Exhibit 10.18


Second Amendment to Lease

Between

Southwest Casino and Hotel Corp. and Lois L. Woods


This
Second Amendment to Lease (the “Second Amendment”) is made and entered into as
of the 10th day of February 2004 by and between Lois L. Woods, an individual
whose address is P.O. Box 489, Cripple Creek, Colorado 80813 (“Landlord”), and
Southwest Casino and Hotel Corp., a Minnesota corporation with offices at 2001
Killebrew Drive, Suite 305, Minneapolis, Minnesota 55425 (“Tenant”). Landlord
and Tenant are sometimes referred to in this Second Amendment as a “party” or
the “parties,” as the sense requires.


Recitals


A.                                                 Landlord and Tenant are parties
to a lease dated as of the 1st day of May, 1998 governing the Premises located
at 251 East Bennett Avenue, Cripple Creek, Colorado.


B.                                                   The parties amended the lease as
of February 9, 2001 to reflect a change in Section 3.B thereof. For
purposes of this Second Amendment, the original lease as amended as of
February 9, 2001 is referred to as the lease.


C.                                                     The parties desire to further
amend the Lease as set forth herein.


D.                                                  Except as otherwise provided in
this Second Amendment, capitalized terms in the Second Amendment shall have the
meanings ascribed to them in the original lease entered into as of
May 1,1998.


Now
Therefore, in consideration of the parties’ mutual obligations and undertakings
hereunder and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Lease as set forth below.


Amendments


1.                             Section 3.C of
the Lease is amended to provide, in its entirety:


C.                                                   During the Extension Term.
Tenant shall pay rent in the amount of Fourteen Thousand Dollars ($14,000.00)
per month during the Extension Term.


2.                             Section 3.F(2)
of the Lease is amended to provide, in its entirety:


(2)                                                On the Commencement Date, a
deposit in the amount of One Hundred Forty-Four Thousand Dollars ($144,000.00),
Ninety-Six Thousand Dollars ($96,000.00) of which shall be credited to the
first eight (8) months rent due during the Initial Term, and the Forty-Eight
Thousand Dollar ($48,000.00) balance of which will be credited against the last
four (4) months rent owed during the Initial Term or, if the Lease Term is
extended, against the last four (4) months rent owed during the Extension Term,
except that the Forty-Eight Thousand Dollar ($48,000.00)











balance shall be
returned to the Tenant in the event this Lease is terminated by either party
prior to expiration of the Initial Term.


3.                             All other terms and
condition of the Lease shall remain in full force and effect.


In
Witness Whereof, the parties have executed this Second Amendment To Lease as of
the day first written above.


 


	
  

  	
   

  	
  Landlord:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
  Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Southwest Casino and Hotel Corp.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ James B. Druck

  	
   

  	
   

  
	
   

  	
   

  	
  James B. Druck, President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						



 


	
  State of CO, County of Jeller

  
	
  Signed before me this 11 th day of

  
	
  February, 2004 by

  
	
   

  
	
  /s/
  Patricia Ruscoe

  	
   

  
	
  Patricia Ruscoe

  
	
  Notary Public

  



 


EXTENSION OF LEASE


This
Extension of Lease is made and entered into as of this 10th day of February,
2004, by and between LOIS L. WOODS, an individual whose address is P.O. Box
489, Cripple Creek, Colorado 80813 (“Landlord”) and SOUTHWEST CASINO AND HOTEL
CORP., a Minnesota corporation with offices at 2001 Killebrew Drive, Suite 306,
Minneapolis, Minnesota 55425 (hereinafter referred to as “Tenant”).


WITNESSETH


WHEREAS,
Landlord and Tenant are parties to the Lease dated the 1st day of May, 1998,
with respect to the Premises located at 251 East Bennett Avenue, Cripple Creek,
Colorado; and


WHEREAS,
the parties desire to extend the Lease as set forth below.


NOW,
THEREFORE, it is agreed by the parties as follows:


1.                                                     Tenant shall exercise their
option to extend the term of the Lease as defined in Section 2(C) for a
single 5 year term.


2.                                                     All terms and conditions of the
Lease and of the first and second amendments shall remain in full force and
effect.


IN
WITNESS WHEREOF, the parties hereto have caused this Extension of Lease to be
executed as of the day and year first above written.


	
  

  	
   

  	
  Landlord:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
  Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Southwest Casino and Hotel Corp.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ James B. Druck

  	
   

  	
   

  
	
   

  	
   

  	
  James B. Druck, President

  	
   

  	
   

  
						



 


	
  State of CO, County of Jeller

  	
  

  	
   

  
	
  Signed before me this 11 th day of

  	
   

  	
   

  
	
  February, 2004 by

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Patricia Ruscoe

  	
   

  	
   

  
	
  Patricia Ruscoe

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  












AMENDMENT TO LEASE


This
Amendment to Lease is made and entered into as of this 9 th day of February, 2001, by and between LOIS L.
WOODS, an individual whose address is P.O. Box 489, Cripple Creek, Colorado
80813 (“Landlord”) and SOUTHWEST CASINO AND HOTEL CORP., a Minnesota.
corporation with offices at 2001 Killebrew Drive, Suite 306, Minneapolis,
Minnesota 55425 (hereinafter referred to as “Tenant”).


WITNESSETH:


WHEREAS,
Landlord and Tenant are parties to the Lease dated the lst day of May, 1998,
with respect to the Premises located at 251 East Bennett Avenue, Cripple Creek,
Colorado; and


WHEREAS,
the parties desire to amend the Lease as set forth below.


NOW,
THEREFORE, it is agreed by the parties as follows:


1.                             Section 3(B)
shall be amended as follows:


B.                                                   During the Initial Term .
Tenant shall pay rent in the amount of Twelve Thousand Dollars per month during
the first five Lease Years following the Commencement Date.


