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American Entertainment LLC Agreement 01-14-1994

OPERATING AGREEMENT

OF

AMERICAN ENTERTAINMENT, L.L.C., A LOUISIANA LIMITED-LIABILITY

COMPANY

 

 

This Operating Agreement (the "Agreement") is entered

into as of this 14th day of January, 1994, by and between

CIRCUS CIRCUS LOUISIANA, INC., a Louisiana corporation ("CCLI")

and AMERICAN ENTERTAINMENT CORPORATION, a Louisiana

corporation ("AEC"), collectively referred to as the

"Members."

 

ARTICLE 1. NAME; DEFINED TERMS

Section 1.1 Name. The name of the Company shall be:

"American Entertainment, L.L.C."

Section 1.2 Identification of Company. The

abbreviation "L.L.C." must appear in the name of the Company

on all correspondence, stationery, checks, invoices, and all

documents executed by the Company.

Section 1.3 Certain Definitions. As used in this

Agreement, the following terms shall have the following

meanings:

"AEC Loan" means the loan made by the Company to AEC

pursuant to Section 6.6.

"Affiliate" means any person or entity controlling,

controlled by or under common control with any other

person or entity, including without limitation, any

officer, director, employee, agent, partner or member of

any such person or entity.

"Appointing Member" means the Member entitled to

initially appoint a Manager or to fill a vacancy of a

Manager on the Management Committee pursuant to Section

5.3(c).

"B of A Prime Rate" means the "prime rate" of

interest charged from time to time by Bank of America,

N.T. & S.A. to its best commercial customers for short

term unsecured loans.

"CCEI" means Circus Circus Enterprises, Inc., a

Nevada corporation, an Affiliate of CCLI.

"CCLI Additional Capital Balance" means an amount

equal to the aggregate amount of CCLI Additional Capital

Contributions, as reduced (but not below zero) by the

aggregate amount of all prior distributions of Net

Available Cash to CCLI pursuant to Section 7.3(a)(iv) and

as provided in Section 7.3(c).

"CCLI Additional Capital Contributions" means the

amounts contributed to or for the benefit of the Company

by CCLI pursuant to Section 6.2(a)(ii).

"CCLI Cost of Funds" means (i) with respect to CCLI

Additional Capital Contributions or CCLI Loans funded

from its own cash (or with the proceeds of inter-company

advances from Affiliates of CCLI), the imputed cost of

funds to CCLI and/or its Affiliates, taking into account

the cost of both equity and debt funds, as such imputed

costs may vary from time to time, or (ii) with respect to

CCLI Additional Capital Contributions or CCLI Loans made

with funds borrowed by CCLI or its Affiliates under its

or their credit facilities, the rate of interest charged

to CCLI or such Affiliate in connection with such

financing.

"CCLI Guaranty" means any guaranty of indebtedness

or similar obligations undertaken by CCLI or an Affiliate

for the benefit of the Company.

"CCLI Loans" means loans made by CCLI or an

Affiliate to or for the benefit of the Company pursuant

to Section 6.2(a)(iii), which Loans (i) shall bear

interest from the date of each advance until repaid, at a

rate equal to one percent (1%) per annum in excess of the

CCLI Cost of Funds, (except as otherwise provided in

Sections 6.2(e) or 6.2(f)), (ii) may be secured by deeds

of trust and/or other security interests in the Property,

the Project and/or other assets of the Company, as

required from time to time by CCLI or such Affiliate, and

(iii) shall be made upon and subject to such commercially

reasonable terms and conditions as required from time to

time by CCCI or such Affiliate.

"Capital Account" shall have the meaning ascribed to

it in Section 6.5.

"Capital Contributions" means the amounts

contributed to or for the benefit of the Company by a

Member pursuant to Section 6.1.

"Code" means the Internal Revenue Code of 1986, as

amended.

"Conditional Approval" means the certificate of

approval for a gaming license granted to the Company by

the Louisiana gaming authorities after completion of all

suitability investigations and all required public

hearings, which license is conditioned (if at all) only

upon the completion of construction of the Project and

the satisfaction of other non-discretionary conditions

(which conditions shall have been approved by the

Management Committee).

"Construction Budget" means the written budgets and

schedules and any amendments thereto, approved by CCLI

pursuant to Section 5.4, setting forth in reasonable

detail, all costs and expenses (including without

limitation, both "hard" and "soft" costs for both off-

site and on-site work) incurred or to be incurred in

connection with the acquisition and development of the

Property and the design, development, construction,

fixturizing, equipping, preopening expenses and initial

bankroll for operation of the Project.

"Consulting Agreement" means that certain Riverboat

Casino Consulting Agreement to be entered into

concurrently herewith between the Company as owner and

AEC as consultant, in form and substance as set forth on

attached Exhibit E.

"Current Year Amortization" means for each fiscal

year with respect to each CCLI Loan and each CCLI

Additional Capital Contribution the aggregate amount that

would be payable by the Company with respect to such

fiscal year to amortize each such CCLI Loan and each such

CCLI Additional Capital Contribution ratably over a five-

year period commencing with the date of such CCLI Loan or

CCLI Additional Capital Contribution, as the case may be;

provided, however, that for any fiscal year in which the

Liquidation of the Company shall occur, "Current Year

Amortization" with respect to each CCLI Loan shall mean

the outstanding principal balance of such CCLI Loan and

with respect to the CCLI Additional Capital Contributions

shall mean an amount equal to the CCLI Additional Capital

Balance.

"Depreciation" means, for each fiscal year or other

period, an amount equal to the depreciation, amortization

or other cost recovery deduction allowable with respect

to an asset for such year or other period, 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 year or other period, 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 year or other period bears to such

beginning adjusted tax basis.

"Estimated Project Cost" means a lump sum amount, to

be approved by the Management Committee, representing the

initial estimated total amount of the costs and expenses

to be more particularly described in the Construction

Budget.

"Event of Default" shall have the meaning ascribed

to it in Section 9.1.

"Final Approval" means the satisfaction or waiver of

all conditions imposed pursuant to the Conditional

Approval, so that all gaming licenses have become

effective and the Company is entitled to conduct all

contemplated gaming activities and substantially all

other contemplated activities at the Project.

"Georgusis" means Joseph Georgusis, an Affiliate of

AEC.

"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 Members; and (ii) the Gross Asset Value

of all assets whose Gross Asset Value has been adjusted

pursuant to Section 7.5(f) shall be adjusted pursuant to

the last sentence of Section 7.5(f).

"Initial Capital Contributions" means the amounts

contributed to or for the benefit of the Company by the

Members pursuant to Section 6.1.

"Intangibles" means (i) the Preliminary Approval (as

modified pursuant to the petition attached hereto as

Exhibit C-2), (ii) the Conditional Approval, (iii) the

Final Approval and (iv) all other leases, contracts,

building or other permits, licenses and other assets

(excluding cash) necessary to develop, construct, market

and operate the Project.

"Liquidation" means (i) when used with reference to

the Company, the earlier of (a) the date upon which the

Company is terminated under Section 708(b)(1) of the

Code, or any similar provision enacted in lieu thereof,

or (b) the date upon which the Company ceases to be a

going concern, and (ii) when used with reference to any

Member, the earlier of (a) the date upon which there is a

Liquidation of the Company or (b) the date upon which

such Member's entire interest in the Company is

terminated by means of a distribution or series of

distributions by the Company to the Member.

"Major Decision" shall have the meaning ascribed to

it in Section 8.2(a).

"Management Agreement" means that certain Riverboat

Casino Management Agreement to be entered into

concurrently herewith between the Company as owner and

CCLI or an Affiliate of CCLI as manager, relating to the

management and operation of the Project, in form and

substance as set forth on attached Exhibit D.

"Management Committee" shall have the meaning

ascribed to it in Section 5.3(a).

"Manager" shall have the meaning ascribed to it in

Section 5.3.

"Member Nonrecourse Debt" means any Company

liability to the extent the liability is nonrecourse for

purposes of Regulations Section 1.1001-2, and a Member

(or a related person within the meaning of Regulations

Section 1.752-4(b)) bears the economic risk of loss

(within the meaning of Regulations Section 1.752-2).

"Member Nonrecourse Debt Minimum Gain" means Minimum

Gain attributable to Member Nonrecourse Debt.

"Minimum Gain" means the sum of the separately

computed amount of gain, if any, that would be realized

by the Company if, with respect to each nonrecourse

liability of the Company, the Company disposed of the

property subject to such nonrecourse liability for no

other consideration than full satisfaction of such

liability in accordance with Regulations Section 1.704-

2(d). For this purpose, the term "nonrecourse liability"

shall have the meaning set forth in Regulations Section

1.752-1(a)(2).

"Net Available Cash" of the Company means, for each

fiscal year or other period, an amount equal to the total

cash revenues and receipts of the Company from any source

(including financings and refinancings) for such period,

less the sum of (i) cash payments made by the Company

during such period in connection with the conduct of the

Company's business (including the repayment of any Third

Party Loans, current principal and interest payments on

other Company debt, and payment of the Project Management

and Consulting Fees, but excluding any payments or

distributions pursuant to Section 7.3) and (ii) the

amount of any increase during such period in, or amounts

established during such period for, reasonable reserves

for anticipated costs, expenses, liabilities and

obligations of the Company, working capital needs of the

Company or other appropriate Company purposes, as

determined by the Management Committee pursuant to

Section 5.3.

"Offering Price" means, for purposes of Section

8.2(c), a hypothetical amount of cash, calculated

separately for each Member, which such Member would

receive if the Total Value was paid to the Company and

the proceeds thereof used to repay all outstanding CCLI

Additional Capital Contributions and CCLI Loans[, to

repay any outstanding balance of the AEC Loan] and to

make distributions of Net Available Cash pursuant to

Section 7.3 (excluding Section 7.3(a)).

"Operating Budgets" means the annual written budgets

and schedules and any amendments thereto, approved by the

Management Committee pursuant to Section 5.3, setting

forth in reasonable detail, all costs and expenses

incurred or to be incurred in connection with the

maintenance, management, marketing and operation of the

Project.

"Percentage Interest" or "Interest" means the

percentage ownership interest of a Member in the Company,

as set forth in Section 7.1.

"Permitted Title Exceptions" means those matters

affecting title to the Property which have been approved

by CCLI, as set forth on attached Exhibit B.

"Preferred Return" means an amount equal to a

cumulative annual return at 1% per annum in excess of the

CCLI Cost of Funds (except as otherwise provided in

Section 6.2(e)), with respect to the daily balance of the

CCLI Additional Capital Balance, compounded annually, as

reduced (but not below zero) by the aggregate amount of

Net Available Cash distributed to CCLI pursuant to

Section 7.3(a)(ii).

"Preliminary Approval" means the certificate of

preliminary approval for a gaming license granted to AEC,

evidence of which approval is attached hereto as

Exhibit C-1, and the petition for modification of

certificate of preliminary approval, in the form attached

hereto as Exhibit C-2.

"Profits" and "Losses" means the taxable income or

loss for federal income tax purposes of the Company for

each fiscal year, plus income and gain of the Company

exempt from federal income tax for such fiscal year, and

minus Section 705(a)(2)(B) Expenditures for such fiscal

year. Any item of income, gain, loss, deduction or

Section 705(a)(2)(B) Expenditure that is allocated in any

fiscal year pursuant to Section 7.5(a), (b), (c) or (d)

shall be excluded from the computation of Profits or

Losses to be allocated for such fiscal year pursuant to

Section 7.4. Profits or Losses resulting from any

disposition of Company property 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. In

lieu of the depreciation, amortization or other cost

recovery deductions taken into account in computing

income for federal income tax purposes, there shall be

taken into account Depreciation for such fiscal year.

"Project" means a riverboat gaming operation and

related facilities to be developed on or adjacent to the

Property. The Members contemplate that the Project will

be completed in two phases, of which "Phase I" shall

consist of a riverboat gaming vessel, a dockside

facility and related parking and "Phase II" shall consist

of additional facilities designed to enhance the

riverboat gaming operation, the general scope and purpose

of which will be determined by the Management Committee

pursuant to Section 5.3(b)(ii), and the specific design

and construction of which will be determined by CCLI

pursuant to Section 5.4(a).

"Project Management and Consulting Fees" means the

management fees payable to CCLI or its Affiliate pursuant

to the Management Agreement and the consulting fees

payable to AEC pursuant to the Consulting Agreement.

"Property" means that certain parcel of land

containing approximately 28 contiguous acres, located on

Paris Road in St. Bernard Parish, State of Louisiana, as

more particularly described on attached Exhibit A.

