Document/Exhibit Description Pages Size
1: 10-K Annual Report 77 476K
2: EX-10.56 Senior Executive Plan 3 17K
3: EX-10.57 Senior Executive Agmt. 5 21K
4: EX-10.58 Amend. #2 to Operating Agmt. 21 82K
5: EX-10.59 Note Purchase Agmt. 41 168K
6: EX-10.60 Reg. Rights Agmt. 25 99K
7: EX-10.61 Note Purchase Agmt. 41 168K
8: EX-10.62 Regis. Rights Agmt. 25 99K
9: EX-10.63 Note Purchase Agmt. 41 168K
10: EX-10.64 Note Purchase Agmt. 41 168K
11: EX-10.65 Note Purchase Agmt. 41 168K
12: EX-10.66 Note Purchase Agmt. 41 168K
13: EX-10.67 Regis. Rights Agmt. 25 100K
14: EX-10.68 Stock Pledge Agmt. 11 35K
15: EX-21.1 Subsidiaries 1 7K
16: EX-23 Consent of Peat 1 9K
17: EX-27 Financial Data Schedule 2 8K
AMENDMENT NO. 2 TO THE OPERATING AGREEMENT OF NASHVILLE
NEVADA, L.L.C.
THIS AMENDMENT NO. 2 TO THE OPERATING AGREEMENT OF NASHVILLE NEVADA, L.L.C.
(this "Amendment"), is effective (except as otherwise specified) as of September
30, 1994, by and between MOJAVE GAMING, INC., a Nevada corporation ("Mojave") as
successor in interest to Eagle Gaming, Inc., a Nevada corporation ("Eagle"),
MOJAVE VALLEY RESORT CASINO COMPANY, a Nevada corporation ("MVRCC"), ELSINORE
CORPORATION, a Nevada corporation ("Elsinore") and NASHVILLE NEVADA, L.L.C., a
Nevada limited-liability company ("Nashville Nevada").
PRELIMINARY STATEMENTS
A. Mojave, MVRCC and Elsinore are parties to that certain Operating
Agreement of Nashville Nevada, L.L.C. dated as of May 27, 1994, as modified by
that certain Amendment to the Operating Agreement of Nashville Nevada, L.L.C.
dated as of June 9, 1994 (such documents collectively, the "Operating
Agreement").
B. The parties wish to further modify the Operating Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Sublease and Option Agreement. Recital B. shall be amended to read as
follows:
MVRCC is an Affiliate (as defined below) of MVR and has entered into
an amended and restated sublease with MVR dated as of August 23, 1994,
approved by the Tribe on August 23, 1994 and by the BIA on October 7,
1994 (the "Sublease"). MVRCC and MVR are also parties to an amended
and restated lease option agreement dated as of October 6, 1994
approved by the Tribe on October 6, 1994 and by the BIA on October 7,
1994 (the "Option Agreement") to sublet up to three (3) additional
parcels of the Leased Land (the "Additional Sites") under the terms
and conditions set forth therein.
2. Capital Contributions. Recital E. shall be amended to read as
follows:
Mojave shall make a capital contribution of Ten Million Dollars
($10,000,000) in the form of cash to the joint venture and MVRCC, as a
capital contribution to the joint venture, shall (i) assign its rights
in the Sublease and (ii) remain solely liable for the Minimum Rent (as
defined therein) charges for the first two (2) years of the Sublease.
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3. Development Option Agreement. The form of Development Option Agreement
set forth as Exhibit "F" to the Agreement shall be deleted in its entirety and
the form of Development Option Agreement attached hereto as Exhibit "A" shall be
substituted in lieu thereof.
4. Annual Operating Budget. Section 1.3 of the Operating Agreement shall
be amended to delete the reference to "July 15, 1995" and to insert "January 31,
1996" in lieu thereof.
5. Annual Plan. Section 1.4 of the Operating Agreement shall be amended
to delete the reference to "July 15, 1995" and to insert "January 31, 1996" in
lieu thereof.
6. Capital Accounts. Section 1.5 of the Operating Agreement shall be
amended to read as follows:
The "Capital Account" of a Member means the capital account of
that Member determined from the inception of the Company strictly in
accordance with the rules set forth in Section 1.704-1(b)(2)(iv) of
the Treasury Regulations.
Subject to the previous paragraph, "Capital Account" means:
(a) The amount of money contributed by the Member to the Company,
increased by: (i) the fair market value of property contributed by the
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Member to the Company, if any (net of liabilities securing such
contributed property that the Company is considered to assume or take
subject to under Section 752 of the Code); and (ii) items of Company
income allocated to the Member, including income and gain exempt from
tax, and decreased by: (iii) the amount of money actually distributed
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or deemed distributed to the Member; (iv) the fair market value of
property distributed to the Member, if any, by the Company (net of
liabilities securing such distributed property that the Member is
considered to assume or take subject to under Section 752 of the
Code); (v) the Member's share of expenditures of the Company described
in Section 705(a)(2)(B) of the Code (including, for this purpose,
losses which are nondeductible under Section 267(a)(1) or Section
707(b) of the Code): (vi) the Member's share of amounts paid or
incurred by the Company to organize the Company or to promote the sale
of (or to sell) an interest in the Company (except to the extent
properly amortizable for tax purposes) and (vii) items of loss and
deduction allocated to the Member.
For this purpose, "income" refers to all items of income
(including all items of gain and including income exempt from tax)
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as properly determined for "book" purposes, and "loss" refers to all
items of loss (including deductions) as properly determined for "book"
purposes. "Book" income and loss shall be determined based on the
value of the Company's assets as set forth on the books of the Company
to the extent permitted and in accordance with the principles of
Section 1.704-1(b)(2)(iv)(d), (f), and (g) of the Treasury
Regulations. To the extent permissible under applicable Treasury
Regulations, the Company will elect to revalue the Capital Accounts of
the Members. Otherwise, book income and loss shall be determined
strictly in accordance with federal income tax principles (including
rules governing depreciation and amortization), applied hypothetically
based on values of Company assets as set forth on the Company books.
