AMENDMENT NUMBER ONE TO DEVELOPMENT AGREEMENT
EXHIBIT
10.9
AMENDMENT
NUMBER ONE TO
THIS
AMENDMENT NUMBER ONE TO DEVELOPMENT AGREEMENT BETWEEN THE CITY OF ▇▇▇▇ AND
THE
MAJESTIC STAR CASINO, LLC (the “Amendment”),
dated
as of October 19, 2005, is entered into by and among the City of ▇▇▇▇, an
Indiana municipal corporation (the “City”),
The
Majestic Star Casino, LLC, an Indiana limited liability company (“Majestic”),
and
▇▇▇▇▇ Indiana, Inc., a Delaware corporation (“▇▇▇▇▇”).
W
I T N E
S S E T H
WHEREAS,
Majestic and the City are parties to a Development Agreement, dated as of March
26, 1996 (the “Majestic
Development Agreement”),
pursuant to which, among other things, Majestic made certain commitments to
the
City relative to certain economic development projects in the City and
▇▇▇▇▇▇▇▇▇▇ Harbor, and agreed to pay the City certain additional payments,
as
more specifically set forth in the Majestic Development Agreement;
WHEREAS,
▇▇▇▇▇ and the City are parties to a Development Agreement, dated as of May
1
1996, as amended by that certain Addendum to Development Agreement, dated as
of
July 12, 1996, and further amended by that certain Second Amendment to
Development Agreement, dated February, 2001 (collectively, the “▇▇▇▇▇
Development Agreement”),
pursuant to which, among other things, ▇▇▇▇▇ made certain commitments to the
City relative to certain economic development projects in the City and
▇▇▇▇▇▇▇▇▇▇ Harbor, and agreed to pay the City certain additional payments,
as
more specifically set forth in the ▇▇▇▇▇ Development Agreement;
WHEREAS,
▇▇▇▇ New Century, LLC, a Delaware limited liability company and an affiliate
of
Majestic (“GNC”),
and
the City are parties to a certain Assignment of Purchase Agreement and
Development Agreement, dated as of August 25, 1999, as amended by that certain
Addendum to Assignment of Purchase Agreement and Development Agreement, dated
as
of August 23, 2000 (collectively, the “GNC
Development Agreement”),
pursuant to which GNC and the City made certain commitments and agreements
to
each other related to the development of the Lehigh Property (as defined in
the
GNC Development Agreement), including certain GNC obligations relative to
conveyance of the outer harbor to the City, conveyance of a portion of the
inner
harbor to the City and GNC’s commitment to invest a minimum of $50,000,000 to
development on the property;
WHEREAS,
in connection with the purchase by Majestic from GNC of certain real property,
Majestic has assumed all of GNC’s obligations under the GNC Development
Agreement;
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WHEREAS,
Majestic proposes to acquire all of the capital stock of ▇▇▇▇▇ (the
“Acquisition”),
after
which Majestic, directly or indirectly, would operate both the Majestic
riverboat casino and the ▇▇▇▇▇ riverboat casino located at ▇▇▇▇▇▇▇▇▇▇ Harbor;
and
WHEREAS,
the parties to this Amendment desire to make certain agreements and
modifications related to the Majestic Development Agreement, the ▇▇▇▇▇
Development Agreement and the GNC Development Agreement in light of the passage
of time and change in circumstances since the execution of the original
Agreements:
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties agree to amend the Majestic
Development Agreement and the GNC Development Agreement, terminate the ▇▇▇▇▇
Development Agreement, and make certain other agreements and covenants as
follows:
1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Majestic Development Agreement.
2. Effectiveness.
This
Amendment shall only be effective on and after the closing of the Acquisition
and shall terminate if and when the Majestic Development Agreement terminates;
provided, however, that Section 9 of this Amendment shall terminate if and
when
the GNC Development Agreement terminates.
3. Other
Business.
Section
1.02 of the Majestic Development Agreement shall be amended by inserting the
following sentence at the end of the second paragraph of such
section:
Notwithstanding
any other provision herein, Section 1.02 shall not be applicable to the direct
or indirect ownership or operation by Developer, and the Developer shall not
be
prohibited from directly or indirectly owning and operating, the riverboat
casino currently owned and operated by ▇▇▇▇▇.
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4. Additional
Payments.
