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EXHIBIT 10.78
GROUND LEASE
This Ground Lease ("LEASE") is made and entered into as of the 31 day of
July, 1996, by and between MacGREGOR INCOME PROPERTIES WEST I, INC., a Nevada
corporation (hereinafter referred to as "LANDLORD"), and CLOOBECK ENTERPRISES, a
Nevada corporation (hereinafter referred to as "Tenant").
ARTICLE I
LEASED PROPERTY
1.01. DEMISE. Upon the conditions, limitations, covenants and agreements set
forth below, Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, those premises (the "LAND") consisting of that land described in
EXHIBIT A attached hereto and incorporated herein by reference, together with
all existing improvements thereon (the "SHARK CLUB IMPROVEMENTS") and all
appurtenances thereto (all of which is sometimes referred to herein as the
"LEASED PROPERTY"); subject to (i) all easements, licenses, reservations,
rights-of-way, conditions, covenants and restrictions of record reflected on
EXHIBIT B attached hereto and incorporated herein by reference (the "RECORDED
EXCEPTIONS"), (ii) all rights and interests of La-Tex Partnership pursuant to
and by virtue of that certain lease dated July 2, 1987, as amended (the "SHARK
CLUB LEASE") including the Shark Club Note, as defined in Section 5.02, and
(iii) conditions, facts, circumstances, rights and claims which could be
ascertained by an inspection of the status of title or condition of the Leased
Property (the "OTHER EXCEPTIONS") other than exceptions resulting from a
voluntary act or omission of Landlord. The Recorded Exceptions, Shark Club Lease
and the Other Exceptions are sometimes referred to in this Lease as the
"RESERVATIONS").
1.02. INSPECTION, EXAMINATION AND INVESTIGATION.
(a) Tenant has fully inspected, examined and investigated the condition
and status of title of the Leased Property and is entering into this Lease as a
result of such inspection, examination and investigation, and is acquiring an
interest in the Leased Property "as is" based upon its own independent and
completed inspection, examination and investigation of the condition and status
of title of the Leased Property and not as a result of any representation,
warranty, assurance, guaranty or promise of Landlord or any person purporting to
act on behalf of Landlord, other than those which may be expressly set forth in
this Lease. TENANT UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT NEITHER LANDLORD
NOR ANY AGENT, EMPLOYEE OR OTHER PERSON ACTING ON BEHALF OF LANDLORD HAS MADE
ANY AND LANDLORD EXPRESSLY DISCLAIMS EVERY REPRESENTATION, WARRANTY, ASSURANCE,
GUARANTY OR PROMISE, EXPRESS OR IMPLIED CONCERNING THE STATUS OF TITLE OR
CONDITION OF THE LEASED PROPERTY WHICH ARE NOT EXPRESSLY SET FORTH IN THIS LEASE
AND THAT NO AGENT, EMPLOYEE OR OTHER PERSON HAS ANY AUTHORITY TO MAKE
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OR DELIVER ANY REPRESENTATION, WARRANTY, ASSURANCE, GUARANTY OR PROMISE WHICH IS
NOT SET FORTH IN THIS LEASE.
(b) Tenant has reviewed all of the documents and correspondence
identified in EXHIBIT C attached hereto concerning the Shark Club Lease and has
had an adequate opportunity (regardless of whether or not exercised) to ask
questions of and receive answers from La-Tex Partnership and its agents
regarding the status of the Shark Club Lease and the Shark Club Note (as defined
in Section 5.02 of this Lease)
ARTICLE 11
TERM
2.01. DURATION; COMMENCEMENT DATE. The term of this Lease shall be for a
period of fifty (50) years commencing as of the first day of August, 1996 (the
"COMMENCEMENT DATE") and shall terminate at 11:59 p.m. on the last day of July,
2046, unless terminated earlier as elsewhere herein provided. Reference in this
Lease to the "LEASE TERM" or the "TERM OF THIS LEASE" shall refer to the period
starting on the Commencement Date and continuing through the date of termination
of this Lease.
2.02. HOLDING OVER. If Tenant continues in possession of the Leased Property
without the objection of Landlord after expiration of the term of this Lease,
such holding-over shall not be construed as a renewal or extension of this Lease
but shall be deemed to be a tenancy from month-to-month only, terminable in
accordance with subsection 1 (b) of NRS 40.251 but otherwise upon the same terms
and conditions set forth in this Lease.
2.03. LEASE YEAR DEFINED. As used in this Lease, "LEASE YEAR" shall mean
every twelve month period commencing on the first day of August of each calendar
year and ending on the last day of July of each succeeding calendar year.
ARTICLE III
RENT
3.01. BASE RENT; SUPPLEMENTAL RENT.
(a) Beginning on the Commencement Date and during the Lease Term,
Tenant shall pay Landlord monthly, in advance, without prior notice or demand,
and in lawful money of the United States of America, rent in the amount of
Sixty-five Thousand Dollars ($65,000) (the "BASE RENT"). Base Rent shall be
payable in advance on the first day of each month.
(b) Subject to Landlord's refund or credit obligations set forth in
this Section 3.01 (b), beginning on August 1, 1996, Tenant shall also pay
Landlord monthly, without prior notice or
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demand, and in lawful money of the United States of America, Six Thousand Five
Hundred Dollars ($6,500) (the "SUPPLEMENTAL RENT") until the outstanding amount
of Four Hundred Forty-Nine Thousand One Hundred Sixty Dollars and Eight Cents
($449,160.08) reflected on EXHIBIT D annexed to this Lease (the "SUPPLEMENTAL
RENT AMOUNT") has been fully amortized in accordance with EXHIBIT D. In the
event Tenant elects, by written notice delivered to Landlord on or before
October 31, 1998, not to use the Land (alone or in aggregation with any other
property contiguous with or in the immediate vicinity of the Land) as a part of
or in conjunction with the operation of a hotel and casino facility, Tenant
shall be relieved of the obligation to pay Supplemental Rent (retroactively from
the Commencement Date) and Landlord shall either credit against Tenant's
next-accruing obligations pursuant to this Lease or refund and pay to Tenant, as
Landlord may elect, any Supplemental Rent actually paid.
3.02. COST OF LIVING ADJUSTMENTS TO BASE RENT.
(a) The Base Rent shall be adjusted for increases (but not decreases)
in the cost-of-living as of the beginning of the second Lease Year and each
Lease Year thereafter in the manner herein provided. Landlord shall compute the
percentage increase in the cost of living for the preceding period based on the
average of all West-A Cities, set forth in the Consumer Price Index for Urban
Consumers for all items (1982-84=100), published by the Bureau of Labor
Statistics of the United States Department of Labor, or such succeeding index
(indices) as may then be in effect. The base index number shall be the index
number for the first month of the preceding Lease Year. The current index number
shall be the index number for the first month of Lease Year of adjustment. The
current index number shall be divided by the base index number. From the
quotient thereof, rounded to the nearest one-thousandth, there shall be
subtracted the integer one. The resultant positive number shall be deemed to be
the percentage of increase in the cost-of -living; provided that the percentage
increase for any Lease Year shall not be less than three percent (311) and shall
not be more than five percent (51). The percentage of increase in the cost of
living multiplied by the Base Rent (as adjusted) payable during the preceding
Lease Year shall be the increase required in the Base Rent. The sum of the
increase required plus the Base Rent (as previously adjusted) payable for and on
account of the preceding Lease Year shall be the Base Rent for the Lease Year of
the adjustment.
(b) Landlord shall, within a reasonable time after obtaining the
appropriate data necessary for computing the adjustment of the Base Rent for the
Lease Year of the adjustment, give Tenant notice of any increase determined. The
Base Rent, as so increased, shall be due and payable for each month, commencing
with the first month of the Lease Year of the adjustment. However, pending the
determination of the increase of the Base Rent, Tenant shall continue to pay the
Base Rent (as previously increased) for the prior Lease Year. When the increase
of the Base Rent for the Lease Year has been determined, Tenant shall pay the
increased Base
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Rent for the calendar month immediately succeeding such determination and pay
the difference between (I) the increased Base Rent for the period commencing
with the first month of the Lease Year of adjustment and ending with the month
preceding the month for which the increased Base Rent is paid; less (2) the Base
Rent already paid for such months.
(c) If, at the time required for the determination of any increase in
Base Rent, the Consumer Price Index mentioned in Section 3.02(a) is no longer
published or issued, Landlord shall use such other index (indices) as may then
be generally recognized and accepted for similar determination of purchasing
power for purposes of calculating and determining increases in Base Rent.
3.03. ADDITIONAL RENT. Any and all amounts required to be paid to Landlord,
for Landlord's benefit or otherwise required to be reimbursed to Landlord
pursuant to this Lease including without limitation, any and all amounts
required to be paid pursuant to Sections 3.04, 8.01, 8.02, 9.01, 10.09 and
22.02, shall be deemed and hereby constitutes "ADDITIONAL RENT" and shall be
paid, without offset, in lawful money of the United States of America, when and
as often as required by the terms of this Lease. Unless otherwise paid when due
or specified in this Lease, items of Additional Rent payable to Landlord shall
be paid with the next installment of Base Rent thereafter falling due hereunder;
but nothing contained in the preceding clause of this sentence shall be deemed
to suspend or delay the payment of any amount of money at the time the same
becomes due and payable hereunder, or limit any remedy of Landlord. It is the
intent of Landlord and Tenant that all payments of Base Rent, Supplemental Base
Rent and Additional Rent payable to Landlord (all of which is hereinafter
sometimes collectively referred to as "RENT") shall be absolutely net to
Landlord, with all costs, expenses and charges of every kind and nature relating
to the Leased Property that may arise or become due during the Lease Term to be
paid by Tenant, and with Landlord to be indemnified and held harmless by Tenant
from and against the same. It is the intention of the parties that Tenant shall
bear any and all expenses relating to the Leased Property, whether such expenses
be deemed significant or insignificant, whether currently anticipated or
unanticipated by Landlord or Tenant, and whether or not required by any
governmental or quasi-governmental authority as a condition to use or occupancy
of the Leased Property or otherwise. Nothing contained in this Section 3.03,
however, shall be construed to obligate Tenant to pay any principal, interest or
other charges accruing with respect to any Fee Mortgage (as defined in Section
14.01).
3.04. LATE CHARGE; INTEREST. If Tenant shall fail to pay, within ten days
after the same becomes due and payable, any amount payable pursuant to the terms
of this Lease, Tenant shall be obligated to bear and pay a late charge of five
percent (5%) of such unpaid amounts which shall accrue automatically as
Additional Rent. Further, if any such amount (including any late charge) is not
paid within thirty days after the same first becomes due and payable, the entire
unpaid amount shall bear interest, as
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Additional Rent, at the rate of fifteen percent (15%) per annum, compounded
monthly (the "INTEREST RATE") , from the date the unpaid amount originally
becomes due until paid. Landlord and Tenant acknowledge and agree that
Landlord's expenses, losses and damages (including consequential damages)
resulting from late payment would be difficult to determine, and that the late
charge and the interest payable pursuant to the provisions of this Section 3.04
constitute reasonable estimates of the amounts of those expenses, losses and
damages.
3.05. NO ABATEMENT, SETOFF OR RENTAL TAX. Rent shall be paid to Landlord
without any abatement, setoff, reduction, deduction, counterclaim, or recoupment
whatsoever. Rent shall be paid to Landlord free and clear of any and all taxes,
liens and other charges, costs, expenses and liabilities of any type whatsoever
(including, without limitation, any rental tax or fee and any business license,
tax or fee measured upon the payment of rent or on the size of the Leased
Property) other than taxes measured upon the income of Landlord.
3.06. PLACE OF PAYMENT. Rent shall be paid to Landlord c/o Xxxxxx X. Xxxxxx
CPA, Xxxxxx & Company, 0000 Xxxxx Xxxxxxx Xxxx., Xxxxx X, Xxx Xxxxx, Xxxxxx
00000 or at such other place or places as Landlord may, from time to time
designate in writing.
3.07. GUARANTY OF LEASE. As a condition precedent to the enforcement of
Tenant's rights and Landlord's obligations pursuant to this Lease, Xxxxxxx X.
Cloobeck and Xxxxxxx X. Cloobeck ("GUARANTORS") shall have absolutely and
unconditionally personally guaranteed the full and faithful payment and
performance of all of Tenant's obligations pursuant to this Lease, jointly and
severally, which shall be evidenced by a written guaranty substantially in the
form of EXHIBIT E annexed to this Lease.
ARTICLE IV
SECURITY DEPOSIT
4.01. AMOUNT.
(a) Contemporaneously with the execution of this Lease, Tenant shall
deposit with Landlord Five Hundred Thousand Dollars ($500,000) (the "SECURITY
DEPOSIT").
(b) Prior to the commencement of any construction on the Land
(including the demolition of any of the Shark Club Improvements) , Tenant shall
increase the Security Deposit to Two Million Five Hundred Thousand Dollars
($2,500,000).
(c) Prior to the commencement of the fifth Lease Year, Tenant shall
increase the Security Deposit to Three Million Five Hundred Thousand Dollars
($3,500,000). Prior to the commencement of the sixth Lease Year and each Lease
Year thereafter, Tenant shall increase the Security Deposit, as previously
augmented, by
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Three Hundred Thousand Dollars ($300,000), so that prior to the commencement of
the tenth lease year, the total security deposit shall be Five Million Dollars
($5,000,000).
(d) Any portion of the Security Deposit which is posted in money shall
earn interest at the rate of six percent (60%) per annum compounded annually.
Earned interest shall constitute a part of the Security Deposit to be held for
the benefit of Tenant and to be used and distributed in accordance with this
Lease.
(e) If (i) Tenant furnishes to Landlord an appraisal prepared by a
nationally recognized firm of real estate appraisers approved by Landlord,
which approval shall not be unreasonably withheld, conditioned or delayed,
reflecting that the value of the Land and all Improvements thereon together with
any improvements on any property contiguous with or in the immediate vicinity of
the Land which constitutes a part of the project which includes the Improvements
is more than Two Hundred Million Dollars ($ 200,000,000), and (ii) the
Improvements constitute a material and integral part of such project the
Security Deposit shall be reduced to the Five Hundred Thousand Dollars
($500,000) specified in Section 4.01 (a) together with interest accrued thereon.
4.02. OPTION TO POST LETTERS OF CREDIT. Other than the first Five Hundred
Thousand Dollars ($500,000) of the Security Deposit which shall be posted in
lawful money of the United States of America, Tenant shall be entitled to post
and deliver to Landlord in lieu of money, any portion of the Security Deposit in
one or more irrevocable letters of credit naming Landlord as the sole and
exclusive obligee entitling Landlord or the firm of Xxxxxxx, Xxxxx & Rivers to
unilaterally draw upon such letters of credit (i) in the event Tenant fails to
replace, renew or extend the maturity of any letter of credit prior to the close
of business on the last banking day which is at least thirty days prior to the
expiration of such letter of credit; or (ii) for any purpose provided in Section
4.03 of Lease. If Landlord draws upon any letter of credit, the proceeds of such
letter of credit shall nevertheless constitute a portion of the Security Deposit
subject to the parties' respective rights and obligations pursuant to this
Lease.
4.03. USE OF SECURITY DEPOSIT.
(a) If, at any time during the Lease Term, any Rent shall be overdue
and unpaid, then Landlord may, at the option of Landlord (but Landlord shall not
be required to), appropriate and apply any portion of the Security Deposit to
the payment of such unpaid amount. If any portion of the Security Deposit is
appropriated and applied by Landlord for the payment of Rent, then Tenant shall,
upon written demand of Landlord, forthwith remit to Landlord, a sufficient
amount to restore the Security Deposit to the amount required to be deposited
pursuant to Section 4.01; and Tenant's failure to do so shall constitute a
default in the payment of Rent pursuant to this Lease, entitling Landlord to the
remedies set forth in Article XV hereof.
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(b) In the event Landlord exercises Landlord's Put Option (as defined
in Section 12.01), the portion of the Security Deposit then posted shall be used
and applied in payment of a portion of the Purchase Price (as defined in Section
12.03) for the Leased Property. Similarly, in the event Tenant exercises
Tenant's Call Option (as defined in Section 12.02), the portion of the Security
Deposit then posted shall be used and applied in payment of a portion of the
Purchase Price for the Leased Property.
(c) Upon the expiration of the Lease Term any portion of the Security
Deposit which has not previously been used in accordance with this Lease shall
be returned to Tenant.
