Joint Venture Agreement of Marina District Development Co. - MAC Corp. and Boyd Atlantic City Inc.
SECOND AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF
MARINA DISTRICT DEVELOPMENT COMPANY
Dated as of August 31, 2000
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SECOND AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF
MARINA DISTRICT DEVELOPMENT COMPANY
This Second Amended and Restated Joint Venture Agreement (the "Agreement")
is made as of August 31, 2000, by and between MAC, CORP. ("MR Sub"), a New
Jersey corporation which is a wholly owned subsidiary of Mirage Resorts,
Incorporated, a Nevada corporation ("MRI"), and Boyd Atlantic City, Inc. ("Boyd
Sub"), a New Jersey corporation which is a wholly owned subsidiary of Boyd
Gaming Corporation, a Nevada corporation ("Boyd") (MR Sub and Boyd Sub are
hereinafter referred to individually as a "Venturer" and collectively as the
"Venturers"). MRI and Boyd are also parties to this Agreement solely for the
specific purposes enumerated herein.
PREAMBLE
WHEREAS, on May 29, 1996, MR Sub, MRI, Atlandia Design and Furnishings,
Inc., a New Jersey corporation (which was subsequently dissolved), Grand K,
Inc., a Nevada corporation, and Boyd entered into that certain Joint Venture
Agreement (the "Original Agreement"), relating to a joint venture formed for the
purpose of designing, developing, constructing, owning and operating a
hotel-casino and related facilities on property located in the "Huron North
Redevelopment Area" in the Marina area of Atlantic City, New Jersey, which
property was conveyed to MR Sub by deed, dated January 8, 1998, recorded in the
office of the County Clerk of the County on January 9, 1998, pursuant to a
resolution of the City Council of the City of Atlantic City, New Jersey (the
"City"), duly adopted at a meeting of the City Council on December 17, 1997, and
signed by the Mayor of the City on December 18, 1997, as such deed was modified
by that certain Agreement Modifying Deed, recorded in Book 6237, Page 223, on
January 18, 1999, between the City and MR Sub (collectively, the "Parcel Deed"),
and which property is designated as the "H-Tract" on EXHIBIT A attached hereto
(the "Parcel").
WHEREAS, on July 14, 1998, Grand K, Inc. assigned all of its right, title
and interest in and to the Original Agreement to Boyd Sub.
WHEREAS, on July 14, 1998, the Parties entered into that certain Amended
and Restated Joint Venture Agreement, as amended pursuant to that certain First
Amendment to Amended and Restated Joint Venture Agreement, dated as of September
10, 1998 (as amended, the "Amended and Restated Agreement"), which Amended and
Restated Agreement superseded the Original Agreement.
WHEREAS, MR Sub has subdivided the Parcel and has agreed to convey to the
Joint Venture, upon the terms and conditions hereinafter set forth, that certain
portion of the Parcel
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commonly known as Block 576, Lot 1.03, comprised of (or to be comprised of)
approximately twenty-seven and twenty-seven one-hundredths (27.27) acres (the
"Property"). The remainder of the Parcel, excluding the Property, as the same
may be further subdivided from time to time, shall be referred to herein as
"Tract II."
WHEREAS, the Parties desire to amend and restate the Amended and Restated
Agreement upon the terms and conditions hereinafter set forth in this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
promises set forth, the parties agree as follows:
ARTICLE 1
THE JOINT VENTURE
Section 1.1 ORGANIZATION. The Venturers hereby confirm that they have
formed and established a joint venture in the form of a general partnership (the
"Joint Venture") under and pursuant to, and which shall continue to constitute a
joint venture for purposes of, the provisions of this Agreement and the New
Jersey Uniform Partnership Act (the "Act") from and after May 29, 1996, upon the
terms and conditions set forth in this Agreement.
Section 1.2 NAME. The name of the Joint Venture shall be Marina District
Development Company, and all business of the Joint Venture shall be conducted
solely in such name or in such other name or names as the Venturers may mutually
determine.
Section 1.3 PLACE OF BUSINESS. The principal office of the Joint Venture
shall be located at such place within the County as may be approved by the
Venturers.
Section 1.4 BUSINESS OF THE JOINT VENTURE. The business of the Joint
Venture is to acquire and own the Property and to design, develop, construct,
finance, own and operate the Facility on the Property. The purposes of the Joint
Venture shall include the conduct of casino gaming. In furtherance of its
business, the Joint Venture shall have and may exercise all the powers now or
hereafter conferred by the laws of the State of New Jersey on partnerships
formed under the laws of that State, and may do any and all things related or
incidental to its business as fully as natural persons might or could do under
the laws of that State. One such power shall include, but shall not be limited
to, the creation, ownership and operation of an entity to be utilized in
connection with financing the Facility, whose board of directors shall be
appointed by the Managing Venturer.
Section 1.5 PURPOSES LIMITED. The Joint Venture shall be a joint venture
only for the purposes specified in Section 1.4. Except as otherwise provided in
this Agreement, the Joint Venture
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shall not engage in any other activity or business and neither Venturer shall
have any authority to hold itself out as an agent of the other Venturer in any
other business or activity.
Section 1.6 NO PAYMENTS OF INDIVIDUAL OBLIGATIONS. The Venturers shall use
the Joint Venture's credit and assets solely for the benefit of the Joint
Venture. No asset of the Joint Venture shall be transferred or encumbered for or
in payment of any individual obligation of a Venturer.
Section 1.7 STATUTORY COMPLIANCE. The Joint Venture shall exist under and
be governed by, and this Agreement shall be construed and enforced in accordance
with, the laws of the State of New Jersey, including the New Jersey Casino
Control Act, but excluding its conflict of law principles. The Venturers shall
make all filings and disclosures required by, and shall otherwise comply with,
all such laws. The Venturers shall execute, file and record in the appropriate
records any assumed or fictitious name certificate required by law to be filed
or recorded in connection with the formation of the Joint Venture and shall
execute, file and record such other documents and instruments as may be
necessary or appropriate with respect to the formation of, and conduct of
business by, the Joint Venture.
Section 1.8 TITLE TO PROPERTY. All property, whether real or personal,
tangible or intangible, owned by the Joint Venture shall be owned in the name of
the Joint Venture and no Venturer shall have any ownership interest in such
property in its individual name or right and each Venturer's interest in the
Joint Venture shall be personal property for all purposes.
Section 1.9 DURATION. The Joint Venture commenced as of May 29, 1996 and
shall continue until dissolved and liquidated pursuant to law or any provision
of this Agreement.
Section 1.10 DEFINITIONS. As used in this Agreement:
"Acceptance Notice" has the meaning set forth in Section 11.4 hereof.
"Accountants" has the meaning set forth in Section 7.3 hereof.
"Act" has the meaning set forth in Section 1.1 hereof.
"Affiliate" means a person which directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control
with the person specified; provided, however, that a Venturer, as such,
shall not be deemed to be an Affiliate of the other Venturer.
"Agreement" means this Second Amended and Restated Joint Venture Agreement,
as the same may be modified or amended from time to time in accordance with
the terms hereof.
"Allocable Share" means the Joint Venture's equitable share of any
Government Improvement Costs and Master Plan Improvement Costs for which
the Joint Venture is
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responsible in accordance with the terms and provisions hereof relating to
the components of the Government Improvements and Master Plan Improvements
that are not for the sole use or benefit of either the Property or Tract
II. The Venturers agree that to the extent that a Government Improvement or
Master Plan Improvement for which the Joint Venture is responsible in
accordance with the terms and provisions hereof is for the use or benefit
of the entire Parcel, the Joint Venture's Allocable Share of the Government
Improvement Costs and/or Master Plan Improvement Costs relating thereto
shall be 25%. The Venturers further agree that the Joint Venture's
Allocable Share of the Initial Master Plan Improvement Costs is as set
forth on EXHIBIT B attached hereto and incorporated herein by this
reference.
"Amended and Restated Agreement" has the meaning set forth in the Preamble
to this Agreement.
"Applicable Ratio" has the meaning set forth in Section 3.5 hereof.
"Appraisal Notice" has the meaning set forth in Section 11.5 hereof.
"Appraised Value" has the meaning set forth in Section 11.5 hereof.
"Boyd" has the meaning set forth in the first paragraph of this Agreement.
"Boyd License Agreement" has the meaning set forth in Section 8.2 of this
Agreement.
"Boyd Sub" has the meaning set forth in the first paragraph of this
Agreement.
"Building Elevation Plans" means that certain Valet Parking Level Plan,
dated as of August 29, 2000, prepared by Anthony A. Marnell II, Chartered,
a copy of which has been provided to Boyd Sub and MR Sub prior to the
execution of this Agreement.
"Bulkhead Project" has the meaning set forth in Section 4.8 of this
Agreement.
"CAFRA" means the New Jersey Coastal Area Facilities Review Act and the
rules, regulations and policies promulgated thereunder, as each may be
amended from time to time.
"Capital Account" has the meaning set forth in Section 3.10 hereof.
"Capital Expenditure Budget" has the meaning set forth in Section 7.11
hereof.
"Capital Expenditure Reserve Account" has the meaning set forth in Section
7.10 hereof.
"City" has the meaning set forth in the Preamble to this Agreement.
"Closure Reports" has the meaning set forth in Section 4.4(b) hereof.
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"Code" has the meaning set forth in Section 5.1 hereof.
"Commencement of Construction" means (i) with respect to construction of
the Facility, the date that a notice to proceed is issued by the Managing
Venturer or any of its Affiliates to the contractor(s) for the Facility,
which date shall, in any event, occur only after receipt by the responsible
Venturer or by MRI, as appropriate, of all permits, authorizations and
approvals necessary to commence construction of the Facility, including
without limitation, all Master Plan Approvals, and (ii) with respect to
construction of the MRI Casino Project, the date that a notice to proceed
is issued by MRI or its Affiliates to the contractor(s) for the MRI Casino
Project, which date shall, in any event, occur only after receipt by MRI or
MR Sub, as applicable, of all permits, authorizations and approvals
necessary to commence construction of the MRI Casino Project, including
without limitation, all Master Plan Approvals.
"Connector" means the Atlantic City-Brigantine Connector road improvement
project currently under construction in the City, as the same may be
modified from time to time hereafter.
"Construction Financing" means debt financing, which may be unsecured or
collateralized by one or more liens on the Property and the Facility or any
portion thereof (including purchase money financing collateralized by
furniture, furnishings, fixtures, machinery or equipment), to be obtained
by the Joint Venture from one or more commercial banks or other lenders
(including vendors or the Venturers) for the purpose of funding Project
Costs.
"Construction Period" has the meaning set forth in Section 4.1 hereof
"County" means Atlantic County, New Jersey.
"CRDA" means the New Jersey Casino Reinvestment Development Authority.
"Cumulative Excess Contributions" has the meaning set forth in Section 3.5
hereof.
"Defaulting Venturer" has the meaning set forth in Section 12.1 hereof
"Development Agreement" means that certain agreement entitled "An Agreement
between the City of Atlantic City and MRI for the Development of the Huron
North Redevelopment Area," dated May 3, 1996, including all exhibits
thereto, as the same was previously amended by Amendments thereto dated
January 8, 1998, December 15, 1998 and January 13, 1999, and as the same
may be amended or supplemented from time to time hereafter upon the terms
and conditions permitted hereby.
"Disapproval Notice" has the meaning set forth in Section 1 1.4 hereof.
"Distributable Cash" has the meaning set forth in Section 6.1 hereof.
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"Employee Parking Lot" means a surface parking lot which shall be
constructed upon a portion of Tract II, as more particularly provided in
Section 4.5(a) hereof.
"Employee Parking Lease" means the lease of the Employee Parking Lot, to be
entered into between the Joint Venture and MR Sub upon the terms and
conditions more particularly set forth in Section 4.5(a) hereof.
"Environmental Assessment Reports" shall mean all environmental assessment
reports and data relating to the Property and the Parcel, including without
limitation, all Phase I, II and III environmental assessments, Closure
Reports, and any and all documentation, correspondence, reports or data
relating to any investigation, analyses, cleanup, detoxification, testing,
monitoring or remediation of the Property and the Parcel or otherwise
relating to the preparation and implementation of any closure, remediation
or other required plans, together with evidence of all federal, state and
local governmental consents and approvals relating thereto.
"Event of Bankruptcy" has the meaning set forth in Section 12.1 hereof.
"Event of Default" has the meaning set forth in Section 12.1 hereof.
"Excess Government Improvement Costs" means the amount, if any, of the
Joint Venture's share of Government Improvement Costs that exceeds, in the
aggregate, the sum of $7,500,000.
"Excess Master Plan Improvement Costs" means the amount, if any, of the
Joint Venture's share of Master Plan Improvement Costs relating to the
Initial Master Plan Improvements that exceeds, in the aggregate, the sum of
$27,500,000.
"Facility" means a new hotel-casino and related restaurant, entertainment,
retail and other facilities and amenities, containing not less than 2,000
guestrooms, to be designed, developed and constructed by the Joint Venture
on the Property, including all furniture, fixtures, machinery, equipment
and other tangible personal property located therein and used in connection
therewith except for any furniture, fixtures, machinery, equipment and
other tangible personal property owned by third parties and to be used at
or incorporated into the Property relating to (i) the central power plant
and related facilities to be constructed and operated by a third party
provider, or (ii) any facilities leased to third parties for operation of
retail, restaurant or spa facilities.
"Force Majeure Event" has the meaning set forth in Section 4.2(f) hereof.
"Government Improvements" means all off-site and on-site improvements
(other than the Initial Master Plan Improvements and any other Master Plan
Improvements to be constructed upon the Parcel) required by any federal,
state, county, municipal or other governmental or
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quasi-governmental agency or by any utility provider, in order to enable
the construction of each of the Facility, the Employee Parking Lot, and, if
applicable, the MRI Casino Project and the Third Casino on the Parcel,
including without limitation, the construction or relocation of any
required common air and water quality infrastructure, wetlands remediation,
solid waste, ground water and storm water runoff facilities and other
similar improvements or projects, and the construction of all improvements
required to bring all necessary utilities to the Parcel and to the Property
(including without limitation, water, gas, electricity, sewer and
telephone), and the relocation of any existing utility service or
installation located upon the Parcel that would obstruct the intended
development thereof.
"Government Improvement Costs" means all costs and expenses of designing,
engineering, developing and constructing the Government Improvements,
including without limitation, all direct and indirect costs related
thereto, such as labor, materials, supplies, machinery, equipment,
construction management, legal, architectural, engineering and design fees,
site work, utility installation and hookup or connection charges and fees,
construction permits, certificates, bonds, and other deposits, but
excluding any and all costs associated with conveying the Property to the
Joint Venture which are the sole responsibility of MRI or MR Sub or their
Affiliates, as more particularly provided in Section 3.2 hereof, and
excluding any other costs or expenses which are the sole obligation of any
of the Parties pursuant to the terms hereof.
"Initial Master Plan Improvements" means, collectively, (i) all of those
Master Plan Improvements of the type or in the nature of those that are
currently anticipated to be constructed upon the Parcel as more
particularly described in that portion of the Tishman Construction Company
of New Jersey Order of Magnitude Estimate - Update, dated February 22, 2000
attached hereto as EXHIBIT C-1 and incorporated herein by this reference;
and (ii) preparation of sub-grade up to the underside of the porte cochere
road paving surface. Except as otherwise specifically provided in this
Agreement, all Initial Master Plan Improvements shall be subject to the cap
on Excess Master Plan Improvement Costs.
"Initiating Venturer" has the meaning set forth in Section 11.4 hereof
"Interest" has the meaning set forth in Section 3.6 hereof.
"Jobs and Business Opportunities Program" means a program designed to
satisfy the requirements and conditions contained in Section 9 of the
Development Agreement.
"Losses" has the meaning set forth in Section 5.1 hereof.
"Managing Venturer" means Boyd Sub until such time, if any, as MR Sub
becomes the Managing Venturer pursuant to Section 9.3 hereof, and
thereafter means MR Sub or its successor as Managing Venturer.
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"Master Plan" means the engineering, design and specifications for (i) the
entirety of the infrastructure and other improvements that will jointly
benefit or be used in common by the MRI Casino Project, the Facility, and
if applicable, the Third Casino, including without limitation, all common
landscaping, signage, lighting and fencing, the specific points at which
the Connector will connect to the Parcel, all roads leading to and from the
porte-cocheres and the preparation of sub-grade up to the underside of the
porte cochere road paving surface, all traffic, parking, and circulation
improvements (including, without limitation, roads, bridges, walkways,
monorail systems and other means of transportation within, adjoining or
servicing the Parcel and the Property and all landscaping, lighting and
fencing related thereto); and (ii) all Government Improvements; excluding
only the engineering and design of those improvements that specifically,
solely, and individually comprise, respectively, the Facility, the MRI
Casino Project, and if applicable, the Third Casino.
"Master Plan Approvals" means all those permits, licenses, and approvals,
issued in final, unappealable, and unconditional form, that are required
under all applicable federal, state, county and municipal laws, regulations
or governmental or quasi-governmental requirements pertaining to or
necessary for the formal adoption and approval of the Master Plan and the
construction of the Government Improvements, excluding only those permits,
licenses, and approvals that pertain solely to the improvements that
specifically, solely, and individually comprise, respectively, the
Facility, the MRI Casino Project, and if applicable, the Third Casino.
"Master Plan Improvement Costs" means all costs and expenses of designing,
engineering, developing, constructing, equipping and opening any Master
Plan Improvements, including without limitation, all direct and indirect
costs related thereto, such as labor, materials, supplies, furniture,
furnishings, fixtures, machinery, equipment, construction management,
legal, architectural, engineering and design fees, site work, permits,
certificates, bonds, and other deposits, but excluding any and all costs
associated with conveying the Property to the Joint Venture, which are the
sole responsibility of MRI or MR Sub or their Affiliates, as more
particularly provided in Section 3.2 hereof, and excluding any other costs
or expenses which are the sole obligation of any of the Parties pursuant to
the terms hereof.
"Master Plan Improvements" means any and all improvements included in or
built or to be built pursuant to the Master Plan other than any specific
improvements included in the Master Plan which constitute Government
Improvements.
"Memorandum of Agreement" has the meaning set forth in Section 14.22 of
this Agreement.
"MGM" means MGM MIRAGE, a Delaware corporation.
"MRI" has the meaning set forth in the first paragraph of this Agreement.
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"MRI Casino Project" means a hotel-casino project which may be constructed
by MRI or its Affiliates or by any purchaser of Tract II from MRI or its
Affiliates.
"MR Sub" has the meaning set forth in the first paragraph of this
Agreement.
"New Jersey Casino Control Act" means all the terms and provisions of
N.J.S.A. 5:12-1 ET. SEQ., as the same may be modified and amended from time
to time.
"New Jersey Gaming Authorities" means, collectively, the New Jersey Casino
Control Commission and the New Jersey Division of Gaming Enforcement, or
any governmental agency of the State of New Jersey or its political
subdivisions which succeeds to the functions of such agencies.
"NJDEP" means the New Jersey Department of Environmental Protection.
"Non-Managing Venturer" means MR Sub until such time, if any, as MR Sub
becomes the Managing Venturer pursuant to Section 9.3 hereof, and
thereafter means Boyd Sub or its successor as Non-Managing Venturer.
"Offering Notice" has the meaning set forth in Section 11.4 hereof.
"Option" has the meaning set forth in Section 4.5(c) hereof.
"Option Agreement" has the meaning set forth in Section 4.5(c) hereof.
"Option Parcel" has the meaning set forth in Section 4.5(c) hereof.
"Ordinance" has the meaning set forth in Section 3.2(a) hereof.
"Original Agreement" has the meaning set forth in the Preamble to this
Agreement.
"Parcel" has the meaning set forth in the Preamble to this Agreement.
"Parcel Deed" has the meaning set forth in the Preamble to this Agreement.
"Party" or "Parties" means MR Sub, MRI, Boyd Sub and Boyd, individually or
collectively, as appropriate, and their respective successors and assigns.
"Profits" has the meaning set forth in Section 5.1 hereof.
"Program" means the number of guestrooms; the number of parking spaces; the
square footage of the retail components of the Facility, including but not
limited to the shops, restaurants and other food and beverage outlets,
meeting and ballroom space, and spa; and
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the number of slot machines and table games to be contained in the
Facility, in each case as set forth on EXHIBIT D attached hereto and
incorporated herein by this reference, as the same may be amended from time
to time as more particularly provided in this Agreement.
