business Days after
receiving written notice of such delinquency from the Company or any other
Member, the Board or any non-breaching Member may enforce such obligation in
such manner as may be permitted by Section 9 of the Joint Contribution Agreement
or applicable law, subject to a Member's election of other remedies specified in
Section 6.3, elsewhere in this Agreement and/or in the Contribution Agreement.
Without limiting the generality of the foregoing, the Board or the non-breaching
Member may, in its discretion:
(1) bring an action at law or in equity to enforce such
obligation;
(2) assess interest on the unpaid amount at the highest rate
of interest then being charged to the Company by any lender; and
(3) if the unpaid obligation is a Capital Contribution
required by this Agreement, neither of the remedies specified in
paragraph (a) or paragraph (b) of Section 6.3 has been elected, and the
non-breaching Appointing Member does not elect to terminate the Joint
Contribution Agreement pursuant to Section 9 thereof, the Board or the
non-breaching Member, as applicable, may require the defaulting Member
to unconditionally and irrevocably assign to one or more of the
remaining Members (determined in accordance with the next following
sentence) that portion of its Interest which bears the same ratio to
all of such defaulting Member's Interest as the remaining amount of
unpaid contributions then due from such defaulting Member bears to the
sum of such remaining amount and the total amount of Capital
Contributions made by such defaulting Member; provided, however, that
such default shall not theretofore have been cured.
If the Board requires assignment of all or a portion of a defaulting
Member's Interest pursuant to clause (c) above, each remaining Member shall have
the right to acquire such Interest, determined as provided in clause (c), in the
proportion that its Interest bears to the aggregate Interests of the remaining
Members who desire to participate in such purchase, by paying the Company a cash
amount equal to such proportion of the unpaid Capital Contributions, at a price
set pursuant to Section 13.8.
1.64 Transferee Succeeds to Transferor's Capital Account. If any
Member Transfers all or a part of its Financial Rights in the Company, whether
or not such Transfer is permitted under Article 12, any transferee from the
Member shall succeed to the Capital Account (including any remaining Capital
Contributions) of the transferor Member to the extent of the Interest
Transferred, in accordance with Regulations Section 1.704-1(b)(2)(iv)(1).
1.65 Loans to Company. Unless authorized in writing by the
Appointing Members, no Member or any of its Affiliates may lend money to the
Company; provided, however, that any loan made by Metroplex to the Company
pursuant to Section 6.3 shall not require the consent of the Appointing Members
or the Board. No such loan, whether or not permitted hereunder, may be treated
as a Capital Contribution for any purpose or entitle such Member to any increase
in the
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Member's share of the Profits, Losses, deductions, credits or Distributions of
the Company. The Company shall be obligated to such Member for the amount of any
such loan permitted hereunder, with interest thereon at such rate as may have
been agreed upon by the Appointing Members, or otherwise expressly provided
herein.
ARTICLE 7
ALLOCATIONS
1.66 Definitions of Profits and Losses. "Profits" and "Losses,"
respectively, shall mean, for each Fiscal Year, an amount equal to the Company's
taxable income or loss (as the case may be) for such Fiscal Year, determined in
accordance with Code section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
section 703(a)(1) shall be included in taxable income or loss) with the
following adjustments:
(1) any income of the Company that is exempt from Federal
income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this Section 7.1 shall be added to such taxable
income or loss;
(2) any nondeductible expenditures of the Company described in
Code section 705(a)(2)(B) or treated as Code section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Profits or Losses
pursuant to this Section 7.1, shall be subtracted from such taxable
income or loss;
(3) in the event the Gross Asset Value of any Company asset is
adjusted pursuant to Section 6.1(e)(ii) or Section 6.1(e)(iii), the
amount of such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing Profits or
Losses;
(4) gain or loss resulting from any disposition of Company
Property with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the Company Property disposed of, notwithstanding that the
adjusted tax basis of such Company Property differs from its Gross
Asset Value;
(5) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Fiscal
Year, computed in accordance with Section 6.1(d);
(6) to the extent an adjustment to the adjusted tax basis of
any Company Property pursuant to Code section 734(b) or Code section
743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a Distribution other than in liquidation of a
Member's Interest, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes
of computing Profits or Losses; and
(7) Notwithstanding any other provisions of this Section 7.1,
any items that are specially allocated pursuant to Section 7.5 or
Section 7.6 shall not be taken into account in computing Profits or
Losses.
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The amounts of the items of Company income, gain, loss or deduction
available to be specially allocated pursuant to Sections 7.5 and 7.6 shall be
determined by applying rules analogous to those set forth in Sections 7.1(a)
through 7.1(f) above.
1.67 Allocation of Profits. After giving effect to the special
allocations set forth in Sections 7.5 and 7.6, the Profits of the Company for
each Fiscal Year for book purposes, whether taxable or nontaxable, shall be
allocated to the Members as follows, and their Capital Accounts shall be
increased in accordance with Section 6.1(b):
(1) First, to each Member to whom Losses have previously been
allocated pursuant to Section 7.3, to the extent that such Losses have
not been fully offset by allocations of Profits pursuant to this
paragraph (a) ("Unrecovered Losses"), until the cumulative amount of
Profits allocated to each such Member pursuant to this paragraph (a) is
equal to the cumulative amount of Losses that have been allocated to
such Member pursuant to Section 7.3. Profits allocated pursuant to this
paragraph (a) shall be allocated to the Members in proportion to their
respective Unrecovered Losses; and
(2) Thereafter, to the Members, ratably in proportion to their
Percentage Interests.
1.68 Allocation of Losses. After giving effect to the special
allocations set forth in Sections 7.5 and 7.6, the Losses, deductions and
credits of the Company for each Fiscal Year for book purposes, whether taxable
or nontaxable, shall be allocated to the Members as follows, and their Capital
Accounts shall be reduced in accordance with Section 6.1(b):
(1) To the Members, ratably in proportion to their respective
Percentage Interests, except as otherwise provided in the following
paragraph (b).
(2) The Losses allocated pursuant to the preceding paragraph
(a) shall not exceed the maximum amount of Losses that can be so
allocated without causing any Member to have a deficit balance in its
Capital Account at the end of any Fiscal Year. If one or more, but not
all, of the Members would have a deficit balance in its Capital Account
as a result of any allocation of Losses pursuant to the preceding
paragraph (a), the limit set forth in the preceding sentence shall be
applied on a Member by Member basis, so as to allocate the maximum
permissible amount of Losses to each Member under Regulations Section
1.704-1(b)(2)(ii)(d). All Losses in excess of the limits set forth in
this paragraph (b) shall be allocated to the Members in proportion to
their respective positive Capital Account balances (if any) until no
Member has a positive Capital Account; and thereafter to all of the
Members, ratably in proportion to their respective Percentage
Interests.
1.69 Pro-ration of Allocations. All Profits, Losses, deductions and
credits for a Fiscal Year allocable with respect to any Member whose Interest
may have been Transferred, forfeited, reduced or changed during such year shall
be allocated based upon the varying Interests of the Members throughout the
year. The precise manner in which such allocation shall be made shall be
determined by the Board, shall be a manner of allocation permitted to be used
for Federal income tax purposes under the Code and, once adopted, shall be
consistently applied.
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1.70 Special Allocations. Notwithstanding anything to the contrary
in this Article 7, the following special allocations shall be made in the
following order:
(1) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company Property pursuant to Code section
734(b) or Code section 743(b) is required pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as the result of a Distribution to a Member in complete
liquidation of the Member's Interest, the amount of such adjustment to
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis) and such gain or loss shall be specially allocated to the
Members in accordance with their Interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member
to whom such Distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(2) Minimum Gain Charge-back. "Partnership Minimum Gain"
within the meaning of Regulations Section 1.704-2(b)(2) means an amount
of gain that would be realized by the Company on the disposition of
Company property subject to nonrecourse indebtedness (within the
meaning of Regulation Section 1.704-2(b)(3)), equal to the amount by
which such nonrecourse indebtedness exceeds the adjusted tax basis (or
book value, if the property has been properly entered on the books of
the Company at a value different from its then adjusted tax basis) of
such property. If for any Fiscal Year, there is a net decrease in
Partnership Minimum Gain, each Member shall be allocated items of
Company income and gain in accordance with Regulations Section
1.704-2(f)(1) (a "Minimum Gain Charge-back") for such year (and, if
necessary, for subsequent years) in an amount equal to such Member's
share of such net decrease of Partnership Minimum Gain. For this
purpose, a Member's share of the net decrease in Partnership Minimum
Gain shall be determined under Regulations Section 1.704-2(g)(2). This
paragraph is intended to comply with Regulations Section 1.704-2(f)(1)
and shall be interpreted consistently therewith.
(3) Qualified Income Offset. If any Member at any time
unexpectedly receives any adjustment, allocation or Distribution
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
and if such adjustment, allocation or Distribution results in a deficit
balance in such Member's Capital Account in excess of the sum of (i)
the amount such Member is obligated to restore to the Company under
this Agreement or the LLC Act, and (ii) the amount such Member is
deemed to be obligated to restore to the Company pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1)(ii) and
1.704-2(i)(5), then items of Company income and gain shall be specially
allocated to such Member so as to eliminate, to the extent required by
Regulations Section 1.704-1(b)(2)(ii)(d), such deficit balance in its
Capital Account as quickly as possible.
(4) Gross Income Allocation. If any Member would have a
deficit balance in its Capital Account at the end of any Fiscal Year in
excess of the sum of (i) the amount such Member is obligated to restore
to the
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Company under this Agreement or the LLC Act, and (ii) the amounts such
Member is deemed to be obligated to restore to the Company pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c) and the penultimate sentences
of Regulations Sections 1.704-2(g)(1)(ii) and 1.704-2(i)(5), then such
Member shall be specially allocated items of Company income (including
gross income) in the amount of such excess as quickly as possible.
(5) Allocations Relating to Taxable Issuance of Interests. Any
income, gain, loss or deduction realized as a direct or indirect result
of the issuance of an Interest by the Company to a Member (the
"Issuance Items") shall be allocated among the Members so that, to the
extent possible, the net amount of such Issuance Items, together with
all other allocations under this Agreement to each Member, shall be
equal to the net amount that would have been allocated to each such
Members if the Issuance Items had not been realized.
(6) Gain on Sale of Options to Purchase Cable Property. To the
extent required by paragraph (a) and/or paragraph (b) of Section 9 of
the Joint Contribution Agreement, special allocations of Profits or
Losses shall be made to the appropriate Appointing Member; and such
Member's Capital Account shall be increased or decreased to correspond
with any such allocation.
1.71 Curative Allocations. The allocations set forth in paragraphs
(a) through (d) of Section 7.5 (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Company income, gain, loss or deduction pursuant to this Section 7.6.
Therefore, notwithstanding any other provision of this Article 7 (other than the
Regulatory Allocations), the Board shall make such offsetting special
allocations of Company income, gain, loss or deduction in whatever manner the
Board determines appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of the Agreement and all Company items were allocated
pursuant to Sections 7.2, 7.3 and 7.5(e).
1.72 Other Allocation Rules.
(1) For purposes of determining the Profits, Losses or any
other items allocable to any period, those Profits, Losses and any such
other items shall be determined on a daily, monthly or other basis, as
determined by the Board using any permissible method under Code section
706 and the Regulations thereunder, which shall be consistently
applied.
(2) The Members are aware of the income tax consequences of
the allocations made by this Article 7 and hereby agree to be bound by
the provisions of this Article 7 in reporting their shares of Company
Profit and Loss for income tax purposes.
(3) Solely for purposes of determining a Member's
proportionate share of the "excess nonrecourse liabilities" of the
Company within the meaning of Section 1.752-3(a)(3) of the Regulations,
the Members' interests in Company Profits are in proportion to their
Percentage Interests.
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1.73 Tax Allocations under Code Section 704(c). In accordance with
Code section 704(c) and the Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the Company
shall, solely for tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such property to the
Company for Federal income tax purposes and its initial Gross Asset Value
(computed in accordance with Section 6.1(e)(i).
