Exhibit 10.16
AMENDED AND RESTATED
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DISPOSITION AND DEVELOPMENT AGREEMENT, AGREEMENT OF
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PURCHASE AND SALE, AND LEASE WITH OPTION TO PURCHASE
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between
THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ▇▇▇▇▇▇▇,
a public body, corporate and politic,
and
COMPTON ENTERTAINMENT, INC.,
a California corporation
Walnut Industrial Park Redevelopment Project
AMENDED AND RESTATED
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DISPOSITION AND DEVELOPMENT AGREEMENT, AGREEMENT OF
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PURCHASE AND SALE, AND LEASE WITH OPTION TO PURCHASE
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THIS AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT (this
"DDA" or "Lease") is made as of this 4th day of April, 1995, by and between the
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ▇▇▇▇▇▇▇, a public body corporate
and politic ("Agency") and COMPTON ENTERTAINMENT, INC., a California corporation
("Redeveloper").
RECITALS
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A. The purpose of this DDA is to effectuate the Agency's Redevelopment Plan,
as amended (the "Redevelopment Plan") for the Walnut Industrial Park Project
Area (the "Project Area") in the City of ▇▇▇▇▇▇▇ (the "City") by facilitating
the development, rehabilitation and operation of all or some portion of an
existing hotel structure (the "Hotel") and entertainment center (the
"Entertainment Center") containing one or more restaurants and a card club (the
"Card Club"), and parking (and which may contain a nightclub/sports lounge, gift
shop, meeting facilities/theater, corporate business lounge, and assorted
concession venues), on a parcel of real property of approximately 24.45 acres
(the "Property") located within the Project Area. The Property is legally
described in Exhibit 1 attached hereto, and is depicted on the Site Plan
attached hereto as Exhibit 2.
B. Agency is the owner of the Property.
C. Redeveloper desires to purchase a portion of the Property and to lease
the remainder of the Property for the purpose of developing and operating the
Hotel and Entertainment Center thereon.
D. Agency desires to lease the Property to Redeveloper in accordance with
the terms and conditions set forth hereinbelow.
E. The Property contains four elements:
1. A portion of the Property (the "Convention Center Parcel") currently
improved with a convention center and parking structure, including the
underlying land, all of which is subject to easements for access to, support of
and parking for the Hotel Parcel.
2. A portion of the Property (the "Hotel Parcel") consisting of a
parcel of air space which includes a nine (9) story hotel containing 290 guest
rooms and ancillary areas such as lobbies, restaurant, kitchen, bars, commercial
areas and the like.
3. A portion of the Property (the "Parking Parcels") will be improved
with parking to support the Hotel and the Entertainment Center.
4. A portion of the Property consists of additional land (the
"Expansion Parcels") upon which Redeveloper shall have the right to expand by
construction of an additional casino or card club.
The Hotel Parcel, the Parking Parcels and the Expansion Parcels are
referred to herein collectively as the "Leasehold Parcels" or the "balance of
the Property."
F. This DDA consists of an agreement of purchase and sale of a portion of
the Property, a lease of the balance of the Property to Redeveloper and, if
Redeveloper complies with the terms thereof, an option to purchase the balance
of the Property.
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G. The parties hereto are parties to that certain Disposition and
Development Agreement dated as of December 10, 1992, concerning real property
adjacent to the Property (the "Prior DDA"). By this DDA, the parties shall
amend and restate such Disposition and Development Agreement on the terms
provided herein.
H. Redeveloper has obtained a license (the "License") from the City of
▇▇▇▇▇▇▇ ("City") to operate within the City of ▇▇▇▇▇▇▇ a Card Club pursuant to
Section 9-10 of the Compton Municipal Code, on the terms and conditions set
forth in the City's Resolution No. 17,087. Such license has been extended and
amended by City Resolution Nos. 17,617 and 17,831. More or less concurrently
herewith, Redeveloper is applying for an amendment to the license to cover the
entire Property so as to permit expansion of the Card Club.
I. Redeveloper proposes to: (i) construct improvements to complete and
rehabilitate the Hotel so that it can be operated, in whole or in part, as a
full service hotel lodging facility, (ii) construct improvements to the Property
so that the Entertainment Center, including the Card Club, can be operated
therefrom, (iii) construct additional parking needed to support the Hotel and
Entertainment Center, and (iv) subject to Section 29 hereof, within fifteen (15)
years after the date hereof, construct, open and operate an expansion of the
Card Club facility on the Expansion Parcels and/or other portions of the
Property. Construction of such improvements and operation of the Hotel and
Entertainment Center from the Property, and construction of the expansion
facility on the Expansion Parcels are referred to herein as the "Project."
J. The Project will assist in the elimination of blight in the Project Area,
will provide additional jobs, and will substantially improve the economic and
physical conditions in the Project Area in accordance with the purposes and
goals of the Redevelopment Plan.
NOW THEREFORE, the parties agree as follows:
1. Purchase and Sale of the Convention Center Parcel.
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(a) Redeveloper hereby agrees to purchase from Agency, and Agency
agrees to sell to Redeveloper, the Convention Center Parcel, including the
underlying land and parking structure, subject to easements of support and for
parking for the benefit of the Hotel Parcel, on the terms and conditions set
forth hereinbelow.
(b) The purchase price shall be $2,000,000 cash, payable in full
at closing.
(c) Closing shall occur at such time as the contingencies set forth
in Section 2(b) hereof have been satisfied, but in no case later than July 31,
1995; provided, however, if the closing has not occurred by July 31, 1995 due to
the fact that the bonds described in Section 5 have not theretofore been
defeased, then
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the closing date may be extended for up to 90 additional days, and if the
closing has not occurred by October 31, 1995, then either party hereto may
terminate this DDA if the terminating party has not defaulted hereunder.
Notwithstanding the foregoing, if the sole reason that the closing has not
occurred is due to the fact that the lis pendens recorded on April 10, 1995, as
Instrument No. 95-496676, Official Records, Los Angeles County (the "Lis
Pendens") has not been expunged, then the closing date may be extended until
such time as the Lis Pendens has been expunged as an exception to title;
provided, however, if the Lis Pendens is not expunged as a title exception by
April 30, 1996, then either party may thereafter terminate this Agreement.
(d) In addition to other matters of title, as provided in Section 3
hereof, title shall be subject to the following matters:
(i) Existing easements of access, support and for parking
referred to hereinabove.
(ii) The Grant Deed pursuant to which Redeveloper or its
successor in interest takes title shall contain a deed covenant in favor of
Agency and City obligating the grantee, its successors and assigns to
continuously and uninterruptedly operate the Hotel, Card Club and Entertainment
Center (except for necessary interruptions which shall not exceed six
consecutive months). If any such use becomes unfeasible or is rendered illegal
(other than as the result of voluntary action on the part of Redeveloper or a
successor in interest), the parties shall negotiate in good faith to substitute
appropriate uses for the Property. Said covenant shall become ineffective from
and after the date that is fifty years after the Rent Commencement Date (as
defined below).
(iii) A deed of trust (the "deed of trust"), in favor of
Agency securing Redeveloper's performance under the Lease hereinafter provided
for, shall be recorded at closing; provided, however, that the foreclosure of
such deed of trust shall not extinguish the Agency's obligation to deliver the
sum set forth in Section 1(e) hereof upon the conditions set forth in Section
1(e).
(e) Anything in Section 1(d)(iii) hereinabove or in the Lease to the
contrary notwithstanding, if, for any reason other than the exercise by
Redeveloper of the option to purchase the Leasehold Parcels, as provided herein,
the Lease is terminated, including a voluntary termination under Section 4(c)
hereof or a termination for breach on the part of Redeveloper or any successor
to Redeveloper, Agency shall be obligated to pay to Redeveloper or to its
successor in interest, the original $2,000,000.00 purchase price of the
Convention Center Parcel, and Redeveloper shall be obligated to reconvey the
Convention Center Parcel to Agency. The failure of Redeveloper to reconvey the
Convention Center Parcel to Agency shall be deemed an event of default under the
deed of trust referred to in Section 1(d)(iii) hereof. Such repurchase price
shall be paid over such
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period of time as shall be determined by binding negotiations of the parties
during the 90 day period following the termination of the Lease. Upon the
exercise of by Redeveloper of the option topurchase the Property which is
subject to the Lease and the payment of the purchase price thereof, the
provisions of this Section 1(e) shall be ineffective, and the deed of trust
referred to in Section 1(d)(iii) shall be reconveyed. The effect of the
covenants referred to in Section 1(d)(ii) and this Section 1(e) shall survive
the transfer of title to the optioned property to Redeveloper or its permitted
successor in interest.
(f) The purchase price shall be paid in all cash through the close
of escrow. Agency will pay the cost of a CLTA policy of title insurance, any
documentary transfer tax, and one half of the escrow fees. Redeveloper will pay
the cost of recording, the additional premium and any expenses (including survey
costs) in the event Redeveloper desires to obtain an extended coverage policy of
title insurance, and the other half of the escrow fees. In connection therewith,
the parties shall execute normal and necessary escrow instructions and all
documents reasonably called for thereunder, so long as such instructions and
documents are not inconsistent herewith.
2. Lease of the Hotel and Other Parcels.
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(a) Agency hereby leases the Leasehold Parcels to Redeveloper, and
Redeveloper leases the Leasehold Parcels from Agency (the "Lease"), for the term
set forth in Section 8 hereof, subject to and on the terms and conditions set
forth in this Lease.
(b) Notwithstanding the foregoing, this Lease, including the parties'
obligations hereunder, is subject to the satisfaction or waiver of each of the
following conditions on or before the Effective Date (as hereinafter defined):
(i) Agency's receipt of an opinion from bond counsel to be
selected and approved by Agency that this transaction will not adversely affect
the tax exempt status of any bonds or other obligations issued to finance the
acquisition and/or construction of the Property or any part thereof (including
any improvements thereon) to be leased or conveyed to Redeveloper. This
condition is inserted for the sole benefit of Agency and may be waived or
deferred by an instrument in writing signed by Agency. The parties shall use
their best efforts to resolve any bond issues raised by such opinion letter;
(ii) Redeveloper's execution and delivery of the deed of trust and
other security instruments and a recordable Memorandum of Lease, in
substantially the form approved by Agency and Redeveloper's title insurance
company;
(iii) The City of Compton's adoption of an amendment to the
License providing that Hollywood Park, Inc., may be a licensee upon a change in
state law allowing Hollywood Park, Inc., (or a joint
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venture of Hollywood Park, Inc., and the Redeveloper) to hold such license, and
subject to Hollywood Park, Inc. (or such joint venture) qualifying as a licensee
pursuant to Subsections 9-10.1 through 9-10.10, and 9-10.13, of the Compton
Municipal Code, and any other applicable provisions of the Compton Municipal
Code;
(iv) Agency's delivery to Redeveloper of Redeveloper's Policies of
Title Insurance described in Section 6 hereof. This condition is inserted for
the sole benefit ofRedeveloper and may be waived, in whole or in part, or
deferred by Redeveloper by an instrument in writing signed by Redeveloper.
If the foregoing conditions are not satisfied or waived by the time permitted
for closing under Section 1(c) hereof, then this Lease may be terminated by
either party on ten (10) days prior written notice to the other party, and this
Lease shall thereafter be of no further force or effect.
3. Title and Survey.
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(a) Within ten (10) business days following execution hereof, Agency
shall deliver to Redeveloper a Preliminary Title Report issued by Old Republic
Title Company. Redeveloper's fee interest in the Convention Center Parcel shall
be insured by a standard form, CLTA Owners Policy of title insurance, and
Redeveloper's leasehold interest in the balance of the Property shall be insured
as of the Effective Date by a CLTA Policy of Leasehold Title Insurance (the
"Leasehold Policy") to be purchased and paid for by Agency. The Policy shall
insure Redeveloper's leasehold interest in the Leasehold Parcels free and clear
of all liens, encumbrances, restrictions, and rights-of-way of record, subject
only to the following permitted conditions of title ("Permitted Title
Exceptions"):
(i) Agency's fee interest in the Leasehold Parcels;
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(ii) The applicable zoning, building and development regulations
of any city, county, state or federal jurisdiction affecting the Property; and
(iii) Those exceptions approved by Redeveloper by May 31, 1995. If
Redeveloper unconditionally disapproves any exceptions, this DDA shall thereupon
terminate and shall be of no further force or effect, unless the sole
disapproved exception is the Lis Pendens, in which case this DDA shall terminate
if the Lis Pendens is not expunged by April 30, 1996. If Redeveloper
conditionally disapproves any exceptions, then Agency shall have ten (10)
business days after receipt from Redeveloper of a written specification of the
title exceptions to which Redeveloper is taking objection within which to either
agree to remove the exceptions to which objection was taken or to notify
Redeveloper that it is unwilling or unable to do so. In the event that Agency
gives notice that it is unwilling or unable to remove any exception to which
objection was taken, then Redeveloper shall have ten (10) business days within
which to give notice that either (A) it will accept title subject to the
exceptions as to which the Agency is unwilling or unable to remove, or (B) to
terminate this DDA forthwith, in which instance each of the parties shall be
relieved of all further liability hereunder, provided that no such termination
shall affect the License for the Card Club or any liability of Redeveloper to
City in connection therewith. The failure of Agency to give notice as provided
hereinabove within the ten (10) day period shall be deemed to be a notice that
it is unwilling or unable to cure the title exceptions to which Redeveloper took
exception, and the failure of Redeveloper to give notice within the subsequent
ten (10) day period that it will either accept title subject to such matters or
to terminate this DDA shall be deemed an election on the part of Redeveloper to
terminate this DDA. If Agency gives notice that it intends to remove a title
defect, it shall use its best efforts to complete such action within thirty (30)
daysthereafter, but, in any case, Agency shall proceed diligently to cause such
title exceptions to be removed.
(iv) With respect to the Convention Center Parcel, those
matters set forth in Section 1(d) hereof.
(v) Should a title exception which Agency is unwilling or unable
to cure and which Redeveloper is unwilling to accept apply only to one or more
the Expansion Parcels, then Redeveloper may elect to defer or sever the affected
parcel by giving written notice thereof to Agency. In the event that the
affected parcel is severed therefrom, there shall be an equitable reduction in
the rental and the option price pursuant to Section 30 hereof. In the event that
the parcel is merely deferred, no such adjustments shall be made until such time
as Redeveloper elects to sever the particular parcel or parcels and gives notice
thereof as provided herein.
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(b) Redeveloper has elected to obtain an ALTA Extended Coverage Title
Insurance Policy for the Convention Center Parcel and the Leasehold Parcels.
Redeveloper shall cause a licensed surveyor or civil engineer to conduct a
survey of the Property, to prepare from the survey a legal description
satisfactory to the title company insuring Redeveloper's title, and to prepare a
plot plan showing the location of any streets, easements, and rights of way over
or in favor of the Property, by June 7, 1995. Redeveloper shall approve or
disapprove any survey by June 15, 1995. Any survey and any premiums for
endorsements or extended coverage shall be paid by Redeveloper.
4. Term.
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(a) Effective Date of Agreement. This Lease shall become effective
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(the "Effective Date") on the close of escrow on the purchase and sale of the
Convention Center Parcel. If escrow has not closed by July 31, 1995, then
(subject to the extensions of time for the reasons set forth in Subsection )
either party may terminate this Agreement. Redeveloper shall have the right, on
five (5) days prior notice in writing, to enter into the entire Property
(including both the Convention Center Parcel and the Leasehold Parcels) at any
time prior to the Effective Date for the purposes of undertaking preconstruction
inspection, testing and planning studies, and Redeveloper's obligation to
indemnify Agency, pursuant to Section 17 hereof, shall commence on the date
which is five (5) days after such notice is given (but the insurance obligations
set forth in Section 17 shall not commence until the Effective Date).
Redeveloper shall not commence any work of improvement or other construction
prior to the Effective Date.
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(b) Term of Lease. The term of this Lease (the "Term") shall commence
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on the Effective Date, and shall end on the date that is fifty (50) years after
the Rent Commencement Date; unless sooner terminated as provided for herein.
The Rent Commencement Date shall be the earlier of (i) the date that the Card
Club or Hotel open for business or (ii) the date that is two (2) years after the
Effective Date. Notwithstanding the foregoing, if the rehabilitation of the
Hotel and Entertainment Center has not been completed by the date set forth in
the Schedule of Performance, then the Agency shall have the right to terminate
this Lease upon giving Redeveloper thirty (30) days written notice, and all
rights of Redeveloper hereunder or in the Property (including the Initial
Improvements (as defined below)) shall thereupon cease and shall be of no
further force or effect,provided however, that within such thirty (30) day
notice period, Redeveloper shall have the right to exercise its option to
purchase the Property, as provided in Section 30 hereof. If the Card Club has
not opened for business within 5 years after the Effective Date, or if the
Redeveloper has not purchased the Property by the date that is 5 years after the
Effective Date, then the Agency shall have the right to bring forth a substitute
developer or operator for the Card Club, and in such event the Redeveloper shall
negotiate in good faith with such party for either an operating agreement or a
buy-out, on reasonable and fair terms, of the Redeveloper's interest in this
DDA. For the purposes hereof, a "Lease Year" shall be the period commencing on
the Rent Commencement Date or any anniversary thereof and ending on the day
prior to the next anniversary of the Rent Commencement Date.
