<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 10, 1999
CHURCHILL DOWNS INCORPORATED
(Exact name of registrant as specified in charter)
KENTUCKY 0-01469 61-0156015
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
700 CENTRAL AVENUE, LOUISVILLE, KENTUCKY 40208
(Address of principal executive offices)
(502) 636-4400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 10, 1999, Churchill Downs Incorporated (the "Company"),
through its wholly owned subsidiary Churchill Downs California Company, acquired
the Hollywood Park Race Track horse racing facility (the "Race Track") and the
Hollywood Park Casino card club casino located in Inglewood, California, from
Hollywood Park, Inc., a Delaware corporation ("Seller"), pursuant to an Asset
Purchase Agreement dated as of May 5, 1999 by and between the Company and
Seller, as amended by Amendment No. 1 dated as of August 31, 1999 by and among
the Company, Churchill Downs California Company and Seller (collectively, the
"Agreement"). Pursuant to the Agreement, the Company acquired substantially all
of the assets of Seller used in its operation of the Race Track which included
land, buildings, improvements and equipment, and the building in which the
Hollywood Park Casino is operated and related fixtures (the "Casino Building")
(the acquired assets associated with the Race Track and the Casino Building are
collectively referred to as the "Assets"). The Assets include approximately 240
acres of land upon which the Race Track and the Casino Building are located. The
Company did not acquire Seller's assets related to its operation of the
Hollywood Park Casino, other than the Casino Building. The Company intends to
continue to operate the Race Track at the same location and under the same name.
The Company will lease the Casino Building to Seller pursuant to a ten-year
lease with one ten-year renewal option. The Seller will pay the Company annual
rent under the lease for the Casino Building of Three Million Dollars
($3,000,000), subject to adjustment during the renewal period.
The Company paid Seller One Hundred Forty Million Dollars
($140,000,000) cash for the Assets, and in addition the Company agreed to assume
and perform certain liabilities of Seller relating to the Assets. The Company
paid the purchase price from a draw on its credit facility with PNC Bank,
National Association. The purchase price was determined by the Company based on
its analysis of the Assets and the financial performance of the Race Track.
A copy of the press release announcing the completion of the
transaction is attached as Exhibit 99 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
A. Financial Statements of Businesses Acquired.
To be filed by amendment on or about November 23, 1999.
B. Pro Forma Financial Information.
To be filed by amendment on or about November 23, 1999.
C. Exhibits
2.1 Asset Purchase Agreement dated as of May 5, 1999 by
and between Churchill Downs Incorporated and
Hollywood Park, Inc., incorporated by
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reference to the Company's Registration Statement on
Form S-3 dated May 21, 1999, File No. 333-79031.
2.2 Amendment No. 1 to Asset Purchase Agreement dated as
of August 31, 1999 by and among Churchill Downs
Incorporated, Churchill Downs California Company and
Hollywood Park, Inc.
10.1 Casino Lease Agreement dated as of September 10, 1999
by and between Churchill Downs California Company and
Hollywood Park, Inc.
99 Press release issued on September 10, 1999 by
Churchill Downs Incorporated.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHURCHILL DOWNS INCORPORATED
(Registrant)
By: /S/ THOMAS H. MEEKER
Thomas H. Meeker, President
Date: September 23, 1999
<PAGE> 5
EXHIBIT INDEX
Exhibit Number Description of Exhibit Page
2.1 Asset Purchase Agreement dated as of May 5, 1999
by and between Churchill Downs Incorporated and
Hollywood Park, Inc., incorporated by reference to
the Company's Registration Statement on Form S-3
dated May 21, 1999, File No. 333-79031.
2.2 Amendment No. 1 to Asset Purchase Agreement 6
dated as of August 31, 1999 by and among
Churchill Downs Incorporated, Churchill Downs
California Company and Hollywood Park, Inc.
10.1 Casino Lease Agreement dated as of September 10, 10
1999 by and between Churchill Downs California
Company and Hollywood Park, Inc.
99 Press release issued on September 10, 1999 by 47
Churchill Downs Incorporated.
<PAGE> 6
AMENDMENT No. 1 TO
ASSET PURCHASE AGREEMENT BETWEEN HOLLYWOOD PARK, INC. AND
CHURCHILL DOWNS INCORPORATED DATED AS OF MAY 5, 1999
Dated as of August 31, 1999
This AMENDMENT No. 1 is entered into by Hollywood Park, Inc., a
Delaware corporation (HPI), Churchill Downs Incorporated, a Kentucky corporation
(CDI), and Churchill Downs California Company, a Kentucky corporation (CDC),
with reference to the following facts:
WHEREAS, CDI has assigned all of it rights and obligations under that
certain Asset Purchase Agreement dated May 5, 1999 (the "Purchase Agreement")
between HPI and CDI, to CDC and CDC has accepted such rights and obligations;
WHEREAS, by virtue of such assignment, CDC is a party to this Amendment
No. 1 and by its execution hereof, CDI acknowledges that CDC is a party to this
Amendment No. 1;
WHEREAS, the California Division of Gambling Control is reviewing, and
has requested clarifications to, the Purchase Agreement between the parties
hereto, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchase Agreement is amended as follows:
Capitalized terms used herein but not otherwise defined shall have the
meanings ascribed to them in the Asset Purchase Agreement.
SECTION 1 DEFINITIONS. The Office Lease defined in Section 1 whereby
HPI would lease office space from CDI on terms substantially similar to the form
of lease attached as Exhibit E and Exhibit E-1 will no longer be necessary. Any
and all references to the Office Lease are hereby deleted.
SECTION 2.2.2 ACCOUNTS RECEIVABLE. Accounts Receivable expressly
excludes all accounts and notes receivable pertaining to gaming at the Hollywood
Park-Casino.
SECTION 2.2.9 EXCLUDED CONTRACTS, PERMITS AND LICENSES. The following
is added to the list of contracts, permits and licenses not transferred to CDC
(as assignee of CDI) as noted on Schedule 2.2.9:
"15. Provisional license to operate Hollywood Park-Casino held by HPI."
SECTION 4.4 GOVERNMENT APPROVALS. The following is added to the list
of governmental approvals required as noted on Schedule 4.4:
"2. Approvals required from the Division of Gambling Control in
connection with this Agreement and the Casino Lease."
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SECTION 4.17 LITIGATION. The following disclosure is hereby added to
Schedule 4.17 in respect to HPI's knowledge of material legal, administrative,
arbitration or other proceedings, claims, actions or governmental regulatory
investigations of any nature pending or threatened against or affecting the
Assets:
"Regulatory investigation by the Division of Gambling Control in
connection with HPI's operation of the Hollywood Park-Casino."
Additionally, the title of Schedule 4.17 is changed from "Litigation"
to "Litigation and Other Regulatory Investigation."
SECTION 5.6 FINANCING. The following sentence is added to the end of
Section 5.6:
"Any such alternate financing shall meet the approval of the Division
of Gambling Control."
SECTIONS 8.1.13 AND 10.3: CASINO OPERATOR. The approved Casino Operator
is Century Gaming Management, Inc., a California corporation. The references to
California Casino Management in Sections 8.1.13 and 10.3 shall be replaced with
Century Gaming Management, Inc., a California corporation.
SECTION 10.4 TERMINATION DATE. Subject to and without waiving or
modifying the parties' respective rights of termination provided for in this
Section 10.4 or otherwise available to it, Seller acknowledges that (i) Buyer
has informed it that Buyer's lender requires three business days prior notice to
release the funds which Buyer intends to utilize to purchase the Assets and
consummate the Transactions; and (ii) upon Seller's receipt of a copy of such
notice, the parties shall perform all acts necessary to consummate such
transactions upon expiration of the three business day period.
SECTION 11.7 NON-PARIMUTUEL GAMING. It is the intent of the parties to
comply with California gaming laws. To the extent California law changes such
that non-parimutuel gaming becomes legal, prior to any such gaming activity
taking place at Hollywood Park, necessary approvals or licensure shall be sought
and obtained from the Division of Gambling Control.
SECTION 12.9 ASSIGNMENT AND ASSUMPTION. The following shall be added to
become Section 12.9 entitled Assignment and Assumption:
"Section 12.9 ASSIGNMENT AND ASSUMPTION. Buyer is assigning
to Churchill Downs California Company, a Kentucky corporation
("CDC"), its rights to enter into the following agreements:
(1) Casino Lease; (2) Parking License; (3) Easement Agreement;
and (4) License Agreement (collectively the "Assigned Agreements").
As a material inducement to and in consideration of Seller's
consent to Buyer's assignment of the Assigned Agreements,
Buyer shall, on the Closing Date, execute
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and deliver to Seller a guaranty (the "Guarantee")
substantially in the form attached hereto as Exhibit B.
3
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This Amendment No. 1, which may be executed in two or more counterparts
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, supersedes any inconsistent provisions
in the Agreement. The Agreement, as amended hereby, remains in full force and
effect.
Dated as of this 31st day of August, 1999.
HOLLYWOOD PARK, INC.
By: /S/ LOREN S. OSTROW
Its: SECRETARY
CHURCHILL DOWNS INCORPORATED
By: /S/ ROBERT L. DECKER
Its: EXECUTIVE VP AND CHIEF FINANCIAL OFFICER
By: /S/ REBECCA C. REED
Its: SENIOR VP, GENERAL COUNSEL AND SECRETARY
CHURCHILL DOWNS CALIFORNIA COMPANY
By: /S/ ROBERT L. DECKER
Its: VICE PRESIDENT
By: /S/ REBECCA C. REED
Its: SECRETARY
4
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LEASE
by and between
Churchill Downs California Company,
a Kentucky corporation,
as "Landlord"
and
Hollywood Park, Inc.,
a Delaware corporation,
as "Tenant"
Dated: September 10, 1999
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<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
PAGE
Article 1. LEASE OF PREMISES..............................................................................1
1.01 Premises................................................................................1
Article 2. TERM; POSSESSION; ACCEPTANCE...................................................................2
2.01 Initial Term............................................................................2
2.02 Extension...............................................................................2
2.03 The "Term"..............................................................................2
Article 3. RENT...........................................................................................3
3.01 Base Rent...............................................................................3
3.02 Common Area Charges.....................................................................4
3.03 Additional Rent; Rent Defined...........................................................5
3.04 Interest on Late Payments...............................................................6
Article 4. USE AND OPERATION OF PREMISES..................................................................6
4.01 Specific Use of Premises................................................................6
4.02 Compliance with Laws....................................................................7
4.03 Independent Business....................................................................7
Article 5. MAINTENANCE, REPAIRS AND ALTERATIONS...........................................................7
5.01 By Tenant...............................................................................7
5.02 By Landlord.............................................................................8
5.03 Manner of Repairs.......................................................................8
5.04 Tenant's Right to Make Repairs..........................................................8
5.05 Alterations; Improvements; Additions....................................................9
5.06 Mechanic's Liens........................................................................9
Article 6. DAMAGE AND DESTRUCTION.......................................................................10
6.01 Definitions............................................................................10
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6.02 Insured Casualty.......................................................................10
6.03 Uninsured Casualty.....................................................................10
6.04 Termination of Lease...................................................................11
6.05 Abatement of Rent......................................................................11
6.06 Casualty Near End of Term..............................................................12
6.07 Waiver.................................................................................12
Article 7. INSURANCE, EXONERATION AND INDEMNITY..........................................................12
7.01 Liability Insurance....................................................................12
7.02 Property Insurance.....................................................................13
7.03 Tenant's Property Insurance............................................................14
7.04 Landlord's Insurance...................................................................14
7.05 Insurance Policies.....................................................................14
7.06 Waiver of Subrogation..................................................................14
7.07 Exoneration and Indemnity..............................................................15
Article 8. ASSIGNMENT, SUBLETTING, HYPOTHECATION.........................................................16
8.01 Landlord's Consent Required............................................................16
8.02 Future Consents/Tenant's Liability.....................................................17
8.03 Tenant Affiliates......................................................................17
8.04 Security Deposit........................................................................6
8.05 Assignment Restrictions................................................................17
Article 9. EMINENT DOMAIN................................................................................17
9.01 Effect on Lease........................................................................17
9.02 Award..................................................................................18
9.03 Rebuilding.............................................................................18
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Article 10. TENANT'S BREACH; LANDLORD'S REMEDIES.........................................................18
10.01 Tenant's Breach........................................................................18
10.02 Landlord's Remedies....................................................................20
10.03 Right to Cure Tenant's Default.........................................................21
10.04 Landlord's Remedies Not Exclusive......................................................21
10.05 Receipt of Rents.......................................................................22
Article 11. LANDLORD'S DEFAULT; TENANT'S REMEDIES........................................................22
11.01 Landlord's Default.....................................................................22
11.02 Tenant's Remedies......................................................................22
11.03 Tenant's Remedies Not Exclusive........................................................22
11.04 Payment of Rents.......................................................................23
Article 12. HAZARDOUS SUBSTANCES.........................................................................23
12.01 Tenant's Obligations...................................................................23
12.02 Notice of Release or Investigation.....................................................23
12.03 Definition of "Hazardous Substance"....................................................23
Article 13. SUBORDINATION, NON-DISTURBANCE and attornment................................................24
Article 14. TAXES AND OTHER CHARGES......................................................................24
14.01 Payment of Taxes.......................................................................24
14.02 Tenant's Obligations...................................................................24
14.03 Right to Contest.......................................................................25
Article 15. UTILITY AND OTHER SERVICES...................................................................25
15.01 Utility Charges........................................................................25
15.02 Security; Landlord Nonresponsibility; Indemnity........................................25
Article 16. GENERAL PROVISIONS...........................................................................26
16.01 Estoppel Certificates..................................................................26
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16.02 Landlord's Right of Entry..............................................................26
16.03 Waiver.................................................................................27
16.04 Surrender of Premises; Holding Over....................................................27
16.05 Notices................................................................................27
16.06 Partial Invalidity; Construction.......................................................28
16.07 Captions...............................................................................29
16.08 Memorandum of Lease....................................................................29
16.09 Readerboard Signs......................................................................29
16.10 Signage................................................................................29
16.11 Brokers' Commissions...................................................................29
16.12 Attorneys' Fees........................................................................29
16.13 Counterparts...........................................................................30
16.14 Sole Agreement.........................................................................30
16.15 Successors and Assigns.................................................................30
16.16 Time is of the Essence.................................................................30
16.17 Survival of Covenants..................................................................30
16.18 Landlord's Consent or Approval.........................................................31
16.19 Entire Agreement.......................................................................31
16.20 Joint and Several Obligations..........................................................31
16.21 No Offer...............................................................................31
16.22 Corporate Resolution...................................................................31
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LEASE
This LEASE is made and entered into this 10th day of September, 1999,
by and between Churchill Downs California Company, a Kentucky corporation,
hereinafter called "Landlord", and Hollywood Park, Inc., a Delaware corporation,
hereinafter called "Tenant".
