Exhibit 10.5


 


SUBLEASE


 


(Sunset
Station)


 


THIS SUBLEASE,
made as of the 7th day of November, 2007, by and between
STATION CASINOS, INC., a Nevada corporation (“Sublessor”), as Sublessor, and Sunset
Station, Inc., a Nevada corporation (“Sublessee”), as Sublessee.


 


W  I  T  N  E
S  S  E  T  H:


 


WHEREAS, under
that certain Master Lease Agreement (as the same may be amended from time to
time, the “Master Lease”) dated as of even date herewith, by and between FCP
PropCo, LLC, a Delaware limited liability company (“Master Landlord”), as
landlord, and Sublessor, as tenant, Master Landlord leased to Sublessor all of
Master Landlord’s right title and interest in and to certain land, improvements
and fixtures located in Clark County, Nevada (the “Master Leased Property”) as
more particularly described therein; and


 


WHEREAS,
Sublessor has agreed to sublet a portion of the Master Leased Property to
Sublessee upon and subject to the terms, covenants, conditions and provisions
hereinafter set forth.


 


NOW,
THEREFORE, in consideration of the foregoing recitals which are incorporated
herein by reference, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublessor and Sublessee hereby
agree as follows:


 


1.             Sublessor hereby
represents and warrants that:


 


(a)           attached hereto as Exhibit A
is a true copy of the Master Lease (including all amendments and other
modifications as of the date hereof); and


 


(b)           the Master Lease is in
full force and effect, Sublessor is not in default thereunder, and no event has
occurred, which, with the passage of time or the giving of notice, or both,
would constitute a default by Sublessor thereunder.


 


2.             Sublessor, as
sublessor, hereby sublets to Sublessee, as sublessee, and Sublessee hereby
sublets from Sublessor that portion of the Master Leased Property located in
the County of Clark, State of Nevada, more particularly described on Exhibit
B attached hereto (collectively, the “Subleased Property”).


 


3.             This Sublease shall
be for a term (the “Sublease Term”) commencing on the date hereof (the “Commencement
Date”), and ending on the expiration of the Term under the Master Lease;
provided that, subject to the rights of Master Landlord under Section 6(d)
below, the term of this Sublease shall end on the earlier of the expiration or
termination of Sublessor’s interest in the Subleased Property under the Master
Lease. Sublessee is in possession of the Subleased Property and accepts the
same in its “AS IS” condition on the Commencement Date.


 

















 


4.             Except as expressly
modified herein, all of the terms, covenants, conditions and provisions
contained in the Master Lease (other than the first paragraph of Section 3.1
and Sections 10.1, 11.1, 11.2, 12.4), together with all Exhibits and Schedules
attached thereto (other than Schedule 3.1(d)), are hereby incorporated into
this Sublease by reference. (Said terms, covenants, conditions, provisions and
schedules are sometimes hereinafter referred to as the “incorporated provisions
of the Master Lease.”)  For purposes of
integrating the incorporated provisions of the Master Lease into this Sublease,
references to “Landlord” in the Master Lease shall signify and apply to
Sublessor, references to “Tenant” in the Master Lease shall signify and apply
to Sublessee, references to “Leased Property” in the Master Lease shall signify
and apply to the Subleased Property, and references to “this Lease” in the
Master Lease shall signify and apply to this Sublease. Notwithstanding the
foregoing, all references to “Landlord’s Debt,” Landlord’s Lender,” “Landlord’s
Loan Documents,” “Lease Shortfall Reserve Period” and “Tenant Security Period”
shall not signify or apply to Sublessor but shall retain the meanings set forth
in the Master Lease. All references to “Rent” and “rental” in the incorporated
provisions of the Master Lease shall herein mean the rental payable pursuant to
Section 7 hereof.


 


5.             (a)           Sublessor and Sublessee hereby assume and
agree to perform and be bound by each and all of the terms, covenants and
conditions in the incorporated provisions of the Master Lease, on the part of
Sublessor to be kept and performed and Sublessor and Sublessee each agree to
indemnify, defend and hold the other harmless from and against all claims,
costs, damages, demands, expenses (including reasonable attorneys’ fees, costs
and expenses whether or not an action, suit or proceeding is brought),
liability and loss arising out of or resulting from any breach by such party in
the performance of the foregoing covenant.


