Joint Contribution Agreement - Grand Casinos Nevada I Inc., Metroplex LLC, Lakes Gaming Inc. and Metroplex-Lakes LLC
JOINT CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into on this 18th day
of April, 2000, but shall be effective as of the 25th day of April, 2000 (the
"Effective Date"), by and among GRAND CASINOS NEVADA I, INC., a Minnesota
corporation ("GCN"); METROPLEX, LLC, a Nevada limited liability company
("Metroplex"); LAKES GAMING, INC., a Minnesota corporation ("Lakes"); and
METROPLEX - LAKES, LLC, a limited liability company that shall become a party
hereto as and when it is formed under the laws of the State of Minnesota (the
"Company") by GCN and Metroplex as its first members (the "Members") pursuant to
this Agreement.
INTRODUCTION AND CERTAIN DEFINITIONS
A. Joint Venture Property. GCN is a wholly-owned subsidiary of Lakes.
GCN owns (or leases with options to purchase) three (3) contiguous parcels of
land (some of which has been improved by buildings that may be replaced upon
redevelopment by the Company) located on and near the corner of Las Vegas
Boulevard and Harmon Avenue in the Las Vegas, Clark County, Nevada, which
parcels are more fully described in SCHEDULE 1 attached to this Agreement and
hereby made a part hereof (collectively, the "Joint Venture Property"). As
indicated in SCHEDULE 1, the three "Named Parcels" parcels included in the Joint
Venture Property are designated individually, for purposes of this Agreement, as
follows: (1) "the Shark Club" or "Parcel A," (2) "the Travelodge" or "Parcel B"
and (3) the "Polo Plaza" or "Parcel C."
GCN owns a ground lease on the Shark Club (the "Shark Club Lease") that
includes GCN's option to buy the fee interest in the Shark Club for a fixed
price, which option must be exercised by January 10, 2001. The Polo Plaza is
owned by GCN. GCN also owns a 99-year ground lease on the Travelodge (the
"Travelodge Lease") that includes GCN's option to buy the fee interest in the
Travelodge for a fixed price, which option must be exercised in the twentieth
year of that lease period (approximately 2 years of which have elapsed). The
Shark Club Lease and the Travelodge Lease are more fully described in the form
of Real Estate Option Agreement attached hereto as EXHIBIT A and hereby made a
part hereof (the "Company's Option Agreement"), under which GCN intends to grant
the Company an option to purchase each Named Parcel (or any "assessor's parcel"
thereof) of the Joint Venture Property, subject to certain rights of Metroplex
to review and object to the condition and title of the Joint Venture Property
during a limited period set forth in the Company's Option Agreement.
B. Cable Property and Cable Options. GCN is also negotiating to obtain
options to purchase two (2) other contiguous parcels of land located in the City
of Las Vegas and more fully described in SCHEDULE 2 attached to this Agreement
and hereby made a part hereof (collectively, the "Cable Property"). When such
options are obtained by GCN, they shall be collectively referred to herein as
the "Cable Options." The Cable Options are expected to require that the holder
make monthly payments to the owner of the Cable Property during the two-year
term of the Cable Options, which is expected to have commenced as of March 1,
2000.
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One of the Named Parcels of the Cable Property is located on Las Vegas
Boulevard adjacent to the Polo Plaza (and is hereby designated for purposes of
this Agreement as "Parcel E"), and the other Named Parcel of the Cable property
is adjacent to Parcel E on its east side (and is hereby designated for purposes
of this Agreement as "Parcel D"). The monthly cost to maintain the Cable Options
is expected to be $80,000 for the option to buy Parcel D and $20,000 for the
option to buy Parcel E.
Upon receiving the Cable Options as described above, GCN is willing to
contribute the Cable Options to the Company and also contribute to the Company
50% of the $100,000 monthly cost to keep the Cable Options in effect. If the
Cable Options are contributed to the Company, Metroplex is willing to contribute
the other 50% of that cost to the Company each month. However, if the Cable
Options are not obtained and contributed on those terms, or Metroplex does not
agree to the Company's acquisition of the Cable Options on those terms, Lakes
and GCN are willing to enter into this Agreement only if Metroplex agrees that
neither Metroplex nor any of its Affiliates will acquire any interest in Parcel
E of the Cable Property for as long as Lakes or any of its subsidiaries owns the
Polo Plaza in its present state. Such restriction on Metroplex would end if and
when the Company, GCN, Lakes or any of the other subsidiaries of Lakes
substantially redevelops the Polo Plaza.
C. Company Purpose and Capital Contributions. Metroplex, its sole owner
(Brett Torino) and their "Affiliates" (as that term is defined in Section 12)
are real estate developers active in the City of Las Vegas and Clark County,
Nevada. Metroplex and GCN wish to form the Company as a joint venture for the
limited purpose of developing the Joint Venture Property and the Cable Property
(if the Cable Options are contributed to the Company).
To facilitate the formation of the Company, Lakes is willing to
transfer to GCN all of the rights of Lakes and its subsidiaries with respect to
the Joint Venture Property and the Cable Property, and, as GCN's initial capital
contributions to the Company, subject to the terms and conditions set forth
below, GCN is willing to contribute to the Company (1) its options to purchase
the Cable Property, as soon as they are obtained; and (2) an option to purchase
each of the parcels included in the Joint Venture Property, pursuant to the
terms and conditions, and for the Aggregate Purchase Price set forth in the
Company's Option Agreement (the "Aggregate Purchase Price"). As the initial
capital contribution of Metroplex to the Company, subject to the terms and
conditions set forth below, Metroplex is willing to contribute $10,000 in cash
to fund organizational and initial development costs incurred by the Company.