Section
2.05(a) of the Majestic Development Agreement shall be amended and restated
as
follows:
| (a) |
(i)
It is agreed that, except as provided for in subparagraph (ii) below,
each
Developer shall pay the City an amount equal to 3% of its respective
adjusted gross receipts, as defined in I.C. 4-33-2-2 (“AGR”, for each
month in which the applicable Developer conducts Riverboat Gaming
Operations (the “AGR Commitment”). The AGR Commitment for a given month
shall be paid on the 10th
day of the following month. The City and each Developer agree to
reconcile
the payments made by the Developer toward its respective AGR Commitment
with the actual AGR within thirty (30) days of the close of each
calendar
quarter. Any overpayment of the AGR Commitment for the preceding
quarter
shall be applied toward the next installment(s) of the respective
Developer’s AGR Commitment due the City. The Developer agrees to pay any
underpayment of its respective AGR Commitment with the next monthly
installment due the City.
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(ii)
It
is agreed that the combined total amount of the AGR Commitments paid for both
boats shall not be less than $6 Million Dollars. If, and only if, the combined
total of the AGR Commitments for both boats exceed $6 Million Dollars, any
amount in excess of $6 Million Dollars shall be placed in a Lakefront Capital
Improvement Fund (Fund), to be established by Developer, a restricted use,
non-reverting fund from which any expenditure shall require the approval of
both
the City, as represented by the Mayor, and Developer, except as set forth in
the
following sentence. The assets of the Fund may only be used to pay for, or
reimburse the costs of, environmental assessment and remediation, or fulfillment
of the City’s obligations under Section 6(b), (c), (d) or (e) of the GNC
Development Agreement, as amended, and a minimum of 50% of the assets of the
Fund towards site preparation, infrastructure improvements and capital
improvements, at the sole discretion of Developer, on or for the benefit of
the
areas identified in Exhibit G attached hereto. Any expenditure from the Fund
shall not be included in calculating the Minimum Investment for purposes of
the
GNC Development Agreement, as amended.
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(iii)
Notwithstanding anything herein to the contrary, the City and the Developer
shall review the provisions of the Majestic Development Agreement every five
(5)
years from the date of this Amendment to assess the viability of such agreement
in light of the prevailing economic and market conditions. Each of the City
and
the Developer shall negotiate in good faith any modification or termination
of
the Majestic Development Agreement in light of such review.
▇▇▇▇▇
shall be deemed a “Developer” for purposes of the amended and restated Section
2.05(a) of the Majestic Development Agreement.
5. Financial
Reporting.
Section
3.10 of the Majestic Development Agreement shall be amended and restated as
follows:
Section
3.10 Financial Reporting.
Each
Developer shall provide the City, on a calendar year quarterly basis, accurate
reports of the data used to compute its AGR Commitment and demonstrating its
calculation of the monthly AGR Commitment payment for the prior three months
and
year-to-date. Each such report shall be certified to be accurate by a
representative of the Developer who has personal knowledge of the accuracy
of
the contents of the reports. Each Developer shall maintain and keep, or shall
cause to be maintained and kept, full and accurate books and records within
the
City or such other accessible location, of all business conducted or transacted
relative to the Project, which may reasonably assist the City in determining
and
verifying the revenues supporting the AGR Commitment of the Developers and
any
Investment Commitment. If a Developer maintains permanent records in a
computerized or microfiche fashion, such Developer shall provide to the City,
upon reasonable request, a detailed index to the microfiche or computerized
record and either a digital copy of the same or access to facilities in the
City
where appropriate City representatives can view and, as appropriate, download
the information necessary to determine and verify the revenues and expenditures.
The books and records shall be retained and stored pursuant to such policies
currently in effect for the City.
▇▇▇▇▇
shall be deemed a “Developer” for purposes of the amended and restated Section
3.10 of the Majestic Development Agreement. In addition, the term “Project”
shall be deemed to include the ▇▇▇▇▇ riverboat casino currently located at
▇▇▇▇▇▇▇▇▇▇ Harbor for purposes of the amended and restated Section 3.10 of
the
Majestic Development Agreement.
6. Sale
or Transfer.
The
term “Developer” shall include ▇▇▇▇▇ for purposes of Section 4.01 of the
Majestic Development Agreement.
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7. ▇▇▇▇▇▇
Foundation.
A new
Section 6.10 shall be added to the Majestic Development Agreement:, as
follows
6.10 ▇▇▇▇▇▇
Foundation.
