EXHIBIT 10.35
LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, LLC,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, L.L.C.,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I. RECITALS AND DEFINITIONS 2
1.1 Recitals 2
ARTICLE II. OFFICES 6
2.1 Principal Office 6
ARTICLE III. PURPOSE 6
3.1 Purpose 6
ARTICLE IV. CAPITAL 6
4.1 Capital Contributions 6
4.2 Capital Accounts 10
4.3 Federal Income Tax Elections 11
4.4 Members Invested Capital 12
4.5 Development Financing 12
4.6 Excess Interest 12
4.7 Interest 13
ARTICLE V. MEMBERS 13
5.1 Powers 13
5.2 Compensation to Members 13
5.3 Other Ventures 14
5.4 Meetings of Members 14
5.5 Action By Written Consent 14
5.6 Place of Meetings of Members 15
5.7 Annual Meetings 15
5.8 Annual Meetings: Notice 15
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5.9 Special Meetings 15
5.10 Waiver of Notice 15
5.11 Adjourned Meetings And Notice Thereof 15
5.12 Delegation of Authority To Members and Managers 16
5.13 Admission of New Members 16
5.14 Cooperation of the Member 16
5.15 Company Action by Members 16
ARTICLE VI. MANAGERS 17
6.1 Election 17
6.2 Removal, Resignation and Vacancies 17
6.3 Managers' Power 18
6.4 Company Action by Managers 18
6.5 Bank Accounts 19
6.6 Meetings of Managers 19
6.7 Action by Written Consent 20
6.8. Place of Meetings of Managers 20
6.9 First Meeting 20
6.10 Special Meetings 20
6.11 Notice 20
6.12 Remuneration of Managers 20
6.13 Deadlock 20
ARTICLE VII. TRANSFER OF MEMBERS' INTERESTS 20
7.1 Transfer of Members' Interests 20
7.2 No Transfer Permitted Under Certain Circumstances 21
7.3 Permitted Transferees 21
ARTICLE VIII. COMPULSORY BUY-SELL PROVISION 22
8.1 Offer to Purchase 22
8.2 Acceptance 22
8.3 Purchase Price 23
8.4 Payment of Purchase Price 23
8.5 Closing 23
8.6 Government Approval 23
ARTICLE IX. DEFAULTING MEMBER 23
9.1 Option to Purchase Member's Interest 23
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9.2 Offer to Purchase Shares of Rockingham Shareholders 24
9.3 Determination of Purchase Price 25
9.4 Payment of Purchase Price 25
9.5 Closing 25
ARTICLE X. RIGHT OF FIRST REFUSAL 26
10.1 Third Party Offer 26
10.2 Acceptance of Offer 26
10.3 Third Party Sale 27
10.4 Re-Application of Provisions 27
10.5 An Offer to Purchase Showboat's Interest 27
ARTICLE XI. APPRAISAL 28
11.1 Appraisal 28
ARTICLE XII. GENERAL SALE PROVISIONS 28
12.1 Application of Sale Provisions 28
12.2 Defined Terms 28
12.3 Obligations of Vendor 28
12.4 Release of Guarantees etc. 29
12.5 Deliveries to Vendor 29
12.6 Repayment of Debts 30
12.7 Non-Completion by Vendor 30
12.8 Non-Completion by Purchaser 30
12.9 Restrictions on Business 31
12.10 No Joint Liability 31
12.11 Consents 31
ARTICLE XIII. PROFITS AND LOSSES 31
13.1 Net Profits and Losses 31
13.2 Allocations of Deductions 31
13.3 Special Allocations 31
13.4 Curative Allocations 33
13.5 Federal Income Tax 33
ARTICLE XIV. DISTRIBUTIONS 33
14.1 Operating Distributions 33
14.2 Payment of Member Loans 33
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14.3 Distribution on Dissolution and Liquidation 34
ARTICLE XV. ACCOUNTING AND RECORDS 34
15.1 Records and Accounting 34
15.2 Access to Accounting Records 34
15.3 Annual Tax Information 34
15.4 Interim Statements and Reports 34
ARTICLE XVI. TERM 35
16.1 Term 35
ARTICLE XVII. DISSOLUTION OF THE COMPANY AND TERMINATION OF A
MEMBER'S INTEREST 35
17.1 Dissolution 35
17.2 Bankruptcy, Insolvency or Dissolution 35
ARTICLE XVIII. INDEMNIFICATION 35
18.1 Indemnity 35
18.2 Indemnity for Actions By or In the Right of The Company 36
18.3 Indemnity If Successful 36
18.4 Expenses 36
18.5 Advance Payment of Expenses 37
18.6 Other Arrangements Not Excluded 37
ARTICLE XIX. MISCELLANEOUS PROVISIONS 38
19.1 Time is of the Essence 38
19.2 Default Interest Rate 38
19.3 Counterparts 38
19.4 Execution by Facsimile 38
19.5 Force Majeure 38
19.6 Complete Agreement 38
19.7 Amendments 39
19.8 Governing Law 39
19.9 Headings 39
19.10 Severability 39
19.11 Expenses 39
19.12 Heirs, Successors and Assigns 39
19.13 Power of Attorney 39
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19.15 Compliance with Laws 40
19.16 Background Investigations 40
19.17 Compliance with Other Agreements 41
19.18 Governmental Approval 41
19.19 Licensing Requirements 41
19.20 Foreign Gaming Licenses 42
19.21 Press Releases 42
19.22 Uncertainties 42
ARTICLE XX. CONFIDENTIALITY AND NON-USE 43
20.1 Disclosure of Propriety Information 43
20.2 Use of Proprietary Information 44
20.3 Destruction or Return of Confidential Information 44
20.4 Exception 44
20.5 Survival 44
ARTICLE XXI. ARBITRATION 44
21.1 Appointment of Arbitrators 44
21.2 Inability to Act 45
ARTICLE XXII. FORCE MAJEURE 45
22.1 Force Majeure Defined 45
22.2 Actions to Resolve Force Majeure Events 46
ARTICLE XXIII. TERMINATION 46
23.1 Termination Events 46
23.2 Notice of Termination 47
23.3 Remedies Upon Termination 47
ARTICLE XXIV. NOTICES 48
EXHIBIT 3. THE COMMON AREA 50
1.01 The Common Area Defined 50
1.02 The Company's Easement to Use the Common Area 50
1.03 Operation and Maintenance of Common Area 51
1.04 Common Area Maintenance Cost 52
1.05 Accounting 53
1.06 Plans and Budgets 53
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LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, L.L.C.,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement")
is made and entered into as of July 27, 1995, by and among
Rockingham Venture, Inc., a New Hampshire corporation,
("Rockingham"), and Showboat New Hampshire, Inc., a Nevada
corporation ("Showboat"), (Rockingham and Showboat are
hereinafter collectively referred to as the "Members" and
individually as the "Member") and Showboat Rockingham Company,
L.L.C., a New Hampshire limited liability company (the
"Company").
RECITALS
A. An affiliate of Showboat lent $8.85 million to
Rockingham in consideration of, among other things, the formation
of an entity to own a private non-racing gaming business at
Rockingham Park , a racetrack owned and operated by Rockingham.
B. Rockingham and Showboat have agreed to form, as of the
date hereof, the Company.
C. The Members will be the registered and beneficial owners
of 100% of the total Interest (as defined below) in the Company.
D. The Members desire to enter into a limited liability
company agreement to govern the affairs of the Company and the
conduct of its business, including, without limitation, the
rights and restrictions on the transfer of shares of a Member's
Interest in the Company owned by the current and future Members
of the Company.
E. The Members desire to set forth their agreements as to
the development and management of the Project (defined hereafter)
and the proposed gaming operations of the Company at Rockingham
Park in the event and with the expectation that (i) the State of
New Hampshire enacts legislation which permits a gaming business
to be operated at a racetrack facility such as the Rockingham
Park and (ii) the gaming licensing authority specified in the
legislation permitting gaming selects and licenses the Members.
F. The Members acknowledge their mutual desire to enter
into this Agreement despite the numerous uncertainties which must
be resolved or clarified to each party's satisfaction. Both
parties undertake to negotiate in good faith in a timely fashion
such addenda to this Agreement as are necessary to continue the
effectiveness of this Agreement and to revise the assumptions and
underlying facts upon which this Agreement is based.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and with the intention of being bound by this
Agreement, the Members agree as follows:
ARTICLE I. RECITALS AND DEFINITIONS
1.1 RECITALS
The foregoing Recitals are true and correct.
1.2 DEFINITIONS
The following defined terms are used in this Agreement:
"Act" shall mean the New Hampshire Limited Liability Company
Act as set forth in the New Hampshire Revised Statutes Annotated
304-C:1 to 304-C:85, inclusive, as amended from time to time.
"Affiliate" shall mean a Person who directly or indirectly
or through one or more intermediaries (i) controls, is controlled
by, or is under common control with the Person in question; (ii)
is an officer, director or 5% shareholder, partner in or trustee
of any Person referred to in the preceding clause; or (iii) is a
spouse, father, mother, son, daughter, brother, sister,
grandchild, uncle, aunt, nephew or niece of any Person described
in clauses (i) and (ii).
"Agreement" shall mean this Limited Liability Company
Agreement as originally executed and as amended, modified,
supplemented, or restated from time to time, as the context may
require.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Company" shall mean Showboat Rockingham Company, L.L.C. and
includes any successor entity resulting from any merger,
amalgamation, reorganization, arrangement or other combination of
the Showboat Rockingham Company, L.L.C. and any other Person.
"Control" shall mean, in relation to a Person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such Person carrying more than 50% of the voting
rights attaching to all voting securities of such Person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Debt" shall mean, in relation to any Person (i) all
indebtedness of such Person for borrowed money, including
obligations with respect to bankers' acceptances; (ii) all
indebtedness of such Person for the deferred purchase price of
property or services represented by a note or other security;
(iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person; (iv) all obligations under leases which
shall have been or should be, in accordance with GAAP
consistently applied, recorded as capital leases in respect of
which such Person is liable as lessee; (v) all reimbursement
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obligations in respect of letters of credit issued at the request
of such Person; and (vi) all Debt Guaranteed by such Person.
"Debt Guaranteed" by any Person shall mean all Debt of the
kinds referred in (i) through (v) of the definition of Debt which
is directly or indirectly guaranteed by such Person, or which
such Person has agreed (contingently or otherwise) to purchase or
otherwise acquire, or in respect of which such Person has
otherwise assured or agreed to indemnify a creditor against loss.
"Defaulting Member" shall have the meaning assigned to that
term in Section 9.1.
"Development Financing" is defined in Section 4.5.
"Effective Date" shall mean the date upon which the Members
sign this Agreement.
"Excess Interest" shall mean the difference between the
interest rate of the Development Financing or replacement
Development Financing specified in Section 4.6(b) obtained
pursuant to Section 4.5 and 14% per annum. In no event shall the
Excess Interest exceed 4.5% per annum, even if the interest rate
exceeds 18.5% per annum.
"Extraordinary Resolution":
(a) of the Managers shall mean a resolution that is:
(i) approved at a properly constituted meeting of the
Managers for the purpose of considering the proposed resolution
by at least 80.0% of the Managers ; or
(ii) consented to by all of the Managers by an
instrument or instruments in writing.
(b) of the Members shall mean a resolution that is:
(i) approved at a properly constituted meeting of
Members convened for the purpose of considering the proposed
resolution by Members holding at least 80% of the Percentage
Interests ; or
(ii) consented to by all of the Members by an
instrument or instruments in writing.
"Full Gaming" shall mean that the enabling legislation for
privately owned non-racing gaming permits gaming of (i) more than
500 electronic games of chance or skill or (ii) any combination
of games which includes table games. During Full Gaming the
Percentage Interest of Rockingham shall be 50% and the
Percentage Interest of Showboat shall be 50%. Notwithstanding
the foregoing, the Company shall not conduct simulcasting, inter-
track wagering and pari-mutuel activities.
"GAAP" shall mean, at any time, accounting principles
generally accepted in the United States of America at such time.
"Gaming Area" shall mean those areas reserved for the
operation of electronic games of chance or skill, table games or
any other legal forms of gaming permitted under applicable law,
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and ancillary service areas, including reservations and
admissions, cage, vault, count room, surveillance room and any
other room or area or activities therein regulated or taxed by
the Gaming Authority by reason of gaming operations.
"Gaming Authority" shall mean the New Hampshire gaming
authority set forth in the enabling legislation or regulations
promulgated thereunder.
"Governmental Authorities" shall mean the Gaming Authority,
the Nevada Gaming Control Board, the Nevada Gaming Commission,
the New Jersey Casino Control Commission, the New South Wales
Casino Control Authority, the Casino Authority, the New Hampshire
Pari-Mutuel Commission and such other authority governing gaming
in states or countries in which the Company or any of the Members
currently conduct or in the future may conduct gaming operations.
"Gross Gaming Revenues" shall mean all of the revenue from
the operation of the Gaming Area, including, but not limited to,
table games, electronic games of chance, electronic games of
skill and admission fees.
"Invested Capital" is defined in Section 4.4 of this
Agreement.
"Limited Gaming" shall mean gaming where the enabling
legislation limits the Project to no more than 500 electronic
games of chance and prohibits other games (e.g., a prohibition
against any variety of table games).
"Limited Gaming Adjustment" shall mean an adjustment in the
scope of the Project, reduction of fees, adjustment in income
sharing and the like in the event the enabling legislation
provides only for Limited Gaming, and such Limited Gaming
Adjustment shall be in effect until the enabling legislation
permits Full Gaming unless otherwise agreed in writing by the
Members. During Limited Gaming the Percentage Interests shall be
70% for Rockingham and 30% for Showboat.
"Management Agreement" shall mean that certain Management
Agreement of even date herewith, entered into between the Company
and an affiliate of Showboat for the management of the Project.
"Manager(s)" shall mean the person(s) elected by the Members
to manage the Company.
"Members" shall mean Rockingham and Showboat and any of
their Permitted Transferees or other Person who acquires, with
the unanimous written consent of the other Members, and directly
or beneficially owns an Interest in accordance with the
provisions of this Agreement.
"Member's Interest" or "Interest" shall mean a Member's
ownership interest in the Company, including the Member's share
of the profits and losses of the Company and the right to receive
distributions of the Company's assets.
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"Member Loan" shall mean any loan by a Member to the Company
other than the Capital Loan (defined in Section 4.1(b)
"Parties" shall mean the parties to this Agreement, and
"Party" shall mean any of them.
"Percentage Interest" shall mean each Member's Invested
Capital as a percentage of all Members' Invested Capital. The
Members' initial percentage interests therefore are as follows:
Showboat 50%
Rockingham 50%
"Permitted Rockingham Transferee" shall mean, in the
case of a particular Rockingham Shareholder, (i) an entity, all
of the voting securities or other ownership interests of which
are owned by the Rockingham Shareholder, free and clear of any
agreement or any option or right capable of becoming an agreement
entitling any other Person (other than a Permitted Rockingham
Transferee)to acquire such voting securities or other ownership
interests in whole or in part; (ii) an inter vivos family or
testamentary trust for the benefit of the Rockingham Shareholder
or for the benefit of the Rockingham Shareholder, his spouse,
children or grandchildren; (iii) the Rockingham Shareholder's
parent, spouse, child or grandchild; (iv) a voting trust or
similar agreement comprised of Rockingham Shareholders or
Permitted Rockingham Transferees; and/or (v) another Rockingham
Shareholder.
"Permitted Transferee" shall mean, in the case of a
particular Member, an entity, all of the voting securities or
other ownership interests of which are owned by the Member (or
parent corporation of the Member) free and clear of all liens,
charges, claims and encumbrances of any nature whatsoever
(including any agreement or any option or right capable of
becoming an agreement entitling any other Person to acquire such
voting securities or other ownership interests in whole or in
part).
"Person" shall mean any individual, partnership, limited
partnership, limited liability company, corporation,
unincorporated association, joint venture, trust, governmental
entity or other entity.
"Project" shall mean a gaming establishment and related
improvements which may include restaurants, entertainment
facilities, retail outlets and other ancillary facilities,
including shared facilities, administrative offices, parking and
easements, ordinarily accompanying a privately owned non-racing
gaming establishment to be located at Rockingham Park. The
Project shall not include the Race Track Operations.
"Promissory Note" shall mean that certain promissory note
made by Rockingham to the benefit of Showboat Development Company
in the principal amount of $8.85 million dated December 28, 1994.
"Race Track Operations" shall mean any permissable activity
permitted by applicable statutes or regulations to be conducted
at Rockingham Park, Rockingham County, Salem, New
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Hampshire excluding all gaming activities, other than
simulcasting, inter-track wagering, sale of lottery tickets and
pari-mutuel activities, permitted by Limited and Full Gaming.
"Regulations" shall mean rulings issued by the US Treasury
as interpretations of the Code.
"Rockingham" shall mean Rockingham Venture, Inc., a New
Hampshire corporation, or its Permitted Transferees and its
successors and assigns.
"Rockingham Shareholders" shall mean Xxxxxx X. Xxxxxx, Xx.,
Xxxxxx X. Xxxxxx, Xxx Xxxxx and Xxxxxx X. Xxxxxx, or any of the
Permitted Rockingham Transferees and their successors and
assigns.
"Rockingham Shares" shall mean the shares of capital stock
of Rockingham.
"Sale Transaction" shall mean a purchase and sale of a
Member's Interest between or among parties hereto pursuant to the
provisions of Articles 8, 9, 10, 11 or 12 as the case may be.
"Showboat" shall mean Showboat New Hampshire, Inc., a Nevada
corporation, or its Permitted Transferees and its successors and
assigns.
"Vendor" shall mean any Party who elects or is required to
sell its Interest pursuant to a Sale Transaction.
ARTICLE II. OFFICES
2.1 PRINCIPAL OFFICE
The principal office of the Company in the state of New
Hampshire shall be at Xxxxxxxxxx Xxxx, Xxxxxxxxxx Xxxx Xxxxxxxxx,
Xxxxx, Xxx Xxxxxxxxx 00000. The Members may change said
principal office at any time from one location to another in the
state of New Hampshire.
ARTICLE III. PURPOSE
3.1 PURPOSE
The purpose of the Company shall be to engage in the
development, ownership and operation of the Project. Any
business beyond the business described herein shall require the
unanimous written consent of the Members.
ARTICLE IV. CAPITAL
4.1 CAPITAL CONTRIBUTIONS
(a) Initial Capital Contributions. Immediately after the
Effective Date, the Members shall contemporaneously each make the
following initial capital contributions (each Member's
contribution shall be conditioned on the other making its
contribution):
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(i) Rockingham $1,000.00
(ii) Showboat $1,000.00
(b) Additional Capital Contributions. The Members shall
make additional capital contributions to the Company under the
following circumstances, which amounts shall be credited to their
respective capital accounts:
(i) Upon the enactment of legislation which authorizes
Limited Gaming at Rockingham Park on or before December 31, 1999
(except, however, Showboat may extend such period in its sole
discretion for two successive twelve-month periods in the event
that progress towards gaming legislature is evident) then:
(1) Rockingham shall contribute such space as is
necessary for the operation of the Project in the
existing facility of Rockingham Park and all
necessary easements, rights-of-way, licenses,
common areas, customer and employee parking
facilities. At the time of enactment of Limited
Gaming the Members agree to attach as Exhibit 1
to this Agreement which exhibit shall specify the
location of the space at the existing Rockingham
Park facility which will be utilized for the
Limited Gaming space.
(2) Showboat shall contribute the principal
balance of the Promissory Note exclusive of any
unpaid due balances. Upon contribution of the
Promissory Note by Showboat, Rockingham's
obligations to make principal and interest
payments shall cease and shall be forgiven by the
Company in accordance with Section 4.1(b)(iii)
below. In the event that the Company is
liquidated during Limited Gaming, all
distributions paid to Showboat pursuant to this
Agreement shall be aggregated. If the aggregated
distributions do not exceed the principal balance
of the Promissory Note as of the date of
contributing same to the Company, Rockingham shall
execute a new promissory note in the principal
amount which is equal to the difference between
the balance of the Promissory Note at the time of
contribution to the Company and the aggregate of
the distributions to Showboat. The new promissory
note shall accrue interest from the date of
liquidation of the Company at the same rate as
interest accrued under the Promissory Note and
principal and interest shall be paid in quarterly
installments of no less than $259,000 until said
promissory note is fully amortized. All monies
paid, whether by the Company or Rockingham shall
be applied first to interest then to principal.
(3) The capital contributions detailed in
4.1(b)(i)(1) and (2), whether cash or assets, when
added to the initial contribution, shall be deemed
to result in a 70% contribution by Rockingham and
a 30% contribution by Showboat.
(ii) Upon the passage of enabling legislation which
authorizes a privately owned non-racing gaming business
(operating Full Gaming or pursuant to the mutual agreement of the
Members) at Rockingham Park on or before December 31, 1999
(except, however,
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Showboat may extend such period in its sole and absolute
discretion for two successive twelve month periods in the event
that progress towards gaming legislation is evident) or
thereafter if the enabling legislation first authorizes Limited
Gaming and thereafter Full Gaming is authorized then:
(1) Rockingham shall contribute approximately
fifteen (15) acres of land at the Rockingham Park
premises plus related easements, licenses (excluding
any Rockingham Park pari-mutuel license) and rights of
way, etc., use of common areas and existing clubhouse
space for the Project. In the event such legislation
enables development of a hotel in connection with the
Project, Rockingham shall additionally contribute
approximately ten (10) acres of land for a hotel to be
constructed, owned, and managed by the Company. Unless
otherwise repaid by Rockingham, all land contributed
shall be subject to the existing 13.5% Senior New
Hampshire Development Authority Bonds (the "13.5%
Bonds") or any other bonds or other indebtedness
secured by the real estate resulting from a refinancing
of the 13.5% Bonds so long as the total amount of such
refinancing does not exceed the then current balance of
the 13.5% Bonds plus any debt service reserve
requirements which in no case shall exceed $7,000,000.
Attached hereto as Exhibit 2 is a drawing of the
Rockingham Park premises generally specifying the
location of the 15 and 10 acre parcels of land.
(2) Showboat shall contribute (i) the principal
balance of the Promissory Note (if not previously
contributed) exclusive of any unpaid due balances and
said Promissory Note shall be deemed paid in full as
provided in Section 4.1(b)(iii) below and (ii) cash
sufficient to obtain the Development Financing in an
amount to fund the Project, not to exceed 30% of cash
funds required for the Project. To the extent that
Showboat's contribution exceeds 20% of cash funds
required for the Project, the excess shall become a
loan (the "Capital Loan") from Showboat to the Company
and shall be repaid to Showboat by the Company over a
four (4) year amortization period which repayment shall
commence on the third anniversary date of commencement
of operations at the Project. Such excess shall accrue
interest at the same rate as the Development Financing.
Attached hereto as Schedule 1 is an exemplar of the
calculation of funds to be repaid to Showboat pursuant
to the Capital Loan should Showboat make cash
contributions in excess of 20% of cash funds
(3) The capital contributions detailed in
4.1(b)(ii)(1) and (2), whether cash or assets, when
added to any previous contributions, including the
contributions made by the Members for Limited Gaming,
shall be deemed to be equal in value.
(iii) The Promissory Note shall be forgiven by the
Company in equal portions over 4 years commencing on the date of
contribution of the Promissory Note to the Company and upon the
anniversary of the date of the contribution to the Company
thereafter. Payment of interest on the principal of the
Promissory Note by Rockingham shall be suspended from the date
the Promissory Note is contributed to the Company by Showboat.
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(iv) Attached hereto as Exhibit 3 and incorporated
herein by reference are the agreements regarding the use of
common areas by the businesses owned and operated by the Company
and Rockingham.
(v) The Company acknowledges that Rockingham is
currently conducting Race Track Operations and that such
operations may require Rockingham to make structural and other
changes to the Rockingham Park facility from time to time. Such
changes may adversely affect the placement of the gaming area of
the Company at the Rockingham Park facility. The Company and
Rockingham agree to discuss all such changes in advance of
Rockingham making the change to the Rockingham Park facility and,
in the event such structural change would affect the Project or
the proposed location for the Project, that Rockingham shall not
make such structural or other change unless the Company has
approved the change in writing. The Company shall not
unreasonably withhold its consent to the proposed structural or
other change requested by Rockingham. Moreover, Rockingham and
Showboat shall enter into a Cooperation Agreement to coordinate
construction and operational activities of the Project with the
Race Track Operations.
(vi) In either Limited Gaming or Full Gaming, the
Project shall be operated in and near Rockingham's Race Track
Operations. The Company and Rockingham shall agree to conduct
their respective operations in such a manner so has to minimize
any adverse impact of their respective operations on the other.
(c) The capital of the Company shall be the sums of cash or
the agreed fair market value of the property or services (or
combination of cash, property and services) contributed to the
Company by the Members in such amounts or value as are set out
opposite the name of each of the Members on Schedule A-1 attached
hereto and incorporated herein by this reference which shall be
amended from time to time by the Managers to reflect a current
list of the names and addresses of each current Member. In the
event that property is contributed by a Member as its capital
contribution, such property shall be contributed to the Company
free and clear of all liens and other interests except as may
otherwise be agreed in writing by all Members. A transfer of any
membership Interest shall not be effective until it has been
recorded in the records of the Company.
(d) At such time as the Members unanimously determine that
additional capital is required by the Company, such additional
capital contributions shall be made by the Members in proportion
to the Members' Percentage Interest. If any Member should fail
to make any additional capital contribution on or before the date
such contribution is due, the Members who had contributed the
additional contribution shall advance to the Company an amount
equal to the noncontributing Member's additional capital
contribution, and the amount so advanced by the contributing
Members shall be considered a loan to the Company ("Additional
Contribution Loan"). Said Additional Contribution Loan shall
accrue interest at the then prevailing interest rates charged by
banks in the Boston, Massachusetts metropolitan area plus a 1%
origination fee on the principal of the Additional Contribution
Loan. Additionally, the Additional Contribution Loan shall be
entitled to the noncontributing Member's distributions until the
Additional Capital Loan is repaid. Notwithstanding the foregoing
the noncontributing Member shall continue to receive
distributions in an amount equal to the noncontributing Member's
portion of federal and
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state income tax liability of the Company as if the Company was a
taxable entity in the State of New Hampshire.
(e) Showboat shall plan and implement necessary
predevelopment, development and preopening activities. Showboat
and Rockingham each agree to fund 50% of any funds required as
preapproval, start-up expenses of the Project, principally for
lobbying for the enactment of gaming legislation, consulting,
advertising and such other services as is necessary for the start-
up of operations including the enactment of gaming legislation
authorizing privately-owned non-racing gaming at facilities such
as Rockingham Park. Showboat agrees to advance up to the first
$1 million of such expenses, if necessary, with Rockingham
funding the next $1 million of such expenses, if necessary. All
funds so expended will become preopening expense and will be
reimbursed to Showboat and Rockingham, as appropriate, upon
obtaining the Development Financing. No funds shall be
distributed for a pre-opening activity unless such distribution
is specified in a pre-opening budget. For each 6 month period,
Rockingham and Showboat shall develop a budget for such pre-
opening activities. Neither Rockingham nor Showboat shall
deviate from the budget except as otherwise approved in writing
by both Members. Only expenses specified by the budget or
otherwise approved in writing by the Members shall be reimbursed
by the Company. Additionally, the Member seeking reimbursement
shall provide the other Member a detailed accounting, with
supporting documentation, of such expenses on a monthly basis.
The Member seeking reimbursement shall be reimbursed within 15
days of receipt of the detailed accounting.
4.2 CAPITAL ACCOUNTS
Capital Accounts shall be established on the Company's books
representing the Members' respective capital contributions to the
Company. The term "Capital Account" shall mean the capital
account maintained for such Member in accordance with the
following provisions:
(a) Each Member's Capital Account shall be increased by:
(i) The amount of the Member's cash or agreed value in-
kind capital contributions to the Company pursuant to Section 4.1
hereof;
(ii) The fair market value of any property contributed
by the Member to the Company (net of liabilities secured by any
such contributed property that the Company is considered to
assume or take subject to for purposes of Section 752 of the
"Code");
(iii) The amount of Net Profits (or items thereof)
allocated to the Member pursuant to Article XIII hereof; and
(iv) Any other increases required by Regulations
issued pursuant to the Code. If Section 704(c) of the Code
applies to property contributed by a Member to the Company, then
the Members' Capital Accounts shall be adjusted in accordance
with Regulations Section 1.704-1(b)(2)(iv)(g).
(b) Each Member's Capital Account shall be decreased by:
10
(i) The amount of Net Losses allocated to the Member
pursuant to Article XIII hereof;
(ii) All amounts paid or distributed to the Member
pursuant to Article XIV hereof, other than amounts required to be
treated as a payment for property or services under the Code;
(iii) The fair market value of any property
distributed in-kind to the Member (net of any liabilities secured
by such distributed property that such Member is considered to
assume or take subject to for purposes of Section 752 of the
Code); and
(iv) Any other decreases required by the Regulations.
Before decreasing a Member's Capital Account (as
described above) with respect to the distribution of any property
to such Member, all Members' accounts shall be adjusted to
reflect the manner in which the unrealized income, gain, loss,
and deduction inherent in such property (that has not been
previously reflected in the Members' Capital Accounts) would be
allocated among the Members if there were a taxable disposition
of such property by the Company on the date of distribution, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
(c) In determining the amount of any liability for purposes
of Sections 4.2(a) and 4.2(b) hereof, there shall be taken into
account Code Section 752(c) and any other applicable provisions
of the Code and any Regulations promulgated thereunder.
(d) Members' Capital Accounts shall be adjusted in
accordance with, and upon the occurrence of an event described in
Regulations Section 1.704-1(b)(2)(iv)(f), including the addition
of new Members pursuant to Section 5.13 hereof or the receipt of
additional capital contributions pursuant to Section 4.6 hereof,
to reflect a revaluation of the Company's assets on the Company's
books. Such adjustments to the Members' Capital Accounts shall
be made in accordance with Regulations Section 1.704-
1(b)(2)(iv)(g) for allocations of depreciation, depletion,
amortization and gain or loss with respect to such revalued
property.
(e) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. The
Members shall make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to
comply with Regulations Section 1.704-1(b).
4.3 FEDERAL INCOME TAX ELECTIONS
(i) The Managers, acting at a meeting of Managers or
by written consent, shall make all elections for federal income
tax purposes, including but not limited to an election, pursuant
to Code Section 754, to adjust the basis of the Company's assets
under Code Sections 734 or 743. In the event an election
pursuant to Code Section 754
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is made by the Managers, upon the adjustment to the basis of
the Company's assets, the Members' Capital Accounts shall be
adjusted in accordance with the requirements of Regulation
Section 1.704-1(b)(2)(iv)(m).