FOR AND IN CONSIDERATION of the mutual covenants and agreements contained
herein, Landlord and Tenant hereby agree as follows:
ARTICLE 1.
LEASE OF PREMISES
1.01 PREMISES
(a) PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord those certain improvements located on a portion of the real
property more particularly described on EXHIBIT A attached hereto (the
"Property") comprised of the casino building (the "Premises") and commonly known
as 3883 West Century Boulevard, Inglewood, California 90303, which Premises are
more particularly described in EXHIBIT B attached hereto, subject to all of the
terms, covenants and conditions set forth herein. Tenant acknowledges that
Landlord has made no representation or warranty, express or implied, regarding
the condition of the Premises except as specifically stated in this Lease.
(b) COMMON AREAS. In addition to the Premises, Tenant shall have a
non-exclusive easement and right to use the "Common Areas" of the Property
comprised of parking areas, driveways, sidewalks, walkways, loading and
unloading areas, trash areas, fences and gates as described and delineated in
EXHIBIT C attached hereto. Tenant acknowledges that Landlord has made no
representation or warranty, express or implied, regarding the condition of the
Common Areas. Landlord shall maintain the Common Areas in neat, clean, safe,
good order and condition. With respect to the Common Areas, Landlord shall have
the right, from time to time, PROVIDED that Landlord at all times provides
sufficient parking facilities for the operation of Tenant's business, access to
the Premises, and access between the Racetrack and the Premises all similar in
size, utility and convenience to that provided to patrons of the Hollywood Park
- - Casino prior to the Closing Date, to (i) make changes to the Common Areas or
to close temporarily any of the Common Areas for maintenance purposes; (ii) add
additional buildings and improvements to the Common Areas; (iii) use the Common
Areas while engaged in making additional improvements, repairs or alterations;
and (iv) promulgate reasonable rules and regulations with respect to the use
thereof. In no event will Landlord charge patrons who have already paid
admission to the Racetrack for readmission to the Racetrack after visiting the
Casino.
(c) PARIMUTUEL SPACE. Notwithstanding anything contained herein to the
contrary, Landlord hereby reserves unto itself use and access rights sufficient
to allow Landlord to operate the parimutuel activities on that portion of the
Premises described and delineated on EXHIBIT D hereto. Landlord shall, at its
sole cost and expense, provide simulcasts of all events which are otherwise
simulcast from the Racetrack to locations within the Premises consistent with
the past practices of Landlord's predecessor in interest immediately prior to
the date hereof. Landlord, at its sole cost and expense, shall be
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responsible for the maintenance, repair and replacement of all equipment
necessary to the operation of the Parimutuel Space.
ARTICLE 2.
TERM; POSSESSION; ACCEPTANCE
2.01 INITIAL TERM
The term ("Initial Term") of this Lease shall commence on [the Closing
Date] (the "Commencement Date") and shall continue for a period of one hundred
and twenty (120) full calendar months thereafter unless sooner terminated
pursuant to any provision hereof. The Initial Term shall end at 11:59 p.m. on
September 9, 2009.
2.02 EXTENSION
Tenant will have the option (the "Extension Option") to extend the
Initial Term for one (1) period of ten (10) years (the "Extension Period") upon
the same terms, covenants and conditions as herein contained, except that (i)
the Base Rent for any such Extension Period will be increased as provided in
Section 3.01; and (ii) there shall be no further extension options at the end of
such ten-year period. Tenant may exercise such option by giving written notice
to Landlord ("Exercise Notice") at least nine (9) months before the expiration
of the Initial Term. Upon Tenant's giving such Exercise Notice, the Initial Term
of this Lease will be automatically extended for the applicable Extension Period
without the execution of an extension or renewal lease.
(a) The Extension Option may be exercised only by written notice
delivered by Tenant to Landlord as provided in this Section 2.02(a) and only if,
as of the date of delivery of the notice, Tenant is not in Default under this
Lease.
(b) The rights contained in this Section 2.02 may be exercised by the
originally named Tenant or by any assignee of Tenant's interest in this Lease if
the assignment has been approved or deemed approved by Landlord in accordance
with Section 8.01.
(c) If Tenant properly exercises the Extension Option and Tenant is
not in Default under this Lease on the expiration date of the Initial Term, the
Term shall be extended for the Extension Period.
2.03 THE "TERM"
The phrase "the Term" (and such similar phrases as "the term of this
Lease," "the term hereof" and phrases of similar import, whether or not
capitalized) will include the Initial Term, plus any Extension Period as to
which Tenant exercises its right to extend this Lease pursuant to Section 2.02.
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ARTICLE 3.
RENT
3.01 BASE RENT
(a) During the Initial Term of the Lease, Tenant shall pay to Landlord
rent in the amount of two hundred fifty-thousand dollars ($250,000) per month
(the "Base Rent"). Payment of the Base Rent shall be made at Landlord's offices
at the Racetrack or at any other place that Landlord may from time to time
designate in writing. Payment must be in United States dollars, either in the
form of a check or via electronically transmitted funds.
(b) The Base Rent shall be increased upon the commencement of the
Extension Period in accordance with the provisions of Section 3.01(c) herein.
(c) Extension Period Rent
(1) As used herein, the following terms shall have the following
meanings:
(A) "Index" shall mean the Consumer Price Index for All
Urban Consumers U.S. City Average, All Items (base years 1982-1984=100),
published by the Bureau of Labor Statistics of the United States Department of
Labor. In the event the Index shall hereafter be converted to a different
standard reference base or otherwise revised, such conversion factor, formula or
table for converting the Index as may be published by the Bureau of Labor
Statistics shall be used, or if the Bureau of Labor Statistics shall not publish
the same, then such conversion factor, formula or table selected by Landlord as
may be published by any other nationally recognized publisher of similar
statistical information shall be used. In the event the Index shall cease to be
published, then there shall be substituted for the Index such other index of
similar nature as is then generally recognized and accepted for like
determinations of purchasing power, as Landlord shall select.
(B) "Base Index" shall mean the Index in effect for the
calendar month which is three (3) months prior to the calendar month in which
the Commencement Date occurs. By way of example, if the Commencement Date occurs
in February, the Base Index would be the Index for the month of November
immediately preceding the Commencement Date.
(C) "Adjustment Date" shall mean the date on which the
Extension Period commences.
(D) "Adjustment Index" shall mean the Index in effect for
the calendar month which is three (3) months prior to the calendar month in
which the Adjustment Date occurs. If the Index shall cease to be published , and
there is no Index in effect for such month, the Adjustment Index shall be the
most currently available quotation of the Index published prior to the relevant
Adjustment Date.
(2) The Base Rent shall be adjusted as of the Adjustment Date to
be the Base Rent multiplied by a fraction, the numerator of which shall be equal
to the Adjustment Index for such Adjustment Date and the denominator of which
shall be equal to the Base Index, but in no event less than one (1). Landlord
shall, within twenty (20) days after the
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publication of the Adjustment Index, give notice to Tenant of the Adjustment
Index and the resulting adjustment, if any, in the Base Rent as determined by
Landlord, and Landlord's computation thereof shall be conclusive and binding
(except for mathematical error), but shall not preclude any further adjustment
which may be required in the event of a published amendment of the Adjustment
Index. If Landlord's notice is not given prior to the Adjustment Date, until
receipt of Landlord's notice, Tenant shall pay, as interim Base Rent, the Base
Rent in effect immediately prior to the Adjustment Date. Commencing with the
next ensuing calendar month following Landlord's notice Tenant shall pay the
adjusted Base Rent. Within twenty (20) days of Tenant's receipt of Landlord's
notice, Tenant shall pay to Landlord the amount of any adjusted Base Rent
previously unpaid due to Landlord's failure to give notice prior to the
Adjustment Date. Landlord's delay in giving notice of an adjustment in Base Rent
shall not constitute a waiver of Landlord's right to receive such adjusted Base
Rent for all periods from and after the applicable Adjustment Date.
(d) The Base Rent shall be paid in advance on the first day of each
month during the Term, without any deduction or offset, prior notice or demand.
Tenant's obligation to pay Base Rent shall commence on the Commencement Date. If
the Commencement Date shall be a day other than the first day of the calendar
month, or, if the Term shall end on any day other than the last day of the
calendar month, then the Base Rent for the first and/or last partial calendar
month of the Term, as the case may be, shall accrue on a daily basis for each
day of that fractional month at a daily rate equal to 1/30th of the Base Rent.
All other payments or adjustments that are required to be made under the terms
of this Lease and that require proration on a time basis shall be prorated on
the same basis.
(e) On the date Tenant executes this Lease, Tenant shall pay to
Landlord the sum of $250,000 which amount represents the Base Rent for the first
full calendar month of the Term.
(f) Tenant shall pay to Landlord the Base Rent, Common Area Charges,
Additional Rent and other payments due hereunder without abatement, deduction or
set-off except as otherwise expressly provided herein.
3.02 COMMON AREA CHARGES. Tenant shall pay to Landlord during the Term
hereof certain Common Area Charges (as defined below) in accordance herewith.
Common Area Charges shall be allocated to Tenant and Landlord in proportion to
their respective use of each of the facilities comprising the Common Areas.
(a) "Common Area Charges" shall be an amount equal to Tenant's share
of the costs, if any, incurred by Landlord in the exercise of its reasonable
discretion, for the operation, repair and maintenance of the Common Areas as
described in Section 1.01(c) herein, provided however, Landlord shall be solely
responsible for all costs, expenses and taxes related to the construction of any
additional buildings or similar capital improvements to the Common Areas or any
maintenance thereto subsequent to the execution date of this Lease.
(b) In the event of a dispute between Landlord and Tenant as to the
determination of Tenant's share of Common Area Charges, Landlord's auditors and
Tenant's auditors shall have 15 days after submission of a dispute to seek to
mutually agree upon such determination. If they are unable to agree, they shall
mutually select another "Big 5" accounting firm which shall make the
determination and whose decision, in the absence
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of manifest error, shall be conclusive and binding on the parties, each of whom
shall be entitled to present evidence in support of its position. The cost of
the parties accounting firms shall be borne by the respective parties and the
costs of any third accounting firm selected shall be borne equally by Landlord
and Tenant.