ARTICLE V
USE; ASSUMPTION OF SHARK CLUB LEASE; AND QUIET ENJOYMENT
5.01. PURPOSE. Tenant shall have the right to use the Land during the
Lease Term for the construction and operation of a first-class recurrent
periodic interval ownership (i.e. time share) resort facility, together with
reasonably related uses necessary and incident thereto. Tenant may also elect to
use the Land for the construction and operation of facilities (alone or in
aggregation with any other property contiguous with or in the immediate vicinity
of the Land) as a part of or in conjunction with the operation of a first class
hotel and casino unless Tenant gives written notice to Landlord on or before
October 31, 1998 that Tenant elects not to so use the Land as a part of or in
conjunction with the operation of a hotel and casino. In the event Tenant timely
gives written notice of its election not to so use the Land as a part of or in
conjunction with a hotel and casino, then Tenant shall be excused from the
obligation to pay Supplemental Rent, as more fully set forth in Section 3.01 (b)
but Tenant shall thereafter only be permitted to use the Land for the purposes
set forth in the first sentence of this Section 5.01. In the event Tenant does
not timely elect not to use the Land as a part of or in conjunction with a hotel
and casino but fails to obtain all necessary Approvals (as defined in
Section 5.04 (b)) to construct and operate a hotel and casino, then Tenant
shall have the right to use the Land for such purposes, in addition to or in
lieu of those set forth in the first sentence of this Section 5.01 as Landlord
may approve in writing, which approval shall not be unreasonably withheld,
delayed or conditioned, but Tenant shall nevertheless continue to pay
Supplemental Rent in accordance with Section 3.01 (b). For purpose of this
Lease, the facilities to be constructed on the Land and any other property
contiguous with or in the immediate vicinity of the Land (whether as a
recurrent periodic interval ownership resort and/or as a hotel and casino) is
sometimes referred to in this lease as the "RESORT". Except as otherwise
permitted in accordance with this Section 5.01 (in the event Tenant has failed
to elect not to use the Land as a part of a hotel and casino but fails to
obtain necessary Approvals), Tenant shall not use the Land for any purpose
other than as a part of the Resort without the prior written consent of
Landlord which may be
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given, withheld by Landlord, in Landlord's sole, absolute and unfettered
discretion. All buildings, real property improvements and fixtures hereafter
erected, constructed or placed on the Land from time to time during Tenant's
occupancy of the Land in connection with the Resort are referred to herein as
the "RESORT IMPROVEMENTS". Nothing contained in this Section 5.01 shall be
construed to preclude or limit Tenant's obligations pursuant to the Shark Club
Lease which are assumed pursuant to section 5.02 of this Lease.
5.02. ASSIGNMENT AND ASSUMPTION OF SHARK CLUB LEASE. Landlord hereby
assigns to Tenant all of its right, title and interest in and to the Shark Club
Lease and all claims Landlord may have under or pursuant to the Shark Club Lease
(regardless of whether or not previously asserted). Tenant hereby assumes and
agrees to timely and fully pay and perform all obligations of Landlord under,
pursuant to and with respect to the Shark Club Lease including without
limitation all obligations for the payment of principal and interest in
accordance with that certain promissory note secured by deed of trust (the
"SHARK CLUB NOTE") in the original principal amount of Two Hundred Fifty
Thousand Dollars ($250,000) which constitutes the security deposit of La-Tex
Partnership pursuant to section 32 of the Shark Club Lease and all other
obligations with respect to the retention and disposition of the security
deposit pursuant to the Shark Club Lease; but Tenant does not assume any
obligation under or with respect to the Shark Club Lease arising before the
Commencement Date which is not disclosed by any item disclosed on Exhibit C.
Tenant shall procure a reconveyance of the deed of trust given to secure the
repayment of the Shark Club Note as a condition of payment of the Shark Club
Note. Tenant hereby agrees to indemnify, defend and hold Landlord harmless from
and against all claims, losses, damages, proceedings, actions, judgments,
interest, costs and expenses (including attorney fees) and other liability
arising out of or in connection with the Shark Club Lease and the payment of the
Shark Club Note.
5.03. PERMITS AND LICENSES - NO CONDITION. Neither the ability of
Tenant to obtain nor to retain any license, permit or approval for Tenant's use
of the Leased Property shall be a condition to the effectiveness of this Lease
or the obligations of Tenant hereunder. Tenant hereby waives any right to
terminate this Lease or to seek or obtain a discharge of Tenant's obligations
hereunder by reason of "commercial frustration", "frustration of purpose" or any
similar claim or defense. Tenant acknowledges that Tenant assumes all risks
associated with the Leased Property and activities that are now or may hereafter
be conducted on the adjoining or nearby properties, none of which shall affect
Tenant's obligations to Landlord under this Lease. Nothing contained in this
Section 5.03, however, shall be construed to release or relieve Landlord from
its obligations pursuant to Section 5.04 (b)(2) or elsewhere herein.
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5.04. COMPLIANCE WITH LAWS; PERMITS; ENVIRONMENTAL COMPLIANCE.
(a) Tenant shall, at Tenant's sole cost and expense, without any
expense being imposed on Landlord, promptly comply with or cause compliance with
all laws, statutes, ordinances, rules, regulations, orders and requirements
of all federal, state, county and municipal governmental authorities with
respect to the condition of, use of, or activities conducted by Tenant on the
Leased Property. Tenant shall have the right to contest by appropriate legal
proceedings before any tribunal having jurisdiction, whether judicial or
administrative, without any expense being imposed on Landlord, the validity or
applicability of any law, statute, ordinance, rule, regulation, order or
requirement of any governmental authority, and Landlord shall reasonably
cooperate with Tenant, at Tenant's sole cost and expense, in that regard.
(b) (1) Subject to Landlord's obligations pursuant to Section 5.04 (b)
(2), Tenant shall, at Tenant's sole expense without any expense being imposed
on Landlord, apply for, obtain and maintain all governmental and
quasi-governmental licenses, permits, consents and approvals required in
connection with any and every activity conducted on the Leased Property.
Specifically, without limitation, at Tenant's sole cost and expense, Tenant
shall promptly apply for and use its best efforts to obtain all necessary
licenses, permits, approvals and consents required for the construction and
operation of the Resort and shall otherwise fully cooperate with such
governmental authorities, which shall include, without limitation, the
provision of such information, books and records as may be requested by such
governmental authorities and compliance with all orders and requirements of
such governmental authorities. If at any time (i) Tenant or any person or
entity associated in any way with Tenant is denied a license or is denied or
otherwise unable to obtain any other approval or permit ("APPROVAL") required
by law or any governmental authority with respect to the Leased Property, is
required by any governmental authority to apply for an Approval and does not
apply within any required time limit, withdraws any application for Approval
other than upon a determination by the applicable governmental authority that
such Approval is not required; or (ii) any governmental authority commences or
threatens to commence any suit or proceeding against Tenant, or any affiliate
of Tenant or to terminate or deny any Approval of Tenant or any affiliate of
Tenant (all of the foregoing events described in clauses (i) or (ii)
above being collectively referred to as a "DENIAL"), and if such action may be
cured by the replacement of one or more individuals as shareholders, officers,
employees, directors or trustees of Tenant or by a transfer of this Lease or
disassociation from the applicable person, then Tenant shall have such period
as may be allowed by the governmental authorities to effect such cure to
replace the disapproved individual with someone, or transfer the Lease to
someone acceptable to the governmental authorities and reasonably acceptable to
Landlord.
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(2) Landlord shall cooperate with Tenant in submitting and, whenever
required by a governmental authority to obtain any Approval, directly submit all
applications with and notices to all governmental authorities to obtain
Approvals for the construction and operation of the Resort including without
limitation (i) the recording of such instruments as may be reasonably required
by the Real Estate Division of the State of Nevada Department of Commerce to
publish notice of Tenant's leasehold interest for the benefit of owners of time
shares of the Resort; and/or (ii) unless Tenant makes a timely election not to
use the Land as a part of or in conjunction with a hotel and casino in
accordance with Section 5.01, the submission of such applications for a finding
of suitability to be a landlord of a gaming licensee as may be required by the
State Gaming Control Board and/or Nevada Gaming Commission or any other
governmental authority (whether or not in the State of Nevada) having
jurisdiction over gaming; provided that Landlord shall not be required to take
any action which will result in the incurrence of any cost or expense for which
Landlord bears or will bear any liability or financial responsibility. Nothing
contained in the preceding sentence shall be construed to preclude Landlord or
any person associated with Landlord from taking, and Landlord and every person
associated with Landlord shall be entitled to take, any action for purposes of
preventing or avoiding any Denial on the basis of a finding that Landlord or any
person affiliated with Landlord is not suitable to be a landlord of a gaming
licensee or otherwise defending Landlord's or such person's character and
reputation. In the event of any Denial in any jurisdiction, whether or not with
respect to the Leased Property, as a result of a finding or other determination
that Landlord or any person associated with Landlord is not suitable or
otherwise may not be associated with Tenant or any affiliate of Tenant, unless
Denial may be cured by disassociation and Landlord effects such disassociation
(which Landlord shall not necessarily be required to do) prior to the Closing
provided below, Tenant shall have the right to accelerate the date of exercise
of the Call Option to any date after such finding or determination and the date
of Closing shall be such date as may be required or recommended by such
governmental authority from which the Denial emanates, or if such governmental
authority has not required or recommended a date by which the sale of the Leased
Property shall occur, Closing shall take place on the date specified in the
Tenant's notice given in accordance with and subject to Section 12.02 (b);
provided that if the sale and purchase of the Leased Property is as a result of
an exercise of Tenant's Call Option (accelerated by virtue of a Denial) prior to
the first day of July, 2006, the Purchase Price (as defined in Section 12.03) is
increased by One Million Dollars ($1,000,000) ; and provided further that if
the sale and purchase of the Leased Property occurs prior to January 1, 2000 as
a result of an exercise of Tenant's Call Option (accelerated by virtue of a
Denial) the Purchase Price is increased in accordance with Section 12.03 (d).
Nevertheless, notwithstanding such Denial and resulting purchase of the Leased
Property, Landlord and any person associated with Landlord that is the subject
of such Denial may, if permitted by applicable law and provided the same shall
have no material
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adverse effect on any Approval, appeal, seek a redetermination or otherwise
contest such Denial.
(c) (1) Tenant shall not, as a result of an intentional or unintentional
act or omission, release, pump, pour, empty, or dump any Hazardous Material (as
defined in Section 5.04 (c)(5)(B) below) upon or permit any Hazardous Material
to exist on the Leased Property in violation of any Environmental Law (as
defined in Section 5.04 (c)(5)(A) below). Tenant will keep and maintain the
Leased Property in compliance with, and shall not cause or permit the Leased
Property to be in violation of, any Environmental Law or allow any other person
or entity to do so.
(2) Tenant shall give prompt written notice to Landlord of (i) every
proceeding or inquiry by any federal, state, county and municipal authority
with respect to the presence or migration of any Hazardous Material on, to or
from the Leased Property; (ii) every claim made or threatened by any third
person against Tenant or the Leased Property of which Tenant becomes aware
relating to any loss or injury resulting from any Hazardous Material; and (iii)
every discovery (to the extent known by Tenant) of any occurrence or condition
on any real property adjoining or in the vicinity of the Leased Property that
could cause the Leased Property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of the Leased
Property under any Environmental Law. Landlord shall have the right, if it so
elects, to join and participate, as a party, in any action, lawsuit or
proceeding initiated in connection with violation of any Environmental Law and
Tenant hereby agrees to pay all expenses (including reasonable attorney fees)
thereby incurred by the Landlord in connection therewith if such action,
lawsuit or proceeding is based upon a violation of Section 5.04 (c) (1) of this
Lease.
(3) Tenant shall protect, defend, indemnify, and hold harmless
Landlord, its directors, officers, administrators, shareholders,
employees, agents, contractors, attorneys, successors and assigns from and
against any and all claims, demands, proceedings, actions, penalties, loss,
damage, cost, interest, expense (including reasonable attorney fees) and other
liability which is directly or indirectly attributable to Tenant's failure to
observe or perform Tenant's obligations pursuant to this Section 5.04 (c).
(4) In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration, or other remedial work of any kind or nature is
required by any judicial order or decree or ruling of any governmental entity
or agency because of, or in connection with the actual, threatened, or
suspected presence of a Hazardous Material in, upon, or under the Leased
Property or any portion thereof, Landlord shall furnish Tenant with written
notice of such order, decree, or ruling and Tenant shall have thirty days after
written notice (or such shorter period of time as may be required pursuant to
any such order, decree or ruling) to commence, or cause to be commenced, all
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remedial work resulting from Tenant's failure to perform any obligation imposed
by this Section 5.04 (c) and to thereafter diligently perform or cause to be
performed to completion all such remedial work.
(5) For purposes of this Lease, the following terms shall have the
meanings as set forth below:
(A) "ENVIRONMENTAL LAW" shall mean any federal, state, county or
municipal law, statute, ordinance, or regulation, ruling, order or
decree pertaining to health, industrial hygiene, or the environmental
conditions on, under or about the premises, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA") as amended, 42 U.S.C. Sections 9601 et seq. and the Resource
Conservation and Recovery Act of 1976 ("RCRA") as amended, 42 U.S.C. Sections
6901 et seq.
(B) The term "HAZARDOUS MATERIAL" shall include without
limitation:
(i) those substances, included within the definitions of any
more or one of the term "hazardous substances", "hazardous materials",
"toxic substances", and "solid waste" in CERCLA, RCRA, and the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., and
in the regulations promulgated pursuant to said laws;
(ii) those substances listed in the United States Department
of Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);
(iii) such other substances, materials and wastes which are
or become classified as hazardous or toxic under any Environmental Law; and
(iv) any material, waste or substance which is (A)
petroleum; (B) asbestos; (C) polychlorinated biphenyls; (D)
designated as hazardous pursuant to Section 311 of the Clean Water Act, 33
U.S.C. Sections 1251 et seq. (33 U.S.C. Section 1317) (E) flammable explosives;
or (F) radioactive materials.
(6) Notwithstanding anything to the contrary contained in or inferable
from this Lease, the covenants and agreements contained in this Section 5.04
(c) shall survive the term of this Lease.
5.05. NO WASTE. Tenant shall not commit or suffer to be committed any
waste on the Leased Property and Tenant shall not permit or suffer any act to
be done or any condition to exist on the Leased Property which may constitute a
nuisance, public or private, or which materially obstructs or interferes with
the rights of adjacent property owners.
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5.06. QUIET ENJOYMENT. Landlord covenants that, so long as Tenant shall
faithfully perform the obligations, terms, covenants and conditions of this
Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Leased Property for the Lease Term, subject to the Reservations.
ARTICLE VI
CONSTRUCTION OF IMPROVEMENTS
6.01. REMOVAL OF SHARK CLUB IMPROVEMENTS. Tenant shall not remove,
demolish or destroy any of the Shark Club Improvements without first (i)
satisfying all obligations pursuant to the Shark Club Lease with respect
thereto, terminating the Shark Club Lease or procuring a waiver from La-Tex
Partnership which, by its terms, releases Landlord from liability; (ii)
increasing the Security Deposit in accordance with Section 4.01 (b); (iii)
affording Landlord an adequate opportunity to remove the items of personal
property identified on EXHIBIT F annexed to this Lease (regardless of whether
or not affixed to the realty); and (iv) securing all necessary permits,
licenses, and approvals from all federal, state, county and municipal
governmental authorities. Tenant shall notify Landlord not less than thirty
days prior to the commencement of any removal, demolition or destruction of any
of the Shark Club Improvements, which notice shall advise Landlord of the date
on which the intended removal, demolition or destruction will be commenced and
shall specifically advise Landlord of Landlord's right to post a notice of
non-responsibility (regardless of whether or not such notice of
non-responsibility is necessary to absolve the Landlord or the Leased Property
from responsibility).
6.02. RESORT IMPROVEMENTS.
(a) It is contemplated and understood that Tenant intends to develop,
construct and erect the Resort Improvements for uses incident to the operation
of the Resort; provided, however, that if any aspect of any Resort Improvement
requires waiver, action, consent or approval of any governmental authority with
respect to a design review, a conditional use permit, a variance, or otherwise,
then Landlord shall cooperate with Tenant in submitting all applications with
and notices to all governmental authorities with respect thereto, including
without limitation the making and delivery of a dedication of up to (but not
more than) fifteen feet of frontage property on the north side of the Land as
may be required by any governmental authority having jurisdiction for purposes
of widening Xxxxxx Avenue; provided that Landlord shall not be required to take
any action which will result in the incurrence of any cost or expenses for
which Landlord bears or will bear any liability or financial responsibility.
(b) If Tenant develops, constructs or erects the Resort Improvements
without any proceeds from an financing provided by Leasehold Mortgagee (as
defined in Section 7.01 (b), Tenant shall, at Tenant's sole cost and expense,
without any expense being
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imposed on Landlord, procure and maintain a completion bond to secure the
timely completion of construction of the Resort Improvements, naming Landlord
as the beneficiary or obligee of such bond or, if Tenant procures and maintains
a completion bond for the benefit of any Leasehold Mortgagee, Tenant shall name
Landlord as an additional beneficiary or obligee of such bond. Tenant shall
deliver or cause to be delivered to landlord a true and correct copy of such
completion bond, upon issuance. Not less than fifteen days prior to the formal
engagement of any architect, engineer, surveyor or contractor to provide any
labor or material with respect to the construction of Resort Improvements,
Tenant shall notify Landlord in writing of the persons so selected.
(c) Subject to other conditions and provisions of this Lease, Tenant
shall diligently construct the Resort Improvements or cause the Resort
Improvements to be diligently constructed to completion, in compliance with all
applicable governmental laws, statutes, ordinances, rules, regulations, orders,
requirements, licenses, permits, approvals and consents. Landlord shall not be
responsible for the construction or installation of any improvement to the
Leased Property (including without limitation off-site improvement or extension
of utility lines to the Leased Property), all of which shall be the sole
responsibility and obligation of Tenant.
6.03. SUBSEQUENT CONSTRUCTION. Tenant shall have the right, from time to
time, to erect and make additions and alterations to the Resort Improvements
for use in conformance with Section 5.01; provided, however, all such
improvements, additions and alterations shall be subject to the same rights
reserved by Landlord with respect to the construction of the Resort
Improvements as provided in Section 6.02. For purposes of this Lease all such
additions and alterations together with the Shark Club Improvements (until and
during demolition) and the Resort Improvements are sometimes referred to in
this Lease generally as "IMPROVEMENTS".