4.4 MEMBERS INVESTED CAPITAL
The "Invested Capital" of a Member shall be the sum of any
cash contributed by said Member to the Company, and the deemed
fair market value of any property contributed by said Member to
the Company, less the amount of any liabilities of such Member
assumed by the Company or which are secured by property
contributed by such Member to the Company. In the event the
Company's assets are revalued pursuant to Section 4.2(d) hereof
resulting in an adjustment to the Members' Capital Accounts, the
Members' "Invested Capital" shall, for purposes of this
Agreement, be deemed to be each Member's respective Capital
Account balance immediately after such revaluation.
4.5 DEVELOPMENT FINANCING
Showboat shall use its best efforts to obtain on behalf of
the Company third-party debt financing in amount sufficient to
fund the initial development of the Project pursuant to plans
approved by the Members (the "Development Financing") following
the enactment of legislation permitting Full Gaming in the State
of New Hampshire. The Development Financing shall be non-
recourse to Rockingham and its shareholders. The Development
Financing may be secured by the Company's assets or cash flows
only. In the event the third party lender requires the Company
to issue equity warrants or any participation in permanent
equity, such equity shall be charged against Showboat's interest
in the Company.
4.6 EXCESS INTEREST
In the event the Development Financing (defined in Section
4.5) or any renewal or replacement thereof obtained by the
Company, whether or not from a Member, has an interest rate,
inclusive of non-permanent participating interests (such non-
permanent participating interests shall terminate
contemporaneously with the satisfaction of the Development
Financing) and other payments and fees paid for the use of the
financing not applied towards the reduction of principal or in
payment of actual costs and expenses incurred and actually paid
by lender, for the financing which exceeds fourteen percent (14%)
per annum, then the following provisions shall apply:
(a) Notwithstanding Showboat's fifty percent (50%)
Interest, Showboat shall be responsible for the payment of all of
the Excess Interest on such loan;
(b) In recognition of Showboat's bearing the responsibility
for payment of all of the Excess Interest that is
disproportionate to its Interest, Showboat and Rockingham agree
that at Showboat's request, the Company shall agree to refinance
such outstanding debt if such replacement financing is available
on terms otherwise no less favorable than the then current
financing, including such financing being nonrecourse to
Rockingham, and can be completed at an effective interest rate
below the Development Financing rate currently in place, where
all proposed refinancing expenses are amortized into the
replacement interest rate. If the effective replacement
financing rate exceeds fourteen percent (14%), Showboat shall be
responsible for the payment of all of the Excess Interest on such
loan. Excess Interest, if any, shall be funded from
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Showboat's share of the Distributable Cash or other cash to be
distributed to Showboat. If there is insufficient cash to
satisfy Showboat's obligations, the Manager shall notify
Showboat. Showboat shall immediately provide additional cash to
the Company by way of an additional Capital Contribution to
satisfy such obligation.
4.7 INTEREST
Except as may otherwise be provided for herein, no interest
shall be paid or credited to the Members on their Capital
Accounts or upon any undistributed profits left on deposit with
the Company.
ARTICLE V. MEMBERS
5.1 POWERS
Subject to the provisions of the Certificate of
Organization, this Limited Liability Company Agreement and the
provisions of the Act, all powers shall be exercised by or under
the authority of, and the business and affairs of the Company
shall be controlled by, the Members. Without prejudice to such
general powers, but subject to the same limitations, it is hereby
expressly declared that the Members shall have the following
powers:
(a) Subject to the provisions of Section 6.1, to select and
remove all Managers, agents and employees of the Company,
prescribe such powers and duties for them as may be consistent
with the Act, with the Certificate of Organization or this
Limited Liability Company Agreement, fix their compensation, and
require from them security for faithful service.
(b) To change the principal office of this Company from one
location to another within New Hampshire; to fix and locate from
time to time one or more subsidiary offices of the Company; and
to designate any place within or without the state of New
Hampshire for the holding of any Members' meeting or meetings.
Each of the Members covenants and agrees to exercise the
rights and votes attaching to the Member's Interest at all times
and to use its best efforts to cause its nominees for Manager to
act at all times so that the provisions of this Agreement shall
govern the affairs of the Company to the maximum extent permitted
by law. In the event of any conflict between the provisions of
this Agreement and the provisions of the Certificate of
Organization, each of the Members covenants and agrees to take or
cause to be taken such steps and proceedings as may be required
under New Hampshire law or otherwise to amend such Certificate of
Organization to resolve such conflict so that the provisions of
this Agreement shall, to the maximum extent permitted by law, at
all times prevail.
5.2 COMPENSATION TO MEMBERS
By Extraordinary Resolution of the Members, the Company
shall have authority to pay to any Member reasonable compensation
for said Member's services to the Company. It is understood that
the salary paid to any Member under the provisions of this
Section shall be determined without regard to the income of the
Company and shall be considered as an operating
13
expense of the Company and shall be deducted as an expense item
in determining the net profits and losses of the Company.
5.3 OTHER VENTURES
Except as may otherwise be provided for herein, nothing
contained in this Agreement shall be construed to restrict or
prevent, in any manner, any Member from engaging in any other
businesses or investments, including, without limitation, any
similar or competitive gaming operation; provided, however, a
Member shall obtain the prior written consent of the other
Members to engage in any similar or competitive activities
without the express written consent of all other Members within
an area having a radius of thirty (30) miles from the existing
boundaries of Rockingham Park, Salem, New Hampshire, except that
Showboat or its Affiliates and/or any other Rockingham Permitted
Transferee may pursue any gaming opportunity/activity with Yankee
Greyhound Racing, Inc., or its successors or assigns, at
Seabrook, a New Hampshire greyhound racing facility. The Members
acknowledge that Showboat and/or its Affiliates and Rockingham
and/or its Affiliates operate other gaming facilities and may in
the future operate additional gaming facilities in different
areas of the world, and that marketing efforts may cross over in
the same markets and with respect to the same potential customer
base. The Members agree that the Parties may refer customers of
the Project to other facilities operated by Showboat and/or its
Affiliates or Rockingham and/or its Affiliates to utilize gaming,
entertainment and other amenities, without payment of any fees to
any Member or the Company. Notwithstanding the foregoing, in the
event that Showboat or one of its Affiliates invests in or
manages a gaming facility in New England Showboat or its
Affiliate shall keep all information regarding the operations of
such gaming business and the business of the Project confidential
in accordance with Article XX.
5.4 MEETINGS OF MEMBERS
Management of the Company is vested in, and all actions of
the Members are taken by the Members in proportion to their
Percentage Interest at the time of the action taken. Except as
specifically otherwise provided herein, the Members' votes to
approve a matter or to take any action shall be by the vote of
Members at a meeting, which meeting may be held by telephone, in
person or by proxy or without a meeting by unanimous written
consent. For any meeting of Members, the presence in person or
by proxy of Members owning 80% of the Percentage Interest at the
time of the action taken constitutes a quorum for the transaction
of business. Members vote in proportion to their Percentage
Interest and, except for an action that requires an Extraordinary
Resolution, an action approved at a meeting by Members owning
more than 50% of the Percentage Interest ("Majority") of that
quorum shall be the action of the Members. From and after the
date a Member becomes a Defaulting Member the votes of such
Member, or its nominee Managers, or both of them, as the case may
be, shall be excluded for purposes of determining whether a
decision, action or matter has been approved by the Members or
Managers, respectively.
5.5 ACTION BY WRITTEN CONSENT
Any action may be taken by the Members without a meeting if
authorized by the unanimous written consent of Members.
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5.6 PLACE OF MEETINGS OF MEMBERS
All annual meetings and special meetings of the Members
shall be held at any place designated by the Members, or, if no
such place is designated, then at the principal office of the
Company. Annual meetings and special meetings may be held by
telephone if designated in the notice of the meeting.
5.7 ANNUAL MEETINGS
The annual meeting of the Members shall be held on the 1st
day of May of each year at the hour of 10:00 a.m., beginning with
the year 1996 or on such other date and time as the Members shall
specify in writing. Should said day fall upon a legal holiday,
then any such annual meeting of Members shall be held at the same
time and place on the next day which is not a legal holiday.
5.8 ANNUAL MEETINGS: NOTICE
Written notice of each annual meeting signed by a Manager or
by such other person or persons as the Members shall designate,
shall be given to each Member, either personally or by mail or
other means of written communication, charges prepaid, addressed
to such Member at his address appearing on the books of the
Company or given by him to the Company for the purpose of notice.
If a Member gives no address, notice shall be deemed to have been
given him if sent by mail or other means of written communication
addressed to the place where the principal office of the Company
is situated. All such notices shall be sent to each Member
entitled thereto not less than seven (7) nor more than sixty (60)
calendar days before each annual meeting, and shall specify the
place, the day and the hour of such meeting.
5.9 SPECIAL MEETINGS
Special meetings of the Members, for any purpose or purposes
whatsoever, may be called at any time by a Manager or by any
Member. Except in special cases where other express provision is
made by statute, notice of such special meetings shall be given
in the same manner as for annual meetings of Members. Notices of
any special meeting shall specify, in addition to the place, day
and hour of such meetings the purpose or purposes for which the
meeting is called.
5.10 WAIVER OF NOTICE
The transactions of any meeting of the Members, however
called and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting,
each of the Members not present sign a written waiver of notice
or a consent to holding such meeting or an approval of the
minutes thereof. All such waivers, consents or approvals shall
be filed with the records or made a part of the minutes of the
meeting.
5.11 ADJOURNED MEETINGS AND NOTICE THEREOF
Any Members' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the vote
of a majority of the Percentage Interests present in person or
represented by proxy at the meeting. In the absence of a quorum
no business other than the adjournment thereof may be transacted
at the meeting. Other than by announcement at the
15
meeting at which such adjournment is taken, it shall not be
necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting. However, when any
Members' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall
be given as in the case of an original meeting.
5.12 DELEGATION OF AUTHORITY TO MEMBERS AND MANAGERS
By Extraordinary Resolution, the Members or Managers may at
any time or times, and for such period as the Members shall
determine, delegate their authority to determine questions
relating to specific areas of the conduct, operation, and
management of the Company. Until such direction or delegation of
authority is made, however, the Members and Managers shall have
the authority set forth in this Article V and Article VI below.
5.13 ADMISSION OF NEW MEMBERS
New Members may be admitted to membership in the Company
only with the unanimous consent of the existing Members. A new
Member must agree in writing to be bound by the terms and
provisions of the Certificate of Organization and this Limited
Liability Company Agreement, as amended, and upon admission the
new Member shall have all rights and duties of a Member of this
Company.
5.14 COOPERATION OF THE MEMBER
One of the reasons for entering into this Agreement is to
create and recognize the fiduciary rights/obligations between
Members delineated in this Agreement. In that regard, the
Members shall cooperate fully with each other during the term of
this Agreement to facilitate the performance by the Company of
the Company's obligations and responsibilities set forth in this
Agreement and to procure and maintain all construction, operating
and gaming licenses and permits related to the Project.
5.15 COMPANY ACTION BY MEMBERS
The taking of any of the following decisions or actions or
the implementation of any of the following matters by the Company
shall require Extraordinary Resolution of the Members:
(a) sale of all or substantially all of the assets of the
Company;
(b) incurring indebtedness in excess of $10,000,000;
(c) approval of the initial development and business plans
and budgets for the Project;
(d) amendments to the Management Agreement, Certificate of
Organization or Limited Liability Company Agreement of the
Company or termination of the Management Agreement;
(e) material changes in the nature of the Company's
business;
(f) application for additional gaming licenses by the
Company;
(g) a change in the auditor of the Company.
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ARTICLE VI. MANAGERS
6.1 ELECTION
(a) The Members agree that the business of the Company
shall be managed by six (6) Managers. So long as Showboat has a
membership interest in the Company, Showboat and any of its
Permitted Transferees shall have the right to nominate at least
one-half (1/2) of all of the Managers, and a Showboat nominated
Manager shall be the General Manager of the Company. The General
Manager shall be the chief executive officer of the Company and
shall be active in the management of the business of the
Company. All of the Members other than Showboat and their
Permitted Transferees shall have the right to nominate the
remaining number of Managers. Each Manager of this Company shall
be chosen annually by the Members and each shall hold office
until such Manager shall resign or shall be removed or otherwise
disqualified to serve, or the Manager's successor shall be
elected and qualified.
(b) Each Member shall vote at all meetings of Members,
unless they are a Defaulting Member, and shall use its best
efforts to cause its nominee Managers to act, in such a manner as
to ensure that the nominees for Manager designated pursuant to
Section 6.1(a) are elected or appointed and maintained in office
as Managers.
(c) In the event a Member transfers only a portion of its
Interest to a Permitted Transferee, the right of such Member, if
any, to nominate any Manager under Subsection 6.1(a) shall be
exercised by such Member and the Permitted Transferee jointly or,
in the event the Member and Permitted Transferee are unable to
agree as to the exercise of such powers, by the original Member
alone as attorney-in-fact for each of them.
(d) If a Member acquires all of the Interest of another
Member, the Member acquiring such Interest shall be entitled to
nominate the Managers, if any, which the other Member was
formerly entitled to nominate.
(e) In the event that a nominee Manager of any Member
resigns from the office of Manager, such Member shall forthwith
deliver or cause to be delivered to the Company a resignation and
release of such nominee Manager in a form satisfactory to the
Company.
(f) From and after the date that a Member becomes a
Defaulting Member, the right of such Member to nominate any
Managers shall be suspended and the nominee Managers of such
Defaulting Member shall immediately resign. In the event of the
failure of the Defaulting Member to obtain such resignations, the
remaining Managers shall be entitled to remove such nominee
Managers from office and replace them with nominees designated by
the remaining Members.
6.2 REMOVAL, RESIGNATION AND VACANCIES
(a) Subject to Section 6.1 above, a Member may remove any
of its nominee Managers, either with or without cause in
accordance with the terms of this Agreement. Any Manager may
resign at any time by giving written notice to the Members. Any
such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
17
(b) In the event that a vacancy in the office of any
Manager arises for any reason whatsoever, and provided that the
Member entitled to nominate a replacement Manager is not a
Defaulting Member, such vacancy shall be filled by the election
or appointment of a Manager nominated by the same procedure as
that by which its predecessor was nominated in accordance with
the provisions of Section 6.1, Until such vacancy is filled, the
Managers shall not transact any business or exercise any of its
powers or functions, save and except as may be necessary to elect
or appoint such new Manager and preserve the business and assets
of the Company.
(c) If a replacement Manager is not elected within ten (10)
days of such vacancy occurring because of the failure of the
Member who is entitled to nominate such replacement Manager to
designate a nominee, thereafter the Managers then in office shall
be entitled to transact business and exercise all of the powers
and functions of the Managers. A decision or action of the
majority of the Managers then in office shall be deemed to be the
decision or action by Extraordinary Resolution of the Managers,
and a decision or action of all of the Managers then in office
shall be deemed to be the unanimous decision or action of the
Managers.
6.3 MANAGERS' POWER
The Managers shall have the right to make the following
decisions or actions at a properly constituted meeting of
Managers by at least a majority of the Managers:
(a) To select and remove all employees, agents and
representatives of the Company, prescribe such powers and duties
for them as may be consistent with law, with the Certificate of
Organization or this Limited Liability Company Agreement, fix
their compensation, and require from them security for faithful
service.
(b) To conduct, manage and control the affairs and business
of the Company, and to make such rules and regulations therefor
consistent with the Act, with the Certificate of Organization or
this Limited Liability Company Agreement.
(c) To change the principal office of this Company from one
location to another within New Hampshire; to fix and locate from
time to time one or more subsidiary offices of the Company; and
to designate any place within or without the State of New
Hampshire for the holding of any Members' meeting or meetings.
6.4 COMPANY ACTION BY MANAGERS
The taking of any of the following decisions or actions or
the implementation of any of the following matters by the Company
shall require an Extraordinary Resolution of the Managers;
(a) Except as otherwise provided for herein, construct,
improve, buy, own, sell, convey, exchange, assign, rent, or lease
any property (real, personal or mixed), or any interest therein
totaling, during any one calendar year, more than $500,000 unless
in an approved budget;
(b) Borrow money, issue evidence of indebtedness, secure
any such indebtedness by mortgage, deed of trust, pledge, or
other lien, or execute agreements, notes, mortgages, deeds of
trust, assignments, security agreements, financing statements or
other documents relating thereto
18
which involve a credit facility to carry out the same totaling,
during any one calendar year, more than $500,000 in a single or
related transactions;
(c) Abandon any of the assets of the Company in excess of
$50,000 in a single or related transactions;
(d) Perform any act in violation of the terms and
conditions of this Agreement;
(e) Make, execute, or deliver any general assignment for
the benefit of creditors or any bond, confession of judgment,
guaranty, indemnity bond or surety bond;
(f) Initiate or settle any litigation by or against the
Company or any proceeding before any governmental or regulatory
body for more than $100,000;
(g) Disburse funds that exceed an approved budget by more
than 5%. Any such variance in excess of 5% shall be promptly
reported to the Managers with reasonable explanations.
(h) Sell, lease or otherwise dispose of substantially all
of the assets of the Project;
(i) Approve annual business plans and budgets with respect
to operations and capital expenditures.
(j) Appoint an executive committee and other committees,
and to delegate to the executive committee any of the power and
authority of the Managers in the management of the business
affairs of the Company. A Manager, in its discretion, may or may
not be a member of an executive committee.
(k) Amend the Management Agreement or the Limited Liability
Company Agreement.
6.5 BANK ACCOUNTS
From time to time, the General Manager may designate a
person or persons to open and maintain one or more bank accounts;
rent safety deposit boxes or vaults; sign checks, written
directions, or other instruments to withdraw all or any part of
the funds belonging to the Company and on deposit in any savings
account or checking account; negotiate and purchase certificates
of deposit, obtain access to the Company's safety deposit box or
boxes, and, generally, sign such forms on behalf of the Company
as may be required to conduct the banking activities of the
Company.
6.6 MEETINGS OF MANAGERS
The quorum for a meeting of the Managers shall be four (4)
Managers, of whom at least two (2) Managers shall be nominees of
Showboat and two (2) Managers shall be nominees of Rockingham.
At least seven (7) days' prior written notice of any meeting of
the Managers must be given unless all of the Managers waive such
notice.
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6.7 ACTION BY WRITTEN CONSENT
Any action may be taken by the Managers without a meeting if
authorized by the unanimous written consent of the Managers.
6.8. PLACE OF MEETINGS OF MANAGERS
All regular and special meetings of the Managers shall be
held at any place within or without the state of New Hampshire
which has been designated from time to time by resolution of the
Managers or by written consent of all of the Managers. In the
absence of such designation, regular or special meetings shall be
held at the principal office of the Company.
6.9 FIRST MEETING
The first meeting of the newly elected Managers shall be
held immediately following the adjournment of the meeting of the
Members and at the place thereof.
6.10 SPECIAL MEETINGS
Special meetings of the Managers, for any purpose or
purposes whatsoever, may be called at any time by a Manager.
6.11 NOTICE
Except in special cases where other express provision is
made by statute, notice of any meeting of the Managers shall be
given in the same manner as for meetings of the Members,
including waiver of notice of such meetings.
6.12 REMUNERATION OF MANAGERS
Unless otherwise determined by an Extraordinary Resolution
of the Members, no amount shall be payable by way of salary,
bonus or other remuneration to any Manager for acting as such.
Each Manager shall be entitled to be reimbursed for reasonable
out-of-pocket traveling and subsistence expenses incurred while
attending meetings of, or otherwise being engaged in the business
of, the Company.
6.13 DEADLOCK
In the event of a deadlock in the Managers, each of
Rockingham and Showboat shall select one representative to
negotiate a resolution of such deadlock.
ARTICLE VII. TRANSFER OF MEMBERS' INTERESTS
7.1 TRANSFER OF MEMBERS' INTERESTS
The Interest of each Member of this Company is personal
property. Except as otherwise provided in this Limited Liability
Company Agreement, the transfer, directly or indirectly, of a
Member's Interest is restricted. The transfer of a Member's
interest shall include a gift, sale, transfer, assignment,
hypothecation, pledge, encumbrance or any other disposition,
whether voluntary or involuntary, by operation of law or
otherwise, including, without limitation, any transfer occurring
upon or by virtue of the bankruptcy, insolvency or dissolution of
a Member; the
20
appointment of a receiver, trustee, conservator or guardian for a
Member or his property; pursuant to any loan or security
agreement under which any of the Member's Interests are pledged
or otherwise serve as collateral, as well as the transfer of any
such Interest in the event recourse is made to such collateral;
or the transfer, directly or indirectly, of any voting securities
or other ownership interest in a Member.
Unless the proposed transferee of a transfer or assignment
of a Member's Interest receives the unanimous written consent of
the Members (excluding the proposed transferee), which consent
may be unreasonably withheld by any Member, the transferee of the
Member's Interest has no right to participate in the management
of the business and affairs of the Company or to become a Member.
The transferee is only entitled to receive the share of profits
or other compensation by way of income and the return of
contributions, to which the transferring Member would otherwise
be entitled. If the transfer is approved by all of the other
Members of the Company by unanimous written consent, the
transferee has all the rights and powers and is subject to all
the restrictions and liabilities of his assignor, has the right
to participate in the management of the business and affairs of
the Company and becomes a substituted Member.
7.2 NO TRANSFER PERMITTED UNDER CERTAIN CIRCUMSTANCES
Notwithstanding any other provision of this Agreement, a
Member shall not transfer all or any part of its Interest if such
transfer would cause the termination of the Company for federal
income tax purposes, would jeopardize any gaming license or would
violate any applicable federal or state securities laws, unless
unanimously agreed by all Parties.
7.3 PERMITTED TRANSFEREES
Each Member shall be entitled, upon prior written notice to
the Company and the other Members, with explanation for the
transfer and a representation and warranty that the transferee is
a Permitted Transferee as defined herein, to transfer the whole
or any part of its Interest to any Permitted Transferee of the
Member. No such transfer shall be or become effective, however,
until such Permitted Transferee executes and delivers to the
Company a counterpart copy of this Agreement or a written
agreement in form and substance satisfactory to the other Members
agreeing to be bound by the terms and conditions hereof formerly
applicable to the transferor of such Interest. No such transfer
shall release or discharge the transferor from any of its
liabilities or obligations under this Agreement until it becomes
effective and, then, only to the extent provided herein. In
addition, Rockingham agrees not to record in its books or
register any attempted transfer of shares of capital stock of
Rockingham in violation of this Agreement.
Each Rockingham Shareholder shall be entitled, upon prior
written notice to the Company and the other Members, with
adequate explanation for the transfer and a representation and
warranty that the transferee is a Permitted Rockingham Transferee
as defined herein, to transfer the whole or any part of its
voting securities or ownership interest in Rockingham (the
"Rockingham Shares") to any Permitted Rockingham Transferee of
the Rockingham Shareholder. No such transfer shall become
effective, however, until such Permitted Rockingham Transferee
executes and delivers to the Company a counterpart copy of this
Agreement or a written agreement in form and substance
satisfactory to the Members agreeing to be bound by the terms and
conditions hereof formerly applicable to the transferor of such
Shares. No such transfer shall
21
release or discharge the transferor from any liabilities or
obligations under this Agreement until it becomes effective, and,
then, only to the extent provided herein. In addition,
Rockingham agrees not to record in its books or registers any
attempted transfer of shares of capital stock of Rockingham by
the Rockingham Shareholders in violation or contrary to the terms
of this Agreement.
ARTICLE VIII. COMPULSORY BUY-SELL PROVISION
8.1 OFFER TO PURCHASE
In the event that any Member fails to fully and finally
perform and fulfill its material obligations pursuant to this
Agreement, except in the event of a Force Majeure Event or the
events identified in Articles IX and XXIII, then in such event a
"Buyout Event" shall be deemed to have occurred. At any time
after the occurrence of a Buyout Event, the non-performing
Member(s) or its Permitted Transferee shall have the right to
take the actions set out in this Section 8.1. The non-performing
Member(s) or its Permitted Transferee which first takes such
action is referred to in this Article as the "Offering Members".
The Offering Members may notify the remaining Members (the
"Remaining Member") in writing that it will offer to purchase
all, but not less than all, of the Interest owned by the
Remaining Member. The Remaining Member shall have a period of
thirty (30) days to cure the Buyout Event. If the Buyout Event
is not cured within said period the Offering Members may offer to
purchase all, but not less than all, of the Interest owned by the
Remaining Member which notice shall specify in the offer the
terms of the purchase and sale including the price (the
"Designated Price") to be paid for the Interest owned by the
Remaining Member.
8.2 ACCEPTANCE
(a) Within forty-five (45) days after the receipt by the
Remaining Member(s) of the offer from the Offering Members
pursuant to Section 8.1, the Remaining Member(s) shall advise the
Offering Member(s) in writing either:
(i) that the Remaining Member(s) accept the offer made
by the Offering Member(s) to purchase the Interest owned by it on
the terms and conditions set out in the offer; or
(ii) that the Remaining Member(s) elect to purchase
all the Interest owned by the Offering Member(s) on the terms and
conditions set forth in the offer. During such forty-five (45)
day period, the Remaining Member(s) may not make an offer under
Section 8.1.
(b) If the Remaining Member(s) elect to purchase the
Interest of the Offering Member(s), (i) they shall thereupon be
conclusively deemed to have made an offer to purchase the
Interest of the Offering Member(s) on the terms and conditions,
including the Designated Price, set out in the offer referred to
in Section 8.1, and the Offering Member(s) shall be conclusively
deemed to have accepted such offer of the Remaining Member(s);
and (ii) each Remaining Member(s) shall purchase from each
Offering Member(s) the proportionate share of such Offering
Member's Interest that the Percentage Interests of the Remaining
Member(s) is of the total Percentage Interest held by Remaining
Member(s), but such Remaining Member(s) may agree among
22
themselves to purchase the Interest of the Offering Member(s) in
different proportions and such purchase may be made by any of the
Remaining Member(s) jointly or by any one of them alone.
(c) If the Remaining Member(s) accept the offer of the
Offering Member(s) or fail to advise the Offering Member(s) in
writing within the period specified in Subsection 8.2(a) of their
intention to purchase the Interest of the Offering Member(s),
(i) the Remaining Member(s) shall be conclusively deemed to have
accepted the offer made by the Offering Member(s) to purchase the
Interest owned by the Remaining Member(s) on the terms and
conditions set out in the offer; and (ii) each Offering Member
shall purchase from each Remaining Member the proportionate share
of such Remaining Member's Interest that the Percentage Interest
of the Offering Member is of the total Percentage Interests held
by the Offering Member(s), but such Offering Member(s) may agree
to purchase the Interest of the Remaining Member(s) in different
proportions and such purchase may be made by any of the Offering
Member(s) jointly or by any one of them alone.
(d) The Member(s) who have accepted or been deemed to have
accepted an offer under this Section 8.2 shall be the "Vendor"
and the Member(s) who have elected or are required to purchase
the Interest under this Section 8.2 shall be the "Purchaser."
8.3 PURCHASE PRICE
The purchase price for the Interest of the Vendor shall be
the Designated Price (the "Purchase Price").
8.4 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be paid by the Purchaser in full by
cash, wire transfer of immediately available funds or certified
check at the Time of Closing.
8.5 CLOSING
The purchase and sale of the Purchased Shares resulting from
the acceptance or deemed acceptance of the offer pursuant to
Section 8.2 (a "Sale Transaction") shall be completed at the Time
of Closing and the Place of Closing on the date which is one
hundred twenty (120) days following the date of such acceptance
or deemed acceptance or such longer or shorter time required by
the Gaming Authority (the "Date of Closing") subject to the
receipt of regulatory approvals pursuant to Section 8.6 hereof.
The Sale Transaction shall be effected in accordance with the
general sale provisions set forth in Article XII.
8.6 GOVERNMENT APPROVAL
No transfer of an Interest pursuant to the provisions of
this Article VIII shall occur, except with the prior written
approval of any relevant Gaming Authority, if the same is
required.
ARTICLE IX. DEFAULTING MEMBER
9.1 OPTION TO PURCHASE MEMBER'S INTEREST
If a Member shall become a "Defaulting Member" as a result
of the occurrence of any of the following events or is otherwise
deemed pursuant to this Agreement to be a Defaulting
23
Member, the non-defaulting Members or their Permitted Transferees
shall have the option to purchase all of the Defaulting Member's
Interest (the "Purchased Interest") at the fair market value of
such Purchased Interest (the "Purchase Price") as determined in
accordance with this Agreement at the time of the exercise of the
option:
(a) If a Member is declared bankrupt or makes a proposal in
bankruptcy or otherwise becomes the subject of bankruptcy,
insolvency, liquidation, dissolution, winding up or similar
proceeding;
(b) If a Member makes an assignment for the benefit of
creditors or otherwise acknowledges its insolvency;
(c) If a Member allows its shares to be foreclosed upon by
a third party;
(d) If a Member ceases paying its debts as they mature
(other than those being contested in good faith and by
appropriate proceedings);
(e) If a Member, directly or indirectly, transfers its
Interest or any portion thereof in the Company to any Person
other than a Permitted Transferee or a Rockingham Permitted
Transferee, as the case may be, without the unanimous written
consent of the Members (excluding the proposed transferee); or
(f) If a Member adversely affects the gaming license of the
Company due to concerns of any aspect of the suitability of such
Member or any of its shareholders.
(g) If a Member fails to obtain all appropriate licenses.
(h) If a Member fails to make its equity investment in the
Company at such time or times as required.
(i) If, in the discretion of Showboat, any of Showboat's
gaming licenses may be adversely affected due to its interest in
the Company, Showboat can elect to become a Defaulting Member.
(j) Any Member is deemed not suitable under the New
Hampshire statute, significantly delays the licensing process or
materially adversely affects the pari-mutuel license of
Rockingham if a pari-mutuel license is required to obtain or
maintain the Full Gaming or Limited Gaming license.
