EXHIBIT 10.15A


 


GROUND LEASE


 


This GROUND LEASE AGREEMENT (“Lease”) is made this               
day of                       ,
2005, by and between CLARK G. RUSSELL and JEAN M. RUSSELL, Trustees of “THE
CLARK AND JEAN RUSSELL FAMILY TRUST” (hereinafter called “Landlord”), and
JACOBS ENTERTAINMENT, INC., a Delaware corporation (hereinafter called “Tenant”).


 


WITNESSETH:


 


1.                                      LEASED PREMISES.


 


A.                                   Leased Premises. 
Landlord is the owner
of certain real property situated in Carson City, State of Nevada, having a
street address of 2171 Highway 50 East, consisting of approximately 17.67
acres, Assessor’s Parcel Number 8-152-15, more particularly described and shown
on Exhibit “A”, attached hereto and incorporated herein (the “Leased
Premises”).  Landlord and Tenant
acknowledge and agree that at the time of this Lease various buildings and
other improvements exist on, under or above the Leased Premises, a schedule of
which is attached to this Lease as Exhibit “B”, attached hereto and
incorporated herein (collectively, the “Improvements”).


 


B.                                     Lease.  Landlord leases to Tenant, and
Tenant leases from Landlord, the Leased Premises.


 


C.                                     As-Is.  Except as set out in this
Lease to the contrary, Landlord disclaims any representations or warranties
with respect to the Leased Premises and Tenant acknowledges that the Leased
Premises are leased to Tenant in an As-Is condition.


 


D.                                    Severance of Improvements. 
Landlord represents and warrants to Tenant that the Improvements are not
part of the Leased Premises and that legal title to such Improvements has been
severed from the legal title to the Leased Premises by virtue of that certain
Affidavit of Conversion dated                      
and filed of record in the                   records
of              
County, Nevada as Instrument No.             ,
an unrecorded copy of which is attached hereto as Exhibit “C” and
incorporated herein as if set out word for word.  Landlord and Tenant agree that upon recording
of the Affidavit of Conversion, a recorded copy of such document shall be
substituted in replacement of the unrecorded version.  Landlord further
represents and warrants to Tenant that legal title to the Improvements is
vested with Capital City Entertainment, Inc., a Nevada corporation. 
Landlord hereby disclaims any claim to title to the Improvements or to any lien
rights in same.


 


E.                                    Adjacent Property.


 


(1)                                  Landlord represents to Tenant that Landlord
believes in good faith that Landlord has the right, pursuant to a written
agreement with the Nevada Department of Transportation (“NDOT”) to purchase
that certain seven (7) acre tract of land situated adjacent to the Leased
Premises (the “Adjacent Tract”), a depiction and legal description of which is
attached hereto and incorporated herein as Exhibit “D”, as if set
out word for word.


 


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(2)                                  Landlord agrees with Tenant that if the
Adjacent Tract becomes available for purchase, Landlord will exercise its best
efforts to promptly consummate the purchase of the Adjacent Tract (and to promptly
and fully advise Tenant in writing as to the status of such efforts as well as
the time and date of the closing of such purchase).


 


(3)                                  Landlord and Tenant further agree that upon
the consummation of the purchase of the Adjacent Tract, such Adjacent Tract
shall become part of the Leased Premises (and this Lease shall be amended by
written agreement executed by Tenant and Landlord to reflect the addition of
the Adjacent Tract to the Leased Premises).


 


(4)                                  Upon the addition of the Adjacent Tract to the
Leased Premises, the Annual Rent defined and described in Section 4,
below shall be increased by an amount determined as follows:


 


(i)                                     In the event the Adjacent Tract Option is
exercised during the Initial Term, the Annual Rent shall be increased by the amount
paid actually by Landlord to NDOT as the purchase price for the Adjacent Tract
(as evidenced by the Purchaser’s Settlement Statement or such other similar
instrument utilized by the title company at the closing of same) multiplied by
an annualized “capitalization rate” of eight percent (8%)(By way of
illustration only:  assuming a purchase price of $2,000,000.00 and the
annualized capitalization rate of 8%, the annual rent amount resulting from the
formula set out in this subpart (bb) would be $160,000.00 [$2,000,000.00 x
..08=$160,000.00]).


 


(ii)                                In the event the Adjacent Tract Option is
exercised during either the First Extension Term or the Second Extension Term,
the Annual Rent shall be increased pursuant to the same alternatives identified
in subsection 1.E.(4)(i), above.


 


(iii)                             Notwithstanding the above, any amounts due
for Annual Rent in relation to the Adjacent Tract shall be prorated in
accordance with Section 4.D., below.


 


(iv)   After
the expiration of the Initial Term (or the expiration of the First Extension
Term, in the event the Adjacent Tract Option is exercised in such extension
term), the Annual Rent shall be determined in accordance with Sections 4.B.
and 4.C., as applicable.


 


2.                                      CONTROL OF LEASED PREMISES.


 


Tenant, during the Term of this Lease, shall have
exclusive control of the Leased Premises, and Landlord shall take no action
pertaining to the Leased Premises (including the construction of new, or the
alteration of existing, structures on the Leased Premises) without the prior written
consent of Tenant subject to the provisions hereof which require or allow
Landlord to take action with respect to the Leased Premises.


 


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3.                                      TERM.


 


A.                                   Initial Term.  The
initial Term of this Lease shall commence on                                   ,
and shall continue for ten (10) calendar years, having a termination date
of                           
(the “Initial Term”).


 


B.                                     First Extension Term. 
Tenant shall have the exclusive, non-revocable right and option, at
Tenant’s sole election, to extend the Initial Term of this Lease (the “First
Extension Right”) for an additional term of ten (10) years (the “First
Extension Term”).  Tenant may exercise
the First Extension Right by giving notice to Landlord of its intention so to
do at least six (6) months prior to the expiration of the Initial
Term.  The First Extension Term shall be
upon all of the terms and conditions set out in this Lease.


 


C.                                     Second Extension Term. 
Tenant shall have the exclusive, non-revocable right and option, at
Tenant’s sole election, to extend the First Extension Term of this Lease (the “Second
Extension Right”) for an additional term of ten (10) years (the “Second
Extension Term”).  Tenant may exercise
the Second Extension Right by giving notice to Landlord of its intention so to
do at least six (6) months prior to the expiration of the First Extension
Term.  The Second Extension Term shall be
upon all of the terms and conditions set out in this Lease.


 


D.                                    Term Defined.  For
purposes of this Lease, any reference to “Term” shall mean the Initial Term,
the First Extension Term or the Second Extension Term, as the context requires
as determined by Tenant, in Tenant’s discretion.


 


4.                                      RENT. 
The annual rent to be
paid to Landlord by Tenant under the Lease (the “Annual Rent”) shall be as
follows:


 


A.                                 Initial Term. 
During the Initial Term, Tenant agrees to pay to Landlord as an Annual
Rent for the use and occupancy of the Leased Premises, as follows:


 


(1)                                  Years 1-5:                                            $250,000.00 per year


 


(2)                                  Years 6-10:                                      $300,000.00 per year


 


B.                                     First Extension Term.  The
Annual Rent to be paid to Landlord during the First Extension Term shall be
calculated as follows:


 


(1)                                  Years 1-5:   The Annual Rent for
Years 1-5 of the First Extension Term shall be the First Extension Term MAI
Valuation Rate.


 


(2)                                  Years 6-10:  The Annual Rent for Years 6-10 shall be calculated by taking
the amount of Annual Rent paid for Year 5 of the First Extension Term
multiplied by the CPI Escalation Factor existing on the first day of the sixth
year of the First Extension Term.


