EXHIBIT 10.8

 

ASSIGNMENT AND ASSUMPTION OF LEASE (ARLINGTON)

 

This Assignment and Assumption Agreement (the “Agreement”) is entered into as of
this 11th day of March, 2004 by and between the Horseshoe Club Operating
Company, a Nevada Corporation (“Assignor”) and Speakeasy Gaming of Fremont,
Inc., a Nevada corporation (“Assignee”), based upon the following:

 

A.                                   Assignor and Harrah’s Operating Company,
Inc., a Delaware corporation (“Harrah’s”) are parties to that certain Asset
Purchase Agreement dated as of January 21, 2004 (the “Asset Purchase
Agreement”), as subsequently assigned by Harrah’s to HHLV Management Company,
LLC, a Nevada limited liability company (“HHLV”), by the terms of which Seller
has agreed to transfer to Harrah’s and its assignee, HHLV, all of its interest
in and to certain Real Property, as therein defined, including certain leased
property.

 

B.                                     HHLV and Assignee have entered into that
certain Purchase and Sale Agreement dated February 9, 2004, pursuant to which
Assignee has acquired all of HHLV’s rights, title and interest in and to certain
Leased Property, as therein defined.

 

C.                                     Assignor is the current lessee of that
parcel of Real Property described on Exhibit “A” hereto (the “Leased Property”).

 

D.                                    The Leased Property is leased to Assignor
pursuant to the lease agreement identified on Exhibit “B” hereto (the “Lease”).

 

NOW THEREFORE, based upon the foregoing and in consideration for the mutual
covenants hereinafter set forth it is agreed as follows:

 

1.                                       Assignor hereby assigns to Assignee all
of its right, title and interest in and to the Lease and its leasehold estate in
the Leased Property to Assignee.

 

2.                                       Assignee hereby assumes all liabilities
and obligations of Assignor under the Lease arising from and after the date
hereof.

 

3.                                       This Agreement shall be binding on and
inure to the benefit of the successors and assigns of the parties hereto.

 

4.                                       NOTICES.  Any notice, demand or
document which any party is required or may desire to give, deliver or make to
any other party shall be in writing, and may be personally delivered or given or
made by United States registered or certified mail, return receipt requested, by
overnight delivery service (e.g., Federal Express), or by telecopied
transmission addressed as follows:

 

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To Assignor:

 

Horseshoe Club Operating Company

1900 Silver Street

Las Vegas, NV 89102

Attn:  Becky Binion Behnen

 

With a copy to:

 

Jerome A. DePalma, Esq.

7040 Laredo, Suite C

Las Vegas, NV 89117

Telecopy:  (702) 794-0479

 

To Assignee:

 

Speakeasy Gaming of Fremont, Inc.

3227 Civic Center Drive

Las Vegas, NV 89030

Telecopy: (702) 399-4108

Attn: Roger Szepelak

 

With a copy to:

 

Ruben & Aronson, LLP

4800 Montgomery Lane, Suite 150

Bethesda, MD 20814

Telecopy: (301) 951-9636

Attn: Robert L. Ruben, Esq.

 

5.                                       VALIDITY.  Assignor represents and
warrants that (i) Assignor has not assigned or executed any assignment of, and
will not assign or execute any assignment of its interest in the Lease to anyone
other than the Assignee, and any assignment, designation or direction by
Assignor inconsistent herewith shall be void; and (ii) Assignor has not done any
act or executed any document that impairs the rights of the Assignee to the
Lease under this Assignment.

 

6.                                       FURTHER ASSURANCES.  Each of the
undersigned agrees to execute and deliver to the other, upon demand, such
further documents, instruments and conveyances and shall take such further
actions as are necessary or desirable to effectuate this Assignment.

 

7.                                       ATTORNEYS’ FEES.  If any party hereto
brings any judicial action or proceeding to enforce its rights under this
Assignment, the prevailing party shall be entitled, in addition to any other
remedy, to recover from the others, regardless of whether such action or
proceeding is prosecuted to judgment, all costs and expenses, including, without
limitation, reasonable attorneys’ fees, incurred therein by the prevailing
party.

