Exhibit 10.16


 


TRIPLE
NET LEASE


 


THIS TRIPLE NET LEASE (the “Lease”) is made this 14th day of November,
2005, by and between ROUTE 225 INVESTMENTS, LLC, a Nevada corporation, which is
hereinafter referred to as “Landlord,” and JACOBS ENTERTAINMENT, INC., a
Delaware limited liability company and/or assigns, which is hereinafter
referred to as “Tenant” (sometimes herein “Landlord” and “Tenant” are
singularly referred to as a “Party” and collectively as the “Parties”).


 


ARTICLE I


 


LEASEHOLD
PREMISES


 


Section 1.01.                             Leasehold Premises.  In consideration of Tenant’s agreement to pay
rent and to comply with the terms, covenants and conditions hereof, Tenant
hereby leases from Landlord and Landlord hereby leases to Tenant:


 


(a)                                  That certain real property which
is particularly described on Exhibit ”A”;
attached hereto and incorporated herein (the “Leasehold Real Property”);


 


(b)                                 all improvements situated on the
Leasehold Real Property which include a commercial building with a gross
interior floor space area of approximately 37,000 square feet (collectively the
“Leasehold Building”);


 


(c)                                  All personal property which is
located in, or is appurtenant to, the Leasehold Building (the “Leasehold
Personal Property”).


 


(d)                                 The Leasehold Real Property, the
Leasehold Building and the Leasehold Personal Property are hereinafter
collectively referred to as the “Leasehold Premises”.


 


Section 1.02                                As – Is.   Except
as expressly set out in this Lease to the contrary, Landlord makes no
warranties or representations regarding the Leasehold Premises.  Tenant declares that it has performed such
inquiries and investigations of the Leasehold Premises, and the circumstances
related to the Leasehold Premises as it deemed necessary or advisable under the
circumstances.  Except as expressly set
out in this Lease to the contrary, the warranties and representations which are
disclaimed hereby include without limitation, warranties and representations
with regard to: (i) the physical and environmental condition of the
Leasehold Premises; (ii) the compliance with any governmental rules or
regulations; (iii) the fitness of the


 





















 


Leasehold
Premises for any particular purpose; and (iv) the propriety of using the
Leasehold Premises for any particular purpose.


 


ARTICLE II


 


TERM


 


Section 2.01.                             Commencement and Expiration.  The term of this Lease (the “Lease Term”)
shall commence on November 14, 2005 (hereinafter referred to as the “Commencement
Date”) and shall continue until October 31, 2010 for five (5) years,
unless sooner terminated or extended, as hereinafter provided.   The first five (5) year term described
in the immediately preceding sentence shall be sometimes referred to as the “Initial
Term”.


 


Section 2.02.                             Option to Renew.  Tenant shall have three (3) successive
options to extend the Lease Term (hereinafter respectively referred to as the “First
Option to Renew”, the “Second Option to Renew” and the “Third Option to Renew”).
The First Option to Renew, the Second Option to Renew and Third Option to Renew
are hereinafter collectively referred to as the “Options to Renew”.  In the event that any Option to Renew is not
validly exercised in accordance with Section 2.02(b), all
subsequent Options to Renew shall expire and shall no longer be enforceable.  The Options to Renew shall each be subject to
the following terms and conditions:


 


(a)                                  Renewal Periods.  Upon exercise of each Option to Renew, the
Lease Term shall be extended for a period of five (5) years (which periods
are respectively referred to herein as the “First Renewal Period”, the “Second
Renewal Period”, and the “Third Renewal Period”).  The First Renewal Period, the Second Renewal
Period and the Third Renewal Period are hereinafter collectively referred to as
the “Renewal Periods”.  The First Renewal
Period, the Second Renewal Period and the Third Renewal Period shall not be
deemed to comprise part of the Lease Term unless the applicable Option to Renew
relating to such Renewal Periods is executed by Tenant.


 


(b)                                 Renewal Exercise.  The Options to Renew shall be exercised by
written notice to Landlord which must be given in accordance with Section 15.14
below.  The First Option to Renew must be
exercised at least ninety (90) but no more than one hundred eighty (180) days
prior to expiration of the Initial Term. 
The Second Option to Renew must be exercised at least 90 but no more
than 180 days prior to expiration of the First Renewal Period.  The Third Option to Renew


 


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must be exercised at
least ninety (90) but no more than one hundred eighty (180) days prior to
expiration of the Second Renewal Period. 
No Option to Renew may be exercised at any time when there is an uncured
Event of Default then existing.


 


(c)                                  Renewal Period Lease Terms.  During the Renewal Periods, the terms and
conditions of this Lease shall remain unchanged from the Initial Term except as
otherwise specifically set forth herein.


 


ARTICLE III


 


RENT


 


Section 3.01.                             Base Rent.  The minimum monthly rent to be paid to
Landlord by Tenant under this Lease shall be as follows:


 


(a) Initial Term.  The
base rent under this Lease (the “Base Rent”) during the Initial Term shall be
payable monthly in advance on the first day of each calendar month during such Initial
Term as follows:


 


	
  Minimum Rent
  payable on

  	
   

  	
   

  	
   

  
	
  each of the
  Rental Due

  	
   

  	
   

  	
   

  
	
  Dates
  occurring during

  	
   

  	
   

  	
   

  
	
  November 2005
  through

  	
   

  	
   

  	
   

  
	
  October 2006

  	
   

  	
  $

  	
  18,750.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum Rent
  payable on

  	
   

  	
   

  	
   

  
	
  each of the
  Rental Due

  	
   

  	
   

  	
   

  
	
  Dates
  occurring during

  	
   

  	
   

  	
   

  
	
  November 2006

  	
   

  	
   

  	
   

  
	
  through October 2007

  	
   

  	
  $

  	
  31,250.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum Rent
  payable on

  	
   

  	
   

  	
   

  
	
  each of the
  Rental Due

  	
   

  	
   

  	
   

  
	
  Dates
  occurring during

  	
   

  	
   

  	
   

  
	
  November 2007

  	
   

  	
   

  	
   

  
	
  through October 2010

  	
   

  	
  $

  	
  37,500.00

  	
   

  



 


(b)                                 Renewal
Periods.  In the event that any of
the Options to Renew are exercised, the Base Rent which is payable on the first
day of each month occurring during the applicable Renewal Periods shall be
Thirty-Seven Thousand Five Hundred


 


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Dollars ($37,500.00)
(the “Renewal Period Base Rent”) as such amount may be increased, from time to
time in accordance with Section 3.02.


 


Section 3.02. Increases in Base Rent.  The amount of the Base Rent, which is set
forth by Section 3.01, above, shall be subject to adjustment (in
each case, a “Rent Adjustment”) on the on the first day of each Renewal Period (with
each such date being referred to herein as an “Adjustment Date”).  The amount of the Base Rent as so adjusted on
each Adjustment Date (the “Adjusted Rent”) shall be payable in advance on the
Adjustment Date for which it was determined, and on the first (1st) day of each
and every calendar month thereafter until, but not including, the next
succeeding Adjustment Date.  The amount
of the Adjusted Rent shall be determined as set forth below:


 


(a)                                  CPI
Escalation.  Each adjustment shall be
determined with reference to the Consumer Price Index for all Urban Consumers
for All Items (1982-1984=100)- “West Region Average”, published by the United
States Department of Labor, Bureau of Labor Statistics (the “Index”).  The Index which is published for August 2005
shall be the “Base Index,” and the Index which is published for the month of August immediately
preceding each Adjustment Date shall be the “Adjustment Index.”


 


(b)                                 Adjusted
Rent Calculation.  On each Adjustment
Date, the Adjustment Index shall be divided by the Base Index, and the
resulting quotient multiplied by the Renewal Period Base Rent.  The Adjusted Rent so determined shall be the
amount of the Base Rent which is payable on the applicable Adjustment Date and
on the same day of each succeeding month thereafter until, but not including,
the next succeeding Adjustment Date. However, the terms of this Section 3.03
notwithstanding, in no event shall the Adjusted Rent be less than the Renewal
Period Base Rent (or the most recently determined Adjusted Rent, as the case
may be).


 


(c)                                  Alternate
Indexes.  In the event the CPI Index referenced
above shall cease to be published during the Lease Term, then and in such event
only, the Adjusted Rent shall be determined on the basis of such other
comparable index as shall be then published by the United States Government,
or, if there be none, by the comparable index published by Standard &
Poor’s.  In the event none of the
foregoing indexes are published, it is understood and agreed that a Board of
Arbitrators shall be constituted as of each Adjustment Date to decide the
percentage of adjustment applicable to the rentals herein specified, based upon
their examination of retail prices in Reno, Nevada, unless Landlord and Tenant
agree  as to the amount


 


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of such
adjustment.  Such Board of Arbitrators
shall be selected pursuant to the following:


 


(i)                                     The Board of
Arbitrators shall consist of three (3) disinterested persons.  Each Party shall appoint one (1) arbitrator,
and the two (2) appointed arbitrators shall appoint the third.


 


(ii)                                  The Board of
Arbitrators shall begin on the next business day after their selection at once
and proceed with all reasonable dispatch to determine questions referred to
them as herein provided, and their determination shall in each and every
instance be final and binding on the Parties.


 


(iii)                               If either Party at any
time prefers to have the adjustment of rental determined by the courts instead
of by arbitrators, the same may be done by the Party having such preference
beginning legal proceedings in the year prior to the appointment of the
arbitrators, but not afterward.


 


(iv)                              The Board of Arbitrators
shall report to the Parties  within
fifteen (15) days after the rental adjustment question has been submitted to
them, and their findings shall be in writing signed by not less than two (2) arbitrators.


 


(v)                                 If any one or more of such
arbitrators shall resign, die or become incapacitated before a full and final
determination is made, such arbitrator shall be replaced in the same manner as
he was originally appointed and shall have the same power and authority as
though he had been originally appointed.


 


(vi)                              The Parties shall share
equally the cost and expense of the arbitrators and all expenses connected
therewith.


 


Section 3.03 Additional Rent.  Subject to Tenant’s rights of contest and
appeal set out in this Lease, all taxes, charges, costs and expenses which the
Tenant is required to pay hereunder, together with all interest and penalties
that may accrue thereon in the event of the Tenant’s failure to pay such
amounts shall be deemed to be Additional Rent. In the event of nonpayment of
Additional Rent by Tenant, the Landlord shall have all the rights and
obligations with respect thereto as the Landlord has for the nonpayment of Base
Rent.  Notwithstanding the above, and
subject to Section 5.05, below, Tenant may in good faith contest
such taxes, charges, costs and


 


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expenses and such
amounts shall not be deemed Additional Rent until a final, non-appealable
judgment from a court of competent jurisdiction is rendered concerning same.


