Document:

EX-10.1

 

Exhibit 10.1

SEPARATION AND MUTUAL RELEASE

AGREEMENT

     THIS AGREEMENT (“Agreement”) is made as of the 16th day of November, 2007, by and
between MARK B. PETERSON (“Executive”) and TOLLGRADE COMMUNICATIONS, INC., a
Pennsylvania corporation (the “Corporation”) (Executive and the Corporation are referred
to sometimes hereinafter individually as “Party” and collectively as, the “Parties”).

W I T N E S S E T H:

     WHEREAS, Executive has served as its Chief Executive Officer for close to three
years; and

     WHEREAS, pursuant to that certain Employment Agreement dated as of May 31, 2005, as
amended from time to time (the “Employment Agreement”), Executive currently is employed
by the Corporation as its Chief Executive Officer; and

     WHEREAS, the Executive’s employment with the Corporation has terminated effective
as of 4:00 p.m. on November 16, 2007 (the “Date of Termination”); and

     WHEREAS, Executive is a member of the Board of Directors of the Corporation (the
“Board” or “Board of Directors”); and

     WHEREAS, the Executive will resign as a director of the Corporation effective as of
the Date of Termination as required in the Employment Agreement; and

     WHEREAS, on and subject to the terms and conditions of this Agreement, Executive
and the Corporation desire to settle fully and finally all matters between them,
including, without limitation, any matters that relate to Executive’s employment, the
termination of that employment, or Executive’s association with the Corporation
generally, whether as an employee, director, officer, shareholder or otherwise.

     NOW, THEREFORE, in consideration of the premises and the covenants and agreements
set forth herein, the Parties hereto, intending to be legally bound, agree as follows:

     1. Termination/Resignation. Executive acknowledges that his employment
with the Corporation has terminated and hereby resigns his position as an officer and
director of the Corporation and any and all positions he holds with the Corporation, its
subsidiary companies, or any of its other affiliates, effective as of the Date of
Termination. From and after the Date of Termination, Executive shall not make any
statements or engage in conduct which would lead any person or entity to believe that he
is an employee, officer, director, consultant, agent or other authorized representative
of the Corporation or any of its subsidiaries.

The Corporation acknowledges and agrees that the resignation of Executive constitutes
the termination of employment of an employee being voluntarily terminated with the
consent of the Corporation for purposes of the Corporation’s 1995 Long-Term Incentive
Compensation Plan (as

 

 

amended through January 24, 2002) and that, accordingly, all options to acquire stock of
the Corporation held by Executive which are vested as of the Termination Date shall
remain exercisable by Executive for a period of not less than one year after the
Termination Date.

     2. Separation Pay; Waiver of Notice and Cure Periods. The Corporation
shall pay to Executive as separation pay the following payments, to be paid on the
Termination Date, net of any applicable tax and other required withholdings:

(a) a sum equal to $31,013.47, which represents any unpaid portion of
the Executive’s full base salary for the period from the last period
for which Executive was paid to the Date of Termination and any
vacation pay and other cash entitlements accrued by Executive as of the
Termination Date;

(b) a sum equal to two times the Executive’s base salary of $335,157,
for a total of $670,314; and

(c) a sum equal to $14,176, which represents two times the average
annual cash award received by the Executive as incentive compensation
for the two calendar years immediately preceding the Date of
Termination.

The Parties also hereby agree to waive any notice and cure periods that may be
applicable under the Employment Agreement and further agree that the Date of Termination
shall be the date set forth in the recitals hereof.

     3. Employee Benefits, Corporation-Related Business Expenses and D&O
Coverage. The Executive’s termination shall be deemed to be a termination under
Section 4(c) of the Employment Agreement. The Corporation shall provide to or on behalf
of Executive all of the benefits and coverages (including outstanding stock option
agreements, welfare plan benefits (including medical insurance coverage continuation),
executive placement assistance, director & officer indemnification and insurance, and
any applicable tax gross-up payments) as may be required pursuant to such a termination.
As it relates to Section 7(e) of the Employment Agreement, the Parties acknowledge and
agree that Executive shall remain on the Corporation’s medical benefits for the entire
required time of coverage, and as such, Executive will not be required to elect COBRA
continuation coverage during that period. Notwithstanding the foregoing, to the extent
the Corporation, in writing, reasonably requests Executive to so elect COBRA
continuation coverage during such two year period to enable the continuation of medical
benefits as required under the Employment Agreement, the Executive shall timely do so.
The Corporation shall also reimburse Executive for any reasonable termination fees
arising under any voice or data plan secured by the Executive during his employment,
which were used primarily for business purposes and for any business expenses incurred
by and not yet reimbursed to Executive prior to the Termination Date.

     4. Return of Corporation Property. Executive agrees that he will promptly
return to the Corporation all property belonging to the Corporation and that he will
otherwise comply with the Corporation’s normal employment termination procedures. By
way of example only, the Corporation’s property includes, but is not limited to, items
such as keys, vehicles, credit cards, cell phones, pagers, computers, all originals and
copies (regardless of the form or format on which such originals and copies are
maintained) of all Corporation specifications and pricing

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information, all customer lists and other customer-related information, all
supplier lists and other supplier-related information, computer discs, tapes and other
documents which relate to the business of the Corporation and/or its customers and/or
its suppliers.

     5. Standstill Provision. Through the second anniversary of the Date of
Termination, Executive and his Representatives (as defined below) shall not, directly
or indirectly, without the prior written consent of the Board: (a) acquire or offer or
agree to acquire, directly or indirectly, by purchase or otherwise, more than five
percent (5%) of any outstanding class of voting securities or securities convertible
into voting securities of the Corporation, (b) propose to, or attempt to induce any
other individual or entity to, enter into, directly or indirectly, any merger,
consolidation, business combination, asset purchase (other than routine purchases in the
ordinary course of business of product offered for sale by the Corporation) or other
similar transaction involving the Corporation or any of its affiliates, (c) make, or in
any way participate in any solicitation of proxies to vote, execute any consent as a
Corporation shareholder, act to call a meeting of the Corporation’s shareholders, make a
proposal to be acted upon by the Corporation’s shareholders or seek to advise or
influence any person with respect to the voting or not voting of any securities of the
Corporation, (d) form, join or in any way participate in a partnership, syndicate, joint
venture or other “group” (as defined under Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)), with respect to any voting securities of the
Corporation or transfer Executive’s voting rights with respect to any securities of the
Corporation (by voting trust or otherwise), (e) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board or policies of the
Corporation or seek a position on the Board, (f) disclose any intention, plan or
arrangement inconsistent with the foregoing, or (g) advise, assist or encourage any
other persons in connection with any of the foregoing. If Executive has initiated any
of the foregoing activities prior to the Date of Termination, Executive shall cease,
terminate and otherwise refrain from conducting such activities and shall take any and
all necessary steps to effect the foregoing and any proposals made by Executive as a
shareholder of the Corporation on or before the Date of Termination, are hereby
withdrawn. As used herein, the term “Representative” shall include Executive’s
employees, agents, investment bankers, advisors, affiliates and associates of any of the
foregoing and persons under the control of any of the foregoing (as the term
“affiliate,” “associate” and “control” are defined under the 1934 Act). Executive also
agrees during such period not to request the Corporation or its representatives,
directly or indirectly, to amend or waive any provision of this Section 5 (including
this sentence) to take any action which might require the Corporation to make a public
announcement regarding the possibility of a merger, consolidation, business combination
or other transaction of any kind with the Executive or any affiliate of the Executive.

     6. Mutual General Release and Covenant Not-to-Sue.

          (a) By Executive.

	 	(i)	 	Except as is otherwise explicitly
provided herein, Executive, for himself, his agents,
attorneys, Representatives, affiliates, heirs and assigns and
all persons claiming by, through, for or under any of them or
on any of their behalf, hereby fully and forever releases and
discharges the Corporation, its subsidiaries and other
affiliates,

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predecessors and successors, their respective shareholders,
officers, directors, employees, heirs and assigns
(individually, a “Releasee” and collectively, “Releasees”),
from any and all Claims which Executive may have had, may
now have, or may hereafter claim or assert against the
Releasees on account of any matter whatsoever, arising out
of or relating to (A) Executive’s employment or termination
of employment or other association with the Corporation, its
subsidiaries or other affiliates (as an employee, director,
officer, shareholder or otherwise) or (B) any other act,
event, failure to act or thing which has occurred or was
created at any time on or before the Date of Termination.
As used herein, “Claims” shall mean all claims,
counterclaims, cross-claims, actions, causes of action,
demands, obligations, debts, disputes, covenants, contracts,
agreements, rights, suits, rights of contribution and
indemnity, liens, expenses, assessments, penalties, charges,
injuries, losses, costs (including, without limitation,
attorneys’ fees and costs of suit), damages (including,
without limitation, compensatory, consequential, bad faith
or punitive damages), and liabilities, direct or indirect,
of any and every kind, character, nature and manner
whatsoever, in law or in equity, civil or criminal,
administrative or judicial, in contract or in tort
(including, without limitation, bad faith and negligence of
any kind) or otherwise, whether now known or unknown,
claimed or unclaimed, asserted or unasserted, suspected or
unsuspected, discovered or undiscovered, accrued or
unaccrued, anticipated or unanticipated, fixed or
contingent, liquidated or unliquidated, state or federal,
under common law, statute or regulation. Without limiting
the generality hereof, this release (and the defined term
“Claims” as used in this Agreement) covers Claims based upon
torts (such as, for example, negligence, fraud, defamation,
wrongful discharge); express and implied contracts (except
this Agreement); federal, state or local statutes and
ordinances; and every other source of legal rights and
obligations which may be validly waived or released.

	 	(ii)	 	Executive covenants and represents
that he has not filed and will not in the future file or
permit to be filed in his name, or on his behalf, any lawsuit
or other legal proceeding asserting Claims which are within
the scope of the release in Section 6(a)(i) against any of the
Releasees. Further, Executive represents and warrants that he
has not suffered any on-the-job injury for which he has not
filed a claim.

	 	(iii)	 	Nothing contained in this Section
6(a) shall be deemed to waive any remedy available to
Executive at law or in equity in the event of a breach by the
Corporation (or any of its successors) of its or their
obligations under this Agreement.

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	 	(iv)	 	Excluded from the release and
covenant not to sue set forth in Sections 6(a)(i) and
6(a)(ii), respectively, are any Claims which cannot be waived
by law and any rights that may arise after the Date of
Termination (including matters arising pursuant to this
Agreement, any benefit policy, plan or program, and the
provisions of the Employment Agreement which specifically
survive termination of the Employment Agreement) and any
claims against any Releasee for fraud, deceit, theft or
misrepresentation.

	 	(v)	 	Executive acknowledges and agrees
that it is his intention that the release set forth in Section
6(a)(i) be effective as a full and final release of each and
every thing released herein.