"Regulations" means the Income Tax Regulations

promulgated under the Code, as such regulations may be

amended from time to time.

"Section 705(a)(2)(B) Expenditure" means any

expenditure of the Company described in Section

705(a)(2)(B) of the Code or treated as such pursuant to

Regulations Section 1.704-1(b)(2)(iv)(i).

"Third Party Loans" means secured or unsecured

financings arranged by CCLI or its Affiliates and

obtained from unaffiliated third parties; each such

financing to bear interest at the rate offered by the

third party lender and to be repayable over such period

and upon such terms and conditions as shall have been

agreed upon between the third party lender and CCLI

(after consultation with AEC).

"Total Value" means, for purposes of Section 8.2(c),

a hypothetical amount representing the total cash value

of the Company, after liquidation of all assets and

payment or reservation for payment of all liabilities to

third parties, but prior to distribution of any Net

Available Cash pursuant to Sections 7.3 or 11.2.

 

ARTICLE 2. PRINCIPAL OFFICE; REGISTERED OFFICE AND AGENT

Section 2.1 Principal Office. The initial principal

office of the Company in the State of Louisiana shall be

located at 700 Camp Street, New Orleans, Louisiana 70130.

The Company may have all such other offices, either within or

without the State of Louisiana, as the Management Committee

may designate from time to time.

Section 2.2 Registered Office and Agent. The address

of the initial registered office of the Company is 700 Camp

Street, New Orleans, Louisiana 70130, and the initial

registered agent at such address is James E. Smith, Jr. The

registered office and agent may be changed from time to time

by action of the Management Committee and by filing the

prescribed form with the Louisiana Secretary of State. The

Company shall keep at its registered office, originals or

copies of the records and information required pursuant to

R.S. 12:1319.

 

ARTICLE 3. PURPOSE

Section 3.1 Purpose. The purposes for which the

Company is organized include, without limiting those

enumerated in the Articles of Organization, the acquisition of

the Property and the development, improvement, construction

and operation thereon of the Project, and for any other lawful

purposes incidental thereto for which a limited-liability

company may be organized under the laws of the State of

Louisiana, except banking or insurance.

Section 3.2 Powers. The Company shall have all the

powers granted to a limited-liability company under the laws

of the State of Louisiana.

 

ARTICLE 4. TERM

Section 4.1 Duration. The Company shall commence its

existence on the date its Articles of Organization and Initial

Report are filed with the Louisiana Secretary of State and

shall terminate fifty (50) years from that date, unless

earlier dissolved as provided by law, in this Agreement or in

the Articles of Organization.

 

ARTICLE 5. MEMBERS; MANAGEMENT OF COMPANY

Section 5.1 Members' Voting Rights.

 

(a) Each Member shall be entitled to cast a single

vote on all matters properly brought before the Members, and

except as otherwise expressly provided in this Agreement or in

the Articles of Organization, all decisions of the Members

shall be made by a majority vote of the Members.

 

(b) Notwithstanding R.S. 12:1318 B, only the

following matters shall require approval by the Members:

 

(i) The election to dissolve and wind up the

Company pursuant to Section 10.01(b).

 

(ii) The sale, exchange or other transfer of

all or substantially all of the assets of the Company

(expressly excluding any lease, mortgage, pledge or similar

financing transactions).

 

(iii) The lease, mortgage, pledge or other

hypothecation of all or substantially all of the assets of the

Company, unless such transaction(s) is contemplated in an

approved Construction Budget or Operating Budget, in which

event such transaction(s) shall not require the independent

approval of the Members.

 

(iv) The merger or consolidation of the

Company.

 

(v) The incurrence of indebtedness by the

Company other than in the ordinary course of its business; it

being expressly agreed and understood that any incurrence of

indebtedness as contemplated in an approved Construction

Budget or Operating Budget shall be deemed in the ordinary

course of the Company's business.

 

(vi) The alienation, lease or encumbrance of

any immovables of the Company other than in the ordinary

course of its business, it being expressly agreed and

understood that any such alienation, lease or encumbrance

contemplated in an approved Construction Budget or Operating

Budget shall be deemed in the ordinary course of the Company's

business.

 

(vii) An amendment to the Articles of

Organization or this Agreement.

 

(viii) Subject to Section 5.3, the selection

and removal of the Managers, the determination of their

compensation and the prescription of such powers and duties

for them as may be consistent with law, the Articles of

Organization and this Agreement.

(ix) Such other matters as are expressly

reserved to the Members pursuant to any provisions of this

Agreement.

Section 5.2 New Members. A new Member may only be

admitted as a Member in the Company with the unanimous consent

of the existing Members; provided however, upon the occurrence

of any of the acts or events set forth in Section 10.1(c), the

remaining Member, acting alone, may admit one or more new

Members. In any such event, the new Member shall execute a

written consent to be bound by the terms and provisions of

this Agreement. The new Member and all existing Members shall

also execute Amended Articles of Organization to be filed with

the Secretary of State before the new Member becomes a Member

of the Company.

Section 5.3 Managers; Management Committee.

(a) Except as otherwise provided in Section 5.4,

the management of the Company's business shall be vested in a

Management Committee composed of six (6) Managers, of which

three of such Managers shall be appointed by AEC and three of

such Managers shall be appointed by CCLI. The vote of a

majority in number of the Managers comprising the Management

Committee shall be required to act on any matter requiring

Management Committee approval; provided however, that until

such time as the AEC Loan has been paid in full and for so

long as any CCLI Guaranty remains outstanding, and/or during

any time that the amount of CCLI's Capital Contributions

exceeds the amount of AEC's Capital Contributions, CCLI shall

have the right to break any tie vote of the Management

Committee; provided further, however, that CCLI will consult

with AEC prior to making any such tie-breaking decision; and

provided further, however, that after the AEC Loan has been

paid in full, if Clyde T. Turner ceases to be associated with

CCLI, then CCLI will not have the right to break a tie vote of

the Management Committee concerning (i) approval of the Annual

Plan and Annual Operating Budget (as defined in and as

provided for pursuant to the Management Agreement), and (ii)

decisions regarding the development and construction of

additional capital facilities on the Property. The powers

granted to the Management Committee shall include, without

limitation, the express powers:

 

(i) To conduct, manage and control the affairs

and business of the Company, and to make such rules and

regulations therefor consistent with law, the Articles of

Organization and this Agreement.

(ii) To change the principal office of the

Company from one location to another within Louisiana; to fix

and locate from time to time one or more subsidiary offices of

the Company within or without the State of Louisiana; and to

designate any place within or without the State of Louisiana

for the holding of any Members' or Management Committee

meeting or meetings.

(iii) To borrow money and incur

indebtedness for the purposes of the Company, in accordance

with the approved Construction Budgets and Operating Budgets

and as directed by CCLI pursuant to Sections 6.2(a)(i) or

(iii), and to cause to be executed and delivered therefor, in

the Company's name, promissory notes, bonds, debentures, deeds

of trust, mortgages, pledges, hypothecations or other evidence

of debt and securities.

(b) Matters requiring Management Committee approval

shall include, without limitation, the following:

(i) the approval of the Estimated Project Cost

based upon estimates presented to the Management Committee by

CCLI.

(ii) Decisions relating to the overall site

development of the Property, based upon submittals presented

to the Management Committee by CCLI.

(iii) Decisions relating to the annual

Operating Budgets for the Project and any amendments thereto.

(c) The Managers appointed to the Management

Committee by one Appointing Member may be removed at any time

either with or without cause, but only by such Appointing

Member. Any Manager may resign at any time by giving written

notice to the Members. Any such resignation shall take effect

at the date of receipt of such notice or at any later time

specified therein; and unless otherwise specified therein, the

acceptance of such resignation shall not be necessary to make

it effective. The applicable Appointing Member shall replace

any vacancy in the office of any Manager appointed by such

Appointing Member. The Management Committee shall endeavor to

defer voting on any material matters while a vacancy exists.

However, if a majority of the remaining Managers on the

Management Committee determine that it is necessary or

advisable to vote on a material matter prior to appointment of

a replacement Manager by the Appointing Member, then the

Management Committee may vote on such matter, but the

remaining Manager(s) appointed by the Appointing Member shall

have the right to cast an additional vote, so that each

Appointing Member shall be represented by an equal number of

votes on the Management Committee. Each Manager on the

Management Committee shall be chosen annually by the

applicable Appointing Member and each shall hold office until

such Manager shall resign or shall be removed or otherwise

disqualified to serve, or the Manager's successor shall be

elected and qualified.

(d) The Management Committee may from time to time

authorize one or more Managers, acting alone or in concert, to

take such actions as may be necessary or advisable to

implement the policies and decisions of the Management

Committee including, without limitation, the execution and

delivery of documents and instruments as contemplated in

Section 5.3(a)(iii).

Section 5.4 CCLI Decisions. Notwithstanding anything

to the contrary contained in Sections 5.1 or 5.3 above, the

following matters shall be determined exclusively by CCLI, in

its capacity as a Member of the Company or by CCLI or an

Affiliate in its capacity as manager of the Project pursuant

to the Management Agreement; provided however, that CCLI shall

consult with AEC prior to making any of the following

decisions:

(a) All decisions relating to the development of

the Project including, without limitation, the concept,

design, Construction Budget, construction schedule and

selection of contractors and equipment suppliers, and any

amendments, modifications and supplements to any of the

foregoing. In this connection, CCLI shall endeavor to cause

the Project to be designed and developed for a total cost in

the approximate range of the Estimated Project Cost; provided

however, (i) CCLI shall have the absolute right to deviate

from the Estimated Project Cost as CCLI, in the exercise of

its reasonable business judgment,shall from time to time

determine and (ii) in no event shall CCLI be deemed a

guarantor of any Project costs.

(b) All decisions relating to the operation of the

riverboat gaming facility comprising the Project including,

without limitation, the layout of the casino, marketing and

credit policies, internal control and security procedures, and

all decisions concerning employment and operation of the

Project. It is acknowledged that employment decisions shall

be made with due consideration to guidelines recommended by

the State of Louisiana Riverboat Gaming Commission and/or

Riverboat Gaming Enforcement Division on local employment and

procurement, and the use of minority and women owned business

enterprises. The initial casino manager shall be R. Zupella.

Mr. Zupella shall be an "at will" employee and may be replaced

by CCLI should he fail to meet the performance standards as

established by CCLI from time to time, in its sole and

absolute discretion.

Section 5.5 Books of Account. Each of the Members

shall have the right at all reasonable times to review all

books of account and physical books and records of the

Company. Each Member shall be entitled to review, for at

least thirty (30) days prior to filing, the annual Form 1065,

income tax returns, tax elections and other tax filings

proposed to be filed for the Company with the Internal Revenue

Service. At the completion of each fiscal year, the books of

account and physical records of the Company shall be audited

by a certified public accounting firm selected by the

Management Committee.

Section 5.6 Banking. The Company shall establish one

or more general business bank accounts with such bank or banks

as may be determined by the Management Committee from time to

time. All Company receipts shall be deposited to said account

or accounts of the Company, and all expenses of the Company

shall be paid from said account or accounts.

Section 5.7 Authorization of Disbursement of Company

Funds. Disbursement of Company funds, in payment of business

expenses or otherwise, shall be by appropriate check, draft or

other instrument and shall be drawn upon those signatures as

determined from time to time by the Management Committee.

Section 5.8 General Restrictions. No Member or

Manager shall have the right, power or authority to do any of

the following acts without the prior written consent of the

Members:

(a) expend or use any Company money or property

except upon the account of and for the benefit of the Company

or except as otherwise expressly provided in Section 6.6;

(b) mortgage, lease, pledge or otherwise dispose of

all, or substantially all, of the assets of the Company, other

than in the ordinary course of business; it being expressly

acknowledged that any transactions contemplated in an approved

Construction Budget or Operating Budget shall be deemed "in

the ordinary course of business;"

(c) pledge any of the Company's credit or property

for other than Company purposes;

(d) compromise, settle or release any debt due the

Company except upon full payment thereof or except in the

ordinary course of business;

(e) assign the Company's property in trust for

creditors or on the assignee's promise to pay the debts of the

Company;

(f) confess a judgment against the Company, the

Company's property or any of the Members;

(g) dispose of any of the goodwill of the Company

business; or

(h) do any other act which would make it impossible

to carry on the ordinary business of the Company.

