EXHIBIT 99.3
GORDON & SILVER, LTD.
GERALD M. GORDON, ESQ.
Nevada Bar No. 229
JOSEPH S. KISTLER, ESQ.
Nevada Bar No. 3548
THOMAS H. FELL, ESQ.
Nevada Bar No. 3717
BRIGID M. HIGGINS, ESQ.
Nevada Bar No. 5990
3960 Howard Hughes Parkway, 9th Floor
Las Vegas, Nevada 89109
Telephone (702) 796-5555
Facsimile (702) 369-2666
E-Mail thf@gordonsilver.com
Attorneys for Aladdin Gaming, LLC
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
In re:
Case No: BK-S-01-20141-RCJ
ALADDIN GAMING, LLC, Chapter 11
a Nevada limited liability company,
Trial Date: April 17, 2002
Debtor. Time: 9:30 a.m.
________________________________________/
FINDINGS OF FACT AND CONCLUSIONS OF LAW
RE: ALADDIN BAZAAR, LLC'S MOTION FOR PAYMENT OF ADMINISTRATIVE
EXPENSE, OR IN THE ALTERNATIVE, FOR AN ORDER SETTING A DEADLINE FOR
DEBTOR TO ASSUME OR REJECT COMMON AREA PARKING AGREEMENT
Aladdin Bazaar, LLC's Motion For Payment Of Administrative Expense, Or
In The Alternative, For An Order Setting A Deadline For Debtor To Assume Or
Reject Common Area Parking Agreement (the "Motion") having come on regularly for
trial on the 17th day of April, 2002, and continuing thereafter, before the
above-entitled court; Joseph S. Kistler, Esq., Brigid M. Higgins, Esq. and
Thomas H. Fell, Esq., of the law firm of Gordon & Silver, Ltd., appearing on
behalf of Aladdin Gaming, LLC ("Debtor"); Patrick E. Breen, Esq., Jeffrey R.
Patterson, Esq. and Michael C. Pruter, Esq. of the law firm of Allen, Matkins,
Leck, Gamble & Mallory, LLP, appearing on behalf of Aladdin Bazaar, LLC
("Bazaar"); the Court having reviewed the papers, pleadings, exhibits and
affidavits on file, having heard the evidence presented at the hearing on this
matter, having heard the oral arguments of counsel on the 2nd day of May, 2002,
and good cause appearing, hereby enters the following Findings of Fact and
Conclusions of Law.
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I.
FINDINGS OF FACT
The Court makes the following Findings of Fact:
A. ALADDIN BAZAAR, LLC.
1. Bazaar was formed in 1997 to develop, construct and operate a
retail shopping center (the "Desert Passage") and parking facilities ("Common
Area Parking") adjacent to the Aladdin Hotel & Casino (the "Hotel"). The retail
shopping center became known as Desert Passage. Bazaar was formed as a Delaware
limited liability company with its two members being TH Bazaar Centers, Inc.
("THC") and Aladdin Bazaar Holdings, LLC ("Bazaar Holdings"). THC, in turn, is
owned by Trizec R& E Holdings, Inc. ("TrizecHahn") and Bazaar Holdings is owned
by, Aladdin Holdings, LLC ("Holdings"), an entity controlled by the Trust Under
Article Sixth u/w/o Sigmund Sommer, a New York Trust (the "Trust").
2. Pursuant to the Limited Liability Company Agreement of Aladdin
Bazaar, LLC dated September 3, 1997 (the "LLC Agreement")(1), Bazaar Holdings,
as lessor, and Bazaar, as lessee, were to execute a lease for the real property
on which the Desert Passage and the Common Parking Area were to be located (the
"Bazaar Site"). According to the LLC Agreement, the proposed lease of the Bazaar
Site was to be at a "below market ground rent." In exchange for the below market
lease, Bazaar Holdings' capital account was to be credited with the amount of
Ten Million Dollars ($10,000,000).
3. Shortly thereafter the structure of the transaction was
changed from a lease of the Bazaar Site to a transfer of the fee simple
ownership of the Bazaar Site. Pursuant to the First Amendment to LLC Agreement,
Holdings agreed to cause the 34-acre parcel on which the entire project was
located (the "Master Site") to be subdivided creating the Bazaar Site as a
separate parcel. Holdings would then transfer the Bazaar Site to Bazaar (the
"Fee Transfer"). Contemporaneous with the Fee Transfer, Bazaar was to issue a
subordinated debenture to Bazaar Holdings in the amount of Sixteen Million Six
Hundred Sixty-Six Thousand Six Hundred Sixty-
- -----------------------
(1) The LLC Agreement was amended three times, the first time on or about
October 16, 1997, by that certain First Amendment To the Limited Liability
Company Agreement of Aladdin Bazaar, LLC ("First Amendment to LLC Agreement"),
the second time in May of 1998, by that certain Second Amendment To the Limited
Liability Company Agreement of Aladdin Bazaar, LLC ("Second Amendment to LLC
Agreement"), and the third time on March 30, 2001 by that certain Third
Amendment To the Limited Liability Company Agreement of Aladdin Bazaar, LLC
("Third Amendment to LLC Agreement").
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Seven and 00/ 100 Dollars ($16,666,667.00) payable in equal monthly installments
of principal and interest aggregating Two Million Dollars ($2,000,000.00) per
annum.
B. THE LEASE.
4. On February 13, 1998, Aladdin Holdings, LLC executed that
certain Grant, Bargain, and Sale Deed (the "Gaming Deed") which conveyed title
to the Master Site, including the Bazaar Site, to Debtor. The Gaming Deed was
recorded with the Office of the Clark County Recorder on February 13, 1998 as
Book No. 980213 Instrument No. 2046.
5. On or about February 26, 1998, Debtor, as lessor, and Bazaar,
as lessee, entered into a Lease (the "Lease") for the Bazaar Site. The Lease
commenced on February 26, 1998 and, unless terminated earlier, the Lease
terminated upon the earlier of: (i) December 31, 2097; (ii) the date upon which
the Bazaar Site and improvements thereon were taken by a governmental authority
or public use or by eminent domain; and (iii) the Fee Transfer. According to the
Lease, Bazaar was to pay Debtor "from and after the date of the grand opening of
the [Desert Passage] to the public ...an annual rent of Ten and No/100
($10.00)".
6. Pursuant to the Lease, Debtor agreed to cause the Bazaar Site
to be subdivided into a separate parcel from the Master Site "as soon as
reasonably practicable, but in any event to complete the Commercial Subdivision
prior to the 'FIRST SCHEDULED OPENING DATE' (as such term is defined in the Site
Work [Development and Construction] Agreement)." The Fee Transfer was to be
"free and clear of any liens created by [Debtor] and subject only to the liens
created by [Bazaar], the Permitted Exceptions and any encumbrances and
exceptions created in accordance with the provisions hereof."
C. THE PARKING AGREEMENT AND THE REA.
7. On February 26, 1998, Debtor and Bazaar also entered into that
certain Common Area Parking Use Agreement ("Parking Agreement") and the
Construction, Operation and Reciprocal Easement Agreement (the "REA"). The REA
provided that Debtor and its Permittees (as defined in the REA) were granted a
non-exclusive easement (the "Parking Easement") to use the Common Parking Area.