Developer agrees to cause its ultimate owner, ▇▇▇ ▇. ▇▇▇▇▇▇, to establish a
charitable education foundation qualified as tax exempt pursuant to one or
more
provisions of Section 501(c) of the Internal Revenue Code, to be called the
“▇▇▇▇▇▇ Foundation,” for providing benefits to the community in the form of
scholarships and assistance to community schools, education organizations and
other charitable entities. Either directly from Developer or from an affiliate
of Developer, an annual contribution of $100,000 shall be made to the ▇▇▇▇▇▇
Foundation on or before January 30 of each year beginning in 2006. Developer
shall cause the board governing said foundation to include one or more
representatives appointed by the Mayor, City Council, Gary Community School
Corporation, Indiana University Northwest, and Ivy Tech-Gary. At a minimum,
50%
of the annual receipts and income of the ▇▇▇▇▇▇ Foundation (up to a maximum
annual amount of $50,000) shall be expended each year for scholarships for
▇▇▇▇
residents to attend post-secondary education institutions.
8. Satisfaction
of ▇▇▇▇▇ Investment and Financial Commitments.
Prior
to the effectiveness of this Amendment, ▇▇▇▇▇ or Majestic shall pay any
outstanding amounts due to the City under Sections 2.01, 2.05, and 6.10 of
the
▇▇▇▇▇ Development Agreement, as amended.
9. Termination
of ▇▇▇▇▇ Development Agreement; Release.
Upon
the effectiveness of this Amendment, the ▇▇▇▇▇ Development Agreement shall
be
terminated and of no further force and effect.
10. Amendments
to GNC Development Agreement.
Upon
the effectiveness of this Amendment, (a) Exhibits E and F attached to this
Amendment are hereby substituted for the Exhibits E and F attached to the
Addendum to the GNC Development Agreement dated August 23rd,
2000
and it is agreed by the parties that the designs of the access road improvements
contained therein and the plan for the Harbor Improvements as shown in Exhibit
D
may be modified prior to construction to accommodate regulatory requirements,
adjacent roadways or neighboring developments; (b) Sections 9, 12, 13(b) and
13(c) of the GNC Development Agreement, as amended, shall be amended and
restated as follows:
9. GNC’s
Obligation to Develop the Project.
Subject
to the provisions of this Agreement, GNC agrees that it will undertake to
develop that part of the Lehigh Property, and may develop such other property
contiguous to the Lehigh Property, that is depicted as amended and attached
to
this Amendment as Exhibit
G - Revised
(collectively, the “Project
Property”)
as the
mixed-use project generally described in the preliminary plans and narrative
set
forth in Exhibit
H
(the
“Preliminary
Plans”).
The
parties acknowledge and agree that the precise nature of the development will
be
determined after GNC has refined the Preliminary Plans and has obtained and
evaluated engineering studies, feasibility studies, marketing studies,
development projects, tenant or user commitments, financing commitments and
other pertinent information pertaining to the development of such project.
The
project described in the Project Property and the Preliminary Plans, as they
may
be changed or modified pursuant to paragraphs 10 or 11, is referred to herein
as
the “Project.”
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12. Extent
of Investment.
GNC
agrees that the minimum investment by GNC or any affiliated entity of GNC,
in
the Project shall be at least Seventy Million ($70,000,000) Dollars (the
“Minimum
Investment”).
The
parties acknowledge that the Minimum Investment represents only part of the
overall Project, and that GNC’s investment obligations hereunder will be fully
satisfied if GNC and any affiliated entity of GNC meets the Minimum Investment.
The parties agree that the development obligations of GNC under this Agreement
shall be satisfied even if the entire Project is not constructed or developed,
so long as funds, services, other resources or other property satisfying the
Minimum Investment have been expended or incurred or otherwise utilized in
connection with the Project. For purposes of this Agreement, the following
costs, services, resources or other property incurred, expended or otherwise
utilized by GNC or any affiliated entity of GNC relative to the Project or
any
part thereof (including renovation costs for existing buildings), whether before
or after the date of this Agreement, shall apply toward the Minimum Investment:
(i) the purchase price of the Lehigh Property or any other real property
purchased by GNC or any affiliated entity of GNC, including, but not limited
to
any property acquired from the City or at the direction of the City; (ii) the
costs associated with the parking structure on the BHR Property or any other
parking structure associated with the Project; (iii) the fees or other charges
of any consultants or advisers, including finance consultants, environmental
consultants, surveyors, marketing consultants, accountants and like advisors;
(iv) all professional fees and related expenses, including architects,
engineers, accountants and attorneys; (v) the costs of environmental
remediation, reporting or testing; (vi) all permit fees for the Project or
any
portion thereof; (vii) construction period interest, insurance premiums and
taxes; (viii) all payments to general contractors, construction managers or
other trade contractors; (ix) demolition and demolition by-products; (x)
easements; (xi) utility changes or installations; (xii) the value of any
improvements, developments or construction of new facilities in connection
with
the Project; (xiii) all other “hard” and “soft” costs of constructing or
development of any part of the Project; and (xiv) any other property or resource
delivered, leased or otherwise exchanged, including, but not limited to property
or resources between the City on the one hand and GNC or any affiliated entity
of GNC on the other hand. Upon reasonable advance notice, GNC shall provide
the
City (or a consultant of the City) with access to the records and documentation
being maintained by GNC in respect of the costs that apply toward the Minimum
Investment, although in no event shall such records or documentation be deemed
to be available to the public. GNC shall provide City, on or before March 31
of
each year and until GNC (to the reasonable satisfaction of the City) completely
fulfills the Minimum Investment commitment (or such commitment is terminated),
a
detailed report identifying each and every expenditure by GNC during the prior
calendar year for which it claims credit toward the Minimum Investment
commitment and a yearly total for all previous years. Such report shall be
certified to be accurate by a person with personal knowledge of the accuracy
of
the report.