 


(b)           Except as herein
otherwise specifically provided with respect to payment of Rent or additional
rent under the Master Lease, which Sublessor specifically agrees to timely pay
and perform, Sublessee shall assume and discharge all of the undertakings and
obligations of Sublessor under the Master Lease with respect to the Subleased
Property as fully and completely as though it were the lessee under the Master
Lease, and any failure by Sublessee to perform and discharge such undertakings
and obligations with respect to the Subleased Property shall be deemed to be a
default by Sublessee hereunder. In addition to the foregoing agreement by
Sublessor to timely pay rent and additional rent under the Master Lease,
Sublessor agrees not to take any action that would constitute a default, breach
or surrender under the Master Lease. Sublessee shall be entitled to exercise,
either separately or jointly with Sublessor, all the rights and benefits
conferred upon Sublessor under the Master Lease with respect to the Subleased
Property and in the event of any failure on the part of the Master Landlord
under the Master Lease to carry out and discharge any of its undertakings and
obligations thereunder, Sublessee shall be entitled to take any and all action
which Sublessor would be entitled to take, and such action may be taken by
Sublessee in either its own name or in the name of Sublessor.


 


6.             Anything herein to
the contrary notwithstanding, it is expressly understood and agreed by
Sublessor and Sublessee to the following:


 

















 


(a)           this Sublease is
subject and subordinate to all of the terms and conditions of the Master Lease
and Landlord’s Loan Documents;


 


(b)           the use of the
Subleased Property shall not conflict with Landlord’s Loan Documents, any Legal
Requirement, Property Document, Insurance Requirement or other provision of the
Master Lease;


 


(c)           Sublessee shall be
permitted to further sublet all or any part of the Subleased Property, assign
or Transfer the Sublease only insofar as the same would be permitted if it were
a sublease, assignment or Transfer by Sublessor under the Master Lease;


 


(d)           that, in the event of
cancellation or termination of the Master Lease for any reason whatsoever or of
the surrender of the Master Lease (whether voluntary, involuntary or by
operation of law) prior to the expiration date of the Sublease, including
extensions and renewals granted hereunder, then, at Master Landlord’s option,
Sublessee shall make full and complete attornment to Master Landlord for the
balance of the term of the Sublease, which attornment shall be evidenced by an
agreement in form and substance satisfactory to Master Landlord and which
Sublessee shall execute and deliver within thirty (30) days after request by
Master Landlord and Sublessee shall waive the provisions of any law now or
hereafter in effect which may give Sublessee any right of election to terminate
the Sublease or to surrender possession in the event any proceeding is brought
by Master Landlord to terminate the Master Lease, and


 


(e)           in the event Sublessee
receives a written notice from Master Landlord stating that an Event of Default
exists under the Master Lease, Sublessee shall thereafter be obligated to pay
all rentals accruing under this Sublease directly to Master Landlord (or
Landlord’s Lender if Master Landlord shall so direct); all rentals received
from Sublessee by Master Landlord shall be credited against the amounts owing
by Sublessor under the Master Lease.


 


7.             Sublessee hereby
covenants to pay Sublessor, in lawful money of the United States of America
which shall be legal tender for the payment of public and private debts, at an
account designated by Sublessor (the “Sublease Designated Account”),
without demand, deduction, or set-off, 
annual base rent for the Subleased Property in the amounts set forth on Exhibit
C attached hereto (the “Sublease Base Rent”). The Sublease Base Rent
shall be payable in advance in twelve (12) equal installments, on the day that
is the third (3rd) Business Day preceding the fifteen (15th)
day of each calendar month of the Sublease Term (the “Sublease Rent Payment
Date”). The Sublease Base Rent shall be paid for the period of the
fifteenth (15th) of each month (or, if applicable, the Commencement
Date) through the fourteenth (14th) of the next month (or, if applicable, the
expiration of the Sublease Term) (each, a “Sublease Rental Period”), provided that the first and last payments of Sublease Base
Rent shall be prorated as to any partial Sublease Rental Period, based on the
number of days within the Sublease Term during such Sublease Rental Period and
the number of days in such Sublease Rental Period. Sublessee hereby agrees to
make any reasonable changes with respect to the definitions of “Sublease Rent
Payment Date” or “Sublease Rental Period,” including, without limitation,
changing the Sublease Rent Payment Date and Sublease Rental Period, to conform
with changes to the terms “Rent 


