Document:

Exhibit
10.10

 

 

MEMBER CONTROL AGREEMENT

 

of

 

NORTH METRO HARNESS INITIATIVE,
LLC

 

a Minnesota Limited Liability
Company

 

 

June 8, 2004

 

 

MEMBER CONTROL AGREEMENT

 

OF

 

NORTH METRO HARNESS INITIATIVE,
LLC

 

This Member
Control Agreement of NORTH METRO HARNESS INITIATIVE, LLC, a Minnesota limited
liability company (the “Company”) is entered into and shall be effective as of
June 8, 2004 (the “Effective Date”), by and between Southwest Casino and
Hotel Corp., a Minnesota corporation (“Southwest”), MTR-Harness, Inc., a
Minnesota corporation (“MTR-Harness”) and MTR Gaming Group, Inc., a Delaware
corporation (“MTR”), the parent of MTR-Harness.

 

RECITALS

 

A.            Southwest caused the
Company to be formed in Minnesota as a single-member limited liability company
on June 16, 2003 (the “Formation Date”) and, since the Formation Date, has
operated the Company as an entity that is disregarded as a separate entity from
its owner for federal and state income tax purposes.

 

B.            Since the Formation
Date, Southwest has contributed funds to the Company, expended funds on behalf
of the formation and establishment of the Business (defined below) of the
Company and acquired certain assets, including the Real Estate Options (defined
below).

 

C.            Upon the admission of
MTR-Harness as a Member (defined below) of the Company in exchange for its
Initial Capital Contribution (defined below), the Company will be converted
from a disregarded entity into a “partnership” for federal income tax purposes,
as described in Situation 2 of IRS Revenue Ruling 99-5, 1999-1 C.B. 434,
whereby (i) Southwest will be treated as making its Capital Contribution in
cash, a cash commitment, and by contributing all of the assets and liabilities
of the Business as such assets and liabilities exist on the Effective Date, and
(ii) MTR-Harness will be considered to contribute its Capital Contribution in
cash and a cash commitment, with each such Capital Contribution made in
exchange for the Membership Interests described in this Agreement.

 

D.            Southwest and
MTR-Harness each have a fifty percent (50%) Percentage Interest (as defined
below) in the Company.

 

E.             Southwest and
MTR-Harness, as all of the Members of the Company desire to enter into this
Member Control Agreement (within the meaning of Minn. Stat. § 322B.37) to govern
the business and affairs of the Company to the fullest extent permitted by law.

 

NOW, THEREFORE, in
consideration of the foregoing and the representations, warranties, covenants
and agreements as set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the parties, intending
to be legally bound, hereby agree as follows:

 

1

 

ARTICLE I

DEFINITIONS

 

For the purposes
of this Agreement (as defined below) the following terms shall have the
following meanings:

 

1.             Act – The
Minnesota Limited Liability Company Act, Minn. Stat. § 322B.01 et  seq.,
as amended from time to time.

 

2.             Additional Member
- A Member other than Southwest, MTR-Harness or a Substitute Member who has
acquired a Membership Interest from the Company.

 

3.             Affiliate – As
applied to any specified Person or Organization means any other Person or
Organization (and all natural Persons related by blood, adoption or marriage to
such other Person) directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such specified Person.  The term “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of 20% or more of the voting power (or in the case of a Person
which is not a corporation, 20% or more of the ownership interests, beneficial
or otherwise) of such Person or Organization or the power otherwise to direct
or cause the direction of the management and policies of that Person or
Organization, whether through voting, by contract or otherwise.  For purposes of this paragraph, “voting power”
of any Person or Organization means the total number of votes which may be cast
by the holders of the total number of outstanding equity interests of any class
or classes of such Person or Organization in any election of directors of such
Person or Organization or individuals serving on a committee or board serving a
function comparable to that served by a board of directors of a
corporation.  All directors and executive
officers of a corporation and all directors and members of a board or Board of
Directors or similar committee of a Person or Organization organized as a
limited liability company shall be deemed to be Affiliates of such Person.

 

4.             Agreement -
This Member Control Agreement established pursuant to Minn. Stat. § 322B.37.

 

5.             Articles - The
Amended and Restated Articles of Organization of the Company filed with the
Minnesota Secretary of State on or before the Effective Date, as properly
adopted and subsequently amended from time to time by the Members and filed
with the Minnesota Secretary of State.

 

6.             Assignee - A
transferee of a Membership Interest who has not been admitted as a Substitute
Member.

 

7.             Bankrupt Member
- The terms “Bankruptcy” and “Bankrupt,” and variations thereof, shall mean any
of the following: (i) the initiation by a Member of a proceeding, or initiation
of any proceeding against a Member which has not been vacated, discharged or
bonded off within sixty (60) days of initiation, under any

 

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federal, state or local
bankruptcy or insolvency law, (ii) an assignment by a Member for the benefit of
creditors, (iii) the admission by a Member in writing of his inability to pay
his debts as they become due, or (iv) the consent of a Member to the
appointment of a receiver or trustee for all or a substantial part of his
property, or court appointment of such receiver or trustee which is not
suspended or terminated within sixty (60) days after appointment.

 

8.             Board of Directors
(“Board”) – Has the meaning assigned in Article VII, Section 4.

 

9.             Budgets – Has
the meaning assigned in Article VII, Section 8.

 

10.           Business – Has
the meaning assigned in Article III, Section 2.

 

11.           Business Day -
Any day other than Saturday, Sunday, or any legal holiday observed in the State
of Minnesota.

 

12.           Capital Account
- The account maintained for a Member or Assignee determined in accordance with
Article VIII, Section 4.

 

13.           Capital Contribution
– Any actual contribution of cash or Property made by or on behalf of a Member,
but exclusive of any obligation to contribute cash or Property to the Company
has not been funded.

 

14.           Capital Contribution
Commitment – The commitment by MTR-Harness to contribute up to an
additional Seven Million Four Hundred Ninety Thousand Dollars ($7,490,000.00)
to the Company subsequent to the occurrence of a Licensing Event and the
commitment by Southwest to contribute fund all costs (other than $10,000
contributed by MTR-Harness) prior to the Licensing Event and to contribute up
to an additional One Million Five Hundred Thousand Dollars ($1,500,000.00) to the
Company subsequent to the occurrence of a Licensing Event, as referenced in
Article VIII, Section 1.

 

15.           Catch-Up
Contribution – Means a Capital Contribution in the amount of Two Million
Nine Hundred Ninety Thousand Dollars ($2,990,000.00) to be made in cash by
MTR-Harness upon the occurrence of a Licensing Event without any further
approval or action by the Board or Members. 
The Catch-Up Contribution is intended to be in such amount that
MTR-Harness’s cumulative Capital Contributions to the Company (including its
Initial Capital Contribution) immediately after such Catch-Up Contribution will
be an amount equal to three (3) times Southwest’s Matched Pre-Licensing Costs.

 

16.           Closing Date –
The date, which is expected to be the same date as the Effective Date, on which
MTR-Harness acquired a fifty percent (50%) Percentage Interest in the Company
pursuant to the terms and conditions of this Agreement and a Purchase
Agreement, dated the Closing Date between the Company, Southwest and MTR Gaming
Group, Inc., with such admission of MTR-Harness as a

 

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Member causing the
Company to convert from a disregarded entity to a partnership for federal
income tax purposes.

 

17.           Code - The
Internal Revenue Code of 1986, as amended from time to time.

 

18.           Company – NORTH
METRO HARNESS INITIATIVE, LLC, a limited liability company formed under the
laws of the State of Minnesota.

 

19.           Company Liability
- Any enforceable debt or obligation for which the Company is liable or which
is secured by any Company Property.

 

20.           Company Property
- Any Property owned by the Company.

 

21.           Director – Has
the meaning assigned in Article VII, Section 4.

 

22.           Disposition
(Dispose) – With respect to any Membership Interest, means any sale, assignment,
transfer, exchange, mortgage, pledge, grant, hypothecation, or other transfer,
absolute or as security or encumbrance (including disposition by operation of
law).

 

23.           Dissociation
(Dissociated) - Any action which causes a Person to cease to be a Member as
described in Article XI hereof.

 

24.           Dissolution Event
- An event, the occurrence of which will result in the dissolution of the
Company under Article XV, unless the Members elect to avoid dissolution where
the Members have the power to so elect.

 

25.           Distribution - A
transfer of cash or other Property to a Member on account of a Membership
Interest as described in Article IX and Article XV.

 

26.           Effective Date –
Has the meaning assigned in the preamble hereto.

 

27.           Formation Date –
Has the meaning assigned in the preamble hereto.

 

28.           Gaming Authority
– Any governmental gaming authority having jurisdiction over MTR or its
subsidiaries, Southwest or the Company including, but not limited to the
Minnesota Racing Commission, Minnesota Gaming Control Board, South Dakota
Division of Gaming, Colorado Division of Gaming, National Indian Gaming
Commission, Cheyenne and Arapaho Tribes Gaming Commission, the Pennsylvania
Horse Racing Commission, the West Virginia Lottery Commission, the West
Virginia Racing Commission, the Ohio Racing Commission, and the Nevada Gaming
Control Board.

 

29.           Initial Capital
Contributions – The Capital Contributions made by the Managing Members in
cash or Property on the Effective Date, as described in Article VIII, Section
1.

 

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30.           Licensing Event
– The date on which a license is issued and received by the Company from the
Minnesota Racing Commission allowing the Company to construct and operate a
harness racing track and card room in Columbus Township, Anoka County,
Minnesota (the “License”).

 

31.           Managing Members
– Southwest and MTR-Harness (each a Managing Member and collectively the
Managing Members and sometimes referred to as the Co-Managing Members).

 

32.           Matched
Pre-Licensing Costs – Shall mean One Million Dollars ($1,000,000.00) of
Southwest’s Pre-Licensing Costs.

 

33.           Member –
Southwest, MTR-Harness, any Substituted Member or any Additional Member, and,
unless the context expressly indicates to the contrary, includes Managing
Members and Assignees.

 

34.           Membership Interest
– The individual equity interest of the respective Members in and to the
Company, which interest is to be maintained as a single interest and which is
not to be divided into any subinterest, such as an interest in separate
financial or management rights or otherwise.

 

35.           Monthly Installment
– Shall mean the return to Southwest of the Unmatched Pre-Licensing Costs to be
paid, subject to the availability of sufficient distributable cash, in the form
of twenty-four (24) equal monthly installments over a twenty-four (24) month
period.

 

36.           MTR – MTR Gaming
Group, Inc., a Delaware corporation.

 

37.           MTR-Harness –
MTR-Harness, Inc., a Minnesota corporation wholly owned by MTR.

 

38.           MTR-Harness Maximum
Capital Contribution – The Seven Million Five Hundred Thousand Dollar
($7,500,000.00) Capital Contribution made, or to be made, by MTR-Harness,
comprised of MTR-Harness’ Initial Capital Contribution and Capital Contribution
Commitment, which amount may only be increased with the consent of MTR-Harness.

 

39.           Net Losses - The
losses and deductions of the Company determined in accordance with accounting
principles consistently applied from year to year employed under the method of
accounting adopted by the Company and as reported separately or in the
aggregate, as appropriate, on the tax return of the Company filed for federal
income tax purposes.

 

40.           Net Profits -
The income and gains of the Company determined in accordance with accounting
principles consistently applied from year to year employed under the method of
accounting adopted by the Company as reported separately or in the aggregate,
as appropriate, on the tax return of the Company filed for federal income tax
purposes.

 

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41.           Notice – Any
notice made pursuant to this Agreement shall be in writing.  Notice to the Company shall be considered
given when mailed by certified mail, postage prepaid, return receipt requested,
addressed to both Managing Members in care of the Company at the address of the
principal office identified in Article II, Section 6.  Notice to a Member shall be considered given
when mailed by certified mail, postage prepaid, return receipt requested,
addressed to such Member at the address reflected in the Agreement unless the
Member has given the Company a Notice of a different address.  Notice to any Director shall be as provided
in Article VII, Section 4.3.  Any
notice hereunder shall be considered given three (3) days after being mailed by
certified mail, postage prepaid, return receipt requested.

 

42.           Officers – Shall
mean the General Manager appointed by the Co-Managing Members and such other
individuals as may be appointed by the Board of Directors, as more fully
described in Article VII, Section 5.

 

43.           Organization - A
Person other than a natural person.  An
Organization includes, without limitation, corporations (both non-profit and
other corporations), partnerships (both limited and general), joint ventures,
limited liability companies, and unincorporated associations, but the term does
not include joint tenancies and tenancies by the entirety.

 

44.           Pre-Licensing Costs
– Documented out-of-pocket costs incurred prior to the occurrence of a
Licensing Event in connection with the preparation of the license application
and pursuit of the license approval, the real property options, engineering and
design work, environmental assessments and other costs related to the Business
on or before the occurrence of the Licensing Event, provided that such costs
shall exclude corporate overheard and provided further that Southwest or the
Company shall have capitalized (rather than deducted) such costs on its tax
returns for the periods prior to or including the occurrence of the Licensing
Event.  The purpose of the
above-mentioned requirement that Southwest or the Company shall have
capitalized such costs on its tax return is to avoid a variation between the
basis of the property to the Company and its fair market value at the time of
contribution and, accordingly, to avoid a special allocation of income, gain,
loss and deduction pursuant to Section 704(c) of the Code.  Except for the exclusion of corporate
overhead, there is no prohibition on such costs being reflected as intangible
assets on the Company’s financial statements. 
Pre-Licensing Costs are divided into two categories:  Match Pre-Licensing Costs and Unmatched
Pre-Licensing Costs.

 

45.           Percentage Interest
- A Member’s share of the Net Profits and Net Losses of the Company (except as
otherwise provided in Article IX) and, subject to the payment of
disproportionate Distributions to MTR-Harness until MTR-Harness and Southwest
have each received a return of their Capital Contributions as provided in
Article IX, a Member’s right to receive Distributions of the Company’s
assets.

 

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46.           Person - An
individual, trust, estate, or any incorporated or unincorporated organization
permitted to be a member of a limited liability company under the laws of the
State of Minnesota.

 

47.           Preferred Return –
means the amount accrued for each taxable year (or portion thereof) of the
Company commencing on the Effective Date by applying the Prime Rate, as in
effect from time to time, to the sum of (i) the Unrecovered Unmatched Pre-Licensing
Costs and (ii) the Unrecovered Preferred Return.

 

48.           Prime Rate -
Prime Rate shall mean the “prime rate” as published in the “Money Rates”
Section of The Wall Street Journal;
however, if such rate is, at any time during the term of this Agreement, no
longer so published, the term “Prime Rate” shall mean the average of the prime
interest rates which are announced, from time to time, by the three (3) largest
banks (by assets) headquartered in the United States which publish a prime,
base or reference rate, in any case not to exceed the maximum rate permitted by
law.

 

49.           Proceeding - Any
judicial or administrative trial, hearing or other activity, civil criminal or
investigative, the result of which may be that a court, arbitrator, or
governmental agency may enter a judgment, order, decree or other determination
which, if not appealed and reversed, would be binding upon the Company, a
Member or other person subject to the jurisdiction of such court, arbitrator,
or governmental agency, including an appeal or review of same.

 

50.           Property - Any
property real or personal, tangible or intangible, including money and any
legal or equitable interest in such property, excluding services and promises
to perform services in the future.

 

51.           Real Estate Options
– The options to acquire the Real Property which was contributed to the Company
by Southwest as part of Southwest’s Initial Capital Contribution.

 

52.           Real Property –
The real property which is referred to in Article III and which is more fully
described in Exhibit B attached hereto and made a part hereof.

 

53.           Regulations -
Except where the context indicates otherwise, the permanent, temporary,
proposed, or proposed and temporary regulations of the U.S. Treasury
Department, promulgated under the Code, as such regulations may be lawfully
changed from time to time.

 

54.           Resignation -
The act by which a Managing Member ceases to be a Managing Member.

 

55.           Southwest Maximum
Capital Contribution – The sum of the Matched Pre-Licensing Costs, the
Unmatched Pre-Licensing Costs, and Southwest’s commitment to contribute up to
an additional One Million Five Hundred Thousand Dollar ($1,500,000.00)
subsequent to the occurrence of the Licensing Event, which amount may only be
increased with the consent of Southwest.

 

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56.           Substitute Member
- An Assignee who has been admitted to all of the rights of membership pursuant
to the Agreement.

 

57.           Suitable Person
– A Person licensable by each Gaming Authority having jurisdiction over the
Company’s Business or any Member’s or their Affiliate’s business operations at
the time of any such determination.

 

58.           Taxable Year -
The taxable year of the company as determined pursuant to Section 706 of the
Code, which shall be the calendar year ended December 31 unless properly
changed by the Managing Members or Board.

 

59.           Taxing Jurisdiction
- Any state, local, or foreign government that collects tax, interest or
penalties, however designated, on any Member’s share of the Net Profits of the
Company.

 

60.           Unmatched
Pre-Licensing Costs – Shall mean the amount of Southwest’s Pre-Licensing
Costs in excess of One Million Dollars ($1,000,000.00).

 

61.           Unrecovered
Preferred Return – Shall mean the cumulative amount of accrued but unpaid
Preferred Return.

 

62.           Unrecovered
Unmatched Pre-Licensing Costs – Shall mean the aggregate Unmatched
Pre-Licensing Costs less the amount of such Unmatched Pre-Licensing Costs paid
to Southwest in the form of Monthly Installments pursuant to Article IX,
Section 3 or otherwise returned to Southwest pursuant to Article IX, Section 4.

 

63.           Unsuitable Person
– A Person not licensable by each Gaming Authority having jurisdiction over the
Company’s Business or any Member’s or their Affiliate’s business operations at
the time of any such determination.

 

ARTICLE II

FORMATION

 

1.             Organization.  Southwest organized the Company as a
Minnesota Limited Liability Company pursuant to the provision of the Act and
filed the Company’s original Articles of Organization on June 16, 2003.  At all times since its formation and through
the Effective Time, the Company has been disregarded as an entity separate from
Southwest for federal and state income tax purposes.  On the Effective Date, MTR-Harness acquired a
fifty percent (50%) Percentage Interest from the Company, and the revised
Articles were filed with the Minnesota Secretary of State on or before the
Effective Date.  On the Effective Date,
the Company converted into a partnership for federal and applicable state
income tax purposes.

 

2.             Agreement.  For and in consideration of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Members executing
the Agreement hereby

 

8

 

agree to the terms and
conditions of the Agreement, as it may from time to time be amended according
to its terms.  It is the express
intention of the Members that the Agreement shall be the sole source of
agreement of the parties.  Consistent
with such intention, the Members acknowledge that the Company’s Operating
Agreement, dated July 16, 2003, is no longer in force and effect.

 

3.             Name.  The name of the Company is NORTH METRO
HARNESS INITIATIVE, LLC, a limited liability company, and all business of the
Company shall be conducted under that name or under any other name, but in any
case, only to the extent permitted by applicable law.

