Document:

Exhibit 10.4

 

JOINT
OPERATING LICENSE AGREEMENT

 

This Joint Operating
License Agreement is dated as of March 10, 2004 and is made and entered into by
and among SPEAKEASY GAMING OF FREMONT, INC., a Nevada  corporation, or its successors and assigns (“Speakeasy”),
whose address is 3227 Civic Center Drive, North Las Vegas, Nevada 89030 and
HHLV MANAGEMENT COMPANY, LLC, a Nevada limited liability company, or its
successors and assigns (“HHLV”), whose address is One Harrah’s Court,
Las Vegas, Nevada 89119.

 

RECITALS

 

A.                                   Speakeasy
recently acquired the hotel, parking facility and accessory buildings and
facilities commonly known as the Binion’s Horseshoe Hotel and Casino located at
128 East Fremont Street in Las Vegas, Nevada commonly described by the
following assessor’s parcel numbers: 139-34-111-014, 139-34-111-019,
139-34-111-020, 139-34-111-021, 139-34-111-022, 139-34-111-023, 139-34-111-024,
139-34-111-025, 139-34-111-026, 139-34-510-001, 139-34-510-002, 139-34-510-003,
139-34-510-004, 139-34-510-012, 139-34-510-013, 139-27-310-094, 139-27-310-095
and 139-27-705-003 and the assets acquired by Speakeasy pursuant to the
Horseshoe Transfer Documents (the “Project”) pursuant to a Purchase and
Sale Agreement with Harrah’s Operating Company, Inc. (“HOCI”), an
affiliate of HHLV, dated as of February 6, 2004 (the “Purchase and Sale
Agreement”).  From and after the
Effective Date, neither HOCI nor HHLV shall have any ownership interest in the
Project except as set forth herein and in the Horseshoe Transfer Documents (as defined
in the Purchase and Sale Agreement).

 

B.                                     The
Project is currently closed.

 

C.                                     Both
HHLV and Speakeasy, or their Affiliates, are experienced in the operation of
hotels and gaming facilities.

 

D.                                    The
parties collectively desire to re-open the Project for business so that the
employees who previously were employed at the Project may regain employment.

 

E.                                      Prior
to or concurrently with the Effective Date, Speakeasy and HHLV were granted a
license to operate the Project by the Nevada Gaming Authorities.  HHLV shall be a “key employee” (as such term
is defined in the Nevada Gaming Act) of the Project during the Term.  The parties have jointly determined that it
would be expedient to have HHLV serve as the primary day-to-day operator of the
Project on an interim basis, subject to certain oversight and review of the
Committee, immediately upon execution of this Agreement.

 

F.                                      Subject
to the terms and conditions set forth below, it is in the mutual best interests
of the parties to jointly operate the Project through HHLV for a period ending
on the Termination Date, with Speakeasy assuming sole operating responsibility
for operating the Project thereafter.

 

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the mutual promises contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this Agreement, the
parties stipulate and agree as follows:

 

ARTICLE I.

RECITALS AND DEFINITIONS

 

1.01                           Definitions.  The following defined terms are used in this
Agreement:

 

“Adjusted EBITDA”
shall mean EBITDA plus Speakeasy’s Remittance Amount (to the extent deducted in
determining EBITDA for such period) paid during the period for which Adjusted
EBITDA is being calculated.

 

“Affiliate” shall
mean, when used with reference to a specific Person:

 

(i)                                     
any Person who is an officer, partner, manager, member or trustee of, or serves
in a similar capacity with respect to, the specified Person;

 

(ii)                                  
any partnership, limited liability company, corporation, trust or other entity
of which the specified Person is a partner, officer, manager, member, trustee
or serves in a similar capacity or is directly or indirectly the owner of a
partnership interest, limited liability company interest, any portion of a
class of equity securities (in the case of publicly held securities, any
portion of a class of such securities aggregating at least five percent (5%) of
such securities), or in which such Person has a beneficial interest;

 

(iii)                               any
Person (or any officer, partner, manager, member or trustee, or, one who serves
in a similar capacity with respect to such Person) that directly or indirectly
through one or more intermediaries Controls or is Controlled by or under common
Control with such specified Person; and/or

 

(iv)                              when
used in reference to any of the parties hereto, any Person that directly or
indirectly through one or more intermediaries Controls or is Controlled by or
is under common Control with any one or more of the beneficial owners of such
party hereto.

 

“Agreement” shall
mean this Joint Operating License Agreement as originally executed and as
amended, modified, supplemented, or restated from time to time, as the context
may require.

 

“Award” is defined
in Section 8.01.

 

“Bank Accounts” is
defined in Section 3.06(c).

 

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“Bankroll” shall
mean an amount reasonably determined by HHLV as funding required to bankroll
Gaming Activities, but in no case less than the amount required by the
applicable gaming law.  Bankroll shall
include the funds located in the gaming devices, cages, vault, counting rooms,
or in any other location at the Project where funds may be found or such other
amount as is reasonably determined by HHLV.

 

“Blackout Period”
is defined in Section 6.01.

 

“Business Days”
shall mean all weekdays except those that are official holidays of the State of
Nevada or the United States government. 
Unless specifically stated as “Business Days,” a reference in this Agreement
to “days” means calendar days.

 

“Capital Expenses”
shall mean actual expenses incurred that are treated as capital expenses under
generally accepted accounting principles, including without limitation, costs
of buildings, furniture, equipment, fixtures, landscaping and parking areas,
but excluding capitalized interest.

 

“Capital Replacements”
shall mean any items, the cost of which is capitalized and depreciated, rather
than expensed, using generally accepted accounting principles as shall be
required to operate the applicable portion of the Project in accordance with
sound business practices.

 

“Casino Operational
Standards” shall mean those standards and policies in effect at the Project
as of January 1, 2004, subject to any adjustments deemed necessary by HHLV
in its sole discretion from time to time to adapt to the local gaming market or
otherwise as necessary for the efficient and successful operation of the
Project.

 

“Committee” shall
consist of the Speakeasy Representative and the HHLV Representative.

 

 “Control” shall mean the ability,
whether by the direct or indirect ownership of an equity interest, by contract
or otherwise, to:

 

(i)                                     in
the case of a corporation, elect a majority of the directors of a corporation;

 

(ii)                                  in
the case of a partnership, select the managing partner of a partnership, or
direct the votes of the partner or partners with authority to make decisions on
behalf of the partnership;

 

(iii)                               in
the case of a limited partnership, select or direct the votes of the sole
general partner, all of the general partners to the extent that each has
management control and authority, or the managing general partner or managing
general partners thereof;

 

(iv)                              in
the case of a limited liability company, select or direct the votes of the
managing member(s) or manager(s) thereof; and

 

(v)                                 otherwise,
to select, or to remove and select, a majority of those Persons exercising
governing authority over an entity.

 

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“Controls” and “Controlled”
shall have correlative meanings to “Control.”

 

“EBITDA” shall
have the meaning given such term in the Purchase and Sale Agreement.

 

“Effective Date”
is defined in Section 2.03.

 

“Emergency Condition”
is a condition of an emergency nature, including, without limitation,
maintenance, replacements or repairs which require immediate action to preserve
and protect the Project, assure its continued operation, and/or protect the
comfort, health, safety and/or welfare of the Project’s guests or employees.

 

“Environmental
Laws” means all foreign, federal, state and local statutes or laws, common
law, judgments, orders, regulations, licenses, permits, rules and ordinances
relating to pollution or protection of health, safety or the environment
(including air, water, soil or natural resources), or the generation,
treatment, manufacturing, use, storage, handling, recycling, presence, release,
disposal, transportation or shipment of any Hazardous Material, including, but
not limited to, the Federal Water Pollution Control Act (33 U.S.C. §1251 et
seq.), Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.),
Safe Drinking Water Act (42 U.S.C. §3000(f) et seq.), Toxic Substances
Control Act (15 U.S.C. §2601 et seq.), Clean Air Act (42 U.S.C. §7401 et
seq.), Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. §9601 et seq.) and other similar state and local statutes, in
effect as of the date hereof.

 

“Event of Default”
shall mean either an HHLV Event of Default or a Speakeasy Event of Default, as
the context requires.

 

“Event of Force
Majeure” shall mean events beyond the reasonable control of the parties,
and include events caused by acts of God, acts of war, terrorist attack, civil
commotions, riots, strikes, lockouts, acts of government in either its
sovereign or contractual capacity, perturbation in telecommunications
transmissions, inability to obtain suitable labor or materials, accident, fire,
water damages, flood, earthquake, or other natural catastrophes.

 

“First Extension Term”
is defined in Section 2.3(a).

 

“Games” shall mean
slot machines, table games and any other form of wagering that may be
authorized from time to time at the Project by applicable law and the Nevada
Gaming Authorities.

 

“Gaming Activities”
shall mean Games managed by HHLV at the Project.

 

“Gaming Revenue”
shall mean all of the revenue from the operation of the Games at the Project.

 

“Gaming Taxes”
shall mean any tax imposed by the Nevada Gaming Authorities on Gross Gaming
Revenue.

 

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“Gross Gaming Revenue”
shall mean all of the revenue from the operation of Games at the Project.

 

“Gross Revenue”
shall mean all of the revenues resulting from the operation of the Project.

 

“Guaranteed HHLV
Obligations” is defined in Section 19.02.

 

“Guaranteed Speakeasy
Obligations” is defined in Section 19.01

 

“Harrah’s System Marks”
is defined in Section 5.04.

 

“Hazardous Material”
shall mean any substance or material (including without limitation PCBs) if
defined or designated as a hazardous or toxic substance, or other similar term,
by any federal, state or local law, statute, regulation, or ordinance affecting
the Project.

 

“HEI” shall mean
Harrah’s Entertainment, Inc., a Delaware corporation.

 

“HHLV” is defined
in the preamble.

 

“HHLV Event of Default”
is defined in Section 14.01.

 

“HHLV Representative”
is defined in Section 2.01(b).

 

“HHLV’s Advances”
is defined in Section 3.07.

 

“HHLV’s Chips and
Tokens” shall mean the gaming chips and tokens used with respect to casino
operations at the Project during the Term, (a) including all (i) slot machine
tokens not currently in circulation and (ii) “reserve” chips, if any, not
currently in circulation and (b) excluding the WSOP Chips (as defined in the
Purchase and Sale Agreement).

 

“HHLV’s Proprietary
Information and Systems” is defined in Section 4.02.

 

“HHLV’s Senior
Management Team” is defined in Section 3.05(e).

 

“HOCI” is defined
in the recitals.

 

“Horseshoe System
Marks” is defined in Section 5.04.

 

“House Funds”
means all cash and cash equivalents located at the Project, including, without
limitation, the Bankroll, cash, negotiable instruments, and other cash
equivalents located in cages, drop boxes, slot machines and other gaming
devices, cash on hand for the Project manager’s petty cash fund and cashiers’
banks, coins and slot hoppers, carousels, slot vault and poker bank.

 

“Impositions” is
defined in Section 5.01.

 

5

 

“Initial Term” is
defined in Section 2.03.

 

“Intellectual Property
License Agreement” means that certain Intellectual Property License
Agreement by and between HHLV and Speakeasy dated as of the date hereof.

 

“Nevada Gaming Act”
shall mean the Nevada Gaming Control Act and various regulations promulgated
from time to time by the Nevada Gaming Authorities.

 

“Nevada Gaming
Authorities” shall mean the Nevada Gaming Control Board, the City of Las
Vegas and the Nevada Gaming Commission or any successor governmental
authorities established by the State of Nevada or the City of Las Vegas to
regulate any of the Gaming Activities at the Project.

 

“Operating Capital”
shall mean such amount in the Bank Accounts as will be reasonably sufficient to
assure the timely payment of all current liabilities of the Project, including
its operations, during the term of this Agreement, and to permit HHLV to
perform its operating responsibilities and obligations hereunder, with
reasonable reserves for unanticipated contingencies and for short term business
fluctuations resulting from monthly variations.

 

“Operating Contracts”
means all service contracts, equipment leases, billboard leases, software
license agreements, sign leases, real property leases and other contracts
affecting the Project, including without limitation the contracts listed on Exhibit
A hereto, prepared pursuant to Section 4.6 of the Purchase and Sale
Agreement.

 

“Operating Expenses”
shall mean actual expenses incurred following the Effective Date in operating
the Project, and any other amounts due to HHLV pursuant to this Agreement and
the portion of the following expenses allocable to the Project: accounting,
maintenance, marketing, Promotional 
Allowance, employee training, compensation and entitlements,
inventories, Gaming Taxes, employee compensation and entitlements for
Speakeasy’s employees, the costs of providing Operating Supplies, common area
expenses, fuel, utilities, taxes and audit costs.

 

“Operating Supplies”
shall mean gaming supplies, paper supplies, cleaning materials, marketing
materials, maintenance supplies, uniforms and all other materials used in the
operation of the Project.

 

“Operations Settlement”
means a final accounting, as of the Transfer Time, prepared by HHLV’s
accountants and reviewed by Speakeasy’s accountants in the period between
11:59 p.m. on the Termination Date and twelve o’clock noon on the day
immediately following the Termination Date, the results of which shall be
incorporated into a written operations settlement statement which shall be
executed by HHLV and Speakeasy.

 

“Permanent Taking”
is defined in Section 8.01.

 

6

 

“Person” shall
mean any individual, partnership, limited partnership, limited liability
company, corporation, unincorporated association, joint venture, trust
generated entity or other entity.

 

“Post-Termination Tax
Period” means any Tax Period beginning after the Termination Date and that
portion of any Straddle Period beginning after the Termination Date.

 

“Pre-Termination Tax
Period” means any tax period ending on or before the Termination Date and
that portion of any Straddle Period ending on the Termination Date.

 

“Project” is
defined in the recitals.

 

“Project Operating Fee”
is defined in Section 4.01(a).

 

“Promotional
Allowances” are goods and services, such as complimentary rooms, food,
beverages, entertainment and parking, given to customers of the Project as an
inducement to gamble at the Project.

 

“Property Taxes”
is defined in Section 9.01(a).

 

“Purchase and Sale
Agreement” is defined in the recitals.

 

“Redemption Period”
is defined in Section 9.05(e).

 

“Redemption Plan”
is defined in Section 9.05(e).

 

“Room Revenues”
means all revenues from the rental of guest rooms at the Project, together with
any sales or other taxes thereon.

 

“Second Extension Term”
is defined in Section 2.03(b).

 

“Speakeasy” is
defined in the preamble.

 

“Speakeasy Parent”
is defined in Section 13.03(b)(ii).

 

“Speakeasy Event of
Default” is defined in Section 14.01.

 

“Speakeasy
Representative” is defined in Section 2.01(a).

 

“Speakeasy’s
Remittance Amount” is defined in Section 4.04.

 

“Straddle Period”
means any tax period beginning before the Termination Date and ending after the
Termination Date.

 

7

 

“System Marks”
shall mean Harrah’s System Marks and Horseshoe System Marks, collectively.

 

“Taking Date” is
defined in Section 8.01.

 

“Temporary Taking”
is defined in Section 8.01.

