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EXHIBIT 10.76
LEASE AGREEMENT
By and Between
▇▇▇▇▇▇ FAMILY TRUST
AND
NEVADA ▇▇▇▇▇▇ ▇▇▇▇
as
Landlord
and
CLOOBECK ENTERPRISES
AND
GRAND CASINOS NEVADA I, INC.
as
Tenant
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TABLE OF CONTENTS
1. PREMISES AND TERM................................................... -1-
1.1. Premises ...................................................... -1-
1.2. Term .......................................................... -2-
1.3. No Representations ............................................ -2-
2. CONSTRUCTION........................................................ -2-
2.1. Approval of Plans and Specifications........................... -2-
2.2. Landlord's Improvement Work ................................... -2-
2.3. Supervising Architect and General Contractor................... -3-
2.4. Completion Bond ............................................... -3-
2.5. Commencement of Tenant's Construction ......................... -3-
2.6. Liability ..................................................... -4-
2.7. Insurance...................................................... -4-
2.8. No subordination of Landlord's Fee Title ...................... -4-
2.9. Notice of Non-Responsibility .................................. -4-
2.10.Liens and Fees ................................................ -5-
2.11.Ownership of Improvements ..................................... -5-
▇.▇▇.▇▇▇▇ Use Matters .............................................. -5-
3. RENT AND SECURITY DEPOSIT........................................... -6-
3.1. Base Rent...................................................... -6-
3.2. Increase in Base Rent.......................................... -6-
3.3. Place of Payment............................................... -7-
3.4. Security Deposit............................................... -7-
3.5. Interest on Tenant's Obligations; Late Charges................. -8-
4. HOLDING OVER BY TENANT.............................................. -9-
5. FEASIBILITY PERIOD.................................................. -9-
6. USES................................................................ -10-
6.1. Permitted Use.................................................. -10-
6.2. Prohibited Uses................................................ -10-
7. REPRESENTATIONS AND CONVENANTS OF LANDLORD.......................... -10-
7.1. Title.......................................................... -10-
7.2. Condemnation................................................... -10-
7.3. Legal Proceedings.............................................. -11-
7.4. Special Assessments............................................ -11-
7.5. Binding Obligation............................................. -11-
7.6. No Violation of Law............................................ -11-
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7.7. Environmental Matters ........................................ -11-
7.8. Existing Leases .............................................. -11-
7.9. Gaming ....................................................... -11-
8. UTILITIES........................................................... -11-
9. TAXES .............................................................. -12-
9.1. Payment....................................................... -12-
9.2. Contest ...................................................... -12-
9.3. Substitute Taxes ............................................. -13-
9.4. Installment Payments.......................................... -13-
10. INSURANCE........................................................... -13-
10.1. Fire Insurance ............................................... -13-
10.2. Liability Insurance .......................................... -13-
10.3. Worker's Compensation ........................................ -14-
10.4. Policy Requirements .......................................... -14-
11. REPAIRS............................................................. -14-
12. ALTERATIONS ........................................................ -15-
12.1. Landlord Consent.............................................. -15-
12.2. Permits ...................................................... -15-
12.3. Tenant's Architect ........................................... -15-
12.4. Construction ................................................. -15-
12.5. Inspection ................................................... -15-
12.6. Liens ........................................................ -16-
12.7. Insurance .................................................... -16-
13. EQUIPMENT, FIXTURES AND SIGNS....................................... -16-
13.1. Equipment and Fixtures ....................................... -16-
13.2. Permitted Signage ............................................ -16-
14. DAMAGE BY FIRE OR OTHER CASUALTY.................................... -17-
14.1. Restoration .................................................. -17-
14.2. Use of Insurance Proceeds .................................... -17-
14.3. Additional Cost of Restoration ............................... -17-
14.4. No Rent Abatement ............................................ -18-
15. CONDEMNATION........................................................ -18-
15.1. Termination .................................................. -18-
15.2. Partial Condemnation.......................................... -18-
15.3. Payment of Award.............................................. -▇▇-
▇▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ................................................ -19-
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16. LIABILITY AND INDEMNIFICATION....................................... -19-
16.1. Tenant Indemnity ............................................. -19-
16.2. Notice of Indemnity .......................................... -19-
16.3. Survival ..................................................... -20-
17. RIGHT OF INSPECTION ................................................ -20-
18. WARRANTY OF TITLE AND QUIET ENJOYMENT............................... -20-
18.1. Ouiet Enjoyment............................................... -20-
18.2. Encumbrances.................................................. -20-
18.3. Transfer by Landlord.......................................... -21-
19. WAIVER OF SUBROGATION............................................... -22-
20. FORCE MAJEURE....................................................... -22-
21. NO BROKERS.......................................................... -23-
22. LANDLORD-TENANT RELATIONSHIP ....................................... -23-
23. ASSIGNMENT AND SUBLETTING........................................... -23-
23.1. Assignment and Subletting .................................... -23-
23.2. Assignment to Affiliate ...................................... -23-
23.3. No Release or Novation ....................................... -23-
23.4. Encumbrance or Assignment as Security......................... -24-
24. NOTICES AND PAYMENTS ............................................... -31-
25. DEFAULT............................................................. -33-
25.1. Events of Default ............................................ -33-
25.2. Landlord's Remedies........................................... -34-
26. HAZARDOUS MATERIALS ................................................ -35-
26.1. Covenant...................................................... -35-
26.2. Right of Entry................................................ -36-
26.3. Indemnity..................................................... -36-
26.4. Hazardous Substances Defined.................................. -36-
26.5. Landlord's Legal Obligations.................................. -37-
27. MISCELLANEOUS....................................................... -37-
27.1. Termination................................................... -37-
27.2. Captions...................................................... -37-
27.3. Meanings...................................................... -37-
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27.4. Successors and Assigns Entire Agreement .................... -37-
27.5. Entire Agreement............................................ -38-
27.6. Time........................................................ -38-
27.7. Severability................................................ -38-
27.8. Counterparts................................................ -38-
27.9. Attorney's Fees............................................. -38-
27.10. Memorandum of Lease......................................... -38-
27.11. Governing Law............................................... -38-
28. GAMING PROVISION................................................... -38-
28.1 Cooperation and Compliance by Landlord...................... -38-
28.2 Denial...................................................... -39-
28.3 Purchase Right.............................................. -39-
29. ARBITRATION........................................................ -40-
30. GUARANTY........................................................... -42-
31. LANDLORD'S SECURITY INTEREST....................................... -42-
31.1. Grant of Security Interests in Project Parcels.............. -42-
31.2. Grant of Security Interests in Furniture, Fixtures and
Equipment................................................... -43-
31.3 Perfection and Priority..................................... -44-
31.5 Further Assurances.......................................... -45-
32. TENANT'S OPTION TO PURCHASE THE LEASED PREMISES.................... -45-
33. BINDING OBLIGATION................................................. -46-
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TABLE OF EXHIBITS
Exhibit A The Land
Exhibit B Tenant's Renderings
Exhibit C Title Exceptions
Exhibit D Permitted Conditions
Exhibit E Guaranty
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LEASE AGREEMENT
This Lease Agreement (the "LEASE") is made and entered into by and between
▇▇▇▇▇▇ FAMILY TRUST and NEVADA ▇▇▇▇▇▇ ▇▇▇▇ (collectively, "LANDLORD"), and
CLOOBECK ENTERPRISES, a California corporation, and GRAND CASINOS NEVADA
I, INC., a Minnesota corporation (collectively, "TENANT") as of this 17th day of
June, 1996 (hereinafter, THE "EFFECTIVE DATE")
WITNESSETH:
1. PREMISES AND TERM.
1.1 Premises. In consideration of the obligation of Tenant to pay rent as
hereinafter provided and in consideration of the other terms, provisions and
covenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby takes from Landlord, those certain tracts or parcels of land located in
the County of ▇▇▇▇▇, State of Nevada, and more particularly described on
Exhibit A attached hereto and made a part hereof (the "Land"), together with
any buildings and other improvements erected or to be erected thereon, and
together with all rights, privileges, easements and appurtenances belonging or
in any way pertaining to the Land (all of the foregoing hereinafter
collectively referred to as the "LEASED PREMISES").
The Leased Premises is now the subject of two existing leases -- (i) a
lease dated May 1, 1987 between the ▇▇▇▇▇▇ Family Trust and Travelodge
International Incorporated (the "TRAVELODGE LEASE") and (ii) a lease dated May
1, 1992 between the ▇▇▇▇▇▇ Family Trust and Moving Forward, Inc. (the "MOVING
FORWARD LEASE"). Subject to the following terms of this paragraph, Landlord
hereby assigns its rights and obligations under the Travelodge Lease and the
Moving Forward Lease (collectively, the "EXISTING LEASES") to Tenant. Tenant
will indemnify and hold Landlord harmless from any claims arising out of any
breach of the Existing Leases by Tenant. All rents accruing and received under
the Existing Leases from and after the Effective Date during the term of this
Lease shall be paid to Tenant; provided, however, that rents received by Tenant
pursuant to the Existing Leases shall first be applied against any rents which
became due and payable during the thirty (30) day period preceding the
Effective Date, and the same shall be paid to Landlord. Concurrently herewith,
Landlord shall provide Tenant with a certificate showing any delinquent or past
due rents under the Existing Leases. During the Feasibility Period, as defined
below, it is anticipated that Tenant will attempt to reach an agreement with
the tenants under the Existing Leases allowing Tenant to terminate such leases.
Any buyout amounts or other costs of negotiating such agreements and/or
terminating such leases shall be paid by Tenant. Tenant acknowledges that
Article XXII of the Travelodge Lease grants a right of first refusal to the
tenant thereunder. Unless such right of first refusal is waived by the tenant
under the Travelodge Lease, Landlord shall, promptly after execution of this
Lease, offer the Leased Premises to such tenant in accordance with such right
of first refusal. If such offer is accepted, this Lease shall automatically
terminate and the remaining portion of the Security Deposit, as defined below,
shall be returned to Tenant. Tenant acknowledges that the
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Travelodge Lease contains an early termination provision and that Landlord
has entered into a letter agreement, dated January 3, 1995, with the tenant
under such lease providing for the reimbursement of certain of such tenant's
refurbishment costs in the event of early termination. Any amounts payable
under such lease provision or side letter shall likewise be due and payable by
Tenant. Similarly, Tenant acknowledges that the Travelodge Lease provides for a
maintenance reserve (the "TRAVELODGE RESERVE") which is to be paid to Landlord
upon termination of the Travelodge Lease. All funds held in or payable to the
Travelodge Reserve as of the Effective Date, which the parties agree to be Four
Hundred Thirty-Nine Thousand Four Hundred Forty-Four Dollars and Ninety Cents
($439,440.90), (the "EXISTING RESERVE AMOUNT") shall be the sole and exclusive
property of Landlord, and Tenant shall have no interest therein. Any amounts
added to the Travelodge Reserve after the Effective Date shall be the sole and
exclusive property of the Tenant. In no event shall Tenant terminate either of
the Existing Leases until Tenant's right of termination set forth in Paragraph
5 below expires or is waived by Tenant, and in no event shall Tenant terminate
the Travelodge Lease unless the tenant thereunder releases the Existing Reserve
Amount to Landlord promptly upon such termination.
1.2. Term. The term of this Lease shall commence upon the Effective Date
and shall continue, unless sooner terminated pursuant to the provisions of this
Lease, for ninety-nine (99) years (the "LEASE TERM").
1.3. No Representations. Landlord makes no representations or warranties
concerning the Leased Premises or any matters with respect thereto, except as
expressly stated herein. Except for such representations, Tenant is entering
into this Lease based on its own investigation and analysis of the Leased
Premises.
2. CONSTRUCTION.
2.1. Approval of Plans and Specifications. Landlord has had the
opportunity to review, and Landlord has approved a preliminary site plan and
rendering prepared by ▇▇▇▇ ▇▇▇▇▇▇▇▇, Ltd. for the hotel/casino and other
related improvements which Tenant intends to be constructed on the Land
(collectively, the "IMPROVEMENTS"). Reductions of such Tenant's Renderings are
attached to this Lease as Exhibit "B" and incorporated herein by this
reference. For purposes of this Lease, "TENANT'S RENDERINGS" means the
above-referenced site plan and rendering and any modifications thereof which
either do not require Landlord's approval or which have been approved or deemed
approved by Landlord in accordance with the terms of this Lease. Tenant shall
deliver to Landlord for approval any material modification of Tenant's
Renderings. Within a period of fifteen (15) days from the date of delivery of
such modified Tenant's Renderings, Landlord shall either approve the same
(which approval shall not be unreasonably withheld, delayed or conditioned and
shall be conclusively presumed if Landlord fails to specify its objections and
reasons therefor within such fifteen (15) day period) or specify its objections
thereto and reasons therefor in detail by written notice delivered to Tenant on
or before the end of said fifteen (15) day period. In the event Landlord shall
specify objections to any modification of Tenant's Renderings hereunder during
the Feasibility Period (as defined in Article 5 below), and if Landlord and
Tenant are unable to resolve such objections by mutual agreement within a
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period of ten (10) days from the date of Tenant's receipt of written
notice of such objections, tenant, at its sole option, may terminate this Lease
by written notice to Landlord within five (5) days after the expiration of such
ten (10) day period, in which event any remaining Security Deposit, as defined
in Section 3.4 below, shall be released to Tenant. If Landlord specifies
objections to a modification of Tenant's Renderings within the Feasibility
Period, and if Tenant does not terminate this Lease pursuant to the preceding
sentence, then Tenant shall promptly revise Tenant's Renderings to fully
accommodate and conform to Landlord's written objections, subject to the terms
of any written agreements between Landlord and Tenant as to the manner in which
any of such objections may be accommodated to the mutual satisfaction of
Landlord and Tenant. Any revision of Tenant's Renderings which is approved by
Landlord shall be signed by Landlord and Tenant and shall be deemed a part
hereof. Notwithstanding the foregoing provisions of this Section 2.1, if
Landlord acts unreasonably or in bad faith in disapproving any modification of
Tenant's Renderings during the Feasibility Period, then, upon termination by
Tenant hereunder, Landlord shall refund to Tenant any Base Rent paid by Tenant
pursuant to Section 3.1 prior to such termination. If Landlord disapproves a
proposed modification of Tenant's Renderings after the Feasibility Period has
expired, and if Tenant claims that Landlord has acted unreasonably in doing so,
Tenant may submit such dispute to binding arbitration pursuant to Article 29
below. Within one hundred eighty (180) days after completion of the
Improvements, Tenant shall deliver a complete set of the as-built plans for the
Improvements to Landlord.
2.2. Landlord's Improvement Work. Landlord shall have no obligation
whatsoever to improve or alter the Land nor to demolish any improvements which
may now be located upon the Land.
2.3. Supervising Architect and General Contractor. Selection of a
supervising architect and general contractor shall be made by Tenant. The
supervising architect shall be a member in good standing of the American
Institute of Architects or any generally recognized similar organization and,
if applicable, the general contractor's financial condition and responsibility
shall be such as to enable Tenant to obtain the completion bond required by the
following Section 2.4.
2.4. Completion Bond. Prior to undertaking any demolition or construction
upon the Leased Premises, Tenant shall provide Landlord with a completion bond
acceptable to Landlord in the amount of the projected costs of constructing the
proposed Improvements, and the amount of such bond shall be increased from
time to time to reflect any increases in the projected costs of such
construction. Tenant shall have the right to name any Leasehold Mortgagee as
co-obligee on any such bond. Similarly, Tenant shall, upon request from
Landlord, name Landlord's assignee and/or lender, if any, as co-obligee on any
such bond. In lieu of such completion bond, Tenant may present to Landlord a
binding written commitment to finance the costs of constructing the Improvements
from a lender which would qualify as a Leasehold Mortgagee under the provisions
of Section 23.4.
2.5. Commencement of Tenant's Construction. Within ninety (90) days after
any material portion of the improvements which are the subject of the Existing
Leases has been
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demolished (other than as a result of fire or other casualty), Tenant
shall commence the construction of the Improvements and thereafter proceed with
such construction substantially in accordance with Tenant's Renderings with all
reasonable diligence and in a good and workmanlike manner.
2.6. Liability. Tenant covenants and agrees that the Improvements shall be
constructed, operated, repaired and maintained without cost or expense to
Landlord and in accordance with the requirements of all laws, ordinances,
codes, orders, rules and regulations of all governmental authorities having
jurisdiction over the Leased Premises and in a good and workmanlike manner.
Tenant agrees to defend, indemnify and hold Landlord, its trustees,
beneficiaries, heirs, successors, assigns, agents, employees and attorneys
harmless from and against any and all cost, liability, expense, damage or
injury resulting from or arising in connection with the construction,
operation, repair and maintenance of the Improvements.
2.7. Insurance. Prior to commencing any demolition or construction on the
Leased Premises, Tenant, its subcontractors and agents, without cost to
Landlord, shall obtain Builder's Risk Insurance covering such project and
improvements to the full extent of the insurable value thereof, and Tenant
shall cause its contractor to obtain or cause to be obtained Workers'
Compensation Insurance covering all persons employed in connection with such
demolition or construction and with respect to whom death or bodily injury
claims could be asserted against Landlord, Tenant or the Leased Premises.
Tenant shall also obtain General Liability Insurance naming both Landlord and
Tenant as co-insureds for the mutual benefit of Landlord, Tenant and the Leased
Premises. All of the aforementioned policies shall be in the form and shall
contain the liability limits specified in Article 10 hereof. Tenant and its
contractors and subcontractors shall have the right, however, to self-insure
with respect to its workers' compensation insurance obligations to the extent
permitted by applicable law.
2.8. No subordination of Landlord's Fee Title. Landlord shall not be
required to subordinate Landlord's fee interest in the Leased Premises or its
reversionary interest in the buildings and improvements to be constructed
thereon to any lien securing Tenant's construction loan or other financing.
2.9. Notice of Non-Responsibility. Landlord may, at Landlord's is sole
discretion, record a Notice of Non-Responsibility to assure that Landlord's
interest in the Leased Premises cannot be encumbered by mechanics' liens or
materialmen's liens arising from Tenant's activity upon the Leased Premises.
Further, with respect to any work after Tenant's initial construction which
costs in excess of One Million Dollars ($1,000,000) (which amount shall
increase annually during the Lease Term by the same percentage as Base Rent is
increased pursuant to Section 3.2 below), at least ten (10) days before any
such work is commenced (or such additional time as may be reasonably required
by Landlord in the future to reflect changes in the law with respect to posting
and/or recording notices of non-responsibility), Tenant shall notify Landlord
of Tenant's intention to commence any such work.
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2.10. Liens and Fees. Tenant shall at all times indemnify, save and
hold harmless Landlord and Landlord's trustees, beneficiaries, heirs,
successors, assigns, agents, employees and representatives and the Leased
Premises against all liens or claims which may ripen into liens, and against all
attorneys' fees and other costs and expenses, growing out of or incurred by
reason of or with respect to any demolition or construction done by or for
Tenant on the Leased Premises. Should Tenant fail to fully discharge any such
lien or claim, or in the alternative fail to post a bond sufficient to discharge
such lien or claim within thirty (30) days after written request therefor by
Landlord, then Landlord, at its option, may pay the same or any part thereof.
Landlord shall be the sole judge of the legality of such lien or claim and the
sufficiency of any bond. All amounts so paid by Landlord, together with interest
thereon at the rate of fifteen percent (15%) per annum from the time of payment
until repayment, shall be repaid by Tenant as additional rent on the next rent
payment date after notice of payment by Landlord.