9.2 OFFER TO PURCHASE SHARES OF ROCKINGHAM SHAREHOLDERS
In the event that (i) the gaming license of the Company is
materially adversely affected due to concerns of any aspect of
the suitability of a particular Rockingham Shareholder or (ii) a
Rockingham Shareholder transfers or attempts to transfer his
Rockingham Shares other than as provided in Article VII (in
either event under subsections (i) or (ii) above, the Rockingham
Shareholder shall be referred to hereinafter as the "Defaulting
Rockingham Shareholder"), and the continuation of such adverse
impact or violation for a period of thirty (30) days after
receipt by the Defaulting Rockingham Shareholder of written
notice from the non-Defaulting Rockingham Shareholders or a
Member specifying the same (the "curative period"), then the non-
Defaulting
24
Rockingham Shareholders shall have the option to purchase the
Defaulting Shareholders' Rockingham Shares for a mutually agreed
purchase price. In the event that the non-Defaulting Rockingham
Shareholders fail to purchase all of the Rockingham Shares of the
Defaulting Rockingham Shareholder within forty-five (45) days
following the curative period, Showboat may lend the purchase
price to Rockingham to purchase the Rockingham Shares held by the
Defaulting Rockingham Shareholder.. Upon receipt of the purchase
price from Showboat, Rockingham shall immediately use such funds
to redeem the Rockingham Shares held by the Defaulting Rockingham
Shareholder. The loan of the purchase price by Showboat to
Rockingham shall be pursuant to the then prevailing interest
rates in the Boston, Massachusetts metropolitan area plus a 1%
origination fee on the purchase price. Rockingham shall execute
a promissory note and all distributions payable to Rockingham in
accordance with this Agreement, except except for such sum which
is equal to Rockingham's portion of federal and state income tax
liability of the Company as if the Company was a taxable entity
in the state of New Hampshire, shall be paid to Showboat until
the promissory note shall have been paid in full.
9.3 DETERMINATION OF PURCHASE PRICE
Except as otherwise provided in Section 9.2, the non-
defaulting Member or its Permitted Transferee exercising an
option under Section 9.1 (the "Buyer") and the Defaulting Member
(the "Vendor" in this Article IX) shall mutually arrive at an
agreeable Purchase Price within ten (10) days of the occurrence
of an event giving rise to the existence of an option under
Section 9.1 (a "Triggering Event"). The Purchase Price shall be
the greater of the fair market value of the Purchased Interest or
the value of unreturned Equity Contribution of the Defaulting
Member. If the parties cannot agree upon the Purchase Price
within such ten (10) day period, the Purchase Price shall be
value as determined by the appraisal provisions of Article XI.
9.4 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be paid by the Purchaser in full by
cash or certified check on the Date of Closing as determined
pursuant to Section 9.5.
9.5 CLOSING
(a) The closing of the transaction of purchase and sale
contemplated by this Article IX (a "Sale Transaction") shall take
place at the Place of Closing at the Time of Closing on the date
(in this Article IX the "Date of Closing") that, unless the
Vendor and Buyer otherwise agree, is the latest of:
(i) the date which is one hundred twenty (120) days
after the relevant Triggering Event:
(ii) the date which is seven (7) days following the
receipt of all necessary governmental releases or approvals
required to be obtained in order to effect a valid transfer of
the Purchased Shares (and the Parties covenant and agree to use
their best efforts to obtain such consents, releases or
approvals); and
(iii) the date which is thirty (30) days after the
Purchase Price is finally determined in accordance with the
provisions of Section 9.3.
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(b) The Sale Transaction shall be effected in accordance
with the general sale provisions of Article XII.
ARTICLE X. RIGHT OF FIRST REFUSAL
10.1 THIRD PARTY OFFER
(a) No transfer by any Member of any Interest to any Person
other than a Permitted Transferee of such Member or another
Member shall be effected except in compliance with this Article
X. Any transfer effected in compliance with this Article X shall
also be in compliance with Article VII.
(b) If any Member or Members (the "Offeror") receives a
bona fide written offer (a "Third Party Offer") from any Person
dealing at arm's length with the Parties (the "Buyer") to
purchase all or less than all of the Interest owned by the
Offeror (the "Purchased Interest"), which Third Party Offer is
acceptable to the Offeror, the Offeror shall, by notice in
writing to the other Members (the "Offerees"), offer to sell the
Purchased Interest to the Offerees at the same price and upon the
same terms and conditions as are contained in the Third Party
Offer (the "Offer").
(c) The Offer (i) shall identify in reasonable detail the
Buyer and, if the Buyer is not an individual, identify those
Persons who, together with their Affiliates, control the Buyer;
(ii) shall be accompanied by a true and complete copy of the
Third Party Offer setting forth all of the terms and conditions
of the Third Party Offer; and (iii) shall provide such
information concerning the business experience and expertise of
the Buyer and its financial condition as is reasonably available
to the Offeror. The Offer shall not be revocable except with the
consent of the Offerees and shall be open for acceptance by the
Offerees for a period of ten (10) days from the date received by
them (the "Offer Period").
10.2 ACCEPTANCE OF OFFER
(a) If the Offer is accepted by any of the Offerees within
the Offer Period, then the Offeror (the "Vendor") shall sell and
the Offerees accepting the Offer (the "Purchaser") shall purchase
the Purchased Interest upon the terms and conditions contained in
the Offer.
(b) If there is more than one Purchaser, the Purchasers
shall purchase the Purchased Interest from the Offeror in the
same proportions that the Percentage Interest of each Purchaser
is to the total Percentage Interests held by all Purchasers, but
such Purchasers may agree to purchase the Purchased Interest in
different proportions and such purchase may be made by any of the
Purchasers jointly or by any one of them alone.
(c) The closing of the transaction of purchase and sale
pursuant to the Offer (a "Sale Transaction") shall take place at
the Place of Closing at the Time of Closing on the date which is
thirty (30) days after the expiration of the Offer Period (the
"Date of Closing"). The Sale Transaction shall be effected in
accordance with the general sale provisions of Article XII.
26
10.3 THIRD PARTY SALE
(a) If the Offerees do not accept the Offer during the
Offer Period, then, subject to the provisions of this Section
10.3, the Offeror shall be entitled, within a period of sixty
(60) days after the expiration of the Offer Period, to sell the
Purchased Interest to the Buyer in accordance with the Third
Party Offer.
(b) The Managers before consenting to the transfer of the
Purchased Interest to the Buyer shall be entitled to require
proof that the sale to the Buyer took place in accordance with
the Third Party Offer and the Managers shall refuse to permit the
recording of the transfer of the Purchased Interest if, in the
opinion of the Managers, the Purchased Interest were sold
otherwise than in accordance with the provisions of the Third
Party Offer.
(c) No disposition to any Buyer pursuant to any Third Party
Offer shall be valid or effective until the Buyer shall have
executed a counterpart copy of this Agreement or a written
agreement in form and substance satisfactory to the Company and
the other Members agreeing to be bound by the terms and
conditions hereof.
(d) Contemporaneously with the completion of the
transaction of purchase and sale under the Third Party Offer the
Offeror shall (i) repay any indebtedness owing by the Offeror to
the Company; and (ii) deliver to the Company and the remaining
Members the documents referred to in Sections 12.3(a), (d) and
(f). At such time, the remaining Members shall deliver to the
Offeror the documents referred to in Section 12.5.
10.4 RE-APPLICATION OF PROVISIONS
If a sale of the Purchased Interest to the Buyer pursuant to
the Third Party Offer is not completed within the sixty (60) day
period referred to in Subsection 10.3(a), no sale of the
Purchased Interest shall be made without the Offeror again
complying with the terms of this Article X.
10.5 AN OFFER TO PURCHASE SHOWBOAT'S INTEREST
With respect to any proposed transfer of any of Showboat's
Interest other than a transfer to an Affiliate of Showboat whose
capital stock or interests are beneficially owned 100% by
Showboat, Inc. or as otherwise permitted in writing by
Rockingham, Showboat and its Affiliates shall have the obligation
to require the proposed transferee to purchase the same
percentage of Rockingham's Interest as the proposed transferee
intends to purchase from Showboat pursuant to the same terms and
conditions that the proposed transferee intends to purchase
Showboat's Interest or portion thereof. The purchase price for
Rockingham's Interest shall be at the same price per percentage
Interest as the percentage price per share of Showboat's
Interest. Showboat shall give Rockingham twenty (20) days
notice of the proposed transfer of Interests and Rockingham shall
accept or decline its participation in the proposed transfer in
said twenty (20) day period. If the proposed transferee fails or
refuses to purchase Rockingham's Interest if Rockingham timely
exercised its participation in the proposed transfer in
accordance with the terms hereof, or if Showboat fails to give
any notice specified herein, then Showboat and its Affiliates
shall not be permitted to make the proposed transfer, and any
such attempted transfer shall be void and of no effect.
27
ARTICLE XI. APPRAISAL
11.1 APPRAISAL
In the event that the value of the Company must be
determined, each Member will choose an employ, at its sole
expense, an appraiser qualified to appraise gaming operations.
Within twenty-one (21) calendar days, each appraiser will deliver
to the Member and the Member shall exchange the written
appraisals of value of the Company. The appraisers, shall
calculate the appraised value of the Company to be the greater of
(i) the Company's book value; (ii) the income capitalization
approach to value which analyzes net operating income of the
subject property which is then capitalized into an indication of
value; or (iii) some other appropriate method which an appraiser
uses to make a valuation of a gaming business as of the time of
the appraisal. Based upon such appraisals, if the Members cannot
agree on a value, the appraisers shall, in accordance with
Section 17.3, choose a third appraiser. Such third appraiser
shall be paid by the Members and, within twenty-one (21) days of
engagement, shall deliver the third appraisal of the property.
The third appraisal, if within 5% (+) of either of the two
appraisals, shall be deemed to be the correct appraisal. In the
event that the discrepancy is in excess of 5% (+) of either of
the original appraisals, the value shall be computed as the
average of the three (3) appraisals.
ARTICLE XII. GENERAL SALE PROVISIONS
12.1 APPLICATION OF SALE PROVISIONS
Except as may otherwise be provided in this Agreement, the
provisions of this Article XII shall apply to any sale of the
Interest between or among the Members or, to the extent
applicable, between Members and the Company, pursuant to the
provisions of Articles VIII, IX, X and XII or Section 12.8 of
this Article XII as the case may be.
12.2 DEFINED TERMS
For the purpose of this Article XII, the terms "Vendor",
"Purchaser", "Date of Closing", "Purchase Price" and "Purchased
Interest" with respect to any Sale Transaction shall have the
meanings attributed thereto in Article VIII, IX, X or XI, as the
case may be. As used in this Article and in Articles VIII, IX and
X. "Time of Closing" shall be 2 p.m. eastern time on the Date of
Closing.
12.3 OBLIGATIONS OF VENDOR
At or prior to the Time of Closing, each Vendor shall:
(a) deliver to the Company signed resignations of the
Vendor and its nominees, if any, as Managers, officers and
employees of the Company, as the case may be;
(b) assign and transfer to the Purchaser the Purchased
Interest and deliver the membership certificate(s), if any,
representing the Purchased Interest duly endorsed for transfer to
the Purchaser or as directed by it;
28
(c) do all other things required in order to deliver good
and marketable title to the Purchased Interest to the Purchaser
free and clear of any claims, liens and encumbrances whatsoever
including, without limitation, the delivery of any governmental
releases and declarations of transmission (provided that, if at
the Time of Closing the Purchased Interest is not free and clear
of all claims, liens and encumbrances whatsoever, the Purchaser
may, without prejudice to any other rights which it may have,
purchase the Purchased Interest subject to such claims, liens and
encumbrances and, in that event, the Purchaser shall, at the Time
of Closing, assume all obligations and liabilities with respect
to such claims, liens and encumbrances and the Purchase Price
payable by the Purchaser for the Purchased Interest shall be
satisfied, in whole or in part, as the case may be, by such
assumption and the amount so assumed by the Purchaser shall be
deducted from the Purchase Price payable at the Time of Closing);
(d) deliver to the Company a release by each of the Vendor
and its nominees, if any, of all claims against the Company with
respect to any matter or thing up to and including the Time of
Closing in their capacities as a Manager, officer, Member,
employee or creditor of the Company, as the case may be, except
for (i) any claims which might arise out of the Sale Transaction,
or (ii) any claims which might arise out of the intentional
misconduct, gross negligence or fraud of the Purchaser, in a form
satisfactory to the Company acting reasonably;
(e) deliver to the remaining Members a release by the
Vendor and its nominees in their capacity as a Manager, officer
and Member of the Company of all of their claims against each
remaining Member and their respective nominees, if any, in their
capacities as a Member, Manager or officer of the Company, except
for (i) any claims which might arise out of the Sale Transaction,
or (ii) any claims which might arise out of the intentional
misconduct, gross negligence or fraud of the Purchaser, in a form
satisfactory to the remaining Members acting reasonably.
12.4 RELEASE OF GUARANTEES ETC.
If, at the Time of Closing, the Vendor, any principal of the
Vendor or any other Person for and on behalf of the Vendor, shall
have any guarantees, securities or covenants lodged with any
Person to secure any indebtedness, liability or obligation of the
Company and/or the remaining Members, then the remaining Members
shall use their reasonable best efforts to deliver or cause to be
delivered to the Vendor or cancel or cause to be canceled all of
such guarantees, securities and covenants at the Time of Closing.
If, notwithstanding such reasonable best efforts, the delivery or
cancellation of any such guarantee, security or covenant is not
obtained, the remaining Members shall deliver to the Vendor an
indemnity of such Vendor, principal or other Person in writing,
in form reasonably satisfactory to counsel for the Vendor,
indemnifying them against any and all claims, demands, costs,
expenses, damages, liabilities and suits which may be or which
shall have been paid, suffered or incurred by them with respect
to the said guarantee, security or covenant.
12.5 DELIVERIES TO VENDOR
At or prior to the Time of Closing, each of the remaining
Members shall:
(a) deliver to each of the Vendor and its nominees, if any,
a release by it, in its capacity as a Manager, officer and Member
of the Company, of all of its claims against the Vendor and its
29
nominees in its capacity as a Member, Manager or officer of the
Company, except for (i) any claims which may arise out of the
Sale Transaction, or (ii) any claims which might arise out of the
intentional misconduct, gross negligence or fraud of the Vendor,
in a form satisfactory to the Vendor acting reasonably; and
(b) cause the Company to deliver to each of the Vendor and
its nominees a release by the Company of all its claims against
each of the Vendor and its nominees with respect to any matter or
thing arising as a result of the Vendor or its nominees being a
Member, Manager or officer of the Company, as the case may be,
except for (i) any claims which might arise out of the Sale
Transactions, or (ii) any claims which might arise out of the
intentional misconduct, gross negligence or fraud of the Vendor,
in a form satisfactory to the Vendor acting reasonably.
12.6 REPAYMENT OF DEBTS
If, at the Time of Closing, the Company is indebted to the
Vendor in an amount recorded on the books of the Company and
verified by the Auditor, the Company shall repay such amount to
the Vendor at the Time of Closing. If, at the Time of Closing,
the Vendor is indebted to the Company in an amount recorded on
the books of the Company and verified by the Auditors, the Vendor
shall repay such amount to the Company at the Time of Closing
and, if the Vendor fails to make such repayment, the Purchaser
shall be entitled to pay the amount of such indebtedness to the
Company from the Purchase Price and the amount of the Purchase
Price payable to the Vendor shall be reduced accordingly.
12.7 NON-COMPLETION BY VENDOR
If, at the Time of Closing, the Vendor fails to complete the
Sale Transaction for any reason other than Purchaser's default,
the Purchaser shall have the right, if not in default under this
Agreement, without prejudice to any other rights which it may
have, upon payment of the Purchase Price payable to the Vendor at
the Time of Closing to the credit of the Vendor in the main
branch of the Company's bankers in the City of Boston, to execute
and deliver, on behalf of and in the name of the Vendor, such
deeds, transfers, share certificates, resignations or other
documents that may be necessary to complete the Sale Transaction
and each Member, to the extent it may be a Vendor hereunder,
hereby irrevocably appoints any Member who becomes a Purchaser in
a Sale Transaction its attorney-in-fact on its behalf, with no
restriction or limitation in that regard and declaring that this
power of attorney may be exercised during any subsequent legal
incapacity on its part.
12.8 NON-COMPLETION BY PURCHASER
If, at the Time of Closing, the Purchaser fails to complete
a Sale Transaction for any reason other than Vendor's default,
the Vendor shall have the right (without prejudice to any other
rights which it may have), at its option, exercisable within a
period of thirty (30) days following the Date of Closing of such
Sale Transaction upon notice to the Purchaser, to purchase from
the Purchaser all the Interest owned by the Purchaser for an
amount equal to 75% of the Purchase Price payable pursuant to the
Sale Transaction which the Purchaser has neglected or refused to
perform, less all costs incurred by the Vendor in connection with
the failure by the Purchaser to complete the Sale Transaction,
and the provisions of this Article XII shall apply to the
purchase by the Vendor of the Purchaser's Interest pursuant to
this Section 12.8.
30
12.9 RESTRICTIONS ON BUSINESS
If the provisions of any of Articles VIII, IX, X or XI,
Section 12.8 of this Article XII hereof become applicable, then
from such date until the Time of Closing, the Members shall not
do, nor cause, nor permit to be done anything except that which
is in the ordinary course of business of the Company.
12.10 NO JOINT LIABILITY
For greater certainty, the Parties hereto acknowledge and
agree that where a Sale Transaction involves more than one
Purchaser, the Purchasers in such Sale Transaction are not
jointly liable for the payment of the Purchase Price for the
Purchased Interest and any indebtedness purchased hereunder, but
are only liable for their proportionate share thereof.
12.11 CONSENTS
The Parties acknowledge that the completion of any Sale
Transaction shall be subject, in any event, to the receipt of all
necessary government, regulatory and lender consents and
approvals to the transfer of Interest contemplated thereby,
including the Gaming Authorities.
ARTICLE XIII. PROFITS AND LOSSES
13.1 NET PROFITS AND LOSSES
Except as otherwise provided in Section 13.2, 13.3 and 13.4
hereof, all Company income, gains, losses, deductions and credit
for each Company taxable year shall be allocated among the
Members in proportion to their Percentage Interests on the last
day of such taxable year.
13.2 ALLOCATIONS OF DEDUCTIONS
(a) COMPANY NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section 13.3 and 13.4 hereof, all Nonrecourse
Deductions of the Company for any taxable year shall be shared by
the Members in proportion to their Percentage Interests on the
last day of such taxable year. The amount of Nonrecourse
Deductions of the Company shall be determined in accordance with
Regulations Section 1.704-2(c).
(b) MEMBER NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section 13.3 and 13.4 hereof, all Member Nonrecourse
Deductions of the Company for any taxable year shall be allocated
in accordance with Regulations Section 1.704-2(i)(1). The amount
of Member Nonrecourse Deductions shall be determined in
accordance with Regulations Section 1.704-2(i)(2).
13.3 SPECIAL ALLOCATIONS
(a) QUALIFIED INCOME OFFSET. Except as otherwise provided
in Section 13.3(b) hereof, in the event any Member unexpectedly
receives any adjustments, allocations or distributions described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items
of Company income and gain shall be specially allocated to each
such Member in an amount and manner sufficient to
31
eliminate, to the extent required by the Regulations, the
adjusted capital account deficit of such Member as quickly as
possible.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 13.3, if there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member
who would otherwise have an adjusted capital account deficit at
the end of such year shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) in an amount and manner sufficient to eliminate
such Member's adjusted capital account deficits as quickly as
possible. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-1(b)(4)(iv)(e).
Notwithstanding any other provision of this Section 13.3, if
there is a net decrease in Minimum Gain attributable to Member
Nonrecourse debt during a Company Taxable Year, each Member with
a share of the Minimum Gain attributable to such member
Nonrecourse Debt shall be allocated items of income and gains for
such year (and, if necessary, subsequent years) in accordance
with Regulations Section 1.704-(i)(4). The items to be so
allocated shall be determined in accordance with Regulations
Section 1.704-2(i). This Section 13.3(b) is intended to comply
with the minimum gain chargeback requirements in such sections of
the Regulations and shall be interpreted consistently therewith.
(c) ALLOCATION OF REMAINING INCOME AND GAINS ON SALE OR
OTHER DISPOSITION. Except as otherwise required by this Section
13.3, income and gains arising from the sale, exchange, transfer
or disposition or condemnation of all or substantially all of the
Company's property shall be allocated, for Federal income tax
purposes, among those who shall be Members on the date of such
transaction or transactions as follows:
(i) If one or more Members has a negative Capital
Account after such Member's Capital Account is adjusted to
reflect any allocation of gains under Section 13.2(b) but before
such Member's Capital Account is adjusted to reflect any
distribution under Section 14.3 with respect to the disposition
to which this Section 13.3(c) is being applied, such income and
gains shall be allocated to such Members in proportion to their
negative Capital Accounts until each such Member's Capital
Account equals zero.
(ii) To the extent one or more Member's Capital
Account balance is less than (A) the total of all Members'
Capital Account balances times (B) such Member's Percentage
Interest in the Company (a "Capital Disparity"), such income and
gains shall be allocated among such Members in proportion to
Capital Disparities until all of the Members' Capital Accounts
are, as nearly as possible, in proportion to their Percentage
Interests.
(iii) The balance of such income and gains shall be
allocated to the Members in proportion to their Percentage
Interests.
(d) ASSIGNMENTS. In the event of an assignment of an
interest in the Company (other than an assignment by reason of
the death of a Member), the assignor's distributive share of
Company income, gains, loss, deductions and credits and
expenditures not deductible in computing its taxable income (in
respect of the interest so assigned) shall be the share of such
items attributable to such interest accruing prior to such
assignment (based on an interim closing of the books of the
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Company), and the Assignee's share shall be the share of such
items attributable to such interest after such assignment (based
on such interim closing).
(e) MANDATORY SECTION 704(C) ALLOCATIONS. Notwithstanding
the foregoing, to the extent that Code Section 704(c),
Regulations Section 1.704-3, 1.704-1(b)(2)(iv), or any other
regulations which may be proposed or promulgated under Code
Section 704(c), require allocations of Company income, gains,
losses or deductions in a manner which is different than that set
forth above, the provisions of Section 704(c) and the regulations
thereunder shall control such allocations among the Members. In
the absence of a contrary agreement among the Members, such items
shall be allocated in accordance with the "Traditional method
with curative allocations" set forth in Regulations Section 1.704-
3(c) or any successor regulation.
13.4 CURATIVE ALLOCATIONS
The allocations set forth in Section 13.2 and 13.3 (the
"Regulatory Allocations") are intended to comply with Regulations
Section 1.704-1(b), Regulations Section 1.704-2 and Regulations
Section 1.704-3, and shall be interpreted and applied in a manner
consistent therewith. Notwithstanding any other provisions of
this Section (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating
other profits, losses and items of income, gain, loss and
deduction among the Members so that, to the extent possible, the
net amount of such allocations of other profits, losses and other
items in the Regulatory Allocations to each Member shall be equal
to the net amount that would have been allocated to each such
Member if the Regulatory Allocations had not occurred.
13.5 FEDERAL INCOME TAX
It is the intent of this Company and its Members that this
Company will be governed by the applicable provisions of
Subchapter K, of Chapter 1, of the Code.
ARTICLE XIV. DISTRIBUTIONS
14.1 OPERATING DISTRIBUTIONS
The Company's Cash Available For Distribution shall, at such
times as the Managers of the Company deem advisable, be
distributed among the Members in proportion to their respective
balances of Percentage Interest, as of the date of any such
distribution. The term "Cash Available For Distribution" shall
mean the total cash revenues generated by the Company's
operations (including proceeds from the sale or refinancing of
Company assets), less all cash expenditures of the Company for
debt service and operating expenses, and less a reasonable amount
determined by the Company to be set aside for reserves. In no
event shall Cash Availible For Distributions be less than the
amount equal to the Member's portion of federal and state income
tax liablilty of the Company as if the Company was a taxable
entity in the State of New Hampshire.
14.2 PAYMENT OF MEMBER LOANS
Under all circumstances, Member Loans shall be repaid first
out of any Cash Available for Distribution after payment of taxes
as provided in Section 14.1. If a difference exists between the
Members in the amount of Member Loans made to the Company, any
Member with more
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Member Loans outstanding (in value) than another Member shall
receive the first distributions of any available cash until that
Member's Loan is in parity with the other Member Loans, if any,
unless otherwise provided herein. Thereafter, the Member Loans
will be repaid ratably to the Members with Loans. It is the
intention of the Members that Member Loans will be repaid as cash
is available for distribution and may result in revolving
payments to the Members as additional Member Loans are advanced
to the Company.
14.3 DISTRIBUTION ON DISSOLUTION AND LIQUIDATION
In the event of the dissolution and liquidation of the
Company for any reason, after the payment of or provision for
creditors pursuant to the Act and other applicable law, the
Company's assets shall be distributed among the Members in
accordance with their respective positive Capital Account
balances, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(b)(2).
ARTICLE XV. ACCOUNTING AND RECORDS
15.1 RECORDS AND ACCOUNTING
The Company shall cause an accurate, current and complete
accounting system in connection with its operation of the
Project. The books and records shall be kept in accordance with
GAAP consistently applied and in accordance with federal tax law.
Such books and records shall be kept on a calendar year basis.
Books and accounts shall be maintained at the principal office of
the Company and at the Project, or at other locations as
determined from time to time by the Company. The Members, or any
of them, shall have the right to inspect the books and records of
the Company at any time during normal business hours with
reasonable notice of such inspection.
15.2 ACCESS TO ACCOUNTING RECORDS
Each Member, and his duly authorized representative, shall
have access to the accounting records at the principal office of
the Company and the right to inspect and copy the books and
records at reasonable times. The Company shall keep all records
required to be kept at the registered office of the Company.
15.3 ANNUAL TAX INFORMATION
The Managers shall use their best efforts to cause the
Company to deliver to each Member within ninety (90) days after
the end of each fiscal year all information necessary for the
preparation of such Member's federal income tax return.
15.4 INTERIM STATEMENTS AND REPORTS
On or before the thirtieth (30th) day of each month, the
Company shall furnish the Managers with an unaudited operating
statement for the preceding calendar month detailing the Gross
Gaming Revenues received from the Project and ancillary services
and expenses incurred. The Gross Gaming Revenues detail shall
specify drop figure accounts on all gaming revenues.
Additionally, the Managers shall meet in person or by telephone
at least once each month to discuss the Company's operations.
The Company shall provide written, oral or videotaped reports on
the operations of the Project on a monthly basis to the Managers.
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ARTICLE XVI. TERM
16.1 TERM
The term of this Company shall begin on the date the
Certificate of Organization is filed with the New Hampshire
Secretary of State and shall continue for a period not to exceed
fifty (50) years, unless terminated prior thereto in accordance
with the provisions hereof, by unanimous agreement of the Members
or pursuant to the Act.
ARTICLE XVII. DISSOLUTION OF THE COMPANY AND
TERMINATION OF A MEMBER'S INTEREST
17.1 DISSOLUTION
This Company must be dissolved on the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or
occurrence of any other event which terminates a Member's
continued membership in the Company, unless the business of the
Company is continued by the consent of all the remaining Members
of the Company.
17.2 BANKRUPTCY, INSOLVENCY OR DISSOLUTION
In the event a Member (the "Bankrupt Member") institutes or
consents to any proceeding under the federal bankruptcy laws
relating to the Member or to all or any part of its property; or
is unable or admits in writing to its inability to pay its debts
as they mature, or makes an assignment for the benefit of
creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of
its property; or applies for or consents to the liquidation or
dissolution of such Member or all or substantially all of its
property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without
the application or consent of the Member and the appointment
continues undischarged or unstayed for thirty (30) calendar days;
or any proceeding under the federal bankruptcy laws or any other
applicable laws relating to such Member or to all or any part of
its property is instituted without the consent of such Member and
continues undischarged or unstayed for sixty (60) calendar days,
if all the remaining Members consent to the continuation of the
business of the Company, the remaining Members shall have the
right to purchase the entire Interest of the Bankrupt Member in
the manner set forth in Article IX.
ARTICLE XVIII. INDEMNIFICATION
18.1 INDEMNITY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or
in the right of the Company, by reason of the fact that he is or
was a Manager, Member, employee or agent of this Company, or is
or was serving at the request of this Company as manager,
director, officer, employee or agent of another limited liability
company or corporation, against expenses, subject to the
provisions of Section 18.4 hereof, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or
proceeding if he
35
acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of this Company,
and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest
of this Company, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct
was unlawful.
18.2 INDEMNITY FOR ACTIONS BY OR IN THE RIGHT OF THE COMPANY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of this
Company to procure a judgment in its favor by reason of the fact
that he is or was a Member, Manager, employee or agent of this
Company, or is or was serving at the request of this Company as a
Member, Manager, director, officer, employee or agent of another
limited-liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses, subject to
the provisions of Section 18.4 hereof, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred
by him in connection with the defense or settlement of the
actions or suit if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of this Company. Indemnification may not be made for
any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable to this Company or for
amounts paid in settlement to this Company, unless and only to
the extent that the court in which the action or suit was brought
or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
18.3 INDEMNITY IF SUCCESSFUL
To the extent that a Member, Manager, employee or agent of
this Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections
18.1 and 18.2, or in defense of any claim, issue or matter
therein, this Company does hereby indemnify such person or entity
against expenses, subject to the provisions of Section 18.4
hereof, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
18.4 EXPENSES
Any indemnification under Sections 18.1 and 18.2, unless
ordered by a court or advanced pursuant to Section 19.5 below,
must be made by this Company only as authorized in the specific
case upon a determination that indemnification of the Member,
Manager, employee or agent is proper in the circumstances. The
determination must be made:
(a) By a majority vote of a quorum of Members who were not
parties to the act, suit or proceeding; or
36
(b) By a majority vote of Managers who were not parties to
the act, suit or proceeding; or
(c) If a quorum consisting of Members or Managers who were
not parties to the act, suit or proceeding cannot be obtained, by
independent legal counsel pursuant to a written opinion.
18.5 ADVANCE PAYMENT OF EXPENSES
The expenses of Members and Managers incurred in defending a
civil or criminal action, suit or proceeding shall be paid by
this Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Member or Manager to repay the
amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by this
Company. The provisions of this subsection do not affect any
rights to advancement of expenses to which personnel other than
Members or Managers may be entitled under any contract or
otherwise by law.
18.6 OTHER ARRANGEMENTS NOT EXCLUDED
The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article XVIII:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the Certificate of Organization or any agreement,
vote of Members or otherwise, for either an action in his
official capacity or an action in another capacity while holding
his office, except that indemnification, unless ordered by a
court pursuant to Section 18.2 above or for the advancement of
expenses made pursuant to Section 18.5 above, may not be made to
or on behalf of any Member or Manager if a final adjudication
establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continues for a person who has ceased to be a Member,
Manager, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
(c) ROCKINGHAM'S INDEMNITY. Rockingham hereby agrees to
indemnify, defend and hold the Company harmless from and against
and in respect of any losses incurred by the Company arising
from:
(i) Any debts, liabilities, penalties, fines,
sanctions, assessments and obligations relating to its business
and operations of the Rockingham Park;
(ii) All reasonable costs and expenses, including
reasonable attorney's fees, incurred by the Company in connection
with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters pursuant to which Rockingham has
agreed to indemnify the Company.
