DONATION AGREEMENT
Donation Agreement dated as of the 10th day of October, 1997
(the "Donation Agreement"), by and between the CASINO
REINVESTMENT DEVELOPMENT AUTHORITY (the "Authority"), a public
body established in, but not of, the Department of the Treasury
of the State of New Jersey, and MAC, Corp., a New Jersey
corporation with an address at 00 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxx Xxxxxx ("Mirage NJ").
WHEREAS, the Authority was requested to provide partial
funding to assist in the design and construction of traffic
infrastructure improvements for the Atlantic City area (the
"Project"); and
WHEREAS, pursuant to 5:12-160 of the Casino Control Act (the
"Act"), the purposes of the Authority are, among other things,
(i) to maintain public confidence in the casino gaming industry
as a unique tool of urban redevelopment for Atlantic City, (ii)
to provide a method of encouraging new capital investment in
Atlantic City, (iii) to provide, further and promote tourist
industries in New Jersey by providing financial assistance for
the planning, acquisition, construction and operation of
facilities for the recreation and entertainment of the public,
(iv) to assist in the financing of the construction of
infrastructure projects, including roads and highways, (v) to
cooperate with and assist local governmental units in financing
eligible projects, and (vi) to perform any combination of the
following; and
WHEREAS, pursuant to 5:12-161g of the Act, the Authority is
empowered to enter into any agreements or contracts, execute any
instruments, and do and perform any acts or things necessary,
convenient, or desirable for the purposes of the Authority,
including the entering into of agreements or contracts with any
governmental unit to provide for the payment of principal of and
interest on any obligation issued by that governmental unit, the
maintenance of necessary reserves in connection with these
obligations or the payments under any lease entered into in
connection with any eligible project; and
WHEREAS, pursuant to 5:12-161o of the Act, the Authority is
empowered to enter into all agreements or contracts with any
governmental unit or person, execute any instruments, and do and
Exhibit 10.16
perform any acts or things necessary, convenient, or desirable
for the purposes of the Authority to carry out any power
expressly given in the Act; and
WHEREAS, the Project is in furtherance of an agreement
executed on January 10, 1997, as amended ("Road Development
Agreement") between the State of New Jersey (the "State"), South
Jersey Transportation Authority ("SJTA") and Mirage Resorts,
Incorporated ("Mirage") and thereafter, assigned by Mirage to
Atlandia Design and Furnishings, Inc., a wholly owned subsidiary
of Mirage ("Atlandia"); and
WHEREAS, Atlandia or an affiliate thereof will be the
developer for the Project and SJTA and/or the State will accept,
own, maintain and operate the Project upon its completion; and
WHEREAS, the total cost for the Project is estimated to be
$330 Million; and
WHEREAS, it is anticipated that the State will contribute
funds from the Transportation Trust Fund as well as funds to be
financed through the SJTA; and
WHEREAS, SJTA has authorized or will authorize the issuance
of bonds to assist in financing the Project; and
WHEREAS, the State requested that partial funding of the
Project costs be made available on terms and conditions
satisfactory to the Authority, Mirage, SJTA and the State; and
WHEREAS, the Authority is requested to fund, or assist in
funding, $120 Million; and
WHEREAS, one part of the Authority funding is to be from a
donation by a casino licensee, as to which Mirage is or will
become a holding company under N.J.S.A. 5:12-26, alone or
together with other casino licensees (collectively the "Donors")
operating casino hotels on the Marina Land as described on
Exhibit A and commonly referred to as the "H-Tract", to be made
if and when they become casino licensees and commence operation
of a casino on the H-Tract, in the aggregate amount of up to $55
Million (such aggregate principal sum of the Bonds at issuance
being the "Donation Principal Sum") plus the equivalent of
interest (including capitalized interest) at a rate per annum set
forth herein from the issue date of certain bonds to be issued by
the SJTA pursuant to that certain Resolution of SJTA adopted
October 8, 1997, authorizing Road Development Special Revenue
Bonds (the "Bonds") to the date of repayment of the Bonds (the
Donation Principal Sum together with such interest being the
"Donation") from their respective investment alternative tax
obligations, as set forth herein, which will be utilized to pay
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interest and retire the Bonds and which are the subject of a
