OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this
8th day of January, 1998, by and between XXXXXX'X CASINO RESORTS, a Nevada
corporation ("HARVEYS"), and GRAND PLAZA LIMITED PARTNERSHIP, a Nevada
limited partnership.
W I T N E S S E T H
1. GRANT OF OPTION:
In consideration of the sum of Five Hundred Thousand Dollars
($500,000.00) paid by HARVEYS to GRAND, receipt of which is hereby
acknowledged (the "Option Payment"), GRAND hereby grants, bargains and sells
to HARVEYS the right and option (the "Option") to purchase 33.3 acres
located on the northeast corner of Harmon and Koval in Las Vegas, Nevada,
commonly known as Grand Plaza Site (the "Property"), as such is shown on the
map attached hereto as Exhibit "A." The Option Payment shall be
nonrefundable, except as expressly provided herein. In the event HARVEYS
exercises its right to purchase the Property, the Option Payment shall be
credited to the purchase price.
2. OPTION PERIOD; EXTENSION OF OPTION PERIOD:
The rights and privileges granted hereunder shall commence on the date
first set forth above, and shall run through and including May 15, 1998.
Subject to the provisions of paragraph 4, HARVEYS shall have the right
to extend the Option on a month to month basis upon payment to GRAND of
Thirty Seven Thousand Five Hundred Dollars ($37,500.00) per month, which
payment shall be due prior to the expiration of the then current option
period; provided, however, that if HARVEYS extends the Option beyond August
15, 1998, the fee to extend the Option shall increase to Seventy-five
Thousand Dollars ($75,000.00) per month. In no event may HARVEYS extend the
Option beyond October 15, 1998. In the event HARVEYS fails to timely make a
required payment to extend the option in accordance with the terms of this
paragraph 2, this Agreement, and all rights hereunder, shall terminate and
GRAND shall retain all funds received prior to the date of termination.
In the event HARVEYS exercises its right to purchase the Property the
Option Payment, as well as all payments to extend the Option, shall be
credited to the purchase price.
3. OPTION ALTERNATIVES; PRICE:
In the event HARVEYS elects to exercise the Option, HARVEYS shall have the
right to elect to purchase the Property in accordance with one of the following
two alternatives:
a. OPTION I:
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i. HARVEYS shall purchase the approximately fourteen (14) acres
of the south side of the Property, as shown on the map
attached hereto as Exhibit "B" (the "Initial Property"), for
Two Million Three Hundred Sixty Thousand Dollars
($2,360,000.00) per acre. The actual acreage purchased by
HARVEYS shall be subject to adjustment as provided hereinbelow.
ii. Simultaneous with close of escrow on the purchase of the
Initial Property, HARVEYS shall loan to GRAND the sum of Ten
Million Dollars ($10,000,000.00), which loan shall bear
interest at the rate of nine percent (9%) per annum and shall
be secured by a first deed of trust on the remainder of the
Property. The loan shall be all due and payable in five (5)
years; provided, however, that in no event shall the loan be
payable sooner than the termination or final expiration of the
Remainder Option. In the event HARVEYS exercises its option
to purchase the remainder of the Property in accordance with
paragraph 4, hereinbelow, the outstanding principal balance of
the loan, and all accrued and unpaid interest, shall be
credited toward the purchase price. In the event HARVEYS
elects not to exercise its option to purchase the remainder of
the Property Three Million Three Hundred Sixty Thousand
Dollars ($3,360,000.00) of the principal balance of the loan
shall be forgiven; the remaining outstanding principal balance
of the loan, and all accrued and unpaid interest, shall be all
due and payable within One Hundred Eighty (180) days of
delivery by HARVEYS to GRAND of written notice of HARVEYS
intent NOT to exercise the Remainder Option.
iii. HARVEYS shall retain the right and option to purchase the
remainder of the Property (the "Remainder Property") in
accordance with paragraph 4, herein below.
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b. OPTION II:
i. HARVEYS shall purchase approximately eighteen (18) acres on
the south side of the Property, as shown on the map attached
hereto as Exhibit "C" (also referred to herein as the "Initial
Property"), for Two Million Three Hundred Sixty Thousand
Dollars ($2,360,000.00) per acre. The actual acreage
purchased by HARVEYS shall be subject to adjustment as
provided hereinbelow.
ii. HARVEYS shall retain the right and option to purchase the
remainder of the Property (also referred to herein as the
"Remainder Property") in accordance with paragraph 4, herein
below.