 

8.                                       AMENDMENTS.  This Assignment shall not
be amended except by a written instrument signed by the parties hereto.

 

9.                                       GOVERNING LAW.  This Assignment shall
be governed by the law of the State of Nevada.

 

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10.                                 BINDING ON SUCCESSORS.  This Assignment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and representatives.

 

11.                                 HEADINGS.  The subject headings or captions
of the paragraphs of this Assignment shall not affect the construction or
interpretation of the any provisions contained herein.

 

12.                                 COUNTERPARTS.  This Assignment may be signed
in multiple counterparts, with each counterpart having the same force and effect
as if this single instrument were executed by the parties.

 

13.                                 THIRD PARTY BENEFICIARIES.  There are no
third-party beneficiaries to this Assignment.

 

14.                                 ENTIRE AGREEMENT.  This Agreement and all
documents and instruments referred to herein constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

 

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the day
and year first above written.

 

 

ASSIGNOR:

 

 

 

HORSESHOE CLUB OPERATING COMPANY,

 

a Nevada corporation

 

 

 

 

 

By:

/S/ Becky Binion Behnen

 

 

Name:

 Becky Binion Behnen

 

 

Title:

President

 

 

 

 

 

 

ASSIGNEE:

 

 

 

SPEAKEASY GAMING OF FREMONT, INC.,

 

a Nevada corporation

 

 

 

 

 

By:

/S/  Roger M. Szepelak

 

 

Name:

Roger M. Szepelak

 

Its:

Vice President and Chief Operating Officer

 

 

EXHIBIT A  TO ASSIGNMENT AND ASSUMPTION OF LEASE (ARLINGTON)

 

Lots Thirteen (13), Fourteen (14), Fifteen (15), Sixteen (16), and Seventeen
(17), in Block 15 of Clark’s Las Vegas Townsite, including any property now
vacated or which may hereinafter be vacated as adjacent alleys, as shown by map
thereof on file in Book 1 of Plats, Page 37, in the Office of the County
Recorder of Clark County, Nevada.

 

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Second Amendment of Restated Lease Agreement

 

This Second Amendment of Restated Lease Agreement (this “Agreement”), dated as
of the 10th day of March, 2004, is by and between Arlington Realty Co. Limited
Partnership, a Nevada limited partnership (“Lessor”) and Speakeasy Gaming of
Fremont, Inc., a Nevada corporation (“Lessee”).

 

Recitals

 

WHEREAS, Lessor is the owner of that certain real property comprised of lots
thirteen (13), fourteen (14), fifteen (15), sixteen (16) and seventeen (17) in
block fifteen (15) of Clark’s Las Vegas Townsite, in the City of Las Vegas,
Nevada, together with that portion of the alley vacated by an Order of Vacation
dated May 24, 1961 and recorded on July 6, 1961 in Book 306 of Official Records
as Document No. 247945 and an Order of Vacation dated February 19, 1993 and
recorded on March 24, 1993 in Book 930324 as Document No. 00839, excepting
therefrom all buildings and improvements (the “Property”).

 

WHEREAS, Lessor’s predecessor, Sage Realty Co., a Nevada limited partnership
(“Sage”), was a party to a Restated Lease Agreement made as of June 1, 1982 by
and between Sage as lessor and Sahara-Nevada Corporation, a Nevada corporation
(“Sahara-Nevada”), as lessee (the “1982 Lease”).

 

WHEREAS, the Lease was amended pursuant to an Amendment of Restated Lease
Agreement made as of December 28, 1984 (the “1984 Amendment”).

 

WHEREAS, Sahara-Nevada’s lessee’s interest in the 1982 Lease, as modified by the
1984 Amendment (collectively, the “Existing Lease”) was conveyed to Horseshoe
Club Operating Company, a Nevada corporation (“HCOC”), by deed recorded
August 12, 1988 in Book 880812 as Document No. 00274.

