EXHIBIT 10(42)
FIRST AMENDMENT TO THE
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
BY AND AMONG
THE CITY OF DETROIT, THE ECONOMIC DEVELOPMENT CORPORATION OF THE CITY OF DETROIT
AND MGM GRAND DETROIT, LLC
THIS FIRST AMENDMENT (the "First Amendment") to that certain Amended and
Restated Development Agreement, dated as of April 9, 1998, by and among the City
of Detroit, the Economic Development Corporation of the City of Detroit and MGM
Grand Detroit, LLC for the City of Detroit Casino Development Project (the
"Development Agreement") is made on this 25th day of June, 1998 by and among the
City of Detroit, the Economic Development Corporation of the City of Detroit and
MGM Grand Detroit, LLC.
WHEREAS, the City, EDC and Developer have previously entered into the
Development Agreement; and
WHEREAS, it is the desire of the parties to enter into this First
Amendment to amend certain provisions of the Development Agreement and to
provide for an advance of certain fees.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants herein contained, the parties agree as follows:
1. All capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Development Agreement.
2. Section 2.4(a) of the Development Agreement is hereby amended by deleting
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the existing language of such section and substituting the following in its
place:
(a) This Agreement shall confer no rights and impose no obligations until
the Effective Date. Notwithstanding the execution hereof and the
occurrence of the Effective Date, except as and to the extent set
forth in (i) Article I, (ii) Section 2.4, (iii) Section 2.5, (iv)
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Section 2.7, (v) Section 2.8, (vi) Section 2.10, (vii) Section 2.11,
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(viii) Section 2.17, (ix) Article VIII, (x) Article IX, (xi) Article
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X, (xii) Article XIV, (xiii) Article XVIII, (xiv) Article XX and (xv)
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Article XXI, each to the extent applicable, no right shall be
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conferred or obligation imposed, by or under this Agreement until the
first to occur of: (x) the Temporary Casino Opening Date, as that term
is defined in Section 20.6, or (y) the Closing Date. Notwithstanding
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the foregoing, Developer shall have no right to commence construction
of the Casino Complex (other than Site Preparation Work on those
parcels within the Project Premises to which Developer has acquired
title) until the Closing Date, unless such condition is otherwise
waived, in writing, by the City. The Closing Date for the Casino
Complex shall occur when each of the following conditions has been
fully satisfied:
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[Remainder of Section 2.4(a)(1)-(a)(14) remains unchanged.]
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3. Section 2.5(b) of the Development Agreement is hereby amended by deleting
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the existing language of such section and substituting the following in its
place:
(b) Within five (5) Business Days following the date the last of the
following occurs: (i) City Council approves the Conveyance Agreement;
and (ii) the Due Diligence Period, as defined in the Conveyance
Agreement has expired, Developer shall furnish the EDC with a letter
of credit in an amount equal to the Letter of Credit Amount (as
hereinafter defined) and in such form and upon such terms and
conditions as are reasonably necessary to allow City to acquire the
Casino Area and the Public Land. For purposes hereof, the "Letter of
Credit Amount" shall be equal to Developer's Pro Rata Share times an
amount equal to (A) the sum of (x) Feehold Compensation plus (y) a
reasonable reserve as agreed to by Developer, the City, the EDC and
the Other Land-Based Casino Developers, less (B) the appraised value
of any land owned by the City in the Casino Area determined in
accordance with the definition of Feehold Compensation.
4. Section 5.1 of the Development Agreement is hereby amended by deleting the
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first sentence of the existing language of such section and substituting
the following in its place:
As City and/or EDC obtains a right of possession to the Project Premises
which permits Developer onto the Project Premises for purposes of
conducting tests and inspections, the City and/or EDC shall grant to
Developer (or shall cause Developer to be granted) a right of entry onto
the Project Premises to conduct preliminary or preparatory work, such as
surveys (including environmental surveys) and tests (including but not
limited to core sampling, test pits, monitoring xxxxx, soil compaction and
test pilings).
[Remainder of Section 5.1 remains unchanged.]