"Project Costs" means all hard and soft costs and expenses of designing,
engineering, developing, constructing, equipping and opening the Facility
paid or accrued prior to the end of the Construction Period, including
without limitation (i) all direct and indirect costs related thereto, such
as labor, materials, site work, supplies, furniture, furnishings, fixtures,
machinery, equipment, construction management, architectural, engineering
and design fees paid to non-Affiliates of Boyd Sub, (ii) all out-of-pocket
fees and expenses for which Boyd Sub shall be entitled to reimbursement or
compensation pursuant to either Section 2.3 or Section 2.4 hereof, and all
salaries paid to employees of Boyd Sub or its Affiliates who devote
substantially full time to the Joint Venture's designing, engineering,
developing, constructing, equipping and opening the Facility, (iii) all
Master Plan Improvement Costs and Government Improvement Costs, to the
extent payable by the Joint Venture pursuant to the terms of Section 4.2.
hereof, (iv) the cost of installing utility service from the Property
boundary, (v) the cost of design and construction approvals, permits,
certificates, bonds and other non-refundable deposits, (vi) preopening
expenses, (vii) costs and expenses of preparing, filing and processing
applications to obtain licenses and approvals from the New Jersey Gaming
Authorities to the extent payable by the Joint Venture pursuant to Section
4.3(d) hereof, (viii) initial gaming and non-gaming bankroll, (ix) interest
and fees on the Construction Financing; (x) the cost of creating and
implementing the Jobs and Business Opportunities Program; and (xi) the
value of the Property as specified in Section 3.2(f) hereof; but excluding
(A) costs and expenses of acquiring any additional property pursuant to
Section 3.4 hereof; (B) all Road Development Costs associated with the
Connector; (C) except as otherwise provided in Section 4.4 hereof, all
costs and expenses associated with the evaluation and remediation of
environmental contamination of the Property; (D) the amount of Excess
Master Plan Improvement Costs, if any, which are the sole obligation of MR
Sub, as provided in Section 4.2(c) hereof; and (E) any other costs or
expenses which are the sole obligation of MRI or MR Sub as provided herein.
"Property" has the meaning set forth in the Preamble to this Agreement.
"Reciprocal Easement Agreement" has the meaning set forth in Section 3.2(a)
hereof.
"Redevelopment Plan" means that certain Redevelopment Plan for the Huron
North Redevelopment Area, adopted by the City, dated as of March 15, 1995.
"Resort Zone Designation" means the land zoning classification of the City
which authorizes and which is recognized by the New Jersey Gaming
Authorities as acceptable for the construction of a casino facility with
all forms of legalized gaming permitted pursuant to the laws of the State
of New Jersey.
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"Responding Venturer" has the meaning set forth in Section 11.4 hereof.
"Reverter" has the meaning set forth in Section 3.2(a) hereof.
"Road Development Agreement" means that certain Road Development Agreement,
dated as of January 10, 1997, by and among the State of New Jersey, SJTA
and AC Holding Corp., a Nevada corporation, as successor by assignment to
MRI, which Road Development Agreement has been amended pursuant to that
certain First Amendment, dated as of July 31, 1997, that certain Second
Amendment, dated as of October 10, 1997, that certain Amended and Restated
Third Amendment, dated as of February 1, 1999 and that certain Fourth
Amendment, dated as of October 30, 1999, and as the same may hereafter be
amended or supplemented from time to time upon the terms and conditions
permitted hereby.
"Road Development Costs" means all costs and expenses of designing,
developing, constructing, equipping and opening the Connector, including
without limitation, any and all direct and indirect costs related thereto,
such as labor, materials, supplies, fixtures, machinery, equipment,
landscaping, construction management, legal, architectural, engineering and
design fees, site work, utility installation and hook-up fees, construction
permits, certificates, bonds, and deposits, and any other costs payable by
MRI or its Affiliates pursuant to the terms of the Road Development
Agreement.
"Survey" shall mean an ALTA survey of the Property prepared by a licensed
surveyor or civil engineering firm, which shall be certified to the Joint
Venture, each of the Parties, and the Joint Venture's title insurer, and
which shall include, without limitation, the legal description and gross
acreage of the Property, and the locations of any existing improvements,
easements and servitudes existing upon or encumbering the Property.
"SJTA" means the South Jersey Transportation Authority.
"Special Revenue Bonds" means the various series of Special Revenue Bonds
(Atlantic City/Brigantine Connector Project - CRDA H-Tract Revenue Pledge
Agreement) issued or to be issued by SJTA to MRI or an Affiliate of MRI
pursuant to SJTA's Resolution adopted on October 8, 1997 and the Bond
Purchase Agreement dated as of October 10, 1997 between SJTA and MRI, as
the same may be amended from time to time hereafter.
"Third Casino" means a casino-hotel project that, in addition to the
Facility and the MRI Casino Project, may be constructed upon the Parcel.
"Third Party" has the meaning set forth in Section 11.4(a) of this
Agreement.
"Tract II" has the meaning set forth in the Preamble to this Agreement.
"Transfer" has the meaning set forth in Section 11.1 hereof.
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"Tri-Party Agreement" means that certain agreement captioned H-Tract
Tri-Party Agreement, contemplated to be executed pursuant to the Ordinance,
by and among the City, the Joint Venture and MR Sub.
"Vacated Land" has the meaning set forth in Section 3.2(a) hereof.
"Venturer" and "Venturers" means, individually or collectively, as
applicable, the parties named as such in the first paragraph of this
Agreement or any successor to either party by Transfer expressly permitted
by this Agreement.
ARTICLE 2
THE VENTURERS
Section 2.1 IDENTIFICATION. MR Sub and Boyd Sub shall be the Venturers of
the Joint Venture. No other person may become a Venturer except pursuant to a
Transfer specifically permitted under and effected in compliance with this
Agreement.
Section 2.2 SERVICES OF VENTURERS. During the existence of the Joint
Venture, the Venturers shall be required to devote only such time and effort to
Joint Venture business as may be necessary to promote adequately the interests
of the Joint Venture and the mutual interests of the Venturers, it being
specifically understood and agreed that the Venturers shall not be required to
devote full time to Joint Venture business and, except as provided in Section
3.4 hereof, each Venturer and its Affiliates may at any time and from time to
time engage in and possess interests in other business ventures of every type
and description, independently or with others, whether or not such ventures
relate to or compete with the Facility; and neither the Joint Venture nor the
other Venturer shall by virtue of this Agreement have any right, title or
interest in or to such independent ventures or to the income or profits derived
therefrom. The Venturers may, but shall not be required to, organize a
management company under the laws of Nevada to manage the affairs of the Joint
Venture in a manner consistent with the provisions of this Agreement.
Section 2.3 REIMBURSEMENT AND FEES. Unless expressly provided for in this
Agreement or approved by each of the Venturers, neither of the Venturers nor any
Affiliate thereof shall be paid any compensation for its management services to
the Joint Venture provided pursuant to the terms hereof or be reimbursed for
out-of-pocket, overhead or general administrative expenses. Notwithstanding the
foregoing, the Managing Venturer and its Affiliates shall be entitled to
reimbursement by the Joint Venture for reasonable out-of-pocket costs and
expenses incurred for travel to and from the Facility in connection with the
performance of any services required or contemplated by this Agreement,
including without limitation, travel in connection with designing, developing,
constructing, and operating the Facility. In addition, in the event the Managing
Venturer requests employees of MR Sub or its Affiliates to travel to the
Facility for purposes of the Joint Venture's business, or employees of MR Sub or
its Affiliates to travel to Las Vegas, Nevada for
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purposes of the Joint Venture's business, then MR Sub or its Affiliates shall be
entitled to reimbursement by the Joint Venture for reasonable out-of-pocket
costs and expenses incurred for such travel.
Section 2.4 TRANSACTIONS WITH AFFILIATES. The Managing Venturer shall be
entitled to employ or retain, or enter into any transaction or contract with,
any Venturer or any officer, employee or Affiliate of any Venturer, provided
that the compensation and other terms and conditions of any such arrangement are
no less favorable to the Joint Venture than those that could reasonably be
obtained at the time from an unrelated party providing comparable goods or
services.
Section 2.5 LIABILITY OF THE VENTURERS; INDEMNIFICATION. Except as
otherwise may be required by the provisions of the New Jersey Casino Control
Act, neither Venturer shall be liable for damages or otherwise to the Joint
Venture or the other Venturer for any act or omission performed or omitted by it
in good faith on behalf of the Joint Venture and in a manner reasonably believed
by it to be within the scope of the authority granted to it by this Agreement
and in the best interests of the Joint Venture if it shall not have been guilty
of gross negligence, bad faith or willful misconduct with respect to such acts
or omissions. Each Venturer shall be indemnified by the Joint Venture for, from
and against any and all claims, losses, damages and liabilities, including
reasonable attorneys' fees which shall be reimbursed as incurred, arising out of
or relating to any act or failure to act performed or omitted by it within the
scope of the authority conferred upon it by this Agreement; provided, however,
that such indemnity shall be payable only if such Venturer acted in good faith
and in a manner it reasonably believed to be in, or not opposed to, the best
interests of the Joint Venture. Any indemnity under this Section 2.5 shall be
paid from, and shall be limited to the extent of, Joint Venture assets, and no
Venturer shall have any personal liability on account thereof.
ARTICLE 3
CAPITAL CONTRIBUTIONS; LOANS; CAPITAL ACCOUNTS
Section 3.1 INITIAL CAPITAL CONTRIBUTIONS. Each Venturer previously
contributed to the Joint Venture, as its initial capital contribution, cash in
the amount of $1,000.
Section 3.2 CONTRIBUTION OF PROPERTY.
(a) Following the latest of such time as: (i) the City shall have adopted
an ordinance substantially in the form of EXHIBIT E attached hereto and
incorporated herein by this reference (the "Ordinance") providing that upon
conveyance of the Property to the Joint Venture, the Property shall be released
from all the requirements, restrictions and conditions of the Development
Agreement, other than the reversion provisions contained in the Development
Agreement and Parcel Deed, as amended (collectively, the "Reverter"), and upon
substantial completion of the Facility, the entire Parcel shall be released from
the Reverter and the City will provide the Joint Venture, for recordation in the
office of the County Clerk of the County pursuant to N.J.S.A. 46:15-1.1 ET.SEQ.,
with an
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instrument to reflect the release of the entire Parcel from the Reverter; (ii)
MR Sub or its Affiliates shall have obtained all other governmental or
quasi-governmental approvals necessary to permit the transfer of title to the
Property to the Joint Venture; (iii) the City has vacated the existing public
works facilities located on the Property, and MRI, MR Sub or the City, as
appropriate, has caused all such facilities to be completely removed from the
Property (it being understood and agreed, however, that underground piling
beneath the public works facilities shall remain in place, and upon Commencement
of Construction of the Facility, MRI will promptly reimburse the Joint Venture,
in the amount of $35,000, as a one-time payment for the installation of new
piles in and around the area of the existing underground piles, as shown on Pile
Overlay Drawing P-1, dated as of January 6, 2000, and prepared by Paulus,
Sokolowski and Sartor, Inc.); (iv) MRI and MR Sub have obtained all Master Plan
Approvals; (v) Managing Venturer shall have obtained all requisite approvals for
construction of the Facility, as contemplated hereunder, from the NJDEP and the
Atlantic City Planning Board; (vi) MRI or MR Sub shall have obtained from the
New Jersey Department of Transportation or the SJTA, as applicable, a vacation
and extinguishment of any public rights in a certain portion of the former North
Carolina Avenue having a size of 0.067 acres, all as more specifically shown on
EXHIBIT F attached hereto and made a part hereof (the "Vacated Land"), which
vacation and extinguishment shall be in a form acceptable to Managing Venturer,
in its reasonable discretion, and acceptable to its title insurer and shall be
sufficient to convey good and marketable fee simple title to the Vacated Land to
the Joint Venture and to enable the Joint Venture, upon payment of the regular
and customary insurance premium, to obtain an owner's policy of title insurance
from its title insurer, insuring, without exception, the Joint Venture as the
fee simple owner of the Vacated Land; (vii) MRI, MR Sub or its Affiliates or
their successors and assigns shall have provided to the Joint Venture a
reciprocal easement agreement (the "Reciprocal Easement Agreement") in form and
substance acceptable to Managing Venturer, in its reasonable discretion, and
acceptable to the provider of Construction Financing, and in form and substance
legally sufficient for recordation in the office of the County Clerk of the
County, granting to the Joint Venture such easements and other rights to use any
Governmental Improvements or Master Plan Improvements which are located on the
Parcel and are necessary or desirable, in the reasonable opinion of Managing
Venturer, for the Joint Venture's construction, use, maintenance or occupancy of
the Facility, including but not limited to the Initial Master Plan Improvements;
(viii) MR Sub and Managing Venturer shall have agreed upon the form and
substance of the Option Agreement; (ix) MR Sub and Managing Venturer shall have
agreed upon the form and substance of the Employee Parking Lease; and (x) MR Sub
and Boyd Sub shall be satisfied, in their reasonable discretion, that all
conditions to allow the first draw under the Construction Financing shall have
been met or are capable of being met; MR Sub shall, as an additional capital
contribution, convey, or cause to be conveyed, to the Joint Venture fee simple
title to the Property. Such conveyance shall be made by bargain and sale deed,
with covenants as to the grantor's acts, and with covenants that the Property
shall be free and clear of all monetary liens and encumbrances and all other
liens, encumbrances, rights and restrictions which would materially adversely
affect the Joint Venture's contemplated use of the Property, other than those
liens, encumbrances, rights and restrictions contained or referred to in (i) the
Parcel Deed or (ii) the Transnation Title Insurance Company Title Commitment
number 98-14779, dated effective as of December 27, 1999 (except for Exception
No. 23, relating to the Reverter, which shall be modified pursuant to the
Ordinance.
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(b) Boyd Sub acknowledges that a portion of the Property is not currently
within the Resort Zone Designation, and such portion is not zoned for the
construction of the casino component of the proposed Facility. MRI and MR Sub
hereby represent and warrant, however, that the zoning for the portion of the
Property that is not within the Resort Zone Designation will allow for the
construction of restaurants, hotel towers, retail, parking garages, showrooms,
administrative office space and any and all other non-casino space to be
developed in connection with the Facility. To the extent that the City or the
New Jersey Gaming Authorities shall require a re-zoning of all or any portion of
the Property to the Resort Zone Designation, or to the extent that Boyd Sub
deems it reasonably necessary to have all or any portion of the Property
re-zoned to the Resort Zone Designation in order to best utilize the Property to
construct the Facility, then the Venturers shall cooperate with each other to
use all commercially reasonable efforts to attempt to obtain such re-zoning of
the Property, with the cost thereof to be a Project Cost to be paid by the Joint
Venture.
(c) The Venturers agree, solely for purposes of this Agreement, that as of
the date that MR Sub contributes the Property to the Joint Venture, MR Sub shall
receive credit for a capital contribution to the Joint Venture in the amount of
$90,000,000, a portion of which amount shall reflect the actual fair market
value of the Property, as determined at such time by an appraisal obtained by
Managing Venturer, and the remainder of which shall reflect the fair market
value of certain other tangible and intangible property contributed to the Joint
Venture by MR Sub, including but not limited to, the Special Revenue Bonds.
(d) Except as hereinafter provided, all costs and expenses associated with
the Environmental Assessment Reports and remediation of the Property, all Road
Development Costs, all real property transfer taxes or fees, and any other costs
and expenses of conveying the Property to the Joint Venture, including the cost
of obtaining the Survey and the cost of an ALTA owner's policy of title
insurance, shall be borne solely by MRI or MR Sub, as appropriate, and shall not
be costs or expenses of the Joint Venture. Real property taxes and assessments
relating to the Property shall be prorated as of the date of contribution of the
Property to the Joint Venture. MR Sub shall not be entitled to any increase in
its capital account or in its Interest in the Joint Venture by virtue of the
expenditure of any sums relating to the matters set forth in this Section
3.2(d). Notwithstanding the foregoing, costs and expenses associated with the
environmental remediation of the Property shall be borne by the Joint Venture as
Project Costs to the extent that (i) changes in the design or location of the
Facility from the design and location of the Facility as reflected in the
Building Elevation Plans, or (ii) changes in the location of the Employee
Parking Lot from the location agreed upon pursuant to the terms of Section
4.5(a) hereof, cause an actual increase in such costs and expenses to MRI or MR
Sub.
Section 3.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) At the time of and as a condition concurrent to conveyance of the
Property to the Joint Venture by MR Sub pursuant to Section 3.2, Boyd Sub shall
make an additional capital contribution of cash aggregating $90,000,000 to the
Joint Venture. From time to time thereafter, each of the Venturers shall
concurrently make equal additional capital contributions of cash aggregating
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$117,000,000 each to the Joint Venture at such time or times as required by the
provider of the Construction Financing or at the time or times as the Managing
Venturer reasonably determines necessary to coincide with the funding of Project
Costs; provided, however, that if acceptable to the provider of the Construction
Financing, each of the Venturers may provide all or part of such $117,000,000
cash contribution as subordinated loans, on such terms as the Venturers may
mutually determine, rather than as capital contributions. Notwithstanding the
foregoing, if acceptable to the provider of Construction Financing, each
Venturer shall be entitled to defer a portion of such $117,000,000 capital
contribution by providing the Joint Venture with a standby letter of credit in
the amount of $25,000,000 as security for its obligation to contribute such
amount. Any such letter of credit shall be on terms and conditions reasonably
acceptable to the Venturers and to the provider of the Construction Financing,
but in any event, each such letter of credit shall provide that the letter of
credit may be drawn if, but only if the respective Venturer shall fail to
contribute the capital contribution secured by such letter of credit at the time
required by either Managing Venturer or by the provider of Construction
Financing pursuant to the express terms of the Construction Financing.
(b) The Parties acknowledge that as of the date of this Agreement, the
anticipated total Project Costs (including a reasonable contingency to be
established by Boyd Sub) are $1,035,000,000. Boyd Sub shall make additional
capital contributions of cash to the Joint Venture equal to the amount of
Project Costs that exceed, in the aggregate, the sum of $1,035,000,000, except
to the extent (i) such Project Costs are the sole obligation of either MRI or MR
Sub or any of their respective Affiliates pursuant to the terms hereof, (ii)
such Project Costs are permitted to be added to the amount of the Construction
Financing pursuant to the terms and provisions of Section 4.1 hereof, or (iii)
the Venturers mutually agree in writing to increase the size or scope of the
Facility and to share in the increase in the Project Cost relating to such
change in size or scope. The additional capital contributions referred to in the
immediately preceding sentence shall be made by Boyd Sub at such time or times
as required by the provider of the Construction Financing or at the time or
times as the Managing Venturer reasonably determines necessary to coincide with
the funding of Project Costs, but in no event prior to the contribution of the
Property to the Joint Venture by MR Sub.
(c) MR Sub shall make additional capital contributions of cash to the Joint
Venture equal to the amount of any Excess Master Plan Improvement Costs, except
to the extent of Excess Master Plan Improvement Costs actually caused by (i)
changes in the design or location of the Facility from the design and location
of the Facility as reflected in the Building Elevation Plans, or (ii) changes in
the location of the Employee Parking Lot from the location agreed upon pursuant
to the terms of Section 4.5(a) hereof. The additional capital contributions
referred to in the immediately preceding sentence shall be made by MR Sub at
such time or times as required by the provider of the Construction Financing or
at the time or times as the Venturers reasonably determine to be necessary to
coincide with the funding of the Master Plan Improvements.
(d) In order to fund Project Costs incurred or to be incurred prior to
conveyance of the Property to the Joint Venture, each Venturer shall, within
five (5) business days following the request of the Managing Venturer, make one
or more additional equal capital contributions of cash to the
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Joint Venture in amounts sufficient to fund outstanding or anticipated Project
Costs, as reasonably determined by Managing Venturer, which contributions
(including such contributions previously made by the Venturers) shall be
credited against each Venturer's cash capital contribution obligations due under
the second sentence of Section 3.3(a) hereof. In connection with each such
request for capital contributions, Managing Venturer agrees to provide each
Venturer with quarterly projected cash requirements for the next succeeding
quarter, which shall contain Managing Venturer's best estimate of the upcoming
capital needs of the Joint Venture for such time period.
