EXHIBIT 10.6.3
AMENDMENT TO LEASE
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THIS AMENDMENT made this 1st day of January, 1978, by and between C. S. &
Y. ASSOCIATES, a general partnership, first party, hereinafter referred to as
"Lessor", and ELDORADO HOTEL ASSOCIATES, a limited partnership, second party,
herein sometimes referred to as "Lessee"
WITNESSETH:
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WHEREAS, Lessor executed a certain lease of real property in the City of
Reno, County of Washoe, State of Nevada, more particularly described in Exhibit
"A" attached hereto and made a part hereof to Lessee on July 21, 1972 and as
amended on March 20, 1973; and
WHEREAS, it has been recognized by both the Lessor and Lessee that it
is to the economic advantage of both parties to expand the present facilities,
known as the Eldorado Hotel and Casino situated on the real property described
in Exhibit "A". To accomplish the proposed expansion, Eldorado Hotel Associates
have acquired adjoining property known as the Shell Property more particularly
described in Exhibit "C" attached hereto and incorporated herein by reference
and made a part hereof. The proposed expanded facility would require
substantial improvements on both parcels of real estate, and the result would be
a much larger hotel and casino that would be economically dependent on both
parcels of real property to fully realize its highest value.
THEREFORE, the Lessor and Lessee agree to amend the above mentioned lease
so that both parcels of real property, Exhibits "A" and "C", may be used jointly
to facilitate improving and expanding the Eldorado Hotel and Casino.
WITNESSETH:
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1. Delete in total items 3. a), b), c) i) and II) page 1 and 2 RENTAL
DURING TERM OF LEASE and substitute the following:
MCDONALD, CARANO, WILSON, BERGIN & BIBLE
ATTORNEYS AT LAW
RENO, NEVADA 89505
RENTAL DURING TERM OF LEASE:
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a) The rental for the year ending December 31, 1978 shall be $11,648.00 per
month representing an annual rent of $139,776.00 or a sum equal to 3% of the
gross gaming receipts, whichever is greater, for said year. The gross gaming
receipts shall be as defined by the rules and regulations of the Nevada Gaming
Commission as of this date.
b) For the balance of the term of the lease the rental for said demised
premises shall be either the amount provided for in Subparagraph (i) or
Subparagraph (ii) of this paragraph, whichever is greater.
i) A basic monthly rental (hereinafter referred to in this agreement as
"basic rental") of the sum of $11,648.00 per month. The basic rental shall
be adjusted every five (5) years from and after June 30, 1982, during the
term of this lease to reflect changes in the Consumer Price Index of the
Bureau of Labor Statistics of the U. S. Department of Labor for the City of
San Francisco in the manner as set forth in Exhibit "B" attached hereto and
incorporated herein by reference. In no event shall the basic monthly
rental be reduced below Eight Thousand Dollars ($8,000.00).
ii) A sum equal to 3% of the gross gaming receipts on the first
$6,500,000.00 of such gross gaming receipts and 1% of the gross gaming
receipts in excess of $6,500,000.00. The gross gaming receipts shall be as
defined by the rules and regulations of the Nevada State Gaming Commission
as of this date.
c) The rental payment due in Paragraphs (a) and (b) shall be paid as follows:
i) The base rental in Subparagraph (i) above shall be payable monthly.
ii) The amount payable in Subparagraph (ii) above, if greater than the
amount payable in Subparagraph (i) for any calendar year, shall be payable
in full at the end of 90 days after the end of each calendar year or after
the Lessee's independent auditors have completed the annual examination of
the Lessee's financial statements, whichever is later.
d) The Lessee shall provide the Lessor a copy of all gaming tax reports filed
with the State of Nevada for the purposes of determining gross gaming receipts
and copies of the results of any audits of gaming receipts by representatives of
the State of Nevada. In addition, the independent auditors of the Lessee shall
provide the Lessor written confirmation after the completion of their
examination of the Lessee's financial statements for each year, that their
opinion on the financial statements was unqualified, or if their opinion was
qualified
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McDONALD, CARANO, WILSON, BERGEN & BIBLE
ATTORNEYS AT LAW
RENO, NEVADA 89505
in any respect related to gross gaming receipts, the independent
auditors shall provide the reasons for such qualification to the
Lessor. The Lessor may, at any time and at its own expense, obtain its
own independent audit of the gross gaming receipts provided that it
does not interfere with the conduct of normal business by the Lessee or
audits which are in progress by the State of Nevada or the Lessee's
independent auditors.