Section 5.9 Progress Reports; Meetings. The

Management Committee shall report not less frequently than

monthly to the Members concerning the progress of the

development, construction and operation of the Project. Any

Member may call a special meeting of the Members and/or the

Management Committee for any purpose on giving three (3) days

prior written notice of the meeting (shorter notice may be

agreed upon by the parties in writing). The notice shall

provide information as to time, place and agenda of the

meeting.

Section 5.10 Salaries and Compensation to Members.

Except as specifically provided in the Management Agreement or

the Consulting Agreement or as otherwise approved from time to

time by the Management Committee, the Company shall have no

duty or obligation to reimburse or compensate the Members,

their employees, assigns or Affiliates, for services rendered

on behalf of the Company, nor shall a Member be entitled to

salary or other compensation; provided however, the Company

shall be responsible for all Project costs as set forth in

approved Construction and Operating Budgets, and to the extent

that such costs are paid or loaned to the Company by a Member

or Affiliates, such Member shall be entitled to reimbursement

by the Company in the manner and at such times as is

specifically herein set forth. Each Member shall pay its own

licensing costs and fees.

Section 5.11 Company Property. All property originally

brought into or transferred to the Company as capital

contributions of the Members or subsequently acquired by

purchase or otherwise by or on behalf of the Company, shall be

owned by and held in the name of the Company or in such

fictitious business names as are approved by the Management

Committee.

Section 5.12 Other Business Activities.

(a) Each reference in this Section 5.12 to a

"Member" shall also mean and include each and every Affiliate

of such Member; it being expressly agreed and understood that

this Section 5.12 shall be deemed to apply to (and each Member

shall cause the provisions of this Section 5.12 to become

binding upon) each and every Affiliate of such Member.

(b) Each Member may be interested, directly or

indirectly, in various other businesses and undertakings not

included in the Company, including non-gaming-related

entertainment ventures wherever situated and gaming-related

ventures located outside of the radii specified in Section

5.12(c) below. The Members hereby agree that the creation of

the Company and the assumption by each of the Members of their

duties hereunder shall, subject to the provisions of Section

5.12(c) below, be without prejudice to their rights to have

such other interests and activities and to receive and enjoy

profits and compensation therefrom. Subject to the provisions

of Section 5.12(c) below, each Member waives any rights it

might otherwise have to share or participate in such other

interests or activities of the other Members. Subject to the

provisions of Section 5.12(c) below, any Member may engage in

or possess any interest in any other business venture of any

nature or description independently or with others, and

neither the Company nor any other Member shall have any right

by virtue of this Agreement in and to such venture or the

income or profits derived therefrom.

(c) Notwithstanding the provisions of Section

5.12(b) above, in the event that (i) prior to the

commencement of operations at the Project and for a period of

three (3) years thereafter, any Member shall desire to

directly or indirectly participate (as an owner, operator,

manager, developer, lender, investor or in any other similar

capacity) in any gaming-related venture (a "Gaming Project")

within that area of Louisiana falling within a 150 mile radius

(to include Lafayette) of the Property or (ii) during the

balance of the term of this Agreement, any Member shall desire

to so participate in any such Gaming Project within that area

of Louisiana falling within a 75 mile radius (to include Baton

Rouge) of the Property, such Member (the "Offering Member")

shall offer to the other Member (the "Receiving Member") the

right to participate with the Offering Member in such proposed

Gaming Project, upon such terms and conditions as the Offering

Member shall reasonably propose, consistent with then-current

market conditions. The Offering Member shall give written

notice thereof to the Receiving Member, which notice shall

include (i) a general description of the proposed Gaming

Project, including such detail as a prudent investor would

customarily require in order to make an informed investment

decision, (ii) to the extent reasonably available, pro forma

budgets of development and construction costs and projections

of income and expense and (iii) the proposed economic terms

and conditions upon which the Offering Member and the

Receiving Member would jointly participate in such proposed

Gaming Project. The Receiving Member shall have ten (10) days

after receipt of such notice and supporting documentation in

which to negotiate a mutually acceptable agreement whereby the

Offering Member and the Receiving Member will jointly

participate in the development of the Proposed Development

Project. If the Receiving Member declines the Offering

Member's offer, or if the parties, after proceeding in good

faith and with due diligence, are unable to reach agreement

within said 10-day periiod, then, unless otherwise approved by

both Members in their sole and absolute discretion, the offer

shall be deemed to have expired and neither Member shall

participate in any manner in such proposed Gaming Project

without the involvement of the other Member.

Section 5.13 Project Management. Concurrently with the

execution and delivery of this Agreement, the Company shall

enter into the Management Agreement with CCLI (or an Affiliate

designated by CCLI) and the Consulting Agreement with AEC.

The termination of the Management Agreement for any reason

whatsoever shall, without the necessity of further action by

any party, result in the automatic termination of the

Consulting Agreement, effective as of the termination date of

the Management Agreement. So long as the Company owns the

Project and AEC is a Member of the Company, a termination of

the Consulting Agreement (other than a voluntary termination

thereof) shall, without the necessity of further action by any

party, result in the automatic termination of the Management

Agreement, effective as of the date of termination of the

Consulting Agreement.

 

ARTICLE 6. CAPITAL CONTRIBUTIONS; LOANS; INITIAL PUBLIC

OFFERING

Section 6.1 Initial Capital

Contributions.

(a) (i) AEC shall initially contribute to the

capital of the Company, (i) fee simple title to the Property,

subject only to any Permitted Title Exceptions and (ii) the

Intangibles, free and clear of all liens and third party

claims, except as shall have been expressly approved in

advance in writing by CCLI. Such contribution of the Property

shall be deemed to have an agreed value of $7,000,000.00.

Such contribution of the Intangibles shall be deemed to have

an initial agreed value of $1.00, which agreed value shall be

deemed increased to $13,000,000.00 if, as and when, the Final

Approval is issued.

(ii) AEC shall execute and deliver to the

Company, such deeds, bills of sale, assignments and other

instruments of conveyance as may, in the opinion of CCLI and

its counsel, be necessary or advisable to vest title to the

Property and the Intangibles in the Company. Concurrently

with the conveyance of the Property to the Company, AEC shall

cause to be issued in favor of and delivered to the Company,

an ALTA extended coverage owner's policy of title insurance

(or equivalent) in a liability amount of not less than

$7,000,000.00, showing fee simple title to the Property to be

vested in the Company, subject only to the Permitted Title

Exceptions and/or such other matters affecting title to the

Property as shall have been approved in advance in writing by

the Members in their sole and absolute discretion.

 

(iii) In the event that either Member

determines that any additional properties, purchase

agreements, options, leases or governmental approvals,

permits, licenses and/or waivers are necessary or advisable

for the full development and operation of the Project, AEC

shall proceed with due diligence and use its best efforts to

cause such property rights and entitlements to be transferred,

assigned and conveyed to the Company at a price to the Company

equal to AEC's actual out-of-pocket costs (as approved by

CCLI), and without any profit, mark-up, commission, finder's

fee or similar payment of whatsoever nature to AEC or its

Affiliates.

(b) CCLI shall initially contribute to the capital

of the Company, cash (or equivalent) in the aggregate amount

of $20,000,000.00.

(c) Except as otherwise expressly provided in

Section 6.1(a) above, AEC shall not be obligated to make any

additional Capital Contributions.

Section 6.2 Additional Capital Requirements.

(a) If and to the extent the Management Committee

determines that additional funds are or will be required for

the payment of Project costs, expenses and obligations (as set

forth in approved Construction Budgets or Operating Budgets),

CCLI shall use its commercially reasonable efforts to arrange

for the funding of such requirements using, at its election,

one or more of the following sources:

(i) Third Party Loans;

(ii) CCLI Additional Capital Contributions; or

(iii) CCLI Loans;

provided however, that in no event shall CCLI (or any

Affiliate) be deemed obligated to make or provide any such

contributions or loans from its own funds.

 

(b) Any financing arranged by CCLI pursuant to

Section 6.2(a) shall not impose any personal liability upon

the Members or their respective officers, directors or

shareholders, and shall not decrease either Member's interest

in the Company, unless expressly approved in advance in

writing by the Members.

 

(c) Except as provided in Section 6.2(a), any other

loans or advances to or for the benefit of the Company shall

be subject to the prior written approval of the Management

Committee.

(d) The provisions of this Article 6 are solely and

exclusively for the benefit of the Members (and their

permitted successors and assigns), and may only be enforced

by, the Members (or such permitted successors and assigns),

and shall not inure to the benefit of, or be enforceable by,

any third parties, including without limitation, any creditors

of the Company.

(e) Notwithstanding anything to the contrary

contained herein, in the event CCLI makes a CCLI Additional

Capital Contribution or CCLI Loan to the Company and the

source of at least 90% of the funds used therefor is a non-

recourse mortgage loan obtained by CCLI or an Affiliate of

CCLI from a third-party lender, secured solely by security

interests in the Project, then in such event, the Preferred

Return on any such CCLI Additional Capital Contribution or the

interest rate on any such CCLI Loan, as the case may be, shall

be the CCLI Cost of Funds and not one percent (1%) in excess

of the CCLI Cost of Funds.

 

(f) (i) Notwithstanding anything to the contrary

contained herein, in the event that in any fiscal year there

is insufficient Net Available Cash to make the full amount of

distributions set forth in Section 7.3(a)(v), solely by reason

of the fact that distributions have been made pursuant to

Sections 7.3(a)(i), (ii), (iii) or (iv), then in such event,

CCLI shall make a CCLI Loan to the Company in an amount equal

to the lesser of (A) such shortfall or (B) the aggregate

distributions received by CCLI pursuant to Sections 7.3(a)(i),

(ii), (iii) and (iv) for such fiscal year, and the proceeds of

such CCLI Loan shall be deemed Net Available Cash and shall be

distributed to the Members in accordance with Section

7.3(a)(v).

(ii) Notwithstanding anything to the contrary

contained herein, in the event that in any fiscal year there

is insufficient Net Available Cash to make the full amount of

distributions set forth in Section 7.3(a)(v), solely by reason

of the fact that Company funds which would otherwise have been

available as Net Available Cash were used for capital

expenditures in excess of the greater of (A) the amounts

permitted to be expended for capital expenditures pursuant to

Sections 6.4 (capital and riverboat replacements), 6.12

(compliance with governmental requirements) and 6.13

(emergency expenditures) of the Management Agreement or (B)

amounts approved by AEC in an Annual Budget (as defined in the

Management Agreement), then in such event, CCLI shall make a

CCLI Loan to the Company in an amount equal to the lesser of

(x) such shortfall or (y) the amount of Net Available Cash

that would have been distributed to the Members for such

fiscal year pursuant to Section 7.3(a)(v) if such excess

capital expenditures had not been made, and the proceeds of

such CCLI Loan shall be deemed Net Available Cash and shall be

distributed to the Members in accordance with Section

7.3(a)(v).

(iii) Any CCLI Loan made pursuant to this

Section 6.2(f) shall bear interest from the date(s) of advance

until repaid at the BofA Prime Rate.

Section 6.3 Interest. No Member shall be entitled to

interest on its Initial Capital Contributions; however, the

provision of this Section shall not impair the obligation of

the Company and the right of CCLI to receive interest and

Preferred Return upon its Loans and Additional Capital

Contributions to the Company as hereinabove provided.

Section 6.4 Withdrawal of Capital. No Member shall

withdraw any portion of the capital of the Company without the

express consent of the Management Committee.

Section 6.5 Capital Account. An individual Capital

Account shall be established and maintained for each Member.

The Capital Account of each Member shall be equal to the

aggregate amount of cash contributed by such Member to the

Company, increased by (i) the fair market value of property

contributed by such Member to the Company (other than a

promissory note by such Member who is the maker of such note),

net of liabilities secured by such property that the Company

assumes or takes the property subject to, (ii) the amount of

any Company liabilities assumed by such Member other than

liabilities secured by property distributed to such Member,

(iii) such Member's distributive share of Profits of the

Company and (iv) any items in the nature of income and gain

which are excluded from the definitions of Profits and Losses

and allocated to such Member, and reduced by (i) such Member's

distributive share of Losses, (ii) the amount of any

distributions of cash to such Member, (iii) the amount of

liabilities of such Member assumed by the Company, other than

liabilities secured by property contributed by such Member,

(iv) the fair market value of property (net of liabilities

assumed by such Member and liabilities to which such

distributed property is subject) distributed to such Member,

and (v) any items in the nature of deductions or losses which

are excluded from the definitions of Profits and Losses and

allocated to such Member. Upon a distribution of property,

other than one described in Section 7.5(f), the Capital

Account of each Member shall be adjusted as provided in

Regulations Section 1.704-1(b)(2)(iv)(e). In the event the

Gross Asset Values of Company assets are adjusted pursuant to

Section 7.5(f), the Capital Account of each Member shall be

adjusted simultaneously to reflect the aggregate net

adjustment as if the Company recognized gain or loss equal to

the amount of such aggregate net adjustment. The foregoing

provisions and the other provisions of this Agreement relating

to the maintenance of Capital Accounts are intended to comply

with Regulations Sections 1.704-1(b) and 1.704-2 and shall be

interpreted and applied in a manner consistent with such

Regulations. For purposes of this section, the term Member

shall include any predecessor in interest of such Member.