8. The Parking Agreement sets forth the parties' rights and
obligations regarding the
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use of the Common Parking Area. Section 10.9 of the Parking Agreement provides
that "[t]he relationship of the parties is that of licensor and licensee".
Recital E of the Parking Agreement provides that "[Debtor] and its Permittees
must have the non-exclusive right to use the Common Parking Area and [Bazaar]
agrees to grant to [Debtor] and its Permittees such non-exclusive right to use
the Common Parking Area, pursuant to the covenant, terms and conditions
hereinafter set forth."
9. Pursuant to the Parking Agreement, Debtor has the
non-exclusive right to use the Common Parking Area. Pursuant to the Parking
Agreement, Bazaar has the right to manage and establish reasonable rules
regarding the non-exclusive joint use between Bazaar and Debtor.
10. The Parking Agreement requires Debtor to pay Bazaar a "Base
Fee" of $3,200,000.00 annually, subject to CPI increases as set forth in Section
3.1(b) of the Parking Agreement, payable in twelve equal monthly installments,
and to pay its allocable share of costs and expenses of the Common Parking Area
(the "Parking Operating Costs"). The Parking Operating Costs were agreed to be
split by the parties with Debtor bearing 75% of these costs ("Debtor's Allocable
Share of Parking Operating Costs") and Bazaar bearing 25% of these costs. The
Base Fee and Debtor's Allocable Share of Parking Operating Costs are referred to
collectively as the "Use Fee."
11. The Parking Agreement specifically defines "Parking Operating
Costs" as follows:
Parking Operating Costs. "Parking Operating Costs" shall mean all costs
and expenses of every kind and nature incurred by Bazaar Company in
connection with its operation, management, maintenance, repair,
replacement or restoration of the Common Parking Area, which costs and
expenses are not allocated among the parties as Common Costs (as that
term is defined in the REA) and are not associated with the Retail
Facility, including without limitation the following:
(a) all payments of an operator of any portion of the Common
Parking Area, including administrative fees paid to and actual
costs incurred by Bazaar Company as operator (and Bazaar
Company shall be entitled to a ten percent (10%) override to
cover Bazaar Company's general and administrative costs) [the
"Administrative Surcharge"];
(b) any use taxes or other fees or charges relating to the parking
operations imposed by Clark County or any other governmental
authority claiming jurisdiction over the Site;
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(c) the costs of licenses, certificates, permits and inspections,
and the cost of contesting the validity or applicability of
any governmental enactments which may affect Parking Operating
Costs;
(d) all real estate taxes and special assessments allocable to the
Common Parking Area, in accordance with Section 6.6 of the
REA;
(e) the cost of insurance premiums with respect to insurance
policies required to be carried by Bazaar Company by its
Mortgagee, the REA, per this Agreement, including business
interruption insurance, in an amount equal to the difference
between the aggregate insurance premiums paid by Bazaar
Company for the Bazaar Site and the aggregate insurance
premiums which would have been payable by Bazaar Company if it
had only carried required insurance with respect to the Retail
Facility;
(f) the cost of supplying utilities, and operating, maintaining,
repairing, renovating and managing all systems and equipment;
(g) wages, salaries and other compensation and benefits of all
persons engaged exclusively (appropriate pro rata portion
thereof) in the operation, management, maintenance or security
of the Common Parking Area, and employer's social security
taxes, unemployment taxes or insurance, and any other taxes
which may be levied on such wages, salaries, compensation and
benefits;
(h) payments under the Bazaar Lease (excluding rent) or under any
easement, license, operating agreement, declaration,
restrictive covenant or instrument pertaining to the sharing
of costs by the Common Parking Area;
(i) the cost of janitorial service, alarm and security service,
trash removal, maintenance of public areas, maintenance and
replacement of curbs, walkways and roofs;
(j) the cost of landscaping, relamping, supplies, tools, equipment
and materials, and all fees, charges and other costs incurred
in connection with the management, operation, repair and
maintenance of the Common Parking Area pursuant to Section 6.1
of this Agreement; and
(k) the cost any capital improvements or other costs (i) which are
intended as a labor-saving device or to effect other economies
in the operation or maintenance of the Common Parking Area,
(ii) made to the Common Parking Area after the Opening Date
that are required under any governmental law or regulation
enacted after the Effective Date unless such capital
improvement or other cost should have been incurred in
connection with the initial construction of the Common Parking
Area in order to comply with then existing governmental laws
and regulations; or (ii) which are reasonably determined by
Bazaar Company to be in the best interests of the Common
Parking Area.
See Parking Agreement, pp. 6-7.
12. Pursuant to the Parking Agreement, "[i]f and to the extent any
services or transactions referred to in subsections (a) through (k) of [the
Parking Operating Costs] definition
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are performed by Affiliates of [Bazaar], they shall be at competitive market
rates."
13. Bazaar was required to submit to Debtor promptly following the
execution of the Parking Agreement a reasonable estimate of the total Parking
Operating Costs to be incurred by Bazaar during the next calendar year (the
"Budget") and each party's Allocable Share of the Parking Operating Costs with
respect thereto (the "Estimated Cost Statement"). Bazaar was then required to
submit a Budget "at least ninety (90) days prior to the first day of the
calendar month following the first anniversary of the Effective Date." Debtor
could object to the Budget or the Estimated Cost Statement within thirty (30)
days of receipt of each respective document and the parties were to negotiate in
good faith to reach an agreement concerning the disputed Budget or the Estimated
Cost Statement.
D. THE DISPUTE OVER PARKING OPERATING COSTS.
14. The primary dispute between Debtor and Bazaar relating to the
Parking Operating Costs was whether Debtor was obligated to pay certain valet
parking costs attributable to Bazaar's operation of the valet parking operations
located in the Common Parking Area adjacent to the Desert Passage (the "Parking
Garage Valet") and the valet parking operations located along Harmon Avenue (the
"Harmon Valet"). Debtor contends that the Parking Garage Valet and the Harmon
Valet fall within the exclusion to the definition of Parking Operating Costs as
a cost that is associated with the "Retail Facility", and thus, Debtor is not
responsible for payment of any portion of these valet costs. Bazaar contends
that valet parking costs are included under the Parking Agreement as "[a]ll
costs and expenses of every kind and nature incurred by Bazaar Company in
connection with its operation, management, maintenance, repair, replacement or
restoration of the Common Parking Area, including, without limitation, the
following...." Bazaar further contends that the parties discussed, agreed and
intended that valet parking costs be included as Parking Operating Costs.
15. Pursuant to the Parking Agreement, Bazaar began forwarding
Budgets and Estimated Cost Statements to Debtor. Between February of 2000 and
June 2000, Bazaar forwarded certain budgets and estimated cost statements to
Debtor which did not include a line item for the Parking Garage Valet or the
Harmon Valet.
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16. On August 30, 2000, Bazaar forwarded another budget to Debtor
(the "August 30 Budget"). The August 30 Budget for the first time included a
line item for "valet parking" at a cost of $558,457.00. Each budget submitted to
Debtor from Bazaar subsequent to the August 30 Budget has included a line item
for "valet parking."