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5. Exhibit 1.1(a)(42) (Conveyance Agreement), Paragraph 3.03 is hereby amended
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by deleting the existing language in such paragraph and substituting the
following in its place:
3.03 Surveying and Testing. EDC shall permit Developer and its Associates
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to enter the Property for purposes of site investigation and testing,
in the manner and subject to the limitations set forth in Section 5.1
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of the Development Agreement. Developer shall have sixty (60) days
(the "Due Diligence Period") commencing on the date the last of the
following occurs: (i) the City and EDC deliver the cost estimates set
forth on Schedule A, as referred to in Section 2.18 of the Development
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Agreement ("Schedule A"), together with all reports, analyses, and
other material relied upon by City and EDC in developing Schedule A
(the "Supporting Material"), including, without limitation,
appraisals, estimates of relocation payments and other costs included
in Feehold Compensation (other than information which the City is
restricted from disclosing pursuant to Section 5(2) of the Uniform
Condemnation Procedures Act, MCL 213.55(2)), Phase I and Phase II
environmental site
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assessments, laboratory analysis, reports, estimates of the cost of
environmental Response activity and underlying assumptions and
calculations, geotechnical reports, estimates of the cost of
Infrastructure Improvements and underlying assumptions and
calculations, and (ii) the City and EDC deliver the Commitment and the
Survey in order to: (x) satisfy itself as to the physical condition of
the Property and title thereto, or (y) determine the feasibility of
the issuance of an Administrative Order By Consent And Covenant Not To
Xxx in favor of the City, EDC, Developer and the Other Land-Based
Casino Developers, or (z) determine the feasibility of Developer and
the Other Land-Based Casino Developers preparing an acceptable
baseline environmental assessment; provided, in any event, the City
shall not be obligated to acquire any portion of the Property until
the Due Diligence Period has expired.
6. Exhibit 1.1(a)(42) (Conveyance Agreement), Paragraph 3.04 is hereby amended
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by deleting the existing language in such paragraph and substituting
the following in its place:
3.04 Developer's Right to Terminate. If Developer's review of the
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Commitment, Schedule A, and/or the Supporting Material during the Due
Diligence Period reveals a defect in title or a physical or
geotechnical condition which renders it commercially impracticable for
Developer to construct and operate the Casino Complex in accordance
with the Development Agreement, then Developer may, at its option,
upon giving EDC written notice thereof, together with an opinion of
counsel describing such defect in title or copies of the reports,
analyses and other material pertaining to such condition, as the case
may be, at any time on or before the expiration of the Due Diligence
Period, elect to terminate this Agreement. If Developer should
terminate this Agreement for any reason, Developer shall immediately
surrender and furnish to City and EDC copies of any and all surveys,
reports and studies which have been prepared by Developer or any of
its consultants with respect to the Property. Subject to the
foregoing right of termination and to Section 18.1(b) of the
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Development Agreement, Developer agrees to accept the Property in an
"as is", "where is" condition and Developer waives any and all rights
and remedies it might have against City and EDC as a result of the
condition thereof.
7. Exhibit 1.1(a)(83) (Guaranty and Keep Well Agreement), Paragraph 1 is
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hereby amended by deleting the existing language in such paragraph and
substituting the following in its place:
1. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to EDC the following (collectively, the "Obligations"): (i)
the full and faithful performance of each and every one of the
covenants and obligations in the Conveyance Agreement on Developer's
part to be kept and performed in accordance with the terms, covenants
and conditions of the Conveyance Agreement; (ii) the full and faithful
performance of each and every one of the covenants and obligations in
the Development Agreement on Developer's part to be kept and performed
with respect to the construction, equipping and completion of the
Casino Complex on or before
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the Agreed Upon Opening Date in accordance with the terms, covenants
and conditions of the Development Agreement (including, without
limitation, the payment of so-called "hard costs" of construction and
so-called "soft costs" of construction such as fees and charges of
architects, engineers, consultants, surveyors, attorneys and others
and the costs of all Permits, licenses and other matters); (iii)
Developer's prompt payment as and when due of all amounts of every
kind or nature whatsoever, including without limitation, the Advance
(if applicable), Feehold Compensation (net of the City Contribution),
Developer's Allocable Share of Development Process Costs, Developer's
portion of all Infrastructure Improvements to be paid by Developer to
EDC and/or City under the Development Agreement; and (iv) with respect
to any mechanic's or materialman's lien filed against or attaching to
all or any part of the Project Premises as a result of the Work, the
removal or release of such lien, provided that nothing herein shall
preclude Developer or Guarantor from contesting in good faith any such
lien by appropriate proceedings. Notwithstanding the foregoing,
Guarantor shall have no obligation to obtain the Certificate of
Suitability and/or Casino License for or on behalf of Developer.
8. Section 20.1 of the Development Agreement is hereby amended by deleting the
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existing language of such section and substituting the following in
its place:
20.1 Developer's Temporary Casino Obligations.
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(a) Subject to Developer acquiring or leasing a Temporary Casino Site (as
herein defined), Developer may elect to design, construct, finance and
operate a Temporary Casino subject to and in accordance with the terms
of this Article XX and the other provisions of this Agreement, as
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applicable. In the event Developer makes such election, the following
provisions in this Article XX shall apply.
