Exhibit 10.14
LEASE
THIS LEASE is made and entered into this ___ day of November, 1993, by and
between Roger Allen Johnson, Jr. and Charles Bryant Johnson (hereinafter
collectively referred to as "Landlord"), and Magnolia Lady, Inc., a Mississippi
corporation (hereinafter referred to as "Tenant").
SECTION 1
LEASED PROPERTY
1.01. Upon the conditions, limitations, covenants and agreements set forth
below, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
those premises (the "Leased Property") consisting of that land described in
Exhibit "A" attached hereto and incorporated herein by reference, together with
all improvements thereon, and all appurtenances thereto including, without
limitation, all water rights, riparian rights, littoral rights and bottomland
rights. The Leased Property is leased to Tenant for any lawful use, including,
without limitation, gaming. Landlord reserves all mineral rights to subject
leased property and all other reservations set forth in Section 9.04 during the
term of this lease.
1.02. For the period of the lease of that property described in Exhibit
"A", Landlord grants unto the Tenant the exclusive right to conduct gaming on
property described in Exhibit "B" attached hereto, and incorporated herein by
reference. Terms, conditions, limitations, covenants and agreements for lease of
that property described in Exhibit "B", or any part thereof, shall be negotiated
at the time of leasing, but shall not be less than those contained in this
Lease. Landlord reserves unto himself, his heirs and assigns, the right to use
or lease the property described in Exhibit "B" during the term of this lease for
any lawful use without limitation, except for gaming.
1.03. Landlord also covenants, warrants, and agrees hereby to grant Tenant
a right of first refusal as described in Section 9.03 to purchase and/or lease
the property described on Exhibit "C", or any part thereof, attached hereto and
incorporated herein by reference.
1.04. Landlord grants Tenant non-exclusive rights of way or easements
across the parcels described in Exhibits "B" and "C" so as to provide access to
both the North and South sides of U.S. Highway 49. Landlord will not be required
to pay any portion of the costs incurred in the construction of access roads to
the Leased Property nor any expenses that might be incurred in securing access
to U. S. Highway 49. Landlord makes no warranty as to the suitability of the
Leased Property for any road construction or location. There shall be mutual
access between the Leased Property and the property described in Exhibit "C"
flowing under the road elevation or bridge at U. S. Highway 49. Landlord
reserves the right to approve construction and engineering plans for said
right-of-ways and easements prior to the commencement of construction, with said
approvals not to be unreasonably withheld.
SECTION 2
TERM
2.01. The term of this Lease shall be for a period of forty (40) years,
unless terminated earlier as elsewhere herein provided; provided that if the
Commencement Date (as hereinafter defined) is not the first day of a calendar
month the term hereof shall be for forty (40) years plus the period between the
commencement Date and the first day of the next succeeding calendar month.
2.02. (a) Subject to Section 2.02 (b), the start of the term of this Lease
(the "Commencement Date") shall be December 1, 1993, or an earlier date if
specified by the Tenant and notification is made to the Landlord in accordance
with Section 16 below.
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(b) This commencement of this Lease is subject to the satisfaction of
the following conditions precedent:
(i) Tenant shall have received, at Tenant's expense, a leasehold
policy of title insurance in such amounts, and otherwise in a form and from an
insurer or insurers reasonably satisfactory to Tenant, with such endorsements
and reinsurance as Tenant may reasonably request, insuring Tenant as the lessee
hereunder; and,
(ii) Tenant shall have received evidence, in form of survey by a
professional engineer (P.E.) and registered land surveyor (R.L.S.), in form and
substance satisfactory to Tenant, that the Leased Property is accessible by way
of abutting public streets or to public streets over property granted or
dedicated rights-of-way. Tenant shall obtain necessary surveys and title policy
and shall provide proof to the Landlord of such accessibility.
2.03. With time being of the essence, Tenant covenants to promptly and
diligently seek to satisfy the conditions precedent set forth in Section
2.02(b). Landlord shall render Tenant its full and complete cooperation in
satisfying the conditions precedent to this Lease.
2.04. In the event the conditions precedent to Tenant's obligations
hereunder are not satisfied prior to December 1, 1993, Tenant may, by written
notice to Landlord, at any time thereafter elect to terminate this Lease so long
as such conditions are unsatisfied and not waived by Tenant.
2.05. Tenant may, in its discretion, for any reason, elect to terminate
this Lease at any time after the Commencement Date with thirty (30) days notice
to Landlord.
2.06. If this Lease is terminated pursuant to this Section Tenant shall
have no further liabilities and obligations other than to pay rent as accrued as
of the date of termination and to perform those duties required in Sections 7
and 8 below.
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2.07. Tenant shall only build and operate casino and hotel facilities on
the Leased Property; however, the casino and hotel facilities may include
restaurants or related facilities inside or physically connected to such casino
or hotel. Tenant shall not construct or establish other separate structures or
enterprises, including but not limited to food service establishments, R-V
parks, or a convenience store, without the prior approval of the Landlord, which
approval shall not be unreasonably withheld.
SECTION 3
RENT
3.01. After the Commencement Date, but prior to the commencement of gaming
operations on the Leased Property, Tenant shall pay rent at the rate of Two
Thousand Five Hundred Dollars ($2,500) per month. Such rent shall be paid on the
tenth day of each month. All such rental payments shall be credited to and
applied toward monthly rental payments set out in Section 3.03.
3.02. Upon the commencement of gaming operations by Tenant on the Leased
Property Tenant shall pay as rent for its use of the Leased Property a monthly
rental equal to the greater of:
(a) $1.00 for each customer or patron boarding any casino vessel
operated by Tenant on the Leased Property during that month; or
(b) 4% of the "Gross Revenue" as defined in Mississippi Code Ann.
