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Sample Business ContractsHome: Sample Business Contracts:
AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
AMONG
CITY OF DETROIT
AND
THE ECONOMIC DEVELOPMENT CORPORATION OF THE CITY OF DETROIT
AND
DETROIT ENTERTAINMENT, L.L.C.
FOR THE CITY OF DETROIT CASINO DEVELOPMENT PROJECT
As of April 9, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation.. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.3 Michigan Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Findings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Intent.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Commencement of Rights and Obligations.. . . . . . . . . . . . . . . 23
2.5 Conveyance of Project Premises to Developer. . . . . . . . . . . . . 25
2.6 Compliance with Other Commitments. . . . . . . . . . . . . . . . . . 25
2.7 Obtaining Certificate of Suitability and Casino License. . . . . . . 29
2.8 Payment of Development Process Costs . . . . . . . . . . . . . . . . 29
2.9 Payment of Feehold Compensation. . . . . . . . . . . . . . . . . . . 30
2.10 Initial Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.11 Failure to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.12 Condition of Project Premises. . . . . . . . . . . . . . . . . . . . 30
2.13 Developer's Development Obligations. . . . . . . . . . . . . . . . . 30
2.14 Other Commitments of Developer . . . . . . . . . . . . . . . . . . . 31
2.15 Other Commitments of City and EDC. . . . . . . . . . . . . . . . . . 31
2.16 Approval by City, EDC and PM . . . . . . . . . . . . . . . . . . . . 31
2.17 Prompt Responses.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.18 Funding of Excess Costs. . . . . . . . . . . . . . . . . . . . . . 31
2.19 Administration of this Agreement . . . . . . . . . . . . . . . . . . 32
ARTICLE III
FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.1 Initial Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3 Subsequent Financings. . . . . . . . . . . . . . . . . . . . . . . . 35
3.4 Transfer by Mortgagee. . . . . . . . . . . . . . . . . . . . . . . . 35
3.5 Sinking Fund Provision . . . . . . . . . . . . . . . . . . . . . . . 35
3.6 Financing Representations; Restrictions. . . . . . . . . . . . . . . 36
3.7 Guarantee of Developer's Obligations . . . . . . . . . . . . . . . . 36
i
<PAGE>
ARTICLE IV
DESIGN; PROJECT SCHEDULING; INFRASTRUCTURE; QUALITY . . . . . . . . . . . . . . . 37
4.1 Schematic, Design and Construction Documents.. . . . . . . . . . . . 37
4.2 Architect(s) and Consultants.. . . . . . . . . . . . . . . . . . . . 38
4.3 City or EDC Not Responsible for Design Documents.. . . . . . . . . . 38
4.4 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.5 Non-Material Deviations. . . . . . . . . . . . . . . . . . . . . . . 39
4.6 Material Deviations. . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7 Presentation Illustrations; Virtual Reality. . . . . . . . . . . . . 39
4.8 Integrated Complex.. . . . . . . . . . . . . . . . . . . . . . . . . 39
4.9 Developer's Representative and Program Manager.. . . . . . . . . . . 39
4.10 Utility Relocation.. . . . . . . . . . . . . . . . . . . . . . . . . 40
4.11 Infrastructure Improvements. . . . . . . . . . . . . . . . . . . . . 40
4.12 Quality of Work and Materials. . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
SITE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1 Developer's Right of Entry Prior to Conveyance . . . . . . . . . . . 41
ARTICLE VI
CONSTRUCTION PHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Performance of the Work. . . . . . . . . . . . . . . . . . . . . . . 42
6.3 Commencement and Completion of the Work. . . . . . . . . . . . . . . 43
6.4 Contractor; Subcontractors . . . . . . . . . . . . . . . . . . . . . 43
6.5 Claims and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.6 Construction Matters . . . . . . . . . . . . . . . . . . . . . . . . 44
6.7 Failure to Complete by Agreed Upon Opening Date. . . . . . . . . . . 44
ARTICLE VII
OTHER COVENANTS OF DEVELOPER. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Casino Complex Operation . . . . . . . . . . . . . . . . . . . . . . 45
7.2 Hours of Operation . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.3 Radius Restriction . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.4 Casino Component Management Agreements . . . . . . . . . . . . . . . 47
7.5 Inaugural Ceremonies . . . . . . . . . . . . . . . . . . . . . . . . 48
7.6 Marketing Cooperation and Coordination . . . . . . . . . . . . . . . 48
7.7 Capital Maintenance Fund . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Maintenance and Repairs. . . . . . . . . . . . . . . . . . . . . . . 49
ii
<PAGE>
7.9 Memorandum of Agreement; Covenants to Run with the Land. . . . . . . 50
7.10 Financial Statements; Annual Business Plan.. . . . . . . . . . . . . 50
7.11 Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.12 Space Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.13 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.14 Notification of Certain Events . . . . . . . . . . . . . . . . . . . 52
7.15 Veracity of Statements . . . . . . . . . . . . . . . . . . . . . . . 52
7.16 Certification of Performance Threshold; Financial Covenants. . . . . 53
7.17 Use of Project Premises. . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF DEVELOPER . . . . . . . . . . . . . . . . . . . 53
8.1 Representations and Warranties of Developer. . . . . . . . . . . . . 53
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CITY AND EDC . . . . . . . . . . . . 59
9.1 Representations and Warranties of City . . . . . . . . . . . . . . . 59