Section 6.6 AEC Loan. Concurrently with (i) the

contribution by AEC to the Company of the Property and the

Intangibles pursuant to Section 6.1(a); (ii) the approval by

the Management Committee of the Estimated Project Cost

pursuant to Section 5.3(b)(i) and the overall plan for site

development of the Property pursuant to Section 5.3(b)(ii);

and (iii) the issuance of the Conditional Approval, the

Company shall loan to AEC, an amount not to exceed

$10,000,000, which AEC Loan shall be evidenced by a recourse

promissory note in the form attached hereto as Exhibit F,

secured by a security and pledge agreement encumbering AEC's

interest in the Company, in the form attached hereto as

Exhibit G, and guaranteed by Georgusis pursuant to a guaranty

in the form attached hereto as Exhibit H (collectively, the

"AEC Loan Documents"). The AEC Loan shall bear interest at a

rate equal to one percent (1%) per annum in excess of the B of

A Prime Rate. The proceeds of the AEC Loan may be drawn in

multiple advances, at any time within one (1) year of the

initial loan advance (the "first draw"), provided AEC is not

in default under the AEC Loan Documents or this Agreement.

The AEC Loan shall be repaid in installments equal to the

greater of (i) annual payments of interest-only commencing one

year after the first draw or (ii) the amount of Net Available

Cash deemed distributed to AEC pursuant to Section 7.3(b);

with the outstanding balance of principal and accrued but

unpaid interest all due and payable not later than six (6)

years after the first draw. At the election of CCLI, the

outstanding balance of the AEC Loan may be accelerated upon

(i) the failure of AEC to make any payment when due under the

AEC Loan which failure remains uncured for a period of ten

(10) days after notice or the occurrence of any non-monetary

default under the AEC Loan Documents which default remains

uncured for a period of thirty (30) days after notice; (ii)

the occurrence of any Event of Default by AEC under this

Agreement, (iii) the occurrence of any event requiring

dissolution of the Company pursuant to Section 10.1, or

(iv) the occurrence of any event which triggers the "buy-sell"

provisions pursuant to Section 8.2. The AEC Loan may be

prepaid in whole or in part at any time without premium or

penalty therefor. Pursuant to Section 8.11(b), CCLI hereby

consents to AEC's pledge of its Membership interest in the

Company pursuant to the above-referenced security and pledge

agreement.

Section 6.7 Initial Public Offering. After the

Project is in operation, the Management Committee will cause

the Company to engage a national investment

banking/underwriting firm to advise the Company on the

advisability/feasibility of retiring debt and invested capital

and commencing an initial public offering or institutional

private placement of equity or debt interests in the Company's

business. Upon approval by the Members, the Company will take

the actions reasonably necessary or advisable to proceed with

such initial public offering or private placement.

 

ARTICLE 7. PERCENTAGE INTERESTS;

CASH DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS

Section 7.1 Percentage Interests. The Members shall

have the following Percentage Interests in the Company:

AEC 50%

CCLI 50%

Section 7.2 Periodic Determination of Net Available

Cash. Not more frequently than monthly and not less than

annually, the Management Committee shall review the cash flow

of the Company and, consistent with prudent business

practices, shall determine the amounts, if any, of funds

available for designation and distribution as Net Available

Cash.

Section 7.3 Distribution of Net Available Cash.

(a) Net Available Cash with respect to each fiscal

year shall be distributed in the following order of priority:

(i) First, to CCLI, an amount equal to all

accrued but unpaid interest with respect to any

outstanding CCLI Loans;

(ii) Second, to CCLI, an amount equal to its

Preferred Return;

(iii) Third, to CCLI, an amount equal to the

Current Year Amortization for such fiscal year with

respect to all outstanding CCLI Loans;

(iv) Fourth, to CCLI, an amount equal to the

Current Year Amortization for such fiscal year with

respect to all CCLI Additional Capital

Contributions;

(v) Fifth, to each Member, an amount equal to

(or in proportion to if less than) 35% (or such

other percentage as the Members shall mutually

agree) of the net income for federal income tax

purposes allocated to such Member by the Company

with respect to such fiscal year;

(vi) Sixth, to CCLI, an amount equal to the

outstanding principal balance and all accrued but

unpaid interest on the AEC Loan;

(vii) Seventh, to the Members, until CCLI has

received distributions of Net Available Cash

pursuant to Section 7.3(a)(vii)(A) equal to the sum

of the outstanding principal balance on any CCLI

Loans and the CCLI Additional Capital Balance:

(A) 70% to CCLI, and

(B) 30% to the Members, pro rata in accordance

with their respective Percentage

Interests; and

(viii) Eighth, the balance of any Net Available

Cash, to the Members, pro rata in accordance with

their respective Percentage Interests.

(b) An amount equal to the Net Available Cash

distributed to CCLI pursuant to Section 7.3(a)(vi) shall be

deemed received by AEC as a distribution of Net Available Cash

followed by a payment by AEC to the Company with respect to

the AEC Loan. Such deemed payment by AEC shall be applied

first to accrued but unpaid interest and then to the

outstanding principal balance of the AEC Loan.

(c) The outstanding principal balance of each CCLI Loan

and the CCLI Additional Capital Balance shall each be

proportionately reduced (but not below zero) by 50% of the

amount of any distributions of Net Available Cash to CCLI

pursuant to Section 7.3(a)(iii) and by 100% of the amount of

any distributions of Net Available Cash to CCLI pursuant to

Section 7.3(a)(vii)(A).

Section 7.4 Determination and Allocation of

Profits and Losses.

(a) Losses of the Company for each fiscal year shall be

allocated to the Members, pro rata in accordance with their

respective Percentage Interests; provided, however, that any

Losses of the Company attributable to the Intangibles shall be

allocated to AEC.

(b) Profits of the Company for each fiscal year shall be

allocated as follows:

(i) First, to CCLI, an amount equal to

the excess, if any, of 1% per annum in excess of the

CCLI Cost of Funds, cumulative, compounded annually,

with respect to the daily balance of the CCLI

Additional Capital Balance over the cumulative

amount of Profits allocated to CCLI pursuant to this

Section 7.4(b)(i); and

(ii) Second, to the Members, pro rata in

accordance with their respective Percentage Interests.

 

Section 7.5 Tax Regulatory Provisions.

(a) Notwithstanding the provisions of Section 7.4,

in no event shall any allocation of Losses (or any other loss,

deduction or Section 705(a)(2)(B) Expenditure) to any Member

cause such Member to have or increase a deficit balance in its

Capital Account.

(b) If a Member receives an adjustment, allocation

or distribution described in Regulations Section 1.704-

1(b)(2)(ii)(d)(4), (5) or (6) which creates or increases a

deficit balance (taking into account distributions, other than

distributions in liquidation of the Company, reasonably

expected to be made) in the Member's Capital Account (as

provided in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)

or (6)), the Company shall allocate items of income or gain

(as those terms are used in Regulations Section 1.704-

1(b)(2)(ii)(d)) to such Member in an amount and manner to

eliminate the Member's Capital Account deficit attributable to

such adjustment, allocation or distribution as quickly as

possible.

(c) If there is a net decrease in the Company's

Minimum Gain during any fiscal year, each Member shall be

allocated items of income and gain for such fiscal year equal

to such Member's share of the net decrease in Minimum Gain

during such fiscal year in accordance with Regulations

Sections 1.704-2(f) and (g).

(d) Any item of Company loss, deduction or Section

705(a)(2)(B) Expenditure that is attributable to Member

Nonrecourse Debt shall be allocated to the Member or Members

that bear the economic risk of loss with respect to such

Member Nonrecourse Debt in accordance with Regulations Section

1.704-2(i). If there is a net decrease during any fiscal year

in the minimum gain attributable to a Member Nonrecourse Debt

(within the meaning of Regulations Section 1.704-2(i)(3)),

then any Member with a share of the minimum gain attributable

to such Member Nonrecourse Debt at the beginning of such

fiscal year shall be allocated items of Company income and

gain for such fiscal year (and, if necessary, for subsequent

fiscal years) equal to such Member's share of the net decrease

in Member Nonrecourse Debt Minimum Gain as provided in

Regulations Section 1.704-2(i)(4).

(e) In accordance with Section 704(c) of the Code

and Regulations Section 1.704-1(b)(2)(iv)(d), 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 adjusted basis of such property to the

Company and its initial Gross Asset Value. In the event the

Gross Asset Value of any Company property is adjusted (other

than for Depreciation) subsequent allocations of income, gain,

loss and deduction with respect to such property shall take

account of any variation between the adjusted basis of such

property and its Gross Asset Value in the same manner as under

Section 704(c) and the Regulations thereunder. Any elections

or other decisions relating to such allocation shall be made

by the Members in a manner that reasonably reflects the

purpose and intention of this Agreement.

(f) The Gross Asset Values of all Company assets

may be adjusted by the Members in accordance with Regulations

Section 1.704-1(b)(2)(iv) to equal their respective gross fair

market values as reasonably determined by the Members as of

the following times: (i) the acquisition of an additional

interest in the Company by any new or existing Member in

exchange for more than a de minimis capital contribution; (ii)

the distribution by the Company to a retiring or continuing

Member as consideration for an interest in the Company of more

than a de minimis amount of money or other Company property;

and (iii) the Liquidation of the Company. In such event, if

the Gross Asset Value of an asset does not equal its adjusted

basis for federal income tax purposes, 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.

(g) For purposes of Sections 7.5(a), (b), (c) and

(d), there shall be excluded from any deficit in a Member's

Capital Account any amount such Member is obligated to restore

to its Capital Account under Regulations Section 1.704-

1(b)(2)(ii)(c), as well as any addition thereto pursuant to

the penultimate sentences of Regulations Sections 1.704-

2(g)(l) and 1.704-2(i)(5) after taking into account thereunder

any changes during such fiscal year in Minimum Gain and Member

Nonrecourse Debt Minimum Gain.

(h) For purposes of Sections 7.5(a), (c) and (d),

each Member's Capital Account shall be reduced by the items

described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)

and (6).

(i) To the extent that Profits includes any income

or gain which for federal income tax purposes is treated as

ordinary income from recapture of depreciation, such Profits

treated as ordinary income shall be apportioned among the

Members, to the extent of Profits allocated to the Members,

pro rata in accordance with the prior allocation of

depreciation to which such recapture is attributable.

 

(j) If there is any conflict in the application of

the following Sections, they shall be applied in the following

order of priority: (i) Section 7.5(c), (ii) Section 7.5(d),

(iii) Section 7.5(b), (iv) Section 7.5(a) and (v) Section 7.4.

(k) If there is a Liquidation of the Company, the

Capital Accounts of the Members shall be adjusted to reflect

the actual or anticipated Profits or Losses allocable among

the Members shall be adjusted in accordance with, or as if

there had been, an actual disposition of the Company's

property at its fair market value.

(l) Upon the transfer of an Interest in the

Company, the Transferor's Capital Account that is attributable

to the transferred Interest shall carry over to the transferee

Member. If the transfer of any Interest in the Company causes

a termination of the Company under Section 708(b)(1)(B) of the

Code, the Capital Account that carries over to the transferee

Member shall be adjusted in accordance with Regulations

Section 1.708-1(b)(2)(iv)(e) in connection with Regulations

Section 1.708-1(b)(12)(iv). The constructive reformation of

the Company shall be treated as the formation of a new limited

liability company, and the capital accounts of the Members of

such new limited liability company shall be determined and

maintained accordingly.

Section 7.6 Taxable Year and Accounting Method.

Except as otherwise required by the Code or the Regulations,

the Company's taxable year shall be the calendar year. The

Company shall use the accrual method of accounting for federal

income tax purposes.

 

Section 7.7 Tax Elections. CCLI shall have the

authority to make any election or other determination on

behalf of the Company provided for under the Code or any

provision of state or local tax law. In making such

elections, CCLI shall consider the interests of both Members

as well as that of the Company.