2.11. Ownership of Improvements. During the term of this Lease all
movable trade fixtures and equipment (collectively, "TENANT'S PERSONAL
PROPERLY") shall remain and continue to be the property of Tenant and may be
replaced at any time and from time to time during the term of this Lease.
Tenant's Personal Property may be removed at the expiration or earlier
termination of this Lease if Tenant repairs any damage to the Improvements
caused by such removal and the removal does not affect or in any way weaken the
structural integrity of the Improvements; provided that no such repair shall be
required, and the structural integrity of the Improvements may be affected or
weakened, if Landlord requires that the Improvements be removed from the Land,
and if Tenant removes the Improvements as provided in this Section 2.11. Title
to the Improvements constructed on the Leased Premises shall be vested in
Tenant. All such Improvements shall remain on the Leased Premises and
automatically become the property of Landlord upon the expiration or earlier
termination of this Lease unless Landlord gives written notice to Tenant that
any or all such Improvements are to be removed, in which case Tenant shall
remove the same and regrade the Land to a finish grade in accordance with
Landlord's reasonable requirements, at Tenant's sole cost and expense, within
sixty (60) days of the expiration or earlier termination of this Lease or notice
from Landlord, whichever is later, as to that portion of the Leased Premises
upon which such Improvement to be removed is situated. If Tenant fails to remove
any Improvement, as required by this Paragraph 2.11, then Landlord may undertake
and complete such removal, and the cost of such removal, together with interest
thereon at the rate of fifteen percent (15%) per annum, shall be payable on
demand from Tenant to Landlord.
2.12. Land Use Matters. Provided Landlord's written consent has first
been obtained (which consent will not be withheld if Tenant demonstrates to
Landlord's reasonable satisfaction that the matters described in or contemplated
by this paragraph would not at any time materially adversely affect Landlord's
use or development of the Leased Premises upon the expiration or earlier
termination of this Lease and which consent will be conclusively presumed if
Landlord fails to specify its objections and reasons therefor within thirty (30)
days after Landlord's receipt of a written request therefor from Tenant), and
provided, further, that no Event of Default then exists, Tenant, at its sole
expense and without cost or expense to Landlord, may enter into any agreement
(including without limitation any reciprocal easement agreement and lot tie
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agreements) restricting the use or alienation of the Leased Premises or granting
easements over the Leased Premises and may apply for and obtain subdivisions,
parcel maps, use permits or zoning changes or variances with respect to the
Leased Premises. Subject to such requirement of prior written consent, and
subject to Landlord's right, at Landlord's cost, to have Landlord's planning and
zoning counsel participate with Tenant in all such matters, Landlord shall, upon
notice of request by Tenant, join with Tenant as necessary in any reciprocal
easement agreement or lot tie agreements and in applications to obtain such
subdivisions, parcel maps, use permits or use or zoning changes or variances,
all at Tenant's expense and without cost or expense to Landlord. Subject to the
conditions set forth in the preceding sentence, Landlord shall cooperate with
Tenant's efforts to obtain entitlements for the development of Tenant's
Improvements provided that such cooperation is without additional cost or
expense to Landlord. Landlord specifically agrees to make such usual and
customary dedications of land to ▇▇▇▇▇ County as may be required as a condition
to the approval of Tenant's project; provided that no such dedication shall
result in a reduction in rent payable by Tenant hereunder.
3. RENT AND SECURITY DEPOSIT.
3.1. Base Rent.
3.1.1. Phase I. For the period beginning upon the Effective Date
and ending upon the date which immediately precedes the earlier of (i) the date
which is eighteen (18) months after the Effective Date, or (ii) the date upon
which a certificate of occupancy is issued with respect to the hotel/casino
project which Tenant intends to construct upon the Leased Premises (the
"Project"), or (iii) October 31, 1997 (the earlier of such three (3) dates being
sometimes referred to herein as the "PHASE II COMMENCEMENT DATE"), Tenant
shall pay a base rent of NINE HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS
($945,000.00) per annum ($78,750.00 per month) (the "PHASE I BASE RENT").
3.1.2. Phase II. For the period beginning upon the Phase II
Commencement Date and continuing until an adjustment is made pursuant to Section
3.2 below, Tenant shall pay a base rent of TWO MILLION AND N0/100 DOLLARS
($2,000,000.00) per annum ($166,667.00 per month) (the "PHASE II BASE RENT").
The Phase I Base Rent and the Phase II Base Rent are sometimes referred to
herein collectively as "BASE RENT".
Base Rent shall be paid to Landlord in lawful money of the United States on the
first day of each calendar month during the Term of this Lease, without any
other reduction, deduction or setoff, provided that the first installment of
Base Rent shall be due and payable upon the Effective Date. Base Rent for any
partial calendar month during which the Term commences or terminates shall be
prorated based on the actual number of days in such month.
3.2. Increases in Base Rent. Beginning on the first day of the calendar
month in which the first annual anniversary of the Phase II Commencement Date
occurs, and upon the same day of each year thereafter during the Lease Term
(hereinafter, an "ADJUSTMENT DATE"), the Base Rent shall be increased to an
amount equal to the product of the Base Rent payable during the
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immediately preceding calendar month multiplied by the Cost of Living Factor.
The "COST OF LIVING FACTOR" for any Adjustment Date during the Term of this
Lease shall be a fraction whose numerator is the index figure stated as the
Consumer Price Index for All Urban Consumers (CPI-U; U.S. City Average; All
Items 1982-84=100) published by the Bureau of Statistics of the United States
Department of Labor (the "INDEX") for the month in which the Adjustment Date
occurs (or the most recent available Index if the Index for the month in which
the Adjustment Date occurs is not available) and whose denominator is the Index
in effect on the Phase II Commencement Date, in the case of the first adjustment
hereunder, or the Index used for the immediately preceding Adjustment Date, in
the case of all adjustments after the first adjustment hereunder. Regardless of
the actual Cost of Living Factor, however, the Base Rent shall be increased each
year hereunder by not less than three percent of the Base Rent payable during
the immediately preceding year but not by more than five percent of such Base
Rent. If the Index is discontinued, the Cost of Living Factor shall be based on
comparable statistics on changes in the purchasing power of the consumer dollar
for the applicable periods, as published by a responsible financial periodical
report of a recognized governmental or private authority then generally
recognized for such purposes, all as selected by Landlord.
3.3. Place of Payment. All payments of Base Rent and other sums due
from Tenant to Landlord pursuant to this Lease (sometimes collectively referred
to herein as "RENT") shall be made to Landlord as the same shall become due in
lawful money of the United States of America at the address specified in Section
24 of this Lease, or to such other party or at such other address as hereinafter
may be designated by Landlord by written notice delivered to Tenant at least ten
(10) days prior to the next ensuing monthly rental payment date.
3.4. Security Deposit. Concurrently with the execution of the Lease,
Tenant shall deposit the total sum of ONE MILLION NINE HUNDRED SEVENTEEN
THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($1,917,500.00) as a "SECURITY
DEPOSIT". ONE MILLION FOUR HUNDRED SEVENTEEN THOUSAND FIVE HUNDRED AND N0/100
DOLLARS ($1,417,500.00) of such sum (together with interest thereon, the
"PHASE I SECURITY DEPOSIT") may be deposited in the form of cash or an
irrevocable standby letter of credit which is reasonably acceptable to
Landlord, or any combination thereof as Tenant may elect in its sole
discretion, and Tenant shall have the right from time to time to substitute
one such form of deposit for the other. To the extent that the Phase I
Security Deposit is paid in cash, the same shall be deposited with and held by
Nevada Title Insurance Company (the "ESCROW AGENT"). The Escrow Agent shall
invest such funds in U.S. Government Money Market Funds as instructed by Tenant
(so long as such funds remain readily available for disbursement in accordance
with this Lease) with the interest being reinvested, and monthly sums equal to
the Phase I Base Rent shall be disbursed to Landlord by the Escrow Agent from
the Phase I Security Deposit as such Base Rent payments come due. To the extent
that the Phase I Security Deposit is in the form of a letter of credit, the
same shall be delivered to Landlord; provided that Landlord shall not draw upon
the Letter of Credit to pay rent due under this Lease unless the same is
delinquent and is not paid to Landlord within five (5) days after written
notice of such delinquency is given to Tenant. Any cash portion of the Phase I
Security Deposit remaining in the escrow account upon the Phase II Commencement
Date which is not required to be paid to Landlord shall be released
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to Tenant. Similarly, if Tenant has delivered a letter of credit to Landlord in
satisfaction of its obligations with respect to the Phase I Security Deposit,
and if Tenant has not defaulted in the performance of its obligations under this
Lease, the same shall be returned to Tenant promptly following the Phase II
Commencement Date. The remaining portion of the Security Deposit, being FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00)(the "PHASE II SECURITY
DEPOSIT") shall be deposited with Landlord by cashier's check or by wire
transfer to Landlord's account. Landlord shall have no obligation to pay
interest with respect to such funds (except as provided in the following
sentence) nor to segregate such funds from its other accounts and assets. The
Phase II Security Deposit, together with interest thereon in the amount of Five
Hundred Thousand Dollars ($500,000) (for a total amount of One Million Dollars
($1,000,000), shall be credited against one-half of each monthly payment of Base
Rent coming due during the eleventh (11th) year after the Phase II
Commencement Date and thereafter until such amount has been fully credited.
If there exists an Event of Default under this Lease, including but not
limited to the provisions relating to the payment of rent, Landlord may, but
shall not be required to, use, apply or retain all or any part of the Security
Deposit for the payment of any rent or any other sum in default, or for the
payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's default,
including without limitation, reasonable costs and attorneys' fees incurred by
Landlord to recover possession of the Leased Premises upon a default by Tenant
hereunder. If any portion of said deposit is so used or applied, Tenant shall,
upon demand therefor, deposit cash with the Escrow Agent, or, in the case of the
Phase I Security Deposit, a letter of credit with Landlord in an amount
sufficient to restore the security deposit to its original amount and Tenant's
failure to do so shall constitute a default hereunder by Tenant. Tenant shall
have no obligation, however, to replace that portion of the Phase I Security
Deposit which is disbursed by the Escrow Agent to Landlord as payment for Base
Rent pursuant to the preceding paragraph.
3.5. Interest on Tenant's Obligations; Late Charges.
3.5.1. Interest. Any amount due from Tenant to Landlord which is
not paid within ten (10) days after the date due shall bear interest at fifteen
percent (15%) from the date such payment is due until paid, but the payment of
such interest shall not excuse or cure any default by Tenant under this Lease.
3.5.2. Late Charge. In the event Tenant is more than fifteen
(15) days late in paying any installment of rent due under this Lease,
Tenant shall pay Landlord a late charge equal to five percent (5%) of the
delinquent installment of rent. The parties agree that the amount of such late
charge represents a reasonable estimate of the cost and expense that would be
incurred by Landlord in processing each delinquent payment of rent by Tenant,
but the payment of such late charge shall not excuse or cure any default by
Tenant under this Lease. The parties further agree that the payment of late
charges and the payment of interest provided for in this Section 3.5 are
distinct and separate from one another in that the payment of interest is
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to compensate Landlord for the use of Landlord's money by Tenant, while the
payment of a late charge is to compensate Landlord for the additional
administrative expense incurred by Landlord in handling and processing
delinquent payments.
4. HOLDING OVER BY TENANT. Should Tenant or any assignee, sublessee or
licensee of Tenant fail to vacate the Leased Premises or any part thereof
after the expiration or earlier termination of the Lease Term, unless otherwise
agreed in writing, such failure to vacate shall constitute and be construed as
a tenancy from month-to-month upon the same terms and conditions as set forth
in this Lease; provided, however, that Tenant shall pay as Base Rent during any
holding over period, an amount equal to one and 50/100 (1.50) times the Base
Rent payable immediately preceding the expiration of the Lease Term. Nothing
contained in this Article 4 shall be construed as a consent by Landlord to any
holding over by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Leased Premises upon the expiration of
the Lease Term or upon the earlier termination hereof and to assert any remedy
in law or equity to evict Tenant and/or collect damages in connection with such
holding over.
5. FEASIBILITY PERIOD. Tenant shall have the right to terminate the Lease
at any time during the first ninety (90) days after the Effective Date (the
"FEASIBILITY PERIOD"), by written notice to Landlord, if Tenant, acting
reasonably and in good faith, determines that (i) the physical condition of the
Leased Premises is not suitable for the construction and operation of Tenant's
proposed Project, including, but not limited to, unsatisfactory environmental
conditions; (ii) Tenant will be unable, despite Tenant's best efforts, to obtain
the zoning and other governmental entitlements which are necessary for the
construction and use of Tenant's proposed Project; (iii) Tenant is unable,
despite Tenant's best efforts, to reach an agreement with the tenant under the
Moving Forward Lease on terms which are satisfactory to Tenant, which will allow
Tenant to terminate such lease in a timely manner; or (iv) Tenant is unable,
despite Tenant's best efforts, to obtain a leasehold title insurance policy
through Escrow Agent insuring Tenant's interest in the Leased Premises subject
only to standard title policy exceptions and to other title exceptions to which
Tenant does not reasonably object (hereinafter, "PERMITTED EXCEPTIONS"); or (v)
Tenant is unable to obtain estoppel certificates from the tenants under the
Existing Leases; or (vi) the Leased Premises is determined to be located in a
flood hazard area. Any notice of termination hereunder shall set forth in detail
the reasons for such termination. Upon any termination hereunder and payment of
Base Rent owing through and including the date of Tenant's termination. Tenant
shall assign the existing Leases to Landlord, Landlord shall return the Phase II
Security Deposit and any Phase I Security Deposit letter of credit to Tenant and
instruct the Escrow Agent to return the remaining cash portion of the Phase
I Security Deposit to Tenant, and all other obligations accruing under the Lease
after the date of termination shall be of no further force or effect. Tenant may
also terminate this Lease during the Feasibility Period for any other reason,
but, upon any termination by Tenant prior to the expiration of the Feasibility
Period for a reason other than those listed in items (i) through (vi) above,
Tenant shall assign the Existing Leases to Landlord, the Escrow Agent shall
immediately disburse the remaining portion of the Phase I Security Deposit to
Landlord (or, if the Phase I Security Deposit is in the form of a letter of
credit and if Tenant does not replace such letter of credit by cash paid to
Landlord, Landlord shall draw the remaining amount of the Phase I Security
Deposit), Landlord shall retain the Phase
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II security deposit and all other obligations accruing under the Lease after the
date of termination shall be of no further force or effect.
6. USES.
6.1. Permitted Use. Tenant shall have the right to develop the Leased
Premises for any lawful use. Landlord specifically agrees that Tenant may
develop and use a portion of the Leased Premises as a "Right to Use Time Share"
project. Tenant shall have the right to use and develop the Leased Premises in
conjunction with adjoining property, subject to Article 31 below. If any
governmental license or permit is required for the lawful conduct of any
business or other activity carried on by Tenant in the Leased Premises, and if
the failure to obtain such license or permit would affect Landlord, Tenant shall
procure and maintain such license or permit so long as the same is so required,
make such license or permit available for inspection, if practicable, by
Landlord and comply at all times with all terms and conditions thereof
6.2. Prohibited Uses. Tenant covenants and agrees that it will not use
or suffer or permit any person or persons to use the Leased Premises or any part
thereof for any use or purpose in violation of the laws of the United States of
America or the laws, ordinances, regulations and requirements of the State of
Nevada, ▇▇▇▇▇ County or other lawful authorities having jurisdiction. Nothing
contained herein shall be deemed to prevent Tenant from contesting the
application or interpretation of such laws or the determinations of any such
lawful authority so long as (i) Landlord is given written notice thereof prior
to the commencement of any such contest; (ii) such contest is prosecuted by
Tenant with all reasonable diligence; and (iii) Tenant provides Landlord with
such assurances or security as Landlord may reasonably require so that neither
the Leased Premises nor Landlord's rights under this Lease may be adversely
affected by such contest.
Tenant shall promptly upon demand by Landlord reimburse Landlord for
any additional premium charged for any insurance policy by reason of Tenant's
failure to comply with the provisions of this Article 6 and for any other costs
reasonably incurred by Landlord in enforcing the provisions of this Section.
7. REPRESENTATIONS AND COVENANTS OF LANDLORD. As of the Effective
Date of this Lease, Landlord represents, warrants and covenants to Tenant as
follows:
7.1. Title. That Landlord has good and marketable fee simple title to
the Leased Premises, subject to those exceptions which are set forth in Exhibit
"C" and such other matters as would be disclosed by an ALTA survey of the Leased
Premises, possesses full power and authority to deal therewith in all respects
and no other party has any right or option thereto or in connection therewith;
7.2. Condemnation. That, except as provided in Section 15.4, there
are no pending or, to the knowledge of Landlord, threatened condemnation
proceedings or actions affecting the Leased Premises;
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7.3. Legal Proceedings. That there are no pending or, to the knowledge
of Landlord, threatened actions or legal proceedings which could adversely
affect the Leased Premises or Tenant's rights under this Lease (Landlord has
disclosed to Tenant that a personal injury action has been filed against
Landlord and the tenant under the Travelodge Lease with respect to a
slip-and-fall type accident which is alleged to have occurred on public property
adjacent to the Travelodge premises and Landlord shall hold Tenant harmless from
any liability or expense in connection with such action);
7.4. Special Assessments.
(a) With the exception of Assessment Districts 97A and 97B
which are described in Article 9 below, that there are no unpaid special
assessments for sewer, sidewalk, water, paving, electrical or power improvements
or other capital expenditures or improvements, matured or unmatured;
(b) Landlord is not delinquent in the payment of assessments due
with respect to Assessment Districts 97A and 97B.
7.5. Binding Obligation. That this lease and the consummation of the
transactions contemplated hereby is valid and binding upon Landlord (and the
individuals executing this Lease on behalf of Landlord represent and warrant
that they are authorized to so act) and does not constitute a default (or an
event which with notice or passage of time or both will constitute default)
under any contract to which Landlord is a party or by which Landlord is bound;
7.6. No Violation of Law. That Landlord has not received notice nor has
Landlord any knowledge of any violation of any law, regulation, ordinance, order
or other requirement of any governmental authority having jurisdiction over or
affecting any part of the Leased Premises;
7.7. Environmental Matters. Landlord has no actual knowledge of any
noncompliance or violation of local, state or federal environmental laws related
to the Leased Premises;
7.8. Existing Leases. The copies of the Existing Leases furnished to
Tenant by Landlord are true, correct and complete copies of such leases, and
Landlord is not aware of any default by Landlord or by either of the tenants
under the Existing Leases; and
7.9. Gaming. Neither Landlord nor, to the best of Landlord's knowledge
(without investigation), any person or entity associated with Landlord has ever
engaged in any conduct or practices which any of the foregoing persons should
reasonably believe would cause Landlord to be denied any gaming or other
governmental approval which may be required for Tenant to operate its business
upon the Leased Premises.
8. UTILITIES. Tenant shall pay all charges incurred for the use of
utility services at the Leased Premises including, without limitation, gas,
electricity, water, sanitary sewer, storm sewer, cable television, and
telephone. If any of such charges are not separately assessed against the
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Leased Premises, Tenant shall pay its pro rata share of such charges, as
reasonably determined by Landlord, within ten (10) days after receipt of written
demand therefor from Landlord. Tenant shall pay all utility connection charges,
including, without limitation, any sewer "hook-up" fees and similar charges.
Tenant shall be entitled to any credit against such fees and charges which may
be allowed by the utility provider for existing sewer "equivalent residential
units" ("ERU's") at the Leased Premises.
