OPERATING AGREEMENT OF AMERICAN RACING AND ENTERTAINMENT, LLC
Execution
Copy November 8, 2005
OF
AMERICAN
RACING AND ENTERTAINMENT, LLC
This
Operating Agreement (the “Agreement”) of American Racing and Entertainment, LLC
(the “Company”), dated effective as of the 24th day of August, 2005, is hereby
executed and agreed to, for good and valuable consideration, by Nevada Gold
NY,
Inc., a New York corporation, (“Nevada Gold”), TrackPower, Inc., a Wyoming
corporation (“TrackPower”), and Southern Tier Acquisition II LLC, a New York
limited liability company ("Southern Tier").
The
parties agree as follows:
ARTICLE
I. ORGANIZATION AND DEFINITIONS
1.1 Company
Name.
The
business of the Company will be conducted under the name “American Racing and
Entertainment, LLC” or any other name selected by the Company in accordance with
governing law.
1.2 New
York Office .
The
Company’s principal place of business is 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Company may maintain offices at such other place or places within
or
outside the State of New York as the Board deems advisable.
1.3 Term.
The
Company shall begin on the date its Articles of Organization are filed with
the
New York Secretary of State and shall continue until a Dissolution may
occur.
1.4 Foreign
Qualification.
After
formation of the Company under the Act, the Company will apply for any required
certificate of authority to do business in any other state or jurisdiction
where
it conducts business, as appropriate.
1.5 Definitions.
Terms
used with initial capital letters will have the meanings specified in
Exhibit
“A,”
applicable to both singular and plural forms, for all purposes of this
Agreement.
ARTICLE
2: PURPOSES AND POWERS
2.1 Principal
Purposes.
The
purposes for which the Company is organized are:
(a) to
own,
hold, develop, operate, lease, transfer, sell, exchange, improve or otherwise
dispose of all or any part of the Tioga Downs Complex;
(b) to
acquire, own, hold, develop, operate, lease, transfer, sell, exchange, improve
or otherwise dispose of all or any part of the Xxxxxx Xxxxx
Complex;
(c) to
enter
into and perform contracts of any kind necessary to, in connection with or
incidental to the accomplishment of the foregoing purposes;
Page
1 of
60
Execution
Copy November 8, 2005
(d) to
incur
Debt from any source, including without limitation any Member or Affiliate
of a
Member, to accomplish the foregoing purposes or to meet the obligations of
the
Company; to issue evidences of the Company's Debt to repay such borrowings;
and
to grant security interests in the Company's assets to secure repayment of
such
Debt; and
(e) to
do all
other things necessary, desirable or conducive to the accomplishment of the
aforesaid purposes or otherwise contemplated by this Agreement.
The
Company is a single-purpose venture and is intended to engage in no business
or
project other than those described above regarding the Tioga Downs Complex
and
the Xxxxxx Xxxxx Complex. Title to all Company property shall be held in
the
name of the Company or a subsidiary of the Company.
2.2 Powers.
The
Company has all of the powers granted to a limited liability company under
the
Act, as well as all powers necessary or convenient to achieve its purposes
and
to further its Business.
ARTICLE
3: MEMBERSHIP
3.1 Members.
The
Members of the Company are Nevada Gold, TrackPower and Southern Tier. The
initial Percentage of each Member in the Company shall be as
follows:
| Nevada Gold | 50.00% | |
| TrackPower | 25.00% | |
| Southern Tier | 25.00% |
The
Percentage of each Member as stated in this Section 3.1 shall be adjusted
from
time to time pursuant to the provisions of this Agreement.
3.2 Rights
of and Restrictions on Members.
No
Member will:
(a) Be
personally liable for any of the debts, obligations or losses (including
deficits in its Capital Account except as specifically provided herein) of
the
Company or the other Members, except as otherwise provided in the Act or
an
agreement signed by the Member to be subjected to any individual
liability;
(b) Be
assessed or required to make any Capital Contributions except as provided
in
Sections 7.1 and 7.2 hereof.
(c)
Except
as
specifically set forth herein or as otherwise approved by the Members, have
the
authority or power to act for or on behalf of the Company, to do any act
that
would be binding on the Company, or to incur any expenditures on behalf of
the
Company;
(d) Except
as
specifically set forth herein or as otherwise approved by the Members, be
entitled to be paid any salary or to have a Company drawing
account;
(e) Be
entitled to receive any interest on any Capital Contribution or Capital
Account;
Page
2 of
60
Execution
Copy November 8, 2005
(f) Be
entitled to a partition of any property of the Company;
(g) Except
as
expressly provided to the contrary herein, be entitled to priority over any
Member, either as to a return of its Capital Contribution or as to allocations
of revenues, gains, costs, expenses, losses or distributions; or
(h) Be
entitled to a return of, or to a withdrawal of, all or any part of its
contributions to the Company, except to the extent that the Members may be
entitled to distributions pursuant to the express provisions of this Agreement,
and (unless otherwise provided) no Member shall have any right to demand
or
receive property other than cash in return for its contributions, and its
right
to receive cash shall be, and is hereby expressly limited and controlled
by the
terms of this Agreement.
3.3 Information.
(a) In
addition to the other rights specifically set forth in this Agreement, each
Member is entitled to all information to which that Member is entitled to
have
access pursuant to the Act under the circumstances and subject to the conditions
therein stated.
(b) The
Members acknowledge that, from time to time, they may receive information
from
or regarding the Company in the nature of trade secrets or that otherwise
is
confidential, the release of which may be damaging to the Company or Persons
with which it does business. Each Member will hold in strict confidence any
information it receives regarding the Company that is identified as being
confidential (and if that information is provided in writing, that is so
marked)
and may not disclose it to any Person other than another Member or a Director
except for disclosures (i) compelled by law (but the Member must notify the
Board promptly of any request for that information, before disclosing it
if
practicable), (ii) required under the securities laws, (iii) to advisers
or
representatives of the Member or Persons to whom any of that Member’s Membership
Interests may be transferred as permitted by this Agreement, but only if
the
recipients have agreed to be bound by the provisions of this Section 3.3(b),
(iv) of information that such Member also has received from a source independent
of the Company that the Member reasonably believes obtained that information
without breach of any obligation of confidentiality or (v) as otherwise
permitted under this Agreement. The Members acknowledge that breach of the
provisions of this Section 3.3(b) may cause irreparable injury to the Company
for which monetary damages are inadequate, difficult to compute, or both.
Accordingly, the Members agree that the provisions of this Section 3.3(b)
may be
enforced by specific performance.
3.4 Meetings.
Special
meetings of the Members shall be held at the Company's principal place of
business in New York, or such other place approved by the Members. There
shall
be no regularly scheduled meetings of the Members of the Company. A special
meeting of the Members may be called by any Member.
3.5 Votes
of Members.
Any
decision or approval required of the Members as a group pursuant to this
Agreement shall require approval of the Members holding at least 75% of the
Membership Interests.
Page
3 of
60
Execution
Copy November 8, 2005
3.6 Notice
of Meetings.
Written
notice of a meeting shall be given to each Member not less than three (3)
days
nor more than thirty (30) days before the date of the meeting, unless waived
by
all of the Members; provided, however, if the immediate attention of the
Members
to a matter is required, then twenty four hours (24) notice, or such shorter
notice if reasonable under the circumstances, shall be given. The notice
shall
state the place, date and hour of the meeting and the general nature of the
business to be transacted.
3.7 Actions
Without a Meeting.
Any
action that may be taken at any meeting of Members may be taken without a
meeting and without prior notice if a consent in writing, setting forth the
action so taken, shall be signed and delivered to the Board by all Members.
Any
Member giving a written consent may revoke such consent by a writing received
by
the Board prior to the time that the Board has received written consents
of all
Members.
3.8 No
Resignation or Retirement.
Each
Member agrees not to voluntarily resign or retire as a Member in the Company.
However, if such voluntary resignation or retirement occurs in contravention
of
this Agreement, the withdrawing Member will, without further act, become
a
Transferee of its Membership Interest (with the limited rights of a Transferee
as set forth in Section 14.6). Any Member who resigns or retires from the
Company in contravention of this Agreement will be liable to the Company
and the
other Members for proven monetary damages (but any such action or proposed
action to resign or retire will not be subject to any equitable action for
injunctive relief or specific performance except as permitted under Section
17.8).
ARTICLE
4: MANAGEMENT
4.1 Management.
The
overall business and affairs of the Company shall be managed by a Board of
Directors (the "Board"), which, except as otherwise provided in this Agreement,
shall have full and complete charge of all facets of the overall business
affairs of the Company, and the overall management and control of the Company's
business shall rest exclusively with the Board. Any decision by the Board
shall
require the affirmative vote of a majority of the directors (except as provided
in Section 4.1(b)), and shall bind the Company and the Members. The Board,
acting as a body pursuant to this Agreement, shall constitute a "manager"
for
purposes of the Act. No Director, in such capacity, acting singly or with
any
other Director, shall have any authority or right to act on behalf of or
bind
the Company, other than by exercising the Director's voting power as a member
of
the Board, unless specifically authorized by the Board in each instance.
No
Director shall represent himself or herself as a manager of the Company.
The
Board shall make all Unanimous Decisions, Major Decisions and Non-Arbitrable
Decisions.
(a) Decisions
other than Unanimous Decisions, Major Decisions and Non-Arbitrable Decisions
may
be made and related acts taken: (x) as provided in this Agreement; or (y)
if not
specifically provided in this Agreement, by the President, subject to the
monetary limitations of the Budgets, or the Board (by majority vote unless
unanimous vote is specifically required by this Agreement) in the event there
is
no President; or (z) as delegated by any contract entered into by the Company
(including, without limitation, the Management Agreement defined in Section
4.5
hereof).
(b) "Unanimous
Decisions" shall mean decisions to:
Page
4 of
60
Execution
Copy November 8, 2005
(i) invest
in
or operate any business other than the Tioga Downs Complex and the Xxxxxx
Xxxxx
Complex;
(ii) make
any
single voluntary expenditure in excess of $250,000 unless such expenditure
is
provided for in the Cost Budget or Annual Plan and Operating Budget (a voluntary
expenditure shall not include an expenditure which (A) is necessary to comply
with applicable laws, rules, regulations and orders; (B) is in defense of
the
Company's interests in any proceedings in any court, before any governmental
agency, or in arbitration; or (C) is necessary to comply with any contractual
or
other Company obligations);
(iii) during
the nine (9) period commencing on the opening of the Tioga Downs Complex,
approve any capital expenditure in excess of those set forth in the Cost
Budget
for the Tioga Downs Complex, it being agreed that any approved capital
expenditures will not actually be made until twelve (12) months following
the
opening of the Tioga Downs Complex;
(iv) during
the nine (9) month period commencing on the opening of the Xxxxxx Xxxxx Complex,
approve any capital expenditure in excess of those set forth in the Cost
Budget
for the Xxxxxx Xxxxx Complex it being agreed that any approved capital
expenditures will not actually be made until twelve (12) months following
the
opening of the Xxxxxx Xxxxx Complex;
(c) "Major
Decisions" shall mean decisions to:
(i) select
the president of the Company, the General Manager and the Racing
Manager;
(ii) approve
the Conceptual Plans and Specifications and the Final Plans and Specifications
or a Material Modification (but a nonmaterial amendment or modification shall
not be a Major Decision);
(iii) after
the
expiration of the nine (9) month period commencing on the opening of the
Tioga
Downs Complex, approve any capital expenditure in excess of those set forth
in
the Cost Budget for the Tioga Downs Complex it being agreed that any approved
capital expenditures will not actually be made until twelve (12) months
following the opening of the Tioga Downs Complex;
(iv) after
the
expiration of the nine (9) month period commencing on the opening of the
Xxxxxx
Xxxxx Complex, approve any capital expenditure in excess of those set forth
in
the Cost Budget for the Xxxxxx Xxxxx Complex it being agreed that any approved
capital expenditures will not actually be made until twelve (12) months
following the opening of the Xxxxxx Xxxxx Complex;
(v) approve
the Cost Budgets, Annual Plan and Operating Budget;
Page
5 of
60
Execution
Copy November 8, 2005
(vi)
allocate
a condemnation award or casualty insurance or title insurance proceeds
among the
various items of property taken (if not allocated by the condemnee, insurer
or
judicial or other authority making such award);
(vii) enter
into a general construction contract and/or the architectural contract
for any
material portion of either Complex;
(viii) enter
into any contracts with or pay any compensation to a Member or Director or
any
Affiliate of a Member, other than pursuant to the Management
Agreement;
(ix) commence,
discontinue, settle, compromise, submit to arbitration, or participate in
any
single or related series of actions in the nature of legal proceedings in
any
court, before any governmental agency, or in arbitration, or other than actions
arising out of the ordinary course of business, involving any potential
liabilities to, or claims by or against, the Company not covered by insurance
or
within the deductible amount of any insurance policy, the cost of which,
if lost
or settled, would not exceed One Hundred Thousand Dollars ($100,000.00),
adjusted annually on each anniversary of the Effective Date, to provide for
increases, but not decreases, in the Consumer Price Index;
(x) select
(or change) attorneys, accountants or other professionals to render legal,
accounting or other professional services to the Company, it being agreed
that
the Board has selected Xxxxxxxx, Xxxxxx & Green as the accountants for the
Company;
(xi) approve
a
proposed transaction between the Company and an Affiliate of a
Member.
(d) "Non-Arbitrable
Decisions" shall mean decisions to:
(i) elect
to
dissolve the Company under Section 12.1;
(ii) sell,
assign, transfer, hypothecate, pledge, lease, encumber or otherwise dispose
of,
in a single transaction or related series of transactions, all or any portion
of
the either Complex (or both Complexes) or enter into any agreement to do
so,
except the Management Agreement and any easements, rights-of-way or title
encumbrances incidental to the development of either Gaming
Complex;
(iii) incur
Debt other than (A) Debt provided for in a Cost Budget; (B) Debt provided
for in
an Operating Budget; (C) Debt provided in an approved budget for future
development; (D) trade debt incurred in the ordinary course of business;
(E)
Debt imposed by law; or (F) Debt incurred under any contract, loan document,
lease or other agreement authorized pursuant to this Agreement.
(iv) elect
to
have the Members make additional capital contributions to the Company pursuant
to Section 7.2;
Page
6 of
60
Execution
Copy November 8, 2005
(v) construct
any improvements on the Project Site, other than the work shown on the Plans
and
Specifications, any Material Modifications and any work approved as part
of an
Annual Plan or required by law;
(vi) (A)
enter
into any management agreement other than the Management Agreement; or (B)
enter
into any amendment or modification of the Management Agreement;
(vii) commence,
discontinue, settle, compromise, submit to arbitration, or participate in
any
single or related series of actions in the nature of legal proceedings in
any
court, before any governmental agency, or in arbitration, or other than actions
arising out of the ordinary course of business, involving any potential
liabilities to, or claims by or against, the Company not covered by insurance
or
within the deductible amount of any insurance policy, the cost of which,
if lost
or settled, would exceed One Hundred Thousand Dollars ($100,000.00), adjusted
annually on each anniversary of the Effective Date, to provide for increases,
but not decreases, in the Consumer Price Index;
(e) If
the
Board is unable to reach a majority decision with respect to a Major Decision,
any Member may submit the matter to the procedures for resolving deadlocks,
including binding arbitration, in accordance with Section 4.7.
(f) If
the
Board is unable to reach a majority decision with respect to a Non-Arbitrable
Decision, the Company shall not undertake the related action, except that:
(i)
any Member may cause the Company to take such action to the extent it, in
good
faith, determines that such action: (A) is necessary to comply with applicable
laws, rules, regulations and orders; (B) is in defense of the Company's
interests in any proceedings in any court, before any governmental agency,
or in
arbitration; or (C) is necessary to comply with any contractual or other
Company
obligations.
(g) The
Conceptual Plans and Specifications, the Final Plans and Specifications
(prepared by Climans, Green, Liang Architects, Inc.) and the Cost Budget
for the
Tioga Downs Complex have been approved by the Board. The Conceptual Plans
and
Specifications, and the Cost Budget for the Xxxxxx Xxxxx Complex have been
approved by the Board. It is anticipated that the Board will (i) cause to
be
performed a cost benefit analysis of making capital improvements to the 47,700
square foot grandstand at the Xxxxxx Xxxxx Complex and, (ii) upon reviewing
the
results of such analysis make a decision (under either Section 4.1(b)(iv)
or
Section 4.1(c)(iv)) as to whether to approve the capital expenditures for
such
improvements.
(h) The
Management Company shall annually prepare, for the Board’s review, an Annual
Plan for each Gaming Complex (the "Annual Plan"). Southern Tier shall have
certain rights to approve matters in the Annual Plan affecting the Racing
Operations as provided in Section 4.5 hereof. The Annual Plan for the first
whole or partial Fiscal Year following the date the Company opens a Gaming
Complex for business will be prepared by the Management Company and presented
to
the Board not less than sixty (60) days before the anticipated opening date
of
the Gaming Complex except as otherwise provided in the Management Agreement.
The
Annual Plan for each subsequent Fiscal Year shall be prepared and submitted
to
the Board not later than sixty (60) days before the beginning of such Fiscal
Year.
Page
7 of
60
Execution
Copy November 8, 2005
The
Annual Plan for each Gaming Complex will be comprised of the
following:
(i) a
statement of the estimated income and expenses of the Gaming Complex for
the
coming Fiscal Year, such statement to reflect the estimated income and expenses
during each month of the subject Fiscal Year;
(ii) either
as
part of the statement of the estimated income and expenses referred to in
the
preceding clause (i), or separately, budgets for:
(A) repairs
and maintenance;
(B) capital
replacements and improvements; and
(C)
equipment
purchases or leases;
(iii) a
business and marketing plan for the subject Fiscal Year including, without
limitation:
(A) room
rates (if applicable), food and beverage pricing and other charges to persons
using the Gaming Complex;
(B) an
advertising and marketing plan for the Gaming Complex as a whole.
(iv) the
Minimum Balance (as defined in the Management) which must remain in the Bank
Account (as defined in the Management Agreement) as of the end of each Fiscal
Month during the Fiscal Year to assure sufficient monies for working capital
purposes and other expenditures authorized under the Annual Plan.
The
"Operating Budget" shall mean the budgeted expenses approved under clauses
(i),
(ii), and (iii) above. References to budgeted items contained in the Annual
Plan
shall refer to the expenses for such items set forth in the Operating
Budget.