          (b) By the Corporation.

	 	(i)	 	Except as is otherwise expressly
provided herein, the Corporation, for itself, its subsidiaries
and other affiliates, agents, attorneys, representatives,
officers, directors, shareholders, predecessors, successors
and assigns and all persons claiming by, through, for or under
any of them or on any of their behalf, hereby fully and
forever releases and discharges Executive, his affiliates,
heirs and assigns (individually, an “Executive Releasee” and
collectively, “Executive Releasees”), from any and all Claims
which the Corporation may have had, may now have, or may
hereafter claim or assert against the Executive Releasees, on
account of any matter whatsoever, arising out of or relating
to (A) Executive’s employment or termination of employment,
service as an officer, director of or fiduciary acting on
behalf of the Corporation, or any other association with the
Corporation, its subsidiaries or any of its other affiliates
(whether as an employee, officer, director, shareholder or
otherwise), or (B) any other act, event, failure to act or
thing which has occurred or was created at any time on or
before the Date of Termination.
	 
	 	(ii)	 	The Corporation covenants and
represents that it has not filed and will not in the future
file or permit to be filed in its name, or on its behalf, any
lawsuit or other legal proceeding asserting Claims which are
within the scope of this release against any of the Executive
Releasees.
	 
	 	(iii)	 	Excluded from the release and
covenant not to sue set forth in Sections 6(b)(i) and
6(b)(ii), respectively, are any Claims which cannot be waived
by law, any rights that may arise after the Date of
Termination (including matters arising pursuant to this
Agreement) and any Claims against any Executive Releasee for
fraud, deceit, theft or misrepresentation.

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	 	(iv)	 	The Corporation acknowledges and
agrees that it is its intention that the release set forth in
Section 6(b)(i) be effective as a full and final release of
each and every thing released herein.

     7. Corporation’s Information; Nondisclosure; Related Matters. Executive
covenants and agrees to be bound by the provisions of Section 5 of the Employment
Agreement.

     8. Executive’s Noncompetition. Executive covenants and agrees to be bound
by the provisions of Section 6 of the Employment Agreement.

     9. Non-Admission of Liability. It is acknowledged and agreed that nothing
contained herein, including but not limited to the consideration paid hereunder,
constitutes or will be construed as an admission of liability or of any wrongdoing or
violation of law on the part of either Party hereto.

     10. Non-Disparagement.

          (a) Executive agrees that he will not, at any time, make any disparaging statements
about the Corporation or any Releasee to any current, former or prospective employer,
any applicant referral source, any current, former or prospective employee of the
Corporation, any current, former or prospective customer or supplier of the Corporation,
the media, or to any other person or entity.

          (b) The Corporation agrees that none of the members of the Board or the Executive
Council of the Corporation as constituted on the date hereof, at no time, will make any
disparaging statements about Executive to any former or prospective employer of
Executive, the media, or to any other person or entity. The Corporation will instruct
its employees not to make any disparaging statements about Executive.

          (c) As used in this Section 10, the term “disparaging statement” means any
communication, oral or written, which would cause or tend to cause the recipient of the
communication to question the integrity, competence, or good character of the person or
entity to whom the communication relates.

     11. Remedies for Breach. Each Party will be entitled to pursue any remedy
available at law or in equity for any breach of this Agreement by the other Party. Each
Party acknowledges that remedies at law may be inadequate to protect against its breach
of this Agreement and hereby in advance agrees, without prejudice to any rights to
judicial relief the other Party may otherwise have, to the granting of equitable relief,
including injunctive relief, in the other Party’s favor without proof of actual damages.

     12. Representations/Warranties by Executive. Executive represents and
warrants to the Corporation that the following statements are true and correct:

	 	(a)	 	Executive is signing this Agreement voluntarily
and is legally competent to do so.

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	 	(b)	 	Executive has been advised to consult, and has
in fact consulted, an attorney of his own choice before signing this
Agreement.
	 
	 	(c)	 	Executive has read and fully understands each of
the provisions of this Agreement, he has been given sufficient and
reasonable time to consider each of them and fully understands his
rights under all applicable laws and the ramifications and
consequences of his execution of this Agreement.
	 
	 	(d)	 	No promises, agreements or representations have
been made to Executive to induce him to sign this Agreement, except
those that are written in this Agreement.
	 
	 	(e)	 	Executive has not, in whole or in part, sold,
assigned, transferred, conveyed or otherwise disposed of any of the
Claims covered by the release set forth in Section 6(a) (the
“Executive’s Release”).
	 
	 	(f)	 	The consideration received by Executive for the
Executive’s Release constitutes lawful and adequate consideration.
	 
	 	(g)	 	Executive has not engaged in any of the
activities listed in subsections (a)-(g) of Section 5 hereof.
	 
	 	(h)	 	Executive waives any notice requirements under
the Corporation’s by-laws with respect to any of the Board’s meetings
to consider the approval of the terms and conditions of this
Agreement.

     13. Representations/Warranties by the Corporation. The Corporation
represents and warrants to Executive that the following statements are true and correct:

	 	(a)	 	This Agreement has been duly authorized and executed by the Corporation.
	 
	 	(b)	 	The Corporation has not, in whole or in part, sold, assigned, transferred, conveyed
or otherwise disposed of any of the Claims covered by the release set forth in Section 6(b)
(the “Corporation’s Release”).
	 
	 	(c)	 	The consideration received by the Corporation for the Corporation’s Release
constitutes lawful and adequate consideration.

     14. Waiver of Rights. If on one or more instances either Party fails to
insist that the other Party perform any of the terms of this Agreement, such failure
shall not be construed as a waiver by such Party of any past, present, or future right
granted under this Agreement; and the obligations of both Parties under this Agreement
shall continue in full force and effect.

     15. Severability/Applicability. If any provision, section or subsection of
this Agreement is adjudged by any court to be void or unenforceable in whole or in part,
this adjudication shall not affect the validity of the remainder of this Agreement,
including any other provision, section or subsection. Each provision, section and
subsection of this Agreement is separable from every other provision, section and subsection, and constitutes a
separate and distinct covenant.

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     16. Successors & Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors, assigns, executors,
administrators and personal representatives.

     17. Notices. All notices, requests, demands, claims and other
communications under this Agreement shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given the next business day
(or when received if sooner) if it is sent by (a) confirmed facsimile; (b) overnight
delivery; or (c) registered or certified mail, return receipt requested, postage
prepaid, and addressed, to the respective address of such Party specified below its or
his signature below. Either Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth below using
any other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and until it
is actually received by the intended recipient. Either Party may change the address to
which notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Party notice in the manner provided in this Agreement.
Each Party irrevocably consents to service of process in connection with disputes
arising out of this Agreement or otherwise in the manner provided for notices in this
Section 17. Nothing in this Agreement will affect the right of any Party to service
process in any other manner permitted by law.

     18. Public Announcement of Termination/Resignation. The Parties agree that
the Corporation will file with the Securities and Exchange Commission (the “SEC”) a
report on Form 8-K and the Corporation will issue a press release each of which will
disclose Executive’s resignation as a Director and termination as an executive officer
of the Corporation. Executive acknowledges and agrees that he has received and reviewed
those provisions of the press release that will be issued that relate to the termination
of employment and resignation from the Board, agrees fully with the statements made by
the Corporation therein with respect thereto, and has not provided and will not provide
to the Corporation any written correspondence concerning the circumstances surrounding
his termination or employment of resignation as a Director. Executive acknowledges and
agrees that his resignation as a Director did not involve any disagreement with the
Corporation on any matter relating to the Corporation’s operations, policies or
practices within the meaning contemplated by Form 8-K.

     19. Sub-certification of 2007 Annual Report. In connection with the
preparation of the Corporation’s 2007 Annual Report on Form 10-K for the fiscal year
(the “Annual Report”) and prior to the filing by the Corporation of such Annual Report
with the SEC, Executive shall provide to the Corporation promptly following the
Corporation’s request (and in no event more than seven (7) business days after such
request) a duly executed original of the Certificate attached hereto as Exhibit A (the
“Sub-certification Certificate”). The Corporation shall provide to Executive a copy of
the Annual Report and the Corporation’s Proxy Statement on Schedule 14A at the time of
requesting such Certificate. If the Corporation requests that Executive provide the
Sub-certification Certificate and Executive provides the same to the Corporation within
the foregoing time frame, the Corporation shall indemnify, defend and hold harmless

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Executive, to the fullest extent provided under applicable law, against any losses,
claims, damages, liabilities, action, suit, proceeding, cost or expense (including
reasonable attorney’s fees) (collectively, “Liabilities”) arising out of or pertaining
to any action against Executive for any material misstatement or omission in the Annual
Report; provided, however, notwithstanding the foregoing provisions of this sentence,
the Corporation shall have no obligation to indemnify, defend or hold harmless Executive
for Liabilities arising out of or pertaining to any material misstatement or omission in
the Annual Report which is actually known to Executive (without duty of investigation)
and not disclosed by him to the Corporation at the time of his delivery to the
Corporation of the Sub-certification Certificate.

     20. Entire Agreement. This Agreement supersedes and replaces all prior and
contemporaneous written or oral agreements relating to Executive’s employment,
compensation and employment termination, including the Employment Agreement (other than
the post-termination provisions which survive the termination of the Employment
Agreement as provided therein), but not including any and all stock option agreements
between Executive and the Corporation and any employee benefit plans or programs.

     21. Interpretation; Enforcement. This Agreement will be interpreted and
enforced according to the laws of the Commonwealth of Pennsylvania, without regard to
its conflicts of laws provision. The parties hereto further agree that any action to
enforce any right or obligation under this Agreement shall be subject to the exclusive
jurisdiction of the courts of the Commonwealth of Pennsylvania. Each Party hereby
consents to personal jurisdiction in any action brought in any court, federal or state,
within the Commonwealth of Pennsylvania having subject matter jurisdiction in this
matter. Each Party hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such action or
proceeding in such jurisdiction.

     22. Amendment. No provision of this Agreement may be modified, amended or
revoked, except in a writing signed by Executive and an authorized official of the
Corporation.

     23. Acknowledgment of Waiver of Claims Under ADEA. Executive acknowledges
that he is waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and
voluntary. Executive and the Corporation agree that this waiver and release does not
apply to any rights that or claims that might arise under the ADEA after the date of
this Agreement. Executive acknowledges that the consideration given for this waiver and
release agreement is in addition to anything of value to which Executive was already
entitled. Executive further acknowledges that he has been advised by this writing that
(a) he has at least twenty-one (21) days within which to consider this Agreement, (b) he
has seven (7) days following the execution of this Agreement by the Parties to revoke
the Agreement and (c) this Agreement shall not be effective until the revocation period
has expired. Any revocation should be in writing and delivered to the Corporation by
the close of business on the seventh (7th) day from the date that Executive
signs this Agreement.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

WITNESS:

	 	 	 	 	 	 	 
	/s/ Joseph G. O’Brien
	 	 	 	/s/ Mark B. Peterson

	 	 	 	 	 
	 	 	 	 	Mark B. Peterson

	 

	 	 	 	Address:

	 	 

 

	 

	 	 	 	 	 	 

	 	 	 	 	TOLLGRADE COMMUNICATIONS, INC.

