Exhibit 10.5
MEMBER AGREEMENT
MEMBER AGREEMENT, dated as of December 6, 2001 (this
"AGREEMENT"), by and among Majestic Investor Holdings, LLC, a Delaware limited
liability company (the "COMPANY"), Majestic Investor, LLC, a Delaware limited
liability company and the sole member of the Company ("MAJESTIC INVESTOR"), The
Majestic Star Casino, LLC, an Indiana limited liability company and the sole
member of Majestic Investor ("MAJESTIC STAR"), and Xxxxxx Development Inc., an
Indiana corporation and the sole member of Majestic Star ("BDI").
WHEREAS, Majestic Star currently has outstanding $130,000,000
aggregate principal amount of its 10 7/8% Senior Secured Notes due 2006, issued
pursuant to an Indenture, dated as of June 18, 1999 (the "MAJESTIC STAR
INDENTURE"), by and among Majestic Star, The Majestic Star Casino Capital Corp.,
and IBJ Whitehall Bank & Trust Company, as Trustee;
WHEREAS, pursuant to the Purchase Agreement, dated as of
November 30, 2001 (the "PURCHASE AGREEMENT"), by and among the Company, Majestic
Investor Capital Corp., a Delaware corporation ("CAPITAL," and together with the
Company, the "ISSUERS"), Xxxxxx Nevada Gaming LLC, a Nevada limited liability
company, Xxxxxx Mississippi Gaming, LLC, a Mississippi limited liability
company, Xxxxxx Colorado Gaming, LLC, a Colorado limited liability company and
Xxxxxxxxx & Company, Inc., the Issuers propose to offer and sell $152,632,000
aggregate principal amount of the Issuers' 11.653% Senior Secured Notes due 2007
(the "NOTES"); and
WHEREAS, to facilitate the offering of the Notes, and for the
benefit of each other and for the equal and ratable benefit of the holders of
the Notes, the parties hereto wish to set forth their agreement concerning (i)
the payment by Majestic Star of certain dividends and other distributions and
(ii) the contribution by Majestic Star of an aggregate of $5,000,000 in cash,
either directly or through an affiliated entity, to the Company.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein without definition
shall have the respective meanings set forth in the Majestic Star Indenture.
2. AGREEMENTS OF MAJESTIC STAR.
(a) Except as set forth in Section 2(b) below, prior to the
date on which (i) Majestic Star, either individually or together with BDI, has
contributed an aggregate total amount in cash of $5,000,000 to Majestic Investor
(reduced by the aggregate amount of any cash contributions made to the Company
by Majestic Star and
BDI after the date hereof and prior to such date) and (ii) Majestic Investor has
contributed such cash to the Company (such date, the "CONTRIBUTION DATE"),
Majestic Star shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(i) declare or pay any dividend or make any distribution
on account of any Equity Interests of Majestic Star
or any of its Subsidiaries (other than (A) dividends
or distributions payable in Equity Interests (other
than Disqualified Capital Stock) of Majestic Star or
(B) amounts payable to Majestic Star or any
Restricted Subsidiary); or
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interest of Majestic Star, or any
other Affiliate (other than any Restricted
Subsidiary) of Majestic Star (other than any such
Equity Interest owned by Majestic Star or any
Restricted Subsidiary);
(all such payments and other actions set forth in clauses (i)
and (ii) above being collectively referred to as "MAJESTIC
STAR RESTRICTED PAYMENTS").
(b) Notwithstanding the foregoing, and subject to the terms
and conditions of the Majestic Star Indenture, Majestic Star shall not be
prohibited from:
(i) the redemption, purchase, retirement or other
acquisition of any Equity Interests of Majestic Star
or Indebtedness of Majestic Star or any Restricted
Subsidiary in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to
a Subsidiary) of, other Equity Interests of Majestic
Star (other than Disqualified Capital Stock);
(ii) with respect to each taxable year that Majestic Star
qualifies as a Flow Through Entity, the payment of
Permitted Tax Distributions;
(iii) the redemption, repurchase or payoff of any
Indebtedness of Majestic Star or a Restricted
Subsidiary with proceeds of any Refinancing
Indebtedness permitted to be incurred pursuant to
Section 4.9(i) of the Majestic Star Indenture;
(iv) Restricted Payments required under the Management
Agreement as in effect on June 18, 1999; provided,
that the Interest Coverage Ratio for Majestic Star's
most recently ended four full fiscal quarters for
which internal financial statements are available
immediately preceding the date on which such payment
is made would have been not less than 1.75 to 1.0,
determined on a pro
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forma basis, as if such payment had been made during
such four-quarter period; or
(v) Any payments not prohibited by the Majestic Star
Indenture and clauses (i) and (ii) of Section 2(a)
above.
3. AGREEMENTS OF BDI.
(a) Prior to the Contribution Date, BDI shall not, directly or
indirectly:
(i) cause Majestic Star to make any Majestic
Star Restricted Payments; or
(ii) accept any Majestic Star Restricted
Payments.
(b) Prior to the Contribution Date, from each sale of Equity
Interests of Majestic Star (other than sales of Equity Interests to BDI), BDI
shall contribute to the Company, directly or indirectly, the net proceeds
therefrom (the "NET PROCEEDS") equal to the excess, if any, of (i) $5,000,000
over (ii) the sum of (A) the aggregate amount of any Net Proceeds contributed by
BDI to Majestic Star (and subsequently contributed to the Company) after the
date hereof and prior to such sale, and (B) the aggregate of any other amounts
contributed by Majestic Star and BDI to Majestic Investor (and subsequently
contributed to the Company) after the date hereof and prior to such sale.