(c) Common Area Charges shall be payable by Tenant within thirty (30)
days after a reasonably detailed statement of actual expenses is presented to
Tenant by Landlord. At Landlord's option, however, an amount may be estimated by
Landlord from time to time of Common Area Charges and the same shall be payable
in twelve (12) equal installments during each calendar month of the Term, on the
same day as the Base Rent is due hereunder. Landlord shall deliver to Tenant
within sixty (60) days after the expiration of each calendar year a reasonably
detailed statement showing the actual expenses comprising elements of Common
Area Charges incurred during the preceding year. In the event Tenant has paid
estimates of Common Area Charges as aforesaid and such payments exceed the
actual charges indicated on Landlord's statement, Tenant shall be entitled to
credit the amount of such overpayment against future payments of Base Rent. If
Tenant's payments were less than Tenant's share of actual charges as indicated
on such statement, Tenant shall pay to Landlord the amount of the deficiency
within twenty (20) days after delivery by Landlord to Tenant of such statement.
(d) Tenant, at its expense, may make, or cause to be made, an audit of
all books and records of Landlord, including its respective bank accounts which
in any way pertain to the accuracy of the Common Area Charges. Landlord shall
give Tenant and its designated representatives access to such books and records
at all reasonable times for purposes of making any such audit and preparing any
such statement, report or financial statements. Such audit shall be made and
such statements and reports shall be prepared by a person or persons selected by
Tenant. The costs thereof shall be paid by Tenant; provided, however, that if
such audit results in an adjustment of five percent (5%) or more or discloses
any willful inaccuracy of Landlord, the cost of such audit shall be borne by
Landlord.
(e) Notwithstanding the foregoing, if Landlord makes the election set
forth in the Parking License to use parking facilities on the property subject
thereto, all Common Area Charges shall abate for so long as the Parking License,
executed concurrently with this Lease, remains in effect.
3.03 ADDITIONAL RENT; RENT DEFINED
(a) In addition to the Base Rent, Tenant shall also pay as additional
rent ("Additional Rent"), without deduction or offset, all Common Area Charges,
other charges relating to Tenant's use of the Premises, including, without
imitation, charges for utilities, taxes, and all other charges, fees, costs,
taxes, impositions, expenses and other sums required to be paid by Tenant under
the provisions of this Lease whether or not the same shall be designated as
Additional Rent. In the event of nonpayment of any Additional Rent when due,
Landlord shall have all of the rights and remedies provided hereunder or by law
for the nonpayment of rent.
(b) As used in this Lease, the term "Rent" shall include Base Rent for
the Premises, Common Area Charges and Additional Rent.
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3.04 INTEREST ON LATE PAYMENTS.
Any Rent or other amounts due from Tenant to Landlord hereunder which
are not paid within five (5) days after the same becomes due shall bear interest
at a rate (the "Agreed Rate") equal to two percent (2%) per annum in excess of
the "reference rate" as announced by Bank of America, National Association, as
such rate may change from time to time, from the date due until the date paid,
regardless of whether a notice of default or any other notice is given by
Landlord; provided, however, if such rate is greater than the maximum rate of
interest then permitted to be charged by law, the Agreed Rate shall be such
maximum rate permitted by law. In the event that Bank of America, National
Association, shall cease to exist or shall cease to announce a "reference rate"
(or equivalent prime rate), there shall be substituted such alternative bank,
alternative rate or alternative office as Landlord shall select. Acceptance of
interest by Landlord shall not constitute a waiver of Tenant's default with
respect to the overdue amount, or prevent Landlord from exercising any other
rights or remedies.
3.05 SECURITY DEPOSIT
Tenant shall deposit an amount equal to one month's Base Rent with
Landlord as a security deposit for the performance by Tenant of the provisions
of this Lease, which shall not be construed as an advance payment of Rent
hereunder. If Tenant is in Default hereunder, Landlord shall be entitled to use
the security deposit, or any portion of it, to cure the Default or to compensate
Landlord for damages sustained by Landlord resulting from Tenant's Default.
Tenant shall immediately upon demand pay to Landlord a sum equal to the portion
of the security deposit expended or applied by Landlord as provided in this
Section 3.05 so as to maintain the security deposit in the sum initially
deposited with Landlord. If Tenant is not in Default at the expiration or
termination of this Lease, Landlord shall return the security deposit to Tenant
within fourteen (14) days after the expiration of the Term of this Lease or
after Tenant has vacated the Premises, whichever is later. Landlord (i) may
commingle the security deposit with Landlord's general funds, and (ii) shall not
pay Tenant interest on the security deposit. THIS PROVISION SHALL NOT APPLY TO
THE ORIGINALLY NAMED TENANT UNDER THIS LEASE OR TO ANY ASSIGNEE WITH A NET WORTH
EQUAL TO OR IN EXCESS OF THE MINIMUM NET WORTH.
ARTICLE 4.
USE AND OPERATION OF PREMISES
4.01 SPECIFIC USE OF PREMISES
Tenant shall use and occupy the Premises as a card club and/or for
other forms of legalized gaming, and for private parties, meetings and other
ancillary uses and for no other purpose without the prior written consent of
Landlord. Notwithstanding the foregoing, in the event any permitted use of the
Premises becomes illegal, Tenant may use the Premises for any lawful purpose so
long as such use (i) does not materially increase the burdens on the Building
Systems (as that term is Section 5.01) or the Common Areas (including without
limitation, parking); (ii) does not increase the real estate tax or insurance
costs, unless Tenant agrees to pay any such increases; and (iii) does not
compete with the types of
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business conducted by Landlord on the Property. Tenant understands that
Landlord's primary business is the operation of a racetrack on the Property, not
the leasing of commercial space, and that Landlord is entering into this
transaction primarily to ensure the existence, at this location, of a
first-class card club. Tenant agrees that it will not change the name of the
card club without the prior consent of Landlord. Tenant shall not allow the
Premises to be used for any unlawful purpose, nor shall Tenant cause or permit
any noxious use of or nuisance in, on or about the Premises. Tenant shall not
commit or suffer the commission of any waste in, on or about the Premises.
Tenant shall not do or permit anything to be done on or about the Premises or
bring or keep anything therein which will in any way increase the rate or
jeopardize the coverage of insurance thereon.
4.02 COMPLIANCE WITH LAWS
Landlord and Tenant shall cause all maintenance, repair and
alterations to the Premises to be performed in a good and workmanlike manner and
in compliance with all federal, state, county, city, or government agency laws,
statutes, ordinances, standards, rules, requirements or orders now in force or
hereafter enacted, promulgated, or issued and any covenants and restrictions of
record (including, without limitation, government measures regulating or
enforcing public access, occupational, health, or safety standards for
employers, employees, landlords, or tenants) (collectively, "Applicable Laws").
The obligation and expense of making any repairs, replacements, alterations or
improvements to the Premises necessary to comply with all Applicable Laws shall
be allocated between Landlord and Tenant pursuant to Article 5 herein.
4.03 INDEPENDENT BUSINESS
By this Lease, neither party acquires any right, title or interest in
or to any property of the other party except such rights as are specifically
stated in this Lease. The relationship between Landlord and Tenant is solely
that of landlord and tenant, and is not and shall not be deemed to be a
partnership or joint venture.
ARTICLE 5.
MAINTENANCE, REPAIRS AND ALTERATIONS
5.01 BY TENANT
Tenant will, at its sole cost and expense, perform such maintenance and
repairs as are necessary to keep and maintain the non-structural portions of the
Premises and all Building Systems (as hereinafter defined) in good and sanitary
order, condition and repair, but excluding ordinary wear and tear; provided,
however, that damage caused by casualty or by subsidence or other earth movement
or by Landlord's failure to perform its obligations under this Lease shall be
governed by Articles 6 and 11, respectively. For purposes of this Lease, the
term "Building Systems shall mean all systems and equipment serving the building
and other improvements comprising the Premises, including, without limitation,
mechanical, plumbing, electrical, fire/life safety, elevator, escalator, and
heating, ventilation and air conditioning ("HVAC") systems.
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5.02 BY LANDLORD
Landlord will, at its sole cost and expense, perform such maintenance,
repairs and replacements as are required to maintain in good order, condition
and repair all structural components of the Premises, including but not limited
to, roof (including skylights and trap doors), foundation, footings,
load-bearing and exterior walls, columns and all other structural elements of
the Premises. Further, if at any time during the Term hereof, any of the
Building Systems, or any components thereof, require replacement or repair, the
cost of which would be treated as a capital expenditure under generally accepted
accounting principles, (i) Landlord shall promptly perform and pay for such
replacement or repair, and (ii) Tenant shall reimburse Landlord annually an
amount equal to the cost of any such repair or replacement, fully amortized over
its useful life in accordance with generally accepted accounting principles
together with interest at the reference rate (as that term is defined in Section
3.04) on the date of the commencement of the replacement or repair, to the
extent so amortized during the Term hereof. Landlord will not be in default of
its obligations under this Section 5.02 if Landlord performs the repairs,
replacements and maintenance within twenty (20) days after written notice by
Tenant to Landlord of the need for such repairs, replacements and maintenance.
If, due to the nature of the particular repair, replacement or maintenance
obligation, more than twenty (20) days are reasonably required to complete it,
Landlord will not be in default under this Section 5.02 if Landlord begins work
within such twenty (20) day period and diligently prosecutes the work to
completion. Except as otherwise provided in this Lease, Tenant waives its
rights, including its right to make repairs at Landlord's expense, under
California Civil Code Sections 1941 - 1942 or any similar law, statute or
ordinance now or hereafter in effect.
5.03 MANNER OF REPAIRS
All maintenance, repairs and replacements required to be made by either
party hereunder will be made in compliance with Applicable Laws and in a good
and workmanlike manner, using materials at least substantially comparable to the
materials used in the original construction (or most recent renovation, if
applicable) of the Premises. Each party shall commence its maintenance, repairs
and replacements promptly after notification by the other of the need therefor,
and carry out and complete the same with all due diligence and in such a manner
as to cause the least possible inconvenience to the other in the conduct of its
business at the Property. If repairs by one party can be made outside of the
other party's business hours without substantial additional cost, reasonable
efforts will be made to do so.
5.04 RIGHT TO MAKE REPAIRS
Notwithstanding anything to the contrary herein, if one party provides
notice to the other party of an event, condition or circumstance that requires
repair, replacement or maintenance by the other party under Section 5.02, and if
such party fails to complete such repair, maintenance or replacement within the
period specified in Section 5.02, then the requesting party may (but shall not
be obligated to) perform such repair, replacement or maintenance on the other
party's behalf and at such party's cost and expense. If any repair, replacement
or maintenance for which one party is responsible hereunder is of an emergency
nature which, if not attended to promptly, might result in injury to persons or
damage to property, or interfere with the conduct of the other party's business
at the Property, then the
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other party, without prior notice, may perform such repairs, replacements or
maintenance on the responsible party's behalf and at such party's cost and
expense. Any sums owing from one party to the other under this Section 5.04
shall be due immediately at the time the sum is paid and, if paid at a later
date, shall bear interest at the Agreed Rate from the date the sum is paid until
reimbursed.
5.05 ALTERATIONS; IMPROVEMENTS; ADDITIONS
Tenant shall be permitted to make any and all alterations,
improvements, additions or installations ("Improvements") in or about the
Premises without Landlord's consent so long as the estimated cost of any such
Improvement does not exceed $100,000 and does not affect the structural parts of
the Premises. Tenant shall not make or permit the making of any Improvements
that affect the structural parts of the Premises or that have an estimated cost
in excess of $100,000 without Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed. No Improvements shall be
undertaken until Tenant shall have procured and paid for, so far as the same may
be required from time to time, all municipal and other governmental permits and
authorizations of the various municipal departments and governmental
subdivisions having jurisdiction, and Landlord shall join in the application for
such permits or authorizations whenever such action is necessary. Worker's
compensation insurance covering all persons employed in connection therewith and
with respect to whom death or bodily injury claims could be asserted against
Landlord shall be maintained by Tenant at all times when any work is in progress
in connection with any changes or alterations. All Improvements which may be
made on the Premises by Tenant or any subtenant shall become the property of
Landlord and remain upon and be surrendered with the Premises at the expiration
or prior termination of the Lease at the election of Landlord. In the event that
Landlord elects to have such Improvements removed, Tenant shall upon notice from
Landlord remove any and all Improvements constructed by Tenant as directed by
Landlord and shall restore the Premises to the condition it was in prior to the
construction of such Improvements.