 

Section 7.8 Tax Matters Partner. The Tax Matters

Partner (within the meaning of Section 6231(a)(7) of the Code)

of the Company shall be CCLI. In the event of an

administrative or judicial proceeding, the Tax Matters Partner

shall regularly consult with AEC regarding all significant

decisions affecting such proceeding. The Tax Matters Partner

shall have the right to determine whether to challenge a final

partnership administrative adjustment by initiating an action

in the Tax Court or, if advised by counsel to do so and with

the consent of AEC, in the United States District Court or the

Claims Court.

 

ARTICLE 8. TRANSFER OF MEMBERS' INTERESTS

Section 8.1 Transfer of Members' Interests.

(a) The Interest of each Member of the Company is

personal property. Except as otherwise provided in this

Agreement, the "transfer" of a Member's Interest or portion

thereof or interest therein shall include a gift, sale,

transfer, assignment, hypothecation, pledge, encumbrance or

any other disposition, whether voluntary or involuntary, by

operation of law or otherwise, including without limitation,

any transfer occurring upon or by virtue of the dissolution,

bankruptcy or insolvency of a Member; the appointment of a

receiver, trustee or conservator or guardian for a Member or

its property; or pursuant to the will of a Member or the laws

of descent and distribution in the event of a Member's death;

pursuant to court order in the event of divorce, marital

dissolution, legal separation or similar proceedings; or

pursuant to any loan or security agreement under which any of

the Member's interests are pledged or otherwise serve as

collateral, as well as the transfer of any such interest in

the event recourse is made to such collateral.

(b) Except as otherwise provided in Section 8.2(c),

neither Member shall transfer all or any portion of its

Interest in the Company without the prior written consent of

the other Member, which consent may be granted or withheld in

its sole discretion.

Section 8.2 Major Decisions: Deadlock: Buy-Sell

Agreement.

(a) For purposes of this Section, the term "Major

Decision" shall mean any action (or election not to act) by or

on behalf of the Company which, pursuant to the provisions of

this Agreement, requires the approval of all or a majority of

the Members or the Management Committee, and which may have,

or which may be anticipated to have, a material effect on the

business and operation of the Company.

(b) In the event the voting rights of the Members

or the Management Committee are evenly divided with respect to

a Major Decision and the Members or the Management Committee

are unable to reach agreement with respect to a proposed

course of action within fifteen (15) days after a request for

action by any Member, then in such an event (except as

otherwise provided in Section 5.3(a) above), a deadlock (the

"Deadlock") shall be deemed to exist.

(c) At any time after the occurrence of a Deadlock

and prior to a resolution thereof among the Members or the

Management Committee, as applicable, or at any time after 36

months from the commencement of operations at the Project

(whether or not a Deadlock exists), either Member (the

"Offering Member") may, upon written notice to the other

Member (the "Offering Notice"), propose a Total Value which

would be the basis for calculating the applicable Offering

Price at which the Offering Member is willing to either (i)

sell to the other Member all of the Offering Member's Interest

or (ii) purchase from the other Member all of the other

Member's Interest; provided however, that such Total Value

shall not be less than an amount sufficient to repay the

outstanding balance of principal and accrued but unpaid

interest due under the AEC Loan pursuant to Section 7.3. The

other Member shall have a period of thirty (30) days after

delivery of the Offering Notice in which to elect, by written

notice to the Offering Member (the "Response Notice") to

either (i) purchase all of the Interest of the Offering Member

at the applicable Offering Price or (ii) sell all of its

Interest to the Offering Member at the applicable Offering

Price. The failure of the other Member to duly and timely

give a Response Notice shall constitute its election to sell

all of its Interest to the Offering Member at the applicable

Offering Price. Unless otherwise approved by the Members,

such purchase and sale shall be consummated within nine (9)

months after the expiration of the 15-day notice period and at

least thirty percent (30%) of the purchase price for the

Interest being sold or purchased shall be payable at the

closing in cash (or by wire transfer in immediately available

funds). The balance of the purchase price shall be paid in

five (5) equal annual installments of principal, together with

interest on the unpaid principal balance at one percent (1%)

per annum in excess of the B of A Prime Rate, and shall be

secured by (i) a deed of trust (or equivalent) encumbering the

Project (subject and subordinate only to any secured debt

existing as of the date of closing of such purchase) and (ii)

an assignment of all rights to receive any proceeds from the

Project. Notwithstanding any other provisions hereof to the

contrary, any Member shall not be required to close on the

purchase of any Interest in accordance with this Section

unless the representations and warranties of the selling

Member as set forth in Section 8.4 shall be true and correct

in all material respects as of the date of such closing, and

the selling Member shall deliver a certificate to such effect

to the purchasing party dated as of the closing date.

(d) At any time after the occurrence of an Event of

Default under this Agreement, the non-defaulting Member,

without limiting any other rights or remedies it may have

under this Agreement, any other agreement or instrument

relating to or arising out of this Agreement, at law or in

equity, may, upon written notice to the Defaulter (the

"Appraisal Notice"), elect to either sell its Interest to the

Defaulter or purchase the Interest of the Defaulter; provided

however, that for purposes of determining the purchase price

hereunder, the "Total Value" shall be an amount equal to the

fair market value of the Project, as determined by mutual

agreement of the Members or by appraisal, but in no event less

than an amount sufficient to repay the outstanding balance of

principal and accrued but unpaid interest due under the AEC

Loan pursuant to Section 7.3. If the Members are unable to

mutually agree upon the fair market value of the Project

within thirty (30) days after delivery of the Appraisal

Notice, the non-defaulting Member shall select a reputable,

disinterested appraiser who shall furnish the Members with a

written Appraisal within thirty (30) days of the selection,

setting forth the determination of the fair market value of

the Project as of the date of the Appraisal Notice. Such

Appraisal shall assume that the Project shall be the highest

and best use of the Property, shall assume that the assets are

subject to any agreements, including without limitation,

leases, management and service agreements then in effect,

except this Agreement, and shall include the value of any

gaming licenses and similar intangible assets, but shall

exclude any other intangible assets such as good will. The

cost of the Appraisal shall be at the expense of the

Defaulter.

Section 8.3 Representations and Warranties of the

Members. As of the date of exercise of any option and closing

of any sale pursuant to this Article 8, each of the Members

represents and warrants to the Company and the other Members

with respect to itself as follows:

(a) Such Member is the lawful owner of and has the

full right, power and authority to sell, transfer and deliver

the Interest of the Company which it purports to own, and the

sale, transfer and delivery of such Interests of the Company

in accordance therewith will transfer good and marketable

title thereto free and clear of all liens, encumbrances,

claims or right of the third parties of every kind and nature

whatsoever, subject only to the provisions of this Agreement.

(b) The Interests of the Company owned by such

Member have been duly authorized and are fully paid and non-

assessable (except as otherwise stated). There are no

existing options, warrants, calls or commitments on the part

of any Member relating to such Interests. No voting

agreements or restrictions of any kind other than those set

forth in this Agreement affect the rights of any such

Interests of the Company or such Member.

(c) Such Member has the right and power to enter

into this Agreement, and this Agreement has been fully

executed and delivered and constitutes the valid and binding

obligation of such Member. No consent of any person not a

party to this Agreement and no consent of any governmental

authority is required to be obtained on the part of such

Member in connection with or resulting from the execution or

performance of this Agreement.

 

ARTICLE 9. EVENTS OF DEFAULT

Section 9.1 Events of Default. The occurrence of any

of the following events shall constitute an event of default

("Event of Default") hereunder on the part of the Member to

whom such event occurs (the "Defaulter") if within thirty (30)

days following the Defaulter's receipt of notice of such

default from the other Member, or within ten (10) days where

the default is due solely to the non-payment of monies,

whichever is applicable, the Defaulter fails to pay such

monies or in the case of non-monetary defaults, fails to

commence substantial efforts to cure such default or

thereafter fails within a reasonable time to prosecute to

completion with diligence and continuity the curing of such

default; provided, however, that the occurrence of any of the

events described in Section 9.1(b) below shall constitute an

Event of Default immediately upon such occurrence without any

requirement of notice or the passage of time except as

specifically set forth in any such subparagraph.

(a) the violation by a Member of any of the

restrictions set forth in Article 8 of this Agreement upon the

right of a Member to transfer its Interest;

(b) (i) institution by a Member of proceedings

under any laws of the United States or any state, whether now

existing or subsequently enacted or amended, for the relief of

debtors wherein such Member is seeking relief as debtor; (ii)

a general assignment by a Member for the benefit of creditors;

(iii) the institution by a Member of a proceeding under any

section or chapter of the Federal Bankruptcy Code as now

existing or hereafter amended or becoming effective; (iv) the

institution against a Member of a proceeding under any section

or chapter of the Federal Bankruptcy Code as now existing or

as hereafter amended or becoming effective, which proceeding

is not dismissed, stayed or discharged within a period of

sixty (60) days after the filing thereof or, if stayed, which

stay is thereafter lifted without a contemporaneous discharge

or dismissal of such proceeding; (v) a proposed plan of

arrangement or other action by a Member's creditors taken as a

result of a general meeting of the creditor of such Member;

(vi) admission by a member in writing of its inability to pay

its debts as they mature; (vii) the attachment, execution or

other judicial seizure of all or any substantial part of a

Member's assets or of a Member's Percentage Interest, or any

part thereof, such attachment, execution or seizure being with

respect to an amount not less than Five Thousand Dollars

($5,000.00) and remaining undismissed or undischarged for a

period of fifteen (15) days after the levy thereof, if the

occurrence of such attachment, execution or other judicial

seizure would reasonably tend to have a materially adverse

effect upon the performance by such Member of its obligations

under this Agreement; provided, however, that any such

attachment, execution or seizure shall not constitute an

Event of Default hereunder if such Member posts a bond

sufficient to fully satisfy the amount of such claim or

judgment within fifteen (15) days after the levy thereof and

the Member's assets are thereby released from the lien of such

attachment (any of the foregoing hereinafter referred to as an

"Act of Insolvency");

(c) any breach by a Member of its representations

and warranties pursuant to Article 13 or any material default

in performance of, or failure to comply with any other

agreements, obligations or undertakings of a Member herein

contained;

 

(d) causing or permitting an event of default under

any Third Party Loan or other permitted mortgage loan

encumbering the Project;

(e) any default in the payment or performance of

the AEC Loan and the Georgusis Guaranty; and

(f) the rejection of a Member for licensing by the

Louisiana gaming authorities or any other event involving a

Member which results in the Company or a Member becoming

unable to conduct a gaming business.

Section 9.2 Remedies Upon Default. Upon the

occurrence of any Event of Default, the non-defaulting Member

shall have the right, without limitation, to exercise any and

all rights and remedies set forth in Agreement and/or as may

otherwise be available at law and in equity against Defaulter.

 

ARTICLE 10. EVENTS REQUIRING DISSOLUTION OF THE COMPANY/CONSENT

TO CONTINUE

Section 10.1 Events Requiring Dissolution. The Company

shall be dissolved upon the occurrence of any of the following

events:

(a) The expiration of the fifty (50) year term of

the Company;

(b) The unanimous written consent of all Members;

(c) The death, interdiction, withdrawal, expulsion,

bankruptcy or dissolution of a Member, or the occurrence of

any other event which terminates a Member's continued

membership in the Company, unless within ninety (90) days

after such event the remaining Members unanimously consent in

writing to continue the business of the Company, or if there

is only one remaining Member, the admission of one or more new

Members pursuant to Sections 5.2 and 10.2;

(d) At the election of the non-defaulting Member,

the occurrence of an Event of Default by a Defaulter;

(e) The final and non-appealable rejection of the

Company's application for a gaming license for the Project or,

after issuance, the final and non-appealable revocation of

such license;

(f) The inability or unwillingness of CCLI to

obtain or provide funding pursuant to Section 6.2(a) which is

required for the initial development and construction of the

Project; or

(g) The sale or other disposition of all or

substantially all of the assets of the Company and the

collection of the proceeds thereof.

Section 10.2 Members' Consent to Continue the Company's

Business. Upon the occurrence of any event described in

Section 10.1 which may cause the dissolution of the Company,

or subsequent discovery of the occurrence of such an event (a

"triggering event"), the Company shall immediately notify in

writing each of the Members of the occurrence of the

triggering event, each of the remaining Members shall notify

the Company, in writing, whether or not such Member consents

to continue the business of the Company. If all of the

remaining Members consent to continue the Company's business,

and there are at least two (2) remaining Members, the Company

shall not be dissolved and the remaining Members shall

continue the Company's business. If there is only one (1)

remaining Member and it consents to continue the Company's

business, such Member shall have the absolute right,

notwithstanding any contrary provisions of this Agreement, to

transfer a portion of its Interest to a transferee (who may be

an Affiliate of such Member) and to unilaterally admit such

transferee as a new Member in the Company, so that such two

(2) Members may continue the Company's business. In the event

the business of the Company is not continued, the provisions

of Article 11 shall apply.