 

WHEREAS, HCOC’s lessee’s interest in the Existing Lease was conveyed to Lessee,
a wholly owned subsidiary of MTR Gaming Group, Inc. (“MTR”), pursuant to an
Assignment and Assumption of Lease of even date hereof, in connection with
Lessee’s purchase of the Binion’s Hotel and Casino.

 

WHEREAS, concurrently with the acquisition by Lessee of HCOC’s lessee’s interest
in the Lease, Lessor and Lessee desire to make certain amendments to the terms
and conditions of the Existing Lease.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

 

1.                                       Recitals.  The foregoing recitals are
hereby incorporated herein as more fully set forth above.

 

2.                                       Scope of Amendment.  This Agreement
amends the Existing Lease in the manner described herein.  For the purposes of
this Agreement, the term “Lease” shall refer to the Existing Lease as modified
by this Agreement.  To the extent of any conflict between this Agreement and the
Existing Lease, the provisions of this Agreement shall govern.  The parties
acknowledge that certain provisions of this Agreement are inconsistent with the
Existing Lease.  Accordingly, the parties agree to negotiate in good faith to
enter into an Amended and Restated Lease within six (6) months of the date
hereof.  It is the parties’ intention that the terms and conditions of such
Amended and Restated Lease shall be consistent with the terms and conditions of
this Agreement and shall otherwise be commercially reasonable.  Unless otherwise
defined herein, capitalized terms shall have the meaning ascribed to them in the
Existing Lease.

 

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3.                                       Rental.

 

(a)                                  Monthly Rental during HHLV Management. 
Pursuant to a Joint Operating License Agreement of even date hereof (the
“Operating Agreement”) between Lessee and HHLV Management Company (“HHLV”), HHLV
shall operate the Binion’s Hotel and Casino (the “Hotel/Casino”) for a term of
from one (1) to three (3) years (the “Operating Agreement Term”).  During the
Operating Agreement Term, the monthly rental amount shall be One Hundred Fifty
Three Thousand Dollars ($153,000.00) per month.  For purposes of this Agreement,
the monthly rental amounts paid to the Lessor shall be net of, without
limitation, utility charges, insurance premiums, maintenance and repairs, and
taxes relating to the Hotel/Casino (other than any inheritance, transfer, estate
or succession tax or any income or other tax or excise on rents that may be
imposed upon Lessor by reason of any existing or subsequently enacted law).

 

(b)                                 Monthly Rental during Lessee Management.

 

(i)                                     Definition of “Rental Year”.  For
purposes of this Agreement, the one year period between the expiration of the
Operating Agreement Term and the first anniversary of such expiration shall be
referred to as the “First Rental Year”, the one year period between such
expiration of the First Rental Year and the second anniversary of the expiration
of the Operating Agreement Term shall be referred to as the “Second Rental
Year”, and subsequent rental years (“Rental Years”) commencing on each
anniversary of the expiration of the Operating Agreement shall be referred to
correspondingly based upon the time that has passed since the expiration of the
Operating Agreement Term.  Although Average EBITDA will be calculated on a
calendar year basis, the commencement date and expiration date of Rental Years
shall be determined by reference to the expiration of the Operating Agreement
Term and not by reference to the calendar year.

 

(ii)                                  Monthly Rental Amount.  During the First
Rental Year and Second Rental Year, the monthly rental amount shall remain at
the Base Rent (defined below).  During the Third Rental Year and in subsequent
Rental Years, the monthly rental amount shall be the Base Rent less the Rent
Credit (defined below) plus the Rent Credit Recapture (defined below) [Base Rent
– Rent Credit + Rent Credit Recapture].

 

(iii)                               Rent Credit.  The “Rent Credit” shall be
equal to the difference between the Base Rent and the Floor multiplied by the
Adjustment Percentage [(Base Rent – Floor) X  Adjustment Percentage].