In
connection with the submission of the Annual Plan, the Board will meet within
twenty (20) days after the proposed Annual Plan is delivered to have an in-depth
review, including, after the first full Fiscal Year, a comparison with the
previous Fiscal Year's performance of the Gaming Complex and a discussion
of
proposed expenditures contained in the Operating Budget.
It
is the
intention of the Board to complete the review and approval of the proposed
Annual Plan no later than thirty (30) days prior to: (x) the opening date
of the
Gaming Complex; and (y) the commencement of each Fiscal Year thereafter.
The
majority of the Board shall be required to approve each proposed Annual Plan.
If
a majority of the Board does not approve the proposed Annual Plan, the
undisputed portions of the proposed Annual Plan shall be operative. In the
case
of any Annual Plan after the Annual Plan for the first full Fiscal Year,
the
item corresponding to the disputed item and contained in the Annual Plan
for the
preceding Fiscal Year shall be substituted in lieu of the disputed portions
of
the proposed Annual Plan. In each instance where portions of the Annual Plan
from the preceding Fiscal Year are deemed to be the Annual Plan in effect
until
a new Annual Plan is approved, the Operating Budget expense contained in
the
Annual Plan for the preceding Fiscal year shall be automatically increased
by a
percentage equal to the percent of increase in the Consumer Price Index during
the preceding Fiscal Year. If, notwithstanding such Consumer Price Index
increase, the Board do not reach agreement as to a mutually acceptable Annual
Plan within thirty (30) days prior to: (x) the opening date of the Gaming
Complex; or (y) the commencement of each Fiscal Year thereafter, as the case
may
be, the item(s) of the Annual Plan that are in dispute shall be submitted
to and
resolved by arbitration in accordance with Section 4.7.
Page
8 of
60
Execution
Copy November 8, 2005
4.2 Election
of Board of Directors.
(a) Number,
Term and Qualifications.
The
Board of Directors shall be comprised of four members (each, a "Director"),
two
designated by Nevada Gold, one designated by TrackPower and one designated
by
Southern Tier. Each of the Members agrees to vote or express consent with
respect to all of their respective Membership Interests in favor of the election
of a slate of Directors consisting of individuals meeting the requirements
of
this Section 4.2. The number of Directors of the Company, and the manner
of
designation and election of such Directors, may only be changed by unanimous
vote of all Members, except as specifically provided in Section 7.2 of this
Agreement or elsewhere in this Agreement. The initial members of the Board
are
as follows:
| H. Xxxxxx Xxxx | Nevada Gold | |
| Xxx Xxxxxxx | Nevada Gold | |
| Xx Xxxxx | TrackPower | |
| Xxxxxxx Xxxxx | Southern Tier | |
(b) Resignation.
Any
Director may resign at any time by giving written notice to the Company.
The
resignation of any Director shall take effect three (3) business days following
receipt of that notice or at such later time as shall be specified in the
notice. Unless otherwise specified in the notice, the acceptance of the
resignation shall not be necessary to make it effective.
(c) Removal.
Any
Director may be removed at any time, with or without Cause, by the vote of
the
Member entitled to designate such Director. A finding of Cause or unsuitability
of a Director to engage in gaming by any Gaming Authority shall result in
the
immediate termination of such Director without further action by the Members.
(d) Vacancies.
If a
vacancy occurs for any reason in the Board, the Member who designated the
Director shall have the right to designate another person to fill that
vacancy.
(e) Committees.
The
Board may from time to time establish one or more committees of the Board,
which
shall have such authority as shall be determined from time to time by the
Board.
Page
9 of
60
Execution
Copy November 8, 2005
(f) Meetings
of the Board.
Regular
meetings of the Board shall be held on a quarterly basis. Special meetings
of
the Board may be called by any Director. All meetings shall be held upon
at
least two (2) days' notice by mail, notice delivered personally or by telephone,
telegraph, facsimile or electronic mail, to the Directors setting forth the
time
and location of such meeting; provided, however, if the immediate attention
of
the Board to a matter is required, then twenty four (24) hours notice, or
such
shorter notice if reasonable under the circumstances, shall be given. Notice
of
a special meeting shall also state the purpose or purposes for which such
meeting is called. Notice of a meeting need not be given to any Director
who
signs a waiver of notice or a consent to holding the meeting (which waiver
or
consent need not specify the purpose of the meeting) or an approval of the
minutes thereof, whether before or after the meeting, or who attends the
meeting
without protesting, prior to its commencement, the lack of notice to such
Director. All such waivers, consents and approvals shall be filed with the
Company records or made a part of the minutes of the meeting. A majority
of the
Directors present may adjourn any meeting to another time. If the meeting
is
adjourned for more than twenty-four (24) hours, notice of any adjournment
shall
be given prior to the time of the adjourned meeting to the Directors who
are not
present at the time of the adjournment. Meetings of the Board may be held
at the
Company's principal place of business in New York or such other place as
may be
approved by the Board. Directors may participate in a meeting through use
of
conference telephone or similar communications equipment, so long as all
Directors participating in such meeting can hear one another. Participation
in a
meeting in such manner constitutes presence in person at such meeting. Any
Major
Decision, any Non-Arbitrable Decision and any other decision to be made by
the
Board under this Agreement requires the affirmative vote of a majority of
the
entire Board of Directors cast in favor of that decision (each Director having
one vote). Notwithstanding the foregoing, any Unanimous Decision requires
the
affirmative vote of the entire Board of Directors cast in favor of that
Unanimous Decision.
(g)
Quorum.
A
quorum shall exist when a majority of the Directors are present.
(h)
Written
Consent.
Any
action required or permitted to be taken by the Board may be taken by the
Board
without a meeting if all of the Directors consent in writing to such action.
Such action by written consent shall have the same force and effect as a
vote at
a duly constituted meeting of the Board.
4.3 Officers.
(a) Appointment
of Officers.
The
Company may at any time appoint such officers as it deems necessary or advisable
for the operation of the business of the Company. Subject to approval of
all
compensation in accordance with Section 4.6, Directors may serve as officers.
The officers shall serve at the pleasure of the Company, subject to all rights,
if any, of an officer under any contract of employment. Any individual may
hold
any number of offices. The officers shall exercise such powers and perform
such
duties as shall be determined from time to time by the Company.
(b) Removal
and Resignation.
Subject
to the rights, if any, of an officer under a contract of employment, any
officer
may be removed, either with or without cause, by the Company at any time.
Any
officer may resign at any time by giving notice to the Board. Any resignation
shall take effect upon receipt of that notice or at any later time specified
in
that notice; and, unless otherwise specified in that notice, the acceptance
of
the resignation shall not be necessary to make it effective.
Page
10 of
60
Execution
Copy November 8, 2005
4.4 Devotion
to Company Business; Conflicts
of Interest; Non-Compete.
(a) The
Members and the Directors shall devote such time to the Company business
as they
deem reasonably necessary in furtherance of, and shall exercise their best
judgment in all matters relating to, the Company's Business. However, except
as
provided in this Section 4.4(a) (i.e., except for gross negligence, fraud,
bad
faith, breach of this Agreement or criminal conduct), no Member or Director
shall have liability to the Company or to the Members for any failure or
misfeasance on the part of such Member or Director whatsoever including,
without
limit, a failure or misfeasance with respect to any Member's or Director’s
obligations under this Agreement. Without limiting the generality of the
foregoing, the Company recognizes that innumerable decisions will have to
be
made by the Members and the Directors during the term of the Company which
will
require the Members and the Directors to exercise broad discretion. Accordingly,
each of the Members hereby waives its right to institute any legal proceeding
of
any kind whatsoever against another Member or a Director for any action taken
by, or any omission of, a Member or Director in its capacity as a Member
or
Director in the Company, except for gross negligence, bad faith, fraud, breach
of this Agreement or criminal conduct.
(b) Each
of
the Members understands that the other Members or their Affiliates (including
their designees to the Board) may be interested, directly or indirectly,
in
various other businesses and undertakings including those in competition
with
the Company. The Members hereby agree that the creation of the Company and
the
assumption by each of the Members of its duties hereunder shall be without
prejudice to its rights (or the rights of its Affiliates) to have such other
interests and activities and to receive and enjoy profits or compensation
therefrom, and each Member waives any rights it might otherwise have to,
by
reason of any duty otherwise owed to the Company or its Members, prevent
or
share or participate in such other interests or activities of the other Member
or the other Member's Affiliates. The Members and their Affiliates may engage
in
or possess any interest in any other business venture of any nature or
description independently or with others, including, but not limited to,
the
ownership, financing, leasing, operation, management, syndication, brokerage,
or
development of real property and gaming facilities, and neither the Company
nor
any other Member shall have the right by virtue of this Agreement or otherwise
to prevent or participate in any such venture or the income or profits derived
therefrom.
(c) No
Member
need disclose to any other Member or the Company any other business venture
in
which it or its Affiliates may have an interest or any other business
opportunity presented to it, even if such opportunity is of a character which,
if presented to the Company, could be taken by the Company, and each Member
and
its Affiliates shall have the right to take for its own account or to recommend
to others any such particular investment opportunity or business
venture.
(d) Notwithstanding
the foregoing provisions of this Section 4.4, during the first forty eight
(48)
months of this Agreement but not thereafter, any and all opportunities to
acquire, own, develop, operate and/or manage projects in the Harness Racing
and
VLT industry in New York State ("New York Harness Racing/VLT Opportunities")
shall be business opportunities of the Company and the Members shall owe
the
Company a fiduciary duty with respect to New York Harness Racing/VLT
Opportunities. The Members each agree for themselves and their respective
Affiliates, not to engage or invest in, independently or with others, any
New
York Harness Racing/VLT Opportunities, unless and until the Company, by
unanimous vote of the Members has elected not to pursue such New York Harness
Racing/VLT Opportunity and has approved the pursuit of such New
York
Harness Racing/VLT Opportunity
by any
of the Members (or their Affiliates) for their own account; provided, that
a
vote of the Members shall be held within fifteen (15) days after receipt
by the
Members of all information related to such New York Harness Racing/VLT
Opportunity from the Member presenting the New York Harness Racing/VLT
Opportunity to the Company. It is understood and acknowledged that any election
by the Members to pursue such opportunity must include the obligation by
the
Members to contribute, on a prorata basis, all equity required for the pursuit
of the opportunity.
Page
11 of
60
Execution
Copy November 8, 2005
4.5 Transactions
between the Company and the Directors, Members and
Affiliates.
Notwithstanding that it may constitute a conflict of interest, the Directors,
Members and their Affiliates may provide the Company with services (e.g.
management, accounting, legal, computer support, engineering, etc.) provided
that such services are reasonably necessary, are at a price that is competitive
with those available from non-affiliates in an arms-length transaction and
the
terms and conditions of such transaction are approved by the Board. Directors,
Members and their Affiliates shall fully disclose to the Company any ownership
or financial interest they may have in the services provided or recommended
to
the Company. The Members and the Directors may also engage in any other
transaction with the Company so long as such transaction is not expressly
prohibited by this Agreement and so long as the terms and conditions of such
transaction are approved by the Board. The Company (or a subsidiary of the
Company) has entered into a management agreement (the "Management Agreement")
with Nevada Gold to manage all operations, including casino operations, racing
operations (subject to the input and approval rights of Southern Tier as
hereinafter provided), food and beverage operations, entertainment and hotel
operations, of (a) the Tioga Downs Complex, and (b) if the acquisition of
the
Xxxxxx Xxxxx Complex is consummated, the Xxxxxx Xxxxx Complex. The terms
of such
management are set forth in the management agreement entered into on the
date of
execution of this Agreement between the Company (or a subsidiary of the Company)
and Nevada Gold. As long as Xxxxxxx Xxxxx (or in the event of retirement,
death
or disability of Xxxxxxx Xxxxx, an Approved Substitute Manager) is the managing
member of Southern Tier and designated director of Southern Tier pursuant
to
Section 4.2(a), Southern Tier shall have the right to:
(a)
designate the manager (the "Racing Manager") for the harness racing and
simulcast facility operations (the "Racing Operations") of (i) the Tioga
Downs
Complex, and (ii) if the acquisition of the Xxxxxx Xxxxx Complex is consummated,
the Xxxxxx Xxxxx Complex,
(b)
approve the compensation and all employment decisions related to the Racing
Manager, and
(c)
approve the operating expenses and capital expenditure allocations for the
Racing Operations in the pre-opening budgets, start-up budgets and Annual
Plans
that are prepared by Nevada Gold, as manager, for submission to the
Board.
The
selection of the general manager for the Project (the "General Manager")
designated by Nevada Gold and the Racing Manager designated by Southern Tier
shall be subject to the approval of the Board. The compensation of the General
Manager and the Racing Manager shall be an expense of the Company (or its
subsidiary) and shall be part of the Operating Budget. No Member or Director
shall represent to any party that it or he is a manager of the Tioga Downs
Complex or the Xxxxxx Xxxxx Complex unless it or he is a manager under a
Management Agreement or is the General Manager or Racing Manager. The Board
will
hold regular quarterly meetings with the General Manager and the Racing Manager
to receive an update on the operations of the Company.
Page
12 of
60
Execution
Copy November 8, 2005
4.6 Payments
to Directors.
Each
Director shall be reimbursed for reasonable out-of-pocket expenses for attending
Board meetings and attending to other Company Business. Except as specified
in
this Agreement, no Director is entitled to remuneration for services rendered
or
goods provided to the Company in his or her capacity as a Director.
4.7 Resolution
of Voting Deadlock.
In the
event of a failure of the Board to approve any Major Decision, any Member
may,
by Notice to the other Members, require that the matter be decided pursuant
to
the terms set forth in this Section 4.7.
(a) The
highest ranking executive officer of each of the Members shall meet in person
within ten (10) days following the Notice and attempt in good faith to resolve
the disagreement in one day.
(b) If
the
disagreement is not resolved pursuant to Section 4.7(a), then any Member
may, by
Notice to the other Members, elect to proceed with an arbitration which shall
be
conducted in accordance with the following procedures:
(i) The
Members shall endeavor to appoint a single qualified and disinterested
Arbitrator. For purposes of this Section 4.7, an Arbitrator (the "Arbitrator")
shall be an individual who: (A) is independent of, and who has not performed
work for, any Member; and who: (x) is a partner with any of the six largest
public accounting firms in the United States; and (y) has at least five (5)
years of auditing or accounting experience in the gaming industry; or, (B)
if
the Members so agree prior to the time for appointment herein provided, but
not
otherwise, is an expert in a field other than accounting (including casino
management) having qualifications agreed to by the Members. Such Arbitrator,
if
agreed to by the Members, shall meet with the Board within thirty (30) days
of
such appointment to discuss the disputed decision and a vote of the Board
and
the Arbitrator shall be held, with a majority of such group authorized to
make
the decision.
(ii) If
the
Members cannot agree on a single Arbitrator within twenty (20) days after
an
election to submit a Major Decision to arbitration, then Nevada Gold, on
the one
hand, and TrackPower and Southern Tier, on the other hand, shall each appoint
one Arbitrator within ten (10) days following such twenty (20) day period.
The
two appointed Arbitrators shall within ten (10) days of such referral appoint
a
third Arbitrator, and if such Arbitrators are not able to agree on such third
Arbitrator within such time, then, on five (5) days' Notice in writing to
the
other Arbitrator, either Arbitrator shall apply to the branch of the American
Arbitration Association in New York, New York to designate and appoint such
third Arbitrator. The three Arbitrators shall meet with the Board within
twenty
(20) days after the appointment of the third Arbitrator to discuss the disputed
decision and a vote of the Board and the Arbitrators shall be held, with
a
majority of such group authorized to make the decision.
Page
13 of
60
Execution
Copy November 8, 2005
(iii) If
either
Nevada Gold, on the one hand, or TrackPower and Southern Tier, on the other
hand, fails timely to appoint an Arbitrator pursuant to Section 4.7(b) (ii),
then the single Arbitrator designated by the other shall act as the sole
Arbitrator and shall be deemed to be the unanimously approved Arbitrator
to
resolve such dispute.
(iv) The
fees
and expenses of the Arbitrators shall be paid by the Company.
(v) The
Arbitrators shall make their decision based solely on the best interests
of the
Company. Unless otherwise agreed, all arbitration proceedings shall be conducted
in New York, New York, at a law office in New York, New York, designated
by the
Member invoking arbitration.
ARTICLE
5: PROJECT FINANCING FOR THE GAMING COMPLEXES
5.1 Senior
Note Financing.
The
Members acknowledge that the Company will arrange certain senior note financing
for the development of the Xxxxxx Xxxxx Complex and the Tioga Downs Complex,
from a lender (the “Lender”) in the aggregate amount of approximately $70.0
million (the “Senior Note Financing”). In connection with the Senior Note
Financing, Nevada Gold agrees to provide an approximately $5.0 million guarantee
to the Lender and, if collateral is required by the Lender with respect to
such
guarantee, then Nevada Gold agrees to provide cash or a letter of credit
to the
Lender to the extent required to collateralize such guarantee on the terms
set
forth below. The Company will endeavor to obtain Senior Note Financing on
a
non-recourse basis, with payments of interest only at an interest rate of
approximately nine percent (9%) per annum and a term of approximately five
to
seven years, or such other terms as the Board shall approve. If Nevada Gold
provides collateral in the form of cash or if cash is drawn from a guaranty
or a
letter of credit provided as collateral, such amounts shall be treated as
loans
by Nevada Gold to the Company and evidenced by subordinated notes (the
“Subordinated Notes”) bearing interest at the rate of one percent (1%) per annum
above the interest rate of the Senior Note Financing and maturing thirty
(30)
days following the maturity date of the Senior Note Financing. The Subordinated
Notes will be unsecured obligations of the Company. The Company shall pay
all
reasonable bank fees incurred by Nevada Gold for any required letter of
credit.
The
Company shall proceed with the development of the Tioga Downs Complex whether
or
not the Company acquires the Xxxxxx Xxxxx Complex. If the Company does not
acquire the Xxxxxx Xxxxx Complex, then the Initial DIP Financing in the net
amount of $1,414,000 contributed by TrackPower and Southern Tier shall be
returned to them as and when repaid in accordance with, and subject to the
limitations of, Section 7.1(f). Additionally, the Senior Note Financing will
decrease from approximately $70 million to approximately $25 million and
Nevada
Gold’s guarantee will decrease from $5.0 million to $2.5 million.
ARTICLE
6: FAIR MARKET VALUE; INDEPENDENT APPRAISALS
6.1 Fair
Market Value.
(a) The
fair
market value (“Fair Market Value”) of any property shall mean the price at which
a willing seller would sell and a willing buyer would buy such property having
full knowledge of the relevant facts, in an arm’s-length transaction without
time constraints, and without being under any compulsion to buy or sell,
or, in
a transaction between Members, the value otherwise agreed by the selling
Member(s) (the “Selling Member”) and the purchasing Member(s) (the “Purchasing
Member”) to be the Fair Market Value.
