**Exhibit 10.40**

 

MASTER LEASE

 

BETWEEN

 

THE CITY OF BOONVILLE, MISSOURI

 

AND

 

DAVIS GAMING BOONVILLE, INC.

 

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TABLE OF CONTENTS

 
| ARTICLE 1 | LEASED PREMISES                                        | 2      |
|-----------|--------------------------------------------------------|--------|
| 1.1       | Leased Premises                                        | 2      |
| 1.2       | Permitted Use                                          | 2      |
| 1.3       | Physical Condition                                     | 2      |
| 1.4       | Lease Term                                             | 2      |
| 1.5       | Designation of Home Dock                               | 2      |
|      |                                                   |   |
| ARTICLE 2 | DEVELOPMENT AND CONSTRUCTION                           | 3      |
| 2.1       | General                                                | 3      |
| 2.2       | Construction of Improvements                           | 3      |
| 2.3       | Riverboat Gaming Project Site  Plan                    | 3      |
| 2.4       | Project Site                                           | 3      |
| 2.5       | Construction of the Land Based  Project                | 4      |
| 2.6       | Critical Path                                          | 6      |
| 2.7       | Project Engineer; Project  Architect                   | 7      |
| 2.8       | Stoppage of Construction  by the City             | 7      |
| 2.9       | Completion of the Land Based  Project                  | 7      |
| 2.10      | Access to the Riverboat Gaming  Project and Inspection | 8      |
| 2.11      | Licenses and Permits                                   | 8      |
| 2.12      | Additional Improvements                                | 8      |
|      |                                                   |   |
| ARTICLE 3 | RENT AND OTHER COSTS                                   | 9      |
| 3.1       | Rent                                                   | 9      |
| 3.2       | Rebate of Rent                                         | 9      |
| 3.3       | Costs                                                  | 10     |
| 3.4       | Net Lease                                              | 10     |
|      |                                                   |   |
| ARTICLE 4 | OPERATIONS AND USE                                     | 10     |
| 4.1       | Operations                                             | 10     |
| 4.2       | Use of the Project Site                                | 11     |
| 4.3       | Traffic                                                | 11     |
| 4.4       | Employment                                             | 11     |
| 4.5       | Security/Safety                                        | 11     |
| 4.6       | Thespian Hall                                          | 12     |
|      |                                                   |   |
| ARTICLE 5 | REPAIRS AND MAINTENANCE                                | 12     |
| 5.1       | Maintenance and Repairs                                | 12     |
| 5.2       | Maintenance Reserve Fund                               | 12     |
| 5.3       | No Services Furnished                                  | 13     |
|      |                                                   |   |
| ARTICLE 6 | INSURANCE                                              | 13     |
| 6.1       | Insurance Coverages                                    | 13     |
| 6.2       | Named Insureds                                         | 14     |
| 6.3       | Waiver of Subrogation and Release                      | 14     |
| 6.4       | Cancellation/Modification  Notice                      | 14     |

 

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| ARTICLE 7  | INDEMNIFICATION                                        | 14                 |
|------------|--------------------------------------------------------|--------------------|
| 7.1        | Indemnification of the City                            | 14                 |
| 7.2        | Indemnification of Tenant                              | 15                 |
| 7.3        | Notification                                           | 15                 |
|       |                                                   |               |
| ARTICLE 8  | TAKING AND DESTRUCTION OF  PROJECT SITE                | 15                 |
| 8.1        | Taking of Facilities                                   | 15                 |
| 8.2        | Destruction of Riverboat Gaming  Project               | 15                 |
|       |                                                   |               |
| ARTICLE 9  | COMPLIANCE WITH LAWS                                   | 16                 |
| 9.1        | General Compliance                                     | 16                 |
| 9.2        | Environmental Matters                                  | 16                 |
|       | 9.2.1                                                  | Negative Covenants | 16 |
|       | 9.2.2                                                  | Removal            | 16 |
|       | 9.2.3                                                  | Notification       | 17 |
|       | 9.2.4                                                  | Definitions        | 17 |
|       | 9.2.5                                                  | Survival           | 18 |
| 9.3        | Inspection Rights                                      | 18                 |
|       |                                                   |               |
| ARTICLE 10 | IMPOSITIONS AND CONTEST                                | 18                 |
| 10.1       | Impositions                                            | 18                 |
| 10.2       | Furnished Receipts                                     | 18                 |
| 10.3       | Utilities                                              | 18                 |
| 10.4       | Protection against Lien Claims                         | 19                 |
| 10.5       | Contest of Liens, Laws and Taxes                       | 19                 |
| 10.6       | City Joinder In Contest                                | 19                 |
|       |                                                   |               |
| ARTICLE 11 | THE CITY’S PERFORMANCE OF TENANT’S COVENANTS | 20                 |
| 11.1       | The City’s Right to Perform                       | 20                 |
| 11.2       | Repayment by Tenant                                    | 20                 |
|       |                                                   |               |
| ARTICLE 12 | TERMINATION                                            | 20                 |
| 12.1       | Termination Events                                     | 20                 |
| 12.2       | Surrender and Delivery of the Project Site             | 22                 |
| 12.3       | Personal Property Not Removed                          | 22                 |
| 12.4       | The City Not Responsible                               | 22                 |
| 12.5       | Restoration                                            | 22                 |
| 12.6       | Survival                                               | 22                 |
|       |                                                   |               |
| ARTICLE 13 | DEFAULT AND REMEDIES                                   | 23                 |
| 13.1       | Default                                                | 23                 |
| 13.2       | Remedies                                               | 23                 |
|       |                                                   |               |
| ARTICLE 14 | BANKRUPTCY                                             | 25                 |
| 14.1       | Events of Bankruptcy                                   | 25                 |
| 14.2       | The City’s Remedies                               | 25                 |
|       |                                                   |               |
| ARTICLE 15 | ASSIGNMENT/SUBLEASE/ENCUMBRANCE                        | 27                 |
| 15.1       | Assignment, Subletting and Other Transfers             | 27                 |
| 15.2       | Limited Right to Encumber Leasehold Interest           | 29                 |

 

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| ARTICLE 16 | COVENANTS                               | 35                    |
|------------|-----------------------------------------|-----------------------|
| 16.1       | Covenants By the City                   | 35                    |
| 16.2       | Covenants By Tenant                     | 36                    |
|       | 16.2.1                                  | Enforceability        | 36 |
|       | 16.2.2                                  | Power and  Authority  | 36 |
|       | 16.2.3                                  | No  Conflicts         | 36 |
|       | 16.2.4                                  | Financial  Condition  | 36 |
|       | 16.2.5                                  | No  Contract Defaults | 36 |
|       | 16.2.6                                  | No Litigation         | 36 |
|       | 16.2.7                                  | Opinion of  Counsel   | 37 |
|       |                                    |                  |
| ARTICLE 17 | GENERAL PROVISIONS                      | 37                    |
| 17.1       | Notices                                 | 37                    |
| 17.2       | Police Power Limitation                 | 38                    |
| 17.3       | Failure to Perform By the City          | 38                    |
| 17.4       | No Liability                            | 38                    |
| 17.5       | Force Majeure                           | 39                    |
| 17.6       | Certificates                            | 39                    |
| 17.7       | Waiver of Jury Trial and  Counterclaims | .39                   |
| 17.8       | Binding Effect                          | 39                    |
| 17.9       | No Joint Venture Or Partnership         | 39                    |
| 17.10      | Attorneys Fees                          | 40                    |
| 17.11      | Governing Law                           | 40                    |
| 17.12      | Amendments                              | 40                    |
| 17.13      | Entire Agreement                        | 40                    |
| 17.14      | Multiple Originals                      | 40                    |
| 17.15      | Severability                            | 40                    |
| 17.16      | Interpretation                          | 40                    |
| 17.17      | Waiver                                  | 40                    |
| 17.18      | Memorandum of Lease                     | 41                    |

 

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MASTER.LEASE

 BETWEEN

 THE CITY OF BOONVILLE, MISSOURI

 AND

 DAVIS GAMING BOONVILLE, INC.,

 

THIS LEASE(this “Lease”) is made on July 18, 1997 by the City of Boonville,Missouri, a Missouri third class city (the “City”) and Davis Gaming Boonville, Inc.(f/k/a Gold River’s Boonville, Resort, Inc.) aNevada corporation (“Tenant”).

 

The City andTenant entered into a Master Agreement for Boonville, Missouri Riverboat GamingProject dated March 7, 1994 andan Amendment to Master Agreement for Boonville, Missouri Riverboat GamingProject dated November 10, 1994, a Second Amendment to Master Agreement dated May 1, 1995, a Third Amendment to Master Agreementand Amendment to Development Agreement dated February 5, 1996, all as amended and restated pursuant to an Amendedand Restated Master Agreement dated as of July 18, 1997 (collectively the “MasterAgreement”) for the development of the Riverboat Gaming Project on the ProjectSite, a map of which is attached as Exhibit A.

 

Under theMaster Agreement, Water Streetor Tenant is to acquire the Project Site and transfer the Project Site, asacquired, to the City and construct the Land Based Project pursuant to the MasterAgreement and this Lease. TheCity is to lease the Project Site to Tenant pursuant to this Lease.

 

Anycapitalized term used in this Lease and not defined in this Lease shall have the same meaninggiven, such term in the Master Agreement except thatthe term “Project Site” shall for purposes of this Lease only refer to that portion of the Project Site as defined in the Master Agreement which isactually acquired by Tenant and transferred to the City. It is intended thatfor purposes of this Lease, the Project Site shall change as additionalproperty is acquired and transferred to the City by Tenant under the Master Agreement and references to Project Site shall refer to onlythose parcelsof property otherwise within theentire Project Site as contemplated in the Master Agreement and that at thetime have been transferred to or are owned by the City.

 

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ARTICLE 1 LEASED PREMISES

 

1.1           Leased Premises. The City leases to Tenant, and Tenant leasesfrom the City, the Project Site, as it may exist from time to time, whenacquired by the Tenant or Water Street and conveyed to the City. The legal description of the Project Site as of the date ofthis Lease is attached as Exhibit B. As additional parcels become part of the Project Site, the legal descriptionof such parcels will be added to Exhibit B. The parties acknowledge that, in accordance with Section 1.3 of theMaster Agreement, the City’s rights in the Railroad Portion may arise under theRailroad Lease or by acquisition and that the City’s rights in the DNR Portionmay arise under the DNR Lease or by acquisition. The parties acknowledge thatthe City does not currently ownthe entire Project Site and that it is thesole responsibility of Tenant and Water Street to acquire and transfer the Project Site to theCity, but only to the extentrequired under the Master Agreement.

 

1.2           Permitted Use. The sole permitted use of the Project Site is the construction and operation of anintegrated gaming and entertainment facility. Tenant will operate the RiverboatGaming Projectin a manner consistent with (i) theterms of the Master Agreement and this Lease, and (ii) all applicable laws, rules andregulations.

 

1.3           Physical Condition. Except as otherwise provided in this Lease, - Tenant accepts the Project Site, asis, without any representations or warranties of any kind by the City.

 

1.4           Lease Term. The term (the “Term”) of this Lease shallcommence on the date hereof (the “Commencement Date”) and unless terminatedearlier, pursuant to this Lease, shall expire on the date (the “Expiration Date”)ninety-nine (99) years after the Commencement Date, except that with respect tothose parts of the Subleased Portions which are subject to a Prime Lease, ifthe Prime Lease for such Subleased Portion is earlier terminated, then theExpiration Date with regard only to such Subleased Portion shall be the date onwhich the Prime Lease for such Subleased Portion terminates. For purposes ofthis Lease and the Project Documents, theterm “Opening Date” shall mean the date on which the Missouri Gaming Commissionfirst issues a license to Tenant to open the Riverboat/Floating Facility for business tothe public.

 

1.5           Designation of Home Dock.  Pursuant to all applicable Missouri gaming laws, including but notlimited to Chapter 313, RSMo., Tenant designates the City as its sole andexclusive “home dock” (as that term is defined in Chapter 313, RSMo, asamended). This designation shall not prevent the temporary docking of theRiverboat/Floating Facility at another location if the Project Site is damaged duringthe period of repairs as long asTenant is using its best efforts to complete such repairs as expeditiously as

 

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possible, nor shall this designation preventTenant from acquiring additional riverboats and designating different homedocks for the different boats.