17. Shortly after its receipt of the August 30 Budget, Debtor
informed Bazaar that it disputed that valet parking costs were intended to be
included as Parking Operating Costs.
18. Pursuant to the 2000 Actual Expense Statement prepared by
Bazaar the actual Parking Operating Costs for year 2000 totaled $1,265,118.71.
Of that amount, Debtor's Allocable Share of Parking Operating Costs was
$948,839.03. Debtor was credited with $525,919.25 for 2000 property taxes
prepaid by Debtor, $60,000 in utilities paid by Debtor, and $250,000.00 for
payments made by Debtor. Pursuant to the 2000 Actual Expense Statement, Debtor
owed Bazaar $112,919.78 for 2000 Parking Operating Costs.
19. Among other expenses, the 2000 Actual Expenses Statement
included: (l) net charges for valet operations of $220,408.47; (2) an
Administrative Surcharge on valet expenses of $22,040.85; (3) an Administrative
Surcharge on 2000 property taxes of $35,061.28 ($350,612.84 x 10%); and (4) an
Administrative Surcharge on 2000 utilities for $8,463.70 ($84,637.00 x 10%).
20. Pursuant to the 2001 Pre-Petition Actual Expense Statement
prepared by Bazaar, the Parking Operating Costs for the pre-petition period from
January 1, 2001, to September 27, 2001 totaled $2,296,916.14. Of that amount,
Debtor's Allocable Share of Parking Operating Costs was $1,722,687.10. Debtor
was credited for $108,000.00 for utilities paid by Debtor and $500,000.00 for
payments made by Debtor. Pursuant to the 2001 Pre-Petition Actual Expense
Statement, Debtor owed Bazaar $1,114,687.10 for 2001 Pre-Petition Parking
Operating Costs.
21. Among other expenses, the 2001 Pre-Petition Actual Expenses
Statement included: (1) net charges for valet operations of $485,544.85; and (2)
an Administrative Surcharge on valet expenses of $48,554.49 ($485,544.85 x 10%).
22. At the initial stages of the conception and development of the
project, Bazaar and Debtor discussed operating one integrated valet operation
for the entire Master Site. The parties
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abandoned the concept of one integrated valet operation and understood that they
would each handle their own valet operations.
23. The Harmon Valet was not included in the traffic studies
submitted by the Debtor to Clark County for approval. As a condition to Bazaar's
permit from Clark County, the Harmon Valet is to be used only by patrons of
Desert Passage's restaurants which face Harmon Avenue and not by hotel/casino
patrons or patrons of the Desert Passage, excluding the Harmon Avenue
restaurants.
24. Construing the Parking Agreement to include costs of the
Harmon Valet as Parking Operating Costs would be contrary to the conditions to
Bazaar's permit with Clark County to use the Harmon Valet for Harmon Avenue
restaurant patrons only. The parties did not intend to include the Harmon Valet
as a "Parking Operating Cost" in the Parking Agreement. In addition, the Harmon
Valet operation is excluded from the definition of "Parking Operating Costs" as
it is a cost "associated with the Retail Facility"" as that phrase is used in
the Parking Agreement.
25. The parties did not intend to include costs of the Parking
Garage Valet as "Parking Operating Costs". The costs of the Parking Garage Valet
are not included in the definition of "Parking Operating Costs" in the Parking
Agreement. In addition, the Parking Garage Valet operation is primarily for the
benefit of the Desert Passage, so that the Parking Garage Valet costs are
excluded from the "Parking Operating Costs" as they are costs "associated with
the Retail Facility."
26. In addition, Debtor disputes various other items included in
the Budget and Estimated Cost Statements: (i) Debtor believes the insurance and
security charges are overstated and inflated; and, (ii) Debtor disputed the
Administrative Surcharge of 10% on certain Parking Operating Costs for which
Debtor contends Bazaar provided no administrative oversight (i.e., the writing
of checks for insurance, utilities and property taxes) or on items which are
inappropriately charged to Debtor as Parking Operating Costs (valet and 2000
property taxes). Bazaar contends that the insurance and security costs are
actually incurred and reasonable. Bazaar further contends that the
Administrative Surcharge was an agreed to term of the Parking
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Agreement which provided for a 10% surcharge on all costs and expenses
associated with the "operation, management, maintenance, repair, replacement or
restoration of the Common Parking Area."
27. The parties intended and agreed that Bazaar is entitled to a
10% Administrative Surcharge on all costs properly included in Parking Operating
Costs that are paid by Bazaar.
28. The net valet costs of $220,408.47 and the Administrative
Surcharge on those valet costs of $22,040.85 included in the 2000 Actual Expense
Statement are not Parking Operating Costs.
29. The net valet costs of $485,544.85 and the Administrative
Surcharge on valet costs of $48,554.49 included in the 2001 Pre-Petition Actual
Expense Statement are not Parking Operating Costs.
30. Debtor paid $793,500.00 of the utilities listed on the 2001
Actual Expense Statement. Bazaar still owes Debtor for payment of the
$793,500.00.
31. The Administrative Surcharge charged by Bazaar on expenses
actually paid by Debtor is not required under the Parking Agreement and is
unreasonable.
32. Debtor paid the 2000 property taxes for the Bazaar Site in the
amount of $525,919.25 and an Administrative Surcharge on those property taxes in
the amount of $35,061.28.
33. Debtor paid $60,000.00 of the utilities listed on the 2000
Actual Expense Statement and Bazaar billed Debtor an Administrative Surcharge on
that $60,000.00 of $6,000.00
34. Debtor paid $108,000.00 of the utilities listed on the 2001
Pre-Petition Actual Expense Statement and Bazaar billed Debtor an Administrative
Surcharge on that $108,000.00 of $10,800.00.
35. After deleting valet expenses and the administrative fees, the
Court finds the remainder of Bazaar's Estimated Allocable Share of Parking
Operating Costs for post-petition 2001 and 2002 to be reasonable and payable by
Debtor as set forth under the Conclusions of Law, paragraph 12 and the
accompanying table below, subject to the provisions of the Parking
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Agreement requiring a "true up" at the end of the year.
E. THE FEE TRANSFER AND THE NOTE.
36. As envisioned in the First Amendment to LLC Agreement, the
Bazaar Site was subdivided from the Master Site. However, as Debtor owned fee
simple title to the Bazaar Site, on September 5, 2000, Debtor (and not Bazaar
Holdings and Holdings) executed that certain Grant, Bargain, Sale Deed (the
"Deed") conveying the Bazaar Site to Bazaar. The Deed was recorded with the
Office of the Clark County Recorder on November 20, 2000 as Book No. 20001120
Instrument No. 00861.
37. On or about November 20, 2000, the Lease was terminated
pursuant to that certain Lease Termination Agreement between Debtor and Bazaar.
The Lease Termination Agreement acknowledges that "after the [Bazaar Site is]
created as a separate legal parcel, [Debtor] and [Bazaar] shall terminate the
Lease in connection with the transfer of fee simple title of the [Bazaar Site]
to [Bazaar]."
