EXHIBIT 10.11

 

DEED OF LEASE

 

THIS DEED OF LEASE is made this May 8, 2003, by and between HAYNES CHIPPENHAM
PLAZA, L.L.C., a Virginia limited liability company, party of the first part
(hereinafter referred to as “Landlord”); and COLONIAL DOWNS, L.P., a Virginia
limited partnership, party of the second, part (hereinafter referred to as
“Tenant”).

 

WITNESSETH:

 

WHEREAS, Landlord is the owner of certain real property, lying and being in the
City of Richmond, Virginia, and known as 6550 Hull Street Road, Richmond,
Virginia, containing approximately 11,457 square feet (the “Premises”), more
particularly described on a plat, a copy of which is attached hereto and marked
“Exhibit A,” together with the right to use the driveways, parking areas,
sidewalks and other common areas of the Shopping Center (as defined herein) as
provided herein (the “Common Areas”) located in Haynes Plaza more particularly
shown on “Exhibit A” (the “Shopping Center”); and

 

WHEREAS, Landlord wishes to lease the Premises with all improvements thereon to
Tenant, and Tenant wishes to lease the Premises with all improvements thereon
from Landlord; and

 

NOW, THEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00), in
hand paid by Tenant to Landlord, and other good and valuable considerations, the
receipt and sufficiency whereof are hereby acknowledged by each of the parties
hereto, Landlord hereby grants to Tenant a lease for the Premises from Landlord,
subject to the following terms and conditions:

 

ARTICLE 1

Lease Period

 

1.1 Initial Term. The initial term of this Lease shall commence on the earlier
to occur of (i) the date Tenant opens for business at the Premises or (ii) April
1, 2004, provided the conditions set forth in Article 21 hereof are satisfied or
waived (such date being referred to as the “Commencement Date”), and shall
continue for a period of five (5) years thereafter (such period being referred
to as the “Initial Term”).

 

1.2 Renewal Term. Tenant shall have the right, six (6) months’ prior written
notice to Landlord given prior to the Initial Term and any subsequent term, as
applicable, to extend the term of this Lease for up to four (4) additional terms
of five (5) years each upon a rent as set forth in paragraph 2.1 herein.

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ARTICLE 2

Payment of Rental and Deposit

 

2.1 Amount.

 

(a) The Tenant shall pay to Landlord annual rental, which shall be paid in equal
monthly installments, in advance, the first installment being payable upon the
execution of this Lease by the parties hereto and similar installments being due
and payable on the first (1st) day of each and every calendar month. Annual
rental is as follows:

 

Period Covered

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Annual Amount

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Commencement Date through end of Initial Term    Seven Dollars ($7.00) per
square foot of gross leasable area in the Premises First Five (5)-Year Option   
Eight Dollars ($8.00) per square foot of gross leasable area in the Premises
Second Five (5)-Year Option    Nine Dollars ($9.00) per square foot of gross
leasable area in the Premises Third Five (5)- Year Option    Ten Dollars
($10.00) per square foot of gross leasable area in the Premises Fourth Five
(5)-Year Option    Eleven Dollars ($11.00) per square foot of gross leasable
area in the Premises

 

(b) If any payment is not paid when due under this Lease and is delinquent for
more than fifteen (15) days, the Tenant agrees to pay a late charge of five
cents ($.05) for each dollar for each and every monthly installment that becomes
overdue. Such charge is acknowledged and agreed, by Landlord and Tenant, to be a
charge other than interest and to be fully earned and non-refundable when due.

 

(c) In the event that Tenant fails to timely pay any installment of annual
rental or any other amount due Landlord, after the expiration of all cure
periods, such unpaid installment or amount shall bear interest at the Prime Rate
of Bank of America, from time to time, plus three percent (3%) until paid. In
the event that Tenant fails to pay any other items required to be paid by Tenant
hereunder,

 

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then and in that event Landlord may, but shall not be obligated to, pay the same
and add the amount paid, together with interest at the Prime Rate of Bank of
America, from time to time, plus three percent (3%) until paid, to the amount of
the next annual installment of rent to be paid by the Tenant hereunder; and if
Landlord pays any other amount to correct a default by Tenant (including
reasonable costs, expenses, and attorney’s fees in connection therewith), or
Tenant pays any amount to correct a default by Landlord, such nondefaulting
party may, but shall not be obligated to, add or deduct, as the case may be, the
amount paid, together with interest at the above rate, to the amount of the next
installment of rent to be paid by Tenant hereunder. Any amount so added shall be
deemed to be rent.

 

2.2 Place of Payments. All rent payable by Tenant to Landlord under this Lease
shall be paid to Landlord at the address provided in paragraph 5.1 herein, or at
such other address as shall be designated by notice given, as provided in this
Lease.

 

2.3 Determination of Premises Area. For purposes of determining rent and
Tenant’s pro-rata share of CAM and Taxes, the gross leasable area of the
Premises shall be computed by measuring from the center line of interior walls
to the outside of exterior walls and shall exclude elevator shafts, stairwells,
ductwork, and mezzanines, and any mechanical rooms or closets or equipment areas
not exclusively serving the Premises. If Tenant elects to use the “Satellite
Dish Area” described herein, or the rooftop area as provided herein, such areas
shall also expressly be excluded from gross leasable area.

 

ARTICLE 3

Title

 

3.1 Ownership. Landlord warrants and represents that Landlord is the sole owner
of fee simple title to the Premises and that no other person, partnership,
corporation, or other entity has the right to lease (as defined herein) or
possess the Premises. Landlord also represents to Tenant that title to the
Premises is free of all liens, leases, and encumbrances and is insurable by a
title policy issued by a reputable title insurance company at its standard
rates, subject only to current City Taxes, not yet due and payable, and general
utility and drainage easements, which do not adversely affect the use of the
Premises.

 

ARTICLE 4 – Intentionally Deleted.

 

ARTICLE 5

Notices

 

5.1 Addresses. All notices, demands, and delivery of surveys and any and all
other communications that may be or are required to be given to or made by

 

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either party to the other in connection with this agreement shall be in writing
and shall be deemed to have been properly given if sent by overnight courier or
by United States registered or certified mail, return receipt requested, postage
prepaid, to the parties at the following addresses:

 

If to Landlord:

 

Haynes Furniture Company, Inc.,

a Virginia corporation

ATTN: Senior Vice President

5324 Virginia Beach Boulevard

Virginia Beach, Virginia 23462

 

With a copy to:

 

H. David Embree, Esquire

Hofheimer Nusbaum, P.C.

1700 Dominion Tower

Norfolk, Virginia 23510

 

If to Tenant:

 

Colonial Downs, L.P.

10515 Colonial Downs Parkway

New Kent, VA 23124

ATTN: Ian M. Stewart

 

With a copy to:

 

James L. Weinberg, Esquire

Hirschler Fleischer

701 East Byrd Street (23219)

P.O. Box 500

Richmond, VA 23218-0500

 

or at such other address as Landlord or Tenant may have designated from time to
time by written notice to the other party hereto. The date of service of such
notices shall be the date such notices are mailed by the addressor.

 

ARTICLE 6

Demised Premises

 

6.1 Premises. The Landlord does hereby demise and lease unto Tenant, and Tenant
does hereby take and lease from Landlord, the Premises, being all that

 

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certain parcel of land, with the improvements thereon and appurtenances
thereunto belonging, lying and being in the City of Richmond, Virginia, and
being more particularly described on “Exhibit A” attached hereto, for the term,
upon the rentals, and conditions hereinafter set forth.

 

ARTICLE 7

Possession

 

7.1 Possession. Exclusive possession of the Premises shall be given to Tenant as
of the date on which the conditions precedent set forth in Article 21 below are
either satisfied or waived, as evidenced by written notice to Landlord. Tenant
shall have the right of entry from and after execution of this Lease at all
reasonable times to inspect, survey, measure and evaluate the Premises.