 

4.             Term.  The duration of the Company shall be
perpetual, unless the Company shall be sooner dissolved and its affairs are
wound up in accordance with the Act or this Agreement.

 

5.             Registered Agent
and Office.  The registered agent for
the service of process shall be Thomas E. Fox and the registered office shall
be that location reflected in the Articles of Organization as filed in the
Minnesota Secretary of State’s office. 
The Members, may, from time to time, change the registered agent or
office through appropriate filings with the Minnesota Secretary of State’s
office.  In the event the registered
agent ceases to act as such for any reason or the registered office shall
change, the Managing Members or Board shall promptly designate a replacement
registered agent or file a notice of change of address as the case may be.  If the Managing Members or Board shall fail
to designate a replacement-registered agent or change of address of the
registered office, any Member may designate a replacement-registered agent or
file a notice of change of address.

 

6.             Principal Office.  The principal office of the Company shall be
located at:

 

2001 Killebrew
Drive

Suite 306

Bloomington,
Minnesota 55425

 

The Managing
Members shall have the authority upon their unanimous agreement to change the
principal office of the Company.

 

ARTICLE III

NATURE OF BUSINESS

 

1.             General Powers.  The Company may engage in any lawful business
permitted by the Act or the laws of any jurisdiction in which the Company may
do business.  The Company shall have the
authority to do all things necessary or convenient to accomplish its purpose
and operate its business as described in the Agreement and this Article
III.  Notwithstanding the foregoing, the
Company exists only for the purpose specified in Section 2 of this Article III,
and may not conduct any other business without the unanimous consent of the
Managing Members.

 

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2.             Harness Race Track.  The Company’s business (the “Business”) may
include, but shall not be limited to, the purchase of the real property
described in Exhibit B attached hereto and made a part hereof (the “Real
Property”), and the operation of card games and a harness horse racetrack
thereon, together with all of the normal ancillary functions and facilities,
such as stables, a clubhouse, a grandstand, restaurants, pari-mutuel wagering,
together with the operation of other ancillary businesses on the Real Property,
such as nightclubs, a hotel and such other activities (including the additional
authorized gaming described in Article VIII, Section 3) as may be permitted by
law from time to time.

 

ARTICLE IV

ACCOUNTING AND RECORDS

 

1.             Records to be
Maintained.  The Company shall
maintain the following records at its principal office:

 

1.1           A current list of the
full name and last known business address of each Member;

 

1.2           A copy of the Articles
and all amendments thereto, together with executed copies of any powers of
attorney pursuant to which any articles have been executed;

 

1.3           Copies of the Company’s
federal, foreign, state, and local income tax returns and reports, if any, for
the three most recent years;

 

1.4           Copies of this
Agreement including all amendments thereto; and

 

1.5           Any financial
statements of the Company for the seven (7) most recent years.

 

2.             Reports to Members:

 

2.1           The Board shall provide
to the Members other than Assignees, (a) unaudited balance sheets, income
statements and changes in financial position (“Financial Statements”) for each
calendar quarter within fifteen (15) days following the end of such calendar
quarter and (b) audited Financial Statements for each calendar year on or
before the end of the fifth (5th) Friday following the end of such
calendar year, or at such other times as may be agreed to by the Members.

 

2.2           The Board shall provide
all Members with such information returns required by the Code and the laws of
the applicable state or states in which the Company operates.

 

3.             Accounts.  The Board shall maintain a record of each
Member’s Capital Account in accordance with Article VIII.

 

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4.             Accountant.  The Managing Members jointly, or the Board,
shall determine the firm or firms of accountants to assist the Company with
financial statements and tax matters. 
Notwithstanding the foregoing, if necessary in order to satisfy the
requirements of Article IV, Section 2.1, the Company shall utilize the
accounting firm selected by MTR-Harness.

 

ARTICLE V

NAMES AND ADDRESSES OF MEMBERS

 

The name and
addresses of the Members are as reflected on Exhibit A attached hereto
and by this reference made a part hereof as if set forth fully herein.

 

ARTICLE VI

RIGHTS AND DUTIES OF MEMBERS

 

1.             Management Rights.  All Members (other than Assignees) who have
not Dissociated shall be entitled to vote on any matter submitted to a vote of
the Members.  Whenever any matter is
required or allowed to be approved by the Members, under the Act or this
Agreement (which shall take precedence over the Act to the fullest extent
permitted by law), such matter shall be considered approved or consented to
upon the receipt of the requisite approval or consent, either in writing or at
a meeting of the Members.  Assignees and,
in the case of approvals to withdrawal where consent of the remaining Members
is required, Members who have Dissociated, shall not be considered Members
entitled to vote for the purpose of determining an approval action.

 

2.             Liability of
Members.  No Member shall be liable
as such, for any Company Liability.  The
failure of the Company to observe any formalities or requirements relating to
the exercise of its powers or management of its Business or affairs under this
agreement or the Act shall not be grounds for imposing personal liability on
the Members, Managing Members or Directors or Officers for liabilities of the
limited liability company.

 

3.             Indemnification.  The Company shall indemnify the Members,
Managing Members, Directors and Officers and their agents for all costs,
losses, claim, judgments, liabilities, and damages paid or accrued by such
Member, Managing Member, Director, Officer or agent in connection with the
Business of the Company, to the fullest extent provided or allowed by the laws
of the State of Minnesota.

 

4.             Representations
and Warranties.  Each Member, and in
the case of an Organization, the person executing the Agreement, hereby represents
and warrants to the Company and each other Member that: (i) if that Member
is an Organization, it is duly organized, validly existing, and in good
standing under the law of its State of organization and that it has full
organizational power to execute and agree to the Agreement and to perform its
obligations hereunder; (ii) the Member is acquiring its interest in the
Company for the Member’s own account

 

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as an investment and
without an intent to distribute the interest; and (iii) the Member
acknowledges that the interests have not been registered under the Securities
Act of 1933 or any state securities laws, and may not be resold or transferred
by the Member without appropriate registration or the availability or an
exemption from such requirements.

 

5.             Conflicts
of Interest:

 

5.1           Independent
Ventures; Nonsolicitation.  Each of
the Members and MTR covenants and agrees that while it may currently engage or
hold interests in other business ventures of varied kinds and descriptions for
its own account, including other investments which include but are not limited
to gaming and real estate ventures, that it shall not compete directly, or
indirectly through any Affiliate, with the Company’s Business (as the same may
evolve from time to time) in the State of Minnesota for so long as such Person
is a Member and for a two (2) year period thereafter.  Further, each Member agrees to present any
opportunities within the scope of the Business in Minnesota to the Board of
Directors promptly after such Member or its Affiliates becomes aware of such
opportunity, however, neither the Company nor any of the Members shall have any
rights by virtue of this Agreement in any: (i) existing business ventures;
or (ii) future business ventures outside of Minnesota, or to the income or
profits derived therefrom.  No Member or
its Affiliates shall solicit any employee of the Company to become employed by
such Member or its Affiliates for so long as such Member is a Member of the
Company and for a one (1) year period thereafter.

 

5.2           Lending Money.  A Member may lend money to and transact other
business with the Company upon such terms and conditions as consented to by all
of the Managing Members or the Board, which loans shall bear interest at the
Prime Rate plus 200 basis points (Prime Rate + 2%) unless the Managing
Members or Board shall otherwise agree. 
The rights and obligations of a Member who lends money to or transacts
business with the Company are the same as those of a Person or Organization who
is not a Member, subject to other applicable law.  No transaction with the Company shall be
voidable solely because a Member has a direct or indirect interest in the
transaction if all of the Managing Members or the Board, knowing the material
facts of the transaction and the Member’s interest, unanimously authorize,
approve, or ratify the transaction.

 

5.3           Affiliated Member
Contracts.  A Member may contract
with the Company to provide certain services to the Company either directly or through
an Affiliate or Subsidiary of such entity (a “Contracting Member”) on such
terms and conditions as are consented to by all of the Managing Members or the
Board.  The rights of such Contracting
Member shall be the same as an unaffiliated Person and no such contract shall
be voidable solely because of such affiliation if all of the Managing Members
or the Board,

 

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knowing the material
facts of the transaction and the Contracting Member’s interest, authorize,
approve, or ratify the transaction.

 

ARTICLE VII

MANAGING MEMBERS; BOARD OF DIRECTORS

 

1.             Co-Managing
Members.  Except as otherwise
specifically provided herein or by law that cannot be modified by this
Agreement, or as otherwise delegated to the Board of Directors, the management
of the Company and its business, and other operating matters, shall be the
responsibility of both Southwest and MTR-Harness, acting in their capacity as
Co-Managing Members of the Company, who shall exercise such management power
through the Board of Directors.  The
Company shall have no Board of Governors as provided under the Act, but shall
have a Board of Directors as described in Section 4 of this Article VII.  All decisions, both ordinary and
extraordinary, shall be made by the Board of Directors, including, but not
limited to those matters set forth in Article VII, Section 2, below.  The Directors shall devote such time and
energy to the business and purposes of the Company to the extent necessary for
the prudent and efficient carrying on thereof. 
The acts of the Board of Directors shall bind the Company.  Any and all documents, agreements,
instruments or certificates executed by both of the Managing Members or any
Person authorized by the Board shall be effective and binding upon the Company
without the need for the consent or approval of any other Member or Director.

 

2.             Board of Directors
Authority.  Subject to those
restrictions set forth in Section 3 of this Article VII, the Board of
Directors, acting through its duly authorized and empowered Company Officers,
is hereby authorized for, and in the name of, at the expense of, and on behalf
of the Company:

 

2.1           To enter into any kind
of activity and to perform and carry out contracts of any kind necessary to, or
in connection with, or incidental to the accomplishment of the purposes of the
Company, so long as said activities and contracts may be lawfully carried on or
performed by a limited liability company under applicable laws and regulations;

 

2.2           To acquire by option,
lease or purchase, finance, refinance, improve, grant options, sell all or any
portion of the Real Property, convey, assign, mortgage, or otherwise transfer
all or any portion of the real or personal property of the Company;

 

2.3           To develop, maintain,
lease and execute such documents ancillary to those activities involving the
development of the Real Property;

 

2.4           To prepare, execute and
deliver any and all agreements, contracts, documents, regulatory filings with
governmental authorities, certifications and instruments necessary or
convenient in connection with the

 

13

 

acquisition, development,
construction, leasing, managing, maintenance and operation of the Company’s
Business or Property;

 

2.5           The Managing Members
shall, upon advice of counsel to the Company, amend any provision of this
Agreement if necessary in order to cause such provision to comply with
Section 704 of the Code and the Regulations thereunder relating to Company
allocations being respected for federal income tax purposes; and

 

2.6           To initiate, defend,
adjust, settle, compromise, or pay any disputed claim, obligation, debt,
demand, suit, litigation or judgment by or against the Company (including,
without limitation, any claim to insurance proceeds).

 

3.             Restrictions on
Authority.

 

3.1           Acts in Violation of
Act, Law or Agreement.  With respect
to the Company and its business and Property, the Managing Members shall have
no authority on behalf of the Company to perform any act in violation of the
(i) Act, (ii) any other applicable law (gaming or otherwise, (iii) any
regulations thereunder, or (iv) this Agreement.

 

3.2           Additional
Restricted Actions.  Unless otherwise
determined by both Managing Members or the unanimous consent of all the Directors
on the Board of Directors, neither the Managing Members nor Board of Directors
shall:

 

a.             cause the Company to
form any subsidiary or acquire any equity interest or other interest in any
other Person or Organization;

 

b.             cause the Company to
make any capital expenditure in excess of Twenty-Five Thousand Dollars
($25,000) or otherwise outside the ordinary course of business, unless set
forth in the Budgets;

 

c.             cause the Company to
enter into any contract involving annual payments by the Company in excess of
Twenty-Five Thousand Dollars ($25,000), unless set forth in the Budgets;

 

d.             cause the Company to
establish or adopt any new employee plan, amend any existing employee plan or
pay any bonus or make any profit sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to, any of its Directors, Officers or employees, except
for merit increases or cost of living adjustments given to employees in the
ordinary course of business;

 

e.             cause the Company to
change any of its methods of accounting or accounting practices in any respect,
except as required by generally accepted accounting principals or applicable
laws;

 

14

 

f.              cause the Company to
commence any action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding and any
informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit,
examination or investigation involving any government entity or third party and
involving an amount in excess of One Hundred Thousand Dollars ($100,000.00);

 

g.             cause the Company to
(i) acquire, dispose of, transfer, lease, license, mortgage, pledge or encumber
any fixed or other assets, other than in the ordinary course of business; (ii)
incur, assume or prepay any indebtedness, liability or obligation or any other
liabilities or issue any debt securities, other than in the ordinary course of
business; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other person, other than in the ordinary course of business; or (iv)
make any loans, advances or capital contributions to, or investments in, any
other person, other than in the ordinary course of business; or

 

h.             cause the Company to
transfer to any person or entity any intellectual property or intangible asset
other than in the ordinary course of business.

 

i.              Operate the Company
in a manner inconsistent with the Budgets.

 

4.             Board of Directors.

 

4.1           Except as to any
decision that is expressly designated to be made only by the Managing Members,
the Business of the Company shall be managed by and under the authority of a
Board of Directors.  The Board of
Directors shall have the exclusive authority and full discretion to manage the
Business of the Company, subject to the terms of this Agreement where decisions
are only to be made by the Managing Members. 
The Members agree that the Directors are not “governors” (as defined in
the Act) but rather are representatives of the Managing Members, and the acts
of the Board of Directors are the acts and decisions of the Managing Members
and are binding on all the Members.  The
Board of Directors shall have all right, power and authority, on behalf of and
in the name of the Company, to enter into, execute, acknowledge and deliver any
and all contracts, agreements or other instruments, and to take any and all
other actions, which the Board of Directors deems necessary, proper, or
desirable to carry out its responsibilities under this Agreement.

 

4.2           Except as provided in
Section 4.10 of this Article VII, the Board of Directors shall be composed of
four (4) Directors.  The Managing Members
shall each appoint two (2) individuals to serve as Directors.

 

15

 

Each of the two (2)
Directors appointed by a Managing Member shall serve until the earlier of (i)
the date of the Director’s death, disability, resignation, or removal, (ii) the
date on which a successor Director is appointed by the action of the Managing
Member which appointed such Director, or (iii) the date on which the Managing
Member that appointed such Director is no longer a Member.  Directors need not be Members or residents of
the State of Minnesota.  Any Director may
resign at any time upon written notice to the Board of Directors.  A resignation shall be effective when given
unless the notice specifies a different date. 
The Managing Member appointing a Director may, at any time by delivery
of notice to all the Members and Directors, remove such Director for any reason
or for no reason and replace any Director who has been removed or who has
otherwise ceased to be a Director.  No
Member shall have the right to appoint, vote for or otherwise interfere with
any other Member’s right to appoint a Director hereunder.

 

4.3           Regular meetings of the
Board of Directors shall be called by the Chairman of the Board and held not less
frequently than quarterly.  Special
meetings of the Board of Directors may be called for any purpose or purposes by
any two Directors, who may designate the time and place of the meeting.  If the place for any meeting of the Board of
Directors is not otherwise designated, the place of meeting shall be the
principal office of the Company.  The
Chairman of the Board shall preside at all meetings of the Board of
Directors.  Written notice stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called shall be delivered not less than 5 nor more than 30 days
before the date of the meeting.  Notices
must be in writing and must be given either personally, by overnight courier or
by facsimile and will be deemed given when received if given personally, one
business day after having been sent by overnight courier to the Director’s
business office, and upon telephonic verification of receipt if sent by
facsimile to the facsimile number of the Director’s business office given by
the Director to the Company from time to time.

 

4.4           Directors may
participate in and hold a meeting by means of a conference telephone call or
other similar communication equipment by means of which all persons
participating in the meeting can hear each other. Such participation shall be
made available at the request of any Director. 
Participation in such a meeting shall constitute presence of a person at
a meeting, except where the person participates solely for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. At any meeting of the Directors, the presence in
person or by telephone (or other electronic means) of all of the Directors (in
person or by proxy pursuant to Section 4.6) shall constitute a quorum.

 

16

 

4.5           All determinations,
acts and designations to be made hereunder by the Board of Directors shall be
final and binding for all purposes of this Agreement.  Each Director shall have one (1) vote on any
matter.  At any meeting of the Directors
at which a quorum is present, the affirmative vote of three (3) Directors shall
constitute an act of the Board of Directors, except to the extent this
Agreement may otherwise require the unanimous consent of all Directors to take
any action.  No Person or Organization
shall be required to inquire into, and Persons or Organizations dealing with
the Company are entitled to rely conclusively on, the right, power and
authority of the Board of Directors to bind the Company.

 

4.6           A Director may vote on
any matter, or execute any consent in lieu of a meeting, either in person or by
proxy executed in writing by the Director. A telegram, telex, cablegram, or
similar transmission by the Director, or a photographic, photostatic,
facsimile, or similar reproduction of a writing executed by the Director shall
be treated as an execution in writing for this purpose.  Any Director may appoint another Director or
another individual employee of the Managing Member as such Director’s proxy and
the proxy may be limited in scope or with full discretion.  Proxies for use at any meeting of the
Directors shall be filed with the Board of Directors before or at the time of
the meeting or execution of the written consent, as the case may be.  No proxy shall be valid after eleven months
from the date of its execution unless otherwise provided in the proxy.  A proxy shall be revocable.

 

4.7           Any action permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent thereto is signed by all the Directors necessary
to take such action at a duly called meeting.

 

4.8           The Board of Directors
may establish and maintain one or more committees and appoint two or more
Directors to serve on such committees. 
In the discretion of the Board of Directors, any committee may also be
comprised of individuals who are not Directors, except that any person who is
not a Director shall act in an advisory role only on such committee and shall
have no vote on committee matters.  The
Board of Directors may, to the fullest extent permitted by law, make a
revocable delegation to such committees of all or any portion of its powers and
authority.  Any delegation to such a
committee shall be set forth in a writing approved by the Board of Directors in
accordance with this Agreement.  All
procedural provisions made applicable to the Board of Directors hereunder shall
be equally applicable to any committee formed under this Section 4.8.

 

4.9           The Company shall
reimburse the Directors (or any committee member) for all out-of-pocket travel
expenses associated with attending a meeting of the Board of Directors (or any
committee thereof).  Unless approved by
the Board of Directors, the Company may not pay compensation to any

 

17

 

Director (or any
committee member) in his or her capacity as such, unless such Director (or
committee member) is neither an Affiliate of any Member nor an employee of the
Company, any Member or an Affiliate of any Member.

 

4.10         In the event that two or
more of James B. Druck, Thomas E. Fox and Jeffrey S. Halpern cease to be
members of the Board of Directors of Southwest, MTR-Harness shall have the
right to require that Board of Directors of the Company be comprised of an odd
number of Directors, at least one of whom is an independent Director who is not
affiliated with either Southwest or MTR-Harness.