Sec. 75-76-5(p) derived from any and all gaming or gambling activities,
including boarding fees, if any, on any casino vessel moored on the Leased
Property and 4% of the revenue derived from the sale of alcoholic beverages on
such Casino Vessels or the Premises. Any future gaming license fees based on
gross revenue that might be enacted into law by the Mississippi Legislature or
adopted by any political subdivision at the state of Mississippi, including the
imposition of that license
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fee presently authorized by Mississippi Code Annotated "75-76-195, shall be
deducted from gross revenue on a monthly or prorata basis; or
(c) $10,000.00 each month.
The computation of the "Gross Revenue" derived from any and all gaming or
gambling activities shall follow the calculation of gross revenues under the
Mississippi Gaming Control Act, specifically Miss. Code Ann. Sections 75-76-181
and 193 (1972) as now written unless both parties agree to accept and adopt any
subsequent amendment of that statute. To illustrate, if in a given month "Gross
Revenue" as calculated under the Mississippi Gaming Control Act were to be
$800,000.00 and Gross Revenue derived from the sale of alcoholic beverages on
the Leased Premises were to be $100,000.00, the Rent due to Landlord under
paragraph (b) above would be calculated by adding $800,000.00 to $100,000.00,
arriving at a grand total of $900,000.00, and calculating 4% of the grand total
figure to derive a rent of $36,000.00.
The Tenant shall pay each month's rent not later than the tenth day of the
following month as time is of the essence. For any monthly rent payment owing
under this lease and not paid when due, Tenant agrees to pay as additional rent
an amount equal to ten percent (l0%) of the amount owing for that month.
Landlord or its representatives may at reasonable times and upon reasonable
notice examine the books and records of Tenant to verify the number of patrons
and Gross Revenues. Landlord and his professional representatives, including
without limitation attorneys and accountants, will hold all information gathered
through such examination in confidence and will not disclose such information to
anyone without Tenant's written approval. Also, Tenant gives its written and
irrevocable consent for Landlord to obtain copies of any and all reports of
revenue filed with the State Tax Commission of Mississippi or the Mississippi
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Gaming Commission including sales tax returns or reports derived from the
operation of any and all businesses conducted on the Leased Premises.
3.03. If Tenant does not commence gaming operations on the Leased Property
prior to June 1, 1994, Tenant shall in its sole discretion have the right to
extend the time by which it may commence gaming operations from month to month
by paying Landlord a monthly rent of $150.000,00. Such rent payments shall be
due on June 1, 1994, and the tenth day of every month thereafter, beginning July
10, 1994, until such time as Tenant terminates the Lease under the provisions
hereof or Tenant commences gaming operations on the Leased Property. A sum equal
to 75% of the aforesaid rental payments shall be credited to and applied towards
rental payments that will be made upon commencement of gaming operations, as
described in Section 3.02, and the remaining 25% shall not be credited to and
applied towards rental payments.
3.04. Cessation of gambling during the term of this Lease due to any cause
not the fault of the Landlord shall not suspend any provisions of this
Agreement, subject, however, to the provisions set forth in Section 15.
3.05. Tenant shall furnish Landlord with each month's rental payment, full
information regarding gross revenues from gaming, alcoholic beverages, on the
casino vessel or vessels on the Leased Property, and the total number of
customers or patrons boarding the vessel or vessels during that month as
furnished to the Mississippi Gaming Commission or the Mississippi State Tax
Commission, so that the Landlord can accurately compute the amount of rental
due.
3.06. Tenant shall pay to the Landlord an additional rent in the sum of
$3,333.33 per month due and payable on or before the tenth day of each month
with the first payment due on November 10, 1993. Such rental payments shall not
be credited or applied towards rental payments specified in Section 3.03.
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3.07. Tenant shall pay an additional rental of $20,000.00 annually with the
first annual payment to commence on or before June 1, 1994 and which may be used
by the Landlord to pay for premiums of a performance bond in the sum of One
Million Dollars ($1,000,000.00) or more. This performance bond shall cover all
contingent costs of environmental cleanup for the Leased Property following
termination or expiration of the term of the Lease and would only apply in the
event Tenant or its transferees, subletees, or assignees refuse or are
economically unable to remedy any conditions on the premises that violate any
federal, state and local laws and ordinances governing the environment or health
and safety, including those related to toxic or hazardous substances and other
contaminants.
3.08. On or before November 25, 1993, Tenant shall tender to Landlord the
sum of $500,000.00 which shall constitute a prepayment on the purchase of dirt
provided in Section 8 and an advance of all rents to be paid under Section 3,
and upon receipt, the aforesaid sum shall be used to pay in full and completely
satisfy all deeds of trust, mortgages, liens, or other encumbrances in anywise
affecting the properties described in Exhibits "A", "B", and "C".
3.09. For purposes of Section 3, Tenant as herein used shall include all
assignees, licensees, subletees or transferees.
3.10. All rents and other monies are required to be paid by Tenant at the
address and location set forth in Section 16.02 below or at such other place as
Landlord may, from time to time, designate in writing.
SECTION 4
REMOVAL OF EQUIPMENT
4.01. Landlord and Tenant acknowledge that the Leased Property is not
intended to include equipment presently located on the Leased Property. Landlord
shall remove the
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Equipment from the Leased Property (but shall not be required to remove any
buildings or structures located thereon) within the time periods specified in
Section 4.02.
4.02. Landlord will have a period of 60 days (or such lesser period as
Landlord elects) after the Commencement Date to remove the Equipment from the
Leased Property. Landlord will give Tenant written notice once the Equipment has
in fact been removed from the Leased Property. Such notice may not be given and
will not be effective unless the Equipment has in fact been removed from the
Leased Property.