Page
14 of
60
Execution
Copy November 8, 2005
(b)
The Fair
Market Value of any property other than a Membership Interest or the Company
shall be determined by an independent appraisal from an independent appraiser
selected by the Board.
(c) The
Fair
Market Value of the Company or a Membership Interest in the Company shall
be
determined in accordance with this Section 6.1(c). Membership Interests in
the
Company shall be valued without regard to classification of ownership, rights
to
Excess Cash Flow, incidents of ownership such as voting rights, or level
of
Ownership Percentage in the Company. The Fair Market Value of the Company
shall
be determined utilizing then current methods for the valuation of gaming
companies (and to the extent other businesses represent a material portion
of
the Company’s business, then current methods for the valuation of such
businesses shall be used for that portion of the business of the Company)
including without limitation EBIDTA multiples, asset valuations or cash flow
analyses, when appropriate. The Fair Market Value of all of the Membership
Interests shall be equal to the Fair Market Value of the Company, less all
liabilities of the Company, including Debt, and Unreturned Capital
Contributions. The Fair Market Value of each Member’s Membership Interests shall
be (i) the Percentage represented by such Member’s Membership Interests,
multiplied by the Fair Market Value of all of the Membership Interests,
plus
(ii) any
Unreturned Capital Contributions of such Member. If the Selling Member and
the
Purchasing Member cannot agree on a Fair Market Value of a Membership Interest,
then the Members shall proceed under the terms of Section 6.2 to provide
for an
independent appraisal process to determine the Fair Market Value.
(d) Notwithstanding
the foregoing, the Members have agreed on the Fair Market Value of the
contributions of property contributed to the Company by the Members as set
forth
in Section 7.1 hereof. In addition, the Members may mutually agree on the
Fair
Market Value of any property, including a Membership Interest in the Company,
by
written agreement.
6.2 Independent
Appraisals.
The
Selling Member shall provide a Notice to the Purchasing Members, which notice
shall include the name, mailing address and telephone number of an appraiser
appointed by it, to determine such fair market value (“First Appraiser”). The
Purchasing Members (or the Company if the Company is the purchaser) shall
then
appoint one appraiser and furnish the name, mailing address and telephone
number
of the appraiser so appointed to the Selling Member (“Second Appraiser”). If any
Member fails to appoint an Appraiser to which it or he is otherwise entitled,
the other appointed appraiser shall proceed to determine the Fair Market
Value
of the Membership Interests or interest therein to be conveyed and such
determination shall be binding on the Selling Member and Purchasing Members
(or
the Company if the Company is the purchaser). If, however, another appraiser
is
appointed, then the two appraisers shall meet and attempt to reach a
determination of the Fair Market Value. If such appraisers select Fair Market
Values within five percent (5%) of each other, then the mathematical average
of
the two (2) appraisals shall constitute the Fair Market Value of the Membership
Interests or interest therein. If the Fair Market Value is not determined
pursuant to the foregoing provisions of this Section 6.2, the two appraisers
shall then select a third appraiser (“Third Appraiser”) and the three appraisers
shall then make such determination. A decision by any two of the appraisers
(or,
in instances where no two appraisers can agree, the mathematical average
of the
two closest appraisals, and the average of the appraisals if no two appraisals
are closest) shall be final and conclusive on the Selling Member and Purchasing
Members (or the Company if the Company is the purchaser) as to such Fair
Market
Value. In the event no Third Appraiser can be agreed upon by the two appraisers,
or by the Selling Member and Purchasing Members (or the Company if the Company
is the purchaser), the third appraiser shall be appointed by the then Senior
Federal District Judge for the Southern District of New York, and application
to
such Court may be made by either Selling Member or Purchasing Members (or
the
Company if the Company is the purchaser). Each appraiser or appraisal firm
appointed pursuant to this Section must be a member of the American Society
of
Appraisers with an ASA accreditation or must be certified as a Certified
Valuation Analyst. The appraisers must establish the Fair Market Value
consistent with the intent of the parties as established in Section 6.1 hereof
and shall generally appraise based on American Society of Appraisers' standards,
utilizing EBIDTA multiples, asset valuations or cash flow analyses, when
appropriate, for determination of Fair Market Value. Each Member (and the
Company if the Company is the purchaser) shall pay the fees and expenses
of its
own appraiser and one-half (1/2) of the fees and expenses of any Third
Appraiser. Each appraiser appointed shall have been engaged for at least
five
(5) years prior to the date of his appointment in the business of appraising
gaming and entertainment businesses or the applicable business that is being
appraised, and shall not otherwise be disqualified from exercising an
independent judgment as to the fair market value determination to be
made.
Page
15 of
60
Execution
Copy November 8, 2005
ARTICLE
7: CAPITAL CONTRIBUTIONS; LOANS
7.1 Initial
Capital Contributions.
(a) In
accordance with the terms of the Contribution Agreement, certain Affiliates
of
TrackPower and Southern Tier have contributed to the Company all of their
right,
title and interest in and to the Tioga Downs Contributed Assets. The Members
agree that the Fair Market Value of the Tioga Downs Contributed Assets is
$10,221,408, including $5,221,408 in cash, and $5,000,000 in increased value.
As
a result of such contribution, TrackPower and Southern Tier have each been
credited with a capital account equal to $5,110,704. For purposes of determining
the pro-rata capital contributions required of each Member from and after
the
date hereof, the $5,000,000 in increased value will not be taken into account
in
determining TrackPower's and Southern Tier's capital contributions. Certain
Affiliates of TrackPower and Southern Tier have also contributed to the Company
all of their right, title and interest in and to the Xxxxxx Xxxxx Contributed
Assets. The Members agree that the Fair Market Value of the Xxxxxx Xxxxx
Contributed Assets is $1,745,360. As a result of such contribution, $872,680
shall be credited to each of TrackPower's and Southern Tier's Capital Account,
resulting in a total Capital Account of $5,983,384 for each of TrackPower
and
Southern Tier.
(b) In
accordance with the terms of the Contribution Agreement, an Affiliate of
Nevada
Gold has contributed to the Company all of its right, title and interest
in and
to the TDR Loan ($1,001,550 in principal outstanding). In addition, an Affiliate
of Nevada Gold made the Xxxxx/Vestin Settlement Payment ($526,550) on behalf
of
the Company. As a result of the contribution of the TDR Loan and the
Xxxxx/Vestin Settlement Payment, Nevada Gold has been credited with a Capital
Account equal to $1,528,100 and the TDR Loan shall be converted from debt
to
equity.
Page
16 of
60
Execution
Copy November 8, 2005
(c) The
equity financing necessary to complete the development of the Tioga Downs
Complex will be approximately $10,000,000. The equity financing necessary
to
complete the development of the Xxxxxx Xxxxx Complex will be approximately
$10,000,000. These amounts ($20,000,000) are inclusive of the capital
contributions made pursuant to Section 7.1(a) (with the exception of the
$5,000,000 in increased value) and Section 7.1(b), which total $8,494,868.
If
the Company is not successful in acquiring the Xxxxxx Xxxxx Complex, then
the
Members shall not be required to contribute any remaining amount of the
$10,000,000 equity financing for the Xxxxxx Xxxxx Complex.
(d) Nevada
Gold agrees to make the next $5,438,668 in capital contributions to the Company,
as and when required for items set forth in the Cost Budget for the Tioga
Downs
Complex and the Cost Budget for the Xxxxxx Xxxxx Complex, in order to equalize
the capital contributions of the Members in accordance with their Percentages
as
follows:
|
(i)
|
Nevada Gold: | $6,966,768 | |
|
(ii)
|
TrackPower: | $3,483,384 | |
|
(iii)
|
Southern Tier: | $3,483,384 | |
(e) Once
Nevada Gold has made the contributions described in Section 7.1(d), each
Member
agrees to contribute to the capital of the Company, as follows:
(i)
Nevada Gold will contribute $3,033,232, as and when required for items set
forth
in the Cost Budgets for the Tioga Downs Complex and the Xxxxxx Xxxxx Complex,
on
a pari passu basis with TrackPower and Southern Tier.
(ii)
TrackPower will contribute $1,516,616, as and when required by the Company
for
items set forth in the Cost Budgets for the Tioga Downs Complex and the Xxxxxx
Xxxxx Complex, on a pari passu basis with Southern Tier and Nevada
Gold.
(iii)
Southern Tier will contribute $1,516,616, as and when required by the Company
for items set forth in the Cost Budgets for the Tioga Downs Complex and the
Xxxxxx Xxxxx Complex, on a pari passu basis with TrackPower and Nevada
Gold.
(f) If
the
Company is not successful in acquiring the Xxxxxx Xxxxx Complex, then the
Company shall return to TrackPower and Southern Tier the interest in the
Initial
DIP Financing (in the net amount of $1,414,000) that each of them contributed,
and their Capital Contributions and Capital Accounts shall be adjusted
accordingly; provided, that no distribution (or portion thereof) will be
made to
the extent such distribution (or portion thereof) would cause the Capital
Contributions (as adjusted for such distribution and not including the increased
value for the Tioga Downs Complex described in Section 7.1(a)) of either
TrackPower and Southern Tier to be less than 25% of the aggregate Capital
Contributions (as adjusted for such distribution and not including the increased
value for the Tioga Downs Complex described in Section 7.1(a)) made by all
Members at the time of such distribution.
Page
17 of
60
Execution
Copy November 8, 2005
(g) Aggregate
Capital Contributions made by the Members pursuant to this Section 7.1 shall
not
exceed (i) $10 million in the aggregate for the Tioga Downs Complex or (ii)
$10
million in the aggregate for the Xxxxxx Xxxxx Complex, except as provided
in
Section 7.2.
(h) The
Company shall have three wholly owned subsidiaries, Tioga Downs Racetrack,
LLC,
Xxxxxx Xxxxx Acquisition, LLC and Tioga Management Co., Inc. The capital
contributions described in Section 7.1(a) represent existing equity in Tioga
Downs Racetrack, LLC and Xxxxxx Xxxxx Acquisition, LLC. Unless otherwise
agreed
by the Board, the capital contributions described in Section 7.1 (b) through
(f)
shall be loaned or contributed as equity to either Tioga Downs Racetrack,
LLC or
Xxxxxx Xxxxx Acquisition, LLC, as appropriate.
7.2 Additional
Capital Contributions; Advances from Nevada Gold.
(a) In
the
event the Company requires financing to fund Cost Budget overruns for the
Tioga
Downs Complex and/or the Xxxxxx Xxxxx Complex or operating deficits of the
Company after all initial Capital Contributions of the Members as set forth
in
Section 7.1 above have been made, then, the Board may elect to require (i)
additional Capital Contributions by the Members or (ii) in the case of Cost
Budget overruns, advances from Nevada Gold, but only on the terms and conditions
set forth in Section 7.2(b).
(b) If
the
Lender has not required a guaranty of $5,000,000 ($2,500,000 in the event
the
Xxxxxx Xxxxx Complex is not acquired), or if the Lender has required such
guaranty but permits all or a portion of it to be used to fund Cost Budget
overruns for the Tioga Downs Complex and/or the Xxxxxx Xxxxx Complex, then
Nevada Gold shall provide financing to the Company, up to the amount of
$5,000,000 (or $2,500,000 in the event the Xxxxxx Xxxxx Complex is not acquired)
to fund Cost Budget overruns for the Tioga Downs Complex and/or the Xxxxxx
Xxxxx
Complex. Any and all such advances shall be treated as unsecured loans by
Nevada
Gold to the Company and evidenced by subordinated notes bearing interest
at the
rate of one percent (1%) per annum above the interest rate of the Senior
Note
Financing and maturing thirty (30) days following the maturity date of the
Senior Note Financing.
(c) If
financing from Nevada Gold is not required under Section 7.2(b), and the
Board
elects to require additional Capital Contributions by the Members, the Board
shall give written notice of such Cost Budget overruns or operating deficits
to
all of the Members, which notice shall summarize, with reasonable particularity,
the specific Cost Budget overruns or operating deficits, as the case may
be, the
Company's actual and projected cash obligations, cash on hand, and the projected
sources and amounts of future cash flow and which notice shall also specify
a
contribution date ("Contribution Date") ( which shall not be less than thirty
(30) days following the effective date of such notice) upon which each Member
shall have the obligation to contribute to the capital of the Company, in
cash,
such Member's Percentage (as of the Contribution Date) of such operating
deficits ("Cash Deficit Contribution"). If any Member (the "Non-Contributing
Member") fails to contribute all or any portion of the Cash Deficit Contribution
or any other amount required to be made by such Member pursuant to Section
7.1
("Delinquent Contribution"), and provided that one or more of the other Members
(collectively, the "Contributing Members") have contributed (in the proportion
of their ownership Percentages unless otherwise agreed) to the capital of
the
Company all of the Cash Deficit Contribution or any other amount required
to be
made by the Non-Contributing Member pursuant to Section 7.1 within thirty
(30)
days following the Contribution Date, then in such event there shall be a
dilution penalty of 150% of every dollar not contributed by the Non-Contributing
Member. The Members agree that if either (but not both) Southern Tier or
TrackPower is the Non-Contributing Member, then the other shall have the
first
right but not the obligation to contribute 100% of the Cash Deficit Contribution
or other amount required by Section 7.1 of such Non-Contributing Member,
such
election to be exercised within five (5) days following the Contribution
Date.
The dilution penalty shall be determined as follows: the Percentage of the
Contributing Members will be increased by an amount which is arrived at by
multiplying 150% times a fraction, the numerator of which is the amount
contributed by the Contributing Members on behalf of the
Non-Contributing Member, and the denominator of which
is the
aggregate Capital Contributions of all of the Members after the making of
the
additional Capital Contribution by the Contributing Members. The
Percentage of the Non-Contributing Member will be decreased
by the
same amount. For example, if (i) $1,000,000 in Cash Deficit Contributions
are
required, (ii) Nevada Gold contributes 100% of such amount, and (iii) the
aggregate Capital Contributions of all of the Members after the making of
the
$1,000,000 Cash Deficit Contribution is $19,000,000, then Nevada Gold's
Percentage shall be increased by 3.95%, calculated as follows:
Page
18 of
60
Execution
Copy November 8, 2005
150%
X
$500,000/$19,000,000 = 3.95%
Trackpower's
Percentage shall be decreased by 1.975% and Southern Tier's Percentage shall
be
decreased by 1.975%.
For
purposes of this Section, the aggregate amount of Capital Contributions made
by
the Members shall not include the amount of $5,000,000 associated with the
Tioga
Downs Contributed Amount (representing the incremental increase in value),
which
was credited one-half to TrackPower and one-half to Southern Tier.
(d) If,
as a
result of the dilution penalty, a Member’s (the "Diluted Member") ownership
Percentage falls to or below 50% of its initial Percentage set forth in Section
3.1, then the other Members (in the proportion of their respective Percentages
unless otherwise agreed) shall have the right by notice ("Purchase Notice")
to
purchase all of the remaining Membership Interests of the Diluted Member
at a
purchase price equal to 85% of the Fair Market Value of the remaining Membership
Interests of the Diluted Member. The Purchase Notice may designate any date,
beginning ninety (90) days before the date of such Notice, and ending on
the
date of such Notice, as to the effective date on which Fair Market Value
of the
Membership Interests being purchased shall be determined. Upon giving of
the
Purchase Notice, the Fair Market Value of the Membership Interests shall
be
determined pursuant to Article 6. The purchase price shall be payable
50%
in cash due sixty (60) days from the date upon which Fair Market Value is
determined pursuant to Article 6 (the "Valuation Date"), with the
balance
payable in 4 equal annual payments, plus interest, with the first installment
due one year following the Valuation Date. The outstanding balance shall
accrue
interest at the interbank borrowing rate that banks charge each other for
overnight loans (the "fed funds rate").
(e) If,
as a
result of this Section 7.2 or any other provisions of this Agreement, a Member's
Percentage increases to 60% or greater, then the Board of Directors shall
be
increased to five members and such Member shall have the right to elect three
directors to the Board, and each of the other two Members shall have the
right
to elect one director (or if there is only one other Member, the Member holding
a 60% or greater Percentage shall have the right to elect three directors
to the
Board and the other Member shall have the right to elect two
directors).
Page
19 of
60
Execution
Copy November 8, 2005
7.3 No
Withdrawal.
Except
as specifically provided in this Agreement, no Member will be entitled to
withdraw all or any part of such Member’s capital from the Company or, when such
withdrawal of capital is permitted, to demand a distribution of property
other
than cash.
7.4 No
Interest on Capital.
No
Member will be entitled to receive interest on such Member’s Capital
Contribution or Capital Account.
7.5 Loans
by Members.
Any
advances by a Member to the Company shall constitute a loan from the Member
to
the Company (“Member Loan”), and shall bear interest at an interest rate agreed
to by the Board, and shall not be deemed to be a Capital Contribution. A
loan
account shall be established and maintained for the Member making a loan
separate from such Member's Capital Account. Loans made by a Member to the
Company will be credited to the Member's loan account. A credit balance in
any
Member’s loan account shall constitute a liability of the Company to such
Member, and all such advances and accrued interest shall be repaid prior
to any
distributions to the Members unless otherwise provided by the terms of the
loan.
7.6 Capital
Accounts.
A
Capital Account will be maintained for each Member.
(a)
Each
Member’s Capital Account will be credited with (i) the Member's Capital
Contributions (net of liabilities secured by any property contributed that
the
Company takes subject to or assumes), (ii) the Member’s allocable share of
Profits and (iii) all other items properly credited to the Member’s Capital
Account.
(b)
Each
Member’s Capital Account will be charged with (i) the amount of cash distributed
to the Member by the Company, (ii) the Fair Market Value of property distributed
to the Member by the Company (net of liabilities secured by such property
that
the Member takes subject to or assumes), (iii) the Member’s allocable share of
Losses and (iv) all other items properly charged to the Member’s Capital
Account.
(c)
Upon
the
distribution of property in kind, all of the property of the Company, including
the property to be distributed, will be revalued and any unrealized appreciation
or depreciation with respect to any asset shall be allocated among the Members
in accordance with the provisions of Article 8 as though such assets had
been
sold for their Fair Market Value on the date of Distribution. The Members'
Capital Accounts will be adjusted to reflect both the deemed realization
of such
appreciation or depreciation and the Distribution of such property in accordance
with Regulations § 1.704-1(b)(2)(iv)(e), (f).