(c) Redeveloper's Right to Terminate the Lease. Redeveloper shall
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have the right, at any time either (i) prior to issuance of any building permits
for the Property, or (ii) after issuance of the Certificate of Completion as
described in Section 22 hereof, to terminate this DDA; provided, however, in the
event of such termination, Redeveloper shall remain liable for any accrued
obligations hereunder arising prior to the date of termination, and any rights
of Agency which are intended to survive the termination of this Lease shall
continue in full force and effect. Redeveloper shall provide 90 days prior
written notice to Agency of any election to terminate this DDA. Redeveloper
shall not have the right to terminate this DDA during the period (i) from and
after issuance of any building permit for the Property and (ii) prior to the
issuance of the Certificate of Completion. In the event of such termination,
Redeveloper shall be released of any further obligation to pay rent (other than
rent accrued prior to the date of termination).
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(d) Personalty. Upon termination of the Lease for any reason other
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than the exercise by Redeveloper or its permitted successor in interest of the
option to purchase the Property as provided herein, Redeveloper shall deliver
possession of the Property (including both the Convention Center Parcel (subject
to Section 1(e)) and the Leasehold Parcels) to Agency in a good and workable
state of repair (ordinary wear and tear excepted), together with full
inventories of furniture, fixtures and equipment of the type for which
Redeveloper was entitled to Rent Reduction/Credit under Section 6 hereof,
including all additions to or replacements of such items installed after the
initial rehabilitation of the Property.
5. Rent. Redeveloper shall pay to Agency, without demand, prior
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notice, deduction, or set-off (except as provided in Section 10 hereof) base
rent ("Base Rent"), in the following sums:
Lease Years 1 through 5 - $ 600,000 per year
Lease Years 6 through 10 - $ 850,000 per year
Lease Years 11 through 15 - $1,100,000 per year
Lease Years 16 through 20 - $1,350,000 per year
Lease Years 21 through 25 - $1,600,000 per year
Lease Years 26 through 30 - $1,850,000 per year
Lease Years 31 through 35 - $2,100,000 per year
Lease Years 36 through 40 - $2,350,000 per year
Lease Years 41 through 45 - $2,600,000 per year
Lease Years 46 through
the end of the Lease - $2,850,000 per year
Base Rent shall be payable in advance on the first day of each Lease Year, in
legal currency of the United States, commencing on the Rent Commencement Date.
6. Rent Reduction/Credit. Redeveloper shall receive a credit
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against any Base Rent obligation of Redeveloper set forth in Section 10 in an
amount equal to the actual verified costs of the Initial Improvements
constructed or installed by Redeveloper for the Hotel and the Convention Center,
including the actual verified costs of furnishing and equipping the Hotel and
Entertainment Center pursuant to Section 18 hereof and Exhibit 4 hereto, such
costs of construction, furnishings and equipage including but not limited to
inventories of china, glassware and linens, ("Initial Improvement Costs") to be
consistent with budgets prepared by Redeveloper and submitted to and approved by
Agency, provided however that the cost of remedying defects, certified as latent
defects by the City Engineer, which existed at the Effective Date and which
Redeveloper would have included in the budgets had their existence been known at
the Effective Date, shall be eligible for reimbursement even if not included in
the approved budgets. For purposes hereof, the "Initial Improvements" are the
improvements to the Hotel and Convention Center approved by Agency and provided
pursuant to the Scope of Development, and the furniture, fixtures and equipment
having a useful life of one year or more reasonably required to open the Hotel
and Card Club for
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business, where first approved by Agency and described in the Scope of
Development, constructed or acquired prior to the earlier of (i) the issuance of
the Certificate of Occupancy, or (ii) issuance of the Certificate of Completion,
or (iii) the opening of the Hotel or Card Club for business. Except as
specifically provided herein, no capital investment after the Initial
Improvement Costs shall be eligible for such credit. Expendables, and other
personalty having a useful life of one year or less, shall not be deemed to be
part of the furniture, fixtures and equipment the cost of which is eligible for
such credit, unless otherwise approved by Agency's Board of Directors.
Redeveloper's allowable credit shall be on a dollar for dollar basis and shall
be applied to the first Base Rent due hereunder. Any unused credit in any Lease
Year shall be carried forward to the next ensuing Lease Year. Redeveloper shall
not receive the credit against Base Rent unless and until (i) Redeveloper is
entitled to receive a Certificate of Completion, and (ii) the Hotel and
Entertainment Center (including the Card Club) are complete and free of
mechanics' and materialmen's liens which concern an amount, in the aggregate, of
$100,000.00 (or any such liens are released through counterbonding pursuant to
California Civil Code Section 3143). No credit shall be available for costs
incurred after the Hotel or Card Club receives a Certificate of Occupancy or
opens for business unless the Agency's Board of Directors agrees to provide such
additional credit.
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7. Additional Consideration. Compton Entertainment, Inc. ("CEI"),
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shall, as additional consideration, deliver to with Agency the sum of
$1,000,000. Such additional consideration shall be delivered by CEI to Agency
in ten installments as follows: The sum of $100,000 shall be paid on the first
day of the third Lease Year, and the sum of $100,000 shall be paid by CEI to
Agency on the first day of each subsequent Lease Year through the 12th Lease
Year, for an aggregate maximum of $1,000,000.00. The payments of additional
consideration provided for herein shall not be subject to the Rent
Reduction/Credit provided for in Section 6 hereof, and shall remain the
obligation of CEI and shall not become the obligation of any assignee of this
DDA.
8. Taxes.
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(a) Covenant to Pay Taxes. As additional rent, Redeveloper shall pay
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directly to the appropriate taxing authorities all Taxes (as defined in Section
8(b)). All Taxes shall be paid at least 10 days before delinquency and before
any fine, interest or penalty shall become due or be imposed by operation of law
for their non-payment. Redeveloper shall furnish to Agency at least 10 days
prior to the date when any Taxes would become delinquent receipts or other
appropriate evidence establishing such payment. Notwithstanding the foregoing,
so long as Redeveloper is fully operating the Card Club and the Hotel,
Redeveloper shall not be obligated to pay or shall be entitled to receive a
refund or rebate of that portion of any possessory interest taxes, or real
property taxes relating to the Property, to the extent payable or allocable to
Agency or City during the first ten (10) Lease Years of the Term. Provided,
however, that if Redeveloper or Redeveloper's successor in interest has not
obtained a State of California Gaming License for the Card Club within one year
after the Effective Date, Redeveloper shall be obligated to pay the full
possessory interest tax or real property tax (or any prorated portion thereof),
and shall not be entitled to any rebate or refund thereof, until the date upon
which the California Gaming License is obtained.
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(b) Definition of Taxes. The term "Taxes" shall include all real
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property taxes (including increases in real property taxes caused by
reappraisals that are the result of changes in the ownership of Agency's
interest), possessory interest taxes, personal property taxes, charges and
assessments, (including but not limited to street improvement liens) which are
levied, assessed upon or imposed by any governmental authority or political
subdivision thereof during or with respect to any portion of the Term hereof
with respect to the Property or any improvements, fixtures, equipment or other
property of Redeveloper or Agency, real or personal, located on the Property or
used in connection with the operation of the Project, and any tax which shall be
levied or assessed in addition to or in lieu of such real or personal property
taxes, and any license fees, taxes measured by or imposed upon rents, or other
taxes or charges upon Agency's leasing of the Property or the receipt of rent
hereunder. All assessments, taxes, fees, levies and charges imposed by
governmental agencies for services such as fire protection, street, sidewalk and
road maintenance, refuse removal and other public services generally provided
without charge to owners or occupants prior to the adoption of Proposition 13 by
the voters of the State of California in the June 1978 election, also shall be
deemed included within the definition of "Taxes" for the purposes of this Lease.
Provided, however, that the definition of "Taxes" shall not include (i) any
taxes imposed by City (other than gaming tax) unless such taxes are of general
application over the City as a whole, or (ii) any special assessments or special
taxes hereafter adopted by City against the Property unless Redeveloper shall
have been granted the right of a property owner to protest the inclusion of the
Property in the Special District in question.
(c) Proration of Redeveloper's Tax Liability. Redeveloper's liability
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to pay Taxes shall be prorated on the basis of a 365-day year to account for any
fractional portion of a fiscal tax year included in the Term at its commencement
or expiration.
9. Use and Compliance with Laws.
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(a) Redeveloper or an operator under contract to Redeveloper shall use
and operate the Property solely for the following purposes:
(i) the construction and operation of the Hotel in whole or in
part.
(ii) the construction and operation of the Card Club containing
the maximum number of gaming tables permitted, subject to health and safety
codes and marketing consideration, in order to maximize revenues.
(iii) operation of one or more restaurants (the "Restaurants").
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(b) Redeveloper shall have the obligation to provide ancillary
facilities which may include but need not be limited to a night club, a sports
bar and other entertainment facilities. The parties recognize that public demand
for such matters may vary from time to time as public tastes and technology
change, and Redeveloper agrees to consult with Agency with respect to the
installation, commencement and termination of operation, substitution and other
modification or replacement of such ancillary facilities.
Redeveloper covenants to and for the benefit of Agency that, subject to Section
32 hereof, Redeveloper shall continuously and uninterruptedly, throughout the
Term of this Lease, operate the Hotel, in whole or in part, the Card Club and
one or more Restaurants on the Property, following completion of the Initial
Improvements constituting the Project, subject to temporary closures for repairs
or remodeling which are reasonable in frequency and duration. Redeveloper shall
diligently pursue obtaining the requisite permission from the State of
California for operation of the Card Club.
(c) At all times from and after opening for business, Redeveloper
shall at all times during the Term hereof obtain, keep and maintain all licenses
and permits required by state and local governmental authorities necessary to
operate the Hotel and the Entertainment Center from the Property. Redeveloper
hereby agrees to comply with all obligations under the Card Club License issued
by the City of ▇▇▇▇▇▇▇, and Redeveloper's breach thereof or the termination
thereof shall be a breach of this Lease.
(d) Redeveloper shall at all times provide such security for operation
of the Hotel and Entertainment Center as shall reasonably be required to provide
all necessary protection for the customers, employees, guests, contractors and
other invitees of the Entertainment Center. Redeveloper shall fully comply with
the security requirements of the City of ▇▇▇▇▇▇▇ Card Club Ordinance and with
the Security Plan submitted to and approved by the City in connection with the
issuance of the Card Club License. Neither Agency nor Agency's Executive
Director shall have any duty or obligation to review, evaluate, or direct the
security of the Hotel and Entertainment Center operation, it being the intent
hereof that Redeveloper shall be solely responsible for providing all necessary
security. Redeveloper shall indemnify, hold harmless and defend Agency and City
against any and all loss, cost or obligation with respect to any claim that any
injury to person or property arising out of or in connection with the operation
of the Property was the result of or was aggravated by any lack of security or
defect in the security plan or the implementation thereof,except for matters
caused by the sole active negligence or to the extent of the wilful misconduct
of Agency or City.
-14-
(e) Redeveloper shall, at Redeveloper's expense, comply promptly with
all applicable statutes, ordinances, rules, regulations, orders, covenants,
conditions, and restrictions of record, and requirements of any governmental
authority or the local Insurance Services Office in effect during the Term
hereof, regulating the Property, the improvements thereon, or Redeveloper's use
of the Property. Redeveloper shall keep and maintain in full force and effect,
and in good standing, all permits and licenses required from state and local
governmental authorities for operation of the Hotel and Entertainment Center
(including the Card Club), and termination of any permit or license shall be a
material breach hereof. If the Insurance Services Office or any other similar
body or any bureau, department or official of the state, county or city
government or any other governmental authority having jurisdiction requires that
any changes, modifications, replacements, alterations, or additional equipment
necessary to life safety be made or supplied in or to any portion of the
Property by reason of Redeveloper's use thereof, Redeveloper shall, at
Redeveloper's cost and expense, make and supply such changes, modifications,
replacements, alterations or additional equipment. Redeveloper shall not use
nor permit the use of the Property in any manner that will tend to create waste
or a nuisance.
(f) At present, the Property conforms to the Redevelopment Plan. This
Lease is conditioned upon, and Redeveloper shall at all times operate the
Property, in conformity with the Redevelopment Plan.
(g) Notwithstanding anything provided herein to the contrary, the
parcels identified as Parcels 2, 3 and 4 of Parcel Map 10784, recorded in Book
112, Pages 96 and 97, of Parcel Maps, Official Records, Los Angeles County,
California, Parcels 1 and 2 of Parcel Map 8669, recorded in Book 87, Page 9, of
Parcel Maps, Official Records, Los Angeles County, California, and ▇▇▇▇▇▇▇ ▇, ▇,
▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ Map 7899, recorded in Book 79, Page 47-49, of Parcel Maps,
Official Records, shall be used by Redeveloper only for surface parking (unless
redesignated at the request of Redeveloper and approved by the Agency), and
Parcels 8 and 9 of Parcel Map No. 7899 shall be used by Redeveloper only for
purposes of expansion of the Card Club and/or for a Casino pursuant to an
approved plan of expansion, provided that such plan makes provision for, and
Redeveloper in fact provides, not less than 14 gross acres of surface parking on
the Property for the benefit of the Hotel and Entertainment Center and for no
other purpose whatsoever. The Agency shall not unreasonably withhold consent to
redesignation of the parcels for development of the expansion of the Card Club,
and no fee shall be charged for such redesignation except as may be necessary to
cover any of the Agency's reasonable expenses (including attorneys fees) in
effectuating such redesignation.
10. Physical Condition of the Property.
----------------------------------
-15-
(a) "As-Is" Condition. Except as provided herein below to its
-----------------
contrary, Agency disclaims any and all covenants or warranties respecting the
condition of the soil or subsoil or any other physical or environmental
condition of the Property. Redeveloper is purchasing and leasing the entire
Property in their "as-is" condition. Prior to the date set forth in the
Schedule ofPerformance attached hereto as Exhibit 3 (the "Schedule of
Performance"), Redeveloper may, at Redeveloper's expense, conduct examinations,
soils tests or an environmental site assessment on the Property (in connection
with which Redeveloper shall indemnify and hold Agency and the Property free and
harmless from any and all costs, expenses, liabilities and charges resulting
from Redeveloper's entry onto the Property). If the examination or soils tests
reveal that the Property is not suitable (or cannot be made suitable at
reasonable cost) for construction of the Initial Improvements thereon,
Redeveloper may elect to cancel this DDA upon written notice to Agency given
within ten (10) days after Redeveloper's receipt of the completed soils reports
or environmental site assessments, but in any event such notice shall be
delivered to Agency no later than June 15, 1995. Agency hereby assigns to
Redeveloper any and all causes of action which it may have against prior
developers, builders, contractors, subcontractors or suppliers of labor and/or
materials to the Hotel Parcel and the Convention Center Parcel for design and
construction defects, negligent construction or other causes of action of a
similar nature resulting in damage to the Hotel Parcel and/or the Convention
Center Parcel, it being understood that (i) all costs of any litigation
(including attorneys' fees) shall be borne solely by Redeveloper and (ii) the
proceeds from any recovery with respect to such litigation, after payment of the
costs thereof (including attorneys' fees), shall be credited against the cost of
the Initial Improvement Costs, thus reducing the Rent Reduction/Credit referred
to in Section 6 hereof.
(b) Environmental Conditions of Property Prior to Commencement of
-------------------------------------------------------------
Lease. Agency shall be solely responsible for the costs of clean up or
-----
remediation of any deposit or discharge of Hazardous Materials on or from the
Property which occurred prior to the Effective Date, and Agency shall indemnify,
hold harmless and defend Redeveloper against any and all loss, cost or
obligation with respect thereto (including attorneys fees and costs), provided,
however, that Agency shall not be liable to Redeveloper for any consequential
damages suffered by Redeveloper by reason of the existence of any Hazardous
Waste on the Property which existed prior to the Effective Date and which could
have reasonably been discovered by a competent environmental assessment of the
Property.
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(c) Environmental Condition of the Property During Lease Term.
---------------------------------------------------------
Redeveloper shall indemnify, protect, defend and hold harmless Agency from and
against any and all claims, liabilities, suits, losses, costs, expenses and
damages, including but not limited to attorneys' fees and costs, arising out of
any claim for loss or damage to any property, including the Property (including
both the Convention Center Parcel and the Leasehold Parcels), injuries to or
death of persons, or for the cost of cleaning up the Property, and removing
hazardous or toxic substances, materials and waste therefrom, by reason of
contamination or adverse effects on the environment, or by reason of any
statutes, ordinances, orders, rules or regulations of any governmental entity or
agency requiring the clean-up of the Property caused by or resulting from any
hazardous material, substance or waste introduced to the Property during the
Term of this Lease. The foregoing indemnity shall survive the expiration or
termination of this Lease, and the close of escrow in the event of Redeveloper's
exercise of the option to purchase the Leasehold Parcels set forth below.
However, Redeveloper shall not be liable on account of this indemnity if, prior
to the date set forth in the Schedule of Performance, Redeveloper elects to
terminate this Lease on account of Redeveloper's disapproval of the condition of
the Property as provided in Section 10(a) hereof. Moreover, upon the expiration
of this Lease, if Redeveloper has not purchased theLeasehold Parcels, then
Redeveloper shall not thereafter be liable on account of this indemnity as a
result of hazardous or toxic substances, materials, or waste that were located
on the Leasehold Parcels prior to the Effective Date, except to the extent such
hazardous or toxic substances, materials, or waste were deposited on the
Property prior to the Effective Date by Redeveloper or Redeveloper's agents,
officers, employees, contractors, sublessees, or assignees.