(d) THE COMPANY'S INDEMNITY. Company hereby agrees to
indemnify, defend and hold Rockingham harmless from and against
and in respect of any losses incurred by Rockingham in the
operation of Rockingham Park arising from:
37
(i) Any debts, liabilities, penalties, fines,
sanctions, assessments and obligations relating to its business
and operations of the Project ;
(ii) All reasonable costs and expenses, including
reasonable attorney's fees, incurred by Rockingham in connection
with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters pursuant to which the Company has
agreed to indemnify Rockingham.
ARTICLE XIX. MISCELLANEOUS PROVISIONS
19.1 TIME IS OF THE ESSENCE
Time is of the essence with respect to all time periods set
forth in this Agreement.
19.2 DEFAULT INTEREST RATE
Any sum accruing to any Party under this Agreement which
shall not be paid when due shall bear interest at a rate per
annum equal to the Wall Street Journal prime rate plus 5% from
the date such payment becomes due and payable until it is paid in
full with said interest.
19.3 COUNTERPARTS
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
19.4 EXECUTION BY FACSIMILE
This Agreement may be executed by facsimile and if so
executed shall be legal, valid and binding on any Party executing
in such manner.
19.5 FORCE MAJEURE
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
19.6 COMPLETE AGREEMENT
This Limited Liability Company Agreement, and the
Certificate of Organization, constitute the complete and
exclusive statement of the Agreement among the Members with
respect to the subject matter contained therein. This Agreement
and the Articles replace and supersede all prior agreements by
and among the Members or any of them. This Agreement and the
Articles supersede all prior written and oral statements and no
representation, statement, or condition or
38
warranty not contained in this Agreement or the Articles will be
binding on the Members or be of any force and effect whatsoever.
19.7 AMENDMENTS
This Limited Liability Company Agreement may be amended by
the Members but only at a special or annual meeting of the
Members, not by written consent, and only if the notice of the
intention to amend the Limited Liability Company Agreement was
contained in the notice of the meeting, or such notice of a
meeting is waived by all Members.
19.8 GOVERNING LAW
This Limited Liability Company Agreement, and its
application, shall be governed exclusively by its terms and by
the laws of the State of New Hampshire without reference to its
choice of law provisions.
19.9 HEADINGS
The headings in this Limited Liability Company Agreement are
inserted for convenience only and are in no way intended to
describe, interpret, define, or limit the scope, extent or intent
of this Limited Liability Company Agreement or any provisions
contained herein.
19.10 SEVERABILITY
If any provision of this Limited Liability Company Agreement
or the application thereof to any person or circumstance shall be
deemed invalid, illegal or unenforceable to any extent, the
remainder of this Limited Liability Company Agreement and the
application thereof shall not be affected and shall be
enforceable to the fullest extent permitted by law.
19.11 EXPENSES
If any litigation or other proceeding is commenced in
connection with or related to this Agreement, the prevailing
party shall be entitled to recover from the losing party all of
the incidental costs and reasonable attorneys' fees, whether or
not a final judgment is rendered.
19.12 HEIRS, SUCCESSORS AND ASSIGNS
Each and all of the covenants, terms, provisions and
agreements contained in this Limited Liability Company Agreement
shall be binding upon and inure to the benefit of the existing
Members, all new and substituted Members, and their respective
assignees (whether permitted by this Agreement or not), heirs,
legal representatives, successors and assigns.
19.13 POWER OF ATTORNEY
Each Member, in accepting this Agreement, makes, constitutes
and appoints the Managers and each of them, with full power of
substitution, as his, her, or its attorney-in-fact and personal
representative to sign, execute, certify, acknowledge, file and
record the Certificate of Organization, and to sign, execute,
certify, acknowledge, file and record all appropriate instruments
amending the Certificate of Organization and this Limited
Liability Company Agreement on behalf of each such Member. In
particular, the Manager as attorney-in-fact may
39
sign, acknowledge, certify, file and record on behalf of each
Member such instruments, agreements and documents which: (1)
reflect any amendments to the Certificate of Organization or
Limited Liability Company Agreement; (2) reflect the admission or
withdrawal of a Member; and (3) may otherwise be required of the
Company, a Member or by law. The Power of Attorney herein given
by each Member is a durable power and will survive the disability
or incapacity of the principal.
19.15 COMPLIANCE WITH LAWS
(a) At all times during the term of this Agreement, each
Member agrees that its actions, and those of its representatives,
agents, and consultants, will be entirely in accordance with all
applicable laws, rules, ordinances and regulations of all states,
counties, districts and municipalities in which such Member
conducts business on behalf of the Company, and also will follow
applicable federal laws, rules and regulations.
(b) In connection with this Agreement, the Members each
acknowledge that certain casino gaming licenses are currently
issued to and held by Showboat or its Affiliates the states of
Nevada, New Hampshire and New Jersey, and the state of New South
Wales, Australia, and that Showboat or its Affiliates may in the
future apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Showboat
to disclose private or otherwise confidential information about
the other Members and their respective principals, lenders and
affiliates. The Members each agree to refrain from all conduct
that may negatively affect Showboat's licenses or license
applications. If any representative, agent, Affiliate, of
Rockingham is required to be licensed, qualified or found
suitable by the Gaming Authorities and is denied such status by
such Gaming Authority, Showboat shall immediately sell its
interest in the Company in the manner specified in Article IX.
19.16 BACKGROUND INVESTIGATIONS
(a) The Members each acknowledge that Showboat or its
Affiliates currently conduct gaming operations in Nevada, New
Jersey, and will conduct gaming operations in New South Wales,
Australia. Such gaming operations are highly regulated by Gaming
Authorities of these states and that such regulations impose upon
Showboat an affirmative duty to investigate the backgrounds of
entities or individuals with whom Showboat does business.
Furthermore, such regulations require that Showboat and its
Affiliates, which includes the Company and the Rockingham,
subject themselves to rigorous investigation. Furthermore,
Showboat or its Affiliates may in the future apply for licensure
in other jurisdictions, including states of the United States or
foreign countries which may have similar regulations. Gaming
authorities in other jurisdictions may request information
regarding entities and persons with whom Showboat does business.
Accordingly, the Members each agree, if requested by Showboat, to
use their best efforts to supply and to cause its principals,
directors, officers, major shareholders, owners and any other key
individuals, to supply such information and execute such
affidavits and documents, including personal history disclosure
documents and personal financial disclosure documents as Showboat
may reasonably request. Showboat shall reimburse Rockingham or
Rockingham's shareholders, officers, or directors, as the case
may be, for such shareholder's officer's, or director's expenses
incurred due to supplying such information to the Gaming
Authorities. Furthermore, gaming regulations require that
Showboat and its Affiliates be of good repute.
40
Rockingham and its principals, directors, officers,
stockholders, owners and Affiliates represent that they are of
good repute.
(b) The Members each acknowledge that Rockingham or its
Affiliates currently conduct pari-mutuel operations in New
Hampshire. Such operations are regulated by Gaming Authorities
of New Hampshire and that such regulations impose upon the
Rockingham an affirmative duty to investigate the backgrounds of
entities or individuals with whom Rockingham does business.
Furthermore, such regulations require that Rockingham and its
Affiliates subject themselves to investigation. Accordingly, the
Members each agree, if requested by Rockingham, to use their best
efforts to cause their principals, directors, officers, major
shareholders, owners and any other key individuals, to supply
such information and execute such affidavits and documents,
including personal history disclosure documents and personal
financial disclosure documents as Rockingham may reasonably
request. Rockingham shall reimburse Showboat or Showboat's
shareholders, officers or directors, as the case may be, for such
shareholder's, officer's, or director's expenses incurred due to
supplying such information to the Gaming Authority except for
such disclosure which is required to obtain or maintain a license
for the Project. Showboat and its principals, directors, and
officers represent that they are of good repute.
19.17 COMPLIANCE WITH OTHER AGREEMENTS
Each Member shall use its best efforts to perform, or cause
to be performed, all obligations of the Company under any
agreement negotiated in connection herewith or pursuant hereto,
including, without limitation, the Management Agreement of even
date herewith between the Company and an Affiliate of Showboat.
19.18 GOVERNMENTAL APPROVAL
Each Members shall use their best efforts to cause the
Company to obtain all necessary licenses, permits and approvals
from all applicable governmental authorities with respect to the
construction and development of the Project.
19.19 LICENSING REQUIREMENTS
Each Member covenants to use its best efforts to diligently
obtain all state and local licenses, including gaming licenses,
necessary to conduct gaming operations at the Project. The
Members agree to provide the other Members with copies of all
applications, reports, letters, and other documents filed or
provided to the state or local licensing authorities. In the
event that any Member as a result of a communication or action by
the Gaming Authority (including, without limitation, the New
Hampshire Racing Commission) or on the basis of consultations
with its gaming counsel and/or other professional advisors,
reasonably believes in good faith, with the concurrence of the
Managers, that the Gaming Authority are likely to: (i) fail to
license and/or approve the Company or its Affiliates to own and
operate any gaming related businesses; (ii) grant required gaming
licensing and/or approval only upon terms and conditions which
are unacceptable to the Company; (iii) significantly delay the
licensing and/or approval contemplated under this Agreement; or
(iv) revoke any existing license or gaming operating contract of
the Company or its Affiliates, in each case due to concerns of
any aspect of the suitability of a particular Member or its
shareholders, then the Company shall cause such Member to divest
itself of such Interest by sale to the other Members in the
manner set forth in Article IX.
41
19.20 FOREIGN GAMING LICENSES
If Showboat determines, at its sole discretion, that any
gaming licenses held by Showboat or its Affiliates in other
jurisdictions may be adversely affected or in jeopardy because of
its status as a Member, Showboat shall have the option at any
such time to sell its Interest, subject to the right of first
refusal pursuant to Article X. If this occurs prior to or within
the first six (6) months after commencement of operations at the
Project and Rockingham elects its right of first refusal,
Showboat shall receive as sole compensation for Rockingham's
purchase of its Interest, the capital contribution Showboat has
made to the Company. In case of a sale by Showboat of all of its
Interest under this Section, the Management Agreement shall
terminate upon the consummation of such sale.
19.21 PRESS RELEASES
The Company shall establish policies and procedures
regarding the issuance of any press release. No press release
shall be issued except as prepared in accordance with such
policies and procedures. Press releases of any Member or its
Affiliates concerning the Project or the Company shall be
submitted to the Company in accordance with the policies and
procedures for the Company's approval, with the exception of any
press releases required to be made by any Member or its
Affiliates pursuant to various securities laws applicable to such
Member or its affiliates.
19.22 UNCERTAINTIES
Due to the fact that, among other things: (i) gaming
legislation has not been enacted in New Hampshire; (ii) gaming
regulations have not been adopted; and (iii) gaming licenses have
not been issued (each of the foregoing are collectively referred
to herein as "Uncertainties"), Showboat and Rockingham agree to
cooperate with each other and respect each other's opinions in
resolving issues which may arise after the date hereof. The
Parties acknowledge that legislation which has been considered by
the New Hampshire Legislature requires that gaming licenses be
limited to the holders of pari-mutuel licensees or entities in
which they have an interest. In the event that such legislation,
or similar legislation, is enacted, certain remedies set forth in
this Limited Liability Company Agreement may not be available to
Showboat.
42
19.23 ADDITIONAL UNDERSTANDINGS
(a) The Parties acknowledge and agree that under no
circumstances shall any of the remedies or rights set forth in
this Limited Liability Company Agreement be exercised in any way
which would adversely affect the operation of pari-mutuel
wagering, simulcasting and inter-track wagering conducted by
Rockingham at Rockingham Park, including, without limitation, any
requirement that Rockingham sell all or any portion of its
interest in Rockingham Park or Rockingham Venture Inc.
(b) Notwithstanding any other provision of this Limited
Liability Company Agreement to the contrary, all remedies of
Showboat, whether under this Limited Liability Company Agreement,
under law, or at equity against Rockingham, shall be limited in
recourse to Rockingham's Interest and the profits and
distributions resulting therefrom. Under no circumstances shall
Showboat have recourse against the Rockingham Shareholders or
assets of Rockingham other than Rockingham's Interest.
(c) Notwithstanding any other provision of this Limited
Liability Company Agreement, the Parties acknowledge and agree
that the performance of any of the obligations set forth herein
by Rockingham may be subject to (i) restrictions contained in the
Loan and Trust Agreement dated as of December 1, 1983 and as
amended (the "Senior LTA"), by and among the Business Development
Authority of the State of New Hampshire (the "Authority"),
Rockingham, and the First National Bank of Boston, as Trustee
(the "Trustee"); and (ii) provisions of RSA 284 and the
regulations promulgated by the New Hampshire Pari-Mutuel
Commission. Based upon the foregoing, any obligations to be
performed by Rockingham pursuant to this Limited Liability
Company Agreement may be subject to enactment of laws authorizing
Limited Gaming or Full Gaming, consent of the Trustee and the
Authority, approval of the New Hampshire Pari-Mutuel Commission,
and compliance with all applicable regulations of the New
Hampshire Pari-Mutuel Commission.
ARTICLE XX. CONFIDENTIALITY AND NON-USE
20.1 DISCLOSURE OF PROPRIETY INFORMATION
Unless otherwise provided for herein, each Party hereto
agrees for itself and its respective Affiliates, agents,
representatives and consultants that it shall not disclose,
reveal or make available to any third party, and that it shall
take all steps necessary or desirable to prevent the Company from
disclosing, revealing or making available to any third party, any
confidential or proprietary information, whether of a technical,
financial, commercial or other nature ("Confidential
Information"), received directly or indirectly from or in respect
of any other Party or in respect of the Company, except as
authorized in writing by such other Party (or in the case of the
Company by all parties) and except that either Party may disclose
such information:
(a) to its employees, agents, representatives and
consultants or employees of the Company to whom, and to the
extent that, such disclosure is necessary in furtherance of the
purposes of this Agreement, provided, however, that the
disclosing Party shall be responsible for ensuring that such
persons comply with the confidentiality and non-use provisions of
this Article
43
XX, and shall take the steps necessary to ensure such compliance,
whether by agreement, establishment of internal regulations, or
otherwise; or
(b) to the extent required by applicable law, judicial or
administrative process or by any Governmental Authority.
20.2 USE OF PROPRIETARY INFORMATION
Each Party hereto agrees that it shall not use and that it
shall take all steps necessary or desirable to prevent the
Company from using, any Confidential Information received from
another Party or from the Company except as specifically provided
in this Agreement or as otherwise expressly authorized in writing
by the relevant Party (or in the case of the Company by all
Parties).
20.3 DESTRUCTION OR RETURN OF CONFIDENTIAL INFORMATION
All documents received by a Party (the "Receiving Party")
containing Confidential Information of another Party or the
Company and all documents derived or prepared from such documents
and all copies thereof shall be inventoried by the Receiving
Party, marked with a suitable label to indicate their
confidential status (to the extent such documents are not already
so marked) and segregated from all other papers of the Receiving
Party. Upon termination of this Agreement for any reason, such
documents and all copies thereof in the possession or control of
the Receiving Party or its present or former employees, agents,
representatives, or consultants relating to the Confidential
Information of the other Party (the "Disclosing Party") shall be
destroyed under the supervision of the Disclosing Party or
returned to the Disclosing Party, at the Disclosing Party's
discretion, and the receiving Party shall immediately cease using
the Confidential Information of the disclosing Party.
20.4 EXCEPTION
A Party (in this Section 20.4, the "Disclosing Party") shall
not be obligated to keep confidential or shall not incur any
liability for the use or disclosure to a third party of any
information that (i) has fallen into the public domain through no
unauthorized act of the Disclosing Party; (ii) was received from
a third party not under any obligation to refrain from revealing
such information; or (iii) was in the Disclosing Party's
possession prior to the receipt from another Party or the
Company.
20.5 SURVIVAL
Notwithstanding anything to the contrary herein, the
provisions of this Article XX shall survive and inure to the
benefit of and be binding upon the Parties for a period of five
(5) years subsequent to the date of termination of this
Agreement.
ARTICLE XXI. ARBITRATION
21.1 APPOINTMENT OF ARBITRATORS
If any dispute shall arise or if any issue left open
hereunder cannot be resolved between the Parties hereto after
negotiating in good faith to reach a just and equitable solution
satisfactory to
44
the Parties within fifteen (15) days, such dispute is to be
referred first to a committee of four persons who shall meet in
an attempt to resolve said dispute or open issue. The committee
shall consist of two persons appointed by Rockingham and two
persons appointed by Showboat. If an agreement cannot be reached
to resolve the dispute by the committee within fifteen (15) days,
the dispute or open issue will be resolved by binding arbitration
before arbitrators having not less than 10 years experience in
the gaming industry. In the event an appraisal of the Project or
other assets needs to be performed, such appraisal is to be
settled by binding arbitration before arbitrators having not less
than 10 years experience in the gaming industry. Any award of the
arbitrators may be filed in a court of law as a final judgment.
Any such arbitration shall be in accordance with the rules and
regulations adopted by the American Arbitration Association or as
the Parties otherwise agree. Either Party may serve upon the
other Party a written notice of the demand that the dispute or
appraisal is to be resolved pursuant to this Article. Within
thirty (30) days after the giving of such notice, each of the
Parties hereto shall nominate and appoint an arbitrator (or
appraiser, as the case may be) and shall notify the other Party
in writing of the name and address of the arbitrator so chosen.
Upon the appointment of the two arbitrators as HEREINABOVE
provided, said two arbitrators shall forthwith, within fifteen
(15) days after the appointment of the second arbitrator, and
before exchanging views as to the question at issue, appoint in
writing a third arbitrator ("Selected Arbitrator") and give
written notice of such appointment to each of the Parties hereto.
In the event that the two arbitrators shall fail to appoint or
agree upon the Selected Arbitrator within said fifteen (15) day
period, the Selected Arbitrator shall be selected by the Parties
themselves if they so agree upon such Selected Arbitrator within
a further period of ten (10) days. If a Selected Arbitrator shall
not be appointed or agreed upon within the time herein provided,
then either Party on behalf of both may request such appointment
in accordance with the American Arbitration Association.
Rockingham and Showboat shall share equally the cost of the
Selected Arbitrator. Said arbitrators shall be sworn faithfully
and fairly to determine the question at issue. The arbitrators
shall afford to Rockingham and Showboat a hearing and the right
to submit evidence, with the privilege of cross-examination, on
the question at issue, and shall with all possible speed make
their determination in writing and shall give notice to the
Parties hereto of such determination. The concurring
determination of any two of said three arbitrators shall be
binding upon the Parties, or, in case no two of the arbitrators
shall render a concurring determination, then the determination
of the Selected Arbitrator shall be binding upon the Parties
hereto. Each Party shall pay the fees of the arbitrator appointed
by it, and the fees of the Selected Arbitrator shall be divided
equally between Rockingham and Showboat.
21.2 INABILITY TO ACT
In the event that an arbitrator appointed as aforesaid shall
thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this
Article for the appointment of the arbitrator so dying or
becoming unable or unwilling to act.
ARTICLE XXII. FORCE MAJEURE
22.1 FORCE MAJEURE DEFINED
The following events are beyond the control of either
Partner (a "Force Majeure Event"):
45
(a) The unavailability of financing in the marketplace
except at rates in excess of eighteen and one/half (18 1/2%) per
annum, inclusive of cash flow participation interests.
(b) A delay in the opening of the Project for more than one
hundred eighty (180) days after the opening date is established
by the Company or a closure of the Project after Opening for more
than one hundred eighty (180) days.
(c) Any other event which materially alters the assumptions
and underlying facts upon which this Agreement is based and which
is reasonably expected by both Members pursuant to a projection
prepared within 90 days of the commencement of Gaming Activities
to reduce the projected internal rate of return to Showboat by
more than thirty percent (30%) compared to such projection.
22.2 ACTIONS TO RESOLVE FORCE MAJEURE EVENTS
In the event of a Force Majeure Event the Members agree to
first meet in a good faith effort to mutually agree on
appropriate courses of action to be taken in connection with a
Force Majeure Event, including the economic effect thereof. In
the event that the Members fail to agree on a course of action
then either Member may terminate this Agreement on thirty
days (30) written notice to the other Member. In the event of
such termination, Showboat shall recover its total equity
contributions to the date of termination in the following manner:
(i) as a subordinated obligation of Rockingham's new
"replacement" gaming venture if Rockingham is successful in
commencing non-racing gaming operation; (ii) repayments of the
equity contributions shall commence five years after the
"replacement" gaming venture commences operations; and (iii) no
interest shall accrue on Showboat's equity contribution until the
repayment of the debt commences in accordance with
subparagraph (ii) above. Interest shall accrue at 18% per annum.
ARTICLE XXIII. TERMINATION
23.1 TERMINATION EVENTS
This Agreement shall terminate upon the occurrence of the
following:
(a) on December 31, 1999, in the event that the New
Hampshire legislature has not enacted legislation permitting
Gaming Activities at a facility such as the Rockingham Park ,
provided, however, Showboat in its sole and absolute discretion
may extend the time period for two successive twelve month
periods in the event such legislation is believed to be imminent;
(b) upon the effective date of passage of legislation
making it unlawful to operate Gaming Activities in the state of
New Hampshire or the entry of an order or judgment from a court
of appropriate jurisdiction declaring such legislation
unconstitutional or invalid under the laws of the state of New
Hampshire (the termination shall be delayed if any court order is
duly appealed and its effectiveness is suspended);
(c) thirty (30) days after the New Hampshire Gaming
Authority denies Rockingham or Showboat any gaming license
necessary to conduct gaming at the Project;
46
(d) upon Showboat's failure to secure and maintain all
approvals from Governmental Authorities governing or regulating
Showboat or its Affiliates to conduct gaming in the state of New
Hampshire.
(e) Showboat fails, after making good faith efforts to meet
its financing obligations.
(f) upon a change in the ownership of Showboat, Inc. or
its Affiliates resulting in a change in the control of Showboat,
unless Rockingham consents within thirty (30) days prior to the
change in control of Showboat, which consent may not be
unreasonably withheld, in writing to such change in control. For
purposes of this section, "control" means the possession,
directly of indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract
or otherwise. Control shall have deemed to occur where a Person
owns more than 35% or more of a publicly traded corporation, or
more than 50% of a non-publicly traded corporation.
(g) upon mutual agreement of the parties.
23.2 NOTICE OF TERMINATION
In the event of an occurrence specified in Section 23.1 (a)
through (f), either Showboat or Rockingham, as appropriate, shall
terminate this Agreement by giving five (5) day's written notice,
and the Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term hereof.
23.3 REMEDIES UPON TERMINATION
(a) Prior to Commencing Gaming Operations.
(i) In the event of an occurrence specified in Section
23.1(a) or (b) or in the event of an occurrence specified in
Section 23.1(c), (d) or (f) and neither Member continues in the
development of the Project the Company shall be liquidated and
each Member shall receive its pro rata share of the liquidation
proceeds.
(ii) In the event of an occurrence specified in
Section 23.1(c), (d), (e) or (f) which terminates this Agreement
but the other party continues to participate in the development
of the Project, then the withdrawing Member shall be paid by the
non-withdrawing Member the value of the withdrawing Member's
equity contributions to the date of termination as specified in
Section 4.1 in the following manner: (i) as a subordinated
obligation of the non-withdrawing Member's new "replacement"
gaming venture; (ii) repayments of the equity contributions,
including, if the withdrawing Member is Showboat, the then
principal balance and accrued but unpaid interest on the Capital
Loan, shall commence five years after the "replacement" gaming
venture commences operations; and (iii) no interest shall accrue
on the equity contributions until the repayment of the debt
commences in accordance with subparagraph (ii) above. Interest
shall accrue on the equity contributions at 18% per annum.
(b) After Commencing Gaming Operations.
47
(i) In the event of the occurrence specified in
Section 23.1(b), each Member agrees to work with the other to
minimize each Member's loss.
(ii) In the event of an occurrence specified in
Section 23.1(c), (d) or (f), the non-defaulting Member shall
purchase the defaulting Member's interest in this Agreement
pursuant to Article IX. The purchase price shall be reduced by
the damage suffered by the non-defaulting Member.
ARTICLE XXIV. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which any Member desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received and a copy of the notice
is mailed with postage prepaid, or (iii) by a nationally
recognized overnight carrier service providing for receipted
delivery, addressed as follows:
Showboat: with a copy to:
X.X. Xxxxxxxx, III Xxxx X. Xxxxxx, Esq.
President Xxxxxx Xxxxxxxx Xxxxxx &
Showboat New Hampshire Xxxxxxx
Inc. 3800 Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Rockingham: with a copy to:
Xxxxxx X. Xxxxxx, Xx. Xxxxxx Xxxxxx
President Suite 200
Rockingham Venture, Inc. 0000 Xxxxx Xxxxxxxx
Xxxxxxxxxx Xxxx Avenue
Rockingham Park Boulevard Boynton Beach, Florida
Xxxxx, XX 00000 33426
Either Rockingham or Showboat may change the address or name
of addressee applicable to subsequent notices (including copies
of said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving notice to the other party as aforesaid, provided that
notice of such change shall not be effective until the fifth day
after mailing or facsimile transmission.
48
IN WITNESS WHEREOF, this Limited Liability Company Agreement
was adopted by a unanimous vote of all the Members of this
Company at the organizational meeting thereof held on
___________________, 1995.
Members:
ROCKINGHAM VENTURE, INC.,
a New Hampshire corporation
By:________________________________
Xxxxxx X. Xxxxxx, Xx.
President
SHOWBOAT NEW HAMPSHIRE, INC.,
a Nevada corporation
By: /s/ X.X. Xxxxxxxx, III
X.X. Xxxxxxxx, III
President
ACKNOWLEDGED AND AGREED TO
WITH RESPECT TO ARTICLES VII AND
IX ONLY:
Rockingham Shareholders:
___________________________________
___________________________________
___________________________________
___________________________________
49
EXHIBIT 3. THE COMMON AREA
1.01 THE COMMON AREA DEFINED
Rockingham shall continue to separately operate its racing
business at Rockingham Park. Accordingly, portions of Rockingham
Park will be available to the patrons, invitees, employees and
licensees of the Company and Rockingham as a Common Area. The
Common Area shall be all areas within Rockingham Park which are
made available as hereinafter provided for the general use,
convenience and benefit of the Company, Rockingham and their
respective patrons, invitees, employees, and licensees. The
Common Area includes, but is not limited to, common entrances,
lobbies, malls, restrooms (not located within the areas
exclusively controlled by the Company or Rockingham), elevators,
stairways and accessways, loading docks, ramps, drives, platforms
and any passageways and serviceways thereto, parking areas,
roadways, sidewalks, walkways, driveways and utility lines and
systems, employee locker rooms, employee lunch rooms, employee
parking, executive offices, boiler room, delivery areas and
loading docks, storage areas, trash receptacles, and other areas
specified for the joint use of Rockingham and the Company, or
their agents, employees or affiliates.
1.02 THE COMPANY'S EASEMENT TO USE THE COMMON AREA
(a)(i) Rockingham grants the Company a nonexclusive
easement to use the Common Area and to permit the Company's
patrons, employees and invitees, as appropriate, to use the
Common Area. The easement may be enjoyed in common with
Rockingham and its employees and invitees.
(a)(ii) Rockingham may grant utility easements over and
under portions of the Common Area to utility companies and
governmental entities and to their employees and contractors as
long as such easements do not materially interfere with the use
thereof.
(b)(i) Any use of, or construction in the Common Area
pursuant to this Section shall be conducted with due regard for
the businesses operated by the Company and Rockingham at
Rockingham Park. The use of or construction in the Common Area
shall also be conducted with due regard for the convenience and
comfort of the customers of Rockingham and the Company to use the
Common Area for parking, passage, maneuvering, egress, ingress,
loading and unloading. Accordingly, during any period in which
the Company is conducting business, Rockingham shall endeavor to
avoid, to the extent possible and economically reasonable,
unreasonable noise levels as a result of construction or
excavation in the Common Area, and Rockingham shall take
reasonable steps to prevent any obstructions, as well as dust and
debris from the areas of construction and excavation from coming
onto other portions of the Common Area or the Premises.
Additionally, any construction work shall be conducted in a
manner so as to not materially interfere with the business of
Rockingham. Rockingham and the Company shall consult with each
other as to the scheduling of and sequence of construction work
and shall conduct such work at times which will not materially
interfere with their respective operations.
50
1.03 OPERATION AND MAINTENANCE OF COMMON AREA
(a) STANDARDS. From and after the date upon which the
Project is open for business, Rockingham shall operate, or cause
to be operated, the Common Area in good order, condition and
repair. Rockingham shall have the right to select from time to
time, a person or persons, other than Rockingham to operate and
maintain the Common Area, provided, however, that such selection
shall not diminish Rockingham's responsibility for such operation
and maintenance.
Without limiting the generality of the foregoing,
Rockingham, in the operation and maintenance of the Common Area,
shall do all things necessary and appropriate in a manner
consistent with the operation of a first-class gaming facility,
including but not limited to:
(i) Maintain the floor of the Common Area smooth and
evenly covered with the type of flooring material originally
installed thereon, or such substitute thereof as shall be in all
respects equal in quality, appearance and durability.
(ii) Remove all papers, debris, filth and refuse from
the Common Area and wash or thoroughly sweep the surface of the
Common Area with frequency sufficient to maintain a clean,
attractive appearance.
(iii) Clean lighting fixtures within the Common Area
and relamp and reballast as needed.
(iv) Maintain and replace the landscaping within the
Common Area in a first-class manner, with plants and materials in
good thriving condition, which create an attractive appearance.
(v) Maintain all signs and lighting fixtures of the
Common Area in a clean and orderly condition, including relamping
and repairing as may be required, and all such signs and lighting
fixtures must provide appropriate illumination.
(vi) Employ courteous and well-trained personnel to
patrol the Common Area to maintain a safe and secure atmosphere
during business hours, and thereafter, during such other hours as
may be deemed necessary.
(vii) Maintain and keep in a clean and sanitary
condition public restrooms and all other common use facilities
within the Common Area including any drainage systems.
(viii) Clean, repair and maintain all utility systems
that are a part of the Common Area.
(ix) Clean and maintain the structure of the Clubhouse
of Rockingham Park, the roof, skylights, wall surfaces, doors and
other appurtenances to the Clubhouse.