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(b) Nothing in this Article XX shall in any way affect, limit, or modify
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Developer's obligations contained in any other provision of this
Agreement.
9. Section 20.3 of the Development Agreement is hereby amended by deleting the
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existing language of such section and substituting the following in its
place:
20.3 Temporary Casino Financing.
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(a) Developer shall submit to City its plan for obtaining funds to finance
the acquisition or leasing of the Temporary Casino Site and the
design, construction and operation of the Temporary Casino. Such funds
shall be on such terms and conditions as are acceptable to City in the
exercise of its commercially reasonable judgment. Any borrowed funds
shall be from a Suitable Lender.
(b) Developer represents and warrants that the funding described under its
plan submitted to the City pursuant to Section 20.3(a) will be
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available to Developer and is sufficient to acquire or lease the
Temporary Casino Site and to construct, develop,
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equip and operate the Temporary Casino in accordance with the terms of
this Agreement.
10. Section 20.4(b) of the Development Agreement is hereby amended by deleting
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"one hundred thousand (100,000) square feet" in the last sentence and
substituting in its place "seventy-five thousand (75,000) square feet."
11. Section 20.5(a) of the Development Agreement is hereby amended by deleting
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the existing language of such section and substituting the following in its
place:
(a) Provided that by May 1, 1998 the Developer has identified its
Temporary Casino Site and submitted to the City the information
required from Developer under Article XX (the "Temporary Casino
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Information"), the Mayor, within ten (10) Business Days of being
satisfied with the Temporary Casino Information, shall transmit the
Temporary Casino Information to the City Council. The Mayor shall act
within a reasonable period of time under the circumstances.
12. Section 20.5(b) of the Development Agreement is hereby amended by deleting
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the existing language of such section and substituting the following in its
place:
(b) Provided that by May 1, 1998 the Mayor receives information from the
Other Land-Based Casino Developers concerning their temporary casinos
as and to the extent required under the casino development agreements
with the City which information is satisfactory to the Mayor
(including but not limited to the information required by Section
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2.6(l)), the Mayor shall submit the Temporary Casino Information and
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the comparable information of any of the Other Land-Based Casino
Developers who satisfy this Section 20.5(b) (collectively, the
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"Temporary Casino Proposals") to the City Council in a single
transmission.
13. Section 20.5(c) of the Development Agreement is hereby amended by deleting
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the existing language of such section and substituting the following in its
place:
(c) Provided City Council approves all zoning changes necessary to
accommodate all of the Temporary Casino Proposals submitted pursuant
to Section 20.5(b), Developer shall have the right to commence
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construction of its Temporary Casino, subject to Section 20.5(f) and
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all other applicable provisions of this Agreement. Notwithstanding the
failure of any Other Land-Based Casino Developer to have satisfied
Section 20.5(b), the Mayor shall submit the Temporary Casino Proposals
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of the Developer and any Other Land-Based Casino Developer who does
satisfy Section 20.5(b) to the City Council in a single transmission.
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14. Section 20.5 of the Development Agreement is hereby amended by inserting as
Section 20.5(e) the following:
(e) Unless the Board shall have indicated in writing its intention not to
approve
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Temporary Casinos, within seven (7) Business Days following the date
the last of the following occurs: (i) the First Amendment is effective
(as set forth in paragraph 26 of this First Amendment); and (ii) City
Council has approved all zoning changes necessary to permit casino
gaming operations to be conducted at, and Developer's development and
site plan for, the Temporary Casino, Developer shall pay to the City a
non-refundable sum of Three Hundred Thirty Three Thousand Three
Hundred Thirty-Three and 34/100 Dollars ($333,333.34) (the "Early
Advance"). The Early Advance shall be credited against Developer's
first year's Municipal Services Fee obligation and will be used to
assist the City in defraying the cost of hosting casinos. Except as
set forth in Section 20.5(f), the City shall have no obligation to
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Developer to pay interest on the Early Advance or to reimburse
Developer for the Early Advance in the event the Municipal Services
Fee obligation never becomes payable. Developer's failure to pay the
Early Advance in accordance with the above terms shall be deemed an
Event of Default as set forth in Section 10.1(a) of the Development
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Agreement and shall be subject to the Default Rate as set forth in
Section 2.11 of the Development Agreement.
