SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF SECURITIES EXCHANGE
ACT OF 1943
For the transition period from _______________________ to ____________________
Commission file number 0-14897
Players International, Inc.
Nevada 95-4175832
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1300 Atlantic Ave., Suite 800 Atlantic City, NJ 08401
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (609) 340-8004
--------------------------
3900 Paradise Road, #135 Las Vegas, NV 89109
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the registrant's classes of
common stock was 29,142,480 shares at February 12, 1996.
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1995 and March 31, 1995 1
Condensed Consolidated Statements of Operations for the Three and Nine Months
Ended December 31, 1995 and December 31, 1994 3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
December 31, 1995 and December 31, 1994 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Results of Operations and Financial
Condition 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
</TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 18,881 $ 23,886
Marketable securities, net 49,170 26,446
Accounts receivable, net of allowance for doubtful accounts of
$155 at December 31, 1995 and $130 at March 31, 1995 2,547 1,351
Notes receivable 3,089 1,279
Inventories 2,212 863
Deferred income tax 2,140 2,345
Prepaid expenses and other current assets 9,097 5,452
------ ------
Total current assets 87,136 61,622
------ ------
PROPERTY AND EQUIPMENT, net of accumulated depreciation
and amortization of $15,739 at December 31, 1995 and $10,248
at March 31, 1995 249,920 118,105
------ ------
DEFERRED INCOME TAX - long-term 1,943 1,943
------ ------
INTANGIBLES, net 37,121 39,130
------ ------
INVESTMENT - joint venture 24,474 --
------ ------
OTHER ASSETS 11,316 2,990
------ ------
TOTAL ASSETS $ 411,910 $ 223,790
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 289 $ 3,375
Accounts payable 13,076 8,233
Accrued liabilities 23,286 27,030
Other liabilities 6,984 669
------- ------
Total current liabilities 43,635 39,307
------- ------
OTHER LONG-TERM LIABILITIES 27,805 2,808
------- ------
LONG-TERM DEBT, net of current portion 150,000 5,532
------- ------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, Authorized--10,000,000 shares
Issued and outstanding--none
Common stock, $.005 par value, Authorized--90,000,000 shares
Issued --
29,814,100 at December 31, 1995 and
29,672,400 at March 31, 1995 149 148
Additional paid-in capital 122,970 121,712
Unrealized loss on marketable securities, net of tax (108) (451)
Treasury stock, at cost; 510,000 shares at December 31, 1995 (5,834) --
Retained earnings 73,293 54,734
------- ------
Total Stockholders' Equity 190,470 176,143
------- ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 411,910 $ 223,790
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
-------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Casino $ 66,394 $ 55,446 $ 203,247 $155,418
Food and beverage 3,246 1,824 8,416 5,848
Hotel 1,673 -- 3,273 --
Other 1,413 1,395 3,698 4,583
-------- -------- --------- --------
72,726 58,665 218,634 165,849
-------- -------- --------- --------
COSTS AND EXPENSES:
Casino 27,937 19,794 82,178 54,199
Food and beverage 3,464 1,674 9,204 5,570
Hotel 940 -- 1,858 --
Other gaming related expenses 21,448 13,945 57,093 36,149
Corporate administrative expenses 2,701 2,081 7,025 5,416
Pre-opening and gaming development costs 3,179 2,159 11,174 5,463
Depreciation and amortization 4,905 1,822 14,163 5,209
-------- -------- --------- --------
64,574 41,475 182,695 112,006
-------- -------- --------- --------
Income before other income (expense) and
provision for income taxes 8,152 17,190 35,939 53,843
-------- -------- --------- --------
OTHER INCOME (EXPENSE):
Interest income 1,187 960 5,370 2,333
Other income (expense), net 315 -- 692 301
Interest expense (4,224) (188) (11,576) (506)
-------- -------- --------- --------
(2,722) 772 (5,514) 2,128
-------- -------- --------- --------
Income before provision for income taxes 5,430 17,962 30,425 55,971
PROVISION FOR INCOME TAXES 2,118 6,387 11,866 20,645
-------- -------- --------- --------
NET INCOME $ 3,312 $ 11,575 $ 18,559 $ 35,326
======== ======== ======== ========
EARNINGS PER COMMON AND
COMMON SHARE EQUIVALENT:
Primary $ 0.10 $ 0.37 $ 0.57 $ 1.14
Fully diluted $ 0.10 $ 0.37 $ 0.57 $ 1.13
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES:
Primary 31,743,708 31,323,600 32,282,100 30,992,100
Fully diluted 31,743,708 31,404,900 32,283,354 31,209,300
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended December 31,
---------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,559 $ 35,326
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 14,163 5,209
Other (1,773) 246
Changes in assets and liabilities:
Accounts and notes receivable (3,004) (733)
Inventories, prepaid expenses and other current assets (4,995) (557)
Other assets (10,670) (334)
Accounts payable and accrued liabilities 556 4,101
Other liabilities (310) (275)
Income tax payable -- (2,357)
--------- ---------
Net cash provided by operating activities 12,526 40,626
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment (114,083) (23,477)
Purchase of marketable securities, net (20,376) (10,790)
Investment in joint venture (19,015) --
Investment in subsidiaries (350) --
--------- ---------
Net cash used in investing activities (153,824) (34,267)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 150,000 --
Payments of long-term debt (9,132) (123)
Proceeds from exercise of stock options 1,260 1,284
Purchase of treasury stock (5,834) --
Other (1) (256)
--------- ---------
Net cash provided by financing activities 136,293 905
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,005) 7,264
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 23,886 13,957
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,881 $ 21,221
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 9,209 $ 506
Income taxes paid 12,805 22,399
Debt incurred to purchase land and equipment 667 3,211
Stock issued to purchase land -- 4,238
Unrealized gain (loss) on marketable securities, net of tax 342 (654)
Accrued liabilities incurred to purchase property and equipment 31,743 --
Liabilities relating to costs in excess of fair value of tangible
assets acquired 494 --
Land, property and equipment contributed to joint venture 5,459 --
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's Form 10-K for the year ended March 31, 1995.
In the opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows of all periods presented have been made.
On April 26, 1995, the Board of Directors declared a 3-for-2 stock
split for stockholders of record at the close of business on May 8, 1995. All
references to share data have been retroactively restated to reflect this split.
The results of operations for the nine month period ended December 31,
1995, are not necessarily indicative of the operating results for the full year.
Certain reclassifications have been made to the financial statements as
previously presented to conform to current classifications.
Note 2 - Casino Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses. Revenues
exclude the retail value of complimentary admissions, food and beverage and
other items furnished to customers, which totaled approximately $5,718,000 and
$2,567,000, and $15,423,000 and $6,380,000 for the three and nine months ended
December 31, 1995 and 1994, respectively.
The estimated cost of providing such complimentary services are
included in casino costs and expenses through inter-department allocations from
the department granting the services as follows (dollars in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
-------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
Food and beverage $ 4,086 $ 1,311 $ 10,872 $ 3,545
Admissions and other 948 1,120 2,844 2,489
--------- ------- -------- --------
$ 5,034 $ 2,431 $13,716 $ 6,034
======= ======= ======= =======
</TABLE>
Note 3 - Pre-opening and Gaming Development Costs
All costs in connection with the identification and development of new
gaming jurisdictions and sites are being expensed, except for the cost of
property and equipment which is capitalized.
<PAGE>
Note 4 - Primary and Fully Diluted Shares
Per share amounts have been computed based on the weighted average
number of outstanding shares and common stock equivalents, if dilutive, during
each period. A summary of the number of shares used in computing primary
earnings per share follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding 29,856,733 27,268,800 29,845,154 26,888,700
Dilutive effect of options and warrants 1,886,975 4,054,800 2,436,946 4,103,400
---------- ---------- ---------- ----------
Shares used in computing primary
earnings per share 31,743,708 31,323,600 32,282,100 30,992,100
=========== =========== =========== ===========
</TABLE>
The number of shares used in computing fully diluted earnings per share
is as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding 29,856,733 27,268,800 29,845,154 26,888,700
Dilutive effect of options and warrants 1,886,975 4,136,100 2,438,200 4,320,600
---------- ---------- ---------- ----------
Shares used in computing fully diluted
earnings per share 31,743,708 31,404,900 32,283,354 31,209,300
========== ========== ========== ==========
</TABLE>
Note 5 - Long-Term Debt
On April 17, 1995, the Company issued $150,000,000 aggregate principal
amount of 10-7/8% Senior Notes maturing on April 15, 2005. Interest is payable
in cash semi-annually on April 15 and October 15 commencing October 15, 1995.
On June 30, 1995, the Company paid off an aggregate of $8,876,000 of
existing debt.
On August 31, 1995, the Company closed on a $120,000,000 line of credit. As
of December 31, 1995, no draws had been made under the line of credit.
Note 6 - Change in Accounting Estimate
Effective October 1, 1995, the Company revised its estimate of
depreciable useful lives as follows:
Old Life New Life
Riverboats, barges and improvements 10 years 30 years
Buildings (new) 20 years 40 years
Intangibles (goodwill) 15 years 40 years
These changes were made to better reflect the estimated periods during
which such assets will remain in service and be recoverable. The result of this
change had the effect of reducing depreciation and amortization expense and
increasing net income by approximately $1.7 million for the three and nine
months ended December 31, 1995.
<PAGE>
Note 7 - Subsequent Events
Subsequent to December 31, 1995, the Company repurchased 162,100 shares
of its Common Stock for a total cost of $1.5 million.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
General
The Company is currently a developer and operator of gaming and
entertainment facilities. The Company owns and operates one riverboat casino in
Metropolis, Illinois, which commenced operations on February 23, 1993, two
riverboat casinos in Lake Charles, Louisiana, the Players Riverboat Casino,
which commenced operations on December 8, 1993, and the Lake Charles Star
Riverboat Casino, which commenced operations on April 27, 1995, and Players
Island Resort, a land based casino complex which opened on June 29, 1995 in
Mesquite, Nevada. The Company also operates a horse racetrack in Paducah,
Kentucky. The Company is presently engaged in the application and/or development
process for a number of potential gaming and entertainment facilities in
jurisdictions where gaming has been legalized or may soon be legalized.
Liquidity and Capital Resources
As of December 31, 1995, cash and cash equivalents and marketable
investment grade debt securities totaled $68.1 million as compared to $50.3
million at March 31, 1995.
Cash provided by operating activities for the nine months ended
December 31, 1995 was $12.5 million as compared to $40.6 million for the
comparable period of the prior year. The decrease is attributable primarily to a
decline in net income, an increase in other assets (due to the costs associated
with issuance of $150 million of 10-7/8% Senior Notes and arranging the $120
million bank credit facility) and the payoff of accrued liabilities related to
the purchase of the Showboat Star Partnership. During the nine months ended
December 31, 1995, the Company used $153.8 million in investing activities as
compared to $34.3 million for the comparable period of the prior year. The use
of cash is related to the net investment by the Company of $114.1 million in
property and equipment, primarily for its operations in Mesquite, Nevada, and
Lake Charles, Louisiana. The Company also recorded net purchases of marketable
securities during the current nine month period of $20.4 million and made a cash
investment in its Maryland Heights, Missouri joint venture of $19 million. Cash
provided by financing activities of $136.3 million for the nine months ended
December 31, 1995, reflects $150 million in proceeds from the issuance of Senior
Notes offset by the repayment of $9.1 million in long term debt and the
repurchase of 510,000 shares of the Company's common stock in the open market
for $5.8 million.
The Company is pursuing the development or acquisition of additional
gaming and entertainment facilities which will require extensive amounts of
capital. Based on projects currently under development, the Company estimates
that expenditures for completion of additional facilities could total up to $135
million over the next twelve months. The Company expects to fund these
expenditures with (i) cash and marketable securities on hand, (ii) cash flow
from operations, and if needed, (iii) drawings available under its $120 million
bank credit agreement.
On November 2, 1995, the Company finalized its agreement with Harrah's
Entertainment, Inc. to form a joint venture and co-develop a $270 million
riverboat casino complex in Maryland Heights, Missouri. The Company's portion of
the project budget is expected to be $135 million, of which $24.5 million has
been invested through December 31, 1995. The project is targeted to open in
early 1997, subject to the receipt of all necessary gaming approvals.
Through December 31, 1995, the Company repurchased a total of 510,000
shares of its common stock in the open market for a total cost of $5.8 million.
Subsequent to December 31, 1995, the Company purchased an additional 162,100
shares for a total cost of $1.5 million.
<PAGE>
Results of Operations
Total revenues for the three and nine months ended December 31, 1995
increased to $72.7 million and $218.6 million, or by 24% and 31.8%,
respectively, when compared to total revenues of $58.7 million and $165.8
million for the comparable periods of the prior year. This increase is primarily
attributable to the opening of two new casinos, the Lake Charles Star Riverboat
which opened on April 27, 1995 and Players Island Resort in Mesquite, Nevada
which opened on June 29, 1995. Combined casino revenues totaled $66.4 million
and $203.2 million for the three and nine months ended December 31, 1995 as
compared to $55.4 million and $155.4 million for the prior year periods. The
period over period increases in casino revenues can be attributed to the opening
of the aforementioned new facilities, the October 1995 replacement of the
Players II Riverboat in Lake Charles with the larger Players III Riverboat and
the November 1995 replacement of the smaller Players I Riverboat in Metropolis
with the Players II Riverboat, and the success of the marketing programs in
Metropolis.
Gaming revenues in Metropolis were $21.1 million and $64.0 million for
the three and nine months ended December 31, 1995 as compared to $18.2 million
and $55.3 million for the comparable periods of the prior year. The period over
period increase was primarily attributable to the continued success of the
Metropolis facility's marketing programs and the opening of the larger Players
II riverboat in November 1995. The increase was partially offset by the opening
of a competing riverboat casino in Evansville, Indiana in December 1995. Lake
Charles gaming revenues were $39.9 million and $128.3 million for the three and
nine months ended December 31, 1995 as compared to $37.3 million and $100.1
million for the comparable periods of the prior year. The year over year
increase was primarily due to the operation of two riverboats in the current
period instead of one in the previous year. Gaming revenues for the December
1995 quarter declined from $44.9 million reported for the September 1995 quarter
due to the impact of two competitive openings in the Lake Charles market in
August 1995 and the disruption caused by the construction of a new parking
garage as well as the normal seasonal decline in revenues. Gaming revenues in
Mesquite were $5.4 million for the December 1995 quarter as compared to $5.5
million for the September 1995 quarter reflecting a lack of sufficient growth in
gaming revenues to offset the absence of the revenues generated by the
property's grand opening activities in the September 1995 quarter.
Total operating costs, exclusive of corporate administrative expense,
pre-opening and gaming development costs and depreciation and amortization,
increased 52% to $53.8 million and 56.7% to $150.3 million for the three and
nine months ended December 31, 1995 as compared to $35.4 million and $95.9
million for the comparable periods of the prior year. The increase in operating
expenses is, again, primarily attributable to the opening of the Lake Charles
Star Riverboat in April 1995 and Players Island Resort in June 1995. In
addition, the Lake Charles and Metropolis operations have increased their
spending on complimentaries, advertising and marketing as a result of increased
competition. Beginning in August 1995, the Lake Charles facility was also
subject to a $.50 per passenger increase in the tax it pays to the local
governments for each passenger on the boats.
Corporate administrative costs were $2.7 million and $7.0 million for
the current year periods as compared to $2.1 million and $5.4 million for the
three and nine months ended December 31, 1994. The increases primarily reflect
staff expansion, additional administrative activities and travel associated with
the operation of three facilities as compared to two facilities for the prior
year periods and the move of the corporate offices to Atlantic City, New Jersey.
Pre-opening and gaming development costs were $3.2 million and $11.2
million for the three and nine months ended December 31, 1995 as compared to
$2.2 million and $5.5 million for the comparable periods of the prior year
primarily due to the Company's Mesquite, Nevada and Maryland Heights, Missouri
projects. Pre-opening expenses for the three and nine months ended December 31,
1995 were $1.4 million and $7.5 million. In comparison, the Company recorded
pre-opening costs of $701,000 and $999,000 for the three and nine months ended
December 31, 1994. Development costs for the three and nine months ended
December 31, 1995 amount to $1.8 million and $3.7 million, respectively, and
include the write-off of $831,000 in expenses associated with the pursuit of two
New Orleans riverboat projects, as compared to $1.4 million and $4.5 million for
the three and nine months ended December 31, 1994.
Depreciation and amortization for the three and nine months ended
December 31, 1995 increased to $4.9 million and $14.2 million, respectively, as
compared to $1.8 million and $5.2 million for the comparable periods of the
prior year. The increase in depreciation and amortization expense is directly
related to (i) the addition of the Lake Charles Star Riverboat and related
assets in April 1995 and the amortization of goodwill associated with the
purchase, (ii) the completion of Players Island Resort in Mesquite, Nevada, in
June 1995 and (iii) the purchase of the Players III Riverboat in October, 1995.
In addition, the Company completed a study of the estimated useful lives of
certain depreciable assets and intangibles which resulted in the adoption of
revised estimated useful lives. These changes were made to better reflect the
estimated periods during which such assets will remain in service and be
recoverable. The result of the change, which was adopted on October 1, 1995, was
a reduction in depreciation and amortization expense of $1.7 million for the
three months ended December 31, 1995. During the quarter, the Company recorded a
write-off of goodwill associated with the Players Bluegrass Downs racetrack in
Paducah, Kentucky of $1.5 million.
Interest income for the three and nine months ended December 31, 1995
increased to $1.2 million and $5.4 million, respectively, as compared to
$960,000 and $2.3 million for the previous year periods. The increase resulted
from the investment of $150 million in proceeds from the 10-7/8% Senior Notes
issued in April 1995 in investment grade debt securities. The increase in
interest expense to $4.2 million and $11.6 million for the three and nine months
ended December 31, 1995 as compared to $188,000 and $506,000 for the same
periods of the prior year reflects (i) interest expense of $3.1 million and
$10.1 million for the three and nine months ended December 31, 1995 related to
the April 1995 issuance of $150 million, 10-7/8% Senior Notes and (ii) imputed
interest of $1.0 million for the three and nine months ended December 31, 1995
associated with the acquisition of the Downtowner Hotel in Lake Charles,
Louisiana.
The Company's effective net tax rate covering both state and Federal
taxes was 39% for the three and nine months ended December 31, 1995 as compared
to 36% and 37% for the comparable periods of the prior year. The increase
reflects a decline in tax exempt income from investments during the current year
periods as compared to the three and nine months ended December 31, 1994.
Consolidated net income for the three and nine months ended December
31, 1995 was $3.3 million, or $.10 per share, and $18.6 million, or $.57 per
share, respectively, as compared to $11.6 million, or $.37 per share, and $35.3
million, or $1.13 per share, for the comparable periods of the prior year. The
period over period decreases in net income are primarily attributable to
increased operating costs, higher depreciation and amortization expense
associated with the Company's new operations, insufficient growth in gaming
revenue at Players Island Resort in Mesquite, Nevada which resulted in an
adjusted EBITDA loss in Mesquite of $1.7 million and $3.7 million for the three
and nine months ended December 31, 1995, and increased interest expense related
to the issuance of $150 million in Senior Notes in April 1995. `Adjusted EBITDA'
is defined as income before interest income and expense, provision for income
taxes, pre-opening expenses, depreciation and amortization and other income and
expense. Adjusted EBITDA is not intended to represent cashflows for the period
and is presently solely as supplemental disclosure because EBITDA is frequently
used to analyze companies on the basis of operating performance, leverage and
liquidity.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company has the following new legal proceedings and developments to
report:
Transam, Ltd. d/b/a Two Bunch Palms Resort & Spa v. Players
International, Inc., et al
On or about November 21, 1995, Transam, Ltd., a Delaware Corporation,
d/b/a Two Bunch Palms Resort & Spa (`Two Bunch Palms') filed an action in the
United States District Court, Central District of California, against the
Company, a subsidiary of the Company, certain principals of the Company, and
certain other defendants alleging various causes of action arising out of an
agreement for services entered into by the Company with Gerald Greenbach and
Creative Hospitality Management. Mr. Greenbach, at the time the Agreement was
executed by the Company, was an executive of Two Bunch Palms. Mr. Greenbach both
individually and through Creative Hospitality Management agreed to provide the
Company with a variety of consulting services with respect to the operation and
marketing of the Company's spa facilities at Players Island Resort in Mesquite,
Nevada. Two Bunch Palms alleges that the Company and/or Mr. Greenbach and
Creative Hospitality Management engaged in copyright infringement, trade dress
infringement, unfair competition, false advertising, misappropriation of trade
secrets, unfair competition as well as certain related allegations with respect
to the services provided by Mr. Greenbach and Creative Hospitality Management to
the Company. The Company has denied all of these allegations and intends to
defend this matter vigorously.
Ornstein v. Players International, Inc., et al
On or about August 12, 1994, Marvin A. Ornstein (`Ornstein') and
Mississippi Gold, Inc. (`Mississippi Gold') filed an Amended Compliant in United
States District Court, Southern District of Illinois, seeking damages for
defamation and for violation of their civil rights under 42 U.S.C.ss.1983,
arising out of an alleged conspiracy among the Company, the Illinois Gaming
Board and the Illinois State Police to aid and abet the Company in prohibiting
Ornstein and Mississippi Gold from being licensed and/or being able to follow
through with a joint venture to operate a riverboat casino in Cairo, Illinois.
On April 12, 1995, Ornstein and Mississippi Gold were permitted to amend their
complaint to include a claim that the Company had also violated the Racketeer
Influenced and Corrupt Organizations Act (`RICO'). The Company was successful in
its motion for summary judgment against Ornstein and Mississippi Gold on the
claims for defamation and violation of their civil rights. This motion was
granted in favor of the Company on January 4, 1996. Thereafter, Ornstein and
Mississippi Gold voluntarily dismissed with prejudice their remaining RICO
claims against the Company, and the litigation has therefore been concluded
favorably from the Company's perspective.
Labor Developments
On June 28, 1995, a petition was filed by the United Food and
Commercial Workers Union, Local 881 ('Local 881') before the NIRB seeking union
representation of approximately one-half of the Metropolis workforce. An
election was scheduled to be held on December 8, 1995. However, on December 4,
1995, Local 881 withdrew its petition voluntarily prior to the scheduled date
for the election, and the election was canceled.
On May 23, 1995, the Seafarers International Union (`SIU') filed a
petition for an election with the National Labor Relations Board (the `Board')
to represent unlicensed crew members of the Players and Star Riverboats in Lake
Charles, Louisiana. After a decision on the appropriateness of the unit, the
Board conducted an election on October 24 and 25, 1995. The outcome of that
election, which remains uncertified, resulted in the SIU being chosen to
represent 61 unlicensed crew members (from among approximately 1700 employees of
the property). Players has filed objections to the conduct of the SIU and its
representatives during the election. The Board has begun a hearing on the merits
of these objections with the hearing to be continued on February 15, 1996.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The Company has included as exhibits the following documents entered
into during the quarter ended December 31, 1995 in connection with the closing
of the transactions related to the Maryland Heights joint venture project.
10.1 Partnership Agreement dated November 2, 1995, by and between Harrah's
Maryland Heights Corporation and Players MH, L.P.
10.2 Guaranty of Players International, Inc. dated November 2, 1995.
10.3 Management Agreement dated November 2, 1995 by and between Riverside
Joint Venture and Harrah's Maryland Heights Operating Company.
10.4 License Agreement dated November 2, 1995 by and among Players
International, Inc. Riverside Joint Venture and Harrah's Maryland
Heights Operating Company.
10.5 Ground Lease dated November 3, 1995 by and between Harrah's Maryland
Heights LLC and Riverside Joint Venture.
10.6 Lease Agreement dated as of November 3, 1995 by and between Riverside
Joint Venture and Players MH, L.P.
10.7 Parent Guaranty of Players International, Inc. dated November 3, 1995.
10.8 Right of First Refusal to Purchase dated November 3, 1995 by and
between Harrah's Maryland Heights LLC and Players MH, L.P.
10.9 Option Agreement dated November 3, 1995 by and between Riverside Joint
Venture and Harrah's Maryland Heights, L.L.C.
10.10 Development Agreement (Earth City Expressway Extension) by and between
the City of Maryland Heights and Riverside Joint Venture.
(b) The Company filed no Current Reports on Form 8-K during the quarter
ended December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PLAYERS INTERNATIONAL, INC.
Date: February 12, 1996 By /s/ Peter J. Aranow
-------------------------
Peter J. Aranow, Executive Vice President
Chief Financial Officer
Date: February 12, 1996 By /s/ Stephen K. Radusch
----------------------------
Stephen K. Radusch, Controller
Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
<S> <C> <C>
10.1 Partnership Agreement dated November 2, 1995, by and between Harrah's
Maryland Heights Corporation and Players MH, L.P.
10.2 Guaranty of Players International, Inc. dated November 2, 1995.
10.3 Management Agreement dated November 2, 1995 by and between Riverside
Joint Venture and Harrah's Maryland Heights Operating Company.
10.4 License Agreement dated November 2, 1995 by and among Players International,
Inc. Riverside Joint Venture and Harrah's Maryland Heights Operating Company.
10.5 Ground Lease dated November 3, 1995 by and between Harrah's Maryland
Heights LLC and Riverside Joint Venture.
10.6 Lease Agreement dated as of November 3, 1995 by and between Riverside
Joint Venture and Players MH, L.P.
10.7 Parent Guaranty of Players International, Inc. dated November 3, 1995.
10.8 Right of First Refusal to Purchase dated November 3, 1995 by and
between Harrah's Maryland Heights LLC and Players MH, L.P.
10.9 Option Agreement dated November 3, 1995 by and between Riverside Joint
Venture and Harrah's Maryland Heights, L.L.C.
10.10 Development Agreement (Earth City Expressway Extension) by and
between the City of Maryland Heights and Riverside Joint Venture.
27 Financial Data Schedule
</TABLE>
PARTNERSHIP AGREEMENT
OF
RIVERSIDE JOINT VENTURE
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C> <C>
I. Basic Provisions.............................................................................. 1
1. Formation of Partnership............................................................. 1
2. Name of the Partnership.............................................................. 1
3. Principal Place of Business.......................................................... 1
4. Definitions.......................................................................... 1
4.1 Accounting Principles................................................................ 1
4.2 Additional Capital Contributions..................................................... 2
4.3 Adjacent Fee Site.................................................................... 2
4.4 Adjacent Fee Site Agreements......................................................... 2
4.5 Affiliate............................................................................ 2
4.6 Affiliate (Controlled)............................................................... 2
4.7 Affiliate Loan....................................................................... 2
4.8 Affiliate (Wholly Owned)............................................................. 2
4.9 Agreement............................................................................ 3
4.10 Annual Plan.......................................................................... 3
4.11 Appraisal Buyout..................................................................... 3
4.12 Appraisal Buyout Notice.............................................................. 3
4.13 Appraisal Buyout Price............................................................... 3
4.14 Appraisal Purchaser.................................................................. 3
4.15 Appraiser............................................................................ 3
4.16 Arbitrator........................................................................... 3
4.17 Authorized Appraiser ................................................................ 3
4.18 Available Cash....................................................................... 3
4.19 Beneficial Owner(ship)............................................................... 3
4.20 Budgets.............................................................................. 3
4.21 Business Day......................................................................... 3
4.22 Buy/Sell............................................................................. 3
4.23 Buy/Sell Notice...................................................................... 3
4.24 Buy/Sell Price....................................................................... 3
4.25 Buy/Sell Response.................................................................... 4
4.26 Capital Account...................................................................... 4
4.27 Capital Contribution................................................................. 4
4.28 Capital Stock ....................................................................... 4
4.29 Change of Control of Players' Parent................................................. 4
4.30 Code................................................................................. 5
4.31 Competing Developer.................................................................. 5
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<PAGE>
4.32 Construction Costs................................................................... 5
4.33 Consumer Price Index................................................................. 5
4.34 Continuing Liabilities............................................................... 5
4.35 Conversion Notice.................................................................... 5
4.36 Cost Budget.......................................................................... 6
4.37 Debt................................................................................. 6
4.38 Debtor Partner....................................................................... 6
4.39 Default Lender....................................................................... 6
4.40 Default Loan......................................................................... 6
4.41 Defaulting Partner................................................................... 6
4.42 Depreciation......................................................................... 6
4.43 Designated Appraiser................................................................. 6
4.44 Distributable Cash................................................................... 7
4.45 Effective Date....................................................................... 7
4.46 Entertainment Facilities............................................................. 7
4.47 Event of Default..................................................................... 7
4.48 Exchange Act......................................................................... 7
4.49 Excluded Person...................................................................... 7
4.50 Exempt Sale or Disposition........................................................... 7
4.51 Fair Market Value.................................................................... 7
4.52 Fiscal Month......................................................................... 7
4.53 Fiscal Period........................................................................ 7
4.54 Fiscal Year.......................................................................... 8
4.55 Fischer Site......................................................................... 8
4.56 Ground Lease......................................................................... 8
4.57 Guarantor............................................................................ 8
4.58 Harrah's............................................................................. 8
4.59 Harrah's (LLC)....................................................................... 8
4.60 Harrah's Las Vegas................................................................... 8
4.61 Harrah's Lease....................................................................... 8
4.62 Harrah's Premises.................................................................... 8
4.63 HEI.................................................................................. 8
4.64 HMHOC................................................................................ 8
4.65 Holding Entity....................................................................... 8
4.66 Indemnified Person................................................................... 8
4.67 Indemnifying Partner................................................................. 8
4.68 Initial Capital Contribution......................................................... 8
4.69 Initial Period....................................................................... 9
4.70 Institutional Investor............................................................... 9
4.71 Invested Capital..................................................................... 9
4.72 IRS.................................................................................. 9
4.73 Leased Site.......................................................................... 9
4.74 Losses............................................................................... 9
4.75 Lot 7................................................................................ 9
4.76 Major Decisions...................................................................... 10
4.77 Management Agreement................................................................. 10
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<PAGE>
4.78 Material Modification................................................................ 10
4.79 Monetary Default..................................................................... 10
4.80 Net Proceeds of Sale or Financing/Refinancing........................................ 10
4.81 Non-Arbitrable Decisions............................................................. 10
4.82 Non-Defaulting Partner............................................................... 10
4.83 Notice............................................................................... 10
4.84 Offering Partner..................................................................... 10
4.85 Offer................................................................................ 10
4.86 Offeree.............................................................................. 10
4.87 Offeror.............................................................................. 11
4.88 Opening Date......................................................................... 11
4.89 Operating Budget..................................................................... 11
4.90 Operating Expenses................................................................... 11
4.91 Operating Leases..................................................................... 11
4.92 Operating Lease Premises............................................................. 11
4.93 Option Period........................................................................ 11
4.94 Partner Loan......................................................................... 11
4.95 Partner Nonrecourse Debt............................................................. 11
4.96 Partner Nonrecourse Minimum Gain..................................................... 11
4.97 Partners............................................................................. 11
4.98 Partnership.......................................................................... 11
4.99 Partnership Accountants.............................................................. 11
4.100 Partnership Interest................................................................. 11
4.101 Percentage........................................................................... 11
4.102 Person............................................................................... 12
4.103 Plans and Specifications............................................................. 12
4.104 Players.............................................................................. 12
4.105 Players' Lease....................................................................... 12
4.106 Players' Parent...................................................................... 12
4.107 Players' Premises.................................................................... 12
4.108 Prime Rate........................................................................... 12
4.109 Profits.............................................................................. 13
4.110 Prohibited Person.................................................................... 13
4.111 Project Office....................................................................... 13
4.112 Project Property..................................................................... 13
4.113 Project Site......................................................................... 14
4.114 Qualified Institutional Buyer........................................................ 14
4.115 Receiving Partner.................................................................... 14
4.116 Redeemed Interest.................................................................... 14
4.117 Redemption Notice.................................................................... 14
4.118 Regulations.......................................................................... 14
4.119 Reserves............................................................................. 14
4.120 Sale or Financing/Refinancing........................................................ 14
4.121 Shoreside Complex.................................................................... 15
4.122 State................................................................................ 15
4.123 Substantial Completion............................................................... 15
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<PAGE>
4.124 Transfer............................................................................. 15
4.125 Transferor Partner................................................................... 15
4.126 Unsuitability Determination.......................................................... 15
4.127 Unsuitability Redemption ............................................................ 16
4.128 Unsuitability Redemption Price....................................................... 16
4.129 Unsuitable Partner................................................................... 16
4.130 Usury Rate........................................................................... 16
4.131 Valuation Date....................................................................... 16
4.132 Voting Power......................................................................... 16
II. Operating Provisions
1. Purposes of the Partnership................................................................... 16
2. Term of Partnership.................................................................. 17
3. Percentage Interests................................................................. 17
4. Capital Contributions; Partner Loans................................................. 17
5. Distributions........................................................................ 19
6. Profits and Losses................................................................... 20
7. Management........................................................................... 22
8. Compensation to Partners; Other Interests............................................ 33
9. Disposition or Transferability of Partnership Interests.............................. 37
10. Dissolution of the Partnership....................................................... 45
11. Liquidation of the Partnership....................................................... 46
12. Books and Records.................................................................... 47
13. Reimbursement........................................................................ 48
14. Representations and Warranties/Indemnification....................................... 48
15. Certificates, Documents, Execution................................................... 56
16. Amendment............................................................................ 57
17. Notices.............................................................................. 57
18. Bank Accounts; Investments........................................................... 57
19. Arbitration.......................................................................... 58
- v -
<PAGE>
20. Events of Default.................................................................... 61
21. Remedies............................................................................. 62
22. Choice of Remedies................................................................... 63
23. Advances; Buy-Down................................................................... 64
24. Redemption of Unsuitable Partner's Partnership Interest.............................. 68
25. Appraisal Buyout..................................................................... 69
26. Buy/Sell............................................................................. 73
27. Waiver............................................................................... 77
28. Gambling Qualifications in Missouri.................................................. 78
29. Other Gambling Qualifications........................................................ 79
30. Lender Suitability................................................................... 80
31. Covenants............................................................................ 81
32. Valuation and Appraisal Procedures................................................... 85
33. Miscellaneous........................................................................ 86
34. Binding Effect....................................................................... 87
</TABLE>
- vi -
<PAGE>
TABLE OF EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A - Description of Adjacent Fee Site
EXHIBIT B - Description of Fischer Site
EXHIBIT C-1 - Description of Leased Site
EXHIBIT C-2 - Description of Easements Appurtenant to Leased Site
EXHIBIT D - Management Agreement
EXHIBIT E - Plans & Specifications
EXHIBIT F - Cost Budget
EXHIBIT F-1 - Cost Budget Items Paid Between 03/01/95 and the
Effective Date
EXHIBIT G - Partner's Initial Capital Contributions
EXHIBIT H - Prohibited Persons
EXHIBIT I - Liens and Encumbrances on Project Property
EXHIBIT J - Partnership Liabilities/Obligations
EXHIBIT K - Irrevocable Banking Instructions
EXHIBIT L - Partnership Investment Guidelines
EXHIBIT M - Confidentiality Agreement
EXHIBIT N - Form of Security Legend Regarding Partnership Agreement Transfer
Restrictions and Redemption Requirements
EXHIBIT O - Form of Redemption Provisions to be Included in Holding Entity Articles
of Incorporation or Other Formative Documents
EXHIBIT P - Form of Provision for Loan Documents
EXHIBIT Q - Hotel and Special Events Room Allocation Policies
EXHIBIT R - Escrow Agreement
- vii -
<PAGE>
EXHIBIT S - Skidmore, Owings and Merrill Agreement
EXHIBIT T - City Agreement, Howard Bend Levee District Agreement, U.S. Army
Corps of Engineers Agreements
EXHIBIT U - Players' Parent Stock Certificate
EXHIBIT V - Conceptual Sign Plan
</TABLE>
- viii -
<PAGE>
PARTNERSHIP AGREEMENT
OF
RIVERSIDE JOINT VENTURE
This agreement (the "Agreement") is made this 2nd day of November,
1995, between HARRAH'S MARYLAND HEIGHTS CORPORATION, a Nevada corporation, and
PLAYERS MH, L.P., a Missouri limited partnership.
In consideration of the promises contained in this Agreement, the
parties to this Agreement, each intending to be legally bound, agree as follows:
I. Basic Provisions
1. Formation of Partnership
Harrah's and Players hereby form a general partnership under and
pursuant to, and, except to the extent permissibly modified hereby, governed by,
the Uniform Partnership Law of the State of Missouri [Chapter 358 RsMO] (the
"Act").
2. Name of the Partnership
The business of the Partnership shall be conducted under the name
"Riverside Joint Venture". The Partners shall register this name (or any other
name the Partners may decide to use for the Partnership) and/or comply with any
applicable fictitious business name law in the State of Missouri.
3. Principal Place of Business
The principal place of business of the Partnership beginning on the
Opening Date shall be located at the Project Office. Until the Opening Date, the
principal place of business of the Partnership shall be located at 1023 Cherry
Road, Memphis, Tennessee 38117.
4. Definitions
In addition to capitalized terms defined elsewhere in this Agreement,
the following capitalized terms shall have the meanings set forth below.
References to Sections of this Agreement refer to the Sections of Part II of
this Agreement, except as otherwise noted.
4.1 Accounting Principles - United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
the event such Accounting Principles Board and
<PAGE>
Financial Accounting Standards Board are no longer in existence or no longer
publish such principles, opinions and statements, in such other statements by
such other entity as may be approved by a significant segment of the accounting
profession, all as in effect from time to time.
4.2 Additional Capital Contributions - those Capital Contributions
described in Section 4(b).
4.3 Adjacent Fee Site - land to be acquired pursuant to the Adjacent
Fee Site Agreements, and more particularly described on Exhibit A.
4.4 Adjacent Fee Site Agreements - (i) that certain Agreement of Sale
dated June 30, 1995 between Riverport Farm Partners, as seller, and Harrah's, as
buyer; and (ii) that certain Agreement dated effective August 21, 1995 between
Anita Bechtold and Eileen Carlson as Trustees under Indenture of Trust of Anita
Bechtold dated March 14, 1991, as seller, and Harrah's, as buyer.
4.5 Affiliate - with respect to any designated Person, any other Person
who, directly or indirectly, owns or controls ten percent (10%) or more of the
Capital Stock or Voting Power of the Person (on a fully diluted basis), or
percent (10%) or more of the Capital Stock or Voting Power of which is owned or
controlled by the designated Person, directly or indirectly.
4.6 Affiliate (Controlled) - with respect to any designated Person, any
other Person who, directly or indirectly, owns or controls more than fifty
percent (50%) of the Capital Stock or Voting Power of the Person (on a fully
diluted basis), or more than fifty percent (50%) of the Capital Stock or Voting
Power of which is owned or controlled by the designated Person, directly or
indirectly.
4.7 Affiliate Loan - any loan (including principal, interest and other
charges) made by an Affiliate of a Partner to the Partnership, but excluding
unpaid amounts due to an Affiliate from time to time under any contract with the
Partnership for goods and/or services.
4.8 Affiliate (Wholly Owned) - with respect to any designated Person,
any other Person who, directly or indirectly, owns or controls one hundred
percent (100%) of the Capital Stock or Voting Power of the Person, or one
hundred percent (100%) of the Capital Stock or Voting Power of which is owned or
controlled in whole by the designated Person, directly or indirectly.
- 2 -
<PAGE>
4.9 Agreement - as defined in the introductory paragraph of this
Agreement.
4.10 Annual Plan - as defined in Section 7(l).
4.11 Appraisal Buyout - as defined in Section 25(a).
4.12 Appraisal Buyout Notice - as defined in Section 25(a)(ii).
4.13 Appraisal Buyout Price - ninety percent (90%), or one hundred
percent (100%) in the case of an Appraisal Buyout caused by casualty or
condemnation, of the Fair Market Value of a Partner's Project Property
determined in accordance with Section 9(n) (as modified by Section 25(a)(ii)).
4.14 Appraisal Purchaser - as defined in Section 25(a)(i).
4.15 Appraiser - as defined in Section 9(n)(ii)(A).
4.16 Arbitrator - as defined in Sections 19(a)(i) and 19(b)(i).
4.17 Authorized Appraiser - an individual designated by a Partner who:
(i) is a partner or employee of a disinterested, reputable and
nationally recognized certified public accounting firm or has comparable
qualifications; and (ii) has at least ten (10) years' experience in the
financial reporting and valuation of casino properties.
4.18 Available Cash - gross receipts of the Partnership derived from
all sources (other than Net Proceeds of Sale or Financing/Refinancing, Capital
Contributions, Partner Loans or Affiliate Loans), LESS Operating Expenses,
determined on a cash basis.
4.19 Beneficial Owner(ship) - as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, whether or not applicable, except that a "person" shall be
deemed to have "beneficial ownership" of all Capital Stock that any such person
has the right to acquire, whether such right is exercisable immediately or after
the passage of time.
4.20 Budgets - the Cost Budget that is approved or otherwise operative
under this Agreement, or the Operating Budget that is approved or otherwise
operative under this Agreement and the Management Agreement (if then existing),
or both, as the case may be.
4.21 Business Day - any Monday through and including Friday that is not
a legal holiday in the State.
4.22 Buy/Sell - as defined in Section 26(a).
4.23 Buy/Sell Notice - as defined in Section 26(a).
4.24 Buy/Sell Price - as defined in Section 26(a).
- 3 -
<PAGE>
4.25 Buy/Sell Response - as defined in Section 26(c).
4.26 Capital Account - a separate account maintained for each Partner
in accordance with the Code and Regulations as part of the books and records of
the Partnership. The Capital Account balance for each Partner shall be computed
in accordance with the principles of Regulation Section 1.704-1(b)(2)(iv).
4.27 Capital Contribution - cash and the agreed value of property
contributed from time to time by a Partner to the Partnership and credited to
its Capital Account.
4.28 Capital Stock - all shares, interests, rights to purchase (other
than convertible or exchangeable indebtedness), warrants, options,
participations or other equivalents of or interests (however designated and
whether or not presently exercisable): (i) with respect to a corporation, in
stock of that corporation; (ii) with respect to a limited liability company, in
the membership of such limited liability company; (iii) with respect to a
partnership, in partnership interests and/or limited partnership interests
thereof; (iv) with respect to a trust, in the beneficial ownership and/or
beneficiaries thereunder; and (v) with respect to any other entity, in the
ownership of the capital and profits of such entity, however designated.
4.29 Change of Control of Players' Parent - until the second
anniversary of the Effective Date, any change in the identity, as members of the
Board of Directors of four (4) or more of the following individuals currently
serving as members of the Board of Directors of Players' Parent or any successor
Holding Entity of Players' Project Property:
Edward Fishman
David Fishman
Howard Goldberg
Thomas E. Gallagher
Marshall S. Geller
Lee Seidler
Steven P. Perskie
On and following the second anniversary of the Effective Date, and continuing
until the seventh anniversary of the Effective Date, any acquisition of more
than forty-nine percent (49%) of the Capital Stock or Voting Power in Players,
Players' Parent or any Holding Entity of Players' Project Property by a
Prohibited Person.
- 4 -
<PAGE>
4.30 Code - The Internal Revenue Code of 1986, as amended to date and
as amended hereafter.
4.31 Competing Developer - as defined in Section 8(d).
4.32 Construction Costs - all costs and expenses incurred in connection
with the acquisition, design, financing, permitting, construction and opening
for business of the Shoreside Complex and the Fischer Site, which, in accordance
with Accounting Principles applicable to the Partnership, are properly
attributable to the cost of acquisition, development and construction of such
property, but excluding Tenant's Work and Tenant's Property (as defined in the
Operating Leases) and other costs incurred by Harrah's (LLC) and Players in
opening their respective Operating Lease Premises, which are not the
responsibility and cost of the Partnership. Construction Costs shall be
determined either (i) by written agreement of the Partners within ninety (90)
days after the Opening Date of the Entertainment Facilities; or (ii) by
arbitration pursuant to Section 19(b) at the request of either Partner, should
the Partners not agree on such Construction Costs within such ninety (90) day
period.
4.33 Consumer Price Index - the Consumer Price Index for All Urban
Consumers most recently published by the Bureau of Labor Statistics of the
United States Department of Labor, U.S. City Average, all items, (1982-84=100),
or any successor or replacement index thereto. If the Consumer Price Index
shall, after the date hereof, be converted to a different standard reference
base or shall otherwise be revised, any determination hereunder which uses the
Consumer Price Index shall be made with the use of such conversion factor,
formula or table for converting the Consumer Price Index as may be published by
the Bureau of Labor Statistics, or, if said Bureau shall not publish the same,
then with the use of such conversion factor, formula or table as may be
published by Prentice Hall, Inc., or, failing such publication, by any other
nationally recognized publisher of similar statistical information. If the
Consumer Price Index shall cease to be published, then for the purpose of this
Agreement there shall be substituted for the Consumer Price Index such other
similar index as the Partnership Accountants shall determine which measures
changes in the relative purchasing power of United States currency over the term
of this Agreement.
4.34 Continuing Liabilities - indemnity obligations relating to events
occurring prior to or during the time of a Partner's ownership of its Project
Property.
4.35 Conversion Notice - as defined in Section 23(b).
- 5 -
<PAGE>
4.36 Cost Budget - the estimate of all categories of Construction Costs
which is hereby approved by both Partners and attached to this Agreement as
Exhibit F, as the same may be modified from time to time pursuant to this
Agreement.
4.37 Debt - (a) all liabilities and obligations, contingent or
otherwise: (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of the Partnership or only to a portion
thereof); (ii) evidenced by bonds, notes, debentures or similar instruments;
(iii) representing the balance deferred and unpaid of the purchase price of any
property or services, if and to the extent any of the foregoing described in
clauses (i), (ii) and (iii) would appear as a liability on the balance sheet of
the Partnership; (iv) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks; (v) for the payment of money relating to a
capitalized lease obligation; or (vi) evidenced by a letter of credit or
reimbursement obligation of such person with respect to any letter of credit;
(b) all liabilities of others of the kind described in the preceding clause(a)
that the Partnership has guaranteed or that is otherwise its legal liability;
and (c) all obligations secured by a lien to which the property or assets
(including, without limitation, leasehold interests and any other tangible or
intangible property rights) of the Partnership are subject, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise be the
Partnership's legal liability, provided, that the amount of such obligations
shall be limited to the lesser of the fair market value of the assets or
property to which such lien attaches and the amount of the obligation so
secured.
4.38 Debtor Partner - as defined in Section 9(c).
4.39 Default Lender - as defined in Section 23(a)(i).
4.40 Default Loan - as defined in Section 23(a).
4.41 Defaulting Partner - as defined in Section 21 (introductory
paragraph).
4.42 Depreciation - the depreciation, amortization, or other cost
recovery deduction allowable to the Partnership for each Fiscal Year as
determined by the Partnership Accountants for the Partnership for Federal income
tax purposes; provided, however, that if an asset is carried on the books of the
Partnership at a value other than its remaining tax basis, then Depreciation
shall be determined within the guidelines set forth in Regulation Section 1.704-
1(b)(2)(iv)(g)(3).
4.43 Designated Appraiser - as defined in Section 9(n)(ii)(A).
- 6 -
<PAGE>
4.44 Distributable Cash - Available Cash LESS Reserves, determined on a
cash basis.
4.45 Effective Date - the date of execution of this Agreement.
4.46 Entertainment Facilities - all buildings within the Shoreside
Complex intended to be used by the Partnership for hotel, parking, restaurant
and entertainment purposes, (other than the Harrah's Premises and Players'
Premises) and all surface parking lots serving such buildings.
4.47 Event of Default - as defined in Section 20.
4.48 Exchange Act - means the Securities and Exchange Act of 1934, as
amended.
4.49 Excluded Person - means (a) Players' Parent or any Affiliate
(Wholly Owned) of Players' Parent; (b) any employee benefit plan of Players'
Parent or of any Affiliate (Wholly Owned) of Players' Parent or any trustee or
similar fiduciary holding Capital Stock of Players' Parent or any Affiliate
(Wholly Owned) of Players' Parent for or pursuant to the terms of any such plan;
(c) HEI and any Affiliate (Wholly Owned) of HEI; (d) Merv Griffin; (e) Edward
Fishman; (f) David Fishman; (g) Howard A. Goldberg; (h) Thomas E. Gallagher; (i)
Marshall S. Geller; (j) Lee Seidler; (k) Steven P. Perskie; (l) Peter J. Aranow;
(m) members of the immediate families of the individuals identified in (d)
through and including (l); and (n) Affiliates (Wholly Owned) of the foregoing
Persons.
4.50 Exempt Sale or Disposition - as defined in Section 8(d).
4.51 Fair Market Value - unless otherwise specifically provided in this
Agreement, the Fair Market Value of any asset shall be its agreed value as
determined by agreement of all of the Partners in accordance with Section 32(a),
or, in the absence of such agreement, as determined in accordance with Sections
9(n) and 25. Solely for the purpose of determining and allocating unrealized
gains and losses upon a liquidation or other distribution event, the Fair Market
Value of an asset shall be at least equal to the nonrecourse debt to which it is
subject.
4.52 Fiscal Month - a calendar month or such portion thereof as may
occur during the term of this Agreement.
4.53 Fiscal Period - a Fiscal Year or Fiscal Month, as the case may be.
- 7 -
<PAGE>
4.54 Fiscal Year - a calendar year or applicable portion thereof as may
occur during the term of this Agreement.
4.55 Fischer Site - the land located in Maryland Heights, Missouri,
more particularly described in Exhibit B.
4.56 Ground Lease - the Ground Lease of even date herewith between
Harrah's (LLC), as landlord, and the Partnership, as tenant, covering the Leased
Site.
4.57 Guarantor - as defined in Section 4(b)(vi).
4.58 Harrah's - Harrah's Maryland Heights Corporation, a Nevada
corporation.
4.59 Harrah's (LLC) - Harrah's Maryland Heights LLC, a Delaware limited
liability company.
4.60 Harrah's Las Vegas - Harrah's Las Vegas, a Nevada corporation, and
any successor owner of Harrah's System Marks (as defined in the Management
Agreement) that are used at the Shoreside Complex.
4.61 Harrah's Lease - the Lease of even date herewith between Harrah's
(LLC), as tenant, and the Partnership, as landlord.
4.62 Harrah's Premises - the portion of the Shoreside Complex that is
leased to Harrah's (LLC) pursuant to the Harrah's Lease.
4.63 HEI - Harrah's Entertainment, Inc., a Delaware corporation.
4.64 HMHOC - Harrah's Maryland Heights Operating Company, a Nevada
corporation.
4.65 Holding Entity - the Partners, and any corporation, partnership,
trust, limited liability company, limited partnership or other Person that,
directly or indirectly, holds any interest in, or any Beneficial Ownership of,
any Partnership Interest or Project Property.
4.66 Indemnified Person - as to any Partner indemnified under Section
14, the Partnership, such Partner and any Affiliate of such Partner (other than
the Indemnifying Partner), and any agents, attorneys, officers, members,
directors, stockholders or employees of such Partner or such Affiliate.
4.67 Indemnifying Partner - a Partner that owes any amount or duty to
any Indemnified Person pursuant to Section 14.
4.68 Initial Capital Contribution - as defined in Section 4(a).
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4.69 Initial Period - as defined in Section 9(n)(ii)(A).
4.70 Institutional Investor - any entity which (i) (A) (1) is an
insurance company, state chartered commercial or savings bank, national bank,
real estate investment trust, pension or profit sharing plan or trustee of any
pension or profit sharing trust; and (2) has either net assets of not less than
Fifty Million Dollars ($50,000,000) or total assets of not less than One Hundred
Million Dollars ($100,000,000), in each instance annually adjusted to reflect
increases, but not decreases, in the Consumer Price Index; or (B) is a Qualified
Institutional Buyer, and (ii) agrees to comply with this Agreement by delivery
of an instrument in form and substance reasonably acceptable to the Partners.
4.71 Invested Capital - as of the time of its determination, the total
of a Partner's Capital Contributions and Partner Loans LESS any Distributable
Cash, Net Proceeds of Sale or Financing/Refinancing and the fair market value of
any non-cash property distributed to such Partner.
4.72 IRS - as defined in Section 12(d).
4.73 Leased Site - the land described in Exhibit C-1, together with the
easements appurtenant thereto as described in Exhibit C-2.
4.74 Losses - for each Fiscal Year or other Fiscal Period, an amount
equal to the Partnership's taxable loss for such Fiscal Year or Fiscal Period,
as determined in accordance with Section 703(a) of the Code (for this purpose,
all items of loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in Losses), with the adjustments
required to comply with the Capital Account maintenance rules of Regulation
Section 1.704-1(b). If Capital Accounts are adjusted in accordance with
Regulation Section 1.704-1(b), such adjustments shall be treated as Losses (when
appropriate under said Regulations), which are to be allocated among the
Partners in accordance with this Section; subsequent to any such adjustments,
tax allocations of loss and deduction with respect to Partnership assets shall
take into account any variation between their respective adjusted bases for
Federal income tax purposes and their fair market value in the same manner as
under Code Section 704(c). Adjustments to Capital Accounts made pursuant to this
Section 4.75 shall have no impact on the Partners' respective Percentages.
4.75 Lot 7 - Lot 1 of Riverport Subdivision Tract 7, as recorded in the
Public Records of St. Louis County, Missouri.
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4.76 Major Decisions - as defined in Section 7(a).
4.77 Management Agreement - the Management Agreement by and between the
Partnership and HMHOC, attached as Exhibit D and to be executed concurrently
with this Agreement.
4.78 Material Modification - a modification of, addition to or deletion
from the conceptual Plans and Specifications for the Shoreside Complex attached
as Exhibit E, including without limitation, the sign layouts referred to in
Section 8.2 of each Operating Lease as well as the use of proprietary marks as
provided in Article 12.1 of the Management Agreement.
4.79 Monetary Default - any of: (i) the failure to make, when due, an
Initial Capital Contribution pursuant to Section 4(a); (ii) the failure to make,
when due, a mandatory Additional Capital Contribution pursuant to Section
4(b)(i); (iii) the failure to make, when due, a voluntary Additional Capital
Contribution pursuant to Section 4(b)(ii) following approval of such Capital
Contribution by the Partners; (iv) the failure of an Indemnifying Partner to pay
any indemnity obligation or any cost of defense of any indemnity claim when due
to or on behalf of the Indemnified Partner; and (v) the failure to timely
contribute the amount of a negative Capital Account balance upon liquidation of
the Partnership.
4.80 Net Proceeds of Sale or Financing/Refinancing - the net proceeds
in cash or other property of a Sale or Financing/Refinancing after: (i) payment
of all costs of the transaction realizing such proceeds; (ii) in the case of a
financing or refinancing, the application of the proceeds of any such financing
or refinancing to the Partnership uses for which they were borrowed; and (iii)
the creation of reserves for contingent liabilities and liabilities, the exact
amounts of which shall not then have been ascertained or as to which payment is
not then due.
4.81 Non-Arbitrable Decisions - as defined in Section 7(b).
4.82 Non-Defaulting Partner - as defined in Section 21 (introductory
paragraph).
4.83 Notice - any notice, demand or other communication required or
permitted by this Agreement. Notices shall be given as set forth in Section 17.
4.84 Offering Partner - as defined in Section 8(d).
4.85 Offer - as defined in Section 26(a).
4.86 Offeree - as defined in Section 26(a).
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4.87 Offeror - as defined in Section 26(a).
4.88 Opening Date - the date that Players first opens for business at
the Players' Premises, Harrah's (LLC) first opens for business at Harrah's
Premises, and/or the Partnership first opens the Entertainment Facilities for
business, as the case may be.
4.89 Operating Budget - as defined in Section 7(l).
4.90 Operating Expenses - all expenditures of the Partnership (other
than Construction Costs) in connection with the Shoreside Complex and the
Fischer Site, determined on a cash basis. Operating Expenses do not include: (a)
any home office overhead expenses of any Partner, except when contained in an
approved Budget or authorized by any contract or agreement executed by both
Partners or otherwise approved by the Partners in writing; (b) any amount paid
from Reserves of the Partnership; and (c) non-cash items such as depreciation
and amortization of assets.
4.91 Operating Leases - the Players' Lease and/or the Harrah's Lease,
as the context requires.
4.92 Operating Lease Premises - the portions of the Entertainment
Facilities leased pursuant to the Operating Leases.
4.93 Option Period - as defined in Section 9(k)(i).
4.94 Partner Loan - any loan (including principal, interest and other
charges) made by a Partner to the Partnership, but excluding unpaid amounts due
to a Partner from time to time under any contract with the Partnership for goods
or services.
4.95 Partner Nonrecourse Debt - as defined in Section 6(a).
4.96 Partner Nonrecourse Minimum Gain - as defined in Section 6(c).
4.97 Partners - collectively and separately, Harrah's, Players and
Persons admitted to the Partnership pursuant to this Agreement.
4.98 Partnership - the partnership formed pursuant to this Agreement.
4.99 Partnership Accountants - as defined in Section 12(b).
4.100 Partnership Interest - the ownership interest of a Partner in the
Partnership.
4.101 Percentage - the percentage ownership of a Partner in the
Partnership, as initially set forth in Section 3, and thereafter determined in
accordance with the terms of this Agreement.
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4.102 Person - an individual, corporation, association, partnership,
limited partnership, limited liability company, trust, unincorporated
organization or other entity.
4.103 Plans and Specifications - the plans and specifications for the
Shoreside Complex, or portions thereof, approved by the Partners or otherwise
adopted pursuant to this Agreement. The conceptual Plans and Specifications
attached or identified as or in Exhibit E are hereby approved by the Partners.
Prior to the commencement of construction of the Shoreside Complex or letting of
the general contract therefor, the Partners shall: (i) agree upon, or there
shall be determined in accordance with Section 19(a), all Material Modifications
required to produce full detailed construction Plans and Specifications for the
Shoreside Complex; and (ii) memorialize such determination by joint writing or
written determination of the Arbitrator, as the case may be.
4.104 Players - Players MH, L.P., a Missouri limited partnership.
4.105 Players' Lease - the lease of even date herewith between Players,
as tenant, and the Partnership, as landlord.
4.106 Players' Parent - Players International, Inc., a Nevada
corporation.
4.107 Players' Premises - the portion of the Shoreside Complex leased
to Players pursuant to the Players' Lease.
4.108 Prime Rate - the "Prime Rate" that is reported in the Money Rates
column of The Wall Street Journal on the Business Day for which the rate is
applicable (or the next preceding Business Day, if the applicable day is not a
Business Day). If The Wall Street Journal ceases publication of the Prime Rate,
the Prime Rate (or base rate) from time to time announced by Bankers Trust
Company, New York, New York, or its successor (whether or not such rate has
actually been charged by such bank), or if Bankers Trust Company discontinues
the practice of announcing the Prime Rate, the "Prime Rate" shall mean the
highest rate charged by such bank on short term, unsecured loans to corporate
borrowers. If The Wall Street Journal (a) publishes more than one Prime Rate,
the higher or highest of such rate shall apply, or (b) publishes a retraction or
correction of any such rate, the rate reported in such retraction or correction
shall apply. If the Prime Rate changes, interest rates in this Agreement which
are based on the Prime Rate shall change, effective as of the first day of each
calendar month, to reflect the Prime Rate in effect on the last day of the
preceding calendar month. Notwithstanding anything to the contrary in this
paragraph, the Prime Rate shall never exceed the Usury Rate.
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4.109 Profits - for each Fiscal Year or other Fiscal Period, an amount
equal to the Partnership's taxable income for such year or period, as determined
in accordance with Section 703(a) of the Code (for this purpose, all items of
income or gain required to be stated separately pursuant to Section 703(a)(1) of
the Code shall be included in Profits), with the adjustments required to comply
with the Capital Account maintenance rules of Regulation Section 1.704-1(b). If
Capital Accounts are adjusted in accordance with Regulation Section 1.704-1(b)
(when appropriate under said Regulations), such adjustments shall be treated as
Profits which are to be allocated among the Partners in accordance with this
Section; subsequent to any such adjustments, tax allocations of income or gain
with respect to Partnership assets shall take into account any variation between
their respective adjusted bases for Federal income tax purposes and their fair
market value in the same manner as under Code Section 704(c). Adjustments to
Capital Accounts made pursuant to this Section 4.110 shall have no impact on the
Partners' respective Percentages.
4.110 Prohibited Person - any of those Persons described in Exhibit H.
4.111 Project Office - the office of the Partnership to be established
by the Partners at the Entertainment Facilities at or following the Opening Date
of the Entertainment Facilities.
4.112 Project Property - in the case of Players:
(i) the Partnership Interest of Players; and
(ii) the interest of Players in the Players' Lease (and any
personal property located or installed in Players' Premises or arising
out of the business conducted therein).
in the case of Harrah's:
(i) the Partnership Interest of Harrah's;
(ii) the interest of HMHOC or any other Affiliate (Wholly Owned)
of HEI to which the obligations of HMHOC under the Management Agreement
may be assigned; and
(iii) the interest of Harrah's (LLC) in the Harrah's Lease (and
any personal property located or installed in Harrah's Premises or
arising out of the business conducted therein);
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provided that, in the case of a purchase by Players of Harrah's
Project Property pursuant to Sections 9(b), 9(c), 24, 25, or 26, Harrah's
Project Property shall also include:
(iv) Lot 7, if then owned by Harrah's or an Affiliate (Wholly
Owned) of HEI; and
(v) the fee simple interest of Harrah's (LLC) or any other
Affiliate (Wholly Owned) of HEI to which such fee simple interest may be
transferred, as ground lessor under the Ground Lease.
Project Property owned by any Affiliate (Wholly Owned) of a Partner shall, for
purposes of this Agreement, be Project Property of such Partner, and such
Partner and its Guarantor shall cause its Affiliate (Wholly Owned) to take all
necessary action to fulfill its obligations or satisfy such Partner's
obligations under this Agreement.
4.113 Project Site - the Leased Site, the Adjacent Fee Site and the
Fischer Site.
4.114 Qualified Institutional Buyer - a qualified institutional buyer
as defined in Rule 144A of the Securities and Exchange Commission promulgated
pursuant to the Securities Act of 1933, as amended.
4.115 Receiving Partner - as defined in Section 8(d).
4.116 Redeemed Interest - as defined in Section 24(a).
4.117 Redemption Notice - as defined in Section 24(a).
4.118 Regulations - regulations promulgated from time to time by the
United States Treasury Department pursuant to the Code. All references to
specific Regulations in this Agreement shall be deemed also to refer to any
corresponding provisions of succeeding Regulations.
4.119 Reserves - with respect to any Fiscal Period, cash set aside by
the Partnership for working capital and to pay taxes, insurance, debt service,
repairs, capital replacements, capital improvements, contingent liabilities, or
other costs and expenses incident to the ownership or operation of the Shoreside
Complex.
4.120 Sale or Financing/Refinancing - any Partnership transaction
resulting in the receipt of cash or other consideration not in the ordinary
course of its business including, without limitation, any transaction of the
following nature by the Partnership: sales or exchanges
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of real or personal property, condemnation or casualty resulting in recovery of
damage awards or property insurance proceeds, or any debt financing/refinancings
or other third-party borrowing, provided however, there shall be excluded from
the definition of Sale or Financing/Refinancing the following: (i) Partner
Loans; (ii) Affiliate Loans; (iii) Capital Contributions; (iv) temporary
condemnation proceeds; and (v) proceeds of business interruption, loss of rent
or similar insurance.
4.121 Shoreside Complex - the Project Site, and any buildings,
structures and improvements constructed on or affixed to the Project Site,
including, without limitation, the Entertainment Facilities, Harrah's Premises,
Players' Premises, and all roads, utilities, dredging, grading, landscaping,
levees and other off-site improvements constructed or developed by the
Partnership on or in support of the Project Site.
4.122 State - the State of Missouri.
4.123 Substantial Completion - substantial completion of the Shoreside
Complex, or applicable portion thereof, in accordance with the Plans and
Specifications as evidenced by: (i) a certificate of occupancy from the City of
Maryland Heights; (ii) a certificate from: (x) the inspecting architect; and (y)
the general contractor, that the Shoreside Complex has been substantially
completed, as defined by Section 9.8.1 of American Institute of Architects
Document A-201, General Conditions of the Contract for Construction (1987
Edition), in accordance with the Plans and Specifications; and (iii) to the
extent required for its operation, issuance of a license or permit by the
Missouri Gaming Commission approving the completion of construction thereof.
4.124 Transfer - any sale, assignment, gift, hypothecation, pledge or
other disposition, whether voluntary or by operation of law, of all or any part
of a Partner's Project Property or of any direct or remote interest therein
owned by a Beneficial Owner except for: (i) the sale of Capital Stock of HEI and
Players' Parent on the New York or NASDAQ Stock Exchanges, as the case may be;
or (ii) the sale, assignment, gift, hypothecation, pledge or other disposition
in a single or related series of transactions, of all or substantially all of
the assets of HEI or Players' Parent, as the case may be.
4.125 Transferor Partner - as defined in Section 9(b).
4.126 Unsuitability Determination - a final determination by a gambling
regulatory authority that, for reasons of character, honesty, integrity, fiscal
probity, or unlawful
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activity: (i) a Person is unsuitable to be associated (by contract or otherwise)
with another Person; (ii) an application of a Person to such gambling regulatory
authority for a gambling license, permit or entitlement will not be approved; or
(iii) a license, permit or entitlement issued by such gambling regulatory
authority to such Person will be suspended for more than seventy-two (72) hours,
revoked, rescinded or not renewed.
4.127 Unsuitability Redemption - as defined in Section 24(a).
4.128 Unsuitability Redemption Price - ninety percent (90%) of the Fair
Market Value of the Project Property determined in accordance with Section 9(n),
except, in the case of: (i) Lot 7; (ii) the interest of Harrah's (LLC), as
ground lessor of the Leased Site; and (iii) the interest of HMHOC as manager
under the Management Agreement; the Unsuitability Redemption Price shall be
ninety percent (90%) of the price for such assets determined in accordance with
the procedure set forth in Section 26(b).
4.129 Unsuitable Partner - as defined in Section 24(a).
4.130 Usury Rate - the highest rate of interest that may be charged
under the criminal law of the State of Missouri for the transaction between the
Persons identified.
4.131 Valuation Date - as defined in Section 24(a).
4.132 Voting Power - the power to direct the management and policies of
a Person, directly or through one or more intermediaries, whether through the
ownership of Capital Stock, by contract, exercise of any right of approval or
otherwise.
II. Operating Provisions
1. Purposes of the Partnership
The purposes of the Partnership are:
(a) to lease the Leased Site under the Ground Lease and acquire fee
title to the Adjacent Fee Site;
(b) to own, hold, develop, operate, lease, transfer, sell, exchange,
improve or otherwise dispose of all or any part of the Shoreside Complex;
(c) to enter into and perform contracts of any kind necessary to, in
connection with or incidental to the accomplishment of the foregoing
purposes;
(d) to incur Debt from any source, including without limitation any
Partner or Affiliate of a Partner, to accomplish the foregoing purposes or
to meet the obligations of the Partnership; to issue evidences of the
Partnership's Debt to repay such
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October 31, 1995
<PAGE>
borrowings; and to grant security interests in the Partnership's
assets to secure repayment of such Debt; and
(e) to do all other things necessary, desirable or conducive to the
accomplishment of the aforesaid purposes or otherwise contemplated by this
Agreement.
The Partnership is a single-purpose joint venture and is intended to
engage in no business or project other than those described above regarding the
Shoreside Complex. The Partnership is not responsible for, and shall have no
liability in connection with, the activities and operations of Harrah's Premises
and Players' Premises, which shall each be separately operated by the tenant
under each such Operating Lease. Title to all Partnership property shall be held
in the name of the Partnership.
2. Term of Partnership
The term of the Partnership shall commence on the date hereof and
continue until December 31, 2080, unless the Partnership is sooner dissolved in
accordance with Section 10.
3. Percentage Interests
(a) The initial Percentage of each Partner in the Partnership shall
be as follows:
Harrah's 50.00%
Players 50.00%
======
TOTAL 100%
(b) The Percentage of each Partner as stated in this Section 3, shall
be adjusted from time to time pursuant to the provisions of this Agreement.
4. Capital Contributions; Partner Loans
(a) Initial Capital Contributions
Each Partner: (i) has this day made a cash Capital Contribution to the
Partnership in the amount of Twenty Million Dollars ($20,000,000), for a total
of Forty Million Dollars ($40,000,000); and (ii) shall make further cash Capital
Contributions in the amount of Eighty-Five Million Five Hundred Thousand Dollars
($85,500,000), for a total of Two Hundred Eleven Million Dollars ($211,000,000),
as provided in Exhibit G. Contributions of such Two Hundred Eleven Million
Dollars ($211,000,000), One Hundred Five Million Five Hundred Thousand Dollars
($105,500,000) by each Partner, shall be called "Initial Capital Contributions".
There shall be credited against the last required portion of each Partner's
additional Eighty-Five Million Five Hundred Thousand Dollar ($85,500,000)
Initial Capital Contribution the amounts set forth
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in Exhibit G, which are the agreed value of Partnership expenses previously
incurred and related property contributed by such Partner.
(b) Additional Capital Contributions
In addition to its Initial Capital Contribution under Section 4(a),
each Partner shall be obligated, within five (5) Business Days after Notice
from the other Partner, to fund its Percentage of "Additional Capital
Contributions," in cash, for the following:
(i) Mandatory Additional Capital Contributions - all additional
cash required by the Partnership for the following uses, without the need
for a decision by the Partners: (A) to meet contractual obligations of
the Partnership (including, without limitation, the contractual
obligations of the Partnership to the City, Howard Bend Levee District
and U.S. Army Corps of Engineers under the Agreements identified in
Exhibit T; (B) to pay uninsured judgments (other than for tort claims);
(C) to comply with law; (D) to restore, repair, rebuild or replace the
Shoreside Complex following casualty or condemnation (unless the Partners
have unanimously decided not to do so); (E) to meet other cash shortfalls
of the Partnership from the operation of the Shoreside Complex (other
than for tort claims); or (F) to repair construction defects, the
estimated cost of which does not exceed amounts recovered from
contractors or other warrantors by more than $50,000,000.
(ii) Voluntary Additional Capital Contributions - all additional
cash required by the Partnership for any use other than uses specified in
Section 4(b)(i), the decision to contribute which shall be a
Non-Arbitrable Decision.
(c) General Provisions
(i) If the allocations or distributions required or permitted
under this Agreement result in the reduction of a Partner's Capital
Account, such reduction need not be restored, except for restoration of
negative Capital Account balances as provided in Section 7(e).
(ii) No Partner shall have the right to withdraw, earn interest on
or reduce its Capital Contribution.
(iii) No Partner shall have personal liability for the repayment
of the Capital Contribution of any Partner.
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(iv) Unless otherwise specified in this Agreement, Partner Loans
and Affiliate Loans shall bear interest at a rate, not to exceed the
Usury Rate, and be made on other terms and conditions, as are agreed by
the Partners prior to the making of such loans; all of which shall be
commensurate with the risk and nature of the particular loan. Partner
Loans and Affiliate Loans shall be repayable solely as provided in this
Agreement or as otherwise agreed and documented by the Partners.
(v) Except to the extent provided for in this Agreement, no
Partner shall have the right to receive a return of its Capital
Contribution upon the dissolution of the Partnership, or to receive any
distributions from the Partnership at any time.
(vi) The obligation of Players to make its Initial Capital
Contribution is guaranteed by Players' Parent, pursuant to the Guaranty
appended to this Agreement, and the obligation of Harrah's to make its
Initial Capital Contribution is guaranteed by Harrah's Operating Company,
Inc., a Delaware corporation, pursuant to the Guaranty appended to this
Agreement. Each of Players' Parent and Harrah's Operating Company, Inc.
is referred to herein as a "Guarantor".
5. Distributions
Except as otherwise provided in Section 11:
(a) Distributable Cash shall be distributed to the Partners in
accordance with their respective Percentage, provided that all
Distributable Cash otherwise payable to a Partner shall first be applied to
pay interest, principal and other amounts due in respect of any Default
Loan owed by such Partner.
(b) Distributable Cash, if any, shall be distributed to the Partners
at such intervals as the Partners may determine, but not less frequently
than once each Fiscal Year within ninety (90) days after the end of the
Fiscal Year.
(c) Net Proceeds of Sale or Financing/Refinancing shall be
distributed to the Partners as promptly as practicable following a Sale or
Financing/Refinancing and in the same order of priority as is described in
Section 5(a).
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(d) On the Effective Date, there shall be distributed to each of
Harrah's and Players the respective amounts set forth in Exhibit F-1
representing fifty percent (50%) of certain costs incurred by each of them
on behalf of the Partnership prior to the Effective Date, for items
contained within the Cost Budget. A further reimbursing distribution in the
amount of fifty percent (50%) of any further such costs which have not been
recorded on the accounting records of Harrah's or Players, as the case may
be, before the cut-off date of the accounting underlying the first tranche
of such reimbursable expenses shall be made on or before ninety (90) days
after the Effective Date. Each of Harrah's and Players has had the
opportunity to and it approves the costs reimbursed on the Effective Date.
The second reimbursing distribution shall be subject to the right of each
Partner to review and approve the additional amounts reimbursed, provided
that the standard for entitlement to, and arbitration of, any dispute as to
any such reimbursement shall be to allow reimbursement of any amount
incurred in good faith for an item or category of expense included within
the Cost Budget that the Partnership's accountants concur is a proper
Partnership expense.
6. Profits and Losses
(a) Allocation of Losses
All Losses shall be allocated to the Partners in accordance with
their respective Percentage; provided, however, that: (i) Losses (or
portion thereof) attributed to a loan made or guaranteed by a Partner, or
Partner nonrecourse debt within the meaning of Regulation Section
1.704-1(b)(4)(iv)(g)2(i) ("Partner Nonrecourse Debt") shall be allocated to
such Partner in accordance with such Regulation; and (ii) in accordance
with Section 704(c) of the Code and Regulations thereunder, loss and
deductions with respect to any property contributed to the Partnership
shall be allocated solely to the contributing Partner so as to take account
of any variation between the adjusted basis of such property and the agreed
value at which such property was contributed.
(b) Allocation of Profits
All Profits shall be allocated in accordance with the following order
and priority:
(i) first, to those Partners who were allocated Losses (or
portions thereof) under Section 6(a) in accordance with Regulation
Section 1.704-1(b)(4)(iv)(g)2(i)
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until the cumulative Profits allocated pursuant to this Section 6(b) to
such Partners are equal to the total of such Losses allocated to such
Partners for all prior periods; and
(ii) second, to the Partners in accordance with their respective
Percentage.
Notwithstanding the foregoing, in accordance with Section 704(c) of
the Code and Regulations thereunder, profit and gain with respect to any
property contributed to the Partnership shall be allocated solely to the
contributing Partner so as to take account of any variation between the
adjusted basis of such property and the agreed value at which such property
was contributed.
(c) Minimum Gain Chargeback
Notwithstanding any other provision of this Agreement, if there is a
net decrease in Partnership minimum gain (as defined in Regulation Section
1.704-2(d), Profits (or items thereof) shall be allocated to all Partners
in an amount determined as provided in Regulation Section 1.704-2(g)(2) and
otherwise in accordance with Regulation Section 1.7042(f). This Section
6(c) is intended to comply with the minimum gain chargeback requirements of
Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith. Any special allocations made under this Section 6(c) shall be
taken into account for purposes of determining subsequent allocations of
Profits and Losses so that the total allocations will, to the extent
possible, equal the allocations that would have been made if this Section
6(c) had not previously applied. In addition, notwithstanding any other
provision of this Agreement, if there is a net decrease in minimum gain
attributable to a Partner Nonrecourse Debt (as defined in Section 6(a)
hereof and as determined pursuant to Regulation Section 1.704-2(i)(3), such
minimum gain being hereinafter referred to as "Partner Nonrecourse Minimum
Gain") for a taxable year of the Partnership, then, after taking into
account allocations pursuant to this Section 6(c), but before any other
allocations are made for such taxable year, each Partner with a share of
Partner Nonrecourse Minimum Gain attributable to such Partner Nonrecourse
Debt at the beginning of such year shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) in an amount
equal to such Partner's share (determined in a manner consistent with
Regulation Section 1.704-2(g)(2)) of the net
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decrease in Partner Nonrecourse Minimum Gain. Any special allocations
made under this Section 6(c) shall be taken into account for purposes of
determining subsequent allocations of Profits and Losses so that the total
allocations will, to the extent possible, equal the allocations that would
have been made if this Section 6(c) had not previously applied.
(d) Liquidating Distributions
Upon liquidation of the Partnership, liquidating distributions shall
in all cases be made in accordance with the positive Capital Account
balances of the Partners, as determined after taking into account all
Capital Account adjustments for the Partnership taxable year during which
such liquidation occurs (other than those made pursuant to Regulation
Sections 1.704-1(b)(2)(ii)(b)(2) and (3)), by the end of such taxable year
(or, if later, within 90 days after the date of such liquidation).
(e) Restoration of Negative Capital Account
If any Partner has a deficit balance in its Capital Account following
the liquidation of in the Partnership, determined after taking into account
all Capital Account adjustments for the Partnership taxable year during
which such liquidation occurs (other than those made pursuant to Regulation
Section 1.704-1(b)(2)(ii)(b)(3)), such Partner shall be unconditionally
obligated to restore the amount of such deficit balance to the Partnership
by the end of such taxable year (or, if earlier, within thirty (30) days
after the date of such liquidation), which amount shall, upon liquidation
of the Partnership, be paid to creditors of the Partnership or distributed
to other Partners in accordance with their positive Capital Account
balances (in accordance with Regulation Section 1.704-1(b)(2)(ii)(b)).
(f) References to Regulations
The inclusion of references in this Section 6 to specific Regulation
sections is not intended to imply that other Regulations are not to apply,
the Partners' intent being that all Regulation Sections 1.704 are to apply
to the allocation of Profits and Losses under this Agreement.
7. Management
(a) Decisions other than Major Decisions and Non-Arbitrable Decisions
may be made and related acts taken: (x) as provided in this Agreement; or
(y) if not
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specifically provided in this Agreement, by Harrah's, subject to the
monetary limitations of the Budgets; or (z) as delegated by any contract
entered into by the Partnership (including, without limitation, the
Management Agreement).
"Major Decisions" shall mean decisions to:
(i) approve any Material Modification;
(ii) approve the Annual Plan and Operating Budget;
(iii) change the Partnership Accountants;
(iv) change the permitted investments or irrevocable banking
instructions identified in Section 18;
(v) allocate a condemnation award or casualty insurance or title
insurance proceeds among the various items of property taken (if not
allocated by the condemnee, insurer or judicial or other authority making
such award);
(vi) modify any management agreement for the Shoreside Complex
other than the Management Agreement;
(vii) commence, discontinue, settle, compromise, submit to
arbitration, or participate in any single or related series of actions in
the nature of legal proceedings in any court, before any governmental
agency, or in arbitration, other than actions arising out of the ordinary
course of business, involving any potential liabilities to, or claims by
or against, the Partnership, not covered by insurance or within the
deductible amounts of any insurance policy, the cost of which, if lost or
settled, would equal or be less than One Hundred Thousand Dollars
($100,000), adjusted annually on each anniversary of the Effective Date,
to provide for increases, but not decreases, in the Consumer Price Index;
(viii) make any tax election pursuant to Section 12(d);
(ix) approve any sublease of a portion, less than substantially
all, of any Operating Lease Premises;
(x) enter into any contracts with or any compensation to a Partner
or any Affiliates of a Partner, other than pursuant to the Management
Agreement, the Ground Lease, the Harrah's Lease, the Players' Lease
and/or any contract for insurance or related services entered into with
HEI's Risk Management
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Department as permitted by this Agreement and/or the Management
Agreement;
(xi) determine or change the location of the Project Office;
(xii) determine the form of agreement to be required of
Institutional Investors pursuant to Section 4.71(ii) of Part I of this
Agreement;
(xiii) allocate Impositions (as defined in the Operating Leases)
to each of the tenants under the Operating Leases;
(xiv) establishing rules and regulations governing the use of the
Shoreside Complex by the tenants under the Operating Leases; or
(xv) approve the amount of the second reimbursing distribution
pursuant to Section 5(d) of this Agreement.
(b) "Non-Arbitrable Decisions" shall mean any decisions to:
(i) enter into the general contract with Hensel Phelps
Construction Company and/or the architectural contract with Wittenberg,
Deloney and Davidson, for the Entertainment Facilities;
(ii) increase the Construction Costs for the Shoreside Complex in
excess of the Cost Budget attached as Exhibit F;
(iii) call for a voluntary Additional Capital Contribution
pursuant to Section 4(b)(ii);
(iv) construct any improvements on the Project Site, other than
the work shown on the Plans and Specifications, any Material
Modifications and any work approved as part of an Annual Plan or required
by law or by reason of Harrah's Operational Standards as defined in
Section 1.1(ab) of the Management Agreement;
(v) repair, restore, rebuild or replace any damage to, or
impairment or destruction of the Shoreside Complex following any
condemnation, fire or other casualty or title defect which might result
in an Operating Lease Termination;
(vi) sell, assign, transfer, hypothecate, pledge, lease, encumber
or otherwise dispose of, in a single transaction or related series of
transactions, all or any portion of the Shoreside Complex or enter into
any agreement to do
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so, except the Harrah's Lease, the Players' Lease and the
Management Agreement and any easements, rights-of-way or minor title
encumbrances incidental to the development of the Shoreside Complex;
(vii) incur Debt other than (A) Debt provided for in a Cost
Budget; (B) Debt provided for in an Operating Budget; (C) Debt provided
in an approved budget for future development; (D) trade debt incurred in
the ordinary course of business; (E) Debt imposed by law; or (F) Debt
incurred under any contract, loan document, lease or other agreement
authorized pursuant to this Agreement.
(viii) (A) enter into any management agreement other than the
Management Agreement; or (B) enter into any amendment or modification of
the Management Agreement;
(ix) commence, discontinue, settle, compromise, submit to
arbitration, or participate in any single or related series of actions in
the nature of legal proceedings in any court, before any governmental
agency, or in arbitration, or other than actions arising out of the
ordinary course of business, involving any potential liabilities to, or
claims by or against, the Partnership not covered by insurance or within
the deductible amount of any insurance policy, the cost of which, if lost
or settled, would exceed One Hundred Thousand Dollars ($100,000.00),
adjusted annually on each anniversary of the Effective Date, to provide
for increases, but not decreases, in the Consumer Price Index;
(x) execute or enter into any single or related series of bonds,
guaranties, or indemnities;
(xi) invest in or operate any business other than the Shoreside
Complex;
(xii) other than admission of transferees of Partners in
connection with any Transfer made in accordance with the terms of this
Agreement, admit any additional or substitute Partners to the Partnership
or approve any Transfer to any such additional or substitute Partner;
(xiii) except as provided in Sections 10 and 11, dissolve, wind up
the business affairs of, or liquidate the Partnership, or merge the
Partnership into another entity;
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(xiv) subject to the provisions of Section 16, amend or modify
this Agreement;
(xv) make an assignment for the benefit of creditors or file a
voluntary petition under the Federal Bankruptcy Code or any insolvency
law of the State or any other state of the United States of America;
(xvi) approve any Transfer of an Operating Lease requiring
Partnership approval;
(xvii) approve any change in identity of the Arbitrator identified
in Section 19(a)(i);
(xviii) reject any agreement of the Partnership, including any
Operating Lease and/or the Management Agreement, in the event of the
filing of Partnership bankruptcy proceedings; or
(xix) repair any construction defect in the Shoreside Complex, the
cost of which is not recovered from contractors or other warrantors.
(c) Subject to Sections 7(f) and 7(i), if the Partners are unable to
reach a unanimous decision with respect to a Major Decision, either Partner
may submit the matter to binding arbitration in accordance with Section
19(b);
(d) Subject to Sections 7(f) and 7(i), if the Partners are unable to
reach a unanimous decision with respect to a Non-Arbitrable Decision, the
Partnership shall not undertake the related action, except that: (i) either
Partner may cause the Partnership to take such action to the extent it, in
good faith, determines that such action: (A) is necessary to comply with
applicable laws, rules, regulations and orders; (B) is in defense of the
Partnership's interests in any proceedings in any court, before any
governmental agency, or in arbitration; or (C) is necessary to comply with
any contractual or other Partnership obligations (including, without
limitation, those certain agreements with the City, Howard Bend Levee
District and U.S. Army Corps of Engineers identified in Exhibit J); (ii)
with respect to Section 7(b)(v), if the Partners are unable to reach a
unanimous decision, the related action shall be taken; and (iii) with
respect to Section 7(b)(xix), if the Partners are unable to reach a
unanimous decision, the related action shall be taken unless the estimated
cost of repair in excess of any amounts recovered from contractors or other
warrantors exceeds $50,000,000.
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(e) Subject to the provisions of Sections 7(a) through (d), Harrah's
shall have authority and responsibility, as well as the benefit of
indemnification by the Partnership as provided in Section 14, to:
(i) manage the development and construction of the Shoreside
Complex, including, without limitation, supervising: (x) the preparation
of the Plans and Specifications; and (y) the performance by the Persons
contracting therefor with the Partnership;
(ii) commit to contract and spend monies provided for in the
Budgets;
(iii) let contracts and change orders to contracts for the
Shoreside Complex not to exceed the monies provided for in the Cost
Budget, but not limited by individual line item sublimits;
(iv) prepare or cause to be prepared for, and following review and
approval by Players, file reports with, any governmental or regulatory
agencies and any Federal, state or local tax returns (and if Players has
not commented on the report, or tax return, submitted to it on or before
fifteen (15) days after the Players' receipt thereof, the report shall be
deemed to have been approved);
(v) pay any taxes payable by the Partnership;
(vi) place and maintain or cause to be placed or maintained
insurance with such insurers and in such amounts as the Partners shall
agree, or as required under any Partnership contract, loan document,
lease or other agreement, or by law (which insurance may be placed
through the Risk Management Department of HEI if the cost of insurance
is: (x) approved by Players; or (y) within an applicable Budget; or (z)
equivalent coverage cannot be obtained at a better cost after competitive
bidding).
Players shall have the right to have representatives present at all
times to inspect (but not direct) work on the Shoreside Complex to assure
itself that the work conforms with the requirements of the Plans and
Specifications.
(f) Notwithstanding the provisions of Section 7(a) and (b) except
Section 7(b)(xviii), Players shall be the Partnership's representative with
exclusive authority to exercise the Partnership's enforcement rights under
the Harrah's Lease, the Ground Lease
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(so long as Harrah's (LLC) or its Affiliate (Wholly Owned) is Ground
Lessor) and the Management Agreement. Notwithstanding the provisions of
Section 7(a) and (b) except Section 7(b)(xviii), Harrah's shall be the
Partnership's representative with exclusive authority to exercise the
Partnership's enforcement rights under the Players' Lease and, if the
Leased Site is acquired by Players or its Affiliate (Wholly Owned) pursuant
to Section 8(d) or otherwise, the Ground Lease. Any dispute between the
Partnership and the other party to such agreements as to matters reserved
to the exclusive authority of Harrah's or Players by this Section 7(f)
shall be resolved under the dispute resolution sections of such agreements.
(g) The Partners shall devote such time to the Partnership business
as they deem reasonably necessary in furtherance of, and shall exercise
their best judgment in all matters relating to, Partnership business.
However, except as provided in this Section 7(g) (i.e., except for gross
negligence, fraud, bad faith, breach of this Agreement or criminal
conduct), no Partner shall have liability to the Partnership or to the
other Partners for any failure or misfeasance on the part of such Partner
whatsoever including, without limit, a failure or misfeasance with respect
to any Partner's obligations under this Agreement. Without limiting the
generality of the foregoing, the Partners recognize that innumerable
decisions will have to be made by the Partners during the term of
Partnership which will require the Partners to exercise broad discretion.
Accordingly, each of the Partners hereby waives its right to institute any
legal proceeding of any kind whatsoever against another Partner for any
action taken by, or any omission of, a Partner in its capacity as a Partner
in the Partnership, except for gross negligence, bad faith, fraud, breach
of this Agreement or criminal conduct.
(h) If, pursuant to the Code and the Regulations, the Partnership is
to be treated as an association taxable as a corporation, the Partners
shall, in compliance with the Code, the Regulations and applicable state
law, take the necessary action to restructure the Partnership, change the
form of entity under which the business of the Partnership is conducted, or
make an appropriate tax election to enable the Partnership or its successor
to be treated as a "pass-through entity" (an entity which, in most
instances, will not be subject to tax in addition to the tax paid at the
participant level) for Federal and State income tax purposes.
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(i) Unless otherwise agreed by the Partners, all meetings of the
Partners shall be held, either:
(i) by telephone conference at which all designated
representatives participating may hear and speak to each other (and such
telephone presence shall be an appearance at a meeting for purposes of
this Agreement); or
(ii) (A) until the Opening Date, at the offices of Peper, Martin,
Jensen, Maichel and Hetlage, 720 Olive Street, St. Louis, MO 63101-2396,
or such other place, as the Partners may agree; and
(B) after the Opening Date, at the Project Office;
in either case, between 9:00 A.M. and 4:00 P.M. local time on any
Tuesday, Wednesday or Thursday that is a Business Day.