In the event the Gross Asset Value of any Company Property is adjusted
pursuant to Section 6.1(e)(ii), subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for Federal income tax purposes and its Gross
Asset Value in the same manner as under Code section 704(c) and the Regulations
thereunder.
Any elections or other decisions relating to such allocations shall be
made by the Board in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 7.8 are solely
for purposes of Federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items or Distributions pursuant to any provision of this
Agreement.
ARTICLE 8
DISTRIBUTIONS
1.74 Distributions of Net Cash From Operations. The Company shall
make Distributions of Net Cash from Operations, if any, for a Fiscal Year only
as follows, but only to the extent such a Distribution is legally permitted and,
if such Distribution had been made in that Fiscal Year, would not have caused a
Member to have a deficit balance in its Capital Account at the end of that
Fiscal Year:
(1) first, to the Members, in proportion to their allocated
shares of the Company's net taxable income and gains for the Fiscal
Year, an amount equal to the Estimated Member Tax Liability (as defined
in the following paragraph); and
(2) thereafter, but only if declared by the Board in its sole
discretion, to the Members in proportion to their Percentage Interests.
"Estimated Member Tax Liability" for a Fiscal Year means the sum of any
Distributions described in this paragraph for the Fiscal Year. If any Member
provides the Board with satisfactory evidence that such Member must pay a
specific amount of income taxes with respect to an allocation of Profits for a
Fiscal Year of the Company (a "Member Tax Liability"), the Board shall promptly
direct the Chief Financial Manager to make Distributions from such Profits to
each of the Members (in proportion to their Percentage Interests in such
Profits) in amounts that will result in a Distribution, to the Member who
provided evidence of the highest marginal income tax rate used to compute its
Member Tax Liability for such Fiscal Year, that is equal to such Member Tax
Liability, but not to exceed the lesser of (a) such Member's Percentage Interest
in the amount of Net Cash From Operations during that Fiscal Year, and (b) forty
percent 40% of such Member's Percentage Interest in the Profits for that Fiscal
Year.
1.75 Other Cash Distributions and Member Debt Repayments. The
Company shall pay its debts to Members and make Distributions from sources other
than Net Cash from Operations in the following manner, unless the Appointing
Members otherwise agree in writing:
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(1) Interim Financing. If any Company financing of a real
estate parcel (or part thereof) included in any of the Joint Venture
Property or the Cable Property acquired by the Company does not provide
Net Cash from Sales or Re-financing, Distributions from Metroplex's
Capital Account shall nevertheless be made, if reasonably practicable,
from the proceeds of such financing, but only to the extent that the
lender permits such use of the proceeds, to the extent of any
Development Costs (other than Internal Development Costs) advanced by
Metroplex with respect to such parcel and treated by the Company as
Additional Capital Contributions; provided, however, that all debts
owed to GCN by the Company for the purchase price of the parcel that is
being financed shall have been satisfied before any such Distribution,
except to the extent GCN consents in writing to permit such a
Distribution before full satisfaction of any such debt.
(2) Net Cash from Sales or Re-financing. Distributions of any
Net Cash from Sales or Re-financing of a real estate parcel (or part
thereof) included in any of the Joint Venture Property or the Cable
Property acquired by the Company shall be made to the Members as
follows; provided, however, that all debts owed to GCN by the Company
for the purchase price of the parcel that is being sold shall have been
satisfied before any such Distribution, except to the extent GCN
consents in writing to permit such a Distribution before full
satisfaction of any such debt:
(1) First, as a Distribution from Metroplex's Capital
Account, to the extent of any Development Costs (other than
Internal Development Costs) advanced by Metroplex with respect
to such parcel and required hereunder to be treated by the
Company as Additional Capital Contributions;
(2) Second, as a Distribution to the Members from their
Capital Accounts, in proportion to their allocated shares of
the Company's net taxable income and gains for the Fiscal
Year, an amount not to exceed the Estimated Member Tax
Liability (as defined in Section 8.1) attributable to the sale
of such parcel, but only to the extent such Distribution is
not expected to cause a Member to have a deficit balance in
its Capital Account at the end of the Fiscal Year in which
such Distribution occurs;
(3) Third, to the extent that the Company has not yet paid
the entire Aggregate Purchase Price (as defined in the Joint
Contribution Agreement) for the Joint Venture Property, the
balance of such Net Cash from Sales or Re-financing shall next
be used (A) to pay any debt owed to GCN by the Company for the
purchase price of any other parcel included in the Joint
Venture Property and (B), after all such debts have been paid,
to purchase any other parcel (or undivided interest therein)
of the Joint Venture Property that GCN is willing to sell to
the Company at that time; and
(4) Thereafter, to the Members, ratably in proportion to
their Percentage Interests.
(3) Disposition of Substantially All of the Company Property.
Distribution of any net proceeds upon the sale, exchange or other
disposition of all or substantially all of the Company Property shall
be made in accordance with Section 15.3 (concerning Distributions on
liquidation of the Company), subject to the purchase option set forth
in Section 15.4.
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ARTICLE 9
MANAGEMENT AND OPERATION OF BUSINESS
1.76 Management and Control of the Company. For purposes of this
Article 9, the Board or the Development Committee, each when acting within its
authority specified in this Agreement, is referred to as the "Governing
Authority."
The Appointing Members shall appoint the Board and the Development
Committee; and the Governors and members of the Development Committee shall be
removed or replaced, all pursuant to Article 10 and the Bylaws. Except as
otherwise provided in Section 10.4 (with respect to the authority of the
Development Committee) or otherwise in this Agreement, the Board shall have the
sole and exclusive control of the conduct, operations and management of the
business of the Company. The Board and the Development Committee (each when
acting within its authority) shall manage the affairs of the Company in a
prudent and businesslike fashion and shall use their best efforts to carry out
the purposes and the business of the Company. The Board shall not have any
authority with respect to matters within the authority of the Development
Committee, while the Development Committee continues to exist as provided in
Article 10.
Each Governing Authority shall carry out its duties through a Chief
Manager, a Manager acting as Treasurer and such other Managers as the Board
shall deem necessary or desirable. The Managers shall be elected and removed by
the Board, and their duties shall be established by the Board, all as provided
in the Bylaws.
Each member of the Board and the Development Committee shall devote
such of their time as the Board or the Development Committee, as applicable,
deems necessary to the management of the business of the Company. The Managers
shall devote such of their time as the Board deems necessary to the management
of the business of the Company.
1.77 Limited Authority of Each Governing Authority. Subject to the
limitations set forth in Section 9.3, each Governing Authority shall have all
necessary powers to carry out the purposes and business of the Company,
including without limitation the power to delegate appropriate authority to the
Company's Managers; provided, however, that the Managers shall at all times
remain subject to the supervision of each Governing Authority. Without limiting
the foregoing, in addition to any other rights and powers that each Governing
Authority may possess, each Governing Authority shall have all specific rights
and powers required or appropriate in the management of the business of the
Company, and each Governing Authority shall have these rights and powers,
including the following, any of which may be exercised only in furtherance of
its authority and the purposes set forth in Article 4 (as amended from time to
time), and as limited to the extent set forth in Section 9.3:
(1) To acquire, own, hold and dispose of items of the Company
Property, any interest therein or appurtenant thereto, whether real,
personal or mixed, including the purchase, lease, development,
improvement, maintenance, exchange, trade or sale of any Company
Property at such price, rental or amount for cash, securities or other
property and upon such other terms as the Governing Authority, in its
sole discretion, may deem to be in the best interest of the Company;
(2) To the extent of Company assets, to prosecute, defend,
settle or compromise actions or claims at law or in equity at the
Company's expense as may be necessary or proper to enforce or protect
the Company's
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interests; and to satisfy any judgment, decree, decision or settlement
of any such suit or claim; first, out of any insurance proceeds
available therefor, and next, out of the Company's assets and income;
(3) To enter into and carry out contracts and agreements and
to do and perform all such other things as may be in furtherance of
Company purposes; and to cause the Managers to execute, acknowledge and
deliver any and all instruments that may be deemed necessary or
convenient to effect the foregoing;
(4) To acquire and enter into any contract of insurance that
the Governing Authority may deem necessary and proper for the
protection of the Company or for any purpose beneficial to the Company;
(5) To employ, engage or retain, at the expense of the
Company, such Persons (other than Affiliates of any Member, except as
authorized pursuant to Section 9.6) to perform such services as the
Governing Authority may deem necessary or advisable for the efficient
operation of the business of the Company and to pay to such Persons
(other than Managers) such compensation as the Governing Authority
shall determine; provided, however, that such compensation is at the
then prevailing rate for the type of services and materials provided;
(6) To cause the Managers to execute and deliver on behalf of
the Company, leases, contracts or agreements of any nature and any or
all instruments necessary or desirable to effectuate the foregoing
powers; and
(7) To accept and value the Capital Contributions made to the
Company by Members, pursuant to any Contribution Agreement and this
Agreement; provided, however, that this power is reserved only to the
Board and may be exercised only to the extent expressly required by
Section 322B.40 of the LLC Act.
1.78 Restrictions on Authority of Governing Authority. In addition
to other acts expressly prohibited or restricted by this Agreement or by law,
neither any Governing Authority, nor any Manager or Managers shall have any
authority to act as follows on behalf of the Company, and each is expressly
prohibited from the following, except to the extent specifically authorized by
the Members pursuant to the last paragraph of this Section 9.3:
(1) Acquiring, by purchase, exchange or otherwise, any real
property other than the Joint Venture Property and the Cable Property
(together, hereinafter called the "Project") or any interest therein;
(2) Selling, exchanging or otherwise disposing of any Company
Property valued at more than Twenty-Five Thousand and No/100 Dollars
($25,000.00);
(3) Placing a mortgage or any other lien or encumbrance on any
of the Company Property, if the debt secured by such encumbrance
exceeds Twenty-Five Thousand and No/100 Dollars ($25,000.00);
(4) Borrowing or committing to borrow or refinance, on behalf
of the Company, any amount in excess of Twenty-Five Thousand and No/100
Dollars
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($25,000.00), except borrowing to refinance obligations previously
consented to by the Members;
(5) Assigning, compromising or releasing any claim made by
the Company against any Person in excess of the sum of Twenty-Five
Thousand and No/100 Dollars ($25,000.00), or consenting to arbitrate
any disputes or controversies involving the Company and another Person
or Persons (except for arbitration described in Article 17);
(6) Confessing a judgment, or adjusting, settling or
compromising any claim, suit, or judgment against the Company for the
payment of funds in excess of Five Thousand and No/100 Dollars
($5,000.00);
(7) Making any expenditures in excess of Ten Thousand and
No/100 Dollars ($10,000.00) unless: (i) such expenditure is necessary
or advisable (A) to preserve the structural integrity of the Project,
or (B) to safeguard or protect the safety of property or Persons in or
about the Project, or (C) comply with any contracts properly made (in
accordance with this Agreement) by the Company; or (ii) unless such
expenditure, when considered with all other expenditures made in the
relevant Fiscal Year, will not be in excess of the total amount of
expenditures contemplated for the relevant category of expenditures in
any Development Budget, or any other budget for such Fiscal Year that
has been approved in writing by the Appointing Members;
(8) Doing any act in contravention of this Agreement;
(9) Doing any act that would make it impracticable to carry
on the ordinary business of the Company, other than as expressly
permitted in this Agreement;
(10) Seizing or possessing any Company Property, or assigning
the rights of the Company in any Company Property, for other than a
Company purpose;
(11) Entering into any letter of intent, or any legally
binding commitment on behalf of the Company, providing for the
development and lease or sale of any parcel included in the Project;
(12) Entering into any lease of space in the Project that
deviates from the tenant lease provisions (if any) (i) permitted by any
applicable loan documents or (ii) previously approved in writing by
Members holding at least two-thirds of the Voting Interests;
(13) Filing a petition or seeking other relief for the Company
that would constitute Voluntary Bankruptcy;
(14) Admitting any Person as a Member, except as expressly
provided in this Agreement;
(15) Performing any act (other than an act required by this
Agreement or an act taken in good faith or in reliance upon counsel's
opinion) that would, at the time such act occurred, subject any Member
to liability as a general partner in any jurisdiction;
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(16) Lending any money on behalf of the Company, or assuming or
guaranteeing the obligations of any Person, except for obligations required to
be assumed by the Company upon the exercise of any purchase option with respect
to a parcel of the Joint Venture Property pursuant to the Company's Option
described in the Joint Contribution Agreement;
(17) Selecting engineers, architects or general construction
contractors or subcontractors to be retained by the Company, in the development
and/or improvement of any parcel included in the Project;
(18) Authorizing payment of any compensation to any Manager for
services provided to the Company;
(19) Purchasing or otherwise acquiring any capital stock, any other
equity interest in, or substantially all of the assets comprising the business
of, obligations of, or any interest in, any Person, except any of the following:
(1) investments by the Company in evidences of indebtedness
issued or fully guaranteed by the United States of America having a
maturity of not more than six (6) months from the date of acquisition;
(2) investments by the Company in certificates of deposit
and demand deposits with commercial banks or savings and loan
associations that have a membership in the relevant Federal insurance
fund for the protection of depositors, and in amounts not exceeding
the maximum amount of insurance thereunder;
(3) investments by the Company in "A"-rated or better
commercial paper having a maturity of not more than six (6) months from
the date of acquisition; or
(4) investments by the Company in (A) shares of any
registered investment company operating as a "money market" fund; or
(B) in "money market" deposit accounts sponsored by banks or other
financial institutions and fully insured by the relevant Federal
insurance fund for the protection of depositors, in amounts not
exceeding the maximum amount of insurance thereunder; provided,
however, that any such "money market" funds are limited to investments
of the types described in clauses (i), (ii) and/or (iii) above;
(20) Issuing or offer any securities in the Company, except for new
Interests approved pursuant to Section 5.3;
(21) Adopting, approving or modifying any architectural, engineering
or other plans relating to the improvement of real property included in the
Project; or
(22) Taking any action that, in the prudent exercise of business
discretion, could reasonably be expected to have a material adverse effect on
the Company or the assets or operations thereof.
