EXHIBIT 10.39
PUBLIC TRUST TIDELANDS LEASE OF FAST LANDS
STATE OF MISSISSIPPI
COUNTY OF XXXXX
THIS AGREEMENT, made and entered into this 31st day of December, 1996, by
and between the SECRETARY OF STATE, with the approval of the GOVERNOR, for and
on behalf of the STATE OF MISSISSIPPI, hereinafter referred to as "LESSOR,"
and BH ACQUISITION CORPORATION, a corporation registered to do and doing
business in the State of Mississippi, hereafter referred to as "LESSEE."
W I T N E S S E T H :
THAT FOR THE TERM and in consideration of the rentals hereinafter set forth,
and covenants, conditions, and obligations to be observed and performed by
LESSEE, LESSOR does hereby lease and rent unto LESSEE, pursuant to the
authority of MISS. CODE XXX. Section 29-1-107 (Supp. 1992), all artificially
filled tidelands also known as "fast" lands, hereinafter referred to as SAID
PROPERTY within the following described parcel, to wit:
A parcel of land situated in Section 35, T7S, R10W, City of Biloxi, Second
Judicial District, Xxxxxxxx County, Mississippi, containing 15.8765 acres,
more or less, and described more particularly as follows:
Commencing at an "X" cut in the top of the concrete seawall at the
intersection of the West line of that property described in the Land Deed
Records of Xxxxxxxx County, MS., Book 134 at page 456, and said seawall;
thence N88 degrees 15'E a distance of 8.89 ft. to the POINT OF BEGINNING;
thence SO degrees 49'19"E a distance of 750.70 ft. to a point; thence S89
degrees 04'15"E a distance of 1.85 ft. to a point; thence S0 degrees
55'13"E a distance of 132.62 ft. to a point; thence North 88 degrees
45'12"E a distance of 77.22 ft. to a point; thence S0 degrees 51'31"E a
distance of 103.45 ft. to the point of curvature of a curve to the left
with a radius of 14.39 ft. and central angle of 103 degrees 05'24"; thence
along the arc of said curve a distance of 25.89 ft. to the point of
tangency of said curve; thence N76 degrees 03'05"E a distance of 144.16
ft. to a point; thence N0 degrees 53'14"W a distance of 766.50 ft. to a
point; thence N89 degrees 51'40"E a distance of 45.36 ft. to a point;
thence N0 degrees 31'32"W a distance of 40.33 ft. to a point; thence N89
degrees 28'30"E a distance of 460.62 ft. to a point; thence S0 degrees
03'25"E a distance of 40.17 ft. to a point; thence N89 degrees 26'21"E a
distance of 45.96 ft. to a point; thence S0 degrees 27'16"E a distance of
815.80 ft. to a point; thence S89 degrees 04'03"W a distance of 58.38 ft.
to a point; thence S7 degrees 32'32"E a distance of 59.26 ft. to a point;
thence S82 degrees 17'08"W a distance of 625.70 ft. to the point of
curvature of a curve to the left with a radius of 45.99 ft. and a central
angle of 83 degrees 07'21"; thence along the arc of said curve a distance
of 66.72 ft. to the point of tangency of said curve; thence S0 degrees
50'17"E a distance of 250.21 ft. to the point of curvature of a curve to
the left with a radius of 46.80 ft. and central angle of 90 degrees
55'17"; thence along the arc of said curve a distance of 74.26 ft. to the
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point of tangency of said curve; thence N88 degrees 14'26"E a distance of
675.55 ft. to the point of curvature of a curve to the left with a radius
of 51.44 ft. and central angle of 88 degrees 40'13"; thence along the arc
of said curve a distance of 79.61 ft. to the point of tangency of said
curve; thence N0 degrees 25'47"W a distance of 1449.80 ft. to a point;
thence S88 degrees 15'W a distance of 855.75 ft. to the point of
beginning.
1. TERM.
The primary term of this lease shall be for forty (40) years, beginning on
the 1st day of January, 1997, and terminating on the 31st day of December,
2037. If LESSEE has complied with all material terms, covenants, conditions,
and obligations of this lease, as of the expiration of the primary term,
LESSEE shall have the option to extend this lease for a renewal term of
twenty-five (25) years until December 31, 2062 under the same terms and
provisions of this lease. LESSEE shall have the option to terminate this
lease upon thirty (30) days prior written notice to LESSOR in the event
LESSEE's Tidelands Lease with LESSOR dated August 6, 1992 is terminated.
