**EXHIBIT 10.17**

 

**GROUND****LEASE AGREEMENT**

 

This**Ground Lease Agreement** (the “Agreement”),is made and entered into by and between **Dakota\Blackhawk,LLC**, a Colorado limited liability company (hereinafter referred toas “Lessor”) and **Jacobs Entertainment, Inc.**,a Delaware corporation and/or assigns (hereinafter referred to as “Lessee”)(sometimes Lessor and Lessee are referred to singularly as a “Party” andcollectively as the “Parties”).

 

**P R E M I S E S:**

 

**WHEREAS**, Lessor and Lessee are the Parties to that certain “Option PurchaseAgreement” dated September 12, 2005, 2005 (the “Option Agreement”), a copyof which is attached hereto as Exhibit “A” and incorporated hereinby reference as if fully copied and set forth at length;

 

**WHEREAS**, attached to the Option Agreement, as an exhibit, is that certain “RealEstate Sales Contract” (the “Real Estate Contract”) which is to be executed byLessor and Lessee pursuant to the terms of the Option Agreement, an unsignedcopy of which is attached hereto as Exhibit “B” and incorporatedherein by reference as if fully copied and set forth at length;

 

**WHEREAS**, Lessor is the owner of that certain tract of real property(hereinafter referred to as the “Property”), as more particularly described on Exhibit “C”attached hereto and incorporated herein by reference as if fully copied and setforth at length; and

 

**WHEREAS**, pursuant to the Option Agreement, Lessor desires to lease to Lesseeand Lessee desires to lease from Lessor the Property upon the terms andconditions herein provided.

 

**A G R E E M E N T:**

 

**NOW, THEREFORE**, in consideration of the foregoing premises, the mutual covenants andagreements set forth herein, and other good and valuable consideration, thereceipt and sufficiency of which are acknowledged and confirmed, the Partiesagree to the lease of the Property upon the following terms and conditions:

 

**1.****                                     ****PROPERTY****.** Lessor hereby leases to Lessee and Lessee hereby leases from Lessor theProperty.

 

**2.**                                      **TERM****.**  Theterm of this Agreement (“Term”) shall begin on the date hereof and end on thedate the Option Agreement terminates or, if the Option thereunder is exercisedand the Real Estate Contract is signed, on the termination or Closing of theReal Estate Contract.

 

**3.**                                      **RENT****.** Lessee agrees to pay to Lessor as rent due under this Agreement the sumof $1.00, at Lessor’s address described in Section 13, below.

 

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**4.****                                     ****USE OF PROPERTY****.** Lessee may use the Property for any and all lawful purposes includingall inspection, testing and examination purposes as described in the OptionAgreement and the Real Estate Contract. Lessee shall not use the Property in any manner that violates anystatute applicable thereto or for any illegal purpose.  Lessee shall have the right to erect fencingof Lessee’s discretion (with locked gates) surrounding the perimeter of theProperty in order to limit access to the Property (subject to the rights ofLessor set out in this Agreement). Lessor shall not erect any other improvement on the Property without thewritten consent of Lessor which may be withheld in Lessor’s solediscretion.  If Lessee does not obtaintitle to the Property, Lessee shall remove the fence and any other permittedimprovements at Lessee’s expense at the end of the Term of the Lease.

 

**5.****                                     ****CONDITION OF PROPERTY****.** Lessee accepts the Property in its present condition and state ofrepair.

 

**6.****                                     ****INSPECTIONS****.** Lessor may enter upon the Property at all reasonable times uponforty-eight (48) hours prior written notice to Lessee to inspect the conditionof the Property.

 

**7.****                                     ****REPAIRS AND MAINTENANCE****.**  Atthe end of the Term, Lessee shall bear all expenses of restoring the Propertyto its prior condition subject to and in accordance with the terms of theOption Agreement and the Real Estate Contract.

 

**8.****                                     ****ASSIGNMENT****.** Lessee may assign its rights under this Agreement at any time during theTerm without the prior written consent of Lessor, provided such assignment iseffected as part of an assignment of contract rights pursuant to the terms ofthe Option Agreement and/or Real Estate Contract.

 

**9.****                                     ****DEFAULT AND REMEDIES****. **Should Lessee default in the payment of rent as and when due and notcorrect same within five (5) days after receipt of written notice fromLessor to Lessee, Lessor may declare this Agreement, and all rights andinterest created by it, to be terminated.

 

**10.****                              ****WARRANTY OF TITLE****. **Lessor hereby represents and warrants that it is the owner of theProperty and has the express actual authority to execute this Agreement.  Lessor covenants and agrees that as long asLessee pays the rent as provided in this Agreement and observes and keeps thecovenants, conditions, and terms of this Agreement, Lessee shall lawfully andquietly hold, occupy, and enjoy the Property during the Term.

 

**11.****                              ****NOTICES****.**  Allnotices, demands, requests, and other communications under this Agreement shallbe in writing or electronic format and shall be deemed properly served anddelivered when: (a) delivered by hand to the Party to whose attention itis directed; or (b) posted, if sent by registered or certified mail,return receipt requested, postage pre-paid addressed; or (c) actuallyreceived by the addressee thereof, after being sent by overnight delivery (suchas Federal Express); or (d) sent to the addressee by confirmed telecopier,facsimile, electronic transmission (email) or similar transmission, as follows(or at such changed address as the Parties may from time to time specify inwriting):

 

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| If to Lessor:             |
|---------------------------|
|                      |
|                      | Dakota/Blackhawk, LLC |
|                      | 1700 Kylie Drive,  Suite 240 |
|                      | Longmont, Colorado  80501 |
|                      | Attn: Wendell Pickett  and Roger Pomainville |
|                      | 303-772-8348 |
|                      | 303-772-8565  (facsimile) |
|                      |
| With A Required Copy  To: |
|                      |
|                      | Christopher C. O’Dell |
|                      | O’Dell & Fell,  LLC |
|                      | 1600 Jackson Street |
|                      | Suite 250 |
|                      | Golden, Colorado 80401 |
|                      | (303) 436-9200 |
|                      | (303) 436-9700  (facsimile) |
|                      |
| If to Lessee:             |
|                      |
|                      | Jacobs  Entertainment, Inc. |
|                      | 240 Main Street |
|                      | Black Hawk, Colorado 80224 |
|                      | Attention: Stephen R.  Roark, President |
|                      | (303) 582-1117 |
|                      | (303) 582-0239  (facsimile) |
|                      |
| With A Required Copy  To: |
|                      |
|                      | Jones &  Keller, P.C. |
|                      | 1625 Broadway, 16th  Floor |
|                      | Denver, Colorado 80202 |
|                      | Attention: | Samuel E.  Wing, Esq. |
|                      |   | R. Steven  Jones, Esq. |
|                      | (303) 573-1600 |
|                      | (303) 893-6506  (facsimile) |

 

**12.****                              ****EXPENSES.** Lessee shall not be responsible for any expenses associated with theownership, operation and/or possession of the Property except for themaintenance of casualty and liability insurance (in such amounts and coveragescope as Lessee may elect, in its sole discretion), maintenance of commercialgeneral liability coverage (including contractual coverage and a waiver ofsubrogation) with limits of no less that $3,000,000 and snow removal, litterremoval and weed cutting as required by the City of Blackhawk.  Lessor shall be responsible for all othercosts and expense associated with the ownership, operation and/or possession ofthe Property including but not limited to property taxes, assessments,insurance and utilities. Lessee hereby indemnifies, holds harmless and agreesto defend Lessor of and from any and all claims, demands, liabilities, actions,costs, expenses or causes of action, including,

 

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butnot limited to, attorneys’ fees and costs, arising our of or related to the useor possession of the Property by Lessee under this Lease except when causedsolely by Lessor or its agents’ or employees’: (a)  negligence; (b) willfulmisconduct; or (c) breach of this Lease.