38. Also as contemplated by the First Amendment to LLC Agreement,
Bazaar executed that certain Subordinated Non-Negotiable Promissory Note (the
"Note") dated November 20, 2000, in favor of Debtor in the principal amount of
Sixteen Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars
($16,666,667.00). The Note provides that to the extent of available Cash Flow
(as defined in the LLC Agreement) on or before the 10th of each month,
"principal and interest shall be due and payable in equal monthly installments
of $166,667.67 each." The interest rate of the Note is 11.99682317% per annum.
To the extent that there is insufficient Cash Flow the monthly principal and
interest payments are "deferred." The Note matures on November 19, 2069.
39. "Cash Flow"" is defined in the LLC Agreement as "the sum of
any and all Ordinary Cash Flow and Extraordinary Cash Flow." "Ordinary Cash
Flow", in turn, is defined as "the amounts if any, of all cash receipts of
[Bazaar] (exclusive of the proceeds of an Extraordinary Event; inclusive,
however, of the proceeds from any rent or business interruption insurance) as of
any applicable determination date in excess of the sum of (i) all cash
disbursements (inclusive of any guaranteed payment within the meaning of Code
Section 707(c)
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paid to any Member but exclusive of disbursements made from the proceeds of an
Extraordinary Event and/or disbursement made to the Members in their capacities
as such) of [Bazaar] prior to that Date; and (ii) a reserve, established in the
reasonable discretion of [THC] for anticipated cash disbursements that will have
to be paid before additional cash receipts from third parties that are
attributable to such Bazaar Improvements [i.e., the Desert Passage and the
Common Parking Area] will provide the funds therefore [the "Reserves"]."
40. Bazaar has never made a payment under the Note. Bazaar
contends that no payments are yet due under the Note because: (a) there is no
available "Cash Flow" to make payments pursuant to the Note; (b) Debtor failed
to transfer the Bazaar Site free of liens caused by Debtor, which was a
condition to the Note, and thus the Note is not yet effective; (c) the existence
of the liens caused by Debtor, as well as an alleged loan to value deficiency,
cause the senior Fleet mortgage to be in default and, so long as that loan is in
default no payments are due under the Note; and (d) Bazaar has monetary claims
against Debtor which completely or partially offset any amounts which might
otherwise be due under the Note.
41. Ms. Wendy Godoy, through THC on behalf of Bazaar, took the
position that there was insufficient available Cash Flow (as defined in the LLC
Agreement) as a result of certain Reserves taken by Bazaar, such that payments
were not required under the Note.
42. Pursuant to the Third Amendment to LLC Agreement, Bazaar paid
Bazaar Holdings $15,000,000.00 which constituted "Extraordinary Cash Flow"
pursuant to Section 12.12 of the LLC Agreement and therefore, should have been
included in the calculation of Cash Flow.
43. A Cash Reserve Estimate (the "Cash Reserve Estimate") was
prepared by Bazaar's expert, Ronald Greenspan, and includes a "Total Cash & Net
Cash Flow Before Repayment and Reserves" of $16,517,228.00 as of February 28,
2002. A copy of the Cash Reserve Estimate was admitted into evidence at the
evidentiary hearing in this matter. The Reserves in the Cash Reserve Estimate
were determined with the assistance of Ms. Godoy. The Reserves in the Cash
Reserve Estimate are referenced by number and shall be so referenced in these
Findings of Fact and Conclusions of Law for the sake of convenience.
44. Bazaar is reserving 100% for the following items: (1)
Forecasted tenant allowance
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payments to tenants with executed leases in the amount of $1,024,539.00 (No. 6
on the Cash Reserve Estimate); (2) Construction/Security deposits in the amount
of $227,662.00 (No. 7 on the Cash Reserve Estimate); (3) Whiting Turner Final
Payment in the amount of $688,023.00 (No. 8 on the Cash Reserve Estimate); (4)
Nevada Power Outstanding Bills for January 2002 in the amount of $181,695.00
(No. 9 on the Cash Reserve Estimate); (5) Nevada Power Bills Outstanding for
February 2002 in the amount of $190,000.00 (No. 10 on the Cash Reserve
Estimate); and (6) working capital for two months/contingency in the amount of
$3,070,000.00 (No. 11 on the Cash Reserve Estimate).
45. Bazaar anticipates making cash disbursements for: (1)
Forecasted tenant allowance payments to tenants with executed leases in the
amount of $1,024,539.00 (No. 6 on the Cash Reserve Estimate); (2)
Construction/Security deposits in the amount of $227,662.00 (No. 7 on the Cash
Reserve Estimate); (3) Whiting Turner Final Payment in the amount of $688,023.00
(No. 8 on the Cash Reserve Estimate); (4) Nevada Power Outstanding Bills for
January 2002 in the amount of $181,695.00 (No. 9 on the Cash Reserve Estimate);
and (5) Nevada Power Bills Outstanding for February 2002 in the amount of
$190,000.00 (No. 10 on the Cash Reserve Estimate).
46. Bazaar does not anticipate making a cash disbursement for the
$3,070,000.00 working capital Reserve (No. 11 on the Cash Reserve Estimate).
47. Bazaar is also reserving 100% for payment of the following:
(l)a $15,500,000.00 principal reduction to Fleet Capital Corporation ("Fleet")
on Bazaar's first mortgage on the Desert Passage (No. 12 on the Cash Reserve
Estimate); (2) $21,930,702.00 for mechanics' liens related to the construction
of the Hotel (the "Gaming Liens") (No. 13 on the Cash Reserve Estimate) and (3)
the Nevada Power bill owed pre-petition in the amount of $1,361,398.00 (No. 14
on the Cash Reserve Estimate).
48. Fleet holds the first mortgage on the Desert Passage.
According to Ms. Godoy, the $15,500,000.00 Reserve for Fleet (No. 12 on the Cash
Reserve Estimate) is for a potential pay down to bring Bazaar back in compliance
with the loan-to-value ratio on the mortgage for the Desert Passage.
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49. Negotiations between Bazaar and Fleet are ongoing. At this
time, it is not certain that Bazaar will have to pay $15,500,000.00 to Fleet.
Therefore, Bazaar cannot reserve for that payment at this time. As soon as a
definite amount to be paid to Fleet is determined, then Bazaar may reserve for
that payment.
50. Bazaar has title insurance on the Bazaar Site. The title
insurer has accepted Bazaar's defense for the Gaming Liens (No. 13 on the Cash
Reserve Estimate) with a reservation of its rights to contest coverage under the
policy.
51. Based upon the acceptance of the defense by the title
insurance company and certain defenses available to Bazaar on the Gaming Liens,
at this juncture it is more probable then not that Bazaar will not have to pay
the Gaming Liens.
52. Bazaar anticipates making cash disbursements for the Nevada
Power bill owed pre-petition in the amount of $1,361,398.00 (No. 14 of the Cash
Reserve Statement).