2. CONSIDERATION.
The parties hereto agree that SAID PROPERTY contains 15.8765 acres, more or
less, of filled tidelands. During the first thirty (30) years of the initial
lease period, LESSEE covenants and agrees to pay annual rental to LESSOR in
the sum of Twenty-One Thousand Three Hundred Thirty-Eight Dollars
($21,338.00), being the 1996 ad valorem tax amount assessed against SAID
PROPERTY (excluding the value of any and all improvements situated thereon).
At the end of the first thirty (30) years the annual rental shall be based
upon the fair market value determined by an appraisal (excluding the value of
any and all improvements situated thereon). The appraisal shall be determined
by competent and disinterested appraisers selected pursuant to Section 3
below. LESSEE shall be responsible for ad valorem taxes for the year 1996 and
all subsequent years during the term of this lease. Payment of the first
year's rent shall be made on or before January 1, 1997.
3. RENT ADJUSTMENT.
Even though the rental amount for the first thirty (30) years of this lease
shall be based upon the ad valorem tax rates as provided for next above,
excluding the value of any and all improvements on SAID PROPERTY, LESSOR
shall, at the end of each five (5) year period of the lease term, adjust the
rental amount (but it shall still be based upon the tax value excluding the
value of any and all improvements on SAID PROPERTY) as provided for in MISS.
CODE XXX. Section 29-1-107(2) (Supp. 1992) or as amended by subsequent
legislation and the adopted and published rules of the Secretary of State for
the administration, control and leasing of public trust tidelands, as amended
and revised. In the event that LESSOR shall require a rental adjustment for
any of such periods, LESSOR and LESSEE may agree in writing on the amount of
the rental for the period in question at any time within sixty (60) days after
the giving by LESSOR to LESSEE of written notice of such requirement. If an
agreement is not reached and signed by both parties within sixty (60) days,
then the rental for the period in question shall be determined by competent
and disinterested M.A.I. Certified Appraisers, one of whom shall be selected
and paid for by LESSOR and one selected and paid for by LESSEE. If the fair
market rental value determined by said appraisers does not differ by more than
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ten percent (10%), the fair market rental shall be the average of the two
appraisals. If the fair market rental value differs more than ten percent
(10%), a third M.A.I. Certified Appraiser shall be appointed by the two
appraisers, the expense to be born equally by LESSOR and LESSEE. Upon
completion of the appraisal by the third appraiser, the fair market rental
value shall be the average of the two appraisals that are closest to each
other in dollar amount. In the event the two appraisers are unable to agree
upon a third appraiser, the appraiser shall be appointed by a Chancellor in
Xxxxxxxx County, Mississippi.
The appraisers when selected shall be instructed that they are to determine
the fair rental value of SAID PROPERTY for the highest and best use of SAID
PROPERTY at such time, without regard to any and all improvements on SAID
PROPERTY or the use then being made of the property by LESSEE. The appraisal
shall be in writing and copies of it shall be given to LESSOR and LESSEE prior
to the commencement of the period in question. In no event shall the
appraised rental value be less than the rental then being paid by LESSEE. The
amount so determined by appraisal shall be the rental for the remainder of the
term of this lease agreement or the option period, as the case may be, or
until further adjustment as provided above. In the event the appraisers fail
to determine the fair market rental value and the LESSOR and LESSEE cannot
agree on an adjusted rental amount, the lease may be cancelled at the option
of LESSOR.
4. PLACE AND TIME OF PAYMENT.
Rent shall be payable annually on or before January 1 to the STATE OF
MISSISSIPPI and shall be submitted to the SECRETARY OF STATE or his successor
in office, through the Public Lands Division, 000 Xxxxxxxxxxx Xxxxxx, Xxxx
Xxxxxx Xxx 000, Xxxxxxx, Xxxxxxxxxxx 00000.
5. INTEREST PENALTY FOR PAST DUE RENT BALANCES.
LESSEE shall pay a late charge equal to interest at the rate of eight
percent (8%) per annum from the date due until paid on any lease rentals,
fees, or other charges due and payable hereunder, which are not paid within
thirty (30) days of their due date.
6. RIGHT TO RE-LEASE
Pursuant to MISS. CODE XXX Section 29-1-107 (Supp. 0000), XXXXXX is hereby
granted the prior right, exclusive of all other persons, to re-lease or renew
this lease at the expiration of the term hereof, as may be reasonably agreed
upon between LESSEE and LESSOR.