 

ARTICLE 11. DISSOLUTION

Section 11.1 Liquidation. Upon the occurrence of any

event requiring dissolution as set forth in Section 10.1, if

the business of the Company is not continued by the remaining

Members pursuant to Section 10.2, the Company shall

immediately execute and deliver to the Secretary of State a

statement of its intent to dissolve. Upon filing the

statement of intent to dissolve, the Company shall cease to

carry on its business and shall wind up its affairs and

liquidate.

In the course of the dissolution and winding up the

affairs of the Company, every effort shall be made to sell the

assets of the Company for cash so that the distribution may be

made to the Members in cash. If the Company's assets include

notes secured by deeds of trust on properties which the

Company or an Affiliate has sold, said notes and deeds of

trust may be distributed in kind to the Members if the Members

may legally accept same, and shall be valued at one hundred

percent (100%) of the unpaid principal balance of said notes,

plus accrued interest at the time of such distribution. Any

assets including notes secured by deeds of trust which are

owned by the Company and cannot conveniently or economically

be converted into cash, may be distributed in kind to the

Members. Unless the Members otherwise agree in writing, each

Member shall receive a proportionate share of each of those

assets which are to be distributed in kind.

Section 11.2 Distribution of Assets. During the

Liquidation of the Company, the Members shall continue to

share profits and losses in the same proportions as before

dissolution. In settling accounts after dissolution, (i) the

outstanding balance of the AEC Loan and all accrued but unpaid

interest thereon shall be repaid by AEC to the extent not

deemed paid pursuant to this Section 11.2 and Sections

7.3(a)(iii) and 7.3(b), (ii) the aggregate amount of all prior

distributions of Net Available Cash to a Member pursuant to

Section 7.3(a)(v) in excess of the additional amount of Net

Available Cash that such Member would receive if the aggregate

amount of all prior distributions of Net Available Cash to the

Members pursuant to Section 7.3(a)(v) were repaid to the

Company and distributed to the Members as Net Available Cash

in Liquidation of the Company pursuant to this Section 11.2

and Section 7.3(a) shall be paid by such Member to the other

Member, and (iii) the proceeds from the Liquidation of the

Company's assets shall be applied as follows:

(a) To creditors of the Company, in the order of

priority as provided by law, other than debts owed to Members

for their contributions; and

(b) To the Members in accordance with Section 7.3;

provided, however, that (i) no distributions of Net Available

Cash in Liquidation of the Company shall be made pursuant to

Section 7.3(a)(v), and (ii) if immediately prior to such

Liquidation $20,000,000 exceeds the sum of (A) 50% of the

aggregate distributions to CCLI pursuant to Section 7.3(a)(vi)

and (B) 100% of the aggregate distributions to CCLI pursuant

to Sections 7.3(a)(vii)(B) and 7.3(a)(viii), distributions of

Net Available Cash in Liquidation of the Company pursuant to

Section 7.3 shall be modified as follows until the sum of (A)

50% of Net Available Cash distributed to CCLI in Liquidation

of the Company pursuant to this Section 11.2 and Section

7.3(a)(vi) and (B) 100% of Net Available Cash distributed to

CCLI in Liquidation of the Company pursuant to this Section

11.2 and Section 7.3(a)(viii) is equal to such excess: (1)

For purposes of Section 7.3(b), an amount equal to 35%

(instead of 100%) of the Net Available Cash distributed to

CCLI in Liquidation of the Company pursuant to Section

7.3(a)(vi) shall be deemed received by AEC as a distribution

of Net Available Cash and applied to repayment of the AEC

Loan, and (2) for purposes of Section 7.3(a)(viii), Percentage

Interests shall be 74.074% for CCLI and 25.926% for AEC;

provided further, however, that if the Conditional Approval

has been obtained (and has not been revoked by reason of any

act or omission of AEC or its Affiliates) but the Company is

dissolved pursuant to Section 10.1(f), then in such event, all

of the Company's right, title and interest in the Property and

the Intangibles shall be distributed to AEC in full

satisfaction of AEC's right to receive any other liquidating

distributions pursuant to this Section 11.2 and Section 7.3.

 

ARTICLE 12. INDEMNIFICATION

Section 12.1 Indemnification of Manager, Member,

Employee or Agent: Proceeding Other than by Company. The

Company shall 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 is or was

a Manager, Member, employee or agent of this Company, or is or

was serving at the request of this Company as Manager, Member,

director, officer, employee or agent of another limited-

liability company partnership, joint venture, trust or other

entity, against expenses, including attorney fees, judgments,

fines and amounts paid in settlement actually and reasonably

incurred by him in connection with the action, suit or

proceeding if he acted in good faith and in a manner which he

reasonably believed to be in or not opposed to the best

interests of this Company, and, with respect to a criminal

action or proceeding, had no reasonable cause to believe his

conduct was unlawful. The termination of any action, suit or

proceeding by judgment, order, settlement, 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 which he reasonably believed to be

in or not opposed to the best interest of this Company, and

that, with respect to any criminal action or proceeding, he

had reasonable cause to believe that his conduct was unlawful.

Section 12.2 Indemnification of Manager, Member,

Employee or Agent: Proceeding by Company. The Company shall

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 right of this Company to procure a

judgment in its favor by reason of the fact that he is or was

a Manager, Member, employee or agent of the Company, or is or

was serving at the request of the Company as a Manager,

Member, director, officer, employee or agent of another

limited-liability company, corporation, partnership, joint

venture, trust or other enterprise against expenses, including

amounts paid in settlement and attorney fees actually and

reasonably incurred by him in connection with the defense or

settlement of the actions or suit if he acted in good faith

and in a manner which he reasonably believed to be in or not

opposed to the best interests of this 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 this Company or for amounts paid in

settlement to this Company, unless and only to the extent that

the court in which the action 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.

Section 12.3 Indemnity if Successful. To the extent

that a Manager, Member, employee or agent of the Company has

been successful on the merits or otherwise in defense of any

action, suit or proceeding described in Section 12.1 or 12.2,

or in defense of any claim, issue or matter therein, the

Company shall indemnify the Manager, Member, employee or agent

against expenses, including attorney fees, actually and

reasonably incurred in connection with the defense.

Section 12.4 Expenses. Any indemnification under

Sections 12.1 and 12.2, unless ordered by a court or advanced

pursuant to Section 12.5 below, must be made by this Company

only as authorized in the specific case upon a determination

that indemnification of the Manager, Member, employee or agent

is proper in the circumstances. The determination must be

made:

(a) By the Members;

(b) By the owners of more than 50% of the interests

owned by Members who were not parties to the act, suit or

proceeding; or

(c) If Members who own more than 50% of the

interests owned by Members who are not parties to the act,

suit or proceeding so order, by independent legal counsel in a

written opinion; or

(d) If Managers who were not parties to the act,

suit or proceeding cannot be obtained, by independent legal

counsel in a written opinion.

Section 12.5 Advancement of Expenses. The expenses of

Members and Managers incurred in defending a civil or criminal

action, suit or proceeding must 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 the Manager or Member to repay the amount if

it is ultimately determined by a court of competent

jurisdiction that the Member or Manager is not entitled to be

indemnified by the Company.

 

ARTICLE 13. REPRESENTATIONS AND WARRANTIES

Section 13.1 CCLI Representations and Warranties. As a

material inducement to AEC to enter into this Agreement, CCLI

represents and warrants to AEC that, as of the date hereof,

CCLI knows of no facts or circumstances that are likely to

affect the ability of CCLI, AEC or the Company to receive all

gaming licenses and approvals necessary to operate the

Project.

 

Section 13.2 AEC Representations and Warranties. As a

material inducement to CCLI to enter into this Agreement, AEC

represents and warrants to CCLI that, as of the date hereof,

AEC knows of no facts or circumstances that are likely to

affect the ability of CCLI, AEC or the Company to receive (i)

all gaming licenses and approvals necessary to operate the

Project or that would constitute a violation of Louisiana

Gaming Laws or the Louisiana Code of Ethics for Public

Employees and (ii) all other licenses, permits and approvals

necessary or advisable for the construction, completion,

operation, ownership and use of the Property and the Project

as a riverboat gaming facility. AEC shall proceed with due

diligence and take all actions necessary or advisable to apply

for all necessary licenses, permits and approvals, and will

use its best efforts to cause all such licenses, permits and

approvals to be issued to the Company in due course, at a cost

to the Company not to exceed the actual out-of-pocket costs

reasonably incurred in furtherance of the terms of the

application processes.

 

Section 13.3 Breach. In the event any representation

or warranty made by a Member is discovered to be untrue or is

breached, the non-defaulting Member may, without limiting the

other rights or remedies it may have, declare an Event of

Default and elect to dissolve the Company pursuant to Article

10. In such event, the defaulting Member shall, within thirty

(30) days after demand, reimburse the non-defaulting Member

for all Capital Contributions and loans or other advances

made, and all expenses incurred, by the non-defaulting Member

in connection with the Project, the Preliminary Approval and

the Company.

 

ARTICLE 14. MISCELLANEOUS PROVISIONS

Section 14.1 Agreement to Perform Necessary Acts. Each

Member agrees to perform any further acts and execute and

deliver any documents that may be reasonably necessary to

carry out the provisions of this Agreement.

Section 14.2 Amendments. The provisions of this

Agreement may not be waived, altered, amended or repealed, in

whole or in part, except with the unanimous written consent of

the Members.

Section 14.3 Successors and Assigns. This Agreement

shall be binding on, and shall inure to the benefit of, the

Members and their respective heirs, legal representatives,

successors and assigns.

Section 14.4 Validity of Agreement. It is intended

that each Section of this Agreement shall be viewed as

separate and divisible, and in the event that any Section

shall be held to be invalid, the remaining Sections shall

continue to be in full force and effect.

 

Section 14.5 Notices. All notices, requests, demands

and other communications under this Agreement shall be in

writing and shall be deemed to have been duly given on the

date of service if served personally on the party to whom

notice is given, or on the next business day if sent by

confirmed electronic facsimile transmission ("fax") or on the

date of actual delivery (as set forth in the courier's or

carrier's receipt) if sent by overnight commercial courier or

by first class mail, registered or certified, postage prepaid

and properly addressed to the party at his address set forth

below, or any other address that any party may from time to

time designate by written notice to the others:

If to CCLI:

Circus Circus Louisiana, Inc.

2880 Las Vegas Boulevard South

Las Vegas, Nevada 89109

Attention: General Counsel

If to AEC:

American Entertainment Corporation

8301 Judge Perez Drive, Suite 305

Chalmette, Louisiana 70043

Attention: Mr. Bill Bueck

Section 14.6 Governing Law. This Agreement shall be

governed by and construed in accordance with the laws of the

State of Louisiana.

Section 14.7 Counterparts. This Agreement may be

executed in one or more counterparts, each of which shall be

deemed an original, but all of which together shall be

constitute one and the same instrument.

Section 14.8 Gender and Number. As used in this

Agreement, and masculine, feminine, and neuter gender, and the

singular or plural number shall be considered to include the

others whenever the context so indicates.

Section 14.9 Attorney Fees. In the event any party

shall bring an action or proceeding for damages against the

other party for an alleged breach of any provision of this

Agreement, or to enforce, protect, or establish any right or

remedy of either party, the prevailing party shall be entitled

to recover as a part of such action or proceeding reasonable

attorney fees and court costs.

Section 14.10 Exhibits. The Exhibits referred to herein

and attached hereto are hereby incorporated by reference as

though set forth in full. Unless the context otherwise

expressly requires, any reference to "this Agreement" shall

mean and include all such Exhibits.

Section 14.11 Complete Agreement. This Agreement and

the Articles of Organization constitute the complete and

exclusive statement among the Members with respect to the

subject matter contained therein. This Agreement and the

Articles of Organization supersede all prior agreements by and

among the Members.

 

 

IN WITNESS WHEREOF, this Agreement was adopted by a

unanimous vote of all the Members of this Company at the

organizational meeting thereof held on the 14th day of

January, 1994.