7. Operational Standards. Section 1.47 of the Operating Agreement shall
be amended to delete the reference to "July 15, 1995" and to insert "January 31,
1996" in lieu thereof.
8. Assignment and Assumption of Sublease. Section 2.5 of the Operating
Agreement shall be amended to read as follows:
MVRCC has assigned its rights in the Sublease to the Company and the
Company has assumed all of MVRCC's obligations under the Sublease
pursuant to the terms and conditions of that certain Assignment and
Assumption Agreement dated September 9, 1994 (the "Assignment"). The
obligations of MVRCC and the Company under the Assignment are
contingent upon the occurrence of the Effective Date. As part of its
Capital Contribution, MVRCC shall be solely liable, without any
reimbursement from the Company, for Minimum Rent (as defined in the
Sublease) charges for the first two (2) years of the Sublease, and in
the event of any abatement of Minimum Rent pursuant to Paragraph 57 of
the Sublease during the first two (2) years of the Sublease, after the
first two (2) years MVRCC shall continue to be liable for such Minimum
Rent for such longer period so that the total Minimum Rent paid solely
by MVRCC, without reimbursement from the Company, shall equal One
Million Two Hundred Thirty-Two Thousand Dollars ($1,232,000).
9. Assumption of MVR Debts. Article II of the Operating Agreement shall
be amended to add the following as Section 2.16:
The Company shall assume the obligation to pay (i) the sum of Seventy-
Five Thousand Dollars ($75,000) owed by MVR to the Tribe pursuant to
the Ground Lease upon demand of the Tribe; (ii)
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the sum of Forty-seven Thousand Seven Hundred Forty-seven Dollars
($47,747) representing the first installment of the 1995 property
taxes assessed on the Leased Land, which amount shall be paid by the
Company to the Tribe no later than March 31, 1995; and (iii) if the
Effective Date has not occurred prior to September 15, 1995, the sum
of Forty-seven Thousand Seven Hundred Forty-seven Dollars ($47,747)
representing the second installment of the 1995 property taxes
assessed on the Leased Land which amount shall be paid by the Company
to the Tribe on or before September 15, 1995. The expenses set forth
above shall be deemed approved Pre-Effective Date Costs.
10. Mojave Capital Contribution. Section 2.6 of the Operating Agreement
shall be amended as follows:
On the Effective Date, Mojave shall make a Capital Contribution to the
Company in the form of cash of Six Million Dollars ($6,000,000) less
any non-reimbursed amounts previously expended by Mojave or Project
Coordinator on the Pre-Effective Date Costs. Within one (1) year of
the Effective Date, Mojave shall either make the balance of its
Capital Contribution as provided in Section 4.1 of this Agreement
(i.e., Ten Million Dollars ($10,000,000) less any prior Capital
Contributions credited to Mojave) or assign a portion of its
Membership Interest in compliance with Section 8.1 of this Agreement
and cause such assignee to do so; provided, however, that in no event
shall the Membership Interest of MVRCC be reduced. In the event that
the balance of Mojave's Capital Contribution is not made prior to the
first anniversary of the Effective Date, the Membership Interest of
Mojave shall be reduced by ten percent (10%), the Membership Interest
of MVRCC shall be increased by ten percent (10%) and the obligation of
Mojave to make the balance of the Capital Contribution to the Company
shall terminate.
11. Off-Site Improvements. Section 2.9 of the Operating Agreement shall
be amended to delete the reference to "September 15, 1996" and to insert
"September 15, 1997" in lieu thereof and to delete the reference to "February 1,
1997" and to insert "August 1, 1997" in lieu thereof.
12. Opening Date. Section 2.10 of the Operating Agreement shall be
amended to delete the reference to "January 15, 1996" and to insert "September
15, 1996" in lieu thereof and to delete the reference to "July 15, 1996" and to
insert "March 15, 1997" in lieu thereof.
13. Organization, Services, Sales and Marketing Program. Section
3.11(a)(ii)(A) of the Operating Agreement shall be amended to delete the
reference to "July 15, 1995" and to insert "January 31, 1996" in lieu thereof.
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14. Annual Plan Submission. Section 3.11(a)(ii)(D) of the Operating
Agreement shall be amended to delete the reference to "July 15, 1995" and to
insert "January 31, 1996" in lieu thereof.
15. Pre-Effective Date Costs. The second sentence of Section 3.17 of the
Operating Agreement shall be amended effective March 31, 1995 to read as
follows:
Within ten (10) days of the Company's receipt of an invoice for each
such expense, Mojave shall (i) pay to the Company its proportionate
share of such expense based upon its Membership Interest and (ii) pay
the remainder of such expense to the Company which shall be deemed to
be a payment on behalf of MVRCC of such Pre-Effective Date Cost as
well as a non-interest bearing loan to MVRCC which shall be due and
payable to Mojave on the earlier to occur of (x) the Effective Date
if, and only if, the Effective Date occurs, or (y) the receipt by
MVRCC of alternative project financing, if any.
16. Operational Standards. Section 3.11(a)(iii) of the Operating
Agreement shall be amended to delete the reference to "July 15, 1995" and to
insert "January 31, 1996" in lieu thereof.
17. Design, Development and Construction Budget. Section 3.32 of the
Operating Agreement shall be amended to read as follows: "The Design,
Development and Construction Budget shall be as set forth on Exhibit "I"
attached hereto."
18. Additional Contributions. Section 4.3 of the Operating Agreement
shall be amended to read as follows:
Subsequent to execution hereof, all expenses of the Company shall
be paid out of the receipts of the Company. Except for any Capital
Contribution of equity Project Financing made by Mojave pursuant to
Section 4.4, and any Capital Contribution required pursuant to
Sections 2.5, 2.6 and 4.1, no Member shall be obligated or entitled to
make any Capital Contribution.