7. TAXES, SURVEY COSTS AND RECORDING FEES.
LESSEE covenants and agrees to pay any and all general taxes and special
assessments if ever any there be, applicable to SAID PROPERTY and LESSEE's
interest therein and improvements thereon; further LESSEE covenants and agrees
to pay survey costs and recording fees in connection with this lease or any
other fees so determined by law.
8. TRANSFERABILITY OF LEASE.
LESSEE anticipates the future necessity to be able to sublease, assign, or
transfer SAID PROPERTY for future development purposes, including, but not
limited to, possible hotel/retail development. LESSEE may assign this lease
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or sublet the whole or any part of SAID PROPERTY provided that the proposed
use complies with the permitted uses specified in Section 14 hereof. No
subletting or assignment shall relieve LESSEE from any of its obligations as
LESSEE hereunder without an express written release from LESSOR, which release
shall not be unreasonably withheld. In this regard, LESSEE agrees that it
will notify the SECRETARY OF STATE or his successor of any such assignment or
sublease in writing, within thirty (30) days of the transfer.
9. LESSOR'S CONSENT TO LEASE ENCUMBRANCES.
LESSOR does hereby acknowledge that LESSEE, or any other related entity, may
from time to time, mortgage or otherwise encumber its leasehold interest in
SAID PROPERTY along with other premises owned or leased by LESSEE, or any
other related entity and, LESSOR recognizes that LESSEE's lenders are likely
to require LESSOR's consent to encumbrance of LESSEE's interest in SAID
PROPERTY. In recognition of the foregoing, LESSOR does hereby agree to
execute consents as may be reasonably required by LESSEE's third party lenders
from time to time, provided that such form(s) are in a form substantially
similarly to the Landlord's Consent to Lease Encumbrance (the "Consent")
attached hereto as Exhibit "A."
10. DEFAULT.
(a) LESSEE. The parties herein expressly agree that if DEFAULT shall be
made in the payment of any rent due pursuant to this lease, then and in any
such event of DEFAULT it shall be lawful for LESSOR to enter upon SAID
PROPERTY, or any part thereon, upon LESSOR's thirty (30) day written notice to
LESSEE within which LESSEE may cure such DEFAULT, either with or without
process of law, to re-enter and repossess the same, and to distrain for any
rent or assessment that may be due thereon, at the election of LESSOR, but
nothing herein is to be construed to mean that LESSOR is not permitted to hold
the said LESSEE liable for any unpaid rent up to that time. As to all other
conditions, covenants, and obligations imposed on LESSEE herein, enforcement
shall be by proceeding at law or in equity against any person violating or
attempting to violate said conditions, covenants, and obligations to restrain
violation and to recover damages, if any, including reasonable expenses of
litigation and reasonable attorney's fees, which, if LESSOR prevails, LESSEE
expressly agrees to pay. Such enforcement by proceedings at law or in equity
may be instituted at any time after thirty (30) days written notice to LESSEE
if the default or violation has not been corrected within that thirty (30) day
period, or if the default is not reasonably curable within thirty (30) days
and LESSEE has not commenced to cure same within thirty (30) days, and
thereafter diligently pursues the curing of such default.
(b) LESSOR. Should LESSOR default in the performance of any covenant or
agreement herein, and such default continues for thirty (30) days after LESSOR
receives written notice thereof from LESSEE, or if such default is not
reasonably curable within thirty (30) days, and LESSOR has not commenced to
cure same within said thirty (30) day period and thereafter diligently pursues
the curing of such default, in the event such default can be cured by the
payment of money, LESSEE may pay any sums necessary to cure such default of
LESSOR and deduct the cost thereof with interest at 8% per annum from the date
paid, from rents and all other monetary charges under this lease.
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11. FORFEITURE, DEFAULT OR CANCELLATION.
LESSEE's FAILURE to comply with the provisions of this lease shall result at
the option of LESSOR, in the cancellation of this lease within sixty (60) days
after written notice of default is given if such default continues or if
LESSEE has not commenced to cure same if such default is not curable within
thirty (30) days. In the event of any such FORFEITURE, DEFAULT OR
CANCELLATION of this lease or termination of the term as aforesaid, said
LESSEE shall quit, deliver up and surrender possession of all lands which
comprise SAID PROPERTY, and thereupon this lease and all agreements and
covenants on LESSOR's behalf to be performed and kept, shall cease, terminate
and be utterly void, the same as if the lease had not been made. In addition
thereof, LESSOR shall be entitled to whatever remedies it may have at law or
equity for the collection of any unpaid rental hereunder, or for any other
sums, for damages or otherwise, that it may have sustained on account of
LESSEE's nonfulfillment or nonperformance of the terms and conditions of this
lease.