pledge agreement between the Authority and SJTA ("Pledge
Agreement"); and
WHEREAS, Mirage desires to advance funds in an amount equal
to the Donation Principal Sum by buying up to $55 Million of the
Bonds to be issued by SJTA pursuant to the Bond Purchase
Agreement, dated of even date herewith, between SJTA and Mirage
(the "Bond Purchase Agreement") for use in funding the Project,
and Mirage NJ desires to enter into this Donation Agreement with
the Authority, providing, among other things, that if and when
Mirage NJ becomes a casino licensee and commences operation of a
casino on the H-Tract, it shall execute (1) a Securities Purchase
Contract in substantially the form of the agreement attached
hereto as Exhibit 1 (the "Securities Purchase Contract"), thereby
obligating it to purchase bonds of the Authority or make
alternative investments in lieu of purchasing bonds and (2) a
Credit Agreement in substantially the form of the agreement
attached hereto as Exhibit 2 (the "Credit Agreement"), thereby
setting forth the terms of the investment credit it will be
eligible to receive as a casino licensee for its portion of the
Donation to the Project; and
WHEREAS, the Authority made a preliminary determination of
eligibility of the Project at its meeting of February 18, 1997,
pursuant to Resolution No. 97-35; and
WHEREAS, a public hearing concerning the Project was held on
March 13, 1997; and
WHEREAS, the Authority, at its meeting of April 15, 1997,
pursuant to Resolution No. 97-75, determined the Project to be an
approved Project, authorized the reservation of funds for the
Project and authorized the Executive Director to negotiate and
enter into a Donation Agreement; and
WHEREAS, the Authority, at its meeting of August 26, 1997,
pursuant to Resolution No. 97-209, amended and supplemented its
Resolutions Nos. 97-75 through 97-78, adopted on April 15, 1997;
and
WHEREAS, as a casino licensee, Mirage NJ shall have an
obligation, pursuant to N.J.S.A. 5:12-144.1a.(2), to pay to the
State Treasurer on or before the 15th day of the first, fourth,
seventh and tenth months of each year as partial payment of the
investment alternative tax imposed pursuant to N.J.S.A. 5:12-
144.1a.(1) an amount equal to 1.25% of the estimated gross
revenues for the three-month period immediately preceding the
first day of those months (for purposes hereinafter, the
occurrence of each such date requiring payment to be made shall
be deemed the date upon which Mirage NJ incurs an Atlantic City
Obligation).
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NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements set forth herein, and for other good and
valuable consideration, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
(a) The following shall have the meanings specified in the
foregoing recitals:
"Authority"
"Donation Agreement"
"Donation"
"Donation Principal Sum"
"Donors"
"H-Tract"
"Mirage"
"Mirage NJ"
"Pledge Agreement"
"Project"
"Road Development Agreement"
"SJTA"
"State"
(b) Terms defined elsewhere in this Donation Agreement
shall have the meanings ascribed to such terms in the sections in
which the definitions therefor appear.
(c) Terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement:
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MIRAGE NJ
SECTION 2.1. Representations and Warranties. Mirage NJ
represents, warrants and agrees that:
(a) It (i) is a corporation duly organized and validly
existing under the laws of the State of New Jersey, (ii) has the
corporate power and authority to carry on its business as now
being conducted, and (iii) has the corporate power to execute and
deliver this Donation Agreement and to perform its obligations
hereunder.
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(b) The execution and delivery of this Donation Agreement
has been duly authorized and this Donation Agreement constitutes
the valid and binding obligation of Mirage NJ enforceable in
accordance with its respective terms, subject only to bankruptcy,
insolvency, moratorium, reorganization or other similar laws or
to equitable principles relating to or affecting the enforcement
of creditors' rights generally.
(c) Except as noted on the litigation schedule attached
hereto as Exhibit 3, there is no action, suit or proceeding at
law or in equity or by any governmental instrumentality or other
agency now pending or, to the knowledge of Mirage NJ, threatened
against or affecting Mirage NJ that, if adversely determined,
would materially impair its right to carry on business
substantially as now conducted and as now contemplated by this
Donation Agreement or to perform its obligations under this
Donation Agreement or would materially adversely affect its
financial condition.
