Document:

Exhibit 10.35

 

 

THIRD AMENDED AND RESTATED

 

OPERATING AGREEMENT

 

OF

 

CANNERY CASINO RESORTS, LLC,

 

A NEVADA LIMITED LIABILITY
COMPANY

 

 

Dated as of March 3, 2010

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE I

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
  Formation

  	
   

  	
  1

  
	
  1.2

  	
  Name

  	
   

  	
  1

  
	
  1.3

  	
  Purpose; Powers

  	
   

  	
  2

  
	
  1.4

  	
  Principal Place of Business

  	
   

  	
  2

  
	
  1.5

  	
  Term

  	
   

  	
  2

  
	
  1.6

  	
  Filings; Agent for Service of Process

  	
   

  	
  2

  
	
  1.7

  	
  Title to Property

  	
   

  	
  3

  
	
  1.8

  	
  Payments of Individual Obligations

  	
   

  	
  3

  
	
  1.9

  	
  Independent Activities; Transactions with Affiliates

  	
   

  	
  3

  
	
  1.10

  	
  Definitions

  	
   

  	
  4

  
	
  1.11

  	
  Interpretation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
  CAPITAL CONTRIBUTIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
  Classes of Units

  	
   

  	
  4

  
	
  2.2

  	
  Conversion of Series B Preferred Units

  	
   

  	
  4

  
	
  2.3

  	
  Redemption or Repurchase

  	
   

  	
  6

  
	
  2.4

  	
  Capital Contributions

  	
   

  	
  8

  
	
  2.5

  	
  Additional Capital Contributions

  	
   

  	
  8

  
	
  2.6

  	
  Equity Participation Plan

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
  ALLOCATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Profits and Losses

  	
   

  	
  13

  
	
  3.2

  	
  Special Allocations

  	
   

  	
  13

  
	
  3.3

  	
  Curative Allocations

  	
   

  	
  15

  
	
  3.4

  	
  Loss Limitation

  	
   

  	
  15

  
	
  3.5

  	
  Other Allocation Rules

  	
   

  	
  15

  
	
  3.6

  	
  Tax Allocations; Code Section 704(c)

  	
   

  	
  16

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
  DISTRIBUTIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
  Distributions

  	
   

  	
  17

  
	
  4.2

  	
  Amounts Withheld

  	
   

  	
  17

  
	
  4.3

  	
  Tax Distributions

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
  MANAGEMENT COMMITTEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
  Managers; Management Committee

  	
   

  	
  18

  
	
  5.2

  	
  Licensing

  	
   

  	
  21

  
	
  5.3

  	
  Meetings of the Management Committee

  	
   

  	
  21

  
	
  5.4

  	
  Management Committee Powers

  	
   

  	
  22

  
	
  5.5

  	
  Actions Requiring Majority Approval of the
  Management Committee or the Unanimous Approval of the AcquisitionCo Managers

  	
   

  	
  24

  
	
  5.6

  	
  Actions Requiring 80% Approval of the Management
  Committee

  	
   

  	
  26

  
	
  5.7

  	
  Duties and Obligations of the Management Committee

  	
   

  	
  27

  
	
  5.8

  	
  Removal of Certain Senior Officers

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
  MEMBERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  Rights or Powers of Members

  	
   

  	
  28

  
	
  6.2

  	
  Voting Rights of Members

  	
   

  	
  28

  
	
  6.3

  	
  Meetings of the Series A1 Preferred Members

  	
   

  	
  28

  
	
  6.4

  	
  Withdrawal

  	
   

  	
  29

  
	
  6.5

  	
  Member Compensation

  	
   

  	
  29

  
	
  6.6

  	
  Members Liability; Duties

  	
   

  	
  30

  
	
  6.7

  	
  Partition

  	
   

  	
  30

  
	
  6.8

  	
  Transactions between a Member and the Company

  	
   

  	
  30

  
	
  6.9

  	
  Other Instruments

  	
   

  	
  30

  
	
  6.10

  	
  Preemptive Right

  	
   

  	
  30

  
	
  6.11

  	
  Drag-Along Rights and Tag-Along Rights

  	
   

  	
  31

  
	
  6.12

  	
  Piggyback Registration Rights

  	
   

  	
  34

  
	
  6.13

  	
  Ranking

  	
   

  	
  35

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
  [INTENTIONALLY OMITTED]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII

  	
   

  	
   

  
	
   

  	
  INDEMNIFICATION AND
  REIMBURSEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
  Indemnification

  	
   

  	
  36

  
	
  8.2

  	
  General Reimbursements

  	
   

  	
  38

  
	
  8.3

  	
  Gaming Development Reimbursements

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX

  	
   

  	
   

  
	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
  In General

  	
   

  	
  39

  
	
  9.2

  	
  Representations and Warranties by Members

  	
   

  	
  39

  
	
  9.3

  	
  Indemnification

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE X

  	
   

  	
   

  
	
   

  	
  ACCOUNTING, BOOKS AND
  RECORDS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
  Accounting, Books And Records

  	
   

  	
  42

  
	
  10.2

  	
  Accounting Statements; Periodic Reports

  	
   

  	
  43

  
	
  10.3

  	
  Series B Preferred Members’ Consultation Right

  	
   

  	
  44

  
	
  10.4

  	
  Tax Matters

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XI

  	
   

  	
   

  
	
   

  	
  TRANSFERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
  Restrictions On Transfers

  	
   

  	
  46

  
	
  11.2

  	
  Permitted Transfers

  	
   

  	
  46

  
	
  11.3

  	
  Second Anniversary Trigger

  	
   

  	
  47

  
	
  11.4

  	
  Fourth Anniversary Trigger

  	
   

  	
  50

  
	
  11.5

  	
  Conditions to Permitted Transfers

  	
   

  	
  53

  
	
  11.6

  	
  Prohibited Transfers

  	
   

  	
  55

  
	
  11.7

  	
  Rights of Unadmitted Assignees

  	
   

  	
  55

  
	
  11.8

  	
  Admission of Substituted Members

  	
   

  	
  55

  
	
  11.9

  	
  Distributions and Allocations in Respect of Units
  Transferred

  	
   

  	
  55

  
	
  11.10

  	
  Gaming Restrictions

  	
   

  	
  55

  
	
  11.11

  	
  Compliance with Gaming Laws

  	
   

  	
  56

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  11.12

  	
  Match Right

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XII

  	
   

  	
   

  
	
   

  	
  ADVERSE ACT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
  Remedies

  	
   

  	
  57

  
	
  12.2

  	
  Adverse Act Purchase

  	
   

  	
  58

  
	
  12.3

  	
  Net Equity Value

  	
   

  	
  60

  
	
  12.4

  	
  Gross Appraised Value

  	
   

  	
  61

  
	
  12.5

  	
  Extension of Time

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XIII

  	
   

  	
   

  
	
   

  	
  DISSOLUTION AND WINDING
  UP

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
  Dissolution Events

  	
   

  	
  62

  
	
  13.2

  	
  Winding Up

  	
   

  	
  62

  
	
  13.3

  	
  Deficit Capital Accounts

  	
   

  	
  63

  
	
  13.4

  	
  Holdback

  	
   

  	
  64

  
	
  13.5

  	
  Deemed Contribution and Distribution

  	
   

  	
  64

  
	
  13.6

  	
  Rights of Members

  	
   

  	
  64

  
	
  13.7

  	
  Notice of Dissolution/Termination

  	
   

  	
  64

  
	
  13.8

  	
  Allocations During Period of Liquidation

  	
   

  	
  64

  
	
  13.9

  	
  Character of Liquidating Distributions

  	
   

  	
  65

  
	
  13.10

  	
  The Liquidator

  	
   

  	
  65

  
	
  13.11

  	
  Form of Liquidating Distributions

  	
   

  	
  65

  
	
  13.12

  	
  Reserves

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XIV

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
  Further Assurances

  	
   

  	
  65

  
	
  14.2

  	
  Notices

  	
   

  	
  65

  
	
  14.3

  	
  Confidentiality

  	
   

  	
  66

  
	
  14.4

  	
  Governing Law

  	
   

  	
  67

  
	
  14.5

  	
  Jurisdiction; Waiver of Jury Trial

  	
   

  	
  67

  
	
  14.6

  	
  Specific Performance

  	
   

  	
  67

  
	
  14.7

  	
  Entire Agreement

  	
   

  	
  67

  

 

iv

 

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  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  14.8

  	
  Amendment

  	
   

  	
  67

  
	
  14.9

  	
  Waiver

  	
   

  	
  68

  
	
  14.10

  	
  Invalid Provisions

  	
   

  	
  68

  
	
  14.11

  	
  No Assignment; Binding Effect

  	
   

  	
  68

  
	
  14.12

  	
  Third Party Beneficiaries

  	
   

  	
  68

  
	
  14.13

  	
  Construction

  	
   

  	
  68

  
	
  14.14

  	
  Incorporation by Reference

  	
   

  	
  68

  
	
  14.15

  	
  Headings

  	
   

  	
  69

  
	
  14.16

  	
  Counterparts

  	
   

  	
  69

  

 

v

 

THIRD
AMENDED AND RESTATED

 

OPERATING
AGREEMENT

 

OF

 

CANNERY
CASINO RESORTS, LLC,

 

A NEVADA LIMITED
LIABILITY COMPANY

 

This THIRD AMENDED AND RESTATED OPERATING AGREEMENT of
Cannery Casino Resorts, LLC, is entered into and shall be effective as of March 3,
2010 (the “Effective Date”), by and among the Persons who are identified
as Members on Appendix A and who have executed a counterpart of this
Agreement as Members pursuant to the provisions of the Act.  Certain capitalized terms used herein are
defined in Appendix B.

 

This Agreement amends, restates, supersedes and replaces in its
entirety the Second Amended and Restated Operating Agreement of Cannery Casino
Resorts, LLC (the “Second A&R Operating Agreement”), dated as of April 24,
2009, and has been approved by the Members in accordance with the terms of the
Second A&R Operating Agreement and the Act.

 

ARTICLE I

THE COMPANY

 

1.1          Formation.

 

(a)           The Company was formed as a limited liability company
under and pursuant to the provisions of the NRS through the filing of the
Articles of Organization with the Secretary of State of the State of Nevada on
or about May 18, 2001.  The fact
that the Articles of Organization are on file in the office of the Secretary of
State of the State of Nevada shall constitute notice that the Company is a
limited liability company.  The Members
of the Company as of the Effective Date are Millennium Gaming, AcquisitionCo.,
Crown One, and Crown Two.

 

(b)           Concurrently herewith, the Company and each Member is
entering into the Series C Purchase Agreement.  In connection therewith, the Members hereby
enter into this Agreement to amend, restate, supersede and replace the Second
A&R Operating Agreement in its entirety.

 

(c)           The rights and liabilities of the Members shall be as
provided under the Act, the Articles of Organization and this Agreement.

 

1.2          Name.  The name of
the Company shall be “Cannery Casino Resorts, LLC” and all Business of the
Company shall be conducted in such name. 
The Management Committee may change the name of the Company upon ten
Business Days prior written notice to the Members.

 

 

1.3          Purpose; Powers.

 

(a)           The purposes of the Company are (i) to acquire
and hold interests in casino operating companies, (ii) to conduct the
Business, (iii) to make such additional investments and engage in such
additional activities as the Members may approve, and (iv) to engage in
any and all activities related to or incidental to the purposes set forth in
clauses (i), (ii) and (iii) above.

 

(b)           The Company has the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to or in
furtherance of the purposes of the Company set forth in Section 1.3(a) above,
and has, without limitation, any and all powers that may be exercised on behalf
of the Company by the Management Committee pursuant to ARTICLE V below.

 

1.4          Principal Place of Business. 
The principal place of business of the Company shall be at 221 North
Rampart Boulevard, Las Vegas, Nevada 89145. 
The Management Committee may change the principal place of business of
the Company to any other place within or without the State of Nevada, upon ten
Business Days prior written notice to the Members.  The registered office of the Company in the
State of Nevada shall be as currently reflected on the annual list on file with
the Secretary of State of the State of Nevada.

 

1.5          Term.  The term of
the Company commenced on the date the Articles of Organization were filed in
the office of the Secretary of State of the State of Nevada in accordance with
the Act, and shall continue until the dissolution, winding up and liquidation
of the Company and its Business is completed following a Dissolution Event, as
provided in ARTICLE
XIII below.

 

1.6          Filings; Agent for Service of Process.

 

(a)           The Company shall take any and all other actions
reasonably necessary to perfect and maintain the status of the Company as a
limited liability company under the laws of the State of Nevada, including the
preparation and filing of such amendments to the Articles of Organization and
such other assumed name certificates, documents, instruments and publications
as may be required by law, including action to reflect:

 

(i)            a change in the Company name;

 

(ii)           a correction of false or erroneous statements in the
Articles of Organization, or the desire of the Members to make a change in any
statement therein in order that it shall accurately represent the agreement
among the Members; or

 

(iii)          a change in the time for dissolution of the Company,
as stated in the Articles of Organization and in this Agreement.

 

(b)           The Members and the Management Committee shall
execute, and the Company shall file, original or amended articles or
certificates and shall take any and all other actions as may be reasonably
necessary to perfect and maintain the status of the Company 

 

2

 

as a limited liability company or similar type of
entity under the laws of any other jurisdictions in which the Company engages
in Business.

 

(c)           The registered agent for service of process on the
Company in the State of Nevada shall be as designated by the Management
Committee from time to time in accordance with the Act.

 

(d)           Upon the dissolution and completion of the winding up
and liquidation of the Company in accordance with ARTICLE XIII below,
the Management Committee shall promptly execute, and the Company shall file,
articles of dissolution or a certificate of cancellation in accordance with the
Act and the laws of any other jurisdictions in which the Management Committee
deems such filing necessary or advisable.

 

1.7          Title to Property.  All Property
owned by the Company shall be owned by the Company as an entity, and no Member
shall have any ownership interest in such Property in such Member’s individual
name, and each Member’s interest in the Company shall be personal property for
all purposes.  The Company shall hold
title to all of its Property in the name of the Company and not in the name of
any Member.

 

1.8          Payments of Individual Obligations. 
The Company’s credit and assets shall be used solely for the benefit of the
Company, and no asset of the Company shall be Transferred or encumbered for, or
in payment of, any individual obligation of any Member.

 

1.9          Independent Activities; Transactions with Affiliates.

 

(a)           Each Manager shall be required to devote such time to
the affairs of the Company as may be necessary to manage and operate the
Company.  Subject to the foregoing
sentence and to any contrary agreement between any Member or Manager and the
Company or among Members, each Manager and each Member may engage or invest in,
and devote its time to, any other business venture or activity of any nature
and description.  Neither the Company nor
any other Member shall have any right by virtue of this Agreement or the
relationship created hereby in or to such other venture or activity of any
other Member (or to the income or proceeds derived therefrom), and the pursuit
thereof shall not be deemed wrongful or improper.  Subject to any contrary agreement between any
Member and the Company or among Members, the Members shall not be required to
offer any business opportunities to the Company or otherwise conduct any
particular business activities through or for the account of the Company and
Members may act in concert with each other with respect to business
opportunities without including other Members.

 

(b)           To the extent permitted by applicable law and subject
to the provisions of this Agreement, the Management Committee is hereby
authorized to cause the Company to purchase Property from, sell Property to, or
otherwise deal with, any Member or Manager, acting on such Member’s or Managers’
own behalf, or any Affiliate of any Member or Manager; provided, that,
any such purchase, sale or other transaction shall be made on terms and
conditions that are no less favorable to the Company than if such purchase,
sale or other transaction had been made with an independent third party.

 

3

 

1.10        Definitions.  As used in
this Agreement, capitalized terms shall have the meanings ascribed to them
herein or in Appendix B.

 

1.11        Interpretation.  Unless the
context clearly indicates otherwise, (a) each definition herein includes
the singular and the plural, (b) each reference herein to any gender
includes the masculine, feminine and neuter where appropriate, (c) the
words “include” and “including” and variations thereof shall not be deemed
terms of limitation, but rather shall be deemed to be followed by the words “without
limitation,” (d) the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder”
and derivative or similar words refer to this Agreement as an entirety and not
solely to any particular provision of this Agreement, (e) each reference
in this Agreement to a particular Article, Section, Appendix or Exhibit means
an Article or Section of, or an Appendix or Exhibit to, this
Agreement, unless another agreement is specified, (f) all accounting terms not specifically defined herein
shall be construed in accordance with GAAP, and (g) all references
to “$” or “Dollars” shall mean United States Dollars.

 

ARTICLE II

CAPITAL CONTRIBUTIONS

 

2.1          Classes of Units.  The Company
is authorized to issue two classes of Units, designated “Preferred Units” and “Common
Units.”  The total number of Preferred
Units that the Company is authorized to issue is 473,918.  The total number of Common Units that the
Company is authorized to issue is zero (0). 
The Preferred Units shall be divided into four series: the Series A1
Preferred Units, the Series A2 Preferred Units, the Series B
Preferred Units, and the Series C Preferred Units. The total number of Series A1
Preferred Units the Company is authorized to issue is 220,690.  The total number of Series A2 Preferred
Units the Company is authorized to issue is 71,614.  The total number of Series B Preferred
Units the Company is authorized to issue is 71,614.  The total number of Series C Preferred
Units the Company is authorized to issue is 110,000, of which 75,000 will be
issued on the Effective Date and up to 35,000 may be issued only pursuant to Section 2.5(b).  Except as expressly provided in Sections 6.13
and 14.8, the Series B Preferred Units and the Series C Preferred
Units shall have no voting or other approval rights or right to share in the
distributions of the Company (other than distributions in liquidation as
specifically provided in Section 13.2). 
Except as expressly provided in Section 14.8, the Series A2
Preferred Units shall have no voting or other approval rights.  The Series A2 Preferred Units may not be
redeemed or repurchased by the Company on a basis other than pro rata with all other Units in proportion to Percentage
Interests.  All Preferred Units issued on
or after the Effective Date shall be designated as Series A1 Preferred
Units, Series A2 Preferred Units, Series B Preferred Units or Series C
Preferred Units in the discretion of the Management Committee in connection
with the authorization of such issuance. 
The number of authorized Preferred Units and Common Units may be
increased as determined from time to time by the Management Committee pursuant
to Section 5.6(h) below.

 

2.2          Conversion of Series B Preferred Units.

 

(a)           On or prior to April 24, 2011 or such later date
as determined by the Management Committee in its sole discretion (the “Conversion
Period”), the Series B 

 

4

 

Preferred Members shall have the option (the “Conversion
Option”) to convert all (but not less than all) of the Series B
Preferred Units held by all Series B Preferred Members into Series A2
Preferred Units in accordance with the provisions of this Section 2.2 (a “Conversion”).  For purposes of clarity, the Conversion
Option may only be exercised concurrently in whole (and not in part) by all Series B
Preferred Members.

 

(b)           If the Series B Preferred Members elect
unanimously to exercise the Conversion Option during the Conversion Period,
such Series B Preferred Members shall each deliver irrevocable written
notice of such exercise (the “Conversion Exercise Notice”) to the
Company, and (subject to Section 2.2(c)) the Company shall
promptly cause each Series B Preferred Unit held by such Series B
Preferred Member to be converted into one (1) Series A2 Preferred
Unit, subject to adjustment from and after the date hereof pursuant to Section 2.2(d) (such
number of Series A2 Preferred Units, as adjusted, the “Conversion
Number”).

 

(c)           Notwithstanding anything to the contrary contained
herein, in connection with any exercise of the Conversion Option (i) the
Company shall require each converting Series B Preferred Member to present
satisfactory evidence that all Gaming Approvals required for such Conversion
have been obtained, and the Company shall not be required to honor any such
Conversion unless and until the Company and its counsel are reasonably
satisfied that all such Gaming Approvals have been obtained and (ii) the
converting Series B Preferred Member shall be required to pay all
licensing, application and other fees and expenses related to such Conversion.

 

(d)           The Conversion Number is subject to adjustment from
time to time upon the occurrence of the events specified in this Section 2.2(d).

 

(i)            Distributions of Preferred Units, Subdivisions and
Combinations.  On and after the Effective Date, if the
Company shall: (i) make a distribution of Preferred Units to holders of
Preferred Units, (ii) subdivide outstanding Preferred Units into a greater
number of Preferred Units, or (iii) combine outstanding Preferred Units
into a smaller number of Preferred Units, then in each such case the Conversion
Number shall be proportionately adjusted so that each Series B Preferred
Member shall be entitled to receive upon Conversion of its Series B
Preferred Units the aggregate number of Series A2 Preferred Units which,
if the Series B Preferred Units held by such Series B Preferred
Member had been converted immediately prior to such distribution, subdivision
or combination, such Series B Preferred Member would have received upon
such Conversion and would have been entitled to receive by virtue of such
distribution, subdivision or combination.

 

(ii)           Adjustments Generally.

 

(A)          Any adjustment made under this ARTICLE II
shall, after taking into account such adjustment, be rounded to the nearest
whole Preferred Unit, in the case of an adjustment to aggregate Preferred
Units.  In the case of any such adjustment,
the Company shall promptly give written notice to the Series B Preferred
Member, in the form of a certificate, certified and confirmed by an officer of
the Company, setting forth the adjustment in reasonable detail.

 

5

 

(B)          All adjustments under this ARTICLE II
shall be made successively whenever an event requiring any such adjustment
occurs.

 

2.3          Redemption or Repurchase.

 

(a)           Series B Preferred Units. 
From and after the Conversion Date if no Conversion has occurred, the
Company, Millennium Gaming and AcquisitionCo shall each or in combination have
the option (the “Redemption/Repurchase Option”) to redeem (in the case
of exercise by the Company) or repurchase (in the case of exercise by
Millennium and/or AcquisitionCo) all (but not less than all) of the Series B
Preferred Units held by a Series B Preferred Member for cash in an amount
equal to the Preferred B Amount as of the consummation of such redemption or
repurchase with respect to the number of Series B Preferred Units held by
such Series B Preferred Member; provided, that, the
Redemption/Repurchase Option may not be exercised prior to the redemption of
all Series C Preferred Units pursuant to Section 2.3(b).  If the Redemption/Repurchase Option is
exercised at the election of Millennium Gaming or AcquisitionCo, then each of
Millennium Gaming and AcquisitionCo shall be entitled to participate in the
repurchase of the Series B Preferred Units on a pro rata basis
in accordance with the relative Percentage Interests of Millennium Gaming and
AcquisitionCo or as otherwise agreed between Millennium Gaming and
AcquisitionCo.  If the
Redemption/Repurchase Option is exercised at the election of the Company, then
such exercise shall require the unanimous approval of the Millennium Managers
and the AcquisitionCo Managers.  The Series B
Preferred Member shall execute and deliver such agreements and other documents
as may be reasonably requested by the party(ies) exercising the
Redemption/Repurchase Option, including an agreement by such Series B
Preferred Member pursuant to which it makes individual representations as to
its unencumbered title to its Series B Preferred Units and authority to
transfer such Series B Preferred Units in accordance with such agreement; provided,
that, such Series B Preferred Member (i) shall not be required to
agree to any noncompetition or like limitations on business activities, and (ii) shall
not be required to indemnify the party(ies) exercising the
Redemption/Repurchase Option for losses arising from its breaches of
representations or warranties in excess of the gross proceeds received by such Series B
Preferred Member pursuant to the exercise of such Redemption/Repurchase Option.

 

(b)           Series C Preferred Units.

 

(i)            Optional Redemption.  At any time and
from time to time, subject to compliance with the Debt Documents, the Company
shall have the right to redeem any or all outstanding Series C Preferred
Units for cash in an amount equal to, with respect to each Series C
Preferred Unit, the Series C Per Unit Redemption Price.  In the event that less than all of the
outstanding Series C Preferred Units are being redeemed, such redemption
shall be made on a pro rata basis
based on the number of Series C Preferred Units held by each Series C
Preferred Member (i.e., each Series C
Preferred Member will have an equal percentage of the aggregate number of Series C
Preferred Units held by it redeemed); provided, that, if any Series C
Preferred Units are held by an Unlicensed Series C Member, such redemption
shall be made so that each Series C Preferred Member receives an aggregate
amount equal to the lesser of (A) subject to the rounding as provided
below, its Series C Investment Percentage of the aggregate consideration
paid by the Company to the Series C Preferred Members in such redemption
and (B) the aggregate number of Series C Preferred Units held by such
Series C Preferred Member 

 

6

 

multiplied by the Series C Per Unit Redemption Price
applicable to such Series C Preferred Member (the aggregate redemption
consideration to which a Series C Preferred Member is entitled, its “Allocated
Series C Redemption Amount”), it being agreed and acknowledged that in
such circumstances the number of Series C Preferred Units redeemed from a Series C
Preferred Member will be such Series C Preferred Member’s Allocated Series C
Redemption Amount divided by the applicable Series C Per Unit
Redemption Price (which will be lower for the Unlicensed Series C Members
relative to Licensed Series C Members), rounded down to the nearest whole Series C
Preferred Unit (and, accordingly, in the event of such rounding down with
respect to the Series C Preferred Units held by a Series C Preferred
Member, the Allocated Series C Redemption Amount for such Series C
Preferred Member will also be rounded down to equal the number of Series C
Preferred Units being redeemed from such Series C Preferred Member multiplied
by the applicable Series C Per Unit Redemption Price).  In the event the Company elects to exercise
such right to redeem, the Company shall provide each Series C Preferred
Member written notice of (i) the date on which such redemption will be
consummated (the “Series C Optional Redemption Date”), which shall
be not less than fifteen (15) Business Days and not more than thirty (30)
Business Days from the date of such notice, (ii) the Series C Per
Unit Redemption Price for the Series C Preferred Units held by the
Licensed Series C Members (and in the event that there are Unlicensed Series C
Members, the Series C Per Unit Redemption Price for the Series C
Preferred Units held by the Unlicensed Series C Members), and (iii) the
number of Series C Preferred Units being redeemed from each Series C
Preferred Member.  On or prior to the Series C
Optional Redemption Date, each Series C Preferred Member shall execute and
deliver such agreements and other documents as may be reasonably requested by
the Company in connection with a redemption pursuant to this Section 2.3(b)(i),
including an agreement by such Series C Preferred Member pursuant to which
it makes individual representations as to its unencumbered title to its Series C
Preferred Units and authority to transfer such Series C Preferred Units in
accordance with such agreement; provided, that, such Series C
Preferred Member (i) shall not be required to agree to any noncompetition
or like limitations on business activities and (ii) shall not be required
to indemnify the Company for losses arising from its breaches of
representations or warranties in excess of the gross proceeds received by such Series C
Preferred Member pursuant to the exercise of the redemption right in this Section 2.3(b)(i).

 

(ii)           Mandatory Redemption.  (A) On
the first Business Day following the one year anniversary date of the date on
which the Company has paid in full all Junior Debt, (B) in the event of a
repayment of the Senior Debt and the Junior Debt in connection with an
acceleration thereof based on a Change of Control (as defined thereunder), on
the first Business Day immediately following such date of repayment, or (C) on
the closing date of a Firm Offer or Purchase Offer pursuant to Section 11.3
or a sale of the Auctioned Equity pursuant to Section 11.4 (each, a “Series C
Mandatory Redemption Date”), the Company shall redeem all (and not less
than all) of the outstanding Series C Preferred Units for cash in an
amount equal to, with respect to each Series C Preferred Unit, the Series C
Per Unit Redemption Price thereof as of the Series C Mandatory Redemption
Date, unless such Series C Mandatory Redemption Date is extended by
written consent of Series C Preferred Member(s) holding a majority of
the issued Series C Preferred Units; provided, that, in the event
that a Conversion by the Series B Preferred Members has occurred and, as a
result, such Members own Series A2 Preferred Units, then any such
extension of the Series C Mandatory Redemption Date shall be subject to
receiving the written consent of the Series A2 Preferred Members.  As promptly as 

 

7

 

practicable following the date on which the Company
reasonably anticipates there will be a mandatory redemption pursuant to this Section 2.3(b)(ii),
the Company shall provide each Series C Preferred Member written notice of
(i) the event causing such mandatory redemption, (ii) the anticipated
Series C Mandatory Redemption Date, and (iii) the Series C Per
Unit Redemption Price as of the anticipated Series C Mandatory Redemption
Date for the Series C Preferred Units held by the Licensed Series C
Members (and in the event that there are Unlicensed Series C Members, the Series C
Per Unit Redemption Price as of the anticipated Series C Mandatory
Redemption Date for the Series C Preferred Units held by the Unlicensed Series C
Members).  On or prior to the Series C
Mandatory Redemption Date, each Series C Preferred Member shall execute
and deliver such agreements and other documents as may be reasonably requested
by the Company in connection with a redemption pursuant to this Section 2.3(b)(ii),
including an agreement by such Series C Preferred Member pursuant to which
it makes individual representations as to its unencumbered title to its Series C
Preferred Units and authority to transfer such Series C Preferred Units in
accordance with such agreement; provided, that, such Series C
Preferred Member (i) shall not be required to agree to any noncompetition
or like limitations on business activities and (ii) shall not be required
to indemnify the Company for losses arising from its breaches of
representations or warranties in excess of the gross proceeds received by such Series C
Preferred Member pursuant to the exercise of the redemption right in this Section 2.3(b)(ii).

 

(c)           Priority of Redemptions.  Neither the
Company nor any of its subsidiaries may redeem or otherwise repurchase any
Units unless and until all Series C Preferred Units have been redeemed or
otherwise repurchased by the Company.

 

2.4          Capital Contributions.  Each Member’s
Preferred Units (specifying whether such Preferred Units are Series A1
Preferred Units, Series A2 Preferred Units, Series B Preferred Units,
or Series C Preferred Units), Common Units, Preferred Percentage Interest
and Percentage Interest in the Company, in each case as of the Effective Date,
are set forth opposite such Member’s name under “Preferred Units,” “Common
Units,” “Preferred Percentage Interest” and “Percentage Interest,”
respectively, on Appendix A.  The
Members agree and acknowledge that Twenty Million Dollars ($20,000,000) of the
aggregate amount paid to the Company by the Series B Preferred Member as
of the Second A&R Effective Date represents a reimbursement of certain
project costs incurred by the Company and shall not be deemed a Capital
Contribution hereunder, nor shall such amount be reflected in the Redemption
Price (Series B) or Redemption Price Per Series B Preferred Unit.

 

2.5          Additional Capital Contributions.

 

(a)           Capital Call - Series A Preferred Members.

 

(i)            The Series A Preferred Members may make
Additional Capital Contributions, other than as set forth in Section 2.5(a)(ii) below,
only with the approval of the Management Committee as set forth in Section 5.6(c) below.  Upon such approval, the Series A
Preferred Members shall be obligated to make Additional Capital Contributions
in accordance with such approval; provided, that, any Series A2
Preferred Member may, but shall not be required to, make Additional Capital
Contributions pro rata in accordance with its Series A
Preferred Percentage Interests.  If such
Additional Capital Contributions are made (i) at a time 

 

8

 

that any Series B Preferred Units are outstanding
or (ii) by the Series A Preferred Members other than pro rata to their respective Preferred Percentage Interests,
the Company shall issue to each Series A Preferred Member making an
Additional Capital Contribution additional Series A Preferred Units of the
same series as it then holds, as provided in Section 2.5(a)(iii) below.

 

(ii)           If any Series A1 Preferred Member determines in
good faith after full and complete consultation with the Managers and senior
management of the Company that the Company requires Additional Capital
Contributions to avoid or cure a Liquidity Crisis with respect to the Company,
such Series A1 Preferred Member shall have the right (but not the
obligation) to request in writing that the Management Committee make a capital
call; provided, that, the requesting Series A1 Preferred
Member is willing and able to fund the entire capital call, if necessary, and
reasonably demonstrates evidence of committed funds available for this
purpose.  Such written request shall
include a reasonably detailed description of the nature and cause (if known) of
the Liquidity Crisis and the aggregate minimum amount (including the calculation
thereof) required to be raised by such capital call to address such Liquidity
Crisis.  Within five Business Days
following receipt of such written request, the Management Committee shall cause
the Company to make a capital call to each Series A Preferred Member by
written notice that sets forth the aggregate amount of such capital call (which
shall equal the aggregate amount requested by the requesting Series A1
Preferred Member) and each Series A Preferred Member’s pro rata (based on Series A Preferred Percentage
Interests) share of such capital call. 
Within ten Business Days of such capital call, each Series A
Preferred Member shall, in its sole and absolute discretion, (i) elect by
written notice not to make an Additional Capital Contribution in response to
such capital call (which option shall not be available to the Series A1
Preferred Member requesting such capital call) or (ii) make up to its pro rata (based on Series A Preferred Percentage
Interests) share of such capital call by wire transfer of immediately available
U.S. funds.  The Company shall promptly
notify the Preferred Members in writing of any shortfall in the capital call
and provide each Series A Preferred Member that made a pro rata (based on Series A Preferred Percentage Interests)
Additional Capital Contribution with five Business Days to elect in writing, in
its sole and absolute discretion, to make a further Additional Capital
Contribution equal to some or all of such shortfall (if such further Additional
Capital Contributions exceed such shortfall, the Company shall make reductions
on a pro rata basis).  The Company shall promptly notify each Series A
Preferred Member in writing of the aggregate Additional Capital Contributions
elected by each Series A Preferred Member and, if any further shortfall
remains, the further Additional Capital Contribution required to be made by the
Series A1 Preferred Member requesting the capital call equal to such
further shortfall.  The Series A
Preferred Members shall make the Additional Capital Contributions to the
Company set forth in such notice within five Business Days of receipt of such
notice by wire transfer of immediately available U.S. funds.  The Company shall use all funds raised by
such capital call to resolve the Liquidity Crisis prompting such capital
call.  If in response to such capital
call, Additional Capital Contributions are made (i) at a time that any Series B
Preferred Units are outstanding or (ii) by the Series A Preferred
Members other than pro rata to
their respective Preferred Percentage Interests, the Company shall issue to
each Series A Preferred Member making an Additional Capital Contribution
additional Series A Preferred Units of the same series that it then holds,
as provided in Section 2.5(a)(iii) below.

 

9

 

(iii)          If Additional Capital Contributions are made pursuant
to Section 2.5(a)(i) or
2.5(a)(ii) above
(x) at a time that any Series B Preferred Units are outstanding or (y) by
the Series A Preferred Members other than pro rata to
their respective Preferred Percentage Interests, the Company shall issue to
each Series A Preferred Member making an Additional Capital Contribution
additional Series A1 Preferred Units or Series A2 Preferred Units (as
applicable, based on the particular series of Series A Preferred Units
held by such contributing Series A Preferred Member at the time of
contribution) equal to the amount of such Additional Capital Contribution made
by such Series A Preferred Member, divided by the Net Equity Per Series A
Preferred Unit (calculated prior to the making of such Additional Capital
Contributions by the Series A Preferred Members and with the Management
Committee selecting the First Appraiser and Second Appraiser), and shall adjust
the Percentage Interest of each Member accordingly.  The Gross Asset Value of the Company’s assets
immediately prior to the making of such Additional Capital Contributions shall
be adjusted to equal the Gross Appraised Value used to determine the Net Equity
Per Series A Preferred Unit.

 

(iv)          If any Series A Preferred Member commits to make
an Additional Capital Contribution pursuant to Section 2.5(a)(i) or
2.5(a)(ii) above
and fails to do so, in addition to any other remedies available to the other
Members under this Agreement, the other Series A Preferred Members shall
be entitled to make further Additional Capital Contributions as determined by
the Management Committee (excluding the Managers designated by the failing Series A
Preferred Member) in an aggregate amount equal to the amount of such Additional
Capital Contribution such failing Series A Preferred Member has failed to
make and appropriate adjustments shall be made pursuant to Section 2.5(a)(iii).

 

(b)           Capital Call - Series C Preferred Members. 
If the Management Committee determines in good faith that the Company
requires Additional Capital Contributions to avoid or cure a Liquidity Crisis
with respect to the Company, the Management Committee shall have the right (but
not the obligation) to cause the Company to make a capital call to each Series C
Preferred Member by written notice that sets forth (i) a reasonably
detailed description of the nature and cause (if known) of the Liquidity
Crisis, (ii) the aggregate minimum amount (including the calculation
thereof) required to be raised by such capital call to address such Liquidity
Crisis (the aggregate amount of such capital call, the “Requested Series C
Additional Capital”), and (iii) each Series C Preferred Member’s pro rata share of such capital call (based on the number of Series C
Preferred Units held by each, except that in the event that there has been a
redemption of less than all of the outstanding Series C Preferred Units
pursuant to Section 2.3(b)(i) and in such redemption Series C
Preferred Units were held by an Unlicensed Series C Member, such pro rata share shall be based on the Series C Preferred
Members’ respective Series C Investment Percentage); provided,
that, the aggregate capital calls pursuant to this Section 2.5(b) shall
not cumulatively exceed in aggregate Thirty-Five Million Dollars ($35,000,000).