 


(3)                                  First Extension Term MAI Valuation Rate
Defined.  For purposes of this Lease, the term “First
Extension Term MAI Valuation Rate” shall mean the ground lease rental rate
agreed to by Landlord and Tenant, but if they cannot


 


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agree, then the fair market value ground lease rate
for the Leased Premises (based on the fair market value of the Leased Premises
and rental rates for ground leases in Carson City, Nevada) as determined by an
Appraisal Team, selected as set forth in Section 31.F. The
valuation appraisal described in this Section 4.B.(3) shall be
in writing and shall be conducted and prepared in accordance with MAI standards
and methodologies and be based on a valuation date which is not more than 60
days prior to the commencement of the First Extension Term.   Such
valuation appraisal shall exclude the value of all Improvements (as well as any
additions to the Improvements as may have been constructed on the Leased
Premises after the commencement date of this Lease and shall further exclude
the value of any existing lease on the Leased Premises, including this Lease,
or extension rights to this Lease, such that it is appraised as unencumbered
real property).


 


C.                                   Second Extension Term.  The Annual Rent to be paid to
Landlord during the Second Extension Term shall be calculated as follows:


 


(1)                                  Years 1-5: The Annual Rent for Years 1-5 of the Second Extension Term shall
be the Second Extension Term MAI Valuation Rate.


 


(2)                                  Years 6-10: The Annual Rent for Years 6-10 shall be calculated by taking the
amount of Annual Rent paid for Year 5 of the Second Extension Term multiplied
by the CPI Escalation Factor existing on the first day of the sixth year of the
Second Extension Term.


 


(3)                                  Second Extension Term MAI Valuation Rate
Defined.  For purposes of this Lease, the term “Second
Extension Term MAI Valuation Rate” shall mean the ground lease rental rate
agreed to by Landlord and Tenant, but if they cannot agree, then the fair
market value ground lease rate of the Leased Premises (based on the fair market
value of the Leased Premises and rental rates for ground leases in Carson City,
Nevada) as determined by an Appraisal Team, selected as set forth in Section 31.F.
The valuation appraisal described in this Section 4.C.(3) shall
be in writing and shall be conducted and prepared in accordance with MAI
standards and methodologies and be based on a valuation date which is not more
than 60 days prior to the commencement of the Second Extension
Term.   Such valuation appraisal shall exclude the value of all
Improvements (as well as any additions to the Improvements as may have been
constructed on the Leased Premises after the commencement date of this Lease
and shall further exclude the value of any existing lease on the Leased
Premises, including this Lease, or extension rights to this Lease, such that it
is appraised as unencumbered real property).


 


D.                                    Monthly Payment.  The
Annual Rent described above is to be paid in equal monthly installments in
advance on the first day of each and every calendar month of the Term.  The Annual Rent for any other portion of the
Term which is less than twelve (12) months shall be the proration of the Annual
Rent above which the number of months in such portion of the Term bears to
twelve (12).


 


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E.                                      Late Payment.  If,
during the Term or any extension thereof, any annual calendar time period,
Tenant fails to pay the Annual Rent on or before the tenth (10th) of
the month, then such payments shall bear interest from the first of the month
of the lesser of the prime lending rate of U.S. Bank, plus one percent (1%) or
the highest rate allowed by the law of the State of Nevada.


 


F.                                      Payments Location.  Payments of Annual Rental shall be made to
Landlord at the address specified in Section 14 hereof, or at such
other place as Landlord may from time to time in writing direct (not less than
thirty (30) days in advance of the date of the address change effective date).


 


G.                                     No Security Deposit. Lessee shall not be obligated to pay a
security deposit in connection with this Lease.


 


H.                                    No Set Off.  Annual Rent, and all other
sums payable hereunder to or on behalf of Landlord shall be paid (except as
permitted herein otherwise or by applicable law) without notice or demand and
without set-off, counterclaim, abatement, suspension, deduction or defense.


 


I.                                         CPI Escalation Factor.  For
purposes of this Lease, the term “CPI Escalation Factor” shall mean that
percentage increase in the Consumer Price Index (“CPI”) established for the
West Region of the United States of America for the relevant immediately
preceding twelve (12) month time period as provided by the United States Bureau
of Labor Statistics.


 


5.                                      TRIPLE NET LEASE. 
Landlord and Tenant
agree that this Lease is a triple net lease
as to the Leased Premises and except as specifically referred herein, Landlord
is not obligated to expend any funds in connection with the operation of the
Leased Premises.


 


6.                                      FIXTURES; EQUIPMENT.


 


A.                                   Tenant Equipment. 
Tenant at its own expense shall provide, install and maintain all trade
fixtures, furniture and equipment (collectively such furniture, fixtures and
equipment, the “Equipment) reasonably required in Tenant’s sole discretion to
enable it to conduct its business on the Leased Premises.  Such Equipment shall remain the property of
Tenant and Tenant may remove same at any time prior to the expiration or
earlier termination of the Term (and Tenant shall remove same within thirty
(30) days of the expiration or earlier termination of this Lease).


 


B.                                     Repair of Leased Premises. 
Tenant shall repair at its own expense any damage to the Leased Premises
caused by the removal of such Equipment.


 


C.                                     Disclaimer.  Landlord hereby expressly
disclaims and waives any rights (whether by Landlord’s lien laws or laws
concerning fixtures or otherwise) to the Equipment.


 


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7.                                      USE OF PREMISES.


 


Tenant may use the Leased Premises for any lawful
purpose, and in particular (but not limited to), the purpose of operating a
hotel, motel, casino, restaurant, bowling center and R.V. park.  Tenant shall conduct its business insofar as
the same relates to Tenant’s use and occupancy of the Leased Premises in a
lawful manner and in compliance with all governmental laws, rules, regulations
and orders applicable to the business of Tenant.  Landlord agrees to promptly execute and
deliver to Tenant, upon Tenant’s request, any and all forms and documents, and
to assist and cooperate with Tenant at Tenant’s expense, to comply with the
provisions of this Section 7.


 


8.                                      PAYMENT OF TAXES.


 


A.                                   Leased Premises. 
Tenant agrees that it shall pay before delinquency any real property
taxes and special assessments for public improvements levied or assessed
against the Leased Premises and payable during the Term.  Such taxes which are to be paid by Tenant
shall be prorated with respect to any taxes levied for a fiscal tax year
extending beyond the end of the Term such that Tenant shall pay only such
portion of taxes as the portion of the fiscal tax year preceding the end of the
Term bears to the entire fiscal tax year.


 


B.                                     Exclusions.  Nothing contained in this
Lease shall require Tenant to pay any franchise, corporate, estate, inheritance,
succession, stamp, transfer, use, income or excess profits tax of Landlord.


 


C.                                     Special Assessments.  In
the event any additional tax or any special assessment is levied or assessed
against the Leased Premises, which such additional tax or special assessment
becomes due and payable in whole or in part during the Term, Tenant shall pay
in a timely manner such part of the tax or assessment that becomes due and
payable during the Term.


 


D.                                    Tenant’s Property. 
Tenant shall also pay before delinquency any and all taxes and
assessments levied or assessed, and becoming payable during the Term, against
Tenant’s property located upon the Leased Premises.


 


E.                                      Contest.  Notwithstanding any provision
in this Section 8 to the contrary, Tenant may contest any tax or
assessment referenced in this Section 8, provided that such contest
is at no expense to Landlord and any late charges or penalties imposed (on such
tax amounts due to Tenant’s failure to timely pay same) are paid by
Tenant.  Landlord agrees to promptly
execute and deliver to Tenant, upon Tenant’s request, any and all forms and
documents, and to assist and cooperate with Tenant, at Tenant’s expense, to
comply with the provisions in Tenant’s reasonable discretion of this Subsection 8.E.  During such contests, Tenant shall take all
steps appropriate, including payment under protest, to prevent foreclosure and
public sale or other divesting of Landlord’s title by reason of nonpayment of
taxes.  In any event, Tenant shall pay
all taxes prior to the issuance of any execution therefore by the applicable
jurisdiction unless adequate provisions have been made for the bonding of
same.  In the event that a written notice
of tax sale is given by the applicable taxing authority, Landlord, upon five (5) days
advance written notice to Tenant, shall have the right to pay all past due
taxes and any penalties.  Tenant shall
pay to Landlord all costs incurred in good faith of any such performance by
Landlord within thirty (30) days of Tenant’s receipt of a written invoice supported
by reasonable evidence


 


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as to such amounts.  Tenant’s failure to timely pay such amounts
to Landlord shall constitute a default.


