HOLLYWOOD PARK, INC. - FORM 10-Q, SEPTEMBER 1996 - EXHIBIT 10.19
SECOND AMENDMENT TO LEASE
-------------------------
This Second Amendment to Lease ("Amendment") is hereby entered into by
and between Crystal Park Casino and Hotel Development Company, LLC, a California
Limited Liability Company ("Landlord"), and COMPTON ENTERTAINMENT, INC., a
California corporation ("Tenant"), with reference to the following facts:
A. Landlord and Tenant are parties to that certain Lease by and
between Landlord and Tenant dated August 3, 1995 (the "Lease");
B. Landlord and Tenant subsequently modified the Lease by executed
that certain First Amendment to Lease dated March 12, 1996 (the "First
Amendment");
C. The Lease provides for Tenant to operate a gaming facility on the
premises which is the subject of the Lease (the "Premises");
D. In order to obtain governmental approval to operate the gaming
facility on the Premises, the State of California Department of Justice has
required Landlord and Tenant to amend certain provisions of the Lease and the
First Amendment;
E. Both Landlord and Tenant desire to effectuate the required changes
in the Lease and the First Amendment and have therefore agreed to enter into
this Second Amendment to Lease.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. Defined Terms. Unless otherwise specified, all capitalized
-------------
terms set forth herein shall carry the same meaning as proscribed to them in the
Lease.
2. Amendments to Lease. The Lease shall be amended by making
-------------------
the following changes:
2.1 Section 3.01 shall be deleted in its entirety and the
following shall be inserted in its place: "3.01 Monthly Rent.
"3.01 Monthly Rent.
------------
(a) Tenant shall pay to Landlord as Monthly Rent the amounts
set forth in the following schedule:
Months 1 - 6 $200,000
Months 7 - 12 $350,000
Months 13 - 60 $759,375
Tenant shall have the right prior to the beginning of Month 13 to
prepay up to $4,650,000 in rent, in which event the Monthly Rent due during
Months 13 through 60 shall be reduced to $662,500. Provided Tenant has
made the above-referenced prepayment, Tenant, at any time during Months 13
through 24, shall have the additional right to make a single lump sum
prepayment of Monthly Rent, which payment shall be equal to an amount set
forth in the following schedule:
-2-
Month 13 $5,428,145
Month 14 $5,353,451
Month 15 $5,227,513
Month 16 $5,200,308
Month 17 $5,121,815
Month 18 $5,042,014
Month 19 $4,960,882
Month 20 $4,878,397
Month 21 $4,794,536
Month 22 $4,709,277
Month 23 $4,622,596
Month 24 $4,534,470
(b) In the event Tenant exercises the option to make a
prepayment of rent during Months 13 through 24, Tenant's rental obligation,
for the remainder of the Term, including the month in which such prepayment
is made, shall be reduced to $500,000 per month. The Monthly Rent shall be
paid in arrears for the immediately preceding month on or before the last
day of each calendar month during the term hereof, without any deduction or
offset, prior notice or demand. Tenant's obligation to pay Monthly Rent
shall commence on the Commencement Date. If the Commencement Date shall be
a day other than the first day of the calendar month, or, if the Term shall
end on any day other than the last day of the calendar month, then the
Monthly Rent for the first and/or last partial calendar month of the Term,
as the case may be, shall be prorated on a daily basis. This a "Triple Net
Lease," it being understood that Landlord shall receive the Monthly Rent
free and clear of any and all Operating Expenses and any and all other
charges and expenses of any nature whatsoever incurred by Landlord or
Tenant in connection with the ownership and operation of the Premises.