19. Project Financing. The third sentence of Section 4.4 of the Operating
Agreement shall be amended to read as follows:
Any equity Project Financing obtained by Mojave or any Affiliate of
Mojave which is contributed to the Company shall be contributed to the
Company as equity and shall constitute an additional Capital
Contribution by Mojave.
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The fifth sentence of Section 4.4 of the Operating Agreement shall be
amended to read as follows:
Mojave shall have until September 30, 1995 (which date shall not be
subject to any further extension or modification) to obtain the
Project Financing and the construction of the Project shall be
commenced as soon as is reasonably practicable after receipt of the
Project Financing (but in no event later than sixty (60) days from the
date the Project Financing has been obtained) and diligently pursued
to completion, otherwise the Company shall dissolve pursuant to
Section 9.2 of this Agreement.
20. Contingencies. Section 4.5 of the Operating Agreement shall be
amended to delete the reference to "January 15, 1995" and to insert "September
15, 1995" in lieu thereof. The last sentence of Section 4.5 of the Operating
Agreement shall be amended to delete the reference to "October 1, 1994" and to
insert "September 1, 1995" in lieu thereof.
21. Sublease Impositions Reimbursement. The first sentence of Section 4.6
of the Operating Agreement shall be amended to read as follows:
On the Effective Date, the Company shall reimburse, to the extent
not previously paid by the Company, (i) MVR for any Impositions (as
defined in the Sublease) paid by MVR from the date of the Sublease,
through and including the Commencement Date (as defined in the
Sublease) and (ii) MVRCC for any Impositions (as defined in the
Sublease) paid by MVRCC from the Commencement Date (as defined in the
Sublease) through and including the Effective Date.
22. Gaming Operations. Section 5.3 of the Operating Agreement shall be
amended to delete the reference to "July 15, 1995" and to insert "January 31,
1996" in lieu thereof.
23. Determination of Net Income and Net Losses. Section 6.1 of the
Operating Agreement shall be amended to read as follows:
The Company's net income or net losses for each Fiscal Year shall
be determined (for purposes of Treasury Regulations
promulgated pursuant to Section 704(b) of the Code) as soon as
practicable after the close of that Fiscal Year in accordance with the
accounting principles employed in the preparation of the federal
income tax return filed by the Company for that year, but without any
special provisions for tax exempt or partially tax exempt income.
This Section 6.1 shall not be applicable for determining net income
and net loss for financial reporting purposes.
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24. Company Minimum Gain Chargeback. Section 7.1 of the Operating
Agreement shall be amended to delete the phrase "with a deficit Capital Account
balance at the end of the year." Section 7.1(a) of the Operating Agreement
shall be amended to delete the phrase "on one more" and to insert "one or more"
in lieu thereof.
25. Ordering Rules. Section 7.5 of the Operating Agreement shall be
amended to insert the following as the last sentence thereof:
If the Management Committee determines, after consultation with
tax counsel, that the allocation of any item of income, gain, loss,
deduction or credit is not specified in this Article VII (an
"unallocated item"), or that the allocation of income, gain, loss,
deduction or credit hereunder is clearly inconsistent with the
Members' economic interests in the Company (determined by reference to
the general principles of Treas. Reg. (S)1.704-1(b)(iv), Treas. Reg.
(S)1.704-1(b) generally and the factors set forth in Treas. Reg.
(S)1.704-1(b)(3)(ii)) (a "misallocated item"), then the Management
Committee may allocate such unallocated items, or reallocate such
misallocated items, to reflect such economic interests.
26. Qualified Income Offset. Section 7.6 of the Operating Agreement shall
be amended to read as follows:
No Net Loss shall be allocated to any Member to the extent such
allocation would create a deficit in the Capital Account of such
Member computed after making all Capital Account adjustments for such
year, debiting, as of the end of such year, adjustments, allocations,
and distributions described in Treasury Regulations Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6) and crediting any amounts such Member is
obligated to restore or is deemed obligated to restore pursuant to
Treasury Regulations Sections 1.704(2)(g)(1) or 1.704-2(i)(5). Any
such Net Loss shall instead be allocated to the other Members, pro
rata in accordance with and to the extent of their positive Capital
Account balances. Notwithstanding any provision of this Agreement to
the contrary (except for Sections 7.1 and 7.2 of this Agreement, which
shall be applied first), if in any taxable year of the Company (or
other period) a Member unexpectedly receives an adjustment, allocation
or distribution described in Treasury Regulations Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), or any successor provision thereto, or
an allocation of Net Loss that causes such a deficit balance in the
Capital Account of such Member, such Member will be allocated items of
income or gain to the extent required by Treasury Regulations Section
1.704-1(b)(2)(ii)(d). This provision is intended
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to constitute a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
27. Restrictions on Transfers of Units. Section 8.1 of the Operating
Agreement shall be amended to (i) delete the phrase "which consent shall not be
unreasonably withheld;" (ii) delete the phrase "such Member may contract to sell
the Membership Interest to a third party,;" and to insert "such Member may
contract to assign (but not substitute the assignee as a Member) to a third
party, in lieu thereof;" and (iii) in each of the two places the phrase "right
to assign (but not substitute)" appears, to read, instead, as follows: "right
to assign (but not substitute the assignee as a Member)".
28. New Members. Section 8.2 of the Operating Agreement shall be amended
to read as follows:
A new Member including, without limitation, a substitute Member
(in either case, a "new Member"), may be admitted only with the
unanimous written consent of the Members, which consent may be
withheld in the sole and arbitrary discretion of such Members. A new
Member may be admitted upon execution of an amendment to this
Agreement and the filing of an amendment to the Articles of
Organization of the Company. Each new Member shall be admitted only
if such new Member has executed an amendment to this Agreement in
which the new Member agrees to be bound by the terms and provisions of
this Agreement as they may be modified by that amendment. A new
Member's Capital Contribution and share of the Company's profits and
losses shall be set forth in an amendment to this Agreement containing
the written consent of the Members agreeing to the admission of the
new Member. Until such time as a transferee is admitted as a new
Member, such transferee by virtue of such transfer shall have no right
to participate in the management of the business and affairs of the
Company or to become a Member.