 

(iv)                              Adjustment Percentage; Average EBITDA
Thresholds.  The “Adjustment Percentage” is equal to a percentage determined by
whether Average EBITDA achieves the following thresholds (the “Average EBITDA
Thresholds”):

 

Average EBITDA Thresholds

 

Adjustment Percentage

 

 

 

 

 

$0 - $999,000

 

100.00

%

$1,000,000 - $1,999,999

 

83.33

%

$2,000,000 - $2,999,999

 

66.67

%

$3,000,000 - $3,999,999

 

50.00

%

$4,000,000 - $4,999,999

 

33.33

%

$5,000,000 - $5,999,999

 

16.67

%

More than $6,000,000

 

0

%

 

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As the Base Rent and Floor are increased every five years pursuant to
Section 3(c), below, the Average EBITDA Thresholds shall be increased
correspondingly.

 

(v)                                 EBITDA.  For purposes of this Agreement,
“Average EBITDA” means the average EBITDA for the preceding three full calendar
year period subsequent to the expiration of the Operating Agreement Term  (or,
if shorter, the number of full calendar years subsequent to the expiration of
the Operating Agreement Term).

 

(A)                              For purposes of calculating the Rent Credit,
there shall be no Rent Credit for the Second Rental Year, the Rent Credit for
the Third Rental Year shall be based upon Average EBITDA for the preceding full
calendar year period, the Rent Credit for the Fourth Rental Year shall be based
upon Average EBITDA for the preceding two full calendar year periods, and the
Rent Credit for the Fifth Rental Year and for subsequent Rental Years shall be
based upon Average EBITDA for the preceding three full calendar year periods.

 

(B)                                For purposes of this Agreement, “EBITDA”
means, for any calendar year, the net income of the Lessee with respect to the
Hotel/Casino (including, but not limited to, net income from gaming, lodging,
food and beverage) for such calendar year adjusted to add thereto (to the extent
deducted in determining net income), without duplication, the sum of (i)
interest expense, (ii) income taxes (excluding any state or local gaming fees,
charges or taxes), and (iii) depreciation and amortization expense as reported
in the income statement of the Lessee.

 

(C)                                Lessor acknowledges that Lessee is a Nevada
gaming licensee and is a subsidiary of MTR, a publicly traded company. 
Accordingly, the Lessor agrees that, if MTR and/or Lessee disclose the EBITDA
for the Hotel/Casino in any filings with the Nevada Gaming Control Board or the
United States Securities and Exchange Commission, such disclosure shall be
dispositive and Lessor shall have no right to audit Lessee’s books and records. 
If neither MTR nor Lessee disclose the EBITDA for the Hotel/Casino in such
filings, Lessee shall disclose the amount of EBITDA to Lessor in commercially
reasonable detail, including, without limitation, the calculation thereof, and
Lessor shall have the right, at reasonable times and with reasonable notice, to
cause an independent public accounting firm to audit Lessee’s books and
records.  If such audit discloses that EBITDA amount provided by the Lessee to
the Lessor is erroneous and that such erroneous understatement represents more
than three percent (3%) of the actual EBITDA in any calendar year, Lessee shall
pay to Lessor the amount of additional rent that would have otherwise have been
payable if the actual EBITDA had been properly utilized plus interest at the
rate of ten percent (10%) per annum, compounded monthly.  In addition, if there
is such an erroneous understatement of EBITDA, Lessee shall reimburse Lessor for
Lessor’s reasonable auditing fees.  If, however, such audit does not disclose an
understatement of EBITDA representing more than three percent (3%) of actual
EBITDA in any calendar year, Lessor shall pay Lessee’s documented costs
resulting from such audit.  Lessor’s right to cause an independent public
accounting firm to audit Lessee’s books and records shall be subject to the
following limitations:  (i) Lessor shall exercise its right to an audit no more
frequently than once every twelve (12) months, (ii) the audit shall be conducted
in a manner that does not unreasonably interfere with the Lessee’s business,
(iii) Lessee and its independent public accounting firm shall have entered into
a commercially reasonable confidentiality agreement that protects Lessee against
damage to its business and against violations of the securities laws by Lessor.

