# **EXHIBIT 10.33**

# **OPTION TO PURCHASE THE GOLD RANCH CASINO PROPERTYAND IMPROVEMENTS, THE LEACH FIELD PROPERTY, THEFRONTAGE PARCEL, THE CALIFORNIA LOTTERY STATION ANDTHE CALIFORNIA LOTTERY PROPERTY, AND THE RIGHT OFFIRST REFUSAL**

# **BETWEEN**

# **PROSPECTOR GAMING ENTERPRISE, INC.A Nevada Corporation**

# **AND**

# **TARGET INVESTMENTS, L.L.C.**

# **A Nevada Limited Liability Company**

# **AND**

# **LAST CHANCE, INC.,**

# **A Nevada Corporation**

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# **OPTION TO PURCHASE THE GOLD RANCH CASINO PROPERTYAND IMPROVEMENTS,  THE LEACH FIELDPROPERTY, THEFRONTAGE PARCEL, THE CALIFORNIA LOTTERY STATION ANDTHE CALIFORNIA LOTTERY PROPERTY, AND RIGHT OF FIRSTREFUSAL**

This Option to Purchase the Gold Ranch Casino Property andImprovements, the Leach Field Property, the Frontage Parcel, the CaliforniaLottery Station and the California Lottery Property, and Right of First Refusal(“**Agreement**”) is made this 27th day ofDecember, 2001, by and between Prospector Gaming Enterprises, Inc., a Nevadacorporation (PGE), Target Investments, L.L.C., a Nevada limited liabilitycompany (Target) and Last Chance, Inc., a Nevada corporation (Last Chance).

# **RECITALS**

A.            Capitalized termsused in this Agreement and not otherwise defined shall have the meaningsascribed to such terms in Section 1.

B.            PGE is the owner ofthe Gold Ranch Casino Property and Improvements;

C.            Target is the ownerof the Leach Field Property, the Frontage Parcel, the California LotteryStation and the California Lottery Property.

D.            Last Chance desiresto acquire an option to purchase the Gold Ranch Casino Property andImprovements, the Leach Field Property, the Frontage Parcel, the CaliforniaLottery Station and the California Lottery Property and a right of firstrefusal with respect thereto and PGE and Target are willing to grant suchoption and right of first refusal to Last Chance on the terms and conditionsset forth in this Agreement.

E.             This Agreement isone of the Integrated Agreements by and between Last Chance and ProspectorGaming Enterprises, Inc., and its Affiliates, for the acquisition by LastChance of all of the Integral Properties and Assets of the Gold Ranch Casinoand RV Resort.

NOW, THEREFORE, in consideration of the foregoing recitals and of themutual covenants and agreements provided below, the execution and delivery ofthe Integrated Agreements and other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, the parties agree asfollows:

## **1.****                                     ****DEFINITIONS.**

1.1           “**Affiliate**” means as to any Person, any other Person whichdirectly or indirectly controls, or is under common control with, or iscontrolled by, such Person and, if such Person is an individual, any member ofthe immediate family (including parents, spouse, children, grandchildren,brothers and sisters, of such individual and any trust the principalbeneficiary of which is such individual or one or more members of suchindividual’s immediate family and any Person who is controlled by any suchmember or trust.  As used in thisdefinition, “control” (including its correlative meanings, “controlled by” and “undercommon control with”) means

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possession, directly or indirectly, of power to director cause the direction of the management or policies, whether through theownership of securities, limited liability company or partnership or otherownership interests, by contract or otherwise.

1.2           “**Asset Purchase Agreement**” means the Asset Purchase Agreementby and between Prospector Gaming Enterprises, Inc., a Nevada Corporation andLast Chance, Inc., a Nevada Corporation, executed contemporaneously herewithand as to which this Agreement is an integral part.

1.3           “**California Lottery Property**” means the real propertydescribed in Exhibit 1 (APN 038-230-06 and APN 023-100-06) which is ownedby Target Investments, LLC and upon which California Prospectors, Ltd.,operates the California Lottery Station.

1.4           “**California Lottery Station**” means the improvements locatedon the California Lottery Property from which California Prospectors Ltd.  operates as a California Lottery gameretailer, including the building containing the lottery station and aconvenience store, adjacent parking, landscaping and associated improvements,furniture, fixtures and equipment not otherwise owned by CaliforniaProspectors, Ltd.

1.5           “**California Lottery Station Lease**” the lease betweenCalifornia Prospectors, Ltd., as “Tenant”, and Target Investments, LLC, as “Landlord”,for the lease of the California Lottery Property.

1.6           “**CERCLA**” means the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended.

