LEASE ACKNOWLEDGMENT, ASSUMPTION AND FOURTH LEASE AMENDMENT
AGREEMENT
THIS LEASE ACKNOWLEDGMENT, ASSUMPTION AND FOURTH LEASE AMENDMENT
AGREEMENT ("Agreement"), dated as of February 11, 1998 (the "Effective Date"),
is entered into by and among PIONEER ASSOCIATES LIMITED LIABILITY COMPANY, a
Nevada limited liability company ("Pioneer"), BWBH, INC., a Delaware
corporation ("BWBH"), and XXXXXX X. XXXXX AND XXXXXXX X. XXXXX (collectively,
"Lessor").
R E C I T A L S:
Lessor and Wild Card Casino, Inc., a Colorado corporation
("Wild Card") entered into a Lease dated March 17, 1992 (the "Original
Lease") by which Lessor leased to Wild Card the premises located at 000
Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxx, more particularly described as Lots
3 and 4, Block 29, in the City of Black Hawk, County of Xxxxxx, Colorado,
together with all improvements thereon and appurtenances thereto (the
"Premises"). Capitalized words not otherwise defined herein have the
meaning set forth in the Lease.
A. On or about March 24, 1992, Wild Card, for good and valuable
consideration, assigned all of its interest in the Lease to Pioneer
Group, Inc., a Nevada corporation ("Pioneer Group").
B. On or about June 9, 1992, Pioneer Group, for good and valuable
consideration, assigned all of its interest in the Lease to Pioneer.
C. By (i) that certain Agreement and Amendment to Lease dated
June 19, 1992 ("First Lease Amendment"), (ii) that certain Second
Agreement and Amendment to Lease dated May 17, 1993 ("Second Lease
Amendment") and (iii) that certain Third Agreement and Amendment to
Lease dated May 1, 1994 ("Third Lease Amendment"), Lessor and Pioneer
modified the Lease in certain respects. The Original Lease, First Lease
Amendment, Second Lease Amendment and Third Lease Amendment shall
hereinafter collectively be referred to as the Lease.
D. Pioneer desires to sell, and BWBH desires to purchase, certain
of Pioneer's assets which it owns and operates on the Premises (the
"Asset Sale and Purchase") as set forth in that certain Asset Purchase
Agreement by and between Pioneer and Colorado Gaming & Entertainment
Co., a Delaware corporation ("CGE") dated December 10,
1997 ("Asset Purchase Agreement"), as such Asset Purchase Agreement has
been assigned by CGE to BWBH.
E. In connection with the Asset Sale and Purchase, Pioneer
desires to assign to BWBH Pioneer's rights as lessee under the Lease and
BWBH desires to assume Pioneer's obligations under the Lease.
F. Pioneer and BWBH desire to obtain Lessor's consent to the
assignment of the Lease and Lessor has agreed to permit and consent to
the assignment, subject to the terms and conditions of this Agreement.
G. BWBH and Lessor also desire to modify the Lease in certain
respects, to be effective upon BWBH's and Pioneer's closing of the Asset
Sale and Purchase, as set forth herein.
NOW THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. ASSIGNMENT. Upon the closing of the Asset Sale and Purchase, as
evidenced by the execution and delivery of an assignment and assumption
agreement attached hereto as EXHIBIT A ("Assignment and Assumption Agreement"),
Pioneer will assign and transfer to BWBH all of Pioneer's right, title and
interest as tenant in and to the Lease, for the duration of the term of the
Lease, as such term may be extended, which Assignment and Assumption Agreement
will be dated as of and effective upon the date that Pioneer and BWBH close
the Asset Sale and Purchase ("Closing Date").
2. ASSUMPTION. Upon the closing of the Asset Sale and Purchase, BWBH
will, in the Assignment and Assumption Agreement, accept the terms of this
Agreement and assume and be bound by all obligations of Pioneer as tenant,
including the payment of all rent and other sums and performance of all
covenants of Pioneer as tenant pursuant to the Lease, as modified herein. In
addition, BWBH shall assume Pioneer's obligations under and be bound by the
terms and conditions of the Agreement dated May 1, 1994 between KDL, Inc.,
Lessor and Pioneer ("Wall Agreement").