5.06 MECHANIC'S LIENS
Tenant shall promptly pay in cash or its equivalent and discharge all
claims for work or labor done or goods or materials furnished by third parties
at the Premises, at the request of Tenant or any Subtenant and shall keep the
Premises free and clear of all mechanic's and materialman's liens in connection
therewith. If any mechanic's or materialman's lien is filed for work done on
behalf of Tenant or any Subtenant at, or materials supplied to, the Premises by
a third party, Tenant shall remove such lien by payment or bond (regardless of
whether Tenant contests the claim made by the person asserting such lien and
regardless of whether such claim is valid or has any basis in fact or law) not
later than thirty (30) days after written demand for such removal is made by
Landlord. If Tenant shall fail to discharge any such lien within such 30-day
period, then in addition to any other right or remedy of Landlord, Landlord may,
but shall not be obligated to, take such action or pay such amount as Landlord,
in its sole discretion, shall deem appropriate to remove such lien, and Tenant
shall pay to Landlord as Additional Rent all amounts (including attorneys' fees)
paid or incurred by Landlord in connection therewith within five (5) days after
demand by Landlord, together with interest at the Agreed Rate from the date of
payment by Landlord. Notwithstanding the foregoing, Tenant shall have the right
to contest the correctness or the validity of any such lien if, immediately upon
demand by Landlord, Tenant procures and
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records a lien release bond issued by a corporation authorized to issue surety
bonds in California in an amount equal to one and one-half times the amount of
the claim of lien. The bond shall meet the requirements of Civil Code ss. 3143
or any similar or successor statute and shall provide for the payment of any sum
that the claimant may recover on the claim (together with costs of suit, if it
recovers in the action). Landlord shall have the right to post and keep posted
at any and all times on the Premises any notices for the protection of Landlord
and the Premises from any such claim. Tenant shall, before the commencement of
any work, or the delivery of any materials, which might result in any such lien,
give to Landlord written notice of its (or any subtenant's) intention to perform
such work or obtain such materials in sufficient time to enable the posting of
such notices.
ARTICLE 6.
DAMAGE AND DESTRUCTION
6.01 DEFINITIONS
For purposes of this Lease, the following terms will have the meanings
indicated:
(a) "Insured Casualty" means damage or destruction to improvements on
the Premises required to be covered by the insurance described in Section 7.02,
including any deductible amounts or coverage limits.
(b) "Uninsured Casualty" means damage or destruction to improvements
on the Premises which is not an Insured Casualty.
(c) "Threshold Amount" means an amount equal to (i) ten percent (10%)
of the replacement cost of the Premises at the time of a casualty, without
deduction for depreciation, plus (ii) available insurance proceeds, if any,
payable with respect to an earthquake or other Uninsured Casualty.
6.02 INSURED CASUALTY
If an Insured Casualty occurs, Landlord, at its cost and expense, will
promptly repair, restore and rebuild the improvements on the Premises in a good
and workmanlike manner and with all due diligence, to substantially the same
condition as existed immediately before the Insured Casualty; provided, however,
that if so requested by Tenant and approved by Landlord, acting reasonably,
Landlord will incorporate such changes and modifications in the improvements as
Tenant reasonably determines will make the improvements more useful for the
conduct of Tenant's business, so long as the value of the improvements as so
changed or modified will be generally comparable to the value of the
improvements immediately before the Insured Casualty. Any deductibles or
coverage limits shall be shared equally between Landlord and Tenant.
6.03 UNINSURED CASUALTY
If an Uninsured Casualty occurs and the cost to repair and restore the
same does not exceed the Threshold Amount, Landlord will promptly perform such
repairs and restoration and the costs thereof shall be shared equally between
Landlord and Tenant. If, however, the cost to repair and restore an Uninsured
Casualty exceeds the Threshold Amount, Landlord may either: (i) perform such
repairs and restoration at its expense, in which case this Lease
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will remain in full force and effect, or (ii) terminate this Lease by giving
written notice to Tenant within sixty (60) days after Landlord becomes aware of
the occurrence of the Uninsured Casualty. Such termination will be effective
sixty (60) days following Tenant's receipt of such notice; provided, however,
that such termination will not occur and this Lease will remain in full force
and effect, and Landlord will promptly repair and restore the Premises at
Tenant's sole cost and expense, if prior to the effective date of such
termination Tenant gives written notice to Landlord that Tenant will pay the
cost of such repairs and restoration. Landlord may require reasonable evidence
of Tenant's financial ability to pay such costs and expenses. All repairs and
restoration required to be performed by Landlord pursuant to this Section 6.03
will be performed in the same manner as provided in Section 6.02.
6.04 TERMINATION OF LEASE
Within thirty (30) days after the occurrence of any damage to or
destruction of the Premises (whether insured or uninsured) which Landlord is
obligated or elects to repair and restore pursuant to this Article 6, Landlord
will give written notice to Tenant setting forth Landlord's contractor's
reasonable determination as to the time necessary to complete such repairs and
restoration ("Landlord's Repair Time Estimate"). Notwithstanding anything to the
contrary herein, if Landlord's Repair Time Estimate indicates that it will take
more than two hundred and seventy (270) days after the occurrence of such damage
or destruction to complete such restoration or repair, Tenant may terminate this
Lease by written notice to Landlord within thirty (30) days after Tenant's
receipt of Landlord's Repair Time Estimate. If Tenant is not entitled or elects
not to terminate this Lease pursuant to the preceding sentence, Landlord will
commence the repair and restoration promptly and will diligently prosecute such
work to completion. If during the course of such work Landlord determines that
such repair and restoration may not be completed within two hundred seventy
(270) days after the occurrence of the damage or destruction, then Landlord will
promptly provide Tenant with a revised written schedule for completion of the
repairs and restoration. Tenant may, within ten (10) days after notice of such
revised schedule, inform Landlord in writing that it (a) accepts such revised
schedule (in which case this Lease will remain in full force and effect
according to its terms) or (b) elects to terminate this Lease (in which case
this Lease will terminate as of the date indicated below). If Tenant fails to
respond within ten (10) days after receipt of written notice of such revised
schedule, Tenant will be deemed to have accepted such revised schedule. If the
repair and restoration of the Premises is not actually completed within two
hundred seventy (270) days after the occurrence of the damage or destruction, or
within fourteen (14) days after the applicable revised scheduled completion date
(if any), agreed to by Tenant in writing, then Tenant may terminate this Lease
by written notice to Landlord at any time thereafter and prior to the actual
completion of such repair and restoration in excess of the Threshold Amount. If
Tenant exercises its right to terminate pursuant to this Section 6.04, then this
Lease will terminate as of the date set forth in Tenant's written notice to
Landlord. If Tenant does not exercise its right to terminate this Lease pursuant
to this Section 6.04, then this Lease will continue in full force and effect
according to its terms.
6.05 ABATEMENT OF RENT
If the Premises are rendered untenantable by reason of any Insured or
Uninsured Casualty, or if it is impractical for Tenant to continue to operate
its business within the
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tenantable portion of the Premises, either due to lack of access or utilities or
for any other cause arising as a result of the Insured or Uninsured Casualty,
the Rent and all other charges payable by Tenant under this Lease will abate for
the period from the date of the damage or destruction until the earlier to occur
of (a) ten (10) business days following delivery of the Premises to Tenant after
completion of Landlord's repair and restoration work or (b) the date that Tenant
reopens for business in the Premises. If only a portion of the Premises is
rendered untenantable by reason of such Insured or Uninsured Casualty and it is
practical for Tenant to continue to operate within the Premises following such
casualty, the Rent and other charges payable by Tenant will abate
proportionately based upon the extent and duration of such period of
untenantability.
6.06 CASUALTY NEAR END OF TERM
Anything in this Article 6 to the contrary notwithstanding, if the
Premises are destroyed or substantially damaged by an Insured or Uninsured
Casualty during the last twenty four (24) months of the Term, and the Premises
cannot be completely restored within a period of ninety (90) days from the date
of such damage, this Lease may be terminated upon written notice by either party
to the other given within thirty (30) days after the occurrence of such damage.
However, if at the time of said damage Tenant has a right to extend the Term
pursuant to Section 2.02 hereof, Landlord may not terminate this Lease until it
has given Tenant notice of Landlord's intent to terminate this Lease and Tenant
fails to exercise said right of extension within thirty (30) days after receipt
of said notice. If Tenant fails to exercise said right of extension within
thirty (30) days after receipt of such notice from Landlord, this Lease will
terminate effective forty five (45) days after Tenant's receipt of said notice
from Landlord.
6.07 WAIVER
Except as otherwise expressly provided in this Article 6, destruction
or damage to the Premises will not terminate this Lease, notwithstanding any
laws of California. If this Lease is terminated pursuant to this Article 6,
Tenant will be relieved from all liabilities hereunder except the liability to
pay Rent up to the date of such casualty and any accrued charges, costs and
expenses required to be paid by Tenant hereunder up to said date. Such
termination will not impair or affect the right of either party hereto to any
remedy for breach by the other of any obligation under this Lease occurring
prior to such termination.
ARTICLE 7.
INSURANCE, EXONERATION AND INDEMNITY
7.01 LIABILITY INSURANCE
Tenant shall obtain and keep in force during the Term of this Lease a
Commercial General Liability policy of insurance protecting Tenant and Landlord
(as an additional insured) against claims for bodily injury, personal injury or
personal advertising injury, and property damage based upon, involving, or
arising out of the ownership, use, occupancy, or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less the average limitation
then being maintained by reputable owners or operators of similar space based on
Tenant's use (and the parties agree that current levels for Casino operation is
not less than Ten Million Dollars and No Cents ($10,000,000.00) per occurrence).
Such insurance shall
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be with an "Additional Insured-Managers or Landlords of Property" Endorsement
and contain the "Amendment of the Pollution Exclusion" for damage caused by
heat, smoke, or fumes from a hostile fire. Such policy shall not contain any
intra-insured exclusions as between insured persons or entities, but shall
include coverage for liability assumed under this Lease as an "insured contract"
for the performance of Tenant's indemnity obligations under this Lease. During
the construction, alteration, or repair of any improvements on the Premises, the
party contracting for said construction shall provide and maintain workers'
compensation and employers' liability insurance covering all persons employed in
connection with such construction, alteration, or repair and with respect to
whom death or personal injury claims could be asserted against Landlord, Tenant,
or the Premises.
7.02 PROPERTY INSURANCE
(a) BUILDING AND IMPROVEMENTS. Landlord shall obtain and keep in
force during the Term a policy or policies of insurance insuring against damage
to, or destruction of any improvements comprising the Premises, together with
all fixtures, machinery and equipment therein and thereon. The amount of such
insurance shall be equal to the full replacement cost of the improvements
comprising the Premises, as such cost shall change from time to time, or such
greater amount as may be required pursuant to Applicable Laws. Such policy or
policies shall insure against all risks of direct physical loss or damage
(including, if mutually approved of by Landlord and Tenant or required by
Landlord's mortgagee, the perils of flood and/or earthquake if and to the extent
obtainable on commercially reasonable terms, including, without limitation,
coverage for any additional costs resulting from debris removal and coverage for
the enforcement of any ordinance or law regulating the reconstruction or
replacement of any undamaged sections of the Premises required to be demolished
or removed by reason of the enforcement of any Applicable Law as the result of a
covered cause of loss). Such policy or policies shall also contain an agreed
valuation provision (in lieu of any coinsurance clause), and waiver of
subrogation. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed fifty thousand dollars ($50,000) per occurrence.
(b) RENTAL VALUE. Landlord shall, in addition, obtain and keep in
force during the Term a policy or policies in the name of Landlord, with loss
payable to Landlord, insuring the loss of the Rent for one (1) year. Such
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for coverage shall be extended beyond
the date of the completion of repairs or replacement of the Premises, to provide
for one (1) full year's loss of rental revenues from the date of any such loss.
Such insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Tenant, for the next one (1)
year. Tenant shall be liable for any deductible amount in the event of such
loss. Tenant may obtain its own policy of business interruption insurance.
(c) TENANT'S REIMBURSEMENT OBLIGATIONS. Tenant will reimburse
Landlord for all insurance costs incurred under this Section 7.02 ("Reimbursable
Insurance Costs"). Immediately on receipt of each insurance bill covering a
Reimbursable Insurance Cost, Landlord will furnish a copy to Tenant. Tenant will
pay the amount of the Reimbursable Insurance Cost for which it is responsible
hereunder to Landlord within twenty (20) days of its receipt of the insurance
bill.
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7.03 TENANT'S PROPERTY INSURANCE
Tenant, at its sole cost, shall either by separate policy or, at
Landlord's option, by endorsement to a policy already carried, maintain
insurance coverage on all of Tenant's personal property in, on, under, or about
the Premises similar in coverage to that carried under Paragraph 7.02 hereof.
Such insurance shall be full replacement cost coverage with a deductible of not
to exceed Fifty Thousand Dollars and No Cents ($50,000.00) per occurrence. The
proceeds from any such insurance shall be used by Tenant for the replacement of
personal property.