 


F.                                      Delivery of Tax Receipt. 
During the Term of this Lease, Tenant shall provide Landlord with a copy
of its paid tax receipt within forty-five (45) days of the date of Tenant’s
receipt of a written request from Landlord of same.


 


9.                                      INSURANCE AND INDEMNIFICATION.


 


A.                                   Indemnity.  Tenant, with respect to its
use and occupancy of the Leased Premises, agrees to defend, assume legal
liability for, indemnify, and hold free and harmless Landlord, its agents,
servants, employees, officers, and directors, from any and all loss, damages,
liability, cost, or expenses (including, but not limited to, attorneys’ fees,
reasonable investigative and discovery costs and court costs) and all other
sums which Landlord, its agents, servants, employees, officers, and directors
may reasonably pay or become obligated to pay on account of any, all, and every
demand, claim, assertion of liability, or action directly caused by the act or
omission of Tenant (but not as to claims and liability arising out of the
negligent or willful conduct of Landlord or its agents), its agents, servants
or employees, whether such claim, demand, assertion of liability or action be
for damages or injury to person or property, including the property of
Landlord, or death of any person, made by any person, group, or organization,
whether employed by either of the parties hereto or otherwise.


 


B.                                     General Liability Insurance. Tenant agrees that it shall, at its own
cost and expense, at all times during the term of this Lease, maintain in force
a policy or policies of insurance written by one or more responsible insurance
carriers, legally qualified to issue such insurance in the State of Nevada
which shall insure against liability for injury to and/or death of and/or
damage to property of any person or persons, with a combined single policy
limit of not less than TWO MILLION DOLLARS ($2,000,000.00).  Such policy or policies shall provide, among
other things, that it or they specifically recognize and insure the liability
assumed by Tenant pursuant to Section 9.A. hereof.


 


C.                                     Workers Compensation Insurance. 
Tenant agrees to maintain and keep in force, during the Term, all
employees’ compensation insurance required under applicable worker’s
compensation acts, currently referred to in the State of Nevada as State
Industrial Insurance.


 


D.                                    Evidence.  Within ten (10) days of
Landlord’s written request, Tenant shall deliver the certificates of insurance
evidencing the existence in force of the policies of insurance referenced in Section 9.B.,
above.  Each of such certificates shall
provide that such insurance shall not be canceled or materially amended unless
the insurer shall give thirty (30) days prior written notice of such
cancellation or amendment to the party designated on such certificate as the
holder thereof, which shall include notice to Landlord.


 


E.                                      Self-Insurance Option. 
Notwithstanding anything to the contrary contained in this Lease, Tenant
shall have the right to self insure as to State Industrial Insurance under
Chapter 616, on meeting the requirements set forth herein.


 


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10.                               CONDEMNATION.


 


A.                                   Leased Premises. 
Subject to the rights of Tenant hereinafter set forth in this Section 10,
Tenant hereby irrevocably assigns to Landlord any award or payment to which
Tenant may be or become entitled by reason of any taking of the Leased Premises
or any part thereof, in or by condemnation or eminent domain proceedings
pursuant to any law, general or special. 
Landlord shall be entitled to participate in any such proceedings at
Landlord’s expense.


 


B.                                     Tenant Property. 
Notwithstanding anything herein to the contrary, Tenant shall have the
right to pursue a claim with and retain any award from the condemning authority
or entity for damage to or loss of Tenant’s leasehold estate in the Leased
Premises as well as for any other separate damages that Tenant may suffer in
relation to the Improvements or the Equipment.


 


C.                                     Governmental Action.  In
the event of the temporary requisition of the use or occupancy of the Leased
Premises or any part thereof, by any governmental authority, civil or military,
Tenant shall retain any award or payment therefore, whether the same shall be
paid or payable in respect of Tenant’s leasehold interest, the Improvements,
the Equipment or otherwise; provided, however, that Tenant shall continue to
pay Annual Rent, and any other sums payable by Tenant hereunder during the
period of such temporary requisition.


 


D.                                    Right of Termination. 
Notwithstanding the provisions of Section 10.B., if all of
the Leased Premises (or so much thereof as to render the Leased Premises
unsuitable for Tenant’s business use, to be determined by Tenant in its sole
discretion) be taken or appropriated by some public authority or private
corporation having the power of eminent domain, or if the Leased Premises be
conveyed by the Landlord or its successors-in-interest for the purpose of
avoiding proceedings in appropriation, this Lease shall terminate as of the
date of such appropriation or conveyance with the same force and effect as if
such date had been originally set forth herein as the expiration date of the
Term.  Upon such event, Landlord shall
rebate to Tenant the amount of Annual Rent paid under this Lease relating to
the time period after such date of termination.


 


E.                                      Partial Taking.  If
only a portion of the Leased Premises be taken or appropriated by eminent
domain proceedings and if the Leased Premises are still suitable for Tenant’s
business use, to be determined by Tenant in its sole discretion, after such
taking, this Lease shall terminate as to that portion of the Leased Premises so
taken but shall remain in full force and effect as to the remainder of the
Leased Premises.  Upon such event, the
future rentals to be paid by the Tenant shall be equitably abated in the ratio
that the value of the Leased Premises taken bears to the value of the whole of
the Leased Premises.


 


F.                                      Restriction Obligation.  To
the extent possible, any amounts awarded shall be used by Landlord to fully
restore the Leased Premises to its former condition, with excess funds
belonging to the Landlord.


 


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G.                                     Consent Required.  For
the purpose of this Lease, all amounts payable pursuant to any agreement with a
condemning authority which agreement has been made in settlement of or under
threat of any condemnation, or other eminent domain proceeding affecting the
Leased Premises shall be deemed to constitute an award made in such proceeding;
provided, however, that no such agreement shall be made with any condemning
authority by either Landlord or Tenant without the written consent of the
other.


 


11.                               UTILITIES, ETC.


 


Tenant shall pay during the Term all electrical,
water, gas, telephone and other public or private utility charges in connection
with its occupancy and use of the Leased Premises, including all business
licenses and similar permit fees.


 


12.                               COVENANTS AGAINST LIENS.


 


A.                                   Discharge; Reimbursement. 
Except for any indebtedness imposed on Tenant’s leasehold interest in
the Leased Premises by Tenant’s lenders pursuant to Section 35,
below (the “Tenant Lender Liens”), Tenant covenants and agrees that it shall
not, during the Term, suffer or permit any lien to be attached to or upon the
Leased Premises or any part thereof by reason of any act or omission on the
part of Tenant, and hereby agrees to save and hold harmless Landlord from or
against any such lien or claim of lien. 
In the event that any such lien (other than the Tenant Lender Liens)
does so attach, and is not released within ninety (90) days after notice to Tenant
thereof, or if Tenant has not indemnified Landlord against any such lien within
such ninety (90) day period, Landlord, in its sole discretion, may pay and
discharge the same and relieve the Leased Premises therefrom. Tenant agrees to
repay and reimburse Landlord for the amount so paid by Landlord within thirty
(30) days of Tenant’s receipt of a notice for such charges supported by
detailed evidence of such expenditures.


