THIRD AMENDMENT TO LEASE AGREEMENT
BETWEEN PARK CATTLE CO, LANDLORD AND
HARVEYS CASINO RESORTS,
FORMERLY KNOWN AS HARVEYS WAGON WHEEL, INC., TENANT
This Third Amendment to Lease Agreement dated as of the 1st day of June,
1997 by and between PARK CATTLE CO. (the Landlord'), a Nevada corporation and
HARVEYS CASINO RESORTS, formerly known as XXXXXX'X WAGON WHEEL, INC. (the
Tenant'), a Nevada corporation,
WITNESSETH:
1. On July 9, 1973, the Landlord and Tenant entered into a Lease
Agreement (the Lease').
2. On April 27, 1979, Landlord and Tenant entered into a Modification of
the Lease (the First Amendment to Lease Agreement').
3. On February 28, 1985, the Landlord and Tenant entered into a Second
Amendment to Lease Agreement.
4. Tenant desires to extend the term of the Lease.
5. Landlord is willing to extend the term of the Lease subject to certain
terms and conditions.
6. The Landlord and Tenant desire to amend the Lease, as amended, as is
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and conditions herein contained, Landlord and Tenant hereby agree as follows:
I. Paragraph 2 of the Lease, as amended, is hereby amended to read as follows:
The Term
2. The term of this Lease shall be a period of seventy-two (72) years
commencing April 1, 1973 and terminating March 31, 2045, subject to earlier
termination as hereinafter set forth.
II. Paragraph 3 of the Lease, as amended, is hereby amended to read as follows:
The Rent
3. (a) Until December 1, 1997, the annual percentage rent for the
Premises shall be a sum equal to three percent (3%) of Gross Gaming Winnings
received and reported by the licensed operator of gaming on the property now
known as Harveys Lake Tahoe Resort during each Lease Year subject to the minimum
annual rent hereinafter provided. For the period December 1, 1997 through
November 30, 1998, the annual percentage rent for the Premises shall be a sum
which is the greater of three and twenty-five one-hundredths percent (3.25%) of
Gross Gaming Winnings received and reported by the licensed operator of gaming
on the property now known as Harveys Lake Tahoe Resort during each Lease Year,
or two and fifteen one-hundredths percent (2.15%) of all Net Revenues received
from the operation of the property now known as Harveys Lake Tahoe Resort during
each Lease Year, subject to the minimum annual rent hereinafter provided. For
the period December 1, 1998 through November 30, 1999, the annual percentage
rent for the Premises shall be a sum which is the greater of three and
thirty-five one-hundredths percent (3.35%) of the Gross Gaming Winnings received
and reported by the licensed operator of gaming on the property now known as
Harveys Lake Tahoe Resort during each Lease Year, or two and twenty-five
one-hundredths percent (2.25%) of all Net Revenues received from the operation
of the property now known as Harveys Lake Tahoe Resort during each Lease Year,
subject to the minimum annual rent hereinafter provided. Commencing December 1,
1999 the annual percentage rent for the Premises shall be a sum which is the
greater of three and fifty one-hundredths percent (3.50%) of Gross Gaming
Winnings received and reported by the licensed operator of gaming on the
property now known as Harveys Lake Tahoe Resort during each Lease Year, or two
and thirty-five one-hundredths percent (2.35%) of all Net Revenues from the
operation of the property now known as Harveys Lake Tahoe Resort during each
Lease Year, subject to the minimum annual rent hereinafter provided. To the
extent that the formula for calculating annual percentage rent changes during a
Lease Year, the change in formula shall be applied to that portion of the Lease
Year which occurs beginning on and after the date of the change.
(b) The annual percentage rent shall be paid by Tenant to Landlord
in four (4) quarterly installments within thirty (30) days of the close of each
quarter of the Fiscal Year of Tenant. The monthly minimum rent payments, as
hereinafter provided, made during each such quarter shall be credited against
such quarterly rent payment.