2.                             All other terms and
conditions of the Lease shall remain in full force arid effect.


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to Lease to be
executed as of the day and year first above written.


 


	
  

  	
   

  	
  Landlord:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
  Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Southwest Casino and Hotel Corp.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ James B. Druck

  	
   

  	
   

  
	
   

  	
   

  	
  James B. Druck, President

  	
   

  	
   

  
						



 











LEASE


LOIS L. WOODS

(as Landlord)


and


SOUTHWEST CASINO AND HOTEL CORP.

a Minnesota corporation

(as Tenant)


 
















 


LEASE


THIS
LEASE is made and entered into as of the 1st day of May, 1998, by and between
LOIS L. WOODS, an individual who address is P.O. Box 489, Cripple Creek,
Colorado 80813 (“Landlord”), and SOUTHWEST CASINO AND HOTEL CORP., a Minnesota
corporation with offices at 2001 Killebrew Drive, Suite 306 in Minneapolis,
Minnesota (“Tenant”).


WITNESSETH:


1.                             PREMISES . In
consideration of the payment of rent and the keeping and performance of the
covenants and agreements by Tenant as hereinafter set forth, Landlord hereby
leases and demises to Tenant the Premises, which consists of that certain real
property known as Lot 33, and the South 25 feet of Lot 8, Block 16, City of
Fremont (now Cripple Creek), County of Teller, State of Colorado, commonly
referred to as 251 East Bennett Avenue, Cripple Creek, Colorado, together with
all improvements thereon and all rights, easements and appurtenances thereto,
including the building currently known as Lucky Lola’s Casino and all
furniture, fixtures and equipment remaining therein as of May 1, 1998 (except
slot machines) as reflected in the Inventory attached hereto and incorporated
herein as Exhibit A (the “Casino”), and three (3) parking spaces located at the
rear of and adjacent to the Casino, and a vacant lot located across the alley
from the Casino on which currently are located a propane tank and a trash
dumpster, all as shown on Exhibit B attached hereto and incorporated herein by
reference.


Notwithstanding
the foregoing, the parties understand and agree that they shall revise Exhibit
A as of the Commencement Date of the Lease as herein defined to reflect which
items of furniture, fixtures and equipment Tenant intends to use in the
operation of the casino here contemplated. Tenant shall return to Landlord as
of the Commencement Date all such items of furniture, fixtures and equipment
located on the Premises which Tenant does not intend to use in its operations
and which do not appear on the revised Exhibit A.


2.                             TERM .


A.                            Pre-Opening
Period . Tenant shall occupy the Premises as of May 1, 1998 in anticipation
of becoming licensed by the Colorado Limited Gaming Control Commission (the
“Gaming Commission”) to operate the casino currently located on the Premises by
the Spring of 1999 (the “Pre-Opening Period”). Rent payable during the
Pre-Opening Period shall be computed as provided in Section 3.A of this
Lease.


B.                            Initial Term
.. The initial term of the Lease shall commence as of the date upon which Tenant
opens the Premises to the public as a casino, having been duly licensed by the
Gaming Commission (the “Commencement Date”) and continue for a period of five
(5) years (the “Initial Term”).


C.                            Extension Term
.. Tenant shall have the option to extend the term of the Lease for a single
five (5) year term at the conclusion of the Initial Term (the “Extension
Term”).


Tenant
shall give Landlord written notice of its election to exercise the extension
option at least six (6) months prior to the expiration of the Initial Term.
Tenant’s notice of its election to



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exercise the extension
option shall be of no force and effect if as of the date of such notice to
extend, Tenant shall be in default under the Lease beyond any applicable cure
period.


The
Extension Term shall be governed by all the provisions of the Lease applicable
to the Initial Term, except for an increase in rent payable during the
Extension Term which shall be computed as provided in Section 3.C hereof,
and except to the extent that the Lease provides other specific provisions
applicable to the Extension Term.


D.                            Holding Over .
Nothing contained in this Lease shall be deemed to permit Tenant to use or
occupy the Premises after the expiration of the Initial Term or, if applicable,
the Extension Term of the Lease. If Tenant continues to occupy the Premises
after such expiration, such occupancy shall (unless the parties hereto
otherwise agree in writing) be deemed to create a month to month tenancy at a
monthly rental equal to one hundred fifty percent (150%) of the annual rent
prorated on a monthly basis for the month prior to the commencement of the
holdover period, and Tenant shall remain liable for all other additional rent
and other charges payable by Tenant under this Lease. Such holdover occupancy
shall be subject to all of the terms and conditions of this Lease.


E.                             Definition of
Lease Term . The phrase “Lease Term” means the Initial Term together with,
if applicable, the Extension Term, both as herein defined.


F.                             Definition of
Lease Year . The term “Lease Year” shall mean a period of twelve (12) full
consecutive calendar months. The first Lease year shall commence as of the
Commencement Date. Each subsequent Lease Year shall commence on the anniversary
of the commencement date of the first Lease Year.


3.                             RENT .


A.                            During Pre-Opening
Period .  Tenant shall pay rent in the total sum of Eight Thousand
Dollars ($8,000.00) per month commencing as of May 1, 1998 and continuing on
the first day of each month thereafter through and including December 1,
1998. Commencing as of January 1, 1999 and continuing on the first day of
each month thereafter until the Commencement Date, Tenant shall pay rent in the
total sum of Twelve Thousand Dollars ($12,000.00) per month.