Any Partner may call a meeting upon no less than seven (7) Business
Days' advance Notice to the other Partner, designating the time, place (or
telephone conference method) and subject matter of the meeting.
If a Partner does not appear at a duly Noticed meeting, action may be
taken at such meeting by the Partner who does appear and vote, and such
action will be deemed to have been consented to by the absent Partner. Each
Partner shall designate two officers, each of whom, acting separately shall
have the authority to designate, by Notice given on or before the Notice of
each meeting: (i) no more than five (5) individuals entitled to appear on
behalf of such Partner at such meeting; and (ii) the one (1) individual
(and one (1) alternate) entitled to cast the vote of such Partner at such
meeting. Each Partner shall have one vote notwithstanding the number of
persons representing such Partner. Each designation shall remain in effect
until modified by Notice designating new officers, representatives or
individuals with voting authority, as the case may be. The initial
designated officer of each Partner with power to designate representatives
and individuals with voting authority is:
as to Players: Howard A. Goldberg, or
Steven P. Perskie
as to Harrah's: Philip G. Satre, or
Laurance B. Lacaff
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The initial individual (and his/her alternate) currently authorized
to cast the vote of each Partner at a meeting is:
as to Players: Howard A. Goldberg, and
David Fishman, Alternate
as to Harrah's: Colin V. Reed, and
Laurance B. Lacaff, Alternate
Any decision permitted or required to be taken at a meeting may be
made without a meeting if evidenced by a written consent signed by the
individuals or alternates holding voting power for each Partner. Any
decision so made shall be effective upon signing of such written consent by
the last Partner whose voting representatives sign, unless the written
consent specifies another effective date.
Any Partner may waive any Notice required before or after the date
such Notice would have otherwise been required. Such a waiver must be in
writing signed by the individual or alternate authorized to vote on behalf
of such Partner.
A Partner may vote at a meeting only through the individual or
alternate authorized to cast its vote. The right of other designated
individuals to appear at a meeting is conditioned upon the presence of the
individual or alternate with voting authority. The appearance at a meeting
of the individual or alternate with voting authority shall waive any
requirement of Notice of such meeting unless such person objects at the
beginning of the meeting to holding the meeting or transacting business at
the meeting and does not thereafter vote or assent to action taken at the
meeting.
For the duration of any Event of Default, the Defaulting Partner, and
its designees, shall not be entitled to appear or vote at any meeting and
there shall be not requirement to obtain the vote of such Defaulting
Partner for any Partnership decision.
(j) The Partners shall endeavor to coordinate the construction of
tenant improvements at the Operating Lease Premises with that of the
Partnership at the Shoreside Complex to arrange for a joint opening of the
Entertainment Facilities and both Operating Lease Premises. To this end,
construction of the Shoreside Complex shall be scheduled, to the extent
practicable, to deliver possession of the Operating Lease Premises for
commencement of tenant improvements to each of Harrah's (LLC) and Players
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simultaneously. Neither Harrah's Premises nor Players' Premises shall
have their Opening Date prior to the Opening Date of the Entertainment
Facilities.
(k) The Partners shall be free to compete and separately market their
respective business operations at the Harrah's Premises and Players'
Premises.
(l) Harrah's shall annually prepare, for Players' review, an Annual
Plan for the Entertainment Facilities (the "Annual Plan"). The Annual Plan
for the first whole or partial Fiscal Year following the Opening Date of
the Entertainment Facilities will be prepared by HMHOC on behalf of
Harrah's and presented by Harrah's to Players not less than sixty (60) days
before the anticipated Opening Date of the Entertainment Facilities. The
Annual Plan for each subsequent Fiscal Year shall be prepared and submitted
to Players not later than sixty (60) days before the beginning of such
Fiscal Year.
The Annual Plan will be comprised of the following:
(i) a statement of the estimated income and expenses of the
Entertainment Facilities for the coming Fiscal Year, such statement to
reflect the estimated income and expenses during each Fiscal Month of the
subject Fiscal Year;
(ii) either as part of the statement of the estimated income and
expenses referred to in the preceding clause (i), or separately, budgets
(and related Capital Contribution and work timetables and requirements)
for:
(A) repairs and maintenance;
(B) capital replacements and improvements; and
(C) equipment purchases or leases;
(iii) a business and marketing plan for the subject Fiscal Year
including, without limitation:
(A) room rates, food and beverage pricing and other charges to
persons using the Entertainment Facilities;
(B) a description of any modifications to the policies,
governing the access of Harrah's (LLC) and Players to, and
reservation of hotel and the special events rooms at the
Entertainment Facilities by, each of Harrah's (LLC) and Players, a
copy of which, as currently approved, is attached as Exhibit Q;
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(C) a description of billing practices and policies to be
implemented among the Partnership, HMHOC, Players and Harrah's
(LLC) with respect to charges by customers of the Entertainment
Facilities, Harrah's Premises and Players' Premises pursuant to
Sections 5.09 and 5.10 of the Operating Leases; and
(D) an advertising and marketing plan for the Shoreside
Complex as a whole.
(iv) the Minimum Balance (as defined in the Management Agreement)
which must remain in the Bank Account (as defined in the Management
Agreement) as of the end of each Fiscal Month during the Fiscal Year to
assure sufficient monies for working capital purposes and other
expenditures authorized under the Annual Plan.
The "Operating Budget" shall mean the budgeted expenses approved
under clauses (i), (ii), and (iii) above. References to budgeted items
contained in the Annual Plan shall refer to the expenses for such items set
forth in the Operating Budget.
In connection with the submission of the Annual Plan, Harrah's and
Players will meet within twenty (20) days after the proposed Annual Plan is
delivered to Players to have an in-depth review, including, after the first
full Fiscal Year, a comparison with the previous Fiscal Year's performance
of the Entertainment Facilities and a discussion of proposed expenditures
contained in the Operating Budget. Such meeting will be attended by the
general manager of each of the casinos operated by Harrah's (LLC) at
Harrah's Premises and Players at Players' Premises.
It is the intention of the parties to complete the review and
approval of the proposed Annual Plan no later than thirty (30) days prior
to: (x) the Opening Date of the Entertainment Facilities; and (y) the
commencement of each Fiscal Year thereafter. Players shall be required to
approve or disapprove each proposed Annual Plan. If Players disapproves or
raises any objections or proposed modifications to any items contained in
Harrah's proposed Annual Plan, until otherwise mutually agreed, the
undisputed portions (and, in the case of the Annual Plan for the first full
Fiscal Year only, disputed portions, until such time as any disputed
portion is resolved by arbitration or joint agreement) of the proposed
Annual Plan shall be operative. In the case of any Annual Plan after the
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Annual Plan for the first full Fiscal Year, the item corresponding to
the disputed item and contained in the Annual Plan for the preceding Fiscal
Year shall be substituted in lieu of the disputed portions of the proposed
Annual Plan. In each instance where portions of the Annual Plan from the
preceding Fiscal Year are deemed to be the Annual Plan in effect until a
new Annual Plan is approved, the Operating Budget expense contained in the
Annual Plan for the preceding Fiscal Year shall be automatically increased
by a percentage equal to the percent of increase in the Consumer Price
Index during the preceding Fiscal Year, based upon the Consumer Price Index
at the time the calculation is made. If, notwithstanding such Consumer
Price Index increase, Players and Harrah's do not reach agreement as to a
mutually acceptable Annual Plan within thirty (30) days prior to: (x) the
Opening Date of the Entertainment Facilities; or (y) the commencement of
each Fiscal Year thereafter, as the case may be, the item(s) of the Annual
Plan that are in dispute shall be submitted to and resolved by arbitration
in accordance with Section 19(b).
(m) All Furnishings and Equipment, Operating Equipment and Operating
Supplies (as each is defined in the Management Agreement, whether or not
the Management Agreement is then in effect) used in the Entertainment
Facilities which bear any identifying information or proprietary marks
identifying the Operating Lease Premises of one Partner (or its Affiliate
(Controlled)) shall bear, in equivalent manner, the marks or other
information identifying the Operating Lease Premises of the other Partner
(or its Affiliate (Controlled)). Except for the primary sign identifying
the hotel and the primary signs identifying each Operating Lease Premises
(which shall be separate but equivalent), all building signs identifying
the Operating Lease Premises of one Partner (or its Affiliate (Controlled))
shall, in equivalent manner, identify the Operating Lease Premises of the
other Partner (or its Affiliate (Controlled)). The sketch attached as
Exhibit V identifies the current conceptual sign plan for the Entertainment
Facility, subject to modification required by law or hereafter agreed upon.
8. Compensation to Partners; Other Interests
(a) No Partner shall be entitled to compensation by reason of the
rendition of services to the Partnership; provided, however, that (i) each
Partner shall be entitled to reimbursement of budgeted out-of-pocket costs
paid to third parties who are not Affiliates
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of such Partner within the scope of such Partner's authority; and
(ii) nothing contained herein shall affect fees and amounts payable to any
Affiliate of a Partner pursuant to any contract or agreement with such
Affiliate approved by both Partners, including, without limitation, the
Management Agreement, the Ground Lease, Harrah's Lease and Players' Lease,
it being understood that the fact that any Partner is directly or
indirectly interested in a Person employed by the Partnership to render or
perform a service, or from whom the Partnership borrows money or buys
merchandise, material or other property, shall not prohibit the Partnership
from employing such Person or from otherwise dealing with it.
(b) Each of the Partners understands that the other Partner or its
Affiliates may be interested, directly or indirectly, in various other
businesses and undertakings not included in the Partnership. Except as
provided in Sections 8(d) and 31(g), the Partners hereby agree that the
creation of the Partnership and the assumption by each of the partners of
their duties hereunder shall be without prejudice to their rights (or the
rights of their Affiliates) to have such other interests and activities and
to receive and enjoy profits or compensation therefrom, and each Partner
waives any rights it might otherwise have to, by reason of any duty
otherwise owed to the Partnership or its Partners, prevent or share or
participate in such other interests or activities of the other Partner or
its Affiliates. Except as provided in Sections 8(d) and 31(g), the Partners
and their Affiliates may engage in or possess any interest in any other
business venture of any nature or description independently or with others,
including, but not limited to, the ownership, financing, leasing,
operation, management, syndication, brokerage, or development of real
property and gambling casinos, and neither the Partnership nor any other
Partner shall have the right by virtue of this Agreement or otherwise to
prevent or participate in any such venture or the income or profits derived
therefrom.
(c) Except as provided in Sections 8(d) and 31(g), no Partner need
disclose to any other Partner or the Partnership any other business venture
in which it or its Affiliates may have an interest or any other business
opportunity presented to it, even if such opportunity is of a character
which, if presented to the Partnership, could be taken by the Partnership,
and each Partner and its Affiliates shall have the right to take for its
own account or to recommend to others any such particular investment
opportunity or business venture.
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(d) Until modified pursuant to Section 31(g), no Partner nor any
Affiliate (Controlled) of a Partner, Players' Parent or HEI (each, a
"Competing Developer") may directly or indirectly, possess any right or
interest in the ownership, operation, management, income, or profits of any
other casino and/or other gambling operation in the St. Louis, Missouri
Metropolitan Statistical Area without the prior written consent of the
other Partner, whether such business is conducted alone or in conjunction
with others; unless, in each case, the Competing Developer has offered to
the other Partner (the "Receiving Partner") a right of first refusal to
participate on an equal basis with the Competing Developer in such
business. The Competing Developer shall send a Notice to the Receiving
Partner including a general description of the proposed business,
incorporating such detail as a prudent investor would customarily require
in order to make an informed investment decision; to the extent reasonably
available, the proposed form of budgets of development and construction
costs and projections of expenses and revenues; the proposed economic terms
and conditions upon which the business partners would jointly participate
in the proposed business; and the asserted fair market value of any real
estate or personal property contemplated to be used in connection with the
business. The foregoing right of first refusal shall not apply to the
acquisition by a Partner or its Affiliate (Controlled) of a Person having
casinos or other gambling operations both in the St. Louis, Missouri
Metropolitan Statistical Areas and in two or more other locations or to the
acquisition of a Partner and/or its Affiliates (Controlled) by any such
Person.
For so long as Harrah's or an Affiliate (Wholly Owned) of HEI is a
Partner of the Partnership and Players' Lease remains in effect, and
subject and subordinate to any rights of third parties currently existing,
and any rights of holders of mortgages, easements or leases (including only
the Ground Lease, Harrah's Lease and Players' Lease and leases of Lot 7
which are terminable without liability on not more than ninety (90) days'
notice following a sale of Lot 7) hereafter granted, and other third-party
rights approved by Players, which approval shall not be conditioned, or
unreasonably withheld or delayed, neither Harrah's nor any such Affiliate
(Wholly Owned) of HEI that owns Lot 7 or the Leased Site (each, also an
"Offering Partner" for purposes of this Section 8(d)) shall sell, otherwise
dispose of Lot 7 or the Leased Site, or develop Lot 7, except: (i) a
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sale or other disposition to an Affiliate (Wholly Owned) of HEI; or
(ii) as part of the sale or other disposition of all or substantially all
of the Project Property of Harrah's; or (iii) as part of the sale or other
disposition of all or substantially all of the assets of HEI; or (iv) a
sale or other disposition pursuant to Sections 24, 25 or 26 (each, an
"Exempt Sale or Disposition"); unless Players, as Receiving Partner, has
been offered the right of first refusal to purchase all or any part of Lot
7 or the Leased Site, or, in the case of a proposal to develop Lot 7, join,
on an equal basis, in the development of, Lot 7, as the case may be.
Harrah's shall send a Notice to Players advising Players of: (i) the
purchase price and other terms of the sale of Lot 7 or the Leased Site; or
(ii) in the case of a development proposal, development information for Lot
7, comparable to that identified above for an offer to participate in a
casino or gambling operation, except that, in the case of any offer to
participate in development of Lot 7 that is not occasioned by a third-party
offer to develop Lot 7 that values Lot 7 otherwise, Lot 7 shall be valued
as provided in Section 26(b).
In each instance above described, the Receiving Partner shall have a
period of one hundred twenty (120) days following the date that the
Receiving Partner has received from the Offering Partner the information
specified (reduced to thirty (30) days in the case of a right of first
refusal to purchase Lot 7 or the Leased Site) in order to decide, in good
faith, to accept the offer and to execute comprehensive documents for such
transaction. If the Partners are unable, in good faith, to agree upon and
execute mutually satisfactory comprehensive documents within said period,
then the right of first refusal of the Receiving Partner shall expire as to
said business, sale or development, except that: (i) the right shall be
reinstated if the Competing Developer or entity owning Lot 7 or the Leased
Site, as the case may be, proceeds with the business, sale or development,
as the case may be, on better terms than were offered to the Receiving
Partner; and (ii) the right of first refusal to purchase Lot 7 and/or the
Leased Site, as the case may be, shall survive an Exempt Sale or
Disposition and shall not be extinguished thereby.
The provisions of this Section 8(d) and Section 31(g) shall be
incorporated into a recordable instrument and recorded in the land records
of St. Louis County, Missouri. The obligations of each entity and its
Affiliates (Controlled or Wholly Owned, as the case may be) under both such
Sections are guaranteed by their respective Guarantors, and each
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Guarantor shall take all actions necessary to assure the compliance
of its Affiliates (Controlled or Wholly Owned, as the case may be) with the
terms hereof.
9. Disposition or Transferability of Partnership Interests
(a) Except for: (i) subleases of Operating Lease Premises approved by
the Partnership or permitted by the terms of the Operating Leases; and (ii)
as specifically permitted by the provisions of this Section 9, no Partner
shall Transfer all or any portion of its Project Property.
(b) Subject to the remaining provisions of this Section 9, each
Partner shall have the right to Transfer all, but not part, of its Project
Property, subject to the right of the other Partner to acquire all (but not
part) of such Project Property at the price and upon the terms set forth in
this Section 9(b), and the surviving rights of Players with respect to Lot
7 described in Section 8(d). A Partner whose Project Property is subject to
acquisition pursuant to this Section 9(b) is sometimes referred to as the
"Transferor Partner."
(i) If a Transferor Partner desires to Transfer its Project
Property and has received a non-collusive and bona fide third-party
offer, the Transferor Partner shall give the other Partner written notice
of its desire to make such transfer and provide the other Partner with a
copy of such offer. The other Partner shall have a right for thirty (30)
days thereafter to elect, by Notice to the Transferor Partner, to acquire
the Transferor's Project Property on the terms set forth in such offer.
If the other Partner timely exercises such right, the Transferor Partner
shall thereafter Transfer the Project Property to the other Partner (the
"purchasing Partner") on the terms set forth in such offer.
If the purchasing Partner fails to timely exercise such right, the
Transferor Partner shall thereafter have the right to dispose of the
Project Property on the same or less favorable terms to the acquiror than
are set forth in such offer.
(ii) If the purchasing Partner will acquire the Transferor's
Project Property, the closing of the purchase shall be held at such place
in St. Louis, Missouri as the purchasing Partner shall specify. The exact
date and time of closing shall be specified in a Notice from the
purchasing Partner to the
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Transferor Partner, but in no event shall it be fewer than ten
(10) or more than ninety (90) days after the date upon which the
purchasing Partner exercises its purchase rights.
(iii) The purchase price, subject to agreed or customary real
estate tax and private or levee district assessment prorations shall be
paid either: (x) in cash and in full at closing; or (y) on the terms
offered by the third party, at the election of the purchasing Partner;
provided however, in either case, that if the purchasing Partner or its
nominee shall not, by the scheduled date of closing, have been issued a
license to operate the Operating Lease Premises of the Transferor Partner
on substantially the same terms and conditions as were applicable to the
Transferor Partner (for reason other than an Unsuitability Determination
as to the purchasing Partner or such nominee), then the purchase money
shall be deposited and held in escrow in an interest bearing account and
shall not be released to the Transferor Partner unless and until the
earliest of the date upon which: (i) the purchasing Partner and, if
applicable, its nominee withdraw their application for such license; (ii)
such license is issued; and (iii) an Unsuitability Determination is made
by the Missouri Gaming Commission as to the purchasing Partner and its
nominee or, if the purchasing Partner is an Affiliate (Controlled) of
such nominee, the purchasing Partner or its nominee. The form of the
Escrow Agreement, subject to any modifications required by the Missouri
Gaming Commission, is attached as Exhibit R.
If the purchase money is paid over time by delivery of a promissory
note, such promissory note shall incorporate provisions for the automatic
reduction of its principal amount by that portion of the value of the
Project Property that is allocable to gambling activity, in the event that
such license does not issue within twenty-four (24) months following the
Closing, unless nonissuance is due to: (i) the withdrawal of the
application for such License by the purchasing Partner, and, if applicable,
its nominee; or (ii) an Unsuitability Determination as to both the
purchasing Partner and its nominee or, if the purchasing Partner is an
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Affiliate (Controlled) of such nominee, the purchasing Partner or its
nominee.
(iv) At the closing, the Transferor Partner shall deliver to the
purchasing Partner, or its nominee, all documents reasonably requested by
the purchasing Partner, or its nominee, to evidence and reflect the
transfer of the Project Property being sold, which documents shall
contain: (x) special warranties relating to the Transferor Partner's
title (which shall be warranted to be free of encumbrances (excluding
liens) other than those affecting the Project Site as of the date of its
acquisition by the Partnership and reflected on the Partnership's title
insurance policies, or those placed subsequent to such date in compliance
with this Agreement, the Operating Leases, or the Ground Lease, as the
case may be) to; and (y) full warranties as to the absence of any liens
upon the property being transferred.
(v) The provisions of this Section 9(b) shall be applicable to any
sale or disposition by an Institutional Investor pursuant to foreclosure
of a lien or security interest in a Partner's Project Property except
that, in such event, the Purchase Price shall be the lesser of: (i) the
Fair Market Value of the Project Property determined in accordance with
Section 9(n); or (ii) the amount of all principal, interest and other
charges secured by the foreclosed lien or security interest, and the
closing shall be postponed until such Fair Market Value is determined
pursuant to Sections 9(n)(i) and 9(n)(ii).
(c) In the case of a composition with creditors, an assignment for
the benefit of creditors or the reorganization or bankruptcy of a Partner
(a "Debtor Partner") or its Guarantor under any federal or state law; the
Partner other than the Debtor Partner shall have the option to purchase the
Project Property of the Debtor Partner by giving Notice thereof to the
Debtor Partner or its legal representatives within fifteen (15) days after
the other Partner shall have received actual Notice of such composition,
assignment, bankruptcy or reorganization. The purchase price payable for
the Project Property of the Debtor Partner shall be an amount equal to
ninety percent (90%) of the Fair Market Value of such Project Property on
the date of the event giving rise to the option described in this Section
9(c) determined pursuant to Sections 9(n)(i) and 9(n)(ii). Closing of the
acquisition of such Project Property shall occur on the date and at the
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time and place designated in the Notice electing to purchase such Project
Property, but the closing shall not be fewer than ten (10) days or more
than ninety (90) days after the earlier of the date upon which the Partners
reach agreement as to Fair Market Value or receive the appraisal report
from the Appraiser. The purchase price shall be paid in cash at closing.
(d) In addition to its option to purchase the Project Property of
Harrah's pursuant to Section 9(b) and 9(c), if Players does not exercise
such option and Harrah's Project Property is sold by Harrah's, Players
shall have the additional right to purchase only the interest of HMHOC as
manager of the Entertainment Facilities under the Management Agreement for
its Fair Market Value, determined in accordance with the procedures
established in Section 26(b). The purchase of the Management Agreement
shall be elected in the same manner as an election to purchase Project
Property. The closing of the purchase of the Management Agreement shall
occur simultaneously with the transfer by Harrah's of the remainder of its
Project Property, and the Purchase Price shall be paid in cash at closing.
(e) At any time during the term hereof (subject only to Sections (f)
through and including (l) of this Section 9 and free of any first offer,
right of first refusal or other pre-emptive right of the other Partner),
following Notice to the other Partner, a Partner may effect a Transfer of
any of its Project Property or permit the Transfer of any Capital Stock
and/or Voting Power in any Holding Entity to any Affiliate (Wholly Owned)
of Players' Parent, in the case of Players, or HEI, in the case of
Harrah's, provided that its Guarantor shall not be released from its
obligations as Guarantor, and such obligations shall continue.
(f) Any transferee of Project Property admitted as a Partner with
respect to a transferred Partnership Interest shall, except as otherwise
provided in this Agreement, have all of the rights, powers and obligations
of its transferor with respect to the transferred Partnership Interest.
(g) every transferee of Project Property shall (whether or not such
transferee is a party hereto):
(i) assume all of the obligations of its predecessor under this
Agreement, the Ground Lease, the Operating Lease, the Management
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Agreement, and any other agreements, other than non-recourse
loans, affecting the transferred Project Property, as the case may be;
and
(ii) deliver to the Partners a statement, in form and content
satisfactory to counsel for the Partners, acknowledging the assumption of
such liabilities and that the transferee has read the provisions of this
Agreement, the Ground Lease, the Operating Lease, the Management
Agreement and any other agreements, as the case may be, and agrees to be
legally bound by all the terms and conditions of such agreements; and
(iii) pay all reasonable expenses in connection with such
Transfer, including but not limited to the cost of the preparation,
filing and publishing of any amendment to Partnership filings, notices,
legal opinions, assignments or other documents of record as may be
necessary or desirable in connection with the Transfer.
(h) The Partners acknowledge and confirm that the Partnership
Interests acquired by them hereunder: (i) have not been registered under
the Securities Act of 1933 and, consequently, Transfer of such interests
may be made only pursuant to such Act and the rules thereunder; and (ii)
have not been registered under any other securities laws. Notwithstanding
anything to the contrary contained in this Section 9, the Partners agree
not to sell their Project Property within twelve (12) months from the
Effective Date if such sale, in the opinion of counsel to the Partnership,
would violate any provisions of the securities laws or the regulations
promulgated thereunder; provided, however, that this sentence shall not be
construed to permit any Transfers which are not permitted by the other
provisions of this Section 9.
(i) If a Partner shall attempt or purport to make a Transfer in
violation of Section 9, any such attempt or purported transfer shall be
null and void and of no legal effect.
(j) No Partner shall Transfer its Partnership Interest or any part
thereof if such Transfer, either alone or when taken together with other
Transfers theretofore made or to be made substantially simultaneously
therewith, would result in a transfer tax becoming payable by the
Partnership or terminate the Partnership for Federal income tax purposes
under Code Section 708(b)(1)(B), unless the transferring Partner shall have
either: (A)
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paid any resulting transfer tax or posted the full amount thereof
with the Partnership, to be used by the Partnership to pay such tax; and
(B) paid, or, if accepted by the other Partner, indemnified and held the
other Partner harmless from and against any adverse current income tax
consequences of the Transfer (determined after considering the mitigating
effects of, but not any detrimental effect upon, the consolidation of the
other Partner's Profits and Losses of this Partnership with those of other
enterprises whose profits and losses are consolidated with those of such
Partner for Federal or state income tax purposes).
(k) (i) If a Change of Control of Players' Parent occurs, Harrah's
shall have the option to purchase Players' Project Property for a purchase
price equal to the Fair Market Value of Players' Project Property
determined in accordance with Sections 9(n)(i) and 9(n)(ii). Harrah's may
elect to exercise such option by Notice to Players given no later than
twenty (20) Business Days following the first of: (A) receipt of Notice
from Players of the Change of Control of Players' Parent; and (B) the
giving of Notice to Players by Harrah's that a Change of Control of
Players' Parent has occurred (the "Option Period"). If Harrah's exercises
this option, the closing of the sale of Players' Project Property shall
occur on the later of: (A) the date specified by Harrah's in its Notice of
exercise that is no more than forty (40) days after such Notice; and (B)
twenty (20) days after the determination of Fair Market Value, at the
offices of Harrah's designated legal counsel in St. Louis, Missouri.
(ii) Upon the expiration of an Option Period without election by
Harrah's to exercise its option, Harrah's shall no longer have the option
to purchase Players' Project Property.
(iii) The Purchase Price for Players' Project Property shall be
paid as provided in Section 9(b)(iii)(x).
(l) No Transfer of Project Property may be made under any
circumstances to any Person who: (A) has not been determined suitable or
otherwise approved or exempted from such determination by the Missouri
Gaming Commission; or (B) is subject to an Unsuitability Determination by
any gambling commission or authority of any other state.
(m) Notwithstanding the preceding provisions of this Section 9, a
Partner
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shall be entitled to pledge or mortgage all, but not part, of its
Project Property, and Harrah's may separately mortgage its, or its
Affiliate's, interest in the Leased Site, subject to the Ground Lease, and
in Lot 7, to the same Institutional Lender who: (i) has been determined
suitable or otherwise approved or exempted from approval by the Missouri
Gaming Commission; and (ii) is not subject to an Unsuitability
Determination by the gambling commission or authority of any other state,
provided that its lien shall be subject to the provisions of this
Agreement, the Operating Leases, the Ground Lease and the Management
Agreement and, in connection therewith, there can be no separation, by
foreclosure or otherwise, of ownership of the Project Property affected.
The Capital Stock of Holding Entities owning 100% of the Project Property
may be pledged, in whole but not in part, to the same Institutional Lender
provided that:
(i) the pledgee is legally bound by all provisions of this
Agreement, the Ground Lease, the Operating Leases and the Management
Agreement; and
(ii) in connection therewith, there can be no separation, upon
foreclosure or otherwise, of ownership of Project Property affected.
The granting of such pledge or mortgage and any transfer in lieu of
foreclosure thereof to such Institutional Investor shall not be subject to
the preemptive right of first refusal set forth in Section 9(b) (but shall
be subject to all other provisions of this Agreement), provided that any
transfer upon foreclosure, or following acceptance of a Transfer in lieu of
foreclosure, shall once again be subject to such preemptive right as
provided in Section 9(b)(v).
(n) (i) The Fair Market Value of Project Property, for purposes of
this Section 9 and other Sections to which this Section is applicable,
shall be determined based on then known costs, operating revenues and
expenses or reasonable cost, revenue and expense projections, and
determined: in the case of a Partnership Interest, on the assumptions that:
(w) all Partnership assets are liquidated; (x) all Partnership liabilities
are paid; and (y) the selling Partner is obligated to restore its negative
Capital Account balance; provided that, in the case of Lot 7, the interest
of Harrah's (LLC) as ground lessor of the Leased Site, and the interest of
HMHOC as the manager of the Entertainment Facilities pursuant to the
Management Agreement, such Project Property shall
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be valued in accordance with the methodology specified in Section
26(b). If the Fair Market Value of a Partner's Project Property is a
negative number, the selling Partner shall pay the negative amount to the
purchasing Partner in cash at closing. If the gambling license of the
selling Partner (or its Affiliate) may not be or is not surrendered by the
selling Partner (or such Affiliate) to the Missouri Gaming Commission in
connection with and at or before the closing, the Project Property of the
selling Partner shall be valued on the assumption that it may not be used
for gambling purposes.
(ii) (A) For purposes of this Section 9(n) and where otherwise
required pursuant to this Agreement, the Fair Market Value of a Partner's
Project Property, as applicable, shall be determined by an Authorized
Appraiser (the "Appraiser") selected as follows. Within fifteen (15) days
after the giving of Notice of the event giving rise to the need for a
determination of Fair Market Value (the "Initial Period"), if the
Partners have not agreed on such Fair Market Value pursuant to Section
32, each Partner shall designate an Authorized Appraiser, and the
Authorized Appraisers so designated (the "Designated Appraisers") shall
select an Authorized Appraiser, within fifteen (15) days following the
expiration of the Initial Period, to act as the Appraiser. If either
Partner fails, within the Initial Period, to designate an Authorized
Appraiser, the Authorized Appraiser selected by the other Partner during
the Initial Period shall be the Appraiser. If the Designated Appraisers
are unable to agree on the appointment of the Appraiser within fifteen
(15) days following expiration of the Initial Period, either of the
Partners shall have the right to request any appropriate court in St.
Louis County, Missouri, to appoint an Authorized Appraiser to act as the
Appraiser, and the other Partner shall not raise any question as to the
court's full power and jurisdiction to make the appointment. The
Appraiser shall deliver an appraisal report to the Partners as promptly
after appointment as is reasonably possible, but in any event, not later
than thirty (30) days after having been designated.
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(B) The appraisal report delivered by the Appraiser shall be
conclusive as to the Fair Market Value of the Project Property. The
determination of Fair Market Value of Project Property pursuant to
Section 9(n)(ii) shall be final and binding on the Partners, and the
Partnership shall pay for the cost of the appraisal report.
10. Dissolution of the Partnership
(a) The Partnership shall be dissolved upon the first to
occur of the following events listed in this Section 10(a):
(i) the occurrence of any of the following events listed in this
Section 10(a)(i), unless the Partnership reconstitutes as a new
partnership adopting the terms of this Agreement as its formative
agreement in accordance with the provisions of Section 10(b);
(A) an election by any Partner to dissolve the Partnership if an
attachment, execution or judicial seizure of all or a substantial
portion of the Project Property of any other Partner shall remain in
effect for a period in excess of ninety (90) days;
(B) an election by any Partner to dissolve the Partnership in
the event of: (1) the dissolution, bankruptcy (voluntary or, if not
stayed or discharged in ninety (90) days, involuntary) or insolvency of
any other Partner; (2) an appointment of a receiver to hold or
administer any substantial portion of another Partner's Project
Property which remains in effect for more than ninety (90) days; (3)
the filing by any other Partner of an arrangement or reorganization
under the provisions of the United States Bankruptcy Code or any other
federal or state statute for the relief of debtors; or (4) an
assignment by such other Partner for the benefit of creditors; or
(C) the occurrence of any act or omission by a Partner which
results in the dissolution of the Partnership by operation of law under
the provisions of the Act;
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(ii) the sale or other disposition of all or substantially all of
the assets of the Partnership and the collection of all sales proceeds,
including any involuntary "sale" as a result of condemnation or casualty
that is not restored;
(iii) the acquisition by a Partner of all of the Project Property
of the other Partners; or
(iv) the written agreement of all Partners to dissolve.
(b) Upon dissolution of the Partnership pursuant to Section 10(a)(i),
the then Partners may elect, by unanimous consent, if more than one, to
reconstitute the Partnership and the reconstituted Partnership shall
continue the business pursuant to the terms of this Agreement.
(c) No Partner shall have a right to recover any money or other
property from the Partnership or the Partners at the time of such
dissolution or thereafter, except as provided in this Agreement. In
accordance with the foregoing, and except as otherwise provided in this
Agreement, each Partner hereby waives any right it or its successors in
interest might otherwise have at law (either at the time of a dissolution
of the Partnership or at a later time) to:
(i) have the value of its Partnership Interest ascertained or paid
to it as a result of a dissolution of the Partnership;
(ii) have the value of its Partnership Interest secured by bond as
a result of such dissolution; or
(iii) receive, as a result of such dissolution, interest on the
value of its Partnership Interest with respect thereto that are not
provided for in this Agreement.
11. Liquidation of the Partnership
Within five (5) days after the dissolution of the Partnership (other
than a dissolution by reason of the acquisition by a Partner of all of the
Project Property of the other Partner), each Partner shall contribute to the
Partnership the amount of any negative balance in its Capital Account. Upon the
dissolution of the Partnership (other than a dissolution by reason of the
acquisition by a Partner of all of the Project Property of the other Partners),
and in the absence of an election to reconstitute the Partnership pursuant to
Section 10(b), the Partners shall wind up the Partnership's affairs by
completing any business then in progress, liquidating its assets to
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the extent practicable and applying its funds or remaining assets in the
following order of priority:
(a) first, the expenses of liquidation and the liabilities of the
Partnership (excluding all obligations owed to Partners) shall be paid or
adequate provision therefor shall be made;
(b) second, all Partner Loans and Affiliate Loans shall be paid until
all such obligations have been repaid;
(c) thereafter, the balance, if any, shall be distributed among the
Partners having positive Capital Accounts pro rata in proportion to such
Capital Accounts, first taking into account all Capital Account adjustments
under this Agreement with respect to the taxable year during which the
liquidation occurs. Where appropriate, Capital Accounts shall be adjusted
as if assets in kind held by the Partnership at dissolution were sold for
their then Fair Market Value and gain or loss therefrom were allocated
under Section 6. Notwithstanding the foregoing, any amount payable to a
Partner who has Default Loans outstanding, shall be paid in such Partner's
behalf directly to the Default Lender(s) on a first in, first out basis,
until such Default Loan(s) is (are) repaid in full.
12. Books and Records
(a) Full and accurate books of the Partnership shall be maintained by
the Partnership, at the Project Office or at the Partnership's principal
place of business, showing all receipts and expenditures, assets and
liabilities, Profits and Losses and all other records necessary for
recording the Partnership's business and affairs. Such books and records
shall, when reported, incorporate accounting information provided pursuant
to the Management Agreement and be open to the inspection and examination
at reasonable times of all Partners or their duly authorized
representatives who have executed confidentiality agreements in the form
attached as Exhibit M.
(b) The Partnership shall cause to be prepared by the Partnership
Accountants, as promptly as practicable after the end of each fiscal year
and sufficient to permit timely preparation and filing of Federal and State
income tax returns by each Partner, a balance sheet and income statement of
the Partnership for such fiscal year, all in reasonable detail, together
with a statement from the Partnership Accountants showing the amount of net
income, net loss, capital gain or other items allocable to each Partner
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for Federal, state and local income tax purposes. Additional services
or reporting shall be undertaken only at the sole expense of the Partner
requesting the same, unless otherwise unanimously agreed. The certified
public accountants for the Partnership ("Partnership Accountants") shall be
KPMG Peat Marwick LLP, which the Partners, by the execution of this
Agreement approve, or such substitute firm of certified public accountants,
as may be hereafter approved by the Partners.
(c) The Partnership's fiscal year and tax year shall be the calendar
year.
(d) Subject to the following sentence, Harrah's is designated as the
tax matters partner, as defined in Section 6231 of the Code, and as such
shall perform all duties and functions within the contemplation of Sections
6223, 6224, 6226, 6228 and 6230 of the Code in connection with any
administrative proceeding by the Internal Revenue Service ("IRS") (or any
taxing authority) or ensuing judicial proceeding regarding a tax return of
the Partnership. The Partners shall determine, as a Major Decision, whether
the Partnership should make any available tax election.
13. Reimbursement
Except in a case of fraud, bad faith, gross negligence, breach of this
Agreement or criminal conduct, the Partnership shall promptly reimburse each
Partner any expenses incurred by it pursuant to the authority granted to such
Partner in this Agreement, but such reimbursement shall be paid from the
Available Cash and the assets of the Partners, limited to their respective
Project Property to the extent of any guaranty, the assets of the Guarantor.
Such amount due from the Partnership shall be considered a debt of the
Partnership due thirty (30) days after demand for payment is made, and shall
bear interest until paid at the Prime Rate plus eight percent (8%) or the Usury
Rate, if less.
14. Representations and Warranties/Indemnification
Each Partner and Guarantor represents and warrants to and with the
Partnership and each other Partner as of the date hereof, that:
(a) (i) it is, and shall continue to be, validly existing and duly
organized under the laws of the state of its formation, and the Persons
acting in its behalf have all the requisite power and authority to execute,
deliver and comply with the terms and provisions hereof and consummate the
transactions contemplated herein;
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(ii) its execution, delivery and performance of this Agreement do
not require the consent or approval of any governmental body or
regulatory authority or other entity other than approvals of the City of
Maryland Heights and the Missouri Gaming Commission, is not in
contravention of or in conflict with any applicable laws, regulations,
rules or orders and this Agreement is, and will continue to be, the
valid, binding and legally enforceable obligation of such Partner and its
Guarantor in accordance with its terms;
(iii) its Project Property has been or will be acquired solely by
and for its account for investment purposes only and is not being
purchased for, or with a view to, subdivision, fractionalization, resale
or distribution; it has no contract, undertaking, agreement or
arrangement with any Person to Transfer its Project Property (or any part
thereof) to such Person or anyone else; and it has no present plans or
intentions to enter into any such contract, undertaking or arrangement
and agrees not to Transfer all or any part of its Project Property (or
any part thereof), except that subject to compliance with the terms of
this Agreement and all applicable laws, regulations, rules or orders;
(iv) except as noted in Exhibit I, it has no knowledge of, and has
not caused to exist, any liens or encumbrances on its Project Property,
and hereafter will not cause or suffer to exist any liens or encumbrances
on its Project Property, except in accordance with and subject to
applicable law and the provisions of this Agreement, the Management
Agreement and/or the Operating Leases, as the case may be;
(v) each Partner has incorporated provisions into its articles of
incorporation, charter, partnership agreement or other formative document
as required by Section 31 and placed legends on its certificates of
Capital Stock and, not later than thirty (30) days after the date hereof,
those of its partners substantially in the form of Exhibit N; and
(vi) it is not in violation or default under any agreement with
any Person, or under any law, judgment, order, decree, license, permit,
approval, rule, or regulation of any court, arbitrator, administrative
agency, or other
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governmental authority to which it may be subject which could reasonably
be anticipated to have a material adverse impact on the Partnership, and
hereafter shall take no action which shall be in violation or cause a
default under any agreement with any Person, or under any law, judgment,
order, decree, license, permit, approval, rule, or regulation of any
court, arbitrator, administrative agency, or other governmental authority
to which it may be subject which could reasonably be anticipated to have
a material adverse impact on the Partnership;
(b) with respect to its investment in the Project Property:
(i) it has knowledge and experience in financial and business
matters in general, and in investments of this type;
(ii) it is capable of evaluating the merits and risks of such
investment;
(iii) it has either secured independent tax advice with respect to
such investment, upon which it is solely relying, or it is sufficiently
familiar with the income taxation of partnerships that it has deemed such
independent advice unnecessary;
(iv) it has received or has access to all material information and
documents with respect to such investment and has had an opportunity to
ask questions and receive answers thereto and to verify and clarify any
information available;
(v) notwithstanding any financial projections which may have been
prepared by any other Person, it has relied solely upon its independent
investigation, and not on any financial projections, statements, actions
or representations of the other Partners or any Affiliate of the other
Partners, in making the decision to acquire such investment;
(vi) it understands that no Federal or State agency has reviewed
or passed upon the adequacy or accuracy of the information set forth in
the documents submitted to it or made any finding or determination as to
the fairness for investment, or any recommendation or endorsement of such
investment;
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(vii) it understands that there are restrictions on the
transferability of its Project Property;
(viii) it understands that there will be no public market for its
Project Property, and, accordingly, it may not be possible to liquidate
such investment;
(ix) it understands that any anticipated Federal or state income
tax benefits applicable to its Project Property may be lost through
changes in, or adverse interpretations of, existing laws and regulations;
(x) it has entered into this Agreement freely and voluntarily,
without coercion, duress, distress, or undue influence by any other
Persons or their respective shareholders, members, directors, officers,
partners, agents or employees; and
(xi) it understands that this Agreement may affect legal rights
and it has received legal advice from counsel of its choice in connection
with the negotiation and execution of this Agreement and is satisfied
with its legal counsel and the advice received from it;
(c) each of the following is true and correct:
(i) none of it or any of its Affiliates is a party to any other
agreement or other arrangement which would interfere with the development
or operation of the Shoreside Complex;
(ii) performance of this Agreement will not violate any other
material agreement or other arrangement to which it or its Affiliates is
a party;
(iii) it and its Affiliates have not received notice of any claim
which would interfere with its or their performance of this Agreement;
(iv) none of it or its Affiliates has incurred any material
liabilities or obligations on behalf of the Partnership or has knowledge
of any liabilities or obligations of the Partnership other than those
described on Exhibit J and agrees hereafter that it or they, as the case
may be, will not, nor cause any of its Affiliates, to incur any liability
or obligation on behalf of the Partnership, except as otherwise expressly
provided herein;
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(v) it knows of no actions or lawsuits, pending, planned or
threatened, by or against it, the Partnership, or its Affiliates, which
could create an obligation or liability for the Partnership or any of the
other Partners; and
(vi) none of such Partner, its Affiliates or any officers or
directors of any of them has been determined by any gambling commission
or authority to be unsuitable, has been convicted of a crime (other than
traffic offenses), has had any application for any gambling license or
permit rejected, or has had any gambling license or permit, once having
been issued, rescinded, suspended, revoked or not renewed or reinstated,
and no Partner has knowledge that its affiliation with any other Partner
will threaten any gambling license, permit, entitlement or approval in
any jurisdiction of any other Partner or Affiliate of a Partner;
(d) the execution, delivery and performance of this Agreement
will not:
(i) violate any law, judgment, order, decree, license, permit,
approval, rule or regulation of any court, arbitrator, administrative
agency, or other governmental authority to which it or its Guarantor may
be subject;
(ii) result in a breach or default under any contract or other
binding commitment or any provision of the charter or by-laws or
partnership agreement or other organizational documents, as the case may
be, of any such entity; or
(iii) require any consent, or approval or vote of any court or
governmental authority or of any Person that, as of the date hereof, has
not been given or taken, and does not remain effective.
As used in this Section 14, the term "Agreement" includes this
Agreement, the Guaranties attached hereto, the Harrah's Lease, the Ground
Lease and the Management Agreement, as to Harrah's; and the Players'
Lease as to Players.
(e) (i) Players shall and does hereby indemnify, defend and hold
harmless the Partnership and the Indemnified Persons of Harrah's, and
each of them separately, from and against all loss, cost, or damage
whatsoever (including attorneys fees) resulting from any act, claim or
omission of or by
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Players or any Affiliates (Controlled) of Players' Parent prior to
the date hereof.
(ii) Harrah's shall and does hereby indemnify, defend and hold
harmless the Partnership, the Indemnified Persons of Players, and each of
them separately, from and against any loss, cost, or damage whatsoever
(including attorneys fees) resulting from any act, claim or omission of
or by Harrah's and any Affiliates (Controlled) of HEI prior to the date
hereof.
(iii) Each Partner shall and does hereby indemnify, defend and
hold harmless the Partnership and each other Partner from and against any
loss, cost, or damage whatsoever (including attorneys fees) resulting
from any breach by any of them of the representations and warranties
under Section 14 hereof, or any losses or expenses as a result of or in
connection with any breach of this Agreement.
(f) (i) To the fullest extent permitted by applicable laws,
regulations, rules or orders, each Partner and its Indemnified Persons
shall not be liable, responsible or accountable in damages or otherwise
to the Partnership, or to any of the Partners, for any act or omission
performed or omitted by them in good faith on behalf of the Partnership
and in a manner reasonably believed by them to be within the scope of
their authority and in the best interests of the Partnership; provided,
however, that this exculpation shall not apply to acts or omissions which
are determined, by final decision of a court of competent jurisdiction,
to constitute either fraud, bad faith, breach of this Agreement, gross
negligence, or criminal conduct.
(ii) To the fullest extent permitted by law, the Partnership, its
receiver or its trustee, shall indemnify, defend and hold harmless each
Partner and its Indemnified Persons from and against any and all loss,
cost, damage, expense or liability (other than a loss of any equity
contributions, Partner Loan, Affiliate Loan or other investment in the
Partnership), which relate to or arise out of the Partnership, the
Shoreside Complex, any development of the Partnership or the
Partnership's business or affairs, regardless of whether the Partners
continue to be Partners, an Affiliate of a Partner, or an agent, officer,
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member, director, stockholder or employee of such Partner or such
Affiliate at the time any such liability or expense is paid or incurred,
if such Partner's or its Indemnified Persons' conduct did not constitute
fraud, bad faith, breach of this Agreement, gross negligence or criminal
conduct.
(iii) To the extent that, at law or in equity, a Partner or its
Indemnified Persons have duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or to the Partners, each
Partner and its Indemnified Persons acting under this Agreement or
otherwise shall not be liable to the Partnership or to any Partner for
its good faith reliance on the provisions of this Agreement. The
provisions of this Section 14, to the extent that they expand or restrict
the duties and liabilities of a Partner or its Indemnified Persons
otherwise existing at law or in equity, are agreed by the Partners to
replace such other duties and liabilities of such Partner and its
Indemnified Person.
(g) (i) (A) Promptly after the assertion of any claim by a third
party which may give rise to a claim for indemnification from an
Indemnifying Partner under this Agreement, an Indemnified Person shall
notify the Indemnifying Partner in writing of such claim and advise the
Indemnifying Partner whether the Indemnified Person intends to contest such
claim.
(B) The Indemnified Person shall permit the Indemnifying Partner
to contest and defend against such claim, at the Indemnifying Partner's
expense, if the Indemnifying Partner has confirmed to the Indemnified
Person in writing that it agrees that the Indemnified Person is
entitled to indemnification hereunder in respect of such claim, unless
the Indemnified Person can establish, by reasonable evidence, that the
conduct of its defense by the Indemnifying Partner could be reasonably
likely to prejudice such Indemnified Person due to the nature of the
claims presented or by virtue of a conflict between the interests of
such Indemnified Person and such Indemnifying Partner and another
Indemnified Person whose defense has been assumed by the Indemnifying
Partner. Notwithstanding a determination by the Indemnifying Partner to
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contest such claim, the Indemnified Person shall have the right
to be represented by its own counsel and accountants at its own
expense. In any case, the Indemnified Person shall make available to
the Indemnifying Partner and its attorneys and accountants, at all
reasonable times during normal business hours, all books, records, and
other documents in its possession relating to such claim. The party
contesting any such claim shall be furnished all reasonable assistance
in connection therewith by the other party (with reimbursement of
reasonable expenses by the Indemnifying Partner). If the Indemnifying
Partner fails to undertake the defense of or to settle or pay any such
third-party claim within fifteen (15) days after the Indemnified Person
has given Notice to the Indemnifying Partner advising the Indemnifying
Partner of such claim, or if the Indemnifying Partner, after having
given Notice to the Indemnified Person that it intends to undertake the
defense, fails forthwith to defend, settle or pay such claim, then the
Indemnified Person may take any and all necessary action to dispose of
such claim including, without limitation, the settlement or full
payment thereof upon such terms as it shall deem appropriate, in its
sole discretion, subject to the following with respect to any proposed
settlement thereof.
(C) The Indemnifying Partner shall not consent to the terms of
any compromise or settlement of any third-party claim defended by the
Indemnifying Partner in accordance herewith (other than terms related
solely to the payment of money damages and only after the Indemnifying
Partner has furnished the Indemnified Person with such evidence as the
Indemnified Person may reasonably request of the Indemnifying Partner's
capacity and capability (financial and otherwise) to pay promptly the
amount of such money damages at such times as provided in the
compromise or settlement) without the prior written consent of the
Indemnified Person if as a result of such compromise or settlement such
Indemnified Person could be adversely affected.
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(D) Any claim for indemnification under this Agreement which
does not result from the assertion of a claim by a third party shall be
asserted by Notice given by the Indemnified Person to the Indemnifying
Partner. Such Indemnifying Partner shall have a period of thirty (30)
days within which to respond thereto. If such Indemnifying Partner does
not respond within such thirty (30) day period, such Indemnifying
Partner shall be deemed to have accepted responsibility to make
payment, and shall have no further right to contest the validity of
such claim. If the Indemnifying Partner does respond within such thirty
(30) day period and rejects such claim in whole or in part, such
Indemnified Person shall be free to pursue such remedies as may be
available to such party under applicable laws, regulations, rules or
orders.
(ii) Mitigation
Each Indemnifying Partner and Indemnified Person shall use
reasonable efforts and shall consult and cooperate with each other with a
view towards mitigating claims, losses, liabilities, damages,
deficiencies, costs and expenses that may give rise to claims for
indemnification.
(iii) Payment
Each Indemnifying Partner agrees to pay any amounts due hereunder
(A) within ten (10) days of Notice in respect of its indemnity
obligations which it has accepted or which it has been deemed to accept;
(B) within five (5) days of any final adjudication by a court of
competent jurisdiction of any indemnity obligations as to which it has
not so accepted; and (c) as attorneys' fees and other costs of defense
are incurred and invoiced.
15. Certificates, Documents, Execution
Each Partner shall execute, with acknowledgment or affidavit, if
required, all documents and writings which may, in the reasonable opinion of
either Partner, be necessary or expedient in the creation of the Partnership and
the authorization of the Partnership to do business pursuant to this Agreement,
including, without limitation, one or more trade or fictitious name
registrations and all amendments thereto, as well as any cancellation thereof,
provided the foregoing is not contrary to any other provision of this Agreement.
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16. Amendment
Except as otherwise provided in this Agreement, this Agreement may be
amended only by an instrument in writing signed by all of the Partners.
17. Notices
All Notices, demands and other communications required or permitted to
be given or delivered hereunder shall be in writing, addressed to the Partner
intended at the address set forth below or such other address as it may
designate by Notice given to the other parties in the manner herein provided,
and shall be deemed to have been given (a) on the dated received if given by
United States mail, postage prepaid, registered or certified, return receipt
requested, or (b) on the date delivered if given by personal delivery or
recognized overnight courier service, provided that delivery is acknowledged in
writing by the receiving Partner or an employee of such Partner or its
Affiliate:
Harrah's:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
FAX: (901) 762-8776
Attn: General Counsel
Players:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
FAX: (702) 792-9843
Attn: President
18. Bank Accounts; Investments
All funds of the Partnership shall be deposited in its name in such
checking and savings accounts, time deposits or certificates of deposit as shall
be designated by the Partners from time to time, pursuant to Irrevocable Banking
Instructions in the form attached as Exhibit K, in the case of accounts
maintained by the Partnership, and in the form attached to the Management
Agreement, in the case of accounts maintained under the Management Agreement.
The Partnership may invest funds in any of the types of investments identified
on Exhibit L.
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19. Arbitration
(a) In the event of a failure of the Partners, at any meeting,
unanimously to approve a Material Modification, any Partner may by Notice
to the other Partner elect an arbitration which shall be conducted in
accordance with the following procedures:
(i) The Partners shall appoint a single qualified and
disinterested advisor. For purposes of Section 19(a), the advisor (the
"Arbitrator") shall be an individual who: (A) is not an Affiliate of any
Partner; and (B) has at least five (5) years' experience in major hotel
or casino hotel design. The initial agreed Arbitrator is the firm of
Skidmore, Owings and Merrill ("SOM"), which shall act pursuant to the
agreement attached as Exhibit S. Such appointment may be modified only by
joint written agreement of the Partners or, if the Arbitrator resigns and
the Partners fail to agree on a substitute Arbitrator within ten (10)
days after the resignation of SOM, by a court of competent jurisdiction
in St. Louis County, Missouri, upon petition of either Partner. Such
Arbitrator shall render a decision within five (5) days of submission of
any item for arbitration. If the Arbitrator fails to render the decision
within such time, either Partner may seek an order from a court of
competent jurisdiction: (x) in the state of residence of such Arbitrator
or the State, requiring such Arbitrator to render the decision
immediately; or (y) in the State, appointing another Arbitrator with
equivalent experience and directing such Arbitrator to render such
decision.
(ii) The decision and award of such sole Arbitrator shall be
binding upon the Partners. The fees and expenses of the Arbitrator shall
be paid by the Partner whose position is not adopted by the Arbitrator.
Arbitration shall be conducted upon written submission of the parties
without need for hearing.
(iii) In rendering a decision on each disputed item, the
Arbitrator shall consider the following factors: (A) integrity of the
Cost Budget, as a whole; (B) operational efficiency of the Shoreside
Complex; (C) consistency of the disputed item with (x) the architectural
design and the quality of the remainder of the Shoreside Complex; and (y)
the conceptual Plans and Specifications approved as identified on Exhibit
E and all other Plans and Specifications and
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Material Modifications theretofore adopted by the Partnership; and
(D) the effect upon future revenue of the Shoreside Complex, as a whole.
(b) In the event of a failure of the Partners, at any meeting,
unanimously to approve any Major Decisions, other than a Material
Modification, either Partner may, by Notice to the other Partner, elect an
arbitration which shall be conducted in accordance with the following
procedures:
(i) The Partners shall endeavor to appoint a single qualified and
disinterested Arbitrator. For purposes of Section 19(b), an Arbitrator
(the "Arbitrator") shall be an individual who: (A) is not a Beneficial
Owner of, and who has not performed work for, any Holding Entity; and (B)
who: (x) is a partner with any of Arthur Andersen LLP, Coopers & Lybrand,
Deloitte & Touche, Ernst & Young, KPMG Peat Marwick LLP, and Price
Waterhouse or a firm of equivalent status; and (y) has at least five (5)
years of auditing or accounting experience in the gambling or hotel
industry; or, if the Partners so agree prior to the time for appointment
herein provided, but not otherwise; (C) is an expert in a field other
than accounting having qualifications agreed by the Partners. Such
Arbitrator, if agreed, shall render his/her decision within thirty (30)
days of such appointment. If the Arbitrator fails to render his/her
decision within such time, either Partner may seek an order from a court
of competent jurisdiction in the state of residence of such Arbitrator or
the State, as the case may be: (x) requiring such Arbitrator to render
his/her decision immediately; or (y) appointing another Arbitrator with
equivalent experience and directing such Arbitrator to render such
decision.
(ii) If the Partners cannot agree on a single Arbitrator within
twenty (20) days after an election to submit a Major Decision to
arbitration, then each Partner shall appoint one Arbitrator within ten
(10) days following such twenty (20) day period. The two appointed
Arbitrators shall within ten (10) days of such referral appoint a third
Arbitrator, and if such Arbitrators are not able to agree on such third
Arbitrator within such time, then, on five (5) days' Notice in writing to
the other Arbitrator, either Arbitrator shall apply to the branch of the
American Arbitration Association in St. Louis, Missouri to designate and
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appoint such third Arbitrator. The three Arbitrators shall render
their decision within twenty (20) days after the appointment of the third
Arbitrator. The Arbitrators shall act by majority vote. If the
Arbitrators fail to render their decision within such time, either
Partner may seek an order from a court of competent jurisdiction in the
State: (x) requiring such Arbitrators to render their decision
immediately, or (y) appointing one replacement Arbitrator of equivalent
qualifications and directing such Arbitrator to render his/her decision.
(iii) If either Partner fails timely to appoint an Arbitrator
pursuant to Section 19(b)(ii), then the single Arbitrator designated by a
Partner shall act as the sole Arbitrator and shall be deemed to be the
unanimously approved Arbitrator to resolve such dispute.
(iv) The fees and expenses of the Arbitrators shall be paid by the
Partner whose position is not adopted by the Arbitrators. All
Arbitrators, by accepting appointment, submit to the jurisdiction of the
courts of the State.
(v) The Arbitrators shall make their decision based solely on the
best interests of the Partnership. All proceedings by the Arbitrators
shall be conducted in accordance with the Uniform Arbitration Act as
enacted in the State, except to the extent the provisions of such Act are
modified by this Agreement or the mutual agreement of the parties. Unless
otherwise agreed, all arbitration proceedings shall be conducted in St.
Louis, Missouri, at the offices of Peper, Martin, Jensen, Maichel and
Hetlage, Twenty-Fourth Floor, 720 Olive Street; St. Louis, Missouri, or
if such law firm should no longer exist or no longer represent Harrah's,
at a law office in St. Louis, Missouri, designated by the Partner
invoking arbitration.
(c) In all arbitration proceedings submitted to any Arbitrator(s),
the Arbitrator(s) shall be required to agree upon and approve the
substantive position advocated by one Partner with respect to each disputed
item. The Arbitrator(s) shall exclusively and finally determine whether a
particular dispute falls within the scope of his/her/their authority unless
such determination is legally groundless or in excess of the limitations
provided in this Agreement. The award of any Arbitrator(s) made in
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accordance with this Section 19 shall be binding on the Partners and
enforceable in any court of competent jurisdiction.
(d) In the event of any disagreement as to a matter subject to
arbitration under the Management Agreement, arbitration shall occur
pursuant to Section 20.2 of the Management Agreement, rather than pursuant
to this Section. In the event of any disagreement as to a matter subject to
arbitration under an Operating Lease or the Ground Lease, arbitration shall
occur pursuant to such agreement rather than pursuant to this Section.
20. Events of Default
It shall be an event of default (an "Event of Default") if any one
or more of the following events shall occur:
(a) a Monetary Default that has not been cured within five (5)
Business Days following Notice of such Monetary Default;
(b) an Event of Default has occurred under the Players' Lease, as
to Players, or Harrah's Lease, as to Harrah's (LLC), which has resulted
in the termination thereof;
(c) the failure of any Partner to perform any of its other
obligations under this Agreement or the breach by any Partner of any of
the other terms, conditions or covenants of this Agreement or the failure
of any representation or warranty in this Agreement to be true in all
material respects and a continuation of such failure or breach for more
than thirty (30) days after Notice by any Non-Defaulting Partner to the
Defaulting Partner that such Partner has failed to perform any of its
obligations under, or has breached this Agreement; provided, that no
Event of Default shall exist hereunder if (i) such default is not capable
of being cured within such thirty (30) days, (ii) such default is capable
of cure in a longer period of time, and (iii) cure of such default has
been promptly commenced within such thirty (30) day period and such cure
is thereafter diligently and expeditiously prosecuted to completion, but
in no event shall any cure period under this Agreement for any default be
longer than one hundred eighty (180) days;
(d) a case or proceeding shall be commenced by any Partner or its
Guarantor seeking relief under any provision or chapter of the Federal
Bankruptcy Code or any other Federal or State law relating to insolvency,
bankruptcy or reorganization; an
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adjudication that any Partner or its Guarantor is insolvent or
bankrupt; the entry of an order for relief under the federal Bankruptcy
Code with respect to any Partner or its Guarantor; the filing of any such
petition or the commencement of any such case or proceeding against any
Partner or its Guarantor, unless such petition and the case or proceeding
initiated thereby are dismissed within ninety (90) days from the date of
such filing; the filing of an answer by any Partner or its Guarantor
admitting the allegations of any such petition; the appointment of a
trustee, receiver or custodian for all or substantially all of the assets
of any Partner or its Guarantor unless such appointment is vacated or
dismissed within ninety (90) days after the date of such appointment but
not fewer than five (5) days before the proposed sale of any assets of
any Partner or its Guarantor; the execution by any Partner or its
Guarantor of a general assignment for the benefit of creditors; the
convening by any Partner or its Guarantor of a meeting of its creditors,
or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts; except in the case of a holder of
a permitted security interest in a Partnership Interest, the levy,
attachment, execution or other seizure of all or substantially all of the
assets of any Partner or any Partner's Partnership Interest, where such
seizure is not discharged within thirty (30) days thereafter; or the
admission by any Partner in writing of its inability to pay its debts as
they mature or that it is generally not paying its debts as they become
due;
(e) an Unsuitability Determination is made with respect to any
Partner or an Affiliate (Controlled) of such Partner;
(f) the dissolution of any Partner or its Guarantor;
(g) any Transfer in violation of Section 9; or
(h) the attempted withdrawal of any Partner from the Partnership
other than in connection with any Transfer not in violation of Section 9.
21. Remedies
Upon the occurrence of any Event of Default with respect to any Partner
or its Guarantor (the "Defaulting Partner"), any Partner which is not a
Defaulting Partner (the "Non-Defaulting Partner"), may elect to do one (1) or
more of the following by Notice of such election to the Defaulting Partner:
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(a) in the case of a Monetary Default: (i) advance money to the
Defaulting Partner as a Default Loan; and (ii) in the case of a failure
timely to repay a Default Loan, exercise the dilution rights as provided in
Section 23; or (iii) elect to exercise the Appraisal Buyout remedy as
provided in Section 25; or (iv) enforce such obligation against the
Defaulting Partner and, if the Monetary Default is guaranteed, its
Guarantor;
(b) in the case of any other Event of Default: (i) elect to exercise
the Appraisal Buyout Remedy as provided in Section 25; or (ii) enforce such
obligation against the Defaulting Partner, and, if such Event of Default is
guaranteed, its Guarantor;
(c) if the Event of Default occurs pursuant to Section 20 (d), the
Non-Defaulting Partner may specifically enforce its rights under Section
9(c);
(d) if the Event of Default occurs pursuant to Section 20(e), the
Non-Defaulting Partner may specifically enforce its rights under Section
24;
(e) in the case of a non-permitted Transfer, the Partners agree that
because of the uniqueness of this Partnership, no Partner can be adequately
compensated in money damages for a breach by any other Partner of the
Transfer restrictions of Section 9; and agrees that, if any Partner
attempts to effect or suffers to occur a purported Transfer in violation of
Section 9, the non-transferring Partner, at law, in equity, or otherwise,
may seek to enjoin such a purported transfer, and the transferring Partner
agrees to submit to the jurisdiction of any court of competent jurisdiction
and to be bound by any order of such a court enjoining such an attempted or
purported Transfer;
(f) enforce any covenant by the Defaulting Partner to take or forbear
from any other action hereunder; or
(g) pursue any other remedy allowed by this Agreement or permitted at
law or in equity.
As provided in Section 7(i), a Defaulting Partner shall have its Voting
Power in the Partnership suspended for the duration of its Event of Default.
22. Choice of Remedies
(a) From and after the date a Non-Defaulting Partner has elected to
exercise any remedy pursuant to Section 21, such exercise of remedies may
be continued thereafter by the Non-Defaulting Partner regardless of whether
the Defaulting Partner thereafter cures such Event of Default.
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(b) The election to pursue any remedy pursuant to Section 21 may be
made alone or in combination with any other remedies; provided that if a
Partner elects a Default Loan for a Monetary Default pursuant to Section
21(a), no other remedy may be elected by such Partner with respect to such
Event of Default prior to the maturity date of such Default Loan, except
exercise of the dilution rights as provided in Section 23.
(c) Except as provided in Section 22(b), nothing contained herein
shall limit any rights to sue a Partner or Guarantor for amounts owing to
the Partnership hereunder, or for any other breach of this Agreement or the
guaranties appended to this Agreement. A Defaulting Partner shall have no
right to demand the immediate valuation and payment for its Partnership
Interest or other Project Property.
(d) In any action against a Defaulting Partner for a failure to make
any Initial Capital Contribution or any Additional Capital Contribution for
which it is callable pursuant to Section 4 or in any levy or enforcement of
any judgment against a Defaulting Partner for any such failure to
contribute, the recovery against such Defaulting Partner may include any
assets of such Defaulting Partner and, its Guarantor, in the case of a
guaranteed obligation.
(e) Upon any Transfer of a Project Property pursuant to Sections 9,
23, 24, 25 and/or 26, the transferee shall acquire the Project Property
free and clear of any lien or security interest with respect to such
Project Property; provided that nothing herein shall restrict or impair the
lien of any lender holding any such security interest to any proceeds
payable to the Partner so Transferring its Project Property or any right of
such lender to receive directly such proceeds.
(f) Prior to exercising the Appraisal Buyout remedy for an Event of
Default, the Non-Defaulting Partner shall give notice and a twenty (20) day
opportunity to cure to any Institutional Investor holding a permitted
pledge of the Defaulting Partner's Project Property, provided that the name
and address of such lender has previously been provided to the
Non-Defaulting Partner by Notice in accordance with this Agreement.
23. Advances; Buy-Down
(a) If a Defaulting Partner shall have failed to make any Capital
Contribution required of it pursuant to Section 4, any Non-Defaulting
Partner may, but shall not be obligated to, advance to the Partnership on
behalf of the Defaulting Partner the amount
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of all or any part of such delinquency, with each such advance to be
treated as a loan by the Non-Defaulting Partner to the Defaulting Partner
(a "Default Loan").
(i) The Non-Defaulting Partner shall promptly give Notice to the
Defaulting Partner of making such advance to the Partnership. Such
Non-Defaulting Partner making a Default Loan shall be the "Default
Lender".
(ii) Each separate advance by a Non-Defaulting Partner shall be a
separate Default Loan. The amount of each such advance to the Partnership
shall be credited to the Capital Account of the Defaulting Partner.
(iii) Each Default Loan shall be due and payable one (1) year
following advance of funds pursuant to this Section 23 and shall bear
interest, payable monthly, at a fixed rate equal to the then Prime Rate
plus eight percent (8%) but in no event greater than the Usury Rate. A
Default Loan shall be prepayable, in whole or in part, at any time, and
from time to time, without penalty or premium, at the option of the
Defaulting Partner.
(iv) Any interest payable by the Defaulting Partner on any Default
Loan shall be paid directly to the Default Lender by the Defaulting
Partner by direct distribution of one hundred percent (100%) of the
Defaulting Partner's Distributable Cash, Net Proceeds of Sale or
Financing/Refinancing, and other revenues and proceeds of its Project
Property to the Default Lender, until repaid in full, and any such
payment shall be a reduction of the Defaulting Partner's Capital Account,
but shall not affect the Default Lender's Capital Account. Default Loans
shall have relative priority on a first in, first out basis.
(v) Upon the payment in full of the principal of and all accrued
interest on a Default Loan, the Defaulting Partner's default, with
respect to which a Default Loan was made, shall be deemed cured. The
making of a Default Loan shall not be deemed to cure an Event of Default
with respect to which a Default Loan has been made, and such cure may be
made only in the manner set forth in the immediately preceding sentence.
(b) Any Default Lender may elect, by Notice (the "Conversion
Notice"), with respect to all or any portion of the Default Loans from such
Default Lender to the
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Defaulting Partner to increase such Default Lender's aggregate
Percentage and decrease the Defaulting Partner's Percentage as of the date
of the Conversion Notice as herein set forth with respect to such Default
Lender's portion of any such outstanding Default Loan.
(i) The Default Lender that delivered the Conversion Notice shall,
as to its portion of any Default Loan, increase its aggregate Percentage
(but not to exceed one hundred percent (100%)) by a percentage derived
from a fraction, the numerator of which equals one hundred twenty percent
(120%) of all outstanding principal and interest of the Default Loan
being converted and the denominator of which equals the positive amount
equal to one hundred percent (100%) of all Invested Capital of the
Partners in the Partnership. The Defaulting Partner shall have its
Percentage correspondingly decreased by the amount by which the Default
Lender's Percentage is increased. If the Defaulting Partner's Percentage
is decreased to zero (0) as a result of any conversion pursuant to this
Section 23(b), the Defaulting Partner shall thereupon cease to be a
Partner in the Partnership, but shall remain liable for the Continuing
Liabilities.
(ii) The Partners acknowledge that Capital Contributions will be
of critical importance to the Partnership, and the Partners further
acknowledge that the value of Capital Contributions or Default Loans made
to Partners who have failed to make Capital Contributions is not readily
ascertainable as of the date hereof and a reasonable estimate of such
value is achieved by the formula contained in Section 23(b)(i) hereof.
Such formula reflects such estimate of the Partners, and is not intended
to be a penalty.
(iii) Upon such recalculation and the corresponding adjustments of
Percentages, if all of the Default Loan has been converted pursuant to
this Section 23(b), the Event of Default associated with the Default Loan
with respect to which such adjustments were made shall be deemed cured as
of the date of such conversion.
(iv) If the Percentage of Harrah's is reduced to zero (0) pursuant
to Section 23(b)(i), Players may elect to terminate the Management
Agreement and Harrah's Lease. If Players elects to terminate the
Management
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Agreement, and/or Harrah's Lease, HMHOC and Harrah's (LLC) shall
receive no payments in respect of their interests in the Management
Agreement or Harrah's Lease, and Harrah's (LLC) shall surrender its
gambling license to the Missouri Gaming Commission and cooperate with
Players' application to secure a new gambling license for Harrah's
Premises. If the Percentage of Players is reduced to zero (0) pursuant to
Section 23(b)(i), Harrah's may elect to terminate Players' Lease, and
Players shall surrender its gambling license to the Missouri Gaming
Commission and cooperate with Harrah's (LLC)'s application for a new
gambling license for Players' Premises. If Harrah's elects to terminate
Players' Lease, Players shall receive no payments in respect of its
interest in the Players' Lease.
(c) Notwithstanding anything to the contrary contained in Section 7,
in the event that Percentages are adjusted as set forth in Section
23(b)(i), and the Defaulting Partner's Percentage, as readjusted, is equal
to zero (0), then the Default Lender shall have the right (but not the
obligation), in its sole discretion, either to (i) admit to the Partnership
as an additional Partner of the Partnership a nominee of the Default
Lender, and to deem the Defaulting Partner to have Transferred its
Partnership Interest to such nominee (instead of increasing the Default
Lender's Percentage by such amount), whereupon the Defaulting Partner will
cease to be a Partner in the Partnership and to have any Partnership
Interest and such Partner shall not be relieved of any Continuing
Liabilities, or (ii) if, after the exercise of the dilution remedy Section
23(b)(i) no other Partner remains, take all steps necessary to dissolve and
wind up the affairs of the Partnership, and to cause all assets to be
liquidated and the net proceeds therefrom to be distributed solely to the
Default Lender, with the Defaulting Partner having no right to receive any
such Distribution.
(d) Upon request by any Default Lender at any time from the date of
the Default Lender's advance pursuant to Section 23(a) until any such
Default Loan shall be repaid in full or converted to an increased
Partnership Interest, the Defaulting Partner shall execute any and all
documents reasonably requested by any Default Lender, including, without
limitation, notes and any other documents which may be necessary to
evidence the Default Loan.
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(e) Until such time as a Defaulting Partner's Percentage is reduced
to zero (0), notwithstanding any dilution of such Partner's Percentage,
such Partner shall remain liable to contribute its initial Percentage of
all Capital Contributions to the Partnership.
24. Redemption of Unsuitable Partner's Partnership Interest
(a) Upon the occurrence of an Unsuitability Determination by the
Missouri Gaming Commission, the remaining Partner may, by Notice (the
"Redemption Notice") to the Partner with respect to which (or with respect
to a Holding Entity of such Partner or its Project Property) an
Unsuitability Determination has occurred (an "Unsuitable Partner") purchase
all (but not part) of: (i) the Project Property of the Unsuitable Partner;
or (ii) the Project Property of a Partner who has failed to redeem the
interest of its Holding Entity as to which an Unsuitability Determination
has occurred, as the case may be (each, the "Redeemed Interest"), pursuant
to this Section 24 (an "Unsuitability Redemption") at the lowest of: (i)
the Unsuitability Redemption Price; or (ii) the maximum amount as may be
permitted to be paid by applicable law or rule, regulation or order of the
Missouri Gaming Commission. The Redemption Notice may designate any date,
beginning ninety (90) days before the date of such Notice, and ending on
the date of such Notice, as to the effective date on which Fair Market
Value of the Project Property being purchased shall be determined. Upon
giving of the Redemption Notice, the Fair Market Value of the Project
Property to be purchased shall be determined pursuant to Section 9(n). The
purchasing Partner shall have the lesser of sixty (60) days or such period
of time allowed or required by the Missouri Gaming Commission from the date
upon which Fair Market Value is determined pursuant to Section 9(n) (the
"Valuation Date") in which to purchase the Redeemed Interest by payment, to
the Unsuitable Partner of an amount equal to the Unsuitability Redemption
Price and shall select and designate the place and time for closing in St.
Louis, Missouri within such period, by Notice to the Unsuitable Partner.
(b) The Unsuitability Redemption Price, to the extent not prohibited,
shall be paid either: (i) in cash at the closing of such Unsuitability
Redemption; or (ii) to the extent permitted by law and elected by the
purchasing Partner, over time, as provided in Section 25(b); in each case
subject to escrow and adjustment in the manner provided in Section
9(b)(iii). At the closing of the purchase of a Redeemed Interest, the
purchasing
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Partner shall save, protect, defend, indemnify and hold harmless the
selling Partner from all debts and liabilities owed by the Partnership to
third parties, excluding any Continuing Liabilities.
(c) Costs of the transaction, including recording fees, escrow costs,
if any, and other fees (but not attorneys' fees) shall be borne by the
Unsuitable Partner and paid at closing. The Unsuitable Partner shall
deliver all appropriate documents of transfer of the purchasing Partner, or
its nominee, at the closing and shall cause its entire Redeemed Interest to
be transferred free and clear of all liens, claims, encumbrances, or other
charges of any kind whatsoever. If the Redeemed Interest is transferred to
a nominee of the purchasing Partner, the admission of such nominee to the
Partnership as a successor to the Unsuitable Partner which owned the
Redeemed Interest shall occur, and for all purposes shall be deemed to have
occurred immediately prior to the transfer by the Partner of the Redeemed
Interest. From and after the closing, the Unsuitable Partner which owned
the Redeemed Interest shall have no further interest in the assets, profits
or management of the Partnership and shall not be responsible for any of
its obligations or losses in respect of the Redeemed Interest incurred
after the redemption of its interest, and all obligations of the
Partnership to the Unsuitable Partner which owned the Redeemed Interest
shall be satisfied and discharged in respect of the Redeemed Interest,
including all Capital Accounts or any other amounts advanced to the
Partnership and owed by the Partnership to the Partner which owned the
Redeemed Interest, but the Unsuitable Partner which owned the Redeemed
Interest shall remain liable for any Continuing Liabilities.
25. Appraisal Buyout
(a) Upon an Event of Default, any Non-Defaulting Partner may give to
the Defaulting Partner written Notice that it intends to buy such
Defaulting Partner's Project Property pursuant to this Section 25 (the
"Appraisal Buyout"). This provision shall also be applicable if a
condemnation, casualty or title defect affecting the Leased Site or the
Adjacent Fee Site results in the termination of one, but not both, of
Harrah's Lease and Players' Lease, in which event the Partner who is the
tenant (or whose Affiliate (Wholly Owned) is the tenant) under the
Operating Lease that is not terminated shall be deemed the Non-Defaulting
Partner, and the Partner whose Lease is terminated shall be the Defaulting
Partner.
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(i) Any Non-Defaulting Partner exercising its right pursuant to
this Section 25 shall be the "Appraisal Purchaser".
(ii) Upon Notice to a Defaulting Partner of an election under this
Section 25 (an "Appraisal Buyout Notice"), the Fair Market Value of the
Project Property being purchased shall be determined pursuant to Sections
9(n)(i) and 9(n)(ii), provided that: (A) in the case of condemnation, the
Fair Market Value of any Project Property taken by condemnation shall be
the award established by the condemning authority or, if contested, by
the court hearing such condemnation, rather than by an appraisal pursuant
to Sections 9(n)(i) and 9(n)(ii) (and such award shall be allocated by
the Partners among the assets taken as a Major Decision), and the
Valuation Date shall be the date that possession of the Harrah's Premises
or Players' Premises, as the case may be, is taken by the condemnor; (B)
in the case of casualty, the Fair Market Value of any Project Property
destroyed by casualty shall be the insurance proceeds recovered therefor,
and the Valuation Date shall be the date upon which such insurance
proceeds are paid by the insurer; and (C) in the case of a title defect,
the Fair Market Value of the Project Property being purchased shall be
the title insurance proceeds recovered therefor, and the Valuation Date
shall be the date upon which such title insurance proceeds are paid by
the title insurer. If condemnation, casualty insurance or title insurance
proceeds are recovered for property in addition to the Project Property
being purchased, and not separately allocated by the condemning
authority, insurer, court or other body making the award, and Harrah's
and Players do not agree as to the allocation thereof, the arbitrators
making such determination pursuant to Article 19 shall allocate such
award applying the criteria used by the condemnor, insurer or court to
establish the amount of such award. Specifically, with reference to title
insurance, if recovery under the Partnership's title insurance policy is
determined according to the value of the business enterprises conducted
at the Entertainment Facilities and Operating Lease Premises, the amount
recovered shall be allocated according to the relative value of such
business enterprises. The Appraisal Purchaser shall have
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ninety (90) days from such Valuation Date in which to purchase the
Defaulting Partner's Project Property by payment, in accordance with
Section 25(b), to the Defaulting Partner of an amount equal to the
Appraisal Buyout Price.
(iii) In the case of an Appraisal Buyout of Players resulting from
an Event of Default by Players, Harrah's may: (A) in lieu of Harrah's
(LLC) enforcing the payment of damages pursuant to Section 29.3 of
Players' Lease, reduce the Appraisal Buyout Price or, retroactively to
the date of such promissory note, reduce the principal amount of the
promissory note delivered pursuant to Section 25(b) (and apply any
resulting overpayment of interest to future interest obligations, or if
insufficient, to further reduction of principal) by the amount of damages
that are determined to be due under Players' Lease; and (B) in lieu of
HMHOC collecting damages under Section 17.2 of the Management Agreement,
reduce the Appraisal Buyout Price, or, retroactively to the date of such
promissory note, the principal amount of the promissory note delivered
pursuant to Section 25(b) (and apply any resulting overpayment of
interest to future interest obligations, or if insufficient, to further
reduction of principal), by the amount of damages that are determined to
be due from Players under Section 17.2 of the Management Agreement.
(iv) The Appraisal Buyout Notice may designate any date, beginning
ninety (90) days before the date of such Notice, and ending on the date
of such Notice, as to the effective date for the determination of Fair
Market Value of the Project Property to be purchased, provided that in
the case of an Appraisal Buyout caused by condemnation, the date shall be
the date specified in Section 25(a)(iii).
(b) The closing of the Appraisal Purchaser's purchase of the
Defaulting Partner's Project Property, shall occur at the time and in the
offices of the Appraisal Purchaser's legal counsel in St. Louis, Missouri,
designated by the Appraisal Purchaser in its Appraisal Buyout Notice, but
no later than ninety (90) days after the Valuation Date. The Appraisal
Buyout Price shall be paid either: (i) in cash at the time of the closing;
or (ii) at the election of the Appraisal Purchaser, in the case of an
Appraisal Buyout resulting from an Event of Default: (A) one-twentieth
(1/20) of the Appraisal Buyout Price shall
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be paid at closing by the plain check of Appraisal Purchaser (or its
nominee); and (B) the balance by delivery of the Appraisal Purchaser's (or
its nominee's) promissory note to the Defaulting Partner, payable in
nineteen (19) equal and consecutive quarter-annual installments of
principal, together with interest on the declining principal balance, from
the date of closing until the principal shall have been paid in full, at a
per annum rate equal to the greater of: (1) one hundred twenty percent
(120%) of the interest rate payable, as of the date of closing, on five (5)
year Treasury Notes of the United States Government selling at par; or (2)
the minimum rate that is required in order to avoid both the imputation of
interest and the presence of original issue discount pursuant to the
provisions of the Code. The first payment under said promissory note shall
be due and payable on the first day of the third month after the date of
closing. The promissory note shall be prepayable in whole or in part at any
time and from time to time, at the option of the maker thereof without
penalty or premium. The promissory note shall provide that it is payable
only from "cash flow" earned by the Appraisal Purchaser or its successor
from the operation of the Defaulting Partner's Operating Lease Premises
(gross revenue less expenses other than: (x) interest, principal or changes
in respect of Debt thereon placed by the Appraisal Purchaser; or (y)
increased expenses resulting from a lease amendment hereafter entered
into), and if such cash flow is insufficient, to the extent of the
insufficiency, any payment shall be deferred, without interest, until such
time as such cash flow is sufficient to pay it.
Payment at closing or pursuant to such promissory note will: (i) be
subject to escrow and adjustment in the manner provided in Section
9(b)(iii).
Payments at closing or pursuant to such promissory note will be
distributed first to satisfy all outstanding obligations of the Appraisal
Seller for Default Loans, indemnity obligations and unsatisfied calls for
Capital Contributions, unless deducted in reaching the determination of
Fair Market Value, and only the amount remaining after satisfaction of such
obligations shall be paid to the Defaulting Partner.
At the closing of the Appraisal Buyout pursuant to this Section 25,
the Appraisal Purchaser shall save, protect, defend, indemnify and hold
harmless the selling Partner from all debts and liabilities owed by the
Partnership to third parties, excluding any Continuing Liabilities.
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(c) Costs of the transaction, including recording fees, escrow costs,
if any, and other fees (but not attorneys' fees) shall be borne and paid at
closing by the Defaulting Partner, except in the case of a transaction
resulting from damage, destruction or condemnation, in which event, costs
of the transaction shall be split equally by both Partners. The Defaulting
Partner shall deliver all appropriate documents of transfer at the closing
and shall convey its entire Project Property to the Appraisal Purchaser, or
its nominee(s), free and clear of all liens, claims, encumbrances, or other
charges of any kind whatsoever. In the event such Project Property is
transferred to a nominee of the Appraisal Purchaser, the admission of such
nominee to the Partnership as a successor to the Defaulting Partner shall
occur, and for all purposes shall be deemed to have occurred immediately
prior to the transfer by the Defaulting Partner of its Project Property.
From and after the closing, the Defaulting Partner shall have no further
interest in the assets, profits or management of the Partnership and shall
not be responsible for any of its obligations or losses, excluding any
Continuing Liabilities.
(d) In all events: (i) condemnation awards; (ii) insurance proceeds;
and (iii) damages for Operating Lease or Management Agreement default of or
caused by the Defaulting Partner or its Affiliate (if paid rather than
credited against the Appraisal Buyout Price, or note owed in payment
thereof, as previously herein provided), shall be retained by the Appraisal
Purchaser or its Affiliate, or nominee, as the case may be.
26. Buy/Sell
(a) (i) In the circumstance described in this Section, either
Partner, provided that no Monetary Default exists with respect to such
Partner, may, by Notice to the other Partner (a "Buy/Sell Notice"),
establish a sales price ("Buy/Sell Price") for the Project Property of such
Partner. This remedy shall be available only pursuant to Section 29 (Other
Gambling Qualifications), and the Partner invoking this Section pursuant to
Section 29 shall be the "Offeror". Any offer made in a Buy/Sell Notice
pursuant to this Section 26 shall be the "Offer". The Buy/Sell Notice shall
(A) state separately the components of the Buy/Sell Price attributable to
each asset comprising the Offeror's Project Property; and (B) summarize in
reasonable detail the calculations which determine the Buy-Sell Price for
which the Offeror would be willing either (x) to purchase from the other
Partner
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(the "Offeree") the Offeree's Project Property; or (y) to sell to the
Offeree the Offeror's Project Property (a "Buy/Sell").
(b) The Buy/Sell Price for each asset (other than: (i) the interest
of Harrah's (LLC) as the ground lessor of the Leased Site; (ii) Lot 7; and
(iii) the interest of HMHOC under the Management Agreement) comprising the
Project Property of an Offeror shall be determined using the following
methodology: (i) in the case of a Buy/Sell Notice given more than
thirty-six (36) months after the Opening Date of the Entertainment
Facilities; by multiplying: (x) the average annual EBITDA (earnings before
interest, income taxes and depreciation allowance and excluding
non-recurring costs) derived from such asset for the preceding five years
(unless less than five years have expired following such Opening Date, in
which case the number of years expired shall apply) by; (y) a multiple
determined by Offeror; and (ii) in the case of any Buy/Sell Notice given
before thirty-six (36) months after the Opening Date of the Entertainment
Facilities, by multiplying: (x) the projected average annual EBITDA (as
above defined) to be derived from such asset over the next succeeding five
(5) years by; (y) a multiple determined by the Offeror; and deducting from
the result of such multiplication the Offeror's Percentage of all
additional amounts necessary to complete and open the Entertainment
Facilities plus all additional amounts necessary to complete and open the
Offeror's Operating Lease Premises. If, in any Buy/Sell invoking the
methodology identified in (i) above, the asset being valued has not been
income producing for any portion of the measuring period, then there shall
be substituted as revenue and expense for such period, revenue and expense
for the same period of the immediately prior year (or, if not available,
the immediately following year) as the case may be. If EBITDA is negative
as to any asset so valued, there shall be no payment for such asset, except
as provided below with respect to Lot 7, the Leased Site and the Management
Agreement. The methodology adopted by the Offeror shall be applied to like
property of the Offeree. Any Offeror or Offeree must purchase all of the
Project Property of the other Partner if it elects to purchase any of such
Project Property.
Notwithstanding the foregoing, if the gambling license of an Offeror
or Offeree, may not be or is not surrendered by the seller, the Buy/Sell
Price for a Partner's Partnership Interest and Operating Lease shall be
determined by appraisal in accordance
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with Section 9(n) (including without limitation, the non-gambling
valuation assumption set forth in Section 9(n)(i)).
If, in any Buy/Sell, Players should be the purchaser of Harrah's
Project Property, and Harrah's (LLC) or an Affiliate (Wholly Owned) of HEI
should, at such time, own Lot 7, and/or the Leased Site, then Players shall
purchase such Project Property at a price equal to: (i) the seller's cost
thereof; plus (ii) all costs incurred by the seller or its Affiliates
during the period of its ownership thereof (including taxes, public and
private assessments, insurance premiums and all payments of principal and
interest under that certain promissory note dated July 21, 1994 given by
Harrah's to Sverdrup/MDRC Joint Venture in the original principal amount of
$4,000,000 that are not included in category (i)); or, in the case of the
Leased Site only, if greater, the Fair Market Value of the Leased Site
(encumbered by the Ground Lease) determined by appraisal in accordance with
Sections 9(n)(i) and (n)(ii). The Management Agreement shall be valued at
the amount of damages that would be due under Section 17.2 thereof for a
termination caused by Players.
(c) From the date the Buy/Sell Notice is given, the Offeree shall
have sixty (60) days, or such lesser period of time as provided by
applicable gambling laws, regulations, rules or orders, to notify the
Offeror of its election either to purchase the Offeror's Project Property
or sell its own Project Property at a price determined (using, in the case
of an asset valued by EBITDA the same multiplier and types of financial
information used by the Offeror to value its like Project Property) (a
"Buy/Sell Response").
(i) If the Offeree determines to purchase the Offeror's Project
Property, the Offeree shall, in its Buy/Sell Response, specify a closing
date for such purchase not more than ninety (90) days, or such lesser
period of time as provided by applicable gambling laws, regulations,
rules or orders, from the date of its Buy/Sell Response, within which it
must purchase the Project Property of the Offeror at the Offeror's
Buy/Sell Price, as calculated above.
(ii) If the Offeree determines to sell its Project Property, it
shall so advise the Offeror in its Buy/Sell Response, and the Offeror
shall, within ten
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(10) days of receipt of the Offeree's Buy/Sell Response,
designate, by Notice to Offeree, a closing date for such sale not more
than ninety (90) days thereafter and shall purchase the Offeree's Project
Property at the Offeree's Buy/Sell Price, as calculated above.
(iii) If the Offeree does not elect either to buy or sell within
the ten (10) day period referred to above, the Offeror may elect by
Notice to Offeree, to buy the Offeree's Project Property, and the Offeror
shall have ten (10) days following expiration of such ten (10) day period
in which to designate, by Notice to Offeree, a closing date for such
purchase not more than ninety (90) days from the date of such election.