 


B.                                     Good Faith Contest. 
Notwithstanding the above, Tenant may in good faith contest any
mechanics, laborers’, materialmen’s or other liens filed or established against
the Leased Premises, and in such event may permit the items so contested to
remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom.  Upon such
circumstances, Landlord shall not have the rights set out in Section 12.A.,
above, unless by nonpayment of any such items the interest of Landlord will be
materially and imminently endangered or the Leased Premises or any part thereof
will be subject to imminent material loss or forfeiture, in which event Tenant
shall promptly pay and cause to be satisfied and discharged all such unpaid
items or secure such payment by posting a bond, in form reasonably satisfactory
to Landlord, with the Landlord.  Landlord
will cooperate fully with the Tenant in any such contest provided that Tenant
shall fully and promptly reimburse Landlord for all reasonable costs incurred
by Landlord in that regard.  Tenant shall
hold Landlord whole and harmless from any loss, cost or expenses Landlord may
reasonably incur related to any such contest.


 


C.                                     Landlord Representation.  Landlord hereby represents and
warrants to Tenant that the Leased Premises are free from all liens,
encumbrances, claims, impediments to title, encroachments, development
restrictions (other than zoning and gaming laws), restrictive covenants,
special taxing districts or the like.  Landlord hereby further represents
and warrants to Tenant that the Leased Premises are free from any other matter
which may impair or restrict Tenant’s business operations or the expansion of,
or the construction of additions to, the


 


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Improvements and that the
Leased Premises are situated within a zoning and gaming district which is
compatible with the use designations set out in Section 7, above.


 


13.                               ASSIGNMENT AND SUBLETTING.


 


A.                                   General.  Tenant shall have the right to
assign or sublet the Leased Premises, or any part thereof, without consent from
Landlord, provided that no such assignment or subletting shall relieve Tenant
from any of its obligations as Tenant hereunder (unless Landlord agrees
otherwise in writing).  Tenant shall be
entitled to retain all proceeds (whether in the form of rent or recoupments or
otherwise) generated from such sublease or assignment.  Every such assignment or sublease shall
recite that it is and shall be subject and subordinate to the provisions of
this Lease, and the termination or cancellation of this Lease shall constitute
a termination and cancellation of every such assignment or sublease (subject to
the Lender rights, described in Section 35, below).


 


B.                                     Assignment To Affiliate. 
Notwithstanding anything herein to the contrary, Tenant shall have the
right to assign this Lease to an Affiliate of Tenant’s election and upon such assignment,
Tenant shall be released from the duties and obligations of this Lease.  For purposes of this Lease, the term “Affiliate”
shall mean any person, partnership, joint venture, corporation or other form of
enterprise, domestic or foreign, including but not limited to subsidiaries
whether one or more, that directly or indirectly, control, are controlled by,
or are under common control with or have an ownership interest in, with or of
Tenant.


 


14.                               NOTICES.


 


All notices, demands, requests, elections, approvals,
disapprovals, consents or other communications which this Agreement
contemplates, or requires or permits either party to give to the other, shall
be in writing and shall be personally delivered or sent by certified mail
return receipt requested, postage prepaid, or by telecopy or by Federal Express
or similar delivery service addressed to the respective parties as follows:


 


	
  Landlord:

  	
   

  	
  CLARK G.
  RUSSELL, Trustee

  
	
   

  	
   

  	
  JEAN M. RUSSELL,
  Trustee

  
	
   

  	
   

  	
  “The Clark and
  Jean Russell Family Trust”

  
	
   

  	
   

  	
  P.O. Box
  1966

  
	
   

  	
   

  	
  Carson City,
  Nevada 89702

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  JACOBS
  ENTERTAINMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17301
  West Colfax Avenue

  
	
   

  	
   

  	
  Suite 250

  
	
   

  	
   

  	
  Golden,
  Colorado 80401

  
	
   

  	
   

  	
  Attention:
  Stephen R. Roark, CFO

  
	
   

  	
   

  	
  (303)
  215-5201

  
	
   

  	
   

  	
  (303)
  215-5219 facsimile

  



 


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  With
  A Copy To:

  	
   

  	
  Jones &
  Keller, P.C.

  
	
   

  	
   

  	
  1625
  Broadway, 16th Floor

  
	
   

  	
   

  	
  Denver,
  Colorado 80202

  
	
   

  	
   

  	
  Attention: Samuel
  E. Wing, Esq.

  
	
   

  	
   

  	
  (303)
  573-1600

  
	
   

  	
   

  	
  (303)
  893-6506 (facsimile)

  



 


or
to such other address as either party may from time to time designate by notice
to the other given in accordance with this Section 14.  Notice shall be deemed to have been given
upon receipt thereof in the case of personal delivery or delivery service, or
three (3) days after deposit in the U.S. mail in the case of mailing.


 


15.                               RIGHT TO INSPECT.


 


During the Term, Landlord hereby reserves the right
for itself or its duly authorized agents and representatives upon forty-eight
(48) hours advance written notice to Tenant to enter upon the Leased Premises
during regular business hours of Tenant for the purpose of inspecting the same
and of showing the same to any prospective purchaser. Notwithstanding the
above, Landlord shall not have the right to enter into any of the Improvements
situated on the Leased Premises.


 


16.                               MAINTENANCE.


 


Tenant shall, at its own expense, maintain the
entire Leased Premises in good condition and repair, and at the end of the Term
or sooner termination of this Lease, (whether by operation of law, for failure
to comply with the provisions hereof, or otherwise), Tenant shall deliver up
the Leased Premises in the same order, condition, and repair as when received
by Tenant; provided, however, Tenant shall not be obligated to restore
diminution in condition caused by: (i) ordinary wear and tear; or (ii) elements
and damages due to casualty or condemnation; or (iii) the construction of
additional buildings, structures or other improvements over, upon or under the
Leased Premises; or (iv) the demolition or alteration of existing
buildings, structures, or other improvements over, upon or under the Leased
Premises.


 


17.                               DEFAULT.


 


A.                                 Tenant Default.


 


(1)                                  Should Tenant default in the performance of
any covenant or agreement herein, and such default continues for sixty (60)
days after receipt by Tenant of written notice thereof from Landlord
(specifying the nature of such default and the remedy for same), or if the
default of Tenant is of a type which is not reasonably possible to cure within sixty
(60) days, if Tenant has not commenced to cure such default within the sixty
(60) day period and does not thereafter diligently prosecute the curing of such
default to completion, Landlord may, so long as such default continues, as
Landlord’s exclusive remedy, either: (i) waive such default; or (ii) accelerate
the Annual Rent due under the remainder of the then current Term by written
notice to Tenant (which written notice shall specify the amount to be paid to
Landlord); (iii) terminate this


 


11

















 


Lease (subject to the Tenant
Lender Rights set out in Section 17.C. and Section 35
below, and the rights of Tenant pursuant to the provisions of subsection A.(3),
below).


 


(2)                                  Notwithstanding the above, in the event
Tenant’s default is for failure to pay Annual Rent, such default must be cured
within thirty (30) days after Tenant’s receipt of written notice from Landlord
specifying each breach (and the cure for same).


 


(3)                                  In the event that Landlord elects to
terminate this Lease in accordance with subsection A. above,
Tenant, at Tenant’s election and notwithstanding Landlord’s election to
terminate this Lease,   shall have the right to exercise the Option
described in Section 31 below, provided such Option is exercised by
Tenant within thirty (30) days of the date Tenant receives written notice from
Landlord of its election to terminate this Lease.


 


(4)                                  In the event that Landlord elects to
terminate this Lease in accordance with subsection A. above (and in
the event Tenant has not exercised the Option described in Section 31
below), Landlord shall take possession of the Leased Premises and title to all
improvements existing thereon shall pass to Landlord.  Notwithstanding the immediately preceding
sentence, Landlord’s right to take possession of the Leased Premises and to
take title to the improvements existing thereon shall be expressly subject and
subordinate to the Tenant Lender Rights set out in Section 35
below.