(d) The
Capital Account of each Member shall be determined and maintained in accordance
with Code Section 704(b) and the regulations promulgated
thereunder.
7.7 Transfer.
If all
or any part of any Membership Interest is transferred in accordance with
this
Agreement, the Capital Account and Membership Interest of the Transferor
(including a pro-rata share of Capital Contributions) that is attributable
to
the transferred Membership Interest will carry over to the Transferee, unless
otherwise provided by the express terms of this Agreement.
Page
20 of
60
Execution
Copy November 8, 2005
7.8 Liability
to Company.
Each
Member is liable to the Company for any Capital Contribution or Distribution
that has been wrongfully or erroneously returned or paid to such Member in
violation of the Act, the Articles or this Agreement.
ARTICLE
8: ALLOCATION
OF PROFITS AND LOSSES
8.1 Profits
and Losses.
(a) Allocation
of Losses other than from Capital Transactions.
All
Losses, other than Losses arising from Capital Transactions, shall be allocated
to the Members in proportion to their respective Percentages.
(b) Allocation
of Profits other than from Capital Transactions.
All
Profits, other than Profits from Capital Transactions, shall be allocated
in
accordance with the following order and priority:
(i) first,
to
those Members who were allocated Losses (or portions thereof) under
Section 8.1(a) in proportion to such Losses until the cumulative Profits
allocated pursuant to this Section 8.1(b) to such Members are equal to the
total
of such Losses allocated to such Members for all prior periods; and
(ii) second,
to the Members in proportion to their respective Percentages.
(c) Allocation
of Losses from Capital Transactions.
All
Losses arising from Capital Transactions shall be allocated among the Members
in
accordance with their respective Percentages.
(d) Allocation
of Profits from Capital Transactions
All
Profits shall be allocated in accordance with the following order and
priority:
(i) first,
to
those Members who were allocated Losses (or portions thereof) under
Section 8.1(c) in proportion to such Losses until the cumulative Profits
allocated pursuant to this Section 8.1(d) to such Members are equal to the
total
of such Losses allocated to such Members for all prior periods; and
(ii) second,
to the Members in accordance with their respective Percentages.
(e) Special
Allocation of Profits and Losses from Initial DIP
Financing.
If
Section 7.1(f) applies such that the interest and fees in the Initial DIP
Financing is returned to TrackPower and Southern Tier, then all Profits and
Losses with respect to the Initial DIP Financing shall be allocated to
TrackPower and Southern Tier pro rata.
Page
21 of
60
Execution
Copy November 8, 2005
8.2 Regulatory
Allocations.
(a) Notwithstanding
any of the foregoing provisions of Section 8.1 to the contrary:
(i) If
during
any fiscal year of the Company there is a net increase in Minimum Gain
attributable to a Member Nonrecourse Debt that gives rise to Member Nonrecourse
Deductions, each Member bearing the economic risk of loss for such Member
Nonrecourse Debt shall be allocated items of Company deductions and losses
for
such year equal to such Member's share of Member Nonrecourse Deductions,
as
determined in accordance with applicable Treasury regulations.
(ii) If
for
any fiscal year of the Company there is a net decrease in Minimum Gain
attributable to Company Nonrecourse Liabilities, each Member shall be allocated
items of Company income and gain for such year equal to such Member's share
of
such net decrease, as determined in accordance with applicable
Regulations.
(iii) If
for
any fiscal year of the Company there is a net decrease in Minimum Gain
attributable to a Member Nonrecourse Debt, each Member bearing the economic
risk
of loss for such Member Nonrecourse Debt shall be allocated items of Company
income and gain for such year equal to such Member's share of such net decrease,
as determined in accordance with applicable Regulations.
(b) The
Losses allocated pursuant to this Article 8 shall not exceed the maximum
amount
of Losses that can be allocated to a Member without causing or increasing
a
deficit balance in the Member's Adjusted Capital Account. All Losses in excess
of the limitations set forth in this Section 8.2(b) shall be allocated to
Members with positive Adjusted Capital Account balances remaining at such
time
in proportion to such balances.
(c) In
the
event that a Member unexpectedly receives any adjustment, allocation or
distribution described in Treasury regulations section
1.704-1(b)(2)(ii)(d)(4)-(6) that causes or increases a deficit balance in
such
Member's Adjusted Capital Account, items of Company income and gain shall
be
allocated to that Member in an amount and manner sufficient to eliminate
the
deficit balance as quickly as possible.
(d) The
allocations set forth in subsections (b), (c), and (d) (collectively, the
"Regulatory Allocations") are intended to comply with certain requirements
of
the Treasury regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations that are made be offset either with
other
Regulatory Allocations or with special allocations pursuant to this Section
8.1(d). Therefore, notwithstanding any other provisions of this Article 8
(other
than the Regulatory Allocations), the Board shall make such offsetting special
allocations in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Member's Adjusted Capital Account balance
is, to the extent possible, equal to the Adjusted Capital Account balance
such
Member would have had if the Regulatory Allocations were not part of this
Agreement and all Company items were allocated pursuant to the remaining
sections of this Article 8.
(e) In
accordance with Section 704(c) of the Internal Revenue Code and the Treasury
regulations thereunder, income and deductions with respect to any property
contributed to or revalued by the Company shall, solely for federal income
tax
purposes, be allocated among the Members in a manner to take into account
any
variation between the adjusted tax basis of such property to the Company
and its
fair market value at the time of contribution or revaluation. In making such
allocations, the Board shall use the remedial allocation method unless the
Members agree to the contrary.
Page
22 of
60
Execution
Copy November 8, 2005
(f) Except
as
otherwise provided in Section 8.2, if a Membership Interest is transferred
during any Fiscal Year (whether by Transfer or liquidation of a Membership
Interest, or otherwise), the books of the Company will be closed as of the
effective date of Transfer. The Profits or Losses attributed to the period
from
the first day of such Fiscal Year through the effective date of Transfer
will be
allocated to the Transferor, and the Profits or Losses attributed to the
period
commencing on the effective date of Transfer will be allocated to the
Transferee. In lieu of an interim closing of the books of the Company and
with
the agreement of the Transferor and Transferee, the Company may agree to
allocate Profits and Losses for such Fiscal Year between the Transferor and
Transferee based on a daily proration of items for such Fiscal Year or any
other
reasonable method of allocation (including an allocation of extraordinary
Company items, as determined by the Company, based on when such items are
recognized for federal income tax purposes).
8.3 Tax
Credits.
Any tax
credit, and any tax credit recapture, will be allocated to the Members in
the
same ratio that the federal income tax basis of the asset (to which such
tax
credit relates) is allocated to the Members under the Section 46 Regulations,
and if no basis is allocated, in the same manner as Profits are allocated
to the
Members under Section 8.1.
ARTICLE
9: DISTRIBUTIONS
9.1 Distributions.
Unless
the Members unanimously agree otherwise, the Company will make distributions
to
its Members of 100% of Excess Cash Flow (as defined below) no later than
forty
five (45) days after the end of each fiscal quarter in the following order
of
priority:
(a) First,
the Company will make distributions to TrackPower and Southern Tier, on a
50/50
basis, until each has received the cumulative amount of $2,500,000 (the
cumulative amount of which represents the $5,000,000 in increased value of
the
Tioga Downs Contributed Assets).
(b) Second,
the Company will make distributions to the Members in proportion to their
Capital Contributions until the Unreturned Capital Contributions of all of
the
Members equal zero.
(c) Third,
the Company will distribute the remaining Excess Cash Flow, other than
distributions of Net Sales Cash, to the Members in proportion to their
respective Percentages.
(d) Fourth,
the Company will make distributions of Net Sales Cash to the Members in
accordance with their respective Percentages.
(e) Distributions
made pursuant to the Dissolution and Liquidation of the Company will be made
pursuant to Article 13.
Page
23 of
60
Execution
Copy November 8, 2005
Notwithstanding
the foregoing, the distributions to Members (other than tax distributions
under
Section 9.5) shall not be made until all Member Loans (including the
Subordinated Notes and any loans under Section 7.2(b)) have been fully repaid,
and distributions, including tax distributions under Section 9.5, shall not
be
in excess of that entitled to be made pursuant to any indenture or credit
facility entered into by the Company. As used herein, “Excess Cash Flow” means
EBIDTA less:
(i)
management
fees (to the extent not taken into account in the calculation of EBIDTA),
(ii)
capital
expenditures approved by the Board and actually paid,
(iii)
interest,
(iv)
tax
distributions made pursuant to Section 9.5 actually paid to Members within
forty
five (45) days after the end of each fiscal quarter,
(v)
scheduled
principal payments on debt of the Company, and
(vi)
Reserves.
9.2 Other
Distributions.
Unless
the Members otherwise unanimously agree, the Members intend that all
Distributions, except for Distributions under Section 9.5, will be made to
the
Members in accordance with Section 9.1. In the event any Distribution is
made
otherwise than in accordance with Sections 9.1 or 9.5, without the unanimous
consent of the Members, any excess Distribution to a Member will be treated
as
an advance or loan made by the Company to such Member, payable to the Company
with interest payable at the Interest Rate and on demand.
9.3 Payment.
Any
Distribution will be made to a Member only if such Person owns a Membership
Interest on the date of Distribution, as reflected on the books of the
Company.
9.4 Withholding.
If
required by the Code or by state or local law, the Company will withhold
any
required amount from Distributions to a Member for payment to the appropriate
taxing authority. Any amount so withheld from a Member will be treated as
a
Distribution by the Company to such Person. Each Member agrees to timely
file
any agreement that is required by any taxing authority in order to avoid
any
withholding obligation that would otherwise be imposed on the
Company.
9.5 Tax
Distributions.
Unless
the Members unanimously agree otherwise, the Company will make distributions
to
its Members no later than forty five (45) days after the end of each fiscal
quarter of an amount equal to 40% of the Profits of the Company allocated
to
each Member. Any payments made under this Section 9.5 to a Member shall be
deemed to be a draw against such Member’s share of future distributions under
Section 9.1, so that such Member’s share of such future distributions shall be
reduced by the amounts previously drawn under this Section 9.5 until the
aggregate reductions in such distributions equal the aggregate draws made
under
this Section 9.5.
Page
24 of
60
Execution
Copy November 8, 2005
ARTICLE
10: REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Representations
and Warranties of Members.
As used
in this Article 10, the term "Agreement" includes this Agreement and the
Management Agreement. Each of the Members represents and warrants (which
representations and warranties shall survive the execution hereof) to the
Company and each of the other Members that, as of the signing of this
Agreement:
(a)
(i) Such
Member is duly organized, validly existing and in good standing under the
laws
of the jurisdiction where it purports to be organized, and is a United States
Person;
(ii) Such
Member has full power and authority to enter into and perform this
Agreement;
(iii) All
actions necessary to authorize the signing and delivery of this Agreement
and
the performance of the respective obligations of the Member to this Agreement,
have been duly taken;
(iv) This
Agreement has been duly signed and delivered by a duly authorized officer
or
other representative of each of the Members that are signatories thereto,
and
each such agreement constitutes the legal, valid and binding obligation of
each
such Member enforceable in accordance with its respective terms (except as
such
enforceability may be affected by applicable bankruptcy, insolvency or other
similar laws effecting creditors’ rights generally, and except that the
availability of equitable remedies is subject to judicial
discretion);
(v) No
consent or approval of any other Person is required in connection with the
signing, delivery and performance of this Agreement by the Members;
(vi) The
signing, delivery and performance of this Agreement do not violate the
organizational documents of such Member, or any material agreement to which
such
Member is a party or by which such Member is bound;
(vii) It
is not
in violation or default under any agreement with any Person, or under any
law,
judgment, order, decree, license, permit, approval, rule, or regulation of
any
court, arbitrator, administrative agency, or other governmental authority
to
which it may be subject which could reasonably be anticipated to have a material
adverse impact on the Company, and hereafter shall take no action which shall
be
in violation or cause a default under any agreement with any Person, or under
any law, judgment, order, decree, license, permit, approval, rule, or regulation
of any court, arbitrator, administrative agency, or other governmental authority
to which it may be subject which could reasonably be anticipated to have
a
material adverse impact on the Company;
(b)
with
respect to its investment in the Company and the Membership
Interests:
(i)
it
acknowledges that the Membership Interests are being offered and sold without
registration under The Securities Act of 1933, as amended, or under similar
provisions of state law;
(ii) it
has
knowledge and experience in financial and business matters in general, and
in
investment of this type;
Page
25 of
60
Execution
Copy November 8, 2005
(iii)
it
is
capable of evaluating the merits and risks of such investment;
(iv) it
has
either secured independent tax advice with respect to such investment, upon
which it is solely relying, or it is sufficiently familiar with the income
taxation of partnerships that it has deemed such independent advice
unnecessary;
(v) it
has
received or has access to all material information and documents with respect
to
such investment and has had an opportunity to ask questions and receive answers
thereto and to verify and clarify and information available;
(vi) notwithstanding
any financial projections which may have been prepared by any other Person,
it
has relied solely upon its independent investigation, and not on any financial
projections, statements, actions or representations of the other Members
or any
Affiliate of the other Members, in making the decision to acquire such
investment;
(vii) it
understands that no Federal or State agency has reviewed or passed upon the
adequacy or accuracy of the information set forth in the documents submitted
to
it or made any finding or determination as to the fairness for investment,
or
any recommendation or endorsement of such investment;
(viii) it
understands that there are restrictions on the transferability of its Membership
Interests;
(ix) it
understands that there will be no public market for its Membership Interests,
and, accordingly, it may not be possible to liquidate such
investment;
(x) it
understands that any anticipated Federal or state income tax benefits applicable
to its Membership Interests may be lost through changes in, or adverse
interpretations of, existing laws and regulations;
(xi) it
has
entered into this Agreement freely and voluntarily, without coercion, duress,
distress, or undue influence by any other Persons or their respective
shareholders, members, directors, officers, partners, agents or employees;
and
(xii) it
understands that this Agreement may affect legal rights and it has received
legal advice from counsel of its choice in connection with the negotiation
and
execution of this Agreement and is satisfied with its legal counsel and the
advice received from it.
(c)
each
of the following is true and correct:
(i) none
of
it or any of its Affiliates is a party to any other agreement or other
arrangement which would interfere with the development or operation of the
Gaming Complexes;
(ii) performance
of this Agreement will not violate any other material agreement or other
arrangement to which it or its Affiliates is a party;
Page
26 of
60
Execution
Copy November 8, 2005
(iii) it
and
its Affiliates have not received notice of any claim which would interfere
with
its or their performance of this Agreement;
(iv) none
of
it or its Affiliates has incurred any material liabilities or obligations
on
behalf of the Company or has knowledge of any liabilities or obligations
of the
Company, the Tioga Downs Complex or the Xxxxxx Xxxxx Complex other than those
described on Exhibit
"B"
to the
Contribution Agreement and
agrees hereafter that it or they, as the case may be, will not, nor cause
any of
its Affiliates, to incur any liability or obligation on behalf of the Company,
except as otherwise expressly provided herein;
(v) it
knows
of no actions or lawsuits, pending, planned or threatened, by or against
it, the
Company, or its Affiliates, which could create an obligation or liability
for
the Company or any of the other Members other than those described in
Exhibit
"B"
to the
Contribution Agreement; and
(vi) none
of
such Member, its Affiliates or any officers or directors of any of them has
been
determined by any gambling commission or authority to be unsuitable, has
been
convicted of a crime (other than traffic offenses), and had any application
for
any gambling license or permit rejected, or has had any gambling licenses
or
permit, once having been issued, rescinded, suspended, revoked or not renewed
or
reinstated, and no Member has knowledge that its affiliation with any other
Member will threaten any gambling license, permit, entitlement or approval
in
any jurisdiction of any other Member or Affiliate of a Member.
(d) the
execution, delivery and performance of this Agreement will not:
(i) violate
any law, judgment, order, decree, license, permit, approval, rule or regulation
of any court, arbitrator, administrative agency, or other governmental authority
to which it may be subject;
(ii) result
in
a breach or default under any contract or other binding commitment or any
provision of the charter or by-laws or partnership agreement or other
organizational documents, as the case may be, of any such entity;
or
(iii) require
any consent, or approval or vote of any court or governmental authority or
of
any Person that, as of the date hereof, has not been given or taken ,and
does
not remain effective.
(e)
(i) TrackPower
shall and does hereby indemnify, defend and hold harmless the Company and
the
Indemnified Persons of Nevada Gold and Southern Tier, and each of them
separately, from and against all loss, cost, or damage whatsoever (including
reasonable attorneys fees) resulting from any act, claim or omission of or
by
TrackPower or any Affiliates of TrackPower's prior to the date
hereof.
(ii) Southern
Tier shall and does hereby indemnify, defend and hold harmless the Company
and
the Indemnified Persons of Nevada Gold and TrackPower, and each of them
separately, from and against all loss, cost, or damage whatsoever (including
reasonable attorneys fees) resulting from any act, claim or omission of or
by
Southern Tier or any Affiliates of Southern Tier prior to the date
hereof.
Page
27 of
60
Execution
Copy November 8, 2005
(iii) Nevada
Gold shall and does hereby indemnify, defend and hold harmless the Company
and
the Indemnified Persons of TrackPower and Southern Tier, and each of them
separately, from and against all loss, cost, or damage whatsoever (including
reasonable attorneys fees) resulting from any act, claim or omission of or
by
Nevada Gold or any Affiliates of Nevada Gold's prior to the date
hereof.
(iv) Each
Member shall and does hereby indemnify, defend and hold harmless the Company
and
each other Member from and against any loss, cost, or damage whatsoever
(including reasonable attorneys fees) resulting from any breach by any of
them
of the representations and warranties under Section 10.1 hereof, or any losses
or expenses as a result of or in connection with any breach of this
Agreement.
10.2 Indemnification.
(a) To
the
fullest extent permitted by applicable laws, regulations, rules or orders,
each
Member and its Indemnified Persons shall not be liable, responsible or
accountable in damages or otherwise to the Company, or to any of the Members,
for any act or omission performed or omitted by them in good faith on behalf
of
the Company and in a manner reasonably believed by them to be within the
scope
of their authority and in the best interests of the Company; provided, however,
that this exculpation shall not apply to acts or omissions which are determined,
by final decision of a court of competent jurisdiction, to constitute either
fraud, bad faith, breach of this Agreement, gross negligence, or criminal
conduct.