Any and all such actions shall require the approving vote of Members
holding at least two-thirds of the Voting Interests (including each Appointing
Member), or such larger proportion of the Voting Interests or other Interests as
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may be required by the LLC Act or another provision of this Agreement in a
particular case; including in any event, however, the approving vote of the
Board. Such approving vote by the Members may be given at either a special
meeting called by the Managers on at least ten (10) Business Days' prior written
notice to all Members, or by written action signed by the requisite number of
Members specified above.
1.79 Obligations of each Governing Authority. In addition to the
obligations expressly provided by law or this Agreement, each Governing
Authority (as applicable) shall, to the extent of Company assets:
(1) the Development Committee shall perform or cause the
Managers to perform all acts necessary or desirable, with respect to
the purposes of the Company, to lease, sublease and operate any real
estate acquired by the Company;
(2) the Board shall cause to be filed and published all
certificates, statements and other instruments required by law for the
formation, qualification and operation of the Company and for the
conduct of its business in all appropriate jurisdictions;
(3) the Board shall cause the Company to prepare or have
prepared all financial and tax statements and reports required under
Article 11; and
(4) the Board shall cause the Company to keep the Required
Records at its principal office.
1.80 Reimbursement of Expenses. Each Member, Governor, member of the
Development Committee and Manager shall be reimbursed for all reasonable and
necessary expenses that are incurred on behalf of the Company and, if in excess
of $1,000, approved by the Board; provided, however, that none of the following
expenses incurred by a Member shall be reimbursed under this Section:
(1) expenses treated as Additional Capital Contributions
under Section 6.3, because they are included in a Development Budget or
are otherwise approved in writing by the Appointing Members; or
(2) expenses otherwise required to be borne by a Member
under Section 6.3.
However, any expense reimbursement that does qualify for reimbursement
under this Section 9.5, but either exceeds $5,000 or is requested by, or is
otherwise payable to or on behalf of, a Member or any Affiliate of a Member,
shall require approval in writing by the Appointing Members.
1.81 Conflicts of Interest. Except with the written approval of the
Appointing Members, no Person who is a Member, Manager, member of a Governing
Authority or any of their Affiliates, may be employed or engaged by a Governing
Authority to render services to the Company, including, but not limited to,
building, financing, constructing, leasing, property management, brokerage,
accounting and legal services; provided, however, that to the extent required by
Section 6.3(c), Metroplex may provide real estate development services for the
Company without any compensation or reimbursement for expenses, except to the
extent Metroplex receives credit for any such expenses as an Additional Capital
Contribution under that Section.
The Appointing Members may approve the engagement of any such Person to
perform services for the Company for compensation, but only if such Person has
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been previously engaged in the business of rendering such services or selling or
leasing such goods, independent of the Company and as an ordinary and on-going
business. If such approval is given, such Person (other than Metroplex, GCN or
Lakes) shall be entitled to, and shall be paid, compensation for such services,
except as otherwise provided in this Agreement; provided, however, that the
compensation to be received for such services is competitive with the amount and
terms charged by and paid to other non-affiliated Persons rendering comparable
services and is at the then prevailing rate for the type of services and/or
materials provided.
The fact that a Member, member of a Governing Authority, Manager or any
of their Affiliates is employed by, or is directly or indirectly interested in
or connected with any Person from whom or which the Company may buy services,
merchandise or other property, shall not prohibit the Board from employing such
Person or from otherwise dealing with such Person, if the Appointing Members
have approved such transaction in writing.
1.82 Other Activities. Any of the Members, members of a Governing
Authority, Managers and their Affiliates may engage in, possess and acquire
interests in other business ventures of any nature and description independently
or with others, including, but not limited to, the acquisition, ownership,
financing, leasing, operation, management, brokerage and development of real
property; provided, however, that neither Metroplex nor any of its Affiliates
(other than the Company) may engage in any such real estate activities with
respect to the real estate designated as Parcel E of the Cable Property (as
those terms are defined in the Joint Contribution Agreement) located in Las
Vegas, Clark County, Nevada, before the Company is dissolved.
Neither the Company nor the Members shall have any right by virtue of
this Agreement in and to any such independent ventures permitted by this
Agreement, or to any income or profits derived therefrom.
1.83 Insurance and Indemnification. Prior to the Company's purchase
of each parcel of the Joint Venture Property, GCN shall maintain comprehensive
general liability insurance providing at least a Five Million Dollars
($5,000,000) combined single limit for bodily injury, personal injury, death and
property damage liability, as well as broad form property insurance for the full
replacement value of all such Joint Venture Property that is not required to be
so insured by others pursuant to a lease. The Company shall maintain the same
types of insurance specified in the preceding sentence, with respect to all
Company Property that is acquired and held by the Company, along with all other
insurance customarily maintained by owners of similar property under similar
circumstances.
The Company shall indemnify the Members, the members of each Governing
Authority and the Managers against any loss, claim or liability incurred by any
of them in connection with the business of the Company, to the maximum extent
provided by the Articles and permitted by the LLC Act. However, any amounts paid
to indemnify any such Person shall be paid out of Company assets only; and
Members shall not be liable for such amount to be paid to indemnify a Person
except to the extent of any amount of a Capital Contribution of a Member that is
due and owing to the Company hereunder and remains unpaid. Neither the Company
nor any Member shall have any claim against the members of a Governing Authority
or any of the Managers based upon or arising out of any act or omission of the
members of a Governing Authority or any of the Managers; provided, however, that
such Manager or member of a Governing Authority acted in good faith and was not
grossly negligent or guilty of willful misconduct.
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With respect to any acts or omissions by GCN (or any of its Affiliates)
or Metroplex (or any of its Affiliates) prior to the Effective Date, each of
them agrees to indemnify the other against, and hold the other harmless from (in
advance), any and all claims, losses, costs and liabilities incurred by the
other in connection with any such prior act or omission, whether related to the
purposes of this Agreement or otherwise.
1.84 Liability Under Other Agreements. The obligations of the
Members, the Managers and the members of each Governing Authority and their
Affiliates, pursuant to any agreement or contract entered into in their personal
capacity with the Company and permitted by Sections 6.7 or 9.6 of this Agreement
(whether or not such agreements are referred to herein) shall be separate and
distinct from their obligations hereunder. Any default or failure of performance
with respect to such separate agreements or contracts, unless otherwise
specified in this Agreement, shall have the consequences provided for in such
separate agreements or contracts or by applicable law and shall not constitute a
breach hereunder.
1.85 Mandatory Offer and Buyout. If the Appointing Members, the Board
or the Development Committee is deadlocked for a period of at least sixty (60)
days, with respect to a proposed discretionary action or a substantial policy
issue involving management of the Company's affairs, and the Appointing Members
are unable to break the deadlock, then any Appointing Member (hereinafter called
the "Initiating Member") may offer in writing all (but not less than all) of its
Interest to the other Appointing Member (the "Other Member") at a price and upon
the terms stated in the offer. The Other Member shall have the option for a
period of sixty (60) days after receipt of such offer to purchase from the
Initiating Member all (but not less than all) of the Interest owned by the
Initiating Member. If the Other Member does not timely exercise its option, then
the Initiating Member shall be obligated to purchase from the Other Member, and
the Other Member shall be obligated to sell to the Initiating Member, all (but
not less than all) of its Interest at the price and upon the terms stated in the
Initiating Member's offer. Any offer and sale pursuant to this Section 9.10
shall be made on terms and conditions (other than the price) no less favorable
to the prospective purchaser than those specified in Article 13.
Notwithstanding any contrary provision of this Agreement or the Joint
Contribution Agreement, this Section 9.10 shall not apply to (a) any condition
or event for which a purchase option is provided in Article 13, (b) any
controversy or claim subject to arbitration under Section 17.14 or (c) any
condition or event for which termination of the Joint Contribution Agreement is
a remedy under Section 9 thereof.
ARTICLE 10
ELECTION, RESIGNATION OR REMOVAL OF GOVERNORS;
ADDITIONAL OR SUCCESSOR GOVERNORS
1.86 Election of Governors. Before all of the Joint Venture Property
and Cable Property has been acquired by the Company, the Board shall consist of
three (3) individuals. At all times, GCN shall be an Appointing Member with the
power to appoint two (2) Governors to serve on the Board. Before all of the
Joint Venture Property and Cable Property has been acquired by the Company,
Metroplex shall be an Appointing Member with the power to appoint one (1)
Governor to serve on the Board.
After all of the Joint Venture Property and Cable Property has been
acquired by the Company, the Board shall consist of four (4) individuals, two
(2) of which shall be appointed by GCN and the other two (2) of which shall be
appointed by Metroplex.
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1.87 First Governors. The first Governors of the Company are the
following individuals named by the Organizer of the Company; and each of the
Appointing Members hereby confirms that each of the initial Governor(s)
designated below under the Appointing Member's name has been appointed on behalf
of such Appointing Member, to hold office until his or her successor is elected
and qualified pursuant to Section 10.1 and the Bylaws:
Governors Appointed by GCN Governor Appointed by Metroplex
-------------------------- -------------------------------
Lyle Berman Brett Torino
Stanley M. Taube
1.88 Removal, Resignation and Replacement of Governors. The
Appointing Member(s) who appointed any Governor under this Article 10 shall have
the power to remove and replace that Governor, upon written notice to that
Governor and the Company, without the consent of the other Members. Any Governor
may resign at any time by giving written notice to the Board and each Member
appointing the Governor.
1.89 Development Committee. During the period after the Company
exercises its option to purchase any parcel of the Joint Venture Property or the
Cable Property and before all of the Joint Venture Property and Cable Property
has been acquired by the Company, the Board shall be deemed to have appointed a
committee of the Board pursuant to Section 322B.66 of the LLC Act, comprised of
the three (3) members of the Board and one other individual to be appointed at
that time (or replaced) by Metroplex in the manner provided above in this
Article 10. That committee shall be known as the Development Committee and shall
have the power and authority to make all decisions concerning the development,
leasing, financing and sale of such parcel and any other parcels of the Joint
Venture Property or the Cable Property that are acquired by the Company. In this
respect, the Development Committee shall have all of the control, power and
authority of the Board.
