LEASE ACKNOWLEDGMENT, ASSUMPTION AND MODIFICATION AGREEMENT
THIS LEASE ACKNOWLEDGMENT, ASSUMPTION AND MODIFICATION AGREEMENT
("Second Lease Modification"), dated as of February 11, 1998 (the Effective
Date), is entered into by and among PIONEER ASSOCIATES LIMITED LIABILITY
COMPANY, a Nevada limited liability company ("Pioneer"), BWBH, INC., a
Delaware corporation ("BWBH"), KDL, INC., a Colorado corporation ("KDL")
and ELIZABETH BRANECKI (the "Lessor").
R E C I T A L S:
A. Lessor and KDL entered into a Lease dated July 10, 1991 (the
"Original Lease") by which Lessor leased to KDL the premises as more
particularly described in Section One of the Original Lease (the
"Premises").
B. By that certain Agreement dated March 16, 1994 ("First Lease
Modification"), by and among KDL, Lessor and Pioneer, which
inadvertently acquired its leasehold interest as Pioneer Associates
Ltd., KDL assigned all of its right, title and interest in the Original
Lease to Pioneer, Lessor consented to such assignment of the Lease and
the Lease was modified in certain respects. Pursuant to the First Lease
Modification, KDL remains primarily liable on the Original Lease through
July 31, 2001. The Original Lease and the First Lease Modification, as
modified by this Second Lease Modification, shall hereinafter
collectively be referred to as the Lease. Capitalized words not
otherwise defined herein have the meaning set forth in the Lease.
C. Pioneer desires to sell, and BWBH desires to purchase, certain
of Pioneer's assets which it owns and operates on the Premises (the
"Asset Sale and Purchase") as set forth in that certain Asset Purchase
Agreement.
D. In connection with the Asset Sale and Purchase, Pioneer
desires to assign to BWBH Pioneer's rights as lessee under the Lease and
BWBH desires to assume Pioneer's obligations under the Lease.
E. Pioneer and BWBH desire to obtain Lessor's consent to the
assignment of the Lease and Lessor has agreed to permit and consent to
the assignment.
F. BWBH and Lessor also desire to modify the Lease in certain
respects, to be effective upon BWBH's and Pioneer's closing of the Asset
Sale and Purchase, as set forth herein.
NOW THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. ASSIGNMENT. Upon the closing of the Asset Sale and Purchase, as
evidenced by the execution and delivery of an assignment and assumption
agreement ("Assignment and Assumption Agreement"), Pioneer will assign and
transfer to BWBH all of Pioneer's right, title and interest as tenant in and
to the Lease, for the duration of the term of the Lease, as such term is
extended, which Assignment and Assumption Agreement will be dated as of and
effective upon the Effective Date.
2. ASSUMPTION. Upon the closing of the Asset Sale and Purchase, BWBH
will, in the Assignment and Assumption Agreement, accept the terms of this
Second Lease Modification, and assume and be bound by all obligations of
Pioneer (and KDL as applicable) as tenant, including the payment of all rent
and other sums and performance of all covenants of Pioneer and/or KDL as
tenant pursuant to the Lease, as modified herein.
3. CONSENT TO ASSIGNMENT OF LEASE. Lessor hereby consents in writing
to the assignment of the Lease by Pioneer to BWBH, which consent shall be
effective upon the Effective Date. All of the parties agree that BWBH and
Pioneer may record the Assignment and Assumption Agreement and Lessor's
consent thereto in the real property records of the Clerk and Recorder of
Gilpin County, Colorado.
4. AMENDMENT OF DESCRIPTION OF THE PREMISES. Lessor acknowledges
that Pioneer will file an action to quiet the title to the Premises and the
adjoining premises because of certain gaps in the chain of title to a portion
of the Premises (the "Quiet Title Action"). Notwithstanding the foregoing,
Lessor hereby agrees that the description of the Premises set forth in
Section One of the Original Lease is hereby amended to provide that Lessor
hereby leases to BWBH all of Lessor's (i) right, title and interest in and to
the West 17.5 Feet, approximately, of Lot 2, Block 29, and (ii) all of her
right, title and interest in Lot 2, Block 29, which she may hereinafter
acquire, as to which Lessor makes no warranty of title with their
appurtenances, all situated in the Town of Black Hawk, County of Gilpin,
State of Colorado.