(d) It is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party,
which default would materially impair its right to carry on its
business substantially as now conducted and as now contemplated
by this Donation Agreement or to perform its obligations under
this Donation Agreement or would materially adversely affect its
financial condition and the execution of this Donation Agreement
and performance hereunder will not result in the violation of any
agreement or instrument to which Mirage NJ is a party.
(e) No representation or warranty made by it in this
Donation Agreement contains any material misstatement of fact.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE AUTHORITY
SECTION 3.1. Representations and Warranties. The Authority
represents, warrants and agrees that:
(a) It (i) is a public body established in, but not of, the
Department of Treasury of the State and an instrumentality of the
State established under the Act, and (ii) has the power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder.
(b) The execution and delivery of this Donation Agreement
has been duly authorized and this Donation Agreement constitutes
the valid and binding obligations of the Authority enforceable in
accordance with its terms, subject only to bankruptcy,
insolvency, moratorium, reorganization or other similar laws or
to equitable principles relating to or affecting the enforcement
of creditors' rights generally.
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(c) Except as noted on the litigation schedule attached
hereto as Exhibit 3, there is no action, suit or proceeding at
law or in equity or by any governmental instrumentality or other
agency now pending or, to the knowledge of the Authority,
threatened against or affecting the Authority that, if adversely
determined, would materially impair its ability to perform its
obligations under this Donation Agreement.
(d) It is not in material default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it
is a party and the execution of this Donation Agreement and
performance hereunder will not result in the violation of any
agreement or instrument to which the Authority is a party.
(e) No representation or warranty made by it in this
Donation Agreement contains any material misstatement of fact.
ARTICLE IV
PURCHASE OF SJTA SPECIAL REVENUE BONDS
SECTION 4.1. Pursuant to the Bond Purchase Agreement,
Mirage has agreed to purchase Bonds in a principal amount up to
the sum of Fifty-Five Million ($55,000,000.00) Dollars. The
Bonds shall bear interest calculated pursuant to the provisions
of the SJTA bond documents related thereto, which rate shall be
as set forth in Section 4.2 hereof.
SECTION 4.2. If the Bonds bear interest at a taxable rate,
such interest rate shall be 66 2/3 of the average rate of Xxxxx'x
A-rated Utility Index for bonds available for purchase during the
26 weeks preceding the date of issuance of such Bonds. If the
Bonds bear interest at a tax exempt rate, such interest rate
shall be 66 2/3 of the average rate of the Bond Buyer Weekly 25
Bond Index for bonds available for purchase during the last 26
weeks preceding the date of issuance of such Special Revenue
Bonds.
ARTICLE V
EXECUTION OF SECURITIES PURCHASE AGREEMENT AND
CREDIT AGREEMENT AND DONATION OF FUNDS
SECTION 5.1. If, and only if, Mirage NJ becomes a casino
licensee as defined in the Casino Control Act (N.J.S.A. 5:12-1,
et seq.) and commences operation of a casino on the H-Tract,
then, within fifteen (15) days after the commencement of such
operations, Mirage NJ and the Authority shall execute the
Securities Purchase Contract and the Credit Agreement. Subject
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to the transfer provisions of Article VI hereof, upon such
execution, Mirage NJ hereby agrees to make a donation to the
Project of its Atlantic City Obligations, as and when such
obligations are incurred and paid in accordance with N.J.S.A.
5:12-144.1a.(2), in an amount equal to its portion of the
Donation and the Authority hereby agrees to accept such donation
and treat it as such for purposes of Section 404(F)(2) of the
Securities Purchase Contract.
SECTION 5.2. The Authority shall not be under any
obligation to repay, reimburse or otherwise compensate Mirage NJ,
Mirage or, except as expressly stated in Article VI hereof, any
holders of the Bonds for any payment of principal and interest or
any costs incurred by them in connection with the purchase or
acquisition of the Bonds other than through credits applied
against the Atlantic City Obligations of Mirage NJ in accordance
with and subject to the terms and conditions of the executed
Credit Agreement. In furtherance of the Credit Agreement and as
provided in that certain Pledge Agreement between the Authority
and SJTA dated of even date herewith, the Authority shall
immediately transfer to SJTA, upon its receipt of any donation
from Mirage NJ under this Donation Agreement (and any donation
from any other Donor pursuant to a donation agreement executed
pursuant to Section 6.2(ii)), 100% of such donation.