During the development process, GCN is willing to pay (a) the carrying
costs of each parcel of the Joint Venture Property and (b) GCN's cost to acquire
the Shark Club (which estimated costs have been included in the Aggregate
Purchase Price), until each such parcel is purchased by the Company; and
Metroplex is willing to advance to the Company the "Development Costs" (as
defined in subsection (d) of Section 8) with respect to each parcel of the Joint
Venture Property and the Cable Property until such parcel is leased or sold by
the Company, but only to the extent included in a Development Budget approved
for such parcel pursuant to Section 8(c). While the Company
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holds the Cable Options, the Members are each willing to contribute to the
Company 50% of the $100,000 monthly cost of maintaining the Cable Options
(except as otherwise provided herein), commencing with the amount (if any) due
for the month of March 2000.
D. Metroplex Property. Cap-Tor Plaza Partnership, an Affiliate of
Metroplex, owns or otherwise controls two (2) contiguous parcels of land located
in the City of Las Vegas and more fully described in SCHEDULE 3 attached to this
Agreement and hereby made a part hereof (collectively, the "Cap-Tor Plaza
Property"). One Named Parcel of the Cap-Tor Plaza Property is located on Las
Vegas Boulevard adjacent to Parcel E of the Cable Property (and is hereby
designated for purposes of this Agreement as "Parcel F") and the other Named
Parcel of the Cap-Tor Plaza Property is not located on Las Vegas Boulevard but
is adjacent to Parcel D of the Cable Property (and such parcel of the Cap-Tor
Plaza Property is hereby designated for purposes of this Agreement as "Parcel
G").
E. Spatial Relationships of Properties. For illustrative purposes, the
spatial relationships of the Named parcels included in the Joint Venture
Property, the Cable Property and the Metroplex Property are represented in the
diagram below, without regard to the relative size of the properties, which are
on the corner of Las Vegas Boulevard and Harmon Avenue in the City of Las Vegas:
----------------------------------------- ------------------------------------------- ------------------------------
Excluded Property Joint Venture Property (Travelodge, or Shark Club
(on the intersection) Parcel B) (Parcel A)
----------------------------------------- ------------------------------------------- ------------------------------
Joint Venture Property (Travelodge, or Joint Venture Property (Travelodge, or Shark Club
Parcel B) Parcel B) (Parcel A)
----------------------------------------- ------------------------------------------- ------------------------------
Joint Venture Property Polo Tower Excluded Property
Polo Plaza (Parcel C) (Excluded Property)
----------------------------------------- ------------------------------------------- ------------------------------
Cable Property Cable Property Excluded Property
(Parcel E) (Parcel D)
----------------------------------------- ------------------------------------------- ------------------------------
Cap-Tor Plaza Property Cap-Tor Plaza Property Excluded Property
(Parcel F) (Parcel G)
----------------------------------------- ------------------------------------------- ------------------------------
Note: Harmon Avenue runs along the top of this diagram, which is the north side.
Las Vegas Boulevard runs along the left side of this diagram, which is the west
side.
F. References to "Parcel." Whenever the term "parcel" is used in this
Agreement or the Company's Option Agreement without specifically referring to
one or more of the Named Parcels, such term may refer to any of them, as the
context requires, or any smaller parcel thereof that is designated for property
tax purposes as an "assessor's parcel."
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AGREEMENT
NOW, THEREFORE, in consideration of the facts and intentions recited
above, which are a part of this Agreement, and of the mutual covenants and
agreements set forth below, the parties agree as follows:
1. Original Contributions to the Company's Capital. Subject to the
conditions set forth in Section 5, the Members agree to contribute the following
property and cash to the initial capital of the Company (the "Original Capital
Contributions") as soon as practical after the Effective Date:
(1) Metroplex shall contribute $10,000 in cash; and
(2) Lakes shall have caused to be transferred to GCN all of
the rights of Lakes and its subsidiaries with respect to the Joint
Venture Property, including without limitation any and all of
pre-development work product previously obtained by them, such as
architectural and engineering plans, studies and surveys, and any and
all credits for prepaid pre-development work; and GCN shall grant the
Company the right and option to purchase all of such rights (including
its own rights) in and to each of the parcels included in the Joint
Venture Property (the "Company's Option"), pursuant to the terms and
conditions, and the Aggregate Purchase Price set forth in the Company's
Option Agreement, which GCN shall execute and deliver to the Company
pursuant to Section 5. Lakes shall also cause to be transferred to GCN
all of the rights of Lakes and its subsidiaries with respect to the
Cable Options; and GCN shall assign all of such rights to the Company,
who shall assume any and all obligations of Lakes and its subsidiaries
under the Cable Options. The Members and the Company agree that,
collectively, the Company's Option (and the documents and other
property delivered to Metroplex and the Company pursuant to the
Company's Option Agreement) shall be valued at $10,000; and the Cable
Options shall be valued at zero, due to the substantial carrying costs
related to the Cable Options.
The Original Capital Contributions and any additional capital
contributions by the Members shall be credited to their respective Capital
Accounts (the "Capital Accounts"), which are further defined in the Company's
Member Control Agreement attached hereto as EXHIBIT B and hereby made a part
hereof (the "Member Control Agreement"). The Members agree to execute and
deliver the Member Control Agreement pursuant to Section 5.
2. Title to Joint Venture Property. To protect the rights of the
parties with respect to the Joint Venture Property and the Company's Option, the
parties agree as follows:
(1) Title Evidence. Lakes and/or GCN shall obtain and
deliver to Metroplex and the Company, within thirty-five (35) days
after the Effective Date, the following evidence of title with respect
to each parcel of the Joint Venture Property:
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(1) a commitment for an ALTA owners policy
(including an ALTA survey in ASTM form reasonably acceptable to
the insurer), and copies of all included documents relating to
exceptions to title;
(2) estoppel letters (substantially in the form
attached hereto as EXHIBIT A-1) from the tenants occupying Polo
Plaza, the landlords of the Travelodge and the Shark Club and
any tenants (other than GCN) of the Travelodge and the Shark
Club; and
(3) true and correct copies of all documents
(including any amendments thereto) evidencing the leases and
purchase options affecting each such parcel and the termination
thereof, including the dates, terms and conditions for vacation
of the parcel by tenants or, as applicable, for GCN to acquire
the fee interest in the parcel.