 

 “Term” shall mean, collectively, the
Initial Term and to the extent options to extend the Initial Term are exercised
by HHLV pursuant to Section 2.03, the First Extension Term, the Second
Extension Term and the Third Extension Term.

 

“Termination Date”
is defined in Section 2.03.

 

“Termination Statement”
is defined in Section 9.01.

 

“Third Extension Term”
is defined in Section 2.03(c).

 

“Transfer Time”
means 11:59:59 p.m., Las Vegas, Nevada Time, on the Termination Date.

 

“Tray Ledger”  means any accounts receivable of registered
guests who have not checked out and who are occupying rooms at the Project on
the evening of the Termination Date.

 

“Union Agreements”
shall mean (a) that certain Labor Agreement dated July 30, 2003 between
Horseshoe Club Operating Company, d/b/a Horseshoe Hotel and Casino and
International Union of Operating Engineers, Local No. 501, including its
subordinate branches, A.F.L.-C.I.O. and (b) that certain Collective Bargaining
Agreement dated as of June 1, 2002 between Horseshoe Operating Company,
d/b/a Horseshoe Hotel and Casino and the Local Joint Executive Board of Las
Vegas, for and on behalf of Culinary Workers Union, Local No. 226 and
Bartenders Union, Local No. 165.

 

ARTICLE II.

COMMITTEE/GRANT OF LICENSE/TERM

 

2.01                           Committee.

 

(a)                                  Speakeasy Representative.                                                 Speakeasy hereby designates Roger
Szepelak the authorized representative of Speakeasy (the “Speakeasy Representative”).  Speakeasy may at any time, and from time to
time, substitute a new Speakeasy Representative by prior written notice to
HHLV.

 

(b)                                 HHLV Representative. 
HHLV hereby designates Wade Faul the authorized representative of HHLV
(the “HHLV Representative”). 
HHLV may at any time, and from time to time, substitute a new HHLV
Representative by prior written notice to Speakeasy.

 

8

 

(c)                                  Meetings of Committee. 
Except as specifically otherwise provided herein, the Committee’s
approval to take any action shall be by the vote of the Speakeasy
Representative and the HHLV Representative at a meeting, which meeting may be
held by telephone, in person or by proxy or without a meeting by unanimous
written consent.

 

(d)                                 Action By Written Consent. 
Any action may be taken by the Committee without a meeting if authorized
by the unanimous written consent of the Speakeasy Representative and the HHLV
Representative.

 

(e)                                  Place of Meetings of Committee. 
All meetings of the Committee shall be held at any place designated by
unanimous written consent of the Committee, or, if no such place is designated,
then at the Project.  Meetings may be
held by telephone if designated in the notice of the meeting.

 

(f)                                    Meetings. 
Meetings of the Committee, for any purpose or purposes whatsoever, may
be called at any time by either the Speakeasy Representative or the HHLV
Representative.  Notice of meetings
shall be given, either personally or by mail or other means of written communication,
charges prepaid, addressed to the Speakeasy Representative and the HHLV
Representative at their address appearing in Article XVI. All such notices
shall be sent to each of Speakeasy Representative and HHLV Representative no
less than three (3) nor more than twenty (20) Business Days before the special
meeting day.  Notices of any special
meeting shall specify, in addition to the place, day and hour of such meetings
the purpose or purposes for which the meeting is called.

 

2.02                           Grant
of License.  Subject to
Article XV, Speakeasy hereby grants an exclusive, irrevocable license to
HHLV (a) to operate the Project under the name “Binion’s Horseshoe” during the
Term, upon the terms and conditions set forth herein and (b) to use the
“Binion’s Marks” (as such term is defined in the Intellectual Property License
Agreement) at the Project during the Term, upon the terms and conditions set
forth herein.  HHLV hereby accepts such
license and undertakes to operate the Project upon the terms and conditions
hereinafter set forth.  Either the HHLV
Representative or the Speakeasy Representative may make a proposal to the
Committee regarding the future outsourcing of food and beverage services at the
Project.

 

2.03                           Term.  This Agreement shall be effective upon
mutual execution by the parties hereto (“Effective Date”).  Unless earlier terminated pursuant to
Section 15.01, the initial term of this Agreement shall commence upon the
Effective Date and shall terminate on the date (the “Termination Date”)
that is twelve (12) months after the Effective Date (the “Initial Term”);
provided, however that, so long as no HHLV Event of Default has occurred and is
continuing, HHLV shall have three (3) options to extend the Term as follows:

 

9

 

(a)  HHLV may, by providing written notice to
Speakeasy not later than one hundred twenty (120) days prior to the end of the
Initial Term, extend the Initial Term by twelve (12) months (such portion of
the Term, the “First Extension Term”),

 

(b) HHLV may, by
providing written notice to Speakeasy not later six (6) months prior to the end
of the First Extension Term, further extend the term of this Agreement for an
additional six (6) months (such portion of the Term, the “Second Extension
Term”), and

 

(c) HHLV may, by
providing written notice to Speakeasy not later than the first day of the
Second Extension Term, further extend the term of this Agreement for an
additional six (6) months (such portion of the Term, the “Third Extension
Term”).

 

ARTICLE III.

OPERATIONS

 

3.01                           Accounting
Procedures and Services Books and Records. 
HHLV shall maintain a complete accounting system in connection with the
operation of the Project.  The books and
records shall be kept in accordance with generally accepted accounting
principles and in accordance with federal tax laws.  Such books and records shall be kept on a calendar year
basis.  Books and accounts shall be
maintained at the Project, at HHLV’s corporate headquarters, or such other
location(s) as may be reasonably determined by HHLV.  HHLV shall prepare and provide all required reports under the
rules and regulations of the Nevada Gaming Authorities regarding the operations
of the Project.  All Bank Accounts shall
be maintained in the State of Nevada or such other location(s) as may be
reasonably determined by HHLV.

 

3.02                           Access
to Records.  HHLV shall at all times
have access to and the right to copy Speakeasy’s books and records relating
solely to the Project.  Speakeasy shall
at all times have access to and the right to copy HHLV’s books and records
relating solely to the Project.  Such
access shall be conditioned upon reasonable advance notice and shall be
conducted in a manner that does not unreasonably interfere with the operations
of the business of any party hereto or the operation of the Project.

 

3.03                           Financial
Statements; Gross Revenue Reports.

 

(a)                                  In accordance with the regular
reporting practices of HHLV and its Affiliates, on a monthly basis HHLV shall
prepare an unaudited operating statement for the preceding calendar month
detailing the Gross Revenue and expenses incurred in the operation of the
Project and an unaudited balance sheet. 
HHLV shall provide Speakeasy with a copy of such reports during the Term
of this Agreement.

 

(b)                                 On a monthly basis during the Term,
HHLV shall provide copies of the gross revenue reports (forms NGC-1 and NGC-31)
that were filed with the Nevada Gaming Authorities in respect of the Project.

 

10

 

3.04                           Expenses.  All costs, expenses, funding or operating
deficits and Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred during the Term due to the
gaming and non-gaming operations of the Project (including without limitation
all real property and personal property leases necessary for continued
operation of the Project) shall be the financial responsibility of HHLV.

 

3.05                           Standards;
Operation of the Project; Employees

 

(a)                                  HHLV shall exclusively operate and
maintain the Project in compliance with the Casino Operational Standards.  HHLV shall establish the Casino Operational
standards and procedures in its sole discretion, subject only to standards and
procedures required by law.

 

(b)                                 Unless an HHLV Event of Default
occurs and is continuing, Speakeasy hereby agrees that (i) HHLV shall have
uninterrupted control of and the exclusive responsibility for the operation of
the Project during the Term and (ii) Speakeasy will not interfere or involve
itself with the day-to-day operation of the Project, and (iii) HHLV shall
operate the Project free of eviction or disturbance by Speakeasy or any third
party claiming by, through or under Speakeasy.

 

(c)                                  HHLV shall perform its obligations
under this Agreement in good faith.  In
no event shall Speakeasy make any claim against HHLV on account of, nor shall
HHLV be liable for, any alleged errors of judgment made in good faith in
connection with the operation of the Project.

 

(d)                                 Speakeasy and HHLV shall comply with
any applicable requirements of the Union Agreements regarding hiring of
employees for the Project.  Speakeasy
shall be the employer of persons employed in connection with the operation of
the Project (other than HHLV’s Senior Management Team).  Speakeasy shall provide such employees either
benefits (i) substantially similar to, and in any case providing no less
coverage than, those benefits set forth under the headings “Binion’s Horseshoe”
and “Colonial Supplemental Insurance” on Exhibit B attached hereto, (ii)
substantially similar to, and in any case no more costly to HHLV than, those
benefits set forth under the heading “MTR Gaming” on Exhibit B attached
hereto, or (iii) as agreed by the Committee from time to time.   HHLV shall determine the fitness and qualifications of all employees,
whether employees of Speakeasy or HHLV, subject only to Nevada gaming licensing
standards.  HHLV shall hire, supervise,
direct the work of, and discharge all personnel working in the Project.  HHLV shall determine the wages and
conditions of employment of all employees. 
During the Term, HHLV shall have the right to negotiate, obtain, and act
as the plan administrator for, any and all benefits programs, including without
limitation, health and pension benefits of all persons employed in connection
with the operation of the Project.  HHLV
may hire consultants or independent contractors.  All wages, bonuses, compensation, benefits, termination or
severance expenses or liabilities, pension fund contribution obligations

 

11

 

or
liabilities, and other costs, benefits, expenses or liabilities and
entitlements of or in connection with employees employed in connection with the
Project during the Term shall be paid by HHLV as an Operating Expense.

 

(e)                                  HHLV shall initially assign the
executives listed on Exhibit C hereto to direct and supervise the
operation of the Project on a full time basis (“HHLV’s Senior Management
Team”).  HHLV shall have sole
discretion to select individuals who shall collectively comprise HHLV’s Senior
Management Team.  HHLV’s Senior
Management Team shall be employed by HHLV. 
At the end of the Term, all members of HHLV’s Senior Management Team
shall be relocated off of the Project, and at HHLV’s option, such members of
HHLV’s Senior Management Team may remain employees of HHLV; provided, however,
that nothing shall preclude Speakeasy from making an offer of employment (which
employment shall commence after the Term) to any of HHLV’s Senior Management
Team, and from such employees accepting or declining such offer in their sole
discretion.  HHLV and its Affiliates
shall be free to employ any of HHLV’s Senior Management Team after the end of
the Term.

 

(f)                                    HHLV may, at its option, use HHLV’s
Proprietary Information and Systems (including, without limitation, Harrah’s
Total Rewards II player loyalty program) in connection with the operation of
the Project; provided, however that while HHLV may use Harrah’s Total Rewards
II player loyalty program to collect customer information and may use such information
in its marketing efforts, HHLV shall not deploy Total Rewards II Kiosks at the
Project and shall not reconfigure the Project’s hardware or software to
accommodate the Harrah’s Total Rewards frequent player award program.

 

(g)                                 HHLV shall not, without the prior
approval of the Committee, offer cash back awards in connection with Harrah’s
Total Rewards II player loyalty program which are redeemable at the Project
after the Termination Date.

 

3.06                           Operating
Policies and Bank Accounts.

 

(a)                                  HHLV shall have the discretion and
authority to determine operating policies and procedures, standards of
operation, staffing levels and organization, win-payment arrangements,
standards of service and maintenance, food and beverage quality and service,
pricing, and other policies affecting the Project, or the operation thereof,
including, but not limited to, admissions and parking, to implement all such
policies and procedures, and to perform any act on behalf of Speakeasy which
HHLV deems necessary or desirable in its good faith business judgment for the
operation and maintenance of the Project on behalf of, for the account of, and
at the expense of Speakeasy.

 

(b)                                 Concurrently herewith, HHLV has
established the Bankroll and funded the Bankroll.

 

12

 

(c)                                  HHLV shall establish one or more
bank accounts for the Project at banking institutions chosen by HHLV (such
account or accounts are hereinafter collectively referred to as the “Bank
Accounts”).  The Bank Accounts shall
be in HHLV’s name and owned by HHLV. 
Checks drawn on the Bank Accounts shall be signed only by designees of
HHLV, and HHLV’s designees shall be the only authorized signators on checks
drawn on the Bank Accounts.  HHLV may
transfer funds from and among the Bank Accounts.  The Bankroll shall be deposited in the Bank Accounts.

 

3.07                           HHLV’s
Advances.  HHLV shall advance, on a
timely and prompt basis, immediately available funds to conduct the affairs of
the Project and maintain the Project (hereinafter referred to as “HHLV’s
Advances”) as set forth in this Agreement and as otherwise provided
hereunder.

 

(a)                                  Initial Cash Needs of Project. 
HHLV shall fund the Operating Capital necessary to operate the Project
and an amount equal to the Bankroll.

 

(b)                                 Operating Capital. 
During the remaining Term of this Agreement, HHLV shall fund HHLV’s
Advances in such a fashion so as to adequately ensure that the Operating
Capital is sufficient to support the uninterrupted and efficient ongoing
operation of the Project.

 

(c)                                  Payment of Expenses. 
HHLV shall pay from the Gross Revenue and may withdraw funds from the
Bank Accounts for the following items in the order of priority listed below,
subject to the laws of the State of Nevada, on or before their applicable due
date:

 

(i)                                     Operating
Expenses;

 

(ii)                                  any
Capital Expenses or Capital Replacements to the extent of HHLV’s responsibility
therefor pursuant to Article VI; and

 

(iii)                               required
payments to the State of Nevada.

 

In the event that funds
are not available for payment of the Operating Expenses in their entirety, all
state and local taxes shall be paid first from the available funds.

 

3.08                           Cooperation
of Speakeasy and HHLV.  Speakeasy
and HHLV shall cooperate fully with each other during the Term to procure and
maintain all operating permits and to facilitate each party’s performance of
this Agreement.  Speakeasy shall provide
HHLV with such information pertaining to the Project as is necessary to the
performance by HHLV of its obligations hereunder and as may be reasonably requested
by HHLV from time to time.

 

13

 

3.09                           Marketing
Efforts.

 

(a)                                  Speakeasy
acknowledges that HHLV and/or its Affiliates operate other gaming facilities
and may in the future operate additional gaming facilities in different areas
of the world, and that marketing efforts may cross over in the same markets and
with respect to the same potential customer base.

 

(b)                                 At
any time during or after the Term, HHLV may refer customers of the Project and
other parties to other facilities operated by Affiliates of HHLV to utilize
gaming, entertainment and other amenities, without payment of any fees to
Speakeasy.  Speakeasy consents to such
activities and agrees that such activities will not constitute a conflict of
interest.

 

(c)                                  Speakeasy
acknowledges and agrees that, during the Term, HHLV may distribute promotional
materials for HHLV’s Affiliates and facilities, including casinos, at the
Project.

 

(d)                                 Although
Speakeasy and/or its Affiliates operate other gaming facilities and may in the
future operate additional gaming facilities in different areas of the world,
Speakeasy shall not, during the Term, (i) refer customers of the Project to
such other facilities or (ii) distribute promotional materials for Speakeasy’s
Affiliates and facilities, including casinos, at the Project; provided that
nothing shall preclude Speakeasy from marketing to those individuals who
otherwise were customers of Speakeasy or its Affiliates, so long as such
marketing shall not be conducted at the Project during the Term.