(b) To
the
fullest extent permitted by law, the Company shall indemnify, defend and
hold
harmless each Member and its Indemnified Persons from and against any and
all
loss, cost, damage, expense or liability (other than a loss of any equity
contributions, loan or other investment in the Company), which relate to
or
arise out of the Company, the Gaming Complexes, the Company's business and
affairs, regardless of whether the Members continue to be Members, an Affiliate
of a Member, or an agent, officer, member, director, stockholder or employee
of
such Member or such Affiliate at the time any such liability or expense is
paid
or incurred, if such Member's or its Indemnified Persons' conduct did not
constitute fraud, bad faith, breach of this Agreement, gross negligence or
criminal conduct. With respect to the expenses actually and reasonably incurred
by a Member or Indemnified Person who is a party to a Proceeding, the Company
shall provide funds to such Member or Indemnified Person for its documented
costs of defense in advance of the final disposition of the Proceeding if
the
Member or Indemnified Person furnishes the Company with such Person’s written
affirmation of a good-faith belief that such Person has met the standard
of
conduct described herein, and such Person agrees in writing to repay the
advance
if it is subsequently determined that such Person has not met such standard
of
conduct.
(c) To
the
extent that, at law or in equity, a Member or its Indemnified Persons have
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to the Members, each Member and its Indemnified Persons acting
under
this Agreement or otherwise shall not be liable to the Company or to any
Member
for its good faith reliance on the provisions of this Agreement. The provisions
of this Section 10.2, to the extent that they expand or restrict the duties
and
liabilities of a Member or its Indemnified Persons otherwise existing at
law or
in equity, are agreed by the Members to replace such other duties and
liabilities of such Member and its Indemnified Person.
Page
28 of
60
Execution
Copy November 8, 2005
(d)
(i) (A) Promptly
after the assertion of any claim by a third party which may give rise to
a claim
for indemnification from an Indemnifying Member under this Agreement, an
Indemnified Person shall notify the Indemnifying Member in writing of such
claim
and advise the Indemnifying Member whether the Indemnified Person intends
to
contest such claim.
(B) The
Indemnified Person shall permit the Indemnifying Member to contest and defend
against such claim, at the Indemnifying Member's expense, if the Indemnifying
Member has confirmed to the Indemnified Person in writing that it agrees
that
the Indemnified Person is entitled to indemnification hereunder in respect
of
such claim, unless the Indemnified Person can establish, by reasonable evidence,
that the conduct of its defense by the Indemnifying Member could be reasonably
likely to prejudice such Indemnified Person due to the nature of the claims
presented or by virtue of a conflict between the interests of such Indemnified
Persona and such Indemnifying Member and another Indemnified Person whose
defense has been assumed by the Indemnifying Member. Notwithstanding a
determination by the Indemnifying Member to contest such claim, the Indemnified
Persons shall have the right to be represented by its own counsel and
accountants at its own expense. In any case, the Indemnified Person shall
make
available to the Indemnifying Member and its attorneys and accountants, at
all
reasonable times during normal business hours, all books, records, and other
documents in its possession relating to such claim. The party contesting
any
such claim shall be furnished all reasonable assistance in connection therewith
by the other party (with reimbursement of reasonable expenses by the
Indemnifying Member). If the Indemnifying Member fails to undertake the defense
of or to settle or pay any such third-party claim within fifteen (15) days
after
the Indemnified Person has given Notice to the Indemnifying Member advising
the
Indemnifying Member of such claim, or if the Indemnifying Member, after having
given Notice to the Indemnified Person that it intends to undertake the defense,
fails forthwith to defend, settle or pay such claim, then the Indemnified
Person
may take any and all necessary action to dispose of such claim including,
without limitation, the settlement or full payment thereof upon such terms
as it
shall deem appropriate, in its sole discretion.
(C) The
Indemnifying Member shall not consent to the terms of any compromise or
settlement of any third-party claim defended by the Indemnifying Member in
accordance herewith (other than terms related solely to the payment of money
damages and only after the Indemnifying Member has furnished the Indemnified
Person with such evidence as the Indemnified Person may reasonably request
of
the Indemnifying Member's capacity and capability (financial and otherwise)
to
pay promptly the amount of such money damages at such times as provided in
the
compromise or settlement) without the prior written consent of the Indemnified
Person if as a result of such compromise or settlement such Indemnified Person
could be adversely affected.
(D) Any
claim
for indemnification under this Agreement which does not result from the
assertion of a claim by a third party shall be asserted by written notice
given
by the Indemnified Person to the Indemnifying Member. Such Indemnifying Member
shall have a period of thirty (30) days within which to respond thereto.
If such
Indemnifying Member does not respond within such thirty (30) day period,
such
Indemnifying Member shall be deemed to have accepted responsibility to make
payment, and shall have no further right to contest the validity of such
claim.
If the Indemnifying Member does respond within such thirty (30) day period
and
rejects such claim in whole or in part, such Indemnified Person shall be
free to
pursue such remedies as may be available to such party under applicable laws,
regulations, rules or orders.
Page
29 of
60
Execution
Copy November 8, 2005
(ii) Mitigation
Each
Indemnifying Member and Indemnified Person shall use reasonable efforts and
shall consult and cooperate with each other with a view towards mitigating
claims, losses, liabilities, damages, deficiencies, costs and expenses that
may
give rise to claims for indemnification.
(iii) Payment
Each
Indemnifying Member agrees to pay any amounts due hereunder (A) within ten
(10)
days of written notice in respect of its indemnity obligations which it has
accepted or which it has been deemed to accept; (B) within five (5) days
of any
final adjudication by a court of competent jurisdiction of any indemnity
obligations as to which it has not so accepted; and (C) as reasonable attorneys'
fees and other costs of defense are incurred and invoiced.
10.3 Insurance.
The
indemnification provisions of this Article do not limit a Member’s or
Indemnified Person's right to recover under any insurance policy or other
financial arrangement by the Company (including any self-insurance, trust
fund,
letter of credit, guaranty or surety). If, with respect to any liability,
any
Member or Indemnified Person receives an insurance or other indemnification
payment which, together with any indemnification payment made by the Company,
exceeds the amount of such liability, then such Member or Indemnified Person
will immediately repay such excess to the Company.
ARTICLE
11: ACCOUNTING AND REPORTING
11.1 Fiscal
Year.
For
income tax and accounting purposes, the Fiscal Year of the Company shall
end on
the last Sunday in April or as otherwise determined by the Board.
11.2 Accounting
Method.
For
accounting purposes, the Company will use United States generally accepted
accounting principles as in effect from time to time, applied on a consistent
basis using the accrual method of accounting ("GAAP") and all financial
statements will be prepared in accordance with GAAP.
11.3 Tax
Elections.
The
Company will have the authority to make such tax elections, and to revoke
any
such election, as the tax matters partner may from time to time determine.
No
Director or Member shall have the right to file an election to treat the
Company
as an association taxable as a corporation for federal income tax
purposes.
Page
30 of
60
Execution
Copy November 8, 2005
11.4 Returns.
The
Company will cause the preparation and timely filing of all tax returns required
to be filed by the Company pursuant to the Code, as well as all other tax
returns required in each jurisdiction in which the Company does
business.
11.5 Reports.
The
Company will furnish a Profit or Loss statement and a balance sheet to each
Member within a reasonable time after the end of each fiscal quarter. The
Company books will be closed at the end of each Fiscal Year and audited
financial statements prepared showing the financial condition of the Company
and
its Profits or Losses from operations. Copies of these statements will be
given
to each Member. In addition, as soon as is practicable after the close of
each
Fiscal Year (and in any event within 90 days following the end of each Fiscal
Year), the Company will provide each Member with all necessary tax reporting
information.
11.6 Books
and Records.
Full
and accurate books of the Company shall be maintained by the Company, at
the
Company's principal place of business, showing all receipts and expenditures,
assets and liabilities, Profits and Losses and all other records necessary
for
recording the Company's business and affairs. The books and records of the
Company will be available for inspection and examination at reasonable times
by
all Members or their duly authorized representatives who have executed
confidentiality agreements.
11.7 Banking.
The
Company may establish one or more bank or financial accounts and safe deposit
boxes. The Company may authorize one or more individuals to sign checks on
and
withdraw funds from such bank or financial accounts and to have access to
such
safe deposit boxes, and may place such limitations and restrictions on such
authority as the Company deems advisable.
11.8 Tax
Matters Partner.
Until
further action by the Company, Nevada Gold is designated as the tax matters
partner under Section 6231(a)(7) of the Code. The tax matters partner will
be
responsible for notifying all Members of ongoing proceedings, both
administrative and judicial, and will represent the Company throughout any
such
proceeding. The Members will furnish the tax matters partner with such
information as it may reasonably request to provide the Internal Revenue
Service
with sufficient information to allow proper notice to the Members. If an
administrative proceeding with respect to a partnership item under the Code
has
begun, and the tax matters partner so requests, each Member will notify the
tax
matters partner of its treatment of any partnership item on its federal income
tax return, if any, which is inconsistent with the treatment of that item
on the
partnership return for the Company. Any settlement agreement with the Internal
Revenue Service will be binding upon the Members only as provided in the
Code.
The tax matters partner will not bind any other Member to any extension of
the
statute of limitations or to a settlement agreement without such Member’s
written consent. Any Member who enters into a settlement agreement with respect
to any partnership item will notify the other Members of such settlement
agreement and its terms within 30 days from the date of settlement If the
tax
matters partner does not file a petition for readjustment of the partnership
items in the Tax Court, Federal District Court or Claims Court within the
90-day
period following a notice of a final partnership administrative adjustment,
any
notice partner or 5-percent group (as such terms are defined in the Code)
may
institute such action within the following 60 days. The tax matters partner
will
timely notify the other Members in writing of its decision. Any notice partner
or 5-percent group will notify any other Member of its filing of any petition
for readjustment.
Page
31 of
60
Execution
Copy November 8, 2005
11.9 No
Partnership.
The
classification of the Company as a partnership will apply only for federal
(and,
as appropriate, state and local) income tax purposes. This characterization,
solely, for tax purposes, does not create or imply a general partnership
between
the Members for state law or any other purpose. Instead, the Members acknowledge
the status of the Company as a limited liability company formed under the
Act.
ARTICLE
12: DISSOLUTION OF THE COMPANY
12.1 Dissolution.
Dissolution of the Company will occur only upon the happening of any of the
following events:
(a)
The
occurrence of any act or omission by a Member which results in the dissolution
of the Company by operation of law under the provisions of the Act;
(b) The
sale
or other disposition of all or substantially all of the assets of the Company
and the collection of all sales proceeds, including any involuntary "sale"
as a
result of condemnation or casualty that is not restored; or
(c)
By
unanimous written agreement of the Members.
(d) The
election of the remaining Members to dissolve as permitted by Section 15.4(g)
of
this Agreement.
(e) The
entry
of a decree of judicial dissolution pursuant to Section 702 of the
Act.
The
withdrawal, retirement, resignation, bankruptcy or dissolution of any Member
or
the occurrence of any event that terminates the continued membership of any
Member in the Company shall not, in and of itself, cause the Company's
dissolution.
12.2 Events
of Withdrawal.
An
event of Withdrawal of a Member occurs when any of the following
occurs:
(a)
With
respect to any Member, upon the Transfer of all of such Member’s Membership
Interests not approved by the Members;
(b)
With
respect to any Member, upon the voluntary withdrawal of the Member (including
any resignation or retirement in contravention of Section 3.8) by notice
to all
other Members;
(c) With
respect to any Member that is a corporation, upon filing of articles of
dissolution of the corporation;
(d)
With
respect to any Member that is a partnership or a limited liability company,
upon
dissolution of such entity;
(e) With
respect to any Member who is an individual, upon either the death or retirement
of the individual, or upon such Person’s insanity or the entry by a court of
competent jurisdiction of an order adjudicating the individual to be incompetent
to manage such individual’s person or estate;
Page
32 of
60
Execution
Copy November 8, 2005
(f)
With
respect to any Member that is a trust, upon termination of the
trust;
(g) With
respect to any Member that is an estate, upon final distribution of the estate’s
Membership Interests;
(h)
Any
other
event which terminates the continued membership of a Member in the
Company;
(i) With
respect to any Member, the bankruptcy of the Member, so long as there is
one or
more remaining Members.
Within
30
days following the happening of any event of Withdrawal with respect to a
Member, such Member must give notice of the date and the nature of such event
to
the Company. Any Member failing to give such notice will be liable in damages
for the consequences of such failure as otherwise provided in this Agreement.
Upon the occurrence of an event of Withdrawal with respect to a Member, such
Member (and its designated Directors) will cease to have voting rights
hereunder, and such Member will, without further act, become a Transferee
of its
Membership Interest (with only the limited rights of a Transferee as set
forth
in Section 14.6). Any Member who withdraws from the Company in contravention
of
this Agreement will be liable to the Company and the other Members for proven
monetary damages (but any such action or proposed action to resign or retire
will not be subject to any equitable action for injunctive relief or specific
performance except as permitted under Section 17.8).
12.3 Bankruptcy.
The
bankruptcy of a Member will not dissolve the Company. The bankruptcy of a
Member
will be deemed to occur when such Person:
(a)
files
a
voluntary petition in bankruptcy,
(b)
is
adjudged a bankrupt or insolvent, or has entered against such Person an order
for relief in any bankruptcy or insolvency proceeding,
(c)
files
a
petition or answer seeking for such Person any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any
statute, law or regulation,
(d)
files
an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any insolvency proceeding
of this nature, or
(e)
seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of all or any substantial part of such Person’s properties. In
addition, the bankruptcy of a Member will be deemed to occur if any proceeding
filed against a Member seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law
or regulation is not dismissed within 120 days or if the appointment without
the
Member’s consent (or acquiescence of a trustee, receiver or liquidator of the
Member or of all or any substantial part of such Person’s properties) is not
vacated or stayed within 90 days (or if after the expiration of any stay,
if the
appointment is not vacated within 90 days).
Page
33 of
60
Execution
Copy November 8, 2005
ARTICLE
13: LIQUIDATION
13.1 Liquidation.
Upon
Dissolution of the Company, the Company will immediately proceed to wind
up its
affairs and liquidate. The Board will appoint a liquidating trustee which
may be
one or more of the Directors or a Member. The winding up and Liquidation
of the
Company will be accomplished in a businesslike manner as determined by the
liquidating trustee and this Article 13. A reasonable time will be allowed
for
the orderly Liquidation of the Company and the discharge of liabilities to
creditors so as to enable the Company to provide for any losses reasonably
anticipated to be attendant upon Liquidation. Any gain or loss on disposition
of
any Company assets in Liquidation will be allocated to Members and credited
or
charged to Capital Accounts in accordance with the provisions of Articles
7 and
8. With respect to all Company property that has not been sold, the Fair
Market
Value of that property shall be determined and the Capital Accounts of the
Members shall be adjusted to reflect the manner in which the unrealized income,
gain, loss, and deduction inherent in property that has not been reflected
in
the Capital Accounts previously would be allocated among the Members if there
were a taxable disposition on that property for the Fair Market Value of
that
property on the date of distribution in accordance with the provisions of
Articles 7 and 8. Any liquidating trustee is entitled to reasonable compensation
for services actually performed, and may contract for such assistance in
the
liquidation process as such Person deems necessary. Until the filing of articles
of dissolution as provided in Section 13.6, the liquidating trustee may settle
and close the Company’s business, prosecute and defend suits, dispose of its
property, discharge or make provision for its liabilities, and make
distributions in accordance with the priorities set forth in Section
13.2.
13.2 Priority
of Payment.
The
assets of the Company will be distributed in Liquidation of the Company in
the
following order:
(a) First,
to
non-Member creditors of the Company in order of priority as provided by law
in
payment of unpaid liabilities of the Company to the extent required by law
or
under agreements with such creditors;
(b) Second,
to the setting up of any reserves which the Board reasonably deem necessary
for
any anticipated, contingent or unforeseen liabilities or obligations of the
Company arising out of or in connection with the conduct of the Company’s
Business. At the expiration of such period as the Board reasonably deem
advisable, the balance thereof shall be distributed in accordance with this
Section 13.2;
(c) Third,
to
any Member for any other loans or debts owing to such Member by the
Company;
(d)
Fourth,
to the Members in accordance with Section 9.1.
Page
34 of
60
Execution
Copy November 8, 2005
13.3 Distribution
to Members.
Distributions in Liquidation due to the Members may be made by either or
a
combination of the following methods: selling the Company assets and
distributing the net proceeds, or by distributing the Company assets to the
Members at their net Fair Market Value in kind. Any liquidating Distribution
in
kind to the Members may be made either by a pro-rata Distribution of undivided
interests or, upon the affirmative vote of all Members, by non pro-rata
Distribution of specific assets at Fair Market Value on the effective date
of
Distribution. Any Distribution in kind may be made subject to, or require
assumption of, liabilities to which such property may be subject, but in
the
case of any non pro-rata Distribution only upon the express written agreement
of
the Member receiving the Distribution. Each Member hereby agrees to save
and
hold harmless the other Members from such Member’s share of any and all such
liabilities which are taken subject to or assumed. Appropriate and customary
prorations and adjustments shall be made incident to any Distribution in
kind.
The Members will look solely to the assets of the Company for the return
of
their Capital Contributions, and if the assets of the Company remaining after
the payment or discharge of the debts and liabilities of the Company are
insufficient to return such contributions, they will have no recourse against
any other Member.
13.4 No
Restoration Obligation.
Except
as otherwise specifically provided in Section 7.8, nothing contained in this
Agreement imposes on any Member an obligation to make a Capital Contribution
in
order to restore a deficit Capital Account upon Liquidation of the Company.
Furthermore, each Member will look solely to the assets of the Company for
the
return of such Member’s Capital Contribution and Capital Account.
13.5 Liquidating
Reports.
A
report will be submitted with each liquidating distribution to Members, showing
the collections, disbursements and distributions during the period which
is
subsequent to any previous report. A final report, showing cumulative
collections, disbursements and distributions, will be submitted upon completion
of the liquidation process.
13.6 Articles
of Dissolution.
Upon
Dissolution of the Company and the completion of the winding up of its business,
the Company will file articles of dissolution (to cancel its Articles of
Organization) with the New York Secretary of State pursuant to the Act. At
such
time, the Company will also file an application for withdrawal of its
certificate of authority in any jurisdiction where it is then qualified to
do
business.
ARTICLE
14: TRANSFER RESTRICTIONS
14.1 General
Restriction.
