EXHIBIT 10.18
LEASE
by and between
HP/COMPTON, INC.,
a California corporation,
as "Landlord"
and
COMPTON ENTERTAINMENT, INC.,
a California corporation,
as "Tenant"
Dated: August 3, 1995
TABLE OF CONTENTS
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Page
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LEASE................................................ 1
RECITALS............................................. 1
Article 1. LEASE OF PREMISES......................... 1
1.01 Premises............................ 1
1.02 Landlord's Obligations.............. 1
Article 2. TERM; POSSESSION; ACCEPTANCE.............. 2
2.01 Term................................ 2
2.02 Termination Right................... 2
2.03 Possession.......................... 3
2.04 Acceptance of Premises; Premises
Remodeling........................ 3
Article 3. RENT...................................... 4
3.01 Monthly Rent........................ 4
3.02 Security Deposit; Account........... 4
3.03 Legal Tender........................ 5
3.04 Additional Rent; Rent Defined....... 5
3.05 Interest on Late Payments........... 5
Article 4. RECORDS AND ACCOUNTING.................... 6
4.01 Records................................ 6
4.02 Monthly Reports........................ 6
4.03 Audited Financial Statements........... 6
4.04 Landlord's Right to Audit.............. 7
Article 5. USE AND OPERATION OF PREMISES............ 7
5.01 Specific Use of Premises............... 7
5.02 Conduct of Business.................... 7
5.03 Compliance with Restrictions and
Laws................................. 8
5.04 Independent Business................... 8
Article 6. MAINTENANCE, REPAIRS AND ALTERATIONS..... 8
6.01 Tenant's Obligations to Repair......... 8
Page
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6.02 Landlord's Option to Make Major
Repairs.............................. 9
6.03 Damage to Premises..................... 9
6.04 Repair of Damage; Rent Abatement....... 10
6.05 Alterations; Improvements;
Additions............................ 10
6.06 Ownership of Improvements, Fixtures,
Furnishings and Equipment............ 11
6.07 Mechanic's Liens....................... 11
Article 7. INSURANCE, EXONERATION AND INDEMNITY..... 13
7.01 Liability Insurance.................... 13
7.02 Property Insurance..................... 13
7.03 Tenant's Property Insurance............ 14
7.04 Landlord's Insurance................... 14
7.05 Insurance Policies..................... 14
7.06 Waiver of Subrogation.................. 15
7.07 Exoneration and Indemnity.............. 15
Article 8. ASSIGNMENT, SUBLETTING, HYPOTHECATION.... 16
8.01 Consent Required....................... 16
8.02 Indirect Transfers..................... 17
8.03 Obligations of Transferees and
Subtenants........................... 17
8.04 Continued Liability; No Waiver......... 18
Article 9. EMINENT DOMAIN............................ 19
9.01 Effect on Lease........................ 19
9.02 Award.................................. 19
9.03 Rebuilding............................. 19
Article 10. TENANT'S BREACH; LANDLORD'S REMEDIES..... 20
10.01 Tenant's Breach....................... 20
10.02 Landlord's Remedies................... 21
10.03 Right to Cure Tenant's Default........ 22
10.04 Landlord's Remedies Not Exclusive..... 22
10.05 Right to Rents, Issues and Profits.... 23
Page
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10.06 Receipt of Rents...................... 23
Article 11. LANDLORD'S DEFAULT; TENANT'S REMEDIES... 23
11.01 Landlord's Default.................... 23
11.02 Tenant's Remedies..................... 24
11.03 Tenant's Remedies Not Exclusive....... 24
11.04 Payment of Rents...................... 24
Article 12. MORTGAGE OF LANDLORD'S INTEREST......... 24
12.01 Subordination......................... 24
12.02 Tenant's Obligations With Respect
to Landlord's Mortgage.............. 25
12.03 Definition of Landlord's Mortgage
and Landlord's Mortgagee............ 25
Article 13. OPERATING EXPENSES...................... 25
13.01 Definitions........................... 25
13.02 Survival.............................. 26
Article 14. TAXES AND OTHER CHARGES.................. 26
14.01 Tenant's Taxes........................ 26
Article 15. UTILITY AND OTHER SERVICES............... 27
15.01 Utility Charges....................... 27
15.02 Compliance With Governmental
Regulations......................... 27
15.03 Security; Landlord
Nonresponsibility; Indemnity........ 27
Article 16. GENERAL PROVISIONS....................... 28
16.01 Estoppel Certificates................. 28
16.02 Landlord's Right of Entry............. 29
16.03 Waiver................................ 29
16.04 Surrender of Premises; Holding
Over................................ 29
16.05 Notices............................... 30
16.06 Partial Invalidity; Construction...... 30
16.07 Captions.............................. 31
16.08 Short Form Lease...................... 31
Page
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16.09 Brokers' Commissions.................. 31
16.10 Attorneys' Fees....................... 31
16.11 Counterparts.......................... 31
16.12 Sole Agreement........................ 31
16.13 Successors and Assigns................ 32
16.14 Time is of the Essence................ 32
16.15 Survival of Covenants................. 32
16.16 Landlord's Consent or Approval........ 32
16.17 Joint and Several Obligations......... 32
16.18 No Offer.............................. 32
16.19 Corporate Resolution.................. 33
LEASE
THIS LEASE is made and entered into this 3rd day of August, 1995 by and
between HP/COMPTON, INC., a California corporation, hereinafter called
"Landlord", and COMPTON ENTERTAINMENT, INC., a California corporation,
hereinafter called "Tenant".
RECITALS
--------
A. Landlord is the owner and the lessee of real property in the City of
Compton, California (the "City"), which property is more particularly described
on Exhibit A attached hereto (the "Property").
B. Landlord intends to cause to be constructed on a portion of the
Property a casino card club (which may include restaurant and retail uses) to be
known as Pyramid Casino (the "Card Club") pursuant to certain plans and
specifications therefor (the "Plans").
C. Landlord desires to lease the Card Club portion of the Property to a
licensed card club operator, together with all fixtures, furniture, equipment
and supplies required to operate a card club, until it can obtain its own
license to operate the Card Club.
D. Tenant is a California corporation which is in the process of being
licensed by the State of California to operate the Card Club and Tenant is
licensed by the City to operate the Card Club.
Article 1.
LEASE OF PREMISES
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1.01 Premises
--------
(a) Subject to the terms and conditions and reservations provided herein,
Landlord hereby grants, demises and leases to Tenant, and Tenant hereby hires
from Landlord, the Property and all fixtures, furniture, equipment, supplies and
all replacements thereof necessary to operate the Card Club (collectively, the
"Premises").
(b) This Lease is subject to the terms, covenants and conditions herein set
forth and each party covenants, as a material part of the consideration for this
Lease, to keep and perform each and all of said terms, covenants and conditions
by it to be kept and performed.
1.02 Landlord's Obligations.
----------------------
Prior to the Commencement Date, as that term is hereinafter defined,
Landlord shall, to Tenant's reasonable satisfaction, fully improve, equip,
fixture, furnish and provide all necessary supplies for the Premises, at
Landlord's sole cost and expense, in accordance with the Plans to enable Tenant
to operate the Card Club on the Premises in a first class manner. The
performance of Landlord's obligations under this Section 4 shall comply with
any and all Applicable Laws (as hereinafter defined) and shall be at Landlord's
sole cost and expense; provided that Landlord shall not be required to expend
more than Twenty Million Dollars ($20,000,000) of its own funds for the
purchase, development and furnishing of the Premises.
Article 2.
TERM; POSSESSION; ACCEPTANCE
----------------------------
2.01 Term
----
The term of this Lease shall commence on the date upon which Tenant opens
the Card Club for business to the general public (the "Commencement Date") and
shall continue until midnight on the date sixty (60) months after the
Commencement Date (the "Expiration Date") unless sooner terminated pursuant to
any provision hereof (the "Term" or "the term of this Lease"). Upon
determination of the actual Commencement Date, Landlord and Tenant mutually will
execute a written instrument specifying the Commencement Date and the Term.
2.02 Termination Right
-----------------
(a) Tenant and Landlord agree that at any time after the date hereof,
should either Landlord or any Affiliate (as hereinafter defined) become eligible
to be licensed to operate a card club in the State of California, and if all
necessary
state and local governmental approvals are first obtained, then Landlord and
Tenant shall execute a partnership agreement in substantially the form of the
partnership agreement attached hereto as Exhibit "B" (the "Partnership
Agreement"), in which event this Lease shall terminate and from and after such
termination, the use of the Premises shall be governed by the terms of the
Partnership Agreement; provided, however, that the foregoing shall in any event
be subject to the following conditions and limitations:
(i) This Lease may not be terminated, and the Partnership Agreement shall
not be entered into or otherwise become effective, until such time as the
following conditions have been satisfied:
(A) the City has taken all actions legally necessary to approve
Landlord or its Affiliate as the owner of an interest in the Card Club operated
by Tenant on the Premises and otherwise approves the partial transfer of
ownership of the Card Club that would be effected by entering into the
Partnership Agreement;
(B) such transfer is in compliance with all applicable provisions of
the Compton Municipal Code, as amended from time to time; and
(C) Landlord (or an Affiliate) is eligible under the laws of the
State of California to own an interest in and otherwise participate in the Card
Club and has been duly licensed by the Attorney General of the State of
California to own such interest.
(ii) Unless and until all appropriate governmental approvals as described
above have been obtained, the Partnership Agreement shall be of no force or
effect.
(iii) For the purposes of this Lease, the term "Affiliate" means any
parent corporation, subsidiary or brother-sister corporation of Landlord or any
entity owned or controlled by Landlord or by any parent, subsidiary or brother-
sister corporation of Landlord, or any individual or entity which owns or
controls Landlord or any parent corporation, subsidiary or brother-sister
corporation of Landlord, including, without limitation, Hollywood Park Operating
Company.
(iv) Tenant hereby covenants and agrees to use its best efforts to
ensure that no provisions of the Compton Municipal Code are enacted that would
preclude or limit the rights of Landlord or its Affiliate to become an owner and
operator of the Card Club and further agrees to fully cooperate with Landlord
and the City in Landlord's efforts to become licensed as such owner and
operator.