3. CONSENT. Subject to the terms and conditions of this Agreement,
Lessor hereby consents to the assignment of the Lease by Pioneer to BWBH,
which consent shall be effective upon the Closing Date. All of the parties
agree that BWBH and Pioneer may record the Assignment and Assumption Agreement
and Lessor's consent thereto in the real property records of the Clerk and
Recorder of Xxxxxx County, Colorado.
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4. RELIANCE ON THIS AGREEMENT. BWBH will consummate the transactions
set forth in the Asset Purchase Agreement in reliance upon Lessor's and
Pioneer's representations, agreements and covenants contained herein, and but
for such representations, agreements and covenants of Pioneer and Lessor as
contained herein, BWBH will not consummate the transactions set forth in the
Asset Purchase Agreement with Pioneer; provided, however, that Lessor is not
responsible for the representations, agreements and covenants of Pioneer.
5. VALID AGREEMENT. The Lease is a valid agreement between Lessor and
Pioneer. The copy of the Lease attached hereto as EXHIBIT B is a true and
correct reproduction of the Lease and constitutes the entire agreement between
Lessor and Pioneer, except as modified herein.
6. NO DEFAULTS. For purposes of this Agreement only, there are no
uncured defaults by Lessor, Wild Card, Pioneer Group or Pioneer under the
Lease. Wild Card, Pioneer Group and Pioneer have paid all rent due to Lessor
under the Lease through the Effective Date. To Lessor's and Pioneer's
knowledge, there are no conditions or events, either with the giving of notice
or lapse of time, or both, which would be treated or constitute defaults of
Lessor, Wild Card, Pioneer Group or Pioneer with respect to any of their
obligations under the Lease. Lessor agrees to notify BWBH of any default
under the Lease subsequent to the date hereof of which Lessor becomes aware.
7. TERM. The current term of the Lease will expire on September 17,
2022 (the "Term").
8. RENT. Notwithstanding any provisions in the Lease to the contrary,
upon the closing of the Asset Sale and Purchase and commencing upon the
Closing Date, BWBH shall pay to Lessor (i) $35,000.00 per month as fixed
monthly rent ($10,000 more per month than the amount Pioneer currently pays
under the Lease), to be increased by the Denver/Boulder Consumer Price Index
for all urban consumers and all items or other similar consumer price index in
the event that such Denver/Boulder Consumer Price Index is unavailable (the
"CPI"), as provided in, and calculated in accordance with, Section 9 of the
Second Lease Amendment, including without limitation, the calculation of such
CPI increase on an annual basis, with the increases not to exceed 2% per year
and the CPI increase to commence May 17, 1998; and (ii) the same Percentage
Rent as provided for in the Lease, which is that amount equal to 40% of the
Net Win (as defined in the Lease) of the gaming operations conducted on the
Premises. Lessor acknowledges and agrees that the amount of gaming taxes
described in Section 3(c)(iii) of the Lease which are used to calculate the
Net Win amount shall equal the revenues from the gaming devices on the
Premises multiplied by the gaming tax rate which BWBH is obligated
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to pay on the revenues from the gaming devices on the Premises plus the
revenues from the gaming devices on the premises which will be connected to
the Premises, and which Premises are depicted in Exhibit C, and which premises
are also depicted in Exhibit C attached hereto and incorporated herein by this
reference.