29. Expulsion of a Member. Section 8.4 of the Operating Agreement shall
be amended to delete the reference to "October 1, 1995" and to insert "October
1, 1996" in lieu thereof.
30. Events of Default. Section 9.1(a) of the Operating Agreement shall be
amended to read as follows: "the failure to pay or make a required payment,
distribution, or contribution hereunder within ten (10) days following written
notice of such default;".
31. Events of Dissolution. Section 9.2(h) of the Operating Agreement
shall be amended to delete the reference to "October 1, 1994" and to insert
"September 1, 1995" in lieu thereof.
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32. Distribution of Assets. Section 9.3(b) of the Operating Agreement
shall be amended to read as follows:
to all the Members, pro rata, in accordance with their "unreturned
Capital Account", to the extent of any unreturned Capital Accounts.
For the purposes of this Section 9.3(b) the phrase "unreturned Capital
Accounts" shall be defined as the amount of cash and the fair market
value of any property contributed to the Company as a Capital
Contribution of a Member (with such property valued pursuant to
Section 1.5 of this Agreement) reduced by the amount of cash and the
fair market value of any property distributed in accordance with
Section 7.7 of this Agreement; and
33. Substitution of Mojave. As between the parties to this Agreement all
references in the Sublease to "Eagle Gaming, Inc." shall be deemed to mean
"Mojave Gaming, Inc." and all references to "Eagle" shall be deemed to mean
"Mojave."
34. Effect. Except as modified by this Amendment, all other terms and
conditions in the Operating Agreement including, without limitation, the
guarantee of Elsinore pursuant to Section 12.12 thereto, shall remain in full
force and effect and this Agreement shall be governed by the provisions thereof.
The parties hereto hereby affirm each and every term of the Operating Agreement
as modified by this Amendment.
35. Binding Nature; Assignments. This Amendment is binding upon and
inures to the benefit of the parties hereto and their respective heirs,
successors and assigns.
36. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Nevada.
37. Further Documents and Action. The parties agree to execute and
deliver all such further or instruments and take all action as may be reasonably
necessary or appropriate to carry out the purposes of this Amendment.
38. Executed in Counterparts. This Amendment may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
39. Capitalized Terms. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Operating Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first hereinabove written.
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ELSINORE CORPORATION, A NEVADA MOJAVE GAMING, INC., A NEVADA
CORPORATION CORPORATION
By: By:
--------------------------------- --------------------------------
Name: Name:
---------------------------- ---------------------------
Title: Title:
--------------------------- --------------------------
MOJAVE VALLEY RESORT CASINO NASHVILLE NEVADA, L.L.C., A NEVADA
COMPANY, A NEVADA CORPORATION LIMITED-LIABILITY COMPANY
By: By:
--------------------------------- --------------------------------
Name: Name:
---------------------------- ---------------------------
Title: Title:
--------------------------- --------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
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EXHIBIT "A"
Development Option Agreement
DEVELOPMENT OPTION AGREEMENT
----------------------------
THIS DEVELOPMENT OPTION AGREEMENT (this "Development Agreement") dated as
of ____________________, 199__, is made by and among MOJAVE GAMING, INC., a
Nevada corporation ("Mojave"), ELSINORE CORPORATION, a Nevada corporation
("Elsinore") and MOJAVE VALLEY RESORT CASINO COMPANY, a Nevada corporation
("MVRCC").
RECITALS
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A. Mojave Valley Resort, Inc., a Nevada corporation ("MVR") and the Fort
Mojave Indian Tribe, an Indian Tribe organized in accordance with Section 16 of
the Act of June 18, 1934, 25 U.S.C. Section 476 (the "Tribe") are parties to a
ground lease dated August 21, 1990, as amended by a lease modification agreement
approved by the United States Department of the Interior, Bureau of Indian
Affairs ("BIA") on June 4, 1993, (collectively, the "Ground Lease") for
approximately four hundred eighty-eight (488) acres of land owned by the Tribe
as further described in the Ground Lease (the "Leased Land"). MVR desires to
develop the Leased Land in accordance with the Tribe's master plan for
development (the "Master Plan").
B. MVR and MVRCC are parties to an Amended and Restated Hotel/Casino
Sublease for Owner-Operator dated as of August 23, 1994, approved by the Tribe
on August 23, 1994 and the BIA on October 7, 1994 (the "Sublease") for a certain
portion of the Leased Land consisting of two parcels as further described
therein (the "Site"). Elsinore and MVRCC are parties to a Memorandum of
Understanding dated February 2, 1994 ("MOU") with respect to the development of
the Site (the "Project"). Elsinore has assigned its rights in the MOU to Eagle
Gaming, Inc., a Nevada corporation ("Eagle"), who in turn assigned its rights in
the MOU to Mojave. Elsinore agrees to guarantee the performance of Mojave or
any permitted transferee of Mojave under this Development Agreement.
C. Eagle, Elsinore and MVRCC are parties to an Operating Agreement dated
May 27, 1994, as thereafter amended (the "Agreement") with respect to the
organization of Nashville Nevada, L.L.C., a Nevada limited-liability company
(the "Company") which has been formed to construct, develop and operate the
Project. Eagle has assigned its rights in the Agreement to Mojave. MVRCC has
agreed to assign its rights under the Sublease to the Company pursuant to the
Agreement. The Agreement contemplates the construction of an approximately five
hundred (500) room hotel with a sixty thousand (60,000) square foot casino
containing approximately one thousand (1,000) slot machines and forty (40) table
games (which composition of slot machines and table games may vary from time to
time based upon customer demand) along with an approximately twenty-five (25)
acre recreational vehicle park containing approximately six hundred thirty-four
(634) parking spaces. Capitalized terms not otherwise defined herein shall have
the same meanings as set forth in the Agreement.