(e) MR Sub shall contribute to the Joint Venture 25% of the aggregate
principal amount of each series of Special Revenue Bonds as and when such
Special Revenue Bonds are issued by SJTA to MRI or an Affiliate of MRI, but in
no event prior to the contribution of the Property to the Joint Venture,
provided that the total principal amount of such Special Revenue Bonds so
contributed shall not exceed, in the aggregate, $13,750,000. All payments of
principal and interest in respect of the Special Revenue Bonds owned by the
Joint Venture shall accrue to and be the property of the Joint Venture. At the
time of the initial contribution of Special Revenue Bonds to the Joint Venture,
and as a condition thereto, the Joint Venture shall execute and deliver, and
agree to perform its obligations under, all agreements and instruments,
including without limitation a Donation Agreement with CRDA in substantially the
form of the Donation Agreement dated October 10, 1997 between CRDA and MR Sub,
necessary to permit the Joint Venture to obtain a credit against its future CRDA
alternative investment tax obligations to the maximum extent permitted by law.
The contribution of the Special Revenue Bonds by MR Sub to the Joint Venture
shall not increase the capital account or Interest of MR Sub in the Joint
Venture.
Section 3.4 ACQUISITION AND DEVELOPMENT OF ADDITIONAL PROPERTY.
(a) Subject to the terms and conditions of this Agreement, MR Sub or its
Affiliates may, alone or as a partner, joint venturer, stockholder or associate
of or with one or more other persons or entities, (i) develop and operate the
MRI Casino Project on such terms and conditions as it may determine, and (ii)
acquire, develop and operate additional property adjacent to the Property or the
Parcel on such terms and conditions as it may determine it its sole discretion,
and neither the Joint Venture nor Boyd Sub shall have any rights with respect
thereto except such as may be agreed to by each of the Venturers.
(b) Without the consent of MR Sub, which it may withhold or condition in
its sole discretion, neither Boyd Sub nor its Affiliates, alone or as a partner,
joint venturer, stockholder (except for ownership of up to 5% of the stock of
any publicly traded company) or associate of or with other persons or entities,
may acquire or possess an interest in any other gaming property, gaming
development project or gaming business located within the Marina area of the
City at any time during the term of this Agreement or within three years
following the termination of this Agreement as a result of the occurrence of an
Event of Default by Boyd Sub. Without the consent of MR Sub, which it may
withhold or condition in its sole discretion, neither Boyd Sub nor its
Affiliates, alone or as a partner, joint venturer, stockholder (except for
ownership of up to 5% of the stock of any publicly traded company) or associate
of or with other persons or entities, may acquire
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or possess an interest in any project involving the construction and development
of a new resort/casino project located within the entire City during the
three-year period commencing on the date of this Agreement; provided, however,
that the foregoing shall not preclude Boyd Sub or its Affiliates from effecting
any merger with or acquisition of another entity that owns all or any interest
in any existing gaming facility in the City (other than in the Marina area of
the City) during such three-year period. Notwithstanding the foregoing, the
restrictions contained in this Section 3.4(b) shall cease and be of no further
force and effect in the event that (A) MRI or MR Sub shall default under any
material obligation under this Agreement, or (B) this Agreement shall terminate
or be terminated without any uncured Event of Default on the part of Boyd Sub.
(c) With the consent of each Venturer, the Joint Venture may acquire
additional property beneficial to the Joint Venture in the vicinity of the
Property. The purchase price and other terms of any such acquisition shall be
subject to the approval of each Venturer. Unless the Venturers agree otherwise,
the acquisition cost of any such additional property shall be funded by equal
additional capital contributions by each of the Venturers on or prior to the
acquisition date, which shall not affect the respective obligations of the
Venturers to make additional capital contributions to the Joint Venture pursuant
to Section 3.3. If any such additional property is acquired by the Joint Venture
and the Joint Venture is thereafter dissolved and liquidated, MR Sub shall have
the option, exercisable for a period of 90 days following liquidation of the
Joint Venture, to purchase any or all of such additional property for cash at a
purchase price equal to the Joint Venture's acquisition cost of such additional
property, plus all other capitalized costs and expenses incurred by the Joint
Venture in connection with such additional property. Notwithstanding the
foregoing, MR Sub hereby expressly consents to the acquisition of the Option
Parcel upon the terms and provisions of Section 4.5(c) hereof and of the Option
Agreement.
Section 3.5 FAILURE TO MAKE CAPITAL CONTRIBUTIONS.
(a) If a Venturer defaults in its obligation to make capital contributions
required by this Article 3, the other Venturer shall have and may exercise all
remedies available pursuant to this Agreement, at law or in equity. In addition,
if a Venturer defaults in its obligation to make capital contributions in cash
required by this Article 3, the other Venturer may, but shall not be required
to, contribute to the Joint Venture all or a portion of such amount. If such
other Venturer contributes any amount to the Joint Venture pursuant to this
Section 3.5, immediately following such contribution the Interest of the
contributing Venturer in the Joint Venture shall be increased and the Interest
of the Defaulting Venturer in the Joint Venture shall be decreased. The
resulting Interest of the contributing Venturer shall be the number of
percentage points (rounded to the nearest one-hundredth of a percentage point)
determined in accordance with the following formula: (i) determine the
percentage equivalent of a fraction, the numerator of which shall be the
aggregate capital contributions made to the Joint Venture by the contributing
Venturer pursuant to this Agreement (excluding capital contributions made by
Boyd Sub pursuant to Section 3.3(b) and by
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MR Sub pursuant to Section 3.3(c) or Section 3.3(e)), and the denominator of
which shall be the aggregate capital contributions made to the Joint Venture by
all Venturers pursuant to this Agreement (excluding capital contributions made
by Boyd Sub pursuant to Section 3.3(b) and by MR Sub pursuant to Section 3.3(c)
or Section 3.3(e)), (ii) SUBTRACT 50 percentage points, (iii) MULTIPLY the
result of (i) and (ii) by the Applicable Ratio (rounded to the nearest
one-hundredth of a percentage point) and (iv) add 50 percentage points to the
result of (i), (ii) and (iii). For purposes of the immediately preceding
sentence, the value of the Property contributed by MR Sub pursuant to Section
3.2 hereof shall at all times be deemed to be equal to $90,000,000. The
resulting Interest of the Defaulting Venturer shall be the number of percentage
points equal to 100 MINUS the resulting Interest of the contributing Venturer as
determined above.
(b) As used in this Section 3.5: (i) to the extent that the cash
contributed by the contributing Venturer pursuant to this Section 3.5 in
response to such default, together with all cash previously contributed by the
contributing Venturer pursuant to this Section 3.5 in response to prior defaults
(collectively, the "Cumulative Excess Contributions"), is less than $30,000,000,
the Applicable Ratio shall be 1.20; (ii) with respect to that portion of the
Cumulative Excess Contributions that is between $30,000,000 and $39,999,999, the
Applicable Ratio shall be 1.30; (iii) with respect to that portion of the
Cumulative Excess Contributions that is between $40,000,000 and $49,999,999, the
Applicable Ratio shall be 1.40; and (iv) with respect to that portion of the
Cumulative Excess Contributions that is $50,000,000 or more, the Applicable
Ratio shall be 1.50.
(c) By way of illustration, assume that (i) MR Sub and Boyd Sub each has a
50% Interest; (ii) MR Sub has previously contributed the Property pursuant to
Section 3.2 and $117,000,000 pursuant to Section 3.3(a), and Boyd Sub has
previously contributed a total of $207,000,000 pursuant to Section 3.3(a); and
(iii) Boyd Sub is required to contribute an additional $35,000,000 pursuant to
Section 3.3(b). If Boyd Sub fails to contribute such amount, and MR Sub elects
to contribute such $35,000,000 pursuant to this Section 3.5, the resulting
Interest of MR Sub following such contribution would be 54.72%, determined as
follows:
$90,000,000 PLUS $117,000,000 PLUS $35,000,000 [MR SUB CASH AND PROPERTY
CONTRIBUTIONS]
--------------------------------------------------------------------------------
$359,000,000 PLUS $90,000,000 [total cash and Property contributions]
EQUALS 53.90%, MINUS 50% EQUALS 3.90%, MULTIPLIED BY 1.21 [the blended
Applicable Ratio applicable to $35,000,000] EQUALS 4.72%, PLUS 50% EQUALS
54.72%.
Accordingly, the resulting Interest of Boyd Sub would be 45.28%.
Section 3.6 INTERESTS. The respective percentage interest (the "Interest")
of the Venturers in the Joint Venture shall initially be as follows:
MR Sub - 50%
Boyd Sub- 50%
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Any additional capital contributions made by Boyd Sub pursuant to Section 3.3(b)
hereof shall not increase the Interest of Boyd Sub. Any additional capital
contributions made by MR Sub pursuant to Section 3.3(c) hereof shall not
increase the Interest of MR Sub.
Section 3.7 LOANS BY VENTURERS TO THE JOINT VENTURE. If the Managing
Venturer reasonably determines that the Joint Venture's existing funds (giving
effect to funds available pursuant to existing third-party financing and amounts
required to be contributed to the Joint Venture by the Venturers pursuant to
Section 3.3) are insufficient to meet the Joint Venture's costs, expenses,
obligations and liabilities, the Managing Venturer may offer to each Venturer
the opportunity to advance funds to the Joint Venture in proportion to its
respective Interest. No Venturer shall be required to advance funds to the Joint
Venture, and neither Venturer shall be permitted to advance funds to the Joint
Venture without the approval of each Venturer. All amounts so advanced shall
take the form of an unsecured loan and shall bear interest at a floating rate
equal to the Joint Venture's weighted average cost of borrowed funds (or, if the
Joint Venture then has no borrowed funds, the published prime rate charged from
time to time by Bank of America NT & SA). Such loans shall be repayable on
demand but solely out of assets of the Joint Venture, in accordance with the
provisions of Section 6.2(a) and Article 13 hereof, and no Venturer shall have
any personal liability on account thereof, nor shall there be any recourse to
such Venturer's assets. To the extent required by the terms of the Construction
Financing or such other third-party financing obtained by the Joint Venture,
repayment of such loans shall be subordinated to the prior repayment of the
Construction Financing or other third-party financing. The provisions of this
Section 3.7 are solely and exclusively for the benefit of the Venturers, may
only be enforced by the Venturers and shall not inure to the benefit of, or be
enforceable by, any third party, including without limitation any creditor of
the Joint Venture.
Section 3.8 NO FURTHER CAPITAL CONTRIBUTIONS. The Venturers shall not be
required to contribute additional capital or lend any funds to the Joint
Venture, except as expressly provided in this Article 3.
Section 3.9 CAPITAL ACCOUNTS. Each Venturer shall have a single capital
account (the "Capital Account") that, except as otherwise expressly provided by
this Agreement, shall be (i) increased by (a) the sum of the cash and the fair
market value at the time of contribution of any property contributed by such
Venturer, (b) such Venturer's distributive share of Joint Venture Profits and
(c) the amount of any Joint Venture liabilities assumed by such Venturer or
secured by any Joint Venture property distributed to such Venturer and (ii)
decreased by (a) the sum of the cash and the fair market value of property
distributed to such Venturer, (b) such Venturer's distributive share of Joint
Venture Losses and (c) the amount of liabilities of such Venturer assumed by the
Joint Venture or that are secured by property contributed by such Venturer to
the Joint Venture. No Venturer shall be entitled to receive or shall be paid
interest on its contributions to the capital of the Joint Venture or on its
Capital Account balance. This Section 3.9 is intended to comply with the
requirements of Treasury Regulation ss. 1.704-1(b) regarding the maintenance of
capital accounts and shall be interpreted and applied in a manner consistent
with that provision.
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Section 3.10 RETURN OF CAPITAL. Except as specifically provided herein, no
Venturer may withdraw capital from the Joint Venture. To the extent any cash
which any Venturer is entitled to receive pursuant to any provision of this
Agreement would constitute a return of capital, each of the Venturers consents
to the withdrawal of such capital. If any capital is, or is to be, returned to a
Venturer, the Venturer shall not have the right to receive property other than
cash, except as otherwise expressly provided in this Agreement.
ARTICLE 4
FINANCING, CONSTRUCTION AND
DEVELOPMENT-RELATED MATTERS
Section 4.1 CONSTRUCTION FINANCING. The Managing Venturer, in consultation
and cooperation with the Non-Managing Venturer, shall use all commercially
reasonable efforts to obtain committed Construction Financing as promptly as
commercially reasonable in an amount up to $621,000,000 plus the amount of
additional indebtedness, if any, allowed or reasonably anticipated by Managing
Venturer to be allowed pursuant to the third sentence of this Section 4.1 on the
most favorable terms available to the Joint Venture. The Managing Venturer shall
have the responsibility and authority for the negotiation, structuring and
documentation of the Construction Financing. Without the approval of each
Venturer, the outstanding principal amount of the Construction Financing shall
not exceed 60% of the total Project Costs; provided, however, that (i) if the
weighted average interest rate accrued on such indebtedness during the period
beginning on the day on which the first draw on such indebtedness is made and
ending on the day before the day on which the Facility opens to the general
public (the "Construction Period") exceeds 10.0% per annum, the outstanding
principal amount of Construction Financing may exceed 60% of the total Project
Costs and/or may be increased by an amount equal to 100% of the difference
between (A) the interest accrued on such indebtedness during the Construction
Period and (B) the interest which would have accrued on such indebtedness during
the Construction Period if such weighted average interest rate had been 10.0%
per annum; (ii) without double counting, the outstanding principal amount of
Construction Financing may exceed 60% of the total Project Costs and/or may
increased by the amount of Excess Government Improvement Costs, if any; (iii)
the outstanding principal amount of Construction Financing may exceed 60% of the
total Project Costs and/or may be increased by the actual amount of the Joint
Venture's costs of creating and implementing the Jobs and Business Opportunities
Program; and (iv) if acceptable to the provider of Construction Financing, if
the Joint Venturers defer a portion of their respective capital contribution
obligations by providing a standby letter of credit pursuant to the terms of
Section 3.3(a) hereof, and if the actual total Project Costs are less than
$1,035,000,000, the outstanding principal amount of Construction Financing may
exceed 60% of the total Project Costs by the amount of capital contributions so
deferred. In any event, without the approval of each Venturer, the aggregate
principal amount of Construction Financing and all other Joint Venture
indebtedness outstanding at any time (other than Venturer subordinated loans
permitted by Section 3.3(a) hereof) shall not exceed the sum of $621,000,000
plus the amount of additional indebtedness, if any, permitted by the immediately
preceding sentence. The interest
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rate and other material terms of the Construction Financing and any other Joint
Venture indebtedness shall be subject to the approval of each Venturer, such
approval not to be unreasonably withheld or delayed. If nonrecourse debt
financing is not available to the Joint Venture on terms reasonably acceptable
to the Venturers, the Venturers will cooperate in good faith to agree on
alternative construction financing and to seek such alternative construction
financing (and in such event such alternative construction financing shall
constitute "Construction Financing" as such term is used in this Agreement). In
no event shall the stockholder or other Affiliates of MR Sub or Boyd Sub be
required to guarantee or otherwise assume liability for Construction Financing;
provided, however, that Boyd agrees, if required by the providers of
Construction Financing, to guarantee to the providers of Construction Financing
that following Commencement of Construction of the Facility, Boyd will complete
the construction thereof, such guaranty to be in form and substance reasonably
satisfactory to Boyd and to the providers of Construction Financing.
Section 4.2 DESIGN, DEVELOPMENT AND CONSTRUCTION.
(a) MRI or its Affiliates shall have sole responsibility and authority with
respect to the Master Plan, and MRI agrees to use all commercially reasonable
efforts to attempt (or to cause its Affiliates to attempt) to obtain, as
expeditiously as possible, all required Master Plan Approvals for the Parcel and
the Property. MRI or its Affiliates, in consultation with Boyd Sub, shall
prepare and submit all applications for all necessary Master Plan Approvals and
shall thereafter prosecute such applications diligently to completion. MRI shall
keep Boyd Sub fully advised on a regular basis with respect to all aspects of
the Master Plan Approvals. Any material changes to the engineering, design
and/or composition of the Initial Master Plan Improvements shall be subject to
the reasonable approval of Boyd Sub. MRI and its Affiliates shall have
responsibility for and shall diligently complete or cause to be completed the
construction of all Master Plan Improvements and Government Improvements in such
a manner as to minimize any inconvenience in or disruption to the construction
or operation of the Facility upon the Property. MRI and its Affiliates shall
cause all Government Improvements and those components of the Initial Master
Plan Improvements more particularly described on EXHIBIT C-2 attached hereto and
incorporated herein by this reference to be completed on or before the date not
less than thirty (30) days before the scheduled opening of the Facility to the
public. The obligations of MRI or its Affiliates under this Section 4.2(a) shall
be expressly referenced in the Memorandum of Agreement to be recorded as more
particularly provided in Section 14.22 hereof.
(b) Upon conveyance of the Property to the Joint Venture, the Joint Venture
shall become obligated to pay or reimburse MRI or its Affiliates for (i) all
Government Improvement Costs and all Master Plan Improvement Costs relating to
the Initial Master Plan Improvements (except to the extent of any Excess Master
Plan Improvement Costs which are the sole obligation of MR Sub as more
particularly provided in Section 3.3(c) hereof) which are for the sole use or
benefit of the Property; and (ii) its Allocable Share of all Government
Improvement Costs, and of all Master Plan Improvement Costs relating to the
Initial Master Plan Improvements (except to the extent of any Excess Master Plan
Improvement Costs, which shall be the sole obligation of MR Sub as more
particularly provided herein), which are partially for the use of or partially
benefit the Property,
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whether such costs are incurred prior to or following conveyance of the Property
to the Joint Venture. Following conveyance of the Property to the Joint Venture,
the Joint Venture shall also become obligated to pay or reimburse MRI or its
Affiliates for the Allocable Share of all reasonable costs and expenses relating
to the operation, maintenance, repair and necessary replacements of all
Government Improvements, and of the Initial Master Plan Improvements, except to
the extent of any costs of operation, maintenance, repair or replacement that
are required due to the negligence or willful misconduct of MRI or its
Affiliates or their respective employees, agents or contractors, or to the
extent the cost of such operation, maintenance, repair or replacement is paid by
any third party, including without limitation, any insurance or bonding company
or any other person or business entity. Notwithstanding the foregoing, the Joint
Venture shall not have any responsibility for any Master Plan Improvement Costs
or for any costs or expenses relating to the operation or maintenance of any
Master Plan Improvements other than those relating to the Initial Master Plan
Improvements unless Boyd Sub agrees in writing to share in any such costs or
expenses.
(c) Except to the extent provided in Section 3.3(c) hereof, MR Sub shall be
responsible, at its sole cost and expense and not as an expense of the Joint
Venture, for any Excess Master Plan Improvement Costs. MR Sub shall pay such
amount as an additional capital contribution to the Joint Venture, as more
particularly provided in Section 3.3(c) hereof.
(d) Except as provided in Section 4.2(a) hereof and in Sections 4.4 and 9.2
hereof, the Managing Venturer shall have the responsibility and authority for
supervising the design, development and construction of the Facility. Managing
Venturer shall (i) prepare or cause to be prepared all necessary preliminary
plans and architectural, engineering, design and construction drawings and other
construction documents for the Facility, (ii) arrange for the Joint Venture to
obtain a construction contract from a reputable and qualified general contractor
or a construction management agreement from a reputable and qualified
construction management firm, (iii) engage on behalf of the Joint Venture other
reputable and qualified contractors or subcontractors, architects, engineers,
designers and other professionals for the design, development and construction
of the Facility, and (iv) in consultation with MR Sub, prepare, submit and
prosecute diligently to completion, applications for all necessary
pre-construction permits and approvals for the Facility, including without
limitation a CAFRA permit. Managing Venturer shall prosecute construction of the
Facility in such a manner as to minimize any inconvenience in or disruption to
the construction or operation of the Initial Master Plan Improvements. Prior to
conveyance of the Property to the Joint Venture, MR Sub agrees to execute any
and all documents, instruments or consents necessary to enable the Managing
Venturer to apply for and obtain any such permits and approvals for the
Facility. The Managing Venturer shall keep the other Venturer fully advised on a
regular basis with respect to all aspects of the design, permitting, development
and construction of the Facility.