7.04 LANDLORD'S INSURANCE
Landlord, at its expense, may obtain and keep in force during the Term
of this Lease a blanket policy of public liability insurance covering the
Premises.
7.05 INSURANCE POLICIES
Insurance required hereunder shall be kept in companies duly licensed
to transact business in the State of California and if such company is rated,
maintaining during the policy term a "General Policyholders Rating" of at least
A, VIII (or such lesser rating as may be reasonably acceptable to the
non-insuring party), as set forth in the most current issue of "Best's Insurance
Guide." Neither party shall do or permit to be done anything which shall
invalidate the insurance policies referred to in this Article 7. With respect to
insurance required of the parties hereunder, the party undertaking to obtain
such insurance (the "Insuring Party") shall cause to be delivered to the other
party (the "Non-Insuring Party") certified copies of policies of insurance or
certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancelable or subject to modification except after thirty (30) days
prior written notice from the Insuring Party to the Non-Insuring party. The
Insuring Party shall, at least fifteen (15) days prior to the expiration of such
policies, furnish the Non-Insuring Party with evidence of renewals or "insurance
binders" evidencing renewal thereof, or else the Non-Insuring may order such
insurance and charge the cost thereof to the Insuring Party, which amount shall
be payable upon demand. If an Insuring Party shall fail to procure and maintain
the insurance required to be carried by it under this Article 7, the
Non-Insuring Party may, but shall not be required to, procure and maintain such
insurance, but at the Insuring Party's expense.
The insurance provided for herein may be brought within the coverage of
a so-called "blanket" policy or policies of insurance carried and maintained by
Tenant or Landlord if (i) Landlord and, if requested by Landlord, any mortgagee
of Landlord shall be named as additional insureds or loss payees thereunder as
required in this Article 7, (ii) the coverage afforded Landlord and Tenant shall
not be reduced or diminished by reason of the use of such "blanket" policy or
policies and (iii) all of the other requirements set forth in this Article 7 are
satisfied.
7.06 WAIVER OF SUBROGATION
To the extent permitted by law and without affecting the coverage
provided by insurance required to be maintained hereunder, Landlord and Tenant
each waives any right to recover against the other (a) damages for injury to or
death of persons, (b) damages to
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property, (c) damage to the Premises or any part thereof, and (d) claims arising
by reason of any of the foregoing, but only to the extent that any of the
foregoing damages and/or claims are covered (then only to the extent of such
coverage) by insurance actually carried, or required by this Lease to be
carried, by either Landlord or Tenant. This provision is intended to waive
fully, and for the benefit of each party, any rights and/or claims which might
give rise to a right of subrogation in any insurer. Each party shall cause each
insurance policy obtained by it to permit such waiver of subrogation or to
provide that the insurer waives all right of recovery by way of subrogation
against either party in connection with any damage covered by such policy. If
any insurance policy cannot be obtained permitting or providing for a waiver of
subrogation, or is obtainable only by the payment of an additional premium
charge above that charged by insurers issuing policies not permitting or
providing for a waiver of subrogation, the party undertaking to obtain such
insurance shall notify the other party in writing of this fact. The other party
shall have a period of fifteen (15) days after receiving the notice either to
place the insurance with an insurer that is reasonably satisfactory to the other
party and that will carry the insurance permitting or providing for a waiver of
subrogation, or to agree to pay the additional premium if such a policy is
obtainable at additional cost. If such insurance cannot be obtained or the party
in whose favor a waiver of subrogation is desired refuses to pay the additional
premium charged, the other party shall be relieved of the obligation to obtain a
waiver of subrogation rights with respect to the particular insurance involved
during the policy period of such insurance, but such obligation shall revive
(subject to the provisions of this Section 7.06) upon the expiration of such
policy period.
7.07 EXONERATION AND INDEMNITY
(a) Tenant shall indemnify Landlord and its Affiliates, and each of their
respective agents, contractors, officers, shareholders and employees and hold
each of them harmless from and against any and all losses, liabilities,
judgments, settlements, causes of action, suits, costs and expenses (including
reasonable attorneys' fees and other costs of investigation and defense) which
they may suffer or incur by reason of any claim asserted by any person arising
out of, or related to (or allegedly arising out of or related to): (i) Tenant's
use and occupancy of the Premises, use of the Common Areas and Tenant's
activities in and about the Premises or the Common Areas including, without
limitation, use or occupancy by Tenant's employees, suppliers, shippers,
customers and invitees; (ii) any failure by Tenant to perform any material
obligation to be performed by Tenant under the terms of this Lease; or (iii) any
wrongful act, wrongful omission, negligence or willful misconduct of Tenant or
any of its agents, employees, representatives, officers, directors or
independent contractors. If any action or proceeding is brought against Landlord
or any of its Affiliates (or any of their respective agents, contractors,
officers, shareholders or employees) by reason of any such claim, Tenant, upon
Landlord's request, shall defend the same by counsel reasonably satisfactory to
Landlord, at Tenant's expense.
(b) Landlord shall indemnify Tenant and its affiliates, and each of their
respective agents, contractors, officers, shareholders and employees and hold
each of them harmless from and against any and all losses, liabilities,
judgments, settlements, causes of action, suits, costs and expenses (including
reasonable attorneys' fees and other cost of investigation and defense) which
they may suffer or incur by reason of any claim asserted by any person arising
out of, or related to (or allegedly or arising out of or related to): (i) any
failure by Landlord to perform any material obligation to be performed by
Landlord under
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the terms of this Lease; (ii) any wrongful act, wrongful omission, negligence or
misconduct of Landlord or any Affiliate of Landlord or any of its or their
agents, employees, representatives, officers, directors or independent
contractors; and (iii) Landlord's activities in and about the Premises or the
Common Areas. If any action or proceeding is brought against Tenant or any of
its affiliates (or any of their respective agents, contractors, officers,
shareholders or employees) by reason of any such claim, Landlord upon Tenant's
request, shall defend the same by counsel satisfactory to Tenant at Landlord's
expense.
ARTICLE 8.
ASSIGNMENT, SUBLETTING, HYPOTHECATION
8.01 LANDLORD'S CONSENT REQUIRED
Except as otherwise provided herein, Tenant will not assign this Lease
or, except as provided below, sublease all or part of the Premises to any third
party without Landlord's prior written consent which consent shall not be
unreasonably withheld or delayed. Notwithstanding any such consent, no
assignment or sublease shall be effective until the assignee or sublessee shall
have obtained all required permits and licenses to use the Premises for its
permitted uses. In the event of a proposed assignment or sublease requiring
Landlord's consent, Tenant will give written notice thereof ("Tenant's Notice")
to Landlord indicating the general nature of the proposed transaction, and the
proposed assignee's or subtenant's identity and financial condition and the
contemplated use of the Premises or the portion to be subleased, as the case may
be. If an assignee or sublessee is required to be licensed by the California
Gambling Commission (the "Commission"), Tenant agrees to provide Landlord with
the same information, at the same time, as the proposed assignee or sublessee
provides to the Commission in connection with such licensing. Landlord will
notify Tenant in writing within thirty (30) days after the date of Tenant's
Notice as to whether Landlord grants or withholds its consent to the proposed
assignment or subletting and, if such consent is withheld, describing in
reasonable detail the basis therefor. Landlord has heretofore approved Century
Gaming Management, Inc., a California corporation ("CGM"), as the Casino
Operator. If, at any time, Tenant proposes to sublease the Premises to a casino
operator other than CGM, the requirements of this Section 8.01 shall apply. In
respect of such a sublease, (i) Tenant shall notify Landlord of such proposal
(the "Sublease Notice") at least sixty (60) days prior to the date such sublease
term is to commence, which notice shall include the identity of the proposed
sublessee (the "Proposed Sublessee"), the equity owners and any other principals
managing the affairs of the Proposed Sublessee together with financial
statements for the Proposed Sublessee, if available (collectively, the
"Sublessee Information"), and (ii) Tenant or the Proposed Sublessee shall
provide Landlord with copies of any applications, forms, data and information
provided to the California Gaming Commission in connection with the licensing of
the Proposed Sublessee and not already provided as part of the Sublessee
Information (collectively, the "Gaming Submittals"). Landlord, in the exercise
of its reasonable judgment, may also request additional information concerning
the Proposed Sublessee. If Landlord shall have received the Sublease Notice, the
Sublessee Information and the Gaming Submittals and thereafter rejects a
Proposed Sublessee which has been duly licensed as an operator of a casino by
the California Gaming Commission, Tenant shall be entitled to an abatement of
rent for the period commencing on the latter to occur of (A) the date sixty (60)
days after the date that Landlord shall have received all of the Sublease
Notice, the Sublessee Information and the Gaming Submittals, and (B) the date
that the California Gaming Commission issues a
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license to the Proposed Sublessee, and ending on the date that the Landlord and
Tenant agree on the identity of a mutually acceptable and licensed sublessee.
Notwithstanding anything to the contrary contained herein, Tenant may freely
sublease the meeting rooms, restaurants, retail areas or similar portions of the
Premises from time to time, without the consent of Landlord.
8.02 FUTURE CONSENTS/TENANT'S LIABILITY
Landlord's consent to one assignment or sublease will not be deemed to
constitute its consent to any future assignments or subleases, whether by Tenant
or any assignee or subtenant. No assignment of this Lease or sublease will
relieve Tenant of its obligations hereunder with respect to the balance of the
Term; provided, however, that if the assignee has a net worth in excess of Two
Hundred Million Dollars ($200,000,000) ("Minimum Net Worth") at the time of the
assignment, and assumes the obligations of Tenant hereunder accruing from and
after the assignment, Tenant shall be released of all obligations and
liabilities hereunder accruing subsequent to the assignment. Any assignment or
subletting hereunder will be pursuant to an instrument reasonably satisfactory
to Landlord, and the assignee or subtenant will agree for the benefit of
Landlord to be bound by, assume and perform all the terms, covenants and
conditions thereafter to be performed by or applicable to Tenant hereunder. Any
purported assignment or subletting not in compliance with this Article 8 will be
null and void and will constitute a breach of this Lease.
8.03 TENANT AFFILIATES
Notwithstanding anything to the contrary herein, Landlord's consent
will not be required for any assignment or subletting to a Tenant Affiliate.
"Tenant Affiliate" will mean any of the following: (i) any person directly or
indirectly controlling or controlled by or under common control with Tenant;
(ii) any person which succeeds to the interest of Tenant under this Lease by
reason of the merger, consolidation or dissolution of Tenant; and (iii) any
person acquiring all or substantially all of the operating assets of Tenant or
any of its divisions. "Person" will mean one or more human beings or legal
entities or other artificial persons, including, without limitation,
partnerships, corporations, firms, associations, groups, limited liability
companies or partnerships, trusts, estates and any combination of human beings
and legal entities.
8.04 ASSIGNMENT RESTRICTIONS
Any attempt to assign or otherwise transfer this Lease or to sublet
space in the Premises without any required Landlord consent shall be void and
shall, at the option of Landlord, terminate this Lease.
ARTICLE 9.
EMINENT DOMAIN
9.01 EFFECT ON LEASE
If the Premises or any portion thereof are taken or damaged, including
severance damage, under the power of eminent domain or by inverse condemnation
or for any public or quasi-public use, or voluntarily conveyed or transferred in
lieu of an exercise of eminent domain or while condemnation proceedings are
pending (all of which are herein called
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"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first occurs.
If so much of the Premises is taken by condemnation that the remainder is
unsuitable for Tenant's continued occupancy for the uses and purposes for which
the Premises are leased, Tenant shall have the option, exercisable only by
written notice to Landlord within thirty (30) days after Landlord shall have
given Tenant written notice of such taking (or in the absence of such notice,
within thirty (30) days after the condemning authority shall have taken title or
possession, whichever first occurs), to terminate this Lease as of the later of
the date the condemning authority takes such title or possession (whichever
first occurs) or the date Tenant vacates the Premises; provided, however, that
if Landlord disagrees with Tenant's determination that the portion of the
Premises remaining after condemnation is unsuitable for Tenant's occupancy, such
controversy shall be settled by arbitration in Los Angeles, California in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect. In the event that less than all of the Premises
shall be taken by condemnation and Tenant does not elect to terminate this Lease
in accordance with the foregoing, this Lease shall remain in full force and
effect as to the portion of the Premises remaining, except that the Base Rent
and applicable Additional Rent shall be reduced in the same ratio that the floor
area of the portion of the Premises taken by such condemnation bears to the
floor area of the Premises immediately before such condemnation.
9.02 AWARD
In the event of any Taking, whether whole or partial, Landlord and
Tenant shall be entitled to receive and retain such separate awards and portions
of lump sum awards as may be allocated to their respective interests in any
condemnation proceedings.