(2) Right to Terminate the Company's Option. GCN shall have
the right and option, in its absolute discretion, to terminate the
Company's Option at any time, with respect one or more of the parcels
included in the Joint Venture Property, after any of the following
shall have occurred; provided, however, that if the Company's Option is
terminated hereunder by GCN pursuant to paragraph (v) below, with
respect to less than all of the parcels remaining subject to the
Company's Option, this Agreement and the Company's Option shall remain
in effect with respect to the parcels not affected by GCN's
termination; and provided further that, if any pro-rated break-up fee
becomes payable to Metroplex in such event pursuant to paragraph (c)
below, Metroplex shall have the right, in its absolute discretion, to
terminate the Company's Option with respect to all of the parcels,
including those not affected by GCN's termination, and obtain the full
termination fee provided hereunder:
(1) First Performance Goal. Metroplex shall have
failed to obtain for the benefit of the Company, before any
event described in the following paragraphs (iv) and (v) and no
later than six (6) months after the Effective Date, an executed
letter of intent or legally binding commitment from a
financially responsible person providing for the development and
lease or sale of at least one of the Named Parcels included in
the Joint Venture Property on terms that satisfy the investment
criteria set forth in Section 2.2 of the Company's Option
Agreement, as shall be determined in good faith by the mutual
agreement of the Members. Metroplex shall not be deemed to have
failed to achieve such goal if GCN shall have delayed for more
than ten (10) "Business Days" (as defined in Article 3 of the
Member Control Agreement) its determination with respect to
approval or rejection of any such letter of intent or
commitment; provided, however, that Metroplex has timely given
GCN all material information needed to make such determination.
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(2) Second Performance Goal. Metroplex shall have
failed to obtain for the benefit of the Company, before any
event described in the following paragraphs (iv) and (v) and no
later than nine (9) months after the Effective Date, an executed
letter of intent or legally binding commitment from a
financially responsible person providing for the development and
lease or sale of at least two (2) of the Named Parcels included
in the Joint Venture Property (including any Named Parcel that
satisfied the similar condition set forth in paragraph (i)
above), on terms that satisfy the investment criteria described
in Section 2.2 of the Company's Option Agreement, as shall be
determined in good faith by the mutual agreement of the Members.
Metroplex shall not be deemed to have failed to achieve such
goal if GCN shall have delayed for more than ten (10) Business
Days its determination with respect to approval or rejection of
any such letter of intent or commitment; provided, however, that
Metroplex has timely given GCN all material information needed
to make such determination.
(3) Third Performance Goal. Metroplex shall have
failed to obtain for the benefit of the Company, before any
event described in the following paragraphs (iv) and (v) and no
later than fifteen (15) months after the Effective Date, a
legally binding commitment from a financially responsible
person, which commitment has been approved by GCN under Section
2.2 of the Company's Option Agreement and provides for the
development and lease or sale of at least one (1) of the Named
Parcels included in the Joint Venture Property. Metroplex shall
not be deemed to have failed to achieve such goal if GCN shall
have delayed for more than ten (10) Business Days its
determination with respect to approval or rejection of any such
commitment; provided, however, that Metroplex has timely given
GCN a copy of each material document in the possession of
Metroplex that relates to such development commitment.
(4) Standstill Effect of GCN Letter of Intent.
Neither Metroplex nor the Company may enter into any letter or
commitment described in the preceding paragraphs (i) or (ii),
with respect to any parcel of the Joint Venture Property, or any
parcel of the Cable Property, while such parcel is subject to a
letter of intent executed by GCN with respect to a transaction
described in paragraph (v) below (a "Standstill Period");
provided, however, that GCN shall not permit any such letter of
intent with respect to a transaction described in paragraph (v)
below to remain in effect for more than a ninety (90) day due
diligence period without either Metroplex's written consent or
the substitution of a legally binding offer described in
paragraph (v) below. Notwithstanding any contrary provision of
this Agreement or the Member Control Agreement, Metroplex shall
not be obligated to pay its share of the carrying costs for the
Cable Option, under Section 8(b) of this Agreement and Section
6.3(b) of the Member Control Agreement, during any such
Standstill Period, and GCN shall instead pay such share as an
additional capital contribution to the Company; provided,
however, that if such Standstill Period
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expires or is otherwise terminated without a Casino Project
Termination (as defined in paragraph (v) below), Metroplex shall
resume Metroplex's payment of such share on the due date for the
next monthly payment under the Cable Options that is due at
least ten (10) Business Days after Metroplex receives from GCN
documentary evidence that the Standstill Period has ended.
(5) Prior Casino Development Offer. A financially
responsible person that is not an Affiliate of either of the
Members (or of Lyle Berman or Brett Torino) shall have made a
legally binding offer to purchase from GCN one or more of the
Named Parcels included in the Joint Venture Property for the
purpose of developing thereon any structure intended primarily
as a gaming casino (a "Casino Offer"), before the Company shall
have exercised the Company's Option with respect to any portion
of the same parcel(s); provided, however, that GCN shall not
have the right to terminate the Company's Option with respect to
such parcel(s) while there remains in effect an executed letter
of intent or legally binding commitment from a financially
responsible person providing for the development and lease or
sale of any portion of such parcel(s) by the Company; and
provided further that, if GCN terminates all or any portion of
the Company's Option pursuant to this paragraph (v) (a "Casino
Project Termination") before any other termination of such
portion under this Agreement, then GCN shall pay Metroplex the
applicable termination fee (or portion thereof) described in the
following paragraph (c). Any such termination fee shall be
payable upon the closing of the sale of the Named Parcel(s)
being sold pursuant to the Casino Offer. Notwithstanding the
foregoing, if the Company has purchased any Named Parcel of the
Joint Venture Property, the Members shall negotiate in good
faith to determine whether or not the Company shall purchase
each parcel of Joint Venture Property subject to the Casino
Offer for an alternative development proposed by Metroplex, at a
price and on terms no less favorable to GCN than the Casino
Offer for the same parcel(s); and, if such negotiations do not
result in any such purchase by the Company, GCN shall not sell
such parcels to the party making the Casino Offer (or any of its
Affiliates) at a price and on terms less favorable than the
original Casino Offer.