 


Section 3.04.                             Late Rental Payments.  Subject to Tenant’s rights of contest and
appeal set out in this Lease, if any installment of rent or any sum due from
Tenant shall not be received by Landlord or Landlord’s designee within ten (10) days
after such amount is due, then Tenant shall pay to Landlord a late charge equal
to five percent (5%) of such overdue amount, plus any attorney’s fees incurred
by Landlord by reason of Tenant’s failure to pay rent and/or other charges when
due hereunder.  The Parties  agree that such late charges represent a fair
and reasonable estimate of the cost that Landlord will incur by reason of the
late payment of Tenant.  Acceptance of
such late charges by the Landlord shall in no event constitute a waiver of
Tenant’s default with respect to any of the other rights and remedies granted
hereunder for uncured defaults.


 


Section 3.05. Minimum Rent Net to Landlord.  It is the intention of the Landlord and the
Tenant that the Base Rent herein specified shall be net to the Landlord in each
year during the term of the Lease. 
Accordingly, all costs, expenses and obligations of every kind relating
to the Leasehold Premises (except as otherwise specifically provided in this
Lease) which may arise or become due during the Lease Term shall be paid by the
Tenant, and the Landlord shall be indemnified by the Tenant against such costs,
expenses and obligations due and owing by Tenant.  Subject to the various provisions of this
Lease to the contrary, including, but not limited to Section 3.06,
the Minimum Rent shall be paid to the Landlord without notice of demand and
without abatement, deduction, or setoff (except as otherwise specifically
provided in this Lease).


 


Section 3.06.  Credit/Offset Rights of Tenant. 
Notwithstanding any other provision of this Lease to the contrary,  Tenant
shall have the right, in Tenant’s election, to offset against any amount
due by Tenant under this Lease (as Base Rent, Additional Rent or otherwise) the
sum of $50,000.00 to be applied by Tenant against such obligations in the
manner and order as Tenant so elects (including the discharge of such obligations
in consecutive months, whether in partial discharge of such monthly obligations
or otherwise)(collectively, the “Offset Rights”). Tenant acknowledges that such
Offset Rights are the product of the negotiations of the Parties and further
based on the due diligence investigation of the Leasehold Premises by Tenant
and that as a result of such matters, Landlord shall have no obligations to
Tenant regarding any further repairs to the Leasehold Building.


 


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Section 3.07                                Payment Terms.


 


(a)                                  Monthly
Payment.  The Base Rent described
above is to be paid in equal monthly installments in advance on the Commencement
Date and thereafter, on the first day of each and every calendar month of the Lease
Term (each a “Rental Due Date”).  The Base
Rent for any other portion of the Lease Term which is less than a complete
calendar month shall be the proration of the Base Rent above which the number
of days in such portion of the Lease Term bears to thirty (30).


 


(b)                                 Payments
Location.  Payments of Base Rental shall
be made to Landlord at the address specified in Section 15.14 hereof,
or at such other place as Landlord may from time to time in writing direct (not
less than thirty (30) days in advance of the date of the address change
effective date).


 


ARTICLE IV


 


USE
OF LEASEHOLD PREMISES


 


Section 4.01.                             Generally.  Except to the extent otherwise provided
herein, Tenant shall not use the Leasehold Premises for any purpose other
than:  (i) operation of a
nonrestricted gaming business (including any ancillary activities reasonably
related thereto); or (ii) any other lawful purpose, as permitted under the
laws of the State of Nevada.


 


Section 4.02.                             Prohibited Uses.  Except as permitted by the Terms of this
Lease or otherwise by Landlord, Tenant shall not suffer or permit the Leasehold
Premises to be used in any manner, or permit anything to be brought into or
kept in such areas which would in any way: 
(i) violate any law or requirement of public authorities (including
but not limited to, Environmental Laws and requirements, all as more particularly
set forth by Section 4.07 below); (ii) cause material structural
injury to the Leasehold Real Property or any part thereof; (iii) interfere
with the normal operations of the heating, air conditioning, ventilation,
plumbing or other mechanical or electrical systems of the building or the
elevators installed therein; (iv) constitute a public or private nuisance;
or (v) constitute a breach of any of the terms and conditions of this
Lease.  The provisions of this Section 4.02
shall not apply to items, materials, products, chemicals or the like which
are:  (i) permitted under this Lease
or (ii) relate to the conduct of Tenant’s ordinary course of business.


 


Section 4.03.                             Compliance with Law.  Tenant shall at Tenant’s sole cost and expense,
comply with all written requirements of all county, municipal, state, federal
and other applicable governmental authorities, now in force, or which may


 


7





















 


hereafter be in
force, pertaining to the Leasehold Premises, and shall faithfully observe in
the use of the Leasehold Premises all municipal and county ordinances and state
and federal statutes now in force or which may hereafter be in force.  Tenant shall not permit the Leasehold Premises,
or any portion thereof, to be used or occupied in any manner which is in
violation of such governmental requirements, and shall timely comply with all
governmental administrative regulations, orders and pronouncements.  In furtherance of this Section 4.03,
Tenant shall provide Landlord with a copy of all inspection reports by state,
federal and local authorities.


 


Section 4.04. Tenant Indemnification.  Tenant shall indemnify, defend and hold
harmless Landlord, its managers, members officers, directors, owners, employees,
agents,  successors and assigns
(collectively, the “Landlord Indemnitees”) from and against any and all losses,
damages, claims, judgments, liabilities, enforcement actions, remedial actions,
fines, penalties, taxes, fees, costs and expenses (including, without
limitation, attorneys’ fees,
consultants’ fees, laboratory costs, and expert fees) suffered by any of them
and caused by, related to, arising out of, resulting from, or in any way
connected with:  (i) any
contamination of the Leasehold Premises with Hazardous Materials caused by
Tenant; or (ii) the breach by Tenant of any obligation which it may have
under this Section 4.04; or (iii) any violation of Environmental
Laws (as hereinafter defined) in or about the Leasehold Premises caused by
Tenant.  Subject
to the provisions of this Section 4.04,
Tenant shall promptly take, at its sole expense, all actions necessary to
investigate, clean up, remediate, and remove any Hazardous Materials which come
to be located in, on, under, or about the Leasehold Premises due to Tenant’s
(or its agents) use of or activities on or about the Leasehold Premises.  Tenant shall comply with all applicable
Environmental Laws (as defined herein) and the written requirements of
governmental authorities in undertaking such actions.  No consent of Landlord to the presence of
Hazardous Materials or Tenant’s compliance with Environmental Laws (as defined
herein) shall relieve Tenant of its indemnification obligations hereunder.


 


Section 4.05.                             Landlord
Indemnification.  Landlord shall
indemnify, defend and hold harmless Tenant, its managers, members, officers,
directors, owners, shareholders, partners, employees, agents,  successors and assigns (collectively, the “Tenant
Indemnitees”) from and against any and all losses, damages, claims, judgments,
liabilities, enforcement actions, remedial actions, fines, penalties, taxes,
fees, costs and expenses (including, without limitation, attorneys’ fees, consultants’ fees, laboratory costs, and expert
fees) suffered by any of them and caused by, related to, arising out of,
resulting from, or in any way connected with: 
(i) any contamination of the Leasehold Premises with Hazardous
Materials caused by Landlord; or (ii) the breach by Landlord of any
obligation which it may have under this Section 4.05; or (iii) any
violation of Environmental Laws (as hereinafter defined) in or


 


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about the
Leasehold Premises caused by Landlord.  Subject to the provisions of this Section 4.05,
Landlord shall promptly take, at its sole expense, all actions necessary to
investigate, clean up, remediate, and remove any Hazardous Materials which come
to be located in, on, under, or about the Leasehold Premises due to Landlord’s
(or its agents) use of or activities on or about the Leasehold Premises, and
Landlord shall restore the Leasehold Premises, and any other properties
(including the Improvements), to the condition existing prior to the
introduction of such Hazardous Materials to the Leasehold Premises.  Landlord shall comply with all applicable
Environmental Laws (as defined herein) and the written requirements of
governmental authorities in undertaking such actions.  Landlord shall obtain Tenant’s prior written
approval of such actions and of any consultants or contractors to be used by
Landlord in connection therewith, such approval of Tenant not to be reasonably
withheld, conditioned or delayed.  No
consent of Tenant to the presence of Hazardous Materials or Landlord’s (or its
agents) compliance with Environmental Laws (as defined herein) shall relieve
Landlord of its indemnification obligations hereunder.


 


Section 4.06                                Representations and
Warranties of Landlord.


 


(a)                                  Landlord
Declaration.  Subject to the
provisions of subsection (b) below, Landlord represents and
warrants to Tenant, to Landlord’s knowledge, that:


 


(1)                                  The Leasehold Premises have not been
used by previous owners and/or operators, Landlord, or any tenant of Landlord
to generate, manufacture, refine, transport, treat, store, handle, or dispose
of Hazardous Materials.


 


(2)                                  The Leasehold Premises have not
contained, either asbestos, PCB, toxic materials or Hazardous Materials.


 


(3)                                  To Landlord’s
current, actual knowledge, the Leasehold Premises do not now contain either
asbestos, PCB, toxic materials or Hazardous Materials.


 


(4)                                  Landlord
has not received a summons, citation, directive, letter or other communication,
written or oral, from any agency or Department of the State of Nevada or the
U.S. Government or any other public agency or entity or any private agency or
entity concerning any intentional or unintentional action or omission on
Landlord’s part:  (i) concerning any
release or discharge of any Hazardous Materials on, under, above or adjacent to
the Leasehold Premises; or (ii) any alleged violation of any Environmental
Laws; or (iii) the releasing, spilling, leaking,


 


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pumping, pouring, emitting, emptying, or dumping of Hazardous Materials
into waters or onto lands of the State of Nevada, or into waters or onto lands
outside the jurisdiction of the State of Nevada.  Landlord further represents and warrants to
Tenant that, to Landlord’s actual knowledge, there is no litigation pending or
threatened with respect to the Leasehold Premises concerning any Hazardous
Materials or the violation of any Environmental Laws.


 


(b)                                 Limitation.  Landlord’s representations and warranties set
out in subsections 4.06(a)(1) and (2) above shall be
limited to the scope of disclosures, representations and warranties made and
given to Landlord by its predecessors in the chain of title or by operation of
law.  Landlord further represents and
warrants to Tenant that Landlord has not received any other representations or
warranties from Landlord’s predecessors in the chain of title other than by
operation by law or by virtue of express warranties contained in Landlord’s
vesting deed.