5. RELIANCE ON THIS AGREEMENT. BWBH will consummate the transactions
set forth in the Asset Purchase Agreement in reliance upon Lessor's and
Pioneer's representations, agreements and covenants contained herein, and but
for such representations, agreements and covenants of Pioneer and Lessor as
contained herein, BWBH will not consummate the transactions set forth in the
Asset Purchase Agreement with Pioneer.
6. VALID AGREEMENT. The Lease is a valid agreement among Lessor, KDL
and Pioneer. The copies of the Original Lease and First Lease Modification
attached hereto as EXHIBIT A are true and correct reproductions of the
Original Lease and First Lease
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Modification and constitute the entire agreement among Lessor, KDL and
Pioneer, except as modified herein.
7. NO DEFAULTS. There have been no defaults by Lessor, KDL or
Pioneer under the Lease. KDL and Pioneer have paid all rent due to Lessor
under the Lease through the Effective Date. To the Lessor's, KDL's, and
Pioneer's knowledge, there are, as of the Effective Date, no conditions or
events, either with the giving of notice or lapse of time, or both, which
would be treated or constitute defaults of Lessor, KDL or Pioneer with
respect to any of their obligations under the Lease. Lessor agrees to notify
BWBH of any defaults under the Lease subsequent to the date hereof of which
Lessor becomes aware.
8. TERM. The current term of the Original Lease will expire on July
31, 2001 (the "Term"). Under the First Lease Modification, Lessor granted
Pioneer two (2) renewal periods of five (5) years each, beginning on August
1, 2001 and ending July 31, 2011.
9. EXTENSION OF LEASE TERM. Lessor KDL, Pioneer and BWBH agree that
upon the Effective Date, the Term of the Lease shall be extended through July
31, 2024.
10. RENT. Pursuant to Section 3 of the Original Lease, Pioneer paid
Lessor base rent of $5,000.00 per month plus monthly override payments of 4%
of the "gaming gross" (as such term is defined in the Original Lease) so long
as the gaming gross from both Premises and the premises located at 131
Gregory Street was in excess of $55,000.00 per month (the "Override
Payments"). Lessor and BWBH hereby agree to amend Section 3 of the Original
Lease so that (i) BWBH shall not be required to make any Override Payments to
Lessor; and (ii) BWBH shall pay Lessor base rent only, in accordance with the
following rent schedule:
a. If the Average Daily Proceeds ("ADP") from all of the slot
machines, poker tables and black jack tables (the "Gaming Devices"), which
ADP consists of the average daily amount of all monies wagered less all
monies paid back to wagerers from all of the Gaming Devices, the average of
which is calculated on a calendar monthly basis, located in (i) the Premises
and (ii) the premises located at 125-131 Gregory Street (collectively, the
"Bronco Billy's Premises") is $70.00 or less per Gaming Device, BWBH shall
pay Lessor, monthly on the 1st day of each month, base rent, as set forth in
this subsection a, and additional base rent as set forth in subsections b
thru e in the following amounts:
$12,500.00 commencing upon the earlier to occur of (i) 90
days from the Effective Date or (ii) the date upon which
BWBH opens its casino business on the Premises, through
July 31, 2001;
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$13,000.00 commencing August 1, 2001 through July 31, 2006;
$13,550.00 commencing August 1, 2006 through July 31, 2011;
$14,518.00 commencing August 1, 2011 through July 31, 2019;
and
$15,220.00 commencing August 1, 2019 through July 31, 2024.