1.7           “**Closing**” means the completion of the transactioncontemplated by the Integrated Agreements on the Closing Date.

1.8           “**Closing Date**” means the last day of the month in which allconditions precedent to the Closing have occurred as provided in the AssetPurchase Agreement.

1.9           “**Environmental Claim**” means, with respect to any Person, anywritten notice, claim, demand or other communication (collectively, a “claim”)by any other person alleging or asserting such person’s liability forinvestigatory costs, cleanup costs, Governmental Authority response costs,damages to natural resources or other Premises, personal injuries, fines orpenalties arising out of, based on or resulting from (A) the presence, orrelease into the environment, of any Hazardous Material at any location,whether or not owned by such person, or (B) circumstances forming thebasis of any violation, or alleged violation, of any Environmental Law.  The term “Environmental Claim” shall include,without limitation, any claim by any Governmental Authority for enforcement,cleanup, removal, response, remedial or other actions or damages pursuant toany applicable Environmental Law, and any claim by any third party seekingdamages, contribution, indemnification, cost recovery, compensation orinjunctive relief resulting from the presence of Hazardous Materials or arisingfrom alleged injury or threat of injury to health, safety or the environment.

1.10         “**EnvironmentalLaw**” means any law, regulation or order relating to the regulationor protection of human health, safety or the environment or to emissions,discharges,

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releases or threatened releases of Hazardous Materialsinto the environment (including without limitation ambient air, soil, surfacewater, ground water, wetlands, land or subsurface strata), or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of Hazardous Materials.

1.11         “**FF&E**”means any and all furniture, fixtures and equipment installed or used, or to beinstalled or used, in connection with the operation of the Gold Ranch CasinoProperty and Improvements which is not owned by Last Chance, including, but notlimited to, the plumbing systems, HVAC systems, fire protection systems,electrical systems, equipment, elevators, exterior sidings and doors,landscaping and irrigation systems.

1.12         “**FrontageParcel**” means a portion of that certain parcel of real property (APN038-241-08) located in Washoe County, Nevada, as more particularly described inExhibit 1.

1.13         “**Gold RanchCasino Property and Improvements**” means the real property located inWashoe County, Nevada, as more particularly described in Exhibit 1 (APN038-230-24) and the improvements and FF&E located thereon at the time ofthe exercise by Last Chance of the rights granted by Sections 2 or 3 ofthis Agreement.

1.14         “**GovernmentalAuthority**” shall mean any federal, state, regional, county ormunicipal governmental agency, board, commission, officer or official having orexercising or purporting to have or exercise jurisdiction over the OptionAssets or the Parties with respect to the Option Assets.

1.15         “**HazardousMaterials**” includes (A) any “hazardous substance,” as definedby CERCLA or any other similar substance or waste regulated pursuant to anysimilar state or local law, regulation or ordinance; (B) any “waste” or “hazardouswaste,” as defined by the Resource Conservation and Recovery Act, as amended,or any other similar substance or waste regulated pursuant to any similar stateor local law, regulation or ordinance; (C) any pollutant, contaminant,material, substance or waste regulated by the Clean Water Act, as amended, orany other similar substance or waste regulated pursuant to any similar state orlocal law, regulation or ordinance; (D) any pollutant, contaminant,material, substance or waste regulated by the Clean Air Act, as amended, or anyother similar substance or waste regulated pursuant to any similar state orlocal law, regulation or ordinance; (E) any petroleum product;(F) any polychlorinated biphenyls; or (G) any radioactive material orsubstances.

1.16         “**Index**”means the Consumer Price Index, All Urban Consumers — (CPI-U), U.S.  City Average, All Items, 1982-84=100.” If theIndex should cease to be compiled and published by the Bureau of LaborStatistics and if other indexes are published by U.S.  governmental agencies for which tables areavailable to correlate the discontinued Index with such other index, then suchother index and correlation tables shall be employed to make the inflationadjustments required under this Agreement. If no such correlation tables are available, then the parties shallutilize such other indexes as may be available in such manner as may fairly andreasonably carry out and effectuate the purposes of this Section to reflect theeffects of inflation upon the payments required to be adjusted under thisAgreement.

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1.17         “**IntegralProperties and Assets**” means all of the assets, real and personal,tangible and intangible, which constitute integral parts of the businessesoperated by Prospector Gaming Enterprises, Inc., and its Affiliates, as theGold Ranch Casino & RV Resort, and as that term is more particularlydescribed in the Asset Purchase Agreement.