 

(i)            Within ten Business Days of a capital call pursuant to
this Section 2.5(b) as set forth above, each Series C Preferred
Member shall, in its sole and absolute discretion, elect by written notice to
either (i) not to make an Additional Capital Contribution in response to
such capital call or (ii) to make up to its pro rata share  of such capital call by wire transfer of immediately
available U.S. funds.  The Company shall
promptly notify the Series C Preferred Members in writing of any shortfall
in the capital call (a “Series C Shortfall Notice”) 

 

10

 

and provide each Series C Preferred Member that
elected to make its full pro rata
Additional Capital Contribution with five Business Days to elect in writing, in
its sole and absolute discretion, to agree to make a further Additional Capital
Contribution equal to some or all of such shortfall (if such further Additional
Capital Contributions exceed such shortfall, the Company shall make reductions
on a pro rata basis).  The Company shall promptly notify each Series C
Preferred Member in writing (a “Series C Capital Call Results Notice”)
of the aggregate Additional Capital Contributions elected by each Series C
Preferred Member.

 

(ii)           In the event that the Series C Preferred Members
have elected to make aggregate Additional Capital Contributions equal to or
greater than the Requested Series C Additional Capital for such capital
call, the Series C Preferred Members shall make such Additional Capital
Contributions to the Company set forth in the applicable Series C Capital
Call Results Notice within five Business Days of receipt of such notice by wire
transfer of immediately available U.S. funds.

 

(iii)          In the event that the Series C Members have
elected to make aggregate Additional Capital Contributions less than the
Requested Series C Additional Capital for such capital call (such
difference, the “Final Series C Shortfall”) following a Series C
Shortfall Notice pursuant to Section 2.5(b)(i) (a “Failed Series C
Capital Call”), for a period of fifteen (15) Business Days following the
date of the applicable Series C Capital Call Results Notice, the Company
shall have the right (but not the obligation) to offer and sell to any Person,
subject to any applicable Gaming Approvals, a number of Series C Preferred
Units equal to the Final Series C Shortfall divided by One Thousand
Dollars ($1,000) on the same terms and conditions offered to the Series C
Preferred Members.

 

(A)          In the event that the Company is able to sell Series C
Preferred Units in an amount equal to the Final Series C Shortfall during
such fifteen (15) Business Day period, the Company shall promptly give written
notice to each Series C Preferred Member of the aggregate Additional
Capital Contributions elected by each and the other Persons purchasing Series C
Preferred Units, and the Series C Preferred Members, the Company, and
other investing Persons set forth in such notice shall consummate such
investments within five Business Days of receipt of such notice by wire
transfer of immediately available U.S. funds.

 

(B)          In the event that the Company uses its good faith
efforts to sell Series C Preferred Units in an amount equal to the Final Series C
Shortfall during such fifteen (15) Business Day period and fails to do so,
subject to terms, conditions, and documentation approved by the Management
Committee, notwithstanding anything to the contrary herein, the Company shall
have the right (but not the obligation) to create and issue a new series of
Preferred Units (the “New Preferred Units”) solely to raise capital to
avoid or cure a Liquidity Crisis in an aggregate amount equal to the Requested Series C
Additional Capital of the applicable Failed Series C Capital Call and with
rights and preferences substantially similar to the Series C Preferred
Units, mutatis mutandis, except that the New
Preferred Units (I) may be entitled to the receipt of amounts
distributable upon the liquidation, dissolution and winding up of the Company
in preference or priority to the Series C Preferred Units, (II) may
have a priority return in excess of twenty percent (20%) per annum, and (III) may
have preference or priority redemption rights vis-à-vis the Series C
Preferred Units; provided, that, prior to offering such New Preferred
Units to any other Person for purchase, the Company shall give each of the Series C

 

11

 

Preferred Members that elected to invest in such
Failed Series C Capital Call an opportunity to purchase (which shall be no
less than five Business Days) up to a number of New Preferred Units in the same
proportion in which each such Series C Preferred Member elected to
participate in such Failed Series C Capital Call; provided, further,
that, in the event that Crown One or Crown Two desires to purchase New
Preferred Units pursuant to the foregoing and does not hold the requisite
Gaming Approvals in the Commonwealth of Pennsylvania as an “Affiliate” (as
defined in 4 Pa.C.S., §1103) of the Company or is not otherwise found
qualified or licensed in the Commonwealth of Pennsylvania to purchase New
Preferred Units, the Company will (x) use its commercially reasonable
efforts to structure the New Preferred Units in a manner such that such Gaming
Approvals, qualifications, or licensing, as the case may be, are not required
for Crown One or Crown Two, as the case may be, to purchase the New Preferred
Units and (y) in the event that any such Gaming Approval, qualification,
or licensing is required despite such efforts, give Crown One and/or Crown Two,
as the case may be, the opportunity (which shall be no less than two Business
Days) to purchase Series C Preferred Units in lieu of New Preferred Units
for the Additional Capital Contributions elected to be made by Crown One and/or
Crown Two for the New Preferred Units. 
If the Series C Preferred Members do not purchase all of the New
Preferred Units offered by the Company, the Company may issue and sell to any
Person, subject to any applicable Gaming Approvals, the New Preferred Units on
the same terms and conditions on which the New Preferred Units were offered to
the Series C Preferred Members.  The
Preferred Members agree and acknowledge that any such issuance of New Preferred
Units will require an amendment to this Agreement and that such amendment and
actions in connection therewith will need to occur expeditiously due to the
Liquidity Crisis requiring such capital raise, and accordingly, each Preferred
Member shall cooperate in good faith with each other Preferred Member and the
Company to take all actions and execute and deliver all agreements and other
documents, in all cases reasonably necessary to consummate expeditiously the
issuance of the New Preferred Units.

 

(iv)          The Company shall use all funds raised by any capital
call pursuant to this Section 2.5(b) to resolve the Liquidity Crisis
prompting such capital call.

 

(v)           In the event that any Additional Capital Contributions
are made for Series C Preferred Units, such Additional Capital
Contributions shall be made in increments of One Thousand Dollars ($1,000), and
the Company shall issue to each Person making any such Additional Capital
Contribution a number of Series C Preferred Units equal to the Additional
Capital Contributions made by such Series C Preferred Member divided by
One Thousand Dollars ($1,000).

 

(vi)          Notwithstanding anything to the contrary in Section 2.5(a)(ii),
if the Management Committee determines that the Company requires Additional
Capital Contributions to avoid or cure a Liquidity Crisis and determines to
make a capital call, for purposes of such capital call, the Management
Committee shall first comply with the provisions of this Section 2.5(b) before
approving or making a capital call pursuant to Section 2.5(a)(ii); provided,
that, to the extent that the Requested Series C Additional Capital for a
capital call results in cumulative capital calls pursuant to this Section 2.5(b) of
greater than Thirty-Five Million Dollars ($35,000,000), the Management
Committee is not required to comply first with this Section 2.5(b) with
respect to the amount of Additional Capital Contributions in excess of
$35,000,000; provided, further, that, the obligation of the 

 

12

 

Management Committee to comply first with this Section 2.5(b) prior
to Section 2.5(a)(ii) shall terminate on the Conversion Date.

 

2.6          Equity Participation Plan. 
The Company may from time to time make grants of Common Units to an
equity participation limited liability company as approved by the Management
Committee and pursuant to the terms and conditions of an equity participation
plan as approved by the Management Committee; provided, that, any such
equity participation plan shall not permit grants of interests to any Manager; provided,
further, that, any such equity participation plan shall provide that
such Common Units shall be subject to the terms of the Option Agreement.  The Management Committee may make such
amendments to this Agreement as are reasonably necessary in connection with the
adoption of such plan, including to reflect the relative economic interests of
the Common Units and the Preferred Units.

 

ARTICLE III

ALLOCATIONS

 

3.1          Profits and Losses.  After giving
effect to the special allocations set forth in Sections 3.2
and 3.3
below and except as otherwise provided in Section 3.4 below,
Profits and Losses for any Allocation Year shall be allocated among the Members
in such a manner that, as of the end of such Allocation Year, the sum of (i) the
Capital Account of each Member, (ii) such Member’s share of Company
Minimum Gain (as determined according to Regulations Section 1.704-2(g))
and (iii) such Member’s Member Nonrecourse Debt Minimum Gain shall be
equal to the respective net amounts, positive or negative, which would be
distributed to them or for which they would be liable to the Company under the
Act, determined as if the Company were to (1) liquidate the assets of the
Company for an amount equal to their Gross Asset Value and (2) distribute
the proceeds of liquidation pursuant to Section 13.2 below.

 

3.2          Special Allocations.  The following
special allocations shall be made in the following order:

 

(a)           Minimum Gain Chargeback.  Except as
otherwise provided in Regulations Section 1.704-2(f), notwithstanding any
other provision of this ARTICLE III, if there is a net
decrease in Company Minimum Gain during any Allocation Year, each Member shall
be specially allocated items of Company income and gain for such Allocation
Year (and, if necessary, subsequent Allocation Years) in an amount equal to
such Member’s share of the net decrease in Company Minimum Gain, determined in
accordance with Regulations Section 1.704-2(g).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto.  The
items to be so allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). 
This Section 3.2(a) is intended to comply
with the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and
shall be interpreted consistently therewith.

 

(b)           Member Minimum Gain Chargeback. 
Except as otherwise provided in Regulations Section 1.704-2(i)(4),
notwithstanding any other provision of this ARTICLE III, if
there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to
a Member Nonrecourse Debt during any Allocation Year, each Member who has a 

 

13

 

share of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(5), shall be specially allocated items of
Company income and gain for such Allocation Year (and, if necessary, subsequent
Allocation Years) in an amount equal to such Member’s share of the net decrease
in Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto.  The
items to be so allocated shall be determined in accordance with Regulations
Sections 1.704-2(i)(4) and 1.704-2(j)(2). 
This Section 3.2(b) is intended to comply
with the minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.

 

(c)           Qualified Income Offset.  In the event
any Member unexpectedly receives any adjustments, allocations or distributions
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6),
items of Company income and gain shall be specially allocated to such Member in
an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of the Member as quickly as
possible; provided, that, an allocation pursuant to this Section 3.2(c) shall
be made only if and to the extent that the Member would have an Adjusted
Capital Account Deficit after all other allocations provided for in this ARTICLE III
have been tentatively made as if this Section 3.2(c) were
not in this Agreement.

 

(d)           Gross Income Allocation.  In the event
any Member has a deficit Capital Account at the end of any Allocation Year
which is in excess of the sum of (i) the amount such Member is obligated
to restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially
allocated items of Company income and gain in the amount of such excess as
quickly as possible; provided, that, an allocation pursuant to
this Section 3.2(d) shall be made only if and to the
extent that such Member would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this ARTICLE III
have been made as if Section 3.2(c) above and this Section 3.2(d) were
not in this Agreement.

 

(e)           Nonrecourse Deductions. 
Notwithstanding anything to the contrary in this Agreement, Nonrecourse
Deductions for any Allocation Year shall be included in the calculation of
Profits and Losses for such Allocation Year and allocated among the Members as
part of such Profits and Losses pursuant to Section 3.1 above.

 

(f)            Member Nonrecourse Deductions. 
Any Member Nonrecourse Deductions for any Allocation Year shall be
specially allocated to the Member who bears the economic risk of loss with
respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).

 

(g)           Section 754 Adjustments. 
To the extent an adjustment to the adjusted tax basis of any Company
asset, pursuant to Code Section 734(b) or 743(b) is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of such Member’s interest in
the Company, the amount of such adjustment to Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of 

 

14

 

the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially allocated to the Members in
accordance with their interests in the Company in the event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

3.3          Curative Allocations.  The
allocations set forth in Sections 3.2(a), 3.2(b), 3.2(c),
3.2(d),
3.2(e),
3.2(f) and
3.2(g) above
and Section 3.4
below (the “Regulatory Allocations”) are intended
to comply with certain requirements of the Regulations.  It is the intent of the Members that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss or deduction pursuant to this Section 3.3.  Therefore, notwithstanding any other
provision of this ARTICLE III (other than the Regulatory
Allocations), the Management Committee shall make such offsetting special
allocations of Company income, gain, loss or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations are made,
each Member’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement and all Company items were
allocated pursuant to Section 3.1 above.  In exercising its discretion under this Section 3.3,
the Management Committee shall take into account future Regulatory Allocations
under Sections 3.2(a) and
3.2(b) above
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 3.2(e) and 3.2(f) above.

 

3.4          Loss Limitation.  Losses
allocated pursuant to Section 3.1 above shall not exceed the
maximum amount of Losses that can be allocated without causing any Member to
have an Adjusted Capital Account Deficit at the end of any Allocation
Year.  In the event some but not all of
the Members would have Adjusted Capital Account Deficits as a consequence of an
allocation of Losses pursuant to Section 3.1 above, the
limitation set forth in this Section 3.4 shall be
applied on a Member by Member basis and Losses not allocable to any Member as a
result of such limitation shall be allocated to the other Members in accordance
with the positive balances in such Members’ Adjusted Capital Accounts so as to
allocate the maximum permissible Losses to each Member under Regulations Section 1.704-1(b)(2)(ii)(d).  Any reallocation
of Losses pursuant to this Section 3.4 shall be subject to
chargeback pursuant to the curative allocation provision of Section 3.3 above.

 

3.5          Other Allocation Rules.

 

(a)           For purposes of determining the Profits, Losses or any
other items allocable to any period, Profits, Losses and any such other items
shall be determined on a daily, monthly, or other basis, as determined by the
Management Committee using any permissible method under Code Section 706
and the Regulations thereunder.

 

(b)           The Members are aware of the income tax consequences
of the allocations made by this ARTICLE III and hereby agree to
be bound by the provisions of this ARTICLE III in reporting their
shares of Company income and loss for income tax purposes.

 

(c)           Solely for purposes of determining a Member’s
proportionate share of the “excess nonrecourse liabilities” of the Company
within the meaning of Regulations 

 

15

 

Section 1.752-3(a)(3), the Members’ interests in
Company profits are in proportion to their Percentage Interests (ignoring for
this purpose, any Percentage Interest held as a Series B Preferred
Member).

 

(d)           For the avoidance of doubt, Profits and items thereof
shall not be allocated to (i) a Series B Preferred Member with
respect to its Series B Preferred Units or (ii) an Unlicensed Series C
Member with respect to its Series C Preferred Units, except to the extent
such allocation is made to reverse a prior allocation to such Member of Losses
or items thereof.

 

(e)           Except as otherwise provided in this Agreement or as
otherwise required by law, all amounts paid or distributed with respect to any
Units shall be treated as Section 731 distributions.

 

3.6          Tax Allocations; Code Section 704(c). 
Except as otherwise provided for in this Agreement, Company items of
income, gain, loss, deduction, or credit for income tax purposes shall be
allocated in the same manner as the corresponding book items are allocated
under this Agreement.  If there is no
corresponding book item and this Agreement does not otherwise specify the
allocation of an item for income tax purposes, the Management Committee shall
allocate the items in the manner it deems appropriate taking into account the
economic interests of the Members.

 

In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss and deduction with respect to
any Property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such Property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value) using such allocation method pursuant to the
Regulations under Code Section 704(c) as is selected by the
Management Committee.

 

In the event the Gross Asset Value of any Company
asset is adjusted pursuant to subparagraph (ii) of the definition of Gross
Asset Value, subsequent allocations of income, gain, loss and deduction with
respect to such asset shall, solely for tax purposes, take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value using such allocation method pursuant to the
Regulations under Code Section 704(c) as is selected by the
Management Committee.

 

Allocations pursuant to this Section 3.6
are solely for purposes of federal, state and local taxes, and shall not
affect, or in any way be taken into account in computing, any Member’s Capital
Account or share of Profits, Losses, other items or distributions (other than
Tax Distributions) pursuant to any provision of this Agreement.

 

16

 

ARTICLE IV

DISTRIBUTIONS

 

4.1          Distributions.

 

(a)           Except (i) as otherwise provided in Section 4.3 or Section 13.2,
and (ii) in the case of distributions approved by the
Management Committee and to be made following the later of (A) the
Conversion Date and (B) the redemption of all Series C Preferred
Units pursuant to Section 2.3(b) or otherwise, the Company shall make
no distributions of cash or Property to the Members.  Subject to the foregoing, any distributions
approved by the Management Committee shall (x) only be to the extent of
Net Cash Flow, (y) be subject to compliance with applicable laws
(including applicable Gaming Laws) and (z) at such times as is reasonably
determined by the Management Committee, be distributed by the Company to the
Members (other than the Series B Preferred Members in their capacity as
such) pro rata in proportion to their
Percentage Interests.

 

(b)           A Member may not receive a distribution from the
Company in violation of the terms of the Debt Documents of the Company or in
violation of law.

 

4.2          Amounts Withheld.  All amounts
withheld pursuant to the Code or any provision of any state, local or foreign
tax law with respect to any payment, distribution or allocation to the Company
or the Members shall be treated as amounts paid or distributed, as the case may
be, to the Members with respect to which such amount was withheld pursuant to
this Section 4.2 for all purposes under this
Agreement.  The Company is authorized to
withhold from payments and distributions, or with respect to allocations to the
Members, and to pay over to any federal, state, local or foreign government,
any amounts required to be so withheld pursuant to the Code or any provisions
of any other federal, state, local or foreign law, and shall allocate any such amounts
to the Members with respect to which such amount was withheld.  To the extent that any withholding made or to
be made exceeds the amount then-distributable to a Member but for such
withholding, the Company shall notify such Member as to the amount of such
excess and such Member shall make a prompt payment to the Company of such
amount by wire transfer.

 

4.3          Tax Distributions.

 

(a)           Subject to compliance with Section 4.1(b) above,
on the first day of the month in which the required estimated tax payments for
federal income taxes are due for individual taxpayers under Code Section 6654,
the Management Committee shall cause the Company to distribute to the Members
(other than any Series B Preferred Members or any Unlicensed Series C
Members in their capacity as such) with respect to each Fiscal Quarter of the
Company an amount of cash (a “Tax Distribution”) which in the good faith
judgment of the Management Committee equals (i) the amount of taxable
income allocable to such Members in respect of such Fiscal Quarter taking into
account any Code Section 704(c) items, multiplied by (ii) the
combined maximum federal, state and local income tax rate to be applied with
respect to such taxable income (calculated by using the highest maximum
combined marginal federal, state and local income tax rates to which any such
Member may be subject and taking into account the deductibility of state income
tax for federal income tax purposes), with such Tax Distribution to 

 

17

 

be made to such Members (x) first, pro rata in proportion to the amount of such taxable income
allocable to them with respect to the Series C Preferred Units until an
amount equal to the product of clause (i) and clause (ii) above with
respect to such Series C Preferred Units has been so distributed; and (y) thereafter,
pro rata in proportion to Percentage
Interests.  If the Management Committee
determines that such amount is less than the amount required for any Member
that is eligible to receive Tax Distributions to satisfy the safe harbor for
such Member’s estimated tax payments under Code Section 6654 or Code Section 6655
(and analogous state or local provisions) assuming that such Member’s only
income were from the Company, the Company shall distribute cash to the Members
that are eligible to receive Tax Distributions pro rata
in proportion to Percentage Interests until an amount has been distributed to
enable such eligible Member to satisfy the safe harbor.

 

(b)           For each such distribution date prior to the end of
such Fiscal Year, the Management Committee shall estimate the Tax Distribution
by annualizing the estimated taxable income (excluding extraordinary items)
allocable to the Members eligible to receive Tax Distributions as of the
applicable distribution date and taking extraordinary items into account
separately.

 

(c)           The Management Committee shall make such adjustments
to the allocation of Tax Distributions among the Members as it determines to be
reasonably necessary or appropriate if a Member becomes eligible to receive Tax
Distributions during a Fiscal Quarter.

 

(d)           If the method of making estimated tax payments changes
for federal income tax purposes, then the Management Committee may revise the
method of distributing Tax Distributions described above to reflect the
requirements of such change.  To the
extent that there is insufficient Net Cash Flow to fully make a Tax
Distribution, such deficiency shall be carried forward and distributed on the
next day on which amounts are distributed under this Section 4.3,
until such deficiency has been distributed in full.  Any amounts distributed to a Member pursuant
to this Section 4.3 shall be applied to reduce
(without duplication) the next distributions or payments to such Member that
would otherwise be distributed or paid to such Member under (i) with
respect to a Series A Preferred Member, Section 4.1(a) or 13.2 and (ii) with
respect to a Series C Preferred Member, Section 2.3(b) or 13.2.

 

ARTICLE V

MANAGEMENT COMMITTEE

 

5.1          Managers; Management Committee.

 

(a)           The Company shall have a Management Committee, the
Voting Managers of which shall be designated by the Series A1 Preferred
Members and the Non-Voting Manager of which, if any, shall be designated by the
Series A2 Preferred Members, in each case as provided in this Section 5.1.

 

(b)           Subject to Section 5.1(c) below,
the number of Voting Managers on the Management Committee shall be four,
comprised of two Voting Managers designated 

 

18

 

from time to time by Millennium Gaming (the “Millennium
Managers”) in accordance with Section 5.1(d) below
(for so long as Millennium Gaming is a Preferred Member of the Company) and two
Voting Managers designated from time to time by AcquisitionCo (the “AcquisitionCo
Managers”) in accordance with Section 5.1(d) below
(for so long as AcquisitionCo is a Preferred Member of the Company); provided,
that, subject to Section 5.2 below, Millennium Gaming
shall designate each of Paulos and Wortman as a Voting Manager for so long as
he holds a direct or indirect beneficial interest in Millennium Gaming; provided,
further, that, if the Series A2 Preferred Members are entitled to
designate a Manager pursuant to Section 5.1(d), the number of Managers on
the Management Committee shall be increased by one (1) to accommodate such
Manager.  The Managers of the Company as
of the Effective Date shall be as set forth on Appendix C.

 

(c)           If the Management Committee approves the incurrence of
Debt by the Company and such Debt requires that the Management Committee have
one or more independent Managers, the Management Committee shall expand to
include such independent Manager or Managers, who shall be unanimously
designated by the Series A1 Preferred Members in accordance with Section 5.1(d) below
and, except as otherwise provided pursuant to such designation, shall be Voting
Managers hereunder.

 

(d)           A Series A1 Preferred Member or Series A1
Preferred Members, as the case may be, shall designate a Manager (each Manager
so designated and his or her replacement or successor, a “Voting Manager”)
by delivering to the Company a written statement of designation that sets forth
the Manager’s name, business address, telephone number, facsimile number,
electronic mail address and, if applicable, the Manager he or she is replacing;
provided, that, if such Manager is an independent Manager, such
independent Manager has received the prior unanimous approval of each Series A1
Preferred Member, such approval not to be unreasonably withheld.  At any time that the aggregate Percentage
Interests of the Series A2 Preferred Members equals or exceeds twenty
percent (20%), the Series A2 Preferred Members may designate a Manager
(any Manager so designated and his or her replacement, a “Non-Voting Manager”)
by delivering to the Company a written statement of designation executed by
each Series A2 Preferred Member that sets forth the Manager’s name,
business address, telephone number, facsimile number, electronic mail address
and, if applicable, the Manager he or she is replacing.  Millennium Gaming hereby designates Paulos
and Wortman as its Managers until their replacements or successors are
designated.  AcquisitionCo hereby
designates the Persons identified on Appendix C under “AcquisitionCo
Managers” as its Managers until their replacements or successors are
designated.  A Manager shall remain in
office until the earlier of (i) removal by the Series A1 Preferred
Member, Series A1 Preferred Members or the Series A2 Preferred
Members, as the case may be, designating such Manager (provided, that,
subject to Section 5.2 below, Millennium Gaming
shall not remove either Paulos or Wortman as a Manager for so long as he holds
a direct or indirect beneficial interest in Millennium Gaming), (ii) death
or incapacity of such Manager, or (iii) the withdrawal or other cessation
of the Series A1 Preferred Member or Series A1 Preferred Members, as
the case may be, designating such Manager as a Series A1 Preferred Member
or Series A1 Preferred Members, as the case may be, of the Company.

 

(e)           A Manager designated by a Series A1 Preferred
Member, Series A1 Preferred Members or the Series A2 Preferred
Members, as the case may be, may be 

 

19

 

removed at any time, with or without cause, by written
notice delivered to the Company by the Series A1 Preferred Member, Series A1
Preferred Members or the Series A2 Preferred Members, as the case may be,
that designated such Manager, demanding such removal and designating the Person
who shall fill the position of the removed Manager in accordance with Section 5.1(d) above;
provided, that, subject to Section 5.2 below,
Millennium Gaming shall not remove either Paulos or Wortman as a Manager for so
long as he holds a direct or indirect beneficial interest in Millennium
Gaming.  A Non-Voting Manager shall be
automatically removed, without action by any Person, at any time the aggregate
Percentage Interests of the Series A2 Preferred Members is less than
twenty percent (20%).

 

(f)            Each Voting Manager shall have one vote.  A Non-Voting Manager shall not have any vote
and shall not have any approval rights over any matter calling for a vote or
other action or determination of the Management Committee.  A majority of the total number of Voting
Managers of the Management Committee (or, in the case of AcquisitionCo Manager
Matters, all of the AcquisitionCo Managers) present in person or by proxy shall
constitute a quorum for the transaction of business at any meeting of the
Management Committee.  Other than with
respect to those matters set forth in Section 5.6 below, the
Management Committee shall act by the affirmative vote of a majority of the
total number of Voting Managers of the Management Committee who do not have a
Material Conflict of Interest (or, in the case of AcquisitionCo Manager
Matters, the affirmative vote of all AcquisitionCo Managers) in voting on the
particular matter before the Management Committee.  With respect to those matters set forth in Section 5.6 below,
the Management Committee shall act by the affirmative vote of 80% of the Voting
Managers of the Management Committee who do not have a Material Conflict of
Interest in voting on the particular matter before the Management
Committee.  Each Voting Manager who has a
Material Conflict of Interest in voting on any particular matter before the
Management Committee shall recuse himself or herself prior to the vote of the
Management Committee on such matter.

 

(g)           Each Manager may authorize another Manager to act for
him or her by proxy on all matters in which a Manager is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting.  Every proxy
must be signed by the Manager or his or her attorney-in-fact.  No proxy shall be valid after the expiration
of eleven months from the date thereof unless otherwise provided in the
proxy.  Every proxy, other than an
irrevocable proxy, shall be revocable at the pleasure of the Manager executing
it by a writing delivered to the Company and executed by such Manager stating
that the proxy is revoked, by a subsequent proxy executed by such Manager, or
as to any meeting of the Management Committee by attendance at such meeting and
voting in person by such Manager.

 

(h)           Each Manager shall perform his or her duties as a
Manager in good faith, in a manner he or she reasonably believes 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.  A Person who so performs his or her duties shall
not have any liability by reason of being or having been a Manager of the
Company.

 

(i)            The Management Committee shall have the power to
delegate authority to such committees of Managers, officers, employees, agents
and representatives of the Company as it may from time to time deem
appropriate.  Any delegation of authority
to take any 

 

20

 

action must be approved in the same manner as would be
required for the Management Committee to approve such action directly.  Until the termination of the Management
Agreement, the Management Committee hereby delegates to MMG II such power and
authority with respect to the day-to-day management and operation of the
business and affairs of the Company as is set forth in the Management
Agreement, subject to the terms and conditions of the Management Agreement,
Sections 5.5
and 5.6
below and any other provision of this Agreement requiring
approval of the Company, the Management Committee, the AcquisitionCo Managers
or the Members.

 

(j)            A Manager shall not be liable under a judgment, decree
or order of court, or in any other manner, for any debt, obligation or
liability of the Company.

 

5.2          Licensing.

 

(a)           If a Manager is required to be licensed or found
suitable by a Gaming Authority in order to actively engage in the management of
the Company, such Manager shall be so licensed or found suitable prior to
performing his or her duties for the Company and, unless otherwise agreed by
the Management Committee, shall pay all costs associated with becoming licensed
or found suitable.

 

(b)           A Manager shall be automatically removed without
action of the Management Committee or the Members upon the occurrence of a
Gaming Adverse Event with respect to such Manager, unless the Management
Committee (excluding such Manager) otherwise determines.

 

(c)           A Manager shall be removed upon the unanimous
affirmative determination of the Management Committee (excluding such Manager)
that such Manager jeopardizes the ability of the Company to obtain or maintain
any necessary or advisable license or qualification awarded by, or approval of,
any Gaming Authority.

 

5.3          Meetings of the Management Committee.

 

(a)           The Management Committee shall hold regular meetings
no less frequently than once every Fiscal Quarter, and shall establish meeting
times, dates and places, and requisite notice requirements (not shorter than
those provided in Section 5.3(b) below), and adopt rules or
procedures consistent with the terms of this Agreement.  At such meetings, the Management Committee
shall transact such business as may properly be brought before the meeting,
whether or not notice of such meeting referenced the action taken at such
meeting.

 

(b)           Special meetings of the Management Committee may be
called by any Voting Manager.  Notice of
each such special meeting shall be given to each Manager on the Management
Committee by nationally recognized overnight courier, telephone, facsimile or
electronic mail (in each case, notice shall be given not less than three
Business Days nor more than ten Business Days prior to the date of such special
meeting, unless a longer notice period is established by the Management
Committee).  Each such notice shall state
(i) the time, date, place (which shall be at the principal office of the
Company, unless otherwise unanimously agreed to by all Voting Managers), or
other means of conducting such special meeting, and (ii) the purpose of
the special meeting to be so held.  No
actions other than those specified in the notice may be 

 

21

 

considered at any special meeting unless unanimously
approved by all Voting Managers.  Any
Manager may waive notice of any special meeting in writing before, at or after
such meeting.  The attendance of a
Manager at a special meeting shall constitute presence in person at such
special meeting and a waiver of notice of such special meeting, except when a
Manager attends a special meeting for the express purpose of objecting to the
transaction of any business because such special meeting was not properly
called.

 

(c)           Any action required to be taken at a meeting of the
Management Committee, or any action that may be taken at a meeting of the
Management Committee, may be taken at a meeting held by means of telephone conference,
video conference, or other communications equipment by means of which all
Persons participating in the meeting can hear and respond to each other.  Participation in such a meeting shall
constitute presence in person at such meeting, except when a Manager
participates in such a meeting for the express purpose of objecting to the
transaction of any business because such meeting was not properly called.

 

(d)           Notwithstanding this Section 5.3, the
Management Committee may take without a meeting any action that may be taken by
the Management Committee under this Agreement if such action is approved by
written consent by the requisite number of Voting Managers and prompt notice
thereof is delivered to all Managers.  Such
written consent shall have the same force and effect, as of the date stated
therein, as a vote of the Management Committee and may be stated as such in any
document or instrument filed with the Secretary of State of the State of
Nevada, or in any certificate or other document delivered to any Person.  The original, signed written consent shall be
placed in the minute books of the Company.

 

5.4          Management Committee Powers. 
Except (i) as otherwise provided in this Agreement and (ii) so
long as the Management Agreement is in effect, for those powers expressly
delegated to MMG II as is set forth in the Management Agreement (subject to the
terms and conditions of the Management Agreement, Sections 5.5 and 5.6 below
and any other provision of this Agreement requiring approval of the Company,
the Management Committee, the AcquisitionCo Managers or the Members), all
powers to control and manage the Business and affairs of the Company shall be
exclusively vested in the Management Committee, and the Management Committee
may exercise all powers of the Company and do all such lawful acts as are not
by the Act, the Articles of Organization or this Agreement directed or required
to be exercised or done by the Members and, in so doing, shall have the right
and authority to take all actions that the Management Committee deems
necessary, useful or appropriate for the management and conduct of the
Business, including exercising the following specific rights and powers:

 

(a)           conduct its Business, carry on its operations, and
have and exercise the powers granted by the Act in any state, territory,
district or possession of the United States, or in any foreign country, that
may be necessary or convenient to effect any or all of the purposes for which
it is organized;

 

(b)           acquire by purchase, lease, or otherwise any real or
personal property that may be necessary, convenient, or incidental to the
accomplishment of the purposes of the Company;

 

22

 

(c)           operate, maintain, finance, improve, construct, own,
grant options with respect to, sell, convey, assign, mortgage, and lease any
real estate and any personal property necessary, convenient, or incidental to
the accomplishment of the purposes of the Company;

 

(d)           execute any and all agreements, contracts, documents,
certifications, and instruments necessary or convenient in connection with the
management, maintenance, and operation of the Business, or in connection with
managing the affairs of the Company, including executing amendments to this
Agreement and the Articles of Organization in accordance with the terms of this
Agreement, both as Managers and, if required, as attorney-in-fact for the
Members, pursuant to any power of attorney granted by the Members to the
Managers;

 

(e)           borrow money and issue evidences of indebtedness
necessary, convenient, or incidental to the accomplishment of the purposes of
the Company, and secure the same by mortgage, pledge, or other lien on any
Company assets;

 

(f)            execute, in furtherance of any or all of the purposes
of the Company, any deed, lease, mortgage, deed of trust, mortgage note,
promissory note, bill of sale, contract, or other instrument purporting to
convey or encumber any or all of the Company assets;

 

(g)           prepay in whole or in part, refinance, recast,
increase, modify, or extend any liabilities affecting the assets of the
Company, and in connection therewith execute any extensions or renewals of
encumbrances on any or all of such assets;

 

(h)           care for and distribute funds to the Members by way of
cash income, return of capital, or otherwise, all in accordance with the
provisions of this Agreement, and perform all matters in furtherance of the
objectives of the Company or this Agreement;

 

(i)            contract on behalf of the Company for the employment
and services or employees and/or independent contractors, such as lawyers and
accountants, and delegate to such Persons the duty to manage or supervise any
of the assets or operations of the Company;

 

(j)            engage in any kind of activity and perform and carry
out contracts of any kind (including contracts of insurance covering risks to
Company assets and Manager liability) necessary or incidental to, or in
connection with, the accomplishment of the purposes of the Company, as may be
lawfully carried on or performed by a limited liability company under the laws
of each state in which the Company is then formed or qualified;

 

(k)           take, or refrain from taking, all actions, not
expressly proscribed or limited by this Agreement, as may be necessary or
appropriate to accomplish the purposes of the Company;

 

(l)            institute, prosecute, defend, settle, compromise, and
dismiss lawsuits or other judicial or administrative proceedings brought on or
in behalf of, or against, the Company, the Members or any Manager, in
connection with activities arising out of, connected with, or incidental to
this Agreement, and to engage counsel or others in connection therewith;

 

23

 

(m)          purchase, take, receive, subscribe for or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or
otherwise dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations, associations,
general or limited partnerships, other limited liability companies, or
individuals, or direct or indirect obligations of the United States or of any
government, state, territory, government district or municipality or of any
instrumentality of any of them; and

 

(n)           indemnify a Member or Manager or former Member or
Manager, and to make any other indemnification that is authorized by this
Agreement in accordance with the Act.

