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AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
AMONG
CITY OF DETROIT
AND
THE ECONOMIC DEVELOPMENT CORPORATION OF THE CITY OF DETROIT
AND
MGM GRAND DETROIT, LLC
FOR THE CITY OF DETROIT CASINO DEVELOPMENT PROJECT
As of April 9, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
<S> <C>
DEFINITIONS.........................................................................1
1.1 Definitions..............................................................1
1.2 Interpretation..........................................................20
1.3 Michigan Statutes.......................................................21
ARTICLE II
GENERAL PROVISIONS.................................................................21
2.1 Purpose.................................................................21
2.2 Findings................................................................21
2.3 Intent..................................................................22
2.4 Commencement of Rights and Obligations..................................22
2.5 Conveyance of Project Premises to Developer.............................24
2.6 Compliance with Other Commitments.......................................24
2.7 Obtaining Certificate of Suitability and Casino License.................28
2.8 Payment of Development Process Costs....................................28
2.9 Payment of Feehold Compensation.........................................29
2.10 Initial Financing.......................................................29
2.11 Failure to Pay..........................................................29
2.12 Condition of Project Premises...........................................29
2.13 Developer's Development Obligations.....................................29
2.14 Other Commitments of Developer..........................................30
2.15 Other Commitments of City and EDC.......................................30
2.16 Approval by City, EDC and PM............................................30
2.17 Prompt Responses........................................................30
2.18 Funding of Excess Costs.................................................30
2.19 Administration of this Agreement........................................31
ARTICLE III
FINANCING..........................................................................33
3.1 Initial Financing.......................................................33
3.2 Financial Covenants.....................................................34
3.3 Subsequent Financings...................................................34
3.4 Transfer by Mortgagee...................................................34
3.5 Sinking Fund Provision..................................................34
3.6 Financing Representations; Restrictions.................................35
3.7 Guarantee of Developer's Obligations....................................35
</TABLE>
i
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<CAPTION>
ARTICLE IV
<S> <C>
DESIGN; PROJECT SCHEDULING; INFRASTRUCTURE; QUALITY................................36
4.1 Schematic, Design and Construction Documents............................36
4.2 Architect(s) and Consultants............................................37
4.3 City or EDC Not Responsible for Design Documents........................37
4.4 Permits.................................................................37
4.5 Non-Material Deviations.................................................38
4.6 Material Deviations.....................................................38
4.7 Presentation Illustrations; Virtual Reality.............................38
4.8 Integrated Complex......................................................38
4.9 Developer's Representative and Program Manager..........................38
4.10 Utility Relocation......................................................39
4.11 Infrastructure Improvements.............................................39
4.12 Quality of Work and Materials...........................................39
ARTICLE V
SITE MATTERS.......................................................................40
5.1 Developer's Right of Entry Prior to Conveyance..........................40
ARTICLE VI
CONSTRUCTION PHASE.................................................................40
6.1 General.................................................................40
6.2 Performance of the Work.................................................40
6.3 Commencement and Completion of the Work.................................42
6.4 Contractor; Subcontractors..............................................42
6.5 Claims and Liens........................................................42
6.6 Construction Matters....................................................43
6.7 Failure to Complete by Agreed Upon Opening Date.........................43
ARTICLE VII
OTHER COVENANTS OF DEVELOPER.......................................................44
7.1 Casino Complex Operation................................................44
7.2 Hours of Operation......................................................44
7.3 Radius Restriction......................................................45
7.4 Casino Component Management Agreements..................................46
7.5 Inaugural Ceremonies....................................................47
7.6 Marketing Cooperation and Coordination..................................47
7.7 Capital Maintenance Fund................................................47
7.8 Maintenance and Repairs.................................................48
7.9 Memorandum of Agreement; Covenants to Run with the Land.................49
7.10 Financial Statements; Annual Business Plan..............................49
</TABLE>
ii
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<CAPTION>
<S> <C>
7.11 Alterations.............................................................49
7.12 Space Leases............................................................50
7.13 Negative Covenants......................................................50
7.14 Notification of Certain Events..........................................51
7.15 Veracity of Statements..................................................51
7.16 Certification of Performance Threshold; Financial Covenants.............51
7.17 Use of Project Premises.................................................52
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF DEVELOPER........................................52
8.1 Representations and Warranties of Developer.............................52
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CITY AND EDC..........................57
9.1 Representations and Warranties of City..................................57
9.2 Representations and Warranties of EDC...................................58
9.3 Final Site Selection....................................................58
9.4 Delivery of Other Development Agreements................................58
ARTICLE X
EVENTS OF DEFAULT, REMEDIES AND TERMINATION........................................59
10.1 Events of Default.......................................................59
10.2 Remedies................................................................60
10.3 Termination.............................................................64
10.4 Liquidated Damages......................................................64
10.5 Limitation on Remedies..................................................64
ARTICLE XI
CITY'S RIGHT TO PERFORM DEVELOPER'S COVENANTS......................................65
ARTICLE XII
FORCE MAJEURE......................................................................66
12.1 Force Majeure...........................................................66
12.2 Extension of Time; Excuse of Performance................................67
ARTICLE XIII
INSURANCE..........................................................................67
</TABLE>
iii
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<S> <C>
13.1 Insurance...............................................................67
13.2 Form of Insurance and Insurers..........................................67
13.3 Other Policies..........................................................67
13.4 Insurance Notice........................................................67
13.5 Keep in Good Standing...................................................68
13.6 Blanket Policies........................................................68
ARTICLE XIV
TRANSFER AND ASSIGNMENT............................................................68
14.1 Transfer of Ownership...................................................68
14.2 Transfer of Agreement; Development......................................69
ARTICLE XV
ENVIRONMENTAL......................................................................70
15.1 Environmental Covenants.................................................70
15.2 Environmental Response..................................................70
15.3 Environmental Indemnity.................................................70
ARTICLE XVI
DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS; CONDEMNATION.............................71
16.1 Damage or Destruction...................................................71
16.2 Use of Insurance Proceeds...............................................71
16.3 No Termination..........................................................73
16.4 Condemnation............................................................74
ARTICLE XVII
FINANCIAL AND ACCOUNTING RECORDS; AUDIT RIGHTS.....................................74
17.1 Financial and Accounting Records........................................74
17.2 Review and Audit........................................................75
17.3 Procedures..............................................................75
ARTICLE XVIII
INDEMNIFICATION....................................................................75
18.1 Indemnification by Developer............................................75
ARTICLE XIX
ENTRY UPON PREMISES; INSPECTION....................................................77
19.1 Access and Inspection...................................................77
</TABLE>
iv
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<TABLE>
<CAPTION>
ARTICLE XX
<S> <C>
TEMPORARY CASINO...................................................................78
20.1 Developer's Temporary Casino Obligations................................78
20.2 Temporary Casino Site...................................................78
20.3 Temporary Casino Financing..............................................78
20.4 Temporary Casino Design Documents.......................................79
20.5 Approval Procedures.....................................................79
20.6 Construction of Temporary Casino........................................80
20.7 Temporary Casino Operations.............................................80
20.8 Restriction on Payments.................................................81
ARTICLE XXI
MISCELLANEOUS......................................................................81
21.1 Notices.................................................................81
21.2 Non-Action or Failure to Observe Provisions of this Agreement...........83
21.3 Applicable Law and Construction.........................................83
21.4 Submission to Jurisdiction..............................................83
21.5 Complete Agreement......................................................83
21.6 Holidays................................................................83
21.7 Exhibits................................................................84
21.8 No Brokers..............................................................84
21.9 No Joint Venture........................................................84
21.10 Governmental Authorities................................................84
21.11 Technical Amendments....................................................84
21.12 Unlawful Provisions Deemed Stricken.....................................84
21.13 No Liability for Approvals and Inspections..............................84
21.14 Time of the Essence.....................................................84
21.15 Captions................................................................85
21.16 Arbitration.............................................................85
21.17 Sunset Provision........................................................88
21.18 Compliance..............................................................88
21.19 Table of Contents.......................................................88
21.20 Number and Gender.......................................................88
21.21 Third Party Beneficiary.................................................88
21.22 Cost of Investigation...................................................88
21.23 Attorneys' Fees.........................................................88
21.24 Further Assurances......................................................89
21.25 Estoppel Certificates...................................................89
21.26 Most Favored Nations Provision..........................................89
21.27 Developer's Right to Terminate..........................................89
21.28 Counterparts............................................................89
</TABLE>
v
<PAGE>
INDEX OF EXHIBITS
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<CAPTION>
<C> <S>
Exhibit Description
------- -----------
1.1(a)(19) Description of Casino Area and Public Land
1.1(a)(30) Form of Closing Certificates
1.1(a)(42) Form of Conveyance Agreement
1.1(a)(83) Form of Guaranty and Keep Well Agreement
1.1(a)(113) Form of Performance Guaranty
7.7(a) Description of Funding of Capital Maintenance Fund
8.1(c) Description of Developer's organizational structure, etc.
8.1(d) Description of Developer's capabilities, etc.
8.1(e) Cost Budgets for Casino Complex
8.1(f) Financial Projections for Casino Complex
8.1(g) Description of Developer's financing, etc.
8.1(h) Financial Statements for Developer's existing gaming operations
8.1(i) Description of Casino Complex, etc.
8.1(j) Developer's community contributions, etc. in the area of Development
8.1(k) Developer's plan for assisting businesses that may experience
employee shortages due to the Development
8.1(l) Description of the manner in which Development will enhance City
as a desirable destination for tourists
8.1(m) Developer's community contributions, etc. outside the area of the
Development
8.1(n) Developer's marketing plan, etc.
8.1(o) Description of staff positions, etc.