The parties acknowledge and agree that, in the event HARVEYS exercises
its option rights under either Option I or Option II there may be a need to
adjust the actual acreage of the Property initially purchased in order the
accommodate existing buildings, roads and other improvements so as to
maintain the utility of the remainder of the Property for use as apartment
rental units. Accordingly, it is agreed that, upon the exercise by HARVEYS of
either Option I or Option II, the parties will negotiate, in good faith, and
identify a mutually agreeable boundary line between the actual acreage to be
initially purchased by HARVEYS and the remainder of the Property. The
parties will use their best efforts to reach an agreement as to the boundary
line such that the acreage purchase by HARVEYS will, as nearly as possible,
equal the acreage
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identified under the option exercised by HARVEYS. In no event will the
actual acreage purchased deviate by more than one-half acre (plus or minus)
from the acreage identified under the option exercised by HARVEYS. The total
purchase price paid by HARVEYS shall be calculated based on the actual
acreage purchased, with a prorata portion of the per-acre price to be paid
for fractional acres purchased.
4. OPTION ON REMAINDER OF PROPERTY; OPTION PRICE; PURCHASE PRICE:
Under either Option I or Option II HARVEYS shall retain the option to
purchase the Remainder Property (the "Remainder Option") for a period
commencing as of the close of escrow for the Initial Property and ending on
August 15, 2003. As consideration for the grant of the Remainder Option,
HARVEYS shall make annual option payments to GRAND over the term of the
Remainder Option in accordance with the following schedule:
a. Year 1: No payment due;
b. Year 2: Two Hundred Fifty Thousand Dollars ($250,000.00), due on or
before August 15, 1999;
c. Year 3: Five Hundred Thousand Dollars ($500,000.00), due on or before
August 15, 2000;
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d. Year 4: Five Hundred Thousand Dollars ($500,000.00), due on or before
August 15, 2001; and
e. Year 5: Five Hundred Thousand Dollars ($500,000.00), due on or before
August 15, 2002.
In the event HARVEYS exercises the Remainder Option, all option payments
made pursuant to this paragraph 4 shall be credited to the purchase price for
the Remainder Property. In the event HARVEYS fails to timely make a required
option payment, in accordance with the terms of this paragraph 4, this
Agreement, and all rights hereunder, shall terminate and GRAND shall retain
all funds received prior to the date of termination.
In the event HARVEYS exercises the Remainder Option under either Option
I or Option II, the purchase price to be paid shall be determined in
accordance with the following schedule:
f. Two Million Five Hundred Fifty Thousand Dollars ($2,550,000.00) per
acre if the purchase is closed on or before August 15, 1999;
g. Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00) per
acre if the purchase is closed or before August 15, 2000;
h. Two Million Nine Hundred Seventy Thousand Dollars ($2,970,000.00) per
acre if the purchase is closed on or before August 15, 2001;
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i. Three Million Two Hundred Ten Thousand Dollars ($3,210,000.00) per
acre if the purchase is closed on or before August 15, 2002;
j. Three Million Four Hundred Seventy Thousand Dollars ($3,470,000.00)
per acre if the purchase is closed on or before August 15, 2003.
5. EXERCISE OF OPTION:
The option is to be exercise by HARVEYS by written notice to GRAND
delivered in accordance with the terms of this Agreement (the "Exercise
Notice"). The Exercise Notice shall specify whether HARVEYS is proceeding in
accordance with Option I or Option II.
6. REPRESENTATIONS BY GRAND OF TITLE AND AUTHORITY:
It is acknowledged and understood that GRAND does not presently control
.60 acres of the Property. GRAND warrants and represents that it is using
and shall use its best efforts to acquire said .60 acres. In the event GRAND
has neither acquired nor secured the contractual right or option to acquire
said .60 acres on or before March 31, 1998, HARVEYS shall have the right to
terminate this Agreement and, in that event, HARVEYS shall be entitled to
immediate repayment of all sums paid to GRAND.