 

5.             Officers.

 

5.1           The Co-Managing Members
shall appoint a General Manager having the functions described in Section 5.2
of this Article VII as an Officer of the Company.  In addition to the General Manager appointed
by the Co-Managing Members, the Board of Directors may also elect or designate,
by resolution or otherwise, individuals as officers of the Company and
revocably delegate to such Officers such powers, authority, and
responsibilities of the Board of Directors as are (i) set forth in Section 5.2
below or in the designation or delegation and (ii) necessary to carry out and
implement the management decisions of the Board of Directors or Managing
Members.  The Company shall not have any
“Chief Manager” as such term is defined in the Act.  The Board of Directors may remove any
Officer, with or without cause, at any time. 
Any Officer may resign at any time by giving written notice to the
Company.  Any resignation shall take
effect at the date of the receipt of such notice or at any later time specified
in such notice (unless such Officer is otherwise removed prior to such date);
and, unless otherwise specified in such notice, the acceptance of the
resignation shall not be necessary to make it effective.  Any removal or resignation is without
prejudice to the rights, if any, of the Company or the Officer under any
contract of employment with the Company.

 

5.2           The following Officers
of the Company, to the extent named, shall have the following duties:

 

a.             Chairman of the
Board:  The Chairman of the Board, if
there is one, shall be a Director and shall preside at meetings of all of the
Members, if any, and at all meetings of the Board of Directors.  The Chairman of the Board shall be appointed
and removed in the manner provided in the definition of such term.  The Chairman of the Board may execute
contracts and agreements (i) in the ordinary course of the Company’s business,
or (ii) the execution of which has been authorized by the Board of
Directors, in the name and behalf of the Company and shall have such other
powers and perform such duties as may be delegated to him by the Board of

 

18

 

Directors.  Unless otherwise determined by the Board,
which may increase, decrease or terminate the term of any Chairman of the Board
at any time, the office of Chairman shall rotate among the Directors appointed
by each of the Managing Members. The initial Chairman shall be appointed by
MTR-Harness. Except as otherwise provided in the preceding sentence, each
Chairman of the Board’s term shall be limited to two calendar years after the
first such term which first term shall end on December 31, 2005.

 

b.             General Manager.  The General Manager shall conduct the day to
day operations of the Company, including the making of expenditures in
connection therewith, in a manner which implements the management decisions of
the Board of Directors or Managing Members and is consistent with the Budgets.

 

c.             President and
Chief Executive Officer:  The
President and Chief Executive Officer shall be the chief executive officer of
the Company, and subject only to the Board of Directors of the Company, shall
have general authority over, and general management and control of, the
Property, business and affairs of the Company. 
The President and Chief Executive Officer shall see that all orders and
resolutions of the Board of Directors are implemented.  The President and Chief Executive Officer may
execute contracts and agreements (i) in the ordinary course of the Company’s
business, or (ii) the execution of which has been authorized by the Board of Directors.

 

d.             Vice President:  The Vice President, or if there shall be more
than one, the vice-presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the President and Chief
Executive Officer, perform the duties and exercise the powers of the President
and Chief Executive Officer, and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.

 

e.             Secretary and
Assistant Secretaries:  The Secretary
shall attend all meetings of the Board of Directors and all meetings of the
Members and record all the proceedings of the meetings of the Company and of
the Board of Directors in a book to be kept for that purpose and shall perform
like duties for the standing committees when required.  The Secretary shall give, or cause to be
given, notice of all meetings of the Members and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or President and Chief Executive Officer, under whose
supervision the Secretary shall be.  The
Assistant Secretary, or if there be more than one, the Assistant Secretaries in
the order determined by the

 

19

 

Board of Directors,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.

 

f.              Treasurer and
Chief Financial Officer; Assistant Treasurer:  The Treasurer and Chief Financial Officer
shall have the custody of the funds and securities of the Company and shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the Company and shall deposit all moneys and other valuable
effects in the name and to the credit of the Company in such depositories as
may be designated by the Board of Directors. 
The Treasurer and Chief Financial Officer shall disburse the funds of
the Company as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President and the Board of
Directors at its regular meetings or when the Board of Directors so requires,
an account of all his transactions as Treasurer and Chief Financial Officer and
of the financial condition of the Company. 
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.

 

6.             Indemnification.  No Member or Director (each, an Indemnified
Party), shall be liable to the Company or any Member for any loss suffered by
the Company or any Member which arises out of any act or omission of the
Indemnified Party involving the exercise of discretion or business judgment, if
(i) such act or omission was committed, or omitted, by the Indemnified
Party in good faith and in the reasonable belief that such act or omission was
in the best interests of the Company, (ii) such act or omission was within
the scope of the authority conferred on the Indemnified Party by this Agreement,
as applicable, and did not constitute or involve a material, and grossly
negligent or willful, breach of any warranty, representation or legal or
contractual obligation or duty by the Indemnified Party, (iii) such act or
omission did not constitute or involve any gross negligence or willful
misconduct of or by the Indemnified Party, and (iv) such act or omission
did not constitute all or part of an interested party transaction not expressly
approved by the Managing Member or Board of Directors.  Each Indemnified Party shall be indemnified,
defended and held harmless by the Company against any losses, judgments,
liabilities, amounts and expenses (including reasonable attorneys’ fees and
legal costs and disbursements as well as reasonable amounts paid in settlement
of any claims) arising out of or in connection with any act or omission for
which such Indemnified Party is not liable to the Company pursuant to the
provisions of the immediately preceding sentence; provided, however, that any
indemnity under this Section 7 shall be paid

 

20

 

only out of and to the
extent of Company Property, including any applicable insurance proceeds.

 

7.             Resolution of
Deadlocks.  In the event Southwest
and MTR-Harness, either through the Board or directly, are unable to reach a
decision on any material matter, including, but not limited to, budget disputes
or matters subject to Section 2 of this Article VII after a period of fifteen
(15) days when discussion of the action by the Board first commenced, either of
such Managing Members may require that the matter be decided pursuant to the
terms and conditions of this Section 7 of this Article VII by sending written
notice to the other Managing Member.  In
order to resolve the matter, Southwest and MTR-Harness shall (i) each
present the issue to the Chief Executive Officers of Southwest and MTR who
shall meet face-to-face or by telephone and who shall have one day to reach
agreement, or (ii) utilize the dispute resolution procedures for mediation
described in Article XVII, Section 7, except that the following sentences shall
be applied by the mediator or arbiter in resolving any such deadlock.  The parties acknowledge that MTR-Harness has
particular expertise with regard to horse racing and that Southwest has
particular expertise with regard to card games, and that MTR-Harness and
Southwest have equivalent expertise as to slots, video lottery terminals and
other electronic games.  Accordingly, the
third party mediator or arbiter, as the case may be, shall be instructed to
give additional weight to MTR’s views regarding horse racing matters and to
Southwest’s views regarding card game matters, but no special weight to either
party as to slots, video lottery terminals and other electronic game matters.

 

8.             Budgets.  On or before sixty (60) days prior to the end
of each fiscal year, the Board shall meet for the purpose of preparing the
Company budget for the upcoming fiscal year and the Company’s capital
expenditure budget (collectively, the “Budgets”).  In connection with its preparation of the
Budgets, the Board shall prepare a comparative analysis of the budgets for the
preceding years.  The Board shall finalize
and approve such budgets within thirty (30) days prior to the end of the fiscal
year.  In the event a Budget for the next
succeeding year is not approved, as provided for herein, the Company shall
continue to operate its business in accordance with the Budgets for the
preceding year, to the extent practicable, until the deadlock concerning the
Budgets is resolved and an annual operating budget approved.  No action taken by the parties in the
discharge of their respective obligations hereunder shall be deemed a waiver of
any claim causing the deadlock on the Budgets.

 

9.             Sale of Membership
Interest Pursuant to Bankruptcy Court Order.  Notwithstanding any provision in this
Agreement to the contrary, in the event that a Managing Member becomes Bankrupt
and the Bankruptcy Court (i) stays the operation of Article XIV, Section 1
and Article XV, Section 2.2 and (ii) orders the sale of the Membership
Interest of the Bankrupt Managing Member to a Person other than the Managing
Member who is not Bankrupt, the Managing Member who is not Bankrupt shall
become the sole Managing Member and shall have the sole authority to appoint
Directors.

 

21

 

ARTICLE VIII

CAPITAL ACCOUNTS & CONTRIBUTIONS

 

1.             Initial
Capital Contributions and Capital Contribution Commitments.  MTR-Harness and Southwest have each made the
Capital Contribution Commitment as described on Exhibit A.  Southwest has funded, and shall continue to
fund, all costs prior to the Licensing Event (other than MTR-Harness’ initial
$10,000.00 Capital Contribution) and shall receive a Capital Account credit
equal to its Pre-Licensing Costs. 
MTR-Harness’ Initial Capital Contribution is in the amount of $10,000 on
the Effective Date, with MTR-Harness making an additional Catch-Up Contribution
immediately upon the occurrence of a Licensing Event.  Subsequent to the occurrence of a Licensing
Event and the contribution by MTR-Harness of the Catch-Up Contribution, any
portion of a Member’s Capital Contribution Commitment that has not been funded
after such Catch-Up Contribution is made may be called for by the Board at any
time with such capital called for in a manner that results in Capital
Contributions (excluding Unmatched Pre-Licensing Costs) having been made by the
Members on a cumulative basis in the ratio of 75% by MTR-Harness up to its
commitment to contribute additional funds of up to Four Million Five Hundred
Thousand Dollars ($4,500,000.00) and 25% by Southwest up to its commitment to
contribute additional funds of up to One Million Five Hundred Thousand Dollars
($1,500,000.00), all as described in Exhibit A. 
In its discretion, the Board can choose to draw down less than the
Member’s respective Capital Contribution Commitments, provided that cumulative
Capital Contributions (excluding Unmatched Pre-Licensing Costs) have been made
on a 75/25 basis by MTR-Harness and Southwest, respectively.  No interest shall accrue on any Capital
Contribution (except for Southwest’s entitlement to receive the Preferred
Return) and no Member shall have the right to withdraw or be repaid any Capital
Contribution except as provided in this Agreement.  The
failure to meet a Capital Call pursuant to this Section 1 shall be subject to
the default provisions in Section 4 below. 
MTR hereby guarantees the obligations of MTR-Harness to make all agreed
Capital Contributions described in this Article VIII.

 

2.             Additional Capital
Contributions Agreed Upon by the Managing Members.  In addition to the Capital Contribution
Commitments made by each of the Managing Members, the Managing Members may
unanimously determine from time to time that additional Capital Contributions
(in excess of the Capital Contribution Commitments) are needed to enable the
Company to conduct its Business.  Upon
the unanimous determination of the Managing Members, the Company may either
seek additional Capital Contributions from the Members or seek Capital
Contributions from third parties either in the full amount of the Capital
Contributions needed or such lesser amount equal to the amounts required less
the additional Capital Contributions to be made by the Members.  The Managing Members shall be entitled to
adjust the Percentage Interests and other allocation and Distribution
provisions in Articles IX and XV to properly reflect any additional Capital
Contributions made by them or any third party pursuant to this Article VIII,
Section 2, and make any such other modifications to this Agreement

 

22

 

as all of the Managing
Members shall determine to be appropriate as a result of such additional
Capital Contributions.

 

3.             Additional
Authorized Gaming.  In the event that
Minnesota law authorizes additional forms of gaming such as slot machines and
video lottery terminals, and the Co-Managing Members have determined that it is
in the Company’s interest to implement such additional forms of gaming, each of
Southwest and MTR-Harness has agreed to fund all Company expenditures necessary
to implement such additional forms of gaming jointly on a going forward basis
in reliance upon each of the other’s agreement to make such additional
contributions to the Company in the event additional capital is needed by the
Company to implement the additional forms of gaming.  It is contemplated that additional Capital
Contributions required in excess of the Member’s Capital Contribution
Commitments will be made by the Members in accordance with their respective
Percentage Interests unless the Members shall unanimously determine
otherwise.  The Members acknowledge that
such agreement was an inducement to make their investment in the Company, and,
accordingly, within thirty (30) days of the Managing Members’ determination as
to the need for additional capital beyond that contemplated by a Company budget
or within thirty (30) days after either of Southwest or MTR-Harness makes
demand thereof to the other, each Member shall contribute to the capital of the
Company its required pro rata percentage share of the required capital.

 

4.             Default.  In the event that either Southwest or
MTR-Harness fails to make any Capital Contribution described in Section 1
or an additional contribution described in Sections 2 or 3, whether in
whole or in part, within the time specified in this Article VIII,
Section 4 (the “Defaulting Member”) the other Managing Member (the
“Non-Defaulting Member”) shall send an additional notice to the Defaulting
Member (and to MTR if MTR-Sub is the Defaulting Member) setting forth such fact
and the amount unpaid, and the Defaulting Member shall have a further period of
ten (10) business days from receipt of such notice to make the full amount of
such contribution.  If at the end of such
ten (10) business day period, the Defaulting Member shall still have failed to
make such contribution, in whole or in part and the Non-Defaulting Member shall
have made its contribution, the Non-Defaulting Member may, at any time
thereafter, elect to make the contribution which the Defaulting Member shall
have failed to make, and in such event, the Non-Defaulting Member shall have
the right to have the aggregate Membership Interests of the Members in the
Company, modified as of any date from and including the date such
Non-Defaulting Member made the Defaulting Member’s contribution through and
including the date of such election to modify the Membership Interests and,
upon such election, the Membership Interests shall be automatically modified as
of such date so that the Non-Defaulting Members’ aggregate Membership Interests
shall be the sum of (i) its aggregate Membership Interests prior to such date
plus (ii) an additional percentage Membership Interest calculated at a rate of
115% of the Default Percentage (defined below). 
The Defaulting Member’s aggregate Membership Interests as of such date
shall then automatically become (x) its aggregate Membership Interests prior to
such date minus (y) a percentage Membership Interest calculated at a rate of
115% of the Default Percentage.  For

 

23

 

purposes of this
Article VIII, Section 4, the term “Default Percentage” shall mean the
percentage that the amount contributed by the Non-Defaulting Member in respect
of the contribution which the Defaulting Member failed to fund represents in
relationship to the total cumulative Capital Contributions made by all the
Members as of the date of such determination. 
Notwithstanding the above, the
Defaulting Member may cure the “Default” by reimbursing the Non-Defaulting
Member for the Default Percentage plus interest at the rate of fifteen percent
(15%) per annum (notwithstanding anything in Article VI, Section 5.2 to the contrary)
paid within 90 days of the date of the additional contribution.  Further, a Defaulting Member’s Percentage
Interest may not under any circumstance hereunder, be reduced to less than 25%
and each Managing Member will continue to retain the same voting rights in the
Company, including the right to appoint two (2) Directors to the Board of
Directors pursuant to Article VII, Section 4.2. 
Notwithstanding the previous sentence, if MTR-Harness fails to make its
full Catch-up Contribution, its Percentage Interest shall be reduced to a
percentage equal to its actual Capital Contribution divided by its full
Catch-Up Contribution then multiplied by 50%, which, for the avoidance of
doubt, would result in a Percentage Interest calculated as follows if MTR-Harness
had made a $300,000 Capital Contribution of a required $4,500,000 Capital
Contribution obligation - $3,000,000/$4,500,000 X 50% = 33%.  Furthermore, if MTR-Harness fails to make its
full Catch-Up Contribution, it shall forfeit its voting rights and the right to
elect any persons to the Board of Directors and Exhibit A will be amended
accordingly.

 

5.             Maintenance of
Capital Accounts.  The Company shall
establish and maintain “Capital Accounts” for each Member and Assignee.  Each Member’s Capital Account shall be
increased by (i) the amount of any money actually contributed by the
Member to the capital of the Company, (ii) the fair market value of any
Property contributed, as determined by the Company and the contributing Member
at arm’s length (net of liabilities assumed by the Company or subject to which
the Company takes such Property, within the meaning of Section 752 if the
Code), and (iii) the Member’s share of Net Profits and of any separately
allocated items of income or gain except adjustments pursuant to the Code
(including any gain and income from unrealized income with respect to accounts
receivable allocated to the member to reflect the difference between the book
value and the tax basis of assets contributed by the Member).  Each Member’s Capital Account shall be
decreased by (x) the amount of any money distributed to the Member by the
Company, (y) the fair market value of any Property distributed to the Member
(net of liabilities of the Company assumed by the Member or subject to which
the Member takes such Property within the meaning of Section 752 of the Code),
and (z) the Member’s share of Net Losses and any separately allocated items of
deduction or loss (including any loss or deduction allocated to the Member to
reflect the difference between the book value and tax basis of assets
contributed by the Member).

 

6.             Distribution of
Assets.  If the Company at any time
distributes any of its assets in-kind to any Member, the Capital Account of
each Member shall be adjusted to account for that Member’s allocable share (as
determined under Article IX below)

 

24

 

of the Net Profits or Net
Losses that would have been realized by the Company had it sold the assets that
were distributed at their respective fair market values immediately prior to
their distribution.

 

7.             Sale or Exchange
of Membership Interest.  In the event
of a permitted sale or exchange or other Disposition of a Membership Interest
in the Company, the Capital Account of the Transferring Member shall become the
Capital Account of the Assignee, to the extent it relates to the Membership
Interest transferred.

 

8.             Compliance with
Section 704(b) of the Code.  The
provisions of this Article VIII as they relate to the maintenance of
Capital Accounts are intended, and shall be construed, and, if necessary,
modified to cause the allocations of profits, losses, income, gain and credit
pursuant to Article IX to have substantial economic effect under the
Regulations promulgated under Section 704(b) of the Code, in light of the
distributions made pursuant to Articles IX and XV and the Capital Contributions
made pursuant this Article VIII. 
Notwithstanding anything herein to the contrary, this Agreement shall
not be constructed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a Capital Contribution in excess of the
Capital Contribution Commitments.

 

ARTICLE IX

ALLOCATIONS AND DISTRIBUTIONS

 

1.             Allocations of Net
Profits and Net Losses.  Except as
may be required by Section 704 of the Code and the regulations thereunder, Net
Profits, Net Losses, and other items of income, gain, loss, deduction and
credit for periods beginning on or after the Effective Date shall be
apportioned among the Members pro-rata in accordance with their Percentage
Interests; provided, however, that (i) Net Losses shall first be allocated
to the Members based on their respective cumulative Capital Contribution
amounts at the end of any fiscal year in which such Net Losses are incurred
(prior to making any allocations hereunder), with the first Net Profits arising
thereafter applied as a “chargeback” to any such Net Losses in the reverse
order thereof and (ii) after applying Net Profits as a “chargeback” pursuant to
clause (i), above, Net Profits shall next be allocated to Southwest to the
extent of the Preferred Return accrued by Southwest during the taxable year.

 

2.             Tax Distributions.  The following Distributions (“Tax
Distributions”) shall take priority over any other Distributions provided in
Sections 3 or 4 hereunder:

 

2.1           On or before the 15th
day of April, June, September, and December of each year (or such other dates
as the Board of Directors shall determine more closely corresponds with the
Members’ estimated tax payment requirements under applicable law), the Board of
Directors shall cause the Company to make a Distribution to the Members in an
amount equal to 40% of the estimated taxable income of the Company for the
portion of the fiscal year ending on the close of the month immediately
preceding such date, minus Distributions previously made during the fiscal year
for

 

25

 

such year under this
Section 2.1.  Each such Distribution
shall be accompanied by information concerning the calculation of the amount of
such Distribution.