Immediately upon the termination of this lease, whether by FORFEITURE,
DEFAULT, or CANCELLATION, LESSOR shall be entitled to take possession of SAID
PROPERTY, custom and usage to the contrary notwithstanding. If LESSEE
declines or fails to remove structures and equipment occupying and erected
upon the leased premises within one hundred twenty (120) days after expiration
or termination of this lease, such structures and equipment will be deemed
forfeited by LESSEE, and may be removed and/or sold by LESSOR after ten (10)
days written notice by certified mail addressed to LESSEE.
12. RENT NOT REFUNDABLE.
LESSOR and LESSEE agree that any rent paid during the term of this lease is
non-refundable and LESSEE waives any right or claim he may have to refund of
rents paid under the term of this lease.
13. IMPROVEMENTS.
LESSOR acknowledges that the improvements which presently exist and which
are constructed on SAID PROPERTY are not the property of LESSOR and that
LESSEE shall have the right to remove the improvements upon termination of
this lease, other than any retaining walls. In the event LESSEE fails to
remove said improvements within one hundred twenty (120) days after
termination of this lease, the improvements shall be deemed abandoned and
revert to LESSOR.
14. RESTRICTIONS ON USE.
LESSEE shall use SAID PROPERTY for the operation of a dockside gaming
facility or the operation of a hotel facility and those activities which are
consistent with operating a hotel and/or a dockside gaming facility, including
without limitation, dining, amusement, gift shops, sports or entertainment
facilities, transportation services or other related activities.
LESSEE shall comply with any and all applicable federal, state, county or
city laws, statutes, regulations, building codes, building requirements,
safety or conservation regulations, fire codes, ordinances, pollution
standards, or zoning regulations, including, but not limited to those
pertaining to parking for all permitted uses developed on SAID PROPERTY in
conformance with City of Biloxi requirements, and the City of Biloxi
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Landscaping Rules and Regulations.
If LESSEE fails to make permitted use of SAID PROPERTY or abandons SAID
PROPERTY, or uses SAID PROPERTY in violation of any applicable law or
regulation as aforesaid, LESSOR shall provide thirty (30) days written notice
to LESSEE and proceed as set forth in Item 10 above for any default in the
covenants, conditions and obligations imposed hereunder on LESSEE.
15. NO CLAIM OF TITLE OR INTEREST.
LESSEE, in accepting this lease, does hereby agree that no claim of title or
interest to SAID PROPERTY other than LESSEE's leasehold interest under this
lease, shall be made by reason of the occupancy or use thereof. LESSEE
further acknowledges and agrees that it is entitled to no rights to any
additional adjoining submerged lands or filled tidelands as a result of this
lease.
16. CATASTROPHIC DESTRUCTION OR DAMAGE.
In the event of catastrophic destruction or damage, or other destruction of
LESSEE's improvements on SAID PROPERTY, LESSEE may terminate this lease at its
option, provided that LESSEE shall reasonably remove the debris remaining on
SAID PROPERTY prior to any such termination. LESSOR agrees that it shall
interpose no objection should LESSEE decide to rebuild those improvements
demolished.
17. DUE DILIGENCE.
LESSEE shall use reasonable effort to protect SAID PROPERTY against damage
or waste from any and all causes. LESSEE shall not deposit any refuse on any
off-site, adjoining state property. Disposition of refuse and waste shall be
consistent with local and State health regulations.
18. INDEMNITY AND HOLD HARMLESS
LESSEE assumes full responsibility for the condition of the premises and
LESSOR shall not be responsible for any damages or injuries caused by any
vices or defects therein to LESSEE or its invitees, and LESSEE agrees to hold
and save harmless, protect and indemnify LESSOR from and against any and all
loss, damages, claims, suits or actions at law or equity, judgments and costs,
including attorney's fees, which may arise or grow out of any injury or death
of persons or loss or damage to property connected with LESSEE's exercise of
any right granted or conferred hereby, or LESSEE's use, maintenance, operation
or condition of the property herein leased or the activities thereon conducted
by LESSEE, whether sustained by LESSEE, its respective agents or employees, or
by any other persons, or corporations which seek to hold LESSOR liable.