(x) Maintain the heating, ventilating and cooling
system of the Common Area, if applicable, in good order,
condition and repair, so that at all times the same shall operate
at least during the same hours of the same days that the heating,
ventilating and cooling system are serving the Project or the
Rockingham Race Track.
51
(xi) Maintain such appropriate automobile parking area
entrance, exit and directional signs, markers and lights in
Rockingham Park as shall be reasonably required.
(xii) Repaint striping, markers, directional signs,
etc., as necessary to maintain in first-class condition the
parking area.
(xiii) Comply with all laws, including zoning laws and
the Americans With Disabilities Act, in the management and
operation of the Common Area.
1.04 COMMON AREA MAINTENANCE COST
The term "Common Area Maintenance Cost" refers to and means
the total of all monies paid out during a fiscal year by
Rockingham for reasonable costs and expenses directly relating to
the maintenance, repair, operation and management of the Common
Area. All costs shall be prorated in a mutually agreeable basis
between Rockingham and the Company based upon the relationship
which the Common Area contributed to the Company bears to total
Common Areas in Rockingham Park. Such costs shall include, but
not be limited to:
(i) All rental charges for equipment and costs of
small tools and supplies;
(ii) All acquisition costs of maintenance equipment
which cannot be capitalized;
(iii) Policing, security protection, traffic
direction, control and regulation of the parking areas and areas
of ingress and egress;
(iv) The cost of cleaning and removal of rubbish, dirt
and debris from the Common Area;
(v) The cost of landscape maintenance and supplies for
the Common Area;
(vi) All charges for utilities services utilized in
connection with the Common Area together with all costs of
maintaining lighting fixtures and the cost of repairing and
maintaining common utility lines in the Common Area (in the event
that utility services are not separately metered, utilities shall
be prorated on a mutually agreeable basis between Rockingham and
the Company based upon the relationship which the Common Area
controlled by the Company bears to the total Common Areas of
Rockingham Park);
(vii) Premiums for all fire and extended coverage,
public liability and property damage insurance carried by
Rockingham on the Rockingham Park under the provisions of this
Agreement, or by law or regulation;
(viii) All real property taxes and assessments on the
Common Area required to be paid by Rockingham;
(ix) All accounting and salary costs for the
management of the Common Area.
52
1.05 ACCOUNTING
Rockingham shall keep complete and accurate books and
records, in accordance with generally accepted accounting
principles consistently applied, of the Common Area Maintenance
Cost and shall retain those books and records at its principal
office at Rockingham Park. Rockingham shall preserve for a
period of five (5) years following the date of the payments by
the Company of its respective portion of the Common Area
Maintenance Cost all such books and records, including any
payroll and time records, vouchers, receipts, correspondence and
memos pertaining to the Common Area Maintenance Cost. The
Company has the right, during the performance of the Common Area
maintenance by Rockingham and for the aforesaid period of
five (5) years following its respective payments of the Common
Area Maintenance Cost, to examine and audit such books and
records, including the right to copy a portion or portions
thereof, at reasonable times during business hours, upon notice
to Rockingham given not less than five (5) days in advance of any
such examination. In the event that any audit shall disclose any
error in the determination of the amount of Common Area
Maintenance Cost, an appropriate adjustment shall promptly be
made to correct the Common Area Maintenance Cost and the
Company's share of Common Area Maintenance Cost. If the Common
Area Maintenance Cost or any party's share shall have been
overstated by more than three percent (3%), Rockingham shall pay,
at its sole cost and expense, all of the reasonable costs and
expenses connected with such audit.
1.06 PLANS AND BUDGETS
(a) Rockingham shall furnish the Company with a Common Area
Budget, a preliminary budget within one hundred twenty (120) days
following the enabling legislation and a definitive Common Area
Budget, on or before ninety (90) calendar days prior to the
opening of the Project which budget shall be for the period
commencing on the first business day on which the Project begins
gaming operations until December 31. On or before October 1 of
each year Rockingham shall furnish the Company with a Common Area
Budget for the next calendar year. Rockingham shall use its best
efforts to comply with the Common Area Budget.
(b) The Company shall approve or disapprove the Common Area
Budget within twenty (20) days of receipt of the budget, provided
that if Company does not give written notice to Rockingham of its
approval or disapproval within such time period, the Common Area
Budget shall be deemed approved. In the event that the Company
disagrees with any line item contained in the Common Area Budget,
the Company shall discuss its disagreement with Rockingham.
Rockingham will, within ten (10) days of notice of the Company's
disagreement, offer constructive corrections to resolve the
Company's concerns. During any period that Owner disapproved of
the Common Area Budget, Rockingham will continue to maintain the
Common Area in accordance with the Common Area Budget for the
preceding year as the same may be adjusted for increases year-to-
year in the Consumer Price Index applicable to the Salem, New
Hampshire area.
(c) The Common Area Budget may be amended from time to time
with the Company's approval, which approval shall not be
unreasonably withheld or delayed, after submission by Rockingham
or the Company, as applicable, of the amendments to such budget
and the rationale for such amendments.
53
MANAGEMENT AGREEMENT
BY AND AMONG
SHOWBOAT ROCKINGHAM COMPANY, LLC,
SHOWBOAT OPERATING COMPANY
AND
ROCKINGHAM VENTURE, INC.
MANAGEMENT AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. RECITALS AND DEFINITIONS 2
ARTICLE 2. PRE-ENACTMENT PERIOD 7
Section 2.01 No Current Legislation 7
Section 2.02 Duties During Pre-enactment Period 7
ARTICLE 3. APPOINTMENT/TERM/OPTION TO EXTEND TERM 7
Section 3.01 Appointment 7
Section 3.02 Term 7
Section 3.03 Opening the Project 7
ARTICLE 4. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS DURING
DEVELOPMENT TERM 8
Section 4.01 Construction of Project/Compliance with Law 8
Section 4.02 Engagement of Manager As Consultant 8
Section 4.03 Preliminary Plans and Specifications 8
Section 4.04 Pre-Opening Committee 8
Section 4.05 Obligations during Development Term. 9
Section 4.06 Construction 9
Section 4.07 Pre-Opening Services by Manager. 9
Section 4.08 Payment of Pre-Opening Expenses 9
ARTICLE 5. OPERATIONS 9
Section 5.01 Accounting Procedures and Services Books and
Records 9
Section 5.02 Manager's Access to Gaming Financial Records 10
Section 5.03 Audits 10
Section 5.04 Monthly Financial Statements 10
Section 5.05 Expenses 11
Section 5.06 Standards. 11
Section 5.07 Plans and Budgets. 12
Section 5.08 Management 13
Section 5.09 Bank Accounts 14
i
Section 5.10 Owner's Advances 14
Section 5.11 Cooperation of Owner and Manager 15
Section 5.12 Financing Matters. 15
Section 5.13 Conflict of Interest/Non-Competition 16
ARTICLE 6. MANAGEMENT FEE 16
Section 6.01 Payments to Manager. 16
ARTICLE 7. MANAGER'S RIGHT OF FIRST REFUSAL FOR CONCESSIONS 17
ARTICLE 8. REAL PROPERTY TAXES AND ASSESSMENTS, AND PAYMENTS
TO THE GAMING AUTHORITY 17
Section 8.01 Payment of Real Estate Taxes and Assessments 17
Section 8.02 Exceptions 17
ARTICLE 9. USE AND OCCUPANCY OF THE PROJECT 18
Section 9.01 Uses 18
Section 9.02 Showboat Marks 18
Section 9.03 Rockingham Marks 18
ARTICLE 10. MAINTENANCE AND REPAIRS 18
Section 10.01 Owner's Maintenance and Repairs 18
ARTICLE 11. INSURANCE AND INDEMNITY 19
Section 11.01 Owner Insurance Obligations 19
Section 11.02 Parties Insured 20
Section 11.03 Approved Insurance Companies 20
Section 11.04 Approval of Insurance Coverage 21
Section 11.05 Failure to Obtain Required Insurance 21
Section 11.06 Waiver of Subrogation 21
Section 11.07 Mutual Cooperation 21
Section 11.08 Delivery of Insurance Policies 21
Section 11.09 Indemnification by Manager 21
Section 11.10 Indemnification by Owner 22
Section 11.11 Selection of Counsel/Conduct of Litigation 22
ii
ARTICLE 12. CASUALTY 23
ARTICLE 13. TAKING OF THE PROJECT 23
Section 13.01 Definitions. 23
Section 13.02 Entire Taking of the Support Areas 23
Section 13.03 Duty to Restore 24
ARTICLE 14. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS 24
Section 14.01 Trustee 24
Section 14.02 Deposits of Insurance Proceeds and Awards 24
Section 14.03 Procedure for Distribution of Insurance
Proceeds and Awards 24
ARTICLE 15. ASSIGNMENT AND SUBLETTING 26
ARTICLE 16. AFFIRMATIVE COVENANTS OF MANAGER 26
Section 16.01 Corporate Status 26
Section 16.02 Compliance with Laws 26
Section 16.03 Gaming Approvals 27
Section 16.04 Confidential Information 27
Section 16.05 Gaming Applications 27
Section 16.06 Compliance With Other Agreement 27
ARTICLE 17. AFFIRMATIVE COVENANTS OF OWNER 27
Section 17.01 Corporate Status 27
Section 17.02 Maintenance of Insurance 28
Section 17.03 Compliance with Laws 28
Section 17.04 Cooperation with Gaming Authorities 28
Section 17.05 Confidential Information 28
Section 17.06 Compliance with Loan Covenants 29
Section 17.07 Non-Interference 29
Section 17.08 Gaming Applications 29
Section 17.09 Title/Quiet Enjoyment 29
ARTICLE 18. REPRESENTATIONS AND WARRANTIES 29
Section 18.01 Owner Corporate Status 29
Section 18.02 Manager Corporate Status 29
Section 18.03 Authorization/No Conflict 30
Section 18.04 Permits/Approvals 30
Section 18.05 Accuracy of Representations 30
iii
Section 18.06 Maintenance of Gaming and Other Licenses 30
Section 18.07 Condition of Project During Term 30
Section 18.09 Impair Reputation 31
ARTICLE 19. ARBITRATION 31
SECTION 19.01 APPOINTMENT OF ARBITRATORS 31
SECTION 19.02 INABILITY TO ACT 32
ARTICLE 20. DEFAULT/STEP-IN RIGHTS 32
Section 20.01 Definition 32
Section 20.02 Manager's Defaults 32
Section 20.03 Step-In Rights 33
Section 20.04 Owner's Default 33
Section 20.05 Bankruptcy 34
Section 20.06 Reorganization/Receiver 34
Section 20.07 Delays and Omissions 34
Section 20.08 Disputes in Arbitration 34
ARTICLE 21. TERMINATION 34
Section 21.01 Terminating Events 34
Section 21.02 Notice of Termination 35
Section 21.03 Remedies Upon Termination. 35
Section 21.04 Delivery of Project 35
ARTICLE 22. HAZARDOUS MATERIALS 36
Section 22.01 No Hazardous Materials 36
Section 22.02 Compliance With Laws 36
Section 22.03 Indemnification By Owner 36
Section 22.05 Hazardous Material Defined 37
ARTICLE 23. NOTICES 37
ARTICLE 24. MISCELLANEOUS 38
Section 24.01 Time of the Essence 38
Section 24.02 Heirs, Successors, Assigns 38
Section 24.03 Construction 38
Section 24.04 Governing Law 38
Section 24.05 Severability 38
iv
Section 24.06 Relation of the Parties 38
Section 24.07 No Broker or Finder 38
Section 24.08 Attorneys' Fees 39
Section 24.09 Entire Agreement 39
Section 24.10 Counterparts 39
Section 24.11 Force Majeure 39
Section 24.12 No Warranties 39
Section 24.13 Headings 39
Section 24.14 Waiver 40
v
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is dated as of
July 27, 1995, and is made and entered into by and among Showboat
Rockingham Company, L.L.C., a New Hampshire limited liability
company or its successors and assigns ("Owner"), whose address is
Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx, Xxx Xxxxxxxxx 00000, Showboat
Operating Company, a Nevada corporation, or its successors and
assigns ("Manager"), whose address is 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxx 00000, and Rockingham Venture, Inc., a New
Hampshire corporation, whose address is Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx, Xxx Xxxxxxxxx 00000.
RECITALS
A. An affiliate of Manager lent $8.85 million to Rockingham
Venture, Inc., a New Hampshire corporation ("Rockingham") and a
member of Owner, in consideration of, among other things, the
ownership of and management of a non-racing gaming business at
Rockingham Park ("Rockingham Park").
B. Rockingham and an Affiliate of Manager have formed, as
of the date hereof, Owner.
C. Upon the enactment of legislation permitting a gaming
business Owner shall design and develop the Project (defined in
Article 1) in order to conduct a gaming business at Rockingham
Park.
D. Manager has experience in designing gaming premises, and
in starting up and conducting a gaming business.
E. Owner desires to engage Manager as a consultant to Owner
in designing the gaming area, training staff and installing
gaming equipment for public use, and, upon completion of the
construction of the Project and/or rehabilitation of the area
designated for the Project and all ancillary facilities,
including the receipt of all gaming and other approvals, to
manage and operate the Project.
F. Manager desires to be engaged as a consultant to assist
in the design of the gaming area of the Project and, upon
completion of the construction of the Project and/or
rehabilitation of the area designated for the Project , to manage
and operate the Project.
G. Owner and Manager desire to set forth their agreements
as to the development and management of the Project and the
proposed non-racing gaming operations at Rockingham Park in the
event and with the expectation that (i) the State of New
Hampshire enacts legislation which permits a privately owned non-
racing gaming business to operate at a racetrack such as
Rockingham Park and (ii) the gaming licensing authority specified
in the legislation permitting gaming selects and licenses both
Owner and Manager.
H. Owner and Manager acknowledge their mutual desire to
enter into this Agreement despite the numerous uncertainties
which must be resolved or clarified to each party's satisfaction.
Both parties undertake to negotiate in good faith in a timely
fashion such addenda to this Agreement as are necessary to
continue the effectiveness of this Agreement and to revise the
assumptions and underlying facts upon which this Agreement is
based.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
ARTICLE 1. RECITALS AND DEFINITIONS
The foregoing Recitals are true and correct.
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person who, directly or indirectly,
or through one or more intermediaries, (i) controls, is
controlled by, or is under common control with the Person in
question; (ii) is an officer, director, 5% stockholder, partner
in or trustee of any Person referred to in the preceding clause;
or (iii) is a spouse, father, mother, son, daughter, brother,
sister, uncle, aunt, nephew, niece or grandchild of any Person
described in clauses (i) and (ii).
"Agreement" shall mean this Management Agreement as
originally executed and as amended, modified, supplemented, or
restated from time to time, as the context may require.
"Audit Day" is defined in Section 5.03.
"Audited Statements" is defined in Section 5.03.
"Award" is defined in Section 13.01.
"Bad Debts" shall mean the amount equal to gaming accounts
receivables which have not been collected for more than 120 days.
"Bank Accounts" is defined in Section 5.09.
"Bankroll" shall mean an amount reasonably determined by
Manager as funding required to bankroll Gaming Activities, but in
no case less than the amount required by New Hampshire gaming
law. In no event shall such Bankroll include amounts necessary
to cover Operating Expenses or Operating Capital. Bankroll shall
include the funds located on the tables, if permitted, in the
gaming devices, cages, vault, counting rooms, or in any other
location in the Gaming Area where funds may be found and funds in
a bank account identified by Owner for any additional amount
required by New Hampshire gaming law or such other amount as is
reasonably determined by Manager.
2
"Business Days" shall mean all weekdays except those that
are official holidays of the state of New Hampshire or the US
government. Unless specifically stated as "Business Days," a
reference in this Agreement to "days" means calendar days.
"Commencement Date" shall mean the first day on which a
revenue-paying customer is admitted to the Project.
"Construction" shall mean the construction of new stand-
alone facilities, construction of additions to existing
facilities and/or rehabilitation of existing facilities as each,
any or all relate to the Project.
"Control" shall mean, in relation to a Person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such Person carrying more than 50% of the voting
rights attaching to all voting securities of such Person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Cooperation Agreement" shall mean that certain agreement
between Rockingham Venture, Inc. and Owner dated ________, 1995.
"Default" or "Event of Default" is defined in Section 20.01.
"Default Interest Rate" shall mean prime rate published in
the WALL STREET JOURNAL, Money Rate Section, plus 4% per annum.
"Development Term" shall mean the period beginning on the
date of this Agreement and ending on the Commencement Date.
"Earnings" shall mean Gross Revenues less Operating
Expenses.
"Effective Date" is defined in Section 3.02.
"FF&E" shall mean all furniture, furnishings, equipment, and
fixtures, including gaming equipment, computers, housekeeping and
maintenance equipment, necessary or convenient to the operations
of the Project in conformity with this Agreement and in
accordance with applicable law.
"Full Gaming" shall mean that the enabling legislation
permits privately owned non-racing gaming to (i) more than 500
electronic games of chance or skill at the Project or (ii) any
combination of games, which includes table games.
"Gaming Activities" shall mean the cage, table games, slot
machines, video machines, electronic games of chance, electronic
games of skill, or any other form of gaming managed by Manager in
the Gaming Area.
"Gaming Area" shall mean those areas reserved for the
operation of electronic games of chance or skill, table games or
any other legal forms of gaming permitted under applicable law,
which may include reservations and admissions, cage, vault, count
room, surveillance room and
3
any other room or area or activities therein regulated or taxed
by the Gaming Authority by reason of gaming operations.
"Gaming Authority" shall mean the New Hampshire gaming
commission or other such body or bodies set forth in the enabling
legislation or regulations promulgated thereunder.
"Gaming Taxes" shall mean any tax imposed by the
Governmental Authorities on Gross Gaming Revenue.
"Governmental Authorities" shall mean the United States, the
state of New Hampshire, county of Rockingham, Town of Salem, any
other political subdivision in which the Project is located or
does business, and any court or political subdivision agency,
commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over
Owner, Manager or the Project.
"Gross Gaming Revenue" shall mean all of the revenue from
the operation of the Gaming Area including, but not limited to,
table games, if permitted, electronic games of chance, and
electronic games of skill and admission fees.
"Gross Revenue" shall mean Gross Gaming Revenues plus all
other revenues resulting from the operation of the Project.
"Hazardous Material" is defined in Section 22.04.
"Impositions" is defined in Section 8.01.
"Incentive Management Fee" shall mean Three Percent (3%) of
Earnings before any interest expense, income taxes, capital lease
rentals, depreciation and amortization.
"Initial Inventory" shall mean the list of operating
supplies required for the operation of the Project for the
initial 30-day period following the Commencement Date.
"Initial Inventory Price" shall mean the cost of purchasing
the Initial Inventory.
"Institution" is defined in Section 14.01.
"Institutional Mortgage" is defined in Section 14.01.
"Limited Gaming" shall mean gaming where the enabling
legislation limits the Project to no more than 500 electronic
games of chance and prohibits other games (e.g. a prohibition
against any variety of table game).
"Limited Gaming Adjustment" shall mean an adjustment in the
scope of the Project, reduction in fees, adjustment in income
sharing and the like, in the event the enabling legislation
provides only for Limited Gaming, and such Limited Gaming
Adjustment shall be in effect until the enabling legislation
permits Full Gaming unless otherwise agreed in writing by the
equity holders of Owner.
4
"Limited Liability Company Agreement" shall mean the
Limited Liability Company Agreement dated _______________, 1995
by and between Rockingham and an Affiliate of Manager governing
the operations of Owner.
"Loan Documents" shall mean all of the documents evidencing,
securing and relating to any indebtedness owing by Owner to any
person, including, without limitation, all promissory notes, loan
agreements, mortgages, pledges, assignments, certificates,
indemnities and other instruments or agreements.
"Management Fee" shall mean that sum which is equal to 1.5%
of Gross Gaming Revenue up to One Million and no/100ths Dollars
($1,000,000.00) per year, plus the Incentive Management Fee.
"Management Fee Account" shall be the bank account
established by Manager into which the Management Fee shall be
deposited.
"Manager Pre-Opening Expenses" are those expenses incurred
during the Development Term including, but not limited to, travel
by Manager employees, officers and directors, rent, regulatory
fees, salaries, wages and benefits, and other costs of Manager
employees which are operational in nature.
"Manager's Management Team" is defined in Section 5.06(d).
"Nevada Gaming Authorities" shall mean the Nevada Gaming
Commission and the Nevada Gaming Control Board.
"New Hampshire Gaming Act" shall mean such statutes enacted
by the State of New Hampshire which permit Gaming Activities.
"Operating Budget" shall mean the budget for the Operating
Expenses of the Project.
"Operating Capital" shall mean such amount in the Bank
Accounts as will be reasonably sufficient to assure the timely
payment of all current liabilities of the Project, including its
operations, during the term of this Agreement, and to permit
Manager to perform its management responsibilities and
obligations hereunder, with reasonable reserves for unanticipated
contingencies and for short term business fluctuations resulting
from monthly variations from the Operating Budget.
"Operating Expenses" shall mean actual expenses incurred
following the Commencement Date in operating the Project,
including, but not limited to, the Management Fee, gaming
supplies, maintenance of the Gaming Area, marketing and
promotions, uniforms, complimentaries, employee training,
employee compensation and entitlements, restaurant equipment and
supplies, gift shop fixtures and stock, and Gaming Taxes,
employee compensation and entitlements, including Manager's
employees assigned to the Project, Operating Supplies, common
area expenses, maintenance costs, fuel costs, utilities and
taxes.
5
"Operating Supplies" shall mean gaming supplies, paper
supplies, cleaning materials, marketing materials, maintenance
supplies, uniforms and all other materials used in the operation
of the Project.
"Owner's Advances" is defined in Section 5.11.
"Person" shall mean any individual, partnership, limited
partnership, limited liability company, corporation,
unincorporated association, joint venture, trust generated entity
or other entity.
"Pre-enactment Period" shall mean the period commencing as
of the Effective Date and ending upon the date upon which either
Full Gaming or Limited Gaming is permitted by the state of New
Hampshire.
"Pre-Opening Budget" shall mean the budget of anticipated
Pre-Opening Expenses.
"Pre-Opening Expenses" shall mean all costs and expenses
incurred by Owner and Owner's Affiliates and Manager and/or
Manager's Affiliates in implementing the Pre-Opening Plan,
including, without limitation, the Manager's Pre-Opening
Expenses, the costs of recruitment and training for all employees
of the Project, costs of licensing or other qualification of
employees prior to the Commencement Date, the cost of pre-opening
sales, marketing, advertising, promotion and publicity, the cost
of obtaining all operating permits, and permits for employees,
and the fees and expenses of lawyers and other professionals and
consultants retained by Owner and Manager in connection
therewith.
"Pre-Opening Plan" shall mean the plan and schedule for
implementing and performing the Pre-Opening Services.
"Pre-Opening Services" is defined in Section 4.07.
"Project" shall mean a gaming establishment and related
improvements which may include restaurants, entertainment
facilities, retail outlets and other ancillary facilities,
including shared facilities, administrative offices, parking and
easements, ordinarily accompanying a privately owned non-racing
gaming establishment to be located at Rockingham Park. The
Project shall not include the Race Track Operations
"Race Track Operations" shall mean any permissable activity
permitted by applicable statutes or regulations to be conducted
at Rockingham Park, Salem, New Hampshire, excluding all Gaming
Activities other than simulcasting, inter-track wagering, sale of
lottery tickets and pari-mutuel activities, permitted by Limited
Gaming or Full Gaming.
"Taking" is defined in Section 13.01.
"Taking Date" is defined in Section 13.01.
"Term" is defined in Section 3.02.
6
"Trustee" is defined in Section 14.01.
ARTICLE 2. PRE-ENACTMENT PERIOD
SECTION 2.01 NO CURRENT LEGISLATION
Manager and Owner acknowledge that the State of New
Hampshire has not enacted any legislation as of the date hereof
which permits any Person to conduct Gaming Activities.
SECTION 2.02 DUTIES DURING PRE-ENACTMENT PERIOD
Until such time as legislation is enacted by the New
Hampshire State Legislature and such legislation becomes
effective Manager agrees to provide to Owner such services as may
be necessary, appropriate and legally permissible for lobbying
for the passage of such legislation which would authorize Gaming
Activities at Rockingham Park as may be reasonably requested by
Owner.
ARTICLE 3. APPOINTMENT/TERM/OPTION TO EXTEND TERM
SECTION 3.01 APPOINTMENT
Owner hereby appoints and employs Manager to act as its
agent for the supervision and control of the management of the
Project on Owner's behalf, upon the terms and conditions set
forth herein. Manager hereby accepts such appointment and
undertakes to manage the Project upon the terms and conditions
hereinafter set forth.
SECTION 3.02 TERM
This Agreement shall be effective upon execution ("Effective
Date"). The terms of this Agreement (the "Term") shall commence
upon the date on which all of the conditions specified in Article
2 have been satisfied and shall continue for a period which is
coterminous to the Limited Liability Company Agreement or for
such period that an Affiliate of Manager owns an equity interest
in Owner. Notwithstanding the foregoing, Owner and Manager
acknowledge that enabling legislation for Gaming Activities has
not been enacted in the state of New Hampshire. Owner and
Manager agree to make any necessary changes to this Agreement
upon enactment of such enabling legislation so that this
Agreement fully complies with the enabling legislation.
SECTION 3.03 OPENING THE PROJECT
The Commencement Date shall be a date established by Owner
upon giving written notice thereof to Manager and shall be a date
no earlier than 10 days after, and no later than 15 days after,
the satisfaction of all the following conditions: (i) the Project
architect has issued to Owner a certificate of substantial
completion confirming that the Project has been substantially
completed in accordance with the plans and specifications, (ii)
the Project interior designer has issued to Owner a certificate
of substantial completion confirming that the FF&E has been
substantially installed in the Project in accordance with the
FF&E specifications contained in the plans and specifications,
(iii) all operating permits for the Project and its operations
(including, without limitation, a certificate of occupancy or
local equivalent, gaming, liquor and restaurant licenses)
7
have been obtained, (iv) the Operating Capital and the Bankroll
for the Gaming Area has been furnished by Owner, (v) Manager
shall have given written notice to Owner that all operational
systems have been tested on a "dry-run" basis to the satisfaction
of Manager and, to the extent required by applicable law, the
Gaming Authority, and (vi) all other material state and federal
governmental requirements necessary to open, occupy and operate
the Project, have been satisfied. Manager shall use its best
efforts in the performance of its duties under this Agreement to
assist Owner in achieving the satisfaction of all of the
foregoing requirements.
ARTICLE 4. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM
SECTION 4.01 CONSTRUCTION OF PROJECT/COMPLIANCE WITH LAW
Owner, at its sole cost and expense, shall construct the
Project and install the FF&E. The Project and its systems
(including but not limited to plumbing, heating, air
conditioning, electrical, and life safety systems, if applicable)
shall comply with the New Hampshire Gaming Act, and all
regulations promulgated thereunder, all appropriate building,
fire and zoning codes and the Americans With Disabilities Act.
SECTION 4.02 ENGAGEMENT OF MANAGER AS CONSULTANT
Owner engages Manager to be Owner's consultant in the
Construction, configuration, layout, interior design and
landscape design associated with the Project. Additionally,
Manager shall recommend to Owner and advise Owner as to the
suggested placement of all gaming equipment and ancillary
furnishings and the configuration of ancillary areas within the
Project.
SECTION 4.03 PRELIMINARY PLANS AND SPECIFICATIONS
Owner shall prepare preliminary design plans, working
drawings, and specifications of the Project. Manager shall
evaluate the preliminary design plans, working drawings and
assist Owner in designing the Project including the plans
prepared pursuant to the Consulting Services Agreement. Owner
shall have the sole and exclusive right to manage, direct,
control, coordinate and prosecute the Construction and the
installation of the FF&E.
SECTION 4.04 PRE-OPENING COMMITTEE
Owner and Manager shall form a Pre-Opening Committee which
shall consist of four persons, two persons appointed by
Rockingham and two persons appointed by Manager immediately upon
passage of enabling legislation permitting Gaming Activities.
Within six (6) weeks of the date thereof, Manager shall prepare
and submit to the Pre-Opening Committee the Pre-Opening Budget
for the Pre-Opening Committee's approval. The Pre-Opening
Committee shall also prepare promptly the Pre-Opening Plan
detailing each party's responsibilities (including those set
forth in Section 4.07) and the time frame for the performance of
such responsibilities during the Development Term. Each party
agrees to use its best efforts to timely complete each task, in
accordance with the Pre-Opening Plan and the Pre-Opening Budget.
Manager agrees not to exceed the Pre-Opening Budget without the
prior approval of Owner.
8
SECTION 4.05 OBLIGATIONS DURING DEVELOPMENT TERM.
(a) Owner represents that it will commence Construction
and agrees to diligently complete same following the passage of
the enabling legislation permitting Gaming Activities.
(b) Owner and Manager shall file all applications necessary
to obtain all required permits and other approvals necessary to
operate the Project as contemplated by this Agreement.
SECTION 4.06 CONSTRUCTION
The construction of the Project shall be in accordance with
appropriate laws, regulations and ordinances of any kind and
nature.
SECTION 4.07 PRE-OPENING SERVICES BY MANAGER.
(a) Prior to the Commencement Date, Manager, as agent of
Owner, shall perform or arrange for others to perform the
following services on behalf of and for the account of Owner
pursuant to the Pre-Opening Plan and Pre-Opening Budget (the
"Pre-Opening Services").
(b) Manager shall implement the marketing portion of
the approved Pre-Opening Plan, including, but not limited to,
direct sales, media and direct mail advertising, promotion,
publicity and public relations designed to attract customers to
the Project from and after the Commencement Date.
(c) Manager shall recruit, hire, provide orientation to
and train all executive and general staff of the Project,
including all personnel to be utilized during the period from
the date hereof until the Commencement Date in accordance with
the Pre-Opening Plan.
(d) Manager shall prepare and deliver to Owner a list of
all Operating Supplies necessary to operate the Project no later
than 10 days prior to the anticipated Commencement Date and
Owner shall purchase the initial inventories for the Project no
later than 10 days prior to the Commencement Date.
SECTION 4.08 PAYMENT OF PRE-OPENING EXPENSES
The cost of the Pre-Opening Expenses shall be paid by Owner.
Pre-Opening Expenses and the time schedule for incurring such
expense shall be established in the Pre-Opening Budget and Pre-
Opening Plan. Owner shall deposit such sums to fund the Pre-
Opening Expenses in accordance with the schedules as shall be
established by the parties in the Pre-Opening Plan and Pre-
Opening Budget and Owner shall maintain sufficient funds therein
to timely provide for any and all Pre-Opening Expenses.