After all of the Joint Venture Property and Cable Property has been
acquired by the Company, the Development Committee shall cease to exist and its
authority shall be revoked.
ARTICLE 11
BOOKS OF ACCOUNT AND REPORTS
1.90 Books of Account. The Board shall cause to be kept complete and
accurate accounts of all transactions of the Company in proper books of account
and shall enter or cause to be entered therein a full and accurate account of
each and every Company transaction in accordance with accounting principles as
set forth in Section 11.2. The books and records of the Company shall be closed
and balanced as of the end of each Fiscal Year. The books of account and other
records of the Company shall at all times be kept at the place of business of
the Company. Each of the Members and Governors shall have access to and may
inspect and copy any of such books and records at all reasonable times.
1.91 Accounting Practices. The books of account of the Company shall
be kept on the accrual basis, according to generally accepted accounting
principles consistently applied. Such principles shall be applied by the Board
upon the advice of the Company's accountants. The Board shall have the authority
to designate and retain a firm of independent certified public accountants to
assist in the maintenance and preparation of such books, records and reports as
the Board deems desirable; and, if requested by the Board, to review or audit
such books and records and the annual financial statements of the Company.
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1.92 Bank Accounts. The Company shall maintain bank accounts in such
bank or banks as may be selected by the Board. All withdrawals from such bank
accounts shall be made by check or other instrument, signed by such Person or
Persons as the Board may designate.
1.93 Report to Members. Not later than one hundred eighty (180) days
after the end of each Fiscal Year of the Company, the Chief Manager shall caused
to be prepared a report of the business and operations of the Company during
such Fiscal Year, which report shall constitute the accounting of the Board for
such Fiscal Year. The report shall contain financial statements, including
statements of assets and liabilities, of income and expenses, of Members' equity
and changes in financial position, of cash flow and of the amount and nature of
any compensation paid to the Members, Governors, Managers or their Affiliates
during the period, including a description of the services performed in relation
thereto, and shall otherwise be in such form and have such content as the Board
deems proper. Such report shall state income from every source, including net
gains from disposition or sale of Company Property.
Each such report shall be delivered to each Appointing Member in
preliminary draft form at least thirty (30) days before it becomes final, so
that each Appointing Member shall have the opportunity to review the draft
report and make comments before it is delivered to the Members in final form.
1.94 Partnership Tax Status and Information. The Members acknowledge
that the Company will be treated as a "partnership" for income tax purposes.
Not later than two hundred seventy (270) days after the end of each
Fiscal Year of the Company, the Manager acting as Treasurer shall cause to be
prepared a Form K-1 and such other information, if any, with respect to the
Company for that Fiscal Year as may be necessary for the preparation of such
Person's Federal, state and local income tax (or information) returns, including
a statement showing such Person's share of income, gain or loss and credits for
such Fiscal Year, as determined for Federal, state and local income tax
purposes.
Each such Form K-1 and other information shall be delivered to each
Appointing Member in preliminary draft form at least thirty (30) days before it
becomes final, so that each Appointing Member shall have the opportunity to
review the draft Form K-1 and other information and make comments before it is
delivered in final form to the Persons who were Members at any time during such
Fiscal Year.
In addition, the Chief Manager shall from time to time cause to be
delivered to each Member adequate information relating to the Company's
operations to enable each Member to complete and file all Federal, state and
local estimated tax returns for which the Member may be liable.
1.95 Tax Basis Elections. In the event of a Transfer or a repurchase
by the Company or Distribution of Company Property by the Company in exchange
for all or part of the Interest of any Member, the Company may elect, pursuant
to Section 754 of the Code (or any successor provision), to adjust the basis of
the assets of the Company. Such election must be agreed to by the Appointing
Members.
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ARTICLE 12
RESTRICTIONS ON TRANSFERS OF MEMBERSHIP INTERESTS
1.96 General Restriction. Except to the limited extent permitted
under this Article 12, no part of a Member's Interest may be Transferred during
lifetime or at death, whether voluntarily or involuntarily, and whether with or
without consideration; nor may a Member enter into a binding agreement to
Transfer all or any part of the Member's Interest. Any Transfer or attempted
Transfer of all or any portion of an Interest in violation of this Agreement
shall nevertheless be subject to the applicable purchase options and rights of
Article 13. The Required Records and other appropriate records of the Company
shall be noted to prevent the Transfer of Interests except in accordance with
this Article 12 and Article 13.
1.97 Permitted Transfers. The following Transfers are permitted to
the extent provided in this Section 12.2 (a "Permitted Transfer"); provided,
however, that any such Transfer and the parties thereto comply with all of the
applicable conditions pertaining to Permitted Transfers under this Article 12:
(1) A Member may voluntarily Transfer (as defined in Section
13.2) all or any portion of the Member's Financial Rights as follows:
(1) GCN may pledge its Financial Rights as a pledge
of collateral security for a debt of GCN or any of its
Affiliates; provided, however, that the transferee shall
thereafter continue to be subject to the options and rights of
first refusal set forth in Article 13; or
(2) at any time after all of the Joint Venture
Property and Cable Property has been developed, as a pledge of
collateral security for a debt of any Member or any of its
Affiliates; provided, however, that the transferee shall
thereafter continue to be subject to the options and rights of
first refusal set forth in Article 13.
(2) A Member's Interest may be Transferred, without the
consent of any other Member, in whole or in part, to another person
already a Member at the time of the Transfer.
(3) All or any portion of GCN's Interest may be Transferred
to another entity that is an Affiliate of GCN or Lakes.
(4) Except as permitted by the preceding clause (c), all or
any portion of GCN's Interest may be Transferred to another entity
without the consent required by the following Section 12.3, but only
after such Interest or such portion has been offered to the Company and
Metroplex pursuant to Article 13.
(5) If applicable, a Member may complete a Transfer pursuant
to Section 13.7.
(6) All of any portion of a Member's Interest may be
Transferred to the extent permitted by Section 12.3, but only if any
consent required for such Transfer is obtained pursuant to Section
12.3.
1.98 Consent to Certain Transfers.
(1) Consent Rules. Subject to Section 12.4, any Transfer of
Financial or Governance Rights not otherwise permitted by this Article
12
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may be completed only upon the written consent of either (i) all of the
Appointing Members; or (ii) if the Company has no Appointing Members,
Members holding at least two-thirds of the Voting Interests; excluding
in either case the Member seeking to make the Transfer; which consent
may in either case be granted or withheld, as the applicable Members
may determine in their sole discretion. Notwithstanding the prior
sentence, no consent is required for a Transfer pursuant to Section
13.7.
(2) Request for Consent. Any Member desiring to Transfer, in
whole or in part, any Financial or Governance Rights pursuant to this
Section 12.3, shall notify the Board in writing of such desire.
(3) Member Approval. In the event that the Interest sought
to be Transferred requires the consent of any Member or Members, and
the Board decides not to exercise the Company's purchase option under
Section 13.5 (if applicable), the Board shall so notify such Members
and, by special meeting called on thirty (30) days' written notice, or
by solicitation of signatures on thirty (30) days' written notice, or
during the thirty (30) day period specified in Section 13.6, shall
request in writing the decision of each Member to exercise the Members'
purchase option under Section 13.6 (if applicable) and, if such
decision is negative, to grant or withhold consent pursuant to Section
12.3(a); provided, however, that notwithstanding any contrary provision
of this Agreement, failure of a Member to respond either affirmatively
or negatively to such request within sixty (60) days of such written
notice shall be construed as a negative purchase decision and the
withholding of such consent.
1.99 Conditions to Permitted Transfers. Any Permitted Transfer of all
or any portion of a Member's Membership Interest under this Agreement shall be
effective only if each of the following conditions is satisfied:
(1) Governance Rights. If the Transfer will include any
Governance Rights, the Member shall Transfer all such Governance
Rights, coupled with a simultaneous Transfer to the same transferee of
all of the Member's Financial Rights relating to such Interest.
(2) Investment Representations. The Member or the proposed
transferee shall provide the following documentation to the Board: (i)
an opinion of counsel (whose fees and expenses shall be borne by such
Member or transferee), satisfactory in form and substance to the Board,
to the effect that either (A) the Transfer constitutes an exempt
transaction and does not require registration under applicable
securities laws, or (B) the Interest to be Transferred is duly and
properly registered under all applicable securities laws; (ii) evidence
satisfactory to the Board that the transferee is eligible to become a
Member pursuant to this Article 12 and of the transferee's agreement to
comply with and be bound by the terms of this Agreement and to execute
any and all documents that the Board may deem necessary in connection
with his, her or its becoming a Member; (iii) evidence satisfactory to
the Board that the Transfer will not impair the ability of the Company
to be taxed as a partnership for Federal income tax purposes under the
Code or to take advantage of accelerated depreciation under the Code;
(iv) representations in form and substance satisfactory to the Board
that the transferee is acquiring the Interest for his, her or its own
account for investment and not with a view to the distribution thereof;
and (v) a written agreement signed by the transferee that the Interest
being acquired will in no event be resold unless properly registered
under all applicable securities laws or exempt therefrom.
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(3) Other Documents and Expenses. As a condition to
admission as a Member, any transferee of all or part of the Interest of
any Member shall execute and acknowledge such instruments, in form and
substance satisfactory to the Board, as the Board shall deem necessary
or advisable to effect such admission and to confirm the agreement of
the person being admitted as such Member to be bound by all the terms
and provisions of this Agreement. Such transferee shall also pay all
reasonable expenses in connection with such admission as a Member,
including, but not limited to, legal fees and costs of the preparation
of any amendment to this Member Control Agreement, if necessary or
desirable in connection therewith.
(4) Effective Date of Transfer. All Transfers of Interests
occurring during any month shall be deemed effected on the first day of
the month next following the month in which the Transfer occurs.
1.100 Acquit Company. In the absence of written notice to the Company
of any Transfer of a Membership Interest, any payment by the Company to the
transferring Member or his or its executors, administrators or representatives
shall acquit the Company of liability, to the extent of such payment, to any
other Person who may have an interest in such payment by reason of a Transfer by
the Member or by reason of such Member's death or otherwise.
1.101 Prohibition of Involuntary Transfers. Except as expressly
permitted by the LLC Act, a Member's Governance Rights shall not be subject to
involuntary Transfer (as that term is defined in Article 13), by operation of
law or otherwise, and any attempted involuntary Transfer shall be void and of no
effect. If such a Transfer is attempted, whether or not permitted by applicable
law, the affected portion of the Member's Interest shall thereupon be subject to
the options and rights of first refusal set forth in Article 13.
If all or any portion of a Member's Financial Rights are the subject of
a foreclosure of pledge or involuntary Transfer (as those terms are defined in
Article 13), or if the Member becomes insolvent (as that term is defined in
Article 13), the affected portion of the Member's Financial Rights shall
thereupon be subject to the options and rights of first refusal set forth in
Article 13.
1.102 Effect of Attempts to Make Prohibited Transfers. Any purported
Transfer (of all or any portion of an Interest) that is not permitted under this
Article 12 shall be null and void and of no force or effect whatever; provided,
however, that, if the Company is required by applicable law to recognize a
Transfer that is not so permitted (or if the Board, in its sole discretion,
elects to recognize a Transfer that is not so permitted), the Transferred
Interest shall be strictly limited to the transferor's Financial Rights as
provided by this Agreement with respect to the Transferred Interest, which may
be applied (without limiting any other legal or equitable rights of the Company)
to satisfy any debts, obligations or liabilities for damages (including without
limitation the Company's expenses relating to the Transfer) that the transferor
or transferee of such Interest may have to the Company.
In the case of a Transfer or attempted Transfer of an Interest that is
not permitted hereunder, the parties engaging or attempting to engage in such
Transfer shall be liable to indemnify and hold harmless the Company and the
other Members from all cost, liability and damage that any of such indemnified
Persons may incur (including, without limitation, incremental tax liabilities,
lawyers' fees and expenses) as a result of such Transfer or attempted Transfer
and efforts to enforce the indemnity required hereby.