	 

	 	 	 	By:

Name:

Title:

	 	/s/ Sara M. Antol

 

Sara M. Antol

 

General Counsel & Secretary

 

	 

	 	 	 	Address:
	 	493 Nixon Road

Cheswick, PA 15024

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Exhibit A

CERTIFICATE

The undersigned hereby certifies as follows:

	1.	 	I understand that this certificate will be relied upon by the Chief
Executive Officer and Chief Financial Officer of Tollgrade Communications, Inc.
(the “Corporation”) in making the certifications required of them in the
Corporation’s annual report for its 2007 fiscal year on Form 10-K (the “Annual
Report”).

	2.	 	I have reviewed the Annual Report (as distributed on                                         , 20                    ). I did
not participate in the preparation of the Annual Report.

	3.	 	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that the Annual
Report contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading.

	4.	 	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that the
financial statements and other financial information included in the Annual Report,
do not fairly present in all material respects the financial conditions, results of
operations and cash flows of the corporation as of, and for, the year ended
December 31, 20                    .

	5.	 	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that there is
any material weakness or significant deficiency in the design or operation of the
Corporation’s disclosure controls and procedures or the Corporation’s internal
controls over financial reporting as they existed and were utilized as of the last
day of my employment by the Corporation, which could adversely affect the
Corporation’s ability to timely and accurately report the financial and other
information required to be disclosed by the Corporation in its periodic reports
required to be filed pursuant to the Securities Exchange Act of 1934, as amended.

     Date:                                         , 20                    

      

	 	 	 
	 

	 	 

Mark B. Petersonexv10w1

 

Exhibit 10.1

AMENDMENT NO. 1

TO

THE LIMITED LIABILITY COMPANY AGREEMENT

OF CITYCENTER HOLDINGS, LLC

     This Amendment No.1 (this “Amendment”), dated as of November 15, 2007 (the “Amendment
Effective Date”), to the Limited Liability Company Agreement is entered into by and between PROJECT
CC, LLC, a Nevada limited liability company (“MGM”) and INFINITY WORLD DEVELOPMENT CORP., a Nevada
corporation (“DW”) (MGM and DW are hereinafter referred to individually as a “Member” and
collectively as the “Members”).

RECITALS

     WHEREAS, MGM and DW entered into that certain Limited Liability Company Agreement (the
“Agreement”), dated August 21, 2007, with respect to the subject matters set forth therein; and

     WHEREAS, MGM and DW desire to amend the Agreement as set forth in this Amendment.

     NOW, THEREFORE, in consideration of the above premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

AGREEMENT

Section 1

Defined Terms. Each capitalized term used and not defined herein shall have the meaning assigned
to it in the Agreement (as amended hereby).

Section 2

Amendment to the Agreement. Effective as of the Amendment Effective Date, the Agreement is hereby
amended:

     (A) PREAMBLE

	 	(i)	 	     by replacing the phrase “a Nevada limited liability company (“Project
LLC”), manage, design, plan,” with the phrase “a Nevada limited liability company,
and to manage, design, plan,” in the second paragraph of the preamble.
	 
	 	(ii)	 	     by replacing the phrase “desire to enter into this Agreement.” with the
phrase “desire to enter into this Agreement;” in the third paragraph of the
preamble.

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	 	(iii)	 	     by removing the word “and” immediately after the phrase “the
membership interests in Project Owner to the Company;” in the fourth paragraph of
the preamble.
	 
	 	(iv)	 	     by replacing the phrase “all as more particularly set forth herein.”
with the phrase “all as more particularly set forth herein;” in the fifth paragraph
of the preamble.
	 
	 	(v)	 	     by adding the paragraph “WHEREAS, the parties entered into the Limited
Liability Company Agreement of CityCenter Holdings, LLC (the “Prior Agreement”) on
August 21, 2007 (the “Signing Date”); and” immediately after the fifth paragraph of
the preamble.
	 
	 	(vi)	 	     by adding the paragraph “WHEREAS, the parties desire to amend and
restate the Prior Agreement pursuant to this Agreement.” immediately after the
sixth paragraph of the preamble.

     (B) ARTICLE 1

	 	(i)	 	     by adding the phrase “, which shall be called CityCenter Holdings,
LLC,” immediately after the phrase “the Members shall form and establish a limited
liability company” in the first sentence of Section 1.1 of the Agreement.
	 
	 	(ii)	 	     by replacing the term “‘Contribution Agreement’.” with the term
““Contribution Agreement.”” in the third sentence of Section 1.1 of the Agreement.
	 
	 	(iii)	 	     by replacing the word “subsidiaries” with the term “Subsidiaries” in
the third sentence of Section 1.4 of the Agreement.
	 
	 	(iv)	 	     by removing the phrase “,or each potential class,” immediately after
the phrase “and operate its business, and own each” in Section 1.10 of the
Agreement.
	 
	 	(v)	 	     by replacing the definitions found in Section 1.11 of the Agreement
with the following list of definitions.

     ““Acceptance Notice” has the meaning set forth in Section 11.6 hereof.

     “Accounted Condo Units” has the meaning set forth in Section 3.2(b)(v)(4)(O) hereof.

     “Act” has the meaning set forth in the preamble hereof.

     “actual knowledge” has the meaning set forth in Section 10.1 or Section 10.2, as applicable.

     “Actual Pre-Closing Development Costs” shall mean the actual amount of aggregate Development
Costs paid by MGM and its Affiliates during the period beginning with the

2

 

inception of the Project and ending on the Closing Date and set forth in the Post-Closing
Statement.

     “Actual Pre-Closing Residential Proceeds” shall mean the actual amount of (A) cash proceeds
received by MGM or its Affiliates, excluding any cash proceeds returned or refunded, from the sale
or a contract to sell any residential units in the Project Components since the inception of the
Project to the Closing Date less (B) the Sales Expenses related to such condominium units.

     “Actual Pre-Opening Costs” shall mean the actual amount of aggregate pre-opening and start-up
expenses paid by MGM and its Affiliates during the period beginning with the inception of the
Project and ending on the Closing Date and set forth in the Updated Pre-Closing Statement.

     “Actual Residential Sales” has the meaning set forth in Section 3.2(b)(v)(4)(I) hereof.

     “Additional Agreements” shall mean the Development Management Agreement, the Operations
Management Agreement, and the Ancillary Agreements.

     “Adjusted Capital Account Deficit” has the meaning set forth in Section 5.6 hereof.

     “Affiliate” means a person which directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the person specified; provided, however,
that a Member, as such, shall not be deemed to be an Affiliate of the other Member. For the
purpose of this definition, “control” (including, with correlative meanings, the terms “controls,”
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

     “Agreement” has the meaning set forth in the first paragraph of this Agreement.

     “Allocation Statement” has the meaning set forth in Section 3.8(a)(i) hereof.

     “Alternate” has the meaning set forth in Section 9.1(b) hereof.

     “Alternative CVA Distribution” has the meaning set forth in Section 3.2(b)(v)(3) hereof.

     “Ancillary Agreement” shall mean an agreement between MGM or its Affiliate and the Company
providing for a grant of a lease, easement, or permission to use or occupy any real, personal or
intellectual property, including, but not limited to, such matters described in Exhibit B hereto.

     “Annual Budget” means, at any time, the annual budget for the day-to-day operations of a
Project Component most recently Approved by the Board of Directors in accordance with the terms of
this Agreement.

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     “Anticipated Pre-Financing Construction Costs” has the meaning set forth in Section 3.2(b)(iv)
hereof.

     “Appraisal Notice” has the meaning set forth in Section 13.5(a) hereof.

     “Appraised Value” has the meaning set forth in Section 13.5(a) hereof.

     “Approval” or “Approved” shall mean, with the respect to the Board of Directors, the approval
by (i) majority of all of the Representatives on the Board of Directors entitled to vote on the
matter, (ii) as long as MGM or its Affiliate is a Member, at least one Representative designated by
MGM, and (iii) as long as DW or its Affiliate is a Member, at least one Representative designated
by DW.

     “Approved Counsel” means (i) Lionel Sawyer & Collins, (ii) Snell & Wilmer, L.L.P., (iii)
Brownstein Hyatt Farber Schreck, and (iv) any other attorney duly licensed in the State of Nevada
that has been Approved by the Board of Directors or by all Members in writing.

     “Base Initial Contingent Value Adjustment” has the meaning set forth in Section
3.2(b)(v)(4)(B).

     “Base Profit Interest” has the meaning set forth in Section 3.4(b)(i)(1) hereof.

     “Board of Directors” has the meaning set forth in Section 9.1 hereof.

     “Business Day” means each day other than a Saturday, Sunday or any day observed by the
Federal, State of Nevada or local government in Las Vegas, Nevada as a legal holiday.

     “Business Plan” means, at any time, the Initial Business Plan or any subsequent Business Plan
for the Project, prepared by the Managing Member and Approved by the Board of Directors in
accordance with Sections 7.9 and 9.3 hereof, as such Business Plan(s) may be, from time to time,
amended, modified or supplemented in accordance with the terms and provisions of this Agreement.

     “Capital Account” has the meaning set forth in Section 3.6 hereof.

     “Capital Contribution” shall mean Initial Capital Contribution or Subsequent Capital
Contribution.

     “Casino CO Delay Adjustment” has the meaning set forth in Section 3.2(b)(v)(4)(D) hereof.

     “Casino Opening Date” has the meaning set forth in Section 4.2 hereof.

     “Closing Date” means the date on which the Initial Capital Contributions are made pursuant to
Section 3.2, which Closing Date shall not be later than March 31, 2008, provided however, that if
approvals that are a condition precedent to either Member’s obligation to make its Initial Capital
Contribution have not been obtained as of March 31, 2008 and the parties are

4

 

using diligent efforts to obtain such approvals, then the Closing Date shall be extended to
June 30, 2008.

     “Code” means the Internal Revenue Code of 1986 (or successor thereto), as amended from time to
time.

     “Company” has the meaning set forth in Section 1.1.

     “Company Accountants” means Deloitte & Touche, LLP.

     “Company Minimum Gain” shall have the meaning as set forth in Regulations Sections
1.704-2(b)(2) and 1.704-2(d).

     “Condition” means the DW Conditions Precedent and the MGM Conditions Precedent.

     “Conditional Transfer Price” shall mean, with respect to the Units to be Transferred pursuant
to Section 4.2(c), 100% of the Appraised Value of such Units.