 

ARTICLE 2DEVELOPMENT AND CONSTRUCTION

 

2.1           General. Tenant will, at its sole cost, develop the RiverboatGaming Project pursuant to the Project Documents and in the Phases set forth herein. The partiesacknowledge that the Phases or any combination thereof may be pursued in wholeor in part concurrently.

 

2.2           Construction of Improvements. Construction of all improvements in accordance with the Project Documents (includingall exhibits and attachments to the Project Documents) is a condition of thisLease.

 

2.3           Riverboat GamingProject Site Plan.Tenant, at its cost, willprepare plans and specifications for the Riverboat Gaming Project and the Land Based Project (the “Riverboat Gaming Project Site Plan”),including all buildings, infrastructure and other construction, consistent with the Project Documents. Tenantwill submit the Riverboat Gaming Project. Site Plan for review andapproval by the City. Prior to the date Tenant commences construction of theRiverboat Gaming Project, the Riverboat Gaming Project Site Plan will beattached to this Lease as Exhibit C and thereby made a part of thisLease, subject to subsequent revisions as are approved by the City in itsreasonable discretion in the event of any substitution between the PreferredSite Configuration and the Alternate Site Configuration. The construction ofthe Riverboat Gaming Project will be completed substantially in accordance withthe Riverboat Gaming Project Site Plan and all applicable laws, rules andregulations. Tenant will obtain the written approval of the City before makingany material changes in the Riverboat Gaming Project Site Plan. The City agrees to act promptly and reasonably withrespect to all requests for approval of the Riverboat Gaming Project Site Planand/or modifications thereof.

 

2.4           ProjectSite. Tenant, with the City’s assistance, at Tenant’s sole cost, willprepare all plats, obtain all vacation of streets, easements, constructionpermits, floor plans, certificates, utility consents for relocation ofutilities, surveys and perform all other actions necessary for the developmentand operation of the Riverboat Gaming Project. Tenant will grant to the City,in a form which is reasonably acceptable to Tenant and the City, all easements reasonably requested by theCity with respect to the Project Site and normally granted to a City in a development. All streets within theProject Site shall be public streets provided that all land up to the curb linewill remain, pursuant to this Lease, leased to Tenant.

 

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2.5           Construction of theLand Based Project.

 

2.5.1      Tenantwill complete construction of the Land Based Project in two phases, Phase I/IIand Phase III.

 

2.5.1.1           INTENTIONALLY DELETED

 

2.5.1.2           No later than June 23, 1997, Tenantwill fund the Acquisition Escrow Account (as provided in the Acquisition EscrowAgreement) in the amount provided for in Section 2.5.2 of the MasterAgreement. No later than the date on which Tenant begins construction of PhaseI/II, Tenant will place into the Construction Escrow Account the sum of OneMillion Dollars ($1,000,000). During Phase I/II, and in all event (but subjectto Section 17.5) no later than April 3, 2001, Tenant will (i) acquireand/or complete construction of the Riverboat/Floating Facility; (ii) completethe acquisition of the Project Site; and (iii) complete the constructionof Phase I/II in accordance with the Project Documents and the final RiverboatGaming Project Site Plan.

 

2.5.1.3           PhaseIII will occur in accordance with the termshereof on an ongoing basis as cash for capital expenditures is generated fromoperations; provided, however, Phase III must be completed, subject to the provisions of Section 17.5 ofthis Lease, no later than April 3, 2000. Before proceeding with any PhaseIII Project Increments, Tenant will, pursuant to the Construction Escrow Agreement,fund the Construction Escrow Account with respect to the applicable ProjectIncrement to the extent not then completed. Tenant, will allocate three and one half percent (3.5%) (“ApplicableGross Revenues”) of the gross revenues (“Gross Revenues”) from the RiverboatGaming Project to pay for the Project Increments and will, within twenty daysafter each March 31, June 30, September 30 and December 31occurring between the Opening Date and the date on which the ConstructionEscrowAccount has been fully funded with respect to all of the Project Increments notthen completed, deposit into the Construction Escrow Account the full amount ofthe Applicable Gross Revenues realized during the calendar quarter then ended.Tenant will provide to the City copies of all reports filed with the MissouriGaming Commission relating to Gross Revenues as well as monthly financial statements and yearly auditedfinancial statements for the Riverboat Gaming Project. Once the allocated andApplicable Gross. Revenues are sufficient to fund a Project Increment, theconstruction of which at such time is then appropriate in Tenant’s

 

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reasonablebusinessjudgmentfortheoverallbenefitoftheRiverboatGamingProject,Tenantshallsubmitanddiligentlypursuethebuildingorotherapplicablepermit.Nolaterthanthirty(30)daysaftertheissuanceofabuildingorotherapplicablepermitfromtheCityofBoonvilletoconstructaProjectIncrement,Tenantshall(i)fundtheConstructionEscrowAccountasprovidedintheConstructionEscrowAgreementtotheextentnotthenfullyfundedwithrespecttosuchProjectIncrementfromdepositsofApplicableGrossRevenues(itbeingunderstoodthatinalleventsandregardlessofinsufficientApplicableGrossRevenues,PhaseIIImustbecompleted,includingpaymentinfulloftheAdditionalPayment,subjecttoSection17.5,nolaterthanApril3,2000);(ii)enterintoConstructionContractswithcontractorsreasonablyacceptabletotheCity;and(iii)commenceconstructionofsuchProjectIncrement.ThisprocedurewillberepeatedwithrespecttoallProjectIncrements.WithoutaffectingtheobligationoftheDevelopertocompletePhaseIIInolaterthanApril3,2000,includingpaymentinfulloftheAdditionalPayment,subjecttoSection17.5,intheeventthatalloftheProjectIncrementshavebeencompletedotherthanpaymentoftheAdditionalPayment,thefundsthereafterfromtimetotimeondepositinthePhaseIIIConstructionEscrowSubaccountshallbedisbursedtotheCityasinstallmentsoftheAdditionalPaymentoneachApril30,July31,October31,andJanuary31untiltheAdditionalPaymenthasbeenpaid in full.

 

2.5.2       Tenant will not commence construction ofany portion of the Land Based Project or any Project Increment until thefollowing conditions have been satisfied or waived with respect to such portionor Project Increment by the City, in addition to any other conditions andrequirements imposed by this Lease or the Project Documents:

 

2.5.2.1     the City approves the Riverboat GamingProject Site Plan;

 

2.5.2.2     INTENTIONALLY DELETED

 

2.5.2.3     Tenant has funded the Construction EscrowAccount in the amount of $1,000,000 and has obtained all payment, performanceand completion bonds in form and amount approved by the City as required under Article 6of this Lease;

 

2.5.2.4     Tenant has obtained all permits and othergovernmental approvals necessary to commence construction;

 

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2.5.2.5     Tenant has provided to the City copies of thecontract with each of its contractors. In addition, but not as a condition of commencement of construction,Tenant shall provide to the City a copy of eachsubcontractor’s contract within ten (10) days of receipt by Tenant of eachcontract;

 

2.5.2.6     the Commencement Date has occurred;

 

2.5.2.7     the applicable portions of the Project Sitehave been transferred to the City; and

 

2.5.2.8     the contracts (the “Contracts”) with any architect,other design professional and any general contractor shall provide, in form andsubstance reasonably satisfactory to the City, for the assignment of theContracts to the City assecurity to the City for Tenant’s performance under this Lease, and Tenantshall provide the City copies of the Contracts, together with the furtheragreement of the respective parties to such Contracts,that if this Lease is terminated, the City may,at its election, use the Riverboat Gaming Project Site Plan as well as any other plansand specifications relating tothe Land Based Project upon the paymentof any future sums due to any party to the Contract. Tenant conditionallyassigns the Contracts and the Riverboat Gaming Project Site Plan to the City, effective upon the termination of thisLease and notice by the City ofits exercise of such assignment. Such assignment is self-operative upon theCity giving such notice without requirement of further action or documentationby the parties.Notwithstanding anything to the contrary contained in this Section 2.5.2.8, a “Lender”(as defined in Article 15 below) shall not be prohibited from possessing a security interest in the Contracts during the term of a “Leasehold Encumbrance” (as defined in Article 15 below) as long as the City’s rights are superior to Lender’s rights if and when this Lease terminates.

 

2.6           Critical Path.

 

2.6.1        Simultaneously with the funding of the ConstructionEscrow Account, Tenant willprovide a “Phase I/II Critical Path” to the City which will set forth the projected start date of eachimprovement in the Phase I/II LandBased Project and the Riverboat/Floating Facility, the manner in which eachimprovement in the Phase I/II Land Based Project and the Riverboat/Floating Facility will beconstructed and a projected completion date for each improvement in the Phase I/II Land BasedProject and the Riverboat/Floating Facility.

 

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2.6.2                        INTENTIONALLY DELETED

 

2.6.3                        Simultaneously with the funding of theConstruction Escrow Account for each Project Increment in the Phase III LandBased Project, Tenant will provide the City a “Phase III Critical Path”, whichwill set forth the projected start date for each such Project Increment, themanner in which such Project Increment will be constructed and a projectedcompletion date for such Project Increment.

 

2.6.4                        Tenant shall have the right to modify the Critical Path(1) for each Phase of the Riverboat GamingProject with the City’s prior written consent which consent shall not beunreasonably withheld or delayed.

 

2.7                                Project Engineer; Project Architect.  Throughout the period of construction of the Land Based Project, theProject Engineer and the Project Architect, engaged at Tenant’s sole cost, andapproved by the City, which approval may not be unreasonably withheld ordelayed, shall be retained on behalf of and for the benefit of Tenant and theCity, to monitor and check the progress of Tenant’s work on the Land BasedProject. The Project Engineer and the Project Architect will be givenreasonable access to the Project Site and all plans, specifications and other permits, documents and reports relatingto the construction of the Land Based Project.

 

2.8                                Stoppage of Construction by the City.   Where there is a material deviation from the Riverboat GamingProject Site Plan which has not been approved by the City, the City will have the right, after written notice to Tenant,and failure to cure as provided in this Lease, to order stoppage ofconstruction and demand that such condition be corrected. After issuance ofsuch an order in writing by the City, no further work will be done on theconstruction of the Land Based Project without the prior written consent of theCity, until such conditions have been substantially corrected.

 

2.9                                Completion of theLand Based Project.

 

2.9.1                        Neither any portion of the Phase I/II LandBased Project nor any Project Increment will be operated until the Project Engineer has certified the substantial completion of theinfrastructure (i.e. the streets, sewers, utilities, and parking lots) withrespect to such portion of the Phase I/II Land Based Project or ProjectIncrement, as the case may be, and the Project Architect certifies that suchportion or Project Increment has been substantially completed and the

 

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(1)                                  The Phase I/IICritical Path and the Phase III Critical Path are collectively referred to asthe “Critical Path.”

 

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City issues a temporary occupancy permit(each such date shall be the “Completion Date” with respect to the work whichTenant wishes to utilize).

 

2.9.2                        Upon completion of Phase I/II and eachrespective Project Increment, Tenant will provide the City with a complete andlegible set of all as-built plans and specifications (including all operatingmanuals for mechanical systems but excluding surveillance and security systemsand secureor sensitive areas) regarding the same, as such plans and specifications may be amended from time to time, within thirty (30) days after such as-built plansand specifications or amendments are received by Tenant. Notwithstanding the foregoing, the City, at its sole discretion, may permit operation of part of the Riverboat GamingProject prior to certification of substantial completion.

 

2.9.3                        Tenant agrees not to open the RiverboatGaming Project for business to the public until Phase I/II has beensubstantially completed.

 

2.10                          Access to theRiverboat Gaming Project and Inspection.  Tenant will advise the cityregarding the progress of negotiating and contracting for the construction ofthe Riverboat Gaming Project. The city and Tenant will meet on a mutuallyagreeable day and time, at a mutually agreeable place, on a monthly basis to discuss the status of the Riverboat Gaming Project generally. Until theconstruction of the Riverboat Gaming Project is completed, each party willuse its reasonable best efforts to keep the other informed as to the status of its efforts and all materialevents occurring with respect to the Riverboat Gaming Project. The city or its duly appointed agents may, at all reasonable times, enter uponthe ProjectSite and examine and inspect theRiverboat Gaming Project.