 


B.                                     Landlord Default. Should Landlord default in the performance
of any covenant or agreement herein, and such default continues for thirty (30)
days after receipt by Landlord of written notice thereof from Tenant specifying
such breach and the cure for same (except as otherwise provided herein) or if
the default of Landlord is of a type which is not reasonably possible to cure
within a thirty (30) day period and does not thereafter diligently prosecute
the curing of such default to completion (except as otherwise provided herein),
Tenant shall have the right to pursue all rights and remedies which are available
at law or in equity.


 


C.                                     Tenant Lender Rights.  Notwithstanding anything in this Section 17
to the contrary, all rights of Landlord set out in this Section 17
(in addition to all other provisions of this Lease) shall be expressly subject
and subordinate to the Tenant Lender Rights set out in Section 35,
below.


 


18.                               SIGNS.


 


A.                                   Tenant Signage. 
Tenant shall have the right to install, erect and maintain upon the
Leased Premises all signs necessary or appropriate to the conduct of its
business.  Tenant shall not install,
erect, or maintain any sign in violation of any applicable law, ordinance, or
use permit of any governmental authority. Tenant may remove (but shall not be
required to remove) such signage at any time during such Term. Within thirty
(30) days after such expiration or termination of this Lease, Tenant, at its
expense, shall remove such signage.


 


B.                                     Landlord Signage. 
Landlord shall not install, erect or maintain any signs on the Leased
Premises during the Term, except that, unless this Lease shall have previously
been extended or renewed, Landlord may erect a “For Sale” or “To Rent” sign
during the last two (2) months of the applicable Term; provided, however,
that such sign shall not obstruct any sign of Tenant or interfere unreasonably
with the conduct of Tenant’s business.


 


12

















 


19.                               LANDLORD LIEN RESTRICTION.


 


Landlord shall not at any time during the Term
create or suffer to be created any lien or encumbrance upon or affecting the
Leased Premises or any portion thereof, except taxes and other liens created by
operation of law upon the Leased Premises (which, except as to taxes required
hereby to be paid by Tenant, Landlord shall pay and discharge before
delinquency).


 


20.                               HOLDING OVER.


 


If Tenant continues to occupy the Leased Premises
after the expiration of the Term and Landlord elects to accept Annual Rent,
thereafter, a monthly tenancy terminable by either party on one month’s notice
shall be created, which shall be upon the same rental, terms and conditions as
those herein specified.


 


21.                               SUCCESSORS IN INTEREST.


 


Each and all of the covenants, agreements,
obligations, conditions and provisions of this Lease shall inure to the benefit
of and shall bind the successors and assigns of the respective parties hereto.


 


22.                               RECORDING MEMORANDUM OF LEASE.


 


Upon execution of this Lease, Landlord shall
execute, cause to be notarized, and deliver to Tenant that certain Memorandum
of Lease, in form and substance as set out on Exhibit “E”, attached
hereto and incorporated herein.  Tenant
shall have the right to cause the recording of such Memorandum of Lease in the
public records of the State of Nevada. 
Upon the termination or other expiration of this Lease, Tenant agrees to
deliver within twenty (20) days of Landlord’s request a quitclaim of its
interest in such Lease.


 


23.                               REMEDIES ARE CUMULATIVE.


 


Unless expressly provided otherwise herein, remedies
conferred by this Lease upon the respective parties are not intended to be
exclusive, but are cumulative and in addition to remedies otherwise afforded by
law.


 


24.                               QUIET POSSESSION.


 


Landlord covenants that Landlord is seized of the
Leased Premises and has full right to make this Lease, and that so long as
Tenant is not in default hereunder, Tenant shall have quiet, peaceful and
exclusive possession thereof as against any adverse claim of any party whether
claiming by, through or under Landlord or otherwise.  During the Term, Landlord shall not have the
right to construct any improvements or make any alterations to any Improvements
and/or structure on, under or above the Leased Premises.


 


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25.                               ALTERATION OR EXPANSION.


 


Tenant shall have the right during the Term and upon
its sole and absolute discretion to cause alterations, expansions, additions or
demolitions to the existing Improvements (whether structural or non-structural)
without the obligation or necessity of securing Landlord’s consent.  Tenant shall have the right during the Term
and upon its sole and absolute discretion to construct new buildings,
structures or infrastructure on, under or above the Leased Premises (whether
structural or non-structural) subject to the consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed.  Notwithstanding the immediately preceding
sentence, Tenant shall not be required to obtain Landlord’s consent for such
new construction unless such new construction would cause a material diminution
in the value of the Leased Premises, in the reasonable commercial judgment of
the Appraisal Team described in Section 31.F., below.  All such construction, alterations,
demolitions and expansions described in the immediately preceding sentence
(whether new construction, construction to existing structures or otherwise)
shall be deemed to constitute part of the Improvements.


 


26.                               INVESTMENT CREDIT.


 


Landlord shall have the right or interest in any
investment credits allowed by any law, as to the Leased Premises.  Tenant shall have the right or interest in any
investment credits allowed by any law, as to any Improvements or any additions
or expansion to same.


 


27.                               GRANTING OF EASEMENTS.


 


A.                                   Tenant Rights. 
Tenant shall have the right from time to time during the Term to enter
into agreements with various parties (including but not limited to utility
providers creating easements, licenses, rights of way or the like) as same may
be appropriate for Tenant’s ownership, operation, alteration, demolition or
construction of new buildings, structures and infrastructure comprising the
Improvements.  To the extent such
agreements materially affect the Leased Premises, Tenant shall seek written
consent of Landlord for same, which consent shall not be unreasonably withheld,
conditioned or delayed.


 


B.                                     Landlord Obligation. 
Landlord agrees from time to time during the Term at the request of
Tenant, without additional consideration and upon condition that Tenant shall
submit satisfactory documentation to Landlord that the easements, licenses,
rights of way, or other rights and privileges so requested will not adversely
affect the utilization of the Leased Premises or the valuation thereof: (i) to
grant easements, licenses, rights of way (and other rights and privileges in
the nature of easements) of such nature, extent and duration (including
perpetual) as Tenant may request; (ii) to release existing easements and
appurtenances which are for the benefit of the Leased Premises; and (iii) to
execute and deliver any instrument necessary or appropriate to confirm such
grants or releases to any person; in each of the foregoing instances (i), (ii) and
(iii), the same to be without consideration, but only upon receipt by Landlord
of and delivery of (x) a certificate of the President or a Vice President of
Tenant stating (A) that such grant or release is not detrimental to the
proper conduct of the business of Tenant on the Leased Premises, (B) that
such grant or release does not materially impair the effective use of the
Leased Premises for its intended purposes or materially and adversely affect
its value; (y) a duly authorized undertaking of Tenant, in form and substance
satisfactory to Landlord, to the effect that Tenant will remain obligated
hereunder to the same extent as if such grant or release had not been made; and
(z)


 


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such instruments,
certificates (including evidence of authority) and opinions as Landlord may
reasonably request.


 


28.                               GENERAL CONDITIONS.


 


A.                                   Time of Essence.  Time
is of the essence of this Lease.


 


B.                                     Waiver.  No waiver of any breach of the
covenants, agreements, obligations and conditions of this Lease to be kept or
performed by either party hereto shall be construed to be a waiver of any
succeeding breach of the same or any other covenant agreement, obligation,
condition or provision hereof.


 


C.                                     Commissions.  Landlord shall be solely
responsible for the payment of any commissions in relation to the leasing
transaction represented by this Lease (and shall further indemnify, defend and
hold Tenant harmless from any claims of commissions by any other party).