ARTICLE 5. OPERATIONS
SECTION 5.01 ACCOUNTING PROCEDURES AND SERVICES BOOKS AND
RECORDS
Manager shall cause Owner's employees to maintain a complete
accounting system in connection with the operation of the
Project. The books and records shall be kept in accordance with
generally accepted accounting principles consistently applied and
in accordance with federal
9
tax laws. Such books and records shall be kept on a calendar
year basis. Books and accounts shall be maintained at the
Project. Manager shall use its best efforts to cause Owner to
comply with all requirements with respect to internal controls in
accounting and Owner shall prepare and provide all required
reports under the rules and regulations of the Gaming Authority
regarding the operations of the Project. The cost of preparing
such reports shall be an Operating Expense. All operating bank
accounts shall be maintained in the state of New Hampshire.
SECTION 5.02 MANAGER'S ACCESS TO GAMING FINANCIAL RECORDS
Manager, at its option and at its sole cost and expense, may
engage and appoint a representative to review, examine, and copy
the gaming books and records, including all daily reports,
prepared by Owner detailing the results of operations of Owner's
business conducted from the Project during regular business
hours. Any representative's review, examination and copying
shall be conducted in such a manner so as to not be disruptive to
Owner's operations. Such representative shall at all times be
bound by Manager's confidentiality covenant contained in Section
17.05 hereof.
SECTION 5.03 AUDITS
Owner shall engage a certified public accountant to audit
the operations of the Project as of and at the end of each
calendar year (or portion thereof) occurring after the date of
this Agreement (the "Audited Statements") by a nationally
recognized reputable accounting firm ("Regular Auditor"), and a
sufficient number of copies of the Audited Statements shall be
furnished to Owner and Manager as soon as available to permit
Owner and Manager to meet any public reporting requirements as
may be applicable to them, but in no event later than seventy-
five (75) days following the end of such fiscal period (such 75th
day to be the "Audit Day"). All costs and expenses incurred in
connection with the preparation of the Audited Statements shall
be an Operating Expense. Nothing herein contained shall prevent
either party from designating an additional reputable accounting
firm ("Special Auditor") to conduct an audit of the Project as of
the end of the calendar year during regular business hours at the
requesting party's expense; provided, however, that if the
additional audit shall reveal a discrepancy within the control of
Manager in the computation of Gross Gaming Revenue of more than
5% from the audit performed by the Regular Auditor, then the
special audit shall be paid for by Manager. In the event of any
dispute between the Regular Auditor and the Special Auditor as to
any item subject to audit, the Regular Auditor and the Special
Auditor shall select a third national, reputable accounting firm
whose resolution of such dispute shall bind the parties.
SECTION 5.04 MONTHLY FINANCIAL STATEMENTS
On or before the last day of each month, Owner shall prepare
under the supervision of Manager an unaudited operating statement
for the preceding calendar month detailing the Gross Revenue and
expenses incurred in the operation of the Project and an
unaudited balance sheet (the "Monthly Financial Statements").
The Monthly Financial Statements shall include a statement
detailing drop figure accounts on all Gross Gaming Revenue.
10
SECTION 5.05 EXPENSES
All costs, expenses, funding or operating deficits and
Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the
gaming and nongaming operations of the Project shall be the sole
and exclusive financial responsibility of Owner, except for those
instances herein where it is expressly and specifically stated
that such costs and expenses shall be the responsibility of
Manager. It is understood that statements herein indicating that
Manager shall furnish, provide or otherwise supply, present or
contribute items or services hereunder shall not be interpreted
or construed to mean that Manager is liable or responsible to
fund or pay for such items or services, except in those instances
specifically mentioned herein.
SECTION 5.06 STANDARDS.
(a) Manager shall exclusively manage and maintain the
Project in a manner utilizing standards and procedures which is
comparable to the management of privately-owned non-racing gaming
businesses of the same or similar type, class and quality,
located in New Hampshire subject to such adjustments as Manager
in its reasonable discretion deems necessary to adjust to the
Salem, New Hampshire gaming market. Manager shall establish such
standards and procedures in its sole discretion, subject only to
standards and procedures required by law.
(b) Owner hereby agrees that Manager shall have
uninterrupted control of and the exclusive responsibility for the
operation of the Project during the Term of this Agreement.
Owner will not interfere or involve itself with the day-to-day
operation of the Project, and Manager shall operate the Project
free of eviction or disturbance by Owner or any third party
claiming by, through or under Owner. Manager acknowledges that
it is a fiduciary with respect to Owner, and agrees that it will
discharge its fiduciary duties and responsibilities in the
control and operation of the Project in good faith and for the
purposes of maximizing Gross Revenue; provided, however, that in
no event shall Owner make any claim against Manager on account of
any alleged errors of judgment made in good faith in connection
with the operation of the Project. Manager agrees that,
notwithstanding the foregoing, it shall not alter the interior
and exterior design and architecture, including color schemes of
the Project, nor make any structural engineering modifications
without the prior written consent of Owner.
(c) All persons employed in connection with the operations
of the Project, including the Gaming Area located therein, shall
be employees of Owner or a subsidiary of Owner, except for
Manager's Management Team. Manager shall determine the fitness
and qualifications of all employees, whether Owner employees or
Manager's Management Team, subject only to New Hampshire gaming
licensing standards. Manager shall hire, supervise, direct the
work of, and discharge all personnel working in the Project.
Manager shall determine the wages and conditions of employment of
all employees, all of which shall be comparable to the existing
standards therefor in New Hampshire for employees of gaming
operations. Manager and Owner shall consult, and if Owner
approves, Manager may hire at Owner's expense consultants or
independent contractors for surveillance, security and other
matters. All wages, bonuses, compensation and entitlements of
employees of the Project and the Manager's Management Team
(although not employees of the Project), shall be an expense of
Owner.
11
(d) Manager shall assign experienced gaming executives to
direct and supervise the management of the Project on a full time
basis (the "Manager's Management Team"). Manager shall solely
select individuals who shall collectively represent Manager's
Management Team.
(e) Manager shall formulate, coordinate and implement
promotions and sales programs for Project operations and Owner
shall cause the Project to participate in such sales and
promotional campaigns and, as appropriate, activities involving
complimentary food, beverages and other items or services to
patrons of the Project in Manager's sole discretion in the
exercise of good management practice. All such promotion and
sales programs shall be an expense of Owner.
SECTION 5.07 PLANS AND BUDGETS.
(a) Manager shall furnish Owner with the Operating Budget
on or before ninety (90) calendar days prior to the opening of
the Project and 60 days prior to the end of each calendar year
thereafter.. Manager shall use its best efforts to comply with
the Operating Budget to meet or exceed the goals set forth
therein.
(b) Owner shall consider the Operating Budget within thirty
(30) days of receipt of the budget, provided that if Owner does
not give written notice to Manager of its approval or failure to
approve within such time period, the Operating Budget shall be
deemed approved. Owner's approval of the Operating Budget cannot
be unreasonably withheld or delayed. Owner may hire a consultant
to evaluate the Operating Budget. In the event that Owner
disagrees with any line item contained in the Operating Budget,
Owner shall discuss its disagreement with Manager. Manager will,
within 10 days of notice of Owner's disagreement, offer
constructive corrections to resolve Owner's concerns. A
representative of Owner and Manager shall meet within five (5)
business days thereafter to discuss the constructive corrections,
if necessary. If the representatives are unable to resolve
Owner's concerns the matter(s) shall be resolved in an
arbitration pursuant to Article 19. During any period that Owner
disapproves or fails to approve of the Operating Budget, Manager
will continue to manage the Project in accordance with the
Operating Budget for the preceding year as the same may be
adjusted for increases year-to-year in the Consumer Price Index
applicable to the Salem, New Hampshire area and as long as the
assumptions underlying the preceding year's Operating Budget
remain substantially true.
(c) The Operating Budget may be amended from time to time
with Owner's and Manager's approval, which approvals shall not be
unreasonably withheld or delayed, after submission by Manager or
Owner, as applicable, of the amendments to such budget and the
rationale for such amendments.
(d) Manager and Owner make no guaranty, warranty or
representation whatsoever in regard to the Operating Budget, same
being intended as reasonable estimates only.
(e) Manager shall use its best efforts to not underperform
the Operating Budget, as amended and supplemented, by 15% of the
budgeted earnings before taxes, interest, depreciation and
amortization.. Additionally, Manager shall prepare a capital
expenditure budget. The budget shall set forth the assumptions
and qualifications underlying its preparation. In the event that
Manager's operation of the Project underperforms budgeted
earnings before taxes, interest, depreciation and amortization by
more than 15% of the agreed to Operating Budget for three
consecutive years commencing with the fourth full calendar year
of operations then Owner
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may terminate this Agreement. Owner shall, in addition to all
other amounts due and payable hereunder, pay to Manager the
Termination Fee provided below, as liquidated damages for the
early termination of the Agreement. Owner's obligation to pay
for all indemnification and defense claims, to maintain insurance
after termination (with respect to occurrences before
termination) and to pay for all costs of operating the Project
prior to termination shall be in addition to and shall survive
termination of this Agreement and payment of the Termination Fee.
The Termination Fee that shall be payable by Owner to Manager in
the event of, and at the time of, termination of this Agreement
due to the above described failure to meet Operating Budget is an
amount equal to three (3) times the average amount of annual
management fees earned in the twelve months preceding the
termination.
OWNER RECOGNIZES AND AGREES THAT, IF THIS AGREEMENT IS
TERMINATED FOR THE REASONS SPECIFIED ABOVE AS ENTITLING MANAGER
TO RECEIVE THE TERMINATION FEE, MANAGER WOULD SUFFER AN ECONOMIC
LOSS BY VIRTUE OF THE RESULTING LOSS OF THE MANAGEMENT FEES WHICH
WOULD OTHERWISE HAVE BEEN EARNED UNDER THIS AGREEMENT. BECAUSE
SUCH FEES VARY IN AMOUNT DEPENDING ON THE REVENUES AND EXPENSES
OF THE PROJECT AND ACCORDINGLY WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN WITH CERTAINTY, THE PARTIES AGREE THAT
THE TERMINATION FEE PROVIDED IN THIS AGREEMENT HAS BEEN
DETERMINED TO CONSTITUTE A REASONABLE ESTIMATE OF LIQUIDATED
DAMAGES TO MANAGER. IT IS AGREED THAT MANAGER SHALL NOT BE
ENTITLED TO MAINTAIN A CAUSE OF ACTION AGAINST OWNER FOR SPECIFIC
PERFORMANCE OF THIS AGREEMENT OR ACTUAL DAMAGES IN EXCESS OF THE
TERMINATION FEE IN ANY CONTEXT WHERE THE TERMINATION FEE IS TO BE
MANAGER'S REMEDY, AND RECEIPT OF SUCH FEE (TOGETHER WITH ALL
OTHER AMOUNTS DUE AND PAYABLE BY OWNER TO MANAGER WITH RESPECT TO
EVENTS OCCURRING PRIOR TO OR IN CONNECTION WITH THE TERMINATION
OF THIS AGREEMENT AND MANAGER'S CONTINUING RIGHT TO INSURANCE
COVERAGE, INDEMNIFICATION FOR PRE AND POST TERMINATION
OCCURRENCES, AND PROTECTION OF THE SHOWBOAT TRADEMARKS BY
INJUNCTIVE AND OTHER APPROPRIATE RELIEF) SHALL BE MANAGER'S SOLE
REMEDY AGAINST OWNER IN SUCH CASE.
SECTION 5.08 MANAGEMENT
Manager shall have the discretion and authority to determine
operating policies and procedures, standards of operating,
staffing levels and organization, win-payment arrangements,
standards of service and maintenance, food and beverage quality
and service, pricing, and other policies affecting the Project,
or the operation thereof, including but not limited to admissions
and parking, to implement all such policies and procedures, and
to perform any act on behalf of Owner which Manager deems
necessary or desirable in its reasonable business judgment for
the operation and maintenance of the Project on behalf of, for
the account of, and at the expense of Owner.
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SECTION 5.09 BANK ACCOUNTS
Immediately upon giving written notice to Manager of the
Commencement Date, Owner shall have established bank accounts
that are necessary for the operation of the Project, including an
account for the Bankroll, and to effect the Pre-Opening Plan at
various banking institutions chosen by Owner and reasonably
acceptable to Manager (such accounts are hereinafter collectively
referred to as the "Bank Accounts"). The Bank Accounts shall be
in Owner's name. Checks drawn on the Bank Accounts shall be
signed only by representatives of Manager who are covered by the
fidelity insurance described in Section 11.01 and Manager may be
the only signatures on checks drawn on the Bank Accounts which
are not payable to Affiliates of Manager or do not exceed Fifty
Thousand and no/100ths Dollars ($50,000). Any checks payable to
an Affiliate of Manager or checks exceeding Fifty Thousand and
no/100ths Dollars ($50,000) shall be executed by a
representative of Owner and a representative of Manager. The
Bank Accounts shall be interest bearing accounts if such accounts
are reasonably available and all interest thereon shall be
credited to the Bank Accounts. All Gross Revenue shall be
deposited in the Bank Accounts and Manager shall use its best
efforts to cause Owner to pay out of the Bank Accounts, to the
extent of the funds therein, from time to time, all Operating
Expenses and other amounts required by Manager to perform its
obligations under this Agreement. All funds in the Bank Accounts
shall be separate from any other funds of any of Owner's
Affiliates and Owner may not commingle any of Owner's funds with
the funds of any of Owner's Affiliates in the Bank Accounts.
Owner shall bear the risk of the insolvency of any financial
institutions holding such Bank Accounts.
SECTION 5.10 OWNER'S ADVANCES
Owner shall advance to Manager on a timely and prompt basis
immediately available funds to conduct the affairs of the Project
and maintain the Gaming Area (hereinafter referred to as "Owner's
Advances") as set forth in this Agreement and as otherwise
provided hereunder.
(a) Pre-Opening Budget. Owner shall timely deposit in the
Bank Accounts the amounts set forth in the Pre-Opening Plan and
Pre-Opening Budget or any revisions thereof approved by Owner in
accordance with such Plan or budget.
(b) Initial Cash Needs. Two (2) weeks prior to the
Commencement Date, Owner shall fund the Operating Capital
necessary to commence operating the Project, in an amount not to
exceed the estimated operating expenses for eight (8) weeks, as
set forth in the Operating Budget, and an amount equal to the
Bankroll.
(c) Operating Capital. During the Term of this Agreement,
within five (5) Business Days after receipt of written notice
from Manager, Owner shall fund Owner's Advances in such a fashion
so as to adequately insure that the Operating Capital set forth
in the Operating Budget as revised is sufficient to support the
uninterrupted and efficient ongoing operation of the Project.
The written request for any additional Operating Capital shall be
submitted by Manager to Owner on a monthly basis based on the
interim statements and the Operating Budget as revised.
(d) Payment of Expenses. Owner shall pay from the Gross
Revenue the following items in the order of priority listed
below, subject to the laws of the state of New Hampshire, on or
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before their applicable due date: (i) Operating Expenses
(including taxes and Management Fee), (ii) emergency expenditures
to correct a condition of an emergency nature, including
structural repairs, which require immediate repairs to preserve
and protect the Project, (iii) required payments to the state of
New Hampshire, or the Town of Salem, and (iv) principal, interest
and other payments due the holder of any Institutional Mortgage.
In the event that funds are not available for payment of the
Operating Expenses in their entirety all state and local taxes
shall be paid first from the available funds.
SECTION 5.11 COOPERATION OF OWNER AND MANAGER
Owner and Manager shall cooperate fully with each other
during the Term of this Agreement to facilitate the performance
by Manager of Manager's obligations and responsibilities set
forth in this Agreement and to procure and maintain all
construction and operating permits. Owner shall provide Manager
with such information pertaining to the Project necessary to the
performance by Manager of its obligations hereunder as may be
reasonably and specifically requested by Manager from time to
time.
SECTION 5.12 FINANCING MATTERS.
(a) If Owner, or any Affiliate of Owner shall, at any time,
sell or offer to sell any securities issued by Owner or any
Affiliate of Owner through the medium of any prospectus or
otherwise and which relates to the Project or its operation, it
shall do so only in compliance with all applicable laws, and
shall clearly disclose to all purchasers and offerees that,
except to the extent of Manager or its Affiliates' interest in
Owner, (i) neither Manager nor any of its Affiliates, officers,
directors, agents or employees shall in any way be deemed to be
an issuer or underwriter of such securities, and (ii) Manager and
its Affiliates, officers, directors, agents and employees have
not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including
without limitation, any liability or responsibility for any
financial statements, projections or other information contained
in any prospectus or similar written or oral communication.
Manager shall have the right to approve any description of
Manager or its Affiliates, or any description of this Agreement
or of Owner's relationship with Manager hereunder, which may be
contained in any prospectus or other communications, and Owner
agrees to furnish copies of all such materials to Manager for
such purposes not less than twenty (20) days prior to the
delivery thereof to any prospective purchaser or offeree. Owner
agrees to indemnify, defend or hold Manager and its Affiliates,
officers, directors, agents and employees, free and harmless from
any and all liabilities, costs, damages, claims or expenses
arising out of or related to the breach of Owner's obligations
under this Section 5.12. Manager agrees to reasonably cooperate
with Owner in the preparation of such agreements and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in Section 5.12(a), Owner may
represent that the Project shall be managed by Manager and
Manager may represent that it manages the Project and both may
describe the terms of this Agreement and the physical
characteristics of the Project in regulatory filings and public
or private offerings. Moreover, nothing in this Section shall
preclude the disclosure of (i) already public information, or
(ii) audited or unaudited financial statements from the Project
required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the
Governmental Authorities, or (iv) the amount of the Management
Fees earned in any period. Both parties shall use their best
efforts to consult with the other concerning disclosures as to
the Project. Owner and
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Manager shall cooperate with each other in providing financial
information concerning the Project and Manager that may be
required by any lender or required by any Governmental Authority.
(c) In the event that the holder of any Institutional
Mortgage requires the collateral assignment of this Agreement as
further security for its loan, Manager shall consent to such
assignment; provided, however, that such collateral assignment
shall contain non-disturbance provisions satisfactory to Manager
and provided further that in no event shall Manager be required
to accept any reduction or subordination of its Management Fee or
to diminish any right which it may have under this Agreement.
SECTION 5.13 CONFLICT OF INTEREST/NON-COMPETITION
Owner acknowledges that Manager and/or its Affiliates
operate other casinos and may in the future operate additional
casinos in different areas of the world, and that marketing
efforts may cross over in the same markets and with respect to
the same potential customer base. Manager, in the course of
managing the Project, may refer customers of the Project and
other parties to other facilities operated by Affiliates of
Manager to utilize gaming, entertainment and other amenities,
without payment of any fees to Owner. Owner consents to such
activities and agrees that such activities will not constitute a
conflict of interest. Owner acknowledges and agrees that Manager
may distribute promotional materials for Manager's Affiliates and
facilities, including casinos, at the Project. Either Manager or
Owner and/or their Affiliates in the future may acquire an
interest or operate other casinos, including, without limitation,
any similar or competitive gaming operation, so long as such
operation is not within a thirty (30) mile radius of the
boundaries of Rockingham Park, Salem, New Hampshire, surrounding
Salem, New Hampshire, without the written approval of the members
of Owner, except for activities by the Manager and/or its
Affiliates at Seabrook, a New Hampshire greyhound racing facility
with Yankee Greyhound Racing, Inc. or its successors or assigns
which requires no further approval of Owner or any of its
Affiliates.
ARTICLE 6. MANAGEMENT FEE
SECTION 6.01 PAYMENTS TO MANAGER.
(a) The Management Fee shall be paid monthly. Manager
shall deposit the Management Fee into the Management Fee Account
for any calendar month in which the Project conducts gaming
operations by the twentieth (20th) day of the following month.
The Management Fee shall be deemed paid upon deposit in the
Management Fee Account. Contemporaneously with the payment of
the Management Fee Manager shall deliver to Owner the
calculation of the Management Fee to Owner.
(b) In the event of Limited Gaming, pursuant to the Limited
Gaming Adjustment, the Management Fee shall be suspended. Upon
commencement of Full Gaming, the payment of the Management Fee
shall recommence. Notwithstanding the foregoing, in the event of
Limited Gaming and if Rockingham and Manager agree to build a
gaming facility outside of the existing facility at Rockingham
Park, the payment of the Management Fee shall recommence even
though Full Gaming is not permitted in the operation of the
Project.
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ARTICLE 7. CONCESSIONS AT ROCKINGHAM PARK
After licensing and during the term of this Agreement, in
the event that Rockingham obtains the right to provide concession
services at Rockingham Park, and Rockingham elects not to
provide such concession services, Rockingham will provide to
Manager the non-exclusive opportunity to bid to manage the
concessions at Rockingham Park. Notwithstanding the foregoing,
Showboat shall manage the concessions of the Project to the
extent possible. Upon such occurrence, Rockingham shall notify
Manager of Manager's opportunity to bid on the concessions at
Rockingham Park. Manager shall have a period of thirty (30) days
to submit to Rockingham, as applicable, its offer to manage the
concessions. If Rockingham accepts such offer of Manager,
Manager and Rockingham shall immediately prepare a management
agreement for such concessions. Manager acknowledges that
concession services at Rockingham Park are currently provided
pursuant to a contract with Servomation Corporation, Rockingham
and Rockingham Ventures dated August 22,1983, as amended by that
First Amendment Concession Agreement among Service Corporation,
Rockingham and Rockingham Ventures, dated January 11, 1989 and
said contract includes such portions of the Project which are
common with Rockingham Park. Rockingham covenants and agrees
that the Concession Agreement shall not be amended, modified or
extended as it applies, if at all, to the Project without the
written approval of Manager.
ARTICLE 8. REAL PROPERTY TAXES AND ASSESSMENTS, AND
PAYMENTS TO THE GAMING AUTHORITY
SECTION 8.01 PAYMENT OF REAL ESTATE TAXES AND ASSESSMENTS
Owner shall be responsible for the payment when due, if any,
of all property taxes and assessments, including, without
limitation, assessments for benefits from public works or
improvements, levies, fees, and all other governmental charges,
general or special, ordinary or extraordinary, foreseen or
unforeseen, together with interest and penalties thereon, which
may heretofore or hereafter be levied upon or assessed against
the Project. All charges set forth in this Section 8.01 are
herein called "Impositions." If any Impositions are levied or
assessed against the Project which may be legally paid in
installments, Owner shall have the option to pay such Impositions
in installments except that each installment thereof, and any
interest thereon, must be paid by the final date fixed for the
payment thereof.
In the event of the enactment, adoption or enforcement by
any governmental authority (including the United States, any
state and any political or governmental subdivision) of any
assessment, levy or tax, whether sales, use or otherwise, on or
in respect of the Management Fee and charges set forth herein,
Manager shall pay such assessment, levy or tax.
SECTION 8.02 EXCEPTIONS
Nothing contained in this Agreement shall be construed to
require Owner to pay any estate, inheritance or succession tax,
any capital levy, corporate franchise tax, business enterprise
tax, business profits tax, any net income or excess profits tax
or other similar tax of Manager.
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ARTICLE 9. USE AND OCCUPANCY OF THE PROJECT
SECTION 9.01 USES
Manager agrees to manage the Project continuously during the
Term hereof only for the purpose of legally operating a gaming
establishment and related ancillary services. Manager and Owner
shall not use or allow the Project or any part thereof to be used
or occupied for any unlawful purpose or for any dangerous or
other trade or business not customarily deemed acceptable to
relevant gaming or pari-mutuel operations. In no event may
Manager or Owner conduct ancillary uses which violate the New
Hampshire Gaming Act. In addition, Manager shall not knowingly
permit any unlawful occupation, business or trade to be conducted
on the Project or any use to be made of the Project contrary to
any law, ordinance or regulation as aforesaid with respect
thereto.
SECTION 9.02 SHOWBOAT MARKS
Manager or its Affiliates (excluding Owner) are the owners
of the trademark "Showboat," its logos, trademarks, tradenames,
service marks, and any variation or extension of such name
(collectively "Showboat Trademark.") Manager shall operate the
Project under the Showboat Trademark, and shall grant to Owner a
non-exclusive personal and non-transferable right to use the
Showboat Trademark at the Rockingham Race Track, Salem, New
Hampshire in connection with the operation of the Project,
pursuant to a trademark license agreement satisfactory to
Manager. Notwithstanding the foregoing, Owner acknowledges that
its use of the Showboat Trademark shall not create in Owner's
favor any right, title, or interest in or to the Showboat
Trademark, but all rights of ownership and control of the
Showboat Trademark shall reside solely in Manager.
SECTION 9.03 ROCKINGHAM MARKS
Rockingham or its Affiliates (excluding Owner) are the
owners of the trademark "Rockingham," its logos, trademarks,
tradenames, service marks, and any variation or extension of such
name (collectively "Rockingham Trademark"). Rockingham shall
permit the Project to use the Rockingham Trademark, and shall
grant to Owner a non-exclusive personal and non-transferable
right to use the Rockingham Trademark at the Rockingham Race
Track, Salem, New Hampshire in connection with the operation of
the Project, pursuant to a trademark license agreement
satisfactory to Rockingham. Notwithstanding the foregoing, Owner
acknowledges that its use of the Rockingham Trademark shall not
create in Owner's favor any right, title, or interest in or to
the Rockingham Trademark, but all rights of ownership and control
of the Rockingham Trademark shall reside solely in Rockingham.
ARTICLE 10. MAINTENANCE AND REPAIRS
SECTION 10.01 OWNER'S MAINTENANCE AND REPAIRS
Owner, at its cost, shall maintain, in good condition and
repair, the following:
(a) The structural parts of the Project;
18
(b) The electrical, plumbing, and sewage systems of the
Project;
(c) Heating, ventilating, and air conditioning systems
servicing the Project.
Owner shall have ten (10) days after notice pursuant to
Article 22 from Manager to commence to perform its obligations
under Section 10.01, except that (i) Owner shall perform its
obligations immediately upon receipt of oral notice from Manager
if the nature of the problem presents a hazard or emergency; or
(ii) Owner shall perform and complete its obligations within
twelve (12) hours after receipt of written or oral notice from
Manager if the nature of the problem interferes with gaming
operations in the Project. If Owner does not perform its
obligations within the time limitations in this Section, Manager
may perform the obligations of Owner and have the right to be
reimbursed for the sum it actually expends in the performance of
Owner's obligations. Any amounts paid by Manager shall be due
from Owner on the first (1st) day of the month occurring after
any such payment, with interest paid at the Default Rate of
Interest from the date of payment thereof by Manager until
repayment thereof by Owner.
ARTICLE 11. INSURANCE AND INDEMNITY
SECTION 11.01 OWNER INSURANCE OBLIGATIONS
Owner covenants and agrees that it will at all times stated
herein, at its sole cost and expense, of this Agreement, keep the
Project insured, with:
(a) full repair and replacement coverage endorsements,
against all risks including, but not limited to, fire, ice,
floods and earthquakes, and against loss or damage by such other,
further and additional risks as now are or hereafter may be
available by standard extended coverage forms or endorsements in
an amount sufficient to prevent Manager or Owner from becoming a
co-insurer of any loss, but in no event in an amount less than
one hundred percent (100%) of the full insurable replacement
value of the Project. So long as Owner is not in default under
this Agreement, all proceeds of insurance not otherwise applied
for the purpose of repairing, replacing or restoring the damage
insured against or applied to an Institutional Mortgage shall be
paid over to Owner. Owner shall obtain such insurance coverage
at the time that it obtains possession of the Project, and Owner
shall maintain such insurance thereafter until the termination of
this Agreement.
(b) general comprehensive public liability insurance
including Broad Form Liability coverage (including coverage for
false arrest, wrongful detention and invasion of privacy, and
coverage for elevators, if any, on the Project) against claims
for bodily injury, death or property damage occurring on, in or
about the Project, the ancillary facilities and the adjoining
streets, sidewalks and passageways, such insurance to afford
protection, with respect to any one occurrence, of not less than
$1,000,000 and no less than $5,000,000 in the aggregate or such
higher amount as Owner and Manager may from time to time
reasonably agree to be maintained, which insurance shall also
cover Owner's liability under any indemnity contained herein, it
being understood that the standard of reasonableness shall be
that amount of insurance which a prudent owner of a comparable
property would maintain. Owner shall also obtain and maintain a
$40,000,000 umbrella liability policy in excess of the general
comprehensive public liability policy. Owner shall obtain such
general comprehensive
19
public liability insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(c) adequate boiler and pressure vessel insurance on all
equipment, parts thereof and appurtenances attached or connected
to the Project which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding.
(d) such other insurance as Owner and Manager may from time
to time reasonably agree to be maintained or as may be required
by lenders of Owner in such amounts and against such insurable
hazards which at the time is customary in the case of businesses
similarly situated.
(e) for the mutual benefit of Owner and Manager, maintain
liquor liability insurance in an amount to be determined by
Owner, covering Manager and Owner under any liquor liability laws
which may currently be in existence or which may hereafter be
enacted as they would be applicable to Manager's operations of
the Project. Owner shall obtain such insurance on or before the
Commencement Date, and Owner shall maintain such insurance until
the termination of the Agreement.
(f) all required workmen's compensation insurance or
equivalent New Hampshire industrial accident coverage. Owner
shall obtain such insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(g) business interruption resulting from losses covered
under policies covering buildings will be required in an amount
sufficient to protect losses for a period of six (6) months.
Owner shall obtain such insurance on or before the Commencement
Date, and Owner shall maintain such insurance until the
termination of this Agreement.
(h) crime insurance which includes fidelity and such other
crime coverages as may be desired in the amount of $5,000,000.
Owner shall obtain such insurance at the time that Owner employs
its first employee, and Owner shall maintain such insurance until
the termination of this Agreement.
SECTION 11.02 PARTIES INSURED
The policies with respect to such insurance as described in
Section 11.01 shall name Owner and Manager as parties insured
thereby and such policies shall require all insurance proceeds
except for liability and third party insurance to be paid to a
Trustee as designated pursuant to Article 14. Such policies
shall also contain, when requested by Owner or Manager, a
mortgagee clause or clauses naming the mortgagee or mortgagees
involved and/or the holder or such mortgage or mortgages as
parties insured thereby (in the form required by such mortgagee
or mortgagees) all as their respective interests may appear and
with loss payable provisions accordingly.
SECTION 11.03 APPROVED INSURANCE COMPANIES
Insurance procured under this Article 11 shall be placed
with reputable, financially sound insurance companies, with a
Best guide rating of A-10 admitted in the state of New Hampshire,
acceptable to Owner and Manager, as the parties may mutually
agree.