4. REPRESENTATIONS AND WARRANTIES. Each of the Company, Majestic
Investor, Majestic Star and BDI hereby represents and warrants that:
(a) Due Organization; Good Standing. It is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority to conduct and carry on
its business as currently conducted and to own and operate its properties and
assets.
(b) Due Authorization; Power and Authority. It has all
requisite power and authority to execute and deliver, and to perform its
obligations under, this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary action on the part of such party.
(c) Binding Agreement. This Agreement has been duly executed
and delivered by, and is the legal, valid and binding obligation of, such party,
enforceable against such party in accordance with its terms, except that (i)
such enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be subject to
general principles of equity (whether considered in a proceeding in equity or at
law).
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(d) Consents and Approvals. No permit, certificate,
authorization, approval, consent, license or order of, or filing, registration,
declaration or qualification with, any government, governmental or regulatory
agency or body (including, without limitation, any applicable gaming authority),
court, arbitrator or self-regulatory organization, domestic or foreign (each, a
"GOVERNMENTAL AUTHORITY"), or any other person (collectively, "CONSENTS") is
required in connection with, or as a condition to, the execution, delivery or
performance of this Agreement, the compliance with the terms and provisions of
this Agreement or the consummation of any of the transactions contemplated by
this Agreement.
(e) No Violations. It is not (i) in violation of its
certificate of formation, certificate of incorporation, operating agreement,
bylaws or other organizational documents (collectively, the "CHARTER
DOCUMENTS"), (ii) in violation of any material federal, state, local or foreign
statute, law or ordinance, or any judgment, decree, rule, regulation or order,
including, without limitation, any applicable gaming laws, in each case
including the rules and regulations promulgated thereunder (collectively,
"APPLICABLE LAW") or (iii) in breach of or default under any material bond,
debenture, note or other evidence of indebtedness, indenture, mortgage, deed of
trust, lease or any other agreement or instrument to which it is a party or by
which it or any of its property is bound (collectively, "APPLICABLE
AGREEMENTS"), which violations, breaches or defaults could impair its ability to
perform its obligations under this Agreement or could impair any of the
transactions contemplated by this Agreement.
(f) No Conflicts. None of the execution, delivery or
performance of this Agreement, the compliance with any of the terms and the
provisions hereof or the consummation of any of the transactions contemplated
hereby shall conflict with, violate, constitute a breach of or a default (with
or without due notice or the passage of time or otherwise) under, result in the
imposition of a lien on any assets or capital stock of or membership interests
in any party, or give rise to any right of termination, amendment or
cancellation or result in an acceleration of indebtedness under or pursuant to,
(i) the Charter Documents, (ii) any Applicable Agreement or (iii) any Applicable
Law.
(g) No Proceedings. To its knowledge, there is no action,
claim, suit, demand, hearing, notice of violation or deficiency, or proceeding
(including, without limitation, any investigation or partial proceeding, such as
a deposition), domestic or foreign, pending or, to the knowledge of any of the
parties hereto, threatened either with respect to any of the parties hereto in
connection with, or that seeks to restrain, enjoin, prevent or otherwise
challenge, this Agreement or the consummation of the transactions contemplated
by this Agreement.
5. MISCELLANEOUS.
(a) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED,
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW
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YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b). EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH PARTY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY IRREVOCABLY CONSENTS, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PARTY, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST EACH PARTY IN ANY OTHER JURISDICTION.
(b) Successors. All agreements of the parties in this
Agreement shall bind their respective successors.
(c) Counterparts. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
(d) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. When a reference is made in this Agreement to a Section or
paragraph, such reference shall mean a Section or paragraph of this Agreement
unless otherwise indicated.
(e) Interpretation. The words "INCLUDE," "INCLUDES," and
"INCLUDING" when used in this Agreement shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The phrases "THE DATE OF THIS
AGREEMENT," "THE DATE HEREOF," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to December 6, 2001. The words
"HEREOF," "HEREIN," "HEREWITH," "HEREBY" and "HEREUNDER" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement.
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Unless the context otherwise requires, defined terms shall include the singular
and plural and the conjunctive and disjunctive forms of the terms defined.
(f) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(g) Amendment. This Agreement may be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may be given, provided that the same are in writing and signed by each of the
signatories hereto.
(h) Certain Understandings. Notwithstanding any of the
foregoing provisions of this Agreement to the contrary, no provision of this
Agreement shall be deemed a commitment by BDI or Majestic Star to make any
contributions to the Company or Majestic Investor.
(i) Termination. This Agreement shall terminate on the
Contribution Date, and following such termination, neither Majestic Star nor BDI
shall have any obligation under this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties to this Agreement have
executed or caused this Agreement to be executed by their duly authorized
officers as of the day and year first written above.
MAJESTIC INVESTOR HOLDINGS, LLC
By: /s/ Xxx X. Xxxxxx
--------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
MAJESTIC INVESTOR, LLC
By: /s/ Xxx X. Xxxxxx
--------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
THE MAJESTIC STAR CASINO, LLC
By: /s/ Xxx X. Xxxxxx
--------------------------------
Name: Xxx X. Xxxxxx
Title: President and CEO
XXXXXX DEVELOPMENT, INC.
By: /s/ Xxx X. Xxxxxx
--------------------------------
Name: Xxx X. Xxxxxx
Title: President and CEO
