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EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 11th day of July, 1995, by and among CROWN CASINO CORPORATION, a
Texas corporation ("Crown"), and CROWN CASINO NEVADA, INC., a Nevada
corporation ("Buyer"), SLT REALTY LIMITED PARTNERSHIP, a Delaware Limited
Partnership (the "Partnership"), and HOTEL INVESTORS CORPORATION OF NEVADA,
INC., a Nevada corporation ("HICN," and together with the Partnership,
"Sellers"), with reference to the following facts:
A. The Partnership owns that certain hotel, restaurant, bar and
casino commonly known as the Bourbon Street Hotel & Casino located at 120 E.
Flamingo Road, Las Vegas, Nevada 89109 (the "Hotel/Casino"), as well as the
real and personal property comprising a 24 unit apartment building located at
135 Albert, Las Vegas, Nevada 89109 (the "Apartment Building").
B. The Hotel/Casino is currently leased by the Partnership to,
and the Hotel/Casino is currently operated by, HICN pursuant to that certain
amended and restated lease dated January 1, 1993 "Partnership/HICN Lease").
The Apartment Building is operated by the Partnership. HICN owns or otherwise
has the right to use all coin-operated gaming devices, gaming equipment and all
food and beverage inventories and gift shop inventories located at the
Hotel/Casino.
C. Buyer is the wholly-owned subsidiary of Crown.
D. Buyer and Sellers heretofore have entered into negotiations
pursuant to which Buyer offered to purchase and acquire from Sellers, upon the
terms and subject to the conditions set forth herein, the assets hereinafter
described.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties herein contained, Crown, Buyer and Sellers agree
as follows:
Article 1. Sale and Purchase of Assets.
1.1 Upon the terms and subject to the conditions hereinafter set
forth:
1.1.1 At the "First Closing" (as defined in Section 4.1
hereof), Sellers shall sell, assign, convey, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Sellers, all right,
title and interest of Sellers in and to the "Non-Gaming Assets" (as
defined in Section 1.2 hereof); and
1.1.2 At the "Second Closing" (as defined in Section 4A.1
hereof), Sellers shall sell, assign, convey, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Sellers, all right,
title and interest of Sellers in and to the "Gaming Assets"
(as defined in Section 1.3 hereof).
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1.2 As used in this Agreement, the term "Non-Gaming Assets" means
and includes:
1.2.1 The land and all appurtenances thereto on which the
Hotel/Casino is located, which land (the "Hotel Land"), is more
particularly described on Exhibit 1.2.1 hereto;
1.2.2 All buildings, structures, parking areas and other
improvements located on the Hotel Land (the "Hotel Improvements");
1.2.3 The land and all appurtenances thereto on which the
Apartment Building is located, which land (the "Apartment Land"), is
more particularly described on Exhibit 1.2.3 hereto;
1.2.4 All buildings, structures, parking areas and other
improvements located on the Apartment Land (the "Apartment
Improvements");
1.2.5 All furniture, fixtures and equipment owned or leased
by a Seller or which a Seller otherwise has the right to use and
located at the Hotel/Casino or the Apartment Building, including,
without limitation, those assets that will be listed on Exhibit 1.2.5
hereto at the time a schedule of those assets is prepared in
accordance with subsection 4D.3.10 hereof, but excluding the Gaming
Assets (collectively, the "FF & E");
1.2.6 The automobile(s) and other vehicle(s) listed on
Exhibit 1.2.6 hereto;
1.2.7 All customer lists, sales records, files, supplier
lists, credit information, business records and plans, sales and
promotional literature and other selling material, and computer
software related to the foregoing;
1.2.8 All rights for public utility connection access, if
any, including water, waste water, sewage and drainage "hook-ups" with
state or local government agencies or public utilities, and all
transferable licenses, permits, certificates or similar governmental
approvals or authorizations, including occupancy, life-safety, and
elevator operation permits issued by state or local government
agencies; provided, however, Buyer shall be responsible for processing
and paying all costs and expenses associated with the transfer of any
such access rights or licenses, permits, certificates, approvals or
authorizations.
1.2.9 All other assets of the Hotel/Casino and all rights
of Sellers or either of them in connection therewith, including,
without limitation, the name and service mark "Bourbon Street Hotel &
Casino" and Sellers' respective rights under the contracts and
commitments referred to in the first paragraph of subsection 2.1.4
hereof, but excluding any such asset(s) as are Gaming Assets.
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1.3 As used in this Agreement, the term "Gaming Assets" means and
includes:
1.3.1 All coin operated gaming devices and
associated equipment ("Slot Machines"), owned by HICN and located at
the Hotel/Casino;
1.3.2 The stock-in-trade and inventory of the
Casino, including, without limitation, all dice, playing cards and
casino chips and tokens; and
1.3.3 All rights of Sellers or either of them in connection
with the assets described in the preceding subsections 1.3.1 through
1.3.2, and Sellers' respective rights under the Gaming Service
Contracts (as defined in subsection 2.1.4 hereof).
As used herein, the term "Casino" means that portion of the Hotel/Casino in
which any gaming activity or related function is conducted. A list of the Slot
Machines located at the Casino as of the date hereof is attached hereto as
Exhibit 1.3.1.
1.4 The Non-Gaming Assets and the Gaming Assets (together the
"Assets"), sold to Buyer hereunder shall, subject to Sections 10.3 and 10A.1
hereof, mean such assets as are Non-Gaming Assets and Gaming Assets as of the
First Closing and the Second Closing, respectively, and notwithstanding any
provision of Sections 1.2 or 1.3 hereof to the contrary, neither the Non-Gaming
Assets nor the Gaming Assets shall include:
1.4.1 Any of Sellers' food, beverage and gift shop
inventories located at the Hotel/Casino, but excluding stock which is
not useable and saleable (collectively, the "Inventories");
1.4.2 Any of Sellers' cash or cash equivalents,
coinage or casino bankroll;
1.4.3 Any utility or other deposits of a Seller;
1.4.4 Any accounts, notes or other receivables of a
Seller;
1.4.5 The corporate seal, certificate of incorporation,
minute book, stock book, tax returns, books of account or other
records having to do with the corporate organization of HICN;
1.4.6 The rights of either Seller to any claim(s) for any
refund of federal, state, county or local taxes (including gaming
taxes);
1.4.7 The rights of HICN under any insurance policy
referred to in Section 8.16 hereof (subject, however, to the
provisions of Section 12.1 hereof);
1.4.8 The rights that accrue or will accrue to a
Seller under this Agreement, including, without limitation,
the rights that accrue or will accrue to HICN under the
Buyer/HICN Lease (as defined in subsection 4.3.7 hereof).
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1.4.9 Any non-transferable licenses; and/or
1.4.10 Any personal property located on the Hotel Land or
the Apartment Land and not owned by a Seller including, without
limitation, any items owned by any tenants of the Hotel/Casino and/or
the Apartment Building, by public or private utilities or any
contractors, or Slot Machines which are subject to participation or
similar agreements.
Article 2. Consideration.
2.1 The purchase price for the Non-Gaming Assets (the "Non-Gaming
Assets Purchase Price"), shall be Nine Million Five Hundred Thousand Dollars
($9,500,000.00), and the purchase price for the Gaming Assets (the "Gaming
Assets Purchase Price"), shall be Five Hundred Thousand Dollars ($500,000.00),
for an aggregate purchase price (the "Purchase Price"), of Ten Million Dollars
($10,000,000.00). In consideration of the purchase by Buyer of the Assets,
Buyer shall pay to Sellers the Purchase Price as follows and take the following
actions:
2.1.1 Buyer will deliver to the "Escrow Agent" (as defined
in Section 3.1 hereof), for deposit into the "Escrow" (as defined in
Section 3.1 hereof), cash in the amount of One Hundred Thousand
Dollars ($100,000.00) (the "Escrow Deposit"), on the day of full
execution of this Agreement.
2.1.2 In the event Buyer does not terminate this Agreement
prior to expiration of the "Limited Inspection Period" (as defined in
subsection 4D.4.1 hereof), Buyer shall deposit with Escrow Agent the
additional sum of Four Hundred Thousand Dollars ($400,000.00) in cash
(the "Additional Deposit") within three (3) days of the expiration of
the Limited Inspection Period. The Escrow Deposit and the Additional
Deposit, together with all interest earned thereon, are referred to
collectively herein as the "Deposit". In the event Buyer terminates
this Agreement as set forth in Article 4D below or any of Buyer's
conditions precedent to its obligation to consummate the First Closing
under Articles 5 and 6 hereof are not satisfied, and Buyer is not in
default hereunder, the Deposit (or so much thereof as has been
deposited with Escrow Agent), shall be returned to Buyer upon Buyer's
written notice to Sellers and Escrow Agent and neither party shall
have any further rights or obligations under this Agreement except for
the provisions of Sections 4D.1 and 16.9 hereof. Should Sellers fail
to consummate the transaction after full execution of this Agreement
through no fault of Buyer and all of Sellers' conditions precedent to
their obligations to consummate the First Closing under Articles 5 and
6A hereof have been satisfied, Buyer shall receive a return of the
Deposit in full, and shall have the right to pursue all legal and
equitable remedies against Sellers, including without limitation,
specific performance. Should Buyer fail to consummate the transaction
after full execution of this Agreement (and Buyer has not terminated
this Agreement pursuant to Section 4.D below) and all of Buyer's
conditions precedent to its obligations to consummate the First
Closing under Articles 5 and 6 hereof have been satisfied, Sellers
shall be entitled, upon Sellers' written notice to Escrow Agent and
Buyer of such default, to receive the Deposit (or so much thereof as
has been deposited with Escrow Agent),
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including all interest earned thereon, as liquidated damages as
its sole and exclusive remedy for such default and neither party shall
have any further rights and obligations under this Agreement except
for the provisions of Sections 4D.1 and 16.9 hereof.
2.1.3 No later than 10:00 a.m., Las Vegas time, on the
scheduled "First Closing Date" (as defined in Section 4.1 hereof ),
Buyer shall deposit into the Escrow by federal wire transfer or bank
cashier's or certified check for delivery to Sellers the Non-Gaming
Assets Purchase Price less the amount of the Deposit. No later than
10:00 a.m., Las Vegas time, on the scheduled "Second Closing Date" (as
defined in Section 4A.1), Buyer shall deposit into Escrow by federal
wire transfer or bank cashier's or certified check, for delivery to
Sellers, the Gaming Assets Purchase Price.
2.1.4 At the First Closing, Buyer shall assume and agree to
pay, perform or otherwise discharge all liabilities and obligations in
respect of the Apartment Building accruing or arising after the First
Closing. All obligations of Sellers arising under any existing
service contracts, maintenance contracts, personal property leases or
similar agreements pertaining to the Hotel/Casino including, without
limitation, the contracts specifically identified in the Disclosure
Letter in response to Sections 7.9, 7.10, 8.10 or 8.11 hereof (the
"Hotel Service Contracts"), shall remain Sellers' obligation following
the First Closing and throughout the " Lease Term" (as defined in the
Buyer/HICN Lease).
At the Second Closing, Buyer shall assume and agree to pay,
perform or otherwise discharge all liabilities and obligations in
respect of the Gaming Assets and the Non-Gaming Assets not assumed by
Buyer at the First Closing and accruing or arising after the Second
Closing, whether pursuant to the Hotel Service Contracts, or under any
service contracts, maintenance contracts, personal property leases or
similar agreements pertaining to the Gaming Assets, including, without
limitation, the contracts specifically identified in the Disclosure
Letter in response to Sections 7.9, 7.10, 8.10 or 8.11 hereof (the
"Gaming Service Contracts"), and to the extent such Hotel Service
Contracts and Gaming Service Contracts not specifically identified in
the Disclosure Letter in response to Sections 7.9, 7.10, 8.10 or 8.11
hereof have been approved by Buyer and were entered into by Sellers
with unaffiliated third parties in the ordinary course of business
(subject, however, to the provisions of Article 11 hereof), other than
any and all liabilities and obligations of HICN for any gaming taxes
and fees due to any Nevada governmental authority pursuant to any
deficiency assessment made subsequent to the Second Closing Date (as
defined in Section 4A.1 hereof), to the extent that such assessment
encompasses the operation of the Gaming Assets at the Hotel/Casino
prior to such date, which liabilities and obligations of HICN shall be
and remain liabilities and obligations of HICN.
2.2 The Purchase Price shall be allocated between the Partnership
and HICN and among the Assets as described on Exhibit 2.2 hereto. Neither
Sellers nor Buyer shall take any position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding which position is in any way inconsistent with the terms of
this Section 2.2.
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2.3 In addition to purchasing the Gaming Assets, Buyer shall
purchase from HICN at the Second Closing all Inventories then located at the
Hotel/Casino, and shall pay to HICN in respect thereof an amount in cash equal
to fifty percent (50%) of HICN's delivered costs (including freight and taxes),
for such Inventories (the "Inventory Purchase Price"), as determined from the
books and records of HICN, as follows: A physical inventory of the foodstuffs
and beverages and gift shop items located at the Hotel/Casino immediately prior
to the Second Closing shall be jointly conducted by representatives of HICN and
Buyer, shall be completed by the close of business on the day preceding the
scheduled Second Closing Date, and shall be the basis on which the Inventories
purchased by Buyer and the Inventory Purchase Price payable to HICN pursuant to
this Section 2.3 are determined.
Except as set forth in this Section 2.3, Buyer shall have no
obligation pursuant to this Agreement to purchase any inventory located at the
Hotel/Casino.
Article 3. The Escrow.
3.1 Promptly upon the execution hereof by Buyer and Sellers, Buyer
and Sellers shall open an escrow (the "Escrow"), with Nevada Title Company, Las
Vegas, Nevada (in such capacity the "Escrow Agent"), for the purpose of
consummating the transactions contemplated hereby. Buyer and Sellers shall
direct the Escrow Agent to deposit an executed copy of this Agreement into the
Escrow, and the provisions of this Agreement shall govern the Escrow and shall
constitute instructions to the Escrow Agent pertaining to the matters set forth
herein. The Escrow Agent, by accepting such deposit, shall have agreed to be
bound by the provisions hereof. Any further escrow instructions prepared by
the Escrow Agent shall implement the performance of this Agreement, and shall
be deemed to incorporate the provisions hereof, whether or not specifically
stated therein. Unless any such further escrow instructions as shall be
prepared by the Escrow Agent and signed by the parties hereto shall
specifically provide that such instructions are to supersede or amend any
provision(s) of this Agreement, such instructions shall in no way be deemed to
alter any provision hereof, but all such provisions shall be and remain in full
force and effect, and if there be any inconsistency between such further escrow
instructions and this Agreement, the provisions of this Agreement shall
prevail.
3.2 Upon delivery of an executed copy of this Agreement to the
Escrow Agent, the Escrow Agent shall prepare such further escrow instructions
pertaining to the transactions contemplated hereby as the Escrow Agent shall
deem necessary, which escrow instructions (to the extent the same are
consistent with the provisions of Section 3.1 hereof), shall be promptly signed
by Buyer and Sellers.
3.3 The Escrow Agent shall invest or deposit all monies delivered
to the Escrow Agent for deposit into the Escrow in such account(s) at, or in
such certificates of deposit issued by, such bank or savings and loan
association located in Las Vegas, Nevada, as Buyer shall direct and as shall be
reasonably satisfactory to Sellers. Except as otherwise expressly provided
herein, all interest, dividends and other income earned in respect of such
deposited monies shall accrue to the account and for the benefit of Buyer and
shall be reinvested or deposited as aforesaid.
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Article 4. The First Closing.
4.1 The closing of the sale and purchase of the Non-Gaming Assets
herein provided for (the "First Closing"), shall take place at the Hotel/Casino
commencing at 10:00 a.m., local time, on the date which is ninety (90) days
after the expiration of the Limited Inspection Period, or such other date as
the parties hereto may agree upon. The date on which the First Closing
actually occurs is sometimes referred to herein as the "First Closing Date",
and the First Closing shall be effective at 12:01 a.m., local time, on such
date (the "First Closing Time").
4.2 Prior to the First Closing:
4.2.1 Sellers shall duly execute and deliver to the Escrow
Agent for deposit into the Escrow (i) a grant, bargain and sale deed
transferring to Buyer fee simple title to the Hotel Land and Hotel
Improvements (the "Hotel/Casino Deed"), and a grant, bargain and sale
deed transferring to Buyer fee simple title to the Apartment Land and
Apartment Improvements (the "Apartment Deed"), and, together with the
Hotel/Casino Deed, the "Deeds"), in each case subject only to the
"Permitted Exceptions" (as defined in subsection 4.D.4 hereof); (ii) a
bill of sale with respect to the FF&E having covenants of warranty
consistent with the provisions of Sections 7.4 and 8.8 hereof; (iii)
assignments consistent with the provisions of subsection 2.1.4 hereof;
and (iv) other instruments and documents of conveyance and transfer in
form reasonably satisfactory to Buyer and its counsel, as together
shall be necessary and effective to transfer to Buyer all of Sellers'
right, title and interest in and to the Non-Gaming Assets; and
4.2.2 Buyer shall deliver to the Escrow Agent for deposit
into the Escrow (i) the Non-Gaming Assets Purchase Price, which shall
be delivered by Buyer at the times provided for and otherwise in
accordance with subsections 2.1.1 and 2.1.2 hereof together with any
additional sums owed by Buyer to Sellers or Escrow Agent pursuant to
the provisions of Section 4.5 hereof; and (ii) an undertaking whereby
Buyer will assume and agree to pay, perform or otherwise discharge, as
appropriate, Sellers' liabilities and obligations with respect to the
Non-Gaming Assets as and to the extent provided in the first paragraph
of subsection 2.1.4 hereof, in form reasonably satisfactory to Sellers
and their counsel.
4.3 At the First Closing:
4.3.1 The parties hereto shall notify the Escrow Agent to
cause the Deeds to be recorded in the public records for the County of
Clark, State of Nevada (the "Records"), and no delivery at the First
Closing shall be deemed final until the Escrow Agent shall confirm
that the Deeds have been so recorded in the Records.
4.3.2 The parties hereto shall notify Commonwealth Land
Title Insurance Company (in such capacity the "Title Insurance
Company"), to cause the "Title Insurance Policy" to be issued. For
purposes of this Agreement, the "Title Insurance Policy" shall be and
mean an ALTA extended coverage policy of title insurance issued by
the Title Insurance Company insuring Buyer's fee simple title to the
Hotel Land, the Hotel Improvements, the Apartment Land and the
Apartment Improvements subject only to the
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Permitted Exceptions. The Title Insurance Policy shall contain
such endorsements as Buyer may reasonably request; provided, however,
that Buyer shall pay all costs of obtaining any and all such
endorsements. Liability coverage under the Title Insurance Policy
shall be equal to $9.5 million.
4.3.3 The bills of sale, assignments and other instruments
and documents described in subsection 4.2.1 hereof shall be delivered
by the Escrow Agent to Buyer.
4.3.4 The Non-Gaming Assets Purchase Price, less the
amount(s) provided for in the immediately following paragraph,
together with the undertaking described in clause (ii) of subsection
4.2.2 hereof, shall be delivered by the Escrow Agent to Sellers.
The Escrow Agent shall withhold from the monies to be
delivered to Sellers pursuant to the immediately preceding paragraph
such amounts as Sellers and Buyer shall agree are necessary to comply
with the provisions of Nevada Revised Statutes ("NRS") 612.695 and
372.620, until such time as Sellers furnish to Buyer and the Escrow
Agent the receipts or certificates provided for in said statute or,
if not so provided for, such evidence as Buyer may reasonably require
in order to assure Buyer that the applicable obligations have been
satisfied. If Sellers do not produce such receipts and certificates
within the time period provided in said statute, or if any lien or
other claim therefor is asserted against Buyer or the Non-Gaming
Assets by a governmental authority, the Escrow Agent shall pay such
withheld funds to the appropriate governmental authorities.
Each Seller also shall deliver to Buyer at the First Closing a
certification of non-foreign status in substantially the form
contemplated by Section 1.1445-2(b) of the Income Tax Regulations of
the Internal Revenue Service under Section 1445(a) of the Internal
Revenue Code, and Buyer expressly agrees that upon Buyer's receipt of
such certifications, Buyer shall not withhold under said Section
1445(a) any portion of the Non-Gaming Assets Purchase Price (or any
other amount(s) payable to Sellers hereunder).
4.3.5 The parties hereto shall deliver to each other the
certificates, opinions and other instruments and documents referred to
in Article 6 hereof.
4.3.6 The Escrow Agent shall deliver to Sellers and Buyer
such amounts as may be payable to any of them pursuant to Section 4.5
hereof.
4.3.7 HICN and Buyer shall execute and deliver a lease by
Buyer to HICN of the Hotel/Casino and Apartment Building in the form
of Annex A hereto (the "Buyer/HICN Lease").
4.4 Subject to the provisions of the Buyer/HICN Lease, possession
of the Non-Gaming Assets shall be delivered by Sellers to Buyer at the First
Closing. Buyer and Sellers shall follow the procedures for transfer of
possession of the Hotel/Casino and Apartment Building set forth
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herein and shall use their mutual best efforts to develop such additional
procedures as may be necessary for the orderly transfer of possession of the
Non-Gaming Assets.
