EXHIBIT 10.1
LEASE
THIS LEASE is entered into by and among R. M. Leatherman, Jr., et al
(collectively "Owner" or "Lessor"), and Isle of Capri-Tunica, Inc.("IOC-Tunica"
or "Lessee").
W I T N E S S E T H:
WHEREAS, Owner is the Landlord and Tunica Partners L.P.(successor in
interest to Harrah's Tunica Corporation) is the Tenant of a lease between Owner
and Tunica Partners L.P. ("the Lease"); and
WHEREAS, IOC-Tunica and Tunica Partners, L.P., have entered into an
agreement whereby IOC-Tunica will purchase Tunica Partners L.P.'s interest in
the property, real and personal, covered by the Lease; and
WHEREFORE, Owner and IOC-Tunica("the Parties") agree that, upon the closing
of the sale by Tunica Partners, L.P. to IOC-Tunica, this Lease shall become
effective:
I. DEMISING OF PREMISES
Owner hereby leases the Premises, a description of which is attached hereto
as Exhibit A, to IOC-Tunica and IOC-Tunica hereby takes and hires the Premises
from Owner, all subject only to the Permitted Exceptions, which are attached as
Exhibit B. The Premises are Leased to IOC-Tunica for the Term defined in this
Lease, upon all the terms and conditions of this Lease; provided, however, that
Owner reserves unto themselves, their successors and assigns, all oil, gas, and
other hydrocarbon minerals in, on and under the Land (the "Minerals"). Owner
covenants that the surface of the Land will not be used or disturbed for any
purpose in connection with the development of the Minerals, to the end that
Lessee's use of the surface of the Land will not be affected, diminished,
disturbed or impeded in any manner by Owner or any person claiming by or through
Owner.
II. VESSEL MOORING SITE
A Casino Vessel is currently sited on the Premises. The Casino Vessel is
capable of functioning as a casino but currently is not. IOC-Tunica agrees to
refurbish the Casino Vessel in the manner it deems necessary for reopening the
casino in due course. Without limitation IOC-Tunica will refurbish the Casino
Vessel in the manner set forth in Exhibit C.
The Lessee shall use the Premises solely for the purpose of mooring and
operating the Casino Vessel and facilities directly related to its maintenance
and operation and providing convenient access thereto, including as possible
uses a hotel, shops, restaurants, bars, entertainment facilities and other
structures.
No part of the Premises can be used for pawn shops, adult entertainment,
"psychic shops" (e.g., fortune, palm, tarot reading) or for any purpose which
would otherwise require an "Adult Entertainment Premises License" under the
Tunica County ordinance governing adult entertainment as such ordinance existed
on or before June 1, 1997, and as recorded in Book 051, p. 427, of the Board of
Supervisors of Tunica County Minute Book, notwithstanding whether the ordinance
is constitutional or unconstitutional.
III. TERM
A. Initial Term and Additional Term
The first term of this Lease shall commence upon the closing of IOC-
Tunica's purchase from Tunica Partners L.P.(the "Commencement Date"). The
initial term of the Lease shall be for five years from the Commencement Date.
Lessee shall have the option to renew this Lease for up to seven successive
five-year terms, such that, assuming IOC-Tunica exercises all seven renewal
options, then the Lease shall extend for a period of forty (40) years from the
Commencement Date.
Unless the Lessee shall notify the Lessor in writing that the Lessee does
not desire to exercise its renewal option for a successive five-year term prior
to 180 days before the termination of the initial term or any successive
additional term, the Lease shall automatically be renewed for the next
successive term. Each additional term shall be upon the same terms, covenants,
and conditions, with the same annual rent payable, as provided in this Lease for
the initial term. Lessee's rights for the extension of this Lease shall expire
automatically upon the termination of this Lease for any reason, whether by
expiration of the initial term or any additional term, or otherwise.
IV. RENT, MANAGEMENT FEES, AND OTHER PAYMENTS
The following definitions apply to payment of rent, management fees and
other payments:
(i) "Gross Gaming Revenue" shall mean the total of all of the following,
less the total of all cash paid out as losses to patrons and those amounts
paid to purchase annuities to fund losses paid to patrons over several
years by independent financial institutions:
(a) Cash received as winnings;
(b) Cash received in payment for credit extended by a licensee to a
patron for purposes of gaming; and
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(c) Compensation received for conducting any game in which the
licensee is not party to a wager.
For the purposes of this definition, cash or the value of noncash
prizes awarded to patrons in a contest or tournament are not losses;
The term does not include:
(a) Counterfeit money or tokens;
(b) Coins of other countries which are received in gaming devices;
(c) Cash taken in fraudulent acts perpetrated against a licenses for
which the licensee is not reimbursed; or
(d) Cash received as entry fees for contests or tournaments in which
the patrons compete for prizes.
(ii) "Percentage Rent Year" means the one year period (or less, in the
event IOC-Tunica changes its fiscal year), beginning with the first
day of IOC-Tunica's fiscal year.
(iii) "Cash Invested" is defined as the cash invested in
IOC-Tunica less any portion funded by debt. For example, if the total
investment in the entity is $20,000,000 and there is no debt, then the
"Cash Invested" is $20,000,000; if there is $10,000,000 in debt, then
the "Cash Invested" is $10,000,000. Beginning with the opening of the
Casino Vessel, Cash Invested may be adjusted from time to time,
provided that if Cash Invested is less than $4,000,000, Casino
America, Inc.'s guarantee pursuant to Section XX R shall become
effective. For purposes of calculating interest and Cash Return,
pursuant to this Section 2, if Cash Invested is adjusted during the
year, interest and Cash Return shall be calculated on a prorated
basis.
(iv) "EBITDA" shall be defined as income of IOC-Tunica before interest,
income taxes, depreciation and amortization but shall not include
hotel lease expense, if any.
1. BASE RENT
A. BASE RENT
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During the initial term and each additional term, as rent for the Premises
and rights granted to the Lessee by this instrument, the Lessee promises and
agrees to pay to the Lessor without notice or demand rent as follows:
(i) On the Commencement Date, Lessee shall pay to Lessor Fixed Rent (Fixed
Rent is defined as $66,666.67 paid monthly, annualized to $800,000 per
year) prorated by the number of days from the Commencement Date to the
end of the month in which the Commencement Date falls.
(ii) Subsequent to the Commencement Date and subject to subparagraph (iv),
on or before the first day of each month, IOC-Tunica shall pay Fixed
Rent in advance to Lessor in the amount of $66,666.67 for the
remainder of the term of the Lease and any renewal terms thereof.
(iii) Percentage Rent is to be paid in arrears. Subsequent to the
Commencement Date and subject to subparagraph (iv), on or before the
20/th/ day of each month, Lessee shall pay Lessor percentage rent in
an amount equal to 2% of Gross Gaming Revenue for the previous
calendar month less the Fixed Rent already paid on the 1/st/ of the
month.
(iv) Once Lessee has paid Lessor $800,000 during a Percentage Rent Year,
then Lessee shall not be obligated to make any further Base Rent
payments for that Percentage Rent Year unless and until such time as
Lessee's total Gross Gaming Revenue for that Percentage Rent Year
exceeds $40,000,000.
On the 20/th/ day of the month following the first month during which
total Gross Gaming Revenue for the Percentage Rent Year exceeded
$40,000,000, Lessee shall pay Lessor Base Rent in an amount equal to
2% of the amount by which total Gross Gaming Revenue for the
Percentage Rent Year exceeded $40,000,000.
Thereafter, on the 20/th/ day of each month for the remainder of the
Percentage Rent Year (including the 20/th/ day of the month following
the last month of the Percentage Rent Year), Lessee shall pay to
Lessor rent equal to 2% of the Gross Gaming Revenue for the prior
calendar month.
(v) It is the intent of the parties that Base Rent paid to Lessor for any
given Percentage Rent Year equal the greater of (x) 2% of Gross Gaming
Revenue for the Percentage Rent Year or (y) $800,000. By way of
example, and for clarification, Base Rent for any Percentage Rent Year
will be as follows:
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GROSS GAMING REVENUE BASE RENT
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$30,000,000 $ 800,000
$37,000,000 $ 800,000
$42,000,000 $ 840,000
$50,000,000 $1,000,000
CHANGE IN IOC-TUNICA'S FISCAL YEAR
(vi) In the event IOC-Tunica changes its fiscal year during the term of this
lease, the minimum base rent for any such year shall be adjusted to
reflect the number of months in the adjusted fiscal year multiplied by
one-twelth (1/12th) the base rent set forth herein provided, however,
that the amount of monthly payments of Fixed Rent shall be unaffected by
such a change.
(vii) Percentage Rent, if any, to be paid for a partial percentage rent year
shall be paid consistent with the subparagraphs above.
(viii) By way of example, if IOC-Tunica's fiscal year in 1999 were to begin on
May 1, 1999, and there were a change of IOC-Tunica's fiscal year to a
calendar year (i.e., FY 1999 would end 12/31/99), then Isle of Capri-
Tunica would continue to pay monthly Fixed Rent in the amount of
$66,666.67. However, the minimum Base Rent for the partial fiscal year
would be $533,333 (i.e., 8 * $66,666.67.