 


D.                                    Further Acts. 
Landlord and Tenant agree to undertake such further acts and execute and
deliver such further documents in order to effectuate the purpose and intent of
this Lease.


 


29.                               HAZARDOUS SUBSTANCES.


 


A.                                   Restrictions On Hazardous Materials. 
Tenant covenants, represents, and warrants that Tenant’s use of the
Leased Premises do not and will not involve the use, storage, generation, or
disposal of Hazardous Materials (as defined herein), and that Tenant shall not
cause or permit any Hazardous Materials to be brought, used, stored, generated,
or disposed on or about the Leased Premises by Tenant, in compliance with all
laws, including, without limitation, Environmental Laws (as defined herein).


 


B.                                     Tenant Indemnification. 
Tenant shall indemnify, defend and hold harmless Landlord, its officers,
directors, owners, employees, agents, 
successors and assigns (collectively, the “Landlord Indemnitees”) from
and against any and all losses, damages, claims, judgments, liabilities,
enforcement actions, remedial actions, fines, penalties, taxes, fees, costs and
expenses (including, without limitation, attorneys= fees, consultants’ fees, laboratory costs,
and expert fees) which arise during the Term as a result of any breach by
Tenant of the obligations set forth in this Section 29.  Subject to the provisions of this Section 29,
Tenant shall promptly take, at its sole expense, all actions necessary to
investigate, clean up, remediate, and remove any Hazardous Materials which come
to be located in, on, under, or about the Leased Premises due to Tenant’s (or
its agents) use of or activities on or about the Leased Premises. Within sixty
(60) days after the expiration of the Term or the earlier termination of this
Lease (subject to the Tenant Lender Rights set out in Section 35,
below), Tenant shall restore the Leased Premises to the condition existing
prior to the introduction of such Hazardous Materials to the Leased
Premises.  Tenant shall comply with all
applicable Environmental Laws (as defined herein) and the requirements of
governmental authorities in undertaking such actions.  No consent of Landlord to the presence of
Hazardous Materials or Tenant’s compliance with Environmental Laws (as defined
herein) shall relieve Tenant of its indemnification obligations hereunder.


 


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C.                                     Landlord Indemnification. 
Landlord shall indemnify, defend and hold harmless Tenant, its officers,
directors, owners, managers, employees, agents, 
successors and assigns (collectively, the “Tenant Indemnitees”) from and
against any and all losses, damages, claims, judgments, liabilities,
enforcement actions, remedial actions, fines, penalties, taxes, fees, costs and
expenses (including, without limitation, attorneys= fees, consultants’ fees, laboratory costs,
and expert fees) which arise during the Term as a result of any breach by
Landlord of the obligations set forth in this Section 29.  Subject to the provisions of this Section 29,
Landlord shall promptly take, at its sole expense, all actions necessary to
investigate, clean up, remediate, and remove any Hazardous Materials which come
to be located in, on, under, or about the Leased Premises due to Landlord’s (or
its agents) use of or activities on or about the Leased Premises, and Landlord
shall restore the Leased Premises, and any other properties (including the
Improvements), to the condition existing prior to the introduction of such
Hazardous Materials to the Leased Premises. 
Landlord shall comply with all applicable Environmental Laws (as defined
herein) and the requirements of governmental authorities in undertaking such
actions.  Landlord shall obtain Landlord’s
prior written approval of such actions and of any consultants or contractors to
be used by Landlord in connection therewith. 
No consent of Tenant to the presence of Hazardous Materials or Landlord’s
(or its agents) compliance with Environmental Laws (as defined herein) shall
relieve Landlord of its indemnification obligations hereunder.


 


D.                                    Representations and Warranties of Landlord.


 


(1)                                  Uses.  Landlord represents and warrants
to Tenant, after due inquiry and investigation, that the Leased Premises have
not been used by previous owners and/or operators, Landlord, or any tenant of Landlord
to generate, manufacture, refine, transport, treat, store, handle, or dispose
of Hazardous Materials.


 


(2)                                  Storage. 
Landlord represents and warrants to Tenant, after due inquiry and
investigation, that the Leased Premises have not contained, nor do the Leased
Premises now contain, either asbestos, PCB, toxic materials or Hazardous
Materials.


 


(3)                                  Governmental or
Private Action.  Landlord represents and warrants to Tenant,
after due inquiry and investigation, that Landlord has not received a summons,
citation, directive, letter or other communication, written or oral, from any
agency or Department of the State of Nevada or the U.S. Government or any other
public agency or entity or any private agency or entity concerning any
intentional or unintentional action or omission on Landlord’s part:  (i) concerning any release or discharge
of any Hazardous Materials on, under, above or adjacent to the Leased Premises;
or (ii) any alleged violation of any Environmental Laws; or (iii) the
releasing, spilling, leaking, pumping, pouring, emitting, emptying, or dumping
of Hazardous Materials into waters or onto lands of the State of Nevada, or
into waters or onto lands outside the jurisdiction of the State of Nevada.  Landlord further represents and warrants to
Tenant that there is no litigation pending or threatened with respect to the
Leased Premises concerning any Hazardous Materials or the violation of any
Environmental Laws.


 


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E.                                      Definition.  As
used herein, “Hazardous Materials” shall mean and include all hazardous
and toxic substances, waste or other materials, any pollutants or contaminants
as defined in Section 101 (14) of the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 (14)
(including, without limitation, asbestos and raw materials which include
hazardous constituents), or other similar substances, or materials which are
included under or regulated by any local, state, or federal law, rule, or regulation
pertaining to environmental regulation, contamination or clean-up, including,
without limitation, “CERCLA”, “RCRA”, “SARA”, or state superlien or
environmental clean-up statutes (all such laws, rules and regulations
being referred to collectively as “Environmental Laws”).  Any other terms mentioned in this Section 29
which are defined in state or federal statutes and/or regulations promulgated
in relation thereto shall have the meaning subscribed to such terms in such
statutes and regulations.


 


F.                                      Reports.  Attached to this Lease as Exhibit “F”
and incorporated herein by reference are all reports and correspondence which
Landlord has received as of the date of this Lease regarding any environmental
status of the Leased Premises or of any alleged violation of any Environmental
Laws.  Landlord further agrees to
promptly disclose to Tenant (but in any event within five (5) days of
Landlord’s receipt) of any other reports, correspondence, claims, documents,
pleadings or the like as to any alleged violation of any Environmental Laws or
of the environmental status of the Leased Premises, which come into Landlord’s
possession, custody or control after the commencement of this Lease.


 


30.                               TENANT’S PREFERENTIAL RIGHT TO
PURCHASE.


 


A.                                   Preferential Right. 
Tenant, during the Term, shall have the prior right to buy the whole or
any part of the Leased Premises if Landlord receives from a third party an
acceptable bona fide offer to buy, or if Landlord offers to sell such Leased
Premises in a general offering or solicitation for the sale of same (a “General
Solicitation”).


 


B.                                     Offer Notice; Procedure. 
Landlord shall within three (3) days of receipt of an offer for the
sale of the Leased Premises or of a General Solicitation (either, an “Offer”)
(and not less than ten (10) days prior to the execution of any contract
for the sale of same) give Tenant written notice of such Offer, together with a
copy thereof. Tenant shall have thirty (30) business days from the receipt of
such Offer to notify Landlord that it will or will not buy such Leased Premises
at the terms of the Offer, or at such lesser terms as Landlord and Tenant may
agree upon (the “Refusal Right”).  If
Tenant fails to notify Landlord of its intent to purchase within such thirty
(30) business day time period, Landlord shall have the right to consummate such
sale but only to the party identified in the Offer and only upon the strict
terms set out in such Offer.  If Tenant
notifies Landlord within such thirty (30) business day period that Tenant has
elected to exercise the Refusal Right and to purchase the Leased Premises
pursuant to the Offer, Tenant shall have ninety (90) days after the date of
Tenant’s notice to Landlord (of its election to so purchase the Leased
Premises) within which to consummate the purchase of the Leased Premises on the
terms stated in the Offer (or such other terms as may be agreed to by Landlord
and Tenant).