53. Bazaar is also reserving 50% of the following total amounts:
(1) $7,292,233.00 on mechanics' liens related to tenant improvements done for
tenants of the Desert Passage ("Tenant Liens") (No. 15 on the Cash Reserve
Estimate); (2) $1,914,958.00 for mechanics' liens related to the construction of
the Desert Passage ("Construction Liens") (No. 16 on the Cash Reserve Estimate);
(3) $5,362,640.00 for litigation relating to the Desert Passage ("Retail
Litigation") (No. 17 on the Cash Reserve Estimate); and (4) $802,522.00 for
litigation related to the Common Parking Area ("Parking Garage Litigation") (No.
18 on the Cash Reserve Estimate).
54. Bazaar anticipates making cash disbursements for 50% of the
claims represented by the Construction Liens (No. 16 on the Cash Reserve
Estimate), the Retail Litigation (No. 17 on the Cash Reserve Estimate) and the
Parking Garage Litigation (No. 18 on the Cash Reserve Estimate).
55. Bazaar filed notices of non-responsibility for certain of the
Tenant Liens. Bazaar has certain other defenses to the Tenant Liens and Bazaar
may have recourse against the respective tenants of Desert Passage. To the
extent: that Bazaar filed a notice of non-responsibility relating to a Tenant
Lien, that Bazaar has a valid defense to a Tenant Lien, or that
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the respective tenant still occupies the premises and is not in bankruptcy or
otherwise in a clear status of being unable to pay the liens it has created, the
Reserve for the Tenant Liens (No. 15 on the Cash Reserve Estimate) is
disallowed. Conversely, if Bazaar did not file a notice of nonresponsibility or
is advised by counsel or a court that such notice of nonresponsibility is not
effective, has no valid defense to the mechanic's lien claim or the tenant is no
longer in the premises or is in bankruptcy, or is otherwise unable to pay the
lien claim, then Bazaar may reserve for such Tenant Liens.
56. The Cash Reserve Estimate is a rolling document and is
intended to be adjusted upward or downward from time to time.
57. The Note provides, "During the existence of any default beyond
applicable cure periods under the First Mortgage Debt . . . [Debtor] shall not
seek to collect any sums due hereunder from [Bazaar] and shall not exercise any
of the rights and remedies provided to it against [Bazaar] hereunder, in law or
in equity." See Note, p. 3, T7(c).
58. Pursuant to the Note, if Bazaar is in default under the Fleet
obligation, payments cannot be made to Debtor.
59. The existence of the Gaming Liens on the Bazaar Site
constituted an event of default under Bazaar's loan obligation to Fleet.
F. THE OFFSET RIGHTS.
60. The Note provides that "[Bazaar] shall have the right to
offset against amounts payable to [Debtor] under this Note any amounts then due
and owing to by [Debtor] to [Bazaar] pursuant to that certain Common Parking
Area Use Agreement, dated February 26, 1998." See Note, p. 3, paragraph 9.
Section 3.5 of the Parking Agreement also provides for offset rights as follows:
The parties hereto are relying on full performance
under both this Agreement and the. .. Lease. The
failure of [Debtor] to pay the Use Fee shall be
offset against any amount due from Bazaar . . . under
the . . . Lease and against the payments due under that
subordinated debenture (the "Subordinated Debt")
issued by Bazaar . . to [Debtor] upon the terms and
conditions set forth in the Amended LLC Agreement
(the "Offset Right").
61. On or about December 20, 2000, counsel for Bazaar sent a
letter to various parties, including the Debtor ("Offset Notice"). The December
20, 2000 letter was entitled
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"Notice of Default, Notice of Offset and Demand For Cure". The Offset Notice set
forth various alleged defaults by Debtor under various agreements, including the
Parking Agreement. Bazaar then asserted its right of setoff against any amounts
owed by Bazaar to Debtor, including among other items, amounts due to Debtor
under the Note.
G. THE MOTION.
62. By the Motion, Bazaar sought an Order from the Court Setting a
Deadline for Debtor to assume or reject the Parking Agreement pursuant to
Section 365(d)(4) of the Bankruptcy Code as an unexpired lease of nonresidential
property. Bazaar further sought to require Debtor to pay the Base Fee and the
Debtor's Allocable Share of Parking Operating Costs as an administrative claim
pursuant to Section 503(b)(l)(A) of the Bankruptcy Code.
63. Debtor objected to the Motion and asserted that the Parking
Agreement is not an unexpired lease of nonresidential real property. Rather,
Debtor asserts that the Parking Agreement is a license, and thus, Debtor would
not be required to assume or reject the Parking Agreement within the sixty (60)
days prescribed by Section 365(d)(4) of the Bankruptcy Code. Moreover, Debtor
asserted that the Debtor's Allocable Share of Parking Operating Costs did not
constitute administrative expenses pursuant to Section 503(b)(l)(A) of the
Bankruptcy Code. Finally, the Debtor asserted the right to setoff amounts due
under the Parking Agreement against amounts due from Bazaar.
64. In the Order On Aladdin Bazaar, LLC's Motion For Payment Of
Administrative Expense, Or In The Alternative, For An Order Setting A Deadline
For Debtor To Assume Or Reject Common Area Parking Agreement (the "Order")
entered on January 30, 2002, the Court limited the issues for the evidentiary
hearing to: (1) the amounts and priority of payment due under and the nature of
the Parking Agreement; (2) the amounts, if any, due under the Note; (3) the
right of Debtor or Bazaar to exercise the right of setoff for payments due under
the Parking Agreement or the Note; and (4) whether and when the Court should
compel the Debtor to assume or reject the Parking Agreement.
///
///
///
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II.
CONCLUSIONS OF LAW
Based on the foregoing Findings Of Fact, the Court hereby concludes
that:
A. THE PARKING AGREEMENT IS A LICENSE AND NOT AN UNEXPIRED LEASE OF
NONRESIDENTIAL REAL PROPERTY.
1. Pursuant to the plain language of the Parking Agreement, the
Parking Agreement is a license and not an unexpired lease of nonresidential
property pursuant to Section 365(d)(4) of the Bankruptcy Code. Thus, Debtor was
not required to assume or reject the Parking Agreement within sixty (60) days of
the filing of Debtor's bankruptcy case. However, it is in the best interest of
the parties for the Debtor to determine whether it will assume or reject the
Parking Agreement within thirty (30) days of the entry of the Order Re: Aladdin
Bazaar, LLC's Motion For Payment of Administrative Expense, Or In The
Alternative, For An Order Setting Deadline For Debtor To Assume Or Reject Common
Area Parking Agreement.
B. THE PARKING OPERATING EXPENSES.
2. The costs of operating the Harmon Valet are not "Parking
Operating Costs" to be paid by Debtor.
3. The cost of operating the Parking Garage Valet are not
""Parking Operating Costs" to be paid by Debtor.
4. Debtor does not owe Bazaar for the valet expenses or for the
Administrative Surcharge on the valet expenses listed in the 2000 Actual Expense
Statement and the 2001 Pre-Petition Actual Expense Statement and such amounts
are disallowed.
5. The Administrative Surcharge charged by Bazaar on expenses
actually paid by Debtor is disallowed.