 

ARTICLE 8

Parking and Common Areas; Signage

 

8.1 Access/Parking. Tenant shall have the non-exclusive use, in common with
others, of the parking areas, entrances, drive aisles, roadways, means of
ingress and egress, service areas and other common areas of the Shopping Center,
subject to Landlord’s adoption of reasonable uniformly applied and enforced
rules and regulations provided that Landlord reserves the right to designate a
portion of the parking spaces immediately adjacent to Harbor Freight Tools in
the area shown on Exhibit A-1 as “Harbor Freight Exclusive Parking” for
exclusive use by Harbor Freight customers. Landlord hereby agrees that Tenant
shall also have exclusive use of those ten (10) parking spaces located adjacent
to the Premises designated on Exhibit A-1 hereto as “Tenant’s Exclusive
Parking”. Tenant shall have the right to erect signs on Tenant’s Exclusive
Parking spaces identifying such parking as “Exclusive Parking for Colonial Downs
– Violators will be Towed at Owner’s Expense”, or similar language. Landlord
shall have no liability to Tenant in the event other tenants or occupants park
in such spaces and shall not be obligated to police parking usage provided,
however, Landlord agrees to validate in writing that Tenant has been granted
such rights, hereby authorizes Tenant to tow vehicles which may park in such
spaces and shall support Tenant’s rights to take such action in any dispute,
controversy, proceeding, litigation or otherwise to the fullest extent possible
including sending supporting notices and letters. Landlord further warrants that
it shall provide and maintain at all times not less than seven hundred
twenty-five (725) parking spaces in the Shopping Center for use by Tenant.

 

8.2 Signs. Tenant is hereby granted an exclusive easement to either (i) erect a
pole sign of at least forty (40) feet in height along the west end of the
Shopping Center so that it is visible from Chippenham Parkway in a location to
be determined as provided herein or (ii) erect a sign on the roof of the
existing Haynes Furniture Store, in either case, subject to approval by
governmental authorities

 

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having jurisdiction over such sign. Tenant will be permitted only to erect one
of the two signs described above. Tenant may also, at its election, erect two
(2) exterior signs on the front and rear walls of the Premises. If Tenant erects
a sign on the roof pursuant to these provisions, Tenant will repair any and all
damage to the roof resulting from the posting of such sign. The design and
location of the signs shall be subject to Landlord’s approval, not to be
withheld, delayed or conditioned unreasonably. Landlord shall have ten (10) days
to approve any submission of signage from Tenant. If not disapproved with
reasons for disapproval stated by written notice to Tenant within such ten (10)
day period, such submission shall be deemed approved. Tenant shall bear all
costs in erecting such signs and shall be responsible for obtaining all
governmental approvals requested therefore. Landlord agrees to join in and
timely support all applications for permits, licenses and approvals necessary to
erect and assemble such signs. Landlord shall also permit Tenant to place its
sign panel on one of the currently vacant sign panels on the existing pylon for
the Shopping Center as shown on Exhibit B. All signs shall be available to
Tenant throughout the term of this Lease and any renewal.

 

8.3 Communications Installations. Tenant shall also have the exclusive right to
use, throughout the term of this Lease and any renewal, at no additional
expense, an area in the Shopping Center, in a location reasonably acceptable to
Landlord and Tenant (the “Satellite Dish Area”) for installation, maintenance,
operation, repair and replacement of satellite and other telecommunications
equipment, provided all necessary governmental approvals are obtained by Tenant
at Tenant’s expense. Tenant shall pay to Landlord any increased real estate
taxes solely resulting from Tenant’s installations in the Satellite Dish Area,
on demand after Landlord receives any bills which include such additional taxes.
Landlord and Tenant shall work in good faith to agree on a mutually acceptable
location for the Satellite Dish Area during the ninety (90) day period following
execution hereof.

 

ARTICLE 9

Hazardous Materials

 

9.1 Environmental Requirements. Neither Landlord nor Tenant shall allow, permit
or cause: (i) the generation, accumulation, storage, release or threat of
release of hazardous substances, pollutants, hazardous waste or toxic materials
as those terms are used in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9601 et seq., as
amended, Toxic Substances Control Act of 1976, Resource Conservation and
Recovery Act of 1976 or in any other federal, state or local law (and all
regulations promulgated under any of the same) as such laws are amended from
time to time (collectively, “Hazardous Substances”), on the Premises, including,
but not limited to, polychlorinated biphenyls (PCBs) and asbestos, but not
including hazardous substances which are used or disposed of by Tenant in its
usual operations provided same are used, stored, handled and disposed of in
compliance with all applicable

 

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laws and regulations, (ii) the spilling or leaking of petroleum products on or
from the Premises (other than immaterial quantities in connection with the
operation of motor vehicles); (iii) the draining, filling or modification of
wetlands (as defined in federal, state or local law, regulation or ordinance) on
the property on which the Premises is located; (iv) the disposal of any
hazardous substances, hazardous waste or toxic materials, or (v) any other
environmental condition with regard to the Premises which could result in
liability for an owner or operator of the Premises.

 

9.2 Indemnification. Landlord shall, at all times, indemnify, defend and hold
harmless Tenant against and from any and all claims, liens, suits, actions,
debts, damages, costs, losses, liabilities, obligations, judgments, and expenses
(including, without limitation, court costs and attorneys’ fees), of any nature
whatsoever, arising from any prior use or operation of the Premises or Shopping
Center and arising from or relating to Landlord’s acts which result in (i)
non-compliance with any Federal, state or local environmental statutes
including, without limitation, RCRA and CERCLA, as amended, or (ii) the release
or discharge or disposal of any Hazardous Substance affecting the Premises or
surrounding areas. The term Hazardous Substances shall include building
materials and building components including, without limitation, asbestos
contained in or comprising building materials or building components.

 

Tenant shall indemnify, defend and hold Landlord harmless against and from any
and all claims, liens, suits, actions, debts, damages, costs, liabilities,
obligations, judgments and expenses (including without limitation, court costs
and attorneys fees) arising (i) from or out of Tenant’s non-compliance with any
applicable Federal, state, or local environmental statutes, or (ii) from or out
of the release or discharge or disposal by Tenant of any such Hazardous
Substances on or in the Premises or surrounding area.

 

ARTICLE 10

Taxes, Assessments, and Commissions

 

10.1 Payment of Additional Rent. Subject to the limits in paragraph 10.5 below,
Tenant shall pay its actual Prorata Share of Taxes (as defined herein) (see
paragraph 10.2) and its share of CAM costs (see paragraph 10.3) to Landlord for
periods after the Commencement Date. Tenant shall pay its share of Taxes within
thirty (30) days after Tenant receives a copy of the paid Tax bill. Tenant shall
pay its share of CAM costs on the first day of each month, commencing on the
Rent Commencement Date and continuing on a monthly basis throughout the Lease
Term. Tenant’s monthly payments shall be equal to one-twelfth (1/12) of Tenant’s
actual CAM cost payment for the previous year, but for the period from the
Commencement Date until the end of the first full calendar year after that date
Tenant shall make estimated monthly payments in an amount reasonably determined
by Landlord prior to the Commencement Date. Within 120 days after

 

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the expiration of each calendar year, Landlord shall furnish to Tenant
Landlord’s annual statement of expenses, itemized by category (“Landlord’s
Reconciliation”) and such other documentation as Tenant reasonably requests.
Tenant shall pay to Landlord within thirty (30) days after Tenant’s receipt of
Landlord’s Reconciliation any outstanding deficiency for the foregoing calendar
year. If Landlord’s Reconciliation reflects an overpayment by Tenant for the
calendar year, Tenant shall be given a credit against CAM costs for the ensuing
calendar year (or in the last year of the Lease Term, Tenant shall be given a
cash refund of overpayment within thirty (30) days after the date of receipt of
Landlord’s Reconciliation). Tenant’s “Prorata Share” for purposes of computing
CAM costs and Taxes hereunder shall be the gross leasable area of the Premises
(determined pursuant to paragraph 2.3 above) (excluding mezzanines) divided by
the gross leasable area of all buildings (including the Building) in the
Shopping Center (excluding mezzanines), and adjusted when necessary to reflect
new leasable area (but shall not be increased if buildings in the Shopping
Center are removed by casualty, condemnation, or otherwise). However, any
increase in Tenant’s CAM costs and Taxes payment shall be limited as provided in
paragraph 10.5 herein. CAM costs and Taxes shall be prorated for partial years.
Landlord waives Taxes and CAM costs that are not billed within 24 months from
the date due. The provisions of this Lease shall not be deemed to require Tenant
to pay, by whatever name called, municipal, state, county, or federal income or
receipts or excess profits Taxes assessed against Landlord, or municipal,
county, state, or federal capital levy, estate, succession, inheritance, gift,
or transfer Taxes of Landlord, or corporation franchise Taxes imposed upon any
corporate owner of the fee of the Premises, or any tax, whatever form it takes,
in lieu of any such Taxes.

