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cash remaining after deduction from total revenue of Majestic's 1) debt service; 2) project costs (all costs incurred and paid by Majestic in designing, development, financing, constructing, owning, operating, maintaining, leasing and managing the premises and commercial facilities); 3) a "reasonable reserve" for future project costs or as required by any lender to Majestic; and 4) repayment of advances [n.16] with interest set at 250 points over prime.



[N.16.] The term "equity contribution" was used in the December 19, 2005 and September 6, 2006 submissions for Board approval, The term "advances" was later substituted.




Rent does not commence until one month past the first anniversary following the effective date of the PGL. Thus, once Majestic enters into a PGL with the Authority, it receives one year rent-free. Further,


Once Revenue Rent is payable to [JAA] by [Majestic], the amount of all Fixed Rent previously paid by [Majestic] at any time during the Term of this Agreement shall be credited, dollar for dollar, against the Revenue Rent otherwise payable by [Majestic], thereby reducing the amount of Revenue Rent actually payable, provided the total Rent paid to [JAA] by [Majestic] shall not be less than the Fixed Rent payable under this Lease.


Such crediting of previously paid Fixed Rent shall continue throughout the Term of this Agreement.



As in the Option, "development fees," which are reimbursed to Majestic from gross revenues prior to determination of "net revenue," means the fee paid to Majestic in the amount of four percent of the construction and improvement costs in the development budget. "Management fees" paid to Majestic for the administration of the commercial facilities in Woodwings East range from three to five percent of the total revenue received by Majestic from sublessees.


The PGL requires construction to commence on the development parcel within two years of the execution of the PGL, and for construction to be substantially complete two years later, otherwise, Majestic will be in breach of the PGL. Thus, if Majestic







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uses all time provided under the PGL, revenues from sublessees may not be generated for four years or more after a PGL is signed.


While the PGL contemplates no incumbrance or liens on JAA's fee simple title to the land, [n.17] loans to Majestic in connection with its development of commercial facilities and improvements on the land "may be secured by a mortgage or deed of trust encumbering the leasehold estate" created by the PGL. If the leasehold interest is foreclosed upon by a Majestic lender, revenue rent may be abated.


Thus, Majestic's lenders may foreclose on its leasehold interest, and the foreclosing lenders will step into Majestic's shoes, assuming a preferred position, with its debt being repaid prior to maintenance expenses, and prior to the determination of net revenue to be shared with the Authority.



[N.17.] The cost to Majestic of bonding against or discharging a lien on the fee is treated as a "project cost" and reimbursed out of gross revenues before the split distribution of net revenues, or "revenue rent" to the Authority.




All improvements and buildings constructed on the premises by Majestic are owned by Majestic until the expiration or termination of the PGL. At termination of the PGL, Majestic will leave the premises and title and ownership in the buildings and other improvements to the property will pass to JAA.


If Majestic defaults on the PGL by failing to pay rent, or abandoning the premises or failing to fulfill other terms and conditions set forth in the agreement, JAA may pursue all rights in law and equity. Any money judgment in favor of JAA resulting from default by Majestic "shall not exceed an amount equal to the fair market value of [Majestic's] interest in the Premises," subject to several exceptions, including when Majestic "intentionally commits waste on the Premises."


Id. at 707-11 (citations and footnote omitted).
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