(d) The closing of the purchase and sale contemplated shall occur at
a specific time designated by the buying Partner, by Notice given within
the above-established time limits, at the offices of its legal counsel in
St. Louis, Missouri. The Buy/Sell Price shall be paid in cash at the
closing, subject to escrow and adjustment in the manner provided in Section
9(b)(iii). The Buy/Sell Price payable to an Offeror shall be distributed
first to satisfy all outstanding obligations of the Offeror for Default
Loans, indemnity obligations and unsatisfied calls for required Capital
Contributions (to the extent not deducted in determining the Buy/Sell
Price), and only the amount remaining after satisfaction of such
obligations shall be paid to the selling Partner. After the closing, the
selling Partner shall have no further interest in the assets, profits or
management of the Partnership and shall not be responsible for any of the
obligations or losses of the Partnership, and all obligations of the
Partnership to the selling Partner, including all Capital Accounts, loans
and advances, shall be deemed satisfied and discharged. After the closing
of the purchase of Project Property pursuant to this Section 26, the buying
Partner shall save, protect, defend, indemnify, and hold harmless the
selling Partner from all debts and liabilities owed by the Partnership to
third parties, but the selling Partner shall not be relieved of any
Continuing Liabilities. Costs of sale of Project Property, including
recording fees, escrow costs, if any, and other fees (but not attorneys'
fees) shall be divided equally between the Partners. A Partner selling its
Project Property shall deliver all appropriate documents of transfer at
closing and shall convey its Buy/Sell Property to the buying Partner, or
its nominee, free and clear of all liens, claims,
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encumbrances or other charges of any kind whatsoever. In the event
the Project Property is conveyed to a nominee of the buying Partner, the
admission of such nominee to the Partnership as a successor to the selling
Partner shall occur, and for all purposes shall be deemed to have occurred
immediately prior to the Transfer by the selling Partner of its Partnership
Interest.
(e) If the buying Partner shall fail to close a purchase pursuant to
this Section 26, the selling Partner may, in addition to any other rights
hereunder, elect to purchase the buying Partner's Project Property at the
Buy/Sell Price established hereunder, with closing to occur on a date
selected by the selling Partner that is no later than sixty (60) days after
the buying Partner's default.
27. Waiver
(a) Each Partner hereby acknowledges and agrees that any exercise of
the dilution pursuant to Section 23, the Unsuitability Redemption pursuant
to Section 24, the Appraisal Buyout pursuant to Section 25, or the Buy/Sell
pursuant to Section 26, for any reason or at any time in accordance with
the terms of such Sections shall not be delayed, enjoined or otherwise
postponed or restrained by an assertion that such action is in bad faith or
a breach of any fiduciary or other Partnership duty, but, following the
completion of any such exercise of rights, each Partner shall retain its
right to bring an action for damages with respect to any claim of bad faith
or breach of fiduciary or other Partnership duty as a result of any
exercise of a dilution pursuant to Section 23, an Unsuitability Redemption
pursuant to Section 24, an Appraisal Buyout pursuant to Section 25, or a
Buy/Sell pursuant to Section 26.
(b) Each Partner hereby acknowledges and agrees that any Partner or
any Affiliate of a Partner who is a party to any agreement with the
Partnership or any Partner may take any separate action or actions as it
shall determine in its sole discretion to be in its own best interest with
respect to the Partnership or such Partner in connection with any of its
roles with respect to the Partnership, and that such Partner or Affiliate
shall not be deemed to have acted in bad faith or to have breached any
fiduciary or other Partnership duty for so acting in its best interest.
Each Partner hereby expressly waives any claim of bad faith or breach of
fiduciary or other Partnership duty as a result of any such action or
actions which any Partner or Affiliate of a Partner who is party to a
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contract with the Partnership or any Partner may take in its own best
interest in any such separate roles.
28. Gambling Qualifications in Missouri
(a) All Partners, and all Persons owning directly or indirectly any
ownership interest, security interest, otherwise being the legal or
Beneficial Owner of any Holding Entity, and their successors and assigns,
who are required to be licensed, permitted or determined suitable or
otherwise approved pursuant to applicable law or by the Missouri Gaming
Commission, shall be so licensed, permitted or determined suitable or
otherwise approved prior to their admission to, and at all times during
their participation in, or association with, the Partnership or any Holding
Entity.
(b)(i) If any Partner, or any Holding Entity of any Partner or its
Project Property, suffers a Missouri Gaming Commission Unsuitability
Determination, all disbursements of Distributable Cash and Net Proceeds of
Sale or Financing/Refinancing by the Partnership to the affected Partner
(or the Partner whose Holding Entity suffers the Unsuitability
Determination) (other than in repayment of Default Loans, to the extent
lawful), shall be suspended and escrowed, and such Partner shall be subject
to any other penalties or provisions to the extent and for so long as
provided by applicable law, regulations, rules or orders;
(ii) In any such case, the Partner in which such Holding Entity
owns a direct or indirect interest and each intervening Holding Entity
shall enforce all provisions of their formative documents which provide
for the suspension of dividends and/or distributions to the unsuitable
Holding Entity.
(iii) In the case of a Missouri Gaming Commission Unsuitability
Determination of a Partner, the remaining Partner shall be entitled to
purchase such Partner's Project Property in accordance with Section 24;
and
(iv) In the case of a Missouri Gaming Commission Unsuitability
Determination of a Holding Entity, the Partner (or its Affiliate
(Controlled)) in which such Holding Entity has a direct or indirect
interest shall redeem such Holding Entity within thirty (30) days of such
Unsuitability Determination or such lesser period of time as may be
required by law. If for any reason such
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Partner or its Affiliate (Controlled) fails to redeem the
ownership interest of such Holding Entity, the remaining Partner may
purchase the Project Property of such Partner in accordance with Section
24.
(c) Notwithstanding any provision herein to the contrary, the
Partner with respect to which a Missouri Gaming Commission Unsuitability
Determination was made, or the Partner or its Affiliate (Controlled) having
a Holding Entity with respect to which an Unsuitability Determination was
made, to the extent permitted by applicable law, regulations, rules or
orders, shall have the right to appeal such Unsuitability Determination to
the Missouri Gaming Commission, and provided that there is no intervening
adverse consequence to the Partnership or the remaining Partner and the
operation of such Partner's Operating Lease Premises is not suspended or
impaired, such Unsuitability Determination shall not be invoked by the
remaining Partner until such Unsuitability Determination has become final.
29. Other Gambling Qualifications
(a) If any Partner reasonably determines that its affiliation with
another Partner, or any of such Partner's or such Partner's Affiliate
(Controlled)'s Holding Entities, will threaten any gambling permit,
approval, or other entitlement that such affected Partner or any of its
Affiliates (Controlled) hold or apply for in any state other than the State
because of an Unsuitability Determination as to such Person, such Partner
may invoke the Buy/Sell remedy set forth in Section 26, with respect to (i)
the objectionable Partner, or (ii) in the case of an objectionable Holding
Entity, the Partner in which (or in the Affiliate (Controlled) of which)
such objectionable Holding Entity directly or indirectly owns an interest.
(b) Without limiting reasonableness to such circumstance, the
Partners agree that such determination shall be reasonable if based upon:
(i) any written communication or Unsuitability Determination from a
gambling commission or authority of another state; or (ii) evidence which,
if true, would violate any law, rule or regulation administered by or be
likely to result in an Unsuitability Determination by any such gambling
commission or authority, so long as such evidence is not induced in bad
faith by its recipient, or (iii) even if such evidence is induced in bad
faith by its recipient, such evidence is true and accurate. To the extent
that notice and cure remedies are made
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available by such state and may be pursued without risk to the
affected Partner, the Buy/Sell remedy may not be initiated unless cure is
not effected within the time permitted by such state. If notice and cure
remedies are not prohibited or specified by such state, the Buy/Sell remedy
may not be initiated until sixty (60) days following notice of a final
Unsuitability Determination by such state gambling commission or authority
provided that: (i) such Unsuitability Determination is curable, (ii) cure
has been initiated and is being diligently and expeditiously pursued, and
(iii) such cure remedies may be pursued without material adverse effect to
the affected Partner.
30. Lender Suitability
(a) If any lender to the Partnership or any lender to a Holding
Entity of the Partnership (other than a Holding Entity which is exempt from
a suitability determination by, or is otherwise determined suitable or
approved by the Missouri Gaming Commission) becomes subject to an
Unsuitability Determination by the Missouri Gaming Commission, the result
of which is to threaten the revocation, suspension, termination or
rescission of any permit, approval, entitlement or license granted by the
Missouri Gaming Commission to or for the benefit of the Partnership or its
Partners, or any Affiliate (Wholly Owned) of Players' Parent or HEI, or
result in any other penalty to the Partnership or its Partners and any such
Affiliate (Wholly Owned), and if the Unsuitability Determination is not
cured in accordance with applicable laws, regulations, rules or orders,
then to the extent and so long as provided by applicable laws, regulations,
rules or orders: (i) all payments to such lender shall be suspended and
escrowed; (ii) such lender shall immediately divest itself of all loans
made to the Partnership or such Holding Entity; and (iii) such lender shall
be subject to any other remedies as shall be required by applicable laws,
regulations, rules or orders. If, notwithstanding the application of, or
failing the enforcement of, the preceding sentence, the Holding Entity has
not satisfactorily complied with the requirements of applicable gambling
laws, regulations, rules or orders, as to eliminate such lender
unsuitability, the Project Property of the Partner owned in whole or in
part by such Holding Entity shall be subject to redemption in the manner
set forth in Section 24.
(b) If any Partner reasonably determines that the existence of a loan
from a lender to the Partnership will threaten any gambling license,
permit, approval, or
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<PAGE>
other entitlement that such affected Partner or any Affiliates
(Wholly Owned) of Players' Parent or HEI, as the case may be, holds or
applies for in any other jurisdiction, the affected Partner may, at no cost
to the Partnership or the other Partner: (i) require the Partnership to
exercise any redemption rights in any loan documents with such lender and
redeem such loan so long as such Partner makes a loan to the Partnership
(with the same security, interest and maturity provisions as the redeemed
loan) of the funds necessary to effect such redemption or procures a loan
for the Partnership (with the same interest, security and maturity
provisions as the redeemed loan) from a suitable lender and so long as such
loan is in compliance with the Partnership's loan documents and this
Agreement; (ii) require the Partnership to exercise any rights in any loan
documents with such lender to procure a suitable lender or lenders that
will assume and accept the rights and obligations of the objectionable
lender; or (iii) with the consent of such lender, if required in any loan
documents with such lender, procure a suitable lender or lenders that
assume and accept the rights and obligations of the objectionable lender.
31. Covenants
(a) Prohibited Payments
Each Partner agrees that it and its Affiliates will conduct their
activities, and will cause any activities conducted on their behalf to be
conducted, in a lawful manner and specifically will not engage in the
following transactions:
(i) payments or offers of payment, directly or indirectly, to any
domestic or foreign government official or employee in order to obtain
business, retain business or direct business to others, or for the
purpose of inducing such government official or employee to fail to
perform or to perform improperly his official functions;
(ii) receive, pay or offer anything of value, directly or
indirectly, from or to any private party in the form of a commercial
bribe, influence payment or kickback for any such purpose; or
(iii) use, directly or indirectly, any funds or other assets of
the Partnership for any unlawful purpose including, without limitation,
political contributions in violation of applicable laws, regulations,
rules or orders.
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<PAGE>
(b) Securities Law Requirements
The Partners acknowledge that HEI and Players' Parent are publicly
held corporations, and that trading in the securities of such corporations
based upon non-public information or unauthorized disclosure or other use
of material developments could expose HEI and Players' Parent to liability.
The Partners shall take appropriate precautions to inform its employees and
agents of such fact and to prevent such persons from making such
disclosure.
(c) Regulatory Information
Each Partner shall provide to the Partnership or regulatory agency,
as the case may be, as required by applicable laws, regulations, rules or
orders, all information pertaining to the Partnership, the Shoreside
Complex, and each Partner's officers, directors, shareholders, financial
sources, and associations as shall be required by any Federal or state
securities law or any regulatory authority with jurisdiction over the
Partnership, the Shoreside Complex, or any Partner or any Affiliates of
such Person including regulatory authorities in the states of Missouri,
Nevada, New Jersey, Louisiana, or any other jurisdiction.
(d) Confidentiality
Any information in connection with the Shoreside Complex in the
possession of any Partner which has not been generally disclosed to the
public shall be held in confidence and shall not be disclosed to any Person
other than Partners, employees, attorneys, agents, or lenders of Partners
and their Affiliates (Wholly Owned), except as may be required by any
regulatory authority having jurisdiction or by any other applicable laws,
regulations, rules or orders of any governmental entity. Any disclosure of
confidential information to any employee, attorney, agent or lender shall
be kept in confidence and delivered to such Persons subject to a written
confidentiality agreement benefiting the Partnership, in the form of
Exhibit M, except as may be required by any regulatory authority having
jurisdiction or by any other applicable laws, regulations, rules or orders
of any governmental entity.
(e) Holding Entity Requirements
(i) Harrah's, Players and any additional or substitute Partner
shall incorporate provisions into their articles of incorporation,
charters, partnership
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agreements or other formative documents substantially similar to
and no less restrictive than those contained in Exhibit O. Each Partner
shall assure that each Holding Entity (but excluding any Holding Entity
that is exempt from a suitability determination by the Missouri Gaming
Commission, or has been otherwise approved or excused from approval by
such Commission) at no cost to any other Partner shall incorporate
provisions into their articles of incorporation, charters, partnership
agreements or other formative documents similar to and no less
restrictive than those contained in the form of Exhibit O; provided that
in no event shall any Holding Entity whose equity securities are publicly
traded pursuant to the Securities Exchange Act of 1934, as amended, and
traded on the New York Stock Exchange, the American Stock Exchange or
NASDAQ be required to include in its formative documents Section (B) of
the first Section of Exhibit O or the last Section of Exhibit O. Each
Partner shall assure that any provisions required of any of its Holding
Entities by this Section 31(e) are enforced and that each of such Holding
Entities shall not amend such provisions in any manner which makes such
provisions less restrictive than the provisions contained in Exhibit O
without the approval of the Partnership. Each Partner has delivered, or,
as to any Holding Entity other than a Partner, not later than thirty (30)
days after the Effective Date, will deliver to the Partnership a copy of
the formative documents of its Holding Entities containing the provisions
required by this Section 31(e) certified by a secretary, partner or other
authorized Person, as being true and correct and adopted in accordance
with its formative documents. Players' Parent shall not be required to
comply with the above provisions of this Section 31(e)(i), and shall be
deemed to have satisfied this Section 31(e)(i) by maintaining in effect
the restrictions and rights referred to in its stock certificate, a copy
of which is attached as Exhibit U, which shall be continuously certified
by its Secretary as being true and correct, adopted and in effect in
accordance with its formative documents.
(ii) Each Partner shall assure that any evidence of ownership of
each Holding Entity that is an Affiliate (Controlled) of such Partner
(other than a
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<PAGE>
Holding Entity that is exempt from a suitability determination by
the Missouri Gaming Commission or has been otherwise approved or excused
from, or is not subject to, approval by such Commission) shall contain a
legend substantially similar to and no less restrictive than those
contained in the form of Exhibit N. Each Partner shall use reasonable
efforts to assure that any evidence of ownership of any of its other
Holding Entities shall contain a legend substantially similar to and no
less restrictive than the provisions contained in the form of Exhibit N.
In no event shall the legend requirements of this Section 31(e)(ii) apply
to any evidence of ownership of any Holding Entity which is publicly
traded pursuant to the Securities Exchange Act of 1934, as amended, and
traded on the New York Stock Exchange, the American Stock Exchange, or
NASDAQ Stock Exchange.
(iii) Without diminishing the rights of the Partners or the
Partnership under Sections 28 and/or 29, each Partner shall at its sole
cost and expense remove any Person within its chain of ownership or
within the chain of ownership of any Affiliate (Wholly Owned) that is
lessee of an Operating Lease who is determined by the Missouri Gaming
Commission, as part of the initial determination of suitability of such
Person, to be unsuitable. The other Partner shall bear no cost of removal
of any such Partner. Each Partner agrees to comply with any requirements
of any Missouri Gaming Commission in connection with any such removal.
(f) Lender Requirements
Harrah's, Players and any additional or substitute Partners shall
assure that any loan documents evidencing loans for borrowed money from any
lender to such entity or to its Affiliate (Wholly Owned) that is tenant
under an Operating Lease, or to any of their respective Holding Entities,
shall include provisions similar to and no less restrictive than the
provisions in the form of Exhibit P, or otherwise sufficient to permit such
entity to comply with Section 30.
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<PAGE>
(g) Post-Purchase Non-Competition
Following the purchase by any Partner of another Partner's Project
Property: (i) the selling Partner and all of the selling Partner's
Affiliates (Controlled) shall thereafter be prohibited, for a period of
twenty (20) years following the purchase, from participation in casino and
gambling operations, as to which Section 8(d) had previously imposed a
right of first refusal; until the earliest of: (w) the date upon which the
purchaser or its nominee is issued a license from the Missouri Gaming
Commission to conduct gambling activity at the Operating Lease Premises of
the seller on substantially the same terms as the seller; (x) the date upon
which an Unsuitability Determination is made by the Missouri Gaming
Commission as to the purchaser and its nominee; (y) the date upon which the
purchaser and, if applicable, its nominee, withdraw their applications to
the Missouri Gaming Commission for such license; and (z) the expiration of
ten (10) years following the purchase, this prohibition shall apply
throughout the State to any new or pending license application of the
selling Partner and all Affiliates (Controlled) of such Partner (and such
prohibition shall survive such purchase and any resulting dissolution of
the Partnership); and (ii) the purchasing Partner and all of its Affiliates
(Controlled) shall be free of any covenants under Section 8(d). The
foregoing prohibition shall not apply to the acquisition by a Partner or
its Affiliate (Controlled) of a Person having casinos or other gambling
operations both in the St. Louis, Missouri Metropolitan Statistical Areas
and in two or more other locations or to the acquisition of a Partner
and/or its Affiliates (Controlled) by any such Person.
32. Valuation and Appraisal Procedures
(a) Voluntary Appraisal
Upon an election of any Partner to exercise its Appraisal Buyout
rights pursuant to Section 25, or upon the commencement of an Unsuitability
Redemption pursuant to Section 24, the Partners shall promptly attempt, in
good faith, to agree upon the Fair Market Value of all Project Property, as
the case may be, for a period of fifteen (15) days from Notice of a Partner
to exercise its rights pursuant to Section 25 [Appraisal Buyout] or from
the commencement of an Unsuitability Redemption pursuant to Section 24,
before resorting to the appraisal procedure established by Section 9(n).
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<PAGE>
(b) Continued Use of Appraisal
If Fair Market Value shall have been established for any Project
Property under this Agreement after the Opening Date, the Fair Market Value
for such asset or assets shall be used for purposes of any subsequent
election pursuant to Sections 24 [Unsuitability Redemption] or 25
[Appraisal Buyout] hereof for a period of twelve (12) months after the date
such Fair Market Value was established.
33. Miscellaneous
(a) This Agreement (and the other agreements referred to herein among
the Partners and their Affiliates) embodies the entire understanding and
agreement of the parties to this Agreement relating to the subject matter
of this Agreement and any promise, condition, representation or warranty,
express or implied, not set forth in this Agreement shall not bind any
party with respect to the subject matter of this Agreement.
(b) A waiver at any time of compliance with any of the terms and
conditions of this Agreement shall not be considered a modification,
cancellation or waiver of such terms and conditions or of any preceding or
succeeding breach of this Agreement unless expressly so stated.
(c) If any provision of this Agreement is held to be invalid, such
provision shall not affect the remaining provisions of this Agreement which
shall continue in full force and effect.
(d) Wherever used in this Agreement, the masculine, feminine and
neuter pronouns shall be fully interchangeable, and the singular shall
include the plural where the context so requires and vice versa.
(e) Each party hereby waives any right to partition or the right to
take any other action which might otherwise be available to such party for
the purpose of severing its relationship with the Partnership or such
party's interest in the property held by the Partnership from the interests
of the other parties until the end of the combined terms of this
Partnership and all successor Partnerships reconstituted pursuant to
Section 10 of this Agreement; provided, however, that this provision shall
not limit a Partner's rights pursuant to Section 10 of this Agreement.
(f) Any statutory references in this Agreement shall include a
reference to any successor to such statute and/or to the referenced
provision of such statute.
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<PAGE>
(g) If any Notice, payment, closing or other action is to occur by
the terms of this Agreement on a day that is a Saturday, Sunday or a legal
holiday under the laws of the United States of America, such action shall
be taken on the closest day thereafter that is not a Saturday, Sunday or
such legal holiday.
(h) This Agreement and the Partnership are and shall be governed by
the laws of the State of Missouri without regard to conflict of law
principles.
34. Binding Effect
This Agreement shall, subject to the provisions of Section 9 of this
Agreement, inure to the benefit of and be binding upon the parties hereto and
their respective heirs, legal representatives, successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto effective as of the day and year set forth above.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
HARRAH'S MARYLAND HEIGHTS CORPORATION,
a Nevada corporation
By: /s/ Martin Boscaccy
-----------------------------------
Name: Martin Boscaccy
----------------------------
Title: Authorized Representative
---------------------------
PLAYERS MH, L.P.,
a Missouri limited partnership
By: PLAYERS MARYLAND HEIGHTS, INC., a
Missouri corporation, its sole General Partner
By: /s/ Steven P. Perskie
-------------------------------
Name: Steven P. Perskie
------------------------
Title: Secretary
-----------------------
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<PAGE>
EXHIBIT H
Prohibited Person
As used herein a Prohibited Person shall mean: (i) the following company and
individuals; (ii) their respective Affiliates (Controlled), spouses, children,
parents and siblings; and (iii) any Person in which any of them separately, or
in the aggregate, hold Voting Power:
1. Donald Trump
2. Robert E. Woolley
3. Lou Walter
4. Bass PLC
EXHIBIT H
(Page 1 of 1)
<PAGE>
GUARANTY
Players International, Inc., a Nevada corporation ("Players"), makes this
Guaranty for the sole and expressly limited purpose of making the guarantees,
representations, warranties, and covenants contained in this Guaranty and hereby
guarantees unconditionally payment of (i) Players MH, L.P.'s Initial Capital
Contributions pursuant to Section 4 of that certain Partnership Agreement of
Riverside Joint Venture (the "Agreement") to which this Guaranty is attached;
and (ii) any amounts necessary to satisfy any indemnity obligations pursuant to
Section 14(e)(iii) of the Agreement; and (iii) the obligations of Players and
its Affiliates (Controlled) under Sections 8(d) and 31(g) of the Agreement (the
"Players Guaranteed Obligations"). Players hereby makes the representations and
warranties set forth in Section 14.1 of the Agreement. Except as specifically
set forth in this Guaranty, the foregoing guarantor shall have no obligation or
liability under this Guaranty.
The Players Guaranteed Obligations may be extended or renewed, and Players
will be bound under this Guaranty notwithstanding any extension, renewal, or
alteration of the Players Guaranteed Obligations. Players hereby waives
presentation of, demand of, and protest of the Players Guaranteed Obligations
and waives notice of protest for nonpayment. This Guaranty shall not be affected
by:
(a) the failure of any party to assert any claim or demand or to
enforce any right or remedy against Players MH, L.P. under the Agreement,
(b) any extension or renewal of any provision of any thereof,
(c) any rescission, waiver, amendment or modification of any of the
terms or provisions of the Agreement, or
(d) the failure of any party to exercise any right or remedy against
any other guarantor of any of the Players Guaranteed Obligations.
Players further agrees that this Guaranty constitutes a guarantee of
payment when due and not of collection and waives any right to require that any
resort be had by any party to any of the security held for payment of any of the
Players Guaranteed Obligations or to any balance of any deposit account or
credit on the books of any party in favor of any Person.
The obligations of Players shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise of
any of the Players Guaranteed Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by
<PAGE>
reason of the invalidity, illegality or unenforceability of any of the Players
Guaranteed Obligations, discharge of Players MH, L.P. from obligations in a
bankruptcy or similar proceeding or otherwise. Without limiting the generality
of the foregoing, the obligations of Players shall not be discharged or impaired
or otherwise affected by its failure to assert any claim or demand or to enforce
any remedy under the Agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of any
of the Players Guaranteed Obligations, or by any other act or thing or omission
or delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of Players or which would otherwise operate as a discharge
of Players as a matter of law or equity.
Players further agrees that this Guaranty shall continue to be
effective or to be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Players Guaranteed
Obligations is rescinded or must otherwise be restored by any party upon the
bankruptcy or reorganization of Players or otherwise.
Upon payment by Players of any sum as provided above so long as any of
the Players Guaranteed Obligations shall remain outstanding hereunder, all
rights of Players against Players MH, L.P. arising as a result thereof by way of
right of subrogation or otherwise, shall in all respects be subordinated and
junior in right of payment to the prior indefeasible payment in full of all the
Players Guaranteed Obligations.
No delay or omission by the Partners or the Partnership to exercise any
right under this Guaranty shall impair any such right, nor shall it be construed
to be a waiver thereof. No amendment, modification, termination or waiver of any
provision of any guarantee, or consent to any departure by Players therefrom,
shall in any event be effective without the written concurrence of all Partners.
No waiver of any single breach of default under this Guaranty shall be deemed a
waiver of any other breach or default.
The Players Guaranteed Obligations may be enforced only by the Partners
other than Players MH, L.P. and by any Indemnified Persons and shall not benefit
or be enforceable by third parties. The Players Guaranteed Obligations shall
exclude liability for tort claims of third parties.
PLAYERS INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Steven P. Perskie
------------------------------
Its: Vice President
------------------------------
<PAGE>
MANAGEMENT AGREEMENT
FOR THE
HARRAH'S-PLAYERS RIVERSIDE COMPLEX
BY AND BETWEEN
RIVERSIDE JOINT VENTURE
AND
HARRAH'S MARYLAND HEIGHTS OPERATING COMPANY
Dated: November 2, 1995
<PAGE>
MANAGEMENT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS............................................................................................ 1
1.1 Definitions.......................................................................... 1
ARTICLE 2
SCOPE OF AGREEMENT..................................................................................... 14
2.1 Subject Matter....................................................................... 14
2.2 Development.......................................................................... 14
2.3 Grant and Acceptance of Management Responsibility.................................... 14
2.4 Funding.............................................................................. 14
ARTICLE 3
TERM................................................................................................... 14
3.1 Term................................................................................. 14
ARTICLE 4
COVENANTS OF OWNER..................................................................................... 15
4.1 Licensing and Permitting............................................................. 15
4.2 Title/Quiet Enjoyment................................................................ 16
ARTICLE 5
PRE-OPENING............................................................................................ 16
5.1 Pre-Opening Budget................................................................... 16
5.2 Payment of Pre-Opening Expenses...................................................... 16
5.3 Pre-Opening Hiring and Training of Employees......................................... 17
5.4 Pre-Opening Inspection............................................................... 17
5.5 Opening.............................................................................. 17
ARTICLE 6
STANDARDS AND MANAGER'S CONTROL........................................................................ 18
6.1 Harrah's Operational Standards....................................................... 18
6.2 Manager's Obligations................................................................ 18
6.3 Owner's Obligations.................................................................. 20
6.4 Manager's Control.................................................................... 21
ARTICLE 7
OPERATION OF THE ENTERTAINMENT FACILITY................................................................ 21
7.1 Permits.............................................................................. 21
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
7.2 Equipment and Supplies............................................................... 21
7.3 Employees............................................................................ 21
7.4 Marketing and Advertising............................................................ 23
7.5 Maintenance and Repairs.............................................................. 23
7.6 Capital Replacements/Improvements.................................................... 24
7.7 Emergency Expenditures............................................................... 24
7.8 Compliance with Legal Requirements................................................... 24
ARTICLE 8
FISCAL MATTERS......................................................................................... 25
8.1 Accounting Matters and Fiscal Periods................................................ 25
8.2 Operating Budget/Annual Plan......................................................... 26
8.2.1 Fiscal Authority and Constraint............................................. 26
8.2.2 Food and Beverage Pricing/Advertising and Marketing......................... 26
8.2.3 Compliance.................................................................. 26
8.2.4 Adjustment to Annual Plan................................................... 27
8.3 Bank Accounts........................................................................ 28
ARTICLE 9
FEES TO MANAGER........................................................................................ 29
9.1 Management Fees...................................................................... 29
9.1.1 Base Management Fee......................................................... 29
9.1.2 Incentive Management Fee.................................................... 29
9.1.3 Payment..................................................................... 30
9.2 Accounting Fee....................................................................... 30
ARTICLE 10
DISBURSEMENTS.......................................................................................... 30
10.1 Priority of Disbursements............................................................ 30
10.2 Adjustment to Bank Account........................................................... 30
10.3 Payment of Ownership Costs........................................................... 30
10.4 Payment of Sales and Other Operational Taxes......................................... 31
ARTICLE 11
HARRAH'S SERVICES...................................................................................... 31
11.1 Nature of Services................................................................... 31
ARTICLE 12
SYSTEM MARK SIGNS AND SYSTEM MARKS..................................................................... 32
12.1 Signs................................................................................ 33
12.2 Harrah's System Marks................................................................ 33
12.3 Litigation........................................................................... 34
12.4 Players' System Marks................................................................ 34
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 13
INSURANCE.............................................................................................. 35
13.1 Insurance Coverage................................................................... 35
13.2 Failure to Obtain - Self Help........................................................ 35
ARTICLE 14
INDEMNITY AND RELATED MATTERS.......................................................................... 35
14.1 Scope................................................................................ 35
14.2 Defense.............................................................................. 36
ARTICLE 15
DAMAGE TO AND DESTRUCTION OF THE ENTERTAINMENT FACILITY................................................ 37
15.1 Obligation to Restore................................................................ 37
15.2 Termination Option................................................................... 37
ARTICLE 16
CONDEMNATION........................................................................................... 38
16.1 Termination.......................................................................... 38
16.2 Restoration and Continuation......................................................... 39
ARTICLE 17
DEFAULT AND TERMINATION................................................................................ 39
17.1 Events of Default.................................................................... 39
17.2 Termination/Damages.................................................................. 41
ARTICLE 18
NOTICES................................................................................................ 43
18.1 Procedure............................................................................ 43
ARTICLE 19
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS............................................................ 44
19.1 Relationship......................................................................... 44
19.2 Contractual Authority................................................................ 44
19.3 Further Actions...................................................................... 44
ARTICLE 20
APPLICABLE LAW AND ARBITRATION......................................................................... 44
20.1 Scope................................................................................ 44
20.2 Arbitration.......................................................................... 45
20.2.1 Matters Subject to Arbitration.............................................. 45
20.2.2 The Accountants............................................................. 45
20.2.3 Arbitration Procedures...................................................... 46
ARTICLE 21
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</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SUCCESSORS AND ASSIGNS.......................................................................................... 46
21.1 Assignment by Manager................................................................ 47
21.2 Assignment or Transfer of Title by Owner............................................. 47
21.3 Binding Effect....................................................................... 48
ARTICLE 22
SHORT FORM OF AGREEMENT......................................................................................... 48
22.1 Memorandum of Agreement............................................................. 48
ARTICLE 23
FORCE MAJEURE................................................................................................... 48
23.1 Operation of Entertainment Facility.................................................. 48
23.2 Extension of Time.................................................................... 48
ARTICLE 24
TERMINATION..................................................................................................... 49
24.1 Surviving Obligations................................................................ 49
24.2 Termination/Expiration............................................................... 49
ARTICLE 25
GENERAL PROVISIONS.............................................................................................. 53
25.1 Authorization........................................................................ 53
25.2 Interest............................................................................. 53
25.3 Formalities.......................................................................... 53
25.4 Documents............................................................................ 53
25.5 Personal Service Contract............................................................ 53
25.6 Exhibits............................................................................. 53
</TABLE>
- v -
<PAGE>
TABLE OF EXHIBITS
EXHIBIT A
Current Form of Operating Statement
EXHIBIT B
Permitted Exceptions
EXHIBIT C
Owner's Insurance Requirements
EXHIBIT D
Harrah's Financial Reporting and Accounting Policies Manual
EXHIBIT E
Short Form of Management Agreement
EXHIBIT F
Irrevocable Banking Instructions
EXHIBIT G
Pre-Opening Budget
EXHIBIT H
Variable Expenses
EXHIBIT I
Pre-Opening Account Funding Schedule
EXHIBIT J
Entertainment Facility Allocation Policies
EXHIBIT K
Harrah's Operational Standards
EXHIBIT L
Key Personnel
- vi -
<PAGE>
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of the
2nd day of November, 1995, by and between RIVERSIDE JOINT VENTURE, a Missouri
general partnership (hereinafter referred to as "Owner"), and HARRAH'S MARYLAND
HEIGHTS OPERATING COMPANY, a corporation organized and existing under the laws
of the State of Nevada, with principal offices at 219 North Center Street, Reno,
Nevada (hereinafter referred to as "Manager");
WITNESSETH:
WHEREAS, Owner is desirous of having Manager operate Owner's Entertainment
Facility to be constructed on the Site; and
WHEREAS, Manager is desirous of operating the Entertainment Facility;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, Owner and Manager agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used herein the following terms shall have the
respective meanings indicated below:
(a) Accountants - the accounting firm selected pursuant to Article
20.2.2 of this Agreement.
(b) Accounting Fee - as defined in Article 9.2.
(c) Adjusted Gross Revenues - Gross Revenues less:
(i) any gratuities or service charges added to a customer's
bill;
(ii) any credits or refunds made to customers, guests or
patrons, provided that any refunds made pursuant to
invocation of Harrah's 100% guaranty by any customer of
the Entertainment Facility shall be an Operating Cost
rather than an adjustment to Gross Revenues;
(iii) any sums and credits (other than those already
excluded from Gross Revenues) received by Owner for
lost or damaged merchandise;
<PAGE>
(iv) any sales taxes, excise taxes, use taxes, gross
receipts taxes, admission taxes, entertainment taxes,
tourist taxes or charges, and similar charges required
by law to be collected from patrons or guests or as
part of the sale price for goods, services or
entertainment which must be remitted to governmental
authorities;
(v) any proceeds from the sale or other disposition of the
Entertainment Facility, Furnishings and Equipment or
other assets;
(vi) any fire and extended coverage insurance proceeds or
other insurance proceeds payable in connection with any
casualty loss (except for business interruption,
increased cost of operations, use, occupancy or similar
insurance proceeds);
(vii) any condemnation awards (except awards for temporary
takings [i.e., condemnations of twelve (12) months or
less]); and
(viii) any proceeds of financing or refinancing of the
Entertainment Facility.
(d) Annual Plan - the Annual Plan adopted by Owner pursuant to Section
7(l) of Owner's Partnership Agreement, as modified from time to time.
(e) Architect - Wittenberg, Delony & Davidson, Inc.; 320 West Capital
Avenue, Suite 840; Little Rock, Arkansas, 72201.
(f) Authorized Mortgage - mortgage(s), deed(s) of trust, security
agreements, or other forms of agreements securing payment of
indebtedness, the proceeds of which are used solely to construct,
improve, restore, or repair the Entertainment Facility, with a lien or
equivalent security interest against the Entertainment Facility.
(g) Bank Account(s) - as defined in Article 8.3(a).
(h) Base Management Fee - as defined in Article 9.1.1.
(i) Building - all buildings, structures and improvements to be located on
the Site and all fixtures and equipment attached to, forming a part of
and necessary for the operation of such buildings, structures and
improvements as a hotel having 300 guest rooms, more or less, each
with bath, and entertainment complex (including,
- 2 -
<PAGE>
without limitation, heating, lighting, sanitary, air-conditioning,
laundry, refrigeration, kitchen, elevator and similar items), and all:
(i) restaurants, bars, banquet, meeting and other public areas;
(ii) commercial space, including concessions and shops;
(iii) storage and service areas; (iv) health club facilities;
(v) parking facilities;
(vi) office facilities;
(vii) permanently affixed signage; and
(viii) other buildings, facilities and appurtenances, as may
now or hereafter, replace, be attached to and form a part of
the Building or otherwise be located on the Site;
but excluding:
(i) the Excursion Gambling Boats; and
(ii) the Excursion Gambling Support Facilities.
(j) Capital Replacement - any alteration or addition to, or rebuilding or
renovation of the Building, including any addition to and replacement of
Furnishings and Equipment, the cost of which is capitalized and amortized,
rather than being expensed.
(k) Compensation - the direct salaries and wages paid to, or accrued for the
benefit of any employee, including incentive compensation, together with
all fringe benefits payable to or accrued for the benefit of such executive
or other employee, including employee meals, employer's contribution under
F.I.C.A., unemployment compensation or other employment taxes, pension fund
contributions, workers' compensation, group life, accident and health
insurance premiums and costs, and profit sharing, severance, retirement,
disability and other similar benefits. It is anticipated that: (i) Manager
will lease employees to Harrah's (LLC) (which, as tenant under an Operating
Lease, will operate Excursion Gambling Boats and Excursion Gambling Boat
Support Facilities); (ii) certain employees will perform
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services for both the Entertainment Facility and such Excursion
Gambling Boats and Excursion Gambling Boat Support Facilities ("Shared
Employees"); and (iii) the Compensation line item of each Operating Budget
will include an allocated portion of Compensation of Shared Employees. If
Owner determines that the use of Shared Employees is not cost effective, it
shall be entitled, by written notice to Manager, effective ninety (90) days
after the date of its receipt, to have all employees of the Entertainment
Facility, work solely at the Entertainment Facility, and all employees of
the Excursion Gambling Boat(s) and Excursion Gambling Boat Support
Facilities operated by Harrah's (LLC) work solely thereat. In such event:
(i) the Operating Budget for the Fiscal Year within which such change is
effected shall, without the need for further approval by Owner, be
automatically increased to include additional Compensation occasioned by
the elimination of sharing of Shared Employees; and (ii) any administrative
or supervisory services performed jointly for the Entertainment Facility
and such Excursion Gambling Boats shall thereafter be an Administrative
Service Fee established under Article 11.1(a), and Owner shall, in the
event of a dispute, be entitled, by notice to Manager given, within ten
(10) days after notice from Manager to Owner of any such Operating Budget
increase, to arbitrate under Article 20.2 both: (i) the reasonableness of
Manager's determination of (x) the number and (y) Compensation of
additional employees required to exclusively serve the Entertainment
Facility; and (ii) the reasonableness of the amount of any Administrative
Service Fee established under Article 11.1(a).
(l) Completion - the date upon which Manager receives (i) an architect's
certificate from the Architect or any replacement architect having
responsibility for the supervision of construction, equipping and
furnishing of the Entertainment Facility and the connection of the
Excursion Gambling Boats thereto, certifying that the Entertainment
Facility, Excursion Gambling Boats and Excursion Gambling Support
Facilities, including all private and public areas, have been fully
constructed, substantially in accordance with the Plans and Specifications;
(ii) a
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permanent or temporary certificate of occupancy from the government
authority or authorities pursuant to whose jurisdiction the Entertainment
Facility and Excursion Gambling Boats and Excursion Gambling Support
Facilities have been constructed, permitting the use and operation of all
portions of the Entertainment Facility, Excursion Gambling Boats and
Excursion Gambling Support Facilities in accordance with this Agreement;
and (iii) certificates of such professional designers, inspectors or
consultants or opinions of counsel, as Manager may determine to be
appropriate, verifying construction and furnishing of the Entertainment
Facility, Excursion Gambling Boats and Excursion Gambling Support
Facilities in compliance with all Legal Requirements. The qualification of
the Entertainment Facility as "Complete" shall not limit the obligation of
Owner to complete any items or correct any deficiencies noted by the
Architect or Manager at the time of Pre-Opening Inspection, or thereafter
discovered.
(m) Defaulting Party - as defined in Article 17.1.
(n) Deficiencies - any failure: (i) of the Entertainment Facility, Excursion
Gambling Boats and/or Excursion Gambling Support Facilities to be
constructed in substantial compliance with the Plans and Specifications; or
(ii) of the hotel portion of the Building to be equipped with Furnishings
and Equipment, Operating Equipment or Operating Supplies that comply with
Harrah's Operational Standards.
(o) Department - those general divisional categories shown in the Annual Plan
(e.g. rooms department or food department), but shall not mean or refer to
the subcategories (e.g. linen replacement and uniforms) appearing in each
such divisional category.
(p) Development Period - the period between the Effective Date and the Opening
Date.
(q) Effective Date - November 3, 1995.
(r) Emergency - any condition or state of affairs involving any of the
following, or the imminent threat of any of the following: (i) personal
injury to a significant
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number of the guests or employees of the Entertainment Facility; (ii)
damage to or destruction of the structural integrity and/or function of the
Entertainment Facility, or any material portion thereof or system therein;
and (iii) closure of the Entertainment Facility or any material portion
thereof by any governmental agency or authority. An Emergency shall
automatically terminate upon the termination or resolution of such actual
or threatened condition(s).
(s) Entertainment Facility - a collective term for the Site, the Building, the
Furnishings and Equipment, the Operating Equipment and the Operating
Supplies.
(t) Event of Default - as defined in Article 17.1.
(u) Excursion Gambling Boats - the boats, ferries or other floating facilities
located adjacent to or within the Building (including, without limitation,
the Excursion Gambling Boat Support Areas) and licensed by the Missouri
Gaming Commission (or its successor) for the conduct of gambling games (as
defined from time to time by Mo.R.S.ss.ss.313.800, et seq.). There shall be
two (2) Excursion Gambling Boats on the Site, one operated by Players (or
its permitted assignee), and one operated by Manager (or its permitted
assignee); both under lease from Owner pursuant to an Operating Lease.
(v) Excursion Gambling Support Facilities - those portions of the Building set
aside for use as: (i) a gift shop; (ii) offices; (iii) a ticketing
facility; or (iv) a specialty restaurant, serving each of the Exclusion
Gambling Boats, and separately leased to the owners pursuant to an
Operating Lease.
(w) Fiscal Period, Fiscal Month, Fiscal Quarter, Fiscal Year - as defined in
Article 8.1(c).
(x) Furnishings and Equipment - all furniture, furnishings and equipment
(excepting Operating Equipment) required for the operation of the
Entertainment Facility in accordance with the standards set forth in this
Agreement, including, without limitation:
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(i) guestroom furnishings and equipment such as beds, bureaus, mirrors,
desks, televisions, chairs, sofas and other items required by Harrah's
Operational Standards;
(ii) office furnishings and equipment;
(iii) specialized equipment necessary for the operation of any portion of
the Building as an Entertainment Facility, including equipment for
kitchens, laundries, dry cleaning facilities, cocktail lounges,
restaurants, public rooms, commercial and parking facilities, and
recreational facilities; and
(iv) all other furnishings and equipment hereafter located and installed in
or about the Building which are used in the operation of the Building
as a hotel in accordance with the standards set forth in this
Agreement.
(y) Gross Revenues - all revenues and income of any nature derived directly or
indirectly from the Entertainment Facility or from the use or operation
thereof, including without limitation room sales, food and beverage sales,
telephone, telegraph, satellite or cable video and telex revenues, gift
shop sales, parking sales, and the actual cash proceeds of business
interruption, increased cost of operation, use, occupancy or similar
insurance.
(z) Ground Lease - that certain ground lease of a portion of the Site
(described therein) by and between Harrah's (LLC) and Owner dated November
3, 1995, to be evidenced by a short form of ground lease to be recorded in
the public records of St. Louis County, Missouri.
(aa) Harrah's (LLC) - Harrah's Maryland Heights LLC, a Delaware limited
liability company.
(ab) Harrah's (Maryland) - Harrah's Maryland Heights Corporation, a Nevada
corporation.
(ac) Harrah's Operational Standards - those rules of operation and other
operational standards and policies, all as may be amended or modified from
time to time by Manager, which are applied to the operation of hotels and
entertainment facilities in the Harrah's System. Harrah's Operational
Standards currently in effect for the
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Entertainment Facility are attached as Exhibit K. Certain of Harrah's
Operational Standards, designated as "Minimum Standards" on Exhibit K (the
"Minimum Standards"), shall not be reduced to a lesser standard of quality
or quantity, as the case may be, than is set forth in Exhibit K.
Modifications of Harrah's Operational Standards shall be advised to Owner
no less than thirty (30) days before they become effective. Any Furnishings
and Equipment, Operating Equipment or Operating Supplies specified by
Manager for inclusion in the Entertainment Facility shall be deemed, while
in new condition, to comply with Harrah's Operational Standards then in
effect. The interpretation and application of Harrah's Operational
Standards by Manager shall be binding upon Owner for all purposes unless
arbitrary or capricious. Harrah's Operational Standards shall be adopted
and amended for all hotels in the Harrah's System of like character and
market on a non-discriminatory basis.
(ad) Harrah's Services - as defined in Article 11.
(ae) Harrah's System - a collective term for the services provided to the public
by Harrah's Las Vegas, a Nevada corporation, and Manager's Affiliates,
through operation or license of facilities under the name Harrah's(R).
(af) Harrah's System Marks - the name and mark Harrah's(R), and all other
service marks, trademarks, copyrights, tradenames, patents or similar
rights or registrations now or hereafter held or applied for in connection
therewith.
(ag) Hotel Revenues - Adjusted Gross Revenues derived from room sales and sales
of telephone, telegraph, satellite or cable video and telex, room service
or other incidental charges incurred by hotel guests and charged to their
hotel room folio.
(ah) Impositions - shall mean and include:
(i) all ad valorem taxes, water and sewer use charges or assessments,
stand pipe charges and assessments, or other charges or assessments
imposed upon the real and personal property comprising the
Entertainment Facility; and
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(ii) any other charge or assessment imposed by governmental or quasi
governmental authority or by any other entity empowered by law to
assess charges against the Entertainment Facility, with or without
lien rights for the enforcement thereof, including, without
limitation: (A) regular and special assessments payable to the Howard
Bend Levee District for administration, maintenance and improvement of
levees; and (B) special assessments payable to the City of Maryland
Heights for the payment of annual principal and interest on bonds
issued to finance extension of the Earth City Expressway.
(ai) Incentive Management Fee - as defined in Article 9.1.2
(aj) Index - the Consumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics of the United States Department of Labor, U.S.
City Average, all items, (1982-84=100), or any successor or replacement
index thereto. If the Index shall, after the date hereof, be converted to a
different standard reference base or shall otherwise be revised, any
determination hereunder which uses the Index shall be made with the use of
such conversion factor, formula or table for converting the Index as may be
published by the Bureau of Labor Statistics, or, if said Bureau shall not
publish the same, then with the use of such conversion factor, formula or
table as may be published by Prentice Hall, Inc., or, failing such
publication, by any other nationally recognized publisher of similar
statistical information. If the Index shall cease to be published, then for
the purpose of this Agreement there shall be substituted for the Index such
other similar index as Manager shall reasonably determine which measures
changes in the relative purchasing power of United States currency over the
term of this Agreement.
(ak) Institutional Investor or Institutional Lender - an Institutional Investor,
as defined in Owner's Partnership Agreement.
(al) Interest Rate - the Prime Rate as defined in Owner's Partnership Agreement.
(am) Key Personnel - as defined in Article 5.3.
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(an) Legal Requirements - as defined in Article 7.8.
(ao) Licenses and Permits - as defined in Article 4.1.
(ap) Management Fee(s) - as defined in Article 9.1.
(aq) Manager's Affiliate - Harrah's Entertainment, Inc., and any of its direct
or remote wholly-owned subsidiaries, determined at the time of application
of the contract provision using this term.
(ar) Minimum Balance - the amount of cash which Manager, from time to time,
determines to be necessary to pay estimated Operating Costs of the
Entertainment Facility for each such succeeding Fiscal Month during the
Term, plus any reserves that Manager determines to be necessary to pay
Operating Costs (or Ownership Costs paid by Manager under this Agreement)
that are paid less frequently than monthly or on a non-recurring basis.
(as) Non-Defaulting Party - as defined in Article 17.1.
(at) Opening Date - the date upon which Manager first opens the Entertainment
Facility to the public and commences business thereat. The parties shall
confirm the Opening Date in an amendment to this Agreement.
(au) Operating Agreements - all agreements for the delivery of goods and/or
services to the Entertainment Facility.
(av) Operating Budget - the Budget adopted by Owner as part of its Annual Plan,
pursuant to Section 7(l) of Owner's Partnership Agreement, as modified from
time to time.
(aw) Operating Costs - the following costs and expenses charged as a cost of
operation under Standard Accounting Principles:
(i) the cost of replacement of Operating Supplies and Operating Equipment
in the ordinary course of Entertainment Facility operations;
(ii) the cost of Compensation;
(iii) the cost of advertising and promotion for the Entertainment Facility;
(iv) the cost of employee training programs;
(v) the cost of utilities and energy;
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(vi) the fees for Licenses and Permits required for the operation of the
Entertainment Facility;
(vii) all expenditures made by Manager for maintenance and repairs to keep
the Entertainment Facility in good condition and repair pursuant to
Article 7.5;
(viii) the Management Fees (Base Management Fee and Incentive Management
Fee payable pursuant to Article 9);
(ix) the Accounting Fee payable pursuant to Article 9.2; and
(x) Service Fees payable pursuant to Article 11.1.
(ax) Operating Cost Savings - as defined in Article 9.1.2.
(ay) Operating Equipment - all equipment other than Furnishings and Equipment
required for the operation of an Entertainment Facility, including
chinaware, glassware, linens, silverware, utensils, uniforms, and all other
similar items.
(az) Operating Lease - as defined in Owner's Partnership Agreement.
(ba) Operating Supplies - food and beverages and other consumable items used in
the operation of an Entertainment Facility, such as fuel, soap, cleaning
materials, matches, stationery and all other similar items.
(bb) Owner's Accountant(s) - the certified public accounting firm selected by
Owner under Owner's Partnership Agreement.
(bc) Owner's Partnership Agreement - that certain general partnership agreement
dated November 2, 1995 by and between Players and Harrah's (Maryland), as
same may be amended from time to time by Players and Harrah's (Maryland).
(bd) Ownership Costs - shall be defined as:
(i) debt service (interest and principal) relating to the Entertainment
Facility, whether unsecured or secured by any mortgage or deed of
trust;
(ii) Impositions;
(iii) construction and Capital Replacement and improvement expenditures
under Articles 2.2, 7.5, 7.6, 15 and 16;
(iv) audit, legal and other professional or special fees;
(v) insurance premiums;
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(vi) costs of leasing or purchasing any Furnishings and Equipment or
other goods incorporated into or used in connection with the
Entertainment Facility;
(vii) uninsured liabilities relating to injury to persons or property
incurred by Manager in connection with the operation of the
Entertainment Facility; and
(viii) such other costs or expenses which are normally treated as capital
expenditures under Standard Accounting Principles.
(be) Permitted Exceptions - (i) any Authorized Mortgage; (ii) liens for
Impositions not yet delinquent; (iii) undetermined or inchoate liens or
charges for labor or materials supplied to the Entertainment Facility in
connection with the construction or operation thereof, which have not been
filed or recorded in the public records and the payment for which is not
yet delinquent; and (iv) easements, restrictions, rights of way or other
title matters which do not, in the aggregate or individually, impair the
use of the Entertainment Facility for its intended purpose or adversely
affect the amount of fees payable to Manager hereunder. Permitted
Exceptions shall, without limiting the foregoing, include all of those
matters listed in Exhibit B to this Agreement.
(bf) Plans and Specifications - a collective term for all designs, layouts,
drawings, plans, specifications and decor and concept themes pertaining to
the Entertainment Facility which are prepared by Owner. Until modified with
approval of Harrah's (Maryland) and Players, the Plans and Specifications
shall mean the Plans and Specifications identified in Exhibit E to Owner's
Partnership Agreement.
(bg) Players - Players MH, L.P., a Missouri limited partnership.
(bh) Players' Affiliate(s) - Players International, Inc. and any of its direct
or remote subsidiaries, determined at the time of application of the
contract provision using this term.
(bi) Players' License - that certain License Agreement of even date herewith,
pursuant to which Players has authorized the use of the Players' System
Marks by Manager
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and Owner for the purpose of identifying and advertising the Entertainment
Facility.
(bj) Players' System Marks - all service marks, trademarks, copyrights,
tradenames, patents, or similar rights or registrations now or hereafter
held or applied for in connection with the operation of casinos or hotels
by Players International, Inc. and Players' Affiliates.
(bk) Pre-Opening Account - as defined in Article 5.2.
(bl) Pre-Opening Budget - the budget of Pre-Opening Expenses for the
Entertainment Facility attached as Exhibit G.
(bm) Pre-Opening Expenses - expenses which Manager anticipates to be necessary
or desirable in order to prepare the Entertainment Facility for opening to
the public, including without limitation, cash for disbursements, initial
Operating Equipment and Operating Supplies, hiring, relocation, training
and housing of employees (whether on or off Site), advertising and
promotion, office overhead and office space (whether on or off Site), and
travel and business entertainment (including opening celebrations and
ceremonies), but excluding all other Construction Costs (as defined in
Owner's Partnership Agreement), including, without limitation, Furnishings
and Equipment, whether or not included in the Cost Budget of Owner (as
defined in the Owner's Partnership Agreement).
(bn) Pre-Opening Inspection - as described in Article 5.4.
(bo) Present Value - shall mean the present value of the stream of Management
Fees payable hereunder had there had been no Event of Default, computed
using a reasonable per annum discount rate, compounded semi-annually from
the respective dates upon which Management Fees would be paid; determined
by agreement between Players and Manager or by arbitration pursuant to
Article 20.
(bp) Service Fees - as defined in Article 11.
(bq) Site - the Project Site as defined in Owner's Partnership Agreement.
(br) Standard Accounting Principles - the Uniform System of Accounts for Hotels
(Eighth Revised Edition 1986) adopted by the Hotel Association of New York
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City, Inc. and the American Hotel & Motel Association, as further revised
from time to time, or to the extent not therein addressed, United States
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles board of the American Institute
of Certified Public Accountants, and statements and pronouncements of the
financial Accounting Standards Board, or in the event such Accounting
Principles Board and Financial Accounting Standards Board are no longer in
existence or no longer publish such principles, opinions and statements, in
such other opinions, statements and pronouncements of such other entity as
is approved by a significant element of the accounting profession. Standard
Accounting Principles shall be applied in the manner set forth in Harrah's
Financial Reporting and Accounting Policies Manual, a copy of which is
attached at Exhibit D.
(bs) Term - as defined in Article 3.1.
(bt) Variable Expenses - the expenses identified in Exhibit H.
(bu) Year - each twelve (12) month period following the Opening Date.
ARTICLE 2
SCOPE OF AGREEMENT
2.1 Subject Matter. The subject matter of this Agreement is the
Entertainment Facility to be constructed, furnished and equipped by Owner on the
Site. The Entertainment Facility is to be operated under the name and style
Riverport Casino Center, and the hotel to be constructed within the
Entertainment Facility (the "Hotel") is to be operated under the name and style
Harrah's(R)- Riverport Casino Center Hotel.
2.2 Development. Owner agrees that it shall, at its sole cost, acquire and
maintain fee simple title or a leasehold estate pursuant to the Ground Lease, as
the case may be, to the Site and provide for and complete construction,
furnishing and equipping of, the Entertainment Facility, Excursion Gambling
Boats and Excursion Gambling Support Facilities, as the case may be, and deliver
to Manager, for management and operation, the completed Entertainment Facility.
2.3 Grant and Acceptance of Management Responsibility. Owner grants to
Manager the sole and exclusive right to supervise and direct pre-opening
activities and, following the Opening
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Date, the management and operation of the Entertainment Facility for the account
of Owner subject to the terms of this Agreement. Manager accepts said grant and
agrees that it will supervise and direct the management and operation of the
Entertainment Facility subject to the terms of this Agreement.
2.4 Funding. Owner agrees to provide all funds, both initially and
throughout the term of this Agreement, as shall be necessary to perform and
satisfy Owner's covenants and responsibilities under this Agreement.
ARTICLE 3
TERM
3.1 Term. The term ("Term") of this Agreement shall begin on the Effective Date
and shall continue until December 31, 2005. Manager shall have the option to
extend the term for fourteen (14) consecutive periods of five (5) years each.
Manager shall be deemed to have exercised its option to extend the term of this
Agreement for each extension period unless it shall have delivered to Owner
written notice to the contrary at least one hundred twenty (120) days prior to
the date of expiration of the then current period of the term. The word "Term"
shall mean the initial term and all extension periods exercised or deemed to
have been exercised by Manager, provided that, solely for the purpose of
determining damages pursuant to Article 17 of this Agreement and measurement of
loss for loss of income insurance purposes, the word "Term" shall mean the
initial period plus all possible extension periods, whether or not then
exercised by Manager. The Term of this Agreement may be terminated in the event
that Manager's rights are acquired by Players and payment therefor is made
pursuant to the provisions of Owner's Partnership Agreement, or this Agreement
is terminated for the reasons set forth herein.
ARTICLE 4
COVENANTS OF OWNER
4.1 Licensing and Permitting. Owner shall, on or before the Opening Date, have
obtained, and throughout the Term, shall maintain all necessary enabling
legislation and governmental and local authority decrees, acts, orders,
consents, licenses and permits, including without limitation, restaurant and
alcoholic beverage licenses required to enable Owner to own the Entertainment
Facility, and Manager to operate the Entertainment Facility (including without
limitation, all
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guest rooms, health club facilities, entertainment facilities, parking
facilities, kitchens, laundry, restaurant, and alcoholic beverage facilities),
excluding any such Licenses that are required, by applicable Legal Requirements,
to be applied for and held by Manager (collectively, the "Licenses and
Permits"). Manager shall, on or before the Opening Date, have obtained and
throughout the Term shall manage all Licenses and Permits required to be
obtained and maintained by Manager. Owner and Manager shall use their best
efforts to obtain a 3:00 A.M. alcoholic beverage license for the Entertainment
Facility.
4.2 Title/Quiet Enjoyment. Owner represents and covenants that it has
acquired fee simple title to or leased the Site pursuant to the Ground Lease,
and, throughout the Term, will maintain, fee simple title and its leasehold
estate pursuant to the Ground Lease, in the Entertainment Facility, Excursion
Gambling Boats and Excursion Gambling Support Facilities, as the case may be,
subject only to the Permitted Exceptions and the provisions of Article 21.2 of
this Agreement. Owner covenants, during the Term, that Manager shall and may
peaceably and quietly operate the Entertainment Facility in accordance with the
terms of this Agreement, free from molestation, eviction and disturbance by
Owner or by any other person or entity. Owner shall, at Owner's expense,
undertake and prosecute all actions, judicial or otherwise, required to assure
such quiet and peaceable operation by Manager.
ARTICLE 5
PRE-OPENING
5.1 Pre-Opening Budget. Exhibit G is the Pre-Opening Budget for the
Entertainment Facility approved by Owner. Manager is authorized, for and on
behalf of Owner and at Owner's expense, to take all actions which it deems
necessary or desirable to implement, perform or cause the performance of the
items identified in the Pre-Opening Budget. Expenditures in excess of the
Pre-Opening Budget shall be made only with the prior written approval by Owner
of a modification to the Pre-Opening Budget.
5.2 Payment of Pre-Opening Expenses. Owner shall, at the time of
commencement of construction of the Entertainment Facility, establish a bank
account, pursuant to a Banking Resolution in the form attached as Exhibit F,
(the sole signatories of which shall be designees of Manager) in the amount of
THREE HUNDRED THOUSAND and 00/100 DOLLARS ($300,000)
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(the "Pre-Opening Account"). Thereafter, the Pre-Opening Account shall be funded
according to the schedule attached as Exhibit I. Manager shall pay Pre-Opening
Expenses from the Pre-Opening Account, and may pay such amount, if funds in the
Pre-Opening Account should be exhausted, from its own funds, on behalf of Owner.
Owner shall, in such case, reimburse the Pre-Opening Account or Manager, as the
case may be, on demand, for all amounts paid from the Pre-Opening Account or
from Manager's own funds (together with interest on any portion thereof advanced
by Manager from its funds at the Interest Rate plus eight percent (8%) per year
from the date of advancement until the date of repayment). All Pre-Opening
Expenses advanced or incurred by Manager shall be itemized, scheduled and
submitted to Owner along with each demand for payment. Reimbursement shall be
made by Owner to Manager within ten (10) days after the date of submission of
each such schedule.
5.3 Pre-Opening Hiring and Training of Employees. Manager agrees, at
Owner's cost, to recruit, relocate, hire and train employees to manage and
operate the Entertainment Facility in accordance with Harrah's Operational
Standards. To the extent pre-completion occupancy is permitted by applicable
insurance policies and Licenses and Permits for the Building, pre-opening
recruiting, hiring and training may be conducted at the Entertainment Facility
during the Development Period (unless and until Owner determines and advises
Manager in writing that such activities unreasonably interfere with the
Completion of the Entertainment Facility) and employees involved in such
recruiting, hiring and training may be housed at the Entertainment Facility. The
persons holding positions of employment identified in Exhibit L (collectively,
"Key Personnel") and all department heads, such as department engineer, head
housekeeper, front office manager and other similar employees, may be hired and
assigned to the Entertainment Facility at such time during the Development
Period as Manager, in its discretion, deems necessary.
5.4 Pre-Opening Inspection. A pre-opening inspection (the "Pre-Opening
Inspection") shall be conducted jointly by Owner and Manager upon Completion to
detect and to note any Deficiencies. Owner agrees to take all measures
reasonably necessary to remedy any Deficiencies as promptly as practicable
following the Pre-Opening Inspection, but in all events, within the time
established by any governmental regulatory authority or insurance underwriter.
5.5 Opening. Owner shall determine the Opening Date of the Entertainment
Facility.
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ARTICLE 6
STANDARDS AND MANAGER'S CONTROL
6.1 Harrah's Operational Standards. Manager shall operate the Entertainment
Facility in accordance with Harrah's Operational Standards, but only if required
funds are made available by Owner, and, provided that, if Harrah's Operational
Standards are violative of Legal Requirements, Legal Requirements shall be the
controlling standard.
6.2 Manager's Obligations. Manager shall have the obligation and the sole
and exclusive authority, throughout the Term, to:
(a) hire, supervise, establish levels of Compensation for, negotiate collective
bargaining agreements with (if applicable), establish labor polices with
respect to, and discharge (as it deems appropriate), all employees at the
Entertainment Facility, as more particularly provided in Article 7.3;
(b) determine the terms of guest admittance to the Entertainment Facility,
provided that in making such determination, Manager shall endeavor to treat
each of the Operating Lease lessees, and any guests, customers or patrons
referred by either of them, on an equal and non-discriminatory basis
applying the policies set forth in Exhibit J.
(c) implement the advertising and marketing plan for the Entertainment Facility
described in the Annual Plan:
(d) select suppliers of goods and services for the Entertainment Facility
(except with respect to the construction, equipping and furnishing of the
Entertainment Facility and Capital Replacements or improvements which shall
be undertaken by Owner, as more particularly provided in Articles 2.2, 7.6,
15 and 16 of this Agreement);
(e) control and manage the Bank Accounts established by Owner for the
Entertainment Facility, as more particularly provided in Article 8.3;
(f) perform operational accounting (but not ownership accounting) for the
Entertainment Facility, as more particularly provided in Article 8.1;
(g) retain and supervise legal counsel and other professional consultants, as
Manager may deem necessary and proper to the performance of this Agreement;
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(h) supervise and effect, or cause to be effected maintenance and repairs,
pursuant to Article 7.5;
(i) enter into, on Owner's behalf, and as Owner's authorized agent, any
contracts necessary or convenient to the accomplishment of this Agreement
and any leases of the Entertainment Facility that are approved by Owner;
(j) collect and disburse Gross Revenues of the Entertainment Facility on behalf
of Owner, as more particularly provided in Article 10;
(k) operate the Entertainment Facility in accordance with the Minimum
Standards; and
(l) develop and implement Emergency procedures for the Entertainment Facility,
Excursion Gambling Boats, and Excursion Gambling Boat Support Facilities
and for obtaining approval for said procedures from the
Bridgeton-Pattonville Terrace Fire District, the Maryland Heights Police
Department and other appropriate public safety agencies. In this regard,
Manager may assume the role of "Executive Command" in the event of an
Emergency and supervise and implement Emergency procedures. Players'
personnel will provide necessary assistance to the Manager in the execution
of its duties as Executive Command. At no time will Players change, modify,
add to or delete any element of the Manager's Emergency procedures without
written approval from the Manager. During an Emergency, Players will be
subordinate to Manager, and at no time, with regard to Emergency
procedures, will Players' personnel countermand, disregard or fail to
execute a directive from the Manager. Manager's Emergency procedures shall
terminate, as to any particular Emergency, upon the cessation of such
Emergency. Manager shall have the option, at its election, and authority
to:
(a) supervise and effect or cause to be effected any Capital Replacements
or improvements required by any emergency condition or Legal
Requirements, as provided in Articles 7.7 and/or 7.8; or
(b) make any other expenditures required of Owner under this Agreement;
and in both such cases, to recover, as a reimbursable expense, the cost
thereof with interest from the date of advancement to the date of repayment at
the Interest Rate from Owner on demand. Manager shall in no event be obligated
to expend its funds or incur any liability in the performance of its obligations
under this Agreement, and Manager's obligations shall be excused
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to the extent that: (i) Owner fails to provide all funds required for Manager to
perform such obligations within the time period provided by this Agreement; or
(ii) performing this Agreement would require Manager to incur any liability; or
(iii) if any act or omission of Owner impairs the ability of Manager to perform
any obligation under this Agreement.
6.3 Owner's Obligations. Owner shall have the sole responsibility and
obligation throughout the Term, unless Players and Harrah's (Maryland), as
partners of Owner, unanimously elect not to do so, to:
(a) provide all funds required by Manager for the operation of the
Entertainment Facility, as and when required by this Agreement;
(b) except for transfers permitted by Article 21.2, maintain good and
sufficient record and marketable fee simple title and leasehold estate
pursuant to the Ground Lease, as the case may be, to the Entertainment
Facility, and assure Manager's quiet enjoyment of the Entertainment
Facility, free from all exceptions other than Permitted Exceptions and free
from interference by any party having rights under any Permitted Exception;
(c) obtain, maintain, pay for and provide evidence to Manager of all insurance
required by Article 13;
(d) construct, equip, furnish, refurbish, reconstruct and improve the
Entertainment Facility as from time to time required by the terms of this
Agreement (including, without limitation, Articles 2.2, 7.6, 15, and 16);
(e) obtain and maintain all Licenses and Permits required for its continued
legal existence, authorization to conduct business, ownership of the
Entertainment Facility, and continued operation of all facilities at the
Entertainment Facility, as more particularly provided in Article 4.1;
(f) pay all Impositions assessed against the Entertainment Facility as same
become due and before any action is commenced to enforce the collection or
foreclosure of the lien thereof;
(g) pay all indebtedness from time to time encumbering or relating to the
Entertainment Facility as and when same becomes due and payable and before
any
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action is commenced against Manager, Owner, or the Entertainment Facility
for the nonpayment thereof;
(h) enforce all agreements in effect for the benefit of the Entertainment
Facility, including the Permitted Exceptions which, if not enforced, may
have an adverse effect upon Manager's enjoyment of Manager's rights or
Manager's ability to perform Manager's obligations under this Agreement;
and
(i) establish the Operating Budgets and Annual Plans (as well as all
modifications thereto) in a timely manner.
6.4 Manager's Control. Manager will have uninterrupted control over the day
to day operation of the Entertainment Facility. Owner agrees not to interfere or
involve itself in any way with the day-to-day operation of the Entertainment
Facility.
ARTICLE 7
OPERATION OF THE ENTERTAINMENT FACILITY
7.1 Permits. Manager agrees to use all reasonable efforts within its control to
comply with any conditions or requirements set out in or imposed by law in
connection with any Hotel Licenses and Permits, for so long as the expense of
such compliance shall be paid for by Owner.
7.2 Equipment and Supplies. Manager shall be responsible and authorized to
obtain, on behalf of Owner and at Owner's cost, subject to the fiscal
limitations of this Agreement, all Operating Supplies, Operating Equipment and
alcoholic beverage inventories necessary or advisable in connection with the
operation of the Entertainment Facility, except that Owner shall be solely
responsible to supply initial Operating Supplies, Operating Equipment and
Furnishings and Equipment, and such Capital Replacements as from time to time
are required to comply with Harrah's Operational Standards.
7.3 Employees
(a) Authority of Manager. Manager will hire, supervise, direct, discharge and
determine the Compensation and terms of employment of all employees working
in the Entertainment Facility. Manager, in the exercise of its discretion,
is to be the sole judge of the fitness and qualification of all employees
and is vested with absolute discretion in the hiring, supervising,
directing, discharging and
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determining the Compensation of all employees. All employees, other than
any employees who are, by Legal Requirement or any License or Permit,
required to be in the employ of Owner, shall be employed by Manager. Owner
shall not interfere with or give orders or instructions to any employees at
the Entertainment Facility. Manager shall be the sole and exclusive
bargaining agent with respect to all collective bargaining agreements and
other employee matters with full power and authority to negotiate
collective bargaining agreements (which may extend beyond the Term and
exceed the Compensation authorized by the then current Annual Plan) and to
settle all employee grievances and claims. Owner shall not be entitled to
participate in labor negotiations or claims. Manager will, however, keep
Owner advised of the results of such negotiations and claims. Owner shall
have the right to approve any collective bargaining agreement which may be
negotiated, so long as such approval does not interfere with Manager's
rights, as exclusive bargaining agent, and Manager's obligation to bargain
in good faith with a labor organization. Manager will provide Owner copies
of any rulings or settlements which may be entered into.
(b) Employee Discount. Employees of Manager who are not based in Maryland
Heights may be provided with complimentary rooms and food whenever said
employees are on the premises or in the vicinity of the Entertainment
Facility performing services for the Entertainment Facility as an Operating
Cost of the Entertainment Facility. Housing for the Director of Hotel
Operations and his family, whether on or off Site, shall be at Manager's
election and shall be an Operating Cost of the Entertainment Facility.
Further, the Director of Hotel Operations and his family, if living
on-Site, shall be granted complimentary food and beverages when such is
customary in Manager's practice and policy. Manager shall be entitled to
extend discounted or complimentary rooms to employees of Manager, Manager's
Affiliates, Players' and Players' Affiliates, on a non- discriminatory
basis, in accordance with Manager's customary practices, provided
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that complimentary rooms shall not be given to any such employee if such
action would be likely, at the time approved, to displace a customer.
(c) Employee Cost Indemnity. Owner shall be solely responsible for and shall
pay, reimburse, indemnify, defend and hold Manager harmless from and
against any and all expenses, costs, liabilities and claims related or
incidental to any employees at the Entertainment Facility (including, by
way of example only, all salaries, vacation, sick leave, severance or
termination benefits, pension plan liabilities, savings and retirement plan
contributions, workers' compensation benefits or claims, health, disability
or life insurance contributions, state, federal or local payroll or other
employer paid or collected taxes, injury, discrimination, back pay,
grievance or wrongful termination awards and any other costs and benefit
for Entertainment Facility employees (however designated), unless caused by
the gross negligence or wilful misconduct of Key Personnel.
(d) Professional Consultants. The cost, fees, compensation or other expenses of
any persons engaged by Owner to perform duties of a special nature, related
to the Entertainment Facility, such as attorneys, accountants and the like
(whether independent contractors or employees of Manager or Manager's
Affiliates), shall be an Operating Cost, and in each instance, the
Operating Budget shall automatically increase by the amount of such cost.
7.4 Marketing and Advertising. Manager shall, and is authorized to,
advertise and promote the business of the Entertainment Facility, and implement
and supervise the advertising and marketing program therefor adopted by Owner as
part of the Annual Plan.
7.5 Maintenance and Repairs
Manager shall make or cause to be made all ordinary repairs and
maintenance, as well as maintain, repair replace or add all Operating Equipment
and Operating Supplies, in the normal and ordinary course of operation of the
Entertainment Facility, including, without limitation, any such repairs,
maintenance, replacement or addition as shall be required to comply with
Harrah's Operational Standards.
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7.6 Capital Replacements/Improvements. Owner shall effect and expend such
amounts for all Capital Replacements and improvements as shall be required, in
the course of operation of the Entertainment Facility, to maintain the
Entertainment Facility in compliance with all Legal Requirements, and, to the
extent not violative of Legal Requirements, Harrah's Operational Standards,
including, without limitation, Manager's recommended programs for renovation,
modernization and improvement intended to keep the Entertainment Facility
competitive in its market. Design and installation of Capital Replacements shall
be effected in a time period and subject to such conditions as Manager may
establish to minimize interference with or disruption of ongoing Entertainment
Facility operations.
7.7 Emergency Expenditures. If Manager determines that an Emergency exists,
Manager is authorized to take all steps and to make all expenditures from the
Bank Accounts, as it deems necessary to repair and correct any such condition,
regardless whether provisions have been made in the Annual Plan for any such
expenditures, and the cost thereof shall be paid as an Operating Cost or, if
Gross Revenues are insufficient to repay such expenditure in the Fiscal Month
when it is made, reimbursed by Owner, on demand, and in each instance, the
Operating Budget shall automatically increase by the amount of such cost.
7.8 Compliance with Legal Requirements. If, at any time, repairs to or
additions, changes or corrections in the Entertainment Facility of any nature
shall be required by reason of any laws, ordinances, rules or regulations now or
hereafter in force, or by order of any governmental or municipal power,
department, agency, authority or officer ("Legal Requirements"), such repairs,
additions, changes or corrections may, whether or not provided for in the Annual
Plan, be made by or at the direction of Manager if not made by Owner in time to
avoid any fine or adverse consequence to the operation of the Entertainment
Facility and paid for from the Bank Accounts, and the cost thereof shall be paid
as an Operating Cost or, if Gross Revenues are insufficient to repay such
expenditure in the Fiscal Month when it is made, reimbursed by Owner, on demand,
and in each instance, the Operating Budget shall automatically increase by the
amount of such cost.
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ARTICLE 8
FISCAL MATTERS
8.1 Accounting Matters and Fiscal Periods
(a) Complete and accurate books and records reflecting Entertainment Facility
operations shall be kept by Manager in accordance with Standard Accounting
Principles and shall be maintained either at the Entertainment Facility or
at the national or any regional office of Manager or Manager's Affiliate,
at Manager's option. Owner shall be solely responsible to maintain
ownership level books and accounts reflecting Ownership Costs, the costs of
Owner's sales and marketing programs, and Owner's tax and accounting
matters. Owner's Accountant(s) shall have the right and privilege of
examining the books and records maintained by Manager during normal working
hours (Monday-Friday) upon no less than forty eight (48) hours advance
written notice.
(b) A certified audit of the Entertainment Facility operations shall (at
Owner's election to be effected by written notice to Manager given on or
before the end of any Fiscal Year) be performed within ninety (90) days
after the end of such Fiscal Year, and upon termination or expiration of
this Agreement. Such audit shall be performed by Owner's Accountants. The
determination of such accounting shall, unless appealed to arbitration by
Manager, be conclusive and binding on the parties as to all matters
properly addressed thereby, and Owner and/or Manager shall, promptly upon
receipt thereof, adjust between them, any over or underpayment made or
received by either of them, as the case may be, during the audited period.
The cost of accounting services delivered in connection with such audit
shall be an Ownership Cost.
(c) The fiscal accounting periods (the "Fiscal Periods") for the Entertainment
Facility shall be the calendar year ("Fiscal Year"), calendar quarter
("Fiscal Quarter"), and calendar month ("Fiscal Month"). On or before the
twenty-fifth (25th) day of the calendar month next following the close of a
Fiscal Month, Manager shall furnish Owner with a detailed operating
statement setting forth the results of Entertainment Facility operations.
There is attached hereto as Exhibit A a form of the operating statement
currently utilized by Manager which reflects the results
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of the prior Fiscal Month of operations as well as the cumulative fiscal
year-to-date results of operations. The form of the operating statement may
be modified from time to time by Manager at its discretion, so long as it
remains consistent with Standard Accounting Principles.
8.2 Operating Budget/Annual Plan
8.2.1 Fiscal Authority and Constraint. The Annual Plan and Operating Budget
for the Entertainment Facility shall be that adopted by Owner pursuant to
Section 7(l) of Owner's Partnership Agreement and shall, when adopted, establish
and limit Manager's authority to expend monies for the Entertainment Facility,
except as otherwise provided in this Article.
8.2.2 Food and Beverage Pricing/Advertising and Marketing. Owner and
Manager recognize that administration of: (i) hotel room pricing; (ii) food and
beverage menu pricing; and (iii) marketing and promotion; of the Entertainment
Facility often require prompt adjustment to changing circumstances, including
without limitation, availability of new products and services, changes in public
tastes, changes in the costs of goods and services, and changes in the
competitive environment. In order to facilitate flexibility in the
administration of such features of the Annual Plan, Owner delegates to Manager
and the general manager of Players' Operating Lease premises, the authority, by
joint written agreement, to modify such elements of an Annual Plan without need
for a meeting or further approval under Owner's Partnership Agreement.
8.2.3 Compliance. Manager shall be permitted to reallocate part or all of
the amount budgeted by an Operating Budget with respect to any line item to
another line item in the same Department, but may not reallocate from one
Department to another Department. Manager shall also be entitled to make
expenditures not authorized under the then applicable Annual Plan to pay for:
(a) emergencies as provided in Article 7.7;
(b) compliance with Legal Requirements as provided in Article 7.8;
(c) the actual cost of any utilities, fuel, Licenses or Permits, insurance
required by this Agreement or otherwise secured by Owner, or Impositions;
(d) uninsured liabilities, including without limitation, uninsurable claims
(such as employee claims, environmental and civil rights claims), the
amount of any uninsured or deductible portion of any insured claim, and any
assessments relating to health or other insurance programs having cost-plus
or self insurance features;
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(e) additional Compensation due pursuant to any collective bargaining agreement
negotiated with a union;
(f) additional Ownership Costs incurred by Owner after approval of an Annual
Plan;
(g) any deficiencies assessed by a taxing authority;
(h) additional costs permitted by Article 8.2.4;
and in each such instance, the amount of the Operating Budget shall
automatically increase by the amount of such cost.
8.2.4 Adjustment to Annual Plan. If Manager encounters circumstances which
require unbudgeted and unexpected expenditures not foreseen at the time of
preparation of the Annual Plan and which Manager deems reasonably necessary, in
addition to and without limiting the instances described in Article 8.2.3, and
including, without limitation, expenditures that Manager deems necessary for the
continued operation of the Entertainment Facility in accordance with Harrah's
Operational Standards, as determined by Manager, in good faith, Manager may,
without Owner's approval, make such expenditures for so long as the same will
not, based upon Manager's reasonable expectations, cause Manager to exceed one
hundred and five percent (105%) of the amount budgeted for any Department or, if
greater, with respect to Variable Expenses for any Department, such Variable
Expenses will not, based upon Manager's reasonable expectations, cause Manager
to exceed an amount such that the ratio of the amount so expended to the
revenues of the affected Department exceeds the ratio (expressed as a
percentage) of the Variable Expenses budgeted to the revenues forecasted,
rounded up to the next full percentage point. If Manager expects that such
future expenditures will cause Manager to exceed (i) one hundred and five
percent (105%) of the amount budgeted for such Department or, if greater, (ii)
an amount such that the ratio of the amount of Variable Expenses so expended to
the revenues of a Department will exceed the ratio (expressed as a percentage)
of the Variable Expenses budgeted to the revenues of such Department forecasted,
rounded up to the next full percentage
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point, Manager shall have the right, from time to time during such Fiscal Year;
to submit a revision to the Operating Budget contained within the Annual Plan to
Owner for approval. Owner will review all proposed revisions to an Operating
Budget in the same manner as the Operating Budget contained within the initial
Annual Plan. If Owner shall disapprove or raise any objections to any items
contained in revisions to an Operating Budget, Manager shall be entitled to
arbitrate such disapproval or obligations under this Agreement.
8.3 Bank Accounts
(a) Owner shall establish account(s) in its name at a bank (with retail offices
in the immediate geographic vicinity of the Entertainment Facility) (the
"Bank Account(s)") as Manager determines to be necessary or convenient for
the operation of the Entertainment Facility. Manager's designees shall be
the only signatories authorized to draw upon the Bank Account(s). Before
the Opening Date, Owner shall deposit in the Bank Account(s) ONE MILLION
FOUR HUNDRED THOUSAND DOLLARS ($1,400,000) (the "Minimum Balance"). This
Minimum Balance shall serve as working capital for Entertainment Facility
Operating Costs and Impositions. The Minimum Balance may be increased by
Manager, at any time during the first twelve (12) Fiscal Months after the
Opening Date, to reflect unanticipated working capital needs revealed by
the experience of actual Entertainment Facility operations, and again at
the time of each anniversary of the Opening Date. Owner shall furnish
Manager immediately, upon demand, with sufficient funds to make up any
deficiency in the Minimum Balance (as so adjusted).
(b) Manager shall have absolute control of the Bank Account(s). All Gross
Revenues of the Entertainment Facility shall pass through the Bank
Accounts.
(c) Manager shall be entitled to maintain separate or commingled payroll
accounts or petty cash funds and to make payments therefrom as customary in
Manager's business practices.
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ARTICLE 9
FEES TO MANAGER
9.1 Management Fees. The Management Fees shall have two components: (i) a
Base Management Fee, as described in Article 9.1.1; and (ii) an Incentive
Management Fee as described in Article 9.1.2.
9.1.1 Base Management Fee. Owner agrees to pay to Manager a base management
fee (the "Base Management Fee") equal to three percent (3%) of Hotel Revenues.
The Base Management Fee shall be paid monthly, in arrears, following the Opening
Date, on the first day of the immediately ensuing Fiscal Month.
9.1.2 Incentive Management Fee. Owner agrees to pay Manager an incentive
management fee (the "Incentive Management Fee") based upon the success of
Manager in operating the Entertainment Facility in a manner which results in
Operating Costs not exceeding the amount set forth within the Operating Budget
for such Fiscal Year taken as a whole, and not on a line item or Departmental
basis, as the same may be modified pursuant to this Agreement (either by
amendment or by increase to include any unbudgeted costs [pursuant to Articles
7.7, 7.8, 8.2.3 and/or 8.2.4] expended by Manager pursuant to the authority of
this Agreement). The Incentive Management Fee shall equal the greater of: (i)
one percent (1.0%) of Hotel Revenues or (ii) fifty percent (50%) of the
Operating Cost savings realized by Manager, measured by the difference between
(x) the actual Operating Costs incurred by Manager in the operation of the
Entertainment Facility for each Fiscal Year and (y) the authorized Operating
Cost of the Entertainment Facility for such Fiscal Year established by the
Operating Budget adopted pursuant to Section 7(l) of Owner's Partnership
Agreement, modified as provided in Articles 7.7, 7.8, 8.2.3 and/or 8.2.4 of this
Agreement (such difference being the "Operating Cost Savings"). The Incentive
Management Fee shall be earned and paid annually, within 10 days after Manager's
close of the accounting books and records for the Entertainment Facility for
such Fiscal Year. In the case of any partial Fiscal Year, the Operating Budget
shall be prorated equitably and actual Operating Costs shall include only those
reasonably allocable to the portion of such Fiscal Year that the Entertainment
Facility was operated by Manager, which allocation shall be determined by
arbitration under this Agreement if Owner and Manager do not agree.
9.1.3 Payment. Manager shall be authorized to pay the Management Fee (as
well as the
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Accounting Fee provided for in Article 9.2, Service Fees provided for in Article
11 and any other amounts payable to Manager pursuant to the terms of this
Agreement) to itself directly by withdrawal from the Bank Account. The
Management Fee, Accounting Fee, Service Fees, and reimbursable amounts for the
final Fiscal Month of the Term shall be paid on or before termination.
9.2 Accounting Fee. Owner shall pay to Manager an annual accounting fee
(the "Accounting Fee") equal to ONE HUNDRED THIRTY THOUSAND DOLLARS ($130,000)
per Fiscal Year. This fee shall compensate Manager for the performance of
operations and fixed asset accounting and reporting required by this Agreement.
The Accounting Fee shall be payable in equal monthly installments, in arrears,
at the time of each payment of the Management Fee. The Accounting Fee shall be
increased annually, at the time of each anniversary of the Effective Date, to
reflect increases in the Consumer Price Index from the Effective Date to the
date of adjustment.
ARTICLE 10
DISBURSEMENTS
10.1 Priority of Disbursements. As and when received by Manager, Gross Revenues
shall be deposited in the Bank Account(s) created pursuant to Article 8.3 of
this Agreement. There shall, in turn, be disbursed by Manager, from the Bank
Account, all Operating Costs and Impositions for the Entertainment Facility
(including, without limitation, Ownership Costs which Manager may pay under this
Agreement), as bills are received for payment or amounts become due, and to the
extent funds are adequate and available.
10.2 Adjustment to Bank Account. After the disbursements pursuant to
Article 10.1, and establishment of any reserves for future disbursements as
Manager deems necessary, taking into account anticipated cash flow from, and
Operating Costs at, the Entertainment Facility, any excess funds remaining in
the Bank Account over the Minimum Balance shall monthly be disbursed to Owner.
Correspondingly, and without limiting Owner's obligation to, at all times,
provide any funds required by this Agreement, any deficiency of the Bank Account
below the Minimum Balance shall immediately be provided by Owner.
10.3 Payment of Ownership Costs. Owner shall pay for all Ownership Costs
(and, should Gross Revenues be insufficient to pay for same, all Operating Costs
as provided in Article 10.2)
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as same become due and payable and before any interest or penalty may attach for
non-payment thereof or action be commenced against the Entertainment Facility,
Owner or Manager for enforcement thereof.
10.4 Payment of Sales and Other Operational Taxes. Manager shall be
responsible to file all necessary returns and remit from Gross Revenues to the
governmental authorities having jurisdiction over the Entertainment Facility,
all sales taxes, excise taxes, use taxes, gross receipts taxes, admission taxes,
entertainment taxes, tourist taxes and similar taxes and charges required by law
to be collected from patrons or guests as part of the sales price for goods,
services or entertainment at the Entertainment Facility. Manager or Owner may
contest the amount of any such taxes, provided that no penalty, interest, lien
or other detriment to Owner, Manager or the Entertainment Facility results.
Manager shall have no liability for the payment of any fines, penalties,
interest or other charges ("assessments") for any under or over payment or
miscalculation of such taxes unless caused by the gross negligence or wilful
misconduct of Manager's Key Personnel charged to administer such payments,
recognizing that the manner of calculating and reporting such taxes is often
vague and subject to broad administrative discretion. All costs of any tax
contest and all assessments of such taxes or charges shall be Ownership Costs
under this Agreement.
Owner shall pay to Manager any sales, gross receipts or similar tax imposed
upon Manager, calculated on any payment or payments to Manager required of Owner
under this Agreement, unless the tax is an alternative to an income tax
otherwise payable by Manager. Any such payment shall be made at the time of each
payment to Manager, or, if not so paid, within ten (10) days of any request by
Manager therefor.
ARTICLE 11
HARRAH'S SERVICES
11.1 Nature of Services. The services described in this Article 11.1 ("Harrah's
Services") shall be provided by Manager and accepted by Owner, with individual
charges ("Service Fees") to accrue commencing as of the Opening Date. It is
understood that the Service Fees for Harrah's Services shall be due and payable
monthly and shall be subject to increase or decrease as
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hereinafter set forth. The presently established charges are listed below
in connection with each service to be provided:
(a) Administrative Service Fee - If and to the extent that common services are
provided to the Entertainment Facility and to the Excursion Gambling Boats
of Harrah's (LLC) following termination of the use of Shared Employees
pursuant to Article 1.1(k), including by way of example, supervisory
services, executive management, or administrative services such as check
processing or accounting, then the cost of such services shall be
established in the Operating Budget as an Administrative Service Fee,
rather than as Compensation. If such event occurs in the course of a Fiscal
Year, as contemplated by Article 1.1(k), then the Operating Budget shall
automatically be increased to include the amount of such Administrative
Service Fee agreed between Owner or Manager, or if not agreed within the
first thirty (30) days of the ninety (90) day period described in Article
1.1(k), by Arbitration under Article 20 (in which case only the amount
agreed by Owner shall be effective pending such arbitration, subject to
retroactive adjustment, with interest at the Interest Rate plus eight
percent (8.0%), if a higher Administrative Service Fee is approved by the
Arbitrator).
(b) Reservation Fee: $2.50 per guest room reservation at the hotel made through
Harrah's telephone reservation system, increased annually on each
anniversary of the Effective Date to reflect increases in the Consumer
Price Index from the Effective Date to the date of adjustment. The
Reservation Fee charged under this Agreement will be no more than the
prevailing charge to participating Harrah's hotels.
ARTICLE 12
SYSTEM MARK SIGNS AND SYSTEM MARKS
12.1 Signs. Owner agrees to install and maintain, subject to applicable
Legal Requirements: (i) all Harrah's System Mark signs, Operating Equipment and
Operating Supplies; and (ii) all Players' System Mark signs, Operating Equipment
and Operating Supplies as provided in Section 7(m) of Owner's Partnership
Agreement. The hotel at the Entertainment Facility shall be
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identified as the Harrah's(R)-Riverport Casino Center Hotel. Stationery and
front desk signage shall indicate that the hotel is owned by a general
partnership, whose partners are Players and Harrah's (Maryland). Owner is solely
responsible for all costs of purchasing, leasing, transporting, constructing
and/or installing the required Harrah's System Mark signs, Operating Equipment
and Operating Supplies, Players' System Mark signs, Operating Equipment and
Operating Supplies, as well as for all costs of dismantling and removing such
signs at the end of the term or earlier termination hereof.
