EXHIBIT 10.8
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("AGREEMENT") is executed as of this 7th day
of October, 2003, by and between Xxxxxx Development, Inc., an Indiana
corporation (the "MANAGER"), and The Majestic Star Casino, LLC, an Indiana
limited liability company (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Manager and the Company entered into a Management
Agreement on June 18, 1999 (the "PRIOR AGREEMENT"), which provided for the
Manager to be compensated for managing the affairs of the Company;
WHEREAS, the parties thereto now desire to terminate the Prior
Agreement in its entirety and enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties do hereby agree as
follows:
1. Terms used but not otherwise defined herein shall have the
meanings set forth in that certain Indenture, dated as of the date hereof, by
and among the Company, The Majestic Star Casino Capital Corp. ("MSCC"), the
subsidiary guarantors named therein and The Bank of New York, as trustee
thereunder (the "INDENTURE").
2. During the term of this Agreement, Manager shall, subject to
and in accordance with the terms of the Third Amended and Restated Operating
Agreement dated as of March 29, 1996, as amended (the "OPERATING AGREEMENT"),
serve as the manager of the Company.
3. Effective upon the closing of the transactions contemplated by
(i) that certain Purchase Agreement, dated as of September 26, 2003, by and
among the Company, MSCC, Xxxxxxxxx & Company, Inc., Xxxxx Fargo Securities, LLC
and certain affiliates of the Company (the "NOTE OFFERING"), and (ii) that
certain Loan and Security Agreement, dated as of October 7, 2003, by and among
the lenders signatory thereto (the "Lenders"), Xxxxx Fargo Foothill, Inc., as
the arranger and administrative agent for the Lenders (the "Agent"), the
Company, and certain subsidiaries of the Company (the "Loan Agreement"),
pursuant to which an $80.0 million credit facility will be established (the
"Credit Facility"), the Prior Agreement shall be terminated and of no further
force and effect.
4. Subject to Section 6 hereof, effective October 1, 2003, the
Company shall pay to the Manager, on a quarterly basis, within 15 days after the
end of each quarter, a management services distribution equal to (i) one percent
(1%) of the Company's Net Revenues for such quarter; plus (ii) five percent
(5.0%) of the Company's Consolidated Cash Flow for such quarter. In addition,
prior to October 15, 2003, the Company shall pay to the Manager, a management
services distribution for the quarter ended September 30, 2003 based on the
foregoing formula.
5. SUBORDINATION.
(a) Agreement to Subordinate. Except as provided in
paragraph (c) of this Section 5, the Company and BDI agree, that the payment of
Management Distributions under this Agreement are subordinated and junior in
right of the payment in full (i) of principal, interest, premium and Liquidated
Damages, if any, on the Notes, and (ii) of principal, interest, and premium, if
any, under the Credit Facility, and that the subordination is for the benefit of
and shall be enforceable by, the Holders of Notes and Lenders, and that each
Holder of Notes shall be deemed to have acquired such Notes, and that each
Lender shall be deemed to have made the loans described under the Loan Agreement
in reliance upon the provisions contained in this Agreement.
(b) Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors of the Company in a
liquidation or dissolution of the Company or its properties, in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its properties, in an assignment for the benefit of creditors or in
any marshalling of assets and liabilities of the Company:
(i) Holders of Notes and Lenders shall receive
payment in full in cash of any Obligations (including interest after the
commencement of any such proceeding at the rate specified in the Indenture,
whether or not such interest is an allowable claim) before BDI shall be entitled
to receive any payment or distribution of any kind or character with respect to
any Management Distributions under this Agreement; and
(ii) until the Obligations are paid in full in
cash, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which BDI would be
entitled under this Agreement but for this Section 5 shall be made to Holders of
Notes and the Lenders, as their interests may appear.
(c) Payment Default. The Company shall not make any
payment or distribution of any kind or character to BDI with respect to any
Management Distributions due under this Agreement until all Obligations with
respect to the Notes or the Credit Facility have been paid in full; provided,
however, that if no Default in the payment when due, whether at maturity, upon
redemption, acceleration, declaration or otherwise, of any Obligations, with
respect to the Notes has occurred and is continuing on the date of such payment
or distribution with respect to any Management Distributions due under this
Agreement, the Company may make any such payment or distribution with respect to
any Management Distributions due under this Agreement; provided, further, that
the Company may resume payments and distributions with respect to any Management
Distributions due under this Agreement upon the date upon which any such Default
has been cured or waived.
(d) When Distribution Must Be Paid Over. In the event
that BDI receives any payment or distribution of any kind or character, whether
in cash, properties or securities, in respect of any Management Distributions
under this Agreement at a time when such payment or distribution is prohibited
by this Section 5 and BDI has actual knowledge that the payment is prohibited,
such payment shall be held by BDI, in trust for the benefit of, and shall be
paid
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forthwith over and delivered, upon written request, (on a pro rata basis based
on the aggregate principal amount of Notes held by the Holders), to the Holders
of the Notes with respect to Notes and to the Lenders with respect to the Loan
Agreement remaining unpaid to the extent necessary to pay the Obligations in
full, after giving effect to any concurrent payment or distribution to or for
the Holders of the Notes and the Lenders.
If BDI is required by any court or otherwise to deliver
payments it received by the Company to a Holder of the Notes or the Lenders, any
amount so paid to the extent theretofore discharged, shall be reinstated in full
force and effect.