(b) The failure by Tenant at any time to be licensed under state or local
law to operate a card club or the disqualification of Tenant as such card club
operator for any reason, including a suspension of license which continues for a
period of five (5) days, shall constitute an Event of Default (as defined in
Section 10.01). Tenant and Landlord agree that in such event, in addition to
and not in limitation of Landlord's remedies under Article 10, Landlord shall
have the right to terminate this Lease without liability upon written notice to
Tenant and thereafter this Lease shall be of no further force or effect.
2.03 Possession
----------
Any access to or possession of the Premises by Tenant prior to the
commencement of the Term shall be on and subject to all of the terms,
provisions, covenants and conditions of this Lease except that no Rent shall be
due and except as otherwise expressly herein provided. Landlord shall not have
any control over Tenant and shall not direct or control the operation of the
business of the Card Club on the Premises throughout the Term of this Lease or
any extension thereof.
2.04 Acceptance of Premises; Premises Remodeling
-------------------------------------------
All improvements constructed and maintained by or under the direction of
Landlord or its Affiliates shall be constructed and maintained in accordance
with "Applicable Laws," as that term is defined in Section 13 hereof. Tenant
agrees to accept the Premises subject to (i) all Applicable Laws regulating or
in any manner applicable to any use or occupancy thereof by Tenant (as limited
by this Lease); (ii) the provisions of that certain Disposition and Development
Agreement, dated December 10, 1992, between Tenant and the Community
Redevelopment Agency ("CRA") of the City (the "Old DDA"); (iii) the provisions
of that certain
Disposition and Development Agreement, dated June 20, 1995, between Landlord (as
Tenant's assignee) and the CRA of the City (the "New DDA"); and (iv) all liens,
encumbrances, easements, rights of way, covenants, conditions, restrictions,
servitudes, licenses and other matters of record or which have been disclosed in
writing to Tenant prior to the execution of this Lease.
Article 3.
RENT
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3.01 Monthly Rent
------------
Tenant shall pay to Landlord as monthly rent, a monthly amount equal
to 2.65% of HPI's Total Investment in the Property (as that term is defined in
that certain Agreement in Principle, dated April 29, 1994, by and between Tenant
and Landlord, as amended and referred to herein as the"AIP") as the monthly rent
for the Premises (the "Monthly Rent"). Upon the determination of the exact
amount of the Monthly Rent, Landlord and Tenant mutually will execute a written
instrument specifying the exact amount of the Monthly Rent. 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 Term shall commence on a day other
than the first day of a calendar month or shall end on a day other than the last
day of a 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 per diem
basis. This Lease is 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 or expenses of any nature whatsoever incurred by
Landlord or Tenant in connection with the ownership and operation of the
Premises.
3.02 Security Deposit; Account
-------------------------
(a) In order to provide Landlord with adequate security for the
faithful performance by Tenant of all of the terms, covenants and conditions of
this Lease during the Term, on a monthly basis, Tenant will deposit into an
account (the "Account") an amount equal to 66.667% of the Card Club's "net
after-tax income" (the "Monthly Security Deposit"). The term "net after-tax
income" shall mean net income before taxes, reduced by an amount equal to 47% of
such income as an allowance for federal and state income taxes; provided,
however, if the Monthly Rent paid for a particular month exceeds the Monthly
Security Deposit for that month, no payment under this Section 3.02 shall be
due. By way of example, if the "net after-tax income" for a full month equals
$7,000,000 and Tenant has paid Monthly Rent for such month in the amount of
$6,000,000, the Monthly Security Deposit would equal $4,666,690 and no Monthly
Security Deposit would be due for that month. If the "net after-tax income" for
a full month equals $12,000,000.00 and Tenant has paid Monthly Rent for such
month in the amount of $6,000,000, the Monthly Security Deposit shall equal
$2,000,040 (i.e. (12,000,000 x 66.667) (-) 6,000,000). Tenant shall be entitled
to withdraw an amount equal to 47% of the annual earnings of the Account as an
allowance for federal and state income taxes on such earnings; the balance of
the earnings of the Account shall be retained in the Account.
(b) If, on audit, any portion of the Rent paid by Tenant to Landlord
under this Lease is held not to be deductible by Tenant for federal or state tax
purposes, thereby resulting in Tenant or its principal shareholder owing any tax
deficiency, then Tenant shall give prompt notice thereof to Landlord and
Landlord shall have the right to participate with Tenant in contesting such
holding. Tenant shall bear all costs and expenses of any such contest. If
Tenant and/or its principal shareholder are held liable for such tax deficiency,
then the amount of such tax deficiency, plus any interest due thereon, may be
paid out of the Account. If the amount of such federal and/or state tax
deficiency plus interest thereon exceeds the amount in the Account, then
Landlord shall pay Tenant an amount equal to such excess amount as a refund of
Monthly Rent and any such amount shall be subject to the Monthly Rent accrual
provisions of Section 3.02 hereof.
(c) Pursuant to a separate Security Agreement to be executed between
Landlord and Tenant concurrently with the establishment of the Account, Landlord
shall have a security interest in the Account during the Term. Tenant agrees to
take all necessary action and execute all instruments and documents necessary
for Landlord to have a perfected security interest in the Account during the
Term of this Lease.
(d) If an Event of Default of Tenant occurs under this Lease,
including, but not limited to, Tenant's failure to pay any Rent, Landlord, at
its option, may require Tenant to apply all or any part of the Account to the
payment of any Rent or any other sum then due, or to compensate Landlord for any
loss or damage which Landlord may suffer by reason of Tenant's failure. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it and any Events of Default have been cured, any remaining balance
in the Account may be withdrawn by Tenant upon termination of this Lease whether
the Partnership Agreement is entered into or not.
3.03 Legal Tender
------------
Rent and all other sums payable under this Lease must be paid in
lawful money of the United States of America, without demand, offset or
deduction.
3.04 Additional Rent; Rent Defined
-----------------------------
(a) In addition to the Monthly Rent, Tenant shall also pay as
additional rent ("Additional Rent"), without deduction or offset, all Operating
Expenses, other charges, fees, costs, taxes, impositions, expenses and other
sums required to be paid by Tenant under the provisions of this Lease whether or
not the same shall be designated as Additional Rent. In the event of nonpayment
of any Additional Rent when due, Landlord shall have all of the rights and
remedies provided hereunder or by law for the nonpayment of rent.
(b) As used in this Lease, the term "Rent" shall include Monthly Rent
for the Premises and Additional Rent.
3.05 Interest on Late Payments
-------------------------
Any Rent or other amounts due from Tenant to Landlord hereunder which
are not paid within five (5) days of when due shall bear interest at a rate (the
"Agreed Rate") equal to two percent (2%) per annum in excess of the "reference
rate" as announced by Bank of America, NT&SA, Los Angeles main office, as such
rate may change from time to time, from the date due until the date paid,
regardless of whether a notice of default or any other notice is given by
Landlord; provided, however,
if such rate is greater than the maximum rate of interest then permitted to be
charged by law, the Agreed Rate shall be the maximum rate of interest then
permitted to be charged by law. In the event that Bank of America, NT&SA, shall
cease to exist or shall cease to announce a "reference rate" (or equivalent
prime rate) or shall cease to have a Los Angeles office, there shall be
substituted such alternative bank, alternative rate or alternative office as
Landlord shall select. Acceptance of interest by Landlord shall not constitute a
waiver of Tenant's default with respect to the overdue amount, or prevent
Landlord from exercising any other rights or remedies.
Article 4.
RECORDS AND ACCOUNTING
----------------------
4.01 Records
-------
For the purposes of ascertaining compliance by Tenant of its
obligations under Article 3.02 and Article 5 hereof, Tenant agrees to prepare
and keep or cause to be prepared and kept on the Premises (or at such other
location approved by Landlord, which approval shall not be unreasonably
withheld) for a period of not less than thirty-six (36) months following the end
of the Term adequate records which shall show all receipts at the Premises, as
well as all charges, fees, costs, taxes, impositions, expenses and other sums
paid or required to be paid by Tenant in connection with its operation of the
Premises ("expenses") and other information reasonably requested by Landlord
from all sales and other transactions on the Premises by Tenant and by all
Subtenants (as hereinafter defined) in the event Landlord were to approve any
other Subtenancy (as hereinafter defined). The requesting or obtaining of
information by Landlord shall not be deemed to make Landlord responsible for
verifying the accuracy of any such information or make the Landlord responsible
for compliance of Tenant's obligations under Articles 3 and 5, which shall
remain the obligations of Tenant.
4.02 Monthly Reports
---------------
Tenant shall submit to Landlord on or before the fifteenth (15th) day
following the end of each calendar month during the Term (including the 15th day
of the calendar month following the end of the Term), a written statement of
income
and expense signed by Tenant, and certified by it (or if Tenant is a corporation
or a partnership, by a duly authorized corporate officer or general partner of
Tenant) to be true and correct, showing in reasonable, accurate detail the
amount of Tenant's receipts, expenses and other information requested pursuant
to Section 4.01 for the immediately preceding period. The certification of each
such statement shall be satisfactory to Landlord in scope and substance and
without qualification except as may be expressly permitted by Landlord. The
statements referred to herein shall be in such form and style and contain such
details and breakdown as Landlord may reasonably determine.
4.03 Audited Financial Statements
----------------------------
Promptly following the end of each calendar year, Tenant shall cause
to be conducted, at its sole cost and expense, an annual audit of its books and
records by Arthur Andersen & Co., Inc. or such other "Big Six" accounting firm
selected by Tenant and acceptable to Landlord. Within sixty (60) days after the
end of each such calendar year, Tenant shall deliver audited financial
statements for the business conducted at the Premises, certified without
qualification by such auditors. Such audited financial statements shall be the
conclusive determination for all calculations required under Article 3.