(e) Without the consent of each Venturer, which consent shall not
unreasonably be withheld or delayed, Commencement of Construction of the
Facility shall not occur prior to the closing of the Construction Financing but
shall occur as promptly as practicable thereafter. If Commencement of
Construction of the Facility has not occurred by the first anniversary of the
earlier to occur of (i) the date of the Commencement of Construction of the MRI
Casino Project by MRI
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or its Affiliate, provided that such construction shall at all times thereafter
proceed with diligence and in a timely manner, or (ii) the date the Property is
contributed to the Joint Venture in accordance with and satisfaction of all of
the terms and conditions of this Agreement; subject, in both cases, to any
delays in the Commencement of Construction of the Facility attributable to
factors beyond Boyd Sub's reasonable control, including, without limitation, any
delays by MRI or MR Sub in obtaining the Master Plan Approvals, any delays in
the Joint Venture's obtaining any and all required consents, permits, licenses
and approvals necessary to construct the Facility (which delays are not caused
by any fault on the part of Boyd Sub), or the inability of the Joint Venture to
obtain Construction Financing upon the terms and conditions provided in Section
4.1 hereof (but which factors shall not include any lack of financial resources
that prevents Boyd Sub from contributing any amount required by Section 3.3
hereof), for all of which delays the foregoing time period shall be
automatically extended for a period of time equal to the corresponding delay,
either Venturer may, by written notice to the other Venturer delivered within 60
days after such date, elect to dissolve the Joint Venture as provided in Article
13 hereof. In the event of a dissolution of the Joint Venture pursuant to the
terms and conditions of this Section 4.2(e), which dissolution is not subject to
any dispute between the Venturers (or which dissolution, in the event of such
dispute, is finally determined by a judicial tribunal to have been authorized
pursuant to the express terms and conditions of this Section 4.2(e)), Boyd shall
pay MR Sub, from Boyd's funds and not from the assets of the Joint Venture, a
termination fee of $2,000,000.
(f) Boyd Sub shall diligently cause to be completed the construction of the
Facility in accordance with the Program, as the same may be modified pursuant to
the terms hereof, and shall cause the Facility to open to the public as
expeditiously as possible. The Venturers acknowledge that the Tri-Party
Agreement establishes a deadline for the completion of construction of the
Facility. Subject to a Force Majeure Event, Boyd Sub agrees to cause the
Facility to be completed on or before the date forty-one (41) months following
the Commencement of Construction of the Facility. The Venturers agree to
document the date of the actual Commencement of Construction of the Facility, in
writing, for purposes of this Section 4.2(f). The foregoing completion date
shall be subject to extension for delays caused by force majeure, which shall
include an act of God, sabotage, strike, labor dispute, lock-out or other
industrial disturbance not caused by any act or omission of Boyd Sub, act of the
public enemy, war, blockade, riots, lightening, fire, flood, explosion, order or
acts of military or civil authority, failure to timely receive necessary
governmental approvals, so long as such an event is not caused by an act or
omission of Boyd Sub, and any other cause, whether of the kind specifically
enumerated above or otherwise, which is not reasonably within the control of
Boyd Sub (a "Force Majeure Event"). In the event MR Sub shall elect to become
Managing Venturer pursuant to Section 9.3(a)(vi) as a result of Boyd Sub's
failure to complete construction of the Facility in the time specified in this
Section 4.2(f), MR Sub shall use all reasonable efforts to complete the
construction of the Facility on or before the deadline specified in the
Tri-Party Agreement. In addition, upon any such election by MR Sub, Boyd Sub and
MR Sub shall promptly determine, using reasonable, good faith best efforts, the
anticipated cost to complete the construction of the Facility, and MR Sub shall
be responsible for any and all Project Costs that exceed such estimated amount.
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(g) MRI shall have the responsibility and authority to negotiate a project
agreement with the South Jersey Building and Construction Trades Council on
behalf of all developers within the Parcel. Such negotiation shall be conducted
by a committee chaired by a representative of MR Sub and on which Boyd Sub shall
be represented by its most senior in-house construction official.
Section 4.3 GOVERNMENTAL APPROVALS.
(a) In addition to using all commercially reasonable efforts in order to
obtain all Master Plan Approvals, as more particularly provided in Section
4.2(a) hereof, MR Sub shall have the responsibility and authority, at its sole
cost and expense and not as an expense of the Joint Venture except as
hereinafter provided, for preparing and filing all documents, instruments and
applications necessary to obtain all permits or approvals of all governmental
and quasi-governmental agencies required in order to contribute the Property to
the Joint Venture. Notwithstanding the foregoing, costs and expenses associated
with obtaining governmental approvals shall be borne by the Joint Venture as
Project Costs to the extent that (i) changes in the design or location of the
Facility from the design and location of the Facility as reflected in the
Building Elevation Plans, or (ii) changes in the location of the Employee
Parking Lot from the location agreed upon pursuant to the terms of Section
4.5(a) hereof, cause an actual increase in such costs and expenses.
(b) MRI and MR Sub, in consultation with Boyd Sub, shall prepare and submit
all applications for the permits and approvals required pursuant to Section
4.3(a) hereof and shall thereafter prosecute such applications diligently to
completion. With regard to all Master Plan Approvals or other governmental
permits and approvals required to be obtained pursuant to Section 4.3(a) hereof,
MRI and MR Sub agree that they will, and will cause their respective consultants
and contractors, to (i) keep Boyd Sub informed on a regular and timely basis as
to the status of any and all such approvals and permits which have not been
received prior to the date hereof or which may require modification or
amendment, as permitted hereby, (ii) cooperate with Boyd Sub and give due
consideration to any recommendations and/or proposals made by Boyd Sub with
regard thereto, and (iii) otherwise not take or permit to be taken any actions
which might materially adversely affect the use and development of the Property
and the Facility.
(c) The Managing Venturer shall have the responsibility and authority for
preparing, filing and processing all applications to obtain all governmental
licenses, approvals, permits and entitlements on behalf of the Joint Venture
necessary or appropriate for the design, development, construction, ownership
and operation of the Facility, including without limitation a CAFRA permit,
building permits and licenses and approvals issued by the New Jersey Gaming
Authorities, but excluding all Master Plan Approvals or other governmental
approvals that are expressly set forth herein as the obligation of MRI or MR
Sub.
(d) The costs of preparing, filing and processing applications to obtain
licenses and approvals from the New Jersey Gaming Authorities, including without
limitation, investigation costs, shall be borne by the Venturer who (or whose
Affiliates) requires such licenses and approvals and shall not be an expense of
the Joint Venture. The Venturers shall at all times cooperate with each
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other and furnish all documents and other information necessary in order to
obtain such licenses, approvals, permits and entitlements. Notwithstanding the
foregoing, the costs of obtaining and maintaining a finding of suitability of
the Facility as an approved hotel and of obtaining and maintaining a valid
operation certificate for the Facility from the New Jersey Gaming Authorities
pursuant to Sections 83, 84e and 96, respectively, of the New Jersey Casino
Control Act, shall be an obligation of the Joint Venture.
(e) MRI and MR Sub and their respective Affiliates shall not enter into any
amendments to the Development Agreement, the Road Development Agreement or any
other agreement with any third party or governmental entity that would
materially adversely affect the development of the Property by the Joint Venture
without obtaining the prior written consent of Boyd Sub thereto, which consent
shall not unreasonably be withheld or delayed by Boyd Sub. If the Managing
Venturer determines that any amendments or modifications to the Development
Agreement or Road Development Agreement are reasonably necessary or advisable to
accommodate the development of the Facility, MRI and MR Sub agree that they will
take such steps as are reasonably necessary or advisable to attempt to obtain
such amendments or modifications, provided that such amendments or modifications
do not adversely affect the interests of MRI or MR Sub.
(f) MRI and MR Sub hereby represent and warrant to the Joint Venture that
MRI and MR Sub have met all of their respective funding obligations under the
Road Development Agreement by putting all required contributions into an escrow
account. MRI and MR Sub and their respective Affiliates agree (i) not to default
or take any action or fail to take any action that would cause or constitute a
default under the Road Development Agreement; (ii) not to terminate the Road
Development Agreement (except in the event of a default thereunder by any other
party thereto; provided, however, that prior to any termination as a result of
any such default, MRI and MR Sub shall diligently pursue any and all other
rights and remedies available at law or in equity including but not limited to
specific performance of the Road Development Agreement);and (iii) to guarantee
that they will continue to approve all appropriate funding requests for payments
to be made pursuant to the terms of the Road Development Agreement.
Section 4.4 ENVIRONMENTAL MATTERS.
(a) MRI shall have sole responsibility and authority with respect to and
shall, at its sole cost and expense and not as an expense of the Joint Venture
(except as provided in Section 3.2(d) hereof), use all commercially reasonable
efforts to cause to be diligently completed, the environmental assessment and
remediation of the Parcel (including the Property, to the extent that such
assessment and remediation relates to the Facility as it exists at the time of
initial public opening and not to any future expansions thereof or additions
thereto). The environmental assessment and remediation of the Parcel and the
Property shall be conducted in accordance with a remediation plan approved by
all applicable federal, state and local agencies. MRI shall also be responsible,
at its sole cost and expense and not as an expense of the Joint Venture, for
satisfying all commercially reasonable requirements of any provider or providers
of the Construction Financing and of any title insurance company that provides
either an ALTA Owner's Policy or a Lender's
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Policy of Title Insurance, relating to the environmental assessment or
remediation of the Parcel. Except for the foregoing costs and expenses, MRI have
no further liability to the Joint Venture or any Venturer with respect to or in
any way arising out of the environmental remediation of the Parcel and the
Property, and the Parties hereby release MRI and its Affiliates from and waive
any such liability, damages, costs and expenses.
(b) MRI shall be entitled to receive and retain any credits or other
financial assistance which may be made available by the State of New Jersey or
any other governmental entity as a result of expenditures for environmental
assessment and remediation of the Parcel, including without limitation, pursuant
to the Municipal Landfill Site Closure, Remediation and Redevelopment Act, L.
1999, c. 124, as the same may be amended from time to time. The Joint Venture
shall report, and shall cause all of its contractors, consultants and lessees to
report, to MRI, on a monthly basis, all sales and other taxes collected which
form the basis of any such credits or other financial assistance. To the extent
that, pursuant to any applicable law or regulation, any such credits or other
financial assistance become payable to the Joint Venture, the Joint Venture
shall promptly remit the full amount thereof to MRI. The environmental
assessment and remediation of the Parcel shall be conducted by one or more
licensed professional firms selected by MRI, and MRI will assign to the Joint
Venture any and all assignable rights (including rights to indemnification)
which MRI has under its contract or contracts with such firms. Promptly upon
completion of such remediation (other than ongoing methane venting and other
ongoing monitoring or remediation systems), MRI shall use all commercially
reasonable efforts to have delivered to the Joint Venture (i) all Environmental
Assessment Reports, including without limitation, all closure reports issued by
all applicable governmental or quasi-governmental agencies and authorities,
confirming their final approval of completion of such remediation work (other
than any such ongoing ventilation and monitoring requirements) (the "Closure
Reports"), (ii) a "no further action" letter issued by the NJDEP, and (iii) a
covenant not to sue issued by the NJDEP, pursuant to which the NJDEP shall agree
to waive its rights to institute any and all civil suits and claims against the
Venturers or the Joint Venture pursuant to any applicable environmental laws or
regulations for cleanup and removal costs or natural resource damages concerning
contamination discharge at the Property prior to date that MR Sub conveys title
to the Property to the Joint Venture.
(c) As and when requested by MRI, Boyd Sub shall furnish MRI as promptly as
practicable with current information concerning the proposed Facility, including
without limitation the footprint, storm drainage system, slab elevations at the
bottom floor relative to existing grade, utility lines, hard scape areas and
site grading, necessary for MRI's consultants to prepare all permit applications
and construction documents that may be required to secure approval for MRI's
contractor(s) to remediate the Property. Boyd Sub will fully cooperate with
MRI's consultants and contractors(s) to ensure that the remediation of the
Property can be accomplished in the most efficient and cost-effective manner
possible. Notwithstanding anything contained herein, MRI acknowledges that
portions of the remediation associated with the Facility (for example, by way of
illustration and not by way of limitation, the installation of methane venting
systems and the excavation of hazardous materials) can be more efficiently
accomplished by the Joint Venture's contractors as part of the construction of
the Facility. MRI agrees to cooperate, in good faith, with
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Managing Venturer in determining which aspects of the remediation can be more
efficiently accomplished by the Joint Venture's contractors. Any of the Joint
Venture's contractors so selected to perform certain aspects of the
environmental remediation shall perform their work in accordance with the rules
and regulations of the NJDEP. If approved by MRI in its reasonable discretion,
the Joint Venture shall directly engage its contractors, pursuant to fixed-price
contracts approved by MRI, to perform those aspects of the remediation that MRI
and Managing Venturer so determine can be more efficiently accomplished by the
Joint Venture's contractors, and MRI shall, except as provided in Section
3.2(d), promptly reimburse the Joint Venture for the costs and expenses of such
contractors that are attributable to environmental remediation. All plans
relating to the Facility shall be consistent with the landfill closure and
remediation plan approved by the State of New Jersey.
(d) The Joint Venture will maintain the methane venting and other
environmental remediation systems associated with the Facility in accordance
with all approved Closure Reports and all applicable laws, regulations and
procedures (and acknowledges that the Property will be subject to recorded deed
restrictions imposed by the NJDEP intended to ensure compliance with such
procedures) and will indemnify and hold harmless MRI and its Affiliates from and
against any and all damages, claims, liabilities and expenses resulting from the
Joint Venture's failure to do so.
Section 4.5 EMPLOYEE PARKING; OPTION TO PURCHASE PORTION OF TRACT II.
(a) MR Sub and its successors and assigns shall make available to the Joint
Venture, the portion of Tract II depicted on EXHIBIT G attached hereto and
incorporated herein by this reference for the Joint Venture to construct up to
one thousand four hundred (1,400) surface parking spaces for use by employees of
the Joint Venture and of its lessees (the "Employee Parking Lot"). MR Sub and
its successors and assigns shall lease the land for the Employee Parking Lot to
the Joint Venture pursuant to the Employee Parking Lease, which shall be a
ground lease in form and substance reasonably acceptable to MR Sub and Managing
Venturer, but which shall provide (i) that it shall be for a term of ninety-nine
(99) years, provided that MR Sub shall have the right to terminate the Employee
Parking Lease upon any uncured material breach thereof by the Joint Venture,
upon completion and opening of an employee parking structure upon the terms and
provisions of Section 4.5(b) hereof in which the Joint Venture is afforded a
minimum of 1,400 parking spaces, or upon any sale of Tract II in accordance with
the terms and provisions of Section 4.5(c) hereof; (ii) that commencing upon the
date that the Employee Parking Lot is completed and is available for use by the
Joint Venture, rent shall accrue at the rate of Thirty-Five Dollars ($35) per
space per month, with such amount increasing on the fifth anniversary of the
rent commencement date and every five (5) years thereafter, based upon increases
in the United States Department of Labor, Bureau of Labor Statistics Consumer
Price Index for All Urban Consumers, United States Average, Subgroup "All Items"
(1982-84 = 100) during such five (5)-year period; provided, however, that the
Joint Venture shall be entitled to a credit against such rent equal to the
amount of all hard and soft costs and expenses of designing, permitting,
engineering, developing, constructing, equipping and opening the Employee
Parking Lot, and the Joint Venture shall not have to pay any rent to MR Sub
under the Employee Parking Lease until such time as the Joint Venture has fully
utilized such rent credit; (iii) that MRI, MR Sub and their Affiliates and
successors and assigns shall provide the Joint
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Venture with unimpeded access (except temporarily during times of emergency or
required repairs) to the Employee Parking Lot at all times during the term of
the Employee Parking Lease; (iv) that the Joint Venture shall maintain the
Employee Parking Lot and shall be responsible for all liability insurance
thereon and for the cost of all utilities relating thereto; (v) that the Joint
Venture shall be responsible for any and all hard and soft costs and expenses of
designing, permitting, engineering, developing, constructing, equipping and
opening the Employee Parking Lot; (vi) that the design of the Employee Parking
Lot shall be subject to the prior approval of MR Sub and its successors and
assigns, which approval shall not unreasonably be withheld or delayed; (vii)
that MR Sub shall have the right, in connection with the construction of any
employee parking structure upon Tract II, to relocate the Employee Parking Lot
upon no less than one hundred-eighty (180) days' prior written notice to the
Joint Venture, provided that (a) the amount of all hard and soft costs and
expenses of designing, permitting, engineering, developing, constructing,
equipping and opening any such relocated Employee Parking Lot incurred pursuant
to a budget that shall be agreed upon between Boyd Sub and MR Sub, in their
reasonable discretion, on or before the construction of the relocated Employee
Parking Lot, shall be paid by the Joint Venture and shall be included in the
computation of the cost of the employee parking structure pursuant to Section
4.5(b) hereof; (b) the Joint Venture shall receive a credit for the foregoing
costs and expenses as more particularly provided in Section 4.5(b) hereof; and
(c) all such costs and expenses shall not be deemed to be Project Costs for
purposes of Section 3.3(b) hereof; (viii) that the Joint Venture shall not be
responsible for any environmental remediation costs associated with the Employee
Parking Lot except to the extent of conditions caused by the Joint Venture or
its agents, employees or contractors; and (ix) MR Sub shall be solely
responsible for all real property taxes and assessments relating to the Employee
Parking Lot.
(b) MR Sub or its Affiliates may, but shall not be required to, construct
an employee parking structure on a portion of Tract II contiguous to the
Property. In such event, subject to the terms of Section 4.5(c) hereof, MR Sub
shall provide a minimum of 1,400 spaces in such parking structure to the Joint
Venture pursuant to either a joint ownership structure or pursuant to a 99-year
lease, either of which shall be in form and substance satisfactory to Boyd Sub
and MR Sub, in their reasonable discretion. In any event, such ownership or
lease arrangement shall provide that the Joint Venture (i) shall pay its pro
rata share of all hard and soft costs and expenses of designing, permitting,
engineering, developing, constructing, equipping, opening and operating such
employee parking structure, including but not limited to property taxes,
utilities and insurance, and (ii) shall be entitled to a credit against the
foregoing costs equal to (x) the amount of all hard and soft costs and expenses
of designing, permitting, engineering, developing, constructing, equipping and
opening any such relocated Employee Parking Lot, and (y) any and all incremental
operating costs incurred by the Joint Venture during such time as the Employee
Parking Lot shall cease to be contiguous to the Property, including but not
limited to all costs of employee shuttle buses necessitated thereby, as
reasonably determined by Managing Venturer. The Joint Venture's pro rata share
of the foregoing costs and expenses shall be determined based upon the number of
employee parking spaces to be utilized by the Joint Venture in comparison to the
total number of parking spaces contained in such parking structure. None of the
costs and expenses incurred by the Joint Venture pursuant to this Section 4.5(b)
shall be deemed to be Project Costs for purposes of Section 3.3(b) hereof.
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(c) In the event (i) MR Sub and Boyd Sub shall mutually determine that they
cannot, after reasonable good faith negotiations, agree upon the terms of a
lease or joint ownership arrangement for any employee parking structure to be
constructed in accordance with the terms of Section 4.5(b) hereof; (ii) MR Sub
or its Affiliates shall enter into a bona fide agreement with an independent
third party to sell any portion of Tract II that includes all or a substantial
portion of the Employee Parking Lot; or (iii) MR Sub or its Affiliates shall
elect to develop all or a substantial portion of the Employee Parking Lot for
other purposes associated with the development of the MRI Casino Project; then
MR Sub shall have the right to terminate the Employee Parking Lease effective on
the date fourteen (14) months following the date that MR Sub shall give written
notice to Managing Venturer of MR Sub's election to terminate the Employee
Parking Lease. In the event MR Sub shall give the Joint Venture any such
termination notice, the Joint Venture shall have an option (the "Option") to
purchase the portion of Tract II comprised of approximately 2.14 acres that is
depicted on EXHIBIT G attached hereto (the "Option Parcel") for construction of
an employee parking structure sufficient to contain no less than 1,400 parking
spaces. Promptly following conveyance of the Property to the Joint Venture, MR
Sub shall obtain a legal description of the Option Parcel sufficient for
recordation of a memorandum of option in the office of the County Clerk of the
County, and MR Sub agrees to execute and cause to be recorded a memorandum of
option, in form and substance reasonably satisfactory to Boyd Sub and MR Sub to
reflect the existence of the Option. Within sixty (60) days following the date
of execution of this Agreement, the parties agree to negotiate and execute a
formal option agreement (the "Option Agreement"), which Option Agreement shall
be in form and substance reasonably satisfactory to Boyd Sub and MR Sub, but
which shall provide (1) that the Option shall be exercisable by the Joint
Venture for a period of thirty (30) days following the Joint Venture's receipt
of written notice from MR Sub or its Affiliates that it intends to terminate the
Employee Parking Lease pursuant to the terms of this Section 4.5(c), (2) that
the purchase price to be paid by the Joint Venture for the Option Parcel shall
be equal to the fair market value of the Option Parcel, as determined by an
appraiser mutually acceptable to MR Sub and Boyd Sub at the time the Option is
exercised; (3) that the Option Parcel shall be delivered free and clear of all
liens and encumbrances other than any liens and encumbrances currently set forth
in the Transnation Title Insurance Company Title Commitment number 98-14779,
dated effective as of December 27, 1999 (except for Exception No. 23, relating
to the Reverter, which shall be modified pursuant to the Ordinance) and any
other non-monetary liens and encumbrances that do not materially adversely
interfere with the intended use of the Option Parcel; and (4) that the close of
escrow on the Option Parcel shall occur on the date thirty (30) days following
the Joint Venture's exercise of the Option. In the event the Joint Venture shall
exercise the Option, if requested by Managing Venturer, MR Sub shall negotiate,
in good faith, with the Joint Venture, to attempt to make available another
location on Tract II or other property then owned by MR Sub or its Affiliates in
the vicinity of Tract II, if any such property shall then be available in the
reasonable determination of MR Sub, in order to relocate all or a portion of the
Employee Parking Lot until the effective termination date of the Employee
Parking Lease. All costs and expenses associated with any such relocation of the
Employee Parking Lot shall be paid by the Joint Venture. Notwithstanding
anything contained in this Section 4.5(c), in the event of any termination
notice given pursuant to clause (ii) of this Section 4.5(c), if Managing
Venturer shall have elected not to exercise the Option, and if MR Sub shall have
failed to complete such third party sale for any reason on or before the
effective termination date of the Employee
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Parking Lease, then the Employee Parking Lease shall not terminate pursuant to
such termination notice, and the Option shall be reinstated upon the same terms
and conditions as set forth in this Section 4.5(c) and in the Option Agreement.