4.03. Landlord covenants and agrees to hold Tenant and the Leased Property
harmless from any and all liability, loss, damage, costs, expenses, including
attorneys' fees, judgments, claims, liens and demands of any kind whatsoever in
connection with, arising out of, or by reason of Landlord's removal of the
Equipment from the Leased Property.
SECTION 5
GOVERNMENT REGULATIONS
5.01. Landlord shall promptly apply for and use its best efforts to obtain
all necessary licenses and other approvals and permits, if any, required for
Landlord from any state or local gaming and liquor licensing authorities
(collectively "Governmental Authorities") for the operation by Tenant of its
business at the Leased Property, at Tenant's expense, and shall otherwise fully
cooperate with such authorities in connection with any approval or permit
applications of Landlord or Tenant, or otherwise, which shall include, without
limitation, provision of such information, books and records as may be requested
by such authorities and compliance with all orders and requirements of such
authorities.
5.02. Tenant shall, at Tenant's sole cost and expense, (a) pay all license
and application fees of Landlord for Approvals (as defined below) which Landlord
is required to obtain pursuant to Section 5.01 if such Approvals are required
generally and routinely for landlords that receive
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percentage rent as contemplated by this Lease; (b) pay all fees and expenses,
including, without limitation, all investigatory fees and expenses of
Governmental Authorities associated with Investigations of Landlord required
generally and routinely for landlords that receive percentage rent as
contemplated by this Lease; and (c) pay all costs to procure information
necessary for such Approvals.
5.03. For the purposes of this Section a "Denial" means (a) Landlord or any
person or entity associated with Landlord is (i) denied a license or is denied
or otherwise unable to obtain any other approval or permit required by any
Governmental Authority with respect to the Leased Property (collectively
"Approvals"), (ii) is required by any Governmental Authority to apply for an
Approval and does not apply within any required time limit, or (iii) withdraws
any application for approval other than upon a determination by the applicable
Governmental Authority that such Approval is not required; or (b) any
Governmental Authority Commences or threatens to commence any suit or proceeding
against Tenant or any affiliate of Tenant or to terminate or deny any Approval
of Tenant or any affiliate of Tenant as a result of Landlord or any person or
entity associated with Landlord. For the purpose of this Section "Equityholder"
means any shareholder, partner or Other Person or entity owning an equity
interest in Landlord. For the purpose of this Section "Other Person" means any
officer, director, employee or other person with similar functions associated
with Landlord. If a denial occurs which may be cured by the replacement or
removal of or disassociation from, one or more Equityholders or Other Persons,
then Landlord shall, within one hundred twenty (120) days from such Denial,
replace, remove or otherwise disassociate from the disapproved Equityholder or
Other Person in a manner acceptable to the Governmental Authorities. Any person
who replaces an Equityholder or other person and receives Denial shall be
afforded the same one hundred twenty (120) day period to
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replace, remove or otherwise disassociate himself. If a Denial occurs and a cure
of the type described in the preceding sentence cannot be effected within the
time limit set forth in the previous sentence, Tenant shall have the right, in
addition to all its other rights and remedies, to elect to (a) terminate this
Lease, or (b), if applicable, exercise the purchase rights described below.
5.04. The purchase right granted Tenant hereunder is only the right to
purchase the equity interest of an Equityholder in Landlord if such Equityholder
is the basis of a Denial. In the event that the basis of Denial is an Other
Person, the purchase right is the right to purchase the Leased Property.
5.05. The total purchase price shall be the fair market value of the
interest acquired on the date of the Denial. However, there shall be factored in
the events resulting in the Denial so that no person or entity is enriched at
the expense of others as a result of improper actions or behavior.
5.06. Tenant shall exercise the purchase right provided in Section 5.02 by
so notifying Landlord in writing. If Tenant and the seller are not able to agree
on the fair market value of the interest to be acquired within ten (10) days of
Tenant's election to exercise its purchase right, then either party may at any
time thereafter elect to cause such value to be determined by appraisal. The
party electing appraisal ("Electing Party") shall include in its notice the name
of this proposed appraiser. Unless the other party ("Responding Party") objects
within ten (10) days after notice from the Electing Party, such appraiser shall
be the sole appraiser. If the Responding Party does so object, such objection
shall be accompanied by its designation of an appraiser. If such two appraisers
cannot agree on the fair market value of the interest being conveyed within ten
(10) days after their appointment, they shall select a third appraiser, the
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third appraiser shall be selected by a judge of the Chancery Court of Coahoma
County upon application of either party. Should such judge not make such
selection within ten (10) days after he or she is requested to do so, such
selection shall be made by the nearest office of the American Arbitration
Association. All appraisers shall make their appraisals within (a) twenty (20)
days after expiration of the period in which the Responding Party can object to
its appointment, in the case of a single appraiser, and twenty (20) days after
the appointment of the third appraiser in the case of the three appraisers. In
the case of an appraisal by three appraisers, the fair market value shall be
conclusively deemed to be an amount equal to the average of the two closest
appraisals. The appraisers shall be persons experienced in appraising the
interest being appraised and in the case of real estate shall be MAI appraisers.
The appraisers shall be impartial and unrelated, directly or indirectly, so far
as employment of services is concerned, to Tenant or the selling party. The
appraisers shall be bound to determine fair market value of the interest being
conveyed subject to the limitations captained in this Lease. Each party shall
pay one-half (1/2) of the cost of the appraisal, including the appraisers' fees,
except that in the case of where two or three appraisers are appointed, each
party shall pay all of the fees of the appraiser appointed by it but, as stated
above, such party shall pay one-half (1/2) of all other appraisal costs.