8.1(p) Developer's training programs
8.1(q) Developer's Equal Opportunity Employment Plan
8.1(r) Compliance with prevailing wage determinations
8.1(s) Commitment re: Detroit resident apprentices journeymen
8.1(t) Commitment re: Executive Order 22
8.1(u) Commitment re: local purchasing
8.1(v) Description of Developer's traffic and transportation plan
8.1(w) Description of Developer's plan for transportation management
8.1(x) Description of Developer's plan re: regional water facilities
8.1(y) Description of Developer's plan re: regional sewer facilities
8.1(z) Developer's commitment re: PLD
8.1(aa) Description of Developer's plan to improve fire protection services
8.1(bb) Description of Developer's plan to improve police protection services
8.1(cc) Description of Developer's plan re: child care services
8.1(dd) Description of Developer's plan re: compulsive behavior disorder
treatment services
8.1(ee) Description of Developer's plan re: underage gambling
13.1 Insurance Schedule
21.25 Form of estoppel certificate
</TABLE>
vi
<PAGE>
CROSS REFERENCE TABLE FOR
-------------------------
ARTICLE VIII EXHIBITS
---------------------
For informational purposes only, the covenants corresponding to the
Exhibits referred to in Article VIII of the Agreement may be found in the
------------
following Sections. The inclusion of this cross reference table in no way
expands, limits, alters or amends any right, obligation or remedy of the parties
hereto.
SECTION IN WHICH CORRESPONDING
EXHIBIT REFERENCE COVENANT MAY BE FOUND
----------------- ----------------------------------------
8.1(c) 7.13(a) and 7.13(b)
8.1(d) Not Applicable
8.1(e) 2.6(a)
8.1(f) Not Applicable
8.1(g) 2.10 and 2.6(b)
8.1(h) Not Applicable
8.1(i) 4.1(a)
8.1(j) 2.6(c)
8.1(k) 2.6(c)
8.1(l) 2.6(c)
8.1(m) 2.6(c)
8.1(n) 2.6(c) and 7.6
8.1(o) 2.6(d)
8.1(p) 2.6(c)
8.1(q) 2.6(c), 2.6(e), 2.6(f), 2.6(g), 2.6(h) and 2.6(i)
8.1(r) 2.6(c)
8.1(s) 2.6(c)
8.1(t) 2.6(i)
8.1(u) 2.6(c) and 2.6(u)
8.1(v) 2.6(c)
8.1(w) 2.6(c)
8.1(x) 2.6(c) and 4.11
8.1(y) 2.6(c) and 4.11
8.1(z) 2.6(c)
8.1(aa) Not Applicable
8.1(bb) Not Applicable
8.1(cc) 2.6(c)
8.1(dd) 2.6(c)
8.1(ee) 2.6(c)
vii
<PAGE>
AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT ("Agreement") as originally executed as of the
12th day of March, 1998 (the "Original Agreement"), is amended and restated as
of the 9th day of April, 1998, by and among the City of Detroit, a municipal
corporation ("City"), The Economic Development Corporation of the City of
Detroit, a Michigan public body corporate ("EDC"), having its principal place of
business at 211 West Fort, Suite 900, Detroit, Michigan 48226 and MGM Grand
Detroit, LLC, a Delaware limited liability company ("Developer") having its
principal place of business at 500 Woodward Avenue, Suite 4000, Detroit,
Michigan 48226-3425
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereby amend and restate the Original Agreement
and agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
-----------
(a) The terms defined in Article I shall have the following meanings
---------
for purposes of this Agreement when initially capitalized herein:
(1) "Acceptable Guarantor" shall mean either (i) Parent Company
or such other Person provided that on the Closing Date in the case of the
Parent Company and on the date of delivery of the Performance Guaranty in
the case of any other Person, either (x) has a shareholders' equity,
determined in accordance with GAAP, of at least Seven Hundred Fifty Million
Dollars ($750,000,000) or (y)(A) has uncommitted credit available for
immediate draw under its primary credit facility plus (B) unrestricted
cash, which aggregates not less than Two Hundred Seventy-Five Million
Dollars ($275,000,000); and (C) has a primary credit facility which
contains a net worth or similar covenant of which it is not in violation or
(ii) such other Person or Persons as are reasonably acceptable to City;
(2) "Act" means the Michigan Gaming Control and Revenue Act,
being Sections 432.101 et. seq. of the Michigan Compiled Laws, as amended
--- ---
from time to time, together with all rules and regulations issued in
connection therewith or promulgated thereunder.
(3) "Addenda" means changes to the Design Documents made prior to
the execution of a Contractor Agreement.
<PAGE>
(4) "Adjusted Equity" means an amount equal to the sum of (i) the
Net Worth of Developer as reflected on the most recent audited financial
statements of Developer, provided that prior to Completion, all assets
shall be valued at cost, without allowance for depreciation or
amortization, all development and construction costs and expenses
(including construction loan interest) shall be capitalized, and the value
of goodwill shall be treated as zero, plus (ii) the "Valuation Adjustment"
as hereinafter determined. The Valuation Adjustment shall be determined as
follows:
(A) Until the first redetermination of the Valuation
Adjustment, the Valuation Adjustment shall equal the sum of (i) the
excess, if any, of the fair market value of Developer's tangible and
intangible assets as determined in the manner provided below, over the
value of such assets as determined in calculating Net Worth as of the
date of the Valuation Adjustment, in each case valuing goodwill at
zero, plus (ii) the excess, if any, of the "going concern value" of
Developer as determined in the manner provided below, over the value
of any goodwill as determined in calculating Net Worth as of the date
of the Valuation Adjustment.
(B) The going concern value shall be an amount equal to four
and one-half (4.5) times the Developer's trailing twelve (12) month's
EBITDA (provided that prior to the first anniversary of Completion,
for purposes of the foregoing computation, EBITDA shall be determined
from Completion and annualized).
(C) At any time, Developer may redetermine its Valuation
Adjustment. Once redetermined, the Valuation Adjustment shall remain
in effect until the next redetermination.
(D) In making a determination or redetermination of the
Valuation Adjustment, the fair market value of Developer's tangible
and intangible assets shall be determined by appraisal, and the value
of Developer's value as a going concern shall be determined by an
opinion of valuation. A real estate appraisal shall be performed by an
M.A.I. appraiser. An appraisal of other tangible property shall be
performed by a recognized appraiser of such types of property. An
appraisal of intangible assets shall be performed by a recognized
expert in valuing such property. The opinion of going concern value
shall be rendered by one or more recognized valuation expert(s) with
experience in valuing businesses similar to Developer's business. All
such appraisers and other experts shall be reasonably acceptable to
City and Developer.
(5) "Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by, or is
under common Control with, another Person. For purposes of clarification
Affiliates of Developer include, without limitation, Parent Company and
Partners Detroit, LLC, a Michigan limited liability company.
2
<PAGE>
(6) "Agreed Upon Opening Date" means the last day of the 36th
full calendar month following the issuance of the Building Permit, provided
however, the Agreed Upon Opening Date shall be extended by that period of
time by which the Submission Date is earlier than the Outside Submission
Date.
(7) "Allocable Share" means a fraction, the numerator of which is
one and the denominator of which is equal to the number of Land-Based
Casino Developments not yet open to the public for business, provided that
if City is notified in a writing signed by the Developer and the Other
Land-Based Casino Developers that the Allocable Share of Developer is a
specified percentage, then the Allocable Share of Developer shall equal
such specified percentage so long as the sum of the specified percentages
of Developer and the Other Land-Based Casino Developers equals one hundred
percent (100%).
(8) "Alteration" means any demolition, alteration,
reconstruction, addition, modification, renovation or improvement in or to
the Development but shall not include any refurbishment, remodeling or
rehabilitation.
(9) "Annual Business Plan" means collectively (i) a report for
the forthcoming Fiscal Year to be prepared by Developer and/or Casino
Component Manager/Operators consisting of an estimate of revenues, expenses
and payments into the Capital Maintenance Fund and (ii) a general summary
containing nonconfidential information about how the Casino Complex is
anticipated to be marketed and promoted, including the total amounts
budgeted and spent for the marketing program each year.
(10) "Annualized Cash Flow" means, as of the last day of any
fiscal quarter of Developer, EBITDA for the most recent four fiscal
quarters of Developer ended on that date, less (i) capital expenditures
(not otherwise deducted in determining EBITDA) in excess of long term debt
incurred to fund such capital expenditures and (ii) distributions made to
Developer's members in an amount estimated to be sufficient to pay federal,
state and local income tax payments of such members (or their respective
members) to the extent required or permitted under Developer's operating
agreement.
(11) "Architect" means an architectural firm retained by
Developer to prepare Design Documents and perform other Design Services.
(12) "Architect Agreement" means an agreement between Developer
and an Architect for the performance of Design Services.
(13) "Board" shall mean the Michigan Gaming Control Board, or its
successors.
(14) "Books and Records" means all revenue records and any other
accounting or financial documents or records, general ledgers, accounts
receivable records,
3
<PAGE>
accounts payable records, invoices, payroll records, expense records, or
income records, relating to or concerning the business operations of the
Developer and the Development. Books and Records shall not include any (i)
information Developer or Casino Component Manager/Operator is required by
law not to disclose; (ii) customer specific information; or (iii) any
information subject to written confidentiality undertakings with third
parties which: (x) were agreed to by Developer and/or any Casino Component
Manager/Operator in good faith and not for the purpose of avoiding
disclosure under this Agreement and (y) the exclusion of which information
from Books and Records would not cause the available Books and Records to
fail to fairly present the operations or financial results of the Developer
or the Development, taken as a whole.
(15) "Building Permit" means that document issued by the City
Department of Building and Safety Engineering authorizing commencement of
construction of the Casino Complex pursuant to Section 12-11-17.0 of
Ordinance 290-H, Chapter 12, Article 11, Administration and Enforcement
Provisions of the Official Building Code of the City.
(16) "Building Permit Submission" shall have the same meaning
ascribed to it in Section 4.4(b).
--------------
(17) "Business Days" or "Work Days" means all weekdays except
Saturday and Sunday and those that are official legal holidays of the City,
the State or the United States government. Unless specifically stated as
"Business Days" or "Work Days," a reference to "days" means calendar days.
(18) "Casino" means any premises wherein gaming is conducted and
includes all buildings, improvements, equipment and facilities used or
maintained in connection with such gaming.
(19) "Casino Area" means the real estate described on Exhibit
-------
1.1(a)(19), together with all rights, covenants, rights of way and
-----------
appurtenances belonging or in anywise appertaining thereto.
(20) "Casino Complex" means the Casino and all buildings, hotel
structures, recreational or entertainment facilities, meeting rooms and
conference centers, restaurants or other dining facilities, bars and
lounges, retail stores, parking, private bus, limousine and taxi parking
and staging areas, and other amenities that are connected with, or operated
in such an integral manner as to form a part of the same operation, whether
on the same tract of land or otherwise.