 

10.2 Taxes. “Taxes” means all real estate Taxes and other levies and assessments
against the Shopping Center (unless the Building is separately assessed), except
(a) Taxes on undeveloped land in the Center; (b) Taxes on land in any out parcel
area; (c) Taxes levied by special taxing districts; and (d) income, excess
profit, estate, franchise, development, transfer, recordation and similar Taxes.
Landlord shall send Tenant a copy of assessment notices at least 15 days before
the appeal deadline. If Tenant requests that Landlord appeal a Taxes assessment,
including any assessment on Tenant’s satellite dish installation, and if
Landlord declines to appeal, Tenant may appeal that assessment at no cost to
Landlord, but Landlord shall cooperate, and Tenant may deduct its appeal
expenses from any Taxes refund obtained as a result of the appeal. Neither party
may compromise an appeal without the other’s approval, which approval shall not
be unreasonably withheld, conditioned or delayed.

 

10.3 CAM. “CAM costs” means Landlord’s direct, out-of-pocket costs, charges, and
expenses reasonably paid to “Third Parties” (i.e., parties that are neither
Landlord nor affiliates of Landlord) or otherwise incurred as obligations to
Third Parties by Landlord (without markups) in connection with cleaning,

 

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maintaining, repairing and insuring the Common Areas in accordance with
Landlord’s obligations hereunder (including a third party management fee not to
exceed 5% of those costs if outside management is employed), the premium for the
casualty and liability insurance required under paragraph 15.1, and utilities
such as water and sanitary sewer on master meters which serve multiple Tenants
in the Shopping Center and parking lot lighting. However, “CAM costs” do not
include: (1) the cost of any capital expenditures, provided that such capital
expenditure costs shall be depreciated on a straight-line basis according to
generally accepted accounting principles over their useful life for federal
income tax purposes with only the annual straight-line depreciation attributable
to the given lease year being included in CAM costs for such lease year, so long
as such capital item reduces or eliminates a CAM cost that otherwise would have
been payable by Tenant (but for this provision); (2) the cost of repairing or
replacing any portion of the Common Area, the original construction of which was
defective or where the repair or replacement is necessitated by Landlord’s
negligent acts or omissions, or default of Landlord’s obligations under this
Lease; (3) the cost of repairs that are covered by guaranties and/or warranties,
or that are reimbursed, in whole or in part, by insurance, other tenants, or
otherwise by third parties; (4) any Taxes or assessments levied against any
portion of the Common Area (including without limitation any interest and
penalties on such Taxes); (5) costs (other than reasonable grass cutting costs)
to maintain unimproved land; (6) interest, late charges and/or penalties imposed
on any CAM costs; (7) business license fees; (8) the cost of investigating,
monitoring or remedying any environmental condition; (9) the cost of any
improvements, repairs and maintenance (a) caused by or resulting from the
negligence or acts or omissions of Landlord or (b) required in order to permit
the occupation of space in the Center by other tenants, their respective agents,
contractors, employees, and/or invitees (including without limitation any
painting, redecorating or other work performed by Landlord for any tenant or
prospective tenant); (10) the cost of any repairs, improvements, electricity,
special cleaning or overtime services provided solely for the benefit of any
other tenant or leasable area in the Center; (11) the cost of compliance with
applicable legal requirements which are applicable to initial construction of
the Improvements, supervision, profit, and/or general overhead, other than a
possible 5 % administrative fee as set forth in this paragraph; (12)
depreciation other than as set forth above with respect to capital expenditures;
(13) interest on and amortization of debt; (14) repairs or other work (including
rebuilding) occasioned by fire, windstorm or other casualty, whether or not
insured, or repairs required by a condemnation; (15) rent payable under any
lease to which this Lease is subject such as a ground or underlying lease; (16)
costs incurred as a result of any violation by Landlord of such underlying or
ground lease or any mortgage; (17) costs incurred as a result of enforcing
leases against other tenants in the Center or in defense of Landlord’s title
(including, without limitation, legal fees); or (18) salaries, wages, benefits
or Taxes of employees, managing agents’ fees or leasing agents’ commissions. On
20 days’ notice to Landlord, Tenant may inspect or audit the CAM

 

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records at Landlord’s headquarters, not more often than annually. Tenant shall
conduct any audit with a C.P.A. or accountant paid by Tenant, using generally
accepted auditing standards, and not unreasonably interfering with Landlord’s
business. Landlord shall promptly pay any overcharge of CAM costs due, and if
the overcharge exceeds 5% of CAM costs due, Landlord also shall pay the audit
cost.

 

10.4 Tenant’s Right to Contest. Intentionally deleted.

 

10.5 Annual Cap. Payments due from Tenant under paragraphs 10.1 and 10.2 above
shall be subject, however, to an annual cap on increases. In no event shall
Tenant’s combined payments under paragraphs 10.1 and 10.2 in the first year
exceed One Dollar ($1.00) per square foot leased. Such amounts shall not
increase in any subsequent year by an amount in excess of (i) the aggregate
percentage change in the CPI Price Index over the 12 month period immediately
preceding the first day of the 2nd and each succeeding lease year, as
applicable, multiplied by (ii) Tenant’s actual Prorata Share of CAM costs and
Taxes for the immediately preceding lease year (as limited by this paragraph
10.5).

 

“CPI Price Index” means the Consumer Price Index, U.S. City Average, All Urban
Consumers, All Items (1982-1984=100) published by the Bureau of Labor Statistics
of the United States Department of Labor or, if the Bureau of Labor Statistics
discontinues such publication, then any other corresponding standard cost of
living index then prepared and published by the U.S. Government, such
determination shall be made effective as of the first day of 2nd and each
subsequent lease year (each, an “Adjustment Date”). The aggregate percentage
change in the CPI Price Index for such period shall be a fraction, the numerator
of which is the CPI Price Index in effect on the Adjustment Date and the
denominator of which is the Price Index in effect as of the first day of the
immediately preceding lease year.

 

ARTICLE 11

Construction of Improvements; Use of Premises

 

11.1 Landlord’s Improvements. Landlord shall cause the Common Areas and Shopping
Center to meet all requirements of the Americans with Disabilities Act related
to access. Landlord shall also cause all utilities, other than water and
sanitary sewer, to be separated from other tenant utility lines, stubbed into
the Building and separately metered. Tenant acknowledges that since water cannot
be subjected to separate metering, neither can sanitary sewer service. Landlord
has installed a full interior sprinkler system to the Premises and shall bear
any costs necessary to make such existing sprinkler system compliant with all
applicable laws. Tenant shall have the right to modify the existing interior
sprinkler systems and related equipment in accordance with Tenant’s final
approved plans and specifications for the Premises at Tenant’s expense. Tenant,
at Tenant’s sole expense, shall also be responsible for any other work,
alterations or improvements

 

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necessary for Tenant to obtain a valid certificate of occupancy for the
Premises. However, if repairs, alterations or improvements to the structural
components of the Premises, systems or Shopping Center are required by
applicable law in order for the Premises to meet current code requirements for
general retail use and such repairs, alterations, or improvements are not due
solely to the specific nature of Tenant’s improvements, Landlord shall perform
the same at its expense. The foregoing work shall be fully completed by
Landlord, at no cost to Tenant, prior to the Commencement Date. In addition,
Landlord shall provide Tenant with a work allowance of $55,000.00 for use by
Tenant in performing its HVAC work and plumbing/fixturing work in bathrooms. The
allowance shall be paid to Tenant within ten (10) days following Tenant’s
installation of the HVAC system and completion of bathroom improvement work. If
the allowance is not paid within thirty (30) days following completion of the
foregoing work, Tenant shall be entitled to offset such unpaid amounts against
rent due hereunder.

 

If Tenant objects to any allocated assessment of water and sewer usage under
Article 10, Tenant shall be entitled to install separate meters for the Premises
and shall thereafter not be billed by Landlord for master water or sewer costs.

 

11.2 Tenant’s Improvements. Tenant shall renovate the Building pursuant to Plans
and Specifications which are approved by Landlord. As part of Tenants work,
Tenant shall install an HVAC system with at least thirty (30) tons of capacity
and which shall, in Tenant’s sole opinion, be adequate to service Tenant’s use
of the Premises. Tenant shall have the further right, at any time after the date
hereof, to make interior alterations and improvements to the Premises as Tenant
shall deem necessary or desirable, provided that said construction shall be of
first class quality. All improvements made by the Tenant shall become the
property of the Landlord at the expiration of this Lease. If any alterations or
improvements involve exterior or structural changes, Tenant shall obtain
Landlord’s written approval prior to Tenant undertaking such work, such approval
not to be unreasonably withheld or delayed.