4.5 Sellers shall pay the cost of the Title Insurance Policy
(provided Buyer shall pay the costs of any endorsements thereto), the Termite
Report referred to in Section 4.D.15 hereof, and the Survey (as defined in
Section 4.D.14 hereof). Buyer and the appropriate Seller each shall pay
through the Escrow one-half of the following expenses: any and all sales and
use taxes, documentary transfer stamps and taxes, and intangible taxes payable
in respect of the transfer of the Non-Gaming Assets to Buyer, the costs of
recording the Deeds and of filing and/or publishing any and all other notices
or documents required by law or this Agreement to be filed or published in
connection with Buyer's purchase of the Non-Gaming Assets, and all fees and
expenses of the Escrow Agent; provided, however, that in the event the First
Closing shall fail to occur as a result solely of the failure of Sellers, on
the one hand, or Buyer, on the other hand, to perform any obligation required
by this Agreement to be performed by such party or parties hereunder at or
prior to the First Closing, the defaulting party or parties shall bear all
costs of obtaining the Title Insurance Policy and the Survey and all fees and
expenses of the Escrow Agent.
Article 4A. The Second Closing.
4A.1 The closing of the sale and purchase of the Slot Machines and
the other Gaming Assets herein provided for (the "Second Closing"), shall take
place as soon as practicable (and in any event within 62 days), after Buyer has
received such licenses and other consents and approvals ("Gaming Licenses"),
from the Nevada Gaming Control Board, Nevada Gaming Commission and the Clark
County Liquor and Gaming Licensing Board (collectively, the "Nevada Gaming
Authorities"), required by applicable law for Buyer or its designee to purchase
and operate the Gaming Assets at the Hotel/Casino as currently operated. In the
event Buyer or its designee has not obtained the Gaming Licenses within sixteen
(16) months following the First Closing Date, the Buyer/HICN Lease shall
terminate as more particularly set forth therein, HICN shall remove all of the
Gaming Assets from the Hotel/Casino, HICN shall have no further obligation to
operate the Hotel/Casino and Sellers shall have no obligation to sell the
Gaming Assets to Buyer. Buyer or its designee shall, on or before the date
which is thirty (30) days prior to the First Closing Date, submit a complete
application to the Nevada Gaming Authorities to obtain the Gaming Licenses and
shall thereafter use diligent and continued efforts to obtain the Gaming
Licenses. Buyer acknowledges that it may be required to incur significant
expenses in connection with its application for the Gaming Licenses and that
such expenses shall be borne solely by Buyer.
The date on which the Second Closing actually occurs is sometimes
referred to herein as the "Second Closing Date ," and the Second Closing shall
be effective at 12:01 a.m. local time, on such date (the "Second Closing
Time").
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4A.2 Prior to the Second Closing:
4A.2.1 Sellers shall duly execute and deliver to the Escrow
Agent for deposit into the Escrow (i) a bill of sale with respect to
the Gaming Assets having covenants of warranty consistent with the
provisions of Sections 7.4 and 8.8 hereof; (ii) assignments consistent
with the provisions of subsection 2.1.4 hereof; (iii) any sums
required to be paid by Sellers pursuant to the provisions of
subsections 4A.4.1 and 4A.4.2 and Section 4A.5; and, (iv) other
instruments and documents of conveyance and transfer in form
reasonably satisfactory to Buyer and its counsel, as together shall
be necessary and effective to transfer to Buyer all of Sellers' right,
title and interest in and to the Gaming Assets; and
4A.2.2 Buyer shall deliver to the Escrow Agent for deposit
into the Escrow (i) the Gaming Assets Purchase Price, which shall be
delivered by Buyer at the times provided for and otherwise in
accordance with subsections 2.1.1 and 2.1.2 hereof and any sums
required to be paid by Buyer pursuant to the provisions of Sections
4A.4 and 4A.5; (ii) the Inventory Purchase Price; and (iii) an
undertaking whereby Buyer will assume and agree to pay, perform or
otherwise discharge, as appropriate, Sellers' liabilities and
obligations with respect to the Gaming Assets as and to the extent
provided in the second paragraph of subsection 2.1.4 hereof, in form
reasonably satisfactory to Sellers and their counsel.
4A.3 At the Second Closing:
4A.3.1 The bills of sale, assignments and other instruments
and documents described in subsection 4A.2.1 hereof relating to the
Slot Machines and the other Gaming Assets and any sums owed to Buyer
pursuant to Section 4A.4 shall be delivered by the Escrow Agent to
Buyer;
4A.3.2 The Gaming Assets Purchase Price, the Inventory
Purchase Price, any sums owed to Sellers pursuant to Section 4A.4, and
the undertaking described in clause (iii) of subsection 4A.2.2 hereof
shall be delivered by the Escrow Agent to Sellers;
4A.3.3 HICN shall reimburse Buyer for 65% of the "Average
Chip and Token Float" (as hereinafter defined);
4A.3.4 Buyer and Sellers shall deliver to each other the
certificates and copies of consents referred to in Article 6B hereof;
and
4A.3.5 The Buyer/HICN Lease shall terminate.
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As used in this Section 4A.3, the term "Average Chip and Token
Float" means the average daily aggregate amount of HICN's outstanding
casino chips and tokens during the 30 days preceding the Second
Closing Date, as calculated by HICN's accountants, subject to
verification by Buyer and/or its accountants.
4A.3.6 Possession of the Slot Machines and the other Gaming
Assets shall be delivered by Sellers to Buyer at the Second Closing.
4A.4.1 Following the First Closing, HICN will be entitled to certain
revenues and income and will be obligated for certain expenses relating to the
Non-Gaming Assets as more fully provided in the Buyer/HICN Lease. Accordingly,
except as may be otherwise expressly provided in this Agreement or the
Buyer/HICN Lease, all revenues, income and expenses of the Non-Gaming Assets
(including rents and expenses associated with the Apartment Building) with
respect to the period prior to the Second Closing or the sooner termination of
the Buyer/HICN Lease shall be for the account of Sellers, and all revenues,
income and expenses of the Non-Gaming Assets (including rents and expenses
associated with the Apartment Building) with respect to the period after the
Second Closing or the sooner termination of the Buyer/HICN Lease shall be for
the account of Buyer. Accordingly, the following expenses shall be allocated
and apportioned as of the Second Closing Date or the sooner termination of the
Buyer/HICN Lease on the basis of a 30-day month and a 365-day year, and shall
be paid or credited by the appropriate Seller to Buyer or by Buyer to the
appropriate Seller, as the case may be (i.e., prorated), at the Second Closing
or the sooner termination of the Buyer/HICN Lease: (i) rent and other sums
payable under each lease, conditional sale agreement or other contract pursuant
to which a Seller leases or otherwise holds any FF&E, and each other contract
and commitment described in the first paragraph of subsection 2.1.4 hereof;
(ii) real and personal property taxes, assessments and special district levies
applicable to the Hotel/Casino and the Apartment Building (based on the tax
bills for the current year, copies of which bills shall be delivered by Sellers
to Buyer prior to or at the Second Closing or the sooner termination of the
Buyer/HICN Lease), other than personal property taxes applicable to the Slot
Machines or the other Gaming Assets; (iii) charges for electricity, gas,
telephone, water, sewage, cable and other utilities furnished to the
Hotel/Casino (Buyer and HICN hereby expressly agreeing, however, to cause, if
possible, all utility meters to be read on the day before the Second Closing
Date or the sooner termination of the Buyer/HICN Lease); (iv) annual license,
permit and/or inspection fees applicable to the Non- Gaming Assets; and (v)
other expenses (including prepaid expenses), incurred by Sellers in connection
with the ownership or operation of the Non-Gaming Assets; provided, however,
that if such apportionment of any of the foregoing expenses is unnecessary
because an invoice, bill or other statement of the amount of such expense
accrued and unpaid as of the Second Closing Date can be obtained at the Second
Closing or the sooner termination of the Buyer/HICN Lease, the Partnership or
HICN, as the case may be, shall pay the accrued amount of such expense as shown
on such statement. In addition, if any of the foregoing expenses cannot be
accurately allocated on the Second Closing Date or the sooner termination of
the Buyer/HICN Lease, the same shall be allocated as soon as practicable after
the Second Closing Date, and in any event no later than sixty (60) days after
the Second Closing Date or the sooner termination of the
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Buyer/HICN Lease, and either the Partnership or HICN, as the case may be, or
Buyer shall promptly pay to the other the sum determined pursuant to such
subsequent allocation.
Notwithstanding the foregoing provisions of this subsection 4A.4.1:
(a) HICN shall retain or be entitled to receive
all guest room rentals, all restaurant, banquet and lounge food and
beverage revenues and all meeting room rentals earned for the night
before the Second Closing or the sooner termination of the Buyer/HICN
Lease (which shall be the night period beginning on the day preceding
the Second Closing Date and ending at noon of the Second Closing Date
or the sooner termination of the Buyer/HICN Lease); and
(b) All guest room deposits and any other deposits or
advance rentals paid to HICN under bookings or other confirmed
reservations for the use of Hotel/Casino guest rooms or banquet or
other Hotel/Casino facilities will be prorated among HICN and Buyer
in accordance with clause (a) of this subsection 4A.4.1. HICN or
Buyer shall promptly pay to the other the sum determined pursuant to
this proration.
4A.4.2 Except as may be otherwise expressly provided in this
Agreement, all revenues, income and expenses of the Gaming Assets with respect
to the period prior to the Second Closing shall be for the account of Sellers,
and all revenues, income and expenses of the Gaming Assets with respect to a
period after the Second Closing shall be for the account of Buyer.
Accordingly, the following expenses shall be allocated and apportioned as of
the Second Closing Date on the basis of a 30-day month and a 365-day year, and
shall be paid or credited by the appropriate Seller to Buyer or by Buyer to the
appropriate Seller, as the case may be (i.e., prorated), to the extent
permitted by applicable law, at the Second Closing: (i) rent and other sums
payable under each lease or purchase or participation agreement pursuant to
which a Seller leases or otherwise has the right to use any Slot Machine or
other Gaming Asset; (ii) personal property taxes applicable to the Slot
Machines or the other Gaming Assets (based on the tax bills for the current
year, copies of which bills shall be delivered by Sellers to Buyer at the
Second Closing); (iii) annual license, permit, inspection and/or similar fees
applicable to the Gaming Assets; and, (iv) other expenses (including prepaid
expenses, but excluding prepaid gaming taxes), incurred by Sellers prior to the
Second Closing Time in connection with the ownership or operation of the Gaming
Assets; provided, however, that if such apportionment of any of the foregoing
expenses is unnecessary because the amount of such expense accrued and unpaid
as of the Second Closing Date can be accurately determined at the Second
Closing (whether by obtaining an invoice, bill or other statement or
otherwise), the Partnership or HICN, as the case may be, shall pay the accrued
amount of the expense as shown on such statement. In addition, if any of the
foregoing expenses cannot be accurately allocated on the Second Closing Date,
the same shall be allocated as soon as practicable after the Second Closing
Date and in any event no later than sixty (60) days after the Second Closing
Date, and either the Partnership or HICN, as the case may be, or Buyer shall
promptly pay to the other the sum determined pursuant to such subsequent
allocation.
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4A.5 Buyer and the appropriate Seller each shall pay one-half of the
following expenses: any and all sales and use taxes payable in respect of the
transfer of the Gaming Assets to Buyer and the costs of filing or publishing
any and all notices or documents required by law or this Agreement to be filed
or published in connection with Buyer purchase of the Gaming Assets.
Article 4B. Intentionally Omitted.
Article 4C. Third-Party Consents.
Buyer acknowledges and expressly agrees that to the extent that a
Seller's rights under any contract or commitment as to which such Seller's
liabilities and obligations are to be assigned to Buyer pursuant to this
Agreement may not be so assigned without the consent of the other party or
parties to such contract, such Seller shall use its best efforts to obtain (and
Buyer shall use its best efforts to assist such Seller in obtaining), such
consent, but the failure of Sellers to have obtained any one or more such
consents as of the date on which the asset(s) subject to such contract or
commitment are to be sold and transferred to Buyer hereunder shall not
constitute a breach by either Seller of any representation, warranty or
covenant made by such Seller in this Agreement or constitute a defense to
Buyer's performance of any of Buyer's obligations hereunder. Notwithstanding
the foregoing, Sellers shall use their best efforts to obtain, as a condition
of Buyer's performance hereunder, the consents identified prior to the First
Closing or the Second Closing, as set forth in Exhibit 4C (the "Required
Consents").
Article 4D. Limited Inspection Period.
4D.1 Subject to subsections 4D.4.2 and 4D.5.2 hereof, Buyer has taken
the opportunity to conduct whatever inspections and investigations of the
Assets that Buyer has deemed necessary or desirable. Buyer has conducted all
of such inspections and investigations, and will conduct such other inspections
and investigations provided below, in good faith at Buyer's sole cost and
expense to determine the feasibility and desirability of purchasing the Assets.
Sellers have allowed Buyer or Buyer's representatives access to the Assets.
Buyer hereby indemnifies Sellers against any damages or liabilities whatsoever
incurred by Sellers resulting from or caused by the inspections, investigations
or other activities of Buyer or Buyer's agents before the date of this
Agreement and during the Limited Inspection Period. Without limitation on the
foregoing, Buyer shall promptly repair any damage to the Assets caused as a
result of Buyer's investigations before the date of this Agreement and during
the Limited Inspection Period. Buyer shall not have any conversations or
contact whatsoever with any employee of the Hotel/Casino or the Apartment
Building other than Richard Ross, unless permission is first obtained from an
executive officer of Sellers, which permission will not be unreasonably
withheld or delayed and all such conversations and consents shall be subject
to compliance with applicable employment law and gaming regulatory
requirements.
4D.2 Buyer represents to Sellers that before the date of this
Agreement and during the Limited Inspection Period, it has or will engage (i) a
professional environmental engineer or consultant to conduct such environmental
inquiries or tests as it may determine to be necessary; (ii) a public
accounting firm to evaluate the books and records of HICN regarding operation
and
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ownership of the Assets; and (iii) legal counsel to make such investigations
and preliminary inquiries of the Nevada Gaming Authorities and other
governmental or regulatory authorities as such counsel deems appropriate;
provided, however, Buyer's failure to engage any of such persons or entities
shall not be deemed a breach hereof.
4D.3 Except as provided in Section 4D.3.10 of this Agreement and
subject to subsection 4.D.4.1 hereof, promptly following the execution of this
Agreement by the parties hereto, Buyer acknowledges that Sellers have made
available or delivered, as hereinafter indicated, to Buyer, or will deliver or
make available to Buyer as specified below, the following items and such other
items Buyer has reasonably requested:
4D.3.1 Sellers have made available at the Hotel/Casino all
as-built plans and specifications for the Hotel Improvements and the
Apartment Improvements as are in the possession of Sellers.
4D.3.2 Sellers have delivered to Buyer a copy of a
Preliminary Site Assessment dated July 19, 1991, prepared by Dames &
Moore and a Precision Tank Test dated September 25, 1992, prepared by
Dames & Moore (collectively, the "Environmental Reports").
4D.3.3 Sellers have delivered to Buyer copies of all
existing Hotel Service Contracts and Gaming Service Contracts.
4D.3.4 Sellers have delivered to Buyer a current preliminary
title report (the "Title Report") relating to the Hotel Land and the
Apartment Land, including copies of all items referred to in the Title
Report as exceptions.
4D.3.5 Sellers have delivered to Buyer copies of all
property tax bills and summaries of property insurance pertaining to
the Assets.
4D.3.6 Sellers have delivered to Buyer operating statements
for the businesses conducted at the Assets for 1991, 1992, 1993, 1994,
and the first three (3) months of 1995.
4D.3.7 Sellers have delivered to Buyer copies of utility
bills pertaining to the Assets for the past twelve (12) months.
4D.3.8 Sellers have delivered to Buyer copies of schedules
of capital improvements made to the Hotel/Casino or the Apartment
Building during 1992, 1993, 1994, and the first three (3) months of
1995.
4D.3.9 Sellers have made available to Buyer for inspection a
schedule of all employees of the Hotel/Casino and Apartment Building
(together with copies of their original employment applications) with
the name, position, date of hire, current amount or rate of
compensation and all accrued benefits of each employee, all employment
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contracts relating to the Hotel/Casino and Apartment Building,
and any union negotiations, agreements and/or contracts
related to the Hotel/Casino and Apartment Building.
4D.3.10 Within thirty (30) days after the date upon
which the Deposit has been made in accordance with Sections 2.1.1 and
2.1.2, Seller shall deliver to Buyer a schedule of all furniture,
fixtures, equipment, stock, inventory, and other non-fixed or
permanently attached assets of the Hotel/Casino and Apartment
Building, including without limitation, all gaming equipment and
devices, kitchen equipment, tables and chairs, other furniture,
accessories, office equipment, computer equipment and devices, and
hard count devices. Once delivered to Buyer, the schedule will be
attached hereto as Exhibit 1.2.5.
4D.3.11 Sellers have delivered or made available to Buyer a
copy of the systems of internal control governing the Hotel/Casino as
approved by the Nevada Gaming Authorities.
4D.3.12 Sellers have delivered to Buyer a schedule of all
security interests, liens and encumbrances on the Assets; the most
recent survey of the Hotel Land and the Apartment Land available to
the Partnership.
4D.3.13 Sellers have delivered to Buyer a schedule of all
pre-sold rooms and/or promotions affecting the Hotel/Casino that would
be a material obligation if assumed by Buyer.
4D.3.14 Sellers have delivered to Buyer a current as-built
survey (the "Survey") of the Hotel/Casino and Apartment Building in
form and content acceptable to the Title Insurance Company and
sufficient to allow the Title Insurance Company to delete from the
Title Insurance Policy all standard exceptions concerning boundary
lines.
4D.3.15 Within five (5) days after the date of this
Agreement, Sellers shall deliver to Buyer a current termite and pest
control report ("Termite Report"), for the Hotel/Casino and Apartment
Building prepared by a licensed pest control company, certifying
inspection.
4D.4.1 Notwithstanding anything to the contrary in this
Article 4D, Buyer shall have until July 21, 1995 (the "Limited Inspection
Period"), to conduct inspections and investigations only with respect to the
following:
(a) The Title Report;
(b) The Survey;
(c) The Termite Report;
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(d) Environmental assessments and other reports,
other than the Environmental Reports, obtained by Buyer at Buyer's sole cost
and expense (the "Updated Environmental Reports"); and
(e) A survey of the Hotel Land, Hotel
Improvements, Apartment Land and Apartment Improvements obtained by Buyer at
Buyer's sole cost and expense to determine compliance or noncompliance with the
American with Disabilities Act (the "ADA Survey" and, together with the Title
Report, Survey, Termite Report and Updated Environmental Reports, the "Limited
Review Items").
During the Limited Inspection Period, Buyer is given the opportunity
to obtain Updated Environmental Reports and an ADA Survey to further
investigate the Assets. However, Buyer cannot terminate this Agreement by
reason of Buyer's failure to obtain Updated Environmental Reports or an ADA
Survey.
4D.4.2 If, before July 13, 1995, Buyer notifies Sellers in
writing of any exceptions to the Title Report or any matter shown on the Survey
which Buyer disapproves ("Disapproved Items"), Sellers will have five (5) days
after receipt of Buyer's notification of any Disapproved Items in which to
advise Buyer that:
(a) Sellers will cause the Disapproved Items to be
removed or obtain appropriate endorsements to the Title Insurance Policy on or
before the First Closing Date; or
(b) Sellers will not cause the Disapproved Items to
be removed. If Sellers advise Buyer that they will not cause the Disapproved
Items to be removed, Buyer will have five (5) days to elect, as its sole
remedy, to:
(c) Proceed with the transactions contemplated
herein, in which case the Disapproved Items shall be deemed approved by Buyer;
or
(d) Terminate this Agreement in accordance with
subsection 4D.5.2.
If Buyer does not give Sellers notice of its election within five (5)
days, Buyer will be deemed to have elected to proceed with the transactions
contemplated herein and the Disapproved Items shall be deemed approved by
Buyer. Buyer's notice of Disapproved Items and Sellers response thereto will
extend the Limited Inspection Period to the last day for Buyer's response to
Seller's response to Buyer's notice of Disapproved Items.
Buyer hereby objects as a Disapproved Item liens and encumbrances of
all deeds of trust, assignments of leases and financing statements that secure
an obligation to pay money, whether to a third party or to an affiliate of
either Seller. These liens and encumbrances will be Disapproved Items without
Buyer delivering any notice to Sellers.
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If Buyer elects to proceed or is deemed to have elected to proceed
with the transactions set forth herein in accordance with subsection 4D.5.2,
Buyer will be deemed to have approved (i) liens for current taxes, assessments
or special district levies on real property not yet delinquent, (ii) except for
Disapproved Items that Seller has agreed to remove from the Title Insurance
Policy pursuant to this subsection 4D.4.2, easements, restrictions, agreements
or exceptions shown on the Title Report; (iii) the Buyer/HICN Lease; (iv) any
easement or encroachments as a result of the Street Widening (as defined in
Section 7.7 hereof), provided the same does not materially interfere with the
use of the Hotel/Casino and the Apartment Building for their intended purposes;
(v) the Title Insurance Company's standard printed exceptions; and (vi) except
for Disapproved Items that Sellers have agreed to remove from the Title
Insurance Policy pursuant to this subsection 4D.4.2, any matters shown on the
Survey (collectively, the "Permitted Exceptions").
4D.5.1 Intentionally Omitted.