(21) "Casino Component Management Agreement" means any management
agreement between Developer and a Casino Component Manager/Operator
pertaining to the management and/or operation of one or more Covered
Components.
4
<PAGE>
(22) "Casino Component Manager/Operator" means the Person(s)
engaged, hired and/or retained by Developer to manage and/or operate one or
more Covered Components under a Casino Component Management Agreement.
(23) "Casino Gaming Operations" means any gaming operations
permitted under the Act and offered or conducted at or on the Development.
(24) "Casino License" means the license issued by the Board to
operate the Casino and engage in Casino Gaming Operations.
(25) "Casino Manager" means the Person engaged, hired or retained
by Developer to manage and/or operate the Casino and the Casino Gaming
Operations.
(26) "Certificate of Suitability" means the certificate issued by
the Board.
(27) "City" means the City of Detroit, a Michigan municipal
corporation.
(28) "City Contribution" means an amount equal to the sum of (i)
the cost of acquiring the Public Land not owned by the City prior to the
Execution Date and any improvements thereon at the fair market value
determined by appraisal, subject to Section 2.9 plus (ii) the relocation
-----------
payments pertaining to the Public Land, up to but not to exceed Fifty
Million Dollars ($50,000,000), payable at the election of the City in
either cash or land in the Casino Area valued in accordance with the
definition of Feehold Compensation.
(29) "City Council" means the Detroit City Council.
(30) "Closing Certificates" means the certificates to be
delivered by Developer in the form as attached hereto as Exhibit
-------
1.1(a)(30).
----------
(31) "Closing Date" means the date on which all of the conditions
set forth in Section 2.4(a)(1) through 2.4(a)(14) are satisfied and/or
------------------------------------
waived.
(32) "Commencement Date" means the date of commencement of the
Work.
(33) "Completion," "Completed" or "Substantial Completion" means
for the Casino Complex, the completion of the Work, as evidenced by the
issuance of a temporary certificate of occupancy by the appropriate
Governmental Authority for all Components to which a certificate of
occupancy would apply, and that the parking structure and not less than
ninety percent (90%) of the gaming area, ninety percent (90%) of the hotel
rooms, and fifty percent (50%) of the retail floor space and fifty percent
(50%) of the restaurant floor space are open to the public for their
intended use (and/or in the case of the retail and restaurant floor spaces,
are completed as shells and available for leasing).
5
<PAGE>
(34) "Completion Date" means the date on which Completion occurs.
(35) "Component" means, with respect to the Casino Complex, any
of the following: the hotel; Casino; restaurants; meeting and assembly
space; retail space; entertainment and recreational facilities; parking;
private bus, limousine and taxi parking and staging areas; the other
facilities described on Exhibit 8.1(i); and such other facilities that may
--------------
be added as Components by amendment to this Agreement.
(36) "Condemnation" means a taking of all or any part of the
Project Premises by eminent domain, condemnation, compulsory acquisition or
similar proceeding by a competent authority for a public or quasi-public
use or purpose, other than in connection with the Resolution of Necessity.
(37) "Construction Documents" means the drawings and
specifications, including Addenda and change orders, to be prepared by the
Architect(s) for the construction of the Casino Complex or the Temporary
Casino, as the context requires, which shall be in sufficient detail for
review by the appropriate Governmental Authority as necessary for the
issuance of a building permit and for review by the EDC as required in this
Agreement.
(38) "Consultants" means the Architect, engineers, planners and
other consultants retained by Developer to perform the Design Services, but
excluding any Contractor or subcontractor.
(39) "Contractor" means one or more firms licensed as a
contractor in the State, City or County as required by applicable law,
bonded to the extent required by applicable law and hired by Developer
pursuant to a Contractor Agreement or by a Contractor pursuant to a
subcontract, to construct all or part of the Development.
(40) "Contractor Agreement" means an agreement between Developer
and a Contractor or an agreement between a Contractor and a subcontractor
for construction of all or part of the Development.
(41) "Control(s)" or "Controlled" means the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, as such terms are used by and
interpreted under federal securities laws, rules and regulations.
(42) "Conveyance Agreement" means the agreement to be entered
into by Developer, City and EDC for the purchase of the Project Premises by
the Developer, in substantially the same form as attached hereto as Exhibit
-------
1.1(a)(42); provided, however, that the parties acknowledge certain
---------
practical issues with Section 3.03 thereof and shall negotiate such changes
------------
as may be appropriate for the parties to realize the benefits thereof.
6
<PAGE>
(43) "County" means Wayne County, Michigan.
(44) "Covered Components" means the Casino, hotel and parking
Components.
(45) "Debt Service" means, as of the last day of any fiscal
quarter of Developer, required payments of all principal and interest
on all Indebtedness for the most recent four fiscal quarters of
Developer ended on that date.
(46) "Debt Service Coverage Ratio" means, as of the last day of
each fiscal quarter of Developer, the ratio of (i) Annualized Cash
Flow as of that date to (ii) Debt Service as of that date.
(47) "Default Rate" means a rate of interest at all times equal
to the greater of (i) the rate of interest announced from time to time
by Comerica Bank, or its successors ("Comerica"), at its City office,
as its prime, reference or corporate base rate of interest, or if
Comerica is no longer in business in the City or no longer publishes a
prime, reference or corporate base rate of interest, then the prime,
reference or corporate base rate of interest announced from time to
time by such local bank having from time to time the largest capital
surplus, plus four percent (4%) per annum or (ii) twelve percent (12%)
per annum, provided, however, the Default Rate shall not exceed the
maximum rate allowed by applicable law.
(48) "Design Development Documents" means the intermediate level
plans, drawings and specifications for the Casino Complex to be
prepared by the Architect(s) and other Consultants that set forth the
requirements for the construction of the Casino Complex in sufficient
detail to establish the size and character of the Casino Complex,
including architectural, structural, mechanical and electrical
systems, materials and other elements.
(49) "Design Documents" means, collectively, as applicable, the
Schematic Design Documents, the Design Development Documents, the
Construction Documents and Temporary Casino Design Documents.
(50) "Design Services" means those services to be provided by the
Architects and other Consultants in connection with the design of the
Casino Complex and the Temporary Casino and the periodic inspections,
reviews, approvals, disapprovals of the Work and any other services
customarily performed by an architect or design consultants.
(51) "Detroit-Based Business" means that term as defined in
Chapter 18 of the 1984 Detroit City Code.
(52) "Detroit Resident Business" means any business which employs
at least fifty-one (51%) percent Detroit residents. An individual
employee will be considered a Detroit resident once the business has
presented proof of such individual's
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payment of the City of Detroit Resident Income Tax in the previous
taxable year, or proof that the individual is now subject to payment
of Detroit Resident Income Tax. Additionally, to qualify as a Detroit
Resident Business, the firm or company must have at least four (4)
employees.
(53) "Developer" means MGM Grand Detroit, LLC, a Delaware limited
liability company, having its principal place of business in the
State, and its successors and assigns as may be permitted hereunder.
(54) "Developer's Representative" means the Person employed or
retained by Developer to be its duly designated, official and
authorized representative and to represent Developer in all matters
pertaining to this Agreement.
(55) "Development" means the Project Premises and the
Improvements, and/or, as applicable, the Temporary Casino Site.
(56) "Development Agreement" or "Agreement" means this
Development Agreement including all exhibits hereto, as the same may
be amended, modified, restated or supplemented from time to time.
(57) "Development Process Costs" means, to the extent not
otherwise payable by Developer hereunder, the aggregate amount of any
and all costs and expenses in good faith paid, or incurred by, City
and/or EDC to third parties (which aggregate amount is reduced by the
Two Million Three Hundred Thousand Dollars ($2,300,000) already
received by the City in connection with the RFP/Q process), in
connection with the Land-Based Casino Developments, beginning with the
planning and preparation of the RFP/Q including, without limitation,
(i) as and to the extent set forth in Section 6.2(a), the services of
--------------
the PM, the PM's staff and the cost of a field office; outside
counsel; consulting engineers; relocation consultants; urban planners;
financial advisors; and accountants; and (ii) any and all title
charges, survey and appraisal costs. Development Process Costs do not
include (x) Infrastructure Improvement costs; (y) Feehold
Compensation; (z) salaries, overhead and other costs related to
municipal or EDC employees performing their normal functions, except
as and to the extent set forth in Section 6.2(a)(1).
-----------------
(58) "Deviation" means any deviation prior to Completion from the
Schematic Design Documents.
(59) "EBITDA" means Developer's (i) earnings before (ii) pre-
opening expenses, interest, taxes, depreciation and amortization each
of which elements shall be determined in accordance with GAAP,
consistently applied.
(60) "EDC" means The Economic Development Corporation of the City
of Detroit, a Michigan public body corporate.
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(61) "EDC Plan" means a plan setting forth the information
required by Section 8 of the Economic Development Corporation Act, MCL
125.1601, et seq. including but not limited to information regarding
the location and extent of existing streets, the location, extent,
character and estimated cost of improvements for the project area, an
estimate of the number of persons that will be displaced, a statement
of the proposed method of financing the project, and a description of
the portions of the project area which will be sold, donated or
exchanged to or from the City.
(62) "Effective Date" means the date on which all of the
following have been accomplished: the Agreement has been executed by
all parties hereto and the City Council has duly approved and
certified the last of the following: (i) this Agreement; and (ii) the
development agreements of each of the Other Land-Based Casino
Developers.
(63) "Environmental Claim" means any demand, cause of action,
administrative, civil or criminal proceeding arising under
Environmental Law and the results thereof for (i) damages (actual or
punitive), losses, injuries to person or property, damages to natural
resources, fines, penalties, expenses, liabilities, interest,
contribution or settlement (including, without limitation, attorneys'
fees, court costs and disbursements), (ii) the costs of site
investigations, feasibility studies, information requests, health or
risk assessments, medical monitoring or Response actions, and (iii)
enforcing insurance, contribution, or indemnification agreements.