 

2.2           Within 90 days after
the end of each fiscal year, the Board of Directors shall cause the Company to
make a Distribution to the Members in an amount equal to 40% of the taxable
income of the Company for such prior fiscal year, as determined by the Board of
Directors, minus Distributions previously made during such fiscal year for such
year under Section 2.1.

 

2.3           All Tax Distributions
required under this Section 2 shall be made to the Members in accordance with
the Members’ respective shares of the taxable income of the Company on which
the 40% amount was computed.

 

3.             Operating
Distributions.  Upon a determination
by the Board as to the amount of distributable cash available, in light of
applicable state law, and unless otherwise unanimously agreed to by the
Managing Members or required pursuant to Article XV, and after any Tax
Distribution has been made, other Distributions (other than pursuant to Section
4 or upon dissolution subject to Article XV) shall be made to the Members as
follows:  (i) first, to Southwest, to the
extent of its Unrecovered Preferred Return, (ii) second, to Southwest to the
extent of the current Monthly Installment and any past due Monthly Installments,
(iii) third, until such time as the Members have received a return of their
respective Capital Contributions, such Distributions shall be made in
proportion to each Member’s Capital Contributions (excluding Unmatched
Pre-Licensing Costs) until they are fully repaid, and (iv) thereafter, to the
Members in proportion to their Percentage Interests.  It is the intention of the Managing Members
that (i) the Company commence payment Monthly Installments as soon as
practicable following the opening of the Business and (ii) the Company shall
not make any payments pursuant to clause (iii), above, until such time as the
Monthly Installments have commenced. 
Notwithstanding the foregoing, there is no requirement that Southwest
shall have received a return of all of its Unmatched Pre-Licensing Costs prior
to the payment by the Company of distributions to the Members pursuant to
clause (iii), above.  To the contrary,
the Company may make distributions pursuant to clause (iii), above, providing
that there shall be no Unrecovered Preferred Return and no past due Monthly
Installments.  The first Monthly
Installment shall be paid at the time determined by the Board of Directors
pursuant to this Article IX, Section 3. 
The determination as to whether subsequently Monthly Installments are
past due shall be determined by reference to time at which the first Monthly
Installment was paid.

 

4.             Non-Operating
Distributions.  Unless otherwise
unanimously agreed to by the Managing Members, or required pursuant to Article
XV, and after any Tax Distribution associated with any net income or gain
arising from such event is made, net proceeds generated by the Company from
events arising other than pursuant to normal day-to-day Business operations
shall be distributed to the

 

26

 

Members within five (5)
Business Days after the event giving rise to such net proceeds, as follows:

 

(1)           First, to
the establishment of such additional reserves as the Managing Members deem
appropriate;

 

(2)           Second,
to the Members, pro rata in proportion to the amount of funds (or value of
property) which they have loaned to the Company until such Loans are repaid in
full, together with accrued interest thereon;

 

(3)           Third, to
Southwest to the extent of its Unrecovered Preferred Return;

 

(4)           Fourth,
to Southwest to the extent of its Unrecovered Unmatched Pre-Licensing Costs;

 

(5)           Fifth,
until such time as the Members have received a return (including pursuant to
any Distributions pursuant to Section 3 of this Article IX) of their cumulative
Capital Contributions (excluding Southwest’s Unmatched Pre-Licensing Costs), to
the Members in proportion to such Capital Contributions until they are fully
repaid;

 

(4)           Sixth, to
the Members in accordance with their respective positive Capital Accounts until
each Capital Account is at zero (0) (after providing for an allocation to such
Capital Accounts for Net Profits or Net Loss related to the event causing such
non-operating Distribution as well as for Business operations for such fiscal
year); and

 

(5)           Thereafter,
if any cash proceeds remain, to the Members, in accordance with their
Percentage Interests.

 

5.             Withholding on
Distributions.  The amount of any
Distributions required by applicable foreign, federal, state or local law to be
withheld and remitted by the Company to any governmental authority shall be
treated as if such amount was distributed to the Member for whose benefit such
withholding was made as if the amount was actually distributed to the Member
for purposes of this Article IX or Article XV

 

ARTICLE X

TAXES

 

1.             Elections.  The Managing Members or Board of Directors
may make any tax elections for the Company under the Code or the tax law of any
state or other jurisdiction having taxing jurisdiction over the Company.

 

2.             Method of
Accounting.  The records of the
Company shall be maintained on the accrual method of accounting.

 

27

 

3.             Partnership.  The Company shall be taxable as a
“partnership” for federal income tax purposes after the Effective Date unless the
Board shall otherwise determine to change such classification.

 

4.             Tax Matters
Partner.  The Member with the
greatest cash Capital Contribution in the Company at any point in time during
2004 shall act as the Tax Matters Member for the Company, as defined in Section
6231 of the Code.  Subject to Article X,
Section 1, the Tax Matters Member shall have the authority to perform any and
all actions permitted by Section 6221 through 6231 of the Code in connection
with any proceedings pertaining to federal income tax issues.  The Tax Matters Member shall have the right
to engage counsel to represent the Company in connection with any audit or
other investigation, and the fees and expenses of such counsel and of any
litigation arising out of or in connection with such audit or investigation
shall be borne by the Company.  The Tax
Matters Member shall be indemnified and held harmless by the Company for any
act or omission performed or omitted by it in its capacity as the Tax Matters
Member.  All expenses incurred by the Tax
Matters Member in connection with any administrative proceeding before the
Internal Revenue Service (the IRS) and/or judicial review of such proceedings,
including reasonable attorney’s fees, shall be deemed a Company expense.  In the even the Tax Matters Member elects to
file a petition for readjustment of any Company tax item (in accordance with
Section 6226(a) of the Code), such petition shall be filed in any court having
jurisdiction over any tax or other matter. 
In the event that the IRS, or any other governmental agency with
jurisdiction, shall conduct, commence or give notification of intent to conduct
or commence any audit or other investigation of the books, records, tax
returns, documents or affairs of the Company, the Tax Matters Member shall
respond to such audit or other investigation for and on behalf of the Company
and shall keep all other Members informed with respect thereto.

 

ARTICLE XI

DISSOCIATION OF A MEMBER

 

1.             Dissociation.  Irrespective of any contrary provision under
the Act, a Person shall cease to be a Member only upon the happening of any of
the following events:

 

1.1           the withdrawal of a
Member with the consent of all of the Managing Members;

 

1.2           that Member is found to
be an Unsuitable Person as more fully set forth in Article XIII, Section 5,
below;

 

1.3           the Bankruptcy of a
Member, if all of the Managing Members, except any Bankrupt Managing Member,
shall so elect;

 

1.4           in the case of a Member
that is a separate Organization other than a corporation, the dissolution and
commencement of winding up of that separate Organization; or

 

28

 

1.5           in the case of a Member
that is a corporation, the filing of a certificate of dissolution, or its
equivalent, for that corporation or the revocation of its charter.

 

The parties intend
that none of the events described above or any other similar events should
cause a dissolution and winding up of the Company.  Dissolution is only expected to occur upon
the occurrence of the events described in Article XV, Section 1.

 

2.             Rights of Member
Who Has Dissociated.  In the event
any Member dissociates in accordance with Section 1 above:

 

2.1           And, notwithstanding
the last sentence of Section 1 above or Article XV, Section 1,
the Dissociation causes a dissolution and winding up of the Company under
Article XV, then to the extent permitted by the Gaming Authorities, the Member
shall be entitled to participate in the winding up of the Company to the same
extent as any other Member except that any Distribution to which the Member
would have been entitled shall be reduced by the damages sustained by the
Company or any other Member as a result of the Dissociation dissolution and
winding up; or

 

2.2           If the Dissociation
does not cause a dissolution and winding up of the Company under Article XV,
then to the extent permitted by the Gaming Authorities the Member or its
successor shall be subject to the Member buy-out provisions of
Article XIV, except that if the Dissociation is caused by the dissolution of
MTR-Harness, MTR shall replace MTR-Harness as a Managing Member and assume all
of the rights and obligations of MTR-Harness hereunder.

 

ARTICLE XII

INSPECTION OF RECORDS; BANK ACCOUNTS

 

1.             Rights of Members
to Inspect Records.  Pursuant to the
Act, a Member may inspect and copy, in person or by agent, from time to time on
a reasonable written demand during regular business hours at the principal
place of business of the Company:

 

a.             true and full
information regarding the state of the business and financial condition of the
Company;

 

b.             a copy of the
Articles of Organization and this Agreement and all amendments thereto;

 

c.             a current lists of
the names and last known business, residence, or mailing address of all
members;

 

d.             a copy of the
Company’s federal, state and local income tax returns; and

 

29

 

e.             other information
regarding the affairs of the Company as is just and reasonable for any purpose
reasonably related to the Member’s interest as a Member.

 

2.             Bank Accounts.  The funds of the Company shall be deposited
in the name of the Company, in such bank account or accounts as all of the
Managing Members or Board deem advisable and the Board shall arrange for the
appropriate conduct and function of such accounts.

 

ARTICLE XIII

ADMISSION OF ADDITIONAL MEMBERS; TRANSFERS OF
INTERESTS

 

1.             Disposition of a
Member’s Membership Interest.

 

1.1           No Disposition of a
Member’s Membership Interest shall be made unless the assignee is an Suitable
Person, and all of the Managing Members, in their sole and absolute discretion,
unanimously consent in writing to such assignment, which consent may be
conditioned upon the determination by the Managing Members (based, if they deem
it advisable, upon an opinion of counsel) that such assignment is not in
violation of any applicable federal or state securities law, does not violate
any gaming laws or rules promulgated by any Gaming Authority having
jurisdiction over the Business of the Company, does not adversely affect the
Company’s status as a limited liability company and will not cause the
dissolution of the Company under the applicable laws of the State of
Minnesota.  Notwithstanding any provision
in this Agreement to the contrary, a change in the control of Southwest or MTR
shall not be deemed to be a disposition of a Members Membership Interest.  A change in the control of MTR-Harness,
however, shall be deemed to be such a disposition.

 

1.2           Except as provided in
Section 2 of this Article XIII the assignee of the Membership Interest, shall
not become a Member, but instead shall be entitled only to receive such
Distributions and allocations as shall have been made to the assignor Member
had such assignor Member continued to be a Member.

 

2.             Substitute Members
and Additional Members.  The assignee
of a Membership Interest shall become a Substitute Member only if (i) the
assignor Member so provides in the instrument of assignment, (ii) the assignee
agrees in writing to be bound by the provisions of this Agreement and of the
Articles and any amendments hereto and thereto, (iii) all of the Managing
Members consent to the substitution in writing (which consent may be withheld
in their sole and absolute discretion), (iv) to the extent required by any
Gaming Authority, the licensure of such person has occurred; and (v) the
satisfaction of completion by the Managing Members of due diligence on said
person to determine if it is a Suitable Person. 
Similarly, a Person seeking to acquire a Membership Interest from the
Company shall become an Additional Member only if (x) such Person agrees in
writing to

 

30

 

be bound by the
provisions of this Agreement and of the Articles and any amendments hereto and
thereto, (y) all of the Managing Members consent in writing (which consent may
be withheld in their sole and absolute discretion) and (z) the provisions of
clauses (iv) and (v) above are met.

 

3.             Members.  Unless named in this Agreement, or unless
admitted to the Company as above provided, no Person shall be considered a
Member, and the Company, each Member, and any other persons having business
with the Company need deal only with Members so named or so admitted.  They shall not be required to deal with any
other person by reason of an assignment by a Member or by reason of the death
of a Member, except as otherwise provided in this Agreement.  In the absence of substitution of a Member
for an assigning or deceased Member, any payment to a Member or to his
executors or administrators shall acquit the Company of all liability to any
other persons who may be interested in such payments by reason of an assignment
by the Member or by reason of his death.

 

4.             Gaming Authority
Approvals.  Notwithstanding any
provisions of this Agreement to the contrary, all assignments of and
Dispositions of Membership Interests and all admissions of Additional Members
shall be subject to the receipt of any required approvals from the Gaming
Authorities having jurisdiction over the Business of the Company.

 

5.             Determination that
Member is Unsuitable Person.  If any
Gaming Authority determines that a Person is an Unsuitable Person and that the
continued participation of such Person in the Company would jeopardize any
gaming license held or being sought by MTR, Southwest, the Company or their
Affiliates, the Company shall purchase, and the Unsuitable Person shall sell,
all of such Person’s Membership Interest. 
The purchase price shall be determined in accordance with the procedures
set forth in Article XIV.

 

ARTICLE XIV

MEMBER BUY-OUT PROVISION; RIGHT OF FIRST
REFUSAL

 

1.             Membership Buy-Out
Provision.  In the event of a
material breach of this Agreement or the Articles, the Bankruptcy of a Managing
Member, or a determination that a Managing Member has become an Unsuitable
Person, the Managing Member who is not in breach, Bankrupt or an Unsuitable
Person (the “Offering Member”) may elect to purchase all of the Membership
Interests of the other Managing Member (the “Receiving Member”).  If the Offering Member elects, in its sole
discretion, not to purchase all of the Membership Interests of the Receiving
Member, the Company shall purchase all of the Membership Interests of the
Receiving Member.  Where this provision
applies, such Offering Member shall forward to the Receiving Member a bona
fide, written offer (the “Offer”) for the purchase of all of the Receiving
Member’s Membership Interests.  The Offer
shall state a purchase price (the “Offering Price”) for all of the Company’s
assets (the “Assets”), free and clear of all liabilities, as determined in good
faith by the Offering Member, taking into .account the price that an
arms-length buyer would likely pay for the Assets.  The Offer- shall also state the “Buyout
Price,” which shall be the amount that would be distributed to the Receiving
Member with respect to its

 

31

 

Membership
Interests as a final liquidating distribution if the Assets were sold for an
all-cash price equal to the Offering Price on the date the Offering Member’s
notice is given, and the proceeds of the sale were distributed in liquidation,
without reserves, in the manner set forth in Section 3.2 of Article XV, reduced
by damages, if any, incurred by the Company or any Member as a result of the
breach, Bankruptcy or Unsuitable Person status of the Receiving Member.  If the Offering Member does not take the
action described above, the Company shall take such action acting through the
Board of Directors, but excluding in the determination any Directors appointed
by the Receiving Member, with the two Directors appointed by the Offering
Member determining the Buyout Price and presenting it to the Receiving
Member.  The Membership Interest of the
Receiving Member shall be promptly transferred to the Purchaser hereunder,
whether the Offering Member or the Company, without any further action required
by the Receiving Member, upon the transfer of the Buyout Price to the Receiving
Member.  The Buyout Price shall be paid
in the form of a 5-year note having the terms described in Article XV, Section
2.2 below.  The Receiving Member hereby
appoints the Directors appointed by the Offering Member as its power of
attorney to transfer the Receiving Member’s Membership Interest to the Offering
Member or the Company, as applicable, upon payment of the Buyout Price pursuant
to the payment terms described in Article XV, Section 2.2.  In the event of a Bankruptcy or determination
of unsuitability, if the Receiving Member disputes the amount of the Buyout
Price, the Membership Interest shall be transferred hereunder notwithstanding
such dispute, and such dispute over the amount of the Buyout Price shall be
resolved pursuant to the binding arbitration provisions of Article XVII,
Section 7(u).  In the event of a dispute
related to the existence of a material breach of this Agreement, the dispute
shall be likewise resolved by the binding arbitration provisions of Article
XVII, Section 7(ii), but the Membership Interest shall be transferred only
after a determination in arbitration that such material default has occurred.
Except in the case of a determination pursuant to the binding arbitration
provisions of Article XV, Section 7(ii) that the Receiving Member was not
Bankrupt or an Unsuitable Person, the Receiving Member shall have no right of
redemption with respect to its Membership Interest transferred pursuant to this
Article XIV, Section 1.

 

2.             Right of First
Refusal.  If at any time any Member
receives a Bona Fide Offer (the “Offer”) for the purchase of all or a portion
its Membership Interest (including an offer received by MTR to purchase all or
a portion of its shares of MTR-Harness), which Offer the Member (hereinafter
sometimes called the “Selling Member”) is willing to accept, the Member shall
notify all of the other Members in writing of the Offer, enclosing a true copy
of the Offer.  The Company, and/or all of
the separate Members, in that order of priority, shall have the first right to
purchase the Membership Interest which is the subject of the Offer at the
price, and upon the terms and conditions (except for time and place of closing
which shall be as hereinafter provided) contained in the Offer.

 

Notice of
intention of the Company to purchase shall be given to the Selling Member and
to all other Members within fifteen (15) days after receipt of notice from the
Selling Member of the Offer.  If the
Company does not give timely notice of an intent to purchase, then any or all
of the other Members shall have the option, which may be exercised by providing
written notice to the Selling Member within fifteen (15) days after the
expiration of the time within which the Company bad the first right to purchase
(i.e., within thirty (30) days after the receipt of the aforesaid notice from
the Selling Member) to purchase the interest of the Selling Member as set forth
in the terms and conditions of the Offer. 
Thereupon, each such Purchasing Member shall

 

32

 

be entitled to
purchase such portion of the Selling Member’s interest which is the subject of
the Offer in such proportion as the Purchasing Member’s interest bears to the
total interest in the Company of all of the Members who actually purchase the
Selling Member’s interest, which is the subject of the Offer.

 

The closing of the
sale to the Company or to the Purchasing Member(s), as the case may be
(hereinafter the “Purchaser”) shall take place within ninety (90) days after
the giving of the notice required of the Selling Member as aforesaid, on such
date and at such time (during normal business hours) and at such reasonable
place as shall be designated by the Purchaser in its notice to the Selling
Member.  If neither the Company nor any
Member shall become the Purchaser, pursuant to the provisions of this Article
XIV, Section 2, then the Selling Member may, subject to Article XIII, sell to
the bona fide offeror such portion or all of its Membership as is set forth in
the Offer, at a price not below nor upon terms more advantageous to the offeror
than the price and the terms contained in the Offer, provided that such sale is
closed within ninety (90) days after the date of the Offer.  If it is not closed within such period then
the rights of the Company and of the separate Members under this Article XIV,
Section 2 shall be fully restored and reinstated as if the Offer had never been
made and the Selling Member may not thereafter dispose of all or any part of
its interest without again giving the Company, and all of the separate Members,
the first option to purchase the Membership Interest of the Selling Member.
Notwithstanding such sale, the offeror shall become a voting Member only with
the unanimous consent of all of the Managing Members.

