Exhibit 10.15

 

GROUND LEASE

 

THIS GROUND LEASE (this “Lease”) made this 1st day of June, 1995, by and between
TEXAS GAMBLING HALL & HOTEL, INC., a Nevada corporation (“Landlord”), and
STATION CASINOS, INC., a Nevada corporation (“Tenant”).

 

SPECIAL LEASE PROVISIONS

 

The following Special Lease Provisions are an integral part of this Lease. 
References in the Special Lease Provisions to Exhibits and other sections are
for convenience and designate some of the Exhibits and other sections where
Special Lease Provisions are discussed.  Each reference in this Lease to any of
the Special Lease Provisions shall be construed to incorporate all the terms
under each such Special Lease Provision into this Lease.  In the event of a
conflict between any Special Lease Provision and the Standard Lease Provisions,
the Special Lease Provision shall control.

 

ARTICLE I
SPECIAL LEASE PROVISIONS

 

A.            Land.  That certain real property located in the City of Las
Vegas, County of Clark, State of Nevada, as more particularly described in
Exhibit A attached hereto and made a part hereof (the “Land”).

 

B.            Term.  The Term shall commence on the Closing Date (as defined in
that certain Asset Purchase Agreement dated as of May 30, 1995 by and between
Station Casinos, Inc. and Landlord (the “Asset Purchase Agreement”)) (the
“Commencement Date”), and shall terminate at midnight on the last day of the
month in which the sixty-fifth (65th) anniversary of the Commencement Date
occurs (“Termination Date”); provided, however that if the Asset Purchase
Agreement is terminated in accordance with its terms, then this Lease shall be
null and void ab initio, and no party hereto shall have any further rights or
obligations hereunder.

 

C.            Rent.  Tenant shall pay Landlord the Rent for the Premises in the
manner set forth in Article V below as follows:

 

1.             Fixed Term.  For the period from the Commencement Date until
midnight on the last day of the month in which the fifth (5th) anniversary of
the Commencement Date occurs (the “Fixed Term”), the Rent shall be One Million
Eight Hundred Thousand Dollars ($1,800,000) per year; provided, however, that
solely for the purposes of calculating Rent under this section, the Commencement
Date shall be deemed to have occurred on the earlier of (i) July 12, 1995 or
(ii) the.  Closing Date.

 

2.             Escalation Periods.  The portion of the Term commencing on the
first day following the end of the Fixed Terra and ending on the Termination
Date shall consist of six (6) consecutive periods of ten (103 years each (each
of said periods being referred to as a “Rental Period”) .

 

(1)           Subject to paragraph (2) below, for each Rental Period during the
remainder of the Term, the Rent for each year in such Rental Period shall be an
amount equal to

 

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the product of:  (a) the then prevailing annual rate of return being realized by
landowners for comparable property located in Clark County, Nevada as of that
date which is 150 days prior to the first day of such Rental Period (provided,
however, that in no event shall such rate of return be less than eight percent
(8%) per year) times (b) the market value of the Land (i.e., excluding any
improvements thereon) as of that date which is 150 days prior to the first day
of such Rental Period.  Notwithstanding the foregoing, in no event shall the
Rent for any Rental period be less than the Rent in effect immediately preceding
the commencement of such Rental Period.  Rent for each Rental Period shall be
determined by mutual agreement of Landlord and Tenant at least ninety (90) days
prior to the first day of such Rental Period- In the event that Landlord and
Tenant are unable to agree upon the Rent for any Rental Period at least ninety
(90) days prior to the first day of such Rental Period, then the annual Rent for
such Rental Period shall be determined by appraisal as provided in Section V.B
below.  The market value for the Land (whether determined by agreement between
the Landlord and Tenant or, in the absence of such agreement, by appraisal under
the terms of Section V.B below) shall be based upon its highest and best use and
upon the assumption that the Land is free and clear of this Lease.  All amounts
determined by appraisal shall be as of the date which is one hundred fifty (150)
days prior to the commencement date of the Rental Period in question.

 

(2)           Notwithstanding the above, on the first day of the sixth
(6th) year of each of the first six (6) Rental Periods, the Rent as determined
in the paragraph (1) above shall be increased by the Cost of Living Factor as
defined in Section II.A.9 below and such increased Rent shall be payable for the
remaining five (5) years of the then current Rental Period.

 

D.            Improvements.  As of the Commencement Date, the Tenant shall own
in fee all improvements now or hereafter located on the Land, including, without
limitation, the first-class casino/hotel facility and all related onsite and
offsite improvements (collectively, the “Improvements”) .

 

E.             Permitted Use of Premises.  The Premises shall be used solely for
a first-class casino/hotel facility, together with related uses, and no other
uses shall be permitted on the Premises without the prior written consent of
Landlord, which consent may be unreasonably withheld.  (Section X.H).

 

F.             Landlord’s Address.                             Texas Gambling
Hall

& Hotel, Inc.

3360 West Sahara Ave.

Suite 200

Las Vegas, Nevada 89102

 

G.            Tenant’s Address.                                       Station
Casinos, Inc.

2411 West Sahara Avenue
Las Vegas, Nevada 89102

 

H.            Insurance.  (Article VIII)

 

1.             Minimum Liability Coverage Amounts.

 

(a)

 

$1,000,000

 

Each Occurrence

 

 

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(b)

 

$1,000,000

 

Products & Completed Operations Aggregate

 

 

 

 

 

 

 

(c)

 

$2,000,000

 

General Aggregate

 

 

 

 

 

 

 

(d)

 

$l,000,000

 

Employer’s Liability

 

 

 

 

 

 

 

(e)

 

$1,000,000

 

Automobile Liability

 

 

 

 

 

 

 

(f)

 

$100,000,000

 

Excess of Primary Coverage as Above

 

 

2.             Maximum Deductibles.

 

(a)

 

$100,000

 

Comprehensive General Liability

 

 

 

 

 

 

 

(b)

 

$100,000

 

Property

 

 

 

 

 

 

 

(c)

 

$100,000

 

Automobile Liability

 

 

I.              Option to Acquire Landlord’s Interest.

 

1.             Exercise of Tenant’s Option.  Landlord hereby grants Tenant the
option to acquire Landlord’s interest upon the terms and conditions contained in
this Section I.I (“Tenant’s Option”).  Tenant’s Option shall be exercised by
Tenant’s delivering to Landlord, in the manner provided in Section XIII.D below,
written notice of such exercise no earlier than one hundred eighty (180) and no
later than one hundred twenty (120) days prior to any of the following dates: 
(i) the fifth (5th) year anniversary of the Commencement Date or (ii) the first
day of any succeeding five (5) year period thereafter.  If Tenant so exercises
Tenant’s Option on any of such dates, then Landlord and Tenant shall complete
Tenant’s acquisition of Landlord’s Interest as set forth in Section I.1,2 below
on or prior to the first day of such fifth anniversary or five year period. 
Landlord may refuse to extend Tenant’s ability to exercise Tenant’s Option for
any or no reason.

 

2.             Terms of Tenant’s Option.  Upon Tenant’s valid exercise of
Tenant’s Option in Section I.I.1 above, Landlord and Tenant shall negotiate in
good faith for a period of no more than thirty (30) days to determine the market
value of Landlord’s Interest to be acquired pursuant to Tenant’s Option.  The
market value for Landlord’s Interest (whether determined by agreement between
the Landlord and Tenant or, in the absence of such agreement, by appraisal under
the terms of Section V.B below) shall be based upon the highest and best use of
the Land and the assumption that the Land is free and clear of this Lease and
shall include Landlord’s remainder interest in the Improvements.  Such market
value shall be agreed upon by Landlord and Tenant within said thirty (30) day
period.  If Landlord and Tenant are unable to agree on the market value of
Landlord’s Interest within said thirty (30) day period, the market value of
Landlord’s Interest shall be determined by appraisal pursuant to Section V.3
below.  Upon determination of the market value of Landlord’s Interest, whether
by agreement or by appraisal, Tenant shall provide evidence to Landlord’s
reasonable satisfaction that there are funds available

 

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and committed to Tenant to complete the acquisition.  Tenant shall acquire
Landlord’s Interest either by purchase or by way of an exchange which would
qualify for tax-deferred treatment to Landlord under Section 1031 of the
Internal Revenue Code, whichever method Landlord shall elect in its sole
discretion; provided, however, that Tenant shall not be required to incur any
additional costs or liabilities as a result of Landlord’s election to proceed
with an exchange under Section 1031.  Landlord’s Interest shall be conveyed to
Tenant free and clear of all liens and encumbrances except those described in
Exhibit B attached hereto and those liens and encumbrances made or suffered by
Tenant.  All costs and expenses of conveying Landlord’s Interest to Tenant,
including without limitation, any and all escrow fees, conveyance taxes, notary
fees, title insurance premiums, recording fees and other customary closing casts
and expenses, shall be allocated between the parties in such proportion as is
mutually agreed upon, or in the absence of such agreement according to the
prevailing practice and custom within the jurisdiction in which the Premises is
located.  All Rent under this Lease and other similar payments shall be prorated
between Landlord and Tenant upon the closing date for Tenant’s acquisition of
Landlord’s Interest.  If Tenant exercises Tenant’s Option but thereafter fails
to acquire Landlord’s Interest for any reason other than Landlord’s default,
this Lease shall continue in full force and effect and Tenant shall reimburse
Landlord for all of Landlord’s out-of-pocket expenses incurred in connection
with Tenant’s Option, including without limitation appraisers’ and attorneys’
fees.

 

J.             Change in Control; Put of Landlord’s Interest.

 

1.             Exercise of Landlord’s Put.

 

Tenant hereby grants Landlord the right to put (“Landlord’s Put”) Landlord’s
Interest to Tenant upon the terms and conditions contained in this Section I.J. 
Landlord’s Put shall be exercised, if at all, by Landlord’s delivering to
Tenant, in the manner provided in Section XIII.D below, written notice of such
exercise no later than one (1) year after the first to occur of either (i) a
Change of Control (as defined in the Asset Purchase Agreement) or (ii) delivery
of written notice to Landlord that Tenant intends to effectuate a Change of
Control or a Change of Control is otherwise anticipated to occur; provided,
however, that if such anticipated Change of Control does not occur, Landlord’s
exercise of Landlord’s Put shall be null and void ab initio.  If Landlord so
exercises Landlord’s Put, then Landlord and Tenant shall complete Tenant’s
acquisition of Landlord’s Interest as set forth in Section I.J.2 below on or
prior to that date which is ninety (90) days after Landlord delivers to Tenant
notice of the exercise of Landlord’s Put.

 

2.             Terms of Landlord’s Put.  Upon Landlord’s valid exercise of
Landlord’s Put in Section I.J.I above, Tenant shall acquire all of Landlord’s
Interest (including Landlord’s remainder interest in the Improvements), for a
purchase price equal to the fair market value of Landlord’s Interest as of such
time (which shall be determined by good faith negotiations within a period of no
more than thirty (30) days or as otherwise provided for in Section I.I. above). 
Landlord may elect to accomplish a tax-deferred exchange under Section 1031 of
the Internal Revenue Code; provided, however, that Tenant shall not be required
to incur any additional costs, liabilities or delays as a result of Landlord’s
election to proceed with such an exchange.  Landlord’s Interest shall be
conveyed to Tenant free and clear of all liens and encumbrances except those
shown in Exhibit B attached hereto, if applicable, and those liens and
encumbrances

 

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made or suffered by Tenant.  All costs and expenses of conveying Landlord’s
Interest to Tenant, including without limitation, any and all escrow fees,
conveyance taxes, notary fees, title insurance premiums, recording fees and
other customary closing costs and expenses, shall be allocated between the
parties in such proportion as is mutually agree upon, or in the absence of such
agreement according to the prevailing practice and custom within the
jurisdiction in which the Premises is located.  All Rent under this Lease and
other similar payments shall be prorated between Landlord and Tenant upon the
closing date for Tenant’s acquisition of Landlord’s Interest.  If Landlord
exercises Landlord’s Put but thereafter fails to close the sale of Landlord’s
Interest to Tenant for any reason, other than Tenant’s default, then Landlord
shall reimburse Tenant for all of Tenant’s out-of-pocket expenses incurred in
connection with Landlord’s Put, including without limitation appraisers’ and
attorneys’ fees.