9.03 REBUILDING
In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall, to the extent of the awards applicable to the
building of which the Premises are a part actually received by Landlord and
Tenant in connection with such condemnation, and subject to the provisions of
any Landlord's mortgage concerning the application of condemnation proceeds,
cause such restoration and repair to the remaining portion of the Premises to be
done as may be necessary to restore them to an architectural and usable whole
reasonably suitable for the conduct of the business of Tenant.
ARTICLE 10.
TENANT'S BREACH; LANDLORD'S REMEDIES
10.01 TENANT'S BREACH
The occurrence of any one of the following events shall constitute an
"Event of Default" and a breach of this Lease by Tenant:
(a) The failure by Tenant to make any payment of Base Rent, Additional
Rent or other payment required to be made by Tenant hereunder, as and when due,
where such failure shall continue for a period of five (5) days after written
notice thereof from Landlord to Tenant; provided, however, that no such notice
shall be required if, during the preceding twelve (12) calendar months, Landlord
shall have provided three (3) such notices.
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(b) The failure by Tenant to observe or perform any of the material
covenants or obligations under this Lease to be observed or performed by Tenant,
other than as specified in subsections (a) and (d) of this Section 10.01, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant (provided however, that if the default
involves a hazardous condition or substance, Tenant shall have such shorter cure
period as Landlord shall specify in writing in its written notice to Tenant of
the default if such shorter period is reasonable under then existing
circumstances, such as imminent danger of spread of contaminants or other danger
to persons or health); provided, however, that if the nature of such failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be in default if Tenant shall commence such cure within said
30-day period and thereafter diligently prosecutes such cure to completion.
(c) The abandonment of the Premises (or a substantial portion thereof)
by Tenant.
(d) The appointment by any court of a receiver, interim trustee or
trustee to take possession of any asset or assets of Tenant, said receivership
or trusteeship remaining undischarged for a period of sixty (60) days.
(e) A general assignment by Tenant for the benefit of creditors.
(f) The filing of a voluntary petition by Tenant in bankruptcy or any
other petition under any section or chapter of the Bankruptcy Code or any
similar law, whether state, federal or foreign, for the relief of debtors.
(g) The filing against Tenant of an involuntary petition or any other
petition under any section or chapter of the Bankruptcy Code or any similar law,
whether state, federal or foreign, for the relief of debtors by the creditors of
Tenant, said petition remaining undischarged for a period of sixty (60) days.
(h) The levy, attachment, execution or judicial seizure of Tenant's
interest in this Lease or all or any substantial part of the properties and
assets of Tenant, such attachment, execution or other seizure remaining
undismissed or undischarged for a period of fifteen (15) days after the levy
thereof.
(i) The admission in writing by Tenant of its inability to pay its
respective debts or perform its obligations as they become due.
(j) The calling of a meeting of the creditors representing a
significant portion of the unsecured liabilities of Tenant for the purpose of
effecting a moratorium, extension, composition or any of the foregoing.
(k) The occurrence of any of the events specified in subsections (e)
through (l), inclusive, with respect to any general partner of Tenant (if Tenant
is a partnership) or any guarantor of Tenant's obligations under this Lease.
(l) The occurrence of any event which expressly constitutes an
incurable breach of this Lease.
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The notices specified in subsections (a) and (b) of this Section 10.01
shall be in lieu of, and not in addition to, any notices required under
California Code of Civil Procedure Section 1161 or any successor statute.
10.02 LANDLORD'S REMEDIES
In the event of an Event of Default under Section 10.01 then Landlord,
in addition to any other rights or remedies it may have at law, in equity or
otherwise, shall have the following rights:
(a) Landlord shall have the right to terminate this Lease and Tenant's
right to possession of the Premises by giving written notice of termination to
Tenant. No act by Landlord other than giving express written notice to Tenant
shall terminate this Lease or Tenant's right to possession of the Premises.
Should Landlord at any time terminate this Lease for any breach, in addition to
any other remedy it may have, it is hereby agreed by Landlord and Tenant that
the damages Landlord shall be entitled to recover under this Lease shall include
without limitation:
(i) The worth, at the time of award, of the unpaid Rent that has
been earned at the time of the termination of this Lease;
(ii) The worth, at the time of award, of the amount by which the
unpaid Rent that would have been earned after the date of termination of this
Lease until the time of award exceeds the amount of the loss of Rent that Tenant
proves could have been reasonably avoided;
(iii) The worth, at the time of award, of the amount by which the
unpaid Rent for the balance of the stated term hereof (determined without regard
to the termination of this Lease for Tenant's breach) after the time of award
exceeds the amount of the loss of Rent that Tenant proves could be reasonably
avoided; and
(iv) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's breach, including, but not limited to,
the costs and expenses (including attorneys' fees, court costs, advertising
costs and brokers' commissions) of recovering possession of the Premises,
removing persons or property therefrom, placing the Premises in good order,
condition and repair, preparing and altering the Premises for reletting and all
other costs and expenses of reletting.
"The worth, at the time of award," as used in subparagraphs (i) and
(ii) above shall be computed by allowing interest at the Agreed Rate. "The worth
at the time of award," as referred to in subparagraph (iii) above shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award, plus one percent (1%). The terms
"Rent" and "Rents" as used in this Section 10.02 shall include the Rent, and all
Additional Rent and all other fees and charges required to be paid by Tenant
pursuant to the provisions of this Lease.
(b) Even though Tenant has breached or defaulted under this Lease and
abandoned the Premises, this Lease shall continue in effect for so long as
Landlord does not terminate by express written notice Tenant's right to
possession, and Landlord may enforce
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all of its rights and remedies under this Lease., including but not limited to
the right to recover all Rents as they become due hereunder.
(c) In addition, Landlord shall have the right to:
(1) Continue the Lease and Tenant's right to possession in
effect (under California Civil Code Section 1951.4) after Tenant's breach and
abandonment and recover the Rent as it becomes due, whether or not Tenant shall
have abandoned the Premises.
(2) Re-enter the Premises and remove all persons or property
from the Premises. Property may be stored or disposed of as provided under
applicable law. Acts of re-entry or maintenance or preservation, efforts to
relet the Premises, or the appointment of a receiver to protect the Landlord's
interest under the Lease, shall not constitute a termination of the Tenant's
right to possession unless Landlord has given a written notice of such election
to Tenant.
(3) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the termination
of Tenant's right to possession shall not relieve Tenant from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Tenant's occupancy of the Premises.
10.03 RIGHT TO CURE TENANT'S DEFAULT
If, after the expiration of any cure or notice period, Tenant has
failed to do any act required to be done by Tenant hereunder, Landlord may (but
without being obligated to do so) cure such failure at Tenant's cost. If
Landlord at any time, by reason of Tenant's failure to comply with the
provisions of this Lease, pays any sum or does any act that requires the payment
of any sum, the sum paid by Landlord shall be due immediately from Tenant to
Landlord at the time the sum is paid and, if paid at a later date, shall bear
interest at the Agreed Rate from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant. Such sum, together with interest thereon,
shall be Additional Rent hereunder.
10.04 LANDLORD'S REMEDIES NOT EXCLUSIVE
The several rights and remedies herein granted to Landlord shall be
cumulative and in addition to any others to which Landlord is or may be entitled
by law or in equity, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of any other
rights or remedies which Landlord may have and shall not be deemed a waiver of
any of Landlord's rights or remedies or to be a release of Tenant from any of
Tenant's obligations, unless such waiver or release is expressed in writing and
signed by Landlord.
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10.05 RECEIPT OF RENTS
Landlord's acceptance of full or partial payment of Rent following any
Event of Default shall not constitute a waiver of such Event of Default.
ARTICLE 11.
LANDLORD'S DEFAULT; TENANT'S REMEDIES
11.01 LANDLORD'S DEFAULT
The failure by Landlord to observe or perform any of the material
covenants or obligations under this Lease to be observed or performed by
Landlord where such failure shall continue for a period of thirty (30) days
after written notice thereof from Tenant to Landlord shall constitute a default
of this Lease by Landlord; provided, however, that if the nature of such failure
is such that more than thirty (30) days are reasonably required for its cure,
then Landlord shall not be in default if Landlord shall commence such cure
within said 30-day period and thereafter diligently prosecutes such cure to
completion.
11.02 TENANT'S REMEDIES
(a) In the event of Landlord's default under Section 11.01 after the
expiration of any applicable cure period, in addition to any other rights or
remedies it may have at law, in equity or otherwise, Tenant, acting reasonably,
shall have the right but not the obligation to cure Landlord's default, at
Landlord's expense. If Tenant at any time, by reason of Landlord's failure to
comply with the provisions of this Lease, pays any sum or does any act that
requires the payment of any sum, the sum paid by Tenant shall be due immediately
from Landlord to Tenant at the time the sum is paid and, if paid at a later
date, shall bear interest at the Agreed Rate from the date the sum is paid by
Tenant until Tenant is reimbursed by Landlord. In no event will such deduction
be the basis of forfeiture of this Lease nor constitute a default in the payment
of Rent unless Tenant fails to pay the amount of such deduction within ten (10)
days after Tenant's receipt of notice of a final adjudication that such amount
is owing to Landlord.
(b) Tenant may recover from Landlord any and all damages or expenses
suffered or incurred by Tenant as a result of such Landlord's Default; and
(c) Tenant may obtain and enforce an order of specific performance
against Landlord, or may enforce any other remedy available to Tenant at law or
in equity.
11.03 TENANT'S REMEDIES NOT EXCLUSIVE
The several rights and remedies herein granted to Tenant shall be
cumulative and in addition to any others to which Tenant is or may be entitled
by law or in equity (provided, however, that Tenant waives any offset rights it
may have), and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of any other rights or
remedies which Tenant may have and shall not be deemed a waiver of any of
Tenant's rights or remedies or to be a release of Landlord from any of
Landlord's obligations, unless such waiver or release is expressed in writing
and signed by Tenant.
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11.04 PAYMENT OF RENTS
Tenant's full or partial payment of Rent following any default of
Landlord under this Lease shall not constitute a waiver of such default.
ARTICLE 12.
HAZARDOUS SUBSTANCES
12.01 TENANT'S OBLIGATIONS.
Tenant will not generate, bring onto, use, store or dispose of any
Hazardous Substance (as hereinafter defined) on or about the Premises except for
such substances that are reasonably required in the ordinary course of Tenant's
business conducted on the Premises or otherwise approved in writing by Landlord.
Tenant will use, store and dispose of all such Hazardous Substances in
compliance with all applicable statutes, ordinances and regulations in effect
during the Lease Term that relate to public health and safety and protection of
the environment ("Environmental Laws"). Tenant will, at its sole cost and
expense, clean-up and remediate any Hazardous Substance released on or about the
Premises by Tenant and will indemnify, defend and hold harmless Landlord from
and against any and all damages, liabilities, judgments, costs, claims, liens,
expenses, penalties and attorneys fees, relating to Hazardous Substances, if
any, brought onto the Premises by Tenant or Tenant's agents or employees.
12.02 NOTICE OF RELEASE OR INVESTIGATION.
If during the Term of this Lease either party becomes aware of (i) any
actual or threatened release of any Hazardous Substance on, under, or about the
Premises, or (ii) any inquiry, investigation, proceeding or claim by any
government agency or other person regarding the presence or alleged presence of
any Hazardous Substance on, under or about the Premises, that party will give
the other party written notice of the release, inquiry, investigation,
proceeding or claim within five (5) days after learning about it and will
simultaneously furnish to the other party copies of any correspondence, claims,
notices of violations, reports or other writings received or sent by the party
providing notice that pertain to the release or investigation.
12.03 DEFINITION OF "HAZARDOUS SUBSTANCE".
For purposes of this Lease, the term "Hazardous Substance" means:
(i)any "hazardous substance," as that term is defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42
United States Code sections 9601-9675); (ii) "hazardous waste," as that term is
defined in the Resource Conservation and Recovery Act of 1976 (RCRA) (42 United
States Code sections 6901-6992k); (iii) any pollutant, contaminant, or
hazardous, dangerous, or toxic chemical, material, or substance, within the
meaning of any other applicable federal, state, or local law, regulation,
ordinance, or requirement (including consent decrees and administrative orders
imposing liability or standards of conduct concerning any hazardous, dangerous,
or toxic waste, substance, or material, now or hereafter in effect); (iv)
petroleum, crude oil or any fraction thereof; (v) radioactive material,
including any source, special nuclear, or byproduct material as defined in 42
United States Code sections 2011-2297g-4; (vi) asbestos
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in any form or condition; and (vii) polychlorinated biphenyls ("PCBs") and
substances or compounds containing PCBs.
ARTICLE 13.