In addition, in the event of any termination notice given pursuant to clause
(iii) of this Section 4.5(c), if Managing Venturer shall have elected not to
exercise the Option, and if MR Sub shall have failed to cause the Commencement
of Construction of the MRI Casino Project for any reason on or before the
effective termination date of the Employee Parking Lease, then notwithstanding
any such termination notice, the Employee Parking Lease shall continue, on a
month-to-month basis, until such time as MR Sub or its Affiliates shall cause
the Commencement of Construction of the MRI Casino Project to occur; provided,
however, if following any such termination notice, Managing Venturer shall have
elected not to exercise the Option, and if at any time before the effective
termination date of the Employee Parking Lease, MR Sub shall notify the Joint
Venture that it has elected not to construct the MRI Casino Project, then the
Employee Parking Lease shall not terminate pursuant to such termination notice,
and the Option shall be reinstated upon the same terms and conditions as set
forth in this Section 4.5(c) and in the Option Agreement. None of the costs and
expenses incurred by the Joint Venture pursuant to this Section 4.5(c) shall be
deemed to be Project Costs for purposes of Section 3.3(b) hereof.
Section 4.6 CONSTRUCTION STAGING AND PARKING. Upon the terms and
conditions set forth in this Section 4.6, MR Sub and its Affiliates shall make
available to the Joint Venture those portions of Tract II depicted on EXHIBIT H
attached hereto and incorporated herein by this reference for use in the staging
of construction of the Facility and for parking of construction vehicles and
equipment during the construction of the Facility. MR Sub shall have the right
to relocate the construction staging areas one (1) time, upon no less than one
hundred-twenty (120) days' advance notice to the Managing Venturer. The Joint
Venture shall not pay any rent for use of the construction staging areas, but
except as hereinafter provided, the Joint Venture shall be responsible, at its
sole cost and expense, for all costs relating to use of the construction staging
areas, including but not limited to all costs and expenses of permits and
approvals, grading the areas, setting up construction trailers on the site,
bringing temporary power and other necessary utilities to the site, and all
costs of restoring the sites to their existing condition upon completion of
construction of the Facility. Notwithstanding the foregoing, in no event shall
the Joint Venture be responsible for any environmental remediation costs
associated with the construction staging areas except to the extent of
conditions caused by the use of the construction staging areas by the Joint
Venture or its contractors. The Joint Venture shall also be responsible for all
utility charges associated with the use of the construction staging areas and
for all costs of insurance associated with the Joint Venture's use thereof. The
Joint Venture agrees to indemnify MR Sub and its Affiliates for, from and
against any and all claims, losses, damages and liabilities, including
reasonable attorneys' fees, which shall be reimbursed as incurred, arising out
of or relating to the use by the Joint Venture of such construction staging
areas.
Section 4.7 JOBS AND BUSINESS OPPORTUNITIES PROGRAM. Upon execution of
this Agreement, and until such time as MRI or its Affiliates or any purchaser of
Tract II from MRI or its Affiliates first obtains a CAFRA permit for the MRI
Casino Project, the Joint Venture agrees to undertake the obligations of MRI and
its Affiliates contained in Section 9 of the Development Agreement,
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captioned "Jobs and Business Opportunities Program." During such time, Managing
Venturer shall develop a Jobs and Business Opportunities Program and take such
actions relating thereto as shall be necessary, in the Managing Venturer's
reasonable discretion, to commence to satisfy such requirements and conditions.
Without limiting the foregoing, Managing Venturer shall commit the Joint Venture
to spend not less than Two Million Dollars ($2,000,000) to create and implement
the Jobs and Business Opportunities Program, all of which shall be deemed to be
a Project Cost, subject, however, to the terms and provisions of Sections
3.3(b)(ii) and 4.1 hereof.
Section 4.8 CRDA FUNDS. The Joint Venture hereby agrees to authorize MRI
and its Affiliates to attempt to obtain the approval of CRDA to use the Joint
Venture's CRDA reinvestment obligation to reimburse MRI or its Affiliates for
its costs of constructing the improvements which may be made by MRI or its
Affiliates pursuant to Section 8.1.1 and pursuant to Exhibit M of the
Development Agreement, consisting primarily of the construction of improvements
to the existing bulkheading along one side of Penrose Canal, and the
construction of additional bulkhead improvements to the opposite side of Penrose
Canal and both sides of the Venice Canal area (collectively, the "Bulkhead
Project"). Specifically, the Joint Venture agrees to use the Joint Venture's
CRDA reinvestment obligation to make a direct investment to reimburse MRI or its
Affiliates for the construction of the foregoing improvements provided (1) that
the CRDA makes a determination that the Bulkhead Project is eligible to be
funded by the Joint Venture from investments designated for housing projects in
Atlantic City under N.J.S.A. 5:12-144.1.f, and (2) that either CRDA agrees to
act as general contractor therefor or MRI or its Affiliates shall be responsible
for directly contracting for such improvements. The Joint Venture agrees to
cooperate, at no cost or expense to the Joint Venture, with MRI and its
Affiliates, in attempting to obtain the foregoing approvals. Notwithstanding
anything contained herein, subject only to the right of reimbursement set forth
in this Section 4.8, MRI or its Affiliates shall be solely responsible for
funding any and all hard and soft costs and expenses of designing, permitting,
engineering, developing, constructing, equipping and opening the Bulkhead
Project regardless of whether or not the CRDA ultimately makes a determination
that the Bulkhead Project is eligible to be funded by the Joint Venture from
investments designated for housing projects in Atlantic City under N.J.S.A.
5:12-144.1.f. MRI agrees to indemnify the Joint Venture for, from and against
any and all costs, expenses, claims, losses, damages and liabilities, including
reasonable attorneys' fees, which shall be reimbursed as incurred, arising out
of or relating to the designing, permitting, engineering, developing,
constructing, equipping and opening the Bulkhead Project and relating to the use
by the Joint Venture of its CRDA funds for that purpose.
ARTICLE 5
ALLOCATION OF PROFITS AND LOSSES
Section 5.1 PROFITS AND LOSSES. The terms "Profits" and "Losses" shall
mean, for each fiscal year, an amount equal to the Joint Venture's federal
taxable income or loss for such period
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determined in accordance with Section 703(a) of the Internal Revenue Code of
1986, as amended (the "Code"), but disregarding Section 703(a)(1) of the Code,
and with the following adjustments:
(a) income exempt from federal income tax shall be added to such taxable
income or loss;
(b) expenditures not deductible in computing the Joint Venture's taxable
income and that are not properly chargeable as capital expenditures shall be
subtracted from such taxable income or loss;
(c) in the event that the tax book value of any Joint Venture asset is
adjusted pursuant to Section 7.2(a) or (b) hereof, the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such asset
in computing Profits and Losses;
(d) gain or loss from any disposition of a Joint Venture asset with respect
to which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the tax book value and not the adjusted federal income
tax basis of the asset disposed of; and
(e) if the tax book value of a Joint Venture asset has been adjusted
pursuant to Section 7.2 hereof, in lieu of federal income tax depreciation, tax
book depreciation (which shall be in the same ratio to tax book value at the
beginning of the taxable period as federal income tax depreciation is to
adjusted federal income tax basis at the beginning of such period) shall be
taken into account in computing Profits and Losses.
Section 5.2 ALLOCATIONS. Profits or Losses, including without limitation
all items of income, gain, profit, loss, cost, expense, deduction or credit
earned or incurred by the Joint Venture, shall be allocated and credited to the
Venturers, and reflected in the Capital Accounts of the Venturers, in accordance
with each Venturer's Interest. Notwithstanding the foregoing, the following
items shall be specially allocated in the following manner:
(a) Solely for the purpose of federal, state and local income taxes, and
without affecting or in any way being taken into account in computing a
Venturer's Capital Account or share of Profits, Losses or other items or
distributions pursuant to any provision of this Agreement:
(i) items of income, gain, loss and deduction with respect to any
property contributed to the Joint Venture by any Venturer shall be allocated
among the Venturers in accordance with Section 704(c) of the Code so as to take
account of any variation between the adjusted basis of the property to the Joint
Venture and the fair market value of the property (as determined by the
Venturers) at the time of the contribution; and
(ii) in the event that the tax book value of a Joint Venture asset is
adjusted pursuant to Section 7.2(a) hereof, subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take account of any
difference between the adjusted basis of such asset
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for federal income tax purposes and its book value in the same manner as under
Section 704(c) of the Code.
(b) To the extent the adjusted federal income tax basis of a Joint Venture
asset is adjusted pursuant to Section 734(b) or 743(b) of the Code, and such
adjustment is required by Treasury Regulation ss. 1.704-1 (b)(2)(iv)(m) to be
taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be allocated to the Venturers
in a manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Treasury Regulation.
(c) Except as provided in Treasury Regulation ss. 1.704-2(f)(2), (3) and
(4) (pertaining to conversion or repayment of nonrecourse liabilities), in the
event there is a net decrease in partnership minimum gain (within the meaning of
Treasury Regulation ss. 1 .704-2(d)) for a taxable year of the Joint Venture,
each Venturer must be allocated items of partnership income and gain for that
year equal to that Venturer's share of the net decrease in partnership minimum
gain (within the meaning of Treasury Regulation ss. 1.704-2(g)(2)). Allocations
made pursuant to this Section 5.2(c) shall consist of gains recognized from the
disposition of Joint Venture property subject to one or more nonrecourse
liabilities of the Joint Venture and then, if necessary, shall consist of a pro
rata portion of the Joint Venture's other items of income and gain for that
taxable year.
(d) Items of loss or deductions attributable to a nonrecourse liability to
a Venturer incurred pursuant to Section 3.7 hereof or to a nonrecourse liability
with respect to which a Venturer bears the economic risk of loss (within the
meaning of Treasury Regulation ss. 1.752-2) shall be allocated to such Venturer.
(e) If the additional capital contributions of Boyd Sub pursuant to the
first sentence of Section 3.3(a) hereof and pursuant to Section 3.3(b) hereof
exceed the fair market value of the sum of the Property and the other tangible
and intangible property referred to in Section 3.2(c) hereof at the time of the
conveyance of the Property to the Joint Venture as specified in Section 3.2(c)
hereof, upon liquidation of the Joint Venture in accordance with Article 13
hereof MR Sub shall be allocated items of income and gain, including gross
income if necessary, equal to the excess of such additional capital
contributions over such fair market value.
(f) If MR Sub makes additional capital contributions pursuant to Section
3.3(c) hereof, upon liquidation of the Joint Venture in accordance with Article
13 hereof Boyd Sub shall be allocated items of income and gain, including gross
income if necessary, equal to the amount of such additional capital
contributions.
Section 5.3 TRANSFERS OF JOINT VENTURE INTERESTS. If any Interest in the
Joint Venture is Transferred in accordance with Section 11.2(a) hereof, all
items of Profits or Losses, including without limitation all items of income,
gain, profit, loss, deduction, cost, expense or credit and all other items of
the Joint Venture with respect to the Interest so Transferred, shall be
allocated
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between the transferor and the transferee in accordance with Section 706 of the
Code using such conventions as may be selected by the Venturers.
ARTICLE 6
NON-LIQUIDATING DISTRIBUTIONS
Section 6.1 DISTRIBUTABLE CASH. The term "Distributable Cash" with respect
to any period shall mean an amount equal to the total cash revenues and receipts
of the Joint Venture from any source (including capital contributions, loans and
refinances) for such period, less the sum of (i) all operating expenses paid or
incurred by the Joint Venture, including current principal and interest payments
on the Construction Financing and other Joint Venture indebtedness, but
excluding any distributions pursuant to Section 6.2, (ii) all capital
expenditures made by the Joint Venture and (iii) the amount of any increase
during such period in, or amounts established during such period for, reasonable
reserves for anticipated costs, expenses, liabilities and obligations of the
Joint Venture, working capital needs of the Joint Venture or other appropriate
Joint Venture purposes, as reasonably determined by the Managing Venturer in
consultation with the other Venturer.
Section 6.2 DISTRIBUTION OF DISTRIBUTABLE CASH. Subject to any covenants
contained in the documentation governing the Construction Financing or any other
agreements to which the Joint Venture is a party, commencing with the first full
fiscal quarter following the fiscal quarter during which the Facility opens to
the public, Distributable Cash for each fiscal quarter shall be distributed
within 45 days after the end of such quarter in the following order of priority:
(a) first, to the Venturers to repay amounts, if any, lent by them to the
Joint Venture pursuant to Section 3.7 hereof, any such payments to be made on a
pro rata basis according to the then outstanding balances of such loans, with
such payments applied first against accrued interest; and
(b) the balance, if any, to the Venturers, pro rata in accordance with
their respective Interests.
ARTICLE 7
ACCOUNTING AND RECORDS; CAPITAL RESERVE AND CAPITAL BUDGETS
Section 7.1 BOOKS AND RECORDS. The Joint Venture shall keep at its
principal office separate books of account for the Joint Venture which shall
show a true and accurate record of all costs and expenses incurred, all charges
made, all credits made and received and all income derived in connection with
the operation of the Joint Venture business in accordance with generally
accepted accounting principles consistently applied.
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Each Venturer shall, at its sole expense, have the right, at any time
without notice to the other, to examine, copy and audit the Joint Venture's
books and records during normal business hours.
Section 7.2 TAX BOOK VALUES. The tax book value of any Joint Venture asset
shall be such asset's adjusted basis for federal income tax purposes, except as
follows:
(a) The tax book value of Joint Venture assets shall be adjusted to equal
their respective gross fair market values, as determined by the Venturers, as of
the following times:
(i) upon the acquisition of an additional Interest in the Joint
Venture by any new or existing Venturer in exchange for more than a DE MINIMIS
capital contribution; and
(ii) upon the liquidation of the Joint Venture within the meaning of
Treasury Regulation Section 1.704-1 (b)(2)(ii)(g).
(b) The tax book value of a Joint Venture asset that is distributed to any
Venturer shall be the fair market value of such asset at the time of
distribution, as determined by the Venturers.
(c) The tax book value of Joint Venture assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Section 734(b) or 743(b) of the Code, but only to the extent such
adjustments are taken into account in determining Capital Accounts pursuant to
Treasury Regulation Section 1.704-l (b)(2)(iv)(m).
(d) If the tax book value of a Joint Venture asset has been adjusted
pursuant to this Section 7.2, such tax book value shall thereafter be adjusted
by the amount of tax book depreciation taken into account with respect to such
asset for the purpose of determining Profits and Losses.
Section 7.3 REPORTS .
(a) The Managing Venturer shall cause to be prepared and distributed to
each Venturer the following reports as promptly as practicable, but in any event
within 75 days after the end of each fiscal year of the Joint Venture:
(i) a balance sheet as of the end of the fiscal year and statements of
income, Venturers' equity and cash flows for the year then ended, each of which
shall be audited by a firm of independent certified public accountants (the
"Accountants") selected by the Venturers in accordance with Section 9.2(k)
hereof;
(ii) a general description of the activities of the Joint Venture
during the period covered by the report; and
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(iii) a report of any material contracts or transactions between the
Joint Venture and the Venturers or any of their Affiliates, including fees or
compensation paid by the Joint Venture and the products supplied and services
performed by the Venturers or any such Affiliate for such fees or compensation.
(b) As promptly as practicable, but in any event within thirty (30) days
after the end of each of the first three quarters of each fiscal year, the
Managing Venturer shall cause to be prepared and distributed to each Venturer a
quarterly report containing a balance sheet and statement of income for the
period covered by the report, each of which may be unaudited but which shall be
certified by the chief financial officer of the Joint Venture as fairly
presenting the financial position and results of operations of the Joint Venture
during the period covered by the report and as having been prepared in
accordance with generally accepted accounting principles applied on a basis
substantially consistent with that of the Joint Venture's audited financial
statements. The report shall also contain a description of any material event
regarding the business of the Joint Venture during the period covered by the
report.
(c) As promptly as practicable, but in any event within twenty-five (25)
days after the end of each calendar month, Managing Venturer shall cause to be
prepared and distributed to each Venturer an unaudited monthly income statement
for the monthly period covered thereby, together with substantially similar
supporting documentation and management information as is provided by each of
Boyd's other operating properties to Boyd's management.
(d) As promptly as practicable, but in any event within ninety (90) days
after the end of each fiscal year, the Managing Venturer shall cause to be
prepared and distributed to each Venturer all information necessary for the
preparation of such Venturer's federal and state income tax returns, including a
statement showing such Venturer's share of income, gains, losses, deductions and
credits for such year for federal and state income tax purposes and the amount
of any distributions made to or for the account of such Venturer pursuant to
this Agreement.
Section 7.4 TAX RETURNS. The Managing Venturer, at the expense of the
Joint Venture, shall prepare or cause the Accountants to prepare all income and
other tax returns, on an accrual basis, of the Joint Venture and cause the same
to be filed in a timely manner. The Managing Venturer shall furnish to each
Venturer a copy of each such return as soon as it has been filed, together with
any schedules or other information which each Venturer may require in connection
with such Venturer's own tax affairs. Each of the Venturers shall, in its
respective income tax return and other statements filed with the Internal
Revenue Service or other taxing authority, report taxable income in accordance
with the provisions of this Agreement.
Section 7.5 TAX MATTERS PARTNER. The Managing Venturer is hereby
designated as the "tax matters partner" of the Joint Venture as defined in
Section 6231 of the Code and, to the extent authorized or permitted under
applicable law, the Managing Venturer shall represent the Joint Venture in
connection with all examinations of Joint Venture affairs by taxing authorities,
including, without limitation, resulting administrative and judicial
proceedings.
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Section 7.6 FISCAL YEAR. The fiscal year of the Joint Venture shall be the
calendar year. As used in this Agreement, a fiscal year shall include any
partial fiscal year at the beginning or end of the term of the Joint Venture.
Section 7.7 BANK ACCOUNTS. The Managing Venturer shall be responsible for
causing one or more accounts to be maintained in one or more banks, which
accounts shall be used for the payment of expenses incurred in connection with
the business of the Joint Venture, and in which shall be deposited any and all
cash receipts and for establishment of the Capital Expenditure Reserve Account.
Such accounts shall be maintained in a bank or banks in New Jersey to the extent
required by the New Jersey Casino Control Act. All such amounts shall be and
remain the property of the Joint Venture and shall be received, held and
disbursed by the Joint Venture for the purposes specified in this Agreement.
There shall not be deposited in any of such accounts any funds other than funds
belonging to the Joint Venture, and no other funds shall be commingled with such
funds.
Section 7.8 TAX ELECTIONS.
(a) At the request of any Venturer, the Managing Venturer, on behalf of the
Joint Venture, shall elect to adjust the basis of the assets of the Joint
Venture for federal income tax purposes in accordance with Section 754 of the
Code in the event of a distribution of Joint Venture property as described in
Section 734 of the Code or a transfer by any Venturer of its Interest in the
Joint Venture as described in Section 743 of the Code.
(b) The Managing Venturer, on behalf of the Joint Venture, shall from time
to time make such other tax elections as it deems necessary or desirable to
carry out the business of the Joint Venture or the purposes of this Agreement.