Other than as set forth herein, GRAND warrants and represents that it
holds legal, marketable and insurable fee simple title to
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the Property and has the authority to enter into and grant the option granted
herein. In the event that HARVEYS exercises the Option, GRAND warrants and
represents that it has the right, title and authority to convey the Property
to HARVEYS by grant bargain and sale deed; provided, however, that the
approximately two (2) acre portion of the Property at the corner of Xxxxxx
Street and Xxxxx Xxxx, defined as the "Drink Land" in the "Drink Agreement"
(as hereinafter defined), shall be conveyed to HARVEYS as soon as possible
after GRAND obtains title thereto in accordance with the Drink Agreement.
GRAND convenants that during the term of the Option and the Remainder Option,
GRAND will not encumber the Property in any way nor grant any property or
contract right relating to the Property which would impair HARVEYS rights
under this Agreement without the prior written consent of HARVEYS.
Notwithstanding the foregoing, it is acknowledged and agreed that GRAND may
(i) continue to rent the apartments on the Property during the term of the
Option and, as to the Remainder Property, during the term of the Remainder
Option, and GRAND shall be entitled to retain the rents and profits
therefrom, and (ii) encumber the Property as GRAND deems appropriate so long
as such encumbrance(s) do not secure debt which exceeds GRAND'S equity in
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the Property and such encumbrance(s) shall be fully released upon HARVEYS
purchase of the Property.
After the close of escrow for the Initial Property, the rental
agreements with respect to the apartment units on the Initial Property shall
remain in effect, with the rents and profits therefrom to be payable to
HARVEYS. GRAND, by and through its affiliate Realty Management, Inc., shall
continue to manage the units on the Initial Property in accordance with the
current management agreement between GRAND and Realty Management, Inc. At
the time HARVEYS determines that it shall no longer lease the apartment units
on the Initial Property, HARVEYS shall instruct GRAND to terminate the then
existing rental agreements affecting the Initial Property (and evict any
tenants if necessary). After HARVEYS acquires the Remainder Property, it may
instruct GRAND to terminate the then existing rental agreements affecting the
Remainder Property (and evict any tenants if necessary).
7. CLOSE OF ESCROW; PRELIMINARY TITLE REPORT:
Upon the execution of this Agreement, the parties shall open an escrow
with Nevada Title Company, with Xxxxx Xxxxxx as escrow agent ("Escrow
Agent"). Upon the exercise of any option hereunder (whether Option I, Option
II or the Remainder Option) HARVEYS shall
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close escrow on the purchase no later than thirty (30) days following
delivery of the Exercise Notice.
g. PRELIMINARY TITLE REPORT:
A Preliminary Title Report for the Property is attached hereto as
Exhibit "D." HARVEYS has had the opportunity to review said report and
hereby approves said report, including the exceptions to title shown on
Schedule B thereto. Prior to the close of escrow, GRAND shall have the duty
and obligation, at GRAND'S sole cost and expense, to remove any monetary
liens, charge or other encumbrance on the Property should HARVEYS so request.
Close of escrow shall be extended for a period equal to any delay resulting
from GRAND's efforts to remove such monetary lien, charge or other
encumbrance.
h. TITLE INSURANCE, PRO-RATIONS, TAXES, COSTS AND FEE:
Current taxes, insurance, utilities, improvement bonds,
assessments, if any, and any obligations under service contracts benefitting
the Property, shall be pro-rated as of the date of recordation of the deed.
All other costs associated with this transaction, including escrow fees, real
property transfer fees, and the like, shall be paid as is customary in Xxxxx
County, Nevada.
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i. NO COMMISSIONS:
The parties acknowledge and agree that neither party is represented
in this transaction by a licensed real estate broker or agent and no real
estate commissions are due in connection with this transaction. GRAND and
Purchaser each hereby agree to indemnify and hold the other harmless from and
against all liability, loss, cost, damage or expense (including, but not
limited to, attorneys' fees and costs of litigation) which the other party
may suffer or incur because of any claim by a broker, agent, or finder
claiming by, through or under such indemnifying party, whether or not such
claim is meritorious, for any compensation with respect to the entering into
of this Agreement, the option, sale and purchase of the Property, or the
consummation of the transactions contemplated herein.
8. ACCESS AND PARKING EASEMENT:
In the event HARVEYS exercises its option rights hereunder HARVEYS
agrees to grant an access and parking easement over the southeastern corner
of the Property in favor of and for the beneficial use by the "The Drink"
night club which occupies, or shall occupy, an approximate two acre parcel
contiguous to the
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Property (the "Drink Parcel"). The Drink Parcel and the area of the access
and parking easement are shown on the map attached hereto as Exhibit "E."