 

ARTICLE XV

DISSOLUTION AND WINDING UP

 

1.             Events of
Dissolution.  The Company shall
continue until the occurrence of any one of the following dissolution events,
at which time the Company shall dissolve:

 

1.1           An election to dissolve
the Company made in writing unanimously by all of the Managing Members.

 

1.2           The sale, exchange or
other disposition of all or substantially all of the Company’s Property, unless
the Company receives a purchase money note in consideration of such sale in
which event dissolution shall occur upon final payment thereof.

 

1.3           A judicial
determination of dissolution under the Act.

 

No other events or
actions, including any such events or actions described in the Act or
Article XI, Section 1 above, shall cause a dissolution of the
Company.

 

33

 

2.             Election to
Continue Doing Business.  If an event
or action occurs, other than those described in Sections 1.1, 1.2 or 1.3 above,
and despite the last sentence of Section 1 or the last sentence of
Article XI, Section 1, providing that such event or action will not
cause a dissolution of the Company, it is determined that the Company is
nevertheless subject to dissolution:

 

2.1           As set forth in the
Act, notwithstanding the occurrence of a dissolution event (other than where
dissolution occurs pursuant to Section 1.1, 1.2 or 1.3 above), the Company may
continue to carry on its business and affairs following such dissolution event
if, within ninety (90) days after such dissolution event there remains at least
one Member (the “Remaining Member(s)”), and all of the Managing Members or all
Remaining Member(s) consent to so continue the business and affairs of the
Company without dissolution.

 

2.2           In the event the
surviving Members shall determine that they wish to continue the Company, and
the Member Buy-Out provisions set forth in Article XIV are not applicable
to the Selling Members (defined below), including by reason of Article XI,
Section 2.2, Article XIII, Section 2.2, Article XIII,
Section 5, or Article XIV, such Members, hereinafter called the
“Purchasing Members,” shall have the absolute option and right to purchase the
Membership Interests of the other Members, hereinafter called the “Selling
Members.”  For this purpose the
Purchasing Members’ group and the Selling Members’ group shall each promptly
appoint an appraiser to determine the value of the Membership Interests.  In respect to those items upon which the
appraisers disagree, they shall together appoint a third appraiser, who shall
determine items and shall render a written report of his opinion with respect
thereto.  All appraisers appointed shall
be appraisers who have qualified to give expert valuation testimony.  The values contained in the said written
reports shall be used to determine the purchase price of the Membership
Interests of the Selling Members.  Within
sixty (60) days after all of the said written reports have been rendered, the
Purchasing Members shall notify the Selling Members in writing of their
decision whether to exercise the option. 
The option is granted to all the Purchasing Members in proportion to
their respective Membership Interests; but if any such Member does not desire
to exercise the option, then his portion may be taken up pro rata by the
remaining Purchasing Members, as the case may be.  Settlement shall be completed within thirty
(30) days after notice of the exercise of the option.  The terms of payment of the purchase price
shall be: no cash down payment, the balance payable in equal monthly
installments over a period of five (5) years with interest on the unpaid
balance at the Prime Rate.  The
obligation of the Purchasing Members to the Selling Members shall be evidenced
by a promissory note or notes, secured by a pledge of the purchased interests
and the filing of a financing statement with respect thereto.

 

34

 

3.             Procedures Upon
Dissolution.

 

3.1           Upon Dissolution of the
Company, the Managing Members or, if there is only one Managing Member, such
Person, shall proceed with dispatch and without any unnecessary delay to sell
or otherwise liquidate the assets of the Company, and shall distribute the
proceeds thereof in accordance with Article XV, Section 3.2, below.

 

3.2           Upon dissolution and
liquidation of the Company, the net proceeds of liquidation shall be applied
and distributed in the following order of priority:

 

3.2.1        First,
to the payment of the debts and liabilities of the Company (other than any
loans or advances that may have been made by any of the Members) and the
expenses of liquidation;

 

3.2.2        Second,
to the creation of any reserves which the Managing Members may deem reasonably
necessary for the payment of any contingent or unforeseen liabilities or
obligations of the Company or of the Members arising out of or in connection
with the Business and operations of the Company;

 

3.2.3        Third,
in accordance with the Non-Operating Distribution provisions of
Article IX, Section 4.

 

3.3           A reasonable time shall
be allowed for the orderly liquidation of the Company’s assets and the
discharge of its liabilities, unless the Managing Members shall have agreed to
make any in-kind distributions.

 

3.4           The Company shall
terminate and wind up when all assets owned by the Company shall have been
disposed of and the net proceeds, after satisfaction of liabilities to Company
creditors, shall have been distributed among the Members.

 

ARTICLE XVI

AMENDMENT

 

1.             Agreement may be
Modified.  The Agreement may be
modified as provided in this Article XVI (as the same may, time to time be
amended).

 

2.             Amendment or
Modification of Agreement.  The
Agreement may be amended or modified from time to time only by a written
instrument adopted by all of the Managing Members.

 

35

 

ARTICLE XVII

MISCELLANEOUS PROVISIONS

 

1.             Pronouns and
Plurals.  Except where the same shall
not be appropriate: references herein to the singular shall include the plural
and to the plural shall include the singular; references to the masculine
gender shall include the feminine and neuter genders (and vice versa).

 

2.             Waiver.  No consent or waiver, express or implied, by
any Member to or of any breach or default by any other Member in the
performance by the other of his or her obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default by the
other in the performance by such other party of the same or any other
obligations of such Member hereunder. 
Failure on the part of any Member to object to or complain of any act or
failure to act of any of the other Members or to declare any of the other Members
in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Member of its rights hereunder.

 

3.             Severability.  If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.

 

4.             Titles and
Captions.  All section titles or
captions contained in this Agreement are for convenience only and shall not be
deemed a part of the context of this Agreement.

 

5.             Agreement in
Counterparts.  This Agreement may be
executed in several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.  In addition, this Agreement may contain more
than one counterpart of the signatures page and the Agreement may be executed
by the affixing of the signatures of each of the Members to one of such counterpart
signature pages; all of such signature pages shall be read as though one, and
shall have the same force and effect as though all of the signers had signed a
single signature page.  Each party shall
become bound by this Agreement immediately upon affixing his, her or its
signature hereto, independent of the signature of any other party.

 

6.             Binding Agreement.  Subject to the restrictions on transfers set
forth herein, this Agreement shall inure to the benefit of and be binding upon
the undersigned Members and their respective heirs, executors, legal or
personal representatives, successors and assigns.  In this context, whenever in this instrument
a reference to any party or Member is made, such reference shall be deemed to
include a reference to the heirs, executors, legal or personal representatives,
successors and assigns of such party or Member.

 

36

 

7.             Governing Law;
Disputes.  It is the intent of the
parties hereto that all questions with respect to the construction of this
Agreement and the rights and liabilities of the parties hereto shall be
determined in accordance with the provisions of the laws of the State of
Minnesota.  Venue for any disputes shall
be in Minneapolis, Minnesota.  To resolve
disputes the parties shall (i) first, engage in non-binding mediation with
a single mediator, with such mediation session before the mediator not to
exceed two (2) business days and, (ii) second, if such mediation is
unsuccessful, submit the dispute to binding arbitration under American
Arbitration Association rules using a single arbiter.  The prevailing party in any mediation or
arbitration with respect to any disputes relating to the Agreement shall be
entitled to recover its reasonable attorneys fees from the other party for all
matters, including but not limited to appeals with such fees to be awarded by
the mediator or arbiter.

 

8.             WAIVER OF JURY
TRIAL.  EACH MEMBER IRREVOCABLY
WAIVES ANY AND ALL RIGHT THE MEMBER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT.  THE MEMBERS ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.

 

9.             Confidentiality.  Each Member agrees that this Agreement, and
all information (other than information which is a matter of public record or
is provided by other sources readily available to the public) shared or
developed on behalf of the Company and its activities shall be kept strictly
confidential, except in discussions with or filings with Gaming Authorities, or
a Member’s financiers, attorneys, accountants, investment bankers or
prospective investors.  No disclosures, press releases, or
announcements concerning the Company shall be made by any Member, except the
Company may make such public disclosures that its counsel deems necessary or
advisable under federal securities laws, as determined by all of the Managing
Members.  Each Member hereby acknowledges
that the securities of MTR are publicly traded and covenants that while in
possession of material non-public information concerning MTR, such Member will
neither trade in MTR’s securities nor advise others with respect to such
trading.

 

10.           Further Assurances.  Each Member agrees that it will, at any time
and from time-to-time, upon the request of the Managing Members, do, execute,
acknowledge or deliver all such further acts, deeds, assignments, conveyances
and assurances as may be reasonably required to effectuate the transactions
contemplated by this Agreement.

 

11.           Investment
Objectives.  Each Member, by such
Member’s signature hereto, warrants that each such Member is acquiring an
interest in the Company for such Member’s own account for investment only and
without any present intention of selling the same.  Each Member further covenants and agrees that
it shall be responsible, at its sole cost and expense, for making any public
filings required by virtue of its ownership interest in the Company.  Further, and to that end, the

 

37

 

Members shall look to
their own counsel and not the Managing Member for guidance as to the filing of
such matters.

 

12.           Entire Agreement.  This Agreement, unless subsequently amended
in the manner provided in Article XVI, contains the final and entire agreement
among the parties hereto, and they shall not be bound by any terms, conditions,
statements or representations, oral or written, not herein contained.

 

13.           No Cumulative Voting.  No Members shall have any cumulative voting
rights.

 

14.           Preemptive Rights.  Except as otherwise expressly provided in
this Agreement, or as determined by all of the Managing Members, no Members
shall have preemptive rights to contribute additional capital as provided in
the Act.

 

IN WITNESS
WHEREOF, the parties have executed this Agreement effective on the date first
set forth above.

 

	
   

  	
  MTR-HARNESS, INC.,

  a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Edson R. Arneault

  	
   

  
	
   

  	
  By:

  	
  Edson R. Arneault

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOUTHWEST CASINO &
  HOTEL CORP.,

  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ James B. Druck

  	
   

  
	
   

  	
  By:

  	
  James B. Druck

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTR GAMING GROUP, INC.

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
							

 

38

 

EXHIBIT A

 

PERCENTAGE INTERESTS AND CAPITAL
CONTRIBUTION COMMITMENT

 

PERCENTAGE INTERESTS AND CAPITAL
CONTRIBUTION COMMITMENT

 

	
  Member

  	
   

  	
  Percentage Interest

  	
   

  	
  Maximum Capital

  Contribution

  Commitment

  	
   

  
	
  MTR-Harness

  c/o MTR Gaming Group, Inc.

  P.O. Box 356

  State Route 2 South

  Chester, WV 26034

  	
   

  	
  50%

  	
   

  	
  $7,490,000(1)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southwest Casino
  & Hotel Corp.

  2001 Killebrew Drive, Suite 306

  Minneapolis, MN 55425

  	
   

  	
  50%

  	
   

  	
  $1,500,000 Plus Pre-

  Licensing Costs(2)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  100%

  	
   

  	
  $8,990,000

  	
   

  

 

(1)     MTR-Harness
contributed $10,000 in cash on the Effective Date of this Agreement, will
contribute the $2,990,000.00 Catch-Up Contribution on the date of any Licensing
Event and has committed to contribute additional funds in excess of the
Catch-Up Contribution of up to $4,500,000.00 to increase its cumulative Capital
Contributions to the Company to the MTR-Harness Maximum Capital Contribution of
$7,500,000 upon the call for such additional capital by the Board of Directors.

 

(2)     Southwest shall
fund all costs prior to the Licensing Event (other than MTR-Harness’ initial
$10,000.00 Capital Contribution) and shall receive Capital Account credit with
respect to all of its Pre-Licensing Costs. 
Southwest has further committed to contribute additional funds of up to
$1,500,000.00 subsequent to the occurrence of the Licensing Event upon the call
for such additional capital by the Board of Directors.

 

A - 1

 

EXHIBIT B

 

LEGAL DESCRIPTION OF THE REAL
PROPERTY

 

B - 1Exhibit
10.11

 

Exhibit
A

 

 

BLN OFFICE PARK

LEASE

 

 

BLN OFFICE PARK ASSOCIATES

 

Landlord

 

 

SOUTHWEST CASINO AND HOTEL CORP.

 

Tenant

 

 

BLN OFFICE PARK

LEASE

 

This Lease entered
into as of this 24th day of February, 1995, is by and between BLN Office Park Associates
and BLN Office Park Associates II Limited Partnership, each of which is a
Minnesota limited partnership (hereinafter “Landlord”) and Southwest Casino and
Hotel Corp., (a Minnesota corporation), (hereinafter “Tenant”).

 

Witnesseth that:

 

1.                                       BLN OFFICE PARK.  BLN Office Park Associates and BLN Office
Park Associates II Limited Partnership are affiliated entities which together
own the BLN Office Park, a two-building office complex located at 2001 and 2051
Killebrew Drive, Bloomington, Minnesota 55425, legally described as Lots 1 and
2, Block One, MCMI Second Addition according to the duly recorded plat thereof,
Hennepin County, Minnesota, and which includes underground parking facilities,
surface parking, walking areas, landscaped areas and certain common areas and
facilities that are shared with occupants of other space in the building and
with occupants of space in the other building in the BLN Office Park, under
rules and regulations as instituted by Landlord from time to time.

 

2.                                       LEASED PREMISES. Landlord does hereby lease
to Tenant, and Tenant does hereby take from Landlord, those certain premises
comprising approximately 2,208 square feet of rentable area hatched in red on
Exhibit A attached hereto (hereinafter the “Leased Premises”). The Leased
Premises are located at 2001 Killebrew Drive.

 

3.                                       TERM. The lease term shall commence on the
1st day of February, 1995 (hereinafter “Commencement Date”) and shall continue
thereafter to and including the 31st day of January, 1998, unless earlier
terminated as hereinafter provided.

 

4.                                       BASE RENT. Tenant shall pay to Landlord
during the lease term base rent in monthly installments pursuant to the
following Schedule:

 

From the commencement of the lease term until
January 31, 1998, the sum of $105,984.00, payable in equal monthly
installments of $2,944.00 on the first

 

The monthly
installments of Base Rent are due and payable in advance on the first day of
each month. Any installment which has not been received by the Landlord by the
5th day of the month shall automatically and without notice be increased by 18%
per annum to compensate the Landlord for its administrative overhead, loss of
use of funds, and other incidental expenses.

 

5.                                       CONTRIBUTION TO OPERATING COSTS. The Base
Rent is predicated in part upon Base Operation Costs on a per square foot basis
of five dollars and 75/100 ($5.75) (hereinafter “Base Operating Cost”)
consisting of two components $1.90 for real estate taxes and $3.85 for other
operating expenses. Prior to March 1, 1995, and prior to the first day of
each calendar year thereafter, Lessor shall furnish Tenant with an Estimate of
the Operating Costs for the ensuing calendar year. The monthly installments of
the Base Rent shall be increased or decreased by one-twelfth of the product of
the number of square feet of net rentable area in the Leased Premises
multiplied by the excess, if any, of such Estimate over the Base Operating

 

2

 

Costs. After the
expiration of each calendar year, Lessor shall furnish Tenant with a statement
of the actual per square foot Operating Costs for the preceding calendar year,
and if the actual per square foot Operating Costs for such preceding calendar
year are more or less than the Estimate, a proper adjustment shall be made;
however, neither component of Operating Costs shall be less than the respective
figures stated above.  Provisions to the
contrary hereinabove contained notwithstanding, the Base Rent shall in no event
be less than the amount stated in Paragraph 3.

 

(a)                                  Definitions.  For the purposes of this Lease, the following
terms shall have the meanings set forth in this paragraph.

 

(i)                                   “Base
Operating Cost” shall mean the Operating Costs (as that term is defined herein)
attributed to the Leased Premises as of the Commencement Date. Base Operating
Cost shall be divided into two components: 
Operating Expenses and Real Estate Taxes. Each part shall be determined
and assessed independent of the other. 
“Operating Costs” means Operating Expense and Real Estate Taxes
combined.

 

(ii)                                “Operating
Expenses” shall mean the following items. All costs incurred by Landlord in
owning, managing, maintaining and operating the BLN Office Park, the
appurtenances thereto and the underlying land, exclusive of interest and depreciation;
an imputed management fee commensurate with the Minneapolis metropolitan market
for management services, if at any time hereafter Landlord elects to manage the
buildings and all other expenditures which, for federal income tax purposes,
may be expensed rather than capitalized. Notwithstanding anything contained
herein to the contrary, Operating Expenses may, at the option of the Landlord,
also include depreciation and interest costs for machinery, equipment systems,
property or facilities installed in and used in connection with the BLN Office
Park, provided that one of the major purposes for such installation or use is
to reduce other items of Operating Expenses, and depreciation and interest
costs for equipment provided or used by the Landlord in the normal maintenance
of the Building.

 

(iii) “Real Estate Taxes” shall mean the annual payment of real estate
taxes and annual installments of special assessments levied against the BLN
Office Park, the appurtenances and underlying land.

 

(b)                                 General
Calculation of Operating Costs.

 

(i) Operating Costs shall be determined on a per square foot basis by
dividing total Operating Costs by the total number of square feet of rentable
area in the BLN Office Park, which rentable area shall be determined in accordance
with the space measuring standards of the Building Owners and Managers
Association International (BOMA) in effect on the date of this Lease and which
can change from time to time. For the purpose of calculating Operating Costs
for any calendar year, if, at any time during such year, less than the entire
rentable area of the BLN Office Park was occupied by tenants making full
utilization of such area, then the Operating Costs for such year shall be
calculated by using a total Operating Cost amount equal to the Operating Costs
which would have been incurred by Landlord had such total occupancy and full
utilization of the BLN Office Park existed. 
Landlord shall have the right, in its sole and reasonable discretion, to

 

3

 

determine the method of calculating Operating Costs, to accomplish the
goal of having the Tenants of BLN Office Park pay all Operating Costs in an
equitable manner, including special adjustments or allocations as between the
two buildings of’ the Office Park.

 

(ii)                                For
purposes of this Section 5, the Tenant’s prorata share shall be the
fraction having the number of rentable square feet of the Leased Premises as
the numerator and the total rentable square feet in the BLN Office Park as the
denominator, which fraction is .679%.

 

6.                                       ADDITIONAL TAXES. The Tenant shall pay at
the time and in the manner specified herein, the following amounts as
additional rent due hereunder:

 

(a)                                Tenant
shall pay, together with each monthly installment of Annual Base Rent, the
amount of any gross receipts tax, sales tax or similar tax (but excluding
therefrom any income tax) payable by Landlord by reason of Landlord’s receipt
of any amounts due to Landlord hereunder.

 

(b)                               If
any improvements are made to the Leased Premises by or at the insistence of the
Tenant which are of a nature or quality beyond standard office space in the BLN
Office Park, the Tenant shall pay to Landlord on the first day of each month
during the lease term, one-twelfth of the annual tax expenses as estimated by
Landlord to be paid during the following calendar year that are attributable to
such improvements. It is understood and agreed by the parties hereto that, if
the amount of estimated annual tax expenses paid by the Tenant during each such
year is lesser or greater than the amount of annual tax expenses actually
attributable to the improvements made by Tenant, an appropriate adjustment
shall be made. In the event such actual annual tax expenses are greater than as
estimated, Tenant shall immediately pay the difference to the Landlord; in the
event they are less than as estimated, Landlord shall credit the difference to
the Tenant’s account.