 

2.11                          Licenses andPermits.   Tenant will, using its best efforts, apply for and obtain all gaming licenses;occupational permits and construction licenses and approvals necessary for theRiverboat Gaming Project.

 

2.12                          Additional Improvements.   Tenant may not materially alter or (otherthan as necessary for and asdirectly related to required repairs) enlarge or structurally change anyimprovements constructed in the Project Site or construct additional improvements on the Project Sitewithout the City’s prior written consent and approval of plans andspecifications for such changes or additions, which consent and approval willnot be unreasonably withheld or delayed.

 

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ARTICLE 3RENT AND OTHER COSTS

 

3.1                                Rent.

 

3.1.1                        Notwithstanding anything to the contrarycontained in any Project Document, Tenant will pay a rent payment (the “LumpSum Rent”) of $1,700,000 to the City, as follows:

 

(1)                              the sum of Two Hundred Thousand Dollars($200,000) has been paid, which the City acknowledges it has already received;and

 

(2)                              the sum of One Million Five Hundred ThousandDollars ($1,500,000) shall be paid in two installments, as follows: (i) thefirst installment (the “First Installment”) shall be in the amount necessary tofund the design and/or engineering of the Traffic Improvements, and shall bepayable no later than ten (10) days after such amount has been determined(and the parties acknowledge thatin partial payment of the First Installment, the Tenant has advanced to theCity the sum of One Hundred Fifty Thousand Dollars ($150,000)), and (ii) thesecond installment shall be in the amount of One Million Five Hundred ThousandDollars ($1,500,000) less the First Installment (to the extent then previouslypaid), and shall be payable on or before Tenant begins construction of PhaseI/II.

 

The Lump Sum Rent will be fullyearned by the City upon the dates due in consideration of thelost opportunity to the City for alternative uses and development of the Project Site.

 

3.1.2                        Tenant’s payment ofthe Lump Sum Rent pursuant to Section 3.1.1is a condition of this Lease.

 

3.1.3                        Except as otherwiseexpressly provided in this Lease,Tenant shall be solely responsible for all obligations, including all monetary requirements under each Prime Lease.

 

3.1.4                        Other than the Lump Sum Rent and the rentrequired in each Prime Lease, there shall be no other rent, percentage rent, orany equivalent payment constituting rent or docking fees, other than Impositions (defined below) and theAdditional Payment (which is a Phase III Project Increment), required to bepaid to the City under this Lease.

 

3.2                                Rebate of Rent.   After the City has received Eight Hundred Thousand Dollars ($800,000) inFees (defined below), Tenant

 

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will receive a dollar for dollar rebate (the “Rebate”),up to $200,000, of the Lump Sum Rent for every additional dollar which the Cityreceives from the admission fees (the “Fees”) paid with respect to each gamingpassenger of the Riverboat/Floating Facility pursuant to Section 313.820.1,RSMo, or any subsequent sectionof the Missouri statutes which imposes the same**or similar admission fee (regardless of how such admission fee isidentified), during the one-year period following the Opening Date. The Cityshall pay the Rebate to Tenant within thirty (30) days of the City’s receipt ofthe Fees from the State of Missouri. Except as provided by this Section 3.2,Tenant shall not be entitled to any rebate, refund or proration of the Lump SumRent for any reason.

 

3.3                                Costs.   Except as otherwise provided inthis Lease, the Riverboat Gaming Project will be developed and operated at thesole cost of Tenant and the City will have no liability and. will bear noexpense whatsoever for any of the costs or expenses associated with theRiverboat Gaming Project.

 

3.4                                Net Lease.  After the Commencement Date, except as expressly provided in this Lease,all costs, expenses and obligations of every kind and nature whatsoeverrelating to the Project Site and/or the operation of the Riverboat GamingProject, which may arise or become due during or after the Term (but only withrespect to the period of time within the Term of this Lease), shall be paid byTenant, and the City shall be protected, defended, indemnified and heldharmless by Tenant from and against the payment of same and/or any obligationor claimed obligation to pay the same.

 

ARTICLE 4OPERATIONS AND USE

 

4.1                                Operations.  Tenant will have the right (subject to the provisions of Article 12of this Lease) and responsibility to continuously operate, subject to Section 17.5of this Lease, the Riverboat Gaming Project in the manner set forth in thisLease; provided, however Tenant may change the nature and character of thebusinesses located within the Activity Center, in Tenant’s reasonablediscretion. Tenant will keep the non-enclosed areas of the Land Based Project(including, without limitation, the amphitheater) open to the general public,without charge, as an outdoor public area provided that Tenant shall have theright to close the park areas after 11 p.m. and prior to 6 a.m. andat other times for reasonable security and safety reasons. Tenant agrees andacknowledges that the Riverboat Gaming Project is to be operated as anintegrated entertainment and gaming facility and that Tenant’s operation of theRiverboat Gaming Project is part of the City’s consideration for selecting Tenant as operator of a riverboat casinofacility, granting urban redevelopment rights to Water Street and entering into this Lease,the MasterAgreement and the other Project Documents.

 

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4.2                                Use of the Project Site.

 

4.2.1                        Tenant will conduct its gaming business, andoperate the Riverboat Gaming Project, in all respects in a quality manner and in accordance with the highest standards of operationfor similar businesses on the Missouri and Mississippi Rivers in Missouri. TheRiverboat Gaming Project will not be operated in any manner which is unlawful,immoral or would constitute a nuisance. Toward that end, Tenant agrees that it will not sell,distribute, display or offer to sell any item, or permit any subtenant,licensee or concessionaire in the Project Site, to sell, distribute, display or offer to sell any item, which isinconsistent with the quality of operation and theambiance and character of the RiverboatGaming Project, or which might tend to injure or detract from the moralcharacter or image of the Riverboat Gaming Project. Without limiting thegenerality of the foregoing, Tenant will not permit the sale, distribution, display or offer for sale of (i) any roach clip, water pipe, toke,coke spoon, cigarette papers, hypodermic syringe or other paraphernaliacommonly used in the use or ingestion of illicit drugs, or (ii) anypornographic newspapers, books, magazines, films, performance pictures, video,representation or merchandise of any kind.

 

4.2.2                        Tenant will, at its expense: (i) keep the Riverboat Gaming Project clean, including but not limited to the removalof ice and snow from all streets, traffic ways, alleys, walkways, parking lots,and other areas within the ProjectSite reasonably requested by the City, and in a sanitary condition; (ii) replacepromptly any broken glass; and (iii) keep any garbage, trash, rubbish or other refuse in City approved containers until removed, which will be done on areasonable basis; and (iv) Tenant will, at its cost, use its reasonablebest efforts to keep the Riverboat Gaming Project free of rodents, verminand other pests.

 

4.3                                Traffic.  Tenant and the City will agree upon a traffic flow plan which provides that traffic may gain access to the RiverboatGaming Project while minimizing the usage of the residential streets in the vicinity of the Project Site.

 

4.4                                Employment.  Tenant will give preference to residents of and businesses located inthe City of Boonville as well as minority owned and women owned businesses withrespect to employment in connection with theconstruction and operation of the Riverboat Gaming Project subject to allfederal, state and local employment and anti-discrimination laws and subject to their ability to perform.

 

4.5                                Security/Safety.  Tenant will implement and carry out reasonable security and safetymeasures for the Riverboat Gaming

 

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Project. This obligation shall in no waylessen the obligation of the City to provide normal police and law enforcementservices to Tenant and the Riverboat Gaming Project as are available to otherbusinesses located in the City of Boonville. The City and Tenant agree tocooperate to implement satisfactory coordination between the security providedby Tenant and the City’s police responsibilities.

 

4.6                                 Thespian Hall.  Tenant will coordinate activities at the Land Based Project with thoseof Thespian Hall to promote year round activities at Thespian Hall. Tenant willensure that activities at. the Land Based Project will not compete withactivities at Thespian Hall. It is expressly acknowledged that the operations of theRiverboat/Floating Facility shall not be deemed competition with the activities of Thespian Hall.

 

ARTICLE 5REPAIRSAND MAINTENANCE

 

5.1                                 Maintenance andRepairs.   Tenant, at its sole cost, will repair,maintain and care for the Riverboat Gaming Project and shall keep the same ingood order and condition, except for reasonable wear and tear, and shall makeall necessary repairs, interior and exterior, structural and nonstructural. Allrepairs and maintenance will be of at least the samequality as the original work,ordinary wear and tear excepted.

 

5.2                                 Maintenance ReserveFund.   Prior to Opening Date, Tenant will establish arepair and maintenance reserve fund (the “Maintenance Reserve Fund”) which will equal the annual estimated “RecurringRepair and Maintenance Expenditures” (as defined below) for the portion of theLand Based Project to be completed by the Opening Date. The Maintenance ReserveFund will be adjusted yearly to the prior year’s Recurring Repair andMaintenance Expenditures for the portion of the Land Based Project completed on the first day of the prior year plus an amount equal to the reasonable annualestimated Recurring Repair and Maintenance Expenditures for any other portionof the Land Based Project to be used during the then commencing year. Tenantwill each year deposit additional funds into the Maintenance Reserve Fund asneeded to bring the balance of the Maintenance Reserve Fund to the level required for the year commencing. The Maintenance Reserve Fund will be held by the City, as landlord, in aninterest bearing account with all interest to be paid to Tenant, and may be used by the City if Tenant defaults in its repairor maintenance obligations under the Project Documents or if this Lease and/orthe Master Agreement terminates. As used herein, “Recurring Repair andMaintenance Expenditures” means expenditures, whether or not capitalized, forrepair and maintenance in the ordinary course of operation of the Land BasedProject: (i) of the improvements at the Land Based Project, and (ii) ofthe landscaping at the Project Site. Recurring Repair and MaintenanceExpenditures shall not include, however: (a) costs of

 

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snow removal, lawn mowing, janitorialservices and other routine operating expenses, or (b) the amount of any extraordinary capitalexpenditures by Tenant for major replacement of or additions to the landscapingat the Project Site or the improvements at the Land Based Project.

 

5.3                                 No ServicesFurnished.   The City shall not be required to furnish toTenant any utilities, facilities or services of any kind whatsoever during the Term other than normal fire,police and other law enforcement services as are available to other businessesin the City of Boonville; provided, further, that if the City also operates anypublic utility, then such services from such public utility will be availableto Tenant and Tenant shall pay to the City for such services the same rates asany other commercial customer of similar size. The City shall in no event berequired to make any alterations, rebuildings, replacements, changes,additions, improvements or repairs during the Term.

 

ARTICLE 6INSURANCE

 

6.1                                 Insurance Coverages.  Tenant will continuously throughout the Term provide, at its sole cost,the following insurance for the RiverboatGaming Project in amounts approved by the City: standard property perilinsurance in the amount of full replacement value, excluding foundation and footers; flood and earthquake insurance to the extent reasonably availablein the amount of replacement value for the Land Based Project; commercial(comprehensive) liability insurancepolicies, including (but not limited to) bodily injury, property damage,contractor’s liability coverage, with broad form property damage endorsement orits equivalentwith initial limits of no lessthan $1,000,000 per occurrence and $2,000,000 in the aggregate; completion andperformance bond in standard form and in an amount not less than the totalamount of the contract for the work to be completed under such contract on theRiverboat Gaming Project;comprehensive automobile liability insurance with initial limits of no less than $1,000,000 per occurrence and$1,000,000 in the aggregate; builder’s risk and (if Tenant is contracting for aboat to be built) ship builder’s risk insurance; umbrella and excess umbrella insurance with initial limits of no less than$10,000,000; and Workers’ Compensation, Longshoreman and Harbor Workers andMaritime Liability (Jones Act Coverage) insurance policy or similar insurancein form and amounts required by law, including employer’s liability. Alllimits set forth in this Lease shall annually be adjusted for inflation.Notwithstanding the foregoing, in lieu of Tenant obtaining such completion and performance bond, Tenant may, at its option, provide a guarantyin form and content reasonably acceptable to the City on the part of a person or entity of financial strength reasonably acceptable to the City guaranteeing to the City, in theevent the contractor fails to perform under the construction contract and theconstruction contract is terminated as a result thereof, the

 

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payment of that amount, if any, which isincurred by the City in causing the completion of the work which is the subjectof the construction contract and which exceeds the contract price under the construction contract at the time of thecontract’s termination (exclusive of any net increase solely attributable tochange orders modifying the scope of the work and generated by the City afterthe contract’s termination or other cost increases solely attributable to actsor omissions of the City).