9.2 Representations and Warranties of EDC. . . . . . . . . . . . . . . . 59
9.3 Final Site Selection . . . . . . . . . . . . . . . . . . . . . . . . 60
9.4 Delivery of Other Development Agreements . . . . . . . . . . . . . . 60
ARTICLE X
EVENTS OF DEFAULT, REMEDIES AND TERMINATION . . . . . . . . . . . . . . . . . . . 60
10.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.2 Remedies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.4 Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.5 Limitation on Remedies . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XI
CITY'S RIGHT TO PERFORM DEVELOPER'S COVENANTS . . . . . . . . . . . . . . . . . . 67
ARTICLE XII
FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.1 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.2 Extension of Time; Excuse of Performance . . . . . . . . . . . . . . 68
iii
<PAGE>
ARTICLE XIII
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.1 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.2 Form of Insurance and Insurers . . . . . . . . . . . . . . . . . . . 69
13.3 Other Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.4 Insurance Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.5 Keep in Good Standing. . . . . . . . . . . . . . . . . . . . . . . . 69
13.6 Blanket Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XIV
TRANSFER AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
14.1 Transfer of Ownership. . . . . . . . . . . . . . . . . . . . . . . . 70
14.2 Transfer of Agreement; Development.. . . . . . . . . . . . . . . . . 71
ARTICLE XV
ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
15.1 Environmental Covenants. . . . . . . . . . . . . . . . . . . . . . . 72
15.2 Environmental Response . . . . . . . . . . . . . . . . . . . . . . . 72
15.3 Environmental Indemnity. . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XVI
DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS; CONDEMNATION. . . . . . . . . . . . . . 73
16.1 Damage or Destruction. . . . . . . . . . . . . . . . . . . . . . . . 73
16.2 Use of Insurance Proceeds. . . . . . . . . . . . . . . . . . . . . . 73
16.3 No Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
16.4 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XVII
FINANCIAL AND ACCOUNTING RECORDS; AUDIT RIGHTS. . . . . . . . . . . . . . . . . . 77
17.1 Financial and Accounting Records . . . . . . . . . . . . . . . . . . 77
17.2 Review and Audit . . . . . . . . . . . . . . . . . . . . . . . . . . 77
17.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XVIII
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
iv
<PAGE>
18.1 Indemnification by Developer . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XIX
ENTRY UPON PREMISES; INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . 79
19.1 Access and Inspection. . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XX
TEMPORARY CASINO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
20.1 Developer's Temporary Casino Obligations . . . . . . . . . . . . . . 80
20.2 Temporary Casino Site. . . . . . . . . . . . . . . . . . . . . . . . 80
20.3 Temporary Casino Financing . . . . . . . . . . . . . . . . . . . . . 81
20.4 Temporary Casino Design Documents. . . . . . . . . . . . . . . . . . 81
20.5 Approval Procedures. . . . . . . . . . . . . . . . . . . . . . . . . 81
20.6 Construction of Temporary Casino . . . . . . . . . . . . . . . . . . 82
20.7 Temporary Casino Operations. . . . . . . . . . . . . . . . . . . . . 83
20.8 Restriction on Payments. . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XXI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
21.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
21.2 Non-Action or Failure to Observe Provisions of this Agreement. . . . 85
21.3 Applicable Law and Construction. . . . . . . . . . . . . . . . . . . 85
21.4 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . 85
21.5 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 86
21.6 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
21.7 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
21.8 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
21.9 No Joint Venture.. . . . . . . . . . . . . . . . . . . . . . . . . . 86
21.10 Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . 86
21.11 Technical Amendments . . . . . . . . . . . . . . . . . . . . . . . . 86
21.12 Unlawful Provisions Deemed Stricken. . . . . . . . . . . . . . . . . 87
21.13 No Liability for Approvals and Inspections . . . . . . . . . . . . . 87
21.14 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . 87
21.15 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.16 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.17 Sunset Provision.. . . . . . . . . . . . . . . . . . . . . . . . . . 90
21.18 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.19 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.20 Number and Gender. . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.21 Third Party Beneficiary. . . . . . . . . . . . . . . . . . . . . . . 91
v
<PAGE>
21.22 Cost of Investigation. . . . . . . . . . . . . . . . . . . . . . . . 91
21.23 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.24 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.26 Most Favored Nations Provision.. . . . . . . . . . . . . . . . . . . 91
21.27 Developer's Right to Terminate. . . . . . . . . . . . . . . . . . . 92
21.28 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
vi
<PAGE>
INDEX OF EXHIBITS
<CAPTION>
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 and 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
vii
<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.