The rights and obligations of GRAND with respect to the Drink Parcel and the
owners thereof, the parking and access easement and the restrictive covenant
to be recorded against a portion of the Property benefitting the owners of
the Drink Parcel are set forth in the Agreement between GRAND and the owners
of the Drink Parcel, a copy of which is attached hereto as Exhibit "F" (the
"Drink Agreement"). HARVEYS has reviewed and is familiar with the terms and
conditions of the Drink Agreement. HARVEYS shall be bound by the terms and
conditions of the Drink Agreement, as they relate to the parking and access
easement and the restrictive covenant set forth therein. HARVEYS
acknowledges and agrees that it shall take title to the Property subject to
said restrictive covenant and the obligations thereunder. If GRAND fails or
refuses to timely acquire the Drink Land (as such is defined in the Drink
Agreement) in accordance with the Drink Agreement, HARVEYS shall have the
right to terminate this Agreement and, in that event, HARVEYS shall be
entitled to immediate repayment of all sums previously paid to GRAND.
9. HARVEYS' RIGHT TO ENTER LAND FOR SPECIFIED PURPOSES:
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On the execution of this Agreement, HARVEYS will have the right to enter
the land above described and carry out any inspections or preliminary work
that may be necessary, in a manner that will cause the least possible
disturbance to the possession of GRAND. HARVEYS hereby agrees to pay or
otherwise satisfy, and to indemnify GRAND and hold GRAND and the Property
harmless from and against, any claims, liens, judgments, liabilities, costs,
expenses, losses and damages incurred or suffered by GRAND and/or to which
the Property becomes subject and which are caused by any such activities and
shall maintain sufficient liability insurance covering its activities on the
Property and the indemnity provided herein, and name GRAND as an additional
insured thereunder. If requested by GRAND, HARVEYS shall provide to GRAND
evidence of such insurance. HARVEYS' indemnity hereunder shall survive the
close of escrow or the termination or expiration of this Agreement. HARVEYS
agrees to immediately restore the Property and otherwise compensate GRAND for
any damage that may arise out of, or be incidental to, any inspections or
work.
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10. GRAND NOT TO LEASE OR ENCUMBER PROPERTY:
GRAND warrants that the Initial Property is not subject to any leasehold
interest which extends beyond any option period, and further agrees that
GRAND will not enter into any written or oral lease of the Initial Property
or any part thereof which extends beyond any option period, without first
securing the written approval of HARVEYS.
11. REPRESENTATIONS BY GRAND ON CONDITION OF PROPERTY:
GRAND warrants and represents that to the best of its knowledge the
Property subject to this Agreement has not been used for the storage or
disposal of hazardous or toxic waste and materials and to the best of its
knowledge the Property is free and clear of such waste, debris or material.
GRAND agrees to indemnify HARVEYS should HARVEYS incur any costs, including
but not limited to clean-up costs or applicable fines, that result from a
breach of the warranty given by GRAND in the previous sentence. This
paragraph and representations contained herein shall not merge in the deed
and shall survive the transfer of title.
12. MEMORANDUM OF OPTION; ASSIGNMENT:
HARVEYS shall have the right to record a memorandum of option in the
Official Records of Xxxxx County. Concurrently herewith,
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HARVEYS shall also execute and deposit into escrow a quitclaim deed to the
Property, which deed shall be recorded by Escrow Agent without further
instruction by the parties in the event HARVEYS has not duly exercised the
Option on or before the aforesaid expiration date hereof and/or timely closed
escrow with respect to the Initial Property or the Remainder Property as
required hereby, or upon GRAND'S instructions if the Option or the Remainder
Option is terminated due to HARVEYS failure to timely make any required
option payment.
HARVEYS shall not assign this option without GRAND'S prior written
consent. GRAND'S consent shall not be withheld or delayed if the assignment
is to an entity in which HARVEYS retains control. Any assignment without
GRAND'S prior written consent shall be null and void, and shall constitute a
material default by HARVEYS of its obligations hereunder and shall cause the
immediate and automatic termination of all rights of HARVEYS hereunder,
including without limitation, all option rights granted hereunder.