 


Section 4.07                                Definitions.  As used herein, “Hazardous
Materials” shall mean and include: (i) any “hazardous waste”, “hazardous
substance” and “pollutant or contaminant”, all as such terms are defined in Section 101
of the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 (including, without limitation, asbestos
and raw materials which include hazardous constituents); (ii) petroleum
and any petroleum byproduct or constituent; and (iii) any or other similar
substances, or materials which are included under or regulated by any local,
state, or federal law, rule, or regulation pertaining to environmental
regulation, contamination or clean-up, including, without limitation, “CERCLA”,
“RCRA”, “SARA”, or state superlien or environmental clean-up statutes (all such
laws, rules and regulations being referred to collectively as “Environmental
Laws”).  Any other terms mentioned in
this Article IV which are defined in state or federal statutes
and/or regulations promulgated in relation thereto shall have the meaning
subscribed to such terms in such statutes and regulations.


 


Section 4.08                                Disclosure
to Landlord.  Tenant further agrees
to provide Landlord with copies of any communications between Tenant and any
governmental authorities relating to any Hazardous Material on or affecting the
Leasehold Premises, and to grant to Landlord the right (but not the obligation)
to participate in any proceeding with any enforcement agency relating to any
Hazardous Material on or affecting the Leasehold Premises.


 


Section 4.09                                Reports.  Attached to this Lease as Exhibit ”B”
and incorporated herein by reference is a list of  all reports and correspondence which Landlord
has received (and which Landlord has delivered to Tenant) as of the date of


 


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this Lease regarding any environmental status of the Leasehold Premises
or of any alleged violation of any Environmental Laws.  Landlord further agrees to promptly disclose
to Tenant (but in any event within five (5) days of Landlord’s receipt) of
any other reports, correspondence, claims, documents, pleadings or the like as
to any alleged violation of any Environmental Laws or of the environmental
status of the Leasehold Premises, which come into Landlord’s possession,
custody or control after the Commencement Date.


 


ARTICLE V


 


MAINTENANCE,
REPAIRS AND ALTERATIONS


 


Section 5.01.                             Maintenance and Repairs.


 


(a)                                  Tenant
Obligation.  Subject to the rights of
Tenant set out in Section 3.06, above, Tenant shall, at all times
during the Lease Term, at its own expense, put and maintain the Leasehold
Premises in thorough repair and in good and safe condition, including, but not
limited to, the roof, floors, walls, heating and air conditioning fixtures,
plumbing fixtures and sewage fixtures, together with all equipment situate
thereon, or therein, and all appurtenances thereto, both inside and outside,
structural and nonstructural, extraordinary and ordinary, however the necessity
or desirability for repairs may occur, and whether or not necessitated by wear,
tear, obsolescence, or defects, latent or otherwise.


 


(b)                                 Landlord Notice.  In the event Landlord determines (in its
reasonable, good faith judgment) that Tenant has failed to make the repairs
required by Tenant pursuant to subsection 5.01(a) above, Landlord
shall notify Tenant in writing as to the matters which have not been repaired
in accordance with the terms of this Lease and of the specific repairs which
remain outstanding (the “Repair Notice”).  The delivery of the Repair
Notice shall be a condition precedent to Landlord’s right of entry described in
subsection 5.01(c) below.


 


(c)                                  Landlord Rights.  In the event that Tenant fails to make the
repairs required by subsection 5.01(a), above, and subject to the
provisions set forthin Section 5.01(b), above, Landlord shall be
entitled, but shall be under no obligation (but only upon three (3) days
advance written notice to Tenant), to enter upon the Leasehold Premises for the
purpose of performing the repairs set out in the Repair Notice.  In the event that Landlord makes such
repairs, the actual cost paid by Landlord for same shall be considered Additional
Rent, which shall be payable by Tenant within thirty (30) days of Tenant’s
receipt of an invoice for same supported by


 


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appropriate receipts.  Prior to commencing such repairs, Landlord
shall give Tenant fifteen (15) days’ additional written notice unless Landlord
determines, in its reasonable, good faith discretion, that immediate repairs
are necessary to avoid irreparable damage or rapid deterioration of the
condition of the Leasehold Premises.


 


Section 5.02.                             Alterations, Additions
and Fixtures. Subject to the provisions hereinafter set forth, Tenant shall
have the right, during the Lease Term to do any of the following (all of which
are collectively referred to herein as the “Improvements”);  (i) make such modifications to the
Leasehold Building (including, without limitation, alterations, expansions,
demolitions and additions); and (ii) construct such other buildings,
structures and infrastructure on the Leasehold  Real Property; in each case, as it deems
necessary or advisable, in its discretion, for conduct of its use of the
Leasehold Premises as permitted hereby. 
However, the terms of this Section 5.02
notwithstanding:  (i) without the
prior written consent of Landlord, which shall not be unreasonably delayed,
conditioned or denied, Tenant shall not cause or undertake any Improvements which
would, in the reasonable, good faith judgment of a structural engineer duly
licensed in the State of Nevada, result in a material  diminution of the structural integrity or
enclosure of the Leasehold Building, as it exists on the Commencement Date; and
(ii) all Improvements shall be constructed with reasonable diligence, in a
quality manner and in compliance with all applicable building codes, laws and
other governmental rules and regulations. 
All Improvements shall be deemed to constitute part of the Leasehold
Premises (but shall not cause an increase in the amount of any Base Rent).  Tenant agrees to provide Landlord with such
information regarding the Improvements, such as plans and specifications,
equipment warranties and similar information as Landlord may, from time to
time, reasonably request in writing to Tenant.


 


Section 5.03.                             Surrender of Premises.  Upon expiration of this Lease, Tenant shall
surrender the Leasehold Premises in a condition which would result from Tenant’s
complete compliance with all of its maintenance obligations hereunder.  Tenant shall surrender all keys for the Leasehold
Premises to Landlord at the place then fixed for the payment of rent and shall
inform Landlord of all combinations on locks, safes and vaults, if any, in the Leasehold
Premises.  At the expiration of the
Lease, Tenant shall remove from the Leasehold Premises all items which do not
become the property of Landlord under Section 5.02, above.  All such property not removed at the end of
the Lease shall be deemed abandoned.


 


Section 5.04.                             Removal of Trade
Fixtures.  Before surrendering the Leasehold
Premises to Landlord, Tenant shall repair any damage caused by removal of trade
fixtures, and the removal of any other items from the Leasehold Premises.  Such repairs shall be performed in a manner reasonably
satisfactory to the Landlord


 


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and shall
include, but not necessarily be limited to: 
capping all plumbing fixtures, capping all electrical wiring and
fixtures, repairing all holes in walls, restoring any damaged floor and/or
ceiling tiles, and thoroughly cleaning the Leasehold Premises.  Provided, however, Tenant shall not be
obligated to restore diminution in condition caused by: (i) ordinary wear
and tear; or (ii) elements and damages due to casualty or condemnation; or
(iii) the construction of additional buildings, structures or other
improvements over, upon or under the Leasehold Premises; or (iv) the
demolition or alteration of existing buildings (including the Leasehold
Building), structures, or other improvements over, upon or under the Leasehold
Premises. Provided, however, subpart (ii) shall not relieve Tenant of its
obligation, under Section 8.02, and all matters described in subparts
, (iii) or (iv) shall be effected in compliance with Section 5.01,
above.


 


Section 5.05.                             Covenants Against Liens.


 


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


 


(b)                                 Good
Faith Contest.  Notwithstanding the provisions
of Section 5.05(a), above, Tenant may in good faith contest any
mechanics, laborers’, materialmen’s or other liens filed or established against
the Leasehold Premises, and in such event may permit the items so contested to
remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom.  Upon such
circumstances, Landlord shall not have the rights set out in Section 5.05(a),
above, unless by nonpayment of any such items the interest of Landlord will be
materially and imminently endangered or the Leasehold Premises or any part
thereof will be subject to imminent material loss or forfeiture in Landlord’s
reasonable, good faith determination, in which event Tenant shall promptly pay
and cause to be satisfied and


 


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discharged all
such unpaid items or secure such payment by posting a bond, in form reasonably
satisfactory to Landlord, with the Landlord. 
Landlord will cooperate fully with the Tenant in any such contest
provided that Tenant shall fully and promptly reimburse Landlord for all
reasonable costs incurred by Landlord in connection with same.  Tenant shall hold Landlord whole and harmless
from any loss, cost or expenses Landlord may reasonably incur related to any
such contest.


 


(c)                                  Landlord
Representation.  Based solely on: 
(i) Landlord’s actual knowledge and that certain Title Commitment
dated October 26, 2005, issued by Stewart Title Guaranty Title Company and
(ii) all other items within Tenant’s actual knowledge, Landlord states to
Tenant in its good faith belief, that the Leasehold Premises are free from all
liens, encumbrances, claims, impediments to title, encroachments, restrictive
covenants, special taxing districts or the like (other than Exceptions 1
through 4 [with all taxes paid current] 5, 6 and 9, all as shown on Schedule B
Part II of the above referenced Title Commitment).  Based solely on: (i) that
certain letter from the City of Elko, Nevada Planning Department dated October 20,
2005 addressed to James M. Copenhaver, P.C.; and (ii) all other items
within Tenant’s actual knowledge, Landlord states to Tenant in its good faith
belief, that the Leasehold Premises are situated within a zoning and gaming
district which is compatible with the operation of a non-restricted gaming
business.


 


ARTICLE VI


 


UTILITIES
AND SERVICES


 


Tenant shall make arrangements, and shall be responsible, for all
utilities and services furnished to or used by it in occupation of the Leasehold
Premises including, without limitation, gas, electricity, water, telephone
service, sewer use fees and other services used in or about or supplied to the
Premises.  Tenant shall indemnify Landlord
from any obligation for any such expenses described above.


 


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ARTICLE VII


 


INSURANCE
AND INDEMNITY


 


Section 7.01.                             Liability and Casualty Insurance.  Tenant agrees, at its sole expense, to
maintain in full force during the Lease Term:


 


(a) A Commercial General Liability policy with a One Million
Dollar ($1,000,000.00) combined single limit for bodily injury and property
damage, including all standard policy form extensions.  The policy must provide a Two Million Dollar
($2,000,000.00) general aggregate and be written on an “occurrence form.”  The Landlord (and such persons, firms, or
corporations as are designed by Landlord) will be named as Additional Insured
on the Tenant’s Commercial General Liability Policy to protect the Landlord’s
interest.  An Umbrella Policy shall be
purchased with a limit of not less than Ten Million Dollars ($10,000,000.00)
providing excess coverage of the required Commercial Liability Policy, which
umbrella policy shall be endorsed to include Landlord as an Additional Insured.