6.04. CONSTRUCTION AND OTHER LIENS. Tenant shall pay or cause to be paid
all costs associated with the demolition and/or construction of all
Improvements. Tenant shall not. suffer or permit to be enforced against the
Leased Property (i) any mechanic, materialman, contractor, subcontractor or
other lien or claim arising from or in any way related to any work performed
on, or material supplied with respect to any Improvements, or (ii) any claim,
lien, charge, encumbrance or judgment (other than a permitted Leasehold
Mortgage, defined in Section 7.01), whether or not well-founded, of a party
claiming through Tenant or any subtenant, licensee or concessionaire of Tenant,
including, but not limited to, any claim, lien, charge, encumbrance or judgment
directly or indirectly arising out of any use or occupancy of the Leased
Property by Tenant or any subtenant, licensee or concessionaire of Tenant, any
actual or purported act, omission or activity of Tenant or any such subtenant,
licensee or concessionaire, or as a result of any actual or purported
obligation incurred by Tenant or any such subtenant, licensee or
concessionaire. Within thirty days after the recordation of any
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lien, judgment or encumbrance (other than a permitted Leasehold Mortgage)
against the Leased Property, including any mechanic's or materialman's lien,
Tenant shall obtain the complete discharge and release thereof unless the
discharge is waived by Landlord or Landlord otherwise agrees to the
postponement of discharge. However, Tenant shall have the right to contest, in
good faith, any mechanic or materialman lien upon the condition that Tenant
provides security reasonably acceptable to landlord in an amount sufficient to
satisfy such lien and adequately indemnify landlord from and against liability
with respect to such lien in accordance with this Section 6.04. Tenant shall
indemnify, defend and hold Landlord harmless from and against all claims,
losses, damages, proceedings, actions, judgments, interest, costs and expenses
(including attorney fees) and other liability arising out of or in connection
with the construction of Improvements.
ARTICLE VII
PERMITTED ENCUMBRANCE OF LEASEHOLD
7.01. DEFINITIONS.
(a) The term "LEASEHOLD MORTGAGE" as used in this Lease shall mean a
first mortgage, deed of trust, deed to secure debt, collateral
assignment, or other security instrument or device by which Tenant's leasehold
estate is mortgaged, conveyed, assigned or otherwise transferred, to secure an
obligation to provide financing for the construction of the Resort Improvements
and/or refinancing of any such obligation.
(b) The term "LEASEHOLD MORTGAGEE" as used in this Lease shall refer
to a holder of a Leasehold Mortgage (which in the case of a deed of
trust is the beneficiary thereof and in the case of a collateral assignment is
the assignee) which is not an affiliate of Tenant with respect to which the
notice provided in Section 7.03 has been given to Landlord and as to which the
provisions of this Article VII are applicable.
7.02. RIGHT TO MORTGAGE LEASEHOLD INTEREST. On one or more occasions
without Landlord's prior consent, Tenant may mortgage or otherwise encumber
Tenant's leasehold estate under one or more (in pari passu with one another)
Leasehold Mortgages and assign this Lease as security for the benefit of the
holder of such Leasehold Mortgage on such terms and conditions as Tenant and
the Leasehold Mortgagee may elect; provided, however, that any such Leasehold
Mortgage shall be subject and subordinate to the rights of Landlord in the
Leased Property. UNDER NO CIRCUMSTANCES SHALL LANDLORD BE OBLIGATED TO SUBJECT
OR SUBORDINATE ITS FEE TITLE INTEREST IN THE LEASED PROPERTY TO THE LIEN OF ANY
PERMITTED LEASEHOLD MORTGAGE, NOR SHOULD ANY PROVISION OF THIS LEASE BE
CONSTRUED AS CREATING OR REQUIRING ANY SUCH SUBORDINATION.
7.03. NOTICE OF LEASEHOLD MORTGAGE. Provided the holder of a Leasehold
Mortgage gives Landlord written notice of such
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Leasehold Mortgage together with a true copy of such Leasehold Mortgage and the
name and address of the Leasehold Mortgagee, following receipt of such notice
by Landlord, the provisions in this Article VII shall apply with respect to
each such Leasehold Mortgage.
7.04. NO MODIFICATION OF LEASE WITHOUT CONSENT OF LEASEHOLD MORTGAGEE. 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.
7.05. NOTICES TO LEASEHOLD MORTGAGEE.
(a) Upon providing Tenant any notice of: (1) default under this Lease,
(2) a termination of this Lease, or (3) a matter with respect to which Landlord
may predicate or claim a default, Landlord shall contemporaneously provide a
copy of such notice to every Leasehold Mortgagee of which Landlord has notice
(as provided in Section 7.03). No such notice by Landlord to Tenant shall be
deemed to have been duly given unless and until a copy of such notice has been
so provided to every Leasehold Mortgagee in accordance with Section 7.14. Upon
expiration of the period of time given to Tenant to cure any monetary default,
unless the default has been cured, every such Leasehold Mortgagee shall have an
additional period of twenty additional days immediately succeeding Tenant's ten
day cure period to cure the monetary default asserted. Upon expiration of the
period of time given to Tenant to cure any nonmonetary default, unless the
default has been cured, every such Leasehold Mortgagee shall have an additional
period of thirty days immediately succeeding Tenant's cure period to cure the
nonmonetary default asserted.
(b) If, during the applicable cure period, any Leasehold Mortgagee:
(i) notifies Landlord of such Leasehold Mortgagee's desire to
nullify any termination of this Lease by Landlord;
(ii) pays or causes to be paid all Rent and other monetary
obligations then due and in arrears as specified in the notice to such
Leasehold Mortgagee as well as those monetary obligations which may
become due during such Leasehold Mortgagee's cure period; and
(iii) cures or commences to cure and proceeds in good faith and
with reasonable diligence to cure all nonmonetary defaults asserted (provided,
however, that nothing contained in this clause (iii) shall be construed to
require a Leasehold Mortgagee 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 Property
junior in priority to the lien of the Leasehold Mortgage held by such Leasehold
Mortgagee);
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then this Lease shall not terminate; provided that such Leasehold Mortgagee
pays and performs every obligation of Tenant pursuant to this Lease and, to the
extent not enjoined or stayed, such Leasehold Mortgagee institutes proceedings
or files an action to acquire or sell Tenant's interest in this Lease by
foreclosure of the Leasehold Mortgage or other appropriate means within six
months following the date of any notice of default by Landlord to such
Leasehold Mortgage. If a Leasehold mortgagee complies with this Section 7.05,
upon the acquisition of Tenant's leasehold estate by such Leasehold Mortgagee
or its designee (other than Tenant or any affiliate of Tenant) or any other
purchaser (other than Tenant or any affiliate of Tenant) at a foreclosure sale
or otherwise, this Lease shall continue in full force and effect as if Tenant
had not defaulted under this Lease. Landlord shall accept any performance of
Tenant's obligations under this Lease 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 such action at such Leasehold Mortgagee's
option and does hereby authorize entry upon the Leased Property by the
Leasehold Mortgagee for such purpose.
7.06. ASSUMPTION OF TENANT'S OBLIGATIONS.
(a) The making of Leasehold Mortgage shall itself 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 the Tenant to be
performed hereunder. Nevertheless, a Leasehold Mortgagee or other purchaser at
any foreclosure or similar sale, shall become the legal owner and holder of
Tenant's leasehold estate under this Lease and become the Tenant hereunder upon
lawful foreclosure of a Leasehold Mortgage or as a result of the assignment of
Tenant's leasehold estate in lieu of foreclosure. Except as otherwise permitted
in the following Section 7.06(b), upon so becoming the owner and holder of the
leasehold estate, a Leasehold Mortgagee or the purchaser at any foreclosure or
similar sale shall have all rights, privileges, obligations and liabilities of
the original Tenant, and the purchaser (including a Leasehold Mortgagee in such
capacity) at any sale of this Lease shall be deemed to be a Permitted Assignee
(as defined in Section 16.01 (a) of this Lease).
(b) Notwithstanding anything to the contrary contained in or inferable
from this Lease, upon the acquisition of Tenant's rights under this Lease
following lawful foreclosure of a Leasehold Mortgage or the assignment of
Tenant's leasehold estate under this Lease in lieu of foreclosure, the
Leasehold Mortgagee shall have the right to thereupon and thereafter assign
Tenant's leasehold estate under this Lease so long as Landlord's written
consent is first obtained, which consent shall not be unreasonably withheld. In
the event of any such assignment, the assignee of such Leasehold Mortgagee
shall be deemed to be a Permitted Assignee and the
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Leasehold Mortgagee shall thereupon be relieved and released of any liability
or obligation under this Lease first accruing or arising after the assignment.
(c) 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 required above, provide each Leasehold Mortgagee with written notice
("NOTICE OF TERMINATION") that the Lease has been terminated, together with a
statement of all sums which would at that time be due under this Lease, if any,
then known to Landlord. Landlord agrees to enter into a new lease ("NEW LEASE")
of the Leased Property with such Leasehold Mortgagee or such affiliate
("LEASEHOLD MORTGAGEE'S DESIGNEE") of such Leasehold Mortgagee as may be
designated in writing by such Leasehold Mortgagee for the remainder of the
Lease Term, effective as of the date of termination, upon terms, covenants and
conditions identical to those set forth in this Lease including obligations for
the payment of Rent and including obligations with respect to the Put Option
and the Call Option but excluding obligations which have already been satisfied
or fulfilled; provided:
(i) such Leasehold Mortgagee delivers a written request to
Landlord for such New Lease within sixty days after the date such
Leasehold Mortgagee receives Landlord's Notice of Termination;
(ii) such Leasehold Mortgagee pays or causes 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 and, in addition thereto, all reasonable expenses
(including reasonable attorney fees) which Landlord shall 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 any other
party in interest under Tenant; and
(iii) such Leasehold Mortgagee cures or commences to cure and
proceeds in good faith and with reasonable diligence to cure all
non-monetary defaults of Tenant of which said Leasehold Mortgagee was notified
by Landlord's Notice of Termination which are reasonably susceptible of being
so cured.
If more than one Leasehold Mortgagee shall request a New Lease pursuant to this
Section 7.06 (c), Landlord shall enter into such New Lease with the Leasehold
Mortgagee whose mortgage is prior in lien or such Leasehold Mortgagee's
Designee. Landlord, without liability to Tenant or any Leasehold Mortgagee with
an adverse claim, may rely upon a mortgagee title insurance policy issued by a
responsible title insurance company doing business within the state in which
the Leased Property is located as the basis for determining the appropriate
Leasehold Mortgagee who is entitled to such New Lease.
(d) Any Leasehold Mortgage may provide, at Tenant's option, that the
Leasehold Mortgagee, upon making good any failure
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or breach on the part of Tenant, shall be thereby subrogated to any and all of
the Rights of Tenant Under the terms and provisions of this Lease.
7.07. NO OBLIGATION TO CURE CERTAIN NONMONETARY DEFAULTS. Nothing herein
contained shall require any Leasehold Mortgagee, as a condition to its exercise
of its rights under this Article VII, to cure any default of Tenant not
reasonably susceptible of being cured by such Leasehold Mortgagee.
7.08. DISPOSITION OF TENANT'S SHARE OF CONDEMNATION AWARD. Tenant's share,
as provided by Section 11.03 of this Lease, of the proceeds arising from an
exercise of the power or threat of eminent domain shall, subject to the
provisions of such Section 11.03, be disposed of as provided for by any
Leasehold Mortgage.
7.09. INSURANCE MORTGAGEE CLAUSES. A mortgagee clause in such form as may
be reasonably acceptable to Landlord and each Leasehold Mortgagee consistent
with reasonable custom and usage prevailing in the industry naming each
Leasehold Mortgagee, may be added to any and all insurance policies required to
be carried by Tenant hereunder; provided that Landlord's rights with respect to
insurance proceeds are not diminished or prejudiced in any way or to any
extent. Any such mortgagee clause proposed in writing by any Leasehold
Mortgagee which is not disapproved in writing ten days after submission shall
be deemed acceptable by Landlord.
7.10. NOTICE of LITIGATION. Landlord shall give each Leasehold Mortgagee
prompt notice of any legal proceedings between Landlord and Tenant involving
obligations under this Lease. Each Leasehold Mortgagee shall have the right to
intervene in any such proceedings and be made a party to such proceedings, 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, which shall be
binding on all Leasehold Mortgagees notwithstanding any Leasehold Mortgagee's
failure to intervene after receipt of notice.
7.11. NO MERGER. So long as any Leasehold Mortgage is in existence, unless
Landlord, Tenant, all Leasehold Mortgagees and all Fee Mortgagees (as defined
in Section 14.01) shall otherwise expressly consent in writing, the fee title
to the Leased Property and the leasehold estate of Tenant herein 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 any third person, by purchase or otherwise.
7.12. TRANSFER OF SECURITY DEPOSIT RIGHTS. If any Leasehold Mortgagee or
other purchaser has acquired the leasehold estate of Tenant pursuant to
foreclosure, conveyance in lieu of foreclosure or other proceedings or a New
Lease, such Leasehold Mortgagee or other purchaser shall succeed to the rights
of Tenant, if any, in
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and to the Security Deposit paid and augmented in accordance with Section 4.01.
In such event, Tenant shall no longer have any rights to such Security Deposit,
and Landlord shall hold such Security Deposit for and on behalf of such
Leasehold Mortgagee or other purchaser.
7.13. STATEMENTS AND CERTIFICATES. Landlord shall, at any time and from
time to time, within ten days after written request from Tenant to do so,
certify by written instrument duly executed and acknowledged to any Leasehold
Mortgagee, proposed Leasehold Mortgagee or proposed Leasehold Mortgagee's
Designee, purchaser at any foreclosure or similar sale, or other assignee
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 term of
this Lease; and (f) as to any other matters as may be reasonably so requested;
provided that, in so doing, Landlord shall not be required to bear any
unreasonable burden or expense. Any such certificate may be relied upon by
Leasehold Mortgagee and any other person, firm or corporation specified
therein, and the contents of such certificate shall be binding on Landlord.
Nothing contained in this Section 7.13 shall be construed to permit any
assignment which is not otherwise permitted pursuant to Article XVI of this
Lease.
7.14. NOTICES. Notices from Landlord to each Leasehold Mortgagee shall be
mailed to the address furnished Landlord pursuant to Section 7.03, and those
from the Leasehold Mortgagee to Landlord shall be mailed to the address
designated pursuant to the provisions of Section 17.02 (and subject to Section
17.04) of this Lease. Such notices, demands and requests shall be given in the
manner described in, and shall in all respects be governed by, the provisions
of Section 17.01.
7.15. AMENDMENT OF LEASE. In the event any proposed Leasehold Mortgagee
requests that this Lease be amended, Landlord agrees to amend this Lease for
the benefit of such Leasehold Mortgagee; provided that the proposed amendment
does not affect any of the economic terms of this Lease and does not materially
adversely affect the rights of Landlord or its interest in the Leased Property.
ARTICLE VIII
TAXES AND UTILITIES
8.01. PROPERTY TAXES.
(a) Tenant shall, for the entire Lease Term, be liable for and,
subject to any right to contest permitted hereunder, shall pay, as
Additional Rent, before delinquency, all taxes, fees, and assessments
(including sewer, water and other utility improvement
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assessments) of every kind and nature, and penalties and interest thereon, if
any, assessed or levied against the Leased Property ("IMPOSITIONS"). If Tenant
fails to pay any Impositions, Landlord may, but shall not be obligated to, pay
such Impositions on Tenant's behalf after first giving Tenant ten days' notice
of Landlord's intention to pay such Impositions. If Landlord pays any
Impositions in accordance with the preceding sentence, Tenant shall immediately
reimburse and pay to Landlord upon demand, as Additional Rent, any Impositions
so paid by Landlord.
(b) Tenant shall also pay directly to the imposing authority, before
delinquency, all personal property taxes, and all other fees, charges and
assessments of every kind and nature, and penalties and interest thereon,
accruing during the Lease Term on or with respect to property used on or in
connection with the Leased Property, including but not limited to ad valorem
personal property taxes, and parking fees, levies or charges. If Tenant fails
to timely pay any tax, fee or assessment required to be paid by Tenant pursuant
to this Section 8.01(b), Landlord may, but shall not be required to, pay
such tax, fee, charge or assessment on Tenant's behalf after first giving
Tenant ten days notice of Landlord's intention to pay. If Landlord pays any
such tax, fee, charge or assessment on Tenant's behalf in accordance with the
preceding sentence, Tenant shall immediately reimburse and pay to Landlord,
upon demand as Additional Rent, an amount equal to all such taxes, fees,
charges and assessments so paid.
(c) If any tax, fee or assessment may be paid in installments, Tenant
may elect to so pay such tax, fee or assessment in installments and
Tenant shall only pay those taxes, fees and assessments accruing during the
Lease Term.
(d) Tenant, at its expense, may contest in its own name or in the
name of Landlord, or both, by appropriate legal proceedings, the
amount, validity or application, in whole or in part, of any tax, fee or
assessment required to be paid hereunder; provided, however, that pending a
final determination of the contested tax, fee, or assessment, Tenant either (i)
pays such contested tax, fee or assessment under protest; or (ii) obtains and
posts a bond issued by a surety reasonably acceptable to Landlord in an amount
sufficient to satisfy and pay the amount of such contested tax, fee or
assessment and estimated interest and penalties thereon, and to adequately
indemnify Landlord from all liability with respect to the enforcement of such
tax, fee or assessment. Neither such contest or the failure to pay such
contested tax, fee or assessment during any period of contest shall constitute
a default hereunder; provided that if as a matter of law, such tax, fee or
assessment must be paid during such contest, Tenant shall do so.