9. TAXES, ASSESSMENTS AND OTHER GOVERNMENTAL IMPOSITIONS.
9.1. Payment. Subject to the following sentence, Tenant shall pay,
within thirty (30) days after written demand from Landlord, all real estate
taxes, assessments (both general and special) and other governmental impositions
which are levied against the Leased Premises, specifically including, without
limitation, all payments due with respect to the Las Vegas Strip beautification
project Assessment District Nos. 97A and B; provided that Tenant shall have no
obligation to pay any of such taxes, assessments and impositions more than ten
(10) days prior to the date the same are due to the taxing authority, and
provided, further, that to the extent the tenants under the Existing Leases are
required to pay the same, compliance with such leases shall constitute
compliance hereunder. Tenant's obligations under this Section 9.1 shall extend
only to taxes, assessments and impositions which are properly allocable to the
Lease Term. Any such tax, assessment, imposition or other similar expense which
is properly allocable to any period prior to the Effective Date shall be the
obligation of the tenants under the Existing Leases.
9.2. Contest. Tenant may, if it shall so desire, contest the validity
or amount of any tax or assessment against the Leased Premises, in which event
Tenant may defer the payment thereof during the pendency of such contest if
applicable law so permits; provided, however, that Tenant shall not allow any
tax lien to be foreclosed on the Leased Premises, and, unless such tax is paid
under protest, not later than ten (10) days prior to the date the same shall
become delinquent, Tenant shall have (i) deposited with a bank or trust company
acceptable to Landlord, an amount sufficient to pay such contested item(s)
together with the interest and penalties thereon (as reasonably estimated by
Landlord) with written instructions to said bank or trust company to apply such
amount to the payment of such item(s) when the amount thereof shall be finally
fixed and determined (with the remainder to be paid to Tenant), or (ii) provided
Landlord with other reasonably acceptable security. Landlord will, at the
request of Tenant, cooperate with Tenant in contesting any such taxes or
assessments; provided, however, there shall be no expense to Landlord in such
cooperation. In the event Landlord is required by law to join in any action or
proceeding taken by Tenant to contest any such taxes or assessments, Tenant
shall indemnify, defend and hold Landlord and Landlord's trustees,
beneficiaries, heirs, successors, assigns, agents, employees and representatives
harmless from any and all costs, fees (including, but not limited to reasonable
attorneys' fees), expenses, claims, judgments, orders, liabilities, losses or
damage arising out of such action or proceeding.
If, at any time, in the judgment of Landlord reasonably exercised, it
shall become necessary so to do, Landlord, after written notice to Tenant, may,
under protest if so requested by Tenant, pay such monies as may be required to
prevent the transfer of the Leased Premises
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to the ▇▇▇▇▇ County Treasurer or the sale of the Leased Premises or any part
thereof, or foreclosure of the lien created thereon by such item, and such
amount shall become immediately due and payable by Tenant to Landlord, together
with interest thereon at the rate of fifteen percent (15%) per annum, and shall
constitute additional rent hereunder, or at Tenant's option and at Tenant's sole
cost and expense, in lieu thereof, Tenant shall obtain lien release bonds in
amounts equal to the claims of any such liens or as otherwise required by
applicable law to obtain the full release of such liens.
9.3. Substitute Taxes. Notwithstanding anything herein to the contrary,
if at any time during the Lease Term there shall be levied or assessed in
substitution of real estate taxes, in whole or in part, a tax, assessment or
governmental imposition (other than a general gross receipts or income tax) on
the rents received from the Leased Premises or the rents reserved herein, and
said tax, assessment or governmental imposition shall be imposed upon Landlord,
Tenant shall pay same as hereinabove provided, but only to the extent that such
new tax, assessment or governmental imposition is a substitute for real estate
taxes previously imposed.
9.4. Installment Payments. Notwithstanding anything herein to the
contrary, if at any time during the Lease Term any assessment (either general or
special) is levied upon or assessed against the Leased Premises or any part
thereof, and such assessment may be paid in installments, and if Tenant elects
to pay such assessment in installments, Tenant's obligation under this paragraph
to pay such assessment shall be limited to the amount of such installments (plus
applicable interest thereon charged by the taxing authority, if any) which
become due during the Lease Term.
10. INSURANCE.
10.1. Fire Insurance. Tenant shall maintain so called "all risk" fire
and extended coverage insurance (including vandalism and malicious mischief
insurance, earthquake insurance and flood insurance) on the Improvements, with a
limit of or in an amount not less than one hundred percent (100%) of the
replacement value thereof, less the cost of excavations, foundation, footings
and underground tanks, conduits, pipes, pilings and other underground items.
Payments for losses shall be made to a third party escrow or construction
control account which is reasonably acceptable to Landlord and Tenant (and, if
applicable, any Leasehold Mortgagee named as loss payee hereunder), and shall be
disbursed from such account to Tenant and Tenant's contractors to pay for the
restoration of the Improvements in accordance with the provisions of this Lease.
Tenant may include the holder of any Leasehold Mortgage as a loss payee provided
that the proceeds of such insurance required hereunder shall be used for the
repair and reconstruction of the Improvements, subject only to conditions
permitted pursuant to Section 23.4. Any such Leasehold Mortgagee which is named
as loss payee shall be deemed an acceptable construction control escrow for
purposes of this Section 10.1.
The full replacement value of the items to be insured under this
Section 10.1 shall be determined by the company issuing the insurance policy at
the time the policy is initially obtained. Not more frequently than once every
year, Landlord shall have the right to notify
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Tenant that it elects to have the replacement value redetermined by the
insurance company. The redetermination shall be made promptly and in accordance
with the rules and practices of the Board of Fire Underwriters or a like board
recognized and generally accepted by the insurance company, and each party shall
be promptly notified of the results by the company. The insurance policy shall
be adjusted according to the redetermination.
10.2. Liability Insurance. Tenant shall also insure against property
damage and public liability arising by reason of occurrences on or about the
Leased Premises by maintaining a policy or policies of commercial general
liability insurance including contractual liability coverage insuring against
the tort liabilities assumed under this Lease, on an "occurrence" basis, with a
primary liability limit of not less than ONE MILLION AND NO/100 DOLLARS
($1,000,000.00), and an excess coverage limit of not less than FORTY-NINE
MILLION DOLLARS ($49,000,000). Not more frequently than once each two (2) years,
if, in the opinion of Landlord's lender or of the insurance broker retained by
Landlord, the amount of public liability and property damage insurance coverage
at that time is not adequate, Tenant shall increase the insurance coverage as
required by Landlord's lender or as may be reasonably required by Landlord's
insurance broker.
10.3. Worker's Compensation. Tenant shall maintain (at its sole cost
and expense) workers' compensation and employers' liability insurance covering
all of its employees as required of the laws of the State of Nevada. Tenant
shall have the right to self-insure with respect to such required coverage to
the extent permitted by applicable law.
10.4. Policy Requirements. Except for workers' compensation insurance,
all insurance policies required to be maintained by Tenant hereunder shall be
with responsible insurance companies, authorized to do business in the State of
Nevada if required by law, and, except for workers' compensation policies, shall
name Landlord as an additional insured or, with respect to property insurance to
be maintained pursuant to Section 10. 1 above, loss payee, as its interests may
appear, and shall provide for cancellation only upon thirty (30) days prior
written notice to Landlord. Except for workers' compensation insurance, Tenant
shall evidence all insurance coverage by delivering to Landlord, prior to taking
possession of the Land, and thereafter from time to time upon request by
Landlord, certificates issued by the insurance companies, if any, underwriting
such risks. Except for workers' compensation insurance, Tenant shall, at least
ten (10) days prior to the expiration of any such policy, furnish Landlord with
renewals or "binders" thereof or certificates evidencing the same, or Landlord
may order such insurance and charge the cost thereof to Tenant, which amount
shall be payable by Tenant upon demand as additional rent, together with
interest thereon at the rate of fifteen percent (15%) per annum. With respect to
workers' compensation insurance, Tenant shall furnish Landlord with reasonable
evidence that Tenant has complied with its obligations under this Lease.
11. REPAIRS. Tenant shall take good care of the Leased Premises (including
the Improvements constructed by Tenant) during the Lease Term and shall maintain
the same in a first class condition and state of repair, including repairs to
the interior, exterior and structure, it being understood that Landlord shall
not be required to make any repairs to the Leased
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Premises during the Lease Term. At the end or other termination of this Lease,
and subject to Section 2.11 and Section 14.1 of this Lease, Tenant shall deliver
up the Land with the Improvements thereon, in good repair and condition,
ordinary wear and tear, depreciation and obsolescence being excepted.
12. ALTERATIONS. Tenant shall have the right to make, at its sole
cost and expense, additions, alterations and changes (hereinafter referred to as
"ALTERATIONS") in or to the Improvements, provided Tenant shall not then be in
default in the performance of any of Tenant's covenants or agreements in this
Lease, and subject to the following conditions:
12.1. Landlord Consent. No Alterations of any kind which would cause
the Improvements to materially deviate from Tenant's Renderings approved by
Landlord shall be made without the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed and shall be conclusively
presumed to have been given if objections and reasons therefor are not given by
Landlord within fifteen (15) days after written request from Tenant. Landlord's
review and approval of Tenant's plans and specifications shall be limited to the
effect of the subject Alteration on the exterior appearance and site plan of the
Improvements.
12.2. Permits. No Alterations shall be undertaken until Tenant shall
have procured and paid for, so far as the same may be required, from time to
time, all required permits and authorizations of ▇▇▇▇▇ County and other
governmental authorities having jurisdiction.
12.3. Tenant's Architect. Any structural Alteration which costs in
excess of One Million Dollars ($1,000,000) (which amount shall increase annually
during the Lease Term by the same percentage as Base Rent is increased pursuant
to Section 3.2 above) shall be conducted under the supervision of an architect
(otherwise qualified under Section 2.3 above) or engineer selected by Tenant and
no such Alteration shall be made except in accordance with detailed plans and
specifications prepared and approved in writing by such architect or engineer.
Any and all such Alterations shall conform, in all material respects, to the
Tenant Renderings approved by Landlord.
12.4. Construction. All Alterations shall be pursued promptly to
completion and shall be done in a good and workmanlike manner and in compliance
with all applicable permits and authorizations and building and zoning laws and
with all other laws, ordinances, orders, rules, regulations and requirements of
all federal, state and local governments, departments, commissions, boards and
officers.
12.5. Inspection. During construction of the Improvements, and subject
to applicable laws and to Tenant's security policies, Landlord shall have the
right to go upon and inspect the Improvements at all reasonable times and upon
reasonable notice and shall have the right to post and keep posted thereon
notices of non-responsibility or such other notices which Landlord may deem to
be proper for the protection of Landlord's interest in the Leased Premises in
such a manner as not to interfere with Tenant's construction.
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12.6. Liens. Tenant shall indemnify, defend, satisfy and hold harmless
Landlord and Landlord's trustees, beneficiaries, heirs, successors, assigns,
agents, employees and representatives from and against all claims, reasonable
attorneys' fees and other costs and expenses growing out of or incurred by
reason of or with respect to liens for labor or materials supplied or claimed to
be supplied in connection with Alterations done by or for Tenant. Should Tenant
fail to fully discharge any such lien or claim, or in the alternative fail to
post a bond sufficient to discharge such lien or claim within thirty (30) days
after written request therefor by Landlord, then Landlord, at its option, may
pay the same or any part thereof and shall be the full judge of the legality of
such lien or claim and the sufficiency of any bond. All amounts paid by
Landlord, together with interest thereon at the rate of fifteen percent (15%)
per annum from the time of payment until repayment, shall be repaid by Tenant as
additional rent on the next rent payment date after notice of payment by
Landlord.
12.7. Insurance. Prior to making any material Alterations to any
building or work of improvement, Tenant and Tenant's subcontractors and agents
shall obtain Workers' Compensation and Builder's Risk and Liability Insurance in
such amounts and form as required by Section 2.7 hereof.
13. EQUIPMENT, FIXTURES AND SIGNS.
13.1. Equipment and Fixtures. Tenant shall have the right to erect,
install, maintain and operate on the Leased Premises such equipment, trade and
business fixtures, and other personal property as Tenant may deem necessary or
appropriate, and such shall not be deemed to be part of the Leased Premises, but
shall remain the property of Tenant, as provided in Section 2.11 above. Any such
installations shall not materially injure or deface the Improvements. At any
time during the Lease Term and within thirty (30) days after termination hereof,
Tenant shall have the right to remove its equipment, fixtures, signs and other
personal property from the Leased Premises provided that Tenant is not then in
default. Tenant's Personal Property may be removed at the expiration or earlier
termination of this Lease if Tenant repairs any damage to the Improvements
caused by such removal and the removal does not affect or in any way weaken the
structural integrity of the Improvements; provided that such repair shall not be
required and the structural integrity of the Improvements may be affected or
weakened, if Landlord requires that the Improvements be removed from the Land,
and if Tenant removes the Improvements pursuant to Section 2.11 above. The
foregoing provisions of this Section 13.1 are subject to Landlord's security
interest in Tenant's "FF&E," as provided in Article 31 below; provided that
nothing herein shall be deemed to limit Tenant's right to dispose of items of
Tenant's Personal Property in the ordinary course of Tenant's business, so long
as Tenant maintains Personal Property which is at all times sufficient for the
operation of the Improvements.
13.2. Permitted Signage. Tenant shall be entitled to such signage as
may be permitted under applicable law. Tenant's rights under this Section 13.2
are subject to Tenant's receipt of any and all necessary governmental approvals,
permits and consents.
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14. DAMAGE BY FIRE OR OTHER CASUALLY.
14.1. Restoration. Except as otherwise provided in this Section 14.1,
Tenant shall repair, at Tenant's cost, any damage to Improvements (including
any damage for which no insurance coverage was obtained or obtainable). In the
event all or any substantial portion of the Improvements shall be damaged or
destroyed in whole or in part by fire or any other casualty such that the cost
to repair and restore the Improvement exceeds ten percent (10%) of the
replacement cost of the Improvements, Tenant shall, at Tenant's option either
(i) proceed diligently to repair or rebuild the Improvements as nearly as
possible to the value, condition, quality and character immediately prior to
such damage or destruction, subject to Tenant's right to alter the same in
accordance with Article 12; or (ii) demolish the Improvements and regrade the
Land to finish grade in accordance with Landlord's reasonable requirements. If
Tenant elects to proceed with option (ii), Tenant shall deliver to Landlord,
prior to such demolition, a cash security deposit in the amount of the annual
Base Rent then payable pursuant to Section 3.1 and 3.2 above (the "ADDITIONAL
SECURITY DEPOSIT"), and the Guaranty described in Article 30 below shall,
notwithstanding any contrary provision thereof, be reinstated and continue in
full force and effect for the remainder of the Lease Term. Any remaining Phase
II Security Deposit paid to Landlord pursuant to Section 3.4 above and not
previously applied by Landlord as a result of a Tenant Event of Default pursuant
to such Section 3.4, shall be credited against the amount of the Additional
Security Deposit required hereunder provided that such credited amount shall
not include or bear interest nor be credited against Base Rent pursuant to such
Section 3.4. Landlord shall have no obligation to pay interest on the Additional
Security Deposit nor to segregate such funds from its other accounts and assets.
If there exists an Event of Default under this Lease, including but
not limited to the provisions relating to the payment of rent, Landlord may, but
shall not be required to, use, apply or retain all or any part of the Additional
Security Deposit for the payment of any rent or any other sum in default, or for
the payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant's default, including
without limitation, reasonable costs and attorneys' fees incurred by Landlord to
recover possession of the Leased Premises upon a default by Tenant hereunder. If
any portion of said deposit is so used or applied, Tenant shall, upon demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Additional Security Deposit to its original amount and Tenant's failure to do so
shall constitute a default hereunder by Tenant. After the expiration of the
Lease Term, any remaining balance of the Additional Security Deposit shall be
returned to Tenant.
14.2. Use of Insurance Proceeds. All insurance proceeds with respect
to the Improvements which are paid to Tenant shall, if Tenant elects to rebuild
the Improvements pursuant to Section 14.1, be deposited by Tenant into a third
party escrow or construction control account which is reasonably acceptable to
Landlord and Tenant (and, if applicable, any Leasehold Mortgagee named as loss
payee with respect to such insurance pursuant to Section 10.1), and shall be
disbursed from such account to Tenant and Tenant's contractor for the payment of
the costs of the repair and restoration of the Improvements. Any such Leasehold
Mortgagee which
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is named as loss payee shall be an acceptable construction control account for
purposes of this Section 14.2. Notwithstanding the foregoing, if Tenant elects
to demolish the Improvements pursuant to option (ii) of Section 14.1, all such
insurance proceeds which are not required to be paid to a Leasehold Mortgagee
shall be allocated between and distributed to Landlord and Tenant based upon the
remaining unexpired Lease Term as of the date of the distribution as follows:
(i) Tenant shall receive that portion of such proceeds which is derived by
multiplying the amount of available insurance proceeds by a fraction, the
numerator of which is the length of the remaining unexpired Lease Term
(expressed in years) and the denominator of which is ninety-nine (99); and (ii)
Landlord shall receive the remaining portion of such proceeds.
14.3. Additional Cost of Restoration. If Tenant elects to rebuild the
Improvements pursuant to Section 14.1, and if the insurance proceeds received
by or for the account of Tenant shall be insufficient to pay the entire cost of
such repairs and restoration, Tenant shall supply the amount of any such
deficiency and shall apply the same to the payment of the cost of such repair
and restoration. Under no circumstances shall Landlord be obligated to make any
payment or contribution towards the cost of any repairs and restoration.
14.4. No Rent Abatement. There shall be no abatement of rent as a
result of any casualty, including without limitation, during the period of
repair and rebuilding of the Leased Premises.
15. CONDEMNATION.
15.1. Termination. If all of the Leased Premises (or if less than
all, but the remaining portion will not permit Tenant to operate its business on
the Leased Premises, with sufficient parking therefor), shall be acquired by the
right of condemnation or eminent domain for any public or quasi-public use or
purpose, or sold to a condemning authority under threat of condemnation or in
lieu thereof, then the Lease Term shall cease and terminate as of the date of
title vesting in such proceeding (or sale) and all rent shall be paid up to that
date.
15.2. Partial Condemnation. In the event of a partial taking or
condemnation which takes less than a substantial portion of the Leased Premises
and if the remaining portion will permit Tenant to operate its business on the
Leased Premises, with sufficient parking therefor, then Tenant, at Tenant's sole
cost and expense, shall proceed with reasonable diligence to restore the Leased
Premises to a condition, to the extent practicable, comparable to its condition
at the time of such condemnation less the portion lost in the taking, and this
Lease shall continue in full force and effect but, subject to Section 15.4
below, with a pro rata reduction of rent.
15.3. Payment of Award. In the event of any condemnation, taking or
sale as aforesaid, whether whole or partial, Landlord shall be entitled to the
entire award for the Land. Any award which is paid for the Improvements and
which is not required to be paid to a Leasehold Mortgagee shall be allocated
between and distributed to Landlord and Tenant based upon the remaining
unexpired Lease Term as of the date of the distribution as follows: (i) Tenant
shall receive that portion of such award which is derived by multiplying the
amount of available
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proceeds by a fraction, the numerator of which is the length of the remaining
unexpired Lease Term (expressed in years) and the denominator of which is
ninety-nine (99); and (ii) Landlord shall receive the remaining portion of such
award. However, if the Leased Premises shall be restored by Tenant as herein
provided, Tenant shall first be entitled to recover the costs and expenses
incurred in such restoration out of any such award. Nothing contained in this
Section 15.3 shall be deemed to prevent Tenant from seeking a separate award
from the taking authority for the taking of Tenant's personal property and
fixtures or for relocation and business interruption expenses incurred by Tenant
as a result of the taking.