     “Construction Budget” means, at any time, the budget for the acquisition, development and
construction of the entire Project prepared by, or on behalf of, the Managing Member and Approved
by the Board of Directors, setting forth in detail, by category and line item, all Development
Costs, as such budget shall be amended from time to time in accordance with this Agreement. The
Construction Budget shall incorporate costs incurred in connection with the Project since inception
of the Project by MGM and its Affiliates. Without limiting the foregoing, the Construction Budget
shall allocate and separate all Development Costs among the various Project Components so that the
Construction Budget sets forth a maximum amount of Development Costs for each Project Component and
the sum of the aggregate budgeted Development Costs for each Project Component will equal the
aggregate amount of the Construction Budget. The initial Construction Budget for the Project has
been approved by the Members as of the Signing Date. All future Construction Budgets, including
any amendments, modifications and/or supplements thereof and thereto, will be in the same form as
the Construction Budget. A summary of the Construction Budget is set forth on Exhibit J.

     “Construction Budget Adjustment” has the meaning set forth in Section 3.2(b)(v)(4)(C) hereof.

     “Contingent Value Adjustment Distribution” has the meaning set forth in Section
3.2(b)(v)(4)(R) hereof.

     “County” means Clark County, Nevada.

     “CPI” means the Consumer Price Index for All Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor, Los Angeles-Anaheim-Riverside, All Items
(1982-84 = 100), or any successor index thereto, as such successor index may be appropriately
adjusted to establish substantial equivalence with the CPI, or if the CPI ceases to be published
and there is no successor thereto, such other index as shall be Approved by the Board of Directors.

5

 

     “Current Owners” means Bellagio, LLC, Treasure Island Corp., April Cook Companies, Restaurant
Ventures of Nevada, Project CC, LLC, Boardwalk Casino, LLC, and Victoria Partners, a Limited
Partnership collectively constituting the owners of legal title to the Project as of the date prior
to the date of this Agreement.

     “Deductible” has the meaning set forth in Section 13.3(a)(ii) hereof.

     “Default Interest Rate” means Prime Rate plus five percent (5%).

     “Defaulting Member” has the meaning set forth in Section 13.1 hereof.

     “Delinquent Member” has the meaning set forth in Section 3.4 hereof.

     “Development Agreement” shall mean that certain Development Agreement, recorded with Clark
County Recorders Office on May 23, 2006 as document number 20030523-0005103, by and among the
County of Clark and Project CC, LLC D/B/A Project CityCenter, Bellagio, LLC, The April Cook
Companies, Treasure Island Corp., Restaurant Ventures of Nevada, Inc., Victoria Partners, a Limited
Partnership and Boardwalk Casino, Inc.

     “Development Costs” means, without duplication, all of the following fees, costs and expenses
incurred or to be paid in connection with the Project: (i) all hard construction costs to
construct and complete the entire Project in accordance with the Plans, (ii) whether incurred
before or after completion of any particular Project Component, any costs of fit out of such
Project Component (which shall include, without limitation, any free rent, tenant improvements or
other tenant concessions), (iii) soft costs directly related to the construction of the Project
(such as architect’s fees), incurred since inception of the Project, (iv) other soft costs not
directly related to hard construction costs of the Project (such as real estate taxes and insurance
premiums), in each case, whether paid or unpaid, and (v) all fees, costs and expenses incurred to
acquire the Project Assets (excluding the initial Capital Contribution of DW pursuant to this
Agreement).

     “Development Management Agreement” shall mean the agreement or term sheet between MGM or its
Affiliate and the Company, as approved by the Members, providing for the management by MGM or its
Affiliate of the designing, planning, development, construction, sales and marketing of the
Project, in either case, in the form attached hereto as Exhibit D.

     “Development Manager” shall have the meaning ascribed to it in the Development Management
Agreement.

     “Disposing Member” has the meaning set forth in Section 11.6 hereof.

     “Disposition Notice” has the meaning set forth in Section 11.6 hereof.

     “Distributable Cash” has the meaning set forth in Section 6.3 hereof.

     “DPA” means the Exon-Florio Amendment at Section 721 of the Defense Production Act of 1950.

6

 

     “Dubai World Restricted Affiliates” has the meaning set forth in Section 15.21(b).

     “DW” has the meaning set forth in the first paragraph of this Agreement.

     “DW Conditions Precedent” has the meaning set forth in Section 3.2(b)(ii) hereof.

     “DW Delay Days” has the meaning set forth in Section 3.2(b)(v)(4)(M) hereof.

     “DW Gaming Approval” has the meaning set forth in Section 4.2(b) hereof.

     “DW Indemnitee” has the meaning set forth in Section 13.3(a)(i) of this Agreement.

     “DW Tax Liability” has the meaning set forth in Section 4.10(a) hereof.

     “Early Purchase Procedure” has the meaning set forth in Section 4.2(a)(ii) hereof.

     “Encumbrance” means any monetary mortgage, pledge, Lien, charge, hypothecation, security
interest, or other monetary encumbrances of any nature whatsoever.

     “Escalation” has the meaning set forth in Section 9.3(c) hereof.

     “Event of Bankruptcy” has the meaning set forth in Section 13.1 hereof.

     “Event of Default” has the meaning set forth in Section 13.1 hereof.

     “Excluded Delay Days” has the meaning set forth in Section 3.2(b)(v)(4)(K) hereof.

     “Financing” means debt financing, which may be unsecured or collateralized by one or more
liens on the Project Assets or any portion thereof (including purchase money financing
collateralized by furniture, furnishings, fixtures, machinery or equipment), to be obtained by the
Company from one or more commercial banks or other lenders (including vendors or the Members) for
the purpose of funding the Project.

     “Financing Documents” means all agreements between the Company and any applicable lender
evidencing any Financing.

     “Fiscal Year” has the meaning set forth in Section 7.5 hereof.

     “Force Majeure” shall mean war, terrorism, explosion, bombing, revolution, riots, civil
commotion, strikes, lockout, inability to obtain labour or materials, fire, flood, storm,
earthquake, hurricanes, tornado, drought, tidal waves, settlement of dredged areas or other acts or
elements, accident, government restrictions or appropriation or other causes, whether like or
unlike the foregoing, beyond the Development Manager’s control.

     “Force Majeure Delay Days” has the meaning set forth in Section 3.2(b)(v)(4)(L) hereof.

     “Gaming” means to deal, operate, carry on, conduct, maintain or expose for play any game as
defined in applicable Gaming Laws, or to operate an inter-casino linked system.

7

 

     “Gaming Approvals” means with respect to any action by a particular Person, any consent,
finding of suitability, license, approval or other authorization required for such action by such
Person from a Gaming Authority or under Gaming Laws.

     “Gaming Authority” means those national, state, local and other governmental, regulatory and
administrative authorities, agencies, boards and officials responsible for or regulating gaming or
gaming activities in any jurisdiction and, within the State of Nevada, specifically, the Nevada
Gaming Commission, the Nevada State Gaming Control Board, and the Clark County Liquor and Gaming
Licensing Board.

     “Gaming Components” means all Project Components in which Gaming will take place.

     “Gaming Laws” means those laws pursuant to which any Gaming Authority possesses regulatory,
licensing or permit authority over gaming within any jurisdiction and, within the State of Nevada,
specifically, the Nevada Gaming Control Act, as codified in NRS Chapters 462 – 466, and the
regulations of the Nevada Gaming Commission promulgated thereunder, and the Clark County Code.

     “Gross Asset Value” has the meaning set forth in Section 3.8 hereof.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “Impasse” has the meaning set forth in Section 9.3(c) hereof.

     “Impasse Election Date” has the meaning set forth in Section 9.3(d) hereof.

     “Indemnification Purchase Notice” has the meaning set forth in Section 13.3(a)(iii) hereof.

     “Indemnified Party” and “Indemnified Parties” have the meaning set forth in Section 2.5(a)
hereof.

     “Indemnifying Party” has the meaning set forth in Section 2.5(c) hereof.

     “Individual Adjusted Profit Interest Addition” has the meaning set forth in Section
3.4(b)(i)(2) hereof.

     “Individual Adjusted Profit Interest Subtraction” has the meaning set forth in Section
3.4(b)(i)(4) hereof.

     “Individual Base Profit Interest Addition” has the meaning set forth in Section 3.4(b)(i)(3)
hereof.

     “Individual Base Profit Interest Subtraction” has the meaning set forth in Section
3.4(b)(i)(5) hereof.

     “Initial Adjustment Date” has the meaning set forth in Section 3.2(b)(v)(1) hereof.

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     “Initial Business Plan” has the meaning ascribed to such term in Section 7.9(a), as such
Initial Business Plan may be, from time to time, amended, modified or supplemented in accordance
with the terms and provisions of this Agreement. As of the date hereof, the Members have each
approved the Initial Business Plan.

     “Initial Capital Contribution” has the meaning set forth in Section 3.2 hereof.

     “Initial Contingent Value Adjustment” has the meaning set forth in Section 3.2(b)(v) hereof.

     “Initial Contingent Value Adjustment Distribution” has the meaning set forth in Section
3.2(b)(v)(4)(A) hereof.

     “Initial Pre-Closing Development Cost Estimate” shall mean the amount set forth on Exhibit I
and is the estimated aggregate Development Costs paid by MGM and its Affiliates during the period
beginning with the inception of the Project and ending on the Closing Date.

     “Initial Pre-Closing Residential Proceeds Estimate” shall mean the amount set forth on Exhibit
I and is the estimated amount of (A) the actual cash proceeds received by MGM or its Affiliates,
excluding any cash proceeds returned or refunded, from the sale or a contract to sell any
residential units in the Project Components since the inception of the Project to the Closing Date
less (B) the Sales Expenses related to such condominium units.

     “Initial Pre-Opening Cost Adjustment” has the meaning set forth in Section 3.2(b)(iii)(2)(B)
hereof.

     “Initial Pre-Opening Cost Estimate” shall mean the amount set forth on Exhibit I and is the
estimated aggregate pre-opening and start-up expenses paid by MGM and its Affiliates during the
period beginning with the inception of the Project and ending on the Closing Date.

     “Interest” means, with respect to a Member, the percentage ownership interest in the Company
represented by the Units owned by such Member.

     “Lease Agreement” has the meaning set forth in Section 4.2(b) hereof.

     “Lending Member” has the meaning set forth in Section 3.4 hereof.

     “Lien” or “Liens” means any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind (including, without limitation, any conditional sale or other title retention agreement
or lease in the nature thereof).

     “Liability Limitation Option” has the meaning set forth in Section 13.3(a)(iii) hereof.

     “License Breach” has the meaning set forth in Section 13.1(d) hereof.

     “Loss” means any loss, liability, claim, damage, expense (including reasonable attorneys’
fees), whether or not involving a third party claim and without taking into account any related
insurance payments.