B.                            During the Initial
Term . Tenant shall pay rent in the amount of Twelve Thousand Dollars
($12,000.00) per month during the first three Lease Years following the
Commencement Date, Thirteen Thousand Dollars ($13,000.00) per month during the
fourth Lease Year, and Fourteen Thousand Dollars ($14,000.00) per month during
the fifth Lease Year of the Initial Term.


C.                            During the
Extension Term . Tenant shall pay rent in an amount equal to the monthly
rent paid during the Initial Term adjusted to reflect applicable changes in the
Consumer Price Index (the “CPI Adjustment”). For purposes of this Lease, the
Consumer Price Index shall mean the Consumer Price Index for All Items for All
Urban Consumers (often referred to as the “Cost of Living Index”), published by
the Bureau of Labor Statistics of the Department of Labor of the United States
Government.



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D.                            Net Lease . It
is the intent of Landlord and Tenant that the rent to be paid during the Lease
Term shall be a net return to Landlord, free of expense, charge, or reduction
with respect to the Premises. Except as otherwise provided herein, Tenant shall
pay all Operating Expenses of the Premises during the Lease Term. Operating
Expenses are defined as:


(1)                           All real property
taxes and assessments levied against the Premises by any governmental or
quasi-governmental authority. The foregoing shall include any taxes,
assessments, surcharges, or service or other fees of a nature not presently in
effect which shall hereafter be levied on the Premises as a result of the use,
ownership or operation of the Premises or for any other reason, whether in lieu
of or in addition to, any current real estate taxes and assessments; provided,
however, that in no event shall the term “taxes or assessments,”  as used
herein, include any net federal or state income taxes levied or assessed on
Landlord, unless such taxes are a specific substitute for real property taxes
(all of the foregoing are collectively referred to herein as the “Taxes”).
“Assessment” shall include so-called special assessments, license tax, business
license fee or tax, gaming license and/or gaming equipment fee, commercial
rental tax, levy, charge penalty or tax, imposed by any authority having the
direct power to tax, including any city, county, state or federal government,
or any school, agricultural, lighting, water, drainage or other improvement or
special district thereof, against the Premises or any legal or equitable
interest of Landlord therein. For purposes of this Lease, any special
assessments shall be deemed payable in such number of installments as is
permitted by law, whether or not actually so paid and shall include any
applicable interest on such installments.


(2)                           Costs of supplies.


(3)                           Costs incurred in
connection with obtaining and providing energy for the Premises, including, but
not limited to, costs of propane, butane, natural gas, steam, electricity,
solar energy and fuel oils, coal or any other energy sources.


(4)                           Costs of water and
sanitary and storm drainage services.


(5)                           Costs of general
maintenance and repairs occasioned by normal wear and tear on the Premises
experienced during the Term, including the cost of maintaining (but not
repairing or replacing) HV AC and other mechanical systems.


(6)                           Costs of maintenance
and replacement of landscaping.


(7)                           Costs of obtaining
insurance insuring Tenant in the amount of Two Million Dollars ($2,000,000.00)
for damage to property, provided that Tenant’s obligation to obtain and
maintain such insurance shall not arise until the Commencement Date, and the
risk of damage, injury or loss on and to the Premises shall be borne by
Landlord during the period May 1, 1998 to the Commencement Date.


“Operating
Expenses” shall not include:


(a)                           Costs of repair of
structural defects, including the roof, walls and floors of the Premises, or of
repair or replacement of the HVAC, plumbing (except in the event of damage
caused by freezing pipes), or sprinkler system (except in the event of damage
caused by freezing pipes). Landlord has represented to Tenant that the
Premises’ structural integrity is



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sound and that all
essential operating equipment and components were installed or replaced during
the 1991 calendar year. As such, Landlord warrants and represents to Tenant
that the Premises and all its major components are in good working order, free
from defects and deficiencies. Landlord further warrants and represents that
the Premises complies with all permits, certificates, laws, rules, building and
other codes and regulations of governmental agencies or authorities
(collectively, the “Codes”) now in effect, and that Landlord will, at its
expense, cause the Premises to continue to comply with such Codes as are now in
effect during the Pre-Opening Period and the Lease Term.


In
addition, Landlord shall provide Tenant, prior to Tenant’s entry into this
Lease, with the most current information filed with the City of Cripple Creek
describing the amount and basis for calculation of electrical power to the
Premises. Upon review of the information, Tenant will determine whether it
wishes to proceed with the Lease and pay for whatever additional power it needs
to operate the casino, or decline to enter into or to terminate the Lease.


In the
event Landlord and Tenant shall disagree as to whether a particular expense is
an “Operating Expense” for purposes of this Lease, Tenant may make and pay for
the repair, and the parties shall thereafter each select an expert, who shall
determine the nature of the expense and its apportionment, if any, between
Landlord and Tenant. If the two experts are unable to agree on the nature and
apportionment of the expense, the two experts shall together appoint a third
expert, whose decision as to both elements of the determination shall be final
and binding upon Landlord and Tenant. Landlord and Tenant shall each bear their
own costs in retaining their own experts, and they shall share equally in the
costs associated with the retention and work of the third (neutral) expert, if
one is appointed.


(b)                           Costs of repairs or
other work occasioned by fire, windstorm or other insured casualty to the
extent of insurance proceeds received.


(c)                           Costs of repairs or
rebuilding necessitated by condemnation.


(d)                           Any interest on
borrowed money or debt amortization, except as specifically provided herein.


(e)                           Depreciation on the
Premises.


Landlord
and Tenant do not intend that Tenant shall pay any Operating Expenses prior to
the Commencement Date as herein defined. Until the Commencement Date, Tenant
shall be responsible  for the rent described in Section 3.A hereof.