5.07. The purchase price shall be paid by Tenant (i) at the closing in cash
or (ii) in Tenant's discretion, in equal installments payable over six (6) years
following the closing. If Tenant elects to pay the balance of the purchase price
in accordance with clause (ii) of the preceding sentence, an initial installment
equal to thirty percent (30%) of the balance of the purchase price will be
payable at the closing. The remaining amount will be payable in five (5) equal
installments of principal, plus accrued interest, on each anniversary of the
closing. The
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unpaid principal balance of the purchase price shall bear interest at the
prime rate plus one percent. For the purpose of the preceding sentence, "prime
rate" shall mean the rate of interest per annum from time to time publicly
announced by Bank of America N.A. (or, if Bank of America, N.A. is no longer in
existence or is no longer announcing such a rate, then such other comparable
bank as Tenant may elect) as its prime or reference rate. The rate of interest
shall change on the effective date of any change in the prime rate.
5.08. Upon exercise of the purchase right any equity interest shall be
conveyed to Tenant with full warranties of title and any real estate shall be
conveyed by general warranty deed subject only to matters existing on the date
of Tenant's title insurance policy referred to in Section 2.02 above and matters
caused by Tenant.
5.09. Without limiting the generality of Section 5.11 hereof, in the event
of any conveyance of an equity interest:
(a) if such interest is evidenced by any certificate, at the closing
the seller shall deliver to Tenant duly endorsed certificates evidencing
such equity interest, with signatures guarantied; and
(b) after such purchase Tenant shall be entitled to deduct from any
payments due Landlord hereunder an amount equal to the same percentage
thereof as the percentage such purchased equity interest constitutes of all
equity of its class.
5.10. Without limiting the generality of Section 5.11 hereof, in the event
of any real estate conveyance;
(a) At the closing, Tenant shall receive at Tenant's expense an
extended ALTA owner's policy of title insurance, in the face amount of the
purchase price, and otherwise in a form and from an insurer or insurers
reasonably satisfactory to Tenant, with such
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endorsements and reinsurance as Tenant may reasonably require, insuring
Tenant's title to the Leased Property.
(b) Closing costs other than title insurance shall be allocated in
accordance with the then prevailing practice in Coahoma County,
Mississippi. Rent shall be prorated as of the date of the closing. At the
closing, Landlord shall provide Tenant with a suitable affidavit satisfying
the requirements of the Internal Revenue Code relating to withholding of a
portion of the purchase price in the event of a purchase from a foreign
person.
5.11. Landlord, Tenant and any affected Equityholder shall promptly upon
request prepare, execute and deliver such further documents, and shall promptly
obtain beneficiary statements and similar certificates and perform such other
acts as shall from time to time be reasonably required in effecting the closing
and the better perfecting, assuring, conveying, assigning, transferring and
confirming unto Tenant the property and the rights to be conveyed or assigned
pursuant to this Section.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.01. Landlord hereby represents and warrants to Tenant as follows:
(a) Landlord reasonably believes that it has good and marketable title
to the properties described in Exhibits "A", "B" and "C" subject to any
matters shown in the Title Policy described in Section 2.02(b)(i) above.
Prior to December 1, 1993, Landlord will insure that the properties
described in Exhibits "A", "B", and "C" are free from all deeds of trust,
mortgages, liens, or other encumbrances and, afterwards, will insure that
all properties described in Exhibit "A", all rights of way, and all pits
while being used for dirt excavation as described in Section 8 shall remain
free from all deeds of trust, mortgages, liens, or other encumbrances.
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(b) This Lease constitutes the legal, valid and binding obligation of
Landlord, enforceable in accordance with its terms.
(c) Landlord is not aware of any adverse condition undisclosed to
Tenant which would materially adversely affect Tenant's use of the Leased
Property.
(d) Neither Landlord, nor, to the best of Landlord's knowledge, any
other person associated with Landlord is unwilling to file all necessary
applications to obtain whatever Approvals may be required of such persons
in connection with the Leased Property. Neither Landlord, nor, to the best
of Landlord's knowledge, any other person associated with Landlord has ever
engaged in any conduct or practices which any of the foregoing persons
should reasonably believe would cause such person or entity to be denied
any Approval.
6.02. Tenant hereby represents and warrants to Landlord as follows:
(a) Tenant has full power and authority to enter into this Lease.
(b) The execution, delivery and performance of this Lease by the
person executing the same on behalf of the Tenant have been duly and
validly authorized and this Lease constitutes the legal, valid and binding
obligation of Tenant enforceable in accordance with its terms.
(c) Tenant shall use its best efforts to obtain, in a prompt and
diligent manner, all approvals and regulatory permits required for Tenant's
use for gaming purposes of the Leased Property and agrees to abide by the
laws of the State of Mississippi, including but not limited to the
Mississippi Gaming Control Act, all laws pertaining to and resolutions and
ordinances promulgated by the Yazoo-Mississippi Delta Levee Board, and any
ordinances passed by the Board of Supervisors of Coahoma County,
Mississippi, as well as the laws of the United States of America.
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(d) Tenant is aware that the real property described in Exhibits "A",
"B" and "C" lie in the flood plain of the Mississippi River and is subject
to the River's overflow.
6.03. Landlord further gives no warranty as to the suitability of the
property for any gaming or gaming-related purpose, as provided under the
Mississippi Gaming Control Act. Tenant has had an opportunity to inspect the
property and satisfies itself as to the suitability of the property for its
intended use.
SECTION 7
POSSESSION AND SURRENDER OF LEASED PROPERTY
7.01. Possession of the Leased Property shall be delivered to Tenant on the
Commencement Date. Thereafter, throughout the term of this Lease Tenant shall
have sole and exclusive possession of the Leased Property. Tenant and Tenant's
employees and representatives shall have the right, throughout the period prior
to the Commencement Date, to enter upon the Leased Property for the purposes of
making tests, surveys and obtaining other data, and shall have the right to
disturb the soil thereon. Upon the expiration or sooner termination of the term
of this Lease all improvements on the Leased Property shall belong to Landlord.