(c) For purposes of this Lease, the term Gross Gaming Winnings'
means the total of all sums received as winnings, less only the total of all
sums paid out as losses from all types of gaming conducted in or about the
casino and hotel now known as Harveys Lake Tahoe Resort. Such gross winnings
for each calendar quarter are now required by law to be reported to the Nevada
Gaming Commission. For purposes of this Lease, the term Net Revenues' shall
include all amounts received, whether by cash or credit, from the operation of
all of the facilities on the Premises and the property now known as Harveys Lake
Tahoe Resort, including, but not limited to, rooms, bars, restaurants,
concessions and gaming, but excluding only Casino Promotional Allowance. For
purposes of this Lease, Casino Promotional Allowance' means allowances
consisting principally of the retail value of complimentary rooms, food,
beverage, and other promotional allowances provided to customers without charge.
Tenant shall keep or cause to be kept complete and accurate records and accounts
of Net Revenues and Casino Promotional Allowance.
(d) With each quarterly payment of rent Tenant shall cause to be
delivered to Landlord an exact copy of all reports required by law to be made to
any agency or department of government of the State of Nevada for the purpose of
disclosing all revenue from the licensed gaming operations at the property now
known as Harveys Lake Tahoe Resorts during such quarter. In addition,
commencing December 1, 1997, with each quarterly payment of rent Tenant shall
cause to be delivered to Landlord a statement of Net Revenues for the preceding
calendar quarter and the amount of any authorized deduction therefrom. The
statement shall be certified as correct by Tenant's independent accountants or
by Tenant's chief financial officer.
(e) Within thirty (30) days after the close of a Fiscal Year of
Tenant, Landlord shall be furnished with a statement certified by Tenant's
independent accountants or chief financial officer of the amount of the Gross
Gaming Winnings and, in addition, commencing December 1, 1997, of Net Revenues
for the Fiscal Year of Tenant just ended, together with an appropriate
accounting setting forth the gross amount of percentage rental to which Landlord
was entitled for the immediately preceding Fiscal Year of Tenant, the amounts
paid to Landlord on account thereof and the resulting balance due Landlord or
the amount of overpayment which Landlord has received in the event that payments
on account exceeded the percentage rental for the preceding Fiscal Year of
Tenant. Landlord will be paid any such balance due at the time of delivery of
said certified statement, or, if there has been such an overpayment, the amount
of said overpayment shall be credited against percentage rental obligations for
the first or subsequent quarters of the following Fiscal Year of Tenant until
such credit has been reduced to zero.
(f) Landlord shall have the right, once with respect to each Fiscal
Year of Tenant and not later than one (1) year after the end thereof, to cause
an audit of the business of Tenant to be conducted at Harveys Lake Tahoe Resort
by a certified public account of Landlord's selection, to verify the amount set
forth in Tenant's statement of Gross Gaming Winnings and Net Revenues for such
Fiscal Year. The records, books and accounts which maybe audited shall include,
but not be limited to certified federal tax returns, sales tax returns, room tax
returns, and such tax returns of all their subtenants with respect to the
determination of Net Revenues'. All accounting records required to be kept
shall be available for inspection and copying by Landlord or its authorized
agents, attorneys or accountants at all reasonable times and places during the
term of this Lease. If a statement of Net Revenues made by Tenant shall be
found to be in error such that Tenant has underpaid annual percentage rent for
the Fiscal Year of Tenant audited by an amount exceeding two percent (2%) of the
percentage for such Fiscal Year of Tenant, Tenant shall immediately pay within
five (5) working days the additional amount of percentage rent owed plus the
cost of the audit. In all other events the cost of the audit shall be paid
solely by Landlord. Tenant agrees to keep and maintain, at its offices, intact
for a period of one (1) year after the end of each Fiscal Year of Tenant all of
the records, books, accounts and other data which are regularly kept by Tenant
in the ordinary course of its business to establish Tenant's Net Revenues and
Casino Promotional Allowances.