4.04 Landlord's Right to Audit
-------------------------
If Tenant omits to prepare and deliver promptly any statement, report
or financial statements required by the provisions of this Article 4, Landlord
shall have the right, in addition to all other rights available to Landlord upon
Tenant's default, to make, or cause to be made, an audit of all books and
records of Tenant and any Subtenants, including their respective bank accounts
which in any way pertain to or show Tenant's activities, and to prepare, or
cause to be prepared, the statement, report or financial statements which Tenant
has failed to prepare and deliver; Tenant shall give Landlord and its designated
representatives access to such books and records at all reasonable times for
purposes of making any such audit and preparing any such statement, report or
financial statements. Such audit shall be made and such statements and reports
shall be prepared by a person or persons selected by Landlord. The statements
or reports so prepared shall be conclusive on Tenant, and Tenant shall pay
all expenses of the audit and other costs incurred by Landlord in connection
therewith. If any such audit shall disclose any willful inaccuracy of Tenant,
such inaccuracy shall constitute an incurable breach of this Lease.
Article 5.
USE AND OPERATION OF PREMISES
-----------------------------
5.01 Specific Use of Premises
------------------------
Tenant shall use and occupy the Premises as the Card Club and for no
other use or purpose.
5.02 Conduct of Business
-------------------
(a) Landlord and Tenant acknowledge that Tenant's obligation to
operate a business in conformance with this Article 5 is a material inducement
to Landlord to enter into this Lease, without which Landlord would not have
entered into this Lease. Accordingly, except as expressly provided elsewhere
herein, Tenant agrees to conduct business continuously at the Premises during
the entire Term of this Lease, except when prevented from doing so by reason of
the acts or omissions of Landlord or any Affiliate, strikes, lockouts, casualty
damage, the order of any governmental agency having jurisdiction over the
Premises and/or the conduct of Tenant's business therein or other reasons (other
than financial inability) beyond Tenant's reasonable control or during such
periods that alterations or repairs are being made to the Premises which make it
impracticable to keep the Premises open. Tenant agrees that, commencing with
the Commencement Date and continuing for the remainder of the Term, Tenant shall
be open for business on a 24-hour a day basis except to the extent prohibited by
law. Tenant shall at all times actively and diligently operate its business on
the Premises in a commercially reasonable manner. Selection and termination of a
Card Club General Manager shall be subject to Landlord's prior approval.
(b) In the event that Landlord consents to any subleasing, Tenant
shall cause all Subtenants to comply with all of the requirements of this
Section 12 to the same extent as if each such Subtenant were the Tenant
hereunder.
(c) Tenant shall at all times during the Term of this Lease remain
fully licensed as a "card club operator" in good standing.
5.03 Compliance with Restrictions and Laws
-------------------------------------
Tenant shall, at its sole cost, comply with all of the requirements of
all covenants, conditions and restrictions of record applicable to the Premises
or any part thereof and shall faithfully observe all such covenants, conditions
and restrictions. Tenant shall, at its sole cost, comply with all federal,
state and local laws, regulations, rules, ordinances, zoning variances,
conditional use permits and orders now in force or which may hereafter be in
force applicable to Tenant, any Subtenant, the Premises, and/or the use or
occupancy of the Premises or the conduct of business therein or thereon,
including all applicable provisions of the DDA ("Applicable Laws"). Tenant
acknowledges that it is familiar with such conditions, and agrees that all of
such conditions (and all additional conditions which may be imposed in the
future) constitute "Applicable Laws" within the meaning of this Lease. Tenant
shall cause any Subtenants to comply with and observe all such covenants,
conditions, restrictions and Applicable Laws.
5.04 Independent Business
--------------------
By this Lease, neither party acquires any right, title or interest in
or to any property of the other party except such rights as are specifically
stated in this Lease. The relationship between Landlord and Tenant is solely
that of landlord and tenant, and is not and shall not be deemed to be a
partnership or joint venture.
Article 6.
MAINTENANCE, REPAIRS AND ALTERATIONS
------------------------------------
6.01 Tenant's Obligations to Repair
------------------------------
Tenant shall at its sole cost and expense, maintain in clean and safe
condition, and make all repairs and replacements to the Premises and every part
thereof, structural and non-structural, so as to keep, maintain and preserve the
Premises in first class condition and repair,
including, without limitation, the roof, the foundation, the heating,
ventilation and air conditioning system ("HVAC"), elevators, if any, all
plumbing and sewage facilities, fire sprinklers, electrical and lighting
facilities, systems, appliances, and equipment within the Premises, fixtures,
interior and exterior walls, floors, ceilings, windows, doors, entrances, all
interior and exterior glass (including plate glass), and skylights located
within the Premises, and all sidewalks, service areas, parking areas and
landscaping comprising part of the Premises. All repairs and replacements
required to be made by Tenant shall be made promptly with new materials of like
kind and quality to those used in the original construction of the Premises. If
the repair or replacement work affects the structural parts of the Premises, or
if the estimated cost of any item or repair or replacement exceeds $10,000, then
Tenant shall first obtain Landlord's written approval of the scope of work,
plans therefor, and materials to be used. Any such work shall be performed by
Landlord's contractor or by such contractor as Tenant may choose from an
approved list to be submitted by Landlord. Landlord shall have the right to make
any repairs or replacements which are not promptly made by Tenant and charge
Tenant, as Additional Rent, for the cost thereof together with interest thereon
at the Agreed Rate from the date of payment thereof by Landlord. Without
limiting any of Tenant's obligations hereunder, during the Lease Term Tenant, at
its expense, shall obtain and keep in force an HVAC service contract and a roof
maintenance program satisfactory to Landlord. Tenant hereby waives the benefit
of any statute now or hereafter in effect which would otherwise afford Tenant
the right to make repairs at Landlord's expense or to terminate this Lease
because of Landlord's failure to keep the Premises in good condition, order and
repair. Tenant specifically waives all rights it may have under Sections
1932(1), 1941 and 1942 of the California Civil Code, and any similar or
successor statute or law. Notwithstanding anything to the contrary contained
herein, Landlord shall exercise its rights under any guaranties or warranties
relating to the original construction of the Premises if the need to make
repairs arises due to a defect therein; provided, however, Landlord shall not
have any liability or be required to expend any funds if such guaranties or
warranties are not honored by the makers hereof.
6.02 Landlord's Option to Make Major Repairs.
---------------------------------------
Notwithstanding anything to the contrary herein, in lieu of Tenant
making any repairs to or replacements of the structural roof, exterior or load-
bearing walls or foundation, or any replacement or resurfacing of the parking
area, which Tenant would otherwise be obligated to make pursuant to Section 6.01
hereof, Landlord instead may elect to perform any or all such repairs or
replacements itself, in which case Tenant shall pay to Landlord the full cost
thereof within 15 days after Landlord's submission of a bill therefor.
6.03 Damage to Premises
------------------
In the case of damage to or destruction of the Premises by fire or
other casualty, Tenant's rental obligation shall continue as provided in Article
3 above to the extent of rental loss insurance and/or business interruption
insurance proceeds, and Tenant shall rebuild and restore such casualty damage,
unless Tenant elects to terminate the Lease pursuant to the further terms of
this Article 6. In the event that Tenant undertakes any restoration and/or
repair work, such work shall be done in accordance with the provisions of
Section 6.05 hereof and Landlord shall make the casualty insurance proceeds
available to Tenant for that purpose.
If the Premises are damaged to the extent that Tenant is unable to
operate a first class card club therein and such damage cannot be repaired
within one hundred eighty (180) days from the date of damage, Tenant may
terminate this Lease by giving written notice to Landlord no later than ten (10)
days after the date of occurrence of such damage. In the event either party duly
elects to terminate this Lease, this Lease shall be deemed to have been
terminated as of the date of occurrence of such damage and neither party shall
have any further liability under this Lease except for the provisions herein,
which by their terms survive the expiration or earlier termination of this
Lease.
6.04 Repair of Damage; Rent Abatement
--------------------------------
(a) If this Lease is terminated pursuant to any of the provisions of
Section 6.03 hereof, the Monthly Rent, Additional Rent and other payments
provided for herein shall be paid by Tenant through the date that Tenant closes
the Card Club and all rents and other payments made by Tenant to
Landlord shall be appropriately prorated through the date of such closure.
6.05 Alterations; Improvements; Additions
------------------------------------
Tenant shall not make or permit the making of any alterations,
improvements, additions or installations ("Alterations") in, on or about the
Premises without Landlord's prior written consent and unless and until the
drawings, plans and specifications for such Alteration shall have been first
submitted in triplicate to and approved by Landlord and, if required, by any and
all mortgagees of Landlord. Landlord's approval to any such Alteration shall
not be unreasonably withheld or delayed.
Landlord, acting reasonably, may, as a condition to its consent
pursuant to this Section 6.05, require Tenant to furnish Landlord, prior to the
commencement of any work that could constitute the basis for a mechanic's lien
on the Premises and before any building materials are delivered to the Premises,
with a bond by a responsible surety company licensed to do business in
California, in a form and with a company satisfactory to Landlord, in an amount
equal to one and one-half times the estimated cost of the work to be done and
the materials to be supplied, such bond to remain in effect until all such costs
shall have been fully paid and the improvements fully insured by Tenant as
herein provided. Such bond, if required, shall secure completion by Tenant, or
on its default by the surety, of all work free from any and all liens of
contractors, subcontractors, materialmen, laborers or others and shall defend
and indemnify Landlord from and against any loss, damage or liability in any
manner arising out of or connected with such work. Landlord may also impose
additional reasonable conditions upon its consent pursuant to this Section 6.05,
including, but not limited to, a requirement that any work be supervised by a
qualified engineer or architect approved by Landlord and that appropriate
"builder's risk" insurance be obtained.
Any Alterations made in, on or about the Premises by or at the
direction of Tenant (or any Subtenant), shall be made and completed with due
diligence, in a good and workmanlike manner, in strict compliance with the
requirements of all Applicable Laws and all conditions of Landlord's consent.
Tenant agrees to carry such insurance as required by Section 7.02 hereof
covering each and every such Alteration.
So long as there exist any restrictions on the square footage of
improvements on the Property, Tenant shall not, under any circumstances, do
anything which would increase the square footage of the Premises.