 

















 


Payment Date” and “Rental Period” under the
Master Lease. The first installment payment of Sublease Base Rent has been made
as of the date hereof. The second installment shall be payable on November 12,
2007, for the Sublease Rental Period beginning November 15, 2007 and ending December
4, 2007. Notwithstanding the above, if Sublessor is in default in the payment
of rent under the Master Lease and upon notice by Master Landlord to Sublessor
and Sublessee, Master Landlord may require all rent and additional rental
payable by Sublessee hereunder to be paid directly to Master Landlord or its
agent, successor or assign. Any rent or rental so paid by Sublessee shall be
credited to the rent or additional rental then due and payable from Sublessor
under the Master Lease.


 


8.             In addition to the
Sublease Base Rent payable hereunder in accordance with Section 7 hereof,
Sublessee hereby agrees to pay additional rental relating to the Subleased
Property as required under the provisions of the Master Lease. Sublessor shall
deliver to Sublessee copies of all calculations of Taxes and Other Charges
relating to the Subleased Property received from Master Landlord under the
Master Lease.


 


9.             All notices, demands,
requests, consents, approvals and other communications (hereafter, “Notices”)
by or between Sublessee and Sublessor under or in connection with this Sublease
and the Subleased Property shall at the same time be delivered by the sending
party to Master Landlord. Similarly, all Notices by or between Sublessor and
Master Landlord under or in connection with the Master Lease and the Subleased
Property, including without limitation any Notice relating to the occurrence of
a Noticed Default, Event of Default, Lease Shortfall Reserve Period or Tenant
Security Period shall at the same time (or promptly after receipt by Sublessor)
be delivered by Sublessor to Sublessee.


 


10.           Subject to the
representations and warranties of Sublessor in Section 1 hereof, Sublessee
hereby agrees that it is leasing the Subleased Property from Sublessor “AS IS”
without representation or warranty, express or implied, as to the
merchantability or fitness of the Subleased Property for a particular purpose.


 


11.           Sublessor and Sublessee
each hereby represent and warrant to each other that it has not entered into
any agreement or done any other act which might result in the obligation to pay
a sales or brokerage commission or finder’s fee with respect to this
transaction. Sublessor and Sublessee each agree to indemnify, defend and hold
the other parties and Master Landlord harmless from and against any claims,
costs, damages, demands, expenses (including without limitation reasonable
attorneys’ fees and costs whether or not an action, suit or proceeding is
brought), liability or loss which the other parties may sustain because or by
reason of any material breach of or inaccuracy in the foregoing representation
and warranty.


 


12.           During the Sublease
Term, Sublessee shall maintain or cause to be maintained the insurance required
under Section 10.1 of the Master Lease with respect to the Subleased Property
except as specifically provided herein. All coverage provided in the
incorporated provisions of the Master Lease shall be maintained for the limits
specified thereunder and shall provide coverage for the mutual benefit of
Sublessor and Sublessee. All policies of insurance shall name Master Landlord
and Landlord’s Lender (if any) and their successors and assigns as additional
insureds or loss payees (except that in the case of general liability
insurance, Master Landlord and Landlord’s Lender shall be named as additional
insureds


 

















 


and not a loss payee) and conform to the
requirements for policies of insurance under Section 10.1 of the Master Lease.


 