<CAPTION>
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)
viii
<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 Detroit Entertainment, L.L.C., a Michigan limited liability company
("Developer") having its principal place of business at 2211 Woodward Avenue,
Fox Center Building, 10th Floor, Detroit, Michigan 48201.
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, Circus
Circus Michigan, Inc., a Michigan corporation, Atwater Casino
2
<PAGE>
Group, L.L.C., a Michigan limited liability company, Atwater Entertainment
Associates, L.L.C., a Michigan limited liability company, and ZRX, L.L.C.,
a Michigan limited liability company.
(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.
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(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, 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,
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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.
(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. For
purposes of clarification, Circus Circus Michigan, Inc., by virtue of its
acting as a member of Developer, shall not be deemed a Casino Component
Manager/Operator for the purposes of this 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. For purposes of clarification, Circus Circus Michigan,
Inc., by virtue of its acting as a member of Developer, shall not be deemed
a Casino Manager for the purposes of this Agreement.
(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.
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(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).
(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.
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(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.
(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.
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(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 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 Detroit Entertainment, L.L.C., a
Michigan 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
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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.
(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.
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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 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.
(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.
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(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.
(74) "First Class Casino Complex Standards" means the
standards of quality established and maintained on the Effective Date at
Monte Carlo Resort 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
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.
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(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 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
1.1(a)(83).
(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. Section 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
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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,
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 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 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,
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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
Atwater Casino Group, L.L.C.
(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).
(97) "Material Alteration" means any Alteration or related
series of Alterations that: (i) materially changes the nature of the use of
the Covered Components 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 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.
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(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.
(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 Greektown
Casino, L.L.C., a Michigan limited liability company and MGM Grand Detroit,
L.L.C., a Delaware limited liability company.
(111) "Outside Submission Date" means the first anniversary
of the Closing Date.
(112) "Parent Company" means Circus Circus Enterprises, 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).
(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
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($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 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%).
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(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 1.1(a)(19) attached hereto, together with all rights, covenants,
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.
(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
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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
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 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.
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(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;
(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;
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(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.
(141) "Termination Date" means the date that this Agreement
is terminated pursuant to SECTION 10.3.
(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
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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".
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
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(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 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.
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(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.
(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.
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(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.
(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 the 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.
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(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 Four Hundred Eighty Million Dollars
($480,000,000).
(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.
(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);
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(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 seven
hundred forty-three (3,743) 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 and require that its
Contractors and Consultants include such provision in any 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.
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(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 management of a specific job; and
(d) receives a substantial portion of the total remuneration from a
specific job.
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(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.
(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
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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 invoice Developer only
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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 the terms of this Agreement. Except as
otherwise provided herein, Developer agrees, for itself and its
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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
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of all of the above and below ground environmental Response activity
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.
(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 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));
(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 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;
(6) whether Developer is aware of any non-compliance with
the Radius Restriction, as that term is defined in SECTION 7.3(a), and a
description thereof if any has occurred, during such Fiscal Year;
(7) a statement as to whether any agreement for the
management and/or operation of any Component has been entered into, amended
in any material respect, or assigned during such Fiscal Year, together with
a copy of any such agreement, amendment or assignment;
(8) a description of Developer's efforts to comply with the
requirements of SECTION 7.6 during such Fiscal Year;
(9) a description of any Material Alteration commenced
during such Fiscal Year;
(10) a description of Developer's efforts to comply with the
requirements of SECTION 7.13(a) during such Fiscal Year;
(11) whether Developer is aware of any non-compliance with
the requirements of SECTION 7.13(c) during such Fiscal Year;
(12) a description of Developer's efforts to comply with the
requirements of SECTION 7.17 during such Fiscal Year;
(13) to the extent not otherwise covered in response to
subparts (b)(1)-(12) above, a description of any change during such Fiscal
Year in Developer's efforts to comply with the plans, measures,
commitments, undertakings and covenants set forth on the following
Exhibits: 8.1(c) (LIMITED TO THE OFFICERS OR MANAGERS OF DEVELOPER AND ANY
CASINO MANAGER), (g), (j), (k), (l), (m), (n), (p), (q), (r), (s), (u),
(v), (w), (x), (y), (z), (cc), (dd) AND (ee); and
(14) whether Developer is aware of any Transfer occurring
during such Fiscal Year.