 

3.             Rescission of landlord’s Put.  Notwithstanding anything in the
foregoing provisions to the contrary, if the fair market value of Landlord’s
Interest is determined by appraisal in accordance with the provisions of
Section I.I. above, Landlord shall have the right to cancel the proposed put
within thirty (30) days of Landlord’s receipt of written notice of the
determined fair market value, in which case Landlord shall bear the fees of all
appraisers.  In such case, Landlord’s exercise of Landlord’s Put shall be null
and void ab initio.

 

All terms, covenants and conditions contained in the Standard Lease Provisions
and the Exhibits attached hereto are incorporated herein by reference and made a
part of this Lease.

 

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

 

Tenant:

 

Landlord:

 

 

 

STATION CASINOS, INC.

 

TEXAS GAMBLING HALL & HOTEL, INC.

a Nevada corporation

 

a Nevada corporation

 

 

 

 

 

 

By

 

 

By

 

 

Its

 

 

Its

 

 

 

 

 

By

 

 

By

 

 

Its

 

 

Its

 

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STANDARD LEASE PROVISIONS

 

In consideration of the respective and mutual covenants of Landlord and Tenant
and the Rent set forth in this Lease, Landlord and Tenant hereby agree to the
Special Lease Provisions and to all of the following terms, conditions and
covenants (“Standard Lease Provisions”):

 

ARTICLE II
DEFINITIONS

 

A.            Use of Defined Terms.  For purposes of construing and interpreting
this Lease, the terms defined in this Article II when written with initial
capital letters in this Lease shall have throughout the Lease the meaning given
such terms in the paragraphs below.  The terms defined in this Article II may be
used in the singular or plural or in varying tenses or forms, but such variation
shall not affect the meaning of such terms set forth in the paragraphs below so
long as those terms are written in initial capital letters.  When such terms are
used in this Lease but are written without initial capital letters, such terms
shall have the meaning they have in common usage; provided, however, that where
legal, technical or trade terms are used and the context in which such terms are
used indicates that such terms are to be given their legal, technical or trade
usage meanings, such terms shall be given such legal, technical or trade usage
meanings.

 

1.             AAA.  “AAA” shall mean the American Arbitration Association.

 

2.             Beneficiary.  “Beneficiary” shall mean any and all beneficiaries
under deeds of trust granted by Tenant which encumber this Lease.

 

3.             Business Day.  “Business Day” shall mean a day other than
Saturday, Sunday or legal holiday (or day observed as a legal holiday) for
Nevada state governmental offices pursuant to Nevada Revised Statutes.

 

4.             Commencement Date.  “Commencement Date” shall mean the date of
this Lease, as set forth on page l of the Special Provisions.

 

5.             Cost of Living Factor.  The “Cost of Living Factor” for any date
during the Term shall be a fraction whose numerator is the index figure stated
in the Consumer Price Index for All Consumers (1982-84=100) specified for all
Items relating to Los Angeles-Long Beach-Anaheim published by the Bureau of
Statistics of the United States Department of labor in effect on such date and
whose denominator is the index figure for such Consumer Price Index in effect on
the Commencement Date of this Lease; provided, however, that the Cost of Living
Factor shall never be less than one (1).  If such “Consumer Price Index” is
discontinued, the Cost of Living Factor shall be based on comparable statistics
on changes in the purchasing power of the consumer dollar for the applicable
periods, as published by a responsible financial periodical report of a
recognized governmental or private authority.  If a dispute between Landlord and
Tenant arises with regard to the proper Cost of Living Factor to be applied to
any time, the Cost of Living Factor shall be determined by the appraisal process
set forth in Section V.B below.

 

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6.             Default.  “Default” means the occurrence of one or more of the
events of default listed in Section XI.A below.

 

7.             Fixed Term.  “Fixed Term” shall mean the initial period of the
Term of the Lease, during which the Rent is fixed, as set forth in Section I.C.I
above.

 

8.             Force Majeure.  “Force Majeure” shall mean any performance or
condition required to be completed by a party to this Lease under the terms of
this Lease which is delayed by any act of God (floods, earthquakes or other
natural disasters) , war, strike in the State of Nevada, national emergencies or
civil disturbances or by general transportation or shipping strikes, which
conditions are not within a party’s control and could not reasonably be avoided
by such party.

 

9.             Hazardous Materials.  “Hazardous Materials” mean and include,
without limitation, inflammable explosives, radioactive materials, asbestos,
organic compounds (including polychlorinated biphenyl) , pollutants,
contaminates, hazardous wastes, toxic substances or related materials and any
substances defined as or included in the definitions for “hazardous substances”,
“hazardous wastes”, “extremely hazardous wastes”, “hazardous materials”, or
“toxic substances” in the Hazardous Material Laws.

 

10.           Hazardous Materials Laws.  “Hazardous Materials Laws” shall mean
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Clean Air Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, as the same may be amended
from time to time, and any similar federal, state, and local laws and
ordinances, and regulations now or hereafter adopted, accomplished and
promulgated pursuant thereto applying to the Premises or any portion thereof.

 

11.           Improvements.  “Improvements” shall have the meaning ascribed to
that term in Section I.D.

 

12.           Land.  “Land” shall mean the Land as defined in Section I.A above,
exclusive of any Improvements existing at any time on such Land.

 

13.           Landlord.  “Landlord” shall mean Texas Gambling Hall &
Hotel, Inc., a Nevada corporation.

 

14.           Landlord’s Cost of Money.  “Landlord’s Cost of Money” for any
period during the Term shall mean an annual rate of interest equal to the lesser
of:  (i) three percent (3%) plus the prime interest rate for such period of
time, which shall be the interest rate then charged by the largest or the second
largest bank (as measured by total assets) in the State of Nevada, whichever
charges the higher rate, to its most responsible commercial borrowers on 90-day
unsecured notes; or (ii) the maximum per annum rate of interest permitted to be
charged by then applicable law.

 

15.           Landlord’s Interest.  “Landlord’s Interest” shall mean all of
Landlord’s interest in the Premises, including without limitation Landlord’s
interest in the Land.

 

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16.           Lease.  “Lease” means this Lease, together with all Exhibits
attached hereto, as the same may be amended from time to time.

 

17.           Premises.  The “Premises” shall mean the Land, and all buildings,
improvements, fixtures, tenements, rights, easements, privileges and
appurtenances belonging, attached or appertaining to such Land on the date
hereof or at any time thereafter.

 

18.           Record.  To “Record” a document shall mean to record such document
in the Recorder’s Office, Clark County, Nevada.

 

19.           Rent.  “Rent” shall mean the net annual rent for the Premises,
which amount is set forth in Section I.C above.

 

20.           Rental Periods.  “Rental Periods” shall mean those fixed periods
of time set forth in Section I.C.2 above, during which the Rent is recomputed.

 

21.           Special Lease Provisions.  “Special Lease Provisions” shall mean
the provisions in Article I of this Lease.

 

22.           Standard Lease Provisions.  “Standard Lease Provisions” shall mean
the provisions in Articles II through XIII, inclusive, of this Lease.

 

23.           Tenant.  “Tenant” shall mean the entity identified as Tenant in
the first paragraph of this Lease.

 

24.           Term.  “Term” snail mean the period of time during which this
Lease is in effect, which period is set forth in Section I.B above.

 

25.           Termination Date.  “Termination Date” shall mean the date upon
which this Lease shall terminate and is set forth in Section I.B above (unless
sooner terminated as provided herein).

 

ARTICLE III
PREMISES

 

A.            Demise.  Landlord hereby demises and leases to Tenant, and Tenant
hereby rents from Landlord for the Term, the Land, subject to the encumbrances
listed on Exhibit A attached hereto and incorporated herein by reference.

 

B.            No Light or Air Easement.  Any diminution or shutting off of light
or air by any structure now existing or which may be hereafter erected on lands
adjacent to the Premises shall in no way affect this Lease, shall not constitute
a constructive eviction or grounds for reduction or abatement of rent, or
otherwise impose any liability on Landlord.

 

C.            Quiet Enjoyment.  If and so long as Tenant pays the Rent and
keeps, observes and performs each and every term, covenant and condition of this
Lease on the part of Tenant to be kept, observed an performed, Tenant shall
peaceably hold and enjoy the Premises

 

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for the Term without hinderance or interruption by Landlord or any other person
lawfully claiming through or under Landlord except as in this Lease expressly
provided.

 

ARTICLE IV
TERM

 

Subject to earlier termination as herein provided, the Term of this Lease shall
be as stated in Section I.B above.

 

ARTICLE V
RENTAL

 

A.            Tenant to Pay Net Rent.  Throughout the Term, Tenant shall pay to
Landlord the Rent set forth in Section I.C above in the manner set forth in this
Article V, net and above any and all taxes, rates, assessments, charges,
impositions, and expenses payable under this Lease and without deductions of any
kind whatsoever.  Rent shall be paid without prior notice or demand, and without
any setoff, counterclaim or deduction whatsoever, and shall not be reduced or
abated except as expressly provided in this Lease.

 

B.            Appraisal.  Whenever this Lease provides that a matter shall be
determined by appraisal, the determination by appraisal of such matter shall be
done in an arbitration format and shall be binding, final and conclusive on the
Landlord and Tenant.  Such appraisal shall be made by three (3) impartial
appraisers appointed and constituted as provided in this paragraph, each of whom
shall be a member in good standing of the American Institute of Real Estate
Appraisers or its successor, Either Landlord or Tenant may give to the other
party written notice of its desire to have an appraisal made and appoint one of
the appraisers in said notice, whereupon the other party, within fifteen
(15) days after the receipt of such notice, shall appoint, a second appraiser,
and, in case of failure so to do, the party who has already appointed an
appraiser may have the second appraiser appointed by a judge of the Clark County
District Court, and the two (2) appraisers so appointed, in either manner, shall
appoint the third appraiser, and in the event that the two appraisers so
appointed shall, within-fifteen (15) days after the appointment of the second
appraiser, fails to appoint the third appraiser, either party may have the third
appraiser appointed by said judge, and the three (3) appraisers so appointed
shall thereupon proceed to make the appraisal in question and the decision of
any two (2) of them shall be final, conclusive and binding upon Landlord and
Tenant.  Landlord and Tenant shall each have an opportunity to present arguments
and evidence to support their respective positions regarding the determination
of Rent or other issues before the appraisers.  The appraisers may call such
expert of other witness as they deem appropriate to assist them in the appraisal
process.  Each of the parties shall pay the costs and expenses of their
respective consultants, as well as the compensation and expenses of the
appraiser it appoints.  All other costs of the appraisal process shall be shared
equally by Landlord and Tenant.

 

C.            Payment of Rent.  Tenant shall commence payment of Rent on the
Commencement Date and such Rent shall be paid in equal monthly installments in
advance on the first day of each month for which such Rent accrues under this
Lease.  If the Commencement Date shall fall on a day other than the first day of
a month, then the rental for the first fractional month shall be computed on a
daily basis from the Commencement Date to the end of such

 

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calendar month by dividing the monthly installment of Rent by thirty (30) and
multiplying this amount by the number of days remaining in the fractional month.

 

D.            Disputed Rent.  In the event that the parties have failed to agree
upon a rental rate for Rent for any Rental Period then, pending determination of
the Rent for such Rental Period through appraisal or agreement, Tenant shall, at
the time and in the manner specified herein, continue payment of Rent at the
rate in effect during the immediately preceding period.  Upon determination of
the Rent for such disputed Rental Period through appraisal or agreement, Tenant
shall immediately pay over to Landlord any additional amounts required to make
up any increase in Rent determined for such Rental Period plus interest thereon.
at Landlord’s Cost of Money accruing from the date such payments would have been
due until actually paid in full.

 

E.             Currency; Agent.  All Rent and all other charges payable by
Tenant under this Lease shall be paid in lawful currency of the United States of
America to Landlord or to such agent as shall be designated by Landlord in
written notice to Tenant on or before its due date.