(64) "Environmental Law" means all federal, state and local
statutes, ordinances, regulations and rules relating to environmental
quality, health, safety, contamination and clean-up, including,
without limitation, the Clean Air Act, 42 U.S.C. Section 7401 et seq.;
the Clean Water Act, 33 U.S.C. Section 1251 et seq., and the Water
Quality Act of 1987; the Federal Insecticide, Fungicide, and
Rodenticide Act ("FIFRA"), 7 U.S.C. Section 136 et seq.; the Marine
Protection, Research, and Sanctuaries Act, 33 U.S.C. Section 1401 et
seq.; the National Environmental Policy Act, 42 U.S.C. Section 4321 et
seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
Section 6901 et seq., as amended by the Hazardous and Solid Waste
Amendments of 1984; the Safe Drinking Water Act, 42 U.S.C. Section
300f et seq.; the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act, the
Emergency Planning and Community Right-to-Know Act, and Radon Gas and
Indoor Air Quality Research Act; the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq.; the Federal Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the
Atomic Energy Act, 42 U.S.C. Section 2011 et seq.; the Nuclear Waste
Policy Act of 1982, 42 U.S.C. Section 10101 et seq.; and the Michigan
Natural Resources and Environmental Protection Act ("NREPA"), MCL
324.3101-.21551, with implementing regulations and to the extent
legally enforceable, guidelines. Environmental Laws shall also
include all state, regional, county, municipal and other local laws,
regulations, rules
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and ordinances insofar as they purport to regulate human health, the
environment or Hazardous Materials.
(65) "Equal Opportunity Employment Plan" means a voluntary plan
for the employment of women and Minorities in the Casino Complex and
in the construction of the Casino Complex.
(66) "Event of Default" shall have the meaning ascribed to it in
Section 10.1.
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(67) "Execution Date" means March 12, 1998.
(68) "Exhibits" means those agreements, diagrams, drawings,
specifications, instruments, forms of instruments, and other documents
attached hereto on the date hereof or added to this Agreement and
designated as exhibits to, and incorporated in and made a part of,
this Agreement.
(69) "Feehold Compensation" means the (i) aggregate amount of any
and all costs, expenses and relocation payments in good faith paid, or
incurred by, City and/or EDC, excluding the cost of any land and any
improvements thereon, to third parties (i.e., "soft costs") in
connection with the acquisition, purchase, ownership, financing and
disposition of all or any part of the Casino Area and the Public Land;
and (ii) cost of acquiring the Casino Area, Public Land and any
improvements thereon at their fair market value determined by
appraisal, subject to Section 2.9. Feehold Compensation does not
-----------
include (x) Development Process Costs, (y) the cost of any land within
the Public Land area owned by the City prior to the Execution Date,
including without limitation Chene Park and St. Aubin marina; or (z)
the cost of any Response with respect to the Public Land. Vacated
streets and sidewalks shall be deemed to be included in the parcels to
which they are appurtenant and no Feehold Compensation shall be
payable with respect thereto.
(70) "Finance Affiliate" means any Affiliate created to
effectuate all or any portion of the Initial Financing.
(71) "Financial Statements" means a balance sheet and related
statements of income and cash flows of Developer.
(72) "Financing" means the act, process or an instance of
obtaining funds for the Development, whether secured or unsecured,
including but not limited to (i) issuing securities; (ii) drawing upon
any existing or new credit facility; or (iii) contributions to capital
by any Person.
(73) "Finish Work" refers to the finishes which create the
internal and external appearance of the Casino Complex and/or the
Temporary Casino, as the case may be.
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(74) "First Class Casino Complex Standards" means the standards
of quality established and maintained on the Effective Date at MGM
Grand Hotel and Casino, Las Vegas, Nevada, taken as a whole; provided
however, for the Temporary Casino due allowances shall be made to take
into account the temporary nature of the facility and the fact the
facility was not originally designed to be a casino.
(75) "First Mortgage" means the first priority Mortgage.
(76) "First Mortgagee" means the holder of the First Mortgage.
(77) "Fiscal Year" means the fiscal year that ends on the last
day of the fiscal year of the Developer. The first Fiscal Year shall
be the period commencing on the Effective Date and ending on the last
day of the fiscal year of the Developer in which the Effective Date
occurs. The term "Full Fiscal Year" means any Fiscal Year containing
not fewer than three hundred sixty-five (365) days. The partial Fiscal
Year commencing after the end of the last Full Fiscal Year and ending
with the termination of this Agreement shall constitute a separate
Fiscal Year.
(78) "Force Majeure" means those events described in Section
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12.1.
----
(79) "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession for use
in the United States, which are applicable to the circumstances as of
the date of determination.
(80) "Gaming Authorities" means all agencies, authorities and
instrumentalities of the City, the State or the United States of
America, or any subdivision thereof, having jurisdiction over the
gaming or related activities at the Casino, including but not limited
to the Board, or their respective successors.
(81) "Governmental Authority" or "Governmental Authorities" means
any federal, state, county or municipal governmental authority,
including all executive, legislative, judicial and administrative
departments and bodies thereof (including, without limitation, any
Gaming Authority) having jurisdiction over the Developer and/or the
Development.
(82) "Governmental Requirements" means all laws, ordinances,
statutes, executive orders, rules, zoning requirements and agreements
of any Governmental Authority that are applicable to the acquisition,
remediation, renovation, demolition, development, construction and
operation of the Development including, without limitation, all
required permits, approvals and any rules, guidelines or restrictions
enacted or imposed
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by Governmental Authorities, but only to the extent that such laws,
ordinances, statutes, executive orders, zoning requirements,
agreements, permits, approvals, rules, guidelines and restrictions are
valid and binding on Developer and Developer would be required to
comply with the same without regard to this Agreement.
(83) "Guaranty and Keep Well Agreement" means that certain
agreement substantially in the same form as attached hereto as Exhibit
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1.1(a)(83).
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(84) "Hazardous Materials" means the following, including
mixtures thereof: any hazardous substance, pollutant, contaminant,
waste, by-product, or constituent regulated under CERCLA; the Michigan
Natural Resources and Environmental Protection Act, MCL 324.101-
.21551; oil and petroleum products, natural gas liquids, liquefied
natural gas and synthetic gas usable for fuel; pesticides regulated
under the FIFRA; asbestos and asbestos-containing materials,
polychlorinated biphenyls and other substances regulated under the
TSCA; source material, special nuclear material, by-product material
and any other radioactive materials or radioactive wastes, however
produced, regulated under the Atomic Energy Act or the Nuclear Waste
Policy Act; chemicals subject to the OSHA Hazard Communication
Standard, 29 C.F.R. (S)1910.1200 et seq.; solid wastes whether or not
hazardous within the meaning of RCRA; and any other hazardous
substance, pollutant or contaminant regulated under any other
Environmental Law.
(85) "Improvements" means all buildings, building additions,
structures, roads, roadways, mechanical devices, infrastructure
improvements (including without limitation, all water and sewer mains,
electrical transmission conduits and equipment and other utility
facilities not owned by public utilities or that are the obligation or
responsibility of a quasi-public or private utility), landscaping,
facilities and appurtenances constructed and situated now or at
anytime hereafter upon the Project Premises and the Temporary Casino
Site.
(86) "Indebtedness" means, without duplication (i) all
obligations, debts, or liabilities of Developer for borrowed money
which in accordance with GAAP would be shown on a balance sheet of
Developer as a liability; (ii) all obligations, debts or liabilities
for the deferred purchase price of property or services secured by any
lien on any property owned by Developer whether or not such obligation
has been assumed; and (iii) all rental obligations under leases
required to be capitalized under GAAP.
(87) "Infrastructure Improvements" means those matters set forth
on Schedule B, to be provided by City pursuant to Section 2.18,
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comprising streets, roads, roadways and other transportation and
roadway improvements, including, without limitation, traffic
signalization and intersection improvements; sidewalks and curbs;
water mains or lines; storm and sanitary sewers and drainage
improvements; electrical transmission conduits and equipment and other
utility facilities; the foregoing of which are located off-site (i.e.,
outside of, and leading to, the Development) and which in the City's
good faith judgment are necessary to operate the Development or to
mitigate or
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reduce the impact of the Development on existing infrastructure
improvements. In determining whether the City is exercising good faith
judgment, the City shall consider, among other relevant matters: (x)
the City's overall policies and practices concerning infrastructure
(y) available cost effective alternatives and (z) the best interests
of the City. For the avoidance of doubt: (i) an off-site improvement
shall be considered an Infrastructure Improvement if but for
construction of the Casino Complex such off-site improvement would not
have been required by City as of the Effective Date; (ii)
Infrastructure Improvements do not include maintenance or repair of
existing facilities; and (iii) subject to Section 2.18, under no
------------
circumstances shall City and/or EDC be responsible to pay for any
Infrastructure Improvements.
(88) "Initial Financing" has the meaning set forth in Section
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3.1.
---
(89) "Interior Leasable Space" means the floor area located in
the Casino Complex available for lease to third parties for retail or
service use.
(90) "Land-Based Casino Developments" means the Development and
the other casino projects being developed in the City by the Other
Land-Based Casino Developers.
(91) "Leverage Ratio" means Indebtedness divided by Adjusted
Equity.
(92) "Loan Default" means an event of default or default or event
or condition which, with respect to Developer or its Finance Affiliate
without further notice or passage of time, would entitle a mortgagee
to exercise the right to foreclose upon, acquire, possess or obtain
the appointment of a receiver or other similar trustee or officer over
all or a part of Developer's interest in the Development.
(93) "Local Partner(s)" means any Person who directly or
indirectly through an entity or series of entities owns an interest in
Partners Detroit, LLC.
(94) "Major Condemnation" means a Condemnation either (i) of the
entire Development, or (ii) of a portion of the Development if, as a
result of the Condemnation, it would be imprudent or unreasonable to
continue to operate the Casino Complex even after making all
reasonable repairs and restorations.
(95) "Manage" means to generate, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or burn for energy
recovery, incinerate, accumulate speculatively, transport, transfer,
dispose of or abandon Hazardous Materials.
(96) "Mandatory Sale" shall have the meaning ascribed to it in
Section 10.2(e).