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1.103 Limited Rights of Unadmitted Transferees. A Person who acquires
any part of an Interest, but is not admitted as a substitute Member: (a) shall
be subject to the restrictions of Section 12.1, (b) shall be entitled only to
allocations and Distributions with respect to such Interest in accordance with
this Agreement, (c) shall have no right to any information or accounting of the
affairs of the Company, (d) shall not be entitled to inspect the books or
records of the Company, (e) shall not be entitled to exercise any Governance
Rights and (f) shall not have any of the other rights of a Member under the LLC
Act or this Agreement.
ARTICLE 13
RIGHTS, OPTIONS AND VALUATION
RESULTING FROM TRANSFERS OR WITHDRAWALS
1.104 Definitions. Wherever used in this Article 13, unless another
meaning is explicitly indicated by the context, the following terms shall have
the meanings set forth below:
(1) "Affected Interests" shall mean any of the following:
(1) all or any portion of a Member's Financial
Rights Transferred (including proposed or attempted Transfers)
by any Person in violation of this Agreement;
(2) a Member's entire Membership Interest in the
event of either (A) a Transfer (including a proposed or
attempted Transfer) by any Person of all or any portion of the
Member's Governance Rights in violation of this Agreement; or
(B) a termination of the Member's membership, whether or not a
dissolution of the Company occurs; or
(3) a Member's entire Membership Interest in the
event such Interest becomes subject to the right of the Company
or any other Member to purchase such Interest under this Article
13 for any other reason.
(2) "Change of Metroplex Control" means that any of the
following events has occurred: (i) any person, as defined in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Securities Act"), has become the "beneficial owner" (as defined
in Rule 13d-3 promulgated pursuant to the Securities Act), directly or
indirectly, of 50% or more of combined voting power of Metroplex's then
outstanding securities, unless such person was such a beneficial owner
on the Effective Date; (ii) Metroplex has sold or exchanged
substantially all of its assets (other than its Interest in the
Company) outside the ordinary course of business; or (iii) within any
twelve-month period a change has occurred in the individual or
individuals who have ultimate policy-making authority with respect to
Metroplex (the "Metroplex Board"), with the result that the Incumbent
Members do not constitute a majority of the Metroplex Board. "Incumbent
Members," with respect to any twelve-month period, shall mean the
individuals comprising the Metroplex Board on the date immediately
preceding the commencement of such twelve-month period; provided,
however, that if a person first becomes one of the individuals
comprising the Metroplex Board during such twelve-month period and his
or her election or nomination for election was supported by a majority
of the individuals who, on the date of such election or nomination for
election, comprised the Incumbent Members, such member of the Metroplex
Board shall be considered one of the Incumbent Members with respect to
such twelve-month period.
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(3) "Transferring Holder" shall mean any of the following
Persons: (i) a Member whose Affected Interest is being terminated or is
the subject of any other event that caused such Interest to become an
Affected Interest; (ii) any non-Member transferee holding an Affected
Interest as a result of a Transfer or attempted Transfer that made it
an Affected Interest; and (iii) any legal representative of either.
1.105 Events Creating Option To Buy. If any of the following events
occurs or is attempted or proposed, the Company and the Members shall have the
option and the right to buy the Affected Interest of the Transferring Holder and
that Transferring Holder shall be obligated to sell the Affected Interest
pursuant to the terms and conditions of this Article 13:
(1) "Voluntary Transfer." A voluntary Transfer shall occur
if (i) an Affected Interest is sold, exchanged, pledged, encumbered,
given, gifted or otherwise voluntarily Transferred, with or without
full consideration, to a Person who is a not a Member; or (ii) an
agreement is entered into to do any of the foregoing; provided,
however, that if a Transfer is permitted by Section 12.2, the Transfer
shall not be an event creating an immediate option to buy the Affected
Interest, except in the case of a proposed Transfer described in
Section 12.2(d).
(2) "Foreclosure of Pledge." Foreclosure of a pledge shall
occur if (i) any Person who is not a Member attempts to gain absolute
rights to an Affected Interest as a result of default under a security
interest, whether pursuant to the Uniform Commercial Code or otherwise
and regardless of whether the security interest is termed as a pledge,
collateral, a conditional assignment, an outright assignment, or in any
equivalent manner, and regardless of whether the security interest is
perfected; (ii) an agreement is entered into to do any of the foregoing
except as permitted by Section 12.2; or (iii) the foreclosure is
otherwise treated under applicable law as a repossession, cancellation,
enforcement, foreclosure or similar action.
(3) "Involuntary Transfer." An involuntary Transfer shall
occur if Person who is not a Member attempts to gain absolute rights to
an Affected Interest by (i) sale pursuant to a levy of execution, (ii)
garnishment, (iii) attachment, (iv) property division or settlement in
a marriage dissolution proceeding, (v) the dissolution of a Member that
is a corporation, partnership, limited liability company, trust or
other business entity or (vi) other legal process, including without
limitation Bankruptcy or receivership proceedings intended to Transfer
the Affected Interest to a non-Member.
(4) "Insolvency." A Transferring Holder shall be considered
insolvent upon filing a petition for Voluntary Bankruptcy or being the
subject of a petition for Involuntary Bankruptcy (which involuntary
petition is not dismissed within ninety (90) days of filing), or if a
receiver, whether permanent or temporary, of a Transferring Holder's
property or any part thereof, shall be appointed by a court of
competent authority, or if a Transferring Holder shall make a general
assignment for the benefit of creditors, or if any material judgment
against a Transferring Holder remains unsatisfied or unbonded of record
for thirty (30) days or longer.
(5) "Withdrawal." A withdrawal from the Company shall occur
if (i) Metroplex ceases its good faith efforts to develop the Joint
Venture Property; (ii) a Change of Metroplex Control, as defined in
Section
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13.1(b), shall have occurred without the written consent of each other
Appointing Member; or (iii) any Member resigns or otherwise declares in
writing an intention to withdraw from the Company, whether or not such
withdrawal is permitted by Section 5.4.
(6) "Gaming Rights Purchase Option." If the Company and
Lakes become entitled to purchase the Interest of any Member (other
than Lakes or one of its Affiliates) under Section 5.5, the Interest
subject to such purchase options shall be an Affected Interest and the
holder thereof shall become a Transferring Holder obligated to sell
such Affected Interest pursuant to the terms and conditions of this
Article 13.
1.106 Notice To Company and Members. Each Transferring Holder shall
give written notice to the Company and to the other Members within thirty (30)
days of the occurrence of any event described in Section 13.2. Such notice shall
be sent, return receipt requested, to a Manager of the Company other than the
Transferring Holder, at the Company's principal administrative office. The
Company's Secretary shall also send the notice to each Member at the most recent
address reflected on the Company's Required Records or such other address as the
party giving notice has reason to know is more current. If the Transferring
Holder fails or refuses to give such notice, the Company or any Member may do so
as soon as it has the information required to be given in such notice. Each such
notice shall contain the following information:
(1) Notice of Voluntary Transfer. Any notice of voluntary
Transfer shall identify the transferee to whom the Transferring Holder
desires to sell, exchange or give an Affected Interest, a description
of the Affected Interest and the consideration, if any, for the
Transfer. The notice shall also identify all pertinent terms of the
Transfer. A copy of all agreements and documents pertinent to the
Transfer shall be attached to the notice.
(2) Notice of Foreclosure of Pledge. The notice of
foreclosure of pledge of an Affected Interest shall identify to whom
the Member pledged the Affected Interest, a description of the Affected
Interest, the reason for the foreclosure, and shall identify all
material terms of the pledge agreement and the foreclosure. A copy of
all agreements and documents relating to the pledge shall be attached
to the notice.
(3) Notice of Involuntary Transfer. Any notice of
involuntary Transfer shall identify: the order, decree or directive
requiring the involuntary Transfer of an Affected Interest, a
description of the Affected Interest, the reason for the involuntary
Transfer, and the pertinent terms of the involuntary Transfer. A copy
of the relevant order, decree or directive shall be attached to the
notice.
(4) Notice of Insolvency. Any notice of insolvency shall
identify the manner in which the Transferring Holder is deemed
insolvent (as defined in Section 13.2(d)) and shall identify any
trustee or fiduciary appointed with regard to the Transferring Holder.
A copy of any petition for bankruptcy, petition for involuntary
bankruptcy, order appointing a receiver, whether permanent or
temporary, order creating an assignment for the benefit of the
Transferring Holder's creditors, and/or any judgment against the
Transferring Holder that has remained unsatisfied or unbonded for a
period of thirty (30) days or longer shall be attached to the notice.
(5) Notice of Withdrawal. A notice of withdrawal shall
identify all pertinent details of the event of withdrawal including, if
applicable,
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all pertinent details of the Change of Metroplex Control. If a Member
has withdrawn from the Company (as defined in Section 13.2) without
giving such a notice, the Board or any other Member may give such a
notice to the withdrawing Member; provided, however, that the Member
alleged to be withdrawing shall be permitted to continue as a Member if
it demonstrates that such alleged withdrawal has not occurred.
(6) Notice of Gaming Rights Purchase Option. If the Company
and Lakes become entitled to purchase the Interest of any Member (other
than Lakes or one of its Affiliates) under Section 5.5, the notice
provisions of Section 5.5 shall apply.
1.107 Company's Option To Purchase. For the period commencing upon the
occurrence of an event giving rise to an option to buy, as specified in Section
13.2, and continuing thereafter until sixty (60) days after the Company's
receipt of notice of the event giving rise to the option, which notice is in
substantial compliance with the provisions of Section 13.3, the Company shall
have the option to purchase all, but not less than all, of the Affected Interest
of a Transferring Holder, which option and right to purchase are at the price
and according to the terms and conditions provided in this Article 13.
The Company may exercise its right and option to purchase by giving
written notice to the Transferring Holder and to the other Members of its
intention to exercise its right and option before the expiration of said sixty
(60) day period. In no event shall the Transferring Holder vote, either as a
Governor or as a Member, on the question of whether the Company will elect to
exercise its option.
1.108 Members' Option To Purchase. If the Company does not exercise
its option to purchase as provided for in Section 13.4, then after the
expiration of the sixty (60) day period provided for in Section 13.4, the
remaining Members of the Company shall have, for a period of thirty (30) days
thereafter, the option and right to collectively purchase all, but not less than
all, of the Affected Interest, which option and right to purchase are at the
price and according to the terms and conditions provided in this Article 13.
Each Member (other than the Transferring Holder) shall have the option and right
to purchase that fraction of the Affected Interest, which the Percentage
Interest owned by each bears to the total Percentage Interests owned by all such
other Members (excluding any Interest held by the Transferring Holder).
Members shall exercise their right and option to purchase by giving
written notice to the Transferring Holder and to the other Members and the
Company of their intention to exercise their right and option within said thirty
(30) day period. In the event that one or more Members elect to purchase their
proportionate part of the Affected Interest and one or more Members do not so
elect, the electing Members shall be required to purchase that fraction of the
Affected Interest not purchased by said non-electing Members, which the
Percentage Interest owned by each bears to the total Percentage Interests of all
such Members who have elected to exercise their option.
1.109 Failure of Company and Members To Exercise Option. In the event
that the Company does not exercise its option to purchase the Affected Interest
as provided for in Section 13.5 in the time period provided therein, and the
Members do not exercise their option to purchase the Affected Interest pursuant
to Section 13.6 in the time period provided therein, then (a) the Transferring
Holder shall be free to retain or dispose of the Financial Rights included in
the Affected Interest identified in the notice given pursuant to Section 13.3;
(b) any attempted or purported Transfer of any Governance Rights shall be
disregarded as provided in Subdivision 5 of Section 322B.313 of the Act and
Sections 12.7 and
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12.8 of this Agreement, unless the remaining Members consent to such Transfer
and admit the transferee as a new Member pursuant to Section 5.3, in which case
such transferee must execute this Agreement; and (c) if any actual, attempted or
purported Transfer giving rise to such options is found by a court of competent
jurisdiction to be an event causing a dissolution of the Company under this
Agreement or the Act, whether or not such Transfer is prohibited under this
Agreement or the Act, then the Company shall thereupon be dissolved and
liquidated pursuant to Article 15, unless its dissolution is avoided by one or
more Members under Section 322B.80, clause (5), Subdivision 1 of the LLC Act.