15.4. ▇▇▇▇▇▇ Avenue. The parties specifically acknowledge that a
portion of the Leased Premises may be condemned to allow for the widening of
▇▇▇▇▇▇ Avenue and that the rent payable under this Lease has been agreed upon in
anticipation of that condemnation. Accordingly, notwithstanding Section 15.2
above, rent shall not be reduced, and this Lease shall continue in full force
and effect, notwithstanding any such condemnation or taking for ▇▇▇▇▇▇ Avenue,
provided that not more than thirty (30) feet of the Leased Premises is so taken
(i.e., not more than thirty (30) feet of depth at any point along the length of
the Leased Premises which is contiguous to ▇▇▇▇▇▇ Avenue). However, if the
widening of ▇▇▇▇▇▇ Avenue results in a taking of more than such thirty (30) feet
of the Leased Premises, the Base Rent shall be reduced pro rata to reflect the
reduction of the size of the Leased Premises (considering only the reduction
in excess of such thirty (30) feet) and proceeds of the award for the taking in
excess of such thirty (30) feet shall be allocated as provided in Section 15.3.
16. LIABILITY AND INDEMNIFICATION.
16.1. Tenant Indemnity. Landlord shall not be liable to Tenant or
Tenant's trustees, beneficiaries, heirs, successors, assigns, employees, agents,
patrons or invitees, or any person whomsoever, for any injury to person or
damage to property caused by or arising as a result of the negligence or
misconduct of Tenant, its employees or agents, or of any other person (other
than Landlord or Landlord's employees or agents) entering upon the Leased
Premises under express or implied invitation of Tenant, as well as any such
damage or injury which is caused by or which arises as a result of Tenant's
breach of this Lease, and Tenant agrees to indemnify, defend and hold Landlord
and Landlord's trustees, beneficiaries, heirs, successors, assigns, members,
agents, employees and representatives harmless from any liability, loss, claim,
damage, cost or expense suffered or incurred by Landlord by reason of any such
damage or injury.
16.2. Notice of Indemnity. Landlord shall provide Tenant notice of any
such claims of liability for which Landlord may seek indemnification pursuant to
Section 16.1 with reasonable promptness and Tenant, at its election, shall have
the right of defense in such proceedings, by counsel of its own choosing, at
Tenant's expense. Landlord shall cooperate fully in all respects with Tenant in
any such defense, including, without limitation, by making available to Tenant
all pertinent information under the control of Landlord. If Tenant does not
notify Landlord within ten (10) days of Landlord's notice to Tenant of a
potential claim that Tenant will defend the same, or should Tenant fail to file
any answer or other pleading at least five (5) days before the same is due,
Landlord may defend or settle such claim or action in such manner as Landlord
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deems appropriate, in its sole discretion but, to the extent such claim is
properly subject to indemnity pursuant to Section 16.1 above, at Tenant's sole
cost and expense. If Tenant so notifies Landlord concurrently with Tenant's
notice of election to defend, Tenant may defend, but not settle, a claim without
waiving its right to assert that such claim is not subject to the indemnity
agreement in this Article 16. If Tenant elects to defend a claim, Landlord may,
at Landlord's expense, participate in such matter with counsel of Landlord's own
choosing.
16.3. Survival. The provisions of this Article 16 shall survive the
termination of this Lease.
17. RIGHT OF INSPECTION. Subject to applicable laws and Tenant's
reasonable security policies, Landlord and its agents and representatives shall
be entitled to enter upon and inspect the Leased Premises at any time during
normal business hours upon prior reasonable notice (or, in the case of an
emergency, at any time and with or without notice), provided only that such
inspection shall not unreasonably interfere with Tenant's business.
18. WARRANTY OF TITLE AND QUIET ENJOYMENT.
18.1. Quiet Enjoyment. Landlord represents and warrants that it is the
owner in fee simple of the Land, and that it alone will have full right to lease
the Leased Premises for the Lease Term set out herein. Landlord further
represents and warrants that Tenant, on paying the rent and performing its
obligations hereunder, shall peaceably and quietly hold and enjoy the Leased
Premises for the Lease Term without any hindrance, molestation or ejection by
Landlord, its successors or assigns, or those claiming by, through, or under
them or anyone claiming under paramount title to Landlord.
18.2. Encumbrances. Landlord represents and warrants that, with the
exception of exceptions shown on Exhibit "C," it has not granted nor created and
covenants that it will not grant, create or suffer any claim, lien, encumbrance,
easement, restriction or other charge or exception to title to the Leased
Premises which would have any material adverse effect upon Tenant's rights or
obligations under this Lease; provided, however, that it is expressly agreed
that Landlord may subject its interest in the Leased Premises to mortgage loans
if its lender shall agree for itself, its successors and assigns: (i) to be
bound by the terms of this Lease; (ii) not to disturb Tenant's use or possession
of the Leased Premises in the event of a foreclosure of such lien or encumbrance
so long as Tenant is not in default hereunder; (iii) not to join Tenant as a
party defendant in any foreclosure proceeding relating to the Project or any
part thereof except as may be required under applicable law. If Landlord's
interest in the Land or in this Lease is sold or conveyed upon the exercise of
any remedy provided for in any such mortgage loan, or otherwise by operation of
law, this Lease will not be affected in any way, and Tenant will attorn to and
recognize the new owner as Tenant's Landlord under this Lease. Tenant will
confirm such attornment in writing within ten (10) days after Tenant's receipt
of a written request for attornment.
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18.3. Transfer by Landlord.
18.3.1 Right of First Offer. If Landlord wishes to sell
the Leased Premises but has not received an offer for the Leased Premises which
it wishes to accept, Landlord shall notify Tenant of its desire to sell. Within
ten (10) days after such notice, Landlord and Tenant shall each appoint a
qualified MAI appraiser, and such appraisers shall determine the value of the
Leased Premises, giving effect to this Lease (and including Landlord's
reversionary interest in the Improvements), within thirty (30) days after being
so appointed. If the values determined by such appraisers do not differ by more
than five percent (5%) of the lower appraisal, then the "APPRAISED VALUE," as
used herein, shall mean the arithmetic average of such two (2) appraisals. If
the two (2) appraisals differ by more than five percent of the lower appraisal,
then the two appointed appraisers shall agree upon a third qualified MAI
appraiser who shall be given a copy of the two (2) previous appraisals and who
shall then determine the Appraised Value, provided that such final Appraised
Value shall not be greater than the higher of the two previous appraisals nor
less than the lower of the two previous appraisals. Landlord and Tenant shall
each bear the cost of their own appraiser and shall share equally the cost of
the third appraiser.
Tenant shall have the right to purchase the Leased Premises at the
Appraised Value provided that it exercises such right by written notice to
Landlord within ten (10) days after the Appraised Value has been determined
pursuant to the preceding paragraph. If Tenant so elects to purchase the Leased
Premises, the Appraised Value shall be paid by cash or cash equivalent and the
closing shall occur within thirty (30) days after Tenant's notice of its
election to purchase the Leased Premises. If Tenant does not so elect to
purchase the Leased Premises, Tenant's right to purchase the Leased Premises
shall expire and have no further force or effect except as provided in the
following Section 18.3.2. However, Tenant's option described in Article 32 shall
remain in full force and effect.
18.3.2. Right of First Refusal. Tenant shall have a right of
first refusal to purchase the Leased Premises in the event that Landlord shall
desire to sell said property and shall have a bona fide offer to purchase the
Leased Premises, whether directly or indirectly, such as by sale of stock in a
corporate Landlord, from a qualified purchaser which Landlord wishes to accept.
No offer to purchase the Leased Premises shall include any other property and
the only consideration shall be cash or a promise to pay cash. Any such offer
shall provide for a closing no earlier than thirty (30) days after expiration of
the thirty (30) day period (or, if applicable, the ten (10) day period) referred
to below. In the event of any such offer, Landlord shall notify Tenant and
provide Tenant with a copy of that offer (except that Landlord shall have no
obligation to disclose the identity of the offeror). Tenant shall then have a
thirty (30) day period of time after receipt of such notice and copy within
which to exercise its right of first refusal, provided that such thirty (30) day
period shall be reduced to ten (10) days if Landlord has, within three hundred
sixty-five (365) days prior to giving notice to Tenant of an offer pursuant to
this Section 18.3.2, offered the Leased Premises to Tenant pursuant to the
preceding Section 18.3.1. In the event Tenant exercises its right of first
refusal, Tenant shall purchase the Leased Premises on the same terms and
conditions and at the same price specified in such offer, including the time for
closing set forth therein. If Tenant does not exercise a right of first refusal
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with respect to a transaction and that transaction is not finalized on the terms
presented to Tenant within one (1) year after the expiration of Tenant's right
of first refusal, the right of first refusal shall be reinstated as to that
proposed purchase. If Tenant does not exercise this right of first refusal with
respect to a transaction and that transaction is finalized within such one (1)
year period, the transferee shall take free of Tenant's right of first refusal,
and free of Tenant's right of first offer under the preceding Section 18.3.1,
which shall not apply to any other proposed sales. However, Tenant's option
described in Article 32 shall remain in full force and effect.
18.3.3. Landlord's Right to Participate in 1031 Exchange.
Notwithstanding the foregoing provisions of Section 18.3.1 and 18.3.2, if Tenant
elects to purchase the Leased Premises, Landlord may elect to participate in a
tax-free exchange under Section 1031 of the Internal Revenue Code. Tenant agrees
to cooperate with such an exchange by Landlord so long as such cooperation is
without cost to Tenant and does not materially affect Tenant's rights hereunder.
Tenant specifically agrees to allow Landlord to postpone the closing of
Tenant's purchase to allow Landlord a reasonable period of time to locate
replacement property.
18.3.4. Sale by Landlord. Landlord has the absolute right to
transfer all or a part of its interest in this Lease to any successor subject to
Section 18.3.1, 18.3.2 and 18.3.3 above. In the event of any sale or other
transfer of all of Landlord's interest in the Leased Premises, including but not
limited to any security deposit, other than a transfer for security purposes
only, Landlord shall automatically be relieved of any and all obligations and
liabilities on the part of Landlord accruing from and after the date of such
transfer, provided that the transferee acknowledges in writing that such
transferee assumes the terms and conditions of this Lease.
19. WAIVER OF SUBROGATION. Landlord and Tenant severally waive any and
every claim which arises or may arise in its favor and against the other during
the Lease Term for any and all loss of, or damage to, any of its property
located within or upon, or constituting a part of, the Leased Premises, which
loss or damage is coveted by valid and collectible fire and extended coverage,
general liability, liquor liability or worker's compensation insurance policies,
to the extent that such loss or damage is recoverable thereunder. Inasmuch as
the above mutual waivers will preclude the assignment of any aforesaid claim by
way of subrogation (or otherwise) to an insurance company (or any other person),
Landlord and Tenant severally agree immediately to give to each insurance
company which has issued to it policies of insurance, written notice of the
terms of said mutual waivers, and to have said insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverages
by reason of said waivers.
20. FORCE MAJEURE. The time for performance by Landlord or Tenant of any
term, provision or covenant of this Lease, other than the payment of amounts due
under this Lease, shall be deemed extended by time lost due to delays resulting
from acts of God, strikes, unavailability of building materials, civil riots,
floods, material or labor restrictions by governmental authority, and any other
cause not within the control of Landlord or Tenant, as the case may be.
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21. NO BROKERS. Tenant warrants that it has not had any contact or
dealings with any person or real estate broker which would give rise to the
payment of any finders' fee or brokerage commission by Landlord in connection
with this Lease, and Tenant shall indemnify, hold harmless and defend Landlord
from and against any liability with respect to any finder's fee or brokerage
commission arising out of any act or omission of Tenant. Landlord warrants that
it has not had any contact with any person or real estate broker which would
give rise to the payment of any finders' fee or brokerage commission by Tenant
in connection with this Lease, and Landlord shall indemnify, hold harmless and
defend Tenant from and against any liability with respect to any finders' fee or
brokerage commission arising out of any act or omission of Landlord.
22. LANDLORD-TENANT RELATIONSHIP. It is further understood and agreed
that the Landlord shall in no event be construed or held to be a partner, joint
venturer or associate of Tenant in the conduct of Tenant's business, nor shall
Landlord be liable for any debts incurred by Tenant in Tenant's business; but it
is understood and agreed that the relationship is and at all times shall remain
that of landlord and tenant.
23. ASSIGNMENT AND SUBLETTING.
23.1. Assignment and Subletting. Tenant shall not assign this Lease
or sublet the whole or any part of the Leased Premises without the prior written
consent of Landlord, which consent Landlord shall not unreasonably withhold,
condition or delay, and shall be conclusively presumed to have been given if
Landlord fails to specify its objections and reasons therefor within fifteen
(15) days after written request from Tenant, provided (i) no Tenant Event of
Default (hereinafter defined) has occurred and is continuing at the time of the
request for consent to the assignment or sublease; (ii) the use to be made of
the Leased Premises by the assignee or subtenant shall be permitted by Article 6
hereof; (iii) the assignee or subtenant, in the case a sublease for all or
substantially all of the Leased Premises, is solvent and financially able to
meet the projected costs of the obligations to be assumed for the unexpired
portion bf the Lease Term as they come due; (iv) any assignee shall assume in
writing the performance of all of the terms, provisions and covenants of this
Lease on the part of Tenant to be kept and performed; (v) Tenant shall deliver
to Landlord within fifteen (15) days (or as soon thereafter as is reasonably
practicable) after the assignment or subletting an executed duplicate of such
agreement, together with a duly executed assumption agreement. Notwithstanding
the foregoing, Tenant shall have the right to sublet portions of the Leased
Premises to Tenant's concessionaires without Landlord's prior consent so long as
such concessionaires, in the aggregate, occupy less than twenty-five percent
(25%) of the Leased Premises.
23.2. Assignment to Affiliate. Tenant shall have the right to assign
this Lease, without Landlord's consent, to assignee which controls or is
controlled by or under common control with Tenant, or either of them.
23.3. No Release or Novation. No assignment or subletting or collection
of rent from the assignee or subtenant (including, without limitation, any
assignment pursuant to the preceding
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Section 23.2) shall be deemed to constitute a novation or in any way release
Tenant from further performance of its obligations under this Lease, and Tenant
shall continue to be liable under this Lease for the balance of the Lease Term
with the same force and effect as if no such assignment had been made.
Notwithstanding the foregoing, Cloobeck Enterprises shall be relieved from all
further liability arising under this Lease from and after the date upon which
Tenant notifies Landlord that Cloobeck Enterprises has assigned all of its
right title and interest in and to this Lease to Grand Casinos Nevada I, Inc.
or to any entity which controls or which is controlled by or under common
control with Grand Casinos Nevada I, Inc.
23.4. Encumbrance or Assignment as Security.
23.4.1. Definitions.
23.4.1.1. The term "LEASEHOLD MORTGAGE" as used in this
Lease shall mean a first mortgage, a first deed of trust, a sale - leaseback
(wherein the leaseback is prior to all other security interests in Tenant's
leasehold estate) or other first priority security instrument or device by which
Tenant's leasehold estate is mortgaged, conveyed, assigned, or otherwise
transferred, to secure a debt or other obligation.
23.4.1.2. The term "LEASEHOLD MORTGAGEE' as used in
this Lease shall refer to an institutional lender (i.e., a savings bank, savings
and loan association, commercial bank, trust company, credit union, insurance
company, college, university, real estate investment trust or pension fund or
any other institution which is recognized nationally or regionally as being in
the business of lending money or serving as the trustee for persons investing in
such debt) which is not affiliated with Tenant and which is the holder of a
Leasehold Mortgage (which in the case of a deed of trust is the beneficiary
thereof and in the case of a sale-leaseback is the lessor) in respect to which
the notice provided for by Section 23.4.3 has been given and received and as to
which the provisions of this Section 23.4 are applicable.
23.4.2. Tenant's Right to Mortgage its Leasehold Interest.
Notwithstanding any other provision contained in this Lease, for the purpose of
financing construction or reconstruction permitted by this Lease or refinancing
any such financing, Tenant shall have the right to encumber or assign its
interest in this Lease or assign its interest in any sublease hereunder by
mortgage or deed of trust (hereinafter, collectively, "MORTGAGE") (or by
foreclosure or assignment in lieu of foreclosure under such Mortgage) to any
institutional lender or other lender reasonably acceptable to Landlord as
mortgagee and if such Mortgage is a deed of trust, foreclosure may be had
thereunder by the exercise of a power of sale in accordance with the provisions
of Chapter 107 of the Nevada Revised Statutes. There may be more than one
Mortgage on Tenant's interest in the Improvements and this Lease except that
there may be only one Mortgage at any given time constituting a first lien
thereon (other than as provided in the following sentence) and only one
Leasehold Mortgagee at any given time (which Leasehold Mortgagee may consist of
more than one person or entity so long as such multiple persons or entities act
through one collateral agent). Notwithstanding the foregoing, beneficiaries of
two (2) separate Mortgages may act collectively as a Leasehold Mortgagee, so
long as (i) such
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beneficiaries act through one (1) collateral agent; and (ii) such Leasehold
Mortgages are, by virtue of an intercreditor or similar agreement between such
beneficiaries (a copy of which shall be provided to Landlord), of equal first
priority. All obligations imposed hereunder on any Mortgage or Mortgagee shall
bind all such Mortgages and Mortgagees but except for a Mortgage constituting a
first lien on Tenant's interest in the Improvements and this Lease and otherwise
complying with the requirements contained herein for a Leasehold Mortgage, no
Mortgage, nor any Mortgagee thereunder, shall be entitled to the benefits of any
provision of this Lease except as set forth in this Section 23.4.2.
23.4.3. Notice to Landlord. Upon execution of a Mortgage
otherwise entitled to the benefits of a Leasehold Mortgage (or any amendment,
supplement or modification thereto) and in order to be entitled to such benefits
a photostatic copy of such instrument and the obligation secured thereby shall
be promptly delivered to Landlord together with a certification by Tenant and
the Leasehold Mortgagee confirming that the photostatic copy is a true copy of
the Leasehold Mortgage and giving written notice of the name and mailing address
of the Leasehold Mortgagee (which shall be deemed such Leasehold Mortgagee's
address hereunder until changed by notice to Landlord and Tenant as provided in
Article 24), that the Leasehold Mortgage was recorded in the Official Records of
▇▇▇▇▇ County, Nevada, the date of recording or filing of record thereof and
recorder's instrument number and book reference or other recorder's index
reference, and that such Mortgage is a first lien on Tenant's interest in the
Improvements and this Lease. Until such true copies and certificate are
delivered to Landlord, any such instrument shall have no force or effect
whatsoever on the enforcement by Landlord of any provisions of this Lease or any
rights or remedies hereunder.
23.4.4. Cancellation, Surrender and Modification. No
cancellation, surrender or modification of this Lease shall be effective as to
any Leasehold Mortgagee unless consented to in writing by such Leasehold
Mortgagee.
23.4.5. Notice of Default and Right to Cure. Landlord, upon
providing Tenant any notice of: (i) default under this Lease, (ii) a termination
of this Lease, or (iii) a matter on which Landlord may predicate or claim a
default, shall at the same time provide a copy of such notice to any Leasehold
Mortgagee. No such notice by Landlord to Tenant shall be deemed to have been
duly given unless and until a copy thereof has been so provided to any Leasehold
Mortgagee. From and after such notice has been given to a Leasehold Mortgagee,
such Leasehold Mortgagee shall have the same period, after the giving of such
notice, for remedying any default or acts or omissions which are the subject
matter of such notice or causing the same to be remedied, as is given Tenant
after the giving of such notice to Tenant, plus in each instance, the additional
periods of time specified in Sections 23.4.6 and 23.4.7, to remedy, commence
remedying or cause to be remedied the defaults or acts or omissions which are
the subject matter of such notice specified in any such notice. Landlord shall
accept such performance by or at the instigation of such Leasehold Mortgagee as
if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee
to take any such action at such Leasehold Mortgagee's option and does hereby
authorize entry upon the Leased Premises by the Leasehold Mortgagee for such
purpose.