7.02. Notwithstanding the foregoing, Tenant may, but shall not be required
to, and at its sole cost and expense, prior to the expiration or sooner
termination of the term of this Lease, remove any and all furniture, fixtures,
equipment, gaming vessels and/or barges, boats and/or other personal property
which Tenant has installed or placed on the Leased Property (all of which are
hereinafter referred to as "Tenant's Property") from the Leased Property and
tenant shall thereupon surrender to Landlord the Leased Property, together with
any of Tenant's Property which Tenant has elected not to remove, in "as-is"
condition, except that Tenant shall be required to remove all structures,
equipment or materials that are destroyed, dilapidated or not
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fit for commercial use, with such removals to be performed in accordance
with the requirements of Section 8 below; provided, however, prior to any
alteration, removal of coffer dams or other work preparatory to removal of the
fixtures, equipment, gaming vessels and/or barges, boats and/or other personal
property, which Tenant has installed, the Tenant shall furnish a performance
bond or other security in an amount sufficient to secure the performance of such
work in conformity with the requirements of Section 8 below.
SECTION 8
ALTERATIONS AND IMPROVEMENTS
8.01. Tenant shall be entitled but not required to make any additions,
alterations, improvements or changes in or to the Leased Property, and any
improvements shall be at the sole cost and expense of the Tenant, and shall be
made in compliance with the standards of all county, state and federal
regulatory agencies. Upon the termination of this Lease, Tenant shall at his
expense, close and cover to ground level, all slips, canals, excavations, pits,
and revetments, unless waived by Landlord. Tenant shall complete such work in
accordance with standards established by the U. S. Army Corps of Engineers and
all pertinent state and federal regulatory agencies.
8.02. All fill dirt excavated and used by Tenant in construction on the
Leased Property and for right-of-way construction on parcels described in
Exhibits "B" or "C" shall be purchased from Landlord or his assigns at the rate
of $1.00 per cubic yard and shall be provided by Landlord from a location on the
premises described in Exhibit "B", but excluding property described in Exhibits
"A" and "C". Tenant shall be responsible for the excavation and transportation
of all fill dirt. Tenant shall be allowed to purchase fill dirt for construction
on the Leased Property and for right-of-ways from other sources, only in the
event Landlord is unable to provide sufficient quantities of fill dirt on the
time schedules required by Tenant.
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SECTION 9
RIGHT OF FIRST REFUSAL
9.01. Landlord grants to Tenant a right of first refusal to purchase the
Leased Property in the event that Landlord shall desire to sell all or any
portion of the Leased Property. In the event Landlord shall have received a bona
fide offer to purchase all or any portion of the Leased Property which Landlord
intends to accept, Landlord shall notify Tenant of such offer, which notice
shall include a copy of such offer. Tenant shall be required within ten (10)
business days of receipt of such notice, to elect by written notice to Landlord
to purchase the Leased Property upon the terms and conditions set forth in the
offer or waive the right of first refusal with respect to such offer. Failure of
Tenant to respond to Landlord's notice within ten (10) business days of delivery
by Landlord shall be deemed to be a waiver of Tenant's right of first refusal.
In the event Tenant elects to exercise its right of first refusal, the closing
shall be the date set for closing in the offer, or thirty (30) days after Tenant
elects to purchase. If the Tenant does not exercise the right of first refusal
with respect to a transaction and that transaction is not finalized on the terms
presented to Tenant within thirty (30) days of the closing date set forth in the
original offer to purchase, Tenant's right of first refusal shall be reinstated.
The Landlord and prospective purchaser shall have the right to extend the
closing date in the contract for sale of the Leased Premises for not more than
twenty-nine (29) days and said extension shall not be deemed to be a new or
amended contract that would give Tenant a right of first refusal. The closing
date shall be a calendar date certain and not a conditional date. This right
shall not extend to any intra-family sale by or between members of Landlord's
family, or corporations wholly owned by Landlord's family. However, anyone
acquiring the Leased Property in a transaction exempt from this right of first
refusal shall themselves thereafter be subject to such right, and the documents
of transfer shall so provide.
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9.02. Landlord grants to Tenant a right of first refusal to purchase the
property described in Exhibit "B" attached in the event that Landlord shall
desire to sell all or any portion of the property described in Exhibit "B" for
any lawful purpose, subject to Tenant's right to conduct gaming on the premises.
In the event Landlord receives a bona fide offer to purchase all or any portion
of the property described in Exhibit "B", which Landlord intends to accept,
Landlord shall notify Tenant of such offer, which notice shall include a copy of
such offer. Tenant shall be required within ten (10) business days of receipt of
such notice, to elect by written notice to Landlord to purchase the property
described in Exhibit "B" upon the terms and conditions set forth in the offer or
waive the right of first refusal with respect to such offer. Failure of Tenant
to respond to Landlord's notice within ten (10) business days of delivery by
Landlord shall be deemed to be a waiver of Tenant's right of first refusal. In
the event Tenant elects to exercise its right of first refusal, the closing
shall be the date set for closing in the offer or thirty (30) days after Tenant
elects to purchase. If Tenant does not exercise the right of first refusal with
respect to a transaction and that transaction is not finalized on the terms
presented to Tenant within thirty (30) days of the closing date set forth in the
original offer to purchase, Tenant's right of first refusal shall be reinstated.
The Landlord and prospective purchaser shall have the right to extend the
closing date in the original offer to purchase for not more than twenty-nine
(29) days and said extension shall not be deemed to be a new or amended contract
that would give Tenant a right of first refusal. The closing date shall be a
calendar date certain and not a conditional date. This right shall not extend to
any intra-family sale by or between members of Landlord's family, or
corporations wholly owned by Landlord's family. However, anyone acquiring the
property described in Exhibit "B" in a transaction exempt from this right of
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first refusal shall themselves thereafter be subject to such right, and the
documents of transfer shall so provide.