D. MVR and MVRCC are parties to a Second Amended and Restated Lease
Option Agreement dated as of October 6, 1994, approved by the Tribe on October
6, 1994 and the BIA on October 7, 1994 (the "Option Agreement") to sublease
portions of the Leased Land known as
parcel 4 as described in Exhibit "A-1" ("Parcel 4"), parcel 5 as described in
Exhibit "A-2" ("Parcel 5"), parcel 8 as described in Exhibit "A-3" ("Parcel 8"),
and parcel 6 as described in Exhibit "A-4" ("Parcel 6," and together with
Parcels 4, 5, and 8 the "Additional Sites" and each such parcel an "Additional
Site"). The Additional Sites are shown on the site plan attached hereto as
Exhibit "B". Upon exercise of a Sublease Option (as defined in the Option
Agreement) and receipt of the requisite approvals, if any, of the sublease and
assignment, a fee shall be paid to the Tribe (the "Option Fee") as set forth in
the Option Agreement. Mojave and MVRCC contemplate the construction, development
and operation of separate hotel/casino projects on certain of the Additional
Sites in conformance with the Master Plan and in each case consistent with a
design scheme, site plan, landscape plan, and inter-site circulation pattern
which complement the Project and every other hotel/casino project built on an
Additional Site or elsewhere on the Leased Land, pursuant to the terms and
conditions contained herein.
E. Due to the experience of Elsinore and Mojave, as an Affiliate of
Elsinore, in the development and operation of modern, first class hotel/casinos
and in reliance on the unique relationship of the parties, MVRCC hereby grants
to Mojave the Development Option (as defined below) (and such corresponding
rights to Elsinore as set forth herein) upon the terms and conditions set forth
in this Development Agreement.
TERMS OF AGREEMENT
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In consideration of the Agreement, the mutual covenants and conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Provided that (i) the Agreement, the Sublease, or the Option Agreement
has not been previously terminated other than by a default of MVRCC or any
Affiliate of MVRCC; (ii) the Company is not then in breach or default of the
Agreement or the Sublease including any event which with the giving of notice or
the lapse of time, or both, would constitute a breach or default (except for any
such event caused by the action or inaction of MVRCC); and (iii) Mojave,
Elsinore or an Affiliate of either of them is not then in breach or default of
the Agreement including any event which with the giving of notice or the lapse
of time, or both, would constitute a breach or default, then Mojave shall have
the option of entering into one (1) or more joint ventures with MVRCC or an
Affiliate of MVRCC to develop Additional Sites ("Development Option") upon the
terms and conditions set forth below, otherwise this Development Agreement shall
terminate:
(a) Mojave shall have a Development Option with respect to Parcel 4
which shall expire on or before 9:00 a.m. P.S.T., January 15, 1997, or one (1)
year following the Opening, whichever is later; provided, however, that at any
time prior to the Opening, should MVRCC or an Affiliate of MVRCC reach an
agreement with a third party or parties for the construction, development and
operation of a hotel/casino to be located on Parcel 4, the Development Option
for Parcel 4 shall terminate upon recordation of the construction financing for
such hotel/casino if the same shall be recorded prior to the Opening and
construction of such hotel/casino shall commence within ninety (90) days
thereafter. In the event of such an
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agreement, a Development Option for Parcel 5 shall be substituted in lieu
thereof which substituted Development Option shall expire on or before 9:00 a.m.
P.S.T., January 15, 1997, or one (1) year following the Opening, whichever is
later. MVRCC hereby assigns to Mojave MVRCC's approval rights under Paragraph
1(a) of the Option Agreement in the event that Parcel 5 is substituted for
Parcel 4. No construction shall be undertaken except under the supervision of an
architect licensed in the State of Nevada. The cost and expense of Mojave's
review of any proposed Building Plan (as defined in the Option Agreement)
required to be furnished pursuant to the Option Agreement shall be paid by
Mojave. To the extent that the time for substituting Parcel 5 for Parcel 4 and
for exercising the Sublease Option (as defined in the Option Agreement) is
extended pursuant to Paragraph 1(a) of the Option Agreement, the time for
substituting Parcel 5 for Parcel 4 and for exercising the Development Option
provided in this subparagraph 1(a) shall be likewise extended.
(b) provided that (i) Mojave has exercised its Development Option as
set forth in subparagraph 1(a) above; (ii) approval of the Tribe and the BIA to
the sublease for Parcel 4 or Parcel 5, as the case may be, has been obtained
within six (6) months following the submission of the sublease for such
approvals; (iii) the hotel/casino to be constructed thereon is open for business
to the public within the time period prescribed by the Joint Venture Agreement
(as defined below) entered into in connection with the exercise of the
Development Option set forth in subparagraph 1(a) above and (iv) Mojave,
Elsinore or any Affiliate of either of them is not then in default (other than a
default caused by MVRCC or an Affiliate of MVRCC) of the Joint Venture Agreement
(as defined below) or of the sublease, entered into in connection with the
Development Option set forth in subparagraph 1(a) above including any event
which with the giving of notice or lapse of time, or both, would constitute a
breach or default, then Mojave shall have a Development Option with respect to
Parcel 5 (or either Parcel 6 or Parcel 8, at the sole option of Mojave, in the
event that Parcel 5 has been substituted by MVRCC in accordance with
subparagraph 1(a) above), which shall expire at 9:00 a.m. P.D.T., July 15, 1998,
or six (6) months following the completion and opening for business to the
public of the hotel/casino to be developed pursuant to the exercise of the
Development Option set forth in subparagraph 1(a) above, whichever is later; and
(c) provided (i) that Mojave has exercised its Development Option as
set forth in subparagraph 1(b) above; (ii) approval of the Tribe and the BIA to
the sublease for Parcel 5, Parcel 6 or Parcel 8, as the case may be, has been
obtained within six (6) months following the submission of the sublease for such
approvals; (iii) the hotel/casino to be constructed thereon is open for business
to the public within the time period prescribed by the Joint Venture Agreement
(as defined below) entered into in connection with the exercise of the
Development Option set forth in subparagraph 1(b) above and (iv) Mojave,
Elsinore or any Affiliate of either of them is not then in default (other than a
default caused by MVRCC or an Affiliate of MVRCC) of the Joint Venture
Agreements (as defined below) or of the subleases, entered into in connection
with the Development Options set forth in subparagraphs 1(a) and 1(b) above
including, any event which with the giving of notice or lapse of time, or both,
would constitute a breach or default, then Mojave shall have a Development
Option with respect to Parcel 8 (or Parcel 6, in the event that Mojave has
exercised its Development Option as set forth in subparagraph 1(b) above as to
Parcel 8) together with the premises designated RV Park #2 as described in
Exhibit "A-5" ("RV
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Park 2") unless such premises has been subleased for use as a recreational
vehicle park, which shall expire at 9:00 a.m. P.S.T. January 15, 2000, or six
(6) months following the completion and opening for business to the public of
the hotel/casino to be developed pursuant to the exercise of the Development
Option set forth in subparagraph 1(b) above, whichever is later.