 

**13.****                              ****NO PARTNERSHIP****.**  Therelationship between Lessor and Lessee at all times shall remain solely that oflessor and lessee and not be deemed a partnership or a joint venture.

 

**14.****                              ****EXHIBITS****.**  Thefirst page of all exhibits to this Agreement shall bear the initials ofeach party hereto, and when so initialed, shall be conclusively deemed to be anExhibit hereto, whether or not physically attached to this Agreement.

 

**15.****                              ****ENTIRE AGREEMENT****.**  Withthe exception of Section 33 of the Option Agreement, this Agreementcontains the entire understanding between the Parties hereto concerning thelease of the Property.

 

**16.****                              ****ADVICE OF COUNSEL****.**  Eachof the Parties hereto represent that they have the advice and counsel of theirown attorneys and that no representation or statement made by any other partyhas influenced them in executing or induced them to execute this Agreement.

 

**17.****                              ****FURTHER ACTS****.**  EachParty hereto agrees to perform any and all such further and additional acts andexecute and deliver any and all such further and additional instruments anddocuments as may be reasonably necessary in order to carry out the provisionsand effectuate the intent of this Agreement.

 

**18.****                              ****MODIFICATION****.**  Anymodification of this Agreement shall be in writing and agreed to by allParties.

 

**19.****                              ****AUTHORITY****.**  EachParty hereto represents and warrants that it has full authority to execute theAgreement and bind to the Agreement its respective partners, trustees,beneficiaries, remaindermen, directors, officers, employees, agents, advisors,attorneys, successors, assigns and personal representatives.

 

**20.****                              ****SEVERABILITY****.**  Ifany provision hereof is held to be illegal, invalid, or unenforceable underpresent or future laws effective during the Term, such provisions shall be dulyseverable; this Agreement shall be construed and enforced as if such illegal,invalid, or unenforceable provision had never comprised a part hereof; and theremaining provisions hereof shall remain in full force and effect and shall notbe affected by the severance of the illegal, invalid, or unenforceableprovision or provisions.

 

**21.****                              ****GOVERNING LAW AND VENUE****.**  ThisAgreement shall be governed by and construed in accordance with the laws of theState of Colorado.  The terms of thisAgreement shall be specifically performable in Gilpin County, Colorado.

 

**22.****                              ****BREACH****.** Should any party breach any part of this Agreement, and litigationensue, the Parties agree that the prevailing party shall be entitled to itsreasonable attorneys’ fees and costs in prosecuting or defending its claims.

 

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**23.****                              ****BENEFIT****.** Except as otherwise provided herein, this Agreement shall be bindingupon and inure to the benefit of the Parties hereto and their successors,assigns, legal representatives, heirs and legatees.

 

**24.****                              ****PARAGRAPH HEADINGS****.**  Allparagraph headings set forth in this Agreement are for purposes ofidentification and are intended for convenience only, and shall not control oraffect the meaning, construction or effect of this Agreement or any provisionhereof.

 

**25.****                              ****COUNTERPART EXECUTION****.**  ThisAgreement may be executed in multiple counterparts, each of which shall befully effective as an original, for which together shall constitute only one (1) instrument.

 

**26.****                              ****MEMORANDUM OF LEASE**. Lessee shall have the right to file a “Memorandum of Lease” with theOffice of the Clerk and Recorder or other appropriate public record custodianhaving jurisdictional authority over the Property in the State of Colorado asto the existence of this Lease.

 

**IN WITNESS WHEREOF**, the Parties hereunto set their hands andseals as of the date above first stated.

 
|   | **LESSOR:**                                                  |
|--------|--------------------------------------------------------------|
|   |                                                         |
|   | DAKOTA/BLACKHAWK, LLC,  a Colorado limited liability company |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Roger Pomanville |   |
|   |                                                         | Roger Pomanville,  Manager |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Wendell Gene  Pickett |   |
|   |                                                         | Wendell Gene Pickett,  Manager |
|   |                                                         |
|   |                                                         |
|   | **LESSEE:**                                                  |
|   |                                                         |
|   | JACOBS ENTERTAINMENT,  INC.,  a Delaware corporation         |
|   | And/Or Assigns                                               |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Stephen R. Roark |   |
|   | Printed Name: Stephen  R. Roark                              |
|   | Title:  President/Chief  Financial Officer         |
|        |                                                              |  |  |  |  |

 

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**EXHIBIT “A”**

 

**OPTION PURCHASE AGREEMENT**

 

ThisOption Purchase Agreement (“Agreement”) is entered into this          day of September 2005 to be effective on the Effective Date (defined in Section 19,below) by and between **Dakota\Blackhawk, LLC**,a Colorado limited liability company (hereafter collectively, the “Dakota Group”)and **Jacobs Entertainment, Inc.**,a Delaware corporation and/or assigns (hereafter “JEI”) (sometimes Dakota Groupand JEI are referred to singularly as a “Party” and collectively as the “Parties”).

 

**RECITALS****:**

 

WHEREAS,Dakota Group is the owner of approximately 2.2258 acres of undeveloped landsituated in Gilpin County, Colorado,(containing 96,956 square feet), the legal description of which is attachedhereto as Exhibit “A” and incorporated herein by reference as ifset out word for word (the “Property”);

 

WHEREAS,40,788 square feet of the Property is situated in the Gaming District of GilpinCounty, Colorado as established by The Colorado Limited Gaming Act, C.R.S. 12-47.1-105and the ordinances adopted by the City of Black Hawk, Colorado;

 

WHEREAS,JEI desires to purchase from Dakota Group an exclusive, non-revocable option toacquire the Property (the “Option”);

 

NOW,THEREFORE, in consideration of the mutual covenants contained herein and othergood and valuable consideration (including the consideration paid pursuant to Section 25,below) the receipt and sufficiency of same is hereby acknowledged and confirmedby the Parties, it is mutually agreed by the Parties as follows:

 

**AGREEMENT**

 

**1.****                                     ****Grant of Exclusive Option.**  Forthe consideration expressed in Sections 3 and 25 below, DakotaGroup hereby grants to JEI the exclusive, non-revocable right and option (the “Option”)to purchase the Property at the price of $13,000,000.00 (the “Purchase Price”)under and pursuant to the terms set forth in that certain “Real Estate SalesContract” attached hereto as Exhibit “B” and incorporated herein byreference as if set out word for word (the “Real Estate Sales Contract”).

 

**2.****                                     ****Initial Option Period****.**  TheOption shall commence on the Effective Date and continue until 11:59 p.m.on the date which is one (1) calendar year from the Effective Date (the “InitialOption Period”), unless same is extended pursuant to the provisions of Section 4,below.