4D.5.2 Buyer may terminate this Agreement during the Limited
Inspection Period only if in Buyer's good faith judgment matters disclosed by
the Limited Review Items materially and adversely affect the value of the
Assets taken as a whole. If Buyer makes this determination, Buyer shall
deliver written notice to that effect and of the termination of this Agreement
to Sellers and the Escrow Agent no later than three (3) days following the
expiration of the Limited Inspection Period, in which case, Buyer shall deliver
to Sellers the Updated Environmental Reports, the ADA Survey and all other
inspections and due diligence reports obtained or commissioned by Buyer
respecting the Limited Review Items, the Deposit shall be returned to Buyer and
neither party shall have any further rights or obligations under this Agreement
except for the indemnification obligations of Buyer pursuant to Section 4D.1
and Section 16.9. If Buyer fails to deliver such termination notice no later
than three (3) days following the expiration of the Limited Inspection Period,
Buyer shall be deemed to have elected to proceed with the transactions set
forth herein, to have approved the Limited Review Items and Buyer shall deposit
the Additional Deposit with Escrow Agent as provided in Article 2 above.
4D.6 If Buyer elects to proceed or is deemed to have elected to
proceed with the transactions set forth herein, Buyer's obligations under this
Agreement will be contingent only upon the satisfaction (or waiver by Buyer) of
the conditions specified in Articles 5, 6 and 6B.
4D.7 The examination and inspection by Buyer of the Assets shall
not constitute a waiver or relinquishment on the part of Buyer of its right to
rely on the representations, warranties and covenants made by Seller herein.
Article 5. Conditions to the Closings.
The respective obligations of Sellers and Buyer to sell and purchase
the Assets and to consummate the other transactions contemplated hereby are
subject to the satisfaction of the condition that as of each of the First
Closing Date and the Second Closing Date, no court or
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administrative agency having jurisdiction shall have issued, entered or
adopted any decision, order, rule or regulation restraining or prohibiting the
consummation of the transactions contemplated by this Agreement to be
consummated on such date (a "Regulatory Termination"). In the event of a
Regulatory Termination before the First Closing Date, the Deposit shall be
promptly returned to Buyer upon Buyer's or Sellers' written notice to Escrow
Agent that a Regulatory Termination has occurred.
Article 6. Additional Conditions Precedent to Buyer's First Closing
Obligations.
The obligation of Buyer to purchase from Sellers the Non-Gaming Assets
and to consummate the other transactions contemplated by this Agreement to be
consummated at the First Closing is subject to the satisfaction or waiver by
Buyer, prior to or at the First Closing, of (in addition to the conditions
specified in Article 5 hereof), each of the following conditions:
6.1 The representations and warranties of Sellers set forth in
this Agreement shall, to the extent such representations and warranties relate
to the Non-Gaming Assets, be true in all material respects as of the First
Closing as if made again at such time; Sellers shall have complied with and
performed in all material respects the covenants and obligations set forth in
this Agreement to be complied with or performed by Sellers prior to or at the
First Closing; and Buyer shall have received a certificate of Sellers, dated
the First Closing Date, certifying that the condition specified in this Section
6.1 has been satisfied.
6.2 The Title Insurance Company shall have issued to Buyer the
Title Insurance Policy, insuring Buyer's fee simple title to the Hotel Land,
the Hotel Improvements, the Apartment Land and the Apartment Improvements,
subject only to the Permitted Exceptions.
6.3 Intentionally Omitted.
6.4 The Escrow Agent shall have delivered to Buyer (i) the bills
of sale, assignments and other instruments and documents described in
subsection 4.2.1 hereof and relating to the Non-Gaming Assets; and (ii) such
amounts as may be payable to Buyer pursuant to Section 4.5 hereof.
6.5 Buyer shall have received the opinion letter of Seller's
counsel dated as of the First Closing Date, in form and substance reasonably
satisfactory to Buyer and its counsel, with respect to the matters set forth in
Sections 7.1, 7.2, 7.3, 8.1, 8.2 and 8.5 hereof, and that the bills of sale and
other instruments of conveyance with respect to the personal property contained
in the Non-Gaming Assets are valid and binding in accordance with Nevada law
and effectively vest in Buyer all of Sellers' right, title and interest in such
personal property. Buyer acknowledges that certain portions of such opinion
letter (including, without limitation, such counsel's opinions with respect to
the last sentences of Sections 7.2 and 8.2 (other than clause (i) of each of
said sentences), and with respect to Sections 7.3 and 8.5), may be qualified as
being to the best knowledge of such counsel (or similar qualification), and the
opinions expressed in such opinion letter concerning enforceability may be
subject to such exceptions and limitations as such counsel deems necessary or
appropriate.
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6.6 Sellers shall have obtained and delivered to Buyer all Required
Consents.
6.7 Sellers shall have delivered to Buyer their certificate
stating that there has been no material adverse change in the business,
operations or financial condition of the Assets, and the Assets have not been
materially and adversely affected due to fire, accident, other casualty or Act
of God.
6.8 Any liens, mortgages, security interests or other encumbrances
to which the Assets are subject (other than the Permitted Exceptions) shall
have been released and Buyer shall be provided with evidence of such releases
having been filed in the appropriate offices of governmental officials in each
jurisdiction where such filing is necessary for proper filing in accordance
with applicable law.
Article 6A. Additional Conditions Precedent to Sellers' First-Closing
Obligations.
The respective obligations of the Partnership and HICN to sell to
Buyer the Non-Gaming Assets owned by such Seller and to consummate the other
transactions contemplated by this Agreement to be consummated at the First
Closing are subject to the satisfaction or waiver by the Partnership or HICN,
as the case may be, prior to or at the First Closing, of (in addition to the
conditions specified in Article 5 hereof), each of the following conditions:
6A.1 The representations and warranties of Buyer set forth in this
Agreement shall be true in all material respects as of the First Closing as if
made again at such time; Buyer shall have complied with and performed in all
material respects the covenants and obligations set forth in this Agreement to
be complied with or performed by Buyer prior to or at the First Closing; and
Sellers shall have received a certificate of Buyer, dated the First Closing
Date, certifying that the condition specified in this Section 6A.1 has been
satisfied.
6A.2 Sellers shall have received such consents and approvals of the
Nevada Gaming Authorities (other than the consents and approvals specified in
subsection 6B.2.2 hereof), and such other governmental or regulatory consents
and approvals, if any, to the transactions contemplated hereby as in the
opinion of Sellers' counsel may be required by applicable law.
6A.3 The Escrow Agent shall have delivered to Sellers the amounts
payable to Sellers pursuant to subsection 4.3.4 hereof, the undertaking
described in clause (ii) of subsection 4.2.2 hereof, and such other amounts as
may be payable to Sellers pursuant to Section 4.5 hereof.
6A.4 Sellers shall have received the opinion letter of counsel to
Buyer and Crown, dated as of the First Closing Date, in form and substance
reasonably satisfactory to Sellers and their counsel, with respect to the
matters set forth in Sections 9.1 through 9.3 hereof. Sellers acknowledge that
certain portions of such opinion letter (including, without limitation, such
counsel's opinion with respect to the last sentence of Section 9.2 (other than
clause (i) thereof)
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and with respect to Section 9.3), may be qualified as being to the best of such
counsel's knowledge (or similar qualification), and that the opinions expressed
in such opinion letter concerning enforceability may be subject to such
exceptions and limitations as such counsel deems necessary or appropriate.
Article 6B. Additional Conditions Precedent to Sellers' and Buyer's Second
Closing Obligations.
6B.1 Buyer's obligation to purchase the Gaming Assets from Sellers
and to consummate the other transactions contemplated by this Agreement to be
consummated at the Second Closing is subject to the satisfaction or waiver by
Buyer, prior to or at the Second Closing, of each of the following conditions:
6B.1.1 The representations and warranties of Sellers set
forth in this Agreement shall, to the extent the same relate to the
Gaming Assets, be true in all material respects as of the Second
Closing as if made again at such time; Sellers shall have complied
with and performed in all material respects the covenants and
obligations set forth in this Agreement to be complied with or
performed by Sellers with respect to the Gaming Assets prior to or at
the Second Closing; and Buyer shall have received a certificate of
Sellers, dated the Second Closing Date, certifying that the condition
specified in this subsection 6B.1.1 has been satisfied.
6B.1.2 Buyer or its designee shall have received the Gaming
Licenses from the Nevada Gaming Authorities.
6B.1.3 The Escrow Agent shall have delivered to Buyer (i)
the bills of sale, assignments and other instruments and documents
described in subsection 4A.2.1 hereof and relating to the Gaming
Assets; and (ii) such amounts as may be payable to Buyer pursuant to
Section 4A.4 and 4A.5 hereof.
6B.2 Sellers' respective obligations to sell the Gaming Assets to
Buyer and to consummate the other transactions contemplated by this Agreement
to be consummated at the Second Closing are subject to the satisfaction or
waiver by Sellers, prior to or at the Second Closing, of each of the following
conditions:
6B.2.1 The representations and warranties of Buyer set forth
in this Agreement shall be true in all material respects as of the
Second Closing as if made again at such time; Buyer shall have
complied with and performed in all material respects the covenants and
obligations set forth in this Agreement to be complied with or
performed by Buyer prior to or at the Second Closing with respect to
the Gaming Assets; and Sellers shall have received a certificate of
Buyer, dated the Second Closing Date, certifying that the condition
specified in this subsection 6B.2.1 has been satisfied.
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6B.2.2 Sellers shall have received such consents and approvals
of the Nevada Gaming Authorities to Sellers' sale to Buyer of the
Gaming Assets as in the opinion of Sellers' counsel are required by
applicable law.
6B.2.3 The Escrow Agent shall have delivered to Sellers the
Gaming Assets Purchase Price and such amounts as may be payable to
Seller pursuant to Section 4A.4 hereof and the undertaking described
in clause (ii) of Section 4.2.2 hereof.
Article 7. Representations and Warranties of the Partnership.
The Partnership represents and warrants to and agrees with Crown and
Buyer that, except as may be otherwise set forth in the Disclosure Letter
delivered by Sellers to Buyer concurrently with Sellers' execution hereof (the
"Disclosure Letter"):
7.1 The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite partnership power and authority to own its assets and
conduct its business as presently conducted. The sole general partner of the
Partnership is Starwood Lodging Trust, formerly known as Hotel Investors Trust,
a Maryland real estate investment trust (the "Trust"). The Trust will continue
to be the sole general partner of the Partnership through the Second Closing.
7.2 The Partnership has all requisite partnership power and
authority to execute and deliver this Agreement and to perform the
Partnership's obligations hereunder. The execution and delivery of this
Agreement by the Partnership and the Partnership's performance of its
obligations hereunder as of the First Closing will have been duly authorized by
all necessary partnership action. This Agreement has been duly executed and
delivered by the Partnership and constitutes a valid and binding obligation of
the Partnership, enforceable against the Partnership in accordance with its
terms, except as such enforceability may be limited by the provisions of
applicable bankruptcy and insolvency, moratorium or similar laws affecting
creditors' rights generally, and except that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought. The execution and delivery of this Agreement by the
Partnership does not, and the Partnership's consummation of the transactions
contemplated hereby to be consummated by the Partnership will not, (i) violate
any provision of the partnership agreement of the Partnership; (ii) result in
the breach of any of the terms or conditions of, or constitute a default under,
any contract, lease, franchise, concession, license, permit, note, bond,
indenture, mortgage, deed of trust, security interest or other agreement or
instrument to which the Partnership is a party or by which the Assets owned or
held by the Partnership may be bound; (iii) subject to obtaining the consents
and approvals contemplated by Section 6A.2 and subsection 6B.2.2 of this
Agreement, violate any law or governmental or regulatory rule or regulation, or
any order, judgment or award of any court or administrative agency, or any
decision or finding of any arbitrator, binding upon the Partnership or the
Assets owned or held by the Partnership; or (iv) except for the consents and
approvals contemplated by Section 6A.2 and subsection 6B.2.2 of this Agreement,
require the consent of any governmental authority; except for in the case of
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clauses (ii) and (iii) above, breaches, defaults and/or violations that
in the aggregate will not have a material adverse effect on the Partnership's
ability to perform its obligations hereunder, Buyer's ownership or operation of
the Hotel/Casino, or Buyer's ownership of the Apartment Building.
7.3 There is no suit, action, proceeding (legal, administrative or
otherwise), arbitration or governmental investigation pending, or to the best
knowledge of the Partnership, threatened, against or with respect to the
Partnership or the Assets owned or held by the Partnership which suit, action,
proceeding, arbitration or investigation will have a material adverse effect on
the Partnership's ability to perform its obligations hereunder, Buyer's
ownership or operation of the Hotel/Casino, or Buyer's ownership or operation
of the Apartment Building.
7.4 The Partnership as of the First Closing will have good and
marketable title in fee simple to the Hotel Land, the Hotel Improvements, the
Apartment Land and the Apartment Improvements, and will have good title to (or
a valid leasehold interest in, or other valid right to use), all other
Non-Gaming Assets owned or held by the Partnership, in each case free and clear
of any mortgage, deed of trust, security interest, pledge, lease or other
claim, charge, lien or encumbrance, except for the Permitted Exceptions.
The Partnership as of the Second Closing will have good title and
marketable to (or a valid leasehold interest in or other valid right to use),
all Gaming Assets owned or held by the Partnership, free and clear of any
security interest, pledge, lease or other claim, charge, lien or encumbrance,
except for the Permitted Exceptions.
7.5 To the Partnership's knowledge, there are no material
structural, electrical, plumbing or mechanical defects in the Hotel/Casino or
Apartment Building.
7.6 Except as disclosed by the Environmental Reports or any
Updated Environmental Reports obtained by Buyer and except for potential
violations of the Americans with Disabilities Act ("ADA") or violations of the
ADA disclosed by the ADA Survey obtained by Buyer, to the best knowledge of the
Partnership, neither the Hotel/Casino nor the Apartment Building are in
violation of any federal, state, county or local law, rule or regulation
(including, without limitation, any applicable building, zoning or other land
use requirement or any law relating to pollution, protection of the
environment, or Hazardous Substances as herein defined), or any regulation of
the National Board of Fire Underwriters, which violation if not corrected would
materially adversely affect Buyer's ownership or operation of the Hotel/Casino
and Apartment Building, nor has the Partnership received any notice that any
governmental authority, insurer or other person is asserting any violation of
the same.
7.7 Except as hereinafter provided, there are no pending or, to
the best knowledge of the Partnership, overtly threatened condemnation actions
or proceedings in eminent domain with respect to the Hotel/Casino or the
Apartment Building, nor has the Partnership received notice of the commencement
of any proceeding that would change the present zoning classification of the
Hotel Land or the Apartment Building. The present zoning classification of the
Hotel Land and the Apartment land is H-1. Various state and local Nevada
governmental authorities are in
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the process of widening Flamingo Road (the "Street Widening") and Sellers
have or will grant certain easements to the State of Nevada in connection with
the Street Widening and the State of Nevada and/or certain local governmental
authorities have granted certain encroachment rights to Sellers in connection
therewith. All proceeds from the Street Widening are the sole property of
Sellers, are not a part of the Assets and will not be a credit against the
Purchase Price.
7.8 The FF&E is in the same operating condition and state of
repair as when such items (or their predecessors), were inspected by Buyer
prior to the date of this Agreement (subject to ordinary wear and maintenance),
and all such FF&E is in all material respects adequate and suitable for the
purposes for which such FF&E is presently being used.
7.9 Other than contracts or commitments that will be terminated or
discharged at or prior to the time the asset(s) subject thereto are sold to
Buyer hereunder, the Partnership is not a party to any contract or commitment
in respect of the Assets which contract or commitment either has a remaining
unexpired term of one year or more or provides for the payment by the
Partnership of more than $100 per month, unless such contract or commitment may
be cancelled by the Partnership without charge or other penalty upon not more
than 30 days' prior notice. Each contract or commitment specifically
identified in the Disclosure Letter in response to this Section 7.9 is valid
and in full force and effect, and there exists no default, or event that with
notice or the lapse of time or both would constitute a default, under any such
contract or commitment by the Partnership or, to the best knowledge of the
Partnership, by any other party to such contract or commitment. The
Partnership has provided the Buyer with true and correct copies of such
contracts and commitments.
In the event that the Partnership intends to terminate any contract or
commitment of the Partnership relating to the Non-Gaming Assets at or prior to
the First Closing, the Partnership will use all reasonable efforts to notify
Buyer of the same, and if Buyer so requests, such contract or commitment shall
not be terminated by the Partnership, but shall be assigned by the Partnership
to Buyer on the same terms and subject to the same conditions as the contracts
and commitments specifically identified in the Disclosure Letter in respect to
this Section 7.9 are so assigned.
7.10 Other than liabilities arising pursuant to the leases and
other contracts and commitments referred to in Section 7.9 hereof, Buyer will
not, by virtue of Buyer's assumption of the liabilities of the Partnership
referred to in subsection 2.1.4 hereof, assume any liability, debt or
obligation of the Partnership whatsoever, and the Partnership covenants to
timely pay and discharge all of its debts, obligations and liabilities with
respect to the Assets.
7.11 Neither this Agreement, the Exhibits attached hereto, nor any
other document furnished by the Partnership, taken as a whole, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statement contained herein and therein not misleading, and except
as disclosed herein or therein, there is no fact (other than matters of a
general economic or political nature which do not affect the Hotel/Casino
uniquely), known to the Partnership which materially adversely affects or in
the future can be reasonably expected to
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materially adversely affect the Hotel/Casino. In addition, to the best
knowledge of the Partnership, the representations and warranties of HICN in
Article 8 are true and correct in all material respects.
7.12 The Partnership has filed or has obtained presently effective
extensions with respect to all federal, state, county and local tax returns
required to have been filed by the Partnership, and has paid all taxes shown
thereon as due and payable on or prior to the date hereof, with respect to the
Assets owned or operated by the Partnership.
Article 8. Representations and Warranties of HICN.
HICN represents and warrants to, and agrees with Crown and Buyer that,
except as otherwise set forth in the Disclosure Letter:
8.1 HICN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, with all requisite
corporate power and authority to own its assets and conduct its business as
presently conducted.
8.2 HICN has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by HICN and HICN's performance of
its obligations hereunder as of the First Closing will have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by HICN and constitutes a valid and binding obligation
of HICN, enforceable against HICN in accordance with its terms, except as such
enforceability may be limited by the provisions of applicable bankruptcy and
insolvency, moratorium or similar laws affecting creditors' rights generally,
and except that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefore may be brought.
The execution and delivery of this Agreement by HICN does not, and the
consummation by HICN of the transactions contemplated hereby to be consummated
by HICN will not, (i) violate any provision of HICN's certificate of
incorporation or bylaws; (ii) result in the breach of any of the terms or
conditions of, or constitute a default under, any contract, lease, franchise,
concession, license, permit, note, bond, indenture, mortgage, deed of trust,
security interest or other agreement or instrument to which HICN is a party or
by which the Inventories, the Slot Machines, or the other Assets owned or held
by HICN may be bound; (iii) subject to obtaining the consents and approvals
contemplated by Section 6A.2 and subsection 6B.2.2 of this Agreement, violate
any law or governmental or regulatory rule or regulation, or any order,
judgment or award of any court or administrative agency, or any decision or
finding of any arbitrator, binding upon HICN or the Inventories, the Slot
Machines or the other Assets owned or held by HICN; or, (iv) except for the
consents and approvals contemplated by Section 6A.2 and subsection 6B.2.2 of
this Agreement, require the consent of any governmental authority; except for
in the case of clauses (ii) and (iii) above, breaches, defaults or violations
that individually or in the aggregate will not have a material adverse effect
on HICN's ability to perform its obligations hereunder or on Buyer's operation
of the Hotel/Casino.
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8.3 HICN has delivered to Buyer the unaudited balance sheet of
HICN with respect to HICN's operation of the Hotel/Casino at April 30, 1995,
and the related statement of earnings for HICN, all for the 4-month period
then ended, together with the related notes and schedules thereto, as certified
by the Chief Financial Officer of HICN (hereinafter referred to as "HICN's
Financial Statements"). HICN's Financial Statements (i) are in accordance with
the books of account and records of HICN's operation of the Hotel/Casino and
fairly present the financial position in all material respects of HICN with
respect to the Hotel/Casino and fairly present the financial position in all
material respects of HICN with respect to the Hotel/Casino at the date
indicated; (ii) contain and reflect reserves for all material liabilities; and
(iii) were prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior accounting periods. Except to the
extent reflected or reserved against in HICN's Financial Statements or the
notes thereto, HICN is not obligated for, nor any of its assets or property
subject to, any liabilities (whether accrued, absolute, contingent or
otherwise), or adverse obligations, whether or not such liabilities or
obligations are normally shown or reflected on a balance sheet, other than
liabilities and obligations arising in the ordinary course of business since
the date of HICN's Financial Statements, none of which are material and
adverse.
8.4 Since the date of HICN's Financial Statements, except as set
forth in Exhibit 8.4 attached hereto, or as set forth below, HICN (with respect
to the Hotel/Casino), has not: (i) suffered the occurrence of any events which,
individually or in the aggregate, have had a material adverse affect on the
Assets (with respect to the Hotel/Casino); (ii) except in the ordinary course
of business, made or granted any general wage or salary increase to persons
employed by HICN at the Hotel/Casino; (iii) except in the ordinary course of
business, made any increase in or commitment to increase any benefits for
employees of the Hotel/Casino or adopted or made any commitments to adopt any
additional benefit plan for such employees; (iv) sold or transferred, or agreed
to sell or transfer, any of the Assets (except sales in the ordinary course of
business); or (v) suffered any damage, destruction or loss, whether or not
covered by insurance which, to the best of HICN's knowledge and belief,
materially and adversely affects the Assets, or had any material adverse change
in the business, operations, financial condition or prospects of the Assets.