 


C.                                     Sale Requirement.  In
the event Tenant elects not to exercise the Refusal Right and if Landlord sells
such Leased Premises to a third person, such sale shall be made subject to all
of the terms and provisions of this Lease.


 


17

















 


D.                                    Nominee.  The rights of Tenant under
this Section 30 may be exercised by a nominee which Tenant may
designate and whose financial responsibility Tenant hereby guarantees.  Furthermore, Tenant’s preferential right to
purchase shall not apply to a transfer to a lender pursuant to foreclosure
proceedings.


 


31.                               OPTION TO PURCHASE.


 


A.                                   Grant of Exclusive Option.  For the independent consideration of
$10.00 and other valuable consideration of (which Landlord acknowledges
receipt), Landlord hereby grants to Tenant the exclusive, non-revocable right
and option (the “Option”) to purchase the Leased Premises (including the
Adjacent Tract) pursuant to the purchase price and terms described below.


 


B.                                     Purchase Price.  The purchase price for the Leased
Premises (the “Purchase Price”) shall be equal to the fair market value of
the Leased Premises (as of the date which is not more than thirty (30) days
from the Exercise Notice, defined below), as such value is determined by a
written appraisal conducted and prepared in accordance with MAI standards (the “Valuation
Appraisal”) by an appraisal team (the “Appraisal Team”) duly licensed by the
State of Nevada.  Such Appraisal Team
shall be selected in accordance with the procedures set out in Section 31.F.,
below.   Such Valuation Appraisal shall exclude the value of the
Improvements (as well as any additions to the Improvements as may have been
constructed on the Leased Premises after the commencement date of this Lease
and shall further exclude any other improvements made to the Leased Premises by
Tenant or any third party), and shall be made without regard to any existing
lease on the Leased Premises or extension rights to the Lease, such that it is
appraised as unencumbered real property.


 


C.                                     Exercise.  The Option may be exercised by Tenant pursuant to any of the
following notice provisions (each, an “Exercise Notice”):


 


(1)                                  By written notice to Landlord by Tenant at
any time during the time period commencing with the day after the last day
of the Initial Term and ending sixty (60) days thereafter; or


 


(2)                                  By written notice to Landlord by Tenant at
any time during the time period commencing with the day after the last day of
each calendar year within the First Extension Term and ending thirty (30)
days thereafter; or


 


(3)                                  By written notice to Landlord by Tenant at
any time during the time period commencing with the day after the last day of
each calendar year within the Second Extension Term and ending thirty
(30) days thereafter.


 


D.                                    Real Estate Contract.    Within twenty (20)
days of Tenant’s delivery of the applicable Exercise Notice, Landlord and
Tenant shall execute and deliver a Real Estate Purchase Contract containing
such terms as are acceptable to Tenant and as are customary for commercial real
estate transactions of like nature and price in the Carson City, Nevada area.


 


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E.                                      Memorandum of Option. Upon execution of this Lease, Landlord
shall execute, cause to be notarized and deliver to Tenant that certain
Memorandum of Option, in form and substance as set out on Exhibit “G”,
attached hereto and incorporated herein. 
Tenant shall have the right to cause the recording of such Memorandum of
Option in the public records of the State of Nevada.  Upon the termination or other expiration of
this Option, Tenant agrees to deliver within twenty (20) days of Landlord’s
request a quitclaim of its interest in such Option.


 


F.                                      Appraisal Team Selection.


 


(1)                                  The Appraisal Team shall be comprised of
three (3) MAI appraisers duly licensed in the State of Nevada.


 


(2)                                  Within five (5) days of an Exercise
Notice, Landlord and Tenant shall designate in writing to each other their
respective selection of an appraiser to participate on the Appraisal
Team (collectively, the “Designated Appraisers”and singularly, a “Designated
Appraiser”).  If either Landlord or Tenant shall fail to timely
notify the other as to the selection of their respective Designated Appraiser,
then the party who timely selected their Designated Appraiser shall have the
right to select the remaining Desginated Appraiser on behalf of the non-timely
party.


 


(3)                                  Within three (3) days of the selection
of the Designated Appraisers, such Designated Appraisers shall act in good
faith to select a third appraiser to participate on the Appraisal Team (the “Final
Appraiser”).  In the event that the Designated Appraisers cannot agree on
the selection of the Final Appraiser, then the selection of such Final
Appraiser shall be determined by Tenant, upon good faith consultation with
Landlord (but with the ultimate decision as to same to reside with Tenant).


 


(4)                                  The determination of the Appraisal Team as to
the Valuation Appraisal shall be final, conclusive and binding (without right
of appeal or initiation of legal action).


 


32.                               APPLICABLE LAW.


 


This Lease shall be subject to the laws of the State
of Nevada and it is agreed that if any word, phrase, clause, sentence, article,
provision or paragraph of this Lease is or shall be held invalid or unlawful
under the laws of the State of Nevada for any reason, the same shall be deemed
severed from the remainder hereof, and stricken therefrom, and shall in no way
affect or impair the validity of this Lease or of any portion thereof, and this
Lease shall otherwise remain in full force and effect.


 


33.                               ENTIRE AGREEMENT/SUBTITLES.


 


A.                                   Entire Agreement.  This
Lease contains the entire agreement of the parties, and no modifications
thereof or statement or representation in connection therewith shall be
effective or binding upon either party unless the same is reduced to writing
signed by Landlord and Tenant, and attached hereto.


 


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B.                                     Headings; Captions.  The
descriptive headings of the Lease are inserted for convenience only and shall
not control or affect the meaning or construction of any provisions hereto.


 


34.                               ATTORNEYS FEES.


 


In the event either Landlord or Tenant brings a suit
against the other in connection with this Lease, either for the collection of
money or for the breach of the terms of this Lease, then the prevailing party
in any such action shall be entitled to its reasonable attorney’s fees and costs
as part of its recovery.


 


35.                               TENANT LENDER RIGHTS.


 


A.                                   Tenant’s Right to Encumber. 
Tenant may encumber all or any portion of its interest in this Lease and
the leasehold estate created by this Lease by a deed of trust, mortgage or
other security instrument (collectively, a “Leasehold Mortgage”), provided that
such Leasehold Mortgage, shall be a lien only on Tenant’s interest in
and to this Lease and the leasehold estate created hereby.  For purposes of this Section 35,
the holder of a Leasehold Mortgage or anyone claiming by or through or under
such holder shall be referred to as a “Leasehold Mortgagee”.


 


B.                                     Rights of Leasehold Mortgagee.


 


(1)                                  Rights of Enforcement.  A
Leasehold Mortgagee may enforce its rights under its Leasehold Mortgage and
acquire title to the Tenant’s leasehold estate in the Leased Premises in any
lawful manner, and upon foreclosure under the Leasehold Mortgage and the
issuance of evidence of title, take possession of the Leased Premises, subject,
however, to all of the terms, provisions and conditions of this Lease.  During such time as a Leasehold Mortgagee or
any successor in interest is the owner and holder of the leasehold estate
created under this Lease, whether by foreclosure or otherwise, such interests
so acquired shall be subject to all of the terms, covenants and provisions of
this Lease.


 


(2)                                  Notice of Default. 
Landlord shall
deliver to such Leasehold Mortgagee a copy of each notice of default under this
Lease (a “Lease Default”) given by Landlord to Tenant (a “Landlord Notice”)
concurrently with and whenever any such Landlord Notice shall thereafter be
given by Landlord to Tenant, addressed to such Leasehold Mortgagee at its
address last furnished to Landlord.  No
such Landlord Notice shall be deemed to have been duly given unless and until a
copy thereof has been delivered to such Leasehold Mortgagee.