12.2 Harrah's System Marks. It is understood that no rights or interests in
the name Harrah's(R) or any other Harrah's System Marks are being granted by
this Agreement. Owner agrees to recognize the exclusive right of ownership of
Harrah's Las Vegas in and to Harrah's System Marks. Manager agrees that the
hotel within the Entertainment Facility will, from and after the Opening Date,
and subject to Owner's compliance with all of its obligations under this
Agreement, be operated by Manager under the Harrah's(R) brand name utilizing
Harrah's System Marks. Manager represents that, as a wholly owned subsidiary of
Harrah's Las Vegas, it has the right to use Harrah's System Marks in connection
with the hotel. Owner acknowledges and agrees that the use of the Harrah's
System Marks in connection with the operation and management of the
Entertainment Facility is vested solely in Manager. Owner disclaims any right or
interest in Harrah's System Marks, regardless of the legal protection afforded
thereto. Owner covenants that, in the event of expiration or termination of this
Agreement, whether as a result of default by Manager, Owner or otherwise, Owner
shall not, without the express prior written consent of Harrah's Las Vegas, hold
itself out as, or continue operation of the Entertainment Facility using the
Harrah's System Marks, and that, unless Harrah's Las Vegas shall have so
consented to the continued use thereof, Harrah's Las Vegas and its designated
contractors may enter the Entertainment Facility and may, at Owner's expense,
remove all signs, furnishings, printed material, emblems, slogans or other
distinguishing characteristics which are now or may hereafter be connected or
identified with the Harrah's System or bear Harrah's System Marks. Upon the
expiration or earlier termination of this Agreement for any reason, Owner shall
likewise remove and discontinue the use of any and all items of Operating
Equipment and any Operating Supplies that bear any Harrah's System Mark.
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Owner shall not convey such property to any person or entity unless such
person or entity is specifically authorized in writing by Harrah's Las Vegas
(whether under license from Manager or otherwise) to use property bearing any
Harrah's System Marks.
Owner shall not use the name Harrah's(R), any other Harrah's System Mark,
or any variant thereof in the name of any partnership, corporation or other
business entity, nor allow the use thereof by others, without the express prior
written consent of Harrah's Las Vegas. Owner shall not make reference to the
name "Harrah's", any other Harrah's System Mark, or any variant thereof,
directly or indirectly, in connection with a public sale or private placement of
securities or other comparable means of financing without obtaining, in each
instance the prior written approval of Harrah's Las Vegas.
12.3 Litigation. Owner and Manager agree that, in the event Owner and/or
Manager is or are the subject of any litigation or action brought by any party
seeking to restrain the use by Owner or Manager, or either of them, of any
Harrah's System Mark used by Manager for or on or in connection with the
Entertainment Facility, any such litigation or action shall be defended entirely
by and at the expense of Manager or Harrah's Las Vegas, notwithstanding that
Manager or Harrah's Las Vegas may not be named as a party thereto. Owner shall
not have the right to bring suit against any user of any of the Harrah's System
Marks. In all cases, the conduct of any suit, whether brought by Manager or
instituted against Owner and/or Manager or Harrah's Las Vegas shall be under the
absolute control of counsel to be nominated and retained by Manager or Harrah's
Las Vegas, notwithstanding that Manager may not be a party to such suit. Manager
agrees and covenants to defend and hold Owner harmless from and to indemnify
Owner against any judgments or awards of any court or administrative agency of
competent jurisdiction, whether such awards be in the form of damages, costs or
otherwise, imposed against Owner and arising from the use by Manager of any
Harrah's System Marks or similar rights or registrations for or on or in
connection with the Entertainment Facility in accordance with the terms of this
Agreement.
12.4 Players' System Marks. Manager's and Owner's right to use the Players'
System Marks at the Entertainment Facility shall be subject to the terms and
conditions of the Players' License.
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Owner and Manager agree to perform all of their respective obligations under the
Players' License.
ARTICLE 13
INSURANCE
13.1 Insurance Coverage. Owner agrees to procure and maintain, at its
expense and at all times during the term hereof, all insurance coverage required
by Exhibit C attached hereto and made a part hereof.
13.2 Failure to Obtain - Self Help
If Owner should, at any time, fail to obtain or maintain all insurance
required by this Article 13, or to provide Manager with satisfactory evidence
that such insurance remains in full force and effect, then, without limiting
Manager's other remedies for such default, Manager shall be entitled to secure
substitute insurance, and the cost thereof shall, immediately upon demand, be
paid as an Operating Cost or, if Gross Revenues are insufficient to any such
expenditure in the month when made, reimbursed by Owner to Manager on demand.
ARTICLE 14
INDEMNITY AND RELATED MATTERS
14.1 Scope
(a) Owner agrees to indemnify and hold Manager and its officers, directors,
employees, agents or independent contractors ("Indemnified Persons") free
and harmless from any liability for injury to persons or damage to property
by reason of any cause whatsoever, either in and about the Entertainment
Facility or elsewhere, including, without limitation, any such loss, cost
or damage occurring as a result of the performance of this Agreement by
Manager, its agents, employees or independent contractors, irrespective of
whether negligence on the part of any Indemnified Person is involved,
provided, however, that, as to Shared Employees, this indemnification shall
only extend to acts or omissions of such individuals occurring while they
are engaged in the performance of work for the Entertainment Facility.
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(b) Owner agrees to reimburse each Indemnified Person, upon demand, for any
money or other property which such Indemnified Person is required or
authorized by this Agreement to pay out for any reason whatsoever, whether
the payment is for Operating Costs, Ownership Costs or any other costs,
charges or debts incurred or assumed by an Indemnified Person, Owner or any
other party, or for judgments, settlements or expenses in defense of any
claim, civil or criminal action, proceeding, charge or prosecution made,
instituted or maintained against an Indemnified Person, Owner and/or
others, jointly or severally, affecting or because of the condition or use
of the Entertainment Facility or other areas, or acts or failure to act of
an Indemnified Person, Owner, employees, agents or independent contractors
of Owner, or arising out of or based upon any Legal Requirement, contract
or award (including without limitation any such matter relating to the
hours of employment, working conditions, wages and/or compensation of
employees or former employees of Owner, or any severance or termination
benefits of such employees), or for any other cause in connection with the
Entertainment Facility.
(c) Notwithstanding the foregoing, Owner shall not be liable to indemnify and
hold the Indemnified Persons harmless from any such liability not covered
by insurance which results solely from the proven gross negligence or
willful misconduct of the Key Personnel or the Memphis based officers of
Harrah's Entertainment, Inc. or its subsidiaries, while present at, and/or
specifically directing activities at, the Entertainment Facility.
14.2 Defense. Owner agrees to defend, promptly and diligently, at Owner's
expense, any claim, action or proceeding brought against Indemnified Persons or
Owner, jointly or severally, arising out of or connected with any of the matters
referred to in Article 14.1, and to hold harmless and fully indemnify each
Indemnified Person from any judgment, liability, loss or settlement on account
thereof. Defense of any such claim shall be accepted within ten (10) days after
the date tendered, or if sooner, when the first action in response to any such
claim is required. Defense shall be with counsel approved by the Indemnified
Person. Failure to accept
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any tender of a claim in writing within such period shall entitle an Indemnified
Person to conduct such defense and/or settle any such matter at Owner's sole
cost and expense. The allegation of facts which would excuse Owner's
indemnification obligation pursuant to 14.1(c) shall not excuse Owner's defense
obligation, and such obligation shall continue until gross negligence or wilful
misconduct of the type described in Article 14.1(c) is proven, by final
unappealable judgment, to have been the sole cause of liability (in which case
Owner shall be entitled to reimbursement from the Indemnified Person of all
reasonable attorneys fees and costs incurred in such defense).
ARTICLE 15
DAMAGE TO AND DESTRUCTION OF THE ENTERTAINMENT FACILITY
15.1 Obligation to Restore. At its cost, Owner agrees, subject to the provisions
of this Article 15, to repair, restore, rebuild or replace any damage to, or
impairment or destruction of, the Entertainment Facility from fire or other
casualty.
15.2 Termination Option. In the event the Building shall be destroyed
or substantially destroyed during the term of this Agreement by fire or other
casualty and Owner shall have maintained insurance as required by Article 13 of
this Agreement and shall not have committed or omitted or suffered any other to
commit or omit any act or omission resulting in any denial of coverage or
payment thereunder, then Owner shall have the right and option, upon notice
served upon the Manager within sixty (60) days after such fire or other
casualty, to terminate this Agreement. In the event of any such permitted
termination by Owner, Manager shall not be entitled to receive from Owner
damages described in Article 17.2, but shall be paid any other amounts due or
owing with respect to events occurring prior to or in connection with
termination of this Agreement (and Owner's obligations with regard thereto shall
survive such termination). If this Agreement is so terminated and the
Entertainment Facility is, at any time within the five (5) year period following
such casualty, nonetheless reconstructed and/or repaired by Owner for use as an
Entertainment Facility (including a hotel), Manager shall have the option to
re-institute this Agreement as to the reconstructed or repaired Entertainment
Facility for the unexpired portion of the Term.
If Owner fails to serve such notice within the time aforesaid, or if Owner
shall not have maintained adequate insurance as required by Article 13 or shall
have caused or suffered to occur
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any commission or omission resulting in any denial of coverage or payment, Owner
shall be obligated, at its cost, to repair, restore, rebuild or replace such
damage, impairment or destruction.
If Owner, for any reason, fails to complete any obligatory repair,
restoration, rebuilding or replacement in a continuous and expeditious manner
after the proceeds of insurance in respect of the fire or other casualty are
made available by the insurer, Manager may, at its election, terminate this
Agreement due to Owner's default, and collect the damages provided in Article
17.2, by delivery of written notice to Owner and without any other notice or
opportunity by Owner to cure such default.
ARTICLE 16
CONDEMNATION
16.1 Termination. If the whole of the Entertainment Facility shall be taken or
condemned in any eminent domain, condemnation, compulsory acquisition or like
proceeding by any competent authority for any public or quasi-public use or
purpose, or if such a portion thereof shall be taken or condemned as to make it
imprudent or unreasonable, in Owner's opinion (noticed to Manager in writing on
or before the effective date of such condemnation), to use the remaining portion
as an Entertainment Facility (including the hotel) for the use made immediately
preceding such taking or condemnation, then, in either of such events, this
Agreement shall cease and terminate as of the date of such taking or
condemnation. Manager shall not, in such event, be entitled to receive the
damages provided in Article 17.2 of this Agreement, but shall be paid any other
amounts due or owing to Manager with respect to events occurring prior to or in
connection with termination of this Agreement (and Owner's obligations with
regard thereto shall survive termination).
To the extent not theretofore paid by Owner, any amounts due and owing to
Manager with respect to events occurring prior to or in connection with the
termination of this Agreement, shall be paid from the first proceeds of any
award for such condemnation. Should any such award be inadequate, applied to
reduction of any debt encumbering the Entertainment Facility, or otherwise
applied to other purposes, Owner's obligation to pay amounts due Manager shall
continue unabated and shall not be limited to the amount of the award made
available to Owner.
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If this Agreement is so terminated, and the Entertainment Facility is
nonetheless reconfigured and/or reconstructed by Owner, at any time within the
five (5) year period following such taking or condemnation, Manager shall have
the option to reinstate this Agreement as to the restored Entertainment Facility
for the unexpired portion of the Term.
16.2 Restoration and Continuation. If only a part of the Entertainment
Facility is taken or condemned, and the taking or condemnation of such part does
not make it unreasonable or imprudent, in the opinion of Owner (noticed to
Manager in writing on or before the effective date of such condemnation), to
operate the remainder as an Entertainment Facility (including the hotel), this
Agreement shall not terminate. Out of any award to Owner, so much thereof as
shall be reasonably necessary to reconstruct the Entertainment Facility, or any
part thereof, or to reconfigure the Entertainment Facility, or any part thereof,
so as to render the Entertainment Facility (including the hotel) a complete and
satisfactory architectural unit of the same size and class as it was immediately
preceding the taking or condemnation shall be made available for that purpose.
The balance of the award, if any, after deduction of bona fide costs of
restoration by Owner, and any sums then due Manager, shall be fairly and
equitably apportioned between Owner and Manager so as to compensate Owner and
Manager for any loss of income resulting or to result from the taking or
condemnation.
Failure of Owner to effect repair and restoration of the Entertainment
Facility in a continuous and expeditious manner after the award of the condemnor
is made available in respect of any partial condemnation which Owner has not
deemed sufficient to render further operation of the Entertainment Facility
unreasonable or imprudent, shall be an Event of Default entitling Manager to
terminate this Agreement and collect the damages provided in Article 17.2
without further notice or opportunity by Owner to cure such default.
ARTICLE 17
DEFAULT AND TERMINATION
17.1 Events of Default. It shall be an event of default hereunder (an
"Event of Default") if any one or more of the following events shall occur:
(a) if there should occur a breach, default or noncompliance by a party hereto
with any covenants, obligations or agreements to be performed by a party
under this
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Agreement (except for matters described in Article 17.1(c) and (d)),
followed by written notice of such breach, default or non-compliance from
the Non-Defaulting Party to such Defaulting Party and failure of such
Defaulting Party to remedy or correct such breach, default or
non-compliance within thirty (30) days after receipt of such notice,
provided that, if such breach, default or non-compliance is other than
payment of money, failure to insure, or violation of Article 21.1 and 21.2,
and is also of a nature such that it cannot reasonably be cured within such
thirty (30) day period, then an Event of Default shall not be deemed to
have occurred for so long as the Defaulting Party commences the curing of
such default within such thirty (30) day period, pursues the completion
thereof with diligence and continuity, and completes such cure within
ninety (90) days of such notice; or,
(b) if Owner should fail to effect any required reconstruction of the Building
following casualty or partial condemnation, as and within the time provided
in Articles 15 and 16 of this Agreement;
(c) if:
(i) a party shall voluntarily or involuntarily be dissolved; apply for or
consent to the appointment of a receiver, trustee or liquidator of all
or a substantial part of its assets; file a voluntary petition in
bankruptcy (or have filed against it any such petition which shall not
have been dismissed within sixty (60) days after filing) or otherwise
seek protection of state laws for the relief of debtors; admit in
writing its inability to pay its debts as they become due; make a
general assignment for the benefit of creditors; file a petition (or
have filed against it any such petition which shall not have been
dismissed within sixty (60) days after filing) or an answer seeking to
be reorganized or arrangement with creditors or to take advantage of
any insolvency law or file an answer admitting the material
allegations of any petition filed against it in any bankruptcy,
reorganization or insolvency proceeding; or
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(ii) an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of any one or more
creditors of such party, adjudicating such party a bankrupt or
insolvent or approving a petition seeking reorganization or appointing
a receiver, trustee or liquidator of all or a substantial part of its
assets, and such order, judgment or decree shall become final; or
(iii) a party shall be directly or indirectly owned or controlled by
another company or entity and an event described in Sub-article (c)(i)
or (ii) shall occur with respect to any company or entity owning or
controlling such party; or
(d) (i) if Owner passes title to the Entertainment Facility or any part
thereof in lieu of foreclosure of any lien or other security interest
in the Entertainment Facility; or
(ii) if an action to foreclose any mortgage, deed of trust or other
security interest in the Entertainment Facility or any part thereof is
instituted against Owner and is not discharged or dismissed within
thirty (30) days thereafter.
The party responsible for the occurrence of an Event of Default or on
account of whom an Event of Default shall have occurred shall be called the
Defaulting Party. The remaining party, as to such Event of Default, shall be
called the Non-Defaulting Party.
The waiver of any one Event of Default shall not be construed as the waiver
of any other Event of Default. No waiver shall be effective unless embodied in a
writing signed by the Non-Defaulting Party.
17.2 Termination/Damages
(a) If an Event of Default occurs and has not been cured within any cure
period allowed above, this Agreement shall terminate at the election
of the Non-Defaulting Party. Notice of termination or suit for
specific performance, as appropriate, may be given or commenced at any
time after expiration of the applicable cure period, if any, and prior
to the curing of such Event of Default,
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and any termination shall be effective as of the date specified in
such notice of termination, which such date shall be not less than ten
(10) and not more than forty five (45) days after the date of such
notice. Owner's and Manager's indemnification and defense obligations
and Owner's obligation to maintain insurance after termination (with
respect to occurrences before termination) and to pay for all costs of
operating the Entertainment Facility prior to or in connection with
termination shall be in addition to and shall survive termination of
this Agreement and payment of damages therefor.
(b) If this Agreement is terminated as a result of an Event of Default by
Owner, then:
(i) if such Event of Default was caused: (A) solely by the act or
omission of Harrah's (Maryland) as partner of Owner or lessee of
an Operating Lease; or (B) the joint act or omission of Harrah's
(Maryland) and Players or a Players' Affiliate as co-partners of
Owner; or (C) by a title matter that was not created or after the
date hereof suffered by Owner; or (D) by a failure of Owner to
secure the Licenses and Permits required to construct or operate
the Entertainment Facility, then Manager shall be entitled to no
remedy other than termination or suit for specific performance as
provided in Article 17.2(a).
(ii) if such Event of Default was caused solely by the act or omission
of Players or a Players' Affiliate, as partner of Owner or lessee
of an Operating Lease, then it is the intent of the parties that
the remedies under the Owner's Partnership Agreement may be
invoked by Harrah's (Maryland) and that Manager shall receive
from Players, damages for such Event of Default (which may be
directly enforced or offset by Harrah's (Maryland) against the
Appraisal Buyout Price paid by Harrah's (Maryland) under Section
25 of Owner's Partnership Agreement) equal to: (i) the average
annual Management Fees earned by Manager under this Agreement
over the two (2) twelve (12) full Fiscal Month periods preceding
termination or, prior to the twenty-fifth (25th) full Fiscal
Month
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following the Opening Date, (ii) Two Hundred Eighty-Five Thousand
Dollars ($285,000). If Manager's Affiliate elects the Buy/Sell
remedy under Section 26 of Owner's Partnership Agreement, it is
the intent of the parties that (i) if Harrah's (Maryland) shall
be the purchaser, Harrah's (Maryland) shall be entitled to offset
against the Buy/Sell Price the damages above specified; and (ii)
if Harrah's (Maryland) shall be the seller, the Fair Market Value
of the Management Agreement, which must be purchased by Players
will equal the damages above specified.
(c) If there is an Event of Default by Manager, there shall be no remedy
against Manager other than termination of this Agreement without damages or
suit for specific performance.
ARTICLE 18
NOTICES
18.1 Procedure. All notices or other communications provided for in this
Agreement shall be in writing and shall be personally served, sent by Federal
Express or comparable express courier, or sent by postage prepaid certified mail
to the following addresses until such time as written notice, as provided
hereby, of a change of address with a new address to be used thereafter is
delivered the other party:
Owner: Riverside Joint Venture
Players International, Inc.
2900 Paradise Road, Suite 135
Las Vegas, NV 89109
Manager: Harrah's Maryland Heights Operating Company
1023 Cherry Road
Memphis, TN 38117
Attn: General Counsel
Such notice shall be effective upon receipt.
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ARTICLE 19
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS
19.1 Relationship. Manager and Owner shall not, by virtue of this
Agreement, be construed as joint venturers or partners of each other and neither
shall have the power to bind or obligate the other except as set forth in this
Agreement.
19.2 Contractual Authority. Manager is authorized to make, enter into and
perform in the name of, for the account of, on behalf of and at the expense of
Owner any contracts and agreements deemed necessary by Manager to carry out and
place in effect the terms and conditions of this Agreement. Manager shall
contract in a commercially reasonable manner; however, Manager shall not be
obligated to obtain Owner's approval of individual contracts or agreements
unless otherwise expressly provided in this Agreement.
19.3 Further Actions. Owner agrees to execute all contracts, agreements and
documents and to take all actions reasonably necessary (unless another standard
is provided) to comply with the provisions of this Agreement and the intent
hereof.
ARTICLE 20
APPLICABLE LAW AND ARBITRATION
20.1 Scope. The interpretation, validity and performance of this Agreement shall
be governed by the laws of the State of Missouri. If any court or appropriate
judicial authority shall hold or declare that the law of another jurisdiction is
applicable, this Agreement shall remain enforceable under the law of that
jurisdiction. If any of the terms and provisions hereof shall be held invalid or
unenforceable for any reason, such invalidity or unenforceability shall in no
event affect any of the other terms or provisions hereof, all such other terms
and provisions to be valid and enforceable to the fullest extent permitted by
law.
20.2 Arbitration
20.2.1 Matters Subject to Arbitration. In case of a dispute with respect to
any of the following matters, either party may submit such matter to arbitration
which shall be conducted by the Accountants:
(a) computation of (but not entitlement to) the Management Fees, Service
Fees or damages payable under Article 17.2(b);
(b) modifications to an Annual Plan or Operating Budget requested by
Manager;
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(c) results of any audit by Owner's Accountant;
(d) adjustment of any amounts required to be adjusted to reflect changes
in the Index;
(e) determination of whether, and to what extent, Manager has operated the
Entertainment Facility at a cost that entitles it to Incentive
Management Fee, including, without limitation, any disagreement over:
(i) the allocation of budgeted Operating Costs to any portion of a
Fiscal Year; or (ii) the amount of Operating Cost Savings;
(f) determination of the amount of additional employees (and resulting
increase in Compensation) and Administrative Service Fee reasonably
chargeable to Owner by reason of a termination of sharing of Shared
Employees.
The decision of the Accountants shall be binding on the parties.
20.2.2 The Accountants. The Accountants shall be one of three firms of
certified public accountants of recognized standing in the casino-hotel
industry. Until otherwise agreed by the parties, the Accountants shall be one of
Deloitte & Touche, Coopers & Lybrand, and KPMG Peat Marwick. The party desiring
to submit any matter to arbitration shall do so by written notice to the other
party, which notice shall set forth the items to be arbitrated and such party's
choice of one of the three firms of accountants designated above. The party
receiving such notice shall, within fifteen (15) days after receipt of such
notice, either approve such choice or designate one of the remaining two firms
by written notice back to the first party, and the first party shall, within
fifteen (15) days after receipt of such notice, either approve such choice or
disapprove the same. For so long as Players is a Partner of Owner and not in
default under Owner's Partnership Agreement, the accounting firm representing
the Owner shall be chosen by Players. If both parties shall have approved one of
the three firms designated above, then such firm shall be the Accountants for
the purpose of arbitrating the dispute; otherwise the third firm, which was not
designated by either party shall be the Accountants for such purpose. The
Accountants shall be required to render a decision in accordance with the
procedures described in Article 20.2.3 within
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thirty (30) days after being notified of their selection. The fees and expenses
of the Accountants will be paid by the non-prevailing party.
20.2.3 Arbitration Procedures. In all arbitration proceedings submitted to
the Accountants, the Accountants shall be required to agree upon and approve the
substantive position advocated by Owner or Manager with respect to each disputed
item. Any decision rendered by the Accountants that does not adopt the
substantive position advocated by Owner or Manager shall be beyond the scope of
authority granted to the Accountants and consequently may be overturned by
either party. All proceedings by the Accountants shall be conducted in
accordance with the Uniform Arbitration Act as adopted in the State of Missouri,
except to the extent the provisions of such Act are modified by this Agreement
or the mutual agreement of the parties. Unless otherwise agreed, all arbitration
proceedings shall be conducted at the Entertainment Facility. Arbitration of any
dispute over an expenditure within a proposed Annual Plan or any revision
thereof for goods and services that Manager determines to be necessary for
compliance with Harrah's Operational Standards shall be limited to whether the
proposed expenditure is reasonable, considering the cost for which goods or
services meeting Harrah's Operational Standards may be obtained in the St.
Louis, Missouri market (or, in the case of specialized goods or services, the
applicable market for such goods or services). The substance of Harrah's
Operational Standards or Manager's determination of the manner of their
implementation shall not be arbitrated but shall remain within the sole
discretion of the Manager and its Affiliates.
ARTICLE 21
SUCCESSORS AND ASSIGNS
21.1 Assignment by Manager. Any act of, or with respect to, Manager that would
constitute a "Transfer" within the meaning of Owner's Partnership Agreement,
shall constitute an assignment hereunder. Owner's consent shall not be required
for Manager to assign any of its obligations or interests as Manager hereunder
to any Manager Affiliate or to any party who is a permitted transferee (or
wholly owned affiliate of such transferee) of the Project Property held by
Harrah's (Maryland) under Owner's Partnership Agreement, provided that any such
assignee is bound by the terms and conditions of this Agreement. Owner's advance
written consent shall be required for any other assignment of the obligations of
Manager under this Agreement, except
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for transactions which are excluded from the definition of "Transfer" in Section
4.125 of Owner's Partnership Agreement. Manager shall be released from liability
hereunder upon the conclusion of any permitted assignment.
Manager may, further, at all times without obtaining any consent from
Owner, assign, pledge, encumber and/or hypothecate all of Manager's rights, fees
(earned and unearned), interest in insurance, condemnation awards, indemnities
and other proceeds as security for a loan, and, in any such case, the assignee
shall hold and be entitled to enforce such rights and receive such fees and/or
payments without counterclaim, defense or setoff by Owner, Owner agreeing to
look solely to Manager and not to any such assignee in regard to any claim which
it may have under this Agreement. Notwithstanding the foregoing, Owner shall
have no obligation to assure the payment to any such assignee, of any amounts
received by Manager from the Entertainment Facility. Nothing herein shall impair
Owner's right to terminate the Agreement as provided herein.
21.2 Assignment or Transfer of Title by Owner. Any Transfer of Project
Property or any interest in a Holding Entity (as such terms are defined in
Owner's Partnership Agreement) by Players in violation of Owner's Partnership
Agreement shall be an Event of Default under this Agreement entitling Manager to
terminate this Agreement and receive damages from Players specified in Section
17.2. Any Transfer of Project Property or any interest in a Holding Entity (as
such terms are defined in Owner's Partnership Agreement) by Harrah's (Maryland)
in violation of Owner's Partnership Agreement shall be an Event of Default under
this Agreement entitling Owner to terminate this Agreement. Any Transfer of the
Entertainment Facility by Owner without the advance written approval of Manager
shall entitle Manager to terminate this Agreement by notice to Owner but not to
collect damages from Owner. Any transferee of the Entertainment Facility shall,
by acceptance of title, be deemed to have assumed all obligations of Owner under
this Agreement and shall deliver a written agreement so evidencing, upon demand,
in form satisfactory to Manager.
No transfer of any legal or beneficial interest in the Entertainment
Facility shall relieve Owner or Players of its obligations under this Agreement.
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21.3 Binding Effect. The terms, provisions, covenants, undertakings, agreements,
obligations and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the permitted successors in interest and the permitted
assigns of the parties hereto with the same effect as if mentioned in each
instance where the party hereto is named or referred to, except that no
assignment, transfer, sale, pledge, encumbrance, mortgage, lease or sublease by
or through Owner in violation of the provisions of this Agreement shall vest any
rights under this Agreement in the assignee, transferee, purchaser, secured
party, mortgagee, pledgee, lessee, sublessee or occupant.
ARTICLE 22
SHORT FORM OF AGREEMENT
22.1 Memorandum of Agreement. On the Effective Date, Owner and Manager
shall execute, acknowledge and record a Short Form of this Agreement in the
public records for the County of St. Louis, Missouri, in the form attached as
Exhibit E.
ARTICLE 23
FORCE MAJEURE
23.1 Operation of Entertainment Facility. If it becomes necessary, in Manager's
opinion, to cease operation of the Entertainment Facility because of an
Emergency, then, in such event, Manager may close and cease operation of all or
part of the Entertainment Facility, reopening and commencing operation when
Manager deems in good faith that such Emergency has ended, provided that the
Term has not theretofore expired. Manager shall have no obligation to reopen the
Entertainment Facility if there shall be less than ninety (90) days remaining
unexpired in the Term at the time of such event.
Manager shall also be entitled, in the event of any labor organizational
activity, picketing or unrest, to designate specific entrances to the
Entertainment Facility as separate entrances for each of the separate businesses
conducted on Excursion Gambling Boats and the Entertainment Facility in order to
avoid tainting all entrances to the Entertainment Facility and harm to the
operation of the businesses that are not the target of such activity.
23.2 Extension of Time. It is further understood and agreed that, with
respect to any obligation to be performed under this Agreement by a party during
the Term (except for defaults in the
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nature of failure to make any required payment or maintain required insurance,
or transfer or assignment in violation of Article 21.2), such party shall not be
in default for failure so to do when and only for so long as such performance is
prevented by any force majeure cause beyond the reasonable control of such party
such as strike, lockout, breakdown, accident, order or regulation of or by any
governmental authority, failure of supply or inability, by the exercise of
reasonable diligence, to obtain supplies, parts or employees necessary to
perform such obligation, or war or other emergency. Notwithstanding the
foregoing, a failure by Owner to perform Owner's obligations due to a lack of
finances or due to a strike, lockout or failure of supply caused by the wrongful
act or omission of Owner, or its partners, or their affiliates that operate the
Excursion Gambling Boats or Excursion Gambling Boat Support Facilities, shall
not be deemed to be a cause beyond Owner's reasonable control. The time within
which such obligation shall be performed may be extended only for a period
equivalent to the delay caused by such force majeure.
ARTICLE 24
TERMINATION
24.1 Surviving Obligations. In the event of any termination or expiration of
this Agreement, Owner shall remain liable to pay all fees and other amounts due
to Manager for periods through termination, to maintain insurance for the
benefit of and indemnify Manager with respect to all occurrences before
termination, and to reimburse Manager for all expenses incurred by Manager
before or in connection with such termination or expiration. Manager's indemnity
obligations shall also survive termination or expiration of this Agreement.
24.2 Termination/Expiration. In connection with the expiration and/or
termination of this Agreement:
(a) Manager shall:
(i) deliver possession of the Entertainment Facility to Owner or
Owner's designated agents or employees subject to rights of all
parties in possession, in "as is" condition, without recourse or
any warranty whatsoever;
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(ii) deliver to Owner any written Operating Agreements with respect to
the Entertainment Facility which have not theretofore been
delivered to Owner;
(iii) prepare and furnish to Owner a list of guest room reservations
for the hotel within the Entertainment Facility and a list (with
copies) of all room allocation and Entertainment Facility service
agreements for the Entertainment Facility (which have not
theretofore been furnished to Owner) for all periods after
expiration or termination;
(iv) advise all Entertainment Facility purveyors by mail of the change
of control of the Entertainment Facility;
(v) permit Owner to have an observer at the Entertainment Facility to
coordinate the turnover of Entertainment Facility operations for
a period of seven (7) days prior to expiration or termination,
provided that such observer shall not participate in the
operation or management of the Entertainment Facility, give any
direction to or contact any Entertainment Facility employee or
otherwise interfere with Manager's operation of the Entertainment
Facility, as determined by Manager's general manager, in his sole
discretion. If such observer shall be deemed by any of Manager's
Key Personnel to interfere with Entertainment Facility
operations, then such observer may be required to leave the
Entertainment Facility immediately upon notice from Manager;
(vi) deliver to Owner records of the Entertainment Facility pertaining
to:
(1) accounts payable outstanding and unpaid at termination or
expiration, provided that Manager shall, to the extent funds
are made available therefor by Owner and amounts due are
then known, pay all accounts payable through and including
the date of expiration or termination;
(2) accounts receivable outstanding and uncollected at
termination or expiration, all of which Owner agrees shall
be accounted for by
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Owner when collected by Owner or Manager as Gross Revenues
under this Management Agreement; and
(3) employees who are hired by Owner and remain at the
Entertainment Facility following termination or expiration
of the Management Agreement (to the extent the information
in such files is not deemed confidential by Manager).
(vii) After deducting therefrom any amounts due and payable under this
Agreement and not theretofore paid, Manager shall disburse the
balance, if any, remaining in the Bank Account(s) after termination or
expiration of this Agreement to Owner.
(b) Owner shall be solely responsible for and shall pay all costs of:
(i) cancelling any Operating Agreements which Owner does not wish to
continue after such termination or expiration; or
(ii) assuming and continuing performance under any such Operating
Agreements which Owner desires to retain in effect.
(c) Owner shall, without limiting Owner's obligation as employer, be solely
responsible and shall pay for all severance or other termination benefits
due any employee of Manager whose services are terminated;
(d) Owner shall, in the event of termination of this Agreement in connection
with any termination involving a change of hotel brand identification or
affiliation, as of the date of termination or expiration:
(i) cooperate in the removal of all signage identifying the Entertainment
Facility as a Harrah's(R) hotel or containing any Harrah's System Mark
and, in the case of any such signage supplied pursuant to an
advertising contract (as in the case of billboard advertisements) pay
all costs necessary to repaint or otherwise re-identify the
Entertainment Facility and remove any Harrah's System Marks from such
advertisement;
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<PAGE>
(ii) cease use of any Harrah's System Mark at the Entertainment Facility
and shall destroy any personal property bearing such designation
unless otherwise authorized in writing by Manager;
(iii) cause the telephone number and all telephone advertisements for the
Entertainment Facility to be changed to different telephone numbers to
de-identify the Entertainment Facility as a Harrah's(R) hotel; and
(iv) cooperate with Manager and the supplier thereof to permit the removal
of any proprietary system owned by or licensed solely to Manager or
Manager's Affiliates at the Entertainment Facility and shall not move
or disturb such equipment and shall be solely responsible for any
damage to such system for any period after termination or expiration
of this Agreement during which the equipment is stored at the
Entertainment Facility, provided however, that such equipment shall,
subject to force majeure, be removed from the Entertainment Facility
within ten (10) days after termination or expiration of this
Agreement, and provided further that Owner shall not be responsible
for any damage to such equipment caused by the parties effecting its
removal.
(e) Owner shall, after termination or expiration, continue to honor all guest
room reservations, room allocation agreements, and other advance bookings
in accordance with their terms and if requested by the party holding same,
cancel any such agreement and refund any deposit made therefore (which has
either been delivered or credited by Manager to Owner on termination or
expiration of this Agreement or received directly by Owner or its
employees, agents or independent contractors), should any such party
request cancellation and refund because the Entertainment Facility is no
longer a Harrah's(R)hotel; and
(f) Owner shall, without limiting the foregoing, indemnify, defend and hold
Manager harmless from and against all loss, cost, claim or damage relating
to events arising at the Entertainment Facility or its operation or
ownership: (i) before termination
- 52 -
<PAGE>
(except for matters excluded by Article 14.1(c)); and (ii) after
termination or expiration of this Agreement, without regard to Article
14.1(c).
The foregoing shall be covenants running with the Entertainment Facility, shall
survive termination or expiration of this Agreement, and shall be specifically
enforceable by Manager and Owner.
ARTICLE 25
GENERAL PROVISIONS
25.1 Authorization. Owner represents that it has full power and authority
to execute this Agreement and to be bound by and perform the terms hereof.
Manager represents it has full power and authority to execute this Agreement and
to be bound by and perform the terms hereof. On request, each party shall
furnish the other evidence of such authority.
25.2 Interest. Any amount payable to Manager which shall not be paid when
due shall accrue interest at the lesser of: (a) the highest legal limit, or (b)
eight percent (8%) over the Interest Rate.
25.3 Formalities. Any change to or modification of this Agreement must be
in writing signed by both parties hereto. This Agreement shall be executed in
one or more counterparts, each of which shall be deemed an original. The
captions for each Article are intended for convenience only.
25.4 Documents. Throughout the term hereof, Owner shall furnish Manager
copies of all documents, as-built plans of the Entertainment Facility,
warranties and guaranties, paid property tax and insurance statements, all
financing documents (including notes and mortgages) relating to the
Entertainment Facility and such other documents pertaining to the Entertainment
Facility as Manager shall request.
25.5 Personal Service Contract. This Agreement shall be construed as a
personal service contract which may not be assigned by Owner or Owner's
representatives in any bankruptcy, receivership, insolvency or similar
proceedings.
25.6 Exhibits. All Exhibits referred to in and attached to this Agreement
are, by such reference, intended to be incorporated within and made a part of
this Agreement.
- 53 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective as of the day and year first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
OWNER:
RIVERSIDE JOINT VENTURE
By: HARRAH'S MARYLAND HEIGHTS CORPORATION,
a Nevada corporation, its General Partner
By: /s/ Martin Boscaccy
--------------------------------------
Its: Authorized Representative
--------------------------------------
By: PLAYERS MH, L.P., a Missouri limited
partnership, its General Partner
By: PLAYERS MARYLAND HEIGHTS, INC.,
a Missouri corporation, its sole General Partner
By: /s/ Steven P. Perskie
-----------------------------
Its: Secretary
----------------------------
MANAGER:
HARRAH'S MARYLAND HEIGHTS
OPERATING COMPANY, a Nevada corporation
By: /s/ Martin Boscaccy
-------------------------------------
Its: Authorized Representative
------------------------------------
- 54 -
<PAGE>
LICENSE AGREEMENT
This is an agreement among Players International, Inc. ("Licensor"), a
Nevada corporation, Riverside Joint Venture ("Riverside"), a Missouri general
partnership and Harrah's Maryland Heights Operating Company ("Harrah's"), a
Nevada corporation (Riverside and Harrah's will be referred to as "Licensees"
herein).
WHEREAS, Licensor is the owner of the trademark and service mark
PLAYERS(R) alone and together with other word(s) and design(s) ("the PLAYERS
marks") in connection with gambling, entertainment and related goods and
services; and
WHEREAS, Licensor is the owner of U.S. Trademark and Service Mark
Registrations and Applications listed on Exhibit A attached hereto; and
WHEREAS, Licensor desires that Licensees use the PLAYERS marks in
connection with the ownership by Riverside and management by Harrah's of a hotel
and restaurant facility in Maryland Heights, Missouri (the "Entertainment
Facilities"), as more particularly described in Riverside's partnership
agreement dated November 2, 1995 (the "Partnership Agreement"), and in a certain
management agreement between Harrah's and Riverside dated November 3, 1995 (the
"Management Agreement"; the Management Agreement and the Partnership Agreement
are sometimes referred to herein as the "Operating Agreements"); and
WHEREAS, Licensor is willing to grant Licensees a license to use the
PLAYERS marks on and in connection with said services for the Entertainment
Facilities, under the terms set forth below; and
NOW THEREFORE, in consideration of the mutual promises and covenants
herein and other good and valuable consideration, the parties agree as follows:
<PAGE>
1. Licensor warrants that Licensor is the owner of the PLAYERS(R) marks
as used in connection with gambling, entertainment and related goods and
services, and that Licensor is the owner of the U.S. Trademark and Service Mark
Registrations and Applications listed on Exhibit A and that such registrations
are valid and subsisting. Licensees acknowledge such ownership.
2. In consideration of the agreements of Licensees set forth herein,
and the payment by Licensees to Licensor of $1.00 per year during the term
hereof, Licensor hereby grants to Licensees a nonexclusive license to use, under
the terms set forth herein, the PLAYERS marks in connection with Licensees'
identification and/or operation of the Entertainment Facilities as contemplated
under the Operating Agreements. This License does not include the right to
otherwise use the PLAYERS marks. No sublicenses shall be granted by Licensees
except in furtherance of this Agreement.
3. Licensees agree that all signs, advertisements, printed materials
and other uses of the PLAYERS marks will at all times fully comply with all
written specifications provided to Licensees by Licensor during the term of this
License Agreement.
4. For purposes of ensuring compliance with this agreement and
Licensor's specifications, Licensees agree that Licensor may enter onto and
inspect Entertainment Facilities during normal business hours at mutually
convenient times, upon prior written request by Licensor, such requests not to
exceed six per year.
5. In the event that Licensor notifies Licensees in writing that
Licensees have failed to meet the specifications then in effect and provided to
Licensees pursuant to paragraph 3, or approvals provided by Licensor to
Licensees, Licensees shall have thirty days
-2-
<PAGE>
in which to correct such failure. If the failure is not corrected within thirty
days, such failure shall constitute a default under this Agreement and shall
permit either the termination hereof or seeking of special performance hereof by
Licensor.
6. Licensees agree to submit all sign designs, advertising and
promotional materials which bear or include the PLAYERS marks to Licensor for
review and approval prior to use, display or distribution of such materials by
Licensees. Licensees agree not to use, display or distribute any advertising or
promotional materials hearing the PLAYERS marks which have not been approved by
Licensor.
7. Licensees agree not to use the Player's marks, other than in
connection with the Entertainment Facilities.
8. Licensees agree to notify Licensor promptly of any unauthorized use
of the PLAYERS marks by others, infringement, unfair competition, passing off,
misappropriation or unfair trade practice in connection with the PLAYERS marks
which come to Licensees attention. Licensor agrees to take all reasonable steps
necessary to half such unauthorized use, infringement, unfair competition,
passing off, misappropriation or unfair trade practice including legal actions.
All actions taken under this clause of the Agreement shall be at Licensor's
discretion, expense and under Licensor's control. Licensees agree to fully
cooperate with Licensor in connection therewith.
9. Licensor agrees to fully indemnify, defend and hold Licensees
harmless (including attorneys' fee): (i) for any claim, threat, demand or action
against Licensees arising out of any Licensor's breach of this Agreement or
Licensor's warranties; and/or (ii) if Licensees are made a party to any lawsuit
or proceeding by virtue of their status as Licensees.
-3-
<PAGE>
10. Licensees acknowledge and agree that any use of the PLAYERS mark
other than in accordance with the terms of this License will entitle Licensor to
terminate this Agreement or seek specific performance or an injunction as its
sole and exclusive remedies.
11. Unless terminated by Licensor, or as otherwise agreed in writing by
the parties hereto, this license shall commence on the date hereof and remain in
effect until the earliest to occur of the date on which: an affiliate of
Licensor shall no longer be a partner in Riverside; an affiliate of Licensor
shall not operate a riverboat or other gaming facility adjacent to the
Entertainment Facilities; Riverside shall no longer own or operate the
Entertainment Facilities; Harrah's or an affiliate of Harrah's shall no longer
manage the Entertainment Facilities; or cessation of operations at the
Entertainment Facilities, or as the parties may agree in writing.
12. All notices to be given under the terms of this agreement shall be
by first class mail, postage prepaid, addressed as follows:
To Licensor: Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
Attn: General Counsel
With a copy to: Melvyn J. Tarnopol, Esq.
Horn, Goldberg, Gorny, Daniels, Plackter & Weiss
1300 Atlantic Avenue, Suite 500
Atlantic City, NJ 08401
To Licensees: Riverside Joint Venture
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
-and-
-4-
<PAGE>
Harrah's Maryland Heights Operating Company
1023 Cherry Road
Memphis, Tennessee 38117
Attn: General Counsel
Any party may change its address for the giving of notices, by written
notice to all other parties in compliance with the foregoing provisions. Counsel
for any party may give notice on behalf of such counsel's client.
13. This Agreement is binding upon the parties hereto, and on their
respective successors and assigns. This Agreement may not be assigned, in whole
or in part, without the written consent of Licensor.
14. The parties acknowledge that they have read this Agreement, that
they understand it, and they agree to be bound by its terms and conditions. This
Agreement may not be modified except in a writing signed by both parties.
15. This Agreement shall be governed by the law of the State of
Missouri.
16. No modification or amendment of this Agreement shall be effective
unless set forth in writing and signed by duly authorized representatives of all
parties hereto.
17. If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, this Agreement shall be construed as if not
containing that provision, the rest of the Agreement shall remain in full force
and effect, and the rights and obligations of the parties hereto shall be
construed and enforced accordingly.
18. This Agreement may be signed in counterparts.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth below:
PLAYERS INTERNATIONAL, INC.
November 2, 1995 By: /s/ Steven P. Perskie
- -------------------- ----------------------
Date Name: Steven P. Perskie
Title: Vice President
RIVERSIDE JOINT VENTURE
By: Players MH, L.P.
By: Players Maryland Heights, Inc.,
general partner
November 2, 1995 By: /s/ Steven P. Perskie
- -------------------- ----------------------
Date Name: Steven P. Perskie
Title: Secretary
By: Harrah's Maryland Heights Corporation,
general partner
November 2, 1995 By: /s/ Martin P. Boscaccy
- -------------------- -----------------------
Date Name: Martin P. Boscaccy
Title: Authorized Representative
-6-
<PAGE>
GROUND LEASE
BETWEEN
HARRAH'S MARYLAND HEIGHTS LLC
and
RIVERSIDE JOINT VENTURE
<PAGE>
TABLE OF CONTENTS
1. LEASE OF PREMISES................................................. 1
2. GENERAL DEFINITIONS............................................... 2
2.1 Accounting Principles.................................... 2
2.2 Additional Rent.......................................... 2
2.3 Business Day............................................. 2
2.4 Casualty................................................. 2
2.5 City..................................................... 2
2.6 Commencement Date........................................ 2
2.7 Commencement Date (Percentage Rent)...................... 2
2.8 Condemnation............................................. 2
2.9 Consumer Price Index..................................... 2
2.10 County................................................... 2
2.11 Default.................................................. 2
2.12 Depository............................................... 3
2.13 Environmental Law........................................ 3
2.14 Estoppel Certificate..................................... 3
2.15 Fee Estate............................................... 3
2.16 Fee Mortgage............................................. 3
2.17 Fee Mortgagee............................................ 3
2.18 Fiscal Month............................................. 3
2.19 Fiscal Year.............................................. 3
2.20 Fixed Rent............................................... 3
2.21 Gambling or Gambling Activity............................ 3
2.22 Gaming Equipment......................................... 3
2.23 Government............................................... 3
2.24 Harrah's Lease........................................... 3
2.25 Harrah's Management Agreement............................ 4
2.26 Hazardous Materials...................................... 4
2.27 Impositions.............................................. 4
2.28 Indemnify................................................ 4
2.29 Indemnitee............................................... 5
2.30 Indemnitor............................................... 5
2.31 Institutional Lender..................................... 5
2.32 Insubstantial Condemnation............................... 5
2.33 Joint Venture Agreement.................................. 5
2.34 Landlord................................................. 5
2.35 Law(s)................................................... 5
2.36 Leasehold Estate......................................... 5
2.37 Mandated Alterations..................................... 5
2.38 Missouri Gambling Law.................................... 6
2.39 Missouri Gaming Commission............................... 6
2.40 Monetary Default......................................... 6
2.41 Monthly Statement........................................ 6
i
<PAGE>
2.42 Mortgage................................................ 6
2.43 Mortgagee............................................... 6
2.44 Net Gaming Revenue...................................... 6
2.45 Non-Monetary Default.................................... 6
2.46 Notice.................................................. 6
2.47 Notice of Default....................................... 6
2.48 Operating Covenant Default.............................. 6
2.49 Percentage Rent......................................... 6
2.50 Permitted Exceptions.................................... 7
2.51 Person.................................................. 7
2.52 Personal Default........................................ 7
2.53 Plans and Specifications................................ 7
2.54 Players' Lease.......................................... 7
2.55 Players' Lease Commencement Date........................ 7
2.56 Players' Premises....................................... 7
2.57 Prime Mortgage.......................................... 8
2.58 Prime Mortgagee......................................... 8
2.59 Prime Mortgagee's Agent................................. 8
2.60 Prime Rate.............................................. 8
2.61 Prohibited Liens........................................ 8
2.62 Prohibited Person (Landlord)............................ 8
2.63 Prohibited Person (Tenant).............................. 9
2.64 Qualified Arbitrator.................................... 9
2.65 Reciprocal Easement Agreement........................... 9
2.66 Rent.................................................... 9
2.67 Shoreside Complex....................................... 9
2.68 State................................................... 9
2.69 State Revenue Reports................................... 9
2.70 State Revenue Audits.................................... 9
2.71 Sublease................................................ 10
2.72 Substantial Condemnation................................ 10
2.73 Subtenant............................................... 10
2.74 Temporary Condemnation.................................. 10
2.75 Tenant's Property....................................... 10
2.76 Termination Date........................................ 10
2.77 Transfer................................................ 10
2.78 Unavoidable Delay....................................... 10
2.79 Waiver of Subrogation................................... 11
3. TERM............................................................. 11
3.1 Term.................................................... 11
3.2 Confirmation of Dates................................... 11
4. DEVELOPMENT AND CONSTRUCTION OF THE SHORESIDE COMPLEX............ 11
4.1 Tenant's Obligation to Construct Shoreside Complex...... 11
4.2 Construction Bonds and Permit Fees...................... 12
4.3 Cooperation by Landlord................................. 12
ii
<PAGE>
4.4 Title to Shoreside Complex and Tenant's Property........ 12
5. RENT............................................................. 12
5.1 Fixed Rent.............................................. 12
5.2 No Improvements Rent.................................... 13
5.3 Means of Payment........................................ 13
5.4 Percentage Rent......................................... 13
5.4.1 Reporting and Payment........................ 13
5.4.2 Accounting Records........................... 14
5.4.3 Landlord's Right to Audit.................... 14
5.4.4 Confidentiality.............................. 15
5.4.5 Substitute Percentage Rent................... 15
5.4.6 Assignment of Percentage Rent to Landlord.... 15
5.5 Additional Rent........................................ 16
5.6 No Conditional Payment................................. 16
5.7 Interest on Overdue Rent............................... 16
6. ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS...................... 16
6.1 Landlord's Net Return.................................. 16
6.2 Impositions............................................ 17
6.3 Assessments in Installments............................ 17
6.4 Combined Tax Lots...................................... 17
6.5 Direct Payment by Landlord............................. 18
6.6 Utilities.............................................. 18
7. USE............................................................. 18
7.1 Permitted Uses......................................... 18
7.2 Tenant's Failure to Operate the Business............... 18
8. LAWS............................................................ 18
8.1 Compliance with Law.................................... 18
8.2 Licenses and Permits................................... 18
8.3 Environmental Matters.................................. 19
8.3.1 Compliance.................................. 19
8.3.2 No Violations............................... 19
8.3.3 Cost of Compliance.......................... 19
8.3.4 Remediation................................. 19
8.4 Disclosure............................................. 19
8.4.1 Reports..................................... 20
8.4.2 Notices..................................... 20
8.4.3 Environmental Audits........................ 20
8.4.4 Orders...................................... 20
8.4.5 Pleadings................................... 20
8.5 Indemnification........................................ 20
8.6 Tenant's Further Responsibility at Termination or
Expiration of Lease......................... 21
8.6.1 Surrender................................... 21
8.6.2 Storage Tanks............................... 21
iii
<PAGE>
8.7 Landlord's Environmental Remedies....................... 21
8.7.1 Inspection Rights............................ 21
8.7.2 Self Help.................................... 21
8.7.3 Hazardous Material Release................... 21
8.7.4 Clean Up..................................... 21
8.7.5 Landlord Participation....................... 22
8.7.6 Fees and Expenses............................ 22
8.8 Landlord's Indemnity.................................... 22
9. MAINTENANCE AND ALTERATIONS...................................... 22
9.1 Obligation to Maintain.................................. 22
9.2 Tenant's Right to Perform Alterations................... 22
10. PROHIBITED LIENS................................................. 23
10.1 Tenant's Covenant....................................... 23
10.2 Protection of Landlord.................................. 23
11. INDEMNIFICATION; LIABILITY OF LANDLORD........................... 23
11.1 Mutual Indemnity Obligations............................ 23
11.2 Liability of Landlord................................... 24
11.3 Indemnification Procedures.............................. 24
11.3.1 Prompt Notice................................ 24
11.3.2 Selection of Counsel......................... 24
11.3.3 Settlement................................... 24
11.3.4 Insurance Proceeds........................... 25
12. RIGHT OF CONTEST................................................. 25
13. INSURANCE........................................................ 25
13.1 Tenant to Insure........................................ 25
14. DAMAGE OR DESTRUCTION............................................ 26
14.1 Notice; No Rent Abatement; Restoration Obligations...... 26
14.2 Lease Termination for Casualty.......................... 26
15. CONDEMNATION..................................................... 26
15.1 Substantial Condemnation................................ 26
15.2 Insubstantial Condemnation.............................. 26
15.3 Other Governmental Action............................... 27
15.4 Settlement or Compromise................................ 27
15.5 Prompt Notice........................................... 27
16. TRANSFERS........................................................ 27
16.1 By Tenant............................................... 27
16.2 By Landlord............................................. 27
17. MORTGAGES........................................................ 27
iv
<PAGE>
17.1 Landlord's Rights....................................... 27
17.2 Tenant's Rights......................................... 28
17.3 Effect of a Prime Mortgage.............................. 28
17.4 Sale and Leaseback...................................... 28
17.5 Modifications Required by Prime Mortgagee............... 28
17.6 Further Assurances...................................... 29
17.7 Protection of Fee Mortgagees............................ 29
17.8 Foreclosure............................................. 29
18. NOTICE TO LANDLORD OF PRIME MORTGAGES............................ 29
18.1 Initial Notice.......................................... 29
18.2 Change of Address....................................... 29
18.3 Termination of Prime Mortgagee's Rights................. 29
18.4 Transfer of Fee Estate.................................. 29
18.5 Landlord's Acknowledgment of Prime Mortgagee............ 30
19. PROTECTION OF PRIME MORTGAGEES................................... 30
19.1 Cancellation, Surrender, Amendment, Etc................. 30
19.2 Copies of Notices....................................... 30
19.3 Tenant's Cure Period Expiration Notice.................. 30
19.4 Right to Perform Covenants and Agreements............... 30
19.5 Transfer of Tenant's Rights............................. 31
19.6 Notice of Default and Mortgagee's Cure Rights........... 31
19.6.1 Monetary Defaults and Non-Monetary Defaults
Curable Without obtaining Possession........ 31
19.6.2 Other Non-Monetary Defaults Curable Without
Obtaining Possession........................ 31
19.6.3 Defaults Curable Only by Obtaining
Possession and Personal Defaults............ 32
19.6.3.1 During Cure Period.......................... 32
19.6.3.2 Further Cure Obligations.................... 32
19.6.3.3 Law Limitation.............................. 32
19.6.3.4 Operating Covenant Default.................. 32
19.7 Effect of Cure......................................... 33
19.8 Quiet Enjoyment........................................ 33
19.9 Subordinate Liens Affecting Leasehold Estate........... 33
19.10 Prime Mortgagee's Right to Enter Premises.............. 33
19.11 Rights of Prime Mortgagee Upon Acquiring Control....... 33
20. PRIME MORTGAGEE'S RIGHT TO A NEW LEASE.......................... 34
20.1 New Lease.............................................. 34
20.2 Form and Priority...................................... 34
20.3 Pendency of Dispute.................................... 34
20.4 Assignment of Certain Items............................ 34
20.5 Preservation of Subleases.............................. 34
v
<PAGE>
21. INTERACTION OF MORTGAGES WITH OTHER ESTATES AND
PARTIES.......................................................... 35
21.1 Prime Mortgages and Fee Mortgages....................... 35
21.2 Prime Mortgagee's Agent................................. 35
21.3 Interaction Between Lease and Prime Mortgage............ 35
21.4 Conflicts Between Mortgagees............................ 35
21.5 No Merger............................................... 36
22. BANKRUPTCY....................................................... 36
22.1 Affecting Tenant........................................ 36
22.2 Affecting Landlord...................................... 37
22.2.1 Tenant's Election..................... 37
22.2.2 Continuation of Lease................. 37
22.2.3 Assumption of Lease................... 37
22.2.4 Continuation of Prime Mortgages....... 37
23. QUIET ENJOYMENT.................................................. 37
24. FORCE MAJEURE.................................................... 37
25. ACCESS........................................................... 38
26. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS................... 38
26.1 Landlord's Option....................................... 38
26.2 Reimbursement by Tenant................................. 38
27. DEFAULT BY TENANT; REMEDIES...................................... 38
27.1 Definition of Event of Defaults......................... 38
27.1.1 Players' Lease Default....................... 38
27.1.2 Monetary Default............................. 39
27.1.3 Operating Covenant Default................... 39
27.1.4 Non-Monetary Default......................... 39
27.1.5 Reciprocal Easement Default.................. 40
27.2 Remedies................................................ 40
27.2.1 Assignment of Remedies....................... 40
27.3 Re-entry................................................ 40
27.4 Damages................................................. 40
27.5 Injunctive Relief....................................... 41
27.6 Pending Dispute Regarding Event of Default.............. 41
27.7 Arbitration............................................. 42
27.7.1 Voluntary Appointment........................ 42
27.7.2 Appointment by Arbitrators................... 42
27.7.3 Failure to Appoint........................... 42
27.7.4 Fees and Expenses............................ 42
27.7.5 Proceedings.................................. 42
27.7.6 Arbitration Decisions........................ 42
vi
<PAGE>
28. TERMINATION...................................................... 43
28.1 Rights on Termination................................... 43
28.2 Possession.............................................. 43
28.3 Documentation........................................... 43
28.4 Miscellaneous Assignments............................... 43
28.5 Termination of Memorandum of Lease...................... 43
28.6 Restoration............................................. 43
28.7 Personal Property and Equipment......................... 43
29. NO BROKER........................................................ 44
30. WAIVERS.......................................................... 44
30.1 No Waiver by Silence.................................... 44
30.2 Waiver of Trial by Jury................................. 44
31. MEMORANDUM OF LEASE.............................................. 44
32. ESTOPPEL CERTIFICATES............................................ 45
32.1 Rights of Each Party.................................... 45
33. MISCELLANEOUS.................................................... 45
33.1 Reasonableness.......................................... 45
33.2 Documents in Recordable Form............................ 45
33.3 Further Assurances...................................... 45
33.4 No Third Party Beneficiaries............................ 45
33.5 Interpretation.......................................... 45
33.6 Captions................................................ 46
33.7 Cumulative Remedies..................................... 46
33.8 Right of Injunction..................................... 46
33.9 Entire Agreement........................................ 46
33.10 Amendment............................................... 46
33.11 Partial Invalidity...................................... 46
33.12 Successors and Assigns.................................. 46
33.13 Governing Law........................................... 46
33.14 Obligation to Perform................................... 46
33.15 Counterparts............................................ 47
33.16 Time Periods............................................ 47
33.17 Rule Against Perpetuities............................... 47
33.18 No Agency or Partnership................................ 47
34. NOTICES.......................................................... 47
35. GAMING LICENSE................................................... 48
36. RECIPROCAL EASEMENT AGREEMENT.................................... 48
37. JOINT VENTURE AGREEMENT.......................................... 49
vii
<PAGE>
38. SURVIVAL......................................................... 49
LIST OF EXHIBITS
EXHIBIT A-1 Land Description
EXHIBIT A-2 Easements and Rights Appurtenant to Premises
EXHIBIT B Form of Estoppel Certificate
EXHIBIT C Permitted Exceptions
EXHIBIT D Form of Reciprocal Easement Agreement
EXHIBIT E Standards of Operation
EXHIBIT F Tenant's Insurance Requirements
EXHIBIT G Transferee Criteria
EXHIBIT H Form of Memorandum of Lease
viii
<PAGE>
GROUND LEASE
THIS GROUND LEASE (the "Lease") is made as of this 3rd day of November,
1995 (the "Commencement Date"), by and between HARRAH'S MARYLAND HEIGHTS LLC, a
Delaware limited liability company ("Landlord"), and RIVERSIDE JOINT VENTURE, a
Missouri general partnership ("Tenant").
R E C I T A L S
A. Harrah's Maryland Heights Corporation, a Nevada corporation
("HMHC"), an affiliate of Landlord, and Players MH, L.P., a Missouri limited
partnership ("Players") are partners in Tenant which is developing the Shoreside
Complex for floating gambling facilities in Maryland Heights, Missouri.
B. Landlord is owner of fee simple absolute title to the land described
in Exhibit A-1, (which includes a portion of the land on which the Shoreside
Complex is to be developed by Tenant), together with: (a) all easements and
rights appurtenant thereto, including without limitation, those set forth in
Exhibit A-2 hereto; (b) all right, title and interest of Landlord, if any, in
and to the land lying in the bed of any street or highway in front of or
adjoining such land; and (c) riparian rights associated with such land; (all,
collectively, the "Premises"), subject to the Permitted Exceptions.
C. Landlord desires to lease the Premises to Tenant, and Tenant desires
to lease the Premises from Landlord.
D. Following the Commencement Date, Tenant intends to construct the
Shoreside Complex on the Premises and on land owned in fee by Tenant, and
located adjacent to the Premises (the "Venture Premises").
E. The parties desire to enter into this Lease to set forth their
rights and obligations relating to the Premises and the Shoreside Complex.
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND AGREEMENTS OF
THE PARTIES CONTAINED IN THIS LEASE, AND IN CONSIDERATION OF THE RECITALS SET
FORTH ABOVE (WHICH ARE INCORPORATED BY REFERENCE IN THIS LEASE), AND IN EXCHANGE
FOR TEN DOLLARS ($10.00) AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF ALL OF WHICH ARE CONCLUSIVELY ACKNOWLEDGED BY BOTH PARTIES,
LANDLORD AND TENANT AGREE AS FOLLOWS:
1. LEASE OF PREMISES.
Landlord hereby leases the Premises to Tenant and Tenant hereby takes,
leases and hires the Premises from Landlord, all subject only to the Permitted
Exceptions. The Premises
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are leased to Tenant for the Term defined in this Lease, upon all the terms and
conditions of this Lease.
2. GENERAL DEFINITIONS.
The following general definitions shall apply throughout the Lease, in
addition to other definitions appearing at other locations in this Lease.
2.1 Accounting Principles. Accounting principles and practices set
forth in the Audit and Accounting Guide for Audits of Casinos with changes
through May, 1994, prepared by the American Institute of Certified Public
Accountants, as from time to time amended, and, to the extent not therein
addressed, United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect from time to time, consistently applied.
2.2 Additional Rent. Payments to be paid by Tenant to Landlord pursuant
to this Lease, other than Fixed Rent, Percentage Rent and Substitute Percentage
Rent.
2.3 Business Day. A day on which banks in the State are generally open
for the conduct, with bank personnel, of regular banking business.
2.4 Casualty. Damage or destruction affecting the Premises and/or the
Shoreside Complex.
2.5 City. The City of Maryland Heights, a municipal corporation, and
any successor Government entity.
2.6 Commencement Date. The date on which this Lease is executed.
2.7 Commencement Date (Percentage Rent). As said term is defined in
Section 2.8 of the Players' Lease.
2.8 Condemnation. A taking of the Premises or the Shoreside Complex, in
whole or in part, by condemnation or by exercise of any right of eminent domain,
or by any similar proceeding or act of any Government or any voluntary sale in
lieu of such proceeding.
2.9 Consumer Price Index. The Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, United States City Average, all items (1982-1984 = 100). If
such index is no longer published, then Landlord shall designate a successor or
replacement index of substantially equivalent reliability and objectivity. The
Consumer Price Index in effect for any given date shall be deemed to refer to
the Consumer Price Index last published before such date.
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2.10 County. St. Louis County, Missouri, and any successor Government
entity.
2.11 Default. A Monetary Default, Non-Monetary Default or Operating
Covenant Default. Each and every covenant of Tenant under this Lease, if not
performed by Tenant, shall give rise to a Default as to which Tenant and (other
than for Personal Defaults) Prime Mortgagees shall have the cure rights provided
for in this Lease.
2.12 Depository. An Institutional Lender, designated by Tenant or by
its highest priority Prime Mortgagee to act as "Depository" where expressly
provided for in this Lease.
2.13 Environmental Law. Any applicable federal, state, or local law,
regulation, ordinance, order, judgment, or decree pertaining to Hazardous
Materials or to the protection of the environment, as such are now in effect or
may hereafter be enacted or revised.
2.14 Estoppel Certificate. A written statement containing all (or, at
the option of the Requesting Party, only some) of the statements set forth in
the form attached as Exhibit B and containing such additional information
relating to this Lease and the Premises as the Requesting Party shall reasonably
specify.
2.15 Fee Estate. Landlord's fee estate in the Premises or any part of
the Premises or any direct or indirect interest in such fee estate. The Fee
Estate is subject to this Lease.
2.16 Fee Mortgage. Any mortgage, deed of trust, deed to secure debt,
assignment, security interest, pledge, financing statement or any other
instrument(s) or agreement(s) intended to grant security encumbering the Fee
Estate for any obligation, as entered into, renewed, modified, amended, extended
or assigned from time to time during the Term.
2.17 Fee Mortgagee. Any holder of a Fee Mortgage.
2.18 Fiscal Month. Each calendar month.
2.19 Fiscal Year. Each calendar year.
2.20 Fixed Rent. Shall have the meaning set forth in Section hereof.
2.21 Gambling or Gambling Activity. Being engaged in the business of
operating "gambling games", as defined in the Missouri Gambling Law.
2.22 Gaming Equipment. Tenant's or Subtenant's equipment constituting
wagering devices used in connection with the operation of Players' Excursion
Gambling Boats (as defined in the Missouri Gambling Law) on the Premises
including baccarat, bingo, twenty-one, poker, craps and other table games, slot
machines, video games, roulette wheel, klondike table, punchboard, faro layout,
keno layout, numbers ticket, push card, jar ticket and pull tab, or other
wagering devices now or hereafter authorized by the Missouri Gaming Commission.
2.23 Government. Each governmental authority, department, agency,
bureau or other entity or instrumentality having jurisdiction over the Premises,
including the federal
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government of the United States, the State, the County, the City and all other
governmental or quasi-governmental authorities and subdivisions thereof having
jurisdiction over the Premises or any portion thereof.
2.24 Harrah's Lease. That certain sublease of even date herewith of a
portion of the Shoreside Complex by and between Tenant and Landlord (as
Subtenant), as the same may be hereafter amended from time to time.
2.25 Harrah's Management Agreement. That certain Management Agreement
of even date herewith by and between Harrah's Maryland Heights Operating
Company, a Nevada corporation and Tenant.
2.26 Hazardous Materials. Any substance or matter including, without
limitation, petroleum products and waste oil, (i) whose concentration in air,
water, groundwater, or soil exceeds levels set forth in any Environmental Law,
or (ii) for which any federal, state, or local agency orders or otherwise
requires removal, treatment, monitoring, or remediation.
2.27 Impositions. Ad valorem taxes, special and general assessments,
water rents, rates and charges, commercial rent taxes, sewer rents and charges,
license and permit fees, charges for public utilities, levee district taxes and
assessments, and all other impositions and charges of every kind and nature
whether or not particularized by name, and whether general or special, ordinary
or extraordinary, foreseen or unforeseen which at any time during the Term may
be created, assessed, levied, confirmed, adjudged, imposed or charged upon or
with respect to the Premises, the Shoreside Complex, Lot 1 of Riverport Tract 7
(to the extent of the proportionate benefit to the Premises) which shall be one
hundred percent (100%) so long as no development occurs on Lot 1 of Riverport
Tract 7 and if development does occur on Lot 1 of Riverport Tract 7, Landlord
and Tenant shall mutually agree as to the amount of such proportionate benefit
and failing such agreement such proportionate benefit shall be determined by
arbitration pursuant to the provisions of Section 27.7 hereof, or any of
Tenant's Property by or for the benefit of any Government with respect
to any period during the Term together with any taxes and assessments that may
be levied, assessed or imposed by the State or by any political or taxing
subdivision of the State upon the gross income arising from any Rent or in lieu
of or as a substitute, in whole or in part, for taxes and assessments imposed
upon or related to the Premises and commonly known as real estate taxes, and
together with all assessments made pursuant to all recorded protective
covenants, indentures or reciprocal easement agreements to the extent the
Premises or the Shoreside Complex are proportionately benefitted by such
protective covenants, indentures or reciprocal easements. The term "Impositions"
shall, however, not include any of the following, all of which Landlord shall
pay before delinquent or payable only with a penalty: (a) any franchise, income,
excess profits, estate, inheritance, succession, transfer, gift, corporation,
business, capital levy, or profits tax, or license fee, of Landlord, (b) if the
Premises is part of a Combined Tax Lot, any taxes and other Impositions
reasonably allocable to any portion of such Combined Tax Lot other than the
Premises, or Shoreside Complex, in accordance with the applicable provisions of
this Lease, (c) the incremental portion of any of the items listed in this
paragraph that would not have been levied, imposed or assessed but for any sale
or other direct or indirect transfer of the Fee Estate or of any interest in
Landlord during the Term, and (d) interest, penalties and other charges with
respect to items "a" through "c".
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2.28 Indemnify. The duty of an Indemnitor to indemnify the Indemnitee
(and its partners and their Affiliates [the terms "Affiliate" or "Affiliates" as
used herein shall have the same meanings as said terms have in the Joint Venture
Agreement] and their respective officers, directors, agents and employees) and
defend and hold the Indemnitee (and its partners and Affiliates and their
respective officers, directors, agents and employees) harmless from and against
any and all loss, cost, claims, liability, penalties, judgments, damage or other
injury, detriment, or expense (including reasonable attorneys' fees, court
costs, interest and penalties) reasonably incurred or suffered by the Indemnitee
(and its partners and Affiliates and their respective officers, directors,
agents and employees) on account of the matter that is the subject of such
indemnification or in enforcing the Indemnitor's indemnity.
2.29 Indemnitee. A Person that is entitled to be Indemnified pursuant
to this Lease.
2.30 Indemnitor. A Person that is obligated to Indemnify another party
pursuant to this Lease.
2.31 Institutional Lender. A national bank, commercial state bank,
savings bank, trust company, insurance company, pension, welfare or retirement
fund or system, real estate investment trust, federal or state agency regularly
making or guaranteeing mortgage loans, any other entity actively engaged in
commercial real estate financing and having total assets of at least $50,000,000
(adjusted annually on each anniversary of the Commencement Date of this Lease to
reflect increases in the Consumer Price Index), or a corporation that is a
wholly-owned subsidiary of any of the foregoing entities, including any of the
foregoing when acting as trustee or agent for other lender(s), whether or not
such other lender(s) are themselves Institutional Lenders. The fact that a
particular entity (or any Affiliate of such entity) is an Affiliate or partner
of the then Tenant under this Lease shall preclude such entity from being an
Institutional Lender and/or a Prime Mortgagee.
2.32 Insubstantial Condemnation. A Condemnation other than a
Substantial Condemnation.
2.33 Joint Venture Agreement. That certain general partnership
agreement of Tenant dated November 2, 1995.
2.34 Landlord. The Landlord named in the opening paragraph of this
Lease and shall, throughout the Term, be limited to mean and refer to only the
owner of the Fee Estate.
2.35 Law(s). Laws, ordinances, requirements, orders, directives, rules
and regulations of any Government affecting the development, improvement,
alteration, use, maintenance, operation or occupancy of the Premises or the
Shoreside Complex, whether in force at the Commencement Date or passed, enacted
or imposed at some time thereafter, subject in all cases, however, to all
applicable waivers, variances and exemptions limiting the application of the
foregoing, and including without limitation, the restrictions or other
requirements of any applicable permit of any Government.
2.36 Leasehold Estate. Tenant's leasehold estate arising under this
Lease, upon and subject to all the terms and conditions of this Lease, and any
legal or beneficial interest in
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such leasehold estate (other than stock of a company whose stock is listed and
traded on the New York or NASDAQ Exchange).
2.37 Mandated Alterations. Repairs, additions, replacements or
alterations mandated by Laws imposed, modified, interpreted or otherwise
rendered more burdensome after the Commencement Date, including "retro-fitting"
and structural alterations, whether or not such Laws could reasonably have been
foreseen at the Commencement Date.
2.38 Missouri Gambling Law. State statutory Law regulating the conduct
of gambling and related activities on the Premises, which law is presently
codified as Sections 313.800 through 313.850, Revised Statutes of Missouri
(1994), and as such law may be amended from time to time, and all rules and
regulations adopted pursuant to any such law.
2.39 Missouri Gaming Commission. The Missouri Gaming Commission, or any
successor commission or authority which has jurisdiction to license and regulate
gambling on the Premises pursuant to Missouri Gambling Law.
2.40 Monetary Default. A failure by Tenant to pay any Rent or other
amount owed by Tenant under this Lease, when and as required to be paid pursuant
to this Lease.
2.41 Monthly Statement. A financial statement of the occupant of
Players' Premises, delivered to Landlord on the twentieth calendar day of every
Fiscal Month, beginning on the Commencement Date (Percentage Rent), reporting
Net Gaming Revenue of the Premises for the immediately preceding Fiscal Month,
certified to be complete, true and accurate, and to have been prepared in
accordance with Accounting Standards by such Subtenant's authorized financial
officer, and which shall include and have attached thereto all State Revenue
Reports for such Fiscal Month.
2.42 Mortgage. A Fee Mortgage or a Prime Mortgage.
2.43 Mortgagee. The holder of a Mortgage.
2.44 Net Gaming Revenue. "Adjusted gross receipts" as said term is
defined under Missouri Gambling Law as now enacted or as hereafter amended.
2.45 Non-Monetary Default. A failure by Tenant to perform any
obligation of Tenant under this Lease, other than a Monetary Default or an
Operating Covenant Default.
2.46 Notice. A notice, demand, request, election, designation, or
consent, including any of the foregoing relating to an Event of Default or
alleged Event of Default, that is permitted, required or desired to be given by
either party in connection with this Lease.
2.47 Notice of Default. A Notice from Landlord to Tenant claiming or
giving Notice of an Event of Default or alleged Event of Default by Tenant.
2.48 Operating Covenant Default. As defined in Section 7.2 of this
Lease.
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2.49 Percentage Rent. An amount equal to the following percentages of
Net Gaming Revenue derived from Players' Premises for the twelve (12) month
period following the Commencement Date (Percentage Rent) and for each twelve
(12) month period thereafter during the Term (each of such twelve-month periods
being herein referred to as a "Percentage Rent Year"):
(i) Two percent (2%) of the first Fifty Million Dollars
($50,000,000) of Net Gaming Revenue; and
(ii) Three percent (3%) of Net Gaming Revenue exceeding Fifty
Million Dollars ($50,000,000) up to and including One Hundred Million
Dollars ($100,000,000), and
(iii) Four percent (4%) of Net Gaming Revenue in excess of One
Hundred Million Dollars ($100,000,000).
If the term "adjusted gross receipts," as defined under the Missouri Gambling
Law, is changed, the percentages applicable to such changed definition as
provided in this Section 2.49 hereof shall be adjusted by agreement of
the parties, to preserve the same payment of Percentage Rent that would have
been due had there been no such change. If the parties fail to agree upon such
percentage prior to the effective date of the change to such definition, then
such percentages shall be determined by arbitration in accordance with Section
27.7 hereof, which arbitration shall be held pursuant to the provisions of
Section 27.7 hereof in lieu of the arbitration provided for in the Players'
Lease so long as Landlord is Harrah's Maryland Heights LLC or an Affiliate
thereof.
2.50 Permitted Exceptions. (i) all matters described on Exhibit C
hereto; (ii) all liens, encumbrances, and other title matters created or
suffered to exist by Tenant; (iii) all matters created or suffered after the
date of this Lease by Landlord with Tenant's consent; (iv) all terms and
conditions of Government licenses, permits or approvals relating to the
Shoreside Complex, as a whole or in part, including, without limitation, the
Premises.
2.51 Person. an individual, corporation, association, partnership,
limited partnership, limited liability company, trust, unincorporated
organization or other entity.
2.52 Personal Default. Any Non-Monetary Default by Tenant that is not
reasonably susceptible of cure by a Prime Mortgagee, such as bankruptcy,
insolvency, a prohibited transfer, failure to deliver financial information
relating to Tenant (to the extent, if any, that any of the foregoing actually
constitute(s) a Non-Monetary Default under this Lease), and any other
Non-Monetary Default that by its nature relates only to Tenant or its Affiliates
or can reasonably be performed only by Tenant or its affiliates. The financial
condition of any Prime Mortgagee shall not be considered in determining whether
a Default is a Personal Default. Any Default that can be cured by the payment of
money is not a Personal Default.
2.53 Plans and Specifications. Tenant's Plans and Specifications for
the Shoreside Complex agreed upon in accordance with the Joint Venture
Agreement.
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2.54 Players' Lease. That certain sublease of a portion of the
Shoreside Complex by and between Players and Tenant of even date herewith, as
the same may be hereafter amended from time to time.
2.55 Players' Lease Commencement Date. As defined in Section 2.7 of the
Players' Lease.
2.56 Players' Premises. The Premises leased to Players under the
Players' Lease.
2.57 Prime Mortgage. A mortgage, deed of trust, deed to secure debt,
assignment, security interest, pledge, financing statement or any other
instrument(s) or agreement(s) intended to grant security encumbering the
Leasehold Estate, for any obligation (including a purchase-money or other
promissory note) as entered into, renewed, modified, consolidated, amended,
extended or assigned from time to time during the Term. A "Prime Mortgage" also
includes certain agreements entered into in connection with a "sale and
leaseback" transaction, as described in Section of this Lease.
2.58 Prime Mortgagee. The holder of a Prime Mortgage. Neither Tenant
nor any "Holding Entity" (as defined in the Joint Venture Agreement) may be, or
have the right of, a Prime Mortgagee under this Lease.
2.59 Prime Mortgagee's Agent. Any agent, designee or nominee of a Prime
Mortgagee, provided that such agent, designee or nominee is a wholly owned
subsidiary of the Prime Mortgagee. A Prime Mortgagee that is not an
Institutional Lender shall not be entitled to designate a Prime Mortgagee's
Agent.
2.60 Prime Rate. The prime rate (or base rate) of interest for
corporate loans that is reported in the Money Rates Column of The Wall Street
Journal published on the Business Day for which the rate is applicable (or the
next preceding Business Day, if the applicable day is not a Business Day) as
having been the rate in effect for corporate loans at large U.S. money center
commercial banks (whether or not such rate has actually been charged by any such
bank). If The Wall Street Journal ceases publication of the Prime Rate, the
prime rate (or base rate) from time to time announced by Bankers Trust Company,
New York, New York, or its successor (whether or not such rate has actually been
charged by such bank), or, if Bankers Trust Company discontinues the practice of
announcing the Prime Rate, the "Prime Rate" shall mean the highest rate charged
by such bank on short term, unsecured loans to its most credit-worthy large
corporate borrowers. If The Wall Street Journal: (a) publishes more than one
Prime Rate, the higher or highest rate shall apply, or (b) publishes a
retraction or correction of any such rate, the rate reported in such retraction
or correction shall apply. If the Prime Rate changes, interest rates in this
Lease which are based on the Prime Rate shall change, effective as of the first
day of each calendar month, to reflect the Prime Rate in effect on the last day
of the preceding calendar month. Notwithstanding anything to the contrary in
this Section, the Prime Rate shall never exceed the highest rate of interest
legally permitted to be charged in the State (without imposition of penalties
for criminal usury [the "Criminal Usury Rate"]) in transactions of the character
of this Lease between parties of a character similar to Landlord and Tenant.
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2.61 Prohibited Liens. A mortgage, ship mortgage or other consensual
lien or judgment lien and any maritime, seaman's, mechanic's, vendor's,
laborer's or material supplier's statutory lien or other similar lien arising by
reason of work, labor, services, equipment or materials supplied, or claimed to
have been supplied, to Tenant or any Subtenant, which lien either: (a) is filed
against the Fee Estate or (b) is filed against the Leasehold Estate or a lesser
estate and, upon termination of this Lease, would under the law of the State
attach to the Fee Estate.
2.62 Prohibited Person (Landlord). Any Person or any Affiliate of such
Person as to which there has been an Unsuitability Determination, in accordance
with the procedures set forth in the Joint Venture Agreement whether or not the
Partnership still exists or remains the Tenant hereunder. Landlord shall provide
each Subtenant under the Harrah's Lease and the Players' Lease with at least
thirty (30) days prior Notice of any proposed transfer of Landlord's Estate or
any interest therein (excluding, however, the creation or transfer of any
easement), together with such documentation and information regarding the
proposed transferee as each Subtenant conducting Gambling Activity shall
reasonably request, to enable such Subtenant to confirm that the proposed
transferee is not a Prohibited Person (Landlord).
2.63 Prohibited Person (Tenant). At any time after Tenant is no longer
Riverside Joint Venture (the "Partnership"), any Person or Affiliate of such
Person that, in Landlord's reasonable judgment would or could, if such Person
owned an interest in the Leasehold Estate or lesser estate, endanger any gaming
license(s) held by an Affiliate of Landlord. At any time after Tenant is no
longer the Partnership, Tenant shall provide Landlord with at least thirty (30)
days prior Notice of any proposed transfer of Tenant's Leasehold Estate or any
lesser estate, or interest in any of them, together with such documentation and
information regarding the proposed transferee as Landlord shall reasonably
request, to enable Landlord to confirm that the proposed transferee is not a
Prohibited Person (Tenant). Failure of Landlord to object to such Person within
thirty (30) days of receipt of said Notice, documentation and information shall
be deemed agreement that such Person is not a Prohibited Person (Tenant).
2.64 Qualified Arbitrator. A partner or other individual designated by
Landlord or Tenant, as the case may be, who: (i) is employed by a disinterested,
reputable and nationally recognized certified public accounting firm or has
comparable qualifications; and (ii) has at least ten (10) years' experience in
the financial reporting and valuation of casino properties.
2.65 Reciprocal Easement Agreement. The Reciprocal Easement Agreement
between Landlord and Tenant to be entered into contemporaneously herewith in the
form attached hereto as Exhibit D.
2.66 Rent. Additional Rent, Fixed Rent, Percentage Rent and Substitute
Percentage Rent.
2.67 Shoreside Complex. All buildings and improvements constructed by
Tenant on the Premises and on the Venture Premises in accordance with this
Lease. The initial improvements comprising the Shoreside Complex are described
in the Plans and Specifications.
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2.68 State. The State of Missouri.
2.69 State Revenue Reports. The daily tax remittal form required to be
submitted by a person or entity engaged in Gambling Activity to the Missouri
Gaming Commission pursuant to the Missouri Gambling Law, reporting Net Gaming
Revenue from the Premises.
2.70 State Revenue Audits. The quarterly external audit of Net Gaming
Revenue prepared for the benefit of the Missouri Gaming Commission pursuant to
the Missouri Gambling Law.
2.71 Sublease. Any sublease of the Premises or any part of the
Premises, or any other agreement or arrangement (including a license agreement)
made by Tenant granting any third party the right to occupy, use or possess any
portion of the Premises. The term "Sublease" includes a management agreement or
similar agreement and any concessionaire and license agreements that Tenant
elects to treat as Subleases. The term "Sublease" includes the Harrah's Lease,
the Players' Lease and the Harrah's Management Agreement.
2.72 Substantial Condemnation. A Condemnation that (i) results in the
Appraisal Buyout of Players or HMHC's interest under the Joint Venture
Agreement, or (ii) renders the continued operation of the Players' Premises, as
a whole, economically unfeasible as determined in accordance with the Joint
Venture Agreement, or (iii) after Tenant is no longer the Partnership a
Condemnation of the Players Premises or Shoreside Complex which renders the
Players Premises unusable as Excursion Gambling Boats as reasonably determined
by Landlord.
2.73 Subtenant. Any person having rights of occupancy, use or
possession under a sublease or license, including, without limitation, Harrah's
Lease, Players' Lease and the Harrah's Management Agreement.
2.74 Temporary Condemnation. A Condemnation relating to the temporary
right to use or occupy the Premises or Shoreside Complex or any part of the
Premises or Shoreside Complex.
2.75 Tenant's Property. All personal property purchased or leased by
Tenant or a Subtenant for use in connection with the Premises including, without
limitation, any Subtenant's Gaming Equipment.
2.76 Termination Date. The date when this Lease terminates or expires,
whether pursuant to the expiration or termination of the Term, Condemnation,
Casualty or an Event of Default.
2.77 Transfer. The assignment, sublease, pledge, mortgaging,
encumbering or other form of disposition, voluntarily or involuntarily, directly
or indirectly of any right to possession of, or legal or beneficial interest in
and to, the Leasehold Estate (or the Tenant) or the Fee Estate (or the
Landlord), as the case may be, including without limitation a transfer of
Capital Stock (as defined in the Joint Venture Agreement) in any direct or
remote parent entity of Landlord or Tenant (or its partners). Transfer shall
not include the sale, on a
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national exchange such as the New York or NASDAQ Stock Exchange, of
publicly held shares of Harrah's Entertainment, Inc. or Players International,
Inc.
2.78 Unavoidable Delay. Delay in the performance of any obligation or,
where specifically provided for, a Prime Mortgagee's exercise of Mortgagee's
Cure Rights under this Lease, (excluding in any case any obligation to pay
money) arising from or on account of any cause whatsoever beyond the reasonable
control of the Person required or entitled to perform, including strikes, labor
troubles, litigation, Casualty, Condemnation, accidents, Laws, governmental
preemption, failure or refusal of a governmental body to issue a required permit
or license, war, riots, and other causes beyond such party's reasonable control,
whether similar or dissimilar to the causes specifically enumerated in this
Section. In no event shall Unavoidable Delay be deemed to include any delay
caused by an unwillingness or inability to make a payment required by this
Lease, or the wrongful act or omission to act of the Person invoking this
definition.
2.79 Waiver of Subrogation. A provision in, or endorsement to, any
insurance policy required by this Lease, by which the insurance carrier agrees
to waive all rights of recovery by way of subrogation against either party to
this Lease in connection with any loss covered by such insurance policy.
3. TERM.
3.1 Term. The term of this Lease (the "Term") shall commence on the
Commencement Date and expire 11:59 p.m. on the last day of the Fiscal Month that
includes the date eighty (80) years after the Players' Lease Commencement Date.
3.2 Confirmation of Dates. Promptly after the occurrence of any date
relevant to the calculation of Rent, or to the determination of the Term, the
parties shall enter into a certificate, in recordable form reasonably
satisfactory to both of them, memorializing such date. The failure of the
parties to enter into any such certificate shall not, however, invalidate or in
any way diminish the effectiveness of the actual date(s) to be set forth in the
certificate. If Landlord and Tenant disagree as to whether any such date has
occurred, then Tenant may pay Rent and otherwise perform under this Lease based
on Tenant's own determination of such date(s) unless and until such date(s) are
otherwise determined by the final judgment of a court of competent jurisdiction
provided that Tenant shall escrow in an interest bearing federally insured
account with a disinterested national bank with offices in St. Louis, Missouri
or the registry of the court hearing such dispute, any additional amounts
claimed by Landlord. If a national bank is used as escrow agent, it shall act
only in accordance with this Section, as modified or supplemented by: (i) joint
written instruction of Landlord and Tenant; or (ii) a final, unappealable order
of the court hearing such dispute; and shall be fully exonerated from liability
to Landlord or Tenant for any act or omission other than its gross negligence or
wilful misconduct. To the extent that any such court accepts Landlord's position
and rejects Tenant's, the court or escrow agent, as the case may be, shall
within five (5) Business Days after the court's order becomes final and
unappealable, remit to Landlord an amount equal to any previous underpayments of
Rent, together with interest earned thereon, and the remainder, if any, of the
escrow account shall be disbursed to Tenant. If the court accepts Tenant's
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position and rejects Landlord's, the court or escrow agent, as the case may be,
shall within five (5) Business Days after entry of the court's final,
unappealable order remit to Tenant all the monies in the escrow account,
including interest. Failure of Tenant to establish such escrow account or to
escrow disputed amounts therein shall be a failure to cure a Monetary Default.
Notwithstanding the foregoing, Tenant's obligation to establish the foregoing
escrow account shall be deemed satisfied if Players establishes and maintains
such an escrow account as provided in the Players' Lease.
4. DEVELOPMENT AND CONSTRUCTION OF THE SHORESIDE COMPLEX.
4.1 Tenant's Obligation to Construct Shoreside Complex. Tenant shall
commence construction, and where appropriate, alteration and renovation of the
Shoreside Complex in accordance with the terms and provisions of the Joint
Venture Agreement, and shall enforce (unless waived in writing by both partners
of the Partnership) the construction covenants of the Players' Lease and the
Harrah's Lease and complete such construction, alteration and renovation within
three (3) years following the Commencement Date, which completion date shall be
extended so long as Tenant is pursuing construction with due diligence and in
good faith and such delay does not adversely affect the zoning or other permits
relating to the Shoreside Complex and otherwise has no material adverse effect
on the Shoreside Complex.
4.2 Construction Bonds and Permit Fees. Tenant shall pay, discharge or
bond or insure against all Prohibited Liens arising from construction of the
Shoreside Complex, all in accordance with the provisions of this Lease regarding
Prohibited Liens. Tenant shall obtain and pay for all permits and approvals
required by Law in order for Tenant to construct the Shoreside Complex.