6. The Administrative Surcharge charged by Bazaar on utility
expenses actually paid by Debtor is disallowed. Debtor and Bazaar should move
quickly to cause Desert Passage and the Common Parking Area to be metered
separately from the Debtor's hotel and casino property, so that Bazaar can
attain direct customer status and pay its own power bill directly and bill
Debtor for its allocable share plus the Administrative Surcharge.
7. Bazaar's Administrative Surcharge on the 2000 property taxes
paid directly by
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Debtor in the amount of $35,061.28 ($350,612.84 x 10%) is disallowed.
8. Bazaar's Administrative Surcharge on the 2000 utilities paid
directly by Debtor in the amount of $6,000.00 ($60,000.00 x 10%) is disallowed.
9. Bazaar's Administrative Surcharge on the 2001 utilities paid
directly by Debtor in the amount of $10,800.00 ($108,000.00 x 10%) is
disallowed.
10. After making adjustments to the 2000 Actual Expense Statement
for the Administrative Surcharge on the property taxes and utilities paid by
Debtor, the valet parking expenses and the Administrative Surcharge on the
valet parking expenses, Bazaar overcharged and owes Debtor $101,713.17,
subject to offset rights, as follows:
Total Parking Operating Costs $1,265,118.71
LESS ADJUSTMENTS:
Net Valet Expenses ($ 220,408.47)
Administrative Surcharge on valet expenses ($ 22,040.85)
Administrative Surcharge on property taxes ($ 35.061.28)
Total Adjusted Parking Operating Costs $ 987,608.11
Debtor's Allocable Share @ 75% $ 736,206.08
LESS CREDITS:
Property Taxes Paid by Debtor ($ 525,919.25)
Utilities Credit Offset $12,000 per month for 5 months ($ 66,000.00)
plus 10% Administrative Surcharge
Other Cash Payments Made By Debtor in 2000 ($ 250,000.00)
NET OVERPAID BY DEBTOR $ 101,713.17
///
///
///
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11. After making adjustments to the 2001 Pre-Petition Actual
Expense Statement for the valet parking expenses and the Administrative
Surcharge on the valet parking expenses and the utilities paid by Debtor,
Debtor owes Bazaar $656,893.40, subject to offset rights, as follows:
Total Parking Operating Costs $2,296,916.14
LESS ADJUSTMENTS:
Net Valet Expenses ($ 485,544.85)
Administrative Surcharge on valet expenses ($ 48,554.49)
Total Adjusted Parking Operating Costs $1,762,817.80
-------------
Debtor's Allocable Share @ 75% $1,322,112.60
LESS CREDITS:
Utilities Credit Offset $12,000 per month for 9 months ($ 118,800.00)
plus 10% Administrative Surcharge
Other Cash Payments Made By Gaming in 2001 ($ 500,000.00)
OWED BY DEBTOR $ 656,893,40
-------------
12. Bazaar's Administrative Surcharge on the remaining Parking
Operating Costs was agreed to, is reasonable and will be allowed.
13. After making adjustments to the 2001 and 2002 Post-Petition
Estimated Allocated Share of Parking Operating Costs, by disallowing valet
parking expenses and the administrative fee thereon, Debtor shall pay to Bazaar
from September 1, 2002 forward the sum of $179,147.50 per month (on or before
the 1st day of each month) for the calendar year 2002, and an appropriate amount
determined in accordance with the Parking Agreement and the principles of these
Findings and Conclusions for each succeeding year, as and for Debtor's Allocable
Share of Parking Operating Costs, in addition to the monthly Base Fee of
S266,667.00. Accordingly, as of September 1, 2002, Debtor owes Bazaar
$1,064,617.00 for the post-petition period under the Parking Agreement, subject
to a "true up" of the 2002 Parking Operating Costs at the end of the year
pursuant to the Parking Agreement, as follows:
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POST-PETITION 09/28/01 - 12/31/01:
Total Actual Parking Operating Costs $ 880,280.63
Less Adjustments:
Net Valet Expenses ($ 133,812.41)
Administrative Surcharge on Valet Expenses ($ 13,381.24)
Total Adjusted Parking Operating Costs $ 733,086.98
Debtor's Allocable Share @ 75% $ 549,815.24
Less Credits:
Utilities Credit offset $12,000/mo. for 3 mos. plus 10% ($ 39,600.00)
Administrative Surcharge
Utilities Credit For Direct Submeter Payments ($ 22,790.59)
(from 10/01-12/01)
SUBTOTAL OWED BY DEBTOR for Post-Petition 2001 $ 487,424.64
-------------
FROM 01/01/02 -09/01/02:
Estimated Allocable Share $179,147.50/month x 9 months $1,612,327.50
LESS CREDITS:
Cash Payments Made by Debtor from 1/01/02-9/31/02
($100,000.00 x 9 months) ($ 900,000.00)
Utilities Credit Offset $12,000 per month for 5 months ($ 66,000.00)
plus 10% Administrative Surcharge
Utilities Credit For Direct Submeter Payments (1/02-7/02) ($ 69,135.08)
-------------
SUBTOTAL OWED BY DEBTOR for Post-Petition $ 577.192.42
1/01/02-09/31/02 -------------
TOTAL OWED BY DEBTOR POST-PETITION $1,064,617.00
-------------
14. The "Parking Operating Costs" should be minimized, if
reasonably appropriate, and pursuant to the Parking Agreement, Debtor has the
right to request, and Bazaar must provide, a detailed explanation and
documentation regarding the Parking Operating Costs, including an explanation
and documentation regarding any allocation by Bazaar of Parking
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Operating Costs. Debtor has the right to shop the "Parking Operating Costs". If
a dispute arises between the parties over whether the "Parking Operating Costs"
are reasonable during the pendency of Debtor's bankruptcy case, the Court shall
determine whether such expenses are reasonable. If the Debtor's bankruptcy case
is no longer pending, consistent with Sections 3.3 and 10.1 of the Parking
Agreement, the parties have the right to have an arbitration panel determine
whether such expenses are reasonable.
15. Pursuant to the Parking Agreement, Debtor has the
non-exclusive right to use the Common Parking Area. Pursuant to the Parking
Agreement, Bazaar has the right to manage and establish reasonable rules
regarding the joint non-exclusive use of the Common Parking Area between the
Debtor and Bazaar, to include but not be limited to the 1st and 2nd floors of
the Common Parking Area. However, based on Clark County's restrictions on the
use of the Harmon Valet to the patrons of the Harmon restaurant row, exclusion
of Debtor from the Harmon Valet parking area is reasonable at this time.
16. Bazaar must provide Debtor a reasonable method for Debtor's
non-exclusive use of the 1st and 2nd floor of the Common Parking Area. Such
reasonable requests by Bazaar include requiring Debtor to provide a waiver for
insurance purposes relating to the automobiles parked on the 1st and 2nd floors
of the Common Parking Area by Debtor and the notification by Debtor of any
events at the Aladdin Hotel & Casino, as well as the Theater for the Performing
Arts, which would require above-normal usage of the 1st and 2nd floors of the
Common Parking Area.