6.06 Ownership of Improvements, Fixtures, Furnishings and Equipment
--------------------------------------------------------------
All improvements, alterations, additions and installations
constructed, installed, affixed or otherwise made in, on or about the Premises
by or at the direction of either Landlord or Tenant (or any Subtenant) at any
time prior to or during the term of this Lease, including, without limitation,
any and all carpeting, floor coverings, wall coverings, lighting and hardware
fixtures, window treatments and ceilings, trade fixtures whether or not
permanently affixed to the Premises, furniture, business equipment and stock in
trade, shall at once become a part of the realty, if applicable and, in any
event belong to Landlord, without any obligation on the part of Landlord to
compensate Tenant or any other person therefor, except as expressly set forth in
the AIP and that certain Amended and Restated Agreement Respecting Pyramid
Casino, dated July 14, 1995, executed by Landlord and Tenant (the "Amended and
Restated Agreement". Any damage to the Premises resulting from the removal of
any items permitted or required to be removed by Tenant hereunder shall be
promptly repaired by Tenant at its sole cost and expense.
6.07 Mechanic's Liens
----------------
Tenant shall promptly pay and discharge all claims for work or labor
done or goods or materials furnished by third parties, at the request of Tenant
or any Subtenant and shall keep the Premises free and clear of all mechanic's
and materialman's liens in connection therewith. If any mechanic's or
materialman's lien is filed for work done on behalf of Tenant or any Subtenant
at, or materials supplied to, the Premises by a third party, Tenant shall remove
such lien by payment or bond (regardless of whether Tenant contests the claim
made by the person asserting such lien and regardless of whether such claim is
valid or has any basis in fact or law) not later than fifteen (15) days after
written
demand for such removal is made by Landlord. If Tenant shall fail to discharge
any such lien within such 15-day period, then in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, take such
action or pay such amount as Landlord, in its sole discretion, shall deem
appropriate to remove such lien, and Tenant shall pay to Landlord as Additional
Rent all amounts (including attorneys' fees) paid or incurred by Landlord in
connection therewith within five (5) days after demand by Landlord, together
with interest at the Agreed Rate from the date of payment by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to contest the
correctness or the validity of any such lien if, immediately upon demand by
Landlord, Tenant procures and records a lien release bond issued by a
corporation authorized to issue surety bonds in California in an amount equal to
one and one-half times the amount of the claim of lien. The bond shall meet the
requirements of Civil
Code (S) 3143 or any similar or successor statute and shall provide for the
payment of any sum that the claimant may recover on the claim (together with
costs of suit, if it recovers in the action).
Except for Landlord's express obligations relating to the improvement,
maintenance and repair of the Premises, nothing in this Lease shall be deemed to
be, or construed in any way as constituting, the consent or request of Landlord,
express or implied, to or for the performance of any labor or the furnishing of
any materials for any construction, rebuilding, alteration or repair of or to
the Premises or any part thereof by any person or as giving Tenant any right,
power or authority to contract for or permit the rendering of any services or
the furnishing of any materials which might in any way give rise to the right to
assert any lien against Landlord's interest in any property. Landlord shall
have the right to post and keep posted at any and all times on the Premises any
notices for the protection of Landlord and the Premises from any such lien.
Tenant shall, before the commencement of any work, or the delivery of any
materials, which might result in any such lien, give to Landlord written notice
of its (or any Subtenant's) intention to perform such work or obtain such
materials in sufficient time to enable the posting of such notices.
Article 7.
INSURANCE, EXONERATION AND INDEMNITY
------------------------------------
7.01 Liability Insurance.
-------------------
Tenant shall obtain and keep in force during the Term of this Lease a
Commercial General Liability policy of insurance protecting Tenant and Landlord
(as an additional insured) against claims for bodily injury, personal injury or
personal advertising injury, and property damage based upon, involving, or
arising out of the ownership, use, occupancy, or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than Ten Million Dollars
and No Cents ($10,000,000.00) per occurrence. Such insurance shall be with an
"Additional Insured-Managers or Landlords of Property" Endorsement and contain
the "Amendment of the Pollution Exclusion" for damage caused by heat, smoke, or
fumes from a hostile fire. Such policy shall not contain
any intra-insured exclusions as between insured persons or entities, but shall
include coverage for liability assumed under this Lease as an "insured contract"
for the performance of Tenant's indemnity obligations under this Lease. The
limits of insurance required by this Lease or otherwise carried by Tenant shall
not, however, limit the liability of Tenant nor relieve Tenant of any obligation
hereunder. All insurance to be carried by Tenant shall be primary to and not
contributory with any similar insurance carried by Landlord, whose insurance
shall be considered excess insurance only. During the construction, alteration,
or repair of any improvements on the Premises, the party contracting for said
construction shall provide and maintain workers' compensation and employers'
liability insurance covering all persons employed in connection with such
construction, alteration, or repair and with respect to whom death or personal
injury claims could be asserted against Landlord, Tenant, or the Premises.
7.02 Property Insurance.
------------------
(a) Building and Improvements. Tenant shall obtain and keep in force
-------------------------
during the Term a policy or policies of insurance in the name of Landlord, with
loss payable to Landlord insuring against damage to, or destruction of any
improvements comprising the Premises, together with all fixtures, machinery and
equipment therein and thereon. The amount of such insurance shall be equal to
the full replacement cost of the improvements comprising the Premise, as such
cost shall change from time to time, or such greater amount as may be required
pursuant to Applicable Laws. Such policy or policies shall insure against all
risks of direct physical loss or damage (including, if mutually approved of by
Landlord and Tenant, the perils of flood and/or earthquake; provided, however,
that Tenant shall consent to Landlord's request to carry such insurance if
Landlord reasonably determines, from time to time, taking into account Tenant's
financial condition, that the value of minimizing the risk of loss outweighs the
financial burden of carrying such insurance), including, without limitation,
coverage for any additional costs resulting from debris removal and coverage for
the enforcement of any ordinance or law regulating the reconstruction or
replacement of any undamaged sections of the Premises required to be demolished
or removed by reason of the enforcement of any Applicable Law as the result of a
covered cause of loss. Such policy or policies shall also contain an
agreed valuation provision (in lieu of any coinsurance clause), and waiver of
subrogation. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed Five Thousand Dollars and No Cents ($5,000.00) per
occurrence, and Tenant shall be liable for such deductible amount in the event
of an insured loss.
(b) Rental Value. Tenant shall, in addition, obtain and keep in force
------------
during the Term (or if only available to Landlord, reimburse Landlord) for the
costs of a policy or policies in the name of Landlord, with loss payable to
Landlord, insuring the loss of the Monthly Rent for one (1) year. Such
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for coverage shall be extended beyond
the date of the completion of repairs or replacement of the Premises, to provide
for one (1) full year's loss of rental revenues from the date of any such loss.
Such insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Monthly Rent otherwise payable by Tenant, for the next one
(1) year. Tenant shall be liable for any deductible amount in the event of such
loss. Tenant shall also obtain business interruption insurance, in form and
substance reasonably acceptable to Landlord.
7.03 Tenant's Property Insurance.
---------------------------
Tenant, at its sole cost, shall either by separate policy or, at
Landlord's option, by endorsement to a policy already carried, maintain
insurance coverage on all of Tenant's personal property in, on, under, or about
the Premises similar in coverage to that carried under Paragraph 7.2 hereof.
Such insurance shall be full replacement cost coverage with a deductible of not
to exceed Five Thousand Dollars and No Cents ($5,000.00) per occurrence. The
proceeds from any such insurance shall be used by Tenant for the replacement of
personal property.
7.04 Landlord's Insurance. Landlord, at its expense, may obtain and
--------------------
keep in force during the Term of this Lease a blanket policy of public liability
insurance covering the Premises.
7.05 Insurance Policies. Insurance required hereunder shall be kept
------------------
in companies duly licensed to transact business in the State of California and
maintaining during the policy term a "General Policyholders Rating" of at least
A, VIII or other rating as may be required by Landlord, as set forth in the most
current issue of "Best's Insurance Guide." Tenant shall not do or permit to be
done anything which shall invalidate the insurance policies referred to in this
Article. With respect to insurance required of Tenant hereunder, Tenant shall
cause to be delivered to Landlord certified copies of policies of insurance or
certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancelable or subject to modification except after thirty (30) days
prior written notice to Landlord. Tenant shall, at least thirty (30) days prior
to the expiration of such policies, furnish Landlord with evidence of renewals
or "insurance binders" evidencing renewal thereof, or else Landlord may order
such insurance and charge the cost thereof to Tenant, which amount shall be
payable by Tenant to Landlord upon demand. If Tenant shall fail to procure and
maintain the insurance required to be carried by Tenant under this Article,
Landlord may, but shall not be required to, procure and maintain such insurance,
but at Tenant's expense.
The insurance provided for herein may be brought within the coverage
of a so-called "blanket" policy or policies of insurance carried and maintained
by Tenant if (i) Landlord and, if requested by Landlord, any mortgagee of
Landlord shall be named as additional insureds or loss payees thereunder as
required in this Article 7, (ii) the coverage afforded Landlord and Tenant shall
not be reduced or diminished by reason of the use of such "blanket" policy or
policies and (iii) all of the other requirements set forth in this Article VII
are satisfied.
7.06 Waiver of Subrogation
---------------------
To the extent permitted by law and without affecting the coverage
provided by insurance required to be maintained hereunder, Landlord and Tenant
each waives any right to recover against the other (a) damages for injury to or
death of persons, (b) damages to property, (c) damage to the Premises or any
part thereof, and (d) claims arising by reason of any of the foregoing, but only
to the extent that any of
the foregoing damages and/or claims are covered (then only to the extent of such
coverage) by insurance actually carried, or required by this Lease to be
carried, by either Landlord or Tenant. This provision is intended to waive
fully, and for the benefit of each party, any rights and/or claims which might
give rise to a right of subrogation in any insurer. Each party shall cause each
insurance policy obtained by it to permit such waiver of subrogation or to
provide that the insurer waives all right of recovery by way of subrogation
against either party in connection with any damage covered by such policy. If
any insurance policy cannot be obtained permitting or providing for a waiver of
subrogation, or is obtainable only by the payment of an additional premium
charge above that charged by insurers issuing policies not permitting or
providing for a waiver of subrogation, the party undertaking to obtain such
insurance shall notify the other party in writing of this fact. The other party
shall have a period of fifteen (15) days after receiving the notice either to
place the insurance with an insurer that is reasonably satisfactory to the other
party and that will carry the insurance permitting or providing for a waiver of
subrogation, or to agree to pay the additional premium if such a policy is
obtainable at additional cost. If such insurance cannot be obtained or the party
in whose favor a waiver of subrogation is desired refuses to pay the additional
premium charged, the other party shall be relieved of the obligation to obtain a
waiver of subrogation rights with respect to the particular insurance involved
during the policy period of such insurance, but such obligation shall revive
(subject to the provisions of this Section 22) upon the expiration of such
policy period.