 

(D)                               On or before April 1 of each calendar year,
Lessee shall have calculated and disclosed its EBITDA for the preceding calendar
year.  In the event that a new Rental Year shall have already commenced, the
monthly rental amount shall remain at the prior year level until the Lessee has
calculated its EBITDA for the preceding calendar year (at which point there
shall be a lump sum adjustment).

 

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(vi)                              Rent Credit Recapture.  In the event that an
increase in EBITDA for a calendar year causes an increase in Average EBITDA over
the prior years, there shall be a recapture of the Rental Credit taken into
account in each of the prior two Rental Years.  Such Rent Credit Recapture (the
“Rent Credit Recapture”) shall be equal to the difference between the Rent
Credit which would have been taken into account in each such Rental Year if the
current Adjustment Percentage (based upon the current Average EBITDA) had been
used in computing the Rent Credit over the Rent Credit taken into account in
such prior Rental Year using the Adjustment Percentage then in effect.  The Rent
Credit Recapture for each of the two prior Rental Years shall be aggregated and
then amortized and paid by Lessee to Lessor in twelve (12) monthly amounts
during the current Rental Year.

 

(c)                                  Base Rent & Floor; Increases Every Five
Years.  The “Base Rent” and the “Floor” shall be determined as set forth in this
Section 3(c).

 

(A)                              The Base Rent shall be initially equal to One
Hundred Fifty Three Thousand Dollars ($153,000.00) and the Floor shall be
initially equal to One Hundred Twenty Five Thousand Dollars ($125,000).  The
initial Base Rent, Floor and Average EBITDA Thresholds shall be increased, in
the manner provided for herein, on March 1, 2009 and every five (5) years
thereafter during the term of the Lease.

 

(B)                                On March 1, 2009, the initial Base Rent,
Floor and Average EBITDA Thresholds shall all be increased by either (i) Twelve
and One-Half Percent (12.5%) if HHLV manages the Hotel/Casino under the
Operating Agreement for a period in excess of one (1) year, or (ii) Fifteen
Percent (15%) if HHLV manages the Hotel/Casino under the Operating Agreement for
a period of one (1) year or less.

 

(C)                                On March 1, 2014 and every five (5) years
thereafter during the term of the Lease (each an “Adjustment Date”), the  Base
Rent, Floor and Average EBITDA Thresholds in effect immediately prior to the
Adjustment Date shall all be adjusted upward by the greater of ten percent (10%)
or the increase in the National Consumer Price Index for Urban Wage Earners and
Clerical Workers for all items (1982-84 = 100), published by the Bureau of Labor
Statistics of the U.S. Department of Labor (the “Index”) during the five (5)
year period immediately preceding the Adjustment Date (the “Adjustment Period”).

 

(D)                               On each Adjustment Date, the increase in the
Index for the Adjustment Period shall be computed  by multiplying the Base Rent,
Floor and Average EBITDA Thresholds in effect immediately prior to the
Adjustment Date by a fraction, the numerator shall be the Index number at the
Adjustment Date and the denominator shall be the Index Number on the date five
(5) years prior to the Adjustment Date.

 

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4.                                       Assignment and Encumbrance.

 

(a)                                  Assignment.  Subject to the provisions of
this Section 4(a), Lessee shall have the right, at any time and from time to
time during the term of the Lease, with the express prior written consent of
Lessor, which shall not be unreasonably withheld, delayed or conditioned, to
assign, sell or otherwise transfer its interest, in whole or in part, in this
Lease and the estate created by this Lease.  Lessor and Lessee agree that it
shall not be reasonable for Lessor to withhold its consent to any proposed
assignment if the proposed assignee has obtained all required gaming approvals
to operate the Property as a Hotel/Casino.  Lessee shall not be released from
liability hereunder in the event of such assignment, sale or other transfer
without the prior written agreement of Lessor releasing Lessee from such
liability, which agreement shall not be unreasonably withheld, delayed or
conditioned.