(g) If any new federal, state or county tax or license fee is imposed
by law on gaming income, games or gaming devices at said Harveys Lake Tahoe
Resort, or the rate or amount of any existing tax or license fee thereon is
increased by the amendment of an act, statute or ordinance, the aggregate dollar
amount resulting from such new or increased tax or license fee shall be
subtracted from the Gross Gaming Winnings before calculating the percentage rent
called for by subparagraph 3(a) above.
(h) During the term hereof Tenant shall cause to be placed, and
remain on file with the Nevada State Gaming Control Board and the Nevada Gaming
Commission or any successor agency a continuing written consent and
authorization from the licensee at Harveys Lake Tahoe Resort by which a
representative of Landlord may during business hours examine and copy all
reports and return showing the gross winnings or gross revenue from gaming
licensed and conducted at Harveys Lake Tahoe Resort. The requirements of this
subparagraph are a condition to this Lease. Such requirements must be met
irrespective of who may be the licensee at Harveys Lake Tahoe Resort.
(i) As noted in subparagraph 3(a) above, Tenant shall pay Landlord a
minimum annual rent of Five Hundred Fourteen Thousand Two Hundred Dollars
($514,200.00) for the Premises, and such minimum annual rent shall be paid in
twelve (12) installments of Forty-Two Thousand Eight Hundred Fifty Dollars
($42,850.00) on the first day of each month of the Lease Year. Such minimum
annual rent payments shall be credited against the quarterly percentage rent
payment required by subparagraph 3(a) and (b) and they shall be modified as
hereinafter provided.
(j) The minimum annual rent shall be adjusted on each anniversary
date of this Lease to reflect any change of one point or more, up or down, in
the Consumer Price Index for all items' in San Francisco, California, compiled
and published by the United States Department of Labor or any successor agency.
Such Index for the quarter ending March 31, 1973, is 128.7, and that shall be
the base for the calculations required by this subparagraph. The first
adjustment in the minimum annual rent to be made because of a change in the
Index shall be calculated, if the facts so require, as soon as the all items'
Index figure for San Francisco for the period ending March 31, 1973, becomes
available, and shall be applicable to the installment of rent due April 1, 1974,
and to each successive installment of minimum rent until changed pursuant to
this subparagraph.
(k) In the event that the Bureau of Labor Statistics shall change the
cycle for publication of the Consumer Price Index so that no Index number is
published for the month of March, then the Index for the nearest month before
the month of March shall be substituted. If the manner in which the Consumer
Price Index is determined by the Bureau of Labor Statistics shall be
substantially revised, an adjustment shall be made in such revised index which
would produce the results equivalent, as nearly possible, to those which would
have been obtained if the Consumer Price Index had not been so revised. If the
1967 average shall no longer be used as an index of 100, such change shall
constitute a substantial revision. If the Consumer Price Index shall become
unavailable to the public because publication is discontinued, or otherwise, a
comparable index based upon changes in the cost of living or purchasing power of
the consumer dollar published by any other governmental agency or, if no such
index shall be available, then a comparable index published by a major bank or
other financial institution or by a university or a recognized financial
publication shall be used to calculate the rental increases required by this
Article.
(l) For the purposes of this Lease, the term Lease Year' means the
period beginning on the Commencement Date and ending March 31, 1974, and each
twelve (12) month period thereafter.
(m) For the purposes of this Lease, the term Fiscal Year of Tenant'
shall mean the period December 1 of a year to November 30 of the following year.
III. Paragraph 10 of the Lease, as amended, is hereby amended to read as
follows:
Assignment and Subletting
Section 10.1. Tenant shall not assign this Lease, or any interest
therein, and shall not sublet the Premises or any part thereof, or any right or
privilege appurtenant thereof, or suffer any other person (the agents and
servants of Tenant excepted) to occupy or use the Premises, or any portion
thereof, without the written consent of Landlord first had and obtained. A
consent to one assignment, subletting, occupation or use by any other person
shall not be deemed to be a consent to any subsequent assignment, subletting,
occupation or use by another person. Any such assignment or subletting without
such consent shall be void, and shall be an event of default. This Lease shall
not, nor shall any interest therein, be assignable, as to the interest of
Tenant, by operation of law, without the written consent of Landlord.