(6) Restriction on Solicitation of Casino Offers.
During the term of this Agreement, neither Metroplex, Lakes,
GCN, nor any of their subsidiaries or other Affiliates, nor Lyle
Berman, Brett Torino, or any of their other officers, directors,
agents or outside brokers, shall solicit, directly or
indirectly, any Casino Offer for any parcel of the Joint Venture
Property or the Cable Property, by advertising, marketing,
distributing brochures or otherwise offering any such parcel;
provided, however, that GCN may provide information concerning
the Joint Venture Property and the Cable Property to any
financially responsible person who inquires concerning the
possibility of making a Casino Offer and, if such person
indicates an intention to make a Casino Offer, GCN may negotiate
with such person
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concerning the possible terms and conditions of a Casino Offer.
However, this restriction shall not apply to any development
project that has a principal component other than a gaming
casino, but does include some tenants that will be engaged in
legal gaming activities.
(3) Termination Fee. GCN shall pay Metroplex a termination
fee, in the applicable amount described in the following subsection
(i), in either of the events described below in subsections (i) and
(ii):
(1) Casino Project Termination. The termination fee,
if any, payable pursuant to the preceding subsection (b)(v), in
the event of a Casino Project Termination with respect to one or
more Named Parcels of the Joint Venture Property, shall be equal
to the applicable termination fee amount set forth in the
following table opposite the relevant time period or, if the
termination affects less than all of the Named Parcels included
in the Joint Venture Property, an amount equal to that
percentage of the applicable termination fee amount which is
equal to the ratio of the value of the Named Parcel(s) subject
to the Casino Project Termination, based on the purchase price
set forth in the Casino Offer (as finally accepted by GCN), to
the Aggregate Purchase Price, excluding any lease and option
obligations to be assumed by the Company as part of the
Aggregate Purchase Price for the Travelodge:
<CAPTION>
---------------------------------------------- --------------------------
Number of Months After the Effective Date Termination Fee Amount
---------------------------------------------- --------------------------
Less than three $3,000,000
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At least three, and less than five $4,000,000
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Five or more $5,000,000
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If any such termination fee becomes payable under this
subsection (i) as a result of a Casino Project Termination, GCN
shall also contribute to the capital of the Company the sum of
(i) any capital contributions made by Metroplex with respect to
the Cable Options pursuant to Section 8(b) during the Standstill
Period with respect to such Casino Offer, and (ii) all
Development Costs (other than Internal Development Costs defined
in paragraph (d)(ii) of Section 8) paid by Metroplex with
respect to each parcel subject to the Casino Project Termination
and treated by the Company as additional contributions pursuant
to Section 8(c); and the Company shall distribute such sum to
Metroplex (without interest) as a distribution from its Capital
Account; provided, however, that if the termination was
pro-rated, any such payment under this paragraph shall all be
pro-rated by the same percentage; and provided further that any
payment under this paragraph shall
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be reduced by any duplicate payment made under Section 3(c) with
respect to the same Casino Offer and the same parcel(s).
(2) Casino Transaction After Termination for GCN
Breach. In the event that this Agreement or any portion of the
Company's Option is terminated by Metroplex pursuant to Section
9 or the Company's Option Agreement, as a result of GCN's
material breach or default of any of its obligations under
either of such agreements or the Member Control Agreement, and
GCN or any of its Affiliates thereafter accepts a Casino Offer,
with respect to one or more Named Parcels of the Joint Venture
Property, that either was received by GCN or any of its
Affiliates within twelve (12) months after such termination, or
results from a signed letter of intent (contemplating a Casino
Offer by the signer) that was received by GCN or any of its
Affiliates within such period, such termination shall be deemed
to have been a Casino Project Termination and GCN shall pay
Metroplex a termination fee with respect to such Named
Parcel(s), determined as provided in subsection (i) above. The
provisions of this paragraph shall survive any termination of
this Agreement, and any such termination fee shall be in
addition to any other remedies that Metroplex may have with
respect to such breach or default.
3. Delivery, Rescission Rights and Exercise of Cable
Options. If and when GCN assigns the Cable Options to the Company, the
parties shall have the following rights and obligations, as applicable:
(1) Title Evidence. Lakes and/or GCN shall obtain
and deliver to Metroplex and the Company the following evidence
of title with respect to each parcel of the Cable Property:
(1) a commitment for an ALTA owners policy
(including an ALTA survey in ASTM form reasonable
acceptable to the insurer);
(2) estoppel letters (substantially in the
form attached hereto as EXHIBIT A-2) from the owners of
the Cable Property and the tenants occupying each parcel
of the Cable Property; and
(3) true and correct copies of all documents
(including any amendments thereto) evidencing any leases
affecting each such parcel and the termination thereof,
including the dates, terms and conditions for vacation
of the parcel by tenants.
(2) Right to Return Cable Options within Sixty Days.
Notwithstanding anything to the contrary in Section 1, with
respect to GCN's contribution of the Cable Options, Metroplex
shall have the right and option, in its absolute discretion, to
cause the Company to re-assign the Cable Options to GCN, at any
time within the first sixty (60)
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days after the Cable Options are assigned to the Company,
without any obligation to contribute funds to pay the carrying
cost of the Cable Options for any period after such
re-assignment, based on either (i) any material adverse change
from the terms and conditions contained in the draft agreement
providing for the Cable Options and disclosed to Metroplex by
GCN (a copy of which has been attached hereto as EXHIBIT C); or
(ii) Metroplex's objections to any material physical conditions
of the real estate or improvements, any material encumbrances,
or any other material title defects or exceptions to title
("Objections"), with respect to any parcel of the Cable Property
that are not required by the terms of the Cable Options to be
cured by the grantors of the Cable Options; provided, however,
that GCN may elect in writing to cure any such Objections during
the sixty (60) day period after GCN receives from Metroplex
written notice of any such Objections, and during such 60-day
period, GCN and Metroplex shall remain subject to their
respective obligations to contribute cash to the Company to pay
the carrying costs of the Cable Options. If such cure is
expected to take longer than such 60-day period, Metroplex may
waive in writing its right to cause the Cable Options to be
assigned to GCN, if GCN agrees in writing to complete such cure
before the Company exercises the Cable Options with respect to
any parcel(s) subject to such Objections. The provisions of this
paragraph (b) shall be implemented pursuant to the review and
objection procedures set forth in Sections 1.1, 1.2 and 1.3 of
the Company's Option Agreement, except that all references
therein to the "Option Property" shall be understood to mean the
Cable Property.