SUBORDINATION, NON-DISTURBANCE and attornment
Concurrently with the mutual execution of this Lease, Landlord, Tenant
and each Landlord's mortgagee shall execute and deliver a Non-Disturbance,
Subordination and Attornment Agreement in substantially the form attached as
EXHIBIT D to this Lease ("Non-Disturbance Agreement"). If a non-disturbance
agreement reasonably satisfactory to Tenant is not executed by each existing
Landlord's mortgagee and by Landlord by said date, Tenant may at any time
thereafter and prior to its actual receipt of such an executed non-disturbance
agreement terminate this Lease upon written notice to Landlord. At the election
of any subsequent mortgagee of Landlord, the rights of Tenant hereunder will be
subject and subordinate to such mortgagee's Encumbrance (as hereinafter
defined); provided, however, that such subordination of Tenant's rights will
only be effective if prior to or concurrently therewith, Tenant receives a
commercially reasonable Non-Disturbance Agreement executed by Landlord and such
mortgagee, which Non-Disturbance Agreement Tenant also agrees to execute. If
Landlord's interest in the Premises is acquired by any ground lessor,
beneficiary under a deed of trust, mortgagee, or purchaser at the foreclosure
sale, Tenant shall attorn to any transferee of or successor to Landlord's
interest in the Property who has previously delivered to Tenant a
Non-Disturbance, Subordination and Attornment Agreement consistent with this
Article 13. For purposes of this Lease, the term "Encumbrance" will mean each
deed of trust, mortgage, or other written security device or agreement which now
encumbers, or may in the future encumber the Premises or any part thereof, and
the note or other obligation it secures, and each lease of which Landlord is the
lessee which covers, or may in the future cover, the Premises or any part
thereof; and the terms "Landlord's mortgagee" and "mortgagee of Landlord"
include the mortgagee under each such mortgage, the beneficiary under each such
deed of trust, and the lessor under each such ground lease.
ARTICLE 14.
TAXES AND OTHER CHARGES
14.01 PAYMENT OF TAXES
Landlord shall pay all real estate taxes and general and special
assessment levied and assessed against the Property and the improvements
thereon.
14.02 TENANT'S OBLIGATIONS
(a) Tenant shall reimburse Landlord, as Common Area Charges under
Section 3.02, for any and all real estate taxes and general or special
assessments levied and assessed against the Premises or upon, allocable to, or
measured by or on the gross or net rent payable hereunder, but excluding (i)
inheritance, estate, succession or transfer taxes of Landlord, (ii) income,
excise, franchise or gross profits taxes on Landlord or any other taxes imposed
on or measured by the net income of Landlord from all sources.
(b) Tenant shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Premises or elsewhere. Tenant shall cause
said trade fixtures, furnishings,
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equipment and all other personal property to be assessed and billed separately
from the real property or Landlord. If any of Tenant's said personal property
shall be assessed with Landlord's real property, Tenant shall pay Landlord the
taxes attributable to Tenant within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Tenant's property.
14.03 RIGHT TO CONTEST
Landlord shall, at the request of Tenant and at Tenant's sole cost and
expense, seek a reduction in the assessed valuation of the Premises or otherwise
contest any real property taxes or assessments applicable to the Premises. If so
requested by Tenant, Landlord will join in such proceeding or contest or permit
it to be brought in Landlord's name, and will otherwise cooperate with Tenant in
connection with any such proceeding or contest. In the event Landlord is
successful in any such proceeding or contest, Landlord will promptly pay over to
Tenant the amount of any refund or rebate of overpaid taxes received by Landlord
from the taxing authority attributable to the Premises.
ARTICLE 15.
UTILITY AND OTHER SERVICES
15.01 UTILITY CHARGES
Landlord shall make application and otherwise arrange, and pay or cause
to be paid all charges for water, sewer, gas, electricity, light, power,
telephone and any other utility services used in or on or supplied to or for the
Premises, or any part thereof. Tenant shall pay a pro rata share of such charges
based upon Tenant's use. The Parties shall act in good faith to agree on
Tenant's pro rata share on an annual basis. Landlord at its sole cost and
expense shall use commercially reasonable efforts to cause the providers of all
such utilities to install separate meters for the utilization thereof at the
Premises. From and after the completion of such separate metering, all future
utility expenses in respect thereof (including any taxes thereon) shall be paid
by Tenant directly to such provider. Upon the request of Landlord, Tenant shall
deliver to Landlord copies of all invoices or bills for such charges with
evidence reasonably satisfactory to Landlord that such charges have been paid.
15.02 SECURITY; LANDLORD NONRESPONSIBILITY; INDEMNITY
Tenant expressly agrees that Tenant shall have the sole responsibility
for providing surveillance and security relating to the Premises and the persons
therein and the activities conducted in and about Premises, including, without
limitation, surveillance necessary to maintain the integrity of the casino
activities, and Landlord shall have no responsibility with respect thereto.
Under no circumstances, and in no event, shall Landlord be liable to Tenant, any
Subtenant or any other person by reason of any theft, burglary, robbery,
assault, trespass, arson, unauthorized entry, vandalism, or any other act of any
person (other than a duly authorized agent of Landlord) occurring in or about
the Premises, and Tenant shall indemnify Landlord and its agents, contractors
and employees and hold each of them harmless from and against any and all
losses, liabilities, judgments, costs or expenses (including reasonable
attorneys' fees and other costs of investigation or defense) which they may
suffer or incur by reason of any claim asserted by any person arising out of, or
related to, any of the foregoing.
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ARTICLE 16.
GENERAL PROVISIONS
16.01 ESTOPPEL CERTIFICATES
Either party shall, without charge, at any time and from time to time,
within ten (10) business days after request by the other party, deliver a
written certificate duly executed and acknowledged, certifying to the requesting
party, or any other person or entity specified by the requesting party:
(a) That this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as so
modified, and identifying any such modification;
(b) Whether or not to the knowledge of the certifying party there are
then existing any offsets or defenses in favor of such party against the
enforcement of any of the terms, covenants and conditions of this Lease and, if
so, specifying the same, and also whether or not to the knowledge of the
certifying party, the requesting party has observed and performed all of the
terms, covenants and conditions on its part to be observed and performed, and,
if not, specifying the same;
(c) The dates to which Base Rent, Additional Rent and all other
charges hereunder have been paid; and
(d) Any other matter which reasonably relates to the tenancy created
hereby and the contractual relationship between Landlord and Tenant.
The failure of the certifying party to deliver such certificate within
five (5) business days after a second written request shall constitute a default
hereunder and shall be conclusive upon Landlord, Tenant and any other person,
firm or corporation for whose benefit the certificate was requested, that this
Lease is in full force and effect without modification except as may be
represented by the requesting party, and that there are no uncured defaults on
the part of the requesting party. If the certifying party does not deliver such
certificate to the requesting party or such person designated by the requesting
party within such 10-day period, the certifying party shall be liable to the
requesting party for all damages, losses, costs and expenses proximately
resulting from the certifying party's failure to timely deliver such
certificate. If the certifying party makes any false statement or claim in any
such certificate, the certifying party shall be liable to the requesting party
for all damages, losses, costs and expenses proximately resulting therefrom.
16.02 LANDLORD'S RIGHT OF ENTRY
Landlord and its authorized representatives may, at reasonable times
and on not less than forty-eight (48) hours prior written notice to Tenant, and
accompanied by a representative of Tenant, enter the Premises to: (i) inspect
the Premises; (ii) show the Premises to prospective purchasers or mortgagees
and, during the last nine (9) months of the Lease Term, to prospective tenants;
(iii) serve, post and keep posted notices or non-responsibility or other notices
required by law or permitted by this Lease; (iv) perform any repairs,
replacements or maintenance required of Landlord hereunder; or (v) perform any
covenants of Tenant that Tenant fails to perform, in accordance with Section
10.03. To the
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extent reasonably practicable, Landlord will exercise its rights under this
Section 16.02 in such a manner as to minimize the Impact on Tenant's business in
and occupancy of the Premises. Notwithstanding anything to the contrary herein,
Landlord and its authorized representatives may enter the Premises without any
advance notice when necessary to address an emergency situation which poses a
threat of imminent bodily harm or substantial property damage.
16.03 WAIVER
No waiver of any breach of any covenant or condition herein contained
shall be effective unless such waiver is in writing, signed by the aggrieved
party and delivered to the breaching party. The waiver by the aggrieved party of
any such breach or breaches, or the failure by the aggrieved party to exercise
any right or remedy in respect of any such breach or breaches, shall not
constitute a waiver or relinquishment for the future of any such covenant or
condition or of any subsequent breach of any such covenant or condition nor bar
any right or remedy of the aggrieved party in respect of any such subsequent
breach. The receipt of any Rent after the expiration of any cure period provided
for in this Lease (regardless of any endorsement on any check or any statement
in any letter accompanying any payment of Rent) by Landlord shall not operate as
an accord and satisfaction or a waiver of the right of Landlord to enforce the
payment of Rents previously due or as a bar to the termination of this Lease or
the enforcement of any other remedy for default in the payment of such Rents
previously due, or for any other breach of this Lease by Tenant.
16.04 SURRENDER OF PREMISES; HOLDING OVER
Tenant shall, at the end of the Term, surrender the Premises to
Landlord together with any personal property therein belonging to Landlord and
alterations made thereto, in good order, repair, and condition, except for
damage caused by casualty or by subsidence or other earth movement,
obsolescence, ordinary physical depreciation, or ordinary wear and tear, or by
Landlord's failure to perform its obligations under this Lease, and except for
the matters and things which Landlord is required to do or repair under this
Lease. Tenant shall have the right at any time on or before the termination of
this Lease to remove from the Premises all merchandise, signs, fixtures,
furniture, furnishings, partitions, and equipment installed and owned by Tenant;
provided, however, Tenant shall repair any damage to the Premises caused by any
such removal. Heating, ventilating, air conditioning, plumbing, bulkheads,
partition walls, ceilings, electrical and sprinkler equipment, and other
permanent fixtures and alterations shall not be removed by Tenant. If Tenant
holds over after the expiration or earlier termination of the Term, Tenant will
become a tenant from month to month upon the same terms as herein provided
except that Base Rent shall be an amount equal to one hundred and fifty percent
(150%) of the Base Rent payable prior to such expiration or termination. Such
month to month tenancy will continue until the tenancy is terminated at the end
of any month by the giving of at least thirty (30) days written notice by either
party hereto to the other.
16.05 NOTICES
Wherever in this Lease one party to this Lease is required or permitted
to give or serve a notice, statement, request or demand to or on the other, such
notice, statement, request or demand shall be given or served upon the party to
whom directed in writing and shall be delivered personally or forwarded by
registered or certified mail, postage prepaid,
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return receipt requested, or by prepaid express mail or overnight courier,
addressed to Landlord or Tenant, as the case may be, at the address of that
party set forth below with copies to be sent concurrently as follows:
If to Tenant: Hollywood Park, Inc.
330 North Brand Avenue
Suite 1100
Glendale CA 91203
Attention: General Counsel
With a copy to: Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Attention: Sandra G. Kanengiser
If to Landlord: Churchill Downs California Company
1050 South Prairie Avenue
Inglewood, California 90306-0369
Attention: President
With a copy to:
Churchill Downs Incorporated
700 Central Avenue
Louisville, Kentucky 40208
Attention: John R. Long, Chief Operating
Officer
Either party may change its address for notice by written notice given
to the other in the manner hereinabove provided. Any such notice, statement,
request or demand shall be deemed to have been duly given or served on the date
personally delivered or two (2) business days after the date deposited in the
United States mail in accordance with this Section 16.05.
16.06 PARTIAL INVALIDITY; CONSTRUCTION
If any term or provision of this Lease or the application thereof to
any person or circumstance shall to any extent be held to be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law. This Lease shall be governed by and construed under the laws
of the State of California. When required by the context of this Lease, the
singular shall include the plural, and the neuter shall include the masculine
and feminine.
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16.07 CAPTIONS
The captions and headings in this Lease are inserted only as a matter
of convenience and for reference, and they in no way define, limit or describe
the scope of this Lease or the intent of any provision hereof.
16.08 MEMORANDUM OF LEASE
Concurrently herewith the parties have executed a Memorandum of Lease
which will be promptly recorded in the Official Records of the City and County
of Los Angeles. This Lease and said Memorandum of Lease will be construed
together as one instrument provided, however, that the terms, covenants and
conditions of this Lease will control over such Memorandum.