The
parties contemplate that Tenant shall receive its gaming license(s) from the
Gaming Commission as of October 1, 1998, and that if Tenant does not, and
if Myers Avenue Gaming, Inc., or such other entity or person as Landlord may
designate, shall thereafter file its own gaming license application governing
the Premises, Tenant shall pay the cost of the filing of such application up to
a maximum total of Twenty Thousand Dollars ($20,000.00), Ten Thousand Dollars
($10,000.00) of which will be refunded to Tenant in the form of applying it to
Tenant’s next month’s rent should Tenant receive its gaming license(s) on or
before April 1, 1999.



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E.                             Place of Payment
.. Rent and such other charges as Tenant is required to pay Landlord shall be
payable at Landlord’s notice address reflected in Section 16.E hereof.


F.                             Deposits .
Tenant shall pay Landlord the following Lease deposits:


(1)                           Upon (a) execution of
this Lease by both parties, and (b) delivery to Tenant of a title insurance
policy acceptable to Tenant, as described in Section 6 of this Lease, a
Fifteen Thousand Dollars ($15,000.00) non-refundable deposit.


(2)                           On the Commencement
Date, a deposit in the amount of One Hundred Forty-Four Thousand Dollars
($144,000.00), Ninety-Six Thousand Dollars ($96,000.00) of which shall be
credited to the first eight (8) months rent due during the Initial Term, and
the Forty-Eight Thousand Dollar ($48,000.00) balance of which will be credited
against the last four (4) months rent owed during the Initial Term, exact
that , the Forty-Eight Thousand Dollar ($48,000.00) balance shall be
returned to Tenant in the event this Lease is terminated by either party prior
to expiration of the Initial Term unless otherwise provided herein.


4.                             USE OF PREMISES
..


A.                            Tenant shall use the
Premises primarily as a gaming casino, as contemplated by the Colorado Limited
Gaming Act, C.R.S. § 12-47.1-101, et seq . (the “Gaming Act”) (the
Gaming Act and all amendments and gaming regulations now existing or hereafter
adopted, and all gaming related laws of the City of Cripple Creek and the
County of Teller, are sometimes collectively referred to in this Lease as the
“Gaming Laws”), and secondarily for any other ancillary or related use as may
be permitted by law. Subject to the Gaming Laws, Tenant shall, in its sole
discretion, determine the types, number and locations of gaming devices on the
Premises and the rules and procedures which will govern the Premises’ operation
as a gaming casino. Landlord shall have no control over or power to influence
decisions concerning operation of the Premises.


B.                            Without limiting the
generality of the provisions of Section 4.A, Tenant shall during the Lease
Term (1) comply with all Gaming Laws, and (2) maintain in force all licenses,
consents and permits necessary for the use of the Premises as a gaming casino.


C.                            Landlord agrees to
cooperate as reasonably required by Tenant to assist Tenant in obtaining and
maintaining gaming and liquor licenses for the Premises and shall, in
particular, execute any and all documents necessary to obtain gaming and liquor
licenses. Landlord shall not cause any such licenses to be denied, revoked, not
renewed, or suspended, whether through actions of Landlord prior to the
issuance of such licenses or thereafter during the Lease Term. If Landlord or
Tenant receives notice that the status or actions of Landlord may or will
result, or have resulted, in the denial, revocation, failure to renew or
suspension of any gaming or liquor license, Landlord shall take such actions as
are necessary to cure the underlying conduct or status.



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5.                             ADDITIONAL
IMPROVEMENTS:  MECHANIC’S LIENS .


A.                            Additional
Improvements . Tenant may, from time to time, construct or install other
improvements on the Premises, and make such changes, alterations and additions
to the Premises as Tenant shall deem necessary or desirable (the “Additional Improvements”),
at Tenant’s expense, subject to the following:


(1)                           No Additional
Improvements requiring structural alteration of the Premises may be made
without Landlord’s prior written consent, which consent will not be
unreasonably withheld. For purposes of this Section 5.A.(1), moving or
removing partitions or non-load bearing walls shall not be structural
alterations requiring the prior consent of Landlord.


(2)                           Where appropriate or
required, Additional Improvements will be conducted under the supervision of an
architect or engineer licensed in the State of Colorado and selected by Tenant
in its sole discretion.


(3)                           All Additional
Improvements shall be of such a kind that, when completed, the value and
utility of the Premises at the time shall not be less than the value and
utility that the Premises would have had at the time if the Additional
Improvements had not been made.


(4)                           All work done in
connection with the Additional Improvements shall be done in a good and
workmanlike manner.


(5)                           Tenant shall provide
Landlord reasonable financial assurance that the Additional Improvements will
be completed as contemplated and that Tenant can pay for them, which assurance
shall include an estimate of the cost of the Additional Improvements.


B.                            Mechanic’s Liens
.. In connection with the construction of any Additional Improvements, Tenant
shall cause the payment of all proper and valid invoices and charges of all
contractors, subcontractors, suppliers, materialmen and similar parties who
furnish services or materials in connection with the construction process. In
the event any party records a mechanic’s lien to enforce any claim for services
or materials alleged to have been provided in connection with the Premises,
Tenant shall cause the same to be released or record within sixty (60) days
after the recordation thereof, and Tenant shall be liable to satisfy and cause
a discharge of any such mechanic’s lien claim.


Notwithstanding
the foregoing, Tenant shall have the right to contest any such mechanic’s lien
claim, provided that Tenant conducts such contest in a timely manner and with
due diligence, and that Tenant provides Landlord with such security in
connection therewith as Landlord may reasonably require. In the event Tenant
loses any such contest, and all further rights of appeal have expired, Tenant
shall satisfy the mechanic’s lien claim in full prior to any foreclosure sale
or other disposition of the Premises in order to satisfy the claim.