(3) Right to Rescind Assignment of Cable Options Upon
Casino Offer Acceptance. Notwithstanding anything to the
contrary in Section 1, with respect to GCN's contribution of the
Cable Options, GCN shall have the right and option, in its
absolute discretion, to cause the Company to re-assign either or
both of the Cable Options to GCN, if GCN accepts a Casino Offer
described in Section 2(b)(v) that includes any parcel of the
Cable Property subject to such Cable Option. In that event, GCN
shall contribute to the capital of the Company the sum of (i)
all capital contributions made before such reassignment by
Metroplex pursuant to Section 8(b) with respect to each
re-assigned Cable Option, and (ii) all Development Costs (other
than Internal Development Costs defined in paragraph (d)(ii) of
Section 8) paid by Metroplex with respect to each parcel subject
to the re-assigned Cable Option and treated by the Company as
additional contributions pursuant to Section 8(c); and the
Company shall distribute such sum to Metroplex (without
interest) as a distribution from its Capital Account. Any
payment under this paragraph (c) shall be reduced by any
duplicate payment made under Section 2(c)(i) with respect to the
same Casino Offer and the same parcel(s).
4. Membership Interests. In consideration of this Agreement, and
upon (a) the satisfaction of the conditions set forth in Section 5, and (b) the
Company's receipt of the Original Capital Contributions of each of the Members,
the Company shall record in its required records under Minnesota law that each
Member is entitled to a Membership interest as described in the Member Control
Agreement, including each Member's initial Percentage Interest and Voting
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Interest (as each such term is defined in the Member Control Agreement), in the
proportions set forth below, which shall also be set forth in the Member Control
Agreement:
------------------------------------------- ------------------------ --------------------
Member Percentage Interest Voting Interest
------------------------------------------- ------------------------ --------------------
GCN 50%* 51%**
------------------------------------------- ------------------------ --------------------
Metroplex 50%* 49%**
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Total 100% 100%
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* As modified in Article 7 of the Member Control Agreement with respect
to:
(1) special allocations of losses to Metroplex, to the
extent of its capital contributions that are not matched by GCN, and
special allocations of gains and profits to Metroplex to compensate for
such special allocations of losses to Metroplex; and
(2) payment of debts and special allocations of cash
distributions.
** As modified in Articles 9 and 10 of the Member Control Agreement, with
respect to appointment of the Company's Board of Governors (the "Board") and,
under certain conditions, the appointment of a committee of the Board pursuant
to Minnesota law, comprised of the members of the Board and one other individual
to be appointed or replaced by Metroplex, which committee shall have certain
power and authority, as set forth in to make decisions concerning the
development, leasing, financing and sale of such parcel and any other parcels of
the Joint Venture Property or the Cable Property that are acquired by the
Company.
5. Formation of the Company and Other Conditions. The obligation of
each of the Member to make the Original Capital Contributions under Section 1
shall be subject to satisfaction of the following conditions:
(1) the Articles of Organization attached hereto as EXHIBIT
D shall have been filed by the Company's Organizer under the laws of
the State of Minnesota;
(2) the Company's Organizer shall have appointed the initial
Board members designated in the last paragraph of Section 5;
(3) each of the Members shall have executed and delivered
the Member Control Agreement; and
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(4) the Board shall have accepted the Original Capital
Contributions, adopted the Bylaws attached hereto as EXHIBIT E (the
"Bylaws") and formed the Company pursuant to the documents described in
this Section 5.
6. Company Name and Assumed Name. The name of the Company shall be
"Metroplex - Lakes, LLC" or such other name as may be agreed upon in writing by
both Members. The Company shall take such action as may be necessary or
desirable to become qualified to do business in the State of Nevada. Metroplex
hereby consents to the Company's use of the name "Metroplex" and agrees to
execute and deliver such documents as may be reasonably necessary or desirable
to accomplish that purpose.
7. Purposes. The Company shall be organized and operated for the
purposes set forth in Article 4 of the Member Control Agreement, which include
the development and sale of the Joint Venture Property and the Cable Property.
8. Development Process. During the development of the Joint Venture
Property and the Cable Property, the Members shall pay the following costs with
respect to the Joint Venture Property and the Cable Property, as applicable:
(1) Carrying Costs of Joint Venture Property. GCN shall pay
all of the ownership and other carrying costs with respect to each
parcel of the Joint Venture Property, including without limitation (i)
the purchase cost of the Shark Club, (ii) the rentals due under the
Travelodge Lease before the Travelodge is purchased by the Company,
(iii) the cost of curing any Objections that GCN elects to cure
pursuant to Section 3(b)(with respect to the Cable Property) or Section
1.3 of the Company's Option Agreement, and (iv) all property taxes,
special assessments, maintenance and utility costs required to satisfy
any leases and safe occupancy laws or regulations, premiums for general
liability and property insurance in amounts customary for such
properties or required by any leases; and neither GCN nor Lakes shall
be entitled to be reimbursed for any such costs by the Company or
Metroplex, because such costs have been taken into account on an
estimated basis in establishing the Aggregate Purchase Price. If GCN
fails to pay any such carrying costs, Metroplex shall have the remedies
set forth in Section 6.3(a) of the Member Control Agreement. However,
any costs of removing the view rights held by the owners of the Polo
Tower adjacent to the Polo Plaza and encumbering the Polo Plaza shall
not be treated as a carrying cost or development cost, but as
construction costs to be paid from Company financing sources. The
obligations to be assumed by the Company upon its exercise of the
Company's Option with respect to the Travelodge shall not be treated as
carrying costs payable by GCN after such purchase, but as construction
costs to be paid from Company financing sources.