4.3 Cooperation by Landlord. Upon Tenant's request, Landlord shall,
without cost to Landlord, promptly join in and execute any instruments
including, but not limited to, applications for building permits, demolition
permits, alteration permits, appropriate consents, zoning, rezoning or use
approvals, amendments and variances, easements, encumbrances, and/or liens
(excluding Mortgages) against the Premises or the Shoreside Complex (Fee Estate
and Leasehold Estate), and such other instruments as Tenant may from time to
time request to enable Tenant from time to time to use, develop, improve, and
construct the Shoreside Complex and other improvements on the Premises in
accordance with this Lease, provided each of the foregoing is in reasonable and
customary form and does not cause the Fee Estate to be encumbered as security
for any obligation and does not otherwise expose the Fee Estate to any material
risk of forfeiture during the Term. Tenant shall reimburse Landlord's reasonable
attorneys' fees incurred by Landlord in performing under this Section. Landlord
agrees not to oppose or object to any applications filed by Tenant with any
Government in connection with development, operation or alteration of the
Shoreside Complex and other improvements located on the Premises.
4.4 Title to Shoreside Complex and Tenant's Property. The Shoreside
Complex and Tenant's Property shall at all times during the Term be owned or
leased by, and shall belong to Tenant or Subtenant. Tenant or Subtenant, in the
case of its Tenant's Property only, shall have title to or lease such property
throughout the Term. All the benefits and
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burdens of ownership of Tenant's Property shall be and remain in Tenant during
the Term. The Shoreside Complex and any Tenant's Property affixed to the
Premises or left in the Premises and not removed by Tenant within thirty (30)
days after the expiration or termination of the Term shall automatically and
without need for any further action or the execution of any further documents
become the property of Landlord.
After the Term, the Shoreside Complex shall be owned by, and shall
belong to Landlord.
5. RENT.
5.1 Fixed Rent. Throughout the Term, Tenant shall pay Landlord, without
notice or demand, in lawful money of the United States of America, at the office
of Landlord or at such other place as Landlord shall designate a net annual
rental (the "Fixed Rent") of ONE AND 00/100 DOLLAR ($1.00) per Fiscal Year,
payable in advance on the first day of each Fiscal Year.
5.2 No Improvements Rent. Landlord acknowledges that it is being
adequately compensated by the payment by Tenant of Fixed Rent and Percentage
Rent hereunder and the parties expressly intend, that construction of the
Shoreside Complex and Landlord's succession to Tenant's and Subtenant's
interests in the Shoreside Complex and Tenant's Property upon the termination or
expiration hereof shall not be construed to be Rent payable to Landlord under
the Lease.
5.3 Means of Payment. Tenant shall pay all Percentage Rent payable to
Landlord by wire transfer to Landlord's bank account, which Landlord shall
identify to Tenant (and Landlord shall have the right to change from time to
time by at least thirty (30) days' Notice to Tenant). All other Rent shall be
payable by company check of Tenant.
5.4 Percentage Rent. Beginning on the twentieth calendar day of each
Fiscal Month following the Commencement Date (Percentage Rent) and continuing
throughout the Term, Tenant shall pay, or shall cause the Subtenant occupying
Players' Premises to pay, Landlord the Percentage Rent from business conducted
at Players' Premises. Landlord may be required by Missouri Gambling Law to be
licensed, permitted or otherwise approved by the Missouri Gaming Commission to
lawfully receive Percentage Rent (such license, permit or approval is herein
referred to as a "Percentage Rent Approval"). If Percentage Rent may not
lawfully be paid because of the denial, revocation, suspension or other failure
of a Percentage Rent Approval unless the Missouri Gaming Commission permits the
payment by Tenant to Landlord of Approved Substitute Percentage Rent
(hereinafter defined), Tenant shall, during such period, continue to calculate
and report Percentage Rent to Landlord and Tenant shall deposit the
amount of Percentage Rent so reported into an escrow account (established and
governed in the manner described in Section 3.2) on the twentieth calendar day
of each Fiscal Month. If Percentage Rent Approval is subsequently obtained,
then, within thirty (30) days after Notice to Tenant of such event (rather than
a court order as provided in Section 3.2), Tenant's obligation to pay Percentage
Rent shall be reinstated and, to the extent lawful, funds in the aforementioned
escrow account, with interest thereon, shall be immediately paid to
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Landlord. In no event shall any failure of a Percentage Rent Approval that is
caused by any act or omission of Tenant excuse Tenant's obligation to pay
Percentage Rent. Failure of Tenant to establish such escrow account shall be a
Monetary Default.
5.4.1 Reporting and Payment. Percentage Rent shall be
determined based upon Net Gaming Revenue from the Premises reported in the State
Revenue Reports and State Revenue Audits of Tenant or the occupant of Players'
Premises, subject to the right of Landlord (as provided in Section 5.4.3) to
independently audit the books and records of Tenant or such occupant, as the
case may be, and collect any additional amounts which such audit may reflect to
be due and owing under this Lease.
On the twentieth (20th) calendar day of each Fiscal Month following the
Commencement Date (Percentage Rent), Tenant shall, or shall cause the occupant
of the Players' Premises to:
(i) deliver to Landlord the Monthly Statement along with
copies of all State Revenue Reports and State Revenue Audits relating
to the immediately preceding Fiscal Month (or the Fiscal Quarter
containing such Fiscal Month) which Tenant or the occupant of the
Players' Premises is required to submit to the Missouri Gaming
Commission (specifically including the daily tax remittals, quarterly
audit required by ss.313.825 RSMo. and the monthly return required by
11 CSR 45-11.040); and
(ii) pay the Percentage Rent (or Substitute Percentage Rent,
as the case may be) for the immediately preceding Fiscal Month in the
manner set forth in Sections 5.3, 5.4 and 5.4.5 of this Lease.
If the Missouri Gaming Commission redetermines Net Gaming Revenue,
Landlord shall automatically be entitled to additional Percentage Rent hereunder
(or Tenant shall be entitled to a reduction of Percentage Rent) based upon such
redetermination applicable to the Percentage Rent Year for which such Percentage
Rent should have been paid. Tenant shall pay, or shall cause the
occupant of the Players' Premises to pay the additional Percentage Rent, in the
manner set forth in Section 5.3, within five (5) Business Days after the
Missouri Gaming Commission provides Notice of such redetermination to Tenant or
the occupant of the Players' Premises and if reduction of Percentage Rent is
required by such redetermination, Tenant may deduct such amount from ensuing
Percentage Rent payment(s).
5.4.2 Accounting Records. Tenant shall maintain, or shall cause the
occupant of Players' Premises to maintain, (at the Premises or at Players'
financial offices in Las Vegas, Nevada, or elsewhere, identified to Landlord in
writing) accounting books and records in accordance with the Accounting
Principles and the Missouri Gambling Law, sufficient to enable Tenant and
Landlord to calculate Percentage Rent. Tenant shall preserve, or shall cause the
occupant of Players' Premises to preserve books and records relating to each
Percentage Rent Year for at least three (3) years after the end of such
Percentage Rent Year. If at the conclusion of such period a dispute is pending
between Landlord and Tenant regarding the amount of Rent due under this Lease,
then Tenant shall continue to preserve, or
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shall cause the occupant of Players' Premises to preserve such records pending
the final disposition of such dispute.
5.4.3 Landlord's Right to Audit. Within (and in no event later than)
one hundred eighty (180) days after the end of each Percentage Rent Year, and
more frequently if Landlord should reasonably believe that Tenant's or such
occupant's reporting is not true and accurate, Landlord shall be entitled to
cause a certified public accounting firm designated by Landlord to audit the
books and records relevant to the calculation of Net Gaming Revenue reported by
Tenant or such occupant during the preceding Percentage Rent Year. Any audit
shall be performed in a reasonable manner, during ordinary business hours and
without unreasonably interfering with Tenant's or such occupant's business. If
such audit reveals that Net Gaming Revenue was understated, then within five (5)
Business Days after receipt of the auditor's report, Tenant shall pay, or cause
to be paid the net additional Percentage Rent due on account of the audit
corrections. If such audit reveals that Net Gaming Revenue was overstated, then
Tenant shall be entitled to a credit against the next payment(s) of Percentage
Rent under this Lease in an amount equal to the previous overpayment revealed by
the audit corrections. Any adjusting payment on account of previous overpayment
or underpayment shall bear interest at the Prime Rate from the date it would
have been paid (or the date of Tenant's previous overpayment, if applicable) had
Tenant's or such occupant's reports and monthly returns been correct until the
date actually paid or credited. If Percentage Rent was understated by more than
three percent (3%) for the period audited, then Tenant shall pay, or cause such
occupant to pay the reasonable cost of such audit; otherwise the audit shall be
conducted at Landlord's expense. The rights provided herein shall survive the
termination or expiration of the Term for three full Fiscal Years (plus any
partial Fiscal Year remaining in the year of termination or expiration of this
Lease, as the case may be).
5.4.4 Confidentiality. Landlord shall preserve the confidentiality of
all information obtained hereunder relating to Net Gaming Revenue from Players'
Premises, except in any litigation or arbitration proceedings between the
parties, when compelled by judicial or administrative order, or when advised by
counsel that disclosure is required to comply with applicable securities Law.
5.4.5 Substitute Percentage Rent. After the Commencement Date
(Percentage Rent), with respect to any period from the date an Operating
Covenant Default has occurred and Landlord has given Tenant Notice of such
Operating Covenant Default and continuing until such Operating Covenant Default
is cured (such period during which an Operating Covenant Default has occurred
and is continuing being referred to as a "Substitute Period"), Tenant shall pay,
or cause the occupant of the Players' Premises to pay, during any Substitute
Period arising due to an Operating Covenant Default, an amount (the "Default
Substitute Percentage Rent") equal to the greater of (A) Percentage Rent
allocable to such Substitute Period and (B) Average Percentage Rent (hereinafter
defined). After the Commencement Date (Percentage Rent), with respect to any
period from the date Landlord has failed to receive its Percentage Rent Approval
(or such Percentage Rent Approval is revoked or suspended) and the Missouri
Gaming Commission (or other gaming authority whose actions have led to an
Unsuitability Determination affecting Landlord) permits payment of Approved
Substitute Percentage Rent (hereinafter defined) by Tenant to Landlord (such
period during which Landlord no longer has its Percentage Rent Approval also
being referred to as a
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"Substitute Period"), Tenant shall pay during any Substitute Period arising due
to Landlord's failure to have Percentage Rent Approval an amount equal to
Average Percentage Rent, but in no event shall Average Percentage Rent exceed
the Percentage Rent otherwise allocable to such Substitute Period (the "Approved
Substitute Percentage Rent", such Default Substitute Percentage Rent and
Approved Substitute Percentage Rent being sometimes hereinafter collectively
referred to as the "Substitute Percentage Rent"). "Average Percentage Rent" is a
daily amount equal to the Percentage Rent payable for the two preceding
Percentage Rent Years divided by 730, which daily amount is then multiplied by
the number of days in a Substitute Period, provided that if the Premises have
been operating for fewer than two full Percentage Rent Years, the daily amount
shall equal the Percentage Rent payable for the period from the Commencement
Date (Percentage Rent) through the day preceding the commencement of a
Substitute Period divided by the number of days in such measuring period and
further provided that if a Substitute Period has previously occurred during the
applicable measuring period for Average Percentage Rent, Landlord shall
reasonably adjust the amount to be used as the daily amount for Average
Percentage Rent to reflect an average daily Percentage Rent during periods of
operation in accordance with Section 7.1.
5.4.6 Assignment of Percentage Rent to Landlord. Tenant hereby assigns
to Landlord all of its right, title and interest in and to and with respect to
the Percentage Rent payable under the Players' Lease and its rights under the
Parent Guaranty (as defined in the Players Lease) and any other Sublease of
Players' Premises (which for purposes hereof shall include Substitute Percentage
Rent), including without limitation Tenant's right to receive all Percentage
Rent, Substitute Percentage Rent and all reports and returns under Section 5.2.1
of the Players' Lease, Tenant's right to audit books and records pursuant to
Section 5.2.3 thereof, the rights to enforce payment of Percentage Rent and
Substitute Percentage Rent in Landlord's own name or in the name of Tenant and
all other remedies of Tenant on a Default in the payment of Percentage Rent and
Substitute Percentage Rent afforded Tenant under the Players' Lease or such
other Lease. Tenant also hereby assigns to Landlord the rights in all insurance
proceeds payable with respect to the Termination Payment (as defined in the
Players Lease) and Tenant agrees to direct Players to name Harrah's as the
insured in the insurance policy insuring the Termination Payment. So long as
Players performs its obligations under the Players' Lease, Tenant's obligations
under Sections 5.4, 5.4.1, 5.4.2 and 5.4.5 hereof shall be deemed satisfied.
5.5 Additional Rent. In addition to Fixed Rent and Percentage Rent,
Tenant shall pay Landlord, as additional rent under this Lease, all Additional
Rent, as and when same is due any payable and before any interest or penalty may
attach for nonpayment thereof.
5.6 No Conditional Payment. No payment by any party of a lesser amount
than the total of all sums due hereunder shall be deemed to be other than on
account of the sums then due, applied in inverse priority of their due dates,
nor shall any endorsement or statement on any check, other payment or
accompanying letter or other communication or notice be deemed an accord and
satisfaction. Any party may accept such payment in cash or negotiate such check
or other payment without prejudice to that party's right to recover the balance
of such sums or to pursue any other remedy provided in this Lease or otherwise
available, regardless of whether that party makes any notation on such
instrument of payment or
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otherwise notifies the other party that such acceptance, cashing or negotiation
is without prejudice to any of that party's rights.
5.7 Interest on Overdue Rent. Unless otherwise provided herein, all
Rent (other than Percentage Rent, Approved Substitute Percentage Rent and
Default Substitute Percentage Rent, which shall be due as provided in
Section 5.4.1) owed by Tenant to Landlord shall be due ten (10) calendar days
from the date the Landlord renders statements of account or invoices therefor.
If any Rent (including, without limitation, Percentage Rent, Approved Substitute
Percentage Rent and Default Substitute Percentage Rent) is not received by
Landlord within one Business Day after the date due, Tenant agrees to pay to
Landlord, interest at the Prime Rate plus eight percent (8%) but not in excess
of the Criminal Usury Rate (the "Default Rate") on the overdue amount from the
date such obligation was due until paid.
6. ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS.
6.1 Landlord's Net Return. The parties intend that this Lease shall
constitute a "net lease," so that the Fixed Rent, Percentage Rent and Substitute
Percentage Rent shall provide Landlord with "net" return for the Term, free of
any expenses or charges with respect to the Premises, except as specifically
provided in this Lease. Accordingly, Tenant shall pay as Additional Rent and
discharge, before failure to pay the same shall create a material risk of
forfeiture or give rise to a penalty, each and every item of expense, of every
kind and nature whatsoever, related to or arising from the Premises, or by
reason of or in any manner connected with or arising from the development,
leasing, operation, management, maintenance, repair, use or occupancy of the
Premises, the Shoreside Complex, Tenant's Property or any portion thereof.
Notwithstanding anything to the contrary in this Lease, Tenant shall not be
required to pay any of the following incurred by Landlord: (a) principal,
interest, or other charges payable under any Fee Mortgage; (b) depreciation,
amortization, financing or refinancing costs incurred by Landlord with respect
to the Fee Estate or the Premises; (c) consulting, overhead, travel, legal,
staff, and other similar costs incidental to Landlord's ownership of the
Premises, other than reasonable attorneys' fees incurred by Landlord and payable
by Tenant pursuant to express provisions of this Lease; and (d) any costs
arising from or pursuant to any instrument or agreement affecting the Premises
that is not a Permitted Exception and to which Landlord is a party and Tenant is
not a party.
6.2 Impositions. For any period within the Term (with daily proration
for periods partially within the Term and partially outside the Term), Tenant
shall pay and discharge, before failure to pay the same shall create a material
risk of forfeiture or give rise to a penalty, all Impositions. Landlord shall
arrange for direct billing of all Impositions to Tenant. Tenant shall also pay
all interest and penalties assessed by any Government on account of late payment
of any Imposition, unless Tenant has not received notice of such Imposition due
to Landlord's failure to arrange for such direct billing.
6.3 Assessments in Installments. To the extent that may be permitted by
law, Tenant shall have the right to apply for conversion of any assessment to
cause it to be payable
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in installments. After such conversion, Tenant shall pay and discharge only such
installments of such assessment as shall become due and payable during the Term.
6.4 Combined Tax Lots. If, as of the Commencement Date, the Premises
are part of a tax lot (a "Combined Tax Lot") that includes any land or
improvements other than the Premises, then the parties shall diligently and
expeditiously cooperate (including by bringing such proceedings as may be
necessary), all at Landlord's expense, including Tenant's reasonable attorneys'
fees, to cause the Combined Tax Lot to be divided so that the Premises
(including the Fee Estate and the Leasehold Estate) shall be a single separate
tax lot that is no longer a Combined Tax Lot. Pending such division of the
Combined Tax Lot: (a) each party shall promptly provide the other with a copy of
any tax bill received by such party relating to the Combined Tax Lot; (b) Tenant
shall pay a portion of the Impositions assessed with respect to the Combined Tax
Lot equal to the estimated assessment of the Premises [which shall include,
without limitation, one hundred percent (100%) of Impositions attributable to
the Shoreside Complex and other improvements made by Tenant or any Subtenant]
divided by the assessment of the Combined Tax Lot; (c) the estimated assessment
for the Premises shall be determined, to the extent possible, based on
preliminary information from the tax assessment authorities and otherwise by
Tenant, in consultation with Landlord (and, in any event, when the assessment of
the Premises has been determined the parties shall make such adjusting payments
[with interest at the Prime Rate] as shall be appropriate to compensate for
errors in the estimated payments previously made); and (d) if Tenant fails to
pay its share of taxes and charges for the Combined Tax Lot before delinquency
and such failure continues for ten (10) Business Days after Notice from
Landlord, then Landlord shall in addition to all other remedies provided in this
Lease be entitled to pay Tenant's unpaid Impositions with respect to the
Combined Tax Lot, and Tenant shall promptly upon demand reimburse Landlord's
advances made on Tenant's account.
6.5 Direct Payment by Landlord. If any Imposition or other item of Rent
required to be paid by Tenant is required by applicable Laws to be paid directly
by Landlord, then: (a) Landlord appoints Tenant as Landlord's attorney in fact
for the purpose of making such payment; and (b) if the Person entitled to
receive such payment refuses to accept it from Tenant, then Tenant shall give
Landlord Notice of such fact no later than ten (10) days prior to the date such
payment is due, shall accompany such Notice with such payment and shall include
in such Notice reasonable instructions as to the further remittance of such
payment. Landlord shall with reasonable promptness comply with Tenant's
reasonable instructions and shall assume responsibility for interest and
penalties resulting from Landlord's failure to do so.
6.6 Utilities. Tenant shall pay all fuel, gas, light, power, water,
sewage, garbage disposal, telephone and other utility charges, and the expenses
of installation, maintenance, use and service in connection with the foregoing,
relating to the Premises, the Venture Premises or the Shoreside Complex during
the Term.
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7. USE.
7.1 Permitted Uses. After the Commencement Date (Percentage Rent)
Tenant shall or shall cause the occupant thereof to, except as herein otherwise
specifically provided, continuously occupy and use the Players' Premises for the
conduct of Gambling Activity as required by Section 7.1 of the Players' Lease.
The remainder of the Shoreside Complex shall be used in a manner that will
comply with all Permitted Exceptions.
7.2 Tenant's Failure to Operate the Business. In the event neither
Tenant nor an occupant of the Players' Premises at any time after the
Commencement Date (Percentage Rent) shall continuously operate, or
cause to be operated the Players' Premises in the manner set forth in Section
7.1 and Exhibit E hereto, or shall vacate the Players' Premises prior to the
expiration of the Term hereof, the parties agree that irreparable harm and
damages, which damages are not readily ascertainable, shall be caused to
Landlord. The parties therefore agree that in such event Landlord, at its
option, shall be entitled to the rights and remedies provided in Section 27.2 of
this Lease.
8. LAWS.
8.1 Compliance with Law. During the Term, Tenant shall, at its own
expense, observe and comply with all Laws affecting the Premises and/or the
Shoreside Complex. Notwithstanding the foregoing, Tenant shall have the right to
contest any such Laws in accordance with this Lease. Tenant shall (so long as
HMHC is a partner in Tenant and is prepared to meet its obligations under the
Joint Venture Agreement) make any Mandated Alterations with respect to the
Premises and/or the Shoreside Complex required by Law arising during the Term.
8.2 Licenses and Permits. Tenant shall procure, in a timely manner,
every permit, license, certificate or other authorization required in connection
with the lawful and proper maintenance, operation, use and occupancy of the
Premises or required in connection with any improvements erected on the Premises
or with respect to the Shoreside Complex and comply with all such permits,
licenses, certificates and other authorizations, unless Tenant is prevented from
so performing by the acts or omissions of HMHC.
8.3 Environmental Matters.
8.3.1 Compliance. All activities upon the Premises shall comply with
Environmental Law.
8.3.2 No Violations. Tenant shall not cause or permit any Hazardous
Materials to be brought upon, stored, handled, used, generated, released into
the environment, or disposed of, on, under, from, or about the Premises (which
for purposes of this Section shall include, without limitation, subsurface soil
and groundwater) without the prior written consent of Landlord. Landlord may, in
its sole discretion, place such conditions as Landlord deems appropriate with
respect to such Hazardous Materials and may further require that Tenant
demonstrate to the Landlord that such Hazardous Materials are necessary or
useful to
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Tenant's business and will be generated, stored, handled, used, and disposed of
in a manner that complies with Environmental Law and with good business
practices. Tenant acknowledges and agrees that Landlord may reasonably utilize
an environmental consultant to assist in determining conditions of approval and
monitoring in connection with the presence, storage, generation, handling, or
use of Hazardous Materials on or about the Premises by Tenant or Tenants'
agents, employees, invitees or Subtenants.
8.3.3 Cost of Compliance. If the presence of any Hazardous Materials
(other than Preexisting Hazardous Materials [hereinafter defined]) on, under,
from, or about the Premises results in (i) injury to any individual, (ii) injury
to or contamination of the Premises, or (iii) injury to or contamination of any
real or personal property wherever situated, then Tenant, at its sole cost and
expense, shall promptly take all actions necessary to return the Premises to the
condition existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination. Without
limiting any other rights or remedies of Landlord under this Lease or at law or
in equity, Tenant shall pay the cost of any cleanup work performed on, under, or
about the Premises as required by this Lease or Environmental Law in connection
with the investigation, monitoring, removal, and disposal of such Hazardous
Materials.
8.3.4 Remediation. Notwithstanding any other provision of this Section,
Tenant shall not, without Landlord's prior written consent which consent shall
not unreasonably be withheld, take any remedial action in response to the
presence of any Hazardous Materials on, under, from, or about the Premises, or
enter into any settlement agreement, consent decree, or other compromise with
any governmental agency with respect to any Hazardous Materials claims;
provided, however, Landlord's prior written consent shall not be necessary in
the event that the presence of Hazardous Materials on, under, from, or about the
Premises (i) poses an immediate threat to the health, safety, or welfare of any
individual, or (ii) is of such a nature that an immediate remedial response is
necessary or appropriate and it is not possible to obtain Landlord's prior
written consent before such response.
8.4 Disclosure. Tenant shall promptly notify Landlord of, and shall
promptly provide Landlord with true, correct, complete, and legible copies of,
all of the following relating to the Premises or to Tenant's activities at the
Premises:
8.4.1 Reports. Reports and other documents filed by Tenant with any
governmental agency or body pursuant to Environmental Law including, without
limitation, all permit applications, permits, monitoring reports, workplace
exposure and community exposure warnings or notices, and environmental audits or
assessments relating to water discharges, air pollution, waste generation or
disposal, underground or aboveground storage tanks, or Hazardous Materials;
8.4.2 Notices. All correspondence, notices, information requests,
complaints, pleadings, legal documents, and other documents received by Tenant
from any Government agency related to Hazardous Materials;
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8.4.3 Environmental Audits. All environmental audits or assessments
(even those which may be characterized as confidential);
8.4.4 Orders. All orders, reports, notices, listings, and
correspondence (including those which may be considered confidential) of or
concerning the release, investigation, compliance, cleanup, remedial or
corrective action, or abatement of Hazardous Materials, whether or not required
by Environmental Law; and
8.4.5 Pleadings. All correspondence, notices, information requests,
complaints, pleadings, and legal documents filed against Tenant related to
Tenant's use, handling, storage, or disposal of Hazardous Materials.
8.5 Indemnification. To the fullest extent permitted by law, Tenant
hereby agrees to indemnify, hold harmless, protect and defend (with attorneys
reasonably acceptable to Landlord) Landlord and any successors to all or any
portion of Landlord's interest in the Premises and their respective directors,
officers, partners, beneficiaries, employees, authorized agents, affiliates,
representatives, and mortgagees from and against any and all liabilities,
losses, damages (including, without limitation, damages for the loss or
restriction on use of rentable or usable space or any amenity of the Premises),
diminution in the value of the Premises, judgments, fines, demands, claims,
recoveries, deficiencies, costs, and expenses (including, without limitation,
reasonable attorneys' fees, disbursements and court costs, and all other
professional or consultant's expenses), whether foreseeable or unforeseeable,
arising directly or indirectly out of:
(i) the breach by Tenant of any of its covenants or
representations made or to be made pursuant to Sections 8.3, 8.4 and,
this Section 8.5 and 8.6 hereof, or
(ii) the presence (except for Preexisting Hazardous
Materials), use, handling, generation, storage, treatment, or on-site
or off-site disposal or transportation of Hazardous Materials on, into,
from, under or about the Premises by Tenant or Tenant's agents,
employees, invitees or Subtenants,
and specifically including, without limitation, the cost of any required or
necessary repair, restoration, clean-up (including, but not limited to, the
costs of investigation, monitoring, and removal of Hazardous Materials [except
for Preexisting Hazardous Materials]) or detoxification of the Premises or other
property where such Hazardous Materials have come to be located, and the
preparation of any closure or other required plans, whether such action is
required or necessary during the term of this Lease or after the expiration of
this Lease.
8.6 Tenant's Further Responsibility at Termination or Expiration of
Lease.
8.6.1 Surrender. Promptly upon the expiration or sooner termination of
this Lease, Tenant shall represent to Landlord in writing that (i) Tenant has
made a diligent effort to determine whether any Hazardous Materials are on,
under, or about the Premises as a result of any acts or omissions of Tenant or
Tenant's agents, employees, invitees or Subtenants, and (ii) no such Hazardous
Materials exist on, under, or about the Premises other than as specifically
identified to Landlord by Tenant in writing.
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8.6.2 Storage Tanks. Any and all underground or aboveground
storage tanks on the Premises, along with their respective piping, pumps,
dispensing equipment, and dispensing islands, are not fixtures but are part of
Tenant's Property. Tenant shall remove all such property from the Premises upon
termination of this Lease. Such removal shall comply with Environmental Law. Any
agreement by Landlord that Tenant may abandon such Tenant's Property on the
Premises must be in writing.
8.7 Landlord's Environmental Remedies.
8.7.1 Inspection Rights. Landlord shall have the right, but not the
obligation, subject to the provisions of Article 25 hereof, to inspect,
investigate, sample, and monitor the Premises at any time to determine whether
Tenant is complying with the terms of this Article, and in connection therewith,
Tenant shall provide Landlord with full access to all relevant facilities,
records, and personnel.
8.7.2 Self Help. If Tenant is not in compliance with any of the
provisions of this Article, or in the event of a release of Hazardous Material
(other than Preexisting Hazardous Materials) on, under, from, or about the
Premises, Landlord shall have the right, but not the obligation, to immediately
enter upon the Premises and to discharge Tenant's obligations under this Article
at Tenant's expense, including without limitation, the taking of emergency or
long-term remedial action. Landlord shall endeavor to minimize interference with
Tenant's business but shall not be liable for any such interference.
8.7.3 Hazardous Material Release. If Landlord has a good-faith reason
to believe that Tenant or Tenant's agents, employees, invitees or Subtenants may
have caused or permitted the release of a Hazardous Material on, under, from or
about the Premises, then Landlord may require Tenant, at Tenant's sole cost and
expense, to conduct monitoring activities on or about the Premises reasonably
satisfactory to Landlord concerning such release of Hazardous Materials on,
under, from or about the Premises.
8.7.4 Clean Up. If Tenant, pursuant to Section 8.6.1, discloses the
existence of Hazardous Materials on, under, from, or about the Premises, or if
Landlord at any time discovers or is informed that Hazardous Materials (other
than Preexisting Hazardous Materials) have been released, disposed of, spilled,
or leaked on, under, from, or about the Premises, Tenant shall, at Landlord's
request, immediately prepare and submit to Landlord within thirty (30) days
after such request a comprehensive plan, subject to Landlord's approval,
specifying the actions to be taken by Tenant to return the Premises to the
condition existing prior to the introduction of such Hazardous Materials.
Landlord, in its sole discretion, may retain a consultant, which shall be at
Tenant's sole cost and expense, to review and comment upon such plan. Upon
Landlord's approval of such clean-up plan, Tenant shall, at Tenant's sole cost
and expense, implement such plan and proceed to clean up such Hazardous
Materials as soon as reasonably possible, but in any event within the time
period prescribed by any Government authority in accordance with Environmental
Law and as required by such plan and this Lease. Tenant acknowledges that
Landlord's review of and comments upon such plan will not prevent any
governmental agency with appropriate jurisdiction from imposing further or other
requirements. All such cleanups and remedial actions shall be at Tenant's sole
cost and expense.
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8.7.5 Landlord Participation. Landlord, at Tenant's sole cost and
expense, shall have the right, but not the obligation, to join and participate
in any legal or administrative proceedings or actions involving Tenant in
connection with any claims, demands, or causes of action arising out of the
storage, generation, handling, use, or disposal of Hazardous Materials (other
than Preexisting Hazardous Materials) on, under, from, or about the Premises.
8.7.6 Fees and Expenses. All sums reasonably disbursed, deposited, or
incurred by Landlord in connection with its rights and remedies under this
Article, including without limitation, all costs, expenses, and actual
attorneys' and consultants' fees, shall be due and payable by Tenant to Landlord
as an item of Additional Rent, on demand by Landlord, together with interest
thereon at the Default Rate from the date 30 days after the date of such demand
until paid by Tenant.
8.8 Landlord's Indemnity. Landlord and Tenant are each in possession of
a copy of the Phase I Environmental Assessment Report dated October 17, 1995
performed by Espey, Huston & Associates, Inc. (the "Assessment"). To the best
knowledge of Landlord, based solely on the Assessment, there are no Hazardous
Materials on the Premises. Landlord shall defend, fully indemnify and hold free
and harmless Tenant from and against all claims, judgments, damages, penalties,
fines, costs, liabilities or losses and costs of remediation, if any, that arise
after the Commencement Date, and that are imposed on or paid by or asserted
against Tenant by reason of or on account of Hazardous Materials which were
present at any time or times on the Premises prior to the Commencement Date (the
"Preexisting Hazardous Materials").
9. MAINTENANCE AND ALTERATIONS.
9.1 Obligation to Maintain. During the Term, Tenant shall keep and
maintain the Premises and the Shoreside Complex in good order, condition and
repair and for so long as Tenant is the Partnership in accordance with the
provisions of the Joint Venture Agreement and the provisions of Article
28 of this Lease, subject to Casualty and Condemnation (governed by the separate
applicable provisions of this Lease), reasonable wear and tear, and any other
conditions that Tenant is not required to repair pursuant to this Lease.
9.2 Tenant's Right to Perform Alterations. At Tenant's sole cost and
expense, Tenant shall be entitled but not required to make and from time to time
alter, modify or reconstruct, any improvements, repairs, or alterations to the
Premises without Landlord's consent subject to the provisions of this Lease, as
Tenant shall consider necessary or appropriate. Tenant shall perform all
construction work in connection with any improvement, repair or alteration to
the Premises or the Shoreside Complex in compliance with all Laws and Permitted
Exceptions.
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10. PROHIBITED LIENS.
10.1 Tenant's Covenant. Tenant shall provide Landlord a performance and
payment bond, satisfactory to Landlord, naming Landlord as a dual obligee for
all construction work undertaken on the Premises. Tenant shall not suffer or
permit any Prohibited Lien to be filed. If a Prohibited Lien is filed then
Tenant shall, within thirty (30) days after receiving Notice of such filing (but
in any case within fifteen (15) days after receipt of Notice of commencement of
foreclosure proceedings), commence and then prosecute appropriate action to
cause such Prohibited Lien to be paid, discharged or bonded (by issuance to
Landlord of a title insurance endorsement insuring against all loss or damage
arising pursuant to such Prohibited Lien). Nothing in this Lease shall be
construed to restrict Tenant's right to contest the validity of any Prohibited
Lien and to pursue Tenant's position to a final judicial determination provided
that an appropriate and adequate title insurance endorsement is issued to
Landlord to assure that there may be no forfeiture (including any judicial or
foreclosure sale) of the Leasehold Estate or the Fee Estate.
10.2 Protection of Landlord. Notice is hereby given that Landlord shall
not be liable for any labor or materials furnished or to be furnished to Tenant
or any Subtenant upon credit, and that no mechanic's or other lien for any such
labor or materials shall attach to or affect the Fee Estate. Nothing in this
Lease shall be deemed or construed in any way to constitute Landlord's consent
or request, express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer, equipment or material supplier for the performance of
any labor or the furnishing of any materials or equipment for any improvement,
alteration or repair of, or to, the Premises, or any part of the Premises, nor
as giving Tenant or any Subtenant any right, power or authority to contract for,
or permit the rendering of, any services, or the furnishing of any materials
that would give rise to the filing of any liens against the Fee Estate. Tenant
shall Indemnify Landlord against any work performed on the Premises and/or the
Shoreside Complex for or by Tenant or any Subtenant.
11. INDEMNIFICATION; LIABILITY OF LANDLORD.
11.1 Mutual Indemnity Obligations. Landlord and Tenant shall each
Indemnify the other against: (a) any wrongful act, wrongful omission or
negligence of the Indemnitor (and, in the case of Tenant, that of any
Subtenants) or its or their partners, directors, officers, or employees; and (b)
any breach or default by the Indemnitor under this Lease. In addition to and
without limiting the generality of the foregoing indemnity, Tenant shall
Indemnify Landlord against all the following matters (except to the extent any
claim arises from any wrongful act, wrongful omission or gross negligence of
Landlord): (x) the conduct, management or occupancy of or from any work or
activity performed in and on the Premises and/or the Shoreside Complex during
the Term; (y) the condition of the Premises and the Shoreside Complex or any
adjoining street, curb or sidewalk, or of any vaults, tunnels, passageways or
space under, adjoining or appurtenant thereto; and (z) any accident, injury or
damage whatsoever caused to any individual or property occurring during the
Term, in or on the Premises, the Shoreside Complex or upon or under any
adjoining sidewalks or appurtenant street, curb, vaults, tunnel, passageway or
space. Furthermore, Tenant agrees to pay, and to Indemnify Landlord against,
reasonable legal costs, including reasonable counsel fees and
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disbursements, incurred by Landlord in obtaining possession of the Premises and
the Shoreside Complex if Tenant fails to surrender possession upon the
expiration or earlier termination of the Term. Notwithstanding anything to the
contrary in this Lease, Tenant shall not be required to Indemnify Landlord from
or against Landlord's intentional acts or omissions or gross negligence.
11.2 Liability of Landlord. Tenant is and shall be in exclusive control
and possession of the Premises and Shoreside Complex during the Term as provided
in this Lease. Subject to Section 11.1, Landlord shall not be liable
for any injury or damage to any property or to any individual occurring on or
about the Premises or the Shoreside Complex. Furthermore, subject to Section ,
Landlord shall not be liable for any injury or damage to any property of Tenant,
Subtenants or of any other person, during the Term. The provisions of this Lease
permitting Landlord to enter and inspect the Premises and Shoreside Complex are
intended to allow Landlord to be informed as to whether Tenant and Subtenants
are complying with the agreements, terms, covenants and conditions of this
Lease, and to the extent permitted by this Lease, to perform such acts required
by this Lease as Tenant or Subtenants shall fail to perform. Such provisions
shall not be construed to impose upon Landlord any liability to third parties.
11.3 Indemnification Procedures. Wherever this Lease requires an
Indemnitor to Indemnify an Indemnitee, the following procedures and requirements
shall apply:
11.3.1 Prompt Notice. The Indemnitee shall give the Indemnitor prompt
Notice of any claim. To the extent, and only to the extent, that both (a) the
Indemnitee fails to give prompt Notice and (b) the Indemnitor is thereby
prejudiced, the Indemnitor shall be relieved of its indemnity obligations under
this Lease.
11.3.2 Selection of Counsel. The Indemnitor shall be entitled to select
counsel (reasonably acceptable to the Indemnitee, but counsel to the
Indemnitor's insurance carrier shall be deemed satisfactory). Notwithstanding
anything to the contrary in the preceding sentence, the Indemnitee, unless the
Indemnitee or an Affiliate of the Indemnitee has previously approved the
selection of counsel as a partner of Indemnitor, shall be entitled to select the
Indemnitee's own counsel and be represented by such counsel, and if the
Indemnitee selects its own counsel, then such counsel shall consult and
reasonably cooperate with the Indemnitor's counsel and the Indemnitor and the
Indemnitee shall each pay fifty percent (50%) of the reasonable attorneys' fees
of the Indemnitee's counsel.
11.3.3 Settlement. The Indemnitor may, with the consent of the
Indemnitee, not to be unreasonably withheld, settle the claim, except that no
consent by the Indemnitee shall be required as to any settlement by which (x)
the Indemnitor procures (by payment, settlement, or otherwise) a release of the
Indemnitee pursuant to which the Indemnitee is not required to make any payment
whatsoever to the third party making the claim, (y) neither the Indemnitee nor
the Indemnitor acting on behalf of the Indemnitee makes any admission of
liability, and (z) the continued effectiveness of this Lease is not jeopardized
in any way.
11.3.4 Insurance Proceeds. The Indemnitor's obligations shall be
reduced by net insurance proceeds paid to an insured person or entity in
satisfaction of an Indemnitee's
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liability to such person or entity or by net insurance proceeds actually
collected by the Indemnitee on account of the loss.
12. RIGHT OF CONTEST.
Tenant shall have the right to contest, at its sole expense, by
appropriate legal proceedings diligently conducted in good faith, the
amount or validity of any Imposition or Prohibited Lien; the valuation,
assessment or reassessment (whether proposed or final) of the Premises or
Shoreside Complex for purposes of real estate taxes; the validity of any Law or
the application of any Law to the Premises or Shoreside Complex. Tenant may
defer payment of the contested Imposition, Prohibited Lien or compliance with
the contested Law pending the outcome of such contest, provided that such
deferral does not subject the Premises to risk of imminent forfeiture or
Landlord to any risk of criminal liability; that any Prohibited Lien is bonded
pending such contest and thereafter removed permanently as required by Section
10.1 hereof. Landlord shall not be required to join in any such contest
proceedings unless a Law shall require that such proceedings be brought in the
name of Landlord as owner of the Fee Estate. In such case, Landlord shall
cooperate with Tenant so as to permit such proceedings to be brought in
Landlord's name. In addition to, and without limiting, Landlord's obligations
under the preceding sentence, Landlord appoints Tenant as Landlord's
attorney-in-fact, irrevocably, with full power of substitution, to execute and
deliver any documentation, and to otherwise act on Landlord's behalf to the full
extent Landlord could and in Landlord's place and stead, in any such proceeding.
This appointment is coupled with an interest and is irrevocable. Tenant shall
pay all costs and expenses (including attorneys' fees) incident to such
proceedings. Tenant shall Indemnify Landlord against such contest. Tenant shall
be entitled to any refund of any Imposition (and penalties and interest paid by
Tenant) based upon Tenant's prior overpayment of such Imposition, whether such
refund is made during or after the Term. Upon termination of Tenant's contest of
an Imposition, Tenant shall pay the amount of such Imposition (if any) as has
been finally determined in such proceedings to be due, together with any costs,
interest, penalties or other liabilities in connection with such Imposition.
Upon final termination of Tenant's contest of a Law, Tenant shall comply with
such final determination. Provided no Event of Default has occurred, Landlord
shall not enter any objection to any contest proceeding undertaken by Tenant
pursuant to this Article. Provided no Event of Default has occurred, Tenant's
right to contest any Imposition or the valuation, assessment or reassessment of
the Premises for tax purposes shall be to the exclusion of Landlord, and
Landlord shall have no right to contest the foregoing without Tenant's consent,
not to be unreasonably withheld.
13. INSURANCE.
13.1 Tenant to Insure. Tenant shall, at Tenant's sole cost and expense,
during the Term, obtain and maintain the insurance specified on Exhibit F to
this Lease.
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14. DAMAGE OR DESTRUCTION.
14.1 Notice; No Rent Abatement; Restoration Obligations. Tenant shall
promptly give Landlord Notice of any Casualty. There shall be no abatement or
reduction of Rent on account of a Casualty. Except as otherwise set forth below,
Tenant shall restore the Shoreside Complex as provided in the Joint Venture
Agreement, the Players' Lease and the Harrah's Lease unless the Partnership is
no longer the Tenant in which case Tenant shall restore the Shoreside Complex as
nearly as may be practicable to its condition, quality, and class immediately
prior to such Casualty.
14.2 Lease Termination for Casualty. This Lease shall not, so long as
no Default has occurred and is then continuing, terminate or be terminated by
reason of any Casualty unless Tenant determines not to restore the Premises
and/or Shoreside Complex or sufficient portion thereof to continue operation of
the Premises. It shall be a condition of Tenant's right to agree to a
termination of this Lease that all Prime Mortgagee(s) whose Prime Mortgage(s)
grant them the power to withhold consent to such termination shall have
consented to or joined in such termination agreement. If Tenant and the other
parties so agree, Tenant shall have the right to terminate this Lease, subject
to the Reciprocal Easement Agreement, upon the date specified in Tenant's Notice
to Landlord, whereupon Tenant shall remove Tenant's Property, demolish damaged
improvements and restore the Premises as nearly as possible to their condition
prior to construction of the Shoreside Complex and surrender the Premises to
Landlord; all casualty or hazard insurance proceeds from any insurance carried
by either Landlord or Tenant with respect to the Premises or Shoreside Complex
shall be paid to the Tenant and shall be distributed in accordance with the
terms of the Joint Venture Agreement. Notwithstanding the foregoing, if this
Lease is terminated as aforesaid within the last three (3) years of the Term
hereof such insurance proceeds shall be payable to Landlord.
15. CONDEMNATION.
15.1 Substantial Condemnation. If a Substantial Condemnation of the
Premises or the Shoreside Complex shall occur, then this Lease shall terminate
as of the effective date of such Substantial Condemnation, and the Rent shall be
apportioned accordingly. The proceeds of the Substantial Condemnation shall be
allocated between Landlord and Tenant as follows: first, Landlord shall be
entitled to receive such portion of the award, as shall equal the book value of
the Premises taken plus the present value of Percentage Rent that would have
been paid but for such termination; and second, Tenant shall be entitled to
receive the entire remaining balance of any such award or awards. All
determinations of value required by the preceding sentences shall be made as if
the Condemnation had never occurred, the Leasehold Estate had not been
terminated, and the Lease had continued for the remainder of the Term.
15.2 Insubstantial Condemnation. If an Insubstantial Condemnation shall
occur, then any award or awards shall be applied in accordance with the
provisions of the Joint Venture Agreement and after dissolution of the
Partnership or the Partnership no longer is the Tenant first to reconfiguration
and reconstruction of any remaining part of the improvements not so taken.
Tenant shall perform such repair, restoration or reconstruction in accordance
with applicable requirements of this Lease. The balance of any such award or
awards remaining
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after the repair, restoration or reconstruction shall be distributed to Landlord
and Tenant as if they were proceeds of a Substantial Condemnation affecting only
the portion of the Premises taken.
15.3 Other Governmental Action. In the event of any action by any
Government not resulting in a Condemnation but creating a right to compensation,
such as the changing of the grade of any street, then this Lease shall continue
in full force and effect without reduction or abatement of Rent and Tenant shall
be entitled to receive the award or payment made in connection with such action.
Notwithstanding the foregoing, Landlord shall be entitled to receive such award
or payment if such right to compensation is established within the last three
(3) years of the Term.
15.4 Settlement or Compromise. Neither Landlord or Tenant shall settle
or compromise any Condemnation award without consent by the other party and by
any Subtenant whose Sublease provides for such right of consent.
15.5 Prompt Notice. If either party becomes aware of any Condemnation
or threatened or contemplated Condemnation, then such party shall promptly give
Notice thereof to the other party.
16. TRANSFERS.
16.1 By Tenant. For so long as the Partnership is Tenant and HMHC is a
partner thereof, Tenant shall only Transfer all or part of the
Leasehold Estate in accordance with the provisions of the Joint Venture
Agreement. If the Partnership is no longer Tenant, Tenant shall not Transfer,
except as is provided under Section 17.2, all or part of the Leasehold Estate
without Landlord's consent, which consent shall not be unreasonably withheld.
Tenant agrees, without limiting the exercise of Landlord's reason, that Landlord
would be reasonable in not consenting to any Transfer to a Transferee that is
(i) a Prohibited Person (Tenant), or (ii) for the period (the "Prohibition
Period") ending on the seventh anniversary of the Effective Date (as defined in
the Joint Venture Agreement) a Prohibited Person (as defined in the Joint
Venture Agreement) or (iii) fails to satisfy the criteria established in Exhibit
G. Except as is provided under 17.2, any Transfer in the nature of an assignment
shall require the assignee to assume all obligations of Tenant under this Lease
in writing in form and substance reasonably acceptable to Landlord.
16.2 By Landlord. Landlord shall not transfer the Fee Estate to a
Prohibited Person (Landlord).
17. MORTGAGES.
17.1 Landlord's Rights. Landlord shall have the right to execute and
deliver Fee Mortgage(s) at any time and from time to time during the Term,
provided that (a) the Fee Mortgage by its terms recites that it is subordinate
to this Lease and any and all estates arising from this Lease; and (b) the
proposed Fee Mortgagee is not a Prohibited Person (Landlord).
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Any Fee Mortgage entered into in violation of the preceding sentence shall be
null and void. If Landlord executes and delivers a Fee Mortgage, then Landlord
shall within ten (10) Business Days provide Tenant with a copy of such Fee
Mortgage. If a Fee Mortgagee forecloses under its Fee Mortgage or accepts a deed
in lieu of such foreclosure, then this Lease shall continue in full force and
effect and Tenant shall attorn to the holder of the Fee Estate as successor
Landlord under this Lease (subject to the limitations on such Fee Mortgagee's
liability for defaults of its Mortgagor, as are provided in this Lease). Such
attornment shall in no way diminish or impair Tenant's rights and remedies
against Landlord hereunder or require waiver of any Landlord default. Tenant
shall not be required to join in any Fee Mortgage or subordinate this Lease to
any Fee Mortgage.
17.2 Tenant's Rights. Tenant shall have the right, without Landlord's
consent, to execute and deliver Prime Mortgage(s) to any Institutional Lender(s)
encumbering this Lease and the Leasehold Estate, that is not a Prohibited Person
(Tenant). Tenant shall not grant a Prime Mortgage to any Person other than an
Institutional Lender(s) that is not a Prohibited Person (Tenant) or, during the
Prohibition Period to a Prohibited Person, without first obtaining Landlord's
prior written consent, which consent shall not unreasonably be withheld.
Landlord shall not be required to join in or "subordinate" the Fee Estate to any
Prime Mortgage.
17.3 Effect of a Prime Mortgage. Tenant's making of a Prime Mortgage
shall not be deemed to constitute an assignment or transfer of the Leasehold
Estate, nor shall any Prime Mortgagee, as such, or in the exercise of its rights
under this Lease, be deemed to be an assignee or transferee or mortgagee in
possession of the Leasehold Estate so as to require such Prime Mortgagee, as
such, to assume or otherwise be obligated to perform any of Tenant's obligations
under this Lease except when, and then only for so long as, such Prime Mortgagee
has entered into possession of the Premises in the exercise of its remedies
under its Prime Mortgage (as distinct from its rights under this Lease to cure
Defaults or exercise Mortgagee's Cure Rights). No Prime Mortgagee (or purchaser
at a foreclosure sale held pursuant to a Prime Mortgage) shall be liable under
this Lease unless and until such time as it becomes, and then only for so long
as it remains, the owner of the Leasehold Estate.
17.4 Sale and Leaseback. If Tenant sells, assigns, transfers or
otherwise conveys the Leasehold Estate to an Institutional Lender and Tenant or
an Affiliate of Tenant substantially concurrently enters into or reserves,
retains or receives a Sublease of the Premises or similar interest, then: (a)
such third party shall be deemed to be a "Prime Mortgagee" and the Sublease
shall be deemed to be a "Prime Mortgage"; and (b) such third party shall not be
deemed to have assumed or become liable under this Lease except to the extent
that such third party has exercised remedies against Tenant under Tenant's
Sublease functionally equivalent to foreclosure under a Prime Mortgage or
acceptance of an assignment in lieu thereof.
17.5 Modifications Required by Prime Mortgagee. If any Prime Mortgagee
or prospective Prime Mortgagee shall require any modification(s) of this Lease
(including clarifications and supplements to Mortgagee's Cure Rights), then
Landlord shall, at Tenant's request, promptly execute and deliver to Tenant such
instruments in recordable form effecting such modification(s) as such Prime
Mortgagee or prospective Prime Mortgagee shall require, provided that such
modification(s): (i) do not materially adversely affect any of Landlord's
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rights or materially increase any of Landlord's obligations under this Lease and
(ii) are consistent with the customary requirements of Institutional Lenders
making loans secured by similar collateral, or are required by banking,
insurance or similar laws and regulations setting forth provisions that must
appear in a lease in order for such lease to be accepted as security by the
Prime Mortgagee or prospective Prime Mortgagee requesting the change.
17.6 Further Assurances. Upon request by Tenant or by any existing or
prospective Prime Mortgagee, Landlord shall deliver to the requesting party a
separate written instrument in recordable form signed and acknowledged by
Landlord setting forth and confirming the rights of Prime Mortgagees under this
Lease.
17.7 Protection of Fee Mortgagees. If Tenant shall give Landlord any
Notice of Default, then Tenant shall simultaneously give a copy of such Notice
of Default to all Fee Mortgagee(s) provided that Tenant shall have received
Notice of their names and addresses and their Fee Mortgage(s) shall not have
been satisfied or discharged of record. Such Fee Mortgagee(s) shall be permitted
to correct or remedy Landlord's alleged breach or default within the same time
within which Landlord is permitted to do so, and with like effect as if Landlord
had done so. Tenant's failure to give Fee Mortgagee(s) the Notice required by
this Section shall not be a Default by Tenant, but no Notice by Tenant of any
default by Landlord shall be legally effective against such Fee Mortgagee(s)
unless and until Tenant shall have given such Notice to such Fee Mortgagee(s).
17.8 Foreclosure. Notwithstanding anything to the contrary in this
Lease, any sale of this Lease and of the Leasehold Estate to a Prime Mortgagee
or of the Fee Estate to a Fee Mortgagee in any proceedings for the foreclosure
of any Prime Mortgage or Fee Mortgage (as applicable), or any assignment,
transfer or conveyance to a Prime Mortgagee or a Fee Mortgagee in lieu of such
foreclosure, shall not be deemed to violate this Lease.
18. NOTICE TO LANDLORD OF PRIME MORTGAGES.
18.1 Initial Notice. If Tenant enters into any Prime Mortgage(s), then
the Prime Mortgagee(s) thereunder shall be entitled to the Prime Mortgagee
protections provided for under this Lease only from and after such time as
Tenant or such Prime Mortgagee has given Landlord Notice of the name and address
of such Prime Mortgagee, accompanied by a copy of the executed Prime Mortgage.
18.2 Change of Address. Any Prime Mortgagee shall be free to change its
name and address from time to time by Notice to Landlord. In the event of a
change of name, such Notice may be provided either by the original Prime
Mortgagee or by the Prime Mortgagee under its new name, without proof of any
kind confirming the change of name. Notice of any change of a Prime Mortgagee's
identity or address, or of a transfer of a Prime Mortgage, may be made by any
means permitted for the original Notice of the Prime Mortgagee's original name
and address.
18.3 Termination of Prime Mortgagee's Rights. If a Prime Mortgagee is
entitled to the Prime Mortgagee protections provided for under this Lease, then
such entitlement shall not
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terminate unless and until such time, if any, as the Prime Mortgage shall have
been satisfied and discharged of record as evidenced by the written report of a
title insurance company licensed in the State or notice to Landlord signed by
such Prime Mortgagee.
18.4 Transfer of Fee Estate. Notice to Landlord of the name and address
of a Prime Mortgagee shall bind any subsequent holder of the Fee Estate provided
that such Prime Mortgagee's Prime Mortgage was recorded before the deed
conveying the Fee Estate to such transferee. The foregoing shall not limit the
right of any Prime Mortgagee to give any successor Landlord Notice of the name
and address of such Prime Mortgagee, and thereby become entitled, as against
such successor Landlord, to all the rights and protections of Prime Mortgagees
under this Lease.
18.5 Landlord's Acknowledgment of Prime Mortgagee. Landlord shall, upon
request, acknowledge receipt of the name and address of any Prime Mortgagee (or
proposed Prime Mortgagee) and confirm to such Prime Mortgagee that such Prime
Mortgagee is (or would be, upon closing of its loan) a Prime Mortgagee and has
(or would have) all the rights of a Prime Mortgagee under this Lease and is (or
would be) an Institutional Lender, if applicable. Such acknowledgment shall, if
requested, be in recordable form. If Landlord reasonably determines that any
purported Prime Mortgagee does not or would not qualify as such or as a
permitted Institutional Lender, then Landlord shall promptly give Notice of such
determination to Tenant and the purported Prime Mortgagee, which Notice shall
specify the reasonable basis for such determination.
19. PROTECTION OF PRIME MORTGAGEES.
If Tenant at any time or from time to time enters into any Prime
Mortgage(s), then so long as such Prime Mortgagee(s) are entitled to the
protections provided for under this Lease:
19.1 Cancellation, Surrender, Amendment, Etc. No voluntary
cancellation, termination, surrender, acceptance of surrender, abandonment,
amendment, or modification of this Lease shall bind a Prime Mortgagee if done
without the prior consent of such Prime Mortgagee, if the Prime Mortgagee
requires such consent.
19.2 Copies of Notices. If Landlord shall give any Notice to Tenant
(including any Notice of Default and a Notice of termination of this Lease for
any reason), then Landlord shall at the same time and by the same means give a
copy of such Notice to each Prime Mortgagee. No Notice to Tenant shall be
effective unless and until so given to each Prime Mortgagee. No Event of Default
or termination of this Lease predicated upon the giving of Notice to Tenant
shall be deemed to have occurred unless like Notice shall have been so given to
each Prime Mortgagee at the same time and by the same means, which Notice shall
describe in reasonable detail the alleged Default.
19.3 Tenant's Cure Period Expiration Notice. If Tenant is in Default
under this Lease and the cure period applicable to Tenant expires without cure
of Tenant's Default, then Landlord shall promptly give Notice of such fact to
each Prime Mortgagee, which Notice
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shall describe in reasonable detail Tenant's Default (a "Tenant's Cure
Period Expiration Notice").
19.4 Right to Perform Covenants and Agreements. Any Prime Mortgagee
shall have the right, but not the obligation, to perform any obligation of
Tenant under this Lease and to remedy any Default by Tenant. Landlord shall
accept performance by or at the instigation of a Prime Mortgagee in fulfillment
of Tenant's obligations, for the account of Tenant and with the same force and
effect as if performed by Tenant. No such performance by a Prime Mortgagee shall
cause such Prime Mortgagee to become a "mortgagee in possession" or otherwise
cause such Prime Mortgagee to be deemed to be in possession of the Premises or
bound by this Lease. Notwithstanding the foregoing, in the event a leasehold
mortgagee of any Subtenant is undertaking the performance of a Non-Monetary
Default or the remedy of a Non-Monetary Default, a Prime Mortgagee shall not
have the right to undertake the same as long as such leasehold mortgagee is
pursuing the performance of such obligation or remedy of such Non-Monetary
Default with due diligence and in good faith.
19.5 Transfer of Tenant's Rights. Tenant may delegate or otherwise
transfer to a Prime Mortgagee any or all of Tenant's rights under this Lease,
but no such delegation or transfer shall bind Landlord unless and until Landlord
shall have received a copy of a written instrument effecting such delegation
accompanied by a photocopy of the Prime Mortgagee's fully executed Prime
Mortgage. Such delegation or transfer of authority may be effected by the terms
of the Prime Mortgage itself, in which case service upon Landlord of an executed
counterpart or certified copy of such Prime Mortgage, together with a written
notice specifying the provisions of such Prime Mortgage that delegate or
transfer such authority to the Prime Mortgagee, shall be sufficient to bind
Landlord to such delegation or transfer of rights.
19.6 Notice of Default and Mortgagee's Cure Rights. Upon receiving any
Notice of Default, any Prime Mortgagee shall have the same cure period granted
to Tenant under this Lease, plus the additional time provided for below, within
which to take (if such Prime Mortgagee so elects) whichever of the actions set
forth below shall apply with respect to the Default described in such Notice of
Default (such actions, "Mortgagee's Cure"; and a Prime Mortgagee's rights to
take such actions, "Mortgagee's Cure Rights"):
19.6.1 Monetary Defaults and Non-Monetary Defaults Curable Without
Obtaining Possession. In the case of a Monetary Default, or a Non-Monetary
Default that is reasonably susceptible of being cured by a Prime Mortgagee
without obtaining possession of the Premises, Prime Mortgagee shall be entitled
(but not required) to cure such Default within a cure period consisting of
Tenant's cure period under this Lease extended through the date sixty (60) days
after such Prime Mortgagee shall have received Tenant's Cure Period Expiration
Notice as to such Default. If the amount of any Monetary Default has not been
finally determined (for example, if a dispute has arisen between Landlord and
Tenant regarding the proper amount of Percentage Rent), then in place of curing
such Monetary Default a Prime Mortgagee shall be entitled instead to (a) cure
such Monetary Default to the extent the amount thereof is not in dispute; and
(b) escrow the remaining disputed portion of such Monetary Default into an
escrow account established and managed in the manner provided in Section of this
Lease. For the purposes of (b) above, in the event an escrow
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for this purpose is established by Players under Section 3.2 of the Players'
Lease, the escrow requirement hereunder shall be deemed to be satisfied.
19.6.2 Other Non-Monetary Defaults Curable Without Obtaining
Possession. In the case of any other Non-Monetary Default (other than a Personal
Default or a Non-Monetary Default that is not reasonably susceptible of being
cured by a Prime Mortgagee without having possession of the Premises), Prime
Mortgagee shall be entitled, but not required, to: (x) within a period
consisting of Tenant's cure period for the Default, extended through the date
ninety (90) days after receipt of the Tenant's Cure Period Expiration Notice as
to such Default, advise Landlord of Prime Mortgagee's intention to take all
reasonable steps necessary to remedy such Non-Monetary Default, (y) duly
commence the cure of such Non-Monetary Default within such extended period, and
thereafter diligently prosecute to completion the remedy of such Non-Monetary
Default, subject to Unavoidable Delay, and (z) complete such remedy within a
reasonable time under the circumstances, subject to Unavoidable Delay.
19.6.3 Defaults Curable Only by Obtaining Possession and Personal
Defaults. In the case of a Non-Monetary Default that is not reasonably
susceptible of being cured by a Prime Mortgagee without obtaining possession of
the Premises (including failure to Complete the Shoreside Complex) or a Personal
Default by Tenant, Prime Mortgagee shall be entitled (but not required) to do
the following, so long as, with respect to any Defaults other than those
referred to in this Section, such Prime Mortgagee has exercised or is exercising
the applicable Mortgagee's Cure Rights as defined in this Lease:
19.6.3.1 During Cure Period. At any time during the cure period (if
any) that applies to Tenant, extended through the date ninety (90) days after
such Prime Mortgagee's receipt of the Tenant's Cure Period Expiration Notice as
to such Default, or if no cure period applies to Tenant, then within ninety (90)
days after receiving Notice of the Non-Monetary Default, Prime Mortgagee shall
be entitled to institute proceedings, and (subject to any stay in any
proceedings involving the bankruptcy, insolvency, or reorganization of Tenant or
the like, or any injunction, unless such stay or injunction is lifted),
diligently prosecute the same to completion subject to Unavoidable Delay to
obtain possession of the Premises as mortgagee (including possession by a
receiver), or acquire the Leasehold Estate by foreclosure proceedings or
otherwise, including delivery of an assignment in lieu of foreclosure (the
obtaining of such possession or the completion of such acquisition, "Control of
the Premises").
19.6.3.2 Further Cure Obligations. Upon obtaining Control of the
Premises (before or after expiration of any otherwise applicable cure period),
Prime Mortgagee shall be entitled (but not required) to proceed with diligence
and continuity to cure such Non-Monetary Defaults as are reasonably susceptible
of being cured by such Prime Mortgagee (excluding Tenant's Personal Defaults,
which Prime Mortgagee shall not be required to cure), subject to Unavoidable
Delay.
19.6.3.3 Law Limitation. If a Prime Mortgagee is a Prohibited Person
(Tenant) or is otherwise denied the authority by the Missouri Gaming Commission
acting pursuant to the Missouri Gambling Law, or pursuant to any other
applicable Law, other
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than a temporary stay of foreclosure in Tenant's Bankruptcy Proceedings, to
obtain Control of the Premises, then the extended cure periods applicable to
Non-Monetary Defaults that are not reasonably susceptible of cure without
obtaining possession of the Premises shall, from and after such date, no longer
be applicable to or benefit such Prime Mortgagee unless such Prime Mortgagee
transfers its Prime Mortgage to a Prime Mortgagee that is so qualified.
19.6.3.4 Operating Covenant Default. Notwithstanding any provision to
the contrary in Sections 19.61, 19.62 or 19.63, owing to the severe
impact that an Operating Covenant Default will have on the Shoreside Complex and
the Premises, the cure period applicable to an Operating Covenant Default shall
be limited to that provided in Section 27.1.3.
19.7 Effect of Cure. A Prime Mortgagee shall not be required to
continue to exercise Mortgagee's Cure Rights or otherwise proceed to obtain or
to exercise Control of the Premises if and when the Default that such Prime
Mortgagee was attempting to cure shall have otherwise been cured.
19.8 Quiet Enjoyment. So long as the time period for a Prime Mortgagee
to exercise Mortgagee's Cure Rights with respect to a Non-Monetary Default by
Tenant has not expired (and provided that all Monetary Defaults are cured within
Prime Mortgagee's cure period provided for under this Lease), Landlord shall not
(i) re-enter the Premises, (ii) serve a notice of election to terminate this
Lease or (iii) bring a proceeding on account of such Default to (A) dispossess
Tenant and/or other occupants of the Premises, (B) re-enter the Premises, (C)
terminate this Lease or the Leasehold Estate, or (D) otherwise exercise any
other rights or remedies under this Lease by reason of such Default. Nothing in
the Prime Mortgagee protections provided for in this Lease shall be construed to
either (a) extend the Term beyond the expiration date provided for in this Lease
that would have applied if no Default had occurred; (b) require any Prime
Mortgagee to cure any Personal Default by Tenant; (c) excuse Tenant or any
Subtenant from personal liability for the performance of Lease obligations; or
(d) prevent or delay any personal action against Tenant or any Subtenant or any
of their respective assets. If however, a Prime Mortgagee shall fail to cure a
Default within the time provided to it under this Article 19, Landlord shall be
free to exercise all remedies otherwise provided in the Lease or available at
law or equity for such Default without further notice or opportunity to Prime
Mortgagee to effect cure.
19.9 Subordinate Liens Affecting Leasehold Estate. Provided the
Prohibited Lien does not constitute a lien on the Fee Estate, a Prime Mortgagee
shall not be required to discharge a Prohibited Lien that is junior in priority
to the lien of its Prime Mortgage, except as necessary to prevent such
Prohibited Lien from foreclosing upon the Premises prior to the completion of
foreclosure of such Prime Mortgagee's Mortgage (and resulting extinguishment of
such junior lien).
19.10 Prime Mortgagee's Right to Enter Premises. Subject to constraints
of applicable Law, including, without limitation, the Missouri Gambling Law,
Landlord and Tenant authorize each Prime Mortgagee to enter the Premises as
necessary to effect Mortgagee's Cure and take any action(s) reasonably necessary
to effect Mortgagee's Cure.
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19.11 Rights of Prime Mortgagee Upon Acquiring Control. If any Prime
Mortgagee or a purchaser at a foreclosure sale shall acquire Control of the
Premises and shall cure all Monetary Defaults and proceed and continue to
exercise Mortgagee's Cure Rights and cure all other Defaults in accordance with
the provisions of this Lease, then (i) any Personal Defaults by Tenant shall not
be asserted against such Prime Mortgagee or any or its direct or remote
permitted Transferees; and (ii) Landlord shall recognize any purchaser of the
Leasehold Estate pursuant to a foreclosure sale under a Prime Mortgage, or any
transferee of the Leasehold Estate under an assignment in lieu of foreclosure,
or, if the Prime Mortgagee should be such purchaser or assignee, the Prime
Mortgagee and any assignee of the Prime Mortgagee, provided such Person (a) is
not a Prohibited Person (Tenant); and (b) assumes in writing all obligations
under this Lease.
20. PRIME MORTGAGEE'S RIGHT TO A NEW LEASE.
20.1 New Lease. If this Lease shall terminate before its stated
expiration date for any reason other than the failure of a Prime Mortgagee to
effect cure of any Default within the cure periods provided in this Lease or
pursuant to the provisions of Article and Article hereof, then (in addition to
any other or previous Notice required to be given by Landlord to a Prime
Mortgagee) Landlord shall, within ten (10) Business Days, give Notice of such
termination to each Prime Mortgagee entitled to Prime Mortgagee protections
under this Lease. Landlord shall, upon a Prime Mortgagee's request given within
sixty (60) days after such Prime Mortgagee's receipt of such notice, enter into
(and if Landlord fails to do so, shall be deemed to have entered into) a new
lease of the Premises, effective as of the Termination Date, for the remainder
of the Term on the same terms and provisions contained in this Lease, but
excluding any requirements that have already been performed or no longer apply
(a "New Lease"), provided such Prime Mortgagee shall, at the time of execution
and delivery of such New Lease, pay to Landlord any and all sums then due under
this Lease as if this Lease had not been terminated and cure all Defaults other
than Personal Defaults of the Tenant. If a Prime Mortgagee enters into a New
Lease, then such Prime Mortgagee shall pay all reasonable expenses, including
reasonable attorneys' fees, court costs and disbursements, incurred by Landlord
in connection with Tenant's Default and the termination of this Lease, the
recovery of possession of the Premises, and the preparation, execution and
delivery of the New Lease. The following additional provisions shall apply to
any New Lease:
20.2 Form and Priority. Any New Lease shall be in recordable form. Such
New Lease shall not be subject to any rights, liens, or interests other than
those to which this Lease was subject at the time of its termination or any
priority liens established in Tenant's Bankruptcy Proceedings. The provisions of
the immediately preceding sentence shall be self- executing. Landlord shall, if
requested, execute and deliver such corporate resolutions, partnership
certificates and other documents as shall be reasonably necessary to enable the
tenant under such New Lease (the "New Tenant") to obtain title insurance with
respect to the New Lease, at such New Tenant's expense.
20.3 Pendency of Dispute. If Landlord and the New Tenant disagree
regarding any payment due Landlord in connection with execution of a New Lease,
then New Tenant (if an Institutional Lender or a Prime Mortgagee's Agent) shall
be deemed to have performed its
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payment obligation if such New Tenant: (a) pays Landlord the full amount not in
controversy and (b) escrows any additional sum claimed to be due by Landlord in
an escrow account established and governed in the manner established in Section
3.2 hereof. The parties shall cooperate to determine any disputed
amount promptly in accordance with the terms of this Lease or the New Lease,
whichever applies.
20.4 Assignment of Certain Items. Upon execution of a New Lease,
Landlord shall assign to New Tenant all of Landlord's right, title and interest
in and to: (a) all moneys (including insurance proceeds and Condemnation
awards), if any, then held by, or payable to, Landlord that Tenant would have
been entitled to receive but for termination this Lease; and (b) all Subleases,
subject to Landlord's assignment of rights under the Players' Lease.
20.5 Preservation of Subleases. Between the Termination Date and the
date of execution and delivery of a New Lease, if a Prime Mortgagee shall have
requested a New Lease and be entitled to a New Lease under this Article 20,
Landlord shall not cancel any Sublease or accept any cancellation, termination
or surrender of a Sublease (unless such termination shall be effected as a
matter of law upon the termination of this Lease, in which case such Sublease
shall, at New Tenant's option, be reinstated upon execution of the New Lease)
without the consent of such Prime Mortgagee.
21. INTERACTION OF MORTGAGES WITH OTHER ESTATES AND PARTIES.
21.1 Prime Mortgages and Fee Mortgages. A Prime Mortgage shall not
encumber or in any other way affect the Fee Estate or affect, limit or restrict
Landlord's rights and remedies under this Lease except as expressly provided in
this Lease. Any Fee Mortgage made by Landlord at any time shall be subject to
this Lease. Any Fee Mortgagee, and in the event of a foreclosure of a Fee
Mortgage or delivery of a deed in lieu of such foreclosure, the Fee Mortgagee or
grantee or successful bidder at the foreclosure sale, shall succeed only to the
Fee Estate, subject to this Lease (whether this Lease [or a New Lease in
substitution therefor] is at the time held by Tenant or by a Prime Mortgagee as
New Tenant or pursuant to foreclosure, delivery of an assignment in lieu of
foreclosure, or otherwise). Upon a foreclosure under a Prime Mortgage or
delivery of an assignment of this Lease in lieu of foreclosure under a Prime
Mortgage, the Prime Mortgagee shall succeed only to the Leasehold Estate, and
any such foreclosure or assignment in lieu of foreclosure shall not affect the
Fee Estate (subject to this Lease) or the rights of any Fee Mortgagees as
against Landlord or the Fee Estate (which shall in all events remain subject to
this Lease).
21.2 Prime Mortgagee's Agent. Any Prime Mortgagee that is an
Institutional Lender may exercise its rights (including Mortgagee's Cure Rights
and the right to obtain a New Lease) under this Lease, or perform any action
permitted to be taken by a Prime Mortgagee under this Lease, through a Prime
Mortgagee's Agent. A Prime Mortgagee's Agent shall be entitled to all the
rights, privileges, and protections of Prime Mortgagees under this Lease.
21.3 Interaction Between Lease and Prime Mortgage. If a Prime
Mortgagee's Prime Mortgage limits such Prime Mortgagee's exercise of any rights
and protections provided for in
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this Lease, then as between Tenant and such Prime Mortgagee the terms of such
Prime Mortgage shall govern. Tenant's default as mortgagor under a Prime
Mortgage shall not constitute a Default under this Lease except to the extent
that Tenant's actions or failure to act in and of itself constitutes a Default
under this Lease.
21.4 Conflicts Between Mortgagees. If more than one Prime Mortgagee
desires to exercise Mortgagee's Cure Rights or the right to obtain a New Lease,
or if more than one Prime Mortgagee or more than one Fee Mortgagee desires to
exercise any other right or privilege provided for Mortgagees under this Lease,
then the party against whom such rights or privileges are to be exercised shall
be required to recognize either: (a) only the Fee Mortgagee or Prime Mortgagee,
as applicable, that desires to exercise such right or privilege and whose Fee
Mortgage or Prime Mortgage, as applicable, is most senior in lien (as against
other Mortgages of its type [Fee or Prime, as applicable]) or (b) such other Fee
Mortgagee or Prime Mortgagee, as applicable, as has been designated in writing
by all Fee Mortgagees or Prime Mortgagees, as applicable, to exercise such right
or privilege. Priority of Mortgages shall be conclusively evidenced either by
(a) the report or certificate of a title insurance company licensed to do
business in the State; or (b) joint written instructions of all Prime Mortgagees
and/or fee mortgagees, as applicable; or (c) order of court of competent
jurisdiction.
21.5 No Merger. Without the written consent of Landlord, Tenant, and
all Mortgagees, the Fee Estate and the Leasehold Estate shall remain distinct
and separate estates and shall not merge, notwithstanding the acquisition of
both the Fee Estate and the Leasehold Estate by Landlord, Tenant, any Mortgagee,
or a third party, whether by purchase or otherwise.
22. BANKRUPTCY.
22.1 Affecting Tenant. If Tenant (as debtor in possession) or a trustee
in bankruptcy for Tenant rejects this Lease in connection with any proceeding
involving Tenant under the United States Bankruptcy Code or any similar state or
federal statute for the relief of debtors (a "Bankruptcy Proceeding"), then
Landlord agrees for the benefit of each and every Prime Mortgagee that such
rejection shall be deemed Tenant's assignment of the Lease and the Leasehold
Estate to Tenant's Prime Mortgagee(s), in the nature of an assignment in lieu of
foreclosure. Upon such deemed assignment, this Lease shall not terminate and
each Prime Mortgagee shall continue to have all the rights of a Prime Mortgagee
under this Lease as if the Bankruptcy Proceeding had not occurred, unless such
Prime Mortgagee shall reject such deemed assignment by Notice to Landlord within
thirty (30) days after receiving Notice of the rejection of this Lease in
Bankruptcy Proceedings. If any court of competent jurisdiction shall determine
that this Lease shall have been terminated notwithstanding the deemed assignment
provided for in place of rejection of this Lease, then Tenant's Prime Mortgagees
shall continue to be entitled to a New Lease as provided in Article 20 of this
Lease.
In the event of an assignment by operation of law or otherwise in a
Bankruptcy Proceeding, if Landlord does not or is not permitted to terminate
this Lease, the assignee shall provide Landlord with adequate assurance of
future performance of all of the terms, covenants
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and conditions of this Lease, which shall include but not be limited to,
assumption of all of the terms, covenants and conditions of this Lease by the
assignee and the making by the assignee of the following express covenants to
the Landlord:
(a) the assignee has sufficient capital to pay the Rent and
other amounts due under the Lease for the entire Term or actually pays the
Default Substitute Percentage Rent or the Approved Substitute Rent, as the case
may be, and performs the other obligations of Tenant under this Lease;
(b) the assignee either (i) holds all Government licenses,
permits and approvals necessary to operate the Premises in accordance with this
Lease; or (ii) is diligently pursuing the obtaining of such licenses, permits
and approvals, none of which have been permanently denied; and
(c) the assignee is not a Prohibited Person (Tenant).
22.2 Affecting Landlord. If Landlord (as debtor in possession) or a
trustee in bankruptcy for Landlord rejects this Lease in connection with any
Bankruptcy Proceeding involving Landlord, then:
22.2.1 Tenant's Election. Tenant shall not have the right to elect to
treat this Lease as terminated except with the prior written consent of each and
every Prime Mortgagee whose recorded Prime Mortgage requires such consent by the
applicable Prime Mortgagee.
22.2.2 Continuation of Lease. If Tenant does not properly elect to
treat this Lease as terminated, then this Lease shall continue in effect without
change upon all the same terms and conditions as are set forth in this Lease,
including provisions relating to Rent and New Leases. Thereafter, Tenant and its
successors (including Prime Mortgagees) shall be entitled to offset against Rent
any damages arising from such rejection, including but not limited to attorneys'
fees and expenses reasonably incurred in connection with the rejection of this
Lease and adjustment of the parties' subsequent rights and duties among
themselves, in accordance with applicable law governing the Bankruptcy
Proceeding, and any such offset properly made shall not be a Default. If Tenant
claims a greater offset than the offset to which Tenant is lawfully entitled,
then the taking of such excessive offset by Tenant shall constitute a Monetary
Default as to which Tenant and Prime Mortgagees shall be entitled to Notice and
opportunity to cure as provided in this Lease.
22.2.3 Assumption of Lease. If Landlord (as debtor in possession) or a
trustee in bankruptcy for Landlord moves to assume this Lease or provides for
assumption of this Lease in any Bankruptcy Proceeding involving Landlord, Tenant
shall, in addition to all its other rights and remedies, be compensated promptly
for all costs and expenses (including but not limited to attorneys' fees and
expenses) resulting from or reasonably incurred in connection with the
proceedings involving assumption (whether or not such assumption is granted or
confirmed), any subsequent proceedings to assign the Lease to another or to
reject the Lease, enforcement of rights to cure and to compensation for damages
resulting from a
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breach of the Lease, and adjustment of the parties' subsequent rights
and duties among themselves.
22.2.4 Continuation of Prime Mortgages. The lien of any Prime Mortgage
that was in effect before the rejection of this Lease shall extend to Tenant's
continuing possessory rights with respect to the Premises following such
rejection, with the same priority as it would have enjoyed had such rejection
not taken place.
23. QUIET ENJOYMENT.
There shall be no express or implied covenant of quiet enjoyment by
Landlord under this Lease, except for acts or omissions of Landlord itself.
24. FORCE MAJEURE.
Tenant's obligation to perform or observe any term, condition, covenant
or agreement on Tenant's part to be performed or observed pursuant to this Lease
(other than Tenant's obligation to pay any item of Rent when due) shall be
suspended during such time as such performance or observance is prevented or
delayed by reason of any Unavoidable Delay.
25. ACCESS.
Landlord and its agents, representatives and designees shall have the
right to enter the Premises and the Shoreside Complex upon reasonable notice to
Tenant during regular business hours, and in accordance with Tenant's or
Subtenant's reasonable instructions, for the purpose of curing Tenant's or
Subtenant's Defaults (provided that Landlord shall have given Tenant or
Subtenant prior Notice of such Default in accordance with this Lease) or for
purposes relating to the mortgaging or sale of the Fee Estate in compliance with
this Lease. In entering the Premises or the Shoreside Complex pursuant to this
Article, Landlord and its authorized individuals shall not unreasonably
interfere with the conduct of operations thereon by Tenant or any Subtenant and
shall comply with Tenant's and such Subtenant's reasonable security procedures.
26. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS.
26.1 Landlord's Option. If Tenant shall at any time fail to make when
required under the Lease any payment or perform any other act on its part to be
made or performed, then Landlord, after ten (10) Business Days' Notice to
Tenant, or with such notice (if any) as is reasonably practicable under the
circumstances, in case of an emergency, and without waiving or releasing Tenant
from any obligation of Tenant or from any default by Tenant and without waiving
Landlord's right to take such action as may be permissible under this Lease as a
result of such Default, may (but shall be under no obligation to) make such
payment or perform such act on Tenant's part to be made or performed pursuant to
this Lease. Landlord may enter upon the Premises for such purpose, and take all
such action on the Premises, as
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may be reasonably necessary under the circumstances, but in doing so shall not
interfere with the conduct of operations on the Premises by Tenant or any
Subtenant and shall comply with Tenant's or Subtenant's reasonable security
procedures.
26.2 Reimbursement by Tenant. All reasonable sums paid by Landlord and
all costs and expenses reasonably incurred by Landlord, together with reasonable
attorneys' fees, in connection with the exercise of Landlord's cure rights under
Section 26.1, shall constitute Additional Rent. Tenant shall pay such Additional
Rent together with interest thereon at the Default Rate within thirty (30) days
after Landlord's demand accompanied by evidence reasonably establishing such
costs and expenses in accordance with this Lease.
27. DEFAULT BY TENANT; REMEDIES.
27.1 Definition of Event of Defaults. The term "Event of Default" shall
mean and refer to the occurrence of any one or more of the following
circumstances:
27.1.1 Players' Lease Default. If the occupant of Players' Premises
shall have failed to pay Percentage Rent or Substitute Percentage Rent as and
when due in accordance with this Lease, or any other Event of Default (as
defined in the Players Lease) shall occur under the Players Lease.
27.1.2 Monetary Default. If any other Monetary Default shall occur and
the Monetary Default shall continue for sixty (60) days after Landlord has given
Tenant Notice of such Monetary Default, specifying in reasonable detail the
amount of money required to be paid by Tenant and the nature of such payment,
provided however that if Tenant shall fail on more than two occasions in any
Percentage Rent Year to make payment of or cause the occupant of Players'
Premises to make payment of Percentage Rent before Landlord gives such Notice
(whether or not such payment was made within the aforesaid cure period), the
notice and cure period for subsequent payments due hereunder within such
Percentage Rent Year and the next Succeeding Percentage Rent Year shall be
shortened to ten (10) days.
27.1.3 Operating Covenant Defaults. If Tenant, or the occupant
of Players' Premises breaches the provisions of Section 7.2 hereof
voluntarily (a "Voluntary Operating Covenant Default") or if Tenant or such
occupant is denied (a "Governmental Denial") the necessary Government licenses,
permits, certificates or approvals (collectively "Licenses and Approvals") of
the Missouri Gaming Commission or any other Government agency to operate the
Players Premises and such denial is not rescinded or revoked within seventy-two
(72) hours or, if any application for Licenses and Approvals is rejected or if
any Licenses and Approvals are rescinded, revoked or suspended for more than
seventy-two (72) hours (an "Involuntary Operating Covenant Default") and in the
case of a Voluntary Operating Covenant Default such Voluntary Operating Covenant
Default is not remedied within thirty (30) days after Landlord has given Tenant
notice of such Voluntary Operating Covenant Default in reasonable detail (the
"Voluntary Operating Covenant Cure Period") and in the case of an Involuntary
Operating Covenant Default such Involuntary Operating Covenant Default is not
remedied within the "Appeal Period" (hereinafter defined) (the "Involuntary
Operating Covenant Cure Period") provided in the case of a Voluntary Operating
Covenant Default or
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an Involuntary Operating Covenant Default Tenant or such occupant is paying
Landlord Default Substitute Percentage Rent during the Voluntary Operating
Covenant Cure Period or the Involuntary Operating Covenant Cure Period, as the
case may be, subject to the right of a Prime Mortgagee or leasehold mortgage of
such occupant to extend the Voluntary Operating Covenant Cure Period or
Involuntary Operating Covenant Cure Period, as the case may be, in order to
substitute another operator of the Premises, so long as such Mortgagee pays
Landlord Default Substitute Percentage Rent and performs the other obligations
under this Lease or the applicable Sublease. For purposes hereof, the "Appeal
Period" shall be the period during which Tenant or such occupant in good faith
and with due diligence pursues a final non-appealable determination concerning
the validity of a Governmental Denial. In the event there is an Operating
Covenant Default, Tenant hereby assigns to Landlord all of Tenant's rights to
enforce like obligations under Section 29.1.3. of the Players' Lease and any
other Sublease of Players' Premises in Landlord's own name or in the name of
Tenant and all other remedies of Tenant upon the occurrence of an Operating
Covenant Default afforded Tenant under the Players' Lease. A Voluntary Operating
Covenant Default and an Involuntary Operating Covenant Default are collectively
referred to herein as an "Operating Covenant Default".
27.1.4 Non-Monetary Default. If any other Non-Monetary Default shall
occur and the Non-Monetary Default shall continue and not be remedied by Tenant
within ninety (90) days after Landlord shall have delivered to Tenant a Notice
describing the same in reasonable detail, or, in the case of a Non-Monetary
Default that cannot with due diligence be cured within ninety (90) days from
such Notice, if Tenant shall not (x) within ninety (90) days from Landlord's
Notice advise Landlord of Tenant's intention to take all reasonable steps
necessary to remedy such Non-Monetary Default, (y) duly commence the cure of
such Non-Monetary Default within such period, and then diligently prosecute to
completion the remedy of the Non-Monetary Default and (z) complete such remedy
within a reasonable time under the circumstances.
27.1.5 Reciprocal Easement Default. An Event of Default (as defined in
the Reciprocal Easement Agreement) shall occur under the Reciprocal Easement
Agreement.
27.2 Remedies. Subject to the provisions of Section 27.2.1 hereof, upon
occurrence of an Event of Default, Landlord may exercise any or all of the
following remedies, and any other remedies provided for under this Lease or
available by law, all of which shall be cumulative and all of which shall be
subject to the rights of Prime Mortgagees under this Lease: (a) Landlord shall
have the right (unless such Event of Default is caused solely by the acts or
omissions of HMHC) to proceed by appropriate judicial proceedings, either at law
or in equity, to enforce performance or observance by Tenant of the applicable
provisions of this Lease and/or to recover damages against Tenant for breach of
this Lease; and/or (b) Landlord may give Tenant a notice of intention to end the
Term at the expiration of thirty (30) days from the date of service of such
notice of intention. Upon the expiration of such thirty (30) day period, unless
Tenant shall have cured the Event of Default that gave rise to such notice, this
Lease, the Leasehold Estate and the Term shall terminate and Landlord shall
retake possession of the Premises and all rights of Tenant shall come to an end
with the same effect as if that day were the expiration date of this Lease.
Tenant shall peaceably and quietly yield up and surrender to Landlord the
Premises.
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27.2.1 Assignment of Remedies. Notwithstanding any provision to the
contrary in this Section 27.2 or elsewhere in this Lease, until such time as the
Players' Lease is terminated, Landlord's sole remedy upon the occurrence of (a)
a Monetary Default by Tenant relating to the payment of Percentage Rent or
Substitute Percentage Rent and/or (b) an Operating Covenant Default, shall be to
pursue Tenant's remedies under the Players' Lease or any other Sublease of
Players' Premises, which remedies Tenant hereby assigns to Landlord.
27.3 Re-entry. Upon the occurrence of an Event of Default, this Lease,
at the option of Landlord, shall be terminated and Landlord or Landlord's agents
and employees may (to the extent permitted by law and subject to the rights of
Prime Mortgagees under this Lease) re-enter the Premises, or any part of the
Premises, either by summary dispossess proceedings or by any suitable action or
proceeding at law, or by force (to the extent permitted by Laws of the State) or
otherwise, without being liable to indictment, prosecution or damages, and may
repossess the same, and may remove any individual from the Premises, all so that
Landlord may have, hold and enjoy the Premises.
27.4 Damages. In addition to Landlord's other remedies hereunder, if
Landlord terminates this Lease by reason of an Event of Default, Tenant shall be
liable to Landlord for an amount equal to the excess of (A) the present value as
of the date of termination of all installments of Rent through the end of the
Term [the amount of Rent to be based upon the average annual Rent paid hereunder
for the immediately preceding two (2) years, or if less than two (2) years of
the Term has elapsed, based upon the amount of Four Million Five Hundred
Thousand Dollars ($4,500,000.00) per year], such present value to be computed
using a reasonable per annum discount rate, compounded semiannually, from the
respective dates upon which such Rent would be paid, over (B) the present value
as of such termination date of the fair market rental value of the Premises
through the end of the Term (such fair market rental value shall be reduced to
the extent that Tenant and/or any Subtenant fails to surrender its applicable
gaming license to the Missouri Gaming Commission and fails to cooperate with
Landlord's application to obtain a new gaming license on termination and
thereupon a non-gaming use of the Premises [or portion thereof for which a
gaming license is not so surrendered] shall be assumed). Such fair market rental
value of the Premises is to be determined by mutual agreement of Landlord and
Tenant or, if they cannot agree within ten (10) days of such notice, by an
arbitration as provided herein. Such present value is to be computed using a
reasonable per annum discount rate mutually agreed upon by Landlord and Tenant
or, if they cannot agree within ten (10) days, by arbitration as provided
herein, compounded semiannually, from the respective dates upon which such Rent
would be paid. The above damages shall be reduced by any damages paid to
Landlord pursuant to the provisions of the Players' Lease. Landlord shall have
no general duty to mitigate the aforesaid damages, but Landlord shall be
required to negotiate in good faith with a proposed successor to Tenant which
meets the criteria set forth on Exhibit G hereto and which is willing to assume
all obligations of Tenant or Tenant's Affiliate under the Joint Venture
Agreement and to execute and deliver to Landlord a Lease which is in form
identical to this Lease including, without limitation, the same Percentage Rent
payable hereunder with the exception of modifications necessitated by the change
in the identity of Tenant.
27.5 Injunctive Relief. In the event of any breach or threatened breach
by Tenant of any Lease covenants or agreements, Landlord shall be entitled to
enjoin such breach or
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threatened breach. The provisions of this Section shall be construed so as to be
consistent with the Law of the State so that remedies of Landlord described in
this Lease shall be available to the full extent but only to the extent that
they are not invalid or unenforceable under the Law of the State.
27.6 Pending Dispute Regarding Event of Default. Notwithstanding
anything to the contrary in the foregoing remedies provided for Landlord under
this Lease, if Tenant shall have given Landlord Notice before termination of
this Lease that Tenant contests Landlord's determination that an Event of
Default has occurred, then Landlord shall not disturb Tenant's possession of the
Premises, Tenant shall be entitled to remain in possession of the Premises under
this Lease, and the Term shall be deemed to continue, so long as Tenant: (a)
continues to pay Landlord the Rent (and to escrow the disputed portion of any
Rent into an escrow account established and managed in the manner set
forth in Section 3.2); and (b) continues to perform such other obligations under
this Lease as are not in dispute; and (c) is prosecuting appropriate judicial
proceedings to prevent Landlord from terminating this Lease. If the Subtenant
occupying Players' Premises is contesting the same event under the Players'
Lease or any other Sublease of Players' Premises then Tenant shall not be
entitled to independently invoke this Section, and the outcome of such contest
shall be determinative of rights under this Lease.