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(97) "Material Alteration" means any Alteration or related series
of Alterations that: (i) materially changes the nature of the use of
the Covered Components
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and the retail Component, taken as a whole (provided that in making
such determination, up to ten percent (10%) of the retail Component
floor space shall be excluded); (ii) materially diminishes the
exterior quality of the Development taken as a whole, or materially
affects the exterior appearance or materially affects the exterior
signage of the Casino Complex; or (iii) subject to Section 7.11,
------------
increases or decreases the gaming floor area of the Casino.
(98) "Material Deviation" is a Deviation that: (i) delays the
Agreed Upon Opening Date in excess of thirty (30) Business Days; (ii)
materially changes the nature of the use of any Component; (iii)
materially diminishes the overall quality or size of a Component
(measured, in the case of size, by a reduction of more than ten
percent (10%) in the number of rooms, number of parking spaces,
aggregate square footage (other than gaming floor area), or other
appropriate measure); (iv) reduces the budget (as then approved) for
the Casino Complex by more than five percent (5%) of Total Cost; or
(v) subject to Section 4.6, increases or decreases the gaming floor
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area of the Casino.
(99) "Mayor" means the duly elected Mayor of the City.
(100) "Memorandum of Agreement" shall mean a memorandum of this
Agreement in recordable form and otherwise satisfactory in form and
substance to City, EDC and Developer in the exercise of reasonable
judgment.
(101) "Minor Condemnation" means a Condemnation that is not a
Major Condemnation.
(102) "Minority" means that term as defined in Section 18-5-31 of
Chapter 18 of the 1984 Detroit City Code.
(103) "Mortgage" means a mortgage on all or any part of
Developer's interest in the Development.
(104) "Mortgagee" means the holder from time to time of a
mortgage on all or any part of Developer's interest in the
Development.
(105) "Municipal Services Fee" shall have the same meaning as
ascribed to it in the Act.
(106) "Net Worth" means the members' equity as reflected on
Developer's balance sheet, determined in accordance with GAAP.
(107) "Non-Material Alteration" means any Alteration which is not
a Material Alteration.
(108) "Non-Material Deviation" means any Deviation which is not a
Material Deviation.
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(109) "Ordinance" means ordinance number 17-97, Chapter 18 of the
1984 Detroit City Code, as amended from time to time, together with
all rules and regulations issued in connection therewith or
promulgated thereunder.
(110) "Other Land-Based Casino Developers" means Detroit
Entertainment, LLC and Greektown Casino, L.L.C., each a Michigan
limited liability company.
(111) "Outside Submission Date" means the first anniversary of
the Closing Date.
(112) "Parent Company" means MGM Grand, Inc., and its successors
and assigns.
(113) "Performance Guaranty" means a guarantee of performance of
Developer's obligations under this Agreement in substantially the same
form as attached hereto as Exhibit 1.1(a)(113).
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(114) "Performance Threshold" means EBITDA, as reduced by
interest expense and scheduled principal payments (other than balloon
payments on maturity to the extent refinanced), of at least Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000) for the most
recent trailing twelve (12) month period, provided that the first
trailing twelve (12) month period shall commence with the thirteenth
(13th) month after the Completion Date and shall end with the twenty-
fourth (24th) month after the Completion Date. For the avoidance of
doubt, Developer is deemed to be in compliance with the Performance
Threshold during the period commencing with the Effective Date through
and including the first full twenty-four (24) months following
Completion Date.
(115) "Permits" means all licenses, permits, approvals, consents
and authorizations that Developer is required to obtain from any
Governmental Authority to perform and carry out its obligations under
this Agreement including but not limited to permits and licenses
necessary to demolish, build, open, operate and occupy the
Development.
(116) "Permitted Affiliate Payments" means (i) payments which
represent compensation for goods and services purchased or acquired
from an Affiliate in the ordinary course of business; (ii)
distributions required under Developer's operating agreement to
satisfy tax payments; (iii) payments of interest or principal to any
Affiliate of Developer, with respect to money borrowed from such
Affiliate provided no acceleration of such payments shall be a
Permitted Affiliate Payment unless as and to the extent loans to such
Affiliate from third parties have been accelerated; (iv) payments to
any Casino Manager which are used by such Casino Manager to pay
compensation and benefits to its employees; (v) (1) at such times as
Developer meets or exceeds the Performance Threshold, or (2) so long
as a Performance Guaranty from an Acceptable
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Guarantor remains in full force and effect, payments for services
purchased or acquired from an Affiliate in the ordinary course of
business, including without limitation management fees, guaranty fees,
and compensation for the use of intellectual property; and (vi)
distributions to Developer's members in an amount equal to, and to be
used solely for the purpose of paying, principal and interest on money
borrowed to make capital contributions to Developer.
(117) "Person" means any individual, partnership, corporation,
limited liability company, association, unincorporated organization,
trust or other entity, including but not limited to, any government or
agency or subdivision thereof, and the heirs, executors,
administrators, legal representatives, successor and assigns of such
Person where the context so permits.
(118) "Pro Rata Share" means one-third, provided that if City and
EDC are notified in a writing signed by the Developer and the Other
Land-Based Casino Developers that the Pro Rata Share of Developer is a
specified percentage, then the Pro Rata Share of Developer shall equal
such specified percentage so long as the sum of the specified
percentages of Developer and the Other Land-Based Casino Developers
equals one hundred percent (100%).
(119) "Program Manager" or "PM" means the Person or Persons
designated by and retained by the EDC to be its authorized
representative, to represent EDC in all construction matters
pertaining to this Agreement and to facilitate the construction
process of the Development.
(120) "Project Site" means the Project Premises, the staging
areas, and temporary construction easements (if any), provided for
construction of the Development.
(121) "Project Premises" means the parcel or parcels of real
estate to be conveyed to Developer pursuant to the Conveyance
Agreement, together with all rights, covenants, rights of way and
appurtenances belonging or in anywise appertaining thereto.
(122) "Proceeds" means the compensation paid by the condemning
authority to the City and/or Developer in connection with a
Condemnation, whether recovered through litigation or otherwise, but
excluding any compensation paid in connection with a temporary taking.
(123) "Public Land" means the real estate described on Exhibit
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1.1(a)(19) attached hereto, together with all rights, covenants,
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rights of way and appurtenances belonging or in anywise appertaining
thereto.
(124) "Publicly Traded Corporation" shall have the same meaning
as defined in the Act.
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(125) "Radius" means the geographic area encompassed by a circle
having a radius of one hundred fifty (150) miles and the intersection
of Woodward and State Fair as its center.
(126) "Release or Released" means actual or threatened spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, presence, dumping, migration from adjacent
property or disposing of Hazardous Materials into the environment, as
"environment" is defined by the Environmental Laws or the abandonment
or discarding of barrels, containers or other closed receptacles
containing a Hazardous Material.
(127) "Resolution of Necessity" means a resolution of City
Council authorizing land acquisition in the project area as set forth
in the EDC Plan by or for the benefit of the public, the City and its
residents for the purposes set forth in PA 338 of 1974.
(128) "Response or Respond" means action taken in compliance with
Environmental Laws to correct, remove, remediate, clean up, prevent,
mitigate, monitor, evaluate, investigate, halt, assess or abate a
Release and includes, but is not limited to evaluation, interim
response activity, remedial action, demolition or the taking of other
actions necessary to protect the public health, safety, welfare or the
environment or any natural resources.
(129) "Restricted Party" has the meaning set forth in Section
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7.3.
---
(130) "RFP/Q" means the Phase I and Phase II Request for
Proposals and Qualifications issued by the City in connection with the
land-based casino development project for the City.
(131) "Schematic Design Documents" means a site plan; a schematic
design establishing the general scope, conceptual design, and scale
and relationships among the Components; preliminary specifications,
specifically including quality of materials to be utilized in
construction of the exterior of the Casino Complex; and elevations
prepared by the Architect(s).
(132) "Secured Debt" means a debt of Developer secured by a
Mortgage.
(133) "Site Preparation Work" means the following actions with
respect to the Project Premises or the Temporary Casino Site, as the
case may be: (a) demolition and removal of structures; (b) demolition
and removal of surface paving and sidewalks; (c) removal of
underground and overhead utility facilities, and capping of any
remaining lines as appropriate (including without limitation the
removal or capping of all sanitary sewer, storm and drainage
facilities); (d) removal of non-soil material, rubble and debris
resulting from the foregoing demolition activities and legal disposal
at landfills authorized by the State to accept such materials; (e)
removal and abatement, to the extent required
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by controlling applicable law, of all toxic or hazardous substances,
materials or wastes, including contaminated soil, if any disclosed by
any environmental assessment; and (f) grading of the Project Premises
to be level with the adjacent property line grades and proper
compaction of all soils, including backfill.
(134) "Small Business Concern" means that term as defined in
Section 18-5-1 of the 1984 Detroit City Code.
(135) "Space Lease" means any sublease, franchise, license or
other agreement that would permit or allow a Person to use and/or
maintain space as a tenant in or on the Development.
(136) "Space Tenant" means a tenant under a Space Lease.
(137) "State" means the State of Michigan.
(138) "Submission Date" means the date on which the Building
Permit Submission is made.
(139) "Suitable Lender" means:
(A) any insurance company as defined in Section 2(13) of
the Securities Act of 1933;
(B) any investment company registered under the Investment
Company Act of 1940;
(C) any business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940;
(D) any small business investment company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958;
(E) any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its
employees;
(F) any employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of 1974;
(G) any trust fund whose trustee is a bank or trust
company and whose participants are exclusively plans of the types
identified in paragraph (E) or (F) of this section;
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(H) any business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(I) any investment adviser registered under the Investment
Advisers Act of 1940;
(J) any dealer registered pursuant to Section 15 of the
Securities and Exchange Act of 1934 or its Affiliate;
(K) any entity, all of the equity owners of which are, or
all debt securities of which are owned by, (i) "qualified
institutional buyers" as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") acting
for their own account or the accounts of other qualified
institutional buyers, and/or (ii) parties who have acquired such
equity interests or debt securities pursuant to Regulation S of
the Securities Act or pursuant to a public offering registered
pursuant to the Securities Act;
(L) any bank as defined in Section 3(a)(2) of the
Securities Act of 1933, any savings and loan association or other
institution as referenced in Section 3(a)(5)(A) of the Securities
Act of 1933, or any foreign bank or savings and loan association
or equivalent institution;
(M) any investor or group of investors purchasing debt
securities of Developer who are (i) purchasing such debt
securities of Developer in any public offering registered
pursuant to the Securities Act; (ii) "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act);
and/or (iii) purchasing such debt securities of Developer
pursuant to Regulation S of the Securities Act;
(N) Parent Company or any Affiliate of Parent Company;
(O) any Publicly Traded Corporation whose securities are
traded on a national exchange or are included for quotation on
the NASDAQ Stock Market; and
(P) any other lender approved by City in the exercise of
its reasonable judgment.