8.5 There is no suit, action, proceeding (legal, administrative or
otherwise), arbitration or governmental investigation pending, or to the best
knowledge of HICN, threatened, against or with respect to HICN or the Assets
owned or held by HICN which suit, action and proceeding, arbitration or
investigation will have a material adverse effect on HICN's ability to perform
its obligations hereunder or Buyer's operation of the Hotel/Casino.
8.6 HICN has all licenses and permits necessary to conduct the
business currently being conducted by HICN at the Hotel/Casino and to operate
the business currently being operated by HICN at the Apartment Building, the
absence of which would have a material adverse effect on such assets and all
such licenses and permits are in full force and effect. No material violation
exists or has been asserted by any governmental authority with respect to any
such license or permit. No proceeding is pending or, to HICN's knowledge, has
been threatened for the purpose of revoking, suspending or limiting any such
license or permit. Exhibit 8.6 attached hereto sets forth a complete and
accurate list of such licenses and permits.
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8.7 HICN has filed or has obtained presently effective extensions
with respect to all federal, state, county and local tax returns required to
have been filed by HICN, and has paid all taxes shown thereon as due and
payable on or prior to the date hereof, with respect to HICN's operation of the
Hotel/Casino.
8.8 As of the First Closing, HICN will have good and marketable
title to (or a valid leasehold interest in, or other valid right to use), all
Non-Gaming Assets owned or held by HICN, in each case free and clear of any
security interest, pledge or other claim, charge, lien or encumbrance, except
for (i) the Permitted Exceptions; (ii) claims, charges, liens and encumbrances
arising out of contracts entered into by HICN pursuant to the Buyer/HICN Lease;
and (iii) the Hotel Service Contracts.
As of the Second Closing, HICN will have good title to all of the
Inventories and good title to (or a valid leasehold interest in, or other valid
right to use), the Slot Machines and the other Gaming Assets owned or held by
HICN, free and clear of any security interest, pledge or other claim, charge,
lien or encumbrance, except for (i) the Permitted Exceptions; (ii) claims,
charges, liens and encumbrances arising out of contracts entered into by HICN
pursuant to the Buyer/HICN Lease; and (iii) the Gaming Service Contracts.
8.9 The Slot Machines are in the same operating condition and
state of repair as when such machines (or their predecessors), were inspected
by Buyer prior to the date of this Agreement (subject to ordinary wear and
maintenance), and are in all material respects adequate and suitable for the
purposes for which the same are presently being used.
8.10 Other than contracts or commitments that will be terminated or
discharged at or prior to the time the Asset(s) subject thereto are sold to
Buyer hereunder, HICN is not a party to any contract or commitment in respect
of the Assets which contract or commitment either has a remaining unexpired
term of one year or more or provides for the payment by HICN of more than $100
per month, unless such contract or commitment may be cancelled by HICN without
charge or other penalty upon not more than 30 days' prior notice and, unless
otherwise identified in the Disclosure Letter, all tenant leases of units
within the Apartment Building may be terminated without charge or penalty upon
not more than 60 days' prior notice. Each such contract or commitment is
specifically identified in the Disclosure Letter in response to this Section
8.10 and is valid and in full force and effect, and there exists no default, or
event that with notice or the lapse of time or both, would constitute a
default, under any such contract or commitment by HICN or, to the best
knowledge of HICN, any other party to such contract or commitment. HICN has
provided Buyer with true and correct copies of such contracts and commitments.
In the event that HICN intends to terminate any contract or commitment
of HICN relating to the Non-Gaming Assets at or prior to the First Closing,
HICN will use all reasonable efforts to notify Buyer of the same, and if Buyer
so requests, such contract or commitment shall not be terminated by HICN, but
shall be assigned by HICN to Buyer on the same terms and subject to the same
conditions as the contracts or commitments specifically identified in the
Disclosure Letter in response to this Section 8.10 are so assigned.
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8.11 Except for liabilities pursuant to the leases, purchase and
participation agreements and other contracts and commitments specifically
identified in response to Section 8.10 hereof or that HICN acquires or becomes
subject to as a result of actions taken by HICN pursuant to the Buyer/HICN
Lease, Buyer will not, by virtue of Buyer's assumption of the liabilities of
HICN referred to in subsection 2.1.4 hereof, assume any material liability,
debt or obligation of HICN whatsoever, and HICN covenants to timely pay and
discharge all of its debts, obligations and liabilities with respect to the
Assets.
8.12 To the best knowledge of HICN, neither the Hotel/Casino nor
HICN's use or occupancy thereof is in violation of any federal, state, country
or local law, rule or regulation (including, without limitation, any applicable
building, zoning or other land use requirement or any law relating to pollution
or protection of the environment or Hazardous Substances), or any regulation of
the National Board of Fire Underwriters, which violation if not corrected would
materially adversely affect Buyer's operation of the Hotel/Casino, nor has HICN
received any notice that any governmental authority, insurer or other person is
asserting any violation of the same.
8.13 Other than the Street Widening as set forth in Section 7.7
hereof, there are no pending or, to the best knowledge of HICN, threatened
condemnation actions or proceedings in eminent domain with respect to the
Hotel/Casino, nor has HICN received notice of the commencement of any
proceeding that would change the present zoning classification of the
Hotel/Casino or the Apartment Building.
8.14 Except for a proposed contract with maintenance workers
affiliated with the operating engineers of the AFL-CIO, none of the employees
of the Hotel/Casino is a party to any employment or consulting agreement with
HICN or represented as a Hotel/Casino employee by any labor union, and there is
not presently in effect any collective bargaining agreement pertaining to the
Hotel/Casino or its employees. Since December 30, 1988, there has not been any
labor strike, work stoppage, interruption or slow-down, or other labor
disturbance in connection with HICN's operation of the Hotel/Casino, and no
such labor trouble (including, without limitation, any labor union
organizational drive), currently is, to the best knowledge of HICN, threatened.
8.15 HICN heretofore has either delivered to Buyer or made
available for inspection by Buyer true and complete copies (or a written
description of the material terms and conditions), of any and all bonus,
profit-sharing, stock option, pension, severance and similar plans and
arrangements maintained by HICN for employees of the Hotel/Casino
(collectively, the "Employee Plans").
HICN is not a party to, and is not required to make any employer
contribution to, any "employee pension benefit plan" (within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any "employee welfare benefit plan" (within the meaning of
Section 3(1) of ERISA), affecting any employee of the Hotel/Casino.
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8.16 Included in the Disclosure Letter is a true and complete
schedule of all policies of fire, public liability and other kinds of insurance
maintained as of the date hereof by HICN relating to the Hotel/Casino, which
schedule includes, without limitation, the kind of insurance, the insurer, the
amount of coverage, the expiration date, the annual premium, the person(s) to
whom the proceeds are payable, the policy number and any pending claim(s)
thereunder. All such policies are binding and in full force and effect, and
there exists no default, or event that with notice or the lapse of time or
both, would constitute a default, under any such insurance policy by HICN or,
to the best knowledge of HICN, by the insurance company issuing such policy.
8.17 Except as set forth in the Environmental Reports and any
environmental reports obtained by Buyer (without, however, HICN making any
representation or warranty relating to the accuracy or completeness of any
environmental reports obtained by Buyer), and any such material used in the
ordinary course of the businesses conducted by Sellers or their tenants at the
Hotel/Casino and Apartment Building and stored in accordance with applicable
environmental laws and regulations, to the best of HICN's knowledge, there are
no Hazardous Substances, as hereinafter defined, located at the Hotel Land,
Hotel Improvements, Apartment Land or Apartment Improvements. As used herein,
"Hazardous Substances" shall mean any material or substance defined as
"hazardous substances", "hazardous materials", "toxic substances",
"pollutants", or hazardous waste" (including asbestos), under federal, state
and local laws regulating hazardous or toxic substances.
8.18 Neither this Agreement, the Exhibits attached hereto, nor any
other document furnished by HICN, taken as a whole, contain any untrue
statement of a material fact or omit to the state a material fact necessary to
make the statement contained herein and therein not misleading, and except as
disclosed herein or therein, there is no fact (other than matters of a general
economic or political nature which do not affect the Hotel/Casino uniquely),
known to HICN which materially adversely affects or in the future can be
reasonably expected to materially adversely affect the Hotel/Casino. In
addition, to the best knowledge of HICN, the representations and warranties of
the Partnership set forth in Article 7 hereof are true and correct in all
material respects.
Article 9. Representations and Warranties of Crown and Buyer.
Crown and Buyer represent and warrant to Sellers that:
9.1 Crown and Buyer are corporations duly organized, validly
existing and in good standing under the laws of the States of Texas and Nevada,
respectively, with all requisite corporate power and authority to own their
assets and conduct their business as presently conducted. Crown and Buyer have
all requisite corporate power and authority to execute and deliver this
Agreement and to perform their respective obligations hereunder.
9.2 This Agreement has been duly executed and delivered by Crown
and Buyer, and constitutes Crown's and Buyer's valid and binding obligation,
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by the provisions of
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applicable bankruptcy and insolvency, moratorium or similar laws affecting
creditors' rights generally, and except that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought. The execution and delivery of this
Agreement by Crown and Buyer and the consummation by Crown and Buyer of the
transactions contemplated hereby to be consummated by Crown and Buyer do not
and will not (i) violate any provision of their respective charter or by-laws;
(ii) result in the breach of any of the terms or conditions, or constitute a
default under, any contract, lease, franchise, concession, license, permit,
note, bond, indenture, mortgage, deed of trust, security interest or other
agreement or instrument to which Crown and Buyer is a party or by which Crown
or Buyer or their respective assets may be bound; (iii) subject to obtaining
the consents and approvals contemplated by subsection 6B.1.2 hereof, violate
any law or governmental rule or regulation, or any order, judgment or award of
any court or administrative agency, or any decision or finding of any
arbitrator, binding upon Crown and Buyer; or (iv) except for the consents and
approvals contemplated by subsection 6B.1.2 hereof and Nomura Holding, Inc.
("Nomura"), require the consent of any governmental authority or other person.
The consent of Nomura shall be obtained, or no longer required, prior to the
First Closing Date. The consent of Nomura is not a condition precedent in any
manner whatsoever to the obligations of Crown or Buyer under this Agreement.
9.3 There is no suit, action, proceeding (administrative or
otherwise), arbitration or governmental investigation pending, or to the best
knowledge of Crown and Buyer, threatened, against Crown or Buyer that will
adversely affect the performance by Crown or Buyer of their respective
obligations hereunder.
9.4 To the best knowledge of Crown and Buyer, the representations
and warranties of the other set forth in this Article 9 are true and correct in
all material respects.
Article 10. Operation of the Hotel/Casino Pending the First Closing.
Between the date hereof and the First Closing:
10.1 HICN shall carry on the business of the Hotel/Casino in the
ordinary course as such business is presently being conducted.
10.2 HICN shall use its best efforts to preserve intact the
business organization of the Hotel/Casino, to retain the services of the
Hotel/Casino's present employees and to preserve the Hotel/Casino's present
relationships with the suppliers, customers and others having business
relationships with the Hotel/Casino.
10.3 Except as may be first approved by Buyer (whose approval shall
not be unreasonably withheld), or as may be otherwise contemplated by this
Agreement, neither Seller shall (i) except for non-material changes in the
ordinary course of business, amend, supplement or otherwise change in any
material respect the terms and conditions of any Hotel Service Contracts; (ii)
enter into any contract or commitment, or incur any liability, with respect to
the Non-Gaming Assets, except contracts and commitments entered into, and
current liabilities incurred, in the ordinary course of business with third
parties; or (iii) sell or otherwise dispose
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of any Non-Gaming Asset owned or held by such Seller as of the date of this
Agreement, except for dispositions of non-material portions thereof in the
ordinary course of business.
10.4 Except as may be first approved by Buyer (whose approval shall
not be unreasonably withheld), HICN shall not (i) increase any compensation
payable or to become payable by HICN to any employee of the Hotel/Casino, other
than in the ordinary course of business; or (ii) make any change in the
benefits payable to any Hotel/Casino employee under any bonus or pension plan
or other employee benefit plan or arrangement specifically identified by HICN
in the Disclosure Letter in response to Section 8.15 hereof, other than in the
ordinary course of business.
10.5 Each Seller shall file all tax returns required to be filed by
such Seller (other than income tax returns), and pay all taxes shown thereon to
be due and payable, prior to the First Closing Date with respect to the
Non-Gaming Assets.
10.6 Each Seller shall file all reports or returns required to be
filed by such Seller prior to the First Closing Date with governmental
authorities and relating to the ownership or operation of the Non-Gaming Assets
owned or held by such Seller.
10.7 HICN shall maintain its existing insurance (or equivalent
insurance coverage), with respect to the Hotel/Casino and the Apartment
Building, subject to variations in amounts required by the ordinary operation
of the Hotel/Casino's and Apartment Building's business. At the request of
Buyer and at Buyer's sole expense, HICN shall use its best efforts to increase
the amount of insurance against fire and other casualties that, at the date of
this Agreement, HICN carries on the Hotel/Casino and Apartment Building or in
respect of its operations by the amount or amounts Buyer shall specify.
10.8 Sellers will maintain, service and repair (if necessary) the
Assets so that, at First Closing, such Assets are in at least as good operating
condition and repair as when inspected by the Buyer prior to the date of this
Agreement.
10.9 Sellers will comply in all respects with all applicable laws,
rules, regulations, judgments, decrees, orders, governmental permits,
certificates and licenses related to the Assets.
10.10 At all reasonable times prior to the First Closing, Sellers
shall provide to Buyer, its counsel and other authorized representatives, full
and free access, at reasonable times and upon reasonable notice, to all of the
properties, books, contracts, commitments and records of Sellers related to the
Hotel/Casino and Apartment Building.
Article 10A. Operation of Gaming Assets Pending the Second Closing.
Between the date hereof and the Second Closing:
10A.1 Except as may be first approved by Buyer (whose approval shall
not be unreasonably withheld), or as may be otherwise contemplated by this
Agreement or permitted by
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the Buyer/HICN Lease, Sellers shall not (i) except for non-material changes
in the ordinary course of business, amend, supplement or otherwise change in
any material respect the terms and conditions of any Gaming Service Contract;
(ii) enter any contract or commitment, or incur any liability, with respect to
the Slot Machines and the other Gaming Assets, except contracts and
commitments entered into, and current liabilities incurred, in the ordinary
course of business with third parties; or (iii) sell or otherwise dispose of
any Gaming Asset owned or held by such Seller as of the date of this Agreement,
except for dispositions of non-material portions thereof in the ordinary course
of business.
10A.2 Each Seller shall file all tax returns, if any, required to be
filed by such Seller (other than income tax returns), and pay all taxes shown
thereon to be due and payable, prior to the Second Closing Date with respect to
the Gaming Assets.
10A.3 Each Seller shall file all reports or returns, if any, required
to be filed by such Seller prior to the Second Closing Date with governmental
authorities (including, without limitation, the Nevada Gaming Authorities) and
relating to the ownership or operation of the Gaming Assets owned or operated
by such Seller.
10A.4 Sellers shall comply with the provisions of Sections 10.1
through 10.9 hereof, subject to the terms of the Buyer/HICN Lease.
Article 11. Indemnification.
11.1 Subject to the remaining provisions of this Article 11, each
of the Partnership and HICN shall severally, but not jointly, indemnify and
hold harmless Crown and Buyer from, against and in respect of any and all
damages, losses or expenses (including reasonable attorneys' fees), suffered or
paid as a result of any and all claims, judgments and liabilities against or
sustained by Crown or Buyer as a result of (i) any inaccuracy in, or breach of
any representation or warranty or covenant made by such Seller herein; (ii) any
breach, non-fulfillment or default in the performance by such Seller of any of
the covenants or agreements made by such Seller herein or in any documents
delivered in connection herewith; or (iii) any failure of such Seller to duly
pay, perform or otherwise discharge any liability or obligation of such Seller
(x) in respect of the Non-Gaming Assets, accruing or arising prior to the First
Closing, and (y) in respect of the Gaming Assets, accruing or arising prior to
the Second Closing; provided, however, that Crown and Buyer shall be entitled
to indemnification hereunder only at such time as the aggregate amount of all
of such damages, losses and expenses exceeds $50,000, except that such minimum
amount shall not apply to a failure by Sellers to duly pay, perform or
discharge any liability or obligation as set forth in Section 8.11 hereof.
HICN shall further indemnify and hold harmless Buyer as follows: In
the event that the Nevada Gaming Authorities determine that Buyer may not at
the Second Closing terminate any progressive Slot Machine liability then in
place and notify Buyer of the same, HICN shall, upon delivery to HICN of a copy
of such notice, reimburse Buyer for the aggregate amount shown on the "meters"
of all such Slot Machines, if any, as of the Second Closing Time.
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11.2 Crown and Buyer shall, jointly and severally, indemnify and
hold harmless each Seller from, against and in respect of any and all damages,
losses or expenses (including reasonable attorneys' fees), suffered or paid as
a result of any and all claims, judgments and liabilities against or sustained
by such Seller as a result of (i) any inaccuracy in, or breach of any
representation or warranty or covenant made by Crown and Buyer herein; (ii) any
breach, non-fulfillment or default in performance by Crown or Buyer of any of
the covenants or agreements made by Crown or Buyer herein or in any documents
delivered in connection herewith; or (iii) any failure of Crown or Buyer to
duly pay, perform or otherwise discharge any contractual or other liability or
obligation assumed by Crown or Buyer pursuant to subsection 2.1.4 hereof.
11.3 In the event that Crown and Buyer, on the one hand, or a
Seller, on the other, (in such capacity, the "Indemnified Party"), obtains
knowledge of any damage, loss, expense, claim, judgment or liability that the
Indemnifying Party determines has given or give rise to a claim under this
Article 11, the Indemnified Party shall promptly give notice of the same to the
party required by this Agreement to provide such indemnification (the
"Indemnifying Party," and such notice a "Notice of Claim"). A Notice of Claim
shall specify, in reasonable detail, the nature of the facts or circumstances
that the Indemnified Party has determined have given or may give rise to a
claim for indemnification hereunder. With respect to any third-party claim
giving rise to a Notice of Claim, the Indemnifying Party may defend, at its
expense, such third-party claim; provided, however, that the Indemnified Party,
at its expense, shall have the right to participate in such defense. The
Indemnified Party shall make available to the Indemnifying Party or its
attorneys or other representatives all books and records of the Hotel/Casino or
the Apartment building, as the case may be, and all other materials reasonably
required by the Indemnifying Party or its representatives for use in contesting
any third-party claim, and shall cooperate fully with the Indemnifying Party in
the defense of all such claims.
11.4 In the event that any facts or circumstances shall occur that
would otherwise entitle any party hereto to assert a claim for indemnification
hereunder, no damage, loss or expense shall be deemed to have been sustained by
such party to the extent of any proceeds received by such party from any
insurance policy or policies with respect thereto.
11.5 An Indemnifying Party shall not be liable under this Article
11 for any damage, loss or expense resulting from any facts or circumstances
relating to a breach of any representation or warranty if the Indemnifying
Party can establish that the Indemnified Party has actual knowledge of such
facts by reason of a writing or written materials on or prior to the First
Closing Date (or, to the extent such representation or warranty relates to the
Gaming Assets, on or prior to the Second Closing Date); provided, however, such
writing or written materials shall have been delivered by a Seller or its
attorneys to Crown, Buyer or their attorneys pursuant to this Agreement and,
with respect to writings or written materials delivered after the date of this
Agreement, the receipt thereof shall have been acknowledged in writing by the
President or a Vice President of Crown, Buyer or their attorneys.
Notwithstanding the foregoing, the provisions hereof shall not affect Sellers'
liability relating to a breach of any representation or warranty relating to
the title of the Assets, and any modification to a representation and warranty
required by such writing or written materials shall have been evidenced in the
certificate of Seller required
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at the First or the Second Closing, as the case may be, pursuant to Section 6.1
and subsection 6B.1.1, respectively, and such modification shall have been
accepted and approved by Buyer, and Buyer shall have waived such modification
to the accuracy of any such representation or warranty.
11.6 For purposes of this Article 11, the representations and
warranties contained in this Agreement and relating to the Non-Gaming Assets
shall survive the First Closing for a period of two years, and the
representations and warranties contained herein and relating to the Gaming
Assets shall survive the Second Closing for a period of two years; provided,
however, that no such termination of any such representation or warranty shall
terminate, limit or otherwise affect any claim(s) made by any party hereto for
breach of such representation and warranty which claim was made prior to the
date of such termination.
11.7 Except as otherwise provided in subsection 2.1.2 hereof, the
indemnification provided for in this Article 11 shall be the sole remedy to
which the parties hereto are entitled in respect of any fact or circumstance
that would give rise to such right of indemnification without regard to the
proviso included in Section 11.1 hereof.
Article 12. Risk of Loss.
Notwithstanding the execution and delivery of this Agreement, HICN
shall continue to conduct the business conducted by HICN at the Hotel/Casino,
and ownership of the Assets subject hereto shall remain with Sellers, until (i)
in the case of the Non-Gaming Assets, the First Closing; and, (ii) in the case
of the Gaming Assets, the Second Closing. Accordingly, until such time(s),
Sellers shall bear all risk of loss with respect to said assets, except as
hereinafter provided to the contrary.