Section 10.2. The consent of the Landlord required under Section 10.1
above, may not be unreasonably withheld. Landlord may withhold or condition the
consent required under Section 10.1 on Tenant remaining obligated to pay the
rent and to perform all other obligations to be performed by the Tenant
hereunder for any of the following reasons, which list is not exclusive, and
such withholding or conditioning of consent shall be deemed to be reasonable:
(a) Lack of experience operating a hotel/gaming facility
comparable to Harveys Lakee Tahoe Resort by the proposed sublessee or assignee;
or
(b) Financial inadequacy or general business history or
experience of the proposed sublessee or assignee.
Section 10.3. Notwithstanding the foregoing, the following conditions
shall apply to any proposed assignment or sublease hereunder:
(a) Each and every covenant, condition, or obligation imposed
upon Tenant by this Lease and each and every right, remedy or benefit afforded
Landlord by this Lease shall not be impaired or diminished as a result of such
assignment or sublease.
(b) The sale, lease, transfer, conveyance, or other disposition,
in one or a series of related transactions of Harveys Lake Tahoe Resort and the
liquidation or dissolution of Harveys Casino Resorts each shall be deemed an
assignment within this paragraph 10.
(c) The acceptance of rent by Landlord from any person shall not
be deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any assignment or subletting.
(d) Tenant shall have the right without the consent of Landlord
but upon prior written notice to Landlord, to assign this Lease to a company
incorporated or to be incorporated by Tenant provided that Tenant owns or
beneficially controls all of the issued and outstanding shares of the capital
stock of the company (the Subsidiary Company'). Such assignment shall not,
however, relieve Tenant from its obligation for the payment of rent and for the
full and faithful observance and performance of the covenants, terms and
conditions contained herein. If at any time after such an assignment there is
any Change of Control of the Subsidiary Company, such Change of Control shall
constitute an assignment subject to the provisions of this Paragraph 10. A
Change of Control shall occur whenever Tenant does not own or beneficially
control all of the issued and outstanding shares of the Subsidiary Company.
(e) No permitted assignment or sublease shall be valid and no
assignee or sublessee shall take possession of the Premises assigned or sublet
unless, within ten (10) days after the execution thereof, Tenant shall deliver
to Landlord a duly executed duplicate original of such assignment or sublease in
form satisfactory to Landlord which provides (1) the assignee or sublessee
assumes Tenant's
obligation for the payment of rent and for the full and faithful observance and
performance of the covenants, terms and conditions contained herein, and (2)
that such assignee or sublessee will, at Landlord's election, attorn directly to
Landlord in the event Tenant's lease is terminated for any reason, and (3) such
assignment of sublease contains such other assurance as Landlord reasonably
deems necessary.
IV. The Lease, as amended, is hereby amended by adding a new paragraph 20 as
follows:
Agreement to Enter Into Restated Lease Agreement
20. The parties hereto agree to prepare and enter into a
Restated Lease Agreement incorporating and to the extent necessary, clarifying
all of the terms and provisions of the Lease as amended.
V. Except as specifically modified herein, the Lease dated July 9, 1973, as
modified April 27, 1979, and February 28, 1985, shall remain in full force and
effect and the parties shall be bound by all the terms and conditions thereof.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Third
Amendment to Lease Agreement dated this 1st day of June, 1997.
LANDLORD: TENANT:
PARK CATTLE CO. HARVEYS CASINO RESORTS
formerly knows as HARVEYS
By Xxxxx Xxxx WAGON WHEEL, INC.
Its President By Xxxxxxx X. Xxxxxxx
Its Chairman, President &
CEO