 

F.             Late Charges/Dishonored Checks.  If the Rent payment is not
received prior to the tenth (10th) of any month, or any other charge or
additional rent due hereunder shall not be received when due, then a late fee in
the amount of the greater of $100.00 or five percent (5%) of the amount due
shall be automatically assessed.

 

ARTICLE VI
IMPROVEMENTS

 

Fee ownership of the Improvements now or hereafter constituted on the Land is
vested in Tenant; provided, however, that upon the termination of this Lease or
the termination of Tenant’s right to occupy the Premises hereunder, the
Improvements shall become the property of Landlord.

 

ARTICLE VII
ENCUMBRANCES

 

A.            Right to Encumber.  Any provision herein contained to the contrary
notwithstanding, Tenant shall have the right without the consent of Landlord to
encumber by way of a deed of trust all or any portion of Tenant’s right, title
and interest in, to and under this Lease.  Any such deed of trust may contain,
except where particular terms, conditions or maturity are required by this
Lease, such terms, conditions and maturity as Tenant may determine.  Provided
that all requirements of this Lease are at all times complied with, Tenant may
enter into any and all such extensions, modifications or amendments of any such
deed of trust as it may desire.  Tenant shall, upon execution of any such deed
of trust, promptly deliver a true copy of the deed of trust to Landlord.  The
aggregate amount secured by all such deeds of trust shall not exceed eighty-five
percent (85%) of the fair market value of Tenant’s leasehold interest under this
Lease and all buildings and other improvements constructed on the Premises or to
be constructed oh the Premises during the Term.  The Beneficiary and its
respective assigns may enforce such deed of trust and may acquire title to the
leasehold estate of Tenant in any lawful way and, pending foreclosure of such
deed of trust (or bona fide sale or assignment in lieu of foreclosure) may take
possession of and sublease the Premises, or cause any person having the

 

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relationship of an independent contractor to the Beneficiary to take possession
of and sublease the Premises.  Upon foreclosure thereof (or any bona fide sale
or assignment in lieu of foreclosure) the Beneficiary may without further
consent of Landlord sell and assign this Lease, by assignment in which the
assignee shall expressly assume and agree to observe and perform all the
covenants of Tenant hereunder for so long as it shall retain title to Tenant’s
interest hereunder.  Any assignee who has acquired title to this Lease by way of
foreclosure or deed in lieu thereof may only assign its rights under the Lease,
other than by way of deed of trust, in compliance with Section XIII.F hereto.

 

B.            Lessor’s Right to Cure Lessee’s Deed of Trust Defaults.  Every
deed of trust encumbering Lessee’s interests under this Lease shall provide
that:

 

1.             In case of Tenant’s default under such deed of trust, should the
Beneficiary determine to institute foreclosure proceedings, the Beneficiary
shall give notice of such intended foreclosure to Landlord, by registered mail
sent to Landlord’s last known address, at least sixty (60) days prior to the
commencement of such foreclosure proceedings, and Landlord may, but shall not be
obligated to, cure any default then capable of being cured by Landlord; and

 

2.             Provided that Landlord commences to cure all current defaults of
Tenant then curable by Landlord and diligently prosecutes such cure within such
sixty (SO) day period, then the Beneficiary shall waive its right to foreclosure
and any default under the deed of trust shall be deemed cured; Landlord shall in
no way be liable for any deficiency judgment on the promissory note secured by
the deed of trust or for any payment of any sums due under the deed of trust or
any other indebtedness as may be owed by Tenant to the Beneficiary.

 

Landlord’s expenses in curing Tenant’s default under such deed of trust,
together with interest at a rate equal to Landlord’s Cost of Money accruing on
such expenses from the date such expenses are incurred by Landlord until fully
repaid by Tenant, shall be deemed to be additional rent under this Lease to be
paid promptly by Tenant.

 

C.            Protection of Beneficiary.  In the event that Tenant shall
encumber the leasehold estate by way of deed of trust in compliance with the
terms of this Lease and, if Tenant or the Beneficiary shall have furnished to
Landlord a true copy of such deed of* trust as provided in Section VILA above,
the following provisions shall apply and inure to and for the benefit of the
Beneficiary therein named, and its successors and assigns, any provision herein
contained to the contrary notwithstanding:

 

1.             This Lease shall not be amended, altered, modified, terminated or
rescinded by Landlord and Tenant, prior to the expiration of the term of. the
deed of trust, without the prior written consent of the Beneficiary.  If such a
deed of trust is in effect, this Lease may be terminated only in accordance with
the provisions of this Section VII.C.

 

2.             Landlord shall, upon serving Tenant any notice of default under
the provisions of or with respect to this Lease, at the same time serve a copy
of such notice upon the Beneficiary, by registered mail, addressed to it at the
address shown in the deed of trust (or such

 

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other address as Beneficiary may direct), and no notice by Landlord to Tenant
shall be deemed to have been duly given unless and until a copy thereof has been
so served upon the Beneficiary.

 

3.             The Beneficiary, in the event Tenant shall be in default
hereunder, shall have the right (but shall not be obligated) within the greater
of (i) the same period as is given to Tenant therefor, or (ii) thirty (30) days
after Beneficiary receives notice of Tenant’s default, to remedy such default or
to cause the same to be remedied, and Landlord shall accept such performance by
or at the instigation of such Beneficiary as if the same had been done by
Tenant.  If after proper notice of default by Landlord neither the Beneficiary
nor Tenant cures or commences to. cure Tenant’s default under this Lease within
the time limits set forth in Section XI.A below, Landlord may. terminate this
Lease pursuant to such Section.

 

a.             Tenant hereby constitutes and appoints each Beneficiary as
Tenant’s agents and attorneys-in-fact with full power, in Tenant’s name, place
and stead, and at Tenant’s cost and expense, to enter upon the Premises and make
repairs thereon and therein, maintain the same, remove any violations of law,
statutes, ordinances or rule or regulation of governing authorities and to
otherwise perform any of the obligations of Tenant under this Lease.

 

b.             In the event of any default of Tenant hereunder (including those
relating to bankruptcy or insolvency) other than a default in the payment of
money or a default susceptible of being cured by the payment of money, Landlord
shall not take any action to effect a termination of this Lease, whether by
service of a notice of termination or otherwise, due to such default, without
allowing the Beneficiary (or a receiver appointed at the Beneficiary’s request
or an independent contractor to the Beneficiary) a reasonable time within which
to either (1) obtain possession of the Premises and the interests of Tenant
under this Lease and cure the default, where the default is susceptible of being
cured after obtaining such possession by the Beneficiary, receiver or
independent contractor, or (2) institute and complete foreclosure proceedings or
otherwise sell or acquire Tenant’s interest in the Premises and in this Lease,
and any such default shall be considered as having been waived by Landlord upon
the completion of foreclosure or such sale or acquisition of Tenant’s interest,
provided that:

 

(i)            the Beneficiary shall not be required to continue possession or
foreclosure proceedings if the default which would have given cause for such
notice shall have been cured; and

 

(ii)           during any period of forbearance the foregoing shall not preclude
Landlord from exercising any remedies hereunder relating to any other default of
Tenant; and

 

(iii)          such Landlord’s waiver of such default, and the waiver of the
right to terminate this Lease as a result of such default and any transfer of
Tenant’s interests under this Lease by way of foreclosure or assignment in lieu
thereof shall at all times be explicitly conditioned upon the curing by either
Beneficiary or the party acquiring Tenant’s interest under this Lease by way of
foreclosure or assignment in lieu thereof of all then existing defaults
hereunder susceptible of cure including, without limiting the generality of the
foregoing, the payment of rent, and other sums payable hereunder by Tenant, such
as attorneys’ fees and other expenses of Landlord incurred in connection

 

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with such default, such that upon foreclosure or assignment in lieu thereof all
payments required from Tenant by the Lease shall have been brought current; and

 

(iv)          on and after the date of such foreclosure, sale or other
acquisition and for so long as it shall hold such title, the party holding title
to Tenant’s interest under this Lease shall observe and perform, or cause to be
observed and performed, all of the covenants and agreements on the part of
Tenant hereunder to be observed and performed.

 

If the conditions in clause {iii} of the immediately preceding sentence are not
met by the Beneficiary (or a receiver appointed at the Beneficiary’s request)
within thirty (30} days of notice or demand by Landlord, Landlord may terminate
this Lease pursuant to Article XI below.

 

4.             No such Beneficiary shall become personally liable under the
agreements, terms, covenants or conditions of this Lease, unless and until such
time as the Beneficiary becomes, and then only for so long as it remains, the
owner of the leasehold estate.

 

5.             In the event of the termination of this Lease or of any
succeeding lease made pursuant to the provisions of this Section VII.C.5 prior
to its stated expiration date, Landlord will enter into a new lease of the
Premises with the Beneficiary or, if there be more than one deed of trust, then
with the Beneficiary entitled under Subparagraph (iii) of this Section VII.C.5,
for the remainder of the Term, effective as of the date of such termination, at
the rent and additional rent and upon the covenants, agreements, terms,
provisions and limitations contained in this Lease, provided:

 

(i)            such Beneficiary makes written request upon Landlord for such new
lease within forty (40) days from the date of such termination and such written
request is accompanied by payment to Landlord of all amounts then due to
Landlord;

 

(ii)           such Beneficiary pays to Landlord at the time of the execution
and delivery of such new lease any and all sums which would at the time of the
execution and delivery thereof be due under this Lease but for such termination
and pays any and all expenses, including reasonable attorneys’ fees, court casts
and disbursements incurred by Landlord in connection with any such default and
termination as well as in connection with the execution and delivery of such new
leases, less the net income collected by Landlord on the Premises subsequent to
the date of termination of this Lease and prior to the execution and delivery of
the new lease; and

 

(iii)          if more than one such Beneficiary makes written request upon
Landlord in accordance with the provisions of subparagraph (i) of this
Section VII.C.5, the new lease shall be delivered to the Beneficiary requesting
such new lease whose deed of trust is prior in lien, and the written request of
any Beneficiary whose deed of trust is subordinate in lien shall be void and of
no force or effect.

 

6.             Upon the execution and delivery of such new lease in accordance
with the provisions of Section VII.C. 5 above, all leases and other agreements
with sublessees which theretofore may have been assigned and transferred to
Landlord shall thereupon be assigned and transferred without recourse by
Landlord to the Beneficiary, as the new lessee.

 

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D.            Subordination of Landlord’s Interest.  Landlord will on request of
Tenant therefor, by suitable instrument in the nature of an additional security
deed of trust, subject and subordinate Landlord’s Interest to any leasehold deed
or deeds of trust which comply with the provisions of Section VII.A. above.  The
additional security deed of trust encumbering Landlord’s Interest may be
enforced by foreclosure only together with foreclosure of said leasehold deed of
trust and shall provide that Landlord’s Interest may be sold only if the sale of
the leasehold estate does not generate sufficient proceeds to satisfy the
indebtedness due under said leasehold deed of trust.  So long as Landlord’s
Interest shall be subject and subordinated to any leasehold deed of trust,
Tenant will pay such deed of trust and the promissory note or notes thereby
secured at the times and in the manner therein set forth and will faithfully
observe and perform all of the terms, covenants, conditions and provisions
contained in such deed of trust and notes within the period of grace therein
provided, and any default of Tenant under such deed of trust or promissory note
shall constitute a default under this Lease.  Tenant will indemnify and hold
Landlord harmless against all loss, cost and expense whatsoever arising out of
or in connection with such additional security deed of trust or any litigation
with respect thereto.

 

E.             Encumbrances on Landlord’s Interest.  Subject to Section VII.D
above, nothing herein contained shall limit Landlord’s rights to assign or
otherwise encumber Landlord’s interest in this Lease.  In the event that
Landlord at any time so encumbers its interest in this Lease, said encumbrance
shall be subject to and shall not be a lien prior to this Lease or any
modifications or extensions hereof or any new lease given by Landlord pursuant
to the provisions contained in Section VII.C or any leasehold deed of trust
placed thereon and any such encumbrance by Landlord shall not be deemed to give
any such assignee any greater rights than Landlord hereunder or the right to
cancel the Lease or any new lease so made to a leasehold Beneficiary unless
there is a default on the part of Tenant, uncured by either Tenant or the
leasehold Beneficiary, which, under the terms of this Lease or such new lease,
would enable Landlord to cancel this Lease, and withhold from such leasehold
Beneficiary a new lease pursuant to the provisions contained in Section VII.C.7.