1.18         “**IntegratedAgreements**” means this Agreement and each of the agreements anddocuments described as a component of that term in the Asset PurchaseAgreement, which constitute integral parts of the single transaction by whichLast Chance, Inc., will acquire the businesses and assets (real, personal,tangible and intangible) operated by Prospector Gaming Enterprises, Inc.  and its Affiliates, as the Gold Ranch Casino& RV Resort.

1.19         “**Leach FieldProperty**” means a portion of that certain parcel of real property(APN 038-230-02) located in Washoe County, Nevada as more particularlydescribed in Exhibit 1.

1.20         “**OptionAssets**” means the Gold Ranch Casino Property and Improvements, theLeach Field Property, the Frontage Parcel (excluding, however, alterations,improvements and additions made by Last Chance under Section 6.5 of the GoldRanch Casino Lease which are the sole property of Last Chance), and theCalifornia Lottery Station and the California Lottery Property (excluding alterations,improvements and additions made by, and furniture, fixtures and equipment ownedby California Prospectors, Ltd.).

1.21         “**Person**”means an individual, firm, corporation, trust, association, partnership, jointventure, tribunal or other entity.

1.22         “**Release**”means release, spill, emission, leaking, pumping, injection, deposit, disposal,discharge, dispersal, leaching or migration into the indoor or outdoorenvironment or into or out of any real or personal property or any fixture,including the movement of Hazardous Materials through or in the air, soil,surface water or groundwater.

## **2.****                                     ****OPTION TO PURCHASE.**

PGE and Target hereby grant to Last Chance an exclusive option, rightand privilege to purchase the Option Assets at any time after the 18th anniversaryof the Closing and prior to the expiration of the term of this Agreement asprovided in Section 4.  The option mustbe exercised, if at all, as to all of the Option Assets and simultaneously asto all option agreements contained in the Integrated Agreements.

2.1           Notice ofExercise of Option.  Last Chanceshall exercise the option by written notice thereof to PGE and Target (Noticeof Exercise).  Upon receipt of the Noticeof Exercise by PGE and Target, the parties shall open an escrow with the titlecompany selected by PGE and Target under Section 2.5.

2.2           Purchase Price,Calculation and Payment.  Thepurchase price for the Option Assets shall be $6,000,000.00 (Base Price)adjusted as provided in Section 2.2(A).

(A)          BasePrice Adjustment.  The Purchase Pricefor the Option Assets shall be calculated as follows: The Base Price shall beincreased or decreased effective on each

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anniversary of the Commencement Date of the Gold RanchCasino Lease (Adjustment Date) preceding the date of exercise of the option, byan amount equal to the increase or decrease in the Index for the calendar yearlast concluded prior to the applicable Adjustment Date, PROVIDED, HOWEVER, thatno annual increase or decrease shall exceed 5% regardless of the actualincrease or decrease in the Index.  Theproduct of that calculation shall be the Base Price for the next AdjustmentDate.  In the event that any of theOption Assets, or any portion of any of them, are taken by condemnation, ordestroyed or damaged and not repaired or replaced (whether or not such failureconstitutes a breach of any of the Integrated Agreements) the base price at theAdjustment Date next preceding the condemnation, damage or destruction, shallbe reduced by (i) the amount of the condemnation award, or (ii) the insuranceproceeds, received by PGE or Target, or their Affiliates, as the case may be,and not paid over to Last Chance.  Theproduct of that calculation shall be the Base Price for the next AdjustmentDate.

(B)           Termsof Payment.  The purchase price shallbe paid on terms mutually agreeable to PGE and Target and Last Chance, however,if the parties cannot reach an agreement thereon, Last Chance shall either paycash or obtain its own third party financing.

2.3           Title.  PGE and Target shall convey good andmarketable title to the Option Assets to Last Chance free and clear of allliens, claims and encumbrances of any kind whatever, all other defects in titleand any Environmental Claims, except for those caused, permitted or suffered byLast Chance or approved by Last Chance as provided in Section 2.4.  The real property portion of the OptionAssets shall be conveyed to Last Chance by grant, bargain and sale deed and anypersonal property shall be transferred by bill of sale.  In either case, the grantor or transferorshall warrant that title is conveyed free and clear of all liens, claims andencumbrances of any kind whatever, all other defects in title and anyEnvironmental Claims, with any exceptions for those caused, permitted orsuffered by Last Chance being set forth in detail reasonably sufficient foridentification.