9

 

     “Major Contract” means any contract under which the Company would be required to make payments
or incur liabilities in excess of $50.0 million.

     “Major Decision” has the meaning set forth in Section 9.3(a).

     “Major Lease” means any lease agreement under which the Company would be required to make
payments, receive payments, or incur liabilities, in each case, in excess of $50.0 million.

     “Managing Member” means MGM or its successor as Managing Member.

     “Material Competitor” means the entities identified in Exhibit H.

     “Member” and “Members” has the meaning set forth in the first paragraph of this Agreement.

     “Member Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4).

     “Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(3).

     “Member Nonrecourse Deductions” has the meaning set forth in Regulations Sections
1.704-2(i)(1) and 1.704-2(i)(2).

     “MGM” has the meaning set forth in the first paragraph of this Agreement.

     “MGM Additional Contribution” has the meaning set forth in Section 4.10(a) hereof.

     “MGM Conditions Precedent” has the meaning set forth in Section 3.2(a)(ii) hereof.

     “MGM Indemnitee” has the meaning set forth in Section 13.4 of this Agreement.

     “MGM MIRAGE” means MGM MIRAGE, a Delaware corporation.

     “MGM MIRAGE Purchase Note” has the meaning set forth in Section 4.2(a)(ii) hereof.

     “MGM MIRAGE Restricted Affiliates” has the meaning set forth in Section 15.21(a).

     “Net Development Costs” has the meaning set forth in Section 3.2(b)(v)(4)(H) hereof.

     “Net Qualified Residential Sale Proceeds” has the meaning set forth in Section 3.2(b)(v)(4)(Q)
hereof.

     “Net Residential Proceeds” shall mean the actual amount of (A) cash proceeds received by the
Company or its Affiliates from the sale of any residential units in the Project Components less (B)
the Sales Expenses related to such residential units.

10

 

     “Non-Defaulting Member” shall mean a Member who is not a Defaulting Member.

     “Non-Delinquent Member” has the meaning set forth in Section 3.4 hereof.

     “Non-Disposing Member” has the meaning set forth in Section 11.6 hereof.

     “Offer Notice” has the meaning set forth in Section 11.6 hereof.

     “Offer Period” has the meaning set forth in Section 11.6 hereof.

     “Offered Units” has the meaning set forth in Section 11.6 hereof.

     “Operations Management Agreement” shall mean the agreement or term sheet between MGM or its
Affiliate and the Company, as approved by the Members, providing for management of all operations
of the Project by MGM or its Affiliate in the form attached hereto as Exhibit E.

     “Operations Manager” shall have the meaning ascribed to it in the Operations Management
Agreement.

     “Party” or “Parties” means MGM, DW, individually or collectively, as appropriate, and their
respective successors and assigns.

     “Passive Member” has the meaning set forth in Section 11.4 hereof.

     “Permitted Liens” means (a) Liens existing on the Signing Date and disclosed to DW either (i)
in written correspondence delivered to DW on or prior to the Signing Date, or (ii) in Nevada Title
Company report dated September 6, 2006, No. 05-12-0916-MME and Nevada Title Company report dated
July 3, 2006, No. 06-07-0488-DTL, (b) Liens on the any property to secure all or part of the cost
of improvements or construction thereon, (c) Liens resulting from Liens to any governmental entity,
including, but not limited to, pollution control or industrial revenue bond financing, (d) Liens
required by any contract or statute in order to perform any contract or subcontract made with or at
the request of a governmental entity, (e) mechanic’s materialmen’s carrier’s or other like Liens
arising in the ordinary course of business, (f) Liens consisting of zoning or planning
restrictions, easements, rights of way, encroachments, conflicts, discrepancies, overlapping of
improvements, protrusions, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from the value of, or
impair the use of, such property in the operation of its business, (g) Liens that are de minimis in
nature or amount, (h) Liens for current taxes, assessments, fees, levies and similar charges
imposed by any federal, state or local taxing authority, including, without limitation, interest,
penalties and additions thereto, and (i) security interests granted by a Delinquent Member pursuant
to Section 3.4(a)(v) hereof.

     “Permitted Transfer” has the meaning set forth in Section 11.2 of this Agreement.

     “Permitted Transferee” means, (i) in the case of MGM:  any person or entity, one
hundred percent (100%) of the voting stock or beneficial ownership of which is owned directly or
indirectly, including through subsidiaries, by MGM MIRAGE, and (ii) in the case of DW: 

11

 

any person or entity, one hundred percent (100%) of the voting stock or beneficial ownership
of which is owned directly or indirectly, including through subsidiaries, by DW.

     “Person” means any natural person, corporation, limited liability company, firm, partnership,
joint venture, association, joint-stock company, trust, unincorporated organization, governmental
or quasi-governmental entity or other entity of similar nature.

     “Plans” means, at any time, the plans and specifications for the construction of the Project,
together with all additions, modifications, supplements, addenda, and change orders thereto and
thereof, in each event Approved by the Board of Directors in accordance with Section 7.9 and 9.3
hereof.

     “Post-Closing Adjustment Amount” has the meaning set forth in Section 3.2(b)(iii)(4)(D)
hereof.

     “Post-Closing Development Cost Adjustment” has the meaning set forth in Section
3.2(b)(iii)(4)(A) hereof.

     “Post-Closing Residential Proceeds Adjustment” has the meaning set forth in Section
3.2(b)(iii)(4)(C) hereof.

     “Post-Closing Statement” has the meaning set forth in Section 3.2(b)(iii)(3) hereof.

     “Pre-Closing Adjustment Amount” has the meaning set forth in Section 3.2(b)(iii)(2)(D) hereof.

     “Pre-Closing Development Cost Adjustment” has the meaning set forth in Section
3.2(b)(iii)(2)(A) hereof.

     “Pre-Closing Residential Proceeds Adjustment” has the meaning set forth in Section
3.2(b)(iii)(2)(B) hereof.

     “Pre-Financing Reserve” has the meaning set forth in Section 3.2(b)(iv) hereof.

     “People Mover” has the meaning set forth in Section 4.9 hereof.

     “Prime Rate” means the “U.S. prime rate” published in the “Money Rates” or equivalent section
of the Western Edition of The Wall Street Journal, provided that if a “prime rate” range is
published by The Wall Street Journal, then the highest rate of that range will be used, or if The
Wall Street Journal ceases publishing a prime rate or a prime rate range, then the Managing Member
will select a prime rate, a prime rate range or another substitute interest rate index that is
based upon comparable information.

     “Profit Interest” has the meaning set forth in Section 3.4(b)(i) hereof.

     “Profits” has the meaning set forth in Section 5.1 hereof.

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     “Project” means the development known as CityCenter located in the County of Clark, State of
Nevada, which is to consist of the Project Components.

     “Project Assets” means all real, personal and intangible property related to or used in
connection with any business, operation, enterprise or development that is the Project, but
excluding all real, personal and intangible property related to or used in connection with any
business, operation, enterprise or development that is not the Project. A description of a portion
of the property comprising the Project Assets is set forth in Exhibit C.

     “Project Components” means the elements of the Project described on Exhibit A attached hereto.

     “Project Owner” has the meaning set forth in the Preamble.

     “Projected Construction Budget Cost” has the meaning set forth in Section 3.2(b)(v)(4)(E)
hereof.

     “Projected Net Construction Budget” has the meaning set forth in Section 3.2(b)(v)(4)(F)
hereof.

     “Projected Pre-Opening Costs” has the meaning set forth in Section 3.2(b)(v)(4)(S) hereof.

     “Projected Residential Sales” has the meaning set forth in Section 3.2(b)(v)(4)(G) hereof.

     “Qualified Condo Units” has the meaning set forth in Section 3.2(b)(v)(4)(P) hereof.

     “Quarterly Payment Notice” has the meaning set forth in Section 3.2(b)(v)(2) hereof.

     “Regulations” means the Treasury Regulations promulgated under the Code.

     “Regulatory Allocations” has the meaning set forth in Section 5.5 hereof.

     “Representative” has the meaning set forth in Section 9.1 hereof.

     “Reserve Distribution” has the meaning set forth in Section 3.2(b)(iv) hereof.

     “Sales Expenses” with respect to any residential units within the Project Components, shall
mean the sales commission and marketing expense related to the sale of such unit.

     “Scope Change Cost” has the meaning set forth in Section 3.2(b)(v)(4)(J) hereof.

     “Scope Delay Days” has the meaning set forth in Section 3.2(b)(v)(4)(N) hereof.

     “Selling Member” has the meaning set forth in Section 11.8(a) hereof.

     “Signing Date” has the meaning set forth in the Recitals.

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     “Subsequent Capital Contribution” has the meaning set forth in Section 3.3 hereof.

     “Subsidiary” has the meaning set forth in Section 1.10 hereof.

     “Tag-Along Notice” has the meaning set forth in Section 11.8(b) hereof.

     “Tagging Member” has the meaning set forth in Section 11.8(b) hereof.

     “Tax Matters Partner” has the meaning set forth in Section 7.4 hereof.

     “Title Policy” has the meaning set forth in Section 3.2(b) hereof.

     “Transfer” means, with respect to a Unit, to directly or indirectly sell, assign, transfer,
give, donate, pledge, hypothecate, deposit, alienate, bequeath, devise or otherwise dispose of or
encumber such Unit. Notwithstanding the foregoing definition of Transfer, the following are not
considered Transfers:

     (a) the transfer of interests (in one or more transactions) of an entity that owns,
directly or indirectly, any Units if:  (A) the value of the Units held, directly or
indirectly, by such entity does not exceed 50% of the fair market value of the total assets
of such entity; and (B) the transferor continues to consolidate with the entity for
financial reporting purposes; and

     (b) an offering of securities by, or a change of control of, MGM MIRAGE.

     “Transfer Breach” has the meaning set forth in Section 13.1(a) hereof.

     “Transferee” means a Person to whom a Transfer is made.

     “True Proceeds” has the meaning set forth in Section 4.10(a) hereof.

     “Unauthorized Action” has the meaning set forth in Section 9.1 hereof.

     “Unit” has the meaning set forth in Section 3.1 hereof.

     “Unreturned Investment” for a Member at any given time shall mean the aggregate amount of such
Member’s Capital Contribution made up to that time less the aggregate amount of
distributions made to such Member by the Company up to that time.

     “Updated Pre-Closing Development Cost Estimate” shall mean the update of the estimated
aggregate Development Costs paid by MGM and its Affiliates during the period beginning with the
inception of the Project and ending on the Closing Date and set forth in the Updated Pre-Closing
Statement.

     “Updated Pre-Closing Residential Proceeds Estimate” shall mean the update of the estimated
amount of (A) the actual cash proceeds received by MGM or its Affiliates, excluding any cash
proceeds returned or refunded, from the sale or a contract to sell any residential units in the
Project Components since the inception of the Project to the Closing Date less (B) the Sales
Expenses related to such condominium units.