9. SECURITY DEPOSIT. Upon the closing of the Asset Sale and Purchase,
BWBH shall pay $150,000 as a security deposit under the Lease (the "Security
Deposit") to Clear Creek-Xxxxxx County Abstract & Title Co. ("Escrow Agent")
to be held in an interest-bearing account by Escrow Agent. Upon each
anniversary of the Closing Date for the five (5) successive years subsequent
to the Closing Date, Escrow Agent shall return to BWBH 20% of the Security
Deposit, or $30,000, plus all interest earned thereon. The security deposit
shall secure BWBH's full and faithful performance under the Lease, including
but not limited to, the payment of all rents owed to Lessor. Lessor shall
give notice to BWBH of any default under or breach of the Lease. If BWBH has
not cured any such default or breach within thirty (30) days from the date of
notice, Lessor shall be entitled to payment of any amounts held by the Escrow
Agent in an amount equal to any rent due and owing under the Lease, or if such
default or breach is other than the nonpayment of rent, the damages reasonably
claimed by Lessor to be caused by the default or breach by BWBH. This remedy
shall be in addition to any and all other rights and remedies that Lessor may
have under the Lease and applicable law, and withdrawal of any such security
deposit by Lessor shall not prejudice any other such rights and remedies of
Lessor.
10. GAMING LICENSURE. If the Colorado Limited Gaming Control Commission
("Commission") deems it necessary, because of the Percentage Rent paid to
Lessor under the Lease and hereunder, for Lessor to obtain gaming licensure,
Lessor acknowledges and agrees that such gaming licensure shall be its
responsibility and obligation, and Lessor will indemnify and hold BWBH
harmless from and against and all claims, damages, liabilities and losses
arising from Lessor's failure to obtain gaming licensure upon the Commission's
directive or their obligation under Commission rules or regulations to obtain
same. In the event that the Commission determines that licensure of the
Lessor is necessary, and such determination prevents the payment of Percentage
Rent to Lessor, BWBH shall pay any Percentage Rents otherwise due under the
Lease into an interest-bearing escrow account pending receipt of such license
or other determination that such license is not necessary, or pending other
arrangements satisfactory to the Commission, provided that, in any event, such
Percentage Rents are the sole responsibility of Lessor.
11. NO LIABILITY FOR LEASE BONUS AND OTHER AMOUNTS. Upon the closing of
the Asset Sale and Purchase, the parties acknowledge and agree that BWBH shall
not be liable for (i) payment of any portion
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of the Lease Bonus described in Section 3 of the Original Lease and Section
1(b) of the First Lease Amendment; (ii) any payments due under that certain
promissory note evidencing the Lease Bonus debt as described in Section
1(b)(2) of the First Lease Amendment; (iii) any of the amounts set forth in
Section 1 of the First Lease Amendment; (iv) any of the Obligation amounts set
forth in Section 1 of the Second Lease Amendment; and (v) the additional
consideration amounts set forth in Section 10 of the Second Lease Amendment.
12. NO LIABILITY FOR PERFORMANCE OF LEASE AS TO OBLIGATION. Pioneer's
Obligation to Lessor for past due rent set forth in Section 1 of the Second
Lease Amendment shall remain the sole responsibility and obligation of
Pioneer, and BWBH's performance or nonperformance under the Lease shall not
operate to extinguish the Obligation or cause BWBH to become liable for the
Obligation.
13. GAMING DEVICES SECURITY INTEREST. Upon the closing of the Asset Sale
and Purchase, the terms and provisions of Section 13 of the Second Amendment
shall be deleted in their entirety.
14. EMPLOYMENT. Upon the closing of the Asset Sale and Purchase, the terms
and provisions of Section 32 of the Original Lease and Section 4 of the Second
Lease Amendment shall be deleted in their entirety.