2.4           Approval ofConditions of Title.

(A)          Withinfifteen (15) days following the receipt by PGE and Target of the Notice ofExercise, PGE and Target shall deliver to Last Chance, at PGE and Target ‘ssole cost and expense: (i) a CLTA preliminary title report for the OptionAssets issued by a reputable title company, and (ii) the results of asearch conducted of the public records of the State of Nevada and WashoeCounty, Nevada, and the State of California and Sierra County, California, forpersonal property security interests and liens by the public officialsresponsible for such records, together with full and complete copies of alldocuments referenced in the title report and the results of such searches, and(iii) copies of all liens, claims, encumbrances and financing statementsaffecting the Option Assets and not otherwise produced by PGE and Targetpursuant to Section 2.4(A)(i) or (ii). Any obligation of Last Chance to purchase the Option Assets upon itselection to exercise the Option is contingent on Last Chance’s approval of thecondition of title thereto.  Last Chanceshall have thirty (30) business days following its receipt of all of thematerials required by Section 2.4(A)(i), (ii) and (iii), within which to givewritten notice to PGE and Target of Last Chance’s objections to the conditionof title to the Option Assets (Title Defects).

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(B)           LastChance’s notice of objection shall either state that: (i) Last Chanceelects to revoke its exercise of the option and to cancel the escrowestablished following the Notice of Exercise, or (ii) that PGE and Targetshall have until the close of escrow to remove the Title Defects at theirexpense.  If PGE and Target do not removeall of the Title Defects, Last Chance shall notify PGE and Target that:(iii) Last Chance elects to revoke its exercise of the option and tocancel the escrow established following the Notice of Exercise, or(iv) the Title Defects or one or more of them are waived and shallconstitute Permitted Exceptions, or (v) that Last Chance will cure anyremaining Title Defect(s) and deduct the cost thereof from the Purchase Price,or (vi) that Last Chance will seek specific performance of PGE and Target ‘sagreement to convey title to the Option Assets in the condition provided inSection 2.3.

(C)           Allmatters shown in the materials produced pursuant to Section 2.4(A)(i),(ii) and (iii), which are not objected to by Last Chance, shall be deemed to bePermitted Exceptions.

## **3.****                                     ****RIGHT OF FIRST REFUSAL.**

In the event that PGE and Target receive an arms-length, good faith,bona fide offer from a third party to purchase the Option Assets during theTerm of this Agreement, or any extension thereof, Last Chance shall have theright of first refusal to meet any such offer on terms and conditions identicalthereto and in accordance with the provisions of this Section 3.  PGE and Target agree that they will not sell,transfer or dispose of any of the Option Assets separately and acknowledge thatthe right of sale, transfer or disposition hereby reserved is limited to asale, transfer or disposition of all of the Option Assets, in toto, in a singletransaction.  In the event that LastChance exercises its right of first refusal but a purchase is not consummated,for any reason, this Section 3 and the rights and obligations of the partiesthereunder, shall survive.

3.1           Notice.  Within ten (10) days following their receiptof an offer to purchase the Option Assets, PGE and Target shall deliver a writtennotice (Notice) to Last Chance stating: (A) PGE and Target ‘s bona fideintention to sell the Option Assets, (B) the name and address of the proposedpurchaser, (C) the date of the proposed sale, (D) copies of any drafteddocuments evidencing the proposed transaction, including letters of intent, and(E) the purchase price and terms for or upon which PGE and Target propose tosell the Option Assets.

3.2           Exercise.  Within thirty (30) days following receipt ofthe Notice Last Chance shall have the right, but not the obligation, to electto purchase the Option Assets for the price and/or upon the terms set forth inthe Notice subject, however, to Section 3.3 in the event that the third partyoffer includes non-cash consideration. Within thirty (30) days after the receipt of the Notice, Last Chanceshall notify PGE and Target in writing of its election to exercise the right offirst refusal granted by this Section 3 (Notice of Election).  The failure of Last Chance to give a timelyNotice of Election shall constitute an election by Last Chance not toexercise.  In the event that Last Chanceelects to exercise its right of first refusal, PGE and Target and Last Chanceshall execute such documents and instruments and make such deliveries as may bereasonably required to consummate such purchase and sale.

3.3           Non-CashConsideration.  If the Noticeprovides for the payment of non-cash consideration, Last Chance may elect toprovide the non-cash consideration or to pay cash in lieu

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of the non-cash consideration in an amount equal tothe good faith estimate of the present fair market value of the non-cashconsideration offered as determined by an independent appraiser of Last Chance’schoice.  Notwithstanding the datespecified in the Notice for the closing of the proposed sale, in the event thatLast Chance elects to provide the non-cash consideration, it shall have untilclose of business on the later of (A) forth-five (45) days from the date ofreceipt of the Notice of Election by PGE and Target, or (B) the date specifiedin the Notice for the closing of the sale, within which to provide suchnon-cash consideration.