(d) Other Conditions of Property. Redeveloper, on behalf itself and
----------------------------
its successors, affiliates, partners, and assigns, hereby fully and entirely
release and discharge the City (as a third party beneficiary hereof) and Agency
(including the City's and Agency's servants, employees, agents, representatives,
successors, descendants, heirs, executors, administrators, assigns, and
attorneys), and of each of them alone, of and from any and all claims, causes of
action, or demands, liabilities, damages, and losses, of whatever nature,
anticipated or unanticipated, known or unknown, or in connection with, or in any
way related to, the Property, or for the physical condition of the Property or
any portion thereof, other than as provided hereinabove with respect to
Hazardous Wastes. This release constitutes an explicit waiver by Redeveloper of
each and all of the provisions of California Civil Code Section 1542, which
states as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
-17-
Redeveloper's Initials: _____________________________________________
Redeveloper hereby declares and represents that Redeveloper is
effecting and executing this release of the City and Agency after having read
all of this release and with full understanding of its meaning and effect and
after having received full legal advice as to Redeveloper's rights from an
attorney.
11. Construction by Redeveloper.
---------------------------
(a) Approval of Financing. Within ninety (90) days after the
---------------------
Effective Date, Redeveloper shall deliver to Agency, for Agency's approval,
evidence of Redeveloper's construction and take-out financing for the Initial
Improvement Costs for the Initial Improvements to be constructed or installed by
Redeveloper on the Property pursuant to this Section 11 including any plan of
self financing, which approval shall not be unreasonably withheld or delayed.
In order to enable Agency to evaluate Redeveloper's financing, Redeveloper shall
provide to Agency evidence of such financing including at a minimum
Redeveloper's proforma and line-item budget, a copy of a binding commitment
obtained by Redeveloper for a leasehold mortgage loan or loans financing, if
applicable, (together with any equity capital contribution of Redeveloper) the
hard and soft costs of constructing the Project, financial statements of
Redeveloper and the lender, and other evidence satisfactory to Agency of sources
of loans or capital, sufficient to demonstrate that Redeveloper has or will have
adequate funds to cover all development and construction costs of the entire
Project. The terms and conditions of such commitments, and the identity of the
construction lender itself, shall be subject to Agency's approval, which
approval shall not unreasonably be withheld, provided,however, that should the
lender be a bank, savings and loan association, insurance company or other
institutional lender, no approval of the identity of the lender or other source
of funds shall be required.
(b) Scope of Development. The Initial Improvements shall consist
--------------------
of the matters described in the Scope of Development attached hereto as Exhibit
5. The Initial Improvements shall include high quality landscaping as approved
by Agency pursuant to the terms hereof (including, but not limited to, the
Conditions of Construction set forth in Exhibit 4).
-18-
(c) Construction Schedule. Redeveloper shall diligently comply
---------------------
with all performance dates, including dates for submitting and obtaining
approvals for plans and specifications, as set forth in the Schedule of
Performance attached hereto as Exhibit 3 and incorporated herein by this
reference (the "Schedule of Performance"). Redeveloper shall diligently seek
approval of all plans and specifications, and permits, required to construct the
improvements described in the Scope of Development.
(d) Anti-discrimination During Construction. Redeveloper, for
---------------------------------------
itself and its successors and assigns, agrees that it shall not discriminate
against any employee or applicant for employment because of age, sex, marital
status, race, handicap, color, religion, creed, ancestry, or national origin in
the construction of the improvements constituting the Property.
(e) Commencement of Construction.
----------------------------
(i) Redeveloper shall commence construction and installation
of the Initial Improvements, notwithstanding any other Section of this Lease
to the contrary (including but not limited to Section 32), within the time
period set forth in the Schedule of Performance.
(ii) When necessary for Redeveloper to commence construction
of the Initial Improvements, Redeveloper may use, sell, demolish, remove, or
otherwise dispose of any improvements existing on the Property at the
commencement of the Term of this Lease. Agency shall receive no compensation
for such improvements other than the performance of Redeveloper's covenants
expressed in this Lease, provided, however, that the proceeds from such
disposition shall be credited against the Initial Improvement Costs, for
purposes of computing the Rent Reduction/Credit under Section 6 hereof.
(iii) After commencement of construction, Redeveloper shall
diligently prosecute such construction to completion. Such construction shall
comply with the Conditions of Construction set forth in Exhibit 4 attached
hereto and incorporated herein by this reference. All work shall be performed
in a good and workmanlike manner, shall substantially comply with the plans
and specifications submitted to and approved by Agency and shall comply with
all applicable governmental licenses, permits, laws, ordinances and
regulations.
(iv) No materials, equipment, fixtures, carpets, appliances,
or any other part of the Initial Improvements shall be purchased or installed
under conditional salesagreements, leases, or under other arrangements wherein
the right is reserved or accrues to anyone to remove or to repossess any such
items. Agency may, in the exercise of its good faith
-19-
business judgment, permit certain specialized equipment to be leased for the
Project but only with its prior written approval and, then, only upon
Redeveloper's execution and delivery of an assignment of the lease to Agency,
together with the original lease and the equipment lessor's written approval
of such assignment, in form satisfactory to Agency.
(f) Completion Of Construction. Construction of the Initial
--------------------------
Improvements shall be completed and the Hotel and Entertainment Center
(including the Card Club) ready for occupancy and open for business by the
date set forth in the Schedule of Performance; provided that the time for
completion shall be extended for as long as Redeveloper shall be prevented
from completing the construction by delays beyond Redeveloper's reasonable
control, including but not limited to flood, earthquake, fire, acts of God,
war, epidemic and civil commotion; provided, further, however, Redeveloper's
failure to complete construction and equipage of the Card Club and Hotel and
to open the Hotel for business within one year after Effective Date (subject
to the term of any reasonable delay caused by force majeure) shall, at
Agency's election, trigger Agency's right to terminate the Lease as provided
herein; however, if this Lease is so terminated, then Redeveloper shall be
released from liability for rent under this Lease accruing thereafter.
(g) Minor Field Changes. The parties acknowledge that it is
-------------------
common practice in the construction industry to make minor changes during the
course of construction without substantially altering the plans and
specifications previously approved by Agency. On completion of the work,
Redeveloper shall give Agency notice of all changes in plans and
specifications made during the course of the work and shall, at the same time,
supply Agency with "as built" drawings accurately reflecting all such changes.
-20-
(h) Easements, Zoning and Other Restrictions.
----------------------------------------
(i) Easements and Dedications. In order to provide for the
-------------------------
more orderly development of the Property, it may be necessary that street,
water, sewer, drainage, gas, power line and other easements and dedications,
and similar rights be granted or dedicated over or within portions of the
Property. Agency shall, upon request of Redeveloper, join with Redeveloper in
executing and delivering such documents as may reasonably be necessary for the
purpose of granting such easements and dedications.
(ii) Zoning. If necessary or appropriate to the Project,
------
Agency agrees, from time to time upon request of Redeveloper, to execute such
documents, petitions, applications and authorizations as may reasonably be
appropriate or required for the purposes of obtaining conditional use permits,
zoning and rezoning, tentative and final map approval, precise plan approval,
and similar government approvals with respect to the Property or any part
thereof. This paragraph shall apply to Agency solely in its capacity as owner
of the Property and shall not in any way restrict or bind Agency acting in its
governmental capacity.
(iii) Street Vacation. If requested by Redeveloper and if
---------------
consistent with the approved plan of development, Agency will apply for
vacation of internal streets within the Property, provided that such vacation
does not result in the creation of land locked parcels.
(iv) Expenses. In each of the foregoing instances, Agency
--------
shall be without expense therefor. Redeveloper shall pay all costs and
expenses thereof (including reimbursement of normal application and processing
fees and other normal and necessary out-of-pocket costs) incurred by Agency.
-21-
(i) Ownership of Improvements. The Initial Improvements on the
-------------------------
Property constructed or installed by Redeveloper shall be owned by Redeveloper
until the expiration or sooner termination of the Term of this Lease;
provided, however, if Redeveloper exercises the option described in Section 30
hereof and purchases the Property, then Redeveloper shall retain ownership of
the Initial Improvements (in addition to all other Improvements, furniture,
fixtures, and equipment) on the Property notwithstanding the termination of
this Lease. Redeveloper shall not, however, remove any improvements from the
Property (without Agency's prior written consent), nor waste, destroy or
modify any improvements on the Property, except as permitted by this Lease.
Anything in this Section 11(i) to the contrary notwithstanding, Redeveloper
shall have the right to demolish or remove existing improvements on the
Property if necessary or appropriate to permit development of the Property in
accordance with the approved plans. The parties covenant and agree for
themselves and all persons claiming under them that the improvements are real
property. Upon expiration or sooner termination of the Term of this Lease
(other than by reason of Redeveloper's exercise of its option to purchase
under Section 30 hereof), all improvements on the Property, and all furniture,
fixtures and equipment used by Redeveloper in operating the Property
(including operation of the Hotel and Entertainment Center) shall, without
additional compensation to Redeveloper, thereupon become Agency's property
free and clear of all claims and encumbrances to or against them by
Redeveloper or any third person, unless within ninety (90) days after such
expiration or termination Agency requires that all or certain improvements or
property be removed by Redeveloper at Redeveloper's expense or Redeveloper
exercises the option described in Section 30 hereof and purchases the
Leasehold Parcels.
12. Certificate of Completion.
-------------------------
-22-
(a) After completion of construction, development, and installation
by Redeveloper of the Initial Improvements, Agency shall, promptly following
written request by Redeveloper therefor, furnish Redeveloper with a
Certificate of Completion, for such completed Initial Improvements. After
issuance of a Certificate of Completion for such completed Initial
Improvements, any party then owning or thereafter purchasing, leasing or
otherwise acquiring any interest in the Project shall not (because of such
ownership, purchase, lease or acquisition) incur any obligation or liability
under this DDA as to such portion of the Project, except that such party shall
be bound by any covenants, conditions or restrictions contained in this Lease,
or other instruments executed in accordance with theprovisions of this Lease.
Neither Agency nor any other person, after recordation of a Certificate of
Completion, shall have any rights, remedies or controls that it would
otherwise have or be entitled to exercise as a result a breach of
Redeveloper's construction obligations under this Lease, except that said
Certificate of Completion shall have no effect on any other separate
instrument signed by Redeveloper in favor of the City or Agency, nor shall it
have any effect on Redeveloper's obligations under the environmental
warranties and other indemnities provided herein, nor shall it waive any
obligations of Redeveloper included hereunder to survive issuance of a
Certificate of Completion.
(b) If Agency refuses or fails to furnish a Certificate of
Completion after written request from Redeveloper, Agency shall, within thirty
(30) days after the written request, provide Redeveloper with a written
statement of the reasons Agency refused or failed to furnish such Certificate
of Completion. The statement shall also contain Agency's opinion of the
action Redeveloper must take to obtain such Certificate of Completion. If the
reason for such refusal is confined to the immediate availability of specific
items or material for landscaping, and the estimated cost of completion does
not exceed $250,000.00 and the particular item or matter is not essential to
the operation of the Property, then Agency will issue its Certificate of
Completion upon the posting by Redeveloper with Agency of a bond or other
collateral satisfactory to Agency in an amount equal to 125% of the reasonable
cost of completing the work not yet completed, but the posting of such bond
shall not excuse Redeveloper from obligation to complete the work, and
Redeveloper shall not be entitled to any Rental Credit for such work until it
has, in fact, been completed.
-23-
(c) Such Certificate of Completion shall not constitute evidence of
compliance with or satisfaction of any obligation of Redeveloper to any holder
of a mortgage, trust other than with respect to Redeveloper's right to claim
the Rent Reduction/Credit for work actually completed. Such Certificate of
Completion shall not be construed as a notice of completion as described in
California Civil Code Section 3093.
13. Utilities and Services. Redeveloper shall make all
----------------------
arrangements for and pay for all utilities and services furnished to or used
by it or its licensees or subtenants, including, without limitation, gas,
electricity, water, telephone service, communications, cable television, and
trash collection, and for all connection charges.
14. Maintenance.
-----------
(a) Throughout the Term, Redeveloper shall, at Redeveloper's sole
cost and expense, maintain the Property in safe and first class condition and
repair (ordinary wear and tear excepted) and in accordance with (i) all
applicable laws, rules, ordinances, orders and regulations of federal, state,
county, municipal, and other governmental agencies and bodies having or
claiming jurisdiction and all their respective departments, bureaus, and
officials; (ii) the insurance underwriting board or Insurance Services Office
having jurisdiction over the Property; and (iii) all insurance companies
insuring all or any part of the Property. Agency shall not have any
responsibility to maintain the Property whatsoever.
(b) Except as provided in Section 25 hereof, Redeveloper shall
promptly and diligently repair, restore, and replace as required to maintain
or comply as above, or to remedy all damage to or destruction of all or any
part of the Property. The completed work of maintenance, compliance, repair,
restoration, or replacement shall be equal in value, quality and use to the
condition of the Property before the event giving rise to the work. Agency's
election to perform any obligation of Redeveloper under this section on
Redeveloper's failure or refusal to do so shall not constitute a waiver of any
right or remedy for Redeveloper's default, and Redeveloper shall promptly
reimburse, defend and indemnify Agency against all liability, loss, cost and
expense arising from such election.
(c) Redeveloper waives the provisions of California Civil Code
sections 1941 and 1942 with respect to Agency's obligations for tenantability
of the Leasehold Parcels and Redeveloper's right to make repairs and deduct
the expenses of such repairs from rent.
-24-
15. Alterations. Redeveloper shall not make any alterations or
-----------
additions to the Leasehold Parcels (other than interior, non-structural, non-
systemic alterations costing not more than $250,000 in any one instance)
without the prior written consent of Agency's executive director, which shall
not be unreasonably withheld. In constructing alterations or additions that
exceed the cost of $250,000, or which affect the exterior or structural
portions or the systems of the Leasehold Parcels, Redeveloper shall comply
with (a) the Conditions of Construction set forth in Exhibit 4 and (b) the
provisions of Section 11 hereof. If Redeveloper makes any alterations to the
Leasehold Parcels as provided in this Section, the alterations or additions
shall not be commenced until 20 days after Agency's executive director has
received written notice from Redeveloper stating the date the construction of
the alterations or additions is to commence so that Agency's executive
director, on behalf of Agency, can post and record an appropriate notice of
nonresponsibility. The provisions of this Section 15 shall not apply to the
construction or installation of the Initial Improvements.
16. Destruction.
-----------
(a) Partial Destruction; Restoration by Redeveloper. If less than
-----------------------------------------------
fifty percent (50%) of the floor area of the improvements on the Property are
rendered unusable by a casualty during the Term of this Lease and the proceeds
of the casualty insurance are sufficient to do so or, if Redeveloper has
failed to maintain the full amount of casualty insurance required by Section
17(c) hereof, whether or not the proceeds of the insurance are sufficient,
then Redeveloper shall restore the Improvements on the Property to
substantially the same condition as they were in immediately before such
damage or destruction, in accordance with the original plans and
specifications (except for changes as may be required by changed building and
safety codes). Such damage or destruction shall not terminate this Lease. In
reconstructing the improvements, Redeveloper shall comply with (i) the
Conditions of Construction set forth in Exhibit 4 and (ii) the provisions of
Section 11. In the event that, notwithstanding the fact that Redeveloper has
maintained the full amount of casualty insurance required, the insurance
proceeds are not adequate to fund the restoration of the Property, then
Redeveloper may terminate the Lease in the manner providedhereinbelow with
respect to a destruction of more than 50% of the Property, as provided in
Section 16(b) hereinbelow.
-25-
(b) Major Damage or Destruction; Redeveloper's Right to Terminate.
-------------------------------------------------------------
If more than fifty percent (50%) of the floor area of the improvements on the
Property are rendered unusable by a casualty during the Term of this Lease,
then Redeveloper shall have the option of either repairing and reconstructing
the Property or of terminating this Lease. If Redeveloper elects to repair
and reconstruct, Redeveloper shall promptly do so and shall comply with (i)
the Conditions of Construction set forth in Exhibit 4 and (ii) the provisions
of Section 11. During the period of reconstruction, Redeveloper may continue
to conduct business from the Property from temporary facilities such as a tent
or temporary structures (subject to compliance with local building and safety
codes or other applicable municipal codes).
To exercise its right of termination, Redeveloper must comply with
all of the following conditions:
(i) Give Agency notice of termination within 30 days after
the damage or destruction, specifying the date of termination which shall be
not less than 60 days nor more than 120 days after the date such notice of
termination is given;
(ii) Prior to the termination date, cure any defaults on
Redeveloper's part under this Lease;
(iii) Continue to make all payments when due (including
without limitation the prorated portion of any annual Base Rent becoming due
after Redeveloper has given the notice of termination but prior to the date of
termination), if any, as required by the provisions of this Lease until the
date of termination, if Redeveloper continues to use the Property after the
casualty but prior to the date of termination;
(iv) Prior to the termination date, pay in full any
outstanding indebtedness incurred by Redeveloper and secured by an encumbrance
or encumbrances on the Property or any part thereof or an interest therein, or
alternatively, deliver to Agency the written consent of the holders of all
such encumbrances to the early termination of this Lease and extinguishment of
their liens;
(v) Prior to the termination date, cause to be discharged all
liens and encumbrances encumbering the Property or Redeveloper's interest in
the Leasehold Parcels resulting from any act or omission of Redeveloper;
(vi) On or before the termination date, deliver possession of
the Property to Agency, quitclaim all right, title and interest in the
Property to Agency and cease to do business on the Property, and vacate the
Property;
-26-
(vii) Prior to the termination date, effectively relinquish,
assign, and deliver to Agency Agency's share of insurance proceeds resulting
from the casualty as provided in subparagraph (d) below.