In the event that a disposition of the Affected Interest is not made in
accordance with the notice given pursuant to Section 13.3, within one (1) year
of the date of said notice, and the Company is not liquidated under Article 15
during that period, then the provisions and conditions of this Agreement
(including, without limitation, Section 12.1 and this Article 13) shall continue
to apply to the Affected Interest. If a disposition of the Affected Interest is
completed in accordance with the notice provided given pursuant to Section 13.3,
the Affected Interest and said transferee shall be subject to the provisions and
conditions of this Agreement (including, without limitation, Section 12.1 and
this Article 13), even if said transferee has not executed this Agreement.
1.110 Purchase Price. In the event of a purchase and sale of an
Affected Interest pursuant to the provisions of this Agreement, it is agreed
that, for the purpose of determining the purchase price, the value of the
Affected Interest shall be its fair market value, determined by agreement or
appraisal as follows; provided, however, that if the event giving rise to the
purchase option is a Transfer or attempted Transfer not expressly permitted by
this Agreement, or the withdrawal of a Member in violation of Section 5.4, then
the value of the Affected Interest shall not exceed the amount of the
Transferring Holder's Capital Account, less the cumulative sum of any Internal
Development Costs that have been allocated thereto:
(1) Agreement. The parties to the purchase and sale shall
attempt to agree upon the fair market value of the Affected Interest,
within fifteen (15) days of the date of notice of exercise of the
option to purchase.
(2) Appraisal. If the parties are unable to agree upon a
valuation within the applicable period, the value of the Affected
Interest shall be determined by appraisal as follows. The Transferring
Holder shall name one certified public accountant ("CPA") and one
licensed real estate appraiser ("Appraiser"), and the acquiring party
(the Company or other Members, as the case may be) shall collectively
name one CPA and one Appraiser. The CPA's and Appraisers shall jointly
determine the fair market value of the Affected Interest, with the
Appraisers determining the fair market value of all real estate and the
CPA's determining the Affected Interest's share of the net value of the
Company's liabilities and assets, using the Appraisers' valuation for
all real estate. If the two CPA's and two Appraisers cannot agree upon
the relevant value within thirty (30) days, the CPA's shall appoint a
third CPA or the Appraisers shall appoint a third Appraiser (or both,
as needed) who, within fifteen (15) days, shall make a determination of
fair market value of the Affected Interest, which determination shall
be final.
(3) Valuation Standards. For purposes of this Agreement, the
fair market value of an Affected Interest shall be the cash price that
would be payable to a reasonable seller by an unrelated reasonable
buyer for said Interest, without a discount for minority interest or a
premium for majority interest, except that a discount shall be applied
for any lack of
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Governance Rights. The balance of the Capital Account related to the
Affected Interest shall not be taken into account in determining the
fair market value of the Affected Interest.
1.111 Closing Date and Terms of Purchase.
(1) Closing or Expedited Closing to Protect Gaming Rights.
Ordinarily, in the event of any sale and purchase of an Affected
Interest pursuant to the terms of this Agreement, the sale and purchase
shall close on a reasonable date, at a reasonable place and at a
reasonable time to be selected by the purchasing party, which shall be
no later than ninety (90) days after a final determination of the price
pursuant to Section 5.5 or Section 13.7, as applicable.
However, the Members acknowledge that it is likely that, if a
Purchaser exercises its right and option to purchase an Affected
Interest pursuant to Section 5.5, such Purchaser will exercise such
option to protect the ability of Lakes (or a subsidiary or other
Affiliate of Lakes) to obtain or maintain a Gaming License (as defined
in Section 5.5) or a contract or agreement to manage a gaming facility.
Accordingly, such Purchaser may need to exercise its option and right
to purchase such Affected Interest and close such purchase (an
"Expedited Closing") before the price of such Affected Interest is
finally determined pursuant to Section 5.5 or Section 13.7, as
applicable (the "Final Price").
Therefore, any Purchaser under Section 5.5 shall have the right
to require the Transferring Holder to assign the Affected Interest to
the Purchaser pursuant to subsection (e) of this Section 13.8, at any
time after the event giving rise to the option under Section 5.5, and
before its Final Price is determined, by giving the Transferring Holder
written notice of the Purchaser's exercise of such purchase option and
its election to require an Expedited Closing. If the Purchaser elects
an Expedited Closing, then (i) the Transferring Holder and the
Purchaser shall complete the conveyance of the Affected Interest to the
Purchaser at a closing within five (5) Business Days after the
Transferring Holder's receipt of notice of the Expedited Closing
election; (ii) the Purchaser shall pay to the Transferring Holder at
such closing an amount of cash equal to the amount in the Transferring
Holder's Capital Account as of the first date the Company becomes
entitled to the purchase option under Section 5.5, which amount shall
be deducted from the Final Price when paid by the Purchaser; (iii) the
Purchaser shall pay the balance (if any) of the Final Price (less the
advance payment made under the preceding clause) to the Transferring
Holder pursuant to the following provisions of this Section 13.8, on a
closing date within ten (10) Business Days after such Final Price is
determined; and (iv) if the amount of any such advance payment exceeds
the Final Price, the Transferring Holder shall repay the excess amount
to the Purchaser on such closing date.
(2) Offset of Final Price. Any Purchaser may offset the
Final Price of an Affected Interest (or any advance payment under the
preceding paragraph) by the amounts of (i) any debts owed such
Purchaser by the Transferring Holder, and (ii) if applicable, any
damages described in Section 5.4; and such offset may be used first to
reduce amounts due at any closing under subsection (a) above, second to
reduce any amount due at the closing under the following paragraph (c),
and then to reduce the first payments due on any promissory note
delivered under paragraph (d) below.
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(3) Cash Payment at Closing. Subject to paragraph (b) above,
on the date of closing the purchasing party (which may be the Company,
a single Member or several Members, in which case they shall be
collectively referred to as the "purchasing party") shall pay to the
Transferring Holder an amount of cash equal to 25% of the purchase
price of the Affected Interest, the remaining amount owing shall be
paid to the Transferring Holder annually in five (5) equal installments
together with simple interest at a rate equal to the applicable Federal
rate in effect under Code section 1274(d) as of the closing date, plus
three (3) percentage points, commencing on the first anniversary of the
closing date.
(4) Promissory Note (or Notes) at Closing. In the case of a
single purchasing party, the purchasing party shall execute a
promissory note for the remaining balance of the purchase price, which
note shall contain the provisions of and be in the form of that note
attached hereto as EXHIBIT D.
In the event of a purchase by more than one purchasing party,
the purchasing parties shall execute separate notes for their
proportionate shares of the unpaid purchase price, which notes shall be
pursuant to the terms of and in the form of the note attached hereto as
EXHIBIT D.
(5) Transfer and Pledge of Affected Interest. Upon delivery
of the cash payment at closing and delivery of the installment note or
notes specified in the preceding paragraph, the Affected Interest shall
be assigned to the purchasing party or parties with all necessary
instruments required to complete the Transfer of the Affected Interest
on the Company's Required Records.
Once the Affected Interest has been Transferred, the Affected
Interest shall be pledged by the purchasing party or parties to the
Transferring Holder, to be held as collateral security for the payment
of said notes pursuant to the provisions of the Pledge Agreement
(attached hereto as EXHIBIT E), which each purchasing party shall
execute on the date of closing. The purchasing party or parties shall
have the right, while said pledge is effective, to vote any pledged
Governance Right and to receive Distributions (other than liquidating
Distributions under Section 15.3).
ARTICLE 14
AMENDMENT OF AGREEMENT
When circumstances require amendment of this Agreement to comply with
any law, or at any time Members holding at least thirty percent (30%) or more of
the aggregate Voting Interests may propose an amendment to this Agreement, in
such event the Chief Manager shall call a special meeting of all Members for the
purpose of considering such proposed amendment. At least thirty (30) days prior
to such meeting, the Board shall deliver to each Member written notice of the
meeting and a statement of the purposes of the amendment and such other matters
as the Board deems material to consideration of the amendment. The amendment so
proposed shall be adopted if unanimously approved in writing by the Appointing
Members. Alternatively, this Agreement may be amended by a written instrument
signed by all of the Appointing Members.
Notwithstanding the foregoing, this Agreement shall not be amended
without the consent of each Member adversely affected if such amendment would
(a) adversely affect the limited liability of a Member or (b) adversely affect
the Governance or Financial Rights of a Member.
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ARTICLE 15
DISSOLUTION
1.112 Liquidating Events.
(1) The Company shall be dissolved upon the occurrence of
any of the following events (a "Liquidating Event"), subject to any
prior exercise of the purchase option set forth in Section 15.4:
(1) upon the vote of the Appointing Members of the
Company, in favor of a proposal to dissolve the Company, at a
meeting held pursuant to Section 322B.806 of the LLC Act;
(2) at the election of an Appointing Member, under
the conditions set forth in Section 9 of the Joint Contribution
Agreement.
(3) upon any voluntary withdrawal of an Appointing
Member after the second anniversary of the Effective Date, if
such withdrawal terminates the continued membership of an
Appointing Member in the Company under clause (5), Subdivision 1
of Section 322B.80 of the LLC Act; or
(4) any other event described in Section 322B.80 of
the LLC Act, excluding clause (5) of Subdivision 1 thereof
(concerning termination of the continued membership of a
Member).
(2) As soon as possible following the occurrence of any
Liquidating Event that causes the dissolution of the Company, the
appropriate representative of the Company shall give all of the Members
a written notice of such Liquidating Event and execute a notice of
dissolution in such form as shall be prescribed by the Secretary of
State of Minnesota, setting forth the information required under
Subdivision 1 of Section 322B.81 of the LLC Act and shall file that
notice with the Secretary of State's office.
(3) If the Company is dissolved, the Company shall cease to
carry on its business upon filing a notice of dissolution with the
Minnesota Secretary of State, except insofar as may be necessary for the
winding up of the Company's business and any Distributions under Section
15.3, but its separate existence shall continue until a certificate of
termination has been issued by such Secretary of State or until a decree
dissolving the Company has been entered by a court of competent
jurisdiction.
1.113 Agreement to Avoid Dissolution. Each Member specifically
acknowledges and agrees that the Company shall not be dissolved upon the
withdrawal of any Member or other termination of any Member's Interest in the
Company, except for a voluntary withdrawal of an Appointing Member after the
second anniversary of the Effective Date that terminates the continued
membership of an Appointing Member in the Company under clause (5), Subdivision
1 of Section 322B.80 of the LLC Act. Notwithstanding any provision of this
Agreement to the contrary, the Company may be dissolved under the conditions set
forth in Section 9 of the Joint Contribution Agreement.
1.114 Distributions on Liquidation. Upon liquidation of the Company,
its business shall be wound up, the Board (or other Person designated by all of
the Members) shall take full account of the Company assets and liabilities, and
all assets (tangible and intangible) shall be liquidated as promptly as is
consistent
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with obtaining the fair value thereof. If any assets are not sold,
gain or loss shall be allocated to the Members in accordance with Article 7 as
if such assets had been sold at their fair market value at the time of the
liquidation. If any assets are distributed to a Member, rather than sold, the
Distribution shall be treated as a distribution equal to the fair market value
of the assets at the time of the liquidation. The assets of the Company shall be
applied and distributed in the following order of priority:
(1) To the payment of all debts and liabilities of the
Company, including all fees due the Members, Governors, Managers and
their Affiliates, and including any loans or advances (other than
Capital Contributions or any other part of a Member's Capital Account)
that may have been made by the Members of the Company, in the order of
priority as provided by law;
(2) To the establishment of any reserves deemed necessary by
the Board or other Person winding up the affairs of the Company for any
contingent liabilities or obligations of the Company;
(3) To the Members, subject to any prior exercise of the
purchase option set forth in Section 15.4, ratably in proportion to the
credit balances in their respective Capital Accounts, in an amount equal
to the aggregate credit balances in the Capital Accounts after and
including all allocations to the Members under Article 7, including the
allocation of any Profit or Loss from the sale, exchange or other
disposition (including a deemed sale pursuant to this Section 15.3, in
the case of a distribution of assets in kind) of the Company's assets;
and
(4) Last, to the Members in accordance with their Percentage
Interests.