Likewise, IOC-Tunica will also pay Lessor Percentage Rent as set forth
in (iii)above. However, once IOC-Tunica, Inc. pays $533,333.36 during
the partial percentage rent year (i.e., $800,000 * 8/12), then IOC-
Tunica shall not be obligated to make any further Base Rent payments for
that partial fiscal/Percentage Rent Year unless and until such time as
total Gross Gaming Revenue for that partial /fiscal Percentage Rent Year
exceeds $26,666,666 (i.e., $40,000,000 * 8/12).
2. Overage Rent and Overage Management Fee
For purposes of payment of Overage Rent and Overage Management Fees, the
following definition applies:
"Available Cash" shall mean EBITDA (after deducting the Base Rent and an
amount equal to 2% of Gross Gaming Revenue
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payable to Casino America, Inc. as a base management fee), less the following:
. A maintenance capital expenditure reserve of $1,000,000 per
year. If during the Percentage Rent Year Lessee does not spend
$1,000,000 for maintenance capital, then Lessee, at its
discretion, shall be entitled to accumulate such unspent amount
to be (i) spent on capital improvements in subsequent years or
(ii) distributed pursuant to distributions of Available Cash.
. Third party debt service insofar as such debt service relates
only to the Premises, the improvements located thereon, or the
Casino Vessel, or portions of Casino America, Inc. debt related
to the Premises, the improvements located thereon, or the Casino
Vessel. In no event shall the amount deducted for such third
party debt service exceed the amount of debt service related to
the total amount invested or lent by Casino America, Inc.
relating to the Premises, the Casino Vessel, or the improvements
located thereon.
. If a hotel is leased from another entity, then a hotel lease
expense, not to exceed $1.9 million per year, provided, however,
that such lease will be on such terms as available to non-
affiliated parties.
. In the event IOC-Tunica changes its fiscal year, the deductions
for maintenance capital expenditure reserve and hotel lease
expense shall be adjusted to reflect the number of months in the
adjusted fiscal year times one-twelfth (1/12).
Within 60 days of the end of a Percentage Rent Year, Available Cash, if
any, will be distributed sequentially as follows on an annual basis:
a. First Tier Distribution - An amount equal to 4% of Gross Gaming Revenue
less the amount paid to Lessor as Base Rent shall be payable to Lessor as
Overage Rent and an amount equal to 2% of Gross Gaming Revenue shall be payable
to Casino America, Inc. as an Overage Management Fee. In the event there is
not sufficient Available Cash to pay all of the Overage Rent/Overage Management
Fee due, then such payments, if any, shall be made on a pro-rata basis and any
unpaid amounts shall accumulate and become Back Overage Rent/Back Overage
Management Fees and shall remain as a First Tier Distribution.
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b. Second Tier Distribution - An amount equal to 25% of Cash Invested by
Casino America, Inc. or any other investor in IOC-Tunica ("Cash Return") shall
be paid to Casino America, Inc. or to any other investor. Cash Invested
specifically does not include the maintenance capital expenditure reserve or any
other cash generated by the operations conducted on the Premises or Casino
Vessel.
There shall be no Second Tier Distribution until all First Tier
Distributions (including Back Overage Rent/Back Overage Management Fee) have
been paid.
In the event there is not sufficient Available Cash to pay all of the Cash
Return, then such unpaid amounts shall accumulate and become Back Cash Return
and shall remain as a Second Tier Distribution.
c. Third Tier Distribution - If, after paying all First Tier Distributions
(including Back Overage Rent/Back Overage Management Fee) and Second Tier
Distributions, (including Back Cash Return) there remains Available Cash
("Remaining Available Cash"), then such Remaining Available Cash shall be
distributed 20% to Lessor (as "Additional Overage Rent") and 80% to Casino
America, Inc. and any other investor, provided, however, that in determining the
amount of Remaining Available Cash for purposes of a Third Tier Distribution
. IOC-Tunica may reserve any amount for capital expenditures at the
Tunica Facility (provided, however, that such reserved amounts shall
accumulate and be held by IOC-Tunica as cash, to be spent on capital
improvements or distributed as a Third Tier Distribution); and
. Hotel Lease expense, if any, regardless of amount, shall be deducted
from Remaining Available Cash.
Third Tier Distributions, if unpaid, do not accrue or accumulate
3. INFORMATION PROVIDED TO LESSOR
After the opening of the Tunica Facility, on or before the 20/th/ day of
each month, Lessee shall provide Lessor a written statement signed by an officer
of Lessee showing and certifying the Gross Gaming Revenue of Lessee as set forth
in subparagraph A above including verification of the Gross Gaming Revenue of
licensees or sub-tenants of Lessee conducting business on such vessels and the
Premises. Lessee gives its written and irrevocable consent for Lessor to obtain
copies of any and all reports of revenue or reports prepared by Lessee or
independent certified public accountants which are related to the business
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conducted on the Premises and which are filed with the State Tax Commission of
Mississippi or the Mississippi Gaming Commission directly from said commissions.
Any assignment or sub-Lease by Lessee will require the assignee or sub-lessee to
permit Lessor to obtain copies of any and all reports of revenue filed with the
State Tax Commission of Mississippi or the Mississippi Gaming Commission.
Within 120 days of the end of a Percentage Rent Year, Lessee shall provide
Lessor with financial statements of the Tunica Facility including all
information necessary to determine Available Cash and Remaining Available Cash.
The financial statements shall be unaudited but shall be those used in
connection with the audited financial statements of Casino America, Inc.
Lessor will keep all information received hereunder confidential unless
required to divulge such by a governmental body such as a court or regulatory
agency. In the event a court or other governmental body requires Lessor to
divulge such information, then Lessor will notify Lessee at least 5 days in
advance of divulging such information (unless such court or governmental body
requires that such information be divulged in less than 5 days, in which case
Lessor will notify Lessee as soon as possible).
V. DEFAULT
A. LESSEE DEFAULT: Each of the following events shall constitute a
Lessee Default:
1. The failure of Lessee to pay all monthly Rent or any other
monetary sum (including without limitation any additional rent) to be
paid by Lessee to Lessor hereunder within fifteen (15) days after the
date on which Lessee receives notice from Lessor of Lessee's failure
to make such payment. Should Lessor already have given such notice
three (3) times during any Percentage Rent Year during the term of the
Lease and Lessee during the same Percentage Rent Year fails to make
the payments contemplated by this subparagraph on a timely basis,
Lessor shall not be required to provide notice thereof, and Lessor at
its option may elect to terminate this Lease at any time thereafter as
provided herein.
2. The failure of Lessee to perform any other term, condition,
covenant or obligation of this Lease within thirty (30) days after the
date on which Lessee receives from Lessor notice
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specifically describing such failure; provided, however, that if
Lessee shall exercise in good faith diligent efforts within such
thirty (30) day period to cure the failure specified in the notice but
shall not be able to do so because of a cause or causes beyond the
control of Lessee, then any such failure shall not be considered a
Lessee Default so long as Lessee shall continue to exercise in good
faith such diligent efforts to cure such failure and shall complete
such cure within a reasonable period of time.
B. LESSOR REMEDIES: In the event of a Lessee Default as defined in
the two preceding paragraphs, Lessor shall have the following rights and
remedies, if Lessee has not by then cured such Default:
1. To enter upon the Premises and again have, repossess and
enjoy the same as if this Lease had not been made, and all terms,
conditions, covenants and obligations of this Lease on the part of
Lessor to be performed shall cease and terminate, without prejudice,
however, to the right of Lessor to recover from Lessee all Rent
accrued hereunder as of the date of such entry by Lessor; and
2. To pursue all other rights and remedies to which Lessor may
be entitled hereunder, at law or in equity.
3. No waiver of breach of any of the covenants of this Lease
shall be construed to be a waiver of any succeeding breach of the same
on any other covenant.
C. LESSOR'S DEFAULT AND LESSEE'S REMEDIES: In the event of any
failure by Lessor to perform any term, condition, covenant or obligation of this
Lease on the part of Lessor to be performed within thirty (30) days after the
date on which Lessor receives from Lessee notice specifically describing such
failure (provided, however, that if Lessor shall exercise in good faith diligent
efforts within such thirty (30) day period to cure the failure specified in the
Notice but shall not be able to do so because of a cause or causes beyond the
control of Lessor, then any such failure shall not be considered a default under
this Lease by Lessor so long as Lessor shall continue to exercise in good faith
such diligent efforts to cure such failure and shall do so within a reasonable
period of time), Lessee (in addition to all other rights and remedies to which
Lessee may be entitled, elsewhere hereunder or at law or in equity) may cure
such default by Lessor on behalf of, and at the sole cost and expense of Lessor.
Lessor shall reimburse Lessee for its costs and expenses
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in connection therewith within thirty (30) days after Lessee's delivery to
Lessor of an invoice therefor.
VI. FORCE MAJEURE
If, after the Commencement Date, operation of the casino shall be
interrupted for more than thirty consecutive days by fire, flood, storms, labor
disorder, accident or any other causes outside the Lessee's reasonable control
(all such causes plus an interruption of operation of the casino for more than
30 consecutive days shall hereinafter referred to as "Force Majeure"), the
Lessee shall have a reasonable time to make required repairs necessary to
recommence operation.
The current term of the Lease shall be extended at reopening of the casino
for the number of months that the casino was closed during the interruption of
the gaming operation.