In the event of any such termination, any Base Rent paid in advance for such
Lease Year, if any, shall be pro-rated through the date the Lease is
terminated. If Redeveloper does not either (i) terminate the Lease as
provided herein, or (ii) restore the Property in a timely fashion, then the
Redeveloper shall be in breach hereof.
(c) No Abatement or Reduction of Rent. In case of any damage or
---------------------------------
destruction where this Lease is not terminated, there shall be no abatement or
reduction of rent except to the extent such rent is paid through a rental
continuation policy or rider.
(d) Insurance Proceeds.
------------------
(i) If Redeveloper is obligated or elects to restore the
Property pursuant to this Section, the proceeds of any insurance maintained
under this Lease or pursuant to the deed of trust (other than rental
continuation insurance) shall be made available to Redeveloper for payment of
costs and expenses of repair. If the insurance proceeds are insufficient to
cover the cost of repair, then Redeveloper shall deposit the amount of the
deficiency with Agency or shall otherwise provide assurances to Agency's
reasonable satisfaction that such funds are and will be available, and such
funds shall be disbursed by Redeveloper first, and the balance of the
construction costs shall be disbursed from the insurance proceeds by Agency.
(ii) In the event that the Lease is terminated by reason of the
destruction of all or some part of the improvements on the Property, then the
casualty insurance proceeds shall be divided between Agency and Redeveloper as
follows:
(A) Redeveloper shall receive the portion of the casualty
insurance proceeds which bears the same relationship to the total casualty
insurance proceeds as the value of the Initial Improvements not amortized
through the Rent Reduction/Credit bears to the value of all of the
improvements on the Property, both measured prior to the casualty loss.
-27-
(B) Any proceeds of fire and extended coverage insurance
attributable to improvements on the Expansion Parcel, or any improvements that
were purchased by Redeveloper, and that were constructed by Redeveloper at
Redeveloper's cost and expense shall be retained by Redeveloper, except and to
the extent of the credit, if any, given to Redeveloper by Agency on account of
such improvements.
(C) Agency shall receive the balance of the casualty
insurance proceeds.
Anything herein to the contrary notwithstanding, Agency alone shall be
entitled to any rent continuation insurance proceeds. In the event that
Redeveloper exercises its option to purchase under Section 30 hereof and, in
fact, consummates such purchase, Redeveloper shall be entitled to all of the
casualty insurance proceeds.
(e) Lease to Govern Redeveloper's Rights. Redeveloper waives the
------------------------------------
provisions of Civil Code (S)1932(2) and Civil Code (S)1933(4), or any
successor statutes, with respect to any destruction of the Leasehold Parcels,
and agrees that Redeveloper's rights in case of destruction shall be governed
solely by the provisions of this Lease. The provisions of this Lease shall
also govern the Redeveloper's obligations with respect to insurance and
restoration of casualty losses under the deed of trust.
17. Insurance and Indemnity.
-----------------------
(a) Liability Insurance.
-------------------
-28-
(i) Redeveloper shall procure at its sole cost and expense,
and keep in effect from the date of this Lease and at all times until the end
of the Term, Commercial General Public Liability Insurance applying to the use
and occupancy of the Property, or any part thereof, and the business operated
by Redeveloper, its sublessees, licensees, employees, agents, or any other
occupant, on the Property. Such insurance shall include Broad Form Contractual
liability insurance coverage insuring all of Redeveloper's indemnity
obligations under this Lease. Such coverage shall have a minimum combined
single limit of liability or the equivalent thereof of at least Five Million
Dollars ($5,000,000). Redeveloper's public liability insurance shall include
dram shop liability insurance or liquor liability insurance. All of
Redeveloper's public liability insurance policies shall be written to apply to
all bodily injury, property damage, personal injury and other covered loss,
however occasioned, occurring during the policy term, shall be endorsed to
provide that such coverage shall be primary and that any insurance maintained
by Agency shall be excess insurance only. Such coverage shall also contain
endorsements: (i) deleting any employee exclusion on personal injury coverage;
(ii) deleting any liquor liability exclusion; and (iii) providing for coverage
of employer's automobile non-ownership liability. All such insurance shall
provide for severability of interests or a cross-liability endorsement; shall
provide that an act or omission of one of the named insureds shall not reduce
or avoid coverage to the other named insureds; and shall afford coverage for
all claims based on acts, omissions, injury and damage, which claims occurred
or arose (or the onset of which occurred or arose) in whole or in part during
the policy period. The policy shall be endorsed to waive the insurer's rights
of subrogation against Agency.
(b) Workers' Compensation Insurance. Redeveloper shall also
-------------------------------
maintain Workers' Compensation insurance in accordance with California law,
and an employer's liability insurance endorsement with customary limits. The
policy shall be endorsed with a waiver of subrogation clause for Agency and
the City and their members, council members, officers, employees, and agents.
(c) Property Insurance.
------------------
-29-
(i) Redeveloper shall at Redeveloper's expense obtain and
keep in force during the Term of this Lease a policy of Broad Form (fire and
extended coverage) insurance covering loss or damage to the Property
(including the Improvements), and all furniture, fixtures, equipment, and
other personal property of Redeveloper, in the amount of the Full Replacement
Cost Value thereof, as the same may exist from time to time, against all
perils included within the classification of fire, extended coverage,
builder's risk, vandalism, malicious mischief, and special extended perils
("Special Form," as that term is known in the insurance industry). Agency and
Redeveloper shall be named as the loss payees on such policy, and any such
coverage for the Convention Center Parcel shall include a Lender's Loss
Payable endorsement in favor of Agency, but Agency's rights shall be subject
to the provisions of this Lease. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $100,000 per occurrence, and
Redeveloper shall be liable for such deductible amount. Redeveloper shall, in
addition, obtain and keep in force during the Term of this Lease a policy of
rental interruption insurance covering a period of one year, with loss payable
to Agency, which insurance shall also cover all Base Rent, Taxes and insurance
premiums for said period.
(ii) The "Full Replacement Cost Value" of the property to
be insured under this Section shall be determined by Redeveloper subject to
Redeveloper's exercise of its reasonable discretion. Not more frequently than
once every three (3) years, either party shall have the right to notify the
other party that it elects to have the Full Replacement Cost Value
redetermined by an independent party. The determination and redeterminations
shall be made promptly and in accordance with the rules and practices of the
Insurance Services Office, or a like board recognized and generally accepted
in the industry, and each party shall be promptly notified of the results by
the party making the determination. The insurance policy shall be adjusted
according to the redetermination.
(d) Insurance Policies.
------------------
(i) Not more frequently than once every three (3) years,
if in the reasonable opinion of Agency the amount or type of any insurance at
that time is not adequate, Redeveloper shall either acquire or increase the
insurance coverage as reasonably required by Agency.
-30-
(ii) All insurance required under this Lease shall be
issued by companies having a Best's rating of B++vi or better and otherwise
reasonably satisfactory to Agency. Redeveloper shall deliver to Agency copies
of policies of such insurance or certificates evidencing the existence and
amounts of such insurance with loss payable clauses as required by this
Section 28. No such policy shall be cancelable or subject to reduction of
coverage or other modification except after thirty (30) days' prior written
notice to Agency. Redeveloper shall, at least thirty (30) days prior to the
expiration of such policies, furnish Agency with renewals or "binders"
thereof. Redeveloper shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in this Section 28. All policies
of insurance shall name Agency and the City and their members, council
members, officers, employees and agents, and any additional parties designated
by Agency, as additional insureds (except to the extent Agency is the loss
payee or a Lenders Loss Payable endorsee).
(iii) Redeveloper shall not use the Property in any
manner, even if the use is for the purposes permitted herein, that will result
in the cancellation of any insurance required under this Lease. Redeveloper
further agrees not to keep on the Property or permit to be kept, used, or sold
thereon, anything prohibited by any fire or other insurance policy covering
the Property.
(iv) If Redeveloper shall fail to obtain any insurance
required under this Lease, Agency may, at its election, obtain such insurance
and Redeveloper shall, as additional rent, reimburse Agency for the cost
thereof plus a handling charge equal to Agency's costs in obtaining such
insurance including but not limited to staff salaries and overhead, within
five (5) days following demand therefor. If Redeveloper fails or refuses to
maintain insurance as required hereunder, or fails to provide the proof of
insurance, or fails to reimburse Agency for all costs of insurance including
the handling charges, Agency shall have the right to declare this Lease in
default without further notice to Redeveloper, and Agency shall be entitled to
exercise all legal remedies for breach of this Lease.
(v) All insurance required to be provided hereunder is in
addition to, and not in lieu of, the indemnity provisions of Sections 17(f)
and 17(g) hereof. The procuring of such required policies of insurance shall
not be construed to limit Redeveloper's liability hereunder, nor to fulfill
the indemnification provisions and requirements of this Lease.
-31-
(vi) Redeveloper shall maintain the insurance described
herein from and after the earlier of (A) the close of escrow for the
Convention Center Parcel or (B) the date Redeveloper accepts possession of any
Parcel, through and until the expiration or sooner termination hereof.
(e) Waiver of Subrogation. Redeveloper and Agency each hereby
---------------------
release and relieve each other and the City, and waive their entire right of
recovery against the other and the City for loss or damage arising out of or
incident to the perils insured against under Section 17(c), which perils occur
in, on or about the Property, whether due to the negligence of Agency, the
City or Redeveloper or their agents, employees, contractors and/or invitees.
Redeveloper shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease and obtain the
insurance carrier's consent thereto.
-32-
(f) Indemnity. Redeveloper shall indemnify, defend, protect, and
---------
hold harmless Agency and the City (and Agency's and the City's members,
employees, agents and contractors) from and against any and all claims,
losses, proceedings, damages, causes of action, liability, costs and expenses
(including reasonable attorneys' fees), arising from or inconnection with, or
caused by (i) any act, omission or negligence of Redeveloper or any sublessee
of Redeveloper, or their respective contractors, licensees, invitees, agents,
servants or employees, wheresoever on or adjacent to the Property the same may
occur; (ii) any use of the Property, or any accident, injury, death or damage
to any person or property occurring in, on or about the Property, or any part
thereof, or from the conduct of Redeveloper's business or from any activity,
work or thing done, permitted or suffered by Redeveloper or its sublessees,
contractors, employees, or invitees, in or about the Property (other than to
the extent arising as a result of Agency's or the City's sole active
negligence or to the extent of any wilful misconduct of the Agency or the
City, but excluding any matter with respect to which Agency or City has or
enjoys the benefit of sovereign immunity); and (iii) any breach or default in
the performance of any obligations on Redeveloper's part to be performed under
the terms of this Lease, or arising from any negligence of Redeveloper, or any
such claim or any action or proceeding brought thereon; and in case any action
or proceeding be brought against Agency or the City (or Agency's or the City's
agents, members, employees, agents and contractors) by reason of any such
claim, Redeveloper upon notice from Agency shall defend the same at
Redeveloper's expense by counsel satisfactory to Agency. Redeveloper, as a
material part of the consideration to Agency, hereby assumes all risk of
damage to property or injury to persons in, upon or about the Property arising
from any cause other than Agency's gross negligence or intentional acts, and
Redeveloper hereby waives all claims in respect thereof against Agency. These
provisions are in addition to, and not in lieu of, the insurance required
under this Section 17.
Agency shall indemnify, defend, protect, and hold harmless
Redeveloper from and against any and all claims, losses, proceedings, damages,
causes of action, liability, costs and expenses (including attorneys' fees),
arising from or in connection with, or caused by (i) any matter arising prior
to the Effective Date (except when arising as a result of any inspection,
investigation, entry or other activity of Redeveloper on the Property), or
(ii) any litigation arising as the result of or in connection with a purported
prior sale of the Property.
-33-
(g) Exemption of Agency from Liability. Except as provided to the
----------------------------------
contrary in Section 10(b) hereof, Redeveloper hereby assumes all risks and
liabilities of a landowner in the possession, use or operation of the
Property. Redeveloper hereby agrees that, Agency shall not be liable for
injury to Redeveloper's business or any loss of income therefrom or for damage
to the goods, wares, merchandise or other property of Redeveloper,
Redeveloper's employees, invitees, customers, contractors, workers, or any
other person in or about the Property, including any liability arising from
the physical condition of the Property or the presence of any hazardous or
toxic materials or substances on the Property, nor shall Agency be liable for
injury to the person of Redeveloper, Redeveloper's employees, agents or
contractors, whether such damage or injury is caused by or results from
hazardous or toxic materials or substances, fire, steam, electricity, gas,
water, or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions arising upon the Property or from other sources or places and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Redeveloper.
18. Condemnation.
------------
(a) Definitions.
-----------
(i) "Condemnation" means (A) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor
and (B) a voluntary sale or transfer by Agency to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are
pending.
(ii) "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.
(iii) "Award" means all compensation, sums, or anything of
value awarded, paid, or received on a total or partial condemnation.
(iv) "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation or eminent domain.
-34-
(b) Rights and Obligations Governed by Lease. If during the Term
----------------------------------------
there is any taking of all or any part of the Property (including the
Convention Center Parcel) or any interest in this Lease by Condemnation, the
rights and obligations of the parties shall be determined pursuant to this
Section. Each party waives the provisions of California Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior
Court to terminate this Lease in the event of a partial taking of the
Property.
(c) Total Taking. If the Property is totally taken by Condemnation,
------------
this Lease shall terminate on the Date of Taking. In the event of any such
termination, any Base Rent paid in advance shall be pro-rated through the date
the Lease is terminated.
(d) Partial Taking. If any portion less than all of the Property is
--------------
taken by Condemnation, this Lease shall remain in effect, except that
Redeveloper can elect to terminate this Lease if the portion of the Property
not so taken cannot be so repaired or reconstructed, taking into consideration
the amount of the award available for repair, so as to be suitable for
Redeveloper's continued use of the Property for the same use as the Property
is being used immediately prior to the taking and the remaining premises would
not be economically feasibly usable by Redeveloper. If Redeveloper elects to
terminate this Lease, Redeveloper must exercise its right to terminate by
giving notice to Agency within 90 days after the nature and the extent of the
taking have been finally determined. If Redeveloper elects to terminate this
Lease, Redeveloper also shall notify Agency of the date of termination, which
date shall not be later than 180 days after Redeveloper has notified Agency of
its election to terminate; except that this Lease shall terminate on the Date
of Taking if the Date of Taking falls on a date before the date of termination
as designated by Redeveloper. If Redeveloper does not terminate this Lease
within the ninety-day period, this Lease shall continue in full force and
effect.
(e) Restoration of Property. If there is a partial taking of the
-----------------------
Property and this Lease remains in full force and effect and pursuant to
Section 18(d), Redeveloper shall accomplish all necessary restoration.
-35-
(f) Temporary Taking. On any taking of the temporary use of all or
----------------
any part or parts of the Property for a period, or of any estate less than a
fee, ending on or before the expiration date of the Term, the Term shall not
be reduced, extended, or affected in any way, and Redeveloper shall be
entitled to any Award for the use or estate taken. If a result of the taking
is to necessitate expenditures for changes, repairs, alterations,
modifications, or reconstruction of the improvements, Redeveloper shall
accomplish all necessary changes, repairs, alterations, modifications, or
reconstruction of the improvements at Redeveloper's sole cost and expense in
accordance with Section 11 hereof. If any such taking is for a period
extending beyond the expiration date of the Term, the taking shall be treated
under the foregoing provisions for total and partial takings, depending upon
whether the temporary taking is of all or only a part of the Property.
(g) Effect on Rent. If any portion of the Property is taken by
--------------
Condemnation and this Lease remains in full force and effect, there shall be
no effect on or reduction of the Base Rent or other rent payable hereunder
unless such Condemnation materially affects Redeveloper's ability to conduct
business from the Property, in which case Base Rent shall be adjusted in a
reasonable proportion reflecting the impact on Redeveloper's business by such
Condemnation.
-36-
(h) Application of Award. Any award for any entire taking shall be
--------------------
apportioned between Agency and Redeveloper as their interests may appear. In
the event of a partial taking, any part of the award attributable to
improvements shall be divided between the parties in the manner provided in
Section 16(d)(ii) hereof, and, in consideration of the abatement of rent, any
part of the award attributable to land shall be paid to Agency; provided,
however, that nothing contained herein shall be deemed to give Agency any
interest in or require Redeveloper to assign to Agency any award made to
Redeveloper for the unamortized value of any improvements or furniture,
fixtures, or equipment or other personal property on the Property constructed
or provided by Redeveloper at Redeveloper's sole cost and expense in
accordance with this Lease (amortized on a straight line basis over the period
in which the cost of such improvements or furniture, fixtures or equipment or
personal property are credited to Base Rent), taking of personal property and
fixtures belonging to Redeveloper and removable by Redeveloper at the
expiration of the Term hereof (except to the extent Redeveloper has received a
rent credit therefor), as provided hereunder, or for the interruption of, or
damage to, Redeveloper's business or for relocation expenses recoverable
against the condemning authority, or in the event of a partial taking, the
cost of restoring the Property to a usable condition. Anything herein to the
contrary notwithstanding, in the event of a termination of the Lease by reason
of any such taking, Agency shall be relieved of any obligation to repay to
Redeveloper the initial purchase price of the Convention Center Parcel, it
being understood and agreed by the parties that Redeveloper's rights shall be
limited to the allocation of the award or settlement in lieu thereof.
(i) Waiver of Right to Take By Eminent Domain. Agency hereby waives
-----------------------------------------
its right to acquire the Property or any material part thereof by exercise of
the power of eminent domain, for the five year period from and after the
Effective Date, and any time after the opening of the Card Club for business.