27.7 Arbitration. Upon the occurrence of a Non-Monetary Default or a
Monetary Default, the amount of which is disputed by Tenant, Tenant may, by
written notice to Landlord, elect an arbitration which shall be conducted in
accordance with the following procedures:
27.7.1 Voluntary Appointment. Landlord and Tenant shall appoint a
single Qualified Arbitrator who is not affiliated with either Landlord or
Tenant. Such Qualified Arbitrator shall render a decision within thirty (30)
days of such appointment.
27.7.2 Appointment by Arbitrators. If Landlord and Tenant cannot agree
on a single Qualified Arbitrator within twenty (20) days after an election to
submit the matter to arbitration, then Landlord and Tenant shall each appoint
one Qualified Arbitrator within ten (10) days following such twenty (20) day
period. The two appointed Qualified Arbitrators shall within ten (10) days of
such referral appoint a third Qualified Arbitrator, and if such Qualified
Arbitrators are not able to agree on such third Qualified Arbitrator, then, on
five (5) days' notice in writing to the other Qualified Arbitrator, either
Qualified Arbitrator shall apply to the branch of the American Arbitration
Association in St. Louis, Missouri to designate and appoint such third Qualified
Arbitrator. The three Qualified Arbitrators shall reach a decision within twenty
(20) days after the appointment of the third Qualified Arbitrator.
27.7.3 Failure to Appoint. If either Landlord or Tenant fails to
appoint a Qualified Arbitrator, then the single Qualified Arbitrator designated
by the other party shall act as the sole Qualified Arbitrator and shall be
deemed to be the unanimously approved Qualified Arbitrator to resolve such
dispute. The decision and award of such sole Qualified Arbitrator shall be
binding upon the parties.
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27.7.4 Fees and Expenses. The fees and expenses of the Qualified
Arbitrators shall be paid by the party whose position is not adopted by the
Qualified Arbitrators. The award of any Qualified Arbitrators made in accordance
with this Section shall be binding on the parties and enforceable in any court
of competent jurisdiction.
27.7.5 Proceedings. All proceedings by the Qualified Arbitrators shall
be conducted in accordance with the Uniform Arbitration Act as enacted in the
State of Missouri, except to the extent the provisions of such Act are modified
by this Lease or the mutual agreement of the parties. Unless otherwise agreed,
all arbitration proceedings shall be conducted in St. Louis, Missouri.
27.7.6 Arbitration Decisions. In all arbitration proceedings submitted
to any Qualified Arbitrators, the Qualified Arbitrators shall be required to
agree upon and approve the substantive position advocated by one party with
respect to each disputed item. The Qualified Arbitrator(s) shall exclusively
determine whether a particular dispute falls within the scope of their
authority.
There shall be no right to submit a matter to arbitration under this
Lease in the event such matter has been or is being arbitrated in accordance
with the terms of the Joint Venture Agreement or the Players' Lease, in which
case, the outcome of such other arbitration shall be determinative of rights
under this Lease.
28. TERMINATION.
28.1 Rights on Termination. Upon the Termination Date, all improvements
constituting part of or located on the Premises [other than, subject to the
provisions of Section hereof, (i) the portion of any signs bearing any
Subtenant's trademarks, servicemarks or other marks owned by a Subtenant, which
such Subtenant may remove within thirty (30) days after the Termination Date;
(ii) Tenant's Property that is not affixed to the Premises; and (iii) Gaming
Equipment shall become Landlord's property unless Landlord requires the
Restoration (hereinafter defined) as hereinafter provided and Landlord and
Tenant shall have the rights and obligations set forth in this Article.
28.2 Possession. Unless Landlord elects for Tenant to undertake the
Restoration, Tenant shall deliver to Landlord possession of the Premises, in its
then current condition and state of repair, unless the Termination Date occurs
by reason of Casualty or Condemnation whereupon Tenant shall deliver to Landlord
possession of the Premises or proceeds of Condemnation, as the case may be, in
accordance with the provisions of Section 14.2 or Section 15.1 hereof, as
applicable.
28.3 Documentation. If possession of the Premises and/or Shoreside
Complex are being returned to Landlord without the Restoration, Tenant shall
deliver to Landlord copies or originals of all contracts which shall be
terminated at its sole cost and expense on the Termination Date unless otherwise
elected, maintenance and service records, plans, specifications, manuals and all
other papers and documents that may be necessary or appropriate for the proper
operation and management of the Shoreside Complex.
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28.4 Miscellaneous Assignments. If possession of the Premises and/or
Shoreside Complex are being returned to Landlord without the Restoration, Tenant
shall assign to Landlord, without recourse, all assignable licenses and permits
affecting the Premises and all assignable contracts, warranties and guarantees
then in effect relating to the Shoreside Complex.
28.5 Termination of Memorandum of Lease. If the parties shall have
entered into and recorded a Memorandum of Lease, then they shall enter into a
memorandum, in recordable form reasonably satisfactory to both parties,
terminating the Memorandum of Lease.
28.6 Restoration. If Landlord so elects, Landlord may require Tenant
(to such extent as Landlord may reasonably require) as of the Termination Date,
at Tenant's sole cost and expense, to demolish all improvements on the Premises
and restore the Premises as nearly as possible to their condition prior to the
construction of the Shoreside Complex (the "Restoration").
28.7 Personal Property and Equipment. Even if Tenant is not required to
effect the Restoration, Tenant shall remove or cause Subtenants to remove all
Tenant's Property that is not attached to the Premises. Landlord shall be
entitled at its option to assume Tenant's or Subtenant's rights under any leases
of Gaming Equipment (which Tenant hereby agrees to assign or caused to be
assigned to Landlord). Landlord shall also be entitled at its option to purchase
any personal property or equipment that Tenant and/or Subtenants are required to
remove pursuant to this Section (other than personal property or equipment
bearing any trademark, service mark or other mark owned by a Subtenant or any
other affiliate or subsidiary of Subtenant) at its then fair market value,
payment to be made by certified check on the Termination Date. Tenant's Property
not removed from the Premises at or within thirty (30) days after the
Termination Date shall be deemed abandoned and become property of Landlord,
without the necessity of any payment from Landlord, and Tenant shall remain
liable for the cost of removal of such property and for the cost of repair of
any damage to the Shoreside Complex occasioned thereby.
29. NO BROKER.
Neither Landlord nor Tenant has engaged the services of a broker,
finder or agent in this transaction as it relates to the Premises, and neither
has employed, nor authorized any other Person to act in such capacity. Landlord
and Tenant each hereby agree to indemnify and hold the other harmless from and
against any and all claims, losses, liabilities, damages or expenses (including,
without limitation, reasonable attorneys' fees, costs and disbursements incurred
in the enforcement of this indemnity) suffered or incurred by the other party as
a result of a claim brought by a Person engaged or claiming to be engaged as a
finder, broker or agent by the indemnifying party. The foregoing representation,
warranty and indemnity shall survive the expiration or earlier termination of
this Lease.
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30. WAIVERS.
30.1 No Waiver by Silence. Failure to complain of any act or omission
shall not be deemed a waiver of any of rights under this Lease. No waiver,
express or implied, of any breach of any provision of this Lease shall be
effective unless set forth in writing signed by the waiving party or be a waiver
of a breach of any other provision of this Lease or a consent to any subsequent
breach of the same or any other provision. No acceptance by Landlord of any
partial payment shall constitute an accord or satisfaction but shall only be
deemed a part payment on account.
30.2 Waiver of Trial by Jury. LANDLORD AND TENANT HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER AGAINST THE
OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, INCLUDING ANY CLAIM OF INJURY OR DAMAGE, AND ANY EMERGENCY OR
STATUTORY REMEDY WITH RESPECT TO THE FOREGOING.
31. MEMORANDUM OF LEASE.
The parties shall, contemporaneously herewith, execute, acknowledge and
deliver duplicate originals of a recordable memorandum of lease (the "Memorandum
of Lease") in the form of Exhibit H.
32. ESTOPPEL CERTIFICATES.
32.1 Rights of Each Party. Upon not less than ten (10) Business Days'
prior written request (an "Estoppel Certificate Request") by either party to
this Lease (the "Requesting Party"), the other party to this Lease (the
"Certifying Party") shall execute, acknowledge and deliver to the Requesting
Party (or directly to a third party whose name and address are provided by the
requesting party [a "Third Party"]) up to four original counterparts of an
Estoppel Certificate. An Estoppel Certificate Request shall not be valid unless
accompanied by a certificate by the Requesting Party that to the best of the
Requesting Party's knowledge the proposed form of Estoppel Certificate is
substantially correct and omits no material information required to be disclosed
in such Estoppel Certificate. Any Estoppel Certificate may be relied upon by any
Third Party to whom an Estoppel Certificate is required to be directed.
33. MISCELLANEOUS.
33.1 Reasonableness. Wherever this Lease states that approval by either
party shall not be unreasonably withheld: (a) such approval shall not be
unreasonably delayed or conditioned; and (b) no withholding of approval shall be
deemed reasonable unless withheld by Notice specifying reasonable grounds, in
reasonable detail, for such withholding of
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approval. Where reasonableness is not specified as the standard for
action, a party may act in its sole discretion.
33.2 Documents in Recordable Form. Wherever this Lease requires either
party to deliver to the other a document in recordable form, both parties shall
be deemed to have consented to the recording of such document, at the sole
expense of the party that elects to record it.
33.3 Further Assurances. Each party agrees to execute and deliver such
further documents, and perform such further acts, as may be reasonably necessary
to achieve the intent of the parties with respect to Tenant's leasing of the
Premises from Landlord, as set forth in this Lease. Without limiting the
generality of this Section, upon request at any time or from time to time either
party shall execute and deliver to the other: (a) additional counterparts of
this Lease or any related documents, provided such additional counterparts are
prepared at the expense of the party requesting them; and (b) such documentation
as any title insurance company shall require to evidence such matters as due
formation, authorization and execution of the Lease on the part of the party of
whom the request is made.
33.4 No Third Party Beneficiaries. Nothing in this Lease shall be
deemed to confer upon any Person (other than Landlord, Tenant, Prime Mortgagees
or Fee Mortgagees) any right to insist upon, or to enforce against Landlord or
Tenant, the performance or observance by either party of its obligations under
this Lease.
33.5 Interpretation. No inference in favor of or against any party
shall be drawn from the fact that such party has drafted any portion of this
Lease. The parties have both participated substantially in the negotiation,
drafting and revision of this Lease with representation by counsel and such
other advisers as they have deemed appropriate. Material in brackets constitutes
parenthetical material within other parenthetical material and is intended to be
part of this Lease.
33.6 Captions. The captions of this Lease are for convenience and
reference only and in no way affect this Lease.
33.7 Cumulative Remedies. Except when expressly otherwise provided, the
remedies to which either party may resort under this Lease are cumulative and
are not intended to be exclusive of any other remedies or means of redress to
which such party may lawfully be entitled in the event of any breach or
threatened breach by the other party of any provision of this Lease.
33.8 Right of Injunction. In the event of a breach by either party of
any of its obligations under this Lease, the other party shall have the right to
obtain an injunction, in addition to the rights and remedies provided for under
this Lease.
33.9 Entire Agreement. This Lease contains all the terms, covenants and
conditions relating to Tenant's leasing of the Premises.
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33.10 Amendment. Any modification or amendment to this Lease must be in
writing signed by Landlord and Tenant and consented to by any Prime Mortgagee(s)
and Fee Mortgagee(s) having the right to consent to amendments or modifications
of this Lease pursuant to the terms of this Lease. Modifications or amendments
of this Lease executed by either party may be exchanged and delivered by
facsimile transmission, and shall be effective upon such transmission. The
parties shall promptly exchange original signature counterparts of amendments
executed by either party and initially exchanged and delivered by facsimile
transmission.
33.11 Partial Invalidity. If any term or provision of this Lease or the
application of such term or provision to any party or circumstance shall to any
extent be invalid or unenforceable, then the remainder of this Lease, or the
application of such term or provision to Persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected by such
invalidity, and each remaining term and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
33.12 Successors and Assigns. This Lease shall bind and benefit
Landlord and Tenant and their successors and assigns, but the foregoing shall
not limit or supersede any Transfer restrictions contained in this Lease.
33.13 Governing Law. This Lease and its interpretation and performance
shall be governed, construed and regulated by the laws of the State, without
regard to principles of conflict of laws.
33.14 Obligation to Perform. Wherever this Lease requires either party
to perform any obligation, such party shall be entitled to discharge such
obligation by causing it to be performed by some other person, but the foregoing
shall in no way limit, restrict or excuse Landlord's or Tenant's obligations
under this Lease or the restrictions on assignment, conveyance or transfer
contained in this Lease.
33.15 Counterparts. This Lease may be executed in counterparts, each of
which shall constitute one and the same agreement.
33.16 Time Periods. Whenever this Lease requires either party to
perform any action within a specified period, or requires that a particular
event occur within a specified period, if the last day of such period is not a
Business Day, then the period shall be deemed extended through the close of
business on the first Business Day following such period as initially specified.
This Section shall in no event delay or defer the effective date of any Rent
adjustment or the commencement of any period with respect to which interest on a
payment shall accrue.
33.17 Rule Against Perpetuities. If the rule against perpetuities or
any rule of law with respect to restrictions on the alienation of property or
any other rule of law shall limit the time when any event contemplated by this
Lease may occur, the happening of such event shall not be impaired within any
period permitted by such rule. Such period with respect to the rule against
perpetuities shall expire upon the expiration of twenty (20) years after the
death of the last survivor of the following individuals:
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Emily Rosenberg of Memphis, Tennessee
Dylan Loveland of Memphis, Tennessee
Dylan Buffalo of Germantown, Tennessee
The intent of this provision is to allow to the maximum extent
permissible by an applicable rule of law the occurrence of any event
contemplated by this Lease.
33.18 No Agency or Partnership. Nothing herein contained shall be
deemed or construed by the parties hereto, nor by any third party, as creating
the relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that no provision
contained herein, nor any acts of the parties hereto, shall be deemed to create
any relationship between the parties hereto other than the relationship of
Tenant and Landlord.
34. NOTICES.
All Notices and other communications required or permitted to be given
or delivered hereunder shall be in writing, addressed to Landlord or Tenant at
the addresses set forth below or at such other address as Landlord or Tenant may
designate by notice given to the other party in the manner herein provided, and
shall be deemed to have been given (a) on the date received if given by United
States mail, postage prepaid, registered or certified, return receipt requested,
or (b) on the date delivered if given by personal delivery or recognized
overnight courier service, provided that delivery is acknowledged in writing by
the receiving party or employee of such party:
Landlord:
HARRAH'S MARYLAND HEIGHTS LLC
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
Fax No.: (901) 762-8776
with a copy to:
HARRAH'S ENTERTAINMENT, INC.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: Corporate Secretary
Fax No.: (901) 762-8735
49
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Tenant:
RIVERSIDE JOINT VENTURE
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas,NV 89109
Attention: General Counsel
Fax No.: (702) 792-9843
with a copy to:
Horn, Goldberg, Gorny, Daniels, Plackter & Weiss
Suite 500 Citicenter Building
1300 Atlantic Avenue
Atlantic City, NJ 08401-7278
Attention: Melvyn J. Tarnopol, Esq.
Fax No.: (609) 348-6834
35. GAMING LICENSE.
Landlord shall undertake to obtain and shall maintain all gaming
licenses and approvals required by the State to enable Landlord to receive the
Percentage Rent.
36. RECIPROCAL EASEMENT AGREEMENT.
The parties shall, contemporaneously herewith, execute, acknowledge and
deliver the Reciprocal Easement Agreement.
37. JOINT VENTURE AGREEMENT.
Landlord acknowledges that the Joint Venture Agreement provides for the
purchase of the Fee Estate in connection with the buyout by Players of HMHC's
interest under the Joint Venture Agreement for an amount equal to the greater of
(i) the cost of the Fee Estate or (ii) fair market value of the Fee Estate and
should the Fee Estate become vested in a person or entity other than Landlord
such person or entity shall be bound by this Lease pursuant to the provisions of
the Joint Venture Agreement to consummate such sale to Players.
38. SURVIVAL.
The obligations of the Tenant and Landlord herein which are not fully
performed upon the expiration or termination of this Lease shall survive such
expiration or termination hereof.
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THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
on the Commencement Date.
"Landlord"
HARRAH'S MARYLAND HEIGHTS LLC
By: /s/ William S. Rosenberg
-----------------------------
William S. Rosenberg,
Authorized Representative
"Tenant"
RIVERSIDE JOINT VENTURE
BY: PLAYERS MH, L.P., General Partner
BY: PLAYERS MARYLAND
HEIGHTS, INC., Its General
Partner
By: /s/ Steven P. Perskie
--------------------------
Steven P. Perskie,
Secretary
BY: HARRAH'S MARYLAND HEIGHTS
CORPORATION, General Partner
By: /s/ William S. Rosenberg
-----------------------------
William S. Rosenberg,
Authorized Representative
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LEASE AGREEMENT
BETWEEN
RIVERSIDE JOINT VENTURE
and
PLAYERS MH, L.P.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. LEASE OF PREMISES...................................................................................... 1
2. DEFINITIONS............................................................................................ 1
2.1 Accounting Principles......................................................................... 1
2.2 Additional Rent............................................................................... 2
2.3 Building...................................................................................... 2
2.4 Business Day.................................................................................. 2
2.5 Casualty...................................................................................... 2
2.6 City.......................................................................................... 2
2.7 Commencement Date............................................................................. 2
2.8 Commencement Date (Percentage Rent)........................................................... 2
2.9 Condemnation.................................................................................. 3
2.10 Consumer Price Index.......................................................................... 3
2.11 County........................................................................................ 3
2.12 Default....................................................................................... 3
2.13 Depository.................................................................................... 3
2.14 Entertainment Facilities...................................................................... 3
2.15 Environmental Law............................................................................. 3
2.16 Equipment Liens............................................................................... 3
2.17 Estoppel Certificate.......................................................................... 4
2.18 Fiscal Month.................................................................................. 4
2.19 Fiscal Year................................................................................... 4
2.20 Gaming Equipment.............................................................................. 4
2.21 Government.................................................................................... 4
2.22 Ground Lease.................................................................................. 4
2.23 Harrah's...................................................................................... 4
2.24 Harrah's Premises............................................................................. 4
2.25 Harrah's Lease................................................................................ 5
2.26 Hazardous Materials........................................................................... 5
2.27 Impositions................................................................................... 5
2.28 Indemnify..................................................................................... 5
2.29 Indemnitee.................................................................................... 6
2.30 Indemnitor.................................................................................... 6
2.31 Institutional Lender.......................................................................... 6
2.32 Insubstantial Condemnation.................................................................... 6
2.33 Joint Venture Agreement....................................................................... 6
2.34 Landlord...................................................................................... 6
2.35 Landlord's Estate............................................................................. 6
2.36 Law(s)........................................................................................ 6
2.37 Leasehold Estate.............................................................................. 7
2.38 Leasehold Mortgage............................................................................ 7
2.39 Leasehold Mortgagee........................................................................... 7
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<PAGE>
2.40 Leasehold Mortgagee's Agent................................................................... 7
2.41 Mandated Alterations.......................................................................... 7
2.42 Missouri Gambling Law......................................................................... 7
2.43 Missouri Gaming Commission.................................................................... 7
2.44 Monetary Default.............................................................................. 8
2.45 Mortgage...................................................................................... 8
2.46 Mortgagee..................................................................................... 8
2.47 Mortgagor..................................................................................... 8
2.48 Net Gaming Revenue............................................................................ 8
2.49 Non-Monetary Default.......................................................................... 8
2.50 Notice........................................................................................ 8
2.51 Notice of Default............................................................................. 8
2.52 Percentage Rent............................................................................... 8
2.53 Permitted Exceptions.......................................................................... 9
2.54 Person........................................................................................ 9
2.55 Personal Default.............................................................................. 9
2.56 Premises...................................................................................... 9
2.57 Prime Mortgage................................................................................ 9
2.58 Prime Mortgagee............................................................................... 10
2.59 Prime Rate.................................................................................... 10
2.60 Prohibited Liens.............................................................................. 10
2.61 Prohibited Person (Landlord).................................................................. 10
2.62 Prohibited Person (Tenant).................................................................... 11
2.63 Qualified Arbitrator.......................................................................... 11
2.64 Rent.......................................................................................... 11
2.65 Shoreside Complex............................................................................. 11
2.66 Site.......................................................................................... 11
2.67 State......................................................................................... 11
2.68 State Revenue Reports......................................................................... 12
2.69 State Revenue Audits.......................................................................... 12
2.70 Structural Modification....................................................................... 12
2.71 Substantial Completion........................................................................ 12
2.72 Substantial Condemnation...................................................................... 12
2.73 Tenant's Monthly Statement.................................................................... 12
2.74 Tenant's Property............................................................................. 13
2.75 Tenant's Work................................................................................. 13
2.76 Termination Date.............................................................................. 13
2.77 Transfer...................................................................................... 13
2.78 Unavoidable Delay............................................................................. 13
2.79 Venture Default............................................................................... 13
2.80 Waiver of Subrogation......................................................................... 14
3. TERM................................................................................................... 14
3.1 Initial Term.................................................................................. 14
3.2 Confirmation of Dates......................................................................... 14
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<PAGE>
4. DEVELOPMENT AND CONSTRUCTION OF THE PREMISES AND
SHORESIDE COMPLEX...................................................................................... 15
4.1 Landlord Construction......................................................................... 15
4.2 Tenant Construction........................................................................... 15
4.3 Title to Shoreside Complex and Tenant's Property.............................................. 15
5. RENT................................................................................................... 15
5.1 Means of Payment.............................................................................. 15
5.2 Percentage Rent............................................................................... 16
5.2.1 Reporting and Payment....................................................... 16
5.2.2 Accounting Records.......................................................... 17
5.2.3 Harrah's Right to Audit..................................................... 17
5.2.4 Confidentiality............................................................. 18
5.2.5 Assignment of Percentage Rent to Harrah's................................... 18
5.2.6 Substitute Percentage Rent.................................................. 19
5.3 Additional Rent............................................................................... 20
5.4 No Allocation to Personal Property............................................................ 20
5.5 No Conditional Payment........................................................................ 20
5.6 Interest on Overdue Rent...................................................................... 20
5.7 Tenant's Licenses............................................................................. 21
5.8 No Offset by Tenant........................................................................... 21
5.9 Restaurant Charges............................................................................ 21
5.10 Hotel Charges................................................................................. 21
6. ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS............................................................. 22
6.1 Landlord's Net Return......................................................................... 22
6.2 Impositions................................................................................... 22
6.3 Assessments in Installments................................................................... 22
6.4 Combined Tax Lot.............................................................................. 23
6.5 Direct Payment by Landlord.................................................................... 23
6.6 Utilities..................................................................................... 23
6.7 Joint Venture Losses.......................................................................... 23
7. USE.................................................................................................... 24
7.1 Permitted Uses................................................................................ 24
7.2 Tenant's Failure to Operate the Business...................................................... 25
7.3 Exterior Operations/Objects/Regulations....................................................... 25
7.4 Refuse/Deliveries............................................................................. 25
7.5 Interruption of Business...................................................................... 26
8. MARKS AND PUBLICITY.................................................................................... 26
8.1 Exclusive Ownership of Marks.................................................................. 26
8.2 Signs......................................................................................... 26
8.3 Effect of Lease Termination................................................................... 27
9. LAWS................................................................................................... 27
9.1 Compliance with Law........................................................................... 27
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<PAGE>
9.2 Licenses and Permits.......................................................................... 27
9.3 Surrender of Licenses......................................................................... 27
9.4 Environmental Matters......................................................................... 28
9.4.1 Compliance.................................................................. 28
9.4.2 No Violations............................................................... 28
9.4.3 Cost of Compliance.......................................................... 28
9.4.4 Remediation................................................................. 29
9.5 Disclosure.................................................................................... 29
9.5.1 Reports..................................................................... 29
9.5.2 Notices..................................................................... 29
9.5.3 Environmental Audits........................................................ 29
9.5.4 Orders...................................................................... 29
9.5.5 Pleadings................................................................... 29
9.6 Indemnification............................................................................... 30
9.7 Tenant's Further Responsibility at Termination or Expiration of Lease......................... 30
9.7.1 Surrender................................................................... 30
9.7.2 Storage Tanks............................................................... 31
9.8 Landlord's Environmental Remedies............................................................. 31
9.8.1 Inspection Rights........................................................... 31
9.8.2 Self Help................................................................... 31
9.8.3 Hazardous Material Release.................................................. 31
9.8.4 Clean Up.................................................................... 31
9.8.5 Landlord Participation...................................................... 32
9.8.6 Fees and Expenses........................................................... 32
9.9 Landlord's Indemnity.......................................................................... 32
10. MAINTENANCE AND ALTERATIONS............................................................................ 33
10.1 Obligation to Maintain........................................................................ 33
10.2 Tenant's Right to Perform Alterations......................................................... 33
10.3 Plans and Specifications...................................................................... 34
10.4 Shoreside Complex............................................................................. 34
10.5 Excavations/Work on Shoreside Complex......................................................... 34
11. PROHIBITED LIENS....................................................................................... 34
11.1 Tenant's Covenant............................................................................. 34
11.2 Protection of Landlord........................................................................ 35
12. INDEMNIFICATION; LIABILITY OF LANDLORD................................................................. 35
12.1 Mutual Indemnity Obligations.................................................................. 35
12.2 Liability of Landlord......................................................................... 36
12.3 Indemnification Procedures.................................................................... 36
12.3.1 Prompt Notice............................................................... 36
12.3.2 Selection of Counsel........................................................ 36
12.3.3 Settlement.................................................................. 36
12.3.4 Insurance Proceeds.......................................................... 37
13. RIGHT OF CONTEST....................................................................................... 37
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<PAGE>
14. INSURANCE.............................................................................................. 37
14.1 Landlord to Insure............................................................................ 37
14.2 Tenant to Insure.............................................................................. 37
15. DAMAGE OR DESTRUCTION.................................................................................. 38
15.1 Notice; No Rent Abatement; Restoration Obligations............................................ 38
15.2 Lease Termination for Casualty................................................................ 38
15.3 Restoration Work.............................................................................. 39
15.4 Adjustment of Claims; Mortgagees.............................................................. 39
15.5 Termination Payment........................................................................... 40
15.6 Business Interruption and Contractual Liability Insurance..................................... 40
15.7 Depository.................................................................................... 40
16. CONDEMNATION........................................................................................... 41
16.1 Substantial Condemnation...................................................................... 41
16.2 Insubstantial Condemnation.................................................................... 41
16.3 Other Governmental Action..................................................................... 41
17. TRANSFERS.............................................................................................. 41
17.1 By Tenant..................................................................................... 41
17.2 By Landlord................................................................................... 42
18. MORTGAGES.............................................................................................. 42
18.1 Landlord's Rights............................................................................. 42
18.2 Tenant's Rights............................................................................... 42
18.3 Effect of a Leasehold Mortgage................................................................ 42
18.4 Sale and Leaseback............................................................................ 43
18.5 Modifications Required by Leasehold Mortgagee................................................. 43
18.6 Further Assurances............................................................................ 43
18.7 Protection of Prime Mortgagees................................................................ 44
18.8 Foreclosure................................................................................... 44
19. NOTICE TO LANDLORD OF LEASEHOLD MORTGAGES.............................................................. 44
19.1 Initial Notice................................................................................ 44
19.2 Change of Address............................................................................. 44
19.3 Termination of Leasehold Mortgagee's Rights................................................... 44
19.4 Transfer of Landlord's Estate................................................................. 45
19.5 Landlord's Acknowledgment of Leasehold Mortgagee.............................................. 45
20. PROTECTION OF LEASEHOLD MORTGAGEES..................................................................... 45
20.1 Cancellation, Surrender, Amendment, Etc....................................................... 45
20.2 Copies of Notices............................................................................. 45
20.3 Tenant's Cure Period Expiration Notice........................................................ 46
20.4 Right to Perform Covenants and Agreements..................................................... 46
20.5 Transfer of Tenant's Rights................................................................... 46
20.6 Notice of Default and Mortgagee's Cure Rights................................................. 46
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<PAGE>
20.6.1 Monetary Defaults and Non-Monetary Defaults Curable Without
Obtaining Possession................................................................. 47
20.6.2 Defaults Curable Only by Obtaining Possession and Personal
Defaults............................................................................. 47
20.6.2.1 During Cure Period.................................................. 47
20.6.2.2 Further Cure Obligations............................................ 48
20.6.2.3 Law Limitation...................................................... 48
20.6.3 Operating Covenant Default and Venture Default....................................... 48
20.7 Effect of Cure................................................................................ 48
20.8 Quiet Enjoyment............................................................................... 48
20.9 Subordinate Liens Affecting Leasehold Estate.................................................. 49
20.10 Leasehold Mortgagee's Right to Enter Premises................................................. 49
20.11 Rights of Leasehold Mortgagee Upon Acquiring Control.......................................... 49
21. LEASEHOLD MORTGAGEE'S RIGHT TO A NEW LEASE............................................................. 50
21.1 New Lease..................................................................................... 50
21.2 Form and Priority............................................................................. 50
21.3 Pendency of Dispute........................................................................... 51
21.4 Preservation of Subleases..................................................................... 51
22. INTERACTION OF MORTGAGES WITH OTHER ESTATES AND
PARTIES................................................................................................ 51
22.1 Leasehold Mortgages........................................................................... 51
22.2 Leasehold Mortgagee's Agent................................................................... 51
22.3 Interaction Between Lease and Leasehold Mortgage.............................................. 51
22.4 Conflicts Between Mortgagees.................................................................. 52
22.5 No Merger..................................................................................... 52
23. BANKRUPTCY............................................................................................. 52
23.1 Affecting Tenant.............................................................................. 52
23.2 Affecting Landlord............................................................................ 53
23.2.1 Tenant's Election........................................................... 53
23.2.2 Continuation of Lease....................................................... 54
23.2.3 Assumption of Lease......................................................... 54
23.2.4 Continuation of Leasehold Mortgages......................................... 54
24. QUIET ENJOYMENT AND WARRANTIES......................................................................... 54
25. FORCE MAJEURE.......................................................................................... 55
26. ACCESS................................................................................................. 55
27. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS......................................................... 56
27.1 Landlord's Option............................................................................. 56
27.2 Reimbursement by Tenant....................................................................... 56
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<PAGE>
28. GUARANTY............................................................................................... 57
28.1 Parent Guaranty............................................................................... 57
29. DEFAULT BY TENANT; REMEDIES............................................................................ 57
29.1 Definition of "Event of Default".............................................................. 57
29.1.1 Venture Default............................................................. 57
29.1.2 Monetary Default............................................................ 57
29.1.3 Operating Covenant Defaults................................................. 57
29.1.4 Non-Monetary Default........................................................ 58
29.2 Re-entry...................................................................................... 58
29.3 Damages....................................................................................... 59
29.4 Pending Dispute Regarding Event of Default.................................................... 59
29.5 Injunctive Relief............................................................................. 60
29.6 Arbitration................................................................................... 60
29.6.1 Voluntary Appointment....................................................... 60
29.6.2 Appointment by Arbitrators.................................................. 60
29.6.3 Failure to Appoint.......................................................... 61
29.6.4 Fees and Expenses........................................................... 61
29.6.5 Proceedings................................................................. 61
29.6.6 Arbitration Decisions....................................................... 61
30. TERMINATION............................................................................................ 61
30.1 Rights on Termination......................................................................... 61
30.2 Possession.................................................................................... 62
30.3 Utility and Other Deposits.................................................................... 62
30.4 Miscellaneous Assignments..................................................................... 62
30.5 Termination of Memorandum of Lease............................................................ 62
31. NO BROKER.............................................................................................. 62
32. WAIVERS................................................................................................ 63
32.1 No Waiver by Silence.......................................................................... 63
32.2 Waiver of Trial by Jury....................................................................... 63
33. MEMORANDUM OF LEASE.................................................................................... 63
34. ADMINISTRATION OF LEASE; LANDLORD'S REPRESENTATIVE..................................................... 63
35. ESTOPPEL CERTIFICATES.................................................................................. 63
35.1 Rights of Each Party.......................................................................... 63
35.2 Failure to Execute Estoppel Certificate....................................................... 64
36. MISCELLANEOUS.......................................................................................... 64
36.1 Reasonableness................................................................................ 64
36.2 Documents in Recordable Form.................................................................. 64
36.3 Further Assurances............................................................................ 64
36.4 No Competition................................................................................ 65
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<PAGE>
36.5 No Third Party Beneficiaries.................................................................. 65
36.6 Interpretation................................................................................ 65
36.7 Captions...................................................................................... 65
36.8 Cumulative Remedies........................................................................... 65
36.9 Entire Agreement.............................................................................. 65
36.10 Amendment..................................................................................... 66
36.11 Partial Invalidity............................................................................ 66
36.12 Successors and Assigns........................................................................ 66
36.13 Governing Law................................................................................. 66
36.14 Counterparts.................................................................................. 66
36.15 Time Periods.................................................................................. 66
36.16 Rule Against Perpetuities..................................................................... 66
36.17 No Agency or Partnership...................................................................... 67
36.18 No Suretyship................................................................................. 67
37. NOTICES................................................................................................ 67
38. SURVIVAL............................................................................................... 68
</TABLE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A Conceptual Design - Building; Conceptual Design - Entertainment Facilities;
Conceptual Design - Harrah's Premises
EXHIBIT A-1 Tenant's Work - Premises
EXHIBIT A-2 Legal Description of Site
EXHIBIT B Estoppel Certificate
EXHIBIT C Permitted Exceptions
EXHIBIT D Shell Condition Criteria
EXHIBIT E Common Area Maintenance Charges
EXHIBIT F Standards for Operation
EXHIBIT G Shoreside Complex Refuse Disposal and Loading Areas
EXHIBIT H Landlord's Insurance Requirements
EXHIBIT I Tenant's Insurance Requirements
EXHIBIT J Transferee Criteria
EXHIBIT K Form of Parent Guaranty (Limited)
EXHIBIT L Form of Memorandum of Lease
EXHIBIT M Form of Parent Guaranty (Unlimited)
</TABLE>
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<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made as of this 3rd day
of November, 1995, by and between RIVERSIDE JOINT VENTURE, a Missouri general
partnership ("Landlord"), and PLAYERS MH, L.P., a Missouri limited partnership
("Tenant").
R E C I T A L S
A. Tenant and Harrah's Maryland Heights Corporation, a Nevada
corporation ("HMHC") are partners in Landlord.
B. Landlord is constructing the Building which will contain the
Premises.
C. Following completion of the Building, Tenant desires to lease the
Premises from Landlord.
D. The parties desire to enter into this Lease to set forth their
rights and obligations relating to the Premises, and the Shoreside Complex.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND AGREEMENTS OF
THE PARTIES CONTAINED IN THIS LEASE, AND IN CONSIDERATION OF THE RECITALS SET
FORTH ABOVE (WHICH ARE INCORPORATED BY REFERENCE IN THIS LEASE), AND IN EXCHANGE
FOR TEN DOLLARS ($10.00) AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF ALL OF WHICH ARE CONCLUSIVELY ACKNOWLEDGED BY BOTH PARTIES,
LANDLORD AND TENANT AGREE AS FOLLOWS:
<PAGE>
1. LEASE OF PREMISES.
Effective as of the Commencement Date, Landlord leases the Premises to
Tenant, and Tenant accepts possession of and leases the Premises from Landlord,
for the Term and upon all the terms and conditions of this Lease.
2. DEFINITIONS.
The following definitions apply throughout the Lease, in addition to
other definitions appearing at other locations in this Lease.
2.1 Accounting Principles. accounting principles and practices set
forth in the Audit and Accounting Guide for Audits of Casinos with changes
through May, 1994, prepared by the American Institute of Certified Public
Accountants, as from time to time amended, and, to the extent not therein
addressed, United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect from time to time, consistently applied.
2.2 Additional Rent. payments to be made by Tenant pursuant to
this Lease, other than Percentage Rent.
2.3 Building. the primary building and four (4) "Excursion Gambling
Boats" (as defined in the Missouri Gambling Law) to be constructed by Landlord
as part of the Shoreside Complex that will contain: (i) the Premises; (ii)
Harrah's Premises; and (iii) the Entertainment Facilities. The conceptual design
of the Building is shown on the plans attached as Exhibit A. The "as built"
configuration of the Building shall be confirmed, at the time of its Substantial
Completion, by written addendum to this Lease.
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<PAGE>
2.4 Business Day. a day on which banks in the State are generally open
for the conduct, with bank personnel, of regular banking business.
2.5 Casualty. damage or destruction affecting the Premises and/or the
Building, and including without limitation, flood conditions interfering with
access thereto.
2.6 City. the City of Maryland Heights, a municipal corporation, and
any successor Government entity.
2.7 Commencement Date. the day the Premises are first made available by
Landlord to Tenant for the commencement of Tenant's Work and installation of
Tenant's Property. The Commencement Date shall be determined in good faith by
HMHC as the Partner of Landlord charged with primary authority to manage
construction of the Shoreside Complex, and is intended to be the date when
Tenant's work may commence without undue interference with the construction of
the Shoreside Complex and the date when Harrah's (hereinafter defined) will also
commence "Tenant's Work" (as defined in the Harrah's Lease) in the Harrah's
Premises.
2.8 Commencement Date (Percentage Rent). the date upon which Tenant
first accepts wagers or conducts other business at the Premises.
2.9 Condemnation. a taking of the Premises or the Shoreside Complex, in
whole or in part, by condemnation or by exercise of any right of eminent domain,
or by any similar proceeding or act of any Government or any voluntary sale in
lieu of such proceeding.
2.10 Consumer Price Index. The Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, United States City Average, all items (1982-1984 = 100). If
such index is no longer published, then Landlord shall designate a successor or
replacement index of substantially equivalent reliability and objectivity. The
Consumer Price Index in effect for any given date shall be deemed to refer to
the Consumer Price Index last published before such date.
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<PAGE>
2.11 County. St. Louis County, Missouri, and any successor Government
entity.
2.12 Default. a Monetary Default, Non-Monetary Default, Venture Default
or Operating Covenant Default. Each and every covenant of Tenant under this
Lease, if not performed by Tenant, shall give rise to a Default.
2.13 Depository. an Institutional Lender, designated by Tenant or its
highest priority Leasehold Mortgagee to act as "Depository" to hold insurance
proceeds received for damage to Tenant's Property as provided in Section 15.7
of this Lease.
2.14 Entertainment Facilities. the portion of the Building, accessible
to both Harrah's Premises and the Premises, to be used by Landlord for hotel,
restaurant and entertainment purposes and ancillary purposes related to the
operations of the Excursion Gambling Boats of Harrah's and Tenant, and/or such
other purposes as Landlord may from time to time determine. The conceptual
design of the Entertainment Facilities is shown on the plans attached as Exhibit
A. The "as built" configuration of the Entertainment Facilities shall be
confirmed, at the time of its Substantial Completion, by written addendum to
this Lease.
2.15 Environmental Law. Any applicable federal, state, or local law,
regulation, ordinance, order, judgment, or decree pertaining to Hazardous
Materials or to the protection of the environment, as such are now in effect or
may hereafter be enacted or revised.
2.16 Equipment Liens. purchase-money security interests and finance
leases of personal property, other than fixtures, used in connection with the
operation of the Premises, such as furniture and equipment, telephone,
telecommunications and facsimile transmission equipment, Gaming Equipment, point
of sale equipment, televisions, radios, and computer systems, provided that each
Equipment Lien encumbers or otherwise relates to only the Tenant's Property
financed or otherwise provided by the secured party under such Equipment Lien.
The lessor, seller or other secured party under an Equipment Lien may not be an
Affiliate of Tenant.
- 4 -
<PAGE>
2.17 Estoppel Certificate. a written statement in the form attached as
Exhibit B, expanded, upon request, to include such additional information
relating to this Lease and the Premises as the requesting party shall reasonably
specify.
2.18 Fiscal Month. each calendar month.
2.19 Fiscal Year. each calendar year.
2.20 Gaming Equipment. Tenant's equipment constituting wagering devices
used in connection with the operation of Tenant's Excursion Gambling Boats on
the Premises, whether or not fixtures, including baccarat, bingo, twenty-one,
poker, craps and other table games, slot machines, video games, roulette wheel,
klondike table, punchboard, faro layout, keno layout, numbers ticket, push card,
jar ticket and pull tab, or other wagering devices now or hereafter authorized
by the Missouri Gaming Commission.
2.21 Government. each governmental authority, department, agency,
bureau or other entity or instrumentality having jurisdiction over the Shoreside
Complex, including the federal government of the United States, the State, the
County, the City and all other governmental or quasi-governmental authorities
and subdivisions thereof having jurisdiction over the Shoreside Complex or any
portion thereof.
2.22 Ground Lease. that certain Ground Lease of even date herewith by
and between Harrah's and Landlord, as the same may be amended from time to time.
2.23 Harrah's. Harrah's Maryland Heights LLC, a Delaware limited
liability company, or, from and after any assignment or transfer of its rights
to Percentage Rent hereunder, its successors and assigns.
2.24 Harrah's Premises. the portion of the Building to be leased
pursuant to the Harrah's Lease. The conceptual design of Harrah's Premises is
shown on the plans attached as
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<PAGE>
Exhibit A. The "as built" configuration of Harrah's Premises shall be confirmed,
at the time of its Substantial Completion, by written addendum to this Lease.
2.25 Harrah's Lease. that certain lease of Harrah's Premises by and
between Harrah's and Landlord, of even date and delivery herewith, as the same
may be hereafter amended from time to time.
2.26 Hazardous Materials. Any substance or matter including, without
limitation, petroleum products and waste oil, (i) whose concentration in air,
water, groundwater, or soil exceeds levels set forth in any Environmental Law,
or (ii) for which any federal, state, or local agency orders or otherwise
requires removal, treatment, monitoring, or remediation.
2.27 Impositions. ad valorem taxes, special and general assessments,
water rents, rates and charges, commercial rent taxes, sewer rents, levee
district taxes and assessments, and other impositions and charges of every kind
and nature whatsoever with respect to or allocable to the Premises or Tenant's
Property, that may be assessed, levied, confirmed, imposed or become a lien on
the Premises or otherwise be payable with respect to or allocable to the
Premises or the operation thereof by or for the benefit of any Government with
respect to any period during the Term together with any taxes and assessments
that may be levied, assessed or imposed by any Government upon Rent or in lieu
of or as a substitute, in whole or in part, for taxes and assessments imposed
upon or related to the Premises and commonly known as real estate taxes. The
term "Impositions" shall, however, not include: (a) any franchise, income,
excess profits, estate, inheritance, succession, transfer, gift, corporation,
business, capital levy, or profits tax, or license fee, of Landlord; (b) if the
Premises are part of a Combined Tax Lot, any taxes and other assessments
allocated to any portion of such Combined Tax Lot other than the Premises, in
accordance with Section 6.4 of this Lease; (c) the incremental portion of any
of the items listed in this definition that would not have been levied,
imposed or assessed but for any sale or other
- 6 -
<PAGE>
direct or indirect transfer of the Landlord's Estate or of any legal or
beneficial interest in Landlord, other than that of Tenant or any Affiliate of
Tenant; and (d) interest or other charges with respect to items "a" through "c."
2.28 Indemnify. the duty of an Indemnitor to indemnify an Indemnitee
(and its partners and their Affiliates [the terms "Affiliate" or "Affiliates" as
used herein shall have the same meaning as said terms have in the Joint Venture
Agreement] and their respective officers, directors, agents and employees) and
defend and hold the Indemnitee (and its partners and their Affiliates and their
respective officers, directors, agents and employees) harmless from and against
any and all loss, cost, claims, liability, penalties, judgments, damage or other
injury, detriment, or expense (including reasonable attorneys' fees, court
costs, interest and penalties) reasonably incurred or suffered by the Indemnitee
(and its partners, and their Affiliates and their respective officers,
directors, agents and employees) on account of the matter that is the subject of
such indemnification or in enforcing the Indemnitor's indemnity.
2.29 Indemnitee. a Person that is entitled to be Indemnified pursuant
to this Lease.
2.30 Indemnitor. a Person that is obligated to Indemnify another
pursuant to this Lease.
2.31 Institutional Lender. a national bank, commercial state bank,
savings bank, trust company, insurance company, pension, welfare or retirement
fund or system, real estate investment trust, federal or state agency regularly
making or guaranteeing mortgage loans, any other entity actively engaged in
commercial real estate financing and having total assets of at least $50,000,000
(adjusted annually on each anniversary of the Commencement Date this Lease to
reflect increases in the Consumer Price Index), or a corporation that is a
wholly-owned subsidiary of any of the foregoing entities, including any of the
foregoing when acting as trustee or agent for other lender(s), whether or not
such other lender(s) are themselves Institutional Lenders. The fact that a
particular entity (or any Affiliate of such entity) is an Affiliate or partner
of the then
- 7 -
<PAGE>
Tenant under this Lease shall preclude such entity from being an Institutional
Lender and/or a Leasehold Mortgagee.
2.32 Insubstantial Condemnation. a Condemnation other than a
Substantial Condemnation.
2.33 Joint Venture Agreement. that certain general partnership
agreement of Landlord dated November 2, 1995.
2.34 Landlord. Riverside Joint Venture, and any successor owner of
Landlord's Estate.
2.35 Landlord's Estate. Landlord's fee and leasehold estate (pursuant
to the Ground Lease) in and to the Shoreside Complex.
2.36 Law(s). laws, ordinances, requirements, orders, directives, rules
and regulations of any Government affecting the development, improvement,
alteration, use, maintenance, operation or occupancy of the Premises or the
Shoreside Complex, whether in force at the Commencement Date or passed, enacted
or imposed at some time thereafter, subject in all cases, however, to all
applicable waivers, variances and exemptions limiting the application of the
foregoing, and including without limitation, the restrictions or other
requirements of any applicable permit of any Government.
2.37 Leasehold Estate. Tenant's leasehold estate arising under this
Lease, upon and subject to all the terms and conditions of this Lease, and any
legal or beneficial interest in such leasehold estate (other than stock of a
company whose stock is listed and traded on the New York or NASDAQ Stock
Exchange).
2.38 Leasehold Mortgage. any mortgage, deed of trust, deed to secure
debt, assignment, security interest, pledge, financing statement or any other
instrument(s) or agreement(s) intended to grant security encumbering all or any
part of the Leasehold Estate for any obligation (including a purchase-money or
other promissory note) as entered into, renewed, modified, consolidated,
- 8 -
<PAGE>
amended, extended or assigned from time to time during the Term. A "Leasehold
Mortgage" also includes certain agreements entered into in connection with a
"sale and leaseback" transaction, as described in Section 18.4 of this Lease.
2.39 Leasehold Mortgagee. the holder of a Leasehold Mortgage. Neither
Tenant nor any Affiliate of Tenant may be, or have the rights of, a Leasehold
Mortgagee under this Lease.
2.40 Leasehold Mortgagee's Agent. an agent, designee or nominee of a
Leasehold Mortgagee, provided that such agent, designee or nominee is a wholly
owned subsidiary of the Leasehold Mortgagee. A Leasehold Mortgagee that is not
an Institutional Lender shall not be entitled to designate a Leasehold
Mortgagee's Agent.
2.41 Mandated Alterations. repairs, additions, replacements or
alterations mandated by Laws imposed, modified, interpreted or otherwise
rendered more burdensome after the issuance of building permits for the
Building, including "retro-fitting" and structural alterations, whether or not
such Laws could reasonably have been foreseen at the time of issuance of such
building permit.
2.42 Missouri Gambling Law. State statutory Law regulating the conduct
of gambling and related activities on the Premises, which law is presently
codified as Sections 313.800 through 313.850, Revised Statutes of Missouri
(1994), and as such law may be amended from time to time, and all rules and
regulations adopted pursuant to any such law.
2.43 Missouri Gaming Commission. The Missouri Gaming Commission, or any
successor commission or authority which has jurisdiction to license and regulate
gambling on the Premises pursuant to Missouri Gambling Law.
2.44 Monetary Default. a failure by Tenant to pay any Rent or other
amount owed by Tenant under this Lease, when and as required to be paid pursuant
to this Lease.
2.45 Mortgage. a Prime Mortgage or a Leasehold Mortgage.
- 9 -
<PAGE>
2.46 Mortgagee. the holder of a Mortgage.
2.47 Mortgagor. the grantor of a Mortgage.
2.48 Net Gaming Revenue. "adjusted gross receipts" as said term is
defined under Missouri Gambling Law as now enacted or as hereafter amended.
2.49 Non-Monetary Default. a failure by Tenant to perform any
obligation of Tenant under this Lease, other than a Monetary Default or an
Operating Covenant Default.
2.50 Notice. a notice, demand, request, election, designation, or
consent, including any of the foregoing relating to an Event of Default or
alleged Event of Default, that is permitted, required or desired to be given by
either party in connection with this Lease.
2.51 Notice of Default. a Notice from Landlord to Tenant claiming or
giving Notice of an Event of Default or alleged Event of Default by Tenant.
2.52 Percentage Rent. An amount equal to the following percentages of
Net Gaming Revenue for the twelve (12) month period following the Commencement
Date (Percentage Rent) and for each twelve (12) month period thereafter during
the Term (each of such twelve-month periods being herein referred to as a
"Percentage Rent Year"):
(i) Two percent (2%) of the first Fifty Million Dollars
($50,000,000) of Net Gaming Revenue; and
(ii) Three percent (3%) of Net Gaming Revenue exceeding Fifty
Million Dollars ($50,000,000) up to and including One Hundred Million
Dollars ($100,000,000), and
(iii) Four percent (4%) of Net Gaming Revenue in excess of One
Hundred Million Dollars ($100,000,000).
If the term "adjusted gross receipts," as defined under the Missouri Gambling
Law, is changed, the percentages applicable to such changed definition as
provided in this Section 2.52 hereof shall
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be adjusted by agreement of the parties, to preserve the same payment of
Percentage Rent that would have been due had there been no such change. If the
parties fail to agree upon such percentage prior to the effective date of the
change to such definition, then such percentages shall be determined by
arbitration in accordance with Section 29.6 hereof, unless previously
determined by arbitration pursuant to the provisions of the Ground
Lease, which arbitration shall be binding on Landlord and Tenant.
2.53 Permitted Exceptions. (i) all matters described on Exhibit C
hereto; (ii) all liens, encumbrances, and other title matters created or
suffered to exist by Tenant; (iii) all matters created or suffered after the
date of this Lease by Landlord (for so long as Tenant or a Leasehold Mortgagee
or Leasehold Mortgagee's agent is a partner of Landlord; or otherwise, with
Tenant's consent, which consent shall not be unreasonably withheld); (iv) all
terms and conditions of Government licenses, permits or approvals relating to
the Shoreside Complex, as a whole or in part, including, without limitation, the
Premises.
2.54 Person. an individual, corporation, association, partnership,
limited partnership, limited liability company, trust, unincorporated
organization or other entity.
2.55 Personal Default. any Non-Monetary Default by Tenant that is not
reasonably susceptible of cure by a Leasehold Mortgagee, such as bankruptcy,
insolvency, a prohibited transfer, failure to deliver financial information
relating to Tenant (to the extent, if any, that any of the foregoing actually
constitute(s) a Non-Monetary Default under this Lease), and any other
Non-Monetary Default that by its nature relates only to Tenant or its Affiliates
or can reasonably be performed only by Tenant or its Affiliates. Any Default
that may be cured by the payment of money is not a Personal Default.
2.56 Premises. those portions of the Building shown on Exhibit A to
this Lease. The conceptual design of the Premises is shown on the plans attached
as Exhibit A. The "as built"
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configuration of the Premises shall be confirmed, at the time of its Substantial
Completion, by written addendum to this Lease. It is intended, to the extent
permitted by Law, that the Premises shall be regarded as real property, subject
to the Law affecting real property of the State of Missouri, rather than a ship
or vessel subject to maritime law or the Ship Mortgage Act, 46 U.S.C. ss.31301
et seq. (1988).
2.57 Prime Mortgage. a mortgage, deed of trust, deed to secure debt,
assignment, security interest, pledge, financing statement or any other
instrument(s) or agreement(s) intended to grant security encumbering the
Landlord's Estate for any obligation, as entered into, renewed, modified,
amended, extended or assigned from time to time before or during the Term.
2.58 Prime Mortgagee. the holder of a Prime Mortgage.
2.59 Prime Rate. the prime rate (or base rate) of interest for
corporate loans that is reported in the Money Rates Column of The Wall Street
Journal published on the Business Day for which the rate is applicable (or the
next preceding Business Day, if the applicable day is not a Business Day), as
having been the rate in effect for corporate loans at large U.S. money center
commercial banks (whether or not such rate has actually been charged by any such
bank). If The Wall Street Journal ceases publication of the Prime Rate, the
prime rate (or base rate) from time to time announced by Bankers Trust Company,
New York, New York, or its successor (whether or not such rate has actually been
charged by such bank), or, if Bankers Trust Company discontinues the practice of
announcing the Prime Rate, the "Prime Rate" shall mean the highest rate charged
by such bank on short term, unsecured loans to its most creditworthy large
corporate borrowers. If The Wall Street Journal: (a) publishes more than one
Prime Rate, the higher or highest rate shall apply, or (b) publishes a
retraction or correction of any such rate, the rate reported in such retraction
or correction shall apply. If the Prime Rate changes, interest rates in this
Lease which are based on the Prime Rate shall change, effective as of the first
day of each
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calendar month, to reflect the Prime Rate in effect on the last day of the
preceding calendar month. Notwithstanding anything to the contrary in this
Section, the Prime Rate shall never exceed the highest rate of interest legally
permitted to be charged in the State (without imposition of penalties for
criminal usury [the "Criminal Usury Rate"]) in transactions of the character of
this Lease between parties of a character similar to Landlord and Tenant.
2.60 Prohibited Liens. a mortgage, ship mortgage or other consensual
lien or judgment lien, and any maritime, seaman's, mechanic's, vendor's,
laborer's or material supplier's statutory lien or other similar lien arising by
reason of work, labor, services, equipment or materials supplied, or claimed to
have been supplied, to Tenant; which lien either: (a) is filed against the
Landlord's Estate or (b) is filed against the Leasehold Estate and, upon
termination of this Lease, would under the law of the State attach to the
Landlord's Estate or any underlying fee estate.
2.61 Prohibited Person (Landlord). Any Person or any Affiliate of such
Person as to which there has been an Unsuitability Determination, in accordance
with the procedures set forth in the Joint Venture Agreement whether or not
Riverside Joint Venture (the "Venture") still exists or remains the Landlord
hereunder. Landlord shall provide Tenant with at least thirty (30) days prior
Notice of any proposed transfer of Landlord's Estate or any interest therein
(excluding, however, the creation or transfer of any easement), together with
such documentation and information regarding the proposed transferee as Tenant
shall reasonably request, to enable Tenant to confirm that the proposed
transferee is not a Prohibited Person (Landlord).
2.62 Prohibited Person (Tenant). Any Person or Affiliate of such Person
as to which there has been an Unsuitability Determination in accordance with the
procedures set forth in the Joint Venture Agreement whether or not the Venture
still exists or remains the Landlord hereunder. Tenant shall provide Landlord or
Harrah's, for so long as HMHC or any Affiliate of HMHC is a partner of Landlord,
with at least thirty (30) days prior Notice of any proposed
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transfer of Tenant's Leasehold Estate or any interest therein, together with
such documentation and information regarding the proposed transferee as Harrah's
shall reasonably request, to enable Harrah's to confirm that the proposed
transferee is not a Prohibited Person (Tenant).
2.63 Qualified Arbitrator. A partner or other individual designated by
Landlord or Tenant, as the case may be, who: (i) is employed by a disinterested,
reputable and nationally recognized certified public accounting firm or has
comparable qualifications; and (ii) has at least ten (10) years' experience in
the financial reporting and valuation of casino properties.
2.64 Rent. Additional Rent, Percentage Rent and Substitute Percentage
Rent.
2.65 Shoreside Complex. the aggregate of: (i) the Site; (ii) the
Building; and (iii) all other buildings and improvements constructed by Landlord
on the Site, including, without limitation, all parking facilities, roads,
driveways and levees.
2.66 Site. The land described in Exhibit A-2, together with all
easements and rights appurtenant thereto. A portion of the Site described in the
Joint Venture Agreement as the Leased Site is leased pursuant to the Ground
Lease, and a portion of the Site is under contract to be owned in fee, by the
Landlord and as is defined in the Joint Venture Agreement as the Adjacent Fee
Site.
2.67 State. Missouri.
2.68 State Revenue Reports. the daily tax remittal form required to be
submitted by Tenant to the Missouri Gaming Commission pursuant to the Missouri
Gambling Law, reporting Net Gaming Revenue from the Premises.
2.69 State Revenue Audits. the quarterly external audit of Net Gaming
Revenue prepared for the benefit of the Missouri Gaming Commission pursuant to
the Missouri Gambling Law.
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2.70 Structural Modification. any of the following: (i) any
modification to the foundation, footings, structural load-bearing walls, joists,
beams, columns, floors and roof deck of the Shoreside Complex, unless such
structural members only affect Excursion Gambling Boats of Tenant and are not
integrally related to the remainder of the Shoreside Complex; (ii) any
modification of the exterior appearance of the Shoreside Complex; or (iii) any
modification to the electric, gas, water, sewer, telephone or other systems
serving both the Excursion Gambling Boats and the Shoreside Complex, if the
modification adversely affects the usefulness or cost of operation of such
Shoreside Complex systems; or (iv) any other modification to Excursion Gambling
Boats which affects the appearance, usefulness or cost of operation of the
Shoreside Complex or otherwise adversely affects the Shoreside Complex.
2.71 Substantial Completion. as defined by Section 9.8.1 of American
Institute of Architects' Document A-201, General Conditions of the Contract for
Construction (1987 Edition)
. 2.72 Substantial Condemnation. a Condemnation of the Premises or
Shoreside Complex which results in the Landlord determining not to rebuild or
reconfigure the Premises in accordance with the terms of the Joint Venture
Agreement. After the Landlord is no longer the Venture, Substantial Condemnation
shall be a Condemnation of the Premises or Shoreside Complex that renders the
Premises unusable as Excursion Gambling Boats, as reasonably determined by
Landlord.
2.73 Tenant's Monthly Statement. a financial statement of Tenant,
delivered to Landlord on the twentieth calendar day of every Fiscal Month,
beginning on the twentieth day of the month next following the month in which
the Commencement Date (Percentage Rent) occurs, reporting Net Gaming Revenue of
the Premises for the immediately preceding Fiscal Month, certified to be
complete, true and accurate, and to have been prepared in accordance with
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Accounting Standards by Tenant's authorized financial officer, and which shall
include and have attached thereto all State Revenue Reports for such preceding
Fiscal Month.
2.74 Tenant's Property. all personal property purchased or leased by
Tenant for use in connection with the Premises including, without limitation,
Tenant's Gaming Equipment and Tenant's interest in any leases of personalty
("Equipment Leases"), including, without limitation, leases of Tenant's Gaming
Equipment.
2.75 Tenant's Work. the initial interior finish improvements and signs
to be installed and affixed by Tenant to the Premises, at Tenant's sole expense,
prior to the Commencement Date (Percentage Rent) all as generally described in
Exhibit A-1.
2.76 Termination Date. the date when this Lease terminates or expires,
whether pursuant to the expiration of the Term, Condemnation, Casualty or an
Event of Default.
2.77 Transfer. the assignment, sublease, pledge, mortgaging,
encumbering or other form of disposition, voluntarily or involuntarily, directly
or indirectly, of any right to possession of, or legal or beneficial interest in
and to, the Leasehold Estate (or the Tenant) or the Landlord's Estate (or the
Landlord), as the case may be, including without limitation a transfer of
Capital Stock (as defined in the Joint Venture Agreement) in any direct or
remote parent entity of Landlord (or its Partners) or Tenant. Transfer shall not
include the sale, on a national exchange such as the New York or NASDAQ Stock
Exchange, of publicly held shares of Harrah's Entertainment, Inc. ("HEI") or
Players International, Inc.
2.78 Unavoidable Delay. delay in the performance of any obligation or,
where specifically provided for, a Leasehold Mortgagee's exercise of Mortgagee's
Cure Rights under this Lease, (excluding in any case any obligation to pay
money) arising from or on account of any cause whatsoever beyond the reasonable
control of the Person required or entitled to perform, including strikes, labor
troubles, litigation, Casualty, Condemnation, accidents, Laws,
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governmental preemption, failure or refusal of a governmental body to issue a
required permit or license, war, riots, and other causes beyond such party's
reasonable control, whether similar to dissimilar to the causes specifically
enumerated in this Section. In no event shall Unavoidable Delay be deemed to
include any delay caused by an unwillingness or inability to make a payment
required by this Lease, or the wrongful act or omission to act of the Person
invoking this definition.
2.79 Venture Default. shall have the meaning ascribed to it in Section
29.1.1 hereof.
2.80 Waiver of Subrogation. a provision in, or endorsement to, any
insurance policy required by this Lease, by which the insurance carrier agrees
to waive all rights of recovery by way of subrogation against either party to
this Lease in connection with any loss covered by such insurance policy.
3. TERM.
3.1 Initial Term. The term of this Lease (the "Term") shall commence on
the Commencement Date and expire 11:59 p.m. on the last day of the Fiscal Month
that includes the date eighty (80) years after the Commencement Date.
3.2 Confirmation of Dates. Promptly after the occurrence of any date
relevant to the calculation of Rent, or to the determination of the Term, the
parties shall enter into a certificate, in recordable form reasonably
satisfactory to both of them, memorializing such date. The failure of the
parties to enter into any such certificate shall not, however, invalidate or in
any way diminish the effectiveness of the actual date(s) to be set forth in the
certificate. If Landlord and Tenant disagree as to whether any such date has
occurred, then Tenant may pay Rent and otherwise perform under this Lease based
on Tenant's own determination of such date(s) unless and until such date(s) are
otherwise determined by the final judgment of a court of competent jurisdiction
provided that Tenant shall escrow in an interest bearing federally insured
account with
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a disinterested national bank with offices in St. Louis, Missouri or the
registry of the court hearing such dispute, any additional amounts claimed by
Landlord. If a national bank is used as escrow agent, it shall act only in
accordance with this Section, as modified or supplemented by: (i) joint written
instruction of Landlord and Tenant; or (ii) a final, unappealable order of the
court hearing such dispute; and shall be fully exonerated from liability to
Landlord or Tenant for any act or omission other than its gross negligence or
wilful misconduct. To the extent that any such court accepts Landlord's position
and rejects Tenant's, the court or escrow agent, as the case may be, shall,
within five (5) Business Days after the court's order becomes final and
unappealable, remit to Landlord an amount equal to any previous underpayments of
Rent, together with interest earned thereon, and the remainder, if any, of the
escrow account shall be disbursed to Tenant. If the court accepts Tenant's
position and rejects Landlord's, the court or escrow agent, as the case may be,
shall within five (5) Business Days after entry of the court's final,
unappealable order remit to Tenant all the monies in the escrow account,
including interest. Failure of Tenant to establish such escrow account or to
escrow disputed amounts therein shall be a failure to cure a Monetary Default.
4. DEVELOPMENT AND CONSTRUCTION OF THE PREMISES AND SHORESIDE
COMPLEX.
4.1 Landlord Construction. Landlord shall construct the Shoreside
Complex at its sole cost and expense and shall deliver the Premises to Tenant in
"Shell" condition in accordance with the criteria set forth on Exhibit D
attached hereto.
4.2 Tenant Construction. Tenant shall construct the Tenant's Work and
install Tenant's Property in the Premises, at its sole cost and expense, within
three hundred sixty-five (365) days after the Commencement Date.
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4.3 Title to Shoreside Complex and Tenant's Property. Tenant's Property
shall at all times during the Term be owned by, and shall belong to, or be
leased by, Tenant. Tenant shall have title to or lease the foregoing throughout
the Term. All the benefits and burdens of ownership of Tenant's Property shall
be and remain in Tenant during the Term. Any Tenant's Property affixed to the
Premises or left in the Premises and not removed by Tenant within thirty (30)
days after expiration or termination of the Term shall automatically and without
the need for any further action or the execution of any further documents become
the property of Landlord, except for any Tenant's Property constituting Gaming
Equipment.
The Shoreside Complex shall at all times during the Term be owned or
leased by, and shall belong to, Landlord before, during and after the Term. All
the benefits and burdens of ownership of the Shoreside Complex shall be and
remain in Landlord before, during and after the Term.
5. RENT.
5.1 Means of Payment. Tenant shall pay Percentage Rent payable to
Landlord by wire transfer to the bank account which Landlord shall identify to
Tenant upon request (and Landlord shall have the right to change from time to
time by at least thirty (30) days' Notice to Tenant), provided that, unless
otherwise directed in writing by Landlord and Harrah's, all Percentage Rent
shall be payable directly to Harrah's only, provided the assignment of
Percentage Rent to Harrah's remains in effect under Section 5.2.5, and to the
bank account which Harrah's shall identify to Tenant upon request (and
Harrah's shall have the right to change from time to time by at least thirty
(30) days' Notice to Tenant). All Rent other than Percentage Rent shall be
payable to Landlord by a company check of Tenant.
5.2 Percentage Rent. Beginning on the twentieth calendar day of each
Fiscal Month following the Commencement Date (Percentage Rent) and continuing
throughout the Term,
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Tenant shall pay Percentage Rent to Landlord or Harrah's, as long as Percentage
Rent remains assigned to Harrah's. Landlord and/or Harrah's may be required by
Missouri Gambling Law to be licensed, permitted or otherwise approved by the
Missouri Gaming Commission to lawfully receive Percentage Rent (such license,
permit or approval is herein referred to as a "Percentage Rent Approval"). If
Percentage Rent may not lawfully be paid because of the denial, revocation,
suspension or other failure of a Percentage Rent Approval unless the Missouri
Gaming Commission permits the payment by Tenant to Landlord of Approved
Substitute Percentage Rent (hereinafter defined), Tenant shall, during such
period, continue to calculate and report Percentage Rent to Landlord (and
Harrah's) and Tenant shall deposit the amount of Percentage Rent so reported
into an escrow account (established and governed in the manner described in
Section 3.2) on or before the twentieth calendar day of each Fiscal Month. If
Percentage Rent Approval is subsequently obtained, then, within thirty (30) days
after Notice to Tenant of such event (rather than a court order as provided in
Section 3.2), Tenant's obligation to pay Percentage Rent shall be reinstated
and, to the extent lawful, funds in the aforementioned escrow account,
with interest thereon, shall be immediately paid to Harrah's. In no event shall
any failure of a Percentage Rent Approval that is caused by any act or omission
of Tenant excuse Tenant's obligation to pay Percentage Rent. Failure of Tenant
to establish such escrow account shall be a Monetary Default.
5.2.1 Reporting and Payment. Percentage Rent shall be determined based
upon Net Gaming Revenue from the Premises reported in Tenant's State Revenue
Reports and State Revenue Audits, subject to the right of Landlord (and of
Harrah's) (as provided in Section 5.2.3) to independently audit Tenant's books
and records and collect any additional amounts which such audit may reflect to
be due and owing under this Lease.
On the twentieth calendar day of each Fiscal Month
following the Commencement Date (Percentage Rent), Tenant shall:
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(i) deliver to Landlord (and Harrah's)
Tenant's Monthly Statement along with copies of all State Revenue
Reports and State Revenue Audits relating to the immediately preceding Fiscal
Month (or the Fiscal Quarter containing such Fiscal Month) which Tenant is
required to submit to the Missouri Gaming Commission (specifically including the
daily tax remittals, quarterly audit required by ss.313.825 RSMo. and the
monthly return required by 11 CSR 45-11.040); and
(ii) pay the Percentage Rent (or Substitute
Percentage Rent, as the case may be) for the immediately preceding Fiscal Month
in the manner set forth in Sections 5.1 and 5.2 of this Lease.
If the Missouri Gaming Commission redetermines Net Gaming Revenue,
Landlord shall automatically be entitled to additional Percentage Rent hereunder
(or Tenant shall be entitled to a reduction of Percentage Rent) based upon such
redetermination applicable to the Percentage Rent Year for which such Percentage
Rent should have been paid. Tenant shall pay the additional Percentage Rent, in
the manner set forth in Section 5.1 within five (5) Business Days after the
Missouri Gaming Commission provides Notice of such redetermination to
Tenant and if reduction of Percentage Rent is required by such redetermination,
Tenant may deduct such amount from ensuing Percentage Rent payment(s).
5.2.2 Accounting Records. Tenant shall maintain (at the Premises or at
its financial offices in Las Vegas, Nevada, or elsewhere, identified to Landlord
and Harrah's in writing) accounting books and records in accordance with the
Accounting Principles and the Missouri Gambling Law, sufficient to enable
Tenant, Landlord (and Harrah's) to calculate Percentage Rent. Tenant shall
preserve Tenant's books and records relating to each Percentage Rent Year for at
least three years after the end of such Percentage Rent Year. If at the
conclusion of such period a dispute is pending between Landlord (and/or
Harrah's) and Tenant
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regarding the amount of Rent due under this Lease, then Tenant shall continue to
preserve such records pending the final disposition of such dispute.
5.2.3 Harrah's Right to Audit. Within (and in no event later
than) one hundred eighty (180) days after the end of each Percentage Rent Year,
and more frequently if Harrah's should reasonably believe that Tenant's
reporting is not true and accurate, Harrah's shall be entitled to cause a
certified public accounting firm designated by Harrah's to audit Tenant's books
and records relevant to the calculation of Net Gaming Revenue reported by Tenant
during the preceding Percentage Rent Year. Any audit shall be performed in a
reasonable manner, during ordinary business hours and without unreasonably
interfering with Tenant's business. If such audit reveals that Net Gaming
Revenue was understated, then within five (5) Business Days after Tenant's
receipt of the auditor's report, Tenant shall pay the net additional Percentage
Rent due on account of the audit corrections unless Tenant disputes such
determination, in which case Tenant shall have the right to require arbitration
of such determination in accordance with the provisions of Section 29.6 hereof.
If such audit reveals that Net Gaming Revenue was overstated, then
Tenant shall be entitled to a credit against the next payment(s) of Percentage
Rent under this Lease in an amount equal to the previous overpayment revealed by
the audit corrections. Any adjusting payment on account of previous overpayment
or underpayment shall bear interest at the Prime Rate from the date it would
have been paid (or the date of Tenant's previous overpayment, if applicable) had
Tenant's reports and monthly returns been correct until the date actually paid
or credited. If Percentage Rent was understated by more than three percent (3%)
for the period audited, then Tenant shall pay the reasonable cost of such audit;
otherwise the audit shall be conducted at Harrah's expense. The rights provided
herein shall survive the termination or expiration of the Term for three full
Fiscal Years (plus any partial Fiscal Year remaining in the year of termination
or expiration of this Lease, as the case may be). Landlord shall also have
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the rights granted to Harrah's in this Section at such time as the Percentage
Rent is no longer assigned to Harrah's.
5.2.4 Confidentiality. Landlord and Harrah's shall preserve
the confidentiality of all information obtained hereunder relating to Tenant's
Net Gaming Revenue, except in any litigation or arbitration proceedings between
the parties, when compelled by judicial or administrative order, or when advised
by counsel that disclosure is required to comply with applicable securities Law.
5.2.5 Assignment of Percentage Rent to Harrah's. Landlord and
Tenant acknowledge that the rent payable to Harrah's as ground lessor under the
Ground Lease includes the Percentage Rent payable under this Lease and it is a
condition of the Ground Lease that Landlord assign all of its right, title and
interest in and to the Percentage Rent to Harrah's. Landlord hereby assigns to
Harrah's all of its right, title and interest in and to and with respect to the
Percentage Rent (which for purposes of this Section shall include Substitute
Percentage Rent), including without limitation the Landlord's right to
receive all Percentage Rent, Substitute Percentage Rent and all Tenant reports
and returns under Section 5.2.1, the rights to audit Tenant's books and records
pursuant to Section 5.2.3, the rights to enforce payment of the Percentage Rent
and Substitute Percentage Rent in Harrah's own name or in the name of Landlord
and all other remedies of Landlord based on a Default in the payment of
Percentage Rent, and Harrah's shall have such rights under the Parent Guaranty
(hereinafter defined) and other security and lien for payment of Percentage Rent
as Landlord shall have under this Lease. Landlord hereby directs Tenant to pay
all Percentage Rent otherwise payable to Landlord under this Lease directly to
Harrah's at such bank account as Harrah's may from time to time specify to
Tenant by written Notice to Tenant. If there is an Event of Default based on a
Default with respect to Percentage Rent, Harrah's may direct the Landlord to
exercise any of Landlord's
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remedies for the benefit of Harrah's, or Harrah's may itself directly enforce
such provisions of this Lease and Landlord's rights under the Parent Guaranty.
The assignment under this Section is an absolute assignment and not an
assignment for security and may not be revoked or amended without the express
written consent of Harrah's. Subject to first satisfying all applicable
requirements of Missouri Gambling Law, Harrah's may further assign its rights
hereunder and may encumber its right to receive payments of Percentage Rent.
5.2.6 Substitute Percentage Rent. After the Commencement Date
(Percentage Rent), with respect to any period from the date an Operating
Covenant Default has occurred and Landlord has given Tenant Notice of such
Operating Covenant Default and continuing until such Operating Covenant Default
is cured (such period during which an Operating Covenant Default has occurred
and is continuing being referred to as a "Substitute Period"), Tenant shall pay
during any Substitute Period arising due to an Operating Covenant Default, an
amount (the "Default Substitute Percentage Rent") equal to the greater of (A)
Percentage Rent allocable to such Substitute Period and (B) Average Percentage
Rent (hereinafter defined). After the Commencement Date (Percentage Rent), with
respect to any period from the date Landlord has failed to receive its
Percentage Rent Approval (or such Percentage Rent Approval is revoked or
suspended) and the Missouri Gaming Commission (or other gaming authority whose
actions have led to an Unsuitability Determination affecting Landlord) permits
payment of Approved Substitute Percentage Rent by Tenant to Landlord (such
period during which Landlord no longer has its Percentage Rent Approval also
being referred to as a "Substitute Period"), Tenant shall pay during any
Substitute Period arising due to Landlord's failure to have Percentage Rent
Approval an amount equal to Average Percentage Rent, but in no event shall
Average Percentage Rent exceed the Percentage Rent otherwise allocable to the
Substitute Period (the "Approved Substitute Percentage Rent," such Default
Substitute Percentage Rent and Approved Substitute Percentage
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Rent being sometimes hereinafter collectively referred to as the "Substitute
Percentage Rent"). "Average Percentage Rent" is a daily amount equal to the
Percentage Rent payable for the two preceding Percentage Rent Years divided by
730, which daily amount is then multiplied by the number of days in a Substitute
Period, provided that if the Premises have been operating for fewer than two
full Percentage Rent Years, the daily amount shall equal the Percentage Rent
payable for the period from the Commencement Date (Percentage Rent) through the
day preceding the commencement of a Substitute Period divided by the number of
days in such measuring period and further provided that if a Substitute Period
has previously occurred during the applicable measuring period for Average
Percentage Rent, Landlord shall reasonably adjust the amount to be used as the
daily amount for Average Percentage Rent to reflect an average daily Percentage
Rent during periods of operation in accordance with Section 7.1.
5.3 Additional Rent. In addition to Percentage Rent, Tenant shall pay
Landlord, as additional rent under this Lease, all Additional Rent, as and when
same is due and payable and before any interest or penalty may attach for
nonpayment thereof.
5.4 No Allocation to Personal Property. None of the Rent provided for
under this Lease is allocable to any personal property included in the Premises,
as such term is defined in this Lease.
5.5 No Conditional Payment. No payment by any party of a lesser amount
than the total of all sums due hereunder shall be deemed to be other than on
account of the sums then due, applied in inverse priority of their due dates,
nor shall any endorsement or statement on any check, other payment or
accompanying letter or other communication or notice be deemed an accord and
satisfaction. Any party may accept such payment in cash or negotiate such check
or other payment without prejudice to that party's right to recover the balance
of such sums or to pursue any other remedy provided in this Lease or otherwise
available, regardless of whether that
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party makes any notation on such instrument of payment or otherwise notifies the
other party that such acceptance, cashing or negotiation is without prejudice to
any of that party's rights.
5.6 Interest on Overdue Rent. Unless otherwise provided herein, all
Rent (other than Percentage Rent, Approved Substitute Percentage Rent and
Default Substitute Percentage Rent, which shall be due as provided in
Section 5.2.1) owed by Tenant to Landlord shall be due ten (10) calendar days
from the date the Landlord renders statements of account or invoices therefor.
If any Rent (including, without limitation, Percentage Rent, Approved Substitute
Percentage Rent and Default Substitute Percentage Rent) is not received by
Landlord or Harrah's, as the case may be, within one Business Day after the date
due, Tenant agrees to pay to Landlord or Harrah's, as the case may be, interest
at the Prime Rate plus eight percent (8%) but not in excess of the Criminal
Usury Rate (the "Default Rate") on the overdue amount from the date such
obligation was due until paid.
5.7 Tenant's Licenses. All separate license and permit fees and
business taxes imposed or payable with respect to Tenant's operations or the
Premises shall at all times be kept current and in full force and effect and
shall be paid by Tenant when due.
5.8 No Offset by Tenant. Rent and other charges and payments required
to be made by Tenant to Landlord or Harrah's under the provisions of this Lease
shall be paid in lawful money of the United States without prior demand,
deduction or offset.
5.9 Restaurant Charges. If guests staying at the hotel portion of the
Entertainment Facilities charge meals at any restaurant facility located within
the Premises, Landlord shall pay to Tenant such restaurant charges that are
included in hotel billings, monthly, in arrears, no later than the 20th day of
the Fiscal Month following the Fiscal Month in which such charges are billed,
or, if such day should be a legal holiday, the next Business Day thereafter.
Payment of such sums shall be accompanied by a written itemization, in
reasonable detail, of such charges.
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Tenant will accept charges made by guests of such hotel for their account with
the hotel for food, beverage and alcoholic beverage service (plus taxes and
gratuities related thereto) at restaurants within the Premises in accordance
with operating procedures for the authorization thereof from time to time
adopted by Landlord and furnished to Tenant. Landlord will make available to
Tenant point of sale equipment to provide Tenant direct access to accounts of
guests at the hotel and the amount of credit authorized for such guest's
account. Tenant shall assume the risk of collection of any such charges and
shall reimburse Landlord, as Additional Rent, for any such uncollected charges
monthly, in arrears, no later than the twentieth day of the Fiscal Month
following the Fiscal Month in which the charges are billed if Landlord has
previously paid such restaurant charges to Tenant.
5.10 Hotel Charges. Tenant's use of hotel rooms in the Shoreside
Complex, so long as Landlord is the Venture, shall be governed by the Joint
Venture Agreement and any agreement entered into by the Venture with a hotel
manager. Thereafter, if Tenant desires to reserve guest rooms or other
dining/meeting room facilities at the hotel portion of the Entertainment
Facilities for the purpose of making such rooms available to its customers,
Tenant shall pay Landlord as Additional Rent (by wire transfer to the bank
account designated in writing by Landlord's hotel manager) the rack or standard
rate for such hotel rooms or facilities no later than 6:00 p.m. on the day for
which such hotel rooms or facilities are reserved, or earlier, in accordance
with policies adopted by the hotel manager which do not discriminate between the
Premises and Harrah's Premises.
6. ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS.
6.1 Landlord's Net Return. The parties intend that this Lease shall
constitute a "net lease," so that the Percentage Rent and Substitute Percentage
Rent shall provide Landlord with "net" return for the Term, free of any expenses
or charges with respect to the Premises, except
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as specifically provided in this Lease. Tenant recognizes that, as a partner of
Landlord, Tenant will be responsible for its percentage share of all liabilities
of the Landlord in addition to its responsibility for all liabilities arising
out of its operation of the Premises and that its obligations as a partner of
Landlord are, pursuant to Sections 6.7 and 29.1.1 cross-defaulted with its
obligations under this Lease. Tenant recognizes that any permitted
transfer of its Partnership Interest (as defined in the Joint Venture Agreement)
or its interest herein which would have the effect of placing such interests in
separate entities will not change or affect the cross-default provisions in the
immediately preceding sentence.
6.2 Impositions. For any period within the Term (with daily proration
for periods partially within the Term and partially outside the Term), Tenant
shall pay and discharge, before failure to pay the same shall create a material
risk of forfeiture or give rise to a penalty, all Impositions. Tenant shall also
pay all interest and penalties assessed by any Government on account of late
payment of any Imposition, unless such late payment was caused by Landlord's
failure to remit an Imposition (paid to Landlord by Tenant) in accordance with
Tenant's reasonable instructions or Landlord's failure to promptly forward
Tenant a copy of a tax bill received by Landlord, in which case Landlord shall
pay such interest and penalties.
6.3 Assessments in Installments. To the extent that may be permitted by
law, Landlord shall have the right to apply for conversion of any assessment to
cause it to be payable in installments. After such conversion, Tenant shall pay
and discharge only such installments of such assessment as shall become due and
payable during the Term.
6.4 Combined Tax Lot. It is likely that the Shoreside Complex and the
Premises will be part of a single tax lot (the "Combined Tax Lot"). In such
event, Tenant shall pay, as Additional Rent:
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(i) fifty percent (50%) of the Impositions assessed against
the Shoreside Complex, as a whole (which payment, so long as there is
no severance of Tenant's ownership (as a Partner in the Venture) of the
Shoreside Complex, may be made by Tenant paying its fifty percent (50%)
share of Landlord's net operating losses pursuant to Section 6.7); and
(ii) one hundred percent (100%) of the Impositions assessed
against Tenant's Property.
Landlord shall provide Tenant a copy of each bill for Impositions as it is
received. Landlord shall have the exclusive right to contest Impositions against
the Shoreside Complex. Tenant shall have the exclusive right to contest
Impositions against Tenant's Property.
6.5 Direct Payment by Landlord. If any Imposition or other item of Rent
required to be paid by Tenant is required by applicable Laws to be paid directly
by Landlord, then: (a) Landlord appoints Tenant as Landlord's attorney in fact
for the purpose of making such payment; and (b) if the Person entitled to
receive such payment refuses to accept it from Tenant, then Tenant shall give
Landlord Notice of such fact no later than ten (10) days prior to the date such
payment is due, shall accompany such Notice with such payment and shall include
in such Notice reasonable instructions as to the further remittance of such
payment. Landlord shall with reasonable promptness comply with Tenant's
reasonable instructions and shall assume responsibility for interest and
penalties resulting from Landlord's failure to do so.
6.6 Utilities. Tenant shall pay all fuel, gas, light, power, water,
sewage, garbage disposal, telephone and other utility charges, and the expenses
of installation, maintenance, use and service in connection with the foregoing,
relating to the Premises during the Term. If any such items are not separately
metered to Tenant or are otherwise charged to Landlord, Tenant shall on demand
reimburse Landlord for all such charges and expenses allocable to the Premises.
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Landlord and Tenant agree to cooperate to install flow meters or retain the
services of professional consultants to determine Tenant's usage of any
utilities that are not separately metered to the Premises.
6.7 Joint Venture Losses. Commencing on the first day of the second
month following the Commencement Date (Percentage Rent) and on the first day of
each month thereafter during the Term and the first month after the end of the
Term, Tenant shall also pay as Additional Rent hereunder fifty percent (50%) of
Landlord's monthly net operating losses (including capital losses) as evidenced
by Landlord's monthly operating statement for the immediately preceding Fiscal
Month, provided that if a Prime Mortgage shall then be in effect, Tenant shall
pay as Additional Rent to Landlord fifty percent (50%) of the principal and
interest payment when due under the Prime Mortgage, which payment shall be
appropriately credited against the Tenant's fifty percent (50%) share of
Landlord's monthly net operating losses as set forth above. Monthly operating
statements may be prepared prior to the end of the applicable month based on
projected income and expenditures, with appropriate adjustments the following
month to reflect actual income and expenditures. If, for any reason, there shall
be a severance of Tenant's ownership of the Shoreside Complex (currently, as a
partner of the Venture) and Leasehold Estate, then Tenant shall pay, as
Additional Rent under this Lease, fifty percent (50%) of the monthly debt
service payments (principal and interest) due under any Prime Mortgage to the
applicable Prime Mortgagee, provided, that the principal amount secured by such
Prime Mortgage does not exceed the amount agreed to by the Venture), as well as
fifty percent (50%) of all Common Area Maintenance Charges as defined in and
provided under Exhibit E hereto, in lieu of Additional Rent pursuant to the
first two sentences of this Section and Tenant shall have the additional rights
and Landlord the additional obligations with respect to the Shoreside Complex as
are provided in such Exhibit E.
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7. USE.
7.1 Permitted Uses. Between the Commencement Date and the Commencement
Date (Percentage Rent), Tenant may use the Premises only for the purpose of
completing Tenant's Work, installing Tenant's Property and conducting
pre-opening training activities in accordance with the remaining terms and
conditions of this Lease and subject to any limitations imposed by Landlord's
insurance policies. After the Commencement Date (Percentage Rent), Tenant shall,
except as herein otherwise specifically provided, continuously occupy and
operate the Premises as two (2) Excursion Gambling Boats (as defined in the
Missouri Gambling Law) with accessory restaurant, ticketing and back of house
facilities to at least the standard set forth in Exhibit F. Such operations
shall be conducted seven days per week, including holidays, for at least the
minimum hours required by the Missouri Gambling Law and Missouri Gaming
Commission and otherwise at least one of such casinos shall be operated not less
than sixteen (16) hours per day, seven (7) days per week (including holidays).
The Premises shall not, at any time, be used in a manner that will violate any
Permitted Exception.
7.2 Tenant's Failure to Operate the Business. If Tenant breaches
Section 7.1, irreparable harm and damages, which damages are not readily
ascertainable, will be caused to Landlord and Harrah's. Tenant agrees that, in
such event, Landlord, at its option, shall be entitled to specific performance
and to seek injunctive relief in addition to all other rights and remedies.
7.3 Exterior Operations/Objects/Regulations. Tenant shall not outside
the boundaries of the Premises: (i) conduct gambling operations; (ii) display,
serve or sell food or merchandise; or (iii) allow furniture, equipment or other
objects or merchandise to be stored or placed, without the prior written consent
of Landlord. Tenant shall also comply with reasonable rules and regulations
adopted from time to time by Landlord with respect to the Shoreside Complex,
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including regulations relative to the use of, and payment for, parking areas
within the Shoreside Complex. Landlord intends to develop and implement
emergency procedures for the Entertainment Facilities, Excursion Gambling Boats
and Excursion Gambling Boat Support Facilities and for obtaining approval for
said procedures from the Pattonville-Bridgeton Terrace Fire District, the
Maryland Heights Police Department and other appropriate public safety agencies.
In that regard, Landlord or its Manager of the Shoreside Complex (the "Manager")
will assume the role of "Executive Command" in the event of an emergency
requiring such, and will be responsible for the execution of emergency
procedures. Tenant's personnel, in accordance with the established emergency
procedures, will provide necessary assistance to the Landlord or the Manager in
the execution of its duties as Executive Command. At no time will Tenant change,
modify, add to or delete any element of the established emergency procedures
without written approval from the Landlord or the Manager. During an actual
emergency, Tenant will be subordinate to Landlord or the Manager, and at no time
with regard to emergency procedures, will Tenant's personnel countermand,
disregard or fail to execute a directive from the Landlord or the Manager.
Tenant agrees to comply with all aspects of the established procedures
manual, including, but not limited to, personnel training, rehearsals and
on-going drills as may be required by Landlord or the Manager.
7.4 Refuse/Deliveries. Tenant shall be solely responsible for causing
all refuse from the Premises to be stored in sealed, watertight containers
fashioned to prevent the soiling of the Shoreside Complex and daily removed to
the refuse compactor for the Shoreside Complex. Tenant shall effect all
deliveries using the loading areas designated on Exhibit G at times and in a
manner so as to minimize the disturbance of guests of the Shoreside Complex.
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7.5 Interruption of Business. Landlord does not warrant the sufficiency
of the Shoreside Complex or the Premises for the purposes of Tenant's
contemplated operation of its business on the Premises nor the sufficiency of
any access thereto or the sufficiency of any utilities or other services
provided with respect thereto, nor does Landlord warrant that any of the
services or access to be provided to the Premises or the Shoreside Complex,
whether under this Lease, the Joint Venture Agreement, or otherwise, will be
free from interruption whether caused by war, riots, acts of God, Government
action, repairs, mechanical breakdown, improvements, alterations, strikes,
picketing, whether legal or illegal, accidents, inability of Landlord or Tenant
to obtain fuel or supply, Casualty, Condemnation, litigation, failure or refusal
of a governmental body to issue a required permit or license, or any cause or
causes beyond the reasonable control of Landlord, whether similar or dissimilar
to the causes specifically enumerated in this Section. No failure or delay in
furnishing any service or access, whether caused in whole or in part by any one
or more of the foregoing causes or otherwise, shall result in any liability of
Landlord to Tenant, or be deemed to be an eviction or disturbance of Tenant's
use and possession of the Premises, or relieve Tenant from its obligation to pay
all Rent when due or from any other obligations of Tenant under this Lease,
Tenant's sole remedy in this regard being to look to insurance carried by Tenant
in accordance with this Lease with respect to any such risks.