Section 7.9 TAX WITHHOLDING. Except as otherwise provided in this Section
7.9, if the Joint Venture incurs an obligation to withhold taxes with respect to
any Venturer, any amount withheld or paid as withholding taxes by the Joint
Venture with respect to such Venturer shall be treated for all purposes of this
Agreement as if it had been distributed to such Venturer. The Venturers may make
such elections with respect to such withholding obligations, including without
limitation an election pursuant to Section 1446 of the Code, as they reasonably
determine. If the withholding obligation exceeds the amount that would have been
distributed to such Venturer determined without regard to the provisions of this
Section 7.9, such excess amount shall be treated for all purposes of this
Agreement as if it had been transferred to such Venturer by the Joint Venture as
an interest-free loan. If the Joint Venture incurs any liability as a result of
a failure to withhold with respect to any Venturer, such liability will be borne
by such Venturer and charged to such Venturer's Capital Account. Amounts treated
as loaned to any Venturer pursuant to this Section 7.9 shall be repaid by such
Venturer to the Joint Venture as promptly as practicable. The Joint Venture
shall offset such amounts against any amounts that would otherwise be
distributed to such Venturer.
Section 7.10 CAPITAL EXPENDITURE RESERVE ACCOUNT. Upon opening of the
Facility, Managing Venturer shall create a reserve for capital expenditures (the
"Capital Expenditure Reserve
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Account") into which Managing Venturer shall pay monthly amounts equal to five
percent (5%) of the Joint Venture's earnings before interest, depreciation and
amortization accrued during the preceding calendar month, as calculated by
Managing Venturer pursuant to generally accepted principles of accounting in the
gaming industry. The Capital Expenditure Reserve Account shall be used
exclusively for the replacement of capital equipment and for improvements to,
renovations of or enhancements to the Facility in accordance with Managing
Venturer's business judgement, above and beyond any capital expenditure items
contained in the annual Capital Expenditure Budget approved by the Venturers as
set forth in Section 7.11 hereof. The funds for the Capital Expenditures Reserve
Account shall be deposited into a bank account in accordance with the terms of
Section 7.7 hereof. The signature of an authorized representative of Managing
Venturer shall be the only signature required to make withdrawals (by check or
otherwise) from such account, provided that the monies withdrawn are to be used
only for the purposes set forth herein.
Section 7.11 CAPITAL EXPENDITURE BUDGET. Managing Venturer shall prepare a
capital expenditure budget (a "Capital Expenditure Budget") and submit such
Capital Expenditure Budget to the Non-Managing Venturer at least ninety (90)
days prior to the public opening of the Facility. Thereafter, Managing Venturer
shall prepare an annual Capital Expenditure Budget, which shall be submitted by
Managing Venturer to the Non-Managing Venturer no later than thirty (30) days
prior to the commencement of each fiscal year of the Joint Venture. Each Capital
Expenditure Budget prepared by Managing Venturer pursuant hereto shall be
subject to approval or disapproval by an authorized representative of the
Non-Managing Venturer within twenty (20) days of submission to the Non-Managing
Venturer for approval; provided, however, that such approval shall not
unreasonably be withheld. In the event an authorized representative of the
Non-Managing Venturer shall fail to approve or disapprove any Capital
Expenditure Budget, in writing, within the foregoing twenty (20)-day time
period, then such Capital Expenditure Budget shall be deemed to be approved by
the Non-Managing Venturer. In the event the Non-Managing Venturer reasonably
disapproves any item contained in any Capital Expenditure Budget, then the
Venturers agree to work, in good faith, to revise the Capital Expenditure Budget
as expeditiously as possible; provided, however, that any non-disputed items
contained in any such Capital Expenditure Budget shall be deemed to be approved.
Notwithstanding anything contained herein, the Venturers recognize that mutually
agreeable adjustments may be made to previously approved Capital Expenditure
Budgets from time to time during any fiscal year to reflect the impact of
unforeseen circumstances, financial constraints, or other events. Managing
Venturer agrees to keep the Non-Managing Venturer informed and to obtain the
Non-Managing Venturer's approval regarding any capital projects or capital
expenditures that exceed any sums in the Capital Expenditure Reserve Account and
that are reasonably anticipated to cause a material change to any Capital
Expenditure Budget previously approved by the Non-Managing Venturer.
Notwithstanding the foregoing, nothing contained in this Section 7.11 shall be
deemed to limit Managing Venturer's ability to expend any funds contained in the
Capital Expenditure Reserve Account as provided in Section 7.10 hereof.
Section 7.12 OWNERSHIP LEDGER. The Joint Venture shall maintain a ledger
in its principal place of business in New Jersey which shall at all times
reflect the current ownership of Interests and
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shall be available for inspection by the New Jersey Gaming Authorities and their
authorized agents at all reasonable times, without notice.
ARTICLE 8
CONFIDENTIALITY; INTELLECTUAL PROPERTY
Section 8.1 CONFIDENTIAL TREATMENT OF INFORMATION. Each of the Venturers
agrees, and shall cause each of its Affiliates (i) not to disclose any material
information concerning the Joint Venture or its business to the press or the
general public without the approval of the other Venturer, such approval not to
be unreasonably withheld or delayed and (ii) to retain in strict confidence any
proprietary confidential information and trade secrets of the other Venturer,
whether disclosed prior to or after the date hereof, and not to use or disclose
to persons other than the Venturer or its Affiliates ("third parties"), and to
use its best efforts to cause its employees, agents and consultants not to use
or disclose to third parties, such proprietary confidential information or trade
secrets without the approval of the other Venturer, unless in either case it can
be established by the disclosing party that such information:
(a) at the time of disclosure is part of the public domain and readily
accessible to the public or such third party;
(b) at the time of disclosure is already known by the receiving party
otherwise than pursuant to a breach of an obligation of confidentiality;
(c) is required by applicable law, regulation or court order to be
disclosed; or
(d) is required by any vendor, supplier or consultant in order to carry out
the business of the Joint Venture, provided that the disclosing Venturer shall
obtain the written agreement and obligation of such third party, in a form
reasonably satisfactory to the other Venturer, prior to disclosing such
information, that all of the provisions of this Article 8 shall apply with equal
effect to such third party. The Joint Venture shall be a third-party beneficiary
of any such written agreement.
Section 8.2 INTELLECTUAL PROPERTY. The Joint Venture, Boyd and Boyd Sub,
and their respective Affiliates, shall not have any right to use any trademark,
service mark, trade name, logo, copyright or other intellectual property owned
by MRI or MR Sub, or any of their respective Affiliates, in connection with the
Facility or the business of the Joint Venture. Except as expressly provided
herein, the Joint Venture, MRI and MR Sub, and their respective Affiliates,
shall not have the right to use any trademark, service mark, trade name, logo,
copyright or other intellectual property owned by Boyd or Boyd Sub, or any of
their respective Affiliates, in connection with the Facility or the business of
the Joint Venture. Notwithstanding the foregoing, Boyd will enter into a license
agreement (in form and substance reasonably satisfactory to Boyd) with the Joint
Venture
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providing for the use of such intellectual property owned by Boyd and to be used
in connection with the management or operation of the Facility (the "Boyd
License Agreement"), without compensation to Boyd, as long as Boyd Sub or
another Affiliate of Boyd shall be Managing Venturer. In the event that Boyd Sub
or another Affiliate of Boyd shall cease for any reason to be a Venturer or to
be the Managing Venturer, the Boyd License Agreement shall provide for a
reasonable transition period to enable the Joint Venture to replace Boyd's
intellectual property being used by the Joint Venture, without causing any
disruption in the operations of the Facility. The Managing Venturer, on behalf
and at the expense of the Joint Venture, shall prepare, file and prosecute all
applications which it reasonably deems necessary or appropriate to protect and
preserve any intellectual property rights acquired or developed by the Joint
Venture. Upon any liquidation of the Joint Venture, the Boyd License Agreement
shall terminate (if not previously terminated pursuant to the terms thereof),
and each Venturer shall be entitled to the full and complete right to use any
and all intellectual property owned or developed by the Joint Venture (other
than any intellectual property covered by the Boyd License Agreement, including
without limitation, any alterations or modifications of the intellectual
property covered thereby which may have been developed by the Joint Venture,
which items shall be the exclusive property of Boyd Sub or its Affiliates)
during the term hereof, including without limitation, any customer or marketing
databases developed by the Joint Venture.
ARTICLE 9
MANAGEMENT
Section 9.1 MANAGEMENT BY MANAGING VENTURER. Subject to Section 9.3
hereof, Boyd Sub shall be and hereby is appointed the Managing Venturer of the
Joint Venture and shall serve in such capacity without fee or other
compensation. Except as otherwise provided in this Agreement, the Managing
Venturer shall have, and hereby assumes, sole responsibility and authority for
the prudent day-to-day management and operation of the Joint Venture and the
Facility, and in furtherance thereof may exercise the following specific rights
and powers without approval of the other Venturer:
(a) oversee and manage the day-to-day operations of the Facility, the Joint
Venture business and such other activities as are customary in connection with
such operations;
(b) except as otherwise provided in Sections 4.2, 4.4 and 9.2 hereof,
direct and oversee the architectural, engineering, design, construction,
administrative, legal and other work necessary for the design, development,
construction, completion, financing, opening, operation and improvement of the
Facility and other Joint Venture business;
(c) prepare appropriate budgets, including but not limited to the Capital
Expenditure Budget, and prepare construction schedules for the development,
construction, opening, repair, improvement and operation of the Facility and
other Joint Venture property;
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(d) except as otherwise provided in Sections 4.2, 4.4 and 9.2 hereof,
negotiate with and enter into contracts for the design, development,
construction, completion, opening, operation and improvement of the Facility,
including but not limited to negotiating and entering into contracts and
easement agreements necessary for the central power plant to be constructed upon
or adjacent to the Property (which shall not include the right to construct such
power plant on Tract II), and negotiating and entering into contracts, leases or
agreements relating to the retail, restaurant and spa operations to be located
at the Facility, and to supervise all work relating to the foregoing;
(e) implement decisions made by the Venturers;
(f) use its best efforts to operate, on behalf of and for the sole benefit
of the Joint Venture, the Facility and such other business and activities as are
customary in connection with such operation;
(g) preserve, maintain and distribute Joint Venture funds in accordance
with the provisions of this Agreement;
(h) contract on behalf of the Joint Venture for the services of independent
contractors, including attorneys, accountants and financial advisers;
(i) establish, maintain and supervise the deposit of funds and securities
of the Joint Venture with federally insured banking institutions, and the
Managing Venturer is authorized to sign on behalf of the Joint Venture on all
accounts with such banking institutions;
(j) acquire by purchase, lease or otherwise such personal property as may
be necessary, convenient or incidental to the accomplishment of the purposes of
the Joint Venture;
(k) procure on behalf of the Joint Venture such general liability,
casualty, comprehensive, workers' compensation, fidelity, errors and omissions,
business interruption and other insurance as is adequate to protect the Joint
Venture;
(l) execute on behalf of the Joint Venture any and all agreements,
documents, certificates and instruments necessary or convenient in connection
with the management and operation of the Facility or in connection with managing
the affairs of the Joint Venture; and
(m) employ or retain, or enter into any transaction or contract with, any
Venturer or any officer, employee or Affiliate of any Venturer, upon the terms
and conditions provided in Section 2.4 hereof.
Section 9.2 EXCLUSIVE POWERS OF THE VENTURERS. In addition to those
matters which, pursuant to other provisions of this Agreement, require approval
of each Venturer, the following matters shall require the approval of each
Venturer:
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(a) except as otherwise provided in this Agreement, the admission of an
additional Venturer;
(b) the acquisition of any real property in addition to the Property
(excluding, however, the leasing of the Employee Parking Lot and the Employee
Parking Structure and further excluding any acquisition of the Option Parcel
pursuant to the terms of Section 4.5(c) hereof and of the Option Agreement);
(c) any transaction which is unrelated to the purposes of the Joint Venture
or makes it unlawful or impossible to carry out the purposes of the Joint
Venture;
(d) except with respect to the Construction Financing or as otherwise
provided in this Agreement, the incurrence of any indebtedness, except for
liabilities which are normal and customary in the gaming business, including but
not limited to the incurrence of trade payables in the ordinary course of
business;
(e) the refinancing or early retirement of any Joint Venture indebtedness;
(f) except in connection with the Construction Financing, the sale or
hypothecation of all or any significant part of the property or assets of the
Joint Venture, other than in the ordinary course of business, except for
subordination, non-disturbance and attornment agreements which may be necessary
in connection with the construction and operation of the central power plant or
the leasing of the retail, restaurant and spa operations at the Facility;
(g) capital expenditures in excess of any funds contained in the Capital
Expenditure Reserve Account other than (i) any capital expenditures included in
a Capital Expenditure Budget prepared by the Managing Venturer and approved by
the Non-Managing Venturer as provided herein or (ii) any capital expenditures
that are Project Costs to be incurred in accordance with the terms hereof.
(h) except as otherwise provided in Article 11 hereof, the Transfer of all
or any portion of a Venturer's Interest in the Joint Venture;
(i) the compromise of any claim owned by or against the Joint Venture in
excess of $500,000 or submission to arbitration of any dispute or controversy
involving the Joint Venture, other than in the ordinary course of business;
(j) the cancellation or lapse of any material insurance policy, which
approval shall not be unreasonably withheld or delayed;
(k) the selection and retention of independent certified public accountants
to audit the Joint Venture's financial statements and prepare its tax returns;
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(l) except as otherwise provided in Section 4.2 hereof, the design of the
exterior of the Facility (the current design of which, as reflected on EXHIBIT I
attached hereto and incorporated herein by this reference, has been approved by
MR Sub), including the design and location of all landscaping, lighting and
signage for the Facility;
(m) commencing upon the opening of the MRI Casino Project (if but only if
the same shall be owned and operated by MRI or any of its Affiliates), the
establishment of hotel room rate structures for the Facility; provided, however,
in any event, Managing Venturer may change hotel room rates without the approval
of the Non-Managing Venturer until such time as the Non-Managing Venturer shall
have notified the Managing Venturer in writing that the Non-Managing Venturer's
approval shall thereafter be required;
(n) any expenditure by the Joint Venture in excess of $50,000 other than
expenditures authorized pursuant to Sections 9.2(a)-(m) hereof or expenditures
in the ordinary course of business;
(o) except as otherwise provided in this Agreement, the dissolution or
liquidation of the Joint Venture, or a merger, consolidation or recapitalization
involving the Joint Venture;
(p) any change in the number of hotel rooms below 2,000 rooms, and any
change to any other element of the Program causing a decrease in any such
element of more than ten percent (10%) of the number for such element set forth
on EXHIBIT D attached hereto; and
(q) the sale or other disposition of any Special Revenue Bonds owned by the
Joint Venture.
Any matter which requires the approval of each Venturer may be approved by
an instrument signed by an authorized representative of each Venturer. The
current authorized representatives of Boyd Sub are William S. Boyd, Donald D.
Snyder, Robert L. Boughner and Ellis Landau, and the current authorized
representatives of MR Sub are J. Terrence Lanni, John T. Redmond, Robert H.
Baldwin and Gary N. Jacobs. Either Venturer may designate different or
additional authorized representatives by written notice to the other.
Section 9.3 REPLACEMENT OF MANAGING VENTURER.
(a) Except as otherwise provided in this Agreement, the Managing Venturer
may only be changed with the approval of each Venturer. In the event that (i)
the Joint Venture is in material default with respect to any of its debt
obligations, and such material default shall be continuing after notice of such
default is received by the Joint Venture and after one-half (1/2) of the
applicable cure period has expired, (ii) an Event of Default on the part of Boyd
Sub has occurred and is continuing under this Agreement, (iii) Boyd Sub or
another direct or indirect wholly owned subsidiary of Boyd ceases for any reason
(including a Permitted Transfer) to own at least a 50% Interest in the Joint
Venture; (iv) prior to the public opening of the Facility, none of William S.
Boyd, Donald D. Snyder, Robert L. Boughner, Ellis Landau or Keith E. Smith is
serving as Chief Operating Officer or a more
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senior executive officer of Boyd), (v) prior to the end of the three-year period
commencing upon the public opening of the Facility, William S. Boyd, or his
heirs or legatees collectively, cease to own beneficially at least 15% of the
outstanding common stock or to be the largest beneficial stockholder of Boyd, or
(vi) Boyd Sub shall fail to cause completion of construction of the Facility on
or before the time period specified in Section 4.2(f), subject to any Force
Majeure Event(s) specified therein, MR Sub may, at any time during the
continuation of any event specified in (i) through (vi) above, elect by written
notice delivered to Boyd Sub to become the Managing Venturer, and MR Sub shall
thereupon become the Managing Venturer and Boyd Sub shall become the
Non-Managing Venturer. In the event of such election by MR Sub as a result of an
event specified in clause (i), (ii) or (iii) of this Section 9.3(a), subject to
the last sentence of this Section 9.3(a), the Joint Venture shall pay MR Sub, on
a quarterly basis, a management fee equal to 3.5% of gross revenues (before
deduction of promotional allowances) of the Joint Venture. In the event of such
election by MR Sub as a result of an event specified in either clause (iv) or
clause (vi) of this Section 9.3(a), subject to the last sentence of this Section
9.3(a), the Joint Venture shall pay MR Sub a one (1)-time fee equal to 3.5% of
gross revenues (before deduction of promotional allowances) earned by the Joint
Venture during the one hundred eighty (180) day period following the public
opening of the Facility. In the event MR Sub becomes the Managing Venturer
pursuant to clause (v) of this Section 9.3(a), no management fee shall be
payable to MR Sub. Upon the occurrence of any of the events specified in Section
13.1(h) hereof with respect to the Managing Venturer, if the business of the
Joint Venture is continued, the remaining Venturer shall become the Managing
Venturer. Notwithstanding anything contained in this Section 9.3(a), any
management fee payable to MR Sub pursuant to this Section 9.3(a) shall be
subordinated to the repayment of principal and interest on the Construction
Financing.
(b) The Managing Venturer shall not have the right to resign as Managing
Venturer, and any such purported resignation shall constitute an Event of
Default under this Agreement which shall entitle the other Venturer to exercise
all rights and remedies available under this Agreement, at law or m equity.
Section 9.4 MEETINGS OF THE VENTURERS: TIME AND PLACE. The Venturers shall
meet with each other on a periodic basis, at least quarterly. At such meetings,
the Managing Venturer's representatives shall report on the performance and
condition of the Joint Venture, give progress reports on negotiation of the
Construction Financing, the status of governmental permits and approvals for the
Facility, capital projects including construction of the Facility, material
contracts entered into, material litigation and other matters material to the
operation of the Joint Venture. Meetings shall be held at such time and place
within the County as the Managing Venturer shall determine or by telephone,
provided that each Venturer's representatives may simultaneously participate and
hear each other Venturer's representatives. The Venturers may take action
without a meeting if the action taken is reduced to writing (either prior to or
thereafter) and signed on behalf of each Venturer. Any Venturer may call for a
meeting of the Venturers at any time by giving at least 48 hours' prior written
notice to the other Venturer.
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Section 9.5 OFFICERS. The Managing Venturer shall appoint the chief
executive officer, chief financial officer and other officers of the Joint
Venture, who shall serve at the direction and pleasure of the Managing Venturer.
Appointment and replacement of the chief executive officer (or equivalent
officer) of the Joint Venture shall require the approval of the Non-Managing
Venturer, which approval shall not be unreasonably withheld or delayed. The
officers shall perform those functions of the Managing Venturer and such other
duties and responsibilities as the Managing Venturer may assign to them. No
officer or employee of either Venturer or its Affiliates who does not devote
substantially full time to the Joint Venture shall receive any salary or other
compensation from the Joint Venture. The Managing Venturer may from time to time
appoint employees of the Managing Venturer or its Affiliates to devote
substantially full time to the Joint Venture and retain such employees on its
payroll. In such event, the Joint Venture shall reimburse the Managing Venturer
or its Affiliate for the out-of-pocket compensation (including salary, bonus and
the direct cost of health and retirement benefit plans) paid to such employee
for performing services to the Joint Venture on a full-time basis. The terms of
any benefits offered to such an employee shall be within the discretion of the
Managing Venturer or its Affiliate. Each officer of the Joint Venture shall be
indemnified by the Joint Venture from and against any and all claims, losses,
damages and liabilities, including reasonable attorneys' fees which shall be
reimbursed as incurred, arising out of or relating to any act or failure to act
performed or omitted by him; provided, however, that such indemnity shall be
payable only if such officer acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Joint Venture.