15. ABATEMENT OF PERCENTAGE RENT DURING CONSTRUCTION PERIOD. Lessor
understands and agrees that commencing on the Closing Date, BWBH shall cease
operations of its casino business on the Premises for an approximate 90 day
period following the Closing Date ("Construction Period") in order to
undertake construction, remodeling and renovation work in the Premises,
subject to the terms and conditions of the Lease, including, but not limited
to Paragraph 9 of the Original Lease. The parties understand and agree that
Lessor has previously approved BWBH's construction plans for the Premises, in
the form attached hereto as EXHIBIT D. Notwithstanding Section 8 of this
Agreement, BWBH shall not be required to pay any Percentage Rent during the
Construction Period. The parties understand and agree that BWBH's obligation
to pay Percentage Rent shall commence upon BWBH's opening of its casino
business on the Premises. Notwithstanding the foregoing, if BWBH has not
commenced gaming operations within one hundred twenty (120) days following the
Closing Date, BWBH shall pay Lessor the amount of Four Hundred Dollars
($400.00) per day as liquidated damages, the actual amount of damages to
Lessor from such delay being difficult to ascertain. BWBH shall continue to
pay all monthly fixed rent amounts owing to Lessor during the Construction
Period. BWBH shall indemnify and hold Lessor harmless from any and all
damages, liabilities, losses and claims, including reasonable attorneys' fees,
arising out of any physical damage to the Premises
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caused by BWBH's construction, remodeling and renovation work on the Premises.
BWBH agrees that at the end of the Lease Term, as such Term may be extended,
BWBH shall rebuild the wall which connects the Premises to the adjoining
premises and shall return the Premises to its present condition as a
freestanding building. BWBH shall execute a memorandum regarding its
obligations to rebuild such wall and the wall that is subject of the Agreement
between KDL, Inc., Lessor and Pioneer dated May 1, 1994 in a form acceptable
to the City of Black Hawk. In order to secure BWBH's obligations to rebuild
the walls separating the Premises from adjoining properties, BWBH shall pay
Lessor, beginning January 1 of the second to last year of the Term, five
percent (5%) of the base rent payable during the last two (2) years of the
Term, which amounts shall be held by Lessor in escrow, without interest, and
shall be returned to BWBH upon returning such walls to their original
condition as near as is reasonably possible. In the event that BWBH fails to
so rebuild such walls, such amounts held in escrow shall be the sole property
of Lessor. This remedy shall be in addition to, and shall not prejudice, any
other right or remedy Lessor may have regarding such walls.
16. CONSENT OF LESSOR TO STRUCTURAL IMPROVEMENTS. The parties agree to
amend Paragraph 9(b) of the Original Lease to require that any improvements or
alterations to the structure of the Premises shall require the prior written
approval of Lessor regardless of the cost of such improvements or alterations.
17. OPTION TO EXTEND LEASE TERM. Lessor agrees that following the
Closing Date, and prior to the expiration of the Term of the Lease, provided
that BWBH is not then in default, BWBH shall have the option to extend the
Term for an additional period beginning on September 17, 2022 and ending on
July 31, 2024, with BWBH paying the same fixed monthly rent and Percentage
Rent as BWBH paid Lessor during the Term, as set forth in Section 8 herein.
BWBH shall exercise its option to extend the Term by giving Lessor written
notice not less than 180 days prior to the expiration of the Term.
18. BWBH'S LENDERS' SECURITY INTERESTS. Lessor understands and agrees
that, upon the closing of the Asset Sale and Purchase, BWBH shall subject
BWBH's leasehold interest in the Premises to two deeds of trust which shall be
subject to the Lease and this Agreement. The two deeds of trust secure BWBH's
indebtedness to BWBH's senior secured lenders which have rights to security
interests to after-acquired property, including leasehold interests, of BWBH,
in accordance with the loan agreements between BWBH and the senior secured
lenders and will in no event encumber Lessor's interest in the Real Property.
19. ASSIGNMENT. BWBH may not assign any of its obligations under the
Lease and this Agreement without the prior written
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consent of Lessor, which consent shall not be unreasonably withheld.
20. FURTHER ASSURANCES. On the Closing Date, Lessor and Pioneer agree
to recertify that the representations contained in this Agreement are true and
correct as of the Closing Date and that the covenants and agreements contained
in this Agreement are in full force and effect through the Closing Date.
Also, on the Closing Date, Lessor agrees to execute a consent to the
assignment of the Lease by Pioneer to BWBH in a form acceptable to Lessor.
21. NOTICES. Upon the closing of the Asset Sale and Purchase, the address
for notice to Lessee under Section 27 of the Original Lease shall be amended as
follows:
BWBH, Inc.
c/o Xxxx X. Xxxxx, Esq.