 


(b) Property insurance with special causes of loss, insuring the
Leasehold Building and any Improvements and the contents thereof with coverage
in an amount equal to at least ninety percent (90%) of the replacement cost (“Tenant’s
Property Policy”).  The Landlord (and
such persons, firms, or corporations as are designed by Landlord) will be named
as Loss Payee on the Tenant’s Property Policy to protect the Landlord’s
interest.


 


(c) Boiler and Machinery Policy with respect to all boilers and
hot water pressure vessels utilized in operation of the Leasehold Building
providing coverage in an amount which is reasonably acceptable to Landlord.


 


Section 7.02                                Policy/Certificate.  A copy of the policies or certificates of
insurance evidencing the required coverage shall be delivered to Landlord
before Tenant opens for business or before Tenant enters the Leasehold Premises
in order to prepare the Leasehold Premises for occupancy and, thereafter, from
time to time as reasonably requested by Landlord in writing, in order to
evidence continued enforceability of the required coverage.  Such policies shall contain a clause that the
insurer will not cancel or change the insurance without first giving the
Landlord thirty (30) days’ prior written notice by certified mail.  All insurance policies required in this Lease
shall be placed with insurance carriers qualified to do business in the State
of Nevada and rated no lower than “B+” in the most recent addition of A.M.
Best.


 


Section 7.03                                Landlord’s Right To
Procure.  Should Tenant fail to
obtain insurance coverage anywhere required in this Article VII, the
Landlord shall have the right, but not the obligation, to obtain such insurance
(but only to the extent of the coverages described herein) and to pay premiums
thereof. In such event, the entire amount of such premiums shall be paid by
Tenant to Landlord within thirty (30) days of


 


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Tenant’s
receipt of an invoice for same supported by reasonable evidence and proof of
payment of same.


 


Section 7.04.                             Indemnification.


 


(a)                                  Tenant Obligation.  Tenant agrees to indemnify, defend and hold
Landlord, its officers, directors, employees, members, managers, successors,
assigns and agents harmless from and against any and all claims, actions,
damages, liability and expenses in connection with loss of life, personal
injury, and/or damage to property arising from or out of any occurrence in,
upon or at the Leasehold Premises or any part thereof, and occasioned wholly or
in part by any act or omission of Tenant, its agents, contractors, employees,
servants, tenants or subtenants (Tenant shall not be responsible for the
proportion of any such claims, injuries, causes of action, damages or the like
which arises out of the negligent or willful conduct of Landlord).  In case Landlord or its officers, directors,
employees, successors, assigns, and agents shall be made party to any
litigation, or action or claim commenced against Tenant, then (and provided
such claims, injuries, causes of action, damages or the like do not arise
primarily out of the negligent or willful conduct of Landlord) Tenant shall
protect and hold Landlord harmless and pay all costs, expenses and reasonable
attorney’s fees paid by Landlord in connection with such litigation.


 


(b)                                 Landlord Obligation.  Landlord agrees to indemnify, defend and hold
Tenant, its officers, directors, shareholders, owners, employees, successors,
assigns and agents harmless from and against any and all claims, actions, damages,
liability and expenses in connection with loss of life, personal injury, and/or
damage to property arising from or out of any occurrence in, upon or at the
Leasehold Premises or any part thereof, and occasioned wholly or in part by any
act or omission of Landlord, its agents, contractors, employees, servants,
tenants or subtenants. (Landlord shall not be responsible for the proportion of
any such claims, injuries, causes of action, damages or the like which arises
out of the negligent or willful conduct of Tenant).  In case Tenant or its officers, directors,
shareholders, owners, employees, successors, assigns, and agents shall be made
party to any litigation, or action or claim commenced against Landlord, then
(and provided such claims, injuries, causes of action, damages or the like do
not arise primarily out of the negligent or willful conduct of Tenant) Landlord
shall protect and hold Tenant harmless and pay all costs, expenses and
reasonable attorney’s fees  paid by
Tenant in connection with such litigation.


 


Section 7.05                                Waiver of Claims.  Landlord shall not be liable to Tenant or to
Tenant’s employees, agents, invitees, guests or visitors, or to any other
person


 


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whomsoever, for any
injury to person or damage to property on or about the Leasehold Premises
caused by the negligence or misconduct of Tenant, its employees, subtenants,
licensees or concessionaires, or of any other person entering the Leasehold
Premises, or arising out of the use of the Leasehold Premises by Tenant and the
conduct of its business therein, or arising out of breach or default by Tenant
in the performance of its obligations hereunder (and provided that the
foregoing waiver shall not be applicable to any portion of such claims,
injuries, causes of action, damages or the like which arises out of the
negligent or willful conduct of Landlord).


 


Section 7.06.                             Property Loss or Damage.


 


(a)                                  Property Loss; Theft.  Landlord shall not be liable for any damage
to property of Tenant or of others located on Leasehold Premises, nor for the
loss of or damage to any property of Tenant or of others by theft or otherwise.


 


(b)                                 Casualty Loss.  Landlord shall not be liable for any injury
or damage to person or property resulting from fire, flood, explosions, falling
plaster, steam, gas, electricity, water, rain or snow, or leaks from any part
of the Leasehold Premises, or from the pipes, appliances or plumbing works or
by any such damage caused by any other tenants or person in the Leasehold Premises,
or the public, or caused by operations in construction of any private, public
or quasi-public work or from any other casualty in or about the Leasehold
Premises.


 


(c)                                  Exception.  Notwithstanding the above, Sections 7.06(a) and
(b) shall not apply to any portion of such damage, loss or injury
which is caused by the willful act or 
negligence of Landlord.


 


Section 7.07.                             Waiver of Subrogation.  Landlord and Tenant each hereby waive the
rights of recovery against the other or against the officers, employees,
agents, successors and representatives of the other, on account of loss or
damage occasioned to such waiving party of its property or the property of
others under its control caused by fire or any of the extended coverage risks
described above to the extent that such loss or damage is insured against under
any insurance policy in force at the time of such loss or damage.  The insuring party shall, upon obtaining the
policies of insurance required under this Lease, give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.


 


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ARTICLE VIII


 


CONDEMNATION
OR DESTRUCTION OF PREMISES


 


Section 8.01                                Condemnation.


 


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


 


(b)                                 Tenant
Property.   Notwithstanding any provision in this Article VIII
herein to the contrary, Tenant shall have the right to pursue a claim with and
retain any award from the condemning authority or entity for damage to or loss
of Tenant’s leasehold estate in the Leasehold Premises as well as for any other
separate damages that Tenant may suffer in relation to Improvements constructed
by Tenant on the Leasehold Premises or to any personal property of Tenant.


 


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


 


(d)                                 Right
of Termination Notwithstanding the provisions of Section 8.02,
above, if all of the Leasehold Premises (or so much thereof as to render the
Leasehold Premises unsuitable for Tenant’s business use, to be reasonably
determined by Tenant) be taken or appropriated by some public authority or
private corporation having the power of eminent domain (collectively, a “Condemnation”),
or if the Leasehold Premises be conveyed by the Landlord or its
successors-in-interest for the purpose of avoiding a Condemnation, this Lease
shall terminate as of the date of such appropriation or conveyance with the
same force and effect as if such date had been originally set forth herein as
the expiration date of the Lease Term. 
Upon such event, Landlord shall rebate to Tenant the amount of Base Rent
paid under this Lease relating to the time period after such date of
termination.


 


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(e)                                  Partial
Taking.   If only a portion of the Leasehold Premises be
taken or appropriated by Condemnation and if the Leasehold Premises are still
suitable for Tenant’s business use, to be reasonably determined by Tenant (a “Partial
Taking”), after such taking, this Lease shall terminate as to that portion of
the Leasehold Premises so taken but shall remain in full force and effect as to
the remainder of the Leasehold Premises. 
Upon such event, the future rentals to be paid by the Tenant shall be
equitably abated in the ratio that the value of the Leasehold Premises taken
bears to the value of the whole of the Leasehold Premises.


 


(f)                                    Severance.  In the event of a Partial Taking, Tenant
shall be responsible for all repairs required as a result of such Partial
Taking (“Severance Repairs”).  All
severance damages awarded to any Party with respect to a Partial Taking shall
be applied towards satisfaction of the Severance Repairs resulting
therefrom.  To the extent that any such
severance damages are awarded to Landlord, Landlord shall make such funds
available to Tenant after receiving reasonable assurances that they will be
utilized towards satisfaction of the Severance Repairs.  To the extent that the aggregate of such
severance damages exceeds the cost of Severance Repairs, the excess amount
shall be divided among Landlord and Tenant in the same proportion that their
respective awards of severance damages bear to the total of such severance
damage awards.


 


(g)                                 Consent
Required.   For the purposes of this Lease, all amounts
payable pursuant to any agreement with a condemning authority which agreement
has been made in settlement of or under threat of any Condemnation, shall be
deemed to constitute an award made in such proceeding; provided, however, that
no such agreement shall be made with any condemning authority by either
Landlord or Tenant without the written consent of the other.


 


Section 8.02                                Total or Partial
Destruction of Premises.


 


(a)                                  Casualty
Event.


 


(1)                                  In
the event that all or any portion of the Leasehold Premises is damaged or
destroyed by fire, tornado or other casualty, it shall be deemed a “Casualty
Event”.


 


(2)                                  In
the event that all or substantially all of the Leasehold Building should be
damaged or destroyed by a Casualty Event (a “Total Casualty”), Tenant shall
either: (i) proceed with reasonable diligence to restore the Shell
Structure (defined below) of the Leasehold Building to substantially the same
condition in which


 


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it was
immediately prior to the occurrence of the Total Casualty (“Shell Restoration”);
or (ii) make a payment to Landlord in an amount which is equal to the
Shell Value (defined below) (the “Total Casualty Payoff”) and provide for
demolition and removal of any structures or other improvements remaining on the
Leasehold Real Property, which demolition shall be performed with reasonable
diligence, in a workmanlike manner and in compliance with all applicable laws
and governmental regulations (the “Demolition”).