In the event of Force Majeure, then payment of rent shall be abated (i.e.,
no rent shall be due) for the period beginning with the 31/st/ consecutive day
of interruption of casino operations and such rent abatement shall continue for
60 days or until the casino operations recommence, whichever is earlier ("Rent
Abatement Period"). Within 10 days following expiration of the Rent Abatement
Period, IOC-Tunica will pay Lessor the pro-rated Fixed Rent due for the
remaining portion of the month in which the Rent Abatement Period expired.
Subsequent to the expiration of the Rent Abatement Period, IOC-Tunica shall
resume making rent payments in the manner set forth in Article IV above.
Should the operation of the casino be interrupted for a period of twelve
(12) consecutive months on account of an event of Force Majeure, Lessee at its
option may terminate this Lease by delivering written notice to Lessor of
Lessee's election to do so within fifteen (15) days after the expiration of said
period.
VII. LESSEE TO COMPLY WITH LAWS
During the Term, Lessee shall, at its own expense, observe and comply with
all laws affecting the Premises if Lessee's failure to comply will or may
subject Lessor to any civil or criminal liability. If Lessee's failure to do so
will or may subject Lessor to any civil or criminal liability, then Lessee shall
procure every permit, license, certificate or other authorization required in
connection with the lawful and proper maintenance, operation, use and occupancy
of the Premises or required in connection with any improvements erected on the
Premises and comply with all such permits, licenses, certificates and other
authorizations. Notwithstanding the foregoing, Lessee shall have the right to
contest any such laws in accordance with
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this Lease. Lessee shall make any mandated alterations required by law arising
during the primary term and any additional terms of this Lease.
The term "law" or "laws" means all laws, ordinances, requirements, orders,
directives, rules and regulations of any applicable government affecting the
development, improvement, alteration, use, maintenance, operation or occupancy
of the Premises or any part of the Premises, whether in force at the
Commencement Date or passed, enacted or imposed at some time in the future,
subject in all cases, however, to all applicable waivers, variances and
exemptions limiting the application of the foregoing to the Premises.
For purposes of determining Lessees's obligations under this Lease,
however, the term "law" or "laws" shall not include any of the foregoing that
require the correction or remediation of any condition that affected the land or
the Premises at the Commencement Date.
VIII. ASSIGNMENT AND SUBLETTING
For purposes of this Article relating to Assignment and Subletting:
(i) Assignment in addition to other transfers, shall also include the
subleasing of substantially all of the Premises or Casino Vessel to
one party.
(ii) "Business Day" means any weekday on which banks in Mississippi are
generally open for the conduct, with bank personnel, of regular
banking business. Specifically excluded are any weekdays on which a
national holiday falls or other weekday on which banks are closed.
A. ASSIGNMENT: Lessee shall have the right at all times during
the Term (or any renewal term) to assign its interest in this Lease without
Lessor's consent and without restriction to any person or entity which controls,
is controlled by, or is under common control with Lessee ("Successor Entity"),
provided that Lessee and such Successor Entity shall remain jointly and
severally liable for the performance of Lessee's obligations under this Lease.
Lessee shall also have the right to collaterally assign or grant a mortgage in
Lessee's Leasehold interest in this Lease for the purpose of securing financing.
Lessor agrees to subordinate payment of the Overage and Additional Overage Rent
to the terms of such financing, if so requested but only if Lessee so
subordinates its rights to receive Overage Management Fees and any Second and
Third Tier Distributions to which Lessee may otherwise be entitled.
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The Leasehold Mortgagee may transfer all or any part of its interest in
such a Leasehold mortgage to another person or entity, and, in addition, or, in
the alternative, may collaterally assign its interest in the Premises and a
Leasehold mortgage to another person or entity and such other person or entity
shall be deemed a Leasehold Mortgagee without Lessor's consent.
In addition to its rights of transfer with respect to a Successor Entity
and for financing, and subject to Lessors' right of first refusal set forth
below, Lessee shall have the right to assign its interest in the Lease:
(i) to any other person or entity with a minimum net worth of Twenty
Million Dollars ($20,000,000.00) as determined by generally accepted
accounting principles (the "Required Net Worth") or to an entity who
obtains a guaranty of these Lease obligations from a person or entity
having a net worth of Twenty Million Dollars ($20,000,000); or
(ii) only with Lessor's consent, which may be given or withheld in Lessor's
sole and absolute discretion, to any person or entity with a net worth
which is less than the Required Net Worth. Any assignee of Lessee
shall assume all obligations and liabilities of Lessee under this
Lease.
Following an assignment pursuant to (i) or (ii)(not including a sublease) of the
Lease to an entity other than a Successor Entity, Lessee shall be relieved of
all further liability hereunder.
B. SUBLETTING: Lessee shall have the right to sublet any part of
the Premises not used for gaming or gambling operations without Lessor's consent
and not subject to Lessors' right of first refusal. Lessee may extend, renew or
modify any such subLease, consent to any sub-subleasing (or further levels of
subleasing), terminate any subLease, or evict any sublessee. The term of any
subLease (including renewal options) shall not extend beyond the term of this
Lease (including only any renewal options previously exercised by the Lessee or
that Lessee agrees, in the subLease, to exercise). If Lessee enters into any
SubLease, then each SubLease shall be subordinate to this Lease and shall
contain provisions in form and substance substantially as follows, and each
Sublessee by executing its SubLease shall be deemed to have agreed to the
following (the term "Sublessor" to be defined in the SubLease to refer to Lessee
as Sublessor under the SubLease):
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Sublessee agrees that if, by reason of a default under any underlying Lease
(including an underlying Lease through which Sublessor derives its
Leasehold estate in the demised subpremises), such underlying Lease and the
Leasehold Estate of Sublessor in the demised subpremises is terminated,
then Sublessee, at the option and request of the then fee owner of the
demised subpremises (the "Fee Lessor"), shall attorn to such Fee Lessor and
shall recognize such Fee Lessor as Sublessee's direct lessor under this
SubLease. Sublessee agrees to execute and deliver, at any time and from
time to time, upon the request of Sublessor or of the Fee Lessor or any
mortgagee of either, any instrument that may be necessary or appropriate to
evidence such attornment. Sublessee hereby appoints Sublessor or such Fee
Lessor or such mortgagee the attorney-in-fact, irrevocably, with full power
of substitution, of Sublessee to execute and deliver any such instrument
for and on behalf of the Sublessee. This appointment is coupled with an
interest and is irrevocable. Sublessee waives any statute or rule of law
now or subsequently in effect that may give or purport to give Sublessee
any right to elect to terminate this SubLease or to surrender possession of
the demised subpremises in the event that any proceeding is brought by a
Fee Lessor to terminate any such underlying Lease. Sublessee agrees that
this SubLease shall not be affected in any way whatsoever by any such
proceeding.
C. NOTICE TO LESSOR; COPIES OF ASSIGNMENT OR SUBLease: Lessee shall
provide written notice to Lessor of any assignment or subLease in accordance
with the terms hereof, together with copies of any documents effecting same
certified by Lessee as being complete and accurate.
D. LESSOR'S RIGHT OF FIRST REFUSAL
Notwithstanding Lessee's right to assign this Lease, prior to making an
assignment to a third party, Lessee shall give Lessor a right of first refusal
to purchase the Lease and Casino Vessel on the same terms and conditions agreed
upon by Lessee and the third party purchaser. This right of first refusal shall
not, however, apply to a change in control of Casino America, Inc. by merger or
consolidation with another entity or a sale of substantially all of Casino
America, Inc.'s assets. Such right shall, however, apply to any assignment of
the Lease by such new entity.
Lessor shall have forty-five (45) Business Days after receiving notice from
Lessee of the terms of the proposed assignment, transfer or sale to accept the
terms agreed upon by
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the third party and Lessee. Accompanying such notice, Lessee shall provide, at
Lessee's option, either: (a) the same financial information (if any) that Lessee
supplied to the third party purchaser in connection with its prospective
purchase; or, if no such information was supplied to such third party, then (b)
financial information maintained by Lessee in the ordinary course of its
business and reasonably necessary, in Lessee's judgment, in order for Lessor to
determine whether to exercise Lessor's right of first refusal; provided that,
Lessee's obligation to provide such information shall be conditioned on Lessor's
executing a confidentiality agreement reasonably acceptable to Lessee. If Lessor
fails to notify Lessee within said forty-five (45) Business Days of its
willingness to purchase Lessee's Leasehold estate on said terms, Lessee shall be
free to assign, transfer or sell this Lease and its Leasehold estate to such
third party without further obligation to Landlord, subject to the Required Net
Worth provision set forth above and so long as the terms of such assignment,
transfer or sale do not change.
Any other or subsequent assignment, transfer or sale of the Lease, Casino
Vessel, and/or the Leasehold estate by Casino America, Inc., IOC-Tunica, or any
assignee or sublessee, of whatever degree, shall again be subject to the
provisions of this Article on Assignment and Subletting including the Required
Net Worth provisions and Lessor's Right of First Refusal.
The right of first refusal provision set forth above shall not apply to a
Leasehold Mortgagee during its acquisition or disposition of the Leasehold
Estate created by this Lease or to an assignment to an entity which is a
subsidiary of or controlled by Casino America, Inc..
E. EFFECT OF TRANSFER BY LESSEE. If Lessee assigns this Lease, then as
between Lessor and Lessee, Lessee shall be deemed to have assigned to the
assignee or transferee all claims against Lessor then existing, together with
all liabilities and obligations of Lessee thereafter arising under this Lease
(except as otherwise expressly provided in this Lease) and the assignee or
transferee thereafter shall be deemed the Lessee. Lessee shall, however, remain
liable for any obligations due and owing prior to the date of assignment.