 

5.5          Actions Requiring Majority Approval of the Management
Committee or the Unanimous Approval of the AcquisitionCo Managers. 
Without limiting the other terms and conditions of this Agreement, the
Company shall not take any of the following actions (or series of related
actions), including the entering into of any contract, agreement, arrangement
or transaction (or series of related contracts, agreements, arrangements or
transactions) with respect thereto, or any amendment, modification,
enforcement, waiver, extension or renewal thereof, without the affirmative vote
of a majority of the total number of Voting Managers of the Management
Committee who do not have a Material Conflict of Interest (or, in the case of
AcquisitionCo Manager Matters, the affirmative vote of all AcquisitionCo
Managers) in voting on the particular matter before the Management Committee:

 

(a)           any approval, adoption, amendment, modification or
repeal of the Company’s annual budget (which, upon approval and adoption with
respect to any given Fiscal Year, shall supersede and replace the then-current
long-term budget for the Company with respect to such Fiscal Year);

 

(b)           any approval, adoption, amendment, modification or
repeal of a long-term budget for the Company covering a three-year period
(which shall be the default budget with respect to any given Fiscal Year in the
absence of a then-current annual budget for such Fiscal Year);

 

(c)           any approval, adoption, amendment, modification or
repeal of any other budget (including budgets of the Company’s subsidiaries);

 

(d)           any approval, adoption, amendment, modification or
repeal of a management agreement for the management of any Property of the
Company; provided, that, the Management Agreement shall be deemed
approved by the Management Committee as of the Second A&R Effective Date;

 

(e)           except as otherwise provided in the Management
Agreement (subject to the terms and conditions of the Management Agreement),
any incurrence of any expenditures by the Company that has not been previously
approved (whether by budget or otherwise) by the Management Committee or, in
the case of AcquisitionCo Manager Matters, the AcquisitionCo Managers;

 

(f)            any incurrence of any gaming opportunity development
expenses by the Company (either directly or through reimbursement) that has not
been previously 

 

24

 

approved (whether by budget or otherwise) by the
Management Committee or, in the case of AcquisitionCo Manager Matters, the
AcquisitionCo Managers (or otherwise provided for by Section 8.3 below);

 

(g)           except as otherwise provided in the Management
Agreement (subject to the terms and conditions of the Management Agreement),
any incurrence of any material Debt, Encumbrance or other liability by the
Company, in each case that has not been previously approved (whether by budget
or otherwise) by the Management Committee or, in the case of AcquisitionCo
Manager Matters, the AcquisitionCo Managers;

 

(h)           any distributions by the Company, other than tax
distributions in accordance with Section 4.3 above;

 

(i)            except as otherwise provided in this Agreement or as
otherwise affirmatively required by applicable Gaming Law, but subject to Section 2.3(c),
any redemption or repurchase by the Company of Units, or securities
convertible, exercisable or exchangeable into Units, in each case pro rata in proportion to Percentage Interest;

 

(j)            any appointment of any Senior Officer of the Company,
and any setting or modifying of the compensation of any Senior Officer of the
Company;

 

(k)           in the event the Management Agreement has been
terminated, any removal of any Senior Officer of the Company;

 

(l)            any approval, adoption, amendment, modification,
repeal or termination of (A) any “employee benefit plan” (within the
meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended), any severance plan or any equity incentive plan, in
each case for the benefit of any employee of the Company (including any Senior
Officer of the Company), or (B) any employment, bonus, incentive
compensation, or any other benefit agreement or plan, in each case for the
benefit of any Senior Officer of the Company;

 

(m)          any granting or issuance of any equity, or securities
convertible, exercisable or exchangeable into equity, in the Company pursuant
to an equity incentive plan (including any equity participation plan);

 

(n)           except as otherwise provided in the Management
Agreement (subject to the terms and conditions of the Management Agreement),
any institution, maintenance, settlement or compromise of any lawsuit, action,
claim or demand, or any arbitration or consent to arbitration of any dispute or
controversy;

 

(o)           any appointment or removal of an independent auditor
of the Company; and

 

(p)           any selection or modification of any accounting method
required under GAAP to be disclosed in the financial statements of the Company.

 

25

 

5.6          Actions Requiring 80% Approval of the Management
Committee.  Without limiting the other terms and
conditions of this Agreement, the Company shall not take any of the following
actions (or series of related actions), including the entering into of any
contract, agreement, arrangement or transaction (or series of related
contracts, agreements, arrangements or transactions) with respect thereto, or
any amendment, modification, enforcement, waiver, extension or renewal thereof,
without the affirmative vote of 80% of the Voting Managers of the Management
Committee who do not have a Material Conflict of Interest in voting on the
particular matter before the Management Committee:

 

(a)           any material change in the Business or purpose of the
Company;

 

(b)           any act or any activity that is inconsistent with the
purpose of the Company as set forth in Section 1.3 above;

 

(c)           any capital call, other than as set forth in Section 2.5 above;

 

(d)           any material acquisition or disposition of Company
assets;

 

(e)           any approval of a gaming opportunity as the subject of
development as an Eligible Operation;

 

(f)            any material construction, expansion or improvement
projects involving Company assets;

 

(g)           except as otherwise provided in this Agreement, any
Transfer of Units by any Member or any Member Unit Transfer with respect to a
Member;

 

(h)           except as otherwise provided in this Agreement, any
increase in the number of Units the Company is authorized to issue;

 

(i)            except as otherwise provided in this Agreement, any
sale, grant or other issuance by the Company of Units or securities
convertible, exercisable or exchangeable into Units;

 

(j)            any merger, consolidation, recapitalization or other
reorganization of the Company;

 

(k)           the Company’s participation in any partnership,
limited liability company, joint venture, alliance, or similar agreement or
arrangement;

 

(l)            any formation of any direct or indirect subsidiary of
the Company;

 

(m)          any conversion of the Company into another form of
entity;

 

(n)           except as otherwise provided in this Agreement,
admission of any Person as a Member;

 

26

 

(o)           except as otherwise provided in this Agreement or as
otherwise affirmatively required by applicable Gaming Law, but subject to Section 2.3(c),
any redemption or repurchase by the Company of Units, or securities
convertible, exercisable or exchangeable into Units, in each case on a basis
other than pro rata in proportion to Percentage
Interest;

 

(p)           any public offering of Company securities;

 

(q)           any relocation of the Company’s principal place of
business;

 

(r)            any assignment for the benefit of creditors, any
voluntary bankruptcy of the Company, or any transaction to dissolve, wind up or
liquidate the Company; and

 

(s)            except as otherwise provided in this Agreement or the
Management Agreement (subject to the terms and conditions of the Management
Agreement), any transaction between the Company and a Member (or an Affiliate
or Upper Tier Holder of a Member).

 

5.7          Duties and Obligations of the Management Committee.

 

(a)           The Management Committee shall cause the Company to
conduct its Business and operations separate and apart from that of any Member
or Manager or any of its or his Affiliates, including (i) segregating
Company assets and not allowing funds or other assets of the Company to be
commingled with the funds or other assets of, held by, or registered in the
name of, any Member or Manager or any of its or his Affiliates, (ii) maintaining
books and financial records of the Company separate from the books and
financial records of any Member or Manager or any of its or his Affiliates, and
observing all Company procedures and formalities, including maintaining minutes
of Company meetings and acting on behalf of the Company only pursuant to due
authorization of the Members, (iii) causing the Company to pay its
liabilities from assets of the Company, and (iv) causing the Company to
conduct its dealings with third parties in its own name and as a separate and
independent entity.

 

(b)           The Management Committee shall take all actions that
may be necessary or appropriate (i) for the continuation of the Company’s
valid existence as a limited liability company under the laws of the State of
Nevada and of each other jurisdiction in which such existence is necessary to
protect the limited liability of the Members or to enable the Company to
conduct the Business in which it is engaged, and (ii) for the
accomplishment of the Company’s purposes, including the acquisition,
development, maintenance, preservation, operation, improvement and expansion of
Property in accordance with the provisions of this Agreement and applicable
laws and regulations, and the use thereof for the exclusive benefit of the
Company.

 

5.8          Removal of Certain Senior Officers. 
The following Senior Officers of the Company shall not be removed
without ten Business Days prior written notice to each Manager of the Company:
chief financial officer and head of mergers and acquisitions (or any officer
exercising comparable power or authority).

 

27

 

ARTICLE VI

MEMBERS

 

6.1          Rights or Powers of Members. 
The Members shall not have any right or power to take part in the
management or control of the Company or its Business and affairs or to act for
or bind the Company in any way. 
Notwithstanding the foregoing, the Members shall have all the rights and
powers specifically set forth in this Agreement and as required in the Act.

 

6.2          Voting Rights of Members. 
No Member has any voting right except with respect to those matters
specifically reserved for a Member vote that are set forth in this Agreement
and as required in the Act.  Without
limitation of Sections 6.13 and 14.8, the Members agree and acknowledge that no
Series B Preferred Member, Series A2 Preferred Member or Series C
Preferred Member, in its capacity as such, has any voting or other approval
rights hereunder.

 

6.3          Meetings of the Series A1 Preferred Members.

 

(a)           Meetings of the Series A1 Preferred Members may
be called by any Series A1 Preferred Member.  The call shall state the location of such
meeting and the nature of the business to be transacted.  Notice of any such meeting shall be given to
all Series A1 Preferred Members by nationally recognized overnight
courier, telephone, facsimile or electronic mail (in each case, notice shall be
given not less than seven Business Days nor more than 30 Business Days prior to
the date of such meeting).  Each such
notice shall state (i) the time, date, place or other means of conducting
such meeting, and (ii) the purpose of such meeting to be so held.  No actions other than those specified in the
notice may be considered at any such meeting unless unanimously approved by all
Series A1 Preferred Members.  Any Series A1
Preferred Member may waive notice of any meeting in writing before, at, or
after such meeting.  The attendance of a Series A1
Preferred Member at a meeting shall constitute presence in person at such
meeting and a waiver of notice of such meeting, except when a Series A1
Preferred Member attends a meeting for the express purpose of objecting to the
transaction of any business because such meeting was not properly called.

 

(b)           Any action required to be taken at a meeting of the Series A1
Preferred Members, or any action that may be taken at a meeting of the Series A1
Preferred Members, may be taken at a meeting held by means of telephone
conference, video conference, or other communications equipment by means of
which all Persons participating in the meeting can hear and respond to each
other.  Participation in such a meeting
shall constitute presence in person at such meeting, except when a Series A1
Preferred Member participates in such a meeting for the express purpose of
objecting to the transaction of any business because such meeting was not
properly called.

 

(c)           Notwithstanding this Section 6.3, the Series A1
Preferred Members may take without a meeting any action that may be taken by
the Series A1 Preferred Members under this Agreement if such action is
approved by written consent by the requisite Series A1 Preferred Members; provided,
that, written notice of such action shall be provided to each Series A1
Preferred Member not executing such written consent at least five Business Days
prior to the effective date of such action. 
Such written consent shall have the same force and effect, as of the 

 

28

 

date stated therein, as a vote of the Series A1
Preferred Members and may be stated as such in any document or instrument filed
with the Secretary of State of the State of Nevada, or in any certificate or
other document delivered to any Person. 
The original, signed written consent shall be placed in the minute books
of the Company.

 

(d)           Unless otherwise specified in this Agreement, a
unanimous vote of the Series A1 Preferred Members shall be required to
constitute the act of the Series A1 Preferred Members.

 

(e)           For the purpose of determining the Series A1
Preferred Members entitled to vote on, or to vote at, any meeting of the
Preferred Members or any adjournment thereof, the Series A1 Preferred
Member requesting such meeting may fix, in advance, a date as the record date
for any such determination.  Such date
shall not be less than ten Business Days nor more than 30 Business Days prior
to the date of the meeting.  The record
date for determining Series A1 Preferred Members entitled to take action
without a meeting pursuant to Section 6.3(c) above
shall be the date the first Series A1 Preferred Member executes a written
consent.  A photocopy, facsimile or
similar reproduction of a written consent signed by a Series A1 Preferred
Member shall be regarded as signed by such Series A1 Preferred Member for
the purposes of this Section 6.3(e).

 

(f)            Each Series A1 Preferred Member may authorize any
Person or Persons previously licensed or found suitable to hold or vote Series A1
Preferred Units to act for it by proxy on all matters in which a Series A1
Preferred Member is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting.  Every proxy must be signed by the Series A1
Preferred Member or such Series A1 Preferred Member’s
attorney-in-fact.  No proxy shall be
valid after the expiration of eleven months from the date thereof unless
otherwise provided in the proxy.  Every
proxy, other than an irrevocable proxy, shall be revocable at the pleasure of
the Series A1 Preferred Member executing it by a writing delivered to the
Company and executed by such Series A1 Preferred Member stating that the
proxy is revoked, by a subsequent proxy executed by such Series A1
Preferred Member, or as to any meeting of the Series A1 Preferred Members
or Series A1 Members by attendance at such meeting and voting in person by
such Series A1 Preferred Member.

 

(g)           The Company shall provide prompt notice to the Series A2
Preferred Members of any Company action taken by the Series A1 Preferred
Members.

 

6.4          Withdrawal.  Except as
otherwise provided in ARTICLE IV above and ARTICLE XIII
below, no Member shall demand or receive a return on or of
such Member’s Capital Contributions or withdraw from the Company without the
consent of all Members.  Under
circumstances requiring a return of any Capital Contributions, no Member has
the right to receive Property other than cash, except as may be specifically
provided herein.

 

6.5          Member Compensation.  No Member
shall be entitled to receive any interest, salary, fee or draw with respect to
its Capital Contributions or its Capital Account or for services rendered to or
on behalf of the Company, or otherwise, in its capacity as a Member, except as
otherwise provided in this Agreement.

 

29

 

6.6          Members Liability; Duties.

 

(a)           No Member shall be liable under a judgment, decree or
order of a court, or in any other manner, for the Debt or any other obligation
or liability of the Company.  A Member
shall be liable only to make its Capital Contributions and shall not be
required to restore a deficit balance in its Capital Account or to lend any
funds to the Company or, after required Capital Contributions have been made,
to make any additional contributions, assessments or payments to the
Company.  No Manager shall have any
personal liability for the repayment of any Capital Contributions of any
Member.

 

(b)           A Member shall not have any duties, fiduciary or
otherwise, to the Company or the other Member, other than the contractual
obligations of such Member set forth herein.

 

6.7          Partition.  While the
Company remains in effect or is continued, each Member agrees and waives such
Member’s rights to have any Property of the Company partitioned, or to file a
complaint or to institute any suit, action or proceeding at law or in equity to
have any Property of the Company partitioned, and each Member, on behalf of
such Member and such Member’s successors and assigns, hereby waives any such
right.

 

6.8          Transactions between a Member and the Company. 
Except as otherwise provided by applicable law and subject to the other
provisions of this Agreement, any Member may, but shall not be obligated to,
lend money to the Company, act as surety for the Company and transact other
business with the Company and has the same rights and obligations when
transacting business with the Company as a Person or entity who is not a
Member.  A Member, any Affiliate thereof
or an equityholder, director, manager, general partner, officer, employee,
agent or representative of a Member or any Affiliate thereof, may also be an
employee or be retained as an agent of the Company.  The existence of these relationships and
acting in such capacities will not result in the Member being deemed to be
participating in the control of the Business or otherwise affect the limited
liability of the Member.

 

6.9          Other Instruments.  Each Member
hereby agrees to execute and deliver to the Company within five Business Days
after receipt of a written request therefor, such other and further documents
and instruments, statements of interest and holdings, designations, powers of
attorney and other instruments and to take such other action as the Management
Committee deems reasonably necessary, useful or appropriate to comply with any
laws, rules or regulations as may be necessary to enable the Company to
fulfill its responsibilities under this Agreement.

 

6.10        Preemptive Right.

 

(a)           If the Company proposes to issue new Units (an “Additional
Issuance”) after the Effective Date (including any options, warrants,
convertible securities or other securities or instruments with rights to
convert into, exchange for or otherwise acquire Units) (“New Units”) to
any Person (the “New Unit Purchaser”), other than an issuance pursuant
to Section 2.5 or pursuant to an equity participation plan as contemplated
by Section 2.6, then the Company shall provide written notice to each
Preferred Member of such proposed issuance, 

 

30

 

setting forth the material terms and conditions of the
issuance, including the proposed purchase price per New Unit.

 

(b)           Each Preferred Member (other than a Series C
Preferred Member in its capacity as such) shall have the right (the “Preemptive
Right”) to purchase, at its election and subject to obtaining all necessary
Gaming Approvals, up to a Pro Rata Portion of the New Units proposed to be
issued in connection with the Additional Issuance on the same terms and
conditions, including the same per New Unit price, that are offered to the New
Unit Purchaser in accordance with the provisions of this Section 6.10 by
delivering to the Company an irrevocable written notice of its election to
exercise its Preemptive Right no later than five (5) Business Days after
the date of the Company’s notice, setting forth the number of such New Units,
not to exceed its Pro Rata Portion, for which such right is exercised.

 

(c)           Each Preferred Member exercising its Preemptive Right
shall deliver the aggregate consideration for the New Units it has elected to
purchase at the same time and upon the same terms and conditions as the New
Unit Purchaser and any other exercising Preferred Member.

 

(d)           If any Preferred Member does
not timely elect to exercise its Preemptive Right with respect to New Units
which the Company proposes to issue pursuant to this Section 6.10, such
Preferred Member shall be deemed to have irrevocably waived any and all rights
under this Section 6.10 with respect to the purchase of such New Units
(but not with respect to future issuances of New Units in accordance with this Section 6.10).

 

6.11        Drag-Along Rights and Tag-Along Rights. 
From and after the Conversion Date (the “Drag/Tag Effective Date”),
the Series A1 Preferred Members, the Series A2 Preferred Members and
the Series B Preferred Members shall hold drag-along and tag-along rights
in accordance with the provisions of this Section 6.11:

 

(a)           Drag-Along Rights.

 

(i)            If the Series A1 Preferred Members propose to
Transfer Series A1 Preferred Units representing 25% or more of the aggregate
outstanding Series A1 Preferred Units, on an arm’s-length basis (which
shall not include Transfers made pursuant to ARTICLE XII),
to an unaffiliated third party (an “Unaffiliated Purchaser”) in a
transaction (including an Auction or other sale conducted pursuant to Section 11.4)
to be consummated on or after the Drag/Tag Effective Date (a “Drag-Along
Sale”), the transferring Series A1 Preferred Members shall have the
right to require, in their sole discretion, that any Series A2 Preferred
Member or any Series B Preferred Member also Transfer up to all of the Series A2
Preferred Units or Series B Preferred Units held by such Series A2
Preferred Member or Series B Preferred Member to the Unaffiliated
Purchaser, with the specific percentage of the Preferred Units to be
Transferred by such Preferred Member to such Unaffiliated Purchaser to be equal
to the percentage of Series A1 Preferred Units held by the Series A1
Preferred Members that are to be included in the Drag-Along Sale in accordance
with the provisions of this Section 6.11(a).  Each Series A2 Preferred Member or Series B
Preferred Member that shall be required to participate in a Drag-Along Sale
shall be referred to herein as a “Drag-Along Participant.”

 

31

 

(ii)           If the Drag-Along Sale is structured as a merger or
consolidation, each Drag-Along Participant shall (to the extent applicable)
vote for, consent to and raise no objection to such Drag-Along Sale, and shall
waive any dissenters’ rights, appraisal rights or similar rights they may have
in connection with such merger or consolidation.  Each Drag-Along Participant shall take all
necessary or desirable actions in connection with the consummation of the
Drag-Along Sale as reasonably requested by the transferring Series A1
Preferred Members.

 

(iii)          In connection with any Drag-Along Sale, each
Drag-Along Participant shall have the right to Transfer its percentage of Series A2
Preferred Units or Series B Preferred Units on the same general terms and
conditions as the transferring Series A1 Preferred Members; provided, however, that, (A) if the Drag-Along
Participant is a Series A2 Preferred Member, such Drag-Along Participant
shall receive from the proceeds of the Drag-Along Sale consideration per Series A2
Preferred Unit (subject to adjustment for splits, combinations,
recapitalizations, reclassifications or other similar transactions) held by
such Drag-Along Participant equal to the consideration per Series A1
Preferred Unit (subject to adjustment for splits, combinations,
recapitalizations, reclassifications or other similar transactions) received by
the transferring Series A1 Preferred Members, and (B) if the
Drag-Along Participant is a Series B Preferred Member, such Drag-Along
Participant shall receive from the proceeds of the Drag-Along Sale
consideration equal to the Preferred B Amount as of the consummation of such
Drag-Along Sale with respect to the number of Series B Preferred Units
being Transferred by such Drag-Along Participant in such Drag-Along Sale.

 

(iv)          If any Series A1 Preferred Member intends to
require any Series A2 Preferred Member or Series B Preferred Member
to participate in a Drag-Along Sale, such transferring Series A1 Preferred
Member shall, not less than thirty (30) days prior to the proposed Drag-Along
Sale, notify such Series A2 Preferred Member or such Series B
Preferred Member, and the Company, in writing of such proposed Drag-Along
Sale.  Such notice (the “Drag Along
Transfer Notice”) shall set forth: (a) a statement that the Series A1
Preferred Members intend to transfer Series A1 Preferred Units
representing 25% or more of the aggregate outstanding Series A1 Preferred
Units of the Company in the proposed Drag-Along Sale and that such notice is
being provided pursuant to Section 6.11(a)(iv) of this Agreement; (b) the
identity of the Unaffiliated Purchaser; (c) the proposed date of the
proposed Drag-Along Sale; and (d) the proposed amount and form of
consideration and terms and conditions of payment offered by the Unaffiliated Purchaser.

 

(b)           Tag-Along Rights.

 

(i)            If the Series A1 Preferred Members propose to
Transfer Series A1 Preferred Units representing 25% or more of the
aggregate outstanding Series A1 Preferred Units, on an arm’s-length basis
(which shall not include Transfers made pursuant to ARTICLE XII),
to an Unaffiliated Purchaser in a transaction (including an Auction or other
sale conducted pursuant to Section 11.4) to be consummated on or
after the Drag/Tag Effective Date (a “Tag-Along Sale”), the transferring
Series A1 Preferred Members and the Unaffiliated Purchaser shall be
required to offer (a “Tag-Along Offer”) to each Series A2 Preferred
Member and each Series B Preferred Member the opportunity to participate
in such Tag-Along Sale by Transferring to the Unaffiliated Purchaser a portion
of the Series A2 Preferred Units or Series B 

 

32

 

Preferred Units held by
such Series A2 Preferred Member or Series B Preferred Member equal to
the percentage of Series A1 Preferred Units held by the Series A1
Preferred Members that are to be included in such Tag-Along Sale in accordance
with the provisions of this Section 6.11(b).  Each Series A2 Preferred Member or Series B
Preferred Member that elects to participate in a Tag-Along Sale shall be
referred to herein as a “Tag-Along Participant.”

 

(ii)           If the Tag-Along Sale is structured as a merger or
consolidation, each Tag-Along Participant shall (to the extent applicable) vote
for, consent to and raise no objection to such Tag-Along Sale, and shall waive
any dissenters’ rights, appraisal rights or similar rights they may have in
connection with such merger or consolidation. 
Each Tag-Along Participant shall take all necessary or desirable actions
in connection with the consummation of the Tag-Along Sale as reasonably
requested by the transferring Series A1 Preferred Members.

 

(iii)          In connection with any Tag-Along Sale, each Tag-Along
Participant shall have the right to Transfer its percentage of Series A2
Preferred Units or Series B Preferred Units on the same general terms and
conditions as the transferring Series A1 Preferred Members; provided, however, that, (A) if the Tag-Along
Participant is a Series A2 Preferred Member, such Tag-Along Participant
shall receive from the proceeds of the Tag-Along Sale consideration per Series A2
Preferred Unit (subject to adjustment for splits, combinations,
recapitalizations, reclassifications or other similar transactions) held by
such Tag-Along Participant equal to the consideration per Series A1
Preferred Unit (subject to adjustment for splits, combinations,
recapitalizations, reclassifications or other similar transactions) received by
the transferring Series A1 Preferred Members, and (B) if the
Tag-Along Participant is a Series B Preferred Member, such Tag-Along
Participant shall receive from the proceeds of the Tag-Along Sale consideration
equal to the Preferred B Amount as of the consummation of such Tag-Along Sale
with respect to the number of Series B Preferred Units being Transferred
by such Tag-Along Participant in such Tag-Along Sale.

 

(iv)          If any Series A1 Preferred Member proposes to
initiate a Tag-Along Sale, such transferring Series A1 Preferred Member
shall, not less than thirty (30) days prior to the date of such proposed
Tag-Along Sale, notify each Series A2 Preferred Member, each Series B
Preferred Member and the Company in writing of such proposed Tag-Along
Sale.  Such notice (the “Tag-Along
Transfer Notice”) shall set forth: (a) a statement that the
transferring Series A1 Preferred Members intend to transfer Series A1
Preferred Units representing 25% or more of the issued and outstanding Series A1
Preferred Shares of the Company in the proposed Tag-Along Sale and that such
notice is being provided pursuant to Section 6.11(b)(iv) of this
Agreement; (b) the identity of the Unaffiliated Purchaser, (c) the
proposed date of the Tag-Along Sale; and (d) the proposed amount and form
of consideration and terms and conditions of payment offered by the
Unaffiliated Purchaser.

 

(v)           The Tag-Along Offer may be accepted by any Series A2
Preferred Member or Series B Preferred Member by delivery of an
irrevocable written notice (the “Tag Along Exercise Notice”) to the
transferring Series A1 Preferred Members within ten (10) Business
Days following the date the Tag-Along Transfer Notice is given (the “Exercise
Period”).  In the event the total
amount of Preferred Units proposed to be transferred to the Unaffiliated
Purchaser by the transferring Series A1 Preferred Members and the
Tag-Along 

 

33

 

Participants exceeds the
amount of Preferred Units that the Unaffiliated Purchaser is willing to
purchase, the amount of Preferred Units to be transferred by the transferring Series A1
Preferred Members and the Tag-Along Participants shall be reduced
proportionately.  If a Tag Along Exercise
Notice is not received by the transferring Series A1 Preferred Members
prior to the expiration of the Exercise Period, then the transferring Series A1
Preferred Members shall have the right to effect the Tag-Along Sale
substantially as set forth in the Tag Along Transfer Notice without any
participation by any non-exercising Series A2 Preferred Member or Series B
Preferred Member.

 

(c)           Cooperation, Representations, Warranties and
Indemnification Obligations.  Subject to
the proviso in the immediately succeeding sentence, in connection with a
Drag-Along Sale or Tag-Along Sale, each Drag-Along Participant or Tag-Along
Participant, as applicable, shall cooperate in good faith with the transferring
Series A1 Preferred Members and shall take or cause to be taken all such
actions as may be necessary or reasonably desirable in order expeditiously to
consummate such Drag-Along Sale or Tag-Along Sale and any related transactions
(including any financing transaction in connection therewith), including by (i) executing,
acknowledging, and delivering consents, assignments and other documents or
instruments, (ii) furnishing information and copies of documents, (iii) filing
applications, reports, returns, and other documents or instruments with
government authorities and (iv) otherwise cooperating with the
transferring Series A1 Preferred Members and the Unaffiliated
Purchaser.  Each Drag-Along Participant
and Tag-Along Participant shall execute and deliver such agreements as may be
reasonably requested by the Unaffiliated Purchaser to which the transferring Series A1
Preferred Members shall also be a party, including an agreement by such
Drag-Along Participant or Tag-Along Participant to (x) make individual
representations as to such Drag-Along Participant’s or Tag-Along Participant’s
unencumbered title to his or her Preferred Units and authority to transfer such
Preferred Units to the Unaffiliated Purchaser and (y) be liable in respect
of representations, warranties, covenants and indemnities to the extent such
representations, warranties, covenants, and indemnities are also made by the
transferring Series A1 Preferred Members; provided, that, a
Drag-Along Participant and Tag-Along Participant (A) shall not be required
to make any representations or warranties with respect to the Company’s
operations or business, (B) shall not be required to divest any assets
(other than the Preferred Units to be Transferred), (C) shall not be
required to agree to any noncompetition or like limitations on business
activities or be prohibited from investing in any Person, and (D) shall
not be required to indemnify the Unaffiliated Purchaser for losses arising from
its breaches of representations or warranties in excess of the gross proceeds
received by such Drag-Along Participant or Tag-Along Participant, as the case
may be.

 

6.12        Piggyback Registration Rights. 
If the Company intends at any time to file a Registration Statement
under the Securities Act with respect to any offering of its equity securities
for its own account or for the account of any other Person (other than (a) a
registration incidental to an issuance of debt securities under Rule 144A,
(b) a registration on Form S-4 or S-8 or any successor form to such
Forms, or (c) a registration of securities solely relating to an offering
and sale to employees or directors of the Company pursuant to any employee
stock plan or other employee benefit plan arrangement, a dividend reinvestment
plan, or a merger or consolidation), then the Company and the Series A
Preferred Members shall, in good faith, negotiate and execute a registration
rights agreement granting to the Series A Preferred Members customary
piggyback registration rights; provided, that, such registration rights
agreement shall 

 

34

 

include customary lock-up
requirements, customary cutbacks and blackouts, and such other customary terms
and conditions which shall apply in all material respects to the Series A
Preferred Members on a non-discriminatory basis; provided, further,
that, the Company shall bear all fees and expenses in connection with any such
registrations (other than underwriting discounts and commissions and transfer
taxes, if any, which shall be borne by the Series A Preferred Members
participating therein).

 

6.13        Ranking.

 

(a)           Series B Preferred Units.

 

(i)            Other than the issuance of Series C Preferred
Units as contemplated by the Series C Purchase Agreement and this
Agreement (including, without limitation, Section 2.5(b)) and New
Preferred Units in accordance with Section 2.5(b)(iii)(B), the Company
shall not, at any time prior to the Conversion Date, issue any Units that are
entitled to the receipt of amounts distributable upon the liquidation,
dissolution and winding up of the Company in preference or priority to the Series B
Preferred Units without the prior written consent of Series B Preferred
Member(s) holding a majority of the issued Series B Preferred Units.

 

(ii)           With respect to any Units outstanding on the Second
A&R Effective Date (or any securities of the Company issued or issuable in
respect thereof) that rank junior to the Series B Preferred Units as to
distribution of assets upon the liquidation, dissolution and winding up of the
Company, the Company shall not, at any time prior to the Conversion Date, amend
the rights and preferences of any such outstanding Units (or issue any new
securities of the Company in respect thereof) such that any such Units would be
entitled to the receipt of amounts distributable upon the liquidation,
dissolution and winding up of the Company in preference or priority to, or on
parity with, the Series B Preferred Units without the prior written
consent of Series B Preferred Member(s) holding a majority of the
issued Series B Preferred Units.

 

(b)           Series C Preferred Units.

 

(i)            Without limitation of the consent rights of the Series B
Preferred Member(s) prior the Conversion Date under Section 6.13(a)(i),
other than the issuance of New Preferred Units in accordance with Section 2.5(b)(iii)(B),
the Company shall not issue any Units that are entitled to the receipt of
amounts distributable by the Company in preference or priority to the Series C
Preferred Units without the prior written consent of (i) Series C
Preferred Member(s) holding a majority of the issued Series C
Preferred Units and (ii) in the event that a Conversion by the Series B
Preferred Members has occurred, the Series A2 Preferred Members, in each
case, such consent not to be unreasonably withheld.

 

(ii)           Without limitation of the consent rights of the Series B
Preferred Member(s) prior the Conversion Date under Section 6.13(a)(ii),
with respect to any Units outstanding on the Effective Date (or any securities
of the Company issued or issuable in respect thereof), the Company shall not
amend the rights and preferences of any such outstanding Units (or issue any
new securities of the Company in respect thereof) such that any 

 

35

 

such Units would be entitled
to the receipt of amounts distributable by the Company in preference or
priority to, or on parity with, the Series C Preferred Units without the
prior written consent of (i) Series C Preferred Member(s) holding
a majority of the issued Series C Preferred Units and (ii) in the
event that a Conversion by the Series B Preferred Members has occurred,
the Series A2 Preferred Members, in each case, such consent not to be
unreasonably withheld.

 

ARTICLE VII

[INTENTIONALLY OMITTED]

 

ARTICLE VIII

INDEMNIFICATION AND REIMBURSEMENT

 

8.1          Indemnification.

 

(a)           Each Member shall indemnify, hold harmless and pay all
judgments and claims against the Company and each other Member and such Member’s
Affiliates relating to any liability or damage incurred from any third-party
claims as a result of such indemnifying Member’s fraud, bad faith or knowing
violation of law, including reasonable attorneys’ fees incurred in connection
therewith (and shall advance expenses in connection therewith.

 

(b)           Except to the extent a Member is liable for indemnity
under Section 8.1(a) above, the Company
does hereby indemnify any Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative), except an action by
or in the right of the Company, by reason of the fact that he, she or it is or
was a Member, Manager, officer, employee or agent of the Company, or is or was
serving at the request of the Company as manager, director, officer, employee
or agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise, against expenses, subject to the provisions
of Section 8.1(e) below,
including attorneys’ fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him, her or it in connection with the
action, suit or proceeding if he, she or it acted in good faith and in a manner
that he, she or it reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his, her or its conduct was
unlawful.  The termination of any action,
suit or proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, does
not, of itself, create a presumption that the Person did not act in good faith
and in a manner that he, she or it reasonably believed to be in or not opposed
to the best interest of the Company, or that, with respect to any criminal
action or proceeding, he, she or it had reasonable cause to believe that his,
her or its conduct was unlawful.

 

(c)           Except to the extent such Member is liable for
indemnity under Section 8.1(a) above, the Company
does hereby indemnify any Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in
the

 

36

 

right of the Company to procure a judgment in its
favor by reason of the fact that he, she or it is or was a Member, Manager,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a Member, Manager, director, officer, employee or agent of
another limited liability company, corporation, partnership, joint venture,
trust or other enterprise against expenses, subject to the provisions of Section 8.1(e) below,
including amounts paid in settlement and attorneys’ fees actually and
reasonably incurred by him, her or it in connection with the defense or
settlement of the actions or suit if he, she or it acted in good faith and in a
manner that he, she or it reasonably believed to be in or not opposed to the
best interests of the Company. 
Indemnification may not be made for any claim, issue or matter as to
which such a Person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the Company or for
amounts paid in settlement to the Company, unless and only to the extent that
the court in which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the circumstances
of the case, the Person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.

 

(d)           To the extent that a Member, Manager, officer,
employee or agent of the Company has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 8.1(b) or
8.1(c) above,
or in defense of any claim, issue or matter therein, the Company does hereby
indemnify such Person against expenses, subject to the provisions of Section 8.1(e) below,
including attorneys’ fees, actually and reasonably incurred by him, her or it
in connection with the defense.

 

(e)           Any indemnification under Section 8.1(b) or
8.1(c) above,
unless ordered by a court or advanced pursuant to Section 8.1(f) below,
must be made by the Company only as authorized in the specific case upon a
determination that indemnification of the Member, Manager, officer, employee or
agent is proper in the circumstances. 
The determination must be made:  (i) by
vote of the Management Committee, excluding any Manager who is a party to the
act, suit or proceeding, or (ii) if the vote of the Management Committee
cannot be obtained, by independent legal counsel in a written opinion.

 

(f)            The expenses of a Member or Manager incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
Company as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
such Member or Manager to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he, she or it is not entitled to be indemnified
by the Company.  The provisions of this Section 8.1(f) do
not affect any rights to advancement of expenses to which personnel other than
Members or Managers may be entitled under any contract or otherwise by law.

 

(g)           The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to this Section 8.1
continues for a Person who has ceased to be a Member, Manager, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such Person, and does not exclude any other rights to which a
Person seeking indemnification or advancement of expenses may be entitled under
the Articles of Organization or any operating agreement, vote of Members or
disinterested Manager, if any, or otherwise, for an action in his, her or its
official capacity or an action in another capacity while 

 

37

 

holding office, except that indemnification, unless
ordered by a court pursuant to Section 8.1(c) above,
or for the advancement of expenses made pursuant to Section 8.1(f) above,
may not be made to or on behalf of any Member of Manager if a final
adjudication establishes that his, her or its acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action.

 

(h)           Notwithstanding any provision of this Section 8.1,
no indemnity under this Section 8.1 shall extend to any claim
related to, or any losses or damages resulting from, an action, suit or
proceeding between or among Members or their respective managers, directors or
officers.

 

(i)            In each instance in which indemnity is claimed
hereunder, the party claiming indemnity (the “Indemnitee”) shall give
prompt written notice to the party against whom indemnity is sought (the “Indemnitor”)
of any claim, suit, action or proceeding in respect of which indemnity is
claimed, together with photocopies of any and all letters, pleadings or other
documents in the Indemnitee’s possession which are alleged to form the material
basis of any such claim or action; provided, that, the failure to
provide such notice in a timely fashion shall not affect the Indemnitor’s
obligations hereunder except and only to the extent that any delay in providing
such notice results in actual prejudice to the Indemnitor.  In any case, the Indemnitee shall cooperate
with the Indemnitor in the defense of any such claim or action to the extent
that the Indemnitor and Indemnitee are not adverse parties or have adverse
interests therein.  The Indemnitor shall
have the right to control the defense of any such claim or action by counsel
reasonably acceptable to the Indemnitee, at the Indemnitor’s sole cost and
expense.  The Indemnitee shall have the
right to observe any legal proceedings relating to any such claim or action and
to retain its own counsel, it being understood that the fees and expenses of
the Indemnitee’s counsel shall be paid by the Indemnitee (unless (i) the
defendants in any such claim or action include both the Indemnitor and the
Indemnitee and the Indemnitee shall have been advised by counsel that there may
be one or more legal defenses available to such Indemnitee that are different
from or additional to those available to the Indemnitor or (ii) the
Indemnitor fails promptly to assume the defense and retain counsel reasonably
satisfactory to the Indemnitee, in which cases such fees and expenses shall be
paid by the Indemnitor).  The Indemnitor
shall not, without the prior written consent of the Indemnitee (which consent
shall not be unreasonably withheld), effect any settlement or compromise of any
pending or threatened claim, suit, action or proceeding, and the Indemnitee
shall not, without the prior written consent of the Indemnitor (which consent
shall not be unreasonably withheld), effect any settlement or compromise of any
pending or threatened claim, suit, action or proceeding.