 

**3.****                                     ****Consideration****.** TheOption is granted in partial consideration of: (a) the payment by JEI to Escrow Agent (defined in Section 5,below) for the conditional benefit of Dakota Group of the sum of $250,000.00,on or before the Effective Date (the “Initial Deposit”) and (b) the paymentto Dakota Group of the sum of $250,000.00, no later than the date which is onehundred eighty

 

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(180)calendar days from the Effective Date (collectively, the amounts identified in Section 3(a) and(b) above, the “Initial Option Fee”).  JEI shall also pay to Dakota Group of the sumof $100.00 pursuant to Section 25, below (the “IndependentAgreement Consideration”).  The InitialDeposit shall be deposited by the Escrow Agent in an interest bearing accountof JEI’s election and all interest accruing thereon shall belong to JEI.    All references in this Agreement to the “TotalOption Fee” shall include: (i) the Initial Option Fee; (ii) anyExtension Fee paid pursuant to Section 4, below; and (iii) allinterest amounts accruing on the Initial Option Fee and the Extension Fee.

 

**4.****                                     ****Extension Right****.**** **Notwithstanding anything in thisAgreement to the contrary, JEI, at its sole election, shall have the right toextend the Initial Option Period (the “Extension Right”), for an additionaltime period of one (1) calendar year (the “Extension Period”) upon thepayment by JEI of the additional sum of $500,000.00 to Dakota Group (the “ExtensionFee”). The Extension Period shall be computed by excluding the expiration dateof the Initial Option Period and counting the last day of the Extension Period(expiring at 11:59 p.m., local time). JEI shall have the option to exercise the Extension Right at any timeprior to the expiration of the Initial Option Period.

 

**5.****                                     ****Escrow Agent****.** Theterm “Escrow Agent” as used in this Agreement shall mean Gilpin Title, LLC ofGolden, Colorado.  The Escrow Agent shallhold the Initial Deposit pursuant to the terms of this Agreement.

 

**6.****                                     ****Exercise of Option****.**

 

(a)                                  Exercise Notice.  JEImay exercise the Option at any time during the Initial Option Period or theExtension Period (if the Extension Right is exercised) by delivery of a writtenor electronic notice to Dakota Group as to such election (the “Exercise Notice”).  Within ten (10) days of the delivery ofthe Exercise Notice to Dakota Group, Dakota Group and JEI shall execute theReal Estate Sales Contract and cause a fully executed original of same to bedelivered to Escrow Agent (and a fully executed copy of same shall be deliveredto each Party).  Delivery of the ExerciseNotice shall be effected in accordance with the notice provisions of Section 22,below.  If JEI fails to execute the RealEstate Sales Contract within the ten (10) days provided and if either theInitial Option Period or the Extension Period (if the Extension Right isexercised) has run, then the Option shall be deemed waived and JEI shall nolonger have the right to purchase the Property.

 

(b)                                 Exercise Condition.  JEImay not exercise this Option if it is in default for failure to pay the InitialOption Fee when due or for failure to pay the Extension Fee when due and samehas not been cured within ten (10) days after receipt of written noticefrom Dakota Group that any such amount has not been received.

 

(c)                                  Release of Option Fees Upon Exercise ofOption.   Escrow Agent shall release to the DakotaGroup, on demand (without the necessity of the consent of JEI),the InitialOption Fee upon the first to occur of:  (i) theexercise of the Option pursuant to this Agreement or (ii) upon theexpiration of the 60th day from the Effective Date, in the event JEIhas not elected to terminate this Agreement pursuant to Sections 9 and 14,below).

 

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**7.****                                     ****Application To PurchasePrice****.**   If theOption is exercised pursuant to this Agreement, then fifty percent (50%) of theInitial Option Fee and fifty percent (50%) of the Extension Fee (if paid),shall be applied to the Purchase Price at the Closing of the Real Estate SalesContract (and otherwise administered pursuant to the terms of such instrument).

 

**8.****                                     ****Recording of Options****.**  JEIshall have the right to file a “Memorandum of Option” with the Office of theClerk and Recorder or other appropriate public record custodian havingjurisdictional authority over the Property in the State of Colorado as to theexistence of this Option or any extension of same.  The form of Memorandum of Option which JEI isauthorized to file of record is attached hereto as Exhibit “C” andincorporated herein by reference as if set out word for word.

 

**9.**                                      **Inspection Period; InspectionRights.**

 

(a)                                  InspectionRights.  During the term of thisAgreement, JEI shall have the right to conduct an inspection and examination ofthe Property (the “Inspection Period”).  During the Inspection Period,JEI, or JEI’s authorized agentsor representatives, shall be entitled (andpermitted) to enter upon the Property for the purpose of inspecting, examiningand making tests upon and/or conducting an evaluation of the Property(including, but not limited to, those inspections described in Section 10,below).

 

(b)                                 TerminationRight.  If JEI, in JEI’s solediscretion, is dissatisfied with the results of JEI’s inspection of theProperty (for any reason or no reason), JEI may, by written or electronicnotice delivered to Dakota Group or Escrow Agent prior to the expiration of the60th day from the Effective Date (the “Refund Inspection Period”),  terminate this Agreement and upon such event,the Initial Deposit, as well as all interest accrued thereon, shall be returnedto JEI (by Escrow Agent) on demand (without the necessity of the consent ofDakota Group), and neither Dakota Group nor JEI shall have any furtherobligations hereunder except as provided in Section 9(d). If JEIdoes not terminate this Agreement by delivery of such notice prior to theexpiration of the Refund Inspection Period, JEI’s shall still have the right toterminate this Agreement during the Inspection Period but shall not be entitledto receive a refund of the Total Option Fee, except as set out in Section 9(c), below.

 

(c)                                  RefundRight Beyond Refund Inspection Period. Notwithstanding anything herein to the contrary, JEI shall be entitledto receive a refund of the Total Option Fee under the following conditions:

 

(i)                                     therefusal by Dakota Group to close under the Real Estate Sales Contract upon theproper exercise of the Option by JEI; or

 

(ii)                                  thefailure or inability of Dakota Group to deliver fee simple title to theProperty, free and clear of all mortgages, liens, claims, encumbrances,easements, encroachments and judgments as provided in the Deed to be deliveredat Closing and as otherwise required pursuant to the Real Estate SalesContract; or

 

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(iii)                               pursuantto Section 5.1(c) of the Real Estate Sales Contract.

 

(d)                                 IndemnityObligation.  In the event JEI failsto consummate the closing of the purchase of the Property (other than forDakota Group’s breach of this Agreement), JEI agrees to indemnify and holdDakota Group harmless from all costs and expenses actually paid by Dakota Group(supported by verified evidence of same) which arise from damages to the RealProperty in connection with JEI’s inspection of the Property.  JEI agrees to indemnify and hold Dakota Groupharmless from damages arising out of injuries sustained by third parties inconnection with JEI’s inspection of the Property. The obligations of JEI underthis Section 9 (d) shall survive the termination of thisAgreement for a period of three (3) months.

 

**10.****                              ****Environmental Inspection.**  The inspection and examination of theProperty in relation to the environmental condition of the Property shall begoverned by the following:

 

(a)                                  ExaminationAuthority.  JEI shall have the rightto conduct a “Phase I”, “Phase II” and/or a “Phase III” environmental siteassessment (collectively or singularly as the context requires, the “EnvironmentalSurvey”) of the Property.,   If anEnvironmental Survey is conducted, then JEI shall cause a copy of the writtenreport setting forth the findings obtained in that Environmental Survey to bedelivered to Dakota Group.