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23.4.6. Termination for Tenant Default. Anything contained in this
Lease to the contrary notwithstanding, if any default shall occur which entitles
Landlord to terminate this Lease, Landlord shall have no right to terminate this
Lease unless, following the expiration of the period of time given Tenant to
cure such default or the act or omission which gave rise to such default,
Landlord shall notify any Leasehold Mortgagee of Landlord's intent to so
terminate at least thirty (30) days in advance of the proposed effective date of
such termination, if such default is capable of being cured by the payment of
money, and at least forty-five (45) days in advance of the proposed effective
date of such termination if such default is not capable of being cured by the
payment of money. The provisions of Section 23.4.7 below shall apply if, during
such thirty (30) or forty-five (45) day cure period, any Leasehold Mortgagee
shall:
(a) notify Landlord of such Leasehold Mortgagee's desire to avoid
any termination of this Lease by Landlord; and
(b) pay or cause to be paid all rent and other payments then due
and in arrears as specified in the notice to such Leasehold
Mortgagee and which may become due during such thirty (30) or
forty-five (45) day cure period; and
(c) comply, or in good faith and with reasonable diligence
commence to comply, with all nonmonetary requirements of this
Lease then in default and reasonably susceptible of being complied
with by such Leasehold Mortgagee (provided, however, that such
Leasehold Mortgagee shall not be required during such period to
cure or commence to cure any default consisting of Tenant's
failure to satisfy and discharge any lien, charge or encumbrance
against Tenant's interest in this Lease or the Leased Premises
junior in priority to the lien of the Leasehold Mortgage held by
such Leasehold Mortgagee, so long as such lien, charge or
encumbrance does not also encumber or threaten Landlord's interest
in the Land or the Leased Premises);
23.4.7. Procedure of Default.
23.4.7.1. If Landlord shall elect to terminate this Lease by
reason of any default of Tenant, and if a Leasehold Mortgagee shall have
proceeded in the manner provided for by Section 23.4.6, the specified date for
the termination of this Lease as fixed by Landlord in its termination notice
shall be extended for a period of six (6) months provided that such Leasehold
Mortgagee shall, during such six (6) month period:
(a) Pay or cause to be paid the rent, additional rent and other
monetary obligations of Tenant under this Lease as the same become
due, and continue its good faith efforts to perform all of
Tenant's other obligations under this Lease, excepting (A)
obligations of Tenant to satisfy or otherwise discharge any lien,
charge or encumbrance against Tenant's interest in this Lease or
the Leased Premises junior in priority to the lien of the
Leasehold Mortgage held by such Leasehold Mortgagee, so long as
such lien, charge or encumbrance does not also
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encumber or threaten Landlord's interest in the Land or the Leased
Premises and (B) past nonmonetary obligations then in default and
not reasonably susceptible of being cured by such Leasehold
Mortgagee; and
(b) If not enjoined or stayed, take steps to acquire or sell
Tenant's interest in this Lease by foreclosure of the Leasehold
Mortgage or other appropriate means and prosecute the same to
completion with due diligence.
23.4.7.2. If at the end of such six (6) month period such
Leasehold Mortgagee is complying with Section 23.4.7.1, this Lease shall not
then terminate, and the time for completion by such Leasehold Mortgagee of its
proceedings shall continue so long as such Leasehold Mortgagee is enjoined or
stayed and thereafter for so long as such Leasehold Mortgagee proceeds to
complete steps to acquire or sell Tenant's interest in this Lease by foreclosure
of the Leasehold Mortgage or by other appropriate means with reasonable
diligence and continuity. Nothing in this Section 23.4.7, however, shall be
construed to extend this Lease beyond the Lease Term, nor to require a Leasehold
Mortgagee to continue such foreclosure proceedings after the subject Tenant
default has been cured. If the default shall be cured and the Leasehold
Mortgagee shall discontinue such foreclosure proceedings, this Lease shall
continue in full force and effect as if Tenant had not defaulted under this
Lease.
23.4.7.3. If a Leasehold Mortgagee is complying with Section
23.4.7.1, upon the acquisition of Tenant's leasehold estate herein by such
Leasehold Mortgagee or its designee or any other purchaser at a foreclosure sale
or otherwise, and upon the discharge of any lien, charge or encumbrance against
the Tenant's interest in this Lease or the Leased Premises which is junior in
priority to the lien of the Leasehold Mortgage held by such Leasehold Mortgagee
and which the Tenant is obligated to satisfy and discharge by reason of the
terms of this Lease, this Lease shall continue in full force and effect as if
Tenant had not defaulted under this Lease.
23.4.7.4. The making of a Leasehold Mortgage shall not be
deemed to constitute an assignment or transfer of this Lease or of the
leasehold estate hereby created, nor shall any Leasehold Mortgagee, as such, be
deemed to be an assignee or transferee of this Lease or of the leasehold estate
hereby created so as to require such Leasehold Mortgagee, as such, to assume
the performance of any of the terms, covenants or conditions on the part of
Tenant to be performed hereunder, but the purchaser at any sale of this Lease
and of the leasehold estate hereby created in any proceedings for the
foreclosure of any Leasehold Mortgage, or the assignee or transferee of this
Lease and of the leasehold estate hereby created under any instrument of
assignment or transfer in lieu of the foreclosure of any Leasehold Mortgage,
shall be deemed to be an assignee or transferee within the meaning of this
Lease, and shall be deemed to have agreed to perform all of the terms,
covenants and conditions on the part of Tenant to be performed hereunder from
and after the date of such purchase and assignment.
23.4.7.5. Any Leasehold Mortgagee or other acquirer of the
leasehold estate of Tenant pursuant to foreclosure, assignment in lieu of
foreclosure or other proceedings
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may, upon acquiring Tenant's leasehold estate, without further consent of
Landlord, sell and assign the leasehold estate on such terms and to such persons
and entities as are acceptable to such Mortgagee or acquirer and thereafter be
relieved of all obligations under this Lease, provided that such assignee is
solvent and financially and legally able to perform the obligations of Tenant
for the unexpired Lease Term. No other or further assignment shall be made
except in accordance with the provisions of Article 23 of this Lease. Upon
execution of any assignment permitted to be made to or by the Leasehold
Mortgagee a fully executed copy thereof, together with a written statement of
the place of recording or filing of record, if any, and a copy of the assumption
agreement, if applicable, shall be delivered promptly to Landlord; and until
such delivery to Landlord such assignment shall have no force or effect
whatsoever on the enforcement by Landlord of any provisions of this Lease or any
rights or remedies hereunder.
23.4.7.6. Notwithstanding any other provisions of this
Lease, any sale of this Lease and of the leasehold estate hereby created in any
proceedings for the foreclosure of any Leasehold Mortgage, or the assignment or
transfer or this Lease and of the leasehold estate hereby created in lieu of the
foreclosure of any Leasehold Mortgage shall be deemed to be a permitted sale,
transfer or assignment of this Lease and of the leasehold estate hereby created.
23.4.7.7. Nothing in this Section 23.4 shall limit Landlord's
ability to enforce this Lease by any means (including, but not limited to, an
action for specific performance and/or injunction) other than termination,
reentry or taking possession after expiration of the cure periods, if any,
provided in Section 25.1.
23.4.8. New Lease. In the event of the termination of this Lease as a
result of Tenant's default, Landlord shall, in addition to providing the notices
of default and termination as required above, provide any Leasehold Mortgagee
with written notice that this Lease has been terminated, together with a
statement of all sums which would at that time be due under this Lease but for
such termination, and of all other defaults, if any, then known to Landlord.
Landlord agrees to enter into a new lease ("NEW LEASE") of the Leased Premises
with such Leasehold Mortgagee or its designee for the remainder of the Lease
Term, effective as of the date of termination, at the rent, and upon the terms,
covenants and conditions (but excluding requirements which are not applicable or
which have already been fulfilled) of this Lease, provided:
(a) Such Leasehold Mortgagee shall make written request upon Landlord
for such New Lease within sixty (60) days after the date such Leasehold
Mortgagee receives Landlord's notice of termination or actual
termination, if later, of this Lease given pursuant to this Section
23.4.8.
(b) Such Leasehold Mortgagee or its designee shall pay or cause to be
paid to Landlord at the time of the execution and delivery of such New
Lease, any and all sums which would at the time of execution and
delivery thereof be due pursuant to this Lease but for such termination
and, in addition thereto, all reasonable expenses, including reasonable
attorney's fees, which Landlord shall
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have incurred by reason of such termination and the execution and
delivery of the New Lease, and which have not otherwise been received
by Landlord from Tenant or other party in interest under Tenant. Upon
the execution of such New Lease, Landlord shall allow to the tenant
named therein as an offset against the sums otherwise due under this
Section 23.4.8(b) or under the New Lease, an amount equal to the net
income, if any, derived by Landlord from the Leased Premises during the
period from the date of termination of this Lease to the date of the
beginning of the lease term of such New Lease. In the event of a
controversy as to the amount to be paid to Landlord pursuant to this
Paragraph (b), the payment obligation shall be satisfied if Landlord
shall be paid the amount not in controversy, and the Leasehold Mortgage
or its designee shall agree to pay any additional sum ultimately
determined to be due plus interest at the rate of fifteen percent (15%)
and such obligation shall be adequately secured. For purposes of this
Section 23.4.8(b), NET INCOME shall mean gross revenue derived by
Landlord from the Leased Premises during the period from the date of
termination of this Lease to the date of the beginning of the lease
term of such New Lease, less all operating expenses, real and personal
property taxes and debt service payments (with respect to debt incurred
to own, operate, alter or manage the Improvements) incurred or paid by
Landlord during such period.
(c) Such Leasehold Mortgagee or its designee shall agree to cure any of
Tenant's defaults of which said Leasehold Mortgagee was notified by
Landlord's notice of termination and which are reasonably susceptible
of being so cured by Leasehold Mortgagee or its designee.
(d) Any New Lease made pursuant to this Section 23.4.8 shall be prior
to any mortgage or other lien, charge or encumbrance on the fee of the
Leased Premises and the tenant under such New Lease shall have the same
right, title and interest in and to the Leased Premises and the
buildings and improvements thereon as Tenant had under this Lease.
(e) The tenant under any New Lease shall, upon an assignment of such
leasehold estate, be relieved and discharged from the obligations
imposed on the tenant by such New Lease, provided that the assignee of
such leasehold estate is solvent and financially and legally able to
perform the obligations of the tenant for the unexpired term of the New
Lease.
23.4.9. Leasehold Mortgagee Need Not Cure Specified Defects. Nothing
herein contained shall require any Leasehold Mortgagee or its designee as a
condition to its exercise of rights hereunder to cure any default of Tenant not
reasonably susceptible of being cured by such Leasehold Mortgagee or its
designee, including, but not limited to, the defaults referred to in Section
25.1.3, 25.1.4, 25.1.5 and 25.1.6, in order to comply with the provisions of
this Section 23.4.
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23.4.10. Casualty and Condemnation Loss. Any Mortgage must be
consistent with and not interfere with Landlord's rights hereunder with respect
to insurance, casualty and condemnation, except that a Leasehold Mortgage may
provide that casualty insurance proceeds with respect to the Leased Premises and
condemnation awards payable with respect to the buildings and other improvements
on the Leased Premises shall only be disbursed for repair, reconstruction or
restoration upon satisfaction of specified conditions. Such conditions shall be
subject to Landlord's approval, which shall not be unreasonably withheld;
provided that those conditions set forth in Exhibit "D" attached hereto shall be
deemed to be reasonable. The Leasehold Mortgage shall provide that Landlord
shall have a reasonable period of time after Tenant's failure to satisfy such
conditions in which to satisfy the same and that thereupon such proceeds or
condemnation awards shall be made available for repair, reconstruction, and
restoration as herein provided. The failure of any Leasehold Mortgagee to make
such proceeds or condemnation awards available shall not relieve Tenant of any
obligation hereunder and any failure of Tenant to repair, reconstruct or restore
as provided in this Lease shall constitute a default. Any Mortgage must provide
that Landlord will be notified of any default thereunder and provided a
reasonable opportunity to cure the same.
23.4.11. Arbitration. Landlord shall give any Leasehold Mortgagee
prompt notice of any arbitration or legal proceedings between Landlord and
Tenant involving obligations under this Lease. Any Leasehold Mortgagee shall
have the right to intervene in any such proceedings and be made a party to such
proceedings at its or Tenant's cost, and the parties hereto do hereby consent
to such intervention. In the event that any Leasehold Mortgagee shall not elect
to intervene or become a party to any such proceedings, Landlord shall give the
Leasehold Mortgagee notice of, and a copy of, any award or decision made in any
such proceedings. In the event Tenant shall fail to appoint an arbitrator after
notice from Landlord, as provided in Article 29 hereof, a Leasehold Mortgagee
shall have an additional period of thirty (30) days, after notice by Landlord
that Tenant has failed to appoint such arbitrator, to make such appointment, and
the arbitrator so appointed shall thereupon be recognized in all respects as if
he had been appointed by Tenant.
23.4.12. No Merger. So long as any Leasehold Mortgage is in existence,
unless any Leasehold Mortgagee shall otherwise expressly consent in writing, the
fee title to the Leased Premises and the leasehold estate of Tenant therein
created by this Lease shall not merge but shall remain separate and distinct,
notwithstanding the acquisition of said fee title and said leasehold estate by
Landlord or by Tenant or by a third party, by purchase or otherwise.
23.4.13. Future Amendments. In the event Tenant hereafter seeks to
encumber its leasehold estate, Landlord agrees to amend this Lease from time to
time to the extent reasonably requested by a prospective Leasehold Mortgagee,
provided that such proposed amendments do not materially and adversely affect
the rights of Landlord or its interest in the Leased Premises. All reasonable
expenses incurred by Landlord in connection with any such amendment shall be
paid by Tenant.
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23.4.14. Security Deposit. If any Leasehold Mortgagee, its designee or
other purchaser has acquired the leasehold estate of Tenant pursuant to
foreclosure, conveyance in lieu of foreclosure or other proceedings, or has
entered into a New Lease with Landlord in accordance with Section 23.4.8, such
Leasehold Mortgagee, its designee or other purchaser shall succeed to the rights
of Tenant, if any, in and to any security deposits paid by Tenant pursuant to
this Lease. In such event, Tenant shall no longer have any rights to such
security deposits, and Landlord shall hold such security deposits for and on
behalf of such Leasehold Mortgagee, its designee or other purchaser.
23.4.15. Estoppel. Landlord shall, without charge, at any time and from
time to time hereafter, but not more frequently than twice in any one-year
period, within ten (10) days after written request from Tenant to do so, certify
by written instrument duly executed and acknowledged to any Leasehold Mortgagee
or purchaser, or proposed Leasehold Mortgagee or proposed purchaser, or any
other person or entity specified in such request: (a) as to whether this Lease
has been supplemented or amended, and if so, the substance and manner of such
supplement or amendment; (b) as to the validity and force and effect of this
Lease, in accordance with its tenor; (c) as to the existence of any default
hereunder; (d) as to the existence of any offsets, counterclaims or defenses
hereto on the part of Tenant; (e) as to the commencement and expiration dates of
the Lease Term; and (f) as to any other matters as may be reasonably so
requested. Any such certificate may be relied upon by Tenant and any other
person or entity to whom the same may be exhibited or delivered, and the
contents of such certificate shall be binding on the Landlord.
23.4.16. Notices. Notices from Landlord to the Leasehold Mortgagee
shall be mailed to the address furnished Landlord pursuant to Section 23.4.3,
and those from the Leasehold Mortgagee to Landlord shall be mailed to the
address designated pursuant to the provisions of Article 24 hereof. Such
notices, demands and requests shall be given in the manner described in Article
24 and shall in all respects be governed by and shall be deemed to be effective
in accordance with the provisions of that Article.
23.4.17. Erroneous Payments. No payment made to Landlord by a Leasehold
Mortgagee shall constitute agreement that such payment was, in fact due under
the terms of this Lease; and a Leasehold Mortgagee having made any payment to
Landlord pursuant to Landlord's wrongful, improper or mistaken notice or demand
shall be entitled to the return of any such payment or portion thereof.
23.4.18. No subordination of Landlord's Fee Title. Landlord shall not
be required to subordinate Landlord's fee interest in the Leased Premises or its
reversionary interest in the buildings and improvements to be constructed
thereon to any lien securing Tenant's construction loan or other financing.
24. NOTICES AND PAYMENTS. Any notice or document required or permitted to
be delivered hereunder or by law shall be deemed to be delivered, whether
actually received or not, (a) when delivered in person, (b) upon confirmed
receipt (or the first business day thereafter if
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receipt does not occur during business hours on a business day) if such item is
sent by facsimile transmission to the appropriate party at its fax number set
forth below or at such other number as it shall have thereafter specified by
written notice delivered in accordance with this Article 24 (provided that a
copy of such notice is also sent by another method permitted hereunder within
one (1) business day after the same is transmitted by facsimile), (c) four (4)
business days after such item is deposited in the United States mail, postage
prepaid, certified or registered, return receipt requested, (d) one (1) business
day after such item is deposited with Federal Express or other nationally
recognized overnight courier, shipping charges prepaid, addressed to the
appropriate party hereto at its address set out below, or at such other address
as it shall have theretofore specified by written notice delivered in accordance
herewith:
LANDLORD
BROOKS FAMELY TRUST
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
Nevada ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
JONES, JONES, CLOSE & ▇▇▇▇▇, CHARTERED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
TENANT
CLOOBECK ENTERPRISES
Polo Towers
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Cloobeck
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
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and to:
GRAND CASINOS NEVADA I, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
Payments of Base Rent and other sums due Landlord from Tenant (collectively
referred to in this Lease as "RENT") shall be deemed to be remitted only upon
actual receipt thereof by Landlord.
If and when included within the term "Landlord" or "Tenant" there is
more than one person or legal entity, all shall jointly arrange among themselves
for one among their numbers to receive at one specified address all such notices
and payments; all parties included within the term "Landlord" or "Tenant," as
appropriate, shall be bound by notices delivered by the other party in
accordance with the provisions of this Article 24 as if each had received such
notice.
25. DEFAULT.
25.1. Events of Default. Each of the following events shall be an
"Event of Default" under this Lease:
25.1.1. Tenant shall fail to pay any installment of rent hereby
reserved as and when the same shall become due and shall not cure such
default within five (5) days after written notice thereof is given by Landlord
to Tenant;
25.1.2. Subject to the following sentence, Tenant shall fail to
comply with any term, provision or covenant of this Lease, other than the
payment of rent, and shall not cure such failure within thirty (30) days
after written notice thereof is given by Landlord to Tenant. If such default
cannot reasonably be cured within thirty (30) days, then Tenant shall have an
additional reasonable period of time within which to cure such default so long
as Tenant commences to cure such default within the initial thirty (30) day
period and thereafter diligently prosecutes such cure to completion;
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25.1.3. Tenant shall be adjudged insolvent, make a transfer in fraud of
creditors or make an assignment for the benefit of creditors;
25.1.4. Tenant shall abandon the Leased Premises or shall cease
operations in the Premises (except for short time periods not exceeding thirty
(30) days in any twelve (12) month period or ninety (90) days in any sixty (60)
month period and except for interruptions in Tenant's operations which are
caused by events which are beyond Tenant's control, including, without
limitation, casualty damage (but not including Tenant's financial inability to
operate); provided that Tenant may cease operations in the Leased Premises for
one (1) period of up to two (2) years in any twenty (20) year period in order to
diligently construct major renovations to, or replacement of, the Improvements;
25.1.5. Tenant shall file a petition under any section or chapter of
the Bankruptcy Reform Act of 1978, as amended, or under any similar law or
statute of the United States or any state thereof, or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant thereunder; or
25.1.6. A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant and Tenant shall not have had such
appointment discharged within thirty (30) days after Tenant receives written
notice of such appointment.