3.4           Non-exercise.  If Last Chance elects or is deemed to haveelected not to exercise its right of first refusal or, having exercised thatright, a purchase of the Option Assets is not consummated due to the fault ofLast Chance, PGE and Target may (A) seek specific performance of theelection by Last Chance to exercise its right of first refusal, or(B) sell the Option Assets to the proposed purchaser, provided that suchsale is: (i) completed within the time specified in the Notice and if noneis specified, within one (1) year after the expiration of Last Chance’s rightof first refusal, (ii) made on terms identical to those specified in theNotice, (iii) the transferee takes, and acknowledges in writing that ittakes title to the Option Assets subject to Last Chance’s rights under thisAgreement, specifically including, without limitation, the rights of LastChance under Sections 2 and 3 of this Agreement, and the IntegratedAgreements, and (iv) all deeds and other documents by which the OptionAssets are conveyed or transferred recite that title thereto is taken subjectto the rights of Last Chance under Sections 2 and 3 of this Agreement, andthe other Integrated Agreements (with specific reference to all pertinentrecording information) and that the grantee, transferee or assignee of theOption Assets, as the case may be, is bound thereby.  If a sale of the Option Assets as hereinprovided is not consummated, PGE and Target must give notice anew in accordancewith Section 3.1 prior to any other sale of the Option Assets.  Any sale or transfer in violation of Section3 shall be voidable by Last Chance, in its absolute discretion.  In the event that Last Chance elects to voida sale or transfer under this Section 3.4, PGE and Target shall, jointlyand severally and at their sole cost and expense, indemnify, protect and defendLast Chance (including costs and attorneys’ fees incurred by Last Chance) fromand against the claims of any such transferee and shall, upon demand by LastChance, take such actions as may be necessary, including the commencement of anaction to quiet title to the Option Assets, or any portion thereof as may havebeen transferred in violation of Section 3, to free the Option Assets ofany claim or encumbrance other than the rights of Last Chance under thisAgreement.

## **4.****                                     ****TERM.**

The Term of this Agreement shall commence on the Closing and shallcontinue so long as any of the Integrated Agreements remain in force andeffect.

## **5.****                                     ****REPRESENTATIONS ANDWARRANTIES.**

5.1           PGE and Target’sRepresentations and Warranties. Except as provided in Exhibit 2, PGE and Target represent andwarrant to Last Chance that each of the following representations andwarranties are true and correct as of the date hereof and, except as otherwiseexpressly provided herein, will be true and correct on the Closing and theclose of escrow in the event of a purchase of the Option Assets by Last Chancepursuant to Sections 2 or 3 of this Agreement.

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(A)                              Organization.  (i) PGE is a corporation validlyexisting and in good standing under the laws of the State of Nevada and everyother jurisdiction in which it does business, owns property or has employeesand has all requisite power and authority to own the Gold Ranch Casino Propertyand Improvements and to grant the option to purchase and right of first refusalas provided in Sections 3 and 4 of this Agreement; (ii) Target islimited liability company duly organized, validly existing and in good standingunder the laws of the State of Nevada and every other jurisdiction in which itdoes business, owns property or has employees, and has all requisite power andauthority to own the Leach Field Property, the Frontage Parcel, the CaliforniaLottery Station and the California Lottery Property and to grant the option topurchase and right of first refusal as provided in Sections 3 and 4 of thisAgreement.

(B)                                Articles,By Laws, Operating Agreement.  Theexecution and delivery of this Agreement does not, and the consummation of thetransactions contemplated hereby will not, conflict with the terms andprovisions of the Articles of Incorporation, By Laws or Articles ofOrganization or Operating Agreement, of either PGE or Target.

(C)                                ProperAuthority and Action, Binding Obligation. Each of PGE and Target has had since its formation, does have currently,and will have at the Closing and the closing of any transaction underSections 2 and 3, all necessary registrations, licenses, filings, permits,exemptions, certificates, approvals, and other authorizations required of themby any Governmental Authority, to own, use and operate the Option Assets, atthe places and in the manner in which the Option Assets have been and are beingowned, used, and operated.  Each of PGEand Target has taken all action necessary under their respective organizationaldocuments and applicable corporate and limited liability company laws, toauthorize the execution and delivery of this Agreement and the performance oftheir respective obligations thereunder and has duly executed and deliveredthis Agreement.  The Agreement is thevalid and binding obligation of each of PGE and Target, enforceable againsteach of them in accordance with its terms.