 

6.2                                 Named Insureds.   Allpolicies of insurance provided for in this Article 6 shall name Tenant asthe insured, and the City as an additional named insured, as their respectiveinterests may appear. Prior to the Commencement Date, and at least thirty (30)days before the expiration of each policy then in force, Tenant shall deliverto the City certificates evidencing the existence of all required insurancepolicies.

 

6.3                                 Waiver ofSubrogation and Release.   Provided that the following can be obtainedand at a reasonable cost. (Tenant acknowledging that as of the date of thisLease, the following can be obtainedand at a reasonable cost), each such policy shall contain an endorsementcontaining a waiver of subrogation so that no act or omission of the City oranyone operating under rights granted by it shall affect or limit theobligation of the issuing insurance company to pay the amount of any losssustained. Tenant for itself and all parties claiming by, through or under it,release and discharges the City, its officers and agents, from all losses, damages, claims or liabilities arising by reason of any perilinsurable (subject to exceptions and exclusions of such policy) pursuant to theproperty peril insurance policy required under Section 6.1 hereof.

 

6.4                                 Cancellation/Modification Notice.  Each such policy or certificate issued by the insurer shall contain anagreement by the insurer that such policy shall not be canceled, modified,nonrenewed or amended without at least thirty (30) days prior written notice tothe City.

 

ARTICLE 7INDEMNIFICATION

 

7.1                                 Indemnification of the City.  Tenant will defend, indemnifyand hold harmless the City against and in respect of any obligation, liability(excluding any exemplary damages) or expense (including court costs andreasonable attorneys’ fees) incurred by the City as a result of any claim oraction brought against the City arising out of the acquisition, development oroperation of the Riverboat Gaming Project or in connection with the Project Site or the Riverboat Gaming Project except damages arising out of the negligence or willfulmisconduct of the City, its agents and employees, or the City’s failure toproperly follow the statutory

 

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and other governing rules and proceduresrequired of the City to properly take an action.

 

7.2                                 Indemnification of Tenant.   TheCity will defend, indemnify and holdharmless Tenant against and in respect of any obligation, liability (excluding any exemplary damages) or expense(including court costs and reasonable attorneys’ fees) incurred by Tenant as a result of any claim or actionbrought against Tenant arising out of any (i) negligence or willfulmisconduct of the City or its agents or employees, as landlord, or (ii) any misfeasance or malfeasance of theCity or its agents or employeesin its capacity as a governing body, in connection with the Project Site or the Riverboat Gaming Project.

 

7.3                                 Notification.   Theparty seeking indemnification (the “Indemnitee”) shall notify the party fromwhom indemnification is sought (the “Indemnitor”) in writing of any action,suit or proceeding for which indemnification is sought and the Indemnitor shallhave the right to retain counsel of the Indemnitor’s reasonable choice and atthe sole cost of the Indemnitor, to defend the Indemnitee; provided, however,the Indemnitor shall not enter into any settlement without the prior writtenconsent of the Indemnitee, which consent shall not be unreasonably withheld ordelayed.

 

ARTICLE 8TAXING AND DESTRUCTION OF PROJECT SITE

 

8.1                                 Taking of Facilities.   Ifall or any part of Tenant’s leasehold interest under this Lease is takenthrough powers of eminent domain exercised by a governmental entity other thanthe City, Tenant shall receive 90% and the City shall receive 10% of thecondemnation award. If any part of the Project Site is taken through theexercise of eminent domain, Tenant shall have the right to reconfigure theProject Site and modify the Riverboat Gaming Project as necessary as the resultof the eminent domain. The City shall not grant any eminent domain rightswith respect to the Project Site other than to Water Street so long as this Lease remains in effect.

 

8.2                                 Destruction of Riverboat Gaming Project.   Ifnonmaterial damage or destruction occurs with respect to all or any part of theRiverboat Gaming Project during the Term, Tenant shall rebuild that portion ofthe Riverboat Gaming Project destroyed and all work performed shall be of atleast equal quality to the original work, ordinary wear and tear excepted. Ifmaterial damage or destruction occurs with respect to all or any part of the Riverboat Gaming Project during the Term,Tenant may rebuild that portion of the RiverboatGaming Project destroyed and all work performed shall be of at least equalquality to the original work, ordinary wear and tear excepted; provided,however if Tenant elects not to rebuild then Tenant shall pay to theCity (i) all insuranceproceeds, other

 

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than any loss of income or loss of businessproceeds, payable with respect to the Land Based Project together with thedeductible amount under the insurance policy(ies) with respect to which Tenantis to pay the proceeds to the City or (ii) if the amount of the damagedoes not exceed the deductible, the amount of the damage, and this Lease shallterminate.

 

ARTICLE 9COMPLIANCE WITH LAWS

 

9.1                                General Compliance.  During the Term, Tenant, at its sole cost, shall promptly comply withall applicable present and future laws, ordinances, orders, rules, regulationsand requirements of all federal, state and municipal governments, departments, commissions, boards and officers, or other body or bodiesexercising similar functions, foreseen or unforeseen, ordinary as well asextraordinary, which may be applicable to the Riverboat Gaming Project.

 

9.2                                Environmental Matters.

 

9.2.1                        Negative Covenants.   Tenant covenants and agrees not to: (i) bring to or place onthe Riverboat Gaming. Project any Hazardous Materials (defined below) otherthan in such Quantities as are reasonably necessary in connection with theconduct of Tenant’s business at the Riverboat Gaming Project; (ii) dump, flush or otherwise dispose ofany Hazardous Materials (defined below) into the Missouri River or anydrainage, sewage or waste disposal systems serving the Riverboat Gaming Project; (iii) generate,store or use (other than in suchquantities as are reasonably necessary in connection with the conduct of Tenant’sbusiness at the Riverboat Gaming Project), release, spill or dispose of any Hazardous Materials (defined below) in or on theRiverboat Gaming Project except in strict compliance with Environmental Laws (defined below); (iv) transferor transport any Hazardous Materials (defined below) from the Riverboat GamingProject to any other location except in strict compliance with Environmental Laws (defined below); (v) commit or allow to be committed in or on the Riverboat GamingProject any act which would require anyreporting or filing of anynotice with any governmental agency pursuant to any Environmental Law (defined below).

 

9.2.2                        Removal.   Tenant agrees that if duringthe Term it or anyone shall generate, store (other than in such quantities as are reasonably necessary in connection with theconduct of Tenant’s business at the Riverboat Gaming Project), release, spill,dispose of, or transfer or transport (other than in such quantities as are, reasonably necessary inconnection with the conduct of Tenant’s business at the Riverboat. Gaming Project) to the Riverboat Gaming Project any

 

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“Hazardous Materials” (defined below), Tenant willimmediately remove the same, at its sole cost, in the manner provided by all applicable “EnvironmentalLaws” (defined below); regardless of when such Hazardous Materials arediscovered. Furthermore, Tenant shall (i) pay and (ii) indemnify,defend and hold the City harmless against, all fines, penalties, claims,demands and other assessments (including without limitation, remediation costsand environmental damages) imposed or brought by any governmental agency orothers with respect to any Hazardous Materials and will immediately repair andrestore any portion of the Riverboat Gaming Project and/or the Missouri Riverwhich it damages or disturbs in removing any such Hazardous Materials andremediating the Riverboat Gaming Project to the condition which existed priorto the damage \or disturbance.

 

9.2.3                Notification.Tenant shall deliver promptly totheCity any notices, orders or similar documents received from anygovernmental agency or official concerning any violation ofany Environmental Laws or with respect toany Hazardous Materials affecting oremanating from the Riverboat GamingProject.

 

9.2.4                Definitions.

 

9.2.4.1     Asused in this Lease, the term “Hazardous Materials” shall be interpreted broadly to mean andinclude any oils, petroleum, petroleum by-products,asbestos, polychlorinated biphenyls, ureaformaldehyde, and any other toxic or hazardous wastes, materials, pollutantsand substances which are defined, classified., determined or identified as suchin any Environmental Laws, or in any judicialor administrative interpretation ofEnvironmental Laws.

 

9.2.4.2     Asused in this Lease, “Environmental Laws” shall mean all federal, state, localand foreign statutes, laws, regulations, ordinances, rules, judgments, orders,decrees, codes, plans, injunctions, permits, concessions, grants, franchises,licenses, agreements or other governmental restrictions relating to theenvironment or to emissions, discharges or releases of pollutants,contaminants, petroleum or petroleum by-products, chemicals or industrial,toxic or hazardous substances, materials or wastes into the environmentincluding, without limitation, ambient air, surface water, ground water orland, or otherwise relating to the manufacture, processing, distribution, use,treatment, storage, disposal, transport or handling of pollutants,contaminants, petroleum or petroleum products, chemicals or industrial, toxicor hazardous substances or wastes or their cleanup or other remediation.

 

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9.2.5        Survival.   The obligations of Tenantcontained in this Section 9.2 shall survive the termination of this Lease.

 

9.3           Inspection Rights.   The City, its officers,employees, contractors and agents shall have the right, but not the duty, toinspect the Project Site and Tenant’s relevant environmental, land use andother documents, and to perform such tests on the Project Site and the adjacentriver as are reasonably necessary to determine whether Tenant is complying withthe material terms of.this Article 9at any reasonable time, so long as such inspection does not reasonablyinterfere with Tenant’s ongoing business operations. The City shall beresponsible for any and all damage it, its officers, employees, contractors oragents cause, with respect to theProject Site and/or the Riverboat Gaming Project as the result of theirinspection or testing hereunder.

 

ARTICLE 10IMPOSITIONS AND CONTEST

 

10.1         Impositions.          Tenant will pay or causeto be paid, subject to Section 10.5 of this Lease, all current andpast due taxes, including but not limited to ad valorem taxes and specialassessments which constitute or will constitute if not paid, a lien on the Project Site, the Land BasedProject, the leasehold interest created by this Lease, or the “Improvements andPersonalty” (definedbelow) (subject toSections 3.1.4 and 16.1) (collectively referred to as the “Taxes”) prior to theTaxes being past due, which at any time on or afterthe.Commencement Date may be assessed, levied,confirmed, imposed upon, and/or become due and payable during the balance, if any, of the Term; provided,however, that if, by law, any Taxes may, at the option of the taxpayer, be paidin installments, Tenant may pay the same in equal installments over the periodof time allowed by law, provided, however, that Tenant shall pay all suchinstallments remaining unpaid at the termination of this Lease. It is theintention of the parties that the Land.Based Project, the leasehold interestcreated by this Lease and the.Improvements and Personalty will be subject to taxation underMissouri law notwithstanding that the land constituting the Project Site is owned by the City.

 

10.2         Furnished Receipts.   Tenant, upon written request ofthe City, shall furnish to the City, within thirty (30) days after the date ofsuch request, official receipts of payment issued by the appropriate taxingauthority, or other evidence of payment satisfactory to the City.

 

10.3         Utilities.  During the Term, Tenant shall be solely responsible for paying for allutilities required for operation of the Riverboat Gaming Project and shall makeall payments for or with respect to the same on a timely basis.

 

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10.4         Protection against LienClaims.   All work on the Land Based Project will beperformed by Tenant in such a manner that the Land Based Project will remainfree and clear at all times of all liens and encumbrances of any nature exceptfor Taxes not yet due and payable and liens created by persons working underthe direction of the City for which payment is not the responsibility ofTenant. Subject to the foregoing, Tenant willpromptly pay and discharge all claims andliens in connection with the Land Based Project. Notwithstanding the foregoing,Tenant shall not be liable for any liensor encumbrances for work performed on theProject Site after Tenant relinquishes possession of the Project Site except as provided in this Lease.