25.2. Landlord's Remedies. Upon the occurrence of any Tenant Event of
Default, Landlord shall have the option to pursue any one or more of the
following remedies without any notice or demand whatsoever:
25.2. 1. Terminate this Lease, in which event Tenant shall immediately
surrender the Leased Premises to Landlord, and if Tenant fails so to do,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Leased
Premises and expel or remove Tenant and any other person who may be occupying
the Leased Premises, or any part thereof, by force if necessary, without being
liable to prosecution or for any claim for damages; and Landlord may recover
from Tenant:
25.2.1.1. The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
25.2.1.2. The worth at the time of award of any amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided; plus
25.2.1.3. The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of the award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided;
plus
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25.2.1.4. Any other reasonable amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease; and
25.2.1.5. At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
All such amounts shall be computed on the basis of the monthly amount
thereof payable on the date of Tenant's default. As used in Sections 25.2.1.1
and 25.2.1.2 above, the "worth at the time of award is computed by allowing
interest in the per annum amount equal to two percent (2%) in excess of the
Reference Rate of interest announced from time to time by Bank of America
National Trust and Savings Association (or an equivalent rate announced by a
comparable national bank selected by Landlord in the event Bank of America no
longer announces a Reference Rate), but in no event in excess of the maximum
interest rate permitted by law. As used in paragraph 25.2.1.3 above, the "worth
at the time of award" is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).
25.2.2. Enter upon and take possession of the Leased Premises and
expel or remove Tenant and other persons who may be occupying the Leased
Premises, or any part thereof, by force if necessary, without being liable to
prosecution or for any claim for damages, and relet the Leased Premises, as
Tenant's agent, and receive the rent therefor; and Tenant agrees to pay Landlord
on demand any deficiency that may arise by reason of such reletting; or
25.2.3. Enter upon the Leased Premises, without being liable to
prosecution or for any claim for damages, and do whatever Tenant is obligated to
do under the terms of this Lease; and Tenant agrees to reimburse Landlord on
demand for any reasonable and necessary expenses which Landlord may incur in
thus effecting compliance with Tenant's obligations hereunder.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damage accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. Forbearance by Landlord to enforce one or more of the remedies herein
provided upon the occurrence of a Tenant Event of Default shall not be deemed or
construed to constitute a waiver of such default.
26. HAZARDOUS MATERIALS.
26.1. Covenant. Tenant covenants to Landlord that it will not use, or
allow to be used on the Leased Premises, or bring onto, or allow to be brought
onto, the Leased Premises any Hazardous Substance, as defined below, except as
may be reasonably required in connection with its permitted business on the
Leased Premises, and then only in full compliance with all federal,
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state or local laws. Tenant shall require every sublease to contain
provisions similar to the provisions set forth in this Article 26.
26.2. Right of Entry. Subject to applicable laws and Tenant's
reasonable security policies, Landlord reserves the right to enter the Leased
Premises and all Improvements thereon at any reasonable time and upon reasonable
notice, and at any time in exigent circumstances, for the purpose of inspecting
and examining the Leased Premises for the presence of any Hazardous Substance
whenever Landlord has a reasonable basis for believing that Tenant has not
complied with this Article 26. If the results of such inspection or examination
reveal the presence of Hazardous Substances in, on or about the Leased Premises,
and if Landlord has reasonable cause to believe that they are present in, on or
about the Leased Premises due to Tenant's failure to be in compliance with
Article 26, then Tenant shall reimburse Landlord for its costs incurred in
undertaking such inspection and examination.
26.3. Indemnity. Tenant shall indemnify, defend and hold Landlord and
its trustees, beneficiaries, heirs, successors, assigns, agents, employees and
representatives harmless from any and all Indemnified Costs caused by the
presence of Hazardous Substances in, on or about the Leased Premises which are
placed, or allowed to be placed, in, on or about the Leased Premises by Tenant,
or incurred by Landlord in connection with the release, removal or storage of
any Hazardous Substance placed, or allowed to be placed, in, on or about the
Leased Premises by Tenant. The provisions of this indemnity shall remain in full
force and effect and shall not be affected or impaired by the expiration or any
earlier termination of this Lease and shall survive any such expiration or
termination. "INDEMNIFIED COSTS" means all actual or threatened liabilities,
claims, actions, causes of action, judgments, orders, damages (including
foreseeable and unforeseeable consequential damages), reasonable costs,
reasonable expenses, fines, penalties and losses (including sums paid in
settlement of claims and all reasonable consultant, expert and legal fees),
including those incurred in connection with any investigation of site conditions
or any clean-up, remedial, removal or restoration work (whether of the Leased
Premises, or any other property), or any resulting damages, harm or injuries to
the person or property of any third parties or to any natural resources.
Without limiting the foregoing, "Indemnified Costs" incurred by Landlord as a
result of any work of cure, mitigation, cleanup, remediation, removal or
restoration shall bear interest at the rate of fifteen percent (15%) per annum
until paid in full. In addition, Indemnified Costs are recoverable by Landlord
regardless of whether (i) the Indemnified Costs are incurred or suffered
pursuant to any order of any federal, state or local governmental agency
relating to the clean-up, remediation or other responsive action required by any
applicable law, or (ii) Landlord now or hereafter has or should have had actual
knowledge of any environmental condition giving rise to any indemnity obligation
of Tenant under this Article.
26.4. Hazardous Substances Defined. As used herein, the term "HAZARDOUS
SUBSTANCES" shall include: (i) petroleum or any of its fractions, flammable
substances, explosives, radioactive materials, hazardous wastes or substances,
toxic wastes or substances or any other similar materials or pollutants which
pose a hazard to the Leased Premises, or to persons on or about same, cause the
Leased Premises to be in violation of any law or local approval, or are defined
as or included in the definition of "HAZARDOUS SUBSTANCES", "HAZARDOUS WASTES",
"HAZARDOUS
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MATERIALS", or "TOXIC", or words of similar import under any applicable law,
including, but not limited to: (A) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 4.2 U.S.C. Section 9601, et
seq.; (B) the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Section 1801, et seq.; (C) the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901, et seq.; and (D) regulations adopted and
publications promulgated pursuant to the aforesaid laws; (ii) asbestos in any
form which is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contain dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million; and
(iii) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or may or could
pose a hazard to the health and safety of the occupants of the Leased Premises
or the owners and/or occupants of property adjacent to or surrounding the
Leased Premises.
26.5. Landlord's Legal Obligations. Nothing contained herein shall be
deemed to limit Landlord's obligations under law for the removal of Hazardous
Substances which exist on the Leased Premises prior to the delivery thereof to
Tenant or which are thereafter placed upon the Leased Premises by Landlord or to
impose upon Tenant any obligation for the removal of such Hazardous Substances.
However, the removal of any asbestos from the Existing Improvements on the
Leased Premises shall be the responsibility of Tenant, at Tenant's sole cost and
expense.
27. MISCELLANEOUS.
27.1. Termination. In the event this Lease is terminated pursuant to a
right to do so herein contained, except as specifically provided herein (such
as, for example, but without limitation, in Section 2.11 (Tenant's obligation to
remove the Improvements and regrade the Land), in Article 4 (the payment of
hold-over rent by Tenant), in Article 5 (the obligations of the parties
following a termination by Tenant during the Feasibility Period), in Section
13.1 (Tenant's right to remove its personal property after the expiration of
this Lease Term), in Article 16 (indemnity), and in Article 26 above (hazardous
materials)) neither Landlord nor Tenant hereto shall thereafter have any further
obligation or liability one to the other except such obligations as are owed
under this Lease through the date of termination, and this Lease shall be of no
further force or effect.
27.2. Captions. The captions used in this Lease are for convenience
only and shall not be deemed to amplify, modify or limit the provisions hereof.
27.3. Meanings. Words of any gender used in this Lease shall be
construed to include any other gender, and words in the singular shall include
the plural and vice versa, unless the context otherwise requires.
27.4. Successors and Assigns. Subject to the restrictions set forth
herein on assignment and subletting by Tenant, this Lease shall be binding upon
and shall inure to the benefit of Landlord and Tenant and their respective
heirs, legal representatives, successors and assigns.
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27.5. Entire Agreement. The Exhibits annexed to this Lease are hereby
incorporated by reference in their entirety with the same force and effect as
if they were set forth in this Lease in their entirety. This Lease contains the
entire agreement of Landlord and Tenant with respect to the subject matter
hereof and can be altered, amended or modified only by written instrument
executed by both of such parties.
27.6. Time. It is expressly agreed by Landlord and Tenant that time
is of the essence with respect to this Lease. In the event the date for
performance of an obligation or delivery of any notice hereunder falls on a
day other than a business day, then the date for such performance or delivery
of such notice shall be postponed until the next ensuing business day. Any
references to "business days" contained herein are references to normal
working business days (i.e., Monday through Friday of each calendar week,
exclusive of Federal and Nevada state holidays).
27.7. Severability. If any term or provision, or any portion thereof,
of this Lease, or application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
27.8. Counterparts. This Lease may be signed in counterparts with
the same force and effect as if all required signatures were contained in a
single, original instrument.
27.9. Attorneys' Fees. In the event of litigation between the
parties to enforce this Lease, the prevailing party in any such action shall
be entitled to recover reasonable costs and expenses of suit, including, without
limitation, court costs, attorneys' fees, and discovery costs.
27.10. Memorandum of Lease. Landlord and Tenant shall execute a
memorandum of this Lease and record such memorandum against the Land.
27.11. Governing Law. This Lease shall construed, interpreted, and
enforced pursuant to the laws of the State of Nevada.
28. GAMING PROVISION
28.1. Cooperation and Compliance by Landlord. Landlord, at Tenant's
sole cost and expense, shall promptly apply for and use its best efforts to
obtain all necessary licenses and other approvals and permits, if any,
required of Landlord from any foreign, federal, state or local gaming and
liquor licensing authorities (collectively "GOVERNMENTAL AUTHORITIES") for the
operation by Tenant of its business at the Leased Premises, and shall
otherwise fully cooperate, at Tenant's sole cost and expense, with such
Governmental Authorities in connection with any approval or permit
applications of Landlord or Tenant, or otherwise, which shall include, without
limitation, provision of such information, books and records as may be
requested by such authorities and compliance with all orders and requirements
of such Governmental Authorities.
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28.2. Denial. If at any time (a) Landlord, or any affiliate of Landlord or
either of them, is denied a license or is denied or otherwise unable to obtain
any other approval or permit required by any Governmental Authority with
respect to the operation by Tenant or any affiliate of Tenant or either of them
of its business at the Leased Premises (collectively "APPROVALS"), is required
by any Governmental Authority to apply for an Approval and does not apply
within any required time limit, or withdraws any application for Approval other
than upon a determination by the applicable Governmental Authority that such
Approval is not required, and such denial or failure or withdrawal prevents
Tenant or any affiliate of Tenant or either of them from operating its
business; or (b) any Governmental Authority commences or threatens to commence
any suit or proceeding against Tenant or any affiliate of Tenant or either of
them to terminate or deny any Approval of Tenant or any affiliate of Tenant or
either of them as a result of Landlord or any person associated with Landlord
(all of the foregoing events described in (a) and (b) above are collectively
referred to as a "DENIAL"), if such action may be cured by the replacement of
one or more individuals as shareholders, officers, employees or directors of
Landlord or by a sale of the Leased Premises or disassociation from the
applicable person, then Landlord shall have up to one hundred twenty (120) days
from such Denial (but not more than thirty (30) days less than the period, if
any, as may be allowed by the Governmental Authorities to effect such cure or
if greater half of such period), to replace the disapproved individual with
someone, or sell the Leased Premises to someone, acceptable to the Governmental
Authorities and reasonably acceptable to Tenant. If a cure of the type
described in the preceding sentence is not feasible or permitted, or if the
same is feasible and permitted but not effected within the time limit set forth
in the previous sentence, Tenant shall have the right, in addition to all its
other rights and remedies, to elect to (a) terminate this Lease, or (b)
purchase the Leased Premises as provided in Paragraph 28.3. Anything in this
Article 28 to the contrary notwithstanding, Landlord shall effect all cures as
expeditiously as possible.
28.3. Purchase Right. Landlord hereby grants to tenant an option (the
"PURCHASE RIGHT") to purchase the Leased Premises as provided in this Paragraph
28.3.
28.3.1. Tenant may exercise the Purchase Right at any time
following a Denial and the cure period specified in Paragraph 28.2 by
delivering written notice to Landlord specifying a commercially reasonable
place at which the close (the "CLOSING") of escrow ("ESCROW") shall occur. The
Closing shall be ten (10) days after the determination of the Purchase Price
pursuant to Section 28.3.2 below.
28.3.2. The total purchase price for the Leased Premises (the
"PURCHASE PRICE") shall be equal to the sum of (i) present value of all
payments of Base Rent due for the remainder of the Lease Term, computed using
an interest rate equal to the "Prime Rate" of interest, as defined below, for
the business day preceding Tenant's notice pursuant to Section 28.3.1, and
(ii) the fair market value of Landlord's residuary interest in the Leased
Premises and the Improvements. If the parties are unable to agree upon the
fair market value of such residuary interest within ten (10) days after
Tenant's exercise of its Purchase Right pursuant to the preceding Section
28.3.1, such value shall be determined by arbitration in accordance with the
provisions of Article 29; provided that if Tenant disapproves the value so
determined by
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arbitration, Tenant shall have the right, to be exercised by written
notice to Landlord within fifteen (15) days after such determination is made,
to terminate this Lease (in which event Tenant shall pay all costs incurred by
Landlord under this Section 28.3). The Purchase Price shall be paid by Tenant
(a) at the close of Escrow in cash or (b) in Tenant's discretion, in equal
installments payable over five (5) years following the close of Escrow. If
Tenant elects to pay the balance of the Purchase Price in accordance with
clause (b) of the preceding sentence, an initial installment equal to twenty
percent (20%) of the balance of the Purchase Price will be payable at the close
of Escrow and all remaining obligations shall be secured by a first priority
deed of trust encumbering the Leased Premises. The remaining amount will be
payable in sixty (60) equal installments of principal, plus accrued interest,
on each monthly anniversary of the close of Escrow. The unpaid principal
balance of the Purchase Price shall bear interest at the Prime Rate, plus three
percent (3%) per annum; provided that such interest rate shall not exceed
fifteen percent (15%) per annum. For the purpose of this Section, "PRIME RATE"
shall mean the rate of interest per annum from time to time publicly announced
by Bank of America N.A. (or, if Bank of America, N.A. is no longer in existence
or is no longer announcing such a rate, then such other comparable bank as
Landlord may elect) as its prime or reference rate. The rate of interest shall
change on the effective date of any change in the prime rate.
28.3.3. Upon exercise of the Purchase Right, Landlord shall convey
title to the Leased Premises to Tenant at the close of Escrow by grant,
bargain and sale deed subject only to matters shown in Tenant's leasehold title
policy delivered pursuant to Article 5 of this Lease and matters caused or
consented to in writing by Tenant. At close of Escrow, Landlord shall provide
Tenant with a CLTA owner's policy of title insurance, in the face amount of the
Purchase Price, and otherwise in a form and from an insurer or insurers
reasonably satisfactory to Tenant, with such endorsements and reinsurance as
Tenant may reasonably request, insuring Tenant's title to the Leased Premises.
28.3.4. Closing costs other than title insurance shall be allocated in
accordance with the then prevailing practice in Las Vegas, Nevada. Rent shall
be prorated as of the date of the close of Escrow. At the close of Escrow,
Landlord shall provide Tenant with a suitable affidavit satisfying the
requirements of the Internal Revenue Code relating to withholding of a portion
of the Purchase Price in the event of a purchase from a foreign person.
28.3.5. Landlord and Tenant shall promptly upon request prepare,
execute and deliver such further documents, and shall promptly obtain
beneficiary statements and similar certificates and perform such other acts as
shall from time to time be reasonably required in effecting the close of Escrow
and the better perfecting, assuring, conveying, assigning, transferring and
confirming unto Tenant the Leased Property and the rights to be conveyed or
assigned.
29. ARBITRATION. If any controversy or claim between the parties hereto
arises out of this Lease, other than a claim by Landlord arising from any
failure by Tenant to pay rent as and when such rent becomes due, and if the
parties are unable to agree by direct negotiations, the parties shall promptly
mediate any such disagreement or dispute under the Commercial Mediation
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Rules of the American Arbitration Association. If the parties are unable
to resolve such disagreement or dispute through mediation within ten (10) days
after the first written notice of an election to mediate, or if the
disagreement concerns the buyout price under Section 28.3, then such
disagreement or dispute (excluding an action by Landlord in unlawful detainer,
as provided above) shall be submitted to binding arbitration under the
Commercial Arbitration Rules of the American Arbitration Association.
Notwithstanding the foregoing, if the resolution of any controversy or claim
requires the participation of a third party who is not required and who
declines to participate in an arbitration proceeding, the parties shall not be
required to proceed with an arbitration of such controversy or claim.
The arbitrators shall be appointed under the Commercial Arbitration Rules
of the American Arbitration Association. As soon as the panel has been
convened, a hearing date shall be set within twenty-one (21) days thereafter.
Written submittals shall be presented and exchanged by both parties ten (10)
days before the hearing date, including reports prepared by experts upon whom
either party intends to rely. At such time the parties will also exchange
copies of all documentary evidence upon which they will rely at the arbitration
hearing and a list of the witnesses whom they intend to call to testify at the
hearing. Each party shall also make its respective experts available for
deposition by the other party prior to the hearing date. The hearings shall be
concluded no later than five (5) days after the initial hearing date. The
arbitrators shall make their award within ten (10) business days after the
conclusion of the hearing. In the event of a three-member panel, the decision
in which two (2) of the members of the arbitration panel concur shall be the
award of the arbitrators.
Except as otherwise specified herein, there shall be no discovery or
dispositive motion practice (such as motions for summary judgment or to dismiss
or the like) except as may be permitted by the arbitrators, who shall authorize
only such discovery as is shown to be absolutely necessary to insure a fair
hearing and no such discovery or motions permitted by the arbitrators shall in
any way conflict with the time limits contained herein. Nothing herein shall be
deemed to permit discovery in such arbitration proceeding except as provided
above. The arbitrators shall not be bound by the rules of evidence or civil
procedure, but rather may consider such writings and oral presentations as
reasonable businessmen would use in the conduct of their day-to-day affairs,
and may require the parties to submit some or all of their presentation as the
arbitrators may deem appropriate. It is the intention of the parties to limit
live testimony and cross-examination to the extent absolutely necessary to
insure a fair hearing to the parties on the significant matters submitted to
arbitration. The parties have included the foregoing provisions limiting the
scope and extent of the arbitration with the intention of providing for prompt,
economic and fair resolution of any dispute submitted to arbitration.