19. Assignment, Subletting and Encumbering.
--------------------------------------
-37-
(a) Prohibition Against Voluntary Assignment, Subletting, and
---------------------------------------------------------
Encumbering. Except as provided in this Section to the contrary, Redeveloper
-----------
shall not, without Agency's prior written consent, voluntarily assign or
encumber Redeveloper's interest in this Lease or in the Leasehold Parcels, or
sublease substantially all or any part of the Leasehold Parcels, or allow any
other person or entity (except Redeveloper's authorized representatives) to
occupy or use all or any part of the Property. For the purposes hereof, an
"encumbrance" shall mean mortgage, deed of trust, land sale contract, lease or
other financing device. Any attempted assignment, encumbrance, or sublease
shall be voidable by Agency and, at Agency's election, shall constitute a
default hereunder. No consent to any assignment, encumbrance, or sublease
shall constitute a further waiver of the provisions of this Section. Any sale
or transfer of the Convention Center Parcel other than as permitted hereunder
shall void the Agency's obligation to repurchase the Convention Center Parcel
upon termination of the Lease but not its right to do so at its option.
(b) Special Exceptions. Anything in Section 19(a) to the contrary
------------------
notwithstanding, Agency hereby acknowledges that:
(i) Redeveloper intends, immediately upon the commencement of the
Term of the Lease, to convey the Convention Center Parcel and assign this
Lease to Hollywood Park, Inc., and Hollywood Park, Inc., intends to let the
operation of the Card Club to ▇▇▇▇▇▇▇ Entertainment Inc., or a third party.
Subject to Hollywood Park, Inc., assuming all obligations under this Lease,
Agency hereby consents to said conveyance and assignment of this Lease and
agrees that the original Redeveloper shall thereupon be relieved of all
obligations hereunder other than those obligations which accrued prior to the
date of the assignment, and other than those obligations specifically not
assumed by Hollywood Park, Inc.
(ii) At such time as Hollywood Park, Inc. qualifies to hold a gaming
license, it intends to convey the Convention Center Parcel and assign this
Lease to a joint venture composed of itself and CEI, and CEI intends to assign
its rights under the lease of the Card Club and the City of ▇▇▇▇▇▇▇ Gaming
License to said joint venture. Provided that Hollywood Park, Inc., then holds
a majority in interest in equity ownership and managerial control of the joint
venture, Agency hereby consents to said conveyance and assignments.
(iii) Nothing herein shall be deemed to waive Agency's rights under
Section 19(a) with respect to any other or additional assignments or
sublettings, whether of a similar or dissimilar nature.
-38-
(iv) The Agency shall not unreasonably withhold its consent to a
sublease of the Hotel. No consent by the Agency to any sublease or assignment
shall operate to release the Redeveloper or any assignee from any of
obligations hereunder undertaken by Redeveloper or assumed by such assignee,
except as provided in Section to the contrary.
(c) Right to Sublease Restaurant, Bar, Night Club, and Parking Area.
---------------------------------------------------------------
Notwithstanding the provisions of Section 19(a) hereof, Redeveloper shall have
the right, without Agency's consent, to lease or sublease discrete portions of
the Property, such as a restaurant, bar, nightclub, and parking areas, to an
operator, provided that Redeveloper shall provide to Agency thirty (30) days
prior written notice of the name of the sublessee and the name of the operator
of the restaurant, bar or nightclub.
Redeveloper shall not sublease or otherwise assign this DDA or the right to
operate the Card Club area to any person or entity that has not qualified
under Municipal Code 9-10 with respect to obtaining a license to operate a
card club.
(d) Corporate Reorganization. Any dissolution, merger,
------------------------
consolidation, or other reorganization of Redeveloper, or the sale or other
transfer of a controlling percentage of the capital stock of Redeveloper,
shall be deemed a voluntary assignment hereof. The phase "controlling
percentage" means the ownership of, or the right to vote, stock possessing 50%
or more of the total combined voting power of all classes of Redeveloper's
capital stock issued, outstanding, and entitled to vote for the election of
directors. As to any issuance or transfer of shares whatsoever, Redeveloper
shall promptly notify the Agency of (i) the number of shares issued or
transferred, (ii) the name of the recipient or transferee of such shares, and
(iii) the number of all shares of Redeveloper then issued and outstanding, and
the percentage of all shares so transferred or changed. In the event a
corporation whose stock is publicly traded shall become a successor in
interest to Redeveloper, then this preceding sentence shall apply only to a
transfer of 5% more of the voting securities of such corporation. If
Redeveloper changes to a partnership, the foregoing provisions shall similarly
apply to partnership interests so transferred or created.
(e) Encumbrance or Assignment as Security.
-------------------------------------
-39-
(i) Notwithstanding any other provision contained in this Lease,
Redeveloper shall have the right to encumber or assign Redeveloper's interest
in the Convention Center Parcel and in this Lease to any bank, savings and
loan, insurance company, or other institutional lender for the purpose of
financing the construction of the Initial Improvements or for purposes of
expansion on the Property and for the purpose of providing a take-out loan (in
a principal amount not to exceed the actual total cost of constructing such
Initial Improvements or of constructing the expansion facilities), provided
only that upon execution of such encumbrance (or any amendment, supplement or
modification thereto) a true copy of such instrument and the obligation
secured thereby be promptly delivered to Agency together with a written notice
of the name and mailing address of the lender, the date and place of recording
or filing of record thereof and recorder'sinstrument number, book and page
reference or other recorder's index reference. Until such true copies and
notice are delivered to Agency any such instrument shall have no force or
effect whatsoever on the enforcement by Agency of any provisions of this Lease
or any rights or remedies hereunder. During the existence of a permitted
encumbrance and following delivery thereof there shall be no cancellation,
surrender, acceptance of surrender or modification of this Lease except (i) by
a written instrument executed by Agency, Redeveloper and the lender, (ii) by
reason of Redeveloper's exercise of the option provided for in Section 30
hereof, or (iii) default under the Lease that is not timely cured by
Redeveloper or the lender. Lessor's interest in this Lease shall at all times
remain senior and superior to the lien of any deed of trust or mortgage
securing any such loan, and any such deed of trust or mortgage shall be
subject to Agency's right to reacquire the Convention Center Parcel upon
termination of the Lease, as hereinbefore provided.
(ii) All financing described in the preceding paragraph shall
provide that Agency shall have the right but not the obligation to assume
Redeveloper's financing for any improvement of the Property. Redeveloper
shall cause the lender to execute all documentation necessary to facilitate
this right. Agency's exercise of this right shall not constitute a waiver of
any other right Agency may have against Redeveloper.
20. Default.
-------
(a) Redeveloper's Default. The occurrence of any of the following
---------------------
shall constitute a default by Redeveloper:
-40-
(i) Failure to pay rent or any other payment required to be made by
Redeveloper hereunder as and when due and the continuation of such failure to
pay rent for ten (10) days after delivery by Agency to Redeveloper of written
of such failure (in which event a Notice to Pay Rent or Quit provided in
accordance with Code of Civil Procedure Section 1161 (or any successor
statute) shall constitute the notice required for this purpose).
(ii) Failure to pay any Taxes which Redeveloper is obligated to pay,
other than possessory interest taxes to be paid by Agency pursuant to Section
8(a) hereof, on a timely basis, or the failure to provide any insurance
required hereunder, and the continuation of such failure for ten (10) days
after delivery by Agency of written of such failure to Redeveloper (in which
event a notice provided in accordance with Code of Civil Procedure Section
1161 (or any successor statute) shall constitute the notice required for this
purpose).
(iii) Abandonment or surrender of the Property or the leasehold
estate by Redeveloper.
(iv) Cessation in a material fashion of either the Hotel or Card
Club business for thirty (30) consecutive days. As used herein, cessation of
operation of the Hotel shall mean the failure to operate the main floor and at
least one floor of guest rooms, including service to said rooms. Said thirty
(30) day period shall be subject to Section 32 hereof and shall not include
any reasonably necessary periods of closure for repair or remodeling.
(v) Failure to comply timely with the obligations set forth in the
Schedule of Performance attached hereto as Exhibit 3, and the continuation of
such failure or the failure to commence performance and diligently pursue the
same to completion for thirty (30) days after receipt of written notice
thereof from Agency.
(vi) Failure to perform any other covenant or provision of this
Lease, if the failure to perform is not cured within thirty (30) days after
written notice. If the failure to perform cannot reasonably be cured within
thirty (30) days, Redeveloper shall not be in default of this Lease if
Redeveloper commences to cure the failure to perform within the thirty (30)
day period and thereafter diligently and in good faith prosecutes the cure to
completion.
(vii) The subjection of any right or interest to attachment,
execution, or other levy, or to seizure under legal process, if not released
within ninety (90) days after such levy.
-41-
(viii) An assignment by Redeveloper for the benefit of creditors or
the filing of a voluntary or involuntary petition by or against Redeveloper
under any law for the purpose of adjudicating Redeveloper a bankrupt; or for
extending time for payment, adjustment, or satisfaction of Redeveloper's
liabilities; or for reorganization, dissolution, or arrangement on account of
or to prevent bankruptcy or insolvency; unless the assignment or proceeding,
and all consequent orders, adjudications, custodies, and supervisions are
dismissed, vacated, or otherwise permanently stayed or terminated within
ninety (90) days after the assignment, filing, or other initial event.
(ix) The appointment of a receiver, unless such receivership is
terminated within ninety (90) days after the appointment of the receiver, to
take possession of Redeveloper's interest in the Property or of Redeveloper's
interest in the leasehold estate or of Redeveloper's operations on the
Property for any reason, including but not limited to, assignment for benefit
of creditors or voluntary or involuntary bankruptcy proceedings, but not
including receivership (A) pursuant to a permitted first leasehold
encumbrance, or (B) instituted by Agency, the event of default being not the
appointment of a receiver at Agency's instance but the event justifying the
receivership, or (C) commenced pursuant to any license dispute.
(x) Failure to pay when due any license fee for the Card Club
License as required by Section 9-10 of the Compton Municipal Code, or any
additional sums set forth in the City's Resolution No. 17,087, as amended, and
the continuation of such failure to pay such fee or sums for ten (10) days
after delivery by the City of ▇▇▇▇▇▇▇ or Agency to Redeveloper of written
notice of such failure.
-42-
(xi) Termination, annulment, cancellation, revocation, repeal, or
rescission of any of Redeveloper's licenses or permits to operate a Card Club
from the Project, or any other failure of Redeveloper to keep in full force
and effect any license or permit required to operate the Card Club from the
Project, and the expiration of all appeals thereof or the expiration of the
time period for applying for an appeal or other procedure to reinstate the
license or permit pursuant to the terms of any applicable ordinances,
statutes, or regulations and the entry of a fraud judgment, supporting such
termination, punishment, cancellation, revocation, etc., of such licenses if
judicially reviewed; provided, however, notwithstanding the foregoing, if the
reason for the termination, annulment, cancellation, revocation, repeal, or
rescission is Redeveloper's failure to pay any fees to the City of ▇▇▇▇▇▇▇ or
the State of California as and when due, then Redeveloper shall be in default
hereunder if such fees are not paid within sixty (60) days after their due
date. Anything herein to the contrary notwithstanding, in this event that the
then Redeveloper is not also the operator of the Card Club, the Redeveloper
shall have ninety (90) days within which to substitute an approved operator
for the Card Club, provided that the Agency shall extend such period for a
reasonable time upon a creditable showing that the reason for delay is a
matter not within the control of Redeveloper or its successor in interest.
(b) Security for Performance of Redeveloper's Duties. As additional
------------------------------------------------
collateral security for Redeveloper's performance of its obligations under
this Lease, Redeveloper shall execute and deliver to Agency:
(i) As provided in Section 1(d)(iii) hereof, a first deed of trust
and fixture filing encumbering the Convention Center Parcel, all improvements
thereon, and all rights attendant thereto.
(ii) A security agreement and a Financing Statement (UCC 1) covering
all furniture, fixtures and equipment and other personal property installed on
or used in connection with the Convention Center Parcel and any and all
replacements therefor or additions thereto.
(iii) A security agreement and a Financing Statement (UCC 1)
covering all furniture, fixtures and equipment and other personal property
installed on or used in connection with the Leasehold Parcels and any and all
replacements therefor or additions thereto.
-43-
Redeveloper, or its successors in interest, shall, at the request of
Agency, execute any additional financing statements or continuation statements
required to perfect and maintain the lien of such security agreements on the
personalty so encumbered, including any replacements therefor or additions
thereto, whether or not the filing period for any such continuation statement
may have expired.
(c) Remedies.
--------
(i) Cumulative Nature of Remedies. If any default by Redeveloper
-----------------------------
shall continue uncured, following notice of default as required by this Lease,
for the period, if any, applicable to the default under the applicable
provision of this Lease, Agency shall have the remedies described in this
subsection (c) in addition to all other rights and remedies provided by the
security instruments referred to in subsection (b) above or otherwise provided
by law or equity, to which Agency may resort cumulatively or in the
alternative.
(ii) Termination for Breach. Agency may at Agency's election
----------------------
terminate this Lease for breach by giving Redeveloper written notice of
termination. In the event Agency terminates this Lease, Agency may recover
possession of the Property (which Redeveloper shall surrender and vacate upon
demand) and remove all persons and property therefrom, and Agency shall be
entitled to recover as damages all of the following:
(A) The worth at the time of the award of any unpaid rent or other
charges which have been earned at the time of termination;
(B) The worth at the time of the award of the amount by which the
unpaid rent and other charges which would have been earned after termination
until the time of the award exceeds the amount of the loss of such rental or
other charges that Redeveloper proves could have been reasonably avoided;
(C) The worth at the time of the award of the amount by which the
unpaid rent and other charges for the balance of the term after the time of
the award exceeds the amount of the loss of such rental and other charges that
Redeveloper proves could have been reasonably avoided; and
(D) Any other amount necessary to compensate Agency for the
detriment proximately caused by Redeveloper's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom.
-44-
As used in subsections (A) and (B) above, the "worth at the time of
the award" shall be computed by allowing interest at the rate of 10 percent
per annum. As used in subsection (C) above, the "worth at the time of the
award" shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of the award, plus one
percent.
(iii) Continuation of the Lease. Even though Redeveloper has
-------------------------
breached this Lease and abandoned the Property, at Agency's option this Lease
shall continue in effect for so long as Agency does not terminate
Redeveloper's right to possession, and Agency may enforce all of its rights
and remedies hereunder, including the right to recover rent as it comes due
under this Lease, and in such event Agency will permit Redeveloper to sublet
the Property or to assign its interest in the Lease, or both, with the consent
of Agency,which consent will not unreasonably be withheld provided the
proposed assignee or sublessee is reasonably satisfactory to Agency as to
credit and reputation and will occupy the Property for the same purposes
specified herein. For purposes of this subsection, the following shall not
constitute a termination of Redeveloper's right to possession: (i) acts of
maintenance or preservation or efforts to relet the Property; or (ii) the
appointment of a receiver under the initiative of Agency to protect Agency's
interest under this Lease.
(iv) Use of Redeveloper's Personal Property. In the event of
--------------------------------------
termination of the Lease for breach, Agency may at Agency's election use
Redeveloper's personal property and trade fixtures located on, about or
appurtenant to the Property or any of such property and fixtures without
compensation and without liability for use or damage, or store them for the
account and at the cost of Redeveloper. The election of one remedy for any
one item shall not foreclose an election of any other remedy for another item
or for the same item at a later time.
-45-
(v) Assignment of Subrents. Redeveloper assigns to Agency all
----------------------
subrents and other sums falling due from tenants, subtenants, licensees, and
concessionaires (herein collectively called "subtenants") during any period in
which Agency has the right under this Lease, whether exercised or not, to
reenter the Property for Redeveloper's default, and Redeveloper shall not have
any right to such sums during that period. This assignment is subject and
subordinate to any and all assignments of the same subrents and other sums to
the lender under a permitted first leasehold encumbrance. Agency may at
Agency's election upon the breach hereof by Redeveloper reenter the Property
with or without process of law, without terminating this Lease, and either or
both collect these sums or bring action for the recovery of the sums directly
from such obligors. Agency shall receive and collect all subrents and
proceeds from reletting, applying them: first, to the payment of reasonable
expenses (including attorneys' fees or brokers' commissions or both) paid or
incurred by or on behalf of Agency in recovering possession, placing the
Property in good condition, and preparing or altering the Property for
reletting; second, to the reasonable expense of securing new tenants or
subtenants; third, to the fulfillment of Redeveloper's covenants to the end of
the Term; and fourth, to Agency's uses and purposes. Redeveloper shall
nevertheless pay to Agency on the due dates specified in this Lease the
equivalent of all sums required of Redeveloper under this Lease, plus Agency's
expenses, less the proceeds of the sums assigned and actually collected under
this provision.
(d) Late Charge. Redeveloper hereby acknowledges that late payment
-----------
by Redeveloper to Agency of rent and other charges due under this Lease will
cause Agency to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but
are not limited to processing and accounting charges, and late charges which
may be imposed on Agency by the terms of any mortgage or trust deed covering
the Property, or bond issues of Agency. Accordingly, if any installment of
rent or any other charge due from Redeveloper is not received by Agency or
Agency's designee within ten (10) days after such amount shall be due, then,
at Agency's election and upon Agency's demand, Redeveloper shall pay to Agency
a late charge equal to five percent (5%) of such overdue amount. The parties
hereby agree that such late charge represents afair and reasonable estimate of
the costs Agency will incur by reason of the late payment by Redeveloper. No
late charge may be imposed more than once for the same late rental payment.