 

(e)                                  Either
HHLV or Speakeasy and/or their Affiliates in the future may acquire an interest
or operate other casinos, including, without limitation, any similar or
competitive gaming operation, without the written approval of Speakeasy or the
members of Speakeasy.

 

3.10                           Relationship
Between the Parties.  The
relationship between the parties hereto shall be that of independent
contractors.  Nothing herein contained
shall be deemed or construed to render the parties hereto partners, principal
and agent, joint venturers, landlord/tenant or any relationship other than that
of independent contractors.  In no event
shall HHLV be deemed in breach of its duties hereunder solely by reason of (i) the
failure of the financial performance of the Project to meet Speakeasy
expectations or income projections, (ii) the acts of Project employees,
(iii) the institution of litigation or the entry of judgments against
Speakeasy or the Project with respect to Project operations, or (iv) any
other acts or omissions not otherwise constituting a breach of this Agreement,
it being the intention and agreement of the parties that HHLV’s sole obligation
hereunder shall be to act in conformity with the standard set forth in
Section 3.06(c) and the express terms and provisions of this Agreement.

 

3.11                           Affiliate
Transactions.  The fact that HHLV or
an Affiliate thereof, or a stockholder, director, officer, member, or employee
of HHLV or an Affiliate thereof, is employed by, or is directly or indirectly
interested in or connected with, any Person which may be employed at the
Project to render or perform a service, or from which HHLV may purchase any
property, shall not prohibit HHLV from employing such Person or otherwise
dealing with such Person.

 

14

 

3.12                           Inventory.  Within sixty (60) days after the Effective
Date, HHLV shall use commercially reasonable efforts to prepare and deliver to
Speakeasy an inventory as of the Effective Date of the linens and employee
uniforms at the Project.

 

3.13                           Statue
of Benny Binion.  Neither party
shall disturb the statue of Benny Binion, currently located on the north-east
corner of Ogden Street and Casino Center Boulevard in Las Vegas, Nevada,
without the prior consent of the Committee.

 

3.14                           Operating
Contracts.  HHLV may enter into any
amendment or modification of any Operating Contract that is terminable by
Speakeasy at the end of the Term (so long as after any such amendment, such
Operating Contract remains terminable by Speakeasy at the end of the
Term).  HHLV may enter into any
non-material amendment or modification to any Operating Contract that is not
terminable by Speakeasy at the end of the Term; provided, however, that unless
otherwise approved by the Committee, HHLV shall not enter into any material
amendment or modification to any Operating Contract that is not terminable by
Speakeasy at the end of the Term.  HHLV
may enter into any new Operating Contract provided that such Operating Contract
is terminable by Speakeasy at the end of the Term.

 

3.15                           Going
Dark.  During the Term, unless
otherwise agreed by the Committee, HHLV shall not cease operating the Project
in the ordinary course of business, except due to Events of Force Majeure.

 

ARTICLE IV.

PROJECT OPERATING FEE

 

4.01                           Project
Operating Fee.  HHLV shall be
entitled to retain the Gross Revenue less Operating Expenses and less
Speakeasy’s Remittance Amount as a project operating fee (the “Project
Operating Fee”).

 

4.02                           HHLV’s
Proprietary Information and Systems

 

(a)                                  Speakeasy agrees that HHLV has the
sole and exclusive right, title and ownership to:

 

(i)                                     certain
proprietary information, techniques and methods of (A) operating gaming
businesses, (B) designing games used in gaming businesses, and (C) training
employees in the gaming business (excluding, with respect to clauses (A), (B)
and (C), any such information, techniques and methods that are available in the
public domain or are industry standard practices); and

 

(ii)                                  certain
proprietary business plans, projections and marketing, advertising and
promotion plans, strategies, and systems, including, but not limited to, the
items listed on Exhibit D attached hereto and by this reference
incorporated

 

15

 

herein, all of
which have been developed and/or acquired over many years through the
expenditure of time, money and effort and which HHLV and its Affiliates
maintain as confidential and as a trade secret(s) (collectively items (i)-(iv),
the “HHLV’s Proprietary Information and Systems”).

 

(b)                                 Speakeasy further agrees to maintain
the confidentiality of such HHLV’s Proprietary Information and Systems, and
upon the termination of this Agreement, to return same to HHLV, including, but
not limited to, documents, notes, memoranda, lists, computer programs and any
summaries of such HHLV’s Proprietary Information and Systems, but excluding any
HHLV’s Proprietary Information and Systems which Speakeasy may retain pursuant
to the express terms of this Agreement. 
HHLV’s Proprietary Information and Systems specifically excludes any
information or documents otherwise falling within Section 4.02(a)(i)-(iv)
above, if same is prepared, designed or created solely for the use and benefit
of the Project.  Speakeasy agrees that
upon termination of this Agreement, HHLV shall retain the database relating to
customers’ activities at the Project, including all customer information
gathered in connection with the Harrah’s Total Rewards II card or successor
Player Rewards Program, and shall be entitled to use any of the customer or
other information gathered by HHLV in connection with this Agreement or such
programs.  Upon termination of this
Agreement, HHLV agrees to provide Speakeasy with one copy of all customer data
bases, customer lists and all historical records of customers of the Project,
but not with respect to any of HHLV’s or its Affiliates’ other casino
properties.  Speakeasy and HHLV shall be
co-owners of, and shall have the right to use, such customer data bases,
customer lists and historical records in connection with its marketing and
loyalty programs.

 

(c)                                  Speakeasy shall acquire no rights in
any such proprietary systems, and they may be removed at any time from the
Project by HEI, without recourse.

 

4.03                           Payments
to HHLV upon Termination.  On the
Termination Date, HHLV may pay itself from any Project funds all accrued and
unpaid amounts due under this Agreement, including without limitation, the
Project Operating Fee.

 

4.04                           Speakeasy’s
Remittance Amount.  On the first
Business Day of each month during the Term, HHLV shall pay Speakeasy as
follows: (a) the amount of Two Hundred Thousand Dollars ($200,000.00) per month
during the Initial Term, (b) Four Hundred Thousand Dollars ($400,000.00) per
month during the First Extension Term, and (c) Four Hundred Fifty Thousand
Dollars ($450,000.00) per month during the Second Extension Term and the Third
Extension Term (“Speakeasy’s Remittance Amount”).

 

4.05                           Potential
Supplements to Speakeasy’s Remittance Amount.

 

(a)                                  Within thirty (30) days after the
end of the First Extension Term, HHLV shall send Speakeasy a statement
containing the following calculation: fifty percent (50%) of

 

16

 

Adjusted
EBITDA earned during the First Extension Term minus the Speakeasy Remittance
Amount paid during the First Extension Term. If and only if such calculation
results in a positive number, then such statement shall be accompanied by
payment to Speakeasy in the amount of such positive number.

 

(b)                                 Within thirty (30) days after the
end of the Second Extension Term, HHLV shall send Speakeasy a statement
containing the following calculation: fifty percent (50%) of Adjusted EBITDA
earned during the Second Extension Term minus the Speakeasy Remittance Amount
paid during the Second Extension Term. If and only if such calculation results
in a positive number, then such statement shall be accompanied by payment to
Speakeasy in the amount of such positive number.

 

(c)                                  Within thirty (30) days after the
end of the Third Extension Term, HHLV shall send Speakeasy a statement
containing the following calculation: fifty percent (50%) of Adjusted EBITDA
earned during the Third Extension Term minus the Speakeasy Remittance Amount
paid during the Third Extension Term. If and only if such calculation results
in a positive number, then such statement shall be accompanied by payment to
Speakeasy in the amount of such positive number.

 

ARTICLE V.

REAL PROPERTY TAXES AND ASSESSMENTS, USES, AND MARKS

 

5.01                           Payment
of Real Estate Taxes and Assessments. 
HHLV shall be responsible for the payment when due, if any, of all
property taxes and assessments, including, without limitation, assessments for
benefits from public works or improvements, levies, fees, and all other
governmental charges, general or special, ordinary or extraordinary, foreseen
or unforeseen, together with interest and penalties thereon, which may
heretofore or hereafter be levied upon or assessed against the Project.  All charges set forth in this Section 5.01
are herein called “Impositions.” If any Impositions are levied or
assessed against the Project which may be legally paid in installments, HHLV
shall have the option to pay such Impositions in installments except that each
installment thereof, and any interest thereon, must be paid by the final date
fixed for the payment thereof.

 

5.02                           Exceptions.  Nothing contained in this Agreement shall be
construed to require Speakeasy to pay any estate, inheritance or succession
tax, any capital levy, corporate franchise tax, business enterprise tax,
business profits tax, any net income or excess profits tax or other similar tax
of HHLV.

 

5.03                           Uses.  HHLV agrees to operate the Project
continuously during the Term hereof only for the purpose of legally operating a
gaming establishment and related services which may also include, without
limitation, hotel, restaurant and related services.  Except as otherwise agreed by the Committee, the Project shall be
operated under the name “Binion’s Horseshoe”, subject to the provisions of
Section 15.06.  In no event may
HHLV or Speakeasy conduct uses which violate the Nevada Gaming Act or any other
applicable gaming law.  In addition,
HHLV shall not knowingly

 

17

 

permit any unlawful
occupation, business or trade to be conducted on the Project or any use to be
made of the Project contrary to any law, ordinance or regulation as aforesaid
with respect thereto.

 

5.04                           System
Marks.  HHLV or its Affiliates are
the owners of the servicemark “Harrah’s®,” “Rio®,”
“Showboat®,” “Harvey’s®,” and their logos, trademarks,
tradenames, service marks, copyrights, patents, or any other similar rights or
registrations now or hereafter held by or applied for in connection therewith
or any variation or extension of such names (collectively “Harrah’s System
Marks”).  With respect to the State
of Nevada, HHLV or its Affiliates are the owners of the servicemark “Horseshoe®,”
its logos, trademarks, tradenames, service marks, copyrights, patents, or any
other similar rights or registrations now or hereafter held by or applied for
in connection therewith or any variation or extension of such name including,
without limitation, those listed in Exhibit E hereto (collectively
“Horseshoe System Marks”). 
Notwithstanding the foregoing, Speakeasy acknowledges that its use of
the Harrah’s System Marks shall not create in Speakeasy’s favor any right,
title, or interest in or to the Harrah’s System Marks, but all rights of
ownership and control of the Harrah’s System Marks shall reside solely in HHLV.

 

5.05                           Rights
to System Marks.  Speakeasy agrees
to recognize the exclusive right of ownership of HOCI and its Affiliates, to
all System Marks.  Speakeasy hereby
disclaims any right or interest therein, regardless of any legal protection
afforded thereto.  Speakeasy
acknowledges that all of System Marks might not be used in connection with the
Project, and HHLV, with the prior written consent of HOCI, shall have sole
discretion to determine which System Marks shall be so used.  Speakeasy covenants that in the event of
termination, cancellation or expiration of this Agreement, whether as a result
of a default by HHLV or otherwise, Speakeasy shall not hold itself out as, or
continue operation of the Project as a Harrah’s or Horseshoe casino nor will it
utilize any of System Marks or any variant thereof in the name or operation of
the Project.  Speakeasy agrees that HHLV
or HOCI or their respective representative may, at any time thereafter, upon
not less than ten (10) days’ prior notice to Speakeasy and with the accompaniment
of one or more Speakeasy’s representatives enter the Project and may remove all
signs, furnishings, printed material, emblems, slogans or other distinguishing
characteristics which are now or hereafter may be connected or identified with
HHLV or which carry any System Marks.

 

5.06                           Offsite
Use of System Marks.  HHLV, in its
sole discretion, may use the System Marks at any location or locations other
than the Project, as well as at the Project, subject to the provisions of this
Article V.

 

5.07                           World
Series of Poker.  HHLV, in its sole
discretion, may operate the World Series of Poker and/or the World Championship
of Poker at the Project or at any location or locations other than the Project.

 

18

 

ARTICLE VI.

CAPITAL EXPENSES AND CAPITAL REPLACEMENTS

 

6.01                           Meetings
of the Committee with respect to Capital Replacements and Capital Expenses.

 

(a)                                  The
Committee shall meet once a month (or more or less frequently if agreed by the
Speakeasy Representative and the HHLV Representative) to discuss whether any
Capital Replacements or Capital Expenses are necessary or desirable for the
continued operation of the Project. 
Each quarter, the Committee will designate dates upon which Capital
Replacement work shall not be performed during the next quarter (the “Blackout
Period”).

 

(b)                                 At
meetings of the Committee, the Speakeasy Representative or the HHLV
Representative may propose additional Capital Replacements or Capital
Expenses.  If both the Speakeasy
Representative and the HHLV Representative agree on the need for additional
Capital Replacements or Capital Expenses, then such Capital Replacements will
be made by HHLV and such Capital Expenses will be incurred as and when agreed
by the parties.

 

(c)                                  Unless
otherwise agreed by the parties, the cost of such Capital Expenses shall be
prorated such that HHLV is responsible for the percentage of the cost of the
Capital Expense attributable to the useful life of the asset prior to the
Termination Date and Speakeasy is responsible for the percentage of the cost of
the Capital Expense attributable to the useful life of the asset after the
Termination Date.

 

(d)                                 The
useful life of a slot machine is deemed to be four (4) years.  The useful life of carpets is deemed to be
four (4) years.  The useful life of all
other assets shall be determined by the Committee in accordance with generally
accepted accounting principles.  The
useful life of an asset is deemed to begin on the date such asset is first
placed into service.

 

(e)           For purposes of the calculation of
the cost of Capital Expenses to be borne by each party to be determined in
clause (c) above, the Termination Date will be presumed to be two (2) years
after the Effective Date.  If the actual
Termination Date is either more or less than two (2) years after the Effective
Date, then the Committee will re-calculate each party’s share of Capital
Expenses on the Termination Date and the party that underpaid for Capital
Expenses shall promptly pay the other party the amount underpaid.

 

6.02                           Capital
Replacements and Capital Expenses. 
Either party may elect to perform Capital Replacements at the Project
and incur Capital Expenses in connection with such Capital Replacements at its
sole cost and expense, and the electing party may take up to an entire floor of
hotel rooms and not more than one elevator out of service for an amount of time
in which it is reasonable to perform the intended Capital Replacement work;
provided, however, that, unless otherwise agreed by the Committee, (a) at least
thirty (30) days prior written notice shall be provided to the non-electing
party (except that sixty (60) day prior written notice shall be required for
Capital Replacement work that requires hotel rooms to be out of service)
detailing the scope of Capital Replacement work and the estimated time frame
within which the work will be completed, (b) such Capital Replacement work
shall not impair the operation of the Project, (c) such Capital Replacement
work shall not occur during a Blackout Period and (d) the Capital Expenses
incurred in connection with such Capital Replacement work shall include any
environmental remediation (including without limitation, removal, abatement,
remediation or repair of asbestos-containing building materials or lead-based paints)
that would be required by any Environmental Laws or

 

19

 

would be performed by a
reasonably prudent operator pursuant to the Casino Operational Standards.