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15. Section 20.5 of the Development Agreement is hereby amended by inserting as
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Section 20.5(f) the following:
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(f) No later than seven (7) months prior to the Temporary Casino Opening
Date, (as defined in Section 20.6(d)), Developer shall pay to the City
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a non-refundable sum of Three Million Six Hundred Sixty Six Thousand
Six Hundred Sixty-Six and 66/100 Dollars ($3,666,666.66) (the
"Advance"). The Advance shall be credited against Developer's first
year's Municipal Services Fee obligation and will be used to assist
the City in defraying the cost of hosting casinos. Except and to the
extent set forth in the next succeeding sentence, the City shall have
no obligation to Developer to pay interest on the Advance or to
reimburse Developer for the Advance in the event the Municipal
Services Fee obligation never becomes payable. In the event the
Temporary Casino Opening Date does not occur because the Board does
not issue a Casino License for the Temporary Casino Site, the Early
Advance and the Advance shall bear interest at a per annum rate equal
to the rate paid from time to time by the Governmental Cash Investment
Fund (Comerica Investment Fund J) or if such fund no longer exists at
the time such interest is calculated, at the rate paid from time to
time by such other governmental investment fund in which the City
maintains short term investments, which amount shall be credited
against Developer's first and subsequent years' Municipal Services Fee
obligation until fully applied.
16. Section 20.6(c) of the Development Agreement is hereby amended by
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capitalizing the reference to "temporary casino opening date."
17. Section 20.6 of the Development Agreement is hereby amended by inserting as
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Section 20.6(d) the following:
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(d) For purposes of Article XX, "Temporary Casino Opening Date" shall mean
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the first
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day the Temporary Casino is open to the public for its intended use.
The Temporary Casino Opening Date shall not occur until and unless all
of the following conditions have been fully satisfied or have been
waived in accordance with Section 20.6(e):
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(1) The Board has issued its Certificate of Suitability pursuant to
the Act, granting to Developer the right to receive a Casino
License upon the conditions set forth in the Act and such
Certificate of Suitability contains only such other conditions as
may be acceptable to Developer in the exercise of its reasonable
judgment.
(2) The Developer, City and EDC have duly executed and delivered the
Conveyance Agreement and the Conveyance Agreement has been
approved by City Council.
(3) The Developer has delivered to the EDC a letter of credit in the
Letter of Credit Amount and in such form and upon such terms and
conditions as are reasonably necessary to allow City to acquire
the Casino Area and the Public Land.
(4) The Developer has delivered, and has caused Parent Company to
deliver, to the City and EDC an opinion of counsel in a form
reasonably satisfactory to City and EDC.
(5) The City and EDC each have delivered to Developer an opinion of
counsel in a form reasonably satisfactory to Developer.
(6) The Developer has paid to the City its Allocable Share of the
Development Process Costs then due.
(7) The Developer has paid to the City the Advance, in accordance
with Section 20.5(f).
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(8) The City Council has approved all zoning changes necessary to
allow Developer to operate the Temporary Casino and enacted an
ordinance authorizing casino gaming in the City.
(9) There shall be no temporary restraining order, preliminary
injunction or permanent injunction to enjoin the Developer from
proceeding to develop the Temporary Casino.
(10) The Developer has delivered to City and EDC the Guaranty and Keep
Well Agreement executed by an Acceptable Guarantor.
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(11) The Developer has delivered to City and EDC Closing Certificates
executed by Developer and an Acceptable Guarantor.
(12) The Developer has delivered to City the executed agreement of
Parent Company, any Casino Manager and each Restricted Party
required under Section 2.14(e).
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(13) The Developer has delivered to City certificates showing that
Developer, any Acceptable Guarantor and any Casino Manager are in
good standing and qualified to do business in the State, if
required under the law of the State, dated no earlier than five
(5) days prior to the Temporary Casino Opening Date.
(14) The Developer has approved, in writing, Schedule A as referred to
in Section 4.11.
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(15) The Developer has furnished such documentation as City reasonably
required to verify that the Initial Financing to be obtained by
Developer is in substantially the same form as set forth in
Exhibit 8.11(e) or is otherwise satisfactory to the City, and is
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still in effect.
Notwithstanding satisfaction of the foregoing conditions, in no event shall
the Temporary Casino Opening Date occur prior to seven (7) months following
Developer's payment of the Advance.