13. PARTIES TO COOPERATE:
The parties hereto agree to execute such other and further documents as
may be necessary to effect this Agreement and to
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cooperate with each other in order to effectuate the terms of this Agreement.
14. INDEMNIFICATION:
The parties will mutually indemnify and save each other harmless from
and against any and all claims, actions, damages, liability and expense in
connection with tort claims, personal injury and/or property damage arising
from the performance of this Agreement.
15. RELATIONSHIP OF PARTIES:
The parties hereto agree and understand that their relationship under
this Agreement is that of optionor and optionee, only; nothing contained in
this Agreement shall be construed or interpreted to create the relationship
of principal and agent, employer and employee, joint ventures or partners, or
any other form of relationship other than optionor and optionee.
16. NOTICES:
All notices required or permitted under this Agreement shall be either
delivered by hand delivery, commercial overnight delivery courier or
facsimile transmittal with confirming overnight courier delivery, and
addressed as follows:
If to HARVEYS:
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HARVEYS CASINO RESORTS
Attn: XXXXXXX X. XXXXXXX, CEO
Highway 50 and Stateline Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxxx, XX 00000
FAX No. (000) 000-0000
With a copy to:
XXXXXXXXX & XXXXXX, LTD.
Attn: Xxxxxx X. Xxxxxx, Esq.
276 Xxxxxxxxx Grade, Xxxxx 0000
Xxxx Xxxxxx Xxx 0000
Xxxx Xxxxx, XX 00000
FAX No. (000) 000-0000
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If to GRAND:
GRAND PLAZA LIMITED PARTNERSHIP
c/o TPF Trading, Inc.
Attn: Xxxxxx Xxxxxx
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
FAX No. (000) 000-0000
With a copy to:
GOOLD, PATTERSON, XXXXXX & XXXXXXX
Attn: Xxxxx X. Xxxxx, Esq.
0000 Xxxxx Xxxxx Xxxx
Xxx Xxxxx, XX 00000
FAX No. (000) 000-0000
If to Escrow Agent:
NEVADA TITLE COMPANY
Attn: Xxxxx Xxxxxx
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
FAX No. (000) 000-0000
The foregoing addresses may be changed by written notice to the other party
as provided herein. Notices shall be deemed delivered upon actual receipt or
refusal to accept delivery.
17. ATTORNEYS FEES:
In the event of any dispute or controversy between the parties
concerning the enforcement or interpretation of this Agreement, the rights,
duties or obligations of the parties under this Agreement, or otherwise
relating to or arising out of this Agreement the
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prevailing party in such dispute or controversy shall be entitled to recover
reasonable costs and expenses incurred, including attorneys fees, in addition
to any other remedies which they may be entitled to at law or in equity.
18. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada. Jurisdiction and venue for any dispute relating
to or arising out of this Agreement shall be in the Eighth Judicial Court, in
and for the County of Xxxxx.
19. ENTIRE AGREEMENT:
This document comprises the entire understanding and agreement among the
parties hereto and may not be changed, modified, altered or amended except by
a writing signed by the parties.
20. WARRANTY AS TO AUTHORITY TO EXECUTE:
Each party hereto warrants to the other parties hereto that such party
has full authority to execute this Agreement, and that, in the event any
party is a non-natural person, all approvals necessary or advisable on the
part of each contracting party have been obtained. Each party hereto further
warrants that, upon
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execution, this Agreement shall be fully binding and enforceable against such
party in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
the date first written above with the intent to be legally bound thereby.
"HARVEYS"
HARVEYS CASINO RESORTS
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Its: Chairman, Pres. & CEO
----------------------------------
"GRAND"
GRAND PLAZA LIMITED PARTNERSHIP
By: TPF Trading, Inc., its general
Partner
By: /s/ Xxxxxx Xxxxxx, President
------------------------------------
Xxxxxx Xxxxxx, President
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EXHIBIT "A"
Map Showing Entire Property
INCLUDING DRINK PARCEL
EXHIBIT "B"
MAP SHOWING 14 ACRE PARCEL
EXHIBIT "C"
MAP SHOWING 18 ACRE PARCEL
EXHIBIT "D"
TITLE REPORT
EXHIBIT "E"
MAP SHOWING THE DRINK PARCEL
AND THE AREA OF THE ACCESS AND PARKING EASEMENT
EXHIBIT "F"
DRINK AGREEMENT