14

 

     “Updated Pre-Closing Statement” has the meaning set forth in Section 3.2(b)(iii)(1) hereof.

     “Updated Pre-Opening Cost Estimate” shall mean the update of the estimated aggregate
pre-opening and start-up expenses paid by MGM and its Affiliates during the period beginning with
the inception of the Project and ending on the Closing Date and set forth in the Updated
Pre-Closing Statement.”

     (C) ARTICLE 2

	 	(i)	 	     by replacing the phrase “Members on behalf of the Company
(collectively, the “Indemnified Parties”) with the phrase “Members on behalf of the
Company (each, an “Indemnified Party” and collectively, the “Indemnified Parties”)”
in Section 2.5(a) of the Agreement.

     (D) ARTICLE 3

	 	(i)	 	     by replacing the phrase “insuring fee simple title or leasehold, as
applicable, to all real property of the Project” with the phrase “insuring fee
simple or leasehold title, as applicable, to all real property of the Project” in
Section 3.2(b)(ii)(7) of the Agreement.
	 
	 	(ii)	 	     by replacing the phrase “showing the location of all buildings,
easements, encroachments and the property lines;” with the phrase “showing the
location of all buildings, easements, encroachments and property lines;” in Section
3.2(b)(ii)(8) of the Agreement.
	 
	 	(iii)	 	     by replacing the phrase “all real property of the Project Assets” with
the phrase “all real property comprising the Project Assets” in Section
3.2(b)(ii)(11) of the Agreement.
	 
	 	(iv)	 	     by replacing the phrase “Initial Cash Distribution” with the phrase
“initial distribution described in Section 6.1” in the third sentence of Section
3.2(b)(iv) of the Agreement.
	 
	 	(v)	 	     by replacing Section 3.2(b)(v) of the Agreement with the following:

               “(v) Contingent Value Adjustment.

                    (1) Promptly following the date of determination of the actual Development Costs (the “Initial
Adjustment Date”), DW shall make an additional Capital Contribution, and the Company shall
distribute to MGM (“Initial Contingent Value Adjustment Distribution”), in such amount of
immediately available cash equal to fifty percent (50%) of the Initial Contingent Value
Adjustment.”

                    (2) To the extent that the Initial Contingent Value Adjustment Distribution is less than one
hundred million dollars ($100,000,000) and the Company actually

15

 

receives Net Qualified Residential Sales Proceeds after the Initial Adjustment Date, the Company
shall (i) if the Base Initial Contingent Value Adjustment is less than zero, first retain the Net
Qualified Residential Sale Proceeds up to the amount by which the Base Initial Contingent Value
Adjustment is less than zero, and (ii) then, subject to Section 3.2(b)(v)(3) hereof, distribute to
MGM no later than ten (10) Business Days following the delivery of the applicable Quarterly Payment
Notice (as defined below) all of the Net Qualified Residential Sale Proceeds in excess of the Net
Qualified Residential Sale Proceeds retained by the Company pursuant to Section 3.2(b)(v)(2)(i), if
any, received during the corresponding calendar quarter. In the event that Net Qualified
Residential Sale Proceeds are distributable to MGM under this Section 3.2(b)(v) hereof during any
calendar quarter, the Managing Member shall deliver to each Member a report setting forth the
calculation of the Net Qualified Residential Sale Proceeds payable to MGM for such quarter no later
than fifteen (15) days following the end of such calendar quarter (a “Quarterly Payment Notice”).

                    (3) (A) In the event that Net Qualified Residential Sale Proceeds are distributable to MGM
during any calendar quarter under Section 3.2(b)(v)(2) above, DW may elect to make an additional
Capital Contribution, and the Company shall distribute to MGM in lieu of distribution to
MGM of the Net Qualified Residential Sale Proceeds otherwise required to be distributed to MGM
pursuant to Section 3.2(v)(2) hereof for such calendar quarter, each in such amount of immediately
available cash equal to fifty percent (50%) of the Net Qualified Residential Sale Proceeds received
by the Company during such calendar quarter (the “Alternative CVA Distribution”); provided,
however, that, such election shall be deemed made by DW only if DW provides a written notice of
such election to the Managing Member no later than ten (10) Business Days following the delivery of
the applicable Quarterly Payment Notice and makes such additional Capital Contribution no later
than five (5) Business Days following the delivery of such Notice from DW.

                         (B) Notwithstanding anything in this Agreement to the contrary, the distributions to MGM in
respect of the sum of (i) the Initial Contingent Value Adjustment Distribution, (ii) fifty percent
(50%) of the aggregate Net Qualified Residential Sale Proceeds actually distributed to MGM by the
Company pursuant to Section 3.2(b)(v)(2) hereof, and (iii) the Alternative CVA Distribution
actually distributed to MGM pursuant to Section 3.2(b)(v)(3)(A) hereof, shall not exceed one
hundred million dollars ($100,000,000). The initial Gross Asset Value of MGM’s Initial Capital
Contribution shall be increased by (i) two hundred percent (200%) of the Initial Contingent Value
Adjustment Distribution, (ii) one hundred percent (100%) of the Net Qualified Residential Sale
Proceeds actually distributed to MGM pursuant to Section 3.2(b)(v)(2) hereof, and (iii) two hundred
percent (200%) of the Alternative CVA Distribution actually distributed to MGM pursuant to Section
3.2(b)(v)(3)(A) hereof.

                    (4) For the purposes of this Agreement,

                              (A) “Accounted Condo Units” shall mean residential units, in each case, within the
Project Components, sold or subject to an executed purchase agreement on or prior to the Initial
Adjustment Date,

                              (B) “Actual Pre-Opening Costs” shall mean the actual aggregate pre-opening and
start-up expenses to be paid during the period beginning with the

16

 

inception of the Project and ending on the date of the opening of the Project, provided,
however the definition of “Actual Pre-Opening Costs” set forth in this Section 3.2(b)(v)(4)(T)
shall only apply to such term as used in Sections 3.2(b)(iii) and 3.2(b)(v),

                              (C) “Actual Residential Sales” shall mean (A) the aggregate sales price, whether paid
or payable, from Accounted Condo Units less (B) the Sales Expenses related to such condominium
units,

                              (D) “Base Initial Contingent Value Adjustment” shall mean such amount equal to two
hundred million dollars ($200,000,000) less the Construction Budget Adjustment less the Casino CO
Delay Adjustment.

                              (E) “Casino CO Delay Adjustment” shall mean the amount equal to the multiple of (A)
one million dollars ($1,000,000) and (B) the greater of (1) zero and (2) the number equal to (x)
the number of days, if any, after December 31, 2009 on which the temporary certificate of occupancy
is filed for the Cesar Pelli-designed resort casino within the Project less (y) the Excluded Delay
Days,

                              (F) “Construction Budget Adjustment” shall mean the amount, if any, by which the Net
Development Costs exceeds the Projected Net Construction Budget,

                              (G) “Contingent Value Adjustment Distribution” shall mean the sum of the Initial
Contingent Value Adjustment Distribution, all Net Qualified Residential Sale Proceeds actually
distributed to MGM pursuant to Section 3.2(b)(v)(2) herof, and all Alternative CVA Distribution
actually distributed to MGM pursuant to Section 3.2(b)(v)(3)(A) hereof,

                              (H) “DW Delay Days” shall mean the number of days that the construction or development
of the Cesar Pelli-designed resort casino within the Project was delayed as a result of (A) the
Representatives of DW failing to approve or consider proposals, to the extent that approval of such
proposals is reasonably necessary for the development or construction of such resort casino and to
the extent that such proposals are subject to approval by the Board of Directors or (B) a breach by
DW of the Agreement,

                              (I) “Excluded Delay Days” shall mean the sum of the Force Majeure Delay Days, the DW
Delay days and the Scope Delay Days,

                              (J) “Force Majeure Delay Days” shall mean the number of days that the construction or
development of the Cesar Pelli-designed resort casino within the Project was delayed as a result of
Force Majeure,

                              (K) “Initial Contingent Value Adjustment” shall mean an amount equal to the greater of
(A) Zero Dollars ($0.00) and (B) the Base Initial Contingent Value Adjustment,

17

 

                              (L) “Net Development Costs” shall mean the actual Development Costs plus Actual
Pre-Opening Costs less Actual Residential Sales less Scope Change Cost,

                              (M) “Net Qualified Residential Sale Proceeds” shall mean the sales price for sale of
Qualified Condo Units less the Sales Expenses related to such Qualified Condo Units,

                              (N) “Projected Construction Budget Cost” shall mean the amount indicated in Exhibit I
and as set forth in the Construction Budget provided to DW prior to the Signing Date and agreed to
by the Members upon the Signing Date,

                              (O) “Projected Net Construction Budget” shall mean the Projected Construction Budget
Cost plus the Projected Pre-Opening Costs less the Projected Residential Sales, and agreed to by
the Members upon the Signing Date,

                              (P) “Projected Pre-Opening Costs” shall mean the amount indicated in Exhibit I and is
the estimated aggregate pre-opening and start-up expenses to be paid during the period beginning
with the inception of the Project and ending on the date of the opening of the Project,

                              (Q) “Projected Residential Sales” shall mean the amount indicated in Exhibit I and is
the aggregate sales proceeds estimated from the projected sale of all of the residential units
within the Project Components since the beginning of the inception of the Project less aggregate
Sales Expenses as agreed to by the Members upon the Signing Date,

                              (R) “Qualified Condo Units” shall mean all residential units, other than Accounted
Condo Units, within the Project Components,

                              (S) “Scope Change Cost” shall mean the Development Cost resulting from any change in
the scope of the Project approved by the Board of Directors,

                              (T) “Scope Delay Days” shall mean the number of days that the construction or
development of the Cesar Pelli-designed resort casino within the Project was delayed as a result of
a scope change in the Project approved by the Board of Directors,

	 	(vi)	 	by replacing the phrase “(the “Lending Member”, whether one or more)”
with the phrase “(the “Lending Member,” whether one or more)” in Section 3.4(a) of
the Agreement.
	 
	 	(vii)	 	by replacing the phrase “(the “Non-Delinquent Member”, whether one or
more)” with the phrase “(the “Non-Delinquent Member,” whether one or more)” in
Section 3.4(b) of the Agreement.
	 
	 	(viii)	 	by replacing the second sentence of Section 3.4(b)(i) of the Agreement with the
sentence: “The resulting Profit Interest of the Non-Delinquent Member

18

 

	 	 	 	shall be the number of percentage points (rounded to the nearest one hundredth of a
percentage point) determined in accordance with the following formula:“ 
	 
	 	(ix)	 	     by replacing the last sentence of Section 3.4(b)(i) of the Agreement
with the sentence: “The initial “Profit Interest” of MGM and DW immediately
following the Closing Date shall each be 50%. The Company shall not issue Units to
any Member solely to reflect any increase in any Member’s Profit Interest, and a
Member’s Interest shall not be deemed to increase or decrease solely as a result of
an increase or decrease in the Member’s Profit Interest.”
	 