 

ARTICLE VIII
INSURANCE

 

A.            Insurance of Buildings.

 

1.             Fire and Hazard Insurance.  Tenant shall at its own expense and
at all times during the Term keep all buildings, other improvements and
fixtures, by whomsoever installed or constructed, existing on the Premises on
the Commencement Date or at any time thereafter, insured against (a) all of the
risks covered by a standard “Special Form” endorsement, with additional coverage
for risk of loss by earthquake (to the extent available at commercially
reasonable rates) and flood and (b) such other hazards or risks which a prudent
businessman would insure against.  This coverage shall be in an amount equal to
the full replacement cost of such buildings, improvements and fixtures without
deduction for depreciation, shall be written on an “Agreed Amount” basis, shall
not have a deductible in excess of the amount shown in Section I.H above, and
shall have an endorsement showing coverage for the loss of rental income after
an insured-against occurrence during the period of restoration of the Premises
and shall be placed with an insurance company or companies approved by Landlord
(which approval will not be unreasonably withheld) .  The limits of liability
with respect to this endorsement for business

 

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interruption/loss of rental income shall be for a period of restoration of not
less than one (1) year after the insured against occurrence and this endorsement
shall be written on an “Agreed Amount” basis.

 

2.             Payment of insurance Proceeds.  Every policy of insurance
described in Section VIII.A.I above shall be issued to cover and insure all the
several interests in the buildings, improvements, fixtures and rent required to
be insured in Section VIII.A.I above, and Landlord, Tenant and any Beneficiary
as their respective interests are defined in this paragraph below, and shall be
made payable in case of loss or damage to a trust company authorized by law to
exercise corporate trust powers in the State of Nevada or another impartial
third party, as shall be designated by Landlord from time to time as trustee of
all proceeds of such insurance, which trustee shall have its principal office in
Las Vegas.  The trustee shall have no obligation whatsoever to effect, maintain
or renew such insurance, nor to attend to any claim for loss or damage
thereunder or the collection of any proceeds thereof, nor to incur any expense
therefor, and shall be responsible only for the proper custody and application
as provided for this Section VIII.A. of all proceeds of such insurance that
shall actually come into its possession, and Tenant shall pay all fees and
expenses of such trustee for or in connection with its services.  The respective
interests of Landlord, Tenant and any Beneficiary in any proceeds -of the
insurance required in Section VIII.A.1 above payable for insured loss or damage
shall be fixed and determined as of the date of such loss or damage as follows:

 

a.             Landlord’s Interest.  Landlord shall have no interest in such
insurance proceeds for the initial fifty-five (55) years of the Term, Landlord’s
interest shall be ten percent (10%) in the fifty-sixth year and shall increase
ten percent (10%) per year for each year thereafter; provided, however, that. 
Landlord’s interest in any rental loss insurance payments (relating to Rents
payable hereunder) shall be one hundred percent (100%).

 

b.             Tenant’s Interest.  The interest of Tenant shall be the balance
of such insurance proceeds after first deducting the amount of the interest of
Landlord determined as set forth in Section VIII.A.2.a above.

 

c.             Beneficiary’s Interest.  The interest of any Beneficiary in such
proceeds shall be limited to the amount of, and encumber only, the interest of
Tenant in such insurance proceeds as defined in Section VIII.A.2.b above, to the
extent of the then outstanding principal and accrued interest secured, under the
deeds of trust of such Beneficiary, provided, however, that if the interest of
Tenant in such insurance proceeds is insufficient to repay the then outstanding
principal and accrued interest secured under the deeds of trust of such
Beneficiary, the interest of such Beneficiary shall include Landlord’s interest
as defined in Section VIII.A.2.a above to the extent necessary Co repay such
outstanding principal and accrued interest.  Any portion of Landlord’s interest
remaining after the outstanding principal and accrued interest secured by such
deeds of trust is repaid shall remain the sole property of Landlord.  The
respective interests and rights of two or more Beneficiaries in and to such
interests of Tenant shall be determined between them in accordance with the
priority of their respective deeds of trust of this Lease.

 

3.             Use of Insurance Proceeds.  In case the buildings, improvements
or fixtures required to be insured in Section VIII.A.1 above or any part thereof
shall be destroyed or

 

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damaged by fire or such other casualty required to be insured against, then and
as often as the same shall happen, all proceeds of such insurance, including the
interest therein of Landlord and the balance of the interest therein of Tenant
after deducting such amount of the interest of any Beneficiary in Tenant’s
insurance proceeds as provided in Section VIII.A.2.c above and excluding the
proceeds of any rental value, or use and occupancy insurance of Tenant, shall be
available for and used with all reasonable dispatch by Tenant in rebuilding,
repairing, replacing or otherwise reinstating the buildings, improvements or
fixtures so destroyed or damaged in a good and substantial manner according to
the plan and elevation thereof, or according to such modified plan for the same
or substitute buildings, improvements or fixtures as shall be approved in
writing by the Landlord in accordance with Article VI above.  If the available
insurance proceeds shall be insufficient for rebuilding, repairing, replacing or
otherwise reinstating such buildings, improvements or fixtures in the manner
provided in this paragraph above, then Tenant shall provide the balance of all
funds required to completely rebuild, repair, replace or otherwise reinstate
such buildings, improvements or fixtures.

 

4.             Uninsured, Casualty and Abatement of Rent.  If a substantial
portion of the Improvements at any time erected on the Premises shall be
rendered untenantable by casualty which Tenant is not required by Article VIII
of this Lease to be insured against, neither party shall have any obligation to
rebuild, repair or otherwise reinstate such buildings.  If Tenant shall
undertake promptly to reinstate the building or buildings, or portions thereof,
so destroyed or damaged according to the original plan and elevation thereof or
according to such modified plan as shall be approved in writing by Landlord,
then from the date of such casualty and during the diligent rebuilding or repair
thereof until such buildings shall be fully reinstated, the rent payable under
this Lease during such period of rebuilding shall be adjusted in such just and
proportionate amount according to the nature and extent of the damage as
Landlord and Tenant shall mutually agree upon in writing.  In the event the
parties cannot mutually arrive at such an agreement, then the matter shall be
submitted to and settled by the appraisal process set forth in Section V.B
above.  If Tenant does not so rebuild, repair or otherwise reinstate such
buildings, Tenant will at its own expense promptly remove from the Premises all
buildings, improvements and trade fixtures and restore the Land then remaining
to good, orderly and sanitary condition and even grade, and upon so doing Tenant
may then surrender this Lease and thereby be relieved of further performance
under this Lease.

 

B.            Liability Insurance.  Tenant shall maintain at its own expense
during the Term a policy or policies of “comprehensive general liability”
insurance naming Landlord as additional insured thereunder in form and with
coverage satisfactory to and approved by Landlord, with limits not less than
those set forth in Section I.H above, and with deductibles not more than those
set forth in Section I.H.  The comprehensive general liability insurance shall
specifically cover contractual liability, liquor liability, personal and
advertising liability and products/completed operations liability.  Tenant shall
periodically, but not less frequently than annually, reevaluate the scope of the
risks covered and the liability limits of such insurance policies and, if
necessary, increase such coverage or liability limits in order to provide
coverage of risks and liability limits which a prudent businessman would provide
under similar circumstances.  Tenant shall also increase the liability limits or
the scope of the risks covered by such insurance policies to such higher levels
or such broader scope of risks as Landlord may from time to time reasonably
specify.  The coverage required hereunder shall state the Tenant’s insurance
shall apply separately to each insured against whom a claim is made or suit is
brought,

 

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except with respect to the limits of the insurer’s liability.  Tenant will name
Landlord as additional insured on each policy of insurance (including any
umbrella policy) that it procures relating to the Premises and each such policy
shall have limits and deductibles no less than or greater than, respectively,
those set forth in Section I.H.

 

C.            Worker’s Compensation and Employer’s Liability Insurance.  Tenant
shall maintain at its own expense during the Term a policy or policies of
“worker’s compensation” insurance with minimum limits as required by Nevada
state law, and the rules and regulations promulgated thereunder, and a policy or
policies of “employer’s liability” insurance with a per accident limit not less
than that set forth in Section I.H above.  The “employer’s liability” insurance
policy shall name Landlord as an additional insured thereunder.  Both policies
shall be in forms and with coverages satisfactory to and approved by Landlord. 
Tenant shall increase the liability limits or the scope of the risks covered by
such insurance policies Co such, higher levels or such broader scope of risks as
Landlord may from time to time reasonably specify.

 

D.            Automobile Liability Insurance.  Tenant shall maintain at its own
expense during the Term a policy or policies of “automobile liability” insurance
naming Landlord as an additional insured thereunder, in form and with coverage
satisfactory to and approved by Landlord, with a combined single limit for
bodily injury and property damage not less than that set forth in Section I.H
above and with a deductible not more than that set forth in Section I.H. The
automobile liability insurance shall specifically cover all automobiles used by
Tenant in connection with its operations at the Premises, whether owned or
non-owned, leased, rented, borrowed or hired.

 

E.             General Insurance Requirements.

 

1.             Policy Provisions.  Each policy of insurance required in
Sections A, B, C and D of this Article VIII and in Section C.7 of Article VI
above shall:

 

a.             provide that the liability of the insurer thereunder shall not be
affected by, and that the insurer shall not claim, any right of set-off,
counterclaim, apportionment, proration, or contribution by reason of, any other
insurance obtained by or for Landlord, Tenant, or any person claiming by,
through, or under any of them;

 

b.             contain no provision relieving the insurer from liability for
loss occurring while the hazard to buildings. improvements and fixtures is
increased, whether or not within warranty or condition or any other act or
neglect by Landlord, Tenant, or any person claiming by, through, or under any of
them;

 

c.             provide that such policy may not be cancelled, whether or not
requested by Tenant, except upon the insurer giving at least sixty (60) days’
prior written notice thereof to Landlord, Tenant, every Beneficiary of any
interest in the Premises, and every other person in interest who has requested
such notice of the insurer;

 

d.             contain a waiver by the insurer of any right of subrogation to
any right of Landlord or Tenant against any of . them or any person claiming by,
through, or under any of them; .

 

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e.             in the case of hazard insurance, contain a standard clause
providing protection to any Beneficiary which shall:

 

(i)            provide that any reference to a Beneficiary in such policy shall
mean and include all Beneficiaries under any deeds of trust encumbering any
interests in the Premises, in their respective order and preference as provided
in their respective deeds of trust;

 

(ii)           provide that such insurance as to the interest of any Beneficiary
shall not be invalidated by any act or neglect of Landlord, Tenant or any person
claiming by, through, or under any of them; and

 

(iii)          waive any provision invalidating such Beneficiary clause by
reason of the failure of any Beneficiary or Landlord, Tenant, or any person
claiming by, through, or under any of them to notify the insurer of any
hazardous use or vacancy, any requirement that any Beneficiary pay any premium
thereon, or any contribution clause;

 

f.              be written by an insurance company rated A or better, Class size
VIII or better, by the Best’s Key Rating Guide, based upon the rating system in
effect on the date this Lease is signed, and approved in writing by Landlord. 
In the event that Best’s changes its rating system or ceases to provide ratings
at some later date, then such insurance company shall have a rating from Best
(or some other comparable rating service if Best’s ceases to provide ratings)
comparable to the “A or better, Class size VIII or better” requirement of the
immediately preceding sentence; and

 

g.             be written as primary policies, not contributing with and not in
excess with any coverage that Landlord may carry.

 

2.             Certificates of Insurance.  Tenant shall deposit with Landlord
current certificates of insurance issued by the insurance carriers certifying
that Tenant has in effect all the insurance carriers certifying that Tenant has
in effect all the insurance required in Sections A, B, C and D of this
Article VIII as well as Section VI.C.7, if applicable.  Tenant shall also
deposit current copies of all insurance policies and endorsements required by
said Sections.

