Document:

Exhibit 10.24

 

MEMBER CONTROL AGREEMENT OF

SW MISSOURI, LLC

 

This Member Control Agreement (“Agreement”) of SW
Missouri, LLC, a Minnesota limited liability company (the “Company”), is
entered into effective as of the 14th day of June, 2004, by and between the
Company and Southwest Casino and Hotel Corp., a Minnesota corporation, as the
sole member of the Company (the “Member”).

 

In
consideration of the formation of the Company on May 25, 2004, at the time of
the filing of the Company’s Articles of Organization with the office of the
Secretary of State of the State of Minnesota, and of the Member’s contribution
to and interest in the Company, the Member and the Company hereby agree as
follows:

 

1.                                       Name.  The name of the Company is SW Missouri, LLC.

 

2.                                       Purpose.  The
Company is formed for the object and purpose of, and the nature of the business
to be conducted and promoted by the Company are, engaging in any lawful act or
activity for which limited liability companies may be formed under the
Minnesota Limited Liability Company Act, Minnesota Statutes Chapter 322B et seq. (the “Act”), and engaging in any and all activities
necessary or incidental to the foregoing. 
This Agreement is adopted as a “member control agreement” within the
meaning of Section 322B.37 of the Act.

 

3.                                       Certificates.  The Member, as an authorized person within
the meaning of the Act, shall execute, deliver and file, or cause the
execution, delivery and filing of, all certificates or other similar documents
required or permitted by the Act to be filed in the Office of the Secretary of
State of the State of Minnesota.

 

4.                                       Registered Office.  The
address of the registered office of the Company in the State of Minnesota is
2001 Killebrew Drive, Suite 306, Minneapolis, MN  55425, in the County of Hennepin.

 

5.                                       Sole Member.  The name and the business,
residence or mailing address of the sole Member of the Company is as follows:

 

	
  Name

  	
   

  	
  Address

  
	
  Southwest Casino and Hotel
  Corp.

  	
   

  	
  2001 Killebrew Drive, Suite
  306

  Minneapolis, MN 55425

  

 

6.                                       Title to Company Property.  All property of the Company, whether real or
personal, tangible or intangible, shall be owned by the Company as an entity,
and the Member, individually, shall not have any direct ownership interest in
such property.

 

7.                                       Additional Members.  New or additional members in the Company may be admitted only by
approval of the Member in its sole discretion. 
Any proposed new or additional member of the Company shall be subject to
all of the terms and conditions of this Agreement and shall be required to
adopt this Agreement in order to be admitted as a member of the Company.

 

 

8.                                       Transfer of Membership Interests. 
Membership interests in the Company may be transferred only to the
extent permitted by law.

 

9.                                       Powers.  The Company shall have the power
and authority to do any and all acts necessary or convenient to or in
furtherance of the purposes described in Section 2 hereof, including all
power and authority, statutory or otherwise, possessed by, or which may be
conferred upon, limited liability companies under the laws of the State of
Minnesota.

 

10.                                 Tax Characterization.  To the fullest extent permitted by applicable federal, state or
local tax law, the Company will be treated for tax purposes as having no
separate existence from the Member, and no action inconsistent with such tax
characterization of the Company will be taken without the express written
consent of the Member.  To the extent the
Company may have more than a single member, the Board is authorized to make
appropriate amendments hereto to address the Company’s change in tax status.

 

11.                                 Management.  The
management of the Company shall be vested exclusively in a Board of Directors,
consisting of a number of directors as determined and as elected by the Member
from time to time (the “Board,” and each member thereof, a “Director”).  Each Director shall be a manager of the
Company.  When there is more than a
single Director, the Board shall take action by majority consent.  The Board may appoint officers of the Company
as the Board deems appropriate and give such officers such titles as the Board
may determine in lieu of the officer titles referenced under the Act.

 

12.                                 Reliance by Third Parties.  Any
person or entity dealing with the Company may rely upon a certificate signed by
any Secretary or Assistant Secretary of the Company, or signed by any Secretary
or Assistant Secretary of the Member as to:

 

(i)                                     the persons or entities authorized to execute
and deliver any instrument or document of or on behalf of the Company, and

 

(ii)                                  the persons or entities authorized to take any
action or refrain from taking any action as to any matter whatsoever involving
the Company.

 

13.                                 Indemnification. 
Subject to any limitations imposed by the Act that cannot be modified in
this Agreement, the Company, its receiver or its trustee, will indemnify and
save harmless the Directors, the Member, the officers or any of their
respective Affiliates (as defined in Section 20 hereof), officers,
directors, shareholders, employees, agents, subsidiaries or assigns, from and
against any liability, loss or damage incurred by them or by the Company by
reason of any claim or demand whatsoever related to or arising from any act
performed or omitted to be performed by them or any of them in connection with
the business of the Company or the provisions of this Agreement, including
costs and attorneys’ fees (which costs and attorneys’ fees may be paid as
incurred) in defense of, any amounts expended in the settlement of and any
judgments resulting from any such claim or demand, provided that no person or
entity will be entitled to indemnification hereunder for their own acts or
omissions constituting fraud, intentional criminal misconduct or gross
negligence, for settlements to which the Member did not consent, or for actions
not meeting the standard of care described in Section 14 hereof.  Any indemnification under this
Section 13 shall be satisfied solely out of the assets of the Company

 

2

 

and
no person shall have any recourse against the Member with respect to such
indemnification.  The indemnification
provided in this Section 13 is for the benefit of the specified persons
only and shall not be deemed to create any right to indemnification for any
other person.

 

14.                                 Standard of Care; Personal Liability.  The
Directors, officers and other persons appointed by the Member or the Board to
act on their behalf shall act in a manner that they believe in good faith to be
in the best interests of the Company and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.  The Directors, officers and such persons
shall not be liable to the Company or the Member for any action taken in
managing the business or affairs of the Company if they perform the duties of
their offices in compliance with the standard contained in this
Section 14, and they shall be entitled to indemnification as provided in
Section 13 hereof.  The Directors,
officers and other persons appointed by the Member or the Board to act on their
behalf shall not be liable to the Company or to the Member for any loss or
damage sustained by the Company or the Member except loss or damage resulting
from intentional misconduct or knowing violation of law or a transaction for
which they received a personal benefit.

 

15.                                 Records and Accounting Matters.  The
Board will keep or cause to be kept the records and books of account of the
Company in a manner consistent with good business practices and will make the
same available to the Member from time to time for any purpose reasonably
related to  Member’s interest in the
Company.

 

16.                                 Capital Contribution.  As its
initial capital contribution to the Company and in exchange for the entire
equity interest in the Company consisting of units of membership interest (the
“Units”), the Member has contributed the sum of $1,805,584.69.

 

17.                                 Additional Contributions.  The
Member may make, but shall not be required to make, any additional capital
contributions to the Company.  No
additional Units will be issued by the Company without the consent of the
Member.

 

18.                                 Allocation of Profits and Losses.  The Company’s profits and losses shall be allocated exclusively to
the Member, or, pursuant to the tax characterization described in
Section 10 hereof, such profits and losses shall be treated as realized or
incurred directly by the Member for certain tax purposes.

 

19.                                 Distributions.  Subject to any limitations
imposed by the Act, distributions shall be made to the Member at the times and
in the aggregate amounts determined by the Board.

 

20.                                 Transactions with the Member and Affiliates.  To the
extent permitted by applicable law, and, unless otherwise provided in this
Agreement, the Company is hereby authorized to purchase property and services
from, sell property or services to, or otherwise deal with any member of the
Company, acting on its own behalf, or any Affiliate of any member, provided
that any such purchase, sale, or other transaction will be made on terms and
conditions that are no less favorable to the Company than if the sale,
purchase, or other transaction had been entered into with an independent third
party.  For the purposes of this
Agreement, “Affiliate” means any one or more of the following:  (i) a person directly or indirectly
controlling, controlled by or under common control with another person; (ii) a
person owning or controlling

 

3

 

ten
percent (10%) or more of the outstanding voting securities of such other
person; (iii) any officer, director, manager, member or partner of such person;
and (iv) if such other person is an officer, director, manager, member or
partner, any company for which such person acts in any such capacity.

 

21.                                 Resignation.  Any Director may
resign from the Board upon providing notice thereof to the Company.  The Member shall have sole authority to
replace any Director so resigning.

 

22.                                 Dissolution and Winding Up.  The
Company shall have perpetual existence unless it shall be dissolved and its
affairs shall have been wound up upon (a) the written consent of the Member or
(b) the entry of a decree of judicial dissolution under the Act.  Upon dissolution of the Company, the Member
or the person required by law to wind up the Company’s affairs will cause the
cancellation of the Articles of Organization and will reduce the assets of the
Company to cash (unless it is determined to distribute certain Company assets
in kind).  Proceeds will be applied in
the following order of priority:

 

(i)                                     to the payment of liabilities and obligations of the Company (unless
it is determined that, pursuant to a distribution in kind, the Member will
assume such liabilities or take assets of the Company subject thereto),
including liabilities payable to the Member, loans from the Member and expenses
of winding up;

 

(ii)                                  to the establishment of such reserves as such
person may reasonably deem necessary for any contingent liabilities and
obligations of the Company for such period as such person deems advisable for
the purpose of disbursing such reserves in payment of such liabilities or
obligations and, at the expiration of such period, the balance of such
reserves, if any, will be distributed as hereinafter provided; and

 

(iii)                               the balance, if any, to be distributed to the
Member.

 

23.                                 Limited Liability.  Except as otherwise provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and
neither the Member nor any of its Affiliates, any Director or any officer,
director, employee, partner or agent of any of them shall have any liability
for the obligations or liabilities of the Company.

 

24.                                 Fiscal Year.  The fiscal year of the Company
shall be the twelve (12) month period ending on December 31.

 

25.                                 Company Seal.  The Company will have no seal unless the
Board shall otherwise determine.  The
seal of the Company, if any, shall be in such form as the Board shall
prescribe.

 

26.                                 Entire Agreement.  This
Agreement constitutes the entire agreement among the parties and supersedes any
prior agreement or understanding among them with respect to the subject matter
hereof.

 

4

 

27.                                 Severability.  If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under the present or
future laws effective during the term of this Agreement, such provision will be
fully severable and this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement.  The remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of such
illegal, invalid, or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.

 

28.                                 Amendments.  This Agreement may be amended
or restated from time to time by the Member and the Company.

 

29.                                 Governing Law.  This Agreement shall be
governed by, and construed under, the laws of the State of Minnesota, all
rights and remedies being governed by said laws.

 

30.                                 No Third Party Beneficiary.  This
Agreement is made solely and specifically among and for the benefit of the
parties hereto, and their respective successors and permitted assigns, and no
other person will have any rights, interest, or claims hereunder or be entitled
to any benefits under or on account of this Agreement as a third party
beneficiary or otherwise; provided, however, that
nothing in this Section 30 shall limit, restrict or preclude any person
from obtaining indemnification from the Company pursuant to Section 13
hereof.