2. Upon compliance with the applicable conditions set forth in Paragraph
1 above, a Development Option shall be exercised by Mojave delivering, within
the respective time periods set forth in subparagraphs 1(a), (b) and (c),
written notice to MVRCC identifying the proposed sources for financing of the
respective hotel/casino project, detailing the constituent parts, terms and
timing of such financing and including satisfactory assurances of commitments
therefor, in the manner and at the address set forth in Section 12.1 of the
Agreement. The parties forthwith after any such exercise of a Development Option
by Mojave shall agree upon and execute the Joint Venture Agreement referred to
in Paragraph 3 below.
3. The form of entity utilized by Mojave and MVRCC to develop an
Additional Site ("Development Entity") upon the exercise of a Development Option
by Mojave shall be a Nevada limited-liability company unless otherwise agreed by
the mutual consent of the parties or unless the tax and liability provisions of
Nevada limited-liability companies have materially adversely changed from the
date hereof. Mojave and MVRCC shall promptly enter into an operating agreement
(the "Joint Venture Agreement") governing the ownership, development and
operation of each hotel/casino project, as well as the Development Entity,
containing substantially similar terms and conditions as contained in the
Agreement, including any amendments thereto and as may be adjusted or modified
pursuant to the terms of the Agreement or any such amendment. By way of
illustration and not limitation, a Joint Venture Agreement shall contain
substantially similar terms and conditions as the Agreement relating to time
frames with respect to the rights and obligations of the parties, size and
composition of each hotel/casino project to be built upon an Additional Site,
and appointment of Temple or an Affiliate of Temple as construction manager and
of Elsinore or an Affiliate of Elsinore as project coordinator. Notwithstanding
the foregoing to the contrary, each Joint Venture Agreement shall deviate from
the Agreement as follows:
(a) there will be no requirement to construct an additional
recreational vehicle park except with respect to RV Park 2;
(b) there will be no obligation on the part of MVRCC to complete or
cause the completion of any off-site improvements, as described in Section 2.9
of the Agreement;
(c) the total initial capital contribution to the Development Entity
shall be not less than Ten Million Dollars ($10,000,000) nor more than Twenty
Million Dollars ($20,000,000) (which amounts are based upon the purchasing power
of money as of the date of this Development Agreement and shall be periodically
adjusted with reference to the Consumer Price Index to retain the same
purchasing power);
(d) MVRCC shall receive a fifty percent (50%) equity interest in the
Development Entity in consideration of a capital contribution in the form of the
assignment of the sublease for the subject Additional Site (with the value of
such assignment of the sublease
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for each Additional Site being Five Million Dollars ($5,000,000) which amount is
based upon the purchasing power of money as of the date of this Development
Agreement and shall be periodically adjusted with reference to the Consumer
Price Index to retain the same purchasing power) and cash in such amount (if
any) as is necessary for the total amount of MVRCC's capital contribution
including said value for the assignment of the sublease to equal fifty percent
(50%) of the total initial capital contribution to the Development Entity.
Mojave shall be obligated to make a cash capital contribution of fifty percent
(50%) of the total initial capital contribution required for the Development
Entity up to a maximum of Ten Million Dollars ($10,000,000) (which amount is
based upon the purchasing power of money as of the date of this Development
Agreement and shall be periodically adjusted with reference to the Consumer
Price Index to retain the same purchasing power) in consideration of the
remaining fifty percent (50%) equity interest;
(e) the total project cost and design, development and construction
budget shall be adjusted to account for any variations in price of building
services and materials at the time of construction and other applicable cost
increases;
(f) the construction manager's fee shall be four percent (4%) of the
design, development and construction budget for the hotel/casino and other
improvements and/or installations subject to the supervision of the construction
manager so long as such fee falls within the range of what is customary and
reasonable for construction management services for construction of a
hotel/casino project of a similar magnitude at that time;
(g) the Joint Venture Agreement shall delete any reference to Pre-
Effective Date or payment of Pre-Effective Date Costs, as the effective date of
the Joint Venture Agreement will be the date that the Joint Venture Agreement is
executed by all parties thereto;
(h) Mojave and MVRCC shall have the unrestricted right to transfer up
to forty percent (40%) of their respective membership interests (i.e. a twenty
percent (20%) membership percentage in the Development Entity) including,
without limitation the unrestricted right of MVRCC to assign (but not
substitute) a five percent (5%) membership percentage in the Development Entity
to George R.A. Johnson or, in his sole discretion, to an entity to be formed and
solely owned by him and/or members of his immediate family;
(i) the Development Entity shall attempt to include, as a component of
the project financing, an amount equal to the Option Fee and, if obtained by the
Development Entity through the project financing, shall be loaned by the
Development Entity to MVRCC upon identical interest rates obtained by the
Development Entity pursuant to the project financing which loan shall be secured
by MVRCC's interest in the Development Entity and repaid to the Development
Entity from the first distributions of the Development Entity to MVRCC (in its
capacity as a member of the Development Entity) other than distributions made to
pay taxes on income which have not been distributed, until such amounts are paid
in full.