7.07 Exoneration and Indemnity
-------------------------
(a) Tenant shall indemnify Landlord and its Affiliates, and each of
their respective agents, contractors, officers, shareholders and employees and
hold each of them harmless from and against any and all losses, liabilities,
judgments, settlements, causes of action, suits, costs and expenses (including
reasonable attorneys' fees and other costs of investigation and defense) which
they may suffer or incur by reason of any claim asserted by any person arising
out of, or related to (or allegedly arising out of or related to): (i) any
failure by Tenant to perform any material obligation to be performed by Tenant
under the terms of this Lease; or (ii) any wrongful act, wrongful omission,
negligence or wilful misconduct of Tenant or any of its agents, employees,
representatives, officers, directors or independent contractors. If any action
or proceeding is brought against Landlord or any of its Affiliates (or any of
their respective agents, contractors, officers, shareholders or employees) by
reason of any such claim, Tenant, upon Landlord's request, shall defend the same
by counsel reasonably satisfactory to Landlord, at Tenant's expense.
(b) Landlord shall indemnify Tenant and its affiliates, and each of
their respective agents, contractors, officers, shareholders and employees and
hold each of them harmless from and against any and all losses, liabilities,
judgments, settlements, causes of action, suits, costs and expenses (including
reasonable attorneys' fees and other cost of investigation and defense) which
they may suffer or incur by reason of any claim asserted by any person arising
out of, or related to (or allegedly or arising out of or related to): (i) any
failure by Landlord to perform any material obligation to be performed by
Landlord under the terms of this Lease; or (ii) any wrongful act, wrongful
omission, negligence or misconduct of Landlord or any Affiliate of Landlord or
any of its or their agents, employees, representatives, officers, directors or
independent contractors. If any action or proceeding is brought against Tenant
or any of its affiliates (or any of their respective agents, contractors,
officers, shareholders or employees) by reason of any such claim,
Landlord upon Tenant's request, shall defend the same by counsel satisfactory to
Tenant at Landlord's expense.
Article 8.
ASSIGNMENT, SUBLETTING, HYPOTHECATION
-------------------------------------
8.01 Consent Required
----------------
Except as hereinafter provided in this Article 8, Tenant shall not
voluntarily, involuntarily or by operation of law assign, transfer, mortgage,
pledge, hypothecate or otherwise encumber or transfer (collectively, a
"Transfer") all or any part of Tenant's interest in this Lease or in the
Premises or sublet the whole or any part of the Premises, or permit any other
person, firm or corporation (a "Subtenant") to occupy by license, concession or
otherwise any portion of the Premises (collectively, a "Subletting"), without
first obtaining in each and every instance the prior written consent of
Landlord.
Any Transfer or further subletting by a Subtenant shall be considered
a Subletting or Transfer hereunder and shall require the prior written consent
of Landlord. Consent to any type of Transfer may be withheld in Landlord's sole
discretion.
Any purported Transfer or Subletting without Landlord's prior written
consent shall be null and void and have no force or effect whatever and shall
constitute an incurable breach of this Lease.
8.02 Indirect Transfers
------------------
If, at any time during the Term, Tenant is a partnership, the death,
insolvency, withdrawal, substitution, addition or change in the identity of any
general partner of Tenant (including, without limitation, any transfer of any
stock of any corporation which is a partner of Tenant) following the date such
partnership becomes the Tenant hereunder shall be deemed a Transfer within the
meaning of this Lease. If, at any time during the Term, Tenant is a
corporation, the transfer of the stock of Tenant to any person who is not as of
the date hereof a shareholder of Tenant shall be considered a Transfer for
purposes of this Lease whether such change occurs by reason of transfer,
redemption, issuance of additional stock, operation of law, or any other cause
whatever, except that Mikael Aloyan shall be permitted to own stock in Tenant
equivalent to a nine percent (9%) ownership interest and each of Tom Atoyan and
Art Atoyan shall be permitted to own stock in Tenant equal to a two and one-half
percent (2 1/2%) ownership interest. Notwithstanding any of the foregoing,
Tenant may not transfer any stock if the proposed transferee (including, without
limitation, the permitted transferees referred to above) is not compatible with
the licensing, permitting, regulatory and other governmental restrictions
applicable to Tenant, Landlord or Landlord's Affiliates.
8.03 Obligations of Transferees and Subtenants
-----------------------------------------
(a) Each person or entity obtaining ownership of Tenant's interest in
this Lease, or any portion thereof, by reason of a Transfer (a "Transferee"),
shall unqualifiedly agree in writing, for the benefit of Landlord, to perform
all of the obligations of Tenant under this Lease. Such agreement
shall be in form and substance satisfactory to Landlord and
shall be delivered to Landlord no later than the date of such Transfer.
(b) In connection with any Subletting, Tenant shall use only such form
of agreement with a Subtenant concerning such Subletting (a "Sublease") as shall
have been approved, as to form and substance, by Landlord, acting reasonably and
after approval, such Sublease shall not be amended or modified in any material
respect without the prior written consent of Landlord. Each Subtenant shall, by
reason of having entered into such Sublease, be deemed to have agreed, for the
benefit of Landlord (i) to the provisions specified in Section 33 hereof, and
(ii) to comply with each and every obligation to be performed by Tenant
hereunder (specifically including Section 12 hereof and this Article 8),
except (i) Tenant's obligation to pay Rent to Landlord; and (ii) the minimum
policy limits of any insurance to be carried by a Subtenant. Concurrently with
any Subletting, Tenant shall provide Landlord with written notice of the name
and address of any Subtenant for the purpose of giving notices to such
Subtenant.
8.04 Continued Liability; No Waiver
------------------------------
Any consent to any Transfer or Subletting which may be given by
Landlord shall not constitute a waiver by Landlord of the provisions of this
Article, or a consent to any other or further Transfer or Subletting, or, in the
event of a Subletting, a release of Tenant from primary liability for the full
performance by it of the provisions of this Lease. Notwithstanding any
Subletting, Tenant shall continue to be liable for the full performance of each
and every obligation under this Lease to be performed by Tenant, regardless of
whether Tenant is in possession of the Premises or has any power or legal
ability to perform such obligations. Notwithstanding any Transfer (or multiple
Transfers) the person named herein as Tenant (and any Transferee) shall continue
to be primarily liable in any and all events for the full performance of each
and every obligation under this Lease to be performed by Tenant, and the
obligations under this Lease of the person named herein as Tenant and any and
all Transferees shall be joint and several.
8.05 Right of First Opportunity to Purchase. Provided an Event of
--------------------------------------
Default of Tenant has not occurred, Tenant shall be afforded, during the Term of
this Lease, the right of first
opportunity to acquire the Premises pursuant to the terms and in accordance with
Section 10.2 of the Amended and Restated Agreement.
8.06 Transfer of Landlord's Interest. The term "Landlord" as used
-------------------------------
herein shall mean and include only the owner or owners, at the time in question,
of the fee title to the Premises. In the event of any transfer, assignment or
other conveyance or transfers of any such title to any party other than an
Affiliate, Landlord herein named (and in case of any subsequent transfers or
conveyances, the then grantor) shall be automatically freed and relieved from
and after the date of such transfer, assignment or conveyance of all liability
as respects the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed and, without further
agreement, the transferee of such title or interest shall be deemed to have
assumed and agreed to observe and perform any and all obligations of Landlord
hereunder, during its ownership of the Premises. Landlord may transfer its
interest in the Premises and/or this Lease without Tenant's consent and such
transfer or subsequent transfer shall not be deemed a violation by Landlord of
any of the terms and conditions hereof. Concurrently with a transfer by Landlord
of its interest in this Lease, Landlord shall also assign all of its right,
title and interest in and to the AIP and the Agreement Respecting Pyramid
Casino.
Article 9.
EMINENT DOMAIN
--------------
9.01 Effect on Lease
---------------
If the Premises or any portion thereof are taken or damaged, including
severance damage, under the power of eminent domain or by inverse condemnation
or for any public or quasi-public use, or voluntarily conveyed or transferred in
lieu of an exercise of eminent domain or while condemnation proceedings are
pending (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If so much of the Premises is
taken by condemnation that the remainder is unsuitable for Tenant's continued
occupancy for the uses and purposes for which the Premises are leased, Tenant
shall have
the option, exercisable only by written notice to Landlord within thirty (30)
days after Landlord shall have given Tenant written notice of such taking (or in
the absence of such notice, within thirty (30) days after the condemning
authority shall have taken title or possession, whichever first occurs), to
terminate this Lease as of the later of the date the condemning authority takes
such title or possession (whichever first occurs) or the date Tenant vacates the
Premises; provided, however, that if Landlord disagrees with Tenant's
determination that the portion of the Premises remaining after condemnation is
unsuitable for Tenant's occupancy, such controversy shall be settled by
arbitration in Los Angeles, California in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect. In the
event that less than all of the Premises shall be taken by condemnation and
Tenant does not elect to terminate this Lease in accordance with the foregoing,
this Lease shall remain in full force and effect as to the portion of the
Premises remaining, except that the Monthly Rent and applicable Additional Rent
shall be reduced in the same ratio that the floor area of the portion of the
Premises taken by such condemnation bears to the floor area of the Premises
immediately before such condemnation.
9.02 Award
-----
In the event of any Taking, whether whole or partial, Landlord and
Tenant shall be entitled to receive and retain such separate awards and portions
of lump sum awards as may be allocated to their respective interests in any
condemnation proceedings. In the event the condemning authority does not make
separate awards, Landlord and Tenant agree that any award shall be allocated
first to Landlord to take into account any unreturned portion of HPI's Total
Investment (determined in accordance with Exhibit "A" to the AIP, with the
months for which rent (including Additional Rent) was not fully paid deemed
"Remaining", less any amounts equal to any partial payments of Monthly Rent. Any
award remaining after Landlord's recovery of the foregoing amounts shall be
allocated two-thirds (2/3) to Landlord and one-third (1/3) to Tenant.
