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Home My WebLink About14-112 Resolution No. 14-112 RESOLUTION AUTHORIZING EXECUTION OF A THIRD AMENDMENT TO AMENDED AND RESTATED GROUND LEASE WITH ELGIN RIVERBOAT RESORT-RIVERBOAT CASINO FOR ALTERNATIVE RENT CALCULATION AND TO ADD TERM OPTIONS TO THE LEASE AGREEMENT BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby authorized and directed to execute a Third Amendment to Amended and Restated Ground Lease Agreement on behalf of the City of Elgin with Elgin Riverboat Resort-Riverboat Casino for alternative rent calculation and to add term options to the lease agreement, a copy of which is attached hereto and made a part hereof by reference. s/David J. Kaptain David J. Kaptain, Mayor Presented: August 13, 2014 Adopted: August 13, 2014 Vote: Yeas: 6 Nays: 2 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk THIRD AMENDMENT TO AMENDED AND RESTATED GROUND LEASE THIS THIRD AMENDMENT to Amended and Restated Ground Lease (this "Third Amendment") is made by and between the City of Elgin, Illinois, an Illinois municipal corporation ("Landlord"), and Elgin Riverboat Resort — Riverboat Casino, an Illinois joint venture, doing business as Grand Victoria Casino ("Tenant") and is effective for all purposes as of the 13 day of August, 2014. RECITALS WHEREAS, Landlord and Tenant have entered into to that certain Amended and Restated Ground Lease effective January 20, 1994 (the "Ground Lease"), which was subsequently amended by that certain First Amendment to Amended and Restated Ground Lease dated September 8, 1999 (the "First Amendment"), and further amended by that certain second amendment to amended and restated ground lease agreement dated November 19, 2013 (the "Second Amendment") (the Ground Lease, the First Amendment and the Second Amendment are collectively referred to as the "Lease"); WHEREAS, pursuant to the Lease, the Basic Term, as therein defined, began on January 20, 1994 and ended on October 31, 2004, and, by option of Tenant, has since been extended by three separate five year increments, with the first option extending the Lease from October 31, 2004 to October 31, 2009, the second option extending the Lease from October 31, 2009 through October 31, 2014, and the third option extending the Lease from October 31, 2014 through October 31, 2019; and WHEREAS, the Lease contemplates only one additional five year extension to the Basic Term; WHEREAS, the gaming market and the competitive environment in State of Illinois have experienced significant change since the Tenant and Landlord entered into the Lease and continue to evolve. NOW THEREFORE, in consideration of (i) the foregoing, (ii) the longstanding relationship of the Landlord and Tenant, (iii) the Tenant's and Landlord's mutual desire to create greater certainty for both parties as of the date of this Third Amendment and (iv) other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant have agreed to enter into this Third Amendment on the terms and conditions hereinafter provided. 1. Effective January 1, 2015, Section 2 of the Lease is hereby amended to make clear that Tenant will and pay Landlord annual rent in an amount equal to the lesser of: "A. Consistent with the calculation of rent amounts prior to the effective date of this Third Amendment, the sum of Basic Rent and Percentage Rent as defined in Sections 2B and 2C of the Lease; or B. One million dollars ($1,000,000), as increased by the CPI Index Adjustment set forth below. (i) CPI Index Adjustment: Beginning on April 1, 2016, and on every April 1 thereafter for the duration of the Lease, the amount in Subsection B above will be increased by initially taking the amount now appearing in Subsection B, and thereafter, the amount resulting from the previous Subsection B CPI Index Adjustment and adjusting such amount by the percentage changes in the "Consumer Price Index" for All Urban Consumers - All Items, Seasonably Adjusted (1982-84 = 100) ("CPI-U") published by the Bureau of Labor Statistics of the United States Department of Labor for the calendar year since the previous CPI Index Adjustment. For reference, the CPI-U for December 2013 was 234.582. Notwithstanding anything to contrary contained in the foregoing, in no event will the amount of the rent be decreased pursuant to a CPI Index Adjustment. (ii) If official publication of the CPI-U number that