12.1 In the event that prior to the First Closing, the Hotel Land,
any of the Hotel Improvements, the Apartment Land or any of the Apartment
Improvements are destroyed or materially damaged as a result of any fire or
other casualty, or in the event that Sellers receive notice that a condemnation
action or proceedings in eminent domain have been or will be commenced against
the Hotel Land, any of the Hotel Improvements, the Apartment Land or any of the
Apartment Improvements (other than the Street Widening), Sellers shall promptly
notify Buyer of the same, and Buyer thereupon shall have the right to terminate
this Agreement (and the Deposit shall be promptly delivered to Buyer) by giving
notice to Sellers of such termination; provided, however, that any such notice
from Buyer shall be effective only if given to Sellers within 10 business days
after Sellers notify Buyer of the commencement of such action or proceeding.
If Buyer does not so terminate this Agreement, (i) the representations,
warranties and covenants of Sellers herein shall be deemed modified to reflect
such casualty or taking; and (ii) any and all insurance proceeds or award(s)
payable to Sellers by reason of such casualty or taking shall be paid by
Sellers (or Sellers' rights to receive the same shall be assigned by Sellers),
to Buyer at the First Closing.
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12.2 In the event that prior to the First Closing any material
portion of the FF&E or other tangible assets or properties included in the
Non-Gaming Assets is damaged or destroyed, and Sellers elect not to repair or
replace the damaged or destroyed asset(s), Sellers shall promptly notify Buyer
of the same and of Sellers' estimate of the aggregate cost of repairing such
damage or replacing the destroyed asset(s). Buyer thereupon shall have the
right to terminate this Agreement (and the Deposit shall be promptly delivered
to Buyer) by giving notice to Sellers of such termination; provided, however,
that any such notice from Buyer shall be effective only if given to Sellers
within 10 business days after Sellers notify Buyer of such damage or
destruction. If Buyer does not so terminate this Agreement, (i) the
representations, warranties and covenants of Sellers herein shall be deemed
modified to reflect such damage or destruction; (ii) any and all insurance
proceeds payable to Sellers by reason of such casualty shall be retained by
Sellers; and (iii) the amount payable to Sellers pursuant to subsection 2.1.2
and to subsection 4.3.4 hereof shall be reduced by an amount equal to the
aforementioned estimate.
12.3 In the event that prior to the Second Closing any material
portion of the Slot Machines or the other tangible personal property included
in the Gaming Assets is damaged or destroyed, and Sellers elect not to repair
or replace the damaged or destroyed asset(s), Sellers shall promptly notify
Buyer of the same and of Sellers' good faith estimate of the aggregate cost of
repairing such damage or replacing the destroyed asset(s). Buyer thereupon
shall have the right to terminate the obligations to purchase the Gaming Assets
pursuant to this Agreement by giving notice to Sellers of such termination;
provided, however, that any such notice from Buyer shall be effective only if
given to Sellers within 10 business days after Sellers notify Buyer of such
damage or destruction. If Buyer does not so terminate this Agreement, (i) the
representations, warranties and agreements of Sellers herein shall be deemed
modified to reflect such damage or destruction; (ii) any and all insurance
proceeds payable to Sellers by reason of such casualty shall be retained by
Sellers; and (iii) the amount payable to Sellers pursuant to subsection 2.1.2
and to subsection 4A.2.2 hereof shall be reduced by an amount equal to the
aforementioned estimate.
Article 13. Termination.
13.1 This Agreement may be terminated at any time prior to the
First Closing:
13.1.1 By mutual consent of all parties hereto;
13.1.2 By Buyer, on the one hand, or Sellers, on the other
hand (in each case by notice given to the other or others), if the
First Closing shall not have occurred on or before the First Closing
Date provided for in Section 4.1 hereof; provided, however, that the
right to terminate this Agreement under this subsection 13.1.2 shall
not be available to any party whose failure to perform any obligation
or comply with any covenant under this Agreement has been the cause
or resulted in the failure of the First Closing to occur on or before
such date; or
13.1.3 If there is a Regulatory Termination, in which event
the Deposit shall be promptly delivered to Buyer.
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13.2 This Agreement may be terminated at any time after the First
Closing but prior to the Second Closing;
13.2.1 By mutual consent of all parties hereto;
13.2.1.1 By Buyer, on the one hand, or
Sellers, on the other hand (in each case by notice given to
the other(s)) if the Second Closing shall not have occurred on
or before sixteen (16) months after the First Closing Date;
provided, however, that the right to terminate this Agreement
under this subsection 13.2.1.1 shall not be available to any
party whose failure to perform any obligation or comply with
any covenant under this Agreement has been the cause or
resulted in the failure of the Second Closing to occur on or
before such date; or
13.2.2 If there is a Regulatory Termination.
13.3 Nothing in this Article 13 shall supersede, limit or otherwise
affect any right of termination granted to any party or parties hereto pursuant
to Article 12 hereof or any other provision or provisions of this Agreement,
including specifically Buyer's right to terminate this Agreement pursuant to
Article 4D.
13.4 In the event of any termination of this Agreement pursuant to
this Article 13 or otherwise:
13.4.1 If this Agreement is terminated after the First
Closing has occurred, such termination shall in no way affect the sale
of the Non-Gaming Assets to Buyer pursuant hereto or the rights,
duties and remedies of the parties hereto arising out of or with
respect to such sale;
13.4.2 This Agreement shall be of no further force or
effect, and neither any of the parties hereto nor any of their
respective trustees, directors, officers, employees, agents or
representatives shall have any further liability or obligation
hereunder, other than for willful failure to consummate the
transactions contemplated hereby notwithstanding the satisfaction of
all of the conditions set forth herein to such party's obligation to
consummate the same; provided, however, that the provisions of Section
4D.1, this Section 13.4, the provisions of Sections 16.9 through and
including 16.12 hereof, and (if the First Closing shall have
occurred), the representations and warranties made by Sellers in
Articles 7 and 8 hereof to the extent the same relate to the
Non-Gaming Assets, the representations and warranties made by Buyer
in Article 9 hereof, and the provisions of Article 11 hereof shall
survive such termination and continue in full force and effect;
13.4.3 Except as otherwise provided in subsection 2.1.2
hereof, there shall be returned to each party hereto any and all
documents and funds theretofore deposited by such party in the Escrow
(including any income earned on any such funds); and
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13.4.4 Except as otherwise provided in the proviso included
in Section 4.5 hereof, Buyer and Sellers each shall pay one-half of
any costs incurred for obtaining the Title Insurance Policy and the
Survey and one- half of the fees and expenses of the Escrow Agent.
Article 14. Brokers.
Crown and Buyer represent and warrant to Sellers that other than
Resort Properties of America ("Broker"), Crown and Buyer have not engaged the
services of a broker, finder or investment banker in connection with this
Agreement or the transactions contemplated by this Agreement. Broker's fees
and expenses shall be paid by Crown and Buyer. Crown and Buyer represent and
warrant that the fee paid to Broker is not one paid in consideration for the
arranging or negotiation of an extension of credit intended for (a) the
acquisition of an interest in a gaming establishment or registered company, or
(b) to finance the gaming operations of a licensed gaming establishment.
Sellers represent and warrant to Buyer that Sellers have not engaged the
services of a broker, finder or investment bankers in connection with this
Agreement or the transactions contemplated by this Agreement. Crown and Buyer
shall, jointly and severally, indemnify and hold the Sellers harmless from and
against any and all claims, liabilities or obligations that may result from any
omission or inaccuracy in the foregoing representation and warranty made by
Crown and Buyer.
Article 15. Notices.
All notices, requests, approvals, consents or other similar
communications that any party hereto shall be required or desire to give to any
other party under this Agreement shall be in writing and shall be delivered by
hand or prepaid overnight courier service, or mailed by first-class U.S.
certified or registered mail, return receipt requested, postage prepaid, or
sent by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above, in each case to
the person named below or addressed as follows:
If to Crown: Crown Casino Corporation
2415 West Northwest Highway, Suite 103
Dallas, Texas 75220
Attn: Mark D. Slusser, Chief Financial Officer
Facsimile: 214-357-1974
If to Buyer: Crown Casino Nevada, Inc.
2415 West Northwest Highway, Suite 103
Dallas, Texas 75220
Attn: Mark D. Slusser, Chief Financial Officer
Facsimile: 214-357-1974
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In each case,
with a copy to: T. J. Falgout, III
Stumpf & Falgout
1400 Post Oak Boulevard, Suite 400
Houston, Texas 77056
Facsimile: 713-871-0408
If to the Partnership: SLT Realty Limited Partnership
c/o Starwood Lodging Corporation
11845 Olympic Boulevard, Suite 550
Los Angeles, California 90064
Attn: Jeffrey C. Lapin, President
Facsimile: 310-575-9512
If to HICN: Starwood Lodging Corporation
11845 Olympic Boulevard, Suite 550
Los Angeles, California 90064
Attn: Kevin Mallory, Executive
Vice President
Facsimile: 310-575-9512
In each case,
with a copy to: Lionel Sawyer & Collins
1100 Bank of America Plaza
50 West Liberty Street
Reno, Nevada 89501
Attn: Dan R. Reaser, Esq.
Facsimile: 702-788-8682
or to such other person or address as the addressee may have specified in a
notice duly given to the sender as provided herein.
If so delivered, couriered or mailed, each such notice or other
communication shall be deemed given when personally delivered, as of the first
business day after the date so sent by courier, or as of the third business day
after the day so sent by mail, as the case may be.
Article 16. Miscellaneous.
16.1 Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof may be assigned by any party
hereto, except that (subject to compliance with applicable Nevada gaming
statutes and regulations), HICN may assign any or all of its rights and
remedies hereunder to Starwood Lodging Corporation, a Maryland corporation
("SLC"), or to any other direct or indirect subsidiary of SLC.
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16.2 For a period of 90 days after each of the First Closing Date and
the Second Closing Date, Buyer shall provide Sellers with the use of such
office space at the Hotel/Casino and such use of the Hotel/Casino's computer
system and staff as Sellers may reasonably request for the purpose of preparing
Sellers' financial statements for the period(s) in which such closings occur.
Sellers may from time to time after each of the First Closing and the
Second Closing (upon reasonable prior notice to Buyer), make copies of the
books and records of the Hotel/Casino with respect to the period prior to such
closing(s) to the extent reasonably required by either Seller to prepare and
substantiate its tax returns (including, without limitation, in connection with
any audit), or to prepare for, prosecute, defend or settle any litigation
pending or threatened against such Seller; provided, however, that Sellers may
not remove any such books or records from the Hotel/Casino. Buyer agrees to
maintain all such original books and records of the Hotel/Casino for such time
periods as are required by the Internal Revenue Service and the Nevada Gaming
Authorities, but in any event, not less than five (5) years.
16.3 Each of the parties hereto shall use its best efforts to bring
about the transactions contemplated by this Agreement as soon as practicable
(including, without limitation, by making such all such filings and taking all
such other actions as are necessary or appropriate to obtain the consents and
approvals referred to in Section 4A.1 hereof). Without limiting the generality
of the foregoing, Sellers shall promptly, from time to time after the First
Closing and the Second Closing, execute and deliver to Buyer such further bills
of sale, conveyances, assignments, assurances or other instruments of transfer
as Buyer shall reasonably request, in order to vest and confirm in Buyer all
right, title and interest of Sellers in and to the assets acquired by Buyer
pursuant to this Agreement.
16.4 This Agreement and the Exhibits attached hereto (together with
the Buyer/HICN Lease), contain(s) all of the terms and conditions agreed upon
by the parties hereto with respect to the subject matter hereof, and no
representation or warranty not specifically made, and no covenant or agreement
not specifically referred to, herein shall be deemed to exist or to bind any of
the parties hereto with respect to the subject matter hereof. Without limiting
the generality of the foregoing, no officer, employee or agent of either Seller
has any authority to make any representation or promise not contained in this
Agreement, and Buyer acknowledges that it has not executed this Agreement in
reliance upon any such representation or promise.
This Agreement may not be amended or supplemented except by a writing
signed by the party or parties to be bound thereby.
This Agreement shall inure to the benefit and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto and their respective successors and permitted
assigns any right or remedy under or by reason of this Agreement.
16.5 Sellers may, by notice to Buyer, or Buyer may, by notice to
Sellers, (i) waive or extend the time for the performance of any of the
obligations or other actions of the other(s); (ii) waive any inaccuracy in the
representations or warranties of the other(s) contained in this
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Agreement or in any document delivered pursuant to this Agreement; or (iii)
waive compliance with any of the covenants of the other(s) contained in this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of such provision or of any breach of any other provision hereof.
16.6 All Article headings herein have been inserted for the
convenience of the parties, and shall not in any way modify, limit, construe or
otherwise affect this Agreement. All references herein to Sections include all
subsections of such Sections.
For purposes of interpreting the phrase "HICN's operation of the
Hotel/Casino" as used in this Agreement, HICN shall be deemed to operate the
Hotel/Casino in substantially the same manner as the Hotel/Casino is currently
operated.
16.7 This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original and which together shall constitute one
and the same instrument.
16.8 This Agreement shall be governed and construed in accordance
with the laws of the State of Nevada.
16.9 Except as may be otherwise required by applicable federal
securities law or by the requirements of any national securities exchange on
which securities of the Partnership, any general partner of the Partnership or
Crown are listed, or as required by applicable laws governing the regulation of
the Hotel/Casino by the Nevada Gaming Authorities, neither Sellers, on the one
hand, nor Crown or Buyer, on the other, shall notify any third party of, or
issue any press release or otherwise make any public disclosure concerning, the
execution and delivery of this Agreement or the transactions contemplated
hereby; provided, however, that notwithstanding the foregoing provisions of
this Section 16.9, copies of this Agreement may be furnished by Crown and Buyer
to those persons and entities that have agreed (or that Crown and Buyer believe
may agree), to provide Buyer with equity or debt financing for Buyer's purchase
of the Hotel/Casino and the Apartment Building if Crown and Buyer shall first
have obtained the written agreement of each such source (or potential source),
of financing to hold such information in confidence and to use such information
only for the purpose of determining whether or not to provide such financing to
Buyer. Crown, Buyer and Sellers will consult and cooperate with each other as
to the timing and content of any announcements of the transaction contemplated
hereby to the general public or to employees, customers or suppliers. Except
as otherwise required by applicable law, neither party without the consent of
the other will issue any press release concerning the transaction contemplated
by this agreement, it being the intent of the parties that any press releases
will be issued simultaneously and the contents thereof will be approved by all
parties.
Unless and until the First Closing has occurred, Crown and Buyer shall
keep strictly confidential and not disclose to any other person or entity
(other than Crown's and Buyer's auditors, attorneys, bankers and other
authorized representatives), any and all Confidential
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Information obtained from any financial statements or other materials
provided to Crown and Buyer or their authorized representatives by or on behalf
of Sellers in connection with the transactions contemplated hereby or pursuant
to visitation, inspection or review rights granted hereunder. If the First
Closing does not occur, Crown and Buyer shall return or cause to be returned to
Sellers all written materials and all copies thereof that were supplied to
Crown and Buyer by or on behalf of Sellers and that contain any Confidential
Information.
As used in this Agreement, "Confidential Information" means any
information concerning the Hotel/Casino or its business and/or the Apartment
Building, but does not include information (i) that is or becomes generally
available to the public through no fault of Crown and Buyer; or, (ii) that is
later acquired by Crown and Buyer on a non-confidential basis from a source
other than Sellers which source is not known by Crown and Buyer to be obligated
to keep such information confidential.
Crown and Buyer shall cause any auditor, attorney, banker or other
authorized representative of Crown and Buyer to whom any Confidential
Information is disclosed by Crown and Buyer or any other authorized
representative of Crown and Buyer to observe in all respects the provisions of
this Section 16.9.
16.10 Crown, Buyer and Sellers each on their own behalf and on behalf
of their successors hereby irrevocably submit themselves to the exclusive
jurisdiction of the Eighth Judicial District Court of the State of Nevada in
and for the County of Clark for the purposes of any suit or other proceeding
arising out of, or relating to, this Agreement or the transactions contemplated
thereby, and hereby waive the right to assert, by way of motion, as a defense,
or otherwise, in any such suit action or proceeding that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Agreement or the subject matter
hereof may not be enforced in or by such court. Each Seller hereby appoints
Dan R. Reaser, Esq. (whose address is set forth in Article 15 hereof) as such
Sellers' agent for service of process, and Crown and Buyer each hereby appoints
T.J. Falgout, Esq. (whose address also is set forth in Article 15 hereof) as
their agent for service of process.
16.11 Except as otherwise expressly provided to the contrary in this
Agreement, each party hereto shall pay its own expenses incidental to the
negotiation and preparation of this Agreement and the carrying out and
consummation of the transactions contemplated hereby.
In the event suit is brought to enforce or interpret any part of this
Agreement or the rights or obligations of any party to this Agreement, the
prevailing party or parties shall be entitled to recover, as an element of such
the costs of suit of such party or parties, and not as damages, reasonable
attorneys' fees to be fixed by the court. A prevailing party shall be a party
entitled to recover such party's costs of suit, whether or not the suit
proceeds to final judgment. A party not entitled to recover such party's costs
shall not recover attorneys' fees. No sum for attorneys' fees shall be counted
in calculating the amount of a judgment for purposes of determining whether a
party is entitled to recover such party's costs or attorneys' fees.
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16.12 No provision of this Agreement shall be construed in favor of
or against any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting hereof or by reason of the
extent to which such provision or any other provision or provisions of this
Agreement is or are inconsistent with any prior draft thereof. If any
provision of this Agreement is held by a court or competent jurisdiction to be
invalid, illegal or unenforceable, the remaining provisions hereof shall in no
way be affected and shall remain in full force and effect.
16.13 From and after the end of the Limited Inspection Period until
the earlier of the Second Closing Date or the termination of this Agreement in
accordance with the terms hereof, Sellers will not solicit or encourage
inquiries or proposals with respect to, or furnish any information relating to,
or participate in any negotiations or discussions concerning, any acquisition
of the Hotel/Casino, and Sellers shall instruct their officers, directors,
agents and affiliates to refrain from doing so. After the end of the Limited
Inspection Period, Sellers will notify Buyer of any such serious inquiry or
proposal received by Sellers, or if any such information is requested from
Sellers, or any such negotiations are sought to be initiated with Sellers, and
any response thereto shall be approved in advance by Buyer.
16.14 At the Second Closing Date, Seller will terminate the Employee
Plans so that, after the Second Closing Date, Buyer shall not be obligated to
any employees of Sellers, whether or not hired by Buyer, with respect to and
under such Employee Plans. Further, Sellers shall be responsible for any
continuation of coverage of group health plans for any such employees under
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA").
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
Crown Casino Corporation SLT Realty Limited Partnership
By: Starwood Lodging Trust,
By:
-------------------------------
its sole general partner
Name:
------------------------------------
Title: By:
----------------------------------- --------------------------------------
Name:
-------------------------------------
Title:
-----------------------------------
Crown Casino Nevada, Inc. Hotel Investors Corporation of Nevada, Inc.
By: By:
-------------------------------------- --------------------------------------
Name: Name:
------------------------------------ --------------------------------------
Title: Title:
----------------------------------- -----------------------------------
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The name "Starwood Lodging Trust" is a designation of Starwood Lodging
Trust and its Trustees (as Trustees but not personally), under a Declaration of
Trust dated August 25, 1969, as amended and restated as of June 6, 1988, and as
further amended [February 28, 1995] and all persons dealing with Starwood
Lodging Trust must look solely to Starwood Lodging Trust's property for the
enforcement of any claims against Starwood Lodging Trust, as the Trustees,
officers, agents and securityholders of Starwood Lodging Trust assume no
personal obligations of Starwood Lodging Trust, and their respective properties
shall not be subject to the claims of any persons relating to such obligations.
For value received, and in consideration for and as an inducement to
Crown and Buyer to enter into this Agreement, Starwood Lodging Corporation, a
Maryland corporation ("SLC"), hereby joins in this Agreement for the sole
purpose of guaranteeing, and SLC hereby unconditionally guarantees unto Crown
and Buyer the full performance and observance of all of the obligations of HICN
under Article 11 of this Agreement, including, without limitation, the
indemnification obligation set forth in Section 11.1 of this Agreement. This
guaranty is unconditional, and the liability of SLC shall be primary and
absolute.
STARWOOD LODGING CORPORATION,
a Maryland corporation
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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LEASE
THIS LEASE is made and entered into as of the _____ day of
____________, 1995, by and between CROWN CASINO NEVADA, INC., a Nevada
corporation, as lessor ("Lessor"), and HOTEL INVESTORS CORPORATION OF NEVADA,
INC., a Nevada corporation, as lessee ("Lessee"), with reference to the
following facts and objectives:
A. Concurrently with the execution hereof, and pursuant to an
Asset Purchase Agreement dated as of July 11, 1995 (the "Asset Purchase
Agreement"), by and among Lessor, Crown Casino Corporation, a Texas
corporation, Lessee and SLT Realty Limited Partnership, a Delaware Limited
Partnership (the "Partnership"), the Partnership and Lessee are selling to
Lessor that certain (i) hotel, restaurant, bar, casino and related assets
commonly known as the Bourbon Street Hotel & Casino located at 120 E. Flamingo
Road, Las Vegas, Nevada 89109 (the "Hotel/Casino") and (ii) real and personal
property comprising a 24-unit apartment building located at 135 Albert, Las
Vegas, Nevada 89109 (the "Apartment Building").