 

(b)                                 Remediation/Termination.  If, as a result of the Environmental Survey,or by any other means, JEI or Dakota Group becomes aware of the existence ofHazardous Substances (as hereinafter defined in Section 10(c),below), or other environmental contamination, on or within the Property, thenJEI shall have the right to terminate this Agreement. If JEI terminates thisAgreement prior to the expiration of the Refund Inspection Period pursuant tothis Section 10, then the Total Option Fee shall be returned to JEIon demand (without the necessity of the consent of Dakota Group) and theParties shall have no further obligations under this Agreement, except forthose obligations that expressly survive termination of this Agreement.

 

(c)                                  “HazardousSubstances.” For purposes of this Agreement, the term “Hazardous       Substances”shall mean and include all hazardous and toxic substances, waste or othermaterials, any pollutants or contaminants as defined in Section 101 (14)of the Comprehensive Environmental Response Compensation and Liability Act, asamended, 42 U.S.C. Section 9301 (14) (including, without limitation,asbestos and raw materials which include hazardous constituents), or othersimilar substances, or materials which are included under or regulated by anylocal, state, or federal law, rule, or regulation pertaining to environmentalregulation, contamination or clean-up, including, without limitation, “CERCLA”,“RCRA”, or state superlien or environmental clean-up statutes, as may beamended, (all such laws, rules and regulations being referred tocollectively as “Environmental Laws”).

 

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**11.**                               **Document Inspection****.**

 

(a)                                  DakotaGroup Obligation.  To facilitate JEI’sinspection of the Property, Dakota Group shall provide to JEI, at Dakota Group’ssole cost and expense, within three (3) days of the Effective Date, thefollowing:

 

(i)                                     True, correctand complete copies of all leases relating to the Property, if any, and anyamendments thereto.  Additionally, DakotaGroup will provide JEI access to Dakota Group’s records regarding expense andincome items in order to enable JEI to complete an audit of such leases;

 

(ii)                                  Atrue, correct and complete schedule (the “Operating Schedule”) reflecting,with respect to the Property, for the twelve (12) month period preceding themonth of execution of this Agreement (including any interim reports): (i) alloperating expenses and capital expenditures of the Property; and (ii) theaggregate rent collected from tenants of the Property during such period, ifany;

 

(iii)                               Atrue, correct and complete inventory of all personal property located upon theProperty;

 

(iv)                              Atrue, correct and complete copy of all service and other agreements, as well asany amendments thereto, pertaining to the Property on which Dakota Group isobligated (the “Third Party Agreements”), showing: (i) the names of theparties to each agreement; (ii) the service rendered or to be renderedunder each agreement; (iii) the compensation payable by Dakota Group undereach agreement; and (iv) the term and expiration date of each agreement;

 

(v)                                 True,correct and complete copies of all certificates of occupancy, licenses andpermits required by law and issued by all governmental authorities havingjurisdiction, if any, concerning the Property;

 

(vi)                              True,correct and complete copies of all engineering, soils, historical preservationand other professional reports in the possession, custody or control of DakotaGroup and which relate to the Property;

 

(vii)                           True,correct and complete copies of all utility bills for the Property for theprevious twelve (12) months;

 

(viii)                        True,correct and complete copies of instruments, evidencing any actual or threatenedlitigation relating to or with respect to the Property;

 

(ix)                                True,correct and complete copies of all ad valorem and personal property taxstatements as well as all related assessment notices (including valuationassessment documents) covering the Property for the current tax year (ifavailable);

 

(x)                                   Atrue, correct and complete report for the Property of any prepaid rent bytenants;

 

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(xi)                                True,correct and complete copies of any Environmental Site Assessments or otherenvironmental reports with regard to the Property which are in Dakota Group’spossession, custody or control;

 

(xii)                             True,correct and complete copies of all warranties and guaranties relating to theProperty;

 

(xiii)                          True,correct and complete copies of all leasing or other commission agreements withthird parties with respect to the Property, with a summary of unpaidcommissions, if any;

 

(xiv)                         True,correct and complete topographic, construction, engineering and architecturalplans and specifications with respect to the Property;

 

(xv)                            True,correct and complete copies of appraisals, surveys and plats of the Property;

 

(xvi)                         Accessto all maintenance and other records which pertain to the Property;

 

(xvii)                      True,correct and complete copies of all bids and estimates received by Dakota Groupor its agents during the twelve (12) month period prior to the Effective Datefor work to be performed at or for the benefit of the Property, which exceedsin each instance, the sum of $500.00;

 

(xviii)                   True,correct and complete copies of all documents and instruments evidencing rightsof ingress and egress to land from the Property, whether recorded in the publicrecords of Gilpin County, Colorado or otherwise;

 

(xix)                           True,correct and complete copies of all agreements with owners or tenants of anyproperty adjacent to the Property (and which pertain in any manner to theProperty); and

 

(xx)                              Alldocuments and instruments relating in any manner to any pending, threatened oranticipated condemnation or eminent domain proceeding or actions which affector relate to the Property including, but not limited to, that condemnationproceeding referenced in Section 15(b)(iii), below.

 

(b)                                 Return of Materials.  JEI agrees that if for any reason the Closingis not consummated, JEI will promptly return to Dakota Group all materialsfurnished to JEI pursuant to this Section 11.

 

(c)                                  ThirdParty Agreements.  Commencing upon the Effective Date, DakotaGroup will not enter into any Third Party Agreements (or modify same) withoutthe prior written consent of JEI.

 

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**12.****                              ****Survey****.**

 

(a)                                  Dakota Group Obligations. Dakota Group, at Dakota Group’s sole cost and expense, shall provide toJEI within five (5) days after the Effective Date, a current survey datedwithin the sixty (60) day time period prior to the Effective Date (hereinafterreferred to as the “Survey”), of the Property prepared by a licensed surveyoror professional engineer, which Survey:  (i) shallbe in form and content sufficient to delete the standard survey exception fromthe Owner Policy; (ii) shall be accompanied by a metes and boundsdescription of the Property which description shall tie the Property to theadjacent property boundaries setting forth the acreage and square feet withinthe Property; (iii) shall locate, and identify by volume and page reference,if applicable, all existing improvements, fences, waterways, lakes, ponds,encumbrances, encroachments, conflicts, protrusions, uses, highways, streets,roads, easements, alleys and rights-of-way, upon or adjacent to the Property,which are visible on the ground or listed in the Commitment; (iv) shallshow the location of the “100-year frequency flood plain” on the Property, ifapplicable, or, if inapplicable, shall certify that such flood plain does notaffect the Property; (v) shall set forth the number of gross acres andsquare feet contained in the Property; (vi) shall identify and establishthe square footage and location of the portion of the Property situated withinthe Gaming District of Gilpin County, Colorado as established by the ColoradoLimited Gaming Act, C.R.S. 12-47.1-105 and the ordinances adopted by the Cityof Black Hawk, Colorado; and (vii) shall meet or exceed in all aspects the“Minimum Standard Detail Requirements for Land Title Surveys” jointlyestablished and adopted by the American Land Title Association, the AmericanCongress on Surveying and Mapping and the National Society of ProfessionalSurveyors in 1999, as amended from time to time.

 

(b)                                 Certification.  TheSurvey shall further contain a certificate by the surveyor or engineer,addressed to Dakota Group, JEI, the Title Company and any lender of JEI(designated by JEI) in the form and substance set out on Exhibit “D”attached hereto and incorporated herein, as if set out word for word.