 


(3)                                  Upon
occurrence of a Casualty Event which does not constitute a Total Casualty (a “Partial
Casualty”), Tenant shall restore the Leasehold Premises in accordance with its
obligations under Section 5.01 (“Partial Casualty Restoration”),
and any insurance proceeds received by Landlord with regard to such Partial
Casualty shall be released to Tenant provided that Landlord is given reasonable
assurances that such proceeds will be utilized to complete the Partial Casualty
Restoration.  All such insurance proceeds
which exceed the cost of the Casualty Restoration shall become the property of
Tenant upon completion of the Partial Casualty Restoration.


 


(4)                                  Upon
occurrence of a Total Casualty: (i) if Tenant elects to perform the Shell
Restoration in accordance with subparagraph (2), Landlord shall make the
insurance proceeds received by Landlord with regard to such Total Casualty (“Total
Casualty Proceeds”) available to Tenant for completion of the Shell Restoration
provided that Landlord is given reasonable assurances that such proceeds will
be utilized to complete the Shell Restoration (with all Total Casualty Proceeds
remaining after completion of the Shell Restoration to be the property of
Tenant); and (ii) if Tenant elects to provide for the Total Casualty
Payoff and Demolition in accordance with subparagraph (2), Landlord
shall apply Total Casualty Proceeds as follows: (aa) first towards satisfaction
of the Total Casualty Payoff; (bb) after the Total Casualty Payoff has been
satisfied, the Total Casualty Proceeds shall then be made available to Tenant
for completion of the Demolition provided that Landlord is given reasonable
assurances that such proceeds will be utilized to complete the Demolition; and
(cc) all remaining Total Casualty Proceeds shall become the property of Tenant
upon completion of the Demolition.  In
the event that Tenant elects to provide for the Total Casualty Payoff and
Demolition, Tenant shall be responsible for the entire Total Casualty Payoff
and shall remain responsible to complete the Demolition notwithstanding the
amount of the Total Casualty Proceeds.


 


(5)                                  Upon
occurrence of a Casualty, Tenant shall remain liable for all rent and other
obligations which it may have under the Lease except as otherwise set forth by
this Section 8.02.


 


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(6)                                  The
party carrying such insurance against loss or damage to the Leasehold Building
shall control the loss settlement process relating to such insurance.


 


(b)                                 Shell
Structure. 


 


(1)                                  For
purposes of this Section 8.02, the term “Shell Structure” shall
mean the state of the construction of the Leasehold Building as of the
Commencement Date.  Landlord and Tenant agree that the state of the
construction of the Leasehold Building as of the Commencement Date is such that
the Leasehold Building is comprised only of: 
(i) interior load bearing walls (comprised of concrete block and
steel columns – 30 feet on center); (ii) exterior walls comprised of
concrete block (rear) and stucco material (sides and front); and; (iii) a
roof comprised of a gravel covered, shingle membrane over a wood substructure
material and a concrete pad flooring.


 


(2)                                  Landlord
and Tenant further agree that the Shell Structure does not include any other
construction aspects or features including but not necessarily limited to the
following:  (i) utilities infrastructure (exclusive of utilities
stubbed to the Leasehold Building for connecting to public utilities); (ii) heating
and cooling systems; (iii) electrical wiring, conduits, finish
connections, breaker/circuit boxes or the like; (iv) interior fire
suppression/sprinkler systems (exclusive of the rough-in of such systems); (v) plumbing
infrastructure, sewer lines, sewer taps, sewer connections or plumbing fixtures
(exclusive of utilities stubbed to the Leasehold Building for connection to
public utilities); (vi) interior ceilings or ceiling support grids; or (vii) interior
wall coverings (i.e. sheetrock, paneling, etc.).  


 


(c)                                  Shell
Structure Value.  Landlord and Tenant
further agree that the value of the Shell Structure as of the date of the
Casualty Event shall be the sum of $1,500,000.00 (adjusted each year during the
Lease Term utilizing the CPI Escalation described in Section 3.02,
above) (the “Shell Structure Value”).


 


ARTICLE IX


 


DEFAULTS:  REMEDIES


 


Section 9.01                                Defaults.  The occurrence of any one or more of the
following events (each, an “Event of Default”) shall constitute a default
hereunder by Tenant:


 


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(a)                                  The failure by Tenant to make
any payment of Base Rent, Additional Rent, or other payment required to be made
by Tenant hereunder within ten (10) days after written notice from
Landlord to Tenant is deemed received pursuant to Section 15.14,
below that such payment is due.


 


(b)                                 The failure by Tenant to observe
or perform any of the other covenants or conditions of this Lease, where such
failure continues for thirty (30) days after   written notice from Landlord to Tenant is
deemed received pursuant to Section 15.14, below.  However, if the nature of such default is
such that it cannot reasonably be cured within such thirty (30) day period,
Tenant shall not be deemed in default if Tenant shall commence to cure within
said thirty (30) day period, and shall diligently pursue same to conclusion.


 


(c)                                  The:  (i) making by Tenant of a general
assignment for the benefit of creditors; 
(ii) filing by or against Tenant of a petition to have Tenant
adjudged as bankrupt, or the filing of a petition for reorganization or
arrangement under any bankruptcy law (unless, in the case of a petition filed
against Tenant, the same is dismissed within sixty (60) days after said
filing); (iii) appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets or of Tenant’s interest in this Lease,
where possession is not restored to Tenant within thirty (30) days; or (iv) attachment,
or other judicial seizure, of substantially all of Tenant’s assets or of Tenant’s
interest in this Lease, where such seizure is not discharged within thirty (30)
days.


 


Section 9.02.  Landlord’s Remedies.


 


(a)                                  Lease Termination.  Subject to the Tenant Lender Rights set out
in Article XIV, below, in the event of any default by Tenant,
Landlord shall have the immediate option to terminate this Lease by giving
written notice.  In the event that
Landlord exercises such right of termination, Landlord shall recover from
Tenant (subject to applicable Nevada law and Landlord’s obligation to mitigate
its damages relevant to the current Lease Term) (the term “rent,” as used
herein, shall be deemed to mean Base Rental and all other sums required to be
paid by Tenant hereunder as Additional Rent or otherwise) the following:


 


(i)                                     The total amount of rent which
is due and owing as of the date of such termination, plus interest at the rate
of eighteen percent (18%) per annum, accruing from the date when such rent was
due and owing; plus


 


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(ii)                                  The amount of the unpaid rent
for the unexpired portion of the Lease Term, discounted to its present value
based upon a discount rate which is equal to the discount rate being offered by
the Federal Reserve Bank of San Francisco at the time of the award, and plus
one percent (1%); further subject to however, Landlord’s mitigation of its
damages reasonably anticipated to result from its good faith efforts to relet
the Leasehold Premises; and plus


 


(iii)                               Landlord’s actual damages
proximately caused by Tenant’s failure to perform its obligations under this
Lease (without duplication of any amounts set forth by subparts (i) and (ii) above);


 


(b)  Without terminating this Lease, Landlord shall have the right
to either recover all rental as it becomes due or relet the Leasehold Premises,
or any part thereof, for such term or terms, and at such rental or rentals, and
upon such other terms and conditions as are commercially reasonable in a good
faith effort to mitigate its damages. In the event that Landlord shall elect to
relet, rentals received by Landlord shall be applied (1)  to the payment
of any reasonable cost of such reletting, including reasonable attorneys’ fees,
(2) to the payment of reasonable and necessary cost of any alterations and
repairs to the Leasehold Premises which are not recouped or contracted to be
recouped from any new Tenant, (3) to the payment of rent due and unpaid
hereunder; and (4) the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same may become due and payable
hereunder.


 


(c)                                  Right of Entry.  Landlord shall also have the right to
re-enter the Leasehold Premises and to remove all persons and property from
same.  Such property may be removed and
stored in a public warehouse or elsewhere (pursuant to commercially reasonable
term) at the cost of, and for the account of, Tenant.  No re-entry or taking possession of the Leasehold
Premises by the Landlord, pursuant to this Section 9.02, shall be
construed as an election to terminate this Lease.  Nor shall it cause a forfeiture of rents or
other charges to be paid during the balance of the then current term unless a
written notice of such intention is given to Tenant, or unless termination is
decreed by a legal proceeding.  Notwithstanding
any reletting without termination by Landlord because of any default by Tenant,
Landlord may at any time after such reletting elect to terminate this Lease for
any such default.


 


Section 9.03                                Tenant Lender Rights. 
Notwithstanding anything in this Article IX to the contrary, all
rights of  Landlord set out in this Article IX (in addition to
all other provisions of this Lease) shall be expressly subject and subordinate
to the Tenant Lender Rights set out in Article XIV, below.


 


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Section 9.04.                             Default by Landlord.  Landlord shall not be deemed to be in default
in the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within sixty (60)
days after written notice by Tenant to Landlord, which notice shall specify
with particularity the claimed default. 
However, if the nature of the default is such that more than sixty (60)
days are required for it to be cured, then Landlord shall not be deemed to be
in default if it shall commence such performance within such sixty (60) day
period and thereafter diligently prosecute the same to completion.  This Lease may not be canceled for any
default by Landlord.  Tenant’s sole
remedy for any default by Landlord shall be such damages or injunction relief
or declaratory relief as may be afforded by law (unless specified herein).


 


Section 9.05.                             Costs and Attorneys’ Fees.  If either Party incurs any expense, including
reasonable attorney’s fees, in connection with any action of proceeding,
including declaratory relief, instituted by either Party by reason of any
default or alleged default of the other Party hereunder, the Party prevailing
in such action or proceeding shall be entitled to recover its reasonable
expenses from the other Party.  In
addition, should it become necessary for either Party to employ legal counsel
to enforce any of the provisions herein contained, the non-prevailing Party
agrees to pay all legal fees and other costs reasonably incurred by the
prevailing Party.


 


Section 9.06                                Default
By Landlord For Appropriate Authority Violations.   Should
Landlord, at any time during the Lease Term, fail to obtain or maintain any
consents or approvals required of Landlord by any governmental or regulatory
authority (including, but not limited to, all federal, state and local gaming
authorities) having jurisdiction over gaming activities at the Leasehold
Premises (“Gaming Authorities”) or be in violation of any such rules,
regulations or laws established by any Gaming Authorities; then Landlord
shall:  (i) within ninety (90) days
(or such longer or shorter period as may be allowed by the applicable Gaming
Authority)  obtain the required consents
and approvals or cure such violation, as the case may be; or (ii) sell the
Leasehold Premises within one hundred twenty (120) days (or such longer or
shorter period as may be allowed by the applicable Gaming Authority); and upon
Landlord’s failure to, accomplish the matters in either (i) or (ii) within
the timeframe allotted above, Tenant may terminate this Lease upon written
notice without any further liability or obligation.