 

6.03                           Removal,
Storage and Disposition of Personal Property.  If at any time during the Term HHLV decides to remove personal
property (including any gaming equipment) from the Project in connection with
any Capital Replacement pursuant to this Article VI, HHLV shall first
provide Speakeasy with ten (10) days written notice specifying in reasonable
detail the personal property to be removed. 
Speakeasy shall then have the following options, to be exercised in a
writing to HHLV no later than five (5) days after receipt of HHLV’s notice: (a)
Speakeasy may instruct HHLV to store such personal property at Speakeasy’s sole
cost and expense and (b) Speakeasy may instruct HHLV to salvage such personal
property, it being understood that HHLV shall pay over to Speakeasy any profits
realized from such salvaging, net of removal costs and expenses.  If Speakeasy does not respond to HHLV’s
notice within the time period specified above, HHLV may, at its option, choose
to act in accordance with clause (a) or (b) above.

 

6.04                           Remedy
for Failure of HHLV to make Capital Replacements.  If (a) HHLV fails to make Capital Replacements as and when
approved by the Committee, and Speakeasy has given HHLV at least fifteen (15)
Business Days notice of such failure, or (b) Speakeasy determines in its reasonable
discretion that a Capital Replacement must be made to an Emergency Condition,
then Speakeasy may enter the Project and make such Capital Replacements.  To the extent that HHLV is responsible to
pay for any Capital Expenses in connection with such Capital Replacements,
Speakeasy may incur such Capital Expenses and invoice HHLV for that portion of
the Capital Expenses for which HHLV is responsible hereunder.

 

6.05                           Covenant
to Use Good Faith Efforts.  If a
party endeavors to perform any Capital Replacement work in accordance with this
Article VI, then such party shall use commercially reasonable good faith
efforts to perform such Capital Replacements work diligently and expeditiously
and in accordance with standard industry practices.

 

ARTICLE VII.

INSURANCE AND INDEMNITY

 

7.01                           Insurance
Obligations.  HHLV covenants and
agrees that it will at all times during the Term, as an Operating Expense, keep
the Project insured, with the following insurance coverage as approved by HHLV
or such other insurance coverage as HHLV may reasonably require:

 

(a)                                  full repair and replacement coverage
endorsements, against all risks including, but not limited to, fire, ice,
floods and earthquakes, and against loss or damage by such other, further and
additional risks as now are or hereafter may be available by standard extended
coverage forms or endorsements in an amount sufficient to prevent Speakeasy
from becoming a co-insurer of any loss, but in no event in an amount less than
one hundred percent (100%) of the full insurable replacement value of the Project.  So long as Speakeasy is not in default under
this Agreement, all proceeds of insurance not otherwise applied for the purpose
of repairing, replacing or restoring

 

20

 

the
damage insured against shall be paid over to Speakeasy.  HHLV shall obtain such insurance coverage as
of the Effective Date for the Project, and HHLV shall maintain such insurance
thereafter until the termination of this Agreement.

 

(b)                                 general comprehensive public
liability insurance including Broad Form Liability coverage (including
garagekeepers’ coverage and coverage for false arrest, wrongful detention and
invasion of privacy, and coverage for elevators, if any, on the Project)
against claims for bodily injury, death or property damage occurring on, in or
about the Project and the ancillary facilities such insurance to afford
protection, with respect to any one occurrence, of not less than One Million
Dollars ($1,000,000) and no less than Five Million Dollars ($5,000,000) in the
aggregate (or such other amount and deductible as HHLV may determine) which
insurance shall also cover HHLV’s liability under any indemnity contained
herein, it being understood that the standard of reasonableness shall be that
amount of insurance which a prudent owner of a comparable property would
maintain.  HHLV shall also obtain and
maintain a Forty Million Dollar ($40,000,000) umbrella liability policy (or
such other amount as HHLV shall determine) in excess of the general
comprehensive public liability policy. 
HHLV shall obtain such general comprehensive public liability insurance
as of the Effective Date for the Project, and HHLV shall maintain such
insurance until the termination of this Agreement.

 

(c)                                  adequate boiler and pressure vessel
insurance on all equipment, parts thereof and appurtenances attached or
connected to the Project which by reason of their use or existence are capable
of bursting, erupting, collapsing or exploding.

 

(d)                                 such other insurance, at Speakeasy’s
expense, as Speakeasy determines or as may be required by lenders of Speakeasy
in such amounts and against such insurable hazards which at the time is
customary in the case of businesses similarly situated.

 

(e)                                  for the mutual benefit of Speakeasy
and HHLV, liquor liability insurance in an amount to be determined by HHLV,
covering HHLV and Speakeasy under any liquor liability laws which may currently
be in existence or which may hereafter be enacted as they would be applicable
to HHLV’s operations of the Project. 
HHLV shall maintain such insurance until the termination of this  Agreement.

 

(f)                                    worker’s compensation insurance in
statutory amount; and employer’s liability insurance in amount determined by
HHLV, insuring both Speakeasy and HHLV. 
HHLV shall maintain such insurance until the termination of this
Agreement.

 

(g)                                 business interruption resulting from
losses covered under policies covering buildings will be required in an amount
sufficient to protect losses for a period of six (6) months (or such other
period as HHLV may determine).  HHLV
shall maintain such insurance until the termination of this Agreement.

 

21

 

(h)                                 crime insurance which includes
fidelity and such other crime coverages as may be desired in the amount of Five
Million Dollars ($5,000,000) or such other amount as HHLV may determine.  HHLV shall maintain such insurance until the
termination of this Agreement.

 

7.02                           Parties
Insured.  The policies with respect
to such insurance as described in Section 7.01 shall name Speakeasy and
HHLV as parties insured thereby.  Such
policies shall also contain, when requested by Speakeasy or HHLV, a mortgagee
clause or clauses naming the mortgagee or mortgagees involved and/or the holder
or such mortgage or mortgages as parties insured thereby (in the form required
by such mortgagee or mortgagees) all as their respective interests may appear
and with loss payable provisions accordingly.

 

7.03                           Approved
Insurance Companies.  Insurance
procured under this Article VII shall be placed with reputable,
financially sound insurance companies as designated by HHLV and approved by
Speakeasy, such approval not to be unreasonably withheld or delayed; provided,
however, that if Speakeasy disapproves the selection of any such insurance
company on the basis that such insurance company does not satisfy the standards
set forth in the Buyer Credit Agreement (as defined in the Purchase and Sale
Agreement), and if the premiums payable to the insurance company ultimately
designated and approved by Speakeasy are higher than the premiums that would
have been paid to the insurance company disapproved by HHLV, then Speakeasy
shall pay the difference between the amounts of such premiums.

 

7.04                           Failure
to Obtain Required Insurance.  In
the event HHLV fails, neglects, or refuses to maintain any of the insurance
required under the provisions of this Article VII, then Speakeasy may
procure or renew such insurance, as an Operating Expense.

 

7.05                           Waiver
of Subrogation.  As long as the
insurer of a party is willing to include a waiver of subrogation in the
policies insuring against the loss or damages referred to in this
Article VII without an extra charge, the parties shall cause the waiver of
subrogation to be included in the policies. 
If an insurer of a party is willing to include a waiver of subrogation
in an insurance policy only if an extra charge is paid, the party carrying the
insurance shall be required to cause the waiver of subrogation to be included
in the policy only if the other party pays the extra charge.

 

7.06                           Mutual
Cooperation.  Speakeasy shall
cooperate with HHLV to the extent HHLV may reasonably require, and HHLV shall
cooperate with Speakeasy to the extent Speakeasy may reasonably require in
connection with the prosecution or defense of any action or proceeding arising
out of, or for the collection of any insurance proceeds and will execute and
deliver to Speakeasy or HHLV, as the case may be, such instruments as may be
properly required to facilitate the recovery of any insurance proceeds.  Such cooperation shall survive the end of
the Term in the event an action or proceeding arises out of or relates to
events occurring during the Term.

 

7.07                           Delivery
of Insurance Policies.  HHLV shall
deliver promptly the original certificates of insurance satisfactory to
Speakeasy evidencing all the insurance which is then required to be maintained
by HHLV hereunder.

 

22

 

7.08                           Indemnifications.

 

(a)                                  Speakeasy
covenants and agrees that it will protect, keep and defend HHLV forever
harmless and indemnified against and from any penalty or damage or charges
imposed for any violation of any laws or ordinances including, but not limited
to, gaming statutes and regulations, which are occasioned by the gross neglect
or the wanton or willful acts of Speakeasy.

 

(b)                                 HHLV
covenants and agrees that it will protect, keep and defend Speakeasy forever
harmless and indemnified against and from any penalty or damage or charges
imposed for any violation of any laws or ordinances including, but not limited
to, gaming statutes and regulations, which are occasioned by the gross neglect
or the wanton or willful acts of HHLV.

 

(c)                                  HHLV
covenants and agrees that it will protect, keep and defend Speakeasy and its
Affiliates forever harmless and indemnified against and from any third party
claims arising out of events occurring during the Term.  Any costs and expenses incurred by HHLV
pursuant to this Section 7.08(c) shall be Operating Expenses.

 

(d)                                 Speakeasy
covenants and agrees that it will protect, keep and defend HHLV and its
Affiliates forever harmless and indemnified against and from any third party
claims arising out of events occurring after the Term.

 

7.09                           Selection
of Counsel.  Indemnitor shall select
defense counsel provided that defense counsel engaged by HHLV or Speakeasy, as
indemnitor, shall be reasonably acceptable to HHLV and Speakeasy, as
indemnitee, and any insurance company insuring indemnitor or indemnitee.  Indemnitor shall control all meetings,
conferences and judicial proceedings with respect to any indemnified
matter.  Without limiting the generality
of the foregoing, indemnitee shall be promptly provided with copies of all
claims and pleadings (as well as correspondence, memos, documents and discovery
with respect thereto, unless within the scope of any applicable privilege)
relating to any such matters. 
Indemnitee shall be given prior written notice of all meetings,
conferences and judicial proceedings and shall be afforded an opportunity to
attend and participate in same.  Indemnitee shall have the right to engage independent counsel, at
its sole expense, to represent indemnitee as additional and/or co-counsel in
all such proceedings, trials, appeals and meetings with respect thereto.

 

7.10                           Amendment,
Termination, Cancellation or Suspension of Insurance Policies.  Each insurance policy required to be
obtained pursuant to Sections 7.01(a), (c), (e) and (f) shall contain
provisions to the effect that: (i) no policy can expire nor can it be amended,
canceled or suspended by HHLV or the insurer during the Term for any reason
(including failure to renew the policy or to pay the premium or any other
amount) unless Speakeasy and, in the case of expiration or if amendment,
cancellation or suspension is initiated by the insurer, HHLV receive at least
thirty (30) days’ notice (or such lesser period as Speakeasy may agree with
respect to amendment, cancellation, suspension or termination in the event of
war an/or terrorist act) prior to the effective date of amendment, termination,
cancellation or suspension.

 

23

 

ARTICLE VIII.
TAKING OF THE PROJECT/CASUALTY

 

8.01                           Definitions

 

(a)                                  “Permanent Taking” means the
permanent taking (more than one year) of, or permanent damage to, property as a
result of the exercise of a power of eminent domain or purchase under the
threat of the exercise where such taking cannot be corrected by contribution of
additional land for relocation of the Project.

 

(b)                                 “Temporary Taking” means the
temporary taking (one year or less) of, or temporary damage to, property as a
result of the exercise of a power of eminent domain or purchase under the
threat of the exercise.

 

(c)                                  “Taking Date” means the date
on which a condemning authority shall have the right of possession of property
pursuant to a Permanent Taking or a Temporary Taking.

 

(d)                                 “Award” means the award for,
or proceeds of, a Permanent Taking or Temporary Taking less all fees and
expenses incurred in connection with collecting the award or proceeds including
the reasonable fees and disbursements of attorneys, appraisers, and expert
witnesses.

 

8.02                           Takings.  If any portion of the Project is taken
pursuant to a Permanent Taking or a Temporary Taking and the parties in good
faith reasonably agree that the taking of such portion of the Project could
have a material adverse effect on the continued operation of the Project, then
the parties may agree to terminate this Agreement. If more than ten percent
(10%) of the Project is taken pursuant to a Permanent Taking or a Temporary
Taking, then this Agreement shall, at HHLV’s option, to be exercised by
providing Speakeasy with thirty (30) days prior written notice, be
terminated.  In the event HHLV shall
deliver such notice of termination pursuant to this Section 8.02, the Speakeasy
Remittance Amount shall continue to accrue until the Termination Date.

 

8.03                           Casualty.  If any portion of the Project is destroyed
due to fire, casualty or other occurrence and the parties in good faith
reasonably agree that the destruction of such portion of the Project could have
a material adverse effect on the continued operation of the Project, then the
parties may agree to terminate this Agreement. 
If more than ten percent (10%) of the Project is destroyed due to fire,
casualty or other occurrence, then this Agreement shall, at HHLV’s option, to
be exercised by providing Speakeasy with thirty (30) days prior written notice,
be terminated unless (i) HHLV recovers insurance proceeds in an amount that
permits HHLV to promptly repair or rebuild the Project, so as to make the
Project at least equal to the Project existing immediately prior to such
occurrence and as nearly similar to it in quality and character as shall be
practicable and reasonable and such that the Project can be rebuilt or repaired
at least ninety (90) days prior to the end of the Term or (ii) the Committee
determines to repair and rebuild the Project on terms and conditions
satisfactory to HHLV and Speakeasy.  In
such case HHLV shall prosecute repairs and rebuilding to completion with
diligence, subject, however, to delays due to Events of Force Majeure.  Insofar as a

 

24

 

certificate of occupancy
may be necessary with respect to such repairs or construction, HHLV shall
obtain a temporary or final certificate of occupancy or similar certificate
before the Project shall be occupied. 
Such repairs, rebuilding or construction shall be free and clear of
mechanics’ or other liens, in accordance with the building code and all
applicable laws, ordinances, regulations or orders of any state, municipal or
other public authority affecting the same. 
In the event HHLV shall deliver a notice of termination pursuant to this
Section 8.03, the Speakeasy Remittance Amount shall continue to accrue
until the Termination Date.

 

8.04                           Disposition
of Insurance Proceeds and Awards. 
All insurance proceeds and Awards shall be paid to Speakeasy and HHLV as
their interests may appear.

 

8.05                           Notice
of a Taking or Casualty.  The
parties hereto shall notify each other promptly upon becoming aware of a
Permanent Taking, a Temporary Taking or any damage or loss to the Project by
reason of fire or otherwise.

 

ARTICLE IX.