 

8.2          General Reimbursements.  The Company
shall reimburse the Series A1 Preferred Members and Managers for
out-of-pocket expenses incurred and paid by any of them as authorized by the
Company in the conduct of the Business, including telephone expenses, travel
expenses incurred in connection with meetings, and any other out-of-pocket
expenditures as may reasonably be attributable to the Company.  Such reimbursed expenses shall not include
any expenses incurred in connection with an exercise of rights as a Member or
Manager apart from the authorized conduct of the Business.  In case of a dispute between the Company and
a Series A1 Preferred Member or Manager with respect to reimbursement of
out-of-pocket expenses, the reasonable determination by the Management
Committee of which expenses may be allocated to and reimbursed as a result of
the Company’s activities or the Business and the 

 

38

 

amount of such
reimbursement shall be conclusive.  Such
reimbursement shall be treated as expenses of the Company and shall not be
deemed to constitute distributions to any Member of profit, loss or capital of
the Company.  No Manager shall be
entitled to receive any salary or other compensation for services rendered to
or on behalf of the Company, or otherwise, in his capacity as a Manager.

 

8.3          Gaming Development Reimbursements. 
Subject to applicable limitations under the Debt Documents of the
Company, the Company shall reimburse a Series A1 Preferred Member and its
Affiliates for reasonable out-of-pocket development expenses incurred by such Series A1
Preferred Member and its Affiliates in connection with the development of
gaming opportunities for the Company upon such Series A1 Preferred Member
providing to the Company reasonable evidence of such expenses; provided,
that, the Company shall not make reimbursements under this Section 8.3(a) not
otherwise authorized by the Management Committee (whether by budget or
otherwise) in excess of $250,000 per Fiscal Year (except the first Fiscal Year,
with respect to which such $250,000 amount shall be pro rated by the number of
full months remaining in such first Fiscal Year).

 

ARTICLE IX

REPRESENTATIONS AND WARRANTIES

 

9.1          In General.  Each Person
admitted as a Member of the Company after the Effective Date shall as of the
date of such admission make each of the representations and warranties set
forth in Section 9.2 below, and such
representations and warranties shall survive the date that they are made.  The covenants, obligations and agreements of
the parties set forth in this Agreement shall survive until performed.  The right to indemnification, payment of
damages or other remedy based on any representation, warranty, covenant,
obligation or agreement made herein will not be affected by any investigation
conducted with respect to, or any knowledge acquired or capable of being
acquired at any time with respect to, the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant, obligation or
agreement.

 

9.2          Representations and Warranties by Members. 
Each Person admitted as a Member of the Company after the Effective Date
hereby represents and warrants to the Company and the other Members that, as of
the date such Member is admitted as a member of the Company:

 

(a)           Due Incorporation or Formation. 
Such Member is a corporation duly organized or a partnership or limited
liability company duly formed, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation or formation, and has requisite
corporate, partnership or company power and authority to own, operate or lease
its assets and properties and to carry out its business as such is presently
conducted.  Such Member is duly licensed
or qualified to do business and is in good standing in each of the jurisdictions
in which the failure to be so licensed or qualified would have a material
adverse effect on its financial condition or its ability to perform its
obligations hereunder.

 

(b)           Authority.  Such Member
has the requisite corporate, partnership or company power and authority to
execute and deliver this Agreement, to perform its 

 

39

 

obligations hereunder, and to consummate the
transactions contemplated hereby.  The
execution and delivery by such Member of this Agreement, and the performance by
such Member of its obligations hereunder, have been duly and validly authorized
by all necessary corporate, partnership or company action on the part of such
Member, and no other corporate, partnership or company action on the part of
such Member is necessary to approve this Agreement or to consummate the
transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by such Member, and
constitutes its legal, valid and binding obligation, enforceable against such
Member in accordance with its terms, subject (as to enforceability) to any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to creditors’ rights generally or to
general principles of equity.

 

(c)           No Conflict; No Default.  Neither the
execution, delivery or performance of this Agreement, nor the consummation of
the transactions contemplated hereby, shall (i) conflict with, result in a
violation or breach of, or constitute a default under (whether with notice or
lapse of time or both), any of the terms, conditions or provisions of the
memorandum of association, articles of incorporation, bylaws or other
applicable governing documents of such Member, or of any material agreement or
instrument to which such Member, or by which any of its assets or properties,
is bound; (ii) conflict with, result in a violation or breach of, or
constitute a default under (whether with notice or lapse of time or both), any
of the terms, conditions, or provisions of, or require any filing, consent or
similar action under, any law, regulation, order, writ, injunction, decree,
determination or award of any court, any governmental department, board, agency
or instrumentality, domestic or foreign, or any arbitrator, applicable to such Member
or any of its assets or properties, (iii) conflict with, result in a
violation or breach of, constitute a default under (whether with notice or
lapse of time or both), accelerate or permit the acceleration of the
performance required by, give to others any material interests or rights
(including rights of termination, cancellation or modification) under, or
require any consent, authorization, approval or action under, any indenture,
mortgage, lease agreement or instrument to which such Member, or by which any
of its assets or properties, is bound, or (iv) result in the creation or
imposition of any Encumbrance upon any of the assets or properties of such
Member.

 

(d)           Consents.  Any
registration, declaration, qualification, designation, declaration or filing
with, or consent, approval, order, waiver, license, permit or other
authorization by, any court, arbitrator, agency or governmental or regulatory
authority, domestic or foreign, or any third party, that is required in
connection with the valid execution, delivery, acceptance and performance of
this Agreement by such Member, or the consummation by such Member of the
transactions contemplated hereby, has been completed, made or obtained on or
before, and are effective as of, the date such Member is admitted as a member
of the Company.

 

(e)           Litigation.  There are no
claims, actions, suits, orders, proceedings or investigations pending or, to
the knowledge of such Member, threatened against, relating to or affecting such
Member or any of its assets, properties or businesses in any court or before or
by any governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator, which if adversely determined would (or, in the
case of an investigation, could lead to any claim, action, suit, order or
proceedings which if adversely determined would) reasonably be expected to
result in the issuance of an order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement.

 

40

 

(f)            Investment Representations.

 

(i)            Preexisting Relationship or Experience. 
By reason of its business or financial experience, or by reason of the
business or financial experience of its financial advisor who is unaffiliated
with and who is not compensated, directly or indirectly, by the Company or any
Affiliate or selling agent of the Company, such Member is capable of evaluating
the risks and merits of an investment in the Units and of protecting its own
interests in connection with this investment.

 

(ii)           No Advertising.  Such Member
has not seen, received, been presented with or been solicited by, any leaflet,
public promotional meeting, newspaper or magazine article or advertisement,
radio or television advertisement, or any other form of advertising or general
solicitation with respect to the sale of the Units.

 

(iii)          Investment Intent.  Such Member
is acquiring the Units for investment purposes for its own account only and not
with a view to or for sale in connection with any distribution of all or any
part of such Units.

 

(iv)          Economic Risk.  Such Member
acknowledges that an investment in the Units is a speculative investment which
involves a substantial degree of risk of loss by it of its entire investment in
the Company, and such Member is financially able to bear the economic risk of
such investment, including the total loss thereof.

 

(v)           Tax Consequences.  Such Member
acknowledges that the tax consequences to it of investing in the Company will
depend on its particular circumstances, and it will look solely to, and rely
upon, its own advisers with respect to the tax consequences of its investment
in the Units.

 

(vi)          No Registration of Units. 
Such Member acknowledges that the Units have not been registered under
the Securities Act or any other applicable blue sky laws in reliance, in part,
on its representations, warranties and agreements herein.

 

(vii)         Restrictions on Transferability. 
Such Member understands that the Units are “restricted securities” under
the Securities Act in that the Units will be acquired from the Company in a
transaction not involving a public offering, and that the Units may be resold
without registration under the Securities Act only in certain limited circumstances
and that otherwise the Units must be held indefinitely.  Such Member acknowledges that there will be
substantial restrictions on the transferability of its Units pursuant to this
Agreement, that there is no public market for such Units and none is expected
to develop, and that, accordingly, it may not be possible for it to liquidate
its investment in the Company.

 

(viii)        No Disposition in Violation of Law. 
Without limiting the representations set forth above, such Member will
not make any disposition of all or any part of the Units which will result in
the violation by it or by the Company of the Securities Act, any other
applicable securities laws or this Agreement.

 

41

 

(ix)          Legends.  Such Member
understands that the certificates, if any, evidencing the Units shall bear such
legends as are required by the Gaming Authorities and may bear the following
legend (and any legend required by applicable state securities laws):

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED NOR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. 
SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED.  ANY TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS
AND CONDITIONS WHICH ARE SET FORTH IN THE THIRD AMENDED AND RESTATED OPERATING
AGREEMENT OF CANNERY CASINO RESORTS, LLC, EFFECTIVE AS OF MARCH 3, 2010,
AS IT MAY BE AMENDED.”

 

9.3          Indemnification.  Each Member
shall indemnify, defend and hold harmless the Company, each and every Manager,
each and every other Member, and their respective Affiliates, equityholders,
members, partners, directors, managers, general partners, officers, employees,
agents and representatives from and against, and to promptly pay such party or
reimburse such party for, any and all liabilities (whether contingent, fixed or
unfixed, liquidated or unliquidated, or otherwise), obligations, claims, suits,
actions or causes of action, demands, deficiencies, losses, settlements,
assessments, awards, judgments, interest, fines, penalties, damages (including
incidental, consequential, actual and punitive damages), and costs and expenses
(including reasonable attorneys’ fees and other reasonable costs and expenses
of investigating or contesting any of the foregoing) sustained or incurred by
such party relating to, resulting from, arising out of or otherwise by virtue
of any inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by such Member in this Agreement.  The procedures for indemnity claims under
this Section 9.3 shall be the same as the procedures set
forth in Section 8.1(i) above, mutatis  mutandis.

 

ARTICLE X

ACCOUNTING, BOOKS AND RECORDS

 

10.1        Accounting, Books And Records.

 

(a)           The Company shall keep on site at its principal place
of business each of the following:

 

(i)            separate books of account for the Company that shall
show a true and accurate record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with
the conduct of the Company and the operation of the Business in accordance with
this Agreement;

 

42

 

(ii)           copies of each periodic report delivered to Members in
accordance with Section 10.2(c) below for the three
most recent years;

 

(iii)          a current list of the full name and last known
business, residence, mailing address, telephone number and electronic mail
address of each Member and Manager, both past and present;

 

(iv)          a copy of the Articles of Organization and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;

 

(v)           copies of the Company’s federal, state, and local
income tax returns and reports, if any, for the three most recent years;

 

(vi)          copies of this Agreement and all amendments thereto;
and

 

(vii)         copies of any written consents of the Managers or
Members taken without a meeting.

 

(b)           The Company shall use the accrual method of accounting
in preparation of its financial reports and for tax purposes and shall keep its
books and records accordingly.

 

10.2        Accounting Statements; Periodic Reports.

 

(a)           In General.  The Company
shall keep adequate and accurate books and records reflecting, in accordance
with GAAP, consistently applied, all business transactions arising out of or
connected with the conduct of the Company.

 

(b)           Audits.  Any Series A1
Preferred Member or its designated representative has the right to have
reasonable access to and inspect and copy the contents of the books and records
of the Company, including the books and records specified in Section 10.2(a) above;
provided, that, such access shall be (i) at the Company’s
principal place of business, (ii) during its normal business hours, (iii) provided
in a manner reasonably intended to avoid any interruption to the Business or
operations of the Company, and (iv) subject to any reasonable rules and
guidelines established by the Management Committee.

 

(c)           Periodic Reports.  The Company
shall cause to be delivered to each Member the following periodic reports, each
prepared in accordance with GAAP:

 

(i)            within 30 days following the end of each calendar
month, a balance sheet and statement of cash flow for the Company as of the end
of such month (including all supporting schedules and documentation) and an
income statement for the Company for such month and for the completed portion
of the then-current Fiscal Year;

 

(ii)           within 25 days following the end of each Fiscal
Quarter, a balance sheet and statement of cash flow for the Company as of the
end of such Fiscal Quarter 

 

43

 

and an income statement
for the Company for such Fiscal Quarter and for the completed portion of the
then-current Fiscal Year;

 

(iii)          within 50 days following the end of each Fiscal Year,
an audited balance sheet and statement of cash flow for the Company as of the
end of such Fiscal Year and an audited income statement for the Company for
such Fiscal Year; and

 

(iv)          such other periodic reports and financial statements
for the Company as are required by any Upper Tier Holder of any Member to
comply with periodic reporting requirements under federal or state securities
law.

 

(d)           Other Reports.  The Company
shall cause to be delivered to each Member such additional periodic reports and
financial statements for the Company as may be reasonably requested from time
to time by a Member.

 

10.3        Series B Preferred Members’ Consultation Right.

 

(a)           Each Series B Preferred Member shall designate
one individual to serve as its representative (the “Series B
Representative”) with respect to the Company.  Each Series B Preferred Member may
change designation of its Series B Representative at any time upon written
notice to the Company.  Crown’s initial Series B
Representative shall be Rowen Craigie.

 

(b)           The Managers and officers of the Company shall from
time to time at their convenience (but not more often than quarterly) consult
with each Series B Representative and discuss the business and affairs of
the Company.  Any recommendations
provided by a Series B Representative shall not obligate the Company to
act in accordance therewith but shall be advisory only.

 

10.4        Tax Matters.

 

(a)           Tax Returns.  Except to the extent expressly set
forth in this Agreement, all elections and decisions required or permitted to
be made by the Company under any applicable tax law and all other matters
relating to taxes or the maintenance of Capital Accounts in order to comply
with Section 704(b) of the Code shall be made by the Management
Committee; provided, that, any change in the manner of maintaining
Capital Accounts shall not materially alter the economic arrangement among the
Members.  The Company shall prepare all
necessary tax returns and shall furnish each Series A1 Preferred Member
with a copy of the proposed federal income tax return for review and
comment.  Each such Member shall have at
least 15 days (but no more than 30 days) to provide comments to the Company on
such proposed tax return, at the end of which time, such federal tax return, as
amended to take into account any changes reasonably requested by a Series A1
Preferred Member, shall be timely filed. 
Each Member shall furnish the Company all pertinent information in its
possession relating to Company operations that the Company requests to prepare
and file its income tax returns.

 

(b)           Tax Matters Member.        AcquisitionCo is hereby designated as the initial tax matters partner for the
Company within the meaning of Code Section 6231(a)(7) (the “Tax
Matters Member”); provided, however, (i) in exercising
its authority as Tax Matters 

 

44

 

Member,
the Tax Matters Member shall be limited by the provisions of this Agreement
affecting tax aspects of the Company; (ii) the Management Committee shall
direct the Tax Matters Member regarding the filing of a Code Section 6227(b) administrative
adjustment request with respect to the Company before filing such request, it
being understood, however, that the provisions hereof will not be construed to
limit the ability of any Member to file an administrative adjustment request on
its own behalf pursuant to Code Section 6227(a) of the Code; (iii) the
Management Committee shall direct the Tax Matters Member regarding the entrance
into any settlement agreement with the Internal Revenue Service that purports
to bind Members other than the Tax Matters Member, the extension of the statute
of limitations with respect to the Company, the filing of a petition for
judicial review of an administrative adjustment request under Code Section 6228,
or a petition for judicial review of a final partnership administrative
judgment under Code Section 6226 relating to the Company before filing
such petition; (iv) the Tax Matters Member shall give prompt notice to the
Management Committee, the Series B Preferred Member and the Series C
Preferred Member of the receipt of any written notice that the Internal Revenue
Service or any state or local taxing authority intends to examine the Company
income tax returns for any year, the receipt of written notice of the beginning
of an administrative proceeding at the Company level relating to the Company
under Code Section 6223, the receipt of written notice of the final
partnership administrative adjustment relating to the Company pursuant to Code Section 6223,
and the receipt of any request from the Internal Revenue Service for waiver of
any applicable statute of limitations with respect to the filing of any tax
return by the Company and (v) the Tax Matters Member shall not take any
action having tax consequences more adverse to any Members than to any other
Member without the prior consent of the more adversely affected Member (such
consent not to be unreasonably withheld or delayed).

 

(c)           Tax Partnership.  Each Member acknowledges that this Agreement
creates a partnership for federal and state income tax purposes (but no other),
that such Member shall be treated as a partner for such purposes and hereby
agrees not to elect under Code Section 761 or applicable state law to be
excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the
Code or any similar state statute.  No
Member, Manager, agent or employee of the Company may file IRS Form 8832
(or such alternative or successor form) to elect to have the Company be
classified as a corporation for federal income tax purposes under Treas. Reg. Section 301.7701-3.  Each Member and Manager agrees to take such
other action as may be reasonably necessary or required (and permitted under
the terms of this Agreement) to maintain the status of the Company as a
partnership for federal income tax purposes. 
The Members further acknowledge and agree that all Units are intended to
be treated as partnership equity for federal and state income tax purposes.

 

(d)           Conversion to a Corporation. 
The Members acknowledge and agree that there may be one or more
circumstances, including but not limited to a desire to undertake a public
offering and/or the desire to comply with regulatory or licensing requirements
under Gaming Laws, that would cause it to be in the best interests of the
Company that the business of the Company be conducted as an association subject
to U.S. federal income tax as a corporation (a “Change in Form”).  Accordingly, the Members agree that upon such
a determination and approval by the Management Committee, the Management
Committee, subject to any applicable Gaming Laws and upon the receipt of any
necessary Gaming Approvals, shall take any and all actions necessary or
desirable so that the Company may 

 

45

 

continue its business and undergo one or more Changes
in Form.  The Management Committee shall
effect the Change in Form in such manner as determined by the Management
Committee (as provided for in this Agreement) to fairly represent the relative
economic and other rights of the Members as members of the Company at the time
and shall strive to minimize taxes and costs to be incurred by the Company, the
Members or the resulting entity.  The
Change in Form may take the form of, without limitation, a merger of the
Company into another entity, a contribution of all of the interests of the
Members in the Company to another entity, the filing of an election with the
Internal Revenue Service to be classified as a corporation, or such other form
as the Management Committee shall reasonably determine to be appropriate.  Each Member, each holder of an option issued
by the Company with respect to Units, and each holder of any other security of
the Company shall execute and deliver all documents, make all exchanges, and
take all other actions, if any, as are reasonably requested by the Management
Committee in connection with any such conversion.  Each Person who held Units, an option issued
by the Company with respect to Units, or any other security of the Company
immediately prior to such conversion shall receive stock, stock options or
other securities, as applicable, in the successor corporation containing terms
materially in accordance with the terms of such instruments, and in such
amounts, in such classes (whether common, preferred or otherwise) and with such
rights and privileges as reasonably determined by the Management Committee consistent
with the following sentence.  The number
of shares of stock in the successor corporation to which a Member shall be
entitled, and the number of shares of stock subject to any stock options or
other convertible securities, shall be determined by the Management Committee
as if all options and other convertible securities were exercised or converted
in full immediately prior to the conversion of the Company to the successor
corporation, all Capital Accounts of the Members, and any Person who would have
a Capital Account upon such exercise or conversion, were adjusted by way of a “book
up” or “book down” in accordance with the rules set forth in the
definition of Gross Asset Value, and shares in the successor corporation were
allocated among the Members, and such other Persons, in proportion to their
Capital Accounts following such hypothetical exercise or conversion and “book
up” or “book down.”  The application of
this section to options issued by the Company with respect to Units and to any
other securities of the Company shall be subject to the terms and conditions
contained in the governing instruments, if any, with respect thereto.

 

ARTICLE XI

TRANSFERS

 

11.1        Restrictions On Transfers. 
Except as otherwise approved by the Management Committee pursuant to Section 5.6(g) above,
or expressly permitted by this ARTICLE XI or ARTICLE XII below,
no Member shall Transfer all or any portion of its Units (whether Preferred
Units or Common Units) and no Member Unit Transfer shall be permitted with
respect to any Member.

 

11.2        Permitted Transfers.  Subject to
the other conditions and restrictions set forth in this ARTICLE XI, a Series A
Preferred Member that is not an Adverse Member may at any time Transfer its
Units as follows:

 

46

 

(a)           any Series A Preferred Member may Transfer all or
any portion of its Units to any other Series A Preferred Member or any
Wholly Owned Affiliate of another Series A Preferred Member;

 

(b)           any Series A Preferred Member may Transfer all or
any portion of its Units to any Wholly Owned Affiliate of such Series A
Preferred Member;

 

(c)           any Series A Preferred Member may pledge or grant
a security interest in such Series A Preferred Member’s Units solely for
the purpose of securing financing to participate in a capital call under Section 2.5(a)(ii) above;
provided, that, if any event occurs that under such pledge or
grant of security interest may give rise to a foreclosure on such Units, then
prior to such foreclosure being realized, (i) an Adverse Act shall be
deemed to have occurred with respect to such Series A Preferred Member, (ii) any
and all rights or interests of the secured lender with respect to such Units
shall be subordinate to (and be suspended in favor of) the rights and interests
of the other Preferred Members under the Adverse Act procedures set forth in ARTICLE XII
below, and (iii) the secured lender may foreclose on
such Units if and only if the closing of the purchase and sale of such Units
pursuant to such Adverse Act procedures are not consummated, in which case the
Transfer of such Units to the secured lender shall be subject to compliance
with all applicable conditions on Transfer set forth in this Agreement
(including Sections 11.5 and 11.10 below)
and all applicable law (including all applicable Gaming Laws); or

 

(d)           any Series A1 Preferred Member may Transfer its
Units in accordance with Section 11.3 or 11.4 below.

 

11.3        Second Anniversary Trigger. 
Subject to the other conditions and restrictions set forth in this ARTICLE XI,
at any time following the Conversion Date, the following mechanism for the
Transfer of Units may be triggered by a Series A1 Preferred Member; provided,
that, the Series A1 Preferred Member triggering this mechanism (the
“Triggering Member”) directly or indirectly holds in the aggregate at
least 25% of the Series A1 Preferred Units:

 

(a)           Purchase Offer.  No Transfer
may be made under this Section 11.3 unless the Triggering Member
has received a bona fide written offer (the “Purchase Offer”) from an
unaffiliated third party (the “Proposed Purchaser”) to purchase all of
the issued and outstanding Units of the Company (or, in lieu of AcquisitionCo’s
Units at AcquisitionCo’s sole and absolute discretion, all of the equity of
AcquisitionCo Parent) for a purchase price (the “Proposed Price”)
denominated and payable in United States dollars at closing, on terms and
conditions that are customary for such a proposed purchase.  The Purchase Offer shall be signed by the
Proposed Purchaser and shall be irrevocable for a period ending no sooner than
the Business Day following the end of the Offer Period.  The Series A2 Preferred Units and Series B
Preferred Units are subject to the drag-along rights set forth in Section 6.11.

 

(b)           Offer Notice.  Prior to
making any Transfer that is subject to the terms of this Section 11.3,
the Triggering Member shall give (i) to each Member and the Company
written notice of the triggering of this Section 11.3 and (ii) to
each other Series A1 Preferred Member (collectively, with the exclusion of
the Series C Preferred Members, the 

 

47

 

“Non-Triggering Members”) written notice (the “Offer
Notice”) that shall include a copy of the Purchase Offer and an offer (the “Firm
Offer”) to sell all of the Triggering Member’s Units (or, in lieu of
AcquisitionCo’s Units at AcquisitionCo’s sole and absolute discretion if
AcquisitionCo is the Triggering Member, all of the equity of AcquisitionCo
Parent) (the “Offered Equity”) to the Non-Triggering Members for a price
(the “Offer Price”) equal to the portion of the Proposed Price
attributable to the Offered Equity, on the same terms and conditions as those
contained in the Purchase Offer; provided, that, the Firm Offer
shall be made without regard to any requirement that (A) earnest money or
similar deposit be made by the Non-Triggering Members prior to closing and (B) any
security (other than the Offered Equity) be provided by the Non-Triggering
Members for any deferred portion of the Offer Price.  In calculating the portion of the Proposed
Price attributable to the Offered Equity, (x) the Proposed Price shall be
broken down by price per Preferred Unit and Common Unit based on the “Net
Equity Value” methodology set forth in Section 12.3(a) below
and assuming for purposes of such methodology that the “Grossed Appraised Value”
is the Proposed Price, and (y) the portion of the Proposed Price
attributable to all of the equity of AcquisitionCo Parent, if applicable, shall
be equal to the aggregate value of the Units held by AcquisitionCo derived from
the valuation methodology described in clause (x) above.

 

(c)           Offer Period.  The Firm
Offer shall be irrevocable for a period (the “Offer Period) ending at
5:00 p.m., local time, at the Company’s principal place of business, on
the 90th day following the date the Offer Notice is
received by the Non-Triggering Members.

 

(d)           Acceptance of the Firm Offer. 
At any time during the Offer Period, any Non-Triggering Member may
accept the Firm Offer as to all or any portion of the Offered Equity, by giving
written notice of such acceptance to the Triggering Member and each other
Non-Triggering Member, which notice shall indicate the maximum amount of
Offered Equity (broken down, if applicable, by Preferred Units and Common
Units) that such Non-Triggering Member is willing to purchase, not to exceed
all of such Offered Equity.  In the event
that the Non-Triggering Members giving such written notice of such acceptance
(the “Accepting Members”) in the aggregate accept the Firm Offer with
respect to all of the Offered Equity, the Firm Offer shall be deemed to be
accepted and each Accepting Member shall be deemed to have accepted the Firm
Offer as to that portion of the Offered Equity (broken down, if applicable, to
Preferred Units and Common Units) that corresponds to the ratio of the number
of Preferred Units held by such Accepting Member to the aggregate number of
Preferred Units held by all Accepting Members; provided,
that, if any Accepting Member’s acceptance of the Firm Offer was for an
amount less than its proportionate share of the Offered Equity as so
determined, the portion of the Offered Equity not so committed to be purchased
shall be allocated to the other Accepting Members; provided, further, that each
other Accepting Member shall not be obligated to purchase in excess of the
amount of Offered Equity such Accepting Member indicated a willingness to
purchase in its acceptance of the Firm Offer. 
If the Non-Triggering Members do not accept the Firm Offer as to all of
the Offered Equity during the Offer Period, the Firm Offer shall be deemed
rejected in its entirety.

 

(e)           Closing of Purchase Pursuant to Firm Offer. 
In the event that the Firm Offer is accepted pursuant to Section 11.3(d) above,
the closing of the purchase and sale of the Offered Equity shall take place
within 60 days after the Firm Offer is accepted, subject to Section 12.5 below.  The Members shall execute such documents and
instruments as may be 

 

48

 

reasonably necessary or appropriate to effect the
purchase and sale of the Offered Equity pursuant to the terms of the Firm Offer
and this ARTICLE
XI.

 

(f)            Closing of Purchase Pursuant to Purchase Offer. 
In the event that the Firm Offer is not accepted pursuant to Section 11.3(d) above,
the Triggering Member may accept the Purchase Offer at any time within 60 days
after the last day of the Offer Period by written notice to the Proposed
Purchaser, each Member and the Company. 
Following such acceptance by the Triggering Member, each Member (other
than the Series C Preferred Members, which will have the rights as set
forth in Section 2.3(b)(ii)) shall be required to sell their Units (or, in
lieu of AcquisitionCo’s Units at AcquisitionCo’s sole and absolute discretion,
all of the equity of AcquisitionCo Parent) in connection with the Purchase
Offer subject, in the case of Series A2 Preferred Units or Series B
Preferred Units to the obligations set forth in Section 6.11.  The closing of the purchase and sale of
equity relating to the Purchase Offer shall take place within 60 days after the
acceptance of the Purchase Offer, subject to Section 12.5 below.  The Company and each Member shall, and each
Member shall cause each of its Affiliates to, execute such documents and
instruments as may be reasonably necessary or appropriate to effect the
purchase and sale of equity relating to the Purchase Offer pursuant to the
terms of the Purchase Offer and this ARTICLE XI.

 

(g)           Closing Conditions. 
Notwithstanding any other provision of this Section 11.3:

 

(i)            Non-Competition Agreement. 
If a closing occurs pursuant to Section 11.3(e) or
11.3(f) above,
and if requested by any purchaser, (A) each Series A1 Preferred
Member (except in respect of the gaming operations described in Appendix D)
and/or (B) each of Paulos and/or Wortman (except in respect of the gaming
operations described in Appendix D) and/or (C) each manager of
AcquisitionCo and/or each Upper Tier Holder of AcquisitionCo (except in respect
of the gaming operations described in Appendix D) holding a Nevada gaming
license, shall, at or prior to such closing, execute a non-competition
agreement in favor of, and reasonably acceptable to, such purchaser and its
Affiliates for a term not to exceed four years following such closing and with
a geographic scope not to exceed a five-mile radius from any Company gaming
property then in operation or Company gaming property or gaming opportunity in
active development; and

 

(ii)           Non-Participation Agreement. 
If a closing occurs pursuant to Section 11.3(f) above
and if requested by any Non-Triggering Series A1 Preferred Member, the
Triggering Member (and (A) if the Triggering Member is Millennium Gaming,
each of Paulos and Wortman and (B) if the Triggering Member is
AcquisitionCo, each manager of AcquisitionCo and each Upper Tier Holder of
AcquisitionCo holding a Nevada gaming license), shall, at or prior to such
closing, execute a non-participation agreement in favor of, and reasonably
acceptable to, such Non-Triggering Member and its Affiliates that provides that
for four years following such closing, it or he, as the case may be, shall not,
directly or indirectly, be a partner, joint venturer, director, manager,
officer, employee, consultant, agent, independent contractor, equityholder or
lender of, or have any other interest in, the Company or any of its
subsidiaries or the Proposed Purchaser or any of its Affiliates.

 

49

 

(h)           Blackout.  If a
Triggering Party triggers this Section 11.3 and the
closing of a Firm Offer or Purchase Offer does not take place by the deadline
for closing set forth in Section 11.3(e) or 11.3(f) above,
respectively, the Triggering Member may not avail itself of the Transfer
mechanism under this Section 11.3 during the one-year period following
the date of the Offer Notice.

 

11.4        Fourth Anniversary Trigger. 
Subject to the other conditions and restrictions set forth in this ARTICLE XI,
following the later of (i) the Conversion Date and (ii) September 22,
2010, the following mechanism for the Transfer of Units may be triggered by a Series A1
Preferred Member; provided, that, the Series A1 Preferred
Member triggering this mechanism (the “Exiting Member”) directly or
indirectly holds in the aggregate at least 25% of the Series A1 Preferred Units:

 

(a)           Negotiation Period.  An Exiting
Member may trigger this Section 11.4 by providing each other Series A1
Preferred Member and the Company with written notice that it wishes to sell all
of its Units (or, in lieu of AcquisitionCo’s Units at AcquisitionCo’s sole and
absolute discretion if AcquisitionCo is the Exiting Member, all of the equity
of AcquisitionCo Parent) (the “Exiting Equity”).  For the 90-day period following the date such
notice is given (such period, as shortened or extended upon the mutual
agreement of all Series A1 Preferred Members, the “Negotiation Period”),
the Series A1 Preferred Members shall negotiate in good faith with respect
to a transaction for the purchase and sale of all of the Exiting Equity.

 

(b)           Auction.  If on the last
day of the Negotiation Period, the Series A1 Preferred Members have not
executed definitive transaction agreements for the purchase and sale of the
Exiting Equity, then the Company and each Series A1 Preferred Member
shall, and each Series A1 Preferred Member shall cause each of its
Affiliates to, use its or his commercially reasonable efforts in good faith to
conduct an auction (the “Auction”) to sell all of the issued and
outstanding Units of the Company (or, in lieu of AcquisitionCo’s Units at
AcquisitionCo’s sole and absolute discretion, all of the equity of
AcquisitionCo Parent) other than the Series C Preferred Units (the “Auctioned
Equity”).  Within ten (10) days
of the end of the Negotiation Period, each Series A1 Preferred Member
shall, in writing, notify the Company and each other Series A1 Preferred
Member whether such Series A1 Preferred Member, or any of such Series A1
Preferred Member’s Affiliates, intends to participate, directly or indirectly,
as a bidder in the Auction (if such Series A1 Preferred Member or any of
such Preferred Member’s Affiliates so intends, such Preferred Member shall be
deemed a “Participating Member” and if such Preferred Member and all of
such Preferred Member’s Affiliates do not so intend, such Preferred Member
shall be deemed a “Non-Participating Member”).  If a Series A1 Preferred Member fails to
so notify the Company and each other Series A1 Preferred Member, such
Preferred Member shall be deemed to be a Participating Member.  Each Non-Participating Member and all of such
Non-Participating Member’s Affiliates shall be barred from participating,
directly or indirectly, as a bidder in the Auction.

 

(c)           Selection of Investment Bank. 
The investment bank to conduct the Auction shall be selected as follows:

 

50

 

(i)            If Less Than All Series A1 Preferred Members Are
Participating Members.  If less than all Series A1
Preferred Members are Participating Members, then the Non-Participating Members
that are Series A1 Preferred Members shall use their commercially
reasonable efforts in good faith to select and hire by mutual agreement, within
30 days of the end of the Negotiation Period, a nationally recognized
investment bank (the “Investment Bank”) to conduct the Auction, on terms
and conditions that are reasonably acceptable to each Non-Participating Member
that is a Series A1 Preferred Member and subject to the prior written
approval of each Participating Member, if any, such approval not to be
unreasonably withheld.  If the Non-Participating
Members that are Series A1 Preferred Members are unable to select and hire
the Investment Bank within 30 days of the end of the Negotiation Period, then
the Investment Bank shall be selected and hired by a majority of the
independent Managers of the Company within 60 days of the end of the
Negotiation Period.  If a majority of the
independent Managers of the Company are unable to select and hire the
Investment Bank within 60 days of the end of the Negotiation Period or if there
are no independent Managers of the Company, then the Investment Bank shall be
selected and hired by arbitration in Los Angeles, California, before a sole
arbitrator.  The arbitration shall be
administered by JAMS pursuant to its Streamlined Arbitration Rules &
Procedures.  The arbitrator’s decision
shall be final and binding upon the parties, and may be entered and enforced in
any court of competent jurisdiction by any Non-Participating Member.  The arbitrator’s expenses shall be borne by
the Company.

 

(ii)           If All Series A1 Preferred Members Are
Participating Members.  If all Series A1
Preferred Members are Participating Members, then the Series A1 Preferred
Members shall use their commercially reasonable efforts in good faith to select
and hire by mutual agreement, within 30 days of the end of the Negotiation
Period, the Investment Bank to conduct the Auction, on terms and conditions
that are reasonably acceptable to each Series A1 Preferred Member.  If the Series A1 Preferred Members are
unable to select and hire the Investment Bank within 30 days of the end of the
Negotiation Period, then the Investment Bank shall be selected and hired by a
majority of the independent Managers of the Company within 60 days of the end
of the Negotiation Period.  If a majority
of the independent Managers of the Company are unable to select and hire the
Investment Bank within 60 days of the end of the Negotiation Period or if there
are no independent Managers of the Company, then the Investment Bank shall be
selected and hired by arbitration in Los Angeles, California, before a sole
arbitrator.  The arbitration shall be
administered by JAMS pursuant to its Streamlined Arbitration Rules &
Procedures.  The arbitrator’s decision
shall be final and binding upon the parties, and may be entered and enforced in
any court of competent jurisdiction by any Series A1 Preferred
Member.  The arbitrator’s expenses shall
be borne by the Company.