Acceptance of such late charge by Agency shall in no event constitute a waiver
of Redeveloper's default with respect to such overdue amount, nor prevent
Agency from exercising any other rights and remedies granted to it hereunder.
(e) Lender's Right to Cure Defaults.
-------------------------------
-46-
(i) Notice of Default. Concurrently with giving notice of default
-----------------
to Redeveloper under Section 20(a), above, Agency shall deliver a copy of such
notice of default to the lender under a permitted encumbrance at its address
as furnished to Agency in accordance with Section 19(e).
(ii) Lender's Right to Cure. During the continuance in effect of a
----------------------
permitted encumbrance, Agency will not terminate this Lease because of any
default on the part of Redeveloper if the lender, within 30 days after Agency
has sent a written notice pursuant to Section 20(a):
(A) Cures such default, if the default can be cured by the payment
of money, or, if the default is not curable by the payment of money, commences
or causes the trustee under the encumbrance to commence, and thereafter
diligently pursues to completion proceedings to foreclose the encumbrance; and
(B) Keeps and performs all of the covenants and conditions of this
Lease requiring the payment or expenditure of money by Redeveloper until such
time as Redeveloper's leasehold interest is sold upon foreclosure pursuant to
the encumbrance, or transferred by an assignment in lieu of foreclosure.
(iii) Transfer by Lender. Notwithstanding the provisions of
------------------
Section 19(a) hereof restricting assignment of this Lease, this Lease may be
assigned to the lender by judicial or non-judicial foreclosure or by
assignment in lieu of foreclosure (without, however, releasing Redeveloper
from any of its obligations hereunder) without further consent of Agency or
any assumption agreement by the lender, the liability of the lender being
limited to the period of its possession or ownership of this Lease. No other
or further assignment shall be made except in accordance with the provisions
of Section 19(a) of this Lease.
(f) Waiver of Rights. Redeveloper hereby waives any right of
----------------
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 or 1179, or under any other present or future law, in the event
Redeveloper is evicted or Agency takes possession of the Property by reason of
any default by Redeveloper hereunder.
-47-
(g) Agency's Default. Agency shall not be deemed to be in default
----------------
in the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within ninety (90)
days after written notice by Redeveloper to Agency specifying wherein Agency
has failed to perform such obligation; provided, however, that if the nature
of Agency's obligation is such that more than ninety (90) days are required
for its performance, then Agency shall not be deemed to be in default if it
shall commence such performance within such ninety (90) day period and
thereafter diligently and in good faith prosecute the cure to completion.
21. Agency's Entry on Property. Agency and its authorized
--------------------------
representatives shall have the right to enter the Property at all reasonable
times upon reasonable notice to Redeveloper for any of the following purposes:
(a) To determine whether the Property is in good condition and
whether Redeveloper is complying with its obligations under this Lease;
(b) To do any necessary maintenance and to make any restoration to
the Property that Agency has the right to perform;
(c) To serve, post, or keep posted any legal notices required or
allowed under the provisions of this Lease;
(d) During the last two years of the Term hereof, to show the
Property to prospective brokers, agents, buyers, lenders, or persons
interested in an exchange, at any time during the Term.
Agency shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance, or other damage arising out of Agency's entry on
the Property as provided in this Section, except damage resulting from the
acts or omissions of Agency or its authorized representatives. Redeveloper
shall not be entitled to an abatement or reduction of rent if Agency exercises
any rights reserved in this Section. Agency shall conduct its activities on
the Property as allowed in this Section in a manner that reasonably attempts
to minimize any inconvenience, annoyance, or disturbance to Redeveloper's
construction or business operations.
-48-
22. Notices. Any notice, demand, request, consent, approval or
-------
communication that either party desires or is required to give to the other
party shall be in writing and shall be given to the addresses set forth below,
and shall be deemed delivered three days after deposit into the United States
mail, postage prepaid, by registered or certified mail, return receipt
requested. Unless notice of a different address has been given in accordance
with this Section, all such notices shall be addressed as follows:
If to Agency, to: Community Redevelopment Agency of the City of
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Director
With a copy to: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Redeveloper, to: Compton Entertainment, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
23. Interest on Past-due Obligations. Any amount due to Agency
--------------------------------
which not paid when due shall bear interest at the maximum rate then allowable
to be charged by non-exempt lenders under the usury and other applicable laws
of the State of California from the date due until paid. Payment of such
interest shall not excuse or cure any default by Redeveloper under this Lease.
24. Attorneys' Fees.
---------------
(a) If either party becomes a party to any litigation concerning
this Lease or the Property, by reason of any act or omission of the other
party or its authorized representatives, the other party shall be liable to
such party for such party's actual attorney's fees and court costs incurred by
it in the litigation. In the event of any litigation is undertaken against
Agency concerning the validity of this DDA, Redeveloper shall indemnify,
defend, and hold harmless Agency for all costs and expenses incurred by
Agency on account of such litigation. Such defense shall be undertaken by
legal counsel mutually selected by Agency and Redeveloper. Provided, however,
-49-
if Agency shall become a defendant to any lawsuit concerning the validity of
this DDA, and Redeveloper informs Agency that it does not wish to indemnify,
hold harmless and defend Agency, then Agency may immediately cancel and
terminate this DDA without any liability to Redeveloper whatsoever, and
Redeveloper shall be relieved of all liability hereunder other than liability
for matters (other than the defense of such litigation) which arose prior to
such termination.
-50-
(b) If either party commences an action against the other party
arising out of or in connection with this Lease, the prevailing party shall be
entitled to have and recover from the losing party reasonable attorneys' fees
and costs of suit.
25. Estoppel Certificates. At any time and from time to time,
---------------------
within thirty (30) days after notice of request by either party, the other
party shall execute, acknowledge, and deliver to the requesting party, or to
such other recipient as the notice shall direct, a statement certifying that
this Lease is unmodified and in full force and effect; or, if there have been
modifications, that it is in full force and effect as modified in the manner
specified in the statement and acknowledging that there are no uncured
defaults or failures to perform any covenant or provision of this Lease on the
part of the requesting party or specifying any such defaults or failures which
are claimed to exist. The statement shall also state the dates to which the
rent and any other charges have been paid in advance. The statement shall be
such that it can be relied on by any auditor, creditor, commercial banker, and
investment banker of either party and by any prospective purchaser or the
lender of the Property or all or any part or parts of Redeveloper's or
Agency's interests under this Lease. Either party's failure to execute,
acknowledge, and deliver, on request, the certified statement described above
within the specified time shall constitute a breach of this Lease.
26. Surrender of Property. At the expiration or earlier
---------------------
termination of the Term (other than by reason of the exercise of the option
set forth in Section 30 hereof), Redeveloper shall surrender to Agency the
possession of the Property. Surrender or removal of improvements, fixtures
and trade fixtures shall be as directed in the provisions of this Lease on
ownership of improvements, fixtures and trade fixtures at expiration or
termination. Except as provided in Section 25 hereof to the contrary,
Redeveloper shall leave the surrendered property and any other property in
good and broom clean condition. All personal property that Redeveloper is not
required to surrender but that Redeveloper does abandon shall, at Agency's
election, become Agency's property at the expiration or the sooner termination
of this Lease.
27. Form of Nondiscrimination and Nonsegregation Clauses; Local
-----------------------------------------------------------
Hiring and Affirmative Action.
-----------------------------
(a) Redeveloper shall refrain from restricting the rental, sale or
lease of the Property, or any portion thereof, on the basis of sex, age,
handicap, marital status, race, color, religion, creed, ancestry or national
origin of any person. All deeds, leases or contracts of sale shall contain or
be subject to substantially the following nondiscrimination or nonsegregation
clauses:
-51-
1. In deeds: "The grantee herein covenants by and for himself, his
heirs, executors, administrators and assigns, and all persons claiming under
or through them, that there shall be no discrimination against or segregation
of, any person or group of persons on account of sex, marital status, race,
age, handicaps color, religion, creed, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
land herein conveyed, nor shall the grantee himself or any person claiming
under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the land herein conveyed. The foregoing covenants shall run with
the land."
2. In leases: "The lessee herein covenants by and for himself, his
heirs, executors, administrators and assigns, and all persons claiming under
or through him, and this lease is made and accepted upon and subject to the
following conditions:
'That there shall be no discrimination against or segregation of any
person or group of persons on account of sex, marital status, race, age,
handicap, color, religion, creed, national origin or ancestry, in the leasing,
subleasing, transferring, use, or enjoyment of the land herein leased, nor
shall the lessee himself, or any person claiming under or through him,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy, of tenants, lessees, sublessees, subtenants or vendees in the land
herein leased.'"
3. In contracts relating to the sale or transfer of the Property or any
interest therein: "There shall be no discrimination against or segregation of
any person or group of persons on account of sex, marital status, race, age,
handicap, color, religion, creed, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land,
nor shall the transferee himself or any person claiming under or through him,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy, of tenants, lessees, subtenants, sublessees or vendees of the
land."
-52-
(b) Redeveloper further understands and agrees that in fulfillment
of the provisions of this DDA, including this Lease, and in complying with the
request of the Agency and the City Council of the City, that the creation of
new jobs from this Project shall be filled with residents of the City of
▇▇▇▇▇▇▇ who have lived in the City of ▇▇▇▇▇▇▇ for more than one year, to the
extent that it is practical and reasonable. Redeveloper shall make every
reasonable effort to fulfill the provisions of this DDA, including the Lease,
by complying with Ordinance No. 1667 of the City of ▇▇▇▇▇▇▇, relating to an
Affirmative Action Program. Redeveloper shall work with local institutions to
establish training programs to assist in ensuring a qualified local applicant
base is established for all levels of employment at the Hotel, the
Entertainment Center, and any related enterprises. Further, preferences shall
be given to local residents when such residents demonstrate equal capability
relative to other applicants for the same job. The covenants and agreements
set forth in this subsection (b) shall survive the expiration or termination
of this Lease after acquisition of title to the Property by Redeveloper,
whether by exercise of the Option to purchase or otherwise.
28. Local Contractors. Redeveloper shall make commercially
-----------------
reasonable efforts to allocate the work associated with the construction of
the Initial Improvements in a manner which provides local contractors with an
opportunity to participate in such work. Contracts for the Initial
Improvements shall be let on the basis of price, quality of service and
reputation. Further, preferences shall be give to local contractors and
minority owned businesses when such contractors demonstrate equal capability
and bondability relative to other contractors for the scope of work to be
performed.
29. Expansion Parcels.
-----------------
-53-
(a) Subject to the provisions of Section 29(b), during the first
fifteen (15) years Lease Years of the Term, Agency shall have the full right
to use the Expansion Parcels, without payment of consideration to Redeveloper.
Any such use shall be of a type which shall not disturb Redeveloper's quiet
enjoyment of the balance of the Property or otherwise adversely affect the use
thereof. Agency shall retain all rentals and other revenues payable on
account of the Expansion Parcels. Provided, however, that Redeveloper shall
have the right, upon ninety (90) days notice in writing to Agency, to
terminate Agency's use of the Expansion Parcels. Redeveloper shall terminate
Agency's use of the Expansion Parcels only upon delivery to Agency of plans
and specifications and financing commitments, as described in Section 11
hereof, for a new card club or casino or other use permitted by the Agency on
the Expansion Parcels, together with reasonable evidence satisfactory to
Agency that Redeveloper shall open the new card club or casino or other use
permitted by the Agency for business within nine (9) months after the
termination date of Agency's right to use the Expansion Parcels.
(b) If Redeveloper does not open the new card club or casino or
other use permitted by the Agency for business on the Expansion Parcels or
another portion of the Property in compliance with Section 9(g) hereof prior
to the expiration of the 15th Lease Year, and Agency receives a bona fide
proposal, from a reputable third party developer with the capacity to perform,
which proposal Agency wishes to accept, Agency shall give notice in writing
thereof to Redeveloper. Unless, within said ninety (90) day notice period,
Redeveloper irrevocably commits to either (i) open a new casino or card club
or other permitted use on the Expansion Parcels within one year thereafter, or
(ii) undertake the same type of development as has been proposed by the
offeror or one meeting or exceeding the benefit to the Agency of that of the
offeror, Agency shall have the right to proceed with the other transaction,
and, upon the closing thereof, all Redeveloper's rights in the Expansion
Parcels shall terminate and shall be of no further force or effect. In such
event, the purchase price set forth in the Option (described below), shall be
reduced as provided in Section 30(e) hereof, and the Base Rent shall be
equitably reduced (based upon the values established in the Agency's original
appraisal for the parcels comprising the Property), effective upon the closing
of the transaction between Agency and the third party developer. Any attempt
by Redeveloper to wrongfully interfere with the other transaction or the
closing thereof, other than by committing to the expansion as provided
hereinabove, may, at the option of Agency, be deemed default hereunder.
-54-
30. Option to Purchase. Agency hereby grants to Redeveloper the
------------------
option to purchase the Leasehold Parcels, including all buildings, furniture,
furnishings and equipment and inventory of food, beverages and other supplies
(the "Option"), subject to the following terms and conditions:
(a) Subject to the provisions hereof, Redeveloper may deliver a
written notice of Redeveloper's election exercise the Option at any time
during the Term hereof. Escrow shall close on or before ninety (90) days
after receipt by Agency of Redeveloper's written notice of Redeveloper's
election to exercise the Option, and Agency shall deliver to Redeveloper
marketable title to the Leasehold Parcels free and clear of any encumbrances
other than those (i) in existence at the Effective Date, (ii) approved by
Redeveloper pursuant to this Lease, or (iii) created or incurred by
Redeveloper; provided, however, the Property shall be free and clear of all
monetary liens in existence on the Effective Date other than those created by
Redeveloper (including, without limitation, deeds of trust executed by the
Redeveloper, its successors and assigns, and mechanics liens resulting from
work performed at the request of the Redeveloper). Agency agrees that it will
not voluntarily encumber title to the Leasehold Parcels without Redeveloper's
prior written consent. At the closing, Agency shall deliver to Redeveloper a
good and sufficient grant deed with respect to the Leasehold Parcels.
(b) Redeveloper shall have no right to exercise the Option,
notwithstanding any provision in the grant of option to the contrary (i) at
any time when Redeveloper is in default hereunder and continuing until the
default is cured, or (ii) during the period of time commencing on the day
after a monetary obligation to Agency is due from Redeveloper and unpaid
(without any necessity for notice thereof to Redeveloper) and continuing until
the obligation is paid, or (iii) in the event that this Lease has been
terminated for any reason, or (iv) during any time Redeveloper's payment of
license fees required by Section 9-10 of the Compton Municipal Code, or
additional sums set forth in the City's Resolution No. 17,087, as amended, is
due and unpaid, or (v) during any time any license or permit of Redeveloper or
any subtenant or operator to operate a Card Club from the Property is
suspended and has not been reinstated, subject, however, to the right of
Redeveloper to replace an operator pursuant to Section 20(a)(xi) hereof.
-55-
(c) All rights of Redeveloper under this Section shall terminate and
be of no further force or effect, if this Lease is terminated for any reason,
or if any license or permit from the City of ▇▇▇▇▇▇▇ or the State of
California to operate a Card Club from the Property is terminated, annulled,
canceled, revoked, repealed, or rescinded, or any other failure of Redeveloper
or an operator claiming under Redeveloper to keep in full force and effect any
license or permit required to operate the Card Club from the Project, and the
expiration of all appeals thereof or the expiration of the time period for
applying for an appeal or other procedure to reinstate the license or permit
pursuant to the terms of any applicable ordinances, statutes, or regulations;
provided, however, notwithstanding the foregoing, if the reason for the
termination, annulment, cancellation, revocation, repeal, or rescission is
Redeveloper's failure to pay any fees to the City of ▇▇▇▇▇▇▇ or the State of
California as and when due, then Redeveloper's rights under this Option shall
terminate if such fees are not paid within 60 days after their due date.
(d) The Option granted to Redeveloper in this Lease is personal to
Redeveloper, and may not be assigned voluntarily or involuntarily, or be
exercised by any person or entity other than Redeveloper or a permitted
assignee of Redeveloper.
(e) Redeveloper shall have the right to elect to purchase only the
Hotel Parcel and the Parking Parcels at the time Redeveloper exercises the
Option. In such case,at the time Redeveloper exercises the Option,
Redeveloper may elect either (i) to terminate this Lease as to the Expansion
Parcels, or (ii) continue this Lease with respect to the Expansion Parcels.
If Redeveloper elects to continue this Lease with respect to the Expansion
Parcels, then upon the close of escrow for the Hotel Parcel and Parking
Parcels, the Base Rent for the Expansion Parcels shall be fifty-nine percent
(59%) of the Base Rent set forth in Section 10, and there shall be a
termination of any remaining Rent Reduction/Credit pursuant to Section 10.
Thereafter, the Redeveloper shall continue to have the option to purchase the
Expansion Parcels, subject to the provisions hereof.
-56-
(f) (i) If Redeveloper purchases all the Leasehold Parcels at once,
then the purchase price of the Leasehold Parcels shall be the sum of
$8,082,500.00, increased at the rate of two percent (2%) per annum, simple
interest, from the Effective Date, and decreased in an amount equal to
interest at the rate of five percent (5%) per annum, simple interest,
calculated on the purchase price of the Convention Center Parcel from the
Effective Date to the date of closing of the purchase under the Option;
provided, however, that the purchase price as so adjusted shall not be greater
than the fair market value of the Property but, in no case, shall the ultimate
purchase price be less than $8,082,500.00.