B. The Hotel/Casino has previously been leased by the Partnership
to, and the Hotel/Casino has been operated by, Lessee pursuant to that certain
amended and restated lease dated January 1, 1993. The Apartment Building has
previously been operated by the Partnership.
C. Lessor will acquire the Non-Gaming Assets (as defined in the
Asset Purchase Agreement), including, without limitation, the Hotel/Casino and
the Apartment Building, from Lessee and the Partnership at the First Closing
(as defined in the Asset Purchase Agreement). Pending the Second Closing (as
defined in the Asset Purchase Agreement), Lessee will continue to operate the
Hotel/Casino and the Apartment Building with the Gaming Assets (as defined in
the Asset Purchase Agreement) owned by Lessee. Accordingly, Lessor and Lessee
desire to enter into this Lease pursuant to which, on the terms and subject to
the conditions herein contained, Lessor will lease to Lessee, and Lessee will
lease from Lessor, the Hotel/Casino and the Apartment Building.
ARTICLE 1
PREMISES AND TERM
1.1 Premises: Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the following assets:
1.1.1 The land and all appurtenances thereto on which the
Hotel/Casino is located, which land (the "Hotel Land") is more particularly
described on Exhibit 1.1.1 hereto;
1.1.2 All buildings, structures, parking areas and other
improvements now or hereafter located on the Hotel Land (the "Hotel
Improvements");
1.1.3 The land and all appurtenances thereto on which the
Apartment Building is located, which land (the "Apartment Land" and, together
with the Hotel Land, the "Land") is more particularly described on Exhibit
1.1.3 hereto;
1.1.4 All buildings, structures, parking areas and other
improvements now or hereafter located on the Apartment Land (the "Apartment
Improvements" and, together with the Hotel Improvements, the "Improvements");
1.1.5 All furniture, fixtures and equipment located as of
the date hereof at the Hotel/Casino and/or the Apartment Building, but
excluding the Gaming Assets owned by Lessee, and owned by Lessor or which
Lessor otherwise has the right to use; and
1.1.6 All other assets and properties of the Hotel/Casino
and the Apartment Building owned by Lessor, other than the Gaming Assets owned
by Lessee, and Lessor's rights under the contracts and commitments referred to
in Section 1.1A hereof.
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The Land and the Improvements together are hereinafter referred to as the
"Premises."
1.1A Assignment of Rights: Lessor hereby assigns to Lessee the
rights of Lessor under the contracts and commitments referred to in the first
paragraph of subsection 2.1.4 of the Asset Purchase Agreement (the "Hotel
Service Contracts"), and delegates to Lessee the obligations of Lessor
thereunder or otherwise assumed by Lessor pursuant to subsection 2.1.4 of the
Asset Purchase Agreement, in each case solely to the extent that such rights or
obligations accrue or arise during the term of this Lease; and Lessee hereby
accepts such assignment and assumes such obligations.
Without limiting the generality of the foregoing, Lessee
during the Lease Term (as defined in Section 1.2 below) shall make each and all
of the payments called for by each agreement or arrangement listed in the
Disclosure Letter (as defined in the first paragraph of Article 7 of the Asset
Purchase Agreement) in response to Sections 7.9, 7.10, 8.10 or 8.11 of the
Asset Purchase Agreement, as such payments may be adjusted from time to time,
on the terms and subject to the conditions of such agreement or arrangement.
Each such payment shall be made by Lessee directly to the lessor, vendor or
other appropriate party or parties to such agreement or arrangement.
Lessor and Lessee acknowledge and expressly agree that nothing
in this Section 1.1A shall be deemed to assign to Lessee any right or to
delegate to Lessee any obligation of Lessor arising or accruing after the
expiration or earlier termination of the Lease Term.
1.2 Lease Term: The term of this Lease (the "Lease Term") shall
commence on ______________, 1995 [the First Closing Date] (the "Commencement
Date"), and shall end on _______________, 1996 [the six month anniversary of
the Commencement Date], unless sooner terminated pursuant to Section 1.3 hereof
or any other provision of this Lease or unless extended pursuant to this
Section 1.2.
If as of _____________, 1996 [62 days prior to the scheduled
expiration of the Lease Term], Lessor has not obtained all of the licenses and
approvals described in Section 1.3 hereof, Lessor at its option may extend the
Lease Term for up to ten (10) additional months on all of the provisions of
this Lease (other than this paragraph); provided, however, that if Lessor does
so elect to extend the Lease Term, Lessor shall notify Lessee of the same not
later than 62 days prior to the then scheduled expiration of the Lease Term.
In no event will the Lease Term extend beyond ___________,
199___ [the sixteen (16) month anniversary of the Commencement Date], unless
Lessor and Lessee agree in writing to extend the term of this Lease on such
terms and conditions mutually satisfactory to each of them in their sole
discretion. If Lessor and Lessee do not agree in writing to extend the term of
this Lease beyond _____________, 19___ [the sixteen (16) month anniversary of
the Commencement Date], this Lease will nevertheless not terminate until
___________, 199___ [eighteen (18) months and two (2) days after the
Commencement Date].
1.3 Lessor's Right to Terminate Lease: If, prior to the
expiration of the Lease Term (including any extended term), Lessor obtains, or
reasonably believes it will obtain, all such licenses and approvals of the
Nevada gaming authorities as are in the opinion of Lessor's counsel required by
applicable law for Lessor to purchase and operate the Gaming Assets (as defined
in Section 1.3 of the Asset Purchase Agreement) at the Hotel/Casino, Lessor
shall notify Lessee of the same, and Lessor at any time thereafter may
terminate this Lease upon not less than 62 days' prior notice to Lessee.
ARTICLE 2
FF&E AND INVENTORY
2.1 FF&E. Lessee (i) subject to Section 4.5 hereof, shall
maintain the FF&E (as hereinafter defined) in the same operating condition and
state of repair
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as on the date hereof (ordinary wear and tear and damage to or destruction of
the Premises covered by Sections 9.1, 9.2 and 9.3 hereof excepted); (ii) shall
keep the same free of any security interest, chattel mortgage, pledge or other
encumbrance, except for those encumbrances permitted by Sections 7.4 and 8.8 of
the Asset Purchase Agreement or by the proviso to the immediately following
sentence; and (iii) subject to Section 4.5 hereof, at Lessee's cost, shall
replace the same when, in Lessee's reasonable business judgment, such
replacement is required. All FF&E installed in or furnished to the Premises
by Lessee during the Lease Term (whether pursuant to contracts or commitments
entered into by Lessee prior to or after the Commencement Date), if any, shall
be new and (except as otherwise provided below) shall be purchased for cash and
acquired free of any security interest, chattel mortgage, pledge or other
encumbrance; provided, however, that Lessee may finance the purchase of (and
in connection therewith encumber) all or any portion of any FF&E purchased
by Lessee pursuant to this Section 2.1 if Lessee's purchase of such item(s) is
financed (through a financing lease or otherwise) by the seller of such item(s)
(or an affiliate of such seller). Lessee shall obtain Lessor's prior consent to
the purchase of any FF&E to be purchased and financed by Lessee pursuant to this
Section 2.1 if the financed purchase price exceeds $5,000.00, with respect to
individual purchases, or $25,000.00 over a period of 12 months or $37,500.00
over a period of 18 months, with respect to purchases in the aggregate.
For purposes of this Lease, "FF&E" means the assets described
in subsection 1.1.5 hereof and any replacements therefor acquired by Lessee
pursuant to clause (iii) of the first sentence of this Section 2.1.
2.1.1 Lessee shall make, as additional rent, each and all
of the payments called for by any and all financing leases or conditional sales
agreements relating to FF&E and entered into by Lessee pursuant to the proviso
to the second sentence of this Section 2.1, as such payments may be adjusted
from time to time, in accordance with the terms of such financing leases or
conditional sales agreements. Such payments shall be made by Lessee directly
to the lessor or vendor under each such lease or conditional sales agreement.
2.1.2 Upon the expiration or earlier termination of the
Lease Term, (i) any FF&E installed in or furnished to the Premises by Lessee
after the Commencement Date shall become a part of the Premises and belong to
Lessor, and (ii) Lessee shall assign to Lessor all right, title and interest of
Lessee in and to, and Lessor shall assume and thereafter duly perform each and
all obligations of Lessee under, each financing lease or conditional sales
agreement entered into by Lessee pursuant to the second sentence of this
Section 2.1.
2.2 Gaming Assets. The Gaming Assets (as defined in Section 1.3
of the Asset Purchase Agreement) located at the Hotel/Casino as of the
Commencement Date shall remain at, and shall be used by Lessee in its operation
of, the Hotel/Casino without additional charge to Lessor.
2.3 Disposal of FF&E: Notwithstanding the foregoing provisions of
this Article 2, Lessee shall have the right, at any time or from time to time,
to remove and sell, demolish or otherwise dispose of any FF&E, whether
installed in or furnished to the Premises, prior to, on or after the
Commencement Date, if (i) Lessee determines, in its reasonable business
judgment, that such act is necessary or desirable in connection with Lessee's
operation of the Premises; (ii) Lessee at its cost (either by the payment of
cash or by a financing pursuant to Section 2.1) replaces the item or items so
removed and disposed of, if such replacement is determined by Lessee to be
necessary in connection with the operation of such business; and (iii) any
proceeds from the sale or other disposition of any such FF&E are either
invested by Lessee in additional FF&E or remitted by Lessee to Lessor;
provided, however, Lessee shall take no such action without Lessor's prior
written consent if the estimated value of such FF&E exceeds $25,000.00 over a
period of 12 months or $37,500.00 over a period of 18 months.
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2.4 Operating Supplies and Stock-in-Trade: Lessor is delivering
to Lessee, concurrently with the execution hereof and without additional
charge, the operating supplies and consumable goods used in the operation of
the Premises and included in the Non-Gaming Assets (as defined by Section 1.2
of the Asset Purchase Agreement) purchased by Lessor pursuant to Section 1.1 of
the Asset Purchase Agreement. Such other assets shall be utilized by Lessee in
connection with its operation of the Premises, and at such times as such assets
are consumed or sold to third parties, Lessee at its cost shall provide all
such operating supplies and consumable goods, as in Lessee's reasonable
business judgment are necessary to operate the Premises.
Lessee at its cost also shall provide such stock-in-trade and
inventory of the casino portion of the Hotel/Casino (the "Casino") as in
Lessee's reasonable business judgment are necessary to operate the Casino.
ARTICLE 3
RENT; BOOKS AND RECORDS
3.1 Rent: Lessee shall pay to Lessor monthly rent for the
Premises in the amount of $62,500.00, without deduction, setoff, prior notice
or demand other than as is specifically permitted or required under this Lease.
Monthly rent shall be paid in advance on the first day of each calendar month,
commencing on the Commencement Date and continuing during the Lease Term;
provided, however, that if the Commencement Date occurs other than on the first
day of a calendar month, rent for such partial calendar month shall be paid on
the Commencement Date. Monthly rent for any partial month shall be prorated at
the rate of 1/30th of the monthly rent per day.
All rent due hereunder shall be paid to Lessor in lawful money of the
United States of America and at the address of Lessor set forth in Section 15.5
hereof, or to such other person or at such other place as Lessor may from time
to time designate to Lessee in writing.
3.2 Late Payment of Rent. All past due rent and additional rent
hereunder shall bear interest at the Default Rate (as hereinafter defined) if
not paid within ten (10) days of the date such payment is due, commencing on
the due date of such payment.
3.3 Books and Records: Lessee shall maintain at the Premises or
at Lessee's principal executive offices complete and accurate books and records
of the operations of the Premises, which books and records shall, to the extent
permitted by applicable Nevada gaming statutes and regulations, be open to
inspection by Lessor or its duly authorized representative during ordinary
business hours and upon reasonable prior notice to Lessee.
3.4 Financial Statements: To the extent permitted by applicable
Nevada gaming statutes and regulations, Lessee shall deliver to Lessor monthly
financial statements of the operations of the Premises during the Lease Term.
These financial statements will be delivered to Lessor no later than the
thirtieth (30th) day of each month for the operations of the immediately
preceding month. The financial statements will be in substantially the same
form and content as those statements prepared by Lessee before the Commencement
Date.
ARTICLE 4
USE; MAINTENANCE; ALTERATIONS; MECHANICS' LIENS
4.1 Use: Lessee shall use the Premises as a hotel/casino
(including a restaurant and bar) and for related activities, or for any other
purpose or purposes consented to by Lessor.
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Subject to such closure(s) of all or a part of the Premises as from
time to time may be necessary to make repairs, replacements, restorations or
improvements required or permitted by this Lease, Lessee shall operate the
Premises and shall keep the Premises open for business continuously during all
such hours and on such days as is customary for hotel/casinos in the Las Vegas,
Nevada metropolitan area.
Lessee shall carry on the business of the Premises in compliance with
all applicable statutes, ordinances, resolutions, rules, regulations, orders or
other requirements (collectively "laws") of any governmental authority having
jurisdiction over the Premises in effect on the Commencement Date or at any
time during the Lease Term, including, without limitation, any regulation or
order of a board of fire examiners. Without limiting the generality of the
foregoing, Lessee at its cost shall obtain and maintain any and all such
business licenses and permits as are required by applicable law in connection
with operation of the restaurant and bar portions of the Premises, and all
licenses and other approvals required by applicable Nevada gaming statutes and
regulations.
4.2 Maintenance: Subject to Section 4.5 and Articles 9 and 10
hereof, Lessee at its cost shall maintain the Premises in the same operating
condition and state of repair as on the Commencement Date.
4.3 Alterations: Lessee shall not make any structural or exterior
additions or changes to the Premises ("alterations") without first obtaining
Lessor's consent.
Lessee shall have the right to make, at Lessee's cost and without
Lessor's consent, such nonstructural alterations to the interior of the
Premises as Lessee in its reasonable business judgment requires in order to
conduct its business on the Premises. In making any such nonstructural
interior alterations, Lessee shall comply with the following:
4.3.1 Lessee shall submit to Lessor, not less than 15 days
before the date Lessee intends to commence such alterations, reasonably
detailed final plans and specifications and working drawings of the proposed
alterations and the name of Lessee's contractor.
4.3.2 Lessee shall not commence the alterations until two
days after Lessor receives notice from Lessee of the date the alterations are
to be commenced, so that Lessor at its option may post on the Premises an
appropriate notice of nonresponsibility.
4.3.3 All permits and other approvals or authorizations of
governmental authorities that Lessee is required by applicable law to obtain in
connection with the making of the alterations, if any, shall be so obtained
before the alterations are commenced.
4.3.4 The alterations shall be completed with due diligence
and shall comply in all material respects with the plans, specifications and
working drawings referred to in subsection 4.3.1 hereof and with all applicable
laws.
Notwithstanding the foregoing, no such non-structural interior
alterations shall be made without Lessor's consent if such alterations will
change the character, color schemes or theme of the Premises. In addition, in
the event that after receipt of final plans and specifications of such
non-structural interior alterations pursuant to subsection 4.3.1 hereof,
Lessor in its sole discretion disapproves of such alterations, such
alterations shall not be made and Lessor and Lessee shall cooperate with each
other so that such alterations that are required shall be made in a manner
mutually agreed between Lessor and Lessee.
Any alterations made by Lessee pursuant to this Section 4.3 shall
remain on and be surrendered with the Premises on expiration or earlier
termination of the Lease Term.
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4.4 Mechanics' Liens: Lessee shall pay all costs of construction
done by or for Lessee on the Premises as permitted by this Lease. Lessee shall
keep the Premises free and clear of any mechanics' lien resulting from any such
construction; provided, however, that Lessee shall have the right to contest
the correctness or validity of any such lien if, immediately on demand of
Lessor, Lessee procures a bond and secures the release of the lien in
accordance with NRS Section Section 108.2413 et. seq.
4.5 Maintenance, Repair and Replacement Expenditures. During the
Lease Term, Lessee has certain obligations specified in this Lease to maintain,
repair and/or replace certain items in the ordinary course of business and in
the exercise of Lessee's reasonable business judgment, including, but not
limited to (i) FF&E under clauses (i) and (iii) of the first sentence of
Section 2.1 ("FF&E Maintenance") and (ii) the Premises under Section 4.2
("Premises Maintenance" and, together with FF&E Maintenance, "Maintenance
Obligations").
(a) Notwithstanding anything to the contrary in this
Lease (except Articles 9 and 10 hereof), Lessee is not obligated to spend more
than $75,000 (the "MRR Cap") for the Maintenance Obligations during the Lease
Term, or such lesser or greater pro rata amount of the MRR Cap if the Lease
Term is less or more than twelve months. If Lessee determines in its
reasonable business judgment that FF&E Maintenance or Premises Maintenance is
required during the Lease Term and the estimated cost thereof will exceed the
MRR Cap, then Lessee shall give written notice to Lessor of the same and the
date on which the estimated difference will be incurred or payable (the "MRR
Due Date") within 15 days after determining that the cost of the Maintenance
Obligations will exceed the MRR Cap. Lessor, within 10 days after receiving
such notice, may elect to pay to Lessee the difference (the "MRR Deficiency")
between the amount of the estimated cost of the Maintenance Obligations and the
MRR Cap on or before the MRR Due Date, in which event Lessee shall perform the
Maintenance Obligations and Lessee shall deliver to Lessor upon its request
evidence that the MRR Deficiency contributed by Lessor pursuant to this Section
4.5 has been expended by Lessee in paying the Maintenance Obligations. In lieu
of Lessor contributing the MRR Deficiency to Lessee, Lessor may direct Lessee
to offset that amount to the rental payments due under this Lease that accrue
after the MRR Due Date until contributed in full.
(b) If Lessor elects to contribute the MRR Deficiency to
Lessee as provided in this Section 4.5 and Lessor does not pay the MRR
Deficiency to Lessee within ten (10) days after the MRR Due Date, the MRR
Deficiency shall bear interest at the Default Rate from the MRR Due Date until
paid. In addition, if Lessor does not elect to pay the MRR Deficiency, or if
Lessor does not pay Lessee the MRR Deficiency within ten (10) days after the
MRR Due Date, Lessee may elect to terminate this Lease. If this occurs, this
Lease shall terminate as of the date specified in Lessee's notice of
termination.
(c) This Section 4.5 does not apply to the provisions of
Articles 9 and 10 hereof.
4.6 Maintenance of Gaming Assets. Lessee represents that, as
provided in the Asset Purchase Agreement, it is the owner or lessee of the
Gaming Assets, and covenants that it will maintain the Gaming Assets at the
Premises in the manner and condition as required by the Asset Purchase
Agreement, and, further, that it will own or lease adequate and sufficient
gaming equipment, games and devices to operate and maintain the Casino in
accordance with the standards of operation in place at the Premises as of the
Commencement Date. Lessee further agrees to keep and maintain all Gaming
Assets, such other gaming equipment, games and gaming devices in good condition
and repair, and repair or replace all damaged or broken gaming equipment, games
and devices as and when needed to keep and maintain the Casino operating and in
good condition.
4.7 Lessor's Rights and Obligations Regarding Alterations and
Improvements. Lessor may, at its sole cost and expense, make or cause to be
made such repairs, alterations, additions, improvements, remodeling,
renovations,
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renewals and replacements (collectively, the "Repairs") to or of the
structural, mechanical, electrical, heating, ventilating, air conditioning,
plumbing, vertical transportation and other elements of the Premises or any
other part of the Premises or any equipment or improvements thereon, other than
the Gaming Assets, as Lessor in its sole discretion shall deem to be necessary
and advisable, provided, however, that any Repairs required by reason of
Lessee's act or omission shall be at the sole cost and expense of Lessee, and
provided further, that: (a) Lessor must give Lessee prior written notice of
Lessor's intention to undertake the Repairs at least fifteen (15) days prior to
undertaking such Repairs or such longer period of time as is reasonable in
relation to the Repairs; (b) the Repairs must comply with all applicable laws,
including any requirements of the Nevada Gaming Authorities; (c) the Repairs
will not interfere or disrupt Lessee's operation of the Premises; and (d)
Lessor agrees to reimburse Lessee for any necessary costs incurred by Lessee
and as are reasonable in relation to the Repairs. Lessor and Lessee shall
reasonably cooperate to facilitate the Repairs.
4.8 Hotel Service Contracts/Non-Gaming Assets. Except as
otherwise provided in this Lease or as may otherwise be first approved by
Lessor (whose approval shall not be unreasonably withheld), Lessee shall not
(a) except for non-material changes in the ordinary course of business, amend,
supplement or otherwise change in any material respect the terms and conditions
of any Hotel Service Contracts; (b) enter into any contract or commitment, or
incur any liability, with respect to the Non-Gaming Assets, except contracts
and commitments entered into, and current liabilities incurred, in the ordinary
course of business with third parties; or (c) sell or otherwise dispose of any
Non-Gaming Asset, except for dispositions of non-material portions thereof in
the ordinary course of business.
ARTICLE 5
WORKING CAPITAL; UTILITIES
5.1 Working Capital: Lessee at its cost shall provide all working
capital necessary in Lessee's reasonable business judgment to operate the
Premises.
5.2 Utilities: Lessee shall make all necessary arrangements, if
any, for, and pay for, all utilities and similar services furnished to or used
by Lessee at the Premises, including, without limitation, electricity, gas,
water, telephone service and trash collection.
ARTICLE 6
EXCULPATION AND INDEMNITY
6.1 Exculpation: Lessor shall not be liable to Lessee for any
injury, damage or loss to Lessee or Lessee's property from any cause. Lessee
hereby waives any and all claims against Lessor for injury, damage or loss to
any person, entity or property occurring in, on or about the Premises, other
than claims resulting from the negligence or willful misconduct of Lessor.