8.02. UTILITIES.
(a) Tenant shall, for the entire Lease Term, be liable for and pay
before delinquency all charges for utilities and other services used or
consumed on the Leased Property during the Lease
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Term, including, without limitation, gas, electricity, water, sewer, telephone
and community antenna television service, and specifically including any and
all charges for initiating and terminating service, such as initiation or
"hook-up" fees, disconnection fees, and similar fees, as well as all costs and
charges incurred in relocating and extending utility lines, whether on or off
the Leased Property. Tenant shall not permit any such charges to accumulate or
become a lien on the Leased Property. If Tenant fails to timely pay any utility
or service charges required to be paid by Tenant pursuant to this Section 8.02,
Landlord may, but shall not be required to, pay such utility or similar service
charge on Tenant's behalf after first giving Tenant ten days' notice of
Landlord's intention to pay. If Landlord pays any such utility or similar
service charge on Tenant's behalf in accordance with the preceding sentence,
Tenant shall immediately reimburse and pay to Landlord upon demand, as
Additional Rent, an amount equal to all such utility and similar service
charges so paid.
(b) Landlord shall assign to Tenant all of Landlord's right, title and
interest in and to any equivalent residential units to which Landlord may be
entitled with respect to the Leased Property.
ARTICLE IX
MAINTENANCE, REPAIRS AND DESTRUCTION
9.01. MAINTENANCE AND REPAIRS. During the Lease Term, Tenant shall keep
and maintain the Leased Property and all Improvements (including landscaping)
thereon in a good clean, sanitary and safe condition, reasonable wear and tear
excepted, and shall make all necessary repairs thereto and replacements
thereof, interior and exterior, structural and non-structural. Nothing
contained in the preceding sentence shall be construed to limit or restrict
Tenant's right to remove the Shark Club Improvements in accordance with and
subject to Section 6.01 of this Lease. All repairs and replacements shall be
performed and installed promptly in a good and workmanlike manner and in
compliance with all applicable building, zoning and all other laws, statutes,
ordinances, orders, rules, regulations, requirements, permits and
authorizations of all federal, state, county and municipal governmental
authorities. Tenant shall be responsible for the repair and maintenance of all
sidewalks, driveways and parking areas on the Leased Property, whether
significant or insignificant, anticipated or unanticipated. Tenant's
maintenance, repair and replacement obligations of this Section 9.01 shall
extend to and include the repair and replacement of all underground and
overhead utility and service lines, facilities and systems, whether or not
located on the Leased Property (including gas, electrical, water, sewer,
telephone and community antenna television systems servicing the Leased
Property but located within rights-of-way adjoining the Leased Property),
unless and except to the extent such utility and service lines facilities and
systems are required to be and are in fact maintained by the provider of such
utility or service. If Tenant
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fails to keep and maintain the Leased Property in a clean, sanitary and safe
condition or if Tenant fails to commence or complete any necessary repairs or
replacements promptly and adequately, Landlord may, but shall not be required
to so maintain the Leased Property and to make and complete such repairs and
replacements on Tenant's behalf after giving Tenant ten days notice of
Landlord's intention to perform or cause the performance of such maintenance,
repair or replacement work on Tenant's behalf. If Landlord pays any amount for
the maintenance of the Leased Property or for necessary repairs or replacements
on Tenant's behalf in accordance with the preceding sentence, Tenant shall
immediately reimburse and pay to Landlord, upon demand, as Additional Rent, an
amount equal to all expenses and expenditures incurred in connection with such
maintenance, repairs or replacements.
9.02. NO RESPONSIBILITY OF LANDLORD. Landlord shall not be obligated to
inspect the Leased Property for any reason whatsoever. Landlord shall not be
liable for, and Tenant on behalf of itself and its licensees and invitees
hereby waives and holds Landlord harmless from any claim for, or right to
recover for, any loss or damage to persons or property which may be caused by
any condition of any Improvements, the condition of the Leased Property, by
flood or surface water, or by any other cause of similar nature.
9.03. DESTRUCTION OR DAMAGE.
(a) Except as otherwise permitted in Section 9.03 (b), if any
Improvements are destroyed or damaged to any extent, Tenant shall, at
Tenant's sole cost and expense, without any expenditure or expense being
imposed on Landlord, restore, repair, replace, rebuild and alter such
Improvements to at least as good a condition as existed prior thereto. Any
restoration, repair, replacement, rebuilding or alteration required pursuant to
this Section 9.03 shall be commenced promptly and in no event later than six
months after such destruction or damage, and shall be prosecuted with
diligence. All such restoration, repair, replacement, rebuilding or alteration
shall be subject to the same rights reserved by Landlord with respect to the
construction of Improvements pursuant to Section 6.03. Insurance proceeds shall
be applied to the cost of any such restoration as provided in Section 10.04,
and if the insurance proceeds are insufficient for such purposes, Tenant shall
be responsible for all excess expenditures and expenses required or necessary.
(b) If the Shark Club Improvements are destroyed or damaged as a
result of casualty, Tenant may elect to completely remove the Shark Club
Improvements provided Tenant first (i) satisfies all obligations pursuant to
the Shark Club Lease with respect thereto, terminates the Shark Club Lease, or
procures a waiver from La-Tex Partnership which, by its terms, releases
Landlord from liability; (ii) increases the Security Deposit in accordance with
Section 4.01 (b); (iii) to the extent practicable, affords Landlord an adequate
opportunity to remove any undamaged items of personal property identified on
EXHIBIT F annexed to this Lease; and (iv) secures all necessary permits,
licenses, and
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approvals from all federal, state, county and municipal governmental
authorities. If any other Improvements are destroyed or damaged, Tenant may
elect to completely remove such Improvements upon the condition that the amount
of the Security Deposit otherwise required to then be posted (but for Section
4.01 (e) of this Lease) shall be posted in accordance with Section 4.01,
notwithstanding Section 4.01 (e).
ARTICLE X
INSURANCE, INDEMNITY AND WAIVER
10.01. GENERAL LIABILITY INSURANCE.
(a) Tenant shall, at Tenant's sole cost and expense, without any
expense being imposed on Landlord, procure and maintain throughout the Lease
Term, one or more policies of comprehensive general liability insurance,
insuring against any and all claims for injuries to or death of any person or
persons, or damage to property occurring in, on or about the Leased Property or
occurring as a result of any activity being conducted on the Leased Property.
Tenant shall cause Landlord to be an additional insured on all such liability
insurance policies insuring Tenant with respect to its occupancy and activities
on the Leased Property, including, but not limited, to all comprehensive
general liability policies, all "umbrella" liability policies, all "excess
liability" policies and all other such liability policies, and under no
circumstances shall such liability insurance have a combined single limit
coverage of less than (i) Five Million Dollars ($5,000,000) or such greater
amount as may be required by a Leasehold Mortgagee if the Land is not used as a
part of or in conjunction with a hotel or casino facilities, or (ii) Twenty
Million Dollars ($20,000,000) or such greater amount as may be required by a
Leasehold Mortgagee if the Land is used as a part of or in conjunction with a
hotel or casino facility. Every such policy shall include liability coverage
normally incident to comprehensive general liability policies and shall include
broad form contractual liability coverage for Tenant's indemnity obligations
under this Lease, liquor legal liability ("dram shop") coverage and personal
liability coverage.
(b) Tenant shall at all times during the term of this Lease, without
any expense being imposed on Landlord, provide worker's compensation
coverage (through insurance or otherwise) as required by Nevada law and the
rules and regulations promulgated thereunder.
10.02. CASUALTY INSURANCE.
(a) Tenant, at its sole cost and expense, without any expense being
imposed on Landlord shall procure and maintain throughout the Lease
Term in full force and effect, in the names of Landlord and Tenant as their
interests may appear, property insurance, including "all-risk" coverage
insuring all Improvements which may, from time to time, constitute a part of
Leased Property
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on a (i) replacement cost basis of not less than ninety percent (90%) of
the replacement cost of all Improvements or (ii) a multiple location "stop
loss" limit basis of one hundred percent (100%) of the replacement cost of the
Improvements.
(b) Tenant, at Tenant's sole cost and expense, without any expense
being imposed on Landlord shall also procure and maintain throughout
the Lease Term in full force and effect loss of rents insurance sufficient in
amount and duration to satisfy Tenant's obligations to pay to Landlord Base
Rent, Supplemental Rent and Additional Rent as may then be payable from Tenant
to Landlord for a period of at least twelve months following any interruption
of Tenant's business by reason of any casualty. The loss of rents policy shall
name Landlord as a loss payee and provide for such payments to be made directly
to Landlord by the insurer.
10.03. COURSE-OF-CONSTRUCTION INSURANCE. During the construction of any
Improvements, the total cost of which exceeds or is expected to exceed Five
Hundred Thousand Dollar ($500,000), Tenant, at its sole cost and expense,
without any expense being imposed on Landlord, shall maintain in full force and
effect, in the names of Landlord and Tenant as their interests may appear,
course-of-construction casualty insurance coverage in such amount and with such
coverages as are commercially reasonable under the circumstances. Prior to
commencement of any construction, addition, alteration, repair, demolition,
destruction or removal of any Improvements the cost of which is anticipated to
exceed Five Hundred Thousand Dollars ($500,000), Tenant shall notify Landlord
not less than ten days in advance, in writing, of the starting date of such
intended work. At the time of the notice, if the cost of the work is
anticipated to exceed Five Hundred Thousand Dollars ($500,000), Tenant shall,
at Tenant's sole cost and expense, obtain a policy of owner's and contractor's
protective liability insurance, with a combined single limit coverage of not
less than Five Million Dollars ($5,000,000), insuring Landlord and Tenant
against any and all claims for injuries to or death of any person or persons or
damage to property occurring in, on or about the Leased Property as a result of
actions related to the construction, alteration, addition, repair, demolition,
destruction or removal of any Improvements. Every such policy shall include
normal comprehensive form liability coverage contained in such policies and
shall include, but shall not necessarily be limited to, bodily injury and broad
form property damage, blanket contractual liability coverage,
premises-operations coverage, explosion and collapse hazard coverage,
underground hazard coverage, products/completed operations hazard coverage,
independent contractors coverage and comprehensive form automobile liability
coverage.
10.04. PAYMENT OF PROCEEDS. Unless otherwise agreed by Landlord, Tenant
and any insured Leasehold Mortgagee and Fee Mortgagee, all insurance proceeds
payable under any casualty insurance policy required to be maintained under the
provisions of Section 10.02 or any course-of-construction casualty insurance
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policy maintained under the provisions of Section 10.03 shall be made
payable, in case of loss or damage, (a) except in the case of loss or damage to
the Shark Club Improvements, to a Leasehold Mortgagee, if a Leasehold Mortgagee
so requires, or (b) to a Fee Mortgagee, if a Fee Mortgagee so requires, or (c)
if no Leasehold Mortgagee or Fee Mortgagee so requires such proceeds be paid to
it, to a trust company authorized by law to exercise corporate trust powers in
the State of Nevada or other impartial third party, as shall be designated (in
either instance) by Landlord, as trustee of such proceeds. The trustee shall be
responsible only for the proper custody and application of policy proceeds as
provided for in this Lease, and Tenant shall pay all fees and expenses of such
trustee for or in connection with its services. The trustee shall make the
proceeds available to Tenant and shall be applied by Tenant to the extent
necessary for the repair, restoration or reconstruction of the Improvements.
Any insurance proceeds remaining after proper repair, restoration and
reconstruction and after payment of all costs and expenses incurred in
connection therewith shall be Tenant's sole property, subject to the terms and
requirements of any Leasehold Mortgage.
10.05. GENERAL INSURANCE REQUIREMENTS. Every policy of insurance required
pursuant to this Lease shall be written by insurance companies licensed in the
State of Nevada to provide the type of coverage required, each of which shall
be subject to the prior written approval of Landlord, which shall not be
unreasonably withheld. Any insurance company designated and/or policy
identified by Tenant in a written notice given to Landlord which is not
disapproved in writing within ten days after submission shall be deemed
approved. Each policy of insurance required pursuant to this Lease shall
contain an endorsement providing that neither the policy nor any coverage
provided therein may be cancelled, reduced, diminished or otherwise abrogated
in any manner or to any extent without first providing prior written notice to
Landlord and such other persons with an interest in the Leased Property and/or
this Lease as Landlord may have previously designated at least thirty days
prior to cancellation, reduction, diminishment or abrogation. At the time
provided for the procurement of insurance coverage as set forth in this Lease
and not less than thirty days prior to the expiration of each policy, Tenant
shall deliver to Landlord originally executed certificates and, as soon
thereafter as may be practicable, true and correct copies of the original
policies of insurance issued by the insuring company or companies evidencing
all coverages, endorsements and policy limits required herein. Each policy of
insurance required under the terms of this Lease shall be written as a primary
policy and not contributory policy with or in excess of any policy that may be
carried by Landlord. Every policy required pursuant to this Lease shall name as
insureds, Landlord and any other persons with an interest in the Leased
Property and/or this Lease as Landlord may reasonably designate. Tenant shall
carry insurance as required in this Lease in such amounts as will prevent the
imposition of a co-insurance penalty in the event of loss, notwithstanding any
other provision of this Lease. All policies required hereunder shall contain
loss payable or other similar endorsements so as to provide for the
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payment of insurance proceeds as required in this Lease. No policy of
insurance required to be carried by Tenant hereunder shall contain deductibles
or self-insured retentions greater than Fifty Thousand Dollars ($50,000)
without the prior written approval of Landlord. If Tenant obtains insurance
coverage with deductibles or self-insured retentions, Tenant shall be solely
responsible for the payment of all deductible and self-insured sums. Tenant may
provide any insurance required hereunder through blanket policies.
10.06. INDEMNIFICATION AND WAIVER.
(a) Tenant hereby covenants and agrees to indemnify, defend and hold
Landlord and Landlord's officers, directors, shareholders, partners,
members, principals, employees, agents and representatives free, clear and
harmless from any and all claims, demands, losses, damages, judgments, liens,
interest, costs, expenses (including attorney fees), expenses of appearing as a
witness (including attorney fees) even if not also a party and other liability
(all of which are herein referred to collectively as "CLAIMS" and each of which
is referred to singularly as a "CLAIM") other than Claims for which Landlord is
required to provide indemnification pursuant to Section 10.06 (b) in connection
with, arising out of, or by reason of: (1) any matter for which indemnification
is required pursuant to Sections 3.03, 5.02, 5.04(c)(3), 6.04 or otherwise
pursuant to this Lease, (2) the inaccuracy or breach of any warranties or
covenants of Tenant contained in this Lease; and (3) any act, omission or
negligence in any way connected with or in any way related to Tenant's
occupancy or use of the Leased Property or the condition of the Leased Property
including, without limitation, Claims resulting from or in any way related to
(i) any injury to or death of any person or damage to property occurring on the
Leased Property, or upon the sidewalks, driveways, parking areas, streets or
rights-of-way adjoining the Leased Property and which is actually or alleged to
be related to or connected with the use, condition or occupancy of the Leased
Property, or the condition of such sidewalks, driveways, parking areas, streets
or ways; (ii) any actual or alleged act or omission of Tenant, Tenant's
officers, directors, employees, servants, agents, contractors, representatives,
subtenants, licensees, customers or invitees; (iii) any violation or alleged
violation of any law, ordinance or regulation or breach or alleged breach of
any agreement or any failure or alleged failure of Tenant to perform or fulfill
any covenant of this Lease; (iv) any actual or alleged encroachment, trespass
or nuisance upon the Leased Property or to property adjoining the
Leased Property; and (v) any contest by Tenant of any ruling, tax, lien or
other matter, it being understood that this provision does not in any way
independently permit or approve of the contest of any such action not otherwise
specifically provided for in this Lease.
(b) Landlord hereby covenants and agrees to indemnify, defend and hold
Tenant and Tenant's officers, directors, shareholders, partners, members,
principals, employees, agents and representatives free, clear and harmless from
any and all Claims other than Claims for which Tenant is required to provide
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indemnification pursuant to Section 10.06 (a), in connection with, arising
out of, or by reason of: (1) the inaccuracy or breach of any warranties or
covenants of Landlord contained in this Lease; (2) any act, omission or
negligence of Landlord while in, upon, about or in any way connected with the
Leased Property; and (3) any matter arising from or connected with the Leased
Property and accruing on or before the Commencement Date, other than
obligations relating to the Shark Club Lease which have been assumed by Tenant
pursuant to this Lease.
(c) Any person entitled to indemnification pursuant to this Section
10.06 (an "INDEMNITEE") shall provide the indemnifying party (an
"INDEMNITOR") with notice of any Claim with reasonable promptness and the
indemnitor shall defend indemnitee in such proceedings by counsel of the
indemnitor's selection subject to the indemnitee's approval (which shall not be
unreasonably withheld, conditioned or delayed), the cost and expense of which
(including attorney fees) shall be borne by the indemnitor. The indemnitee
shall cooperate fully in all respects with the indemnitor in any such defense,
including, without limitation, making available to the indemnitor all pertinent
information under the control of the indemnitee. If an indemnitee so requests
indemnification, the indemnitor shall defend, but not settle, a Claim without
waiving the indemnitor's right to assert that such Claim is not subject to an
obligation of indemnification pursuant to this Lease.