(ii) If Redeveloper purchases only the Hotel Parcel and the Parking
Parcels (whether due to the severing of the Expansion Parcel from this Lease
due to the provisions of Section , or Redeveloper's election to purchase only
the Hotel Parcel and Parking Parcels, as provided in Section ), then the
purchase price of the Hotel Parcel and the Parking Parcels shall be the sum of
$3,350,000.00, regardless of when purchased./1/
(iii) If upon acquisition of the Hotel Parcel and Parking Parcels
Redeveloper has elected to continue this Lease, and thereafter purchases the
Expansion Parcels, then the purchase price of the Expansion Parcels shall be
calculated pursuant to the following formula:
EPPP = 4,732,500 + (8,082,500 x .01 x (HPPD - ED)) + (4,732,500 x .02 x
(EPPD - HPPD))
utilizing the following definitions:
EPPP = Expansion Parcels Purchase Price
HPPD = Hotel Parcel and Parking Parcels Date of Purchase
ED = Effective Date
EPPD = Expansion Parcels Date of Purchase
utilizing the number of years, and any fraction thereof, between the HPPD, the
ED, and the EPPD for the purpose of calculating the resulting factors.
-----------
/1/ This is due to the fact that the parties had agreed to a base price of
the Hotel Parcels and Parking Parcels in the sum of $3,350,000, increased at
the rate of 2% per annum from the Effective Date, and reduced by the sum of
the credit of 5% of the $2,000,000 purchase price for the Convention Center
Parcel. However, due to the fact that such amount would result in a purchase
price of less than $3,350,000, the parties have agreed to fix the purchase
price of the Hotel Parcels and the Parking Parcels at $3,350,000.
-57-
(g) The purchase price shall be paid in all cash through the close
of escrow. Agency will pay the cost of a CLTA policy of title insurance, any
documentary transfer tax, and one half of the escrow fees. Redeveloper will
pay cost of recording, the additional premium and any expenses (including
survey costs) in the event Redeveloper desires to obtain an extended coverage
policy of title insurance, and the other half of the escrow fees. In
connection therewith, the parties shall execute normal and necessary escrow
instructions and all documents reasonably called for thereunder, so long as
such instructions and documents are not inconsistent herewith.
31. Holding Over. If Redeveloper, with Agency's consent, remains
------------
in possession of the Leasehold Parcels or any part thereof after the
expiration or termination of the Term of this Lease, such occupancy shall be a
tenancy from month to month upon all the provisions of this Lease pertaining
to the obligations of Redeveloper, except that the annual Base Rent shall be
150% of the annual Base Rent set forth in Section 10, above (as, and if,
adjusted pursuant hereto), and shall be payable monthly, in advance, in
installments equal to 1/12th of the annual Base Rent so calculated.
32. Force Majeure; Extension of Times of Performance.
------------------------------------------------
(a) Force Majeure. Except as otherwise provided in this Lease,
-------------
delay in performance by any party hereunder shall not be a default where
delays or defaults are due to war; insurrection; strikes; lock-outs; riots;
floods; earthquakes; fires; casualties; acts of God; acts of the public enemy;
epidemics; quarantine restrictions; freight embargoes; shortages of
transportation; unusually severe weather; or any other causes (other than
financial inability) beyond the reasonable control or without the fault of the
party claiming an extension of time to perform. An extension of time for any
such cause shall only be for the period of the delay, which period shall
commence to run from the time of the commencement of the cause, if written
notice by the party claiming such extension is delivered to the other party
within ten (10) days after commencement of the cause, and shall otherwise
commence to run from the date of delivery of such notice.
(b) Extension of Time. If prior to a date which is three months
-----------------
after the Effective Date, any lawsuit is filed by a third party against Agency
on account of the California Environmental Quality Act ("CEQA") or otherwise
challenging Agency's ability to enter into this transaction to lease the
Property for the purposes hereof, or against the City of ▇▇▇▇▇▇▇ on account of
the card club license in favor of Redeveloper, then, to the extent permitted
by law, the time periods provided herein shall be tolled until resolution of
such lawsuits in favor of Agency or City, as the case may be or until there
has been
-58-
compliance with CEQA, and the parties shall cooperate in the defense of such
action, with the costs ofsuch defense being borne as hereinabove provided,
and/or shall take all steps necessary to comply with the requirements of CEQA.
33. Sale or Transfer by Agency. In the event of any transfer or
--------------------------
transfers of Agency's interest in the Property, other than a transfer for
security purposes only, the transferor shall automatically be relieved of any
and all obligations and liabilities on the part of the Agency accruing from
and after the date of such transfer; provided, however, that any funds in the
hands of Agency in which Redeveloper has an interest, at the time of such
transfer, shall be turned over to the transferee and upon such transfer,
Agency shall be discharged from any further liability with reference to such
funds. The covenants and obligations of Agency contained in this Lease shall
be binding upon Agency, its successors and assigns only during their
respective periods of ownership. Any transferee must, however, comply with
the requirements of the Gaming Laws of the State of California to the extent
applicable.
34. Limitation on Recourse Against Agency. Redeveloper agrees to
-------------------------------------
look solely to Agency's interest in the Property and the real property of
which it is a part (or the proceeds thereof) for the satisfaction of any
remedy of Redeveloper, for the collection of a judgment (or other judicial
process) requiring the payment of money by Agency in the event of any default
by Agency hereunder (other than with respect to Agency's obligations pursuant
to Section 10(b) hereof), and no other property or assets of Agency shall be
subject to levy, execution, or other enforcement procedure for the
satisfaction of Redeveloper's remedies under or with respect to this Lease,
the relationship of Agency and Redeveloper hereunder, or Redeveloper's use or
occupancy of the Property. Under no circumstances shall Redeveloper have any
recourse against any tax increment revenues of Agency. Any obligations of
Agency hereunder to deliver any funds to Redeveloper shall not be secured by
any lien upon or pledge of the Agency's tax increment, and such obligations
shall be subordinate and inferior to any and all rights, including but not
limited to a pledge of any such moneys, created by (A) any bonded indebtedness
now or hereafter created by the Agency, and (B) any loan agreement, lease
agreement, or other obligation or agreement now or hereafter entered into by
the Agency, or otherwise from time to time outstanding that is secured by a
pledge of tax increment.
35. Redeveloper's Representations and Warranties. Redeveloper
--------------------------------------------
makes the following representations and warranties as of the date of this
Lease and agrees that such representations and warranties shall survive and
continue thereafter:
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(a) Status. If Redeveloper is a corporation, it is duly organized,
------
validly existing, in good standing under the laws of the state of its
incorporation, has stock outstanding, which has been duly and validly issued,
and is qualified to do business and is in good standing in the State of
California with full power and authority to perform the obligations
contemplated hereby. If Redeveloper is a partnership, it is duly formed and
validly existing and has all power and authority to consummate the
transactions contemplated hereby. If Redeveloper is a limited liability
company, it is duly formed and validly existing and has all power and
authority to perform the obligations contemplated hereby.
(b) Authority. Redeveloper has complied with all laws and
---------
regulations concerning its organization, existence and transaction of
business. Redeveloper has the right and power to own and develop the Project
and Initial Improvements thereon as contemplated in this Lease.
(c) No Litigation. There is no litigation, action, suit, or other
-------------
proceeding pending or threatened against Redeveloper, the Property, or the
Project which may in any manner whatsoever substantially adversely affect the
validity, priority, or enforceability of this Lease or the construction, use,
occupancy or operation of the Project.
(d) Enforceability. Redeveloper has full right, power and authority
--------------
to execute and deliver this Lease and all instruments executed pursuant
hereto, and to perform the undertakings of Redeveloper contained in this Lease
and all agreements executed pursuant hereto. This Lease and all agreements
executed pursuant hereto constitute valid and binding obligations of
Redeveloper which are legally enforceable in accordance with their terms,
subject to the laws of bankruptcy, creditor's rights exceptions, and equity.
(e) No Breach. None of the undertakings of Redeveloper contained in
---------
this Lease and all agreements executed pursuant hereto violates or any
applicable statute, law, regulation or ordinance or any order or ruling of any
court or governmental entity, or conflicts with, or constitutes a breach or
default under, any agreement by which Redeveloper is, or the Project and
Improvements thereon are, bound or regulated.
(f) Financial Information. All financial information delivered to
---------------------
Agency by Redeveloper, including, without limit, information relating to
Redeveloper, the Property, the Project, and the Improvements thereon, fairly
and accurately represents such financial condition. No material adverse
change in such financial condition has occurred.
(g) Proceedings. To the best of Redeveloper's knowledge,
-----------
Redeveloper is not in violation of any statute, law,
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regulation or ordinance, or of any order of any court or governmental entity.
(h) Accuracy. To the best of Redeveloper's knowledge, all
--------
documents, reports, instruments, papers, data, information and forms of
evidence delivered to Agency by Redeveloper with respect to this Lease and all
agreements executed pursuant hereto are accurate and correct, are complete
insofar as completeness may be necessary to give Agency true and accurate
knowledge of the subject matter thereof, and do not contain any material
misrepresentation or omission. Agency may rely on such reports, documents,
instruments, papers, data, information and forms of evidence without any
investigation or inquiry.
(i) Taxes. To the best of Redeveloper's knowledge, Redeveloper has
-----
filed all federal, state, county and municipal tax returns required to have
been filed by Redeveloper, and has paid all taxes which have become due
pursuant to such returns or toany notice of assessment received by
Redeveloper. Redeveloper has no knowledge of any basis for additional
assessment with respect to such taxes.
36. Agency's Representations and Warranties. Agency makes the
---------------------------------------
following representations and warranties as of the date of this Lease and
agrees that such representations and warranties shall survive and continue
thereafter:
(a) No Litigation. There is no litigation, action, suit, or other
-------------
proceeding pending or threatened against Agency, the Property, or the Project
which may in any manner whatsoever substantially adversely affect the
validity, priority, or enforceability of this Lease or the construction, use,
occupancy or operation of the Project.
(b) Enforceability. Agency has full right, power and authority to
--------------
execute and deliver this Lease and all instruments executed pursuant hereto,
and to perform the undertakings of Agency contained in this Lease and all
agreements executed pursuant hereto. This Lease and all agreements executed
pursuant hereto constitute valid and binding obligations of Agency which are
legally enforceable in accordance with their terms, subject to the laws of
bankruptcy, creditor's rights exceptions, and equity.
(c) No Breach. None of the undertakings of Agency contained in this
---------
Lease and all agreements executed pursuant hereto violates or any applicable
order or ruling of any court or governmental entity, or conflicts with, or
constitutes a breach or default under, any agreement by which Agency is, or
the Project and Improvements thereon are, bound or regulated.
-61-
(d) Entitlements. The proposed development and use of the Property
------------
is consistent with City's General Plan and all applicable zoning and land use
ordinances and regulations.
37. Miscellaneous.
-------------
(a) Governing Law. This Lease shall be construed and interpreted in
-------------
accordance with the laws of the State of California.
(b) Time of Essence. Time is of the essence herein.
---------------
(c) Additional Rent. Any monetary obligations of Redeveloper to
---------------
Agency under the terms of this Lease shall be deemed to be rent.
(d) Quiet Enjoyment. Upon Redeveloper's paying the Base Rent and
---------------
other sums provided hereunder when due, and observing and performing all of
the covenants, conditions, and provisions on Redeveloper's part to be observed
and performed hereunder, Redeveloper shall enjoy the quiet possession of the
Leasehold Parcels for the entire term hereof, subject to all of the provisions
of this Lease.
(e) Transfer of Agency's Interest. In the event of any transfer or
-----------------------------
transfers of Agency's interest in the Property, the transferor shall be
automatically relieved of any and all obligations and liabilities on the part
of Agency accruing from and after the date of such transfer.
(f) Waiver. The waiver by Agency or Redeveloper of any breach by
------
the other party of any term, covenant, or condition herein contained shall not
be deemed to be a waiver of such term, covenant, or condition or any
subsequent breach of the same or any other term, covenant, or condition herein
contained. The subsequent acceptance of all or part of the rent due hereunder
by Agency shall not be deemed to be a waiver of any preceding breach by
Redeveloper of any term, covenant, or condition of this Lease, other than the
failure to pay the particular rent so accepted, regardless of Agency's
knowledge of such preceding breach at the time of acceptance of such rent.
Acceptance by Agency of a part payment of the rent due shall not be construed
as a waiver by Agency of any rights to collect the balance of the rent due.
(g) Brokers. Each party warrants to and for the benefit of the
-------
other that it has had no dealings with any real estate broker or other agent
(attorneys excepted) in connection with the negotiation or making of this
Lease. Agency shall indemnify Redeveloper for breaches by Agency of this
warranty,
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and Redeveloper shall indemnify Agency for any breaches by Redeveloper of this
warranty.
(h) Headings. The captions of the various sections of this Lease
--------
are for convenience and ease of reference only and do not define, limit,
augment, or describe the scope, content, or intent of this Lease or of any
part or parts of this Lease.
(i) Inspection Of Books and Records. Agency shall have the right at
-------------------------------
all reasonable times to inspect the books and records of Redeveloper relevant
to the purposes of this Lease.
(j) Merger. The voluntary or other surrender of this Lease by
------
Redeveloper, or a mutual cancellation thereof, or a termination by Agency,
shall not work a merger, but instead, at the option of Agency, shall either
terminate all or any existing subtenancies, or at the option of Agency,
operate as an assignment to Agency of any or all of such subtenancies.
(k) Gender; Number. The neuter gender includes the feminine and
--------------
masculine, the masculine includes the feminine and neuter, and the feminine
includes the masculine and neuter, and each includes corporations,
partnerships and other legal entities whenever the context so requires. The
singular number includes the plural whenever the context so requires.
(l) No Joint Venture. Nothing contained herein shall be construed
----------------
to render the Agency in any way or for any purpose a partner, joint venturer,
or associated inany relationship with Redeveloper other than that of Agency
and Redeveloper, nor shall this Lease be construed to authorize either party
to act as agent for the other.
(m) Exhibits. All exhibits to which reference is made in this Lease
--------
are hereby incorporated by reference. Any reference to "this Lease" includes
matters incorporated by reference.
(n) Entire Agreement; Modification. This Lease contains the entire
------------------------------
agreement between the parties. No verbal agreement or implied covenant shall
be held to vary the provisions hereof, any statements, law or custom to the
contrary notwithstanding. No promise, representation, warranty, or covenant
not included in this Lease has been or is relied on by either party. Each
party has relied on its own inspection of the Property and examination of this
Lease, the counsel of its own advisors, and the warranties, representations,
and covenants in this Lease itself. The failure or refusal of either party to
inspect the Property, to read this Lease or other documents, or to obtain
legal or other advice relevant to this transaction constitutes a waiver of any
objection, contention, or claim that
-63-
might have been based on such reading, inspection, or advice. No provision of
this Lease may be amended or varied except by an agreement in writing signed
by the parties hereto and the lender under a permitted first leasehold
encumbrance or their respective permitted successors.
(o) Joint and Several Obligations. "Party" shall mean Agency or
-----------------------------
Redeveloper; and if more than one person is Agency or Redeveloper, the
obligations imposed on that party shall be joint and several.
(p) Severability. The invalidity or illegality of any provision
------------
shall not affect the remainder of this Lease and all remaining provisions
shall, notwithstanding any such invalidity or illegality, continue in full
force and effect.
(q) Consents of Agency. Neither Agency's execution of this Lease
------------------
nor any consent or approval given by Agency hereunder in its capacity as
Agency shall waive, abridge, impair or otherwise affect Agency's powers and
duties as a governmental body. Any requirements under this Lease that
Redeveloper obtain consents or approvals of Agency or the City are in addition
to and not in lieu of any requirements of law that Redeveloper obtain
approvals, licenses, or permits.
(r) Records. Agency or any representative or designee thereof may
-------
at any time during normal business hours, upon 48 hours' notice, examine the
books and records of Redeveloper, or any officer, employee, agent, contractor,
affiliate, related person, assignee or franchise, to the extent that such
books and records relate, directly or indirectly, to the operation and income
of the Card Club from the Property. Redeveloper shall keep all such records
at the Property or at another location in Los Angeles County approved by
Agency.
(s) Recordation of Memorandum of Lease With Option to Purchase. This
----------------------------------------------------------
Lease shall not be recorded. A memorandum of the Lease with Option to
Purchase shall be recorded. The parties shall execute the memorandum in form
and substance approved by Agency and as required by the title insurance
company insuring Redeveloper's leasehold estate, and sufficient to give
constructive notice of this Lease and the option to purchase set forth herein
to subsequent purchasers and lenders.
(t) Execution in Counterparts. This Lease, or the memorandum of
-------------------------
this Lease, or both, may be executed in two or more counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement at
Compton, California, as of the date first written above.
-64-
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF
▇▇▇▇▇▇▇ ("Agency")
By:__________________________________________
Chairman
ATTEST:
___________________________
Secretary
COMPTON ENTERTAINMENT, INC., a California
corporation ("Redeveloper")
By:__________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
-65-
EXHIBIT 1
LEGAL DESCRIPTIONS
ENTIRE PROPERTY
---------------
▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇, ▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇ Map No. 7899, in the City of ▇▇▇▇▇▇▇,
per map recorded in Book 79, Pages 47-49, of Parcel Maps, Official Records, Los
Angeles County, California.