9.03. Landlord grants to Tenant a right of first refusal to own or lease
any property described in Exhibit "C" in the event Landlord shall desire to sell
or lease all or any portion of that land described in Exhibit "C". In the event
Landlord shall have received a bona fide written offer to purchase or lease or
an option to purchase or lease all or any of the property described in Exhibit
"C", which Landlord intends to accept, Landlord shall notify Tenant of such
offer, which notice shall include a copy of such offer. Tenant shall be required
within ten (10) business days of receipt of such notice, to elect by written
notice to Landlord to purchase or lease any or all of the property described in
Exhibit "C" upon the terms and conditions set forth in the offer or waive the
right of first refusal with respect to such offer. Failure of Tenant to respond
to Landlord's notice within ten (10) business days of delivery by Landlord shall
be deemed to be a waiver of Tenant's right of first refusal. In the event Tenant
elects to exercise its right of first refusal, the closing shall be the date set
for closing in the offer, or thirty (30) days after Tenant elects to purchase.
If Tenant does not exercise the right of first refusal with respect to a
transaction and that transaction is not finalized on the terms presented to
Tenant within thirty (30) days of the closing date set forth in the original
offer to purchase, Tenant's right of first refusal shall be reinstated. The
Landlord and prospective purchaser or lessee shall have the right to extend the
closing date in the original offer to purchase for not more than twenty-nine
(29) days and said extension shall not be deemed to be a new or amended contract
that would give Tenant a right of first refusal. This right shall not extend to
any intra-family sale, lease or option by or between members of Landlord's
family, or corporations wholly owned by Landlord's immediate family. However,
anyone acquiring the Property described in Exhibit "C" in a
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transaction exempt from this right of first refusal shall themselves
thereafter be subject to such right, and the documents of transfer shall so
provide.
9.04. Should there be a sale or lease of property described in Exhibits
"A", "B", or "C", or any parts thereof, Landlord reserves unto himself all crop
bases, allotments, and history pertaining to any and all crops on the subject
property as administered under the programs of the Agricultural, Stabilization,
and Conservation Service of the United States Department of Agriculture, as well
as all mineral interest in and to the subject property.
SECTION 10
INDEMNIFICATION
10.01. Tenant hereby covenants and agrees to indemnify, save and hold
Landlord, free, clear and harmless from any and all liability, loss, damages,
costs, expenses, including attorneys' fees, judgments, claims, liens and demands
of any kind whatsoever in connection with, arising out of, or by reason of: (a)
Tenant's occupancy and use of the Leased Property and the conduct of its
business thereon; (b) the environmental impact of occupancy and/or use of Leased
Property by Tenant, its subcontractors, assigns, sublessees, officers,
employees, agents, or customers, except that such indemnity shall not apply to
any pre-existing conditions on the premises; (c) the inaccuracy or breach of any
warranties or covenants of Tenant contained in this Lease; and any act,
omission, or negligence of Tenant, its agents or employees while in, upon, about
or in any way connected with the Leased Property.
10.02. Landlord covenants and agrees to indemnify, save and hold Tenant
free, clear and harmless from any and all liability, loss, damages, costs,
expenses, including attorneys' fees, judgments, claims, liens and demands, any
kind whatsoever in connection with, arising out of, or by reason of: (a) the
inaccuracy or breach of any warranties or covenants of Landlord contained in
this Lease; (b) any act, omission or negligence of Landlord, its agents or
employees while in,
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upon, about or in any way connected with the Leased Property; or (c) any matter,
not otherwise specifically provided for in this Lease, arising from or connected
with the Leased Property and accruing on or before the Commencement Date.
10.03. The indemnified party shall provide the indemnifying party notice of
any such claims of liability with reasonable promptness and the indemnifying
party, at its election, shall have the right of defense in such proceedings, by
counsel of its own choosing and reasonably satisfactory to the indemnified
party, at the indemnifying party's expense. The indemnified party shall
cooperate fully in all respects with the indemnifying party in any such defense,
including, without limitation, by making available to the indemnifying party all
pertinent information under the control of the indemnified party. If the
indemnifying party so notifies the indemnified party concurrently with the
indemnifying party's notice of election to defend, the indemnifying party may
defend, but not settle, a claim without waiving its right to assert that such
claim is not subject to indemnity agreements in this Section. If the
indemnifying party elects to defend a claim, the indemnified party may at the
indemnified party's expense participate in such matter with counsel of the
indemnified party's own choosing.
SECTION 11
TENANT'S RIGHT TO MORTGAGE
11.01. Tenant shall have the right, without Landlord's approval, to
mortgage its interest in this Lease, or to pledge, sale-leaseback, or otherwise
assign this Lease as security for financing.
11.02. This Lease may be amended from time to time to the extent reasonably
requested by any prospective mortgagee, provided that such proposed amendments
do not reduce the rent payable to Landlord under this Lease or otherwise
materially and adversely affect the rights of Landlord or its interest in the
Leased Property.
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SECTION 12
ASSIGNMENT, SUBLETTING AND ENCUMBRANCE
Tenant may assign or otherwise transfer any interest herein, or sublease or
license the use of all or any portion of the Leased Property, only with the
written consent of Landlord. Landlord reserves the right of inspection of the
books and records of all sublessees, licensees and assigns of the Tenant.
Landlord may transfer or assign its interest of the Lease, subject to first
receiving necessary prior approval of such transactions by the appropriate
governmental authorities, including the Mississippi Gaming Commission.
Any transfer, assignment, or sublease of the Tenant shall not relieve
Tenant from any liabilities accruing for payment of all rents herein provided
and from any obligation thereafter accruing to keep and be bound by all terms,
covenants and conditions of the Lease, unless Landlord consents to allowing
transferee, assignee or sublessee to assume these obligations, which consent
shall not be unreasonably withheld or delayed.