6.                             TITLE TO PREMISES
AND IMPROVEMENTS . As a condition precedent to Tenant’s entering into this
Lease, Landlord shall, at its expense, obtain a title insurance policy insuring
Tenant’s leasehold interest in the Premises, which title insurance shall
evidence Landlord’s fee simple interest ownership in the Premises subject only
to what are listed in the title insurance policy as Permitted Exceptions. The
title insurance policy shall be attached to this Lease as Exhibit C and shall
be incorporated herein by reference. Landlord warrants that she has



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fee simple title to the
Premises, free and clear of all encumbrances save for the Permitted Exceptions.


Except
as otherwise provided herein, Landlord shall be the owner of all improvements
paid for and constructed by Tenant upon the Premises, as the same may be
altered, expanded and/or improved in accordance with this Lease. Upon the
expiration or earlier termination of this Lease, all improvements then existing
upon the Premises shall revert to and become the property of Landlord without
compensation to, or the requirement of consent or act of, Tenant, and tenant
shall thereafter have no further rights thereto or interest therein.


Tenant
shall surrender the Premises at the end of the Lease Term or upon earlier
termination of the Lease in good condition and repair, reasonable wear and tear
and fire and other casualty excepted.


7.                             QUIET ENJOYMENT
..  So long as Tenant is not in default under this Lease, Tenant shall
peaceably and quietly use and enjoy the Premises during the Pre-Opening Period
and the Lease Term without hindrance or interruption by Landlord or any other
person or persons lawfully or equitably claiming by, through or under Landlord.


8.                             CASUALTY AND
RESTORATION OF THE PREMISES .


A.                            If
the Premises shall be so damaged by fire or other casualty as to render the
casino wholly untenantable, and if such damage shall be so great that a
competent architect, in good standing, selected by Tenant shall certify in
writing to Tenant within sixty (60) days of said casualty that the Premises,
with the exercise of reasonable diligence, cannot be made fit for occupancy
within one hundred eighty (180) working days from the happening thereof, then
this Lease shall cease and terminate from the date of the occurrence of such
damage and Tenant shall thereupon surrender to Landlord the Premises and all
interest therein hereunder and Landlord may reenter and take possession of the
Premises and remove Tenant therefrom.  If, however, the damage shall be
such that said architect shall certify within said sixty (60) day period that
the Premises can be made tenantable within said one hundred eighty (180) day
period, then, except as hereinafter provided, Landlord shall repair the damage
so done with all reasonable speed.


B.                            If the Premises
shall be slightly damaged by fire or other casualty, but not so as to render
the same wholly untenantable or to require a repair period in excess of one
hundred eighty (180) days, then, Landlord, after receiving notice in writing of
the occurrence of the casualty, except as hereafter provided, shall cause the
same to be repaired with reasonable promptness. If the estimated repair period
as established in accordance with the provisions of subparagraph A above
exceeds one hundred eighty (180) days, then the provisions of subparagraph A
shall control notwithstanding the fact that the Premises are not wholly
untenantable.


C.                            In case the Premises
shall be so injured or damaged, whether by fire or otherwise, that, within
sixty (60) days after the happening of such injury, Landlord shall decide not
to reconstruct or rebuild the Premises, then, notwithstanding anything
contained herein to the contrary, upon notice in writing to that effect given
by Landlord to Tenant within said sixty (60)



 8
 









 


days, this Lease shall
terminate from the date of such written notice, and both parties hereto shall
be freed and discharged of all further obligations hereunder.


D.                            Landlord and Tenant
hereby waive any and all rights of recovery against the other, their officers,
agents, and employees occurring out of the use and occupancy of the Premises
for loss or damage to their respective real and/or personal property arising as
a result of a casualty or condemnation contemplated by this Section 8.
Each of the parties shall, upon obtaining the policies of insurance required by
this Lease, notify the insurance carrier that the foregoing waiver is contained
in this Lease and shall require such carrier to include an appropriate waiver
of subrogation provision in the policies.


E.                             Provided that the
casualty is not the fault of Tenant, Tenant’s agents, servants, or employees,
Tenant’s rent shall abate during any such period of repair and restoration.


9.                             CONDEMNATION
..  If the entire Premises or substantially all of the Premises or any
portion of the casino which shall render the Premises untenantable shall be
taken by right of eminent domain or by condemnation or shall be conveyed in
lieu of any such taking, then this Lease, at the option of either Landlord or
Tenant exercised by either party giving notice to the other of such termination
within thirty (30) days after such taking or conveyance, shall forthwith cease
and terminate and the rent shall be duly apportioned as of the date of such
taking or conveyance. Tenant thereupon shall surrender the Premises and all
interest therein under this Lease to Landlord and Landlord may reenter and take
possession of the Premises or remove Tenant therefrom. In the event less than
all of the Premises shall be taken by such proceeding, Landlord shall promptly
repair the Premises to its condition immediately prior to said taking, unless
Landlord elects not to reconstruct or rebuild as described in subparagraph C of
Section 8 above.