 

F.             Waiver of Subrogation.  Tenant hereby waives any and all rights
of recovery (including any subrogation rights of its insurers) from Landlord,
its agents, principals, employees and representatives for any loss or damage,
including consequential loss or damage, covered by any insurance policy
maintained by Tenant, whether or not such policy is required under the terms of
this Lease.  Landlord hereby waives any and all rights of recovery (including
any subrogation rights of its insurers) from Tenant, its agents, principals,
employees and representatives for any loss or damage, including consequential
loss or damage, covered by any insurance policy maintained by Landlord, whether
or not such policy is required under the terms of this Lease.

 

G.            Construction Insurance.  Not less than ten (10) Business Days
prior to the commencement of construction, erection, placement, replacement,
maintenance or repair of any improvements on the Premises by an independent
contractor, the . total cost of which is reasonably anticipated to exceed FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00),

 

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Tenant shall give Landlord written notice of Tenant’s intention to commence such
work (to permit Landlord to timely record an appropriate Notice of
Non-responsibility) together with a certificate of insurance evidencing Landlord
and Tenant as having been named as insureds on a policy of Owner’s and
Contractor’s Protective Liability Insurance with a combined single limit
coverage of not less than TWO MILLION DOLLARS ($2,000,000.00) , insuring
Landlord and Tenant against any and all claims for injuries to or death of any
person or persons or damage to property occurring, in, on or about the Premises
as a result of acts or omissions, related to such construction.  Such policy or
policies shall include normal comprehensive form liability coverage contained in
such policies and shall include, but shall not necessarily be limited to, bodily
injury and broad form property damage, blanket contractual liability coverage,
premises-operations coverage, products/completed operations hazard coverage,
independent contractors’ coverage and comprehensive form automobile liability
coverage.

 

H.            Assignees and Subtenants.  Tenant covenants that any and all
sub-tenants, assignees and licensees of Tenant shall, prior to commencing
occupancy or use of any portion of the Premises, obtain and thereafter maintain
in full force and effect throughout the period of said occupancy or use,
insurance with respect to said parties’ businesses, properties and actions in
the same names, coverages and amounts and with the same endorsements and other
requirements as required of Tenant herein, save and except for Tenant’s required
excess liability (“umbrella”) coverage.  In addition, Tenant covenants that each
such sub-tenant, assignee and licensee will timely provide Landlord with all
evidences of coverage which are required of Tenant herein, and that said
insurance will meet any and all standards and requirements imposed on Tenant
herein.

 

ARTICLE IX
CONDEMNATION

 

A.            Partial Termination and Reduction of Rent.  In the event at any
time or times during the Term all or any part of the Premises shall be taken or
condemned by any authority having the power of eminent domain, and neither of
the events described in Section IX.D below occur, then and in every such case
the estate and interest of Tenant in any part of the Premises so taken or
condemned shall at once cease and terminate, and the Rent provided for in this
Lease shall be reduced for and during the unexpired balance of the Term,
effective as of the date when Tenant shall by reason of such taking or
condemnation lose the right to possession of such part of the Premises, to a sum
to be set by agreement of Landlord and Tenant.  If Landlord and Tenant are
unable to agree upon such Rent on or before the date ninety (90) days prior to
the effective date of Tenant’s loss of possession as set forth in the first
sentence of this paragraph, then Tenant shall continue to pay the Rent then in
effect, and the new Rent shall be set by the appraisal process set forth in
Section V.B above according to the formula provided for in the immediately
following two sentences.  The appraisal shall determine the economic value of
the Premises immediately after the taking, based on the highest and best use of
the Premises.  The new Rent for the period of the Term commencing on the
effective date of Tenant’s loss of possession as set forth in the first sentence
of this paragraph shall be the Rent which would have been in effect for such
period under the Lease if no condemnation had occurred, multiplied by a
fraction, the numerator of which is the economic value of the Premises after the
taking and the denominator of which is the economic value of the Premises before
the taking, and the Rent for the remainder of the Term shall be adjusted
accordingly.  Following the determination of the new Rent, any Rent paid by
Tenant to Landlord in addition to the amount

 

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Tenant should have paid shall be retained by Landlord and applied to the monthly
installment of Rent next coming due.

 

B.            Compensation and Damages.

 

1.             Land.  In every case of taking or condemnation of all or any part
of the Land, all compensation and damages payable for or on account of the
taking of all or any part of the Land shall be payable to and be the sole
property of Landlord, and neither Tenant nor any Beneficiary shall have any
interest or claim to such compensation or damages or any part thereof
whatsoever.

 

2.             Improvements.  All compensation and damages payable for or on
account of the taking of all or any part of any buildings and other improvements
now or hereafter erected on the Land during the Term and any plans and other
preparations therefor shall be payable to Landlord, Tenant and any Beneficiary
in accordance with their respective interests as set forth in the following
sentences.  The respective interests of Landlord, Tenant and any Beneficiary in
such compensation and damages payable for or on account of any such buildings or
other improvements shall be determined as of the date when Tenant by reason of
such taking or condemnation loses the right to possession of such part of the
Premises so taken or condemned. . The respective interests in such compensation
and damages shall be as follows:

 

a.             Landlord’s Interest.  Landlord shall have no interest in such
compensation and damages for the first fifty- five (55) years of the Term;
Landlord’s interest shall be ten percent (10%) in the fifty-sixth year and shall
increase ten percent (10%) per year for each year thereafter;

 

b.             Tenant’s Interest.  Tenant’s interest shall be the balance of
such compensation and damages after first deducting the amount of Landlord’s
interest as defined in subparagraph a above; and

 

c.             Beneficiary’s Interest.  The Beneficiary’s interest shall be
limited to Tenant’s interest under subparagraph b immediately above, to the
extent of the then outstanding principal and accrued interest secured under the
deeds of trust of such Beneficiary; provided, however, that if such Tenant’s
interest is not sufficient to repay the then outstanding principal and accrued
interest secured under the deeds of trust of such Beneficiary, then such
Beneficiary’s interest shall include Landlord’s interest under subparagraph a
above to the extent necessary to repay such outstanding principal and accrued
interest.  Any portion of Landlord’s interest remaining after the outstanding
principal and accrued interest secured by such deeds of trust is repaid shall
remain the sole property of Landlord.  In no event shall such Beneficiary be
deemed to have any interest in any compensation or damages payable for or on
account of the taking of all or part of the Land or any buildings or other
improvements existing on the Land at the commencement of the Term, which amounts
shall be the sole property of Landlord.  The interests and rights of two or more
Beneficiaries in and to the interest of Tenant shall be determined in turn
according to the respective priorities of their deeds of trust.

 

C.            Partial Taking of Improvements.  In the event only part of any
building or other improvement now or hereafter built on the Premises shall be so
taken or condemned, then

 

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and in every such case, notwithstanding the foregoing provisions of this
Article IX, all compensation and damages payable for or on account of such
portion of such building or improvements so taken or condemned, including both
the interest of Landlord therein and the balance of Tenant’s interest in such
compensation and damages after deducting the amount of the interest of any
Beneficiary in such compensation and damages as set forth in Subparagraph B.2
above, shall be paid to trust company authorized by law to exercise corporate
trust powers in the State of Nevada or another impartial third party, which
corporate trustee or third party shall have its principal office in Las Vegas
and shall be designated by Landlord from time to time as trustee of all such
compensation and damages, and all such amounts held by such trustee shall be
available for and used with all reasonable dispatch by Tenant in rebuilding,
repairing or otherwise reinstating or replacing such portion of such building or
improvement taken or condemned on the balance of the Land not taken or
condemned, in a good and substantial manner according to such plan as shall be
approved in writing by Landlord.  If an economically viable building used for
the uses permitted under this Lease can then be built and operated on the
balance of the Land then remaining by combination of new construction and
rebuilding of the taken or condemned portions of the improvements, and if the
funds held by such trustee are insufficient to carry out such new construction
and rebuilding, Tenant shall provide the balance of the funds required for such
new construction or rebuilding in order to complete such a building on the
Premises pursuant to the requirements for construction on the Premises set forth
in Article VI above.  The trustee of the condemnation compensation and damages
shall have no obligation whatsoever to attend to any claim for such compensation
or damages or the collection thereof, nor to incur any expense therefor, and
shall be responsible only for the proper custody and application as herein
provided of all such compensation and damages that shall actually come into its
possession.  Tenant shall pay all fees and expenses of such trustee for or in
connection with such trustee’s services.  The provisions of this paragraph
relate only to the handling of condemnation proceeds attributable to the partial
taking of any building or improvements and do not in any way alter the
provisions of paragraph B.1 of this Article IX with respect to condemnation
proceeds paid for the taking of all or any portion of the Land.

 

D.            Termination of Lease.  In the event only part of the Premises
shall be so taken or condemned, and either:

 

a.             Landlord and Tenant shall agree in writing that the balance of
the Premises is unsuitable for construction and operation of an economically
viable building used for purposes permitted under this Lease, or

 

b.             all of the Improvements on the Premises shall be taken or
condemned,

 

If requested by Landlord, Tenant shall remove all buildings and other
improvements then remaining on the Premises and restore the Land then remaining
to good and orderly condition and even grade, and upon such removal and
restoration and in every such case, Tenant shall have the right at its option,
by giving prior written notice thereof to Landlord within seventy-five (75) days
after completing such removal and restoration, to terminate this Lease.  Upon
such termination, Tenant shall be relieved of all further obligations under this
Lease, Landlord shall refund to Tenant any unearned portion of the Rent paid in
advance prior to the effective date of such termination and Landlord shall
receive both Landlord’s and Tenant’s interest in such condemnation compensation
and damages then held by such trustee.

 

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E.             Condemnation of Leasehold Interest.  In the event at any time or
times during the Term a leasehold interest in the Premises or any part of such
interest shall be taken or condemned, then and in every such case,
notwithstanding the foregoing provisions of this Article IX, such taking or
condemnation shall not result in any reduction in Rent under this Lease, nor
give Tenant any right to terminate this Lease with respect to any part of the
Premises, nor excuse Tenant form the full and faithful performance of any or all
of its covenants and obligations under this Lease for the payment of money, nor
excuse or relieve Tenant from the performance of its covenants and obligations
under this Lease except to the extent that, and for so long as, the performance
of such covenants and obligations shall be rendered impossible by reason of the
loss by Tenant of possession of such part of the Premises subject to such taking
or condemnation.  In every such case of taking or condemnation of all or a part
of Tenant’s interest.  Tenant shall be entitled to claim and recover from the
condemning authority its damages sustained by reason of such taking, and all
compensation and damages payable for or on account of such taking or
condemnation of any part of such leasehold interest shall be payable to and be
the sole property of Tenant.

 

F.             Loss of Business Damages.  Not withstanding the foregoing
provisions of this Article IX, if and only if such claim for damages is not
adverse to any interest of Landlord, Tenant shall have the right to claim and
recover from the condemning authority but not from Landlord, such compensation
as may be separately awarded or recoverable by Tenant in its own right on
account of any and all damage to its business by reason of any condemnation and
for or on account of any cost or loss of Tenant in removing its furnishings and
equipment.

 

G.            Conveyance as Condemnation.  The term “condemnation” as used in
this Lease shall include any conveyance made under threat or imminence of
condemnation by any public or private authority having the power of eminent
domain.