LESSEE agrees to maintain the leased premises in good condition, keeping the
structures and equipment located thereon in a good state of repair in the
interests of public health and safety.
19. QUIET AND PEACEFUL POSSESSION.
LESSOR shall defend LESSEE's right of use of SAID PROPERTY under this lease,
and LESSEE shall have quiet and peaceful possession of SAID PROPERTY so long
as compliance is made by LESSEE with the terms of this agreement. LESSEE
agrees to deliver possession of SAID PROPERTY peaceably and promptly within
thirty (30) days after the expiration or termination of this lease, subject to
LESSEE's right to remove the improvement as specified in paragraph 13 above.
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20. RIGHT OF ENTRY.
LESSOR reserves the right to enter onto SAID PROPERTY at reasonable times to
inspect the premises to determine compliance with the lease terms herein, upon
notice to LESSEE at least 24 hours in advance of said inspection.
21. PERMITTED USE.
All property of LESSEE shall be maintained by LESSEE at LESSEE's expense and
in a clean, orderly, healthful, and attractive condition subject to reasonable
inspection by LESSOR or his representative upon 24 hours notice to LESSEE. It
is expressly agreed by and between the parties that LESSEE will not occupy or
use, nor permit to be occupied or used, SAID PROPERTY for any business deemed
hazardous, nor will LESSEE permit the same to be used for any unlawful
purposes.
22. LIABILITY INSURANCE.
LESSEE shall secure and maintain throughout the term of the lease a
liability insurance policy providing coverage in any amount not less than Five
Million Dollars ($5,000,000.00) against accidents, death or bodily injury or
loss or damages to property occurring on or in connection to SAID PROPERTY, or
LESSEE's improvements thereon, or arising out of or associated with any
activity of LESSEE on SAID PROPERTY. In the event LESSEE constructs a hotel
and/or retail development on SAID PROPERTY, with permission of LESSOR, LESSEE
shall increase this amount of coverage to not less than Fifteen Million
Dollars ($15,000,000.00).
23. RESERVATION OF MINERAL RIGHTS.
LESSEE further covenants and agrees that this lease and interest of LESSEE
SHALL NOT include any mineral, oil or gas, coal, lignite, or other
subterranean rights WHATSOEVER.
24. RIGHT TO CANCEL UPON INSOLVENCY OF LESSEE.
LESSEE covenants and agrees that if an execution or process is levied upon
SAID PROPERTY or if a Petition in Bankruptcy be filed by or against LESSEE in
any court of competent jurisdiction, LESSOR shall have the right, at its
option to cancel this lease. LESSEE covenants and agrees that this lease and
the interest of LESSEE hereunder shall not, without the written consent of the
SECRETARY OF STATE or his successor first obtained, be subject to garnishment
or sale under execution or otherwise in any suit or proceeding which may be
brought by or against said LESSEE.
25. WAIVER NOT A DISCHARGE.
No failure, or successive failures, on the part of LESSOR to enforce any
provisions, nor any waiver or successive waivers on its part of any provision
herein, shall operate as a discharge thereof or render the same inoperative or
impair the right of LESSOR to enforce the same upon any renewal thereof or in
the event of subsequent breach or breaches.
26. NOTICE.
All notifications required under the terms of this lease shall be made to
the parties at the following addresses:
Secretary of State: 000 Xxxxxxxxxxx Xxxxxx
Post Office Xxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
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BH Acquisition Corporation: Attention: Xxxx Xxxxxxxx, President
0000 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Xxxx Xxxxxxxxxx, Secretary
0000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
With copy to:
Xxxxxx Xxxxxx, L.L.P.
P. O. Xxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
000-000-0000 - Phone
000-000-0000 - Fax
LAWS OF MISSISSIPPI TO GOVERN.
This agreement is to be governed by the laws of the STATE OF MISSISSIPPI,
both as to interpretation and performance.
IN WITNESS WHEREOF, this lease is executed by LESSOR and LESSEE, this the
31st day of December, 1996.
LESSOR:
STATE OF MISSISSIPPI
XXXX XXXXX
SECRETARY OF STATE
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
XXXXX X. XXXXXX, XX
ASSISTANT SECRETARY OF STATE
FOR PUBLIC LANDS
LESSEE:
BH ACQUISITION CORPORATION,
a Mississippi Corporation
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
APPROVED BY THE GOVERNOR of the State of Mississippi on the 10th day of
January, 1997.
/s/ Xxxx Xxxxxxx
------------------------------------
GOVERNOR
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