(2) Carrying Costs of Cable Options. After the Company
acquires the Cable Options, each of the Members shall pay or advance to
the Company 50% of the Company's periodic carrying costs for retaining
the Cable Options, as and when such costs
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are incurred, subject to the provisions of Section 2(b)(iv). All of
such costs paid or advanced to the Company by each Member shall be
promptly reported to the Company and shall be accounted for by the
Company as additional capital contributions by such Member, which shall
not affect the Percentage Interest or Voting Interest of either of the
Members in the Company, if such additional contributions are made
equally by the Members. If either of the Members does not timely
contribute its required share of the monthly cost to maintain the Cable
Options, the other Member shall have the remedies set forth in Section
9 of this Agreement, Section 6.3 of the Member Control Agreement and/or
elsewhere in the Member Control Agreement.
(3) Development Costs. From time to time after the Effective
Date, Metroplex shall pay or advance to the Company all of the
Development Costs (as defined in paragraph (d) below) incurred by or on
behalf of the Company after the Effective Date for developing each
parcel of the Joint Venture Property and the Cable Property until such
parcel is subject to a binding commitment to be sold or leased (to a
primary tenant) by the Company (a "Commitment"), but only to the extent
such Development Costs have been either approved by both Members or
included in one of the detailed line items in a "Development Budget"
for such parcel that has been approved by both Members as follows.
Promptly after the Effective Date, the Members shall cooperate and
exert their best efforts to establish a written Development Budget for
such Development Costs, with respect to each of the Named Parcels of
the Joint Venture Property and the Cable Property; and thereafter for
each proposed development project involving one or more of the parcels
included in such property. Each Development Budget shall include
Internal Development Costs (as defined in paragraph (d)(ii) below) as a
separate component, with its own detailed line items. The Members may
from time to time agree in writing to amend such Development Budget;
and shall cooperate and exert their best efforts to do so in connection
with any proposed changes in cost or concept with respect to a
development project or parcel. To the extent that any Development Costs
are required to be incurred with respect to a parcel after it is
subject to a Commitment, they shall be financed and paid by the
Company, pursuant to the management and expense approval procedures set
forth in the Member Control Agreement.
All Development Costs paid or advanced to the Company by
Metroplex with respect to a parcel before it is subject to a Commitment
shall be treated as additional capital contributions by Metroplex to
the extent provided in Section 6.3(c) of the Member Control Agreement.
(4) Definitions Relating to Development Costs. For purposes
of this Agreement, the Company's Option Agreement and the Member
Control Agreement, the term "Development Costs" shall mean the sum of
the External Development Costs (as defined below) and the Internal
Development Costs (as defined below) incurred by Metroplex pursuant to
the preceding paragraph (c). However, Development Costs shall not
include any land purchase or Construction Costs (as defined in
paragraph (e) below),
<PAGE> 14
which shall be financed and payable by the Company, nor any carrying
costs described in paragraphs (a) or (b) of this Section 8.
(1) "External Development Costs" shall mean
reasonable and necessary out-of-pocket costs (excluding employee
compensation or overhead costs incurred by Metroplex) that are
paid to third parties for any of the following services: (A)
site analysis; (B) review of surveys, title conditions and
exceptions, easements, setbacks and site constraints; (C)
preliminary soils testing and geological, hydrology and seismic
studies, to include borings and core drilling for samples
("Ground Studies"); (D) traffic studies, circulation studies and
pedestrian counts; (E) preparation of preliminary site plan
alternatives, architectural sketch plans and conceptual drawings
for a number of project alternatives; analysis of spatial
relationships between structures and uses to be developed; (F)
preliminary engineering studies; (G) development planning; (H)
preparation of financial analysis alternatives, proposed
Development Budget and preliminary project cost analysis for
each parcel and/or project; (I) public relations campaign and
development of theme for each project; (J) marketing and leasing
consulting; and (K) preparation of a pre-leasing program. To the
extent that any of such services are performed by Metroplex,
they shall be treated as Internal Development Costs under the
following paragraph (ii), rather than External Development
Costs.
(2) "Internal Development Costs" shall mean employee
compensation and overhead costs incurred by Metroplex, to the
extent such costs are capitalized on the books and financial
statements of Metroplex pursuant to generally accepted
accounting principles, consistently applied; and permitted to be
allocated as Development Costs pursuant to the preceding
paragraph (c).
(5) Definition of Construction Costs. For purposes of this
Agreement, the Company's Option Agreement and the Member Control
Agreement, the term "Construction Costs" includes the costs of
construction labor and materials for real estate improvements, and the
following related services: (i) final ground studies; (ii) demolition
and land preparation; (iii) fabrication and installation of fixtures;
(iv) preparation of final hard- line drawings for construction; (v)
final architectural building plans; (vi) engineering, structural
engineering and mechanical engineering; and (vii) furniture, fixture
and equipment plans for building interiors and common areas. However,
the parties acknowledge that, in most cases the tenants will hire their
own architectural and engineering teams, which will be integrated into
and supervised by the Company's project development team.
(6) Tenant Payments. The Company may use for Construction
Costs, but not for Development Costs, any funds provided by a tenant
before such tenant has the right to occupy any of the Joint Venture
Property or the Cable Property.
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<PAGE> 15
The Company may develop the parcels included in the Joint Venture
Property and the Cable Property as separate parcels, or may develop one or more
parcels as a unit for any lawful purpose other than primarily as a gaming
casino; provided, however, that GCN shall have the right and option to accept or
reject any development proposal presented to the Company by Metroplex, before
such proposal requires any legally binding commitment by the Company, unless GCN
and Metroplex agree that such proposal satisfies the investment criteria
described in Section 2.2 of the Company's Option Agreement, pursuant to the
procedure provided in that section.