 

ARTICLE X
MAINTENANCE AND USE OF PREMISES

 

A.            Taxes and Assessments.  Tenant shall pay throughout the Term,
beginning as of the Commencement Date, directly to the appropriate taxing or
other applicable authority at least ten (10) days before the same become
delinquent, all real property taxes and assessments of every description
attributable to the Premises or any part thereof or improvement thereon, or for
which Landlord or Tenant in respect thereof, are now or may during the Term be
assessed or became liable, whether assessed to or payable by Landlord or Tenant;
provided, however, that with respect to any assessment made under any betterment
or improvement law which may be payable in installments, Tenant shall be
required to pay only such installments of principal and, interest as shall
become due and payable during the Term.  Tenant’s covenant for the payment of
the taxes set forth in the preceding sentence shall include the payment of any
new tax (except federal or state net income taxes) which supplements or replaces
either the real property tax or increases the real property taxes and is
assessed upon the Premises or any part thereof or upon the rents received under
this Lease by Landlord or upon Landlord in respect of any of the preceding
items.  Notwithstanding the foregoing, Tenant shall pay all such taxes directly
to Landlord or such other party designated by Landlord at least ten (10) days
before the same become due until such time as Tenant receives written notice
from Landlord that such taxes shall be paid directly to the appropriate taxing
or other . applicable authority.  Subject to all of the

 

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conditions set forth in this sentence, Tenant may contest in good faith at
Tenant’s sole expense by appropriate proceedings, as may be allowed by law, the
validity or amount of any tax or assessment required in this paragraph to be
paid by Tenant, which conditions are as follows:  (a) such actions must be
commenced before any such tax or assessment becomes delinquent, (b) the action
commenced by tenant must be an action which either stays the collectability of
such tax or prevents the sale of the Premises in satisfaction of such tax or
assessment or lien securing such tax or assessment, · or in the alternative to
the previous two types of actions, an action in which Tenant pays such tax or
assessment while such action ensues, (c) Tenant complies with all requirements
of such action, including but not limited to the posting of bond or payment of
such tax or assessment while such action ensues, (d) Tenant gives notice to
Landlord of Tenant’s intention to contest such tax or assessment not less than
ten (10) days before such ‘ taxes or assessments become delinquent, and
(e) prior to undertaking such action, Tenant gives security to Landlord,
satisfactory to Landlord in both quality and quantity, for payment of such
taxes; provided, however, that notwithstanding the foregoing, Tenant shall pay
all such taxes, rates, assessments or charges, together with all interest,
penalties or fines accrued thereon or imposed in connection therewith,
immediately upon the commencement of proceedings to foreclose any lien which
attached to the Premises or any part thereof as security for such taxes, rates,
assessments or charges.  If Tenant shall fail to pay any taxes or assessments as
provided in this paragraph, Landlord may at any time thereafter pay the same,
together with any interest, penalties, fines and costs accrued thereon or
imposed in connection therewith, and Tenant shall repay to Landlord upon demand
therefor the full amount so paid by Landlord, together with interest at
Landlord’s Cost of Money accruing from the date such payments were due until
Landlord is reimbursed for such payments by Tenant.  Tenant shall pay all
conveyance taxes imposed with respect to this Lease.

 

B.            Rates and Other Charges.

 

1.             Tenant to Pay All Rates and Charges.  Tenant shall pay directly
before such charges and rates become delinquent, all utility charges, water and
sewer rates, garbage rates, hook-up fees and other charges and outgoings- of
every description attributable to the Premises or any part thereof or
improvement thereon, or for which Landlord or Tenant in respect thereof may
during the Term be assessed or become liable, whether assessed to or payable by
Landlord or Tenant and whether such charges and rates are imposed by
governmental authority, public or private utility or Landlord.

 

C.            Improvements Required by Law.  Tenant shall at its own expense
during the whole of the Term of this Lease make, build, maintain and repair all
fences, roads, curbs, sidewalks, sewers, drains, parkways and parking areas and
other improvements which may be required by law to be made, built, maintained or
repaired upon or adjoining or in connection with or for the use of the Premises
or any part thereof.  Without limiting the foregoing sentence, Tenant agrees
that all such improvements shall be subject to Landlord’s right of approval as
provided in Section VI.B above.

 

D.            Repair and Maintenance.  Tenant will at its own expense keep the
Premises, all landscaping, all structural and non-structural portions of all
buildings and other improvements existing on the Premises at any time during the
Term, in good order, condition, maintenance and repair, reasonable wear and tear
from normal usage excepted.  All repairs or

 

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maintenance which alter the external visual appearance of the Premises
(including any change in paint color) shall be subject to the prior written
approval of Landlord, which approval shall not be unreasonably withheld. 
Repairs or maintenance which return the Premises to their original condition and
aesthetic appearance (including color) on the Commencement Date shall not
require Landlord’s prior consent as set forth in the preceding sentence.  During
the last ten (10) years of the term of this Lease, Tenant:  shall not demolish
any buildings on the Premises or remove any buildings from the Premises without
the prior written approval of Landlord, which will not be unreasonably withheld.

 

E.             Observance of Laws.  Tenant shall during the Terra (i) keep the
Premises in a strictly clean and sanitary condition; (ii) observe and perform
all laws, ordinances, rules and regulations whether now or hereafter made by any
governmental authority for the time being applicable to the Premises or the use
thereof; and (iii) indemnify, defend and hold Landlord harmless against all
actions, suits, claims and damages (including reasonable attorney’s fees) by
whomsoever brought or made by reason of the nonobservance or nonperformance of
such requirements, laws, ordinances, rules and regulations or this covenant.  If
at any time hereafter, Landlord or any governmental authority having
jurisdiction shall require Landlord or Tenant to pre-sort, recycle, segregate or
otherwise prepare trash and garbage for disposition from the Premises, Tenant at
no cost to Landlord will cooperate fully in such efforts and shall provide on
the Premises any and all receptacles, containers and holding areas reasonably
necessary to accommodate the trash and garbage generated at the Premises by
Tenant and others.

 

F.             Inspection of Premises.  Tenant shall permit Landlord and its
agents at all reasonable times during the Term to enter and examine the state of
repair and condition of the Premises.  If any defects come to Landlord’s
attention, Landlord may give notice of such defects to Tenant and within sixty
(60) days after such notice, Tenant shall repair and make good all defects
required by the terms of this Lease to be repaired by Tenant; provided, however,
that if such repair or correction may be made within a reasonable period of time
but cannot reasonably be made within sixty (60) days, then such repair or
correction shall be deemed to be made if begun within the sixty (60) day period
and thereafter continuously and diligently undertaken to completion by Tenant;
provided, further, however, that if such defect poses a threat to health and
replace it to the original level with an uncontaminated material of the same
character as existed prior to the contamination.

 

G.            Use of Premises.  Tenant will use the Premises only for the use
permitted under Section I.E above and related commercial operations, operated by
Tenant or its permitted sublessees, ordinarily included in a first-class
operation of such type.  Tenant’s failure to comply with the provisions of this
Section X.H shall give Landlord the right to terminate this Lease.

 

H.            Liens.  Tenant shall keep the Premises at all times free and clear
of all liens, charges and encumbrances of every nature, other than such deeds of
trust as may be permitted under this Lease, and will indemnify, defend and hold
Landlord harmless from all loss, cost and expenses (including reasonable
attorney’s fees) with respect to any such liens, charges and encumbrances,
unless such liens, charges and encumbrances (i) exist on the Commencement Date,
(ii) are created by Landlord or persons claiming by, through or under Landlord,
(iii) are in the nature of tenant space leases permitted under the terms of this
Lease, (iv) are liens for taxes

 

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and assessments not yet due and payable or (v) are liens being contested in a
manner permitted by this Lease.

 

ARTICLE XI
DEFEASANCE

 

A.            Events of Default.  Tenant shall be in default under this Lease
(herein a “Default”) if:

 

1.             Failure to Pay Rent.  Tenant shall fail to make full payment of
any payment of Rent or any other payments required under this Lease within ten
(10) days after written notice that such payment is due; or

 

2.             Breach of Covenant.  Tenant shall fail to observe or perform any
of the covenants contained in this Lease on the part of Tenant to be observed
and performed, and such failure shall continue for a period of thirty (30) days
after written notice of such failure given by Landlord to Tenant without
substantial action having been initiated by Tenant within such period and
diligently and continuously continued to remedy such failure; or

 

3.             Abandonment.  Tenant shall vacate or abandon the Premises; or

 

4.             Bankruptcy or Insolvency.  Tenant shall become bankrupt or
insolvent, or seek protection under any provision of any bankruptcy or
insolvency law, or any similar law providing for the relief of debtors or if any
assignment be made of Tenant’s property for the benefit of creditors; or

 

5.             Liens.  If this Lease or any estate or interest of Tenant
hereunder shall become subject to any attachment or judgment, or to any lien,
charge or encumbrance not consented to by Landlord pursuant to the provisions of
this Lease and the same shall not be released within sixty (60) days thereafter.

 

B.            Landlords’ Remedies.  In the event of any Default by Tenant under
this Lease:

 

1.             Right of Re-entry.  Landlord may, with or without termination, at
once re-enter the Premises or any part thereof in the name of the whole and,
upon or without such entry, at its option, expel and remove from the Premises
Tenant and any persons claiming under Tenant and its and their property without
service of notice or resort to legal process or being deemed guilty of any
trespass or becoming liable for any loss or damage occasioned thereby, and
without prejudice to any other right or remedy of action, including summary
possession, which Landlord may have for rent or any other indebtedness owning by
Tenant hereunder whether theretofore or thereafter accruing or to accrue, or
damages for any preceding or other breach of contract.

 

2.             Summary Possession.  Whether or not Landlord shall have taken any
action above permitted, Landlord may bring an action for summary possession in
case of such Default, and in any such action, service of prior notice or demand
is hereby expressly waived.  No such action on the part of Landlord shall result
in a legal “surrender” of the Premises or a termination of this.  Lease or
Tenant’s obligations hereunder unless Landlord specifically elects

 

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to effect such a surrender or termination by specific and express application
therefor in such action.  Landlord may, at its option, assert its claim for
unpaid rent in such action or may institute a separate action for the recovery
of rent.

 

3.             Removal of Persons or Property.  In the event of such resumption
of possession under this Lease, whether by summary proceedings or by any other
means, Landlord, or any receiver appointed by a court having jurisdiction, may
dispossess and remove all persons and property from the Premises, and any
property so removed may be stored in any public warehouse or elsewhere at the
cost of and for the account of Tenant, and Landlord shall not be responsible for
the care or safekeeping thereof, and Tenant hereby waives any and all loss,
destruction, and/or damages or injury which may be occasioned in the exercise of
any of the aforesaid, acts.

 

4.             Damages, Attorneys’ Fees and Costs.  Landlord may recover from
Tenant all damages, attorneys’ fees and costs which ‘ may have been incurred by
Landlord as a result of any default of Tenant hereunder.

 

5.             Right to Re-let.  Should Landlord elect to re- enter for Tenant’s
Default, as provided hereinabove, or should it. take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Landlord may
either terminate this Lease or from time to time without terminating this Lease,
make such alterations and repairs as may be necessary in order to re- let the
Premises, and re-let said Premises or any part thereof for such term or terms
(which may be for a term extending beyond the Term of this Lease) and at such
rental or rentals and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable; upon each such re-letting all rental
received by Landlord from such re-letting shall be applied, first, to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of such re-letting
and of any necessary alterations and repairs; third, to the payment of Rent due
and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Rent and other payments as the same may become due
and payable hereunder.  If such rentals received from such re-letting during any
month are less than that to “be paid during that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord.  Such deficiency shall be
calculated and paid monthly.  Termination may, but need not necessarily, be made
effective by the giving of written notice to Tenant of intention to end the Term
of this Lease, specifying a day not earlier than five (5) days thereafter, and
upon the giving of such notice, the Term of this Lease and all right, title and
interest of Tenant hereunder shall expire as fully and completely on the day so
specified as if that day were the date herein specifically fixed for the
expiration of the Term.  No re-entry or taking of possession of said Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction. 
Notwithstanding any such re- letting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous Default.  Should
Landlord at any time terminate this Lease for Tenant’s Default, in addition to
any other remedies it may have, Landlord may recover from Tenant all damages it
may incur by reason of such Default, including the cost of recovering the
Premises, reasonable attorney’s fees, and the worth at the time of such
termination of the excess, if any, of the amount of Rent and other charges
reserved in this Lease for the remainder of the stated Term over the then
reasonable rental value of the Premises for the

 

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remainder of the stated Term, all of which amounts shall be immediately due and
payable from Tenant to Landlord.

 

C.            Non-waiver; Remedies Cumulative.  The waiver by Landlord or Tenant
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of such term, covenant or condition or any subsequent
breach of the same or any other term, covenant or condition herein contained. 
The subsequent acceptance of rent or any other payment hereunder by Landlord or
the subsequent acceptance of payment by Tenant shall not be deemed to be a
waiver of any preceding breach of any term, covenant or condition of this Lease,
other than the failure of the party to pay the particular rental or other
payment so accepted, regardless of such party’s knowledge of such preceding
breach at the time of acceptance of such rent or other payment.  Each and all
the remedies given to Landlord and Tenant hereunder are cumulative, and the
exercise of one right or remedy by Landlord or Tenant shall not impair
Landlord’s or Tenant’s right to any other remedy.