(j) the project financing shall be closed and the initial draw request
or other funding has occurred within sixty (60) days after the approval by the
Tribe and BIA of the
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sublease for such Additional Site; provided, however, that this time period
shall be extended by one (1) day for each day that such funding was delayed due
to a material breach by MVR or an Affiliate of MVR under a construction
management agreement;
(k) the opening of the hotel/casino to be built upon an Additional
Site shall occur within (i) fourteen (14) months of the exercise of the
Development Option for such Additional Site or (ii) sixty (60) days after
completion of construction provided that such sixty (60) day time period shall
be diminished by one (1) day for each day that Mojave or an Affiliate of Mojave
delays completion of construction but in no event more than sixty (60) days,
whichever is later;
(l) notwithstanding anything contained in this Development Agreement
to the contrary, the Option Fee to be expended by MVRCC pursuant to Mojave's
exercise of the Development Option set forth in subparagraph 1(c) above and the
corresponding exercise of MVRCC's Sublease Option (as defined in the Option
Agreement) provided in Paragraph 4 below shall be paid by the Development Entity
to MVRCC on the later of the exercise of such Development Option and Sublease
Option or the organization of the Development Entity provided that the
Development Entity is organized within thirty (30) days from such exercise;
provided, however, that in the event RV Park 2 is not, for any reason, part of
the Development Option set forth in subparagraph 1(c) above except as provided
in subparagraph 3(i), the Option Fee expended by MVRCC pursuant thereto shall be
the sole and exclusive responsibility of MVRCC with no reimbursement from the
Development Entity or Mojave; and
(m) any changes required by law.
4. MVRCC, upon the proper exercise of a Development Option by Mojave
pursuant to the terms hereof, shall (i) exercise its option rights for such
corresponding Additional Site under the Option Agreement and enter into a
sublease for such corresponding Additional Site; (ii) assign its rights in said
sublease to the Development Entity; (iii) promptly submit said sublease for
approval by the Tribe and the BIA; and (v) upon receipt of such approvals pay
any Option Fee required under the Option Agreement.
5. Any additional notices required to be given by a party under this
Development Agreement shall be in writing and duly given as set forth in Section
12.1 of the Agreement.
6. The rights and obligations described in this Development Agreement
shall terminate if (i) Elsinore or an Affiliate of Elsinore ceases to be Project
Coordinator of the Project; (ii) Mojave and/or an Affiliate reduces its
Membership Interest in the Company below forty percent (40%) in the aggregate;
(iii) there is a transfer of a majority interest in Mojave other than a transfer
due to the exercise of a security interest in the stock of Mojave granted to the
holders of Elsinore's convertible subordinated notes to be issued in 1995 (the
"Security Interest"); (iv) there is a change in the control of Mojave other than
a transfer due to the exercise of the Security Interest or Elsinore, with a
"change of control" in Elsinore being defined as a change in the majority of the
Board of Directors within any twelve (12) month period; or (v) the average win
per unit computed by adding the total gaming win amount and dividing such total
by the
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sum of total games, card games and total slot machines of the Project and
any hotel/casino constructed on an Additional Site pursuant to the exercise of a
Development Option in any Fiscal Year subsequent to the Fiscal Year of Opening
is less than seventy-five percent (75%) of the average win per unit for Clark
County - Laughlin Area casinos with gaming revenue of One Million Dollars
($1,000,000) and over as calculated (as set forth above) from the figures
published in the then most recent State of Nevada Gaming Control Board Gaming
Revenue Report. If the Gaming Revenue Report shall cease to be published, then
for the purposes of this Development Agreement, there shall be substituted for
the Gaming Revenue Report such other publication containing similar information
as the parties shall reasonably agree.
7. Any dispute, controversy, or claim arising out of or relating to this
Development Agreement shall be settled by arbitration held in Las Vegas, Nevada
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect, except as specifically provided below.
(a) If the matter in controversy shall appear, at the time of the
demand, to equal or exceed One Hundred Thousand Dollars ($100,000.00) (which
amount is based upon the purchasing power of money as of the date of this
Development Agreement and shall be periodically adjusted with reference to the
Consumer Price Index to retain the same purchasing power) then the panel to be
appointed shall consist of three neutral arbitrators; if less than such amount,
one neutral arbitrator.
(b) Subject to the time restrictions set forth below, the arbitrator
shall conduct the arbitration in such a manner (including the allowance of such
discovery as the arbitrator determines is appropriate under the circumstances)
and on such a schedule as the arbitrator deems to be fair and reasonable and to
provide each party with an adequate opportunity to present and support its
position. The arbitrator shall resolve the dispute and give the parties written
notice of his or her decision, with the reasons therefor set out in full, within
thirty (30) days after the arbitrator's selection and shall have ten (10) days
thereafter to reconsider and modify his or her decision if any party so
requests. Thereafter the arbitrator's decision shall be final, binding, and
nonappealable. The arbitrator shall be bound by the terms of this Development
Agreement and applicable law.
(c) The arbitrator shall have authority to award relief under legal or
equitable principles, including interim and preliminary relief. The arbitrator
shall allocate the costs of the arbitration, including the arbitrator's fee,
between the parties upon such basis as the arbitrator deems equitable and, if
the arbitrator determines that any party has proceeded in bad faith or
arbitrarily or capriciously, then the arbitrator shall require that party to
reimburse the other parties for the attorneys' fees and out-of-pocket expenses
incurred by the other party in connection with the arbitration. The arbitrator
shall also award such incidental recovery, such as interest, as required by this
Development Agreement.
(d) Judgment upon the award rendered by the arbitrator may be entered
in any court having personal and subject matter jurisdiction.