 

**13.****                              ****Title****. **Within fifteen (15) days after the Effective Date,  Dakota Group, at its sole cost and expense,shall cause to be delivered to JEI a Commitment for Title Insurance, Coloradostandard form (hereinafter referred to as the “Commitment”), together withtrue, correct, complete and legible copies of all instruments and documentsreferred to therein as exceptions to title covering the Property, in the amountof the Purchase Price, in favor of JEI, pursuant to which the Title Companyagrees, subject to the provisions thereof, to issue at the Closing of the RealEstate Sales Contract an Owner Policy of Title Insurance (hereinafter referredto as the “Owner Policy”).

 

**14.****                              ****Termination****.**

 

(a)                                  Refund Inspection Period.  Atany time prior to the expiration of the Refund Inspection Period, JEI shall beentitled, for any reason, to terminate this Agreement by giving a written orelectronic notice of same to either Dakota Group or the Escrow Agent (the “RefundInspection Period Termination Notice”). Upon delivery of the Refund Inspection Period Termination Notice toeither Dakota Group or Escrow Agent: (i) this Agreement shall becomeautomatically null and void and of no effect without the necessity of furtheraction or consent of either Party; and (ii) the Escrow

 

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Agent shall be deemed authorized andinstructed by the Parties to return the Initial Deposit (and all interestaccrued thereon) to JEI, free and clear of all liens, claims, encumbrances andcharges, minus a reasonable escrow fee to be agreed upon by JEI and the EscrowAgent.

 

(b)                                 Post-Refund Inspection Period Termination.  Atany time after the expiration of the Refund Inspection Period and prior to theClosing of the Real Estate Sales Contract, JEI shall have the right, for anyreason, to terminate this Agreement by giving a written or electronic notice toeither Dakota Group or Escrow Agent (the “Post-Refund Inspection Period TerminationNotice”). Upon delivery of the Post-Refund Inspection Period Termination Noticeto either Dakota Group or Escrow Agent, this Agreement shall becomeautomatically null and void and of no effect without the necessity of furtheraction or consent of either Party. Provided, however, upon the issuance of aPost-Refund Inspection Period Termination Notice, the Initial Option Fee andany Extension Fee, if paid, shall be deemed non-refundable to JEI.

 

(c)                                  Refund Exception. Notwithstanding the immediately preceding Section 14(b), theTotal Option Fee shall be refundable to JEI after the expiration of theInspection Period pursuant to the provisions of Section 9(c),above.

 

(d)                                 Expiration of Option.  Uponthe expiration of the Initial Option Period (or the Extension Period, if theExtension Right is exercised), without the Refund Inspection Period TerminationNotice or the Post-Refund Inspection Period Termination Notice or the ExerciseNotice having been given by JEI under this Agreement, then:  (i) this Agreement shall automaticallyterminate without the necessity of further action or consent of either Party;and (ii) the Escrow Agent shall record the quitclaim deed in accordancewith Section 18, below.

 

**15.****                              ****Dakota Group Representations,Warranties and Covenants****.**

 

(a)**                                 **Dakota Group****Covenants.  In addition to any other agreements or covenantsset out in this Agreement, Dakota Group further agrees to the following:

 

(i)                                     Access.  During the term of thisAgreement (including but not limited to the Inspection Period), Dakota Groupagrees to provide JEI with reasonable access to the Property from time to timein the discretion of JEI, in order for JEI to inspect the Property.

 

(ii)                                  Cooperation.**** Dakota Group agrees to undertake allreasonable efforts to cooperate with JEI in connection with any matterinvolving JEI’s inspection of the Property.

 

(iii)                               No Further Encumbrance; Standstill Obligation. Dakota Group agrees that, commencing on the Effective Date, it willnot:  (i)  cause or allow theProperty to be encumbered by any claim, lien (other than liens of recordexisting as of the Effective Date or any refinancing or extension thereof in anamount not to exceed the current amount) or contaminated by any HazardousSubstances; or (ii) negotiate to enter

 

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into or enter into a back-up contract for the sale of all or part ofthe Property; or (iii) negotiate to enter into or enter into an agreementfor an option to purchase all or part of the Property, unless and until thisAgreement expires or is otherwise terminated.

 

(b)                                 Dakota Group Representations and Warranties.Dakota Group represents and warrants to JEI as of the Effective Date (andrestates and reaffirms each and every item below as of the Closing Date of theReal Estate Sales Contract) the following:

 

(i)                                     Subjectto the provisions of the Deed to be delivered at Closing, Dakota Group hasgood, indefeasible, and fee simple title to the Property, free and clear of allmortgages, liens, claims, encumbrances, leases, tenancies, security interest,covenants, conditions restrictions, rights-of-way, easements, judgments orother matters affecting title other than those shown on the Commitment andotherwise permitted herein.

 

(ii)                                  ThisAgreement has been duly authorized and executed by Dakota Group and is a validand binding obligation of, and is enforceable, in accordance with its terms,against Dakota Group.  The documentsdelivered to JEI at Closing will be duly authorized and executed by DakotaGroup and will be a valid and binding obligation of, and will be enforceable inaccordance with their terms, against Dakota Group.

 

(iii)                               Thereis no pending or threatened condemnation or similar proceeding affecting theProperty or any portion thereof, or pending public improvements, liens, orspecial assessments, in, about or outside the Property which will in any manneraffect the Property or affect access to the Property or affect JEI’s use of theProperty (as a gaming facility, hotel or otherwise). Provided, however, DakotaGroup shall receive all compensation relating to the pending condemnation ofstreet (the “Bobtail Street Condemnation Area”) and sidewalk (the “SidewalkEasement Condemnation Area”) described and depicted on Exhibit “E”attached hereto and incorporated herein as if set out word for word.  Seller further represents and warrants thatthe Bobtail Street Condemnation Area is comprised of five hundred seven squarefeet (507 sq. ft.), does not constitute part of the Property and is not situatedwithin the Gaming District of Gilpin County, Colorado.  Seller further represents and warrants thatthe Sidewalk Easement Condemnation Area is comprised of three thousand twohundred eighty square feet (3,280 sq. ft.), none of which is situated withinthe Gaming District of Gilpin County, Colorado but all of which is included inthe description of the Property.

 

(iv)                              Exceptas provided in Subsection (iii) above, there is no pending orthreatened legal action of any kind or character whatsoever affecting theProperty or any portion thereof which will in any manner affect JEI upon theconsummation of the Closing, nor is any such action presently contemplated.

 

(v)                                 DakotaGroup has complied with all applicable laws, ordinances, regulations, statutes,rules and restrictions pertaining to and affecting the Property, andDakota Group’s performance of this Agreement will not result in any breach of,or constitute any default under, or result in the imposition of, any lien orencumbrance upon the Property under any agreement or other instrument to whichDakota Group is a party or by which Dakota Group or the Property might bebound.

 

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(vi)                              Subjectto the Lease provided for below, Dakota Group will operate and manage theProperty in substantially the same manner it has been operated and managedprior to the execution of this Agreement and will maintain the physicalcondition of the Property in the same or better condition as it presentlyexists to the date of Closing, reasonable wear and tear excepted.

 

(vii)                           Alldocuments delivered pursuant to Section 11 are the most recentdocuments in existence in connection with the operation and maintenance of theProperty.  The balance of such statementsfor the preceding thirty-six (36) months shall be made available to JEI withinfive (5) days of JEI’s request.