8. MARKS AND PUBLICITY.
8.1 Exclusive Ownership of Marks. Landlord acknowledges and recognizes
the exclusive rights of Players International, Inc. ("Players") to the service
marks, trademarks, names, copyrights, logos, registrations and patents used in
connection with the "Players" casinos, riverboat casinos and casino hotels
(collectively, the "Players Marks"). Landlord disclaims any right, title or
interest in or to any of the Players Marks by operation of this Lease
(recognizing
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that the right of Landlord to use the Players Marks derives exclusively from
that certain License Agreement of even date herewith by and among Players,
Landlord and Harrah's Maryland Heights Operating Company) (the "Players
License").
8.2 Signs. Tenant shall not display any sign, light, advertisement,
banner, flag, or awning (collectively, "signs" or singly, a "sign") in the
interior or exterior of the Entertainment Facilities (including without
limitation, the roof, windows, walls, columns, and/or other similar areas of the
Entertainment Facilities) or the exterior of the Premises without the prior
written consent of Landlord. Landlord, Harrah's and Tenant desire to effect a
coordinated sign program for the Shoreside Complex that will fairly allocate
sign area permitted by Law among the Premises, the Harrah's Premises and the
Entertainment Facilities. Any signs installed in violation of the provisions
hereof or any sign plan adopted by Landlord, as the same may be modified by
Landlord from time to time, may be removed by Landlord without notice and all
costs incurred in doing so shall be due and payable by Tenant upon demand, as
Additional Rent. If during the Term, Tenant should change the Players Marks and
desire to modify the design (but not the area) of signs allocated to it under
the sign plan, it may do so, provided that all costs and expense associated
therewith shall be paid by Tenant.
8.3 Effect of Lease Termination. Landlord acknowledges that under the
terms of the Players License, in the event of any termination of this Lease
(including on account of an uncured Default by Tenant): (a) neither Tenant nor
Players shall be under any obligation, express or implied, to issue a license to
Landlord or any subsequent operator of the Premises to utilize the Players
Marks; and (b) Landlord shall not use Players Marks in association with the
Premises or the Shoreside Complex. Tenant shall have the right, within thirty
(30) days after the termination of this Lease, to remove all Tenant's Property
identified with Players Marks, subject
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to the obligation to restore any damage to the Premises or Shoreside Complex
caused by the installation or removal thereof.
9. LAWS.
9.1 Compliance with Law. During the Term, Tenant shall, at its own
expense, observe and comply with all Laws affecting the Premises. Tenant shall
have the right to contest any such Laws only in accordance with Article 13.
9.2 Licenses and Permits. Tenant shall procure, in a timely manner,
every permit, license, certificate or other authorization required in connection
with the lawful and proper maintenance, operation, use and occupancy of the
Premises, completion of Tenant Work or installation of Tenant's Property and
shall comply with all such permits, licenses, certificates and other
authorizations.
9.3 Surrender of Licenses. To the fullest extent allowed by law, at the
expiration or termination of this Lease, Tenant agrees to surrender and/or
transfer all permits, licenses, certificates and other authorizations pertaining
to the Premises to the Landlord, Landlord's designated successor operator of the
Premises or the licensing authority, as required by Law, to permit or facilitate
the transfer or reissuance of such licenses and/or permits to Landlord or
Landlord's designee, without cost to Landlord or such designee. The provisions
hereof shall survive expiration or termination of this Lease.
9.4 Environmental Matters.
9.4.1 Compliance. All activities of Tenant upon the Premises
shall comply with Environmental Law, but Tenant shall have no responsibility for
activities of others outside the Premises which cause the Premises not to comply
with Environmental Laws. Landlord shall also have no responsibility for the
activities of others outside the Premises.
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9.4.2 No Violations. Tenant shall not cause or permit any
Hazardous Materials to be brought upon, stored, handled, used, generated,
released into the environment, or disposed of, on, under, from, or about the
Premises (which for purposes of this Section shall include, without limitation,
subsurface soil and groundwater) without the prior written consent of Landlord.
Landlord may, in its sole discretion, place such conditions as Landlord deems
appropriate with respect to such Hazardous Materials and may further require
that Tenant demonstrate to the Landlord that such Hazardous Materials are
necessary or useful to Tenant's business and will be generated, stored, handled,
used, and disposed of in a manner that complies with Environmental Law and with
good business practices. Tenant acknowledges and agrees that Landlord may
reasonably utilize an environmental consultant to assist in determining
conditions of approval and monitoring in connection with the presence, storage,
generation, handling, or use of Hazardous Materials on or about the Premises by
Tenant or Tenants' agents, employees, invitees or subtenants.
9.4.3 Cost of Compliance. If the presence of any Hazardous
Materials (other than Preexisting Hazardous Materials [hereinafter defined]) on,
under, from, or about the Premises results in (i) injury to any individual, (ii)
injury to or contamination of the Premises, or (iii) injury to or contamination
of any real or personal property wherever situated, then Tenant, at its sole
cost and expense, shall promptly take all actions necessary to return the
Premises to the condition existing prior to the introduction of such Hazardous
Materials to the Premises and to remedy or repair any such injury or
contamination. Without limiting any other rights or remedies of Landlord under
this Lease or at law or in equity, Tenant shall pay the cost of any cleanup work
performed on, under, or about the Premises as required by this Lease or
Environmental Law in connection with the investigation, monitoring, removal, and
disposal of such Hazardous Materials.
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9.4.4 Remediation. Notwithstanding any other provision of this
Section, Tenant shall not, without Landlord's prior written consent, which
consent shall not unreasonably be withheld, take any remedial action in response
to the presence of any Hazardous Materials on, under, from, or about the
Premises, or enter into any settlement agreement, consent decree, or other
compromise with any governmental agency with respect to any Hazardous Materials
claims; provided, however, Landlord's prior written consent shall not be
necessary in the event that the presence of Hazardous Materials on, under, from,
or about the Premises (i) poses an immediate threat to the health, safety, or
welfare of any individual, or (ii) is of such a nature that an immediate
remedial response is necessary or appropriate and it is not possible to obtain
Landlord's prior written consent before such response.
9.5 Disclosure. Tenant shall promptly notify Landlord of, and shall
promptly provide Landlord with true, correct, complete, and legible copies of,
all of the following relating to the Premises or to Tenant's activities at the
Premises:
9.5.1 Reports. Reports and other documents filed by Tenant
with any governmental agency or body pursuant to Environmental Law including,
without limitation, all permit applications, permits, monitoring reports,
workplace exposure and community exposure warnings or notices, and environmental
audits or assessments relating to water discharges, air pollution, waste
generation or disposal, underground or aboveground storage tanks, or Hazardous
Materials;
9.5.2 Notices. All correspondence, notices, information
requests, complaints, pleadings, legal documents, and other documents received
by Tenant from any Government agency related to Hazardous Materials;
9.5.3 Environmental Audits. All environmental audits or
assessments (even those which may be characterized as confidential);
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9.5.4 Orders. All orders, reports, notices, listings, and
correspondence (including those which may be considered confidential) of or
concerning the release, investigation, compliance, cleanup, remedial or
corrective action, or abatement of Hazardous Materials, whether or not required
by Environmental Law; and
9.5.5 Pleadings. All correspondence, notices, information
requests, complaints, pleadings, and legal documents filed against Tenant
related to Tenant's use, handling, storage, or disposal of Hazardous Materials.
9.6 Indemnification. To the fullest extent permitted by law, Tenant
hereby agrees to indemnify, hold harmless, protect and defend (with attorneys
reasonably acceptable to Landlord) Landlord and any successors to all or any
portion of Landlord's interest in the Premises and their respective directors,
officers, partners, beneficiaries, employees, authorized agents, affiliates,
representatives, and mortgagees from and against any and all liabilities,
losses, damages (including, without limitation, damages for the loss or
restriction on use of rentable or usable space or any amenity of the Premises),
diminution in the value of the Premises or Shoreside Complex, judgments, fines,
demands, claims, recoveries, deficiencies, costs, and expenses (including,
without limitation, reasonable attorneys' fees, disbursements and court costs,
and all other professional or consultant's expenses), whether foreseeable or
unforeseeable, arising directly or indirectly out of:
(i) the breach by Tenant of any of its covenants or
representations made or to be made pursuant to Sections 9.4, 9.5,
and, this Section 9.6 and 9.7 hereof, or
(ii) the presence (except for Preexisting Hazardous
Materials), use, handling, generation, storage, treatment, or on-site
or off-site disposal or transportation of Hazardous Materials on, into,
from, under or about the Premises by Tenant or Tenant's agents,
employees, invitees or subtenants,
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and specifically including, without limitation, the cost of any required or
necessary repair, restoration, clean-up (including, but not limited to, the
costs of investigation, monitoring, and removal of Hazardous Materials [except
for Preexisting Hazardous Materials]) or detoxification of the Premises or other
property where such Hazardous Materials have come to be located, and the
preparation of any closure or other required plans, whether such action is
required or necessary during the term of this Lease or after the expiration of
this Lease.
9.7 Tenant's Further Responsibility at Termination or Expiration of
Lease.
9.7.1 Surrender. Promptly upon the expiration or sooner
termination of this Lease, Tenant shall represent to Landlord in
writing that (i) Tenant has made a diligent effort to determine whether any
Hazardous Materials are on, under, or about the Premises as a result of any acts
or omissions of Tenant or Tenant's agents, employees, invitees or subtenants,
and (ii) no such Hazardous Materials exist on, under, or about the Premises
other than as specifically identified to Landlord by Tenant in writing.
9.7.2 Storage Tanks. Any and all underground or aboveground
storage tanks on the Premises, along with their respective piping, pumps,
dispensing equipment, and dispensing islands, are not fixtures but are part of
Tenant's Property. Tenant shall remove all such Tenant's Property from the
Premises upon termination of this Lease. Such removal shall comply with
Environmental Law. Any agreement by Landlord that Tenant may abandon such
Tenant's Property on the Premises must be in writing.
9.8 Landlord's Environmental Remedies.
9.8.1 Inspection Rights. Landlord shall have the right, but
not the obligation, subject to the provisions of Article 26 hereof, to
inspect, investigate, sample, and monitor the Premises at any time to determine
whether Tenant is complying with the terms of this Article,
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and in connection therewith, Tenant shall provide Landlord with full access to
all relevant facilities, records, and personnel.
9.8.2 Self Help. If Tenant is not in compliance with any of
the provisions of this Article, or in the event of a release of Hazardous
Material (other than Preexisting Hazardous Materials) on, under, from, or about
the Premises, Landlord shall have the right, but not the obligation, to
immediately enter upon the Premises and to discharge Tenant's obligations under
this Article at Tenant's expense, including without limitation, the taking of
emergency or long-term remedial action. Landlord shall endeavor to minimize
interference with Tenant's business but shall not be liable for any such
interference.
9.8.3 Hazardous Material Release. If Landlord has a good-faith
reason to believe that Tenant or Tenant's agents, employees, invitees or
subtenants may have caused or permitted the release of a Hazardous Material on,
under, from or about the Premises, then Landlord may require Tenant, at Tenant's
sole cost and expense, to conduct monitoring activities on or about the Premises
reasonably satisfactory to Landlord concerning such release of Hazardous
Materials on, under, from or about the Premises.
9.8.4 Clean Up. If Tenant, pursuant to Section 9.7.1, discloses the
existence of Hazardous Materials on, under, from, or about the Premises, or if
Landlord at any time discovers or is informed that Hazardous Materials (other
than Preexisting Hazardous Materials) have been released, disposed of, spilled,
or leaked on, under, from, or about the Premises, Tenant shall, at Landlord's
request, immediately prepare and submit to Landlord within thirty (30) days
after such request a comprehensive plan, subject to Landlord's approval,
specifying the actions to be taken by Tenant to return the Premises to the
condition existing prior to the introduction of such Hazardous Materials.
Landlord, in its sole discretion, may retain a consultant, which shall be at
Tenant's sole cost and expense, to review and comment upon such plan. Upon
Landlord's
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approval of such clean-up plan, Tenant shall, at Tenant's sole cost and expense,
implement such plan and proceed to clean up such Hazardous Materials as soon as
reasonably possible, but in any event within the time period prescribed by any
Government authority in accordance with Environmental Law and as required by
such plan and this Lease. Tenant acknowledges that Landlord's review of and
comments upon such plan will not prevent any governmental agency with
appropriate jurisdiction from imposing further or other requirements. All such
cleanups and remedial actions shall be at Tenant's sole cost and expense.
9.8.5 Landlord Participation. Landlord, at Tenant's sole cost
and expense, shall have the right, but not the obligation, to join and
participate in any legal or administrative proceedings or actions involving
Tenant in connection with any claims, demands, or causes of action arising out
of the storage, generation, handling, use, or disposal of Hazardous Materials
(other than Preexisting Hazardous Materials) on, under, from, or about the
Premises.
9.8.6 Fees and Expenses. All sums reasonably disbursed,
deposited, or incurred by Landlord in connection with its rights and remedies
under this Article, including without limitation, all costs, expenses, and
actual attorneys' and consultants' fees, shall be due and payable by Tenant to
Landlord as an item of Additional Rent, on demand by Landlord, together with
interest thereon at the Default Rate from the date thirty (30) days after the
date of such demand until paid by Tenant.
9.9 Landlord's Indemnity. Landlord and Tenant are each in possession of
a copy of the Phase I Environmental Assessment Report dated October 17, 1995
performed by Espey, Huston & Associates, Inc. (the "Assessment"). To the best
knowledge of Landlord, based solely on the Assessment, there are no Hazardous
Materials on the Premises. Landlord shall defend, fully indemnify and hold free
and harmless Tenant from and against all claims, judgments, damages, penalties,
fines, costs, liabilities or losses and costs of remediation, if any, that arise
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after the Commencement Date, and that are imposed on or paid by or asserted
against Tenant by reason of or on account of Hazardous Materials which were
present at any time or times on the Premises prior to the Commencement Date (the
"Preexisting Hazardous Materials").
10. MAINTENANCE AND ALTERATIONS.
10.1 Obligation to Maintain. Tenant shall provide Landlord a guaranty
of Players International, Inc. in the form attached hereto as Exhibit M or a
performance and payment bond, satisfactory to Landlord, naming Landlord as a
dual obligee for all construction work undertaken on the Premises the cost of
which exceeds One Million Dollars ($1,000,000.00). During the Term, Tenant shall
keep, maintain, repair, replace, renew and restore Tenant's Work, Tenant's
Property and the interior of the Premises in good and serviceable condition
consistent with or better than the standard to which Tenant as of the date of
this Lease maintains the riverboat casino facility of its Affiliate at Lake
Charles, Louisiana, subject to Casualty (governed by the separate applicable
provisions of this Lease) and reasonable wear and tear. Tenant shall also
operate the Premises for the uses provided in Section 7.1 hereof in accordance
with the operating standards set forth on Exhibit F hereto. Tenant's
responsibility shall include, without limitation, consumable goods, light
fixtures, floor coverings, wall coverings and finishes, interior walls,
furniture and furnishings, food preparation areas, appliances, Gaming Equipment,
cashier equipment, counting room equipment, ceilings, doors, door frames,
windows, window sashes and casements, glass and frames, entrances, exits, signs,
locks and closing devices.
10.2 Tenant's Right to Perform Alterations. In addition to Tenant's
Work, at Tenant's sole cost and expense, Tenant shall be entitled but not
required to make and from time to time alter, modify or reconstruct, any
interior improvements to the Premises so long as none of such improvements
constitutes a Structural Modification to the Premises without Landlord's consent
(except to the extent, if any, expressly provided otherwise in this Lease), as
Tenant shall consider
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necessary or appropriate, provided Tenant has furnished Landlord a certificate
of the structural engineer for the original construction of the Shoreside
Complex or other appropriate civil engineer (or such other structural engineer
or other appropriate civil engineer as is approved by Landlord, which approval
shall not be unreasonably withheld) that none of such alterations is a
Structural Modification. If Landlord disagrees with the determination by such
structural engineer as set forth in such certificate, Landlord shall have the
right to require arbitration of such determination in accordance with the
provisions of Section 29.6 hereof. Tenant shall perform all construction work in
connection with any such improvement, repair or alteration to the Premises in
compliance with all Laws and Permitted Exceptions, and shall not perform any
work on any common systems servicing both the Premises and other portions of the
Shoreside Complex without Landlord's advance written consent.
10.3 Plans and Specifications. To the extent that Tenant makes or
permits to be made any improvements, repairs or alterations to the Premises
(including initial construction of Tenant's Work) Tenant shall obtain as-built
plans and specifications for such improvements, repairs or alterations, and
promptly upon Substantial Completion of such work, provide Landlord with a true
and complete copy of such plans and specification(s) (excluding any portions
thereof relating to security devices or procedures which must be maintained
confidential to reasonably preserve the security of Tenant's gambling
operations).
10.4 Shoreside Complex. Landlord shall be responsible to maintain,
repair, replace, renew and restore the Shoreside Complex, excluding the interior
of the Premises, Tenant's Work and Tenant's Property at the Premises, and like
work and property at Harrah's Premises. Tenant agrees that Tenant and HMHC, as
partners of Landlord, shall have the right to determine the appropriate level of
maintenance, repair, replacement, renewal and restoration of such portions of
the Shoreside Complex and may delegate that determination to Harrah's Maryland
Heights
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Management Company or to another management company. Tenant agrees that the
determination of Landlord and/or its management company in that regard shall be
deemed acceptable to Tenant and shall not be the cause of any right or action by
Tenant against Landlord.
10.5 Excavations/Work on Shoreside Complex. If excavation, maintenance,
repair, restoration, or construction work shall be conducted upon the Shoreside
Complex adjacent to the Premises, Tenant shall afford to the Person causing or
authorized to cause such excavation or work, license to enter the Premises, in
accordance with Tenant's reasonable instructions and Tenant's reasonable
security procedures, to perform such work. Tenant shall not, by reason of any
excavations or work described in this Section, have any claim against Landlord
for damages or for indemnity or for suspension, diminution, abatement or
reduction of any Rent.
11. PROHIBITED LIENS.
11.1 Tenant's Covenant. Tenant shall not suffer or permit any
Prohibited Lien to be filed. If a Prohibited Lien is filed then Tenant shall,
within thirty (30) days after receiving Notice of such filing (but no later than
fifteen (15) days after receipt of Notice of commencement of foreclosure
proceedings), commence and then prosecute appropriate action to cause such
Prohibited Lien to be paid, discharged or bonded (by issuance to Landlord of a
title insurance endorsement insuring against all loss or damage arising pursuant
to such Prohibited Lien). Nothing in this Lease shall be construed to restrict
Tenant's right to contest the validity of any Prohibited Lien and to pursue
Tenant's position to a final judicial determination provided that appropriate
and adequate title insurance endorsement is issued to Landlord to assure that
there may be no forfeiture (including any judicial or foreclosure sale) of the
Leasehold Estate or Landlord's Estate. The mere existence of a Prohibited Lien
shall not be construed as a Default under this Lease.
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11.2 Protection of Landlord. Notice is hereby given that Landlord shall
not be liable for any labor or materials furnished or to be furnished to Tenant
upon credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the Landlord's Estate. Nothing in this Lease
shall be deemed or construed in any way to constitute Landlord's consent or
request, express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer, equipment or material supplier for the performance of
any labor or the furnishing of any materials or equipment for any improvement,
alteration or repair of, or to, the Premises, or any part of the Premises, nor
as giving Tenant any right, power or authority to contract for, or permit the
rendering of, any services, or the furnishing of any materials that would give
rise to the filing of any liens against the Landlord's Estate. Tenant shall
Indemnify Landlord against any work performed on the Premises for or by Tenant.
12. INDEMNIFICATION; LIABILITY OF LANDLORD.
12.1 Mutual Indemnity Obligations. Landlord and Tenant shall each
Indemnify the other against any wrongful act, wrongful omission or negligence of
the Indemnitor (and, in the case of Tenant, that of any Person occupying the
Premises by, through or under Tenant) or its or their partners, directors,
officers, or employees. In addition to and without limiting the generality of
the foregoing indemnity, Tenant shall Indemnify Landlord against all the
following matters (except to the extent any claim arises from any wrongful act,
wrongful omission or gross negligence of Landlord): (x) the conduct, management
or occupancy of or from any work or activity performed in and on the Premises
during the Term; (y) the condition of the Premises; and (z) any accident, injury
or damage whatsoever caused to any individual or property occurring during the
Term, in or on the Premises. Notwithstanding anything to the contrary in this
Lease, Tenant shall not be required to Indemnify Landlord from or against
Landlord's intentional acts or omissions or gross negligence nor for any loss or
damage to property covered by insurance
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so long as the applicable insurance policy contains a waiver of subrogation
provision or endorsement which Landlord agrees to obtain at its sole cost and
expense.
12.2 Liability of Landlord. Except as otherwise expressly provided,
Tenant is and shall be in exclusive control and possession of the Premises
during the Term as provided in this Lease. Subject to Section 12.1, Landlord
shall not be liable for any injury or damage to any property or to any
individual occurring on or about the Premises.
12.3 Indemnification Procedures. Wherever this Lease requires an
Indemnitor to Indemnify an Indemnitee, the following procedures and requirements
shall apply:
12.3.1 Prompt Notice. The Indemnitee shall give the Indemnitor
prompt Notice of any claim. To the extent, and only to the extent, that both (a)
the Indemnitee fails to give prompt Notice and (b) the Indemnitor is thereby
prejudiced, the Indemnitor shall be relieved of its indemnity obligations under
this Lease.
12.3.2 Selection of Counsel. The Indemnitor shall be entitled
to select counsel (reasonably acceptable to the Indemnitee, but counsel to the
Indemnitor's insurance carrier shall be deemed satisfactory). Notwithstanding
anything to the contrary in the preceding sentence, the Indemnitee, unless the
Indemnitee or an Affiliate of Indemnitee has previously approved the selection
of counsel as a partner of Indemnitor, shall be entitled to select the
Indemnitee's own counsel and be represented by such counsel, and if the
Indemnitee selects its own counsel, then such counsel shall consult and
reasonably cooperate with the Indemnitor's counsel and the Indemnitor and the
Indemnitee shall each pay fifty percent (50%) of the reasonable attorneys' fees
of the Indemnitee's counsel.
12.3.3 Settlement. The Indemnitor may, with the consent of the
Indemnitee, not to be unreasonably withheld, settle the claim, except that no
consent by the Indemnitee shall be required as to any settlement by which (x)
the Indemnitor procures (by payment, settlement, or
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otherwise) a release of the Indemnitee pursuant to which the Indemnitee is not
required to make any payment whatsoever to the third party making the claim, (y)
neither the Indemnitee nor the Indemnitor acting on behalf of the Indemnitee
makes any admission of liability, and (z) the continued effectiveness of this
Lease is not jeopardized in any way.
12.3.4 Insurance Proceeds. The Indemnitor's obligations shall
be reduced by net insurance proceeds actually collected by the Indemnitee on
account of the loss.
13. RIGHT OF CONTEST.
Tenant shall have the right to contest, at its sole expense, by
appropriate legal proceedings diligently conducted in good faith, the amount or
validity of any Prohibited Lien; any Impositions assessed against Tenant's Work
or Tenant's Property (but not Impositions upon the Shoreside Complex, the right
to contest which shall belong exclusively to the Landlord); the validity of any
Law or the application of any Law to the Premises; or the validity or merit of
any claim against which Tenant is required to Indemnify Landlord under this
Lease. Tenant may defer payment of the contested Prohibited Lien or Imposition,
or compliance with the contested Law, or performance of any contested indemnity
obligation pending the outcome of such contest, provided that such deferral does
not subject the Premises or any part of the Shoreside Complex to any
material risk of imminent forfeiture or Landlord to any material risk of
criminal liability; that any Prohibited Lien is bonded as required by Section
11.1; and that any indemnity claim is continuously, diligently and competently
defended as provided in Section 12.3 for the duration of such contest. An
Indemnitee shall not be required to join in any such contest proceedings unless
a Law shall require that such proceedings be brought in the name of the
Indemnitee. In such case, the Indemnitee shall cooperate with Tenant, at
Tenant's sole cost and expense, so as to permit such proceedings to be brought
in Indemnitee's name. Tenant shall pay all costs and expenses (including
attorneys' fees for Tenant and for separate counsel for Indemnitee, if
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Indemnitee is required to join in such contest) incident to such
proceedings as they are incurred. Tenant shall Indemnify Indemnitee against such
contest. Upon final termination of Tenant's contest of a Law, Tenant shall
comply with such final determination.
14. INSURANCE.
14.1 Landlord to Insure. Landlord shall, at Landlord's sole cost and
expense, during the Term, maintain insurance coverage for the Shoreside Complex
described in Exhibit H.
14.2 Tenant to Insure. Tenant shall, at Tenant's sole cost and expense,
during the Term, maintain insurance for the Premises described in Exhibit I.
15. DAMAGE OR DESTRUCTION.
15.1 Notice; No Rent Abatement; Restoration Obligations. Tenant shall
promptly give Landlord Notice of any Casualty. There shall be no abatement or
reduction of Rent on account of a Casualty. Except as provided in Section 15.2
and for so long as Landlord is the Venture, Landlord shall either elect not to
restore or shall restore the damaged Building, as determined under the Joint
Venture Agreement, including Tenant's Work, and Tenant shall replace Tenant's
Property, in each case as nearly as may be practicable to its condition, quality
and class immediately prior to such Casualty, with only such changes (that do
not violate other terms and conditions of this Lease) as Landlord (with respect
to the Building) and Tenant (with respect to Tenant's Property) may determine.
If Landlord is not the Venture, restoration and changes (including without
limitation demolition) of the Shoreside Complex shall be left to the sole
discretion of the Landlord, subject to (i) Tenant's right to require the
Landlord to restore the Premises as nearly as may be practicable to its
condition, quality and class prior to such Casualty so long as Tenant pays
Landlord, prior to the letting of any contract for restoration, an amount which
would, when added to the insurance proceeds expressly allocated by Landlord's
property insurer to the Premises, equal the total cost of restoration of the
Premises, and (ii) Landlord's sole
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discretion of whether to restore, demolish, or change the remainder of the
Shoreside Complex, provided that in such event Tenant shall continue to have
access to the Shoreside Complex as provided in Exhibit E hereto.
15.2 Lease Termination for Casualty. This Lease shall not, so long as
no Default has occurred and is then continuing, terminate or be terminated by
reason of any Casualty unless Landlord determines not to restore the Premises
and/or Shoreside Complex or sufficient portion thereof to continue operation of
the Premises in accordance with the provisions of Section 15.1 hereof. If
Landlord elects not to restore the Shoreside Complex and thereby to terminate
this Lease in accordance with Section 15.1 hereof, this Lease shall terminate
upon the date specified in Landlord's Notice to Tenant, whereupon Tenant shall
remove Tenant's Property and Players Marks and surrender the Premises with all
improvements affixed thereto in their then condition to Landlord and all
casualty or hazard insurance proceeds from any insurance carried by either
Landlord or Tenant with respect to the Premises or Shoreside Complex shall be
paid to the Landlord and shall be distributed in accordance with the terms of
the Joint Venture Agreement.
15.3 Restoration Work. Landlord and Tenant shall cooperate in
scheduling and carrying out their respective restoration work under this Lease
and may jointly hire a construction manager to coordinate or supervise their
respective work. In order to carry out their respective work: (a) Tenant shall
be entitled to use the proceeds of any separate insurance carried by Tenant with
respect to damaged Tenant's Property that is not affixed to the Premises and
Tenant's Gaming Equipment; and (b) with respect to any insurance for personal
property that is affixed (other than Tenant's Gaming Equipment) to the Premises,
Landlord shall be entitled to receive all such insurance proceeds. Tenant and
Landlord shall each, respectively, be responsible for restoring the property
which each respectively is required to restore as set forth above, provided that
if the insurance proceeds received by Landlord are insufficient, Landlord's
restoration obligations shall
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be limited to such restoration as Landlord reasonably determines, taking into
account the insurance proceeds received by Landlord, any additional funds made
available by Tenant for this purpose and any additional funds which Landlord
shall in its sole determination agree to make available for this purpose. If
Landlord and Tenant cannot agree on the proper allocation between them of any
insurance proceeds to be received, and including any agreement of Harrah's to
the extent it has a separate interest in such insurance proceeds because the
Casualty also affects the Harrah's Premises, then this dispute shall be resolved
in accordance with the dispute resolution provisions contained in the Joint
Venture Agreement.
15.4 Adjustment of Claims; Mortgagees. Landlord shall be solely
responsible for the adjustment of any insurance claim with respect to casualty
or hazard insurance affecting the Shoreside Complex and Tenant's Work, if
affixed to the Premises. Tenant shall be solely responsible for the adjustment
of any insurance claim on Tenant's Property to the extent such items (including
all of Tenant's Gaming Equipment) are separately insured from the Shoreside
Complex and not affixed to the Premises. No Leasehold Mortgagee or Prime
Mortgagee shall have a right to adjust any insurance claim or to be paid or
receive any insurance proceeds of casualty or hazard insurance or otherwise
participate in any settlement, adjustment, arbitration or proceeding with
respect to any insurance claims unless: (1) after completion of restoration
there are insurance proceeds allocable to its Mortgagor in excess of the costs
of restoration and the applicable Mortgagee requires that such excess be paid to
the Mortgagee pursuant to the provisions of such Mortgagor's Mortgage in which
event such excess proceeds shall be so paid; or (2) this Lease is terminated as
set forth above, and then only to the extent insurance proceeds are required to
be paid to a Prime Mortgagee pursuant to the express terms of a Mortgage or
become distributable to Tenant pursuant to the Joint Venture Agreement, in which
event the distribution shall be payable to a Leasehold Mortgagee having a
security interest in Tenant's
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Partnership Interest to the extent and in the priority required by the express
terms of the Leasehold Mortgage or security agreement and applicable Law and
provided the Landlord has received appropriate notice of the Leasehold
Mortgagee's claim prior to the distribution.
15.5 Termination Payment. If this Lease is terminated pursuant to the
provisions of this Article 15, Tenant shall pay to Landlord within thirty (30)
days following such termination the sum of Twelve Million Dollars
($12,000,000.00) [the "Termination Payment"] which Termination Payment the
parties recognize is reasonable compensation to Landlord for its loss of
Percentage Rent for the remainder of the Term. The Termination Payment
represents the discounted present value of the projected Percentage Rent over a
period of three (3) years and accordingly the Termination Payment shall be
reduced by thirty-three and one-third percent (33 1/3%) as of the first day of
each year of the final three (3) years of the Term. Tenant's obligation to pay
Landlord the Termination Payment shall survive the termination of this Lease,
but shall be limited to the amount of insurance proceeds received by Landlord
(as loss payee) under the contractual liability policy required to be carried by
Tenant under Section 14.2 hereof.
15.6 Business Interruption and Contractual Liability Insurance. The
proceeds of any business interruption insurance in connection with any Casualty
shall belong to the party carrying such insurance, and the other party shall
have no claim thereto. The proceeds of any insurance in connection with any
Casualty or any contractual liability insurance relating to the Termination
Payment shall belong to Landlord (and Harrah's), as the exclusive loss payee(s)
specified in the policy of insurance, and Tenant and its Leasehold Mortgagees
shall have no claim thereto. Tenant may offset first against Additional Rent and
then against Percentage Rent the annual premiums paid by Tenant for the
contractual liability insurance for the Termination Payment upon providing
Landlord a copy of the paid invoice therefor.
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15.7 Depository. Upon request by any Leasehold Mortgagee (subject to
the terms of the applicable Leasehold Mortgage), all proceeds of insurance for
Tenant's Property that is not affixed to the Premises (including Tenant's Gaming
Equipment), in the event that damage to Tenant's Property, as determined by
insurance adjusters is in excess of Five Hundred Thousand Dollars ($500,000),
shall be deposited with a Depository, to be disbursed solely for the replacement
or repair of Tenant's Property.
16. CONDEMNATION.
16.1 Substantial Condemnation. If a Substantial Condemnation shall
occur, then this Lease shall terminate as of the effective date of such
Substantial Condemnation, and the Rent shall be apportioned accordingly and paid
through the date of termination. The proceeds of the Substantial Condemnation
shall be the sole property of Landlord.
16.2 Insubstantial Condemnation. If an Insubstantial Condemnation shall
occur, then Landlord shall be entitled to receive any award or awards and any
such award or awards shall be applied first to repair, restoration or
reconstruction of any remaining part of the improvements not so taken. Landlord
shall perform such repair, restoration or reconstruction in accordance with
applicable requirements of this Lease, provided that if the award or awards
received by Landlord are insufficient, Landlord's obligations hereunder shall be
limited to such repair, restoration or reconstruction as Landlord reasonably
determines, taking into account the award or awards received by Landlord, any
additional funds made available by Tenant for this purpose and any additional
funds which Landlord shall in its sole determination agree to make available for
this purpose. The balance of any such award or awards remaining after the
repair, restoration or reconstruction shall be the sole property of Landlord.
16.3 Other Governmental Action. In the event of any action by any
Government not resulting in a Condemnation but creating a right to compensation,
such as the changing of the
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grade of any street upon which the Site abuts, then this Lease shall
continue in full force and effect without reduction or abatement of Rent and the
award or payment made in connection with such action shall be the sole property
of Landlord.
17. TRANSFERS.
17.1 By Tenant. For so long as the Venture is Landlord, Tenant shall
not Transfer all or part of the Leasehold Estate, other than: (i) a Transfer of
Project Property permitted by the Joint Venture Agreement or a Transfer
permitted by Section 18.2 hereof; or (ii) with the advance written consent of
the Venture. If the Landlord is not the Venture, Tenant shall not Transfer all
or part of the Leasehold Estate without Landlord's consent (except as provided
in Section 18.2 hereof), which consent shall not unreasonably be withheld.
Tenant agrees, without limiting the exercise of Landlord's reason, that Landlord
would be reasonable in not consenting to any Transfer to a Transferee that is a
Prohibited Person (Tenant) or at any time prior to the seventh anniversary of
the Effective Date (as defined in the Joint Venture Agreement) (the "Prohibition
Period") a Prohibited Person (as defined in the Joint Venture Agreement) or
fails to satisfy the criteria established in Exhibit J. Except as provided in
Section 18.2 hereof, any Transfer in the nature of an assignment shall require
the assignee to assume all obligations of Tenant under this Lease in writing in
a form and substance reasonably acceptable to Landlord.
17.2 By Landlord. Landlord shall not Transfer the Landlord's Estate to
a Prohibited Person (Landlord).
18. MORTGAGES.
18.1 Landlord's Rights. Landlord shall have the right to execute and
deliver Prime Mortgage(s) at any time and from time to time during the Term,
provided that the proposed Prime Mortgagee: (i) is not a Prohibited Person
(Landlord); and (ii) Tenant and the Prime Mortgagee enter into a subordination,
attornment, recognition and nondisturbance agreement with
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Landlord and the Leasehold Mortgagees in a form reasonably proposed by such
Prime Mortgagee (a "SARN Agreement"), pursuant to which the Lease (and any
Leasehold Mortgages) shall be subordinated to the Prime Mortgage. Tenant agrees
to enter into a SARN Agreement as aforesaid on demand by Landlord or a Prime
Mortgagee.
18.2 Tenant's Rights. Tenant shall have the right to execute and
deliver Leasehold Mortgage(s) to any Institutional Lender(s), provided that the
Institutional Lender(s): (i) is not a Prohibited Person (Tenant); (ii) if then
required by the Missouri Gaming Commission, has been determined suitable or
otherwise approved or exempted from approval by the Missouri Gaming Commission;
(iii) is not an Affiliate of Tenant; (iv) concurrently takes a security interest
in Tenant's Partnership Interest (and agrees with Harrah's and Landlord to
foreclose both pieces of collateral concurrently, should it elect to foreclose
upon any collateral); and (v) executes or consents in writing to any SARN
Agreement with a Prime Mortgagee referred to in Section 18.1 only if the
Leasehold Mortgage encumbers Tenant's interest under this Lease. Tenant shall
not grant a Leasehold Mortgage to any Person other than an Institutional Lender
(i) who is a Prohibited Person (Tenant) or (ii) at any time during the
Prohibition Period, if then a Prohibited Person or (iii) an Affiliate of Tenant
or (iv) any other Person without first obtaining Landlord's prior written
consent, which consent shall not unreasonably be withheld.
18.3 Effect of a Leasehold Mortgage. Tenant's making of a Leasehold
Mortgage shall not be deemed to constitute an assignment or transfer of the
Leasehold Estate, nor shall any Leasehold Mortgagee, as such, or in the exercise
of its rights under this Lease, be deemed to be an assignee or transferee or
mortgagee in possession of the Leasehold Estate so as to require such Leasehold
Mortgagee, as such, to assume or otherwise be obligated to perform any of
Tenant's obligations under this Lease except when, and then only for so long as,
such Leasehold Mortgagee has entered into possession of the Premises in the
exercise of its remedies under its
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Leasehold Mortgage (as distinct from its rights under this Lease to cure
Defaults or exercise Mortgagee's Cure Rights). No Leasehold Mortgagee (or
purchaser at a foreclosure sale held pursuant to a Leasehold Mortgage) shall be
liable under this Lease unless and until such time as it becomes, and then only
for so long as it remains, the owner of the Leasehold Estate.
18.4 Sale and Leaseback. If Tenant sells, assigns, transfers or
otherwise conveys the Leasehold Estate to an Institutional Lender and Tenant or
an Affiliate of Tenant substantially concurrently enters into or reserves,
retains or receives a sublease of the Premises or similar interest, then: (a)
such third party shall be deemed to be a "Leasehold Mortgagee" and the sublease
shall be deemed to be a "Leasehold Mortgage"; and (b) such third party shall not
be deemed to have assumed or become liable under this Lease except to the extent
that such third party has exercised remedies against Tenant under Tenant's
sublease functionally equivalent to foreclosure under a Leasehold Mortgage or
acceptance of an assignment in lieu thereof.
18.5 Modifications Required by Leasehold Mortgagee. If any Leasehold
Mortgagee or prospective Leasehold Mortgagee shall require any modification(s)
of this Lease (including clarifications and supplements to Mortgagee's Cure
Rights), then Landlord shall, at Tenant's request, promptly execute and deliver
to Tenant such instruments in recordable form effecting such modification(s) as
such Leasehold Mortgagee or prospective Leasehold Mortgagee shall require,
provided that such modification(s): (i) do not materially adversely affect any
of Landlord's or Harrah's rights or materially increase any of Landlord's
obligations under this Lease and (ii) are consistent with the customary
requirements of Institutional Lenders at the time, making loans secured by
similar collateral, or are required by banking, insurance or similar laws and
regulations setting forth provisions that must appear in a lease in order for
such lease to be accepted as security by the Leasehold Mortgagee or prospective
Leasehold Mortgagee requesting the change.
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18.6 Further Assurances. Upon request by Tenant or by any existing or
prospective Leasehold Mortgagee, Landlord shall deliver to the requesting party
a separate written instrument in recordable form signed and acknowledged by
Landlord setting forth and confirming the rights of Leasehold Mortgagees under
this Lease.
18.7 Protection of Prime Mortgagees. If Tenant shall give Landlord any
Notice of Default, then Tenant shall simultaneously give a copy of such Notice
of Default to all Prime Mortgagee(s) provided that Tenant shall have received
Notice of their names and addresses and their Prime Mortgage(s) shall not have
been satisfied or discharged of record. Such Prime Mortgagee(s) shall have the
same notice and cure rights as are afforded to Leasehold Mortgagees by Article
of this Lease and also shall be permitted to correct or remedy any alleged
breach or default of Landlord. Tenant's failure to give Prime Mortgagee(s) the
Notice required by this Section shall not be a Default by Tenant, but no Notice
by Tenant of any default by Landlord shall be legally effective against such
Prime Mortgagee(s) unless and until Tenant shall have given such Notice to such
Prime Mortgagee(s).
18.8 Foreclosure. Notwithstanding anything to the contrary in this
Lease, any sale of this Lease and of the Leasehold Estate or of the Landlord's
Estate in any proceedings for the foreclosure of any permitted Leasehold
Mortgage or Prime Mortgage (as applicable), or any assignment, transfer or
conveyance in lieu of such foreclosure, shall not be deemed to violate this
Lease.
19. NOTICE TO LANDLORD OF LEASEHOLD MORTGAGES.
19.1 Initial Notice. If Tenant enters into any Leasehold Mortgage(s),
then the Leasehold Mortgagee(s) thereunder shall be entitled to the Leasehold
Mortgagee protections provided for under this Lease only from and after such
time as Tenant or such Leasehold Mortgagee has given
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Landlord Notice of the name and address of such Leasehold Mortgagee, accompanied
by a copy of the executed Leasehold Mortgage.
19.2 Change of Address. Any Leasehold Mortgagee shall be free to change
its name and address from time to time by Notice to Landlord. In the event of a
change of name, such Notice may be provided either by the original Leasehold
Mortgagee or by the Leasehold Mortgagee under its new name, without proof of any
kind confirming the change of name. Notice of any change of a Leasehold
Mortgagee's identity or address, or of a transfer of a Leasehold Mortgage, may
be made by any means permitted for the original Notice of the Leasehold
Mortgagee's original name and address.
19.3 Termination of Leasehold Mortgagee's Rights. If a Leasehold
Mortgagee is entitled to the Leasehold Mortgagee protections provided for under
this Lease, then such entitlement shall not terminate unless and until such
time, if any, as the Leasehold Mortgage shall have been satisfied and discharged
of record as evidenced by the written report of a title insurance company
licensed in the State or Notice to Landlord signed by such Leasehold Mortgagee.
19.4 Transfer of Landlord's Estate. Notice to Landlord of the name and
address of a Leasehold Mortgagee shall bind any subsequent holder of the
Landlord's Estate provided that such Leasehold Mortgagee's Leasehold Mortgage
was recorded before the deed conveying the Landlord's Estate to such transferee.
The foregoing shall not limit the right of any Leasehold Mortgagee to give any
successor Landlord Notice of the name and address of such Leasehold Mortgagee,
and thereby become entitled, as against such successor Landlord, to all the
rights and protections of Leasehold Mortgagees under this Lease.
19.5 Landlord's Acknowledgment of Leasehold Mortgagee. Landlord shall,
upon request, acknowledge receipt of the name and address of any Leasehold
Mortgagee (or proposed
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Leasehold Mortgagee) and confirm to such Leasehold Mortgagee that such Leasehold
Mortgagee is (or would be, upon closing of its loan) a Leasehold Mortgagee and
has (or would have) all the rights of a Leasehold Mortgagee under this Lease and
is (or would be) an Institutional Lender, if applicable. Such acknowledgment
shall, if requested, be in recordable form. If Landlord reasonably determines
that any purported Leasehold Mortgagee does not or would not qualify as such or
as a permitted Institutional Lender or other Leasehold Mortgagee permitted
hereunder, then Landlord shall promptly give Notice of such determination to
Tenant and the purported Leasehold Mortgagee, which Notice shall specify the
reasonable basis for such determination.
20. PROTECTION OF LEASEHOLD MORTGAGEES.
If Tenant at any time or from time to time enters into any Leasehold
Mortgage(s), then so long as such Leasehold Mortgagee(s) are entitled to the
protections provided for under this Lease:
20.1 Cancellation, Surrender, Amendment, Etc. No voluntary
cancellation, termination, surrender, acceptance of surrender, abandonment,
amendment, or modification of this Lease shall bind a Leasehold Mortgagee if
done without the prior consent of such Leasehold Mortgagee, if the Leasehold
Mortgagee requires such consent.
20.2 Copies of Notices. If Landlord shall give any Notice to Tenant
(including any Notice of Default and a Notice of termination of this Lease for
any reason), then Landlord shall at the same time and by the same means give a
copy of such Notice to each Leasehold Mortgagee. No Notice to Tenant shall be
effective against such Leasehold Mortgagee unless and until so given.
20.3 Tenant's Cure Period Expiration Notice. If Tenant is in Default
under this Lease and the cure period applicable to Tenant expires without cure
of Tenant's Default, then Landlord
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shall promptly give Notice of such fact to each Leasehold Mortgagee, which
Notice shall describe in reasonable detail Tenant's Default (a "Tenant's Cure
Period Expiration Notice").
20.4 Right to Perform Covenants and Agreements. Any Leasehold Mortgagee
shall have the right, but not the obligation, to perform any obligation of
Tenant under this Lease and to remedy any Default by Tenant. Landlord shall
accept performance by or at the instigation of a Leasehold Mortgagee in
fulfillment of Tenant's obligations, for the account of Tenant and with the same
force and effect as if performed by Tenant. No such performance by a Leasehold
Mortgagee shall cause such Leasehold Mortgagee to become a "mortgagee in
possession" or otherwise cause such Leasehold Mortgagee to be deemed to be in
possession of the Premises or bound by this Lease.
20.5 Transfer of Tenant's Rights. Tenant may delegate or otherwise
transfer to a Leasehold Mortgagee any or all of Tenant's rights under this
Lease, but no such delegation or transfer shall bind Landlord unless and until
Landlord shall have received a copy of a written instrument effecting such
delegation accompanied by a photocopy of the Leasehold Mortgagee's fully
executed Leasehold Mortgage. Such delegation or transfer of authority may be
effected by the terms of the Leasehold Mortgage itself, in which case service
upon Landlord of an executed counterpart or certified copy of such Leasehold
Mortgage, together with a written notice specifying the provisions of such
Leasehold Mortgage that delegate or transfer such authority to the Leasehold
Mortgagee, shall be sufficient to bind Landlord to such delegation or transfer
of rights.
20.6 Notice of Default and Mortgagee's Cure Rights. Upon receiving any
Notice of Default, any Leasehold Mortgagee shall have the same cure period
granted to Tenant under this Lease, plus the additional time provided for below,
within which to take (if such Leasehold Mortgagee so elects) whichever of the
actions set forth below shall apply with respect to the
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Default described in such Notice of Default (such actions, "Mortgagee's Cure";
and a Leasehold Mortgagee's rights to take such actions, "Mortgagee's Cure
Rights"):
20.6.1 Monetary Defaults and Non-Monetary Defaults Curable
Without Obtaining Possession. In the case of a Monetary Default, or a
Non-Monetary Default that is reasonably susceptible of being cured by a
Leasehold Mortgagee without obtaining possession of the Premises, Leasehold
Mortgagee shall be entitled (but not required) to cure such Default within a
cure period consisting of Tenant's cure period under this Lease extended through
the date sixty (60) days after such Leasehold Mortgagee shall have received
Tenant's Cure Period Expiration Notice as to such Default. If the amount of any
Monetary Default has not been finally determined (for example, if a dispute has
arisen between Landlord and Tenant regarding the proper amount of Percentage
Rent), then in place of curing such Monetary Default a Leasehold Mortgagee shall
be entitled instead to (a) cure such Monetary Default to the extent the amount
thereof is not in dispute; and (b) escrow the remaining disputed portion of such
Monetary Default into an escrow account established and managed in the manner
provided in Section 3.2 of this Lease.
20.6.2 Defaults Curable Only by Obtaining Possession and
Personal Defaults. In the case of a Non-Monetary Default that is not reasonably
susceptible of being cured by a Leasehold Mortgagee without obtaining possession
of the Premises (including failure to Complete the Tenant's Work) or a Personal
Default by Tenant, Leasehold Mortgagee shall be entitled (but not required) to
do the following, so long as, with respect to any Defaults other than those
referred to in this Section, such Leasehold Mortgagee has exercised or is
exercising the applicable Mortgagee's Cure Rights as defined in this Lease:
20.6.2.1 During Cure Period. At any time during the
cure period (if any) that applies to Tenant, extended through the date ninety
(90) days after such Leasehold
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Mortgagee's receipt of the Tenant's Cure Period Expiration Notice as to such
Default, or if no cure period applies to Tenant, then within ninety (90) days
after receiving Notice of the Non-Monetary Default, Leasehold Mortgagee shall be
entitled to institute proceedings, and (subject to any stay in any proceedings
involving the bankruptcy, insolvency, or reorganization of Tenant or the like,
or any injunction, unless such stay or injunction is lifted), diligently
prosecute the same to completion, to obtain possession of the Premises as
mortgagee (including possession by a receiver), or acquire the Leasehold Estate
by foreclosure proceedings or otherwise, including delivery of an assignment in
lieu of foreclosure (the obtaining of such possession or the completion of such
acquisition, "Control of the Premises").
20.6.2.2 Further Cure Obligations. Upon obtaining
Control of the Premises (before or after expiration of any otherwise
applicable cure period), Leasehold Mortgagee shall be entitled (but not
required) to proceed with diligence and continuity to cure such Non-Monetary
Defaults as are susceptible of being cured by such Leasehold Mortgagee
(excluding Tenant's Personal Defaults, which Leasehold Mortgagee shall not be
required to cure). A Leasehold Mortgagee having Control of the Premises shall
not be bound to complete Tenant's Work by the Commencement Date (Percentage
Rent), provided that such Leasehold Mortgagee shall with diligence and
continuity prosecute completion of Tenant's Work.
20.6.2.3 Law Limitation. If a Leasehold Mortgagee is
a Prohibited Person (Tenant) or is otherwise denied the authority by
the Missouri Gaming Commission acting pursuant to the Missouri Gambling Law, or
pursuant to any other applicable Law, other than a temporary stay of foreclosure
in Tenant's Bankruptcy Proceedings, to obtain Control of the Premises, then the
extended cure periods applicable to Non-Monetary Defaults that are not
reasonably susceptible of cure without obtaining possession of the Premises
shall, from and after
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such date, no longer be applicable to or benefit such Leasehold Mortgagee unless
such Leasehold Mortgagee transfers its Leasehold Mortgage to a Leasehold
Mortgagee that is so qualified.
20.6.3 Operating Covenant Default and Venture Default.
Notwithstanding any provision to the contrary in this Section 20.6, owing to the
severe impact that an Operating Covenant Default or a Venture Default will have
on the Shoreside Complex and Harrah's Premises, the cure period applicable to an
Operating Covenant Default shall be limited to that provided in Section 29.13
and there shall be no further Mortgagee Cure Rights relative to a Venture
Default.
20.7 Effect of Cure. A Leasehold Mortgagee shall not be required to
continue to exercise Mortgagee's Cure Rights or otherwise proceed to obtain or
to exercise Control of the Premises if and when the Default that such Leasehold
Mortgagee was attempting to cure shall have been otherwise cured. Upon such cure
and the cure of any other Defaults in accordance with this Lease, this Lease
shall continue in full force and effect as if no Default(s) had occurred.
20.8 Quiet Enjoyment. So long as the time period for a Leasehold
Mortgagee to exercise Mortgagee's Cure Rights with respect to a Non-Monetary
Default by Tenant has not expired (and provided that all Monetary Defaults are
cured within Leasehold Mortgagee's cure period provided for under this Lease),
Landlord shall not (i) re-enter the Premises, (ii) serve a notice of election to
terminate this Lease or (iii) bring a proceeding on account of such Default to
(A) dispossess Tenant and/or other occupants of the Premises, (B) re-enter the
Premises, or (C) terminate this Lease. Nothing in the Leasehold Mortgagee
protections provided for in this Lease shall be construed to either (i) extend
the Term beyond the expiration date provided for in this Lease that would have
applied if no Default had occurred; or (ii) require any Leasehold Mortgagee to
cure any Personal Default by Tenant; (iii) excuse Tenant or any guarantor of
Tenant from personal liability for the performance of Lease obligations; or (iv)
prevent or delay
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any personal action against Tenant or any guarantor of Tenant or any of their
other assets. If however, a Leasehold Mortgagee shall fail to cure a Default
within the time provided to it under this Article , Landlord shall be free to
exercise all remedies otherwise provided in the Lease or available at law or
equity for such Default without further notice or opportunity to Leasehold
Mortgagee to effect cure.
20.9 Subordinate Liens Affecting Leasehold Estate. Provided the
Prohibited Lien does not constitute a lien on Landlord's Estate, a Leasehold
Mortgagee shall not be required to discharge a Prohibited Lien that is junior in
priority to the lien of its Leasehold Mortgage, except as necessary to prevent
such Prohibited Lien from foreclosing upon the Premises prior to the completion
of foreclosure of such Leasehold Mortgagee's Mortgage (and resulting
extinguishment of such junior lien).
20.10 Leasehold Mortgagee's Right to Enter Premises. Subject to
constraints of applicable Law, including, without limitation, the Missouri
Gambling Law, Landlord and Tenant authorize each Leasehold Mortgagee to enter
the Premises as necessary to effect Mortgagee's Cure and take any action(s)
reasonably necessary to effect Mortgagee's Cure.
20.11 Rights of Leasehold Mortgagee Upon Acquiring Control. If any
Leasehold Mortgagee or a purchaser at a foreclosure sale shall acquire Control
of the Premises and shall cure all Monetary Defaults and proceed and continue to
exercise Mortgagee's Cure Rights and cure all other Defaults in accordance with
the provisions of this Lease, then (i) any Personal Defaults of its Leasehold
Mortgagor shall not be asserted against such Leasehold Mortgagee or any or its
direct or remote permitted Transferees; and (ii) Landlord shall recognize any
purchaser of the Leasehold Estate pursuant to a foreclosure sale under a
Leasehold Mortgage, or any transferee of the Leasehold Estate under an
assignment in lieu of foreclosure, or, if the Leasehold Mortgagee should be such
purchaser or assignee, the Leasehold Mortgagee and any assignee of
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the Leasehold Mortgagee, provided such Person (a) is not a Prohibited Person
(Tenant); (b) assumes in writing all obligations under this Lease; (c) acquires
the Partnership Interest of Tenant and assumes all obligations of the Tenant
under the Joint Venture Agreement; and (iv) is duly licensed, permitted and
approved as lessee and operator of the Premises by all Governments having
jurisdiction, including without limitation, the Missouri Gaming Commission.
21. LEASEHOLD MORTGAGEE'S RIGHT TO A NEW LEASE.
21.1 New Lease. If this Lease shall terminate before its stated
expiration date for any reason other than the failure of Leasehold Mortgagee to
effect cure of any Default within the cure periods provided in this Lease or
pursuant to the provisions of Article 15 and Article 16 hereof, then (in
addition to any other or previous Notice required to be given by Landlord to a
Leasehold Mortgagee) Landlord shall, within ten (10) Business Days, give Notice
of such termination to each Leasehold Mortgagee entitled to Leasehold Mortgagee
protections under this Lease. Landlord shall, upon a Leasehold Mortgagee's
request given within sixty (60) days after such Leasehold Mortgagee's receipt of
such notice, enter into (and if Landlord fails to do so, shall be deemed to have
entered into) a new lease of the Premises, effective as of the Termination Date,
for the remainder of the Term on the same terms and provisions contained in this
Lease, but excluding any requirements that have already been performed or no
longer apply (a "New Lease"), provided such Leasehold Mortgagee shall, at the
time of execution and delivery of such New Lease, pay to Landlord any and all
sums then due under this Lease as if this Lease had not been terminated and cure
all Defaults other than Personal Defaults of the Tenant. If a Leasehold
Mortgagee enters into a New Lease, then such Leasehold Mortgagee shall pay all
reasonable expenses, including reasonable attorneys' fees, court costs and
disbursements, incurred by Landlord in connection with Tenant's Default and the
termination of this Lease, the recovery of
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possession of the Premises, and the preparation, execution and delivery of the
New Lease. The following additional provisions shall apply to any New Lease:
21.2 Form and Priority. Any New Lease shall be in recordable form. Such
New Lease shall not be subject to any rights, liens, or interests other than
those to which this Lease was subject at the time of its termination or any
priority liens established in Tenant's Bankruptcy Proceedings. The provisions of
the immediately preceding sentence shall be self-executing. Landlord shall, if
requested, execute and deliver such corporate resolutions, partnership
certificates and other documents as shall be reasonably necessary to enable the
tenant under such New Lease (the "New Tenant") to obtain title insurance with
respect to the New Lease, at such New Tenant's expense.
21.3 Pendency of Dispute. If Landlord and the New Tenant disagree
regarding any payment due Landlord in connection with execution of a New Lease,
then New Tenant (if an Institutional Lender or a Leasehold Mortgagee's Agent)
shall be deemed to have performed its payment obligation if such New Tenant: (a)
pays Landlord the full amount not in controversy; and (b) escrows any additional
sum claimed to be due by Landlord in an escrow account established and governed
in the manner established in Section 3.2. The parties shall cooperate to
determine any disputed amount promptly in accordance with the terms of this
Lease or the New Lease, whichever applies.
21.4 Preservation of Subleases. Between the Termination Date and the
date of execution and delivery of a New Lease, if a Leasehold Mortgagee shall
have requested a New Lease, Landlord shall not cancel any sublease or accept any
cancellation, termination or surrender of a sublease (unless such termination
shall be effected as a matter of law upon the termination of this Lease, in
which case such sublease shall, at New Tenant's option, be reinstated upon
execution of the New Lease) without the consent of such Leasehold Mortgagee.
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22. INTERACTION OF MORTGAGES WITH OTHER ESTATES AND PARTIES.
22.1 Leasehold Mortgages. A Leasehold Mortgage shall not encumber or in
any other way affect the Landlord's Estate or affect, limit or restrict
Landlord's rights and remedies under this Lease except as expressly provided in
this Lease. Upon a foreclosure under a Leasehold Mortgage or delivery of an
assignment of this Lease in lieu of foreclosure under a Leasehold Mortgage, the
Leasehold Mortgagee shall succeed only to the Leasehold Estate and Tenant's
interest in Landlord, and any such foreclosure or assignment in lieu of
foreclosure shall not affect the Landlord's Estate (except for Tenant's
partnership interest in Landlord and subject to this Lease) or the rights of any
Prime Mortgagees as against Landlord or the Landlord's Estate.
22.2 Leasehold Mortgagee's Agent. Any Leasehold Mortgagee that is an
Institutional Lender may exercise its rights (including Mortgagee's Cure Rights
and the right to obtain a New Lease) under this Lease, or perform any action
permitted to be taken by a Leasehold Mortgagee under this Lease, through a
Leasehold Mortgagee's Agent. A Leasehold Mortgagee's Agent shall be entitled to
all the rights, privileges, and protections of Leasehold Mortgagees under this
Lease.
22.3 Interaction Between Lease and Leasehold Mortgage. If a Leasehold
Mortgagee's Leasehold Mortgage limits such Leasehold Mortgagee's exercise of any
rights and protections provided for in this Lease, the terms of such Leasehold
Mortgage shall govern. Tenant's default as Mortgagor under a Leasehold Mortgage
shall not constitute a Default under this Lease except to the extent that
Tenant's actions or failure to act in and of itself constitutes a Default under
this Lease.
22.4 Conflicts Between Mortgagees. If more than one Leasehold Mortgagee
desires to exercise Mortgagee's Cure Rights or the right to obtain a New Lease,
or if more than one Leasehold Mortgagee or more than one Prime Mortgagee desires
to exercise any other right or privilege provided for Mortgagees under this
Lease, then the party against whom such rights or
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privileges are to be exercised shall be required to recognize either: (a) only
the Prime Mortgagee or Leasehold Mortgagee, as applicable, that desires to
exercise such right or privilege and whose Prime Mortgage or Leasehold Mortgage,
as applicable, is most senior in lien (as against other Mortgages of its type
[Prime or Leasehold, as applicable]) or (b) such other Prime Mortgagee or
Leasehold Mortgagee, as applicable, as has been designated in writing by all
Prime Mortgagees or Leasehold Mortgagees, as applicable, to exercise such right
or privilege. Priority of Mortgages shall be conclusively evidenced either by:
(a) the report or certificate of a title insurance company licensed to do
business in the State; or (b) joint written instructions of all Leasehold
Mortgagees or all Prime Mortgages, as applicable, or (c) order of a court of
competent jurisdiction.
22.5 No Merger. Without the written consent of Landlord, Tenant, and
all Mortgagees, the Landlord's Estate and the Leasehold Estate shall remain
distinct and separate estates and shall not merge, notwithstanding the
acquisition of both the Landlord's Estate and the Leasehold Estate by Landlord,
Tenant, any Mortgagee, or a third party, whether by purchase or otherwise.
23. BANKRUPTCY.
23.1 Affecting Tenant. If Tenant (as debtor in possession) or a trustee
in bankruptcy for Tenant rejects this Lease in connection with any proceeding
involving Tenant under the United States Bankruptcy Code or any similar state or
federal statute for the relief of debtors (a "Bankruptcy Proceeding"), then
Landlord agrees for the benefit of each and every Leasehold Mortgagee that such
rejection shall be deemed Tenant's assignment of the Lease and the Leasehold
Estate to Tenant's Leasehold Mortgagee(s), in the nature of an assignment in
lieu of foreclosure. Upon such deemed assignment, this Lease shall not terminate
and each Leasehold Mortgagee shall continue to have all the rights of a
Leasehold Mortgagee under this Lease as if the Bankruptcy Proceeding had not
occurred, unless such Leasehold Mortgagee shall reject such deemed assignment by
Notice to Landlord within thirty (30) days after receiving Notice of the
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rejection of this Lease in Bankruptcy Proceedings. If any court of competent
jurisdiction shall determine that this Lease shall have been terminated
notwithstanding the deemed assignment provided for in place of rejection of this
Lease, then Tenant's Leasehold Mortgagees shall continue to be entitled to a New
Lease as provided in Article 21 of this Lease.
In the event of an assignment by operation of law or otherwise in a
Bankruptcy Proceeding, if Landlord does not or is not permitted to terminate
this Lease, the assignee shall provide Landlord with adequate assurance of
future performance of all of the terms, covenants and conditions of this Lease,
which shall include but not be limited to, assumption of all of the terms,
covenants and conditions of this Lease by the assignee and the making by the
assignee of the following express covenants to the Landlord:
(a) the assignee has acquired the Partnership Interest of
Tenant and assumed all obligations with respect thereto and cured all prior
Defaults of Tenant thereunder;
(b) the assignee has sufficient capital to pay the Rent and
other amounts due under the Lease for the entire Term or actually pays the
Default Substitute Percentage Rent or the Approved Substitute Percentage Rent,
as the case may be, and performs the other obligations of Tenant under this
Lease;
(c) the assignee either (i) holds all Government licenses,
permits and approvals necessary to operate the Premises in accordance with this
Lease; or (ii) is diligently pursuing the obtaining of such licenses, permits
and approvals, none of which have been permanently denied; and
(d) the assignee is not a Prohibited Person (Tenant).
23.2 Affecting Landlord. If Landlord (as debtor in possession) or a
trustee in bankruptcy for Landlord rejects this Lease in connection with any
Bankruptcy Proceeding involving Landlord, then:
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23.2.1 Tenant's Election. Tenant shall not have the right to
elect to treat this Lease as terminated except with the prior written consent of
each and every Leasehold Mortgagee whose recorded Leasehold Mortgage requires
such consent by the applicable Leasehold Mortgagee.
23.2.2 Continuation of Lease. If Tenant does not properly
elect to treat this Lease as terminated, then this Lease shall continue in
effect without change upon all the same terms and conditions as are set forth in
this Lease, including provisions relating to Rent and New Leases. Thereafter,
Tenant and its successors (including Leasehold Mortgagees) shall be entitled to
offset against Rent any damages arising from such rejection, including but not
limited to attorneys' fees and expenses reasonably incurred in connection with
the rejection of this Lease and adjustment of the parties' subsequent rights and
duties among themselves, in accordance with applicable Law governing the
Bankruptcy Proceeding, and any such offset properly made shall not be a Default.
If Tenant claims a greater offset than the offset to which Tenant is lawfully
entitled, then the taking of such excessive offset by Tenant shall constitute a
Monetary Default as to which Tenant and Leasehold Mortgagees shall be entitled
to Notice and opportunity to cure as provided in this Lease.
23.2.3 Assumption of Lease. If Landlord (as debtor in
possession) or a trustee in bankruptcy for Landlord moves to assume this Lease
or provides for assumption of this Lease in any Bankruptcy Proceeding involving
Landlord, Tenant shall, in addition to all its other rights and remedies, be
compensated promptly for all costs and expenses (including but not limited to
attorneys' fees and expenses) resulting from or reasonably incurred in
connection with the proceedings involving assumption (whether or not such
assumption is granted or confirmed), any subsequent proceedings to assign the
Lease to another or to reject the Lease, enforcement of
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rights to cure and to compensation for damages resulting from a breach of the
Lease, and adjustment of the parties' subsequent rights and duties among
themselves.
23.2.4 Continuation of Leasehold Mortgages. The lien of any Leasehold
Mortgage that was in effect before the rejection of this Lease shall extend to
Tenant's continuing possessory rights with respect to the Premises following
such rejection, with the same priority as it would have enjoyed had such
rejection not taken place.
24. QUIET ENJOYMENT AND WARRANTIES.
Landlord is making no warranties to Tenant concerning the condition of
the Premises, including, without limitation, the compliance of the Premises or
the Shoreside Complex with any laws, ordinances or regulations, the quality of
construction of the improvements to the Premises or the Shoreside Complex or any
other warranty whatsoever (subject to the covenant of quiet enjoyment set forth
below) and Tenant is leasing the Premises from Landlord "as is" and "where is"
and subject to the Permitted Exceptions, provided that Landlord shall enforce
all construction warranties and correct any construction deficiencies affecting
the Premises to the extent provided in the Joint Venture Agreement. Landlord
covenants that, so long as Tenant is not in Default under this Lease, Tenant
shall and may peaceably and quietly have, hold and enjoy the Premises for the
Term without molestation or disturbance by or from Landlord or anyone claiming
by or through Landlord, except Permitted Exceptions and except that Tenant's
recourse under this covenant shall, so long as Tenant or an Affiliate of Tenant
is a partner of the Venture (the "Venture Period"), be limited to its recovery
of title insurance proceeds as a partner of the Landlord, if this Lease is
terminated as provided below, or to its recovery of Net Title Insurance Proceeds
(as defined below) if this Lease is not so terminated. During the Venture
Period, if a title defect shall affect the Premises and/or the Shoreside
Complex, which in the Landlord's opinion materially interferes with the use or
enjoyment of the Premises and/or the Shoreside
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Complex, then the Landlord shall have the right to terminate this Lease subject
to the provisions of Article . If the Landlord determines not to terminate this
Lease by reason of such title defect, then the Landlord, after deducting all
costs and expenses of reconfiguring, reconstructing or restoring the Premises,
shall pay to Tenant such portion (the "Net Title Insurance Proceeds") of the
title insurance proceeds received by Landlord by reason of such title defect as
are determined by Landlord to represent Tenant's proportionate share thereof.
25. FORCE MAJEURE.
Tenant's obligation to perform or observe any term, condition, covenant
or agreement on Tenant's part to be performed or observed pursuant to this Lease
(other than Tenant's obligation to pay any item of Rent when due) shall be
suspended during such time as such performance or observance is prevented or
delayed by reason of any Unavoidable Delay.
26. ACCESS.
Landlord, Harrah's and their respective agents, representatives and
designees shall have the right to enter the Premises upon reasonable notice to
Tenant during regular business hours, and in accordance with Tenant's reasonable
security procedures, for the purpose of: (i) performing work related to the
Shoreside Complex; (ii) curing Tenant's Defaults (provided that Landlord shall
have given Tenant prior Notice of such Default in accordance with this Lease);
(iii) mortgaging, insuring, obtaining of Government licenses, permits or
approval for the Shoreside Complex; or (iv) sale of the Shoreside Complex or the
land affected by the Ground Lease. In entering the Premises pursuant to this
Article, authorized individuals shall not unreasonably interfere with the
conduct of operations on the Premises by Tenant or anyone claiming through
Tenant and shall comply with Tenant's reasonable security procedures.
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27. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS.
27.1 Landlord's Option. If Tenant shall at any time fail to make when
required under the Lease any payment or perform any other act on its part to be
made or performed, then Landlord, after ten (10) Business Days' Notice to
Tenant, or with such notice (if any) as is reasonably practicable under the
circumstances, in case of an emergency, and without waiving or releasing Tenant
from any obligation and without waiving Landlord's right to take such action as
may be permissible under this Lease as a result of such Default, may (but shall
be under no obligation to) make such payment or perform such act on Tenant's
part to be made or performed pursuant to this Lease. Landlord may enter upon the
Premises for such purpose, and take all such action on the Premises, as may be
reasonably necessary under the circumstances, but in doing so shall not
interfere with the conduct of operations on the Premises by Tenant or anyone
claiming through Tenant and shall comply with Tenant's reasonable security
procedures.
27.2 Reimbursement by Tenant. All costs and expenses reasonably
incurred by Landlord, together with reasonable attorneys' fees, in connection
with the exercise of Landlord's cure rights under Section 27.1, shall constitute
Additional Rent. Tenant shall pay such Additional Rent together with interest
thereon at the Default Rate within thirty (30) days after Landlord's demand
accompanied by evidence reasonably establishing such costs and expenses,
provided Tenant shall have the right to audit such costs and expenses, and if
Tenant, in good faith, disputes the accuracy of such costs and expenses, Tenant
shall have the right to require arbitration of the amount of such costs and
expenses in accordance with the provision of Section 29.6 hereof. Tenant shall
also have the right, if in good faith Tenant believes that either no emergency
existed or no Default had occurred, to require arbitration (pursuant to the
provisions of Section 29.6 hereof) as to whether an emergency existed or a
Default had occurred. If the arbitrators uphold Tenant's contention that no
emergency existed or no Default had occurred, as the case may be,
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then Landlord shall nonetheless be entitled to reimbursement of
reasonable costs and expenses incurred to the extent of the reasonable benefit
to Tenant or the Premises. If the arbitrators uphold Landlord's contention that
an emergency existed or a Default had occurred, then Landlord shall be entitled
to reimbursement of all costs and expenses incurred in good faith whether
reasonable or not.
28. GUARANTY.
28.1 Parent Guaranty. Tenant's obligations under this Lease shall be
guaranteed by Players International. Inc. (the "Parent Guaranty"), which Parent
Guaranty shall be in the form of Exhibit K attached hereto.
29. DEFAULT BY TENANT; REMEDIES.
29.1 Definition of "Event of Default". The term "Event of Default"
shall mean and refer to the occurrence of any one or more of the following
circumstances:
29.1.1 Venture Default. If an Event of Default by Tenant shall
have occurred under the terms and provisions of the Joint Venture Agreement
which shall not be subject to any additional cure rights other than those
provided in the Joint Venture Agreement (a "Venture Default").
29.1.2 Monetary Default. If a Monetary Default shall occur and
the Monetary Default shall continue for sixty (60) days after Landlord has given
Tenant Notice of such Monetary Default, specifying in reasonable detail the
amount of money required to be paid by Tenant and the nature of such payment,
provided however that if Tenant shall fail on more than two occasions in any
Percentage Rent Year to make payment of Percentage Rent or Substitute Percentage
Rent before Landlord (or Harrah's) gives such Notice (whether or not such
payment was made within the aforesaid cure period), the notice and cure period
for subsequent payments
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due hereunder within such Percentage Rent Year and the next succeeding
Percentage Rent Year shall be shortened to ten (10) days.
29.1.3 Operating Covenant Defaults. If Tenant breaches the
provisions of Section 7.2 hereof voluntarily (a "Voluntary Operating
Covenant Default") or if Tenant is denied (a "Governmental Denial") the
necessary Government licenses, permits, certificates or approvals (collectively,
"Licenses and Approvals") of the Missouri Gaming Commission or any other
Government agency to operate the Premises as Excursion Gambling Boats and such
denial is not rescinded or revoked within seventy-two (72) hours or, if any
application for Licenses and Approvals is rejected or if any Licenses and
Approvals are rescinded, revoked or suspended for more than seventy-two (72)
hours (an "Involuntary Operating Covenant Default") and in the case of a
Voluntary Operating Covenant Default such Voluntary Operating Covenant Default
is not remedied within thirty (30) days after Landlord has given Tenant notice
of such Voluntary Operating Covenant Default in reasonable detail (the
"Voluntary Operating Covenant Cure Period") and in the case of an Involuntary
Operating Covenant Default such Involuntary Operating Covenant Default is not
remedied within the "Appeal Period" (hereinafter defined) (the "Involuntary
Operating Covenant Cure Period") provided in the case of a Voluntary Operating
Covenant Default or an Involuntary Operating Covenant Default Tenant is paying
Landlord Default Substitute Percentage Rent during the Voluntary Operating
Covenant Cure Period or the Involuntary Operating Covenant Cure Period, as the
case may be, subject to the right of a Leasehold Mortgagee to extend the
Voluntary Operating Covenant Cure Period or Involuntary Operating Covenant Cure
Period in order to substitute another operator of the Premises, so long as the
Leasehold Mortgagee pays Landlord Default Substitute Percentage Rent and
performs Tenant's other obligations under this Lease. For purposes hereof, the
"Appeal Period" shall be the period during which Tenant in good faith and with
due diligence pursues a final non-
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appealable determination concerning the validity of a Governmental
Denial. A Voluntary Operating Covenant Default and an Involuntary Operating
Covenant Default are collectively referred to herein as an "Operating Covenant
Default."
29.1.4 Non-Monetary Default. If a Non-Monetary Default shall
occur and the Non-Monetary Default shall continue and not be remedied by Tenant
within ninety (90) days after Landlord shall have delivered to Tenant a Notice
describing the same in reasonable detail, or, in the case of a Non-Monetary
Default that cannot with due diligence be cured within ninety (90) days from
such Notice, if Tenant shall not (x) within ninety (90) days from Landlord's
Notice advise Landlord of Tenant's intention to take all reasonable steps
necessary to remedy such Non-Monetary Default; (y) duly commence the cure of
such Non-Monetary Default within such period, and then diligently prosecute to
completion the remedy of the Non-Monetary Default; and (z) complete such remedy
within a reasonable time under the circumstances.
29.2 Re-entry. Upon the occurrence of an Event of Default, this Lease,
at the option of Landlord, shall be terminated and Landlord or Landlord's agents
and employees may (to the extent permitted by law and subject to the rights of
Leasehold Mortgagees under this Lease) re-enter the Premises, or any part of the
Premises, either by summary dispossess proceedings or by any suitable action or
proceeding at law, or by force (to the extent permitted by Law of the State) or
otherwise, without being liable to indictment, prosecution or damages, and may
repossess the same, and may remove any individual from the Premises, all so that
Landlord may have, hold and enjoy the Premises.
29.3 Damages. In addition to Landlord's other remedies hereunder, if
Landlord terminates this Lease by reason of an Event of Default, Tenant shall be
liable to Landlord for an amount equal to the excess of (A) the present value as
of the date of termination of all installments of Rent through the end of the
Term [the amount of Rent to be based upon the
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average annual Rent paid hereunder for the immediately preceding two (2) years,
or if less than two (2) years of the Term has elapsed, based upon the amount of
Four Million Five Hundred Thousand Dollars ($4,500,000.00) per year], such
present value to be computed using a reasonable per annum discount rate,
compounded semiannually, from the respective dates upon which such Rent would be
paid, over (B) the present value as of such termination date of the fair market
rental value of the Premises through the end of the Term (such fair market
rental value shall be reduced to the extent that Tenant fails to surrender its
gaming license to the Missouri Gaming Commission and fails to cooperate with
Landlord's application for a new gaming license as provided in Sections and
hereof on termination and thereupon a non-gaming use of the Premises shall be
assumed). Such fair market rental value of the Premises is to be determined by
mutual agreement of Landlord and Tenant or, if they cannot agree within ten (10)
days of such notice, by an arbitration as provided herein. Such present value is
to be computed using a reasonable per annum discount rate mutually agreed upon
by Landlord and Tenant or, if they cannot agree within ten (10) days, by an
arbitration as provided herein, compounded semiannually, from the respective
dates upon which such Rent would be paid. The above damages shall be increased
by an amount equal to all amounts expended by Landlord in curing any preexisting
defaults of Tenant under leases of Gaming Equipment or by reason of Tenant's
failure to arrange for Landlord to have the legal right to assume said leases
should Landlord exercise its option to assume such leases under the provisions
of Article hereof. Landlord shall have no general duty to mitigate the aforesaid
damages, but Landlord shall be required to negotiate in good faith with a
proposed successor to Tenant which meets the criteria set forth on Exhibit J
hereto and which is willing to assume all obligations of Tenant or Tenant's
Affiliate under the Joint Venture Agreement and to execute and deliver to
Landlord a Lease which is in form identical to this Lease (including, without
limitation, the same Percentage Rent payable
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hereunder) with the exception of modifications necessitated by the change in
the identity of Tenant.
29.4 Pending Dispute Regarding Event of Default. Notwithstanding
anything to the contrary in the foregoing remedies provided for Landlord under
this Lease, if Tenant shall have given Landlord Notice before termination of
this Lease that Tenant contests Landlord's determination that a Voluntary
Operating Covenant Default, Involuntary Operating Covenant Default or other
Default has occurred or that an Event of Default has occurred, then Landlord
shall not disturb Tenant's possession of the Premises, Tenant shall be entitled
to remain in possession of the Premises under this Lease, and the Term shall be
deemed to continue, so long as Tenant: (a) continues to pay Landlord the Rent
(and to escrow the disputed portion of any Rent into an escrow account
established and managed in the manner set forth in Section ); (b) continues to
perform all other obligations under this Lease as are not in dispute; and (c) is
prosecuting appropriate arbitration proceedings to prevent Landlord from
terminating this Lease as provided in Section 29.6 hereof.
29.5 Injunctive Relief. In the event of any breach or threatened breach
by Tenant of any Lease covenants or agreements, Landlord shall be entitled to
enjoin such breach or threatened breach. The provisions of this Section shall be
construed so as to be consistent with the Law of the State so that remedies of
Landlord described in this Lease shall be available to the full extent but only
to the extent that they are not invalid or unenforceable under the Law of the
State.
29.6 Arbitration. Upon the occurrence of a Non-Monetary Default or a
Monetary Default, the amount of which is disputed by Tenant, Tenant may, by
written notice to Landlord, elect an arbitration which shall be conducted in
accordance with the following procedures:
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29.6.1 Voluntary Appointment. Landlord and Tenant shall
appoint a single Qualified Arbitrator who is not affiliated with either
Landlord or Tenant. Such Qualified Arbitrator shall render a decision within
thirty (30) days of such appointment.
29.6.2 Appointment by Arbitrators. If Landlord and Tenant
cannot agree on a single Qualified Arbitrator within twenty (20) days after an
election to submit the matter to arbitration, then Landlord and Tenant shall
each appoint one Qualified Arbitrator within ten (10) days following such twenty
(20) day period. The two appointed Qualified Arbitrators shall within ten (10)
days of such referral appoint a third Qualified Arbitrator, and if such
Qualified Arbitrators are not able to agree on such third Qualified Arbitrator,
then, on five (5) days' notice in writing to the other Qualified Arbitrator,
either Qualified Arbitrator shall apply to the branch of the American
Arbitration Association in St. Louis, Missouri to designate and appoint such
third Qualified Arbitrator. The three Qualified Arbitrators shall reach a
decision within twenty (20) days after the appointment of the third Qualified
Arbitrator.
29.6.3 Failure to Appoint. If either Landlord or Tenant fails
to appoint a Qualified Arbitrator, then the single Qualified Arbitrator
designated by the other party shall act as the sole Qualified Arbitrator and
shall be deemed to be the unanimously approved Qualified Arbitrator to resolve
such dispute. The decision and award of such sole Qualified Arbitrator shall be
binding upon the parties.
29.6.4 Fees and Expenses. The fees and expenses of the
Qualified Arbitrators shall be paid by the party whose position is not adopted
by the Qualified Arbitrators. The award of any Qualified Arbitrators made in
accordance with this Section shall be binding on the parties and enforceable in
any court of competent jurisdiction.
29.6.5 Proceedings. All proceedings by the Qualified
Arbitrators shall be conducted in accordance with the Uniform
Arbitration Act as enacted in the State of Missouri,
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except to the extent the provisions of such Act are modified by this
Lease or the mutual agreement of the parties. Unless otherwise agreed, all
arbitration proceedings shall be conducted in St. Louis, Missouri.
29.6.6 Arbitration Decisions. In all arbitration proceedings
submitted to any Qualified Arbitrators, the Qualified Arbitrators shall
be required to agree upon and approve the substantive position advocated by one
party with respect to each disputed item. The Qualified Arbitrator(s) shall
exclusively determine whether a particular dispute falls within the scope of
their authority.
30. TERMINATION.
30.1 Rights on Termination. Upon the Termination Date, all improvements
constituting part of or located on the Premises (other than (i) the portion of
any signs bearing any Players Mark, which Tenant may remove; (ii) the Tenant's
Property that is not affixed to the Premises; and (iii) Gaming Equipment) shall
become Landlord's property, and Landlord and Tenant shall have the additional
rights and obligations set forth in this Article , provided that Landlord shall
have the option to be exercised by Notice to Tenant at least thirty (30) days
before the Termination Date to prospectively assume any leases of Gaming
Equipment. A copy of each such lease shall be delivered to Landlord within ten
(10) days after its execution. Landlord shall also be entitled at its option on
at least thirty (30) days' Notice to purchase any personal property or equipment
that Tenant has the right to remove pursuant to this Section (other than
personal property or equipment bearing any trademark, service mark or other mark
owned by a Tenant or any of its Affiliates) at its then fair market value,
payment to be made by certified check on the Termination Date.
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30.2 Possession. Tenant shall deliver to Landlord possession of the
Premises and all affected Tenant's Property (including, without limitation,
Tenant's Work), in its then current condition and state of repair.
30.3 Utility and Other Deposits. To the extent that Tenant shall have
delivered any deposits to any utility companies or other providers of services
for the Premises and such deposits are not separately refunded or credited to
Tenant, Landlord shall credit an amount equal to such deposits against any
amounts due to Landlord from Tenant, and, if no amounts are due from Tenant, pay
such amount to Tenant; in each case within thirty (30) days after the later of:
(i) the date that Tenant delivers possession of the Premises to Landlord in
accordance herewith; or (ii) the date that all disputes between Landlord and
Tenant are finally resolved by voluntary agreement or final and unappealable
judicial determination.
30.4 Miscellaneous Assignments. Tenant shall assign to Landlord,
without recourse, all assignable warranties and guarantees then in effect
relating to Tenant's Property that is acquired by Landlord or Landlord's
designee, and shall, at its sole cost and expense, cancel all contracts relating
to the Premises other than those contractually and legally assignable contracts
that Landlord elects to assume, which shall be assigned to and assumed by
Landlord and costs relating thereto apportioned.
30.5 Termination of Memorandum of Lease. If the parties shall have
entered into and recorded a Memorandum of Lease, then they shall enter into a
memorandum, in recordable form reasonably satisfactory to both parties,
terminating the Memorandum of Lease.
31. NO BROKER.
Neither Landlord nor Tenant has engaged the services of a broker,
finder or agent in this transaction as it relates to the Site, and neither has
employed, nor authorized any other Person to act in such capacity. Landlord and
Tenant each hereby agree to indemnify and hold the other
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harmless from and against any and all claims, losses, liabilities, damages or
expenses (including, without limitation, reasonable attorneys' fees, costs and
disbursements incurred in the enforcement of this indemnity) suffered or
incurred by the other party as a result of a claim brought by a Person engaged
or claiming to be engaged as a finder, broker or agent by the indemnifying
party. The foregoing representation, warranty and indemnity shall survive the
expiration or earlier termination of this Lease.
32. WAIVERS.
32.1 No Waiver by Silence. Failure to complain of any act or omission
shall not be deemed a waiver of any rights under this Lease. No waiver, express
or implied, of any breach of any provision of this Lease shall be a waiver of a
breach of any other provision of this Lease or a consent to any subsequent
breach of the same or any other provision.
32.2 Waiver of Trial by Jury. LANDLORD AND TENANT HEREBY WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, INCLUDING ANY
CLAIM OF INJURY OR DAMAGE, AND ANY EMERGENCY OR STATUTORY REMEDY
WITH RESPECT TO THE FOREGOING.
33. MEMORANDUM OF LEASE.
The parties shall, contemporaneously herewith, execute, acknowledge and
deliver duplicate originals of a recordable memorandum of lease (the "Memorandum
of Lease") in the form of Exhibit L.
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34. ADMINISTRATION OF LEASE; LANDLORD'S REPRESENTATIVE.
Landlord will be bound with respect to any matter affecting this Lease
by the signature of Landlord's Representative. Landlord's Representative is
currently HMHC. Landlord's Representative may be changed from time to time only
by Notice to Tenant executed by both Landlord and the current Landlord's
Representative designating the name and address of the successor Landlord's
Representative.
35. ESTOPPEL CERTIFICATES.
35.1 Rights of Each Party. Upon not less than ten (10) Business Days'
prior written request (an "Estoppel Certificate Request") by either party to
this Lease (the "Requesting Party"), the other party to this Lease (the
"Certifying Party") shall execute, acknowledge and deliver to the Requesting
Party (or directly to a third party whose name and address are provided by the
requesting party [a "Third Party"]) up to four original counterparts of an
Estoppel Certificate in the form attached as Exhibit B. An Estoppel Certificate
Request shall not be valid unless accompanied by a certificate by the Requesting
Party that to the best of the Requesting Party's knowledge the proposed form of
Estoppel Certificate is substantially correct and omits no material information
required to be disclosed in such Estoppel Certificate. Any Estoppel Certificate
may be relied upon by any Third Party to whom an Estoppel Certificate is
required to be directed.
35.2 Failure to Execute Estoppel Certificate. If (i) the Requesting
Party delivers an Estoppel Certificate Request to the Certifying Party in
accordance with the Notice provisions of this Lease and (ii) ten (10) Business
Days have elapsed from the effectiveness of such Estoppel Certificate Request
and during such period the Certifying Party has failed to execute and deliver to
the Requesting Party (or its attorneys or the Third Party(ies) designated by
such Requesting Party) the Estoppel Certificate counterpart(s) provided by the
Requesting Party, setting forth with
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reasonable specificity any alleged exceptions to the statements required to be
contained in such Estoppel Certificate, then the Certifying Party shall be
deemed for all purposes, whether or not this Lease has been terminated or is
otherwise in full force and effect, to have executed and delivered to the Third
Party and the Requesting Party an Estoppel Certificate, dated as of the
effective date of the Estoppel Certificate Request, in the form submitted by the
Requesting Party to the Certifying Party.
36. MISCELLANEOUS.
36.1 Reasonableness. Wherever this Lease states that approval by either
party shall not be unreasonably withheld: (a) such approval shall not be
unreasonably delayed or conditioned; and (b) no withholding of approval shall be
deemed reasonable unless withheld by Notice specifying reasonable grounds, in
reasonable detail, for such withholding of approval, and indicating specific
reasonable changes in the proposal under consideration that would cause such
proposal to be acceptable. Where reasonableness is not specified as the standard
for action, a party may act in its sole discretion.
36.2 Documents in Recordable Form. Wherever this Lease requires either
party to deliver to the other a document in recordable form, both parties shall
be deemed to have consented to the recording of such document, at the sole
expense of the party that elects to record it.
36.3 Further Assurances. Each party agrees to execute and deliver such
further documents, and perform such further acts, as may be reasonably necessary
to achieve the intent of the parties with respect to Tenant's leasing of the
Premises from Landlord, as set forth in this Lease. Without limiting the
generality of this Section, upon request at any time or from time to time either
party shall execute and deliver to the other: (a) additional counterparts of
this Lease or any related documents, provided such additional counterparts are
prepared at the expense of
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the party requesting them; and (b) such documentation as any title insurance
company shall require to evidence such matters as due formation, authorization
and execution of the Lease on the part of the party of whom the request is made.
36.4 No Competition. Tenant shall be bound by the non-competition
provisions of Sections 8(d) and 31(g) of the Joint Venture Agreement which
non-competition covenant shall continue to apply whether or not Tenant remains a
partner of Landlord and which non-competition covenant shall survive the
expiration or termination of this Lease for a period of five (5) years in
accordance with the terms of the Joint Venture Agreement.
36.5 No Third Party Beneficiaries. Except for Harrah's rights as
assignee of Percentage Rent, as discussed in Section 5.2.5 of this Lease, and as
otherwise expressly specified, nothing in this Lease shall be deemed to confer
upon any Person (other than Landlord, Tenant, Leasehold Mortgagees, fee
mortgagees or Prime Mortgagees) any right to insist upon, or to enforce against
Landlord or Tenant, the performance or observance by either party of its
obligations under this Lease.