(D)                               Ownership,Authority and Compliance.  PGE representsand warrants that it is the legal owner of the Gold Ranch Casino Property andImprovements and Target represents and warrants that it is the legal owner ofthe Leach Field Property, the Frontage Parcel, the California Lottery Stationand the California Lottery Property; that this Agreement does not violate anycontractual obligations with any third party, including recorded documents suchas deeds of trust, mortgages, security agreements, liens or other encumbrances,or violate or contravene any law, governmental rule, regulation, order, writ,injunction or decree applicable to either PGE or Target, that there are noconsents necessary from any person, association, entity, or GovernmentalAuthority necessary to render this Agreement lawful, or effective in accordancewith its terms, and that each of PGE and Target is in compliance with allfederal, state and local laws, rules and regulations applicable to the OptionAssets.

(E)                                 Wantof Notice.  Neither PGE nor Targethas received any notice from any Governmental Authority: (i) requiringeither of them to make any material repairs or changes to any of the OptionAssets which have not been made, or (ii) giving notice of any materialgovernmental actions pending or threatened relating to any of the OptionAssets.  All of the Option Assets are inmaterial compliance with applicable laws, regulations and ordinances and, tothe best of Optionors’ knowledge, all current building and health codes to theextent

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applicable. Neither PGE nor Target has received any notice of any materialviolations of any laws, regulations, ordinances or building or health codeswith respect to the Option Assets.

(F)                                 Licensesand Permits.  Each of PGE and Targetrepresents and warrants that they hold all licenses and permits necessary totheir ownership and use of the Option Assets and are in compliance with allsuch licenses and permits.

(G)                                Conditionand Compliance.  PGE and Targetwarrant and represent that all of the Option Assets: (A) comply with, and areoperated in accordance with, all material applicable laws, (B) that the OptionAssets are in good operating condition and repair, free from latent and patentdefects and adequate for the uses to which they are being put, and (C) thatnone of the Option Assets is in need of maintenance or repair, except forordinary, routine maintenance and repairs that are not material in nature orcost.

(H)                               EnvironmentalMatters.

(i)                                     Eachof PGE and Target represents and warrants that, except as provided in Exhibit2, the Option Assets have all times been, and continue to be, used and operatedin material compliance with all Environmental Laws;

(ii)                                  Exceptas provided in Exhibit 3, there have been no past, and there are no pending orthreatened: (a) Environmental Claims, complaints, notices, requests forinformation or investigations with respect to any alleged material violation ofany Environmental Law by either PGE or Target, or (b) complaints, noticesor inquiries to or investigations of PGE or Target regarding potentialliability under any Environmental Law;

(iii)                               Except as provided inSection 5.1(H)(vi), there have not been, at or on any of the Option Assets anyReleases of Hazardous Materials and there are no citations, notices or ordersof noncompliance issued and outstanding to PGE or Target under anyEnvironmental Law;

(iv)                              Eachof PGE and Target is the holder of and is in material compliance with allpermits, certificates, approvals, licenses and other governmentalauthorizations relating to environmental matters and necessary for theownership, operation, lease and use of the Option Assets, and no order has beenissued, no Environmental Claim has been made, no penalty has been assessed andno investigation or review has occurred or is pending or threatened, by anyGovernmental Authority or any Person with respect to any alleged failure byeither PGE or Target to have any license or permit required under applicableEnvironmental Laws in connection with the use of the Option Assets or to complywith any Environmental Laws or with respect to any generation, treatment,storage, recycling, transportation, discharge, disposal or release of anyHazardous Material generated or Released by them;

(v)                                 Eachof PGE and Target warrant that, except as provided in Exhibit 2 and Section5.1(H)(vi), no condition exists with respect to the Option Assets that wouldrepresent an environmental liability to Last Chance, and that if such acondition does exist, that PGE and Target shall indemnify, defend, and holdharmless,

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Last Chance for any losses associated with suchliability, including, but not limited to, any and all claims, judgments,damages, penalties, fines, costs, liabilities or other losses, sums paid insettlement of claims, attorney fees, consultant fees and expert fees.

(vi)                              PGEand Target acknowledge that a petroleum Release from an underground storagetank on the Gold Ranch Casino Property was discovered in 1995.  That Release resulted in the contamination ofthe well(s) (Permit No.  48834 and PermitNo.  49019; Certificate No.  12799 and Certificate No.  12801) located inside the Casinobuilding.  Subsequent examination andcharacterization led PGE to cease using these wells and to install numerousmonitoring wells, ground water recovery wells, soil vapor extraction points,and a treatment system, which continue to operate.  It is expected that remediation will beconcluded within twelve (12) months following the Closing.  PGE and Target shall indemnify Last Chance fromand against liability for this Release to the extent provided in Section 4(g)(vi)of the Asset Purchase Agreement.