 

D.            No Accord and Satisfaction.  No payment by Tenant or receipt by
Landlord of a leaser amount than the monthly Rent or other payments herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent or other payment, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as Rent or other payment
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
Rent or other payment or pursue any other remedy provided in this Lease.

 

E.             Landlord Default.  Landlord shall be in default hereunder if
Landlord fails to perform or observe any provision of this Lease to be performed
or observed by Landlord and such failure continues for a period of thirty
(30) days after written notice thereof to Landlord from Tenant or, in the case
of a failure which cannot with reasonable diligence be cured within 30 days, if
Landlord shall fail to proceed within said 30 days to cure the same or
thereafter shall fail to prosecute such cure with reasonable diligence. 
Notwithstanding the foregoing, if Landlord’s Interest is encumbered by any
mortgage or deed of trust, if requested in writing by Landlord or the applicable
mortgagee or beneficiary under the deed of trust, Tenant shall give such
mortgagee or beneficiary, at such address as may be specified by Landlord or
such mortgagee or beneficiary (as such address may be changed, from time to
time, by Landlord or such mortgagee or beneficiary by notice to Tenant),
duplicate copies of all notices to Landlord and all documents and suits
delivered to or served upon Landlord, and no notice intended for Landlord shall
be deemed properly given, and no default of Landlord hereunder shall be deemed
to have occurred unless Tenant shall have given the mortgagee or beneficiary a
copy of its notices to Landlord relating to such default.  Further, no default
of Landlord shall be deemed to have occurred by reason of the expiration of
Landlord’s 30-day cure period (or period for permitted commencement of cure) as
provided in this paragraph unless, following the expiration of such period, an
additional ten (10) Business Days shall have expired following receipt by such
mortgagee or beneficiary of written notice from Tenant specifying (i) the nature
of the potential default, (ii) this Lease Section together with the Lease
Section requiring the applicable performance, (iii) that the applicable period
for Landlord’s cure or commencement of cure as provided in this Section has
expired without cure or commencement of cure by Landlord and (iv) that unless
the mortgagee or beneficiary cures or commences cure within 10 Business Days of
receipt of such notice, default shall occur and all applicable cure periods
shall have expired.

 

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Any such mortgagee or beneficiary shall have the right to pay any amount or
perform any act required of Landlord and so remedy any default under this Lease
or cause the same to be remedied, and Tenant shall accept such performance by or
at the instance of such mortgagee or beneficiary as if the same had been made by
Landlord.  Tenant’s sole remedy in the event of default by Landlord shall be the
right to perform the applicable obligation of Landlord or otherwise cure the
deficiency of Landlord for the account of, and at Landlord’s cost and expense
and to thereafter obtain monetary judgment against Landlord for the amount
thereof not paid to Tenant by Landlord within ten (10) days of written demand
therefor.  Tenant shall look solely to the equity of Landlord in the Premises at
the time of any breach or default by Landlord for the satisfaction of any
remedies of Tenant against Landlord, and neither Landlord nor its principals or
employees shall have any personal liability in excess of such equity with the
respect to any provision of this Lease in the event of a breach or default by
Landlord of any of its obligations hereunder.  Under no circumstances shall
tenant have the right to terminate this Lease nor its obligations hereunder
except pursuant to any express provision (if any) of this Lease permitting such
termination.

 

ARTICLE XII
SURRENDER

 

A.            Surrender.  Subject to the terms of Section VIII.A.4 above,
dealing with termination of the Lease in the event of an uninsured casualty, and
Section IX.D above, dealing with termination of the Lease in the event of
condemnation under certain conditions, and subject further to Landlord’s options
set forth in this Section XII.B below, at the end of the Term or sooner
termination of this Lease, Tenant shall peaceably deliver to Landlord possession
of the Premises, which shall include all buildings and other improvements by
whomever made located on the Land as of the time of surrender, in good repair,
order and condition; provided, however, that if Tenant shall not then be in
default under this Lease, subject to the provisions set forth in Section XII.B
below, Tenant may remove from the Premises any furnishings and trade fixtures
installed by Tenant during the Term upon the condition that Tenant shall at its
own expense repair promptly all damage caused by such removal.

 

B.            Removal and Restoration.  Notwithstanding the provisions of
Section XII.A above, upon surrender Landlord may in its sole discretion require
the Tenant at its sole expense remove any or all buildings or improvements by
whomsoever made then on the Premises, all debris from such demolition and
removal and restore the Land to good and even grade.

 

ARTICLE XIII
GENERAL PROVISIONS

 

A.            Assumption of Risk.  Tenant shall and does hereby assume all risk
of loss or damage to furnishings, furniture, fixtures, supplies, merchandise and
other property, by whomsoever owned, stored, placed or affixed in the Premises
and does hereby agree that Landlord shall not be responsible for loss or damage
to any such property, and Tenant hereby agrees to indemnify, defend and hold
Landlord harmless form and against any and all claims for such loss or damage,
including reasonable attorney’s fees.

 

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B.            Holding Over.  If Tenant shall, with the consent of Landlord,
remain in possession of the Premises after the expiration of the Term without
executing any extension or renewal of this Lease, Tenant shall be deemed to
occupy the Premises as a tenant from month-to-month subject to all of the terms
and conditions of the Lease, to the extent such terms and conditions are
applicable to a month-to-month tenancy except that each month’s Rent shall be
one-twelfth (1/12) of three hundred percent (300%) of the annual Rent paid for
the year preceding the expiration date.

 

C.            Acceptance of Premises and of Nearby or Adjacent Land Use.

 

1.             Premises in “As Is, Where Is” Condition.  It is expressly
understood and agreed that Landlord has not made any representation or warranty,
express or implied, regarding any aspect of the Premises including, but not
limited to, the implied warranties of merchantability, fitness for a particular
purpose, suitability, habitability, quality, physical condition and value, and
Landlord hereby disclaims any and all liability for any and all such
representations and warranties.  Tenant agrees that it has examined and
investigated the Premises prior to the execution of this Lease and that Tenant
has relied solely upon such examinations and investigations in leasing the
Premises.  Without · limiting the generality of the foregoing, Tenant
acknowledges that (i) it has made all inspections, investigations and analyses
deemed necessary or appropriate to determine compliance by the Premises with all
Hazardous Materials Laws that may apply to the Premises, and (ii) Landlord has
made no representation or warranty, express or implied, concerning the Premises’
compliance with Hazardous Materials Laws.  Tenant acknowledges and agrees that
it is leasing the Premises in its “as is, where is” condition, with all faults,
if any, and that Tenant has assumed all risks regarding all aspects of the
Premises, and the condition thereof, including, without limitation:  (i) the
risk of any physical condition affecting the Premises including, without
limitation, the existence of any Hazardous Materials, the existence of any soils
conditions, or the existence of archeological or historical conditions on the
Premises; (ii) the risk of any damage or loss to the Premises caused by any
means including, without limitation, flood or earthquake; and (iii) the risk of
use, zoning, habitability, merchantability or quality of the Premises or the
suitability of the Premises for its present use or future development.  Tenant
expressly releases Landlord from any and all liability and claims that it may
have against Landlord, its successors in trust and assigns with regard to
Hazardous Materials presently existing or hereafter placed on the Premises, and
Tenant hereby agrees to indemnify, defend and hold Landlord harmless from and
against any and all claims and demands for loss or damage, including claims for
personal injury, property damage or wrongful death, arising out of or in
connection with the existence of Hazardous Materials subsequently placed on or
near the Premises at any time during the Term, and Tenant shall reimburse
Landlord for all costs and expenses, including reasonably attorney’s fees, paid
or incurred by Landlord in connection with the defense of such claims including,
but not limited to all costs of Landlord’s defense to any such claim or in any
such action as well as costs for research regarding settlement or other
preventative measures which Landlord may take prior to the filing of such action
or to attempt to prevent the filing of such action.  The provisions of this
Section XIII.C.I shall survive the termination of this Lease.

 

2.             Adjacent and Nearby Property Uses.  Tenant, for itself and any
person or entity claiming by, through or under it, understands and acknowledges
that the Premises are adjacent to or nearby other lands owned by Landlord or
others, and that the activities of Landlord

 

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and its lessees, licensees, invitees, or others on such lands include or may
include, without limitation, commercial activities, golf courses and other
resort related. activities, housing development, quarrying activities, cement
manufacturing, refinery, power plant, or industrial park . operations, the
operation of agriculture related activities, the operation of heliports or
airports, the storage or munitions and explosives, military activities, sanitary
landfill operations, underground fires, and such other uses as may be permitted
by law on said lands, and that Tenant desired and sought the Premises with the
understanding that the Premises may be affected by nuisance or hazards to
persons and property from such operations and related activities.  Tenant
covenants and agrees for itself, its permitted assigns, transferees, and any
other party claiming by, through or under it that it assumes all such risks
associated with such location and that it shall defend and hold Landlord
harmless form any liability, claims or expenses, including attorneys’ fees,
property damage, personal injury, or wrongful death arising from such operations
and activities, only with regard to liabilities, claims or expenses, including
attorney’s fees, incurred or related to Tenant, its permitted assigns,
transferees and any other party claiming by, through or under Tenant, and
further covenants and agrees that Landlord or any other party shall have the
right, in the nature of an easement, to perpetually discharge, emit, diffuse,
and inflict over and upon the Premises noise, smoke, soot, dust, lights, noxious
vapors, odors, and other nuisances of every description arising from or
incidental to the operation of the foregoing and other activities, subject only
to zoning and other legal restrictions on use.

 

D.            Notices.  Any notice or demand to be given to or served upon
either Landlord or Tenant in connection with this Lease shall be in writing and
shall be deemed to have been sufficiently given or served for all purposes by
being sent by certified mail, postage prepaid, return receipt requested,
addressed to such party at its post office address specified above or at such
other post office address as such party may from time to time designate in
writing to the other party, or by being delivered personally Co any officer of
such party within the State of Nevada, and any such notices or demand shall be
deemed conclusively to have been given or served on the date indicated on the
return receipt of delivery or upon the date of such personal delivery; provided,
however, that if such party refuses to accept delivery of such notice or demand,
then delivery will be deemed conclusively to have been given or served on the
date of such refusal.  If, at any time during the Terra of this Lease, Landlord
shall dissolve or otherwise change from its legal form, Landlord shall designate
and thereafter maintain during the term of this Lease a person or entity to act
as the sole and exclusive agent of Landlord, with full authority to receive all
notices and Rent, additional rent and other sums due hereunder and to act on
behalf of Landlord on any and all matters concerning this Lease, including,
without limitation, the interpretation and implementation of the same.

 

E.             Article, Section, Paragraph Headings.  The Article, Section, and
Paragraph headings in this Lease are inserted only for convenience and reference
and shall in no way define, limit or describe the scope or intent of any
provision of this Lease.

 

F.             Assignments and Subleases.

 

1.             In General.  Except by way of deeds of trust permitted by
Article VII above, and subleases permitted by Section XIII.F.3 below, Tenant
shall not assign, transfer, deed of trust, pledge, hypothecate or encumber this
Lease or any interest therein or sublet the Premises in whole or in part or
otherwise part with possession of the whole or any part of the Premises,

 

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without the prior written consent of Landlord, which consent will not be
unreasonably withheld, and any such purported transfer without consent shall be
void and shall at the option of Landlord, constitute a default; PROVIDED,
HOWEVER, that Landlord will not require the payment of any money for any such
consent other than such reasonable costs and “expenses as may be incurred by
Landlord in connection with such consent.  Each Assignee, other than Landlord,
shall assume and be deemed to have assumed this Lease and shall become and
remain liable jointly and severally with Tenant for the payment of the Rent and
other payments due hereunder, and for the due performance of all the terms,
covenants, conditions and agreements herein contained on Tenant’s part to be
performed for the term of this Lease.  No assignment shall be binding on
Landlord unless such assignee or Tenant shall deliver to Landlord a counterpart
of such assignment and an instrument in recordable form, acceptable in form and
content to Landlord, which contains a covenant of assumption by the assignee,
but the failure or refusal of the assignee to execute such instrument of
assumption shall not release or discharge the assignee from its liability as set
forth above.  Landlord’s consent to any such transfer shall in no event release
Tenant from its continuing liability hereunder unless such release is expressly
set forth in a writing signed by Landlord.  Unless so released, Tenant’s
liability hereunder shall continue notwithstanding any other or further
assignment of this Lease or subsequent amendment or revision hereof; Tenant
hereby expressly consenting to all such amendments and revisions and waiving
notice thereof.  Tenant’s continuing liability hereunder shall be direct,
primary and absolute and not secondary or conditional.