9. Termination of Agreement and Treatment of Cable Options and Cable
Property. No party to this Agreement may terminate this Agreement without the
written consent of the other parties (other than the Company), except that
either of the Members may elect to terminate this Agreement (without prejudice
to its other remedies at law or in equity) if the other does not timely perform
its obligations hereunder in any material respect, and such delinquency is not
cured within ten (10) Business Days after the breaching party receives written
notice of such delinquency from the Company or the non-breaching Member, unless
the non-breaching Member elects any other applicable remedy provided in
paragraphs (a), (b) or (c) of Section 6.3 of the Member Control Agreement. In
addition, Metroplex shall have the right, in its sole discretion, to terminate
this Agreement and the Member Control Agreement at any time during the
"Contingency Period" or, if applicable, the "Cure Period" (as those terms are
defined in the Company's Option Agreement), to the extent such termination is
permitted under the Company's Option Agreement.
This Agreement shall automatically terminate upon the dissolution of
the Company or, if earlier, upon any termination of the Company's Option in its
entirety (pursuant to the preceding sentence or otherwise) before any portion of
the Company's Option has been exercised according to its terms; provided,
however, that each of the Members shall continue to make capital contributions
under Section 8(b) until the options described in the following paragraphs (a)
and (b) have been exercised by a Member, or have expired or have been waived by
both Members. Any such termination shall not affect any rights or obligations of
the parties that exist as of the date of such termination, including without
limitation the following options; provided, however, that no Member who caused
the termination of this Agreement by a material breach of its obligations
hereunder shall thereafter have any of the following options to purchase Company
property:
(1) First Right to Acquire Cable Options. If this Agreement
is terminated or the Company is dissolved while the Cable Options
remain in effect and before the Company exercises either or both of the
Cable Options, one of the following options shall apply:
(1) if at that time the Polo Plaza has not been
redeveloped or sold by the Company or GCN, or a legally binding
agreement to do so has not been reached by the Company or GCN,
then GCN shall have the exclusive right and option (as among the
parties to this Agreement), during the first sixty (60) days
after such termination or the commencement of such dissolution,
to acquire either or both of
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<PAGE> 16
the remaining Cable Options in the following manner: first, the
Company shall distribute to GCN a 50% undivided interest
therein, and second, GCN shall purchase the other 50% undivided
interest for an amount equal to the aggregate amount previously
contributed to the Company by Metroplex with respect to such
remaining option or options, without interest; and any gain or
loss recognized by the Company upon such purchase shall be
allocated to Metroplex and the purchase price shall be
distributed to Metroplex as a return of such capital
contributions made by Metroplex; or
(2) if at that time the Polo Plaza has been
redeveloped or sold by the Company or GCN, or a legally binding
agreement to do so has been reached by the Company or GCN, then
Metroplex shall have the exclusive right and option (as among
the parties to this Agreement), during the first sixty (60) days
after such termination or the commencement of such dissolution,
to acquire either or both of the remaining Cable Options in the
following manner: first, the Company shall distribute to
Metroplex a 50% undivided interest in therein, and second,
Metroplex shall purchase the other 50% undivided interest for an
amount equal to the aggregate amount previously contributed to
the Company by GCN with respect to such remaining option or
options, without interest; and any gain or loss recognized by
the Company upon such purchase shall be allocated to GCN and the
purchase price shall be distributed to GCN as a return of such
capital contributions made by GCN.
(2) Second Right to Acquire Cable Options. If the Member
with an option to acquire one or both of the Cable Options under the
preceding paragraph (a) (the "First Member") does not exercise its
option within such 60-day period, then the other Member (the "Second
Member") shall have a similar exclusive right and option (as among the
parties to this Agreement), during the next sixty (60) days, to acquire
either or both of the remaining Cable Options in the following manner:
first, the Company shall distribute to the Second Member a 50%
undivided interest in therein, and second, the Second Member shall
purchase the other 50% undivided interest for an amount equal to the
aggregate amount previously contributed to the Company by the First
Member with respect to such remaining option or options, without
interest; and any gain or loss recognized by the Company upon such
purchase shall be allocated to the First Member and the purchase price
shall be distributed to the First Member as a return of such capital
contributions made by the First Member.
(3) Rights After Expiration of Cable Options. If this
Agreement is terminated or the Company is dissolved after the Company
has acquired the Cable Options, and the Cable Options have expired
without being exercised by the Company or acquired by either of the
Members hereunder, this Agreement shall not be construed to restrict
either of the Members from acquiring or developing the Cable Property
for any purpose; provided, however, that:
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<PAGE> 17
(1) if before such expiration the Polo Plaza has not
been redeveloped or sold by the Company or GCN, or a legally
binding agreement to do so has not been reached by the Company
or GCN, then GCN shall have the exclusive right and option (as
among the parties to this Agreement), during the first ninety
(90) days after such expiration, to acquire the right to
purchase or develop one or both of the Named Parcels included in
the Cable Property; or
(2) if before such expiration the Polo Plaza has
been redeveloped or sold by the Company or GCN, or a legally
binding agreement to do so has been reached by the Company or
GCN, then Metroplex shall have the exclusive right and option
(as among the parties to this Agreement), during the first
ninety (90) days after such expiration, to acquire the right to
purchase or develop one or both of the Named Parcels included in
the Cable Property.
10. Member Representations. Each of the Members and Lakes represents
that (a) the execution, delivery and performance of this Agreement by such party
does not conflict with any other agreement or any law or regulation binding upon
such party; (b) this Agreement is a valid and binding agreement of such party
enforceable in accordance with its terms; and (c) no third party has any right,
interest or valid claim against the Company for any compensation as a finder or
broker, or in any similar capacity, in connection with any capital contributions
by the Members or the Company's exercise of any purchase options contemplated by
this Agreement, by reason of any action by such party.
Each of Lakes and GCN represents that (a) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota; (b) it is duly authorized to do business in the State of Nevada; (c)
it has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement; and (d) it has received no Casino Offer that
is still in effect, nor has it received any letter of intent that contemplates a
Casino Offer and is still in effect. Lakes also represents that GCN is a
wholly-owned subsidiary of Lakes.