(I)                                    Fulland Accurate Disclosure, Reliance. No statement of fact made by PGE and/or Target in this Agreementcontains any untrue statement of a material fact or omits to state any materialfact necessary to make statements contained herein not misleading in allmaterial respects.  There is no materialfact presently known to PGE and/or Target which has not been disclosed to LastChance which adversely affects, nor as far as PGE and Target can foresee, wouldreasonably be expected to have a material adverse effect upon the Option Assetsor Last Chance’s willingness to enter into this Agreement.  All representations, warranties, covenantsand agreements made in this Agreement by PGE and Target shall be deemed to havebeen relied upon by Last Chance notwithstanding any investigation made by LastChance or on its behalf.

(J)                                   NoMaterial Adverse Change.  Since June30, 2001, there has not been any material adverse change in the Option Assetsor the results of operation thereof (financial or otherwise), includingcustomer or employee or supplier relations or relations with any GovernmentalAuthority.

5.2                                 LastChance’s Representations and Warranties. Last Chance represents and warrants to PGE and Target as set forth inthis Section 5.2.  and that all suchrepresentations and warranties are true and correct as of the date hereof and,except as otherwise expressly provided herein, will be true and correct on theas of the Closing and the close of escrow in the event of a purchase of theOption Assets by Last Chance as provided for in Sections 2 or 3.

(A)                              Organization.  Last Chance is a corporation duly organized,validly existing and in good standing under the laws of the State of Nevada andevery other jurisdiction in which the Last Chance does business, owns propertyor has employees, and has all requisite power and authority to acquire therights granted or created by this Agreement.

(B)                                Articlesand By Laws.  The execution anddelivery of this Agreement does not, and the consummation of the transactioncontemplated hereby will not, conflict with the terms and provisions of theArticles of Incorporation or the By Laws of Last Chance.

(C)                                ProperAuthority and Action, Binding Obligation. Last Chance has all requisite corporate power and authority to enterinto this Agreement and to perform its

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obligations thereunder.  Last Chance has taken all action necessaryunder its organizational documents and applicable corporate law to authorizethe execution and delivery of this Agreement and the performance of itsobligations thereunder and has duly executed and delivered this Agreement.  The Agreement is the valid and bindingobligation of Last Chance, enforceable against Last Chance in accordance withits terms.  Neither this Agreement norLast Chance’s performance of its obligations thereunder, will violate anycontractual obligations with any third party or contravene any law,governmental rule, regulation, order, writ, injunction or decree applicable toLast Chance.

## **6.****                                     ****MISCELLANEOUS PROVISIONS.**

6.1.                              Covenantsand Conditions.  All of the terms andconditions of this Agreement are expressly intended to be construed ascovenants as well as conditions.

6.2.                              Notice.  Whenever under this Agreement a provision ismade for any demand, notice or declaration of any kind, or whether it is deemedadvisable or necessary by either party to give or serve any such notice, demandor declaration to the other party, the notice shall be in writing and servedeither personally or sent by certified or registered mail, return receiptrequested, postage prepaid, addressed to addresses set forth below:
| To PGE and Target: | Peter Stremmel                        |
|--------------------|---------------------------------------|
|               | Prospector  Gaming Enterprises, Inc.  |
|               | 1400 S. Virginia                      |
|               | Reno, Nevada  89502                   |
|               |                                  |
| With a copy to:    | David R. Grundy, Esq.                 |
|               | Lemons, Grundy  & Eisenberg       |
|               | 6005 Plumas  Street, Suite 300        |
|               | Reno, Nevada  89509                   |
|               |                                  |
| To Last Chance:    | Ferenc B. Szony, President            |
|               | Last Chance,  Inc.                    |
|               | 345 Arlington  Ave.                   |
|               | Reno, Nevada  89501                   |
|               |                                  |
| With a copy to:    | David R. Wood, Treasurer              |
|               | The Sands Regent                      |
|               | 345 Arlington  Ave.                   |
|               | Reno, Nevada  89501                   |
|               |                                  |
| * *           | *and*                                 |
| * *           | * *                              |
|               | Paul A. Bible,  Esq.                  |
|               | Bible, Hoy &  Trachok             |
|               | 201 West Liberty  Street, Third Floor |
|               | Reno, Nevada  89501.                  |

 

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6.3                                 PartiesBound; Assignment.  This Agreementshall be binding on and inure to the benefit of and be enforceable by theparties and their respective successors and assigns, provided, however, thatthis Agreement may not be assigned by Last Chance without the prior writtenconsent of PGE and Target or by PGE and Target without the prior writtenconsent of Last Chance, which consent, by any party, shall not be unreasonablywithheld or delayed.