	 	(x)	 	     by replacing the word “a” with the word “an” in the third sentence of
Section 3.8(a)(i) of the Agreement.
	 
	 	(xi)	 	     by adding the phrase “Profit Interests or” immediately after the phrase
“the acquisition of additional” in Section 3.8(a)(ii)(i) of the Agreement.
	 
	 	(xii)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(g)” with the term
“Section 1.704-1(b)(2)(ii)(g)” in Section 3.8(a)(ii)(iii) of the Agreement.
	 
	 	(xiii)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(g)” with the term “Section
1.704-1(b)(2)(ii)(g)” in Section 3.8(a)(iv) of the Agreement.
	 
	 	(xiv)	 	     by replacing the term “Depreciation” with the word “depreciation” in
Section 3.8(a)(v) of the Agreement.
	 
	 	(xv)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(g)” with the term
“Section 1.704-1(b)(2)(ii)(g)” in Section 3.8(c) of the Agreement.

     (E) ARTICLE 4

	 	(i)	 	     by adding the word “be” immediately after the phrase “The terms of such
Lease Agreement shall” in the second sentence of Section 4.2(b) of the Agreement.
	 
	 	(ii)	 	     by replacing the term “Section 4.2I” with the term “Section 4.2(c)(ii)”
in the second sentence of Section 4.2(c)(ii) of the Agreement.
	 
	 	(iii)	 	     by replacing the section heading “Development Agreement:” with
the section heading “Development Agreement.” in Section 4.6 of the
Agreement.
	 
	 	(iv)	 	     by removing the phrase “and which will not be included in determining
Development Costs” immediately following the phrase “which will not be included in
the Construction Budget” in Section 4.9 of the Agreement.
	 
	 	(v)	 	     by renumbering the subsections “(a)”, “(b)” and “(c)” in Section 4.10
of the Agreement.

19

 

	 	(vi)	 	     by replacing the phrase “the Condo Sales” with the phrase “sales of
residential units, in each case, within the Project Components” in the first
sentence of Section 4.10 of the Agreement.
	 
	 	(vii)	 	     by adding the phrase “in the amount” immediately after the phrase “the
distribution of the MGM Additional Contribution” in third sentence of Section
4.10(c) of the Agreement.

     (F) ARTICLE 5

	 	(i)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(d)(4)” with the term
“Section 1.704-1(b)(2)(ii)(d)(4)” in the first sentence of Section 5.3 of the
Agreement.
	 
	 	(ii)	 	     by replacing the phrase “Section 1.704 2(g)(1) and 1.704 2(i)(5)” with
the phrase “Section 1.704-2(g)(1) and 1.704-2(i)(5)” in Section 5.6(a)(i) of the
Agreement.
	 
	 	(iii)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(d) with the term
“Section 1.704-1(b)(2)(ii)(d)” in Section 5.6(a)(ii) of the Agreement.
	 
	 	(iv)	 	     by replacing the term “Section 1.704 1(b)(2)(ii)(d) with the term
“Section 1.704-1(b)(2)(ii)(d)” in the second paragraph of Section 5.6(a)(ii) of the
Agreement.
	 
	 	(v)	 	by replacing the section heading “Section 704I Tax
Allocations.” with the section heading “Section 704(c) Tax
Allocations.” in Section 5.7 of the Agreement.
	 
	 	(vi)	 	     by replacing the term “Code Section 704I” with the term “Code Section
704(c)” in the first sentence of Section 5.7 of the Agreement.
	 
	 	(vii)	 	     by replacing the term “Regulations Section 1.706-1I(2)(ii)” with the
term “Regulations Section 1.706-1(c)(2)(ii)” in the first sentence of Section 5.8
of the Agreement.
	 
	 	(viii)	 	     by replacing the phrase “for the term “Partnership”,” with the phrase “for the
term “Partnership,”” in Section 5.9 of the Agreement.

     (G) ARTICLE 6

	 	(i)	 	     by replacing the phrase “interest payments on the Construction
Financing and other Company indebtedness” with the phrase “interest payments on the
Financing of the construction of the Project and other Company indebtedness” in
Section 6.3(i) of the Agreement
	 
	 	(ii)	 	     by revising Section 6.4 of the Agreement to read as follows:

20

 

     “Distribution of Distributable Cash. Distributable Cash with respect to the Company
for each fiscal quarter shall be distributed:

          (a) First, to the extent that (i) the Members made Subsequent Capital Contribution to fund
Development Costs, (ii) the Net Qualified Residential Sale Proceeds required to be distributed to
MGM under Section 3.2(b)(v)(2) for the applicable fiscal quarter have been distributed to MGM, and
(iii) such distribution will not result in a default or a breach of any Financing Document, to the
Members, pro rata in proportion to their respective Profit Interests until each Member has received
distribution pursuant to this Section 6.4(a) in an amount equal to the amount of such Subsequent
Capital Contribution made by such Member;

          (b) Then, in accordance with the Business Plan or as Approved by the Board of Directors, in
the following order of priority:

(A) first, to the Members to repay amounts, if any, lent by them to the Company, to the extent
permissible, including any payments made by such Member to any lender in connection with any
liability assumed on behalf of the Company, any such payments to be made on a pro rata basis
according to the then outstanding balances of such loans or payments on account of credit
enhancements, with such payments applied first against accrued interest; and

(B) the balance, if any, to the Members, pro rata in proportion to their respective Profit
Interests.”

     (H) ARTICLE 7

	 	(i)	 	     by replacing the word “‘tax matters partner’” with the term “‘Tax
Matters
Partner’” in the first sentence of Section 7.4 of the Agreement.
	 
	 	(ii)	 	     by replacing the phrase “‘Initial Business Plan’.” with the phrase
“‘Initial Business Plan.’” in the second sentence of Section 7.9 of the Agreement.
	 
	 	(iii)	 	     by replacing the term “‘Board of Directions’” with the term “‘Board of
Directors’” in the last sentence of Section 7.9 of the Agreement.

     (I) ARTICLE 8

	 	(i)	 	     by replacing the section heading “Intellectual property.” with
the section heading “Intellectual Property.” in Section 8.2 of the
Agreement.

     (J) ARTICLE 9

	 	(i)	 	     by adding the words “of Directors” immediately following the phrase
“Either Member may call a meeting of the Board” in the second sentence of Section
9.1(c) of the Agreement.
	 
	 	(ii)	 	     by adding a semicolon to the end of Section 9.3(a)(xix).

21

 

     (K) ARTICLE 10

	 	(i)	 	     by adding the word “Capital” immediately after the phrase “or otherwise
encumber the Initial” in Section 10.1(q) of the Agreement.
	 
	 	(ii)	 	     by adding the word “Capital” immediately after the phrase “”including
any equity interest of an entity that would be included in the Initial”, in Section
10.1(q) of the Agreement.
	 
	 	(iii)	 	     by removing the word “and” immediately after the phrase “any of its
Affiliates respecting the Project;” in Section 10.1(v) of the Agreement.
	 
	 	(iv)	 	     by replacing the period with a semicolon at the end of Section 10.1(w).
	 
	 	(v)	 	     by replacing the phrase “by any applicable labor union.” with the
phrase “by any applicable labor union; and” in Section 10.1(x) of the Agreement.
	 
	 	(vi)	 	     by removing the section heading “Section 10.3” in Article 10 of the
Agreement.
	 
	 	(vii)	 	     by removing the phrase “which representations and warranties,”
immediately after the phrase “DW hereby represents and warrants,” in the second
paragraph of Section 10.2 of the Agreement.
	 
	 	(viii)	 	     by replacing the word “The” with the word “the” in Section 10.2(b) of the
Agreement.
	 
	 	(ix)	 	     by removing the word “and” immediately after the phrase “of this
Agreement as to DW;” in Section 10.2(f) of the Agreement.
	 
	 	(x)	 	     by replacing the period with a semicolon at the end of Section 10.2(g)
of the Agreement.
	 
	 	(xi)	 	     by replacing the period with a semicolon at the end of Section 10.2(i)
of the Agreement.
	 
	 	(xii)	 	     by replacing section heading “Section 10.4” with section heading
“Section 10.3” in Article 10 of the Agreement.

     (L) ARTICLE 11

	 	(i)	 	     by replacing the term “Transferor” with the word “transferor” in the
third sentence of Section 11.5 of the Agreement.

     (M) ARTICLE 13

	 	(i)	 	     by replacing the term “Non Defaulting Member” with the term
“Non-Defaulting Member” in Section 13.2(a) of the Agreement.
	 
	 	(ii)	 	     by replacing the phrase “Sections 4.2(c)(ii) or 13.5” with the phrase
“Section 4.2(c)(ii) or Section 13.5” in Section 13.2(b) of the Agreement.

22

 

	 	(iii)	 	     by adding the term “Business Days” immediately after the phrase
“Within fifteen (15) in the third sentence of Section 13.3(a)(iii) of the
Agreement.
	 
	 	(iv)	 	     by replacing the term “Non Defaulting Member” with the term
“Non-Defaulting Member” in the first sentence of Section 13.5(a) of the Agreement.
	 
	 	(v)	 	     by replacing the term “Party” with the term “Member” in the second
sentence of Section 13.5(a) of the Agreement.
	 
	 	(vi)	 	     by replacing the term “non defaulting Member” with the term
“Non-Defaulting Member in the ninth sentence of Section 13.5(a) of the Agreement.
	 
	 	(vii)	 	     by replacing the term “non defaulting Member” with the term
“Non-Defaulting Member in the twelfth sentence of Section 13.5(a) of the Agreement.

     (N) ARTICLE 15

	 	(i)	 	     by replacing the term “Infinity” with the term “DW” in the first
sentence of Section 15.21(b) of the Agreement.
	 
	 	(ii)	 	     by revising Section 15.22 of the Agreement to read as follows:

     WAIVER OF TRIAL BY JURY. THE MEMBERS TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED
WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE MEMBERS HERETO WITH RESPECT
TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE.

     (O) EXHIBITS

	 	(i)	 	     by increasing the size of the heading numbers from 10 point font to 12
point font in Exhibit C to the Agreement.
	 