 

11.3 Indemnity by Tenant. Tenant covenants and agrees promptly to pay all sums
legally due and payable by Tenant on account of any labor performed or materials
supplied for which Tenant is responsible for the payment of and for which any
lien is or can legally be asserted against the Building, including the
improvements thereon (or Tenant’s leasehold interest hereunder) and that Tenant
will save Landlord harmless from and against all such asserted claims or liens,
including the cost of removing same. Tenant agrees that any lien for services,
labor, or materials provided can only be placed on the Tenant’s leasehold
interest in the improvements placed upon the Building, but not the land or
existing improvements.

 

11.4 Compliance with Laws. Tenant agrees that all construction, alteration and
improvements by Tenant shall comply with all applicable and lawful statutes,
rules, orders, ordinances, requirements, and regulations of the City of
Richmond,

 

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Virginia, the Federal Government, and any other governmental authority having
jurisdiction over the Building. Tenant may, if in good faith and on reasonable
grounds, dispute the validity of any charge, complaint, or action taken pursuant
to or under color of any statute, rule, order, ordinance, requirement, or
regulation, defend against the same, and in good faith diligently conduct any
necessary proceedings to prevent and avoid any adverse consequence of the same.
Tenant agrees that any such contest shall be prosecuted to a final conclusion as
speedily as possible, and that it will hold Landlord harmless with respect to
any actions taken by any lawful governmental authority with respect thereto.

 

11.5. Use. Tenant shall have the right, during the term hereof, to occupy and to
use the Premises as a satellite wagering facility with food and beverage
(including alcoholic beverages) service, retail sales and for any other lawful
purpose, provided same does not violate any applicable governmental regulation
or any exclusive use granted to any existing tenant of the Shopping Center as of
the date hereof, such restrictions being identified on Exhibit C hereto.

 

11.6 Environmental Statement. Notwithstanding any other provision of this Lease,
Landlord affirmatively represents and warrants to Tenant that the Premises do
not violate any applicable laws or regulations relating to environmental or
other similar matters, and agrees to indemnify, defend and save harmless the
Tenant from any claim, loss, damage or expense, including attorneys’ fees
arising by virtue of any violation existing as of the date hereof.

 

11.7 Zoning. Landlord has no actual knowledge of any law, regulation, recorded
covenant or restriction that would prohibit or interfere with Tenant’s use of
the Premises as a restaurant, bar, and satellite wagering facility. Landlord
shall not change or attempt to change the zoning of the Premises without
Tenant’s prior written consent.

 

11.8 Fixtures and Other Inventory. All trade fixtures, furnishings, equipment,
inventory and personal property of Tenant shall be and remain the personal
property of Tenant and removable by Tenant at any time prior to, or within ten
(10) days after, the termination of this Lease, and shall be so removed by
Tenant at the request of Landlord within said ten (10) days after the
termination of this Lease. Those fixtures that are integrated into the physical
structure of the Premises shall not be removed and shall become the property of
Landlord when so integrated, except in the case of machinery and equipment used
in Tenant’s business, or trade fixtures which can be removed without damage to
the Premises. Tenant agrees to promptly repair any damage to the Premises
occasioned by the removal of Tenant’s trade fixtures, furnishings, and
equipment.

 

11.9 Quiet Enjoyment. So long as Tenant is not in material default hereunder
beyond any applicable cure period, Landlord covenants that Tenant shall

 

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have quiet possession and enjoyment of the Premises for the term of this Lease
without hindrance on the part of Landlord and others claims through or under
Landlord, and Landlord will warrant and defend Tenant in such quiet possession
and enjoyment against the claims of all persons claiming by, through, or under
Landlord.

 

ARTICLE 12

Utilities

 

12.1 Payment by Tenant. Tenant shall pay, or cause to be paid by others, when
due, all charges for all gas, electricity, and all other utilities of every kind
and nature whatsoever and for all other services used by Tenant and its
sublessees in connection with the Premises, and Tenant will save Landlord
harmless from all of such charges; provided, however, Landlord shall have caused
all such services to be separately stubbed into the Premises and separately
metered for Tenant.

 

ARTICLE 13

Maintenance and Repairs

 

13.1 Tenant’s Repairs. Tenant shall keep the Premises in good, clean condition,
including keeping the HVAC system repaired and in working order. Tenant shall
maintain an annual HVAC service maintenance contract and shall provide Landlord
with a copy thereof.

 

13.2 Landlord’s Repairs. Landlord shall be responsible for maintenance,
cleaning, repair and replacement to: (i) the roof; (ii) the structural walls,
concrete floors, foundation and slab; (iii) the exterior water and sewer lines,
(iv) the failure of any utility line under the floor slab or within a structural
wall of the Premises, (v) all sidewalks, landscaping, grass areas, parking and
other Common Areas in the Shopping Center, including grass cutting, clearing
snow and ice removal, waste removal, striping and resurfacing of paved surfaces,
exterior and parking lot lighting and utility poles, and (vii) cleaning,
maintaining and repairing the Common Areas in first class condition.

 

13.3 No Changes. Landlord shall not modify or reduce the access drives, parking
or other Common Areas in any manner, nor construct improvements or alterations
in the Shopping Center if doing so would adversely affect Tenant’s use or access
to the Premises or visibility of the Premises.

 

13.4 Tenant’s Completion of Landlord’s Obligations. In the event that Landlord
fails or neglects to make repairs or corrections, as provided herein, within a
reasonable period of time after notice from Tenant, then Tenant may make such
repairs, and Landlord shall promptly reimburse Tenant for the actual cost
thereof.

 

 

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13.5 Good Working Condition; Warranties. Landlord represents, warrants, and
covenants that the electricity, water, sanitary, and drainage sewers, telephone,
and natural gas are available to the Premises and that Landlord will do nothing
throughout the term of this Lease to interrupt such services, except for
temporary interruptions during non-business hours (except in the case of
emergencies) required to repair or renovate such service facilities. Landlord
further represents, warrants, and covenants that at the beginning date of this
Lease, the structural components roof, plumbing, and electrical systems in or
affecting the Premises are in good working condition and satisfy all building
and safety code requirements.

 

ARTICLE 14

Parties’ Indemnification

 

14.1 By Tenant. Tenant hereby waives all claims against Landlord for damage to
any property or injury to, or death of, any person in, upon, or about the
Building, arising at any time and from any cause other than by reason of the
negligence or willful misconduct of Landlord, its agents, employees,
representatives, or contractors. Tenant shall, and hereby agrees to, indemnify
and hold Landlord harmless from any loss, cost, claim, expense and the like,
including damage to any property, injury to or death of any person arising from
or out of Tenant’s use and occupancy of the Building except arising out of the
negligence or willful misconduct of Landlord, its contractors, employees or
principals.

 

14.2 By Landlord. The Landlord hereby agrees to indemnify the Tenant and save
the Tenant harmless from and against any and all claims, actions, damages,
liability and expense in connection with loss of life, personal injury and
damage to property arising from or out of any occurrence in, upon or within the
Common Areas, or any part thereof, except arising out of the negligence or
willful misconduct of Tenant, its contractors, employees or principals. In the
event that the Tenant, without fault on its part, is made a party to any
litigation commenced by or against the Landlord, the Landlord shall protect and
hold the Tenant harmless and shall pay all costs and expenses, including
reasonable attorney’s fees, incurred or paid by the Tenant in connection with
such litigation.

 

14.3 Waiver of Recovery and Subrogation. Except as otherwise provided above, the
Landlord and the Tenant hereby waive all claims, demands or rights of indemnity
which either of them may have against the other on account of damage to the
Premises or to any personal property located thereon or to other improvements in
the Shopping Center resulting from fire or other casualties, no matter what the
cause thereof may be even if such loss or damage results from the negligence of
the other party, if and to the extent such loss or damage is covered (or
required to be covered) by insurance benefiting the injured party. The parties
waive their respective rights, as set forth herein, because adequate insurance
is to be maintained to protect them against all such casualties and they have
obtained or agree to obtain from their insurance carriers appropriate “waiver of
subrogation provisions” in all such policies of insurance.