(140) Temporary Casino" shall mean that facility in which Casino
Gaming Operations shall be conducted by Developer until the Completion
Date in accordance with the provisions of Article XX.
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(141) Termination Date" means the date that this Agreement is
terminated pursuant to Section 10.3.
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(142) "Total Cost" means all hard and soft costs and expenses of
Developer incurred through Completion for acquiring and developing the
Development (other than for the Temporary Casino), including without
limitation Developer's Allocable Share of Development Process Costs; Pro
Rata Share of Feehold Compensation, Infrastructure Improvements and Site
Preparation Work; and for designing and constructing the Improvements,
including but not limited to, land acquisition costs for the Development
(other than for the Temporary Casino), payments under the Contractor
Agreement(s), payments under the Agreement, fees and expenses of the
Architect(s) and other Consultants, overhead, and costs of bonds, taxes,
insurance, permits, licenses and inspections, interest and other financing
costs, legal fees and expenses and pre-opening and related marketing or
advertising expenses.
(143) "Transfer" means (i) any sale (including agreements to sell
on an installment basis), assignment, transfer, pledge, alienation,
hypothecation, merger, consolidation, reorganization, liquidation, or any
other disposition by operation of law or otherwise, and (ii) the creation
or issuance of new or additional interests in the ownership of any entity.
(144) "Wagering Tax" shall have the same meaning as ascribed to
it in the Act.
(145) "Work" means Site Preparation Work and/or construction of
the Improvements in accordance with the Construction Documents and includes
labor, materials and equipment to be furnished by a Contractor or
subcontractor pursuant to a Contractor Agreement.
(146) "Working Development Schedule" means the schedule to be
prepared by Developer outlining the events and estimated time periods
necessary for the completion of the Site Preparation Work and the
significant milestones for design, permitting, construction and Completion
of the Casino Complex, as modified from time to time.
(b) Any other initially capitalized terms defined within the text of
this Agreement shall have the meaning set forth therein for purposes of
this Agreement.
1.2 Interpretation. When a reference is made in this Agreement to an
--------------
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on any schedules and exhibits are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement or such schedules or exhibits. Words of the masculine gender shall be
deemed and construed to include correlative words of the feminine and neuter
genders. "Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement and not solely
to the particular portion thereof in which any such word is used. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
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1.3 Michigan Statutes. All references herein to Michigan statutes are to
-----------------
the Michigan Compiled Laws, as amended.
ARTICLE II
GENERAL PROVISIONS
2.1 Purpose. The purpose of this Agreement is:
-------
(a) To set forth the relationship among Developer, City and EDC the
respective duties, responsibilities and obligations of each and the procedures
to be followed relating to the design, construction and operation of the
Development; and
(b) To provide a means by which the Development can be designed,
constructed and completed by Developer, with the cooperation of City and
EDC, and for the coordination of efforts on the part of each to ensure the
timely and expedited construction and Completion of the Development.
2.2 Findings. City and EDC do hereby ascertain, determine, declare and
--------
find that:
(a) The Development will provide or preserve gainful employment for
citizens of City, make a significant contribution to the economic growth of City
and serve a public purpose by, among other things, advancing economic
prosperity, helping to alleviate conditions of unemployment and underemployment
in the City and attracting new and improved commercial and industrial
enterprises to the City.
(b) The Development is in the best interests of the City and
accomplishes the purposes of Act 338, Michigan Public Acts of 1974, as
amended ("Act 338").
(c) The EDC is empowered under Act 338, to construct, acquire by gift
or purchase, reconstruct, improve, maintain or repair projects and acquire
necessary lands for the site of a project, and to sell and to convey a project
or any part thereof for a price and at a time which EDC determines, and to lend,
grant, transfer, or convey funds, all such powers being declared by Act 338 to
constitute the performance of essential public purposes and functions for the
State and its municipalities.
(d) The execution of this Agreement and the construction
implementation of the Development will enhance the public benefit and welfare
and therefore constitute public purposes in that they prevent and combat
community deterioration in the City; increase employment opportunities in the
City; help to alleviate conditions of unemployment and/or underemployment in the
City; promote the location, relocation, expansion and retention of commercial
and industrial enterprises in the City; increase and promote tourism and enhance
tourist amenities in the City; and preserve and improve the aesthetic quality
inuring to the
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economic health of the City. The above-cited items constitute important public
benefits to City and EDC. Further, additional public benefits of this Agreement
and the construction of the Development consist of increased taxes and other
revenues from the operation of the Development. Further, City hereby declares
and acknowledges that the entering into of this Agreement was done on a
competitive basis with a systematic evaluation of factors relating to the public
benefit and welfare, and the public purposes, hereinabove described, all in
accordance with the Ordinance.
2.3 Intent. It is the intent of the parties to this Agreement that:
------
(a) The Development is to be accomplished by Developer as provided
herein.
(b) This Agreement sets forth the duties, obligations, rights and
responsibilities of City, EDC and Developer with respect to the development,
design and construction of the Development and operation of the Casino Complex
and the Temporary Casino.
2.4 Commencement of Rights and Obligations.
--------------------------------------
(a) This Agreement shall confer no rights and impose no obligations
until the Effective Date. Notwithstanding the execution hereof and the
occurrence of the Effective Date, except as and to the extent set forth in
(i) Article I, (ii) Section 2.4, (iii) Section 2.5, (iv) Section 2.7, (v)
--------- ----------- ----------- -----------
Section 2.8, (vi) Section 2.10, (vii) Section 2.11, (viii) Section 2.17,
----------- ------------ ------------ --------
(ix) Article VIII, (x) Article IX, (xi) Article X, (xii) Article XIV,
------------ ---------- --------- -----------
(xiii) Article XVIII, (xiv) Article XX and (xv) Article XXI, each to the
------------- ---------- -----------
extent applicable, no right shall be conferred or obligation imposed, by or
under this Agreement unless and until each of the following conditions has
been fully met:
(1) The Board has issued its Certificate of Suitability pursuant
to the Act, granting to Developer the right to receive a Casino License
upon the conditions set forth in the Act and such Certificate of
Suitability contains only such other conditions as may be acceptable to
Developer in the exercise of its reasonable judgment.
(2) The Developer has paid its Pro Rata Share of the Feehold
Compensation, less its Pro Rata Share of the City Contribution.
(3) The Developer has furnished such documentation as City
reasonably requires to verify that the Initial Financing has been obtained
and is available for immediate disbursement or use.
(4) The Developer, City and EDC have duly executed and delivered
the Conveyance Agreement; the Conveyance Agreement has been approved by
City Council; and the Developer, City and EDC have duly executed, delivered
and recorded the Memorandum of Agreement and Developer has acquired title
to the Project Premises subject to such Memorandum of Agreement.
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(5) The Developer has delivered, and has caused Parent Company
to deliver, to the City and EDC an opinion of counsel in a form reasonably
satisfactory to City and EDC.
(6) The City and EDC each have delivered to Developer an opinion
of counsel in a form reasonably satisfactory to Developer.
(7) The Developer has paid to the City its Allocable Share of
the Development Process Costs then due.
(8) The City Council has (x) vacated all streets, sidewalks and
other land, the use of which is dedicated to the public as set forth in the
EDC Plan; (y) approved all zoning changes necessary to allow Developer to
operate the Casino Complex; and (z) enacted an ordinance authorizing casino
gaming in the City.
(9) There shall be no temporary restraining order, preliminary
injunction or permanent injunction enjoining the Developer from proceeding
to develop the Development.
(10) The Developer has delivered to City and EDC the Guaranty and
Keep Well Agreement executed by an Acceptable Guarantor.
(11) The Developer has delivered to City and EDC Closing
Certificates executed by Developer and an Acceptable Guarantor.
(12) The Developer has delivered to City the executed agreement
of Parent Company, any Casino Manager and each Restricted Party required
under Section 2.14.
------------
(13) The Developer has delivered to City certificates showing
that Developer, any Acceptable Guarantor and any Casino Manager are in good
standing and qualified to do business in the State, if required under the
law of the State, dated no earlier than five (5) days prior to the Closing
Date.
(14) The Developer has delivered to City copies of the
organizational documents of Developer, any Acceptable Guarantor and
each member of Developer, certified by an authorized officer of each
such respective entity as true and accurate as of the Closing Date.
(b) The definition of Effective Date as provided for herein and in the
development agreements entered in by the Other Land-Based Casino Developers may
not be modified except in an instrument executed by the City, EDC, Developer and
the Other Land-Based Casino Developers. The Other Land-Based Casino Developers
are intended third party beneficiaries of this Section 2.4(b) and are entitled
--------------
to enforce it as a direct party hereto.
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(c) Developer may waive, in whole or in part, any or all of those
conditions set forth in Sections 2.4(a)(6), (a)(8), or (a)(9) prior to the
-------------------------------------
satisfaction of such condition. City may waive, in whole or in part, in
writing any of those conditions set forth in Sections 2.4 (a)(2), (a)(5),
----------------------------
(a)(11), (a)(l2), (a)(13) or (a)(14) prior to the satisfaction of such
------------------------------------
condition. Developer and City may mutually waive, in whole or in part, the
conditions set forth in Sections 2.4(a)(3) and (a)(4) prior to th
-----------------------------
satisfaction of such condition. No waiver of any condition shall be
effective: (x) unless such waiver shall be in writing or (y) if the failure
to satisfy such condition would make performance of this Agreement illegal.
(d) Notwithstanding anything to the contrary contained in this
Agreement, this Agreement shall automatically terminate if all of the
conditions set forth in Sections 2.4(a)(1) through 2.4(a)(14) above are
-------------------------------------
not satisfied or waived on or before December 31, 1999.