13.           Sublessee hereby agrees
to cooperate with Sublessor and Master Landlord and to execute any and all
instruments reasonably requested by Sublessor and Master Landlord (including,
if necessary, the execution of an amendment to this Sublease), in the
establishment and maintenance of reserve accounts and cash management
procedures reasonably requested by any Landlord’s Lender in connection with
Landlord’s Loan Documents (the “Cash Management Procedures”). For the
avoidance of doubt, such Cash Management Procedures shall not affect Sublessee’s
internal procedures for handling cash in conjunction with gaming operations or
complying with, and being subject to, applicable Gaming Laws. Without limiting
the foregoing, Sublessee shall maintain with respect to the Subleased Property
a reserve (the “Sublease FF&E Reserve”) for capital and FF&E
expenditures in the amount of 2.5% of gross revenues derived from operations of
such Subleased Property (including, without limitation, from operations of the hotel
and casino components of such Subleased Property) which Sublease FF&E
Reserve shall constitute a portion of the FF&E Reserve under the Master
Lease. So long as no Lease Reserve Shortfall Period or Event of Default under
either the Master Lease or Sublease shall exist or be in effect, funds in the
Sublease FF&E Reserve may be withdrawn at the discretion of Sublessee for
the payment or reimbursement of FF&E expenditures. An Operating Budget for
the Subleased Property (the “Sublease Operating Budget”) shall be submitted by
Sublessee to Sublessor and Landlord’s Lender not later than the expiration of
the then current Fiscal Year, provided that Sublessor and Landlord’s Lender
shall have no right to approve same except as provided in the following
sentence. If a Lease Shortfall Reserve Period is in effect, Sublessee shall
submit the then-current Sublease Operating Budget and, when due, all subsequent
Sublease Operating Budgets for Fiscal Years during a Lease Shortfall Reserve
Period, and any requested interim Modifications thereto, to Sublessor and
Landlord’s Lender, and Landlord’s Lender shall have the right to approve all
aspects of the Sublease Operating Budget relating to FF&E expenditures,
which approval shall not be unreasonably withheld, delayed or conditioned. During
the continuance of any Lease Reserve Shortfall Period or Event of Default under
the Master Lease or Sublease, any disbursement from the Sublease FF&E
Reserve shall be subject to the prior review of and confirmation by Master
Landlord and Landlord’s Lender that the requested disbursement is in accordance
with the Sublease Operating Budget for the Subleased Property approved for such
Fiscal Year by Master Landlord and Landlord’s Lender and only amounts of
expenses incurred consistent with (or up to the amounts set forth in) such
approved Sublease Operating Budget shall be released from the Sublease FF&E
Reserve to Sublessee; provided that in the event that cash expenditures exceed
the budgeted amount or amounts in the Sublease FF&E Reserve, expenditures
for FF&E to be made in the succeeding period will be credited with such
excess cash expenditures during the current period and Sublessee shall be
entitled to be reimbursed from the Sublease FF&E Reserve in the succeeding
period for such excess cash expenditures during the current period.


 


14.           The Sublease FF&E
Reserve and (i) all cash, checks, funds, drafts, certificates, instruments and
other property, including, without limitation, all deposits and/or wire
transfers from time to time deposited or held in, credited to or made to the
Sublease FF&E Reserve, (ii) all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise payable in
respect of, or in exchange for, any or all of the foregoing; (iii) any
replacement deposit account designated by Landlord’s Lender, and (iv) to the 


 

















 


extent not covered by clauses (i), (ii), or
(iii) above, all proceeds (as defined under the Uniform Commercial Code) of any
or all of the foregoing and the funds deposited therein and any securities and
other assets credited thereto (the Sublease FF&E Reserve and all such other
items noted above are referred to, collectively, as “Sublease FF&E
Reserve Collateral”) shall serve as additional security for the Sublessor’s
obligations under the Master Lease. At all times the Master Landlord shall have
control over the Sublease FF&E Reserve Collateral (subject to Sublessee’s
rights to withdraw funds from the Sublease FF&E Reserve in accordance with
Section 13 above), as further set forth in the Deposit and Control Agreement of
even date herewith by and among Master Landlord, Sublessor, Sublessee, Landlord’s
Lender, the Deposit Bank (as defined therein) and, if applicable, others, a
true and correct copy of which is attached hereto as Exhibit D (the “Sublease
Control Agreement”).


 


15.           The parties acknowledge
and agree that the operating covenant set forth in Section 6.1(a)(iii) of the
Master Lease (as incorporated into this Sublease pursuant to Section 4 above)
constitutes material consideration for Sublessor’s willingness to enter into
this Sublease on the terms and conditions set forth herein, and that any
discontinuation of operations of the Primary Intended Use other than as
expressly permitted under this Sublease may have a material adverse effect on
the Subleased Property. The parties further acknowledge and agree that the
Sublessee’s obligation to maintain the Subleased Property and the FF&E as
otherwise provided in this Sublease, constitutes further material consideration
to Sublessor for entering into the Sublease on the terms provided herein, and
that the failure to maintain the FF&E as required hereunder would have a
direct and material adverse effect on the Subleased Property, and interfere
with the timely reletting of the Subleased Property were the Sublease to be
terminated following an Event of Default under either the Master Lease or this
Sublease.