10.                           OPTION TO PURCHASE
AND RIGHT OF FIRST REFUSAL .


A.                            Option To
Purchase . During the Lease Term, Tenant may purchase the Premises on the
following terms:


(1)                           During
the first two years of the Initial Term, Two Million Dollars ($2,000,000.00);


(2)                           During the third,
fourth and fifth years of the Initial Term, Two Million Dollars
($2,000,000.00), plus the CPI Adjustment, if any;


(3)                           At any time during the
Extension Term, Two Million Dollars ($2,000,000.00), plus fifty percent (50%)
on any increase in the Fair Market Value (as herein defined) of the building
housing the casino over its Fair Market Value as of the end of the Initial
Term. Immediately upon notice from Tenant to Landlord of Tenant’s intent to
exercise its option to purchase the Premises, the parties will attempt to
arrive at an agreement as to the Fair Market Value of the Premises as herein
determined. The Fair Market Value shall in no event include any amount
attributable to the value of Tenant’s business operations. If Landlord and
Tenant are unable to agree on the Fair Market Value within fifteen (15) days of
the notice, they shall jointly select an MAI certified appraiser familiar with
properties within the vicinity of the Premises to determine the Fair Market
Value. If Landlord and Tenant are unable within five (5) days to reach



 9
 









 


agreement on one MAI
appraiser, each party shall designate one qualified MAI appraiser, who shall
then jointly select a third qualified MAI appraiser for the purpose of making
the Fair Market Value determination here contemplated. The costs of the
appraiser selected by the parties shall be borne by the party selecting the
same, and the cost of the appraiser who makes the actual determination of Fair
Market Value shall be shared equally by Landlord and Tenant. The determination
of Fair Market Value shall be made by the appraiser no later than thirty (30)
days following his selection.


Upon
determination of the Fair Market Value, Tenant shall have fifteen (15) days
within which to decide whether it wants to proceed with the purchase option
granted herein. If Tenant fails to advise Landlord in writing of Tenant’s
intention to exercise the option by the expiration of the fifteen (15) day
period, it shall be presumed that Tenant does not wish to exercise the option,
and this Lease will expire according to its terms upon the expiration of the
Lease Term.


If
Tenant timely advises Landlord of Tenant’s intention to exercise the option,
the closing on Tenant’s purchase of the Premises shall occur no later than the
last day of the Lease Term. If the closing date is other than the last day of
the Lease Term, the rent due hereunder shall be prorated to the date of
closing. Tenant shall pay the Fair Market Value to Landlord on the closing date
in readily available funds. Landlord shall convey title to the Premises by
General Warranty Deed, free and clear of all liens and encumbrances except
those created by, through or under Tenant during the Lease Term. Landlord shall
provide Tenant, at Landlord’s expense, an owner’s title insurance policy in the
amount of the purchase price paid by Tenant for the Premises. If Tenant is in
default under the Lease at the time of the exercise of the option to purchase,
such default must be cured prior to Tenant’s giving Landlord its notice of
intention to exercise.


B.                            Right of First
Refusal . If Landlord desires to transfer, assign or otherwise convey all
of any portion of its interest in Premises, Landlord shall so notify Tenant in
writing (the “Notice”), specifying the terms and conditions, and the price at
which Landlord intends to offer its interest (the “Terms”). Tenant shall have
thirty (30) days after receipt of the Notice within which to notify Landlord
that Tenant desires to purchase the interest being offered on the Terms. If
Tenant fails to so notify Landlord, Landlord shall be free to consummate a
transaction with any third party or parties on the Terms at any time within the
next three (3) months without referring the same to Tenant. If no sale occurs
within that three (3) month period, then prior to consummating any transaction,
the provisions of this Section 10.B shall be complied with again. If
Tenant timely notifies Landlord that Tenant desires to exercise the right to
purchase contemplated by this Section 10.B, the closing shall occur on the
Terms within ninety (90) days of the date of Tenant’s giving such notice.


11.                           TENANT’S RIGHT TO
ENCUMBER .  Tenant may at any time during the Pre-Opening Period or
the Lease Term encumber the leasehold estate by mortgage or deed or trust. Such
right of Tenant to encumber the leasehold estate shall be a continuing right
and shall not be deemed to be exhausted by the exercise thereof on one or more
occasions. Any such encumbrance shall be expressly subject to the provisions of
this Lease, shall not encumber Landlord’s fee simple interest in the Premises,
and shall be subordinate to any loans to which Landlord has subordinated its
fee simple interest.



 10
 









 


12.                           ASSIGNMENT BY
TENANT .  Tenant may assign or transfer all or any part of its
interest in this Lease and the underlying Premises to any entity or person
licensed to operate a casino in the State of Colorado, provided that the
transferee’s financial performance ranks it among the top fifteen (15) casino
operators in the State of Colorado as measured by the gaming tax rate applied
to its revenues during for the preceding month determined in accordance with
the Colorado Limited Gaming Act and the Gaming Regulations promulgated
thereunder, and provided further that Tenant shall first obtain Landlord’s
consent to such assignment or transfer, which consent shall not be unreasonably
withheld.


Tenant
may, without first obtaining Landlord’s prior consent, transfer or assign all
or any part of Tenant’s interest in this Lease and the underlying Premises to
any entity in which Tenant retains an ownership interest, provided that
, Tenant provides Landlord with not less than thirty (30) days prior written
notice of such intended transfer.


13.                           DEFAULT BY TENANT
..


A.                            Definition of
Event of Default . Each one of the following events is herein referred to
as an “Event of Default.”


(1)                           Any failure by Tenant
to pay the rent or any other monetary sums required to be paid hereunder on the
date such sums are due and the continuance of such failure for a period of
thirty (30) days after written notice of such failure from Landlord.


(2)                           After the Commencement
Date, Tenant shall vacate or abandon the Premises, except that , mere
vacation as may be necessary to facilitate the re-occupancy of the Premises for
a permitted use pursuant to an assignment or subletting authorized under the
terms of this Lease, or caused by any casualty or condemnation, or as ordered
by any legal authority shall not constitute an Event of Default hereunder.


(3)                           The filing of any
petition or the commencement of any case or proceeding by Tenant under any
provision or chapter of the Federal Bankruptcy Act, the Federal Bankruptcy
Code, or any other federal or state law relating to insolvency, bankruptcy, or
reorganization or the adjudication that Tenant is insolvent or bankrupt or the
entry of an order for relief under the Federal Bankruptcy Code with respect to
Tenant.