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SECTION 11.04 APPROVAL OF INSURANCE COVERAGE
Each year, Owner shall submit to Manager a summary of the
insurance coverage maintained by Owner (including deductibles)
with respect to the Project and each party shall have thirty (30)
days thereafter to give its comments thereon to the other. If a
submitting party receives no written comments from the other
party within said period, the insurance program shall be deemed
approved for that year.
SECTION 11.05 FAILURE TO OBTAIN REQUIRED INSURANCE
In the event Owner fails, neglects, or refuses to maintain
any of the insurance required under the provisions of this
Article 11, then Manager may procure or renew such insurance, and
any amounts paid therefor by Manager shall be due from Owner on
the first day of the month occurring after any such payment, with
interest at the Default Interest Rate from the date of payment
thereof by Manager until repayment thereof to Manager by Owner.
SECTION 11.06 WAIVER OF SUBROGATION
As long as the insurer of a party is willing to include a
waiver of subrogation in the policies insuring against the loss
or damages referred to in this Article 11 without an extra
charge, the parties shall cause the waiver of subrogation to be
included in the policies. If an insurer of a party is willing to
include a waiver of subrogation in an insurance policy only if an
extra charge is paid, the party carrying the insurance shall be
required to cause the waiver of subrogation to be included in the
policy only if the other party pays the extra charge.
SECTION 11.07 MUTUAL COOPERATION
Owner shall cooperate with Manager to the extent Manager may
reasonably require, and Manager shall cooperate with Owner to the
extent Owner may reasonably require in connection with the
prosecution or defense of any action or proceeding arising out
of, or for the collection of any insurance proceeds and will
execute and deliver to Owner or Manager, as the case may be, such
instruments as may be properly required to facilitate the
recovery of any insurance proceeds (including the endorsement by
Owner or Manager over to the Trustee of all checks evidencing
said insurance proceeds).
SECTION 11.08 DELIVERY OF INSURANCE POLICIES
Owner shall deliver promptly the original or duplicate
policies or certificates of insurers satisfactory to Manager
evidencing all the insurance which is then required to be
maintained by Owner hereunder. Owner shall, within thirty (30)
days prior to the expiration of any such insurance, deliver to
Manager original or duplicate policies or other certificates of
the insurers evidencing the renewal of such insurance.
SECTION 11.09 INDEMNIFICATION BY MANAGER
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Manager or
those holding under Manager, and that
21
Manager will at all times protect, indemnify and save and keep
Owner harmless against and from any and all claims and against
and from any and all loss, cost, damage or expense, including
reasonable attorneys' fees, arising out of any failure of Manager
in any respect to comply with and perform all the requirements
and provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the sole or negligent or the
wanton or willful acts of Owner's directors, officers, employees,
agents or stockholders. Without limiting the generality of the
foregoing and with the inclusion of the same exceptions as set
forth above, Manager covenants and agrees that it will protect,
keep and defend Owner forever harmless and indemnified against
any and all debt, claim, demand, suit or obligation of every
kind, character and description which may be asserted, claimed,
filed or brought against Owner where such claim arises out of or
is asserted in connection with Manager's management of the
Project, including any claim by any subtenant, guest, licensee or
invitee of Manager. This indemnity does not apply to loss or
damage occasioned by defects in the Project.
SECTION 11.10 INDEMNIFICATION BY OWNER
Owner covenants and agrees that it will protect, keep and
defend Manager forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Owner or
those holding under Owner, and that Owner will at all times
protect, indemnify, defend and save and keep harmless Manager
against and from any and all claims and against and from any and
all loss, cost, damage or expense, including reasonable
attorneys' fees, arising out of any failure of Owner in any
respect to comply with and perform all of the requirements and
provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the negligent or the wanton or
willful acts of Manager's officers, agents, employees or
stockholders. Without limiting the generality of the foregoing,
and with the inclusion of the same exceptions as set forth above,
Owner covenants and agrees it will protect, keep and defend
Manager forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Manager where such claim arises out of or is asserted in
connection with Owner's ownership of the Project. This indemnity
does not apply to loss or damage occasioned by defects in the
Project.
SECTION 11.11 SELECTION OF COUNSEL/CONDUCT OF LITIGATION
Defense counsel engaged by Manager or Owner, as indemnitor,
shall be reasonably acceptable to Manager and Owner, as
indemnitee. Without limiting the generality of the foregoing,
indemnitee shall be promptly provided with copies of all claims
and pleadings (as well as correspondence, memos, documents and
discovery with respect thereto, unless within the scope of any
applicable privilege) relating to any such matters. Indemnitee
shall be given prior written notice of all meetings, conferences
and judicial proceedings and shall be afforded an opportunity to
attend and participate in same. Indemnitee shall have the right
to engage independent counsel, at its sole expense, to represent
indemnitee as additional and/or co-counsel in all such
proceedings, trials, appeals and meetings with respect thereto.
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ARTICLE 12. CASUALTY
In case of any damage or loss to the Project by reason of
fire or otherwise, Manager shall give immediate notice thereof to
Owner. If the Project shall at any time be damaged or destroyed
by fire or otherwise, Owner shall at its sole option promptly
repair or rebuild same at Owner's expense, so as to make the
Project at least equal to the Project existing immediately prior
to such occurrence and as nearly similar to it in quality and
character as shall be practicable and reasonable. Owner shall
submit for Manager's approval, which approval Manager shall not
unreasonably withhold or delay, complete detailed plans and
specifications for such rebuilding or construction. Promptly
after receiving Manager's approval of said plans and
specifications, Owner shall begin such repairs and rebuilding and
shall prosecute the same to completion with diligence, subject,
however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other foreseeable causes beyond
the reasonable control of Owner. Insofar as a certificate of
occupancy may be necessary with respect to such repairs or
construction, Owner shall obtain a temporary or final certificate
of occupancy or similar certificate before the Project shall be
occupied by Manager. Such repairs, rebuilding or construction
shall be completed free and clear of mechanics' or other liens,
in accordance with the building code and all applicable laws,
ordinances, regulations or orders of any state, municipal or
other public authority affecting the same.
ARTICLE 13. TAKING OF THE PROJECT
SECTION 13.01 DEFINITIONS.
(a) "Permanent Taking" means the permanent taking (more
than one year) of, or permanent damage to, property as a result
of the exercise of a power of eminent domain or purchase under
the threat of the exercise where such taking cannot be corrected
by contribution of additional land for relocation of the Project.
(b) "Temporary Taking" means the temporary taking (one year
or less) of, or temporary damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(c) "Taking Date" means the date on which a condemning
authority shall have the right of possession of property pursuant
to a Permanent Taking or a Temporary Taking.
(d) "Award" means the award for, or proceeds of, a taking
less all fees and expenses incurred in connection with collecting
the award or proceeds including the reasonable fees and
disbursements of attorneys, appraisers, and expert witnesses.
SECTION 13.02 ENTIRE TAKING OF THE SUPPORT AREAS
The following shall apply if all or a part of the Project
are taken pursuant to a Permanent Taking or a Temporary Taking:
(a) Owner shall be entitled to any Award.
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(b) If all of the Project is taken pursuant to a Permanent
Taking, this Agreement shall be terminated as of the Taking Date.
(c) If a portion of the Project is taken pursuant to a
Permanent Taking which renders it uneconomic to continue
operation of the Project in Manager's reasonable judgment,
Manager shall have the option to terminate this Agreement by
giving Owner notice of termination within ten (10) days after
Owner gives Manager notice of the Permanent Taking. This
Agreement will terminate five (5) days after Manager delivers its
written termination notice to Owner.
SECTION 13.03 DUTY TO RESTORE
If part of the Project is taken pursuant to a Permanent
Taking and this Agreement is not terminated, then Owner shall
restore the Project to an architectural unit as near as possible
to its function and condition immediately prior to the Permanent
Taking. The restoration shall begin promptly after the Taking
Date and shall be prosecuted diligently. If a party shall have
an option to terminate with respect to the Permanent Taking, then
Owner may delay the beginning of the restoration until the option
is waived or until the time within which the option may be
exercised expires.
ARTICLE 14. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS
SECTION 14.01 TRUSTEE
Other than the lien created by the 13.5% Senior New
Hampshire Development Authority Bonds or permitted replacement
financing, if the Project is encumbered by an Institutional
Mortgage, the "Trustee" shall be the Institutional Mortgagee or a
national bank designated by such mortgagee. If the Project is
not encumbered by a Mortgage, the "Trustee" shall be a commercial
bank which maintains an office in New Hampshire and the total
assets of which exceed $1 billion, and the Trustee shall be
selected by Owner subject to the reasonable approval of Manager.
An "Institutional Mortgage" is a Mortgage granted to an
Institution. An "Institution" is a bank, insurance company,
trust company, savings and loan association, real estate
investment trust, pension trust, governmental entity or similar
institution. An "Institutional Mortgagee" is the holder of
Mortgage of Owner's interest in the Project.
SECTION 14.02 DEPOSITS OF INSURANCE PROCEEDS AND AWARDS
In the event this Agreement is not terminated all insurance
proceeds and Awards shall be paid to the Trustee. If this
Agreement is terminated, all Insurance Proceeds and Awards shall
be paid to Owner and Manager as their interests may apply. All
funds paid to the Trustee shall be held by the Trustee, and the
Trustee shall disburse them solely in accordance with this
Article.
SECTION 14.03 PROCEDURE FOR DISTRIBUTION OF INSURANCE PROCEEDS
AND AWARDS
The following shall apply unless this Agreement is
terminated and the termination is not nullified.
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(a) The Trustee shall make payments to Owner or Manager, as
appropriate, out of the insurance proceeds or Awards to be
applied to the cost of repair or restoration. The payments shall
be made as the repair or restoration progresses.
(b) The Trustee shall comply with the following
requirements which shall be contained in escrow instructions, if
required by the Trustee, with respect to the payments:
(i) The Trustee shall not make payments more
frequently than once each month.
(ii) Until the repair or restoration is complete, the
Trustee shall make no payment unless the sum of the payment
requested and all previous payments shall be less than ninety
percent (90%) of the cost of the repair or restoration to date.
(iii) The Trustee shall make no payment unless the
balance of the insurance proceeds or Awards shall be at least
sufficient to complete the repair or restoration.
(iv) The Trustee shall make no payment unless it
receives a certificate of Owner or Manager, as appropriate, and a
certificate of Owner's or Manager's architect or engineer, as
appropriate, in accordance with part (c) of this subsection.
(v) The Trustee shall receive, prior to any payment, a
certificate from the Title Insurance Company stating that there
are no liens filed of record.
(c) The certificate of Owner or Manager shall be certified
as true and correct by an officer of Owner or Manager and shall
set forth the following information:
(i) The estimated cost of the repair or restoration.
(ii) The nature of the work to be done and the
materials furnished which form the basis for the requested
payments.
(iii) That the requested payment does not exceed the
reasonable cost of the work and materials.
(iv) That none of the work or materials has been made
the basis for any previous payment.
(v) That, insofar as the work has been completed, the
work complies with the requirements of this Agreement, applicable
legal requirements, and insurance requirements.
(vi) That all contractors, laborers, suppliers and
subcontractors that have performed work shall have been paid any
amount then payable to them.
(d) The architect's or engineer's certificates shall be
certified by an architect or engineer familiar with the work.
The certificate shall be certified as true and correct to the
best of the knowledge, information and belief of the architect or
engineer and shall be based upon periodic on-site
25
inspections of, and testing by, the architect or engineer. The
architect or engineer selected by one party shall be reasonably
satisfactory to the other party. The architect or engineer shall
certify that, in the opinion of the architect or engineer, the
Trustee shall have complied with the requirements of clauses (ii)
and (iii) of part (b) of this subsection; shall verify that the
statements set forth in clauses (iii), (iv) and (v) of part (c)
of this subsection are true; and shall set forth the information
required by clauses (i) and (ii) of part (c) of this subsection.
(e) Any balance of insurance proceeds or Awards after the
cost of any repair or restoration shall have been paid in full
shall be paid to Owner or Manager, as their interests appear, and
shall be the sole property of such party.
ARTICLE 15. ASSIGNMENT AND SUBLETTING
Except as provided in Section 5.12(c), neither Owner or
Manager shall assign this Agreement or any interest therein
without the express prior written consent of the other party,
which consent shall not be unreasonably withheld. However,
Manager may assign or transfer this Agreement to any Affiliate
which Affiliate is beneficially owned entirely by Showboat, Inc.,
provided, that a counterpart original of such assignment is
delivered to Owner on or before the effective date of such
assignment, and provided further that such Affiliate expressly
assumes and agrees to be bound by all of the terms and conditions
of this Agreement.
ARTICLE 16. AFFIRMATIVE COVENANTS OF MANAGER
Manager hereby covenants and agrees that so long as this
Agreement remains in effect:
SECTION 16.01 CORPORATE STATUS
Manager shall preserve and maintain its corporate
rights, franchises and privileges in Nevada and New Hampshire.
SECTION 16.02 COMPLIANCE WITH LAWS
Manager shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Project, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Gaming Authority, the Nevada Gaming Authorities, the New
Jersey Casino Control Commission, and the New South Wales Casino
Control Authority. Manager shall also follow applicable federal
laws, rules, and regulations.
In connection with this Agreement, Manager acknowledges that
certain casino gaming licenses are currently issued to and held
by Owner's Affiliates, and Owner's Affiliates may in the future
apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Owner's
Affiliates to disclose private or otherwise confidential
information about Manager and its respective principals, lenders
and Affiliates. Manager agrees to refrain from all conduct that
may negatively affect such licenses or license applications.
Manager further agrees that this Agreement shall terminate
immediately at Owner's option if any representative, agent or
Affiliate of Manager is required to be licensed, qualified or
found suitable
26
by any gaming authority where it is currently licensed and is
denied such status by such gaming authority; provided, however,
that upon the termination of any such agreement, Owner shall be
obligated to reimburse Manager immediately for any Management
Fees and all other amounts due to Manager under this Agreement.
SECTION 16.03 GAMING APPROVALS
Manager shall use its best efforts to obtain the approval of
the Nevada Gaming Authorities, the New Jersey Casino Control
Commission, and the New South Wales Casino Control Authority to
permit it to conduct gaming operations in the state of New
Hampshire and shall use its best efforts to secure and maintain
such approvals necessary for the conduct of gaming operations at
the Project.
SECTION 16.04 CONFIDENTIAL INFORMATION
Manager agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Manager
who are also bound by this section) without the prior express
written consent of Owner (except as such disclosures are required
in applications or by applicable securities or gaming laws) any
of Owner's confidential data, whether related to the Project or
to general business matters, which shall come into their
possession or knowledge. In addition, Manager agrees that it
shall cause all documents, drawings, plans or other materials
developed by Owner in connection with the Project to be returned
to the Owner in the event of termination of this Agreement and
that Manager shall not make use of such information in connection
with the Project or any other undertaking by Manager without the
prior express written consent of Owner.
SECTION 16.05 GAMING APPLICATIONS
Manager agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
SECTION 16.06 COMPLIANCE WITH OTHER AGREEMENT
Manager agrees to comply with all terms of the Agreement
between Owner and Rockingham, the Administrative Agreement
Between Owner and Manager, and the Trademark Services Agreement
between Showboat, Inc., and Owner, each dated as of the date
hereof.
ARTICLE 17. AFFIRMATIVE COVENANTS OF OWNER
Owner hereby covenants and agrees that so long as this
Agreement remains in effect:
SECTION 17.01 CORPORATE STATUS
Owner shall preserve and maintain its corporate rights,
franchises and privileges as a limited liability company in New
Hampshire, including without limitation its right to own a gaming
establishment.
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SECTION 17.02 MAINTENANCE OF INSURANCE
Owner shall, in accordance with the provisions of Article 11
of this Agreement, maintain insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged
in similar business and owning similar properties in the same
general area in which Owner operates, and which may be necessary
to satisfy the requirements of Owner's lenders, as well as the
mutual approvals and agreements of the parties hereto as is
specified in Article 11 hereof.
SECTION 17.03 COMPLIANCE WITH LAWS
Owner shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Project, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Gaming Authority, the Nevada Gaming Authorities, Gaming
Authorities, the New Jersey Casino Control Commission, and the
New South Wales Casino Control Authority. Owner shall also
follow applicable federal laws, rules, and regulations.
In connection with this Agreement, Owner acknowledges that
certain casino gaming licenses are currently issued to and held
by Manager's Affiliates by the States of Nevada and New Jersey,
and the State of New South Wales, Australia, and Manager or its
Affiliates may in the future apply for gaming licenses in
additional states or foreign countries. The laws of such
jurisdictions may require Manager to disclose private or
otherwise confidential information about Owner and its respective
principals, lenders and Affiliates. Owner agrees to refrain from
all conduct that may negatively affect such licenses or license
applications. Owner further agrees that this Agreement shall
terminate immediately at Manager's option if any representative,
agent or Affiliate of Owner is required to be licensed, qualified
or found suitable by Nevada, New Jersey, New South Wales or other
gaming authority and is denied such status by such gaming
authority; provided, however, that upon the termination of any
such agreement, Owner shall be obligated to reimburse Manager
immediately for any Management Fees and all other amounts due to
Manager under this Agreement.
SECTION 17.04 COOPERATION WITH GAMING AUTHORITIES
Owner shall use its best efforts to cause its officers,
directors, employees and stockholders to provide any gaming
authority which governs or may govern gaming facilities of
Affiliates of Manager with necessary documents and information.
SECTION 17.05 CONFIDENTIAL INFORMATION
Owner agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Owner who
are also bound by this section) without the prior express written
consent of Manager (except as such disclosures are required in
applications or by applicable securities or gaming laws) any of
Manager's confidential data, whether related to the Project or to
general business matters, which shall come into their possession
or knowledge. In addition, Owner agrees that it shall cause all
documents, drawings, plans or other materials developed by
Manager in connection with the Project to be returned to the
Manager in the event
28
of termination of this Agreement and that Owner shall not make
use of such information in connection with the Project or any
other undertaking by Owner without the prior express written
consent of Manager.
SECTION 17.06 COMPLIANCE WITH LOAN COVENANTS
Owner shall comply with and be bound by and shall not breach
or default under any of the terms, covenants or provisions of any
mortgage, loan, financing or debt covenant applicable to it.
SECTION 17.07 NON-INTERFERENCE
Owner agrees and shall use its best efforts to cause its
shareholders, directors, officers, and employees to not interfere
with or attempt to influence day-to-day operations of the Project
(except in accordance with this Agreement).
SECTION 17.08 GAMING APPLICATIONS
Owner agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
SECTION 17.09 TITLE/QUIET ENJOYMENT
Owner represents and covenants that it has acquired, or will
acquire before the commencement of any construction of the
Project and thereafter, and will maintain a valid and continuing
fee estate for the Project subject to the Cooperation Agreement
and the exceptions permitted in the Limited Liability Company
Agreement. Owner covenants, during the Term that Manger shall
and may peaceably possess and quietly enjoy the Project in
accordance with the terms of this Agreement, free from
molestation, eviction and disturbance by Owner or by any other
Person. Owner shall, at Owner's expense, undertake and prosecute
all actions, judicially or otherwise, required to assure such
quiet enjoyment and peaceable possession by Manager.
ARTICLE 18. REPRESENTATIONS AND WARRANTIES
SECTION 18.01 OWNER CORPORATE STATUS
Owner represents and warrants that it is a limited liability
company duly organized, validly existing and in good standing
under the laws of the state of New Hampshire, that Owner has full
corporate power and authority to enter into this Agreement and
perform its obligations hereunder, and that the officers of Owner
who executed this Agreement on behalf of Owner are in fact
officers of Owner and have been duly authorized by Owner to
execute this Agreement on its behalf.
SECTION 18.02 MANAGER CORPORATE STATUS
Manager represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Nevada, and qualified to do business in the
State of New Hampshire, that Manager has full corporate power and
authority to enter into this Agreement and perform its
obligations hereunder, and that the officers of Manager who
executed
29
this Agreement on behalf of Manager are in fact officers of
Manager and have been duly authorized by Manager to execute this
Agreement on its behalf.
SECTION 18.03 AUTHORIZATION/NO CONFLICT
The execution, delivery and performance by Owner and
Manager, as applicable, of this Agreement has been duly
authorized by all necessary corporate action (including any
necessary stockholder action) on the part of Owner and Manager,
as applicable, and no further action or approval is required in
order to constitute this Agreement as the valid and binding
obligations of Owner and Manager, enforceable in accordance with
its terms. The execution, delivery and performance of this
Agreement by Owner and Manager, as applicable, does not and will
not (a) violate or conflict with any provisions of their
respective articles of incorporation or bylaws, or of any law,
rule, regulation of the Gaming Authorities, or any order, writ,
judgment, decree, determination, or award presently in effect
having applicability to Owner or Manager; (b) result in a breach
of any condition or provision of, or constitute a default under,
any indenture, loan or credit agreement or any other agreement or
instrument to which Owner or Manager is a party or by which Owner
or Manager may be bound or affected; or (c) result in, or
require, the creation or imposition of any lien, claim, charge or
encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by Owner or Manager.
SECTION 18.04 PERMITS/APPROVALS
Owner and Manager possess adequate franchises, licenses,
permits, orders and approvals of all federal, state and local
governmental or regulatory bodies required for them to carry on
their businesses as presently conducted; all of such franchises,
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is
threatened; and none of such franchises, licenses, permits,
orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement.
SECTION 18.05 ACCURACY OF REPRESENTATIONS
No representation or warranty of Owner or Manager in this
Agreement nor any information, exhibit, memorandum, schedule or
report furnished by Owner or Manager in connection with this
Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
of fact contained therein not misleading.
SECTION 18.06 MAINTENANCE OF GAMING AND OTHER LICENSES
Owner and Manager agree to provide the other party with
copies of all applications, reports, letters, and other documents
filed or provided to the Gaming Authorities. Both parties agree
to use their best efforts to secure and maintain any license
needed for the operation of the Project.
SECTION 18.07 CONDITION OF PROJECT DURING TERM
During the Term of this Agreement, Owner shall maintain the
Project in first-class condition and repair. All areas of the
Project shall be adequately illuminated and adequately patrolled
by security guards.
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SECTION 18.09 IMPAIR REPUTATION
Owner will do nothing to embarrass or impair Manager's good
name and reputation. Manager will do nothing to embarrass or
impair Owner's good name and reputation.
ARTICLE 19. ARBITRATION
SECTION 19.01 APPOINTMENT OF ARBITRATORS
IF ANY DISPUTE SHALL ARISE OR IF ANY ISSUE LEFT OPEN
HEREUNDER CANNOT BE RESOLVED BETWEEN THE PARTIES HERETO, SUCH
DISPUTE IS TO BE REFERRED FIRST TO A COMMITTEE OF FOUR PERSONS
WHO SHALL MEET IN AN ATTEMPT TO RESOLVE SAID DISPUTE OR OPEN
ISSUE. THE COMMITTEE SHALL CONSIST OF TWO PERSONS APPOINTED BY
ROCKINGHAM AND TWO PERSONS APPOINTED BY MANAGER. IF AN AGREEMENT
CANNOT BE REACHED TO RESOLVE THE DISPUTE BY THE COMMITTEE, THE
DISPUTE OR OPEN ISSUE WILL BE RESOLVED BY BINDING ARBITRATION
BEFORE ARBITRATORS HAVING NOT LESS THAN 10 YEARS EXPERIENCE IN
THE GAMING INDUSTRY. ANY AWARD OF THE ARBITRATORS MAY BE FILED
IN A COURT OF LAW AS A FINAL JUDGMENT. ANY SUCH ARBITRATION
SHALL BE IN ACCORDANCE WITH THE RULES AND REGULATIONS ADOPTED BY
THE AMERICAN ARBITRATION ASSOCIATION OR AS THE PARTIES OTHERWISE
AGREE. EITHER PARTY MAY SERVE UPON THE OTHER PARTY A WRITTEN
NOTICE OF THE DEMAND DISPUTE OR APPRAISAL TO BE RESOLVED PURSUANT
TO THIS ARTICLE. WITHIN THIRTY (30) DAYS AFTER THE GIVING OF SUCH
NOTICE, EACH OF THE PARTIES HERETO SHALL NOMINATE AND APPOINT AN
ARBITRATOR (OR APPRAISER, AS THE CASE MAY BE) AND SHALL NOTIFY
THE OTHER PARTY IN WRITING OF THE NAME AND ADDRESS OF THE
ARBITRATOR SO CHOSEN. UPON THE APPOINTMENT OF THE TWO
ARBITRATORS AS HEREINABOVE PROVIDED, SAID TWO ARBITRATORS SHALL
FORTHWITH, WITHIN FIFTEEN (15) DAYS AFTER THE APPOINTMENT OF THE
SECOND ARBITRATOR, AND BEFORE EXCHANGING VIEWS AS TO THE QUESTION
AT ISSUE, APPOINT IN WRITING A THIRD ARBITRATOR ("SELECTED
ARBITRATOR") AND GIVE WRITTEN NOTICE OF SUCH APPOINTMENT TO EACH
OF THE PARTIES HERETO. IN THE EVENT THAT THE TWO ARBITRATORS
SHALL FAIL TO APPOINT OR AGREE UPON THE SELECTED ARBITRATOR
WITHIN SAID FIFTEEN (15) DAY PERIOD, THE SELECTED ARBITRATOR
SHALL BE SELECTED BY THE PARTIES THEMSELVES IF THEY SO AGREE UPON
SUCH SELECTED ARBITRATOR WITHIN A FURTHER PERIOD OF TEN (10)
DAYS. IF A SELECTED ARBITRATOR SHALL NOT BE APPOINTED OR AGREED
UPON WITHIN THE TIME HEREIN PROVIDED, THEN EITHER PARTY ON BEHALF
OF BOTH MAY REQUEST SUCH APPOINTMENT BY THE AMERICAN ARBITRATION
ASSOCIATION (OR ITS SUCCESSOR OR SIMILAR ORGANIZATION IF THE
AMERICAN ARBITRATION ASSOCIATION IS NO LONGER IN EXISTENCE).
OWNER AND MANAGER SHALL SHARE EQUALLY THE COST OF THE SELECTED
ARBITRATOR. SAID ARBITRATORS SHALL BE
31
SWORN FAITHFULLY AND FAIRLY TO DETERMINE THE QUESTION AT ISSUE.
THE ARBITRATORS SHALL AFFORD TO OWNER AND MANAGER A HEARING AND
THE RIGHT TO SUBMIT EVIDENCE, WITH THE PRIVILEGE OF CROSS-
EXAMINATION, ON THE QUESTION AT ISSUE, AND SHALL WITH ALL
POSSIBLE SPEED MAKE THEIR DETERMINATION IN WRITING AND SHALL GIVE
NOTICE TO THE PARTIES HERETO OF SUCH DETERMINATION. THE
CONCURRING DETERMINATION OF ANY TWO OF SAID THREE ARBITRATORS
SHALL BE BINDING UPON THE PARTIES, OR, IN CASE OF NO TWO OF THE
ARBITRATORS SHALL RENDER A CONCURRING DETERMINATION, THEN THE
DETERMINATION OF THE SELECTED ARBITRATOR SHALL BE BINDING UPON
THE PARTIES HERETO. EACH PARTY SHALL PAY THE FEES OF THE
ARBITRATOR APPOINTED BY IT, AND THE FEES OF THE SELECTED
ARBITRATOR SHALL BE DIVIDED EQUALLY BETWEEN OWNER AND MANAGER.
SECTION 19.02 INABILITY TO ACT
IN THE EVENT THAT AN ARBITRATOR APPOINTED AS AFORESAID SHALL
THEREAFTER DIE OR BECOME UNABLE OR UNWILLING TO ACT, HIS
SUCCESSOR SHALL BE APPOINTED IN THE SAME MANNER PROVIDED IN THIS
ARTICLE FOR THE APPOINTMENT OF THE ARBITRATOR SO DYING OR
BECOMING UNABLE OR UNWILLING TO ACT.
ARTICLE 20. DEFAULT/STEP-IN RIGHTS
SECTION 20.01 DEFINITION
The occurrence of any one or more of the following events
which is not cured within the time permitted shall constitute a
default under this Agreement (hereinafter referred to as a
"Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
SECTION 20.02 MANAGER'S DEFAULTS
If Manager shall (a) fail to perform or materially comply
with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager (other than
monetary payments) and such failure shall continue for a period
of thirty (30) days after written notice thereof from Owner to
Manager specifying in detail the nature of such failure, or, in
the case such failure is of a nature that it cannot, with due
diligence and good faith, be cured within thirty (30) days, if
Manager fails to proceed promptly and with all due diligence and
in good faith to cure the same and thereafter to prosecute the
curing of such failure to completion with all due diligence
within ninety (90) days thereafter, or (b) take or fail to take
any action to the extent required of Manager under this Agreement
that creates a default under or breach of any loan document, any
related contract or any requirement of the Gaming Authorities,
unless Manager cures such default or breach prior to the
expiration of applicable notice, grace and cure periods, if any;
provided, however, that Manager shall only be required to cure
any defaults with respect to which Manager has a duty hereunder.
If the only result of the failure by Manager to act is a monetary
loss to Owner which is not otherwise capable of being cured by
Manager, then Manager
32
shall not be in Default if Manager reimburses Owner for such
losses within ten (10) Business Days of incurring such loss or
otherwise protects Owner against such loss in a manner reasonably
acceptable to Owner.
SECTION 20.03 STEP-IN RIGHTS
(a) If Owner funds are available, and Manager fails to pay
when due any amount which it is Manager's responsibility to pay
pursuant to this Agreement, then Owner, after five (5) Business
Days written notice to Manager with respect to any Operating
Expense, and with respect to non-Operating Expense with such
notice, if any, as may be reasonable under the circumstances
(except in the event that Manager has exposure to potential
liability in connection with making such payments in which case
Owner shall give Manager two (2) days written notice), and
without waiving or releasing Manager from any responsibility of
Manager hereunder, Owner may (but shall not be required to) pay
such amounts (including fines, penalty, interest and late payment
fees) and take all such action as may be necessary in respect
thereof. Manager shall, following such payments by Owner,
promptly reimburse Owner from the Bank Accounts to the extent
funds are available the amount which Manager failed to pay when
due. In addition, unless Manager has not acted with reasonable
diligence in failing to make such payments then, to the extent
that Manager's lack of reasonable diligence in this connection
has resulted in fines, penalty, interest or late payment fees in
excess of Twenty-Five Thousand and no/100ths Dollars ($25,000.00)
in any twelve (12) month period, then Manager shall immediately
disburse to Owner from Gross Revenue, following such payments by
Owner, such amounts as may be necessary to reimburse Owner for
such payments and Manager shall promptly deposit into the
appropriate Bank Accounts, from Manager's own funds, the full
amount of any fines, penalty, interest or late payment fees paid
in connection therewith.