Any indemnity under this Section 9.5 shall be paid from, and shall be limited to
the extent of, Joint Venture assets, and no Venturer shall have any personal
liability on account thereof. Each officer of the Joint Venture shall be fully
protected with respect to any action or omission taken or omitted by him in good
faith if such action or omission is taken or omitted in reliance upon and in
accordance with the opinion or advice of competent legal counsel, accountants,
financial advisers or other professionals as to matters within their
professional competence.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 MR SUB. MRI and MR Sub, as applicable, hereby represent and
warrant, which representations and warranties shall survive the execution of
this Agreement (and which representations and warranties shall be true and
accurate in all material respects at the time that MR Sub conveys the Property
to the Joint Venture pursuant to the terms hereof), that:
(a) MR Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has the requisite
corporate power and authority to enter into and carry out the terms of this
Agreement;
(b) all of the outstanding capital stock of MR Sub is owned directly or
indirectly by MRI;
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(c) all corporate action required to be taken by MR Sub to enter into and
carry out the terms of this Agreement has been taken and, except as otherwise
provided or contemplated in this Agreement, no further approval of any
governmental agency, court or other body is necessary in order to permit MR Sub
to enter into and carry out the terms of this Agreement;
(d) this Agreement has been duly executed and delivered by MR Sub and
constitutes the legal, valid and binding obligation of MR Sub, enforceable in
accordance with its terms (subject to applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, equitable
principles and judicial discretion);
(e) to the best of its knowledge, neither the execution and delivery of
this Agreement, nor the performance of its obligations hereunder, has resulted
or will result in any violation of, or default under, the charter or bylaws of
MR Sub or any indenture, trust agreement, mortgage or other agreement or any
permit, judgment, decree or order to which MR Sub is a party or by which it is
bound, including but not limited to, that certain Agreement and Plan of Merger,
dated as of March 6, 2000, among MRI, MGM, and a wholly-owned subsidiary of MGM,
and there is no default and no event or omission has occurred which, with the
passage of time or the giving of notice or both, would constitute a default on
the part of MR Sub under this Agreement;
(f) to the best of its knowledge, there is no action, proceeding or
investigation, pending or threatened, which questions the validity or
enforceability of this Agreement as to MR Sub;
(g) no representation, warranty or covenant of MR Sub in this Agreement, or
in any document or certificate furnished or to be furnished to Boyd Sub pursuant
hereto, contains or will contain any untrue statement of material fact or omits
or will omit to state a material fact necessary to make the statements or facts
contained therein not misleading; all such representations, warranties or
statements of MR Sub are based, to the best of MR Sub's knowledge, upon accurate
and complete information as of the time of their making, and there have been, to
the best of MR Sub's knowledge, no material changes in such information
subsequent thereto;
(h) MR Sub has no reason to believe that it or its Affiliates will not
receive any gaming license, approval or permit necessary for the consummation of
the transactions contemplated by this Agreement;
(i) MR Sub has provided Boyd Sub with complete and accurate copies of the
Development Agreement and the Road Development Agreement, including any
amendments thereto. Other than as set forth in or referred to in the Development
Agreement and the Road Development Agreement, to the best of MR Sub's and MRI's
knowledge, there are no unrecorded leases, arrangements, agreements,
understandings, options, contracts, or rights of first refusal affecting or
relating in any material way to the use and development of the Facility and/or
the Property. No material default or breach (nor event which, with the giving of
notice or the passage of time, or both, would constitute a material default or
breach) exists under the Development Agreement or the Road Development Agreement
on the part of MRI or MR Sub or their respective Affiliates, or to the best
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of the knowledge of MRI or MR Sub, any other party to such agreements. There is
no information or document not disclosed or provided by MRI or MR Sub to Boyd
Sub, which to the best of the actual knowledge of MRI or MR Sub, could
reasonably be expected to materially adversely affect the use and development of
the Facility and/or the Property.
(j) MRI and MR Sub have complied, in all material respects, with all laws,
ordinances, rules, regulations, requirements and orders of federal, state, or
local governments and/or their agencies with respect to the Property of which
they have actual knowledge.
(k) To the best of the knowledge of MRI and MR Sub, there are no historical
or archeological materials or artifacts of any kind or any Indian ruins of any
kind located on the Property;
(l) To the best of the knowledge of MRI and MR Sub, the Property is not
located within any water conservation, irrigation, weed or insect abatement, or
other similar district, or any special improvement district. The Property is
located within a soil conservation district and a flood hazard area;
(m) MRI and MR Sub do not have any liability for any taxes, or any interest
or penalty in respect thereof, of any nature that may be assessed against the
Joint Venture or that are or may become a lien against the Property, except real
property taxes not yet due and payable;
(n) Except as set forth in the Parcel Deed or in the Development Agreement,
there are no conditions imposed by any governmental or quasi-governmental agency
or instrumentality, which, if not satisfied, waived or otherwise eliminated,
could result in a reversion or other defeasance of title to the Property or the
Parcel;
(o) MRI and MR Sub have provided Boyd Sub with copies of any and all
reports, studies, investigations and other similar information obtained by MRI
and/or MR Sub which could reasonably be expected to materially adversely affect
the use and development of the Property; and
(p) The information furnished by MRI and MR Sub to Boyd Sub or Boyd in
accordance with the provisions of this Agreement is true and accurate in all
material respects, and if, at any time hereafter, there is any material change
in any of such information, MRI or MR Sub shall promptly notify Boyd Sub of such
material change.
Section 10.2 BOYD SUB. Boyd Sub hereby represents and warrants, which
representations and warranties shall survive the execution of this Agreement
(and which representations and warranties shall be true and accurate in all
material respects at the time that MR Sub conveys the Property to the Joint
Venture pursuant to the terms hereof), that:
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(a) Boyd Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has the requisite
corporate power and authority to enter into and carry out the terms of this
Agreement;
(b) all of the outstanding capital stock of Boyd Sub is owned directly or
indirectly by Boyd;
(c) all corporate action required to be taken by Boyd Sub to enter into and
carry out the terms of this Agreement has been taken and, except as otherwise
provided or contemplated in this Agreement, no further approval of any
governmental agency, court or other body is necessary in order to permit Boyd
Sub to enter into and carry out the terms of this Agreement;
(d) this Agreement has been duly executed and delivered by Boyd Sub and
constitutes the legal, valid and binding obligation of Boyd Sub, enforceable in
accordance with its terms (subject to applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, equitable
principles and judicial discretion);
(e) to the best of its knowledge, neither the execution and delivery of
this Agreement, nor the performance of its obligations hereunder, has resulted
or will result in any violation of, or default under, the charter or bylaws of
Boyd Sub or any indenture, trust agreement, mortgage or other agreement or any
permit, judgment, decree or order to which Boyd Sub is a party or by which it is
bound, and there is no default and no event or omission has occurred which, with
the passage of time or the giving of notice or both, would constitute a default
on the part of Boyd Sub under this Agreement;
(f) to the best of its knowledge, there is no action, proceeding or
investigation, pending or threatened, which questions the validity or
enforceability of this Agreement as to Boyd Sub;
(g) No representation, warranty or covenant of Boyd Sub in this Agreement,
or in any document or certificate furnished or to be furnished to MR Sub
pursuant hereto, contains or will contain any untrue statement of material fact
or omits or will omit to state a material fact necessary to make the statements
or facts contained therein not misleading; all such representations, warranties
or statements of Boyd Sub are based, to the best of Boyd Sub's knowledge, upon
accurate and complete information as of the time of their making, and there have
been, to the best of Boyd Sub's knowledge, no material changes in such
information subsequent thereto; and
(h) Boyd Sub has no reason to believe that it or its Affiliates will not
receive any gaming license, approval or permit necessary for the consummation of
the transactions contemplated by this Agreement.
Section 10.3 BROKERS. The parties each represent to the other that they
have not retained any broker, finder or agent in connection with the
transactions contemplated hereby or the negotiation thereof. Each party shall
indemnify and hold the other party harmless from and against
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all losses, claims, damages and liabilities, including reasonable attorneys'
fees, arising out of or relating to any claim of brokerage or other commissions
relative to this Agreement or the transactions contemplated hereby insofar as
any such claim arises by reason of services alleged to have been rendered to or
at the request of the indemnifying party.
ARTICLE 11
TRANSFER OF INTERESTS
Section 11.1 RESTRICTIONS ON TRANSFERS. Except as otherwise expressly
provided in this Agreement, no Venturer shall, without the approval of each of
the Venturers, sell, transfer, assign, pledge, encumber or otherwise dispose of
(each a "Transfer") all or any portion of its Interest in the Joint Venture or
any rights therein. Any purported Transfer in violation of the preceding
sentence shall be null and void and of no force or effect. Each Venturer
acknowledges the reasonableness of the restrictions on Transfers imposed by this
Agreement in view of the Joint Venture purposes and the relationship of the
Venturers. The Venturers acknowledge and agree that they are relying on the
experience, reputation and financial condition of each other in entering into
this Agreement, that the nature of the relationship between the Venturers is
personal and that the amount of damages that would be sustained by the Venturers
in the event of a breach of the restrictions on Transfers imposed by this
Agreement would not be readily ascertainable. Accordingly, upon any breach of
this Article 11 by any Venturer, the other Venturer (in addition to all rights
and remedies it may have under this Agreement, at law or in equity) shall be
entitled to a decree or order from a court of competent jurisdiction
specifically enforcing the restrictions on Transfers contained herein. Each
Venturer further agrees to hold the Joint Venture and the other Venturer
(including their respective directors, officers, employees, Affiliates,
successors and assigns) harmless for, from and against any and all claims,
losses, damages, liabilities and costs, including without limitation, reasonable
attorneys' fees (which shall be reimbursed as incurred), and liabilities for
income taxes and costs of enforcing this indemnity, incurred by any of such
indemnified parties as a result of a Transfer or purported Transfer in violation
of this Agreement.
Section 11.2 PERMITTED TRANSFERS.
(a) A Venturer shall be entitled to make the following Transfers of its
Interest (each a "Permitted Transfer") without the approval of the other
Venturer: (i) a pledge or encumbrance of its Interest in favor of one or more
commercial banks or other institutional lenders to secure a loan provided by
such lender(s) to such Venturer or its Affiliates, provided that a foreclosure
upon such pledge or encumbrance shall not be a Permitted Transfer; (ii) a
Transfer of its Interest to an Affiliate of such Venturer, subject to the
provisions of Section 11.3; (iii) a Transfer of its Interest to MR Sub or Boyd
Sub; or (iv) a Transfer of its Interest pursuant to the right of first refusal
provisions of Section 11.4.
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(b) Except with respect to Permitted Transfers described in clause (ii),
(iii) or (iv) of Section 11.2(a), a transferee of an Interest in the Joint
Venture shall be admitted as a Venturer only upon the agreement of each
Venturer. The rights of a transferee who is not admitted as a Venturer shall be
limited to the right to receive allocations and distributions from the Joint
Venture with respect to the Interest transferred, as provided in this Agreement.
A transferee that is not admitted as a Venturer shall not be a Venturer with
respect to such Interest, and without limiting the foregoing, shall not have the
right to inspect the Joint Venture's books or assets, grant or withhold
approvals, act for or bind the Joint Venture or otherwise participate in its
operations.
(c) The Venturers intend that a Permitted Transfer shall not cause the
dissolution of the Joint Venture under the Act. However, if a court of competent
jurisdiction determines that a dissolution has occurred, the Venturers shall
continue to hold the Joint Venture's assets and operate its business in joint
venture form pursuant to this Agreement as if no such dissolution had occurred.
(d) In the event of a Permitted Transfer, the Venturer making the Transfer
shall notify the other Venturer of the Transfer and shall furnish the Joint
Venture with the transferee's taxpayer identification number and sufficient
information to determine the transferee's Interest and tax basis in the Joint
Venture and any other information reasonably necessary to permit the Joint
Venture to file all required tax returns. All Transfers shall be by instrument
in form and substance reasonably satisfactory to counsel for the Joint Venture
and shall contain an agreement of the transferee to accept the Transfer and to
accept and adopt all of the applicable provisions of this Agreement. The
Venturer making a Permitted Transfer shall execute, acknowledge and deliver all
such documents and instruments, in form and substance reasonably satisfactory to
counsel for the Joint Venture, as may be necessary or desirable to effectuate
such Transfer, and shall pay all costs and expenses incurred by the Joint
Venture in connection with such Transfer.
(e) Notwithstanding anything to the contrary in this Agreement, no Venturer
shall be permitted to Transfer its Interest or any portion thereof to the extent
such Transfer would be in violation of applicable law (including without
limitation securities laws and regulations and the New Jersey Casino Control
Act) or would cause a default under any agreement or instrument to which the
Joint Venture is a party or by which it is bound. Without limiting the
foregoing, at such time as the Joint Venture is a casino licensee or an
applicant for a casino license, no Transfer of Interest or any portion thereof
shall be valid or effective unless such transfer is first approved by the New
Jersey Casino Control Commission as provided in N.J.S.A. 5:12-82(d)(7).
Section 11.3 LIMITATION ON OWNERSHIP OF VENTURERS.
(a) Unless otherwise agreed by Boyd Sub, all of the outstanding capital
stock of MR Sub (or any Affiliate of MR Sub to whom MR Sub Transfers its
Interest pursuant to the terms of Section 11.2(a)(ii) hereof) shall continue to
be owned directly or indirectly by MRI or MGM.
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(b) Unless otherwise agreed by MR Sub, all of the outstanding capital stock
of Boyd Sub (or any Affiliate of Boyd Sub to whom Boyd Sub Transfers its
Interest pursuant to the terms of Section 11.2(a)(ii) hereof) shall continue to
be owned directly or indirectly by Boyd.
Section 11.4 RIGHT OF FIRST REFUSAL.
(a) Commencing on the first anniversary of the opening of the Facility to
the public, either Venturer shall have the right to Transfer all or any part of
its Interest in the Joint Venture to a person who is not an Affiliate of any
Venturer (the "Third Party"), in consideration for cash and/or a promissory
note, provided that (i) the Venturer wishing to Transfer its Interest (the
"Initiating Venturer") has not caused the Joint Venture to be in default under
the terms of the Construction Financing, (ii) the Initiating Venturer is not in
default under any of the provisions of this Agreement, and (iii) the Initiating
Venturer first offers the Interest (or portion thereof) to the other Venturer as
provided in this Section 11.4.
(b) Prior to becoming legally obligated to Transfer its Interest or any
portion thereof (the "Relevant Interest") to a Third Party pursuant to the terms
of this Section 11.4, the Initiating Venturer shall deliver written notice (the
"Offering Notice") to the other Venturer (the "Responding Venturer") offering to
Transfer the Relevant Interest to the Responding Venturer on the same terms and
for the same price as the Initiating Venturer proposes to Transfer to the Third
Party. The Offering Notice shall specify the name of the Third Party, the
Relevant Interest proposed to be Transferred and the material terms on which the
Transfer is to be consummated, including without limitation, the Transfer price,
terms of payment and the time and place of the closing. The Responding Venturer
shall thereupon have the right and option to purchase from the Initiating
Venturer all ( but not less than all) of the Relevant Interest at the purchase
price set forth in the Offering Notice by delivering written notice (an
"Acceptance Notice") to the Initiating Venturer within 30 days after delivery of
the Offering Notice. If the Responding Venturer delivers an Acceptance Notice,
it shall be legally obligated to purchase the Relevant Interest on the same
terms as specified in the Offering Notice at a closing to be held as specified
in the Offering Notice (but in no event earlier than 60 days after delivery of
the Offering Notice) or such other time as may be directed by the New Jersey
Gaming Authorities. At the closing, the Initiating Venturer shall deliver to the
Responding Venturer good title to the Relevant Interest, free and clear of any
liens, claims or other encumbrances.
(c) If the Responding Venturer does not elect to purchase the Relevant
Interest, it may, within the 30-day period referred to above, deliver to the
Initiating Venturer written notice (the "Disapproval Notice") stating that it
does not elect to purchase the Relevant Interest and that it disapproves of the
proposed Transfer to the Third Party. In the event that the Responding Venturer
delivers the Disapproval Notice within such 30-day period, and the Disapproval
Notice sets forth the existence of specific facts which reasonably demonstrate
that the Third Party would not be suitable as a Venturer due to its background,
reputation or lack of financial capability, the Initiating Venturer may not
consummate the proposed Transfer. If the Responding Venturer does not deliver
the Acceptance Notice or the Disapproval Notice within the 30-day period
referred to above, or if the Disapproval Notice does not satisfy the foregoing
requirements, the Initiating Venturer may, within
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90 days after the expiration of such 30-day period, consummate the proposed
Transfer to the Third Party on the terms set forth in the Offering Notice or on
substantially similar terms. If the Initiating Venturer does not consummate the
proposed Transfer within such 90-day period, the proposed Transfer may not be
effected unless the Initiating Venturer again complies with the provisions of
this Section 11.4.
Section 11.5 BUY-OUT ON DEFAULT. At any time during the continuance of an
Event of Default under this Agreement, the non-defaulting Venturer, without
limiting any other rights or remedies it may have under this Agreement, at law
or in equity, may, upon written notice (the "Appraisal Notice") delivered to the
Defaulting Venturer, elect to purchase all (but not less than all) of the
Interest of the Defaulting Venturer for cash in an amount equal to 80% of the
Appraised Value of the Defaulting Venturer's Interest. The "Appraised Value"
shall be an amount equal to the Defaulting Venturer's Interest multiplied by the
fair market value of the Joint Venture, which shall represent the amount that a
single purchaser unrelated to any Venturer would reasonably be expected to pay
for the Joint Venture business and assets as a going concern, subject to all
existing indebtedness, liens and encumbrances, in a single cash purchase, taking
into account the current condition, use and net income of the Facility. If the
Venturers are unable to mutually agree upon the Appraised Value within 30 days
after delivery of the Appraisal Notice, each Venturer shall select a reputable
MAI appraiser to determine the Appraised Value. The two appraisers shall furnish
the Venturers with their written appraisals within 45 days of their selection,
setting forth their determinations of the Appraised Value as of the date of the
Appraisal Notice. If the higher of such appraisals does not exceed the lower of
such appraisals by more than 10%, the Appraised Value shall be the average of
the two appraisals. If the higher of such appraisals exceeds the lower of such
appraisals by more than 10%, the two appraisers shall, within 20 days, mutually
select a third reputable MAI appraiser. The third appraiser shall furnish the
Venturers with its written appraisal within 45 days of its selection, and the
Appraised Value shall be the average of the three appraisals. The cost of the
appraisals shall be borne equally by the Defaulting Venturer and the
non-defaulting Venturer. The determination of the Appraised Value in accordance
with this Section 11.5 shall constitute a final and non-appealable arbitration.
The closing of the purchase and sale of the Interest of the Defaulting Venturer
pursuant to this Section 11.5 shall occur not later than 90 days after
determination of the Appraised Value, or such other time as may be directed by
the New Jersey Gaming Authorities. At the closing, the Defaulting Venturer shall
deliver to the non-defaulting Venturer good title to its Interest, free and
clear of any liens, claims or other encumbrances.