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13. Time
for Commencement and Completion.
(b) If
the
City has not completed its obligations under Section 6(b), (c), (d) and (e)
within thirty-six (36) months of the date of this Amendment, GNC’s obligations
under paragraphs 9 through 13 (as amended) to develop the Project and meet
its
Minimum Investment, and the City’s options under paragraph 15 shall terminate,
subject to extension of such date for the duration of delays occasioned by
acts
of God, war, civil unrest, strikes or labor disputes, labor shortages, material
shortages, inclement weather, lack of available funds and other causes beyond
the reasonable control of the City.
(c) GNC
shall
complete the Project to the point where it has fulfilled its Minimum Investment
within sixty (60) months after the date that the City has completed its
obligations pursuant to Section 6(b), (c), (d) and (e), subject to extension
of
such date for the duration of delays occasioned by acts of God, war, civil
unrest, strikes or labor disputes, labor shortages, material shortages,
inclement weather and other causes beyond the reasonable control of GNC. The
City shall cause the obligations imposed on it by Section 6(b), (c), (d), and
(e) to be completed as soon as available funding permits, subject to reasonable
extension of such date for delays occasioned by acts of God, war, civil unrest,
strikes or labor disputes, labor shortages, material shortages, inclement
weather and other causes, beyond the reasonable control of City. City, GNC,
and
the Developers commit to use all reasonable efforts to pursue all reasonably
available public funding for City's obligations under Section 5 and Section
6.
City commits to use reasonable efforts to assist GNC and Developers to obtain
third party financing for the Minimum Investment and any other Project
development activities approved by the City. In lieu of the time period stated
therein, City shall cause its obligations specified in Section 5 to complete
improvements to the Harbor, including the City Harbor Improvements, to be
completed after conveyance of the Harbor Improvements to the City by GNC as
provided for in Section 5 as soon thereafter as available funding permits,
subject to reasonable extension of such date for delays occasioned by acts
of
God, war, civil unrest, strikes or labor disputes, labor shortages, material
shortages, inclement weather, regulatory permit requirements and procedures,
and
other causes beyond the reasonable control of City.
11. Mutual
Release.
(a) Upon
the
effectiveness of this Amendment, ▇▇▇▇▇ does hereby release and discharge the
City, and its officers, employees, and agents, from and against any and all
claims, demands, debts, accounts, contracts, obligations, liabilities, actions
and causes of action, whether in law or in equity, and of any kind or nature,
which as of the effectiveness of this Amendment, ▇▇▇▇▇ had, has or hereafter
may
have, directly or indirectly, arising out of or in any way relating to the
▇▇▇▇▇
Development Agreement.
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(b) Upon
the
effectiveness of this Amendment, the City does hereby release and discharge
▇▇▇▇▇, its successors and assigns, and each of its officers, directors,
employees, and agents, from and against any and all claims, demands, debts,
accounts, contracts, obligations, liabilities, actions and causes of action,
whether in law or in equity, and of any kind or nature, which as of the
effectiveness of this Amendment, the City had, has or hereafter may have,
directly or indirectly, arising out of or in any way relating to the ▇▇▇▇▇
Development Agreement excepting those specifically identified in this Amendment
as continuing obligations of ▇▇▇▇▇.
[Signatures
on Following Page]
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IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered as of the date first written above.
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THE
CITY OF ▇▇▇▇,
an
Indiana municipal corporation
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By:
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Title:
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THE
MAJESTIC STAR CASINO, LLC,
an
Indiana limited liability company
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By:
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Title:
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▇▇▇▇▇
INDIANA, INC.,
a
Delaware corporation
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By:
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Title:
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