To the extent any payment of the Obligations on the Notes
(whether by or on behalf of the Company, as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, the
Obligations on the Notes or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
(e) Notice By the Company. The Company shall promptly
notify BDI in writing of any facts known to the Company that would cause a
payment of any Management Distributions under this Agreement to violate this
Section 5, but failure to give such notice shall not affect the subordination of
the Management Distributions to the Notes and the Lenders as provided in this
Section 5.
(f) Subrogation. Subject to the payment in full of all
Obligations on the Notes and the Credit Facility, BDI shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Company's
obligation to pay Management Distributions) to the rights of the Lenders and the
Holders of Notes to receive payments or distributions of cash, properties or
securities of the Company applicable to the Notes until the Notes have been paid
in full. A distribution made under this Section 5 to the Holders of the Notes or
the Lenders that otherwise would have been made to BDI is not, as between the
Company and BDI, a payment by the Company to or on account of the Notes or the
Credit Facility.
(g) Relative Rights. This Section 5 defines the relative
rights of BDI and the Holders of the Notes and the Lenders. The relative rights
of the Lenders and the Holders of Notes are set forth in that certain
Intercreditor Agreement, dated the date hereof, among the Company and certain of
its affiliates, the Agent, and The Bank of New York. Nothing in this Agreement
shall:
(i) impair, as between the Company and BDI, the
obligation of the Company, which is absolute and unconditional, to pay
Management Distributions in accordance with the terms of this Agreement;
(ii) affect the relative rights of BDI and
creditors of the Company other than their rights in relation to Holders of the
Notes and the Lenders; or
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(iii) prevent BDI from exercising its available
remedies upon a default under this Agreement, subject to the rights of the
Holders of the Notes and the Lenders to receive distributions and payments
otherwise payable to BDI.
The failure to make a payment on account of Management
Distributions by reason of any provision of this Section 5 shall not be
construed as preventing the occurrence of a default under this Agreement.
(h) Subordination May Not Be Impaired by the Company. No
right of any Holder of Notes to enforce the subordination of the payment of
Management Distributions under this Agreement shall at any time in any way be
prejudiced or be impaired by any act or failure to act by the Company or BDI or
by the failure of the Company or BDI to comply with this Agreement, regardless
of any knowledge thereof which BDI may have otherwise been charged with.
Without in any way limiting the generality of the foregoing
paragraph, the Holders of the Notes may, at any time and from time to time,
without the consent of or notice to BDI, without incurring responsibility to BDI
and without impairing or releasing the subordination provided in this Section 5
or the obligations hereunder of BDI to the Holders of the Notes, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, the Notes, or otherwise amend
or supplement in any manner the Notes; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing the Notes; (iii)
release any Person liable in any manner for the payment or collection of the
Notes; and (iv) exercise or refrain from exercising any rights against the
Company and any other Person.
(i) Amendments. The provisions of this Section 5 shall
not be amended or modified without the written consent of the parties holding a
majority of the outstanding Notes.
6. Notwithstanding the foregoing, the Company shall not be
required to pay the distributions under Section 4, if a Default or Event of
Default has occurred and is continuing under (i) the Indenture or (ii) the
Credit Facility (as such terms are defined therein), or would occur as a
consequence of such payment. Any payments otherwise owed hereunder that are not
made shall not be canceled but rather shall accrue and shall be payable by the
Company promptly when, and to the extent, the Company is no longer prohibited
from making such payments.
7. The terms of this Agreement shall commence on the day and year
first above written and shall continue until the date on which the manager no
longer serves as manager of the Company pursuant to the Operating Agreement,
unless earlier terminated by either party upon 60 days prior written notice.
8. The Manager shall have no liability hereunder for any breach
of this Agreement, except to the extent that any such breach hereunder gives
rise to a breach of the Manager's obligations as set forth in the Operating
Agreement, which breach shall be remedied pursuant to the terms thereof. The
Company's sole remedy for any claim hereunder shall be the termination of this
Agreement, provided, that nothing set forth herein shall in any way impair the
Company's
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rights and remedies are set forth in the Operating Agreement. The Company shall
indemnify the Manager, and any employee, officer, manager, director or Agent of
the Manager, as and to the extent set forth in Section 8.2 of the Operating
Agreement.
9. MISCELLANEOUS.
(a) This Agreement and the Operating Agreement set forth
the entire understanding of the parties with respect to the Manager's rendering
of management services to the Company. This Agreement may not be modified,
waived, terminated or amended, except expressly by an instrument in writing
signed by the Manager and the Company.
(b) This Agreement and the right to receive distributions
due hereunder may be assigned or pledged in whole or in part by the Manager to
any party. This Agreement may not be assigned or pledged by the Company without
the prior written consent of the Manager.
(c) In the event that any provision of this Agreement
shall be held to be void or unenforceable in whole or in part, the remaining
provisions of this Agreement and the remaining portion of any provision held
void or unenforceable in part shall continue in full force and effect.
(d) Except as otherwise specifically provided herein,
notice given hereunder shall be deemed sufficient if delivered personally or
sent by registered or certified mail to the address of the party for whom
intended at the principal executive offices of such party, or at such other
address as such pay may hereinafter specify by written notice to the other
party.
(e) No waiver by either party of any breach of any
provision of this Agreement shall be deemed a continuing waiver or a waiver of
any preceding or succeeding breach of such provision or of any other provision
herein contained
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
(g) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the day and year first above written.
XXXXXX DEVELOPMENT, INC.
_____________________________
Name:
Title:
THE MAJESTIC STAR CASINO, LLC
_____________________________
Name:
Title:
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