 

31.                                 Notices. 
All notices, offers or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and may be personally
served or sent by United States mail and shall be deemed to have been given
when delivered in person or three (3) business days after deposit in the United
States mails, registered or certified, postage prepaid, and properly addressed,
by or to the appropriate party.  For purposes
of this Section 31, the addresses of the parties hereto shall be as set
forth on the signature page hereto.  The
address of any party hereto may be changed by a notice in writing given in
accordance with the provisions of this Section 31.

 

32.                                 Survival; Dispute Resolution.  All covenants, agreements, statements,
representations, warranties and indemnities made in this Agreement shall
survive the execution and delivery of this Agreement and, where appropriate to
facilitate the intent of this Agreement, the dissolution, liquidation and
winding up of the Company.  Any dispute
between the parties hereto, or between or among the Directors and the Company,
shall be subject to arbitration in Minneapolis, Minnesota under the rules of
the American Arbitration Association.

 

33.                                 Indemnification
of Organizer.  The Company hereby
approves all acts or instruments heretofore done or executed by Patrice H.
Kloss, the organizer of the Company (the “Authorized Person”), on behalf of or
in the furtherance of the Company.  The
Company, its receiver or its trustee, hereby further agrees to assume any and
all liability arising out of or resulting from any act of the Authorized Person
done on behalf of or in furtherance of the Company, and to indemnify the
Authorized Person for any such liability.

 

5

 

34.                                 Counterparts.  This Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
agreement binding on all parties.  Each
party shall become bound by this Agreement immediately upon signing any
counterpart, independently of the signature of any other party.

 

 

[signature
page follows]

 

6

 

IN
WITNESS WHEREOF, the
undersigned, intending to be legally bound hereby, have duly executed this
Member Control Agreement of SW Missouri, LLC as of the date and year first set
forth above.

 

	
  THE
  COMPANY:

  	
  SW
  MISSOURI, LLC

  
	
   

  	
   

  	
   

  
	
  2001
  Killebrew Drive, Suite 306,

  	
  By:

  	
  /s/
  James B. Druck

  	
   

  
	
  Minneapolis,
  MN  55425

  	
  Name:

  	
  /s/
  James B. Druck

  	
   

  
	
   

  	
  Its:

  	
  /s/
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  THE
  MEMBER:

  	
  SOUTHWEST
  CASINO AND HOTEL CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
  2001
  Killebrew Drive, Suite 306,

  	
  By:

  	
  /s/
  James B. Druck

  	
   

  
	
  Minneapolis,
  MN  55425

  	
  Name:

  	
  /s/
  James B. Druck

  	
   

  
	
   

  	
  Its:

  	
  /s/
  Chief Executive Officer

  	
   

  

 

7Exhibit
10.25

 

 

OPERATING
AGREEMENT

 

of

 

SOUTHWEST
MISSOURI GAMING, LLC

 

a
Missouri Limited Liability Company

 

 

June 16,
2004

 

 

OPERATING
AGREEMENT

 

OF

 

SOUTHWEST
MISSOURI GAMING, LLC

 

THIS OPERATING AGREEMENT
(“Agreement”) of Southwest Missouri Gaming, LLC, a Missouri limited liability
company (the “Company”) is entered into and shall be effective as of
June       , 2004 (the “Effective Date”), by
and between SW Missouri, LLC, a Minnesota limited liability company (“Southwest”),
and Robert E. Low (“Low”).

 

RECITALS

 

A.                                   Southwest
and Low have caused the Company to be formed under the laws of the State of
Missouri.

 

B.                                     Southwest
and Low wish to set forth their agreement concerning the conduct of the
business and affairs of the Company and the relative rights and obligations of
Southwest and Low in relation thereto, all as set forth herein.

 

NOW, THEREFORE, in
consideration of the foregoing and the representations, warranties, covenants
and agreements as set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the parties, intending
to be legally bound, hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

For the purposes of this Agreement, the following terms shall have the
following meanings:

 

1.                                       Act
– The Missouri Limited Liability Company Act, Section 347.010 et seq., as amended from time to time.

 

2.                                       Additional
Member - A Member other than Southwest or Low or a Substitute Member who
has acquired a Membership Interest from the Company.

 

3.                                       Affiliate
– As applied to any specified Person or Organization means any other Person or
Organization (and all natural Persons related by blood, adoption or marriage to
such other Person) directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such specified Person.  The term “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of 20% or more of the voting power (or in the case of a Person
which is not a corporation, 20% or more of the ownership interests, beneficial
or otherwise) of such Person or Organization or the power otherwise to direct
or cause the direction of the management and policies of that Person or
Organization, whether through voting, by contract or otherwise.

 

1

 

For purposes of
this paragraph, “voting power” of any Person or Organization means the total
number of votes which may be cast by the holders of the total number of
outstanding equity interests of any class or classes of such Person or
Organization in any election of directors or managers of such Person or
Organization or individuals serving on a committee or board serving a function
comparable to that served by a board of directors of a corporation.  All directors and executive officers of a
corporation and all directors and members of a board or board of directors or
similar committee of a Person or Organization organized as a limited liability
company shall be deemed to be Affiliates of such Person.

 

4.                                       Agreement
- This Operating Agreement established pursuant to Section 347.081 of the
Act.

 

5.                                       Approved
Financial Goals – The Company’s financial goals for operating expenses from
the agreed upon commencement date of such financial goals through the
occurrence of the Ballot Initiative Date with an aggregate total amount not to
exceed $10,000,000, as approved in writing by both Low and Southwest in
connection with this Agreement.  Any
increase to the aggregate total of the operating expenses under the Approved
Financial Goals that exceeds $10,000,000 must be approved (prior to exceeding
the $10,000,000 total) by the Board.

 

6.                                       Articles
- The Articles of Organization of the Company filed with the Missouri Secretary
of State on or before the Effective Date, as properly adopted and subsequently
amended from time to time by the Members and filed with the Missouri Secretary
of State.

 

7.                                       Assignee
- A transferee of a Membership Interest who has not been admitted as a
Substitute Member.

 

8.                                       Ballot
Initiative Date – The date when voter approval of a ballot initiative is
obtained to allow riverboat gaming activities on the White River at the city of
Rockaway Beach, Missouri.

 

9.                                       Bankrupt
Member - The terms “Bankruptcy” and “Bankrupt,” and variations thereof,
shall mean any of the following: (i) the initiation by a Member of a
proceeding, or initiation of any proceeding against a Member which has not been
vacated, discharged or bonded off within sixty (60) days of initiation, under
any federal, state or local bankruptcy or insolvency law, (ii) an assignment by
a Member for the benefit of creditors, (iii) the admission by a Member in
writing of his inability to pay his debts as they become due, or (iv) the
consent of a Member to the appointment of a receiver or trustee for all or a
substantial part of his property, or court appointment of such receiver or
trustee which is not suspended or terminated within sixty (60) days after appointment.

 

10.                                 Board
– Has the meaning assigned in this Article I, Section 40.

 

11.                                 Business
– Has the meaning assigned in Article III, Section 2.

 

2

 

12.                                 Business
Day - Any day other than Saturday, Sunday, or any legal holiday observed in
the State of Missouri.

 

13.                                 Capital
Account - The account maintained for a Member or Assignee determined in
accordance with Article VIII, Section 4.

 

14.                                 Capital
Contribution - Any actual funded contribution of cash or Property made by
or on behalf of a Member.

 

15.                                 Capital
Contribution Commitment – Means (i) prior to the occurrence of the Ballot
Initiative Date, and after the entire Catch-Up Contribution has been made by
Low, 70% of the Company’s operating expenses with respect to Low and 30% of the
Company’s operating expenses with respect to Southwest, provided that the
aggregate operating expenses of the Company do not exceed $10,000,000 unless
such operating expenses have been approved in advance by the Board; and (ii) During
the Pre-Development Stage, 70% of the Company’s operating expenses with respect
to Low and 30% of the Company’s operating expenses with respect to Southwest
provided that such operating expenses of the Company have been approved in
advance by the Board, and after the occurrence of the Construction Date, 70% of
the Company’s operating expenses with respect to Low and 30% of the Company’s
operating expenses with respect to Southwest, provided that the aggregate
operating expenses of the Company (including those incurred prior to the
Construction Date) cannot exceed $110,000,000 unless both Low and Southwest
have given their prior written consent to such increase.

 

16.                                 Catch-Up
Contribution – Means a Capital Contribution to be made in cash by Low
without any further approval or action by the Board or Members, such that Low’s
cumulative Capital Contributions to the Company immediately after such Catch-Up
Contribution will total $4,213,030 in the aggregate.

 

17.                                 Code
- The Internal Revenue Code of 1986, as amended from time to time.

 

18.                                 Company
– Southwest Missouri Gaming, LLC, a limited liability company formed under the
laws of the State of Missouri.

 

19.                                 Company
Liability - Any enforceable debt or obligation for which the Company is
liable or which is secured by any Company Property.

 

20.                                 Company
Property - Any Property owned by the Company.

 

21.                                 Competitive
Casinos - Ameristar Kansas City, Ameristar St. Charles, Isle of Capri
Kansas City, Isle of Capri Boonville, Argosy and their respective successors
and assigns.

 

22.                                 Construction
Date – The date of the definitive agreement between the Company and a
construction company pertaining to the construction of a riverboat gaming
facility located in Rockaway Beach, Missouri in connection with the Business.

 

3

 

23.                                 Cost
of Funds Rate – The rate of interest equal to Southwest’s average cost of
funds for a given period.

 

24.                                 Disposition
(Dispose) – With respect to any Membership Interest, means any sale,
assignment, transfer, exchange, mortgage, pledge, grant, hypothecation, or
other transfer, absolute or as security or encumbrance (including disposition
by operation of law).

 

25.                                 Dissociation
(Dissociated) - Any action which causes a Person to cease to be a Member as
described in Article XI hereof.

 

26.                                 Dissolution
Event - An event, the occurrence of which will result in the dissolution of
the Company under Article XV, unless the Members elect to avoid
dissolution where the Members have the power to so elect.

 

27.                                 Distribution
- A transfer of cash or other Property to a Member on account of a Membership
Interest as described in Article IX and Article XV.

 

28.                                 EBITDA
Margin – For the designated period,
(1) the sum of an Organization’s (i) pretax earnings from continuing operations,
(ii) interest expense and (iii) depreciation, depletion, and
amortization of tangible and intangible assets (including real property leases
and all contractual obligations to the city of Rockaway Beach, Missouri as they
relate to the Company, and all Management Fees, if applicable), before
(a) special extraordinary gains, (b) minority interests, and
(c) miscellaneous gains and losses, (2) divided by such Organization’s net
win from casino operations, in each case computed and calculated in accordance
with GAAP.

 

29.                                 Effective
Date – Has the meaning assigned in the preamble hereto.

 

30.                                 Formation
Date – March 29, 2004.

 

31.                                 GAAP
– Generally accepted accounting principles, consistently applied.

 

32.                                 Gaming
Authority – Any governmental gaming authority having jurisdiction over the
Members or their subsidiaries, or the Company, including, but not limited to,
the state gaming authorities for Missouri, Mississippi, Colorado, West
Virginia, Pennsylvania, Ohio, Nevada and Minnesota and the National Indian Gaming
Commission.