10.07. MUTUAL WAIVERS OF SUBROGATION. As a material inducement to Landlord
to enter into this Lease, Tenant hereby waives any and all rights of recovery
(including any subrogation rights of its insurers) from Landlord, and
Landlord's officers, directors, shareholders, partners, members, principals,
employees, agents and representatives for any loss or damage, including
consequential loss or damage, covered by any insurance policy maintained by
Tenant, whether or not such policy is required pursuant to this Lease. Landlord
likewise hereby waives any and all rights of recovery (including any
subrogation rights of its insurers) from Tenant and Tenant's officers,
directors, shareholders, partners, members, principals, employees, agents and
representatives for any loss or damage, including consequential loss or damage,
covered by any insurance policy maintained by Landlord.
10.08. LANDLORD NOT OBLIGATED. Notwithstanding anything to
the contrary contained in or inferable from any provision of this
Lease, Landlord shall not be required to carry or maintain
insurance coverage of any kind or nature; and Tenant hereby waives
all claims and demands against, and any and all rights of recovery
against Landlord, its officers, directors, shareholders, partners,
members, principals, employees, agents and representatives, for any
losses, damages, claims, and causes of action other than those
proximately caused by and resulting from Landlord's willful
misconduct or acts of gross negligence, or matters which are the
subject of Landlord's indemnification obligations under Section
10.06 (b).
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10.09. FAILURE TO MAINTAIN INSURANCE. If Tenant fails or refuses to
procure or maintain any insurance coverage required by this Lease or fails or
refuses to furnish Landlord with required evidence that the insurance has been
obtained, is in force and has been paid for, Landlord may, but shall not be
required to, procure and maintain such insurance on Tenant's behalf after first
giving Tenant ten days' notice of Landlord's intention to do so. If Landlord
pays any premium for insurance coverage on tenant's behalf in accordance with
the preceding sentence, Tenant shall immediately reimburse and pay to Landlord,
upon demand, as Additional Rent, an amount equal to all expenses associated
therewith.
ARTICLE XI
EMINENT DOMAIN
11.01. CONDEMNATION. If all of the Leased Property shall be taken or
acquired by any governmental or quasi-governmental authority under the power or
threat of eminent domain or by inverse condemnation, the Lease Term shall cease
as of the day possession shall be taken by such authority. Likewise, even if
less than all, but so much of, the Leased Property is taken such that a
reasonable amount of reconstruction will not render the Improvements legally
usable or feasibly suited for the use in the manner the Leased Property was
used immediately prior to the taking, the taking shall be deemed to be and
treated as a complete taking for purposes of this Section 11.01. Upon a
complete taking of the Leased Property, Tenant shall pay Rent up to the date
possession is taken with an appropriate refund by Landlord of such Base Rent
and Additional Rent as may have been paid in advance for any period subsequent
to the date possession in taken.
11.02. PARTIAL CONDEMNATION.
(a) If up to fifteen feet of frontage property (based upon current lot
lines) is taken or acquired by any governmental or quasi-governmental authority
under the power or threat of eminent domain or by inverse condemnation for the
purpose of widening Xxxxxx Avenue, the Lease Term shall not cease or be
interrupted to any extent, there shall be no abatement of Rent for the portion
of the Leased Property so taken and Tenant shall continue to fully pay and
perform all obligations pursuant to this Lease.
(b) With respect to any taking other than or in excess of the taking
described in Section 11.02 (a), if less than all of the Leased Property shall
be taken or acquired by any governmental or quasi-governmental authority under
the power or threat of eminent domain or by inverse condemnation, such that a
reasonable amount of reconstruction will render the Improvements legally usable
and feasibly suited for the use in the manner the Leased Property was used
immediately prior to the taking, the Lease Term shall not cease, Tenant shall
continue to pay Rent up to the date possession is taken and, thereafter, Base
Rent (not Supplemental Rent and not Additional Rent) as it then exists shall be
reduced in
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the same proportion that the value of the Leased Property immediately
before the taking bears to the value of the Leased Property immediately after
the taking. Tenant shall, at its sole cost and expense, without any expense
being imposed on Landlord, make fully restore, repair, replace, rebuild and
alter the Improvements in accordance with Section 9.03 so as to constitute the
remaining premises a complete architectural unit.
11.03. CONDEMNATION AWARD.
(a) Except as otherwise provided in Section 11.03 (b), all compensation
awarded or paid for any taking or acquiring of the Land and/or the Shark Club
Improvements under the power or threat of eminent domain or by inverse
condemnation, complete or partial, up to an amount equal to the Purchase Price
(determined in accordance with Section 12.03 as if either party had timely
exercised one of the options set forth and the date payment is made is deemed
to be the date of Closing), shall be the property of Landlord; and any and all
amounts awarded as compensation for the taking or acquiring of the Resort
Improvements and for any diminution in the value of Tenant's leasehold interest
shall be the property of Tenant. In the event the condemnation award for the
taking or acquiring of the Land and/or Shark Club Improvements is less than the
Purchase Price (so determined), Landlord shall be entitled to retain from the
Security Deposit an amount equal to the difference between the Purchase Price
(so determined) minus the condemnation award and the balance of the Security
Deposit, if any, shall be delivered to Tenant. In the event the condemnation
award for the taking or acquiring of the Land and/or Shark Club Improvements
and the portion of the Security Deposit retained by Landlord equals or exceeds
the Purchase Price (so determined), any amounts in excess of the Purchase Price
(so determined) shall belong to Tenant and Landlord shall transfer all rights
in the Leased Property to Tenant upon receipt of the Purchase Price.
(b) With respect to any condemnation award on account of any taking
described in Section 11.02 (a), the first Two Hundred Fifty Thousand Dollars
($250,000) thereof shall belong to Landlord and the balance of such award shall
be divided between Landlord and Tenant in the same proportions as the values of
their respective interests.
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ARTICLE XII
PURCHASE RIGHTS
12.01. LANDLORD'S PUT OPTION.
(a) Tenant hereby grants to Landlord an option to sell ("PUT OPTION")
the Leased Property subject to all of the Reservations (other than any Fee
Mortgage) and all easements, licenses, reservations, rights-of-way, conditions,
covenants, and restrictions which become matters of record on or after the
Commencement Date through no act or omission of Landlord and all other
conditions, facts, circumstances, rights and claims which are not shown as
matters of record and which arise on or after the Commencement Date through no
act or omission of Landlord for the Purchase Price and upon the terms and
conditions set forth in this Article XII.
(b) Landlord may exercise the Put Option by delivering written notice
to Tenant at any time on or after the first day of the fifth Lease Year. Such
notice shall specify a date and place at which the Closing (as defined in
Section 12.05) shall occur, which date shall not be less than three months nor
more than four months after the date of such notice.
12.02. TENANT'S CALL OPTION.
(a) Landlord hereby grants to Tenant an option ("CALL OPTION") to
purchase the Leased Property subject to the same matters identified in Section
12.01 (a) for the Purchase Price and upon the terms and conditions set forth in
this Article XII.
(b) Provided there does not exist any uncured event of default
pursuant to Section 15.01 of this Lease, Tenant may exercise the Call
Option by delivering written notice to Landlord at any time on or after the
first day of January, 1999 (subject to Tenant's right to accelerate in
accordance with Section 5.04 (b) (2) or 14.02 (b)); provided, however, that if
such notice is given prior to the first day of July, 2006, the Purchase Price
shall be increased in accordance with Section 12.03 (c) and (d), if applicable.
Such notice shall specify a date and place at which the Closing shall occur,
which date (except as provided in Section 5.04 (b) (2) and 14.02 (b)) shall not
be less than twelve months or more than fifteen months after the date of such
notice.
12.03. PURCHASE PRICE. Subject to Sections 5.04 (b)(2), 14.02 (b) and
12.02 (b), in the event Landlord exercises Landlord's Put Option or in the event
Tenant exercises Tenant's Call Option, the purchase price (the "PURCHASE
PRICE") for the Leased Property shall be an amount equal to:
(a) the product of (i) either (A) in the case of a sale and purchase of
the Leased Property on or after January 1, 2000, the Base Rent, as adjusted,
payable during the month preceding the Closing adjusted to take into account
increases (but not decreases)
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in the cost-of-living occurring during the Lease Year in which the Closing
occurs, based on the same index (indices) as may then be used for the
calculation of adjustments of Base Rent pursuant to Section 3.02, such
adjustment being made in the same manner and subject to the same limitations
(proportionately applied) as Base Rent is adjusted pursuant to Section 3.02
with the base index number being the first month of the Lease Year in which
Closing occurs and the current index number being the month preceding the month
in which Closing occurs, or (B) in the case of a sale and purchase of the
Leased Property which occurs prior to January 1, 2000 as a result of an
exercise of Tenant's Call Option (accelerated by virtue of a Denial in
accordance with Section 5.04 (b) (2)), the Base Rent that would have been
payable for the month of January, 2000, adjusted to take into account
adjustments in cost-of-living in the same manner as set forth in the preceding
clause (A) of this Section 12.03 (a) (i), assuming cost-of-living increases of
three percent (3%) per annum between the date of Closing and January, 2000;
multiplied by (ii) 12; multiplied by (iii) 10; plus
(b) if Tenant has failed to timely elect not to use the Land as a part
of or in conjunction with a hotel and casino in accordance with Section 5.01,
the outstanding balance of the Supplemental Rent Amount for the month in which
Closing occurs which balance shall be determined in accordance with EXHIBIT D
annexed to this Lease plus a lease termination fee of Two Hundred Fifty
Thousand Dollars ($250,000); plus
(c) if Tenant gives notice of exercise of Tenant's Call Option prior to
July 1, 2006 (with Closing being not less than twelve months or more than
fifteen months thereafter), One Million Dollars ($1,000,000) but nothing
contained in the preceding clause shall be construed to permit an exercise of
the Call Option any earlier than the date specified in Section 12.02 (b); plus
(d) if Tenant accelerates the exercise of Tenant's Call option as a
result of a Denial in accordance with Section 5.04 (b) (2), the present value
of the Base Rent Landlord would have received pursuant to this Lease from and
after the date of the sale and purchase of the Leased Property (but for such
sale and purchase) through and including December, 1999, assuming cost-of-living
increases of three percent (3%) per annum and employing a discount factor of
eight percent (8%); less
(e) any amount received by Landlord pursuant to Section 11.03 (a) (but
not any amount received by Landlord pursuant to Section 11.03 (b)).
Upon exercise of Landlord's Put Option, Landlord may, but shall not be
obligated to, use and apply all or any portion of the Security Deposit toward
the payment of the Purchase Price, after first giving Tenant thirty days'
notice of Landlord's intention to so use and apply the Security Deposit for
such purposes, during which time Tenant may substitute money for any letters of
credit then constituting a part of the Security Deposit. If Landlord exercises
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its Put Option or if Tenant exercises Tenant's Call Option but Tenant fails to
timely close the purchase of the leased property, through no fault of Landlord,
Landlord may elect but shall not be obligated to elect to recover, in addition
to terminating the Lease, as its exclusive remedy for damages, the Security
Deposit as liquidated damages. It is agreed that the exact amount of costs,
expenses and damages incurred and suffered by Landlord would be difficult to
determine and that the amount of the Security Deposit which shall then have
been paid is a reasonable estimate of that amount. In that regard, Tenant and
Landlord stipulate, acknowledge and agree that the failure to close the sale
and purchase of the Leased Property on or before the date of Closing shall
deprive Landlord of not only the opportunity to earn interest or other normal
investment return on funds that Landlord would receive at Closing, but shall
also preclude Landlord from availing itself of valuable business opportunities
and engaging in transactions that could result in substantial monetary profit
to Landlord. Tenant and Landlord agree that the likely amount of such profit
would be extremely difficult to determine, but that the amount of any such
profit, as well as the likelihood of Landlord making such profit, will diminish
with the passage of time. Tenant and Landlord acknowledge, stipulate and agree
that the retention by Landlord of the Security Deposit, increasing in amount as
provided in Section 4.01, will be reasonable, and that the increasing amount of
the Security Deposit shall bear direct relationship to the likelihood and
amount of lost opportunity profits to Landlord.
12.04. TAX-FREE EXCHANGE. In the event Landlord exercises its Put Option
or Tenant exercises its Call Option and Landlord desires to structure the sale
of the Leased Property to Tenant as part of a tax-free exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, Tenant shall cooperate with
Landlord in such efforts and shall execute and deliver such documents and
perform such actions as Landlord may reasonably request. However, in no event
shall such structuring or accommodation result in any cost to Tenant or in any
way relieve Landlord of any of its obligations under this Lease.
12.05. TERMS OF PURCHASE. The following provisions shall govern the sale
and purchase of the Leased Property, regardless of whether the sale and
purchase results from an exercise of Landlord's Put Option or Tenant's Call
Option:
(a) The closing ("CLOSING") shall take place on the date specified in
notice given by Landlord pursuant to Section 12.01 or the date specified in the
notice given by Tenant pursuant to Section 12.02.
(b) At Closing, Landlord shall convey title to the Leased Property to
Tenant by grant, bargain and sale deed subject to the Reservations, any
Leasehold Mortgage and all encumbrances and liens not resulting from any act or
omission of Landlord and Landlord shall remove, any and all exceptions to title
reasonably related to any act or omission of Landlord including, but not
limited to, any Fee Mortgage.
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(c) Closing costs other than title insurance (which shall be borne by
Tenant) shall be allocated in accordance with the custom and usage then
prevailing in Xxxxx County, Nevada. Rent shall be prorated as of the date of
the Closing. At Closing, Landlord shall provide Tenant with a suitable
affidavit satisfying the requirements of the Internal Revenue Code relating to
the withholding of a portion of the purchase price in the event of any purchase
from a "foreign" person.
(e) Each party shall promptly prepare, execute and deliver such further
documents, and shall promptly perform whatever acts are necessary to Closing.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES
13.01. LANDLORD'S WARRANTIES. Landlord hereby represents and warrants to
Tenant that:
(a) Landlord is the owner of the Land. Previous to the execution of
this Lease, Landlord has not conveyed the Leased Property or any interest
therein except as disclosed by the Recorded Exceptions and the Shark Club Lease.
(b) Landlord has furnished to Tenant true and correct copies of all
items identified in EXHIBIT C, all of which set forth and constitute the entire
understanding between Landlord and La-Tex Partnership concerning the Leased
Property; and rent has not been prepaid in advance of dates upon which such
rent becomes due in accordance with the Shark Club Lease.
(c) Landlord has furnished Tenant true and correct copies of the Shark
Club Note, the Short Form Deed of Trust and Assignment of Rents executed by
Landlord for the benefit of La-Tex Partnership recorded in Book 870702 as
Instrument No. 01263, in the office of the Xxxxx County Recorder and the
Assignment of Short Form Deed of Trust and Assignment of Rents and Promissory
Note recorded in Book 870803 as Instrument No. 00566 in the office of the
Xxxxx County Recorder, which together with the documentation described in
Section 13.01 (b) constitute the entire understanding between Landlord and
La-Tex Partnership concerning such loan transaction.
(d) As of the Commencement Date, the outstanding balance of principal
and interest due on and with respect to the Shark Club Note is Four Hundred
Twenty-two Thousand Three Hundred Sixty-Nine Dollars and Seventy-Four Cents
($422,369.74).
(e) Landlord claims that Tenant is in default under the Shark Club
Lease and La-Tex Partnership claims that Landlord is in default under the Shark
Club Lease as more fully disclosed in various items of correspondence and
pleadings identified on EXHIBIT C annexed to this Lease, copies of which have
been provided to
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Tenant; and there exist no defaults by either party under the Lease other than
those which are the subject of the items of correspondence and pleadings
identified on EXHIBIT C.
(f) Other than the right embodied in Section 39 of the Shark Club Lease
which have been the subject of various items of correspondence identified in
Section 13.02 (a), Landlord has not granted La-Tex Partnership or any other
person any option or right to purchase the Leased Property.
(g) Landlord has furnished to Tenant true and correct copies of the
documents which constitute the entire understanding of Landlord and Bank of
America Nevada concerning the loan set forth therein (the "BOFA LOAN").
(h) As of April 19, 1996, the outstanding principal balance of the BofA
Loan was Nine Hundred Twelve Thousand Six Hundred Fifty-Two Dollars and
Seventy-Eight Cents ($912,652.78).
(i) The BofA Loan may be prepaid at anytime without any prepayment
premium or penalty.
(j) Landlord has full power and authority to enter into this Lease. All
actions by Landlord necessary to authorize the execution, delivery and
performance of this Lease have been duly undertaken. In addition to these
representations and warranties of Landlord, the person executing this Lease on
behalf of Landlord represents and warrants to Tenant that such person has full
power and authority to execute this Lease on behalf of Landlord.
(k) This Lease constitutes the legal, valid and binding obligation of
Landlord, enforceable in accordance with its terms.
(l) There exists no litigation, instrument or agreement which would
prevent Landlord from entering into or performing this Lease. Without limiting
the generality of the foregoing, there is no agreement other than the Shark
Club Lease which allows any person or entity to use the Leased Property.