2.5 Conveyance of Project Premises to Developer.
-------------------------------------------
(a) Provided that City is acquiring the Casino Area and Public Land
pursuant to financing from such sources and on terms and conditions (other than
amount) reasonably satisfactory to Developer and the Other Land-Based Casino
Developers and further provided that Developer's right to approve such sources
and such terms and conditions shall expire if Developer shall fail to respond
within fifteen (15) Business Days of its receipt in writing of such sources and
such terms and conditions, City and EDC shall notify Developer of their desire
to enter into the Conveyance Agreement. Upon receipt of such notice, and
provided that the proviso in the first sentence of Section 4.11 has been
------------
satisfied, City, EDC and Developer shall promptly execute and deliver to each
other the Conveyance Agreement and submit the Conveyance Agreement to City
Council for approval.
(b) Within five (5) Business Days following the approval of City
Council referred to in Section 2.5(a), Developer shall furnish EDC with a
--------------
letter of credit in an amount equal to its Pro Rata Share of Feehold
Compensation and in such form and upon such terms and conditions as are
reasonably necessary to allow City to acquire the Casino Area and the Public
Land.
(c) If Developer breaches its obligations to acquire the Project
Premises pursuant to the Conveyance Agreement, City and EDC shall have the
right to terminate this Agreement.
2.6 Compliance with Other Commitments.
---------------------------------
(a) Developer agrees that the Total Cost, exclusive of the Feehold
Compensation, shall not be less than Six Hundred Million Dollars
($600,000,000)
(b) As set forth on Exhibit 8.1(g), Developer agrees to use
--------------
commercially reasonable efforts to acquire all or some of its financing from a
Detroit-Based Business, a Detroit Resident Business and/or a Small Business
Concern and/or to utilize Detroit-based and/or Minority-owned financial
institutions in serving Developer's financial needs.
24
<PAGE>
(c) Developer agrees, to the extent permitted by applicable law, to:
(1) perform and comply in all material respects with the
commitments, promises and/or undertakings set forth on Exhibits
--------
8.1(j), (m), (r) and (s);
------------------------
(2) use good faith efforts to perform and comply in all material
respects with the commitments, promises and/or undertakings set forth
on Exhibits 8.1(k), (l), (v), (x), (y), (z), (cc) and (dd);
-------------------------------------------------------
(3) use reasonable best efforts to perform and comply in all
material respects with the commitments, promises and/or undertakings
set forth on Exhibits 8.1(p), (q), (u) and (ee), provided that
----------------------------------
Developer's obligations with respect to its commitments, promises and
undertakings set forth on Exhibit 8.1(q) are also subject to the
--------------
Developer's obligations set forth in Sections 2.6(e), (h) and (i); and
----------------------------
(4) use commercially reasonable efforts to perform and comply in
all material respects with the commitments, promises and undertakings
set forth on Exhibits 8.1(n) and (w).
-----------------------
(d) Developer agrees that no fewer than three thousand three hundred
(3,300) full-time equivalent employees will be employed at the Casino Complex
immediately following Completion, exclusive of construction workers, and
thereafter, subject to Section 7.17, will employ such number of employees as may
-------------
be appropriate in the exercise of Developer's reasonable judgment to operate the
Casino Complex in a manner consistent with First Class Casino Complex Standards
and in compliance with this Agreement.
(e) Developer agrees to use reasonable best efforts to attain the
goals of employment of Detroit residents set forth in Exhibit 8.1(q)
--------------
Whenever in this Agreement or the Exhibits, reference is made to "Detroit
residents," the first determination of whether an individual is a Detroit
resident shall be made on the Completion Date based on an individual's residence
on his or her date of hire. Subsequent to the Completion Date, the determination
of whether Developer has achieved its hiring goals with respect to Detroit
residents shall be made on each anniversary of the Completion Date (each, a
"Determination Date"). Such goal shall be deemed met if on each Determination
Date Developer either (i) met its hiring goals for Detroit residents since the
last Determination Date, based on an individual's residence on his or her date
of hire or (ii) Developer then employs no fewer than the number of Detroit
residents established by its hiring goal, based on each individual's most
current address on file with Developer.
(f) Developer agrees to comply with all federal, state and local laws
governing equal employment opportunity.
(g) The Developer agrees that it shall notify its Contractors and
Consultants of their obligations relative to non-discrimination under this
Agreement when soliciting same, shall include the provisions of Section
-------
2.6(f) in each contract with its Contractors and Consultants
------
25
<PAGE>
and require subcontract as well as provide the City and/or EDC a copy of any
such subcontract upon request. Developer shall have no obligation to enforce
such provision if City is given the direct right to enforce such provision in
any contract or subcontract.
(h) As set forth in Exhibit 8.1(q), Developer agrees to be committed
--------------
to affirmative action programs to increase the numbers of minority and women
employees in the workforce of the Developer, including professional and
management positions.
(i) As set forth in Exhibit 8.1(q), Developer voluntarily commits to
--------------
hire contractors who agree to implement an Equal Opportunity Employment Plan
conforming to all applicable laws and consistent with Executive Order No. 22,
dated August 29, 1983. Developer shall notify its Contractors of their
obligations relative to implementing such an Equal Opportunity Employment Plan
and shall include such a provision in each contract with its Contractors and
require that its Contractors include such provision in any subcontract.
Developer will not, however, be in default under this Agreement if any
contractor fails to comply with its agreement to implement its Equal Opportunity
Employment Plan provided, however, the City is given the direct right to enforce
such provision in any contract or subcontract.
(j) Developer shall use reasonable best efforts to ensure that at
least thirty percent (30%) of aggregate amounts expended by Developer under
contracts entered into by Developer for the construction of, or any material
additions, improvements or modification to the Casino Complex shall be paid to
Detroit-Based Businesses, Detroit Resident Businesses, Small Business Concerns,
minority business concerns or women-owned businesses. As set forth in Exhibit
-------
8.1(u), Developer agrees to use reasonable best efforts to purchase during each
------
Fiscal Year at least thirty percent (30%) of the total dollar value of all
purchases of goods and services from Detroit-Based Businesses, Detroit Resident
Businesses, Small Business Concerns, minority business concerns or women-owned
businesses.
(1) "Reasonable Best Efforts" to achieve the goals set forth in
this Section 2.6(j) may include, but are not to be limited to, the use
--------------
of Joint Venture arrangements; Mentor Ventures; outreach to Detroit,
minority and women business, trade and professional associations or
organizations; outreach to community organizations; and advertising through
media publications or other vehicles reasonably calculated to reach
Detroit, minority and women-owned businesses, including, but not limited
to, community newsletters.
(2) "Joint Venture" as used in this Section 2.6(j) means a
--------------
combination of separate business persons or entities, one of which is a
Detroit-Based Business, Detroit Resident Business, Small Business Concern,
minority business concern or women-owned business, which has been created
to perform a specific contract, and in which one or more of the latter
business entities (a) shares in profits and losses, (b) is substantially
involved in all phases of the contract, including, but not limited to,
bidding and staffing; (c) provides a substantial portion of the total
performance, responsibility and project
26
<PAGE>
management of a specific job; and (d) receives a substantial portion of the
total remuneration from a specific job.
(3) "Mentor Venture" as used in this Section 2.6(j) refers to a
--------------
combination of a business entity with a Detroit-Based Business, Detroit
Resident Business, Small Business Concern, minority business concern or
women-owned business for the purpose of providing the latter business
entity with training, expertise, skill, experience, market access or other
attributes in a business, trade or profession designed to enhance its
ability to compete in the marketplace.
(k) Developer agrees to comply in all material respects with all
Governmental Requirements.
(l) In the event Developer elects to construct a Temporary Casino
subject to and in accordance with the provisions of Article XX
----------
(1) Developer shall submit to the Mayor as exhibits to its
Temporary Casino Proposal (as that term is defined in Section
-------
20.5(b)), the information required by the following Sections, modified
--------
to address the Temporary Casino as applicable: 8.1(d), (e), (g), (i),
----------------------
(j), (k), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w),
---------------------------------------------------------------------
(x), (y), (z), (aa), (bb), (cc), (dd) and (ee); and
----------------------------------------------
(2) Developer agrees that its obligations set forth in the
following Sections apply to the Temporary Casino as well as to the
Casino Complex: 2.6(b), (c), (e) (substituting "completion of the
-------------------------------------------------
Temporary Casino" for "Completion Date" and "anniversary of the
---------------------------------------------------------------
completion of the Temporary Casino" for "Determination Date"), (f),
-------------------------------------------------------------------
(g), (h), (i), (j) and (k), and substituting all references to the
--------------------------
exhibits therein to the exhibits furnished as part of the Temporary
Casino Proposal.
(m) Except as the Agreement or the context may otherwise require, each
of the Developer's obligations set forth in Sections 2.6(b)-(l),
-------------------
inclusive, are ongoing and shall commence as of the Closing Date and
performance thereof shall be determined annually.
(n) Joint Employment and Procurement Advisory Board
(1) The Joint Employment and Procurement Advisory Board (the
"JEPAB") will be a private entity acting in an advisory capacity to
Developer and the Other Land-Based Casino Developers. Developer shall
cooperate with the Other Land-Based Casino Developers to establish the
JEPAB within thirty (30) days after the Closing Date. Developer and each
of the Other Land-Based Casino Developers will appoint two (2) members to
the JEPAB, and the Mayor and the City Council will each be invited to
appoint two (2) members from the community at large. The public appointees
will be non-salaried, but will be entitled to expense reimbursement paid by
the JEPAB.
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(2) The purpose of the JEPAB will be to work closely with the
Developer and the Other Land-Based Casino Developers to evaluate the
effectiveness of, and recommend improvements to, Developer's and each of
the Other Land-Based Casino Developers' respective programs to achieve
their goals of not less than fifty-one percent (51%) Detroit resident
employment and not less than thirty percent (30%) procurement of goods and
services from Detroit-Based Businesses, Detroit Resident Businesses,
minority business concerns, women-owned businesses and/or Small Business
Concerns. The JEPAB will review Developer's and each of the Other Land-
Based Casino Developers' practices and programs aimed at achieving such
goals, review the success of such efforts, recommend improvements and
refinements to such practices and programs, and assist the Developer and
each of the Other Land-Based Casino Developers in involving local community
organizations and businesses in support of such efforts. Additionally, the
JEPAB may recommend to Developer and each of the Other Land-Based Casino
Developers the engagement of outside consultants to provide expert,
independent guidance as to how to make Developer's and each of the Other
Land-Based Casino Developers' programs more effective.