 

33.                                 Initial
Capital Contributions – The Capital Contributions made by Southwest in cash
or Property on or before the Effective Date totaling $1,805,584.69 in the
aggregate, as described in Article VIII, Section 1.

 

34.                                 Low-Funded
Capital Contribution – Has the meaning assigned in Article VIII,
Section 8.2.

 

35.                                 Low
Managers – Has the meaning assigned in Article VII, Section 4.2.

 

4

 

36.                                 Low
Tasks – The tasks that Low has agreed to perform and complete in connection
with the Business, which shall include arranging and obtaining debt financing
for the Business from third party lenders, the planning and construction of all
facilities connected with the Business and performance under the Management
Agreement.

 

37.                                 Management
Agreement – The Management Agreement dated of even date herewith between
the Company and Low in the form attached hereto as Exhibit B and
approved by both Low and Southwest whereby Low will provide operation and
supervision services to the Company’s Business in exchange for the payment of
an annual Management Fee, as assumable pursuant to Article VII,
Section 10.

 

38.                                 Management
Agreement Criteria – The occurrence of either of the following events (i)
determined commencing as of the fourth January 1 following the Operation
Date (after three (3) full calendar years) and tested each January 1
thereafter, the failure of the Company to maintain an EBITDA Margin during the
previous calendar year equal to at least 90% of the average EBITDA Margin of
all of the Competitor Casinos during the same period, or (ii) determined as of
the second January 1 following the Operation Date (after one (1) full
calendar year) and tested each January 1 thereafter, the failure of the
Company to achieve Net Income (excluding actual and mock interest on the
Company’s acquisition debt) during the previous calendar year totaling more
than the Company’s debt services costs (or mock debt service costs) for 70% of
the Company’s Business start-up costs (based on a twenty (20) year amortization
period at the Cost of Funds Rate); provided, however, in the case where either
Southwest or Low exercises its option to assume all rights, duties and
responsibilities under the Management Agreement, the Management Agreement
Criteria shall be determined commencing as of the second January 1
following the date when Southwest or Low, as the case may be, officially
commences its management duties under the Management Agreement pursuant to such
assumption (after one (1) full calendar year).

 

39.                                 Management
Fee – Equals (i) 5% of the Company’s annual Net Income up to $20,000,000,
(ii) 10% of the Company’s annual Net Income in excess of $20,000,000 but less
than $35,000,000, (iii) 15% of the Company’s annual Net Income in excess of
$35,000,000 but less than $50,000,000 and (iv) 17.5% of the Company’s annual
Net Income in excess of $50,000,000.

 

40.                                 Managers
– Has the meaning assigned in Article VII, Section 4 (the Managers
are singly referred to as a “Manager” and are sometimes collectively referred
to herein as the “Board”).

 

41.                                 Member
– Southwest, Low, any Substituted Member or any Additional Member, but does not
include Assignees.

 

42.                                 Member
Designees – Has the meaning assigned in Article VII, Section 5.

 

5

 

43.                                 Membership
Interest – The individual equity interest of the respective Members in and
to the Company, which interest is to be maintained as a single interest and
which is not to be divided into any subinterest, such as an interest in
separate financial or management rights or otherwise.

 

44.                                 Net
Income — The Company’s net income from the Business prior to the payment of
any Management Fee but after taking into account deductions for depreciation,
interest, expenses (but not start-up expenses incurred by the Company) and
salaries, all as determined in accordance with GAAP.

 

45.                                 Net
Losses - The losses and deductions of the Company determined in accordance
with GAAP and as reported separately or in the aggregate, as appropriate, on
the tax return of the Company filed for federal income tax purposes.

 

46.                                 Net
Profits - The income and gains of the Company determined in accordance with
GAAP as reported separately or in the aggregate, as appropriate, on the tax
return of the Company filed for federal income tax purposes.

 

47.                                 Notice
– Any notice made pursuant to this Agreement shall be in writing.  Notice to the Company shall be considered
given when mailed by certified mail, postage prepaid, return receipt requested,
addressed to each of the Members in care of the Company at the address of the
principal office identified in Article II, Section 6.  Notice to a Member shall be considered given
when mailed by certified mail, postage prepaid, return receipt requested,
addressed to such Member at the address reflected in the Agreement unless the
Member has given the Company a Notice of a different address.  Notice to any Manager shall be as provided in
Article VII, Section 4.3.  Any
notice hereunder shall be considered given three (3) days after being mailed by
certified mail, postage prepaid, return receipt requested.

 

48.                                 Operation
Date – The first date that the Company’s riverboat casino Business is open
for operation to the general public.

 

49.                                 Organization
- A Person other than a natural person. 
An Organization includes, without limitation, corporations (both
non-profit and other corporations), partnerships (both limited and general),
joint ventures, limited liability companies, and unincorporated associations,
but the term does not include joint tenancies and tenancies by the entirety.

 

50.                                 Percentage
Interest - A Member’s share of the Net Profits and Net Losses of the
Company (except as otherwise provided in Article IX) and, subject to the
payment of disproportionate Distributions to Southwest until Low has made the
entire Catch-Up Contribution as provided in Article IX, a Member’s right
to receive Distributions of the Company’s assets.

 

51.                                 Person
- An individual, trust, estate, or any incorporated or unincorporated
organization permitted to be a member of a limited liability company under the
laws of the State of Missouri.

 

6

 

52.                                 Pre-Development
Stage – The period of time occurring between the Ballot Initiative Date and
the Construction Date when the Company will incur fees and expenses related to
architectural services, engineering services, environmental studies, services
related to construction professionals, public relation services, consultant
services, legal services, accounting services, land acquisition costs, travel
and entertainment.

 

53.                                 Prime
Rate - Prime Rate shall mean the “prime rate” as published in the “Money
Rates” Section of The Wall Street
Journal; however, if such rate is, at any time during the term of
this Agreement, no longer so published, the term “Prime Rate” shall mean the
average of the prime interest rates which are announced, from time to time, by
the three (3) largest banks (by assets) headquartered in the United States
which publish a prime, base or reference rate, in any case not to exceed the
maximum rate permitted by law.

 

54.                                 Property
- Any property real or personal, tangible or intangible, including money and
any legal or equitable interest in such property, excluding services and
promises to perform services in the future.

 

55.                                 Regulations
- Except where the context indicates otherwise, the permanent, temporary,
proposed, or proposed and temporary regulations of the U.S. Treasury
Department, promulgated under the Code, as such regulations may be lawfully
changed from time to time.

 

56.                                 Rockaway
Agreements - The Riverboat at Rockaway Beach Amended and Restated Term
Sheet for Development Agreement dated March 29, 2004 between the Company
and the City of Rockaway Beach, Missouri, as amended, and the Funding Agreement
dated October 22, 2002 between Southwest Casino and Hotel Corp. and the
City of Rockaway Beach, Missouri, as amended by an Amendment to Funding
Agreement dated December 31, 2002 and as assigned by Southwest Casino and
Hotel Corp. to the Company pursuant to an Assignment, Assumption and Consent
Agreement dated March 29, 2004 among Southwest Casino and Hotel Corp., the
Company and the City of Rockaway Beach, Missouri.

 

57.                                 Southwest
Managers – Has the meaning assigned in Article VII, Section 4.2.

 

58.                                 Southwest
Tasks – The tasks that Southwest has agreed to perform and complete in
connection with the Business, which shall include planning, managing and
implementing the ballot initiative with regard to voter approval of gaming
activities in Taney County, Missouri, managing all site acquisition matters and
any corresponding land development and maintaining the Company’s on-going
relationship with the city of Rockaway Beach, Missouri.

 

59.                                 Substitute
Member - An Assignee who has been admitted to all of the rights of
membership pursuant to the Agreement.

 

7

 

60.                                 Suitable
Person – A Person licensable by each Gaming Authority having jurisdiction
over the Company’s Business or any Member’s or their Affiliate’s business
operations at the time of any such determination.

 

61.                                 Taxable
Year - The taxable year of the Company as determined pursuant to
Section 706 of the Code, which shall be the calendar year ended
December 31 unless properly changed by the Members or the Board.

 

62.                                 Taxing
Jurisdiction - Any state, local, or foreign government that collects tax,
interest or penalties, however designated, on any Member’s share of the Net
Profits of the Company.

 

63.                                 Unsuitable
Person – A Person not licensable by each Gaming Authority having
jurisdiction over the Company’s Business or any Member’s or their Affiliate’s
business operations at the time of any such determination.

 

ARTICLE II

FORMATION

 

1.                                       Organization.  Southwest and Low have organized the Company
as a Missouri Limited Liability Company pursuant to the provisions of the Act
and filed the Company’s original Articles of Organization on the Formation
Date.  The Company constitutes a
partnership for federal and applicable state income tax purposes.

 

2.                                       Agreement.  For and in consideration of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Members executing
this Agreement hereby agree to the terms and conditions of this Agreement, as
it may from time to time be amended according to the terms hereof.  It is the express intention of the Members
that this Agreement shall be the sole source of agreement of the parties.

 

3.                                       Name.  The name of the Company is Southwest Missouri
Gaming, LLC, a Missouri limited liability company, and all business of the
Company shall be conducted under that name or under any other name, but in any
case, only to the extent permitted by applicable law.

 

4.                                       Term.  The duration of the Company shall be
perpetual, unless the Company shall be sooner dissolved and its affairs are
wound up in accordance with the Act or this Agreement.

 

5.                                       Registered
Agent and Office.  The registered
agent for the service of process shall be Steve Crawford and the registered
office shall be that location reflected in the Articles as filed with the
Missouri Secretary of State’s office. 
The Members may, from time to time, change the registered agent or
office through appropriate filings with the Missouri Secretary of State’s
office.  In the event the registered
agent ceases to act as such for any reason or the registered office shall
change, the Members or the Board shall promptly designate a replacement
registered agent or

 

8

 

file a notice of
change of address, as the case may be. 
If the Members or the Board shall fail to designate a replacement
registered agent or change of address of the registered office, any Member may
designate a replacement registered agent or file a notice of change of address.

 

6.                                       Principal
Office.  The principal office of the
Company shall be located at:

 

2740 N. Mayfair

Springfield, Missouri 65803

 

The Board shall have the authority to change the principal office of
the Company.

 

ARTICLE III

NATURE OF BUSINESS

 

1.                                       General
Powers.  The Company may engage in
any lawful business permitted by the Act or the laws of any jurisdiction in
which the Company may do business.  The
Company shall have the authority to do all things necessary or convenient to accomplish
its purpose and operate its business as described in the Agreement and this
Article III.  Notwithstanding the
foregoing, the Company exists only for the purpose specified in Section 2
of this Article III, and may not conduct any other business without the
unanimous consent of the Members.

 

2.                                       The
Business of the Company.  The
Company’s business (the “Business”) may include, but shall not be limited to,
the licensing, development, construction and operation of a riverboat gaming
facility and retail development located in the city of Rockaway Beach,
Missouri, together with all of the normal ancillary functions and facilities
associated therewith such as gaming operations and restaurants, together with
the operation of other ancillary businesses such as nightclubs, a hotel and
such other activities as may be permitted by law from time to time.