If Landlord gives Tenant notice of a claimed default pursuant to Article
25 of this Lease, and if the out-of-pocket costs to Tenant of curing such
claimed default are reasonably expected to be One Hundred Thousand Dollars
($100,000) or less, Tenant's election to dispute such claimed default pursuant
to the provisions of this Article 29 shall not extend or toll the running of
any cure period provided in Article 25. However, if the out-of-pocket costs to
Tenant of curing such claimed default are reasonably expected to exceed One
Hundred Thousand Dollars
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($100,000), and if Tenant in good faith elects to dispute such claimed default
pursuant to the provisions of this Article 29, any cure period provided in
Article 25 for the claimed default shall be tolled during the resolution of
such dispute hereunder.
The arbitrators shall have the discretion to award the costs of
arbitration, arbitrators' fees and the respective attorneys' fees of each party
between the parties as they see fit.
Judgment upon the award entered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
Notwithstanding the parties' agreement to mediate or arbitrate their
disputes as provided herein, any party may seek emergency relief in a court of
law without waiving the right to arbitrate.
The arbitrators shall make their award in accordance with applicable law
and this Lease and based on the evidence presented by the parties, and at the
request of either party at the start of the arbitration, shall include in their
award findings of fact and conclusions of law supporting the award.
Nothing contained herein is intended to, nor shall, limit Landlord's right
to pursue any action in unlawful detainer in the case of a Tenant Event of
Default in the payment of Base Rent.
30. GUARANTY. The obligations of Tenant under this Lease shall be
guaranteed by Grand Casinos, Inc. ("GRAND"). Within fourteen (14) days after
the Effective Date, Grand shall execute and deliver to Landlord a guaranty in
the form attached hereto as Exhibit "E" (the "GUARANTY"). Such Guaranty shall
provide that it will not apply with respect to obligations occurring under this
Lease more than five (5) years after the Effective Date if, within such time,
Tenant constructs and thereafter maintains Tenant's Project, so long as
Tenant's Project has a Fair Market Value of not less than Two Hundred Million
Dollars ($200,000,000), all subject to such Guaranty being reinstated pursuant
to Section 14.1 above. If the Guaranty is not executed and delivered to
Landlord as provided herein, this Lease shall terminate and the remaining
portion of the Security Deposit shall be returned to Tenant.
31. LANDLORD'S SECURITY INTEREST.
31.1. Grant of Security Interests in Project Parcels. Prior to
commencing construction of any portion of Tenant's Project, as hereinafter
defined, upon the Leased Premises (the date of such commencement is referred to
herein as the "START DATE"), and as additional security for the payment and
performance of Tenant's obligations under this Lease, Tenant shall convey,
grant and assign (or cause to be conveyed, granted and assigned) to Landlord a
lien on, security interest in and assignment of (collectively, "LANDLORD'S
LIEN") all of the right, title and interest which is now owned or hereafter
acquired by Tenant or either of them or any affiliate of either of them in each
other parcel of land (together with all improvements thereon and appurtenances
thereto, collectively, the "PROJECT PARCELS") upon which Tenant's integrated
hotel/casino project and
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related, integrated amenities thereto (collectively, "TENANT'S PROJECT"),
or any part thereof, is to be located, as shown by the site plan which is
included as a part of Tenant's Renderings. Without limiting the foregoing,
Landlord's Lien shall automatically extend to and cover any after acquired
right, title, or interest in any Project Parcel (including, without limitation,
a fee interest therein). Tenant shall, at Landlord's request, execute and
deliver (or cause to be executed and delivered) (in recordable form, if
appropriate) any instrument reasonably necessary or appropriate to subject to
Landlord's Lien any such after acquired property, when, and if, Tenant or either
of them or any affiliate or either of them acquires such property. In addition,
if, upon the Start Date, neither Tenant nor either of them nor any affiliate of
either of them has yet acquired any right, title or interest in a Project
Parcel, Tenant shall convey, grant and assign (or cause to be conveyed, granted
and assigned) the Landlord's Lien in such Project Parcel immediately after
Tenant or either of them or any affiliate of either of them has acquired any
right, title or interest therein. Notwithstanding the foregoing, Landlord's
Lien shall not encumber any "time share" buildings and related non-gaming
amenities (including the land upon which such improvements are located)
("TENANT'S TIME SHARE IMPROVEMENTS") which are constructed on any Project
Parcel so long as Tenant's Time Share Improvements are not constructed upon the
Leased Premises and do not secure a Leasehold Mortgage. If a Leasehold Mortgage
initially encumbers the land or leasehold interest in the land upon which
Tenant's Timeshare Improvements are constructed, and if such Leasehold Mortgage
is released to allow for the construction of Tenant's Time Share Improvements
to be separately financed or otherwise, Landlord's Lien shall encumber such
land until the Leasehold Mortgage is released, at which point Landlord's Lien
shall likewise be released from Tenant's Time Share Improvements. If at any
time thereafter a Leasehold Mortgagee acquires a security interest in Tenant's
Time Share Improvements, Tenant shall likewise convey Landlord's Lien in such
property to Landlord with the priority described in Section 31.3.2. No Landlord
Lien shall be granted in the property commonly known as "Polo Plaza" or the
"Shark Club" unless and until Tenant has been granted the right to construct,
maintain, use or operate a portion of Tenant's Project thereon, whether by
deed, lease, conveyance or otherwise.
31.2. Grant of Security Interests in Furniture, Fixtures and Equipment.
Prior to the Start Date, Tenant shall, and as additional security for
the payment and performance of Tenant's obligations under this Lease, grant (or
cause to be granted) to Landlord a security interest (the "LANDLORD'S SECURITY
INTEREST") in all items of personal property, whether tangible or intangible,
and whether now owned or hereafter acquired, owned, used or held in connection
with the ownership, operation or maintenance of Tenant's Project, including,
without limitation, all furniture, fixtures and equipment (collectively, the
"FF&E"), whether such items are to be located or used upon the Leased Premises
or upon one more the Project Parcels. Nothing contained herein shall prevent
Tenant from disposing of items of FF&E in the ordinary course of Tenant's
business so long as the FF&E maintained by Tenant is at all times sufficient
for the operation of Tenant's Project.
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31.3. PERFECTION AND PRIORITY.
31.3.1 Forms of Conveyance. The Landlord's Lien in a Project Parcel
shall be evidenced by a recorded deed of trust, fixture filing, security
agreement and assignment of leases and rents in a commercially reasonable form,
reasonably acceptable to Landlord and Tenant. The Landlord's Security Interest
shall be evidenced by a written security agreement and shall be perfected by
the filing and recordation of appropriate financing statements, all in
commercially reasonable forms, reasonably acceptable to Landlord and
Tenant.
31.3.2. Priority. Subject to the following provisions of this Section
31.3.2, each of Landlord's Lien and Landlord's Security Interest shall be prior
to all other liens and encumbrances on the interests of Tenant or either of
them or any affiliate of either of them, and, concurrently with the grant of
each Landlord's Lien in a Project Parcel (and concurrently with the acquisition
of any after acquired title therein), Tenant shall provide Landlord with an
ALTA lender's policy of title insurance (or an endorsement thereto, in the case
of any after acquired title), issued through Nevada Title Company in the amount
of the current market value of the subject Project Parcel, as reasonably
demonstrated by Tenant's delivery of an escrow closing statement for its
purchase of such parcel or other evidence of value which is reasonably
acceptable to Landlord, insuring the priority of Landlord's Lien in such
collateral. Landlord's Lien and Landlord's Security
Interest shall be subordinated to other financing ("PRIOR DEBT") which
satisfies the following conditions:
31.3.2.1. The amount of the Prior Debt encumbering the Project Parcels
and the FF&E shall not exceed seventy-five percent (75%) of the Fair Market
Value, determined in the manner described in Section 31.4 below, of the
aggregate of the Project Parcels (including improvements) and FF&E in which
Landlord has a security interest.
31.3.2.2. The amount of the Prior Debt encumbering the Project Parcels
shall not exceed seventy percent (70%) of the Fair Market Value,
determined in the manner described in Section 31.4 below, of the aggregate of
the Project Parcels (including improvements) in which Landlord has a security
interest.
31.3.2.3. The Prior Debt shall specifically provide that Landlord
shall receive notice of any default thereunder and shall have the right to cure
any such default to the extent that Tenant is afforded any such cure rights.
31.3.2.4. Tenant shall provide Landlord with a title insurance
policy, or an appropriate endorsement to Tenant's existing title insurance
policy with respect to the subject collateral, insuring Tenant's subordinated
security interest in an amount equal to the Fair Market Value of that
collateral.
31.3.2.5. Landlord shall have the right to review the loan documents
for the Prior Debt to verify that the conditions to the subordination of
Landlord's security interest, as set forth herein, have been satisfied.
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31.4. Fair Market Value. Tenant shall provide Landlord with an appraisal
of the "Fair Market Value" of the Project Parcels and of the FF&E prior to any
subordination of Landlord's security interest hereunder. If such appraisal is
relied upon by Tenant's Leasehold Mortgagee or, with respect to the value of
the FF&E, by the lender financing the FF&E, as the value of the subject
collateral for the purpose of making the loan which is secured by the Leasehold
Mortgage or the FF&E, as the case may be, then such appraisal shall be accepted
by Landlord and the value shown therein shall be the Fair Market Value.
Otherwise, such appraisal, and the determination of Fair Market Value, shall be
subject to the following provisions of this Section 31.4.
Tenant's appraisal shall be prepared by a licensed MAI or other
qualified appraiser. Unless Landlord disapproves such appraisal within ten (10)
days of its receipt of the same, the value shown therein shall be deemed to be
the Fair Market Value of the subject collateral; provided that: if Landlord,
acting reasonably and in good faith, disapproves such appraisal, then Landlord
shall appoint its own qualified MAI appraiser within ten (10) days after
receipt of Tenant's appraisal, and Landlord's appraiser shall give its opinion
as to the Fair Market Value of the subject collateral within thirty (30) days
after being so appointed. If the values determined by Landlord's appraiser and
Tenant's appraiser do not differ by more than five percent (5%) of the lower
appraisal, then the "Fair Market Value," as used herein, shall mean the
arithmetic average of such two (2) appraisals. If the two appraisals differ by
more than five percent (5%) of the lower appraisal, then the two appointed
appraisers shall agree upon a third qualified appraiser within ten (10) days
after the expiration of such thirty (30) day period who shall be given copies
of the two (2) preceding appraisals and who shall determine the Fair Market
Value within fifteen (15) days after such third appraiser is engaged, provided
that such final Fair Market Value shall not be greater than the higher of the
two previous appraisals nor less than the lower of the two previous appraisals.
Landlord and Tenant shall each bear the cost of their own appraiser and shall
share equally the cost of the third appraiser. For purposes of determining the
ratios under Section 31.3 in the case of Prior Debt which is construction or
FF&E financing, the Fair Market Value shall be determined on a "completed
project" basis.
31.5. Further Assurances. Landlord shall execute, acknowledge
and deliver to Tenant or to Tenant's lender and/or title insurer, as designated
by Tenant, such evidence of the subordination of Landlord's Lien and Landlord's
Security Interest required hereunder as Tenant may reasonably request.
32. TENANT'S OPTION TO PURCHASE THE LEASED PREMISES.
Tenant shall have the option to purchase the Leased Premises during the
twentieth (20th) year after the Phase II Commencement Date, (the "Option
Year"), for the purchase price of Thirty Million Dollars ($30,000,000) (the
"OPTION PURCHASE PRICE"). Such option shall be exercised, if at all, by written
notice to Landlord not later than two and one-half (2.5) years prior to the
proposed closing date, which closing date (hereinafter, the "PURCHASE OPTION
CLOSING DATE") shall be within the Option Year and shall be set forth in
Tenant's written notice. The Option Purchase Price shall be paid in cash or by
cash equivalent upon the Purchase Option
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Closing Date. If Tenant fails to exercise its option in a timely manner as
provided herein, the provisions of this Article 32 shall have no further force
or effect.
Upon exercise of Tenant's option to purchase the Leased Premises
hereunder, Landlord shall convey title to the Leased Premises to Tenant at the
close of escrow by grant, bargain and sale deed subject only to matters shown
in Tenant's leasehold title policy delivered pursuant to Article 5 of this
Lease and matters caused or consented to in writing by Tenant. At close of
escrow, Landlord shall provide Tenant with a CLTA owner's policy of title
insurance, in the face amount of the Option Purchase Price, and otherwise in a
form and from an insurer or insurers reasonably satisfactory to Tenant, with
such endorsements and reinsurance as Tenant may reasonably request, insuring
Tenant's title to the Leased Premises.
Closing costs other than title insurance shall be allocated in
accordance with the then prevailing practice in Las Vegas, Nevada. Rent shall
be prorated as of the date of the close of escrow. At the close of escrow,
Landlord shall provide Tenant with a suitable affidavit satisfying the
requirements of the Internal Revenue Code relating to withholding of a portion
of the Option Purchase Price in the event of a purchase from a foreign person.
Landlord and Tenant shall promptly upon request prepare, execute and
deliver such further documents, and shall promptly obtain beneficiary
statements and similar certificates and perform such other acts as shall from
time to time be reasonably required in effecting the close of escrow and the
better perfecting, assuring, conveying, assigning, transferring and confirming
unto Tenant the Leased Property and the rights to be conveyed or assigned.
If Tenant elects to purchase the Leased Premises, Landlord may elect to
participate in a tax-free exchange under Section 1031 of the Internal Revenue
Code. Tenant agrees to cooperate with such an exchange by Landlord, so long as
such cooperation is without cost to Tenant and does not materially affect
Tenant's purchase. Landlord specifically reserves the right to accelerate the
Purchase Option Closing Date to accommodate a tax-free exchange provided that
(i) Landlord shall provide Tenant with notice of the earlier Purchase Option
Closing Date not later than one hundred eighty (180) days prior to such date;
and (ii) such date be at least one hundred eighty (180) days after Tenant's
notice of the exercise of its option to purchase the Leased Premises hereunder.
33. BINDING OBLIGATION. Tenant hereby represents and warrants to Landlord
that this Lease and the consummation of the transactions contemplated hereby is
valid and binding upon Tenant (and the individuals executing this Lease on
behalf of Tenant represent and warrant that they are authorized to so act) and
does not constitute a default (or an event which with notice or passage of time
or both will constitute default) under any contract to which Tenant is a party
or by which Tenant is bound; provided that such representation and warranty
shall apply to the Guaranty only after the Guaranty is executed and delivered
by Grand Casinos. Within fourteen (14) days after the Effective Date, Tenant
shall provide Landlord with a certified resolution of the board of directors
of each entity constituting Tenant authorizing the transactions contemplated
hereby and the execution and delivery of this Lease by the persons executing
the same on behalf of Tenant.
-46-
53
IN WITNESS WHEREOF, the parties hereto have executed this Lease to be
effective as of the Effective Date.
LANDLORD:
▇▇▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
Date:
----------------------------
NEVADA ▇▇▇▇▇▇ ▇▇▇▇
/s/ Nevada ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Date:
----------------------------
TENANT:
CLOOBECK ENTERPRISES
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. Cloobeck
------------------------------
Date: 6/17/96
----------------------------
By:
------------------------------
Date:
----------------------------
-47-
54
GRAND CASINOS NEVADA I, INC.
a Minnesota corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
-----------------------------
Date: 6-17-96
----------------------------
By:
------------------------------
Date:
----------------------------
Nevada Title Company of Las Vegas, a Nevada corporation, hereby
acknowledges receipt of the foregoing instructions and agrees to act as Escrow
Agent in accordance with the terms and conditions thereof.
DATED: Nevada Title Company
------------------- a Nevada corporation
By:
------------------------------
Title:
---------------------------
Escrow Number:
-------------------
-48-
55
ESCROW NUMBER 96-06-0201 RMG
EXHIBIT "A"
LEGAL DESCRIPTION
PARCEL ONE (1):
THAT PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF SAID
SECTION 21; THENCE SOUTH 89 DEGREES 07'15" EAST A DISTANCE OF 80.01 FEET TO A
POINT IN THE ▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇ (ORIGINAL ALIGNMENT 80 FEET
WIDE), SAID POINT BEING THE NORTHWEST CORNER OF THAT CERTAIN PARCEL OF LAND
CONVEYED BY ▇▇▇▇▇▇ ▇▇▇▇, ET AL, TO LAND O'SUN LAND COMPANY, BY DEED RECORDED
AUGUST 12, 1954, AS DOCUMENT NO. 17629 OF OFFICIAL RECORDS, ▇▇▇▇▇ COUNTY,
NEVADA; THENCE CONTINUING SOUTH 89 DEGREES 07'15" EAST ALONG THE NORTH LINE OF
THE ABOVE DESCRIBED PARCEL A DISTANCE OF 409.87 FEET TO A POINT; THENCE SOUTH 0
DEGREES 02'00" EAST A DISTANCE OF 158.92 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 230.00 FEET TO A
POINT IN THE SOUTH LINE OF SAID PARCEL CONVEYED BY DOCUMENT NO. 17629; THENCE
NORTH 88 DEGREES 42'28" WEST ALONG SAID SOUTH LINE, A DISTANCE OF 410.00 FEET
TO A POINT IN THE AFOREMENTIONED ▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇; THENCE NORTH
0 DEGREES 02'00" WEST ALONG SAID EAST LINE A DISTANCE OF 230.00 FEET TO A POINT
IN A LINE THAT BEARS NORTH 88 DEGREES 42'28" WEST FROM THE TRUE POINT OF
BEGINNING; THENCE ALONG SAID LAST MENTIONED LINE SOUTH 88 DEGREES 42'28" EAST
PARALLEL WITH THE AFOREMENTIONED SOUTH LINE OF SAID CONVEYED PARCEL, A DISTANCE
OF 410.00 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPTING FROM THE HEREINABOVE DESCRIBED PARCEL, THE INTEREST IN AND TO THE
WESTERLY TEN (10) FEET, AS CONVEYED TO THE STATE OF NEVADA, FOR HIGHWAY
PURPOSES.
FURTHER EXCEPTING THEREFROM THAT PORTION OF SAID LAND LYING WITHIN PARCEL TWO
(2) HEREIN BELOW DESCRIBED.
PARCEL TWO (2):
THAT PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF THE
SAID SECTION 21; THENCE SOUTH 89 DEGREES 07'15" EAST A DISTANCE OF 80.01 FEET
TO A POINT IN THE EAST LINE OF U.S. HIGHWAY NO. 91, (ORIGINAL ALIGNMENT, 80
FEET WIDE), SAID POINT BEING THE NORTHWEST CORNER OF THAT CERTAIN PARCEL OF
LAND CONVEYED BY ▇▇▇▇▇▇ ▇▇▇▇, ET AL, TO LAND O'SUN LAND COMPANY, BY DEED
RECORDED AUGUST 12, 1954 AS DOCUMENT NO. 17629 OF OFFICIAL RECORDS, ▇▇▇▇▇
COUNTY, NEVADA;
▇-▇
▇▇
▇▇▇▇▇▇ ▇▇. ▇▇-▇▇, ▇▇▇▇ ▇▇▇
EXHIBIT "A" (CONTINUED)
LEGAL DESCRIPTION
THENCE CONTINUING SOUTH 89 DEGREES 07'15" EAST ALONG THE NORTH LINE OF THE ABOVE
DESCRIBED PARCEL A DISTANCE OF 409.87 FEET TO A POINT; THENCE SOUTH 0 DEGREES
02'00" EAST A DISTANCE OF 158.92 FEET TO A POINT; THENCE NORTH 88 DEGREES
42'28" WEST PARALLEL WITH THE SOUTH LINE OF SAID PARCEL CONVEYED BY DOCUMENT
NO. 17629, A DISTANCE OF 110.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE
SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 115.00 FEET TO A POINT; THENCE NORTH
88 DEGREES 42'28" WEST PARALLEL WITH THE AFOREMENTIONED SOUTH LINE OF SAID
CONVEYED PARCEL, A DISTANCE OF 300.00 FEET TO A POINT IN THE AFOREMENTIONED
▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇; THENCE NORTH 0 DEGREES 02'00" WEST ALONG SAID
EAST LINE A DISTANCE OF 115.00 FEET TO A POINT IN A LINE THAT BEARS NORTH 88
DEGREES 42'28" WEST FROM THE TRUE POINT OF BEGINNING; THENCE ALONG SAID LAST
MENTIONED LINE SOUTH 88 DEGREES 42'28" EAST PARALLEL WITH THE AFOREMENTIONED
SOUTH LINE OF SAID CONVEYED PARCEL, A DISTANCE OF 300.00 FEET TO THE TRUE POINT
OF BEGINNING.