(3) Developer commits One Million Dollars ($1,000,000) to fund
the activities of the JEPAB. Such amount will be derived from funds
dedicated under Section 8.1(j) to promote development, economic growth and
--------------
jobs in the City. Developer shall fund the JEPAB according to the
following schedule: Two Hundred Thousand Dollars ($200,000) on the
formation of the JEPAB; Four Hundred Thousand Dollars ($400,000) on the six
(6) month anniversary of the Closing Date; and Four Hundred Thousand
Dollars ($400,000) on the twelve (12) month anniversary of the Closing
Date.
2.7 Obtaining Certificate of Suitability and Casino License. Promptly
-------------------------------------------------------
following the Effective Date, Developer agrees to submit to the Board a
completed application to obtain a Certificate of Suitability in the manner and
form prescribed by such Gaming Authorities and thereafter fully cooperate with,
and cause its members and their respective owners and investors to cooperate
with, the background investigation conducted by the Board. Based solely on the
information furnished by Developer to City in the RFP/Q, but without review of
such application, City agrees to support such application before the Board.
Developer shall diligently pursue the issuance of such Certificate of
Suitability on terms and conditions satisfactory to Developer. Upon obtaining
the Certificate of Suitability, Developer shall thereafter diligently pursue the
satisfaction of all conditions to obtaining a Casino License.
2.8 Payment of Development Process Costs. Upon the Effective Date,
------------------------------------
Developer shall pay to City the sum of One Million Dollars ($1,000,000) toward
its Allocable Share of the Development Process Costs. Thereafter, City and/or
EDC shall invoice Developer from time to time but no more frequently than
monthly for (i) its Allocable Share of Development Process Costs and (ii) to the
extent City and/or EDC in their respective reasonable discretion determines that
any Development Process Cost is directly attributable to a particular Land-Based
Casino Development, the entire amount of such Development Process Cost, in each
case incurred prior to the Completion Date. Subsequent to the Completion Date
but in no event later than six (6) months following completion of the Land-Based
Casino Developments, City and/or EDC shall
28
<PAGE>
invoice Developer only for such Development Costs as City and/or EDC reasonably
determine were incurred in connection with the Development. Developer shall pay
such invoiced Development Process Costs within fifteen (15) Business Days from
the date of the invoice. City and EDC, respectively, shall submit to the
Developer a summary of the charges set forth in such invoice containing such
detail as City and EDC, respectively, reasonably believes is necessary to inform
Developer of the nature of the costs and expenses and the basis for the
allocation amongst the Developer and the Other Land-Based Casino Developers. At
Developer's request, City and EDC shall consult with Developer on the necessity
for and allocation of such charges during the five (5) Business Days period
immediately subsequent to Developer's receipt of such summary. In addition,
prior to the Closing Date, City shall require each Other Land-Based Casino
Developer to enter into an agreement with Developer providing for arbitration of
any dispute concerning the allocation of any Development Process Costs amongst
Developer and each Other Land-Based Casino Developer.
2.9 Payment of Feehold Compensation. Provided that the proviso in the
-------------------------------
first sentence of Section 4.11 has been satisfied, Developer agrees to pay,
------------
without duplication, its Pro Rata Share of Feehold Compensation, less its Pro
Rata Share of the City Contribution, as and to the extent set forth in the
Conveyance Agreement. Developer hereby acknowledges that upon approval by City
Council, portions of the Casino Area and Public Land have been or will be
acquired by City through one or more acquisition activities including exercise
of the power of eminent domain, and that in some instances, a final cost of
acquisition particularly with respect to eminent domain actions ("Final Purchase
Price") may not be known for some period of time after the Effective Date. City
shall estimate the amount of compensation necessary to pay the Final Purchase
Price in accordance with law (the "Estimated Compensation"). In the event the
Final Purchase Price exceeds the Estimated Compensation, Developer shall pay to
EDC in immediately available funds within five (5) Business Days following
written notice thereof from the EDC, its Pro Rata Share of the difference
between the Estimated Compensation and the Final Purchase Price. If the Final
Purchase Price shall be less than the Estimated Compensation, the difference
shall be refunded by the City within ten (10) Business Days after the Final
Purchase Price has been determined.
2.10 Initial Financing. Upon the Effective Date, Developer shall have
-----------------
either obtained the Initial Financing or shall at all times thereafter
diligently pursue obtaining the Initial Financing.
2.11 Failure to Pay. All amounts, including, without limitation,
--------------
Development Process Costs and Feehold Compensation, owed by Developer to City
and/or EDC pursuant to any provision of this Agreement shall bear interest at
the Default Rate from the due date (but if no due date is specified, then
fifteen (15) Business Days from demand for payment) until paid.
2.12 Condition of Project Premises. Matters involving the condition of the
-----------------------------
Project Premises are set forth in the Conveyance Agreement.
2.13 Developer's Development Obligations. The Developer agrees to
-----------------------------------
undertake and complete the Development by the Agreed Upon Opening Date subject
to and in accordance with
29
<PAGE>
the terms of this Agreement. Except as otherwise provided herein, Developer
agrees, for itself and its successors and assigns, that, from and after the
Closing Date, it shall promptly begin, and thereafter shall diligently prosecute
or cause to be prosecuted to Completion, the Design Services and the Work
subject to and in accordance with the terms of this Agreement.
2.14 Other Commitments of Developer. By the Closing Date, Developer shall
------------------------------
deliver to City and EDC the following:
(a) The Guaranty and Keep Well Agreement, executed by an Acceptable
Guarantor.
(b) The opinions of counsel referred to in Section 2.4(a)(5).
-----------------
(c) The Memorandum of Agreement.
(d) The Closing Certificates.
(e) The executed agreement of Parent Company, any Casino Manager and
each Restricted Party requested by City, to abide by the Radius
Restriction.
2.15 Other Commitments of City and EDC. By the Closing Date, City and EDC
---------------------------------
shall deliver to Developer the opinions of counsel referred to in Section
-------
2.4(a)(6).
---------
2.16 Approval by City, EDC and PM. Wherever an approval is required of
----------------------------
City, EDC, or PM pursuant to the terms of this Agreement, the approval or
disapproval shall be given in writing, which in the case of disapproval, shall
set forth the reasons of disapproval. Whenever in this Agreement any consent or
approval of the City is required, such approval or consent shall be given or
withheld by the Mayor, any City official designated by the Mayor or appropriate
City department unless otherwise indicated. Prior to the Closing Date and from
time to time thereafter, City and EDC shall designate in writing to Developer
those individuals who have authority to grant any approvals or consents
hereunder on behalf of City and EDC. Developer shall be entitled to rely on any
writing signed by such designees.
2.17 Prompt Responses. The parties agree that the time limits and time
----------------
periods provided herein are of the essence in this Agreement. The parties
mutually agree to exercise their mutual and separate best efforts to consider
and respond promptly and as expeditiously as reasonably possible notwithstanding
any time period provided in this Agreement.
2.18 Funding of Excess Costs.
-----------------------
(a) As promptly as practicable, but in any event not later than one
hundred eighty (180) days following the Effective Date, the City shall
submit to Mayor and City Council: (1) Schedule A, specifying (i) the City's
best estimate of the aggregate of the Feehold Compensation including the
City Contribution; (ii) the cost of all Infrastructure Improvements; and
(iii) the costs of all of the above and below ground environmental Response
activity
30
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necessary in order to obtain a covenant not to sue in favor of the City, EDC,
Developer and the Other Land-Based Casino Developers issued by the Michigan
Department of Environmental Quality("MDEQ") with respect to the Casino Area and
the Public Land; and (2) Schedule B, identifying all of the Infrastructure
Improvements for which the Developer and the Other Land-Based Casino Developers
will be responsible. Developer shall cooperate with the City and EDC in the
preparation of such Schedules reflecting the nature and cost of the
Infrastructure Improvements and estimates of the cost of Response activity.
(b) If Schedule A reflects an estimate in excess of Two Hundred Fifty
Million Dollars ($250,000,000), the City, through the Mayor, may, subject to
approval of the City Council, within ten (10) Business Days thereafter,
determine whether the project described in the EDC Plan is suitable for public
purposes. In the event the City determines that such project is still suitable
for public purposes, the City shall proceed with the project described in the
EDC Plan. If the City determines otherwise, the City and the EDC shall use their
commercially reasonable efforts to locate a suitable alternate site for
Developer to develop, construct and operate the Casino Complex.
2.19 Administration of this Agreement.
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(a) The Mayor shall designate the City departments, agencies and/or
personnel who shall be responsible for the administration of this Agreement;
monitoring of the performance by the Developer of its duties and obligations
under this Agreement; and making recommendations to the Mayor concerning its
enforcement.
(b) Except to the extent set forth in any other certificate or report
delivered to the City that contains substantially the same information, not
later than ninety (90) days after the end of each Fiscal Year commencing with
the Fiscal Year in which the Closing Date occurs, Developer shall deliver to
City a report setting forth the following:
(1) a description of Developer's efforts to comply with the
requirements of Section 2.6(b) during such Fiscal Year, as they apply
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to the Temporary Casino, if any, and the Casino Complex;
(2) a statement as to the number of employees (including the
total number of full-time, part-time and full-time equivalent) employed by
the Developer as of the completion of the Temporary Casino, if any, each
anniversary thereof, and on the Completion Date and each Determination Date
(as the term is defined in Section 2.6(e));
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(3) a description of any administrative determination, binding
arbitration decision, or judgment rendered by a court of competent
jurisdiction finding a violation of any federal, state or local laws
governing equal employment opportunity during such Fiscal Year;
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(4) a description of Developer's efforts to comply with the
requirements of Sections 2.6(g), (h), (i) and (j) during such Fiscal
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Year, as they apply to the Temporary Casino, if any, and to the Casino
Complex;
(5) a statement setting forth material information adequate to
enable the City to determine compliance with Section 7.2;