 

7.                                       USE AND INSURANCE RATING. Tenant shall use
the Leased Premises for the following purposes and for no other purposes
whatsoever: general office.

 

Tenant will not
conduct or permit to be conducted any activity or place any equipment in or
about the Leased Premises which will in any way increase the rate of fire and
extended coverage insurance or liability insurance on the Building.  If any increase in the rate of such insurance
is stated by any insurance company or by the applicable insurance rating bureau
to be due to activity or equipment of Tenant in or about the Leased Premises,
such statement shall be conclusive evidence that such increase in such rate is
due to such activity or equipment, and, as a result thereof, Tenant shall be
liable for such increase and shall reimburse Landlord therefor.

 

8.                                       SPACE ADJUSTMENTS. Tenant acknowledges that
much of the rental space in the Building may be rented in smaller units and,
therefore, it may be necessary for Landlord to make adjustments in Tenant’s
space or actually relocate Tenant within the building so that the space needs
of all Tenants may be accommodated. Tenant agrees that Landlord may, at any
time, and

 

4

 

from time to time,
relocate Tenant within the Building, provided that Landlord shall pay all
Tenant’s direct costs incurred in connection therewith.

 

Landlord’s right
to relocate Tenant is conditioned only on the obligation that the new leased
premises shall be located in the BLN Office Park and shall not vary in size
more than plus or minus five percent (5%) from the Leased Premises. Tenant
shall pay rentals based on the actual rentable area calculated for the space
occupied after such relocation, whether said space is larger or smaller than
the Leased Premises. If Tenant shall be moved more than once, the new space
shall never vary more than ten percent (10%) from the originally estimated
space.

 

9.                                       LEASEHOLD IMPROVEMENTS.  Landlord agrees to provide those improvements
in the Leased Premises set forth on Exhibit B attached hereto.

 

10.                                 NO WARRANTIES BY LANDLORD AND AGENTS/ACCEPTANCE OF
PREMISES.

 

(a) By signing this Lease, Tenant acknowledges and
agrees that neither Landlord nor any agents or employee of Landlord have made
any representations or promises with respect to the Leased Premises or BLN
Office Park, except as expressly set forth herein, and no rights, privileges,
easements or licenses are acquired by Tenant except as expressly set forth
herein.

 

(b)                                 The
taking of possession of the Leased Premises by Tenant shall be conclusive
evidence that, except for minor “punch list” items, if any, the Leased Premises
were on such date of possession in good, clean and tenantable condition and
that the Tenant accepts the Leased Premises “as is.”

 

11.                                 TIME OF POSSESSION AND OCCUPANCY OF PREMISES.
If the Leased Premises shall, on the date of commencement of the Lease Term, be
in the possession and occupancy of any person not lawfully entitled thereto,
Landlord shall use due diligence to obtain possession thereof for Tenant. If
the Leased Premises shall not be ready (for occupancy at said time because
construction has not yet been substantially completed or by reason of any
building operations, repairing or remodeling to be done by Landlord, or by
reason of a tenant holding over, Landlord shall use due diligence to make the
Leased Premises ready for occupancy by Tenant. It is agreed that Landlord and
Landlord’s agents and employees, using due diligence, shall not in any way be
liable to Tenant for any incidental or consequential damages resulting to
Tenant from failure to obtain possession of the Leased Premises for the Tenant
or to deliver the possession thereof to Tenant, and this Lease shall remain in
all things in full force and effect and the Lease Term shall not thereby be
extended, except that the monthly installments of Base Rent, additional rent
and other amounts payable hereunder shall be abated until the Landlord has made
the Leased Premises ready for occupancy; provided, however, if the Leased
Premises are not ready for occupancy by March 1, 1995, Tenant, at its
option, shall have the right to terminate this Lease by written notice.

 

12.                                 ASSIGNMENT AND SUBLETTING. Tenant shall
have the right to assign this Lease or sublet all or any part of the Leased
Premises with the prior written consent of the Landlord, which consent shall
not be unreasonably withheld, provided as follows:

 

5

 

(a)                                the
Landlord may, in its sole discretion, withhold its consent to an assignment or
a sublease (i) to any present tenant of Landlord in the BLN Office Park or any
other location, (ii) to any tenant whose credit standing and financial
statements are unsatisfactory to Landlord, or (iii) to any tenant whose
occupancy would be inconsistent with the character of BLN Office Park;

 

(b)                               such
assignment or sublease shall not relieve Tenant of any of its obligations under
this Lease;

 

(c)                                any
profit received from such assignment or sublease shall promptly, upon receipt
thereof be paid by Tenant to Landlord. “Profit” as used herein shall mean any
amounts paid by an assignee or subtenant in excess of the Base Rent and
additional rent attributable to the Leased Premises being assigned or sublet
after deducting therefrom any amounts Tenant has paid for outside leasing
commissions and reasonable tenant improvements occasioned by such assignment or
subletting;

 

(d)                               Tenant
shall provide Landlord with notice of any assignment or sublease in writing,
together with a copy of such assignment or sublease, and Landlord shall have 30
days from receipt thereof to make a decision concerning such assignment or sublease;
and

 

(e) any assignment or subletting made in violation of the provisions
contained herein shall be ineffective.

 

13.                                 ALTERATIONS. Tenant will not make any
alterations of or additions to the Leased Premises without the prior written
approval of Landlord. All work to be performed in the Leased Premises shall be
performed by competent contractors and subcontractors, approved by Landlord,
which approval shall not be unreasonably withheld by Landlord, except that
Landlord may in any event condition its approval of such contractors and
subcontractors on the Tenant’s furnishing separate performance and payment
surety bonds or other financial guaranties or deposits satisfactory to
Landlord, covering any work to be performed by such contractors or subcontractors
on the Leased Premises, and Landlord may, in any event, require that
contractors and subcontractors normally employed by Landlord be engaged for any
mechanical or electrical work and that any alterations be done by contractors
or subcontractors compatible with those workmen, contractors and subcontractors
employed from time to time in the BLN Office Park by Landlord.  All alteration work performed by or for
Tenant hereunder must be performed in such manner to avoid disruption of the
BLN Office Park operations or disturbance of other tenants in the BLN Office
Park. Unless Landlord requires the Tenant to restore the Leased Premises as set
forth in this Lease, all alterations, additions or improvements which may be
made by either of the parties hereto upon the Leased Premises, except office
furnishings purchased by Tenant which may be removed without damage or
destruction to the Leased Premises, shall be the property of Landlord and shall
remain upon and be surrendered with the Leased Premises as a part thereof at
the termination of this Lease or any extension thereof. Tenant will not permit
any mechanics, laborers or materialmen’s liens to stand against the Leased
Premises, the Building or BLN Office Park for any labor or materials furnished
to or in connection with any work performed or claimed to have been performed
in, on or about the Leased Premises and will immediately remove all such liens.
Tenant further agrees that, in the event Tenant fails to remove any such lien,
Landlord

 

6

 

may remove such
lien and Tenant shall immediately reimburse Landlord upon demand for all costs
and expenses, including attorneys’ fees, incurred by Landlord in removing such
mechanic’s or materialmen’s lien.

 

14.                                 TENANT EQUIPMENT AND FURNISHINGS.

 

(a)                                Tenant
may install or operate in the Leased Premises any electrically operated
equipment or other machinery which uses standard 110-volt current and which
Landlord determines in its reasonable judgment to constitute standard office equipment.
Tenant shall not install any other equipment of any kind or nature whatsoever
which will or may require any changes, replacements or additions to or in the
use of the heating, air conditioning, electrical or plumbing systems of the
Leased Premises or BLN Office Park without first obtaining the prior written
consent of the Landlord. No plumbing fixtures of any type shall be installed
within the Leased Premises without Landlord’s written approval. If Tenant’s
business machines and mechanical equipment cause noise or vibration that may be
transmitted to the structure of the BLN Office Park or to any space therein to
such a degree as to be reasonably objectionable to Landlord or to any tenant in
the Building, then Tenant shall install vibration eliminators or sound
abatement measures or other devices sufficient to eliminate such noise and
vibration at Tenant’s cost.  If Tenant
uses heat generating machines or equipment (other than standard office
equipment designated by Landlord as set forth above) in the Leased Premises
which affect the temperature in the Leased Premises otherwise maintained by the
air conditioning system furnished by Landlord as set forth in
Section 15(a), Landlord reserves the right to install or to require Tenant
to install adequate supplementary air conditioning equipment in the Leased
Premises at Tenant’s cost.

 

(b) No furniture, equipment or other bulky items of any description
will be received into the building or carried in the elevators, except as
approved by Landlord. All moving of furniture, equipment and other materials
shall be done during hours previously approved by Landlord and shall be under
the direct control and supervision of Landlord or its agent. Landlord and its
agents and representatives shall not be responsible for any damage to any of
Tenant’s personal property nor for any charges for moving the same. Tenant
shall promptly remove from the public and common areas in the building and the
BLN Office Park any of the Tenant’s furniture, equipment or other material there
delivered or deposited. Landlord shall have the right to limit the weight and
prescribe the position of safes and other heavy equipment or fixtures. Any and
all damage or injury to the Leased Premises or BLN Office Park caused by moving
the property of Tenant in or out of the Leased Premises, or due to the same
being on the Leased Premises, shall be repaired by and at the sole cost of
Tenant.

 

15.                                 SERVICES FURNISHED BY LESSOR.  Landlord agrees to furnish the following
services to Tenant upon the terms and conditions set forth herein, with the
costs for such services being part of the Operating Costs:

 

(a)                                Heating,
Ventilation and Air Conditioning. 
Landlord agrees to furnish sufficient heat, ventilation and air
conditioning to provide a temperature condition required in Landlord’s
reasonable judgment for comfortable occupancy of the Leased Premises

 

7

 

under normal business operations daily from 8:00 a.m. to 6:00 p.m.,
Saturdays, Sundays and holidays excepted.

 

(b)                               Lavatory
Service.  Landlord will provide
reasonable sewer service and water for drinking, lavatory and toilet purposes
in the Building.

 

(c)                                Electricity.  Landlord agrees to provide 110-volt current
electricity to the Leased Premises for standard building lighting and office
use during normal business hours. Any 110-volt equipment which is not
reasonably energy-efficient shall not be deemed to be standard hereunder.

 

(d)                               Elevator
Service.  Landlord will provide passenger
elevator service in common with others at all times.

 

(e)                                Janitor
Service.  Landlord will provide daily
janitor service in and about the Leased Premises, Saturdays, Sundays and
holidays excepted.

 

(f)                                  Building
Access.  Landlord will keep the buildings
open during normal business hours and will provide after hours access to Tenant
in accordance with such reasonable rules, regulations and conditions as may be
specified from time to time by Landlord and generally applicable to all tenants
of the BLN Office Park.

 

16.                                 TENANT EQUIPMENT - ADDITIONAL UTILITIES AND COSTS.

 

(a)                                If
any electrical equipment, machinery, plumbing fixtures or other mechanical
equipment installed or used by Tenant in the Leased Premises consumes or
requires utility service in addition to those services to be furnished by
Landlord pursuant to Section 15, Tenant shall promptly pay, as additional
rent, all charges for such additional utilities and utility service furnished
to the Leased Premises during the term of this Lease. If such utilities are
separately metered to the Leased Premises, Tenant shall pay all such additional
charges directly to the utility company furnishing the same. To the extent that
utilities are furnished to the Leased Premises without separate metering, the
amount which may be specifically charged to Tenant for additional utility usage
shall be determined by Landlord on the basis of the costs incurred by Landlord
in purchasing such additional utilities for use in the building.

 

(b)                               Tenant
shall also promptly pay to Landlord, as additional rent, all costs and expenses
of installation, operation and maintenance of all electric lamps, starters and
ballasts (but excluding the cost for light bulbs installed by Landlord prior to
Tenant’s initial possession of the Leased Premises) all additional electrical wiring
caused by electrical equipment installed by Tenant with Landlord’s approval
other than the standard office equipment described in Section 14(a), any
supplemental air conditioning equipment or vibration or noise elimination
equipment described in Section 14(a), all plumbing fixtures and all
additional sewer and water service used in or on the Leased Premises in
addition to those described in Section 15(b).

 

17.                                 NO WARRANTY AS TO SERVICES.  Landlord does not warrant that any of the
services it is required to provide under the terms of this Lease will be free
from interruption.

 

8

 

Interruption of
service shall never be deemed an eviction or disturbance of Tenant’s use and
possession of the Leased Premises or any part thereof, or render Landlord or
Landlord’s agents or employees liable to Tenant for damages, or relieve Tenant
from performance of Tenant’s obligations under this Lease. Landlord will use
due diligence to restore the interrupted service as soon as is reasonably
possible to the extent that the interruption of service is under the control of
Landlord.

 

18.                                 ENERGY POLICIES. Wherever in this Lease any
terms, covenants or conditions are required to be performed by the Landlord,
the Landlord shall be deemed to have kept and performed such terms, covenants
and conditions notwithstanding any action taken by the Landlord, if such action
is pursuant to any governmental regulations, requirements or directives.
Without limiting the generality of the foregoing, the Landlord may reduce the
quantity and quality of all utility and any other services and impose such
regulations as the Landlord deems necessary in order to preserve energy.
Landlord agrees that its determination hereunder shall in all instances be reasonable.

 

19.                                 PROPERTY INSURANCE.

 

(a)                                Landlord
shall carry and cause to be in full force and effect a fire and extended
coverage insurance policy on the BLN Office Park, but not on the contents
owned, leased or otherwise in possession of the Tenant. The cost of such
insurance shall be an Operating Expense.

 

(b) The Tenant shall carry and cause to be in full force and effect a
fire and extended coverage insurance policy covering property of the Tenant
within the BLN Office Park.

 

(c) Landlord and Tenant hereby release each other from any and all
liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any of the extended coverage or supplementary contract
casualties, even if such fire or other casualty shall have been caused by the
fault or negligence of the other party, or anyone for whom such party may be
responsible, provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such time
as the releasing party’s policies shall contain a clause or endorsement to the
effect that any such release would not adversely affect or impair said policies
or prejudice the right of the releasing party to recover thereunder. Landlord
and Tenant agree that they will request their insurance carriers to include in
their policies such a clause or endorsement. If extra costs shall be charged
therefor, each party shall advise the other of the amount of the extra cost and
the other party, at its election, may pay the same, but shall not be obligated
to do so.

 

(d) Tenant shall be responsible for the security and safeguarding of
the Leased Premises and all of its property kept, stored or maintained in the
Leased Premises.  In the event of any
loss or damage to any of Tenant’s property, Tenant agrees to look solely to its
insurance carrier for recovery, irrespective of the cause of such loss or
damage.

 

9

 

20.                                 PUBLIC LIABILITY.

 

(a)                                Tenant
will keep in force at its own expense for so long as this Lease remains in
effect and for so long as Tenant occupies or has a right to occupy the Leased
Premises, a policy of public liability with respect to the Leased Premises and
the BLN Office Park in which policy Landlord shall be named as an additional
insured. This insurance will be with a company and in such a form as is
acceptable to Landlord, and shall have a minimum combined limit of liability,
per location, of $1,000,000. The insurance shall also provide for contractual
liability coverage by endorsement. Tenant will deposit with Landlord a
certificate of insurance or other acceptable evidence, which evidence shall
indicate that the Landlord will be notified in writing thirty (30) days prior
to any cancellation, material change or failure to renew said insurance. Tenant
covenants and agrees to indemnify and hold Landlord and Landlord’s building
managers and other agents and employees harmless from any claim, loss or
damage, including reasonable attorney’s fees, suffered by Landlord, Landlord’s
management agent, employees or other agents or Landlord’s other tenants caused
by: (i) any act or omission by Tenant, Tenant’s employees or anyone claiming
through or by Tenant in, at or around the Leased Premises or the BLN Office
Park; (ii) the conduct or management of any work or thing whatsoever done by
Tenant in or about the Leased Premises or the BLN Office Park, or (iii)
Tenant’s failure to comply with any and all governmental laws, rules,
ordinances or regulations applicable to the use of the Leased Premises and its
occupancy. If Tenant shall not comply with the covenants made in this
paragraph, Landlord may, at its option, cause insurance to be issued and the
costs thereof shall be billed to Tenant and shall thereafter become immediately
due, as additional rent.

 

(b)                               During
the term of this Lease Agreement, Landlord shall also maintain a policy of
public liability insurance in full force and effect with a combined single
liability limit of at least $1,000,000, relative to the BLN Office Park
location.

 

21.                                 HAZARDOUS SUBSTANCES.

 

(a)                                “Claim”
shall mean and include any demand, cause of action, proceeding or suit for any
one or more of the following: (i) actual or punitive damages, losses, injuries
to person or property, damages to natural resources, fines, penalties,
interest, contribution or settlement, (ii) the costs of site
investigations, feasibility studies, information requests, health or risk
assessments, or Response (as hereinafter defined) actions, and
(iii) enforcing insurance, contribution or indemnification agreements.

 

(b)                               “Environmental
Laws” shall mean and include all federal, state and local statutes, ordinances,
regulations and rules relating to environmental quality, health, safety,
contamination and clean-up, including, without limitation, the Clean Air Act,
42 U.S.C. §7401, et seq.; the
Clean Water Act, 33 U.S.C. §1251, et seq.;
and the Water Quality Act of 1987; the Federal Insecticide, Fungicide, and Rodenticide
Act (FIFRA), 7 U.S.C. § 136, et seq.;
the Marine Protection, Research, and Sanctuaries Act, 33 U.S.C. §1401, et seq.; the Noise Control Act, 42 U.S.C.
§4901, et seq.; the Occupational
Safety and Health Act, 2 U.S.C. §651, et seq.;
the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §6901, et seq., as amended by the Hazardous and
Solid Waste

 

10

 

Amendments of 1984; the Safe Drinking Water Act, 42 U.S.C. §300f, et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §9601, et seq., as amended by the Superfund
Amendments and Reauthorization Act, the Emergency Planning and Community
Right-to-Know Act, and Radon Gas and Indoor Air Quality Research Act; the Toxic
Substances Control Act (“TSCA”), 15 U.S.C. §2601, et seq.; the Atomic Energy Act, 42 U.S.C. §2011, et seq.; and the Nuclear Waste Policy Act
of 1982, 42 U.S.C. § 10101, et seq.;
and all Minnesota state superlien and environmental clean-up statutes, with
implementing regulations and guidelines, as amended from time to time.
Environmental Laws shall also include all state, regional, county, municipal
and other laws, regulations, and ordinances insofar as they are equivalent or
similar to the federal laws recited above or purport to regulate Hazardous
Materials (as hereinafter defined);

 

(c)                                “Hazardous
Materials” shall mean and include the following, including mixtures thereof:
any hazardous substance, pollutant, contaminant, waste, by-product or
constituent regulated under CERCLA; oil and petroleum products and natural gas,
natural gas liquids, liquefied natural gas and synthetic gas usable for fuel;
pesticides regulated under FIFRA; asbestos and asbestos-containing materials,
PCBs, and other substances regulated under TSCA; source material, special
nuclear material, by-product material and any other radioactive materials or
radioactive wastes, however produced, regulated under the Atomic Energy Act or
the Nuclear Waste Policy Act; chemicals subject to the OSHA Hazard
Communication Standard, 29 C.F.R. §1910.1200, et
seq., and industrial process and pollution control wastes, whether
or not hazardous within the meaning of RCRA; any substance whose nature and/or
quantity of existence, use, manufacture, disposal or effect render it subject
to federal, state or local regulation, investigation, remediation or removal as
potentially injurious to public health or welfare.