 

ARTICLE IV

ACCOUNTING AND RECORDS

 

1.                                       Records
to be Maintained.  The Company shall
maintain the following records at its principal office:

 

1.1                                 A
current lists of the names and last known business, residence or mailing
address of all Members and Managers (set forth in alphabetical order);

 

1.2                                 A
copy of the Articles and all amendments thereto, together with executed copies
of any powers of attorney pursuant to which any articles have been executed;

 

1.3                                 Copies
of the Company’s federal, state and local income tax returns and reports for
the three (3) most recent years, or if such returns and reports were not
prepared for any reason, copies of the information and records provided to, or
which should have been provided to, the Members to

 

9

 

enable them to
prepare their federal, state and local tax returns for such period;

 

1.4                                 Copies
of this Agreement, including all amendments thereto; and

 

1.5                                 Any
financial statements of the Company for the seven (7) most recent years.

 

2.                                       Reports
to Members.

 

2.1                                 As
soon as practicable after the end of each fiscal year, and in any event within
ninety (90) days after the end of each such fiscal year, the Board shall
provide to the Members an income statement of the Company for such fiscal year,
consolidated balance sheets of the Company as of the end of such fiscal year,
and consolidated statements of operations and consolidated statements of cash
flows and Members’ equity of the Company for such year, in each case prepared
in accordance with GAAP and in the form required by the Missouri Gaming
Commission, all in reasonable detail and audited and certified by a national
accounting firm selected by the Board and reasonably acceptable to the Members;
provided, however, that if a Member requires such information be provided
earlier than ninety (90) days after the end of any fiscal year in order for
such Member to satisfy federal, state or local securities, gaming or other
requirements (including, without limitation, Sarbanes-Oxley filing
requirements), the Board shall provide the Member with such information within
the timeframe necessary for the Member to satisfy such requirements.

 

2.2                                 Within
sixty (60) days of the end of each month, the Board shall provide the Members
with an unaudited income statement and statement of cash flows and balance
sheet of the Company for and as of the end of such month, all in reasonable
detail as determined by the Members.

 

2.3                                 The
Board shall provide all Members with such information returns required by the
Code and the laws of the applicable state or states in which the Company
operates.

 

3.                                       Accounts.  The Board shall maintain a record of each
Member’s Capital Account in accordance with Article VIII.

 

4.                                       Accountant.  The Members or the Board shall determine the
firm or firms of accountants to assist the Company with financial statements
and tax matters.

 

ARTICLE V

NAMES AND ADDRESSES OF THE MEMBERS

 

The name and addresses of the Members are as reflected on Exhibit A
attached hereto and by this reference made a part hereof as if set forth fully
herein.

 

10

 

ARTICLE VI

RIGHTS AND DUTIES OF THE MEMBERS

 

1.                                       Management
Rights.  All Members (other than
Assignees) who have not Dissociated shall be entitled to vote on any matter
submitted to a vote of the Members. 
Whenever any matter is required or allowed to be approved by the Members
under the Act or this Agreement (which shall take precedence over the Act to
the fullest extent permitted by law), such matter shall be considered approved
or consented to upon the receipt of the requisite approval or consent, either
in writing or at a meeting of the Members. 
Assignees and, in the case of approvals to withdrawal where consent of
the remaining Members is required, Members who have Dissociated, shall not be
considered Members entitled to vote for the purpose of determining an approval
action.

 

2.                                       Liability
of the Members.  No Member shall be
liable as such, for any Company Liability. 
The failure of the Company to observe any formalities or requirements
relating to the exercise of its powers or management of its Business or affairs
under this Agreement or the Act shall not be grounds for imposing personal
liability on the Members or the Managers for liabilities of the Company.

 

3.                                       Indemnification.  The Company shall indemnify the Members and
the Managers and each of their agents for all costs, losses, claim, judgments,
liabilities, and damages paid or accrued by such Member, Manager or agent in
connection with the Business of the Company, except in connection with acts of
gross negligence or willful misconduct, to the fullest extent provided or
allowed by the laws of the State of Missouri.

 

4.                                       Representations
and Warranties.  Each Member, and in
the case of an Organization, the person executing this Agreement, hereby
represents and warrants to the Company and each other Member that: (i) if
that Member is an Organization, it is duly organized, validly existing, and in
good standing under the law of its state of organization and that it has full
organizational power to execute and agree to this Agreement and to perform its
obligations hereunder; (ii) the Member is acquiring its interest in the
Company for the Member’s own account as an investment and without an intent to
distribute the interest; and (iii) the Member acknowledges that the
Membership Interests have not been registered under the Securities Act of 1933
or any state securities laws, and may not be resold or transferred by the
Member without appropriate registration or the availability of an exemption
from such requirements.

 

5.                                       Conflicts
of Interest.

 

5.1                                 Independent
Ventures; Nonsolicitation.  Each of
the Members covenants and agrees that while it may currently engage or hold
interests in other business ventures of varied kinds and descriptions for its
own account, including other investments which include, but are not limited to,
gaming and real estate ventures, that it shall not compete directly, or
indirectly

 

11

 

through any
Affiliate, with the Company’s Business (as the same may evolve from time to
time) in the State of Missouri for so long as such Person is a Member and for a
two (2) year period thereafter.  Further,
each Member agrees to present any opportunities within the scope of the
Business in Missouri to the Board promptly after such Member or its Affiliates
becomes aware of such opportunity, however, neither the Company nor any of the
Members shall have any rights by virtue of this Agreement in any:
(i) existing business ventures; or (ii) future business ventures
occurring outside of Missouri, or to the income or profits derived therefrom.  No Member or its Affiliates shall solicit any
employee of the Company to become employed by such Member or its Affiliates for
so long as such Member is a Member of the Company and for a period of one (1)
year thereafter.

 

5.2                                 Lending
Money.  A Member may lend money to
and transact other business with the Company upon such terms and conditions as
consented to by a unanimous vote of all of the Managers on the Board; provided,
however, that a Member loan may be approved by a majority vote of the Board if
the material terms of such Member loan are more favorable to the Company then
the market loan terms available from independent third party financial
institutions for loans of similar size and type.  The rights and obligations of a Member who
lends money to or transacts business with the Company are the same as those of
a Person or Organization who is not a Member, subject to other applicable
law.  No transaction with the Company
shall be voidable solely because a Member has a direct or indirect interest in
the transaction if all of the Managers on the Board, knowing the material facts
of the transaction and the Member’s interest, unanimously authorize, approve,
or ratify the transaction.

 

5.3                                 Affiliated
Member Contracts.  A Member may
contract with the Company to provide certain services to the Company either
directly or through an Affiliate or Subsidiary of such entity (a “Contracting
Member”) on such terms and conditions as are consented to by a unanimous vote
of all of the Managers on the Board, provided that such terms provide for most
favorable rates and require a quality standard of performance.  The rights of such Contracting Member shall
be the same as an unaffiliated Person and no such contract shall be voidable
solely because of such affiliation if all of the Managers on the Board, knowing
the material facts of the transaction and the Contracting Member’s interest,
unanimously authorize, approve, or ratify the transaction.

 

ARTICLE VII

THE MEMBERS; THE BOARD

 

1.                                       The
Members.  Except as otherwise
specifically provided herein or by law that cannot be modified by this
Agreement, or as otherwise delegated to the Board, the management of the
Company and its business, and other operating matters, shall

 

12

 

be the
responsibility of both Southwest and Low, acting in their capacity as Members
of the Company, who shall exercise such management power through the Board, as
described in this Article VII. 
Except as otherwise provided in this Agreement, all decisions shall be
made by the Board in accordance with this Article VII, Section 4.5
below, including, but not limited to, those matters set forth in this
Article VII, Section 2 below. 
The Managers shall devote such time and energy to the Business and
purposes of the Company to the extent necessary for the prudent and efficient
carrying on thereof.  The acts of the
Board shall bind the Company.  Any and
all documents, agreements, instruments or certificates executed by the Members
or any Person authorized by the Board shall be effective and binding upon the
Company without the need for the consent or approval of any other Member or
Manager.  Notwithstanding the foregoing,
Southwest shall be responsible for the performance and completion of the
Southwest Tasks and Low shall be responsible for the performance and completion
of the Low Tasks, in each case with the assistance of the Board as provided
below.

 

2.                                       The
Board.  Subject to those restrictions
set forth in Section 3 of this Article VII, the Board, acting through
any of its duly authorized and empowered Company officers, is hereby authorized
for, and in the name of, at the expense of, and on behalf of the Company:

 

2.1                                 To
enter into any kind of activity and to perform and carry out contracts of any
kind necessary to, or in connection with, or incidental to the accomplishment
of the purposes of the Company, so long as said activities and contracts may be
lawfully carried on or performed by a limited liability company under
applicable laws and regulations;

 

2.2                                 To
convey, assign, mortgage, or otherwise transfer all or any portion of the real
or personal property of the Company;

 

2.3                                 To
develop, maintain, lease and execute such documents ancillary to those
activities involving the development of any real property of the Company;

 

2.4                                 To
prepare, execute and deliver any and all agreements, contracts, documents,
regulatory filings with governmental authorities, certifications and
instruments necessary or convenient in connection with the acquisition,
development, construction, leasing, managing, maintenance and operation of the
Company’s Business or Property;

 

2.5                                 To
initiate, defend, adjust, settle, compromise, or pay any disputed claim,
obligation, debt, demand, suit, litigation or judgment by or against the
Company (including, without limitation, any claim to insurance proceeds);

 

2.6                                 To
provide all necessary assistance to Southwest regarding the completion of the
Southwest Tasks and to provide all necessary assistance to Low regarding the
completion of the Low Tasks; and

 

13

 

2.7                                 To
cause the Company to assume from Southwest, and to perform under, the
Development Consulting and Owner’s Representative Services agreement between
Southwest Casino and Hotel Corp. and LaSalle Development Group Ltd.

 

3.                                       Restrictions
on Authority. With respect to the Company and its business and Property,
the Members and the Managers shall have no authority on behalf of the Company
to perform any act in violation of the (i) Act, (ii) any other applicable law
(gaming or otherwise), (iii) any regulations thereunder, or (iv) this
Agreement.

 

4.                                       General
Provisions; Selection.

 

4.1                                 Except
as to any decision that is expressly designated to be made only by the Members,
the Business of the Company shall be managed by and under the authority of a
Board.  The Board shall have the
exclusive authority and full discretion to manage the Business of the Company,
subject to the terms of this Agreement where decisions are only to be made by
the Members.  The Members agree that the
acts of the Board are the acts and decisions of the Members and are binding on
all of the Members.  The Board shall have
all right, power and authority, on behalf of and in the name of the Company, to
enter into, execute, acknowledge and deliver any and all contracts, agreements
or other instruments, and to take any and all other actions which the Board
deems necessary, proper, or desirable to carry out its responsibilities under
this Agreement.