b. If the ADP from the Gaming Devices on the Bronco Billy's Premises
is $70.01 to $80.00 per Gaming Device, BWBH shall pay Lessor monthly rent under
the Lease in the following amounts:
$13,500.00 commencing upon the earlier to occur of (i) 90
days from the Effective Date or (ii) the date upon which
BWBH opens its casino business on the Premises through
July 31, 2001;
$14,000.00 commencing August 1, 2001 through July 31, 2006;
$14,550.00 commencing August 1, 2006 through July 31, 2011;
$15,518.00 commencing August 1, 2011 through July 31, 2019;
and
$16,220.00 commencing August 1, 2019 through July 31, 2024.
c. If the ADP from the Gaming Devices on the Bronco Billy's Premises
is $80.01 to $90.00 per Gaming Device, BWBH shall pay Lessor monthly rent under
the Lease in the following amounts:
$14,500.00 commencing upon the earlier to occur of (i) 90
days from the Effective Date or (ii) the date upon which
BWBH opens its casino business on the Premises through
July 31, 2001;
$15,000.00 commencing August 1, 2001 through July 31, 2006;
$15,550.00 commencing August 1, 2006 through July 31, 2011;
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$16,518.00 commencing August 1, 2011 through July 31, 2019;
and
$17,220.00 commencing August 1, 2019 through July 31, 2024.
d. If the ADP from the Gaming Devices on the Bronco Billy's Premises
is $90.01 to $100.00 per Gaming Device, BWBH shall pay Lessor monthly rent under
the Lease in the following amounts:
$15,500.00 commencing upon the earlier to occur of (i) 90
days from the Effective Date or (ii) the date upon which
BWBH opens its casino business on the Premises through
July 31, 2001;
$16,000.00 commencing August 1, 2001 through July 31, 2006;
$16,550.00 commencing August 1, 2006 through July 31, 2011;
$17,518.00 commencing August 1, 2011 through July 31, 2019;
and
$18,220.00 commencing August 1, 2019 through July 31, 2024.
e. If the ADP from all gaming devices on the Bronco Billy's Premises
is $100.01 or more per gaming device, BWBH shall pay Lessor monthly rent under
the Lease in the following amounts:
$16,500.00 commencing upon the earlier to occur of (i) 90
days from the Effective Date or (ii) the date upon which
BWBH opens its casino business on the Premises through
July 31, 2001;
$17,000.00 commencing August 1, 2001 through July 31, 2006;
$17,550.00 commencing August 1, 2006 through July 31, 2011;
$18,518.00 commencing August 1, 2011 through July 31, 2019;
and
$19,220.00 commencing August 1, 2019 through July 31, 2024.
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BWBH and Lessor agree that if BWBH owes Lessor additional base rent
pursuant to subsections b through e above for any month, BWBH's payment of
the additional base rent shall be due on or before the 1st day of the second
month thereafter. BWBH also agrees to supply Lessor with records of the
gaming proceeds and ADP calculations with each rent payment, and upon
request, BWBH shall also supply Lessor with copies of any records or
information that BWBH supplies to the Commission in connection with the ADP.
11. GAMING LICENSURE. If the Colorado Limited Gaming Control
Commission ("Commission") deems it necessary for Lessor to obtain gaming
licensure, Lessor acknowledges and agrees that such gaming licensure shall be
her responsibility and obligation. In the event that the Commission
determines that licensure of the Lessor is necessary, and such determination
prevents the payment of all or any portion of the rent by BWBH to Lessor
under the Lease, BWBH shall pay any such rent amounts otherwise due under the
Lease into an interest-bearing escrow account with an escrow agent reasonably
satisfactory to Lessor and BWBH. Upon the receipt of such license or other
determination that such license is not necessary, or pending other
arrangements satisfactory to the Commission. BWBH shall have the escrow
agent disburse all amounts and interest thereon in the escrow account to
Lessor.
12. TAXES. BWBH acknowledges and agrees that its obligation to pay
all taxes assessed and imposed against the Premises as set forth in Section
Eight of the Original Lease shall include payment of all taxes hereinafter
assessed against the Premises by any special improvement district, business
district or metropolitan district.