No
Member may Transfer all or any part of its Membership Interests in any manner
whatsoever (and no constituent owner of a Member shall be permitted to transfer
its interests in such Member) except (a) to a Permitted Transferee as set
forth
in Section 14.3 or (b) after full compliance with the right of first refusal
set
forth in Section 14.4, and in either case only if the requirements of Section
14.5 have also been satisfied. Any other Transfer of all or any part of its
Membership Interests is null and void, and of no effect. Any Member who makes
a
Transfer of all of such Member’s Membership Interests will be treated as
resigning from the Company on the effective date of such Transfer. Any Member
who makes a Transfer of part (but not all) of such Member’s Membership Interests
will continue as a Member (with respect to the interest retained), and such
partial Transfer will not constitute an event of Withdrawal of such Member.
The
rights and obligations of any resigning Member or of any Transferee of a
Membership Interest will be governed by the other provisions of this
Agreement.
Page
35 of
60
Execution
Copy November 8, 2005
14.2 No
Member Rights.
No
Member has the right or power to confer upon any Transferee (other than a
Permitted Transferee) the attributes of a Member in the Company. The Transferee
of all or any part of a Membership Interest by operation of law (except as
contemplated by Section 14.3) does not, by virtue of such Transfer, succeed
to
any rights as a Member in the Company.
14.3 Permitted
Transferee.
Subject
to the requirements set forth in Section 14.5, a Person may Transfer all
or any
part of such Person’s Membership Interest without the consent of any other
Member:
(a) To
a
wholly-owned subsidiary of such Person;
(b) To
the
Company;
(c) To
a
Person approved by all the Members;
(d) In
the
case of Nevada Gold, to another Person as part of a change in control, merger,
reorganization, consolidation or sale of all or substantially all of the
assets
of its parent company;
(e) In
the
case of TrackPower, to another Person as part of a change in control, merger,
reorganization, consolidation or sale of all or substantially all of its
assets;
(f) In
the
case of Southern Tier only, ownership interests within Southern Tier may
be
transferred provided that (i) Xxxxxxx Xxxxx remains the managing member,
(ii)
Xxxxxxx Xxxxx, together with his immediate family members or family trusts
for
the benefit of his immediate family members, retains ownership of at least
35%
of the ownership interests of Southern Tier and (iii) Xxxxxxx Xxxxx has the
ability, by ownership of voting securities or membership interests, contract
or
otherwise, to direct the management and affairs of Southern Tier; provided,
that
upon the retirement, death or disability of Xxxxxxx Xxxxx, the provisions
of
Section 14.7 shall be applicable.
(g) A
pledge
or encumbrance of a Membership Interest in favor of one or more lenders to
secure a loan provided by such lender(s) to such Member or its Affiliates,
provided that a foreclosure upon such pledge or encumbrance shall not be
a
Permitted Transfer.
Each
of
the foregoing transferees shall be a “Permitted Transferee” and shall become a
Member of the Company in accordance with Section 602 of the Act.
Page
36 of
60
Execution
Copy November 8, 2005
14.4 Right
of First Refusal.
Prior
to any proposed Transfer of all or any part of Membership Interests of a
Member,
other than to a Permitted Transferee pursuant to Section 14.3, the Transferor
must obtain a Third Party Offer. For purposes of this Section 14.4, a Transfer
of the Membership Interests of a Member shall be deemed to occur upon any
change
in control of such Member other than to a Permitted Transferee pursuant to
Section 14.3(d). The Third Party Offer must not be subject to unstated
conditions or contingencies or be part of a larger transaction such that
the
price for the Membership Interests stated in such Third Party Offer does
not
accurately reflect Fair Market Value (reduced by the amount of associated
liabilities of such Membership Interests). The Third Party Offer must contain
a
description of all of the consideration, material terms and conditions of
the
proposed Transfer. The Transferor will give notice of the Third Party Offer
to
the Company and the other Member (such Members called the “Other Members”),
together with a written offer to sell the Membership Interests (which is
the
subject of the Third Party Offer) to the Other Member on the same price and
terms as the Third Party Offer as provided herein. The Other Members shall
have
the right, to purchase, in whole but not in part, the Membership Interests
of
the Transferor in accordance with the terms of the Third Party Offer by giving
notice to the Transferor within 30 days after notice of such offer. The Other
Members shall each have the right to purchase a proportionate part of the
Transferor's Membership Interest, equal to a percentage determined by dividing
its Percentage by the total Percentages of the Other Members; provided that
if
only Member elects to purchase then that Member shall have the right to purchase
100% of the Transferor's Membership Interest. Unless otherwise agreed, the
closing of such sale will be held at the Company’s principal place of business
in New York on a date to be specified by the Other Members which is not later
than 60 days after the date of the notice of acceptance by the Other Members.
At
the closing, the Other Members will deliver the consideration in accordance
with
the terms of the Third Party Offer, and the Transferor will by appropriate
documents assign to the Other Members the Membership Interests to be sold,
free
and clear of all liens, claims and encumbrances. If all of the Other Members
reject the right of first refusal or if the acceptance of the right of first
refusal is not closed in accordance with this Section 14.4, the Transferor
will
be free for a period of 60 days after the last day for such acceptance to
sell
all, but not less than all, of such Membership Interests so offered, but
only to
the Third Party for a price and on terms no more favorable to the Third Party
than the Third Party Offer and subject to Section 14.5. If such Membership
Interests are not so sold within such 60-day period (or within any extensions
of
such period agreed to in writing by the Company), all rights to sell such
Membership Interests pursuant to such Third Party Offer (without making another
offer to the Other Members pursuant to this Section 14.4) will terminate
and the
provisions of this Article will continue to apply to any proposed future
Transfer.
14.5 General
Conditions on Transfers.
No
Transfer of a Membership Interest after the date of this Agreement will be
effective unless all of the conditions set forth below are
satisfied:
(a) Unless
waived by the Company, the Transferor signs and delivers to the Company an
undertaking in form and substance satisfactory to the Company to pay all
reasonable expenses incurred by the Company in connection with the Transfer
(including, but not limited to, reasonable fees of counsel and accountants
and
the costs to be incurred with any additional accounting required in connection
with the Transfer, and the cost and fees attributable to preparing, filing
and
recording such amendments to the organizational documents or filings as may
be
required by law);
(b) Such
transfer does not require the registration of such transferred Membership
Interests pursuant to any applicable federal or state securities laws, and
the
Transferor delivers to the Company an opinion of counsel for the Transferor
satisfactory in form and substance to the Company to the effect that the
Transfer of the Membership Interests is in compliance with the applicable
federal and state securities laws, and a statement of the Transferee in form
and
substance satisfactory to the Company making appropriate representations
and
warranties in respect to compliance with the applicable federal and state
securities laws and as to any other matter reasonably required by the
Company;
Page
37 of
60
Execution
Copy November 8, 2005
(c)
The
Company receives an opinion from its counsel that (i) the Transfer does not
cause the Company to lose its classification as a partnership for federal
or
state income tax purposes, and (ii) unless waived by the Company, the Transfer,
together with all other Transfers within the preceding twelve months, does
not
cause a termination of the Company for federal or state income tax
purposes;
(d)
The
Transferor signs and delivers to the Company a copy of the assignment of
the
Membership Interests to the Transferee, together with the Certificates
representing such Membership Interests, duly executed for
assignment;
(e)
The
Transferee signs and delivers to the Company its agreement to be bound by
this
Agreement;
(f) Such
Transfer does not cause the Company to become a “Publicly Traded Partnership,”
as such term is defined in Sections 469(k)(2) or 7704(b) of the
Code;
(g)
Such
Transfer does not subject the Company to regulation under the Investment
Company
Act of 1940, the Investment Advisers Act of 1940 or the Employee Retirement
Income Security Act of 1974, each as amended;
(h) Such
Transfer is in compliance with any and all gaming acts and regulations now
or
hereafter existing in the State of New York, including a finding of suitability
of such Transferee or any owners or beneficial owners of a
Transferee;
(i) Such
Transfer is not made to any Person who lacks the legal right, power or capacity
to own such Membership Interest; and
(j) The
Transfer is in compliance with the other provisions of this
Article.
Except
as
the Company and the Transferee may otherwise agree, the Transfer of a Membership
Interest will be effective as of 12:01 a.m. (Eastern Time) on the first day
of
the month following the Transfer.
Notwithstanding
anything to the contrary expressed or implied in this Agreement, the sale,
assignment, transfer, pledge or other disposition of any direct or indirect
interest in the Company is subject to the laws of the State of New York and
the
requirements, limitations and decisions of any gaming commission or other
gaming
regulatory body for the State of New York.
Page
38 of
60
Execution
Copy November 8, 2005
14.6 Rights
of Transferees.
A
Permitted Transferee shall become a Member of the Company in accordance with
Section 602 of the Act. Any Transferee of a Membership Interest will, on
the
effective date of the Transfer, have only those rights of an assignee as
specified in the Act and this Agreement unless and until such Transferee
is
admitted as a substitute Member. This provision limiting the rights of a
Transferee will not apply if such Transferee is already a Member; provided
that,
any Member who withdraws from the Company pursuant to an event of Withdrawal
described in Section 12.2 will have only the rights of an assignee as specified
in the Act and this Agreement. Any Transferee of all or any part of a Membership
Interest who is not admitted as a substitute Member in accordance with this
Agreement has no right (a) to participate or interfere in the management
or
administration of the Company’s Business or affairs, (b) to vote or agree on any
matter affecting the Company or any Member (and if a Member has transferred
its
entire Membership Interest to a Transferee who is not a substitute Member,
then
(x) if the transferring Member is Nevada Gold, the Board shall be decreased
by
the number of directors such transferring Member had the right to appoint
or (y)
if the transferring Member is either Southern Tier or TrackPower, then the
Board
shall be increased to 5 members, Nevada Gold shall have the right to appoint
3
directors and the other Member shall have the right to appoint 2 directors),
(c)
to require any information on account of Company transactions, or (d) to
inspect
the Company’s books and records. The only right of a Transferee of all or any
part of an Membership Interest who is not admitted as a substitute Member
in
accordance with this Agreement is to receive the allocations and Distributions
to which the Transferor was entitled (to the extent of the Membership Interest
transferred) and to receive required tax reporting information. However,
each
Transferee of all or any part of a Membership Interest (including both immediate
and remote Transferees) will be subject to all of the obligations, restrictions
and other terms contained in the Agreement as if such Transferee were a Member.
To the extent of any Membership Interest transferred, the Transferee or Member
does not possess any right or power as a Member and may not exercise any
such
right or power directly or indirectly on behalf of the Transferee. The Members
acknowledge that these provisions may differ from the rights of an assignee
as
set forth in the Act, and the Members agree that they intend, to that extent,
to
vary those provisions by this Agreement.
14.7 Ownership
Interests in Members.
Each
Member represents and warrants that on the date of this Agreement its directors,
officers and owners (and in the case of Nevada Gold and TrackPower, shareholders
owning five percent (5%) or more of stock in their parent companies) in such
Member is listed on Exhibit “B”
to this
Agreement. Southern Tier further represents that no transfers or assignments
of
ownership interests in Southern Tier will be made except in compliance with
Article 14, it being agreed that a transfer of a Membership Interest by Southern
Tier (or its Permitted Transferee) shall include a transfer of ownership
interests within Southern Tier (or its Permitted Transferee) by its members
and
shall require compliance with the provisions of this Article 14. In the event
the retirement, death or disability of Xxxxxxx Xxxxx causes a Transfer of
the
Membership Interest of Southern Tier, then Southern Tier shall thereafter
have
only the rights of an assignee pursuant to Section 14.6; provided, however,
such
Transfer shall be considered a Permitted Transfer if and for so long as Southern
Tier's managing member and designated director pursuant to Section 4.2 is
either
an Approved Substitute Manager or approved by a majority in interest of the
remaining Members. An event described in Section 14.3(d), (e) or (f) shall
not
be deemed to be a transfer of a Membership Interest by Nevada Gold, TrackPower
or Southern Tier, respectively. The Members shall have a continuing obligation
to update the list on Exhibit
“B”.
Page
39 of
60
Execution
Copy November 8, 2005
ARTICLE 15:
PRIVILEGED LICENSE PROTECTION
15.1.
No
Unsuitability Knowledge.
Each Member represents to the other that it is not aware of any facts or
circumstances which would make it an Unsuitable Person.
15.2.
Regulatory
Compliance in the State of New York.
Each Member acknowledges that it and its Affiliated Persons will be subject
to
licensing and other regulatory review and approval procedures by New York
Regulatory Authorities. Each Member agrees to cooperate fully and to cause
its
Affiliated Persons to cooperate fully with the representatives of all New
York
Regulatory Authorities. If any New York Regulatory Authority determines at
any
time that a necessary Gaming License will not be issued or renewed for the
Company, or must be revoked, as a result of a Member’s, or a Member’s Affiliated
Person’s relationship to the Company or a Member, then such Member shall, if
possible, remedy or cause its Affiliated Person to remedy the condition that
gave rise to such determination to the satisfaction of the New York Regulatory
Authority. If the Member (the “Non-Compliant Member”) does not remedy the
condition that gave rise to such determination prior to the expiration of
the
period prescribed by the New York Regulatory Authority, then the Licensed
Members may provide written notice to the Non-Compliant Member that it is
an
Unsuitable Person, and of its intention to exercise the provisions set forth
in
Section 15.4.
15.3.
Gaming
Regulations in Jurisdictions Outside of New York.
(a)
Each
Member acknowledges that each other Member and its Affiliated Persons may
or
will be a Licensed Member because of Gaming Licenses related to Gaming
Authorities other than New York Regulatory Authorities. Each Member acknowledges
that the issuance and maintenance of Gaming Licenses are highly regulated
by
these other Gaming Authorities and that the laws of applicable jurisdictions
may
require a Licensed Member to disclose private or otherwise confidential
information about the other Members and their respective Affiliated Persons.
If
requested to do so by a Licensed Member, any other Member shall obtain any
Gaming License, qualification, clearance or the like which shall be requested
or
required of such other Member by any Gaming Authority having jurisdiction
over
the Licensed Member.
(b)
All
Members acknowledge and agree that if a Gaming Authority shall determine
that
any Member or any of its Affiliated Persons (a) is or might be engaged
in,
or is about to be engaged in, any activity or activities, or (b) was
or is
involved in a relationship with any Person, and if as a result of such
determination any Gaming Authority (i) fails to issue a Gaming License,
(ii) fails to grant or renew any required or requested Gaming License
or
related application upon terms and conditions which are in the Licensed Member’s
reasonable discretion acceptable to the Licensed Member, (iii) unreasonably
delays any Gaming License sought by the Licensed Member, (iv) conditions
any Gaming License sought by the Licensed Member upon terms and conditions
which
are in the Licensed Member’s reasonable discretion not acceptable to the
Licensed Member, (v) revokes any Gaming License, or (vi) disciplines,
in any manner, the Licensed Member, then such other Member (the “Non-Compliant
Member”) shall immediately (A) terminate any relationship with the Person
which is the source of the problem, or (B) cease the activity creating
the
problem. In the event that the Non-Compliant Member does not comply with
item
(A) or (B) above, then the Licensed Member may provide written notice to
the
Non-Compliant Member that it is an Unsuitable Person, and of its intention
to
exercise the provisions set forth in Section 15.4.
15.4.
Buy-Out
Provisions.
(a)
In
the event of an unremedied finding that a Member is an Unsuitable Person
and the
sending of notice by a Licensed Member of its intention to exercise the rights
set forth in this Section 15.4, the provisions of this Section 15.4 shall
apply,
notwithstanding any other provision herein to the contrary.
Page
40 of
60
Execution
Copy November 8, 2005
(b)
During the period commencing with the Trigger Date and ending with the transfer
or sale of the Affected Member’s Membership Interest pursuant to a subsection of
this Section
15.4,
(i) the
Company shall not be required or permitted to pay any distribution or interest
with regard to the Membership Interests and the amount of such distributions
or
interest shall be held in escrow by the Company, (ii) the holder of
such
Membership Interests shall not be entitled to vote on any matter, and
(iii) the Company shall not pay any remuneration in any form to the
holder
of the Membership Interests except in exchange for such Membership Interests
as
provided in this Section 15.4. Upon any sale or transfer of the Affected
Member’s Membership Interest in accordance herewith, all voting rights shall be
reinstated with respect to the Membership Interest and all amounts held in
escrow shall be applied to pay to the Affected Member the purchase price
of the
Membership Interest.
(c)
For
a period of 120 days following the Trigger Date (or such shorter period of
time
as the New York Regulatory Authority or the Gaming Authority, as applicable,
otherwise allows), the Affected Member shall have the right to sell its
Membership Interest to a third party for cash, subject to the provisions
of
Section 14.5 and
the right of first refusal in favor of the other Members pursuant to and
in
accordance with the terms of Section 14.4.
(d)
If the Affected Member has not given notice to the other Members on or before
120 days following the Trigger Date (or such shorter period of time as the
New
York Regulatory Authority or the Gaming Authority, as applicable, otherwise
allows), that a third party (who is permitted to receive an assignment of
the
Membership Interest pursuant to Section 14.5), has entered into a
binding
agreement to purchase the Membership Interest for cash, or if the cash purchase
is not consummated within the period provided in Section 14.4), any one or
more
of the remaining Members may purchase the Membership Interest by giving written
notice of such Member’s or Members’ purchase intent to the Company and the
Affected Member. The price of this purchase shall be an amount equal to the
sum
of (a) the outstanding principal balance of and accrued and unpaid
interest
on the Affected Member’s loans to the Company, plus (b) the Fair Market
Value of the Affected Member’s Membership Interest as of the Trigger Date. Such
purchase price shall be payable, without interest on the Fair Market Value
of
the Affected Member’s Membership Interest, by the Company applying the
distributions from the Company that would have otherwise gone to the Affected
Member to pay the Affected Member until the purchase price has been paid
in
full, provided that any remaining balance shall be repaid at the end of five
(5)
years following the Trigger Date.
(e)
In the event that the Affected Member does not give proper notice that it
has
entered into a binding agreement to sell its Membership Interest pursuant
to
Section 15.4(c), or if, in the case of a sale, the cash purchase is not
consummated within the period provided in Section 14.4, and if no Member
chooses
to purchase the Membership Interest as provided for in Section 15.4(e), the
majority in interest of the remaining Members may choose to continue the
business of the Company. In such event, the Company shall repay any loans
owed
to the Unsuitable Person and shall repurchase the Unsuitable Person’s Membership
Interest for its Fair Market Value plus any escrowed amounts under Section
15.4(b). The Company shall repay the Unsuitable Person’s loans when the Company
receives revenues that the Company would have been required to use to repay
loans made by the Unsuitable Person, had the Unsuitable Person remained a
Member. The Fair Market Value of the Unsuitable Person’s Membership Interest
(without interest) shall be payable when the Company receives cash payments
that
the Company would have been required to distribute to all Members under Article
9 had the Unsuitable Person remained a Member; provided that any remaining
balance shall be repaid at the end of five (5) years following the Trigger
Date.