 

(d)           Auction Process.  The Auction
process shall be conducted by the Investment Bank and the Non-Participating
Members that are Series A1 Preferred Members (or, if there are no
Non-Participating Members that are Series A1 Preferred Members, then the
independent Managers of the Company, if any). 
The Company and each Member shall, and each Member shall cause each of
its Affiliates to, use its or his commercially reasonable efforts in good faith
to assist the Investment Bank and the Non-Participating Members that are Series A1
Preferred Members (or, if there are no Non-Participating Members, then the
independent Managers of the Company, if any) in the conduct of the Auction and
the consummation of a sale of all of the Auctioned Equity, including in the
hiring of outside advisors (other than the 

 

51

 

Investment Bank), the identification of potential
bidders, the preparation of an information memorandum regarding the Company
(including financial statements and financial projections relating thereto),
the preparation of bid procedures and a bid procedures letter to be distributed
to potential bidders, the assembly of a data room, the making of management
presentations, the drafting, negotiation and execution of transaction documents
(including the schedules, exhibits, appendices, annexes and ancillary documents
thereto), the closing of the transaction (including the obtaining of applicable
approvals, consents and waivers), and the equal and fair treatment of all
potential bidders.  Unless the Series A1
Preferred Members otherwise mutually agree, the deadline for the receipt of
bids in the Auction (the “Bid Deadline”) shall be a date that is no
later than 180 days following the last day of the Negotiation Period.  If all Series A1 Preferred Members are
Participating Members, then any bid involving the direct or indirect
participation of any Preferred Member or any Affiliate of any Preferred Member
shall be submitted by the Bid Deadline in last-and-best offer form and may not
be later modified to “top” other bids. 
Such restriction shall be reflected in the bid procedures letter distributed
to potential bidders.

 

(e)           Bid Selection.  The winning
bid in the Auction shall be selected as follows:

 

(i)            If Less Than All Series A1 Preferred Members Are
Participating Members.  If less than all Series A1
Preferred Members are Participating Members, then following the Bid Deadline,
the Non-Participating Members that are Series A1 Preferred Members shall
use their commercially reasonable efforts in good faith to select by mutual
agreement the bid that obtains the greatest aggregate value for the Members
(taking into account factors such as type and amount of consideration, timing
of the payment of such consideration, the amount of after-tax proceeds, closing
conditions, indemnification terms and consistent treatment of Series A1
Preferred Members) and to negotiate for execution definitive transaction
agreements for the sale of the Auctioned Equity with the maker of such bid; provided,
that, the Non-Participating Members that are Series A1 Preferred
Members may not agree to terms that disproportionately favor the
Non-Participating Members over the Participating Members without the prior
written approval of each Participating Member, such approval not to be
unreasonably withheld.  No Participating
Member or any Affiliate of a Participating Member may review any submitted bid
(or any analysis relating thereto) or any draft transaction agreement, or
negotiate with any bidder.

 

(ii)           If All Series A1 Preferred Members Are
Participating Members.  If all Series A1
Preferred Members are Participating Members, then following the Bid Deadline, a
majority of independent Managers of the Company or, if there are no independent
Managers of the Company, then the Investment Bank shall use their or its
commercially reasonable efforts in good faith to select the bid that obtains
the greatest aggregate value for the Members (taking into account factors such
as type and amount of consideration, timing of the payment of such
consideration, the amount of after-tax proceeds, closing conditions,
indemnification terms and consistent treatment of Series A1 Preferred
Members) and to negotiate for execution definitive transaction agreements for
the sale of the Auctioned Equity with the maker of such bid.  If the Company has independent Managers, then
no Participating Member or any Affiliate of a Participating Member may review
any submitted bid (or any analysis relating thereto) or any draft transaction
agreement, or negotiate with any bidder.

 

52

 

(f)            Closing.  The closing
of the purchase and sale of the Auctioned Equity shall take place within 60
days following the execution of definitive transaction documents, subject to Section 12.5 below.  The Company and each Member shall, and each
Member shall cause each of its Affiliates to, execute such documents and
instruments as may be reasonably necessary or appropriate to effect the
purchase and sale of the Auctioned Equity pursuant to the terms of the
definitive transaction documents and this ARTICLE XI.

 

(g)           Closing Conditions.  Notwithstanding
any other provision of this Section 11.4:

 

(i)            Non-Competition Agreement. 
If a closing occurs pursuant to Section 11.4(f) above,
then upon the request of the purchaser of the Auctioned Equity, (A) each Series A1
Preferred Member (except in respect of the gaming operations described in
Appendix D and/or (B) each of Paulos and/or Wortman (except in respect of
the gaming operations described in Appendix D) and/or (C) each manager of
AcquisitionCo and/or each Upper Tier Holder of AcquisitionCo (except in respect
of the gaming operations described in Sections Appendix D) holding a Nevada
gaming license, shall, at or prior to such closing, execute a non-competition
agreement in favor of, and reasonably acceptable to, such purchaser and its
Affiliates for a term not to exceed four years following such closing and with
a geographic scope not to exceed a five-mile radius from any Company gaming
property then in operation or Company gaming property or gaming opportunity in
active development; and

 

(ii)           Non-Participation Agreement. 
If a closing occurs pursuant to Section 11.4(f) above,
then upon the request of any Series A1 Preferred Member, each Series A1
Preferred Member, so long as such Preferred Member or any of its Affiliates is
not a participant in the winning bid (and (A) if such Series A1
Preferred Member is Millennium Gaming, each of Paulos and/or Wortman, so long
as Paulos or Wortman, as the case may be, or any of his Affiliates is not a
participant in the winning bid, and (B) if such Series A1 Preferred Member
is AcquisitionCo, each manager of AcquisitionCo and each Upper Tier Holder of
AcquisitionCo holding a Nevada gaming license, so long as such Person or any of
its, his or her Affiliates is not a participant in the winning bid), shall, at
or prior to such closing, execute a non-participation agreement in favor of,
and reasonably acceptable to, such requesting Series A1 Preferred Member
and its Affiliates that provides that for four years following such closing, it
or he, as the case may be, shall not, directly or indirectly, be a partner,
joint venturer, director, manager, officer, employee, consultant, agent,
independent contractor, equityholder or lender of, or have any other interest
in, the Company or any of its subsidiaries or the purchaser of the Auctioned
Equity or any of its Affiliates.

 

11.5        Conditions to Permitted Transfers. 
A Transfer shall not be treated as a permitted Transfer under Sections 11.1
or 11.2
above unless and until the following conditions are
satisfied:

 

(a)           The transferor and transferee shall execute and
deliver to the Company such documents and instruments of conveyance as may be
necessary or appropriate in the opinion of counsel to the Company to effect
such Transfer or as may be required by this Agreement.  The Company shall be reimbursed by the
transferor and/or transferee for all costs and expenses that it reasonably
incurs in connection with such Transfer.

 

53

 

(b)           The transferor and transferee shall furnish the
Company with the transferee’s taxpayer identification number, sufficient
information to determine the transferee’s initial tax basis in the Units
Transferred, and any other information reasonably necessary to permit the
Company to file all required federal and state tax returns and other legally
required information statements or returns. 
Without limiting the generality of the foregoing, the Company shall not
be required to make any distribution otherwise provided for in this Agreement
with respect to any Units Transferred until it has received such information.

 

(c)           Unless otherwise approved by the Management Committee,
no Transfer of Units shall be made except upon terms and conditions which would
not, in the opinion of counsel chosen by and mutually acceptable to the
Management Committee and the transferor Member, result in the Company being
classified as a publicly traded partnership or association taxable as a
corporation for federal income tax purposes.

 

(d)           No notice initiating the procedures contemplated by Section 11.3
or 11.4
above may be given by any Member while any notice,
purchase or Transfer is pending under Section 11.3 or 11.4 above
or ARTICLE
XII below, as the case may be, or after a Dissolution
Event has occurred.

 

(e)           If there are any non-transferring Members, the
transferee of Units shall execute and deliver to the Company and to each such
non-transferring Member a Joinder Agreement.

 

(f)            In the case of a Transfer pursuant to Section 11.2(b) above,
the transferor shall not be relieved of its obligations hereunder.

 

(g)           Except as set forth in Section 11.2, the Series A2
Preferred Units and Series B Preferred Units shall not be transferable
without the consent of the holders of the Series A1 Preferred Units.

 

(h)           Notwithstanding Section 11.1 and except as
otherwise expressly contemplated by Section 2.3, no Series C
Preferred Member may Transfer any of its Series C Preferred Units, other
than a Transfer to (i) any other Series C Preferred Member, (ii) any
Wholly Owned Affiliate of another Series C Preferred Member, or (iii) any
Wholly Owned Affiliate of such Series C Preferred Member.  In addition, no Unlicensed Series C
Member may Transfer any of its Series C Preferred Units for aggregate
consideration (cash or otherwise) in excess of the Series C Face Amount
thereof.

 

(i)            In the case of a Transfer made while the Option
Agreement is in effect, the Company and the transferee shall execute and
deliver to the Company and the Series B Preferred Member or Series A2
Preferred Member such documents as reasonably requested by the Series B
Preferred Members to comply with Section 8.2(h) of the Option
Agreement.

 

(j)            Any Transfer shall be subject to approval by the
appropriate regulatory authority.

 

54

 

11.6        Prohibited Transfers.

 

(a)           Any purported Transfer of Units, other than a Transfer
permitted under Sections 11.1 and 11.2 above,
shall be null and void and of no force or effect whatsoever; provided, that,
if the Company is required by law to recognize a Transfer of Units, other than
a Transfer permitted under Sections 11.1 and 11.2 above, the
rights of the transferee with respect to the Units Transferred shall be
strictly limited to the transferor’s rights to allocations and distributions as
provided by this Agreement with respect to the Units Transferred, which
allocations and distributions may be applied (without limiting any other legal
or equitable rights of the Company) to satisfy any debts, obligations or
liabilities for damages that the transferor or transferee of such Units may
have to the Company.

 

(b)           In the case of a Transfer or attempted Transfer of
Units, other than a Transfer permitted under Sections 11.1 and 11.2 above,
the parties engaging or attempting to engage in such Transfer shall be liable
to indemnify and hold harmless the Company and the other Members from all cost,
liability and damage that the Company or any of such indemnified Members may
incur (including incremental tax liabilities and attorneys’ fees and expenses)
as a result of such Transfer or attempted Transfer and efforts to enforce the
indemnity granted hereby.

 

11.7        Rights of Unadmitted Assignees. 
A Person who acquires Units but who is not admitted as a substituted
Member in accordance with Section 11.8 below shall be entitled only
to allocations and distributions with respect to such Units in accordance with
this Agreement, and shall have no right to any information or accounting of the
affairs of the Company, shall not be entitled to inspect the books or records
of the Company, and shall not have any of the rights of a Member under the Act
or this Agreement.

 

11.8        Admission of Substituted Members. 
Subject to the other provisions of this ARTICLE XI, a
transferee of Units in a Transfer from a Member permitted under Sections 11.1
and 11.2 above
shall, if not a Member, be admitted to the Company as a substituted Member.

 

11.9        Distributions and Allocations in Respect of Units
Transferred.  If any Units are Transferred by a Member
during any Fiscal Year in compliance with the provisions of this ARTICLE XI,
Profits and Losses, each item thereof, and all other items attributable to the
Units Transferred for such Fiscal Year shall be divided and allocated between
the transferor and the transferee by taking into account their varying
Percentage Interests during the Fiscal Year in accordance with Code Section 706(d),
using any conventions permitted by law and selected by the Management
Committee.  All distributions on or
before the date of such Transfer shall be made to the transferor, and all
distributions thereafter shall be made to the transferee.

 

11.10      Gaming Restrictions.  To the extent
that the Company conducts any gaming activities that subjects the Company to
the licensing and regulatory control of any Nevada Gaming Authority or other
applicable Gaming Authority and notwithstanding any other provision of this
Agreement, the following provisions shall apply:

 

(a)           Any Transfer of any Units shall not be valid unless
approved in advance by the applicable Nevada Gaming Authorities or other
applicable Gaming Authorities.

 

55

 

(b)           As of the date that the Company receives notice that a
Member or transferee of Units is unsuitable to be licensed or to hold that
interest, such unsuitable Member or transferee shall not (i) receive any
share of any cash distribution or any other Property or payments upon the
dissolution of the Company, (ii) exercise directly or through a trustee or
nominee any voting rights conferred by such Units, (iii) participate in
the management of the Business and affairs of the Company, or (iv) receive
any remuneration in any form from the Company for services rendered or
otherwise.

 

(c)           In the event that any Member or transferee of Units is
found unsuitable by any Nevada Gaming Authority or other applicable Gaming
Authority, the Company and such Member or transferee, as the case may be, shall
cooperate in good faith to take corrective actions with respect to such finding
and the resulting impact on the Company as promptly as practicable, whether by
appealing such finding, Transferring the Units held by such Member or
transferee, or otherwise.

 

11.11      Compliance with Gaming Laws. 
Each Member shall, and shall cause any Upper Tier Equityholder of such
Member and any holder of a beneficial interest in such Upper Tier Equityholder,
to comply with all Gaming Laws applicable to casino operating companies
directly or indirectly held by the Company, including delivery of such
information as shall be required by the Gaming Authorities under the Gaming
Laws applicable to such casino operating companies.  The Members hereby agree and acknowledge that
a breach of this Section 11.11 by any Member shall be
deemed a material breach of this Agreement.

 

11.12      Match Right.  Prior to the
Conversion Date:

 

(a)           No Solicitation.  Neither the
Members nor the Company shall seek or solicit any proposal or offer by any
person in relation to a Sale Transaction.

 

(b)           Sale Offer.  In the event
that the Company or the Series A Preferred Members, on behalf of the
Company, receive a bona fide
written offer for a Sale Transaction (the “Sale Offer”) from an
unaffiliated third party (the “Proposed Match Purchaser”), the Company
shall give each Preferred Member written notice of such offer (the “Sale
Offer Notice”), which notice shall include a copy of the Sale Offer, a
description of the material terms and conditions thereof (including, without
limitation, the purchase price and the legal structure of the proposed Sale
Transaction), and an offer (the “Firm Sale Offer”) to enter into a Sale
Transaction with Crown One on the terms and conditions set forth in the Sale
Offer.  The Sale Offer shall be signed by
the Proposed Match Purchaser and shall be irrevocable for a period ending no
sooner than the Business Day following the end of the Sale Offer Period (as
defined below).

 

(c)           Offer Period.  The Firm Sale
Offer shall be irrevocable for a period (the “Sale Offer Period”) ending
at 5:00 p.m., local time, at the Company’s principal place of business, on
the 30th day following the date the Sale Offer Notice is received by Crown One.

 

(d)           Acceptance of the Firm Sale Offer. 
At any time during the Sale Offer Period, Crown One may accept the Firm
Sale Offer, on behalf of itself and/or Crown Two, by giving written notice of
such acceptance to the Company and each of the other Preferred

 

56

 

Members.  If
Crown One does not duly accept the Firm Sale Offer during the Sale Offer
Period, the Firm Sale Offer shall be deemed rejected.

 

(e)           Closing of Purchase Pursuant to Firm Sale Offer. 
In the event that the Firm Sale Offer is accepted pursuant to Section 11.12(d) above,
the closing of the purchase and sale of the Sale Transaction shall take place
within 60 days after the Firm Sale Offer is accepted, subject to Section 12.5
below.  The Members shall execute a
purchase agreement in form and substance as contemplated by the Option
Agreement, with such reasonable changes therein to reflect the structure of the
Sale Transaction, and such other documents and instruments as may be reasonably
necessary or appropriate to effect the Sale Transaction pursuant to the terms
of the Firm Sale Offer.

 

(f)            Rejection of Firm Sale Offer. 
In the event that the Firm Sale Offer is not duly accepted pursuant to Section 11.12(d) above,
the Company or the Series A1 Preferred Members, as the case may be, may
accept the Sale Offer at any time within 60 days after the last day of the Sale
Offer Period by written notice to the Proposed Match Purchaser, the Preferred
Members and the Company.  The closing of
the Sale Transaction relating to the Sale Offer shall take place within 60 days
after the acceptance of the Sale Offer, subject to Section 12.5
below.  The Company and each Member
shall, and each Member shall cause each of its Affiliates to, execute such
documents and instruments and take such actions (including, without limitation,
actions pursuant to Sections 6.11(a) and 6.11(c), if applicable) as may be
reasonably necessary or appropriate to effect the Sale Transaction relating to
the Sale Offer.

 

ARTICLE XII

ADVERSE ACT

 

12.1        Remedies.

 

(a)           If an Adverse Act has occurred or is continuing with
respect to any Member, then any Series A1 Preferred Member that is not an
Adverse Member or an Affiliate of an Adverse Member may elect:

 

(i)            To trigger the procedures specified in Section 12.2 below
for the purchase and sale of the Adverse Member’s Units; or

 

(ii)           To seek to enjoin such Adverse Act or to obtain
specific performance of the Adverse Member’s obligations or Damages (as defined
and subject to the limitations specified below) in respect of such Adverse Act.

 

The foregoing remedies shall not be deemed to be
mutually exclusive, and, subject to the requirements of this Section 12.1(a) regarding
the timing of the election of such remedies, selection or resort to any one
remedy shall not preclude selection or resort to the others.

 

The election of a remedy specified in clause (i) or
(ii) above may be exercised by notice given to the Adverse Member within
90 days after the Series A1 Preferred Member 

 

57

 

making such election
obtains actual knowledge of the occurrence of such Adverse Act, including, if
applicable, that any cure period has expired; provided, that, if
an election pursuant to clause (ii) above is made to seek an injunction,
specific performance or other equitable relief and a final judgment in such
action is rendered denying such equitable remedy and no election was made
pursuant to clause (i) above, then, by notice given within 30 days after
such final judgment is rendered, the non-Adverse Member may elect to pursue the
remedies specified in clause (i) above unless (x) prior to the giving
of such notice, the Adverse Member has cured in full (or caused to be cured in
full) the Adverse Act in question and no other Adverse Act with respect to such
Adverse Member has occurred and is continuing, or (y) the final judgment
denying equitable relief specifically held that there was no Adverse Act.

 

Except as provided in Section 12.1(b) below,
the failure to elect a remedy with respect to the subject Adverse Act within
the time periods provided in the preceding paragraph shall be conclusively
presumed to be a waiver of the remedies provided in this ARTICLE XII
with respect to the subject Adverse Act.

 

Unless resort to such remedy has been waived as set
forth in the immediately preceding paragraph, the Company shall be entitled to
recover from the Adverse Member in an appropriate proceeding any and all
damages, losses and expenses (including reasonable attorneys’ fees and
disbursements) (collectively, “Damages”) suffered or incurred by the
Company as a result of such Adverse Act; provided, that, the
Company shall not have or assert any claim against the Adverse Member for
punitive Damages or for indirect, special or consequential Damages suffered or
incurred by the Company as a result of an Adverse Act; provided, further,  that the amount the Company may recover in
any action for Damages shall be reduced by an amount equal to any positive
difference between the Net Equity Value of the Adverse Member’s Units and the
applicable Buy-Sell Price.

 

The resort to any remedy pursuant to this Section 12.1(a) shall
not for any purpose be deemed to be a waiver of any remedy not described in
this Section 12.1(a) and otherwise available hereunder
or under applicable law.

 

(b)           If the Company is dissolved pursuant to Section 13.1 below
at any time as a result of a Dissolution Event that occurs prior to a remedy
having been elected pursuant to Section 12.1(a) above
with respect to any Adverse Member, the time periods for such election shall
thereupon expire and the Management Committee shall deduct from any amounts to
be paid to such Adverse Member pursuant to Section 13.2 below that
amount which it reasonably estimates to be sufficient to compensate each Member
that is not an Adverse Member for Damages incurred by such Member as a result
of the Adverse Act (subject to the limitations of Section 12.1(a) above)
and shall pay the same to the such Member on behalf of the Adverse Member.

 

12.2        Adverse Act Purchase.

 

(a)           Determination of Net Equity Value of Adverse Member’s
Units.  Any Series A1 Preferred Member that is
not an Adverse Member or an Affiliate of an Adverse Member may make an election
pursuant to Section 12.1(a)(i) above to commence
the procedures set forth in this Section 12.2 by written
notice (the “Election Notice”) to the Company and each 

 

58

 

Member (including the Adverse Member).  Following the giving of such Election Notice,
the Net Equity Value of the Adverse Member’s Units shall be determined as of
the last day of the Fiscal Quarter immediately preceding the Fiscal Quarter in
which the Election Notice is given, and the Adverse Member shall be obligated
to sell all but not less than all of the Adverse Member’s Units in accordance
with this Section 12.2 and subject to Section 11.10 above.  The purchase price for such Units (the “Buy-Sell
Price”) shall be equal to (i) in the case of any Adverse Act specified
in clause (ii) or (iv) of the definition of “Adverse Act,” the Net
Equity Value thereof, and (ii) in the case of any Adverse Act specified in
clause (i), (iii), (v), (vi), (vii) or (viii) of the definition of “Adverse
Act,” 80% of the Net Equity Value thereof. 
The Election Notice shall designate the First Appraiser and the Adverse
Member shall appoint the Second Appraiser within ten Business Days of receiving
the Election Notice.

 

(b)           Election to Purchase Units of Adverse Member. 
The Management Committee (not including any Manager designated by an
Adverse Member or who is an Affiliate of an Adverse Member) shall, until the 30th day following
the day on which notice of the Adverse Member’s Net Equity Value is given
pursuant to Section 12.3 below (the “First
Election Period”), have the right, by written notice to the Members, to
cause the Company to purchase, or designate a third party to purchase, all or
any portion of the Units of the Adverse Member, which written notice shall
state the number of Preferred Units and Common Units that the Company or such
designated third party is purchasing.  If
the Company or such designated third party is purchasing less than all of the
Units of the Adverse Member (such remaining units, the “Unpurchased Units”),
then each Series A1 Preferred Member that is not an Adverse Member or an
Affiliate of an Adverse Member shall, until the 30th day following the earlier
of the receipt of the Company’s notice during the First Election Period or the
expiration of the First Election Period (the “Second Election Period”),
have the right, by written notice to the Members, to purchase, or designate a
third party to purchase, all or any portion of the Unpurchased Units, which
notice shall state the number of remaining Preferred Units and Common Units
that such Series A1 Preferred Member that is not an Adverse Member or an
Affiliate of an Adverse Member (in each case, a “Purchasing Member”) is
willing to purchase (each, a “Purchase Commitment”).  If the aggregate Purchase Commitments made by
Purchasing Members are equal to at least 100% of the Unpurchased Units, then
the Purchasing Members shall be obligated to purchase, and the Adverse Member
shall be obligated to sell to such Purchasing Members, 100% of the Unpurchased
Units (with each Purchasing Member’s Purchase Commitment with respect to
Preferred Units and/or Common Units reduced, if necessary, by the Management
Committee (not including any Manager designated by an Adverse Member or who is
an Affiliate of an Adverse Member) pro rata based
on their respective Preferred Percentage Interest).  If following the
completion of the procedure set forth in this Section 12.2(b), all of
the Units of the Adverse Member are not designated for sale to the Company
and/or the Purchasing Members, the Adverse Member shall be under no obligation
to sell any Units pursuant to this ARTICLE XII.

 

(c)           Terms of Purchase; Closing.

 

(i)            The closing of the purchase and sale of the Adverse
Member’s Units shall occur at the principal office of the Company at 10:00 a.m.,
local time, on the first Business Day occurring on or after the 30th day following
the last day of the First Election Period or the Second Election Period,
whichever is the last applicable period, subject to 

 

59

 

Section 12.5 below.  At the closing, the purchaser or purchasers
of the Adverse Member’s Units shall pay to the Adverse Member, by cash or other
immediately available U.S. funds, the Buy-Sell Price per Preferred Unit for
each Preferred Unit and the Buy-Sell Price per Common Unit for each Common
Unit, and the Adverse Member shall deliver to such purchaser or purchasers good
title, free and clear of any liens or Encumbrances (other than those created by
this Agreement), to such Units thus purchased.

 

(ii)           At the closing, the Company and the Members shall
execute such documents and instruments of conveyance as may be reasonably
necessary or appropriate to effectuate the transactions contemplated hereby,
including the Transfer of Units to the Purchasing Members and the assumption by
each Purchasing Member of the Adverse Member’s obligations with respect to such
Units.  The Company and each Member shall
bear its own costs of such Transfer and closing, including attorneys’ fees and
filing fees.  The cost of determining Net
Equity Value shall be borne one-half by the Adverse Member and one-half by the
Company.

 

(iii)          If requested by a Series A1 Preferred Member, the
Adverse Member (except in respect of the gaming operations described in
Appendix D) (and (A) if the Adverse Act is with respect to Millennium
Gaming and is an Adverse Act specified in clause (i), (iii), (iv), (v), (vi) or
(vii), then each of Paulos and/or Wortman (except in respect of the gaming
operations described in Appendix D) and (B) if the Adverse Act is with
respect to AcquisitionCo and is an Adverse Act specified in clause (i), (iii),
(iv), (v), (vi) or (vii), then each of manager of AcquisitionCo and/or
each Upper Tier Holder of AcquisitionCo (except in respect of the gaming
operations described in Appendix D) holding a Nevada gaming license), shall, at
or prior to the closing, execute a non-competition agreement in favor of, and
reasonably acceptable to, such Member and its Affiliates for a term not to
exceed four years following such closing and with a geographic scope not to
exceed a five-mile radius from any Company gaming property then in operation or
Company gaming property or gaming opportunity in active development.

 

12.3        Net Equity Value.

 

(a)           The “Net Equity Value” of a Member’s Units, as
of any date, shall be the amount that would be distributed to such Member with
respect to the applicable Units in liquidation of the Company pursuant to Section 13.2 below
if (i) the Company’s Business were sold substantially as an entirety for
Gross Appraised Value, (ii) the Company paid, or established reserves
pursuant to Section 13.2 below for the payment of,
all Company liabilities, and (iii) the Company distributed the remaining
proceeds to the Members in liquidation, all as of such date, limited in the
case of a Series B Preferred Member, to the product of (x) the number
of Series B Preferred Units held by such Series B Preferred Member
and (y) the Redemption Price Per Series B Preferred Unit.

 

(b)           The Net Equity Value of a Member’s Units shall be
determined, without audit or certification, from the books and records of the
Company by the Company’s accountants. 
The Net Equity Value of a Member’s Units shall be determined within 30
days of the day upon which the accountants are apprised in writing of the Gross
Appraised Value of the Property of the Company, and the amount of such Net Equity
Value shall be disclosed to the 

 

60

 

Company and each of the Members by written
notice.  The Net Equity Value
determination of the accountants shall be final and binding in the absence of a
showing of manifest error.

 

12.4        Gross Appraised Value.

 

(a)           “Gross Appraised Value,” as of any date, shall
be equal to the fair market value of Property of the Company as of such
day.  As used herein, as of any date, “fair
market value” of the Property means the price at which a willing seller would
sell, and a willing buyer would buy, the Property, free and clear of all liens,
security interests or other encumbrances, in an arm’s length transaction for
cash, without time constraints and without being under any compulsion to buy or
sell; provided, that, any such determination shall incorporate
into its analysis the effect, if any, on the value of such Property of the
departure of a Member or any of its equityholders, if the fair market value
determination relates to a purchase and sale that would result in such
departure.

 

(b)           Each provision of this Agreement that requires a
determination of Gross Appraised Value also provides the manner and time for
the appointment of two appraisers (the “First Appraiser” and the “Second
Appraiser”).  If the Second Appraiser
is not timely designated, the determination of the Gross Appraised Value shall
be made by the First Appraiser.  The
First Appraiser, or each of the First Appraiser and the Second Appraiser if the
Second Appraiser is timely designated, shall submit its determination of the
Gross Appraised Value to the Company, the Members and the accountants of the
Company within 30 days of the date of its selection (or the selection of the
Second Appraiser, as applicable).  If
there is a First Appraiser and a Second Appraiser and their respective
determinations of the Gross Appraised Value vary by less than 10% of the higher
determination, the Gross Appraised Value shall be the average of the two
determinations.  If such determinations
vary by 10% or more of the higher determination, the two Appraisers shall
promptly designate a third appraiser (the “Third Appraiser”).  Neither the Company nor any Member shall
provide, and the First Appraiser and Second Appraiser shall be instructed not
to provide, any information to the Third Appraiser as to the determinations of
the First Appraiser or the Second Appraiser or otherwise influence such Third
Appraiser’s determination in any way. 
The Third Appraiser shall submit its determination of the Gross
Appraised Value to the Company, the Members and the accountants of the Company
within 30 days of the date of its selection. 
The Gross Appraised Value shall be equal to the average of the two
closest of the three determinations; provided,
that, if the difference between the highest and middle determinations is
no more than 105% and no less than 95% of the difference between the middle and
lowest determinations, then the Gross Appraised Value shall be equal to the
middle determination.  The determination
of the Gross Appraised Value in accordance with the foregoing procedure shall
be final and binding on the Company and each Member.  If any appraiser is only able to provide a
range in which Gross Appraised Value would exist, the average of the highest
and lowest value in such range shall be deemed to be such appraiser’s
determination of Gross Appraised Value. 
Each appraiser selected pursuant to the provisions of this Section 12.4
shall be a qualified Person with prior experience in appraising businesses
comparable to the Business of the Company and that is not an interested person
with respect to, or Affiliate of, any Member.

 

12.5        Extension of Time.  If any
Transfer of a Member’s Units in accordance with ARTICLE XI above
or this ARTICLE
XII requires the consent, approval, waiver or 

 

61

 

authorization of any
governmental authority or any third party as a condition to the lawful and
valid Transfer of such Member’s Units to the proposed transferee thereof, then
each of the time periods provided in ARTICLE XI above or this ARTICLE XII,
as applicable, for the closing of such Transfer shall be suspended for the
period of time during which any such consent, approval, waiver or authorization
is being diligently pursued; provided, that, in no event shall
the suspension of any time period pursuant to this Section 12.5
extend for more than 180 days without the prior written consent of all of the Series A1
Preferred Members.  The Company and each
Member shall use its diligent efforts to obtain, or to assist in obtaining, any
such consent, approval, waiver or authorization, and shall cooperate and use
its diligent efforts to respond as promptly as practicable to all inquiries
received by either the Company or a Member from any governmental authority for
initial or additional information or documentation in connection therewith.

 

ARTICLE XIII

DISSOLUTION AND WINDING UP

 

13.1        Dissolution Events.

 

(a)           The Company shall dissolve and shall commence winding
up and liquidating upon the first to occur of any of the following (each a “Dissolution
Event”):

 

(i)            the unanimous vote of the AcquisitionCo Managers and
the Millennium Managers following the Conversion Date to dissolve, wind up, and
liquidate the Company; and

 

(ii)           a judicial determination that an event has occurred
that makes it unlawful, impossible or impractical for the Company to carry on
the Business.

 

(b)           The Members hereby agree that, notwithstanding any
provision of the Act, the Company shall not dissolve prior to the occurrence of
a Dissolution Event.

 

13.2        Winding Up.  Upon the
occurrence of (i) a Dissolution Event or (ii) the determination by a
court of competent jurisdiction that the Company has dissolved prior to the
occurrence of a Dissolution Event, the Company shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Members, and no Member
shall take any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Business and affairs of the Company; provided,
that, all covenants contained in this Agreement and obligations provided
for in this Agreement shall continue to be fully binding upon the Members until
such time as the Property of the Company has been distributed pursuant to this Section 13.2
and the Articles of Organization have been canceled pursuant to the Act.  The Liquidator shall be responsible for
overseeing the winding up and dissolution of the Company, which winding up and
dissolution shall be completed within 90 days of the occurrence of a
Dissolution Event.  The Liquidator shall
take full account of the Company’s liabilities and Property and shall cause
such Property or the proceeds from the sale thereof (as determined pursuant to Section 13.10 below),
to the extent 

 

62

 

sufficient therefor, to
be applied and distributed, to the maximum extent permitted by law, in the
following order:

 

(a)           First, to creditors (including Members and Managers
who are creditors, to the extent otherwise permitted by law and this Agreement)
in satisfaction of all of the Debt of the Company and other liabilities
(whether by payment or the making of reasonable provision for payment thereof),
other than liabilities for which reasonable provision for payment has been made
and liabilities for interim distributions to the Members or distributions to
resigning Members;

 

(b)           Second, except as provided in this Agreement, to the
Members and former Members in satisfaction of liabilities for interim
distributions to the Members or distributions to resigning Members;

 

(c)           Third, to the Series C Preferred Members pro rata based on the number of Series C Preferred
Units held by each until each Series C Preferred Member has received for
each Series C Preferred Unit held by it distributions pursuant to this Section 13.2(c) equal
to the Series C Face Amount;

 

(d)           Fourth, to the Licensed Series C Members pro rata based on the number of Series C Preferred Units
held by each until each Licensed Series C Member has received for each Series C
Preferred Unit held by it distributions pursuant to this Section 13.2(d) equal
to the Series C Priority Return thereon;

 

(e)           Fifth, in the case of any winding up prior to the
Conversion Date, to the Series B Preferred Members pro rata
in accordance with their Percentage Interests until each Series B
Preferred Member has received distributions pursuant to this Section 13.2(d) equal
to its share of the Redemption Price (Series B); and

 

(f)            The balance, if any (i) in the case of any
winding up prior to the Conversion Date, to the Members (other than any Series B
Preferred Member or any Series C Preferred Member) pro rata
in proportion to their Percentage Interests and (ii) in the case of any
other winding up, to the Members (other than any Series C Preferred
Member) pro rata in proportion to their
Percentage Interests, limited in the case of a Series B Preferred Member,
to the product of (x) the number of Series B Preferred Units held by
such Series B Preferred Member and (y) the Redemption Price Per Series B
Preferred Unit.

 

Subject to Section 13.10 below, no
Member or Manager shall be entitled to receive additional compensation for any
services performed pursuant to this ARTICLE XIII.

 

13.3        Deficit Capital Accounts. 
If any Member has a deficit balance in his Capital Account (after giving
effect to all contributions, distributions and allocations for all Allocation
Years, including the Allocation Year during which such liquidation occurs),
such Member shall have no obligation to make any contribution to the capital of
the Company with respect to such deficit, and such deficit shall not be
considered a debt owed to the Company or to any other Person for any purpose
whatsoever.

 

63

 

13.4        Holdback.  In the
discretion of the Liquidator, a pro rata
portion of the distributions that would otherwise be made to the Members
pursuant to this ARTICLE
XIII may be:

 

(a)           Distributed to a trust established for the benefit of
the Members for the purposes of liquidating Company assets, collecting amounts
owed to the Company, and paying any contingent or unforeseen liabilities or
obligations of the Company.  The assets
of any such trust shall be distributed to the Members from time to time, in the
reasonable discretion of the Liquidator, in the same proportions as the amount
distributed to such trust by the Company would otherwise have been distributed
to the Members pursuant to Section 13.2 above; or

 

(b)           Withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Company, provided that such withheld
amounts shall be distributed to the Members as soon as practicable.

 

13.5        Deemed Contribution and Distribution. 
In the event the Company is “liquidated” within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has
occurred, the Property shall not be liquidated, the Company’s Debt and other
liabilities shall not be paid or discharged, and the Company’s affairs shall
not be wound up.  Instead, solely for
federal income tax purposes, the Company shall be deemed to have contributed
all Property and liabilities to a new limited liability company and,
immediately thereafter, the Company will be deemed to liquidate by distributing
interests in the new limited liability company to the Members.

 

13.6        Rights of Members.  Except as
otherwise provided in this Agreement, each Member shall look solely to the
Property of the Company for the return of its Capital Contribution and has no
right or power to demand or receive Property other than cash from the
Company.  If the assets of the Company
remaining after payment or discharge of the debts or liabilities of the Company
are insufficient to return such Capital Contribution, the Members shall have no
recourse against the Company or any other Member or Manager.

 

13.7        Notice of Dissolution/Termination.

 

(a)           In the event a Dissolution Event occurs or an event
occurs that would, but for the provisions of Section 13.1 above,
result in a dissolution of the Company, the Management Committee shall, within
30 days thereafter, provide written notice thereof to each of the Members and
to all other parties with whom the Company regularly conducts Business (as
determined in the discretion of the Management Committee).

 

(b)           Upon completion of the distribution of the Property of
the Company as provided in this ARTICLE XIII, the Company shall
be terminated, and the Liquidator shall cause the filing of the Articles of
Dissolution and shall take all such other actions as may be necessary to
terminate the Company.

 

13.8        Allocations During Period of Liquidation. 
During the Liquidation Period, the Members shall continue to share
Profits, Losses, and other items of Company income, gain, loss or deduction in
the manner provided in ARTICLE III above.

 

64

 

13.9        Character of Liquidating Distributions. 
All payments made in liquidation of the interest of a Member in the
Company shall be made in exchange for the interest of such Member in Property
pursuant to Code Section 736(b)(1), including the interest of such Member
in Company goodwill.