 

(viii)                        Noaction has been taken with respect to work performed or delivery of materialwhich would give rise to a lien on the Property and at Closing, there will beno claim in favor of any person or entity which is or could become a lien onthe Property, arising out of the furnishing of labor or materials at DakotaGroup’s request; there will be no unpaid assessments against the Property,except for property taxes assessed but not due and payable at the time ofClosing; and there will be no claim in favor of any person or entity (includingthe present management company) for any unpaid commissions or fees for leasingof the Property.  In the event of any suchclaims at Closing, Dakota Group shall, at JEI’s option:  (aa) establish with the Title Company anescrow of funds in an amount and upon conditions reasonably acceptable toDakota Group and JEI, or (bb) provide a bond in favor of JEI or Title Company(or Title Company’s underwriter) in such amount, upon such conditions and forsuch purposes as may be satisfactory to JEI, Dakota Group and Title Company, ineither case for the purpose of providing for such claims and/or inducing theTitle Company to insure JEI’s title to the Property free and clear of suchclaims.

 

(ix)                                DakotaGroup agrees that benefits or compensation accrued prior to Closing, and due orclaimed to be due either before or after the Closing of the Real Estate SalesContract, to employees or former employees of Dakota Group shall constituteobligations of Dakota Group only, and Dakota Group agrees to indemnify, defendand hold JEI harmless from all such obligations and claims.

 

(x)                                   DakotaGroup will not borrow any money or do, or fail to do, any other act or thingwhich would cause the Property to become pledged or otherwise utilized ascollateral or in any way stand as security for any indebtedness or obligation(excepting encumbrances existing of record as of the Effective Date or any refinancing or extension thereof inan amount not to exceed the current amount).

 

(xi)                                Alldue and owing ad valorem taxes and personal property taxes, together with allassessments or other charges for utilities, roads,  the widening of roads, sidewalks or any otherpublic infrastructure or any other fees imposed by any governmental authoritywith respect to the Property which are currently due and payable, have beenpaid in full.

 

(xii)                             Tothe current knowledge of Dakota Group, no Hazardous Substances (as defined in Section 10,above) are located on or about the Property.

 

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(xiii)                          Theportion of the Property depicted on Exhibit “F” attached hereto andincorporated herein as if set out word for word is situated within the GamingDistrict of Gilpin County, Colorado.

 

(xiv)                         Tothe current knowledge of Dakota Group, there are no pending assessments orother charges for utilities, roads, widening of roads, sidewalks or any otherpublic infrastructure imposed by any governmental authority with respect to theProperty which will become due and owing after the Closing of the Real EstateSales Contract.

 

(c)                                  ContinuingEffect.  The representations,warranties and covenants of Dakota Group contained in this Agreement or in anydocument delivered to JEI pursuant to the terms of this Agreement (whether inthis Section 15 or elsewhere in this Agreement) shall be true andcorrect in all material respects and not in default at the time of Closing ofthe Real Estate Sales Contract, just as though they were made at such time,Dakota Group shall deliver to JEI, at Closing of the Real Estate SalesContract, an affidavit to that effect.

 

(d)                                 Survival.  The provisions of this Section 15,shall expressly survive the exercise of the Option and the Closing of the RealEstate Sales Contract and shall not merge with the Deed or any conveyancethereof for a period of one year from the date of Closing.

 

**16.****                              ****Condemnation****.**  During the period from the Effective Date ofthis Agreement to the Closing of the Real Estate Sales Contract, all risk ofloss from condemnation or eminent domain, shall be borne by Dakota Group exceptas set out in Section 15(b)(iii). If any condemnation proceedings are instituted or threatened, betweenthe Effective Date and the Closing of the Real Estate Sales Contract, JEI shallhave a period of twenty (20) calendar days (regardless of whether the RefundInspection Period has expired) to elect to: (a) terminate this Agreement and upon such event Dakota Group shallwithin seven (7) days of JEI’s issuance of such notice, refund the TotalOption Fee to JEI and thereafter the Parties shall have no further obligationsto each other; or (b) proceed under this Agreement (and upon the exerciseof the Option, to proceed under the Real Estate Sales Contract), in which eventDakota Group shall, at the Closing, assign to JEI its entire right, title andinterest in and to any condemnation or eminent domain award.  Notwithstanding any other language in this Section 16to the contrary, if the condemnation or eminent domain is for less than 5% ofthe total land area of the Property, JEI shall not be entitled to terminatethis Agreement and receive a refund of the Total Option Fee (unless JEI’snotice of termination described above is delivered to Dakota Group prior to theexpiration of the Refund Inspection Period). The parties recognize that the property which the City of Blackhawk (“City”)needs for Bobtail Street has been excluded from the description of theProperty.  Notwithstanding this Section 16or any other provision of this Agreement, if the City condemns a sidewalkeasement on the lands shown in Exhibit E, Dakota Group shall be entitledto retain all compensation paid for said easement and the amount of landcondemned thereby shall not be counted in the 5% described above in this Section 16.

 

**17.****                              ****Risk of Loss****.**  Inthe event of material loss or damage to the Property prior to the Closing ofthe Real Estate Sales Contract (and while this Agreement is in full force andeffect),

 

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whichresults in a diminution in the value of the Property (in Purchaser’s reasonabledetermination) (each, a “Casualty Event”) and Seller cannot restore theProperty to its original condition and value within thirty (30) daysthereafter, to Purchaser’s satisfaction, JEI shall be entitled, within thirty (30) days of the occurrence ofsuch Casualty Event, to terminate this Agreement (and if the Option has beenexercised, to terminate the Real Estate Sales Contract) by giving a RefundInspection Period Termination Notice or a Post-Refund Inspection PeriodTermination Notice to Dakota Group . Within seven (7) days of issuance of the applicable terminationnotice described in the immediately preceding sentence, Dakota Group shallrefund the Total Option Fee to JEI.  Inthe event JEI elects not to terminate this Agreement, JEI shall be entitled, onexercise of the Option, to the rights set out in Section 9.1 of theReal Estate Sales Contract.  Theprovisions of this Section 17 shall expressly survive the exerciseof the Option.

 

**18.****                              ****Quitclaim Deed****.** Concurrently with the execution of this Agreement, JEI agrees to executeand acknowledge a quitclaim deed quitclaiming its interest in the Property, andto deliver the quitclaim deed to the Escrow Agent, who shall hold suchquitclaim deed in accordance with this provision.  On termination of this Agreement (without theexercise of the Option pursuant to Section 6) or upon terminationof the Real Estate Sales Contract without Closing (except as a result of abreach thereof by Dakota Group),  EscrowAgent shall cause the quitclaim deed to be recorded in the Office of the Clerkand Recorder, Gilpin County, Colorado. Dakota Group shall be responsible forall reasonable costs of Escrow Agent for its performance in accordance withthis Section 18.

 

**19.****                              ****Effective Date****.**This Agreement (or a counterpart hereof) mustbe executed by the Parties and a fully executed copy hereof (or executedcounterparts) deposited with the Escrow Agent not later than five (5) daysafter execution hereof by the latter of the Parties (the confirmed date ofreceipt by Escrow Agent of a fully executed original of this Agreement beingherein referred to as the “Effective Date”), or this Agreement shall becomenull, void and of no effect whatsoever.