 

 

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ARTICLE 15

Insurance and Loss by Casualty

 

15.1 Insurance. Landlord covenants that it will cause the Shopping Center and
the Premises to be insured against loss by fire or other casualty, with special
forms endorsement or other comparable form providing extended coverage, with a
company or companies authorized to do business in the Commonwealth of Virginia,
and in an amount sufficient at all times for the full replacement of such
buildings and improvements in the event of total or partial loss by facilities
of the same size and quality as existed upon the premises prior to such loss.
Landlord shall promptly deliver to Tenant certificates of insurance relating to
such policy or policies. The premiums for all such policies shall be paid by
Landlord. Tenant shall carry and keep in force at all times public liability
insurance with Landlord to be named as an additional insured, with combined
single limit of Three Million Dollars ($3,000,000.00) for each occurrence for
bodily injury and death and/or property damage to the Premises. Tenant shall
promptly deliver to Landlord certificates of insurance relating to liability
policies. Notwithstanding the foregoing, it is expressly understood that Tenant
shall not be liable to Landlord hereunder for any claims or liability arising
out of the negligence of Landlord, its agents, employees or invitees, or
Landlord’s failure to comply with any of the terms and conditions of this Lease,
or a condition on the Premises existing prior to the date hereof. Landlord shall
provide a public liability insurance policy naming Tenant as additional insured
with combined single limits of $5,000,000 for each occurrence, each person, for
bodily injury and death and/or property damage. The coverage limits provided
herein may be satisfied by a combination of primary and excess liability
coverage.

 

15.2 Casualty. The loss or destruction of the Premises or the Shopping Center,
whether by fire, earthquake, windstorm, or other casualty, shall not constitute
grounds for the termination of this Lease by Tenant if the Premises can be, and
are, repaired by Landlord within one hundred eighty (180) days, and such repair
and restoration costs do not exceed seventy-five percent (75%) of the then total
replacement cost of the Premises and related parking areas; provided, however,
that damage or destruction of the Premises, in whole or in part, shall entitle
Tenant to an abatement of rent or other charges herein required to be paid by
Tenant until the Premises are restored to their pre-casualty condition. Within
thirty (30) days of the loss or destruction of the Premises, parking areas or
any Common Areas, Landlord shall notify Tenant in writing of the expected
completion date of such repairs, and Landlord shall promptly commence and
diligently prosecute to completion such demolition, repair, restoration,
rebuilding, reconstruction, or replacement of the Premises, parking areas or any
Common Areas. In the event the Premises, parking areas and other Common Areas
are not

 

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substantially repaired and reconstructed by Landlord, or are not reasonably
expected to be restored, within one hundred eighty (180) days after such
destruction or damage then Tenant may, at its option, by giving notice to
Landlord within thirty (30) days after the expiration of said period, terminate
this Lease as of the fifteenth (15th) day after such notice if such restoration
has not been completed, whereupon this Lease and the right, liabilities, and
obligations of Landlord and Tenant shall expire on such day.

 

ARTICLE 16

Condemnation

 

16.1 Entire Premises. In the event the Premises or any substantial portion of
the Common Areas shall be acquired by authority of any governmental agency in
the exercise of its power of eminent domain or by purchase in lieu thereof, and
such taking relates to substantially all of the fee simple title to the
Premises, as well as to the entire right, title, and interest of Tenant, the
rights and obligations of the parties hereunder (except rights and obligations
arising prior to such taking or purchase) shall terminate as of the date of such
taking, and the parties hereto agree that Landlord shall receive the value of
the land and all improvements thereon, with the exception of Tenant’s signs,
fixtures, equipment, and inventory.

 

16.2 Partial Taking. If, during the term of this Lease, a portion (but less than
all) of the Premises or Common Area shall be acquired by authority of any
government or governmental agency in the exercise of its power of eminent
domain, or by private purchase in lieu thereof, and such taking or acquisition
includes a portion of the Premises or more than ten percent (10%) of the parking
spaces in the Shopping Center, the rent accruing thereafter shall be reduced in
proportion to the reduction that the amount received by Landlord from said
partial taking bears to the value of the land before such taking, as determined
by an appraiser reasonably acceptable to Landlord and Tenant. If any portion of
the Premises or more than twenty percent (20%) of the Shopping Center or more
than ten percent (10%) of the parking spaces are taken or conveyed to an agency
having the power of eminent domain, the Tenant may, at its election, terminate
the Lease. If the Lease is not terminated, Landlord shall restore the Premises,
the Common Area and other portions of the Shopping Center to a condition as
substantially comparable as possible to their condition prior to the taking.

 

16.3 Award. Notwithstanding the above, the Tenant shall not have any claim to
any portion of the award representing the real property or other portions of the
Shopping Center, but shall be entitled to assert a claim for improvements placed
thereon by the Tenant, fixtures and moving costs.

 

 

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ARTICLE 17

Insolvency

 

17.1 By Tenant. Should Tenant make an assignment or other conveyance for the
benefit of its creditors, or should a voluntary or involuntary petition in
bankruptcy be filed by or against Tenant, and Tenant be adjudicated bankrupt by
final decree of such adjudication, this Lease shall not be terminated as a
result thereof so long as (and only so long as) the rental payments hereunder
are not in arrears beyond the period specified in Article 18 hereof and there is
no default on the part of Tenant with respect to any other provisions hereof.

 

ARTICLE 18

Default

 

18.1 Remedies of Landlord. Landlord and Tenant further covenant and agree that
if default shall be made at any time by Tenant in the payment of rent or upon
default in the payment of any sum which Landlord is entitled to under the terms
of this Lease, or if Tenant shall be in material default hereunder, and if any
such material default: (i) shall continue for ten (10) days in the case of
default in the payment of rent after notice in writing thereof by Landlord to
Tenant without further notice of any kind by Landlord to Tenant, or (ii) shall
continue for thirty (30) days (in the case of any other default) after notice in
writing thereof by Landlord to Tenant, if said material default is capable of
being cured within thirty (30) days, or a reasonable time to cure same if such
default is not capable of being cured within said thirty (30) days, provided
Tenant undertakes and proceeds with due diligence and continuity to cure same,
it shall be lawful for Landlord, at its election, after the termination of said
ten (10) or thirty (30) days (as the case may be) to declare the term of this
Lease ended and this Lease terminated, cancelled, and annulled (whereupon all
rights of Tenant hereunder and in the Premises shall expire and terminate, but
Tenant shall remain liable hereunder as hereinafter provided), and thereafter
Landlord may reenter and take possession of the Premises as improved, and every
part thereof, with process of law, and to distrain for any rent due or to become
due hereunder or to institute such other appropriate proceedings as Landlord may
be legally entitled to employ in the Premises. In the event of default,
Landlord’s remedies shall be cumulative, and no remedy expressly provided for
herein shall be deemed to exclude any other remedy allowed by law. Termination
of this Lease by reason of Tenant’s default, as above provided, shall not
relieve Tenant of its liabilities and obligations, and such liabilities and
obligations shall survive any such termination. In the event of any such
termination, Tenant shall remain in all events liable for the full rent to the
date of such termination, and shall also be and remain liable and answerable in
damages for the deficiency and loss of rent and other damages which Landlord may
thereby sustain in respect of the balance of the term of this Lease, but it
shall be Landlord’s duty to use commercially reasonable efforts to minimize
damages to Tenant and to relet the Premises for the account and

 

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benefit of Tenant in liquidation and discharge, in whole or in part, as the case
may be, of the liability of Tenant under the terms and provisions of this Lease,
and such damages may, at the option of Landlord, be recovered by Landlord in
separate actions, from time to time, as Tenant’s obligation to pay rent would
have accrued if the term hereof had continued, or from time to time as such
damages shall have been made more easily ascertainable by reletting of the
Premises, or such action by Landlord may, at the option of Landlord, be deferred
until the expiration of the term hereof. In the event that Tenant defaults in
the performance of any of its obligations hereunder and Landlord institutes any
legal proceedings to recover possession of the Premises, or to enforce the
performance by tenant of any of its obligations under this Lease, Landlord shall
be entitled to reimbursement for its reasonable costs incurred, including
reasonable attorney’s fees. Notwithstanding the foregoing, if the Premises are
encumbered by any leasehold deeds of trust and Landlord has been given written
notice thereof, then at the time of any such default, as hereinbefore set forth
by Tenant, Landlord shall give written notice of such default to the noteholders
of any such deeds of trust, and said noteholders shall have the right and time
period afforded Tenant herein in which to cure any such default of Tenant, and
if such default is so cured within said time period, the terms and provisions of
this Lease shall remain in full force and effect for the benefit of the
noteholders of any such deeds of trust or any assignee of said noteholders.