IX. USE OF PREMISES
Lessee may use the Premises only for the conduct of casino gambling and
ancillary uses related thereto, i.e., hotel, restaurants, cocktail lounges,
shops, entertainment facilities and other related structures. Nothing in this
Lease shall be construed to impose upon Lessee any obligation to actually
operate the or the Casino Vessel(s) on or from the Premises or otherwise conduct
business of any nature thereon, provided,
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however, that Lessee is obligated to make renovations to the Premises and Casino
Vessel and open the Tunica Facility as a casino. Lessor agrees that the Fixed
Rent described above in and of itself, constitutes sufficient consideration to
bind Lessor to their obligations under this Lease and Lessee is under no
obligation, express or implied, to use the Premises in such a manner as to
produce percentage rent.
X. INSURANCE
Lessee shall, at Lessee's sole cost and expense, during the Term, maintain
the following insurance:
A. CASUALTY: Casualty insurance providing coverage for the Premises
and all equipment, fixtures, and machinery at or in the Premises, against loss,
damage and destruction by fire and other hazards encompassed under broad form
coverage as may be customary for like properties in the County (but Lessee shall
in no event be required to maintain earthquake or war risk insurance) from time
to time during the Term, in an amount not less than eighty per cent (80%) of the
replacement value of the insurable buildings, structures, improvements and
equipment (excluding excavations and foundations) located at the Premises, but
in any event sufficient to avoid co-insurance in the event of a partial loss.
To the extent customary for like properties at the time, such insurance shall
include coverage for explosion of steam and pressure boilers and similar
apparatus located at the Premises; an "increased cost of construction"
endorsement, and an endorsement covering demolition and cost of debris removal.
B. LIABILITY: General public liability insurance against claims for
personal injury, death, liquor or dram shop liability, or property damage
occurring upon, in or about the Premises and the Casino Vessel, and adjoining
streets and passageways, including so-called Garage Keeper's Legal Liability
coverage. The coverage under all such liability insurance shall be at least Ten
Million Dollars ($10,000,000.00) in respect of injury or death to a single
person, and at least Ten Million Dollars ($l0,000,000.00), in respect of any one
accident, and not less than Five Million Dollars ($5,000,000.00) for property
damage. Lessor shall be entitled from time to time, upon 90 days' Notice to
Lessee, to increase the dollar limits set forth in this paragraph; provided,
however, that such increased limits shall in no event exceed the greater of (a)
the limits initially set forth plus an increase proportionate to the increase in
the consumer price index from the Commencement Date to the date of the
adjustment, rounded to the nearest million dollars, or (b) the limits
customarily maintained for similar gambling resort properties owned and operated
by Casino America, Inc.(or, if Casino America, Inc. has no such properties, then
for similar
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gambling resort properties in the U.S.A.); and provided further, that Lessor
shall not be entitled to increase such limits more frequently than once every
five years. Notwithstanding the foregoing, if Lessee constructs a hotel on the
Premises, Lessor shall have the right to require Lessee to increase the amount
of liability insurance to levels comparable to that carried on hotels owned or
operated by Casino America, Inc., or if Casino America, Inc. has no such
properties, then for similar hotel properties in the U.S.A.
C. WORKERS' COMPENSATION: Appropriate workers' compensation
insurance covering all persons employed in connection with the construction,
alteration, repair or operation of the Premises and the Casino Vessel and with
respect to whom any claim could be asserted against Lessor or the Fee Estate,
including if applicable, any of Lessee's employees who may be subject to the
United States Longshoreman and Harbor Workers Act or the Jones Act.
D. CONSTRUCTION PERIOD: For the period from the Commencement Date
through completion of the renovations to the Premises and Casino Vessel
contemplated hereby, Lessee shall also provide the following insurance coverage:
(a) Contractor's Comprehensive and Motor Vehicle Liability Insurance having a
combined single limit of not less than $10,000,000.00 (and, if the contractor is
undertaking foundation, excavation or demolition work, an endorsement stating
that such operations are covered and that the "XCU Exclusions" have been
deleted); and (b) Builder's Risk Insurance (having such scope of coverage as may
be customary for like construction projects in the County at the time) written
on a completed value non-reporting basis (with an endorsement stating that
"permission is granted to complete and occupy").
E. OTHER: All insurance required by any Leasehold Mortgage and such
other insurance as Lessee determines appropriate in the exercise of Lessee's
reasonable business judgment.
F. NATURE OF INSURANCE PROGRAM: Any or all insurance required by
this Lease may be provided, by notice to Lessor specifying the risks being
covered by self-insurance, through a self-insurance program provided, that the
self-insuring entity is (a) an affiliate or subsidiary of the Lessee or its
parent company, or (b) any other substantial entity that, in Owner's reasonable
judgment, has sufficient assets and net worth under the circumstances; provided
that the amount of loss to be self-insured shall not exceed $250,000.00.
G. POLICY REQUIREMENTS AND ENDORSEMENTS: All insurance policies
required by this Lease shall contain (by endorsement or otherwise) the following
provisions:
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1. Additional Insureds. All insurance policies shall name as
additional insureds Lessors, fee mortgagees, and Leasehold mortgagees to the
extent of each party's insurable interest.
2. Primary Coverage. All policies shall be written as primary
policies not contributing with or in excess of any coverage that Lessors may
carry.
3. Lessee's Acts or Omissions. Each policy shall include, if
available without additional cost, a provision that any act or omission of
Lessee shall not prejudice any party's rights (other than Lessee's) under such
insurance coverage.
4. Contractual Liability. Policies of liability insurance shall
contain contractual liability coverage, relating to Lessee's indemnity
obligations under this Lease.
5. Insurance Carrier Standards. Each insurance carrier shall be
authorized to do business in the State and shall have a "Best's" rating of at
least A-/IX, except to the extent such insurance is provided in compliance with
this Lease by an affiliated "captive" insurance company or pursuant to Lessee's
self-insurance program.
6. Notice to Lessor. Lessee shall obtain the insurance carrier's
agreement to give Lessor thirty days' prior notice of cancellation, other than
on account of nonpayment of premiums, provided that (except in the case of a
"captive" insurance carrier) failure to give such notice shall not adversely
affect the rights or increase the obligations of the insurance carrier.
7. Deliveries to Lessor. At least ten days before expiration of any
then current policy, Lessee shall deliver to Lessor declaration pages from and
proof of premium payment, or upon Lessor's request therefor certified copies of,
the insurance policies required by this Lease.
8. Blanket and Umbrella Policies. Lessee may provide any insurance
required by this Lease pursuant to a "blanket" or "umbrella" insurance policy,
provided that (i) such policy or a certificate of such policy shall specify the
amount(s) of the total insurance allocated to the Premises, which amount(s)
shall not be subject to reduction on account of claims made with respect to
other properties and (ii) such policy otherwise complies with this Lease.
9. Lessee's Inability to Obtain Insurance. If (a) any insurance
required by this Lease should, after diligent effort by Lessee, be unobtainable
at commercially reasonable rates through no act or omission of Lessee, and (b)
Lessee has
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obtained the maximum insurance reasonably obtainable and give notice to Lessor
of the extent of Lessee's inability to obtain any insurance required to be
maintained under this Lease, then unless Lessee's inability to procure and
maintain such insurance results from some activity or conduct within Lessee's
reasonable control, Lessee's obligation to procure and maintain such insurance
as is unobtainable shall be excused. To the extent that such insurance may be
obtainable by Lessor at a cost per million dollars of coverage not exceeding
110% of the cost per million dollars of coverage of the insurance of the same
type actually obtained by Lessee, Lessor may (unless Lessee has elected to self
insure, in compliance with this Lease, the risk in question) at Lessee's cost
and expense procure and maintain such insurance, which shall be issued in
Lessee's name and otherwise comply with all applicable requirements of this
Lease.
10. Waiver of Certain Claims. To the extent that Lessor or Lessee
purchases any hazard insurance relating to the Premises or the Casino Vessel,
the party purchasing such insurance shall attempt to cause the insurance carrier
to agree to a Waiver of Subrogation. If any insurance policy cannot be obtained
with a Waiver of Subrogation, or a waiver of Subrogation is obtainable only by
the payment of an additional premium, then the party undertaking to obtain the
insurance shall give notice of such fact to the other party. The other party
shall then have ten Business Days after receipt of such notice either to place
the insurance with a company that is reasonably satisfactory to the other party
and that will issue the insurance with a Waiver of Subrogation at no additional
cost, or to agree to pay the additional premium if such a policy can be obtained
only at additional cost. To the extent that the parties actually obtain
insurance with a waiver of Subrogation, the parties release each other, and
their respective authorized representatives, from any claims for damages to any
person, the Premises, or the Casino Vessel that are caused by or result from
risks insured against under such insurance policies, but only to the extent of
the available insurance proceeds.
XI. COLLECTION COSTS
If a court of competent jurisdiction rules that a party has defaulted, such
party shall pay the non-defaulting party's costs of collection, including
reasonable attorney's fees.
XII. EQUIPMENT LIENS
If at any time or from time to time Lessee desires to enter into or grant
any equipment liens, then upon Lessee's request Lessor shall enter into such
customary documentation with respect to the property Leased or otherwise
financed pursuant to such equipment liens as Lessee shall request, providing for
matters
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such as the following: (a) Lessor's waiver of the right to take possession of
such property upon occurrence of an event of default; and (b) customary
agreements by Lessor to enable the secured party to repossess such property in
the event of a default by Lessee as may be permitted by the agreement subsisting
between Lessee and the secured party.