6.2 Indemnity: Lessee shall indemnify Lessor and hold Lessor
harmless from and against any and all costs and expenses incurred by Lessor as
a result of any injury, damage or loss to any person or property occurring in,
on or about the Premises; provided, however, that Lessor shall be liable to
Lessee for injury, damage and/or loss resulting from the negligence or willful
misconduct of Lessor, and Lessor shall indemnify Lessee and hold Lessee
harmless from and against any cost or expense occurred by Lessee as a result of
any such injury, damage or loss.
A party's obligation under this Section 6.2 to indemnify and hold the
other party harmless shall be limited to the amount that exceeds the amount of
insurance proceeds, if any, received by the party being indemnified.
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ARTICLE 7
INSURANCE
7.1 Fire Insurance: Lessee at its cost shall maintain fire and
"all-risk" property damage insurance with an extended coverage endorsement
insuring the Premises in an amount equal to the full replacement value of the
Premises. The insurance policy shall be issued in the names of Lessor and
Lessee as their interests appear, and shall provide that any proceeds shall be
payable as provided in Article 9 hereof.
7.2 Liability Insurance: Lessee at its cost shall maintain public
liability and property damage insurance with a single combined limit of not
less than $10,000,000 insuring against any and all liability of Lessee and its
agents and employees arising out of and in connection with Lessee's use or
occupancy of the Premises. Both Lessor and Lessee shall be named as an
additional insured, and the policy shall contain cross-liability endorsements.
7.3 Delivery of Policies: An executed copy of each policy of
insurance required hereunder, or a certificate of the policy, shall be
delivered to Lessor within 10 days after the Commencement Date.
7.4 Other Insurance: Lessee may also maintain at its cost such
other coverages in such amounts as Lessee may determine. Policies of insurance
purchased by Lessee under this Section 7.4 will be in the name of Lessee and
any proceeds will be payable to Lessee.
7.5 Form of Policies. Each insurance policy and certificate shall
provide, in effect, that the policy will be renewed and further renewed on
substantially the same terms and conditions unless the insurer shall give
Lessee and Lessor at least thirty (30) days' notice in writing of the insurer's
unwillingness to renew. The insurance coverage required to be carried under
this Lease shall (a) be written by companies rated "A" or better in current
edition of "Best's Insurance Reports" and authorized to do business in Nevada,
and (b) name any parties reasonably designated by Lessor or Lessee, as
applicable, including any mortgagee, as additional insureds.
7.6 Worker's Compensation. Lessee shall be solely responsible to
maintain workers' compensation insurance coverage for all of its employees
working at the Premises in accordance with applicable Nevada law.
ARTICLE 8
TAXES
8.1 Real Property Taxes: Lessee shall pay all real property taxes
and the current portion or portions of any general and special assessments
levied or assessed against the Premises during the Lease Term. Lessee's
obligation to pay assessments as provided in this Section 8.1 shall be
calculated on the basis of the amount due if Lessor allows the assessment to go
to bond and the assessment is to be paid in installments, even if Lessor pays
the assessment in full.
8.2 Taxes on Personality: Lessee shall pay before delinquency all
taxes, assessments, license fees and other charges levied or assessed against
personal property installed or located in or on the Premises during the Lease
Term, whether such property is owned by Lessee or Lessor.
8.3 Taxes on Rent: Lessee shall pay to Lessor before delinquency
any tax, fee or excise levied or assessed against Lessor on rent received by
Lessor hereunder or by virtue of the letting of the Premises pursuant hereto
under any law now in effect or enacted during the Lease Term; provided,
however, that Lessee shall not be required to pay any income or franchise taxes
or any estate, succession, inheritance or transfer taxes imposed on Lessor.
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8.4 Payment of Taxes: Lessor shall notify Lessee of the taxes
payable by Lessee hereunder, and immediately on receipt of the tax bill shall
furnish Lessee a copy of the same. Lessee shall pay the taxes no later than
the taxing authority's delinquency date or 10 days after receipt of a copy of
the tax bill, whichever is later. If permitted by applicable law, Lessee may
pay any tax in installments as determined by Lessee in Lessee's reasonable
business judgment.
8.5 Proration: Real and personal property taxes payable pursuant
to this Article 8 shall be prorated on a time basis for any partial tax year as
provided in subsection 13.1.5 hereof.
ARTICLE 9
DAMAGE OR DESTRUCTION
9.1 Total Destruction: If during the Lease Term the Premises are
totally destroyed, this Lease shall automatically terminate as of the 30th day
after such destruction.
9.2 Damage or Destruction Due to Risks Covered by Insurance: If
during the Lease Term the Premises and/or the FF&E are damaged or partially
destroyed from a risk covered by the insurance described in Section 7.1 hereof
and such damage or destruction renders the Premises totally or partially
inaccessible or unusable, such damage or destruction shall not terminate this
Lease and Lessee shall restore the Premises and/or repair or replace the
damaged or destroyed FF&E to substantially the same condition as they were in
immediately before the damage or destruction, except that:
9.2.1 If applicable law then does not permit the
restoration, either party hereto may terminate this Lease immediately by giving
notice of the same to the other party; and
9.2.2 If in Lessee's reasonable business judgment the costs
of the restoration (including, for purposes of this subsection 9.2.2, the costs
of required repairs to or replacement of FF&E) will exceed the amount of
proceeds to be received from the insurance required under Section 7.1 hereof
and to be made available to Lessee, Lessee shall give written notice to Lessor
of the same and the date(s) the estimated excess will be incurred or payable
(the "Insurance Due Date(s)") within 15 days after determining that the
restoration costs will exceed the insurance proceeds. Lessor, within 10 days
after receiving such notice, may elect to pay to Lessee the difference (the
"Insurance Deficiency") between the amount of insurance proceeds to be made
available to Lessee and the costs of restoration on or before the Insurance Due
Date(s), in which event Lessee shall restore the Premises as provided above,
and Lessee shall deliver to Lessor upon its request evidence that the Insurance
Deficiency contributed by Lessor pursuant to this subsection 9.2.2 has been
expended by Lessee in paying the costs of restoration.
If Lessor elects to contribute the Insurance Deficiency to Lessee as
provided in this subsection 9.2.2 and Lessor does not pay the Insurance
Deficiency to Lessee within ten (10) days after the Insurance Due Date(s), the
Insurance Deficiency shall bear interest at the Default Rate from the
Insurance Due Date(s) until paid. In addition, if Lessor does not elect to pay
the Insurance Deficiency or if Lessor does not pay Lessee the Insurance
Deficiency with ten (10) days after the Insurance Due Date(s), Lessee may
elect to terminate this Lease. If this occurs, this Lease shall terminate as
of the date specified in Lessee's notice of termination.
9.3 Extraordinary Repairs; Damage or Destruction Due to Uninsured
Risks: If during the Lease Term Lessee will be required to make, in order to
maintain the Premises in the operating condition and state of repair required
by this Lease, repairs other than in the ordinary course, maintenance or
repairs to the Improvements or any of their operating systems (other than the
Repairs described in Section 4.7 hereof and regardless of whether the cost of
such maintenance or repairs would be capitalized or expensed under generally
accepted accounting
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principles), or if during Lease Term the Premises and/or the FF&E are damaged
or partially destroyed from a risk not covered by the insurance described in
Section 7.1 hereof and such damage or destruction renders the Premises totally
or partially inaccessible or unusable, neither the necessity of such
maintenance or repairs nor such damage or destruction, as the case may be,
shall terminate this Lease, and Lessee shall make the necessary maintenance or
repairs and replacements or restore the Premises to substantially the same
condition as they were immediately before the damage or destruction, except
that:
9.3.1 If applicable law then does not permit the
maintenance, repairs or restoration, either party hereto may terminate this
Lease immediately by giving notice of the same to the other party; and
9.3.2 If the costs of making such repairs or replacements
or the costs of restoration will exceed $50,000, Lessee shall give written
notice to Lessor of the same and the date(s) the estimated excess will be
incurred or payable (the "Extraordinary Due Date(s)") within 15 days after
Lessee determines such repair or replacement or such restoration costs.
Lessor, within 10 days after receiving such notice, may elect to pay to Lessee
the difference (the "Extraordinary Repair Deficiency") between $50,000 and the
actual repair, replacement or restoration costs on or before the Extraordinary
Due Date(s), in which event Lessee shall make the necessary repairs or
replacements or restore the Premises as aforesaid. Lessee shall provide to
Lessor upon Lessor's request evidence that the Extraordinary Repair Deficiency
contributed by Lessor pursuant to this Section 9.3 has been expended by Lessee
in paying the repair, replacement or restoration costs.
If Lessor elects to contribute the Extraordinary Repair Deficiency to
Lessee as provided in this subsection 9.3.2 and Lessor does not pay the
Extraordinary Repair Deficiency to Lessee within ten (10) days after the
Extraordinary Due Date(s), the Extraordinary Repair Deficiency shall bear
interest at the Default Rate from the Extraordinary Due Date(s) until paid.
In addition, if Lessor does not elect to pay the Extraordinary Repair
Deficiency or if Lessor does not pay Lessee the Extraordinary Repair
Deficiency within ten (10) days after the Extraordinary Due Date(s), Lessee
may elect to terminate this Lease. If this occurs, this Lease shall terminate
as of the date specified in Lessee's notice of termination.
9.4 Restoration of Premises - Minor Loss: If during the Lease
Term the Premises and/or the FF&E are damaged or destroyed from a risk covered
by the insurance described in Section 7.1 hereof and the total amount of loss
does not exceed $250,000, Lessee shall make the loss adjustment with the
insurance company insuring the loss, and the proceeds of such insurance shall
be paid directly to Lessee for the purpose of repairing or replacing the
damaged or destroyed FF&E and/or restoring the Premises in accordance with
Section 9.6 hereof. Lessee shall provide to Lessor upon Lessor's request
evidence that all insurance proceeds have been expended by Lessee in paying
the repair, replacement or restoration costs.
9.5 Restoration of Premises - Major Loss: If during the Lease
Term the Premises and/or the FF&E are damaged or destroyed from a risk covered
by the insurance described in Section 7.1 hereof and the total amount of loss
exceeds $250,000, Lessor and Lessee jointly shall make the loss adjustment with
the insurance company insuring the loss and on receipt of the proceeds shall
immediately pay them to Nevada Construction Services (the "insurance trustee").
In addition, if pursuant to Sections 9.2 or 9.3 hereof Lessor is to contribute
to the costs of restoring the Premises and/or repairing or replacing FF&E,
Lessor shall deposit with the insurance trustee Lessor's respective
contribution towards the costs of restoration, and shall pay directly to Lessee
any contribution by Lessor towards the costs of making such FF&E repairs or
replacements.
All sums deposited with the insurance trustee shall be held for the
following purposes, and the insurance trustee shall have the following rights
and duties:
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9.5.1 The sums shall be paid in installments by the
insurance trustee to the contractor retained by Lessee as construction
progresses, for payment of the costs of restoration. A 10% retention fund
shall be established that will be paid to the contractor on completion of
restoration, payment of all costs, expiration of all applicable lien periods,
and proof that the Premises are free of all mechanics' liens and lienable
claims.
9.5.2 Payment shall be made on presentation of
certificate(s) or voucher(s) from the architect or engineer retained by Lessee
showing the amount due.
9.5.3 If the sums held by the insurance trustee are not
sufficient to pay the actual costs of restoration, Lessor shall deposit the
amount of the deficiency with the insurance trustee within three days after
Lessor receives a request by the insurance trustee indicating the amount of the
deficiency.
Any sums not disbursed by the insurance trustee after
restoration has been completed and final payment has been made to Lessee's
contractor shall be delivered within 15 days thereafter to Lessor.
All costs and charges of the insurance trustee shall be paid
one-half by Lessor and one-half by Lessee.
If the insurance trustee resigns or for any reason is
unwilling to act or continue to act, Lessee shall substitute a new trustee in
the place of the designated insurance trustee, which new trustee shall be an
institutional lender, title company or construction control company doing
business in Clark County, Nevada.
Both parties hereto shall promptly execute all documents and
perform all other acts reasonably required by the insurance trustee to perform
its obligations under this Section 9.5.
9.6 Procedure for Restoring the Premises: Within 30 days after
the date it is determined that Lessee is obligated to restore the Premises,
Lessee at its cost shall engage an architect and/or engineer to prepare final
plans and specifications and working drawings complying with applicable law for
the restoration of the Premises. The fees and costs of the architect and/or
engineer for preparing the plans and specifications and working drawings shall
be deemed a cost of restoration and subject to the provisions of Sections 9.4
or 9.5 hereof. The plans and specifications and working drawings shall be
delivered by Lessee to Lessor for its approval, and Lessor shall have 15 days
after receipt of such plans and specifications and working drawings to either
approve or disapprove the same and return them to Lessee. If Lessor
disapproves the plans and specifications and working drawings, Lessor shall
notify Lessee of its objections and Lessor's proposed solution to each
objection.
The restoration shall be accomplished as follows:
9.6.1 Lessee shall commence the restoration promptly after
final plans and specifications and working drawings have been approved by
Lessor and by all appropriate governmental authorities and all required permits
have been obtained, and shall complete the same as soon as practicable
(subject, however, to an extension or extensions for delays resulting from
causes beyond Lessee's reasonable control).
9.6.2 Lessee shall retain a licensed contractor that is
bondable and that shall be required to carry public liability and property
damage insurance, and standard fire and extended coverage insurance, during the
period of construction in accordance with Sections 7.1 and 7.2 hereof. The
contractor shall not commence construction until a completion bond and a labor
and materials bond to insure completion of the construction have been delivered
to Lessor.
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9.6.3 Lessee shall notify Lessor of the date of
commencement of the restoration not later than two days before commencing the
same, so that Lessor at its option may post notices of nonresponsibility on the
Premises.
9.6.4 On completion of the restoration, Lessee shall
immediately record a notice of completion in the county in which the Premises
are located.
9.6.5 Lessee shall not be required to commence the
restoration unless and until sums sufficient to cover the costs of restoration
are place with the insurance trustee as provided in Section 9.5 hereof.
9.7 Abatement or Reduction of Rent: There shall be an abatement
or reduction of rent between the date of destruction and the date of completion
of restoration, based on the extent to which the damage or destruction
interferes with Lessee's use of the Premises.
9.8 Loss During Last Part of Term: Notwithstanding the prior
provisions of this Article 9, if, during the 30 days preceding the then
scheduled expiration of the Lease Term (including all permitted extensions
thereof), Lessee will be required to make, in order to maintain the Premises
and the FF&E in the operating condition and state of repair required by this
Lease, repairs other than in the ordinary course, or if during such period
there occurs damage to or destruction of the Premises that renders the Premises
totally or partially inaccessible or unusable, either Lessor or Lessee may
terminate this Lease by giving notice to the other not more than 15 days after
the need for such repairs is determined or such damage or destruction occurs,
and this Lease shall terminate on the date specified in the notice of
termination.
ARTICLE 10
EMINENT DOMAIN
10.1 Definitions: "Eminent domain" means (i) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a condemnor,
and (ii) any sale or other transfer by Lessor to any condemnor, either under
threat of condemnation or while legal proceedings or condemnation are pending.
"Date of taking" means the date on which the condemnor has the right to
possession of the property being condemned. "Award" means all compensation,
sums or anything of value awarded, paid or received on a total or partial
condemnation. "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.
10.2 Parties' Rights and Obligations to be Governed by Lease: If
there is any taking by eminent domain of all or any part of the Premises or any
interest in the Lease, the rights and obligations of the parties hereto shall
be determined pursuant to this Article 10.
10.3 Total Taking: If the Premises are totally taken by eminent
domain, this Lease shall terminate on the date of taking.
10.4 Partial Taking: If any portion of the Premises is taken by
eminent domain, this Lease shall remain in effect, except that either Lessee or
Lessor my elect to terminate this Lease if 30% or more of the total number of
guest rooms on the Premises are, and/or 50% or more of the total floor area of
the Casino is, taken.
If either party so elects to terminate this Lease, that party shall
notify the other party of the same within 30 days after the nature and extent
of the taking have been finally determined. Such notice shall specify the date
of termination of this Lease, which date shall not be earlier than 30 days nor
later than 60 days after the date on which the termination notice is given.
10.5 Effect on Rent: If any portion of the Premises is taken by
eminent domain and this Lease remains in full force and effect, then, as of the
date of taking, the monthly rent shall be reduced by an amount that is in the
same ratio
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to the monthly rent specified in Section 3.1 hereof as the value of the
portion of the Premises taken bears to the total value of the Premises
immediately before the date of taking, and Lessee at its cost (subject to
Section 10.6 hereof) shall make all repairs and restorations (including repairs
to and replacements of FF&E) necessary in Lessee's reasonable business judgment
for Lessee to continue to operate the Premises.
10.6 Award - Distribution: The award shall be divided between
Lessor and Lessee based upon the value of their respective interests in the
Premises as determined in the eminent domain proceedings or by an independent
appraisal (the costs of which shall be paid by Lessor and Lessee in the same
ratio as the award is divided); provided, however, that Lessee in all events
shall be entitled to receive from the award an amount equal to Lessee's actual
costs in making the repairs and restorations provided for in Section 10.5
hereof and that if, in Lessee's reasonable business judgment, the costs of
making such repairs and restorations will exceed the amount of the award to be
made available to Lessee, Lessee shall give written notice to Lessor of the
same and the date(s) the estimated excess will be incurred or payable (the
"Condemnation Due Date(s)") within 15 days after determining that such costs
will exceed the amount of the award. Lessor, within 10 days after receiving
such notice, may elect to pay to Lessee the difference (the "Condemnation
Deficiency") between the amount of the award to be made available to Lessee and
the costs of the repairs and restorations on or before the Condemnation Due
Date(s), in which event Lessee shall refurbish, repair and restore the Premises
as provided above, and Lessee shall deliver to Lessor upon its request evidence
that the Condemnation Deficiency contributed by Lessor pursuant to this Section
10.6 has been expended by Lessee as provided in this subsection.
If Lessor elects to contribute the Condemnation Deficiency to Lessee
as provided in this Section 10.6 and Lessor does not pay the Condemnation
Deficiency to Lessee within ten (10) days after the Condemnation Due Date(s),
the Condemnation Deficiency shall bear interest at the Default Rate from the
Condemnation Due Date(s) until paid. In addition, if Lessor does not elect to
pay the Condemnation Deficiency or if Lessor does not pay Lessee the
Condemnation Deficiency within ten (10) days after the Condemnation Due
Date(s), Lessee may elect to terminate this Lease. If this occurs, this Lease
shall terminate as of the date specified in Lessee's notice of termination.
ARTICLE 11
ASSIGNMENT AND SUBLETTING
11.1 Lessee: Except as otherwise provided in this Section 11.1,
Lessee shall not voluntarily assign, mortgage or otherwise transfer or encumber
its interest in this Lease or in the Premises, or sublet all or any part of the
Premises, without first obtaining Lessor's consent, which consent shall not be
unreasonably withheld or delayed.
Notwithstanding the foregoing provisions of this Section 11.1, Lessee
shall have the right, without Lessor's consent:
11.1.1 To maintain the subleases and/or concessions of or
with respect to the Premises or a part thereof in existence on the date hereof,
and to enter into any one or more extensions or other amendments thereof or any
one or more replacement subleases or concessions with respect to the portion(s)
of the Premises subject to a sublease or concession on the date hereof, if and
as long as the term of such extended or replacement sublease or concession does
not extend past the scheduled expiration of the Lease Term; and/or
11.1.2 To assign Lessee's interest in this Lease to any
parent or subsidiary of Lessee or any other subsidiary of Lessee's parent, to
any entity with which Lessee may merge or consolidate, or to a purchaser of all
or substantially all of the assets or operations of Lessee;
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provided, however, that no such assignment or encumbrance shall be made in
violation of any Nevada gaming statute or regulation, and Lessee shall continue
to be bound by the terms and conditions of this Lease. Consent by Lessor to
one sublease, assignment or encumbrance shall not be deemed to be a consent to
any successive or future sublease, assignment or encumbrance, and Lessor's
acceptance of rent from any person or other entity other than Lessee shall not
be deemed a waiver by Lessor of any provision of this Section 11.1.
No interest of Lessee in this Lease shall be assignable by
operation of law.
11.2 Lessor: Lessor may not assign or otherwise transfer all or
any part of its interest herein or in the Premises without first obtaining
Lessee's consent, which consent will not be unreasonably withheld or delayed.
Notwithstanding the foregoing provisions of this Section 11.2, Lessor shall
have the right, without Lessee's consent:
11.2.1 To assign or transfer Lessor's interest in this Lease
or in the Premises to any parent or subsidiary of Lessor or any other
subsidiary of Lessor's parent, to any entity with which Lessor may merge or
consolidate, or to a purchaser of all or substantially all of the assets or
operations of Lessor; and/or
11.2.2 To mortgage or otherwise encumber its interest in
this Lease or in the Premises; provided, however, that any mortgage or other
encumbrance of Lessor's interest shall be made only in accordance with Section
14.1 hereof; provided, however, that no such assignment or encumbrance shall be
made in violation of any Nevada gaming statute or regulation, and Lessor shall
continue to be bound by the terms and conditions of this Lease.
No interest of Lessor in this Lease or in the Premises shall be
assignable by operation of law.