(m) Landlord has not received any notice or other communication
concerning any alleged violation of any Environmental Law or any notices or
other communications concerning liability for the presence of any Hazardous
Material in connection with the Leased Property, and there exists no writ,
injunction, decree, order or judgment outstanding, nor any lawsuit, claim,
proceeding, citation or investigation, pending or, to Landlord's actual
knowledge, threatened, relating to the ownership, use, maintenance or operation
of the Leased Property by any person, or to any alleged violation of any
Environmental Law or to the suspected presence of any Hazardous Material
thereon, nor does there exist any basis for any such lawsuit, claim,
proceeding, citation or investigation being instituted or filed. To the best of
Landlord's actual knowledge, there are no Hazardous Materials stored,
deposited, or otherwise located in, on or under the Leased Property nor has the
Leased Property ever been used as a landfill or waste
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disposal site, or used or occupied for the purpose of, or in any way
involving, the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Material to,
from or across the Leased Property. Landlord has not been involved in
operations upon the Leased Property which could lead to the imposition on
Landlord or any other owner or lessee of the Leased Property of liability or
the creation of a lien on the Leased Property under any Environmental Law.
13.02. TENANT'S WARRANTIES. Tenant hereby represents and warrants to
Landlord that:
(a) Tenant understands and acknowledges that La-Tex Partnership has a
right to first negotiate to purchase the Leased Property as more fully set
forth in section 39 of the Shark Club Lease and that Tenant has been provided
copies of (i) Landlord's notice to Tenant dated December 8, 1995, (ii) Tenant's
request for extension dated December 19, 1995, (iii) Landlord's denial of
Tenant's requested extension dated December 20, 1995, (iv) Tenant's offer to
purchase the Leased Property dated December 29, 1995, and (iv) Tenant's
response to Tenant's offer dated January 4, 1996.
(b) Tenant understands and acknowledges that as of the expiration of
the Lease Term, the balance of principal and interest due with respect to the
Shark Club Note will approximate Four Hundred Forty-Seven Thousand Seven Hundred
Eleven Dollars and Seventy-Four Cents ($447,771.74) the obligation for the
payment of which is assumed by Tenant by virtue of Section 5.02 of this Lease.
(c) Tenant has full power and authority to enter into this Lease. All
actions by Tenant necessary to authorize the execution, delivery and
performance of this Lease have been duly undertaken. In addition to these
representations and warranties of Tenant, the person executing this Lease on
behalf of Tenant represents and warrants to Landlord that such person has full
power and authority to execute this Lease on behalf of Tenant.
(d) This Lease constitutes the legal, valid and binding obligation of
Tenant enforceable in accordance with its terms.
(e) There exists no litigation, instrument or agreement which would
prevent Tenant from entering into or performing this ILease.
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ARTICLE XIV
TRANSFER AND ENCUMBRANCE OF FEE
14.01. Encumbrance by Landlord; Subordination.
(a) At Landlord's election, subject to the rights of any
Leasehold Mortgagee pursuant to Article VII and subject to the conditions set
forth in this Article XIV, this Lease (and any sublease hereunder) shall be
subject and subordinate to the lien of any present or future mortgage, deed of
trust, security agreement, lease assignment or any other encumbrance, and any
renewal, extension or replacement thereof, and to all advances made or hereafter
to be made upon the security thereof (herein collectively referred to as a "FEE
MORTGAGE") including without limitation the deed of trust given to secure the
repayment of the BofA Loan encumbering Landlord's fee interest in the Leased
Property, without regard to the time of execution or the time of recording of
the Fee Mortgage, and without the necessity of the execution and delivery of any
further instruments on the part of Tenant to effectuate such subordination; upon
the condition, however, that with respect to any Fee Mortgage any holder ("FEE
MORTGAGEE") of any such Fee Mortgage (other than the holder of the BofA Loan),
shall have agreed in writing and in recordable form, for the benefit of Tenant
and any Leasehold Mortgagee, that so long as Tenant is not in default under any
of the provisions, covenants or conditions of this Lease or such Leasehold
Mortgagee is complying with the provisions of Article VII, neither this Lease
nor any of the rights of Tenant under this Lease (including without limitation
Tenant's Call Option) or any rights of any Leasehold Mortgagee then holding a
security interest in this Lease shall be terminated or modified or be subject to
termination or modification, nor shall Tenant's possession of the Leased
Property be disturbed by proceedings to foreclosure such Fee Mortgage, and that
any person or entity acquiring title to the Leased Property through foreclosure
of such Fee Mortgage, deed in lieu thereof or otherwise shall take title subject
to all of the provisions of this Lease (including without limitation Tenant's
Call Option). Nevertheless, Tenant covenants and agrees to execute and deliver,
in recordable form, upon demand, such further instruments as Landlord may
request to (i) confirm in writing and in recordable form that this Lease is so
subordinate to the lien of any Fee Mortgage, or (ii) so subordinate this Lease
to the lien of such Fee Mortgage, which confirmation and/or subordination shall
be in such form as may be reasonably required by the Fee Mortgagee. If a Fee
Mortgagee elects to constitute this Lease as a lien superior to the lien its Fee
Mortgage, upon the giving of written notice to Tenant and to any Leasehold
Mortgagee than holding a security interest in this Lease to such effect, this
Lease shall be superior in priority to the lien of such Fee Mortgage. Further,
Tenant agrees to execute and deliver, from time to time, upon demand by
Landlord, such documents as may be reasonably requested by Landlord to evidence
or effect such priority. In no event may the amount secured by the Fee
Mortgages, at any time, exceed the amount of the Purchase Price less the
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amount of the Security Deposit, and such indebtedness must be
prepayable at anytime, without premium or penalty.
(b) Nothing contained in Section 14.01 (a) shall relieve
Landlord of any liability or responsibility with respect to the BofA Loan
pursuant to Section 5.06. Tenant may prepay the BofA Loan at any time for any
reason and, in such event, Landlord shall thereafter pay to Tenant all payments
due, and render all performance due, with respect to the BofA Loan the same as
if the BofA Loan had not been prepaid and Tenant were the holder thereof (except
to the extent any obligation is the obligation of Tenant pursuant to this
Lease).
14.02. TRANSFER OF LEASED PROPERTY.
(a) Subject to Tenant's right of acceleration set forth in
section 14.02 (b) in the case of a sale, Landlord may sell, exchange or
transfer all or any portion of Landlord's interest in the Leased Property and
assign and transfer all or any portion of Landlord's interest in this Lease;
provided the transferee agrees in writing and in recordable form to be subject
in all respects to the terms, covenants and provisions of this Lease (including
without limitation Tenant's Call Option). Upon the transfer of all of the Leased
Property and all of Landlord's interest in the Lease, including without
limitation the entire Security Deposit then held by Landlord, Landlord shall
thereupon be released from all liabilities and obligations imposed upon Landlord
pursuant to this Lease accruing after the date of transfer and such liabilities
and obligations shall be binding solely upon the transferee of the Leased
Property and Lease.
(b) Upon receipt of any offer to purchase the Leased Property
for the payment of money or the deferred payment of money from any third person,
Landlord shall not accept such offer without first giving Tenant written notice
("NOTICE OF OFFER") of such offer including the latest date on which such offer
may be accepted and an opportunity to accelerate Tenant's Call Option as set
forth herein. For thirty days after the date of such Notice of Offer, Tenant
shall have the right and privilege, exercisable by written notice given prior to
the expiration of such thirty day period, to accelerate the date of exercise of
the Call Option to a date which is not earlier than the latest date on which the
offer set forth in the Notice of Offer may be accepted and purchase the Leased
Property for an amount equal to the sum of (i) the Purchase Price set forth in
Section 12.03; plus (ii) One Million Dollars ($1,000,000). In the event Tenant
so elects to accelerate Tenant's Call Option, the purchase and sale of the
Leased Property shall be conducted in accordance with and be governed by the
terms and conditions set forth in Section 12.05. If Tenant fails to timely
exercise Tenant's right to accelerate the Call Option set forth in this Section
14.02 (b), then Landlord shall be entitled to accept the offer which is the
subject of the Notice of Offer and proceed with the sale of the Leased Property
in accordance therewith without any further obligation to Tenant; but such
failure to elect to accelerate Tenant's Call Option shall not in any way impair
or
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limit Tenant's rights pursuant to Section 5.04 (b)(2) and Section 12.02.
Nothing contained in this Section 14.02 (b) shall be construed to restrict,
limit or otherwise affect Landlord's right to transfer all or any portion of the
Leased Property (subject to this Lease) and/or all or any portion of Landlord's
rights pursuant to this Lease to one or more persons in a transaction other than
a sale, such as contributions to corporations, partnerships, limited
partnerships, limited liability companies, joint ventures, trusts or other
entities and such as distributions in liquidation of Landlord, or to restrict,
limit or otherwise affect the right of the shareholders of Landlord to transfer
corporate shares of Landlord and other beneficial interests of Landlord
(howsoever evidenced) by assignment, exchange, gift, bequest, legacy,
inheritance or otherwise.
14.03. STATEMENTS AND CERTIFICATES. Tenant shall, at any time and from
time to time, within ten days after written request from Landlord to do so,
certify by written instrument duly executed and acknowledged to any Fee
Mortgagee or proposed Fee Mortgagee 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 term of this Lease; and (f) as to any other matters as may be reasonably so
requested; provided that, in so doing, Tenant shall not be required to bear any
unreasonable burden or expense. Any such certificate may be relied upon by any
Fee Mortgagee and any other person, firm or corporation specified therein, and
the contents of such certificate shall be binding on Tenant.
14.04. ATTORNMENT. If the Leased Property is sold pursuant to
foreclosure of a Fee Mortgage or transferred in lieu of foreclosure by reason of
a default under a Fee Mortgage, or in the event the Leased Property and Lease
are otherwise transferred, Tenant shall not disaffirm this Lease or any of its
obligations under this Lease, and Tenant shall attorn to the Fee Mortgagee,
purchaser in foreclosure, or other transferee of the Leased Property and Lease;
provided that Tenant's right to quiet possession of the Leased Property shall
not be disturbed so long as Tenant shall pay all amounts required to be paid
pursuant to this Lease and observe and perform all of the provisions of this
Lease. Without limiting the generality of the foregoing, the Call Option shall
remain in full force and effect and Tenant shall be entitled to offset the
Security Deposit against the Purchase Price of the Leased Property. Landlord may
transfer the Security Deposit to the purchaser; and, thereupon, if the purchaser
of the Leased Property assumes the obligations of Landlord under this Lease,
Landlord shall be discharged from any further liability in reference thereto.
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14.05. FEE MORTGAGEE'S RIGHTS. If Landlord notifies Tenant that the
Leased Property is encumbered by a Fee Mortgage, with a notice that sets forth
the name and address of the Fee Mortgagee and a request that Tenant give copies
of all notices intended for Landlord to its Fee Mortgagee, then no notice
intended for Landlord shall be deemed properly given unless and until a copy of
the notice is also given to the Fee Mortgagee. If any Fee Mortgagee shall
perform any obligation that Landlord is required to perform under this Lease,
the performance by the Fee Mortgagee shall be deemed to be performance on behalf
of Landlord, and the performance shall be accepted by Tenant as if performed by
Landlord.
ARTICLE XV
DEFAULTS, REMEDIES AND SURRENDER
15.01. EVENTS OF DEFAULT. Each of the following events shall
constitute a material default and breach of this Lease by Tenant:
(a) Any failure to pay any portion of any Rent or other
monetary obligation required to be paid by Tenant pursuant to this Lease when
the same shall become due and payable, and such failure continues for a period
of ten days after notice of such failure from Landlord or a representative of
Landlord to Tenant and, an additional period of twenty days thereafter for the
exclusive benefit of any Leasehold Mortgagee to whom notice is required to be
sent pursuant to Section 7.05.
(b) Any failure to observe, comply with or perform any
nonmonetary covenant or obligation set forth in this Lease (including without
limitation Tenant's failure to purchase the Leased Property following the
Landlord's exercise of its Put Option) and such failure or breach continues for
a period of thirty days after notice of such failure or breach from Landlord or
a representative of Landlord to Tenant and an additional period of thirty days
thereafter for the exclusive benefit of any Leasehold Mortgagee to whom notice
is required to be sent pursuant to Section 7.05; provided, however, that if the
default is one which, with reasonable diligence, is capable of being cured but
more than thirty days is reasonably required to cure the default asserted,
Tenant shall not be deemed to be in default if cure is commenced by Tenant
within a reasonable period after the thirty day notice to Tenant or by a
Leasehcld Mortgagee within a reasonable period after the thirty day notice to
Leasehold Mortgagee and, in either case, the cure of the default asserted is
thereafter diligently pursued to completion.
(c) The vacation or abandonment of the Leased Property.
(d) (1) The making by Tenant of any general assignment for
the benefit of creditors; (2) subject to the rights of a trustee or court in
bankruptcy under the Bankruptcy Code of 1978, or any similar succeeding law, the
filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or
of a petition for
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reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
days); or (3) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Leased Property or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within sixty days.
(e) Subject to any right of contest set forth in this Lease,
if this Lease or any estate or interest of Tenant in the Leased Property shall
become subject to any attachment or judgment, or to any lien, charge or
encumbrance other than a Leasehold Mortgage unless such attachment, judgment,
lien, charge or encumbrance is fully released within sixty days thereafter.
(f) Any actual, attempted or purported assignment or sublease
in violation of this Lease.
(g) Any other event, act or failure of Tenant specified as a
default in this Lease.
Any notice required to be furnished pursuant to this Section 15.01 shall be
sufficient and valid notice regardless of whether or not the notice requires
Tenant to quit the Leased Property as an alternative to the performance of the
action demanded in the notice. Further, any such notice shall be in lieu of and
not in addition to any notice required pursuant to NRS Chapter 40 as a condition
precedent to the maintenance of an unlawful detainer action. Any vacation or
abandonment of the Leased Property by Tenant following any such notice to
Tenant, any entry on the Leased Property by Landlord, or any action by Landlord
in unlawful detainer or otherwise to obtain possession of the Leased Property
shall not result in a surrender of the Leased Property or a termination of
Tenant's obligations under this Lease unless Landlord expressly notifies Tenant
in writing that a surrender or termination of Tenant's obligations is intended
by, or acceptable to, Landlord.
15.02. LANDLORD'S REMEDIES. In the event of default of Tenant,
Landlord, at its option, in addition to, and not to the exclusion of, any and
all other rights and remedies herein set forth or at law or in equity, may (i)
declare the term of this Lease ended and re-enter and take possession of the
Leased Property (including all Improvements) terminating all of the rights of
Tenant under this Lease and in and to the Leased Property and to collect from
Tenant all costs and damages to which Landlord is entitled as a result of such
default; (ii) without declaring the term of this Lease ended, re-enter the
Leased Property and occupy the Leased Property or lease the whole or any portion
thereof, for and on account of Tenant as hereinafter provided, applying any
monies received first to payment of such expenses, including attorney fees and
real estate commissions paid, assumed or incurred by Landlord in or in
connection with the recovery, cleaning, repairing, restoring, altering and
reletting of the Leased Property and then to the fulfillment of the obligations
of Tenant, with any
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such reletting to be for such a term, at such rent, and on such other
conditions as Landlord in its discretion deems advisable; (iii) even though it
may have relet all or any portion of the Leased Property as above provided,
thereafter at any time terminate this Lease for such previous default on the
part of Tenant retaining the right to bring legal action against Tenant for
recovery of damages sustained by Landlord as a result of Tenant's default; and
(iv) demand and recover the Shark Club Note (unless paid), in which case Tenant
shall also execute and deliver such assignments as may be necessary to reassign
the Shark Club Lease and reconvey the beneficial interest the deed of trust
given to secure the Shark Club Note. If at the time of any termination of this
Lease, the Resort is the subject of any recurrent periodic interval ownership
interests and, therefore, subject to regulation by the Real Estate Division of
the State of Nevada Department of Commerce, then Landlord shall (i) give notice
of termination to such association of time-share owners as may then exist; and
(ii) enter into a new replacement lease with such association of timeshare
owners as may then exist upon terms and conditions identical to those set forth
in this Lease. Nothing contained in the preceding sentence shall be construed
to require Landlord to negotiate any term or condition with such association
even if the proposed term or condition would otherwise constitute a reasonable
departure from the terms and conditions of this Lease.
15.03. DAMAGES FOLLOWING TERMINATION. In the event Landlord elects to
re-enter and take possession of the Leased Property following a default by
Tenant and terminate all of the rights of Tenant under this Lease pursuant to
the provisions set forth in clause (i) or clause (iii) of Section 15.02, Tenant
and Landlord acknowledge and agree that future rental values and future demands
in the rental market are and will be uncertain and extremely difficult to
determine, with the result that Landlord's damages, including consequential
damages, resulting from Tenant's default will be difficult to determine.
Landlord and Tenant therefore stipulate and agree that Landlord may recover from
Tenant damages in an amount equal to the sum of the following amounts:
(a) any unpaid rent which had been earned at the time of such
termination, plus interest at the Interest Rate; plus
(b) the amount by which the unpaid rent that would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves reasonably could be avoided, plus interest
thereon at the Interest Rate.
(c) the value at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award exceeds
the amount of such rental loss that Tenant proves reasonably could be avoided
(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); plus
(d) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to
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perform its obligations under this Lease or which, in the ordinary course of
things, would be likely to result therefrom including without limitation
expenses of cleaning, repairing, restoring, altering the Leased Property, real
estate brokerage and leasing commissions and other expenses of reletting the
Leased Property, all costs incurred in connection with the removal, storage and
disposition of personal property located on the Leased Property upon the
termination of Tenant's occupancy, and attorneys fees; and
(e) 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.