	 	(ii)	 	     by revising Exhibit G to the Agreement to read as follows:

“Representatives Appointed by MGM:

	-	 	J. Terrence Lanni
	 
	-	 	James J. Murren
	 
	-	 	Robert H. Baldwin

23

 

Representatives Appointed by DW:

	-	 	Chris O’Donnell
	 
	-	 	Kar Tung Quek
	 
	-	 	Lai Boon Yu”

     (P) TABLE OF CONTENTS

	 	(i)	 	by adding a table of contents immediately following Exhibit J to the
Agreement. The table of contents shall read as follows:

	 	 	 	 	 
	“ARTICLE 1 THE COMPANY
	 	 	2	 
	 
	Section 1.1 Organization
	 	 	2	 
	Section 1.2 Name
	 	 	2	 
	Section 1.3 Place of Business
	 	 	2	 
	Section 1.4 Business of the Company
	 	 	2	 
	Section 1.5 Purposes Limited
	 	 	2	 
	Section 1.6 No Payments of Individual Obligations
	 	 	2	 
	Section 1.7 Statutory Compliance
	 	 	2	 
	Section 1.8 Title to Property
	 	 	3	 
	Section 1.9 Duration
	 	 	3	 
	Section 1.10 Conduct of Business Through Single Purpose Entities
	 	 	3	 
	Section 1.11 Definitions
	 	 	3	 
	 
	ARTICLE 2 THE MEMBERS
	 	 	16	 
	 
	Section 2.1 Identification
	 	 	16	 
	Section 2.2 Services of Members
	 	 	16	 
	Section 2.3 Reimbursement and Fees
	 	 	16	 
	Section 2.4 Transactions with Affiliates
	 	 	16	 
	Section 2.5 Liability of the Members; Indemnification
	 	 	16	 
	 
	ARTICLE 3 CAPITAL CONTRIBUTIONS; LOANS; CAPITAL ACCOUNTS
	 	 	18	 
	 
	Section 3.1 Issuance of Units
	 	 	18	 
	Section 3.2 Initial Capital Contributions by the Members
	 	 	18	 
	Section 3.3 No Further Capital Contributions
	 	 	25	 
	Section 3.4 Failure to Make a Capital Contribution
	 	 	25	 
	Section 3.5 Additional Remedies for Failure to Make a Capital Contribution
	 	 	29	 
	Section 3.6 Capital Accounts
	 	 	29	 
	Section 3.7 Return of Capital
	 	 	30	 
	Section 3.8 Gross Asset Value
	 	 	31	 
	 
	ARTICLE 4 COVENANTS
	 	 	32	 
	 
	Section 4.1 Financing
	 	 	32	 
	Section 4.2 Licensing
	 	 	32	 

24

 

	 	 	 	 	 
	Section 4.3 Maintenance of the Project
	 	 	35	 
	Section 4.4 Ancillary Agreements
	 	 	36	 
	Section 4.5 FAA Determination Letters
	 	 	36	 
	Section 4.6 Development Agreement
	 	 	36	 
	Section 4.7 HSR Act
	 	 	36	 
	Section 4.8 DW Notification Obligation
	 	 	36	 
	Section 4.9 People Mover Construction Obligation
	 	 	36	 
	Section 4.10 Income Tax on Condominiums
	 	 	37	 
	Section 4.11 Closing Date Balance Sheet
	 	 	37	 
	 
	ARTICLE 5 ALLOCATION OF PROFITS AND LOSSES
	 	 	38	 
	 
	Section 5.1 Allocation of Profits and Losses
	 	 	38	 
	Section 5.2 Minimum Gain Chargeback Allocation Provisions
	 	 	38	 
	Section 5.3 Qualified Income Offset
	 	 	39	 
	Section 5.4 Nonrecourse Deductions
	 	 	39	 
	Section 5.5 Curative Allocations
	 	 	39	 
	Section 5.6 Limitation on Losses
	 	 	40	 
	Section 5.7 Section 704 Tax Allocations
	 	 	40	 
	Section 5.8 Allocations Between Transferor and Transferee
	 	 	41	 
	Section 5.9 Regulations Interpretation
	 	 	41	 
	 
	ARTICLE 6 NON LIQUIDATING DISTRIBUTIONS
	 	 	41	 
	 
	Section 6.1 Initial Distribution
	 	 	41	 
	Section 6.2 Tax Distribution
	 	 	41	 
	Section 6.3 Distributable Cash
	 	 	42	 
	Section 6.4 Distribution of Distributable Cash
	 	 	42	 
	 
	ARTICLE 7 ACCOUNTING AND RECORDS; CAPITAL BUDGETS
	 	 	42	 
	 
	Section 7.1 Books and Records
	 	 	42	 
	Section 7.2 Reports
	 	 	43	 
	Section 7.3 Tax Returns
	 	 	44	 
	Section 7.4 Tax Matters Partner
	 	 	44	 
	Section 7.5 Fiscal Year
	 	 	44	 
	Section 7.6 Bank Accounts
	 	 	44	 
	Section 7.7 Tax Elections
	 	 	45	 
	Section 7.8 [Reserved.]
	 	 	45	 
	Section 7.9 Business Plan and Budgets
	 	 	45	 
	Section 7.10 Ownership Ledger
	 	 	47	 
	 
	ARTICLE 8 CONFIDENTIALITY; INTELLECTUAL PROPERTY
	 	 	47	 
	 
	Section 8.1 Confidential Treatment of Information
	 	 	47	 
	Section 8.2 Intellectual Property
	 	 	48	 
	 
	ARTICLE 9 MANAGEMENT
	 	 	48	 
	 
	Section 9.1 General
	 	 	48	 
	Section 9.2 Management by Managing Member
	 	 	50	 
	Section 9.3 Exclusive Powers of the Board of Directors
	 	 	50	 

25

 

	 	 	 	 	 
	Section 9.4 Replacement of Managing Member
	 	 	53	 
	 
	ARTICLE 10 REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	 
	Section 10.1 MGM
	 	 	53	 
	Section 10.2 DW
	 	 	57	 
	Section 10.3 Brokers
	 	 	58	 
	 
	ARTICLE 11 TRANSFER OF UNITS
	 	 	59	 
	 
	Section 11.1 Restrictions on Transfers
	 	 	59	 
	Section 11.2 Permitted Transfers
	 	 	59	 
	Section 11.3 Conditions to Transfers
	 	 	59	 
	Section 11.4 Prohibited Transfers
	 	 	60	 
	Section 11.5 Distributions and Allocations in Respect of Transferred Units
	 	 	61	 
	Section 11.6 Right of First Offer
	 	 	62	 
	Section 11.7 Indirect Transfers
	 	 	62	 
	Section 11.8 Tag-Along Rights
	 	 	63	 
	 
	ARTICLE 12 GAMING LAWS
	 	 	63	 
	 
	Section 12.1 Qualifications
	 	 	63	 
	 
	ARTICLE 13 EVENTS OF DEFAULT
	 	 	64	 
	 
	Section 13.1 Events of Default
	 	 	64	 
	Section 13.2 Remedies upon Default
	 	 	65	 
	Section 13.3 Indemnification
	 	 	65	 
	Section 13.4 Indemnification by DW
	 	 	66	 
	Section 13.5 Buy Out on Default
	 	 	66	 
	 
	ARTICLE 14 DISSOLUTION AND LIQUIDATION
	 	 	67	 
	 
	Section 14.1 Events of Dissolution
	 	 	67	 
	Section 14.2 Members’ Consent to Continue Business
	 	 	68	 
	Section 14.3 Dissolution and Liquidation
	 	 	68	 
	Section 14.4 Notice of Dissolution
	 	 	69	 
	 
	ARTICLE 15 MISCELLANEOUS PROVISIONS
	 	 	69	 
	 
	Section 15.1 Waiver of Partition and Covenant Not to Withdraw
	 	 	69	 
	Section 15.2 Additional Agreements
	 	 	70	 
	Section 15.3 Notices
	 	 	70	 
	Section 15.4 Amendments
	 	 	72	 
	Section 15.5 Successors and Assigns
	 	 	72	 
	Section 15.6 Time
	 	 	72	 
	Section 15.7 Severability
	 	 	72	 
	Section 15.8 Counterparts
	 	 	72	 
	Section 15.9 Attorneys’ Fees
	 	 	72	 
	Section 15.10 Entire Agreement
	 	 	73	 
	Section 15.11 Further Assurances
	 	 	73	 
	Section 15.12 Headings; Interpretation
	 	 	73	 
	Section 15.13 Exhibits
	 	 	73	 

26

 

	 	 	 	 	 
	Section 15.14 Approvals and Consents
	 	 	73	 
	Section 15.15 Estoppels
	 	 	73	 
	Section 15.16 Compliance with Laws and Contractual Obligations
	 	 	73	 
	Section 15.17 Remedies Cumulative
	 	 	74	 
	Section 15.18 Waiver
	 	 	74	 
	Section 15.19 Governing Law and Choice of Forum
	 	 	74	 
	Section 15.20 Survival of Indemnification Obligations
	 	 	74	 
	Section 15.21 Limited Liability
	 	 	74	 
	Section 15.22 WAIVER OF TRIAL BY JURY
	 	 	75	 

LIST OF EXHIBITS

Exhibit A            Project Components

Exhibit B            Ancillary Agreements

Exhibit C            Partial Description of Project Assets

Exhibit D            Development Management Agreement

Exhibit E            Operations Management Agreement

Exhibit F            Gross Asset Value/Initial Capital Contributions

Exhibit G            Representatives to the Board of Directors

Exhibit H            Material Competitors

Exhibit I            Initial Estimates and Projections

Exhibit J            Construction Budget Summary”

Section 3

     Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and
remedies of the parties under the Agreement. This Amendment shall apply and be effective only with
respect to the provisions of the Agreement specifically referred to herein. On and after the
Amendment Effective Date, each reference in the Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import, shall be deemed a reference to the Agreement as amended
hereby.

Section 4

     Governing Law. This Amendment shall be governed by the laws of the State of Delaware, without
regard to conflict of laws principles.

Section 5

     Counterparts. This Amendment may be executed in two or more counterparts (including

27

 

by facsimile or similar means of electronic communication), each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

[signature pages follow]

28

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to the Limited
Liability Company Agreement as of the date first written above.

	 	 	 	 	 
	 

	 	PROJECT CC, LLC,
	 	 
	 

	 	a Nevada limited liability company	 	 
	 
	 	 	 	 
	 

	 	/s/ Bryan L. Wright	 	 
	 

	 	 	 	 
	 

	 	Name: Bryan L. Wright	 	 
	 

	 	Title: Assistant Secretary	 	 
	 
	 	 	 	 
	 

	 	INFINITY WORLD DEVELOPMENT CORP.,	 	 
	 

	 	a Nevada corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Chris O’Donnell	 	 
	 

	 	 	 	 
	 

	 	Name: Chris O’Donnell	 	 
	 

	 	Title: President and CEO	 	 
	 
	 	 	 	 
	 

	 	/s/ Abdul Wahid A. Rahim Al Ulama	 	 
	 

	 	 	 	 
	 

	 	Name: Abdul Wahid A. Rahim Al Ulama	 	 
	 

	 	Title: Assistant Secretary	 	 

29

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