(4)                           The
filing of any petition or the commencement of any case or proceeding described
in subparagraph (3) above against Tenant, unless such petition and all
proceedings initiated thereby are dismissed within sixty (60) days from the
date of such filing; the filing of an answer by Tenant admitting the
allegations of any such petition; the appointment of or taking possession by a
custodian, trustee or receiver for all or any assets of Tenant, unless such
appointment is vacated or dismissed within sixty (60) days from the date of
such appointment.


(5)                           The insolvency of
Tenant or the execution by Tenant of an assignment for the benefit of
creditors; the convening by Tenant of a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; or the failure of Tenant generally to pay its debts
as they mature.



 11
 









 


(6)                           Tenant shall fail to
take possession of the Premises on the Commencement Date.


(7)                           Tenant shall fail to
perform any of the other agreements terms, covenants, or conditions hereof on
Tenant’s part to be performed and such non-performance shall continue for a
period of thirty (30) days after written notice thereof by Landlord to Tenant
or, if such performance cannot be reasonably had within such thirty (30) day
period, Tenant shall not in good faith have commenced such performance within
such thirty (30) day period and shall not diligently proceed therewith to
completion.


B.                            Remedies of
Landlord . If any one or more Events of Default shall happen, then Landlord
shall have the right at Landlord’s election, then or at any time thereafter,
either to:


(1)                           Make any payment or
take any action to cure any such default by Tenant in such manner and to such
extent as Landlord may in good faith deem necessary or desirable.


(2)                           Give Tenant written
notice in accordance with the Colorado forcible entry and detainer laws,
terminate this Lease as of the date of Tenant’s default or as of any later date
specified in the notice, and demand and recover possession of the Premises from
Tenant.


(3)                           Re-enter and take
possession of all or any part of the Premises and expel Tenant therefrom. After
recovering possession of the Premises, Landlord shall use reasonable efforts to
re-let the Premises.


C.                            Remedies
Cumulative . Each of the remedies described above, and all of the remedies
available to Landlord at law or in equity upon a default by Tenant, shall be
cumulative with and in addition to one another, and may be exercised
simultaneously or successively, as Landlord may deem appropriate, without any
exercise of one remedy being deemed an election of remedies or a waiver to the
exclusion of any other remedy.


14.                           DEFAULT BY LANDLORD
..


A.                            Definition of
Default . Landlord shall be in default under this Lease if Landlord shall
fail to comply with any term, condition or obligation of Landlord under the
Lease, and such failure to comply continues for a period of thirty (30) days
after Tenant gives Landlord written notice of such failure, unless such failure
cannot reasonably be cured within such thirty (30) day period, in which event
the cure period shall extend so long as Landlord has in good faith begun to
take action to cure the default within the thirty (30) day period and
diligently proceeds to completion thereafter.


B.                            Remedies of Tenant
.. Upon the occurrence of any default by Landlord, after expiration of any
applicable cure periods, Tenant shall have the right, at its election, then or
at any time thereafter, to exercise any one or more of the following remedies:



 12
 









 


(1)                           Make any payment or
take any action to cure any such default by Landlord in such manner and to such
extent as Tenant may in good faith deem necessary or reasonable.


(2)                           Terminate this Lease
as of the date of the default by Landlord, or as of any later date specified in
a written notice of termination to Landlord.


(3)                           Commence an action to
specifically enforce any of Landlord’s obligations under the Lease.


C.                            Remedies
Cumulative . Each of the remedies described above, and all of the remedies
available to Tenant at law or in equity upon a default by Landlord, shall be
cumulative with and in addition to one another, and may be exercised
simultaneously or successively, as Tenant may deem appropriate, without any
exercise of one remedy being deemed an election of remedies or a waiver to the
exclusion of any other remedy.


15.                           TERMINATION
.. In addition to termination in accordance with Sections 2, 13 and 14 hereof,
this Lease may be terminated in the event of the following:


A.                            Termination By
Landlord .  If by April 1, 1999, Tenant has not been licensed by
the Gaming Commission to operate the Premises as a gaming casino, and if, in
addition, the One Hundred Forty-Four Thousand Dollar ($144,000.00) deposit
contemplated by Section 3.F.(2) hereof has not been paid to Landlord,
Landlord may terminate this Lease forthwith, and neither party shall have any
obligation to the other thereafter.


B.                            Termination By
Tenant .


(1)                           Tenant may, in its
sole discretion, terminate this Lease at any time during the Pre-Opening Period
as herein defined. In the event Tenant elects to do so, Landlord’s sole remedy
against Tenant shall be to retain the Fifteen Thousand Dollar ($15,000.00)
deposit provided for in Section 3.F.(1) hereof, and to reenter the Premises.


(2)                           If, in the sole
discretion of Tenant, the casino located on the Premises is not operating
profitably at any time after the first two years of the Initial Term of this
Lease, Tenant may terminate the Lease upon payment to Landlord of Ninety-Six
Thousand Dollars ($96,000.00), representing a year’s rental payments less the
Forty-Eight Thousand Dollar ($48,000.00) deposit balance described in
Section 3.F.(2) hereof. In such event, neither party shall thereafter have
any obligation to the other, except that , Landlord shall make all
reasonable efforts to re-let or re-open the Premises within one year following
the Lease’s termination and shall repay to Tenant any sums realized as a result
of the mitigation obligation here described.