C. THE NOTE PAYMENTS.
17. Bazaar is allowed to Reserve for the following: (1) forecasted
tenant allowance payments to tenants with executed leases in the amount of
$1,024,539.00 (No. 6 on the Cash Reserve Estimate); (2) Construction/Security
deposits in the amount of $227,662.00 (No. 7 on the Cash Reserve Estimate); (3)
the Whiting Turner Final Payment in the amount of $688,023.00 (No. 8 on the Cash
Reserve Estimate); (4) Nevada Power Outstanding Bills for January 2002 in the
amount of $181,695.00 (No. 9 on the Cash Reserve Estimate); and (5) Nevada Power
Bills Outstanding for February 2002 in the amount of $190,000.00 (No. 10 on the
Cash Reserve
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Estimate).
18. The $3,070,000.00 working capital Reserve (No. 11 on the Cash
Reserve Estimate) is disallowed.
19. The $15,500,000.00 Reserve for Fleet is disallowed. However,
Bazaar may Reserve for amounts owed to Fleet if those amounts become definite in
the future.
20. The Reserve for the Gaming Liens (No. 13 on the Cash Reserve
Estimate) is disallowed.
21. The Reserve for the Nevada Power Bill owed pre-petition in the
amount of $1,361,398.00 (No. 14 of the Cash Reserve Statement) is allowed.
22. The 50% Reserves for the Construction Liens (No. 16 on the
Cash Reserve Estimate), the Retail Litigation (No. 17 on the Cash Reserve
Estimate) and the Parking Garage Litigation (No. 18 on the Cash Reserve
Estimate) are allowed. These reserve amounts may be adjusted upward or downward
from time to time based on definite opinions of Bazaar's counsel as to the
likelihood of prevailing in the various litigation or arbitration matters.
23. Bazaar is also reserving 50% for the Tenant Liens (No. 15 of
the Cash Reserve Estimate). Bazaar filed notices of non-responsibility for
certain of the Tenant Liens. Bazaar has certain other defenses to the Tenant
Liens and that Bazaar has recourse against the respective tenants of Desert
Passage. To the extent: that Bazaar filed a notice of non-responsibility
relating to a Tenant Lien, that Bazaar has a valid defense to a Tenant Lien, or
that if the respective tenant still occupies the premises and is not in
bankruptcy or otherwise in a clear status of being unable to pay the liens it
has created, the Reserve for the Tenant Liens is disallowed.
24. The Court's findings and conclusions as to allowable Reserves
are made as of May 2, 2002, and the Court recognizes that Cash Flow estimates
and Reserve amounts will change over time. The Cash Reserve Estimate is a
rolling document and shall be adjusted upward or downward from time to time
depending on actual cash payments anticipated to be made and in the case of
reserves for litigation/arbitration based upon the definite opinions of Bazaar's
counsel as to the likely outcome of such litigation/arbitration.
25. In order to facilitate the rolling nature of the Cash Reserve
Estimate, Bazaar shall
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forward a Cash Reserve Estimate to Debtor on a monthly basis for the term of the
Note commencing thirty days after the entry of these Findings of Fact And
Conclusions of Law. In addition, Bazaar shall provide reasonable documentation
to support the Reserves upon the request of Debtor. If a dispute arises between
the parties over the Note, including but not limited to the reasonableness of
the Reserves or the availability of Cash Flow to make payments under the Note,
during the pendency of Debtor's bankruptcy case, the parties have the right to
have this Court determine whether such Reserves are reasonable. If the Debtor's
bankruptcy case is no longer pending, the parties shall resolve the dispute over
the reasonableness of the Reserves and the existence of Cash Flow pursuant to
following "Mediation Provision":
(i) Agreement to Mediate Disputes concerning
Subordinated Non-Negotiable Cash Flow Note. It is the
intent and agreement of Debtor and Bazaar (each on
behalf of itself and its successors, assigns and
assignees) that prior to instituting any litigation,
relating to or concerning any dispute or disagreement
("Dispute") arising under or pursuant to the
Subordinated Non-Negotiable Cash Flow Note, including
by not limited to any dispute or disagreement about
the failure of Bazaar to provide monthly the Cash
Reserve Estimate to Debtor, the failure of Bazaar to
provide reasonable documentation to support the
Reserves or the availability of "Cash Flow" to make
payments under the Note, the parties shall first
attempt to resolve the Dispute informally through
negotiation. Accordingly, should any Dispute arise,
the parties agree that before any litigation is
commenced, the following steps toward resolution of
the Dispute shall be taken:
(ii) Step One- Correspondence. Either party may initiate
negotiation proceedings by providing written notice
("Notice of Dispute") to the other party setting
forth the particulars of the Dispute, the term(s) of
the Subordinate Non-Negotiable Cash Flow Promissory
Note that are involved, and a suggested resolution of
the Dispute. The recipient ("Recipient Party") of the
Notice of Dispute shall respond ("Response") within
ten (10) business days of receipt of the Notice of
Dispute with a written explanation and response to
the proposed solution. If the Recipient Party does
not provide a Response within ten (10) business days,
the Recipient Party will be deemed to have refused to
negotiate.
(iii) Step Two - Meeting. If correspondence does not
resolve the Dispute, then within ten (10) business
days of delivery of the Response to the Notice of
Dispute, representatives of each party, with
authority to make decisions, will meet in person and
confer in a bona fide attempt to resolve the Dispute.
Should this step not produce resolution, then the
parties agree to mediation as provided in Step Three
below, which may be initiated by either party by
written notification ("Mediation Demand") to the
other party at any time after twenty (20) business
days has passed from the date the Notice of Dispute
was given.
///
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(iv) Step Three - Non-Binding Mediation. Upon issuance of
the Mediation Demand, the parties shall submit such
Dispute to an independent mediator who shall be an
attorney licensed to practice law in the State of
Nevada with at least fifteen (15) years of genera]
legal experience, for his or her non-binding
determination. If the parties are unable to agree
upon the identity of a single qualified and neutral
mediator within ten (10) days after the receipt of
the Mediation Demand, the Dispute shall be referred
to the American Arbitration Association for
non-binding mediation under its commercial Mediation
Rules; provided that in the event of any
inconsistency between such Rules and the provisions
of this agreement, then the provisions of this
agreement shall control. The mediator shall fix the
date and time of no more than two (2) mediation
sessions. The mediation shall be held at a mutually
convenient location in Las Vegas, Nevada. The
mediation process shall continue until the Dispute is
resolved or until such time as either party declares
in writing that the mediation has ended or the
mediator makes a determination that continuing the
mediation would be fruitless. Notwithstanding
anything else in this agreement, the mediator must
make such determination if the Dispute has not been
resolved within thirty (30) days following the
selection of the mediator, unless the parties
stipulate in each of their sole discretion (whether
reasonable or not) to extend such date. Each party
shall bear its own mediation expenses, and the
expenses of its mediation participants, including
attorneys. The expenses of the mediator shall be
borne equally by the parties. The meeting(s) pursuant
to Step Two and the non-binding mediation subject to
this Step Three shall be for the purpose of
compromising, settling, or resolving a dispute, and
accordingly: (1) evidence of anything said, or of any
admission made in the course of, such meetings or the
mediation is not admissible in evidence, and
disclosure of any such evidence shall not be
compelled in any civil action,; and (2) unless the
document otherwise provides, no document prepared for
the purpose of, or in the course of, or pursuant to,
the meetings or mediation, or copy thereof, is
admissible in evidence, and disclosure of any such
document shall not be compelled, in any civil action.