ARTICLE VI
TRANSFERS OF SPECIAL REVENUE BONDS
AND DONATION OBLIGATIONS
SECTION 6.1. In the event Mirage NJ or Mirage sells or
otherwise transfers any of the Bonds to one or more Casino
Licensee Bondholders, the donation to be made by Mirage NJ under
this Donation Agreement shall be reduced such that its portion of
the Donation shall be an amount equal to the Donation less the
amount of investment alternative tax obligation payments received
by the Authority from Casino Licensee Bondholders for donations
for principal and interest payments on the Bonds made by such
Casino Licensee Bondholders pursuant to and consistent with their
respective donation agreements (said donations for principal and
interest payments on the Bonds in an amount equal to the
principal amount of the Bonds purchased or acquired by the Casino
Licensee Bondholder from Mirage or any other Casino Licensee
Bondholder, together with unpaid, accrued interest and future
interest on the transferred bonds being the "Transferred
Donation"). A sale or transfer of bonds to any person or entity,
shall not reduce the amount of the donation obligation of Mirage
NJ pursuant to Section 5.1, except, and to the extent, such
transfer is to a Casino Licensee Bondholder which (i) executes a
Donation Agreement committing to make a donation of its
investment alternative tax obligations, (ii) incurs such
obligations, and (iii) makes payments to the Authority in
satisfaction thereof.
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SECTION 6.2. For purposes of this Donation Agreement, a
Casino Licensee Bondholder shall mean a casino licensee or
prospective casino licensee (other than Mirage NJ) whose casino,
as defined in the Casino Control Act, is located or to be located
on the H-Tract, which: (i) becomes the holder of Bonds as a
result of the sale or transfer to it of such Bonds by Mirage NJ
or Mirage or any other Casino Licensee Bondholder; (ii) executes
an appropriate donation agreement with the Authority analogous to
this Donation Agreement, pursuant to which it agrees that upon
becoming a casino licensee and commencing operation of a casino
on the H-Tract, it shall execute an appropriate securities
purchase contract and a credit agreement, analogous to Exhibits 1
and 2, respectively, and commits to make a donation of its
"Atlantic City Obligations" to satisfy the Transferred Donation,
which Atlantic City Obligations shall be utilized to pay
interest and/or to retire the Bonds; and (iii) agrees to pay to
the Authority its administrative costs and all out-of-pocket fees
and expenses in connection with the subject sale or transfer.
The Authority shall execute the agreements referenced in Section
6.2(ii) upon execution of such agreements by a Casino Licensee
Bondholder. A sale or transfer by the Casino Licensee Bondholder
of the Bonds it has purchased or acquired to any other person or
entity shall not reduce the amount of the donation obligation of
the Casino Licensee Bondholder pursuant to this Section 6.2.
SECTION 6.3. The Authority shall not be under any
obligation to repay, reimburse or otherwise compensate a Casino
Licensee Bondholder or other bondholders for any costs incurred
by them in connection with the purchase of the Bonds other than
through credits against the Atlantic City Obligations of Mirage
NJ or Casino Licensee Bondholders in accordance with and subject
to the terms and conditions of the credit agreements executed by
Casino Licensee Bondholders. In furtherance of the Credit
Agreement, and as provided in that certain Pledge Agreement
between the Authority and SJTA dated of even date herewith, the
Authority shall immediately transfer to SJTA, upon the
Authority's receipt of the donations from the Donors, 100% of
such donations for payment to the holders of the Bonds in
accordance with this Donation Agreement, donation agreements
executed by Casino Licensee Bondholders, and the Pledge
Agreement.
SECTION 6.4. For purposes of subsections 6.2 and 6.3,
Atlantic City Obligations shall mean, as calculated at any time,
and from time-to-time, that portion of the subject Casino
Licensee Bondholder's Annual Investment Tax Credit (as defined
herein) attributable to a future Quarterly Payment Date which
constitutes funds available for projects in the City of Atlantic
City which are not Housing Projects. "Annual Investment Tax
Credit" shall mean, with respect to each calendar year commencing
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with the calendar year in which the subject Casino License
Bondholder becomes a casino licensee, an amount equal to one-half
of said Casino Licensee Bondholder's Tax Obligation, or such
other percentage as may be required by any amendment to N.J.S.A.