 

(b)                                 Subletting.  Lessee shall have the right, at
its sole option, at any time and from time to time during the term of the Lease
to sublet all or any part or parts of the Property and to assign, encumber,
extend, or renew any sublease; provided, however, Lessee shall ensure that such
sublease entered into after the date hereof shall contain a provision requiring
such sublessee, so long as the terms of such sublease are recognized and
honored, to attorn to Lessor if Lessee defaults under this Lease, and if the
sublessee is notified of Lessee’s default and instructed to make sublessee’s
rental payments to Lessor.

 

(c)                                  Encumbrances.

 

A.                                   By Lessor.  At all times during the Term,
Lessor shall have the right to encumber or hypothecate to any mortgagee of any
mortgage or beneficiary of a deed of trust encumbering Lessor’s leasehold estate
in this Lease or Lessor’s fee interest in the Property.  If the interest of
Lessor shall be acquired by any person (a “Purchaser”) by reason of foreclosure
of an encumbrance or deed in lieu thereof, and such Purchaser succeeds to the
interest of Lessor hereunder, Lessee hereby attorns to such Purchaser as lessor
and agrees to be bound to such Purchaser under all provisions of this Lease for
the balance of the term of the Lease.  Lessor agrees to execute any documents
required by Lessee to be executed to affect such attornment.  Notwithstanding
the foregoing, Lessor shall not encumber the Property unless such lender or
beneficiary provides to Lessee a certificate of non-disturbance in form and
substance reasonably acceptable to Lessee’s counsel agreeing that so long as
Lessee pays the rent hereunder, and otherwise complies with its obligations
hereunder, its leasehold estate and possession of the Property shall not be
affected by any default under the encumbrance placed upon the Property by
Lessor.

 

B.                                     By Lessee.  Without the necessity of the
consent of Lessor, Lessee shall have the right from time to time and at any time
during the term of the Lease to encumber or hypothecate its leasehold estate in
this Lease and in the Property, and its interest in any buildings, improvements,
fixtures and personal property thereon, in favor of  any mortgagee of any
mortgage or beneficiary of a deed of trust (a “Lender”); provided that (i) the
form of any mortgage or deed of trust shall require Lender to provide to Lessor,
substantially concurrently with the provision thereof to Lessee, a copy of any
notice of default or breach by Lessee thereunder, and (ii) Lender will enter
into an agreement with Lessor providing that Lessor will have the option, to be
exercised in its sole discretion to cure any default or breach of which notice
is given to Lessee pursuant to the Lease and that such cure will be accepted by
Lender, and such other provisions as are customarily included in agreements
between lenders and lessors with respect to ground leases as the parties may
agree to.  The execution and delivery of an encumbrance shall not be deemed to
constitute an assignment or transfer of this Lease nor shall any Lender be
deemed an assignee or transferee of this Lease so as to require such Lender to
assume the performance of any of the covenants or agreements on the part of
Lessee to be performed under this Lease.  Promptly after execution and delivery
of an encumbrance instrument and all documents, agreements,

 

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instruments and other writings relating thereto, Lessee shall send to Lessor a
copy of said encumbrance and all such other relevant documentation connection
therewith for Lessor’s files.