 


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ARTICLE X


 


ASSIGNMENT
AND SUBLETTING


 


Section 10.01.                       Landlord’s Consent.


 


(a)                                  General Restriction.  Except as set forth by Section 10.03
or as set forth in Article XIV, Tenant shall not, either
voluntarily or by operation of law, assign, sell, encumber, pledge or otherwise
transfer all or any part of Tenant’s leasehold estate hereunder, or permit the Leasehold
Premises to be occupied by any one other than Tenant or Tenant’s employees or
sublet the Premises or any portion thereof, without Landlord’s prior written
consent in each instance (which consent of Landlord may be withheld in Landlord’s
reasonable discretion).


 


(b)                                 Permitted Actions. Landlord shall not  withhold its consent to a transfer of Tenant’s
interest hereunder so long as:  (i) Tenant
remains liable for all obligations of Tenant’s transferee and executes such
documentation as may be reasonable and customary under Nevada law evidencing
such continued liability ; and (ii) there is no uncured Event of Default
then existing.


 


(c)                                  No Pay
Over.  Tenant shall be
entitled to retain all proceeds (whether in the form of rent or recoupment or
otherwise) generated from such assignment or sublease.


 


Section 10.02                          Landlord’s Right to Assign
Interest in Rents.  Subject to the Gaming Laws under the State of
Nevada, Landlord shall have the right, without selling its fee interest in the Leasehold
Premises or assigning its interest in this Lease, to assign from time to time
the whole of the  rent, at any time
payable hereunder, to persons, firms, corporations, trusts, or other entities
designated by the Landlord,  upon thirty
(30) day prior written notice to  Tenant,
and in any such case,  Tenant shall pay
the  rent, subject to the terms of this
Lease, to the Landlord’s designee at the address mentioned in any such notice
for the period covered by such assignment.


 


Section 10.03.                       Transfers to Affiliates and
Permitted Encumbrances.


 


(a)                                  Affiliate Transfers.  Notwithstanding anything herein in this Lease
to the contrary, Tenant shall be entitled to transfer its interest hereunder to
any “Affiliate of Tenant” , without the written consent of Landlord  provided that:  (i) there is no uncured Event of Default
then existing at the time of such transfer; and (ii) Tenant shall remain
liable for all of the transferee’s obligations hereunder and shall


 


25





















 


execute such
documentation as may be reasonable and customary under Nevada law evidencing
such continued liability.


 


(b)                                 Affiliate
of Tenant Defined.  For purposes of
this Lease, the term “Affiliate of Tenant” shall mean any person, partnership,
joint venture, corporation or other form of enterprise, domestic or foreign,
including but not limited to subsidiaries whether one or more, that directly or
indirectly, control, are controlled by, or are under common control with or
have an ownership interest in, with or of Tenant.


 


ARTICLE XI


 


RIGHT
OF ENTRY


 


Section 11.01.                       Right of Entry.


 


(a)                                  Landlord’s Right.  Landlord or Landlord’s agents shall have the
right to enter the Leasehold Premises upon seventy two (72) hours advance
written notice (an “Authorized Entry”) for any of the following purposes:  (i) showing it to prospective purchasers
of the Leasehold Premises; (ii) making such repairs, alterations,
improvements or additions as Landlord may deem necessary or desirable (to the
extent that Landlord has the power or duty to make such repairs, alterations,
improvements or additions under the express terms of this Lease);  and (iii)   seeking in good faith to determine whether Tenant
is in compliance with the terms and conditions of this Lease.


 


(b)                                 Materials.  Landlord shall be allowed to take all
material into and upon such Leasehold Premises that may be required for the
matters described in subsection (a) above without the same
constituting an eviction of Tenant in whole or in part and the rent reserved
shall in no event abate, by reason of loss or interruption of business, or
otherwise, during the period when such repairs, alterations, improvements or
additions are being made.


 


(c)                                  Good Faith Obligation.  In making any Authorized Entry, Landlord
shall cooperate, in good faith, with Tenant to the greatest extent reasonably
possible and shall take all reasonable efforts to ensure that Tenant’s business
operations on the Leasehold Premises, in accordance with this Lease, are not
disturbed by any Authorized Entry.


 


26










 













 


ARTICLE XII


 


ESTOPPEL,
SUBORDINATION, ATTORNMENT, NON-DISTURBANCE


 


Section12.01.         Estoppel Certificates from
Tenant.


 


(a)           Within fifteen (15)
days after receipt of written notice from Landlord, Tenant shall execute,
acknowledge and deliver to Landlord a written certificate setting forth:


 


(i)            That
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which the monthly , Base Rent and Additional
Rent are paid in advance, if any;


 


(ii)           The
commencement and termination dates of this Lease;


 


(iii)          All
circumstances known to Tenant in Tenant’s current, actual knowledge which, as
of the date of the certificate, constitute an uncured default by Landlord
hereunder, or which with the lapse of any applicable notice period under this
Lease would constitute a default by Landlord.


 


(b)           Any certificate
which is delivered to Landlord under this Section 12.01 may be
relied on by any prospective purchaser of, or person encumbering, the Leasehold
Premises.


 


Section 12.02.        Subordination.  Landlord is hereby
irrevocably vested with full power and authority to subordinate this Lease to
any mortgage, deed of trust or other lien that may exist or hereafter be placed
upon the Leasehold Premises, or any portion thereof.  No further action shall be necessary on the
part of Tenant to effectuate the subordination which is provided for by this Section 12.02.  However, upon Landlord’s written request,
Tenant shall execute and return to Landlord any required instrument of
subordination, in a form which may be recorded with the Washoe County
Recorder.  Such instrument shall be returned
to Landlord within fifteen (15) days after it has been received by Tenant.


 


Section 12.03.        Tenant’s Rights Not Affected by Foreclosure.  In the event that Landlord’s interest in the
Premises is acquired pursuant to purchase at a


 


27





















 


foreclosure sale (whether by a lien
instrument, operation of law, tax sale or otherwise), or pursuant to conveyance
in lieu of such foreclosure, Tenant shall attorn to and recognize said
acquiring party as Landlord under the terms of this Lease.  No such foreclosure or conveyance in lieu
thereof shall disturb, terminate or otherwise affect Tenant’s rights hereunder,
regardless of whether the lien foreclosed upon may have priority over this
Lease and such successor-in-interest to this Lease shall execute, cause to be
notarized and delivered to Tenant,  at
Tenant’s request, a non-disturbance agreement covenanting Landlord’s obligation
to permit Tenant’s continued peaceable use and enjoyment of the Leasehold
Premises (provided that there is no uncured Event of Default  then existing).


 


Section 12.04.  Estoppel
Certificates from Landlord.  Landlord
agrees to execute, cause to be notarized and delivered to Tenant from time to
time an estoppel certificate or certificates to Tenant’s lenders in accordance
with Article XIV below.


 


ARTICLE XIII


 


OPTION TO PURCHASE


 


Section 13.01         Grant
of Exclusive Option.  For the independent consideration of $10.00 and
other valuable consideration of (which Landlord acknowledges receipt), Landlord
hereby grants to Tenant the exclusive, non-revocable right and option (the “Option”)
to purchase the Leasehold Premises pursuant to the purchase price and terms
described below.


 


Section 13.02         Purchase
Price.  The purchase price for the Leasehold Premises in relation to
the Initial Term Exercise shall be Five Million and No/100 Dollars
($5,000,000.00). Purchase price for the Leasehold Premises in relation to the
Renewal Exercise shall be Five Million Three Hundred Ninety Eight and No/100
Dollars ($5,398,000.00).


 


Section 13.03         Exercise. 
The Option may be exercised by Tenant pursuant to any of the following notice
provisions (each, an “Exercise Notice”):


 


(1)           By written notice to
Landlord by Tenant at any time during the time period commencing with the
day after the last day of the first year of the Initial Term and ending on
the last day of the Initial Term (the “Initial Term Exercise”); or


 


28





















 


(2)           By written notice to
Landlord by Tenant at any time during the First Renewal Period (the “Renewal
Exercise”).


 


The notices described above shall be referred to as an “Exercise Notice”.


 


Section 13.04         Real
Estate Contract.  Within twenty (20) days of Tenant’s delivery of
the applicable Exercise Notice, Landlord and Tenant shall execute and deliver a
Real Estate Purchase Contract containing such terms as are acceptable to
Landlord and Tenant and as are customary for commercial real estate
transactions of like nature and price in the Elko, Nevada area (the “Purchase
Contract”).  The Purchase Contract shall
provide for: (i) Landlord to sell the Leasehold Premises to Tenant without
warranty or representation other than the Title Warranties referred to below
and the warranties set out in this Lease from Landlord (such warranties of
Landlord to Tenant to be restated as warranties from Seller to Buyer); (ii) title
to be conveyed free and clear of all debts, liens, claims, encumbrances,
exceptions and conditions of title other than: (aa) Exceptions 1 through 6, 8
and 9 as set forth on the Commitment for Title Insurance issued by Stewart
Title Guaranty Company under its Order Number 05012821, dated October 26,
2005; (bb) real property taxes and assessments imposed by governmental
authorities (paid current); and (cc) matters 
asserted by any party not claiming by or through Landlord.  Any obligations which Landlord may have to
convey title shall be deemed satisfied so long as a reputable title company
doing business in Elko County, Nevada issues its title insurance policy free
and clear of such matter.


 


Section 13.05.        Memorandum
of Lease. Upon execution of this Lease, Landlord shall execute, cause
to be notarized and deliver to Tenant that certain Memorandum of Lease, in form
and substance as set out on Exhibit “C”, attached hereto and
incorporated herein.  Tenant shall have
the right to cause the recording of such Memorandum of Lease in the public
records of the State of Nevada.  Such
Memorandum of Lease shall address the basic terms of the Lease and shall
further state that Tenant shall have an option to purchase the Leasehold
Premises pursuant to the Terms set out in such Lease.  Upon the termination or other expiration of
this Option, Tenant agrees to deliver within twenty (20) days of Landlord’s
request a quitclaim of its interest in such Option.