 

18.2 Remedies of Tenant. Other than in the event of an emergency, in the event
Landlord fails to comply with any material covenant or obligation contained in
this Lease within thirty (30) days after written notice from Tenant to Landlord
of the noncompliance, Tenant shall have the right, in addition to Tenant’s other
rights and remedies hereunder, at law and in equity, to: (a) terminate this
Lease at any time thereafter upon written notice to Landlord; or (b) cure or
attempt to cure such noncompliance. In the event of an emergency, or if such
non-performance is or will disrupt Tenant’s normal use and operations at the
Premises or if there is a risk of imminent damage to the property or injury to
persons, Tenant shall have the right, in addition to Tenant’s other rights and
remedies hereunder, at law and in equity, to cure or attempt to cure such
noncompliance immediately and following reasonable notice to Landlord. If Tenant
elects to cure such noncompliance by Landlord, any costs or expenses (including,
without limitation, reasonable attorney’s fees and costs), plus interest at the
Prime Rate of Bank of America plus three percent (3%) of the amount of such
costs and expenses (collectively, the “Amount Due”) shall be set off from the
next due installment or installments of rent or other charge due to Landlord
hereunder. If there is no rent or other charge due to Landlord; the Amount Due
shall be paid by Landlord to Tenant within ten (10) days after notice from
Tenant to Landlord of the Amount Due. After such ten (10)-day period, interest
shall accrue on such unpaid Amount Due at the above rate. The failure of Tenant
to insist in any one (1) or more instances upon the strict performance of any
covenant of this Lease or to exercise any option or right herein contained shall
not be construed as a waiver for the future of such covenant, right, or option,
but the same shall continue in full force and effect.

 

 

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ARTICLE 19

Assignment and Subletting

 

19.1 Tenant may not assign this Lease, in whole or in part, or sublet all or any
part of the Premises without the express written consent of Landlord, which
consent will not be unreasonably withheld, conditioned or delayed; provided,
however, that no assignment or subletting by Tenant, voluntary or involuntary,
shall in any way affect the terms, conditions, covenants, agreements, and
provisions herein set forth, and any and all such assignments or subleases shall
be at all time subject to this Lease and to the prior right, title, and interest
of Landlord in and to the Premises. Any such assignment or subletting, in whole
or in part, shall not relieve or release tenant of the primary responsibility
for all payments, covenants, duties, and obligations hereunder. Landlord shall
have the right to transfer or assign this Lease or Landlord’s reversion
hereunder, and Tenant agrees to attorn to the lawful transferee thereof, but any
such transfer or assignment shall be at all times subject to this Lease and the
right of Tenant hereunder. The Tenant shall have the right to assign this Lease
to a parent, subsidiary or affiliated company, or to an entity which merges with
or consolidated into the foregoing, provided the Tenant and any guarantor of
this Lease shall not be released from the obligations for the payment of rent
and other requirements hereunder. Landlord acknowledges that Tenant may sublease
the kitchen and certain restaurant facilities in the Premises to a third party,
and Landlord hereby agrees to such sublease without further action by Tenant,
subject to the foregoing.

 

ARTICLE 20

Subordination and Attornment

 

20.1 This Lease shall be subject and subordinate to any and all mortgages (as
hereinafter defined) now or hereafter encumbering the Premises or any part
thereof and placed thereon by Landlord and to all renewals, modifications,
replacements, and extensions of such mortgages; provided, however, that the
subordination herein contained shall not be effective with respect to any
mortgage, unless and until the holder of such mortgage shall execute and deliver
a non-disturbance and attornment agreement in favor of Tenant, providing that in
the event its mortgage shall be foreclosed or the holder of the mortgage accepts
a duly recorded deed in lieu of foreclosure, so long as no event of default
shall have occurred and be continuing hereunder, and so long as Tenant shall
attorn to the purchaser upon foreclosure, or the owner of the Premises pursuant
to the deed in lieu of foreclosure, and continues to fully and completely
perform Tenant’s duties and obligations under this Lease, the Lease shall not
terminate by reason of such foreclosure or deed in lieu of foreclosure, Tenant’s
possession and quiet enjoyment of

 

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the property shall not be disturbed and the purchaser, upon acceptance and
recordation of the Trustee’s deed after such foreclosure or acceptance and
recordation of such deed in lieu of foreclosure, its successors, or assigns,
shall recognize Tenant and shall be obligated to perform fully and completely
Landlord’s duties and obligations under this Lease arising from and after the
date of acceptance and recordation of the Trustee’s deed or deed in lieu of
foreclosure. Landlord shall promptly advise Tenant in writing if it shall enter
into any mortgage affecting the Premises after the date hereof. In such event,
Landlord shall use its best efforts to cause the holder of any mortgage
affecting the Premises to enter into a nondisturbance agreement with Tenant
substantially in the form of Exhibit D attached hereto. As used in this
paragraph, the term “mortgage” shall mean any mortgage, deed to secure debt,
deed of trust, trust deed, sale-leaseback, lease-leaseback, or other collateral
conveyance of, or lien, or encumbrance against the Premises or any part thereof.

 

ARTICLE 21

Conditions Precedent

 

21.1 The respective obligations set forth herein of Landlord and Tenant shall be
subject to the fulfillment of the conditions set forth below, or such conditions
shall have been waived by the Tenant:

 

(a) The Virginia Racing Commission and any other applicable regulatory bodies
shall have granted a license to Tenant to own and operate a satellite wagering
facility in the Premises;

 

(b) Tenant shall have secured all requisite State and local governmental
approvals for the operation of a restaurant and satellite wagering facility;

 

(c) Tenant shall have secured a license to serve alcoholic beverages from the
Virginia Alcohol Beverage Control Bureau;

 

(d) The current holder of a mortgage affecting the Premises shall have executed
and delivered a Subordination, Nondisturbance and Attornment Agreement
substantially in the form of Exhibit D attached hereto;

 

(e) Landlord shall have secured any Tenant or Lender consents related to the
Shopping Center that are required by Tenant’s use of the Premises as described
in paragraph 11.5; and

 

(f) Tenant shall have satisfied itself that it can obtain governmental approvals
for its signs as provided in Section 8.2, and that it can operate its business
under the current zoning affecting the Shopping Center and the Premises.

 

 

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(g) Landlord and Tenant shall have reached agreement on the location for
Tenant’s telecommunications equipment, satellite dish, etc,. pursuant to Section
8.3.

 

Notwithstanding the foregoing, if such conditions precedent set forth in clauses
(a) – (c) above have not been satisfied or waived by Tenant on or before May 15,
2003, and the conditions precedent set forth in clauses (d), (e), (f) and (g)
above have not been satisfied or waived by Tenant on or before ninety (90) days
after the date hereof, Tenant may terminate this Lease upon written notice to
Landlord following which Landlord and Tenant shall have no obligations to one
another hereunder. The May 15, 2003 deadline date for Tenant to terminate based
on clauses (a) - (c) may be extended through May 1, 2004 upon payment by Tenant
of a non-refundable deposit of $2,500.00 per month, such payments to be made by
the 10th day of each month beginning with July 2003.

 

ARTICLE 22

Early Termination

 

22.1 Notwithstanding any provision to the contrary contained in this Lease,
Tenant shall have the right to terminate this Lease upon six (6) months’ written
notice to Landlord in the event that at any time during the initial term or any
renewal (i) the Virginia Racing Commission revokes Tenant’s license to own and
operate a satellite wagering facility on the Premises, provided Tenant does not
open a satellite wagering facility within four (4) miles of the Premises during
the one (1) year period following termination of this Lease and/or (ii) Haynes
Furniture ceases operating in 100% of its Premises as they are used for retail
selling space (approximately 100,000 square feet) today unless a comparable
retail operator commences operating in 100% of such retail selling space within
ninety (90) days after Haynes closes. Upon such termination, neither Landlord
nor Tenant shall have any rights or obligations with respect to the other under
this Lease other than Tenant’s duty to surrender the Premises as required
herein.