would otherwise be used pursuant to this Lease has been delayed and not published as of the date the CPI Index Adjustment is to be made in any year during the term of this Lease, then, in the interim, until such CPI-U number is officially published the Tenant shall continue to pay the rent as paid in the preceding year. When such CPI-U number is officially published, the determination shall be made as though such CPI-U had been officially published as of April 1 of the year in question and the adjusted rent so determined shall be applied retroactively and prospectively for the remainder of such year of the Lease term. (iii) In the event the applicable CPI-U is discontinued by the Bureau of Labor Statistics, the parties shall use a successor index thereto for the CPI Index Adjustment. If the Bureau of Labor Statistics, or a successor agency thereto, discontinues the CPI-U and does not create a successor index thereto, the parties shall utilize a substantially similar index then in existence which is convertible to the CPI-U, 1982-84 equals 100, through the use of conversion tables, for the purposes of determining the CPI Index Adjustment for future rent increases during the remaining term of this Lease. 2. Effective January 1, 2015, the terms "Basic Rent" and "Percentage Rent" used throughout the Lease shall mean and be construed as the lesser of the Basic Rent and the Percentage Rent as defined in Sections 2B and 2C of the Lease prior to this Third Amendment or the alternative amount of rent of $1,000,000 as increased by the CPI Index as described in Section 1B above in this Third Amendment. 2 3. Section 3 of the Lease is hereby amended by amending the first sentence of subsection A thereof to read as follows: "Notwithstanding anything to the contrary in this Lease, it is agreed and understood that a condition of this Lease is that Tenant continue to operate its adjacent Riverboat Gambling Operation. Tenant's lease and use of the Demised Premises and Improvements is subject to and contingent upon the Tenant conducting its adjacent Riverboat Gambling Operation and Tenant's use and occupancy of the Demised Premises and the Improvements thereon shall be limited to the operation of its entertainment and support facilities for and in conjunction with the adjacent Riverboat Gambling Operation and for no other purposes." 4. Section 4E of the Lease is hereby amended to read as follows: "Notwithstanding anything to the contrary contained above, Tenant's use of the Demised Premises and Improvements shall be limited to the operation of its entertainment and support facilities for and in conjunction with the adjacent Riverboat Gambling Operation and for no other purposes." 5. Section 16 of the Lease is hereby amended by adding to subsection A thereof new subparagraphs (vi) and (vii)thereto to read as follows: "(vi) Except in the event of a temporary suspension of Riverboat Gambling Operations due to the occurrence of a Force Majeure event, failure by the Tenant to continue to operate its adjacent Riverboat Gambling Operation. (vii) Use of the Demised Premises and the Improvements thereon for a use other than operation of Tenant's entertainment and support facilities for and in conjunction with the adjacent Riverboat Gambling Operation." 6. Section 25 entitled "Renewal Options" is hereby amended by amending subparagraph A thereof to read as follows: "A. Provided that Tenant has not been in material default hereunder, Tenant shall have the right to renew this Lease for ten (10) successive terms of five (5) years each." 7. Except as expressly modified by this Third Amendment, the Lease remains in full force and effect. This Third Amendment may be executed in counterparts, both of which shall be considered one and the same agreement and shall become effective when both counterparts have been signed by each of the parties and delivered to the other parties. 3 IN WITNESS HEREOF and intending to be bound, the parties have caused this Third Amendment to be executed by their duly authorized representatives on the date and year first written above. CITY OF ELGIN, a municipal ELGIN RIVERBOAT RESORT- corporation RIVERBOAT CASINO, an Illinois general partnership BY By: Illinois RBG, LLC, M r Its general partner By: City Clerk B Jeff Ehlers, President FALegal Dept\Agreement\Elgin Riverboat Agrs\Ground Lease-Riverboat-Third Amendment-clean-7-25-14.docx 4