 

**20.****                              ****Successors and Assigns**.  ThisAgreement shall be binding upon and shall inure to the benefit of the Partieshereto and their respective heirs, executors, personal representatives,successors and assigns.  Dakota Group maynot assign this Agreement without the prior written consent of JEI except thatDakota Group may assign this Agreement to a related entity without the consentof JEI.  JEI may assign this Agreement ifsuch assignment is effected to an entity organized as a corporation, limitedliability company, limited partnership, limited liability partnership, limitedliability limited partnership, partnership or joint venture, the controllingownership and/or management of which resides in JEI so long as such assigneeassumes, in writing in an instrument delivered promptly to Dakota Group, allobligations of JEI under this Agreement.

 

**21.****                              ****Counterparts**.  ThisAgreement may be executed in any number of identical counterparts, any or allof which may contain the signatures of less than all of the Parties, and all ofwhich shall be construed together as a single instrument.

 

**22.****                              ****Notices**.  Allnotices, demands, requests, and other communications under this Agreement shallbe in writing or electronic format and shall be deemed properly served anddelivered when: (a) delivered by hand to the Party to whose attention itis directed; or (b) posted, if sent by registered or certified mail,return receipt requested, postage pre-paid addressed; or (c)

 

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actually received by the addressee thereof, afterbeing sent by overnight delivery (such as Federal Express); or (d) sent tothe addressee by confirmed telecopier, facsimile, electronic transmission(email) or similar transmission, as follows (or at such changed address as theParties may from time to time specify in writing):

 
| If to Dakota Group:       |
|---------------------------|
|                      |
|                      | Dakota/Blackhawk, LLC |
|                      | 1700 Kylie Drive,  Suite 240 |
|                      | Longmont, Colorado  80501 |
|                      | Attn: Wendell Pickett  and Roger Pomainville |
|                      | 303-772-8348 |
|                      | 303-772-8565  (facsimile) |
|                      |
| With A Required Copy  To: |
|                      |
|                      | Christopher C. O’Dell |
|                      | O’Dell & Fell,  LLC |
|                      | 1600 Jackson Street |
|                      | Suite 250 |
|                      | Golden, Colorado 80401 |
|                      | (303) 436-9200 |
|                      | (303) 436-9700  (facsimile) |
|                      |
| If to JEI:                |
|                      |
|                      | Jacobs  Entertainment, Inc. |
|                      | 240 Main Street |
|                      | Black Hawk, Colorado 80224 |
|                      | Attention: Stephen R.  Roark, President |
|                      | (303) 582-1117 |
|                      | (303) 582-0239  (facsimile) |
|                      |
| With A Required Copy  To: |
|                      |
|                      | Jones &  Keller, P.C. |
|                      | 1625 Broadway, 16th  Floor |
|                      | Denver, Colorado 80202 |
|                      | Attention: | Samuel E.  Wing, Esq. |
|                      |   | R. Steven Jones, Esq. |
|                      | (303) 573-1600 |
|                      | (303) 893-6506  (facsimile) |

 

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**23.****                              ****Entire Agreement****. **The Parties agree that all the terms and conditions of this Agreementare contained herein and declare that no promises, representations, guarantees,warranties or agreements other than those expressly herein contained have beenmade or relied upon by either of the Parties hereto.  This Agreement represents the completeunderstanding between the Parties hereto as the subject matter hereof, andsupersedes all prior written or oral negotiations, statements, or agreementsbetween the Parties hereto as to the Property or this Agreement, the conditionthereof, or any other matter whatsoever, made or furnished by any real estatebroker, agent, employee or other person representing or purporting to representeither Party hereto.

 

**24.****                              ****Governing Law**.  ThisAgreement shall be construed in accordance with the laws of the State ofColorado.

 

**25.****                              ****Independent Consideration****. **Upon execution of this Agreement by the Parties, JEI shall pay toDakota Group the sum of One Hundred and No/100 Dollars ($100.00) as independentagreement consideration for Dakota Group’s execution, delivery and agreement tobe bound by all of the provisions of this Agreement (the “Independent AgreementConsideration”).  The IndependentAgreement Consideration shall be non-refundable to JEI and not applicable tothe Purchase Price at the Closing of the Real Estate Sales Contract.

 

**26.****                              ****Significance of Headings****.**  Allparagraph headings set forth in this Agreement are for purposes ofidentification and are intended for convenience only.

 

**27.****                              ****Exhibits****. **All exhibits to this Agreement, if any, shall bear the initials of eachParty hereto, and when so initiated, shall be conclusively deemed to be an Exhibit hereto,whether or not physically attached to this Agreement.

 

**28.****                              ****Advice of Counsel****. **Each of the Parties hereto represent that they have had the opportunityto seek the advice and counsel of their own attorneys; that they are relyingupon their own judgment, belief, and knowledge with respect to the nature andextent of this Agreement; and that no representation or statement made by anyother party has influenced them in executing or induced them to execute thisAgreement.

 

**29.****                              ****Further Acts****.**  EachParty hereto agrees to perform, without delay, any and all such further andadditional acts and execute and deliver any and all such further and additionalinstruments and documents as may be reasonably necessary in order to carry outthe provisions and effectuate the intent of this Agreement.

 

**30.****                              ****Authority****. **Each Party hereto represents and warrants that it has full authority toexecute this Agreement and bind to this Agreement its respective partners,trustees, beneficiaries, remaindermen, directors, officers, employees, agents,advisors, attorneys, successors, assigns and personal representatives.

 

**31.****                              ****Breach****. **Should any Party breach any part of this Agreement and litigationensue, the Parties agree that the prevailing Party shall be entitled to itsreasonable attorneys’ fees and costs in prosecuting or defending its claim.

 

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**32.****                              ****Construction****. **This Agreement is the result of negotiations between the Parties,neither of whom has acted under any duress or compulsion, whether legal,economic or otherwise.  Accordingly, theterms and provisions hereof shall be construed in accordance with their usualand customary meanings.  The Partieshereby waive the application of any rule of law which otherwise would beapplicable in connection with the construction of this Agreement that ambiguousor conflicting terms or provisions should be construed against the Party who(or whose attorney) prepared the executed Agreement or any earlier draft of thesame.

 

**33.****                              ****Lease of Property****.** Effective upon execution of this Agreement by the Parties and continuinguntil the first to occur of:  (a) theexpiration or earlier termination of this Agreement or (b) the Closing ortermination of the Real Estate Sales Contract, Dakota Group hereby leases toJEI for the sum of One Dollar and No/100 ($1.00) the Property (the “Lease”).  The Lease shall be evidenced by a writtenlease agreement setting out such terms as may be satisfactory to JEI, in itssole discretion, including, but not limited to: (a) the right of JEI to erect a fence around the perimeter of theProperty; (b) the right of JEI to the exclusive possession of theProperty; and (c) the right of JEI to record a Memorandum of Lease in thepublic records of Gilpin County, Colorado. The Lease to be executed by JEI and Dakota Group is attached to thisAgreement as Exhibit “G” and incorporated herein as if set out wordfor word.  Prior to the commencement dateof the Lease, Dakota Group shall be solely responsible for the proper andcomplete termination of all rights of tenancy to the Property vested with anythird party as of the Effective Date.

 

**34.**                               **Date Computation**.  Ifany date of significance hereunder falls upon a Saturday, Sunday or recognizedFederal holiday, such date will be deemed moved forward to the next day whichis not a Saturday, Sunday or recognized Federal holiday.  The terms “working day” shall mean dayselapsed exclusive of Saturday, Sunday or recognized Federal holidays.

 

**35.**                               **Dispute Resolution/Mediation/Arbitration**.

 

(a)                                  Informal Resolution.  TheParties shall attempt amicably to resolve any controversy, dispute ordifference arising out of this Agreement.