XIII MUTUAL INDEMNITY OBLIGATIONS
A. MUTUAL INDEMNITY OBLIGATIONS: Lessor and Lessee shall each
indemnify the other against (a) any wrongful act, wrongful omission or
negligence of the indemnitor (or, in the case of Lessee, that of any of Lessee's
Sublessees) or its or their partners, directors, officers or employees; and (b)
any, breach or default by the indemnitor under this Lease. In addition to and
without limiting the generality of the foregoing indemnity, Lessee shall
indemnify Lessor against all the following matters (except to the extent any
claim arises from any wrongful act, omission or negligence of Lessor): (x) the
conduct, management, or occupancy of or from any work or activity performed in
and on the Premises and the Casino Vessel during the Term; (y) the condition of
the Premises, the Casino Vessel or any street, curb or sidewalk adjoining the
Premises, or of any vaults, tunnels, passageways or space under, adjoining or
appurtenant to the Premises; and (z) any accident, injury or damage whatsoever
caused to any person or property occurring during the Term, in or on the
Premises, or the Casino Vessel or upon or under the sidewalks adjoining the
Premises. Furthermore, Lessee agrees to pay, and to indemnify Lessor against,
reasonable legal costs, including reasonable counsel fees and disbursements
incurred by Lessor in obtaining possession of the Premises if Lessee fails to
surrender possession upon the expiration or earlier termination of the Term.
Notwithstanding anything to the contrary in this Lease, neither party shall be
required to indemnify the other party from or against such other party's
negligence, omissions, or intentional acts, and Lessee shall not be required to
indemnify Lessor from or against any condition that existed on or at the
Premises on or before the Commencement Date.
B. LIABILITY OF LESSOR: Lessee is and shall be in exclusive control
and possession of the Premises and the Casino Vessel during the Term as provided
in this Lease. Except for Lessor's own negligence, Lessor shall not be liable
for any injury or damage to any property or to any person occurring on or about
the Premises and the Casino Vessel, nor for any injury or damage to any property
of Lessee, or of any other person, during the Term. The provisions of this
Lease permitting Lessor to enter and inspect the Premises are intended to allow
Lessor to be informed as to whether Lessee is complying with the agreements,
terms, covenants and conditions of this Lease, and to the extent
-19-
permitted by this Lease, to perform such other acts required by this Lease as
Lessee shall fail to perform. Such provisions shall not be construed to impose
upon Lessor any liability to third parties, but nothing in this Lease shall be
construed to exculpate, relieve or indemnify Lessor from or against any
liability of Lessor to third parties existing or arising from facts or
circumstances in existence on or before the date IOC-Tunica takes possession of
the Premises.
C. INDEMNIFICATION PROCEDURES: Wherever this Lease requires an
indemnitor to indemnify an indemnitee, the following procedures and requirements
shall apply:
1. Prompt Notice. The indemnitee shall give the indemnitor prompt
notice of any claim. To the extent, and only to the extent, that both (a) the
indemnitee fails to give prompt notice and (b) the indemnitor is thereby
prejudiced, the indemnitor shall be relieved of its indemnity obligations under
this Lease.
2. Selection of Counsel. The indemnitor shall be entitled to select
counsel (reasonably acceptable to the indemnitee, but counsel to the
indemnitor's insurance carrier shall be deemed satisfactory). The indemnitee
shall be entitled to approve the indemnitor's choice of counsel or select the
indemnitee's own counsel and be represented by such counsel. If the indemnitee
selects its own counsel, then such counsel shall consult with (but not be
controlled by) the indemnitor's counsel and the indemnitor and the indemnitee
shall each pay fifty percent (50%) of the reasonable attorney's fees of the
indemnitee's counsel.
3. Settlement. The indemnitor may, with the consent of the
indemnitee, not to be unreasonably withheld, settle the claim, except that no
consent by the indemnitee shall be required as to any settlement by which (x)
the indemnitor procures (by payment, settlement or otherwise) a release of the
indemnitee pursuant to which the indemnitee is not required to make any payment
whatsoever to the third party making the claim, (y) neither the indemnitee nor
the indemnitor acting on behalf of the indemnitee makes any admission of
liability, and (z) the continued effectiveness of this Lease is not jeopardized
in any way.
4. Insurance Proceeds. The indemnitor's obligations shall be reduced
by net insurance proceeds actually collected by the indemnitee on account of the
loss.
As used herein, wherever this Lease provides that a party shall "indemnify"
another from or against a particular matter, such term means that the indemnitor
shall indemnify the indemnitee (and its parent company, and their affiliates and
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subsidiaries and their respective officers, directors, agents, and employees)
and defend and hold the indemnitee (and its parent company and their affiliates
and subsidiaries and their respective officers, directors, agents and employees)
harmless from and against any and all loss, cost, claims, liability, penalties,
judgments, damage or other injury, detriment, or expense (including reasonable
attorney's fees, court costs, interest and penalties) reasonably incurred or
suffered by the indemnitee (and its parent company and their affiliates and
subsidiaries and their respective officers, directors, agents and employees) on
account of the matter that is the subject of such indemnification or in
enforcing the indemnitor's indemnity.
XIV. LESSOR'S WARRANTIES & REPRESENTATIONS
A. QUIET ENJOYMENT: Lessor covenants that, so long as Lessor has not
terminated this Lease on account of an event of default by Lessee, Lessee shall
and may peaceably and quietly have, hold and enjoy the Premises for the Term
without molestation or disturbance by or from Lessor or anyone claiming by or
through Lessor or having title to the Premises paramount to Lessor, and free of
any encumbrance created or suffered by Lessor, except Permitted Exceptions.
B. ALL PROPERTY COVERED: Lessor is leasing to Lessee all property
within the Premises, whether deemed to be real or personal (including signs,
buildings and any other personal property attached thereto or contained
therein), owned or controlled by them which are useful or necessary for the
operation of the improvements on the Premises or the Casino Vessel. The parties
acknowledge that the Casino Vessel is personal property and is not owned or
controlled by Lessor.
XV. ADDITIONAL PAYMENTS BY LESSEE; IMPOSITIONS
A. LESSOR'S NET RETURN: The parties intend that this Lease shall
constitute a "net Lease," so that the fixed rent and percentage rent shall
provide Lessor with "net" return for the Term, free of any expenses or charges
with respect to the Premises, except as specifically provided in this Lease.
Accordingly, Lessee shall pay as additional rent and discharge, before failure
to pay the same shall create a material risk of forfeiture or give rise to a
penalty, each and every item of expense, of every kind and nature whatsoever,
related to or arising from the Premises, or by reason of or in any manner
connected with or arising from the development, leasing, operation, management,
maintenance, repair, use or occupancy of the Premises or any portion of the
Premises. Notwithstanding anything to the contrary in this Lease, Lessee shall
not be required to pay any of the following incurred by Lessor: (a) principal,
interest, or other charges payable under any fee
-21-
mortgage; (b) depreciation, amortization, brokerage commissions, financing or
refinancing costs, management fees or leasing expenses incurred by Lessor with
respect to the fee estate or the Premises; (c) consulting, overhead, travel,
legal, staff, and other similar costs incidental to Lessor's ownership of the
Premises; and (d) any costs arising from or pursuant to any instrument or
agreement affecting the Premises that is not a Permitted Exception and to which
Lessor is a party and Lessee is not a party.
B. IMPOSITIONS: For any period within the term (with daily proration
for periods partially within the term and partially outside the term), Lessee
shall pay and discharge, before failure to pay the same shall create a material
risk of forfeiture or give rise to a penalty, all impositions. Lessee shall
also pay all interest and penalties assessed by any government on account of
late payment of any imposition, unless such late payment was caused by Lessor's
failure to remit an imposition (paid to Lessor by Lessee) in accordance with
Lessee's reasonable instructions or Lessor's failure to promptly forward Lessee
a copy of a tax bill received by Lessor, in which case Lessor shall pay such
interest and penalties.
As used herein, the terms "impositions' shall mean all taxes, special and
general assessments, water rents, rates and charges, commercial gross receipts
or rent taxes, sewer rents and other impositions and charges of every kind and
nature whatsoever with respect to the Premises, that may be assessed, levied,
confirmed, imposed or become a lien on the Premises (other than on account of
any actions or omissions of Lessor or conditions existing on, at or with respect
to the Premises before the Commencement Date by or for the benefit of any
government with respect to any period during the term together with any taxes
and assessments that may be levied, assessed or imposed by the State of
Mississippi or by any political or taxing subdivision of the State upon the
gross income arising from any rent or in lieu of or as a substitute, in whole or
in part, for taxes and assessments imposed upon or related to the Premises and
commonly known as real estate taxes. The term "impositions" shall, however, not
include any of the following, all of which Lessor shall pay before delinquent or
payable only with a penalty: (a) any franchise, income, excess profits, estate,
inheritance, succession, transfer, gift, corporation, business, capital levy, or
profits tax of Lessor, (b) if the Premises is part of a combined tax lot, any
taxes and other impositions reasonably allocable to any portion of such combined
tax lot other than the Premises, in accordance with the applicable provisions of
this Lease, and (c) interest, penalties and other charges with respect to items
"a" through "c."