 

(d)                               “Use”
means to manage, generate, manufacture, process, treat, store, use, re-use,
refine, recycle, reclaim, blend or burn for energy recovery, incinerate,
accumulate speculatively, transport, transfer, dispose of or abandon Hazardous
Materials.

 

(c)                                “Release”
or “Released” shall mean any actual or threatened spilling, leaking. pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of Hazardous Materials into the environment, as
“environment” is defined in CERCLA.

 

(f)                                  “Response”
or “Respond” shall mean action taken in compliance with Environmental Laws to
correct, remove, remediate, clean up, prevent, mitigate, monitor, evaluate,
investigate, assess or abate the Release of a Hazardous Material.

 

Tenant shall not
have or maintain any Hazardous Materials on the Leased Premises nor shall it commit
any violation of Environmental Laws on the Leased Premises or in the BLN Office
Park. Tenant agrees to indemnify and hold Landlord harmless from and against
any damages as a result of Tenant’s violation of the provisions of this
paragraph.

 

Landlord agrees to
indemnify and hold Tenant harmless from and against any damage or liability to
Tenant or its agents, employees or invitees arising from any Hazardous
Materials which

 

11

 

Landlord may have
on the Leased Premises or in the BLN Office Park or from the Landlord’s
violation of any environmental laws.

 

22.                                 FIRE OR OTHER CASUALTIES. If the Building
is substantially damaged or destroyed by fire or other casualty, the Landlord
shall have the right to terminate this Lease, provided it gives written notice
thereof to the Tenant within 90 days after such damage or destruction. If a
portion of the Leased Premises is damaged by fire or other casualty and
Landlord elects not to terminate this Lease, the Landlord shall, within a
reasonable time and at its own expense, restore the Leased Premises, exclusive
of any alterations or other changes made to the Leased Premises at any time by
or at the direction or request of Tenant, to as near the condition which
existed immediately prior to such damage or destruction as reasonably possible.
In the event Landlord so elects to restore the Leased Premises, rent shall
abate during such period of time as the Leased Premises are unusable in
proportion that the unusable portion of the Leased Premises shall bear to the
entire Leased Premises. If the destruction is so substantial that the Leased
Premises cannot be substantially restored within 180 days from the time of such
damage or destruction, then the Tenant shall have the right to terminate this
Lease. The Landlord shall not be responsible to the Tenant for damages to or
destruction of any furniture, equipment, alterations or other changes made or
installed in, on or about the Leased Premises by Tenant regardless of the cause
of the damage or destruction.

 

23.                                 EMINENT DOMAIN. If the entire BLN Office
Park or that portion of the BLN Office Park which includes all or substantially
all of the Leased Premises is permanently taken by eminent domain, this Lease
shall automatically terminate as of the date of such taking. If any portion of
the BLN Office Park is taken by eminent domain, Landlord shall also have the
right to terminate this Lease by giving written notice thereof to Tenant within
90 days after the date of taking. If only a portion of the Leased Premises is
taken by eminent domain and Landlord elects not to terminate this Lease,
Landlord shall, at its expense, restore the Leased Premises, exclusive of any
improvements or other changes made to the premises by Tenant, to as near the
condition which existed immediately prior to the date of taking as reasonably
possible. Rent shall abate during such period of time as the Leased Premises
are unusable in proportion that the unusable portion of the Leased Premises
shall bear to the entire Leased Premises and, upon completion of restoration,
necessary adjustments shall be made in the Base Rent, additional rent or other
costs to reflect a reduction in the size of the Leased Premises and/or the
total rentable area of the BLN Office Park. Tenant shall have no right to any
of the award or payment made in connection with such taking; provided, however,
that Tenant shall be entitled to recover any separate amount for Tenant
fixtures and/or relocation costs provided under appropriate statutes,
ordinances or regulations.

 

24.                                 SIGNS. No sign, advertisement or notice
shall be inscribed, painted, affixed or displayed in any part of the outside or
the inside of the BLN Office Park, except on the directories and the doors of
offices, and then only in such place, number, size, color and style as is
approved by Landlord. Any such permitted uses, excepting initial listing on
directories in the main building lobby and the standard building sign installed
by Landlord for each Tenant, shall be at the sole expense and cost of Tenant.
If any such sign, advertisement or notice is improperly exhibited, Landlord
shall have the right to remove the same without any legal proceeding, and
Tenant shall be liable for any and all expenses incurred by Landlord for said removal.

 

12

 

25.                                 WINDOW COVERINGS. Landlord, at its expense,
will install window coverings. Tenant shall maintain the window coverings so
installed in an attractive and safe condition and shall not change or alter
such window coverings without the written consent of Landlord.

 

26.                                 ACCEPTANCE OF TENANT’S GOODS. Tenant
authorizes Landlord and Landlord’s agents and employees to accept and sign for
shipments as a convenience and measure of traffic control with a stamp which
shall indicate that any signature is authorized only to clear the loading dock
or other receiving area as a matter of convenience, and such signature does not
constitute acceptance by the addressee and does not relieve the carrier of any
liability nor create an agency or bailment. Tenant hereby releases Landlord and
Landlord’s agents and employees from any and all liability resulting from or
related to the acceptance of goods addressed to Tenant and delivered to the
Building’s loading dock or other area designated for receipt of goods.

 

27.                                 RULES AND REGULATIONS. Tenant shall use the
Leased Premises and the public and common areas in the BLN Office Park in
accordance with such rules, regulations and procedures as may, from time to
time, be made by the Landlord for the general safety, comfort and convenience
of the owners, occupants and tenants of the BLN Office Park and shall cause
Tenant’s employees and invitees to abide by such rules and regulations. The
current rules and regulations are attached hereto as Exhibit D.

 

28.                                 WASTE. Tenant shall use due care in the use
of heat, air conditioning, water and electricity, the use of the Leased
Premises and of the public and common areas in the building; and BLN Office
Park and, without qualifying the foregoing, shall not neglect or misuse water
fixtures, electric lights and heating and air conditioning apparatus.

 

29.                                 RUBBISH AND DEBRIS. No rubbish, dirt,
overshoes, mats, umbrellas or objects of any kind shall be put or kept in the
public or common areas in the BLN Office Park by Tenant or its guests, agents
or employees.

 

30.                                 VENDING MACHINES. No vending machines shall
be installed in the Leased Premises without the written consent of Landlord.

 

31.                                 LIGHT AND AIR. Tenant has no right to light
or air over any premises adjoining the Building or the BLN Office Park.

 

32.                                 LANDLORD’S RIGHT TO ENTER PREMISES.
Landlord or its authorized agents or attorneys may, at any reasonable time,
enter the Leased Premises to inspect, make repairs and improvements and/or changes
in the Leased Premises or other premises in the BLN Office Park, as Landlord
may deem proper. Landlord’s reserved rights hereunder shall include, without
limitation, free, unhampered and unobstructed access to airways, equipment
ducts, underfloor heater ducts, stairways, access panels and all cleaning and
utility services. There shall be no diminution of rent or liability on the part
of the Landlord by reason of any inconvenience, annoyance or injury to business
caused by Landlord’s exercise of the rights reserved by Landlord in this
paragraph.

 

33.                                 SECURITY OF LEASED PREMISES. Tenant assumes
full responsibility for protecting the Leased Premises from theft, robbery and
pilferage, which includes keeping doors

 

13

 

locked and other
means of entry to the Leased Premises closed and secured after normal business
hours.

 

34.                                 REPAIRS. Tenant shall promptly pay to
Landlord upon request an amount equal to any cost incurred by Landlord in
repairing the Leased Premises and/or public and common areas in the building or
BLN Office Park when such repairs were made necessary by the negligence of or
misuse by the Tenant.

 

35.                                 LEASE TO BE SUBORDINATE. Landlord may cause
this Lease to be made subject and subordinate to all ground or underlying
leases, mortgages and restrictions which may now or hereafter affect the
Building or BLN Office Park and to all renewals and extensions thereof. For
confirmation of such subordination, Tenant shall execute promptly any
subordination agreement requested by Landlord. Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant’s agent to execute any such
subordination agreement or agreements for or on behalf of Tenant. Such
subordination is subject to Tenant enjoying the quiet possession of the Leased
Premises if any Mortgagee becomes landlord hereunder provided that Tenant is
not then in default hereunder or does not default in the future.

 

36.                                 ESTOPPEL CERTIFICATE. Tenant agrees, at any
time and from time to time upon not less than five business days prior written
notice by Landlord, to execute, acknowledge and deliver to Landlord a statement
in writing:

 

(a)                                Certifying
that this Lease is unmodified and in full force and effect or, if there have
been modifications, that this Lease is in full force and effect as modified and
stating the modifications.

 

(b)                               Stating
the dates to which the rent and ether charges hereunder have been paid by
Tenant to Landlord.

 

(c)                                Stating
whether or not, to the best knowledge of Tenant, Landlord is in default in the
performance of any covenants, agreements or conditions contained in this Lease
and, if so, specifying each such default of which Tenant may have knowledge.

 

(d)                               Responding
to such other matters as Landlord reasonably requests.

 

Any such statement
delivered pursuant hereto may be relied upon by any owner or prospective
purchaser of the building, any prospective mortgagee of the building or
Landlord’s interest therein or any prospective assignee of any such mortgagee.

 

37.                                 TENANT TO SURRENDER PREMISES IN GOOD CONDITION.
Upon the expiration or termination of the Lease Term, Tenant shall, at its
expense:

 

(a)                                Remove
Tenant’s goods and effects and those of all persons claiming through Tenant;

 

(b)                               Quit
and deliver up the Leased Premises to Landlord peaceably and quietly in as good
order and condition as the same were on the date the Lease Term commenced or

 

14

 

were thereafter placed in service by Lessor, reasonable wear and tear
and damages from fire and other casualties excepted; and

 

(e) At Landlord’s request, and if there have been alterations made to
the Leased Premises without the Landlord’s explicit written consent, restore
the Leased Premises to general office standards adopted from time to time by
Landlord for general application throughout the BLN Office Park.

 

Any property left
in the Leased Premises after the expiration or termination of the Lease Term
shall be deemed to have been abandoned and shall be deemed the property of
Landlord to be disposed of as Landlord sees fit.

 

38.                                 HOLDING OVER. Tenant shall not hold over in
the Leased Premises, or any part thereof, after the expiration or termination
of the Lease Term. Such continued occupancy by Tenant shall be at the
sufferance of Landlord, and Tenant shall pay as rent therefor an amount equal
to 150% of the amount or Base Rent in effect for the last period prior to the
date of termination or expiration of the Lease Term, plus additional rent and
all other amounts which would have been payable to the Landlord under this
Lease for such additional period had the Lease remained in effect, adjusted and
calculated on a per diem basis.
Tenant shall pay Landlord such amount for each day the Tenant retains
possession of the Leased Premises or any part thereof after such expiration or
termination of the Lease Term. Tenant’s obligations with respect to the Leased
Premises as a Tenant at sufferance upon holding over shall be in all respects
the same as Tenant’s obligations under the Lease during the Lease Term. At
Landlord’s option, a holdover Tenant may be deemed to be a month-to-month
tenant whose rent is subject to adjustment with one month’s prior written
notice.

 

39.                                 DEFAULT. The occurrence of any of the
following events shall constitute a default by Tenant under this Lease:

 

(a)                                If
Tenant shall fail to pay any amounts to be paid by it hereunder, including, but
not limited to, Base Rent and additional rent, and such default shall continue
for a period of seven (7) days after Landlord has given Tenant written notice
of such failure to pay; or

 

(b)                               If
Tenant fails to perform or observe any of Tenant’s other obligations, covenants
or agreements herein or hereunder and such failure shall continue for a period
of twenty (20) days after Landlord has given Tenant written notice thereof; or

 

(c)                                If
Tenant makes a general assignment for the benefit of creditors, or, subject to
the rights of a Trustee in Bankruptcy, files, or has filed against it, a
petition in bankruptcy under the Bankruptcy Reform Act of 1978 or under any
other applicable law of the United States of America or any state thereof,
consents to the appointment of a trustee or receiver for Tenant or for its
property, or if Tenant takes any action for the purpose of effecting or
consenting to any of the foregoing.

 

(d)                                 If
Tenant holds over after the expiration or termination of this Lease.

 

Upon the
occurrence of any of the foregoing defaults, Landlord may, but with no
obligation to do so, immediately, re-enter the Leased Premises and remove all
persons and property therefrom.

 

15

 

Landlord shall
have the right to keep this Lease in full force and effect or, at its option,
terminate this Lease as to all future rights of Tenant. Landlord shall comply
with notice and other requirements of Minnesota law as in effect from time to
time. Tenant shall be liable to Landlord for all loss of rents and other
damages which Landlord may incur by reason of such default including all
attorneys’ fees and expenses incurred in enforcing any of the terms of this
Lease. In the event Landlord re-enters the Leased Premises as set forth herein,
and, whether it elects to keep this Lease in effect or terminate it, Landlord
may re-let the Leased Premises for such rent and upon such terms as are not
unreasonable under the circumstances. In such event, Tenant also shall be
liable for all costs, expenses and damages incurred or sustained by Landlord in
re-letting the Leased Premises, including, without limitation, deficiency in
rent, attorneys’ fees, expenses of placing the Leased Premises in first class
rentable condition, brokerage fees, tenant allowances, improvements or payment
of any other tenant inducement. If Tenant has breached this Lease by failing to
pay all rent due hereunder during the initial term hereof, then Tenant shall be
liable to Landlord as an element of Landlord’s damages for the unamortized
portion of Landlord’s up-front costs in entering into this Lease, including,
but not limited to, leasehold improvements, leasing commissions and rent
abatement. For example, if this Lease is for five years and Tenant vacates and
quits paying rent after three years, and if Landlord had costs of $50,000
(i.e., $15,000 leasing commission, $25,000 build-out and $10,000 rent
concessions), then Tenant would owe Landlord $20,000 (40% of $50,000) to
reimburse Landlord for the unamortized portion of its up-front costs. This
amount is due irrespective of whether Landlord is successful in reletting the
premises for the balance of the initial term. Landlord shall have the right to
commence one or more actions to enforce the terms hereof, and the commencement
and prosecution of one action shall not be deemed a waiver or an estoppel from
commencing one or more actions from time to time in the future. Provisions
contained in this section shall be in addition to and shall not prevent
the enforcement of any claim Landlord may have against Tenant for anticipatory
breach of the unexpired term of this Lease. All rights and remedies of Landlord
under this Lease shall be cumulative and shall not be exclusive of any other
rights and remedies provided to Landlord under applicable law.

 

40.                                 RIGHT TO CURE DEFAULTS. If Tenant defaults
in the observance or performance of any of Tenant’s covenants, agreements or
obligations hereunder wherein the default can be cured by the expenditure of
money, Landlord may, but without obligation and without limiting any other
remedies which it may have by reason of such default, cure the default, charge
the cost thereof to Tenant and Tenant shall pay the same forthwith upon demand.
If Landlord is required to commence a legal action to recover such sums from
the Tenant, Landlord shall also have the right to recover all interest costs
and attorneys’ fees in connection with such litigation.

 

41.                                 QUIET ENJOYMENT. So long as the Tenant
complies with the terms and conditions hereof, it shall be entitled to the
peaceable and quiet enjoyment of the Leased Premises.

 

42.                                 FORCE MAJEURE. Any prevention, delay or
stoppage of work to be performed by Landlord or Tenant which is due to strikes,
labor disputes, inability to obtain labor, materials, equipment or reasonable
substitutes therefor, acts of God, governmental restrictions or regulations or
controls, judicial orders, enemy or hostile government actions, civil
commotions, fire or other casualty, or other causes beyond the reasonable
control of the party obligated to perform hereunder shall excuse performance of
the work by that party for a period equal to the duration of that prevention,
delay or stoppage.

 

16

 

43.                                 SECURITY DEPOSIT. Tenant agrees to deposit
with Landlord a security deposit in the amount of $0 upon execution of the
Lease, which shall be held by Landlord as security for Tenant’s faithful
performance of its obligations hereunder. Landlord and Tenant agree that the
security deposit may be commingled with funds of Landlord and Landlord shall
have no obligation or liability for payment of interest on such deposit. Tenant
shall not pledge, mortgage, assign, transfer or encumber the security deposit
without the prior written consent of Landlord, and any attempt by Tenant to do
so shall be void as to Landlord’s rights. If Tenant fails to pay any rent or
other amount due hereunder or fails to perform any of the other terms hereof,
Landlord may appropriate and apply all or any portion of the security deposit
to cure any such default by Tenant hereunder or to reimburse Landlord for any
loss or damage sustained by Landlord as a result of Tenant’s default or breach.
Landlord may use the security deposit without prejudice to any other remedy
which it may have. If Landlord so uses any of the security deposit, Tenant
shall, within ten (10) days after written demand by Landlord, restore the
security deposit to the full amount originally deposited. Tenant’s failure to
do so shall constitute an event of default hereunder. Within thirty (30) days
after the termination or expiration of this Lease and the vacation of the
Premises by Tenant, Landlord shall account for the security deposit to Tenant
and return any portion which is due or owing. Landlord may deliver the security
deposit to the purchaser of Landlord’s interest in the BLN Office Park and, if
it does so, shall be relieved of any further liability to Tenant for the return
of said deposit.

 

44.                                 BROKERS. Landlord and Tenant each represent
and warrant to the other that they have dealt with and only with the real
estate brokers/agents named on Exhibit E hereto.  Landlord and Tenant hereby agree to indemnify,
defend and hold the other harmless from any claims for real estate brokerage or
leasing commissions or other suits of any kind by real estate brokers or
representatives in connection with or arising out of this Lease and the
negotiations leading up to the execution of this Lease.

 

45.                                 USE OF THE TERMS “LANDLORD” AND “TENANT.” The terms
“Landlord” and “Tenant” wherever used in this Lease shall be construed to mean
plural in all cases where there is more than one Landlord or Tenant, and the
necessary grammatical changes required to make the provisions hereof apply to
corporations, partnerships or individuals, men or women, shall in all cases be
assumed as though in each case fully expressed. In addition, where relevant in
this Lease and especially in connection with the provisions of this Lease
relating to personal injury, limitation of liability, indemnification, property
damage and insurance, “Landlord” shall mean Landlord, its respective employees,
agents, invitees, licensees, customers, clients, partners and shareholders, and
“Tenant” shall mean its employees, agents, invitees, licensees, customers,
clients, family members, guests, trespassers, partners and shareholders.