 

2.             Reasonableness.  Without limiting Landlord’s consent rights under
Section XIII.F.1 above, it shall be reasonable for Landlord to withhold its
consent to any assignment of this Lease or to a sublease of all or any
substantial part of the Premises if Landlord determines, in its reasonable
discretion, that:

 

(i)            the proposed assignee or sublessee lacks the credit-worthiness or
financial capabilities required to perform all of Tenant’s covenants under this
Lease;

 

(ii)           the proposed assignee or sublessee lacks the experience necessary
to perform all of Tenant’s obligations under Lease;

 

(iii)          the proposed assignee or sublessee’s proposed use of the Premises
is not in compliance with the uses permitted under Section X.H above; or

 

(iv)          the proposed assignee or sublessee or their affiliates have an
unfavorable business reputation or character.

 

3.             Subleases.  Tenant shall not enter into subleases with sublessees
to use or occupy all or any portions of the . buildings constructed by Tenant on
the Premises during the Term of this Lease without the prior written consent of
the Landlord, which consent shall not be unreasonably withheld or delayed, and
any such purported subleases without consent shall be void and shall, at the
option of the Landlord, constitute a default.  Notwithstanding the foregoing,
Tenant may, without Landlord’s consent, enter into any sublease so long as that
portion of the Premises demised thereby does not exceed two thousand
(2,000) rentable square feet of space.

 

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G.            Costs and Expenses of Landlord.  Tenant shall pay to Landlord all
costs and expenses, including without limitation reasonable architects’ and
attorneys’ fees, incurred or paid by Landlord in reviewing documents for which
Landlord’s consent is required, in preparing and processing consents, in
enforcing any of the covenants and conditions contained in this Lease, in
recovering possession of the Premises or any part thereof or in collecting any
delinquent Rent, taxes or other charges payable under this Lease by Tenant, or
incurred by or imposed upon Landlord by or in connection with any litigation
commenced by or against Tenant (other than condemnation proceedings) to which ‘
Landlord shall, without fault, be made a party.  All payments required of Tenant
under this Section XIII.G shall be subject to interest as provided in
Section XIII.K below.

 

H.            Indemnity.  Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims and demands for loss or damage,
including claims for property damage, personal injury or wrongful death, arising
out of or in connection with the use or occupancy of the Premises by Tenant or
any other person claiming by, through or under Tenant, or any accident or fire
on the Premises, or any nuisance made or suffered thereon, or any failure of
Tenant to maintain the Premises in a safe condition, and Tenant shall reimburse
Landlord for all costs and expenses, including reasonable attorneys’ fees, paid
or incurred by Landlord in connection with defense of any such claim or in any
such action as well as all costs for research regarding settlement or other
preventive measures which Landlord may take prior to the filing of such action
or to attempt to prevent the filing of such an action.

 

I.              Multiple Tenants.  In the event that more than one Tenant is
entering into this Lease, then all such Tenants shall be jointly and severally
bound by the Tenant’s covenants in this Lease and any notice given to any one
such Tenant by Landlord shall be deemed to be notice upon all such Tenants.

 

J.             No Increase of Tenant’s Estate.  Tenant hereby waives and
relinquishes any and all rights given to a lessee under any law which may be
enacted at any time during the Term giving Tenant the right to expand Tenant’s
leasehold estate under this Lease, which Tenant would not have under the terms
of this Lease in the absence of such chapter or such law, it being understood
and agreed by and between Landlord and Tenant that the provisions of such
chapter of such law shall not apply to this Lease.  Any attempt by Tenant or any
person claiming by or through Tenant to expand its estate under this Lease
pursuant to such chapter or such law shall be a breach of this Lease.

 

K.            Interest on All Late Payments.  All payments required to be made
by Tenant to Landlord under this Lease which are not paid within thirty
(30) days of the due date for such payments required in the Lease shall bear
interest at a rate equal to Landlord’s Cost of Money accruing from the due date
until such overdue payments are paid in full.

 

L.             Neither Landlord nor Tenant Deemed Drafter.  All provisions of
this Lease have been negotiated by Landlord and Tenant at “arm’s length” and
with full opportunity for representation by their respective legal counsel and
Landlord arid Tenant agree that neither party shall be deemed to be the drafter
of this Lease and in the event this Lease is ever construed by a court of law,
such court shall not construe this Lease against either party drafter of this
Lease.

 

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M.           Landlord’s Right to Transfer Landlord’s Interest and Reserved
Rights.  Tenant agrees that nothing in this Lease shall be construed to prevent
Landlord from selling, assigning or otherwise transferring all or any part of
Landlord’s Interest, or selling, assigning, releasing or otherwise transferring
all or any part of Landlord’s rights reserved under Article III above.  In the
event of Landlord’s transfer of all of Landlord’s Interest, Tenant agrees that
any and all obligations of Landlord under this Lease not then accrued shall
terminate upon the effective date of such transfer and Tenant hereby releases
Landlord from any obligations or covenants under this Lease which have not
accrued prior to such effective date; provided, however, that nothing herein
shall be deemed or construed to release the transferee of Landlord’s Interest
from the obligation to perform all of the obligations and covenants of Landlord
under this Lease which accrue from and after the effective date of such
transfer.  No assignment, sale, release or other transfer of Landlord’s rights
reserved under Article III above shall be implied from any conveyance or other
document executed by Landlord, but shall be made effective only by a document
describing specifically the rights transferred, provided, however, that such
rights shall pass automatically to any legal successor of Landlord by merger,
consolidation or otherwise by operation of law.

 

N.            Entire Agreement.  This Lease together with the Exhibits attached
hereto constitutes the full and complete agreement of Landlord and Tenant and
all other prior oral and written agreements shall be deemed to have merged into
this Lease and have no further force or effect.

 

O.            Consent.  Where the consent or approval of Landlord or Tenant is
required by any provisions of this Lease, all such approvals or consents shall
be in writing and unless expressly so provided to the contrary, such consent
shall not unreasonably withheld or delayed.

 

P.             Amendment.  This Lease may only be amended in writing, executed
by both Landlord and Tenant.

 

Q.            Estoppel Certificates.  Within ten (10) days of written notice
from either party, the other party shall execute, acknowledge and deliver to the
requesting party a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the Rent and other charges are paid in
advance, if any, and {ii} acknowledging that there are not, to certifying
party’s knowledge, any uncured defaults on the part of the other party, or
specifying such defaults if any are claimed.  Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises.

 

R.            Attorneys’ Fees.  If either party hereto institutes any action or
proceeding against the other party in court relating to this Lease or the rights
or obligations of any party hereunder, the prevailing party shall be entitled to
receive from the losing party all costs, including reasonable attorneys’ fees.

 

S.             Expenditures By Landlord.  Whenever under any provision of this
Lease Tenant shall be obligated to make any ‘ payment or expenditure, or to do
any act or thing, or to incur any liability whatsoever, and Tenant fails,
refuses or neglects to perform as herein required, Landlord shall be entitled
but shall not be obligated to make any such payment or expenditure, or

 

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do any such act or thing, or to incur any such liability, all on behalf of and
at the cost and for the account of Tenant, and in such event the amount thereof,
together with interest computed at Landlord’s Cost of Money, shall be deemed
additional rent hereunder and shall be added to and deemed a part of the next
installment of Rent thereafter becoming due.

 

T.            Partial Invalidity.  If any term, provision, covenant or condition
of this Lease should be held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of this Lease shall continue in full force
and effect and shall in no way be affected, impaired or invalidated thereby.

 

U.            Time of Essence.  Time is of the essence of this Lease and all of
the terms, provisions, covenants and conditions hereof.

 

V.            Recordation.  This Lease shall not be Recorded, but the parties
shall execute and deliver a memorandum hereof, in recordable form, sufficient to
give constructive notice of the leasehold estate hereby created, and said
memorandum shall be Recorded.  Tenant agrees, at Tenant’s expense, once the
Lease is terminate, to execute a recordable instrument evidencing such
termination.  Tenant hereby appoints Landlord as Tenant’s attorney-in-fact for
the purpose of executing any instrument evidencing termination of this Lease,
such appointment being coupled with an interest irrevocable and not affected by
specific revocation, death, incompetence or other cause.

 

W.           Successors and Assigns; Exculpation.  All the terms, covenants and
conditions of this Lease shall inure to the benefit of and be binding upon the
successors, successors in trust and assigns of Landlord and subject to the
restrictions on assignment herein contained) the heirs, devisees, personal
representatives, successors and permitted assigns of Tenant to the same extent
as said terms, covenants and conditions inure to the benefit of and are binding
upon Landlord and Tenant, respectively.

 

X.            Grammar; Governing Law.  The necessary grammatical changes
required to make the provision of this Lease apply in the plural sense where
there is more than one Tenant and to either corporations, associations,
partnerships, or individuals, males or females, shall in all instances be
assumed as though in each case fully expressed.  The laws of the State of Nevada
shall govern the validity, performance and enforcement of this Lease.

 

Y.            Arbitration of Disputes.  Except for those matters under this
Lease which are to be determined by appraisal under Section V.B above as
expressly provided for herein, any dispute or controversy arising under, out of,
in connection with, or in relation to this Lease or any breach hereof shall be
determined and settled by arbitration to be held in Las Vegas, in accordance
with the commercial arbitration rules of the AAA then in effect.  Disputes shall
be heard by a panel of three (3) arbitrators, which panel shall be selected as
follows:  the party requesting or desiring arbitration shall give written notice
to that effect to the other party.  The notice shall designate an individual
person as an arbitrator.  Within ten (10) days after the notice is given, the
other party shall give notice to the party requesting the arbitration, and its
notice shall designate a second individual person as an arbitrator.  If the
second party shall fail to designate an arbitrator within the ten (10) day
period, the first arbitrator shall elect a second individual person as an
arbitrator.  When two arbitrators are designated in accordance with the

 

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foregoing provisions, they shall designate a third individual person as an
arbitrator as promptly as possible.  If, within ten (10) days after the
appointment of the second arbitrator, the two arbitrators so designated do not
agree upon the designation of a third arbitrator, they shall give notice of
their failure to agree to the parties.  If the parties do not agree upon the
selection of a third arbitrator within five (5) days after that notice, either
party may apply to the ABA for the appointment of the third arbitrator within
ten (10) days thereafter. . All decisions of a majority of the arbitrators shall
be final, conclusive and binding on the parties.  All proper costs and expenses
of such arbitration including, without limitation, witnesses’ fees, attorneys’
fees and the fees of the arbitrators, shall be charged to a party or parties in
such amounts as the arbitrators shall decide at the time of the award.  In the
event of the failure, inability or refusal of any arbitrator to act within
thirty (30) days of the appointment of the panel, a new arbitrator shall be
appointed in his stead by the AAA.  An award so rendered shall be final and
binding in all aspects upon the parties and judgment may be rendered upon the
award by the courts of the State of Nevada and the parties consent to the
jurisdiction of such courts.  The parties agree that any process or notice of
motion or other application to any of the courts and any paper in connection
with arbitration may be served by certified mail, return receipt requested, or
by personal service or in such other manner as may be permissible under the
rules of the applicable court or arbitration tribunal, provided a reasonable
time for appearances is allowed.  In the resolution of any dispute or
controversy as set forth in this Section XIII.Y, each party irrevocably waives
any right and claim to exemplary or punitive damages.

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed, this Lease as of the date
first above written.

 

“LANDLORD”

TEXAS GAMBLING HALL & HOTEL, INC.,

 

a Nevada corporation

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

“TENANT”

STATION CASINOS, INC.

 

a Nevada corporation

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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