PRORATIONS/TRANSFERS ON TERMINATION DATE

 

9.01                           Termination
Statement.  The items listed in
subclauses (a) through (c) of this Section 9.01 shall be prorated,
allocated and/or adjusted between Speakeasy and HHLV pursuant to a written
closing statement (the “Termination Statement”) to be prepared by
Speakeasy and HHLV and executed by Speakeasy and HHLV on the Termination
Date.  Any additional amounts owed by
Speakeasy shall be reflected in such Termination Statement and Speakeasy shall,
within seven (7) Business Days after the Termination Date, pay such
additional amounts to HHLV:

 

(a)                                  Property Taxes. 
At the Closing, all real and personal property, ad valorem or similar
taxes of the Project (collectively, “Property Taxes”) for the calendar
year that includes the Termination Date shall be prorated as of the Termination
Date using the latest available rates and assessments, and HHLV’s proportionate
share of Property Taxes (which shall be determined on a per diem basis from the
beginning of the calendar year through the day prior to the Termination Date)
shall be credited to Speakeasy in the Termination Statement.  This proration of Property Taxes shall be
subject to adjustment after the Termination Date when the final tax bill for
the year of the Termination Date becomes available.  HHLV or Speakeasy, as applicable, shall pay promptly to the other
party any amounts due as a result of such adjustments.  Any Property Tax refunds or rebates relating
to any Pre-Termination Date Tax Period shall be the property of HHLV, and
Speakeasy shall pay promptly to HHLV any such amounts (or portions thereof)
that it receives.  Any Property Tax
refunds or rebates relating to any Post-Termination Date Tax Period shall be
the property of Speakeasy, and HHLV shall pay promptly to Speakeasy any such
amounts (or portions thereof) that it receives.

 

(b)                                 Utilities. 
Utility meters will be read, to the extent that the utility company will
do so, during the daylight hours on the Termination Date, with charges to that
time paid by

 

25

 

HHLV
and charges thereafter paid by Speakeasy. 
Prepaid utility charges shall be adjusted on the Termination
Statement.  Charges for utilities which
are un-metered, or for meters which have not been read on the Termination Date,
will be prorated between Speakeasy and HHLV as of the Transfer Time based upon
utility billings received after the Closing. 
HHLV or Speakeasy, as appropriate, shall, upon receipt, submit a copy of
the utility billings for any such charges to the other party and such party
shall pay the party’s pro-rata share of such charges to the party requesting
payment within seven business (7) days from the date of any such request.

 

(c)                                  Operating Contracts. 
All income and expenses pursuant to the Operating Contracts will be
prorated between Speakeasy and HHLV as of the Termination Date on the Termination
Statement.  HHLV shall receive a credit
on the Termination Statement for the amount of any prepaid rents related to
periods after the Termination Date, security deposits, or other deposits
previously paid by HHLV under the Operating Contracts, less any such amounts
paid to and collected by HHLV under the Operating Contracts.  Any amounts received by Speakeasy under the
Operating Contracts related to any period prior to the Termination Date shall
be promptly paid to HHLV.  Any amounts
received by HHLV under the Operating Contracts related to any period after the
Termination Date shall be promptly paid to Speakeasy.

 

(d)                                 Cooperation. 
In the event HHLV and Speakeasy agree that additional items should be
prorated, allocated and/or adjusted between Speakeasy and HHLV, any such items
shall be prorated, allocated and/or adjusted consistent with the provisions of
this Section 9.01.

 

9.02                           Operations
Settlement.  The items listed in
subclauses (a) through (c) of this Section 9.02 shall be determined
by the Operations Settlement.  Any
amounts determined to be due and owing to HHLV pursuant to the Operations
Settlement shall be paid for by Speakeasy, by cashier’s or certified check
payable directly (and not by way of endorsement) to HHLV or by wiring of
federal funds to the account designated by HHLV, no later than 12:00 noon (Las
Vegas Time) on the day immediately following the Termination Date.  Each party shall bear its own costs of
participation in the preparation of the Operations Settlement.

 

(a)                                  Room Revenues. 
Room Revenues for the night of the Termination Date shall be divided
equally between Speakeasy and HHLV pursuant to the Operations Settlement.  Revenues, other than Room Revenues, of the
Property for the night of the Termination Date shall belong solely to and be
retained by HHLV.

 

(b)                                 Tray Ledger. 
Speakeasy shall purchase the Tray Ledger as of the Transfer Time from
HHLV pursuant to the Operations Settlement.

 

(c)                                  House Funds. 
Speakeasy and HHLV shall mutually agree upon a procedure for counting
and determining all House Funds as of the Transfer Time and Speakeasy shall pay
to HHLV as part of the Operations Settlement the amount of House Funds

 

26

 

so
determined.  Speakeasy shall have no
obligation to purchase chips or tokens of other casinos, all of which shall be
retained by HHLV and are excluded from sale.

 

9.03                           Accounts
Receivable.

 

(a)                                  HHLV
acknowledges and agrees that any amounts owed to the owner of the Project
pursuant to accounts receivable outstanding as of the Effective Date (other
than any Excluded Assets (as such term is defined in that certain Asset
Purchase Agreement dated as of January 21, 2004 by and between Horseshoe
Club Operating Company and HOCI)) are the property of Speakeasy.  HHLV shall not be obligated to collect any
such amounts owed, but if HHLV collects same, such amounts will be paid over to
Speakeasy (or its designees) promptly.

 

(b)                                 The
collection of all accounts receivable other than the Tray Ledger accruing
between the Effective Date and the Transfer Time (including receivables and
revenues for food, beverages and telephone and casino credit) shall be the
responsibility of HHLV.  Following the
Termination Date, Speakeasy shall not be obligated to collect any such accounts
receivable or revenues for HHLV, but if Speakeasy, following the Termination
Date, collects same, such amounts will be paid over to HHLV (or its designees)
promptly.

 

(c)                                  During
the Term, each of HHLV and Speakeasy agrees to keep each other informed of (i) any
amounts owed pursuant to casino markers that are actually collected and (ii)
any collection efforts made in relation to amounts owned pursuant to such
casino markers.

 

(d)                                 Following
the Termination Date, each of the parties shall reasonably cooperate with each
other regarding the foregoing, and shall not enter into any relationship,
agreement or take any action intended to frustrate the intent of this
Section 9.03.

 

9.04                           Adjustment
For Progressive Liabilities.  Within
two (2) Business Days following the Termination Date, HHLV shall pay to
Speakeasy an amount equal to the amounts shown as of the Transfer Time on:

 

(a)                                  the Project’s in-house progressive
slot machine meters as of the Transfer Time (if not removed by the vendor at or
before the Transfer Time);

 

(b)                                 table games with an in-house
progressive jackpot feature as of the Transfer Time; and

 

(c)                                  any other games with an in-house
progressive feature as of the Transfer Time.

 

9.05                           Reservations;
Loyalty Programs; Guests; Chips

 

(a)                                  Reservations. 
Speakeasy will honor the terms and rates of all pre-Termination Date
reservations (in accordance with their terms) at the Project made in the
ordinary course of business by guests or customers, including advance
reservation cash deposits, for rooms or services confirmed by HHLV for dates
after the Termination

 

27

 

Date.  HHLV may continue to accept reservations for
periods after the Termination Date in the ordinary course of business.  Speakeasy recognizes that such reservations
may include discounts or other benefits, including, without limitation,
benefits under frequent player or casino awards programs, group discounts,
other discounts or requirements that food, beverage or other benefits be
delivered by Speakeasy to the guest(s) holding such reservations.  Speakeasy will honor all room allocation
agreements and banquet facility and service agreements which have been granted
to groups, persons or other customers for periods after the Termination Date at
the rates and terms provided in such agreements; provided that such agreements
were made in the ordinary course of business. 
Speakeasy agrees that HHLV cannot make and has made no representation or
warranty that any party holding a reservation or agreement for rooms,
facilities or services will utilize such reservation or honor such
agreement.  Speakeasy, by the execution
hereof, assumes the risk of non-utilization of reservations and non-performance
of such agreements from and after the Termination Date.

 

(b)                                 Total Rewards. 
Subject to HHLV’s compliance with Section 3.05(f), Speakeasy agrees
to honor all cash back awards extended by HHLV to members of Harrah’s Total
Rewards® frequent player award program on terms consistent with HHLV’s past
practice or HOCI’s nationwide programs, and Speakeasy authorizes HHLV to extend
such awards with expirations up to the Termination Date.  HHLV agrees to reasonably cooperate with
Speakeasy in order for Speakeasy to fulfill its obligations under this
Section 9.05(b).

 

(c)                                  Guests’ Safe Deposit Boxes. 
Speakeasy shall be responsible for all guest safety deposit boxes from
and after the Termination Date.

 

(d)                                 Guests’ Vehicles and Baggage. 
Prior to the Termination Date, HHLV and Speakeasy shall take inventory
of: (i) all baggage, suitcases, luggage, valises and trunks of hotel guests
checked or left in the care of HHLV; (ii) all luggage or other property of
guests retained by HHLV as security for unpaid accounts receivable; (iii) the
contents of the baggage storage room and (iv) all motor vehicles that were
checked and placed in the care of HHLV at the Project; provided, however, that
no such baggage, suitcases, luggage, valises or trunks shall be opened.  Except for the property referred to in (ii)
above, which shall be removed from the Project by HHLV within ten (10) days
after the Termination Date, all such baggage and other items shall be marked or
sealed in a manner to be agreed upon by the parties and listed in an inventory
prepared and signed jointly by said representatives of HHLV and Speakeasy as of
the Termination Date.  Said baggage and
other items shall be stored as Speakeasy shall choose, and Speakeasy shall be
responsible for claims with respect thereto.

 

(e)                                  Chip and Token Redemption. 
Within sixty (60) days prior to the end of the Term, HHLV shall file a
plan (the “Redemption Plan”) for the redemption and disposal of HHLV’s
Chips and Tokens in accordance with Nevada Gaming Regulation 12.070.

 

28

 

Such
Redemption Plan, including the form of publication notice and the terms of
publication, shall be approved by Speakeasy in its reasonable discretion, which
shall not be unreasonably withheld or delayed, and shall provide, among other
things, that (i) HHLV shall be responsible for any outstanding liability
relating to HHLV’s Chips and Tokens, (ii) Speakeasy, as an accommodation to
HHLV, shall redeem HHLV’s Chips and Tokens at the Project during the redemption
period set forth in the Redemption Plan (the “Redemption Period”) and
(iii) HHLV and Speakeasy shall implement the Redemption Plan as approved by the
Chairman of the Nevada Gaming Control Board. 
HHLV agrees to pay the costs associated with preparing and publishing
the notices required pursuant to the Redemption Plan.  For the avoidance of doubt, it is understood by the parties that
HHLV shall reimburse Speakeasy for any of HHLV’s Chips and Token redeemed by
Speakeasy during the Redemption Period.

 

9.06                           Transfer
of Utilities; Insurance.

 

(a)                                  Utilities. 
Prior to the Termination Date, HHLV shall notify all utility companies
servicing the Project of the anticipated change in the entity operating the
Project and request that all billings after the Termination Date be made to
Speakeasy at the Project address. 
Speakeasy shall be responsible for paying, before the Termination Date,
all deposits required by utility companies in order to continue service at the
Project for periods after the Transfer Time and shall take any other action and
make any other payments required to assure uninterrupted availability of
utilities at the Project for all periods after the Termination Date.  Following the Termination Date, all utility
deposits made by HHLV will be refunded directly to HHLV by the utility company holding
same.

 

(b)                                 Insurance. 
Notwithstanding the provisions of Article VII, all of HHLV’s fire
and casualty insurance and other insurance policies may be cancelled by HHLV as
of the Termination Date, and any refunded premiums shall be retained by, and
transferred to, HHLV.  Speakeasy will be
responsible for acquiring and placing its insurance policies for periods after
the Termination Date.

 

ARTICLE X.

ASSIGNMENT AND SUBLETTING

 

Neither Speakeasy nor HHLV shall assign this Agreement
or any interest therein without the express prior written consent of the other
party, which consent shall not be unreasonably withheld. Notwithstanding the
preceding sentence, (a) HHLV may assign or transfer this Agreement to any
Affiliate of HHLV; provided, that a counterpart original of such assignment is
delivered to Speakeasy on or before the effective date of such assignment, and
provided further that such Affiliate of HHLV expressly assumes and agrees to be
bound by all of the terms and conditions of this Agreement and (b) Speakeasy
may assign or transfer this Agreement to any Affiliate of Speakeasy; provided,
that a counterpart original of such assignment is delivered to HHLV on or

 

29

 

before the effective date of such assignment, and
provided further that such Affiliate of Speakeasy expressly assumes and agrees
to be bound by all of the terms and conditions of this Agreement.

 

ARTICLE XI.

AFFIRMATIVE COVENANTS OF HHLV

 

HHLV hereby covenants and
agrees that so long as this Agreement remains in effect:

 

11.01                     Corporate
Status.  HHLV shall preserve and
maintain its rights, franchises and privileges as a limited liability company
in the state of its formation and remain qualified to conduct business in the
State of Nevada.

 

11.02                     Compliance
with Laws.

 

(a)                                  HHLV
shall comply in all material respects with all applicable laws, rules,
regulations and orders of all states, counties, and municipalities in which
such party conducts business related to the Project, including, without
limitation, any laws, rules, regulations, orders and requests for information
of the Nevada Gaming Authorities.  HHLV
shall also follow applicable federal laws, rules, and regulations.

 

(b)                                 HHLV
agrees to comply in all material respects with all Environmental Laws relating
to HHLV’s operation of the Project. 
Without limiting the generality of the foregoing, HHLV shall not bring
Hazardous Materials onto the Project, except as permitted by Environmental
Laws.  HHLV agrees to indemnify, defend
and hold Speakeasy and its officers, employees and agents harmless from any
claims, judgments, damages, penalties, fines, costs, liabilities (including
sums paid in settlements of claims) or loss including reasonable attorneys’
fees, consultant fees, and expert fees (consultants and experts to be selected
by Speakeasy) incurred in connection with any investigation of site conditions
or any clean-up, remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision because of the
presence of asbestos, other toxic or Hazardous Material in the Project, or the
soil, groundwater or soil vapor on or under the Project as a result of a breach
of this Section 11.02(b).  The
foregoing indemnity shall survive the expiration of the Term or earlier
termination of this Agreement.

 

(c)                                  HHLV
agrees to comply in all material respects with health and liquor laws and codes
relating to HHLV’s operation of the Project.

 

(d)                                 All
expenses incurred in connection with HHLV’s compliance with laws pursuant to
this Section 11.02 shall be Operating Expenses.

 

11.03                     Gaming
Approvals.  HHLV and Speakeasy each
agree to use its best efforts to expeditiously prepare and file all Nevada
gaming license applications necessary for it to perform its obligations under
this Agreement.

 

30

 

11.04                     Cooperation
with Gaming Authorities.  HHLV shall
cause its members, officers, directors, employees and/or stockholders, as the
case may be, to provide any Nevada Gaming Authorities or other gaming
authorities which govern or may govern gaming facilities of Affiliates of
Speakeasy or HHLV with necessary documents and information.

 

11.05                     Confidential
Information.  HHLV agrees for itself
and its Affiliates, agents, representatives and consultants to hold in the
strictest confidence and not to disclose to any person, entity, party, firm or
corporation (other than agents or representatives of HHLV who are also bound by
this Section 11.05) without the prior express written consent of Speakeasy
(except as may be advised by outside counsel to be disclosed for purposes of
compliance with laws and regulations including but not limited to applicable
securities laws, gaming laws and/or NYSE marketplace rules) any of Speakeasy’s
confidential data, whether related to the Project or to general business
matters, which shall come into their possession or knowledge (unless such
information is already publicly available through no action of HHLV).  HHLV agrees that Speakeasy and its
Affiliates may make such public disclosures as Speakeasy and its Affiliates are
advised by their outside counsel for purposes of compliance with laws and
regulations including but not limited to applicable securities laws, gaming
laws and/or NASDAQ Marketplace Rules.