CIRCUS CIRCUS

LOUISIANA, INC., a

Louisiana corporation

By:

 

/ S /

 

Name: Clyde T. Turner

Title: President

AMERICAN ENTERTAINMENT

CORPORATION, a Louisiana

corporation

By:

 

/ S /

 

Name: Joseph H. Georgusis

Title: President

EXHIBIT A

LEGAL DESCRIPTION

LEGAL DESCRIPTION

 

 

1. Lots 6-B-1, 6-B-3 and 6-B-4 (15.82 acres).

 

2. Submerged portions Lots 6-B-1, 6-B-3, 6-B-4 and Halter

Marine Lot (approximately 5 acres)

 

3. Halter Marine Lot (10 acres)

EXHIBIT B

PERMITTED TITLE EXCEPTIONS

 

TO BE PROVIDED

EXHIBIT C-1

PRELIMINARY APPROVAL

 

CERTIFICATE OF

PRELIMINARY APPROVAL

FOR RIVERBOAT GAMING OPERATIONS

 

 

After consideration of the submitted Application for a

Certificate of Preliminary Approval, the Louisiana Riverboat

Gaming Commission (the "Commission"), in accordance with the

provisions of the Louisiana Riverboat Economic Development and

Gaming Control Act, La. R.S. 4"501 et. seq., (the "Act") hereby

awards

 

AMERICAN ENTERTAINMENT, L.L.C.

 

(hereinafter referred to as "Holder"), this Certificate of

Preliminary Approval to begin construction of a riverboat and

commence such other operations as are authorized by the

administrative rules of the Commission. Upon compliance with

said

rules and the voluntary conditions of this Certificate, and

further, upon receipt of a Certificate of Final Approval, the

Holder is hereby authorized to commence riverboat gaming

operations and other operations incident thereto, as described in

detail in their application; said riverboat to utilize the routes

described in the application and (voluntary conditions hereto),

with the riverboat to be berthed at 5601 Paris Road in Chalmette,

Louisiana, on Bayou Bienvenue to the Mississippi Gulf Outlet in

St. Bernard Parish.

 

By accepting this Certificate of Preliminary Approval, the

Holder expressly accepts and agrees to all of the conditions to

this Certificate, as previously or subsequently amended, as set

forth in the attached statement of Mandatory and Voluntary

Conditions, which are incorporated herein by reference and made a

part of this Certificate.

 

By accepting this Certificate of Preliminary Approval,

Holder agrees to: (1) conduct all riverboat gaming and related

operations in accordance with the law, the rules of the Commission, and the

conditions attached hereto and incorporated herein; and (2)

expressly agrees that this Certificate is an absolute privilege,

the awarding, denial, conditions or modification of which shall

be controlled solely by the Commission and the provisions of the

Louisiana Riverboat Economic Development and Gaming Control Act.

 

This Certificate, and the conditions attached hereto are

approved this 10th day of February, 1994, in New Orleans,

Louisiana.

 

 

 

__________|s|_________________

__________|s|_________________

Kenneth Pickering William F. Biossat

Chairman Executive Director

 

STATEMENT OF CONDITIONS TO

CERTIFICATE OF PRELIMINARY APPROVAL

OF AMERICAN ENTERTAINMENT, L.L.C.

 

AMERICAN ENTERTAINMENT, L.L.C,

hereafter referred to as

"Holder", hereby expressly accepts, agrees and stipulates to the

following mandatory and voluntary conditions to its Certificate

of Preliminary Approval, issued by the Louisiana Riverboat Gaming

Commission pursuant to the provisions of La. R.S. 4"501 et. seq.

and administrative rules promulgated pursuant thereto. More

particularly, holder agrees as follows:

 

GENERAL CONDITIONS

 

1. Holder agrees and stipulates to the following: (1) To

not mention, assert, utilize or argue that he or another

person should be licensed by the State Police Riverboat

Gaming Enforcement Division (hereafter "Division") because he

or another person holds or has applied for a Certificate; (2)

To make application to the Division for a gaming operator's

license and commence construction of the riverboat within the

time limits required by Rule 307 of Rules of the Louisiana

Riverboat Gaming Commission; and (3) To apply to the

Commission for a Certificate of Final Approval, prior to

commencement of the operations authorized by this

Certificate.

 

2. To indemnify and hold harmless the Riverboat Gaming

Commission, the State of Louisiana, and their agents and

employees against any and all claims for personal injury or

property damage arising out of or in connection with errors

and omissions in the following: (1) The approval of riverboat

or support facility plans, designs and specifications; (2)

The granting of a Certificate; (3) The issuance of emergency

orders; and (4) The denial, suspension or revocation of a

Certificate of Approval. Pursuant to this condition, Holder

further agrees to, at the time of signing its acceptance of

this Certificate, sign a separate indemnification agreement

implementing this condition.

 

3. To maintain copies of this Certificate and Conditions at

the helm or pilot house of the riverboat named herein, the

offices of the gaming operator, and any Louisiana State

Police Riverboat Gaming Division offices on board the

riverboat; they shall be produced for examination and

inspection upon demand of any agent or representative of the

Commission or the Division.

 

4. To at all times comply with all provisions of the Act.

 

5. To at all times comply with all administrative rules

promulgated by the Commission.

 

6. To at all times and in all operations comply with

all administrative rules of the Louisiana State Police

Riverboat Enforcement Division.

 

7. To operate the riverboat on the approved and authorized

routes as described in the application for certificate of

preliminary approval (or separate route authorization

document) unless authorized otherwise by the Act or rules of

the Commission.

 

8. To conduct the kind, amount, and scope of gaming

activities as described in the Application or Certificate.

 

9. To offer the kind, amount and scope of non-gaming

activities upon the riverboat and shore or support facilities

as described in the Holder's Application.

 

10. To allow inspection by the authorized agents and

representatives of the commission or the Division at any time

and of any premises under control of the Holder or affiliated

companies and particularly any portion of the riverboat

terminal support facilities, administrative offices,

surveillance rooms and account rooms.

 

11. To report to the Commission in writing as soon as is

practical any failure to comply with these voluntary

conditions or any provision of the Act or rules of the

Commission along with an explanation of the reasons

therefore.

 

12. To construct and operate shore, support, and terminal

facilities as detailed in the Holder's Application.

 

13. To quarterly submit to the Commission sworn

certifications that the Holder has complied with all

conditions of this Certificate or any Certificate of Final

Approval, or in the event of non-compliance, to certify that

such conditions (or specific portions thereof) have not been

met, and the reasons therefore.

 

14. To quarterly submit to the commission a sworn

certificate or list of all persons having an interest in the

Holder, the Holder's gaming operator or the Holder's

riverboat (excluding publicly traded companies), and a list

of all consultants, contractors or persons deriving $25,000 a

year or more from the Holder or any affiliated company in

connection with or as a result of the Holder's riverboat

operations.

 

15. That no ownership, income or security interest, in the

Holder, the Holder's gaming operator or the Holder's

riverboat is transferable or may be transferred without the

permission of the Commission. (This does not apply to the

transfer of the stock of publicly traded companies not

forming a part of a transaction relating to the Holder.)

 

 

16. To quarterly submit to the Commission a sworn report of

the numbers of minorities employed, their general job

classification and total salaries of all minority employees.

 

17. Upon receipt of the Certificate of Final Approval, the

Commission may require a Holder to discontinue use of a

particular advertisement or promotion which the Commission

determines offensive or contrary to the integrity of gaming

regulations.

 

18. In the event the Holder fails to comply with an

employment or procurement goal as set forth in the specific

conditions of this Certificate, the Holder agrees to submit

quarterly an affidavit setting forth in detail the variance

from the employment or procurement goal, the specific reasons

therefore, the efforts undertaken by the Holder to remedy or

overcome the variance and the results thereof.

 

19. This Certificate of Preliminary Approval shall have a

term of 120 days but may be subject to renewal upon the

approval of the Commission.

 

20. To comply with such other general or specific conditions

to this preliminary or the Holder's Final Certificate of

Approval, as may be required by the Commission.

 

SPECIFIC ECONOMIC AND PROCUREMENT

CONDITIONS

 

In addition to the general conditions above, the Holder also

agrees to specific economic and procurement conditions or goals as

follows:

 

1. To construct at the Bender Shipyard the riverboat

described in the application, said construction to begin on

or before January 14, 1994, said construction to be completed

by November 1, 1994.

 

2. To start construction of the shore, support, terminal

and related facilities on or before January 13, 1994, and to

complete construction of said facilities by November 1, 1994.

 

3. To take immediate steps and continue to take whatever

measures necessary to obtain sufficient cash, loan proceeds

or unconditional letters of credit to finance all aspects of

the construction of the riverboat, and all related shore,

support, terminal and related facilities, said cash, loan

proceeds or unconditional letters of credit to be completed

and in the possession of Holder by January 14, 1994.

 

4. (A) To commence riverboat gaming operations on or about

November 1, 1994. There will be 4 cruises per day Monday

through Friday at 10:00 a.m., 2:00 p.m., 6:00 p.m. and 10:00

p.m. There will be 5 cruises per day on Saturday, Sunday and

holidays at 9:00 a.m., 1:00 p.m., 5:00 p.m., 9:00 p.m., and

1:00 a.m. The designated route shall be upon Bayou Bienvenue

as authorized by the chairman of the Commission, originating

at and within a reasonable distance of 5601 Paris Road in

Chalmette, the riverboat's licensed berth.

 

(B) For purposes of this Certificate, an excursion

shall consist of a total of three hours with not more than

the initial and last forty-five minute periods of the

excursion to be used for the embarking and disembarking of

passengers at the riverboat's approved berth. The riverboat

shall be underway away from its approved berth for not less

than ninety minutes during an excursion unless the conditions

of La. R.S. 4:525 (B) (1) or other provisions of the Act are

met. In the event that the riverboat remains dockside at its

licensed berth pursuant to La. R.S. 4:525 (b) (1) or other

provisions of the Act, passengers may embark or disembark

during the initial and last forty-five minute periods;

however, during the remaining (middle) ninety minute period

passengers may disembark only.

 

5. To maintain a policy or policies of general liability

insurance, insuring all non-employee passengers, guests,

patrons, etc. against personal injury and damage to property

which they may sustain in connection with or arising out of

their presence upon the riverboat and the various related and

support facilities operated by Holder, pursuant to this

Certificate. The said policy of liability insurance to be in

an amount of not less than $50 Million Dollars.

 

6. Holder agrees to achieve and adhere to the general

following economic and procurement goals in conducting

riverboat operations.

 

a) To hire at least 80% Louisiana residents.

 

b) To procure 75% of the total cost of goods and

services purchased from or through Louisiana owned

companies.

 

7. To hire minorities and women to fill employment

positions in the same percentage as minorities and women

represent the total population of this state, or in the

percentage represented in the parish in which the riverboat

is docked, whichever is greater. Minority and women

populations shall be determined in accordance with the 1990

U.S. Census data.

 

8. To procure 20% and 20% of the total cost of goods and

services from minorities and women (respectively) majority

owned suppliers and firms.

 

9. To employ at least 500 persons in riverboat and support

operations.

 

10. To pay a minimum wage of at least $4.25 per hour to

salaried, non-tipped employees and at least $2.13 per hour to

tipped employees.

 

11. To provide within 20 days, if not already provided,

complete and any remaining documentation, information, and

affidavits as requested by the Commission in its letters of

July 28, 1993 requesting "source documentation" and September

17, 1993 requesting additional and supplemental information

in affidavit form.

 

Issued or revised on January 29, 1994.

 

 

 

 

Footnotes to specific voluntary conditions.

 

1. The amount expended by a Holder for a construction of a

riverboat vessel shall not be included in the

calculation of the percentage of procurements from

Louisiana firms.

 

2. Amounts expended by a Holder for the purchase of gaming

supplies and devices shall not be included in the

calculation of the percentage of procurements from

Louisiana firms.

 

3. The term minorities shall mean minorities as defined by

41 CFR ch. 60-4.3. The numbers of minorities and women

employed shall be calculated separately in the manner

provided for the Equal Employment Opportunity

Commission's EEO-1 so that, for example, if a minority

woman is employed she is credited toward both the

minority and woman hiring goals.

 

STATE OF LOUISIANA

PARISH OF EAST BATON ROUGE

 

 

 

ACKNOWLEDGEMENT OF CERTIFICATE CONDITIONS

 

BEFORE ME, the undersigned notary public, duly commissioned

and qualified within and for the State and Parish aforesaid, and

in the presence of the subscribing witnesses, personally came and

appeared:

 

AMERICAN ENTERTAINMENT, L.L.C.