 

46.                                 LANDLORD’S CONSENT.  Unless it is expressly stated herein that, as
to any particular required consent, Landlord’s consent shall not be
unreasonably withheld, Landlord’s consent need be given only at Landlord’s sole
discretion.

 

47.                                 INTEREST ON AMOUNTS DUE LANDLORD.  Any installment of Base Rent, additional rent
or other charges to be paid by Tenant under the provisions of this Lease which
shall not be promptly paid when due shall bear interest at the rate of 18% per
annum from the date when the same is due until the same shall be paid, but, if
such rate exceeds the maximum

 

17

 

rate permitted by
law, such interest rate shall be reduced to the highest rate allowed by law
under such circumstances.

 

43.                                 EXECUTION BY LANDLORD.  Submission of this instrument to Tenant or
Tenant’s agents or attorneys for examination or signature does not constitute
or imply an offer to lease, reservation of space or option to lease, and this
Lease shall have no binding legal effect until execution hereof by both
Landlord and Tenant.

 

49.                                 CONTINUANCE OF AGREEMENT. This Agreement
shall be binding upon and inure for the benefit of the parties hereto and
subject to the restrictions and limitations herein contained, their respective
heirs, successors and assigns.

 

50.                                 SEVERABILITY. The provisions of this Lease
are expressly severable, and the unenforceability of any provision or
provisions hereof shall not affect or impair the enforceability of any other
provision or provisions.

 

51.                                 EXHIBITS/RIDERS. The additional provisions,
if any, set forth in the attached exhibits or riders are included herein and by
reference made a part hereof.  If there
is any conflict between the terms, conditions and provisions of this Lease and
the terms, conditions and provisions contained in any of said riders, the
terms, conditions and provisions of said riders shall control and take
precedence.  The fo1lowing riders are
attached:

 

	
  Rider

  	
   

  	
  No. of Pages

  
	
   

  	
   

  	
   

  
	
  A.  Floor Plans

  	
   

  	
  1

  
	
  B.  Landlord-provided Improvements

  	
   

  	
  1

  
	
  C.  Rider-1

  	
   

  	
  1

  
	
  D.  Rules and Regulations

  	
   

  	
  1

  
	
  E.  Brokers

  	
   

  	
  1

  

 

52.                                 WAIVER OF COVENANTS. Failure of Landlord to
insist, in any one or more instances, upon strict performance of any term,
covenant or condition of this Lease, or to exercise any option herein
contained, shall not be construed as a waiver, or a relinquishment for the
future of such term, covenant, condition or option, but the same shall continue
and remain in full force and effect.  The
receipt by Landlord of rents with knowledge of a breach in any of the terms,
covenants and conditions of this Lease to be kept or performed by Tenant shall
not be deemed a waiver of such breach, and Landlord shall not be deemed to have
waived any provision of this Lease unless expressed in writing and signed by
Landlord.

 

53.                                 NOTICES. Any notice or demand which, under
the terms of this Lease or under any statute must or may be given or made by
the parties hereto, shall be in writing and may be given or made by personal
delivery or mailing the same by certified mail, addressed to the other party at
the address hereinbelow mentioned.  Either
party, however, may designate in writing such new or other address to which
such notice or demand shall thereafter be so given, made or mailed. Any notice
given hereunder by mail shall be deemed delivered two days after depositing in
the United States mails, certified mail, return receipt requested, postage
prepaid, and addressed as herein provided:

 

18

 

	
  (a)

  	
  If to Landlord,
  at:

  	
  Managing Partner

  
	
   

  	
   

  	
  BLN Office Park

  
	
   

  	
   

  	
  2001 Killebrew
  Drive

  
	
   

  	
   

  	
  Bloomington, Minnesota
  55425

  

 

(b)                               If
to Tenant, at the Leased Premises (unless notice of change of address is given
pursuant to this section) or at the following address:

 

 

54.                                 AMENDMENTS. This Lease may be amended only
by a writing executed by both parties hereto.

 

55.                                 MISCELLANEOUS. There are no understandings
or agreements not incorporated in this Lease. 
This is a Minnesota lease and shall be construed according to the laws
of the State of Minnesota.  The Captions
in this Lease are for convenience only and are not part of this Lease.

 

IN
WITNESS WHEREOF, Landlord and Tenant respectfully have duly
signed and sealed these presents the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  BLN OFFICE PARK
  ASSOCIATES

  
	
   

  	
  AND

  
	
   

  	
  BLN OFFICE PARK
  ASSOCIATES II

  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
  Date:

  	
    2/28/95

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its Managing Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  SOUTHWEST CASINO
  AND HOTEL

  CORP.

  
	
   

  	
   

  	
   

  
	
  Date:

  	
    2/24/95

  	
   

  	
  By:

  	
  /s/ Jeffrey S. Halpern

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
  Jeffrey S. Halpern

  	
   

  
	
   

  	
  (Please Print)

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
							

 

19

 

	
  STATE OF
  MINNESOTA

  	
  )

  	
   

  
	
   

  	
  ) SS.

  	
   

  
	
  COUNTY OF
  HENNEPIN

  	
  )

  	
   

  

 

The foregoing
instrument was acknowledged before me this 28th day of Feb. 1995, by
John Kofski, the managing agent of BLN Office Park Associates or BLN Office
Park Associates II Limited Partnership, a Minnesota limited partnership.

 

	
   

  	
  /s/ Carol M.
  Evens

  
	
   

  	
  Notary Public

  

 

	
  STATE OF
  MINNESOTA       

  	
  )

  	
   

  
	
   

  	
  ) SS.

  	
   

  
	
  COUNTY OF
  HENNEPIN

  	
  )

  	
   

  

 

The foregoing
instrument was acknowledged before me this 24th day of Feb. 1995, by
Jeffrey S. Halpern, the Chairman of the Board & CEO of Southwest Casino, a
MN corp., on behalf of said corporation and Hotel Corp.

 

	
   

  	
  /s/ Janet S.
  Smith

  
	
   

  	
  Notary Public

  
	
   

  	
   

  

 

20

 

Exhibit B

 

Lease Amendment
No. 1

 

This Agreement, made this 20th day of March, 1997 by and
between BLN Office Park Associates, a Minnesota limited partnership
(“Landlord”) and Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement
of Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
April 1, 1997, the Lease be revised as follows:

 

(1)                                    Section 2,
LEASED PREMISES, of the Lease shall change.

 

After the words “those certain premises comprising approximately” in
the section labeled Leased Premises in the printed portion of the Lease,
change the rentable area from 2,208 to 1,432.

 

(2)                                    The
Tenant agrees to accept the Leased Premises outlined In Exhibit A-1 in its “as
is” condition.

 

(3)                                    In
Section 4, BASE RENT, of the Lease, delete the first paragraph in its
entirety and substitute the following:

 

The Base Rent for the Leased Premises will be paid in
accordance with the following schedule:

 

	
  Annual

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  Per SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  Including March 31, 1997

  	
   

  	
  $

  	
  35,328

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  including January 31, 1998

  	
   

  	
  $

  	
  22,912

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  

 

(4)                                    In
Section 5, CONTRIBUTION TO OPERATING COSTS of the printed portion of the
Lease paragraph (b) subsection (ii), after those words “square foot basis”
in the third line, change “.679%” to “.426%”. This change becomes effective
April 1, 1997.

 

(5)                                    Exhibit
A of the Lease shall be substituted with Exhibit A-1 effective April 1,
1997.

 

21

 

(6)                                    The
Landlord shall have the right during the month of March, 1997 to construct
minimal improvements in the Tenant’s present suite #345.

 

(7)                                    The
Landlord shall have the right to lease to Circuit City 285 square feet of space
further outlined in yellow on Exhibit A-1. The Landlord shall provide Tenant
with sixty (60) days advance written notice of its intent to acquire said space
and shall erect a demising wall at its own expense.

 

In Witness Whereof, this instrument has been duly
executed by the parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/ 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its: President

  

 

22

 

Exhibit B

 

LEASE AMENDMENT
NO. 2

 

This Agreement, made this 26th day of January, 1998 by and
between BLN Office Park Associates, a Minnesota limited partnership
(“Landlord”) and Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement
of Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 1
dated March 20, 1997, whereby the Landlord leased to the Tenant other
third floor space; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
February 1, 1998, the lease be revised as follows:

 

1.                                         Section 3,
TERM OF THE LEASE, after the words “to and including the”, in the
printed portion of the Lease change the date from “31st day of
January, 1998” to the “31st day of January, 1999.”

 

2.                                         In
reference to Article 3 of LEASE AMENDMENT NO. 1 and pertaining to BASE
RENT payable in Section 4 of the printed portion of the Lease shall be
as follows:

 

The Base Rent for the Leased Premises will be paid in
accordance with the following schedule:

 

	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  	
   

  	
   

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  Including March 31, 1997

  	
   

  	
  $

  	
  35,328.00

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  Including January 31, 1998

  	
   

  	
  $

  	
  22,912.00

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1998 through and

  Including January 31, 1999

  	
   

  	
  $

  	
  27,566.00

  	
   

  	
  $

  	
  2,297.17

  	
   

  	
  $

  	
  19.25

  

 

3.                                         EXHIBIT
C, RIDER-1 of the Lease Article 1 shall be replaced in its entirety
by the following:

 

23

 

Article 1

 

Tenant shall be provided five (5) underground garage stalls during the
term of this Lease Amendment No. 2 commencing with February 1, 1998
through and including January 31, 1999. 
The monthly charge will be $375.00 plus tax for the five (5) stalls.

 

4.                                         EXHIBIT
C, RIDER-1 of the Lease Article 2 shall be replaced in its entirety
by the following:

 

Article 2

 

The Tenant shall be provided 108 square feet of storage for the term of
this Lease Amendment No. 2.  Commencing
February 1, 1998, the monthly charge shall be $72.00.

 

In Witness Whereof, this instrument has been duly
executed by the parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/ 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its:  President

  

 

24

 

Exhibit B

 

LEASE AMENDMENT
NO. 3

 

This Agreement, made this 5th day of October, 1998 by and
between BLN Office Park Associates, a Minnesota limited partnership
(“Landlord”) and Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement
of Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 1
dated March 20, 1997, whereby the Landlord leased to the Tenant other
third floor space; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 2
dated January 26, 1998, whereby the Tenant extended the term; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
February 1, 1999, the lease be revised as follows:

 

1.                                         In
reference to Article 1 of LEASE AMENDMENT NO. 2 and Section 3, TERM
OF THE LEASE, after the words “to and including the”, in the printed
portion of the Lease change the date from “31st day of January, 1999” to the
“31st day of January, 2000.”

 

2.                                         In
reference to Article 2 of LEASE AMENDMENT NO. 3 and pertaining to BASE
RENT payable in Section 4 of the printed portion of the Lease shall be
as follows:

 

The Base Rent for the Leased Premises will be paid in accordance with
the following schedule:

 

	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  	
   

  	
   

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  including March 31, 1997

  	
   

  	
  $

  	
  35,328.00

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  including January 31, 1998

  	
   

  	
  $

  	
  22,912.00

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1998 through and

  including January 31, 2000

  	
   

  	
  $

  	
  27,566.00

  	
   

  	
  $

  	
  2,297.17

  	
   

  	
  $

  	
  19.25

  

 

25

 

3.                                         In
reference to Article 3 of LEASE AMENDMENT NO. 2 and EXHIBIT C, RIDER-1 of
the Lease Article 1 shall be replaced in its entirety by the
following:

 

Article 1

 

Tenant shall be provided four (4) underground garage stalls during the
term of this Lease Amendment No. 3 commencing with February 1, 1999
through and including January 31, 2000. 
The monthly charge will be $300.00 plus tax for the four (4) stalls.

 

4.                                         In
reference to Article 4 of LEASE AMENDMENT NO. 2 and EXHIBIT C, RIDER-1 of
the Lease Article 2 shall be replaced in its entirety by the
following:

 

Article 2

 

The Tenant shall be provided 108 square feet of storage for the term of
this Lease Amendment No. 3.  Commending
February 1, 1999, the monthly charge shall be $72.00.

 

In Witness Whereof, this instrument has been duly
executed by the parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/ 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its:  President

  

 

26

 

Exhibit B

 

LEASE AMENDMENT
NO. 4

 

This Agreement, made this 5th day of October, 1998 by and
between BLN Office Park Associates, a Minnesota limited partnership
(“Landlord”) and Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement of
Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 1
dated March 20, 1997, whereby the Landlord leased to the Tenant other
third floor space; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 2
dated January 26, 1998, whereby the Tenant extended the term; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
February 1, 1999, the lease be revised as follows:

 

1.                                         In
reference to Article 1 of LEASE AMENDMENT NO. 2 and Section 3, TERM
OF THE LEASE, after the words “to and including the”, in the printed
portion of the Lease change the date from “31st day of January, 2000” to the
“31st day of January, 2001.”

 

5.                                         In
reference to Article 2 of LEASE AMENDMENT NO. 3 and pertaining to BASE
RENT payable in Section 4 of the printed portion of the Lease shall be
as follows:

 

The Base Rent for the Leased Premises will be paid in accordance
with the following schedule:

 

	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  	
   

  	
   

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  including March 31, 1997

  	
   

  	
  $

  	
  35,328.00

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  including January 31, 1998

  	
   

  	
  $

  	
  22,912.00

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1998 through and

  including January 31, 2001

  	
   

  	
  $

  	
  27,566.00

  	
   

  	
  $

  	
  2,297.17

  	
   

  	
  $

  	
  19.25

  

 

27

 

6.                                         In
reference to Article 3 of LEASE AMENDMENT NO. 3 and EXHIBIT C, RIDER-1 of
the Lease Article1 shall be replaced in its entirety by the following:

 

Article 1

 

Tenant shall be provided four (4) underground garage stalls during the
term of this Lease Amendment No. 3 commencing with February 1, 1999
through and including January 31, 2001. 
The monthly charge will be $300.00 plus tax for the four (4) stalls.

 

In Witness Whereof, this instrument has been duly
executed by the parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/ Thomas E.
  Fox

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its:  Chief Financial Officer

  

 

28

 

Exhibit B

 

LEASE AMENDMENT
NO. 5

 

This Agreement, made this 11th day of October, 2000 BLN
Office Park Associates, a Minnesota limited partnership (“Landlord”) and
Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement
of Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 1
dated March 20, 1997, whereby the Landlord leased to the Tenant other
third floor space; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 2
dated January 26, 1998, whereby the Tenant extended the term; and

 

Whereas, the Landlord and Tenant entered into LEASE AMENDMENT NO. 3
dated October 5, 1998, whereby the Tenant extended the term; and

 

Whereas, the Landlord and Tenant entered into LEASE AMENDMENT NO. 4
dated October 20, 1999, whereby the Tenant extended the term; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
February 1, 2001, the lease be revised as follows:

 

1.                                         In
reference to Article 1 of LEASE AMENDMENT NO. 4 and Section 3, TERM
OF THE LEASE, after the words “to and including the”, in the printed
portion of the Lease change the date from “31st day of January, 2001” to the
“31st day of January, 2002.”

 

2.                                         In
reference to Article 2 of LEASE AMENDMENT NO. 4 and pertaining to BASE
RENT payable in Section 4 of the printed portion of the Lease shall be
as follows:

 

The Base Rent for the Leased Premises will be paid in
accordance with the following schedule:

 

	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  	
   

  	
   

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  including March 31, 1997

  	
   

  	
  $

  	
  35,328.00

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  including January 31, 1998

  	
   

  	
  $

  	
  22,912.00

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1998 through and

  including January 31, 2002

  	
   

  	
  $

  	
  27,566.00

  	
   

  	
  $

  	
  2,297.17

  	
   

  	
  $

  	
  19.25

  

 

29

 

In Witness Whereof, this instrument has been duly executed by the
parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/  Jeffrey S. Halpern

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its: C.E.O.

  

 

30

 

Exhibit B

 

LEASE AMENDMENT
NO. 6

 

This Agreement, made this 16th day of January, 2002 BLN
Office Park Associates, a Minnesota limited partnership (“Landlord”) and
Southwest Casino and Hotel Corp., a Minnesota Corporation.

 

Whereas, the Landlord and the Tenant entered into a written agreement
of Lease dated February 24, 1995 (herein collectively called the “Lease”),
whereby the Landlord leased to the Tenant approximately 2,208 square feet of
office space located on the third level of Phase I of the BLN Office Park, to
be used and occupied as the Tenant’s office for the transaction of its
business; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 1
dated March 20, 1997, whereby the Landlord leased to the Tenant other
third floor space; and

 

Whereas, the Landlord and the Tenant entered into LEASE AMENDMENT NO. 2
dated January 26, 1998, whereby the Tenant extended the term; and

 

Whereas, the Landlord and Tenant entered into LEASE AMENDMENT NO. 3
dated October 5, 1998, whereby the Tenant extended the term; and

 

Whereas, the Landlord and Tenant entered into LEASE AMENDMENT NO. 4
dated October 20, 1999, whereby the Tenant extended the term; and

 

Whereas, the Landlord and Tenant entered into LEASE AMENDMENT NO. 5
dated October 11, 2000, whereby the Tenant extended the term; and

 

Now therefore, in consideration of the Leased Premises and of the
mutual agreement hereinafter set forth, it is mutually agreed that effective
February 1, 2002, the lease be revised as follows:

 

3.                                         In
reference to Article 1 of LEASE AMENDMENT NO. 5 and Section 3, TERM
OF THE LEASE, after the words “to and including the”, in the printed
portion of the Lease change the date from “31st day of January, 2002” to the
“31st day of January, 2005.”

 

4.                                         In
reference to Article 2 of LEASE AMENDMENT NO. 5 and pertaining to BASE
RENT payable in Section 4 of the printed portion of the Lease shall be
as follows:

 

The Base Rent for the Leased Premises will be paid in
accordance with the following schedule:

 

31

 

	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Rate

  	
   

  	
   

  
	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  SF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1995 through and

  including March 31, 1997

  	
   

  	
  $

  	
  35,328.00

  	
   

  	
  $

  	
  2,944.00

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1,
  1997 through and

  including January 31, 1998

  	
   

  	
  $

  	
  22,912.00

  	
   

  	
  $

  	
  1,909.33

  	
   

  	
  $

  	
  16.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  February 1,
  1998 through and

  including January 31, 2005

  	
   

  	
  $

  	
  27,566.00

  	
   

  	
  $

  	
  2,297.17

  	
   

  	
  $

  	
  19.25

  

 

In Witness Whereof, this instrument has been duly executed by the
parties hereto as of the day and year first written above.

 

	
  Landlord:

  	
  Tenant:

  
	
  BLN Office Park
  Associates

  	
  Southwest Casino
  and Hotel Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  /s/ Thomas E.
  Fox

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:  Managing Agent

  	
  Its:  CFO

  

 

32

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]