 

10.5         Contest of Liens, Laws and Taxes.   Tenant shall have the right, after prior writtennotice to the City, to contest by appropriate administrativeand/or legal proceedings, diligentlyconducted, in good faith, without cost or expense to the City, unless and tothe extent that the City is the defendant to the action that.Tenant brings, thevalidity or application of any Taxes, Utilities charges, liens or laws(collectively “Impositions” and individually “Imposition”), subject to thefollowing:

 

10.5.1      if,by the terms of any Imposition, compliance therewith pending the prosecution ofany such proceeding may legally be delayed without the occurrence of any lien,charge or liability of any kind against the Project Site, the leaseholdinterest created by this Lease, the Land Based Project or the.Improvements andPersonalty, or the operation of the Riverboat Gaming Project, and withoutsubjecting Tenant or the City to any liability, civil or criminal, for failureso to comply therewith, Tenant may delay compliance until the finaldetermination of such proceeding: or

 

10.5.2      ifany lien, charge or civil or criminal liability would be incurred by reason ofany such delay, Tenant nevertheless may contest as aforesaid and delay asaforesaid, provided that such delay would not subject the City to criminalliability, and Tenant furnishes to the City satisfactory evidence of securityto the City against any loss or injury by reasonof such contest or delay, if required by theCity. If Tenant posts a bond in the amount of the Imposition under contest,Tenant shall be deemed to have provided reasonable security.

 

10.6         City Joinder In Contest.   Tothe extent legally necessary to enable Tenant tolawfully exercise its rights under this Lease to contest an Imposition, theCity shall, at Tenant’s expense, join in any such contest in which the City isnot the defendant or adverse party.

 

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ARTICLE 11

TEE CITY’S PERFORMANCE OF TENANT’S COVENANTS

 

11.1         The City’s Right toPerform.   IfTenant fails to pay any Imposition in accordance with this Lease, or to takeout, pay for, maintain or deliver any of the insurance policies or certificatesas provided for in this Lease, or fails to make any other payment or performany other act on its part to be made or performed under this Lease, then theCity, after written notice to Tenant and Tenant’s failure to cure the samewithin thirty (30) days after such notice (or immediately without notice oropportunity to cure in the event of an emergency),may (but shall be under no obligation to) (i) payany Imposition or other charge payable by Tenant pursuant to this Lease, or (ii) takeout, pay for and maintain any of the insurance policies provided for in thisLease, or (iii) make any other payment or perform any other act on Tenant’spart to be made or performed under this Lease, and may enter upon the Project Site for any such purpose, and take all such action, as may be necessary. No suchpayment or performanceby the City will waive or release Tenant from its obligation which the City haselected to pay or perform on behalf of Tenant nor waive the City’s right to take such action as may be permissible underthis Lease as a result of such default.

 

11.2         Repayment by Tenant. All sums so paid by the City and all costsand expenses incurred by the City (including without limitation fees ofattorneys and other professionals) in connection with the performance of anysuch act, shall bear interest until repaid to the City at the rate of 300 basis points above the prime rate of Boonslick Bank in Boonville,Missouri and shall be paid by Tenant to the City within five (5) daysafter demand.

 

ARTICLE 12

TERMINATION

 

12.1         Termination Events.

 

12.1.1      Thefollowingevent“TerminatingEvents”)shallviolateconditionstoperformancebytheCityofitsobligationunderthisLease,andshallconstitutetheonlygroundsfortheCityterminatingthisLease:(i)subjecttoSection17.5ofthisLease,thefailureofTenanttocompleteconstructionofPhaseI/IIoftheLandBasedProjectnolaterthanApril3,2001;(ii)subjecttoSection13.2.1ofthisLease,thetotalabandonmentoftheLandBasedProject;(iii)  subjecttoSection13.2.1andSection17.5ofthisLease,theceasingofgamingactivitiesatorfromtheProjectSiteforaperiodofmorethanthirty(30)consecutivedays;(iv)thefailureofTenanttokeepthepublicparkareas(whichincludetheamphitheaterarea)opentothepublic(butsubjecttosuchrightsofclosureasareprovidedinSection

 

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4.1 of this Lease) after notice and reasonableopportunity to cure; (v) the failure of Tenant to pay the rent requiredunder Section 3.1 of this Lease; (vi) the failure of Tenant to complywith Section 2.5 of the Master Agreement after notice and reasonable opportunity to cure; (vii) thefailure of Tenant to operate the Riverboat Gaming Project pursuant to Section 4.1of this Lease after notice and reasonable opportunity to cure; (viii) the failure of Tenant to maintain insurance as required pursuant to Article 6 of this Lease; (ix) thefailure of Tenant to pay any City expenses which are the responsibility ofTenant pursuant to this Lease or the Master Agreement or other monetary amountswhich the City advances for the benefit of Tenant (and which the City has the right to advance under the terms ofthis Lease or the Master Agreement) after notice and reasonable opportunity tocure; (x) the termination of the Master Agreement; or (xi) subject to Section 17.5 of this Lease, the failure of the Opening Date to occur by April 3, 2001.

 

12.1.2      Upontermination of this Lease, all improvements to the Project Site, and all improvements, equipment, fixtures,trade fixtures and personal property (except solely those artifacts, objects ofart and similar discreet items which are in good faith merely loaned or madeavailable to Tenant for display atthe Riverboat Gaming Project and so designated bywritten notice to the City within thirty (30) days after such item is first placed upon the Riverboat GamingProject) constituting the Land Based Project(the “Improvements and Personalty”) shallautomatically become the sole and exclusive property of the City. Until thetermination of this Lease, the Improvements and Personalty shall be theproperty of the Tenant. In the event that the Riverboat Gaming Project isconstructed in accordance with the Preferred Site Configuration, then the term “Improvementsand Personalty” shall include theRiverboat/Floating Facility (but not interiorgaming equipment and other personalty located therein, which shall be theproperty of Tenant in all events and regardless of whether the Riverboat GamingProject is constructed in accordance with the Preferred Site Configuration or the Alternate SiteConfiguration) and the Holding Pond. In the event that the Riverboat Gaming Project is constructed in accordance withthe Alternate Site Configuration, then theRiverboat/Floating Facility will remain theproperty of.Tenant and may be removed by Tenantupon the terminationof this Lease. During the Term, Tenantwill satisfy any liens or encumbrances and prevent, except as otherwise provided in this Lease, any lien or encumbrance from beingfiled against the Project Site orthe Improvements and Personalty other than for ad valorem property taxes and special assessments not yet due and payable, so that the Project Site and the Improvements and Personalty will at all

 

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times during the Term be free and clear of all liensand encumbrances.

 

12.1.3      Tenantagrees that the City shall be entitled to thebenefit of all provisions of law respecting the summary recovery of possessionof the Project Site. Tenant agrees that if it fails to surrender possession of the Project Site andthe Improvements and Personalty, Tenant shall be liable to the City for alldamages which the City shall suffer from Tenant’s failure to surrenderpossession.

 

12.2         Surrenderand Delivery of the Project Site.Tenant shall, upon the termination of this Lease,deliver possession of the Project Site and the Improvements and Personalty tothe City without delay and in good order, condition and repair, except forreasonable wear and tear, and free and clear of all occupancies, subleases,concessions and licenses, and free and clear of allliensand encumbrances. In the event that the Riverboat Gaming Project is constructedin accordance with the Alternate Site Configuration, then theRiverboat/Floating Facility shall not constitute part of the Land Based Projectand shall remain the sole property of Tenant upon termination of this Lease.

 

12.3         Personal Property NotRemoved. Tenant shall remove all of Tenant’s personal property which does not constitute the Personalty from the Project Site upon terminationof this Lease. Any personal property of Tenant which remains in or on theProject Site after thirty (30) days from the termination of this Lease may, atthe option of the City, be deemed to have been abandoned by Tenant and eitherretained by the City as its property or disposed of in such manner by the Cityas the City may see fit.

 

12.4         The City Not Responsible. After termination of this Lease, the Cityshall not be responsible for any loss or damage occurring to any personalproperty owned by Tenant or any sublessee, licensee or franchisee of Tenant or any of theirrespective suppliers, customers or invitees.

 

12.5         Restoration. If the Riverboat Gaming Project isconstructed in accordance with the Alternate Site Configuration, then followingtermination of this Lease, Tenant will, if requested in writing by the Citywithin thirty (30) days after this Lease terminates, remove the Holding Pond.If the City does not request removal of the Holding Pond within thirty (30)days after termination of this Lease, the Holding Pond shall become theproperty of the City.

 

12.6         survival. Every obligation of Tenant under this Lease andeach Prime Lease which relates tothe Riverboat Gaming Project or the occupancy by Tenant of the Project Site,including the Railroad Portion and the DNR Portion, shall survive the terminationof this Lease and the applicable Prime Leaseand shall not

 

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terminate until such obligation is fully satisfied by Tenant. Notwithstanding the foregoing, Tenant shallincur no obligation or liability under either this Lease or any Prime Leasewhich arises after the termination of this Lease or such Prime Lease, as the case may be, other than obligations or liabilities which result from any action by Tenant, its agents or employees or from theoccupancy of the Project Site by Tenant or relate to the period of time thatTenant occupied the Project Site.

 

ARTICLE 13DEFAULT AND REMEDIES

 

13.1         Default. The following constitute a “Default” underthis Lease:

 

13.1.1      Failureto perform or observe any covenant, obligation or agreement of this Lease whichfailure continues uncured for thirty (30) days after written notice from theCity; provided that if such Default is of such a nature that it cannotreasonably be cured within such thirty (30) day period, then so long as Tenantcommenced cure efforts within the thirty (30) day period and diligently pursuescompletion of such cure, the thirty (30) day period will be extended for suchperiod of time as is reasonably necessary to complete such cure.

 

13.1.2      Theoccurrence of any other event described as constituting a “Default” in theProject Documents, which is not cured within any applicable notice and cureperiod.

 

13.2         Remedies.

 

13.2.1      Iffor any reason Tenant abandons the Phase I/II portions of the Land BasedProject at any time on or after the date the Acquisition Escrow Account isfunded by Tenant in accordance with this Lease Agreement and the MasterAgreement, then Tenant shall have the right to attempt to sell its interest inthe Riverboat Gaming Project (including but not limited to an assignment of itsinterest under this Lease) in accordance with the provisions of Section 1.6.2of the Master Agreement, and in the event of such abandonment, the rights andremedies of Tenant and the City in connection therewith shall be as providedfor, and as limited in, Sections 1.6.2, 1.6.3 and 1.6.4 of the MasterAgreement.

 

13.2.2      Thecessation of gaming activities at or from the Project Site for period of 30consecutive days or more shall,unlesscaused by the matters provided for in Section 17.5 of this Lease, bedeemed to constitute an abandonment of the Phase I/II portions of the LandBased Project, and in such event the parties shall have the rights and remediesprovided for in Section 13.2.1 above;provided,

 

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however,thatunlesssuchcessationofgamingactivitieswasavoluntaryactbyTenant,TenantshallhavetherighttopromptlycommencesuchactionasmaybenecessaryorappropriatetopermittheresumptionofgamingactivitiesatorfromtheProjectSite,andsolongasTenantisdiligentlypursuingsuchaction,thecessationofgamingactivities(i)shallnotbeconsideredanabandonmentofthePhaseI/IIportionsoftheLandBasedProject,and(ii)shallnotpermittheCitytoterminatethisLeaseinaccordancewithclause(iii)ofSection12.1.

 

13.2.3      IfaDefaultarisesfromTenant’sfailuretocompletePhaseIII(otherthanpaymentoftheAdditionalPayment)asandwhenrequiredundertheProjectDocuments,withinthirty(30)daysafterreceivingwrittennoticeofsuchDefaultfromtheCity,Tenantwill(i)curesuchdefault,(ii)notifytheCityinwritingthatsuchfailureisforreasonsbeyond.itscontrol,orduetoeventsorcircumstanceswithinthescopeofSection17.5ofthisLease,thatarethenreasonablylikelytocontinueindefinitely,or(iii)notifytheCitythatsuchfailureisduetoeventsorcircumstanceswithinthescopeofSection17.5thatarenotthenlikelytocontinueindefinitely.Inthecaseofclause(ii)above,theCitywillbeentitledtoanamountequaltotheactualreasonablecostofcompletionoftheuncompletedProjectIncrement(s),andTenantwillaccompanyitswrittennoticereferredtoinclause(ii)abovewithpaymenttotheCityofitsestimatedcostofcompletionofsuchProjectIncrement(s)(withTenantremainingobligatedtopaytheactualreasonablecostthereof,ifgreater,andtheCityremainingobligatedtorefundanyexcessofsuchpaymentovertheactualreasonablecostthereof,iflower).Inthecaseofclause(iii)above,solongasTenantcommencedcureeffortswithinthirty(30)daysafterreceivingwrittennoticeofsuchDefaultfromtheCityanddiligentlypursuescompletionofsuchcure,thethirty(30)dayperiodwillbeextendedasreasonablynecessarytocompletesuchcure.IfaDefaultarisesfromTenant’sfailuretofullypaytheAdditionalPaymentasandwhenrequiredundertheProjectDocuments,Tenantshallhaveaperiodofthirty(30)daysafterreceiptofwrittennoticeofsuchDefaultfromtheCitytocuresuchDefault.