(c) On or before the 90th day following the opening of the Card
Club, Landlord shall provide Tenant a detailed statement indicating the
total investment of Landlord in the Card Club and related facilities (the
"Total Improvement Amount"), including but not limited
-3-
to all tenant improvements Landlord has made to the Premises on behalf of
Tenant (the "Improvement Statement"). In the event the Total Improvement
Amount does not equal $25,000,000, the Landlord shall include in the
Improvement Statement an adjustment schedule for both the Monthly Rent and
the prepayments set forth in paragraphs (a) and (b) above (collectively,
the "Prepayments") to accurately reflect Tenant's obligation to Landlord
for the tenant improvements which Landlord provided (the "Improvement
Adjustments"). The Improvement Adjustments shall be based upon a factor
.0265 times the difference between the Total Improvement Amount and
$25,000,000. Landlord shall use the resulting number to calculate the
adjustments to the Monthly Rent and the Prepayments based upon the same
formulas that were used to establish the Monthly Rent and Prepayments
currently set forth herein. Upon receipt of the Improvement Statement,
Tenant shall have 20 days (the "Objection Period") to object, in writing
(the "Improvement Objection"), to the amount of the Improvement Adjustment
as well as the costs used to calculate the Total Improvement Amount. Upon
receipt of the Improvement Objection Landlord shall have 10 days to provide
Tenant with any additional information necessary to justify the Total
Improvement Amount and the Improvement Adjustments. In the event Tenant and
Landlord cannot agree as to either the Total Improvement Amount or the
Improvement Adjustments within 15 days of Landlord's receipt of the
Improvement Objection, then such dispute shall be resolved in accordance
with Section 13.2 of the Agreement Respecting Pyramid Casino. In the event
Tenant fails to provide Landlord with the Improvement Objections within the
Objection Period, the Total Improvement Amount and the Improvement
Adjustments shall be deemed accepted by Tenant. The adjustment to Monthly
Rent, if any, shall be effective as of the Commencement Date and any amount
owing shall be either paid by Tenant with or
-4-
credited by Landlord against the next payment of Monthly Rent due
immediately following the date on which the Improvement Adjustments are
agreed upon by the parties or decided by an arbitration panel.
2.2 Section 3.02 shall be deleted in its entirety, and the
following shall be inserted in its place:
"3.02 Security Deposit.
----------------
Prior to the Commencement Date, Tenant shall provide Landlord
with a cash deposit in an amount equal to one month's rent as security for
Tenant's faithful performance of the provisions of this Lease (the
"Security Deposit"). If Tenant fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this
Lease, Landlord shall unilaterally have the right to use such cash deposit,
or any portion thereof, to cure such default or compensate Landlord for all
damages sustained by Landlord resulting from Tenant's default. Tenant
shall, immediately on demand, pay to Landlord a sum equal to that portion
of the Security Deposit expended or applied by Landlord which was provided
for in this paragraph so as to maintain the Security Deposit in a sum equal
to one month's rent. Landlord shall not be required to keep the Security
Deposit separate from its general account nor shall Landlord be required to
pay any interest on the Security Deposit. If Tenant performs all of
Tenant's obligations
-5-
under this Lease, the Security Deposit, or that portion thereof which had not
been previously applied by Landlord, shall be returned to Tenant by Landlord,
within fourteen (14) days after the expiration of the term of this Lease or
after Tenant has vacated the Premises, whichever is later. Any time the Monthly
Rent increases during the term of this Lease, Tenant shall, without notice,
deposit additional monies with Landlord in order to maintain the Security
Deposit equal to one month's Monthly Rent. Failure to maintain the Security
Deposit shall be deemed an Event of Default."
2.3 Any reference in the Lease to the "Account," as such term
was defined in Section 3.02 prior to this Second Amendment to Lease, shall
be deleted or disregarded in the interpretation of the Lease.
2.4 Section 8.07 as set forth in the First Amendment shall be
amended by inserting the following at the beginning thereof: "Except as it
may relate to Tenant, or any affiliate or subsidiary of Tenant, as a
transferee of Landlord's interest in accordance with the Agreement
respecting Pyramid Casino,".
-6-
C3. Other than the foregoing changes which shall supersede the
inconsistent provisions in the Lease, the Lease shall remain in full force and
effect in its entirety and may not be amended or modified except as provided
therein.
IN WITNESS WHEREOF, this Second Amendment to Lease is executed this
____ day of ______________, 1996.
COMPTON ENTERTAINMENT, INC.
a California corporation
By:_/s/Xxxxxx Kandilian_____
Xxxxxx Xxxxxxxxx, President
CRYSTAL PARK CASINO AND HOTEL DEVELOPMENT COMPANY
a California Limited Liability Company
By: HP/Compton, Inc.,
a California corporation, Manager
By:__/s/G. Michael Finnigan_____________
G. Xxxxxxx Xxxxxxxx, Vice President
-7-