Page
41 of
60
Execution
Copy November 8, 2005
(f)
In the event that the remaining Members decide not to continue the business
of
the Company, the Company shall be dissolved.
ARTICLE 16:
GOVERNING LAW; DISPUTE RESOLUTION
16.1 Governing
Law.
THIS
AGREEMENT IS GOVERNED BY AND WILL BE CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE
STATE OF NEW YORK, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT
MIGHT
REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF
ANOTHER
JURISDICTION. In the event of a direct conflict between the provisions of
this
Agreement and any mandatory provision of the Act, the applicable provision
of
the Act, will control.
16.2 Disputes.
Except
as to any disputes for which injunctive relief may be available, in the event
a
dispute of any kind arises in connection with this Agreement (including any
dispute concerning its construction, performance or breach), the parties
to the
dispute (who may be any combination of the Company and any one or more of
the
Members) will attempt to resolve the dispute as set forth in Section 16.3
before
proceeding to arbitration as provided in Section 16.4. All documents, discovery
and other information related to any such dispute, and the attempts to resolve
or arbitrate such dispute will be kept confidential to the fullest extent
possible. This Article 16 shall not apply to disputes arising under the
Management Agreement.
16.3 Negotiation.
If a
dispute arises, any party to the dispute will give notice to each other party.
If the Company is not a party to the dispute, notice will be given to the
Company. After notice has been given, the parties in good faith will attempt
to
negotiate a resolution of the dispute.
16.4 Arbitration.
If,
within 30 days after the notice provided in Section 16.3, a dispute is not
resolved through negotiation or mediation, the dispute will be arbitrated.
The
parties to the dispute agree to be bound by the selection of an arbitrator,
and
to settle the dispute exclusively by binding arbitration in accordance with
the
following provisions:
(a) All
parties to the dispute will collectively select one arbitrator. If they fail
to
do so within 45 days after the notice provided in Section 16.3, one or more
parties will request the American Arbitration Association to submit a panel
of
five arbitrators who are qualified to resolve the matters in dispute from
which
the choice will be made. The party requesting the arbitration will strike
first,
followed by alternative striking until one name remains. A similar procedure
will be followed if there are more than two parties. The parties may by
agreement reject one entire list, and request a second list. If selection
by the
above method is not completed within 90 days after the notice provided in
Section 16.3, or if there are more than four parties, then an arbitrator
will be
selected by the American Arbitration Association. The arbitrator so selected
will then arbitrate the dispute in New York, New York, and issue an
award.
Page
42 of
60
Execution
Copy November 8, 2005
(b) To
the
extent consistent with the provisions of this Article, the arbitration will
be
conducted under the Commercial Arbitration Rules of the American Arbitration
Association and in accordance with New York law. The arbitrator’s decision will
be made pursuant to the relevant substantive law of the State of New York.
The
award of the arbitrator will be final, binding and non-appealable. Judgment
on
the award may be entered in any court, state or federal court having
jurisdiction.
(c)
The
fees
and expenses of the arbitrator, and the other direct costs of the arbitration,
will be shared by the parties to the dispute in equal proportions. Each party
to
the dispute will bear all other costs and expenses as provided in Section
17.11.
If one or more Members are included in the arbitration because of their
membership or former membership in the Company, such group will collectively
be
treated as one party to the dispute (through the Company as a
party).
(d) The
arbitrator(s) shall have the authority to award equitable relief and
compensatory damages. The arbitrator(s) shall not have any authority to award
punitive damages or other non-compensatory damages against the Company, Nevada
Gold, TrackPower, Southern Tier, or any Transferee or Permitted Transferee
notwithstanding any action based on gross negligence, bad faith, fraud, breach
of this Agreement, or any other conduct that might give rise to a claim for
punitive damages.
(e)
The
decision of the arbitrator(s) shall be rendered within ninety (90) calendar
days
after the date of the selection of the arbitrator(s) or within such period
as
the parties may otherwise agree.
ARTICLE 17:
GENERAL PROVISIONS
17.1 Covenants.
(a) Securities
Law Requirements.
The
Members acknowledge that Nevada Gold's Parent and TrackPower are publicly
held
corporations, and that trading in the securities of such corporations based
upon
non-public information or unauthorized disclosure or other use of material
developments could expose such publicly held corporations to liability. The
Members shall take appropriate precautions to inform its employees and agents
of
such fact and to prevent such persons from making such disclosure.
(b) Regulatory
Information.
Each
Member shall provide to the Company or regulatory agency, as the case may
be, as
required by applicable laws, regulations, rules or orders, all information
pertaining to the Company, the Gaming Complexes, and each Member's officers,
directors, shareholders, financial sources, and associations as shall be
required by any Federal or state securities law or any regulatory authority
with
jurisdiction over the Company, the Complexes, or any Member or any Affiliates
of
such Person including the regulatory authorities in the states of New York,
Colorado, California, Oklahoma, New Mexico or any other jurisdiction.
Specifically and without limitation, each Member shall provide the other
Members
with all information necessary to determine such Member’s and its Affiliates’
suitability for licensing applications and renewals, including regarding
their
ownership structure, corporate structure, officers and directors, stockholders,
members, and partners' identity, financing, transfers of interest, etc.,
as
shall be required by any regulatory authority with jurisdiction over the
other
Members or any of their Affiliates, whether foreign or domestic, including,
without limitation, Colorado, California, New Mexico, Oklahoma, Texas and
New
York, or with respect to any federal, state or other security law requirement
-
this shall be a continuing obligation during the term of the
Agreement.
Page
43 of
60
Execution
Copy November 8, 2005
(c) Prohibited
Payments.
Each
Member agrees that it and its Affiliated Persons will conduct all activities
that affect the Company, and will cause any activities affecting the Company
conducted on their behalf, to be conducted in a lawful manner and specifically
will not engage in the following transactions:
(i) payments
or offers of payment, directly or indirectly, to any domestic or foreign
government official or employee in order to obtain business, retain business
or
direct business to others, or for the purpose of inducing such government
official or employee to fail to perform or to perform improperly his official
functions;
(ii) receive,
pay or offer anything of value, directly or indirectly, from or to any private
party in the form of a commercial bribe, influence payment or kickback for
any
such purpose; or
(iii) use,
directly or indirectly, any funds or other assets of the Company for any
unlawful purpose including, without limitation, political contributions in
violation of applicable laws, regulations, rules or orders.
17.2 Amendments.
This
Agreement may be amended by the unanimous written agreement of the Members.
Any
amendment will become effective upon such approval, unless otherwise provided.
Notice of any proposed amendment must be given at least 5 days in advance
of the
meeting at which the amendment will be considered (unless the approval is
evidenced by duly signed minutes of action). Any duly adopted amendment to
this
Agreement is binding upon, and inures to the benefit of, each Person who
holds a
Membership Interest at the time of such amendment. Notwithstanding any other
provision of this Agreement, with respect to any Transferee not admitted
as a
substitute Member, any amendment to Article 8 (relating to allocation of
Profits
or Losses), Article 9 (relating to Distributions), Section 13.2 (relating
to
Distributions in Liquidation) and Section 17.2 (relating to amendment of
this
Agreement) will not be effective if it adversely affects a Member's rights
under
such Articles or Sections, nor will such Person be required to make any Capital
Contribution, without such Person’s written consent. Non-material amendments
relating to this Agreement or that are necessary for compliance with applicable
law may be made by the Board.
17.3 Intentionally
Deleted.
17.4 Confidentiality.
In
addition to and as provided in Section 3.3 and Article 17, the Members
shall consult with each other as to the form, substance and timing of all
public
announcements regarding the Company or this Agreement, and no public
announcements regarding the Company or this Agreement shall be made by one
Member without the consent of the Board. Notwithstanding the foregoing, a
Member
may make such announcements, file such documents (including this Agreement)
with
the Securities and Exchange Commission and other regulatory authorities,
and
take other actions to comply with the requirements of federal and state
securities laws as it deems necessary.
Page
44 of
60
Execution
Copy November 8, 2005
17.5 Intentionally
Deleted.
17.6 Waiver
of Partition Right.
Each
Member waives and renounces any right that such Person may have prior to
Dissolution and Liquidation to institute or maintain any action for partition
with respect to any real property owned by the Company.
17.7 Waivers
Generally.
No
course of dealing will be deemed to amend or discharge any provision of this
Agreement. No delay in the exercise of any right will operate as a waiver
of
such right. No single or partial exercise of any right will preclude its
further
exercise. A waiver of any right on any one occasion will not be construed
as a
bar to, or waiver of, any such right on any other occasion.
17.8 Equitable
Relief.
If any
Person proposes to Transfer all or any part of such Person’s Membership Interest
in violation of the terms of this Agreement, the Company or any Member may
apply
to any court of competent jurisdiction for an injunctive order prohibiting
such
proposed Transfer except upon compliance with the terms of this Agreement,
and
the Company or any Member may institute and maintain any action or proceeding
against the Person proposing to make such Transfer to compel the specific
performance of this Agreement. Any attempted Transfer in violation of this
Agreement is null and void, and of no force and effect. The Person against
whom
such action or proceeding is brought waives the claim or defense that an
adequate remedy at law exists, and such Person will not urge in any such
action
or proceeding the claim or defense that such remedy at law exists.
17.9 Remedies
for Breach.
The
rights and remedies of the Members set forth in this Agreement are neither
mutually exclusive nor exclusive of any right or remedy provided by law,
in
equity or otherwise. The Members agree that all legal remedies (such as monetary
damages) as well as all equitable remedies (such as specific performance)
will
be available for any breach or threatened breach of any provision of this
Agreement.
17.10 Notices.
All
notices, consents, waivers and other communications required or permitted
by
this Agreement shall be in writing and shall be deemed given to a party when
(a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail
with
confirmation of transmission by the transmitting equipment; or (c) received
or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, e-mail address or person as
a party
may designate by notice to the other parties):
Page
45 of
60
Execution
Copy November 8, 2005
If
to
Nevada Gold:
Nevada
Gold NY, Inc.
0000
Xxxx
Xxx Xxxx., Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attention:
Chief Executive Officer
Fax
no.:
(000) 000-0000
E-mail
address: xxxxx@xxxxxxxxxx.xxx
With
a copy to:
Nevada
Gold & Casinos, Inc.
0000
Xxxx
Xxx Xxxx., Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attention:
General Counsel
Fax
no.:
(000) 000-0000
E-mail
address: xxxxxxx@xxxxxxxxxx.xxx
If
to
Southern Tier:
Southern
Tier Acquisition II LLC
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xx. Xxxxxxx Xxxxx
Fax
no.: 000-000-0000
E-mail
address: XXxxxx@xxxxxxxxx.xxx
With
a copy to:
Xxxxxxxx
Weprin & Ustin LLP
0000
Xxxxxxxx - 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx, Esq
Fax
no.: 000 000 0000
E-mail
address: xxxxxxxxx@xxxxxx.xxx
If
to
TrackPower:
TrackPower,
Inc.
000
00xx
Xxxx Xxxx
Xxxx
Xxxx, Xxxxxxx Xxxxxx X0X0X0
Attention:
Xxxx Xxxxxxxx
Fax:
000-000-0000
E-mail
address: xxx@xxxxxxxxxx.xxx
Page
46 of
60
Execution
Copy November 8, 2005
With
a
copy to:
Towne
Law
Firm
000
Xxx
Xxxxxx Xx
X.X.
Xxx
00000
Xxxxxx,
XX 00000-0000
Attention
Xxx Xxxxx, Esq.
Fax:
000-000-0000
E-mail
address: xxxxxxxxxx@XxxxxXxx.xxx
17.11 Costs.
If the
Company or any Member retains counsel for the purpose of enforcing or preventing
the breach or any threatened breach of any provision of this Agreement or
for
any other remedy relating to it, then the prevailing party will be entitled
to
be reimbursed by the non-prevailing party for all costs and expenses so incurred
(including reasonable attorneys’ fees, costs of bonds, and fees and expenses for
expert witnesses) unless the arbitrator or other trier of fact determines
otherwise in the interest of fairness.
17.12 Partial
Invalidity.
Wherever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law. However, if for
any
reason any one or more of the provisions of this Agreement are held to be
invalid, illegal or unenforceable in any respect, such action will not affect
any other provision of this Agreement. In such event, this Agreement will
be
construed as if such invalid, illegal or unenforceable provision had never
been
contained in it.
17.13 Survivability
of the August 24, 2005 Agreement.
This
Agreement hereby amends, restates and supersedes any and all of the provisions
of the letter agreement dated August 24, 2005, by and among Tioga Downs
Racetrack, LLC, Xxxxxx Xxxxx Acquisition, LLC, Nevada Gold & Casinos, Inc.,
TrackPower, Inc. and Southern Tier Acquisition, LLC.
17.14 Entire
Agreement.
This
Agreement the Exhibits attached hereto, the Contribution Agreement and the
Management Agreement contain the entire agreement and understanding of the
Members with respect to its subject matter, and it supersedes all prior or
other
contemporaneous understandings, correspondence, negotiations, or agreements
between them respecting the within subject matter. No amendment, modification
or
interpretations hereof shall be binding unless in writing and signed by all
the
Members unless it is made in accordance with Section 17.2.
17.15 Binding
Effect.
This
Agreement is binding upon, and inures to the benefit of, the Members and
their
permitted successors and assigns; provided that, any Transferee will have
only
the rights specified in Section 14.6 unless admitted as a substitute Member
in
accordance with this Agreement.
17.16 Further
Assurances.
Each
Member agrees, without further consideration, to sign and deliver such other
documents of further assurance as may reasonably be necessary to effectuate
the
provisions of this Agreement.
Page
47 of
60
Execution
Copy November 8, 2005
17.17 Headings.
Article
and section titles have been inserted for convenience of reference only.
They
are not intended to affect the meaning or interpretation of this
Agreement.
17.18 Terms.
Terms
used with initial capital letters will have the meanings specified, applicable
to both singular and plural forms, for all purposes of this Agreement. All
pronouns (and any variation) will be deemed to refer to the masculine, feminine
or neuter, as the identity of the Person may require. The singular or plural
include the other, as the context requires or permits. The word include (and
any
variation) is used in an illustrative sense rather than a limiting
sense.
17.19 Effectiveness.
This
Agreement shall automatically, without further action by any of the parties,
become effective and enforceable according to its terms immediately upon
execution hereof.
17.20 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original for all purposes, but all of which taken together shall constitute
only one agreement. The production of any executed counterpart of this Agreement
shall be sufficient for all purposes without producing or accounting for
the
other counterparts hereof.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK]
SIGNATURE
PAGE FOLLOWS
Page
48 of
60
Execution
Copy November 8, 2005
IN
WITNESS
WHEREOF, the Members have executed this Operating Agreement of American Racing
and Entertainment, LLC as of the 8th day of November, 2005 but to be effective
as of the date first set forth above.
| NEVADA GOLD: | ||
| NEVADA GOLD NY, INC. | ||
| |
|
|
| By: | ||
|
H. Xxxxxx Xxxx, President |
||
| SOUTHERN TIER: | ||
| SOUTHERN TIER ACQUISITION II LLC | ||
| |
|
|
| By: | ||
|
Xxxxxxx Xxxxx, Manager |
||
| TRACKPOWER: | ||
| TRACKPOWER, INC. | ||
| |
|
|
| By: | ||
|
Xxxx Xxxxxxxx, Chairman |
||
| |
|
|
| By: | ||
|
Xx Xxxxx |
||
| President and Chief Executive Officer | ||
Page
49 of
60
Execution
Copy November 8, 2005
LIST
OF EXHIBITS
Exhibit
"A" Definitions
Exhibit
"B" Constituent
Interests in Members
Page
50 of
60
Execution
Copy November 8, 2005
EXHIBIT
“A”
Definitions
In
addition to other terms which are defined elsewhere in this Agreement, the
following terms, for purposes of this Agreement, shall have the meanings
set
forth in this Exhibit “A”:
|
Act:
|
The
New York Limited Liability Company Law and any successor statute,
as
amended from time to time.
|
|
Adjusted
Capital
Account:
|
The
Capital Account maintained for each Member as provided in Section
7.6 of
the Regulations, (a) increased by (i) the amount of any unpaid
Capital
Contributions agreed to be contributed by such Member, if any,
(ii) an
amount equal to such Member's allocable share of Minimum Gain
as computed
on the last day of such Fiscal Year in accordance with the applicable
Regulations, and (iii) the amount of Company liabilities allocable
to such
Member under Section 752 of the Internal Revenue Code with respect
to
which such Member bears the economic risk of loss to the extent
such
liabilities do not constitute Member Nonrecourse Debt, and (b)
reduced by
the adjustments provided for in Regulations §
1.704-1(b)(2)(ii)(d)(4)-(6).
|
|
Affected
Member:
|
A
Member that is notified that it is an Unsuitable Person under
Section 15.2
or Section 15.3(b).
|
|
Affiliate:
|
An
“Affiliate” of a Person means a Person directly or indirectly controlling,
controlled by or under common control with such Person. For this
purpose
and for purposes of the use of the term “control” in this Agreement,
control means the possession, direct or indirect, of the power
to direct
or cause the direction of the management and policies of a Person,
whether
through the ownership of voting securities, by contract or
otherwise.
|
|
Affiliated
Person:
|
A
Person whose relationship to a Member is such that a Gaming Authority
considers such Person’s suitability as a factor in determining the
Member’s or the Company’s suitability for receiving a Gaming
License.
|
|
Agreement:
|
This
Agreement, as amended from time to time.
|
|
Annual
Plan:
|
The
Annual Plan set forth in Section 4.1(h) of the
Agreement.
|
Page
51 of
60
Execution
Copy November 8, 2005
|
Approved
Substitute
Manager:
|
Xxxxx
X. Xxxxx, Vice Chairman and Chief Executive Officer of Newmark
&
Company Real Estate, Inc., or Xxxxx X. Xxxx, President of Newmark
&
Company Real Estate, Inc.
|
|
Articles:
|
The
Articles of Organization of the Company as filed under the
Act, as amended
from time to time.
|
|
Board:
|
The
Board of Directors established pursuant to Section 4.2 of this
Agreement.
|
|
Budgets:
|
The
Cost Budgets that are approved or otherwise operative under
this Agreement
or the Operating Budgets that are approved or otherwise operative
under
this Agreement.
|
|
Business:
|
The
business of the Company set forth in Section 2.1 of the
Agreement.
|
|
|
|
|
Capital
Account:
|
The
capital account maintained for each Member under Section 7.6
of this
Agreement.
|
|
Capital
Contribution:
|
The
aggregate of the dollar amounts of any cash contributed to
the capital of
the Company and the Fair Market Value of any property contributed
to the
capital of the Company, or, if the context in which such term
is used so
indicates, the dollar amounts of cash and the Fair Market Value
of any
property agreed to be contributed, by such Member to the capital
of the
Company.
|
|
Capital
Transaction:
|
Any
sale, exchange, condemnation (including any eminent domain
or similar
transaction), casualty, financing, refinancing or other disposition
with
respect to any real or personal property owned by the Company
which is not
in the ordinary course of business.
|
|
Cause:
|
Cause
as to the termination of any Director under Section 4.2 (c)
shall be
defined as any breach of the terms of this Agreement, breach
of any term
of employment including violation of policies and procedures
of the
Company, fraud, or willful misconduct, by the Director who
is being
terminated.
|
|
Code:
|
The
Internal Revenue Code of 1986, as amended from time to time
(including
corresponding provisions of subsequent revenue laws).
|
|
Company:
|
American
Racing and Entertainment, LLC, as formed under the Articles
and as
operating under this Agreement.
|
|
Company
Nonrecourse
Liabilities:
|
Nonrecourse
liabilities (or portions thereof) of the Company for which
no Member (or a
related person within the meaning of Treasury Regulation section
1.752-4)
bears the economic risk of loss.
|
Page
52 of
60
Execution
Copy November 8, 2005
|
Conceptual
Plans and
Specifications:
|
The
Conceptual Plans and Specifications for a Gaming Complex
(or any portion
thereof), approved by the Board.
|
|
Consumer
Price Index:
|
The
Consumer Price Index for All Urban Consumers most recently
published by
the Bureau of Labor Statistics of the United States Department
of Labor,
U.S. City Average, all items, (1997-98=100), or any successor
or
replacement index thereto. If the Consumer Price Index shall,
after the
date hereof, be converted to a different standard reference
base or shall
otherwise be revised, any determination hereunder which uses
the Consumer
Price Index shall be made with the use of such conversion
factor, formula
or table for converting the Consumer Price Index as may be
published by
the Bureau of Labor Statistics, or, if said Bureau shall
not publish the
same, then with the xxx of such conversion factor, formula
or table as may
be published by Prentice Hall, Inc., or, failing such publication,
by any
other nationally recognized publisher of similar statistical
information.