 

ARTICLE 23

Force Majeure

 

23.1 In the event that Landlord or Tenant shall be delayed, hindered in, or
prevented from the performance of any action required hereunder by reason of
strikes, lock-outs, riots, insurrection, war, acts of God, or other reason of a
like nature not the fault of such parties or not within their control, then
performance of such act shall be excused for the period of delay, and the period
for the performance of any such act shall be extended for a period equivalent to
the period of such delay.

 

 

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ARTICLE 24

Successors and Assigns

 

24.1 This Lease shall be binding upon and shall inure to the benefit of the
parties hereto, and to their respective personal and legal representatives,
estates, heirs, legatees, assigns, and successors in interest.

 

ARTICLE 25

Landlord’s Covenants

 

25.1 In connection herewith, Landlord has granted Tenant a reasonable credit
toward rent for and in consideration of the Tenant undertaking to make
substantial repairs and renovations to the Premises, it being understood that
all repairs, additions, and improvements to the Premises shall become part of
the freehold, and title to same shall be vested in Landlord upon vacation of the
Premises by the Tenant, with the exception of Tenant’s signs within or upon the
Premises or the Shopping Center, equipment, furnishings, inventory, trade
fixtures and other personal property, as provided in paragraph 11.6 hereof.

 

ARTICLE 26

Relationship of Landlord and Tenant

 

26.1 It is expressly understood that Landlord shall not be construed or held to
be a partner, joint venturer, or associate of Tenant in the conduct of its
business, it being expressly understood and agreed that the relationship between
the parties hereto is and shall at all times remain that of Landlord and Tenant.

 

ARTICLE 27

Right to Inspect

 

27.1 Upon twenty-four (24) hours’ written notice to Tenant, Landlord or its
agents shall have access to the Premises and improvements thereon at any and all
reasonable times for the purpose of inspecting the Premises. Tenant agrees to
furnish an agent of Tenant for such purpose upon request therefor, after
reasonable notice, by Landlord.

 

ARTICLE 28

Estoppel Certificates

 

28.1 Landlord and Tenant will, at the request of the other, execute,
acknowledge, and deliver to the requesting party a certificate certifying: (i)
whether or not this Lease is unmodified and in full force and effect (or, if
there have been modifications, the extent to which this Lease is in full force
and effect as modified

 

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and stating the modifications); (ii) whether or not there are then existing any
offsets or defenses against the enforcement of any other provisions of this
Lease (and if so, specifying the same); and (iii) the dates, if any, to which
the rent and other charges have been paid in advance. Any such certificate may
be relied upon by any prospective mortgagee or mortgagees of the Premises or of
any part thereof, or any prospective assignee or mortgagee of Tenant’s interest
hereunder.

 

ARTICLE 29

Brokerage

 

29.1 Landlord and Tenant each warrant and represent to the other that except for
Divaris Real Estate (“Broker”), whose commission shall be paid by Landlord,
there was no broker or agent involved by it in consummating this Lease, and that
no conversations or prior negotiations were had with any broker or agent
concerning the renting of the Premises. Landlord and Tenant shall each indemnify
and hold the other harmless against any claims for brokerage or other
commissions arising by reason of a breach of its aforesaid representation and
warranty.

 

ARTICLE 30

Recordation

 

30.1 Landlord agrees that it will, upon Tenant’s written request, execute and
record a memorandum or short form lease in form and substance acceptable to
Tenant at Tenant’s expense.

 

ARTICLE 31

Gender and Number

 

31.1 Words of any gender used in this Lease shall be held to include any other
gender, and words in the singular number shall be held to include the plural
(and vice-versa) when the sense requires.

 

ARTICLE 32

Time is of the Essence

 

32.1 Time is of the essence, and each party recognizes same.

 

ARTICLE 33

Titles

 

33.1 The titles and article or paragraph headings are inserted for convenience
only and are in no way to be construed as a part of this Lease or as a
limitation on the scope of the particular provisions to which they enter.

 

 

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ARTICLE 34

Waiver

 

34.1 The failure of Landlord or Tenant to insist upon strict performance of any
of the covenants or conditions of this Lease or to exercise any option herein
conferred in any one or more instances shall not be construed as a waiver or
relinquishment for the future of any such covenant, condition, or option, but
the same shall be and remain in full force and effect; and it is further agreed
that the acceptance by Landlord of rent from Tenant shall not constitute a
waiver of such breach, nor a waiver of the right of Landlord to insist upon
Tenant’s curing such breach or default.

 

ARTICLE 35 - Intentionally Deleted.

 

ARTICLE 36

Validity

 

36.1 In the event that any provision of this Agreement shall be held to be
invalid, the same shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.

 

ARTICLE 37

Applicable Law

 

37.1 This Agreement and the rights of the parties hereunder shall be interpreted
in accordance with the laws of the Commonwealth of Virginia.

 

ARTICLE 38

Entire Agreement

 

38.1 This instrument contains all the agreements and conditions made between the
parties hereto, and there are no promises, agreements, conditions, or
understandings, either oral or written, expressed or implied, between them,
other than as herein set forth. This Lease supersedes all prior understandings,
agreements, and conditions, whether oral or written, between the parties hereto,
and may not be modified orally or in any other manner other than by an agreement
in writing, signed by all the parties hereto or their respective successors in
interest.

 

ARTICLE 39

Effectiveness of Lease

 

39.1 This Lease shall not be effective until executed by Landlord and Tenant.

 

24

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IN WITNESS WHEREOF, Landlord, by its duly authorized representative, and Tenants
have signed and sealed this Agreement as of the day and year first above
written.

 

LANDLORD:

HAYNES CHIPPENHAM PLAZA, L.L.C., a

Virginia limited liability company

By:

  HAYNES FURNITURE COMPANY, INC., a Virginia corporation,     Member-Manager

 

   

  By:

 

(SEAL)

--------------------------------------------------------------------------------

   

  Name:

 

 

--------------------------------------------------------------------------------

   

  Title:

 

 

--------------------------------------------------------------------------------

 

TENANT:

COLONIAL DOWNS, L.P., a

Virginia limited partnership

By:

  STANSLEY RACING CORP., a Virginia corporation, its sole general partner

 

   

By:

 

(SEAL)

--------------------------------------------------------------------------------

            Ian M. Stewart, President

 

25

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Exhibit A

 

The Shopping Center and the Premises

 

1

Exhibit A

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Exhibit A-1

 

Parking and Signs

 

 

1

Exhibit A-1

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Exhibit B

 

Pylon Sign

 

1

Exhibit B

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Exhibit C

 

Restrictions

 

The following restrictions pertain to the Shopping Center:

 

1. Pursuant to a Declaration of Restrictive Covenant dated June 19, 2000 and
recorded as instrument number 0026279, by Haynes Furniture Company,
Incorporated, as owner, for the benefit of Delhaize America, Inc., formerly
known as Food Lion, Inc., the Owner has agreed that it will not, until March 31,
2013:

 

  a. Lease, rent or sell any portion of the Premises or allow any portion of the
Premises to be occupied as a grocery store or a supermarket, or

 

  b. Lease, rent or sell any portion of the Premises to or allow any portion of
the Premises to be occupied by a tenant, the majority of whose sales results
from the sale of food items.

 

2. Pursuant to that certain Lease made as January 31, 2001, by and between
Harbor Freight Tools USA, Inc., as Tenant, and Haynes Furniture Company,
Incorporated, as Landlord, Harbor Freight Tools USA, Inc., has the exclusive
right in the Premises and Shopping Center to operate a retail store for sales of
hardware, tools, and related merchandise and services.

 

1

Exhibit C

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Exhibit D

 

THIS INSTRUMENT WAS PREPARED BY HOFHEIMER NUSBAUM, P.C.

 

SUBORDINATION NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

THIS AGREEMENT made this      day of                              2003, among
COLUMN FINANCIAL, INC., a Delaware corporation, its successors and assigns
(hereinafter referred to as “Lender”) (Index as Grantor and Grantee), COLONIAL
DOWNS, L.P., a Virginia limited partnership, (hereinafter referred to as
“Tenant”) (Index as Grantor and Grantee), and HAYNES CHIPPENHAM PLAZA, L.L.C., a
Virginia limited liability company (hereinafter referred to as “Landlord”)
(Index as Grantor and Grantee).