2. Delete in total item 7, pages 3, 4 and 5 IMPROVEMENTS AND REPAIRS, and
substitute the following:
IMPROVEMENTS AND REPAIRS:
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It is the intention of Lessee to construct income producing
improvements on the demised premises and adjoining properties owned by
the Lessee, and the nature, extent, and use of such improvements, if
made, shall be in the discretion of Lessee. It is agreed that Lessee
may construct on said premises income producing structure or
structures. All improvements, alterations, additions, deletions,
modifications and repairs to premises shall be the sole cost of Lessee
and Lessee agrees to pay for all labor and materials used, and said
improvements shall be the property of Lessee during the term of this
lease. All improvements on the premises shall, except as may otherwise
hereafter agree in writing by the parties, be the property of Lessee
during the term hereof, and on the termination of this lease shall
become a part of the realty and the property of the Lessor and Lessee
in accordance with the following formula:
i) All of the real property described in Exhibit "A" and "C"
approximates 42,000 square feet, without regard to the alley that
will be abandoned and the new alley that must be created, shall be
considered as one entity. Exhibit "A" consists of property measuring
140' x 200' or 28,000 square feet and Exhibit "C" consists of
property measuring 100' x 140' or 14,000 square feet. The fraction
of ownership of the real property when considered as a whole is
therefore 2/3 C. S. & Y. ASSOCIATES, Lessor, and 1/3 ELDORADO HOTEL
ASSOCIATES, Lessee.
It is, therefore, agreed that upon termination of this lease, C. S.
& Y. Associates, Lessor, shall have an undivided 2/3 interest and
Eldorado Hotel Associates, Lessee, shall have an undivided 1/3
interest in the total of all improvements then existing on the
property described in Exhibits "A" and "C" taken as whole and
considered as one entity without regard to the physical
characteristics of the improvements then existing on either piece of
property when considered separately.
Improvements to the premises shall not be removed therefrom, unless the
same shall be rebuilt or replaced with improvements of equal or greater value,
or unless the removal shall be for the
MCDONALD, CARANO, WILSON, BERGIN & BIBLE
ATTORNEYS AT LAW
RENO, NAVADA 89505
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economic betterment of the premises.
Lessee will comply at its sole expense with all requirements of public
authorities. The expenses of all repairs, alterations or improvements heretofore
or hereafter ordered by any public authority relative to the leased premises
shall be the responsibility of Lessee and paid for by it. This covenant shall
apply not only to incidental repairs, alterations or improvements required by
public authorities, but also to those of substantial or structural nature. It
shall also apply to safety requirements by public authorities.
In the event of substantial improvements, alterations, construction or
refinancing of existing debt on the subject premises, a binding contract for
the furnishing of such funds may be entered into by Lessee and secured by a
first mortgage or first deed of trust against the leased premises and this lease
shall be subordinate to said mortgage or deed of trust except as herein
provided. No such lien or encumbrance shall extend beyond the term of this
lease. Such subordination shall be effective automatically without any further
act of Lessor and Lessor hereby consents thereto. Lessor agrees to execute and
deliver any such first mortgage or first deed of trust or any other documents or
instruments that may be required by a lender to effectuate the subordination of
this lease.
Twenty years prior to the termination of this lease or beginning July 1,
2007, the above said automatic subordination clause shall terminate and
thereafter, any subordination of this lease will require the written approval of
the Lessor, which approval will not be unreasonably withheld. From and after
obtaining the written approval of the Lessor of the terms and conditions of any
promissory note and mortgage or deed of trust, the mortgage or deed of trust may
then be recorded as a first mortgage or first deed of trust as to the leased
premises and this lease shall then be subordinated to said first mortgage or
first deed of trust.
Prior to commencing any substantial improvements, alterations or
construction the subject premises, Lessee shall cause to be secured, relative to
the same, without cost to Lessor, a payment
MCDONALD, CARANO, WILSON, BERGIN & BIBLE
ATTORNEYS AT LAW
RENO, NEVADA 89505
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and performance bond by the general contractor, guaranteeing all payments
incident to the cost, including but not limited to costs and materials, will be
duly made, and that the performance of such project shall be completed and in
accordance with the construction contract.