 

appearing herein, through and represented by James E. Smith, Jr.,

its dully authorized officer and agent bearing the title of

General Counsel, who after being sworn and deposed and stated

that he does hereby, for and on behalf of AMERICAN ENTERTAINMENT,

L.L.C., accept and agree to this Certificate of Preliminary

Approval and expressly agrees to and is bound by the conditions

provided thereto.

 

 

__________|s|____________________

James E. Smith, Jr.

 

Witnesses:

 

 

___________|s|__________________

____________|s|_______________

 

 

Sworn to and Subscribed before me, Notary, and the

subscribing witnesses, this 10th day of February, 1994, at New

Orleans, Louisiana.

 

_____________|s|_________________

Notary Public

 

EXHIBIT C-2

PETITION FOR MODIFICATION OF

CERTIFICATE OF PRELIMINARY APPROVAL

 

LOUISIANA RIVERBOAT GAMING COMMISSION

 

STATE OF LOUISIANA

 

 

PETITION FOR MODIFICATION AND AMENDMENT

OF APPLICATION OF AMERICAN ENTERTAINMENT CORPORATION

FOR CERTIFICATE OF PRELIMINARY APPROVAL

 

NOW COMES American Entertainment Corporation ("American")

and respectfully submits this Petition for Modification and Amendment

of its Application for Certificate of Preliminary Approval.

 

On March 22, 1993, American filed an Application for

Certificate of Preliminary Approval (the "Application") with the

Louisiana Riverboat Gaming Commission (the "Commission"). On

June 18, 1993, the Commission approved the Application subject to an

ongoing duty on the part of American to apprise the Commission of

any modifications or amendments to the Application.

 

Subsequent to approval of the Application, American has

entered into a letter agreement (the "Agreement") with Circus

Circus Enterprises, Inc. ("Circus") whereby the parties to the

Agreement will form a joint venture to acquire or obtain all

property, rights, assets, leases, approvals, contracts, licenses

and permits necessary to develop, construct, market, manage and

operate a riverboat gaming operation and related facilities. As

a result of this Agreement, the terms of which are more fully set

forth in the attached Memorandum in Support, American desires to

amend its application in order to permit the inclusion of Circus

as a 50% owner of the venture formed to develop, manage and

operate the vessel.

 

WHEREFORE, American Entertainment Corporation respectfully

petitions this Commission to permit the modification and amendment

of its Application For Certificate of Preliminary Approval dated

March 22, 1993, as set forth herein and in the attached

Memorandum in Support.

 

Respectfully submitted,

 

 

AMERICAN ENTERTAINMENT CORPORATION

 

 

BY:_____________|s|___________________

James E. Smith, Jr., its

attorney

SMITH, MARTIN & SCHNEIDER

700 Camp Street

New Orleans, Louisiana 70130

Telephone: (504) 525-0134

 

LOUISIANA RIVERBOAT GAMING COMMISSION

 

STATE OF LOUISIANA

 

 

MEMORANDUM IN SUPPORT OF PETITION FOR MODIFICATION AND

AMENDMENT OF APPLICATION OF AMERICAN ENTERTAINMENT

CORPORATION FOR CERTIFICATE OF PRELIMINARY APPROVAL

 

On March 22, 1993, American Entertainment Corporation

("American") filed an Application for Certificate of Preliminary

Approval (the "Application") with the Louisiana Riverboat Gaming

Commission (the "Commission"). On June 18, 1993, the Commission

approved the Application subject to an ongoing duty on the part

of American to apprise the Commission of any modifications or

amendments to the Application.

 

Having subsequently entered into a letter agreement to form

a joint venture with Circus Circus Enterprises, Inc. ("Circus") to

jointly own, develop, construct, market and operate the riverboat

gaming operation described in the Application, American

respectfully submits this Petition for Modification and Amendment

of its Application for approval by the Commission.

 

A. THE LETTER AGREEMENT WITH CIRCUS

 

American and Circus have expressed their intent, via a

letter agreement (the "Agreement"), to form a Louisiana joint venture

for the purpose of acquiring or obtaining the property, Preliminary

Approval, and all other leases, contracts, building and other

permits, licenses and other assets necessary to develop,

construct, market, manage and operate a riverboat gaming

operation and related facilities. A copy of the confidential Agreement has

been provided to the Commission under separate cover, marked

"Confidential".

 

The general terms of the Agreement require that American

contribute the property on which the terminal operation and

related facilities will be constructed and that Circus will be

responsible for arranging all additional financing for the

venture. The joint venture will enter into a Management

Agreement with Circus to operate the project and a Consulting Agreement

with American to provide its expertise in connection with the

development and operation of the project.

 

The riverboat gaming operation and related facilities

referred to in the Agreement are those described in American's

original Application. The overall plans for the project will be

unaffected by the Agreement, although it is expected that the

benefit of Circus's operational experience will be reflected in

the final plans and may result in modification of the plans

described in the original Application. As discussed below, these

plans were developed and approved with the knowledge that an

experienced gaming operator would eventually become involved with

the project.

 

The Agreement between American and Circus contemplates an

actual transfer of ownership in the project. American is

currently the sole owner of the project. The current and

approved stockholders of American and their respective ownership

percentages are Joseph H. Georgusis (93%), Lewis S. Frank (5%)

and Dr. Charles C. Mary, Jr. (2%). Pursuant to the Agreement,

ownership of the project will be transferred resulting in both

American and Circus having a 50% interest therein. Of course,

the respective interests of the American stockholders will be reduced

proportionately.

 

B. BENEFITS OF THE AGREEMENT WITH CIRCUS

 

From the early stages of planning its riverboat gaming

project, through preliminary Approval by the Commission, and

until this time, American has fully informed the Commission of its

intent to join forces with an established and experienced gaming

concern for the purpose of operating the project. In fact, in

its original Application, American disclosed to the commission that

it was negotiating with nationally known gaming operators to manage

the day-to-day gaming activities. (See letter from American

submitting original Application to Commission, dated March 22,

1993, a copy of which is attached hereto as Exhibit "A".) The

Agreement with Circus is the result of those negotiations. In

Circus, American has selected a partner whose combination of

experience, reputation, and resources are unsurpassed in the

gaming industry. A summary of the most significant benefits of

this alliance are set forth below.

 

1. Greater Financial Resources

 

Circus's financial strength provides the project with access

to financial resources. Circus is a Fortune 500 corporation with

over $950 million in assets. For the fiscal year ended January

31, 1993, Circus recorded net income of over $117 million on

gross revenues of $843 million. Over the past five years, Circus has

generated operating cash flow exceeding $1 billion, resulting in

the highest operating cash flow per total investment among all

major publicly traded gaming companies. A copy of Circus's most

recent annual report is attached hereto as Exhibit "B".

 

As a result of its sustained successful operating results,

Circus is financially well-positioned. Its size and strength

provide it with access to the private and public markets to raise

additional capital. Certainly, Circus's financial stability and

experience in these markets will benefit the venture in its own

future public or private financing.

 

2. Greater Management Resources

 

Circus is a nationally recognized and renowned gaming

operator with a reputation for innovation. Circus successfully

operates eight gaming facilities throughout Nevada. Circus

pioneered the themed resort approach to gaming and was among the

first in the industry to introduce a value-oriented entertainment

concept to gaming activities and resorts. The results of this

visionary management approach have been impressive.

 

In addition to its gaming management resources, Circus

brings with it extensive support resources, including staff experienced

in the design, construction, financial and legal aspects of the

gaming business.

 

 

3. Promotes Louisiana's Interests

 

To a great extent, the benefits outlined above will inure to

Louisiana and its citizens in the form of a more successful and

stable gaming operation. In addition, Circus's gaming experience

will provide the project a greater potential for growth and

investment, thereby increasing related income, property, gaming,

and franchise tax bases. Moreover, the presence of a recognized

gaming operator with Circus's reputation in the fledgling

Louisiana gaming arena adds credibility and an increased

potential for building a successful and profitable industry.

 

Introducing a public company into this project further

promotes the interests of the state and its citizens by providing

extensive public disclosure of corporate events and operations.

Under federal and state laws, a public corporation must publicly

report its financial position and results of operations on a

quarterly and annual basis. It must disclose all significant

events, contracts, relationships, and contingencies. It is

overseen by the Securities and Exchange Commission and various

other agencies. Public corporations are accountable to

stockholders, as well as regulatory agencies. Finally, public

corporations are required to undergo an annual audit by an

independent accounting firm. Consequently, the involvement of

Circus in this project will result in Louisiana and its citizens

having access to an abundance of otherwise unavailable information

on the position, operations, management and ownership of the

proposed venture.

 

C. CONCLUSION

 

For the reasons set forth above, American believes that the

joint venture with Circus is in the best interests of the subject

project, the local gaming industry and the state of Louisiana and

its citizens. Accordingly, American Entertainment Corporation

respectfully requests that the Commission approve its Petition

for Modification and Amendment of its Application for Certificate of

Preliminary Approval to permit the inclusion of Circus as a 50%

owner in the venture to be formed to develop and operate the

vessel.

 

Respectfully submitted,

 

AMERICAN ENTERTAINMENT CORPORATION

 

 

By:___________|s|_____________________

James E. Smith, Jr., its

attorney

SMITH, MARTIN & SCHNEIDER

700 Camp Street

New Orleans, Louisiana 70130

Telephone: (504) 525-0134

 

SUPPLEMENTAL PETITION FOR MODIFICATION AND

AMENDMENT OF AMERICAN ENTERTAINMENT CORPORATION

FOR CERTIFICATE OF PRELIMINARY APPROVAL

 

NOW COMES American Entertainment Corporation ("American")

and respectfully submits this Supplemental Petition for Modification

and Amendment of its Application for Certificate of Preliminary

Approval.

 

On November 23, 1993, American filed a Petition for

Modification and Amendment of its Application for Certificate of

Preliminary Approval (the "Petition") with the Louisiana

Riverboat Gaming Commission (the "Commission").

 

The Petition set forth the ownership of American

Entertainment Corporation as follows: Joseph H. Georgusis 93%,

Lewis S. Frank 5% and Dr. Charles C. Mary, Jr. 2%.

 

Subsequent to the filing of the Petition, there was a change

in ownership in American, representing a reallocation of 3.5% of

the stock of American to Joseph H. Georgusis from each of the

other shareholders. As part of its ongoing duty to the

Commission, American hereby apprises the Commission that the

ownership of American is now as follows: Joseph H. Georgusis

96.5%, Lewis S. Frank 2.5% and Dr. Charles C. Mary, Jr. 1%.

 

WHEREFORE, American Entertainment Corporation respectfully

petitions this Commission to permit the supplemental modification

and amendment of its Application for Certificate of Preliminary

Approval dated March 22, 1993, as set forth herein.

 

Respectfully submitted

 

AMERICAN ENTERTAINMENT CORPORATION

 

 

By:____________|s|____________________

James E. Smith, Jr., its attorney

SMITH, MARTIN, SCHNEIDER & SHIELDS

700 Camp Street

New Orleans, LA 70130

Telephone: (504) 525-0134

EXHIBIT D

MANAGEMENT AGREEMENT

RIVERBOAT CASINO MANAGEMENT AGREEMENT

 

This Agreement is made and entered into this ____ day of

January __, 1994, by and among AMERICAN ENTERTAINMENT, L.L.C., a

Louisiana limited liability company ("Owner"), and CIRCUS CIRCUS

LOUISIANA, INC., a Louisiana corporation ("Manager").

 

R E C I T A L S

A. Owners desires to own and operate a riverboat gaming

operation based in St. Bernard Parish, Louisiana at Bayou

Bienvenue which shall operate on the inland waterways of Bayou

Bienvenue within the State of Louisiana or other navigational

limits established by any Operating Permit or Law (as each is

defined herein).

B. Owner has received a Certificate of Preliminary

Approval from the Louisiana Riverboat Gaming Commission (the "Commission")

describing in detail the riverboat gaming and incidental

operations Owner desires to conduct (the "Proposal").

C. Owner desires to engage a third party to manage the

gaming operations on the riverboat and any landside or other

related operations necessary, required or incidental to the

riverboat gaming operations as described in the Proposal and as

such plans are modified in accordance with any Related Contract

or Governmental Requirements.

D. Affiliates of Manager are experienced in managing

gaming establishments.

E. Owner desires to engage Manager and Manager desires to

be engaged to manage the Project (as defined herein), including

the gaming operations on the riverboat and the landside or other

related operations necessary, required or incidental to the

riverboat gaming operations. This Agreement, and to the extent

applicable, the Vessel Operating Agreement and the Owner's

Operating Agreement, will serve as the sole management agreement

pertaining to the operation and maintenance of the Project.