C. COMBINED TAX LOTS: If, as of the date of this Lease, the Premises
are part of a tax lot (a "Combined Tax Lot")
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that includes any land or improvements (other than the Premises), then the
parties shall diligently and expeditiously cooperate (including by bringing such
proceedings as may be necessary), all at Lessor's expense, including Lessee's
reasonable attorneys' fees, to cause the Combined Tax Lot to be divided so that
the Premises (including the fee estate and the Leasehold estate) shall be a
single separate tax lot that is no longer a Combined Tax Lot. Pending such
division of the Combined Tax Lot: (a) each party shall promptly provide the
other with a copy of any tax bill received by such party relating to the
Combined Tax Lot; (b) Lessee shall pay a portion of the impositions assessed
with respect to the Combined Tax Lot equal to the estimated assessment of the
Premises divided by the assessment of the Combined Tax Lot (except to the extent
that Lessee reasonably determines that a particular imposition, other than real
estate taxes, is more appropriately allocated in some other way); (c) Lessor
shall pay all impositions (and the items excluded from the definition of such
term by clauses "a" through "e" in such definition) with respect to the balance
of the Combined Tax Lot; (d) the estimated assessment for the Premises shall be
determined, to the extent possible, based on preliminary information from the
tax assessment authorities and otherwise by Lessee, in consultation with Lessor
(and, in any event, when the assessment of the Premises has been determined the
parties shall make such adjusting payments [with interest at the Prime Rate] as
shall be appropriate to compensate for errors in the estimated payments
previously made); and (e) if either party fails to pay its share of taxes and
charges for the Combined Tax Lot before delinquency and such failure continues
for ten business days after notice from the other party, then such other party
shall be entitled to pay the first party's unpaid impositions with respect to
the Combined Tax Lot, and the first party shall promptly upon demand reimburse
the other party's advances made on the first party's account ("Tax Reimbursement
Payments").
D. DIRECT PAYMENT BY LESSOR: If any imposition or other item of rent
is required to be paid directly by Lessor, then: (a) Lessor appoints Lessee as
Lessor's attorney in fact for the purpose of making such payment; and (b) if the
person entitled to receive such payment refuses to accept it from Lessee, then
Lessee shall give Lessor notice of such fact and shall remit payment of such
imposition to Lessor in a time or manner accompanied by reasonable instructions
as to the further remittance of such payment. Lessor shall with reasonable
promptness comply with Lessee's reasonable instructions and shall indemnify
Lessee against Lessor's failure to do so.
E. UTILITIES: Lessee shall pay all fuel, gas, light, power, water,
sewage, garbage disposal, telephone and other utility charges, and the expenses
of installation, maintenance, use and service in connection with the foregoing,
relating to the Premises and the Casino Vessel during the Term.
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XVI. EMINENT DOMAIN
A. REPAIR AND RESTORATION: In the event that all or any portion of
the Premises shall be taken or threatened to be taken under the power of eminent
domain or settlement in lieu thereof for any public or quasi-public use, Lessor
promptly shall deliver to Lessee notice thereof. Regarding any condemnation
award, the parties will seek reasonable compensation for the Premises, and the
Lessee's improvements. Unless terminated pursuant to the paragraphs which
follow, this Lease shall remain in full force and effect.
If any of such property hereby leased is taken by eminent domain or threat
thereof the aggregate proceeds of any eminent domain award or settlement for
Lessor's and Lessee's interest under this Lease will be divided between Lessor
and Lessee depending upon the time of taking as follows:
Period during which Percentage to Percentage to
taking occurs Lessor Lessee
Cm Dt - 12/31/2006 20% 80%
1/1/2007 - 12/31/2016 25% 75%
1/1/2017 - 12/31/2026 30% 70%
1/1/2026 - 12/31/2031 35% 65%
1/1/2032 - 12/31/2038 40% 60%
B. RIGHT OF TERMINATION: In addition to the rights conferred above,
Lessee shall have the right to terminate this Lease upon the occurrence of a
taking or a threatened taking under the power of the eminent domain or
settlement in lieu thereof if, as a result thereof, the Premises no longer shall
be fit and suitable for the use and occupancy thereof by Lessee for the conduct
of its business operations, in which Event Lessee may elect to terminate this
Lease by delivery of Notice to Lessor within thirty (30) days after the earlier
of: (i) Lessor's delivery to Lessee of notice regarding such taking or
threatened taking; or (ii) the date on which possession of the Premises or
portion thereof shall be required by the public or quasi-public body. Upon
delivery of such Notice to Lessor, this Lease shall terminate as of the date on
which such possession shall be required by the public or quasi-public body
unless otherwise provided in such notice.
XVII. TERMINATION
A. IMPOSSIBILITY: If at any time it should become impossible for
Lessee to operate a casino on the Premises due to changes in applicable law,
regulations or interpretations thereof which prohibit casino gambling on the
Premises, Lessee may immediately terminate the Lease. The loss of Lessee's
gaming
-24-
license or the impossibility of further performance for reasons reasonably
within the control of Lessee shall not constitute cause for termination of the
Lease by Lessee under this paragraph.
B. Upon termination of this Lease for any reason, all improvements
constituting part of the Premises (other than (i) the signs bearing any
trademark, service mark, or other mark owned by Lessee, all of which Lessee may
remove; and (ii) the Casino Vessel, shall become Landlord's property (subject to
Permitted Exceptions), and Lessor and Lessee shall have the rights and
obligations set forth in this Article. If the Term has expired because of an
Event of Default, then Lessor shall be entitled to claim a credit against any
payments due by Lessor to Lessee pursuant to this Article in an amount equal to
any unpaid Rent through the Termination Date or damages payable by Lessee on the
Termination Date.
Upon termination, Lessee shall, at its option, pay Lessor a one-time
termination fee of $250,000 and remove the Casino Vessel or pay no termination
fee and leave the Casino Vessel on the Premises.
If IOC-Tunica decides to remove the Casino Vessel, Lessee will give Lessor
90 days notice prior to doing so and generally describe to Lessor the manner in
which removal of the Casino Vessel will be accomplished. Lessee will pay all
costs of repairing damage to the Premises by such removal. The costs of such
repair and restoration will be paid by Lessee. However, Lessee shall be
entitled to deduct fifty percent (50%) of the amount of such costs up to
$125,000 from the $250,000 termination fee referred to in the preceding
paragraph.
Notwithstanding anything to the contrary herein, Lessee may not remove the
Casino Vessel without first placing into escrow an amount of money sufficient to
repair any physical damage to the Premises caused by such removal including
restoring the levee, any areas excavated to remove the Casino Vessel, and any
break in the riverbank.
Upon the termination of the Lease for any reason, Lessee shall have the
absolute obligation to remove hazardous materials from the Premises which were
deposited on the Land by parties other than Owner subsequent to the Commencement
Date. Hazardous materials shall be deemed to mean any toxic or hazardous
substance defined in 42 U.S.C. (S)(S) 9601(14); any petroleum product,
including, without limitation, crude oil or any fraction thereof, natural gas
liquid, liquefied natural gas or synthetic gas, asbestos and other pollutants,
and any chemical subject to reporting under the Emergency Planning and Community
Right to Know Act of 1986, 42 U.S.C.A. (S)(S) 1101, et seq.
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XVIII. ESCROW OF PERCENTAGE RENT
For purposes of this Article, the terms "Commission" or "MGC" mean the
Mississippi Gaming Commission.
If, at any time, Lessor or any of the persons constituting Lessor is or are
not entitled to lawfully receive a percentage of gaming revenues as rent, but
such Lessor has an application for finding of suitability or renewal thereof (or
for any other findings required by the Mississippi Gaming Commission), then all
percentage rent due at and/or for such time shall be paid into a third-party
escrow account under agreements complying with this paragraph, and satisfactory
to and duly approved by the Mississippi Gaming Commission (the "Commission") or
its Director or as otherwise required by applicable Law. It shall be Lessor's
responsibility to obtain and maintain the approvals described above at and for
all times that percentage rent is payable.
The terms of the escrow agreement and of all related arrangements must be
strictly in conformity with the requirements of the Commission and its Director.
The express terms of the escrow, and of the Commission's approval thereof, must
be such that Lessor shall have absolute responsibility for the escrow or for
escrow funds once paid into the escrow as directed and approved by the
Commission. Without limitation on the foregoing, the requisite agreements must
expressly provide that Lessee shall have absolutely no obligation with respect
to (a) investment or risk of loss of the escrow funds; or (b) improper or
illegal disbursement of the funds (to an unqualified person or otherwise). Any
agreements by Lessor in connection with the escrow must be in form and substance
reasonably acceptable to Lessee.
In the event of any reasonable good faith uncertainty by Lessee at any time
as to the legality of continued payments into the escrow, Lessee may suspend
further payment into the escrow until Lessee obtains an express affirmative
ruling from the Commission (and Lessee will promptly seek such ruling) but
Lessee will instead deposit such payments into an interest bearing account at a
national bank, and such deposits and interest thereon may only be disbursed to a
Lessor (or any of them) at such time as approved by the Commission.