(3)                           If at any time during
the Lease Term the casino’s operations are, in the sole discretion of Tenant,
materially adversely affected by local, state or federal legislative or
administrative changes, Tenant may terminate the Lease upon payment to Landlord
of Ninety-Six Thousand Dollars ($96,000.00), representing one year’s rental
payments less the Forty-Eight Thousand Dollar ($48,000.00) deposit balance
described in Section 3.F.(2) hereof. In such event, neither party shall
thereafter have any obligation to the other, except that , Landlord
shall make all reasonable efforts to re-let or re-open the Premises within one
year following the Lease’s



 13
 









 


termination and shall
repay to Tenant any sums realized as a result of the mitigation obligation here
described.


In the
event Tenant shall terminate the Lease as contemplated by this
Section 15.B.(1) and (2), the Forty-Eight Thousand Dollar ($48,000.00)
deposit balance described in Section 3.F.(2) hereof shall be forfeited to
Landlord.


16.                           MISCELLANEOUS .


A.                            No Implied Waiver
.. No failure by Landlord or Tenant to insist upon the strict performance of any
term, covenant, or agreement contained in this Lease, or to exercise any right
or remedy in connection therewith, and no acceptance of full or partial payment
during the continuance of any default by Landlord or Tenant, shall constitute a
waiver of any such term, covenant, or agreement or any such right or remedy or
any such default by Landlord or Tenant.


B.                            Survival of
Provisions .  Notwithstanding any termination of this Lease, the same
shall continue in force and effect as to any provisions hereof which
specifically contemplate and require observance or performance by Landlord or
Tenant subsequent to termination.


C.                            Binding Effect
.. This Lease shall extend to and be binding upon the heirs, executors, legal
representatives, successors, and permitted assigns of the respective parties
hereto. The terms, covenants, agreements, and conditions in this Lease shall be
construed as covenants running with the Premises.


D.                            Recordation .
Neither this Lease nor any memorandum thereof shall be recorded. However,
Landlord understands, and agrees that as a condition precedent to Tenant’s
entry into this Lease, Tenant shall obtain from any and all lenders of record
as evidenced by the title insurance policy required by Section 6 hereof
such subordination and attornment agreements as Tenant deems necessary, and
Landlord shall assist Tenant as may be required in securing such agreements.


E.                             Notice . All
notices required or permitted under this Lease shall be given by registered or
certified mail, return receipt requested, correctly addressed and postage
prepaid, or by hand or commercial carrier delivery, or by telecopier as
follows:




	
  If to Landlord :

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ms. Lois L.
  Woods

  
	
   

  	
   

  	
  P.O. Box 489

  
	
   

  	
   

  	
  Cripple Creek,
  Colorado 80813

  
	
   

  	
   

  	
  Telecopier
  Number: 719/689-2587

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert M.
  Duitch, Esq.

  
	
   

  	
   

  	
  811 South Tejon
  Street

  
	
   

  	
   

  	
  Colorado
  Springs, Colorado 80903

  







 14
 









 




	
  

  	
   

  	
  Telecopier Number: 719/632-0006

  
	
   

  	
   

  	
   

  
	
  If to Tenant :

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James B. Druck,
  Esq.

  
	
   

  	
   

  	
  President.

  
	
   

  	
   

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  	
  2001 Killebrew
  Drive, Suite 306

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55425

  
	
   

  	
   

  	
  Telecopier
  Number: 512/853-9991

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Christopher D.
  Whitney, Esq.

  
	
   

  	
   

  	
  Mulliken,
  Gleason, Weiner & Whitney, P. C.

  
	
   

  	
   

  	
  102 South Tejon
  Street, Suite 700

  
	
   

  	
   

  	
  Colorado
  Springs, Colorado 80903

  
	
   

  	
   

  	
  Telecopier
  Number: 719/635-8706

  






 


Any notice delivered by
mail in accordance with this Section shall be deemed to have been duly
given on the third business day after the same is deposited in any post office
or postal box regularly maintained by the United States Postal Service. Any
notice delivered by telecopier shall be deemed to have been duly given upon
receipt if concurrently with sending by telecopier receipt s confirmed
mechanically or by the recipient. Any notice delivered by hand or commercial
carrier shall be deemed to have been given upon actual receipt. Either party,
by notice given as herein provided, may change the address to which future
notices may be sent.


F.                             Time of the
Essence . Time is of the essence under this Lease for the performance and
observance of all obligations of Landlord and Tenant, and all provisions of
this Lease shall be strictly construed.


G.                            Captions for
Convenience . The headings and captions hereof are for convenience only and
shall not be considered in interpreting the provisions of this Lease.


H.                            Severability .
If any provision of this Lease shall be held invalid or unenforceable. The
remainder of the Lease shall not be affected thereby, it being the intent of
the parties that the provisions of this Lease shall be enforceable to the
fullest extent permitted by law.  There shall be deemed substituted for
any invalid or unenforceable provision a valid and enforceable provision as
similar as possible to the invalid provision.


I.                              Jurisdiction and
Governing Law . This Lease shall be interpreted and enforced in the courts
of the state of Colorado and in accordance with the laws of the State of
Colorado.


J.                             Integration/Entire
Agreement . This Lease, the Exhibit hereto, and the other documents
expressly referenced herein constitute the entire agreement between the parties
with regard to the subject matter hereof. and any extrinsic covenants,
agreements,



 15
 









 


representations,
warranties, conditions or terms are superseded hereby and shall be of no force
or effect.


K.                            Modification .
No provision of this Lease may be amended or modified except to the extent any
such amendment or modification is expressly and specifically set forth in a
written instrument executed by both parties.


IN
WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of
the day and year first above written.


 


	
  

  	
   

  	
  LANDLORD:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
                               /s/
  Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
  Lois L. Woods

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOUTHWEST CASINO AND HOTEL CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  President

  	
   

  	
   

  
						



 


 


 



 16