ARTICLE 12
EVENTS OF DEFAULT AND REMEDIES
12.1 Event of Default: The occurrence of any one or more of the
following shall constitute an "Event of Default" by Lessee:
12.1.1 Lessee shall fail to pay rent when due, if such
failure continues for 10 days after written notice of the same has been given
to Lessee;
12.1.2 Lessee shall abandon or vacate the Premises. For
purposes of this Lease, Lessee shall be deemed to have abandoned and vacated
the Premises if Lessee shall fail to occupy and operate the Premises for 15
consecutive days, other than as a result of a fire, flood, explosion,
earthquake or other accident or contingency beyond Lessee's reasonable control
and not caused by Lessee's negligence or willful misconduct;
12.1.3 Lessee shall fail to perform any other provision of
this Lease to be performed by Lessee, if such failure continues for 30 days
after written notice of the same has been given to Lessee (provided, however,
that if the default cannot reasonably be cured within 30 days, Lessee shall not
be in default of this Lease if Lessee commences to cure such default during such
30-day period and proceeds diligently to cure the default);
12.1.4 Lessee shall fail to possess at all times during the
Lease Term all necessary licenses and findings of suitability for the operation
of a casino at the Premises; or
12.1.5 Lessee shall file a voluntary petition of bankruptcy
or a petition or answer seeking reorganization, arrangement, composition or
similar relief under present or future federal bankruptcy laws or other
applicable law
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of the United States of America or any state thereof, or shall file a petition
to take advantage of any present or future insolvency act or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts as they become due, or shall consent to the
appointment of any receiver, trustee or liquidator of all or a substantial part
of its property, or if any petition seeking any of the aforementioned relief
shall be commenced against Lessee, and if such proceeding, whether commenced
by or against Lessee, is not dismissed within sixty (60) days after such
proceeding is commenced.
12.2 Remedies Upon Default: Upon the occurrence of an Event of
Default by Lessee, Lessor shall have the following remedies:
12.2.1 Lessor may elect not to terminate Lessee's right to
possession and to continue this Lease in full force and effect, in which event
this Lease shall so continue unless and until Lessor so terminates Lessee's
right to possession. During the period Lessee is in default, Lessor may enter
the Premises and relet them, or any part of them, to one or more third parties
for Lessee's account. Lessee shall pay to Lessor the rent due under this Lease
on the dates the rent is due, less the rent Lessor receives from any reletting
as hereinafter provided, and shall reimburse Lessor immediately upon demand for
all costs and expenses Lessor incurs in so reletting the Premises as follows:
If Lessor elects to relet the Premises as provided in this subsection 12.2.1,
rent that Lessor receives from reletting shall be applied as follows:
First, all costs, including for maintenance, incurred by
Lessor in reletting; and
Second, rent due and unpaid under this Lease.
After deducting the payments referred to in the immediately
preceding paragraphs, any sum remaining from the rent Lessor receives from
reletting shall be held by Lessor and applied in payment of future rents as
rent becomes due under this Lease. In no event shall Lessee be entitled to any
excess rent received by Lessor.
No act by Lessor permitted by this subsection 12.2.1 shall
terminate this Lease unless Lessor notifies Lessee that Lessor elects to
terminate this Lease.
12.2.2 Lessor may terminate Lessee's right to possession of
the Premises by giving notice to Lessee of the same, whereupon this Lease shall
terminate. Upon such termination, Lessor may recover from Lessee (i) the
worth, at the time of award, of the unpaid rent that had been earned at the
time of termination; (ii) the worth, at the time of the award, of the amount
by which the unpaid rent that would have been earned after the date of
termination until the time of award exceeds the amount of the rental loss that
Lessee proves could have been reasonably avoided; (iii) the worth, at the time
of the award, of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Lessee proves could have been reasonably avoided; and (iv) any other amount, and
court costs, necessary to compensate Lessor for all detriment proximately caused
by Lessee's default.
"The worth, at the time of the award," as used in clauses (i)
and (ii) of the immediately preceding paragraph, is to be computed by allowing
interest at the Default Rate (as defined in subsection 12.2.3 below). "The
worth, at the time of the award," as used in clause (iii) of the immediately
preceding paragraph, is to be computed by discounting the amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award, plus 1%.
12.2.3 Lessor may, at any time after Lessee commits an Event
of Default, cure such default at Lessee's cost. If Lessor in connection
therewith pays any sum or does any act that requires the payment of any sum,
such sum, together with interest thereon at the per annum rate of interest
publicly
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announced from time to time by Bank of America NT&SA in San Francisco,
California as its "Reference Rate" plus 5% (the "Default Rate") from the date
the sum is paid by Lessor, shall be additional rent hereunder, and shall be
paid by Lessee to Lessor within 10 days after Lessor renders to Lessee a bill
therefor.
12.3 Non-Exclusive Remedies: The remedies afforded to Lessor by
this Lease shall be cumulative and in addition to any one or more remedies now
or later available by law.
ARTICLE 13
SURRENDER OF POSSESSION
13.1 Surrender: Upon the expiration or within 10 days after any
earlier termination of the Lease Term, Lessee shall surrender to Lessor the
Premises in the same condition as on the Commencement Date, ordinary wear and
tear and damage or destruction covered by Articles 9 and 10 hereof excepted.
In connection with such surrender:
13.1.1 Subject to applicable provisions of the Asset
Purchase Agreement, Lessee shall be entitled to remove from the Premises all
Gaming Assets, Inventories (as defined in the Asset Purchase Agreement) and
other personal property of Lessee then located at or installed in the Premises
(except as otherwise provided in subsections 2.1.2 and 13.1.2 hereof) within
the stated time, and at Lessee's cost make whatever repairs to the Premises are
necessitated by the removal.
13.1.2 All operating supplies and non-inventory consumable
goods, located at the Premises upon the expiration or earlier termination of
the Lease Term shall (except to the extent such items are thereafter sold or
consumed in the ordinary course of business) be surrendered with the Premises
and shall become the property of Lessor, without additional charge. These
operating supplies and non-inventory consumable goods shall not be less than
85% of the book value of the items as at the time Lessor acquired and/or
valued them pursuant to the Asset Purchase Agreement.
13.1.3 Upon surrender of the Premises, Lessor shall
reimburse Lessee for all cash and cash equivalents then on hand at the
Premises, including cash held in house banks, change booths and/or the Slot
Machines. Lessor shall also reimburse Lessee for casino chips and tokens then
outstanding at the Hotel/Casino in accordance with Section 4A.3.3 of the Asset
Purchase Agreement.
13.1.4 Upon surrender of the Premises, Lessee shall (a)
terminate the Employee Plans (as defined in the Asset Purchase Agreement) so
that, upon surrender of the Premises, Lessor shall not be obligated to any
employees of Lessee, whether or not hired by Lessor, with respect to and under
such Employee Plans and (b) pay to its employees at the Premises all salaries,
wages and sick back pay accrued, all vacation pay earned, and all other
employee benefits accrued through or earned as of the expiration or earlier
termination of the Lease Term.
13.1.5 Any and all expenses (including prepaid expenses)
incurred by Lessee in operating the Premises during the Lease Term (including,
without limitation, pursuant to the second paragraph of Section 1.1A hereof)
shall be allocated and apportioned between Lessor and Lessee as of the date the
Lease Term expires or is earlier terminated, and such expenses, together with
any and all expenses described in subsections 4A.4.1 and 4A.4.2 of the Asset
Purchase Agreement, shall be prorated by Lessor and Lessee upon surrender of
the Premises, in each case in the manner provided in subsections 4A.4.1 and
4A.4.2 of the Asset Purchase Agreement.
Notwithstanding the foregoing provisions of this subsection
13.1.5, (i) Lessee shall retain or be entitled to receive all guest room
rentals, all restaurant revenues, banquet and lounge food and beverage revenues
and all meeting room rentals earned for the night period beginning on the day
preceding
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the date on which the Lease Term expires or is earlier terminated and
ending at noon on such expiration or termination date; (ii) guest room deposits
and any other deposits or advance rentals paid to Lessee under bookings or
other confirmed reservations for the use of Hotel/Casino guest room or banquet
or other Hotel/Casino facilities for any period after the above-referenced
night period shall be paid to Lessor, and Lessor shall duly perform the
obligations of Lessee under such agreements, bookings or reservations in
accordance with their respective terms; and (iii) Lessee shall retain or be
entitled to receive all other revenues of the Premises earned before such
expiration or termination date, including gaming revenues evidenced by markers.
13.2 Post-Termination Deliveries: Lessor shall accept delivery of,
and duly pay the vendors of such items for, any and all FF&E, Inventory and
other assets delivered to the Premises after the expiration or earlier
termination of the Lease Term pursuant to purchase orders made by Lessee during
the Lease Term pursuant to clause (iii) of the first sentence of Section 2.1
hereof but without obtaining Lessor's prior consent; provided, however, that
the aggregate amount payable by Lessor pursuant to this Section 13.2 shall not
exceed $25,000 if the Lease Term was 12 months or less or $37,500 if the Lease
Term was more than 12 months.
13.3 Accounts Receivable: For a period of 90 days following the
date on which Lessee surrenders the Premises to Lessor, Lessor shall bill in
the ordinary course of business all guests of the Premises who as of the date
of such surrender owed Lessee monies for accommodations, goods or services
furnished by Lessee during the Lease Term and who have checked out of the
Premises prior to the date of surrender. All funds collected by Lessor as a
result of such billing shall be applied in the order of the age of the
outstanding accounts receivables of such payee (from the oldest to the most
recent), except where due to a dispute a particular payment is designated by
the payee to be applied other than to that payee's oldest account receivable,
in which case such specified application shall control. All monies collected
by Lessor with respect to the foregoing accounts receivable shall be accounted
for and remitted by Lessor to Lessee monthly with a statement showing the
collection. Lessor's sole obligation with respect to collection of the
accounts receivable described in this Section 13.3 shall be the billing of such
amounts in the ordinary course of Lessor's business, and after the expiration
of the 90-day period referred to herein, Lessor shall have no further
obligation to attempt to collect the same.
ARTICLE 14
SUBORDINATION; QUIET ENJOYMENT
14.1 Subordination: This Lease is and shall be prior to any
encumbrance recorded after the date hereof affecting the Premises. If,
however, a lender requires that this Lease be subordinate to any mortgage or
deed of trust to be granted to such lender to secure the repayment of debt owed
or to be owed by Lessor to such lender, this Lease shall be subordinate to that
encumbrance if Lessor first obtains from the lender a written agreement that
provides substantially as follows:
"As long as Lessee pays all amounts required to be paid by
Lessee under this Lease, no foreclosure of, deed given in lieu of
foreclosure of, or sale under, the encumbrance, and no actions taken
pursuant to the encumbrance, shall affect Lessee's rights under this
Lease; provided, however, this Lease may be terminated by such lender
upon sixty-two (62) days written notice to Lessee."
Subject to the foregoing, Lessee shall attorn to any purchaser or
assignee of the Premises at any foreclosure sale, or to any grantee or
transferee designated in any deed given in lieu of foreclosure, and shall
execute an agreement and any other documents in form and content reasonably
acceptable to Lessee required by the lender to accomplish the purposes of this
Section 14.1.
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14.2 Quiet Enjoyment: Lessor covenants that conditioned upon
Lessee's payment of the rent and performance of the other covenants hereof to
be performed by Lessee, Lessee may peaceably and quietly have, hold and enjoy
the Premises in accordance with the provisions of this Lease, without hindrance
from Lessor or any other person or entity.
ARTICLE 15
MISCELLANEOUS
15.1 Governing Law: This Lease shall be construed in accordance
with and governed by the laws of the State of Nevada.
15.2 Severability: The unenforceability, invalidity or illegality
of any provision hereof shall not affect the enforceability, validity or
legality of any other provision hereof, and any such unenforceable, invalid or
illegal provision shall be limited only to the extent necessary to conform to
applicable law and so as most closely carry out the intent of the parties
hereto as expressed herein.
15.3 Construction: No provision of this Lease shall be construed
in favor of or against either party hereto by reason of the extent to which
such party or its counsel participated in the drafting hereof or by reason of
the extent to which such provision or any other provision of this Lease is
inconsistent with any prior draft hereof.
15.4 Captions: The captions of the Articles and Sections of this
Lease have been inserted for convenience only, and shall not be used in any way
to modify, construe or otherwise affect this Agreement. All references to
Sections hereof include all subsections of such Sections.
15.5 Notices: Any and all notices that either party hereto desires
or is required to give to the other party pursuant to this Lease shall be in
writing and delivered in person, sent by overnight courier or sent by prepaid,
registered or certified U.S. mail, addressed as follows:
If to Lessor: c/o Crown Casino Corporation
2415 West Northwest Highway
Suite 103
Dallas, Texas 75220
Attn: Mark D. Slusser, Chief Financial
Officer
With a copy to: Stumpf & Falgout
1400 Post Oak Boulevard
Suite 400
Houston, Texas 77056
Attn: T. J. Falgout, III
If to Lessee: c/o Starwood Lodging Corporation
11845 Olympic Boulevard
Suite 550
Los Angeles, California 90064
Attn: Kevin Mallory, Executive Vice
President
With a copy to: Lionel Sawyer & Collins
1100 Bank of America Plaza
50 West Liberty Street
Reno, Nevada 89501
Attn: Dan R. Reaser
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or to such other person or place as either party hereto my designate in writing
in the manner provided herein for giving notice. Each such notice so
delivered, couriered or mailed shall be deemed delivered when personally
delivered, as of the first business day after the date so sent by courier, or
as of the third business day after the date so sent by mail, as the case may
be.
15.6 Successors in Interest: Subject to Article 11 hereof, the
provisions of this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person or entity
other than the parties hereto and their respective successors and permitted
assigns any right or remedy under or by reason of this Lease.
15.7 No Merger: The voluntary or other surrender of this Lease by
Lessee or actual termination or other cancellation thereof shall not work a
merger, and shall, and Lessor's sole option, either terminate any or all
existing subleases or subtenancies, or operate as an assignment to Lessor of
all rights of Lessee under or pursuant to such subleases or subtenancies.
15.8 Termination of Obligations: Upon the expiration or earlier
termination of this Lease, neither Lessor nor Lessee shall have any further
liability or obligation hereunder, except for rent or other amounts accrued and
owing as of the date of such expiration or termination.
15.9 Attorneys' Fees: In the event that any action, suit or
proceeding is commenced under or in connection with this Lease or for the
recovery of possession of the Premises, including any insolvency or bankruptcy
proceeding, the losing party shall pay to the prevailing party in any such
action, suit or proceeding the reasonable attorneys' fees incurred by the
prevailing party in connection therewith, together with all costs and expenses
of the prevailing party.
15.10 Counterparts: This Lease may be entered into in more than one
counterpart, each of which shall be deemed an original when executed, and which
together shall constitute but one and the same Lease.
15.11 Further Information: From time to time after the expiration
or earlier termination of the Lease Term, Lessee may, upon reasonable prior
notice to Lessor, make copies of the records of the Premises with respect to
the Lease Term to the extent reasonably required by Lessee (i) to prepare its
financial statements for the period(s) including all or a portion of the Lease
Term, (ii) to prepare and substantiate Lessee's tax returns (including, without
limitation, in connection with any audit), or (iii) to prepare for, prosecute,
defend or settle any litigation pending or threatened against Lessee with
respect to its operation of the Premises hereunder; provided, however, that
Lessee may not remove any such books and records from the Premises. Lessor
shall maintain all original books and records of the Premises with respect to
the Lease Term for such time periods as are required by the Internal Revenue
Service and the Nevada gaming authorities.
15.12 Integration: This Lease contains all of the terms and
conditions agreed upon by the parties hereto with respect to the subject matter
hereof, and no representation, warranty or agreement not specifically made
herein shall be deemed to exist or to bind any of the parties hereto with
respect to the subject matter hereof.
15.13 Amendments: This Lease may not be amended or supplemented
except by a writing signed by the party or parties to be bound thereby.
15.14 No Recordation: This Lease shall not be recorded; provided,
however, that if either party hereto requests the other party to do so, the
parties shall execute a memorandum of this Lease in recordable form describing
expiration dates of the Lease Term, which memorandum may be recorded by either
party at such party's cost.
19
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15.15 Guaranty Agreements. Starwood Lodging Corporation, a Maryland
corporation, shall guarantee the full and faithful performance of the
covenants, agreements and obligations of Lessee pursuant to the terms of this
Lease in accordance with the terms of a Guaranty Agreement in the form of
Exhibit 15.15A attached hereto. Similarly, Crown Casino Corporation, a Texas
corporation, shall guarantee the full and faithful performance of the
covenants, agreements and obligations of Lessor pursuant to the terms of this
Lease in accordance with the terms of a Guaranty Agreement in the form of
Exhibit 15.15B attached hereto.
15.16 Entry. Lessor may enter the Premises at any time to (i)
inspect the Premises, (ii) determine whether Lessee is complying with all its
obligations hereunder, (iii) make Repairs in accordance with Section 4.7
hereof, and (iv) post notices of non-responsibility. Except in emergency
situations, Lessor shall give Lessee at least twenty-four (24) hours prior
notice of entry. In no event shall Lessor have access to any area for which
access is restricted in accordance with Nevada gaming laws, except pursuant to
such laws.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first written above.
LESSOR: LESSEE:
CROWN CASINO NEVADA, INC., a HOTEL INVESTORS CORPORATION
Nevada corporation OF NEVADA, INC., a Nevada
corporation
By: _________________________ By: ________________________
Name: _______________________ Name: ______________________
Title: ______________________ Title: _____________________
20
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The Hotel Land
ALL THAT REAL PROPERTY SITUATED IN THE COUNTY OF CLARK, STATE OF NEVADA,
DESCRIBED AS FOLLOWS:
THOSE PORTIONS OF THE SOUTHEAST QUARTER (SE 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 16 AND THE NORTH HALF (N 1/2) OF THE NORTH HALF (N 1/2) OF
SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., FURTHER DESCRIBED AS
FOLLOWS:
PARCEL ONE
LOTS SEVENTY-FIVE (75) AND SEVENTY SIX (76) IN BLOCK FOUR (4) OF FLAMINGO
ESTATES, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22, IN THE
OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
PARCEL TWO
LOTS ONE HUNDRED TWO (102) AND ONE HUNDRED THREE (103) IN BLOCK FIVE (5) OF
FLAMINGO ESTATES, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22,
IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
PARCEL THREE
LOT ONE HUNDRED FIVE (105) IN BLOCK FIVE (5) OF FLAMINGO ESTATES, AS SHOWN BY
MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22, IN THE OFFICE OF THE COUNTY
RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING THEREFROM THE SOUTHERLY TEN (10) FEET AS CONVEYED TO THE COUNTY OF
CLARK, BY DOCUMENT NO. 658664 IN BOOK 699 OF OFFICIAL RECORDS, CLARK COUNTY,
NEVADA.
PARCEL FOUR
LOT ONE HUNDRED FOUR (104) IN BLOCK FIVE (5) OF FLAMINGO ESTATES, AS SHOWN BY
MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22, IN THE OFFICE OF THE COUNTY
RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING THE SOUTHERLY TEN (10) FEET AND THAT CERTAIN SPANDREL AREA AT THE
SOUTHWESTERLY CORNER (SW COR.) OF SAID LOT 104 BOUNDED ON THE WEST BY THE
EASTERLY RIGHT-OF-WAY OF AUDRIE STREET (60.00 FEET WIDE), BOUNDED ON THE SOUTH
BY THE NORTHERLY RIGHT-OF-WAY OF FLAMINGO ROAD (50.00 FEET FROM THE CENTERLINE)
AND ON THE NORTHEAST BY A CURVE CONCAVE NORTHEASTERLY WITH A RADIUS OF 22.00
FEET.
PARCEL FIVE
LOT ONE HUNDRED SIX (106) IN BLOCK FIVE (5) OF FLAMINGO ESTATES, AS SHOWN BY
MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22, IN THE OFFICE OF THE COUNTY
RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING THEREFROM THE SOUTHERLY TEN (10) FEET, THE EASTERLY FOURTEEN (14)
FEET FURTHER EXCEPTING THE WESTERLY TWENTY (20) FEET OF THE EASTERLY
THIRTY-FOUR (34) FEET, NOT INCLUDING THE SOUTHERLY 135.50 FEET.
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The Apartment Land
ALL THAT REAL PROPERTY SITUATED IN THE COUNTY OF CLARK, STATE OF NEVADA,
DESCRIBED AS FOLLOWS:
THOSE PORTIONS OF THE SOUTHEAST QUARTER (SE 1/4) OF THE SOUTHWEST QUARTER (SW
1/4) OF SECTION 16 AND THE NORTH HALF (N 1/2) OF THE NORTH HALF (N 1/2) OF
SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., FURTHER DESCRIBED AS
FOLLOWS:
LOTS ONE HUNDRED (100) AND ONE HUNDRED ONE (101) IN BLOCK FIVE (5) OF FLAMINGO
ESTATES, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 5 OF PLATS, PAGE 22, IN THE
OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING THEREFROM GAS & OIL RIGHTS AS RESERVED IN DOCUMENT NO. 381100
RECORDED FEBRUARY 19, 1952 AND AS CONVEYED BY DOCUMENT NO. 102052 RECORDED
MARCH 25, 1957, ALL IN CLARK COUNTY, NEVADA RECORDS.
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Guaranty Agreement - Starwood Lodging Corporation
[To be attached]
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Guaranty Agreement - Crown Casino Corporation
[To be attached]