 

13.10      The Liquidator.

 

(a)           Fees.  The Company
is authorized to pay a reasonable fee to the Liquidator for its services
performed pursuant to this ARTICLE XIII, and to reimburse
the Liquidator for its reasonable costs and expenses incurred in performing
those services.

 

(b)           Indemnification.  The Company
shall indemnify, hold harmless, and pay all judgments and claims against such
Liquidator or any directors, managers, general partners, officers, employees or
agents of the Liquidator relating to any liability or damage incurred by reason
of any act performed or omitted to be performed by the Liquidator, or any
directors, managers, general partners, officers, employees or agents of the
Liquidator, in connection with the liquidation of the Company, including
reasonable attorneys’ fees incurred by the Liquidator or any such director,
manager, general partner, officer, employee or agent in connection with the
defense of any action based on any such act or omission, which attorneys’ fees
may be paid as incurred, except to the extent such liability or damage is
caused by the fraud, gross negligence, or intentional misconduct of, or a
knowing violation of the laws by, the Liquidator which was material to the
cause of action.

 

13.11      Form of Liquidating Distributions. 
For purposes of making distributions required by Section 13.2 above,
the Liquidator may determine whether to distribute all or any portion of the
Property of the Company in-kind or to sell all or any portion of the Property
of the Company and distribute the proceeds therefrom.

 

13.12      Reserves.  In the
discretion of the Liquidator, a pro rata
portion of the distributions that would otherwise be made to the Members
pursuant to this ARTICLE
XIII may be withheld to provide a reasonable reserve for
Company liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company; provided, that,
such withheld amounts shall be distributed to the Members as soon as
practicable.

 

ARTICLE XIV

MISCELLANEOUS

 

14.1        Further Assurances.  Each Member
shall use such Member’s best efforts in good faith (a) to take, or cause
to be taken, all actions, (b) to do, or cause to be done, all things, and (c) to
execute and deliver all additional certificates, documents, instruments or
agreements, in each case reasonably necessary, proper or advisable to give full
force and effect to all of the terms and provisions of this Agreement.

 

14.2        Notices.  All notices,
requests and other communications hereunder must be in writing and shall be
deemed to have been duly given only if delivered personally or by 

 

65

 

facsimile transmission or
internationally recognized courier, to the parties at the following addresses
or facsimile numbers:

 

(a)           If to the Company, to:

 

	
   

  	
  Cannery Casino Resorts,
  LLC

  
	
   

  	
  221 North Rampart
  Boulevard

  
	
   

  	
  Las Vegas, NV 89145

  
	
   

  	
  Attn:

  	
  William J. Paulos

  
	
   

  	
   

  	
  William C. Wortman

  
	
   

  	
  Fax:

  	
  (702) 507-5992

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Oaktree Capital
  Management, LLC

  
	
   

  	
  333 South Grand Avenue,
  28th Floor

  
	
   

  	
  Los Angeles, CA 90071

  
	
   

  	
  Attn:   Stephen A. Kaplan, Principal

  
	
   

  	
  Fax:   (213) 830-6293

  

 

(b)           If to a Manager, to the address or facsimile number
set forth on Appendix C; and

 

(c)           If to a Member, to the address or facsimile number set
forth on Appendix A.

 

All such notices, requests and other
communications shall (i) if delivered by facsimile transmission, be deemed
given upon electronic confirmation of receipt, and (ii) if delivered
personally or by internationally recognized courier, be deemed given upon
actual receipt by the person to receive delivery.  Any party hereto may from time to time change
such party’s address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.

 

14.3        Confidentiality.  The Preferred
Members shall mutually agree on the form and content of any public
announcement, whether by press release or otherwise, with respect to this
Agreement or any of the discussions, negotiations or transactions relating
hereto.  Each Member shall not, and shall
cause its Affiliates and any of such Member’s or such Affiliates’ directors,
managers, general partners, officers, employees, agents and representatives not
to, make any public announcement, whether by press release or otherwise, or
otherwise disclose the terms of this Agreement or any of the discussions,
negotiations or transactions relating hereto, except (a) with the prior
written consent of all Preferred Members, (b) such disclosures as are
consistent with press releases or other formal public disclosure made by the
Company, or (c) as such disclosure may be made in the course of normal
reporting practices by a Member to its equityholders, directors, managers,
general partners, officers, outside accountants and outside counsel.  In addition, notwithstanding the previous
sentence, a Member may disclose the terms of this Agreement or any of the
discussions, negotiations or transactions relating hereto if and to the extent
required by order of any governmental authority or otherwise required by law;

 

66

 

provided, that, in each case, such party shall first
notify the other Members of such requirement, permit the other Members to
contest such requirement, and cooperate with the other Members in limiting the
scope of the proposed disclosure and/or obtaining appropriate further means for
protecting the confidentiality of such disclosure.  Each Member shall not, and shall cause its
Affiliates and any of such Member’s or such Affiliates’ directors, managers,
general partners, officers, employees, agents and representatives not to, use
or disclose any confidential or proprietary information of any Member or the
Company, except in each case in connection with the transactions contemplated
hereby or as otherwise required by law. 
Information that is available, or becomes available, to the public
through no fault or action by such Member or its Affiliates or any of such
Member’s or such Affiliates’ directors, managers, general partners, officers,
employees, agents or representatives shall, in each case, not be deemed “confidential
information.”

 

14.4        Governing Law.  The Members
expressly agree that all the terms and conditions hereof shall be construed
under the laws of the State of Nevada applicable to agreements made and to
be performed entirely therein.

 

14.5        Jurisdiction; Waiver of Jury Trial. 
Each Member hereby consents to the exclusive jurisdiction of the state
and federal courts sitting in Reno, Nevada in any action on a claim arising out
of, under or in connection with this Agreement or the transactions contemplated
by this Agreement.  Each of the Members
irrevocably waives to the extent permitted by law, all rights to trial by jury
and all rights to immunity by sovereignty or otherwise in any action,
proceeding or counterclaim arising out of or relating to this Agreement.

 

14.6        Specific Performance.  Each Member
agrees with the other Members that the other Members would be irreparably
damaged if any of the provisions of this Agreement are not performed in
accordance with their specific terms and that monetary damages would not
provide an adequate remedy in such event. 
Accordingly, it is agreed that, in addition to any other remedy to which
the non-breaching Members may be entitled, at law or in equity, the
non-breaching Members shall be entitled to injunctive relief to prevent
breaches of the provisions of this Agreement and specifically to enforce the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having subject matter jurisdiction thereof.

 

14.7        Entire Agreement.  This
Agreement sets forth the entire agreement of the parties hereto and thereto
relating to the subject matter hereof and thereof and supersedes all prior
agreements and understandings of the parties hereto in connection therewith.

 

14.8        Amendment.  This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each Series A1 Preferred Member of the
Company, provided, however, that this Agreement
may not be amended in a manner that would (a) increase or decrease the
number of authorized Series B Preferred Units or adversely effect the
rights of the Series B Preferred Members without the consent of the Series B
Preferred Members, (b) increase or decrease the number of authorized Series A2
Preferred Units or adversely effect the rights of the Series A2 Preferred
Members without the consent of the Series A2 Preferred Members (or if the Series B
Preferred Units have not been converted into Series A2 Preferred Units in
accordance with the terms of this Agreement as of the date of such 

 

67

 

amendment, the consent of the Series B Preferred
Members), (c) increase or decrease the number of authorized Series C
Preferred Units without the prior written consent of (i) Series C
Preferred Member(s) holding a majority of the issued Series C
Preferred Units and (ii) in the event that a Conversion by the Series B
Preferred Members has occurred, the Series A2 Preferred Members, in each
case, such consent not to be unreasonably withheld, or (d) adversely
effect the rights of the Series C Preferred Members without the consent of
all of the Series C Preferred Members.

 

14.9        Waiver.  Any term or
condition of this Agreement may be waived at any time by the Member that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the Member
waiving such term or condition.  No
waiver by any Member of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion.  No delay or omission in the exercise of any
power, remedy or right herein provided or otherwise available to any Member
will impair or affect the right of such Member thereafter to exercise the
same.  Any extension of time or other
indulgence granted to any Member will not otherwise alter or affect any power,
remedy or right with respect to any other Member, or the obligations of the
Member to whom such extension or indulgence is granted. All remedies, either
under this Agreement or by law or otherwise afforded, shall be cumulative and
not alternative.

 

14.10      Invalid Provisions.  If any provision
of this Agreement is held to be illegal, invalid or unenforceable under any
present or future law, and if the rights or obligations of any Member under
this Agreement shall not be materially and adversely affected thereby, (a) such
provision shall be fully severable, (b) this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom.

 

14.11      No Assignment; Binding Effect. 
Except pursuant to a Transfer permitted under Sections 11.1
and 11.2
above, neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any Member without the prior written
consent of the other Members and any attempt to do so shall be void.  Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
Members and their respective successors permitted transferees and assigns.

 

14.12      Third Party Beneficiaries. 
This Agreement shall be binding upon and inure solely to the benefit of
the Members, their respective successors and permitted assigns, and nothing
herein, express or implied, is intended to or shall confer upon any other
Persons any legal or equitable right, benefit, or remedy of any nature
whatsoever, except as expressly set forth herein.

 

14.13      Construction.  Every term
and provision of this Agreement shall be construed simply according to its fair
meaning and not strictly for or against any Member.

 

14.14      Incorporation by Reference. 
Every Appendix and Exhibit attached hereto and referred to herein
is incorporated in this Agreement by reference, unless this Agreement expressly
otherwise provides.

 

68

 

14.15      Headings.  The headings
used in this Agreement have been inserted for convenience of reference only,
and are not intended to describe, interpret, define or limit the scope, extent
or intent of this Agreement or any provision hereof.

 

14.16      Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

[Remainder of Page Intentionally Left Blank]

 

69

 

IN WITNESS WHEREOF, the Members have executed and entered
into this Agreement as of the day first above set forth.

 

 

	
   

  	
  MILLENNIUM GAMING, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. Wortman

  
	
   

  	
   

  	
  Name:

  	
  William C. Wortman

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OCM ACQUISITIONCO, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen A. Kaplan

  
	
   

  	
   

  	
  Name:

  	
  Stephen A. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald N. Beck

  
	
   

  	
   

  	
  Name:

  	
  Ronald N. Beck

  
	
   

  	
   

  	
  Title:

  	
  Manager

  

 

[Operating
Agreement Signature Page]

 

S-1

 

	
   

  	
  CROWN CCR GROUP
  INVESTMENTS ONE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Nisbet

  
	
   

  	
   

  	
  Name:

  	
  Todd Nisbet

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CROWN CCR GROUP
  INVESTMENTS TWO, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Nisbet

  
	
   

  	
   

  	
  Name:

  	
  Todd Nisbet

  
	
   

  	
   

  	
  Title:

  	
  Manager

  

 

[Operating
Agreement Signature Page]

 

S-2

 

APPENDIX B

Attached to and
Made a Part of

the Third Amended
and Restated Operating Agreement of

Cannery Casino
Resorts, LLC

(a Nevada Limited
Liability Company)

 

Definitions

 

“Accepting Members” has the meaning ascribed to
it in Section 11.3(d) above.

 

“AcquisitionCo” means OCM AcquisitionCo, LLC, a
Nevada limited liability company.

 

“AcquisitionCo Manager Matters” means those
matters requiring the approval of the “Oaktree Managers” (as such term is
defined in the Management Agreement) as set forth in the Management Agreement.

 

“AcquisitionCo Managers” has the meaning
ascribed to it in Section 5.1(b) above.

 

“AcquisitionCo Parent” means any Person that
holds all of the outstanding equity of AcquisitionCo and no other material
assets or liabilities.

 

“Act” means Chapter 86 of the NRS (the Nevada
Limited Liability Company Act), as amended from time to time (or any
corresponding provisions of succeeding law).

 

“Additional Capital Contributions” means, with
respect to each Member, the Capital Contributions made by such Member pursuant
to Section 2.5
above.  In the event
Units are Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Additional Capital Contributions of the
transferor to the extent they relate to the Units Transferred.

 

“Additional Units” has the meaning ascribed to
it in Section 6.10.

 

“Adjusted Capital Account Deficit” means, with
respect to any Member, the deficit balance, if any, in such Member’s Capital
Account as of the end of the relevant Allocation Year, after giving effect to
the following adjustments:

 

(i)            Credit to such Capital Account any amounts that such
Member is deemed to be obligated to restore pursuant to the penultimate
sentences in Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(ii)           Debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6).

 

B-1

 

The foregoing definition
of Adjusted Capital Account Deficit is intended to comply with the provisions
of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

 

“Adverse Act” means, with respect to a Member,
any of the following:

 

(i)            a Member Unit Transfer with respect to such Member,
other than as approved by the Management Committee pursuant to Section 5.6(g) above
or permitted by Section 11.2 above;

 

(ii)           in the case of Millennium Gaming only, the death or
incapacity of both Paulos and Wortman;

 

(iii)          the uncured material breach of this Agreement by such
Member or any of its Affiliates; provided, that, such Member has
been provided with prior written notice of such breach by the Company or
another Member and (A) if such breach can reasonably be cured within 30
days of the receipt of such written notice, has failed to cure such breach
within such 30-day period or (B) if such breach cannot reasonably be cured
within such 30-day period (but is otherwise curable), has failed to commence
the curing of such breach within such 30-day period (and thereafter use
commercially reasonable efforts to cure such breach as promptly as practicable)
or, in any event, has failed to cure such breach within a reasonable period of
time of the receipt of such written notice;

 

(iv)          the uncured material breach of the Management
Agreement (or any successor management agreement) by (A) if such Member is
Millennium Gaming: Paulos, Wortman or any Affiliate of Paulos and/or Wortman
(including MMG II and any permitted assignee of MMG II) and (B) if such
Member is AcquisitionCo: the Company (but only if such uncured material breach
was caused solely by an action or omission of the AcquisitionCo Managers); provided,
that, in either case, such breach results in the termination of the
Management Agreement (or any successor management agreement);

 

(v)           any event giving rise to an Adverse Act under 11.2(c) above
occurs with respect to such Member;

 

(vi)          the revocation, suspension or voluntary relinquishment
of a Gaming Approval issued to such Member or any Upper Tier Holder of such
Member by any applicable Gaming Authority under the applicable Gaming Laws and
required in order for such Member to hold an equity interest in the Company; provided,
that, with respect to a revocation or suspension, such revocation or
suspension is not resolved by such Member within such period, if any, afforded
such Member by the applicable Gaming Authority or under the applicable Gaming
Laws;

 

(vii)         any dissolution or liquidation of such Member or the
taking of any action by its directors, managers, general partners or
equityholders looking to the dissolution or liquidation of such Member (unless
taken in furtherance of a pending dissolution of the 

 

B-2

 

Company), unless substantially
all assets of such Member are transferred or are to be transferred to a Wholly
Owned Affiliate of such Member; or

 

(viii)        the Bankruptcy of such Member or the occurrence of any
other event that would permit a trustee or receiver to acquire control of the
affairs or assets of such Member.

 

“Adverse Member” means any Member with respect
to whom an Adverse Act has occurred.

 

“Affiliate” means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any director, manager, general partner, officer or
trustee of such Person, or (iii) any Person who is an director, manager,
general partner, officer or trustee of any Person described in clauses (i) or
(ii) of this sentence.  For purposes
of this definition, the terms “controlling,” “controlled by” or “under common
control with” mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person or entity,
whether through the ownership of voting securities, by contract or otherwise,
or the power to elect at least 50% of the directors, managers, general partners
or persons exercising similar authority with respect to such Person or entity.  Notwithstanding the foregoing, Paulos,
Wortman and Millennium Gaming shall be deemed to be “Affiliates” of one
another, and the Company shall not be deemed to be an “Affiliate” of any
Member.

 

“Agreement” or “Operating Agreement”
means this Third Amended and Restated Operating Agreement of Cannery Casino
Resorts, LLC, including all appendices, exhibits, annexes and schedules
attached hereto, as amended from time to time.

 

“Allocated Series C Redemption Amount” has
the meaning ascribed to it in Section 2.3(b)(i) above.

 

“Allocation Year” means (i) the period
commencing on the Effective Date and ending on December 31 of that same
calendar year, (ii) any subsequent 12-month period commencing on January 1
and ending on December 31, or (iii) any portion of the period
described in clauses (i) or (ii) for which the Company is required to
allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to ARTICLE III above.

 

“Articles of Dissolution” means articles filed
in accordance with Sections 86.531 and 86.541 of the Act.

 

“Articles of Organization” means the Articles
of Organization of the Company filed with the Secretary of State of the State
of Nevada pursuant to the Act to form the Company, as amended, modified,
supplemented or restated from time to time.

 

“Auction” has the meaning ascribed to it in Section 11.4(b) above.

 

“Auctioned Equity” has the meaning ascribed to
it in Section 11.4(b) above.

 

B-3

 

“Bankruptcy” means, with respect to any Person,
the occurrence of one or more of the following events:

 

(i)            such Person files a voluntary petition seeking relief
under Chapter 7 of the Bankruptcy Code (or analogous applicable bankruptcy law
in any non-U.S. jurisdiction, excluding bankruptcy laws relating to reorganizations
or restructurings similar to Chapter 11 of the Bankruptcy Code) (collectively, “Chapter
7”) or, after filing a voluntary petition seeking relief under Chapter 11 of
the Bankruptcy Code (or any similar bankruptcy laws relating to reorganizations
or restructurings in any non-U.S. jurisdiction) (collectively, “Chapter 11”),
consents to the conversion of that case to one under Chapter 7; or

 

(ii)           an involuntary petition under Chapter 7 is filed
against such Person that continues undismissed for 60 days; or

 

(iii)          such Person files a voluntary petition seeking relief
under Chapter 11, or an involuntary petition under Chapter 11 is filed against
such Person that continues undismissed for 60 days; or

 

(iv)          a court of competent jurisdiction enters an order (A) appointing
a trustee (including trustee under Chapter 11 of the Bankruptcy Code),
receiver, liquidator, conservator, sequestrator, custodian or other similar
official for such Person or for all or substantially all of its property or
assets, or (B) finding that such Person is insolvent, in each case only if
such order is not vacated or stayed within 60 days; or

 

(v)           such Person makes a general assignment for the benefit
of its creditors.

 

Notwithstanding (i) through (v) above, in
the event that this Agreement or any material provision hereof is rejected in
any proceeding, a Bankruptcy shall immediately exist.

 

“Bid Deadline” has the meaning ascribed to it
in Section 11.4(d) above.

 

“Business” means activities related to the
development and management of gaming activities conducted by the Company’s
subsidiaries, and activities as may be necessary, appropriate, proper,
advisable, incidental or convenient to or in furtherance of the promotion or
conduct of the purposes and business of the Company, in accordance with the
terms of this Agreement.

 

“Business Day” means any day other than a
Saturday, a Sunday or a day on which banking institutions in Los Angeles,
California, or Las Vegas, Nevada are authorized by law to close.

 

“Buy-Sell Price” has the meaning ascribed to it
in Section 12.2(a) above.

 

“Capital Account” means, with respect to any
Member, the capital account for such Member maintained and adjusted in
accordance with the following provisions:

 

B-4

 

(i)            To each Member’s Capital Account there shall be
credited (A) such Member’s Capital Contributions, (B) such Member’s
distributive share of Profits and any items in the nature of income or gain
which are specially allocated pursuant to Section 3.2, 3.3
or 3.4
above, and (C) the amount of any Company liabilities
assumed by such Member or that are secured by any Property distributed to such
Member.  The principal amount of a
promissory note which is not readily traded on an established securities market
and that is contributed to the Company by the maker of the note (or a Member
related to the maker of the note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
Member until the Company makes a taxable disposition of the note or until (and
to the extent) principal payments are made on the note, all in accordance with
Regulations Section 1.704-1(b)(2)(iv)(d)(2);

 

(ii)           To each Member’s Capital Account there shall be
debited (A) the amount of money and the Gross Asset Value of any Property
distributed to such Member pursuant to any provision of this Agreement, (B) such
Member’s distributive share of Losses and any items in the nature of expenses
or losses which are specially allocated pursuant to Section 3.2,
3.3
or 3.4
above, and (C) the amount of any liabilities of such
Member assumed by the Company or which are secured by any Property contributed
by such Member to the Company;

 

(iii)          In the event Units are Transferred in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the Units Transferred;
and

 

(iv)          In determining the amount of any liability for
purposes of subparagraphs (i) and (ii) above there shall be taken
into account Code Section 752(c) and any other applicable provisions
of the Code and Regulations.

 

The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended to
comply with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations.  In the event the Management Committee shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including debits or credits relating to
liabilities that are secured by contributed or distributed property or that are
assumed by the Company or any Members), the Management Committee may make such
modification; provided, that, it is not likely to have a material
effect on the amounts distributed to any Person pursuant to ARTICLE XIII
above upon the dissolution of the Company.  The Management Committee also shall (i) make
any adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Members and the amount of capital reflected on the
Company’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make
any appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b).

 

“Capital Contributions” means, with respect to
any Member, the amount of money and the initial Gross Asset Value of any
Property (other than money) contributed to the 

 

B-5

 

Company with respect to
the Units in the Company held or purchased by such Member, including Additional
Capital Contributions.

 

“Change in Form” has the meaning ascribed to it
in Section 10.4(d) above.

 

“Code” means the United States Internal Revenue
Code of 1986, as amended from time to time.

 

“Common Unit” means a common ownership interest
in the Company, including any and all benefits to which the holder of such
Common Unit may be entitled as provided in this Agreement, together with all
obligations of such holder to comply with the terms and provisions of this
Agreement.

 

“Company” means Cannery Casino Resorts, LLC,
the limited liability company formed pursuant to the Articles of Organization,
and the limited liability company continuing the Business of this Company in
the event of dissolution of the Company as herein provided.

 

“Company Minimum Gain” has the same meaning as
the term “partnership minimum gain” in Regulations Sections 1.704-2(b)(2) and
1.704-2(d).

 

“Conversion” has the meaning ascribed to it in Section 2.2(a).

 

“Conversion Date” means the earlier of (i) the
date on which the Conversion occurs and (ii) the expiration of the
Conversion Period.

 

“Conversion Exercise Notice” has the meaning
ascribed to in Section 2.2(b).

 

“Conversion Number” has the meaning ascribed to
it in Section 2.2(b).

 

“Conversion Option” has the meaning ascribed to
it in Section 2.2(a).

 

“Conversion Period” has the meaning ascribed to
it in Section 2.2(a).

 

“Crown” means Crown One and Crown Two.

 

“Crown One” means Crown CCR Group Investments
One, LLC, a Delaware limited liability company.

 

“Crown Two” means Crown CCR Group Investments
Two, LLC, a Delaware limited liability company.

 

“Damages” has the meaning ascribed to it in Section 12.1(a) above.

 

“Debt” means (i) any indebtedness for
borrowed money or the deferred purchase price of property as evidenced by a
note, bonds or other instruments, (ii) obligations as lessee under capital
leases, (iii) obligations secured by any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind existing on any asset owned
or held by the Company whether or not the Company has assumed or become liable
for the obligations secured thereby, 

 

B-6

 

(iv) any obligation
under any interest rate swap agreement, (v) accounts payable, and (vi) obligations
under direct or indirect guarantees of (including obligations (contingent or
otherwise) to assure a creditor against loss in respect of) indebtedness or
obligations of the kinds referred to in clauses (i), (ii), (iii), (iv) and
(v) above; provided, that, Debt shall not include
obligations in respect of any accounts payable that are incurred in the
ordinary course of the Company’s Business and are not delinquent or are being
contested in good faith by appropriate proceedings.

 

“Debt Documents” shall mean the debt documents
relating to third-party Debt of the Company.

 

“Depreciation” means, for each Allocation Year,
an amount equal to the depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such Allocation Year, except
that if the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Allocation Year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such Allocation Year bears to such beginning
adjusted tax basis; provided, however, that if the adjusted basis
for federal income tax purposes of an asset at the beginning of such Allocation
Year is zero, Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the Management
Committee.

 

“Dissolution Event” has the meaning ascribed to
it in Section 13.1 above.

 

“Drag-Along Participant” has the meaning
ascribed to it in Section 6.11(a).

 

“Drag-Along Sale” has the meaning ascribed to
it in Section 6.11(a).

 

“Drag-Along Transfer Notice” has the meaning
ascribed to it in Section 6.11(a).

 

“Drag/Tag Effective Date” has the meaning
ascribed to it in Section 6.11.

 

“Effective Date” has the meaning ascribed to it
in the Preamble.

 

“Election Notice” has the meaning ascribed to
it in Section 12.2(a) above.

 

“Eligible Operation” has the meaning ascribed
to it in the Management Agreement.

 

“Encumbrance” means any claim, charge,
easement, encumbrance, lease, covenant, security interest, lien, option,
pledge, rights of others or restriction, whether on voting, sale, transfer,
disposition or otherwise, and whether imposed by agreement, understanding, law,
equity or otherwise.

 

“Exiting Equity” has the meaning ascribed to it
in Section 11.4(a) above.

 

“Exiting Member” has the meaning ascribed to it
in Section 11.4
above.

 

B-7

 

“Failed Series C Capital Call” has the
meaning ascribed to it in Section 2.5(b)(iii) above.

 

“Final Series C Shortfall” has the meaning
ascribed to it in Section 2.5(b)(iii) above.

 

“Firm Offer” has the meaning ascribed to it in Section 11.3(b) above.

 

“Firm Sale Offer” has the meaning ascribed to
it in Section 11.12(b) above.

 

“First Appraiser” has the meaning ascribed to
it in Section 12.4(b) above.

 

“First A&R Operating Agreement Effective Date”
means September 22, 2006.

 

“First Election Period” has the meaning
ascribed to it in Section 12.2(b) above.

 

“Fiscal Quarter” means (i) the period
commencing on the Effective Date and ending on the immediately following March 31,
June 30, September 30 or December 31, as the case may be, (ii) any
subsequent three-month period commencing on each of January 1, April 1,
July 1 and October 1, and ending on the last date before the next
such date, and (iii) the period commencing on the immediately preceding January 1,
April 1, July 1 or October 1, as the case may be, and ending on
the date on which all Property is distributed to the Members pursuant to ARTICLE XIII
above.

 

“Fiscal Year” means (i) the period
commencing on the Effective Date and ending on the immediately following December 31,
(ii) any subsequent 12-month period commencing on January 1 and
ending on December 31, and (iii) the period commencing on the
immediately preceding January 1 and ending on the date on which all
Property is distributed to the Members pursuant to ARTICLE XIII above.

 

“GAAP” means United States generally accepted
accounting principles, consistently applied.

 

“Gaming Adverse Event” means, with respect to a
Person:

 

(i)            the denial, revocation, suspension or voluntary
relinquishment (except in connection with the disposition of equity or assets
of a subsidiary of the Company) of a required Gaming Approval issued to such
Person by any Gaming Authority; or

 

(ii)           any action by such Person that results in (A) a
written communication from any Gaming Authority to the Company advising the
Company that, or (B) administrative action by any Gaming Authority
determining that: (x) any required Gaming Approval by such Gaming
Authority with respect to the Company shall be approved only upon terms and
conditions that are unacceptable to the Company (as determined by the
Management Committee, excluding such Person if such Person is also a Manager),
or (y) such Gaming Authority shall revoke or suspend any existing required
Gaming Approval held by the Company or any of its subsidiaries.

 

B-8

 

“Gaming Approval” means, with respect to a
Person, a license or finding of suitability required by a Gaming Authority
under the Gaming Laws in order for such Person to hold an equity interest in
the Company or actively engage in the management of the Company.

 

“Gaming Authorities” means those federal,
state, local and other governmental, regulatory and administrative authorities,
agencies, boards and officials responsible for or involved in the regulation of
gaming or gaming activities or the sale of liquor in any jurisdiction and,
within the State of Nevada specifically, Nevada Gaming Authorities.

 

“Gaming Laws” means the gaming laws of any
jurisdiction or jurisdictions to which the Company or any of its subsidiaries
are, or may at any time become, subject, including Chapter 463 of the NRS, and
the rules and regulations adopted by the Nevada Gaming Authorities.

 

“Gross Appraised Value” has the meaning
ascribed to it in Section 12.4(a) above.

 

“Gross Asset Value” means with respect to any
asset, the asset’s adjusted basis for federal income tax purposes, except as
follows:

 

(i)            The initial Gross Asset Value of any asset contributed
by a Member to the Company shall be the gross fair market value of such asset,
as determined by the Management Committee;

 

(ii)           The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code Section 7701(g) into
account), as determined by the Management Committee, as of the following times:
(A) immediately prior to the acquisition of an additional interest in the
Company by any new or existing Member; (B) the distribution by the Company
to a Member of more than a de minimis
amount of Company property as consideration for an interest in the Company; (C) the
liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (D) in connection with a Conversion; provided,
that, an adjustment described in clause (A), (B) or (D) of
this paragraph shall be made only if the Management Committee reasonably
determines that such adjustment is necessary to reflect the relative economic interests
of the Members in the Company;

 

(iii)          The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair market
value (taking Code Section 7701(g) into account) of such asset on the
date of distribution as determined by the Management Committee; and

 

(iv)          The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Section 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and
subparagraph (vi) of the definition of “Profits” and “Losses” or Section 3.2(g) above;
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this subparagraph 

 

B-9

 

(iv) to the extent
that an adjustment pursuant to subparagraph (ii) is required in connection
with a transaction that would otherwise result in an adjustment pursuant to
this subparagraph (iv).

 

If the Gross Asset Value of an asset has been
determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such
Gross Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset, for purposes of computing Profits and
Losses.

 

“Indemnitee” has the meaning ascribed to it in Section 8.1(i) above.

 

“Indemnitor” has the meaning ascribed to it in Section 8.1(i) above.

 

“Issuance Items” has the meaning ascribed to it
in Section 3.2(h) above.

 

“Investment Bank” has the meaning ascribed to
it in Section 11.4(b) above.

 

“Joinder Agreement” means a written instrument
in form and substance reasonably satisfactory to the Management Committee pursuant
to which the transferee of Units (i) makes representations and warranties
to the Company and each non-transferring Member equivalent to those set forth
in Section 9.2
above, (ii) accepts, adopts and agrees to be bound by
the terms and conditions of this Agreement, and (iii) assumes all the
obligations of, and accept all the limitations and restrictions imposed on, the
transferor Member (and its Managers) under this Agreement and with respect to
the Units Transferred.

 

“Junior Debt” means any and all amounts now or
hereafter owing by the Company pursuant to the Second Lien Credit Agreement,
dated as of May 18, 2007, by and among the Company, Washington Trotting
Association, Inc., a Delaware corporation, Bank of America, N.A., as
Administrative Agent and Collateral Agent, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as Syndication Agent, and the Lenders party thereto from
time to time (as amended, restated, or modified from time to time, the “Junior
Credit Agreement”) and the other Loan Documents (as defined in the Junior
Credit Agreement), including any extensions or refinancing of the foregoing.

 

“Licensed Series C Member” means a Series C
Preferred Member that holds the requisite Gaming Approvals in the Commonwealth
of Pennsylvania as an “Affiliate” (as defined in 4 Pa.C.S., §1103) of
the Company or that is otherwise found qualified or licensed in the
Commonwealth of Pennsylvania to receive the Series C Priority Return.

 

“Liquidation Period” means the period
commencing on the first day of the Fiscal Year during which a Dissolution Event
occurs and ending on the date on which all of the assets of the Company have
been distributed to the Members in accordance with Section 13.2 above.

 

“Liquidator” means AcquisitionCo, or such other
Person appointed and approved by the Management Committee to oversee the
liquidation of the Company.  The
Liquidator may be a Manager, an officer, a Member or any other Person.

 

B-10

 

“Liquidity Crisis” means a Bankruptcy, an event
of default under a Debt Document of the Company, a failure to maintain positive
net working capital, and an insolvency, in each case that may be avoided or
cured by the making of Additional Capital Contributions.

 

“Losses” has the meaning ascribed to it in the
definition of Profits and Losses.

 

“Management Agreement” means the Casino
Management Agreement, dated as of the First A&R Operating Agreement
Effective Date, by and among the Company and its subsidiaries and MMG II,
including all appendices, exhibits, annexes and schedules attached thereto, as
amended from time to time.

 

“Management Committee” means the management
committee of the Company, consisting of Managers designated in accordance with Section 5.1 above.

 

“Manager” means a manager of the Company,
designated in accordance with Section 5.1 above.

 

“Material Conflict of Interest” means, with
respect to a Manager regarding any matter requiring a vote of the Management
Committee, a conflict of interest arising from (i) such Manager or any of
his Affiliates having a material interest (financial or otherwise) in such
matter, other than an interest solely attributable to an equity interest in the
Company, or (ii) any legal action involving the Company or any of its
subsidiaries, on the one hand, and such Manager or any of his Affiliates, on
the other.  For the purpose of clarity,
any matter involving the enforcement of, or the assertion of a breach under,
the provisions of the Management Agreement shall be deemed to give rise to a
Material Conflict of Interest with respect to the Millennium Managers.

 

“Member” means any Person (i) who is
referred to as such on Appendix A or who has become a substituted Member
in accordance with the terms of this Agreement or who is admitted as a new
Member in accordance with the terms of this Agreement, and (ii) who has
not ceased to be a Member.

 

“Member Nonrecourse Debt” has the same meaning
as the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).

 

“Member Nonrecourse Debt Minimum Gain” means an
amount, with respect to each Member Nonrecourse Debt, equal to the Company
Minimum Gain that would result if such Member Nonrecourse Debt were treated as
a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

 

“Member Nonrecourse Deductions” has the same
meaning as the term “partner nonrecourse deductions” in Regulations Sections
1.704-2(i)(1) and 1.704-2(i)(2).

 

“Member Unit Transfer” means, with respect to a
Member, the direct Transfer of voting or equity power in such Member or an
Upper Tier Equityholder of such Member; provided, that, (i) the
death of one of Paulos or Wortman (but not both) shall not be deemed to be a “Member
Unit Transfer” with respect to Millennium Gaming, so long as (A) the
deceased’s 

 

B-11

 

equity units in
Millennium Gaming are Transferred to Wortman or Paulos, as the case may be,
and/or the deceased’s spouse and/or children (subject to compliance with all applicable
conditions on Transfers set forth in this Agreement, including Sections 11.5
and 11.10
above, and all applicable law, including all applicable
Gaming Laws) and (B) following such death, Wortman or Paulos, as the case
may be, is the holder of a majority of the total equity of, and a majority of
the total voting power in, Millennium Gaming, (ii) the direct Transfer by
Wortman and/or Paulos to Northwestern Mutual Life Insurance Company of equity
in Millennium Gaming (having only proportionate voting rights, with no
supermajority, veto, consent right or separate class protection) with a fair
market value not to exceed $10 million in the aggregate (and, in the
alternative and only with the prior written consent of AcquisitionCo, to be
given or withheld in AcquisitionCo’s sole and absolute discretion, the creation
of an intermediary entity between Millennium Gaming and the Company to effect
such direct Transfer) shall not be deemed to be a “Member Unit Transfer” with
respect to Millennium Gaming, so long as Northwestern Mutual Life Insurance
Company does not receive any voting or other governance rights with respect to
the Company and AcquisitionCo has been permitted no less than ten Business Days
to review the transaction documents relating to such Transfer prior to their
execution, (iii) the indirect Transfer of voting or equity power in
AcquisitionCo to an Affiliate of Oaktree Capital Management, LLC (including a
principal thereof), or the Transfer of any limited partnership interest in any
fund of Oaktree Capital Management, LLC by any limited partner of such fund or
the Transfer of any general partnership interest in, or of any interest in the
general partner of, any fund of Oaktree Capital Management, LLC to any member,
director, officer or employee of Oaktree Capital Management, LLC or its
Affiliate or to any Affiliate of any such member, director, officer or employee
or to any Affiliate of Oaktree Capital Management, LLC, shall not be deemed to
be a “Member Unit Transfer” with respect to AcquisitionCo, (iv) the
issuance of equity interests by OCM InvestCo, LLC, a Nevada limited liability
company, to any Person that is a member of OCM InvestCo, LLC as of the date
hereof shall not be deemed to be a “Member Unit Transfer” with respect to
AcquisitionCo, (v) the repurchase by OCM InvestCo, LLC of non-voting
equity interests in OCM InvestCo, LLC held by any Person that is a non-voting
member of OCM InvestCo, LLC as of the date hereof, or the forfeiture of equity
interests in any of OCM VoteCo, LLC, OCM InvestCo, LLC or OCM Blocker, LLC in
accordance with the operating agreement of such entity, shall not be deemed to
be a “Member Unit Transfer” with respect to AcquisitionCo, and (vi) the
transfer of 0.100 non-voting class B units of OCM Blocker, LLC, a Delaware
limited liability company, to GLCP Nevada, LLC, a Delaware limited liability
company, or the subsequent repurchase by OCM Blocker, LLC of such units, shall
not be deemed to be a “Member Unit Transfer” with respect to AcquisitionCo.