 

STATEMENT OF BACKGROUND

 

Landlord and Tenant have entered into a certain lease (hereinafter referred to
as the “Lease”), dated May     , 2003, relating to the premises described in the
Lease (hereinafter referred to as the “Premises”) which are described in, or are
a part of the property described in Exhibit “A” attached hereto and by this
reference made a part hereof. Lender has made a loan to Landlord in the
principal amount of $7,000,000 secured by a mortgage or security deed
(hereinafter referred to as the “Mortgage”) and an assignment of leases and
rents from Landlord to Lender covering certain property described therein (the
“Property”) including the Premises. Tenant has agreed that the Lease shall be
subject and subordinate to the Mortgage held by Lender, provided Tenant is
assured of continued occupancy of the Premises under the terms of the Lease.

 

STATEMENT OF AGREEMENT

 

For and in consideration of the mutual covenants herein contained, the sum of
Ten Dollars ($10.00) and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, and notwithstanding anything in
the Lease to the contrary, it is hereby agreed as follows:

 

1. Lender, Tenant and Landlord do hereby covenant and agree that the Lease with
all rights, options (including options to acquire or lease all or any part of
the Premises), liens and charges created thereby, is and shall continue to be
subject and subordinate in all respects to the Mortgage and to any renewals,
modifications, consolidations, replacements and extensions thereof and to all
advancements made thereunder.

 

2. Lender does hereby agree with Tenant that, in the event Lender becomes the
owner of the Premises by foreclosure, conveyance in lieu of foreclosure or
otherwise, so long as Tenant complies with and performs its obligations under
the Lease, (a) the Lease shall continue in full force and effect as a direct
Lease between the succeeding owner of the Property and Tenant, upon and subject
to all of the terms, covenants and conditions of the Lease, for the balance of
the term of the Lease, and Lender will not disturb the possession of Tenant, and
(b) the

 

1

Exhibit D

--------------------------------------------------------------------------------

Premises shall be subject to the Lease and Lender shall recognize Tenant as the
tenant of the Premises for the remainder of the term of the Lease in accordance
with the provisions thereof and Tenant’s rights under the Lease and shall not
disturb Tenant’s possession of the Premises; provided, however, that Lender
shall not be liable for any act or omission of any prior landlord (including
Landlord), nor shall Lender be bound by any rent or additional rent which Tenant
might have paid for more than the current month or any security deposit or other
prepaid charge paid to any prior landlord (including Landlord) nor shall it be
bound by any amendment or modification of the Lease made without its written
consent. Nothing contained herein shall prevent Lender from naming Tenant in any
foreclosure or other action or proceeding initiated by Lender pursuant to the
Mortgage to the extent necessary under applicable Law in order for Lender to
avail itself of and complete the foreclosure or other remedy.

 

3. Tenant does hereby agree with Lender that, in the event Lender becomes the
owner of the Premises by foreclosure, conveyance in lieu of foreclosure or
otherwise, then Tenant shall attorn to and recognize Lender as the landlord
under the Lease for the remainder of the term thereof, and Tenant shall perform
and observe its obligations thereunder, subject only to the terms and conditions
of the Lease. Tenant further covenants and agrees to execute and deliver upon
request of Lender an appropriate agreement of attornment to Lender and any
subsequent titleholder of the Premises reasonably acceptable to Tenant.

 

4. Tenant acknowledges that Landlord may execute and deliver to Lender an
assignment of the Lease as security for said loan, and Tenant hereby expressly
consents to such assignment. Tenant agrees to notify Lender of any default(s) by
Landlord under the Lease; Lender shall have the same right to cure such
default(s) as is provided to Landlord under the Lease.

 

5. Lender shall have no obligation or incur any liability with respect to the
construction or completion of the improvements in which the Premises are located
or for completion of the Premises or any improvements for Tenant’s use and
occupancy. Lender shall have no obligations nor incur any liability with respect
to any warranties of any nature whatsoever, including, any warranties respecting
use, compliance with zoning, hazardous wastes or environmental laws, Landlord’s
title, Landlord’s authority, habitability, fitness for purpose or possession. In
the event that Lender shall acquire title to the Premises or the Property,
Lender shall have no obligation, nor incur any liability, beyond Lender’s then
equity interest, if any, in the Premises, and Tenant shall look exclusively to
such equity interest of Lender, if any, in the Premises for the payment and
discharge of any obligations or liability imposed upon Lender, hereunder, under
the Lease or under any new lease of the Premises.

 

6. If any portion or portions of this Agreement shall be held invalid or
inoperative, then all of the remaining portions shall remain in full force and
effect, and, so far as is reasonable and possible, effect shall be given to the
intent manifested by the portion or portions held to be invalid or inoperative.

 

7. This Agreement shall be governed by and construed in accordance with the laws
of the State in which the Property is located.

 

8. Lender shall not, either by virtue of the Mortgage, the Assignment of Leases
or this Agreement, be or become a mortgagee in possession or be or become

 

2

Exhibit D

--------------------------------------------------------------------------------

subject to any liability or obligation under the Lease or otherwise until Lender
shall have acquired the interest of Landlord in the Premises, by foreclosure or
otherwise, and then such liability or obligation of Lender under the Lease shall
extend only to those liability or obligations accruing subsequent to the date
that Lender has acquired the interest of Landlord in the Premises as modified by
the terms of this Agreement.

 

9. Any and all notices, elections, approvals, consents, demands, requests and
responses thereto (“Communications”) permitted or required to be given under
this Agreement shall be in writing and shall be deemed to have been properly
given and shall be effective upon the earlier of receipt thereof or deposit
thereof in the United States mail, postage prepaid, certified with return
receipt requested, to the other party at the address of such other party set
forth hereinbelow or at such other address within the continental United States
as such other party may designate by notice specifically designated as a notice
of change of address and given in accordance herewith; provided, however, that
the time period in which a response to any Communication must be given shall
commence on the date of receipt thereof; and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt thereof. Any notice, if given to Lender, must be
addressed as follows, subject to change as provided hereinabove:

 

Column Financial, Inc.

11 Madison Avenue, 5th Floor

New York, NY 10010

Attn: Edmund Taylor

 

and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:

 

Colonial Downs, L.P.

10515 Colonial Downs Parkway

New Kent, VA 23124

 

with a copy to:

 

James L. Weinberg, Esq.

Hirschler Fleischer

P.O. Box 500

Richmond, VA 23218-0500

 

and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:

 

Haynes Chippenham Plaza, L.L.C.

5324 Virginia Beach Blvd.

Virginia Beach, VA 23462

 

10. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors,
successors-in-title and assigns. When used herein, the term “landlord” refers to
Landlord and to any successor to the interest of Landlord under the Lease. The
term “Lender” refers to Lender and to any successor-in-interest of Lender under
the Mortgage.

 

3

Exhibit D

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the date first above written.

 

LENDER:

COLUMN FINANCIAL, INC.,

a Delaware corporation

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

 

--------------------------------------------------------------------------------

LANDLORD:

HAYNES CHIPPENHAM PLAZA, L.L.C.,

a Virginia limited liability company

By:

 

HAYNES FURNITURE COMPANY,

   

INCORPORATED, a Virginia

   

corporation, its Managing Member

 

   

      By:

 

 

--------------------------------------------------------------------------------

   

      Name:

 

 

--------------------------------------------------------------------------------

   

      Title:

 

 

--------------------------------------------------------------------------------

 

TENANT:

COLONIAL DOWNS, L.P., a Virginia

limited partnership

By:

 

STANSLEY RACING CORP., a

   

Virginia corporation, its sole general

partner

 

   

By:

 

 

--------------------------------------------------------------------------------

       

        Ian M. Stewart, President

 

4

Exhibit D

--------------------------------------------------------------------------------

STATE OF VIRGINIA

COUNTY/CITY OF                                     , to-wit:

 

The foregoing Subordination, Non-Disturbance and Attornment Agreement was
acknowledged before me this      day of                         , 2003, by
                                                                  of Column
Financial, Inc., a Delaware corporation, on behalf of said corporation. He/She
is personally known to me or has produced a driver’s license as identification.

 

--------------------------------------------------------------------------------

Notary Public

 

My Commission Expires:                                                  

 

STATE OF VIRGINIA

COUNTY/CITY OF                             , to-wit:

 

The foregoing Subordination, Non-Disturbance and Attornment Agreement was
acknowledged before me this      day of                         , 2003, by
                                                                  of Hayes
Furniture Corporation, Incorporated, a Virginia limited liability company, on
behalf of said company. He/She is personally known to me or has produced a
driver’s license as identification.

 

--------------------------------------------------------------------------------

Notary Public

 

My Commission Expires:                                                  

 

5

Exhibit D