Parcels 1 and 2 of Parcel Map No. 8669, in the City of ▇▇▇▇▇▇▇, per map
recorded in Book 87, Page 9, of Parcel Maps, Official Records, Los Angeles
County, California.
▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇▇▇ ▇ ▇▇▇▇▇▇ Map No. 10784, in the City of ▇▇▇▇▇▇▇, per
map recorded in Book 112, Pages 96 and 97, of Parcel Maps, Official Records, Los
Angeles County, California.
Convention Center Parcel/2/
------------------------
Parcel 1 of Parcel Map No. 10784, in the City of ▇▇▇▇▇▇▇, per map recorded
in Book 112, Pages 96 and 97, of Parcel Maps, Official Records, Los Angeles
County, California, reserving and excepting therefrom easements for access to,
support of and parking for the Hotel Parcel.
Hotel Parcel/1/
------------
A parcel of air space which includes a nine (9) story hotel containing 290
guest rooms and ancillary areas such as lobbies, restaurant, kitchen, bars,
commercial areas and the like, on Parcel 1 of Parcel Map No. 10784, in the City
of ▇▇▇▇▇▇▇, per map recorded in Book 112, Pages 96 and 97, of Parcel Maps,
Official Records, Los Angeles County, California.
Parking Parcels
---------------
Parcels 2, 3, and 4 Parcel Map No. 10784, in the City of ▇▇▇▇▇▇▇, per map
recorded in Book 112, Pages 96 and 97, of Parcel Maps, Official Records, Los
Angeles County, California.
Expansion Parcels
-----------------
-----------
/2/ The legal descriptions of the Hotel Parcel and the Convention Center Parcel
are subject to change based upon legal descriptions prepared by a licensed civil
engineer and approved by Agency and Redeveloper prior to the close of escrow for
the Convention Center Parcel.
-66-
Parcels 2, 7, 8, 9, and 11, of Parcel Map No. 7899, in the City of
▇▇▇▇▇▇▇, per map recorded in Book 79, Pages 47-49, of Parcel Maps, Official
Records, Los Angeles County, California.
Parcels 1 and 2 of Parcel Map No. 8669, in the City of ▇▇▇▇▇▇▇, per map
recorded in Book 87, Page 9, of Parcel Maps, Official Records, Los Angeles
County, California.
-67-
EXHIBIT 2
SITE PLAN
[to be inserted]
-68-
EXHIBIT 3
SCHEDULE OF PERFORMANCE
1. Execution of the DDA by Agency and Within 15 days of Agency
Redeveloper approval
2. Amendment of Redeveloper's Card Club Within 60 days of Agency
License from the City of ▇▇▇▇▇▇▇ and approval
the City's adoption of an ordinance
to waive transient occupancy taxes and
valet taxes until the valet parking
operation at the Hotel is profitable
3. Redeveloper's Approval of Preliminary By May __, 1995
Title Report
4. Redeveloper's Approval of ALTA Survey By June 15, 1995
5. Redeveloper's approval of Physical By June 15, 1995
Condition of the Property
6. Recordation of Memorandum of Lease for On the close of escrow for the
the Project and issuance of leasehold Convention Center Parcel or
policy of title insurance July 31, 1995, whichever first
occurs (the "Effective Date")
7. Redeveloper's submission of Design Within 45 days after Agency's
Development Drawings execution of the DDA
8. Agency's approval or disapproval of Within 30 days after receipt of
Design Development Drawings same from Redeveloper
9. Redeveloper's delivery to Agency of Within 90 days after the
financing commitments for the Project Effective Date
10. Agency's approval of Redeveloper's Within 30 days from submittal
financing for the Project
11. Redeveloper's Submission of the Final Within 120 days after the
Construction Plans for Development Effective Date
of the Project (including construction
drawings) sufficient to obtain building
permits for the Initial Improvements
12. Agency's Approval of Final Construction 60 days after delivery of same
Plans (including construction drawings, to City and Agency, provided
and final grading and landscaping plans) they are acceptable to City
and Agency
13. Payment of fees and issuance of permits Within 30 days of approval of
for grading and site work, and plans
commencement of grading and site work
-69-
14. Payment of fees and issuance of building Within 10 days after issuance
permits and commencement of construction of grading permit
of the Initial Improvements
15. Commencement of Construction of Within 10 days from approval of
remaining work any construction plans
16. Completion of Construction of the Initial Within 12 months after the
Improvements and rehabilitation of Hotel, Effective Date, subject to the
and opening of the Hotel for business length of any delays by the
Agency or City in approving
plans or specifications from
the time periods set forth
herein, and subject to Force
Majeure
17. Opening of the Card Club for business Within 30 days of issuance of
a state license
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EXHIBIT 4
CONDITIONS OF CONSTRUCTION
1. Submittal of Design Development Drawings and Preliminary Construction
---------------------------------------------------------------------
Budgets. Redeveloper shall prepare and deliver to Agency Design Development
-------
Drawings and a Preliminary Construction Budget for the proposed Initial
Improvements to the Property. Upon Agency's reasonable approval of both the
Design Development Drawings and the Preliminary Budget, Redeveloper shall have
the right to partition the work represented by the Design Drawings in a manner
which will promote the most expeditious construction and completion of the
Initial Improvements. Notwithstanding the foregoing Redeveloper shall not
commence construction as to any portion of the work until such time as Agency
has approved complete Final Construction Plans, or if applicable, Final Interior
Design Documents, and the Budget relative to the portion of work for which
Redeveloper desires to commence construction.
"Design Development Drawings" shall be prepared by a licensed architect or
engineer, and shall include, but not be limited to, preliminary grading and
drainage plans, soil tests, utilities, sewer and service connections, locations
of ingress and egress to and from public thoroughfares, curbs, gutters,
parkways, street lighting, designs and locations for outdoor signs, storage
areas, and landscaping. The Design Development Drawings shall be based upon the
Scope of Development, and shall enable Agency to make an informed judgment about
the design and quality of construction. They shall also include delineation of
landscape and architectural features, floor plans, sections and elevations, site
treatment, proposed building materials and proposed colors, and other features.
The Design Development Drawings shall describe all major design features, as
well as the size, character and quality of the Project as to architectural and
structural systems. Key details of the Project will be provided and samples of
key materials to be used in public visible areas shall accompany the drawings.
With the Design Development Drawings, Redeveloper shall deliver to Agency the
certificate of the person who prepared the plans and specifications certifying
that Agency has fully paid for them or waiving payment and waiving any right to
a lien for preparing them and permitting Agency to use the Design Development
Drawings without payment for purposes relevant to and consistent with this DDA.
"Final Interior Design Documents" are those Final Construction Plans relating to
the interior design of the Initial Improvements.
-71-
2. Submittal of Final Construction Plans and Final Interior Design
---------------------------------------------------------------
Documents. Prior to the commencement of construction of any portion of the
---------
Initial Improvements, Redeveloper shall prepare complete Final Construction
Documents or, if applicable, Final Interior Design Documents, and submit such
documents to Agency for its approval. Upon receipt of approval from Agency,
Redeveloper may commence construction in a manner consistent with the approved
Final Construction Plans or Final Interior Design Documents.
3. Submittal of Construction Budgets. Upon obtaining bids relative to
---------------------------------
approved Construction Documents or Interior Design Documents, Redeveloper shall
submit to Agency a "bid based" Construction Budget outlining specific costs
associated with the work to be performed pursuant to the approved Construction
Documents or Interior Design Documents. Agency shall have the right to review
such bid based budgets and request any additional information reasonably
necessary to ascertain the appropriateness and reasonableness of the items
contained within such bid based Construction Budget. Agency may, in the exercise
of its reasonable, good faith judgment, determine whether the proposed budget is
unreasonable, and in such case, then the unreasonable portion shall not be
included in the Rent Reduction/Credit, unless such cost is shown to be
reasonable pursuant to the arbitration provisions of this paragraph. If the
parties cannot agree on a final budget, the question of whether such charge is
appropriate and reasonable shall be submitted to binding arbitration in
accordance with the Construction Industry Rules of the American Arbitration
Association. In no case shall payments be made to affiliates of the Redeveloper
without the Agency's prior written consent.
4. Final Construction Plan Documents. Redeveloper shall submit to Agency
---------------------------------
all Final Construction Plans approved by the appropriate governmental agencies
for issuance of the necessary permits to complete the Initial Improvements.
Changes from the Final Construction Plans may be made without the prior written
approval by Agency only if: a) they are not substantial or are made to comply
with exceptions, requests or requirements of any governmental agency or official
in connection with the inspection or approval of the work undertaken; or b) if
they do not materially depart in size, utility or value from the Initial
Improvements described in the Construction Documents or, if applicable, the
Interior Design Documents previously submitted to Agency.
-72-
5. Final Cost Breakdowns. Upon completion of the Initial Improvements,
---------------------
Redeveloper shall deliver to Agency a Final Cost Breakdown relative to the
Initial Improvements for which Redeveloper is requesting a rent credit pursuant
to Section 6 of the DDA. The form and content of the Final Cost Breakdown shall
be subject to Agency's reasonable approval and shall not deviate materially from
the Construction Budget absent good cause therefor (other than negligence or
mismanagement on the part of Redeveloper) being shown. Any dispute with respect
to such deviation shall be submitted to arbitration as provided herein above.
6. Procedure for Qualification of Rent Credits. As a condition precedent to
-------------------------------------------
Agency's, application of the rent credit described in Section 6 of the DDA,
Redeveloper shall provide to Agency evidence verifying the expenditures
represented in the Final Cost Breakdown. Such evidence may include, but not be
limited to, original paid invoices, names and addresses of persons or firms who
have furnished any work, labor or materials in connection with items contained
in the Final Cost Breakdown and/or receipts indicating full payment of
particular items contained in the Final Cost Breakdown. Agency reserves the
right to refuse to provide a rent credit as to particular items for which Agency
has evidence that such item was either not expended or paid in full; provided,
however, that Redeveloper shall have the right to cure any alleged misallocation
by presenting any contrary evidence to Agency. Redeveloper shall pay for and may
include in the cost of the Initial Improvements any construction manager,
project manager, accountants, auditors or supervisors hired by Agency, at
Agency's reasonable discretion, for the purposes of reviewing and inspecting the
course of construction and determining or confirming the appropriate rent credit
to be applied. Agency's representatives shall have the right to attend regular
construction meetings held by Redeveloper and its superintendents, contractors
and subcontractors. Redeveloper shall not be entitled to receive any rent credit
for materials or labor not actually incorporated into or used for the Initial
Improvements. During the course of construction, Redeveloper shall provide
Agency's representative (or Agency's Executive Director if no representative has
been appointed) with copies of all periodic or special reports with respect to
the work received by Redeveloper from its contractors, subcontractors,
architects, engineers or other consultants and, at least monthly, with a
statement of expenditures made to date.
7. Performance Bonds. Redeveloper shall
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provide a labor and material payment bond and a performance bond acceptable to
the Agency naming the Agency as co-obligee thereon; provided, however, if
Hollywood Park, Inc., shall guaranty to the Agency's satisfaction completion of
the Initial Improvements, then the Redeveloper shall not be required to provide
a labor and material payment bond or performance bond.
8. City and Other Governmental Agency Permits and Approvals. Before
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commencement of construction, Redeveloper shall secure, or cause to be secured,
any and all permits which may be required by the City of ▇▇▇▇▇▇▇ or any other
governmental agency having jurisdiction over the construction or development of
the Project. Redeveloper shall carry out the construction of the Initial
Improvements in conformity with all applicable laws, including all applicable
Federal, State and local occupation, safety and health laws, rules, regulations
and standards.
9. Selection of Consultants. Redeveloper shall have the sole right to
------------------------
select architects, landscape architects, consultants, engineers, interior
designers, and contractors for the Project, provided such selection does not in
any way violate or contradict any portion of the DDA. Agency shall select any
consultants to perform the services described in Section 6 hereof.
10. Cooperation of Agency. Agency shall cooperate with Redeveloper in
---------------------
providing a "fast track" basis of construction to expedite the design,
construction and furnishing of the Initial Improvements. Additionally, Agency
shall cooperate with Redeveloper in expediting any necessary permits or
approvals on the part of the City of ▇▇▇▇▇▇▇ for any portions of the work to be
performed.
11. Plans and Data. If the DDA is terminated for any reason, Redeveloper
--------------
shall deliver to Agency, without a cost or expense to Agency, copies of any and
all maps, architectural designs, engineering plans, drawings, studies, reports,
surveys or data pertaining to the Project, provided Redeveloper has title to
such items and the right to transfer such items free of claims or interest of
any third party. Additionally, upon completion of the work, Redeveloper shall
provide Agency with a set of "as built" plans for the Project.
12. Notification of Commencement of Work. Redeveloper shall notify Agency
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of Redeveloper's intention to commence a work of improvement at least twenty
(20) days before commencement of any such work or delivery of any materials in
connection therewith. The notice shall
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specify the approximate location and nature of the intended improvements. Agency
shall have the right to post and maintain on the Property any notices of
nonresponsibility provided for under applicable law, and to inspect the property
in relation to the construction at all reasonable times.
13. Cost of Construction; Mechanics' Liens. Except to the extent of any
credit to Base Rent received by Redeveloper, the entire cost of constructing the
Initial Capital Improvements shall be borne by Redeveloper. Redeveloper shall
keep the Property free and clear of all mechanics' and materialmen's liens
resulting from construction done by or for Redeveloper. Redeveloper shall have
the right to contest the correctness or the validity of any such lien if,
immediately on demand by Agency, Redeveloper procures and records a lien release
bond issued by a corporation authorized to issue surety bonds in California in
an amount equal to one and one-half times the amount of the claim of lien. The
bond shall meet the requirements of Civil Code (S)(S)3143 and shall provide for
the payment of any sum that the claimant may recover on the claim (together with
costs of suit, if it recovers in the action). Redeveloper shall hold harmless,
defend and indemnify Agency and the Property and the property against all
liability and loss of any type arising out of work performed on the Property by
Redeveloper, together with reasonable attorneys' fees and all costs and
expenses reasonably incurred by Agency in negotiating, settling, defending or
otherwise protecting against such claims. If Redeveloper does not cause to be
recorded the bond described in California Civil Code Section 3142 or otherwise
protect the Property under any alternative or successor statue, and a final
judgment has been rendered against Redeveloper by a court of competent
jurisdiction for the foreclosure of a mechanics' materialman's, contractor's or
subcontractor's lien claim, and if Redeveloper fails to stay the execution of
the judgment by lawful means or to pay the judgment, Agency shall have the
right, but not the duty, to pay or otherwise discharge, stay or prevent the
execution of any such judgment or lien or both. Redeveloper shall reimburse
Agency for all sums paid by Agency under this section, together with all
Agency's attorneys fees and costs, plus interest on those sums, fees, and costs,
at the maximum legal rate that may be charged by non-exempt lenders under the
usury laws of the State of California. On completion of any substantial work of
improvement during the term, Redeveloper shall file or cause to be filed a
notice of completion. Redeveloper hereby appoints Agency as Redeveloper's
attorney-in-fact to file the notice of completion on Redeveloper's failure to do
so after the work of improvement has been substantially completed.
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EXHIBIT 5
SCOPE OF DEVELOPMENT
[To Be Inserted]
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TABLE OF CONTENTS
Page
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RECITALS
1. Purchase and Sale of the Convention Center Parcel 2
2. Lease of the Hotel and Other Parcels 4
3. Title and Survey 5
4. Term 6
5. Rent 7
6. Rent Reduction/Credit 8
7. Additional Consideration 9
8. Taxes 9
9. Use and Compliance with Laws 10
10. Physical Condition of the Property 12
11. Construction by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. Certificate of Completion 17
13. Utilities and Services 18
14. Maintenance 18
15. Alterations 19
16. Destruction 19
17. Insurance and Indemnity 22
18. Condemnation 26
19. Assignment, Subletting and Encumbering 28
20. Default 30
21. Agency's Entry on Property 36
22. Notices 37
23. Interest on Past-due Obligations 37
24. Attorneys' Fees 37
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Page
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25. Estoppel Certificates 38
26. Surrender of Property 38
27. Form of Nondiscrimination and Nonsegregation Clauses; Local
Hiring and Affirmative Action 39
28. Local Contractors 40
29. Expansion parcels 40
30. Option to ▇▇▇▇▇▇▇▇ ▇▇
▇▇. Holding Over 43
32. Force Majeure; Extension of Times of Performance 44
33. Sale or Transfer by Agency 44
34. Limitation on Recourse Against Agency 44
35. Redeveloper's Representations and Warranties 45
36. Agency's Representations and Warranties 46
37. Miscellaneous 47
(a) Governing Law 47
(b) Time of Essence 47
(c) Additional Rent 47
(d) Quiet Enjoyment 47
(e) Transfer of Agency's Interest 47
(f) Waiver 47
(g) Brokers 48
(h) Headings 48
(i) Inspection Of Books and Records 48
(j) Merger 48
(k) Gender; Number 48
(l) No Joint Venture 48
(m) Exhibits 48
(n) Entire Agreement; Modification 48
(o) Joint and Several Obligations 49
(p) Severability 49
(q) Consents of Agency 49
(r) Records 49
(s) Recordation of Memorandum of Lease With Option to Purchase 49
(t) Execution in Counterparts 49
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EXHIBIT 1 LEGAL DESCRIPTIONS 1
EXHIBIT 2 SITE PLAN 1
EXHIBIT 3 SCHEDULE OF PERFORMANCE 1
EXHIBIT 4 CONDITIONS OF CONSTRUCTION 1
EXHIBIT 5 SCOPE OF DEVELOPMENT 1
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