The said bond, or bonds, shall provide, standard, adequate and
reasonable protection so that the work to be done shall be completed and that
there shall be no liens against the improvements of premises. Such bond shall be
secured from a major national surety or insurance company of good standing and
a copy thereof furnished to Lessor. The obligees of the bond shall include the
Lessee and the Lessor.
It is agreed that the form, and amount of, and the surety or insurance
company selected relative to the form, and amount of, such completion bond, or
bonds, shall first be submitted to and approved by Lessor, who shall, however,
not unreasonably withhold such approval.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment to
Lease to be executed and have affixed their signatures the day and year in this
instrument first written.
ELDORADO HOTEL ASSOCIATES C.S. & Y. ASSOCIATES
/s/ William Carano /s/ George L. Siri, Jr.
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William Carano George L. Siri, Jr.
/s/ Raymond J. Poncia, Jr. /s/ George Yori
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Raymond J. Poncia, Jr. George Yori
/s/ Ludwig Corrao /s/ William Carano
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Ludwig Corrao William Carano
/s/ Donald L. Carano /s/ Donald L. Carano
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Donald L. Carano Donald L. Carano
/s/ Lena M. Carano
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Lena M. Carano
/s/ Susan B. Siri
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Susan B. Siri
/s/ Genevieve Yori
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Genevieve Yori
MCDONALD, CARANO, WILSON, BERGIN & BIBLE
ATTORNEYS AT LAW
RENO, NEVADA 89505
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The real property is located in the City of Reno,
County of Washoe, State of Nevada and more particularly
described as follows:
Lots 5, 6, 7 and 8 in Block G of original
town now City of Reno, according to the
map thereof, filed in the Office of the
County Recorder of Washoe County, State of
Nevada, on June 27, 1871.
"EXHIBIT B"
ADJUSTMENT TO BASIC MONTHLY RENTAL
CONSUMER PRICE INDEX
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The basic monthly rental shall be increased or decreased effective the
month of July of every (5) years (the adjustment month) beginning with the month
of July, 1982 as follows:
The base for computing the adjustment is the index figure for the month
of June, 1977 (the index month) as shown in the Consumer Price Index
(CPI) for the City of San Francisco for all items based on the period
1967 equals 100 as published by the United States Department of Labor's
Bureau of Labor Statistics. The base figure for the index month is one
hundred eighty and seven tenths (180.7). The index for the adjustment
month shall be computed as a percentage of the base figure for the index
month. That percentage shall be applied to the base monthly rent of
Eleven Thousand Six Hundred Forty Eight Dollars (11,648.00) and the
resulting amount shall be the monthly rent for the period beginning
the adjustment month and continuing until the next adjustment month.
The index for the adjustment month shall be the one reported in the
United States Department of Labor's most comprehensive official index
then in use and most nearly answering the foregoing description of the
index to be used. If it is calculated from a base different that the
base period 1967 equals 100 used for the base figure above, then the
base figure used for calculating the adjustment percentage shall first
be converted under a formula supplied by the Bureau of Labor Statistics.
If the Consumer Price Index for the City of San Francisco average of all
items shall no longer be published, then another index generally
recognized as authoritative shall be substituted by the agreement of
Lessor and Lessee. If Lessor and Lessee are unable to agree within ten
(10) days after demand by either party, then the substitute index shall,
on application of either party, be selected by the Chief Office of the
San Francisco Regional Office of the Bureau of Labor Statistics or
his successor.
The increase or decrease in the basic monthly rent to be computed pursuant
to the provisions of this subparagraph shall be determined as soon after
the adjustment month as is practicable, and any increased or decreased rent
accrued for the period beginning with the adjustment month to the date the
computation is finally made shall be paid by Lessee to Lessor or refunded
by Lessor to Lessee, as the case may be, not later than ten (10) days after
the computation date.
COMPUTATION EXAMPLE
If the Consumer Price Index for the month of June, 1982 is 210.7, then the
monthly rent commencing July, 1982, until and including June 30, 1987, shall be
$13,582.00 computed as follows:
210.7/180.7 equals 116.6%
116.6% of $11,648. equals $1,3582.00
"EXHIBIT C"
The real property is situated in the City of Reno, County of Washoe, State
of Nevada, as follows:
Lots 3 and 4 in Block G of original town, now City of Reno, According
to the map thereof, filed in the office of the County Recorder of
Washoe County, State of Nevada, on June 27, 1871.
[STREET MAP FOR EVANS NORTH ADDITION APPEARS HERE]