ARTICLE 12
EVENTS OF DEFAULT
Section 12.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder on the part of the
Venturer to which such event relates (the "Defaulting Venturer") if within 30
days following delivery to the Defaulting Venturer of written notice of such
default by the other Venturer, or within 10 days if the default is due solely to
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the non-payment of monies, the Defaulting Venturer fails to pay such monies, or
in the case of non-monetary defaults, fails to commence substantial efforts to
cure such default or thereafter fails within a reasonable time to prosecute to
completion with diligence the curing of such default; provided, however, that
the occurrence of any of the events described in Section 12.1 (a) or (b) shall
constitute an Event of Default immediately upon such occurrence without any
requirement of notice or the passage of time except as specifically set forth
therein:
(a) the violation by a Venturer of any of the restrictions set forth in
Article 11 of this Agreement upon the right of such Venturer to Transfer its
Interest;
(b) (i) the institution by a Venturer of proceedings under any federal or
state law for the relief of debtors wherein such Venturer is seeking relief as
debtor, (ii) a general assignment by a Venturer for the benefit of creditors,
(iii) the institution by a Venturer of a proceeding for relief under the Federal
Bankruptcy Code, (iv) the institution against a Venturer of a proceeding under
the Federal Bankruptcy Code, which proceeding is not dismissed, stayed or
discharged within 60 days after the filing thereof or, if stayed, which stay is
thereafter lifted without a contemporaneous discharge or dismissal of such
proceeding, (v) the admission by a Venturer in writing of its inability to pay
its debts as they mature or (vi) the attachment, execution or other judicial
seizure of all or any substantial part of a Venturer's Interest which remains
undismissed or undischarged for a period of 15 days after the levy thereof, if
such attachment, execution or other judicial seizure would reasonably be
expected to have a material adverse effect upon the performance by such Venturer
of its obligations under this Agreement; provided, however, that any such
attachment, execution or seizure shall not constitute an Event of Default if
such Venturer posts a bond sufficient to fully satisfy the amount of such claim
or judgment within 15 days after the levy thereof and the Venturer's Interest is
thereby released from the lien of such attachment (each an "Event of
Bankruptcy");
(c) any material breach by a Venturer of its representations and warranties
pursuant to Article 10 hereof or any material default in performance of, or
failure to comply with, any other agreement, obligation or undertaking of a
Venturer contained in this Agreement;
(d) the Managing Venturer causing or permitting a material event of default
under the Construction Financing or any other third-party indebtedness incurred
by the Joint Venture, which material default shall be continuing after notice of
such default is received by the Joint Venture and after one-half (1/2) of the
applicable cure period has expired;
(e) the issuance of a final and non-appealable order or directive of a
governmental agency of any jurisdiction, including the New Jersey Gaming
Authorities, disqualifying a Venturer from holding any license, approval or
permit required for the business of the Joint Venture, or directing that the
other Venturer or any of its Affiliates terminate its relationship with such
Venturer;
(f) the failure or inability of a Venturer, its officers, directors, key
employees or direct or indirect owners or the officers, directors or key
employees of its direct or indirect owners to obtain any license, approval or
permit required for the business of the Joint Venture or any other event
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involving a Venturer which results in the Joint Venture or such Venturer
becoming unable to conduct a gaming business; and
(g) the failure of MRI or its Affiliates to use all commercially reasonable
efforts to obtain any Master Plan Approvals or to cause to be completed the
Government Improvements and/or the Master Plan Improvements upon the terms and
conditions set forth herein.
Section 12.2 REMEDIES UPON DEFAULT. Upon the occurrence of any Event of
Default, the non-defaulting Venturer shall have the right, without limitation,
to exercise any and all rights and remedies set forth in this Agreement or as
may be available at law or in equity against the Defaulting Venturer.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 EVENTS OF DISSOLUTION. The Joint Venture shall dissolve upon
the occurrence of any of the following events:
(a) the sale or other disposition (including, without limitation, taking by
eminent domain) of all or substantially all of the assets of the Joint Venture
and the collection of the proceeds thereof;
(b) the approval of each of the Venturers;
(c) at the election of the non-defaulting Venturer, the occurrence of an
Event of Default by a Defaulting Venturer;
(d) December 31, 2070;
(e) at the election of Boyd Sub or MR Sub, as the case may be, pursuant to
Section 4.2(e) hereof;
(f) at the election of either Venturer in the event of a final
determination, judicial or otherwise, resulting in the permanent termination of
construction of the Connector prior to the substantial completion thereof;
(g) the final and non-appealable denial of the Joint Venture's application
for a casino license for the Facility or, after issuance, the final and
non-appealable revocation of such license;
(h) the death, withdrawal, bankruptcy or dissolution of a Venturer, or the
occurrence of any event that terminates a Venturer's continued interest in the
Joint Venture or causes a Transfer of such interest by operation of law, unless
within 90 days after such event one or more new Venturers is admitted pursuant
to Section 11.2 or 13.2 hereof;
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(i) the failure of the Commencement of Construction of the Facility to
occur on or before December 31, 2010; or
(j) the occurrence or failure to occur of any other event, as a result of
which it is or becomes unlawful or impossible to carry on the business of the
Joint Venture.
Section 13.2 VENTURERS' CONSENT TO CONTINUE BUSINESS. Upon the occurrence
of an event described in Section 13.1 which may cause the dissolution of the
Joint Venture, or subsequent discovery of the occurrence of such an event, the
Managing Venturer shall immediately notify each of the remaining Venturers of
the occurrence of the event, and each of the remaining Venturers shall notify
the Managing Venturer whether or not it consents to continue the business of the
Joint Venture. If all of the remaining Venturers consent to continue the Joint
Venture's business, and there are at least two remaining Venturers, the Joint
Venture shall not be dissolved and the remaining Venturers shall continue the
Joint Venture's business. If there is only one remaining Venturer and it
consents to continue the Joint Venture's business, such Venturer shall have the
absolute right, notwithstanding any contrary provision of this Agreement (but
subject to applicable law) to Transfer a portion of its Interest to a transferee
(who may be an Affiliate of such Venturer) and to unilaterally admit such
transferee as a new Venturer in the Joint Venture, so that such two Venturers
may continue the Joint Venture's business.
Section 13.3 DISSOLUTION AND LIQUIDATION. Upon the occurrence of an event
of dissolution described in Section 13.1, if the business of the Joint Venture
is not continued by the remaining Venturers pursuant to Section 13.2, the Joint
Venture shall continue solely for the purpose of winding up its affairs in an
orderly manner, liquidating its assets and satisfying the claims of its
creditors and Venturers and no Venturer shall take any action that is
inconsistent with, or not necessary to or appropriate for, winding up the Joint
Venture's business and affairs. To the extent not inconsistent with the
foregoing, all covenants and obligations set forth in this Agreement shall
continue in effect until such time as the Joint Venture's assets have been
distributed pursuant to this Section 13.3 and the Joint Venture has been
liquidated. The Managing Venturer shall be responsible for overseeing the
winding up and liquidation of the Joint Venture, shall take full account of the
Joint Venture's liabilities and assets, shall cause the assets to be liquidated
as promptly as is consistent with obtaining the fair market value thereof and
shall cause the proceeds therefrom, to the extent sufficient therefor, to be
applied and distributed in the following order:
(a) first, to the payment and discharge of all of the Joint Venture's debts
and liabilities to creditors other than Venturers, in the order of priority
provided by law;
(b) second, to the payment and discharge of all of the Joint Venture's
debts and liabilities to Venturers, other than liabilities for distributions to
which Venturers are entitled in their capacities as Venturers pursuant to
Article 6 hereof;
(c) third, to the establishment of any reserves that may reasonably be
deemed necessary by the Managing Venturer to meet any contingent or unforeseen
liabilities or obligations of the Joint
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Venture not covered by insurance. Any such reserve shall be deposited in a bank
or other financial institution. All or any portion of such reserve no longer
needed for the purpose for which it was established shall be distributed as
promptly as practicable in accordance with Section 13.3(d) or 13.3(e), as
appropriate;
(d) fourth, to the Venturers in accordance with the positive balances in
their respective Capital Accounts; and
(e) fifth, to the Venturers in accordance with their respective Interests.
The Managing Venturer shall not receive any compensation for any services
performed pursuant to this Section 13.3 but shall be entitled to reimbursement
for all out-of-pocket costs and expenses reasonably incurred in connection
therewith.
Any gains or losses on the disposition of assets of the Joint Venture in
the process of liquidation shall be credited or charged to the Venturers in
accordance with Article 5 hereof. Any property distributed in kind in the
liquidation shall be valued by agreement of the Venturers and the Capital
Accounts of the Venturers shall be adjusted to reflect the amount of Profits or
Losses that would have been recognized by the Joint Venture had such property
been sold for such value immediately before such distribution.
In the event that any Venturer has a negative balance in its Capital
Account after the liquidation of all of the Joint Venture's assets, such
Venturer shall contribute to the Joint Venture cash in an amount sufficient to
eliminate such negative balance.
Section 13.4 NOTICE OF DISSOLUTION. Upon the occurrence of an event of
dissolution described in Section 13.1, if the business of the Joint Venture is
not continued by the remaining Venturers pursuant to Section 13.2, the Managing
Venturer shall, within 30 days thereafter (i) provide written notice thereof to
each of the Venturers and to all other persons with whom the Joint Venture
regularly conducts business (as determined in the discretion of the Managing
Venturer) and (ii) publish notice of such dissolution in a newspaper of general
circulation in each place in which the Joint Venture conducts business.
ARTICLE 14
MISCELLANEOUS PROVISIONS
Section 14.1 WAIVER OF PARTITION AND COVENANT NOT TO WITHDRAW. Each
Venturer covenants and agrees that the Venturers have entered into this
Agreement based on the mutual expectation that both Venturers will continue as
Venturers and carry out the duties and obligations undertaken by them hereunder
and, except as otherwise expressly required or permitted by this Agreement or
approved by each of the Venturers, each Venturer covenants and agrees not to (i)
take any action to
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require partition or to compel any sale with respect to its Interest, (ii) take
any action to file a certificate of dissolution or its equivalent with respect
to itself, (iii) take any action that would cause an Event of Bankruptcy of such
Venturer, (iv) withdraw or resign, or attempt to do so, from the Joint Venture,
(v) exercise any power under the Act to dissolve the Joint Venture, (vi) except
as permitted herein, transfer all or any portion of its Interest, (vii) petition
for judicial dissolution of the Joint Venture or (viii) demand a return of its
capital contributions. Upon any breach of this Section 14.1 by any Venturer, the
other Venturer (in addition to all rights and remedies it may have under this
Agreement, at law or in equity) shall be entitled to a decree or order from a
court of competent jurisdiction restraining and enjoining such application,
action or proceeding.
Section 14.2 NOTICES. Unless otherwise provided herein, all notices or
other communications required or permitted by this Agreement shall be in writing
and shall be deemed to have been duly given on the date of delivery if delivered
personally to the Party to whom notice is given, on the next business day if
sent by confirmed facsimile transmission or on the date of actual delivery if
sent by overnight commercial courier or by first-class mail, registered or
certified, with postage prepaid and properly addressed to the Party at its
address set forth below, or at any other address that any Party may from time to
time designate by written notice to the others:
If to MR Sub:
MAC, CORP.
c/o MGM MIRAGE
3600 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
Facsimile: (702) 693-7628
If to MRI:
MIRAGE RESORTS, INCORPORATED
c/o MGM MIRAGE
3600 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
Facsimile: (702) 693-7628
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If to Boyd Sub:
BOYD ATLANTIC CITY, INC.
c/o Boyd Gaming Corporation
2950 Industrial Road
Las Vegas, Nevada 89109-1150
Attention: General Counsel
Facsimile: (702) 792-7335
If to Boyd:
BOYD GAMING CORPORATION
2950 Industrial Road
Las Vegas, Nevada 89109-1150
Attention: General Counsel
Facsimile: (702) 792-7335
Section 14.3 AMENDMENTS. The provisions of this Agreement may not be
waived, amended or repealed, in whole or in part, by any of the Parties hereto,
except with the written consent of each of the Parties hereto.
Section 14.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on,
and inure to the benefit of, the Parties hereto and their respective heirs,
legal representatives, successors and permitted transferees and assigns.
Section 14.5 TIME. Time is of the essence with respect to this Agreement
and each and every provision hereof.
Section 14.6 SEVERABILITY. Each provision of this Agreement is intended to
be severable. If any term or provision hereof is held to be illegal or invalid
for any reason, such illegality or invalidity shall not affect the legality or
validity of the remainder of this Agreement.
Section 14.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 14.8 ATTORNEYS' FEES. Except as otherwise provided in this
Agreement, each of the Parties shall bear its own legal fees and expenses in
connection with the negotiation, execution and performance of this Agreement.
Boyd and Boyd Sub acknowledge that various legal and administrative proceedings
are pending in federal and state courts in New Jersey and before the NJDEP
challenging the construction of the Connector and agree that if they are named
as parties in any such proceeding or in any future proceeding relating to the
Development Agreement, the Parcel or the Connector, they shall bear their own
legal fees and expenses in connection therewith. The
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Joint Venture shall bear all legal fees and expenses in connection with any
proceeding in which the Joint Venture is named as a party. Should any action or
proceeding be commenced (including without limitation any proceeding in
bankruptcy) by any of the Parties to enforce any of the terms of this Agreement
or that in any other way pertains to Joint Venture affairs or this Agreement,
the prevailing Party or Parties in such action or proceeding (as determined by
the presiding official(s)) shall be entitled to receive from the opposing Party
or Parties the prevailing Party's reasonable costs and attorneys' fees incurred
in investigating, prosecuting, defending or appearing in any such action or
proceeding.
Section 14.9 ENTIRE AGREEMENT. This Agreement constitutes the complete and
exclusive statement of the agreement among the Parties. This Agreement
supersedes all prior negotiations, understandings and agreements of the parties,
written or oral, with respect to the subject matter hereof, including without
limitation the Amended and Restated Agreement.
Section 14.10 FURTHER ASSURANCES. Each of the Parties agrees to perform any
further acts and execute, acknowledge and deliver any documents or instruments
which may be reasonably necessary or appropriate to carry out the provisions of
this Agreement and to satisfy the conditions to the obligations of the Parties
hereunder.
Section 14.11 HEADINGS; INTERPRETATION. Article and section headings
contained in this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement or have any legal effect. All provisions of
this Agreement shall be construed to further the interests and business of the
Joint Venture. The Parties agree to cooperate with one another in all respects
in order to effect the purposes of and carry out the business activities of the
Joint Venture, as more particularly set forth herein.
Section 14.12 EXHIBITS. Each of the Exhibits referred to herein and
attached hereto is hereby incorporated by reference and made a part hereof for
all purposes. Unless the context otherwise expressly requires, any reference to
"this Agreement" shall mean and include all such Exhibits.
Section 14.13 APPROVALS AND CONSENTS. Whenever the approval or consent of
a Venturer or any of the Parties is required by this Agreement, such Venturer or
Party shall have the right to give or withhold such approval or consent in its
sole and unfettered discretion, unless otherwise expressly provided herein.
Section 14.14 ESTOPPELS. Each of the Parties shall, upon the written
request of any other Party, promptly execute and deliver to the other Parties a
statement certifying that this Agreement is unmodified and in full force and
effect (or, if modified, the nature of the modification) and whether or not
there are, to such Party's knowledge, any uncured defaults on the part of the
other Party or Parties, specifying such defaults if any exist. Any such
statement may be relied upon by third parties.
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Section 14.15 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. Each of
the Parties shall at all times act in accordance with all applicable laws and
regulations and shall indemnify and hold the other Parties (including their
respective directors, officers, employees, Affiliates, successors and assigns)
harmless for, from and against any and all claims, losses, damages, liabilities
and costs, including without limitation, reasonable attorneys' fees (which shall
be reimbursed as incurred), arising out of or relating to any breach of such
laws or regulations. The Joint Venture will at all times comply with all legal
and contractual obligations and requirements applicable to the acquisition or
development of the Property and the operation of the Facility, including without
limitation those relating to the employment of economically disadvantaged
persons and City residents, contained in the Development Agreement, and with all
applicable federal, state and local statutes, ordinances and regulations.
Section 14.16 REMEDIES CUMULATIVE. Each right, power and remedy provided
for in this Agreement or now or hereafter existing at law, in equity, by statute
or otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power or remedy provided for in this Agreement or now or
hereafter existing at law, in equity, by statute or otherwise, and the exercise
by any Party of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by such Party of any or all of such
other rights, powers or remedies.
Section 14.17 WAIVER. No consent or waiver, express or implied, by any
Party to or of any breach or default by any other Party in the performance of
obligations under this Agreement shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by such Party.
Failure on the part of any Party to complain of any act or failure to act by any
other party or to declare any other party in default, irrespective of how long
such failure continues, shall not constitute a waiver by any Party of its rights
under this Agreement.
Section 14.18 GAMING LICENSING MATTERS. The Parties shall provide all
reasonable cooperation with any investigation by any gaming authority having
jurisdiction over any Party or any Affiliate of any Party. Each Venturer shall
cause any transferee of any portion of its Interest likewise to so cooperate.
Each Party agrees that it shall not take any action or omit to take any action
that would have the effect of adversely affecting any gaming license, approval
or permit held by any Venturer. MR Sub and its Affiliates shall cooperate with
Boyd and its Affiliates, to the extent reasonably necessary, in connection with
any review of this Agreement by the New Jersey Gaming Authorities, and the
Parties shall execute and deliver any further documents or instruments,
including amendments to this Agreement, as the New Jersey Gaming Authorities may
reasonably require and which do not alter the terms of this Agreement in a
manner unfavorable to any of the Parties in their sole discretion. Each Party
acknowledges that monetary damages alone would not be adequate compensation for
a breach of this Section 14.18 and the Parties agree that a non-breaching Party
shall be entitled to seek a decree or order from a court of competent
jurisdiction for specific performance to restrain a breach or threatened breach
of this Section 14.18 or to require compliance by a Party with this Section
14.18.
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Section 14.19 LIQUIDATED DAMAGES. The provisions of Section 3.5 hereof,
which in certain circumstances could result in the reduction of a Venturer's
Interest, constitute an agreement by the Parties upon a liquidated amount as to
the damages sustained by the other Parties upon the failure of a Venturer to
contribute to the capital of the Joint Venture. Each Venturer acknowledges that
the amount of damages sustained by the Venturers in the event of such a failure
is not readily ascertainable and that the provisions of Section 3.5 hereof
establishing such liquidated amount are reasonable under the circumstances
existing at the time of the execution of this Agreement and, to the extent
permitted by law, each Venturer waives any and all rights of any nature
whatsoever to challenge the reasonableness of such provisions as of the date of
this Agreement. In the event that the non-defaulting Venturer contributes the
full amount of capital that the Defaulting Venturer shall have failed to
contribute, the reduction in the Defaulting Venturer's Interest shall be the
sole measure of damages resulting from the occurrence of such a failure. If the
non-defaulting Venturer does not contribute the full amount of the deficit, the
Joint Venture and the non-defaulting Venturer shall have all other rights and
remedies that may be available under this Agreement, at law or in equity against
the Defaulting Venturer with respect to the portion of the deficit not
contributed by the non-defaulting Venturer.
Section 14.20 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
Jersey, excluding its conflict of law principles. In the event of any litigation
between the Parties concerning or arising out of this Agreement, the Parties
hereby consent to the exclusive jurisdiction of the federal and state courts in
New Jersey.
Section 14.21 JOINT ACCESS. MRI agrees that there shall be a physical
public connection or transportation link between the Facility and the MRI Casino
Project (if the same is constructed), which connection or link shall be subject
to the reasonable approval of Boyd Sub. The Joint Venture shall pay its
equitable share of all costs and expenses relating to the design, engineering,
construction, operation, maintenance and repair of such physical public
connection or transportation link, including the Joint Venture's equitable share
of any people mover system, but only if such people mover system includes a
station or stop constructed upon the Property and such station or stop is
approved by Boyd Sub.
Section 14.22 MEMORANDUM OF AGREEMENT. The Parties hereby consent to the
recordation of a memorandum of agreement (the "Memorandum of Agreement")
promptly following contribution of the Property by MR Sub to the Joint Venture
pursuant to Section 3.2(a) hereof, which Memorandum of Agreement shall be in
form and substance reasonably acceptable to each of Boyd Sub and MR Sub. Without
limiting the foregoing, the Memorandum of Agreement will specifically reference
the Initial Master Plan Improvements and Government Improvements to be
constructed by MRI and its Affiliates upon the Parcel and the Employee Parking
Lease. Upon the earlier of (a) the substantial completion of all of the Initial
Master Plan Improvements described on EXHIBIT C-2; or (b) the dissolution of the
Joint Venture in accordance with the terms hereof, the Managing Venturer shall
execute a release of the Memorandum of Agreement in recordable form and shall
cause such release to be recorded in the official records of the County.
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Section 14.23 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. Each and every
indemnification obligation of any one or more of the Parties hereto shall
expressly survive the termination of this Agreement and the dissolution of the
Joint Venture.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MAC, CORP., a New Jersey corporation
By: /s/ JOHN REDMOND
---------------------------------------
Its: Chairman of the Board
-------------------------------------
Boyd Atlantic City, Inc., a New Jersey corporation
By: /s/ ROBERT L. BOUGHNER
---------------------------------------
Its: Vice President & Secretary
--------------------------------------
Mirage Resorts, Incorporated hereby agrees to
all of its obligations specified in the foregoing
Agreement.
Mirage Resorts, Incorporated, a Nevada corporation
By: /s/ ROBERT H. BALDWIN
----------------------------------------
Its: President and CEO
---------------------------------------
Boyd Gaming Corporation hereby agrees to all of
its obligations specified in the foregoing
Agreement.
Boyd Gaming Corporation, a Nevada corporation
By: /s/ ROBERT L. BOUGHNER
----------------------------------------
Its: Senior Executive Vice President & COO
---------------------------------------
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