 

4.2                                 The
Board shall be composed of five (5) Managers, two (2) of which shall be
appointed by Southwest or any Substitute Member of Southwest (the “Southwest
Managers”), and three (3) of which shall be appointed by Low or any Substitute
Member of Low (the “Low Managers”).  Each
Manager shall serve until the earlier of (i) the date of the Manager’s death,
disability, resignation, or removal, (ii) the date on which a successor
Manager is appointed by the action of the Member who appointed such Manager, or
(iii) the date on which the Member who appointed such Manager is no longer a Member.  Managers need not be Members or residents of
the State of Missouri.  Any Manager may
resign at any time upon written notice to the Board.  A resignation shall be effective when given
unless the notice specifies a different date. 
The Member appointing a Manager may, at any time by delivery of notice
to all of the Members and Managers, remove such Manager for any reason or for
no reason.  No Member shall have the
right to appoint, vote for or otherwise interfere with any other Member’s right
to appoint a Manager hereunder.

 

4.3                                 Regular
meetings of the Board shall be called by the Chairman of the Board and held not
less frequently than quarterly.  Special
meetings of the Board may be called for any purpose or purposes by any two (2)
Managers.  If the place for any meeting
of the Board is not otherwise

 

14

 

agreed upon, the
place of meeting shall be the principal office of the Company.  Written notice stating the place, day and
hour of the meeting and the purpose or purposes for which the meeting is called
shall be delivered to each of the Managers not less than five (5) Business Days
nor more than thirty (30) days before the date of the meeting; provided,
however, that in extenuating circumstances, a meeting may be called upon
shorter notice as long as each of the Managers receives notice of such meeting
at least forty-eight (48) hours prior to such meeting.  Notices must be in writing and must be given
either personally, by overnight courier or by facsimile and will be deemed
given when received if given personally, one business day after having been
sent by overnight courier to the Manager’s business office, and upon telephonic
verification of receipt if sent by facsimile to the facsimile number of the Manager’s
business office given by the Manager to the Company from time to time.

 

4.4                                 Managers
may participate in and hold a meeting by means of a conference telephone call
or other similar communication equipment by means of which all persons
participating in the meeting can hear each other. Such participation shall be
made available at the request of any Manager. 
Participation in such a meeting shall constitute presence of a person at
a meeting, except where the person participates solely for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. At any meeting of the Managers, the presence in
person or by telephone (or other electronic means) of at least three (3) of the
Managers (in person or by proxy pursuant to Section 4.6 of this
Article VII) shall constitute a quorum.

 

4.5                                 All
determinations, acts and designations to be made hereunder by the Board shall
be final and binding for all purposes of this Agreement.  Each Manager shall have one (1) vote on any
matter.  At any meeting of the Managers
at which a quorum is present, the affirmative vote of three (3) Managers shall
constitute an act of the Board, except to the extent this Agreement may otherwise
require the unanimous consent of all Managers to take any action or the
unanimous vote of the Members.  No Person
or Organization shall be required to inquire into, and Persons or Organizations
dealing with the Company are entitled to rely conclusively on, the right, power
and authority of the Board to bind the Company.

 

4.6                                 A
Manager may vote on any matter, or execute any consent in lieu of a meeting,
either in person or by proxy executed in writing by the Manager. A telegram,
telex, cablegram, or similar transmission by the Manager, or a photographic,
photostatic, facsimile, or similar reproduction of a writing executed by the
Manager shall be treated as an execution in writing for this purpose.  Any Manager may appoint another Manager or
another individual employee of the Member as such Manager’s proxy and the proxy
may be limited in scope or with full discretion.  Proxies for use at any meeting of the
Managers shall be filed with the Board before or at the

 

15

 

time of the
meeting or execution of the written consent, as the case may be.  No proxy shall be valid after eleven months
from the date of its execution unless otherwise provided in the proxy.  A proxy shall be revocable.

 

4.7                                 Any
action permitted to be taken at any meeting of the Board may be taken without a
meeting if a written consent thereto is signed by all the Managers necessary to
take such action at a duly called meeting.

 

4.8                                 Unless
approved by the Board, the Company may not pay compensation to any Manager in
his or her capacity as such, unless such Manager is neither an Affiliate of any
Member nor an employee of the Company, any Member or an Affiliate of any
Member.

 

5.                                       Member
Employees.  Each of Southwest and Low
shall be entitled to designate one of their employees (the “Member Designees”),
who shall have full access to the Company, including, without limitation, the
Company’s facilities, Properties, operations, records and information;
provided, however, that if Southwest or Low is providing management services to
the Company under the Management Agreement, such party shall not have a Member
Designee.  The Company shall provide the
Member Designees with furnished office space (including computer equipment) and
access to office equipment and supplies, but the Member Designees shall remain
employees of Southwest and Low, respectively, and shall not be considered
employees of the Company.  Both Southwest
and Low may also designate any of their respective employees and Affiliates to
perform certain of the Southwest Tasks or the Low Tasks, as the case may be;
provided, however, that such employees or Affiliates shall not be considered to
be employees or consultants of the Company, and Southwest and Low, as the case
may be, shall be solely responsible for the payment of any compensation owed to
such employees or Affiliates (including the Member Designees), but any such
payment of compensation by Southwest or Low shall not be considered a Capital
Contribution hereunder.

 

6.                                       Tax
Matters.  Low shall act as the Tax
Matters Member for the Company, as defined in Section 6231 of the
Code.  The Tax Matters Member shall have
the authority to perform any and all actions permitted by Section 6221
through 6231 of the Code in connection with any proceedings pertaining to
federal income tax issues.  The Tax
Matters Member shall have the right to engage counsel to represent the Company
in connection with any audit or other investigation, and the fees and expenses
of such counsel and of any litigation arising out of or in connection with such
audit or investigation shall be borne by the Company.  The Tax Matters Member shall be indemnified
and held harmless by the Company for any act or omission performed or omitted
by it in its capacity as the Tax Matters Member.  All expenses incurred by the Tax Matters Member
in connection with any administrative proceeding before the Internal Revenue
Service (the “IRS”) and/or judicial review of such proceedings, including
reasonable attorney’s fees, shall be deemed a Company expense.  In the event the Tax Matters Member elects

 

16

 

to file a petition
for readjustment of any Company tax item (in accordance with
Section 6226(a) of the Code), such petition shall be filed in any court
having jurisdiction over any tax or other matter.  In the event that the IRS, or any other
governmental agency with jurisdiction, shall conduct, commence or give
notification of intent to conduct or commence any audit or other investigation
of the books, records, tax returns, documents or affairs of the Company, the
Tax Matters Member shall respond to such audit or other investigation for and
on behalf of the Company and shall keep all other Members informed with respect
thereto.  The Members may agree, upon
advice of counsel to the Company, to amend any provision of this Agreement if
necessary in order to cause such provision to comply with Section 704(b)
of the Code and the Regulations thereunder relating to Company allocations
being respected for federal income tax purposes.

 

7.                                       Indemnification.  No Member or Manager (each, an “Indemnified
Party”), shall be liable to the Company or any Member for any loss suffered by
the Company or any Member which arises out of any act or omission of the
Indemnified Party involving the exercise of discretion or business judgment, if
(i) such act or omission was committed, or omitted, by the Indemnified
Party in good faith and in the reasonable belief that such act or omission was
in the best interests of the Company, (ii) such act or omission was within
the scope of the authority conferred on the Indemnified Party by this
Agreement, as applicable, and did not constitute or involve a material, and
grossly negligent or willful, breach of any warranty, representation or legal
or contractual obligation or duty by the Indemnified Party, (iii) such act
or omission did not constitute or involve any gross negligence or willful
misconduct of or by the Indemnified Party, and (iv) such act or omission
did not constitute all or part of an interested party transaction not expressly
approved by the Members or the Board. 
Each Indemnified Party shall be indemnified, defended and held harmless
by the Company against any losses, judgments, liabilities, amounts and expenses
(including reasonable attorneys’ fees and legal costs and disbursements as well
as reasonable amounts paid in settlement of any claims) arising out of or in
connection with any act or omission for which such Indemnified Party is not
liable to the Company pursuant to the provisions of the immediately preceding
sentence; provided, however, that any indemnity under this Section 7 of
this Article VII shall be paid only out of and to the extent of Company
Property, including any applicable insurance proceeds.

 

8.                                       Resolution
of Deadlocks.  In the event Southwest
and Low, either through the Board or directly, are unable to reach a decision
on any material matter that requires either the unanimous vote of the Members
or the unanimous vote of the Board, including, but not limited to, financial
goal disputes, after a period of fifteen (15) days when discussion of the
action by the Board or the Members first commenced, either of the Members may
require that the matter be decided pursuant to the terms and conditions of this
Section 9 of this Article VII by sending written notice to the other
Member.  In order to resolve the matter,
Southwest and Low shall (i) each present the issue to the Chief Executive
Officers

 

17

 

and/or Presidents
of Southwest and Low who shall meet face-to-face or by telephone and who shall
have one day to reach agreement, or (ii) utilize the dispute resolution
procedures for mediation described in Article XVII, Section 7 of this
Agreement.

 

9.                                       Financial
Goals.  On or before sixty (60) days
prior to the end of each fiscal year, the Board shall meet for the purpose of
preparing the Company’s financial goals for the upcoming fiscal year.  The Board shall finalize and approve such
financial goals within thirty (30) days prior to the end of the fiscal year or
treat the failure to reach agreement as an event of deadlock.

 

10.                                 The
Management Agreement.  As of the
Effective Date, the Company shall have entered into the Management Agreement
with Low.  Pursuant to the terms of the
Management Agreement, Southwest shall have the option to assume Low’s rights,
duties and responsibilities under the Management Agreement if the Management
Agreement Criteria are not met and thereafter, Low shall have the option to
assume Southwest’s rights, duties and responsibilities under the Management
Agreement if the Management Agreement Criteria are not met.

 

ARTICLE VIII

CAPITAL ACCOUNTS & CONTRIBUTIONS

 

1.                                       Initial
Capital Contributions and Capital Contribution Commitments.  Southwest has made the Initial Capital
Contribution as of the Effective Date. 
The Initial Capital Contribution of Southwest takes into account the
amount invested in the Company by Southwest prior to the Effective Date of this
Agreement as described on Exhibit A. 
Low agrees to make the Catch-Up Contribution on an “as needed” basis, as
determined by the Board, but in no event later than the occurrence of the
Construction Date.  Southwest and Low
each agree to make their respective Capital Contribution Commitments, as
authorized by the Board, subject to Low’s obligation to make the entire
Catch-Up Contribution.  Subject to
Section 8.2 of this Article VIII, in its discretion, the Board can
choose to draw down less than the Members’ Capital Contribution Commitments,
provided that cumulative Capital Contributions have been made on a 70% basis by
Low and a 30% basis by Southwest, after such time that Low has made the entire
Catch-Up Contribution.  No interest shall
accrue on any Capital Contribution and no Member shall have the right to withdraw
or be repaid any Capital Contribution except as provided in this
Agreement.  The failure to meet a Capital Contribution pursuant to this
Section 1 shall be subject to the default provisions in this
Article VIII, Section 3 below.