13. LEASE BONUS PAID. The parties acknowledge and agree that the lease
bonus described in Section 6 of the First Lease Modification has been paid by
Pioneer and KDL and upon the closing of the Asset Sale and Purchase, BWBH
shall not be obligated to pay such lease bonus. The parties further
acknowledge and agree that Pioneer shall pay $55,000.00 to Lessor on the
Effective Date as consideration for Lessor's entering into this Second Lease
Modification, and that but if such $55,000.00 is not paid by Pioneer to
Lessor on the Effective Date, Lessor will not execute and deliver this Second
Lease Modification. The parties further agree that such $55,000 paid by
Pioneer to Lessor shall be Pioneer's sole responsibility and BWBH shall have
no liability to Lessor or Pioneer for payment of any portion thereof.
14. PARKING IMPACT FEES PAID. Pioneer represents and warrants that it
has paid all impact parking fees owing to the City of Black Hawk for the
Premises and the premises located at 131 Gregory Street, Black Hawk, Colorado,
as described in Section 7 of the Lease Modification, and commencing on the
Effective Date, BWBH shall not be obligated to pay such impact parking fees.
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15. CONSTRUCTION PERIOD. Lessor understands and agrees that commencing
on the Effective Date, BWBH shall cease operations of its casino business on
the Premises for an approximate 90 day period following the Effective Date
("Construction Period") in order to undertake construction, remodeling and
renovation work in the Premises. The parties understand and agree that Lessor
has previously approved BWBH's construction plans for the Premises, in the
form attached hereto as EXHIBIT B. In consideration of Lessor's waiving
payment of the rental amounts set forth in Section 10 during the Construction
Period, BWBH shall pay Lessor (i) a one-time payment of $10,000 upon the
Effective Date and (ii) monthly rent in the amount of $5,000.00 during the
Construction Period, commencing upon the Effective Date. In addition, the
parties acknowledge and agree that upon the earlier to occur of (i) 90 days
from the Effective Date or (ii) BWBH's opening of its casino operations on
the Premises, BWBH shall commence making the rent payments to Lessor which
are set forth in Section 10. Notwithstanding the foregoing, the parties
agree that Pioneer's obligation pay rent to Lessor under the Lease shall
include for all periods up to the Effective date.
16. BWBH'S LENDERS' SECURITY INTERESTS. Lessor understands and agrees
that, upon the closing of the Asset Sale and Purchase, BWBH shall subject
BWBH's leasehold interest in the Premises to two deeds of trust which shall
be subject to the Lease. The two deeds of trust secure BWBH's indebtedness to
BWBH's senior secured lenders which have rights to security interests to
after-acquired property, including leasehold interests, of BWBH, in accordance
with the loan agreements between BWBH and the senior secured lenders and will
in no event encumber Lessor's interest in the real Property.
17. NOTICES. Upon the closing of the Asset Sale and Purchase, the
notice to Lessee under the Lease in Section 7 of the Lease shall be revised
as follows:
BWBH, Inc.
c/o Alan L. Mayer, Esq.
12596 W. Bayaud Ave.
Suite 450
Lakewood, Colorado 80228
18. COUNTERPARTS. This Second Lease Modification may be executed in
several counterparts each of which shall be an original and all of which,
when taken together, shall constitute one instrument notwithstanding that all
parties have not executed the same counterpart. The parties agree that
signatures transmitted by facsimile shall be binding as if they were original
signatures.
IN WITNESS WHEREOF, this Second Lease Modification has been executed by
the parties effective as of the Effective Date.
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Pioneer:
PIONEER ASSOCIATES LIMITED LIABILITY COMPANY, a
Nevada limited liability company
By: /s/ M. Chaput
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Title: Agent
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BWBH:
BWBH, INC., a Delaware corporation
By: /s/ Alan L. Mayer
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Title: Vice President and Secretary
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KDL:
KDL, INC., a Colorado corporation
By: /s/ Kenneth Dalton
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Title: President
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Lessor:
/s/ Elizabeth Branecki
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Elizabeth Branecki
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