Pursuant to action taken in good faith by the Board or any other Person
winding up the Company, the Company may offset any amount due a Member under
this Section 15.3 by (i) any debts owed the Company by the Member; and (ii) any
damages suffered by the Company as a result of that Member's breach (if any) of
this Agreement; provided, however, that such Person shall have first given the
affected Member a written notice of such offset, including the reasons for the
offset and a description of the facts on which it is based; and provided
further, to the extent any such offset is disputed in writing by any such
Member, the amount of such offset shall be retained by the Company until such
dispute shall have been resolved pursuant to Section 17.14.
1.115 GCN's Liquidation Purchase Option. Prior to any dissolution of the
Company that is proposed for approval by Members pursuant to Section 15.1, or
will occur without the consent of the Appointing Members, the Company shall
provide to all of the Members a written notice of the plan of liquidation and
dissolution of the Company (in addition to the notice required by paragraph (b)
of Section 15.1), specifying (a) the price and terms of any proposed sale of the
remaining Company Property, and (b) the amounts of any Distributions to Members
that are expected to result from such liquidation or dissolution, at least ten
(10) Business Days, but not more than thirty (30) days, before any Distribution
is made with respect to such liquidation or dissolution. In any such event, GCN
shall have the right and option, which may be exercised by giving written notice
of such exercise to Metroplex within ten (10) Business Days after GCN receives
such notice from the Company, to purchase all of the Interest of Metroplex at a
price determined pursuant to the following paragraph. If GCN exercises such
purchase option, the closing of the purchase shall take place on the day before
the first liquidation Distribution by the Company would otherwise be made with
respect to such dissolution (the "Closing Date"), but only after all Company
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Property has been sold (or valued for Distribution in kind pursuant to Section
15.3), all known Company obligations have been satisfied pursuant to Section
15.3 and any objection by Metroplex to such price shall have been settled
pursuant to the following paragraph. If GCN purchases the Interest of Metroplex
under this Section 15.4, and the Company is not dissolved, including the
completion of all liquidating Distributions, within thirty (30) days after the
Closing Date, Metroplex shall be entitled to rescind the sale of its Interest
hereunder, and shall be entitled to enforce its rescission right by an
injunction compelling specific performance of such rescission right; provided,
however, that GCN's purchase option under this Section 15.4 shall nevertheless
apply again in the event of any dissolution of the Company that is proposed or
occurs after such rescission.
For purposes of this Section 15.4, the price of Metroplex's Interest
shall be equal to the balance of Metroplex's Capital Account as of such Closing
Date, less fifty percent (50%) of the cumulative sum of any Internal Development
Costs that have been allocated thereto; provided, however, that, if Metroplex
believes that its Capital Account Balance as of the Closing Date is less than
the true fair market value of its Interest, as such value would be determined
under Section 13.7, due to an incorrect valuation of any Company Property to be
included in a liquidating Distribution (or otherwise), then Metroplex may object
to such value in a writing delivered to GCN before the Closing Date. If such
objection is duly made, such Closing Date and the first Distribution pursuant to
the dissolution shall be delayed until such fair market value has been
determined pursuant to Section 13.7. If the fair market value of Metroplex's
Interest is determined to exceed the balance of its Capital Account as of the
Closing Date, the price for GCN's purchase of Metroplex's Interest under this
Section 15.4 shall be equal to such fair market value, less fifty percent (50%)
of the cumulative sum of any Internal Development Costs that have been allocated
to Metroplex's Capital Account.
ARTICLE 16
RIGHT OF CERTAIN MEMBERS
TO CAUSE SALE; CO-SALE RIGHTS
1.116 Notice of Sale by Appointing Members. If Appointing Members
holding at least a majority of the Voting Units (the "Majority Voting Members" )
desire to sell (or otherwise complete a Transfer for consideration of) the
Company, all or substantially all of its assets or all of its Membership
Interests, whether pursuant to a merger, sale of assets, sales of Membership
Interests of the Company by its Members or otherwise, or to dissolve the Company
(collectively, a "Sale Transaction"), such Majority Voting Members may give a
written notice (a "Sale Notice") to all other Members stating that such Majority
Voting Members desire that the Sale Transaction be completed. Prior to giving
such Sale Notice, the Majority Voting Members who are considering giving such
Sale Notice shall discuss with all other Members that they are considering a
Sale Transaction.
If applicable, the Sale Notice shall set forth the name and address of
the Person or Persons proposing to buy the Company, its assets or its Membership
Interests (the "Acquisition Offeror") and summarize the basic terms of the
proposed Sale Transaction, which must provide (among other provisions) that: (a)
all Members shall receive the same amount and type of consideration (in
proportion to their Percentage Interests), regardless of class; (b) an
Appointing Member shall not be required to accept consideration in a form other
than cash without its consent, (c) an Appointing Member may require that it
receive a share of any non-cash consideration in such Sale Transaction that is
proportional to its Percentage Interest; and (d) no Member shall be required to
make any representation, warranty or commitment in any agreement effecting a
Sale Transaction of a nature that is not also made by an Appointing Member,
except
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that (i) any representations and warranties made regarding the operation
or condition of the Company by any Member that is not an Appointing Member (a
"Non-Appointing Member") may be based on the Non-Appointing Member's actual
knowledge and (ii) any non-competition or confidentiality agreements to be
entered into by a Non-Appointing Member may differ from those entered into by
the Appointing Members.
In the event that the Acquisition Offeror is an Affiliate of any of the
Majority Voting Members giving the Sale Notice, (a) the other Members shall have
the right to demand an appraisal of the Company, such appraisal to be made at
the Company's expense in the same manner and on the same basis as the appraisal
process provided for in Section 13.7; and (b) no Member shall be obligated to
accept an amount of consideration that is less than such Member's Percentage
Interest multiplied by such appraised value.
For purposes of subsection 15.1(a), the giving of a Sale Notice pursuant
to this Section 16.1 by Majority Voting Members, which notice states that such
Majority Voting Members intend to require the dissolution of the Company, shall
constitute the written agreement of such Members to require such dissolution.
1.117 Completion of Sale. As soon as practicable after receipt of a Sale
Notice given under Section 16.1, the Members shall take all lawful action
reasonably requested by the Majority Voting Members giving the Sale Notice to
complete the Sale Transaction, including without limitation: (a) the voting of
all Voting Interests in favor of the Sale Transaction, if deemed necessary or
desirable by the holders of such Voting Interests giving the Sale Notice; (b) if
so requested, the surrender to the Acquisition Offeror of any Membership
Interest certificates representing all Membership Interests, properly endorsed
for transfer to the Acquisition Offeror against payment of the sale price for
such Membership Interests in the Sale Transaction; and (c) if so requested, the
execution of all sale, liquidation and other agreements in the form so
requested.
1.118 Co-Sale Rights. GCN hereby agrees not to make a voluntary Transfer
for consideration of any portion of its Interest (other than a Transfer
permitted by Section 12.2, or a Transfer to the Company or the other Members
following an exercise of the options granted pursuant to Section 13.2), without
permitting each other Appointing Member to participate as a seller in such
transaction, such that each Appointing Member exercising its right of co-sale
hereunder shall be entitled to sell an amount of its Interest, in connection
with such transaction, equal to its then respective proportionate ownership of
all outstanding Percentage Interests held by GCN and all other Appointing
Members exercising their rights of co-sale hereunder.
1.119 Co-Sale Procedure. Before accomplishing or entering into a binding
contract for any Transfer for consideration of Interests that would be covered
by the right of co-sale granted by Section 16.3, GCN (as the "Proposing Member")
hereby agrees to give the other Appointing Members prompt written notice of any
such proposed sale (a "Co-Sale Proposal"), stating the terms and conditions of
the Co-Sale Proposal in sufficient detail to allow the other Appointing Members
to exercise their rights of co-sale.
The Appointing Members receiving such a notice (the "Receiving Parties")
hereby agree to notify the Proposing Member within ten (10) Business Days after
receipt of such notice as to whether they wish to exercise their rights of
co-sale and participate in the Co-Sale Proposal; and thereafter all negotiations
leading to the consummation of the Co-Sale Proposal shall be conducted under the
joint control of the Proposing Member and those Receiving Parties exercising
their rights of co-sale. Failure by a Receiving Party to respond within such
10-day period shall be deemed to be a declination of such Receiving Party's
right
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of co-sale with respect to such Co-Sale Proposal; provided, however, that
(a) such Co-Sale Proposal is fully consummated within ninety (90) days after the
expiration of such 10-day period and (b) the terms of the actual transaction are
in all material respects the same as those set forth in the notice given by the
Proposing Member to the Receiving Parties hereunder. Failure to meet either of
the foregoing conditions shall again subject the Units covered by the Co-Sale
Proposal to the Receiving Parties' rights of co-sale, the Proposing Member shall
be required to give the Receiving Parties a new written notice with respect to
the same or any future Co-Sale Proposal and the Receiving Parties shall again
have the right to participate in the same or any future Co-Sale Proposal if they
notify the Proposing Member thereof within ten (10) Business Days after receipt
of such a new notice.
ARTICLE 17
MISCELLANEOUS
1.120 Notices. All notices required to be given by this Agreement shall
be made in writing either:
(1) By personal or commercial courier delivery to the party
requiring notice and securing a written receipt, or
(2) By mailing the notice in the U.S. mails to the address of
the party requiring notice, as specified in the Required Records, by
registered mail, return receipt requested.
Notice shall be treated as given when personally received or, if sent as
provided above, the effective date of the notice shall be the date of the
written receipt received upon delivery in clause (a) above or (except in the
event of a mail strike) the date the notice is sent pursuant to clause (b)
above.
Such notices will be given to a Member at the address specified in the
Company's Required Records. Any Member or the Company may, at any time by giving
five (5) Business Days' prior written notice to the other Members and the
Company, designate any other address in substitution of the foregoing address to
which such notice will be given.
All notices, offers, demands, certificates or other communications
required or permitted under this Agreement shall be in writing, signed by the
Person giving the same.
1.121 Partition. The Members agree that neither the Joint Venture
Property (when acquired by the Company) nor any other Company Property is, nor
will be suitable for partition. Accordingly, each of the Members hereby
irrevocably waives any and all rights that it may have to maintain any action
for partition of any Company Property.
1.122 Consent and Waiver. No consent under and no waiver of any
provision of this Agreement on any one occasion shall constitute a consent under
or waiver of any other provision on said occasion or on any other occasion, nor
shall it constitute a consent under or waiver of the consented-to or waived
provision on any other occasion. No consent or waiver shall be enforceable
unless it is in writing and signed by the party against whom such consent or
waiver is sought to be enforced.
1.123 Entire Agreement. Except for the Company's Articles of
Organization and Bylaws, and the Joint Contribution Agreement of the initial
Members, this Agreement constitutes the entire agreement among the parties with
respect to the Company. Such instruments supersede any prior agreement or
understanding among
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such parties, and it may not be modified or amended in any manner other than as
set forth herein.
1.124 Governing Law and Venue. This Agreement and the rights of the
parties hereunder shall be governed by, interpreted and enforced in accordance
with the laws of the State of Minnesota, without regard to its laws governing
conflicts of laws. The venue of any judicial proceeding for the breach, or
enforcement at law or equity, of this Agreement shall be determined under
Section 13 of the Joint Contribution Agreement.
1.125 Binding Effect. Except as herein otherwise specifically provided,
this Agreement shall be binding upon and inure to the benefit of the Members and
their legal representatives, heirs, administrators, executors and permitted
successors and assigns.