6.4                                 Effectof Partial Invalidity.  Should anysection or any part of any section of this Agreement be rendered void, invalidor unenforceable for any reason by any court of law exercising competentjurisdiction, such a determination shall not render void, invalid orunenforceable any other section or any part of any section in this agreement.

6.5                                 Choiceof Law and Venue.  This Agreementshall be interpreted, governed and controlled by the laws of the State ofNevada and venue for any litigation arising out of or related to this Agreementshall be in Washoe County, Nevada.

6.6                                 Attorney’sFees.  In the event a party must retainan attorney to enforce this Agreement or in the event of litigation whicharises as a result of any controversy, dispute, breach or construction of thisAgreement, the prevailing party shall be entitled to recover, from the otherparty, all costs, expenses and reasonable attorney’s fees incurred inconnection with the enforcement efforts or litigation.

6.7                                 Modification.  This agreement may not be modified unlesssuch modification is in writing and signed by both parties to this Agreement.

6.8                                 Headings. The headings of this Agreement areinserted for convenience and identification only and are in no way intended todescribe, interpret, define or limit the scope, extent or intent of thisAgreement or any provision hereof.

6.9                                 Waivers.  No waiver by any party hereto of anyprovision hereof shall be deemed a waiver of any other provision hereof or ofany subsequent breach by the respective party of the same or any otherprovision.  Any party’s consent to orapproval of any act shall not be deemed to render unnecessary the obtaining ofthat party’s consent to or approval of any subsequent act by the breachingparty.

6.10                           Recording.  The parties hereto shall execute a memorandumof option to purchase and right of first refusal in recordable form and eitherparty may record the memorandum.

6.11                           Approvals.  This Agreement shall be contingent upon LastChance receiving any and all required government approvals.  In the event that Last Chance is unable tosecure the required approvals, this Agreement shall terminate with no damagesclaimed by any party against the other.

6.12                           AdditionalDocuments.  The parties hereto agreeto execute any additional documents, as may be reasonable and necessary tocarry out the provisions of this Agreement.

6.13                           NoConstruction Against Drafting Party. This Agreement is not being offered on a take-it-or-leave-it basis.  Each party has been given an opportunity tonegotiate each term, propose new language or edits to existing language, andhas been given an opportunity to have

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the Agreement reviewed by an independentattorney.  This Agreement is a jointproduct of all parties and not one party. Therefore, the rule of construction that an ambiguous contract should beconstrued against the drafting party shall not apply to this Agreement.

6.14                           Expenses.  Each party shall pay its own attorneys’ feesincurred to document or negotiate this Agreement.

6.15                           CovenantRunning With Land.  All of thecovenants, conditions, and terms of this Agreement shall (i) be of benefitto the parties, (ii) constitute a covenant running with the Option Assets,and (iii) bind and inure to the benefit of the Parties and any Person acquiringany interest in the Option Assets.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of theday and year first above written.
| Target Investments, L.L.C.,          | Last Chance, Inc.    |
|--------------------------------------|----------------------|
| a Nevada limited  liability company  | a Nevada corporation |
|                                 |                 |   |
| By:                                  | /s/ Peter  Stremmel  |   | By: | /s/ Ferenc Szony |   |
| Its:                                 | Partner              | Its: | Pres/CEO |
|                                 |                 |   |
|                                 |                 |   |
| Prospector  Gaming Enterprises, Inc. |                 |   |
| a Nevada  Corporation                |                 |   |
|                                 |                 |   |
| By:                                  | /s/ Peter Stremmel   |   |   |   |
| Its:                                 | Partner              |   |   |

 

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| State of Nevada  | )     |
|------------------|-------|
|             | ) ss. |
| County of Washoe | )     |

 

This instrument wasacknowledged before me on the 27th day of December, 2001, by Peter Stremmel,the Partner of Target Investments, LLC.

 
|        | /s/ Yvonne Cody |   |
|--------|-----------------|--------|
|   | Notary Public   |

 

 
| State of Nevada  | )     |
|------------------|-------|
|             | ) ss. |
| County of Washoe | )     |

 

This instrument was acknowledged before me on the 27th day of December,2001, by Peter Stremmel, the President of Prospector Gaming Enterprises, Inc.

 
|        | /s/ Yvonne Cody |   |
|--------|-----------------|--------|
|   | Notary Public   |

 

 
| State of Nevada  | )     |
|------------------|-------|
|             | ) ss. |
| County of Washoe | )     |

 

This instrument was acknowledged before me on the 27th day of December,2001, by Ferenc Szony, the President/CEO of Last Chance, Inc.

 
|        | /s/ Yvonne Cody |   |
|--------|-----------------|--------|
|   | Notary Public   |

 

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