 

C.                                     Delivery of Additional Documents.  Each
of Lessor and Lessee agrees that from time to time, if so requested by the other
and if doing so will not substantially and adversely affect its economic
interests under this Lease, it will cooperate with the other in providing
documentation concerning the terms of this Lease so as to meet the reasonable
needs or requirements of any lender which is considering furnishing or which has
furnished any of the financing referred to this Section 4; provided, however,
that nothing herein shall be construed as a requirement or agreement on the part
of either party that the Lease be amended.  Without limiting the foregoing,
Lessee and Lessor shall, at any time and from time to time during the Term and
upon not less than fifteen (15) calendar days’ prior request by the other party,
execute, acknowledge and deliver to the other an estoppel certificate in
recordable form executed by an authorized representative or officer of the
requested party, stating that this Lease is in full force and effect, unmodified
and unamended (or stating the modifications or amendments in effect), such
defenses or offsets as are claimed by the requested party, if any, the date to
which all Rent has been paid, and such other information concerning the Lease,
the Property and the requested party as the requesting party or said designee
may reasonably request, it being intended that any such statement delivered
pursuant to this Section 4(c)(C) may be relied upon by any prospective lender or
assignee of any interest in the Property.  Failure to deliver such estoppel
certificate within thirty (30) calendar days shall be conclusive upon the party
failing to deliver that the provisions and statements set forth in any proposed
estoppel certificate delivered with the request are true and correct in all
respects.

 

5.                                       Notification of Lender

 

(a)                                  Notice of Breach or Default.  Concurrently
with the giving of any notice of a default under the Lease to Lessee, Lessor
shall also deliver a copy of such notice to any Lender at such address as such
Lender may have specified to Lessor.  The time period for the applicable cure
period shall be extended by a reasonable time, not to exceed ninety (90) days,
to permit such Lender to cure such default if such Lender notifies Lessor of its
intentions to cure any such default and diligently prosecutes such cure to
completion.

 

(b)                                 Notice of Termination.  Concurrently with
the giving of any notice of election of termination to Lessee, Lessor shall also
deliver a copy of such notice to any Lender at such address as such Lender may
have specified to Lessor.  The time period for termination shall be extended if
such Lender notifies Lessor of its election to proceed with reasonable diligence
promptly (but no later than 180 days) to acquire possession of the Property or
to foreclose its encumbrance or otherwise to extinguish Lessee’s interest in
this Lease and delivers to Lessor an instrument in writing duly executed and
acknowledged in which the Lender agrees that (i) during the period that such
Lender or a receiver of rents and profits appointed upon application of such
Lender shall be in possession of the Property and/or during the pendency of any
such foreclosure or other proceedings and until the interest of Lessee in this
Lease shall terminate, as the case may be, it will pay or cause to be paid to
Lessor all rent hereunder from time to time becoming due under this Lease, and
(ii) if delivery of possession of the Property shall be made to such Lender or
such receiver, whether voluntarily or pursuant to any foreclosure or other
proceedings or otherwise, such Lender shall, promptly following such delivery of
possession, perform such of the covenants and agreements herein contained on
Lessee’s part to be performed as Lessee shall have failed to perform to the date
of delivery of possession, and to perform all other covenants and agreements
Lessee shall have failed to perform promptly after extinguishment of Lessee’s
interest in this Lease.

 

6.                                       Right of First Refusal.  If during the
term of the Lease, Lessor shall receive a bona fide offer to purchase its fee
interest in the Property from a third party with demonstrable ability to
consummate such proposed purchase, and such offer is acceptable to Lessor,
Lessor shall immediately provide to Lessee a copy of

 

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such offer.  Lessor agrees that Lessee shall have and is hereby granted the
right of first refusal to purchase the fee interest in the Property on terms
substantially the same as such third party’s offer.  Lessee shall have thirty
(30) calendar days following written notice from Lessor of the existence and
terms of such offer to advise Lessor of its election to exercise its right of
first refusal.  In the event that Lessee elects to exercise its right of first
refusal, a closing of the transaction shall occur within one hundred eighty
(180) calendar days following exercise of such right of first refusal or within
the time by which closing is required pursuant to such third party’s offer,
whichever date is later.