9.03 Rebuilding
----------
In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall, to the extent of the severance damages applicable
to the building of which the Premises are a part actually received by Landlord
and Tenant in connection with such condemnation, and subject to the provisions
of any Landlord's mortgage concerning the application of condemnation proceeds,
cause such restoration and repair to the remaining portion of the Premises to be
done as may be necessary to restore them to an architectural and usable whole
reasonably suitable for the conduct of the business of Tenant.
Article 10.
TENANT'S BREACH; LANDLORD'S REMEDIES
------------------------------------
10.01 Tenant's Breach
---------------
The occurrence of any one of the following events shall constitute an
"Event of Default" and a breach of this Lease by Tenant:
(a) The failure by Tenant to make any payment of Monthly Rent,
Additional Rent or other payment required to be made by Tenant hereunder, as and
when due, where such failure shall continue for a period of five (5) days after
written notice thereof from Landlord to Tenant.
(b) The failure by Tenant to observe or perform any of the material
covenants or obligations under this Lease to be observed or performed by Tenant,
other than as specified in subsections (a) and (d) of this Section 29, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant; provided, however, that if the nature of
such failure is such that more than thirty (30) days are reasonably required for
its cure, then Tenant shall not be in default if Tenant shall commence such cure
within said 30-day period and thereafter diligently prosecutes such cure to
completion.
(c) The abandonment of the Premises by Tenant.
(d) The failure by Tenant to remain fully licensed as a "card club
operator" in good standing at all times during the
Term of this Lease which failure shall continue for a period of five (5) days.
(e) The appointment by any court of a receiver, interim trustee or
trustee to take possession of any asset or assets of Tenant, said receivership
or trusteeship remaining undischarged for a period of sixty (60) days.
(f) A general assignment by Tenant for the benefit of creditors.
(g) The filing of a voluntary petition by Tenant in bankruptcy or any
other petition under any section or chapter of the Bankruptcy Code or any
similar law, whether state, federal or foreign, for the relief of debtors.
(h) The filing against Tenant of an involuntary petition or any other
petition under any section or chapter of the Bankruptcy Code or any similar law,
whether state, federal or foreign, for the relief of debtors by the creditors of
Tenant, said petition remaining undischarged for a period of sixty (60) days.
(i) The attachment, execution or judicial seizure of all or any part
of the properties and assets of Tenant, such attachment, execution or other
seizure remaining undismissed or undischarged for a period of fifteen (15) days
after the levy thereof.
(j) The admission in writing by Tenant of its inability to pay its
respective debts or perform its obligations as they become due.
(k) The calling of a meeting of the creditors representing a
significant portion of the unsecured liabilities of Tenant for the purpose of
effecting a moratorium, extension, composition or any of the foregoing.
(l) The occurrence of any of the events specified in subsections (e)
through (l), inclusive, with respect to any general partner of Tenant (if Tenant
is a partnership) or any guarantor of Tenant's obligations under this Lease.
(m) The occurrence of any event which expressly constitutes an
incurable breach of this Lease.
The notices specified in subsections (a) and (b) of this Section 29
shall be in lieu of, and not in addition to, any notices required under
California Code of Civil Procedure Section 1161 or any successor statute.
10.02 Landlord's Remedies
-------------------
In the event of an Event of Default under Section 29 then Landlord,
in addition to any other rights or remedies it may have at law, in equity or
otherwise, shall have the following rights:
(a) Landlord shall have the right to terminate this Lease and Tenant's
right to possession of the Premises by giving written notice of termination to
Tenant. No act by Landlord other than giving express written notice to Tenant
shall terminate this Lease or Tenant's right to possession of the Premises.
Should Landlord at any time terminate this Lease for any breach, in addition to
any other remedy it may have, it is hereby agreed by Landlord and Tenant that
the damages Landlord shall be entitled to recover under this Lease shall include
without limitation:
(i) The worth, at the time of award, of the unpaid Rent that has
been earned at the time of the termination of this Lease;
(ii) The worth, at the time of award, of the amount by which the
unpaid Rent that would have been earned after the date of termination of this
Lease until the time of award exceeds the amount of the loss of Rent that Tenant
proves could have been reasonably avoided;
(iii) The worth, at the time of award, of the amount by which
the unpaid Rent for the balance of the stated term hereof (determined without
regard to the termination of this Lease for Tenant's breach) after the time of
award exceeds the amount of the loss of Rent that Tenant proves could be
reasonably avoided; and
(iv) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's breach, including, but not limited to,
the costs and expenses (including attorneys' fees, court costs, advertising
costs and
brokers' commissions) of recovering possession of the Premises, removing persons
or property therefrom, placing the Premises in good order, condition and repair,
preparing and altering the Premises for reletting and all other costs and
expenses of reletting.
"The worth, at the time of award," as used in subparagraphs (i) and (ii)
above shall be computed by allowing interest at the Agreed Rate. "The worth at
the time of award," as referred to in subparagraph (iii) above shall be computed
by discounting the amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%). The terms "Rent" and
"Rents" as used in this Section 31 shall include the Monthly Rent, and all
Additional Rent and all other fees and charges required to be paid by Tenant
pursuant to the provisions of this Lease.
(b) Even though Tenant has breached or defaulted under this Lease and
abandoned the Premises, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant's right to possession, and Landlord may
enforce all of its rights and remedies under this Lease, including but not
limited to the right to recover all Rents as they become due hereunder.
Tenant's right to possession of the Premises shall not be deemed to have been
terminated by Landlord unless express written notice to such effect is given by
Landlord to Tenant, and Tenant's right to possession of the Premises shall in no
event be deemed terminated without such notice on account of acts of maintenance
or preservation of or efforts to relet the Premises by Landlord or by reason of
the appointment of a receiver upon the initiative of Landlord.
10.03 Right to Cure Tenant's Default
------------------------------
If, after the expiration of any cure or notice period, Tenant has failed to
do any act required to be done by Tenant hereunder, Landlord may (but without
being obligated to do so) cure such failure at Tenant's cost. If Landlord at
any time, by reason of Tenant's failure to comply with the provisions of this
Lease, pays any sum or does any act that requires the payment of any sum, the
sum paid by Landlord shall be due immediately from Tenant to Landlord at the
time the sum is paid and, if paid at a later date, shall bear interest at the
Agreed Rate from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant. Such sum, together with interest thereon,
shall be Additional Rent hereunder.
10.04 Landlord's Remedies Not Exclusive
---------------------------------
The several rights and remedies herein granted to Landlord shall be
cumulative and in addition to any others to which Landlord is or may be entitled
by law or in equity, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of any other
rights or remedies which Landlord may have and shall not be deemed a waiver of
any of Landlord's rights or remedies or to be a release of Tenant from any of
Tenant's obligations, unless such waiver or release is expressed in writing and
signed by Landlord.
10.05 Right to Rents, Issues and Profits
----------------------------------
In the event this Lease is terminated pursuant to the provisions of this
Article 10, all of the right, title, estate and interest of Tenant in and to (a)
the Premises; (b) all rents, issues and profits of the Premises whether then
accrued or to accrue; (c) all insurance policies and all insurance monies paid
or payable to Tenant with respect to the Premises, any property thereon and any
business conducted thereon; and (d), at the election of Landlord, all Subleases
then in existence for any part or parts of the Premises, shall, without
compensation being paid therefor, pass unto and vest in and become the property
of Landlord, free of any trust or claim thereto by Tenant. Tenant hereby
assigns to Landlord all subrents and other sums falling due from Subtenants
during any period in which Landlord has the right under this Lease, whether
exercised or not, to reenter the Premises upon Tenant's breach of this Lease,
and Tenant shall not have any right, interest or claim in or to such sums during
any such period. By its acceptance of an interest subject to this Lease, each
Subtenant shall be deemed to have agreed, and Tenant shall require each
Subtenant to expressly agree in writing (i) upon receipt of written notice from
Landlord that Tenant has breached this Lease, to make all payments of subrents
directly to Landlord, which payments shall be received by Landlord without any
liability or obligation to such Subtenant or otherwise (except to credit such
payments against the rents and other sums due under this Lease from Tenant), and
(ii) at the election of Landlord in its sole
discretion, to attorn to Landlord in the event this Lease is terminated as the
result of Tenant's breach.
Each Sublease shall terminate upon the termination of this Lease for
Tenant's breach unless Landlord shall expressly elect by written notice to the
Subtenant thereunder to continue such Sublease in effect following a termination
of the Lease. Neither Landlord's consent to such Sublease, nor Landlord's
receipt of subrents from the Subtenant thereunder, nor any other act or omission
by Landlord other than Landlord's express written election to keep such Sublease
in effect following termination of this Lease, shall be construed as a consent
to the continued use or occupancy of the Premises by the Subtenant thereunder
following the termination of this Lease for Tenant's breach.
10.06 Receipt of Rents
----------------
Landlord's acceptance of full or partial payment of Rent following any
Event of Default shall not constitute a waiver of such Event of Default.
Article 11.
LANDLORD'S DEFAULT; TENANT'S REMEDIES
-------------------------------------
11.01 Landlord's Default
------------------
The failure by Landlord to observe or perform any of the material covenants
or obligations under this Lease to be observed or performed by Landlord where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Tenant to Landlord shall constitute a default of this Lease
by Landlord; provided, however, that if the nature of such failure is such that
more than thirty (30) days are reasonably required for its cure, then Landlord
shall not be in default if Landlord shall commence such cure within said 30-day
period and thereafter diligently prosecutes such cure to completion.
11.02 Tenant's Remedies
-----------------
In the event of Landlord's default under Section 11.01 after the expiration
of any applicable cure period, in addition to any other rights or remedies it
may have at law, in equity or
otherwise, Tenant, acting reasonably, shall have the right but not the
obligation to cure Landlord's default, at Landlord's expense. If Tenant at any
time, by reason of Landlord's failure to comply with the provisions of this
Lease, pays any sum or does any act that requires the payment of any sum, the
sum paid by Tenant, at Tenant's option, shall be offset against future Rent or
shall be due immediately from Landlord to Tenant at the time the sum is paid
and, if paid at a later date, shall bear interest at the Agreed Rate from the
date the sum is paid by Tenant until Tenant is reimbursed by Landlord.