18. Section 20.6 of the Development Agreement is hereby amended by inserting as
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Section 20.6(e) the following:
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(e) Developer may waive, in whole or in part, any or all of those
conditions set forth in Section 20.6(d)(5) prior to the satisfaction
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of such condition. City may waive, in whole or in part, any of those
conditions set forth in Sections 20.6(d)(2), (d)(3), (d)(4), (d)(6),
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(d)(7), (d)(10), (d)(11), (d)(12), (d)(13) and (d)(14) prior to the
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satisfaction of such condition. No waiver of any condition shall be
effective: (x) unless such waiver shall be in writing or (y) if the
failure to satisfy such condition would make performance of this
Agreement illegal.
19. Section 20.7(b) of the Development Agreement is hereby amended by deleting
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the existing language in such section and substituting the following in its
place:
(b) Developer agrees to cease all Casino Gaming Operations at the
Temporary Casino on the Completion Date but in no event later than
forty-eight (48) months from the Temporary Casino Opening Date.
Developer's obligation to cease Casino Gaming Operations at the
Temporary Casino Site under this Section 20.7(b) is not subject to
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Force Majeure.
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20. Section 20.8 of the Development Agreement is hereby amended by inserting as
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Section 20.8(c) the following:
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(c) Notwithstanding and in addition to the limitations imposed by Section
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20.8(b), distributions to Developer's members (other than those
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permitted by Section 20.8(a)) shall be suspended during any period in
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which either of the following conditions exists: (i) Developer's
Schematic Design Documents have not been submitted to the PM for
review or approval, provided that such distributions shall not be
suspended under this Section 20.8(c)(i) during the one hundred twenty
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(120) day period after the Closing Date; or (ii) construction of the
Casino Complex is not at least fifty percent (50%) completed, as
certified by Developer's architect, provided that such distributions
shall not be suspended under this Section 20.8(c)(ii) during the
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twenty-four (24) month period after issuance of the Building Permit.
21. Section 20.8 of the Development Agreement is hereby amended by inserting as
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Section 20.8(d) the following:
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(d) For purposes of Section 20.8(b) and (c), "distributions" shall include
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any loans or advances made to Developer's members.
22. Article XX of the Development Agreement is hereby amended by inserting as
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Section 20.9 the following:
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20.9 Certain Limitations on Remedies. Notwithstanding any other provision
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in this Agreement to the contrary, upon an Event of Default arising under
Section 10.1(a) due to the breach by Developer of any of Developer's
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obligations specified in Article XX, it being understood that Article XX
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does not obligate Developer to develop or operate a Temporary Casino, City
and EDC's remedies under Sections 10.2(a) and (b) shall be limited to the
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City electing to (i) institute a Specific Performance Proceeding and/or
(ii) receive actual damages from Developer. The foregoing limitation on
City's and EDC's remedies under Sections 10.2(a) and (b) shall in no way
limit or diminish any other right of City under this Agreement or
otherwise, including without limitation, City's or EDC's rights or remedies
under the Guaranty and Keep Well Agreement, under any other guaranty,
indemnity or agreement or under Section 2.11 or Article XI.
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23. Section 1.1(a)(4)(B) of the Development Agreement is hereby amended by
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inserting at the beginning of that section the following: "Until the first
redetermination of the Valuation Adjustment,".
24. By execution of this First Amendment, the Mayor hereby approves Developer's
Temporary Casino Proposal, subject to: (i) all necessary approvals by City
Council; and (ii) all approval, permitting, and inspection processes
associated with building projects generally in the City and within the
zoning classification pertaining to the Temporary Casino.
25. Except as amended by this First Amendment, the Development Agreement is
reaffirmed in
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all respects, and shall remain in full force and effect.
26. This First Amendment shall become effective on the date on which all of the
following have been accomplished: the First Amendment has been executed by
all parties hereto and the City Council has duly approved the last of the
following: (i) this First Amendment; and (ii) the first amendment to the
amended and restated development agreements of each of the Other Land-Based
Casino Developers.
27. This First Amendment may be executed in counterparts, each of which shall
be deemed to be an original document and together shall constitute one
instrument.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have set their hands and had their
seals affixed on the dates set forth after their respective signatures.
CITY OF DETROIT, a municipal
corporation
By: /s/
-----------------------------------
Its: /s/
--------------------------------
THE ECONOMIC DEVELOPMENT
CORPORATION OF THE CITY OF
DETROIT, a Michigan public body
corporate
By: /s/
-----------------------------------
Its: /s/ Authorized Agent
--------------------------------
By: /s/
-----------------------------------
Its: /s/ Authorized Agent
--------------------------------
MGM GRAND DETROIT, LLC, a Delaware
limited liability company
By: /s/
----------------------------------
Its: Chief Financial Officer
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