(v) Step Four-Litigation. If the Dispute is not resolved,
either party shall be free to commence litigation at
any time following termination, in accordance with
Step Three, of the non-binding mediation. Any party
to this agreement (and/or their successors, assigns
or assignees) with standing) may seek compliance with
Steps One, Two and/or Three by petition to any court
of general jurisdiction as permitted under the terms
of the Subordinated Non-Negotiable Cash Flow Note.
The prevailing party in such an action to compel
shall be entitled to its reasonable attorneys' fees
and costs in connection with the action.
Notwithstanding any other provision of this
non-binding mediation agreement, the parties (and/or
their successors, assigns or assignees have no
authority to impose a settlement on the parties or
otherwise bind the parties. However, the parties
shall have no obligation to comply with the dispute
resolutions procedures described above if both
parties so stipulate in writing.
(vi) Notice. Any notice required hereunder, including
Notice of Dispute, the Response and the Mediation
Demand, shall be made by hand delivery with receipt
of copy, overnight express delivery or by facsimile
transmission, to the following addresses and
facsimile numbers:
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23
For Aladdin Gaming, LLC: Patricia Becker, Esq.
General Counsel
Aladdin Resort Casino
3667 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Facsimile No.: (702) 785-5165
With a copy to: Gerald M. Gordon, Esq.
Gordon & Silver, Ltd.
3960 Howard Hughes Parkway, 9th Fl.
Las Vegas, Nevada 89109
Facsimile No.: (702) 369-2666
For Aladdin Bazaar, LLC: Douglas L. Hageman, Esq.
General Counsel
TrizecHahn Centers
4530 La Jolla Village Drive, Suite 400
San Diego, California 92122
Facsimile No.: (858)546-3218
With a copy to: Jeffrey Patterson
Allen Matkins Leck Gamble &
Mallory LLP
501 West Broadway, Ninth Floor
San Diego, California 92101-3577
Facsimile No.: (619) 233-1158
Each party may designate at any time a different or
additional address for its receipt of notice by at
least giving ten (10) days' notice of such change of
address or addition of party to all other parties.
Any notice shall be deemed to have been made, given,
received, and communicated, as the case may be, on
the date personal delivery was effected if personally
served, one (1) business day after the deposit
thereof with any overnight delivery service, and on
the date of transmission if by facsimile (and
received by the recipient prior to 5:00 p.m. on the
recipient's business day provided a hard copy of the
same is sent in another manner permitted herein
within twenty-four (24) hours of transmission);
provided however, if delivery is not completed due to
the absence of the recipient or his/her refusal to
accept delivery, delivery to the person identified
above for receipt shall be deemed delivery to the
primary addressee. If other such notice requires any
action or response by the recipient or involves any
consent or approval from the recipient, such fact
shall be stated in the notice.
(collectively, the "Mediation Provision").
D. The Right To Offset.
26. Based on the Court's conclusion that Bazaar owes Debtor
$101,713.17 for overcharges on the 2000 Parking Operating Costs and that Debtor
owes Bazaar $656,893.40 for 2001 Pre-Petition Parking Operating Costs, the net
amount owed by Debtor to Bazaar for 2000 and Pre-Petition 2001 Parking Operating
Costs is $555,680.23.
GORDON & SILVER, LTD.
ATTORNEYS AT LAW
NORTH FLOOR
3960 HOWARD HUGHES PKWY
LAS VEGAS NEVADA 89109
(702) 796-5555
24
27. Bazaar owes Debtor $793,500.00 for reimbursement for Debtor's
payment of Bazaar's 2001 pre-petition Nevada Power bills.
28. Because the $656,893.40 owed from Debtor to Bazaar for the
2001 Pre-Petition Parking Operating Costs only partially offset the
reimbursement for 2000 Parking Operating Costs $101,713.17 owed from Bazaar to
Debtor and the $793,500.00 Bazaar owes Debtor for the 2001 Nevada Power bills
paid by Debtor, Bazaar still owes Debtor $237,819.77.
29. Pursuant to the Offset Notice, Bazaar exercised its offset
rights under the Note, while reserving all of its rights.
30. Debtor has the right to offset the 2001 Pre-Petition Parking
Operating Costs owed by Debtor to Bazaar against the 2000 Pre-Petition Parking
Operating Costs of $101,713.17 and the $793,500.00 owed by Bazaar for the Nevada
Power bill, and then pre-petition amounts due from Bazaar under the Note to the
extent there is available Cash Flow.
31. Pursuant to the Note, if Bazaar is in default under the Fleet
obligation no Note payments are required to be made to Debtor, even if Cash Flow
is otherwise available. However, if payments are not made to Debtor solely as
the result of a default under the Fleet obligation, Debtor has the right to
request that the Court require Bazaar to place such Note payments in a
segregated interest bearing deposit account held in trust for Debtor. As of May
2, 2002, Bazaar was in default under the Fleet obligation. Thus, no payments are
due under the Note at this time, even if there is available Cash Flow.
32. To the extent that Bazaar makes a payment under the Note to
Debtor, or Debtor offsets any pre-petition amounts owed to Bazaar against
pre-petition Note payments, Bazaar is entitled to also either make a pari passu
payment to THC on its preference payment under the
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GORDON & SILVER, LTD.
ATTORNEYS AT LAW
NORTH FLOOR
3960 HOWARD HUGHES PKWY
LAS VEGAS NEVADA 89109
(702) 796-5555
25
Bazaar LLC Agreement, as amended, and/or establish a reserve for the pari passu
payment to THC on its preference payment under the Bazaar LLC Agreement, as
amended.
Dated this 7 day of Oct, 2002.
------------------------------
UNITED STATES BANKRUPTCY JUDGE
PREPARED AND SUBMITTED BY:
GORDON & SILVER, LTD.
BY:
----------------------------
GERALD M. GORDON, ESQ.
Nevada Bar No. 229
JOSEPH S. KISTLER, ESQ.
Nevada Bar No. 3548
THOMAS H. FELL, ESQ.
Nevada Bar No. 3717
BRIGID M. HIGGINS, ESQ.
Nevada Bar No. 5990
3960 Howard Hughes Parkway, 9th Floor
Las Vegas, NV 89101
Attorneys for Aladdin Gaming, LLC
APPROVED/DISAPPROVED AS TO FORM
ALLEN, MATKINS, LECK, GAMBLE & MALLORY LLP
BY:
-----------------------------
PATRICK E. BREEN, ESQ.
California Bar No. 081579
JEFFREY R. PATTERSON, ESQ.
California Bar No. 126148
501 West Broadway 9th Floor
San Diego, California 92101-3577
Attorneys for Aladdin Bazaar, LLC
GORDON & SILVER, LTD.
ATTORNEYS AT LAW
NINTH FLOOR
3960 HOWARD HUGHES PKWY
LAS VEGAS, NEVADA 89109
(702) 796-5555
26