 


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ARTICLE XIV


 


TENANT
LENDER RIGHTS


 


Section 14.01


 


(a)           Tenant’s Right To
Encumber. Tenant may encumber all or any portion of its interest in this
Lease and the leasehold estate created by this Lease by a deed of trust,
mortgage or other security instrument (collectively, a “Leasehold Mortgage”),
provided that such Leasehold Mortgage, shall be a lien only on Tenant’s
interest in and to this Lease and the leasehold estate created hereby.  Provided that: (i) the Leasehold
Mortgage has been recorded in the Official Records of Elko County; and (ii) the
holder of such Leasehold Mortgage has given notice of the Leasehold Mortgage to
Leasehold Mortgagee in accordance with Section 15.14, which notice
shall include a file stamped copy of the recorded Leasehold Mortgage and a
statement setting forth the address to which notices required hereunder are to
be directed (as such notice may be changed from time to time in accordance with
Section 15.14, the “Leasehold Mortgagee’s Address”) such holder of
a Leasehold Mortgage or anyone claiming by or through or under such holder
shall be deemed to be a “Leasehold Mortgagee” for the purpose of this Section 14.01.


 


(b)           Rights of
Leasehold Mortgagee.


 


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


 


(2)           Notice of Default.  Landlord shall deliver to such
Leasehold Mortgagee a copy of each notice of default under this Lease (a “Lease
Default”) given by Landlord to Tenant (a “Landlord Notice”) concurrently with
and whenever any such Landlord Notice shall be given by Landlord to Tenant.  No such Landlord Notice shall be deemed to
have been duly given unless and until delivery of such Landlord Notice to the Leasehold Mortgagee shall be deemed to be effective in
accordance with the terms and conditions hereof.


 


(3)           Landlord
Covenants.  Landlord
agrees that it will not:  (i) accept
the surrender of the Leasehold Premises by Tenant prior to the termination of
the Lease, or (ii) consent to the modification of any material term of
this Lease


 


30





















 


or the termination of this Lease by Tenant, without prior written
notice to the Leasehold Mortgagee in each instance.  Landlord further agrees that it will not seek
to terminate this Lease by reason of any Lease Default  except in accordance with this Section 14.01.


 


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


 


(5)           Reasonable Period of Time Defined.  As used in Section 14.01
B.(4), above, “a reasonable period of time” shall be:  (i) thirty (30) days if such Lease
Default can be remedied during such thirty (30) day period, or (ii) if
such Lease Default cannot be remedied during such thirty (30) day period, then
such period of time as is necessary to remedy such Lease Default (not to
exceed, however, one hundred one hundred eighty (180) days), provided that the
Leasehold Mortgagee has commenced to cure such Lease Default or to foreclose
the lien of its Leasehold Mortgage within such initial thirty (30) day period
and continues to diligently prosecute such cure of foreclosure to completion
(and, upon completion of any foreclosure, promptly commences, and thereafter
diligently pursues, such cure).


 


(6)           Time Extension.  The time for the Leasehold
Mortgagee to cure any Lease Default by Tenant that reasonably requires the
Leasehold Mortgagee be in possession of the Leasehold Premises to do so, shall
be deemed extended to include the period of time required by such Leasehold
Mortgagee to obtain such possession or obtain Tenant’s interest in this Lease
(by foreclosure or otherwise); provided, however, as a condition precedent to


 


31





















 


such extension:  (i) such
Leasehold Mortgagee shall have delivered to Landlord its written commitment to
cure all outstanding Lease Defaults reasonably requiring possession of the Lease
Premises; (ii) Leasehold Mortgagee shall continually and diligently pursue
the obtaining of such possession or leasehold interest; and (iii) during
such period all other obligations of Tenant under this Lease are being performed
and kept current by such Leasehold Mortgagee in accordance with the Lease.


 


(7)           New
Lease Covenants.  If this Lease is terminated for
any reason, (including without limitation, the rejection or disaffirmance of
this Lease pursuant to bankruptcy laws or laws affecting creditor rights), other
than a termination based upon Leasehold Mortgagee’s failure to cure a Lease
Default as permitted in this Section 14.01 Landlord will enter into
a new lease of the Leasehold Premises with the Leasehold Mortgagee, or any
party designated by the Leasehold Mortgagee within thirty (30) days after the
request of the Leasehold Mortgagee.  The
new lease shall be effective as of the date of the applicable termination,
rejection or disaffirmance of this Lease, and shall be upon the same terms,
covenants and provisions as are contained in this Lease, except that the
provisions of such new lease shall: (i) reflect expiration of that portion
of the Lease Term elapsing between the Commencement Date and the date of the
Lease termination; and (ii) require the tenant thereunder to promptly
commence, and thereafter diligently pursue, cure of any uncured Lease Default
which cannot be cured by the payment of money. 
In order to obtain a new lease, a Leasehold Mortgagee must make a
written request to Landlord for the new lease (a “Substitute Lease Request”)
within (30) days after the Leasehold Mortgagee is notified of the effective
date of the applicable termination, rejection or disaffirmance of this Lease in
which event no further action shall be taken by Landlord pending the execution
and delivery thereof.  In addition, prior
to making written request to Landlord for the new lease, the Leasehold
Mortgagee must cure all Lease Defaults that can be cured by the payment of
money and pay to Landlord all rent and other sums that would have been due and
payable by Tenant under this Lease but for the termination thereof.  Delivery of the Substitute Lease Request
shall constitute an agreement by Leasehold Mortgagee to promptly
reimburse Landlord for its reasonable costs and expenses (including attorneys
fees) incurred in good faith connection with termination of the Lease and entry
into the new lease (the “Substitute Lease Expenses”).  Within fifteen (15) days after receipt of the
Substitute Lease Request, Landlord shall deliver the new lease to Leasehold
Mortgagee and, within ten (10) days after Leasehold Mortgagee’s receipt of
the new lease, Leasehold Mortgagee shall: (i) cause the tenant under the
new lease to enter


 


32





















 


into the new lease; (ii) pay Landlord the Substitute Lease
Expenses; and (iii) satisfy all monetary obligations which would have
accrued under the Lease, but for the Lease termination; (collectively, the “Substitute
Lease Conditions”).  If the Substitute
Lease Conditions are not satisfied within said ten (10) day period,
Landlord shall have no further obligations to enter into the new lease (and
Leasehold Mortgagee shall remain liable for any unsatisfied Substitute Lease
Expenses).


 


(8)           Separate
Rights; Use and Enjoyment.  To the
extent Landlord is able, Landlord shall undertake reasonable efforts at the
sole cost of the Leasehold Mortgagee,  to
provide for any new lease made pursuant hereto to be senior and superior to any
other encumbrances on the Leased Premises. 
The Leasehold Mortgagee’s right under this Section 14 are in
addition to and not limited by such Leasehold Mortgagee’s right to cure under Section 14.01(b)(4) and
(5), above.  The provisions of this Section 14
are a separate and independent contract made by Landlord and each Leasehold
Mortgagee.  From the effective date of
termination, rejection or disaffirmance of this Lease to the date of execution
and delivery of such new lease or the expiration of the period during which a
Leasehold Mortgagee may make a request, such Leasehold Mortgagee may, upon
payment of any rent and any other sums as may be due from Tenant, use, occupy
and enjoy the leasehold estate created by this Lease without hindrance by
Landlord.


 


(9)           Benefit.  The provisions of
this Section 14.01 are for the benefit of each Leasehold Mortgagee
and may be relied upon and shall be enforceable by each Leasehold
Mortgagee.  Neither a Leasehold Mortgagee
nor any other holder or owner of the indebtedness secured by a leasehold
mortgage or otherwise shall be liable with respect to the terms, covenants,
agreements or obligations of Tenant contained in this Lease, unless and until
such Leasehold Mortgagee or that holder or owner acquires the interest of
Tenant hereunder.


 


(10)         Estoppel.  Within fifteen (15) days from Tenant’s
written request, Landlord agrees to execute, have notarized, and deliver to
Tenant and Leasehold Mortgagee, an estoppel certificate (the “Lender’s Estoppel
Certificate”), in a form and substance reasonably requested by Leasehold Mortgagee,
setting forth Landlord’s representation that : 
(i) the Lease is in full force and effect; (ii) there exists
no condition of default by Landlord under the Lease and, to Landlord’s actual
knowledge, there exists no condition of default by Tenant under the Lease, or
if such condition of default by Landlord or Tenant does exist, a statement from
Landlord specifying the nature of such default


 


33





















 


including the sums due from or action necessary of the defaulting party
in order to cure same;


 


(11)         Notices.  All notices to Landlord, or to a Leasehold
Mortgagee, which are required, or contemplated, under this Section 14.01,
shall be given, and shall be deemed effective, in accordance with Section 15.14
(except that notices to a Leasehold Mortgagee shall be directed to the Leasehold
Mortgagee’s Address).


 


ARTICLE XV


 


MISCELLANEOUS


 


Section 15.01.        Holding Over.  Any holding over by
Tenant after the expiration of the Lease Term shall be construed to be a
tenancy from month to month at a Base Rent of 110% of the Base Rent for the
immediately expired Lease Term(prorated on a monthly basis) and shall otherwise
be on the terms and conditions herein specified, so far as applicable.


 


Section 15.02.        Successors and Assigns.  All rights and
obligations of each Party hereunder shall extend to and bind the respective
heirs, executors, administrators, successors and assigns of the Parties; and if
there shall be more than one tenant, they shall all be bound jointly and
severally by the terms, covenants and agreements herein.  Subject to the provisions of Article X
above, no rights, however, shall inure to the benefit of any assignee of Tenant
unless the assignment to such assignee has been approved by Landlord in writing
as provided by Section 10.01, above.


 


Section 15.03.        Quiet Enjoyment.  Upon payment by the
Tenant of the rents herein provided, upon the observance and performance of all
the conditions of this Lease on Tenant’s part to be observed and performed, and
subject to the terms and conditions of this Lease, Tenant shall peaceably and
quietly hold and enjoy the Leasehold Premises for the Lease Term without
hindrance or interruption by Landlord or any other person or persons lawfully
or equitably claiming by, through or under Landlord.


 


Section 15.04.        Sale or Transfer of Premises.  If Landlord sells or transfers all or any
portion of the Leasehold Building, other improvements and land of which the Leasehold
Premises are a part, Landlord, on consummation of the sale or


 


34





















 


transfer shall be released from any liability
thereafter accruing under this Lease, provided that Landlord’s successor shall
have assumed in writing, for the benefit of Tenant, Landlord’s obligations
hereunder and such successor-in-interest to this Lease shall execute, cause to
be notarized and delivered to Tenant, at Tenant’s request a non-disturbance
agreement covenanting Landlord’s obligation to permit Tenant’s continued
peaceable use and enjoyment of the Leasehold Premises (provided that Tenant is
not in default of this Lease, and that any default has not been timely cured by
Tenant).