No information need be included in such report as to any obligation of
Developer which has lapsed or which otherwise does not apply during such Fiscal
Year.
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ARTICLE III
FINANCING
3.1 INITIAL FINANCING.
(a) Developer agrees to obtain Initial Financing from a Suitable
Lender on such terms and conditions as are acceptable to City and necessary and
sufficient in the reasonable opinion of City to:
(1) Fully perform its development obligations set forth in
SECTION 2.13.
(2) Pay City and/or EDC for Developer's Pro Rata Share of
the Feehold Compensation.
(3) Fund the cost of Developer's portion of all
Infrastructure Improvements to be completed by City.
(4) Reimburse City and/or EDC, as applicable, for the
Development Process Costs.
(5) Provide adequate funds for all preopening activities
and initial working capital of the Casino Complex.
(6) Provide adequate funds and/or other financial
guarantees or assurances to enable the Casino Complex to continue operating
in the event that actual operations do not meet operating projections
during the first twenty-four (24) months subsequent to the Completion Date.
(7) Fully perform all of Developer's other commitments set
forth in SECTION 2.6, except for such commitments as are to be funded out
of operating cash flow of the Casino Complex.
(b) No portion of the Initial Financing may be derived from or be
dependent on the success of the Temporary Casino.
(c) Subject to SECTION 7.13(d), Developer may mortgage, pledge or
otherwise encumber all or part of Developer's interest in the Development in
connection with the Initial Financing.
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(d) The terms and conditions of the Initial Financing as and to
the extent set forth on EXHIBIT 8.1(g) are acceptable to City, subject to
review by the City of the final documents incorporating such terms and
conditions.
3.2 FINANCIAL COVENANTS. Subject to SECTION 3.7, Developer shall
maintain (i) at all times on and after the Completion Date a Leverage Ratio
of not greater than 4 to 1 or Net Worth of no less than $120 million; (ii)
commencing with the end of the fourth full fiscal quarter subsequent to
Completion, a Debt Service Coverage Ratio of at least 1.0 to 1; and (iii)
commencing with the end of the eighth full fiscal quarter subsequent to
Completion, a Debt Service Coverage Ratio of at least 1.2 to 1. The
obligations of Developer under this SECTION 3.2 shall lapse and be of no
further force or effect seven (7) years after the Execution Date.
3.3 SUBSEQUENT FINANCINGS. Subject to SECTION 3.7, after the
Completion Date, Developer may mortgage, pledge or otherwise encumber
Developer's interest in the Development from time to time only after first
obtaining City's prior written consent which consent shall not be
unreasonably withheld, provided that City's consent shall not be required in
connection with a Financing, or the Mortgage or other security agreements as
security therefor, in which each lender is a Suitable Lender, so long as the
principal amount of Secured Debt incurred in the Financing does not (i)
have a maturity date earlier than seven (7) years subsequent to the Closing
Date; and (ii) cause a violation of the Leverage Ratio or Debt Service
Coverage Ratio covenants set forth in SECTION 3.2. The obligations of
Developer under this SECTION 3.3 shall lapse and be of no further force or
effect seven (7) years after the Execution Date.
3.4 TRANSFER BY MORTGAGEE. Developer agrees that it shall not enter
into any Mortgage unless such Mortgage shall provide that (i) the Mortgagee
shall not transfer or assign its interest in any Mortgage without City's
prior written consent, except to a Suitable Lender; and (ii) if, as the
result of a Loan Default, the Mortgagee forecloses upon or otherwise acquires
all or part of Developer's interest in the Development, the Mortgagee (or the
Nominee of the Mortgagee) shall expressly accept and agree to assume all of
the terms, covenants and provisions of this Agreement contained to be kept,
observed and performed by the Developer and become bound to comply therewith.
As used in this Agreement, the word "Nominee" shall mean a Person who is
designated by Mortgagee to act in place of the Mortgagee solely for the
purpose of holding title to the Development and performing the obligations of
Developer hereunder.
3.5 SINKING FUND PROVISION. Subject to SECTION 3.7, during the
thirty-six (36) month period ending on the final maturity date of any Secured
Debt outstanding at any time, Developer shall make Sinking Fund Payments
equaling, in the aggregate, thirty-three percent (33%) of the original
principal amount of the Secured |