 

ARTICLE XII.

AFFIRMATIVE COVENANTS OF SPEAKEASY

 

12.01                     Affirmative
Covenants of Speakeasy.  Speakeasy
hereby covenants and agrees that so long as this Agreement remains in effect:

 

(a)                                  Corporate Status

 

(i)                                     Speakeasy
shall preserve and maintain its rights, franchises and privileges as a
corporation in the state of its formation and remain qualified to conduct
business in the State of Nevada, including without limitation, its right to own
the Project.

 

(ii)                                  Speakeasy
shall, in accordance with the provisions of Article VII of this Agreement,
maintain insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar business and owning similar properties in the same
general area in which Speakeasy operates, and which may be necessary to satisfy
the requirements of Speakeasy’s lenders.

 

(b)                                 Compliance with Laws.  Speakeasy shall comply in all material
respects with all applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts business related to
the Project, including, without limitation, any laws, rules, regulations,
orders and requests for information of the Nevada Gaming Authorities and any of
the other gaming authorities that may license HHLV or from which HHLV may seek
a license.  Speakeasy shall also follow
applicable federal laws, rules, and regulations.

 

31

 

(c)                                  Cooperation
with Gaming Authorities. 
Speakeasy  shall cause its
members, officers, directors, employees and/or stockholders, as the case may
be, to provide any Nevada Gaming Authorities or other gaming authorities which
govern or may govern gaming facilities of Affiliates of Speakeasy or HHLV with
necessary documents and information.

 

(d)                                 Confidential
Information.  Speakeasy agrees for
itself and its Affiliates, agents, representatives and consultants to hold in
the strictest confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Speakeasy who are also
bound by this Section 12.01(d)) without the prior express written consent
of HHLV (except as may be advised by outside counsel to be disclosed for
purposes of compliance with laws and regulations including but not limited to
applicable securities laws, gaming laws and/or NASDAQ Marketplace Rules) any of
HHLV’s confidential data, whether related to the Project or to general business
matters, which shall come into their possession or knowledge (unless such
information is already publicly available through no action of Speakeasy).  Speakeasy agrees that HHLV and its
Affiliates may make such public disclosures as HHLV and its Affiliates are
advised by their outside counsel for purposes of compliance with laws and
regulations including but not limited to applicable securities laws, gaming
laws and/or NYSE marketplace rules.

 

(e)                                  Quiet
Enjoyment.  So long as no HHLV Event
of Default has occurred and is continuing, Speakeasy covenants that, during the
Term, (i) HHLV shall and may peaceably possess and quietly enjoy the Project in
accordance with the terms of this Agreement, free from molestation, eviction
and disturbance by Speakeasy or by any of its Affiliates and (ii) Speakeasy
shall, at Speakeasy’s expense, undertake and prosecute all commercially
reasonable actions, judicially or otherwise, required to assure such quiet
enjoyment and peaceable possession by HHLV.

 

(f)                                    Compliance
With Laws.  Speakeasy agrees to
comply with all Environmental Laws relating to Speakeasy’s ownership of the
Project.

 

(g)                                 Environmental
Indemnification By Speakeasy. 
Speakeasy agrees to indemnify, defend and hold HHLV and its officers,
employees and agents harmless from any claims, judgments, damages, penalties,
fines, costs, liabilities (including sums paid in settlements of claims) or
loss including reasonable attorneys’ fees, consultant fees, and expert fees
(consultants and experts to be selected by HHLV) incurred in connection with
any investigation of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of the presence or suspected presence of
asbestos, other toxic or Hazardous Material in the Project, or the soil,
groundwater or soil vapor on or under the Project, unless (i) the Hazardous
Materials are present solely as a result of the actions of HHLV, its officers,
shareholders, employees or agents or (ii) the presence of the Hazardous
Materials are the result of a violation by HHLV of HHLV’s obligations under
Section 11.02(b).  The foregoing
indemnity shall survive the expiration of the Term or earlier termination of
this Agreement.

 

(h)                                 Domain
Names and Telephone Numbers. 
Speakeasy agrees that it will not change any of the following during the
Term without the consent of the Committee: (i) the domain names

 

32

 

“binions.com,” “binions.org” or “binions.net” or (ii) the telephone
number (702) 382-1600 or (iii) the telephone number (800) 937-6537.

 

ARTICLE XIII.

REPRESENTATIONS AND WARRANTIES

 

13.01                     Speakeasy’s
Status.  Speakeasy represents and
warrants that it is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of Nevada, that Speakeasy has full
corporate power and authority to enter into this Agreement and perform its
obligations hereunder, and that the officers of Speakeasy who executed this
Agreement on behalf of Speakeasy are in fact officers of Speakeasy and have
been duly authorized by Speakeasy to execute this Agreement on its behalf.

 

13.02                     HHLV’s
Status.  HHLV represents and
warrants that it is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of its organization,
and qualified to do business in the State of Nevada, that HHLV has full limited
liability company  power and
authority to enter into this Agreement and perform its obligations hereunder,
and that the officers of HHLV who executed this Agreement on behalf of HHLV are
in fact officers of HHLV and have been duly authorized by HHLV to execute this
Agreement on its behalf.

 

13.03                     Authorization/No
Conflict

 

(a)                                  The execution, delivery and
performance by HHLV of this Agreement have been duly authorized by all
necessary limited liability company action on the part of HHLV and no further
action or approval is required in order to constitute this Agreement as the
valid and binding obligations of HHLV, enforceable in accordance with its
terms.  The execution, delivery and
performance of this Agreement by HHLV, as applicable, do not and will not:

 

(i)                                     violate
or conflict with any provisions of its certificates of formation or operating
agreements or of any law, rule, regulation of the Nevada Gaming Authorities, or
any order, writ, judgment, decree, determination, or award presently in effect
having applicability to HHLV;

 

(ii)                                  result
in a breach of any condition or provision of, or constitute a default under,
any indenture, loan or credit agreement or any other agreement or instrument to
which HHLV is a party or by which HHLV may be bound or affected; or

 

(iii)                               result
in, or require, the creation or imposition of any lien, claim, charge or
encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by HHLV.

 

33

 

(b)                                 The execution, delivery and
performance by Speakeasy of this Agreement have been duly authorized by all
necessary corporate action on the part of Speakeasy and no further action or
approval is required in order to constitute this Agreement as the valid and
binding obligations of Speakeasy, enforceable in accordance with its
terms.  The execution, delivery and
performance of this Agreement by Speakeasy do not and will not:

 

(i)                                     violate
or conflict with any provisions of its certificate of incorporation or bylaws,
or of any law, rule, regulation of the Nevada Gaming Authorities, or any order,
writ, judgment, decree, determination, or award presently in effect having
applicability to Speakeasy;

 

(ii)                                  result
in a breach of any condition or provision of, or constitute a default under,
any indenture, loan or credit agreement or any other agreement or instrument to
which Speakeasy or MTR Gaming Group, Inc. (“Speakeasy Parent”) is a
party or by which Speakeasy or Speakeasy Parent may be bound or affected; or

 

(iii)                               result
in, or require, the creation or imposition of any lien, claim, charge or
encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by Speakeasy.

 

13.04                     Permits/Approvals.  Speakeasy and HHLV possess adequate
franchises, licenses, permits, orders and approvals of all federal, state and
local governmental or regulatory bodies required for them to carry on their
businesses as presently conducted; all of such franchises, licenses, permits,
orders and approvals are in full force and effect, and no suspension or
cancellation of any of them is threatened; and none of such franchises,
licenses, permits, orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement.

 

13.05                     Accuracy
of Representations.  No
representation or warranty of Speakeasy or HHLV in this Agreement nor any
information, exhibit, memorandum, schedule or report furnished by
Speakeasy or HHLV in connection with this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements of fact contained therein not misleading.

 

ARTICLE XIV.

DEFAULT

 

14.01                     Definitions.  The occurrence of any one or more of the
events described in Section 14.02 which is not cured within the time
permitted shall constitute an “HHLV Event of Default”.  The occurrence of any one or more of the
events described in Section 14.03 which is not cured within the time
permitted shall constitute a “Speakeasy Event of Default”.

 

34

 

14.02                     HHLV Event
of Default

 

An HHLV Event of Default
shall have occurred if:

 

(a)                                  HHLV shall fail to make any monetary
payment required under this Agreement, on or before the due date recited herein
and said failure continues for five (5) Business Days after written notice
from HHLV specifying such failure,

 

(b)                                 HHLV shall fail to perform or
materially comply with any of the material covenants, agreements, terms or
conditions contained in this Agreement applicable to HHLV and such failure
shall continue for a period of thirty (30) days after written notice
thereof from Speakeasy to HHLV specifying in reasonable detail the nature of
such failure, or, in the case such failure is of a nature that it cannot, with
due diligence and good faith, be cured within thirty (30) days, if, HHLV
fails to proceed promptly and with all due diligence and in good faith to cure
the same and thereafter to prosecute the curing of such failure to completion
with all due diligence within ninety (90) days thereafter,

 

(c)                                  HHLV shall take or fail to take any
action to the extent required of HHLV under this Agreement that creates a
default under or breach of any loan document, any related contract or any
requirement of the Nevada Gaming Authorities, unless HHLV cures such default or
breach prior to the expiration of the applicable notice, grace and cure
periods, if any; provided, however, that HHLV shall only be required to cure
any defaults with respect to which HHLV has a duty hereunder.  If the only result of the failure by HHLV to
act is a monetary loss to Speakeasy which is not otherwise capable of being cured
by HHLV, then there shall be no HHLV Event of Default with respect to HHLV’s
failure if HHLV reimburses Speakeasy for such losses within ten (10)
Business Days of incurring such loss or otherwise protects Speakeasy against
such loss in a manner reasonably acceptable to Speakeasy,

 

(d)                                 HHLV shall apply for or consent to
the appointment of a receiver, trustee or liquidator of itself or any of its
property,

 

(e)                                  HHLV shall make a general assignment
for the benefit of creditors,

 

(f)                                    HHLV shall be adjudicated bankrupt
or insolvent,

 

(g)                                 HHLV shall file a voluntary petition
in bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors, takes advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law, or admit the material
allegations of a petition filed against it in any proceedings under any such
law, or

 

35

 

(h)                                 If an order, judgment or decree is
entered by any court of competent jurisdiction approving a petition seeking
reorganization of HHLV, or appointing a receiver, trustee or liquidator of
HHLV, of all or a substantial part of any of the assets of HHLV, and such
order, judgment or decree continues unstayed and in effect for a period of
sixty (60) days from the date of entry thereof.

 

14.03                     Speakeasy
Event of Default

 

A Speakeasy Event of
Default shall have occurred if:

 

(a)                                  Speakeasy shall fail to make any
monetary payment required under this Agreement, on or before the due date
recited herein and said failure continues for five (5) Business Days after
written notice from HHLV specifying such failure,

 

(b)                                 Speakeasy shall fail to perform or
materially comply with any of the other covenants, agreements, terms or
conditions contained in this Agreement applicable to Speakeasy and such failure
shall continue for a period of thirty (30) days after written notice
thereof from HHLV to Speakeasy specifying in reasonable detail the nature of
such failure, or, in the case such failure is of a nature that it cannot, with
due diligence and good faith, cure within thirty (30) days, if Speakeasy
fails to proceed promptly and with all due diligence and in good faith to cure
the same and thereafter to prosecute the curing of such failure to completion
with all due diligence within ninety (90) days thereafter,

 

(c)                                  Any of Speakeasy’s lenders or any of
Speakeasy’s Affiliate’s lenders initiates foreclosure proceedings with respect
to any portion of the Project consisting of real property,

 

(d)                                 Speakeasy shall apply for or consent
to the appointment of a receiver, trustee or liquidator of itself or any of its
property,

 

(e)                                  Speakeasy shall make a general
assignment for the benefit of creditors,

 

(f)                                    Speakeasy shall be adjudicated
bankrupt or insolvent,

 

(g)                                 Speakeasy shall file a voluntary
petition in bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors, takes advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law, or admit the
material allegations of a petition filed against it in any proceedings under
any such law, or

 

(h)                                 If an order, judgment or decree is
entered by any court of competent jurisdiction approving a petition seeking
reorganization of Speakeasy, or appointing a receiver, trustee or liquidator of
Speakeasy, of all or a substantial part of any of the assets of

 

36

 

Speakeasy,
and such order, judgment or decree continues unstayed and in effect for a
period of sixty (60) days from the date of entry thereof.

 

14.04                     Delays and
Omissions.  No delay or omission as
to the exercise of any right or power accruing upon any Event of Default shall
impair the non-defaulting party’s exercise of any right or power or shall be
construed to be a waiver of any Event of Default or acquiescence therein.

 

ARTICLE XV.

TERMINATION

 

15.01                     Terminating
Events

 

This Agreement
shall terminate upon the occurrence of the following:

 

(a)                                  at the election of the
non-defaulting party, upon the occurrence of an Event of Default under this
Agreement and the time to cure has lapsed;

 

(b)                                 if and as specified in
Article VIII; or

 

(c)                                  at HHLV’s election, upon the sale,
transfer or other disposition of the Project; provided, however, that if
Speakeasy decides to sell, transfer or dispose of the Project during the Term
and delivers prior written notice to HHLV of its intention to do so, then,
within fifteen (15) days after receipt of such notice from Speakeasy, HHLV
shall notify Speakeasy if HHLV intends to terminate this Agreement in
accordance with this Section 15.01(c).

 

15.02                     Delivery
of Project.  Upon termination of
this Agreement,

 

(a)                                  HHLV
shall assign and transfer to Speakeasy all of HHLV’s rights, title, and
interest in and to all transferable licenses and permits with respect to the
operation of the Project, save and except the System Marks which will and shall
remain the property of HHLV’s Affiliates, subject to the license granted to
Speakeasy pursuant to Section 1 of the Intellectual Property License
Agreement;

 

(b)                                 HHLV
shall peacefully vacate the Project;

 

(c)                                  HHLV
shall prepare and deliver to Speakeasy an inventory of the linens and employee
uniforms at the Project as of thirty (30) days prior to the Termination Date;
and

 

(d)                                 No
signs or personalized property bearing any System Marks shall be purchased or
used by Speakeasy without prior written agreement between Speakeasy and HHLV’s
Affiliate.

 

15.03                     Removal of
Exterior Signs.  Commencing up to
forty-five (45) days prior to the end of the Term, HHLV may remove from the
Project, at HHLV’s sole cost and expense, any exterior signs inscribed with any
System Marks.  Upon surrender of the
Project at the end of the Term, any

 

37

 

exterior signs inscribed
with any System Marks remaining at the Project shall be removed by Speakeasy
and destroyed as soon as is practicable, and in any event within
forty-five (45) days after the Termination Date; provided, however, that
Speakeasy shall be entitled to an additional forty-five (45) day extension if
Speakeasy is diligently pursuing such removal and destruction but is not able
to complete such removal and destruction within the initial forty-five (45) day
period.