 

2.                                       Additional
Capital Contributions Agreed Upon by the Members.  In addition to the Capital Contribution
Commitments to be made by each of the Members, the Members may unanimously
determine from time to time that additional Capital Contributions (in excess of
the Capital Contribution Commitments) are needed to enable the Company to
conduct its Business.  Upon the unanimous
determination of the Members, the Company may either seek additional Capital
Contributions

 

18

 

from the Members
or seek Capital Contributions from third parties either in the full amount of
the Capital Contributions needed or such lesser amount equal to the amounts
required less the additional Capital Contributions to be made by the
Members.  The Members shall be entitled
to adjust the Percentage Interests and other allocation and Distribution
provisions in Articles IX and XV to properly reflect any additional Capital
Contributions made by them or any third party pursuant to this
Article VIII, Section 2, and make any such other modifications to this
Agreement as all of the Members shall determine to be appropriate as a result
of such additional Capital Contributions.

 

3.                                       Default.  In the event that either Southwest or Low
fails to make any Capital Contribution described in Section 1 or an
additional contribution described in Section 2, whether in whole or in
part, within the time specified (the “Defaulting Member”), the other Member
(the “Non-Defaulting Member”) shall send an additional notice to the Defaulting
Member setting forth such fact and the amount unpaid, and the Defaulting Member
shall have a further period of twenty (20) days from receipt of such notice to
make the full amount of such contribution; provided, however, that Southwest
shall not be required to make any Capital Contribution until after Low has made
its entire Catch-Up Contribution.  If at
the end of such twenty (20) day period the Defaulting Member shall still have
failed to make its portion of such Capital Contribution in whole or in part and
the Non-Defaulting Member shall have made its portion of such Capital
Contribution, the Non-Defaulting Member may, at any time thereafter, elect to
have the aggregate Membership Interests of the Members in the Company modified
as of any date from and including the date such Defaulting Member failed to
make its portion of such Capital Contribution and, upon such election, the
Membership Interests shall be automatically modified as of such date so that
both the Non-Defaulting Members’ and the Defaulting Members’ aggregate
Membership Interests shall be equal to the aggregate Capital Contributions made
by each such Member as of such date divided by the aggregate Capital
Contributions made by all Members as of such date.  Further, if Low fails to make
its entire Catch-up Contribution prior to the occurrence of the Construction
Date, the Membership Interests shall be modified in the manner described
above.  Upon any modification hereunder
to the Membership Interests, the Company shall cause Exhibit A to be
amended to correspond with such modification.

 

4.                                       Maintenance
of Capital Accounts.  The Company
shall establish and maintain “Capital Accounts” for each Member and
Assignee.  Each Member’s Capital Account
shall be increased by (i) the amount of any money actually contributed by
the Member to the capital of the Company, (ii) the fair market value of any
Property contributed, as determined by the Company and the contributing Member
at arm’s length (net of liabilities assumed by the Company or subject to which
the Company takes such Property, within the meaning of Section 752 if the
Code), and (iii) the Member’s share of Net Profits and of any separately
allocated items of income or gain except adjustments pursuant to the Code
(including any gain and income from unrealized income with respect to accounts
receivable allocated to the member to reflect the difference between the book
value and the

 

19

 

tax basis of
assets contributed by the Member).  Each
Member’s Capital Account shall be decreased by (x) the amount of any money
distributed to the Member by the Company, (y) the fair market value of any
Property distributed to the Member (net of liabilities of the Company assumed
by the Member or subject to which the Member takes such Property within the
meaning of Section 752 of the Code), and (z) the Member’s share of Net
Losses and any separately allocated items of deduction or loss (including any
loss or deduction allocated to the Member to reflect the difference between the
book value and tax basis of assets contributed by the Member).

 

5.                                       Distribution
of Assets.  If the Company at any
time distributes any of its assets in-kind to any Member, the Capital Account
of each Member shall be adjusted to account for that Member’s allocable share
(as determined under Article IX below) of the Net Profits or Net Losses
that would have been realized by the Company had it sold the assets that were
distributed at their respective fair market values immediately prior to their
distribution.

 

6.                                       Sale
or Exchange of a Membership Interest. 
In the event of a permitted sale or exchange or other Disposition of a
Membership Interest in the Company, the Capital Account of the Transferring
Member shall become the Capital Account of the Assignee, to the extent it
relates to the Membership Interest transferred.

 

7.                                       Compliance
with Section 704(b) of the Code. 
The provisions of this Article VIII as they relate to the
maintenance of Capital Accounts are intended, and shall be construed, and, if
necessary, modified to cause the allocations of profits, losses, income, gain
and credit pursuant to Article IX to have substantial economic effect
under the Regulations promulgated under Section 704(b) of the Code, in
light of the distributions made pursuant to Articles IX and XV and the Capital
Contributions made pursuant this Article VIII.  Notwithstanding anything herein to the
contrary, this Agreement shall not be constructed as creating a deficit
restoration obligation or otherwise personally obligate any Member to make a
Capital Contribution in excess of the Capital Contribution Commitments.

 

8.                                       Debt
Financings to Fund Capital Contributions.

 

8.1                                 Southwest
and Low may each obtain, on an individual basis, debt financing of its Capital
Contribution Commitments; provided, however, that if Southwest obtains a loan
commitment to fund a portion of Southwest’s Capital Contribution Commitment
from a third party lender, Southwest shall give Low written notice of such
third party loan commitment and Low shall have the option, exercisable for a
period of five (5) days from the date of its receipt of such notice, to provide
Southwest with a written loan commitment under the same terms as the loan
commitment of the third party lender. 
Any such loan by Low to Southwest shall not cause any modification to
the Membership Interests pursuant to this Article VIII.  Southwest and Low shall each have the right
to pledge their respective Membership Interests to any third party lender

 

20

 

who is financing
any portion of such party’s Capital Contribution Commitments; provided, however
that such third party lender(s) must be required to give Southwest or Low, as
the case may be, the sole option to purchase the Membership Interest of such
defaulting Member (at or after the corresponding foreclosure sale) for a
purchase price equal to the outstanding debt owed to such third party lender by
the defaulting Member.

 

8.2                                 After
the occurrence of the Construction Date, upon the request of Southwest, Low
agrees to lend to Southwest an amount equal to up to 70% of Southwest’s
post-Construction Date Capital Contribution Commitment at a rate of interest
equal to the prevailing market rate for non-recourse debt (a “Low-Funded
Capital Contribution”).  Any Low-Funded
Capital Contribution will cause the Membership Interests of Southwest and Low
to be modified so that Southwest is credited for making only 25% of such
Low-Funded Capital Contribution and Low is credited for making 75% of such
Low-Funded Capital Contribution; provided, however, that Southwest shall have
the right to repay all Low-Funded Capital Contribution loans prior to the
Operation Date as long as Southwest also pays Low a prepayment fee equal to the
difference between the rate of interest under such Low-Funded Capital Contribution
loan and 14% per annum (as adjusted on a plus or minus basis based on any
change in the Prime Rate during the period from March 1, 2004 through
November 1, 2004).  All Membership
Interest modifications that resulted from the Low-Funded Capital Contribution
loans that are repaid by Southwest prior to the Operation Date shall be
re-modified so that Southwest receives full credit to its Membership Interest
and Low receives no credit to its Membership Interest for such Low-Funded
Capital Contribution.

 

ARTICLE IX

ALLOCATIONS AND DISTRIBUTIONS

 

1.                                       Allocations
of Net Profits and Net Losses. 
Except as may be required by Section 704 of the Code and the
Regulations thereunder, Net Profits, Net Losses, and other items of income,
gain, loss, deduction and credit for periods beginning on or after the
Effective Date shall be apportioned among the Members pro-rata in accordance
with their Percentage Interests; provided, however, that Net Losses shall first
be allocated to the Members based on their respective cumulative Capital
Contribution amounts at the end of any fiscal year in which such Net Losses are
incurred (prior to making any allocations hereunder), with the first Net
Profits arising thereafter applied as a “chargeback” to any such Net Losses in
the reverse order thereof.

 

2.                                       Operating
Distributions.  Upon a determination
by the Board after consultation with the Company’s accountants and legal
counsel as to the amount of distributable cash available in light of applicable
law and after payment by the Company of its operating expenses, debt service
costs and Management Fees that

 

21

 

are due and owing,
and unless otherwise unanimously agreed to by the Members or required pursuant
to Article XV (related to a dissolution of the Company), Distributions
(other than pursuant to Section 3 of this Article IX or upon
dissolution subject to Article XV) shall be made to the Members as
follows: (i) first, until such time as the Members have received a return
of their respective Capital Contributions, such Distributions shall be made pari passu in proportion to each Member’s
Capital Contributions until they are fully repaid based on a twenty (20) year
amortization period at the Cost of Funds Rate, and (ii) second, 57.5% may be
retained by the Company as additional reserves for the Company’s operating
expenses or distributed to the Members, as determined by the Board, and 42.5%
of the remainder shall be distributed to the Members in accordance with their
respective Membership Interests; provided, however, that until such time when
Low has made its entire Catch-Up Contribution, such Distributions shall be made
based upon the actual Capital Contributions made by each Member in relation to
the aggregate Capital Contributions received by the Company as of the date of
any such Distribution.

 

3.                                       Non-Operating
Distributions.  Unless otherwise
unanimously agreed to by the Members, or required pursuant to Article XV,
and after any Tax Distribution associated with any net income or gain arising
from such event is made, net proceeds generated by the Company from events
arising other than pursuant to normal day-to-day Business operations shall be
distributed to the Members within five (5) Business Days after the event giving
rise to such net proceeds, as follows:

 

(1)                                  First,
to the establishment of such additional reserves as the Members deem
appropriate;

 

(2)                                  Second,
to the Members, pro rata in proportion to the amount of funds (or value of
property) which they have loaned to the Company until such Loans are repaid in
full, together with accrued interest thereon;

 

(3)                                  Third,
until such time as the Members have received a return of their cumulative
Capital Contributions (including pursuant to any Distributions pursuant to
Section 2), pari passu to
the Members in proportion to such Capital Contributions until they are fully
repaid based on a twenty (20) year amortization period at the Cost of Funds
Rate;

 

(4)                                  Fourth,
to the Members in accordance with their respective positive Capital Accounts until
each Capital Account is at zero (0) (after providing for an allocation to such
Capital Accounts for Net Profits or Net Loss related to the event causing such
non-operating Distribution as well as for Business operations for such fiscal
year); and

 

(5)                                  Thereafter,
if any cash proceeds remain, to the Members, pari
passu in accordance with their Percentage Interests; provided,
however that until such time when Low has made its entire Catch-Up
Contribution, such Distributions shall be made based upon the actual Capital
Contributions

 

22

 

made by each Member in relation to the aggregate Capital Contributions
received by the Company as of the date of any such Distribution.

 

4.                                       Withholding
on Distributions.  The amount of any
Distributions required by applicable foreign, federal, state or local law to be
withheld and remitted by the Company to any governmental authority shall be
treated as if such amount was distributed to the Member for whose benefit such
withholding was made as if the amount was actually distributed to the Member
for purposes of this Article IX or Article XV

 

ARTICLE X

TAXES

 

1.                                       Elections.  The Members or the Board may make any tax
elections for the Company under the Code or the tax law of any state or other
jurisdiction having taxing jurisdiction over the Company.

 

2.                                       Method
of Accounting.  The records of the
Company shall be maintained on the accrual method of accounting.

 

3.                                       Partnership.  The Company shall be taxable as a
“partnership” for federal income tax purposes after the Effective Date unless
the Board shall otherwise determine to change such classification.