Tenant is aware that Landlord intends to form a business corporation to
which some or all of the real property described in Exhibits "A", "B" and "C"
shall be conveyed. The owners, officers and directors of the aforesaid
corporations will consist of Landlord and their immediate family members.
SECTION 13
CONDEMNATION
If all or any part of the Leased Property be condemned or taken by a
competent authority for any public or quasi-public purpose, Tenant shall be
entitled to that portion of the award payable on account of damage to or loss of
the leasehold estate of Tenant under this Lease or to the unexpired term
thereof. Landlord shall receive four (4) percent of that portion of the award
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payable resulting from damage to or loss of the leasehold estate of Tenant.
Additionally, Landlord shall be entitled to that portion of the award payable on
account of damage to or loss of Landlord's reversionary interest in the Leased
Property. Nothing herein shall prevent Tenant from prosecuting claims for
matters for which it is separately entitled such as lost profits and moving
expenses. Landlord shall receive four percent (4%) of such proceeds.
SECTION 14
INSURANCE
14.01. Tenant shall, at all times during the term hereof, at its sole cost
and expense, procure and maintain in full force and effect a policy of general
liability insurance assuring against loss, damage or liability for injury to or
death to persons and loss or damage to property occurring in connection with the
Leased Property and all rights-of-way or Tenant's use thereof. Such liability
shall provide that Landlord and his assigns is an additional insured thereunder
and shall be in amounts not less than One Million Dollars ($1,000,000.00) for
bodily injuries to or death to one person and not less than Five Million Dollars
($5,000,000.00) for any one incident or accident on the Leased Property and all
rights-of-way, on which Tenant has an interest.
14.02. Tenant may, during the term hereof, procure additional insurance
against such risk and in such amounts and forms as Tenant shall elect in its
sole discretion. Tenant may maintain the insurance of the kind and in amounts
required under this Lease under a blanket insurance policy or policies which may
cover other properties owned or operated by Tenant or any Affiliate of Tenant as
well as the Leased Property. All insurance maintained pursuant to this Lease may
contain acommercially reasonable deductible clause.
14.03. All insurance proceeds payable under any fire, other casualty and/or
rental insurance shall be payable solely to Tenant and Landlord shall have no
interest therein, unless Tenant has a use and occupancy policy which provides
coverage for loss of profits to which
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Landlord shall receive four percent (4%) of the insurance proceeds. Should
casino vessel be damaged beyond use as a casino or destroyed by fire, windstorm,
or other disaster, Tenant will remove the damaged vessel at its expense.
14.04. Landlord may during the term hereof, procure additional insurance
in his own separate right against any such risks and in such amounts and forms
as he shall elect in his sole discretion without participation of Tenant.
SECTION 15
TENANT'S DEFAULT
15.01. Tenant shall be in default hereunder if:
(a) Tenant shall default in the payment of any sum of money required
to be paid hereunder and such default continues for twenty (20) days after
written notice thereof from Landlord to Tenant, but if Tenant's failure to
timely pay rentals when due result in Landlord sending notices of failure to
Tenant more than three (3) times in a calendar year, Landlord may terminate this
Lease at his sole option; or
(b) Tenant shall default in the performance of any other term,
covenant or condition of this Lease on the part of Tenant to be kept and
performed and such default continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the default
complained of in such notice is of such a nature that the same can be rectified
or cured, but cannot with reasonable diligence be done within said thirty (30)
day period, then such default shall be deemed to be rectified or cured if Tenant
shall, within said thirty (30) day period commence to rectify and cure the same
and shall thereafter complete such rectification and cure with all due
diligence.
(c) Tenant shall make a transfer in fraud of creditors or shall make
an assignment for the benefit of creditors.
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(d) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or Statute of the
United States or any State thereof; or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder.
(e) A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant, which remains unstayed and in effect for more than
thirty (30) days.
(f) Tenant shall construct a gaming facility of less than thirty
thousand (30,000) square feet on the property described in Exhibit "A".
(g) Revocation of gaming license constitutes default.
(h) Cessation of gaming for sixty (60) consecutive days or ninety (90)
days during any twelve (12) month period, if such cessation occurs at Tenant's
election. Such cessation shall not constitute default if it occurs due to causes
beyond Tenant's reasonable control.
15.02. Landlord's remedies.
(a) Upon default by Tenant, Landlord shall have the option of
terminating this Lease.
(b) If Tenant shall fail to pay an installment of rent promptly
on the day when the same shall become due and payable hereunder, and shall
continue in default for a period of thirty (30) days after written notice
thereof by Landlord, or if Tenant shall fail to promptly keep and perform any
other affirmative covenant of this Lease, strictly in accordance with the terms
of this Lease and shall continue in default for a period of thirty (30) days
after written notice thereof by Landlord of default and demand of performance,
then, in any such event, and as often as any such event shall occur, Landlord
may (i) declare the said term ended and enter into said Lease
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Premises, or any part thereof, either with or without process of law, and expel
Tenant or any person occupying the same in or upon said premises, using such
force as may be necessary so to do, and so to repossess and enjoy said premises
in Landlord's former estate; or (ii) re-let the premises applying said rent from
the new Tenant on this Lease and Tenant shall be responsible for no more than
the balance that may be due, should a balance exist. Anything hereinbefore
contained to the contrary notwithstanding, if any default shall occur, other
than in the payment of money, which cannot with due diligence be cured within a
period of thirty (30) days, and Tenant prior to the expiration of thirty (30)
days from and after the giving of notice as aforesaid, commences to eliminate
the cause of such default and proceeds diligently and with reasonable dispatch
to take all steps and to undertake all work required to cure such default and
does so cure such default, then Landlord shall not have the right to declare the
said term ended by reason of such default.