Further, payments into the escrow shall be subject to immediate suspension
at any time that the Commission or its Director rescinds or suspends approval of
the escrow arrangement or otherwise disapproves it. Further, in no event shall
Lessee or any of Lessee's affiliates be obligated to take any actions that
would, in the opinion of its gaming counsel, result in a material violation of
the Mississippi Gaming Control Act or any other applicable Law. Lessee shall
not be deemed in default in
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the payment of percentage rent so long as payment is precluded or suspended by
virtue of the actions of the MGC. If payments are suspended, then within ten
(10) days after discontinuance of the reason for the suspension, Lessee shall
pay the amount which was not paid by reason of the suspension.
In the event that the application for any findings required by the MGC of
any of the Lessors is withdrawn or denied, then that individual shall not be
entitled to any percentage rent payments. In such event that individual's share
of such monies, shall be paid to a transferee of such individual who is approved
by the MGC or, if no such transferee exists, then such monies shall be paid to
the remaining Lessors (i.e., the amount of rent to be paid by Lessee shall not
be reduced on account of such an event). The affected individual shall continue
to receive the minimum rent for the balance of the Term and any renewal terms
throughout the existence of this Lease and shall not, at any time, be entitled
to payment pursuant to a percentage of revenue. Withdrawal of an application or
a finding of unsuitability (denial of application) as to one Lessor shall not
affect payment to the other Lessor unless such individual also withdraws his
application or is found unsuitable (denial of application).
The parties further agree and understand that Lessee currently holds a
license with the Mississippi Gaming Commission and is currently pursuing a
license in connection with the Premises which are the subject of this Lease.
Lessor hereby agrees to use their best efforts to cooperate in the licensing
process and to take whatever steps are necessary to assist in the licensing
process, including the execution of whatever documents are appropriate and the
attendance at Gaming Commission meetings in Jackson, Mississippi or elsewhere if
necessary (at Lessee's expense).
Lessor agrees not to engage in any activities or take any actions or form
any associations which would threaten or otherwise be detrimental to the
Lessee's gaming license or license application. In the event that Lessor is
advised that either of the individual lessors has in any way threatened or
jeopardized the license or license application of Lessee, Lessor, and each of
them, agrees to take whatever steps are reasonably necessary to rectify the
situation.
XIX. NOTICES TO LEASEHOLD MORTGAGEES
A. Lessor shall, upon serving Lessee with any notice of breach or default
under the Lease, promptly serve a copy of such notice to every Leasehold
Mortgagee in writing, at the address(es) provided by any Leasehold Mortgagee to
Lessor from time to time. Lessor shall not terminate the Lease by reason of
Lessee's default without first serving Leasehold Mortgagee with
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written notice of default and allowing Leasehold Mortgagee that period to cure
same as specified herein. Leasehold Mortgagee shall have the right, but not the
obligation, to cure such default on behalf of Lessee. If such default on the
part of Lessee remains uncured for a period in excess of any applicable notice
and/or grace period set forth in the Lease, Lessor shall again notify Leasehold
Mortgagee in writing, in the manner provided above, after the expiration of such
notice and/or grace period, and Leasehold Mortgagee shall be entitled to a
further period of thirty (30) business days (ten (10) business days for monetary
defaults) after receipt of such notice within which to cure such default. If
such non-monetary default cannot be cured within such thirty (30) day period,
Leasehold Mortgagee shall have such additional period as may be necessarily
required within which to cure same, provided that Leasehold Mortgagee commences
to cure the same within such thirty (30) day period and diligently attempts to
prosecute such cure to completion. In the event Leasehold Mortgagee is unable to
cure any such default until Leasehold Mortgagee recovers possession of the
premises, such cure period shall be extended for such period as may be required
to foreclose or otherwise acquire possession of the Premises so long as
Leasehold Mortgagee commences foreclosure or other proceedings (including
without limitation judicial or non-judicial foreclosure, or a deed in lieu
thereof) to acquire possession of the Leasehold Premises promptly and thereafter
diligently prosecutes same to completion.
B. Should Leasehold Mortgagee, any party claiming through Leasehold
Mortgagee, or any party which is the successful purchaser of the Lessee's
Leasehold Premises at a foreclosure sale or through a purchase in-lieu-of
foreclosure succeed to the interest of Lessee under the Lease, Lessor shall
recognize such party as the Lessee and shall not disturb its use and enjoyment
of the Property, provided that such party cures any default by Lessee which may
be satisfied by the payment of money, and performs all of the obligations of
Lessee set forth in the Lease which is susceptible to being cured by such party.
C. In the event this Lease shall be terminated at any time during the term
hereof by reason of a surrender, cancellation or termination by Lessee, or if
Lessee shall have rejected or otherwise terminated this Lease pursuant to the
United States Bankruptcy Code (as hereinafter defined) or any other comparable
principle of debtors' rights, then Lessor agrees upon written request of such
Leasehold Mortgagee, its successors or assigns, within thirty (30) days after
knowledge of any such surrender, cancellation, termination or rejection to enter
into a new Lease with the Leasehold Mortgagee or with any nominee of Leasehold
Mortgagee upon all the same terms and conditions as shall then be contained in
this Lease, provided Leasehold Mortgagee pays all rents due through the date of
such new Lease and cures all other monetary defaults of Lessee on the date such
new Lease is
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executed, and cures all other defaults which are susceptible of being cured by
Leasehold Mortgagee within sixty (60) days after the date such new Lease is
executed. Any such new Lease shall have the same priority of title as the Lease.
Lessor shall execute and return to Leasehold Mortgagee any and all documents in
form and substance reasonably satisfactory to Leasehold Mortgagee, which secure
and evidence such priority in title, and Leasehold Mortgagee's Leasehold title
to the improvements on the Property, within twenty (20) days after request
therefor. From and after the effective date of such new Lease, Leasehold
Mortgagee or its nominee may, notwithstanding any provision to the contrary
contained elsewhere in the Lease, freely assign its interest under the Lease,
and in the Property, to any person or entity, without obtaining Lessor's consent
thereto. Leasehold Mortgagee will be relieved of all liability under the Lease
in the event such assignee expressly assumes the duty to perform all of Lessee's
obligation and Leasehold Mortgagee's obligations under the Lease in any such
assignment.
D. The Leasehold Mortgagee shall not be liable for any of Lessee's
obligations under the Lease, unless and until the Leasehold Mortgagee shall
acquire Lessee's interest in this Lease. If Lessor or Lessee acquires the
interest of the other in the demised premises, or any portion thereof, there
shall be no merger of the Leasehold estate into (i) the fee simple estate in the
Property, or (ii) any Leasehold estate superior to that of Lessee.
E. The Lease shall not be modified, terminated, canceled or surrendered
and Lessor shall not accept a termination, cancellation or surrender thereof by
Lessee without the prior written approval of Leasehold Mortgagee.
F. In the event that Lessee fails to exercise any options it may have to
extend the term within the period provided in the Lease (or elects not to
exercise such renewal option(s)), Lessor shall provide Leasehold Mortgagee with
notice of Lessee's failure or election and thereafter Leasehold Mortgagee shall
have the right to exercise such renewal option as agent for lessee within thirty
(30) days of receipt of Lessor's notice, and Lessee acknowledges that such
exercise shall be binding on it.
G. Lessor agrees, for the benefit of any Leasehold Mortgagee, that so long
as a Leasehold Mortgage shall encumber the Premises the right of election
arising under Section 365 (h) (1) of the Bankruptcy Code (the "Bankruptcy
Code"), 11 U.S.C. (S) 365 (h) (1) may be exercised by Leasehold Mortgagee and
not by Lessee. Any exercise or attempted exercise of such right of election by
Lessee shall be void.
H. Any option of the Lessee to be made under any provision of the Lease
relating to insurance proceeds, taking awards, or
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proceeds in lieu thereof or settlement thereof, casualty or taking shall not be
made until Leasehold Mortgagee shall have been provided with prior written
notice and shall have approved such election and, at Leasehold Mortgagee's
option, Leasehold Mortgagee may make such election.
I. Any mortgage or deed of trust hereafter placed on Lessor's interest in
the demised premises shall be and remain inferior and subordinate to this Lease
and to any Leasehold mortgage p laced on the demised premises, and Lessor shall
furnish evidence of such priority and record same upon request of Lessee or
Leasehold Mortgagee.
XX. MISCELLANEOUS
A. CONFIDENTIALITY: Lessor shall preserve the confidentiality of all
information obtained by Lessor relating to Lessee's Gross Gaming Revenue,
except: (i) in any litigation or arbitration proceedings between the parties;
(ii) in response to any lawful subpoena received by Lessor; or (iii) for
delivery to professional persons, e.g. attorneys, accountants, financial
advisers, employed by Lessor to assist with the management of Lessor's business
affairs. Lessor agrees that it will promptly deliver to Lessee a copy of any
subpoena received by Lessor seeking information concerning Lessee's Gross Gaming
Revenue.
B. NOTICE: Notices from either party to the other shall be given by
registered or certified mail, as follows:
To the Lessors by sending such notice(s) to:
1. Robertson M. Leatherman, Jr.
80 Monroe Avenue, Suite 700
Memphis, TN 38103;
2. Joseph Orgill
35 Union Avenue
Memphis, TN 38103 and to
3. James P. Orr
6232 Caribou Court
Cincinnati, OH 45243
To the Lessee at:
Casino America, Inc.
ATTN: John M. Gallaway
711 Washington Route
Biloxi, MS 39530-3848 and to
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Casino America, Inc.
ATTN: Allan B. Solomon
Suite 310
2200 Corporate Blvd., N.W.
Boca Raton, FL 33431
Either party, by written notice to the other, may designate a different person
and/or address than the one above given.