Any efforts by Landlord to mitigate the damages caused by Tenant's default shall
not waive or constitute a waiver of or otherwise limit or restrict Landlord's
from right to recover damages under this Section 15.03. Notwithstanding anything
in the foregoing to the contrary, Landlord's recovery of the foregoing amounts
from Tenant shall not be in settlement or payment of Tenant's obligations and
liabilities that survive termination of this Lease, and Tenant shall in any
event be and remain liable to Landlord with respect to those obligations and
liabilities following termination.
15.04. NO ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of any amount which is less than an amount required to be paid pursuant
to this Lease shall be other than a payment on account to be applied to the
earliest Rent due and payable hereunder, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment be an accord and
satisfaction, and Landlord may accept and endorse any such check or payment
without prejudice to Landlord's right to recover the balance of all Rent due or
pursue any other remedy available to Landlord notwithstanding such endorsement
or statement.
15.05. NO TERMINATION WITHOUT LANDLORD CONSENT. Neither the
commencement of any action by Landlord against Tenant for unlawful detainer of
the Leased Property, nor the entry of any temporary or permanent writ of
restitution or judgment in favor of Landlord against Tenant in any such action
shall terminate or result in a forfeiture of this Lease or the future
obligations of Tenant hereunder except at the option of Landlord, exercised by
either (i) written notice thereof from Landlord to Tenant, (ii) specific and
express prayer therefor in Landlord's complaint in such action or (iii) specific
and express written application therefor in such action. In that regard, Tenant
waives all rights which Tenant might otherwise have, statutory or otherwise, if
any, to cause this Lease or the obligations of Tenant to be declared terminated
as a result of any such commencement of unlawful detainer proceedings, entry of
writ of restitution or Judgment.
15.06. LANDLORD DEFAULTS. Landlord shall be in default hereunder if
Landlord fails to perform or observe any provision of this Lease to be performed
or observed by Landlord and (i) if such failure constitutes a failure to pay any
monetary obligation required to be paid by Landlord pursuant to this Lease (it
not
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being conceded by Landlord that any such obligation exists) and such failure
continues for a period of ten days after notice from Tenant to Landlord and an
additional period of twenty days thereafter for the exclusive benefit of any Fee
Mortgagee of which Tenant has notice; or (ii) if such failure constitutes a
failure to observe or perform any nonmonetary covenant or obligation and such
failure continues for a period of thirty days after written notice thereof from
Tenant to Landlord and an additional period of thirty days thereafter for the
exclusive benefit of any Fee Mortgagee of which Tenant has notice provided,
however, that if the default is one which, with reasonable diligence, is
capable or susceptible of being cured and more than thirty days is reasonably
required to cure the default asserted, Landlord shall not be deemed to be in
default if cure is commenced by Landlord within a reasonable period of time
after the thirty day notice to Landlord or by a Fee Mortgagee within a
reasonable period of time after the thirty day notice to the Fee Mortgagee and,
in either case, the cure of the default asserted is thereafter diligently
pursued to completion.
15.07. TENANT'S REMEDIES. In the event Tenant exercises the Call Option
or Landlord exercises the Put Option and Landlord fails to timely close the sale
of the Leased Property, through no fault of Tenant, Tenant shall have the
remedy of specific performance to enforce the provisions of this Lease requiring
the sale of the Leased Property to Tenant. Under no circumstances shall Tenant
have the right to terminate this Lease or its obligations hereunder except
pursuant to express provisions of this Lease permitting such termination.
15.08. SURRENDER. Upon the expiration or earlier termination of this
Lease or the termination of Tenant's right to occupy the Leased Property, all
Improvements shall automatically become the property of Landlord. Tenant
covenants to thereupon surrender the Leased Property in good and (if applicable)
operating condition, reasonable wear and tear excepted, free and clear of any
liens, claims, charges or encumbrances and with no Hazardous Material located
therein, thereon or thereunder (other than those liens, claims, charges,
encumbrances and Hazardous Materials which are attributable to any act or
omission of Landlord), and Tenant shall at its sole cost and expense remove
Tenant's records and all consumable items from the Leased Property. If Tenant
fails to remove any such records or consumable items, Landlord may deem the same
abandoned by Tenant, or Landlord may, but is not obligated to, at Tenant's
expense and without notice to Tenant, remove the same from the Leased Property
and thereafter, in Landlord's sole discretion, use, consume, destroy, dispose of
or sell all or any part thereof without notice to Tenant. Any proceeds from
sales of such property by Landlord shall belong solely to Landlord. Upon
termination of Tenant's occupancy, Tenant shall promptly execute and deliver to
Landlord (i) a quitclaim deed or, at Landlord's option, a memorandum, in
recordable form, evidencing the termination of this Lease and (ii) bills of sale
and other documents and instruments of conveyance, transfer and assignment as
Landlord may reasonably request to evidence Landlord's acquisition of ownership
of the Improvements.
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ARTICLE XVI
ASSIGNMENT AND SUBLETTING
16.01. CONSENT TO ASSIGNMENT REQUIRED.
(a) Except as provided in Section 16.01 (b) with respect to
Permitted Assignees, Tenant shall not assign or transfer or permit the
assignment or transfer of this Lease voluntarily or involuntarily (by operation
of law or otherwise) in whole or in part without first obtaining the prior
written consent of Landlord, which may be given or withheld by Landlord, in
Landlord's sole, absolute and unfettered discretion.
(b) Notwithstanding Section 16.01 (a), Tenant shall be
permitted to assign and transfer this Lease, in its entirety, to the following
persons ("PERMITTED ASSIGNEES") upon the conditions stated, if any:
(1) Any affiliate of Tenant.
(2) Any Leasehold Mortgagee in accordance with and
subject to Section 7.02 of this Lease.
(3) A purchaser (including without limitation any
Leasehold Mortgagee in such capacity) at any foreclosure or similar sale or
any assignee of such Leasehold Mortgagee in accordance with and subject to
Section 7.06 of this Lease.
(4) Any lawfully organized association, the members of
which consist exclusively of time-share owners and/or the developer of the
Resort, and/or any lawfully organized association the members of which consist
exclusively of condominium owners, time-share owners and/or the developer of
the Resort administering time-share and/or condominium property on the Leased
Property.
(5) Grand Casinos, Inc. or any affiliate of Grand
Casinos, Inc. if and only if (i) Grand Casinos, Inc. or an affiliate of Grand
Casinos, Inc. acquires an interest in this Lease on or before October 31, 1998;
and (ii) Grand Casinos, Inc. becomes fully liable for the payment and
performance of all obligations of Tenant pursuant to this Lease (including
without limitation the obligation to purchase the Leased Property in the event
Landlord exercises Landlord's Put Option), whether by direct assumption,
guaranty of its affiliate's obligations, or other written instrument reasonably
satisfactory to Landlord.
(6) Any person controlled by Tenant and/or one or
more Permitted Assignees designated in Section 16.01 (b)(1) and/or Section
16.01 (b)(5).
(7) Any transferee of Grand Casinos, Inc. or any
affiliate thereof which is a Permitted Assignee by virtue of Section
16.01 (b)(5) if and only if (A) the conditions set forth in
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Section 16.01 (b)(5) have been fully satisfied; and (B) (i) Tenant furnishes an
appraisal prepared by a nationally-recognized firm of real estate appraisers
approved by Landlord which approval shall not be unreasonably withheld,
conditioned or delayed reflecting that the value of the Land and all
Improvements thereon together with any improvements on any property contiguous
with or in the immediate vicinity of the Land constitutes a part of the project
which includes the Improvements is more than Two Hundred Million Dollars
($200,000,000), and (ii) the Improvements constitute a material and integral
part of such project. Notwithstanding any assignment or transfer pursuant to
this Section 16.01 (b) (7), however, Grand Casinos, Inc. shall remain
absolutely and unconditionally liable to fully and faithfully pay and perform
all obligations imposed upon Tenant pursuant to this Lease. The consent by
Landlord to any assignment of the Lease or any right or obligation of Tenant
shall not constitute a waiver of the necessity for such consent to any other
assignment or transfer.
(c) If this Lease is assigned or transferred to any person
(including Grand Casinos, Inc. pursuant to Section 16.01 (b) (5) and any
assignee of Grand Casinos, Inc. pursuant to Section 16.01 (b) (7)) to any
extent, regardless of whether or not Landlord consents to such assignment or
transfer, by accepting any benefit of any such assignment the assignee shall be
deemed to have fully assumed and agreed to pay and perform all obligations of
Tenant pursuant to this Lease. If Landlord has not consented to any such
assignment or transfer, the subsequent acceptance of payment or performance by
the assignee or transferee shall not be deemed to be a waiver of the necessity
to obtain Landlord's consent. Notwithstanding any assignment or transfer, Tenant
and Guarantors shall remain absolutely and unconditionally liable to fully and
faithfully pay and perform all obligations imposed by this Lease.
(d) If, at any time during the Lease Term, more than fifty
percent of the corporate shares, partnership interests, membership interests or
other beneficial interest of Tenant shall be transferred, directly or indirectly
(through one or more affiliates or otherwise), by sale, assignment, exchange,
gift, bequest, legacy, inheritance, assignment, operation of law or otherwise so
as to result in the change of the present effective control of Tenant, such
transfer, at the election of Landlord, may be treated as an assignment of this
Lease subject to the preceding section 16.01 (a). Nothing contained in this
Section 16.01 (d) however shall be construed to limit or restrict the issuance
or transfer of publicly traded shares of stock of any corporation which
constitutes Tenant.
16.02. SUBLETTING. It is recognized and understood that Tenant
contemplates subletting interests in the Leased Property in connection with its
operation of the Resort; and, therefore, Tenant may sublet the Leased Property
to (i) any one or more Permitted Assignees; (ii) any one or more recurrent
periodic interval owners of the Resort provided that each such sublease is in a
form which has been approved by Landlord, in writing which approval shall not be
unreasonably withheld, conditioned or delayed; and/or (iii) any
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operator of any restaurant, store, or other business which is incident to
Tenant's operation of the Resort. Except as provided in the preceding sentence,
Tenant shall not voluntarily or involuntarily (by operation of law or
otherwise), license, franchise, or sublet any portion of the Leased Property.
ARTICLE XVII
SERVICE OF NOTICES
17.01. MANNER OF DELIVERY. Any and all notices and demands by any party
hereto to the other party, required or desired to be given hereunder shall be in
writing and shall be validly given or made only if deposited in the United
States mail, certified or registered, postage prepaid, return receipt requested
or if made by Federal Express or other similar delivery service keeping records
of deliveries and attempted deliveries or if made by telecopy. Service by United
States mail or delivery service shall be conclusively deemed made on the first
business day delivery is attempted or upon receipt, whichever is sooner. Service
by telecopy shall be deemed made upon the date of transmission provided
transmission is confirmed prior to 5:00 o'clock p.m. local time at the place of
delivery or on the day after the date of transmission if transmission is
confirmed after 5:00 o'clock p.m. local time.
17.02. NOTICES TO LANDLORD. Any notice or demand to Landlord shall be
addressed to Landlord c/o Xxxxxx X. Xxxxxxx, 0000 Xxxxxx Xxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxx 00000, with a copy to Landlord's counsel at Xxxxxxx, Xxxxx &
Rivers, 000 X. Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000, telecopier (702)
382-2892.
17.03. NOTICES TO TENANT. Any notice or demand to Tenant shall be
addressed to Tenant at c/o Xxxxxxx X. Cloobeck, Polo Towers, 0000 Xxx Xxxxx
Xxxx. Xxxxx, Xxx Xxxxx, Xxxxxx 00000, fax (000) 000-0000, with a copy to
Tenant's counsel at Xxxxxx Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx Xxxxxx, #0000, Xxx
Xxxxx, Xxxxxx 00000, attention Xxxxxxx X. Xxxxxx, Esq., fax (000) 000-0000.
17.04. CHANGES OF ADDRESSES. Any party hereto may change its address
for the purpose of receiving notices or demands as herein provided by a written
notice given in the manner aforesaid to the other party hereto, which notice of
change of address shall not become effective, however, until the actual receipt
thereof by the other party.
ARTICLE XVIII
SUCCESSORS AND ASSIGNS
The terms, provisions, covenants and conditions contained in this Lease
shall apply to, bind and inure to the benefit of the
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heirs, executors, administrators, legal representatives, successors and assigns
of Landlord and Tenant, respectively.
ARTICLE XIX
PARTIAL INVALIDITY
If any term, covenant or condition of this Lease, or any application
thereof, should be held by a court of competent jurisdiction to be invalid, void
or unenforceable, all terms, covenants and conditions of this Lease, 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.
ARTICLE XX
SCOPE OF AGREEMENT
20.01. ENTIRE AGREEMENT. This Lease, including information incorporated
herein by reference or attached hereto, sets forth all (and is intended by the
parties to be an integration of all) of the representations, promises,
agreements, and understandings among the parties hereto. This Lease terminates
and supersedes all prior agreements, if any, between the parties hereto. There
are no representations, promises, agreements, or understandings, oral or
written, express or implied, between the parties other than as set forth or
incorporated herein. In entering into this Lease neither party has relied upon
any act or statement of any person or upon any presumption in fact or in law,
(i) with respect to this Lease, or with respect to the duration, termination, or
renewal of this Lease, or with respect to the relationship between the parties,
other than as expressly set forth in this Lease; (ii) which in any way tends to
change or modify any of the terms of this Lease or to prevent this Lease
becoming effective; or (iii) which in any way affects or relates to the subject
matter of this Lease.
20.02. NO AMENDMENT. No modification, alteration, amendment, change,
addition or waiver of any of the terms, covenants or conditions hereof shall be
effective unless reduced to writing and duly executed by the parties.
ARTICLE XXI
MEMORANDUM OF LEASE
Subject to Section 5.04 (b)(2) this Lease shall not be recorded but,
concurrently with the execution of this Lease, the parties shall execute in
recordable form a memorandum of this Lease, which either party may record. It is
understood and agreed that such memorandum shall describe generally the
existence of the Put Option and the Call Option.
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ARTICLE XXII
MISCELLANEOUS
22.01. WAIVER.
(a) The failure of any party to insist, in any one or more
instances, upon observance and performance of any provision of this Lease shall
not be construed as a waiver of such provision or the relinquishment of any
other right granted herein or of the right to require future observance and
performance of any such provision or right.
(b) The waiver by any party of any breach of any provision
herein contained shall not be deemed to be a waiver of such provision on account
of any other breach of the same or any other provision of this Lease.
(c) No provision of this Lease shall be deemed to have been
waived, unless such waiver be in writing and signed by the person sought to be
charged with a waiver of such provision.
22.02. ATTORNEY FEES.
(a) In the event any legal action or proceeding brought by
either party against the other to enforce any provision hereof by reason of any
alleged breach hereunder, for a declaration of rights or obligations hereunder,
or for any other remedy, the prevailing party shall be entitled to recover such
amounts as a court of competent jurisdiction may adjudge to be reasonable
attorneys' fees; and such amount shall be included in any judgment rendered in
such action or proceeding.
(b) If either party incurs any expense (including attorney
fees) (i) in furnishing any certificate for the benefit of Tenant or any
Leasehold Mortgagee, or Landlord or any Fee Mortgagee, as the case may be, (ii)
to defend title or the right to quiet possession of the Leased Property and such
party's rights under this Lease against any claim by any person claiming under
or through Tenant or Landlord, as the case may be, including without limitation
the foreclosure of any Leasehold Mortgage or Fee Mortgage, (iii) to protect and
enforce its rights pursuant to this Lease, the recovery of which is subject to
Section 22.02 (a) of this Lease if an action or proceeding between Landlord and
Tenant is involved, or (iv) with respect to any bankruptcy reorganization,
arrangement, receivership or similar proceedings in relation to insolvency
which, in any way, to any extent, pertain to or involve this Lease, the Leased
Property, Landlord, Tenant, any Permitted Assignee and/or any guarantor of this
Lease, the party incurring such expense shall be entitled to recover the same
from the other party upon demand and if such expense is incurred by Landlord,
Tenant shall immediately reimburse and pay to Landlord, as Additional Rent, an
amount equal to all such expenses so incurred.
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22.03. CONSTRUCTION.
(a) The captions appearing at the commencement of the various
articles and sections of this Lease are descriptive only and for convenience in
reference to this Lease and in no way whatsoever define, limit or describe the
scope or intent of this Lease, nor in any way affect this Lease.
(b) Masculine or feminine pronouns shall be substituted for
the neuter form and vice versa, and the plural shall be substituted for the
singular form and vice versa, in any place or places herein which the context
requires such substitution or substitutions.
(c) This Lease shall not be construed either for or against
Landlord or Tenant, but this Lease shall be interpreted in accordance with the
general tenor of its language.
(d) For purposes of this Lease, the term "person" shall mean
any individual, corporation, partnership, limited-liability company,
association, estate, trust, or other entity, however denominated.
(e) For purposes of this Lease the term "affiliate" of a
specified person shall mean any person (i) that, directly or indirectly (through
one or more intermediaries or otherwise), controls, is controlled by, or under
common control with such specified person.
(f) This Lease shall be interpreted to give effect to the
intent and purposes of the parties and the spirit of this Agreement.