EXCEPTING THEREFROM THE HEREINABOVE DESCRIBED PARCEL, THE INTEREST IN AND TO
THE WESTERLY TEN (10) FEET, AS CONVEYED TO THE STATE OF NEVADA FOR HIGHWAY
PURPOSES.
PARCEL THREE (3):
THAT PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF SAID
SECTION 21, THENCE SOUTH 89 DEGREES 07'15" EAST A DISTANCE OF 80.01 FEET TO A
POINT ON THE ▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇, (ORIGINAL ALIGNMENT, 80 FEET
WIDE), SAID POINT BEING THE NORTHWEST CORNER OF PARCEL CONVEYED BY ▇▇▇▇▇▇ ▇▇▇▇,
ET. AL., TO LAND O'SUN LAND CO., BY DEED RECORDED AUGUST 12, 1954 AS DOCUMENT
NO. 17629, OFFICIAL RECORDS, ▇▇▇▇▇ COUNTY, NEVADA; THENCE SOUTH 0 DEGREES
02'00" EAST ALONG THE EAST LINE OF SAID U.S. HIGHWAY NO. 91, A DISTANCE OF
271.38 FEET TO A POINT; THENCE SOUTH 88 DEGREES 42'28" EAST, PARALLEL WITH THE
SOUTH LINE OF ABOVE DESCRIBED PARCEL A DISTANCE OF 410.00 FEET TO THE TRUE
POINT OF BEGINNING; THENCE CONTINUING SOUTH 88 DEGREES 42'28" EAST A DISTANCE
OF 400 FEET TO A POINT; THENCE SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 115.00
FEET TO THE SAID SOUTH LINE; THENCE NORTH 88 DEGREES 42'28" WEST ALONG THE
SAID SOUTH LINE A DISTANCE OF 400.00 FEET TO A POINT; THENCE NORTH 0 DEGREES
02'00" WEST A DISTANCE OF 115.00 FEET TO THE TRUE POINT OF BEGINNING.
▇-▇
▇▇
▇▇▇▇▇▇ ▇▇. ▇▇-▇▇, ▇▇▇▇ ▇▇▇
EXHIBIT "A" (CONTINUED)
LEGAL DESCRIPTION
PARCEL FOUR (4) :
THAT PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF SAID
SECTION 21; THENCE SOUTH 89 DEGREES 07'15" EAST A DISTANCE OF 80.01 FEET TO A
POINT ON THE ▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇, (ORIGINAL ALIGNMENT 80 FEET WIDE),
SAID POINT BEING THE NORTHWEST CORNER OF PARCEL CONVEYED BY ▇▇▇▇▇▇ ▇▇▇▇, ET AL,
TO LAND O'SUN LAND COMPANY DEED RECORDED AUGUST 12, 1954 AS D0CUMENT ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇; THENCE CONTINUING SOUTH 89 DEGREES
07'15" EAST ALONG THE NORTH LINE OF THE ABOVE DESCRIBED PARCEL A DISTANCE OF
409.87 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 89 DEGREES
07'15" EAST ALONG THE SAID NORTH LINE A DISTANCE OF 399.91 FEET TO A POINT;
THENCE SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 161.42 FEET TO A POINT; THENCE
NORTH 88 DEGREES 42'28" WEST PARALLEL WITH THE SOUTH LINE OF THE SAID CONVEYED
PARCEL A DISTANCE OF 400.00 FEET TO A POINT; THENCE NORTH 0 DEGREES 02'00" WEST
A DISTANCE OF 158.92 FEET TO THE TRUE POINT. OF BEGINNING.
EXCEPTING THEREFROM THE NORTH 40 FEET THEREOF FOR ROAD PURPOSES.
PARCEL FIVE (5):
THAT PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF THE SOUTHWEST QUARTER (SW 1/4)
OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER (SW
1/4) OF SAID SECTION 21; THENCE SOUTH 89 DEGREES 07'15" EAST A DISTANCE
OF 80.01 FEET TO A POINT ON THE ▇▇▇▇ ▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇,
(ORIGINAL ALIGNMENT, 80 FEET WIDE), SAID POINT BEING THE
NORTHWEST CORNER OF PARCEL CONVEYED BY ▇▇▇▇▇▇ ▇▇▇▇; ET AL, TO
LAND O'SUN LAND CO. BY DEED RECORDED AUGUST 12, 1954 AS DOCUMENT
NO. 17629, OFFICIAL RECORDS, ▇▇▇▇▇ COUNTY, NEVADA RECORDS; THENCE
CONTINUING SOUTH 89 DEGREES 07'15" EAST ALONG THE NORTH LINE OF THE
ABOVE DESCRIBED PARCEL A DISTANCE OF 409.87 FEET TO A POINT; THENCE
SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 158.92 FEET TO THE TRUE POINT
OF BEGINNING; THENCE SOUTH 88 DEGREES 42'28" EAST, PARALLEL WITH THE
SOUTH LINE OF ABOVE DESCRIBED PARCEL A DISTANCE OF 400.00 FEET TO
A POINT; THENCE SOUTH 0 DEGREES 02'00" EAST A DISTANCE OF 115.00 FEET TO
A POINT; THENCE NORTH 88 DEGREES 42'28" WEST, PARALLEL WITH SAID SOUTH LINE A
DISTANCE OF 400.00 FEET TO A POINT; THENCE NORTH 0 DEGREES 02'00" WEST A
DISTANCE OF 115.00 FEET TO THE TRUE POINT OF BEGINNING.
A-3
58
EXHIBIT "B"
TENANT'S RENDERINGS
[TO BE ATTACHED]
B-1
59
ESCROW NO. 96-06-0201 RMG
EXHIBIT "C"
At the date hereof Exceptions to coverage in addition to the printed exceptions
and exclusions contained in said policy form would be as follows:
(1) SUBSEQUENT YEAR TAXES: Taxes for the fiscal year 1996 to
1997 and subsequent years, a lien not yet due or payable.
Taxes for the fiscal year 1995-96, are paid in full. All taxes current
(2) SUPPLEMENTAL TAXES: Any supplemental taxes which may become a lien on the
subject property by reason of increased valuations due to land use or
improvement, NRS 361.260, or otherwise. All taxes current
(3) SPECIAL ASSESSMENTS: for MEDIAN LANDSCAPE AND MAINTENANCE
Improvement District No.: 97A
Assessment No.: 162-21-301-007-5076
Term: 20 YEARS
Installment due on: FEBRUARY 1 AND AUGUST 1
Initial Principal Balance: $51,741.30
Interest Rate: 6.35
Pay off $53,596.42 if paid by June 30, 1996.
No. of delinquent installments 0
Affects: PARCEL ONE (1)
(4) SPECIAL ASSESSMENTS: for MEDIAN LANDSCAPE AND MAINTENANCE
Improvement District No.: 97A
Assessment No.: 162-21-301-003-5076
Term: 20 YEARS
Installment due on: FEBRUARY 1 AND AUGUST 1
Initial Principal Balance: $51,741.30
Interest Rate: 6.35
Pay off $56,733.57 if paid by June 30, 1996.
No. of delinquent installments 0
Affects: PARCEL TWO (2)
(5) PENDING SPECIAL ASSESSMENT: A pending assessment for ▇▇▇▇▇
County Special Assessment District No. 97B as disclosed by Assessment Plat
recorded October 10, 1994 in Book 941010 as Document No. 01177.
Affects: PARCEL 1 AND 2
(6) ▇▇▇▇▇ COUNTY SANITATION DISTRICT: The herein described property lies
within the boundaries of ▇▇▇▇▇ COUNTY SANITATION DISTRICT and may be subject to
all assessments and obligations thereof.
(7) PATENT: Reservations and Easements in the patent from the United States
of America, recorded July 1, 1931, in Book 18 of Deeds, Pages 272 and 273 as
Document No. 41003, of Official Records.
C-1
60
ESCROW NO: 96-06-0201 RMG
(8) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded July 16, 1957, in Book 135 as Document
No. 110695 of Official Records.
(9) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded July 16, 1957, in Book 135 as Document
No. 110699 of Official Records.
(10) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded November 24, 1959, in Book 222 as
Document No. 180725 of Official Records.
(11) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded August 29, 1961, in Book 315 as
Document No. 255041 of Official Records.
(12) An unrecorded Lease executed by and between the parties named herein, for
the terms and upon and subject to all of the terms, covenants, and provisions
contained therein;
Dated: May 1, 1987
Lessor: ▇▇▇▇▇▇ FAMILY TRUST
Lessee: FORTE HOTELS INTERNATIONAL, INC.
Term: 20 years
Disclosed by: MEMORANDUM OF LEASE
Recorded: October 9, 1989 in Book 891009 as Document No. 00485
Affects: PARCELS ONE (1) AND THREE (3)
Said lease was modified by an instrument executed by ▇▇▇▇▇▇ FAMILY TRUST, ▇▇▇▇▇
▇▇▇▇▇▇ TRUSTEE, as lessor, and FORTE HOTELS INTERNATIONAL, INC., as lessee.
Said instrument recorded November 19, 1990 in Book 901119 of Official Records
as document number 00332.
C-2
61
EXHIBIT "D"
PERMITTED CONDITIONS
Section 23.4 of this Lease grants to Tenant the right to encumber its interest
in this Lease by mortgage for the purpose of financing construction and
provides inter alia and acknowledges that a Leasehold Mortgage may provide that
certain property insurance proceeds and condemnation awards with respect to the
buildings and other improvements constructed on the Leased Premises shall only
be disbursed for repair, reconstruction or restoration upon the satisfaction of
certain specified conditions (the "CONDITIONS").
Landlord hereby acknowledges that the Conditions set forth below are
reasonable conditions to such disbursement and hereby grants its approval of
such conditions.
Conditions
1. A provision that all proceeds of such property insurance (which does
not include debris removal or demolition cost insurance) with respect to any
damage or destruction to the improvements on the Leased Premises, shall be
payable to the Leasehold Mortgagee if received by Tenant.
2. A provision that all proceeds of insurance shall be held by the
Leasehold Mortgagee for Tenant in a non-interest bearing escrow account pending
disbursement.
3. A provision that the amount of loss proceeds to be disbursed toward
reconstruction shall be the amount of such condemnation awards or insurance
proceeds remaining after deduction of all reasonable expenses of collection and
settlement including, without limitation, attorneys' and adjustors' fees and
charges.
4. A provision that no such loss proceeds shall be disbursed unless or
until:
(i) no default, or an event which with the giving of notice, the passage
of time, or both, would constitute a default has occurred and is continuing;
(ii) the sum of condemnation awards and/or insurance proceeds and other
amounts deposited with the Leasehold Mortgagee or its designee is sufficient to
complete such repair, reconstruction or alteration;
(iii) the Leasehold Mortgagee determines, in its reasonable judgment,
that the damage or destruction to the improvements on the Leased Premises can be
repaired and the restoration completed by the maturity date of the loan;
(iv) the Leasehold Mortgagee and all applicable governmental authorities
shall have approved the final plans and specifications for reconstruction of
the subject improvements;
D-1
62
(v) Tenant shall have delivered to the Leasehold Mortgagee (A) a
budget of all costs of reconstruction of the improvements on the Leased
Premises, (B) a construction schedule for the reconstruction of such
improvements, and (C) a construction contract for the reconstruction work of
the improvements on the Leased Premises in form and content, and with a
contractor, acceptable to the Leasehold Mortgagee in its reasonable judgment;
(vi) the ratio of the loan amount to the value of the improvements on
the Leased Premises and Tenant's interest under this Lease is not more than that
ratio as of the date the loan evidenced by the Leasehold Mortgage was made;
(vii) the Leasehold Mortgagee receives satisfactory written evidence
that ▇▇▇▇▇ County, Nevada has approved the plans and specifications for the
reconstruction work, if such approval is required;
(viii) the Leasehold Mortgagee receives satisfactory evidence that this
Lease is, and during the period of required reconstruction will remain, in full
force and effect and all necessary approvals in connection with the
reconstruction have been obtained from the Landlord; and
(ix) the Leasehold Mortgagee receives satisfactory evidence that ingress
to and egress from the Leased Premises, and Tenant's use thereof, will be fully
available as of the projected date of reconstruction of such improvements to
the same degree as before such damage or destruction.
D-2
63
EXHIBIT "E"
GUARANTY
This Guaranty of LEASE ("GUARANTY) is made as of the ___ day of June, 1996,
by GRAND CASINOS, INC., a Minnesota corporation ("GUARANTOR") in favor of ▇▇▇▇▇▇
FAMILY TRUST and NEVADA ▇▇▇▇▇▇ ▇▇▇▇ (collectively, "LANDLORD"), with respect to
a certain Lease Agreement entered into as of ________, 1996 (the "LEASE") by and
between Landlord and CLOOBECK ENTERPRISES, a California corporation and GRAND
CASINOS NEVADA I, INC., a Minnesota corporation, (collectively, "TENANT").
W I T N E S S E T H
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
Guarantor agrees as follows:
1. Guarantor directly, absolutely, independently, primarily,
unconditionally and continually guarantees as to Landlord and its successors
and assigns, the full and punctual payment, performance and observance by
Tenant of all terms, covenants and conditions contained in the Lease on
Tenant's part to be kept, performed or observed, including, without limitation,
payment of Base Rent, late charges and all other amounts payable by Tenant to
Landlord under the Lease. If, at any time, default shall be made by Tenant in
the performance or observance of any of the terms, covenants or conditions
contained in the Lease on Tenant's part to be kept, performed or observed, or
if Tenant shall default in any payment due under the Lease, Guarantor will pay,
keep, perform and observe the same, as the case may be, in the place and stead
of Tenant.
2. Any act of Landlord or its agents, or the successors or assigns of
Landlord or their agents, consisting of a waiver of any of the terms or
conditions of the Lease, or the giving of any consent to any manner or thing
relating to the Lease, or the granting of any indulgences or extensions of time
to Tenant, or to the release of any collateral providing security for the full
performance of Tenant's obligations, or the failure of Landlord to resort to
any of its remedies provided by the Lease or at law or in equity, may be done
and taken without notice to Guarantor and without releasing the obligations of
Guarantor hereunder and Guarantor hereby expressly waives any notice of
non-payment, non-performance or non-observance, or proof of notice or demand,
in order for Landlord to claim under this Guaranty.
3. The obligations of Guarantor hereunder shall not be released by
Landlord's receipt, application or release of security given for the
performance and observance of covenants and conditions contained in the Lease,
nor by any modification of the Lease, but in case of any such modification the
liability of Guarantor shall be deemed modified in accordance with the terms of
any such modification.
E-1
64
4. The liability Of Guarantor hereunder shall in no way be affected by:
(a) the release or discharge of Tenant in any receivership, bankruptcy or other
proceedings; (b) the impairment, limitation or modification of Tenant's
liability under the Lease resulting from the operation of any present or future
provision of the bankruptcy laws or other statute or from the decision in any
court; (c) the rejection or disaverments of the Lease in any such proceedings;
(d) the assignment or transfer or sublease of the Lease by Tenant; (e) any
disability or other defense of Tenant other than performance or accord and
satisfaction; (f) the cessation from any cause whatsoever of the liability of
Tenant other than performance or accord and satisfaction; (g) the impairment or
release of any collateral securing the full performance of Tenant's
obligations; or (h) the release of any other guarantor or surety for the
obligations of Tenant under the Lease or any portion of such obligation.
5. This Guaranty shall apply to the Lease, any extension or renewal
thereof and to any holdover term thereby granted or any extension or renewal
thereof.
6. This instrument may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement in writing signed by
Guarantor and Landlord.
7. Guarantor shall pay all costs incurred, including without limitation
reasonable attorneys' fees, in the event collection or enforcement efforts are
commenced against Guarantor by the placement of this Guaranty into the hands of
an attorney, such costs and reasonable attorneys' fees to be paid irrespective
of whether or not action or actions are commenced or continued to judgment.
8. Guarantor's liability herein is primary, direct, absolute, continual
and unconditional and is joint and several and independent of the obligations
of Tenant. A separate action may be brought and the obligations of Guarantor
may be immediately enforced without necessity of any action against Tenant or
collateral or the resort by Landlord to any of its remedies under the Lease or
at law or in equity and a separate action may be prosecuted against Guarantor
whether or not action or actions are brought against Tenant and whether or not
Tenant is joined in any such action and Guarantor hereby waives the benefit of
any enforcement thereof.
9. No delay on Landlord's part in exercising any right, power or
privilege under this Guaranty or any other document executed in connection
herewith shall operate as a waiver of any such privilege, power or right.
10. Guarantor agrees that any judgment rendered against Tenant for monies
or performance due Landlord shall in every and all respects bind and be
conclusive against Guarantor to the same extent as if Guarantor had appeared in
any such proceeding and judgment therein had been rendered against Guarantor.
11. Guarantor subordinates to Tenant's obligations to Landlord all
indebtedness of Tenant to Guarantor, whether now existing or hereafter
contracted, whether direct or indirect, contingent or determined.
▇-▇
▇▇
▇▇. The terms, covenants and conditions contained in this Guaranty shall
apply to and bind the successors and assigns of undersigned.
13. The terms, covenants and conditions contained in this Guaranty shall
inure to the benefit of the successors and assigns of Landlord. Without
limiting the holder of any lien or security interest in the real property
described in the Lease, any assignee of Landlord's interest in the Lease and
any purchaser at a foreclosure, trustee's or other sale shall be entitled to
the benefits of this Guaranty.
14. If any term, covenant or condition of this Guaranty, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or enforceable, all terms, covenants and conditions of this
Guaranty, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
15. In addition to the foregoing, (a) pursuant to Section 40.495 of the
Nevada Revised Statutes ("NRS"), Guarantor hereby waives and relinquishes all
rights and remedies to which Guarantor might otherwise be entitled pursuant to
NRS 40.430 or other applicable Nevada law, and (b) Guarantor specifically
waives its rights under NRS 104.3605, and agrees that the foregoing shall
constitute a waiver of discharge under NRS 104.3605(9).
16. Notwithstanding the foregoing provisions of this Guaranty, but subject
to the provisions of Section 14.1 of the Lease, the obligations of Guarantor
hereunder shall not extend to and Guarantor shall have no liability under this
Guaranty with respect to any obligations of the Tenant which arise after the
later of (i) the fifth annual anniversary of the Effective Date, as defined in
the first paragraph of the Lease; or (ii) the date upon which a certificate of
occupancy is issued for Tenant's Project, as defined in Section 31.1 of the
Lease, so long as the Fair Market Value of Tenant's Project, as defined in
Section 31.4 of the Lease, is a least Two Hundred Million Dollars
($200,000,000).
IN WITNESS WHEREOF, Guarantor has caused this instrument to be executed as
of the day and year first written above.
GRAND CASINOS, INC.
a Minnesota corporation
By:_________________________
Its:________________________
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This instrument was acknowledged before me on _____________, 1996
by ____________ as _______________ of Grand Casinos, Inc.
______________________________
Notary Public
My commission expires:________
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