 

If the City disagrees with the position takenin Tenant’s notice referred to in the foregoing paragraph, then it will within thirty (30) days of receiving such notice so notify Tenant in writing, and, unless the parties otherwise agree, the dispute will be submitted toarbitration in St. Louis, Missouri under the Commercial Arbitration Rules ofthe American Arbitration Association. The decision of the arbitrator(s) shallbe binding and conclusive on the City and Tenant, and a judgment on the award may be entered by anycourt having jurisdiction. In addition, if theposition taken

 

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by Tenant in its written notice to the City was as**specified in clause (ii) above, then the City’s written notice madepursuant to this paragraph will be accompanied by a return of the paymenttendered by Tenant.

 

ARTICLE 14

BANKRUPTCY

 

14.1         Events of Bankruptcy.   The following shall be “Eventsof Bankruptcy” under this Lease:

 

14.1.1      Tenant’shaving been adjudicated insolvent, as that term is defined in 11 U.S.C. § 101, et. seq*.*(the“Bankruptcy Code”), or under the insolvency laws of any state, district,commonwealth or territory of the UnitedStates (the “Insolvency Laws”);

 

14.1.2      theappointment of a receiver or custodianfor all or a substantial portion of Tenant’sproperty or assets, or the institution of a foreclosure action upon all or asubstantial portion of Tenant’s real or personal property;

 

14.1.3      thefiling of a voluntary petition by Tenant under the provisions of the BankruptcyCode or Insolvency Laws;

 

14.1.4      thefiling of an involuntary petition against Tenant as the subject debtor underthe Bankruptcy Code or Insolvency Laws, which is either not dismissed within sixty (60) days of filing, or results in theissuance of an order for relief against the debtor,whichever is later; or

 

14.1.5      Tenant’smaking or consentingto an assignment for the benefit of creditors or a common law composition of creditors.

 

14.2         The City’s Remedies.

 

14.2.1      Termination of Lease.          Upon the occurrence of anEvent of Bankruptcy, the City shall have the right to terminate this Lease by giving written notice to Tenant, and Tenant shall be immediately obligated to quit the Project Site. Any othernotice to quit, or notice of the City’s intention to reenter, is expresslywaived. If the City elects to terminate thisLease, everything contained in this Lease on the part of the City to be done andperformed shall cease without prejudice,subject, however, to the right of the City to recover from Tenant all amountsowed up to the time of termination or recovery of possession by the City,whichever is later,and any other monetary damages or losses sustained by the City; provided,however, and notwithstanding the

 

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foregoing or the further remedies set forth in this Section 14.2,the City shall not have the**rightto terminate this Lease while a case in which Tenant is the subject debtorunder the Bankruptcy Code is pending, unless Tenant or its trustee in bankruptcy (the “Trustee”)is unable to comply with the provisions ofSections 14.2.5 of this Lease.

 

14.2.2      Suit for Possession.             Upon termination of this Lease pursuant to Section 14.2.1 of this Lease, the City may proceed to recover possession under and by**virtue of the provisions of the laws of**Missouri or by such other proceedings, including reentry and possession, as may be applicable.

 

14.2.3      Reletting of Project Site.     Upon termination of this Leaseunder Section 14.2.1 of this Lease, theCity shall have the option to relet the Project Site for such rent andupon such terms, in the City’s sole discretion. The City shall not be liable inany way whatsoever for failure to relet the Project Site or, if the Project Site is relet, for failure to collect the rentunder such reletting, and in no event shall Tenant be entitled to receive the excess, if any, of suchnet rent collected over the sums payable by Tenant to the City under thisLease.

 

14.2.4      Monetary Damages.            Anydamage or loss sustained by the City as a result of an Event of Bankruptcy maybe recovered by the City in any manneravailable at lawor in equity. However, if Tenant becomes the subject debtor in a case pending under theBankruptcy Code, the provisions ofthisSection 14.2.4 may be limited bythe limitation of damage provisions ofthe Bankruptcy Code.

 

14.2.5      Assumption or Assignment by Trustee. If Tenant becomes the subject debtor in**a case pending under the Bankruptcy Code, the City’s right to terminatethis Lease pursuant to this Article 14 shall be subject to the rights of the Trustee to assume or assign this Lease.The Trustee shall not have the right to assume or assign this Lease unless theTrustee (i) promptly cures all Defaults under this Lease and all otherProject Documents (ii) promptly compensates the City for monetary damageswhich the City has established to the satisfaction of the Bankruptcy Court thatit has incurred as a result of such Defaults, (iii) provides “adequateassurance of future performance”, and (iv) complies with Article 15of this Lease.

 

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ARTICLE 15ASSIGNMENT/SUBLEASE/ENCUMBRANCE

 

15.1         Assignment, Subletting and Other Transfers.

 

15.1.1      Subject to Sections 15.1.3, 15.1.4 and15.1.5, Tenant may not assign this Lease, or sublet the Land Based Project, in whole or in part, without the City’s prior written consent (which may not be unreasonably withheld). No suchassignment or sublease, even if so consented to, will be effective until theCity receives and approves an executed counterpart of such assignment orsublease, in recordable form, under which the assignee assumes all obligationsof Tenant under this Lease. This Article 15 shall not be construed toprevent Tenant from assigning its rights pursuant to Section 16 of theMaster Agreement provided that Tenant complies with this Article 15. Notwithstandingthe foregoing, Tenant may sublease individual premises within buildings thatconstitute part of the Land Based Project (for example, without limitation, asublease of a restaurant facility) without the prior consent of the City; provided,however, that each such sublease will terminate upon the expiration or sooner terminationof this Lease and will provide that such sublease is subject to all of the terms and conditions of this Lease.

 

15.1.2      Subject to Sections 15.1.3, 15.1.4 and15.1.5, any transfer, whether voluntary, involuntary or by operation of law, or any issuance by Tenant, of shares of stock or other interestsof a proprietary nature in Tenant or its successor which, whether through atransaction or series of transactions, results in the Trusts or their PermittedTransferee(s) (definedbelow) ceasing to own at least51% of all of the issued and outstanding shares ofstock and other interests of aproprietary nature in Tenant may not occur without the prior written consent ofthe City (which may not unreasonably be withheld).

 

15.1.3      Notwithstanding Sections 15.1.1 and 15.1.2,it willbe unreasonable per se for theCity to withhold its consent to a transfer (i) on the ground (whether byitself or together with other factors) that the proposed transferee hasinsufficient net worth if the proposed transferee has a net worth, immediatelyprior to the transfer, of at least Ten Million Dollars ($10,000,000) (exclusiveof goodwill and other intangible assets if the proposed transferee is not anindividual), it being understood that the City may reasonably consent to a transfer to a proposed transferee with anet worth of less than such amount, or (ii) if the proposed transferee isa Necessarily Acceptable Transferee (defined below), it being understood that theCity may reasonably

 

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consent to a transfer to a proposedtransferee other than a Necessarily Acceptable Transferee.

 

15.1.3.1   For purposes of this Section 15.1.3, a “NecessarilyAcceptable Transferee” means that theproposed transferee satisfies all of the following criteria, as evidenced tothe City by such documentation as the City may reasonably request:

 

(a)  theproposed transferee has a net worth, immediately prior to the transfer, of atleast Ten Million Dollars ($10,000,000) (exclusive of goodwill and otherintangible assets if the proposed transferee is not an individual);

 

(b)  theproposed transferee shall either (i) have proven expertise in the gamingindustry of at least five (5) continuous years,or (ii) be a company whose equity interests are directly or indirectlyowned 50% or more by a company or individuals with provenexpertise in the gaming industry of at least five (5) continuous years;

 

(c)  Tenantshall have in its employ following the transfer a general manager for theRiverboat Gaming Project whose executive officers and other key personnel (asreasonably designated by**the City) possess proven expertisein the gaming industry as evidenced by prior business activity of at least five(5) continuous years; and

 

(d)           the proposed transferee has been investigatedby the Missouri Gaming Commission and advised in writing that issuance of allpermits and licenses necessary in order to lawfully conduct gaming activities atthe Project Site in accordance with the terms of this Master Agreement andMaster Lease will be forthcoming reasonably contemporaneously with theeffective date of the, transfer.

 

15.1.4      Notwithstanding Sections 15.1.1 and 15.1.2, the Trusts may transfer all or a portion of their proprietaryinterest in Tenant without the City’s consent to, or to a**trust for thebenefit of, Marvin Davis or a spouse, child or grandchild of Marvin Davis(individually, a “Permitted Transferee” and, collectively, “Permitted Transferees”).

 

15.1.5      Notwithstanding Sections 15.1.1 and 15.1.2,Tenant may transfer its rights under the Project Documents without the City’sconsent so long as after giving effect to such transfer the transferee is acorporation, partnership or

 

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limited liability company the proprietaryinterests of which are at least 51% owned, directly or indirectly, by theTrusts or their Permitted Transferee(s).

 

15.2         LimitedRighttoEncumberLeaseholdInterest.Tenantmay,atanytimeandfromtimetotimeduringthetermofthisLease(subject,however,tothelimitationscontainedinSection15.2.3),encumber,bydeedoftrustormortgageorothersecurityinstrumentinfavorofaLenderwhohasbeenapprovedbytheMissouriGamingCommission(totheextentsuchapprovalisrequiredbyapplicablelaw)asanacceptablesecuredlendertoTenant(“Lender”),allofTenant’sinterestunderthisLeaseandtheleaseholdestateherebycreatedinTenant(the“LeaseholdEstate”)togetherwithanyoralloftheotherportionsoftheRiverboatGamingProjectownedbyTenant(suchdeedoftrust,mortgageorothersecurityinstrumentisreferredtointhisLeaseasa“LeaseholdEncumbrance”),strictlyinaccordancewiththetermshereinaftersetforth:

 

15.2.1      Any Leasehold Encumbrance shall be subject toallcovenants, conditions andrestrictions set forth in this Lease and to all rights and interests of the City.

 

15.2.2      TenantshallgivetheCitynolessthantwenty(20)dayspriorwrittennoticeofanyLeaseholdEncumbrance,accompaniedbyacopyofanyandalldeedsoftrust,mortgagesand/orothersecurityinstrumentsevidencing,creatingand/orgoverningtheLeaseholdEncumbrance(collectivelythe“SecurityInstrument”).

 

15.2.3      Any indebtedness secured by a LeaseholdEncumbrance must, at the time of creation of such Leasehold Encumbrance, comply with the following:

 

(a)           as long as Tenant is at least 51% owned,directly or indirectly, by beneficiaries of the Trusts,no indebtedness secured by aLeasehold Encumbrance shall have a term which extends (regardless of when theindebtedness is incurred) past the tenth (10th) anniversary of the Opening Date; and

 

(b)           except to the extent such indebtedness ispersonally guaranteed by any of (i) Marvin Davis, (ii) any or all ofthe Trusts, or (iii) any individual or entity with a net worth in excessof $10,000,000 (exclusive of goodwill and other intangible assets in the caseof an entity), the amount of such indebtedness (i.e., the amount of theunguaranteed portion of such indebtedness) shall not exceed a sum equal to 60%of the fair market value of the Riverboat Gaming Project.

 

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The parties acknowledge that in the event that Tenant desires to expand thegeographic area of the Project Site beyond the area contemplated by the MasterAgreement or desires to construct additional improvements as a part of the LandBased Project upon the Project Site, and in the event that Tenant and the Citymutually agree upon the applicable terms andconditions of such geographic expansion or additional improvements, then the parties will negotiate the prospect of Tenant providing to a Lender asecurity interest in its interest in thisLease to secure financing for such geographic expansion and/or additionalimprovements.