 


(3)                                  Landlord Covenants.  Landlord agrees that it will
not:  (i) accept the surrender of
the Leased Premises by Tenant prior to the termination of the Lease, or (ii) consent
to the modification of any material term of this Lease or the termination of
this Lease by Tenant, without prior written notice to the Leasehold Mortgagee
in each instance.  Landlord further
agrees that it will not seek to terminate this Lease by reason of any act or
omission of Tenant until Landlord has given to the Leasehold Mortgagee a


 


20

















 


copy of the Landlord Notice
with respect to the Lease Default upon which the proposed termination is based.


 


(4)                                  Additional Required Notices To Leasehold
Mortgagee.  After the expiration
of all applicable notice and grace periods set forth in this Lease with respect
to any such default, Landlord shall give written notice to the Leasehold
Mortgagee (“Mortgagee Notice”) of the failure of Tenant to cure such Lease
Default.  The Mortgagee Notice shall be
sent by certified mail, return receipt requested, or by a nationally recognized
commercial overnight delivery service, to the address set forth in the
Leasehold Mortgage (or such other address as may hereafter be designated in
writing to Landlord by the Leasehold Mortgagee).  Landlord shall not declare or assert a
termination of this Lease by reason of any such Lease Default until a “reasonable
period of time” (as defined below) shall have elapsed following the receipt of
the Mortgagee Notice, during which period the Leasehold Mortgagee shall have
the right, but shall not be obligated, to remedy such Lease Default.  Landlord hereby agrees to accept performance
by any such Leasehold Mortgagee of any covenant, condition or agreement on
Tenant’s part to be performed hereunder with the same force and effect as
though performed by Tenant.


 


(5)                                  Reasonable Period of Time Defined. 
As used in Section 35.B.(4),
above, “a reasonable period of time” shall be: 
(i) thirty (30) days if such Lease Default can be remedied during
such thirty (30) day period, or (ii) if such Lease Default cannot be
remedied during such thirty (30) day period, then such period of time as is
necessary to remedy such Lease Default (not to exceed, however, one hundred one
hundred eighty (180) days), provided that the Leasehold Mortgagee has commenced
to cure such Lease Default or to foreclose the lien of its Leasehold Mortgage
within such initial thirty (30) day period and continues to diligently
prosecute same to completion.


 


(6)                                  Time Extension.  The time for the Leasehold Mortgagee to cure
any Lease Default by Tenant that reasonably requires the Leasehold Mortgagee be
in possession of the Leased Premises to do so, or the time for a Leasehold
Mortgagee to obtain Tenant’s interest in this Lease in order to elect to enter
into a new lease with Landlord as provided in Section 35.B.(7) below,
shall be deemed extended to include the period of time required by such
Leasehold Mortgagee to obtain such possession or obtain Tenant’s interest in
this Lease (by foreclosure or otherwise) with due diligence; provided, however,
as a condition precedent:  (i) such
Leasehold Mortgagee shall have delivered to Landlord its written commitment to
cure all outstanding Lease Defaults reasonably requiring possession of the
Lease Premises; and (ii) during such period all other obligations of
Tenant under this Lease are being duly performed by such Leasehold Mortgagee.


 


(7)                                  New Lease Covenants.  If this Lease is terminated for
any reason, including, but not limited to, a termination following a Leasehold
Mortgagee’s failure to cure a Lease Default as permitted in this Section 35,
or the rejection or disaffirmance of this Lease pursuant to bankruptcy laws or
other laws affecting creditors’ rights, Landlord will enter into a new lease of
the Leased Premises with the Leasehold Mortgagee, or any party designated by
the Leasehold Mortgagee within thirty (30) days after the request of the
Leasehold Mortgagee.  The new lease shall
be effective as of the date of termination,


 


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rejection or disaffirmance
of this Lease and shall be upon the same terms, covenants and provisions as are
contained in this Lease, including the amount of the Annual Rent and other sums
due from Tenant hereunder.  In order to
obtain a new lease, a Leasehold Mortgagee must make a written request to
Landlord for the new lease within (30) days after the Leasehold Mortgagee is
notified of the effective date of termination, rejection or disaffirmance of
the Lease, as the case may be, in which event no further action shall be taken
by Landlord pending the execution and delivery thereof.  In addition, prior to making written request
to Landlord for the new lease, the Leasehold Mortgagee must cure all Lease
Defaults that can be cured by the payment of money and pay to Landlord all rent
and other sums that would have been due and payable by Tenant under this Lease
but for the rejection, disaffirmance or termination.  Further, the Leasehold Mortgagee shall
promptly reimburse Landlord for its reasonable costs and expenses (including
attorneys fees) incurred in connection with such termination, rejection or dissaffirmance
as the case may be.  If the Leasehold
Mortgagee or the party so designated by the Leasehold Mortgagee shall have
entered into a new lease with Landlord pursuant this Section 35.B.(7),
then any Lease Default that cannot be cured by the payment of money shall be
deemed cured.  To the extent Landlord is
able, Landlord shall assure that any new lease made pursuant hereto shall be
senior and superior to any other encumbrances on the Leased Premises.  The Leasehold Mortgagee’s right under this Section 35.B.(7) are
in addition to and not limited by such Leasehold Mortgagee’s right to cure
under Section 35.B.(4) and (5), above.  The provisions of this Section 35.B.(7) are
a separate and independent contract made by Landlord and each Leasehold
Mortgagee.  From the effective date of
termination, rejection or disaffirmance of this Lease to the date of execution
and delivery of such new lease or the expiration of the period during which a
Leasehold Mortgagee may make a request, such Leasehold Mortgagee may, upon
payment of any rent and any other sums as may be due from Tenant, use, occupy
and enjoy the leasehold estate created by this Lease without hindrance by
Landlord.


 


(8)                                  Benefit.  The
provisions of this Section 35 are for the benefit of each Leasehold
Mortgagee and may be relied upon and shall be enforceable by each Leasehold
Mortgagee.  Neither a Leasehold Mortgagee
nor any other holder or owner of the indebtedness secured by a leasehold
mortgage or otherwise shall be liable with respect to the terms, covenants,
agreements or obligations of Tenant contained in this Lease, unless and until
such Leasehold Mortgagee or that holder or owner acquires the interest of
Tenant hereunder.


 


(9)                                  Estoppel.  Landlord agrees to promptly
(but in any event within seven (7) days of Tenant’s or Leashold Mortgagee’s
request for same) execute, have notarized and deliver to Tenant and Leasehold
Mortgagee an estoppel certificate (the “Estoppel Certificate”) in such from,
substance, scope and application as may be requested by Leasehold
Mortgagee.  Such Estoppel Certificate
shall state, but not be limited to, a representation and covenant of Landlord
that:  (i) the Lease is in full
force and effect; (ii) there exists no condition of default of either
Landlord or Tenant under the Lease or if such condition of default does exist,
a statement from Landlord specifying the nature of such default including the
sums due from or action necessary of the defaulting party in order to cure
same; and (iii) such other items as the Leasehold Mortgagee may require.


 


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IN WITNESS WHEREOF, the Landlord and Tenant hereunto set their hands and seals as of the
date above.


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  THE CLARK AND
  JEAN RUSSELL

  FAMILY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Clark
  G. Russell, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jean
  M. Russell, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  JACOBS
  ENTERTAINMENT, INC.,

  a Delaware corporation

  
	
   

  	
  And/Or
  Assigns

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name: Stephen R. Roark

  
	
   

  	
  Title:  President
  and Chief Financial Officer

  
				



 


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