 

ARTICLE XI

DISSOCIATION OF A MEMBER

 

1.                                       Dissociation.  Irrespective of any contrary provision under
the Act, a Person shall cease to be a Member only upon the happening of any of
the following events:

 

1.1                                 the
withdrawal of a Member with the consent of all of the other Members;

 

1.2                                 that
Member is found to be an Unsuitable Person as more fully set forth in
Article XIII, Section 5, below;

 

1.3                                 the
Bankruptcy of a Member, if all of the Members, except any Bankrupt Member,
shall so elect;

 

1.4                                 in
the case of a Member that is a separate Organization other than a corporation,
the dissolution and commencement of winding up of that separate Organization;
or

 

1.5                                 in
the case of a Member that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for that corporation or the revocation of its
charter.

 

The parties intend that none of the events described above or any other
similar events should cause a dissolution and winding up of the Company.  Dissolution is

 

23

 

only expected to occur upon the occurrence of the events described in
Article XV, Section 1.

 

2.                                       Rights
of a Member Who Has Dissociated.  In
the event any Member dissociates in accordance with Section 1 above:

 

2.1                                 And,
notwithstanding the last sentence of Section 1 above or Article XV,
Section 1, the Dissociation causes a dissolution and winding up of the
Company under Article XV, then to the extent permitted by the Gaming
Authorities, the Member shall be entitled to participate in the winding up of
the Company to the same extent as any other Member except that any Distribution
to which the Member would have been entitled shall be reduced by the damages
sustained by the Company or any other Member as a result of the Dissociation
dissolution and winding up; or

 

2.2                                 If
the Dissociation does not cause a dissolution and winding up of the Company
under Article XV, then to the extent permitted by the Gaming Authorities
the Member or its successor shall be subject to the Member buy-out provisions
of Article XIV.

 

ARTICLE XII

INSPECTION OF RECORDS; BANK ACCOUNTS

 

1.                                       Rights
of Members to Inspect Records. 
Pursuant to the Act, a Member may inspect and copy, in person or by
agent, from time to time on a reasonable written demand during regular business
hours at the principal place of business of the Company:

 

a.                                       true
and full information regarding the state of the Business and financial
condition of the Company;

 

b.                                      a
copy of the Articles and this Agreement and all amendments thereto (including
any versions which are no longer in effect), together with executed copies of
any powers of attorney pursuant to which any such documents were executed;

 

c.                                       a
current lists of the names and last known business, residence or mailing
address of all Members and Managers (set forth in alphabetical order);

 

d.                                      copies
of the Company’s federal, state and local income tax returns and reports for the
three (3) most recent years, or if such returns and reports were not prepared
for any reason, copies of the information and records provided to, or which
should have been provided to, the Members to enable them to prepare their
federal, state and local tax returns for such period;

 

24

 

e.                                       copies
of the Company’s financial statements for the three (3) most recent years; and

 

f.                                         other
information regarding the affairs of the Company as is just and reasonable for
any purpose reasonably related to the Member’s interest as a Member or required
to be disclosed to the Members under the Act.

 

2.                                       Bank
Accounts.  The funds of the Company
shall be deposited in the name of the Company, in such bank account or accounts
as all of the Members or the Board deem advisable and the Board shall arrange
for the appropriate conduct and function of such accounts.

 

ARTICLE XIII

                                                ADMISSION
OF ADDITIONAL MEMBERS; TRANSFERS OF INTERESTS

 

1.                                       Disposition
of a Member’s Membership Interest.

 

1.1                                 Except
as provided in Section 2.1 of this Article XIII, no Disposition of a
Member’s Membership Interest shall be made unless the Assignee is an Suitable
Person, and all of the other Members, in their sole and absolute discretion,
unanimously consent in writing to such assignment, which consent may be
conditioned upon the determination by the Members (based, if they deem it
advisable, upon an opinion of counsel) that such assignment is not in violation
of any applicable federal or state securities law, does not violate any gaming
laws or rules promulgated by any Gaming Authority having jurisdiction over the
Business of the Company, does not adversely affect the Company’s status as a
limited liability company and will not cause the dissolution of the Company
under the applicable laws of the State of Missouri.

 

1.2                                 Except
as provided in Section 2 of this Article XIII, the Assignee of a
Membership Interest shall not become a Member, but instead shall be entitled
only to receive such Distributions and allocations as shall have been made to
the assignor Member had such assignor Member continued to be a Member.

 

2.                                       Substitute
Members and Additional Members.  The
Assignee of a Membership Interest shall become a Substitute Member only if:

 

2.1                                 the
Assignee is an Affiliate of the assigning Member or if the Assignee is a
surviving party with regard to a merger or acquisition of all or substantially
all of the assigning Member’s assets or equity ownership; or

 

2.2                                 (i)
the assignor Member so provides in the instrument of assignment, (ii) the
Assignee agrees in writing to be bound by the provisions of this Agreement and
of the Articles and any amendments hereto and thereto, (iii) all of the Members
consent to such substitution in writing (which

 

25

 

consent may be
withheld in their sole and absolute discretion), (iv) to the extent required by
any Gaming Authority, the licensure of such person has occurred; and (v) the
satisfaction of completion by the Members of due diligence on said Assignee to
determine if the Assignee is a Suitable Person. 
Similarly, a Person seeking to acquire a Membership Interest from the
Company shall become an Additional Member only if (x) such Person agrees in
writing to be bound by the provisions of this Agreement and of the Articles and
any amendments hereto and thereto, (y) all of the Members consent in writing
(which consent may be withheld in their sole and absolute discretion) and (z)
the provisions of clauses (iv) and (v) above are met.

 

3.                                       Members.  Unless named in this Agreement, or unless
admitted to the Company as above provided, no Person shall be considered a
Member, and the Company, each Member, and any other Persons having business
with the Company need deal only with Members so named or so admitted and shall
not be required to deal with any other person by reason of an assignment by a
Member or by reason of the death of a Member, except as otherwise provided in
this Agreement.  In the absence of
substitution of a Member for an assigning or deceased Member, any payment to a
Member or to the Member’s executors or administrators shall acquit the Company
of all liability to any other persons who may be interested in such payments by
reason of an assignment by the Member or by reason of the Member’s death.

 

4.                                       Gaming
Authority Approvals.  Notwithstanding
any provisions of this Agreement to the contrary, all assignments of and
Dispositions of Membership Interests and all admissions of Additional Members
shall be subject to the receipt of any required approvals from the Gaming
Authorities having jurisdiction over the Business of the Company.

 

5.                                       Determination
that a Member is an Unsuitable Person. 
If any Gaming Authority determines that a Person is an Unsuitable Person
and that the continued participation of such Person in the Company would
jeopardize any gaming license held or being sought by or on behalf of the
Company, the Company shall purchase, and the Unsuitable Person shall sell, all
of such Person’s Membership Interest. 
The purchase price shall be determined in accordance with the procedures
set forth in Article XIV.

 

ARTICLE XIV

MEMBER BUY-OUT PROVISION

 

In the event of a material breach of this Agreement or the Articles,
the Bankruptcy of a Member, or a
determination that a Member has become an Unsuitable Person, the Member
who is not in breach, Bankrupt or an Unsuitable Person (the “Offering Member”)
may elect to purchase all of the Membership Interests of the other Member (the
“Receiving Member”) or, in the absence of such an election, the Company shall
purchase all of the Membership Interests of the Receiving Member.  Where this provision applies, such Offering
Member shall forward to

 

26

 

the Receiving
Member a bona fide, written offer (the “Offer”) for the purchase of all of the
Receiving Member’s Membership Interests at a purchase price equal to the amount
of the Receiving Member’s unreturned cumulative Capital Contributions (the
“Buyout Price”).  Within thirty (30) days
of receipt of the Offer, the Receiving Member shall notify the Offering Member
and the Company of the Receiving Member’s election to either (i) sell its
Membership Interest to the Offering Member for the Buyout Price or
(ii) sell its Membership Interest to the Company for the Buyout
Price.  If no election is made by the
Receiving Member, the Company shall be the Purchaser hereunder.  The Membership Interest of the Receiving
Member shall be promptly transferred to the Purchaser hereunder, whether the
Offering Member or the Company, without any further action required by the
Receiving Member, upon the transfer of the Buyout Price to the Receiving
Member, under payment terms (i.e.,
a promissory note payable over five (5) years) similar to those described in
Article XV, Section 2.2 below. 
The Receiving Member hereby appoints the Company’s President and Chief
Executive Officer as its power of attorney to transfer the Receiving Member’s
Membership Interest to the Offering Member or the Company, as applicable, upon
payment of the Buyout Price pursuant to the payment terms described in
Article XV, Section 2.2.  In
the event of a Bankruptcy or determination of Unsuitability, if the Receiving
Member disputes the amount of the Buyout Price, the Membership Interest shall
be transferred hereunder notwithstanding such dispute, and such dispute over
the amount of the Buyout Price shall be resolved pursuant to the binding
arbitration provisions of Article XVII, Section 7(ii).  In the event of a dispute related to the
existence of a material breach of this Agreement, the dispute shall be likewise
resolved by the binding arbitration provisions of Article XVII,
Section 7(ii), but the Membership Interest shall be transferred only after
a determination in arbitration that such material default has occurred.

 

ARTICLE XV

DISSOLUTION AND WINDING UP

 

1.                                       Events
of Dissolution.  The Company shall
continue until the occurrence of any one of the following dissolution events,
at which time the Company shall dissolve:

 

1.1                                 An
election to dissolve the Company made in writing unanimously by all of the
Members.

 

1.2                                 The
sale, exchange or other disposition of all or substantially all of the
Company’s Property, unless the Company receives a purchase money promissory
note in consideration of such sale in which event dissolution shall occur upon
final payment thereof.

 

1.3                                 A
judicial determination of dissolution under the Act.

 

No other events or actions, including any such events or actions
described in the Act or Article XI, Section 1 above, shall cause a
dissolution of the Company.

 

2.                                       Election
to Continue Doing Business.  If an
event or action occurs, other than those described in Sections 1.1, 1.2 or 1.3
above, and despite the last sentence of Section 1 or the last sentence of
Article XI, Section 1, providing that such event

 

27

 

or action will not
cause a dissolution of the Company, it is determined that the Company is
nevertheless subject to dissolution:

 

2.1                                 As
set forth in the Act, notwithstanding the occurrence of a dissolution event
(other than where dissolution occurs pursuant to Sections 1.1, 1.2 or 1.3
above), the Company may continue to carry on its business and affairs following
such dissolution event if, within ninety (90) days after such dissolution event
there remains at least one (1) Member (the “Remaining Member(s)”), and all of
the Members or all of the Remaining Member(s) consent to so continue the
business and affairs of the Company without dissolution.