SECTION 16
SERVICE OF NOTICES
16.01. Any and all notices and demands by any party hereto to the other
party, required or desired to be given hereunder shall be in writing and shall
be validly given or made only if signed and deposited in the United States mail,
certified or registered, postage prepaid, return receipt requested or if made by
Federal Express or other similar delivery service keeping records of deliveries
and attempted deliveries or if made by telecopy. Service by United States mail
or delivery service shall be conclusively deemed made on the first business day
delivery is attempted or upon receipt, whichever is sooner. Service by telecopy
shall be deemed made upon confirmed transmission.
16.02. Any notice or demand to Landlord shall be addressed to Landlord at
1850 Old Lula-Rich Road, P. O. Box 397, Lula, Mississippi 38644.
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16.03. Any notice or demand to Tenant shall be addressed to Tenant at c/o
Andrew Tompkins, Lady Luck Casino Hotel, 206 N. Third St., Las Vegas, NV 89101,
facsimile (702) 477-3003.
16.04. Any party hereto may change its address for the purpose of receiving
notices or demands as herein provided by a written notice given in the manner
aforesaid to the other party hereto, which notice of change of address shall not
become effective, however, until the actual receipt thereof by the other party.
SECTION 17
SUCCESSORS AND ASSIGNS
The terms, provisions, covenants and conditions contained in this Lease
shall apply to, bind and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of Landlord and
Tenant, respectively.
SECTION 18
PARTIAL INVALIDITY
If any term, covenant or condition of this Lease, or any application
thereof, should be held by a court of competent jurisdiction to be invalid, void
or unenforceable, all terms, covenants and conditions of this Lease, and all
applications thereof, not held invalid, void or unenforceable, shall continue in
full force and effect and shall in no way be affected, impaired or invalidated
thereof.
SECTION 19
ENTIRE AGREEMENT
This Lease contains the entire agreement between the parties and cannot be
changed or terminated orally.
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SECTION 20
MEMORANDUM OF LEASE
This Lease shall not be recorded. The parties will execute and record a
memorandum of this Lease, within ten (10) days of the execution of the Lease.
SECTION 21
MISCELLANEOUS
21.01. The captions appearing at the commencement of the sections hereof
are descriptive only and for convenience in reference to this Lease and in no
way whatsoever define, limit or describe the scope or intent of this Lease, nor
in any way affect this Lease.
21.02. Masculine or feminine pronouns shall be substituted for the neuter
form and vice versa, and the plural shall be substituted for the singular form
and vice versa, in any place or places herein which the context requires such
substitution or substitutions.
21.03. The laws of the State of Mississippi shall govern the
interpretation, validity, construction, performance and effect of this Lease.
21.04. In the event any action, including any bankruptcy proceeding, is
commenced by either party against the other in connection herewith the
prevailing party shall be entitled to its costs and expenses, including
reasonable attorneys' fees.
21.05. This Lease shall not be construed either for or against Landlord or
Tenant, but this Lease shall be interpreted in accordance with the general tenor
of its language.
21.06. Nothing contained in this Lease shall constitute or be construed to
be or create a partnership or joint venture between Landlord, their successors
or assigns, and Tenant, its successors or assigns.
21.07. Any real and personal property taxes and assessments levied during
the term of this Lease on the real property subject to this Lease will be paid
by the Tenant.
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21.08. Termination of this Lease for any reason, shall terminate any and
all rights and options of the Tenant to that property described in Exhibits "A",
"B" and "C" attached hereto.
21.09. There are no real estate commission costs to be paid in connection
with this closing. The Landlord is not responsible for any brokerage commission,
finder's fee, or other similar compensation arising out of or in connection with
this transaction.
21.10. Tenant shall comply with all provisions of the Mississippi Gaming
Control Act and all laws which would affect the Leased Property.
21.11. Waiver by either party of any breach of any covenant contained in
this agreement shall not be deemed a Waiver of any subsequent breach of that
same covenant or any other covenant.
21.12. Should the Mississippi Gaming commission, the Mississippi Tax
Commission or any other governmental agency levy a cash fine on the Tenant, it
shall be the sole responsibility of Tenant to pay this fine.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.
LANDLORD TENANT:
/s/ Roger Allen Johnson, Jr. MAGNOLIA LADY, INC.
- ----------------------------
Roger Allen Johnson, Jr.
/s/ Charles Bryant Johnson By: /s/ Andrew H. Tompkins
- ---------------------------- ---------------------------------
Charles Bryant Johnson Andrew H. Tompkins, President
STATE OF MISSISSIPPI
COUNTY OF COAHOMA
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 16th day of November, 1993, within my
jurisdiction, the within named Roger Allen Johnson, Jr., who acknowledged that
he executed the above and foregoing instrument.
--------------------------------------
NOTARY PUBLIC
My Commission Expires:
Sept. 13, 1995
- ----------------------------
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STATE OF MISSISSIPPI
COUNTY OF COAHOMA
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 16th day of November, 1993, within my
jurisdiction, the within named Charles Bryant Johnson, who acknowledged that he
executed the above and foregoing instrument.
---------------------------------------------
NOTARY PUBLIC
My Commission Expires:
Sept. 13, 1995
- ---------------------------------
STATE OF NEVADA
COUNTY OF CLARK
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 23rd day of November, 1993, within my
jurisdiction, the within named Andrew H. Tompkins, who acknowledged that he is
President of Magnolia Lady, Inc., a Mississippi corporation, and that for and on
behalf of the said corporation, and as its act and deed he executed the above
and foregoing instrument, after first having been duly authorized by said
corporation so to do.
---------------------------------------------
NOTARY PUBLIC
My Commission Expires:
11-11-95
- ---------------------------------
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