 

“Millennium Gaming” means Millennium Gaming, Inc.,
a Nevada corporation.

 

“Millennium Managers” has the meaning ascribed
to it in Section 5.1(b) above.

 

“MMG II” means Millennium Management Group II
LLC, a Nevada limited liability company.

 

“Negotiation Period” has the meaning ascribed
to it in Section 11.4(a) above.

 

B-12

 

“Net Cash Flow” means the gross cash proceeds
of the Company, less the portion thereof used to pay or establish reserves for
all Company expenses, debt payments, capital improvements, replacements and
contingencies, all as determined by the Management Committee.  “Net Cash Flow” shall not be reduced by
depreciation, amortization, cost recovery deductions, or similar allowances,
but shall be increased by any reductions of reserves previously established
pursuant to the first sentence of this definition.

 

“Net Equity Per Series A Preferred Unit”
means the Net Equity Value of all the Series A Preferred Units issued and
outstanding, divided by the number of Series A Preferred Units issued and
outstanding.

 

“Net Equity Value” has the meaning ascribed to
it in Section 12.3 above.

 

“Nevada Gaming Authorities” means the Nevada
Gaming Commission, the Nevada State Gaming Control Board, the Clark County
Liquor and Gaming Licensing Board, the City of Las Vegas, the City of North Las
Vegas and the City of Henderson, and all other state and local regulatory and
licensing bodies with authority over gaming in the State of Nevada and its
political subdivisions.

 

“New Preferred Units” has the meaning ascribed
to it in Section 2.5(b)(iii)(B) above.

 

“New Unit” has the meaning ascribed to it in Section 6.10.

 

“New Unit Purchaser” has the meaning ascribed
to it in Section 6.10.

 

“Nonrecourse Deductions” has the meaning set
forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

 

“Nonrecourse Liability” has the meaning set
forth in Regulations Section 1.704-2(b)(3).

 

“Non-Participating Member” has the meaning
ascribed to it in Section 11.4(b) above.

 

“Non-Triggering Members” has the meaning
ascribed to it in Section 11.3(b) above.

 

“Non-Voting Manager” has the meaning ascribed
to it in Section 5.1(d).

 

“NRS” means the Nevada Revised Statutes, as
amended from time to time.

 

“Oaktree Operating Group” means, collectively,
Oaktree Capital I, L.P., Oaktree Capital II, L.P., Oaktree Capital Management,
L.P., and Oaktree Capital Management (Cayman), L.P.

 

“Offered Equity” has the meaning ascribed to it
in Section 11.3(b) above.

 

 

B-13

 

“Offer Notice” has the meaning ascribed to it
in Section 11.3(b) above.

 

“Offer Period” has the meaning ascribed to it
in Section 11.3(c) above.

 

“Offer Price” has the meaning ascribed to it in
Section 11.3(b) above.

 

“Option Agreement” shall mean that certain
Option Agreement dated as of March 12, 2009 by and among Crown Limited,
Crown CCR Group Investments One, LLC, Crown CCR Group Investments Two, LLC,
Millennium Gaming, Inc., OCM Holdco, LLC, and the Company.

 

“Participating Member” has the meaning ascribed
to it in Section 11.4(b) above.

 

“Paulos” means William J. Paulos, an
individual.

 

“Percentage Interest” means, with respect to
any Member as of any date, the ratio (expressed as a percentage) of the number
of Units held by such Member on such date to the aggregate Units held by all
Members on such date; provided, however, that such calculation
shall be done on an as-converted basis to Series A2 Preferred Units with
respect to the calculation of the Percentage Interest of the Series B
Preferred Units; provided, further, that, solely for purposes of
determining Percentage Interests, Series C Preferred Units shall be
excluded and disregarded.

 

“Person” means any individual, firm,
corporation, partnership, limited liability company, incorporated or
unincorporated association, joint venture, joint stock company, governmental
agency or instrumentality, or other entity of any kind, or any combination of
the foregoing.

 

“Preemptive Right” has the meaning ascribed to
it in Section 6.10.

 

“Preferred B Amount” means, with respect to a
certain number of Series B Preferred Units and as of any time of
determination, the amount which is the lower of (i) the Redemption Price
Per Series B Preferred Unit as of such time, multiplied by such number of Series B
Preferred Units and (ii) (a) with respect to a Drag-Along Sale, the
aggregate amount that would have been received pursuant to Section 6.11(a)(iii) for
the Series A2 Preferred Units into which such number of Series B
Preferred Units would have been convertible into as of such time had such
number of Series B Preferred Units been converted into such number of Series A2
Preferred Units pursuant to Section 2.2 as of such time, (b) with
respect to a Tag-Along Sale, the aggregate amount that would have been received
pursuant to Section 6.11(b)(iii) for the Series A2 Preferred
Units into which such number of Series B Preferred Units would have been
convertible into as of such time had such number of Series B Preferred
Units been converted into such number of Series A2 Preferred Units pursuant
to Section 2.2 as of such time, and (c) for all other transactions,
the Net Equity Value of the Series A2 Preferred Units into which such
number of Series B Preferred Units would have been convertible into as of
such time.

 

“Preferred Member” means a Member holding
Preferred Units.

 

B-14

 

“Preferred Percentage Interest” means, with
respect to any Preferred Member as of any date, the ratio (expressed as a
percentage) of the number of Series A Preferred Units held by such
Preferred Member (including any Series A2 Preferred Units into which Series B
Preferred Units held by such Preferred Member would have been convertible into
as of such date had such Series B Preferred Units been converted pursuant
to Section 2.2) to the aggregate Series A Preferred Units held by all
Preferred Members on such date (including any Series A2 Preferred Units
into which Series B Preferred Units held by all Preferred Members would
have been convertible into as of such date had such Series B Preferred
Units been converted pursuant to Section 2.2).

 

“Preferred Unit” means a preferred ownership
interest in the Company, including any and all benefits to which the holder of
such Preferred Unit may be entitled as provided in this Agreement, together
with all obligations of such holder to comply with the terms and provisions of
this Agreement.

 

“Profits” and “Losses” mean, for each
Allocation Year, an amount equal to the Company’s taxable income or loss for
such Allocation Year, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the following adjustments (without
duplication):

 

(i)            Any income of the Company that is
exempt from federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of “Profits” and “Losses”
shall be added to such taxable income or loss;

 

(ii)           Any expenditures of the Company
described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition of “Profits” and “Losses,” shall be subtracted from such
taxable income or loss;

 

(iii)          In the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraphs (ii) or (iii) of
the definition of “Gross Asset Value,” the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the Gross Asset Value
of the asset) or an item of loss (if the adjustment decreases the Gross Asset
Value of the asset) from the disposition of such asset and shall be taken into
account for purposes of computing Profits or Losses;

 

(iv)          Gain or loss resulting from any
disposition of Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of the Property disposed of, notwithstanding that the adjusted tax basis
of such Property differs from its Gross Asset Value;

 

(v)           In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into 

 

B-15

 

account Depreciation for
such Allocation Year, computed in accordance with the definition of
Depreciation;

 

(vi)          To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) is
required, pursuant to Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Member’s interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) from the disposition of such asset and shall be taken into account for
purposes of computing Profits or Losses; and

 

(vii)         Notwithstanding any other provision of
this definition, any items which are specially allocated pursuant to Section 3.2
or 3.3
above shall not be taken into account in computing Profits
or Losses.

 

The amounts of the items of Company income, gain, loss
or deduction available to be specially allocated pursuant to Section 3.2
or 3.3
above shall be determined by applying rules analogous
to those set forth in subparagraphs (i) through (vi) above.

 

“Property” means all real and personal property
acquired by the Company, including cash, and any improvements thereto, and
shall include both tangible and intangible property.

 

“Proposed Price” has the meaning ascribed to it
in Section 11.3(a) above.

 

“Proposed Match Purchaser” has the meaning
ascribed to it in Section 11.12(b) above.

 

“Proposed Purchaser” has the meaning ascribed
to it in Section 11.3(a) above.

 

“Pro Rata Portion”
means, with respect to a Preferred Member, a number of Preferred Units
determined by multiplying (i) the number of New Units the Company proposes
to issue pursuant to its notice delivered to the Preferred Members pursuant to Section 6.10(a),
by (ii) the Preferred Percentage Interest of such Preferred Member as of the
date of such notice.

 

“Purchase Commitment” has the meaning ascribed
to it in Section 12.2(b) above.

 

“Purchase Offer” has the meaning ascribed to it
in Section 11.3(a) above.

 

“Purchasing Member” has the meaning ascribed to
it in Section 12.2(b) above.

 

“Redemption Price (Series B)” means $300
million.

 

“Redemption Price Per Series B
Preferred Unit” means, as of any time of determination, (i) the
Redemption Price (Series B) as of such time, divided by (ii) the
number of Series B Preferred Units outstanding as of such time.

 

B-16

 

“Redemption/Repurchase Option” has the meaning
ascribed to it in Section 2.3(a).

 

“Registration Statement” means any registration
statement of the Company filed with, or to be filed with, the SEC under the rules and
regulations promulgated under the Securities Act, including the related
prospectus, amendments and supplements to such registration statement,
including pre- and post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement.

 

“Regulations” means the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as such
regulations are amended from time to time.

 

“Regulatory Allocations” has the meaning
ascribed to it in Section 3.3 above.

 

“Requested Series C Additional Capital”
has the meaning ascribed to it in Section 2.5(b) above.

 

“Sale Offer” has the meaning ascribed to it in Section 11.12(b) above.

 

“Sale Offer Notice” has the meaning ascribed to
it in Section 11.12(b) above.

 

“Sale Offer Period” has the meaning ascribed to
it in Section 11.12(c) above.

 

“Sale Transaction” means the acquisition of all
or substantially all of the business of the Company, including, without
limitation, any merger, consolidation, sale of all or substantially all the
assets or equity interests therein, or similar transaction.

 

“SEC” means the Securities and Exchange
Commission.

 

“Second Appraiser” has the meaning ascribed to
it in Section 12.4(b) above.

 

“Second A&R Effective Date” means April 24,
2009.

 

“Second A&R Operating Agreement” means the
Second Amended and Restated Operating Agreement of the Company, dated as of the
Second A&R Effective Date, by and among Millennium Gaming, AcquisitionCo,
Crown One, and Crown Two.

 

“Second Election Period” has the meaning
ascribed to it in Section 12.2(b) above.

 

“Securities Act” means the Securities Act of
1933, as amended, including the rules and regulations promulgated
thereunder.

 

“Securities Exchange Act” means the Securities
Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder.

 

“Senior Debt” means any and all amounts now or
hereafter owing by the Company pursuant to the First Lien Credit Agreement,
dated as of May 18, 2007, by and among the Company, Washington Trotting
Association, Inc., a Delaware corporation, Bank of America, 

 

B-17

 

N.A., as Administrative
Agent, Collateral Agent, Swing Lender and L/C Issuer, the other financial
institutions party thereto, and the lenders party thereto from time to time (as
amended by the Amendment No. 1 thereto, dated as of the date hereof, and
as otherwise amended, restated, or modified from time to time, the “Senior
Credit Agreement”) and the other Loan Documents (as defined in the Senior
Credit Agreement), including any extensions or refinancing of the foregoing.

 

“Senior Officer” shall mean any of the
following officers of the Company (or any officer exercising comparable power
or authority): chief executive officer, president, chief operating officer,
chief financial officer, chief accounting officer, secretary, treasurer,
in-house general counsel, head of mergers and acquisitions, regional vice
presidents of operation, and vice presidents of development or construction.

 

“Series A Preferred Member” means a Member
holding Series A1 Preferred Units and/or Series A2 Preferred Units.

 

“Series A Preferred Percentage Interest”
means, with respect to any Series A Preferred Member as of any date, the
ratio (expressed as a percentage) of the number of Series A Preferred
Units held by such Series A Preferred Member on such date to the aggregate
Series A Preferred Units held by all Series A Preferred Members on
such date.

 

“Series A Preferred Units” means Series A1
Preferred Units and Series A2 Preferred Units.

 

“Series A1 Preferred Member” means a
Member holding Series A1 Preferred Units.

 

“Series A2 Preferred Member” means a
Member holding Series A2 Preferred Units.

 

“Series B Preferred Member” means a Member
holding Series B Preferred Units.

 

“Series B Preferred Units” means Series B
Non-Participating Units.

 

“Series C Capital Call Results Notice” has
the meaning ascribed to it in Section 2.5(b)(i) above.

 

“Series C Face Amount” means, with respect
to each Series C Preferred Unit, One Thousand Dollars ($1,000.00).

 

“Series C Investment Percentage” means,
with respect to a Series C Preferred Member, the ratio (expressed as a
percentage) of the Series C Preferred Units purchased by such Series C
Preferred Member on the Effective Date to the aggregate number of Series C
Preferred Units issued on the Effective Date, it being agreed and acknowledged
that upon any Transfer of Series C Preferred Units, the Management
Committee may, in its reasonable discretion, implement equitable revisions to
this definition to reflect a “Series C Investment Percentage” for the
transferee thereof.

 

B-18

 

“Series C Mandatory Redemption Date” has
the meaning ascribed to it in Section 2.3(b)(ii) above.

 

“Series C Optional Redemption Date” has
the meaning ascribed to it in Section 2.3(b)(i) above.

 

“Series C Per Unit Redemption Price” means
(i) with respect to Series C Preferred Units held by a Licensed Series C
Member, the Series C Face Amount plus the Series C Priority Return
thereon as of the date of the consummation of the redemption thereof and (ii) with
respect to Series C Preferred Units held by an Unlicensed Series C
Member, the Series C Face Amount thereon.

 

“Series C Preferred Member” means a Member
holding Series C Preferred Units.

 

“Series C Preferred Units” means Series C
Non-Participating Units.

 

“Series C Priority Return” means, with
respect to each Series C Preferred Unit as of any date (the “Applicable
Date”), a cumulative sum equal to twenty percent (20%) per annum, compounded
monthly, of the Series C Face Amount from time to time, commencing on and
including the date the Series C Preferred Member purchased the underlying Series C
Preferred Unit and ending on and including the Applicable Date.

 

“Series C Purchase Agreement” shall mean
that certain Series C Preferred Purchase Agreement, dated as of March 3,
2010, by and among Millennium Gaming, AcquisitionCo, Crown One, and Crown Two.

 

“Series C Shortfall Notice” has the meaning
ascribed to it in Section 2.5(b)(i).

 

“Tag-Along Offer” has the meaning ascribed to
it in Section 6.11(b)(i).

 

“Tag-Along Participant” has the meaning
ascribed to it in Section 6.11(b)(i).

 

“Tag-Along Sale” has the meaning ascribed to it
in Section 6.11(b)(i).

 

“Tag-Along Exercise Notice” has the meaning
ascribed to it in Section 6.11(b)(iv).

 

“Tag-Along Exercise Period” has the meaning
ascribed to it in Section 6.11(b)(iv).

 

“Tag-Along Transfer Notice” has the meaning
ascribed to it in Section 6.11(a)(iii).

 

“Tax Distribution” has the meaning ascribed to
it in Section 4.3(a) above.

 

“Tax Matters Member” has the meaning ascribed
to it in Section 10.4(b) above.

 

“Third Appraiser” has the meaning ascribed to
it in Section 12.4(b) above.

 

B-19

 

“Transfer” means, as a noun, any voluntary or
involuntary transfer, sale, pledge or hypothecation or other disposition and,
as a verb, voluntarily or involuntarily to transfer, sell, pledge or
hypothecate or otherwise dispose of.

 

“Triggering Member” has the meaning ascribed to
it in Section 11.3 above.

 

“Unaffiliated Purchaser” has the meaning
ascribed to it in Section 6.11(a)(i) above.

 

“Unit” means a Preferred Unit or a Common Unit.

 

“Unlicensed Series C Member” means a Series C
Preferred Member that is not a Licensed Series C Member.

 

“Unpurchased Units” has the meaning ascribed to
it in Section 12.2(b) above.

 

“Upper Tier Equityholder” means, with respect
to a Person, any other Person that holds a direct or indirect equity interest
in such Person; provided, that, with respect to AcquisitionCo, an
Upper Tier Equityholder shall not include the Oaktree Operating Group (or any
Person holding a direct or indirect equity interest therein), any principal of
the Oaktree Operating Group, any limited partner of any fund sponsored or
managed by the Oaktree Operating Group (or any Person holding a direct or
indirect equity interest in any such limited partner), any Person that is a
non-voting member of OCM InvestCo, LLC, a Nevada limited liability company, as
of the date hereof (or any Person holding a direct or indirect equity interest
in any such Person), or GLCP Nevada, LLC, a Delaware limited liability company
(or any Person holding a direct equity interest in such Person), with respect
to, if acquired by GLCP Nevada, LLC, 0.100 non-voting class B units of OCM
Blocker, LLC, a Delaware limited liability company.

 

“Upper Tier Holder” means, with respect to a
Person, any Upper Tier Equityholder of such Person or any director (or, if the
Upper Tier Equityholder is a limited liability company, manager) or officer of
any Upper Tier Equityholder; provided, that, with respect to
AcquisitionCo, an Upper Tier Holder shall not include the Oaktree Operating
Group (or any Person holding a direct or indirect equity interest therein), any
principal of the Oaktree Operating Group, any limited partner of any fund
sponsored or managed by the Oaktree Operating Group (or any Person holding a
direct or indirect equity interest in any such limited partner), any Person
that is a non-voting member of OCM InvestCo, LLC, a Nevada limited liability
company, as of the date hereof (or any Person holding a direct or indirect
equity interest in any such Person), or GLCP Nevada, LLC, a Delaware limited
liability company (or any Person holding a direct equity interest in such
Person), with respect to, if acquired by GLCP Nevada, LLC, 0.100 non-voting
class B units of OCM Blocker, LLC, a Delaware limited liability company.

 

“Voting Manager” has the meaning ascribed to it
in Section 5.1(d).

 

“Wholly Owned Affiliate” of any Person means (i) an
Affiliate of such Person (A) 100% of the voting stock or beneficial
ownership of which is owned directly by such Person, 

 

B-20

 

or by any Person that, directly or indirectly, owns
100% of the voting stock or beneficial ownership of such Person, or (B) that,
directly or indirectly, owns 100% of the voting stock or beneficial ownership
of such Person, and (ii) any Wholly Owned Affiliate of any Affiliate
described in clause (i)(A) or (B).

 

“Wortman” means William C. Wortman, an
individual.

 

B-21Exhibit 10.36

 

 

SERIES C PREFERRED PURCHASE AGREEMENT

 

by and among

 

CROWN LIMITED,

 

CROWN CCR GROUP INVESTMENTS ONE, LLC,

 

CROWN CCR GROUP INVESTMENTS TWO, LLC,

 

MILLENNIUM GAMING, INC.,

 

OCM ACQUISITIONCO, LLC

 

and

 

CANNERY CASINO RESORTS, LLC

 

Dated as of March 3, 2010

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  1

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
  SALE AND PURCHASE OF SERIES C PREFERRED UNITS

  	
  6

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Sale
  and Purchase of Series C Preferred Units

  	
  6

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Consideration

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Closing
  Deliveries of CCR

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Closing
  Deliveries of the Purchasers

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Closing
  Deliveries of the Parent

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
  CLOSING

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Closing

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Closing
  Date

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
  REPRESENTATIONS AND WARRANTIES REGARDING THE
  COMPANIES

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Company
  Organization and Good Standing

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  CCR
  Authority; Enforceability

  	
  9

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capitalization;
  Valid Issuance

  	
  9

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Consents
  and Approvals

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  No
  Violations

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Governmental
  Authorizations; Compliance with Laws

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
  REPRESENTATIONS AND WARRANTIES REGARDING THE
  PURCHASERS AND THE PARENT

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organization
  and Good Standing

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Authority;
  Enforceability

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Consents
  and Approvals

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  No
  Violations

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Securities
  Act

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Investor
  Status

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Securities
  Not Registered

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Tax
  Matters

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
  COVENANTS OF THE PARTIES

  	
  12

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Crown
  Consent

  	
  12

  

 

i

 

	
  6.2

  	
  Cooperation

  	
  13

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Guarantee

  	
  14

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Use
  of Proceeds

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7

  	
  CONDITIONS TO CLOSING

  	
  15

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Conditions
  to the Obligations of All Parties

  	
  15

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Conditions
  to the Obligations of the Purchasers and the Parent

  	
  15

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Conditions
  to the Obligations of CCR

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
  TERMINATION

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Effect
  of Termination

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Gaming
  Approvals

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  	
  GENERAL

  	
  17

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Entire
  Agreement

  	
  17

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  No
  Third Party Rights or Obligations

  	
  17

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Counterparts

  	
  17

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Headings

  	
  18

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Applicable
  Law

  	
  18

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Enforcement

  	
  18

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Waiver
  of Jury Trial

  	
  18

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Waiver
  of Conditions

  	
  18

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Transaction
  Expenses

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Construction

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Severability

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.12

  	
  Amendments

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.13

  	
  Assignments

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.14

  	
  Notices

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.15

  	
  Further
  Assurances

  	
  22

  
	
   

  	
   

  	
   

  
	
  9.16

  	
  Confidentiality

  	
  22

  
	
   

  	
   

  	
   

  
	
  9.17

  	
  Additional Rules of
  Construction

  	
  22

  

 

ii

 

ANNEXES AND SCHEDULES

 

Annexes

 

Annex
I:      Form of Third Amended and
Restated Operating Agreement

 

Schedules

 

Schedule
4.3(a):         Capitalization

 

Schedule
4.3(b):         Exceptions to Certain
Equity Representations

 

iii

 

SERIES C PREFERRED PURCHASE AGREEMENT

 

This SERIES C PREFERRED
PURCHASE AGREEMENT, dated as of  March 3, 2010 (this “Agreement”), is
by and among (i) Crown Limited, an Australian company (the “Parent”),
(ii) Crown CCR Group Investments One, LLC, a Delaware limited liability
company and indirect wholly owned subsidiary of the Parent (“Crown One”),
(iii) Crown CCR Group Investments Two, LLC, a Delaware limited liability
company and indirect wholly owned subsidiary of the Parent (“Crown Two”
and, collectively with Crown One and the Parent, the “Crown Parties”), (iii) Millennium
Gaming, Inc., a Nevada corporation (“Millennium”), (iv) OCM
AcquisitionCo, LLC, a Delaware limited liability company (“AcquisitionCo”
and, collectively with Millennium, Crown One and Crown Two, the “Purchasers”
and each, a “Purchaser”), and (v) Cannery Casino Resorts, LLC, a
Nevada limited liability company (“CCR”).

 

RECITALS

 

WHEREAS, CCR proposes to
enter into (i) that certain Amendment No. 1 to First Lien Credit
Agreement, of even date herewith, among CCR, Washington Trotting Association, Inc.,
a Delaware corporation (“WTA”), each Lender party thereto and Bank of
America, N.A. (“Bank of America”), to amend the First Lien Credit
Agreement (the “First Lien Credit Agreement”), dated as of May 18,
2007, among CCR, WTA, the lenders from time to time party thereto, Bank of
America, and the other financial institutions party thereto, and (ii) that
certain Third Amendment, of even date herewith, among CCR, WTA, GE Business
Financial Services (“GE”), and the Lenders party thereto, to amend the
Amended and Restated Loan Agreement (the “FF&E Loan Agreement”),
dated as of May 18, 2007, among CCR, WTA, GE and the lenders from time to
time party thereto, as amended by the First Amendment thereto, dated as of June 1,
2007, and the Second Amendment thereto, dated as of December 19, 2007 (the
First Lien Credit Agreement and the FF&E Credit Agreement being hereinafter
referred to collectively as the “Credit Agreements”);

 

WHEREAS, in connection with
the Company’s execution and delivery of the Credit Agreements, subject to the
terms and conditions hereof, CCR desires to sell and issue to the Purchasers,
and the Purchasers desire to purchase from CCR, an aggregate of 75,000 Series C
Non-Participating Units of CCR (the “Series C Preferred Units”),
for an aggregate purchase price of Seventy-Five Million Dollars ($75,000,000);

 

WHEREAS, CCR intends to use
the proceeds from the issuance of the Series C Preferred Units to repay a
portion of the outstanding indebtedness under certain debt facilities of CCR;
and

 

WHEREAS, upon the closing of
the transactions contemplated by this Agreement, the Purchasers, which
constitute all of the members of CCR, will enter into the Third Amended and
Restated Operating Agreement of CCR (the “Revised Operating Agreement”),
in the form attached hereto as Annex I;

 

NOW, THEREFORE, in
consideration of the terms, conditions and other provisions herein, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1

 

ARTICLE 1

 

Definitions

 

As used in this Agreement,
the following terms shall have the following meanings:

 

1.1.          “AcquisitionCo”
has the meaning set forth in the Preamble.

 

1.2.          “Affiliate”
means, with respect to a specified Person, a Person that directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified; provided that, for the
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling,” “controlled by” and “under common control with”), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
Contract, or otherwise; provided, however, that when used with
respect to the Parent, “control” (including, with correlative meanings, the
terms “controlling,” “controlled by” and “under common control with”) shall
require the ownership of securities or other interests having the power to
elect a majority of the Board of Directors or similar governing body of such
Person.

 

1.3.          “Agreement”
has the meaning set forth in the Preamble.

 

1.4.          “Bank of America”
has the meaning set forth in the Recitals.

 

1.5.          “Business”
means the gaming, racing, entertainment, hospitality and related businesses and
operations conducted by the Companies in Nevada and Pennsylvania.

 

1.6.          “Business Day”
means any day other than a Saturday or a Sunday or a day on which banks located
in New York, New York generally are authorized or required by Law to close.

 

1.7.          “CCR” has the
meaning set forth in the Preamble.

 

1.8.          “Closing” has
the meaning set forth in Section.

 

1.9.          “Closing Date”
has the meaning set forth in Section 3.2.

 

1.10.        “Code” means
the Internal Revenue Code of 1986, as amended.

 

1.11.        “Companies”
means, collectively, CCR and its Subsidiaries; “Company” means, individually,
any of CCR or its Subsidiaries.

 

1.12.        “Contract”
means any agreement, lease, license, note, mortgage, contract or other legally
binding obligation, in each case, including all modifications and amendments
thereto.

 

1.13.        “Credit Agreements”
has the meaning set forth in the Recitals.

 

2

 

1.14.        “Crown Parties”
has the meaning set forth in the Preamble.

 

1.15.        “Current Operating
Agreement” means the Second Amended and Restated Operating Agreement of
CCR, dated as of April 24, 2009, by and among the members of CCR.

 

1.16.        “Effect” has
the meaning set forth in the definition of “Material Adverse Effect.”

 

1.17.        “FF&E Loan
Agreement” has the meaning set forth in the Recitals.

 

1.18.        “First Lien Credit
Agreement” has the meaning set forth in the Recitals.

 

1.19.        “GAAP” means
United States generally accepted accounting principles in effect from time to
time.

 

1.20.        “Gaming Approvals”
has the meaning set forth in Section 6.2(c).

 

1.21.        “Gaming Authority”
means any Governmental Entity with regulatory control, authority or
jurisdiction over casino, pari-mutuel and lottery or other gaming activities
and operations, including the Nevada Gaming Commission, the Nevada State Gaming
Control Board, the Clark County Liquor and Gaming Licensing Board, the City of
Las Vegas and the City of North Las Vegas, the Pennsylvania Gaming Control
Board and the Pennsylvania Harness Racing Commission.

 

1.22.        “Gaming Laws”
means all Laws pursuant to which any Gaming Authority possesses regulatory,
licensing or permit authority over, casino and pari-mutuel, lottery or other
gaming activities within the State of Nevada or the Commonwealth of
Pennsylvania, including the rules and regulations established by any
Gaming Authority.

 

1.23.        “GE” has the
meaning set forth in the Recitals.

 

1.24.        “Governing
Documents” means with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a limited
liability company, the articles or certificate of organization and the limited
liability company agreement or operating agreement; (e) if another type of
entity, any other charter or similar document adopted or filed in connection
with the creation, formation or organization of such entity; and (f) any
amendment or supplement to any of the foregoing.

 

1.25.        “Governmental
Authorization” means any authorization, approval, consent, finding of
suitability, license, permit, franchise, registration, exemption or similar
right, approval or authorization from any Governmental Entity (including any
Gaming Authority).

 

1.26.        “Governmental
Entity” means any federal, state or local government or any subdivision
thereof, any supranational, or any domestic or foreign federal, state or local
court, tribunal (including any arbitrator or arbitral tribunal), legislative,
executive, or regulatory 

 

3

 

authority,
agency, department, commission, instrumentality or body, including any Gaming
Authority.

 

1.27.        “Income Tax”
means any federal, state, local, or foreign income tax based upon or measured
by net income, including any interest, penalty, or addition thereto, whether
disputed or not.

 

1.28.        “Indebtedness”
means, without duplication, any indebtedness for borrowed money, obligations
evidenced by notes, bonds, debentures or similar instruments, net obligations
(positive or negative) under any swap contract or hedging agreement and
guarantees of any of the foregoing.

 

1.29.        “knowledge”
means, for the purpose of Section 4.6(a), when referring to the
knowledge of any Company, the actual knowledge of William Paulos, William
Wortman, Tom Lettero, and Guy Hillyer.

 

1.30.        “Law” or “Laws”
means any federal, state, regional, local, municipal or other statute, law,
code, ordinance, Order, rule or regulation or any common law right or
obligation, including the Gaming Laws.

 

1.31.        “Licensed Persons”
means all Persons who are associated or affiliated with the Parent, the
Purchasers or their Affiliates and who are, in the view of the applicable
Gaming Authorities, required to be licensed or provide information under
applicable Gaming Laws in order to consummate the transactions contemplated by
this Agreement.

 

1.32.        “Liens” means
all liens, assessments, governmental charges or levies, security interests,
deeds of trust, pledges, charges, conditional sales contracts, mortgages or
encumbrances.

 

1.33.        “Material Adverse
Effect” means (i) any fact, change, development, circumstance, event,
effect or occurrence (an “Effect”) that, when considered either
individually or in the aggregate with all other Effects, is materially adverse
to the business (excluding any future development opportunities), properties,
assets, liabilities, financial condition or results of operations of the
Companies, taken as a whole, (ii) any failure of CCR to be able to deliver
to the Purchasers at the Closing, free and clear of all Liens, the Series C
Preferred Units or (iii) the loss by any Subsidiary of CCR of its
non-restricted gaming license necessary to operate its gaming Business in the
State of Nevada, the loss by CCR of its finding of suitability as a holding
company of any Subsidiary holding such non-restricted gaming license, or the
loss of Washington Trotting Association, Inc.’s Category I Slot Machine
License to operate its gaming Business; provided, however, that
in no event shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether
there has been, a Material Adverse Effect under clause (i) above:  (A) an Effect in general business,
economic, political, legislative, social, regulatory or other conditions,
whether locally, nationally or internationally, or in the financial, banking or
securities markets (including changes to interest rates, currency rates or the
value of the U.S. Dollar relative to other currencies, consumer confidence,
stock, bond and/or debt prices and trends), or any acts of war, hostilities,
military action, sabotage or terrorism (whether or not declared or undeclared)
or 

 

4

 

any
escalation or worsening of any such acts of war, hostility, military action,
sabotage or terrorism; (B) any Effect resulting from the announcement of
this Agreement and the transactions contemplated hereby, or the identity of the
Parent, the Purchasers or any of their Affiliates as the acquiror of the
Companies; (C) any failure to meet projections, forecasts or revenue or
earnings predictions for any period, provided that the underlying causes of any
such failure shall not be excluded; (D) any changes in Law, GAAP or any
accounting regulation (including any proposal or adoption of any new Law or
GAAP rule or any change in the interpretation or enforcement of any
existing Law or GAAP rule); (E) any Effect in the travel, hospitality or
gaming industries generally; or (F) any taking of any action by any of the
parties hereto specifically required by this Agreement to be so taken; provided,
however, that the Effects set forth in clauses (A), (D) and (E) above
may be taken into account to the extent such Effects have a materially
disproportionate impact on the Companies.

 

1.34.        “Millennium”
has the meaning set forth in the Preamble.

 

1.35.        “Obligations”
has the meaning set forth in Section 6.3(a).

 

1.36.        “Order” means
any order, injunction, judgment, decree, ruling, writ, or arbitration or
judicial award.

 

1.37.        “Parent” has
the meaning set forth in the Preamble.

 

1.38.        “Person” means
any individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, Governmental Entity, joint
venture, estate, trust, association, organization or other entity of any kind
or nature.

 

1.39.        “Preferred
Purchase Price” has the meaning set forth in Section 2.2.

 

1.40.        “Purchaser”
and “Purchasers” have the meanings set forth in the Preamble.

 

1.41.        “Representatives”
of any Person shall mean such Person’s directors, managers, members, officers,
employees, agents, advisors, Affiliates and representatives (including
attorneys, accountants, consultants, financial advisors, financing sources and
any representatives of such advisors or financing sources).

 

1.42.        “Restraint”
has the meaning set forth in Section 7.1(b).

 

1.43.        “Revised Operating
Agreement” has the meaning set forth in the Recitals.

 

1.44.        “Securities Act”
has the meaning set forth in Section 5.5.

 

1.45.        “Series C
Preferred Units” has the meaning set forth in the Recitals.

 

1.46.        “Subsidiary”
means, with respect to any Person, any corporation or other entity of which
such Person has, directly or indirectly, (a) ownership of securities or
other interests having the power to elect a majority of the Board of Directors
or similar governing body 

 

5

 

of
such corporation or other entity or (b) the power to direct the business
and policies of that corporation or other entity.

 

1.47.        “Tax Authority”
means any Governmental Entity or any subdivision, agency, commission or
authority thereof, or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition of
any Tax.

 

1.48.        “Tax Returns” means
any report, return, election, document, estimated tax filing, declaration or
other filing required to be provided to any Tax Authority or jurisdiction with
respect to Taxes, including any amendments thereto.

 

1.49.        “Taxes” means
all taxes, assessments, charges, duties, fees, levies, imposts or other
governmental charges, including Income Taxes, all federal, state, local,
municipal, county, foreign and other franchise, profits, capital gains, capital
stock, capital structure, transfer, gross receipts, sales, use, transfer,
service, occupation, ad valorem, property, excise, severance, windfall profits,
premium, stamp, license, payroll, employment, social security, unemployment,
disability, environmental (including taxes under Code Section 59A),
alternative minimum, add-on, value-added, withholding and other taxes of any
kind whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), and all estimated taxes, deficiency
assessments, additions to tax, and additional amounts imposed by any
governmental authority (domestic or foreign) with respect to a Tax, and
penalties and interest thereon.

 

1.50.        “WTA” has the
meaning set forth in the Recitals.

 

ARTICLE 2

 

Sale and Purchase of Series C
Preferred Units

 

2.1           Sale and Purchase
of Series C Preferred Units. 
Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, CCR shall issue and sell, and each Purchaser
shall purchase from CCR and subscribe for, the number of Series C Preferred
Units set forth immediately to the right of such Purchaser’s name below, for a
total of 75,000 Series C Preferred Units:

 

	
   

  	
   

  	
  Number of

  	
   

  	
  Aggregate

  	
   

  
	
  Purchaser

  	
   

  	
  Series C Preferred Units

  	
   

  	
  Consideration

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Millennium

  	
   

  	
  10,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AcquisitionCo

  	
   

  	
  46,625

  	
   

  	
  $

  	
  46,625,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crown One

  	
   

  	
  9,188

  	
   

  	
  $

  	
  9,188,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crown Two

  	
   

  	
  9,187

  	
   

  	
  $

  	
  9,187,000

  	
   

  

 

6

 

The terms, limitations and
relative rights and preferences of the Series C Preferred Units shall be
as set forth in the Revised Operating Agreement.

 

The
Company’s agreement with each Purchaser is a separate agreement and the sale of
Series C Preferred Units to each such Purchaser is a separate sale.  No Purchaser shall have any responsibility or
obligation for the performance by any other Purchaser of such other Purchaser’s
obligations under this Agreement.