36.6 Interpretation. No inference in favor of or against any party
shall be drawn from the fact that such party has drafted any portion of this
Lease. The parties have both participated substantially in the negotiation,
drafting and revision of this Lease with representation by counsel and such
other advisers as they have deemed appropriate. Material in brackets constitutes
parenthetical material within other parenthetical material and is intended to be
part of this Lease. The words "include" and "including" shall be construed to be
followed by the words: "without limitation."
36.7 Captions. The captions of this Lease are for convenience and
reference only and in no way affect this Lease.
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36.8 Cumulative Remedies. The remedies to which either party may resort
under this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which such party may lawfully be entitled
in the event of any breach or threatened breach by the other party of any
provision of this Lease.
36.9 Entire Agreement. This Lease contains all the terms, covenants and
conditions relating to Tenant's leasing of the Premises.
36.10 Amendment. Any modification or amendment to this Lease must be in
writing signed by Landlord and Tenant and consented to by any Leasehold
Mortgagee(s) and Prime Mortgagees having the right to consent to amendments or
modifications of this Lease pursuant to the terms of this Lease. Modifications
or amendments of this Lease executed by either party may be exchanged and
delivered by facsimile transmission, and shall be effective upon such
transmission. The parties shall promptly exchange original signature
counterparts of amendments executed by either party and initially exchanged and
delivered by facsimile transmission.
36.11 Partial Invalidity. If any term or provision of this Lease or the
application of such term or provision to any party or circumstance shall to any
extent be invalid or unenforceable, then the remainder of this Lease, or the
application of such term or provision to Persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected by such
invalidity, and each remaining term and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
36.12 Successors and Assigns. This Lease shall bind and benefit
Landlord and Tenant and their successors and assigns, but the foregoing shall
not limit or supersede any Transfer restrictions contained in this Lease.
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36.13 Governing Law. This Lease and its interpretation and performance
shall be governed, construed and regulated by the Law of the State, without
regard to principles of conflict of laws.
36.14 Counterparts. This Lease may be executed in counterparts, each of
which shall constitute one and the same agreement.
36.15 Time Periods. Whenever this Lease requires either party to
perform any action within a specified period, or requires that a particular
event occur within a specified period, if the last day of such period is not a
Business Day, then the period shall be deemed extended through the close of
business on the first Business Day following such period as initially specified.
This Section shall in no event delay or defer the effective date of any Rent
adjustment or the commencement of any period with respect to which interest on a
payment shall accrue.
36.16 Rule Against Perpetuities. If the rule against perpetuities or
any rule of law with respect to restrictions on the alienation of property or
any other rule of law shall limit the time when any event contemplated by this
Lease may occur, the happening of such event shall not be impaired within any
period permitted by such rule. Such period with respect to the rule against
perpetuities shall expire upon the expiration of twenty (20) years after the
death of the last survivor of the following individuals:
Emily Rosenberg of Memphis, Tennessee
Dylan Loveland of Memphis, Tennessee
Dylan Buffalo of Germantown, Tennessee
36.17 No Agency or Partnership. Nothing herein contained shall be
deemed or construed by the parties hereto, nor by any third party, as creating
the relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed
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that no provision contained herein, nor any acts of the parties hereto, shall be
deemed to create any relationship between the parties hereto other than the
relationship of tenant and landlord.
36.18 No Suretyship. It is the express intent of the parties that the
fact that Tenant's obligations are cross-defaulted to its obligations under the
Joint Venture Agreement and that Tenant is a partner of Landlord in no way
constitutes Tenant as a surety in its capacity as Tenant for its obligations as
a partner of Landlord. To the extent that a suretyship relationship has been
created notwithstanding the express intent of the parties as stated above,
Tenant hereby waives the benefit of any suretyship defenses or rights that may
have been so created.
37. NOTICES.
All Notices and other communications required or permitted to be given
or delivered hereunder shall be in writing, addressed to the Landlord or Tenant
at the address set forth below or such other address as it may designate by
notice given to the other parties in the manner herein provided, and shall be
deemed to have been given (a) on the date received if given by United States
mail, postage prepaid, registered or certified, return receipt requested, or (b)
on the date delivered if given by personal delivery or recognized overnight
courier service, provided that delivery is acknowledged in writing by the
receiving party or an employee of such party:
Landlord:
Riverside Joint Venture
1023 Cherry Road
Memphis, TN 38117
with a copy to:
Harrah's Maryland Heights LLC
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attn: General Counsel
FAX: (901) 762-8776
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Tenant:
Players MH, L.P.
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
Attn: General Counsel
FAX: (702) 792-9843
with a copy to:
Horn, Goldberg, Gorny, Daniels, Plackter & Weiss
Suite 500 Citicenter Building
1300 Atlantic Avenue
Atlantic City, NJ 08401-7278
Attn: Melvyn J. Tarnopol, Esq.
FAX: (609) 348-6834
38. SURVIVAL.
The obligations of the Tenant and Landlord herein which are not fully
performed upon the expiration or termination of this Lease shall survive such
expiration or termination hereof.
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the date hereof.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
"Landlord"
RIVERSIDE JOINT VENTURE
BY: PLAYERS MH, L.P., General Partner
BY: PLAYERS MARYLAND HEIGHTS,
INC., Its General Partner
By: /s/ Steven P. Perskie
------------------------------
Steven P. Perskie, Secretary
BY: HARRAH'S MARYLAND HEIGHTS
CORPORATION, General Partner
By: /s/ William S. Rosenberg
------------------------------
William S. Rosenberg,
Authorized Representative
"Tenant"
PLAYERS MH, L.P.
BY: PLAYERS MARYLAND HEIGHTS, INC.,
Its General Partner
By: /s/ Steven P. Perskie
-------------------------------
Steven P. Perskie, Secretary
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PARENT GUARANTY
PLAYERS INTERNATIONAL, INC., a Nevada corporation ("Players"),
guarantees unconditionally to Riverside Joint Venture (the "Partnership"),
Harrah's Maryland Heights, LLC ("Landlord"), and any successor of the
Partnership or Landlord or assignee of the Partnership's or Landlord's rights
(collectively and separately the "Benefitted Parties") under that certain Lease
(the "Players' Lease") of even date herewith by and between the Partnership, as
landlord, and Players MH, L.P., a Missouri limited partnership, as tenant,
("Players LP"), the payment of Players LP's obligations under the Players' Lease
(the "Players Guaranteed Obligations"). Landlord is one of the Benefitted
Parties hereunder as Ground Lessor to the Partnership and as assignee of all
Percentage Rent and Substitute Percentage Rent due to the Partnership under the
Players' Lease. Capitalized terms used herein shall have the same definition as
are contained in the Players' Lease, unless otherwise defined herein or the
content requires otherwise.
The amount of this Guaranty shall be limited to the aggregate amount of
all dividends and other distributions or payments (for other than value
received) made by Players LP or any successor tenant under the Players' Lease to
Players and/or any of its Affiliates during the three (3) year period
immediately preceding and for all periods following the occurrence of an Event
of Default under the Players' Lease until the Event of Default is cured or the
Players' Lease is terminated. This Guaranty shall not be deemed satisfied until
all obligations of the tenant under the Players' Lease are satisfied or the
Players' Lease has terminated or the limited amount of this Guaranty is fully
paid.
This Guaranty shall be released, prospectively, and also retroactively
if there is not then an Event of Default under the Players' Lease at such time
as the Benefitted Parties are granted a first priority lien and security
interest in all revenues and personal property, (including Tenant's Property and
Gaming Equipment, subject, however, to Equipment Liens encumbering such Gaming
Equipment) arising from or used in connection with the premises leased pursuant
to the Players' Lease, on terms and conditions substantially the same as those
contained on the form of the amendment to the Players' Lease attached hereto as
Schedule 1.
The Players Guaranteed Obligations may be extended or renewed, and
Players will be bound under this Guaranty notwithstanding any extension,
renewal, or alteration of the Players
<PAGE>
Guaranteed Obligations. Players hereby waives presentation of, demand
of, and protest of the Players Guaranteed Obligations and waives notice of
protest for nonpayment. This Guaranty shall not be affected by:
(a) the failure of any party to assert any claim or demand or to
enforce any right or remedy against Players LP under the Players' Lease,
(b) any extension or renewal of any provision of the Players' Lease,
(c) any rescission, waiver, amendment or modification of any of the
terms or provisions of the Players' Lease, or
(d) the failure of any party to exercise any right or remedy against
any other guarantor of any of the Players Guaranteed Obligations.
Players further agrees that this Guaranty constitutes a guarantee of
payment when due and not of collection and waives any right to require that any
resort be had by any party to any of the security held for payment of any of the
Players Guaranteed Obligations or to any balance of any deposit account or
credit on the books of any party in favor of any Person.
The obligations of Players shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise of
any of the Players Guaranteed Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of any of the Players
Guaranteed Obligations, discharge of Players LP from obligations in a bankruptcy
or similar proceeding or otherwise. Without limiting the generality of the
foregoing, the obligations of Players shall not be discharged or impaired or
otherwise affected by its failure to assert any claim or demand or to enforce
any remedy under the Agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of any
of the Players Guaranteed Obligations, or by any other act or thing or omission
or delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of Players or which would otherwise operate as a discharge
of Players as a matter of law or equity.
Players further agrees that this Guaranty shall continue to be
effective or to be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Players Guaranteed
Obligations is rescinded or must otherwise be restored by any party upon the
bankruptcy or reorganization of Players or otherwise.
-2-
<PAGE>
Upon payment by Players of any sum as provided above so long as any of
the Players Guaranteed Obligations shall remain outstanding hereunder, all
rights of Players against Players LP arising as a result thereof by way of right
of subrogation or otherwise, shall in all respects be subordinated and junior in
right of payment to the prior indefeasible payment in full of all the Players
Guaranteed Obligations.
No delay or omission by the Benefitted Parties to exercise any right
under this Guaranty shall impair any such right, nor shall it be construed to be
a waiver thereof. No amendment, modification, termination or waiver of any
provision of any guarantee, or consent to any departure by Players therefrom,
shall in any event be effective without the written concurrence of the then
landlord under the Players' Lease. No waiver of any single breach of default
under this Guaranty shall be deemed a waiver of any other breach or default.
The Players Guaranteed Obligations may be enforced by either of the
Benefitted Parties, acting separately (in the case of Landlord those obligations
relating to the payment of Percentage Rent or Substitute Percentage Rent),
provided that there shall be no double recovery from Players of any amounts
guaranteed.
PLAYERS INTERNATIONAL, INC.
By: /s/ Steven P. Perskie
-----------------------
Its: Vice President
-----------------------
-3-
<PAGE>
Schedule 1
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT is made this ______ day of
_____________________, by and between RIVERSIDE JOINT VENTURE, a Missouri
general partnership ("Landlord"), and PLAYERS MH, L.P., a Missouri limited
partnership ("Tenant").
BACKGROUND:
A. On ________________, 1995, Landlord and Tenant entered into that
certain Lease Agreement relating to the property in Maryland Heights, Missouri
(the "Lease").
B. Pursuant to Section 28.1 of the Lease, Tenant's parent, Players
International, Inc., a Nevada corporation ("Players"), delivered to Landlord and
Harrah's Maryland Heights LLC ("Harrah's"), a certain Parent Guaranty bearing
the same date as the Lease (the "Guaranty").
C. The Guaranty provides by its terms that Players shall be released
therefrom, as provided therein, upon delivery of this Amendment by Tenant.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby mutually acknowledged, the parties hereto agree as follows:
1. Capitalized terms used in this Amendment, unless otherwise defined
herein, shall have the same meanings given to them in the Lease.
2. Section 28 of the Lease is hereby deleted in its entirety and
replaced in full with the following:
"28. LIEN.
28.1 Landlord's Lien. Tenant hereby grants to Landlord a first
lien on and security interest in the following: (i) all accounts,
accounts receivable
-4-
<PAGE>
income, revenues and the like derived from the operation of the
Premises (the "Receivables"); (ii) Tenant's Property (which lien will
be subject to the rights of the holders of any Equipment Liens); and
(iii) any and all escrow accounts required to be established by Tenant
for Landlord's benefit under the terms of this Lease (the "Escrow
Accounts"). Such lien shall secure the payment of monies due under this
Lease and the performance of the agreements of this Lease by Tenant,
and may be enforced after an Event of Default, by attachment pursuant
to Missouri law applicable to landlords or pursuant to Article 9 of the
Missouri Uniform Commercial Code (the "UCC"). Tenant has executed and
delivered herewith or it will do so without demand at the first
practicable date that such instruments may be effectively filed,
financing statements for purposes of perfecting this lien. Tenant shall
also establish the Escrow Accounts as prescribed by Landlord in order
to fully perfect Landlord's lien thereon."
3. The Lease is hereby amended by adding thereto a new Section 29.7, as
follows:
"29.7 Remedies. Upon an Event of Default, Landlord (i) shall
be entitled under the UCC to all of Tenant's Receivables and proceeds
thereof, including the immediate right to receive payment and the right
to immediate payment of the balance of the Escrow Accounts to Landlord;
and (ii) may enter the Premises and take possession or assert its
rights, under this Section, to such portion of the Premises and
Tenant's Property as Landlord may elect, including Tenant's rights
under the Gaming Equipment leases (subject to the rights of the holders
of the Equipment Liens) (the "UCC Elected Property"). If at the end of
ten (10) days, Tenant shall not have fulfilled its obligations under
this Lease, then Landlord, at Landlord's option, may proceed to sell
all or part of the UCC Elected Property, at a public or private sale,
pursuant to the provisions of the UCC, applying the proceeds first to
the cost and expense of such sale, storage fees and the cost of
preparation of such property for sale and then to the satisfaction of
Tenant's obligations to Landlord under this Lease."
4. The parenthetical contained in the first sentence of Section 30.1
shall be restated as follows:
"(other than (i) the portion of any signs bearing any "Players" mark,
which Tenant may remove; (ii) the Tenant's Property that is not affixed
to the Premises; and (iii) Gaming Equipment; provided that any such
Tenant's Property or Gaming Equipment that is subject to the lien
granted to Landlord pursuant to Section 28 or the option of Landlord to
assume same as provided below shall remain subject to that lien until
Tenant has paid monies due under this Lease and performed the
agreements of Tenant under this Lease or such option to assume)"
5. Except as amended hereby, the Lease remains unmodified and in full
force and effect.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
lease Agreement the day and year first above written.
"Landlord"
RIVERSIDE JOINT VENTURE
BY: PLAYERS MH, L.P., General Partner
BY: PLAYERS MARYLAND
HEIGHTS, INC., Its General
Partner
ATTEST:
_____________________ By: _____________________
Its: _____________________
BY: HARRAH'S MARYLAND HEIGHTS
CORPORATION, General Partner
ATTEST:
By: ______________________________
_____________________ Its: ______________________________
"Tenant"
PLAYERS MH, L.P.
BY: PLAYERS MARYLAND
HEIGHTS, INC., Its General
Partner
ATTEST:
By: _____________________
_____________________ Its: _____________________
-6-
<PAGE>
RIGHT OF FIRST REFUSAL TO PURCHASE
THIS AGREEMENT (the "Agreement") made and entered into as of this 3rd
day of December, 1995 by and between HARRAH'S MARYLAND HEIGHTS LLC, a Delaware
limited liability company ("Grantor"), and PLAYERS MH, L.P., a Missouri limited
partnership ("Grantee").
STATEMENT OF FACTS
A. Grantor is the fee simple owner of certain real property, together
with all rights and easements appurtenant thereto, located in the City of
Maryland Heights, County of St. Louis, Missouri, and being more particularly
described on Exhibit A attached hereto and incorporated herein by this reference
("Harrah's Land"); and
B. Grantor's Affiliate Harrah's Maryland Heights Corporation ("HMHC")
and Grantee are partners in Riverside Joint Venture (the "Venture") pursuant to
the terms of a Partnership Agreement dated November 2, 1995 (the "Joint Venture
Agreement") pursuant to which HMHC has obligated Grantor to grant to Grantee the
rights contained in this Agreement.
C. The Venture is leasing the Harrah's Land pursuant to the terms of a
Ground Lease with Grantor as Landlord dated as of November 3, 1995 (the "Ground
Lease").
D. The right of first refusal being granted herein is subject to the
exceptions provided for in Section 8(d) of the Joint Venture Agreement.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto mutually agree as follows:
1. Right of First Refusal to Purchase. Grantor hereby grants to
Grantee, the right to purchase (the "Purchase Right") Harrah's Land or any
portion thereof at a price equal to any bona fide arm's length written offer
that Grantor is willing to accept (the "Offer") received from any person or
entity which is not an Affiliate (as defined in the Joint Venture Agreement) of
Grantor (the "Third Party") for Harrah's Land or such portion thereof and upon
identical terms and conditions of the Offer (including, without limitation, the
closing date thereunder) subject and subordinate to any rights of third parties
currently existing, and any rights of holders of mortgages, easements or leases
(including only the Ground Lease, Harrah's Lease (as defined in the Joint
Venture Agreement) and Players' Lease (as defined in the Joint Venture
Agreement)) hereafter granted, and other third-party rights approved by Grantee,
which approval shall not be conditioned, or unreasonably withheld or delayed.
Within ten (10) days of Grantor's receipt of the Offer, Grantor shall provide
Grantee with written notice ("Grantor's Notice") of the Offer enclosing a true
and correct copy of the Offer. Grantor's Notice shall be accompanied by
Grantor's notification to Grantee of Grantor's intent to accept such Offer.
Grantor shall record Grantor's Notice with the
<PAGE>
Recorder of Deeds of St. Louis County, Missouri (without a copy of the Offer) on
the same day that Grantor mails Grantor's Notice to Grantee. Grantee shall then
have the first option to purchase Harrah's Land or such portion thereof by
giving written notice to Grantor of its intention to purchase Harrah's Land or
such portion thereof at the same price and on the same terms as the Offer,
subject to the provisions of Section 8(d) of the Joint Venture Agreement which
option, if exercised, must be exercised by Grantee within thirty (30) days of
the date of Grantee's receipt (or refusal to accept delivery of) of Grantor's
Notice (the "Acceptance Period"). Grantee shall be deemed to have "exercised"
its option if Grantee gives Grantor written notice of its intent to purchase
within the Acceptance Period and records such notice with the Recorder of Deeds
of St. Louis County, Missouri (the "Acceptance Notice"). If Grantee does not
give and record the Acceptance Notice within the Acceptance Period, then Grantor
may then, after recording evidence of Grantee's receipt (or refusal to accept
delivery of) of Grantor's Notice, proceed to sell Harrah's Land or such portion
thereof to the Third Party at the same price and on the same terms set forth in
the Offer and the Purchase Right shall be extinguished of record on the date
that the deed of conveyance from Grantor to the Third Party is recorded with
respect to the property described in such deed. If Grantee does not exercise its
option hereunder and Harrah's Land or such portion thereof is not sold pursuant
to such Offer or the terms of the Offer are materially changed (which shall
constitute a new Offer), so long as the term of this Agreement remains unexpired
or has not been terminated, Grantee shall have, upon the same conditions and
notice, the continuing first option to purchase Harrah's Land upon the terms of
any subsequent offer or offers to purchase or the materially changed Offer. If a
portion of the Harrah's Land is so sold, Grantee shall retain the Purchase Right
with respect to the remaining portion of the Harrah's Land. In any event and
notwithstanding the foregoing, the Purchase Right shall terminate upon the
expiration or earlier termination of this Agreement. Notwithstanding the
foregoing, the Purchase Right shall not apply to an Exempt Sale or Disposition
(as defined in the Joint Venture Agreement) and the Purchase Right shall survive
any Exempt Sale or Disposition and shall not be extinguished thereby.
2. Term. The term of this Agreement shall expire upon the earlier to
occur of the following dates:
(i) the date upon which neither Grantor nor any Affiliate of
Grantor remains a partner of the Venture; or
(ii) the date upon which the Players Lease (as defined in the
Joint Venture Agreement) expires or is otherwise terminated; or
(iii) the date upon which the Ground Lease expires or is
otherwise terminated.
3. Amendments. No oral amendment of this Agreement shall be
binding on the parties hereto. Any modification or amendment of this
Agreement must be in writing and signed by Grantor and
-2-
<PAGE>
4. Recording. This Agreement may be recorded by Grantor or Grantee
without the prior written consent of the other party at the expense of the party
so recording same.
5. Captions. Any captions contained in this Agreement are for
convenience only and shall not be considered as part of this Agreement for
purposes of construction of the terms and conditions hereof.
6. Notice. Any notice which may or is required to be given hereunder
shall be deemed given when actually received. If such notice is mailed, it shall
be deposited, registered or certified, return receipt requested, in the United
States mail, or by commercial overnight courier such as Federal Express or
Airborne, addressed to the parties at the addresses set forth after their
respective names below, or at such different addresses as such party may have
designated to the other by notice hereunder.
GRANTOR: Harrah's Maryland Heights LLC
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attention: General Counsel, Gaming
Development
GRANTEE: Players MH, L.P.
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
Attention: General Counsel
7. Governing Law. This Agreement shall be governed by the laws of the
State of Missouri.
8. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns, except as otherwise provided herein.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
GRANTOR
HARRAH'S MARYLAND HEIGHTS LLC
BY: HARRAH'S MARYLAND HEIGHTS
OPERATING COMPANY, its Managing
Member
By: /s/ William S. Rosenberg
-----------------------------
William S. Rosenberg
Authorized Representative
GRANTEE
PLAYERS MH, L.P.
BY: PLAYERS MARYLAND HEIGHTS,
INC., its general partner
By: /s/ Steven P. Perskie
-----------------------------
Steven P. Perskie
Secretary
-4-
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made and entered into as of the 3rd
day of November, 1995, by and between RIVERSIDE JOINT VENTURE, a Missouri
general partnership ("Venture"), and HARRAH'S MARYLAND HEIGHTS LLC, a Delaware
limited liability company ("Harrah's").
STATEMENT OF FACTS
A. Harrah's is the owner of certain land (the "Harrah's Property"),
located in the City of Maryland Heights, St. Louis County, Missouri, the same
being more particularly described in Exhibit A attached to this Agreement and
made a part hereof.
B. The Venture is the owner of certain land (the "Venture Property")
lying adjacent to the Harrah's Property and located in the City of Maryland
Heights, St. Louis County, Missouri, the same being more particularly described
in Exhibit B attached to this Agreement and made a part hereof.
C. The Venture has heretofore entered into a certain Ground Lease with
Harrah's dated as of November 3, 1995 (the "Ground Lease") pursuant to which the
Venture has leased the Harrah's Property from Harrah's, a Memorandum of which
was recorded on November ____, 1995, as Daily No. ______ of the Office of the
Recorder of Deeds for St. Louis County, Missouri.
D. Harrah's and the Venture have also entered into as of the date
hereof a Reciprocal Easement Agreement (the "Reciprocal Easement Agreement")
which was recorded on November ____, 1995 as Daily No. ________ of the Office of
the Recorder of Deeds for St. Louis County, Missouri granting easement rights
over the Harrah's Property to the Venture and over the Venture Property to
Harrah's.
E. The Venture has agreed to grant Harrah's an option to purchase the
Venture Property upon the expiration or termination of the Ground Lease for its
Fair Market Value (as defined below).
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
the parties hereto agree as follows:
1. Option to Purchase. The Venture hereby grants Harrah's an exclusive
option to purchase the Venture Property (the "Option") from the Venture, on the
terms and subject to the conditions set forth in this Agreement.
2. Consideration; Term. The Venture grants this option to Harrah's in
exchange for Ten Dollars ($10.00) and other good and valuable consideration
(including without limitation the execution and delivery of the Ground Lease and
Reciprocal Easement
<PAGE>
Agreement), receipt of which is hereby acknowledged. Subject to the terms and
conditions set forth herein, the term of this Agreement shall commence on the
date hereof and shall terminate sixty (60) days after the expiration or
termination of the Ground Lease (the "Expiration Date").
3. Exercise of Option. So long as Harrah's is not in default under the
terms of this Agreement and the term of this Agreement has not expired, Harrah's
shall have the right upon the expiration or termination of the Ground Lease (the
"Ground Lease Expiration") to exercise the Option. In order to effectively
exercise the Option, Harrah's shall simultaneously give the Venture written
notice of Harrah's intent to exercise the option.
The Option must be exercised, if at all, after the Ground Lease
Expiration but prior to the Expiration Date, and if not so exercised this
Agreement shall automatically expire and terminate. The date upon which Harrah's
exercises the Option by notice to the Venture is hereinafter called the
"Exercise Date".
4. Purchase Price. The Purchase Price for the Property (the "Purchase
Price") shall be equal to its Fair Market Value (as defined below). "Fair Market
Value" as used above shall be determined pursuant to an MAI (or comparable) real
estate appraisal as follows: Harrah's and the Venture shall within twenty (20)
days following the Exercise Date agree upon a qualified real estate appraiser to
determine the Fair Market Value of the Venture Property. If Harrah's and the
Venture are unable to agree upon a single real estate appraiser to determine
Fair Market Value within such initial twenty (20) day period, then Harrah's and
the Venture shall within forty (40) days after the Exercise Date each select a
qualified real estate appraiser. The two (2) appraisers selected by Harrah's and
the Venture shall select a third qualified appraiser within ten (10) days
following their appointment, and the three (3) appraisers shall independently
determine the Fair Market Value of the Venture Property and Fair Market Value as
used herein shall be one-third of the aggregate sum of the Fair Market Values
determined by such appraisers unless the appraisal of one of such appraisers
differs by more than ten percent (10%) from the average amount of the other two
(2) in which case it will be disregarded and such average amount of the other
two (2) appraisals shall be Fair Market Value. The real estate appraiser(s)
shall promptly after appointment render a written report to the parties, in
customary form which specifies the basis for his (or their) determination. If
either party fails to select a real estate appraiser, as provided above, the
real estate appraiser selected by the other party shall determine Fair Market
Value. If a single real estate appraiser determines Fair Market Value, as
provided above, the parties shall share equally the fee and out-of-pocket
expenses of such real estate appraiser. If three (3) real estate appraisers
determine Fair Market Value, as provided above, then each party shall be
responsible for all fees and expenses of the real estate appraiser selected by
it, and the parties shall share equally the fee and expenses of the third
appraiser selected by the other appraisers.
5. Closing. Harrah's shall purchase the Property "AS IS" and no
representations or warranties as to the condition or nature of the Property are
made or implied by the Venture under this Agreement. Any monetary encumbrances
on the Property shall be removed on or before Closing. Closing pursuant to this
Agreement (the "Closing" or "Closing Date") shall be on a date selected by
Harrah's, which date shall be a business day which is not sooner than thirty
(30) days nor later than sixty (60) days after the Exercise Date at 10:00 a.m.,
St. Louis
-2-
<PAGE>
time, or on such earlier date or at such different time as the parties shall
mutually agree in writing, in the offices of the Harrah's counsel.
6. Closing Terms and Procedures. The Venture shall prepare or cause to
be prepared a closing statement to be delivered to Harrah's before Closing
reflecting all adjustments, prorations and credits to the Purchase Price made
pursuant to this Agreement. At Closing, the Venture shall deliver a special
warranty deed conveying the Venture Property to Harrah's free and clear of all
encumbrances other than those non-monetary encumbrances noted in the title
report received at the time of the Venture's acquisition of the Venture
Property, if any, and encumbrances thereafter created or approved by Harrah's or
any affiliate of the Venture. At Closing, Harrah's shall deliver the Purchase
Price, as adjusted, in the form of cash or by wire transfer, and both parties
shall, at Closing, deliver all other documents as shall be reasonably required
to fully consummate the transactions described herein.
7. Adjustments, Prorations, Credits and Payments. The following
adjustments, prorations and credits to the Purchase Price shall be computed and
made as of the Closing and shall be reflected on the closing statement:
(a) Real estate taxes and assessments and Levee District taxes and
assessments for the then current year and rents and other customary items shall
be prorated between the parties. Whenever this Agreement provides that charges
or credits shall be prorated as of Closing, the Venture shall be charged or
credited, as the case may be, with the day of Closing.
(b) Harrah's shall pay all costs of title searches for the Venture
Property and the title insurance premium and all other costs and fees related to
the issuance of a policy of title insurance covering the Venture Property, the
issuance of which in a form satisfactory to Harrah's shall be a condition to
Harrah's obligation to close hereunder.
(c) The Venture shall furnish Harrah's with a copy of the Venture's
existing survey of the Property. In the event Harrah's shall order and obtain an
additional survey, Harrah's shall do so at its sole cost and expense.
(d) Except as expressly provided herein, each party shall pay its
own attorneys' fees and expenses and all other costs and expenses incurred by it
in connection with this Agreement and the transactions described herein.
9. Harrah's Default. If Harrah's shall fail to complete the purchase as
provided by this Agreement by reason of any default of Harrah's under the terms
of this Agreement, and shall fail to cure such default within thirty (30) days
after written notice of such default from the Venture, the Venture shall be
released from the Venture's obligation to sell the Venture Property to Harrah's
and from any other obligation pursuant to this Agreement.
10. Venture's Default. In the event of default by the Venture in
performance of its obligations hereunder, Harrah's shall, at Harrah's option, be
entitled to all rights and remedies at law or in equity.
-3-
<PAGE>
11. Assignment. Harrah's shall not, without the prior written consent
of the Venture (which consent shall not unreasonably be withheld), sell, assign
or transfer, whether by operation of law, merger, acquisition or otherwise, all
or any of its rights under this Agreement, except or in connection with a
Permitted Transfer of the Project Property as provided in the Partnership
Agreement of the Venture.
12. Successors and Assigns. Subject to the restriction on assignment
set forth above, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the respective parties and their successors and assigns in
accordance with the terms of this Agreement.
13. Notices. All notices required or permitted to be given pursuant to
this Agreement shall be effective only if in writing given as provided in this
Section. Notices shall be deemed given and received upon deposit in the United
States mail, as registered or certified mail, postage prepaid, return receipt
requested, or when delivered personally addressed as follows:
If to Venture:
Riverside Joint Venture
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attention: General Counsel
with a copy to:
Players MH, L.P.
c/o Players International, Inc.
1300 Atlantic Avenue, Suite 800
Atlantic City, NJ 08401
If to Harrah's:
Harrah's Maryland Heights LLC
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attention: General Counsel
or to such other address as the party to receive such notice shall theretofore
have furnished to the other party by notice given in accordance with this
Section.
14. Entire Agreement. This Agreement is the entire agreement between
the parties with respect to the subject matter hereof and sets forth all the
terms, covenants, agreements, conditions, undertakings, representations and
warranties of the parties and supersedes all prior understandings, inducements,
promises, warranties and representations, express or implied,
-4-
<PAGE>
oral or written, and may be amended only by written agreement, signed by both
parties to this Agreement.
15. Headings. Section headings are for convenience only and shall not
be construed to affect the meaning or scope of any provision of this Agreement.
16. Applicable Law. This Agreement shall be governed, and the rights
and liabilities of the parties determined, by the laws of the State of Missouri.
17. Severability. All terms and provisions of this Agreement and all
other documents executed in connection herewith and therewith are severable, and
any term or provision or the application thereof to any person or situation
which may be prohibited or unenforceable by law shall be ineffective to the
extent of such prohibition or unenforceability without affecting the remainder
of such document, any other application of such term or provision or any other
document.
18. Memorandum of Option. Upon the execution hereof, Harrah's and the
Venture shall execute and Harrah's shall record in the St. Louis County,
Missouri records, at its sole cost and expense, a Memorandum of Option Agreement
in the form attached hereto as Exhibit C.
19. Subordination. Harrah's agrees to subordinate its rights under this
Agreement to the lien of any institutional lender which secures its loan with a
mortgage or deed of trust on the Venture Property consented to by Harrah's or
any affiliate of Harrah's.
20. Rule Against Perpetuities. If the rule against perpetuities or any
rule of law with respect to restrictions on the alienation of property or any
other rule of law shall limit the time when any event contemplated by this
Option may occur, the happening of such event shall not be impaired within any
period permitted by such rule. Such period with respect to the rule against
perpetuities shall expire upon the expiration of twenty (20) years after the
death of the last survivor of the following individuals:
Emily Rosenberg of Memphis, Tennessee
Dylan Loveland of Memphis, Tennessee
Dylan Buffalo of Germantown, Tennessee
The intent of this provision is to allow to the maximum extent
permissible by an applicable rule of law the occurrence of any event
contemplated by this Option.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RIVERSIDE JOINT VENTURE, a Missouri general
partnership
BY: PLAYERS MH, L.P., its General Partner
BY: PLAYERS MARYLAND HEIGHTS,
INC., its sole general partner
(SEAL)
By: /s/ Steven P. Perskie
---------------------------------
Steven P. Perskie, Secretary
BY: HARRAH'S MARYLAND HEIGHTS
CORPORATION, its General Partner
(SEAL)
By: /s/ William S. Rosenberg
---------------------------------------
William S. Rosenberg
Title: Authorized Representative
HARRAH'S MARYLAND HEIGHTS LLC
BY: HARRAH'S MARYLAND HEIGHTS
OPERATING COMPANY, its Managing Member
(SEAL)
By: /s/ William S. Rosenberg
---------------------------------------
William S. Rosenberg
Title: Authorized Representative
-6-
<PAGE>
EXHIBIT A
("Harrah's Property")
The following real estate is located in the County of St. Louis, State
of Missouri:
Lot 1 of Riverside Center, a subdivision, according to subdivision plat
recorded in Plat Book 339, Pages 94 through 97 in the Office of the Recorder of
Deeds for St. Louis County, Missouri, as said Lot 1 of Riverside Center has been
adjusted pursuant to boundary adjustment plat recorded in Plat Book ____, Page
____ in the Office of the Recorder of Deeds for St. Louis County, Missouri.
-7-
<PAGE>
EXHIBIT B
("Venture Property")
The following real estate located in the County of St. Louis, State of
Missouri:
Lots 3, 4 and 5 of Riverside Center, a subdivision, according to
subdivision plat recorded in Plat Book 339, Pages 94 through 97 in the Office of
the Recorder of Deeds for St. Louis County, Missouri.
-8-
<PAGE>
EXHIBIT C
MEMORANDUM OF OPTION
THIS MEMORANDUM OF OPTION AGREEMENT, executed as of this ______ day of
November, 1995, by RIVERSIDE JOINT VENTURE, a Missouri general partnership
("Venture") and HARRAH'S MARYLAND HEIGHTS LLC, a Delaware limited liability
Company ("Harrah's").
Pursuant to a certain Option Agreement between the Venture and Harrah's
dated as of the ______ day of November, 1995 (the "Option Agreement"), Venture
has granted and does hereby grant to Harrah's an option to purchase the real
property described on Schedule A hereto and incorporated herein (the "Property")
for the price and upon such further terms and conditions as are therein
provided. The option term commences on the date hereof and terminates sixty (60)
days after the date of the expiration or termination of that certain Ground
Lease between the Venture and Harrah's of even date, a memorandum of which has
been recorded with the Recorder of Deeds of St. Louis County, Missouri on
November _____, 1995 as Daily No. _____________, unless earlier terminated as
provided in the Option Agreement.
IN WITNESS WHEREOF, the parties have executed this Notice of Option
Agreement as of the day and year first above written.
RIVERSIDE JOINT VENTURE, a Missouri general
partnership
BY: PLAYERS MH, L.P., its General Partner
BY: PLAYERS MARYLAND HEIGHTS,
INC., its sole general partner
(SEAL)
By:
----------------------------------
Steven P. Perskie, Secretary
BY: HARRAH'S MARYLAND HEIGHTS
CORPORATION, its General Partner
(SEAL)
By:
-------------------------------------------
William S. Rosenberg
Authorized Representative
-9-
<PAGE>
HARRAH'S MARYLAND HEIGHTS LLC
BY: HARRAH'S MARYLAND HEIGHTS
OPERATING COMPANY, its Managing Member
(SEAL)
By:
-------------------------------------
William S. Rosenberg
Authorized Representative
STATE OF MISSOURI )
) SS
CITY OF ST. LOUIS )
On this _______ day of November, 1995, before me appeared STEVEN P.
PERSKIE to me personally known, who, being by me duly sworn, did say that he is
the Secretary of PLAYERS MARYLAND HEIGHTS, INC., a Missouri corporation which is
the general partner of PLAYERS MH, L.P., a Missouri limited partnership, which
in turn is a general partner of RIVERSIDE JOINT VENTURE, a Missouri general
partnership, and that the seal affixed to the foregoing instrument is the
corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation for said limited partnership as a general
partner of said general partnership, by authority of its Board of Directors and
said STEVEN P. PERSKIE acknowledged said instrument to be the free act and deed
of said corporation, said limited partnership and said general partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal in the City and State aforesaid, the day and year first above
written.
________________________________
Notary Public
My commission expires:
-10-
<PAGE>
STATE OF MISSOURI )
) SS
CITY OF ST. LOUIS )
On this _______ day of November, 1995, before me appeared WILLIAM S.
ROSENBERG, to me personally known, who, being by me duly sworn, did say that he
is the Authorized Representative of HARRAH'S MARYLAND HEIGHTS CORPORATION, a
corporation of the State of Nevada, a general partner of RIVERSIDE JOINT
VENTURE, a Missouri general partnership, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation as a general
partner of said partnership, by authority of its Board of Directors and said
WILLIAM S. ROSENBERG acknowledged said instrument to be the free act and deed of
said corporation and said general partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal in the City and State aforesaid, the day and year first above
written.
________________________________
Notary Public
My commission expires:
STATE OF MISSOURI )
) SS
CITY OF ST. LOUIS )
On this _____ day of November, 1995, before me appeared WILLIAM S.
ROSENBERG to me personally known, who, being by me duly sworn, did say that he
is the Authorized Representative of HARRAH'S MARYLAND HEIGHTS OPERATING COMPANY,
a Nevada corporation which is the Managing Member of HARRAH'S MARYLAND HEIGHTS
LLC, a Delaware limited liability company, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation acting as the
Managing Member of said limited liability company, and said WILLIAM S. ROSENBERG
acknowledged said instrument to be the free act and deed of said limited
liability company.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal in the City and State aforesaid, the day and year first above
written.
________________________________
Notary Public
My commission expires:
-11-
<PAGE>
Schedule A
-12-
<PAGE>
DEVELOPMENT AGREEMENT
FOR
MARYLAND HEIGHTS, MISSOURI
RIVERBOAT GAMING PROJECT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 - RIVERBOAT GAMING PROJECT............................................................................ 2
1.1 City Assistance............................................................................... 2
1.2 Costs......................................................................................... 2
1.3 Designation of Home Dock...................................................................... 2
1.4 Operations.................................................................................... 2
1.5 Missouri Gaming Application................................................................... 2
1.6 City Services................................................................................. 3
1.7 City Taxes.................................................................................... 3
1.8 Litigation Cooperation........................................................................ 3
ARTICLE 2 - EARTH CITY EXPRESSWAY............................................................................... 4
2.1 General....................................................................................... 4
2.2 Road Project.................................................................................. 4
2.3 Responsibility................................................................................ 5
2.4 Partnership Assessment........................................................................ 5
2.5 Partnership Loan.............................................................................. 5
2.6 City Escrow Account........................................................................... 7
2.7 Escrow Agreements and Security Interest....................................................... 7
2.8 Tax Increment Financing....................................................................... 8
2.9 Financing of City Road Project - Road Bonds................................................... 8
A. Issuance of Road Bonds............................................................... 9
B. Sale of Bonds........................................................................ 9
C. Limited Guaranty..................................................................... 10
2.10 Financing of Road Project - Alternate Road Project............................................ 12
A. Identification of Alternate Road Project............................................. 12
B. Election of Alternate Road Project................................................... 12
C. Termination of Agreement............................................................. 14
D. Limitation On Disbursements Until Road Project Elected............................... 14
2.11 Lien on Road Project Improvements............................................................. 14
2.12 Audit and Financial Information............................................................... 15
2.13 No Sharing Of City Tax Revenues............................................................... 15
ARTICLE 3 - REPRESENTATIONS..................................................................................... 15
3.1 City Representations.......................................................................... 15
3.2 Partnership's Representations................................................................. 15
ARTICLE 4 - CONDITIONS PRECEDENT................................................................................ 15
4.1 Conditions to Partnership's Obligations....................................................... 15
ARTICLE 5 - CLOSING............................................................................................. 16
5.1 Closing Date.................................................................................. 16
5.2 Actions to be Taken at the Closing............................................................ 17
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ARTICLE 6 - TERMINATION......................................................................................... 17
6.1 Termination................................................................................... 17
ARTICLE 7 - GENERAL PROVISIONS.................................................................................. 18
7.1 Notices....................................................................................... 18
7.2 Successors and Assigns........................................................................ 19
7.3 Attorneys Fees................................................................................ 19
7.4 Governing Law................................................................................. 19
7.5 Merger........................................................................................ 19
7.6 Amendments.................................................................................... 20
7.7 Multiple Originals............................................................................ 20
7.8 Severability.................................................................................. 20
7.9 Interpretation................................................................................ 20
7.10 Default and Cure Rights....................................................................... 20
7.11 Waiver........................................................................................ 21
7.12 Force Majeure................................................................................. 21
7.13 Third Party Beneficiaries..................................................................... 21
</TABLE>
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<PAGE>
DEVELOPMENT AGREEMENT
FOR
MARYLAND HEIGHTS, MISSOURI
RIVERBOAT GAMING PROJECT
THIS DEVELOPMENT AGREEMENT FOR THE MARYLAND HEIGHTS, MISSOURI RIVERBOAT
GAMING PROJECT (this "Agreement") is entered into on _________________________,
1995 by the City of Maryland Heights, Missouri, a Missouri third class
city (the "City") and Riverside Joint Venture, a Missouri general partnership
(the "Partnership").
WHEREAS, the Partnership's partners are Harrah's Maryland Heights
Corporation, a Nevada corporation ("HMHC") and Players MH, L.P., a Missouri
limited partnership ("Players MH"); and
WHEREAS, the voters of Maryland Heights on April 6, 1993 approved
excursion riverboat gaming in the City; and
WHEREAS, the City has granted certain approvals for a project that
includes development of a land based facility (the "Land Based Project") on a
riverfront development site in Maryland Heights (the "Project Site") which
Project Site is described on Exhibit A hereto, in conjunction with the casino(s)
operation located on one or more floating vessels or facilities ("Riverboats");
and
WHEREAS, the portion of the project that is located on the Riverboats
(the "Riverboat Project") includes Riverboats moored at the Project Site (the
Land Based Project and the Riverboat Project are collectively referred to as the
"Riverboat Gaming Project"); and
WHEREAS, HMHC, for itself or another subsidiary of Harrah's
Entertainment, Inc., and Players Maryland Heights, Inc. ("PMH") for itself or
another subsidiary of Players International, Inc., have each applied to be
licensed by the Missouri Gaming Commission to operate up to two Riverboats in
connection with the Riverboat Gaming Project and the City has adopted
Resolutions 95-417 and 95-418 in support thereof; and
WHEREAS, the Harrah's entity to be licensed to operate the Harrah's
Riverboat(s) ("Harrah's Operator"), presently contemplated to be Harrah's
Maryland Heights LLC, a Delaware limited liability company, and the Players
entity to be licensed to operate the Players' Riverboat(s) ("Players'
Operator"), presently contemplated to be Players MH, L.P., are hereinafter
referred to collectively as the "Operators" and together with HMHC, PHM, Players
MH and the Partnership are collectively referred to as the "Companies"; and
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WHEREAS, the City desires to encourage development of the Project Site
and has determined that development of the Project Site will aid the City by
creating employment opportunities and tax base; and
WHEREAS, the City and the Partnership are entering into this Agreement
to set forth certain obligations and responsibilities of the City and the
Partnership with respect to development of the Riverboat Gaming Project and
their respective obligations with respect to a proposal to extend the Earth City
Expressway as described herein (the "Road Project"), which proposal is being
investigated by the City;
NOW, THEREFORE, in consideration of the covenants contained herein, the
City and the Partnership agree as follows:
ARTICLE 1 - RIVERBOAT GAMING PROJECT
1.1 City Assistance. The City to the extent permitted by law agrees to
pass all zoning, sign and other ordinances, issue all permits and take all other
actions necessary to develop and operate the Riverboat Gaming Project subject
to: (a) submission to the City of plans and documents in compliance with City
building codes and other applicable City ordinances, and (b) compliance with
City building codes. The City agrees to act promptly and reasonably with respect
to all requests for such approvals and other actions.
1.2 Costs. The Riverboat Gaming Project will be developed at the sole
cost of the Partnership and the City is not responsible for paying for
construction or operating costs.
1.3 Designation of Home Dock. Pursuant to Chapter 313, RSMo, the
Companies agree to designate the City as their "home dock" (as that term is
defined in Chapter 313, Revised Statutes of Missouri) with respect to the
Riverboat Gaming Project.
1.4 Operations. The Partnership and Operators have the right to
establish the hours of operation of the Riverboat Gaming Project from time to
time in accordance with the rules of the Missouri Gaming Commission. The City
acknowledges the Companies may in the Companies' sole discretion from time to
time abandon all or any portion of the Riverboat Gaming Project, or change the
nature and character of the Riverboat Gaming Project, including without
limitation, the businesses located within the Land Based Project, subject to
compliance with applicable zoning laws.
1.5 Missouri Gaming Application. HMHC and PMH have each filed an
application with the Missouri Gaming Commission for licenses to own or operate
excursion gambling boats at the Riverboat Gaming Project. The City has prepared
its Economic Development, Impact and Affirmative Action Plan ("Plan") pursuant
to the rules and regulations of the Missouri Gaming Commission ("Commission").
The Plan includes the endorsement by the City of Harrah's Operator and Players'
Operator as riverboat gaming operators, and such other information as the City
deemed necessary. So long as the Partnership is in compliance with the terms of
this
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Agreement, the City's endorsement may not be altered or withdrawn, and the City
agrees to assist the Companies in any reasonable manner, including appearances
before the Commission, in connection with Harrah's Operator and Players'
Operator efforts to obtain Missouri gaming licenses for the Riverboat Gaming
Project.
1.6 City Services. The City agrees to provide the same services to the
Riverboat Gaming Project that it provides to other businesses located in the
City at no additional or extra charge. The City shall not assess or charge the
Companies for utilities, tap-in rights, hook-ups, refuse pick-up or any other
charge for City services or City owned services which are not consistent with
the charges charged to any other business in the City.
1.7 City Taxes. The City agrees not to impose any Gaming Tax (as
defined below). The City also agrees to not impose any taxes on the Companies or
their property that operate or are applied in a discriminatory manner (by
imposing a burden on Companies in a substantially different manner than the
burden imposed on the class of all businesses in the City) or which are not paid
by nongaming businesses located in the City. The parties agree that this Section
1.7 does not limit the City's right to receive proceeds from the statewide
gaming tax imposed by the state pursuant to Sections 313.800 et seq., R.S.Mo.,
or substitute state provisions. As used herein "Gaming Tax" means any tax based
on adjusted gross receipts, net gaming revenue, admissions tax or any other tax
based on gaming, including but not limited to the taxes imposed by the state
pursuant to Sections 313.800 et seq., R.S.Mo., or substitute state provisions,
but said term does not include income taxes that are also paid by nongaming
companies. As used herein the term "Admission Tax" refers to one type of Gaming
Tax and refers to the tax imposed by section 313.820, R.S.Mo.
1.8 Litigation Cooperation. In the event that any litigation is filed
to stop the Riverboat Gaming Project or which otherwise relates to the Riverboat
Gaming Project or in the event that the Companies or their affiliates file
litigation against a third party to facilitate the Riverboat Gaming Project (all
such litigation is collectively referred to as the "Litigation"), the parties
shall cooperate with each other to facilitate a prompt resolution of the
litigation that allows the Riverboat Gaming Project to be completed as soon as
possible. Subject to the agreement of the parties, such cooperation includes
sharing of information, consultation and cooperation with each other concerning
prosecution and settlement of the Litigation, and may include sharing of legal
expenses and/or use of the same law firm (approved by the Partnership and the
City) to represent the Companies and the City in the Litigation.
ARTICLE 2 - EARTH CITY EXPRESSWAY
2.1 General. Earth City Expressway currently ends at Prichard Farm
Road. The parties hereto have agreed that extension of the Earth City Expressway
to Olive Boulevard will benefit the residents of the City and the residents of
St. Louis County by providing them with a highway that will give them easier
access to Interstate 70 and surrounding areas and will help alleviate traffic
congestion on other streets. The City and the Partnership have agreed to
cooperate with each other to cause the Earth City Expressway to be extended on
the terms and
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<PAGE>
conditions set forth in this Article 2. The City has determined that operation
of the Riverboat Gaming Project will cause increased traffic on certain streets
in the City and has imposed certain impact fees to be paid by the Partnership as
set forth in this Article 2. The City agrees that the obligations of the
Partnership with respect to the Road Project as set forth in this Agreement
satisfy all requirements under Section V(C) of Ordinance No. 95-974, adopting a
PDM planned development district for the Riverboat Gaming Project (the "Zoning
Ordinance") and together with the other roadway and infrastructure improvements
required by the Zoning Ordinance, satisfy all requirements of the Companies to
construct or pay for construction of any roads and/or infrastructure for roads
in connection with the Riverboat Gaming Project.
2.2 Road Project. The Road Project to be undertaken is the extension of
the Earth City Expressway from Prichard Farm Road to Olive Boulevard. The term
"City Road Project" means the Road Project the City has proposed building. The
"Alternate Road Project" means the Road Project that would be built by the Road
Joint Venture (defined below). The term "Road Project" means either the City
Road Project or the Alternate Road Project. As provided in Section 10.B below
the City and the Partnership will agree on an election between the City Road
Project and the Alternate Road Project, and in no event is the Partnership
obligated to provide financing for both projects. The term "Road Project Costs"
includes all costs incurred by the City in connection with planning and
constructing the Road Project, including but not limited to all planning costs,
all financing costs (including the Loan as defined below), all land acquisition
costs and all construction costs. Unless the parties otherwise agree, the Road
Project shall be of the same quality of construction as the existing Earth City
Expressway. The City agrees to proceed with due diligence to complete the Road
Project. The financial obligations of the Companies with respect to the Road
Project are set forth in this Article 2, and the Companies have no obligation to
provide any additional funds for the Road Project.
2.3 Responsibility. The City either by itself or in conjunction with
other governmental agencies is responsible for taking all actions necessary to
plan and construct the Road Project.
2.4 Partnership Assessment. The City has imposed or hereby imposes a
$2,225,000.00 assessment on the Partnership (the "Assessment") as the Companies'
share of the Road Project Costs. The Assessment shall be due within 10 days
after the later of the effective date of the Zoning Ordinance or the date the
U.S. Army Corps of Engineers issues all permits needed for the Riverboat Gaming
Project. Subject to Section 2.10D below, the Assessment shall be used by the
City to pay for part of the Road Project Costs. The Assessment shall be
delivered to an escrow agent selected by the Partnership and approved by the
City ("Escrow Agent") to be held in escrow in an Assessment Escrow Account. The
Assessment shall be invested in investments (the "Investments") in accordance
with the investment guidelines attached hereto as Exhibit B. Subject to Section
2.10D below, the Assessment will be disbursed by the Escrow Agent to pay Road
Project Costs upon receipt of a draw request signed by the City Treasurer or
other authorized City official summarizing the Road Project Costs to be paid for
expenses actually incurred. Fifteen (15) days in advance of each draw, copies of
each draw request shall be forwarded to the Partnership and the Partnership
shall have the right during such 15 days to
4
<PAGE>
object to any such costs which it reasonably believes do not constitute
appropriate Road Project Costs, in which event a draw shall not be paid for such
costs unless and until the objection is resolved or until the City Attorney
provides a legal opinion that such costs are appropriate Road Project Costs
under this Agreement and are permissible redevelopment project costs under the
tax increment financing statute and the district established pursuant to Section
2.8 below. The Assessment is to be disbursed in full before the Loan (defined
below) is disbursed. In the event that actual construction of the Road Project
has not commenced within five (5) years after the date of this Agreement, any
funds remaining in the Assessment Escrow Account shall be returned to the
Partnership.
2.5 Partnership Loan. The Partnership agrees to loan Two Million Two
Hundred Twenty Five Thousand Dollars ($2,225,000.00) (the "Loan") to the City to
pay for part of the Road Project Costs within 10 days after the last to occur of
the following: (i) the effective date of the Zoning Ordinance; (ii) the U.S.
Army Corps of Engineers issues all permits needed for the Riverboat Gaming
Project, (iii) the City has passed any inducement resolution requested by the
Partnership, and (iv) the City has complied with the requirements of Section 2.8
relating to the Loan. The proceeds of the Loan shall be delivered to the Escrow
Agent to be held in escrow in a Loan Escrow Account (the "Loan Escrow Account").
The Escrow Agent shall invest the proceeds of the Loan in the Investments until
needed. Escrow Agent shall cause all such accrued interest on the proceeds of
the Loan to be paid on a quarterly basis to the Partnership. The City agrees to
repay the Loan, together with interest on any amount disbursed from the date of
disbursement at a rate equal to the average rate of interest earned on the
Investments, in full on the earlier of: (a) the date the Road Bonds (as defined
below) or TIF Notes (as defined below) are issued, or (b) the date of the fifth
anniversary of the Closing (the earlier of said dates is referred to as the
"Loan Maturity Date"). After the Assessment has been expended, and subject to
Section 2.10D below, the proceeds of the Loan may be disbursed by the Escrow
Agent to pay Road Project Costs upon receipt of a draw request signed by the
City Treasurer or other authorized City official summarizing the Road Project
Costs to be paid for expenses actually incurred. Fifteen (15) days in advance of
each draw, copies of each draw request shall be forwarded to the Partnership and
the Partnership shall have the right during such 15 days to object to any such
costs which it reasonably believes do not constitute appropriate Road Project
Costs, in which event a draw shall not be paid for such costs unless and until
the objection is resolved or until the City Attorney provides a legal opinion
that such costs are appropriate Road Project Costs under this Agreement and are
permissible redevelopment project costs under the tax increment financing
statute and the district established pursuant to Section 2.8 below. If Escrow
Agent still holds any proceeds of the Loan on the Loan Maturity Date, Escrow
Agent shall pay such proceeds of the Loan on the Loan Maturity Date to the
Partnership, to be applied toward City repayment of the Loan. The Road Bond
proceeds or TIF Note proceeds will be used to repay the Loan if the Road Bonds
or TIF Notes are issued. In the event that the Road Bonds or TIF Notes have not
been issued prior to the Loan Maturity Date, the City agrees to repay the Loan
using the monies that the City has agreed to deposit in the City Escrow Account
(defined below). At the same time the Loan is made the City shall issue to the
Partnership a TIF obligation (issued pursuant to Section 99.835 RSMo., secured
by a pledge of funds in the special allocation fund established pursuant to
Section 99.845 RSMo. and Section 2.8 of this Agreement)
5
<PAGE>
evidencing the Loan and providing for repayment (the "TIF Obligation"). The City
grants the Partnership a first lien on the Road Bond or TIF Note proceeds and on
the City Escrow Account, the Loan Escrow Account and the Assessment Escrow
Account to secure the Loan and agrees to execute all documents necessary to
perfect said liens.
2.6 City Escrow Account. The City shall establish an escrow account
with the Escrow Agent to be called the "Maryland Heights Earth City Expressway
Road Extension Escrow Account" (the "City Escrow Account"). The City agrees to
deposit in the City Escrow Account at least thirty percent (30%) of the "City
Tax Revenue" prior to the date the Road Bonds or TIF Notes are issued (including
a prorated portion for the year in which the Road Bonds or TIF Notes are
issued). As used in this Agreement, "City Tax Revenue" shall mean the total
revenue received by the City from the Gaming Tax. The City Escrow Account will
be disbursed by the Escrow Agent to pay Road Project Costs for expenses actually
incurred and to repay the Loan upon receipt of a draw request signed by the City
Treasurer or other authorized City official summarizing the Road Project Costs
or the Loan to be paid. The City Escrow Account shall be invested in Investments
and all earnings thereon shall at the City's option be paid to the City or added
to the City Escrow Account. If for any reason, whether voluntary or involuntary,
the City deposits less than 30% of all City Tax Revenue into the City Escrow
Account, the amount of Road Bonds or TIF Notes that the Partnership has
committed to purchase under Sections 2.9 or 2.10 hereof, respectively, shall be
reduced dollar for dollar by the amount by which 30% of the City Tax Revenue
exceeds the actual amount deposited in the City Escrow Account.
2.7 Escrow Agreements and Security Interest. The City, the Partnership
and the Escrow Agent shall each execute escrow agreement(s) (the "Escrow
Agreements") substantially in the form attached hereto as Exhibit C governing
the escrows established pursuant to Sections 2.4, 2.5 and 2.6. Among other
requirements the Escrow Agreements will require that the Escrow Agent provide
the City and the Partnership with a quarterly accounting concerning all activity
in the escrow funds, and a copy of the draw requests summarizing the Road
Project Costs that have been paid. The Escrow Agent shall deduct its fees for
administering each escrow from the applicable escrow. Notwithstanding the
foregoing, upon establishment of tax increment financing pursuant to Section 2.8
below, the parties hereto may agree to have the City Escrow Account held by the
City or by some person or entity other than the Escrow Agent, pursuant to an
agreement other than the Escrow Agreement. The City hereby grants the
Partnership a security interest in the Assessment Escrow Account, the Loan
Escrow Account, the City Escrow Account, the Road Bond Escrow (defined below)
and the TIF Note Escrow (defined below) to secure: (1) the City's monetary
obligations under this Agreement to the Partnership if this Agreement is
terminated pursuant to Section 6.1, and (2) payment of the TIF Obligation, the
Road Bonds and the TIF Notes against default thereunder or if prepayment is
required because there has been a change in law or other circumstance that would
impair the City from receiving and using at least 50% of the Admissions Tax (as
existing under state law in effect on the date of this Agreement) and 10% of all
other Gaming Tax, as imposed by state law in effect on the date of this
Agreement, paid in connection with the Riverboat Gaming Project, for payment of
said obligations, and as a result thereof the available revenue is insufficient
to pay said obligations. Notwithstanding said security interest, unless this
Agreement is terminated pursuant to Section 6.1, or unless the City defaults on
its payment obligations to the Partnership, the City may use the funds in said
escrow accounts in accordance with the terms of this Agreement to pay Road
Project Costs.
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2.8 Tax Increment Financing. As a condition precedent to the
Partnership's obligation to purchase Road Bonds, or the TIF Obligation or TIF
Notes pursuant to other sections of this Agreement, the City must pass all
ordinances and take all steps necessary to establish tax increment financing
pursuant to section 99.800 et seq., RSMo, in order to finance the Road Project,
and to undertake the City's obligations contained in this Agreement, including
but not limited to its obligations in Sections 2.5, 2.6, 2.7, 2.9 and 2.10
hereof, so that 1) the Loan made pursuant to Section 2.5 shall be a purchase by
the Partnership of the TIF Obligation (as defined in Section 2.5) (issued
pursuant to Section 99.835, secured by a pledge of the funds in the special
allocation fund established pursuant to Section 99.845, RSMo.); 2) the 50% of
the total additional revenue deposited pursuant to Section 99.845(3), RSMo, in
the special allocation fund shall constitute the amounts deposited in the City
Escrow Account pursuant to Section 2.6; 3) the City Escrow Account shall be a
segregated account in the special allocation fund; 4) the Road Bonds or the TIF
Notes, as applicable, shall be tax increment financing bonds issued pursuant to
Section 99.835, RSMo; and 5) the Road Bonds or the TIF Notes, as applicable,
will be secured by a pledge of the City Tax Revenue deposited pursuant to
Section 2.6 in the special allocation fund established pursuant to Section
99.845, RSMo. The Partnership's obligations under Sections 2.5 (Partnership
Loan), 2.9 (Road Bonds) and 2.10 (Alternate Road Project) shall be conditioned
upon establishment of a TIF district (including designation of a redevelopment
area and adoption of a redevelopment plan and project) in a manner satisfactory
to the Partnership. The City hereby acknowledges and agrees that the City Tax
Revenue constitutes a tax imposed by the City or other taxing districts which is
generated by economic activities in the area of the Riverboat Gaming Project,
such that the City Tax Revenue will be subject to the provisions of Section
99.845.3 when tax increment financing is established for an area including the
Riverboat Gaming Project. The parties hereto state that establishment of tax
increment financing is instrumental to the development of the Riverboat Gaming
Project, and the Partnership is taking actions and making expenditures in
anticipation that tax increment financing will be adopted.
2.9 Financing of City Road Project - Road Bonds.
A. Issuance of Road Bonds. Subject to Section 2.10 below, the
City agrees to issue special obligation bonds (the "Road Bonds") to pay the City
Road Project Costs, including repayment of the Partnership's Loan. Said Bonds
will be TIF bonds or another bond form approved by the Partnership. The amount
of the Road Bond issue shall not exceed the total Road Project Costs, plus any
Fire Station Costs pursuant to Section 2.9D below, reduced by any balances in
the Assessment Escrow Account and by the amount of City Tax Revenue the City has
agreed to deposit in the City Escrow Account pursuant to Section 2.6 hereof. The
Road Bonds shall be customary municipal bonds that are tax free (state and
federal), that are at market rates and carry standard terms approved by the bond
underwriter designated by the Partnership so that they are readily marketable.
The City agrees to annually appropriate and to grant to the Bond trustee or
paying agent a lien on City Tax Revenue (as defined in Section 2.6) in an amount
deemed necessary by the Bond underwriter to fully cover all principal and
interest payments when due on the Road Bonds, and to fund any sinking funds. The
City agrees not to take any actions that would adversely affect its ability to
repay any Road Bonds that may hereafter be issued. The City acknowledges that
authorizing any additional gaming casinos in the City would adversely affect the
City's ability to repay the Road Bonds by reducing the amount of City Tax
Revenue the City receives from the Riverboat Gaming Project.
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B. Sale of Bonds. The City agrees to use its best efforts to
engage one or more bond underwriters who will be responsible for finding a buyer
or buyers for the Road Bonds. In the event that the City after using its best
efforts is unable to find buyers for the Road Bonds, the Partnership agrees to
purchase or cause to be purchased by others the Road Bonds, on condition that:
(i) the purchase price and face amount of Road Bonds to be purchased by or on
behalf of the Partnership shall not exceed Twenty Two Million Dollars
($22,000,000.00) less the amount of City Tax Revenue the City has agreed to
deposit in the City Escrow Account pursuant to Section 2.6 hereof; (ii) if the
City issues Road Bonds whose total face amount exceeds the amount being
purchased by the Partnership, the Partnership's obligation to purchase any such
Road Bonds will be contingent on a simultaneous purchase by a third party of all
Road Bonds in excess of the amount being purchased by the Partnership, (iii) the
Road Bonds shall be of investment quality, (iv) the Partnership, in its sole
discretion, must approve the terms of the Road Bonds (including, without
limitation, maturity, interest rate, tax exempt status and security) and of all
bond documents or other documents relating to the Road Bonds; (v) no Road Bonds
shall be issued until after the second anniversary of the later of the date that
i) the Riverboat Gaming Project opens for business, and ii) the City makes a
deposit of City Tax Revenues into the City Escrow Account; (vi) the City has not
entered into any agreements with any other governmental entities which would
obligate it to share the City Tax Revenues with any other governmental entity
and has agreed not to enter into any such sharing agreement so long as the Road
Bonds are outstanding; (vii) the Road Bond proceeds are placed in escrow (the
"Road Bond Escrow") and the Partnership receives a first lien on said Road Bond
Escrow until it is disbursed to pay Road Project Costs, (viii) the applicable
documents contain provisions requiring the City to terminate construction of the
Road Project and apply funds held in the Road Bond Escrow toward prepayment of
the Road Bonds in the event there is a change in law or other circumstance
during construction of the Road Project which reduces the City's share of the
Gaming Tax below the amount of Gaming Tax it would receive under State law as in
effect on the date this Agreement is signed, and (ix) there has been no change
in law or other circumstance that would impair the City from receiving and using
at least 50% of the Admissions Tax (as existing under state law in effect on the
date of this Agreement) and 10% of all other Gaming Tax, as imposed by state law
in effect on the date of this Agreement, paid in connection with the Riverboat
Gaming Project, for payment of the Road Bonds, and as a result thereof the
available revenue is insufficient to pay the Road Bonds.
C. Limited Guaranty. For purposes of this Section 2.9,
"Guaranty Year" shall mean any of the five (5) consecutive periods of 365 days
each, the first such period commencing on the first day of the first month
following the date the City first issues Road Bonds and the last such period
expiring on the fifth anniversary thereof. As soon as possible after expiration
of each Guaranty Year, the City shall provide the Partnership with a statement
of all City Tax Revenue attributable to that Guaranty Year. Provided that the
City has then issued Road Bonds, if the total of the City Tax Revenue
attributable to any Guaranty Year is less than Four Million Five Hundred
Thousand Dollars ($4,500,000.00), the Partnership will pay to the trustee for
the Road Bonds for application toward payment of the Road Bonds an amount (the
"Guaranty Payment") equal to the lesser of: (a) the amount by which Four Million
Five Hundred Thousand Dollars ($4,500,000.00) exceeds the City Tax Revenue
attributable to said Guaranty Year, or (b) the amount by which scheduled
payments of debt service due on the Road Bonds
8
<PAGE>
during said Guaranty Year exceed the City Tax Revenues attributable to said
Guaranty Year. Notwithstanding any provision herein to the contrary, if the City
Tax Revenue attributable to any Guaranty Year exceeds Four Million Five Hundred
Thousand Dollars ($4,500,000), then an amount equalling the difference between
such City Tax Revenue and $4,500,000 shall be applied as a credit against any
subsequent Guaranty Payments as such payments thereafter come due. It is a
condition precedent to the Partnership being obligated under this Guaranty that
it approve the terms of the Road Bonds (including, without limitation, maturity,
interest rate, tax exempt status and security) and of all bond documents or
other documents relating to the Road Bonds.
Notwithstanding the foregoing, in the event that the Riverboat Gaming
Project is temporarily closed during any Guaranty Year because of force majeure
conditions, the guaranty contained in this Section of Four Million Five Hundred
Thousand Dollars ($4,500,000.00) (or Road Bond payment, whichever is less) for
such Guaranty Year shall be reduced by multiplying it by a fraction in which the
numerator is the number of days the Riverboat Gaming Project was open for
business in such Guaranty Year and the denominator is the total number of days
that it would have been open for business if the force majeure had not occurred.
The Partnership's guaranty obligations under this Section 2.9
terminate: (i) in the event that the City defaults under this Agreement and such
default is not cured after the Partnership has given notice of the default to
the City and the applicable cure period has expired, or (ii) in the event that
for any reason the City does not receive at least 50% of the Admissions Tax (as
existing under state law in effect on the date of this Agreement) and 10% of all
other Gaming Tax, as imposed by state law in effect on the date of this
Agreement, paid in connection with the Riverboat Gaming Project, and as a result
thereof the Partnership is required to make a payment on its guaranty
obligations under this Section 2.9, or (iii) in the event that Harrah's Operator
or Players' Operator ceases operating a gaming facility at the Project Site, or
(iv) in the event that changes are made to the Missouri Gaming Tax which
adversely affects the Partnership's Guaranty obligations, or (v) at the
Partnership's option if the Partnership is the sole purchaser of the Road Bonds.
If the Partnership is called upon to make a Guaranty Payment with
respect to a Guaranty Year(s) and in any later calendar year(s) the City Tax
Revenue exceeds Four Million Five Hundred Thousand Dollars ($4,500,000), then to
the extent such excess exists and is not required to make scheduled payments on
Road Bonds due in the Guaranty Year, such excess shall be used to reimburse the
payor of any Guaranty Payments made.
D. Fire Station Costs. The City and the Partnership
acknowledge and agree that, in addition to the Road Project, the tax
increment financing plan adopted pursuant to Section 2.8 hereof may contain as a
redevelopment project construction of a new fire station located in the City, in
an amount that may equal approximately $1 million (the "Fire Station Costs.")
The Fire Station Costs may also be included in determining the issuance amount
of the Road Bonds and may be payable from the proceeds of the Road Bonds,
provided that such inclusion 1) shall not increase the maximum purchase price
and face amount of Road Bonds to be purchased by the Partnership ($22 million
less certain amounts) pursuant to Section 2.9B above; 2) shall not affect
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<PAGE>
the right of the Partnership to approve the terms of the Road Bonds as provided
in Section 2.9B above, 3) the real estate taxes from all real estate in the TIF
District, as well as City Tax Revenue, shall be pledged pursuant to the TIF
statute for repayment of the series of Road Bonds issued to pay Fire Station
Costs, and 4) the Partnership's obligations with respect to such bonds are
subject to all other terms and conditions in this Agreement applicable to the
Road Bonds.
2.10 Financing of Road Project - Alternate Road Project.
A. Identification of Alternate Road Project. The City has
received a proposal (the "River Road Proposal"), made by a joint venture formed
by Sverdrup Civil, Inc., Fred Weber, Inc. and Spire Company, LLC (together with
any redevelopment corporation formed by such joint venture, called the "Road
Joint Venture"), to construct the Road Project along a route differing from the
route the City would select if it issued Road Bonds and constructed the City
Road Project. In lieu of the obligations of the City and of the Partnership
contained in Section 2.9 above regarding issuance and sale of Road Bonds and
limited guaranty of certain City Tax Revenue, the parties hereto may elect for
the City to complete the Road Project by adopting the River Road Proposal, with
any necessary modifications, and for the parties to finance the River Road
Proposal as described in this Section 2.10 (the "Alternate Road Project"). Under
the Alternate Road Project, the Road Joint Venture will acquire property and
construct the Road Project and transfer the completed Road Project to the City
or other governmental entities for a fixed price cost, which cost shall be
subject to the approval of the Partnership and the City, but which cost in any
event is anticipated to be substantially less than the cost of the City Road
Project originally contemplated by the City. To pay the purchase price of the
Alternate Road Project, the City will first (1) apply the then-remaining
balances of the Assessment and the Loan and the City Escrow Accounts; and then
(2) issue one or more tax increment financing notes in the amount of the
remaining balance of the fixed price cost plus any unpaid balance of the Loan
(whether one or more, the "TIF Notes"), to be purchased by the Partnership or
its designees. The Partnership, in its sole discretion, has the right to approve
the terms of the TIF Notes (including, without limitation, maturity, interest
rate, tax exempt status and security).
B. Election of Alternate Road Project. The parties may elect
the Alternate Road Project as follows: on or before October 31, 1995 (and in all
events prior to any issuance of the Road Bonds), either party may give the other
party notice that it desires to pursue negotiations for the Alternate Road
Project, and the parties shall begin good faith negotiations to determine
whether the Alternate Road Project satisfies the parties' requirements and is
acceptable. The parties shall have until 5:00 p.m. January 19, 1996 to reach a
written agreement that the Alternate Road Project is elected in lieu of the
parties' obligations under Section 2.9 of this Agreement, and in no event shall
the Partnership be obligated to purchase both TIF Notes and Road Bonds. If no
such notice is given, or if the parties cannot reach such agreement on or prior
to January 19, 1996, then unless the parties agree otherwise the Alternate Road
Project shall be null and void and the City Road Project shall be completed and
financed as provided in Section 2.9 above. Notwithstanding any notice to pursue
negotiations for the Alternate Road Project, the Partnership shall have the
right at any time during those negotiations to give the City notice that the
Partnership is going to construct the improvements required by Section V(B)(3)
of the Zoning Ordinance, at the location and in the manner mutually agreed upon
in writing by the parties, and after giving such notice said improvements shall
no longer be part of the Alternate Road Project.
10
<PAGE>
The parties acknowledge and agree that at the Partnership's option, the
Partnership's agreement to election of the Alternate Road Project may be
conditioned on, without limitation, one or more of the following:
(1) design of the Road Project in a manner that
satisfies (or is sufficient for the City and St. Louis County to
eliminate) the requirements contained in Section V(B)(3) of the Zoning Ordinance
regarding raising and widening Prichard Farm Road and improving the intersection
of Prichard Farm Road and Creve Coeur Mill Road;
(2) phasing or staging of the Road Project,
including separate construction contracts for different phases, so that
the portion or portions of the Road Project near the Project Site as specified
by the Partnership can reasonably be completed prior to March 31, 1997 or prior
to such other date as the Partnership may specify, and other portions may be
completed later;
(3) if litigation or other problems or delays with
the Alternate Road Project at any time threaten to adversely affect the
Riverboat Gaming Project, the Partnership would have the right to terminate the
election of the Alternate Road Project, and cause the substitution of the City
proposal for the Road Project, with such reimbursement of the City's cost and
costs of the Road Joint Venture as are agreed upon by the Partnership and the
City;
(4) arrangements satisfactory to the Partnership and
the City providing for the escrowing of the TIF Note proceeds (the "TIF
Note Escrow"), the disbursement of funds, and a lien to the Partnership on the
TIF Note Escrow to secure the TIF Notes; and
(5) satisfaction of the conditions in Section 2.9B
above that are conditions to buying the Road Bonds.
C. Termination of Agreement. The parties acknowledge that the
TIF Notes may be issued by the City and purchased by the Partnership prior to
opening of the Riverboat Gaming Project for gaming, and that this Agreement may
be terminated by the Partnership pursuant to Section 6.1 after such issuance and
purchase. In such event, the balance of the proceeds of the TIF Notes in escrow
shall be disbursed, first to pay any amounts then due and payable for Road Costs
or required to be paid for the City to terminate any outstanding contracts with
the Road Joint Venture or other third parties in connection with the Road
Proposal and the balance shall be applied to payments of the TIF Notes, and to
the extent not thereby paid in full, the TIF Notes shall remain outstanding and
shall remain payable by the City in accordance with their terms.
D. Limitation On Disbursements Until Road Project Elected.
Notwithstanding any provision of this Agreement to the contrary, the
Partnership's written consent (which may be granted or withheld in the
Partnership's sole discretion) shall be required for disbursement of any portion
of the Assessment or of the Loan (or of any funds in the City Escrow Account)
until the earlier of (i) the date that the Partnership and the City have reached
a written agreement pursuant to Section 2.10B to elect the Alternate Road
Project, or (ii) January
11
<PAGE>
19, 1996, or any earlier date on which the Partnership and the City agree in
writing that the Alternate Road Project will not be elected and the City Road
Project shall be completed and financed as provided in Section 2.9 above.
2.11 Lien on Road Project Improvements. To the extent permitted by law,
the City agrees to grant the Partnership a first lien on the Road Project
improvements (the "Road") or, at the Partnership's option, grant the Partnership
an option to lease and/or purchase the Road for $1 if the City defaults on the
Road Bonds or TIF Notes (such lien or lease/purchase option is referred to as
the "Road Lien"). The Road Lien shall secure the City's obligation to repay the
Road Bonds or TIF Notes, and may be enforced by the Partnership if the City
fails to pay the Road Bonds or TIF Notes in accordance with their terms due to a
change in the amount of City Tax Revenues the City is receiving or due to any
other reason. The documents evidencing the Road Lien shall be in a form mutually
satisfactory to the City and the Partnership.
2.12 Audit and Financial Information. The City agrees to provide the
Partnership with copies of any audit reports the City may receive with respect
to the Assessment Escrow Account, the Loan Escrow Account and the City Escrow
Account. The City also agrees to provide the Partnership with a copy of the
City's annual financial report, including, if any, any financial report that the
City files with the State of Missouri at the same time it is filed with the
state (currently referenced in 15 CSR 40-3.030). The Partnership shall also have
the right at its cost to audit any of said escrow accounts at any time.
2.13 No Sharing Of City Tax Revenues. The City agrees that so long as
the Road Bonds are outstanding it will not enter into any agreement with any
other governmental entity which would obligate it to share the City Tax Revenues
with any other governmental entity if as a result thereof the City Tax Revenues
would be insufficient to pay the Road Bonds, the TIF Obligation and the TIF
Notes.
ARTICLE 3 - REPRESENTATIONS
3.1 City Representations. The City represents, warrants and covenants
to the Partnership and its permitted assigns that this Agreement is valid,
binding upon and enforceable against the City in accordance with its terms.
3.2 Partnership's Representations. The Partnership represents, warrants
and covenants to the City that after the respective boards of directors
of Harrah's Entertainment, Inc. and Players International, Inc. authorize their
respective affiliates to enter into this Agreement, this Agreement will be
valid, binding upon and enforceable against the Partnership in accordance with
its terms.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 Conditions to Partnership's Obligations. The Partnership's
obligations under this Agreement are subject to the satisfaction or removal by
the end of the Due Diligence Period (as defined below) of each of the following
conditions, any or all of which may be removed only in writing by the
Partnership, except the Partnership has agreed to make certain payments before
12
<PAGE>
the conditions are satisfied as set forth herein. With respect to the following
conditions under Section 4.1, the Due Diligence Period is eighteen (18) months
after the day on which the last party signs this Agreement. The conditions to
the Partnership's obligations are:
a. Authorization for execution of this Agreement in accordance with
Section 3.2.
b. The Riverboat Gaming Project, including both the Harrah's Operator's
casino(s) and the Players Operator's casino(s), has opened for gaming business
without restrictions on its operations (other than general restrictions
applicable to all casinos in Missouri).
c. The City has established tax increment financing pursuant to
Section 2.8
If the conditions in Section 4.1(b) are not satisfied during the Due
Diligence Period because of pending litigation, administrative proceeding, or
unexpired appeal period, the Partnership may at its option extend the Closing
Date until the period for appeal has expired or the litigation or administrative
proceeding is resolved in a manner reasonably satisfactory to the Partnership.
In the event all of the conditions set forth in this Section 4.1 are not
satisfied or waived by the Partnership by written notice to City within the Due
Diligence Period, the Partnership may by written notice to the City terminate
this Agreement at any time during the Due Diligence Period or at any time
thereafter prior to Closing. Subject to the first sentence of this paragraph, in
the event all of the conditions set forth in this Section 4.1 are not satisfied
or waived by the Partnership by written notice to City within the Due Diligence
Period, the City may by written notice to the Partnership terminate this
Agreement upon the expiration of the Due Diligence Period. Upon termination of
this Agreement, both City and the Partnership shall be released and discharged
from all further obligations under this Agreement, and neither City nor the
Partnership shall be subject to any claim by the other for damages of any kind,
except as provided in the next sentence. If the Partnership has paid to the City
the Assessment prior to such termination, any balance then remaining in the
Assessment Escrow Account shall be paid to the City; if the Partnership has paid
the Loan, any funds in the Loan Escrow Account shall be paid to the Partnership,
and the City shall repay the Loan to the Partnership in accordance with the
terms of the TIF Obligation or, if the TIF Notes have been issued, shall repay
the TIF Notes as provided in Section 2.10C above.
ARTICLE 5 - CLOSING
5.1 Closing Date. Subject to the terms and conditions of this Agreement
and the removal or satisfaction of the contingencies described in Section 4.1
hereof, the documents and actions to implement the consummation of the
transactions contemplated by this Agreement (the "Closing") shall occur on a
date selected by Partnership, which date shall be no later than 30 calendar days
after the Partnership has acknowledged in writing that all conditions in Section
4.1 have been waived or satisfied (the "Closing Date"), or at such other date
and time as may be mutually established by the parties. The parties hereto do
not contemplate that there will be a formal closing.
13
<PAGE>
5.2 Actions to be Taken at the Closing. On or before the Closing:
a. The City shall deliver to the Partnership a copy of all City
ordinances which relate to the Riverboat Gaming Project and the TIF District
accompanied by the certificate of the City Clerk certifying that all such City
ordinances have been duly adopted by the City Council, are in full force and
effect and have not been modified or repealed, except as set forth in the
Certificate.
b. The City shall deliver to the Companies (if not previously
delivered) all occupancy permits and business and operating licenses needed to
occupy and operate the Riverboat Gaming Project.
c. The City, the Partnership and the Escrow Agent shall execute the
Escrow Agreements (if not previously executed).
d. The Partnership shall deliver to the City a certified copy of the
Partnership's resolutions authorizing execution of this Agreement accompanied by
the certificate of the Partnership certifying that all such resolutions have
been duly adopted by the Partnership, are in full force and effect and have not
been modified or repealed, except as set forth in the Certificate.
e. The parties will take such other actions and will execute and
deliver such other instruments, documents, agreements and certificates as are
required by the terms of this Agreement or as may be reasonably requested by the
Partnership, the Partnership's lender, if any, the Escrow Agent or the City, as
the case may be, in connection with the consummation of the transactions
contemplated herein.
ARTICLE 6 - TERMINATION
6.1 Termination. This Agreement may be terminated by the Partnership at
any time before the Closing by giving written notice (the "Termination Notice")
to City, for the failure of any of the conditions precedent to Closing set forth
in Section 4.1 hereof or if the Partnership determines at any time that it
desires to abandon the Riverboat Gaming Project. Upon issuance of the
Termination Notice the Partnership shall have no obligation to complete the
Riverboat Gaming Project and shall have no obligation to make any payments
required by this Agreement, and shall have no other obligations or liability of
any kind under this Agreement. If this Agreement is terminated in accordance
with this Article 6, it will have no further force or effect and the parties
shall have no further rights or obligations to each other under this Agreement,
except that any balance remaining in the Loan Escrow Account shall be paid to
the Partnership and the City shall repay the Loan to the Partnership, in
accordance with the terms of the TIF Obligation or, if the TIF Notes have been
issued, shall repay the TIF Notes as provided in Section 2.10C above.
ARTICLE 7 - GENERAL PROVISIONS
7.1 Notices. Any notice or other communication required, permitted, or
contemplated by this Agreement (a "Notice") must be in writing and may be given
by personal delivery, overnight courier service (e.g. Federal Express, Airborne,
etc.), or United States Mail, registered
14
<PAGE>
or certified mail, return receipt requested. Such notice shall be deemed to have
been duly given, delivered or served; (a) if and when personally delivered on
the date so delivered, or (b) three (3) days after being mailed by registered or
certified mail, postage prepaid, or (c) one (1) business day after being sent if
sent by a recognized overnight courier delivery service for next day delivery,
costs prepaid, addressed to:
The City: City of Maryland Heights
Attn: City Clerk
212 Millwell Drive
Maryland Heights, Missouri 63043
Fax: (314) 291-3292
The Partnership: Harrah's Maryland Heights Corporation
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attention: General Counsel
Fax: (901) 762-8776
Players MH, L.P.
c/o Players International, Inc.
3900 Paradise Road
Suite 135
Las Vegas, NV 89109
Attention: Patrick Madamba, Esq.
Fax: (702) 792-9843
Notice given in any other manner will be deemed delivered when actually received
by the party to whom the notice is addressed. Any party may change its address
by giving the other parties ten days advance written notice of such change.
7.2 Successors and Assigns. The obligations of the Partnership may be
performed by one or more entities established by the Partnership for the
specific purpose of performing various aspects of the Riverboat Gaming Project;
provided, however, the Partnership will remain obligated under this Agreement.
The rights and obligations of the Partnership under this Agreement may be
assigned in connection with any sale of the Riverboat Gaming Project, or any
sale of the stock or assets of any of the Companies, or to any of HMHC, Players
MH or the Partnership and/or their affiliates. If the Riverboat Gaming Project
is transferred to a licensed gaming operator that assumes the Partnership's
obligations under this Agreement, the Partnership shall be deemed released from
all obligations under this Agreement that arise after the date this Agreement is
assigned to the new owner of the Riverboat Gaming Project. If either partner in
the Partnership assigns its interest in the Riverboat Gaming Project to the
other or an affiliate of the other, then upon the effective date of the
assignment, the assigning entity is released from all
15
<PAGE>
obligations under this Agreement and the assignee entity shall be deemed to have
assumed all of the assigning entity's obligations under this Agreement. This
Agreement is binding upon the parties and their respective successors and
assigns.
7.3 Attorneys Fees. If any party institutes litigation to enforce its
rights under or relating to a breach of this Agreement, the prevailing party
will be entitled to recover from the other party(ies) reasonable attorneys' fees
and court costs.
7.4 Governing Law. This Agreement will be construed and interpreted in
accordance with the internal laws of the State of Missouri without regard to
conflicts of law provisions.
7.5 Merger. This Agreement constitutes the complete and exclusive
statement of the agreement between the parties with respect to the development
of the Riverboat Gaming Project and the Road Project, except that the City also
remains bound by all ordinances it has passed and permits it has issued with
respect to the Riverboat Gaming Project. This Agreement sets forth in full all
of the Companies' obligations to the City, and the Companies have no obligations
that are not set forth in this Agreement. This Agreement supersedes all prior
written and oral statements, representations, communications of any type,
covenants, conditions, warranties and/or presentations by any of the Companies
with respect to the development of the Riverboat Gaming Project and any other
gaming projects in Maryland Heights, and by any of the Companies with respect to
the Road Project, and no representation, statement, communication of any type,
covenant, condition, warranty or presentation by the Companies not contained in
this Agreement shall be binding on the Companies or have any force or effect
whatsoever.
7.6 Amendments. This Agreement cannot be amended or modified except by
a written instrument signed by the City and the Partnership.
7.7 Multiple Originals. This Agreement may be executed in multiple
original counterparts. Each counterpart will be deemed an original, and when the
counterparts are taken together, they will be deemed to be one and the same
instrument.
7.8 Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability will not affect any other provision of this Agreement.
7.9 Interpretation. Where required for proper interpretation, words in
the singular will include the plural, and words of any gender will include all
genders. The descriptive headings of the Articles and Sections of this Agreement
are for convenience only and will not control or affect the meaning or
construction of any of the provisions hereof.
7.10 Default and Cure Rights. Default shall occur under this Agreement
if any party fails to perform any obligation, covenant or agreement of this
Agreement and fails to timely cure within the applicable cure period set forth
below after receiving notice specifying the obligation, covenant or agreement
which such party is believed to have failed to perform. A party will not be in
default under this Agreement unless an event that would be a default under this
Agreement is
16
<PAGE>
not cured within 90 days after the defaulting party has received written notice
from the nondefaulting party of such an event. However, such cure period will be
extended, without further action by the parties, if the nature of the event
requires additional time for the cure to be made, provided that the defaulting
party initiates cure efforts within said 90-day period and diligently pursues
such cure to completion.
The Partnership may assign, mortgage or otherwise encumber the
Riverboat Gaming Project or any interest therein, or its interests under this
Agreement, the Road Bonds, the TIF Notes, or any other instrument entered in
connection herewith. In the event of such encumbrance, at the request of any
holder of any such encumbrance ("Partnership's Lender") the City shall give the
Partnership's Lender a copy of any notice or claim of default served upon the
Partnership by the City. The City further agrees that if the Partnership shall
have failed to have cured such default within the period provided under this
Agreement, then the Partnership's Lender shall have an additional thirty (30)
days within which to cure or correct such default (or if such default cannot be
cured or corrected within that time, then such additional time as may be
necessary if the Partnership's Lender has commenced within such thirty (30) days
and is diligently pursuing the remedies or steps necessary to cure or correct
such default) before City may exercise any right or remedy which it may have on
account of any such default by the Partnership. The parties hereto agree that
upon any default hereunder by the Partnership not cured within the periods
provided herein, the City may enforce this Agreement through an action for
specific performance of the Partnership's obligations hereunder, provided that
the parties acknowledge that the Partnership's right and authority to own,
construct, lease and operate the Riverboat Gaming Project is independent of this
Agreement and that no default, City action or judgment therein shall affect the
right to own, construct, lease or operate the Riverboat Gaming Project.
7.11 Waiver. No waiver by any party of any of its rights or remedies
under this Agreement will be considered a waiver of any other or subsequent
right or remedy. No waiver by any party of any of its rights or remedies under
this Agreement will be effective unless evidenced by a written instrument
executed by the waiving party.
7.12 Force Majeure. If either the Partnership or the City is delayed,
hindered in or prevented from the performance of any act required hereunder by
reason of litigation, weather, fire, acts of God, strikes, lock-outs, inability
to procure materials, failure of power, riots, insurrection, war or the failure
of another party to this Agreement to perform an act required of it which is
required in order for the party who was prevented from acting to act and/or
other matters beyond the reasonable control of the party who is to act, then
performance of such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay, provided the January 19, 1996 deadline
in Section 2.10B may not be extended pursuant to this Section without the
written consent of the Partnership.
7.13 Third Party Beneficiaries. Harrah's Operator and the Players'
Operator, as well as any successor operator(s) of the casinos, are third party
beneficiaries of this Agreement and each may enforce the obligations of the City
hereunder.
17
<PAGE>
EXECUTED as of the date first above written.
"The City"
CITY OF MARYLAND HEIGHTS, MISSOURI
By: ________________________________
Mayor
ATTEST:
- ------------------------------
City Clerk
APPROVED AS TO FORM
- ------------------------------
City Attorney
"Partnership"
RIVERSIDE JOINT VENTURE
By Harrah's Maryland Heights
Corporation, Partnership
Partner
By:________________________
Name:______________________
Title:_____________________
By Players MH, L.P.,
Partnership Partner
By Players Maryland Heights, Inc.,
General Partner of Players MH, L.P.
By:________________________
Name:______________________
Title:_____________________
18
<PAGE>
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