 


Section 15.05.        Interpretation.  This Lease shall be construed and enforced in
accordance with the laws of the State of Nevada.


 


Section 15.06.        Waiver.  No waiver by Landlord of any provision of
this Lease shall be deemed to be a waiver of any other provision hereof or of
any subsequent breach by Tenant of the same or any other provision.  Landlord’s consent to or approval of any act
by Tenant, which act requires Landlord’s consent or approval, shall not
constitute a waiver of any requirement that Landlord consent to or approval of
any future acts by Tenant.  The terms of
this Section 15.06 notwithstanding, no waiver, consent or approval
by Landlord shall be effective unless such consent, approval or waiver is in
writing and is executed by Landlord or by Landlord’s agent.


 


Section 15.07.        Real Estate Brokers.  Landlord and Tenant
shall each indemnify and hold the other harmless from any and all claims which
may be asserted by any real estate broker on the basis of any alleged
commission obligation of the indemnifying party to said real estate broker,
pursuant to or in connection with this Lease.


 


Section 15.08.        Entire Agreement.  This Lease and the
exhibits attached hereto, if any, set forth all the covenants, agreements and
conditions between Landlord and Tenant concerning the Leasehold Premises, and
there are no covenants, agreements or conditions, either oral or written,
between them other than are herein set forth. 
Except as otherwise provided by the terms of this Lease, no subsequent
alteration, amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by the party to be
charged with performance thereof.


 


Section 15.09.        Joint and Several Obligations.  “Party” shall mean Landlord or Tenant; and if
more than one person or entity is Landlord or Tenant, the obligations imposed
on that party shall be joint and several.


 


35





















 


Section 15.10.        Severability.  If it shall be
determined by a court of competent jurisdiction that any term, covenant or
condition of this Lease is unenforceable as to any person or circumstance, such
determination shall not render such term, covenant or condition unenforceable
as to any other person or circumstance, and the remaining terms, covenants and
conditions of this Lease shall be unaffected and shall remain in full force and
effect.


 


Section 15.11.        Time is of the Essence.  Time is of the
essence of each provision of this Lease.


 


Section 15.12.        Relationship Between Parties.  Landlord shall not, by virtue of this Lease,
or the relationship created hereby, be deemed to be a partner, joint venturer,
agent or principal of Tenant, it being expressly understood that the singular
relationship of the Parties hereunder shall be that of Landlord and Tenant.


 


Section 15.13.        Delay.  If either Party, except as otherwise herein
specifically provided, shall be delayed or hindered in or prevented from the
performance of any act required hereunder by reason of strikes, lock-outs,
labor troubles, inability to procure materials, failure of power, restrictive
governmental laws or regulations, riots, insurrection, acts of terrorism, war
or other reason of a like nature not the fault of the Party delayed in
performing work or doing acts required under the terms of this Lease, then
performance of such act shall be excused for the period of delay and the period
of the performance of any such act shall be extended for a period equivalent to
the period of such delay.  It is
specifically provided, however, that the provisions of this Section 15.13
shall not operate to excuse Tenant from the prompt payment of Base Rent, Additional
Rent or any other payments required by the terms of this Lease.


 


Section 15.14.        Notices.   All
notices, objections and approvals referred to in this Lease must be given in
writing and will be effective:  (i) on
the day the notice is actually received by the addressee thereof after being
sent by overnight delivery (such as Federal Express) or having been personally
hand delivered by the sender; or (ii) two (2) days after being
deposited in the United States Mail, postage prepaid, registered or certified
mail, return receipt requested, and properly addressed to the party to receive
such notice; or (iii) on the day such notice is sent to the addressee by confirmed telecopier,
facsimile or similar transmission. The notice addresses of the Parties shall be
those specified below unless modified in writing by the appropriate party:


 


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  Tenant:

  	
   

  	
  JACOBS
  ENTERTAINMENT, INC.

  	
   

  	
   

  
	
   

  	
   

  	
  17301 West Colfax Avenue

  	
   

  	
   

  
	
   

  	
   

  	
  Suite 250

  	
   

  	
   

  
	
   

  	
   

  	
  Golden, Colorado 80401

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Stephen R. Roark, CFO

  	
   

  	
   

  
	
   

  	
   

  	
  (303) 215-5201

  	
   

  	
   

  
	
   

  	
   

  	
  (303) 215-5219 facsimile

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With A Copy To:

  	
   

  	
  Jones & Keller, P.C.

  	
   

  	
   

  
	
   

  	
   

  	
  1625 Broadway, 16th Floor

  	
   

  	
   

  
	
   

  	
   

  	
  Denver, Colorado 80202

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Samuel E. Wing, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
  (303) 573-1600

  	
   

  	
   

  
	
   

  	
   

  	
  (303) 893-6506 (facsimile)

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Route 225
  Investments, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  1900
  Manzanita Lane

  	
   

  	
   

  
	
   

  	
   

  	
  Reno, Nevada
  89509

  	
   

  	
   

  
	
   

  	
   

  	
  (775)
  825-1364

  	
   

  	
   

  
	
   

  	
   

  	
  (775)
  825-1367 (facsimile)

  	
   

  	
   

  



 


37





















 


	
  With A Copy To:

  	
   

  	
  Henderson &
  Morgan, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  4600 Kietzke Lane

  	
   

  	
   

  
	
   

  	
   

  	
  Suite K228

  	
   

  	
   

  
	
   

  	
   

  	
  Reno, Nevada 89502

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Jim Morgan, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone No. (775) 825-7000

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No. (775) 825-7738

  	
   

  	
   

  



 


or to such
other address as either party may from time to time by written notice designate
for this purpose.


 


Section 15.15.        Captions and Section Numbers.  The captions appearing in this Lease are
inserted as a matter of convenience only, and in no way shall they define,
limit, construe or otherwise describe the scope or intent of the sections or
articles herein.


 


Section 15.16         Further
Acts.  Landlord and Tenant agree to
undertake such further acts and execute and deliver such further documents in
order to effectuate the purpose and intent of this Lease.


 


Section 15.17         Counterpart
Execution.  This Lease may be
executed in multiple counterparts, each of which shall be fully effective as an
original, for which together shall constitute only one (1) instrument.


 


IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ROUTE 225
  INVESTMENTS, LLC,

  
	
   

  	
  a Nevada
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Ward
  Chilton,

  
	
   

  	
   

  	
  Its Manager

  



 


38





















 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  JACOBS ENTERTAINMENT, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
						



 


39





















 


EXHIBIT “A”


 


LEASEHOLD REAL
PROPERTY


 


All that real
property situate in the City of Elko, County of Elko, State of Nevada,
described as follows:


 


Parcels 1, 2
and 3 as shown on that certain Parcel Map for SAFEWAY STORES, INC. filed in the
office of the County Recorder of Elko County, State of Nevada, on February 21,
1984, as File No. 188745, being a portion of Section 16, TOWNSHIP 34
NORTH, RANGE 55 EAST, M.D.B. & M.


 


40





















 


EXHIBIT “B”


 


REPORTS AND CORRESPONDENCE REGARDING ENVIRONMENTAL STATUS


 


41





















 


LIST
OF ENVIRONMENTAL REPORTS AND CORRESPONDENCE


 


The following is a list of all reports and correspondence which
Landlord has received as of the date of the Lease regarding the environmental
status of the Leasehold Premises or of any alleged violation any environmental
laws with respect to the Leasehold Premises, all of which have been delivered
to Tenant:


 


(1)           Phase I
Environmental Assessment Report prepared by Converse Consultants under their
Project No. 05-73182-01 and dated as of October 12, 2005 (the “Phase
I Environmental Report”);


 


(2)           Letter from Converse
Consultants to Ward Chilton dated October 14, 2005 as an addendum; and


 


(3)           Polarized light
microscopy analysis report prepared by Converse Consultants under Project No. 05-73182-01
and dated as of October 17, 2005.


 


(4)           Letter from George
M. Lostra, P.E. to Ward Chilton dated October 24, 2005.


 


42





















 


EXHIBIT “C”


 


MEMORANDUM OF
LEASE


 


43





















 


Prepared by
and when


recorded mail
to:


 


 


                     


                     


                     


                     


 


MEMORANDUM
OF LEASE


 


THIS MEMORANDUM OF LEASE, dated this       
day of                  ,
2005 is executed by ROUTE 225 INVESTMENTS, LLC, a Nevada limited liability
company, hereinafter collectively to as “Lessor”, and JACOBS ENTERTAINMENT,
INC., a Delaware corporation, hereinafter referred to as “Lessee”.


 


NOTICE IS HEREBY GIVEN THAT, concurrently, or substantially concurrent,
herewith, Lessor and Lessee have entered into a Triple Net Lease (the “Lease”),
with respect to the real property and Improvements which is particularly
described by Exhibit ”A” attached hereto and incorporated by reference
herein (the “Real Property”).  Lessor
hereby leases the Real Property to Lessee in accordance with the terms and
conditions of said Lease.  The term of
the Lease commences on                  ,
2005 and will expire on October 31, 2010, unless sooner terminated or
extended in accordance with the terms and conditions set forth in the
Lease.  The Lease also includes a grant,
from Lessor to Lessee, of an option to purchase the Real Property in accordance
with the terms and conditions set forth therein.


 


44





















 


IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease
as of the day and year first above written.


 


 


	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  ROUTE 225
  INVESTMENTS, LLC,

  	
  JACOBS
  ENTERTAINMENT, INC.,

  
	
  a Nevada
  limited liability company

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
  Title

  	
   

  	
   

  
										



 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss

  
	
  COUNTY OF

  	
  )

  



 


This instrument was acknowledged before me on                       ,
2005, by                                               
as                                           
of ROUTE 225 INVESTMENTS, LLC.


 


	
   

  	
   

  
	
  Notary
  Public

  



 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss

  
	
  COUNTY OF

  	
  )

  



 


This instrument was acknowledged before me on                       ,
2001, by                                   
as                                         
of JACOBS ENTERTAINMENT, INC.


 


 


	
   

  	
   

  
	
  Notary
  Public

  



 


45





















 


LEGAL
DESCRIPTION


 


All that real
property situate in the City of Elko, County of Elko, State of Nevada,
described as follows:


 


Parcels 1, 2
and 3 as shown on that certain Parcel Map for SAFEWAY STORES, INC. filed in the
office of the County Recorder of Elko County, State of Nevada, on February 21,
1984, as File No. 188745, being a portion of Section 16, TOWNSHIP 34
NORTH, RANGE 55 EAST, M.D.B. & M.