11.03 Tenant's Remedies Not Exclusive
-------------------------------
The several rights and remedies herein granted to Tenant shall be
cumulative and in addition to any others to which Tenant is or may be entitled
by law or in equity, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of any other
rights or remedies which Tenant may have and shall not be deemed a waiver of any
of Tenant's rights or remedies or to be a release of Landlord from any of
Landlord's obligations, unless such waiver or release is expressed in writing
and signed by Tenant.
11.04 Payment of Rents
----------------
Tenant's payment of full or partial payment of Rent following any default
of Landlord under this Lease shall not constitute a waiver of such default.
Article 12.
MORTGAGE OF LANDLORD'S INTEREST
-------------------------------
12.01 Subordination
-------------
The rights of Tenant hereunder shall be subject and subordinate to the lien
or interest of any Landlord's mortgage but only upon execution and delivery to
Tenant of a subordination, non-disturbance and attornment agreement executed by
Landlord's mortgagee in form and substance reasonably acceptable to Tenant.
12.02 Tenant's Obligations With Respect to Landlord's Mortgage
--------------------------------------------------------
Tenant shall at any time and from time to time, upon not less than twenty
(20) days' prior written request by Landlord, deliver to Landlord either or both
of the following:
(a) Such financial information concerning Tenant and Tenant's operations as
reasonably may be required by any mortgagee or prospective mortgagee under any
Landlord's mortgage; provided, however, that any such financial information
shall be required and used only for bona fide business reasons related to such
mortgage or the obtaining thereof; and
(b) An executed and acknowledged instrument amending this Lease in such
respect as may be reasonably required by any mortgagee or prospective mortgagee
under any Landlord's mortgage; provided, however, that any such amendment shall
not materially alter or impair any of the rights and remedies of Tenant under
this Lease.
12.03 Definition of Landlord's Mortgage and Landlord's Mortgagee
----------------------------------------------------------
As used in this Lease, the term "Landlord's mortgage" refers to each
mortgage or deed of trust which may in the future encumber, the Premises or any
part thereof, and each lease of which Landlord is the lessee which covers, or
may in the future cover, the Premises or any part thereof. As used in this
Lease, the terms "Landlord's mortgagee" and "mortgagee of Landlord" include the
mortgagee, or bondholder under each such mortgage, the beneficiary under each
such deed of trust and the lessor under each such lease.
Article 13.
OPERATING EXPENSES
------------------
13.01 Definitions.
-----------
(a) "Operating Expenses" shall include all expenses and costs of every kind
and nature (including without limitation, payments to independent contractors)
which Landlord shall pay or become obligated to pay because of or in connection
with the ownership and operation of the Premises and surrounding property and
supporting facilities, and additional facilities
(as such additional facilities may be determined by Landlord to be reasonably
necessary in subsequent years), including, without limitation: (i) all Tax
Costs; (ii) all Insurance Costs; (iii) any deductible portion of an insured loss
occurring to the Premises; (iv) expenses payable for the Premises under any
reciprocal easement agreement or other expense sharing arrangement with adjacent
property owner(s); and (v) all other expenses incurred by Landlord in connection
with the Premises.
(b) As used herein, the term "Insurance Costs" shall mean and refer to all
insurance premiums paid by Landlord with respect to insuring the Premises or any
portion thereof or the interest of Landlord or any mortgagee of Landlord
therein, including, without limitation, premiums for fire, extended coverage,
earthquake, business interruption, loss of rents and liability insurance, and
any other insurance which Landlord deems necessary or advisable.
(c) As used herein, the term "Tax Costs" shall mean and refer to all real
estate taxes, personal property taxes, privilege taxes, gross income taxes
assessed on the income of the Card Club, excise taxes, gross sales or use taxes,
water charges, sewer charges, assessments (including, but not limited to,
assessments for public improvements or benefits) and all other governmental
taxes, fees, impositions and charges of every kind and nature, whether or not
now customary or within the contemplation of the parties hereto, which shall be
or become due and payable under or by virtue of any law, statute, ordinance,
regulation or other requirement of any governmental authority, whether federal,
state, county, city, municipal or otherwise, (i) which shall be levied, assessed
or imposed upon Landlord or the owner of the Premises, or (ii) which shall be or
become liens upon or against the Premises or any portion thereof, or any
interest of Landlord or Tenant, or (iii) which shall be levied, assessed or
imposed or shall be or become liens upon or against any personal property used
in connection with the Premises or (iv) which shall be levied or imposed upon or
with respect to the ownership, possession, leasing, operation, management,
maintenance, improvement, alteration, repair, use or occupancy of the Premises
or any portion thereof. Landlord and Tenant recognize that there may be imposed
new forms of taxes, assessments, charges, levies or fees, or there may be an
increase in certain existing taxes, assessments, charges,
levies or fees placed on, or levied in connection with the ownership, leasing,
occupancy or operation of the Premises and its facilities. All such new or
increased taxes, assessments, charges, levies or fees which are imposed or
increased, including, but not limited to, any taxes, assessments, charges,
levies and fees assessed or imposed due to the existence of this Lease or for
the purpose of funding services or special assessment districts theretofore
funded by real property taxes, shall also be included within the meaning of "Tax
Costs" as used herein. "Tax Costs" shall also include any costs incurred in
negotiating or contesting any of the foregoing taxes, fees, impositions and
charges. "Tax Costs" shall not include estate, inheritance, gift or franchise
taxes of Landlord or the federal or state net income tax imposed on Landlord.
13.02 Survival. Any sum payable by Tenant under this Article 13 which
--------
would not otherwise be due until after the termination of this Lease, shall, if
the exact amount is uncertain when this Lease terminates, be paid by Tenant to
Landlord upon such termination in an amount to be estimated by
Landlord with an adjustment to be made once the exact amount in known.
Article 14.
TAXES AND OTHER CHARGES
-----------------------
14.01 Tenant's Taxes
--------------
Tenant agrees that it will pay and discharge, punctually as and when the
same shall become due and payable without penalty, all personal property taxes,
excise taxes and all other governmental taxes, fees, impositions and charges
payable by Tenant of every kind and nature, whether or not now customary or
within the contemplation of the parties hereto, which shall be or become due and
payable under or by virtue of any law, statute, ordinance, regulation or other
requirement of any governmental authority, whether federal, state, county,
municipal or otherwise (all of such taxes, charges, assessments and other
governmental impositions being hereinafter collectively referred to as "Tenant's
Tax" or "Tenant's Taxes") which shall be levied, assessed or imposed, or shall
be or become liens, upon or against any personal
property of Tenant or any interest of Tenant therein or under this Lease.
Notwithstanding the foregoing provisions of this Section 14.01,
nothing contained in this Lease shall require Tenant to pay any franchise,
estate, inheritance, succession, capital levy or transfer tax of Landlord or any
net income or excess profits tax which is in fact personal to Landlord.
Article 15.
UTILITY AND OTHER SERVICES
--------------------------
15.01 Utility Charges
---------------
Tenant shall make application and otherwise arrange, and pay or cause to be
paid all charges for water, sewer, gas, electricity, light, power, telephone and
any other utility services used in or on or supplied to or for the Premises, or
any part thereof.
15.02 Compliance With Governmental Regulations.
----------------------------------------
Landlord and Tenant shall comply with all rules, regulations and
requirements promulgated by national, state or local government agencies or
utility suppliers concerning the use of utility services, including any
rationing, limitation, or other control. Landlord may cooperate voluntarily in
any reasonable manner with the efforts of all governmental agencies or utility
suppliers in reducing consumption of energy or other resources. Tenant shall
not be entitled to terminate this Lease nor to any reduction or abatement of
Rent by reason of such compliance or cooperation. Tenant agrees at all times to
cooperate fully with Landlord and to abide by all rules, regulations and
requirements which Landlord may prescribe in order to maximize the efficiency of
the HVAC system and all other utility systems.
15.03 Security; Landlord Nonresponsibility; Indemnity
-----------------------------------------------
Tenant expressly agrees that Tenant shall have the sole responsibility for
providing surveillance and security relating to the Premises and the persons
therein and the activities conducted in and about Premises, including, without
limitation, surveillance necessary to maintain the integrity
of the casino activities, and Landlord shall have no responsibility with respect
thereto. Under no circumstances, and in no event, shall Landlord be liable to
Tenant, any Subtenant or any other person by reason of any theft, burglary,
robbery, assault, trespass, arson, unauthorized entry, vandalism, or any other
act of any person (other than a duly authorized agent of Landlord) occurring in
or about the Premises, and Tenant shall indemnify Landlord and its agents,
contractors and employees and hold each of them harmless from and against any
and all losses, liabilities, judgments, costs or expenses (including reasonable
attorneys' fees and other costs of investigation or defense) which they may
suffer or incur by reason of any claim asserted by any person arising out of, or
related to, any of the foregoing.
Article 16.
GENERAL PROVISIONS
------------------
16.01 Estoppel Certificates
---------------------
Either party shall, without charge, at any time and from time to time,
within ten (10) business days after request by the other party, deliver a
written certificate duly executed and acknowledged, certifying to the requesting
party, or any other person or entity specified by the requesting party:
(a) That this Lease is unmodified and in full force and effect, or if there
has been any modification, that the same is in full force and effect as so
modified, and identifying any such modification;
(b) Whether or not to the knowledge of the certifying party there are then
existing any offsets or defenses in favor of such party against the enforcement
of any of the terms, covenants and conditions of this Lease and, if so,
specifying the same, and also whether or not to the knowledge of the certifying
party, the requesting party has observed and performed all of the terms,
covenants and conditions on its part to be observed and performed, and, if not,
specifying the same;
(c) The dates to which Monthly Rent, Additional Rent and all other charges
hereunder have been paid; and
(d) Any other matter which reasonably relates to the tenancy created hereby
and the contractual relationship between Landlord and Tenant.