 

2.2           Consideration.  The consideration for each Series C
Preferred Unit shall be One Thousand Dollars ($1,000), payable in cash at the
Closing, and accordingly, the aggregate consideration paid by a Purchaser for
the Series C Preferred Units purchased by such Purchaser hereunder shall
be the amount set forth under “Aggregate Consideration” to the right of such
Purchaser’s name in Section 2.1 above (with respect to each Purchaser,
such consideration being referred to herein as the “Preferred Purchase Price”).

 

2.3           Closing
Deliveries of CCR.  At the
Closing, CCR shall deliver, or cause to be delivered, to the Purchasers the
following (in addition to any other documents required to be delivered to the
Purchasers by or on behalf of CCR pursuant to any other provisions of this
Agreement):

 

(a)           a certificate
duly executed by CCR, dated as of the Closing Date, certifying as to the
satisfaction of the conditions in Section 7.2(a) and Section 7.2(b);

 

(b)           for each
Purchaser, certificates representing the Series C Preferred Units
purchased by such Purchaser;

 

(c)           execution
copies of each of the Credit Agreements; and

 

(d)           such other
instruments, assignments, waivers, consents or other documents as the
Purchasers may reasonably request to evidence the satisfaction of all
conditions precedent set forth in ARTICLE 7 or to consummate the
transactions contemplated by this Agreement.

 

2.4           Closing
Deliveries of the Purchasers.  At the Closing, each Purchaser shall deliver
the following (in addition to any other documents required to be delivered by
such Purchaser pursuant to any other provisions of this Agreement):

 

(a)           to CCR, such
Purchaser’s Preferred Purchase Price for the Series C Preferred Units
being purchased by such Purchaser hereunder;

 

(b)           to CCR, a
certificate duly executed by such Purchaser, dated as of the Closing Date,
certifying as to the satisfaction of the conditions in Section 7.3(a) and
Section 7.3(b) as such conditions relate to such Purchaser;

 

(c)           to each other
Purchaser, counterpart originals of the Revised Operating Agreement, duly
executed by such Purchaser; and

 

7

 

(d)           such other
instruments, assignments, waivers, consents or other documents as CCR may
reasonably request to evidence the satisfaction of all conditions precedent set
forth in ARTICLE 7 or to consummate the transactions contemplated by
this Agreement.

 

2.5           Closing
Deliveries of the Parent.  At
the Closing, the Parent shall deliver to CCR the following (in addition to any
other documents required to be delivered by the Parent pursuant to any other
provisions of this Agreement):

 

(a)           a certificate
duly executed by the Parent, dated as of the Closing Date, certifying as to the
satisfaction of the conditions in Section 7.3(a) and Section 7.3(b) as
such conditions relate to the Parent; and

 

(b)           such other
instruments, assignments, waivers, consents or other documents as CCR may
reasonably request to evidence the satisfaction of all conditions precedent set
forth in ARTICLE 7 or to consummate the transactions contemplated by
this Agreement.

 

ARTICLE 3

 

Closing

 

3.1           Closing.  The closing of the sale and purchase of the Series C
Preferred Units and the other transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of Munger, Tolles & Olson LLP, Los
Angeles, California at 10:00 a.m. local time (or such other time, place
and date as the Purchasers and CCR may mutually agree) as soon as practicable,
but no later than two (2) Business Days after the first date on which all
the conditions to Closing (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the fulfillment or waiver of
those conditions) shall have been satisfied or waived.

 

3.2           Closing Date.  The date on which the Closing occurs is
referred to as the “Closing Date”.

 

ARTICLE 4

 

Representations and Warranties
Regarding the Companies

 

Except as set forth in the
Schedules attached hereto (provided that a listing of an item in one Schedule
shall be deemed to be a listing in each other Schedule to which such item
relates only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to another section), CCR
hereby represents and warrants to the Parent and the Purchasers as follows:

 

4.1           Company
Organization and Good Standing.  Each Company (a) is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization (except where such concepts are not applicable), (b) has all
requisite power and authority to own, operate and lease its properties and
assets and to carry on its business as now 

 

8

 

conducted
and (c) is duly qualified or licensed to transact business and is in good
standing in each state or jurisdiction in which the ownership, operation or
leasing of its property or the conduct of its business requires such
qualification or license, except where the failure to so qualify or be licensed
would not have a Material Adverse Effect.

 

4.2           CCR Authority;
Enforceability.  CCR has the
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby.  The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of CCR, and no other company action on the part of CCR or
any of its members is necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement,
when duly executed by the other parties hereto, will constitute legally valid
and binding obligations of CCR enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting creditors’ rights and remedies generally and to
general principles of equity.

 

4.3           Capitalization;
Valid Issuance.  (a)  Schedule
4.3(a) to this Agreement contains a complete and accurate description
of the ownership structure of the Companies (including the identity of each
equityholder and its percentage ownership of each Company).  The Companies do not have any other
Subsidiaries or own any stock of, or any equity participation in, any Person,
except as set forth on Schedule 4.3(a) to this Agreement.  The equity interests of each Company as set
forth on Schedule 4.3(a) to this Agreement constitute all of the
issued and outstanding equity interests of such Company.  All of the issued and outstanding equity
interests of each Company have been duly authorized and are validly issued,
fully paid (if applicable) and nonassessable (if applicable) and none of them
has been issued in violation of preemptive or similar rights.  There are no declared or accrued but unpaid
dividends or distributions with regard to any issued and outstanding equity
interests of any Company, other than distributions by CCR to its members for
payment of Taxes in accordance with the Governing Documents of CCR.

 

(b)           Except as set
forth on Schedule 4.3(b), (i) there are no equity interests in any
Company reserved for issuance or subject to preemptive rights or any
outstanding subscriptions, options, warrants, calls, rights, agreements,
obligations, convertible, exercisable or exchangeable securities, or other
commitments, contingent or otherwise, relating to equity interests in any of
the Companies, (ii) there are no outstanding or authorized membership
interests, stock appreciation, phantom stock, profit participation, or similar
rights for which any Company has any obligation or liability, and there are no
issued and outstanding bonds, indentures, notes or other Indebtedness having
the right to vote (or convertible into, exchangeable or exercisable for, or
creating the right to subscribe for or acquire securities that have the right
to vote) on any matters on which owners or members of any Company may vote, and
(iii) there are no shareholder agreements, proxies, voting trusts or other
agreements or understandings to which any Company is a party or by which any
Company is bound relating to the voting or registration of any equity interests
of a Company or preemptive rights with respect thereto.

 

9

 

(c)           The Series C
Preferred Units being purchased by the Purchasers pursuant to this Agreement
will, upon issuance pursuant to the terms of this Agreement, (i) be duly
authorized and validly issued Series C Preferred Units of CCR, and (ii) have
the rights and privileges set forth in the Revised Operating Agreement.

 

4.4           Consents and
Approvals.  No material
consent, approval, order or authorization of any third party that is not a
Governmental Entity is required for the execution, delivery and performance of
this Agreement by CCR.  Except for the
Gaming Approvals, no notices, reports, registrations or other filings are
required to be made by any of the Companies with, nor are any consents,
approvals or Governmental Authorizations required to be obtained by any of the
Companies from, any Governmental Entity in connection with the execution,
delivery and performance of this Agreement, in each case except for those the
failure of which to make or obtain, individually or in the aggregate, are not
material to its ability to perform its obligations hereunder or thereunder and
are not reasonably likely to prohibit or materially restrict or delay the
consummation of the transactions contemplated hereby or thereby.

 

4.5           No Violations.  The execution and delivery of this Agreement
by CCR does not, and the consummation by CCR of the transactions contemplated
hereby will not (a) violate, breach, conflict with or contravene any
provision of the Governing Documents of CCR or (b) assuming all notices,
reports, registrations, filings, consents, approvals and other Governmental
Authorizations contemplated by Section 4.4 having been made or
obtained, as applicable, violate, breach, contravene or conflict with any
applicable Law, other than such violations that would be immaterial or would
not have a Material Adverse Effect.

 

4.6           Governmental
Authorizations; Compliance with Laws.  (a)  To the Companies’ knowledge, the
Companies have obtained and maintain in full force and effect all material
Governmental Authorizations required to substantially conduct the Business of
the Companies as it is presently being conducted, and for the lawful ownership,
leasing, use and operation of their respective properties and assets, in each
case, except for such Governmental Authorizations the failure to have, obtain
or maintain are not material to the ability of CCR to perform its obligations
hereunder and are not reasonably likely to prohibit or materially restrict or
delay the consummation of the transactions contemplated hereby.  To the Companies’ knowledge, there has
occurred no material violation of or default under any such Governmental
Authorization.  To the Companies’
knowledge, none of the Companies has received a currently effective written
notice, or has knowledge of any other notice, indicating that any such
Governmental Authorizations will be revoked or will not be renewed or will only
be renewed in a manner that would prohibit or materially restrict the Companies
from conducting their material operations in the ordinary course of business
consistent with past practice.

 

(b)           To the
Companies’ knowledge, each of the Companies is in compliance in all material
respects with all Laws and Orders applicable to the Business.

 

10

 

ARTICLE 5

 

Representations and Warranties
Regarding the Purchasers and the Parent

 

Each of Millennium and
AcquisitionCo, severally and not jointly, and each Crown Party, jointly and
severally with respect to any and all representations and warranties made by a
Crown Party (except that the Parent is not making the representations and
warranties in Sections 5.5, 5.6, 5.7 and 5.8 with respect to itself, but
rather, is making such representations and warranties jointly and severally
with respect to Crown One and Crown Two), hereby represents and warrants to CCR
as follows:

 

5.1           Organization
and Good Standing.  It (a) is
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization (except where such concepts are not
applicable), (b) has all requisite power and authority to own, operate and
lease its properties and assets and to carry on its business as now conducted
and (c) is duly qualified or licensed to transact business and is in good
standing in each state or jurisdiction in which the ownership, operation or
leasing of its property or the conduct of its business requires such
qualification or license, except for failures to so qualify or be licensed or
in good standing that, individually or in the aggregate, are not material to
its ability to perform its obligations hereunder and are not reasonably likely
to prohibit or materially restrict or delay its performance of this Agreement.

 

5.2           Authority;
Enforceability.  It has the
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby.  The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of it, and no other company action on the part of its or any
of its equityholders is necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement,
when duly executed by the other parties hereto, will constitute its legally
valid and binding obligations, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting creditors’ rights and remedies generally and to
general principles of equity.

 

5.3           Consents and
Approvals.  No material
consent, approval, order or authorization of any third party that is not a
Governmental Entity is required for the execution, delivery and performance of
this Agreement by it.  Except for the
Gaming Approvals,  no notices, reports,
registrations or other filings are required to be made by it with, nor are any
consents, approvals or Governmental Authorizations required to be obtained by
it from, any Governmental Entity in connection with the execution, delivery and
performance of this Agreement by it, in each case except for those the failure
of which to make or obtain, individually or in the aggregate, are not material
to its ability to perform its obligations hereunder and are not reasonably
likely to prohibit or materially restrict or delay its performance of this
Agreement.

 

5.4           No Violations.  The execution and delivery of this Agreement
by it do not, and the consummation by it of the transactions contemplated
hereby will not (a) violate, breach, conflict with or contravene any
provision of its Governing Documents or (b) assuming all 

 

11

 

notices,
reports, registrations, filings, consents, approvals and other Governmental
Authorizations contemplated by Section 5.3 have been made or
obtained, as applicable, violate, breach, contravene or conflict with any
applicable Law, other than such violations which, individually or in the aggregate,
are not material to its ability to perform its obligations hereunder and are
not reasonably likely to prohibit or materially restrict or delay the
consummation of the transactions contemplated hereby.

 

5.5           Securities Act.  It is acquiring the Series C Preferred
Units for its own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act of 1933, as amended (the “Securities
Act”), in any manner that would be in violation of the Securities Act.  It has not, directly or indirectly, offered
the Series C Preferred Units to anyone or solicited any offer to buy the Series C
Preferred Units from anyone, so as to bring the offer and sale of the Series C
Preferred Units within the registration requirements of the Securities
Act.  It will not sell, convey, transfer
or offer for sale any of the Series C Preferred Units except upon
compliance with the Revised Operating Agreement, the Securities Act and any
applicable state securities or “blue sky” Laws or pursuant to any exemption
therefrom.

 

5.6           Investor Status.  It certifies and represents to CCR that it is
an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act. 
Its financial condition is such that it is able to bear the risk of
holding the Series C Preferred Units for an indefinite period of time and
the risk of loss of its entire investment. 
It has been afforded the opportunity to ask questions of and receive
answers from the management of CCR concerning this investment and has
sufficient knowledge and experience in investing in companies similar to CCR so
as to be able to evaluate the risks and merits of its investment in CCR.

 

5.7           Securities Not
Registered.  It
understands that the Series C Preferred Units have not been registered
under the Securities Act, by reason of their issuance by CCR in a transaction
exempt from the registration requirements of the Securities Act, and that the Series C
Preferred Units must continue to be held by it unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration.  It understands that the
exemptions from registration afforded by Rule 144 (the provisions of which
are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.

 

5.8           Tax Matters.  It is a United States person within the
meaning of Section 7701(a)(30) of the Code.  It shall deliver to CCR an IRS Form W-9
in connection with its acquisition of the Series C Preferred Units
hereunder and at any other time reasonably requested by CCR.

 

ARTICLE 6

 

Covenants of the Parties

 

6.1           Crown Consent.  For purposes of Section 6.13 of the
Current Operating Agreement, each of Crown One and Crown Two hereby consents to
the issuance of the Series C Preferred Units pursuant hereto and as
permitted pursuant to Section 2.5(b) of the Revised 

 

12

 

Operating
Agreement, the relative rights, preferences and powers of which are set forth
in the Revised Operating Agreement.

 

6.2           Cooperation.  (a)  Each party will cooperate with the
other in taking, or causing to be taken, all appropriate actions and all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including preparing and filing as promptly as reasonably
practicable all documentation to obtain all Governmental Authorizations.

 

(b)           In the event
that any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Entity or private party
challenging the transactions contemplated by this Agreement, each of the
parties shall cooperate in all respects with each other to contest and resist
any such action or proceeding and to have vacated, lifted, reversed or
overturned any Order, whether temporary, preliminary or permanent, that is in
effect and that prohibits or materially restricts or delays consummation of the
transactions contemplated by this Agreement.

 

(c)           The parties
mutually agree to cooperate with each other (i) to, as promptly as
practicable after the date hereof, obtain all licenses, permits, approvals,
authorizations, registrations, findings of suitability, franchises,
entitlements, waivers and exemptions issued by any Gaming Authority (including
the receipt of informal advice from the Gaming Authority that no filing or
permit is required, including with respect to any Affiliates or Licensed
Persons) required to permit the parties hereto to consummate the transactions
contemplated by this Agreement (collectively, “Gaming Approvals”), (ii) to
avoid any action or proceeding by any Gaming Authority challenging the
consummation of the transactions contemplated hereby, (iii) to make or
cause to be made all necessary filings, and thereafter make or cause to be made
any other required submissions with respect to this Agreement and the
transactions contemplated hereby, as required under the Gaming Laws, (iv) to
schedule and attend (or cause to be scheduled and attended) any hearings or
meetings with Gaming Authorities to obtain the Gaming Approvals as promptly as
possible and (v) to act diligently and promptly to pursue any and all of
the foregoing as necessary to obtain the Gaming Approvals.

 

(d)           All analyses,
appearances, meetings, discussions, presentations, memoranda, briefs, filings,
arguments and proposals made by or on behalf of the Purchasers, the Parent or
any Licensed Person before any Governmental Authority, including any Gaming
Authority, or the staff or regulators of any Governmental Authority, in
connection with the transactions contemplated hereunder (but for the avoidance
of doubt, not including any interactions between the Purchasers or the
Companies with Governmental Authorities in the ordinary course of the conduct
of their business operations, any disclosure which is not permitted by Law, or
any disclosure containing confidential information or unrelated to the
transaction contemplated by this Agreement) shall be disclosed to the other
party hereunder in advance of any filing, submission or attendance, it being
the intent that the parties will notify, consult and cooperate with one
another, and consider in good faith the views of one another, in connection with
any analyses, appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments and proposals, with the final materials regarding
the purchase of the Series C Preferred Units being subject to the approval
of CCR’s counsel.  Each of the Crown
Parties, on the one hand, and Millennium, AcquisitionCo and CCR, on the other
hand, shall give notice to each other with respect to any meeting, discussion,
appearance, or material contact or meeting 

 

13

 

with
any Governmental Authority or the staff or regulators of any Governmental
Authority, with such notice being sufficient to provide such other party with
the opportunity to attend and participate in such meeting, discussion,
appearance or material contact or meeting.

 

(e)           Notwithstanding
anything to the contrary herein, the parties agree that counsel for CCR may, at
its discretion, direct the strategy for obtaining the Gaming Approvals required
to consummate the purchase of the Series C Preferred Units and coordinate
and participate in any and all appearances, meetings, discussions,
presentations, memoranda, briefs, filings, arguments and proposals made before
any Governmental Authority, including any Gaming Authority, or the staff or
regulators of any Governmental Authority, in connection with the purchase of
the Series C Preferred Units, with the cooperation of the Crown Parties
and their counsel; provided that at the reasonable request of Licensed
Persons outside the control of the Crown Parties, CCR, Millennium and
AcquisitionCo agree that counsel for CCR shall not participate in the portion
of any appearance, meeting, or discussion before the Gaming Authorities which
involves confidential information of such Licensed Persons.

 

(f)            Notwithstanding
anything to the contrary herein, the parties agree that counsel for the Crown
Parties may, at its discretion, direct the strategy for obtaining the Gaming
Approvals required to consummate the conversion of the Series B Preferred
Units to Series A2 Preferred Units and coordinate and participate in any
and all appearances, meetings, discussions, presentations, memoranda, briefs,
filings, arguments and proposals made before any Governmental Authority,
including any Gaming Authority, or the staff or regulators of any Governmental
Authority, in connection therewith, with the cooperation of CCR and its
counsel.

 

6.3           Guarantee.  (a)  The Parent absolutely,
unconditionally and irrevocably guarantees to CCR, Millennium and AcquisitionCo
the due and punctual observance, performance and discharge of all of the
covenants, agreements, obligations and liabilities of Crown One and Crown Two
pursuant to this Agreement, whether fixed, contingent, now existing or
hereafter arising, created, assumed, incurred or acquired from the date hereof
through the Closing Date (the “Obligations”).

 

(b)           The Parent
agrees that the obligations of the Parent hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (i) the failure
of CCR, Millennium or AcquisitionCo to assert any claim or demand or to enforce
any right or remedy against Crown One or Crown Two, (ii) any change in the
time, place or manner of payment of any of the Obligations or any rescission,
waiver, compromise, consolidation or other amendment or modification of any of
the terms of provisions of this Agreement, (iii) any change in the
corporate existence, structure or ownership of Crown One or Crown Two, (iv) any
insolvency, bankruptcy, reorganization or other similar proceeding affecting Crown
One or Crown Two, (v) any lack of validity or enforceability of this
Agreement, (vi) the existence of any claim, set-off or other rights which
the Parent may have at any time against CCR or any of the Purchasers, whether
in connection with the Obligations or otherwise, and (vii) any other act
or omission which might in any manner or to any extent vary the risk of the
Parent or otherwise operate as a release or discharge of the Parent, all of
which may be done without notice to the Parent. 
None of CCR, Millennium or AcquisitionCo shall be bound or obliged to
exhaust their recourse against Crown One or Crown Two or pursue any other
remedy whatsoever before being entitled to demand the satisfaction of the
Obligations by the Parent hereunder.  To
the fullest extent 

 

14

 

permitted
by Law, the Parent hereby expressly waives any and all rights or defenses
arising by reason of any Law which would otherwise require any election of
remedies by CCR, Millennium or AcquisitionCo. 
The Parent acknowledges that it will receive substantially direct and
indirect benefits from the transactions contemplated by this Agreement and that
the waivers set forth herein are knowingly made in contemplation of such
benefits.  Notwithstanding anything to
the contrary herein, the Parent’s obligations under this guarantee shall be
subject to any and all claims, defenses, setoffs or other rights of or
available to Crown One and Crown Two.

 

(c)           The guarantee
set forth in this Section 6.3 shall remain in full force and effect and
shall be binding on the Parent, its successors and assigns until all of the
Obligations have been indefeasibly paid, observed, performed or satisfied in
full.

 

6.4           Use of Proceeds.  CCR shall use the aggregate Preferred
Purchase Price received hereunder promptly to make payments in respect of the
Companies’ debt facilities in partial repayment of outstanding Indebtedness of
the Companies as of the Closing Date.

 

ARTICLE 7

 

Conditions to Closing

 

7.1           Conditions to
the Obligations of All Parties.  The obligations of each party hereto to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or waiver, at or prior to the Closing, of each of the following
conditions.

 

(a)           Regulatory Approval.  Any and all Gaming Approvals required to be
obtained prior to the Closing to consummate the transactions contemplated by
this Agreement shall have been obtained.

 

(b)           No Injunctions
or Restraints; Illegality.  No
temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any Governmental Entity (other than a failure to
obtain any Gaming Approval) (each, a “Restraint”) shall be in effect
which prohibits, restrains or renders illegal the consummation of the
transactions contemplated by this Agreement; provided that prior to
asserting this condition, the party asserting this condition  shall have used its reasonable best efforts
to prevent the entry of any such Restraint and to appeal as promptly as
practicable any judgment that may be entered.

 

7.2           Conditions to
the Obligations of the Purchasers and the Parent.  The several obligation of each Purchaser and
the Parent to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or waiver, at or prior to the Closing, of each of
the following conditions:

 

(a)           Representations
and Warranties.  The
representations and warranties of CCR contained in this Agreement shall be true
and correct in all material respects (except for such representations and
warranties as are qualified by materiality or Material Adverse Effect, which
representations and warranties shall be true and correct in all respects), as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except where the failure of such representations and
warranties to be in compliance with the standard set forth above would not have
a Material Adverse Effect.

 

15

 

(b)           Covenants.  CCR shall have performed in all material
respects all obligations required to be performed by it under this Agreement.

 

(c)           Credit
Agreements.  Each of the
Credit Agreements shall be in full force and effect and, immediately after
giving effect to the issuance of the Series C Preferred Units and the use
of proceeds therefrom, there shall not exist (i) any default or event of
default under any of the Credit Agreements, or (ii) event that with the
giving of notice or lapse of time, or both, would result in a default or event
of default under any of the Credit Agreements.

 

(d)           Purchase by
Other Purchasers.  Each of the
other Purchasers shall have purchased the Series C Preferred Units to be
purchased by it as set forth in Section 2.1.

 

(e)           Closing
Deliveries.  The Purchasers
shall have received the deliverables set forth in Section 2.3.

 

7.3           Conditions to
the Obligations of CCR.  The
obligation of CCR to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or waiver, at or prior to the Closing, of
each of the following conditions:

 

(a)           Representations
and Warranties.  The
representations and warranties of the Parent and the Purchasers contained in
this Agreement shall be true and correct in all material respects (except for such
representations and warranties as are qualified by materiality, which
representations and warranties shall be true and correct in all respects), as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except where the failure of such representations and
warranties to be in compliance with the standard set forth above would not
prohibit or materially restrict the performance of this Agreement by the Parent
or the Purchasers.

 

(b)           Covenants.  The Parent and each Purchaser shall have
performed in all material respects all obligations required to be performed by
it under this Agreement.

 

(c)           Closing
Deliveries.  CCR shall
have received the deliverables set forth in Section 2.4.

 

ARTICLE 8

 

Termination

 

8.1           Termination.  This Agreement may be terminated at any time
prior to the Closing:

 

(a)           by written
consent of CCR, Millennium, AcquisitionCo, and the Parent; or

 

(b)           automatically,
without any further action on the part of any party, if the Closing shall not have
occurred on or before 5:00 pm (New York City time) on May 31, 2010.

 

16

 

8.2           Effect of
Termination.  Each party’s
right of termination under Section 8.1 is in addition to any other rights
it may have under this Agreement or otherwise, and the exercise of such right
of termination will not be an election of remedies.  If this Agreement is terminated pursuant to Section 8.1,
all obligations of the parties under this Agreement will terminate, except that
the obligations of the parties in this Section 8.2 (Effect of
Termination), 9.5 (Applicable Law), 9.6 (Enforcement), 9.7
(Waiver of Jury Trial), 9.9 (Transaction Expenses) and 9.14 (Notices)
will survive; provided, that, a party’s right to pursue all legal
remedies against another party hereto for breaches of this Agreement prior to
the effective date of a termination hereof will survive such termination
unimpaired.

 

8.3           Gaming
Approvals.  Without
limitation of a party’s express obligations herein, it is understood and agreed
by the parties hereto that none of the Purchasers or the Parent shall be in
breach or violation of their respective obligations under this Agreement solely
as a result of the failure to obtain any Gaming Approval, or the failure of any
Persons affiliated or associated with the Parent or the Purchasers that may
need to be licensed under applicable Gaming Laws to receive any Gaming
Approval, required to consummate the transactions contemplated hereby.

 

ARTICLE 9

 

General

 

9.1           Entire
Agreement.  This
Agreement, including the Annex and Schedules hereto, constitute the entire
agreement and understanding and supersede all other prior covenants,
agreements, undertakings, obligations, promises, arrangements, communications,
representations and warranties, whether oral or written, by any party hereto or
by any director, officer, employee, agent, Affiliate or Representative of any
party hereto.  Except for the documents
referred to in the immediately preceding sentence, there are no covenants,
agreements, undertakings or obligations with respect to the subject matter of
this Agreement other than those expressly set forth or referred to herein and
no representations or warranties of any kind or nature whatsoever, express or
implied, including any implied warranties of merchantability or fitness for a
particular purpose, are made or shall be deemed to be made herein by the parties
hereto except those expressly made herein.

 

9.2           No Third Party
Rights or Obligations. 
Nothing in this Agreement, express or implied, is intended to confer any
rights or remedies of any nature whatsoever, or impose any burden or obligation
of any nature whatsoever, upon any Person other than the parties hereto, under
or by reason of this Agreement or any provision of this Agreement, and  this Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of, and the sole and exclusive
burden of, the parties to this Agreement and their respective successors and
permitted assigns.

 

9.3           Counterparts.  This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.  The parties agree and acknowledge that
delivery of a signature by facsimile or by electronic delivery in .pdf or .tiff
format shall constitute execution by such signatory.

 

17

 

9.4           Headings.  The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of, or to
affect the meaning, construction or interpretation of, this Agreement.

 

9.5           Applicable Law.  This Agreement shall be governed by and
construed and enforced in accordance with the internal Laws of the State of
Delaware, regardless of the Laws that might otherwise govern under the
applicable principles of conflicts of laws.

 

9.6           Enforcement.  The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law and
that money damages would not be sufficient in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, and it is accordingly agreed that
the parties shall be entitled to an injunction or injunctions and other
equitable relief (without bond or other security being required) to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any federal or state court located in the State of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity.  In addition, each
of the parties hereto (a) consents to submit itself to the personal
jurisdiction of the federal and state courts located in the State of Delaware
in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court in the State of
Delaware.

 

9.7           Waiver of Jury
Trial.  Each party to this Agreement
waives, to the fullest extent permitted by applicable Law, any right it may
have to a trial by jury in respect of any action, suit or proceeding arising
out of or relating to this Agreement.

 

9.8           Waiver of
Conditions.  (a) 
No claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
parties hereto.  No waiver that may be
given by a party will be applicable except in the specific instance for which
it is given.  No notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.

 

(b)           Except as
otherwise set forth herein, the rights and remedies of the parties hereto are
cumulative and not alternative. Except where a specific period for action or
inaction is provided herein, neither the failure nor any delay on the part of
any party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of
any other such right, power or privilege. 
The failure of a party to exercise any right conferred herein within the
time required shall cause such right to terminate with respect to the
transaction or circumstances 

 

18

 

giving
rise to such right, but not to any such right arising as a result of any other
transactions or circumstances.

 

9.9           Transaction
Expenses.  Whether or
not the transactions contemplated by this Agreement are consummated, each party
shall pay its own fees and expenses incident to the negotiation, preparation,
execution, delivery and performance hereof, including the fees and expenses of
its counsel, accountants and other experts, except as expressly provided
herein.  All fees associated with the
legal services of Munger, Tolles & Olson, LLP, Brownstein Hyatt Farber
Schreck, and Fox Rothschild LLP and all other service providers to CCR in
connection with this Agreement shall be paid by CCR at the Closing.

 

9.10         Construction.  Each party has been represented by counsel of
its choice in the negotiation of this Agreement.  This Agreement shall be deemed to have been
drafted by each of the parties hereto jointly, and no rule of construction
shall be invoked respecting the authorship hereof.

 

9.11         Severability.  In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision or provisions shall be ineffective
only to the extent of such invalidity, illegality or unenforceability, without
invalidating the remainder of such provision or provisions or the remaining
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein, unless such a construction would be unreasonable.

 

9.12         Amendments.  This Agreement may only be amended by a
written document signed by the parties hereto. 
Until such an amendment is signed by all parties, any other agreements,
understandings, writings or oral promises or representations that are at odds
with the terms of this Agreement will be of no effect and will not in any way
be binding upon the parties.

 

9.13         Assignments.  (a)  None of the Purchasers nor the
Parent may assign any of their rights or obligations under this Agreement
without the prior written consent of CCR and any purported assignment without
such consent shall be void, except that any of the Purchasers may assign this
Agreement to its direct or indirect wholly-owned Affiliate; provided
that such assignment shall not unduly delay or hinder the obtaining or
completion of the Gaming Approvals required by Section 7.1(a) hereof.

 

(b)           CCR may not
assign any of its rights or obligations under this Agreement without the prior
written consent of the Purchasers and any purported assignment without such
consent shall be void.

 

9.14         Notices.  All notices, requests, instructions, claims,
demands, consents and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given on
the date delivered by hand or by a nationally recognized, overnight courier service
(with tracking capability), or by other messenger (or, if delivery is refused,
upon presentment) or upon receipt by facsimile transmission (with
confirmation), or 

 

19

 

upon
delivery by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses:

 

If to Crown One or Crown Two:

 

The
Corporation Trust Company

1209
Orange Street

Wilmington,
Delaware  19801

Attention:   Scott Lascala

Service of Process Department

Facsimile:
  (302) 655-7813

 

With a copy to:

 

Crown
Limited

8
Whiteman Street

Southbank,
Victoria 3006

Australia

Attn:  Company Secretary

Facsimile:  + 61 3 9292 8815

 

and

 

Skadden,
Arps, Slate, Meagher & Flom LLP

Four
Times Square

New
York, New York  10036

Attn:       Patricia Moran

Facsimile:  (212) 735-2000

 

If
to the Parent:

 

Crown
Limited

8
Whiteman Street

Southbank,
Victoria 3006

Australia

Attn:  Company Secretary

Facsimile:  + 61 3 9292 8815

 

With a copy to:

 

Skadden,
Arps, Slate, Meagher & Flom LLP

Four
Times Square

New
York, New York  10036

Attn:       Patricia Moran

Facsimile:  (212) 735-2000

 

20

 

If to CCR:

 

Cannery Casino Resorts, LLC

9107 West Russell Road

Las Vegas, Nevada 
89148

Attn: 
Managers

Facsimile:  (702) 856-5101

 

With a copy to:

 

OCM Holdco, LLC

333 South Grand Avenue, 28th Floor

Los Angeles, California   90071

Attn:  Stephen A. Kaplan

Facsimile:  (213) 830-6377

 

and

 

Munger,
Tolles & Olson LLP

355
South Grand Avenue, 35th Floor

Los Angeles, California  90071

Attn: 
Sandra A. Seville-Jones

Facsimile:  (213) 683-5126

 

If to Millennium or AcquisitionCo:

 

Millennium Gaming, Inc.

9107 West Russell Road

Las Vegas, Nevada 
89148

Attn:  Chief
Executive Officer

Facsimile: 
(702) 856-5101

 

and

 

OCM Holdco, LLC

333 South Grand Avenue, 28th Floor

Los Angeles, California   90071

Attn:  Stephen A. Kaplan

Facsimile:  (213) 830-6377

 

With a copy to:

 

Munger,
Tolles & Olson LLP

355
South Grand Avenue, 35th Floor

Los Angeles, California  90071

Attn: 
Sandra A. Seville-Jones

Facsimile:  (213) 683-5126

 

21

 

or to such other Persons or
addresses as the Person to whom notice is given may have previously furnished
to the other in writing in the manner set forth above (provided that notice of
any change of address shall be effective only upon receipt thereof).

 

9.15         Further
Assurances.  Without
limiting the provisions of Section 6.2, the parties hereto shall
use commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other
party may reasonably request in order to carry out the intent and purposes of
this Agreement and the consummation of the transactions contemplated hereby.

 

9.16         Confidentiality.  The disclosure of confidential or proprietary
information by the parties shall be governed by the terms and conditions of the
terms of the Current Operating Agreement, and on and after the Closing, the
terms and conditions of the Revised Operating Agreement.  Notwithstanding anything to the contrary set
forth herein or in any other understanding or agreement between the parties
hereto, the parties acknowledge and agree that any obligations of
confidentiality contained herein and therein shall not apply to the tax
treatment and tax structure of this Agreement upon the earlier to occur of (a) the
date of the public announcement of discussions relating to the sale and purchase
described herein, (b) the date of the public announcement of sale and
purchase described herein, or (c) the date of the execution of this
Agreement, all within the meaning of Treasury Regulations Section 1.6011-4;
provided, however, that the foregoing
is not intended to affect each party’s privilege to maintain, in its sole
discretion, the confidentiality of communications with its attorneys or with a
federally authorized tax practitioner under Section 7525 of the Code.

 

9.17         Additional Rules of
Construction.  The
following provisions shall be applied wherever appropriate herein:

 

(a)           “herein,” “hereby,”
“hereunder,” “hereof” and other equivalent words shall refer to this Agreement
as an entirety and not solely to the particular portion of this Agreement in
which any such word is used;

 

(b)           all definitions
set forth herein shall be deemed applicable whether the words defined are used
herein in the singular or the plural;

 

(c)           all pronouns
and any variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require;

 

(d)           the words “include”
and “including” and variations thereof shall not be deemed terms of limitation,
but rather shall be deemed to be followed by the words “without limitation”;

 

(e)           all accounting
terms not specifically defined herein shall be construed in accordance with
GAAP;

 

(f)            the captions
and descriptive headings herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof;

 

22

 

(g)           any references
herein to a particular Section, Article, Annex or Schedule means a Section or
Article of, or an Annex or Schedule to, this Agreement unless another
agreement is specified;

 

(h)           the Annex and Schedules
attached hereto are incorporated herein by reference and shall be considered
part of this Agreement as if fully set forth herein; and

 

(i)            all references
to “$” or “Dollars” shall mean United States Dollars.

 

[Signature Pages Follow]

 

23

 

IN WITNESS WHEREOF, the
parties hereto have entered into and signed this Agreement as of the date and
year first above written.

 

CROWN PARTIES:

 

CROWN CCR GROUP INVESTMENTS ONE, LLC

 

 

	
  By:

  	
  /s/
  Todd Nisbet

  	
   

  
	
   

  	
  Name:

  	
  Todd Nisbet

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  

 

 

CROWN CCR GROUP INVESTMENTS TWO, LLC

 

 

	
  By:

  	
  /s/
  Todd Nisbet

  	
   

  
	
   

  	
  Name:

  	
  Todd Nisbet

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  

 

CROWN LIMITED

 

 

	
  By:

  	
  /s/
  Rowen Craigie

  	
   

  
	
   

  	
  Name:

  	
  Rowen Craigie

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  

 

[Purchase Agreement
Signature Page]

 

S-1

 

CCR:

 

CANNERY CASINO RESORTS, LLC

 

 

	
  By:

  	
  /s/
  William C. Wortman

  	
   

  
	
   

  	
  Name:

  	
  William
  C. Wortman

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  

 

 

OTHER PURCHASERS:

 

MILLENNIUM GAMING, INC.

 

 

	
  By:

  	
  /s/
  William C. Wortman

  	
   

  
	
   

  	
  Name:

  	
  William
  C. Wortman

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  

 

 

OCM ACQUISITIONCO, LLC

 

 

	
  By:

  	
  /s/
  Stephen A. Kaplan

  	
   

  
	
   

  	
  Name:

  	
  Stephen
  A. Kaplan

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  

 

 

	
  By:

  	
  /s/
  Ronald N. Beck

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  N. Beck

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  

 

[Purchase Agreement
Signature Page]

 

S-2

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