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8. This Development Agreement contains the entire understanding of the
parties with respect to its subject matter and supersedes all prior agreements
and understandings, including without limitation the MOU, between the parties
with respect to such subject matter.
9. This Development Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all of the
parties. Except for the Development Options, no failure to exercise, and no
delay in exercising, any right, power or privilege under this Development
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the exercise of any other
right, power or privilege. The waiver of any breach of any provision shall not
be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any course of dealing
between or among the parties. No extension of time for performance of any
obligations or other acts under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and obligations under this Development Agreement shall bind
and inure to the benefit of the parties (including the respective officers,
directors, employees, agents and Affiliates). The Development Option granted to
Mojave hereunder shall not be transferable either voluntarily or by operation of
law, without the written consent of MVRCC, except that Mojave may transfer to an
Affiliate of Mojave without such consent of MVRCC so long as such Affiliate
assumes in writing all of the duties and obligations of Mojave hereunder. For
the purposes of this paragraph, the sale, issuance or transfer of a controlling
interest in Mojave, or the transfer of a majority interest in or change in the
control of any partnership, trust, unincorporated association, or corporation
which directly or indirectly controls Mojave (which shall be deemed to occur
when a majority of the board of directors of such corporation has been
replaced), shall be deemed a prohibited transfer except for a transfer due to
the exercise of the Security Interest. Notwithstanding the foregoing to the
contrary, the only restriction on Elsinore with respect to this paragraph shall
be a change of majority control upon a change in the majority of the board of
directors within a twelve (12) month period.
10. This Development Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11. This Development Agreement shall be construed in accordance with and
governed for all purposes by the laws and public policy of the State of Nevada.
12. If any provision of this Development Agreement or the application of
any such provision to any party or circumstance is held to be inconsistent with
any present or future law, ruling, rule or regulation of any court or
governmental or regulatory authority having jurisdiction over the subject matter
of this Development Agreement, such provision shall be deemed to be modified to
the minimum extent necessary to comply with such law, ruling, rule or
regulation, and the remainder of this agreement or the application of such
provision to persons or circumstances other than those as to which it is held
inconsistent, shall not be affected. If any provision is determined to be
illegal, unenforceable, or void, then such void provision shall be
-8-
deemed rescinded and each provision not so affected shall enforced to the extent
permitted by law.
13. In no event shall this Development Agreement be construed to grant any
rights to any party other than Mojave and MVRCC and their permitted successors
or assigns.
14. If this Development Agreement is terminated due to the contingencies
contained herein or otherwise rendered void due to the non-occurrence of a
condition subsequent, Mojave shall upon the written request of MVRCC, execute
and deliver to MVRCC a written release, quitclaim deed, or such other instrument
specified by MVRCC, evidencing the termination of this Development Agreement.
Such instrument shall be signed and acknowledged in a form eligible for
recording.
15. This Development Agreement shall, at all times, be subject and
subordinate to the terms of the Option Agreement and Ground Lease. In the event
of any inconsistency between the terms of the Option Agreement and Ground Lease
and the terms of this Development Agreement, the terms of the Option Agreement
shall prevail over the terms of the Development Agreement and the terms of the
Ground Lease shall prevail over the terms of the Development Agreement and
Option Agreement.
16. Elsinore hereby unconditionally guarantees to MVRCC the full and
prompt payment and performance of the obligations of Mojave (or of any Affiliate
of Mojave which assumes the obligations of Mojave) hereunder and indemnifies
MVRCC against any and all loss, damage and expense which MVRCC may sustain as a
result of a breach by Mojave hereof, together with reasonable attorneys fees and
other costs and expenses of enforcement incurred by it in connection with any
matter covered by this guaranty.
17. An Affiliate of MVRCC is in negotiations to obtain a leasehold
interest in certain lands adjoining Parcel 6. In the event that such leasehold
interest is acquired, MVRCC agrees to expand Parcel 6 by adding the premises
described in Exhibit "C" attached hereto consisting of approximately two and
one-half (2.5) acres of land.
18. Notwithstanding anything contained herein to the contrary, as a
material inducement for MVRCC to enter into this Development Agreement and due
to the unique relationship of the parties, Mojave and Elsinore agree that upon
the filing of a petition by or against either of them under the United States
Bankruptcy Code (11 U.S.C. 101 et. seq.) as amended (the "Bankruptcy Code"),
agree that the provisions of Bankruptcy Code (S) 365(c)(1) (as the same may be
amended from time to time) shall govern any assignment of this Development
Agreement.
19. The parties and their respective professional advisors believe that
this Development Agreement is the product of all of their efforts, that it
expresses their agreement and that it should not be interpreted in favor of or
against any party to this Development Agreement.
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20. Notwithstanding anything in this Development Agreement to the
contrary, the obligation of MVRCC to grant option rights to RV Park 2 and the
corresponding obligation of the Development Entity to pay the Option Fee
pursuant to the exercise of Mojave's Development Option set forth in
subparagraph 1(c) above, shall be contingent upon MVRCC obtaining the approval
of the Tribe and BIA of an amendment to the Option Agreement to allow the grant
of the RV Park 2 option rights as provided in subparagraph 1(c) above. Such
amendment shall be acceptable to Mojave in the exercise of its reasonable
discretion. MVRCC shall use commercially reasonable efforts to obtain the
approvals of the Tribe and BIA set forth in this Development Agreement.
IN WITNESS WHEREOF, the undersigned by their duly authorized
representatives have executed this Development Agreement on the date first above
mentioned.
MOJAVE:
MOJAVE GAMING, INC., a Nevada
corporation
By:
----------------------------------
Its:
---------------------------------
ELSINORE:
ELSINORE CORP., a Nevada corporation
By:
----------------------------------
Its:
---------------------------------
MVRCC:
MOJAVE VALLEY RESORT CASINO COMPANY,
a Nevada corporation
By:
----------------------------------
Its:
---------------------------------
By:
----------------------------------
Its:
---------------------------------
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Dates Referenced Herein and Documents Incorporated by Reference
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