16.09 READERBOARD SIGNS
Tenant shall retain its exposure on the Readerboard Signs consistent
with the fixed and electronic exposure currently dedicated to the Hollywood
Park-Casino. In the event Landlord sells or otherwise transfers its rights in
the Readerboard Signs, such sale or transfer shall be subject to Tenant's rights
hereunder for the term of the Lease and the Extension Period. Landlord shall be
entitled to retain all revenue received from third parties for the use of the
Readerboard Signs and shall bear sole responsibility for the maintenance and
repair and payment of all utility and other expenses of the Readerboard Signs.
16.10 SIGNAGE
Subject to compliance with Applicable Laws, Tenant may install its
signs on the Premises at its sole cost and expense. Tenant will be responsible
for the maintenance and repair of such signs, and will remove such signs at its
expense at the end of the Term. Tenant shall be responsible for repairs to the
improvements (including the roof) arising as a result of the maintenance or
removal of signage. Any such signage installed after the Commencement Date
visible from outside of the Premises shall be subject to Landlord's prior
approval, not to be unreasonably withheld or delayed. Landlord will not take any
action on or about the Property that will obstruct the visibility of such signs.
16.11 BROKERS' COMMISSIONS
Each party represents and warrants to the other party that it has had
no dealings with any broker, finder or agent in connection with the subject
matter of this Lease or any of the transactions contemplated hereby. Each party
agrees to defend, indemnify and hold harmless the other party from any claim,
suit, liability, cost or expense (including attorneys' fees) with respect to
brokerage or finder's fees or commissions or other similar compensation alleged
to be owing on account of such party's dealings (or alleged dealings) with any
real estate broker, agent, finder or other person.
16.12 ATTORNEYS' FEES
(a) In the event of any litigation between Landlord and Tenant
alleging a breach of this Lease by either party, or seeking a declaration of the
rights of the parties hereunder,
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the losing party shall pay to the prevailing party its costs of litigation
including reasonable attorneys' fees.
(b) Each party shall reimburse the other party, upon demand, for all
costs and expenses (including attorneys' fees) incurred by such party in
connection with any bankruptcy proceeding, or other proceeding under Title 11 of
the United States Code (or any successor or similar law) involving the other
party.
16.13 COUNTERPARTS
This Lease may be executed in two or more counterparts, each of which
may be deemed an original, but all of which together shall constitute one and
the same instrument.
16.14 SOLE AGREEMENT
This Lease contains all of the agreements of the parties hereto with
respect to the matters covered hereby, and no prior agreements, oral or written,
or understandings or representations of any nature whatsoever pertaining to any
such matters shall be effective for any purpose unless specifically incorporated
in the provisions of this Lease or said agreements.
16.15 SUCCESSORS AND ASSIGNS
Subject to the provisions hereof relative to assignment, this Lease
shall be binding upon and inure to the benefit of the successors and assigns of
the respective parties hereto, and the terms "Landlord" and "Tenant" shall
include the respective successors and assigns of such parties. In the event
Landlord sells or otherwise transfers its interest as Landlord in and to this
Lease (other than a transfer or assignment to a lender for purposes of
security), Landlord will be released from all liability and obligations under
this Lease that accrue after the effective date of transfer, subject to the
following restrictions: (i) Landlord will not be released from its obligations
under this Lease unless the transferee assumes in writing, for the benefit of
Tenant, Landlord's obligations under this Lease from and after the date of
transfer; and (ii) nothing contained herein shall release or be construed to
release Landlord from any of its obligations or liabilities under this Lease
that accrue before the date of transfer.
16.16 TIME IS OF THE ESSENCE
Time is of the essence with respect to the performance or observance of
each of the obligations, covenants and agreements of each of Landlord and Tenant
under this Lease.
16.17 SURVIVAL OF COVENANTS
Except with respect to those conditions, covenants and agreements of
this Lease which by their express terms are applicable only to, or which by
their nature could only be applicable after, a certain date or time during the
term hereof, all of the conditions, covenants and agreements of this Lease shall
be deemed to be effective as of the date of this Lease. Any obligation arising
during the Term of this Lease under any provision hereof, which by its nature
would require Landlord and/or Tenant to take certain action after the expiration
of the Term or other termination of this Lease, including any termination
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<PAGE> 45
resulting from the breach of this Lease by Landlord or Tenant, shall be deemed
to survive the expiration of the Term or other termination of this Lease to the
extent of requiring any action to be performed after the expiration of the Term
or other termination hereof which is necessary to fully perform the obligation
that arose prior to such expiration or termination.
16.18 LANDLORD'S CONSENT OR APPROVAL
Where any provision of this Lease requires the consent or approval of
Landlord to any action to be taken or of any instrument or document submitted or
furnished by Tenant or otherwise, such consent or approval shall not be
unreasonably withheld or delayed by Landlord unless such provision entitles
Landlord to the discretionary withholding of any such consent or approval
required thereby. The consent or approval of Landlord to or of any such act,
instrument or document shall not be deemed a waiver of, or render unnecessary,
Landlord's consent or approval to or of any subsequent similar or dissimilar
acts to be taken or instruments or documents to be submitted or furnished by
Tenant hereunder.
16.19 ENTIRE AGREEMENT
This Lease together with its exhibits, contains all the agreements of
the parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or Tenant or understandings made between
the parties other than those set forth in this Lease and its exhibits. This
Lease may not be modified except by a written instrument duly executed by the
parties hereto.
16.20 JOINT AND SEVERAL OBLIGATIONS
If more than one person or entity is Tenant or Landlord, the
obligations imposed on that party shall be joint and several. If either Landlord
or Tenant is a partnership, the obligations of each general partner shall be
joint and several.
16.21 NO OFFER
The submission of this document for examination and discussion does not
constitute an offer to lease, or a reservation of, or option for, the Premises.
This document will become effective and binding only upon execution and delivery
by Landlord and Tenant.
16.22 CORPORATE RESOLUTION
If either party hereto is a corporation, it will deliver to the other
party, upon execution of this Lease, a certified copy of a resolution of its
board of directors authorizing the execution of this Lease and naming the
officer or officers who are authorized to execute this Lease on behalf of the
corporation.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as
of the day and year first above written.
LANDLORD: Churchill Downs California Company,
a Kentucky corporation
By: /S/ ROBERT L. DECKER
Its: VICE PRESIDENT
By:/S/ REBECCA C. REED
Its: SECRETARY
TENANT: Hollywood Park, Inc.,
a Delaware corporation
By: /S/ R.D. HUBBARD
R.D. Hubbard
Chairman of the Board and
Chief Executive Officer
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<PAGE> 47
EXHIBIT 99
[Churchill Downs Logo]
Contacts for Hollywood Park Inc.: Mike Finnegan
President and Chief Executive Officer of Realty Investment Group Inc.
or R.D. Hubbard
Chief Executive Officer of Hollywood Park Inc.
(949) 752-4841
Contact for Churchill Downs Incorporated: Karl Schmitt
Senior Vice President, Communications
(502) 636-4594/(502) 551-1395
or Chantelle Kammerdiener
Investor Relations Manager
(502) 636-4415/(502) 266-8731
KENTUCKYDERBY.COM
CHURCHILL DOWNS COMPLETES ACQUISITION
OF HOLLYWOOD PARK RACETRACK
LOUISVILLE, KY. (Sept. 10, 1999) - Churchill Downs Incorporated (Nasdaq: CHDN)
("Churchill Downs") and Hollywood Park Inc. (NYSE: HPK) announced today that
they have completed the transaction in which Churchill Downs purchased the
Hollywood Park Race Track and the Hollywood Park Casino, including approximately
240 acres of land at the track site in Inglewood, Calif.
Under the terms of the agreement, Churchill Downs paid $140 million in
cash for the assets and has granted Hollywood Park Inc. a 10-year lease on the
Hollywood Park Casino, a California card club, at a lease rate of $3 million per
year with one 10-year renewal option and an adjustment to the rent during the
renewal period. Plans for the transaction were initially announced in May 1999.
Eual Wyatt will continue to serve as vice president and general manager
for Hollywood Park Race Track. Additionally, Churchill Downs recently announced
that racing industry veteran Allen Gutterman will oversee Hollywood Park's
marketing efforts. Don Robbins will step into a new role as a consultant for the
track in the areas of governmental and racing affairs.
"The completion of the Hollywood Park Race Track purchase is a
milestone for our Company," said Thomas H. Meeker, president and chief executive
officer for Churchill Downs. "We are excited to now be a part of the excellent
West Coast racing circuit and to begin integration of this historic racetrack
into our existing operations. The addition of Hollywood Park's simulcast program
will be essential to our efforts as we continue to build a comprehensive
simulcast network."
- MORE -
------------------
Churchill Downs Incorporated
700 Central Avenue
Louisville, KY 40208
(502) 636-4400
FAX: (502) 636-4430
Address:
www.kentuckyderby.com
<PAGE> 48
Churchill Downs Incorporated Completes Acquisition
Page 2
SEPTEMBER 10, 1999
R.D. Hubbard, chief executive officer of Hollywood Park Inc., said, "We
are pleased to have completed the sale of the Hollywood Park Race Track to
Churchill Downs as we continue to focus on the development of our gaming
businesses. Churchill Downs is a leader in the racing industry, which will
ensure the continuation of live racing at Hollywood Park for the foreseeable
future."
Churchill Downs Incorporated, headquartered in Louisville, Ky., is one
of the world's leading horse racing companies. Its flagship operation, Churchill
Downs racetrack, is home of the Kentucky Derby and will host its 126th running
on May 6, 2000. The Company has additional racing and simulcast-wagering
operations in Kentucky, Indiana and Florida and interests in various racing
services companies. Churchill Downs Incorporated can be found on the Internet at
KENTUCKYDERBY.COM.
Hollywood Park Inc. is a diversified gaming company that owns and
operates eight casinos (four with hotels) in Nevada, Mississippi, Louisiana and
Argentina; owns a card club casino and, via the transaction with Churchill Downs
Incorporated, leases a second card club casino, both in the Los Angeles
metropolitan area; and owns and operates a racing facility in Arizona. Hollywood
Park Inc. is also in the developmental stages of the Belterra Resort and Casino,
a riverboat gaming casino on the Ohio River in Indiana (located in Switzerland
County, Ind., 35 miles from Cincinnati) and has announced its intentions to seek
the 15th and final gaming license to be issued in Louisiana (at a site in Lake
Charles, La.). In connection with the sale of the Hollywood Park Race Track,
Hollywood Park Inc. relocated its corporate offices to Glendale, Calif.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS MADE BY CHURCHILL DOWNS
INCORPORATED AND PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THE READER IS CAUTIONED THAT SUCH
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE PRESENTLY ESTIMATED AMOUNTS. THESE
RISKS AND UNCERTAINTIES INCLUDE: THE CONTINUED ABILITY OF THE COMPANY TO
EFFECTIVELY COMPETE FOR THE COUNTRY'S TOP HORSES AND TRAINERS NECESSARY TO FIELD
HIGH-QUALITY HORSE RACING; THE CONTINUED ABILITY OF THE COMPANY TO GROW ITS
SHARE OF THE INTERSTATE SIMULCAST MARKET; A SUBSTANTIAL CHANGE IN REGULATIONS
AFFECTING OUR GAMING ACTIVITIES; A SUBSTANTIAL CHANGE IN ALLOCATION OF LIVE
RACING DAYS; THE IMPACT OF COMPETITION FROM ALTERNATIVE GAMING (INCLUDING
LOTTERIES AND LAND-BASED, RIVERBOAT AND CRUISE SHIP CASINOS) AND OTHER SPORTS
AND ENTERTAINMENT OPTIONS IN THOSE MARKETS IN WHICH THE COMPANY OPERATES; A
DECREASE IN RIVERBOAT ADMISSIONS REVENUE FROM THE COMPANY'S INDIANA OPERATIONS;
YEAR 2000 COMPUTER ISSUES; AND THE COMPANY'S SUCCESS IN ITS PURSUIT OF STRATEGIC
INITIATIVES DESIGNED TO GENERATE ADDITIONAL REVENUES.
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A "SAFE HARBOR"
FOR FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT
RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY AFFECT FUTURE RESULTS AND,
ACCORDINGLY, SUCH RESULTS MAY DIFFER FROM THOSE EXPRESSED IN FORWARD-LOOKING
STATEMENTS MADE BY OR ON BEHALF OF HOLLYWOOD PARK, INCLUDING STATEMENTS RELATED
TO THE OPTION TO SELL PROPERTY TO MARVIN DAVIS, OR THE SALES OF PROPERTY FOR NON
SPORTS USE. FOR MORE INFORMATION ON THE POTENTIAL FACTORS THAT COULD AFFECT THE
COMPANY'S FINANCIAL RESULTS, REVIEW THE COMPANY'S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND
THE COMPANY'S OTHER FILINGS WITH THE SEC.