(b) If Manager fails to take any action which it is
Manager's responsibility under this Agreement to take and the
result is to expose the Project to a material loss or patrons to
a material risk of physical safety, then Owner, upon five (5)
days written notice to Manager (except in any emergency in which
case Owner shall give Manager such notice, if any, as is
reasonable under the circumstances), without saving or releasing
Manager from any obligation of Manager hereunder, may (but shall
not be required to) take such actions as may be necessary to
preserve Owner's assets from such a material loss and/or to
protect the patrons. Manager shall, following any payments by
Owner made with respect to such actions, promptly reimburse Owner
from the Bank Accounts, to the extent funds are available, the
amount which Owner has expended. In addition, unless Manager has
acted with reasonable diligence in failing to take such action
then, to the extent that Manager's lack of reasonable diligence
in this connection has resulted in fines or late payment fees in
excess of Twenty-Five Thousand and no/100ths Dollars ($25,000.00)
in any twelve month period, then Manager shall immediately
disburse to Owner from Gross Revenue, following payment of such
amounts by Owner, such amounts as are necessary to reimburse
Owner for any fines or late payment fees by Owner in connection
with taking such action on Manager's behalf and Manager shall
also deposit into the appropriate Bank Account, from Manager's
own funds, the full amount of such payment made to Owner.
SECTION 20.04 OWNER'S DEFAULT
If Owner shall (a) fail to make any monetary payment
required under this Agreement, including, but not limited to,
debt service, Incentive Management Fee or Owner's Advances, on or
before the due date recited herein and said failure continues for
five (5) Business Days after
33
written notice from Manager specifying such failure, (b) fail to
pay the entire Management Fee for a period of six (6) months, or
(c) fail to perform or materially comply with any of the other
covenants, agreements, terms or conditions contained in this
Agreement applicable to Owner (other than monetary payments) and
such failure shall continue for a period of thirty (30) days
after written notice thereof from Manager to Owner specifying in
detail the nature of such failure, or, in the case such failure
is of a nature that it cannot, with due diligence and good faith,
cure within thirty (30) days, if Owner fails to proceed promptly
and with all due diligence and in good faith to cure the same and
thereafter to prosecute the curing of such failure to completion
with all due diligence within ninety (90) days thereafter.
SECTION 20.05 BANKRUPTCY
If either party (i) applies for or consents to the
appointment of a receiver, trustee or liquidator of itself or any
of its property, (ii) makes a general assignment for the benefit
of creditors, (iii) is adjudicated a bankrupt or insolvent, or
(iv) files a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors,
takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation Law, or admits
the material allegations of a petition filed against it in any
proceedings under any such law.
SECTION 20.06 REORGANIZATION/RECEIVER
If an order, judgment or decree is entered by any court of
competent jurisdiction approving a petition seeking
reorganization of Manager or Owner, as the case may be, or
appointing a receiver, trustee or liquidator of Manager or Owner,
as the case may be, or of all or a substantial part of any of the
assets of Manager or Owner, as the case may be, and such order,
judgment or decree continues unstayed and in effect for a period
of sixty (60) days from the date of entry thereof.
SECTION 20.07 DELAYS AND OMISSIONS
No delay or omission as to the exercise of any right or
power accruing upon any Event of Default shall impair the non-
defaulting party's exercise of any right or power or shall be
construed to be a waiver of any Event of Default or acquiescence
therein.
SECTION 20.08 DISPUTES IN ARBITRATION
Notwithstanding the provisions of this Article 19, any
occurrence which would otherwise constitute an Event of Default
hereunder shall not constitute an Event of Default for so long as
such dispute is subject to arbitration pursuant to the
arbitration provisions of Article 19.
ARTICLE 21. TERMINATION
SECTION 21.01 TERMINATING EVENTS
This Agreement shall terminate upon the occurrence of the
following:
(a) in the event of a terminating event specified in the
Limited Liability Company Agreement or the date on which an
Affiliate of Manager no longer owns an equity interest in Owner;
34
(b) upon the occurrence of an Event of Default under this
Agreement and the time to cure has lapsed; or
(c) upon a change in the ownership of the Manager or its
Affiliates resulting in a change in the control of the Manager,
unless Owner consents within thirty (30) days prior to the change
in control of Manager or its Affiliates, which consent may not be
unreasonably withheld, in writing to such change in control. For
purposes of this section, "control" means the possession,
directly of indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract
or otherwise. Control shall have deemed to occur where a Person
owns more than 35% or more of a publicly traded corporation, or
more than 50% of a non-publicly traded corporation .
(d) upon the occurrence of a taking as specified in Article
13.
SECTION 21.02 NOTICE OF TERMINATION
In the event of an occurrence specified in Section 21.01(a)-
(b), either Manager or Owner, as appropriate, shall terminate
this Agreement by giving five (5) days written notice, and the
Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term.
SECTION 21.03 REMEDIES UPON TERMINATION.
(a) Prior to Commencing Gaming Operations. In the event
that this Agreement is terminated prior to commencing gaming
operations and if the termination is not the result of an Event
of Default caused by Manager, Owner shall reimburse Manager all
Manager's Pre-Opening Expenses.
(b) After Commencement of Gaming Operations. Owner shall
pay to Manager all earned Management Fees.
SECTION 21.04 DELIVERY OF PROJECT
Upon termination of this Agreement for any reason, Manager
shall assign and transfer to Owner all of Manager's rights,
title, and interest in and to all transferable licenses and
permits with respect to the operation of the Project, save and
except the "Showboat Trademark" which will and shall remain the
property of Manager. Manager shall peacefully vacate the
Project. No signs or personalized property bearing the "Showboat
Trademark" shall be purchased or used by Owner without prior
written arrangements between Owner and Manager, which may need a
license from its parent company, Showboat, Inc. Upon surrender,
any exterior signs inscribed with the "Showboat Trademark" shall
be removed as soon as is practicable, and in any event within
fifteen (15) days of the date of termination. Additionally, any
personalized property bearing a "Showboat Trademark" (including
without limitation, ashtrays, office supplies, linen, glassware,
paper goods, promotional items, guest checks, uniforms, carpets,
and upholstery) shall also be removed as soon as practicable, and
in any event within thirty (30) days of the date of termination.
35
ARTICLE 22. HAZARDOUS MATERIALS
SECTION 22.01 NO HAZARDOUS MATERIALS
Prior to Construction, Owner will provide Manager with an
Environmental Site Assessment Phase I Investigation relating to
the Project. Owner will represent and warrant after inquiry and
investigation prior to the completion of Construction, that: (i)
any handling, removing, transportation, storage, treatment or
usage of Hazardous Materials or toxic substances that has
occurred in the Project to date has been in compliance with all
applicable federal, state and local laws, regulations and
ordinances; (ii) no leak, spill, release, discharge, emission or
disposal of Hazardous Materials or toxic substances has occurred
in the Project to date; and (iii) the Project is free of
asbestos, toxic or Hazardous Materials as of the date that the
term of this Agreement commences.
SECTION 22.02 COMPLIANCE WITH LAWS
Owner agrees to comply with all federal, state and local
environmental and real estate laws, including the Americans With
Disabilities Act relating to Owner's construction, ownership,
management and operation of the Project. Manager agrees to
comply with all federal, state and local environmental and real
estate laws, including the Americans With Disabilities Act
relating to Manager's management and operation of the Project.
All expenses incurred in such compliance shall be Operating
Expenses.
SECTION 22.03 INDEMNIFICATION BY OWNER
Owner agrees to indemnify, defend and hold Manager and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Manager) which arise
during or after the Term as a result of any breach of Owner's
representation and warranty contained in Section 22.01 or as a
result of Owner's failure to perform its covenant contained in
Section 22.02. Without limiting the generality of the foregoing,
the indemnification provided by this Section shall specifically
cover costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision because of the presence or suspected
presence of asbestos, other toxic or Hazardous Material in the
Project, or the soil, groundwater or soil vapor on or under the
Project, unless the Hazardous Materials are present solely as a
result of the actions of Manager, its officers, shareholders,
employees or agents. The foregoing indemnity shall survive the
expiration or earlier termination of this Agreement.
Section 22.04 Indemnification by Manager
Manager agrees to indemnify, defend and hold Owner and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Owner) which arise
during or after the Term as a result of any breach of Manager's
representation and warranty contained in Section 22.02. Without
limiting the generality of the foregoing, the indemnification
provided by this
36
Section shall specifically cover costs incurred in connection
with any investigation of site conditions or any clean-up,
remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision
because of the presence or suspected presence of asbestos, other
toxic or Hazardous Material in the Project, or the soil,
groundwater or soil vapor on or under the Project, unless the
Hazardous Materials are present solely as a result of the actions
of Owner, its officers, shareholders, employees or agents. The
foregoing indemnity shall survive the expiration or earlier
termination of this Agreement.
SECTION 22.05 HAZARDOUS MATERIAL DEFINED
"Hazardous Material," as used in this Agreement, shall be
any substance or material if defined or designated as a hazardous
or toxic substance, or other similar term, by any federal, state
or local law, statute, regulation, or ordinance affecting the
Project.
ARTICLE 23. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which either party desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received and a copy of the
transmission is mailed with postage prepaid, or (iii) by a
nationally recognized overnight delivery service provided for
receipted delivery, addressed as follows:
Owner: Manager:
Showboat Rockingham Company, Showboat Operating Company
L.L.C. Vice President Finance and
c/o President and Chief Chief Financial Officer
Executive Officer 0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxx Xxxxxxxxx Inc. Xxx Xxxxx, XX 00000
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Rockingham: with a copy to:
Xxxxxx X. Xxxxxx, Xx. Xxxx X. Xxxxxx, Esq.
President Xxxxxx Xxxxxxxx Xxxxxx &
Rockingham Venture, Inc. Xxxxxxx
Rockingham Park 3800 Xxxxxx Xxxxxx Parkway
Rockingham Park Boulevard Seventh Floor
Salem, NH 03079 Xxx Xxxxx, XX 00000
Either Owner or Manager may change the address or name of
addressee applicable to subsequent notices (including copies of
said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving notice to the other party as aforesaid, provided that
notice of such change shall not be effective until the fifth
(5th) day after mailing or facsimile transmission.
37
ARTICLE 24. MISCELLANEOUS
SECTION 24.01 TIME OF THE ESSENCE
Time is of the essence with respect to all time periods set
forth in this Agreement.
SECTION 24.02 HEIRS, SUCCESSORS, ASSIGNS
Except as otherwise provided herein, each provision hereof
shall extend to and shall, as the case may require, bind and
inure to the benefit of the parties' heirs, executors,
administrators, permitted successors, permitted assigns and legal
representatives.
SECTION 24.03 CONSTRUCTION
All of the provisions of this Agreement shall be deemed and
construed to be conditions as well as covenants as though in
words specifically expressing or importing covenants and
conditions for use in each separate provision hereof. The
language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning, and not strictly
for or against Owner or Manager. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the party causing the same to be
drafted.
SECTION 24.04 GOVERNING LAW
This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New Hampshire without
reference to its choice of law provisions.
SECTION 24.05 SEVERABILITY
Should any portion of this Agreement be declared invalid or
unenforceable, then such portion shall be deemed to be severed
from this Agreement and shall not affect the remainder thereof.
SECTION 24.06 RELATION OF THE PARTIES
Nothing in this Agreement shall be construed as creating a
tenancy, ownership, limited partnership, joint venture, or any
other relationship between the parties hereto other than as
principal and agent. All debts and liabilities incurred by
Manager within the scope of the authority granted and permitted
hereunder in the course of its management and operation of the
Project shall be the debts and liabilities of Owner only, and
Manager shall not be liable for such debts and liabilities except
as specifically stated to the contrary herein.
SECTION 24.07 NO BROKER OR FINDER
Each party represents to the other that it has not engaged
any finder, broker or agent for whose commission or fee the other
party could be liable. Each party covenants and agrees to
indemnify and hold the other party free and harmless at all times
in respect of any and all liabilities, actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including attorneys fees, arising from, by reason of, or in
connection with any fees, commissions or other compensation which
shall be alleged to be due to any finder, broker, agent or other
similar representative in connection with this transaction, if
the person is found to have been
38
engaged by either party or if such services are found to have
been provided at the request of either party.
SECTION 24.08 ATTORNEYS' FEES
Should either party institute an arbitration, action or
proceeding to enforce any provisions hereof or for other relief
due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other
party all costs of the action or proceeding and reasonable
attorneys fees.
SECTION 24.09 ENTIRE AGREEMENT
This Agreement covers in full each and every agreement of
every kind or nature whatsoever between the parties hereto
concerning this Agreement, and all preliminary negotiations and
agreements, whether verbal or written, of whatsoever kind or
nature are merged herein. No oral agreement or implied covenant
shall be held to vary the provisions hereof, any statute, law or
custom to the contrary notwithstanding.
SECTION 24.10 COUNTERPARTS
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
SECTION 24.11 FORCE MAJEURE
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
SECTION 24.12 NO WARRANTIES
Manager shall use its best efforts to render the services
contemplated by this Agreement in good faith to Owner, but hereby
explicitly disclaims any and all warranties, express or implied,
including but not limited to the success or profitability of the
Project.
39
SECTION 24.13 HEADINGS
Headings or captions have been inserted for convenience of
reference only and are not to be construed or considered to be a
part hereof and shall not in an way modify, restrict or amend any
of the terms or provisions hereof.
SECTION 24.14 WAIVER
The waiver by one party of any default or breach of any of
the provisions, covenants or conditions hereof of the part of the
other party to be kept and performed shall not be a waiver of any
preceding or subsequent breach or any other provisions, covenants
or conditions contained herein.
DATED as of the day first above written.
"Manager" "Owner"
SHOWBOAT OPERATING COMPANY, SHOWBOAT ROCKINGHAM COMPANY,
a Nevada corporation L.L.C., a limited liability
company, by Showboat
New Hampshire, Inc., its Manager
By: /s/ Xxxxx Xxxxxxxxx By:_____________________________
Treasurer
ACKNOWLEDGED AND AGREEDTO
WITH RESPECT TO ARTICLE 7 ONLY:
ROCKINGHAM VENTURE, INC.,
a New Hampshire corporation
By:_________________________
40
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement"), dated
as of the 27th day of July, 1995, between Showboat Operating
Company, a Nevada corporation whose principal office is located
at 0000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000 ("Showboat"), and
Showboat Rockingham Company, LLC, a New Hampshire limited
liability company whose principal office is located at Xxxxxxxxxx
Xxxx Xxxxxxxxx, Xxxxx, Xxx Xxxxxxxxx 00000 ("Owner").
W I T N E S S E T H:
WHEREAS, Showboat and its management are experienced in
providing corporate administrative services to casinos and
restaurant operations; and
WHEREAS, Owner contemplates that the state of New Hampshire
may enact gaming legislation and, if permitted by such
legislation and licensed by the appropriate licensing authority,
construct a gaming facility at Rockingham Park (the "Project");
and
WHEREAS, Owner has appointed Showboat as the manager and
operator of the Project; and
WHEREAS, Owner desires to engage Showboat to render certain
corporate administrative services to Owner in order for Owner to
manage and operate the Project all as more fully described
herein; and
WHEREAS, Showboat desires to render such services to Owner;
and
WHEREAS, the parties hereto are desirous of setting forth
the terms of compensation for the services to be rendered by
Showboat hereunder; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained, the parties agree as
follows:
ARTICLE 1.0 - SERVICES TO BE PROVIDED
1.1. THE SERVICES. Upon the terms and conditions described
herein, Showboat shall provide to Owner the corporate
administrative services (the "Services") set forth in Exhibit A,
which is attached hereto and made a part hereof.
1.2. CONTINUED OWNER PERFORMANCE. Any Services to be
performed by Showboat hereunder shall not be performed as a
substitute for Owner performance, but shall assist, support or
supplement the routine functions and responsibilities of the
employees, officers and Managers of Owner.
1.3. SHOWBOAT PERSONNEL. All Showboat personnel engaged to
render the Services shall remain the employees of Showboat, and
Showboat shall be responsible for their compensation and for
withholding federal or state income taxes. The costs and expenses
incurred by Showboat for consultants, agents and independent
contractors selected and engaged to perform Services for Owner
shall be engaged directly by Owner and paid directly by Owner or
reimbursed to Showboat upon demand. Any such consultants, agents
and independent subcontractors shall separately invoice and
account for Services to Owner. To the extent that Showboat itself
or any Showboat personnel, other than consultants, agents and
independent
2
contractors, must be licensed or approved by the
authorized gaming authority in the State of New Hampshire,
however, Owner shall bear the expense of obtaining such
regulatory approvals and Showboat shall cooperate fully in order
to obtain all necessary regulatory approvals.
1.4. SHOWBOAT PERFORMANCE/RESPONSIBILITY. Showboat
undertakes to provide the Services hereunder with the same degree
of care and diligence it uses in providing such Services for its
own operations. In providing the Services hereunder, Showboat
shall not be liable to Owner for errors or omissions hereunder
except to the extent that such errors and omissions constitute
gross negligence or willful misconduct. Under no circumstances
shall any of Showboat's employees, officers, agents, directors,
or stockholders be liable to Owner for any errors or omissions by
Showboat hereunder.
ARTICLE 2.0 - PAYMENT OF COMPENSATION
2.1. FEES. Owner shall pay to Showboat fees for the
Services rendered hereunder equal to one percent (1%) of Owner's
Earnings before any interest expense, income taxes, capital lease
rentals, depreciation and amortization. Earnings shall have the
meaning specified in that certain Management Agreement among
Showboat, Owner and Rockingham Venture, Inc. dated as of the date
hereof (the "Management Agreement"). Showboat and owner agree
that the fees provided for by this Section 2.1 constitute their
good faith determination of the fair market value of such
services.
2.2. PARTIAL YEARS. Fees for partial fiscal years and
months hereunder shall be prorated.
3
2.3. TAXES. Showboat and Owner agree that in the event any
tax or assessment (other than any such tax or assessment on
income) is required to be paid as a result of the performance of
the Services by Showboat hereunder, Owner shall be solely
responsible for the payment of such tax or assessment.
2.4. FISCAL YEAR: BOOKS AND RECORDS. Owner shall keep at
its usual place of business books and records relating to gross
revenues and the payment to be made hereunder containing such
true entries as may be necessary or proper to ascertain the
amount of payments to be made to Showboat hereunder. Owner shall
produce, during normal business hours, said books and records and
make them available for inspection or audit by duly authorized
agents of Showboat, shall permit such agents to make copies
thereof, and shall give such information as may be necessary or
proper to enable the amount of payment due hereunder to be
ascertained and verified.
ARTICLE 3.0 - TERM AND TERMINATION
3.1. TERM. The term of this Agreement shall begin as of
the date hereof and shall continue for a term of the earlier to
occur of (i) 50 years or (ii) the termination of the Management
Agreement.
3.2. FORCE MAJEURE. Neither party shall be liable in any
manner for failure or delay of performance of all or any part of
this Agreement, directly or indirectly, owing to an act of God,
governmental orders or restrictions, strikes or other labor
disturbances, riots, embargoes, revolutions, wars (declared or
undeclared), sabotage, fires, floods, or any other causes or
circumstances beyond the control of the parties. The party
suffering such delay or failure shall
4
give prompt notice to the other party and shall exert its best
efforts to remove the causes or circumstances of nonperformance
with all possible dispatch. If any of the causes or
circumstances above continue for more than six (6) months,
either party hereto may elect to terminate this Agreement by
written notice to the other party.
3.3. ACCRUED PAYMENTS. Termination of the Agreement
pursuant to Section 3.2 hereof shall not affect the right of
Showboat to any fees accrued hereunder prior to the date of such
termination.
3.4. REMEDIES. In the event that either party commits a
material default of its obligations hereunder, the nondefaulting
party may notify the defaulting party of such default. In the
event that such default is not cured within thirty (30) days
thereafter, the nondefaulting party shall be entitled to pursue
any remedies available to it, including but not limited to, the
termination of the Agreement upon notice to the defaulting party.
ARTICLE 4.0 - GENERAL PROVISIONS
4.1. OTHER SERVICES. Nothing in this Agreement shall be
construed to prohibit Showboat from undertaking to provide
additional services to Owner not described in this Agreement or
in the exhibits hereto on terms and conditions (including the
fees therefore) satisfactory to each of Showboat and Owner.
5
4.2. INDEPENDENT PARTIES. Nothing in this Agreement shall
be construed as creating a partnership or a joint venture between
Showboat and Owner, or making either party an agent or employee
of the other party, but in all of its operations hereunder
Showboat shall be an independent contractor for Owner. No
employee of Showboat who renders any service hereunder shall be
considered, construed, or deemed to be an employee of Owner as a
result thereof.
4.3. INTEGRATION, MODIFICATION AND WAIVER. This Agreement
constitutes the entire agreement between Showboat and Owner
pertaining to the subject matter hereof and supersedes all prior
understandings of the parties. No supplement, modifications or
amendment of this Agreement shall be binding upon either Showboat
or Owner unless executed in writing by each of them. No waiver of
any of the provisions of this Agreement shall be deemed to be or
shall constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
4.4. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the state
of New Hampshire without giving effect to the conflict of laws
principles thereof.
4.5. NOTICES. Any notice or other communication required
or permitted under this Agreement shall be deemed given when: (a)
it is personally delivered; (b) it is transmitted by telecopy,
telex, or telegram with confirmation of receipt and a copy of the
document transmitted is also mailed, to the recipient, postage
prepaid; (c) the day after it is sent by a nationally recognized
overnight courier service; or (d) five (5) days after it is sent
by United States mail with postage prepaid, addressed to the
respective party at its address set forth in the first paragraph
of
6
this Agreement, attention: President if for Showboat or
General Manager if for Owner. Either party may change the address
or telecopy number to which notices or other communications are
to be given under this Agreement by furnishing the other party
with written notice of such change in accordance with this
Section 4.5.
4.6. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of the other
party.
4.7. HEADINGS. The headings used in this Agreement are for
convenience of reference only and are not intended to affect the
interpretation of this Agreement.
4.8. SEVERABILITY. If any provision of this Agreement or
the application of any provision to any party or circumstance
shall, to any extent, be adjudged invalid or unenforceable, the
application of the remainder of such provision to such party or
circumstance, the application of such provision to other parties
or circumstances, and the application of the remainder of this
Agreement shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
4.9. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
7
4.10. NO THIRD PARTY BENEFICIARIES. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any person or entity, other than the parties
hereto, any rights or remedies under or by the reason of the
Agreement.
4.11. NO WARRANTIES. Showboat shall use its best efforts
to provide the services in good faith to Owner, but disclaims any
and all warranties, express or implied, including, but not
limited to, the success or profitability of the business
conducted by Owner. Nothing contained herein shall be deemed to
confer on Showboat the right or ability to manage Owner's
business. Management of Owner's business shall solely be the
function and responsibility of Owner.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their representatives thereunto duly
authorized.
SHOWBOAT OPERATING COMPANY
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxxx
Name:
Title: Treasurer
SHOWBOAT ROCKINGHAM COMPANY, LLC,
By:______________________________
Name:
8
EXHIBIT A
SERVICES TO BE PROVIDED
Pursuant to the Administrative Services Agreement entered
into by the Parties, Owner engages Showboat to render, or cause
to be rendered, the following corporate administrative services
in connection with Owner's operations.
1. Human Resource services, including: provision of policy
development and operating guidelines for standardization of
operation philosophy and principles for employee management; and
establishment of uniform controls for selection and licensing of
key management personnel, compensation and benefits.
2. Accounting and financial services, including:
development of standards and procedures for internal audits and
supervision; review and evaluation of internal audits; assistance
with the development of policies, standards and procedures for
accounting and supervision; and, provision of technical
accounting advisory services and review of financial statements
and other accounting records maintained by Owner.
3. Data processing services, including: development of
policies, standards and procedures governing data processing
operations: assistance in the acquisition of software programs;
coordination of hardware acquisitions; and, review and evaluation
of data processing systems and operations.
9
4. Tax planning and compliance, including: review of
federal and state income tax returns; review of estimated tax
payments; and assistance in the coordination of Internal Revenue
Service and state agency examinations.
5. General administrative services, including: consultation
on selection of consultants for strategic planning efforts;
assistance in the evaluation and acquisition of insurance
policies and establishment of standards and policies related to
all insurance-related matters; assistance in the development of
standards and policies related to safety programs and supervision
of such programs; and such other administrative services as may
be appropriate.
10
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement")
made as of July 27, 1995, by and between Showboat, Inc., a Nevada
corporation ("Licensor"), and Showboat Rockingham Company, LLC, a
New Hampshire limited liability company ("Licensee").
RECITALS
A. Licensor is the owner of the trademark "Showboat",
its logos, trademarks, tradenames, service marks, and any
variation or extension of such name ("Trademark").
B. Licensor and Licensee desire that the Licensee be
permitted to use the Trademark in connection with the operation
of a privately-owned non-racing gaming establishment (the
"Project") located at Rockingham Park, Salem, New Hampshire (the
"Territory").
OPERATIVE PROVISIONS
In consideration of the recitals, covenants and
conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Licensor and Licensee agree as follows:
1. LICENSE. The Licensor grants to the Licensee the
non-exclusive, personal and nontransferable right to use the
Trademark in the Territory in connection with the operation of
the Project.
2. OPERATION OF PROJECT. The Licensee shall operate
the Project in a first-rate manner, consistent with the quality
of other gaming operations on the eastern seaboard of the United
States, and shall use the Trademark only in connection with the
operations of the Project, and the quality of the operations of
the Project shall be satisfactory to the Licensor, as determined
in its sole discretion.
3. INSPECTION. The Licensee will permit only
authorized representatives of the Licensor to inspect, at all
reasonable times, the operations of the Project.
4. USE OF TRADEMARK. Whenever the Licensee uses the
Trademark in advertising or in any other manner in connection
with the Project, the Licensee shall clearly indicate the
Licensor's ownership of the Trademark. The Licensee shall
provide the Licensor with samples of all signs, advertising,
promotional material, literature, packages and labels prepared by
or for the Licensee and intended to be used by Licensee. When
using the Trademark under this Agreement, the Licensee undertakes
to comply with all laws pertaining to trademarks in force at any
time in the Territory.
5. REGISTRATION OF LICENSEE. If the law requires, or
if requested by the Licensor or its duly authorized
representative, the Licensee shall execute any such documents and
to take such action as may be necessary to implement an
application to register the Licensee as a Permitted User or to
retain, enforce or defend the Trademark.
6. ASSIGNMENT OF LICENSEE. The right granted in
Paragraph 1 hereof shall not be transferable without the
Licensor's prior written consent, which consent may be granted or
withheld in Licensor's sole discretion, PROVIDED, HOWEVER, that
the Licensee shall have the right to use the Trademark in the
Territory for the purpose of exercising the rights granted
hereunder.
7. INDEMNITY. The Licensor assumes no liability to
the Licensee or to third parties with respect to the operations
of the Project or to the use of the Trademark in the Territory,
and the Licensee hereby defends, indemnifies and holds harmless
the Licensor against all losses, damages and expenses, including
attorneys' fees, incurred as a result of or related to claims of
third persons involving the operations of the Project or use of
the Trademark.
8. COMPENSATION. Licensee shall pay to Showboat
monthly fees for the Services rendered hereunder equal to three
percent (3%) of Licensee's Earnings before any interest expense,
income taxes, capital lease rentals, depreciation and
amortization. Earnings shall have the meaning specified in that
certain Management Agreement among Showboat, Licensee and
Rockingham Venture, Inc. dated as of the date hereof (the
"Management Agreement"). Payment of the fee payable hereunder
shall be paid in the manner and at the times as the Management
Fee is paid to Showboat under the Mangement Agreement. Showboat
and Licensee agree that the fees provided for by this Section 2.1
constitute their good faith determination of the fair market
value of such services.
9. TERM.
(a) The term of this Agreement shall commence on
the enactment of privately owned non-racing gaming legislation
and shall continue in effect for a term of 50 years thereafter or
upon the earlier termination of the Management Agreement.
(b) If the Licensee or any sublicensee makes any
assignment of assets or business for the benefit of creditors, or
if a trustee or receiver is appointed to administer or conduct
its business or affairs, or if it is adjudged in any legal
proceeding to be either voluntary or involuntary bankrupt, then
all the rights granted herein shall forthwith cease and terminate
without prior notice or legal action by the Licensor and without
any further obligation or liability to Licensor.
(c) Should the Licensee fail to comply with any
provision of this Agreement, the Licensor may terminate this
Agreement without prior notice or legal action and without any
further obligation or liability to Licensor. The Licensor shall
have the right to determine unilaterally whether or not the
conditions envisioned by this subparagraph exist, and the
Licensor's determination shall be final.
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10. OWNERSHIP OF TRADEMARK. The Licensee acknowledges
the Licensor's exclusive right, title and interest in and to the
Trademark including its trademarks, logos, service marks, and any
variation or extensions thereof (collectively, "Showboat
Intellectual Property" and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or
tending to impair any part of such right, title, and interest.
In connection with the use of the Trademark, the Licensee shall
not in connection with the use of the Trademark, the Licensee
shall not in any manner represent that it has any ownership in
the Trademark or registration hereof, and the Licensee
acknowledges that use of the Trademark shall not create in the
Licensee's favor any right, title, or interest in or to the
Trademark, but all uses of the Trademark by the Licensee shall
insure to the benefit of the Licensor. Upon termination of this
Agreement in any manner provided herein, the Licensee will cease
and desist from all use of the Trademark in any way (and will
deliver up to the Licensor, or its duly authorized
representatives, all material and papers upon which the Trademark
appears), and the Licensee shall at no time adopt or use, without
the Licensor's prior written consent, any word or xxxx which is
likely to be similar to or confusing with the Trademark.
11. NOTICES. Any notices required or permitted to be
given under this Agreement shall be deemed sufficiently given if
mailed by certified mail, postage prepaid, addressed to the party
to be notified at its address shown at the beginning of this
Agreement, or at such other address as may be furnished in
writing to the notifying party.
IN WITNESS WHEREOF this Agreement has been executed as
of the day and year first above written.
"Licensor" "Licensee"
SHOWBOAT, INC. SHOWBOAT ROCKINGHAM
COMPANY, LLC
By: /S/ X.X. Xxxxxxxx III By:___________________________
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