5:12-144.1.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Notices. All notices and other communications
hereunder shall be in writing and shall be hand delivered with
receipt acknowledged, sent by telecopy, telegraph, telex,
facsimile transmission or any other similar means of electronic
communication, mailed by first class mail, registered or
certified, return receipt requested, or sent by recognized
overnight carrier, postage prepaid and with acknowledgement of
delivery, to the parties at the addresses or numbers set forth
below or as to each party at such other or additional address or
numbers as shall be designated by such party in a written notice
to the other party thereto:
1. to the Authority at the following address:
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Executive Director
Facsimile: 000-000-0000
2. to Mirage NJ at the following address:
c/o Mirage Resorts, Incorporated
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Vice President & General Counsel
Facsimile: 000-000-0000
Notice shall be deemed given when received. The
Authority or Mirage NJ may, by notice given hereunder, designate
any further or different addresses to which subsequent notices,
certificates or other communication shall be sent. Notices may
be given on behalf of a party by its attorney.
SECTION 7.2. Severability. If one or more provisions of
this Donation Agreement, or the application of any provision of
this Donation Agreement to any set of circumstances, shall be
determined to be invalid or ineffective for any reason, such
determination shall not affect the validity or enforceability of
the remaining provisions or the application of said provision or
any remaining provisions to a set of different circumstances.
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SECTION 7.3. Governing Law. This Donation Agreement shall
be governed by and construed as a contract negotiated, entered
into and performed in, and in accordance with the laws of the
State of New Jersey without regard to principles of conflicts of
law. Each party irrevocably consents to the exclusive
jurisdiction of the Superior Court of the State of New Jersey
venued in Atlantic County in any and all actions and proceedings
under this Donation Agreement. Any service of process and other
notice in any action, suit or proceeding shall be effective in
the manner set forth in Section 7.1 above.
SECTION 7.4. Execution of Counterparts. This Donation
Agreement may be simultaneously executed in several counterparts,
by manual or facsimile signatures, each of which counterparts
shall be an original and all of which shall constitute but one
and the same instrument.
SECTION 7.5. Amendments. This Donation Agreement may be
amended only with the concurrent written consents of the parties
hereto. In the event that the Act is amended, the Authority and
Mirage NJ hereby agree to amend this Donation Agreement provided
such amendment does not reduce or increase the obligations of
either party and is made to be consistent with the Act.
SECTION 7.6. Nature of Relationship. This Donation
Agreement constitutes a contractual agreement between the
Authority and Mirage NJ and is not intended nor shall it be
construed so as to create any form of a partnership, joint
venture or other business relationship as between the Authority
and Mirage NJ.
SECTION 7.7. Assignment. The interest of any party in this
Donation Agreement may not be assigned by any such party without
the prior written consent of all other parties to this Donation
Agreement.
SECTION 7.8. Additional Documents. The parties hereto
agree to execute such additional documents and to take such
additional actions as are necessary to effectuate the terms of
this Donation Agreement.
SECTION 7.9. Construction of Certain Terms. Wherever the
term "Authority" shall be used in this Donation Agreement, the
term shall include the Authority's successors and permitted
assigns.
SECTION 7.10. Fees and Expenses. Except as provided
otherwise in Section 6.2 hereof, each party hereto shall be
responsible for its own fees and expenses in connection with the
negotiations and consummation of the transactions contemplated by
this Agreement, including the transactions contemplated by the
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Bond Purchase Agreement. Nothing contained in this Section 7.10
shall limit the rights of either party to receive reimbursement
of its fees and expenses as may be provided in the Road
Development Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Donation Agreement to be executed by its duly authorized officers
and attested as of the date first above written.
ATTEST: CASINO REINVESTMENT DEVELOPMENT
AUTHORITY
/s/ [Illegible] BY:/s/ Xxxxx X. Xxxxxxx
---------------------------
XXXXX X. XXXXXXX
Executive Director
ATTEST: MAC, CORP.
/s/ Xxxxx X. Xxxxxx BY:/s/ Xxxxx X. Xxxxx
---------------------------
XXXXX X. XXXXX
Assistant Secretary
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