 


16.           In the event of any
sale or assignment of Sublessor’s leasehold interest in the Subleased Property
or any portion thereof, Sublessor shall be entirely relieved of all liability
under any and all of its covenants and obligations contained in this Sublease
arising out of any act, occurrence or omission relating to the Subleased
Property or this Sublease occurring after the consummation of such sale or
assignment.


 


17.           All Notices shall be in
writing and delivered by hand or mailed (by registered or certified mail,
return receipt requested or reputable nationally recognized overnight courier
service and postage prepaid), addressed to the respective parties, as follows:


 


	
  If to Master Landlord:

  	
   

  
	
   

  	
  FCP PropCo, LLC

  1505 South Pavilion
  Center Drive

  Las Vegas, Nevada  89135

  Attention:  General Counsel

  Fax:  (702) 495-4260

  



 

















 


	
  If to Sublessor:

  	
   

  
	
   

  	
  Station Casinos, Inc.

  1505 South Pavilion
  Center Drive

  Las Vegas, Nevada  89135

  Attention:  General Counsel

  Fax:  (702) 495-4260

  
	
   

  	
   

  
	
  If to Sublessee:

  	
   

  
	
   

  	
  Sunset Station, Inc.

  1505 South Pavilion
  Center Drive

  Las Vegas, Nevada  89135

  Attention:  General Counsel

  Fax:  (702) 495-4260

  
	
  With copies to:

  	
   

  



 


or to such other
address as either party may hereunder designate, and shall be effective upon
receipt.


 


18.           This Sublease shall be
construed with respect to the Subleased Property under the substantive laws of
the State in which such Subleased Property is situated.


 


19.           This Sublease contains
the entire understanding among the parties relating to the transactions
contemplated hereby and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged
herein and shall be of no further force or effect.


 


20.           Exhibits A, B, C and
D are hereby incorporated into this Sublease as if set out in full herein.


 


21.           If a party commences an
action, suit or proceeding (arbitration or otherwise) against another party
because of the breach or anticipated breach by such party of, or due to any
dispute concerning, this Sublease, the losing or defaulting party shall pay to
the prevailing party reasonable attorneys’ and arbitrators’ fees, costs and
expenses incurred in connection with such action, suit or proceeding.


 


22.           This Sublease shall be
binding upon and shall inure to the benefit of the respective successors and
permitted assigns of the parties hereto.


 


23.           This Sublease may be
executed in any number of counterparts, each of which shall be an original and
all of which shall be deemed to be one in the same instrument with the same
effect as if all parties hereto had signed the same signature page. Any
signature page of this Sublease may be detached from any counterpart of this
Sublease identical in form hereto but having attached to it one or more
additional signature pages.


 

















 


24.           Nothing herein shall be
construed as releasing or discharging Sublessor from any of the obligations
under the Master Lease, and its liability under said Master Lease shall be that
of principal and not surety. The liability of Sublessor and Sublessee under
said Master Lease with respect to the Subleased Property shall be joint and
several, and Master Landlord may enforce such terms, covenants and conditions
of said Lease and Modifications against either Sublessor or Sublessee without
first proceeding against the other.


 


[signature page follows]


 

















 


IN WITNESS
WHEREOF, the parties hereto have executed or have caused this Sublease to be
executed as of the date first above written.


 


	
   

  	
  “Sublessor”

  
	
   

  	
   

  
	
   

  	
  STATION CASINOS, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
        /s/
  Thomas M. Friel

  	
   

  
	
   

  	
  Name: Thomas M.
  Friel

  
	
   

  	
  Title:   Executive
  Vice President, Chief

  
	
   

  	
              Accounting
  Officer & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Sublessee”

  
	
   

  	
   

  
	
   

  	
  SUNSET STATION, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
        /s/
  Thomas M. Friel

  	
   

  
	
   

  	
  Name: Thomas M.
  Friel

  
	
   

  	
  Title:   Senior
  Vice President & Treasurer