 

15.04                     Removal of
Personal Property.  Commencing up to
forty-five (45) days prior to the end of the Term, HHLV may remove from the
Project, at HHLV’s sole cost and expense, any personal property bearing a
System Mark (including without limitation, ashtrays, office supplies, linen,
glassware, paper goods, promotional items, guest checks, uniforms, and
upholstery).  Upon surrender of the
Project at the end of the Term, any such personal property bearing a System
Mark remaining at the Project shall be removed and destroyed by Speakeasy as
soon as practicable, and in any event within thirty (30) days after the
Termination Date.

 

15.05                     Removal
and Replacement of Existing Carpets. 
From time to time during the Term, the Committee shall consider
replacing the existing carpets at the Project. 
If the existing carpets that contain Horseshoe System Marks are not
replaced during the Term, then Speakeasy shall be required to remove and
dispose of such carpets within nine (9) months after the end of the Term.  Regardless of whether the carpet is replaced
during the Term or after the Term, it must be replaced with a carpet that does
not bear a System Mark.

 

15.06                     Re-Branding.  Commencing up to ninety (90) days prior to
the end of the Term, and in conformance with the terms of the Intellectual
Property License Agreement, HHLV may commence re-branding the Project as a
“Binion’s” casino (or such other casino name as Speakeasy may choose) to the
extent HHLV deems reasonable and practical, and in connection therewith HHLV
shall, in the manner approved by the Committee (i) begin to reduce the use of personal
property bearing a System Mark (including without limitation, ashtrays, office
supplies, linen, glassware, paper goods, promotional items, guest checks,
uniforms, and upholstery), (ii) refrain from re-ordering disposable personal
property bearing a System Mark (e.g. office supplies and paper goods, etc.) to
the extent such personal property would not be used at the Project prior to the
end of the Term and (iii) begin to increase the use of the “Binion’s” name (or
such other casino name as Speakeasy may choose) at the Project.  Speakeasy agrees that (a) it shall not
operate the Project under the name “Binion’s Horseshoe” after the Term and (b)
it shall not use or suffer the use by any of its Affiliates, employees, or any
parties with whom it is in privity of contract, of any of the Horseshoe Marks
or the name “Binion’s Horseshoe” at the Project after the Term.

 

ARTICLE XVI.

NOTICES

 

All notices provided for
in this Agreement or related to this Agreement, which either party desires to
serve on the other, shall be in writing and shall be considered delivered upon
receipt.  Any and all notices or other
papers or instruments related to this Agreement shall be sent by:

 

38

 

(a)                                  by United States registered or certified
mail (return receipt requested), postage prepaid, in an envelope properly
sealed;

 

(b)                                 by a facsimile transmission where
written acknowledgment of receipt of such transmission is received and a copy
of the transmission is mailed with postage prepaid; or

 

(c)                                  a nationally recognized overnight
delivery service;

 

provided for receipted
delivery, addressed as follows:

 

HHLV:

 

HHLV Management Company, LLC

c/o Harrah’s Operating Company, Inc.

One Harrah’s Court

Las Vegas, Nevada 89119

Attn:  Jonathan
Halkyard

Fax: (702) 407-6366

 

With a copy to:

 

Harrah’s Operating Company, Inc.

One Harrah’s Court

Las Vegas, NV 89119

Attn: General Counsel

Fax: (702) 407-6418

 

SPEAKEASY:

 

Speakeasy Gaming of Fremont, Inc.

3227 Civic Center Drive

North Las Vegas, NV 89030

Attn: Roger Szepelak

Fax: (702) 399-4108

 

With a copy to:

 

Ruben & Aronson, LLP

4800 Montgomery Lane,
Suite 150

Bethesda, MD  20814

Attn: Robert L. Ruben,
Esq.

Fax:  (301)
951-9636

 

39

 

Speakeasy or HHLV may change
the address or name of addressee applicable to subsequent notices (including
copies of said notices as hereinafter provided) or instruments or other papers
to be served upon or delivered to the other party, by giving notice to the
other party as aforesaid, provided that notice of such change shall not be
effective until the fifth (5th) day after mailing or facsimile
transmission.

 

ARTICLE XVII.

MISCELLANEOUS

 

17.01                     Heirs,
Successors, Assigns.  Except as
otherwise provided herein, each provision hereof shall extend to and shall, as
the case may require, bind and inure to the benefit of the parties’ heirs,
executors, administrators, permitted successors, permitted assigns and legal
representatives.

 

17.02                     Construction.  The language in all parts of this Agreement
shall be in all cases construed simply according to its fair meaning, and not
strictly for or against Speakeasy or HHLV. 
This Agreement shall be construed without regard to any presumption or
other rule requiring construction against the party causing the same to be
drafted.

 

17.03                     Governing
Law.  This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State
of  Nevada without reference to its
choice of law provisions.

 

17.04                     Severability.  Should any portion of this Agreement be
declared invalid or unenforceable, then such portion shall be deemed to be
severed from this Agreement and shall not affect the remainder thereof.

 

17.05                     Relation
of the Parties.  Nothing in this
Agreement shall be construed as creating a tenancy, ownership, limited
partnership, joint venture, agency or any other relationship between the
parties hereto other than independent contractors.  All debts and liabilities incurred by HHLV within the scope of
the authority granted and permitted hereunder in the course of its operation of
the Project shall be the debts and liabilities of Speakeasy only, and HHLV
shall not be liable for such debts and liabilities except as specifically
stated to the contrary herein.

 

17.06                     Attorneys’
Fees.  Should either party institute
an action or proceeding to enforce any provisions hereof or for other relief
due to an alleged breach of any provision of this Agreement, the prevailing
party shall be entitled to receive from the other party all costs of the action
or proceeding and reasonable attorneys’ fees.

 

17.07                     Counterparts.  This Agreement may be executed in two or
more counterparts and shall be deemed to have become effective when and only
when all parties hereto have executed this Agreement, although it shall not be
necessary that any single counterpart be signed by or on behalf of each of the
parties hereto, and all such counterparts shall be deemed to constitute but one
and the same instrument.

 

40

 

17.08                     Entire
Agreement.  This Agreement covers in
full each and every agreement of every kind or nature whatsoever between the
parties hereto concerning this Agreement, and all preliminary negotiations and
agreements, whether verbal or written, of whatsoever kind or nature are merged
herein.  No oral agreement or implied
covenant shall be held to vary the provisions hereof, any statute, law or
custom to the contrary notwithstanding.

 

17.09                     Force
Majeure.  Whenever this Agreement
requires an act to be performed within a specified time period or to be
completed diligently, such periods are subject to delays cause by Events of
Force Majeure.

 

17.10                     No
Warranties.  HHLV shall use its best
efforts to render the services contemplated by this Agreement in good faith to
Speakeasy, but hereby explicitly disclaims any and all warranties, express or
implied, including but not limited to the success or profitability of the
Project.

 

17.11                     Headings.  Headings or captions have been inserted for
convenience of reference only and are not to be construed or considered to be a
part hereof and shall not in an way modify, restrict or amend any of the terms
or provisions hereof.

 

17.12                     Waiver.  The waiver by one party of any default or
breach of any of the provisions, covenants or conditions hereof of the part of
the other party to be kept and performed shall not be a waiver of any preceding
or subsequent breach or any other provisions, covenants or conditions contained
herein.

 

17.13                     Consent to
Jurisdiction.  The parties hereto
agree that any legal action or proceeding with respect to or arising out of
this Agreement may be brought in or removed to the courts of the State of
Nevada, in and for the County of Clark, or of the United States of America for
the District of Nevada, as HHLV may elect. 
By execution and delivery of this Agreement, the parties hereto accept,
for themselves and in respect of their property, generally and unconditionally,
the jurisdiction of the aforesaid courts. 
The parties hereto irrevocably consent to the service of process out of
any of the aforementioned courts in any manner permitted by law.  Nothing herein shall affect the right of
HHLV to bring legal action or proceedings in any other competent jurisdiction.  The parties hereto hereby waive any right to
stay or dismiss any action or proceeding under or in connection with this
Agreement brought before the foregoing courts on the basis of forum
non-conveniens.

 

17.14                     Waiver of
Jury Trial.  THE PARTIES HERETO
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP BETWEEN
THE PARTIES HERETO THAT IS BEING ESTABLISHED. 
THE PARTIES HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. 
THE PARTIES HERETO

 

41

 

FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

 

17.15                     Third
Party Beneficiaries.  None of the
obligations hereunder of either party shall run to or be enforceable by any
party other than the parties to this Agreement and their respective successors
and assigns in accordance with the provisions of this Agreement.

 

17.16                     Amendments.  This Agreement may be changed or modified
only by an agreement in writing signed by the parties hereto, and no oral
understandings shall be binding as between the parties.

 

17.17                     Waste.
Other than (a) when necessary in the reasonable business judgment of a party or
(b) as expressly permitted pursuant to the terms of this Agreement, neither
party will commit or permit any waste (including economic and non-physical
waste), impairment or deterioration of the Project (other than normal wear and
tear) or any alteration, demolition or removal of any of the Project without
the prior consent of the other party, which may be withheld in such party’s
sole discretion.

 

17.18                     No
Warranty.                       Speakeasy
makes no representation or warranty, express or implied, at law or in equity,
in respect of any of the Project, including, without limitation, with respect
to merchantability, habitability or fitness for any particular purpose, and any
such other representations or warranties are hereby expressly disclaimed.

 

17.19                       Press
Releases.  Each of Speakeasy and
HHLV shall use commercially reasonable efforts to ensure that its press
releases and the press releases of its Affiliates concerning the Project or
this Agreement shall first be submitted to the Committee for the Committee’s
approval, with the exception of any press releases required to be made by a
party or its Affiliates pursuant to various securities laws applicable to such
party or its Affiliates.

 

17.20                     “As Is.”  HHLV acknowledges that pursuant to
Section 3.2(d) of the Purchase and Sale Agreement, Speakeasy purchased the
Project in an “as is” condition.  HHLV
hereby agrees to take possession of the Project in the same “as is” condition.

 

17.21                     Survival.  Any provision of this Agreement which by its
terms or by reasonable implication or interpretation is intended to or should
survive the Termination Date, shall fully survive the Termination Date and the
termination of this Agreement for any reason whatsoever.

 

42

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date and year first above
written.

 

	
  HHLV:

  
	
   

  
	
  HHLV MANAGEMENT COMPANY, LLC,

  
	
  a Nevada limited liability company

  
	
   

  
	
   

  	
  By:

  	
  Harrah’s Operating Company, Inc.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
  Its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jonathan S. Halkyard

  	
   

  
	
   

  	
   

  	
  Name:

  	
   Jonathan S.
  Halkyard

  	
   

  
	
   

  	
   

  	
  Its:

  	
  VP and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  SPEAKEASY:

  
	
   

  
	
  SPEAKEASY GAMING OF FREMONT, INC.,

  
	
  a Nevada corporation

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Roger M. Szepelak

  	
   

  
	
   

  	
   

  	
  Name:

  	
   Roger M.
  Szepelak

  	
   

  
	
   

  	
   

  	
  Its:

  	
  VP and Chief Operating Officer

  	
   

  
								

 

S-1

 

The undersigned, in
consideration of, and as a material inducement to, HHLV entering into the
foregoing Agreement, hereby unconditionally and absolutely guaranties unto
HHLV, its successors and assigns, the due and complete performance and payment
(and not merely collection) in full of all obligations and liabilities of
Speakeasy pursuant to the Agreement, as and when due and payable, subject to
the terms and conditions of the Agreement. 
The undersigned agrees that HHLV shall be entitled to enforce directly
against the undersigned any of such obligations to the extent that Speakeasy
fails to perform its obligations. 
Notwithstanding any of the foregoing, nothing herein shall be deemed to
waive or limit HHLV’s ability to assert any claims, defenses or other rights
that HHLV may have under the Agreement.

 

This guaranty is
independent of and in addition to any security or other remedies which HHLV has
or may have for performance of any of the obligations on the part of Speakeasy;
and the undersigned and Speakeasy agree that HHLV shall not be required to
resort to any other security or other remedies before proceeding upon this
guaranty, but that HHLV may proceed hereunder against the undersigned and
Speakeasy, or any of them, at any time it sees fit, independently of or
concurrently with any other remedies it may have.

 

	
  MTR GAMING GROUP, INC.,

  
	
  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Edson R. Arneault

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   Edson R.
  Arneault

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  President

  	
   

  
					

 

S-2

 

The undersigned, in
consideration of, and as a material inducement to, Speakeasy entering into the
foregoing Agreement, hereby unconditionally and absolutely guaranties unto
Speakeasy, its successors and assigns, the due and complete performance and
payment (and not merely collection) in full of all obligations and liabilities
of HHLV pursuant to the Agreement, as and when due and payable, subject to the
terms and conditions of the Agreement. 
The undersigned agrees that Speakeasy shall be entitled to enforce
directly against the undersigned any of such obligations to the extent that
HHLV fails to perform its obligations. 
Notwithstanding any of the foregoing, nothing herein shall be deemed to
waive or limit Speakeasy’s ability to assert any claims, defenses or other
rights that Speakeasy may have under the Agreement.

 

This is independent of
and in addition to any security or other remedies which Speakeasy has or may
have for performance of any of the obligations on the part of HHLV; and the
undersigned and HHLV agree that Speakeasy shall not be required to resort to
any other security or other remedies before proceeding upon this guaranty, but
that Speakeasy may proceed hereunder against the undersigned and HHLV, or any
of them, at any time it sees fit, independently of or concurrently with any
other remedies it may have.

 

 

	
  Harrah’s Operating Company, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Jonathan S. Halkyard

  	
   

  
	
  Name:

  	
   Jonathan S.
  Halkyard

  	
   

  
	
  Its:

  	
  VP and Treasurer

  	
   

  
					

 

S-3

 

TABLE OF EXHIBITS

 

 

EXHIBIT A - List
of Operating Contracts (Section 1.01)

 

EXHIBIT B -
Benefits (Section 3.05(d))

 

EXHIBIT C - HHLV’s
Senior Management Team (Section 3.05(e))

 

EXHIBIT D - HHLV’s
Proprietary Information and Systems (Section 4.02(a)(ii))

 

EXHIBIT E - List
of Horseshoe System Marks (Section 5.04)

 

S-4Exhibit
10.5

 

FIRST AMENDMENT

 

TO

 

JOINT
OPERATING LICENSE AGREEMENT

 

THIS FIRST
AMENDMENT TO JOINT OPERATING LICENSE AGREEMENT (the “Amendment”) is made
as of March 10, 2004 by and between SPEAKEASY GAMING OF FREMONT, INC., a
Nevada  corporation (“Speakeasy”)
and HHLV MANAGEMENT COMPANY, LLC, a Nevada limited liability company (“HHLV”).

 

Recitals

 

A.                                   Speakeasy and HHLV are parties to that
certain Joint Operating License Agreement, dated as of March 5, 2004 (the
“Joint Operating Agreement”). 
Capitalized terms not otherwise defined herein shall have the meanings
given them in the Joint Operating Agreement.