22.04. GOVERNING LAW. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Lease.
22.05. JOINT AND SEVERAL LIABILITY. In the event that a party shall
consist of more than one person, firm or corporation then and in such event all
of such persons, firms and corporations shall be jointly and severally obligated
under this Lease.
22.06. LANDLORD REPRESENTATIVE. If at any time Landlord shall consist
of more than one person, Landlord shall designate one person to serve as
Landlord representative under this Lease for giving and receiving notices,
granting approvals and all other purposes. Unless and until Tenant receives
notice of a new appointment from all such persons, Tenant may consider any
previously appointed Landlord representative to continue to be the Landlord
representative. At any time that Landlord consists of
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more than one person and Landlord has not designated a Landlord representative,
Tenant may designate any of such persons as the Landlord representative.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
LANDLORD:
MacGREGOR INCOME PROPERTIES WEST I,
INC., a Nevada corporation
By
----------------------------------
(signature)
----------------------------------
(name)
----------------------------------
(title)
TENANT:
CLOOBECK ENTERPRISES, a Nevada
corporation
By /s/ Xxxxxxx X. Cloobeck
----------------------------------
(signature)
Xxxxxxx X. Cloobeck
----------------------------------
(name)
President
----------------------------------
(title)
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more than one person and Landlord has not designated a Landlord representative,
Tenant may designate any of such persons as the Landlord representative.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
LANDLORD:
MacGREGOR INCOME PROPERTIES WEST I,
INC., a Nevada corporation
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
(signature)
Xxxxxx X. Xxxxxxx
----------------------------------
(name)
President
----------------------------------
(title)
TENANT:
CLOOBECK ENTERPRISES, a Nevada
corporation
By
----------------------------------
(signature)
----------------------------------
(name)
----------------------------------
(title)
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EXHIBIT A
TO
GROUND LEASE
(Legal Description)
Parcels One (1) and Two (2) as shown by Parcel Map in File 7 of Parcel Maps,
Page 87 and recorded on December 10, 1975 as Document No. 536501 of Official
Records, all in the Office of the County Recorder of Xxxxx County, Nevada
54
PERMITTED EXCEPTIONS
EXHIBIT B
1. Taxes for 1996-1997, a lien not yet due and payable.
2. Mineral rights, reservations, and easements in a patent, provided the same
contain no right to surface entry or to disturb improvements on the
surface.
3. An easement in favor of Nevada Power Company, for electrical lines,
recorded July 16, 1957, in Book 135 as Document No. 110695 of Xxxxx County
Official Records.
4. An easement in favor of Nevada Power Company, for electrical lines,
recorded July 16, 1957, in Book 135 as Document No. 110699 of Xxxxx
County Official Records.
5. Dedications and easements as shown on the recorded map in File 7 of Parcel
Maps, Page 87, of Xxxxx County Official Records.
6. An easement in favor of County of Xxxxx, for perpetual avigation, recorded
January 22,1976, in Book 588 as Document No. 547497 of Xxxxx County
Official Records.
7. An easement in favor of Las Vegas Valley Water District, a Quasi-Municipal
Corporation, for pipelines, recorded September 13, 1976, in Book 659, as
Document No. 618562 of Xxxxx County Official Records, as modified by
partial relinquishment recorded October 10, 1980, in Book 1294, as
Document No. 1253697 of Xxxxx County Official Records.
8. An easement in favor of Nevada Power Company and Central Telephone Company
for electrical and communication facilities, recorded April 11, 1978, in
Book 871, as Document No. 830381 of Xxxxx County Official Records.
9. An easement in favor of County of Xxxxx, for perpetual avigation, recorded
March 27, 1986, in Book 860327, as Document No. 00478 of Xxxxx County
Official Records.
10. Deed of Trust in favor of MacGregor Income Properties West I, Inc.,
recorded July 2, 1987, in Book 870702, as Document No. 01263 and
Assignment, recorded August 3, 1987, in Book 870803, as Document No. 00566
of Xxxxx County Official Records.
11. Survey by Xxxx X. Xxxxxxx, filed in File 75 of Surveys at Page 31,
recorded February 21, 1995, in Book 950221, as Document No. 00649 of Xxxxx
County Official Records.
55
EXHIBIT C
TO
GROUND LEASE
(Documents and Correspondence concerning Shark Club Lease)
DATE DESCRIPTION
LA-TEX LEASE DOCUMENTS:
07/02/87 Lease
07/07/87 $25O,000 Promissory Note Secured by Deed of Trust
07/02/87 Short Form Deed of Trust and Assignment of Rents recorded in Book
870202 as Instrument No. 01263 in the Office of the Xxxxx County
Recorder
02/17/98 First Amendment to Lease
07/12/89 Second Amendment to Lease
05/17/98 Third Amendment to Lease
08/02/91 Notice of Tenant's Election to Extend Term of Lease
03/10/92 Payment Date Modification
03/20/92 Fourth Amendment to Lease
12/22/95 Notice of Change of Address
NOTICE OF ELECTION TO SELL:
12/08/95 Notice of Election to Sell
12/19/95 Letter from Rush to Xxxxxxx requesting extension on negotiation
period
12/20/95 Letter from Sully to Rush denying extension of negotiation period
12/29/95 Letter from Rush to Sully and Xxxxxxx containing offer to
purchase property
01/04/96 Letter from Sully to La-Tex Partnership and Rush notifying that
negotiation period expired and that Landlord was free to
negotiation with other persons
Page 1 of 4
56
EVICTION DOCUMENTS:
11/20/95 Seven Day Notice to Pay Rent (Replenish Security Deposit) or Quit
and Affidavits of Service
11/29/95 Affidavit of Complaint for Summary Eviction
11/30/95 Order for Summary Eviction
11/30/95 Instructions to the Constable Evictions
12/01/95 Affidavit of Xxxxxxx X. Xxxx
12/01/95 Letter from Rush to Rivers tendering $55,334.75
12/01/95 Letter from Rivers to Rush rejecting $55,334.75 tender
12/01/95 Two letters from Rush to Rivers denying effectiveness of service
of Order for Summary Eviction
12/04/95 Defendants Emergency Ex Parte Application for Emergency Stay of
Order for Summary Eviction
12/04/95 Order Staying Summary Eviction
12/04/95 Letter from Rivers to Rush disputing denial of effectiveness of
service
12/05/95 Affidavit of Xxxxx X. Xxxxxx for Order Shortening Time and
Receipt of Copy
12/05/95 Application to Lift Stay on Shortened Time
12/05/95 Affidavit of Mailing
12/06/95 Notice of Entry of Order Shortening Time
12/12/95 Stipulation and Order to Dismiss Without Prejudice and to Vacate
Hearing
01/03/96 Letter from Sully to Xxxxxxxxxx informing Tenant of default in
maintenance of insurance coverage
01/03/96 Letter from Rush to Sully re: Sanitation District
01/10/96 Notice of Default (assignment without consent), noncompliance
with governmental rules and failure to maintain insurance
coverage)
01/12/96 Demand for payment of interest on security deposit
01/12/96 Demand for evidence that security deposit has been segregated
Page 2 of 4
57
01/17/96 Letter from Rush to Sully and Xxxxxxx providing insurance binder
01/25/96 Letter from Rivers to Rush, La-Tex Partnership, Club Concepts and
Club Investments, Inc. responding to 1/12/96 letters and 1/17/96
letter
01/26/96 Letter from Rush to Sully and Xxxxxxx requesting extension of
time to cure defaults and consent for Tenant to sublet to
Xxxxxxxx-XxXxxxxxx, Inc.
01/29/96 Letter from Rivers to Rush, La-Tex Partnership, Club Concepts and
Club Investments, Inc. responding to Rush's 1/26/96 letter
01/30/96 Letter from Xxxxxxxxxx to Sully and Xxxxxxx notifying Landlord
of Tenant's new address; requesting refund of sanitation fees;
etc.
01/31/96 Letter from Rush to Rivers and Xxxxxxx regarding cancellation of
Xxxxxxxx-XxXxxxxxx, Inc. Service Agreement
01/31/96 Letter from Rush to Rivers and Xxxxxxx requesting name and
address of lender
02/05/96 Letter from Rivers to Rush, La-Tex Partnership and Club Concepts
responding to Rush's letters dated January 30 and 31, 1996
02/15/96 Letter from Rush to Sully and Xxxxxxx requesting written consent
of Landlord to sublease to Xxxxxxxx-XxXxxxxxx, Inc.
03/18/96 Letter from Rush to Sully and Xxxxxxx demanding (1) consent to
sublease to Xxxxxxxx-XxXxxxxxx, Inc. and (2) evidence that
security deposit is segregated and threatening declaratory relief
action
03/20/96 Letter from Rivers to Rush, La-Tex and Club Concepts responding
to Rush's 3/18/96 letter
03/29/96 Letter from Xxxxxx to Xxxxxx enclosing resume and personal
history concerning two principals of Xxxxxxx-XxXxxxxxx, Inc.
04/01/96 Letter from Xxxxxx to Xxxxx County Department of Business License
04/03/96 Letter from Xxxxxx to Rivers enclosing copy of proposed sublease
04/11/96 Letter from Rivers to Xxxxxx responding to Xxxxxx'x letters of
March 29, 1996 and April 3, 1996
Page 3 of 4
58
04/12/96 Letter from Xxxxxx to Xxxxxx advocating reasonableness of
sublease to Xxxxxxxx-XxXxxxxxx
04/23/96 Letter from Rush to Rivers informing Landlord of Snow's lack of
authority
05/01/96 Letter from Rush to Sully and Xxxxxxx enclosing copy of
commercial insurance policy
05/08/96 Letter from Xxxxxxxxxx to Sully informing Landlord of Snow's lack
of authority
05/09/96 Letter from Rush to Sully and Xxxxxxx proposing settlement
conference
05/20/96 Letter from Rush to Sully regarding Rush's May 9, 1996 letter,
threatening declaratory relief action
05/30/96 Letter from Xxxxxxxxxx to Sully memorializing conversation to
allow Rush to meet with Xxxxxxx
Page 4 of 4
59
EXHIBIT D TO GROUND LEASE
(Supplemental Rent Amount)
SUPPLEMENTAL SUPPLEMENTAL
RENT RENT
BEGINNING ENDING
MONTH BALANCE BALANCE
8/96 449160.08 446727.38
9/96 446727.38 444272.38
10/96 444272.38 441794.88
11/96 441794.88 439294.66
12/96 439294.66 436771.53
1/97 436771.53 434225.27
2/97 434225.27 431655.67
3/97 431655.67 429062.51
4/97 429062.51 426445.59
5/97 426445.59 423804.67
6/97 423804.67 421139.55
7/97 421139.55 418449.99
8/97 418449.99 415735.78
9/97 415735.78 412996.70
10/97 412996.70 410232.50
11/97 410232.50 407442.96
12/97 407442.96 404627.86
1/98 404627.86 401786.95
2/98 401786.95 398919.99
3/98 398919.99 396026.76
4/98 396026.76 393107.01
5/98 393107.01 390160.49
6/98 390160.49 387186.96
7/98 387186.96 384186.17
8/98 384186.17 381157.88
9/98 381157.88 378101.82
10/98 378101.82 375017.76
11/98 375017.76 371905.42
12/98 371905.42 368764.55
1/99 368764.55 365594.90
2/99 365594.90 362396.18
3/99 362396.18 359168.15
4/99 359168.15 355910.52
5/99 355910.52 352623.04
6/99 352623.04 349305.41
7/99 349305.41 345957.38
8/99 345957.38 342578.66
9/99 342578.66 339168.96
10/99 339168.96 335728.01
11/99 335728.01 332255.52
12/99 332255.52 328751.19
1/00 328751.19 325214.74
2/00 325214.74 321645.88
3/00 321645.88 318044.30
4/00 318044.30 314409.71
5/00 314409.71 310741.79
6/00 310741.79 307040.26
7/00 307040.26 303304.80
Page 1 of 3
60
SUPPLEMENTAL SUPPLEMENTAL
RENT RENT
BEGINNING ENDING
MONTH BALANCE BALANCE
8/00 303304.80 299535.09
9/00 299535.09 295730.83
10/00 295730.83 291891.69
11/00 291891.69 288017.37
12/00 288017.37 284107.53
1/01 284107.53 280161.85
2/01 280161.85 276180.00
3/01 276180.00 272161.65
4/01 272161.65 268106.46
5/01 268106.46 264014.10
6/01 264014.10 259884.23
7/01 259884.23 255716.51
8/01 255716.51 251510.57
9/01 251510.57 247266.09
10/01 247266.09 242982.69
11/01 242982.69 238660.03
12/01 238660.03 234297.75
1/02 234297.75 229895.48
2/02 229895.48 225452.86
3/02 225452.86 220969.51
4/02 220969.51 216445.06
5/02 216445.06 211879.14
6/02 211879.14 207271.37
7/02 207271.37 202621.35
8/02 202621.35 197928.72
9/02 197928.72 193193.06
10/02 193193.06 188414.00
11/02 188414.00 183591.13
12/02 183591.13 178724.05
1/03 178724.05 173812.35
2/03 173812.35 168855.63
3/03 168855.63 163853.47
4/03 163853.47 158805.46
5/03 158805.46 153711.18
6/03 153711.18 148570.20
7/03 148570.20 143382.09
8/03 143382.09 138146.43
9/03 138146.43 132862.77
10/03 132862.77 127530.68
11/03 127530.68 122149.71
12/03 122149.71 116719.42
1/04 116719.42 111239.34
2/04 111239.34 105709.04
3/04 105709.04 100128.04
4/04 100128.04 94495.88
5/04 94495.88 88812.09
6/04 88812.09 83076.20
7/04 83076.20 77287.73
8/04 77287.73 71446.20
Page 2 of 3
61
SUPPLEMENTAL SUPPLEMENTAL
RENT RENT
BEGINNING ENDING
MONTH BALANCE BALANCE
9/04 71446.20 65551.13
10/04 65551.13 59602.01
11/04 59602.01 53598.36
12/04 53598.36 47539.68
1/05 47539.68 41425.46
2/05 41425.46 35255.20
3/05 35255.20 29028.37
4/05 29028.37 22744.46
5/05 22744.46 16402.95
6/05 16402.95 10003.31
7/05 10003.31 3545.01
8/05 3545.01 0.00
Page 3 of 3
62
EXHIBIT E
TO
GROUND LEASE
GUARANTY OF GROUND LEASE
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned ("GUARANTOR") hereby unconditionally and
irrevocably guarantees the full and faithful performance by TENANT of all the
terms, covenants, and conditions of the foregoing Ground Lease ("Lease"),
including without limitation the payment of all Base Rent (as adjusted),
Supplemental Rent and Additional Rent when and as the same shall become due and
payable and the timely payment of the Purchase Price upon an exercise of either
the Put Option or the Call Option. This is a guaranty of payment and not merely
guaranty of collection.
This Guaranty is absolute and continuing and shall remain in full force
and effect for the term of the Lease, including any extensions or renewals,
regardless of any amendment, modification, compromise, or release of any term,
covenant, or condition of the Lease or any party thereto as the case may be.
GUARANTOR hereby covenants and agrees to indemnify, defend, and hold
LANDLORD harmless from and against any and all claims, action, damages,
liability, expenses, charges, penalties, obligations, attorneys' fees,
judgments, and demands of any kind whatsoever in connection with or arising out
of or by reason of the assertion of TENANT of any defense to its obligations
under the Lease or the assertion by GUARANTOR of any defense to its obligations
hereunder based on any action or inaction of Tenant.
GUARANTOR hereby waives any right or claim or right to cause a
marshaling of TENANT's assets as well as any right to require LANDLORD to
exhaust any remedy against TENANT before proceeding against GUARANTOR.
To the extent there is more than one guarantor of the Lease, GUARANTOR
hereby waives any right to require LANDLORD to proceed against guarantors in any
particular order.
GUARANTOR hereby agrees that any payments or performance required to be
made hereunder shall become due upon demand in accordance with the terms hereof
immediately upon the occurrence of a default under the Lease, whether or not
GUARANTOR has been given notice of such default; and GUARANTOR hereby expressly
waives notice of demand, notice of default, or other notice of any kind,
promptness in commencing suit and/or giving any notice to or in making any claim
or demand upon TENANT or TENANT's property and agrees that no act or omission of
any kind on the part of LANDLORD shall, in any event, affect or impair this
Guaranty. GUARANTOR
1
63
further waives and relinquishes any defense arising out of the absence,
impairment or loss of any right of reimbursement or subrogation in any defense
arising by reason of any defense of TENANT or by reason of the cessation of the
liability of TENANT.
To the extent there is more than one guarantor of the Lease,
GUARANTOR's obligation hereunder shall be joint and several with that of all
other such guarantors.
The necessary grammatical changes required to make the provisions this
Guaranty apply in a plural sense or singular sense, where required, or to a
particular gender shall, in all instances, be assumed as though in each case
fully expressed.
GUARANTOR hereby agrees to pay all costs incurred by Landlord in
enforcing this Guaranty, including attorneys' fees, regardless of whether or not
suit is instituted.
The undersigned has caused this Guaranty to be executed this__________
day of __________________, 1996.
GUARANTOR:
_______________________________________
2
64
EXHIBIT F
TO
GROUND LEASE
(Personal Property)
1. Two Crystal Chandeliers which were property of Sweet Water Restaurant.
2. Bronze plaque on front entrance wall depicting date of opening and
architect.
3. Various Sweet Water Restaurant pots.
4. Several Paintings by Xxx Xxxxxxx.