 

7.                                       Deletions of Provisions in 1982 Lease;
Deletion of 1984 Amendment.  Sections 44, 45 and 46 of the 1982 Lease are hereby
deleted.  The 1984 Amendment is hereby deleted.  The above-mentioned provisions
are hereby deleted because the parties view them to be extraneous.  The parties
agree that, if Lessor subsequently determines that non-extraneous provisions
were inadvertently deleted, the parties shall negotiate in good faith as to
whether to restore such provisions in connection with the negotiation by the
parties of an Amended and Restated Lease.

 

8.                                       Ownership of Buildings and
Improvements.  Notwithstanding any provision in the Lease to the contrary, the
Lessor shall not have any ownership interest in the buildings, improvements or
personal property situate on the Property.

 

9.                                       No Joint Venture.  Nothing contained in
this Lease shall be deemed or construed by the parties hereto or by any third
party to create the relationship of principal and agent, or of partnership, or
of a joint venture between Lessor and Lessee.

 

10.                                 Notices.  The parties respective addresses,
for purposes of providing notice pursuant to Section 21 of the Lease, is as
follows:

 

if to Lessee, to:

 

with a copy to:

 

 

 

Speakeasy Gaming of Fremont, Inc.

 

Ruben & Aronson, LLP

3227 Civic Center Drive

 

4800 Montgomery Lane, Suite 150

Las Vegas, NV 89030

 

Bethesda, MD 20814

Attention: Roger Szeplak

 

Attention: Robert L. Ruben, Esq.

Telecopy: (702) 399-4108

 

Telecopy: (301) 951-9636

 

if to Lessor, to:

 

with a copy to:

 

 

 

Arlington Realty Co. Limited Partnership

 

Snell & Wilmer

1001 Central Park Avenue,

 

3800 Howard Hughes Parkway, # 1000

Suite 2140

 

Las Vegas, NV 89109

Scarsdale, NY 10583

 

Attention:  Patricia J. Curtis

Attention:  Mark Steinberg

 

Telecopy:  (702) 784-5252

Telecopy:(914) 725-8236

 

 

 

11.                                 Term.  Unless earlier terminated pursuant to
the terms and conditions of the Lease, the Lease shall continue until May 31,
2054 (the “Initial Expiration Date”).  Lessee shall have the option, in its sole
and absolute discretion, to extend the Lease, pursuant to the terms and
conditions of the Lease, for a period of ten (10) years until May 31, 2064 (the
“First Extension Expiration Date”) and to further extend the Lease for an

 

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additional period of ten (10) years until May 31, 2074 (the “Second Extension
Expiration Date”).  Such extension options must be exercised at least one
hundred eighty (180) days prior to the applicable expiration date of the Lease.

 

12.                                 Governing Law; Jurisdiction; Litigation. 
This Lease has been prepared, executed and delivered in, and shall be
interpreted under, the internal laws of the State of Nevada, without giving
effect to its conflict of law provisions.  Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Lease or the transactions
contemplated hereby in (a) the courts of the State of Nevada, Clark County, or
(b) the United States District Court for the District of Nevada, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.  In the event of litigation
arising hereunder, the prevailing party shall be entitled to recover from the
non-prevailing party its reasonable attorneys’ fees and expenses incurred in
connection with such litigation at all levels, including before the filing of
suit.  To the extent such waiver is permitted by Applicable Laws, the parties
hereto waive trial by jury in any action or proceeding brought in connection
with this Lease

 

13.                                 Effect of Agreement.  Except as amended by
this Agreement, the Existing Lease remains in full force and effect.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.

 

LESSOR

LESSEE

 

 

Arlington Realty Co. Limited Partnership,

Speakeasy Gaming of Fremont, Inc.,

a Nevada limited partnership

a Nevada corporation

 

 

 

/S/  Mark Steinberg

 

/S/  Roger M. Szepelak

 

By:

Mark Steinberg, Trustee

By: Roger M. Szepelak

 

of the Mark Steinberg

Its:  Vice President & Chief Operating Officer

 

Revocable Trust, its general partner

 

 

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