Metroplex represents that (a) it is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Nevada; (b) it has the requisite power and authority to enter into and perform
its obligations under this Agreement; (c) its sole owner is Brett Torino and (d)
Brett Torino is a partner in, and also controls, Cap-Tor Plaza Partnership (in
the sense that he has the authority to prevent such partnership, but not its
other partners, from acquiring or developing any real property).
Each party to this Agreement (other than the Company) shall indemnify
and hold the Company harmless against any and all liability, damages, costs and
expenses (including without limitation reasonable attorneys fees) with respect
to any breach of any of the foregoing representations or warranties by such
party.
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<PAGE> 18
11. Confidential Information. Each of the parties to this Agreement
agrees that such party will not disclose to any persons (other than the
officers, attorneys, accountants and financial advisors of the Company and its
Members), use for such party's own account except in connection with the
purposes of the Company, or use for the benefit of any third party any
confidential information relating to the Joint Venture Property, the Company's
Option, the Cable Property, the Cable Options or the Company, that the Member
obtains pursuant to this Agreement, except to the extent required by applicable
law, the rules of a national securities exchange or the order of a court of
competent jurisdiction. The parties acknowledge that all information developed
pursuant to this Agreement is the property of the Company or, prior to the
formation of the Company, the party that developed such information. In the
event of a termination of this Agreement that results in the continuation of the
Company by one Member, the other Member shall turn over to the Company all
memoranda, plans, reports and other documentation (and copies thereof) relating
to the Joint Venture Property and the Cable Property that the Member may then
possess or have under the Member's control. The covenants made in this Section
shall be construed as an agreement independent of any other provision of this
Agreement, and shall survive the termination of this Agreement.
12. Affiliates. For purposes of this Agreement, the term "Affiliate"
shall be defined as set forth in Article 3 of the Member Control Agreement. The
Company shall not make any loan to or from any Member or Affiliate of a Member,
purchase from (or sell to) any Member (or Affiliate of a Member) any services or
property, or enter into any contract with any Member (or Affiliate of a Member)
to do any of the foregoing, except to the extent expressly permitted by the
Member Control Agreement.
13. Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Minnesota, without regard
to its law concerning conflicts of laws.
Subject to the arbitration provisions described in Section 20, any
judicial proceeding for the breach, or enforcement at law or equity, of this
Agreement, the Company's Option Agreement, the Member Control Agreement, or any
provision hereof or thereof, shall be instituted only in a federal or state
court of competent jurisdiction in the City of Minneapolis and State of
Minnesota; provided, however, that any such venue shall be in the Clark County
in the State of Nevada in the following cases:
(1) any dispute arising from or relating to any real estate
interest then held by the Company (other than the Company's
Option or the Cable Options); or
(2) any dispute arising after all of the Joint Venture
Property and Cable Property has been acquired by the Company.
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<PAGE> 19
Each party consents to the jurisdiction of the applicable court
designated above, and the applicable venue designated above; and waives the
right to challenge the jurisdiction of such court on grounds of lack of personal
jurisdiction or to seek a change of such venue.
14. Assignment. Except as expressly provided herein, no party hereto
may assign, pledge or otherwise transfer this Agreement or any interest herein,
whether by direct transfer or by merger or transfer of a controlling portion of
its voting equity interest, without the prior written consent of the other
parties; provided, however, that either of the Members may assign its rights
hereunder to any transferee of its membership interest in the Company in
connection with a transfer of such membership interest that is expressly
permitted by the Member Control Agreement.
15. Binding Effect. This Agreement inures to the benefit of, and shall
be binding upon, the parties and their respective heirs, successors and
permitted assigns, as the case may be.
16. Amendment and Waiver. No amendment or waiver of any provision of
this Agreement is valid unless it is in writing and signed by all parties
hereto.
17. Notice; Agent for Service. Any notice required or permitted to be
given hereunder or pursuant hereto must be in writing addressed to the person at
the address specified in the Company's required records under Minnesota law, or
at an address changed in the manner set forth therein, and shall be effective
when received by the other party or, if earlier, either two (2) Business Days
after it is mailed (with all postage prepaid) or the next Business Day after it
is sent by a nationally recognized over night courier.
18. Entire Agreement. This Agreement, the Company's Option Agreement,
the Member Control Agreement, and the Schedules and other Exhibits attached
hereto and thereto, constitute the entire agreement among the parties with
respect to the subject matter hereof.
19. Investment Interest. Each of the Members agrees that the Member's
capital contributions to the Company shall be for investment purposes only and
not with a view to any resale of the Member's interest in the Company. Each of
the Members represents that the Member has the sophistication to evaluate the
risks and merits of the purchase of the Company interests summarized herein.
20. Resolution of Disputes. If any controversy or claim arising out of
this Agreement cannot be settled by the parties thereto, including without
limitation whether or not any condition has been satisfied or any approval has
been unreasonably withheld or delayed, such controversy or claim shall be
resolved by arbitration pursuant to Article 17 of the Member Control Agreement
or, if applicable, the provisions of Section 9.10 of the Member Control
Agreement.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 20
IN WITNESS WHEREOF, each of the Members has executed this Agreement on
the date first written above, to be effective as of the Effective Date, and the
Company shall have executed this Agreement upon its formation pursuant to
Section 5 on the date set forth below.
GRAND CASINOS NEVADA I, INC.
By ___________________________________
Its _________________________
METROPLEX, LLC
By ___________________________________
Its __________________________
"MEMBERS"
LAKES GAMING, INC.
By ___________________________________
Its _________________________
"LAKES"
This Contribution Agreement and the capital contributions described
herein are accepted by Metroplex - Lakes, LLC as a contribution agreement and
capital contributions under the Minnesota Limited Liability Company Act, as of
April ___, 2000, the Effective Date on which the Company is formed, pursuant to
the authorization of its Board and the terms and conditions of the Member
Control Agreement.
METROPLEX - LAKES, LLC
By _________________________
Its Chief Manager
"COMPANY"
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