00000 X. Xxxxxx Xxx.
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
22. COUNTERPARTS. This Agreement may be executed in several
counterparts each of which shall be an original and all of which, when taken
together, shall constitute one instrument notwithstanding that all parties
have not executed the same counterpart. The parties agree that signatures
transmitted by facsimile shall be binding as if they were original signatures.
23. ENTIRE AGREEMENT. The Original Lease, First Amendment, Second
Amendment, Third Amendment, Wall Agreement and this Agreement constitute the
entire agreement between the parties. This Agreement supersedes all written
or oral representations and/or negotiations made by and between the parties
leading up to this Agreement. Except as the Lease is expressly amended by
this Agreement, the Lease shall continue in full force and effect.
24. AMENDMENT. This Agreement may be amended only in writing signed by
the parties to the Agreement affected thereby.
25. ATTORNEYS' FEES AND COSTS. The prevailing party in any action
including but not limited to, any judicial action, mediation and/or
arbitration, brought to interpret or enforce this Agreement and the Lease
shall be entitled to an award of that party's attorneys' fees and costs
against the other party or parties.
26. JURISDICTION, VENUE AND GOVERNING LAW. Jurisdiction and venue of
any action brought to interpret or enforce this Agreement shall be solely in
the state courts of Xxxxxx County, State of Colorado. This Agreement shall be
governed by the laws of the State of Colorado.
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27. NO WAIVER. No waiver by Lessor of any breach or default by Wild
Card, Pioneer Group or Pioneer of any obligations, agreements or covenants
under the Lease shall be a waiver of any subsequent breach or of any
obligation, agreement or covenant, nor shall any forbearance by Lessor in
seeking a remedy for any breach or default by Wild Card, Pioneer Group or
Pioneer be a waiver of Lessor of any rights or remedies with respect to such
or any subsequent breach or default, except as expressly provided in any
written amendment to the Lease.
28. BINDING EFFECT. This Agreement is binding on the parties and their
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the
dates below, to be effective as of the Effective Date.
Pioneer:
PIONEER ASSOCIATES LIMITED LIABILITY COMPANY, a
Nevada limited liability company, By Pioneer
Group, LLC, Manager
By: /s/ X. Xxxxxx
----------------------------------
Title: Agent
-------------------------------
Date: 2-10-98
--------------------------------
State of Colorado )
) ss.
County of Xxxxxx )
The foregoing instrument was acknowledged before me this 10th day of
February, 1998, by X. Xxxxxx of Pioneer Associates Limited Liability Company,
a Nevada limited liability company.
Witness my hand and official seal.
My commission expires Sept. 1, 2000.
/s/ R.H.S. French
------------------------------
Notary Public
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BWBH:
BWBH, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxx
----------------------------------
Title: Vice President and Secretary
-------------------------------
Date: February 11, 1998
--------------------------------
State of Colorado )
) ss.
County of Denver )
The foregoing instrument was acknowledged before me this 11th day of
February, 1998, by Xxxx X. Xxxxx as V.P. and Secretary of BWBH, INC., a
Delaware corporation.
Witness my hand and official seal.
My commission expires Sept. 1, 2000.
/s/ R.H.S. French
------------------------------
Notary Public
Lessor:
/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
Date: February 11, 1998
--------------------------------
State of Colorado )
) ss.
County of __________)
The foregoing instrument was acknowledged before me this ___________ day of
____________________, 1998, by Xxxxxx X. Xxxxx.
Witness my hand and official seal.
My commission expires ______________________________________.
------------------------------
Notary Public
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/s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
Date: February 11, 1998
--------------------------------
State of Colorado )
) ss.
County of ___________)
The foregoing instrument was acknowledged before me this ___________ day of
____________________, 1998, by Xxxxxxx X. Xxxxx.
Witness my hand and official seal.
My commission expires ______________________________________.
------------------------------
Notary Public
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