 

(b)                                 Mediation Predicate.

 

(i)                                     In the event the Parties are unable toresolve such dispute, the Parties shall submit same to mediation.

 

(ii)                                  Each Party covenants and agrees that, withinseven (7) days after receipt of the other Party’s written request formediation, it will participate in at least two (2) hours with a mediatorfor each issue brought forward by any Party. Any mediation proceeding shall be conducted in Denver, Colorado.  The fees of the mediator shall be borneequally by all Parties to the dispute, unless otherwise agreed by them inwriting and all other court fees (including attorneys’ fees) and expensesincurred by any Party shall be borne solely by the Party incurring same;provided, however, should any Party fail or refuse to follow the terms of thisparagraph in pursuit of mediation, then such Party shall be fully liable forthe fees of the mediator and all costs, fees (including reasonable attorneys’fees) and expenses incurred by both Parties in the other Party’s pursuit ofsuch

 

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mediation. An agreement by the Parties to settle any issues of such dispute shallbe regarded as a contract which provisions are conclusive as to those issues ofthe dispute.

 

(c)**                                 **Arbitration.

 

(i)                                     After satisfaction of the mediation predicateset out in Section 35(b), above), upon demand of either Party,(whether made before or after the institution of any judicial proceeding) anycontroversy or claim whatsoever arising out of or relating to this Agreement,or the breach thereof, shall be settled by binding arbitration in Denver,Colorado in accordance with the rules of the American ArbitrationAssociation (“AAA”) and judgment upon the award rendered by the arbitrator(s)may be entered by any court having jurisdiction thereof.  THE PARTIES UNDERSTAND THAT BY AGREEING TOBINDING ARBITRATION FOR THE RESOLUTION OF ANY DISPUTES THEY ARE WAIVING THEIRRESPECTIVE RIGHT TO A JURY TRIAL.

 

(ii)**                                 **Any dispute submitted for arbitration shallbe referred to a panel of three (3) arbitrators.  The Party submitting (“Submitting Party”)the intention to arbitrate (the “Submission”) shall nominate onearbitrator.  Within thirty (30) days ofreceipt of the Submission, the Party receiving the Submission (“Answering Party”)shall nominate one arbitrator.  If theAnswering Party fails to timely nominate an arbitrator, then the secondarbitrator shall be appointed by the AAA in accordance with the industryapplicable AAA Rules (the “Rules”). If the arbitrator chosen by the Submitting Party and the arbitratorchosen by or selected for the Answering Party can agree upon a neutralarbitrator within fifteen (15) days of the choice or selection of the AnsweringParty’s arbitrator, then such individual shall serve as the thirdarbitrator.  If no such agreement isreached, a third neutral arbitrator shall be appointed by the AAA in accordancewith the Rules.  The Parties agree thatthey shall consent to an expedited proceeding under the Rules, to the fullextent the AAA can accommodate such a request.

 

(iii)                               The ruling of the arbitrators shall bebinding and conclusive upon all Parties hereto and any other person with aninterest in the matter.

 

(iv)                              Except as to either Party’s right to seekinjunctive relief under applicable law, the arbitration provision set forthherein shall be a complete defense to any suit, action or other proceedinginstituted in any court regarding any controversy or claim (including, withoutlimitation, whether any controversy or claim is subject to arbitration) arisingout of or relating to this Agreement, or the breach thereof (whether, in anycase, involving: (x) a Party hereto, (y) their beneficiaries, successors,assigns and subcontractors, or (z) such Party’s or successor’s directors,officers, partners, members, managers, assigns or subcontractors,representatives or agents); provided, however, that: (aa) any of theparties to the arbitration may request a Colorado state court in Denver County,Colorado, to provide interim injunctive relief in aid of arbitration hereunderor to prevent a violation of this Agreement pending arbitration hereunder (andany such request shall not be deemed a waiver of the obligations to arbitrateset forth in this Section 35); (bb) any ruling on the awardrendered by the arbitrators may be entered as a final judgment in state orfederal court having jurisdiction over the Parties (and each of the Partieshereto irrevocably submits to the jurisdiction of such court for suchpurposes); and (cc) application may be made by a Party to any court ofcompetent jurisdiction

 

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wherever situated for enforcement of any such final judgment and theentry of whatever orders are necessary for such enforcement.  In any proceeding with respect hereto, alldirect, reasonable costs and expenses (including, without limitation, AAAadministration fees and arbitrator fees) incurred by the Parties to theproceeding shall, at the conclusion of the proceeding, be paid by the Partiesincurring same.

 

(d)**                                **Injunctive Relief**.** Nothing in this Section 35 shall prevent or prohibit a Party’sright to seek injunctive relief under applicable law.

 

**36.****                              ****Recitals****.** Theterms, definitions and provisions of the Recitals set out above are expresslyincorporated herein by reference as if set out word for word.

 

**37.****                              ****Defined/Capitalized Terms****.** Anycapitalized terms which are not defined in this Agreement shall have themeaning ascribed to such term in the Real Estate Sales Contract.

 

**38.****                              ****Survival****. **The provisions of Sections 7, 13, 15, 16, 17, 20, 22, 23,24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 and 38 of thisAgreement shall survive the exercise of the Option and the Closing of the RealEstate Sales Contract and remain in full force and effect after Closing asbetween the Parties hereto except to the extent limited herein and in the RealEstate Sales Contract.  Provided,further, nothing in this Section 38 shall construed or applied tolimit or negate the survival of other provisions in this Agreement which arespecified to expressly survive the exercise of the Option and the Closing ofthe Real Estate Sales Contract but which may not be listed in this Section 38.

 

INWITNESS WHEREOF, the Parties have duly executed this Agreement on the 12thday of September 2005.

 

 
|   | **DAKOTA  GROUP:**                                           |
|--------|--------------------------------------------------------------|
|   |                                                         |
|   | DAKOTA/BLACKHAWK, LLC,  a Colorado limited liability company |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Roger Pomanville |   |
|   |                                                         | Roger Pomanville,  Manager |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Wendell G. Prichett |   |
|   |                                                         | Wendell G. Prichett,  Manager |
|   |                                                         |
|   |                                                         |
|   | **JEI:**                                                     |
|   |                                                         |
|   | JACOBS ENTERTAINMENT,  INC.,                                 |
|   | And/Or Assigns                                               |
|   |                                                         |
|   |                                                         |
|   | By:                                                          | /s/ Stephen R. Roark |   |
|   | Printed Name: Stephen  R. Roark                              |
|   | Title: President/Chief  Financial Officer                    |
|        |                                                              |  |  |  |

 

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**ACCEPTANCEBY ESCROW AGENT**

 

The undersigned title company, as Escrow Agent, hereby acknowledgesreceipt of a fully executed original (or executed original counterparts) of theforegoing Agreement and the sum of $250,000.00 as the Initial Deposit referredto therein, and accepts the obligations of the Escrow Agent as set forththerein.  The Effective Date of theAgreement is the date identified below.

 

 
|   | GILPIN  TITLE, LLC |
|--------|--------------------|
|   |               |
|   | By:                |   | /s/  Mari O’Brien |   |
|   | Name:              |   Mari  O’Brien |   |
|   | Title:             | Commercial  Escrow Officer |   |
|   |               |
|   |               |
|   | Date:              |   | September 13,  2005 |   |
|   |               | “Effective Date” |
|        |                    |  |  |  |  |  |  |  |

 

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