If the Consumer Price Index shall cease to be published,
then for the
purpose of this Agreement there shall be substituted for
the Consumer
Price Index such other similar index as the Company accountants
shall
determine which measures changes in the relative purchasing
power of
United States currency over the term of this Agreement.
|
|
Contribution
Agreement:
|
The
Contribution Agreement dated the same date as the execution
date of this
Agreement, between the Company, Nevada Gold, TrackPower,
Inc. and Southern
Tier Acquisition, LLC, relating to the contribution of certain
assets to
the Company.
|
|
Cost
Budget:
|
The
Cost Budget for all development and construction costs for
each Gaming
Complex (or any part thereof), approved by the Board.
|
|
Debt:
|
(a)
all liabilities and obligations, contingent or otherwise:
(i) in respect
to borrowed money (whether or not the recourse of the lender
is to the
whole or the assets of the Company or only to a portion thereof);
(ii)
evidenced by bonds, notes, debentures or similar instruments;
(iii)
representing the balance deferred and unpaid of the purchase
price of any
property or services, if and to the extent any of the foregoing
described
in clauses (i), (ii) and (iii) would appear as a liability
on the balance
sheet of the Company; (iv) evidenced by bankers' acceptances
or similar
instruments issued or accepted by banks; (v) for the payment
of money
relating to a capitalized lease obligation; or (vi) evidenced
by a letter
of credit or reimbursement obligation of such person with
respect to any
letter of credit; (b) all liabilities of others of the kind
described in
the preceding clause (a) that the Company has guaranteed
or that is
otherwise its legal liability; and (c) all obligations secured
by a lien
to which the property or assets (including, without limitation,
leasehold
interests and any other tangible or intangible property rights)
of the
Company are subject, whether or not the obligations secured
thereby shall
have been assumed by or shall otherwise be the Company's
legal liability,
provided, that the amount of such obligations shall be limited
to the
lesser of the fair market value of the assets or property
to which such
lien attaches and the amount of the obligation so
secured.
|
Page
53 of
60
Execution
Copy November 8, 2005
|
Director:
|
Any
Person named in the Articles and any Person elected as
a Director of the
Company as provided in this Agreement, but does not include
any Person who
has ceased to be a Director of the Company.
|
|
Dissolution:
|
The
dissolution of the Company as provided in Section 12.1.
|
|
Distribution:
|
A
distribution of money or other property made by the Company
with respect
to a Membership Interest.
|
|
EBIDTA:
|
Earnings
of the Company before interest, depreciation, taxes and
amortization.
|
|
Fair
Market Value:
|
Fair
Market Value as defined in Section 6.1.
|
|
Final
Plans and
Specifications:
|
The
final plans and specifications for a Gaming Complex (or
any portion
thereof), approved by the Board.
|
|
Fiscal
Year:
|
The
fiscal and taxable year of the Company as determined under
this Agreement,
including both 12-month and short taxable years.
|
|
Gaming
Authority
|
Any
national, state, tribal, local and other governmental,
regulatory and
administrative authority, agency, board, commission or
official
responsible for or involved in the regulation of gaming
activities of the
Company or its Members in any jurisdiction.
|
|
Gaming
Complex:
|
For
each of the Xxxxxx Xxxxx Complex and the Tioga Downs Complex,
the Project
Site, and any building structures and improvements construed
on or affixed
to the Project Site; and all roads, utilities, dredging,
grading,
landscaping, and other off-site improvements constructed
or developed by
the Company on or in support of the Project
Site.
|
Page
54 of
60
Execution
Copy November 8, 2005
|
Gaming
Facilities:
|
Any
and all buildings within a Gaming Complex including but
not limited to
hotel, parking, gaming, restaurant and entertainment
facilities and all
surface parking lots serving such buildings.
|
|
Gaming
Laws:
|
The
laws pursuant to which any Gaming Authority possesses
regulatory,
licensing or permit authority over gaming within any
jurisdiction.
|
|
Gaming
License:
|
Any
license, permit, authorization, consent or favorable
determination from or
issued by a Gaming Authority pursuant to any Gaming
Laws.
|
|
General
Manager:
|
The
General Manager for the Gaming Complexes.
|
|
Indemnified
Person:
|
As
to any Member indemnified under Article 10, such Member
and any Affiliate
of such Member (other than the Indemnifying Member),
and any agents,
attorneys, officers, members, directors, stockholders
or employees of such
Member or such Affiliate.
|
|
Indemnifying
Member:
|
The
Member that woes any amount or duty to any Indemnified
Person pursuant to
Article 10.
|
|
Initial
DIP Financing:
|
The
debtor-in-possession financing in the net amount of $1,414,000
provided to
Mid-State Raceway, Inc. by VDA. Such amount is net of
(a) loans advanced
by Nevada Gold for the purpose of funding any portion
of such
debtor-in-possession financing, which loans have been
converted to equity
pursuant to Section 7.1, and (b) any loans advanced by
the Company to
Mid-State Raceway, Inc. from and after the execution
date of this
Agreement.
|
|
Interest
Rate:
|
The
prime interest rate of X.X. Xxxxxx Xxxxx & Co. (or any successor
bank), plus 2%.
|
|
Licensed
Member:
|
Any
Member to which a Gaming License has been granted, or
to whose Affiliate a
Gaming License has been granted.
|
|
Liquidation:
|
The
process of terminating the Company and winding up its
business under
Article 13 after its Dissolution.
|
|
Losses:
|
The
net losses, deductions and credits of the Company determined
in accordance
with generally accepted accounting principles and as
reported separately
or in the aggregate, as appropriate, on the tax returns
of the Company
filed for federal income tax
purposes.
|
Page
55 of
60
Execution
Copy November 8, 2005
|
Major
Decisions
|
As
defined in Section 4.1(c).
|
|
Management
Company
|
Nevada
Gold NY, Inc.
|
|
Material
Modification:
|
A
modification of addition to or deletion from the Conceptual
Plans and
Specifications or the Final Plans and Specifications
for a Gaming Complex,
including without limitation, the sign layouts as well
as the use of
proprietary marks.
|
|
Member(s):
|
Each
of the Persons executing this Agreement as a Member,
or who is
subsequently admitted as a substitute or an additional
Member as provided
in this Agreement, but not including any Person who
has ceased to be a
Member in the Company.
|
|
Member
Nonrecourse
Debt:
|
Any
nonrecourse debt of the Company (or portions thereof)
for which any Member
(or a related person within the meaning of Treasury
Regulation section
1.752-4) bears the economic risk of loss.
|
|
Member
Nonrecourse
Deductions:
|
The
amount of deductions, losses and expenses equal to
the net increase during
the year in Minimum Gain attributable to a Member Nonrecourse
Debt,
reduced (but not below zero) by proceeds of such Member
Nonrecourse Debt
distributed during the year to the Members who bear
the economic risk of
loss for such debt, as determined in accordance with
applicable
Regulations.
|
|
Membership
Interest:
|
The
Membership Interests established under Section 3.1
of this Agreement;
with
respect to each Person owning a Membership Interest
in the Company, all of
the Membership Interests of such Person in the Company
expressed as a
Percentage.
|
|
Minimum
Gain:
|
With
respect to Company Nonrecourse Liabilities, the amount
of gain that would
be realized by the Company if it disposed of (in a
taxable transaction)
all properties that are subject to Company Nonrecourse
Liabilities in full
satisfaction of such liabilities, computed in accordance
with applicable
Regulations. With respect to each Member Nonrecourse
Debt, the amount of
gain that would be realized by the Company if it disposed
of (in a taxable
transaction) the property that is subject to such Member
Nonrecourse Debt
in full satisfaction of such debt, computed in accordance
with applicable
Regulations.
|
|
Net
Sales Cash:
|
Cash
receipts of the Company from a Capital Transaction,
less payment of fees
or expenses related to the Capital
Transaction.
|
Page
56 of
60
Execution
Copy November 8, 2005
|
Nevada
Gold:
|
Nevada
Gold NY, Inc., a New York corporation, owned 100%
by Nevada Gold &
Casinos, Inc.
|
|
New
York Regulatory
Authority
|
A
Gaming Authority whose approval is necessary in order
for the Company to
obtain or maintain Gaming Licenses with respect to
the Gaming
Complexes.
|
|
Non-Arbitrable
Decisions:
|
As
defined in Section 4.1(d).
|
|
Non-Compliant
Member
|
As
defined in Sections 15.2 or 15.3(b) hereof, as
applicable.
|
|
Notice:
|
Written
notice (including any communication or delivery),
actually given pursuant
to Section 17.10.
|
|
Operating
Budget:
|
The
Operating Budget defined in Section 4.1.
|
|
Percentages:
|
The
percentage ownership of a Member in the Company,
as initially set forth in
Section 3.1; subject, however, to appropriate adjustment
in the event of
any dilution pursuant to Section 7.2, in the event
of any transfer
pursuant to Articles 14 or 15, or as may be otherwise
provided in this
Agreement.
|
|
Permitted
Transferee:
|
A
person described in Section 14.3 to whom a Membership
Interest may be
transferred without compliance with a right of first
refusal.
|
|
Person:
|
An
individual, corporation, trust, partnership, limited
liability company,
limited liability association, unincorporated organization,
association or
other entity.
|
|
Profits:
|
The
net income and gains of the Company determined in
accordance with
generally accepted accounting principles and as reported
separately or in
the aggregate, as appropri-ate, on the tax returns
of the Company filed
for federal income tax purposes.
|
|
Project
Site(s):
|
The
sites on which the Tioga Downs Complex and the Xxxxxx
Xxxxx Complex are
located.
|
|
Racing
Manager:
|
The
manager for the Racing Operations.
|
|
Racing
Operations:
|
As
defined in Section 4.5 hereof.
|
|
Regulations:
|
The
Regulations (including temporary regulations) promulgated
under the Code,
as amended from time to time (including corresponding
provisions of
succeeding regulations).
|
Page
57 of
60
Execution
Copy November 8, 2005
|
Reserves:
|
With
respect to any Fiscal Period, cash set aside by
the Company for working
capital and to pay taxes, insurance, debt service,
repairs, capital
replacements, capital improvements, contingent
liabilities or other costs
and expenses incident to the ownership or operation
of the Company's
properties, as estimated in good faith by the Board.
|
|
Xxxxx/Vestin
Settlement
Payment:
|
The
amount of $526,550 paid by Nevada Gold to Vestin
Mortgage, Inc., Xxxxx
Xxxxx, Xxxxxxxx Xxxxx, All Capital, LLC, and All
Xxxxxx Acquisition, LLC
on September 12, 2005.
|
|
Southern
Tier:
|
Southern
Tier Acquisition II LLC, a New York limited liability
company owned
36.364% by Xxxx Xxxxx.
|
|
TDR
Loan:
|
The
loan in the original principal amount of $1,125,000
made by Nevada Gold to
Tioga Downs Racetrack, LLC, of which there is an
outstanding principal
balance of $1,001,550 on the execution date of
this
Agreement.
|
|
Third
Party:
|
With
respect to any Member, a Person other than an
Affiliate.
|
|
Third
Party Offer:
|
A
bona
fide,
non-collusive, binding, arm’s-length written offer from a Third Party
stated in terms of U.S. dollars.
|
|
Tioga
Downs Complex:
|
Tioga
Downs Racetrack, a harness track located in Nichols,
New York, located on
approximately 145 acres of real estate, and all
improvements located
thereon.
|
|
Tioga
Downs Contributed Assets: |
100%
of the ownership interests in Tioga Downs Racetrack,
LLC and Tioga Downs
Management Co., Inc.
|
|
TrackPower:
|
TrackPower,
Inc., a Wyoming corporation.
|
|
Transfer:
|
A
sale, exchange, assignment or other disposition
of a Membership Interest,
whether voluntary or by operation of law.
|
|
Transferee:
|
A
Person to whom a Membership Interest is transferred
in compliance with
this Agreement.
|
|
Transferor:
|
A
Person who transfers a Membership Interest in compliance
with this
Agreement.
|
Page
58 of
60
Execution
Copy November 8, 2005
|
Trigger
Date:
|
The
later of the date of receipt by the Company and
receipt by all other
Members of a notice from a Licensed Member under
Sections 15.2 or 15.3
that it intends to exercise the rights set forth
in Section
15.4.
|
|
Unanimous
Decisions
|
As
defined in Section 4.1(b).
|
|
Unreturned
Capital
Contributions:
|
The
total amount of Capital Contributions made to the
Company by a Member less
the total distributions received by that Member.
In no event will the
total Unreturned Capital Contribution of a Member
be less than
zero.
|
|
Unsuitable
Person
|
(i) any
Person who, if the Person is an Affiliate of the
Company or any Member,
will cause the Company, any Member or any Affiliate
of any Member (A) not
to obtain any Gaming License, or (B) to have a
Gaming License revoked or
note renewed, or (ii) a Member who is properly
determined by a second
Member to be an Unsuitable Person in accordance
with Sections15.2 or
15.3(b) for reasons that remain unremedied.
|
|
VDA:
|
Xxxxxx
Xxxxx Acquisition, LLC, a Delaware limited liability
company owned 50% by
Southern Tier and 50% by TrackPower, Inc.
|
|
Xxxxxx
Xxxxx Complex:
|
Xxxxxx
Xxxxx Raceway, a harness track located in Xxxxxx,
New York, located on
approximately 600 acres of real estate, and all
improvements located
thereon, including a 47,700 square foot grandstand,
clubhouse, 34,000
square foot VLT facility, a 175-room hotel, surface
parking and other
amenities.
|
|
Xxxxxx
Xxxxx Contributed
Assets:
|
100%
of the ownership interests in VDA.
|
|
Withdrawal:
|
The
occurrence of an event with respect to a Member
which terminates
membership in the Company, as provided in
Section 12.2.
|
Page
59 of
60
Execution
Copy November 8, 2005
EXHIBIT
"B"
Constituent
Interests in Members
Directors,
Officers and Owners of Southern Tier:
|
Manager:
|
Xxxxxxx
Xxxxx
|
||
|
Owners:
|
Xxxxxxx
X. Xxxxx
|
36.364%
|
|
|
Xxxxx
Xxxxx
|
18.182%
|
||
|
Xxxxx
Xxxxx
|
9.091%
|
||
|
Xxxxx
Xxxxxxxxx
|
9.091%
|
||
|
Xxx
Xxxxxxx
|
7.273%
|
||
|
Buzzy
Geguld
|
5.455%
|
||
|
Xxxxx
Xxxxxxxxx
|
5.455%
|
||
|
Xxxxx
Xxxx
|
4.545%
|
||
|
Xxxxxx
Xxxx
|
2.727%
|
||
|
Marc
Holiday
|
1.817%
|
||
|
TOTAL
|
100%
|
Directors,
Officers and Owners (5% or more) of TrackPower, Inc.
|
Directors:
|
Xxxx
X. Xxxxxxxx, Chairman
|
||
|
Xxxxxxx
X. Xxxxxxxx
|
|||
|
Xxxxxx
X. Xxxxx
|
|||
|
Xxxxx
Xxxxxx
|
|||
|
Officers:
|
Xxxxxx
X. Xxxxx, CEO and President
|
||
|
Xxxx
Xxxxxxxx, CFO and Treasurer
|
|||
|
Xxxxxx
Xxxxxx, Secretary
|
|||
|
Shareholders
(5% or more):
|
Xxxx
Xxxxxxxxx
|
||
|
Asolare
II, LLC
|
Directors,
Officers and Owners (5% or more) of Nevada Gold & Casinos,
Inc.
|
Directors:
|
H.
Xxxxxx Xxxx
|
||
|
Xxxx
Xxxxxxx
|
|||
|
Xxxxx
Xxxxx
|
|||
|
Xxxxxxx
Xxxxx
|
|||
|
Xxxxxxx
Xxxxxx
|
|||
|
Xxx
Xxxxxxx
|
|||
|
Officers:
|
H.
Xxxxxx Xxxx, CEO
|
||
|
Xxx
Xxxxxxx, President & COO
|
|||
|
Xxxxxxx
X. Xxxxxx, General Counsel and Secretary
|
|||
|
Xxx
Xxxxxxx, Vice President - Development
|
|||
|
Shareholders
(5% or more):
|
Clay
County Holdings, Inc.
|
Page 60
of 60