 

15.2.4      No Leasehold Encumbrance shall in any way constitute or be construed as a lien or encumbrance on the City’sfee interest in the Project Site or on the City’s reversionary interest in theImprovements or Personalty. The LeaseholdEncumbrance may encompass the Improvementsand Personalty but only so long as the Leasehold Encumbrance is in effect with respect to this Lease andonly so long as the Leasehold Encumbrance recognizes the City’s reversionaryinterest in the Improvements and Personalty and can not extinguish or affectthe City’s rights to receive the Improvements and Personalty upon the termination of this Leasefree and clear of any lien or encumbrance. Therefore, any lien or encumbranceon the Improvements or Personalty shall onlybepermitted if such lien or encumbrance is only a lien onthe Improvements and/or Personalty for the duration that the Lender has a lienor encumbrance against Leasehold Estate and does not extinguish the City’sreversionary interest in the Improvements and/or Personalty. Notwithstandingthe foregoing, however, the Lender may also hold liens on theRiverboat/Floating Facility and theother property of Tenant to the extent such property does not constitute the Leasehold Estate or theImprovements or Personalty under this Lease, and Lender shall have the right torealize on such collateral without restriction.

 

15.2.5      The City shall mail to any Lender who has given the City written request for thesame accompanied by notice of its address (a “Noticed Lender”), a duplicatecopy of any and all notices alleging or asserting the existence of a Default byTenant under this Lease or the occurrence or existence of any fact, event orcircumstance which with the giving of notice or the passage of time, or both,would constitute a Default by Tenant under this Lease (a “Required Lender Notice”). In addition, the City shall usereasonable efforts to mail to any Noticed Lender a duplicate copy of any othernotices the City may from time to time give to or serve on Tenant pursuant to or relating to thisLease, but the City

 

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shall have no liability for failure to do so.Any notices or other communications to a Noticed Lender by the City pursuant to this Lease shall be deemed to have been served on or given to Lender three (3) business days afterdeposit in the United States first class certified mail, return receipt requested, postage prepaid, addressed to Lender at thelast mailing address for Lenderfurnished in writing by the Lender to the City.

 

15.2.6      For as long as there is any Leasehold Encumbrance in effect, the City herebyexpressly agrees that it will notify aNoticed Lender prior to materially modifying any material term of this Lease.Notwithstanding the foregoing, however, upon foreclosure or other realizationunder a Leasehold Encumbrance (including but not limited to by assignment orother transfer in lieu of foreclosure), no Lender or other person which succeedsto the interest of Tenant shall be**bound by any amendment to thisLease which has not been consented to by Lender in writing.

 

15.2.7      A Lender with a valid Leasehold Encumbranceshall have the right at any time to:

 

15.2.7.1      do any act or thingrequired of Tenant under this Lease, and any such act or thing done andperformed by Lender shall be as effective to prevent a forfeiture of Tenant’srights under this Lease as if done by Tenant; and/or

 

15.2.7.2      realize on thesecurity afforded by the Security Instrument by foreclosure proceedings,accepting an assignment in lieu of foreclosure, or other remedy afforded in lawor in equity or by the Security Instrument, and to:

 

(a)  transfer,convey or assign the title of Tenant to the Leasehold Estate to any purchaserat any foreclosure sale, whether the foreclosure sale is conducted pursuant tocourt order or pursuant to a power of sale contained in the SecurityInstrument, or to an assignee pursuant to an assignment in lieu of foreclosure,provided that in each and any such instance the Lender shall first obtain theprior written consent of the City, which consent shall not be unreasonablywithheld or denied so long as the Lender provides to the City satisfactoryevidence that the purchaser, assignee or other acquirer is an “AcceptableTransferee” (defined below), but may otherwise be withheld, denied orconditioned in the sole and absolute unrestricted discretion of the City; and

 

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(b)  itselfacquire and succeed to the interest of Tenant under this Lease by virtue of anyforeclosure sale, whether the foreclosure sale is conductedpursuant to a court order or pursuant to a power of sale contained in theSecurity Instrument, or by virtue of an assignment in lieu of foreclosure, provided that theLender has complied with the provisions of Sections 15.2.11.3 and 15.2.11.5below, and further provided that thereafter the Lender shall be requiredtocomply with the provisions of Section 15.2.7.2(a) in connection withany subsequent sale, transfer, assignment or other conveyance or disposition ofthe Leasehold Estate.

 

15.2.8      No Lender under any Leasehold Encumbranceshall be liable to the City as an assignee of this Lease unless and untilLender acquiresallrights of Tenant under this Lease through foreclosure, an assignment in lieu offoreclosure, or as a result of some other action or remedy provided by law orby the Security Instrument; provided, however, that in all events, any person or entity acquiring theLeasehold Estate (including Lender if Lender acquires the Leasehold Estate)shall be liable to perform Lessee’s obligations under this Lease during anyperiod, but only during any period, in which that entity or person hasownership of the Leasehold Estate or possession of the Project Site. No sale,assignment,. transfer or other conveyance of the Leasehold Estate byany party who is an assignee, successor in interest or transferee of Lender shallcause any such party to be released from liability under this Lease; providedthat Lender shall not be deemed an owner of the Leasehold Estate or to be inpossession of the Project Site until Lender acquires all rights of Tenant underthe Lease through foreclosure, an assignment in lieu of foreclosure,or as a result of some other action or remedy provided by law or by theSecurity Instrument.

 

15.2.9      For as long as there is in effect anyLeasehold Encumbrance held by a Noticed Lender, the City may not terminate thisLease because of any Terminating Event other than those Terminating Eventslisted in Sections 12.1.1 (i),(x) or (xi) of this Lease (the TerminatingEvents listed in clauses (ii) through and including (ix) beingreferred to as a “Lender-CurableTerminating Event”), unless the City hasgiven to the Noticed Lender a copy of the written notice providedto Tenant declaring the existence of the Lender-Curable Terminating Event andafforded Lender the opportunity after service of the notice to:

 

15.2.9.1      Cure the Lender-CurableTerminating Event within 20 days after expiration of the time period granted to Tenantunder this Lease for curing such

 

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Lender-Curable Terminating Event, when theLender-Curable Terminating Event can be cured by the payment of money to theCity or some other person;

 

15.2.9.2      Cure theLender-Curable Terminating Event within 45 days after expiration of the time period granted to Tenant underthis Lease for curing such Lender-Curable Terminating Event, when the Lender-Curable Terminating Eventmust be cured by something other than the payment of money and can by itsnature reasonably be cured within the period of time after service of thenotice on Lender and before the expiration of such 30 day period; provided,however, that if the applicable Lender-Curable Terminating Event is of such anature that, although it can be cured, it cannot be cured within such period,then so long as Lender commences the acts necessary to cure the Lender-CurableTerminating Event within such period and thereafter diligentlycontinues to pursue such cure,then the cure period available to Lender shall be extended forsuch reasonable period of time as is reasonably necessary in order to permit Lender to complete suchcure.

 

15.2.10    Tenant and Lender, jointly and severallyagree to reimburse City on demand for the City’s actual costs (includingreasonable attorney’s fees), incurred in conjunction with the review,processing and documentation of any assignment, transfer, or other change of ownership of the Leasehold Estate effectuated by or on behalfof Lender or otherwise pursuant to the exercise of rights under the SecurityInstrument.

 

15.2.11    For purposes of this Section 15.2, theterm “Acceptable Transferee” shall mean that the proposed transferee of theLeasehold Estate satisfies each and every one of the following criteria, asevidenced to the City by such documentation as the City shall reasonablyrequest:

 

15.2.11.1    theproposed transferee has a net worth, immediately prior to the transfer, of atleast Ten Million Dollars, exclusive of goodwill and other intangible assets;

 

15.2.11.2    theproposed transferee shall (a) be a company either (i) with provenexpertise in the gaming industry of at least 5 continuous years, or (ii) whoseequity interests are directly or indirectly owned 50% or more by a companywhich has proven expertise in the gaming industry of at least 5 continuousyears, and (b) employ a general manager for the Riverboat Gaming Projectwhose executive officers and other key personnel (as reasonably designated bythe City) possess proven

 

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expertise in the gaming industry as evidencedby prior business activity of at least five continuous years;

 

15.2.11.3    the proposedtransferee has been investigatedby the Missouri Gaming Commission and advised in writing that issuance of allpermits and licenses necessary in order to lawfully conduct gaming activitiesat the Project Site in accordance with the terms of this Lease will beforthcoming reasonably contemporaneous with the effective date of the transferof this Lease;

 

15.2.11.4    theproposed transferee agrees to fund, contemporaneous with the effectiveness ofthe transfer,the entire then unfunded portionof the Acquisition Escrow Account and the Construction Escrow Account,determined as if there was a present obligation to cause (a) theAcquisition Escrow Account to equal the full unpaid acquisition cost of allphases of the Riverboat Gaming Project and/or (b) the Construction EscrowAccount to equal the full unpaid costs of the construction (including requiredrenovations) of all phases of the Riverboat Gaming Project; and

 

15.2.11.5    theproposed transferee assumes all of the duties and obligations of Tenant (or itsaffiliates) under this Lease, the Master Agreement and all other ProjectDocuments and agrees to be bound to the City to observe, perform and/or complywith all ofthe terms, provisions, conditions, obligations, duties,covenants and agreements at any time to be observed, performed and/or compliedwith by Tenant (or its affiliates) under each such document as if thetransferee were originally a party to the same in the place of Tenant (or itsaffiliates), all pursuant to documents and/or instruments in form and contentas are requested by and acceptable to the City.

 

15.2.12    Any rights of a Lender pursuant to this Section 15.2,including but not limited to the right torealize on the Leasehold Estate created hereunder, may be exercised by anaffiliate or by a nominee on behalf of such Lender.

 

15.2.13    If this Lease is terminated or is proposed to be terminated for anyreason, by the City or Tenant (including, but not limited to, any rejection ofthis Lease in a bankruptcy proceeding), then as soon as the City learns of suchtermination or proposed termination, the City will immediately notify Lender ofsuch termination or proposed termination (a “Termination Notice”), which noticewill set forth any sums or other performance due to the City under this Lease, and upon the written request of Lender, the City will

 

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enter into a new lease for the Project Sitewith Lender or its designee (a “Lender Tenant”) for the remainder of the termof this Lease, upon the terms, provision, covenants and agreements set forth inthis Lease, with such amendments thereto as may have been theretofore approvedin writing by Lender,provided:

 

15.2.13.1    Such LenderTenant will request the City for such a newlease within thirty (30) days after the date of its receipt of the TerminationNotice.

 

15.2.13.2    Such LenderTenant will pay to the City, at the time of the execution and delivery of saidnew lease, on or about the date such Lender Tenant acquires the right to ‘leasethe Project Site (which may be subject to delay by operation of any stay in any proceedings involving the reorganizationor insolvency of Tenant), any and all sums then due under this Lease but forsuch termination.

 

15.2.13.3    Such LenderTenant will, upon execution, and delivery of said new lease, perform and observe all the other covenants and conditions onTenant’s part to be performed and observed to the extent that Tenant will havefailed to perform and observe the same, except that (i) with respect toany breach or default which cannot be cured by such Lender Tenant until itobtains possession of the Project Site, said Lender Tenant will have areasonable time after said Lender Tenant obtains possession to cure such breachor default, and (ii) in no event will any Lender or Lender Tenant be required to.cure a breach or defaultrelating to the bankruptcy or insolvency of Tenant or any other breach or default of Tenant which is not susceptible ofbeing cured by a Lender Tenant.

 

ARTICLE 16

COVENANTS

 

16.1         Covenants By theCity. The City represents, warrants and covenants to Tenant and its permitted assigns(i) a covenant of quiet enjoyment for any action taken by or through theCity and with the further limitation that the City shall in no way be liable for title defects associated withtitle prior to the City receiving title to the Project Site; (ii) thatthis Lease is valid, binding upon and enforceable against the City inaccordance with its terms; (iii) that uponexecution of this Lease, the City will provide Tenant with an opinion of itslegal counsel that this Lease is valid, binding upon and enforceable againstthe City in accordance with its terms; and (iv) during the term of thisLease, the City shall not assess or charge Tenant for utilities, tap-in rights,hook-ups, refuge pick-up or any other chargefor City services or

 

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City owned services which are not consistent withthe charges charged to any other business in the City nor shall it impose anydocking fees of any nature or description on Tenant.

 

16.2         Covenants By Tenant.   Tenantrepresents, warrants and covenants to the City as follows:

 

16.2.1      Enforceability.   This Lease isvalid, binding upon and enforceable against Tenant in accordance with itsterms.