 

2.2                                 In
the event the surviving Members shall determine that they wish to continue the
Company, and the Member Buy-Out provisions set forth in Article XIV are
not applicable to the Selling Members, including by reason of Article XI,
Section 2.2, Article XIII, Section 2.2, Article XIII,
Section 5, or Article XIV, such Members, hereinafter called the
“Purchasing Members,” shall have the absolute option and right to purchase the
Membership Interests of the other Members, hereinafter called the “Selling
Members.”  For this purpose the
Purchasing Members’ group and the Selling Members’ group shall each promptly
appoint an appraiser to determine the value of the Membership Interests.  In respect to those items upon which the
appraisers disagree, they shall together appoint a third appraiser, who shall determine
items and shall render a written report of his opinion with respect
thereto.  All appraisers appointed shall
be appraisers who have qualified to give expert valuation testimony.  The values contained in the said written
reports shall be used to determine the purchase price of the Membership
Interests of the Selling Members.  Within
sixty (60) days after all of the said written reports have been rendered, the
Purchasing Members shall notify the Selling Members in writing of their
decision whether to exercise the option. 
The option is granted to all the Purchasing Members in proportion to
their respective Membership Interests; but if any such Member does not desire
to exercise the option, then his portion may be taken up pro rata by the
remaining Purchasing Members, as the case may be.  Settlement shall be completed within thirty
(30) days after notice of the exercise of the option.  The terms of payment of the purchase price
shall be: no cash down payment, the balance payable in equal monthly installments
over a period of five (5) years with interest on the unpaid balance at the
Prime Rate.  The obligation of the
Purchasing Members to the Selling Members shall be evidenced by a promissory
note or notes, secured by a pledge of the purchased Membership Interests and
the filing of a financing statement with respect thereto.

 

28

 

3.                                       Procedures
Upon Dissolution.

 

3.1                                 Upon
Dissolution of the Company, the Members or, if there is only one Member, such
Person, shall proceed with dispatch and without any unnecessary delay to sell
or otherwise liquidate the assets of the Company, and shall distribute the
proceeds thereof in accordance with Article XV, Section 3.2, below.

 

3.2                                 Upon
dissolution and liquidation of the Company, the net proceeds of liquidation
shall be applied and distributed in the following order of priority:

 

3.2.1                        First, to the payment of the
debts and liabilities of the Company (other than any loans or advances that may
have been made by any of the Members) and the expenses of liquidation;

 

3.2.2                        Second, to the creation of any
reserves which the Members may deem reasonably necessary for the payment of any
contingent or unforeseen liabilities or obligations of the Company or of the
Members arising out of or in connection with the Business and operations of the
Company;

 

3.2.3                        Third, in accordance with the
Non-Operating Distribution provisions of Article IX, Section 4.

 

3.3                                 A
reasonable time shall be allowed for the orderly liquidation of the Company’s assets
and the discharge of its liabilities, unless the Members shall have agreed to
make any in-kind distributions.

 

3.4                                 The
Company shall terminate and wind up when all assets owned by the Company shall
have been disposed of and the net proceeds, after satisfaction of liabilities
to Company creditors, shall have been distributed among the Members.

 

ARTICLE XVI

AMENDMENT

 

1.                                       Modification
of this Agreement.  This Agreement
may be modified as provided in this Article XVI (as the same may from time
to time be amended).

 

2.                                       Amendment
or Modification of Agreement.  The
Agreement may be amended or modified from time to time only pursuant to a
written instrument adopted and executed by all of the Members.

 

29

 

ARTICLE XVII

MISCELLANEOUS PROVISIONS

 

1.                                       Pronouns
and Plurals.  Except where the same
shall not be appropriate, references herein to the singular shall include the
plural and to the plural shall include the singular; references to the
masculine gender shall include the feminine and neuter genders (and vice
versa).

 

2.                                       Waiver.  No consent or waiver, express or implied, by
any Member to or of any breach or default by any other Member in the
performance by the other of such Member’s obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default by
the other in the performance by such other party of the same or any other
obligations of such Member hereunder. 
Failure on the part of any Member to object to or complain of any act or
failure to act of any of the other Members or to declare any of the other
Members in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Member of its rights hereunder.

 

3.                                       Severability.  If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.

 

4.                                       Titles
and Captions.  All
section titles or captions contained in this Agreement are for convenience
only and shall not be deemed a part of the context of this Agreement.

 

5.                                       Agreement
in Counterparts.  This Agreement may
be executed in several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.  In addition, this Agreement may contain more
than one counterpart of the signatures page and the Agreement may be executed
by the affixing of the signatures of each of the Members to one of such
counterpart signature pages; all of such signature pages shall be read as
though one, and shall have the same force and effect as though all of the
signers had signed a single signature page. 
Each party shall become bound by this Agreement immediately upon
affixing his, her or its signature hereto, independent of the signature of any
other party.

 

6.                                       Binding
Agreement.  Subject to the
restrictions on transfers set forth herein, this Agreement shall inure to the
benefit of and be binding upon the undersigned Members and their respective
heirs, executors, legal or personal representatives, successors and assigns.  In this context, whenever in this Agreement a
reference to any party or Member is made, such reference shall be deemed to
include a reference to the heirs, executors, legal or personal representatives,
successors and assigns of such party or Member.

 

30

 

7.                                       Governing
Law; Disputes.  It is the intent of
the parties hereto that all questions with respect to the construction of this
Agreement and the rights and liabilities of the parties hereto shall be
determined in accordance with the provisions of the laws of the State of
Missouri.  Venue for any disputes shall
be in Greene County, Missouri.  To
resolve disputes the parties shall (i) first, engage in non-binding
mediation with a single mediator, with such mediation session before the
mediator not to exceed two (2) Business Days and, (ii) second, if such
mediation is unsuccessful, submit the dispute to binding arbitration under the
American Arbitration Association rules using a single arbiter.  The prevailing party in any mediation or
arbitration with respect to any disputes relating to the Agreement shall be
entitled to recover its reasonable attorneys fees from the other party for all
matters, including but not limited to appeals with such fees to be awarded by
the mediator or arbiter.

 

8.                                       WAIVER
OF JURY TRIAL.  EACH MEMBER
IRREVOCABLY WAIVES ANY AND ALL RIGHT THE MEMBER MAY HAVE TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT.  THE MEMBERS ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.

 

9.                                       Confidentiality.  Each Member agrees that this Agreement, and
all information (other than information which is a matter of public record or
is provided by other sources readily available to the public) shared or
developed on behalf of the Company and its Business and activities shall be
kept strictly confidential, except in discussions with or filings with Gaming
Authorities or a Member’s financiers, attorneys, accountants, investment
bankers or prospective investors.  No disclosures, press releases, or
announcements concerning the Company shall be made by any Member, except the
Company may make such public disclosures that its counsel deems necessary or
advisable under federal securities laws, as determined by all of the Members.

 

10.                                 Further
Assurances.  Each Member agrees that
it will, at any time and from time to time, upon the request of the Members,
do, execute, acknowledge or deliver all such further acts, deeds, assignments,
conveyances and assurances as may be reasonably required to effectuate the
transactions contemplated by this Agreement.

 

11.                                 Investment
Objectives.  Each Member, by such
Member’s signature hereto, warrants that each such Member is acquiring an
interest in the Company for such Member’s own account for investment only and
without any present intention of selling the same.  Each Member further covenants and agrees that
it shall be responsible, at its sole cost and expense, for making any public
filings required by virtue of its ownership interest in the Company.  Further, and to that end, the Members shall
look to their own counsel and not the other Members for guidance as to the
filing of such matters.

 

31

 

12.                                 Entire
Agreement.  This Agreement, unless
subsequently amended in the manner provided in Article XVI, contains the
final and entire agreement among the parties hereto, and they shall not be
bound by any terms, conditions, statements or representations, oral or written,
not herein contained.

 

13.                                 No
Cumulative Voting.  No Members shall
have any cumulative voting rights.

 

14.                                 Preemptive
Rights.  Except as otherwise
expressly provided in this Agreement, or as determined by all of the Members,
no Members shall have preemptive rights to contribute additional capital to the
Company.

 

 

[signature
page follows]

 

32

 

IN WITNESS WHEREOF,
the parties have executed this Agreement effective on the date first set forth
above.

 

 

	
   

  	
   

  	
  /s/ Robert E.
  Low

  	
   

  
	
   

  	
   

  	
  Robert
  E. Low

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SW
  MISSOURI, LLC,

  
	
   

  	
  a Minnesota
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ James B.
  Druck

  	
   

  
	
   

  	
  Name:

  	
  /s/ James B.
  Druck

  	
   

  
	
   

  	
  Its:

  	
  Chief Executive
  Officer

  	
   

  
								

 

33

 

EXHIBIT A

 

PERCENTAGE
INTERESTS AND CAPITAL CONTRIBUTION COMMITMENT

 

	
  Member

  	
   

  	
  Percentage

  Interest(1)

  	
   

  	
  Pre-Ballot

  Initiative Date

  Maximum

  Aggregate Capital

  Contribution

  Commitment

  	
   

  	
  Maximum

  Aggregate Capital

  Contribution

  Commitment(2)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Low

  2740 N. Mayfair

  Springfield, MO 65803

  	
   

  	
  70

  	
  %

  	
   

  	
  $

  	
  7,000,000

  	
  (3)

  	
  $

  	
  77,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southwest

  2001 Killebrew Drive, Suite 306

  Minneapolis, MN 55425

  	
   

  	
  30

  	
  %

  	
   

  	
  $

  	
  3,000,000

  	
  (4)

  	
  $

  	
  33,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  100

  	
  %

  	
   

  	
  $

  	
  10,000,000

  	
  (5)

  	
  $

  	
  110,000,000

  	
   

  

 

(1)               Low
shall solely fund all Capital Contributions until such time that Low has made
its entire Catch-Up Contribution totaling $4,213,030.  Until Low has made the entire Catch-Up
Contribution, for the purposes of any Distributions, the Member’s respective
Percentage Interest shall be computed based upon the actual Capital
Contributions made by each Member on the date of any such Distribution.

 

(2)               The
maximum aggregate Capital Contribution includes all Capital Contributions made
by the Members (both before and after the Ballot Initiative Date).

 

(3)               Low
shall solely fund all Capital Contributions until such time that Low has made
its entire Catch-Up Contribution totaling $4,213,030.  Thereafter, Low and Southwest shall fund all
Capital Contributions on a pro rata basis based on their respective Percentage
Interests.

 

(4)               Prior
to the Effective Date, Southwest made an Initial Capital Contribution in the
amount of $1,805,584, as itemized on the attached Schedule A to
this Exhibit A, representing all of Southwest’s documented out-of-pocket
costs incurred by it in connection with the arrangement of the Rockaway
Agreements.  After Low has made its
entire Catch-Up Contribution, Southwest will contribute additional funds on a
pro rata basis based upon its Percentage Interest to increase its cumulative
Capital Contributions to the Company to the pre-Ballot Initiative Date Capital
Contribution Commitment amount of $3,000,000.

 

(5)               The
total pre-Ballot Initiative Date Capital Contribution Commitment may be
increased to over $10,000,000 upon the prior approval of the Board.  Any such increases to the Member’s Capital
Contribution Commitments shall be funded by the Members on a pro rata basis
based on their respective Percentage Interests.

 

Ex. A

 

SCHEDULE A

 

Itemized Initial
Capital Contribution

 

 

Sch. A

 

EXHIBIT
B

 

The Management
Agreement

 

 

Ex. B

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