1.126 Number and Gender. Wherever 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.
1.127 Interpretation. Except as otherwise indicated by the context, all
references herein to Articles, Sections and paragraphs refer to Articles,
Sections and paragraphs of this Agreement. All such Article, Section and
paragraph headings are for reference purposes only and shall not affect the
interpretation of this Agreement.
1.128 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstances, shall be held
invalid, the remainder of the 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.
1.129 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all Members. Each Member shall become bound by this Agreement immediately
upon signing any counterpart, independently of the signature of any other
Member. However, in making proof of this Agreement, it will be necessary to
produce only one copy signed by the party to be charged.
1.130 Right to Specific Performance. In view of the fact that the
Membership Interests subject to this Agreement are of a closely-held limited
liability company, and in view of the purposes of this Agreement, it is agreed
that the remedy at law for failure of any party to perform would be inadequate
and that the injured party or parties, at his, her or their option, shall have
the right to compel the specific performance of this Agreement in a court of
competent jurisdiction, to the extent permitted by the LLC Act and other
applicable law, and not expressly prohibited by this Agreement. 1.1
1.131 Additional Documents and Acts. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and the transactions
contemplated hereby.
1.132 No Third Party Beneficiary other than Lakes. This Agreement is
made solely and specifically among and for the benefit of the parties hereto,
Lakes (while it is an Affiliate of GCN) and their respective permitted
successors and assigns, and no other Person will have any rights, interest, or
claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third
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party beneficiary or otherwise. Lakes shall be treated as a third party
beneficiary of this Agreement while it is an Affiliate of GCN and GCN is a
Member.
1.133 Arbitration. If any controversy or claim arising out of this
Agreement cannot be settled by the parties hereto and, if applicable, the
Company (the "disputants"), the controversy or claim shall be resolved pursuant
to informal arbitration by an arbitrator selected under the Commercial
Arbitration Rules of the American Arbitration Association (as then in effect for
expedited proceedings) and located in Minneapolis, Minnesota; and the
arbitration shall be conducted in that same location under such rules.
Notwithstanding the foregoing, no disputant shall be required to seek
arbitration regarding any cause of action that would entitle such disputant to
injunctive relief.
Each of the disputants shall be entitled to present evidence and
argument to the arbitrator. The arbitrator shall have the right only to
interpret and apply the provisions of this Agreement (including other applicable
agreements) and may not change any of such provisions. The arbitrator shall
permit reasonable pre-hearing discovery of facts, to the extent necessary to
establish a claim or a defense to a claim, subject to supervision by the
arbitrator.
The determination of the arbitrator shall be conclusive and binding upon
the parties and a court judgment upon the same may be entered in any court
having competent jurisdiction thereof. The arbitrator shall give written notice
to the disputants stating the arbitrator's determination, and shall furnish to
each disputant a signed copy of such determination. The expenses of arbitration
shall be borne equally by the opposing disputants or as the arbitrator shall
otherwise equitably determine.
1.134 Litigation Expense. If any disputant (as defined in Section 17.15,
and including all disputants opposing one or more other disputants as one party)
is made or shall become a party to any litigation (including arbitration)
commenced by or against another disputant involving the enforcement of any of
the rights or remedies of such disputant, or arising on account of a default of
the other disputant in its performance of any of the other disputant's
obligations hereunder, then the prevailing disputant in such litigation shall
receive from the other disputant all costs incurred by the prevailing disputant
in such litigation, plus reasonable attorneys' fees to be fixed by the court or
arbitrator (as applicable), with interest thereon from the date of judgment or
arbitrator's decision at the interest rate set forth in Section 13.8 or, if
less, the maximum rate permitted by law.
IN WITNESS WHEREOF, the undersigned Members have duly executed this
Member Control Agreement as of the day and year first above written or, in the
case of Persons becoming Members after that date, as of the date set forth
opposite their respective signatures.
GRAND CASINOS NEVADA I, INC.
By
------------------------------------
Its
--------------------------------------
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METROPLEX, LLC
By
------------------------------------
Its
--------------------------------------
MEMBERS
METROPLEX - LAKES, LLC
By
------------------------------------
Its
--------------------------------------
COMPANY
[ADDITIONAL SIGNATURE PAGE FOLLOWS]
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Each of the undersigned Additional Members hereby agrees to be bound by
the foregoing Agreement, as amended from time to time pursuant thereto, as of
the date opposite such Member's signature.
Dated: __________________, 200_.
___________________________________
Dated: __________________, 200_. ___________________________________
___________________________________
ADDITIONAL MEMBERS
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EXHIBIT A
Attached hereto as Exhibit A is a copy of the Joint Contribution
Agreement of the initial Members of Metroplex - Lakes, LLC
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EXHIBIT B
Attached hereto as Exhibit B is a copy of the Articles of Organization
of Metroplex - Lakes, LLC
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EXHIBIT C
Attached hereto as Exhibit C is a copy of the Bylaws of Metroplex -
Lakes, LLC
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EXHIBIT D
INSTALLMENT PROMISSORY NOTE
Note No. ____________________ _______________
$____________________________ _______________
FOR VALUE RECEIVED, ______________ (hereinafter the "Obligor"), promises
to pay to ________________, or order, with exchange, the principal sum of
$_____________ with interest from the date hereof upon the unpaid principal at
the rate of ______________ percent (______%) per annum, until fully paid. The
principal and interest shall be paid in lawful money of the United States at
such place as the legal holder of this Note may designate in writing; payments
of principal and interest shall be due and payable in five (5) equal annual
installments of principal, plus accrued interest, commencing on the first
anniversary of the date hereof; and payments when made shall be first applied
against accrued but unpaid interest and then against principal. The unpaid
balance of accrued interest under this Note and all or any portion of the
principal (but not less than $1,000 in partial payment) may be prepaid at any
time without penalty.
Default in the payment of this Note or any installment of principal or
interest at the maturity thereof, which default is not cured within ten (10)
Business Days following written notice by the holder hereof to the Obligor,
shall give to the holder the option to declare all of the unpaid installments of
this Note due and payable at once and to exercise any or all of its remedies
under the Pledge Agreement attached hereto and identified as Exhibit C, which
has been executed by the Obligor to secure this Note.
Without affecting the liability of any maker, endorser or guarantor, the
holder may, without notice, renew or extend the time for payment or accept
partial payments.
Any maker, endorser or guarantor hereby waives presentment, demand,
protest or notice of intention to accelerate.
Any notice required hereunder shall be sent to the Obligor by certified
mail, return receipt requested, to the following address:
___________________________________
___________________________________
___________________________________
IN WITNESS WHEREOF, the Obligor has caused this Note to be executed as
of the date and year first above written.
___________________________________
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EXHIBIT E
PLEDGE AGREEMENT
THIS AGREEMENT, made as of this _____________ day of ________________,
19__, by and between __________________________________________________,
hereinafter collectively referred to as "Secured Parties," and
________________________________________________, hereinafter referred to
collectively as "Debtors."
IN CONSIDERATION of the mutual covenants and promises herein contained,
the Secured Parties and Debtors agree:
1. Security Interest. For value received, Debtors hereby grant
Secured Parties a security interest in a Membership Interest in Metroplex -
Lakes, LLC, a Minnesota limited liability company, consisting of Financial
Rights with a Percentage Interest of _____%, and Governance Rights including a
Voting Interest of _____%, (such Interests are hereinafter referred to as the
"Interest" and Metroplex - Lakes, LLC is hereinafter referred to as the
"Company"), together with all rights related thereto.
2. Obligation Secured. The Interest shall secure payment of the
indebtedness evidenced by that certain Note ("Note") of even date between the
Debtors and the Secured Parties, which is issued pursuant to the terms of the
Company's Member Control Agreement.
3. Representations, Warranties and Agreements. Debtors represent,
warrant and agree that:
a. Debtors have delivered to Secured Parties a written
assignment of the Interest, subject to release upon
payment in full of the Note.
b. Debtors are the owners of the Interest free and clear of
all liens, encumbrances, security interests, restrictions
on transfer and other restrictions, except this security
interest and the Company's Member Control Agreement.
c. Debtors will keep the Interest free and clear of all
liens, encumbrances, security interests and restrictions,
except this security interest and the Company's Member
Control Agreement, will defend the Interest against all
claims and demands of anyone other than Secured Parties,
and will not sell or otherwise dispose of the Interest or
any interest therein.
d. Debtors will pay, when due, all taxes and other
governmental charges levied or assessed upon or against
any part of the Interest.
e. The Interest is fully paid and non-assessable.
4. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default:
a. Failure by Debtors to honor or perform any of the terms
and conditions of this Agreement, the Company's Member
Control Agreement, the Note or any other agreement
between any of the parties hereto.
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b. Default by Debtors in the payment when due of the
principal of the indebtedness evidenced by the Note, any
installment thereto, or any interest thereon, whether at
maturity, by acceleration, or otherwise.
5. Remedies Upon Event of Default. Upon the occurrence of an Event
of Default and at any time thereafter, Secured Parties may give notice of Event
of Default to Debtors. If said Event of Default is not cured within ten (10)
days after said notice is given, the entire Debtor evidenced by the Note shall,
at Secured Parties' option, become immediately due and payable without notice,
presentment, demand, protest or notice of protest of any kind, all of which are
expressly waived by Debtors; and Secured Parties may exercise and enforce with
respect to the Interest any or all rights and remedies available upon default to
a secured party under the Uniform Commercial Code, including the right to offer
and sell the Interest privately to purchasers who will agree to take the
Interest for investment and not with a view to distribution.
If notice to Debtors of any intended disposition of the Interest or any
other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given at least ten (10) calendar days
prior to the date of intended disposition or other action. Nothing in this
Agreement shall abridge Secured Parties' right to exercise or enforce any or all
other rights or remedies available to Secured Parties by law or agreement
against the Interest, against Debtors or against any other person or property.
6. Waiver. Debtors waive any right that Debtors may have to require
Secured Parties to proceed against any other person, to proceed against or
exhaust collateral or any part thereof, or to pursue any other remedy that
Secured Parties may have. Debtors consent to any and all extensions of time,
renewals, waivers or modifications of any of the terms and conditions of the
Note that may be granted by Secured Parties, to release the security interest
granted hereunder or any part thereof with or without substitution, and to the
release, substitution, or addition of any parties primarily or secondarily
liable on the Indebtedness evidenced by the Note. Notice of any of the above is
hereby waived by Debtors.
7. Miscellaneous. Any disposition of the Interest in the manner
provided in Paragraph 5 shall be deemed commercially reasonable. This Agreement
can be waived, modified, amended, terminated or discharged, and this security
interest can be released, only explicitly in a writing signed by Secured Party.
A waiver signed by Secured Party shall be effective only in the specific
instance and for the specific purpose given. Mere delay or failure to act shall
not preclude the exercise or enforcement of any of Secured Parties' rights or
remedies. All rights and remedies of Secured Parties shall be cumulative and may
be exercised singularly or concurrently, at Secured Parties' option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other.
All notices to be given to Debtors shall be deemed sufficiently given if
delivered or mailed by registered or certified mail, postage prepaid, to Debtors
at the most recent address shown on Secured Parties' records. Secured Parties
are not obligated to preserve any rights Debtors may have against prior parties,
to realize on the Interest at all or in any particular manner or order, or to
apply any cash proceeds of the Interest in any particular order of application.
Debtors will reimburse Secured Parties for all expenses incurred in disposing of
the Interest or otherwise enforcing this security interest (including reasonable
attorneys' fees and legal expenses). This Agreement shall be binding upon and
inure to the benefit of Debtors and Secured Parties and their respective
successors and assigns.
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Except to the extent otherwise required by law, this Agreement shall be
governed by the internal laws of the State of Minnesota, and, unless the context
otherwise requires, all terms used herein which are defined in Articles 1 and 9
of the Uniform Commercial Code, as in effect in said State, shall have the
meanings therein stated. If any provision or application of this Agreement is
held unlawful or unenforceable in any respect, such illegality or
unenforceability provision or application had never been contained herein or
prescribed hereby. All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the indebtedness evidenced by the
Note.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the date first above written.
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