C. ENTIRE AGREEMENT; AMENDMENTS: This Lease and its exhibits
contain the entire agreement between the parties and no promise, representation,
warranty, covenant, agreement or understanding not specifically set forth in
this Lease shall be binding upon, or inure to the benefit of, either party.
This Lease may not be amended, altered, modified or supplemented in any manner
except by an instrument in writing duly executed by the parties.
D. GOVERNING LAW; INTERPRETATION: This Lease shall be construed and
enforced in accordance with the laws of the State of Mississippi. The fact that
this Lease shall have been prepared by the attorney for either the Lessor or
Lessee shall not be used to construe or interpret this Lease for or against
either party; the parties intend that the provisions of this Lease shall be
given their fair meaning and no court shall construe this Lease more stringently
against one party than against the other.
E. AUTHORITY; BINDING EFFECT: If Lessor or Lessee shall be a
corporation, trust or general or limited partnership, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on behalf of such entity.
Subject to the provisions of paragraphs VIII and XX Q. hereof, this Lease shall
be binding upon, and shall inure to the benefit of, the parties and their
respective heirs, executors, administrators, personal and legal representative,
successors, and permitted assigns.
F. NO WAIVER: The failure of Lessor or Lessee to insist upon strict
performance of any of the terms, conditions, covenants and obligations contained
in this Lease shall not be deemed a waiver of any rights or remedies for any
subsequent breach or default in the terms, conditions, covenants and obligations
herein contained.
G. RECORDING: If Lessor or Lessee requests, the parties shall
execute and acknowledge a short form of Lease for recording purposes, which
short form of Lease shall be recorded at the expense of the party requesting the
same, which party shall pay any documentary transfer tax or other special tax or
assessment associated with, or triggered by, such recording.
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H. SIGNS: Lessee shall have exclusive sign rights for the Premises,
and shall have the right to erect and display signs on the Premises subject only
to compliance with applicable laws, ordinances and requirements of governmental
authorities with competent jurisdiction.
I. SECTION HEADINGS: The Section headings hereof are intended for
convenience and reference purposes only and shall not be used to construe or
interpret this Lease.
J. SEVERABILITY: If any provision of this Lease shall be determined
by any court to be invalid, illegal or unenforceable to any extent, then the
remainder of this Lease shall not be affected, and this Lease shall be construed
as if the invalid, illegal or unenforceable provision had never been contained
in this Lease.
K. TRANSMITTAL: Submission of this Lease for examination, even
though executed by Lessor or Lessee, shall not bind the other party in any
manner, and no Lease or other obligation on the part of either party shall arise
until this Lease shall be executed and delivered by the parties, each to other.
L. ADDITIONAL ACTIONS AND DOCUMENTS: Lessor and Lessee hereby agree
to exercise their best efforts to obtain, execute, deliver and file, or cause to
be obtained, executed, delivered and filed, as the case may be, such additional
documents, instruments and consents as may be necessary or as reasonably may be
requested by either party, and to take such further action as may be necessary,
or as reasonably may be requested by either party, at the sole cost and expense
of the requesting party, in order fully to effectuate the terms and conditions
of this Lease.
M. COUNTERPARTS: This Lease may be executed in three (3) or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same.
N. NO PARTNERSHIP OR JOINT VENTURE: Nothing contained herein, nor
the acts of the parties hereto, shall be construed to create a partnership or
joint venture between Lessor and Lessee.
O. LIEN WAIVERS AND NO CONSENT TO LIENS:
(i) Lien Waivers
Prior to allowing any construction to be commenced on the Premises,
Lessee shall obtain from the contractor (as defined by the Mississippi Code
Annotated) who may file a lien for work
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performed or materials supplied, for the performance of any labor or the
furnishing of any materials or equipment for any improvement, alteration or
repair of, or to the Premises, or any part of the Premises, a waiver of lien
from such person or entity which provided that such person or entity waives any
lien against Lessor and/or the Fee Estate that may otherwise arise from
performing services on the Premises and agrees to hold Lessor harmless for any
claims made by such person or entity, or their successors or assigns, against
Lessor and/or the Fee Estate.
Moreover, any such contractor, who enters into a contract with Lessee
and commences work without granting such lien waiver to Lessor and/or the Fee
Estate shall be deemed trespasser(s) and shall be liable for damages to Lessor
to the fullest extent allowed by law (including punitive damages) including in
any event an amount not less than the the value of the services, work or
material performed on or supplied to the Premises and shall be liable to Lessor
for all of Lessors' attorneys' fees incurred in connection with removal of or
defending against any liens filed against Lessor and/or the Fee Estate.
(ii) No consent to liens
Lessee shall not suffer or permit any liens to be filed. If a lien is
filed, then Lessee shall, within thirty (30) days after receiving notice of such
filing (but in any case within fifteen (15) days after receipt of notice of
commencement of foreclosure proceedings), commence and then prosecute
appropriate action to cause such lien to be paid, discharged or bonded. Nothing
in this Lease shall be construed to restrict Lessee's right to contest the
validity of any lien and to pursue Lessee's position to a final judicial
determination. The mere existence of a lien shall not be construed as a default
under this Lease provided that Lessee bonds such lien off pursuant to
Mississippi law within 30 days of its filing.
Notice is hereby given that Lessor shall not be liable for any labor
or materials furnished or to be furnished to Lessee upon credit, and that no
mechanic's or other lien for any such labor or materials shall attach to or
affect Lessor's fee simple estate. Nothing in this Lease shall be deemed or
construed in any way to constitute Lessor's consent or request, written, express
or implied, by inference or otherwise, to Lessee or to any contractor,
subcontractor, laborer, equipment or material supplier for the performance of
any labor or the furnishing of any materials or equipment for any improvement,
alteration or repair of, or to the Premises, or any part of the Premises, nor as
giving Lessee any right, power or authority to contract for, or permit the
rendering of, any services, or the furnishing of any materials that would give
rise to the filing of any liens
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against Lessor's fee simple estate. Lessee shall indemnify Lessor against any
work performed on the Premises for or by Lessee.
Q. RELEASE OF LESSOR: After a sale, assignment, conveyance, or
other transfer of Lessor's interest in the Premises and its interests in this
Lease (each and every such event being a "Transfer"), each and every assignor
and each and every prior assignee of Lessor's interest in this Lease shall
thereupon be automatically released from all liability for the performance and
observance of covenants and conditions herein contained on Lessor's part to be
performed or observed which shall accrue from and after such Transfer, provided,
however that each respective assignee shall have assumed the obligations of
Lessor hereafter accruing under this Lease. Lessee shall, upon request of
Lessor or any prior assignee or transferee so reLeased, execute, acknowledge and
deliver (without expense to Lessor or the requesting party) a certificate
confirming such reLease. Failure of such transferee to either ask for such
certificate or the failure of Lessee to deliver such certificate shall not,
however, impair the effectiveness of the automatic reLeases set forth herein.
R. MINIMUM CASH INVESTED
During the term of this Lease (including any renewals thereof), IOC-Tunica
will at all times maintain Cash Invested of $4,000,000. To the extent IOC-
Tunica fails to maintain such Cash Invested, then Casino America, Inc.
guarantees the obligations of IOC-Tunica under this Lease, during the period of
time that such Cash Invested is below $4,000,000.
S. CASINO AMERICA, INC. GUARANTEE
Casino America, Inc. guarantees the Base Rent due under this Lease until
such time as the Casino Vessel opens under IOC-Tunica's ownership.
T. RULE AGAINST PERPETUITIES If the rule against perpetuities or any rule
of law with respect to restrictions on the alienation of property or any other
rule of law shall limit the time when any event contemplated by this Lease may
occur, the happening of such event shall not be impaired within any period
permitted by such rule. Such period with respect to the rule against
perpetuities shall expire upon the expiration of twenty (20) years after the
death of the last survivor of the following persons:
The following children of Lessors:
Robertson M. Leatherman, III
Camille Breland, Jr.
Sara Leatherman
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James P. Orr, III
Irene Leatherman Orr
Ellen McCandless
Eliza Wellford
Fred Smith
Annie Buttarazzi
The intent of this provision is to allow to the maximum extent permissible
by an applicable rule of law the occurrence of any event contemplated by this
Lease.
U. Time Periods. Whenever this Lease requires either party to
perform any action within a specified period, or requires that a particular
event occur within a specified period, if the last day of such period is not a
Business Day, then the period shall be deemed extended through the close of
business on the first Business Day following such period as initially specified.
This paragraph shall in no event delay or defer the effective date of any Rent
adjustment or the commencement of any period with respect to which interest on a
payment shall accrue.
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
by each of their respective authorized representatives as of the day and year
first above written.
LESSOR: /s/ Robertson M. Leatherman, Jr.
------------------------------------------
Robertson M. Leatherman, Jr.
/s/ Camille L. Breland
------------------------------------------
Camille L. Breland
------------------------------------------
Leslie F. Leatherman
------------------------------------------
James Potter Orr
------------------------------------------
Edward C. Orr
------------------------------------------
Kate O. McCandless
------------------------------------------
Adele O. Wellford
------------------------------------------
Irene O. Smith
------------------------------------------
Anne O. Keeney
------------------------------------------
Kate O. Buttarazzi
LESSEE: IOC-TUNICA, INC.
By:
--------------------------------
Its: President
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