 

16.2.2      Power and Authority. Tenant is acorporation duly organized, validly existing and in good standing under Nevadalaw, and is authorized to do business as a foreign corporation in, and is ingood standing under the laws of, Missouri. Tenant has the full authority and power to enter into this Lease, toexecute and deliver this Lease and to perform and observe all the terms,conditions and provisions of this Lease to be so observed and performed byTenant. The execution and delivery of this Lease by Tenant has been duly authorized byall necessary action on its part. Tenant shall provide to the City a certified copy of itsresolution authorizing theexecution and delivery of this Lease.

 

16.2.3      No Conflicts. Except asotherwise provided in this Lease, nothing in this Lease agreed to by Tenant or its officers,members and directors, will conflict with or result in a breach of the termsand provisions of any contract or agreement to which Tenant, its officers, membersor directors, are a party or by which Tenant, its officers, members or directors otherwiseare bound, or to the best knowledge of Tenant will violate any existing law, rule,regulation, order of any court or governmental authority having jurisdictionover or otherwise affecting Tenant, its officers, members or directors.

 

16.2.4      Financial Condition. Tenant is not aparty to any assignment for the benefits of its creditors or any bankruptcyproceedings, and the transactions contemplated in this Lease shall not causeTenant to become insolvent or otherwise unable to pay its debts as the samebecome due.

 

16.2.5      No Contract Defaults.         Except as otherwiseprovided in this Lease, Tenant is not in default under the terms or conditions ofany contract or agreement to which it is a party, which materially andadversely affects its ability to perform its obligations under this Lease.

 

16.2.6      No Litigation. Except as otherwiseprovided in this Lease, to thebest knowledge of Tenant, there are no claims, suits or other proceedingsthreatened or pending against Tenant which materially and adversely affect itsability to perform its obligations under this Lease.

 

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16.2.7    Opinion of Counsel. Tenant shallprovide to the City an opinion of counsel stating that Tenant has the requisitepower and authority to enter into this Lease, the party executing this Lease onbehalf of Tenant has been duly authorized to do so and that this Lease isvalid, binding upon and enforceable against Tenant in accordance with itsterms. Further, the opinion of counsel shall state that based upon the factsknown to counsel but without further investigation or inquiry that this Leasedoes not violate any existing law, rule, regulation, order of any court orgovernmental authority having jurisdiction over or otherwise affecting Tenant,its officers or directors

 

ARTICLE 17

GENERAL PROVISIONS

 

17.1       Notices.   Any notice or other communication required,permitted, or contemplated by this Lease (a “Notice”) must be in writing andmay be given by a nationally recognized overnight courier service (e.g. FederalExpress, Airborne, etc.), United States Mail, registered or certified mail, return receipt requested, personal delivery withexecuted receipt or facsimile with verification and followed by United StatesMail, registered or certified mail, return receipt requested. Such Notice shallbe deemed to have been duly given, delivered or served; (i) if and when personally delivered or sent byverifiable facsimile on the date so delivered or sent, or (ii) three (3) daysafter being mailed by registered or certified mail, postage prepaid, or (iii) one (1) day if sent by a nationally recognized overnightcourier delivery service for next day delivery, costs prepaid, addresses to:

 
| The City:           |   | City of Boonville                              |
|---------------------|--------|------------------------------------------------|
|                |   | Attn:   City Administrator           |
|                |   | 525 East  Spring Street                        |
|                |   | Boonville, Missouri 65233-1658                 |
|                |   | Telephone:   (816)  882-2332         |
|                |   | Telecopier:   (816) 882-6608         |
|                |   |                                           |
| With copies to:     |   | Paul M. Wooldridge, Esq.                       |
|                |   | 312 Main Street                                |
|                |   | Boonville, Missouri 65233                      |
|                |   | Telephone:   (816) 882-3447          |
|                |   | Telecopier:   (816) 882-2542         |
|                |   |                                           |
| And with copies to: |   | King Hershey Coleman  Koch & Stone    |
|                |   | 2345 Grand Boulevard,  Suite 2100         |
|                |   | Kansas City, Missouri 64108                    |
|                |   | Attn:     Douglas S. Stone |
|                |   | Telephone:   (816) 842-3636          |
|                |   | Telecopier:   (816)  842-2414        |

 

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| Tenant:         |   | c/o The Davis Companies                 |
|-----------------|--------|-----------------------------------------|
|            |   | 2121 Avenue of the Stars                |
|            |   | Suite 2800                         |
|            |   | Los Angeles, California 90067           |
|            |   | Attn: Michael Colleran                  |
|            |   | Telephone:   (310)  551-1470  |
|            |   | Telecopier:   (310)  286-9359 |
|            |   |                                    |
| With copies to: |   | Katten, Muchin & Zavis              |
|            |   | 525 West Monroe Street                  |
|            |   | Suite 1600                         |
|            |   | Chicago, Illinois 60661                 |
|            |   | Attn: David Bryant                      |
|            |   | Telephone:   (312)  902-5200  |
|            |   | Telecopier:   (312)  902-1061 |

 

Notice given in any other manner will bedeemed delivered when actually received by the party to whom the notice isaddressed. Any party may change its address by giving the otherparties ten (10) days advance written notice of such change.

 

17.2         Police PowerLimitation. Notwithstanding anythingto the contrary set forth in the Project Documents with respect to the City’s obligations, the City’s obligations under the Project Documents shall not be construed to require the City tosurrender or waive its police powers or contract away any of its governmentalfunctions in violation of Missouri law. The parties intend the City’sobligations under the Project Documents shall be interpreted and construed inlight of the inherent limitations placed upon the City as a municipalcorporation which requires it to retain such powers and does not permit theCity to contract away those powers that are exclusively a legislative prerogative.

 

17.3         Failure to PerformBy the City. The City shall not bedeemed to be in default in the performance of any of its obligations under thisLease unless the City’s failure to perform such obligation continues for a**periodof thirty (30) days after written notice to the City specifying the nature of such non-performance, providedthat if such failure to perform is of such a nature that it cannot reasonablybe cured within such thirty (30) day period, then so long as the City commencedcure efforts within the thirty (30) day period and diligently pursuescompletion of such cure, the thirty (30) day period will be extended for suchperiod of time as is reasonably necessary to complete such cure. Tenant shallhave no right to terminate this Lease for any default or non-performance by theCity under this Lease, except by operation of law in the event Tenant becomesowner of fee simple title to all or any part of the Project Site, nor any rightto offset.

 

17.4         No Liability. Tenant shall not assert or seek to enforce any claim for breach of this Lease against any of the assets of the

 

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City other than the City’s interest in theProject Site for the satisfaction of any liability or claim against the Cityunder this Lease. Tenant agrees to look solely to such interests for thesatisfaction of any liability or claim against the City under this Lease. It isspecifically agreed that in no event whatsoever shall the City, or any of itsofficers, officials, servants or agents, ever be personally liable for any suchliability, except, with respect to the City only, as expressly set forth in thefirst two sentences of this Section.

 

17.5         ForceMajeure.   If either Tenant or theCity are delayed, hindered in or prevented from the performance of any act required underthis Lease by. reason of weather, fire, acts of God, strikes, lock-outs, inability to procure materials,failure of power, riots, insurrection, war, litigation which is being pursuedor defended by Tenant, or the failure of another party to this Lease to performan act required of it which is required in order for the party who was prevented fromacting to act and/or othermatters beyond the reasonable control of the party who is to act, thenperformance of such act shall be excused for the period of the delay and theperiod for the performance of any such act shall be extended for a periodequivalent to the period of such delay.

 

17.6         Certificates.   Eitherparty will at any time and without charge, within ten (10) days afterwritten request by the other, certify by written instrument as to: whether this Lease has been supplementedor amended, or if so, in what manner; the validity of this Lease as of the timethe request is received; the existence of any Default by either party and anyoffsets, counterclaims or defenses on the part of the other party; theCommencement and Expiration Dates; and such other matters as might bereasonably requested. Such certification may be delivered to any personspecified in the certificate.

 

17.7         Waiverof Jury Trial and counterclaims. The City and Tenant waive trial by jury inany action, proceeding or counterclaim brought by either of the parties againstthe other in connection with any matter whatsoever arising out of or in any wayconnected with this Lease, Tenant’s use or occupancy of the Project Site, anyclaim of injury or damage or the landlord-tenant relationship between theparties. Tenant expressly waives the right to impose any counterclaims in anyaction or proceeding in which the City seeks possession of the Project Siteand/or the Improvements and Personalty, except solely those counterclaims whichbut for such imposition would, pursuant to applicable law or rules ofcourt, be forever barred.

 

17.8         BindingEffect. This Lease will be binding upon the parties and their respectivesuccessors and permitted assigns.

 

17.9         NoJoint Venture Or Partnership. Under no circumstances shall the ProjectDocuments or any actions of the parties in

 

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furtherance of the Project Documentsbe construed to create either apartnership or a joint venture between the City and Tenant, the existence ofthe same being specifically denied.

 

17.10       Attorneys Fees. If any partyinstitutes litigation to enforce its rights under or relating to a breach of this Lease, theprevailing party will beentitled to recover from the other partyreasonable attorneys’ fees and court costs.

 

17.11       GoverningLaw. This Lease will be construed and interpreted in accordance with thelaws of Missouri, excluding its conflict of law provision.

 

17.12         Amendments. This Lease together with the Project Documents constitute the complete and exclusivestatement of the agreement between the parties with respect to the developmentof the Riverboat, Gaming Project.

 

17.13       EntireAgreement. The Project Documents supersede all prior written and oral statements, representations, communications ofany type, covenants, conditions, warranties and/or presentations with respect to the development of theRiverboat Gaming Project and no representation, statement, communication of anytype, condition, warranty or presentationnot contained in the Project Documents shall be binding on the parties or haveany force oreffect whatsoever. This Lease may not be amended ormodified except by a written instrument signed by both the City and Tenant.

 

17.14       Multiple Originals. This Lease may be executed inmultipleoriginal counterparts. Each counterpart will be deemed an original, and whenthe counterparts are taken together, they will be deemed to be oneand the same instrument.

 

17.15       Severability.If any provision of thisLease or its application to any personor circumstances is to any extent held to be invalid, illegal or unenforceable,the remainder of this Lease, or the application of such provision to otherpersons or circumstances, will not be affected, and each provision of thisLease will be valid and enforceable to the fullestextent permitted by law.

 

17.16       Interpretation. Where required for proper interpretation, words in the singular will include the plural,and words of any gender willinclude all genders. The descriptiveheadings of the articles and sections of this Lease are for convenience only andwill not control or affect themeaning or construction of any of the provisions of this Lease.

 

17.17       Waiver. Nowaiver by any party of any of its rights or remedies under this Lease will be considered a waiver of any other or subsequent right or remedy. No waiver by any party of any

 

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of its rights or remedies under this Leasewill be effective unless evidencedby a written instrument executed by the waivingparty.

 

17.18       Memorandum of Lease.  At any time and from time to time, at the request of either party, the parties shall execute, deliver and record, at Tenant’s expense, a Memorandum of Leasewith respect to this Lease.

 

EXECUTED as of the date first above written.

 
|                                  |   | “THE CITY”            |
|---------------------------------------|--------|---------------------------------|
|                                  |   |                            |
|                                  |   | THE CITY OF BOONVILLE, MISSOURI |
| [SEAL]                                |   |                            |   |
|                                  |   |                            |   |
| ATTEST:                               |   | By:                             | /s/ Bernard Kempf |
|                                  |   |                            | Bernard Kempf, Mayor |
| /s/ [ILLEGIBLE]                       |   |                            |   |
| City Clerk                            |   |                            |   |
|                                  |   |                            |   |
| APPROVED AS TO FORM AND LEGALITY |   |                            |   |
|                                  |   |                            |   |
| /s/ [ILLEGIBLE]                       |   |                            |   |
| City Counselor                        |   |                            |   |

 

 
|   |   | “TENANT”           |
|--------|--------|------------------------------|
|   |   |                         |   |
|   |   | DAVIS GAMING BOONVILLE, INC. |
|   |   |                         |   |
|   |   |                         |   |
|   |   | By:                          | /s/ Michael Colleran |
|   |   |                         | Michael Colleran, President |
|        |        |                              |  |  |

 

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