 

B.                                     Speakeasy and HHLV desire to amend the
Joint Operating Agreement in the manner set forth herein in order to assure
that a final round of the World Series of Poker be held at the Project during
2005.

 

Agreement

 

FOR GOOD AND
VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.                                       Amendments.  The parties
hereby agree to the following amendments to the Joint Operating Agreement:

 

A.                                   Section 3.14 of the Joint Operating
Agreement is hereby deleted and replaced in its entirety with the following
provision:

 

“3.14  Operating Contracts.

 

(a)   Commencing on the Effective Date and for a
period of sixty (60) days thereafter, the Committee will undertake a review of
the operations of the Project and the Assignment and Assumption of Assumed
Contracts to (i) establish as complete and accurate a list of Project vendors
and Operating Contracts as is commercially practicable, (ii) determine which
Operating Contracts have a term which extends beyond the Term and which
Operating Contracts have rights of termination, and (iii) prepare a plan
identifying those Operating Contracts which HHLV and Speakeasy desire to
replace, renegotiate or terminate.  HHLV
shall use commercially reasonable efforts to implement the plan with respect to
Operating Contracts which is established by the Committee.

 

1

 

(b) 
Without any approvals from the Committee or Speakeasy (i) HHLV may enter
into any amendment or modification of any Operating Contract that is terminable
by Speakeasy at the end of the Term (so long as after any such amendment, such
Operating Contract remains terminable by Speakeasy at the end of the Term), and
(ii) HHLV may enter into any non-material amendment or modification to any
Operating Contract that is not terminable by Speakeasy at the end of the Term;
provided, however, that unless otherwise approved by the Committee, HHLV shall
not enter into any material amendment or modification to any Operating Contract
that is not terminable by Speakeasy at the end of the Term, and (iii) HHLV may
enter into any new Operating Contract provided that such Operating Contract is
terminable by Speakeasy at the end of the Term.”

 

B.                                     The following Section 3.16 is hereby
added to Article III of the Joint Operating Agreement:

 

“3.16  Indemnities.

 

(a)  HHLV hereby indemnifies Speakeasy
for any loss, damage, claim, cost, charge or expense, including direct,
indirect or consequential loss, damage, claim cost, charge or expense, and also
including reasonable attorney’s fees and other costs of litigation, arising
after the end of the Term pursuant to obligations under Operating
Contracts not listed in Exhibit A to this Agreement, but only to the
extent that HHLV is able to recover such amounts from Horseshoe Club
Operating Company.

 

(b)  HHLV hereby indemnifies
Speakeasy for any loss, damage, claim, cost, charge or expense, including direct,
indirect or consequential loss, damage, claim cost, charge or expense, and also
including reasonable attorney’s fees and other costs of litigation, arising out
of the Union Agreements and accruing prior to the Effective Date.

 

(c)                                     The indemnities described in
Section 3.16(a) and 3.16(b) shall terminate at the end of the Initial
Term.”

 

C.                                     The following Section 3.17 is hereby
added to the end of Article III of the Joint Operating Agreement:

 

“3.17 
Parry Lease Payment.  The
parties acknowledge and agree that a Lease Buyout (as such term is defined in the Purchase and
Sale Agreement) of that certain Lease dated May 3, 1957, between O.L. Parry and
Stewart Kennard, Junior, Trustee, recorded as Instrument 183143 in Book 225 of
the Official Records of Clark County, Nevada, as amended, assigned or affected
by that certain First Amendment of Lease and Consent to Assignment of Lease,
dated September 21, 1984, recorded as Instrument 1990886 in Book 2031 of
the Official Records of Clark

 

2

 

County, Nevada; that certain Second Amendment of
Lease, dated as of December 12, 1984, recorded as Instrument 2000565 in
Book 2041 of the Official Records of Clark County, Nevada; and that certain
Third Amendment of Lease, dated as of December 25, 1984, recorded as
Instrument 2000566 in Book 2041 of the Official Records of Clark County, Nevada
(the “Parry Lease”), has occurred.  The parties further acknowledge and agree that the remaining
lease payments owing under the Parry Lease pursuant to Section 1.3(d) of
the Purchase and Sale Agreement shall be $12,669 per month, regardless of the
actual amount of lease payments otherwise payable under the Parry Lease.

 

D.                                    Subparagraph (b) of Article X of the
Joint Operating Agreement is hereby deleted and replaced in its entirety with
the following provision:

 

“(b)  Speakeasy may assign or transfer (i) this Agreement to
any Affiliate of Speakeasy; provided, that a counterpart original of such
assignment is delivered to HHLV on or before the effective date of such
assignment, and provided further that such Affiliate of Speakeasy expressly
assumes and agrees to be bound by all of the terms and conditions of this
Agreement, or (ii) its right to receive the Speakeasy’s Remittance Amount to
Wells Fargo Bank, National Association (“Wells Fargo”) as collateral to
secure the loan from Wells Fargo to Speakeasy Parent.”

 

E.                                      The following Section 5.08 is hereby
added to the end of Article V of the Joint Operating Agreement:

 

“5.08  Websites; Computer Systems; Databases.

 

(a)  Subject to and in
accordance with the Intellectual Property License Agreement, HHLV shall, during
or by the end of the Term as deemed appropriate by HHLV, remove or cause to be
removed, any references on the website at www.binions.com or www.binions.net or
www.binions.org to any content, trademarks, logos or other indicia relating to
“Horseshoe,” “World Series of Poker” or any other “Retained Marks” (as such
term is defined in the Intellectual Property License Agreement) or intellectual
property rights or marks reserved by HHLV in the Intellectual Property License
Agreement.  Thereafter, subject to the
foregoing, Speakeasy may modify said website(s) with content, trademarks or
indicia approved by Speakeasy. HHLV shall give Speakeasy reasonable notice of
its intention to remove the foregoing from the websites and cooperate with
Speakeasy in order to avoid any unnecessary interruption in the operation
thereof.

 

(b)  Subject to and in
accordance with the Intellectual Property License Agreement, HHLV shall, at the
time or times during the Term deemed appropriate by HHLV, remove or cause to be
removed, any references in the computer systems or databases operated in
connection

 

3

 

with the Project any data, databases, software
programs or software applications (including any related customizations,
modifications, or adaptations)  any
specific references to “Horseshoe,” “World Series of Poker” or any other Retained
Marks or intellectual property rights or marks reserved by HHLV in the
Intellectual Property License Agreement. Thereafter, subject to the foregoing,
Speakeasy may modify the above referenced media to include information approved
by Speakeasy. HHLV shall give Speakeasy reasonable notice of its intention to
remove the foregoing items from the media and cooperate with Speakeasy in order
to avoid any unnecessary interruption in the use thereof.”

 

F.                                      Speakeasy hereby acknowledges that HHLV
has funded a $250,000.00 security deposit in connection with the assignment by
Horseshoe Club Operating Company to Speakeasy of Horseshoe Club Operating
Company’s interest as tenant under that certain Lease, dated as of
January 20, 1981, between Horseshoe Garage, a Nevada limited partnership,
as landlord, and Horseshoe Club Operating Company, as tenant.  At the end of the Term, Speakeasy will pay
$250,000.00 to HHLV as reimbursement of the security deposit funded by HHLV;
provided that HHLV shall have in fact funded the security deposit and (i) no
claim has been made against said security deposit and (ii) the full security
deposit remains in place at that time.

 

G.                                     HHLV
shall have the right, at its option, to hold the final round of the World
Series of Poker or any preliminary rounds of the World Series of Poker prior to
the 2005 final round of the World Series of Poker (collectively, the “2005
WSOP”) at the Project; provided that, HHLV agrees to hold at least the two
final rounds of the World Series of Poker at the Project during 2005.  If
the 2005 WSOP or any portion thereof is held after the end of the Term at the
Project, then, subject to any applicable gaming laws or requirements and
receipt of any necessary gaming or other regulatory approvals, the following
shall apply:

 

(i)  HHLV or any of its Affiliates (the “2005
WSOP Operator”) shall have the right and license to conduct the
2005 WSOP at the Project at its own cost and expense in accordance with the
following provisions of this Paragraph F.

 

(ii)  Apart from the activities necessary to
conduct the 2005 WSOP at the Project, the 2005 WSOP Operator shall not hinder
or interfere with the operations of the Project.

 

(iii)  Speakeasy hereby grants the 2005 WSOP
Operator rights to access the Project and control the 2005 WSOP at the
Project as necessary or desirable to conduct the 2005 WSOP at the Project
in a first class manner that will not bring disrepute to the Project, including
such rights necessary or desirable to set up and prepare for the 2005 WSOP
and such rights necessary or desirable to dismantle and/or decommission the
2005 WSOP; provided that it is agreed and understood that Speakeasy shall have
exclusive control of all casino, hotel, food, beverage

 

4

 

and other operations of
the Project not directly related to conducting the 2005 WSOP.

 

(iv)  The 2005 WSOP Operator shall obtain and
maintain any insurance necessary to conduct the 2005 WSOP in accordance
with the insurance requirements of the Joint Operating Agreement or Wells
Fargo, if applicable, as applicable to the 2005 WSOP.

 

(v)  The 2005 WSOP Operator shall have the
exclusive right to market the 2005 WSOP. 
The 2005 WSOP Operator shall retain all revenues generated from
television or other media coverage of the 2005 WSOP, any entrance fee requirements,
any shares of wagers customarily retained by the house or any other revenues
collected by the 2005 WSOP Operator directly in connection with conducting the
2005 WSOP at the Project. 
Notwithstanding the foregoing, any revenue generated at the Project from
poker games not conducted as part of the 2005 WSOP tournament shall be the sole
income of Speakeasy.

 

(vi)  Subject to the reimbursement requirements
set forth in Subparagraph (vii) of this Paragraph F, no Speakeasy Remittance
Amount or any other amounts shall be payable by the 2005 WSOP Operator to
Speakeasy in connection with the 2005 WSOP.

 

(vii)  Notwithstanding the expiration of the Term,
the Committee shall be reconstituted for purposes of determining the amount of
extraordinary costs (the “Extraordinary Costs”) incurred by Speakeasy in
operating the Project as a direct result of the conduct of the 2005 WSOP at the
Project by the 2005 WSOP Operator.  In
order to determine the amount of the Extraordinary Costs, the Committee shall
meet prior to the commencement of the 2005 WSOP to identify the physical
boundaries (the “Boundaries”) at the Project within which the 2005 WSOP
will be held, and shall in good faith prepare a plan (the “Plan”) to
identify and compute the amount of the Extraordinary Costs, which amount shall
be limited to event-related costs necessary to support the additional burdens
on the Project, including personnel and operations costs, that are primarily
incurred for the purpose of facilitating or supporting the conduct of the 2005
WSOP within the Boundaries.  Within a
reasonable time after the completion of the 2005 WSOP, Speakeasy shall compute
the amount of the Extraordinary Costs in accordance with the Plan (the “Reimbursement
Amount”).  After Speakeasy has
computed the Reimbursement Amount, the Committee shall again meet to in good
faith review the Plan and the Reimbursement amount, and shall either approve or
modify the Reimbursement Amount as it sees fit.  Once the Committee has approved or modified the Reimbursement
Amount, the 2005 WSOP Operator shall pay to Speakeasy the Reimbursement Amount,
as approved or modified by the Committee.

 

(viii)  Speakeasy and Speakeasy Parent may market
the 2005 WSOP on-site at its Mountaineer Park casino property in West Virginia
and Scioto Downs

 

5

 

horse racing property in
Ohio to the extent and so long as such marketing is conducted in accordance
with the marketing template and format being utilized by the 2005 WSOP
Operator, which template and format will be provided in writing to Speakeasy.

 

(ix)  The 2005 WSOP Operator shall indemnify
Speakeasy for any loss, damage, claim, cost, charge or expense, including
direct, indirect or consequential loss, damage, claim cost, charge or expense,
and also including reasonable attorney’s fees and other costs of litigation,
arising out of the actions of the 2005 WSOP at the Project by the 2005 WSOP
Operator.

 

H.                                    HHLV
and Speakeasy have agreed that each shall receive fifty percent (50%) of the
proceeds from that certain Promissory Note, dated March 2, 1994, in the
original principal of amount of $240,000 from Michael Hines, as sole
individual, and as Executor of the Estate of Margo Goumond, in favor of
Horseshoe Club Operating Company (the “Hines Note”).  When and as HHLV receives payments on the
Hines Note, HHLV shall pay to Speakeasy an amount equal to fifty percent (50%)
of any such payments.  Such payments to
Speakeasy shall be paid by HHLV concurrently with each monthly payment of the
Speakeasy Remittance Amount.

 

I.                                         Speakeasy’s
address for notice in Article XVI of the Joint Operating Agreement shall
be:

 

Speakeasy Gaming of Fremont, Inc.

c/o Ramada Inn and Speedway Casino

3227 Civic Center Drive

North Las Vegas, NV 89030

Attn: Roger Szepelak

Fax: (702) 399-4108

 

With a copy to:

 

Ruben & Aronson, LLP

4800 Montgomery Lane,
Suite 150

Bethesda, MD  20814

Attn: Robert L. Ruben, Esq.

Fax:  (301)
951-9636

 

2.                                       Governing Law. 
This Amendment shall be governed by, construed and enforced in
accordance with the laws of the State of 
Nevada without reference to its choice of law provisions.

 

3.                                       Counterparts. 
This Amendment may be executed in two or more counterparts and shall be
deemed to have become effective when and only when all parties hereto have
executed

 

6

 

this Amendment, although it shall not be necessary that any single
counterpart be signed by or on behalf of each of the parties hereto, and all
such counterparts shall be deemed to constitute but one and the same
instrument.

 

4.                                       Continuing Effect. 
As amended hereby, the Joint Operating Agreement shall continue in full
force and effect following the date hereof. 
If there is any inconsistency between the provisions of this Amendment
and the provisions of the Joint Operating Agreement, the provisions of this
Amendment shall supercede and control.

 

5.                                       Amendments.  This
Amendment may be changed or modified only by an agreement in writing signed by
the parties hereto, and no oral understandings shall be binding as between the
parties.

 

7

 

IN WITNESS
WHEREOF, the undersigned have executed this Amendment as of the date and year
first above written.

 

	
  HHLV:

  
	
   

  
	
  HHLV MANAGEMENT
  COMPANY, LLC,

  
	
  a Nevada limited
  liability company

  
	
   

  
	
   

  	
  By:

  	
  Harrah’s
  Operating Company, Inc.,

  a Delaware corporation

  Its sole member

  
	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S.
  Halkyard

  	
   

  
	
   

  	
  Name:

  	
   Jonathan S. Halkyard

  	
   

  
	
   

  	
  Its:

  	
  VP and Treasurer

  	
   

  
	
   

  
	
   

  
	
  SPEAKEASY:

  
	
   

  
	
  SPEAKEASY GAMING
  OF FREMONT, INC.,

  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger M.
  Szepelak

  	
   

  
	
   

  	
  Name:

  	
   Roger M. Szepelak

  	
   

  
	
   

  	
  Its:

  	
  VP and Chief
  Operating Officer

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