The failure of the certifying party to deliver such certificate within five
(5) business days after a second written request shall constitute a default
hereunder and shall be conclusive upon Landlord, Tenant and any other person,
firm or corporation for whose benefit the certificate was requested, that this
Lease is in full force and effect without modification except as may be
represented by the requesting party, and that there are no uncured defaults on
the part of the requesting party. If the certifying party does not deliver such
certificate to the requesting party or such person designated by the requesting
party within such 10-day period, the certifying party shall be liable to the
requesting party for all damages, losses, costs and expenses proximately
resulting from the certifying party's failure to timely deliver such
certificate. If the certifying party makes any false statement or claim in any
such certificate, the certifying party shall be liable to the requesting party
for all damages, losses, costs and expenses proximately resulting therefrom.
16.02 Landlord's Right of Entry
-------------------------
Provided that Landlord does not unreasonably interfere with the operation
of Tenant's business on the Premises, Landlord and its agents shall have the
right:
(a) To display the Premises to prospective tenants. If Tenant vacates the
Premises prior to the expiration of the Term, Landlord, at its sole cost and
expense, may from and after Tenant's vacation decorate, remodel, repair, alter,
improve or otherwise prepare the Premises for reoccupancy.
(b) To enter the Premises at any reasonable time for inspections, to
exhibit the Premises to others, such as prospective purchasers and insurance,
building and lender's inspectors, to perform its obligations under this Lease
and for any purpose whatsoever reasonably related to the safety, protection or
preservation of the Premises or Landlord's interest therein, without being
deemed guilty of an eviction or disturbance of Tenant's use and possession,
provided that
Landlord shall not unreasonably interfere with Tenant's business operation.
Tenant shall deliver to Landlord all keys necessary to unlock all of the
doors in, on or about the Premises, except Tenant's vaults and safes, and
Landlord shall have the right to use any and all means which Landlord may deem
proper in order to obtain entry in an emergency.
16.03 Waiver
------
No waiver of any breach of any covenant or condition herein contained shall
be effective unless such waiver is in writing, signed by the aggrieved party and
delivered to the breaching party. The waiver by the aggrieved party of any such
breach or breaches, or the failure by the aggrieved party to exercise any right
or remedy in respect of any such breach or breaches, shall not constitute a
waiver or relinquishment for the future of any such covenant or condition or of
any subsequent breach of any such covenant or condition nor bar any right or
remedy of the aggrieved party in respect of any such subsequent breach. The
receipt of any Rent after the expiration of any cure period provided for in this
Lease (regardless of any endorsement on any check or any statement in any letter
accompanying any payment of Rent) by Landlord shall not operate as an accord and
satisfaction or a waiver of the right of Landlord to enforce the payment of
Rents previously due or as a bar to the termination of this Lease or the
enforcement of any other remedy for default in the payment of such Rents
previously due, or for any other breach of this Lease by Tenant.
16.04 Surrender of Premises; Holding Over
-----------------------------------
Subject to Landlord's obligations to maintain and repair the Premises,
Tenant agrees on the last day of the Term or on the earlier termination of this
Lease to surrender the Premises, in good order, condition and repair, reasonable
wear and tear excepted.
If Tenant fails to surrender the Premises upon the termination of this
Lease, Tenant agrees to and shall indemnify and hold harmless Landlord from and
against any loss or liability, including costs and attorneys' fees, resulting
from such failure to surrender the Premises, including but not
limited to, any claims made by, or loss of rent from, any succeeding tenant
based on or resulting from such failure to surrender. Nothing contained herein
shall be construed as a consent to Tenant's occupancy or possession of the
Premises beyond the expiration or earlier termination of this Lease.
16.05 Notices
-------
Wherever in this Lease one party to this Lease is required or permitted to
give or serve a notice, statement, request or demand to or on the other, such
notice, statement, request or demand shall be given or served upon the party to
whom directed in writing and shall be delivered personally or forwarded by
registered or certified mail, postage prepaid, return receipt requested,
addressed to Landlord or Tenant, as the case may be, at the address of that
party set forth below with copies to be sent concurrently as follows:
If to Tenant: Compton Entertainment, Inc.
P. O.Box 90038
City of Industry, CA 91715-0038
Attention: Rouben Kandilian
With a copy to: Jerry Neuman, Esq.
Mitchell, Silberberg & Knupp
11377 West Olympic Blvd.
Los Angeles, CA 90064
Fax: (310) 312-3100
If to Landlord: Hollywood Park, Inc.
1050 So. Prairie Ave.
Inglewood, California 90301
Attn: G. Michael Finnigan
With a copy to: Sandra G. Kanengiser, Esq.
Irell & Manella
1800 Avenue of the Stars
Suite 900
Los Angeles, California 90067
Either party may change its address for notice by written notice given to
the other in the manner hereinabove provided. Any such notice, statement,
request or demand shall be deemed to have been duly given or served on the date
personally
delivered or two (2) business days after the date deposited in the United States
mail in accordance with this Section 18.05.
16.06 Partial Invalidity; Construction
--------------------------------
If any term or provision of this Lease or the application thereof to any
person or circumstance shall to any extent be held to be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law. This Lease shall be governed by and construed under the laws
of the State of California. When required by the context of this Lease, the
singular shall include the plural, and the neuter shall include the masculine
and feminine.
16.07 Captions
--------
The captions and headings in this Lease are inserted only as a matter of
convenience and for reference, and they in no way define, limit or describe the
scope of this Lease or the intent of any provision hereof.
16.08 Short Form Lease
----------------
At the request of Landlord, Tenant agrees to join in the execution and
delivery of a short form memorandum of this Lease to be recorded in the Official
Records of Los Angeles County, California. The terms, covenants and conditions
of this Lease shall control over any such memorandum. In no event shall Tenant
have this Lease recorded without the prior written consent of Landlord, which
consent may be withheld in Landlord's sole and absolute discretion.
16.09 Brokers' Commissions
--------------------
Each party represents and warrants to the other party that it has had no
dealings with any broker, finder or agent in connection with the subject matter
of this Lease or any of the transactions contemplated hereby. Each party agrees
to defend, indemnify and hold harmless the other party from any claim, suit,
liability, cost or expense (including attorneys' fees) with respect to brokerage
or finder's fees or
commissions or other similar compensation alleged to be owing on account of such
party's dealings (or alleged dealings) with any real estate broker, agent,
finder or other person.
16.10 Attorneys' Fees
---------------
(a) In the event of any litigation between Landlord and Tenant alleging a
breach of this Lease by either party, or seeking a declaration of the rights of
the parties hereunder, the losing party shall pay to the prevailing party its
costs of litigation including reasonable attorneys' fees.
(b) Each party shall reimburse the other party, upon demand, for all costs
and expenses (including attorneys' fees) incurred by such party in connection
with any bankruptcy proceeding, or other proceeding under Title 11 of the United
States Code (or any successor or similar law) involving the other party.
16.11 Counterparts
------------
This Lease may be executed in two or more counterparts, each of which may
be deemed an original, but all of which together shall constitute one and the
same instrument.
16.12 Sole Agreement
--------------
This Lease, together with the Agreement Respecting Pyramid Casino and the
AIP, contains all of the agreements of the parties hereto with respect to the
matters covered hereby, and no prior agreements, oral or written, or
understandings or representations of any nature whatsoever pertaining to any
such matters shall be effective for any purpose unless specifically incorporated
in the provisions of this Lease or said agreements.
16.13 Successors and Assigns
----------------------
Subject to the provisions hereof relative to assignment, this Lease shall
be binding upon and inure to the benefit of the successors and assigns of the
respective parties hereto, and the terms "Landlord" and "Tenant" shall include
the respective successors and assigns of such parties.
16.14 Time is of the Essence
----------------------
Time is of the essence with respect to the performance or observance of
each of the obligations, covenants and agreements of each of Landlord and Tenant
under this Lease.
16.15 Survival of Covenants
---------------------
Except with respect to those conditions, covenants and agreements of this
Lease which by their express terms are applicable only to, or which by their
nature could only be applicable after, a certain date or time during the term
hereof, all of the conditions, covenants and agreements of this Lease shall be
deemed to be effective as of the date of this Lease. Any obligation arising
during the Term of this Lease under any provision hereof, which by its nature
would require Landlord and/or Tenant to take certain action after the expiration
of the Term or other termination of this Lease, including any termination
resulting from the breach of this Lease by Landlord or Tenant, shall be deemed
to survive the expiration of the Term or other termination of this Lease to the
extent of requiring any action to be performed after the expiration of the Term
or other termination hereof which is necessary to fully perform the obligation
that arose prior to such expiration or termination.
16.16 Landlord's Consent or Approval
------------------------------
Where any provision of this Lease requires the consent or approval of
Landlord to any action to be taken or of any instrument or document submitted or
furnished by Tenant or otherwise, such consent or approval shall not be
unreasonably withheld or delayed by Landlord unless such provision entitles
Landlord to the discretionary withholding of any such consent or approval
required thereby. The consent or approval of Landlord to or of any such act,
instrument or document shall not be deemed a waiver of, or render unnecessary,
Landlord's consent or approval to or of any subsequent similar or dissimilar
acts to be taken or instruments or documents to be submitted or furnished by
Tenant hereunder.
16.17 Joint and Several Obligations
-----------------------------
If more than one person or entity is Tenant or Landlord, the obligations
imposed on that party shall be joint and several. If either Landlord or Tenant
is a partnership, the
obligations of each general partner shall be joint and several.
16.18 No Offer
--------
The submission of this document for examination and discussion does not
constitute an offer to lease, or a reservation of, or option for, the Premises.
This document will become effective and binding only upon execution and delivery
by Landlord and Tenant.
16.19 Corporate Resolution
--------------------
If Tenant is a corporation, Tenant shall deliver to Landlord, upon
execution of this Lease, a certified copy of a resolution of its board of
directors authorizing the execution of this Lease and naming the officer or
officers who are authorized to execute this Lease on behalf of the corporation.
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of
the day and year first above written.
LANDLORD: HOLLYWOOD PARK, INC.,
a Delaware corporation
By:____________________________
Title:_________________________
TENANT: COMPTON ENTERTAINMENT, INC.,
a California corporation
By:____________________________
Title:_________________________